LONDON (ShareCast) - (Sharecast News) - Pre-revenue UK hydrogen-from-waste technology company PowerHouse Energy reported that its expenditure in research and development was now "significantly reduced", with other costs brought under "tighter control", in its first-half results on Friday.
The AIM-traded firm's operating loss for the six months ended 30 June totalled £0.87m, narrowing from £1.16m at the same time last year.

It said management was focussed on project activities associated with its first application, and other early commercial delivery priorities, with a funding engagement for the pipeline of projects being led by its partners Peel Environmental and Waste2Tricity (W2T).

The company started its first paid engineering consultancy work during the period, with the revenue from that expected to be recognised in its forthcoming accounting period.

On the operational front, PowerHouse highlighted the signing of the agreement for Peel and W2T to develop a site on Peel's Protos Energy Park in Cheshire, as a 35 tonnes per day facility generating electricity and hydrogen.

Engineering and development design had been launched on the Protos site, for planning and permit submission, in readiness for the next stage of engineering leading to financial close.

The company said it had engaged in "successful" community and council briefings for site owners Peel Environmental.

The laboratory scale unit became operational during the half-year, and was added to the firm's research demonstrator capability.

It added that it commenced offering third-party feedstock testing, laboratory services and consulting services, with a short-term plan for operations to become cash positive.

David Ryan was appointed as the firm's chief executive officer during the period, which the board said would provide "strong" leadership and clear direction for the company to secure sales, provide engineering and delivery and operational services.

Since the period ended, the firm signed a collaboration contract with Peel to develop 10 further sites, with a pipeline of opportunities now being developed to mature PowerHouse's second and third project to the planning stage.

The waste regeneration design capacity at Protos was upgraded to regenerate 35 tonnes per day of waste plastics, produce 3.8MWe on site and export 3.4MWe, and produce up to two tonnes of hydrogen per day, with some reduction in exported power.

PowerHouse confirmed that the planning submission had been completed by Peel for the Protos site, with the firm's efforts now moving on to the identification, planning and permitting for follow-on sites.

The company said it was in negotiation with unnamed overseas entities for exclusive regional representation.

"The engineering design services contract for Protos, signed in the period, has initiated the first revenue generation for the company, with income recognition and contract payments to follow later in the year," said PowerHouse Energy non-executive chairman Cameron Davies.

"The company intends to raise further revenues from feedstock testing for other customers."

Dr Davies said the company was "carefully managing" expenditures, and was budgeting to match expenditures against expected revenues.

He said there was no material effect on the advancement of development projects, as those were being funded by customers, with the bulk of technology definition accomplished with the design completion work in 2018.

Subsequent to the reporting period, the company said it had received research and development tax reimbursements for 2017, and would expect similar refunds for 2018.

"We note that the company's share price has not changed markedly in the period," Dr Davies added.

"However, the board is confident that the company's recent engagement in paid engineering and external research and testing for customers is leading to a position where a significant proportion of the operational costs and company overhead will be covered.

"The financial situation is eased by consultants and service providers having agreed to payments in equity."

He said the funding of the first DMG process, and initiation of development work on customer sites in the coming months, together with agreements with international partners for DMG technology, would have a positive effect on the value in PowerHouse.

"The board is confident in the future of the company and its members have all made financial commitments in waiving fees to achieve this vision.

"The board appreciates the continued support of PHE's shareholders and is making every effort to repay your confidence in the company and its future."

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