Final Results

28 June 2013 PowerHouse Energy Group Plc ("PowerHouse" or "the Company") Final results for the year ended 31 December 2012 Chairman's Report 2012 has been a challenging and difficult year for the Group, for the directorsand for the shareholders of PowerHouse. However, as we close the books on the2012 financial year we also can see several positive outcomes and encouragingsigns emerging. On 10 October 2012 AIM agreed to a lifting of the suspension in the trading ofour shares. Re-establishing ourselves as a viably listed company on the AIM wasa significant accomplishment. However, it was only a single step toward ourlonger-term goals. Our intention is to establish PowerHouse as a pre-eminentprovider of commercial, community-scale, Waste to Energy solutions globally. A rapidly growing market opportunity exists to recover energy, in a fullysustainable manner, from the existing commercial and residential waste stream.Projects are continuing to be developed, worldwide, on a massive scale toleverage this renewable source of energy. We have committed ourselves to thedevelopment of a best-of-breed commercial platform on which to base projects ofboth small and large magnitude. To that end, working in conjunction with industry experts, we have engaged in abroad evaluation of both existing and emerging technologies and products thatwould serve as the cornerstone to a commercial platform. We have evaluated andconducted due diligence on a number of companies. While we have decided againstpursuing relationships with most of our targets, our explorations haveunderscored that there is still potential value in our 30% ownership stake inPyromex Holdings, A.G. ("Pyromex") and that its patented Ultra-High Temperature(UHT) gasification process may hold a unique opportunity for us to work inparallel with their efforts and develop a fully executed, and commerciallyviable, suite of offerings. PowerHouse has a license in place with Pyromex andhas the rights to manufacture the UHT reactor and integrate it into ourcommercial offerings. Having recently worked very closely with the Pyromexteam, it has become clear where the stumbling blocks of the past lay, and weare now prepared to work around those. Significant, recent, advances in engineering, by a number of resources,including the Powerhouse Energy team, have resulted in an extremely promisingnear-term prospect for a commercial system that can deliver syngas which canreadily, efficiently, and economically be converted into electricity. We'reconfident that based upon the added process engineering, project management,and commercial expertise that we are building into Powerhouse, we finally willbe able to drive forward and move the "science experiment" aggressively intothe commercial realm. Renewable energy is the future. Even as additional storesof fossil fuels are discovered, the mandate of mankind is clear: Energy mustbecome cleaner and it must be sustainable. The UHT reactor can become a keycomponent in this process. Generating only Syngas and a minute amount ofnon-leachable, non-toxic "sand", the effectively emission free (no smoke, noNOx, no odour, no noxious waste at all) unit represents a key building-block todelivering low cost, clean electricity; ultra-pure synthetic fuels; purehydrogen streams for the use in Hydrogen Fuel Cell applications. Syngas iscreated efficiently, in a cost-effective manner and in abundance - all fromwaste. By diverting and gasifying only 5% of the plastic material that goes tolandfill after recycle sorting, thousands of homes can be provided with cleanelectricity. The opportunity is growing. Awareness is growing. The market isgrowing. And we, and our partners, are poised to take advantage of it. To get there still requires tremendous effort. However, measures have beentaken to ensure that we are on our way. During the latter half of the year we have managed to settle a number ofoutstanding liabilities that had previously put the Company at risk. We havesubsequently progressed additional settlement negotiations and are confident inreaching reasonable outcomes for the Company and its shareholders - in factturning once adversarial relationships into productive partnerships. In line with our annual accounts of 2011, the annual accounts for the yearended 31 December 2012 show separate statements for both the Company and theGroup. The Company financial statements have been presented prior to the Groupfinancial statements as the Board of Directors believes the Company accountsmore accurately represent the on-going position of the Group. The Company accounts reflect a decrease in net liabilities of £625,579, mainlyas a result of a waiver of the loan with its subsidiary to £nil. Administrativecosts have been reduced from £2,045,178 in 2011 to £354,571 as a result offocused management and only incurring absolutely necessary costs. The Groupaccounts show the expiry of the Pyromex option (see 2012 interim Chairmanreport for further details) and the result of Pyromex no longer beingconsolidated. Additionally, the Group accounts show the settlement agreementswith former employees. The financial support received from Hillgrove Investments Pty Limited("Hillgrove") has been a vital lifeline to the Company that has afforded us theopportunity to emerge from our trading suspension and continue to develop ourbusiness, which we have been doing pro-actively. Hillgrove continues to providefinancial support for the Company under the terms of the Convertible LoanAgreement dated 8 October 2012. On 28 June 2013, Hillgrove agreed to amend therepayment date of the previous Convertible Loan note, provided to the Companyon 19 June 2012, to 8 October 2014. Details of the loan are included in note 6to the Company accounts. This additional support from Hillgrove is sufficientfor the Company to meets its minimal operational obligations for the next 12months. The most pressing challenges facing the Company include resolution to theexisting licensing agreement with RenewMe (see note 5 to the Company accounts),resolution to the Aspermont loan (see note 6 to the Company accounts.) andfinal resolution to any issues outstanding regarding Powerhouse Energy, Inc.Active and productive negotiations are underway to resolve any issues thesechallenges may represent. Having regard for the uncertainties to the above challenges, the Directors havea reasonable expectation that the Company and the Group will have adequateresources to continue as a going concern for the foreseeable future (refer tonote 2 to the Company accounts). Thus we continue to adopt the going concernbasis of accounting for the preparation of the annual financial statements.However, there remain risks to which shareholders should be aware and we havehighlighted them in the Company accounts. The outlook for the Waste to Energy industry is a glowing one. Seven Europeancountries no longer allow landfill of municipal solid waste. In addition to theEU Landfill Directive requires an additional reduction of 35% of the currentbiodegradable municipal waste sent to landfill by 2016, 18 countries areimplementing stringent landfill taxes immediately, driving tremendous demandfor realistic, commercially viable solutions to recover the energy valuerepresented in the waste stream. We believe that we are building one suchsolution. As we continue to build our new team and our commercial platform continues todevelop we are confident that PowerHouse Energy Group will turn the corner toreplicable success. We appreciate that this has been a difficult year for allstakeholders of the Company and thank you for continuing to support the Companywhile it prepares for the next phase of its growth. Keith AllaunChairman28 June 2013 Further enquiries: PowerHouse Energy Group Plc T: +44 (0) 753 513 8974Keith Allaun, Director SanlamSecuritiesUKLimited (Nomad/Broker) T: +44 (0) 20 7628 2200David Worlidge / Simon Clements Company Statement of Comprehensive Income For the year ended 31 December 2012 31 December 31 December 2012 2011 £ £ Note Revenue 45,000 25,000 Administrative expenses (354,571) (2,045,178) Operating loss (309,571) (2,020,178) Finance income 2 77 Finance costs (124,972) (3,231) Impairment of investment (119,999) (47,830,451) Loan waivers 1,109,068 - Profit/(Loss) before taxation 554,528 (49,853,783) Income tax expense - - Total comprehensive expense 554,528 (49,853,783) Earnings/(Loss) per share (pence) 3 0.19 (33.39) Diluted profit/(loss) per share (pence) 3