Powerhouse Energy Group — Expanding pipeline

Powerhouse Energy Group — Expanding pipeline

PowerHouse Energy’s interim results include news that its partner Peel Environmental has submitted the planning application for a waste-to-energy plant on its Protos Energy Park on Merseyside, which will deploy PowerHouse’s proprietary DMG technology. Protos will potentially be the first of 11 sites with DMG waste-to-energy installations being developed under a collaboration contract with Peel.

Analyst avatar placeholder

Written by

PowerHouse Energy Group

Expanding pipeline

Interims

Alternative energy

27 September 2019

Price

0.40p

Market cap

£8m

Net cash (£m) at end June 2019

0.179%

Shares in issue

1,924.1m

Free float

79%

Code

PHE

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(6.0)

0.0

18.2

Rel (local)

(9.1)

0.4

21.2

52-week high/low

0.68p

0.30p

Business description

PowerHouse Energy designs, delivers and licenses plastic regeneration processes for the generation of hydrogen and electrical energy. It also provides associated customer engineering and testing services, and operational support for applications in the UK and across the world.

Next events

FY19 results

June 2020

Analyst

Anne Margaret Crow

+44 (0)20 3077 5700

PowerHouse Energy Group is a research client of Edison Investment Research Limited

PowerHouse Energy’s interim results include news that its partner Peel Environmental has submitted the planning application for a waste-to-energy plant on its Protos Energy Park on Merseyside, which will deploy PowerHouse’s proprietary DMG technology. Protos will potentially be the first of 11 sites with DMG waste-to-energy installations being developed under a collaboration contract with Peel.

Year end

Revenue (£m)

EBITDA
(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

12/16

0.0

(0.8)

(1.3)

(0.23)

0.0

N/A

12/17

0.0

(1.6)

(1.7)

(0.17)

0.0

N/A

12/18

0.0

(1.9)

(1.9)

(0.12)

0.0

N/A

06/19**

0.0

(0.6)

(0.6)

(0.03)

0.0

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Six months ended June 2019.

H119 results show losses reducing

H119 EBITDA losses reduced by 40% compared with H118 to £0.6m and by 32% compared with H218. There were no revenues as the first fees derived from the provision of engineering services for the Protos site are dependent on achieving milestones reached in Q319 as per the agreed schedule. Working capital increased by £0.1m, primarily reflecting fees receivable under this contract. Cash (there is no debt) reduced by £0.7m during H119 to £0.1m.

Generating fees from engineering services

Now that Peel has submitted the planning application for the Protos site, the focus is on identifying which of the pipeline of sites are most suitable for DMG deployment, and preparing applications for planning approval and operating permits. As well as the 11 Peel sites, this pipeline includes opportunities with waste management companies, local councils and industrial users wanting to replace natural gas with syngas generated from their own waste. Management expects that fees from testing potential feedstock and preparation of site-specific, front-end engineering designs for these additional projects will balance expenditure until it starts to receive more substantial fees from IP licensing. In April, it received its first contract, for £400k, for engineering services supporting the Protos planning application. As well as internally generated funds, we note that one of PowerHouse’s shareholders, who is also a director of the company, intends to make up to £300k available for at least 12 months from the end of June 2019. In addition, directors, certain contractors and consultants are being remunerated in shares to reduce cash consumption. However, there remains a risk, in our opinion, that the company will need to raise more finance.

Valuation: Defined route to profitability

PowerHouse has a qualified pipeline of over 30 sites in the UK where DMG units may be deployed. We calculate that it will reach break-even on sales of two DMGs per year. We estimate that deployment on 10 sites in a year, such as those already identified by Peel Environmental, could generate c £6m operating profit.

Exhibit 1: Financial summary

Year end 31 Dec

£'000s

2014

2015

2016

2017

2018

PROFIT & LOSS

Revenue

 

0

0

0

0

0

Cost of Sales

0

0

0

0

0

Gross Profit

0

0

0

0

0

EBITDA

 

(1,182)

(397)

(784)

(1,609)

(1,940)

Operating Profit (pre amort. of acq intangibles & SBP)

 

(1,182)

(397)

(784)

(1,610)

(1,941)

Amortisation of acquired intangibles

0

0

0

0

0

Share-based payments

0

0

(68)

(195)

(554)

Exceptionals

(1,038)

0

0

0

0

Operating Profit

(2,221)

(397)

(852)

(1,805)

(2,495)

Net Interest

(329)

(385)

(482)

(70)

(0)

Profit Before Tax (norm)

 

(1,512)

(782)

(1,266)

(1,680)

(1,941)

Profit Before Tax (FRS 3)

 

(2,550)

(782)

(1,334)

(1,875)

(2,495)

Tax

0

0

0

0

145

Profit After Tax (norm)

(1,512)

(782)

(1,266)

(1,680)

(1,796)

Profit After Tax (FRS 3)

(2,550)

(782)

(1,334)

(1,875)

(2,350)

Average Number of Shares Outstanding (m)

376.6

390.1

551.4

975.1

1,541.7

EPS - normalised (p)

 

(0.40)

(0.20)

(0.23)

(0.17)

(0.12)

EPS - normalised fully diluted (p)

 

(0.40)

(0.20)

(0.23)

(0.17)

(0.12)

EPS - FRS 3 (p)

 

(0.68)

(0.20)

(0.24)

(0.19)

(0.15)

Dividend per share (p)

0.00

0.00

0.00

0.00

0.00

Gross Margin (%)

N/A

N/A

N/A

N/A

N/A

EBITDA Margin (%)

N/A

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

0

0

2

3

2

Intangible Assets

0

0

0

0

0

Tangible Assets

0

0

2

3

2

Current Assets

 

6

177

154

839

1,049

Stocks

0

0

0

0

0

Debtors

6

1

6

88

905

Cash

0

176

148

750

145

Current Liabilities

 

(2,416)

(199)

(3,383)

(1,643)

(247)

Creditors including tax, social security and provisions

(235)

(199)

(51)

(241)

(247)

Short term borrowings

(2,181)

0

(3,332)

(1,402)

0

Long Term Liabilities

 

0

(2,939)

0

0

0

Long term borrowings

0

(2,939)

0

0

0

Other long term liabilities

0

0

0

0

0

Net Assets

 

(2,410)

(2,960)

(3,227)

(802)

804

CASH FLOW

Operating Cash Flow

 

(1,961)

(813)

(637)

(1,311)

(1,909)

Net Interest

(329)

(385)

(482)

(70)

(0)

Tax

0

0

0

0

0

Capital expenditure

0

0

(2)

(1)

(0)

Capitalised product development

0

0

0

0

0

Acquisitions/disposals

0

0

0

0

0

Equity financing

1,225

231

701

4,104

3,402

Dividends

0

0

0

0

0

Net Cash Flow

(1,066)

(966)

(421)

2,722

1,493

Opening net debt/(cash)

 

1,490

2,181

2,763

3,184

652

Finance leases

0

0

0

0

0

Other

(375)

(384)

0

190

0

Closing net debt/(cash)

 

2,181

2,763

3,184

652

(840)

Source: Company data, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by PowerHouse Energy Group and prepared and issued by Edison, in consideration of a fee payable by PowerHouse Energy Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by PowerHouse Energy Group and prepared and issued by Edison, in consideration of a fee payable by PowerHouse Energy Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Research: Investment Companies

Invesco Asia Trust — Exciting opportunities emerging

Invesco Asia Trust (IAT) aims to deliver significant capital returns to shareholders over the long term through investing in Asian equities, following a rigorous bottom-up process. The manager, Ian Hargreaves, is not constrained by index considerations and the portfolio of 50–70 stocks represents his highest-conviction investment ideas over a three- to five-year horizon. The trust has a solid medium- and long-term performance track record and has generated an annualised NAV total return of 11.3% over 10 years, while its dividend per share has more than doubled.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free