Company Registration No. 05075088
Inspirit Energy Holdings Plc
ANNUAL REPORT AND FINANCIAL STATEMENTS
30 June 2013
Inspirit Energy Holdings Plc
Contents
Officers and Advisers
Chairman’s Statement
Directors’ Report
Statement of Directors’ Responsibilities
Corporate Governance
Report of the Independent Auditor
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Page
2
3
5
8
9
10
12
13
14
15
16
Inspirit Energy Holdings Plc
Officers and Advisers
DIRECTORS
(Non-executive Chairman)
D Lenigas
J Gunn
J Nazhat
N Jagatia
N Luke
SECRETARY
J Nazhat
REGISTERED OFFICE
2nd Floor
London Wall Buildings
London
EC2M 5PP
REGISTERED NUMBER
05075088
INDEPENDENT AUDITOR
REGISTRARS
SOLICITORS
NOMINATED ADVISER
PKF Littlejohn LLP
Statutory Auditor
1 Westferry Circus
Canary Wharf
London
E14 4HD
Share Registrars Limited
Suite E, First Floor
9 Lion and Lamb Yard
Farnham
Surrey
GU9 7LL
Nabarro LLP
Lacon House
84 Theobald’s Road
London
WC1X 8RW
Westhouse Securities Limited
110 Bishopgate
London
EC2N 4AY
WEBSITE
www.inspirit-energy.com
2
Inspirit Energy Holdings Plc
Chairman’s Statement
Introduction
Since Inspirit Energy Holding Plc’s (“Inspirit” or “the Company”) interim results, the Board has been
primarily focused on ensuring the business reduced its overheads and continued to implement its
investing policy in order to generate returns to shareholders.
Continued Research into Investment Opportunities
Following shareholder approval at the Company’s General Meeting on 23 July 2013, the Company
completed the acquisition of Inspirit Energy Limited (“Inspirit Energy”), which is now a wholly owned
subsidiary. Inspirit Energy is a company in the final stages of development of a micro combined heat
and power appliance (“the Appliance”). Inspirit Energy is in the process of formalising product
introduction plans with the aim of installing commercial boilers at key customer sites in the first half of
2014 with volume production targeted for the end of 2014.
Financial Results
The Financial Statements for the year to 30 June 2013 are set out in the following pages. The Financial
Statements show revenue of £7,300 (2012 - £26,446) and administrative expenses have increased by
approximately 30%. Exceptional legal and professional costs of £258,123 were incurred during the
year in connection with the acquisition of Inspirit Energy.
Changes to the Board of Directors
On 25 March 2013 Mr Nilesh Jagatia was appointed as an executive director and Chief Financial Officer
to the Company. Mr Jagatia has over 20 years experience including senior financial roles.
On 26 July 2013 Mr Neil Luke was appointed as a non-executive director. It was further announced on
2 September 2013 he had been appointed as an executive director and Chief Operating Officer to the
Company. Mr Luke has experience in a number of renowned businesses in the heating sector which
provide extensive experience of bringing development projects to market.
On 11 September 2013 Mr David Lenigas was appointed as non-executive Chairman of the Company.
Mr Lenigas replaces Mr John Gunn as executive Chairman who assumes the role of Chief Executive
Officer. Mr Lenigas has extensive experience operating in global public markets having served in a
senior executive capacity on many public company boards.
Company Finance
In connection with the re-admission of the Company and the reverse acquisition of Inspirit Energy, the
Company raised £410,000 (gross) by way of a subscription for 41.0 million new Ordinary Shares at a
price of 1 pence per ordinary share.
In addition to the above, on 29 August 2013 the Company raised a further £175,000 (gross) through
the issue of 13,461,537 of new Ordinary Shares at a price of 1.3 pence per share.
On 13 September 2013, the Company entered into a £472,000 Placing and an Equity Swap Agreement,
consisting of 16,857,142 ordinary shares, with YA Global Master SPV, Ltd. ("YAGM") at 2.8 pence per
share. Of this amount, £236,000 was paid back by the Company to YAGM under the Equity Swap
Agreement from which Inspirit is expected to receive a base amount of £19,666.67 per month for a 12
month period. The final amount of these monthly funds received by the Company under the Equity
Swap Agreement will be dependent on the future price performance of the Company's ordinary shares.
3
Inspirit Energy Holdings Plc
Chairman’s Statement (continued...)
The proceeds from the subscription will be used for general working capital purposes, including further
development of the Appliance.
Loan Notes
At the beginning of the financial year under review, Global Investment Strategy UK Limited (“GIS”) had
two loan note instruments dated 22 June 2010 and 22 November 2009 under which some of the debt
owing to GIS has been converted into shares in Inspirit during the year ended 30 June 2012. The
undiscounted debt outstanding on each of the loan note instruments as at 30 June 2013, excluding
interest, was £75,141 and £131,971 respectively. Since the year ended 30 June 2013, the Company
approved the conversion of all existing debt held with GIS and John Gunn into new ordinary shares.
D Lenigas
Non-executive Chairman
22 November 2013
4
Inspirit Energy Holdings Plc
Directors’ Report
For the year ended 30 June 2013
The Directors present their annual report and audited Financial Statements for the year ended 30 June
2013.
On 25 July 2013, the Company changed its name from KleenAir Systems International Plc to Inspirit
Energy Holdings Plc.
Principal Activity and Business Review
The principal activity of the Company during the year was that of an investment company which aims
to invest in disruptive products or technologies that are either proven or at the latter stages of
development, which own or have exclusive licence to the relevant intellectual property and may benefit
from feed-in tariffs or other renewable energy incentives.
The Business Review is included in the Non-executive Chairman’s Statement on pages 3 and 4.
Key Performance Indicators (KPIs)
The primary performance indicator applicable to the Company is a return based on targeting suitable
investments. This was not a key performance indicator in the period; however, it will be assessed during
2013/2014 and reported on in the 2014 Directors’ Report.
There are no non-financial performance indicators being used at present.
Future Developments
A review of activities together with future developments is provided in the Non-executive Chairman’s
Statement.
Risk and Uncertainties
The main risks and uncertainties that the Company faces are to find suitable acquisition opportunities
in line with the Company’s business development strategy (see also Note 3 to the Financial
Statements).
Results and Dividends
The results for the Company for the year are set out in the Statement of Comprehensive Income on
page 12. The Directors do not recommend the payment of a dividend.
Directors
The following have been Directors of the Company during the financial year ended 30 June 2013 and
up to the date of approval of these Financial Statements:
J Gunn
J Nazhat
N Jagatia
N Luke
D Lenigas
(appointed 25 March 2013)
(appointed 26 July 2013)
(appointed 11 September 2013)
Indemnity of Officers
The Company maintains appropriate insurance cover against legal action brought against its Directors
and officers.
5
Inspirit Energy Holdings Plc
Directors’ Report (continued...)
For the year ended 30 June 2013
Company’s Policy on Payment of Creditors
It is the Company’s normal practice to make payments to suppliers in accordance with agreed terms
provided that the supplier has performed in accordance with the relevant terms and conditions. At
30 June 2013, the number of creditor days in respect of trade creditors was 136 days (2012 – 50 days).
Going Concern
The Directors consider that the Company has adequate resources to continue in operational existence
for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing
the Financial Statements.
Financial Risk Management
The principal financial risk faced by the Company is liquidity risk. The Company’s financial instruments
included borrowings and cash which it used to finance its operations. At the year end, borrowings did
not include borrowings supplied from the bank. More information is given in Note 3 to the Financial
Statements. The Company has no significant concentrations of credit risk.
Directors’ Interests
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 and share options at the beginning and
end of the accounting year were:
Ordinary shares
Share options
Interest at
end of
year
No.
Interest at
start of
year or date
appointed
No.
9,240,160
7,290,160
Interest
at end of
year
No.
-
Interest at
start of
year or date
appointed
No.
-
J Gunn
6
Inspirit Energy Holdings Plc
Directors’ Report (continued...)
For the year ended 30 June 2013
Major Shareholdings
Shareholders holding more than 3% of the shares of the Company as at 21 November 2013 were:
John Gunn
Rothschild Nominees Limited
Hebolux S.A.
Events after the Reporting Period
Ordinary
shares
350,269,927
29,950,817
23,852,243
%
61.8
5.3
4.2
The events after the reporting period are set out in Note 22 to the Financial Statements.
Provision of Information to Auditor
So far as each of the Directors is aware at the time this report is approved:
there is no relevant audit information of which the Company's auditor are unaware; and
the Directors have taken all steps that they ought to have taken to make themselves aware of
any relevant audit information and to establish that the auditor is aware of that information.
Auditor
The auditor, PKF Littlejohn LLP (formerly named Littlejohn LLP), will be proposed for reappointment in
accordance with section 485 of the Companies Act 2006.
PKF Littlejohn LLP has signified its willingness to continue in office as auditor.
This report was approved and signed on behalf of the Board by:
J Nazhat
Director
22 November 2013
7
Inspirit Energy Holdings Plc
Statement of Directors’ Responsibilities
For the year ended 30 June 2013
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 elected to prepare the Company Financial Statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union. 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 Company and of the profit or loss 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 the Financial Statements comply with IFRSs as adopted by the European Union,
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 Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s transactions and disclose with reasonable accuracy at any time the financial
position of the 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 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 the Financial Statements may differ from legislation in other
jurisdictions. The Company is complaint with the AIM Rule 26 regarding the Company’s website.
8
Inspirit Energy Holdings Plc
Corporate Governance
For the year ended 30 June 2013
The Directors acknowledge the importance of the principles set out in the UK Corporate Governance
Code. Although the Corporate Governance requirements and disclosures are not compulsory for AIM
companies, the Directors have applied the principles as far as practicable and appropriate for a
relatively small public company as follows:
The 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 that Board procedures are followed and that applicable rules
and regulations are complied with.
Audit Committee and Remuneration Committee
The Audit Committee and the Remuneration Committee consists of one Non-Executive Director and
one Executive Director. The Audit Committee receives and reviews reports from management and the
Company’s auditor relating to the annual and interim accounts and the accounting and internal control
systems of the Company. The Audit Committee has unrestricted access to the Company’s auditor.
The Remuneration Committee reviews the performance of the Executive Directors, sets their
remuneration, determines the payment of bonuses to Executive Directors and considers the allocation
of share options to Directors and employees.
Internal Financial Control
The Board is responsible for establishing and maintaining the Company’s system of internal financial
control and places importance on maintaining a strong control environment. The key procedures which
the Directors have established with a view to providing effective internal financial control are as follows:
The Company’s organisational structure has clear lines of responsibility.
The Board is responsible for identifying the major business risks faced by the Company and
for determining the appropriate courses of action to manage those risks.
The Board is involved with structured operational reporting requirements.
The Directors recognise, however, that such a system of internal financial control can only provide
reasonable, not absolute, assurance against material misstatement or loss. The Directors have
reviewed the effectiveness of the system of internal financial control that will be operated by the
Company, and have concluded it is appropriate to the current level of operations.
Relations with Shareholders
Communications with shareholders are given high priority. The Board uses the Annual General Meeting
to communicate with investors and welcomes their participation. The Chairman aims to ensure that the
Directors are available at Annual General Meetings to answer questions.
Statement by Directors on Compliance with the Provisions of the UK Corporate Governance
Code
The Board considers that it has complied with the provisions of the UK Corporate Governance Code,
as far as practicable and appropriate for a public company of this size.
9
Inspirit Energy Holdings Plc
Report of the Independent Auditor
For the year ended 30 June 2013
Report of the Independent Auditor to the Members of Inspirit Energy Holdings Plc
We have audited the Financial Statements of Inspirit Energy Holdings Plc for the year ended 30 June
2013 which comprise the Statement of Comprehensive Income, the Statement of Financial Position,
the Statement of Cash Flows, the Statement of Changes in Equity and the related notes. The financial
reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
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.
Respective Responsibilities of Directors and Auditor
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for
the preparation of the Financial Statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the Financial Statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us
to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the Audit of the Financial Statements
An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements
sufficient to give reasonable assurance that the Financial Statements are free from material
misstatement, whether caused by fraud or error. This includes an assessment of whether the
accounting policies are appropriate to the Company’s circumstances and have been consistently
applied and adequately disclosed, the reasonableness of significant accounting estimates made by the
Directors, and the overall presentation of the Financial Statements. In addition, we read all the financial
and non-financial information in the Annual Report to identify material inconsistencies with the audited
Financial Statements. If we become aware of any apparent material misstatements or inconsistencies
we consider the implications for our report.
Opinion on Financial Statements
In our opinion the Financial Statements:
give a true and fair view of the state of the Company’s affairs as at 30 June 2013 and of its loss
for the year then ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union;
and
have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the Financial
Statements are prepared is consistent with the Financial Statements.
10
Inspirit Energy Holdings Plc
Report of the Independent Auditor (continued...)
For the year ended 30 June 2013
Matters on which we are required to Report by Exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires
us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not
been received from branches not visited by us; or
the 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.
Mark Ling (Senior statutory auditor)
For and on behalf of PKF Littlejohn LLP
Statutory auditor
22 November 2013
1 Westferry Circus
Canary Wharf
London E14 4HD
11
Inspirit Energy Holdings Plc
Statement of Comprehensive Income
For the year ended 30 June 2013
Note
Year ended
30 June 2013
£
Year ended
30 June 2012
£
Continuing Operations
Revenue
Cost of sales
Gross Profit
Administrative expenses
Exceptional expenses
Operating Loss
Finance income
Finance costs
Loss before Income Tax
Income Tax
Loss for the Year
4
7
7
7
8
8
9
Other comprehensive income
Total Comprehensive Income
for the Year
Total Comprehensive Income
attributable to:-
Equity shareholders of the Company
Earnings per share attributable to the
equity shareholders of the Company –
basic and diluted (pence per share)
10
7,300
-
───────
7,300
(169,842)
(258,123)
───────
(420,665)
4,047
(31,166)
_______
26,446
-
──────
26,446
(131,085)
-
──────
(104,639)
1,762
(32,072)
_______
(447,784)
(134,949)
-
───────
(447,784)
-
───────
(447,784)
══════
(447,784)
══════
(0.641)
______
-
──────
(134,949)
-
──────
(134,949)
═════
(134,949)
═════
(0.221)
______
The accounting policies and notes on pages 16 to 39 form part of these Financial Statements.
12
Inspirit Energy Holdings Plc
Statement of Financial Position
For the year ended 30 June 2013
Company Registration Number: 05075088
Assets
Non-Current Assets
Investments
Trade and other receivables
Current Assets
Trade and other receivables
Cash and cash equivalents
Current Liabilities
Trade and other payables
Borrowings
Net Current Liabilities
Note
2013
£
2012
£
11
12
12
13
14
15
740,000
124,515
_______
864,515
_______
34,962
34
_______
740,000
-
_______
740,000
_______
52,528
34
_______
34,996
52,562
367,868
-
_______
188,511
227,482
_______
(332,872)
_______
(363,431)
_______
Total Assets less Current Liabilities
531,643
376,569
Non-Current Liabilities
Trade and other payables
Borrowings
Equity Attributable to Shareholders
Share capital
Share premium
Other reserves
Retained loss
Total Equity
14
15
16
16
411,247
52,329
_______
68,067
_______
-
-
_______
376,569
_______
471,283
4,011,515
109,522
(4,524,253)
________
460,747
3,887,762
104,529
(4,076,469)
________
68,067
________
376,569
________
The Financial Statements were approved and authorised for issue by the Board of Directors
on 22 November 2013 and were signed on its behalf by:
J Nazhat
Director
The accounting policies and notes on pages 16 to 39 form part of these Financial Statements.
13
Inspirit Energy Holdings Plc
Statement of Changes in Equity
For the year ended 30 June 2013
Attributable to the equity shareholders of the Company
Share
Capital
£
Share
Premium
£
Shares to
be issued
£
Other
Reserves
£
Retained
Loss
£
Total
£
At 1 July 2011
Total comprehensive income
for the year
Conversion of convertible
loan
452,419
_______
3,671,231
________
3,232
_____
124,492
______
(3,941,520)
________
309,854
_______
-
_______
-
________
-
_____
-
______
(134,949)
________
(134,949)
_______
8,328
_______
216,531
________
-
_____
(23,195)
______
-
________
201,664
_______
Transactions with owners
8,328
_______
216,531
________
-
_____
(23,195)
______
-
________
201,664
_______
At 30 June 2012
460,747
_______
3,887,762
________
3,232
_____
101,297
______
(4,076,469)
________
376,569
_______
At 1 July 2012
Total comprehensive
income for the year
Shares issued
Share based payments
Conversion of convertible
loan
460,747
_______
3,887,762
________
3,232
_____
101,297
______
(4,076,469)
________
376,569
_______
-
_______
-
________
-
_____
-
______
(447,784)
________
(447,784)
_______
8,333
613
91,667
17,776
-
-
-
19,399
-
-
100,000
37,788
1,590
_______
14,310
________
-
_____
(14,406)
______
-
________
1,494
_______
Transactions with owners
10,536
_______
123,753
________
-
_____
4,993
______
-
________
139,282
_______
At 30 June 2013
471,283
4,011,515
3,232
_____
106,290
(4,524,253)
68,067
_______
_______
________
_______
________
The accounting policies and notes on pages 16 to 39 form part of these Financial Statements.
14
Inspirit Energy Holdings Plc
Statement of Changes in Equity
For the year ended 30 June 2013
15
Inspirit Energy Holdings Plc
Statement of Cash Flows
For the year ended 30 June 2013
Cash Flows from Operating Activities
Loss before tax
Finance income
Finance costs
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Net Cash used in Operating Activities
Cash Flows from Investing Activities
Interest received
Net Cash used in Investing Activities
Cash Flows from Financing Activities
Proceeds from issue of shares
Net cash from Financing Activities
Year ended
30 June
2013
£
Note
Year ended
30 June
2012
£
(447,784)
(4,047)
31,166
(106,949)
427,614
_______
(100,000)
_______
-
_______
-
_______
100,000
_______
100,000
_______
(134,949)
(1,762)
32,072
10,120
62,053
_______
(32,466)
_______
479
_______
479
_______
-
_______
-
_______
Net decrease in cash and cash equivalents
-
(31,987)
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
13
34
_______
34
_______
32,021
_______
34
_______
Major non cash transactions:
Convertible loans of £15,900 were converted into shares during the year ended 30 June 2013 (2012 -
£224,859). In total 1,590,000 (2012 - 8,328,125) new ordinary shares were issued with a total value
including share premium of £15,900 (2012 - £224,859).
On 2 July 2012 and 24 September 2012, the Company issued 412,982 and 200,000 ordinary shares,
respectively, fully paid at 0.01 pence per share, in settlement of financial advisor fees. The aggregate
value of these shares was £12,389 and £6,000, respectively, and calculated by reference to the fair
value of services rendered and outstanding.
The accounting policies and notes on pages 16 to 39 form part of these Financial Statements.
16
Inspirit Energy Holdings Plc
Notes to the Financial Statements
For the year ended 30 June 2013
1.
GENERAL INFORMATION
Inspirit Energy Holdings Plc is a Company incorporated in England & Wales. The Company’s
shares are traded on AIM, a market operated by the London Stock Exchange. The address of
the registered office is disclosed on page 2 of the Financial Statements. The principal activities
of the Company are described in the Directors’ Report.
2.
ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are
set out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
2.1
Basis of Preparation
These Financial Statements have been prepared in accordance with International Financial
Reporting Standards and IFRIC interpretations issued by the International Accounting
Standards Board (IASB), as adopted by the European Union, and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS. The Financial Statements
have been prepared under the historical cost convention. The Financial Statements are
presented in pounds sterling, rounded to the nearest pound. Sterling is the functional currency
of the Company.
The preparation of Financial Statements in conformity with IFRSs requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the
process of applying the 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 2.18 to these Financial Statements.
Going Concern
The Company’s business activities, together with the factors likely to affect its future
development, performance and position are set out in the Chairman’s Statement and Directors’
Report. In addition, Note 3 to the Financial Statements include the Company’s financial risk
management objectives and policies for managing its capital.
The Company entered into an unsecured loan facility on 28 June 2013 with Global Investment
Strategy UK Limited (“GIS”) for an aggregate maximum amount of £350,000. Amounts may be
drawdown at the discretion of the Company. Interest is payable on any drawdown at 5 per cent
above the base rate of HSBC Bank plc. Any amount drawdown under the loan facility shall be
repayable 18 months from the date of the loan facility.
On 28 June 2013, the Company also entered into a Discretionary Drawdown Facility (“DDF”)
with Mr D Lenigas (non-executive Chairman) which provides the Company with an equity facility
up to a maximum aggregate limit of £70,000. The facility is available for drawdown at any time,
and for any specified amount at the Company’s discretion, up to 17 May 2015. Mr D Lenigas is
entitled to commission at 6.0% of any amount received by the Company in accordance with the
terms of the facility.
In connection with the AIM re-admission and acquisition of Inspirit Energy Limited, the
Company raised £410,000 (gross) by way of a subscription for 41.0 million new ordinary shares
at a price of 1 pence per ordinary share. The proceeds from the subscription will be used for
general working capital purposes.
17
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
2.
ACCOUNTING POLICIES (continued…)
2.1
Basis of Preparation (continued...)
In addition, on 29 August 2013 the Company raised a further £175,000 (gross) through the
issue of 13,461,537 of new ordinary shares at a price of 1.3 pence per share.
The Company has secured further funding by entering into a placing for £472,000 and an Equity
Swap Agreement with YA Global Master SPV, Ltd. ("YAGM") at 2.8 pence per share. YAGM
subscribed for a total of 16,857,142 new ordinary shares at a price of 2.8 pence per share for
a gross consideration of £472,000. Of this amount, £236,000 will be paid back to YAGM under
the Equity Swap Agreement from which the Company is expected to receive a base amount of
£19,666.67 per month for a 12 month period.
On 4 September 2013, the Company approved the conversion of all existing debt held with GIS
and John Gunn (executive director). The total debt and accrued interest of £706,680 (including
the liabilities of Inspirit Energy Limited) was satisfied by the allotment of 54,360,019 new
ordinary shares in the Company at a conversion price of 1.3 pence per share.
The Company’s forecasts and projections, taking into account reasonably possible changes in
trading performance, show that the Company should be able to operate with the cash funds
and facilities. The Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future. Thus they continue to
adopt the going concern basis of accounting in preparing the Financial Statements.
2.2
Changes in Accounting Policy and Disclosures
(i) New and amended standards adopted by the Company
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial
year beginning on or after 1 July 2012 that have a material impact on the Company.
(ii) New and amended standards, and interpretations mandatory for the first time for the
financial year beginning 1 July 2012, but not currently relevant to the Company
A number of new standards and amendments to standards and interpretations are effective for
annual periods beginning 1 July 2012, and have not been applied in preparing these Financial
Statements. None of these is expected to have a significant effect on the financial statements
of the Company.
Amendments to IFRS 1, ‘First time adoption’ on fixed dates and hyperinflation. The first
amendment replaces references to a fixed date of 1 January 2004 with ‘’the date of transition
to IFRSs”, thus eliminating the need for companies adopting IFRSs for the first time to restate
derecognition transactions that occurred before the date of transition to IFRSs. The second
amendment provides guidance on how an entity should resume presenting financial statements
in accordance with IFRSs after a period when the entity was unable to comply with IFRSs
because its functional currency was subject to severe hyperinflation.
IFRS 7, ‘Financial instruments: Disclosures’ was amended in October 2012 for the transfer of
financial assets. These amendments are as part of the IASB’s comprehensive review of off
Statement of Financial Position activities. The amendments promote transparency in the
reporting of transfer transactions and improve users’ understanding of the risk exposures
relating to transfers of financial assets and the effect of those risks on an entity’s financial
position, particularly those involving securitisation of financial assets.
18
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
2.
ACCOUNTING POLICIES (continued…)
2.2
Changes in Accounting Policy and Disclosures (continued...)
Amendments to IAS 12, ‘Income Taxes’ on deferred tax. Currently IAS 12 requires an entity to
measure the deferred tax relating to an asset depending on whether the entity expects to
recover the carrying amount of the asset through use or sale. It can be difficult and subjective
to assess whether recovery will be through use or through sale when the asset is measured
using the fair value model in IAS 40 Investment Property. Hence this amendment introduces
an exception to the existing principle for the measurement of deferred tax assets or liabilities
arising on investment property measured at fair value. As a result of the amendments, SIC 21,
‘income taxes – recovery of revalued non-depreciable assets’, would no longer apply to
investment properties carried at fair value. The amendments also incorporate into IAS 12 the
remaining guidance previously contained in SIC 21, which is accordingly withdrawn.
Amendment to IAS 1, ‘Financial statement presentation’ regarding other comprehensive
income. The main change resulting from these amendments is a requirement for entities to
group items presented in ‘other comprehensive income’ (OCI) on the basis of whether they are
potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The
amendments do not address which items are presented in OCI.
(iii) New and amended standards and interpretations issued but not yet effective and not early
adopted
The standards and interpretations that are issued, but not yet effective, up to the date of
issuance of the Financial Statements are disclosed below. The Company intends to adopt these
standards, if applicable, when they become effective. Unless stated, none of these are
expected to have a significant effect on the Financial Statements of the Company.
IAS 19, ‘Employee benefits’, was amended in June 2011. The amendments eliminate the option
to defer the recognition of gains and losses, known as the ‘corridor method’; streamline the
presentation of changes in assets and liabilities arising from defined benefit plans, including
requiring re-measurements to be presented in other comprehensive income; and enhance the
disclosure requirements for defined benefit plans, providing better information about the
characteristics of defined benefit plans and the risks that entities are exposed to through
participation in those plans. The amendment becomes effective for annual periods beginning
on or after 1 January 2013.
Amendment to IFRS 1, ‘First-time Adoption of International Financial Reporting Standards’ on
government loans. This amendment addresses how first-time adopters would account for a
government loan with a below-market rate of interest when transitioning to IFRS. It also adds
an exception to the retrospective application of IFRS, which provides the same relief to first
time adopters granted to existing preparers of IFRS Financial Statements when the requirement
was incorporated into IAS 20 ‘Accounting for Government Grants and Disclosure of
Government Assistance’ in 2008. The amendment is effective for the accounting period
beginning on or after 1 January 2013.
IFRS 7, ‘Financial Instruments: Disclosures’ was amended for asset and liability offsetting. This
amendment requires disclosure of information that will enable users of financial statements to
evaluate the effect or potential effect of netting arrangements, including rights of set-off
associated with the entity’s recognised financial assets and recognised financial liabilities, on
the entity’s financial position. The amendment is effective for the accounting period beginning
on or after 1 January 2013.
19
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
2.
ACCOUNTING POLICIES (continued…)
2.2
Changes in Accounting Policy and Disclosures (continued...)
IFRS 10, ‘Consolidated financial statements’, builds on existing principles by identifying the
concept of control as the determining factor in whether an entity should be included within the
consolidated financial statements of the parent company. The standard provides additional
guidance to assist in the determination of control where this is difficult to assess. The Company
is yet to assess IFRS 10’s full impact and intends to adopt IFRS 10 no later than the accounting
period beginning on or after 1 January 2013.
IFRS 11, ‘Joint Arrangements’ provides for a more realistic reflection of joint arrangements by
focusing on the rights and obligations of the arrangement, rather than its legal form. There are
two types of joint arrangement; joint operations and joint ventures. Joint operations arise where
a joint operator has rights to the assets and obligations relating to the arrangement and
therefore accounts for its share of assets, liabilities, revenue and expenses. Joint ventures arise
where the joint venture has rights to the net assets of the arrangement and therefore equity
accounts for its interest. Proportional consolidation of joint ventures is no longer allowed. The
Company is yet to assess IFRS 11’s full impact and intends to adopt IFRS 11 no later than the
accounting period beginning on or after 1 January 2013.
IFRS 12, ‘Disclosures of interests in other entities’, includes the disclosure requirements for all
forms of interests in entities, including joint arrangements, associates, special purpose vehicles
and other off Statement of Financial Position vehicles. The Company is yet to assess IFRS 12’s
full impact and intends to adopt IFRS 12 no later than the accounting period beginning on or
after 1 January 2013.
Amendments to IFRS 10, ‘Consolidated Financial Statements’, IFRS 11, ‘Joint Arrangements
and IFRS 12, ‘Disclosure of Interests in Other Entities’, provide additional transition relief to
IFRSs 10,11 and 12 by limiting the requirement to provide adjusted comparative information to
only the preceding comparative period. For disclosures related to unconsolidated structured
entities, the amendments will remove the requirement to present comparative information for
periods before IFRS 12 is first applied. The Company is yet to assess the full impact of these
amendments and intends to adopt the amended standards no later than the accounting period
beginning on or after 1 January 2013.
Amendments to IFRS 10 “Consolidated Financial Statements”, IFRS 12 “Disclosure of Interests
in Other Entities” and IAS 27 “Separate Financial Statements” define an investment entity and
introduce an exception to consolidating particular subsidiaries for investment entities. These
amendments require an investment entity to measure those subsidiaries at fair value through
profit or loss in accordance with IFRS 9, ‘Financial Instruments’, in its consolidated and separate
financial statements. The amendments also introduce new disclosure requirements for
investment entities in IFRS 12 and IAS 27. The Company is yet to assess the full impact of
these amendments and intends to adopt the amended standards no later than the accounting
period beginning on or after 1 January 2014.
IFRS 13, ‘Fair value measurement’, aims to provide consistency and reduce complexity by
providing a precise definition of fair value and a single source of fair value measurement and
disclosure requirements for use across IFRSs. The requirements, which are largely aligned
between IFRS and US GAAP, do not extend the use of fair value accounting but provide
guidance on how it should be applied where its use is already required or permitted by other
standards with IFRSs or US GAAP. The standard becomes effective for annual periods
beginning on or after 1 January 2013.
20
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
2.
ACCOUNTING POLICIES (continued…)
2.2
Changes in Accounting Policy and Disclosures (continued...)
IAS 27, ‘Separate Financial Statements’, replaces the current version of IAS 27, ‘Consolidated
and Separate Financial Statements’ as a result of the issue of IFRS 10. The revised standard
includes the requirements relating to separate financial statements. The revised standard
becomes effective for annual periods beginning on or after 1 January 2013.
IAS 28, ‘Investments in Associates and Joint Ventures’, replaces the current version of IAS 28,
’Investments in Associates’, as a result of the issue of IFRS 11. The revised standard includes
the requirements for associates and joint ventures that have to be equity accounted following
the issue of IFRS 1. The revised standard becomes effective for accounting period beginning
on or after 1 January 2013.
Amendments to IAS 36 “Impairment of Assets” require additional information about the fair
value measurement when the recoverable amount of impaired assets is based on fair value
less costs of disposal. The amendments also incorporate the requirement for an entity to
disclose the discount rates that have been used in the current and previous measurements if
the recoverable amount of impaired assets based on fair value less costs of disposal was
measured using a present value technique. The amendments become effective for accounting
periods beginning on or after 1 January 2014.
Amendments to IAS 39 “Financial Instruments: Recognition and Measurement” introduce a
narrow-scope exception to the requirement for the discontinuation of hedge accounting. The
amendments allow hedge accounting to continue in a situation where a derivative that has been
designated as a hedging instrument is novated from one counterparty to a central counterparty,
as a consequence of new laws or regulations if specific conditions are met. This relief has been
introduced in response to legislative change across many jurisdictions that would lead to the
widespread novation of over-the-counter derivatives. The amendments become effective for
accounting periods beginning on or after 1 January 2014.
IFRS 9, ‘Financial Instruments’, addresses the classification, measurement and recognition of
financial assets and financial liabilities. IFRS 9 was issued in November 2009 and October
2010. It replaces parts of IAS 39 that relate to the classification and measurement of financial
instruments. IFRS 9 requires financial assets to be classified into two measurement categories:
those measured as at fair value and those measured at amortised cost. The determination is
made at initial recognition. The classification depends on the entity’s business model for
managing its financial instruments and the contractual cash flow characteristics for the
instrument. For financial liabilities, the standard retains most of the IAS 39 requirements.
The main change is that, in cases where the fair value option is taken for financial liabilities, the
part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive
income rather than the income statement, unless this creates an accounting mismatch. The
Company is yet to assess IFRS 9’s full impact and intends to adopt IFRS 9 no later than the
accounting period beginning on or after 1 January 2015, subject to endorsement by the EU.
The Company will also consider the impact of the remaining phases of IFRS 9 when completed
by the Board.
21
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
2.
ACCOUNTING POLICIES (continued…)
2.2
Changes in Accounting Policy and Disclosures (continued...)
Amendments to IAS 32, ‘Financial Instruments: Presentation’, add application guidance to
address inconsistencies identified in applying some of the criteria when offsetting financial
assets and financial liabilities. This includes clarifying the meaning of ‘’currently has a legally
enforceable right of set-off” and that some gross settlement systems may be considered
equivalent to net settlement. The Company is yet to assess the full impact of the amendments
to IAS 32 and intends to adopt the amended standard no later than the accounting period
beginning on or after 1 January 2014.
IFRIC 21 “Levies” addresses the accounting for a liability to pay a levy if that liability is within
the scope of IAS 37. The interpretation also addresses the accounting for a liability to pay a
levy whose timing and amount is certain. The amendment intends to be adopted no later than
the accounting periods beginning on or after 1 January 2014.
‘Annual Improvements 2009–2011 Cycle’ sets out amendments to various IFRSs as follows:
An amendment to IFRS 1, ‘First-time Adoption’ clarifies whether an entity may apply
IFRS 1:
(a) if the entity meets the criteria for applying IFRS 1 and has applied IFRS 1 in a
previous reporting period; or
(b) if the entity meets the criteria for applying IFRS 1 and has applied IFRSs in a
previous reporting period when IFRS 1 did not exist.
The amendment to IFRS 1 also addresses the transitional provisions for borrowing
costs relating to qualifying assets for which the commencement date for
capitalisation was before the date of transition to IFRSs.
An amendment to IAS 1, ‘Presentation of Financial Statements’ clarifies the
requirements for providing comparative information:
(a) for the opening Statement of Financial Position when an entity changes accounting
policies, or makes retrospective restatements or reclassifications; and
(b) when an entity provides Financial Statements beyond the minimum comparative
information requirements.
An amendment to IAS 16, ‘Property, Plant and Equipment’ addresses a perceived
inconsistency in the classification requirements for servicing equipment.
An amendment to IAS 32, ‘Financial Instruments: Presentation’ addresses
perceived inconsistencies between IAS 12, ‘Income Taxes’ and IAS 32 with regard
to recognising the consequences of income tax relating to distributions to holders
of an equity instrument and to transaction costs of an equity transaction.
An amendment to IAS 34, ‘Interim Financial Reporting’ clarifies the requirements
on segment information for total assets and liabilities for each reportable segment.
The Company intends to adopt the amended standards no later than the accounting period
beginning on or after 1 January 2013.
22
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
2.
ACCOUNTING POLICIES (continued…)
2.3
Revenue Recognition
Revenue comprises the fair value of the consideration received or receivable for the provision
of corporate services in the ordinary course of the Company’s activities. Revenue is shown net
of Value Added Tax.
2.4
Current and Deferred Tax
The Company’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period based on the profit or loss for the
period.
Deferred income tax is provided in full, using the liability method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the
Financial Statements. Deferred income tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability
is settled. Deferred income tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be utilised.
2.5
Operating Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the
lessor are classified as operating leases.
Payments made under operating leases are charged to the Statement of Comprehensive
Income on a straight line basis over the period of the lease.
2.6
Segment Reporting
The Company currently has one segment, being an investment holding company. All activities
are within the United Kingdom.
2.7
Investments
Equity investments not held for trading are stated at cost as they are unlisted and their fair
values cannot be reliably determined.
2.8
Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and at bank.
2.9
Trade and Other Receivables
Trade and other receivables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method, less provision for impairment. A provision
for impairment is established when there is objective evidence that the Company will not be
able to collect all amounts due according to the original terms of the receivables.
23
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
2.
ACCOUNTING POLICIES (continued…)
2.10
Trade and Other Payables
Trade and other payables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method.
2.11 Borrowings
Borrowings are recognised initially at fair value. 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.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan
to the extent that it is probable that some or all of the facility will be drawn down. To the extent
that there is no evidence that it is probable that some or all of the facility will be drawn down,
the fee is capitalised as a prepayment for liquidity services, and amortised over the period of
the facility to which it relates.
Borrowings are classified as current liabilities, unless the Company has an unconditional right
to defer settlement of the liability for at least 12 months after the end of the reporting period.
2.12
Financial Instruments
Financial assets comprise investments in equity securities (available for sale), trade and other
receivables (loans and receivables) and cash and cash equivalents. Financial liabilities
comprise trade and other payables (at amortised cost) and borrowings.
A financial instrument is recognised when the Company becomes a party to the contractual
provisions of the instrument. Financial assets are derecognised if the Company’s contractual
rights to the cash flows from the financial assets expire or if the Company transfers the financial
assets to another party without retaining control or substantially all risks and rewards of the
asset. Financial liabilities are derecognised if the Company’s obligations specified in the
contract expire or are discharged or cancelled.
24
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
2.
ACCOUNTING POLICIES (continued…)
2.13 Compound Financial Instruments
Compound financial instruments issued by the Company comprise convertible loan notes that
can be converted to share capital at the option of the holder, and the number of shares to be
issued does not vary with changes in their fair value.
Where material, the liability component of a compound financial instrument is measured initially
at the fair value of a similar liability that does not have an equity conversion option.
The equity component is recognised initially at the difference between the fair value of the
compound financial instrument as a whole and the fair value of the liability component. Any
directly attributable transaction costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is
measured at amortised cost using the effective interest method. The equity component of a
compound financial instrument is not re-measured subsequent to initial recognition except on
conversion or expiry.
Borrowings are classified as current liabilities unless the Company has an unconditional right
to defer settlement of the liability in cash for at least 12 months after the end of the reporting
period.
2.14
Fair Values
The carrying amounts of the financial assets and liabilities such as cash and cash equivalents,
receivables and payables of the Company at the reporting date approximate to their fair values,
due to the relatively short term nature of these financial instruments.
25
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
2.
ACCOUNTING POLICIES (continued…)
2.15
Share Based Payments
The Company 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 Company. The Company 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 income statement 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 the share premium account 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 income statement 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.
2.16
Share Capital
Equity instruments issued by the Company are recorded at the proceeds received, net of any
direct issue costs.
Share capital is classified as equity and is the amount subscribed for shares at nominal value.
The B ordinary shares rank pari passu in all respects with the ordinary shares, save that the
holder or holders of B ordinary shares shall not have the right to attend and vote at general
meetings of the Company (save in respect of resolutions to vary the rights attaching to the B
ordinary shares). Holders of B ordinary shares have the option to convert their interests in B
ordinary shares at any time, and from time to time, into ordinary shares on a 1 for 1 basis.
Deferred shares have no righting votes and have no rights to dividends. Deferred shares only
have very limited rights on a return of capital and are not freely transferable.
Share premium represents the excess of the amount subscribed for share capital over the
nominal value of the respective shares.
26
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
2.
ACCOUNTING POLICIES (continued…)
2.17 Reserves
Retained loss represents the cumulative loss of the Company attributable to equity
shareholders.
Other reserves represent the equity component of convertible loans and the share option
reserve.
2.18 Critical Accounting 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.
Actual results may differ from these estimates. The estimates and assumptions which have a
significant risk of causing a material adjustment to the carrying amount of assets and liabilities
are discussed below:
(a) Impairment of investments
Investments are reviewed for impairment if events or changes in circumstances indicate that
the carrying amount may not be recoverable. 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. Following the Directors’ assessment,
no impairment was considered necessary.
(b) Interest rate applicable to financial instruments of comparable credit status
In order to calculate the split for convertible loans between the financial liability and equity
components, management is required to discount the contractual stream of future cash
flows under the convertible loan note instrument at an estimated rate of interest applicable
to instruments which do not have any associated conversion option.
(c) Share Based Payments
The fair value of options and warrants is determined by reference to the fair value of the
options and warrants granted, excluding the impact of any non-market vesting conditions.
In accordance with IFRS 2 ‘Share Based Payments’, the Company has recognised the fair
value of options and warrants, calculated using the Black-Scholes option pricing model. The
Directors have made assumptions particularly regarding the volatility of the share price at
the grant date in order to reach a fair value. Further information is disclosed in Note 17.
27
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
3.
FINANCIAL RISK MANAGEMENT
General Objectives, Policies and Processes
The Board has overall responsibility for the determination of the Company’s risk management
objectives and policies. The Company operates informal treasury policies which include
ongoing assessments of interest rate management and borrowing policy.
The Company is exposed through its operations to the following financial risks:
Liquidity risk; and
•
• Credit risk.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible
without unduly affecting the Company’s flexibility. There have been no substantive changes in
the Company’s exposure to financial instrument risks, its objectives, policies and processes for
managing those risks or the methods used to measure them from previous periods unless
otherwise stated in this note. Further details regarding these policies are set out below:
Principal Financial Instruments
The principal financial instruments used by the Company, from which financial instrument risk
arises, are as follows:
•
•
•
•
Trade and other receivables;
Cash and cash equivalents;
Trade and other payables;
Convertible loan notes.
Liquidity Risk
The Company’s policy is to ensure that it will always have sufficient cash to allow it to meet its
liabilities when they become due. To achieve this aim, it seeks to maintain readily available
cash balances to meet expected requirements for a period of at least 60 days. The Company’s
current borrowings are all in the form of fixed interest convertible loan notes.
Rolling cash forecasts identifying the liquidity requirements of the Company are produced
frequently. These are reviewed regularly by management and the Board to ensure that
sufficient financial headroom exists for at least a twelve month period.
Credit Risk
Credit risk arises from cash and cash equivalents as well as outstanding receivables.
Management does not expect any losses from non-performance of these receivables.
The amount of exposure to any individual counter party is subject to a limit, which is assessed
by the Board.
The Company considers the credit ratings of banks in which it holds funds in order to reduce
exposure to credit risk.
28
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
3.
FINANCIAL RISK MANAGEMENT (continued…)
Capital Risk Management
The Company’s objectives when managing capital are to safeguard the Company’s ability to
continue as a going concern, to make future investments and provide a return for shareholders.
The Company monitors its level of cash resources available against future expenses and may
issue new shares or create new convertible loan note instruments in order to raise further funds
from time to time. No quantitative analysis is currently applicable based upon the Company’s
current operations.
4.
REVENUE
Revenues during the year comprise the provision of corporate services to Global Investment
Strategy UK Limited. All income is generated in the United Kingdom.
5.
EMPLOYEES
The average number of staff employed by the Company
during the year amounted to:
Executive Directors
Non-executive Directors
Employees
Wages and salaries (including Directors’ fees)
Social security costs
6.
DIRECTORS’ REMUNERATION
J Gunn
S Pozner
D Pinckney
J Nazhat
N Jagatia
Year ended
30 June
2013
No.
Year ended
30 June
2012
No.
3
-
1
___
4
___
51,700
2,752
_____
£54,452
_____
2
1
-
___
3
___
34,000
-
_____
£34,000
_____
Salary and Fees
Year ended
30 June
2013
£
-
-
-
22,500
3,000
______
Year ended
30 June
2012
£
-
13,591
5,000
11,715
-
______
25,500
______
30,306
______
The Company does not operate a pension scheme and no contributions were paid during the
year.
29
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
7.
EXPENSES BY NATURE
Directors’ remuneration and fees (note 6)
Salaries and wages (note 5)
Social security costs (note 5)
Audit and other fees
Professional and consultancy fees
Other expenses
Exceptional expenses (see below)
Year ended
30 June
2013
£
Year ended
30 June
2012
£
25,500
26,200
2,752
14,300
100,293
797
______
169,842
______
258,123
______
30,306
3,694
-
13,150
61,397
22,538
______
131,085
______
-
______
Exceptional expenses consist of legal and professional fees incurred during the year on the
acquisition of Inspirit Energy Limited (see Note 22 for further details) and re-admission of the
Company to AIM.
AUDITOR’S REMUNERATION
Operating loss is stated after charging:
Fees payable to the Company’s Auditor for the audit of the
Company
12,500
12,100
Fees payable to the Company’s Auditor for other services:
Taxation compliance services
Corporate finance services
Other assurance services
8.
FINANCE INCOME AND COSTS
Finance Costs
Convertible loans (see below)
Convertible loans (Note 15)
Finance Income
Loan to related party
1,050
28,050
750
_____
-
31,166
______
31,166
______
4,047
______
1,050
-
-
_____
7,394
24,678
______
32,072
______
1,762
______
Interest on convertible loans, not split between liabilities and equity based on materiality, was
included within accruals during the year ended 30 June 2012.
30
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
9.
INCOME TAX EXPENSE
Due to the losses in the accounting periods presented, no income tax liability has arisen.
Factors affecting current tax charge:
The tax on the Company’s loss on continuing operations differs from the theoretical amount
that would arise using the weighted average tax rate of 20% (2012 – 20%) to losses of the
entity as follows:
Loss for the year
Loss for the year multiplied by rate of tax
Expenses not deductible for tax purposes
Unutilised losses
Total current tax
Year ended
30 June
2013
£
Year ended
30 June
2012
£
(447,784)
_______
(134,949)
______
(89,557)
57,379
32,178
______
-
______
(26,990)
-
26,990
______
-
______
The Company has excess management expenses of approximately £1,379,000 (2012 -
£1,216,000), capital losses of £150,000 (2012 - £150,000) and non-trade financial losses of
approximately £119,000 (2012 - £92,000) 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.
10.
EARNINGS PER SHARE
Loss 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 loss per share for the year are based upon the loss for
the year of £447,784 (2012 - £134,949). The weighted number of equity shares in issue during
the year was 69,818,036 (2012 – 61,200,460).
In accordance with IAS 33, basic and diluted earnings per share are identical as the effect of
the exercise of share options and warrants and convertible debt would be to decrease the loss
per share and are therefore deemed anti-dilutive. Details of convertible loans and share options
that could potentially dilute earnings per share in future periods are set out in Notes 15, 17 and
22.
31
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
11.
INVESTMENTS
As at 1 July
As at 30 June
30 June
2013
£
30 June
2012
£
740,000
_______
740,000
_______
740,000
_______
740,000
_______
During the year ended 30 June 2011, the Company purchased equity shares at a cost of
£740,000 in Inspirit Energy Limited, an unlisted company registered in the United Kingdom
operating in the Clean Tech and Renewables sector. As at 30 June 2013 the Company owned
a total of 2,596,666 shares in Inspirit Energy Limited, representing approximately 17% of the
total shares in issue.
12.
TRADE AND OTHER RECEIVABLES
Loans due from related parties
VAT repayable
Prepayments and accrued income
Less non-current portion
Current portion
30 June
2013
£
124,515
26,810
8,152
_______
159,477
(124,515)
_______
34,962
_______
30 June
2012
£
40,435
50
12,043
_______
52,528
-
_______
52,528
_______
All trade and other receivables are denominated in Sterling. The maximum exposure to credit
risk at the reporting date is the carrying value of each class of receivable mentioned above.
The Company does not hold any collateral as security.
The Company entered into a revised loan agreement on 28 June 2013 with Inspirit Energy
Limited in relation to a series of loans provided by the Company to Inspirit Energy Limited
between 23 May 2011 and 28 June 2013. Interest is receivable on the loan amount at 7 per
cent per annum. As at 30 June 2013, the aggregate amount outstanding from Inspirit Energy
Limited is £101,234. The loan agreement terminates on 23 May 2015, when all outstanding
monies under the loan agreement become payable.
32
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
13.
CASH AND CASH EQUIVALENTS
Cash at bank
30 June
2013
£
34
_______
30 June
2012
£
34
_______
All of the Company’s cash at bank is held with institutions with an AA credit rating.
14.
TRADE AND OTHER PAYABLES
Current
Trade payables
Amount due to related parties
Other payables
Accruals and deferred income
Non-current
Amount due to related parties
30 June
2013
£
30 June
2012
£
160,907
-
8,749
198,212
______
367,868
______
411,247
______
411,247
______
18,034
132,784
2,039
35,654
______
188,511
______
-
______
-
______
The Company entered into a loan agreement on 28 June 2013 with Global Investment Strategy
UK Limited (“GIS”) in relation to a £45,000 loan provided by GIS to the Company between 2
February 2012 and 13 February 2012. Interest is payable on the loan amount at 7 per cent per
annum. As at 30 June 2013, a total aggregate amount of £34,636 was outstanding, including
£3,636 of interest under the loan agreement. The loan agreement terminates on 31 July 2015,
when all outstanding monies under the loan agreement become payable.
Included in ‘Amounts due to Related Parties’ is a balance due to GIS for £110,094, including
interest of £4,515. Also included within ‘Amount due to Related Parties’ are amounts totalling
£266,517 due to GIS, including interest, following the re-classification of the outstanding
convertible loan notes on 28 June 2013 (see Note 15).
The Company entered into an unsecured loan facility on 28 June 2013 with GIS for an
aggregate maximum amount of £350,000. Amounts may be drawdown at the discretion of the
Company. Interest is payable on any drawdown at 5 per cent above the base rate of HSBC
Bank plc. Any amount drawdown under the loan facility shall be repayable 18 months from the
date of the loan facility. No amounts had been drawn down under this facility as at 30 June
2013.
33
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
15.
BORROWINGS
Non-current
Convertible loan
Current
Convertible loan
Convertible Loans
30 June
2013
£
52,329
_______
30 June
2012
£
-
_______
-
_______
227,482
_______
During the year ended 30 June 2010, the Company issued 220,000 5% convertible loans at a
par value of £220,000 under loan note instruments dated 22 November 2009. Loan notes
totalling £54,073 and £18,056 were converted into shares during the years ended 30 June 2010
and 30 June 2011 respectively. There were no conversions during the year ended 30 June
2012. During the year ended 30 June 2013, loan notes totalling £15,900 were converted into
shares, with a conversion price of £0.01 per share.
During the year ended 30 June 2010, the Company issued 300,000 5% convertible loans at a
par value of £300,000 under a loan note instrument dated 22 June 2010. Loan notes totalling
£224,859 were converted into shares on 24 October 2011. There were no conversions during
the years ended 30 June 2012 and 2013.
On 28 November 2012 the redemption date for both loan note instruments was extended to 22
December 2013.
On 28 June 2013, the Company entered into two Deeds of Variation in respect of the loan note
instruments. Under the terms of these deeds, the rights to convert these debts into shares were
removed. Furthermore, the terms of repayment for both the 2009 and 2010 loan notes were
extended to 22 December 2014. Both the 2009 and 2010 convertible loans were issued to GIS
and have been reclassified from Current liabilities ‘Borrowings’ to Non-current liabilities
‘Amounts due to Related Parties’.
On 9 July 2012 the Company issued 50,000 0% convertible loans at par value of £50,000 with
Hebolux S.A. No loans were converted into shares during the year ended 30 June 2013. The
loans mature on 9 July 2015 and have a conversion price of £0.015 per ordinary share plus 50
per cent of the subscription price if the Company relists. Conversion of the loan would require
the allotment of 10,000,000 ordinary shares in the Company to Hebolux S.A. in full and final
settlement of the loan.
The values of the liability and equity conversion component were determined at the date the
loan notes were issued. The fair value of the liability component was calculated using a market
interest rate for an equivalent non-convertible loan. The residual amount, representing the value
of the equity conversion option was deemed immaterial and therefore not included in
shareholders’ equity.
34
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
15.
BORROWINGS (continued...)
The convertible loan recognised in the Statement of Financial Position is calculated as follows:
At 1 July
Face value of convertible loans
30 June
2013
£
227,482
-
_______
30 June
2012
£
449,516
-
_______
Liability component on initial recognition
227,482
449,516
Converted to ordinary shares
Reclassification on removal of conversion rights
Interest expense (Note 8)
Liability component at 30 June
(15,900)
(190,419)
31,166
_______
52,329
_______
(246,712)
-
24,678
_______
227,482
_______
The fair value of current and non-current borrowings equals their carrying amount.
35
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
16.
SHARE CAPITAL
Authorised
Ordinary shares of £0.001
‘B’ Ordinary shares of £0.001
Deferred shares of £0.99
Number
£
1,501,855,740
1,221,200
400,932
____________
1,501,856
1,221
396,923
___________
1,503,477,872
____________
1,900,000
___________
The ‘B’ ordinary shares and deferred shares have no voting rights.
There has been no movement in the authorised share capital during the year.
Number of
ordinary
shares
Number of
‘B’ ordinary
shares
Number
of
deferred
shares
Ordinar
y
shares
£
‘B’
ordinary
shares
£
Deferred
shares
£
Share
premium
£
Total
£
Issued and Fully Paid
At 1 July 2011
54,275,065
1,221,200
400,932
54,275
1,221 396,923
3,671,231
4,123,650
Conversion of
convertible loan
8,328,125
-
-
8,328
-
-
__________ __________ _______
______
_____ _______
At 30 June 2012
62,603,190
1,221,200
400,932
62,603
1,221 396,923
__________ __________ _______
______
_____ _______
Issue of new shares
Share based payment
Conversion of
convertible loans
8,333,333
612,982
1,590,000
-
-
-
-
-
-
8,333
613
1,590
-
-
-
-
-
-
__________ __________ _______
______
_____ _______
216,531
________
_
3,887,762
________
_
224,859
________
4,348,509
________
91,667
17,776
100,000
18,389
14,310
________
_
15,900
________
At 30 June 2013
73,139,505
1,221,200
400,932
73,139
1,221 396,923
4,011,515
4,482,798
On 3 July 2012, GIS agreed to convert £15,900 of its outstanding convertible loan into
1,590,000 ordinary shares of 0.1 pence each. These shares were placed with unconnected
third parties to GIS. Also on 3 July 2012, the Company allotted 412,982 ordinary shares of 0.1
pence each to a financial advisor in settlement of fees.
On 19 September 2012, the Company allotted 200,000 ordinary shares of 0.1 pence each to a
financial advisor in settlement of fees.
On 4 October 2012, the Company raised £50,000 through the placement of 3,333,333 ordinary
shares of 0.1 pence each at a price of 1.5 pence per share.
On 20 December 2012, the Company raised £50,000 through the placement of 5,000,000
ordinary shares of 0.1 pence each at a price of 1 pence per share.
36
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
17.
SHARE BASED PAYMENTS
Share options and warrants are 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 exercise prices:
2013
2012
Weighted
Average
Exercise Price
£
0.04875
0.03000
At 1 July
Granted
At 30 June
0.04310
Expiry date
26 April 2021
12 September 2015
Options and
warrants
1,500,000
646,620
________
2,146,620
________
Exercise
price in £
per share
0.04875
0.03000
0.04310
Weighted
Average
Exercise Price
£
0.04875
-
0.04875
Options and
warrants
1,500,000
-
________
1,500,000
________
Number of options and
warrants
2013
2012
1,500,000
646,620
________
2,146,620
________
1,500,000
-
________
1,500,000
________
The share options and warrants granted in 2011 and 2012 may only be exercised on or after
26 April 2012 and 13 September 2013, respectively.
The total weighted average contractual life of the outstanding options and warrants at 30 June
2013 was 6.14 years (2012 – 8.83 years).
The fair value of the share options and warrants were determined using the Black Scholes
valuation model. The parameters used are detailed below:
2011 Options
2012 Warrants
Shares and warrants under option
Option granted on:
Option life (years)
Share price (pence per share) at grant date
Risk free rate
Expected volatility
Expected dividend yield
Marketability discount
Fair value per option granted (pence per share)
Exercise price (pence per share)
1,500,000
26 April 2011
10
4.50
3.71%
10%
Nil
5%
1.254
4.875
646,620
13 September 2012
3
3.00
3.71%
10%
Nil
5%
0.330
3.000
37
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
17.
SHARE BASED PAYMENTS (continued...)
The expected volatility is based on historical volatility for the 6 months prior to the date of grant.
The risk free rate of return is based on zero yield government bonds for a term consistent with
the option life.
Based on materiality, the total fair value of the options and warrants granted in the year has not
resulted in a charge to the Statement of Comprehensive Income for the year ended 30 June
2013 (2012 - £nil). No options were exercised during the year.
18.
CAPITAL COMMITMENT
There was no capital expenditure that had been contracted for at the end of the reporting period
but not yet incurred.
19.
CONTINGENT LIABILITIES
The Company has no contingent liabilities.
20.
ULTIMATE CONTROLLING PARTY
In the opinion of the Directors, Mr J Gunn is the ultimate controlling party.
21.
RELATED PARTY TRANSACTIONS
During the year ended 30 June 2011, the Company entered into a loan agreement dated 23
May 2011 with Inspirit Energy Limited. As described in note 12, the terms of this loan agreement
were amended on 28 June 2013. Inspirit Energy Limited is beneficially owned and controlled
by J Gunn, a substantial shareholder and Director of the Company. Interest on the loan at 7%
per annum is payable to the Company and the loan is repayable on 23 May 2015. The amount
due to the Company from Inspirit Energy Limited as at 30 June 2013 is £81,110 (2012 -
£14,465) together with accrued interest receivable under a previous agreement of £5,554 (2012
- £1,502).
In addition, the Company charged Inspirit Energy Limited fees of £nil (2012 - £16,946) for the
provision of corporate services. An amount of £14,570 was receivable from Inspirit Energy
Limited as at 30 June 2013 (2012 - £14,570).
Global Investment Strategy UK Limited (“GIS”) is a company which is beneficially owned and
controlled by J Gunn. At the year end the Company owed GIS £376,611 (2012 - £111,438) for
the provision of rent, rates, office facilities, loan interest and funds advanced for working capital
purposes, to include the reclassification of convertible loans following the removal of conversion
rights during the year. GIS in turn owed the Company £23,280 (2012 - £11,400) for the provision
of corporate services. GIS converted £15,900 of the outstanding convertible loan on 2 July
2012 into 1,590,000 ordinary shares of 0.1 pence each.
The Company entered into a loan agreement on 28 June 2013 with GIS in relation to a £45,000
loan provided by GIS to the Company between 2 February 2012 and 13 February 2012. Interest
is payable on the loan amount at 7 per cent per annum. The loan agreement terminates on 31
July 2015, when all outstanding monies under the loan agreement become payable. During the
year ended 30 June 2013, aggregate interest under the loan agreement amounted to £3,636
and the amount outstanding as at 30 June 2013 is £34,636 (2012 - £45,000).
38
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
21.
RELATED PARTY TRANSACTIONS (continued...)
The Company entered into an unsecured loan facility on 28 June 2013 with GIS for an
aggregate maximum amount of £350,000. Amounts may be drawdown at the discretion of the
Company. Interest is payable on any drawdown at 5 per cent above the base rate of HSBC
Bank plc. Any amount drawdown under the loan facility shall be repayable 18 months from the
date of the loan facility. No amounts were drawn down under this facility as at 30 June 2013.
GIS hold a fixed and floating charge over all assets of the Company.
On 28 June 2013, the Company entered into a Discretionary Drawdown Facility (“DDF”) with
Mr D Lenigas, non-executive Chairman, which provides the Company with an equity facility up
to a maximum aggregate limit of £70,000. The facility is available for drawdown at any time,
and for any specified amount at the Company’s discretion, up to 17 May 2015. Mr D Lenigas is
entitled to commission at 6.0% of any amount received by the Company in accordance with the
terms of the facility.
22.
EVENTS AFTER THE END OF THE REPORTING PERIOD
Reverse acquisition of Inspirit Energy Limited
On 28 June 2013, the Company announced the proposed acquisition of the remaining share
capital of Inspirit Energy Limited for an aggregate deemed consideration of £3.5 million, to be
satisfied by the issue of 350,000,000 new ordinary shares in the Company. The acquisition
constituted a reverse takeover under the AIM Rules and shareholder approval was obtained at
a General Meeting on 23 July 2013. The acquisition was completed on 25 July 2013.
As at 30 June 2013, the unaudited assets and liabilities of Inspirit Energy Limited were as
follows:
Intangible assets
Tangible assets
Investment in subsidiary undertaking
Stocks
Debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net assets
£
769,214
6,320
1
5,238
28,477
1,396
(560,197)
________
250,449
________
The investment in subsidiary undertaking relates to Somemore Limited which owns the product
rights to the micro combined heat and power boiler appliance.
39
Inspirit Energy Holdings Plc
Notes to the Financial Statements (continued...)
For the year ended 30 June 2013
22.
EVENTS AFTER THE END OF THE REPORTING PERIOD (continued…)
Equity Transactions
At the same time as the acquisition of the remaining share capital of Inspirit Energy Limited,
the Company raised £410,000 (gross) through a subscription for 41.0 million new ordinary
shares at a price of 1 pence per share. As part of the subscription, the subscribers were issued
with one warrant for every two subscription shares, comprising a total of 20.5 million warrants.
The warrants are exercisable into ordinary shares at a price of 1 pence per ordinary share at
any time within 12 months from the date of re-admission to AIM. In addition, the whole of the
£50,000 convertible loan provided by Hebolux S.A. converted into 10,000,000 new ordinary
shares at the date of re-admission.
On 9 August 2013, the Company issued 1,250,000 new ordinary shares to Ascend Capital Plc
for the provision of corporate finance services.
On 29 August 2013, the Company raised £175,000 (gross) through the issue of 13,461,537 of
new ordinary shares at a price of 1.3 pence per share.
On 13 September 2013, the Company entered into a £472,000 Placing and an Equity Swap
Agreement with YA Global Master SPV, Ltd. ("YAGM") at 2.8 pence per share. YAGM
subscribed for a total of 16,857,142 new ordinary shares at a price of 2.8 pence per share for
a gross consideration of £472,000. Of this amount, £236,000 will be paid back to YAGM under
the Equity Swap Agreement from which the Company is expected to receive a base amount of
£19,666.67 per month for a 12 month period, depending on the future price performance of the
Company’s shares.
On 17 September 2013, the Company issued 1,978,733 new ordinary shares in settlement of
professional fees.
On 6 November 2013, the Company has received a conversion notice from a warrant holder to
exercise warrants over 1,000,000 ordinary shares at an exercise price of 1 pence per share.
Borrowings and Convertible Loans
On 4 September 2013, the Company approved the settlement of all existing debt held with GIS
and Mr J Gunn (executive director) through the issue of new shares. Total debt and accrued
interest of £706,680 (including the liabilities of subsidiary Inspirit Energy) was satisfied by the
allotment of 54,360,019 new ordinary shares in the Company at a conversion price of 1.3 pence
each.
40