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.

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. 

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.