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Powerhouse Energy Group PLC

POWERHOUSE ENERGY GROUP PLC - Interim Results

27 September 2017

PowerHouse Energy Group plc

(“PowerHouse” or the “Company”)

Interim results for the six months ended30 June 2017

(AIM: PHE), the company focused on ultra-high temperature waste-to-energy and waste-to-hydrogen systems, and the creator of Distributed Modular Gasification (DMG), announces its unaudited interim results for the six months to .PowerHouse Energy Group plc©30 June 2017

H1 2017 Highlights

Operational

Financial

Post-period Highlights

Operational

Financial

For more information, contact:

AboutPowerHouse Energy

is the developer of the G3-UHt Ultra High Temperature Gasification unit, and the creator of the Distributed Modular Gasification (DMG) system which allows for the distributed elimination of waste, the generation of distributed electricity, and the production of distributed hydrogen with the world’s first hydrogen from waste process (HfW).PowerHouse Energy Group plc©

The Company is focused on technologies to enable projects for energy recovery from municipal and industrial waste streams that would otherwise be directed to landfills and incinerators; or from renewable and alternative fuels such as biomass, tyres, and plastics to create synthesis gas (syngas) for power generation, or high-quality hydrogen as a fuel for transport. DMG© allows for easy, economical, deployment and scaling of an environmentally sound solution to the growing challenges of waste elimination, electricity demand, and distributed hydrogen production.

PowerHouse is quoted on the AIM Market. The Company is incorporated in the .London Stock Exchange'sUnited Kingdom

For more information see www.powerhouseenenergy.net

Interim Results for the six months to30 June 2017

Chairman’s Statement

Introduction

The first six months of 2017 has been an exciting period for PowerHouse that saw a rapid increase in activity both in terms of technical development and financial restructuring.

The delivery of the Company’s G3-UHt Ultra-high temperature gasification unit (G3 UHt Unit) to the in early 2017 and its re-siting and re-commissioning at the Thornton Science Park Energy Centre successfully concluded the initial testing phase of our proprietary technology. The confirmation of the G3-UHt Unit’s ability to operate at target temperature and its re-commissioning were completed in accordance with applicable , Safety, and Environmental regulations and standards. A regular programme of demonstration, testing, enhancement, and consistent operation is underway at the Energy Centre and the Board believes that Distributed Modular Gasification (DMG) has truly begun its industry disruptive journey.UKUK Health©

Our technology

The focus for PowerHouse in recent years has concentrated on the efficient generation of energy from waste, but increasingly we see exciting prospects for the ability to convert waste into hydrogen. Our small footprint, our high-temperature process, and our ability to generate a concentrated volume of hydrogen on a distributed basis sets us apart from others. This process, DMG , has led to one of the world’s first distributed hydrogen from waste (HfW) design.  ©

DMG enables the thermal-molecular conversion of waste into an energy-rich syngas. The syngas can be used immediately to generate low emission electrical energy which can be used locally, thereby leveraging private line or micro-grid connections on-site. If appropriate, it can be sold directly into the National Grid.©

We believe that DMG is a disruptive technology that could fundamentally change the waste-to-energy market. DMG is a mechanism for the eradication of waste, the generation of distributed electricity, and, most importantly, the production of distributed hydrogen – HfW - which we believe will help unleash the hydrogen economy by providing hydrogen as a road-fuel as the demand for Fuel Cell Vehicles (FCVs) ramps up.©©

Operations

The arrival of the G3-UHt Unit in the in March saw the start of a programme of engineering activity to ensure that the unit would safely and securely operate in accordance with , Safety, and Environmental guidelines. The work followed a comprehensive knowledge transfer from the Ore-Pro team (our prior external engineering partners) to our based engineering staff and included extensive upgrading of componentry, the installation of advanced automation, and the integration of appropriate safety controls for the system. The unit was completely deconstructed, examined, tested, and reconstructed to ensure its ideal operational condition.UKUKUK Health

During this period the system was moved from its initial commissioning site to its current location in Unit 99 of the Energy Centre at the , operated by the . This was purpose-built as an emissions test facility for and is an ideal location for the continuous operation, demonstration, and improvement of the G3-UHt Unit. The Company has established an active engineering programme at the Centre and has taken a two year lease on its facilities there.Thornton Science ParkUniversity of ChesterShell Research

In the Company announced that the first phase of the re-commissioning of the G3-UHt Unit had been completed, with the successful production of syngas from the system. The G3-UHt unit operated at a temperature of over 1000 degrees Celsius, demonstrating its capacity to successfully gasify many historically difficult waste materials and generate synthesis gas.  April 2017

The second phase of re-commissioning saw a number of improvements and modifications made to the system, ahead of the scaling up necessary for commercial deployment. These included the enhancement of the gas-handling systems, refurbishment of the feed and steam generation systems and the complete redesign and introduction of programmable safety and control systems. During the test, the Company recorded a maximum peak flow rate of over 50 cubic metres per hour of syngas.

Following a robust programme of testing and technical data collection, the Company announced the completion of its first extended technical trial of the DMG© gasification process at the Energy Centre at on .Thornton Science Park31 July 2017

Operating on a feedstock of tyre crumb, PowerHouse engineers were able to demonstrate control of the process at ultra-high temperature which generated a syngas that, according to onsite, in-line, analytical instrumentation, was greater than 50% hydrogen by volume. The remaining, measurable, constituent elements of the syngas were CO (carbon monoxide) and CH4 (methane.) Importantly, the in-line gas analysis equipment detected absolutely no CO2 in the gas stream generated by the Unit. A more rigorous analysis of the syngas produced in the DMG process will be conducted by certified external laboratories in future trials.

Strategic alliances and Relationships

The accomplishments achieved in H1 2017 were underpinned by a number of strategic alliances with influential partners.

Over the past several years, the Company has been working with Waste2tricity, , in an effort to develop a pipeline of projects in that country. The experience of working with Waste2tricity principals made establishing a centric relationship between our two entities a clear option and in PowerHouse entered into a 24 month project development relationship with Waste2tricity, Ltd.  The initial results of that relationship have led to a substantive expansion of our capabilities, relationships with other industrial partners, and a pipeline of commercial opportunities, in the , and elsewhere, under consideration.ThailandUKUKUKJanuary 2017

Among the introductions made by Waste2tricity on behalf of PowerHouse was to Peel Environmental (Peel). This relationship led to the Memorandum of Understanding announced on between the Company and Peel to negotiate potential participation at Protos, Peel’s expansive energy park near . Our relationship with Peel continues to grow and develop and, through their introduction, led to the siting of our G3-UHt demonstration unit at the newly established Energy Centre at the , part of the . This base is the hub of our future R&D activities in co-operation with the , including the sponsorship of a PhD program to further the science behind Ultra-high Temperature Gasification and the expansion of DMG©.6 February 2017ChesterThornton Science ParkUniversity of ChesterUniversity of Chester

On , made an investment of £250,000 into the Company, showing an early commitment to the G3-UHt Unit and the continued development and roll-out of DMG. Yady further contributed £500,000 to a £2.5 million placing in .30 January 2017February 2017Yady Worldwide SA©

The appointment of as our principal engineering partner, announced in March, to assist in the re-commissioning of the G3-UHt Unit, has proven to be extremely productive and we look forward to a long-standing and successful relationship with their talented engineering team. We are working closely with the EngSolve team on our commercial design efforts.EngSolve, Ltd

In June, the Company announced a collaboration agreement with a major partner involved in the development of energy and waste projects. The partner has committed two tranches of funding of up to £500,000 in aggregate to meet the cost of preparing and funding applications for planning permission and environmental permits of the initial demonstration unit and first five PHE Waste-to-Energy G3-UHt systems. The agreement will require PowerHouse to supply five systems at locations of the partners' choosing on a prioritised basis, based upon the completion of Certifications and demonstration of the G3-UHt unit in active operation. £100,000 of this commitment was released in July to fund the planning development of the Company’s first commercial sites.UKUK

Risk Reduction and Funding

The Board made the strategic decision to negotiate the retirement of the Hillgrove loan note (Note) with a combination of cash and shares.

The retirement of the Note was a significant milestone for the Company as there is no longer a financial impediment to its growth and operation.

The Note was accruing interest at a rate of 15% per annum and had reached a value of £3.4M.  The coupon on the Note would add approximately a half-million pounds of fully secured debt to the Company each year. 

The decision was taken to raise £2.5 million in a private placement and to repay the Note with £2 million in cash, and issue £1.4 million worth of shares at the conversion price of 0.5p.  Hillgrove has agreed to release its debenture over the Company’s assets and IP upon the final settlement of the share issuance. 280,430,920 shares will be issued in due course to Hillgrove as it had agreed to a 12 month lock-in period and a continuing Relationship Agreement with the Company. Hillgrove has the right to nominate a suitably acceptable Director to the Board at its discretion.

The remainder of the proceeds of the placement provided capital for the continued operations of the Company. 15 February 2017

After the period end, on , a further £1.6m was raised through a placing of new ordinary shares at 1.0p to fund further development.24 August 2017

The PowerHouse Team

The company has made a number of significant appointments to strengthen the board and management team.

was appointed as a Non-Executive Director in late , and on , became Executive Director of , overseeing the technical operations of the Company. Introduced to PowerHouse by Waste2tricity, David was the former CEO and Managing Director of Thyssenkrupp Industrial Solutions’ Oil & Gas Business Unit for the . Prior to his employment with Thyssenkrupp, he founded and built a successful engineering consulting organisation, , which was acquired by Thyssenkrupp in 2012.David RyanFebruary 201720 March 2017Programme DevelopmentEnergy & Power LimitedUK

With over 30 years of complex engineering, business development, and project management experience, David is an expert in sophisticated design engineering and brings a breadth of project delivery, international business management, and general engineering acumen to the management team. David has been instrumental in the successful siting and re-commissioning of the G3-UHt Unit at and continues to work on the design and development of the Company’s commercial platform, DMGThornton Science Park©.

joined the PowerHouse management team as Chief Financial Officer, bringing an extensive background in financial accounting and waste-to-energy finance management.  In addition, the first site personnel in the were hired, based at .Chris VanezisUKThornton Science Park

resigned from his position as Non-Executive Director in May after serving on the for one year.Clive CarverBoard

The first half of the year also saw the new creation of an experienced, knowledgeable, and well-connected consisting of Peter Jones OBE, , , , and . The value of the is leading to an acceleration of our commercial activities as is evidenced by the MOU announced 20 between PowerHouse and EEH regarding potential HfW activities in for broadly rolling out the Company’s DMG platform. Advisory PanelAdvisory PanelKeith RileyMyles KitcherRoudi BaroudiHoward Whiteth©September 2017Qatar

Of significant note is the Company’s appointment of Dr. as Non-Executive Chairman of the Board of Directors, announced on . Dr. Davies’ many accomplishments, his extensive experience, and his steady hand will serve the Company well as we move forward.  Having known for nearly a year now, I am eager for his tenure to commence. His appointment bodes well for the future of PowerHouse and it is anticipated that his appointment will take effect on . On Dr. Davies’ appointment I will relinquish my position as Executive Chairman to become the Chief Executive Officer of the Company.Cameron DaviesDr. Davies24 August 20173 October 2017

Current trading and Outlook

The first half of the year has seen a tremendous amount accomplished by the Company and the recent placing, raising £1.6 million has provided the funding we require to begin revving our commercial engine.  

We have created what we believe to be a disruptive philosophy in DMG: distributed waste destruction; distributed electrical generation; distributed hydrogen production. We have taken a contrarian approach to the megaliths of the past and believe in bringing the solution to where the problem lies. We are positioned to do something powerful for communities across the and throughout the world. We believe that DMG today is but a ripple in the pond but that in time it will help redefine how our environment is managed and play a key role in the evolution of transport, - as the ripple turns into a wave of opportunity for positive change in our world.©©UK

no longer sees itself solely in the category of companies, but now Waste to hydrogen. We are convinced that the hydrogen economy is coming and that we have a big part to play. And DMG will help fuel our future. Cleanly.PowerHouse Energy Group plcWaste to Energy©

As always, we appreciate your continued support.

Executive ChairmanKeith Allaun

27 September 2017


Statement of Comprehensive Income

The notes numbered 1 to 5 are an integral part of the interim financial information.



Statement of Changes in Equity

The notes numbered 1 to 5 are an integral part of the interim financial information.



Statement of Financial Position

The notes numbered 1 to 5 are an integral part of the interim financial information.


Statement of Cash Flows

The notes numbered 1 to 5 are an integral part of the interim financial information.

Notes (forming part of the interim financial information)

1.  Summary of significant accounting policies

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial information.

1.1.     Basis of preparation

This interim consolidated financial information is for the six months ended and has been prepared in accordance with International Accounting Standard 34 “Interim Financial Statements”. The accounting policies applied are consistent with International Financial Reporting Standards (“IFRS”) adopted for use by the . The accounting policies and methods of computation used in the interim consolidated financial information are consistent with those expected to be applied for the year ending .30 June 201731 December 2017European Union

The financial information set out above does not constitute the Company's statutory accounts for the year ended , but is derived from those accounts. Statutory accounts for 2016 have been delivered to the Registrar of Companies. The auditors have reported on those accounts: their report was qualified and contained a disclaimer of opinion and contained statements under section 498(2) or (3) of the Companies Act 2006.31 December 2017

1.2.     Going concern

The Directors have considered all available information about the future events when considering        going concern. The Directors have reviewed cash flow forecasts for 12 months following the date of these Financial Statements.

The cash balance held at together with the further fund raise completed after this date is considered sufficient to ensure the company can pay its debts as they fall due. Based on this, the Directors believe it is appropriate to continue to adopt the going concern basis of accounting for the preparation of the interim financial statements.30 June 2017

1.3.     Functional and presentational currency

This interim financial information is presented in £ sterling which is the Group’s functional currency.

2.  SHARE CAPITAL

The deferred shares have no voting rights and do not carry any entitlement to attend general meetings of the Company. They will carry only a right to participate in any return of capital once an amount of £100 has been paid in respect of each ordinary share. The Company will be authorised at any time to affect a transfer of the deferred shares without reference to the holders thereof and for no consideration.

On the Company issued 35,714,285 ordinary shares of 0.5p each at a price of 0.7p each, totalling £250,000.30 January 2017

On and the Company issued 250,000,000 and 62,500,000 ordinary shares of 0.5p each respectively at a price of 0.8p each, totalling £2,500,000.15 February 201715 March 2017

On PowerHouse announced it had entered into a Cooperation Agreement to appoint as its exclusive Project Development Consultant in the . In accordance with the terms of the agreement, on the Company issued Waste2Tricity with 7,460,035 ordinary shares of 0.5p each in the Company in lieu of cash payment of £70,000.17 January 201727 June 2017Waste2tricity plcUK

3.  Loss per share

4.  LOANS

4.1.  Hillgrove Loan

(“Hillgrove”) has provided the Company with a convertible loan which is secured by a debenture over the assets of the company and carries interest of 15 per cent per annum. Hillgrove had the option at any time to convert the loan in part or whole at a conversion price of 0.5p per share.Hillgrove Investments Pty Limited

On , the Company announced that Hillgrove had accepted a settlement of this loan for a £2 million cash pay-out, and conversion of the residual balance of £1,402,155 into newly issued share capital of the Company at the previously agreed 0.5p conversion price, amounting to 280,430,920 shares. These shares are yet to be issued. Hillgrove will hold a total of 300,430,920 shares of the enlarged issued share capital of the Company. Hillgrove has committed to a 12 month lock-in period for its newly issued shares. Hillgrove is a related party as defined by the Aim Rules for Companies and accordingly the Hillgrove Note payout and share conversion is deemed a Related Party Transaction.29 April 2017

5.  TRADE AND OTHER PAYABLES

--  Delivery of the G3-UHt ultra-high temperature gasification demonstration
        unit to the  and successful testing and re-commissioning completed
    --  DMG© - Continued process and engineering development of DMG© technology
        platform to convert waste to energy and to extract hydrogen from waste
        (HfW)
    --  Board strengthened – appointment of  as Executive Director of
        
    --  Appointment of  as CFO
    --  Creation of and appointments toUKDavid RyanChris VanezisProgramme DevelopmentAdvisory Panel
--  Equity fundraisings totalling £2.75 million to support the development
        of DMG and the Company’s commercialisation phase
    --  Repayment and elimination of the onerous Hillgrove Loan Note
--  Second phase of recommissioning and first extended technical trial
        successfully completed
    --  MOU with EEH, 
    --   appointed as Non-Executive Chairman, effective from 3QatarCameron DaviesOctober 2017
--  Additional £1.6m raised in August via a placing of new ordinary shares
        at 1.0p
    --  Net cash balance at end of  of £181k. This does not include
        the funds raised above which had fully cleared to the Company’s bank
        account byAugust 201711 September 2017
Tel: +44 (0) 203 368 6399
, Executive Chairman

 (Nominated Adviser)          Tel: +44 (0) 207 220 1666
 / 

 (Joint Broker)      Tel: +44 (0) 203 621 4120
 / 

 (Joint Broker)  Tel: +44 (0) 203 651 2910


 (Media enquiries) Peter Tel: +44 (0) 20 3633 1730
CurtainPowerHouse Energy Group plcWH Ireland LimitedTurner Pope Investments LtdSmaller Company Capital LimitedAllerton CommunicationsKeith AllaunJames JoyceJames BavisterBen TurnerJames PopeJeremy Woodgate
(Unaudited) (Unaudited)   (Audited)
                                          Six months  Six months        Year

                                               ended       ended       ended

                                             30 June     30 June 31 December

                                    Note        2017        2016        2016
                                                   £           £           £

Revenue                                            -           -           -

Cost of sales                                      -           -           -

Gross Loss                                         -           -           -

Administrative expenses                    (424,144)   (639,057)   (851,903)

Research and development                   (202,842)           -           -

Operating loss                             (626,986)   (639,057)   (851,903)

Finance costs                               (69,863)   (241,968)   (482,106)

Loss before taxation                       (696,849)   (881,025) (1,334,009)

Taxation                                           -           -           -

Loss after taxation                        (696,849)   (881,025) (1,334,009)

Total comprehensive expense                (696,849)   (881,025) (1,334,009)

Total comprehensive expense
attributable to:

Owners of the Company                      (696,849)   (881,025) (1,334,009)

Non-controlling interests                          -           -           -

Basic and Diluted Loss per share in  3        (0.08)      (0.18)(0.24)
pence
Shares and stock Accumulated losses      Share
                                     £                  £    premium       Total
                                                                   £           £

Balance at 1 January         5,264,600       (55,145,999) 46,921,180 (2,960,219)
2016 (audited)

Transactions with                    -                  -          -
equity participants:

- Shares issued                696,547                  -  (100,475)     596,072

Total comprehensive
income:

- Loss after taxation                -          (881,025)          -   (881,025)

Balance at 30 June           5,961,147       (56,027,024) 46,820,705 (3,245,172)
2016 (unaudited)

Transactions with
equity participants:

- Shares issue                 192,308                  -    211,284     403,592

Total comprehensive
income:

- Loss after taxation                -          (452,984)          -   (452,984)

- Share based payment                -             68,000          -      68,000

Balance at 31                6,153,455       (56,412,008) 47,031,989 (3,226,564)
December 2016
(audited) (GBP)

Transactions with
equity participants:

- Shares issued to              37,300                  -     32,700      70,000
settle liabilities

- Shares issued              1,741,071                  -    853,803   2,594,874

Total comprehensive
expense:

- Loss after taxation                -          (696,849)          -   (696,849)

Balance at 30 June           7,931,826       (57,108,857) 47,918,492 (1,258,539)
2017 (unaudited)
(Unaudited)  (Unaudited)    (Audited)
                                          As at        As at       As at
                                        30 June      30 June  31 December

                              Note         2017         2016         2016
                                              £            £            £

ASSETS

Non-current assets

Property, plant and equipment             2,424            -        2,424

Total non-current assets                  2,424            -        2,424

Current Assets

Trade and other receivables              90,772        9,009        6,336

Cash and cash equivalents               144,616      354,269      148,151

Total current assets                    235,388      363,278      154,487

Total assets                            237,812      363,278      156,911

LIABILITIES

Non-current liabilities

Loans                          4              -  (3,506,678)            -

Total non-current liabilities                 -  (3,506,678)            -

Current liabilities

Loans                          4    (1,402,155)            -  (3,332,292)

Trade and other payables       5       (94,196)    (101,772)     (51,183)

Total current liabilities           (1,496,351)    (101,772)  (3,383,475)

Total liabilities                   (1,496,351)  (3,608,450)  (3,383,475)

Net Liabilities                     (1,258,539)  (3,245,172)  (3,226,564)

EQUITY

Shares and stock               2      7,931,826    5,961,147    6,153,455

Share premium                        47,918,492   46,820,705   47,031,989

Accumulated losses                 (57,108,857) (56,027,024) (56,412,008)

Total deficit                       (1,258,539)  (3,245,172)  (3,226,564)
(Unaudited) (Unaudited)  (Audited)

                                               Six months  Six months Year ended

                                                    ended       ended         31

                                        Note      30 June     30 June   December

                                                     2017        2016       2016
                                                        £           £          £

Cash flows from operating activities

Operating loss                                  (626,986)   (639,057)  (851,903)

Adjustments for:

- Share based payment                                   -      68,000     68,000

- Renewme settlement                                    -           -    299,152

- Share settled payment                            70,000           -          -

Changes in working capital:

- (Increase) / Decrease in trade and             (84,436)     (7,401)    (4,885)
other receivables

- Increase / (Decrease) in trade and               43,013   (116,436)  (147,601)
other payables

Net cash used in operations                     (598,409)   (694,894)  (637,237)

Cash flows from investing activities

Purchase of fixed assets                                -           -    (2,424)

Cash flows from financing activities

Share/stock issues (net of issue costs)         2,594,874     588,618    700,512

Finance costs                                    (69,863)   (241,968)  (482,106)

Loans received                                     69,863     526,763    577,567

Loans repaid                                  (2,000,000)           -  (183,911)

Net cash flows from financing                     594,874     873,413    612,062
activities

Net (decrease) / increase in cash and cash        (3,535)     178,519   (27,599)
equivalents

Cash and cash equivalents at beginning            148,151     175,750    175,750
of period

Cash and cash equivalents at end of               144,616     354,269    148,151
period
0.5 p Ordinary 0.5p Deferred 4.5 p Deferred 4.0 p Deferred
                             shares        shares         shares         shares

Balance at 1 January    607,934,536   388,496,594     17,373,523      9,737,353
2017

Shares issued           355,674,320             -              -              -

Balance at 30 June      963,608,856   388,496,594     17,373,523      9,737,353
2017
(Unaudited) (Unaudited)   (Audited)
                                                 As at       As at       As at
                                               30 June     30 June 31 December

                                                  2017        2016        2016
                                                     £           £           £

Total comprehensive (expense)/profit ()   (881,025) (1,334,009)
£)

Weighted average number of shares          862,671,965 482,036,976 551,433,936

Basic and Diluted Loss per share in       (0.18)      (0.24)GBP    (696,849pence       (0.08)
(Unaudited) (Unaudited)   (Audited)
                                              As at       As at       As at
                                            30 June     30 June 31 December

                                  Notes        2017        2016        2016
                                                  £           £           £

Hillgrove Investments Pty Limited   4.1   1,402,155   3,506,678   3,332,292

Total loans                               1,402,155   3,506,678   3,332,292

Classified as:

- Current                                 1,402,155           -   3,332,292

- Non-current                                     -   3,506,678           -
(Unaudited) (Unaudited)   (Audited)
                                       As at       As at      As at
                                     30 June     30 June 31 December

                                        2017        2016        2016
                                           £           £           £

Trade creditors                       75,696      51,840      34,183

Other accruals                        18,500      49,932      17,000

Total trade and other payables        94,196     101,772      51,183

Classified as:

- Current                             94,196     101,772      51,183

- Non-current                              -           -           -
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