TIDMINSP
RNS Number : 0124M
Inspirit Energy Holdings PLC
09 January 2023
Inspirit Energy Holdings Plc
("Inspirit" or "the Company")
ANNUAL REPORT AND ACCOUNTS FOR THE YEARED 30 JUNE 2022
NOTICE OF ANNUAL GENERAL MEETING
Inspirit Energy Holdings Plc today announces its audited results
for the year ended 30 June 2022 (the "Accounts").
Copies of the Company's Annual Report and Accounts will be sent
to shareholders along with a Notice of AGM and will be available on
the Company's website www.inspirit-energy.com today.
The AGM will be held at 200 Aldersgate Street, London EC1A 4HD
at 11 am on 22 February 2023.
Further copies may be obtained directly from the Company's
Registered Office at Inspirit Energy Holdings plc, 200 Aldersgate
Street, London EC1A 4HD. Extracts of the Accounts are set out
below.
CHAIRMAN'S STATEMENT
Inspirit Energy Holdings plc (Inspirit) has successfully
maintained its focus on the application of the Stirling engine in
various sectors during the reporting year, and had been primarily
working with its engineering partners on the fine details of the
new Waste Heat Recovery (WHR) system for the application on the
Volvo marine engine. The unit was built and tested in Poland and
with the issues in neighbouring Ukraine, sourcing materials and
components had been challenging.
Despite the global slowdown and access to materials, the
operating Board believe that the Company has maintained positive
progress over the last year in the alternative applications of the
Stirling engine and there is strong evidence of the need to refocus
our strategic objectives towards these areas that include marine
and waste heat recovery. As mentioned last year, we wait to assess
the impact on government's ban on oil and gas boilers on new build
property from 2025, but there is no clear outcome with existing
households gas boiler heating. It should be noted that this is by
no means an abandonment of our MicroCHP boiler technology as the
underlying technology for the Inspirit charger is applicable to the
marine and waste heat recovery applications.
The Company's phase one trial in Poland managed by Inspirit's
engineering team, using a non-branded automotive engine, regularly
produced a power output of over 34kW during several weeks of
testing. This trial was conducted using an automotive engine with
the same horsepower as the Volvo Penta D13 Engine running at 2400
revolutions per minute.
Further phase two testing, again conducted in Poland, introduced
the use of the Company's technology, the Helix Accelerator. Use of
the Helix Accelerator resulted in a near doubling in the power
output achieved to 64kW, using the same automotive engine as the
phase one trial.
Further testing and development in Poland is currently being
undertaken, with an emphasis on endurance and stress testing,
simulating varying scenarios, which should be complete before the
end of 2022. Our engineering team will be adding additional
enhancements to the WHR system as part of this phase three trial
programme, where further improvements in the power output are
anticipated. To date the performance of the WHR system and its
robustness have exceeded the Company's expectations and we look
forward to shortly reporting on the results of the phase 3
trial.
Thereafter, Inspirit will seek to enter into a trial phase with
Volvo Marine. The board are also actively pursuing commercial
discussions with other parties that are active in the commercial
automotive sector and WHR.
The board of Inspirit are very pleased with the team's
achievements and the progress that has been made to date.
Additionally, the board are investigating the potential for the
unit to be incorporated as a retrofit for the commercial engine
market and in particular certain applications in the haulage
market. This includes widening the Company's traditional sphere of
operation in Europe and also in Asia and North America.
The operating Board believe that the WHR technology and the
application can be applied to marine, waste heat recycling from
energy generation, refrigerated transport that uses diesel engines
and many more applications.
As per previous years, the board are continuing to assess
funding options for the development and commercialisation of our
products and will continue to demonstrate prudence in our approach
to managing our current resources whilst pushing forward with our
product development.
I would like to thank my colleagues for their hard work and
commitment to driving the business forward during these challenging
times.
J Gunn
Chairman and Chief Executive Officer
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No. 596/2014, as
it forms part of UK Domestic Law by virtue of the European Union
(Withdrawal) Act 2018. Upon the publication of this announcement,
this inside information is now considered to be in the public
domain.
More information on Inspirit Energy can be seen at:
www.inspirit-energy.com
For further information please contact:
Inspirit Energy Holdings plc
John Gunn, Chairman and CEO +44 (0) 207 048 9400
Beaumont Cornish Limited
www.beaumontcornish.com
(Nominated Advisor)
Roland Cornish / James Biddle +44 (0) 207 628 3396
Global Investment Strategy UK
Ltd
(Broker)
Samantha Esqulant +44 (0) 207 048 9045
STRATEGIC REPORT
FOR THE YEARED 30 June 2022
The Directors present their Strategic Report on Inspirit Energy
Holdings plc (the "Company") and its subsidiary undertakings
(together the "Group") for the year ended 30 June 2022.
REVIEW OF THE BUSINESS
Inspirit Energy Limited (IEL) continues to apply its expertise
in the application of the Stirling engine technology in different
sectors including Marine and Waste Heat Recovery.
The Company is also currently pursuing the development and
commercialisation of a world-leading micro-Combined Heat and Power
("mCHP") boiler for use in commercial and residential markets. The
mCHP boiler is powered by natural gas or hydrogen and designed to
produce hot water (for domestic hot water or central heating) and a
simultaneous electrical output that can be used locally or fed back
into the National Grid.
DEVELOPMENTS DURING THE YEAR
Despite COVID 19 still having an impact during the beginning of
the financial year with lockdowns, supply line issues and general
movement in Europe, IEL has been working with its engineering
partners on the fine details of the new WHR for the application on
the Volvo marine engine.
In addition, IEL successfully assembled and applied the first
phase of the WHR unit and with limited testing, the unit provided
the highest recorded output of over 34 kW in the first stage build
test period. The WHR is a major component in the application for
the Volvo Marine engine and other heat recovery applications the
Company has been working on whereby waste heat exhaust is recycled
and converted to energy.
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A
WHOLE
The Director's believe they have acted in the way most likely to
promote the success of the Company for the benefit of its members
as a whole, as required by s172 of the Companies Act 2006, as
modified by the Companies ( Miscellaneous Reporting ) Regulations
2018 are outlined as follows:
a. Employee engagement
The quality, commitment and effectiveness of the Company's
current and future employees are crucial to its continued success.
Employee policies and programmes are designed to encourage
employees to become interested in the Company's activities and to
reward employees according to their contribution and capability and
the Company's financial performance. Employee communications are a
priority and regular briefings are used to disseminate relevant
information.
Employment policies do not discriminate between employees or
potential employees on the grounds of colour, race, ethnic or
natural origin, sex, marital status, sexual orientation, religious
beliefs or disability. If an employee were to become disabled
whilst in employment and as a result was unable to perform his or
her duties, every effort would be made to offer suitable
alternative employment and assistance with retraining.
b. Suppliers and customers
The Company maintains an ongoing dialogue with its potential
customers and suppliers and the Company engages in supplier
face-to-face meetings, email and telephone conversations with
directors and senior management of key suppliers. When selecting
suppliers and materials, issues such as the impact on the community
and the environment have actively been taken into
consideration.
The Company pays its employees and creditors promptly and keeps
its costs to a minimum to protect shareholders' funds. The
Executive Directors have agreed to accrue their fees in this
reporting period (note 5).
c. Shareholders and investors
The Company is quoted on AIM and its members will be fully
aware, through detailed announcements, shareholder meetings and
financial communications, of the Board's broad and specific
intentions and the rationale for its decisions.
Other developments during the year:
On 2nd November 2021, the Company announced that it was in
early-stage discussions with a view to entering into an agreement
with a British certification company Enertek International
Ltd. Enertek International have won several development contracts
from the government (BEIS) and have gained a vast knowledge
in developing backward compatible Hydrogen products such as:
domestic and commercial cookers, domestic and commercial heating
systems etc. They have now gained the knowledge which could
be very beneficial to Inspirit in developing a Hydrogen product,
with a view of also looking at our existing products to make
them hydrogen powered backwards compatible without the need
to redevelop the core technology.
On 27th June 2022 the company announced that on the first
phase of the development of the WHR unit and with limited
testing, the unit provided the highest recorded output of
over 34 kW in the first stage build test period. The WHR is
a major component in the application for the Volvo Marine
engine and other heat recovery applications the Company had
been working on whereby waste heat exhaust is recycled and
converted to energy.
BOARD CHANGES
None.
RESULTS AND DIVIDS
The Group made a loss after taxation of GBP233,000 (2021: loss
of GBP253,000) and net assets as at 30 June 2022 were GBP2,657,000
(2021: GBP2,890,000).
The Directors do not propose a dividend for the year to 30 June
2022 (2021: GBPnil).
KEY PERFORMANCE INDICATORS
The key performance indicators (KPI) used by the Board to
monitor the performance of the Group, are set out below:
PLC S 30 June 30 June
2022 2021
------------------------------------ ------------ ------------
Net asset value GBP2,657,000 GBP2,890,000
Net asset value - fully diluted per
share 0.062p 0.074p
Closing share price 0.06p 0.05p
Market capitalisation GBP2,648,417 GBP2,135,820
------------------------------------ ------------ ------------
The Net asset value decreased but the Market capitalisation
increased during the reporting period. The closing share price was
0.06p compared to 0.05p in 2021.
COVID 19 ASSESMENT
During the reporting period, the Company continued to develop
its microCHP boiler, Marine engine and Waste Heat Recovery (WHR)
application with its European partners. Specifically, the Company
has spent time working to refine Inspirit's Stirling technology and
are continually reviewing the potential supply chain and detailing
the product specifics for potential commercial partners.
The Board recognises that these are still unprecedented times
and the risk of COVID-19 still remains current and that this may
still cause disruption to the economy and supply chain for
components. As with all businesses, we are not immune to this risk.
After disruption in the prior year to development and testing, this
recommenced in the year.
To mitigate any future impact of COVID 19, the Company has
maintained communication with its diversified supplier base with
multiple suppliers in different countries. In the event that any
country has further lock downs or restrictions we would be able to
swap supplier with minimal impact on our project plan .
KEY RISKS AND UNCERTAINTIES
Early stage product development carries a high level of risk and
uncertainty, although the rewards can be outstanding. At this
stage, there is a common risk associated with all pioneering
technologically advanced companies in their requirement to
continually invest in research and development. The Group has
already made significant investments in addressing opportunities in
the renewable energy sector.
Other risks and uncertainties within the Group are detailed in
principle 4 of the Corporate Governance Report.
GOING CONCERN RISK
The Group requires financing to fund its operations through to
commercialisation and the stage where it is profit generating and
the Group will seek to raise such funds via placings and short term
debt finance. There is the risk that the Group will not have access
to sufficient funds to achieve this. The Group seek to mitigate
through forecast preparation, monitoring and reducing discretionary
costs. Further details are below.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The principal financial risk faced by the Group is liquidity
risk. The Group's financial instruments included borrowings and
cash which it used to finance its operations. At the year end,
borrowings did not include any borrowings supplied from the Group's
principal bank, Barclays Bank Plc. More information is given in
Note 3 to the Financial Statements. The Group has no significant
concentrations of credit risk.
CAPITAL RISK MANAGEMENT
The Group's objectives when managing capital are to safeguard
the Group's and Company's ability to continue its activities and
bring its products to market. Capital is defined based on the total
equity of the Company. The Company monitors its level of cash
resources available against future planned activities and may issue
new shares in order to raise further funds from time to time.
MANAGEMENT AND KEY PERSONNEL
The risk of high turnover of staff and other specialist staff
recruitment issues would have an impact on operation and
reputation. The Board provides recognition and support for well
performing existing employees and has implemented and monitors
robust health and safety measures at the workplace.
TECHNOLOGY RISK
The Group's success is dependent on its technology and
management's ability to market it successfully. There is the risk
that the technology could become obsolete or a rival could develop
an improved alternative. Management seek to mitigate this by
constantly seeking to improve the product, closing watching its
competitors and employing skilled personnel.
ASSESSMENT OF BUSINESS RISK
The Board regularly reviews operating and strategic risks. The
Group's operating procedures include a system for reporting
financial and non-financial information to the Board including:
-- reports from management with a review of the business at each
Board meeting, focusing on any new decisions/risks arising;
-- reports on the performance of its subsidiary;
-- reports on selection criteria on the applications of its technology;
-- discussion with senior personnel; and
-- consideration of reports prepared by third parties.
Details of other financial risks and their management are given
in Note 3 to the financial statements.
ON BEHALF OF THE BOARD
N Jagatia
Director
5 January 2023
REPORT OF THE DIRECTORS
FOR THE YEARED 30 June 2022
The Directors present their annual report on the affairs of the
Group and Company, together with the audited financial statements
for the year ended 30 June 2022.
PRINCIPAL ACTIVITIES
The principal activity of the Group and Company is that of
development and commercialisation of the mCHP boiler and
application of the stirling technology in other sectors such as
marine, waste energy recycling and automotive truck industries.
Details of the Group's principal activity can be found in the
Strategic Report.
GREENHOUSE GAS (GHG) EMISSIONS
The Group is aware that it needs to measure its operational
carbon footprint in order to limit and control its environmental
impact. However, given the very limited nature of its direct
activities during the year under review, it has not been practical
to measure its carbon footprint.
The Group only measures the impact of its direct activities, as
the full impact of the entire supply chain
of its suppliers cannot be measured practically.
DIRECTORS
The Directors who held office in the period up to the date of
approval of the Financial Statements and their beneficial interests
in the Company's issued share capital at the beginning and end of
the accounting year were:
*861,403,363 Ordinary Shares (direct 657,981,981 Ordinary Shares
and indirect via GIS 203,421,382 Ordinary Shares)
SIGNIFICANT SHAREHOLDERS
INDEMNITY OF OFFICERS
The Company maintains appropriate insurance cover against legal
action brought against its Directors and officers.
RESEARCH AND DEVELOPMENT
For details of the development activities undertaken in the
year, please refer to principle 1 of the Corporate Governance
Report.
BOARD OF DIRECTORS
The Board is responsible for strategy and performance, approval
of major capital projects and the framework of internal controls.
To enable the Board to discharge its duties, all Directors receive
appropriate and timely information. All Directors have access to
the advice and services of the Company Secretary, who is
responsible for ensuring the Board procedures are followed and that
applicable rules and regulations are complied with.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority. In
addition to the publication of an annual report and an interim
report, there is regular dialogue with shareholders and analysts.
The Annual General Meeting is viewed as a forum for communicating
with shareholders, particularly private investors. Shareholders may
question the Executive Chairman and other members of the Board at
the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Group's
system of internal control and for reviewing the effectiveness of
these systems. The risk management process and systems of internal
control are designed to manage rather than eliminate the risk of
the Group failing to achieve its strategic objectives. It should be
recognised that such systems can only provide reasonable and not
absolute assurance against material misstatement or loss. The Group
has well established procedures which are considered adequate given
the size of the business.
MATTERS COVERED IN THE STRATEGIC REPORT
The business review, results, review of KPI's and future
developments are included in the Strategic Report and Chairman's
Statement.
GOING CONCERN
As at 30 June 2022 the Group had a cash balance of GBP160,000
(2021: GBP561,000), net current liabilities of GBP366,000 (2021:
net current assets of GBP87,000) and net assets of GBP2,657,000
(2021: GBP2,890,000). The Group has maintained its core spend
during the year whilst still managing to move its projects forward
and post year end secured a $250,000 loan facility. There can be no
assurance that the Group's projects will become fully developed and
reach commercialisation nor that there will be sufficient cash
resources available to the Group to do so.
The Directors have reviewed a detailed forecast based on the
funds expected to be raised and forecasted expenditure. Having made
due and careful enquiry, the Directors acknowledge that funds will
need to be raised within the next 12 months to enable the Group to
meets its obligations as they fall due, however, the Directors are
confident that the required funds will successfully be raised
through the issue of equity and/or debt to fund its operations over
the next 12 months.
The Directors, therefore, have made an informed judgement, at
the time of approving financial statements, that the Group is a
going concern but they acknowledge that the dependence on raising
further funds during the next 12 months represents a material
uncertainty. The Auditors have made reference to going concern by
way of a material uncertainty.
EVENTS AFTER THE REPORTING DATE
On 8th December 2022, the Company announced that it has entered
into a short-term, un-secured debt facility of up to US$250,000
(approximately GBP205,075) (the "Facility"). Under the Facility
Inspirit initially drew down US$80,000 (approximately GBP65,624)
(the "Initial Advance"). The Facility is with Riverfort Global
Opportunities PCC Limited, and the proceeds of the advance are for
general working capital.
The Facility has a 12-month term and allows Inspirit to draw
down funds ("Advances") which will be repayable within 6 months in
either cash or shares at the Noteholders' discretion in respect of
the Initial Advance and thereafter at the agreement of the Company
and Riverfort. If the debt is repaid in shares, they will be repaid
at 130% of the Reference Price being the average of the five (5)
daily VWAPs preceding the Drawdown Date in respect of the relevant
Advance (the "Fixed Premium Placing Price"). In the event that
Inspirit completes any share placing during the Term of the
relevant Advance and the share placing price is below the Fixed
Premium Placing Price, the Fixed Premium Placing Price will be
amended to be the relevant share placing price. Inspirit will issue
the Noteholder with warrants in respect of each Advance so as to
represent 50% of the value of the relevant Advance, divided by the
relevant Reference Price; the warrants will have an exercise price
of Fixed Premium Placing Price and a 48 month term.
Inspirit drew down US$80,000 as the Initial Advance and issued
Riverfort with warrants to the value of 50% of the Initial Advance
at the reference price of 0.03376 pence being 97,191,943 warrants.
These warrants will have a term of 48 months and will be
exercisable at 130% of the reference price being 0.04388 pence.
The Facility will attract 1.5% interest per month based on the
value of the outstanding indebtedness payable in cash and an
implementation fee of 6% of any Advances if settled in cash or 8%
if issued in Shares. Accordingly, Inspirit will issued 15,550,710
Ordinary Shares of 0.001p each ("Shares") at a price of 0.03376
pence each for the implementation fee in respect of the Initial
Advance (the "Initial Shares"). The Facility contains a right of
first refusal clause allowing Riverfort to match the terms of any
alternative debt/ structured funding the Company may seek during
the term of the Facility.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the group and parent company financial statements in
accordance with UK-adopted international accounting standards.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the group and the parent company
and of the profit or loss of the group and the parent company for
that period. In preparing these financial statements, the directors
are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- state whether applicable UK-adopted international accounting
standards have been followed, subject to any material departures
disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group and the parent
company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group's and
company's transactions and disclose with reasonable accuracy at any
time the financial position of the group and the parent company and
enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the group and the parent company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions. The Company is compliant
with AIM Rule 26 regarding the Company's website. See
www.inspirit-energy.com .
DISCLOSURE OF INFORMATION TO AUDITOR
In the case of each person who was a Director at the time this
report was approved:
-- so far as that director is aware there is no relevant audit
information of which the Company's auditor is unaware; and
-- that director has taken all steps that the director ought to
have taken as a director to make himself aware of any relevant
audit information and to establish that the Company's auditor is
aware of that information.
INDEPENT AUDITOR
A resolution that PKF Littlejohn LLP be re-appointed will be
proposed at the annual general meeting. PKF Littlejohn LLP have
indicated their willingness to continue in office.
ON BEHALF OF THE BOARD
N Jagatia
Director
5 January 2023
CORPORATE GOVERNANCE REPORT
Inspirit Energy Holdings plc Quoted Companies Alliance Code ("QCA Code")
Principles: Application:
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1) Strategy This section complies with the requirements
and business of the QCA Code.
model to promote
long-term values Inspirit Energy Holdings plc has maintained
for shareholders its focus on the application of the Stirling
engine in various sectors as well as progressing
the commercialisation efforts of the Group's
micro combined heat and power ("mCHP") boilers
and Waste Heat Recovery (WHR) applications.
Inspirit achieved a number of significant milestones
including increseing the output of its WHR to
over 30kW.
These milestones continue to demonstrate strategic
direction as an R&D company in this niche sector.
The operating Board has worked throughout to
identify differing potential applications for
the technology where there is significant potential
for growth, as well as considering the future
strategy and funding of its operating subsidiary..
The Directors believe that the positive progress
over the last year in the alternative applications
of the Stirling technology in the Marine and
Waste Heat Recovery (WHR) sectors is strong
evidence of the need to refocus our strategic
objectives towards these areas. It should be
noted that this is by no means an abandonment
of our MicroCHP boiler technology - on the contrary,
we are actively looking into the application
of the technology in the rapidly emerging hydrogen
market. Additionally, with the continued growth
demand for electric cars, the Board will be
looking at the automotive sector to utilise
the Stirling engine to provide a source of power
to charge electric motor cars.
The Group will also potentially make investments
in complementary areas and technologies that
will utilise the Group's existing technical
expertise.
------------------------------------------------------------------------------------------
This section complies with the requirements
2) Meeting and of the QCA Code.
understanding
shareholders
needs and The Company has a close and ongoing relationship
expectations with its shareholders. The Company also places
great importance on effective and timely communication
with its shareholders. Shareholders are encouraged
to attend the Company's meetings (including
the Annual General Meeting) to provide feedback
and to actively engage with the management on
a regular basis. Furthermore, the INSP's shareholders
and investors can keep themselves updated about
the current Company's position by visiting the
INSP's website http://www.inspirit-energy.com
.
------------------------------------------------------------------------------------------
This section complies with the requirements
3) Considering of the QCA Code.
stakeholders
and social The Board recognises that the long-term success
responsibilities of the Group is reliant on efforts of its employees,
and their consultants, suppliers, regulators and stakeholders.
implications
for long term Employees: In order to support employees' growth
success and enforce social responsibilities the Board
has implemented systems to monitor and evaluate
employees' performance and to encourage well
performing employees to progress further by
supporting them to attend courses. Employees'
performance is monitored through a process designed
to encourage open and confidential communication
between the management and the employees on
a regular basis.
Consultants: The Board recognises that consultants
play a vital part for INSP as they bring knowledge
and expertise for specific areas, and in some
instances, they also provide training for existing
staff.
Suppliers: INSP maintains a good working relationship
with its suppliers to provide for its growing
business and to support its existing needs.
Regulators: The Board monitors and implements
any legal or regulatory changes where possible
both domestically and overseas and is fully
committed to compliance.
Stakeholders: INSP encourages its shareholders
to actively participate in meetings and shareholders
are provided with the opportunity to give feedback
on a regular basis.
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This section complies with the requirements
4) Risk of the QCA Code.
Management
The risks in the Group are managed by the audit
committee which is responsible to the Board
to work closely with the executive directors
to identify, implement and manage risks faced
by the Group.
INSP has robust controls and procedures in place
to manage internal controls of the Company and
these are considered to be appropriate to the
size and complexity of the organisation. The
audit committee has been set up to evaluate
and manage significant risks faced by the Group.
Control is established mainly through the Group's
directors who monitor and support the day to
day running of the Group and where possible
comply with the Board's and shareholders concerns
and requirements.
INSP has identified and implemented the following
risks and controls to mitigate risks:
Activity: Risk Impact Control(s)
Management High turnover of Operational Recognition
staff and other and reputational and support
recruitment issues. impact. for well performing
existing employees.
Implementing
and monitoring
of robust health
and safety
measures at
workplace.
--------------------- ------------------ ----------------------
Regulatory / legal Non-compliance. Loss of Robust policies
adherence licences and procedures
resulting to be followed.
in inability
to comply Maintaining
with the effective
regulatory communication
/ legal with the Company's
requirements. Auditors and
NOMAD on a
regular basis.
--------------------- ------------------ ----------------------
Strategic Failure of systems Loss of Disaster recovery
and controls. key data policy to be
and inability followed in
to operate case of crisis.
effectively.
Maintaining
strong IT systems
and controls
in place.
--------------------- ------------------ ----------------------
Financial Internal: Inadequate Loss of The Board to
systems and controls business. regularly review
of accounting in operating and
place and Inability strategic risks.
liquidity risk. to continue
trading The audit committee
External: as a going to provide
Market and credit concern. adequate and
crisis; sufficient
Short term liquidity information
freezes; to the Company's
Commercialisation external auditors.
Brexit.
Robust capital
Covid 19 and liquidity
levels in place
alongside effective
accounting
Delays systems and
in activity controls.
internally
and externally
would lead Large proportion
to consumption of the development
of working work is successfully
capital complete.
Diversification
of suppliers
and partners
to meet delivery
of activity.
--------------------- ------------------ ----------------------
Regulatory External: Potential Understanding
environment in Changes in to undermine regulatory
domestic power legislation microchip environment
market regarding domestic boiler and adapting
power market. product. system accordingly.
--------------------- ------------------ ----------------------
Product Risk Internal: Potential Testing of
Failure to develop for significant product
commercial product. financial Certification.
loss. Understanding
of market place
and competition.
--------------------- ------------------ ----------------------
The above matrix is kept up to date and regularly
reviewed as changes arise in order to mitigate
risks.
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5) Maintain This section does not comply with the requirements
the board as of the QCA Code as the board composition does
a not include a Non-Executive Chairman and two
well-functioning Non-Executive Directors.
and balanced
team led by
the chair At the date of this publication the Board comprises
of the Chairman (John Gunn), the Chief Financial
Officer (Nilesh Jagatia) and the independent
Non-Executive Director (Anthony Samaha). Further
detail about the skills and capabilities of
these directors are set out in principle six
below.
The letter of appointment of the Company's Directors
and Secretary are available for inspection at
the Company's registered office and all directors
are subject to re-election at intervals of no
more than three years.
The Board is responsible for strategy and performance
of major capital projects and the framework
of internal controls. All directors have access
to seek independent advice should they feel
that their knowledge of the given task is insufficient.
There is a clear balance between the executive
director and the non-executive director.
Furthermore, the directors liaise with the Company
Secretary (Nilesh Jagatia), who is responsible
for compliance with the Board procedures and
that applicable rules and regulations are complied
with.
The Board meets quarterly. The Board established
the following committees; Audit Committee and
Remuneration Committee. All Directors are encouraged
to participate and attend meetings on a regular
basis and the attendance is closely monitored.
Despite the QCA recommendation of having two
independent directors INSP has opted to have
only one non-executive director and a joint
role of Chief Executive Director and the Chairman
as they feel that this is appropriate to the
current size and complexity of the organisation.
INSP is still in the R&D phase of its business
cycle and therefore relies on a team of consultants
in developing the product. Following conclusion
of this process, certification is managed externally,
and then commercial trials would commence. As
such the role of the Board, at this stage, is
to oversee this process, review strategy, hold
high level discussions regarding possible commercial
trials and ensure adequate funding. As such,
the current Board is deemed sufficient. As and
when the business develops beyond this stage
the Board will review its requirements at this
stage. The Group is actively looking to appoint
an additional non-executive director to provide
a balance of the non-executive directors and
executives as per the QCA.
------------------------------------------------------------------------------------------
6) Directors This section complies with the requirements
experience, of the QCA Code.
skills and
capabilities The Chairman: John Gunn
Mr Gunn is the founder of INSP and a 20.2% (
Direct and indirect) shareholder of the Company.
Mr Gunn is also the managing director and majority
shareholder of Global Investment Strategy UK
Limited and a majority shareholder of Octagonal
Plc. With a career spanning over 30 years in
the financial services industry, Mr Gunn began
his career in 1987 at Hoare Govett and has since
worked at Carr Sheppards Limited, Assicurazioni
Generali S.p.A. and Williams de Broe, where
he was a senior investment manager until 2002.
Chief Financial Officer: Nilesh Jagatia
Mr Jagatia currently serves as Finance Director
at INSP and also currently holds the Finance
Director position with a Financial Services
group Octagonal Ltd and AIM quoted Limitless
Earth Plc (LME). Nilesh has been involved with
several IPO's and was previously Group Finance
Director of an AIM quoted Online Media and Publishing
Company for a period of five years until July
2012. Nilesh has over 20 years' experience,
including senior financial roles in divisions
of both Universal Music Group and Sanctuary
Group plc. He served as a Finance Director for
an independent record label that expanded into
the US. Nilesh is a qualified accountant and
holds a degree in finance.
Non-Executive Director: Anthony Samaha
Mr Samaha is a Chartered Accountant (Australia)
who has over 20 years' experience in accounting
and corporate finance. Mr Samaha has worked
for over 10 years with international accounting
firms, including Ernst & Young, principally
in corporate finance, and mergers and acquisitions.
He has extensive experience in the listing and
management of AIM quoted companies and is currently
Executive Director of AIM traded Reabold Resources
Plc.
In addition to the Board directors above INSP
uses Beaumont Cornish Limited as their nominated
adviser (NOMAD), Hill Dickinson LLP to assist
with legal and regulatory matters and FTB ITC
Services Ltd to support the IT systems.
------------------------------------------------------------------------------------------
7) Evaluation This section complies with the requirements
of the Board's of the QCA Code.
performance
INSP is fully committed to uphold Directors'
independence and to regularly evaluate their
performance.
Where appropriate, INSP sets targets which the
Directors have to adhere to. Each Director is
assigned with an individual target which is
linked to the corporate and financial targets
of the Group. Career support, development and
training may also be provided to the Directors
where necessary.
------------------------------------------------------------------------------------------
8) Promoting This section complies with the requirements
corporate of the QCA Code.
culture,
ethical values INSP is committed to ethical conduct and to
and behaviours the governance structures that ensure that the
Group delivers long term value and earns the
trust of its shareholders. The shareholders
are encouraged at General Meetings to express
their views and expectations in an open and
respectful dialogue.
The Board is fully aware that their conduct
impacts the corporate culture of the Group as
a whole and that this will impact the future
performance of the Group. The Directors are
invited to provide an open comprehensive dialogue
and constructive feedback to the employees,
and to promote ethical values and behaviours
within the Group.
INSP also believes that doing business honestly,
ethically and with integrity helps to build
long-term, trusting relationship with our employees,
customers, suppliers and stakeholders. Our Code
of business Conduct means that our employees
understand that we pride ourselves in high ethical
standards. INSP has zero tolerance for bribery
and corruption among our employees.
------------------------------------------------------------------------------------------
9) Maintenance This section complies with the requirements
of governance of the QCA Code.
structures and
processes to The Board is responsible for the ultimate decision
support good making, the structures and processes adopted
decision making by INSP. The Board is headed by the Chairman.
by the board In order to comply with the Companies Act 2006
or QCA code the Board recognises that it must
comply with the following principles set out
by the Act:
* duty to exercise independent judgement;
* duty to exercise reasonable care, skill and due
diligence;
* duty to avoid conflicts of interest;
* duty not to accept benefits from third parties; and
* duty to declare interest in a proposed transaction or
arrangement.
The Chairman is responsible for leading the
Board, sets the agenda and ensures it is an
effecting working group at the head of the Company.
The Chairman is also responsible for promoting
a culture of openness and effective communication
with shareholders and to ensure that all board
members receive accurate, timely and clear information.
The Executive Directors are responsible for
day to day running of the Company and effective
communications with the Board and the Shareholders.
They represent the Company to ensure quality
of information provision, they challenge and
monitor performance of the teams, and they set
business plans and targets for the Company.
Non-Executive Director: INSP has one Non-Executive
Director who is an independent director. This
is to reinforce the Group's commitment to a
transparent and effective governance structure
which encourages and provides ample opportunity
for challenge and deliberation. The Non-Executive
Director's objective is to scrutinise the performance
of the Board and senior management as well as
to monitor performance, agree goals and objectives.
They will satisfy themselves on the integrity
of financial information and that financial
controls and systems of risk management are
robust and fit for purpose. The Non-Executive
Director is also closely working with the Remuneration
Committee as they are responsible for determining
appropriate levels of remuneration of Executive
Directors and have a prime role in appointing
/ removing senior management.
The Company established the following committees
to help with processes, structures and support
good decision making by the Board.
Audit Committee - The Audit Committee is currently
chaired by Anthony Samaha and its other member
is Nilesh Jagatia. The Committee provides a
forum for reporting by the Group's external
auditors. The committee is also responsible
for reviewing a wider range of matters, including
half-year and annual results before their submission
to the board, as well as monitoring the controls
that are in force to ensure the integrity of
information reported to shareholders. The Audit
Committee will advise the Board on the appointment
of external auditors and on their remuneration
for both audit and non-audit work, and it will
also discuss the nature, scope and results of
the audit with the external auditors. The committee
will keep under review the cost effectiveness,
the independence and objectivity of the external
auditors.
Remuneration Committee - The Remuneration Committee
is currently chaired by Anthony Samaha and its
other member is John Gunn. The Committee is
responsible for making recommendations to the
Board, within agreed terms of reference, on
the Company's framework of executive remuneration
and costs. The Remuneration Committee determines
the contract terms, remuneration and other benefits
for the Executive Directors, including performance
related bonus schemes and compensation payments.
The Board itself determines the remuneration
of the non-executive directors.
It is recognised that if the Group grows, it
may be necessary to review the current structure
in order to provide better segregation of the
responsibilities and clear lines of reporting,
that are consistent with industry standards.
------------------------------------------------------------------------------------------
10) Shareholders This section complies with the requirements
communication of the QCA Code.
The Company recognises that its shareholders
are imperative for future growth and prosperity
of the Company. The Shareholders are treated
equally both in relation to participation at
meetings and in the exercising of voting rights.
INSP's shareholders are encouraged to attend
the annual general meetings and the Company
provides regulatory news updates and any other
matters the Board feels fit. The Company maintains
the following website https://www.inspirit-energy.com/investors
for investor relations.
------------------------------------------------------------------------------------------
INDEPENT AUDITOR'S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEARED 30 June 2022
Opinion
We have audited the financial statements of Inspirit Energy
Holdings Plc (the 'parent company') and its subsidiaries (the
'group') for the year ended 30 June 2022 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated
and Company Statements of Financial Position, the Consolidated and
Company Statements of Changes in Equity, the Consolidated and
Company Statements of Cash Flows and notes to the financial
statements, including significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted international
accounting standards and as regards the parent company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group's and of the parent company's affairs as at 30
June 2022 and of the group's loss for the year then ended;
-- the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
-- the parent company financial statements have been properly
prepared in accordance with UK-adopted international accounting
standards and as applied in accordance with the provisions of the
Companies Act 2006; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which
indicates that the group incurred a loss of GBP233k during the year
ended 30 June 2022, the group's current liabilities exceeded its
total assets by GBP366k at that date and that the group and company
are reliant on raising further finance in the next 12 months in
order to fund forecasted expenditure over this period. As stated in
note 2, these events or conditions, along with the other matters as
set forth in note 2, indicate that a material uncertainty exists
that may cast significant doubt on the company's ability to
continue as a going concern. Our opinion is not modified in respect
of this matter.
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the company's ability to
continue to adopt the going concern basis of accounting included
reviewing and challenging cashflow forecasts, and related key
assumptions, prepared by management covering the going concern
period, discussing their strategies regarding future fund raises
and assessing the likelihood of the required funds being
successfully raised by considering the funds required and the group
and company's ability to raise such funds.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing
and extent of our audit procedures. We also determine a level of
performance materiality which we use to assess the extent of
testing needed to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a
whole. In determining our overall audit strategy, we assessed the
level of uncorrected misstatements that would be material for the
financial statements as a whole.
Materiality for the consolidated financial statements was set as
GBP79,000 (2021: GBP87,000) based upon net assets. Materiality has
been based upon net assets which we determined, in our professional
judgement, to be the key principal benchmark relevant to members of
the parent company in assessing the financial performance of the
group due to the number of risks identified relating to assets
within the Consolidated Statement of Financial Position and the
relative size of gross assets, liabilities and equity compared to
the Consolidated Statement of Comprehensive Income. Performance
materiality and the triviality threshold for the consolidated
financial statements was set at GBP63,200 (2021: GBP69,600) and
GBP3,950 (2021: GBP4,350) respectively given our accumulated
knowledge of the group, the number of risks identified and the
assessed risk level.
Materiality for the parent company was set as GBP64,000 (2021:
GBP86,000) based upon net assets. Net assets was considered to be
an appropriate basis due to the fact that the parent company is
non-revenue earning and holds significant material balances through
investments in its subsidiaries and other assets and cash held.
Performance materiality and the triviality threshold for the parent
company was set at GBP51,200 (2021: GBP68,800) and GBP3,200 (2021:
GBP4,300) respectively given our accumulated knowledge of the
group, the number of risks identified and the assessed risk
level.
We also agreed to report any other differences below that
threshold that we believe warranted reporting on qualitative
grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed
the risks of material misstatement in the financial statements. In
particular we looked at areas involving significant accounting
estimates and judgements by the directors and considered future
events that are inherently uncertain, such as the recoverable value
of the capitalised development costs. We also addressed the risk of
management override of internal controls, including among other
matters consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
A full scope audit was performed on the complete financial
information of both components of the group.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. In addition to
the matter described in the Material uncertainty related to going
concern section we have determined the matters described below to
be the key audit matters to be communicated in our report.
Key Audit Matter How our scope addressed this
matter
Carrying value of Intangible
Assets
==============================================================
Carrying value of intangible Our work in this area included:
assets of GBP3.0m (2021: GBP2.8m). * Obtaining management's assessment of impairment and
Refer to Note 4: Critical Accounting reviewing and challenging the key estimates and
Estimates. judgements used therein;
Intangible Assets is the largest
asset within the financial statements * Performing sensitivity analysis on the key areas of
and represents the asset (development estimation/judgement and verifying to supporting
of its Stirling technology) documentation where possible including benchmarking
from which, if successful, the against companies in the same industry;
group will generate revenue.
There is a risk that the development * Substantive testing of the additions to intangible
costs capitalised during the assets to ensure they are eligible to be capitalised
year do not meet the recognition under IAS 38; and
criteria of IAS 38 Intangible
Assets .
* Reviewing disclosures in the financial statements to
Since the Group are still in ensure compliance with IFRS.
the process of developing their
technology and have not yet
begun generating revenue from
said technology, there is also The positive developments in
the risk that the carrying value the year with respect to the
of the intangible asset is impaired. application of the Stirling technology
to the marine industry demonstrated
the commercial potential of Inspirit's
technology and thus indicate
that the capitalised development
costs as at 30 June 2022 are
materially recoverable.
Successful commercialisation
of the group's Stirling technology
is reliant on project completion,
the availability of sufficient
funds (see the "Material uncertainty
related to going concern" section
above for our conclusion in respect
of the directors' use of the
going concern basis of accounting
in the preparation of the financial
statements) and the required
regulatory approvals being obtained.
It is drawn to the users' attention
that none of these matters are
certain. Failure to achieve the
above may result in an impairment
to the assets capitalised.
==============================================================
Carrying Value of Investment
in Subsidiaries
==============================================================
Carrying value of investment Our work in this area included:
in subsidiaries of GBP2.4m (2021: * Obtaining the directors' assessment of impairment and
GBP2.4m). Refer to Note 4: Critical reviewing and challenging the key estimates and
Accounting Estimates. judgements used therein; and
Investments in subsidiaries
is the largest asset within * Performing sensitivity analysis on the key areas of
the Parent Company's Statement estimation/judgement and verifying to supporting
of Financial Position and represents documentation where possible including benchmarking
its investment in the subsidiary against companies in the same industry.
whose principal activity is
the development of its Stirling
technology from which, if successful,
the group will generate revenue. The positive developments in
the year with respect to the
There is the risk that the application of the Stirling technology
carrying value of the investment to the marine industries demonstrated
in subsidiary is impaired since the commercial potential of Inspirit's
the subsidiary is loss making technology and thus indicate
and has yet to become revenue that the investment in the subsidiary,
generating. the entity conducting said development,
as at 30 June 2022 is materially
recoverable.
Successful commercialisation
of the group's Stirling technology
is reliant on project completion,
the availability of sufficient
funds (see the "Material uncertainty
related to going concern" section
above for our conclusion in respect
of the directors' use of the
going concern basis of accounting
in the preparation of the financial
statements) and the required
regulatory approvals being obtained.
It is drawn to the users' attention
that none of these matters is
certain. Failure to achieve the
above may result in an impairment
to the carrying value of investments.
==============================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the group and parent company financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read the
other information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
the parent company and their environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the parent company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities, the directors are responsible for the preparation
of the group and parent company financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements,
the directors are responsible for assessing the group and the
parent company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do
so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- We obtained an understanding of the group and parent company
and the sector in which they operate to identify laws and
regulations that could reasonably be expected to have a direct
effect on the financial statements. We obtained our understanding
in this regard through management, industry research and experience
of the sector.
-- We determined the principal laws and regulations relevant to
the group and parent company in this regard to be those arising
from UK Company Law, rules applicable to issuers on the AIM Market
and UK-adopted international accounting standards.
-- We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the financial
statements from our sector experience and through discussion with
the directors. We considered the event of compliance with those
laws and regulations as part of our procedures on the related
financial statement items. We communicated laws and regulations
throughout our audit team and remained alert to any indications of
non-compliance throughout the audit of the group.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the group and parent company with those laws and regulations. These
procedures included, but were not limited to:
o Discussions with management regarding compliance with laws and
regulations by the parent company and the subsidiary;
o Reviewing legal expenses incurred in the year;
o Reviewing board minutes; and
o Review of regulatory news announcements made.
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to
the non-rebuttable presumption of a risk of fraud arising from
management override of controls, that there was potential for
management bias in relation to the impairment of capitalised
development costs and investments in subsidiaries and we addressed
this by challenging the assumptions and judgements made by
management when auditing these significant accounting
estimates.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias;
discussing with management as to whether there had been any
instances or suspicions of fraud within the subsidiaries and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone, other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Joseph Archer (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
05 January 2023
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 June 2022
2022 2021
Note GBP'000 GBP'000
---------------------------------- ----- ---------- ---------
CONTINUING OPERATIONS:
Administrative expenses 7 (329) (277)
OPERATING LOSS (329) (277)
LOSS BEFORE INCOME TAX (329) (277)
Income tax credit 8 96 24
---------------------------------- ----- ---------- ---------
NET LOSS AND TOTAL COMPREHENSIVE
INCOME LOSS FOR THE YEAR
ATTRIBUTABLE TO THE OWNERS
OF THE PARENT (233) (253)
---------------------------------- ----- ---------- ---------
EARNINGS PER SHARE
- Basic and diluted earnings
per share 9 (0.005p) (0.007p)
(attributable to owners
of the parent)
---------------------------------- ----- ---------- ---------
STATEMENT OF FINANCIAL POSITION
FOR THE YEARED 30 June 2022
Company Number: GROUP COMPANY
05075088
-------- -------- --------- ---------
2022 2021 2022 2021
Note GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----- -------- -------- --------- ---------
NON-CURRENT ASSETS
Intangible assets 10 2,998 2,773 - -
Property, plant
and equipment 11 25 30 1 1
Investment in subsidiaries 12 - - 2,440 2,440
3,023 2,803 2,441 2,441
---------------------------- ----- -------- -------- --------- ---------
CURRENT ASSETS
Trade and other
receivables 13 107 37 6 7
Cash and cash equivalents 14 160 561 158 554
---------------------------- ----- -------- -------- --------- ---------
267 598 164 561
---------------------------- ----- -------- -------- --------- ---------
TOTAL ASSETS 3,290 3,401 2,605 3,002
---------------------------- ----- -------- -------- --------- ---------
EQUITY ATTRIBUTABLE
TO OWNERS OF THE
PARENT
Share capital 15 2,103 2,103 2,103 2,103
Share premium 15 9,783 9,783 9,783 9,783
Merger reserve 3,150 3,150 3,150 3,150
Other reserves 3 3 3 3
Reverse acquisition
reserve (7,361) (7,361) - -
Retained losses (5,021) (4,788) (12,994) (12,463)
---------------------------- ----- -------- -------- --------- ---------
TOTAL EQUITY 2,657 2,890 2,045 2,576
---------------------------- ----- -------- -------- --------- ---------
CURRENT LIABILITIES
Trade and other
payables 17 533 411 460 326
Borrowings 18 100 100 100 100
---------------------------- ----- -------- -------- --------- ---------
633 511 560 426
TOTAL LIABILITIES 633 511 560 426
---------------------------- ----- -------- -------- --------- ---------
TOTAL EQUITY AND
LIABILITIES 3,290 3,401 2,605 3,002
---------------------------- ----- -------- -------- --------- ---------
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the Parent Company
Statement of Comprehensive Income.
The loss for the Parent Company for the year was GBP531,000
(2021: loss of GBP331,000).
These Financial Statements were approved by the Board of
Directors on 5 January 2023 and were signed on its behalf by
N Jagatia
Director
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 June 2022
Attributable to the owners of the parent
-------------------------------------------------------------------------------
Share Share Other Merger Reverse Retained Total
capital premium reserves reserve acquisition losses Equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- --------- ---------- --------- ------------- --------- --------
BALANCE AT 30 June
2020 1,967 9,192 3 3,150 (7,361) (4,535) 2,416
---------------------- --------- --------- ---------- --------- ------------- --------- --------
Loss for the year - - - - - (253) (253)
--------
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR - - - - - (253) (253)
---------------------- --------- --------- ---------- --------- ------------- --------- --------
Share issues 136 621 - - - - 757
Share issue costs - (30) - - - (30)
TRANSACTIONS WITH
OWNERS RECOGNISED
DIRECTLY IN EQUITY 136 591 - - - - 727
---------------------- --------- --------- ---------- --------- ------------- --------- --------
BALANCE AT 30 June
2021 2,103 9,783 3 3,150 (7,361) (4,788) 2,890
---------------------- --------- --------- ---------- --------- ------------- --------- --------
Loss for the year - - - - - (233) (233)
--------
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR - - - - - (233) (233)
---------------------- --------- --------- ---------- --------- ------------- --------- --------
BALANCE AT 30 June
2022 2,103 9,783 3 3,150 (7,361) (5,021) 2,657
---------------------- --------- --------- ---------- --------- ------------- --------- --------
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 June 2022
Attributable to equity shareholders
----------------------------------------------------------------
Share Share Merger Other Retained Total
capital premium Reserve reserves losses Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- --------- --------- ---------- --------- --------
BALANCE AT 30 June
2020 1,967 9,192 3,150 3 (12,132) 2,180
---------------------- --------- --------- --------- ---------- --------- --------
Loss for the year - - - - (331) (331)
---------
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR - - - - (331) (331)
---------------------- --------- --------- --------- ---------- --------- --------
Share issues 136 621 - - 757
Share issue costs - (30) - - (30)
---------
TRANSACTIONS WITH
OWNERS RECOGNISED
DIRECTLY IN EQUITY 136 591 - - - 727
---------------------- --------- --------- --------- ---------- --------- --------
BALANCE AT 30 June
2021 2,103 9,783 3,150 3 (12,463) 2,576
---------------------- --------- --------- --------- ---------- --------- --------
Loss for the year - - - - (531) (531)
---------
TOTAL COMPREHENSIVE
LOSS FOR THE YEAR - - - - (531) (531)
---------------------- --------- --------- --------- ---------- --------- --------
BALANCE AT 30 June
2021 2,103 9,783 3,150 3 (12,994) 2,045
---------------------- --------- --------- --------- ---------- --------- --------
STATEMENT OF CASH FLOWS
FOR THE YEARED 30 June 2022
GROUP GROUP COMPANY COMPANY
2022 2021 2022 2021
Note GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----- --------- --------- --------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES
Loss after tax (233) (253) (531) (331)
Depreciation 5 7 - 1
Interco loan provision - - 258 85
Tax credit (96) (24) - -
Decrease/(increase) in
trade and other receivables 3 (6) 2 (2)
Increase in trade and
other payables 121 50 133 35
Tax received 24 42 - -
NET CASH USED IN OPERATING
ACTIVITIES (176) (184) (138) (212)
CASH FLOWS FROM INVESTING
ACTIVITIES
Development costs (225) (108) - -
Purchase of tangible
fixed assets - (2) - (2)
Increase in loan to subsidiary - - (258) (85)
NET CASH USED IN INVESTING
ACTIVITIES (225) (110) (258) (87)
-------------------------------- ----- --------- --------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Gross proceeds from issue
of shares - 757 - 757
Share issue costs - (30) - (30)
-------------------------------- ----- --------- --------- --------- ---------
NET CASH GENERATED FROM
FINANCING ACTIVITIES - 727 - 727
-------------------------------- ----- --------- --------- --------- ---------
NET INCREASE IN CASH
AND CASH EQUIVALENTS (401) 433 (396) 428
Cash and cash equivalents
at the beginning of the
year 561 128 554 126
CASH AND CASH EQUIVALENTS
AT THE OF THE YEAR 14 160 561 158 554
-------------------------------- ----- --------- --------- --------- ---------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 30 June 2022
1 GENERAL INFORMATION
The principal activity of Inspirit Energy Holdings plc during
the period was that of developing and commercialising the
mCHP boiler and in the prior year started to refocus its
expertise in the application of the Stirling engine technology
in different sectors including Marine and Waste Heat Recovery.
These financial statements show the consolidated results
of the Group for the year ended 30 June 2022 together with
the comparative results for the year ended 30 June 2021.
Inspirit Energy Holdings plc is a company incorporated and
domiciled in England and Wales and quoted on the Alternative
Investment Market of the London Stock Exchange. The address
of its registered office is 200 Aldersgate Street, London,
EC1A 4HD.
2 SUMMARY OF SIGNIFICANT A CCOUNTING POLICIES
The principal accounting policies adopted in the preparation
of these financial statements are set out below. These policies
have been consistently applied to all the periods presented,
unless otherwise stated.
BASIS OF PREPARATION
The financial statements have been prepared in accordance
with UK-adopted International Accounting Standards and with
the Companies Act 2006 applicable to companies reporting
under IFRS .
The financial statements have been prepared under the historical
cost convention and are presented in GBP Pound Sterling,
rounded to the nearest GBP1,000.
The preparation of financial statements in conformity with
IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in
the process of applying the Group's and Company's accounting
policies. The areas involving a higher degree of judgement
or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in
Note 4.
GOING CONCERN
As at 30 June 2022 the Group had a cash balance of GBP160,000
(2021: GBP561,000), net current liabilities of GBP366,000
(2021: net current assets of GBP87,000) and net assets of
GBP2,657,000 (2021: GBP2,890,000). The Group has maintained
its core spend during the year whilst still managing to move
its projects forward and post year end secured a $250,000
loan facility. There can be no assurance that the Group's
projects will become fully developed and reach commercialisation
nor that there will be sufficient cash resources available
to the Group to do so.
The Directors have reviewed a detailed forecast based on
the funds expected to be raised and forecasted expenditure.
Having made due and careful enquiry, the Directors acknowledge
that funds will need to be raised within the next 12 months
to enable the Group to meets its obligations as they fall
due, however, the Directors are confident that the required
funds will successfully be raised through the issue of equity
and/or debt to fund its operations over the next 12 months.
The Directors, therefore, have made an informed judgement,
at the time of approving financial statements, that the Group
is a going concern but they acknowledge that the dependence
on raising further funds during the next 12 months represents
a material uncertainty. The Auditors have made reference
to going concern by way of a material uncertainty.
BASIS OF CONSOLIDATION
Inspirit Energy Holdings plc, the legal parent, is domiciled
and incorporated in the United Kingdom.
The Group Financial Statements consolidate the Financial
Statements of Inspirit Energy Holdings plc and its subsidiary,
Inspirit Energy Limited, made up to 30 June 2022.
Subsidiaries are entities over which the Group has control.
The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through
its power over the entity. The Group obtains and exercises
control through voting rights. The existence and effect of
potential voting rights that are currently exercisable or
convertible are considered when assessing whether the company
controls another entity.
The cost of acquisition is measured as the fair value of
the assets acquired, equity instruments issued and liabilities
incurred or assumed at the date of exchange. Acquisition
related costs are expensed as incurred. Intercompany transactions,
balances and unrealised gains on transactions between Group
companies are eliminated. Profits and losses resulting from
inter-company transactions that are recognised in assets
are also eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with
the policies adopted by the Group.
Where necessary, adjustments are made to the financial statements
of subsidiaries to bring the accounting policies used into
line with those used by the Group.
STATEMENT OF COMPLIANCE
The new and amended standards and interpretations which were
applied forthe first time in the annual reporting period
commenting 1 July 2021 have not had a material effect on
the Group and Company financial statements.
NEW STANDARDS, AMMENTS AND INTERPRETATIONS NOT YET ADOPTED
The standards, amendments and interpretations which are in
issue but not yet mandatorily effective are not expected
to have a material effect on the Group or Company financial
statements.
SEGMENTAL REPORTING
Developing and commercialising the mCHP boiler and its related
technology is the only activity in which the Group is engaged
and is therefore considered as the only operating / reportable
segment. The Group currently only operates in the UK. The
financial information therefore of the single segment is
the same as that set out in the Group Statement of Comprehensive
Income and Group Statement of Financial Position.
CURRENT AND DEFERRED INCOME TAX
The tax credit for the period comprises an estimated Research
and Development taxation credit to be received in respect
of Research and Development costs incurred during the year.
Tax is recognised in the Statement of Comprehensive Income,
except to the extent that it relates to items recognised
directly in equity. In this case the tax is also recognised
directly in other comprehensive income or directly in equity,
respectively.
Deferred tax is recognised on differences between the carrying
amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of
taxable profit and is accounted for using the balance sheet
liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable
that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from
initial recognition of goodwill or from the initial recognition
(other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Company
is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at
each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected
to apply in the period when the liability is settled, or
the asset realised. Deferred tax is charged or credited to
profit or loss, except when it relates to items charged or
credited directly to equity, in which case the deferred tax
is also dealt with in equity.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Company
intends to settle its current tax assets and liabilities
on a net basis.
The current income tax credit is calculated on the basis
of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Company's
subsidiaries operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to
or recoverable from the tax authorities.
FOREIGN CURRENCY TRANSLATION
a) FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the Financial Statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("functional
currency").
The consolidated Financial Statements are presented in Pounds
Sterling (GBP), which is the Group's presentation and Company's
functional currency.
b) TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates
of the transactions, or valuation where items are remeasured.
Foreign exchange gains and losses resulting from the settlement
of such transactions, and from the translation at year-end
exchange rates of monetary assets and liabilities denominated
in foreign currencies, are recognised the Statement of Comprehensive
Income.
Foreign exchange gains and losses relating to borrowings
and cash and cash equivalents are presented in the Statement
of Comprehensive Income within "Finance Income" or "Finance
Costs".
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost
less depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item
can be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance are
charged to the Statement of Comprehensive Income during the
financial period in which they are incurred.
Depreciation is calculated to allocate the cost of each class
of asset to their residual values over their estimated useful
lives, as follows:
* Plant and Equipment - 15% reducing balance
* Fixtures and Fittings - 20% reducing balance
* Motor Vehicles - 5 years, straight line
The assets' residual values and useful lives are reviewed,
and adjusted if appropriate, at the end of each reporting
period.
An asset's carrying amount is written down immediately to
its recoverable amount if the asset's carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing
the proceeds with the carrying amount, and are recognised
within "Other (Losses)/Gains - Net" in the Statement of Comprehensive
Income.
INTANGIBLE ASSETS - DEVELOPMENT COSTS
Development costs relate to expenditure on the development
of the mCHP boiler technology and applications of the underlying
engine technology.
Development costs incurred on the project are capitalised
when all the following conditions are satisfied:
* completion of the intangible asset is technically
feasible so that it will be available for use or
sale;
* the Group intends to complete the intangible asset
and use or sell it;
* the Group has the ability to use or sell the
intangible asset;
* the intangible asset will generate probable future
economic benefits;
* there are adequate technical, financial and other
resources to complete the development and to use or
sell the intangible asset; and
* the expenditure attributable to the intangible asset
during its development can be measured reliably.
Directly attributable costs that are capitalised as part
of the product include any employee costs directly related
to the development of the asset and appropriate expenditure
which directly furthers the development of the project.
Other development expenditure that does not meet these criteria
is recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as
an asset in a subsequent period.
IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets that have an indefinite useful life, are not subject
to amortisation and are tested annually for impairment. An
impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value
less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash-generating
units). Non-financial assets other than goodwill that suffered
an impairment are reviewed for possible reversal of the impairment
at each reporting date. See note 4 for more information on
the impairment assessment performed by management.
FINANCIAL ASSETS
a) CLASSIFICATION
The Group classifies its financial assets as loans and receivables.
The classification depends on the purpose for which the financial
assets were acquired. Management determines the classification
of its financial assets at initial recognition.
LOANS AND RECEIVABLES
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in
an active market. They are included in current assets, except
for maturities greater than 12 months after the Statement
of Financial Position date. These are classified as non-current
assets. The Group's loans
and receivables comprise trade and other receivables and
cash and cash equivalents in the Statement of Financial Position.
b) RECOGNITION AND MEASUREMENT
Financial assets are initially measured at fair value plus
transactions costs.
Loans and receivables are subsequently carried at amortised
cost using the effective interest method, except for short
term receivables.
c) IMPAIRMENT OF FINANCIAL ASSETS
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset, or a
group of financial assets, is impaired. A financial asset,
or a group of financial assets, is impaired, and impairment
losses are incurred, only if there is objective evidence
of impairment as a result of one or more events that occurred
after the initial recognition of the asset (a "loss event"),
and that loss event (or events) has an impact on the estimated
future cash flows of the financial asset, or group of financial
assets, that can be reliably estimated.
The criteria that the Group uses to determine that there
is objective evidence of an impairment loss include:
* significant financial difficulty of the issuer or
obligor;
* a breach of contract, such as a default or
delinquency in interest or principal repayments;
* the disappearance of an active market for that
financial asset because of financial difficulties;
* observable data indicating that there is a measurable
decrease in the estimated future cash flows from a
portfolio of financial assets since the initial
recognition of those assets, although the decrease
cannot yet be identified with the individual
financial assets in the portfolio; or
* for assets classified as available-for-sale, a
significant or prolonged decline in the fair value of
the security below its cost.
ASSETS CARRIED AT AMORTISED COST
The amount of impairment is measured as the difference between
the asset's carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have
not been incurred), discounted at the financial asset's original
effective interest rate. The asset's carrying amount is reduced,
and the loss is recognised in the Statement of Comprehensive
Income. As a practical expedient, the Group may measure impairment
on the basis of an instrument's fair value using an observable
market price.
If, in a subsequent period, the amount of the impairment
loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised
(such as an improvement in the debtor's credit rating), the
reversal of the previously recognised impairment loss is
recognised in the Statement of Comprehensive Income.
CASH AND CASH EQUIVALENTS
In the consolidated Statement of Cash Flows, cash and cash
equivalents comprise cash in hand and deposits held at call
with bank.
FINANCIAL LIABILITIES
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Group becomes
a party to the contractual provisions of the instruments.
Financial liabilities are initially measured at fair value,
net of transactions costs. They are subsequently measured
at amortised cost using the effective interest method.
Financial liabilities are derecognised when the Group or
Company's contractual obligations expire, are cancelled or
are discharged.
SHAREHOLDERS' EQUITY
Equity comprises the following:
-- "Share capital" represents the nominal value of equity
shares.
* "Share premium" represents the excess over nominal
value of the fair value of consideration received for
equity shares, net of expenses of the share issue.
-- "Share option reserve" represents the cumulative cost
of share based payments.
-- "Merger reserve" and "Reverse Acquisition reserve" represents
historical reserves formed upon
previous Business Combinations entered into by the Company
that fall outside the scope of
IFRS 3.
-- "Retained losses" represents retained losses.
BORROWINGS
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently carried
at amortised cost; any difference between the proceeds (net
of transaction costs) and the redemption value is recognised
in the Statement of Comprehensive Income over the period
of the borrowings, using the effective interest method.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the end of the reporting
period.
BORROWINGS COSTS
Borrowing costs are recognised in profit or loss in the period
in which they are incurred.
SHARE BASED PAYMENTS
The Group operates equity-settled, share-based schemes, under
which it receives services from employees or third-party
suppliers as consideration for equity instruments (options
and warrants) of the Group. The Group may also issue warrants
to share subscribers as part of a share placing. The fair
value of the equity-settled share based payments is recognised
as an expense in the Statement of Comprehensive Income or
charged to equity depending on the nature of the service
provided or instrument issued. The total amount to be expensed
or charged is determined by reference to the fair value of
the options granted:
* including any market performance conditions;
* excluding the impact of any service and non-market
performance vesting conditions (for example,
profitability or sales growth targets, or remaining
an employee of the entity over a specified time
period); and
* including the impact of any non-vesting conditions
(for example, the requirement for employees to save).
In the case of warrants the amount charged to equity is determined
by reference to the fair value of the services received if
available. If the fair value of the services received is
not determinable, the warrants are valued by reference to
the fair value of the warrants granted as described previously.
Non-market vesting conditions are included in assumptions
about the number of options or warrants that are expected
to vest. The total expense or charge is recognised over the
vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the
end of each reporting period, the entity revises its estimates
of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact
of the revision to original estimates, if any, in the Statement
of
Comprehensive Income or equity as appropriate, with a corresponding
adjustment to a separate reserve in equity.
When the options are exercised, the Company issues new shares.
The proceeds received, net of any directly attributable transaction
costs, are credited to share capital (nominal value) and
share premium.
3 FINANCIAL RISK MANAGEMENT
The Group is exposed to a variety of financial risks which
result from both its operating and investing activities. The
Group's risk management is coordinated by the Board of Directors
and focuses on actively securing the Group's short to medium
term cash flows by minimising the exposure to financial markets.
The main risks the Group is exposed to through its financial
instruments are market risk (including market price risk),
credit risk and liquidity risk.
MARKET PRICE RISK
The Group's exposure to market price risk mainly arises from
potential movements in the pricing of its products. The Group
manages this price risk within its long-term strategy to grow
the business and maximise shareholder return.
CREDIT RISK
The Group's financial instruments that are subject to credit
risk are cash and cash equivalents and loans and receivables.
The credit risk for cash and cash equivalents is considered
negligible since the counterparties are reputable financial
institutions.
The Group's maximum exposure to credit risk is GBP267,000
(2021: GBP598,000) comprising cash and cash equivalents and
loans and receivables.
LIQUIDITY RISK
Liquidity risk arises from the possibility that the Group
might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities.
The Group manages this risk through maintaining a positive
cash balance and controlling expenses and commitments. The
Directors are confident that adequate resources exist to finance
current operations.
The following table summarises the maturity profile of the
Group's non-derivative financial liabilities with agreed repayment
periods. The table has been drawn up based on contractual
undiscounted cash flows based on the earliest repayment date
on which the Group can be required to pay. The table includes
both interest and principal cash flows. To the extent that
the interest flows are floating rate, the undiscounted amount
is derived from the interest rate curves at the balance sheet
date:
Less Between Between
than 1 and 2 2 and Over Carrying
Group 1 year years 5 years 5 years Total value
At 30 June 2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Trade and other
payables 533 - - - 533 533
Borrowings 100 - - - 100 100
-------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
At 30 June 2021
--------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Trade and other payables 411 - - - 411 411
Borrowings 100 - - - 100 100
-------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
CAPITAL RISK MANAGEMENT
The Group's objectives when managing capital are:
-- to safeguard the Group's ability to continue as a going
concern, so that it continues to provide returns and benefits for
shareholders;
-- to support the Group's growth; and
-- to provide capital for the purpose of strengthening the
Group's risk management capability.
The Group actively and regularly reviews and manages its capital
structure to ensure an optimal capital structure and equity holder
returns, taking into consideration the future capital requirements
of the Group and capital efficiency, prevailing and projected
profitability, projected operating cash flows, projected capital
expenditures and projected strategic investment opportunities.
Management regards total equity as capital and reserves, for
capital management purposes.
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of Financial Statements in conformity with
IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. Estimates
and judgements are continually evaluated and are based on
historical experience and other factors including expectations
of future events that are believed to be reasonable under
the circumstances.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the
next financial year are discussed below.
RECOVERABLE VALUE OF R&D TAX DEBTOR
The Corporation tax receivable in Note 13 relates to the firm's
Research & Development tax reclaim that the firm is expected
to receive once it files its corporation tax returns. The
directors have assessed the R&D tax debtor as being fully
recoverable based on historic successful submissions and post
year end the company recovered GBP28,000. The balance relates
to R&D costs incurred in FY2022 for which the claim has not
been filed and will be filed on the publication of the audited
accounts and submission of its corporation tax return.
IMPAIRMENT OF DEVELOPMENT COSTS AND INVESTMENT IN SUBSIDIARIES
The Group tests annually whether development costs and investments
in the subsidiaries, which have a carrying value of GBP2,998,000
and GBP2,440,000 respectively (2021: GBP2,773,000 and GBP2,440,000
respectively) have suffered any impairment in accordance with
the accounting policy as stated in Note 2.
The core development to date on the mCHP and Stirling technology
is the base technology that will be applied the Marine, Waste
Heat Recovery, Hydrogen and automotive sectors that the company
will be focusing on in the future.
When a review for impairment is conducted, the recoverable
amount is determined based on value in use calculations prepared
on the basis of management's assumptions and estimates. As
a result of their 2022 review management has concluded that
no impairment is required.
The value-in-use calculations require management to estimate
future cash flows expected to arise from the cash generating
unit, once commercial production is achieved, and apply a
suitable discount rate in order to calculate present value.
These calculations require the use of estimates. See Note
10 for further details.
Following other sources of products interest during the year,
management have focussed the value-in-use calculations on licensing
sales rather than product sales. This has been done as management
consider that the revenues are more near term in nature and note
that it uses the same core developed technology. Given the
product's nature, the core estimates have remained broadly
consistent with prior years.
Note that the recoverability of the capitalised development
costs and the investment in subsidiaries is dependent on sufficient
funds being raised as and when required up to the point of
commercialisation. Due to the dependence on raising further funds
to meet forecasted expenditure over the next 12 months, the
Auditors have made reference to going concern by way of a material
uncertainty.
5 DIRECTOR'S AND KEY MANAGEMENT PERSONNEL EMOLUMENTS
2022 2021
GBP'000 GBP'000
----------------------------------------------------- --------- -------
Aggregate emoluments 144 144
Social security costs 6 6
------------------------------------------------------------------------ --------- -------
150 150
------------------------------------------------------------------------ --------- -------
Short Term Other Total Total
Name of director Benefits Benefits 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------ ----------- --------- -------
J Gunn 80 - 80 80
N Jagatia 40 - 40 40
A Samaha 12 - 12 12
S Gunn* 12 - 12 12
--------------------------------------------- ------------ ----------- --------- -------
144 - 144 144
--------------------------------------------- ------------ ----------- --------- -------
*Key Management Personnel
The number of Directors who contributed to pension schemes
during the year was nil (2021: nil).
6 EMPLOYEE INFORMATION
2022 2021
GBP'000 GBP'000
--------------------------------------- ---------------------- ----------------------
Wages and salaries 237 240
Social security costs 2 6
239 246
---------------------------------------------------------- ---------------------- ----------------------
Included in the above is a total of GBP92,885 (2021: GBP96,331)
wages and salaries for employees which has been included in
Development costs.
Average number of persons employed (including executive directors
and excludes the Non Executive Director - Anthony Samaha):
2022 2021
Number Number
--------------------------------------- ---------------------- ----------------------
Office and management 4 4
---------------------------------------------------------- ---------------------- ----------------------
COMPENSATION OF KEY MANAGEMENT PERSONNEL
There are no key management personnel other than those disclosed
in Note 5.
7 LOSS FOR THE YEAR
Loss for the year is arrived at after charging:
2022 2021
GBP'000 GBP'000
------------------------------------------------------------------------------ -------- --------
Salaries and wages (Note 6) 146 150
Audit and other fees 25 20
Depreciation 7 7
FX expense/credit - -
------------------------------------------------------------------------------ -------- --------
AUDITOR'S REMUNERATION
During the year the Group obtained the following services from the Company's auditor:
2022 2021
GBP'000 GBP'000
------------------------------------------------------------------------------ -------- --------
Fees payable to the Company's auditor for the audit of the parent company and the Group
financial
statements 25 20
8 Taxation
GROUP 2022 2021
GBP'000 GBP'000
Deferred tax - -
Current tax (96) (24)
---------------------------------------- ------- -------
Total current tax charge / (credit) (96) (24)
---------------------------------------- ------- -------
The tax on the Group's loss before tax differs from the theoretical
amount that would arise using the average rate applicable
to losses of the consolidated entities as follows:
2022 2021
GBP'000 GBP'000
------------------------------------------------------ -------- -------
Loss before tax from continuing operations (329) (277)
------------------------------------------------------ -------- -------
Loss before tax multiplied by rate of corporation
tax in the UK of 19% (2021: 19%) (63) (53)
Tax effects of:
Expenses not deductible for tax purposes - -
Unrelieved tax losses carried forward 63 53
Research and development tax credit (96) (24)
------------------------------------------------------ -------- -------
Total tax (96) (24)
------------------------------------------------------ -------- -------
The Group has excess management expenses of approximately
GBP5,781,000 (2021: GBP5,450,000), capital losses of GBP150,000
(2021: GBP150,000) and non-trade financial losses of approximately
GBP119,000 (2021: GBP119,000) to carry forward against future
suitable taxable profits. No deferred tax asset has been provided
on any of these losses due to uncertainty over the timing of their
recovery.
9 EARNINGS PER SHARE
Earnings per ordinary share has been calculated by dividing
the loss attributable to equity holders of the Company
by the weighted average number of shares in issue during
the year. The calculations of both basic and diluted earnings
per share for the year are based upon the loss for the
year of GBP233,000 (2021: GBP253,000). The weighted number
of equity shares in issue during the year was 4,271,640,186
(2021: 3,399,326,136).
In accordance with IAS 33, basic and diluted earnings
per share are identical as the effect of the exercise
of share options and warrants would be to decrease the
loss per share and therefore deemed anti-dilutive. Details
of share options and warrants that could potentially dilute
earnings per share in future periods are set out in Note
16.
10 INTANGIBLE ASSETS
GROUP Development Total
Costs
GBP'000 GBP'000
At 30 June 2020 2,666 2,666
Additions 107 107
At 30 June 2021 2,773 2,773
Additions 225 225
At 30 June 2022 2,998 2,998
------------------ --- ------------- --------
No amortisation has been recognised on development costs to date
as the assets are still in the development stage and the related
products are not yet ready for sale. As such, the value-in-use
calculations to support the carrying value of development costs is
directly reliant on the availability of future capital funding in
order to achieve product accreditation and enter into commercial
production. Additions during the year included GBP92,885 (2021:
GBP96,331) of capitalised wages.
The recoverable amount of the above cash generating unit has
been determined based on value-in-use calculations and includes
revenue from stirling applications in marine, commercial truck,
Inspirit Charger (boiler technology) with Hydrogen application and
waste recycling activities. The value-in-use calculations use cash
flow projections based on financial budgets approved by Management
covering a five year period. They key estimates in the value-in-use
calculation are:
Growth rate - Nonlinear year on year increases based on
directors' estimations following discussion with a number of
potential partners.
Discount rate - 30% Historically, the company used a discount
rate of 15%, however in FY2021 the board took a prudent view of
increasing the rate to 30% due to Covid-19 and the global downturn
with it's impact on the economy. Although the global economic
outlook has improved, the board have been prudent in maintaining
the 30% discount rate.
The gross margin is derived from licensing the technology and it
is remained consistent with the margin assumed in the 2021
impairment assessment.
11 PROPERTY, PLANT
AND EQUIPMENT
GROUP Plant and Fixtures Motor Total
Equipment and fittings Vehicles
COST GBP'000 GBP'000 GBP'000 GBP'000
----------------- ----------- -------------- ---------- --------
As at 30 June
2020 84 15 1 100
Additions 2 - - 2
--------
As at 30 June
2021 86 15 1 102
Additions - - - -
--------
As at 30 June
2022 86 15 1 102
DEPRECIATION
----------------- ----------- -------------- ---------- --------
As at 30 June
2020 53 11 1 65
Charge for year 6 1 - 7
--------
As at 30 June
2021 59 12 1 72
Charge for year 4 1 - 5
--------
As at 30 June
2022 63 13 1 77
NET BOOK VALUE
----------------- ----------- -------------- ---------- --------
As at 30 June
2022 23 2 - 25
As at 30 June
2021 27 3 - 30
---------------------- ----------- -------------- ---------- --------
12 INVESTMENT IN SUBSIDIARIES
COMPANY 2022 2021
SHARES IN GROUP UNDERTAKINGS: GBP'000 GBP'000
----------------------------------------------- ------- -------
At 1 July 2,440 2,440
Increase in loan to subsidiary 258 75
Provision against the loan balance outstanding (258) (75)
------------------------------------------------------------------- ------- -------
2,440 2,440
------------------------------------------------------------------- ------- -------
Included in the above is an amount of GBP3,304,595 (2021:
GBP3,046,513) relating to the amount due to the Company by its
subsidiary Inspirit Energy Limited. A provision of GBP3,304,595
(2021: GBP3,046,513) has been set against this loan balance
outstanding.
Investments in Group undertakings are recorded at cost, which is
the fair value of the consideration paid.
Details of Subsidiary Undertakings are as follows:
Proportion
Registered of share capital Nature of
Name of subsidiary Registered address capital held business
-------------------- ------------------ --------------- ----------------- -------------------
Inspirit Energy c/o Niren Blake Ordinary shares 100% Product development
Limited** LLP 2nd Floor, GBP 15,230
Company No.07160673 Solar House,
915 High Road,
London, England,
N12 8QJ
*** Inspirit Energy Limited (Co No 07160673) is entitled and has
taken exemption under section 479a of the Companies Act 2006. No
members of Inspirit Energy Limited have required the company to
obtain an audit of its accounts for the year in question in
accordance with section 476 of the Companies Act 2006
13 TRADE AND OTHER RECEIVABLES
GROUP COMPANY
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------- ------- ------- -------
Corporation tax* 96 24 - -
VAT recoverable 11 13 6 7
Other receivables - - - -
107 37 6 7
-------------------------------------- ------- ------- ------- -------
*The Corporation tax repayable relates to the R&D tax claim
receivable from HMRC.
The Directors consider that the carrying amount of receivables
is approximately equal to their fair value and under IFRS 9 that
they are held at amortised cost
14 CASH AND CASH EQUIVALENTS
GROUP COMPANY
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------- ------- ------- -------
Cash and cash equivalents 160 561 158 554
---------------------------------------------- ------- ------- ------- -------
The Directors consider the carrying amount of cash and cash
equivalents approximates to their fair value.
All of the Group and Company's cash and cash equivalents are
held with institutions with an AA credit rating.
15 SHARE CAPITAL AND SHARE PREMIUM
Number Number Ordinary Deferred New Share Total
of ordinary of deferred shares shares Deferred premium
shares shares B shares
GBP GBP GBP GBP GBP
------------ -------------- ------------- --------- --------- ---------- ----------- -----------
At 30
June 2020 2,903,783,047 400,932 162,506 396,923 1,406,599 12,342,733 14,308,761
----------------- -------------- ------------- --------- --------- ---------- ----------- -----------
Issue
of New
Shares 1,367,857,139 - 136,786 - - 620,714 757,500
Issue
costs - - - - - (30,000) (30,000)
----------------- -------------- ------------- --------- --------- ---------- ----------- -----------
At 30
June 2021 4,271,640,186 400,932 299,292 396,923 1,406,599 12,933,447 15,036,261
----------------- -------------- ------------- --------- --------- ---------- ----------- -----------
At 30
June 2022 4,271,640,186 400,932 299,292 396,923 1,406,599 12,933,447 15,036,261
----------------- -------------- ------------- --------- --------- ---------- ----------- -----------
Both the Deferred shares and the New Deferred B shares have no
voting rights.
On 6 June 2018, the Company announced that members, at a General
meeting on the same day, had approved the completion of a Capital
Reorganisation which comprised the sub-division of shares whereby
each existing Ordinary Share of 0.1 pence each in the capital of
the Company was sub-divided into 1 New Ordinary Shares of 0.001
pence each and 1 Deferred B Share of 0.099 pence each. This
resulted in 1,420,806,859 New Ordinary Shares and 1,420,806,859
Deferred B Shares in issue.
16 SHARE BASED
PAYMENTS
Share options and warrants can be granted to selected Directors
and third-party service providers.
Share options and warrants outstanding at the end of the year have
the following expiry dates and exercisable prices:
Weighted Options Weighted Options and
Average Exercise and warrants Average Exercise warrants
Price Price
2022 2021
At 1 July
Granted - - 0.00075 500,000,000
----------------------- ------------------ ---------- --------------- ------------------ -------------
At 30 June 0.00075 500,000,000 0.00075 500,000,000
----------------------- ------------------ ---------- --------------- ------------------ -------------
Grant date Expiry Exercise Number of Number of
date price in options and options and
GBP per share warrants warrants
2022 2021
03-Jun-21* 02-Jun-23 0.00075 500,000,000 500,000,000
------------------
0.00075 500,000,000 500,000,000
----------------------- ------------------ ---------- --------------- ------------------ -------------
On 27th May 2021, the Company announced that it had raised a
gross amount of GBP500,000 through the placing of 1,000,000,000
ordinary shares of 0.001 pence each in the share capital of the
Company at 0.05 pence per Ordinary Share. For every two Placing
Shares they subscribed to, placees will also receive one warrant
over Ordinary Shares valid for 24 months from the date of issue
exercisable at 0.075 pence per Ordinary Share. The warrants awarded
did not fall under the scope of IFRS 2 therefore no share-based
payment expense has been recognised in the year ended 30 June
2022.
TRADE AND OTHER PAYABLES
17
GROUP COMPANY
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------- --------------------- -------- --------
Trade payables 54 54 17 17
Other payables 56 56 57 55
Social security and other taxes 35 46 - -
Accrued expenses 388 255 386 254
------------------------------------------------------ ------- --------------------- -------- --------
533 411 460 326
------------------------------------------------------ ------- --------------------- -------- --------
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
18 BORROWINGS
GROUP COMPANY
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- --------- -------- ----------
Current
Drawdown facility (see Note
1 below) 100 100 100 100
Total current borrowings 100 100 100 100
------------------------------------------------- --------- -------- -------- -------------
Note 1
The Drawdown facility relates to the facility entered into
during 2017 with YA Global Master SPV Limited. The facility is
unsecured and carries an implied interest rate of 10 per cent per
annum, repayable in 12 equal monthly instalments and has now
lapsed. The directors are seeking to renew.
On 30 April 2015, the Company issued warrants to subscribe for
9,283,364 new ordinary shares as part of the unsecured $3,000,000
Debt facility arrangement with YA Global Master SPV Limited ("YA
Global"). The issue of the warrants was triggered following the
drawdown of the initial Tranche 1, being $400,000, under the terms
of the agreement. The terms of the issue of warrants are governed
by the Debt Facility agreement, which specify that for every
tranche drawn down, the Company is required to issue 25% of the
value of the drawdown based on the interbank rate at the nearest
possible date and using the average Volume Weighted Average Price
("VWAP") of the Company for the five trading days immediately prior
the date of the agreement. Based on those terms, were the Company
to drawdown the remaining $2,600,000 they would be required to
issue further warrants to subscribe for an estimated total of
99,622,448 new ordinary shares. The Directors do not expect to use
the remaining facility in the foreseeable future.
19 ANALYSIS OF CHANGES IN NET DEBT As at Cashflows Acquired Repayment Non-Cash As at
1 July movement 30 June
GBP000s 2021 2022
Cash at
bank and
in hand 561 (401) - - - 160
-------- ---------- --------- ---------- ---------- ---------
As at Cashflows Acquired Repayment Non-Cash As at
1 July movement 30 June
GBP000s 2021 2022
Borrowings 100 - - - - 100
-------- ---------- --------- ---------- ---------- ---------
20 FINANCIAL INSTRUMENTS BY CATEGORY
2022 2021
GBP'000 GBP'000
-------------------------------------------------------------------- ------------------- --------------------------
FINANCIAL ASSETS AT AMORTISED COST :
-------------------------------------------------------------------- ------------------- --------------------------
Trade and other receivables (excluding prepayments, - -
VAT and corporation tax)
Cash and cash equivalents 160 561
------------------------------------------------------------------------------------------ ------------------- --------------------------
FINANCIAL LIABILITIES AT AMORTISED COST:
-------------------------------------------------------------------- ------------------- --------------------------
Trade and other payables 54 54
Borrowings 100 100
------------------------------------------------------------------------------------------ ------------------- --------------------------
The table providing an analysis of the maturity of the non-derivative
financial liabilities has been included in Note 3.
21 ULTIMATE CONTROLLING PARTY
At the date of signing this report the Directors do not
consider there to be one single ultimate controlling party.
22 RELATED PARTY TRANSACTIONS
See note 6 for details of director's remuneration in the
year.
During the year, NKJ Associates Ltd, a company in which N
Jagatia is a Director, charged consultancy fees of GBP40,000
(2021: GBP40,000). The amount owed to NKJ Associates Ltd
at year end is GBP112,000 (2021: GBP72,000).
Amount of fees due to John Gunn at 30 June 2021 was GBP240,000
(2021: GBP160,000) and the amount of fees due to Anthony
Samaha at 30 June 2022 was GBP10,000 (2021: GBP18,000).
Both John Gunn and Nilesh Jagatia are Directors of Global
Investment Strategy UK Limited (GIS) and GIS held cash in
its Inspirit Energy Holdings Plc's client account at 30 June
2022 totalling GBP134,276 (2021: GBP183,000) and this balance
is included in cash and cash equivalents.
23 EVENTS AFTER THE REPORTING DATE
On 8th December 2022, the Company announced that itentered
into a short-term, un-secured debt facility of up to US$250,000
(approximately GBP205,075) (the "Facility"). Under the Facility
Inspiritinitially draw down US$80,000 (approximately GBP65,624)
(the "Initial Advance"). The Facility is with Riverfort Global
Opportunities PCC Limited, and the proceeds of the advance
are for general working capital.
The Facility has a 12-month term and allows Inspirit to draw
down funds ("Advances") which will be repayable within 6 months
in either cash or shares at the Noteholders' discretion in
respect of the Initial Advance and thereafter at the agreement
of the Company and Riverfort. If the debt is repaid in shares,
they will be repaid at 130% of the Reference Price being the
average of the five (5) daily VWAPs preceding the Drawdown
Date in respect of the relevant Advance (the "Fixed Premium
Placing Price"). In the event that Inspirit completes any
share placing during the Term of the relevant Advance and
the share placing price is below the Fixed Premium Placing
Price, the Fixed Premium Placing Price will be amended to
be the relevant share placing price. Inspirit will issue the
Noteholder with warrants in respect of each Advance so as
to represent 50% of the value of the relevant Advance, divided
by the relevant Reference Price; the warrants will have an
exercise price of Fixed Premium Placing Price and a 48 month
term.
Inspirit drew down US$80,000 as the Initial Advance and issued
Riverfort with warrants to the value of 50% of the Initial
Advance at the reference price of 0.03376 pence being 97,191,943
warrants. These warrants will have a term of 48 months and
will be exercisable at 130% of the reference price being 0.04388
pence.
The Facility will attract 1.5% interest per month based on
the value of the outstanding indebtedness payable in cash
and an implementation fee of 6% of any Advances if settled
in cash or 8% if issued in Shares. Accordingly, Inspirit will
issued 15,550,710 Ordinary Shares of 0.001p each ("Shares")
at a price of 0.03376 pence each for the implementation fee
in respect of the Initial Advance (the "Initial Shares").
The Facility contains a right of first refusal clause allowing
Riverfort to match the terms of any alternative debt/ structured
funding the Company may seek during the term of the Facility.
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END
FR FLFFVLVITIIV
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January 09, 2023 02:00 ET (07:00 GMT)
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