Inspirit Energy Holdings plc
Annual Report and Financial Statements
for the year ended 30 June 2017
Company Registration no: 05075088
1
Inspirit Energy Holdings plc
COMPANY INFORMATION
DIRECTORS
J Gunn (Chairman and CEO)
N Jagatia
N Luke (Resigned 2 June 2017)
COMPANY SECRETARY
N Jagatia
REGISTERED OFFICE
2nd Floor
2 London Wall Buildings
London
EC2M 5PP
COMPANY REGISTRATION NUMBER
05075088
REGISTRAR AND TRANSFER OFFICE
SOLICITORS
INDEPENDENT AUDITOR
NOMINATED ADVISOR
BROKER
BANKERS
Share Registrars Limited
The Courtyard
17 West Street
Farnham
Surrey
GU9 7DR
Hill Dickenson LLP
50 Fountain House
Manchester
M2 2AS
Welbeck Associates
Statutory Auditor
30 Percy Street
London
W1T 2DB
Beaumont Cornish
2nd Floor
Beaumont House
29 Wilson Street
London
EC2M 2SJ
Peterhouse Corporate Finance Limited
3rd Floor
New Liverpool House
15 – 17 Eldon Street
London
EC2M 7LD
Barclays Bank plc
1-3 Haymarket Towers
Humberstone Gate
Leicester
LE1 1WA
2
Inspirit Energy Holdings plc
CONTENTS
Chairman’s statement
Strategic report
Report of the directors
Independent auditor's report
Group statement of comprehensive income
Group statement of changes in equity
Company statement of changes in equity
Group and company statements of financial position
Group and company statements of cash flows
Notes to the financial statements
page
3
4
7
10
14
15
16
17
18
19
3
Inspirit Energy Holdings plc
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 30 June 2017
INTRODUCTION
This financial year, Inspirit Energy Holdings plc has maintained its focus in the commercialisation of the Group’s micro
combined heat and power (“mCHP”) boilers.
COMMERCIALISATION AND PROGRESS
During the year, the Group has been working to advance its microCHP boiler towards commercialisation. To this end,
improvements to the design of the Group's Stirling engine technology, including simplification as part of the 'design for
manufacture' ("DFM") process, have resulted in a peak electrical output up to 3.2kW of electricity against the unit's
benchmark output of 3.0kW, whilst maintaining the same fuel input and heat output.
In addition, the Inspirit Charger has a similar footprint to many existing microCHP products but more than double the
electrical output, making it a more attractive proposition in its key launch market of commercial plant rooms.
Importantly, this has been achieved without compromising the Group's "Sealed for Life" philosophy which aims to give
customers peace of mind and aligns maintenance requirements and skillsets with those of a standard natural gas
condensing boiler.
The DFM process is the means by which the manufacturing cost of the technology is reduced through engineering
improvements and through improved manufacturability. The DFM process has already yielded several engineering
improvements and manufacturing cost reductions and more are expected. Improved manufacturability leverages
volume based cost reductions which will be available once commercial production starts. This DFM process remains
ongoing and the Group will update investors once complete.
The ongoing collaboration with CIBSE, the Chartered Institute of Building Services Engineers, a key influencer in our
initial target market of commercial plant rooms, is another example of our preparation for commercial launch. Customer
confidence in our technology and its performance is a key success factor.
The applicable market for our technology is global, either as a boiler replacement product or as an add-on to an existing
commercial plant room. In the UK there are in excess of 20 million gas boilers installed and more than 1.6 million new
and replacement domestic gas boilers are installed each year. This is in addition to almost 300,000 commercial boiler
installations each year. Europe as a whole has approximately 70 million boilers installed. These are the first markets to
which our technology is applicable.
OUTLOOK
The operating board and I believe that the progress over the last year has been positive. Whilst we remain well
positioned in the microCHP boiler technology market, ongoing funding for the development and commercialisation of
our product remains a challenge. Accordingly, we continue to manage our resources whilst pushing forward with the
product and expect this to continue in 2018.
At the same time, the Board continues to consider its options for the future strategy and funding of its operating
subsidiary and will provide investors with an update when this review is complete.
J Gunn
Chairman and Chief Executive Officer
22 December 2017
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4
Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2017
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 2017.
REVIEW OF THE BUSINESS
Inspirit Energy Limited (IEL) is 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 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.
Inspirit Energy’s new “British Engineered” mCHP boiler is one of the industry’s most powerful and energy efficient
mCHP appliances for its size with simultaneous generation of up to 15 kilowatts of thermal output and up to 3 kilowatts
of electrical output. The mCHP boiler has been designed to be low maintenance and can be installed by a certified gas-
safe tradesman. The appliance’s patented engine takes the waste heat from the boiler and converts it efficiently into
electricity, first supplying the property where it is installed and then feeding surplus electricity into the National Grid.
DEVELOPMENTS DURING THE YEAR
In May 2017 the Company raised £292,500 before expenses through the issue of 234,000,000 new ordinary shares at a
price of 0.125 pence per share.
BOARD CHANGES
On 2nd June 2017, the Company announced that Mr Neil Luke, the Company's Chief Operating Officer stepped down
from the board due to his planned retirement.
RESULTS AND DIVIDENDS
The Group made a loss after taxation of £419,000 (2016: loss of £458,000).
The Directors do not propose a dividend for the year to 30 June 2017 (2016: £nil).
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Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2017
KEY PERFORMANCE INDICATORS
The key performance indicators used by the Board to monitor the performance of the Company, are set out below:
PLC S PLC STATISTICS
Net asset value
Net asset value – fully diluted per share
Closing share price
Market capitalisation
30 June
2017
30 June
2016
£2,360,000
£2,597,000
0.24p
0.14p
0.28p
0.38p
£1,639,130
£3,559,866
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.
The Group has raised funds during the period as discussed in the ‘Developments during the year’ above. The Directors
feel that while this is sufficient for operating forecasts, further funding requirements are necessary to expedite the
commercialisation of the micro co-generation boiler.
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. More information is given in Note 3 to the Financial Statements. The Group
has no significant concentrations of credit risk.
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 investments;
reports on selection criteria of new investments;
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.
POST YEAR END EVENTS
On 15th August 2017, the Company announced that it raised £300,000 by issuing 208,333,334 new Ordinary Shares of
0.1p each at a price of 0.12p per Ordinary Share together with a proposed Director's subscription of 41,666,666.
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Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2017
GOING CONCERN
As at 30 June 2017 the Group had a cash balance of £30,000 (2016: £258,000), net current assets/ liabilities of negative
£361,000 (2016: positive £39,000) and net assets of £2,360,000 (2016: £2,597,000). The Group continues to incur costs
in the development and modification of their products and is pre-revenue.
Therefore the cash flow forecasts for the Group and Company show that further equity and/or borrowings will be required
to complete the final development and external testing of the Group’s mCHP boilers and bring them into production to get
to a cash flow positive position. Although the Directors are confident that further debt or equity can be raised at a
valuation acceptable to the Group there is no guarantee this will be the case.
ON BEHALF OF THE BOARD
N Jagatia
Director
22 December 2017
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2017
The Directors present their annual report on the affairs of the Group, together with the audited financial statements
for the year ended 30 June 2017.
PRINCIPAL ACTIVITIES
The principal activity of the Group is that of development and commercialisation of the mCHP boiler.
Details of the Group’s principal activities can be found in the Strategic Report.
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 Group’s issued share capital at the beginning and end of the accounting year were:
Number of
ordinary shares
Number of
share options and warrants
30 June
2017
30 June
2016
30 June
2017
30 June
2016
J Gunn
N Jagatia
439,696,246
370,029,580
2,000,000
2,000,000
N Luke ( resigned 02/06/2017)
3,300,000
3,300,000
-
-
-
-
-
-
INDEMNITY OF OFFICERS
The Company maintains appropriate insurance cover against legal action brought against its Directors and officers.
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2017
CORPORATE GOVERNANCE
The Board has not adopted the UK Corporate Governance Code; this is only a requirement for premium listed
companies and the Board does not consider it appropriate for a company of the size and nature of Inspirit Energy
Holdings plc. The Board has, however, adopted the requirements of the Corporate Governance Guidelines for
Smaller Companies published by the Quoted Companies Alliance, although, until an independent non-executive
director is appointed, John Gunn will chair each of the committees.
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.
AUDIT COMMITTEE
The Audit Committee is currently chaired by John Gunn and includes Nilesh Jagatia. The committee provides a
forum for reporting by the Group’s external auditors. The committee is also responsible for reviewing a wide range of
matters, including half-year and annual results before their submission to the Board, and for 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 will
discuss the nature, scope and results of the audit with the external auditors. The committee will keep under review
the cost effectiveness and the independence and objectivity of the external auditors.
The Audit Committee is responsible for ensuring the “right tone at the top” and that the ethical and compliance
commitments of management and employees are understood throughout the Group.
REMUNERATION COMMITTEE
The Remuneration Committee is chaired by John Gunn and includes Nilesh Jagatia. The committee is responsible
for making recommendations to the Board, within agreed terms of reference, on the Group’s framework of executive
remuneration and its cost. 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.
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.
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9
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2017
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report of the Directors 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 International
Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”). 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 Company and of the profit or loss of the Group 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 IFRSs as adopted by the European Union 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
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 Group and
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 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.
INDEPENDENT AUDITOR
The auditors, Welbeck Associates, will be proposed for reappointment in accordance with section 485 of the
Companies Act 2006.
ON BEHALF OF THE BOARD
N Jagatia
Director
22 December 2017
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Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2017
OPINION
We have audited the financial statements of Inspirit Energy Holdings Plc (the ‘Company’) and its subsidiaries (the
“Group”) for the year ended 30 June 2017 which comprise the Group income statement, the Group statement of
comprehensive income, the Group and Parent Company statements of changes in equity, the Group and Parent
Company statements of financial position, the Group and Parent Company statements of cash flows, and notes to the
financial statements, including a summary of significant accounting policies. 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.
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 2017 and of
the group’s 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.
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 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 4 in the financial statements, which indicates that the Group incurred a net loss of £419k
during the year ended 30 June 2017 and, of that date, the Group’s current liabilities exceeded its current assets by
£361k. As stated in note 4, these events or conditions, along with the other matters as set forth in note 4, 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.
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.
Key audit matter
Carrying value of intangible assets
The capitalisation of development costs as an
intangible asset requires the Board of Directors to
demonstrate that six criteria as defined within IAS
38 “Intangible Assets” have all been met.
the 30 June 2017,
At
is £2,668k of
intellectual property capitalised (2016: £2,495k) in
the Consolidated Statement of Financial Position.
there
We focused on this area because the Directors’
assessment of whether impairment triggers have
been
to an
impairment charge in relation to the development
costs involved complex and subjective judgements
that could give
identified
rise
How we addressed it
We focused on the key assumptions relating to future revenue
forecasts, margin expectations and associated selling costs.
We were able to evaluate the reasonableness of the Directors’
forecasts and expectations including the impact upon terminal
to
values by agreeing changes
corroborating evidence.
in growth assumptions
We validated the inputs used by the Directors to calculate the
discount rate applied by comparing this to a selection of
comparable organisations. The Directors’ key assumptions for
long term growth rates were also compared to economic and
industry forecasts for reasonableness.
We assessed, through the performance of sensitivity analysis
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Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2017
Key audit matter
and assumptions including the progress and future
performance of the boiler.
have
prepared
The Directors
impairment
assessment models which include a number of
assumptions. The assumptions which are deemed
to be the most significant in respect of these
models are related to the estimated length of
revenue streams and the associated costs.
Clear and full disclosure of the facts and the
Directors’ rationale for the use of the going concern
basis of preparation, including that there is a
related material uncertainty, is a key financial
statement disclosure. Significant
is
required in assessing the disclosures.
judgement
•
How we addressed it
over the key assumptions above, the extent of change in those
assumptions that either individually or collectively would be
required for any potential impairment charges, to have a
material impact on the carrying value of the acquired intangible
assets and goodwill. We also assessed the likelihood of such
changes occurring.
Our procedures included:
Assessing the completeness and accuracy of the matters
covered in the going concern disclosure by assessing its
consistency with the cash flow forecasts prepared by the Group
and the terms of the loan notes issued.
the disclosure was balanced,
We assessed whether
understandable and sufficiently prominent, and referred to there
being a material uncertainty.
OUR APPLICATION OF MATERIALITY
Materiality for the Group financial statements as a whole was set at £71k (2016: £78k).
This has been calculated as 3% of the net assets (2016: 3%), which we have determined, in our professional
judgment, to be one of the principal benchmarks within the financial statements relevant to members of the Company
in assessing financial performance of the Group.
Materiality for the parent company financial statements was set at £63k (2016: £67k), determined with reference to a
benchmark of the net assets of £2,103k, of which it represents 3% (2016: 3%).
We report to the Director all corrected and uncorrected misstatements we identified through our audit with a value in
excess of £3k (2016: £4), in addition to other audit misstatements below that threshold that we believe warranted
reporting on qualitative grounds.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
All entities of the group were subject to full scope audit procedures for group and statutory reporting purposes. We did
not rely on the work of any component auditors
As part of our planning we assessed the risk of material misstatement including those that required significant auditor
consideration at the component and group level. Procedures were then performed to address the risk identified and
for the most significant assessed risks of material misstatement, the procedures performed are outlined above in the
key audit matters section of this report.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in
the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the 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.
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether there is a material misstatement in the
financial statements or a material misstatement of the other information. 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.
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Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2017
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 company and its 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, 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.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement set out on page 9, the directors are responsible for
the preparation of the 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 financial statements, the directors are responsible for assessing the 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 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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s 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 Auditors' 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.
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Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2017
Jonathan Bradley-Hoare (Senior statutory auditor)
for and on behalf of Welbeck Associates
Chartered Accountants and Statutory Auditor
London, United Kingdom
22 December 2017
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Inspirit Energy Holdings plc
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 June 2017
CONTINUING OPERATIONS:
Revenue
Administrative expenses
Other losses – net
OPERATING LOSS
Finance costs
LOSS BEFORE INCOME TAX
Income tax credit
NET LOSS AND TOTAL COMPREHENSIVE LOSS FOR THE YEAR
EARNINGS PER SHARE
- Basic and fully diluted earnings per share
(attributable to owners of the parent)
Note
2017
£’000
2016
£’000
8
9
10
11
-
-
(384)
(503)
-
(384)
(73)
(457)
38
(419)
(23)
(526)
(27)
(553)
95
(458)
12
(0.04p)
(0.06p)
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 £283,000 (2016: £807,000).
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Inspirit Energy Holdings plc
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 June 2017
Attributable to the owners of the parent
Share
capital
£’000
Share
premium
£’000
Other
reserves
£’000
Merger
reserve
£’000
Reverse
acquisition
reserve
£’000
Retained
losses
£’000
Total
Equity
£’000
1,098
7,305
125
3,150
(7,361)
(2,371)
1,946
-
-
236
-
-
236
-
-
919
(46)
(81)
792
-
-
-
-
81
81
-
-
-
-
-
-
-
-
-
-
-
-
(458)
(458)
(458)
(458)
-
-
-
-
1,155
(46)
-
1,109
1,334
8,097
206
3,150
(7,361)
(2,829)
2,597
-
-
234
-
-
234
-
-
58
(11)
-
47
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(419)
(419)
(419)
(419)
-
-
292
(11)
(99)
(99)
-
-
(99)
182
BALANCE AT 1 July 2015
Loss for the year
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
Share issues
Share issue costs
Issue of warrants
TRANSACTIONS WITH OWNERS
BALANCE AT 30 June 2016
Loss for the year
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR
Share issues
Share issue costs
Debt Adjustment
Issue of warrants
TRANSACTIONS WITH OWNERS
BALANCE AT 30 June 2017
1,568
8,144
206
3,150
(7,361)
(3,347)
2,360
P a g e | 15
16
Inspirit Energy Holdings plc
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 June 2017
BALANCE AT 30 June 2015
Loss for the year
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
Share issues
Share issue costs
Issue of warrants
TRANSACTIONS WITH OWNERS
BALANCE AT 30 June 2016
Loss for the year
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
Share issues
Share issue costs
Debt adjustment
Attributable to equity shareholders
Share
capital
£’000
Share
premium
£’000
Other
reserves
£’000
Retained
losses
£’000
Total
equity
£’000
1,098
10,455
125
(9,719)
1,959
-
-
236
-
-
236
-
-
919
(46)
(81)
792
-
-
-
-
81
81
(807)
(807)
(807)
(807)
-
-
-
-
1,155
(46)
-
1,109
1,334
11,247
206
(10,526)
2,261
-
-
234
-
-
-
-
58
(11)
-
-
-
-
-
-
(283)
(283)
(283)
(283)
-
-
(99)
(99)
292
(11)
(99)
182
TRANSACTIONS WITH OWNERS
234
47
-
BALANCE AT 30 June 2017
1,568
11,294
206
(10,908)
2,160
P a g e | 16
17
Inspirit Energy Holdings plc
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 June 2017
Company Number: 05075088
GROUP
COMPANY
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Investment in subsidiaries
CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY ATTRIBUTABLE TO OWNERS
OF THE PARENT
Share capital
Share premium
Merger reserve
Other reserves
Reverse acquisition reserve
Retained losses
TOTAL EQUITY
CURRENT LIABILITIES
Trade and other payables
Borrowings
TOTAL LIABILITIES
Note
13
14
15
16
17
18
19
19
21
21
21
22
23
2017
£’000
2,668
53
-
2,721
-
174
30
204
2016
£’000
2,495
63
-
2,558
-
329
258
587
2017
£’000
-
-
2,440
2,440
-
122
30
152
2016
£’000
-
-
2,440
2,440
-
12
250
262
2,925
3,145
2,592
2,702
1,568
8,144
3,150
206
(7,361)
(3,347)
1,334
8,097
3,150
206
(7,361)
(2,829)
1,568
11,294
-
206
-
(10,908)
1,334
11,247
-
206
-
(10,526)
2,360
2,597
2,160
2,261
366
199
565
565
381
167
548
548
233
199
432
432
274
167
441
441
TOTAL EQUITY AND LIABILITIES
2,925
3,145
2,592
2,702
These Financial Statements were approved by the Board of Directors on 22 December 2017 and were signed on its
behalf by:
N Jagatia
Director
P a g e | 17
18
Inspirit Energy Holdings plc
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 June 2017
GROUP
COMPANY
Note
2017
£’000
2016
£’000
2017
£’000
2016
£’000
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax
Depreciation
Finance income
Finance expense
Shares issued in settlement of fees and debt
Impairment of investment in subsidiary
Interco loan provision
Other adjustments
Decrease/(increase) in trade and other
receivables
Increase/(decrease) in trade and other payables
CASH (USED BY)/GENERATED FROM OPERATING
ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in development costs
Increase in short term loans
Purchases of property, plant and equipment
Increase in loan to subsidiary
NET CASH FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVTIES
Net proceeds from issue of shares
Net repayment of short term borrowings
Finance costs paid
NET CASH FROM FINANCING ACTIVITIES
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at the beginning of the
year
CASH AND CASH EQUIVALENTS AT THE END OF THE
YEAR
18
(457)
11
-
73
-
-
-
(33)
192
29
(553)
13
-
27
-
-
-
(283)
-
-
73
-
-
(64)
(33)
218
62
(110)
2
(807)
-
-
27
-
-
361
20
131
(185)
(233)
(415)
(268)
(173)
-
(1)
-
(174)
204
-
(73)
131
(388)
-
-
(388)
999
(94)
(27)
878
-
-
64
64
204
-
(73)
131
(228)
257
(220)
258
1
250
-
-
(361)
(361)
999
(94)
(27)
878
249
1
30
258
30
250
P a g e | 18
19
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
1
GENERAL INFORMATION
The principal activity of Inspirit Energy Holdings plc during the period was that of developing and
commercialising the mCHP boiler.
These financial statements show the consolidated results of the Group for the year ended 30 June 2017
together with the comparative results for the year ended 30 June 2016.
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 2nd
Floor, 2 London Wall Buildings, London, EC2M 5PP, United Kingdom.
2
SUMMARY OF SIGNIFICANT ACCOUNTING 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 consolidated financial statements have been prepared in accordance with applicable International
Financial Reporting Standards (“IFRS”) including standards and interpretations issued by both the
International Accounting Standards Board (“IASB”) and the International Financial Reporting Interpretation
Committee (“IFRIC”) as adopted and endorsed by the European Union (“EU”), further to IAS Regulation (EC
1606/2002).
The consolidated Financial Statements have been prepared under the historical cost convention and are
presented in GBP Pound Sterling, rounded to the nearest £1,000.
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 accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the consolidated Financial Statements are disclosed in
Note 4.
GOING CONCERN
The financial statements have been prepared on the going concern basis.
The Directors have prepared cash flow forecasts for the Group and Company which reflect the Group’s and
Company’s forecast cash inflows and costs.
The Group’s activities, together with the factors likely to affect its future development, performance and
position, are set out in the Strategic Report on pages 4 to 6. It also includes the Group’s objectives, policies
and processes for managing its business risk objectives, which includes its exposure to technology,
customer and other operational risks.
It is envisaged by the Directors, who have formed a judgement at the time of approving these financial
statements, that existing cash resources together with these forecast cash inflows will provide adequate
funds for the Group for the foreseeable future. For this reason the Directors continue to adopt the going
concern basis in preparing the financial statements.
P a g e | 19
20
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 2017.
Subsidiaries are entities over which the Group has control. Control is the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. 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
At the date of authorisation of this document, the following Standards and Interpretations, which have not
been applied in these financial statements, were in issue, but not yet effective:
•
•
•
•
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
IAS 27 (amendments) Equity Method in Separate Financial Statements
The Directors anticipate that the adoption of the above Standards and Interpretations in future periods will
have little or no impact on the financial statements of the Company when the relevant Standards come into
effect for future reporting periods, although they have yet to complete their full assessment in relation to the
impact of IFRS 9 and IFRS 15.
SEGMENTAL REPORTING
The accounting policy for identifying segments is now based on internal management reporting information
that is regularly reviewed by the chief operating decision maker, which is identified as the Board of Directors.
In identifying its operating segments, management generally follows the Group's service lines which
represent the main products and services provided by the Group. The Directors believe that the Group’s
continuing trading operations comprise one segment.
CURRENT AND DEFERRED INCOME TAX
The tax expense for the period comprises current tax. 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.
The current income tax charge 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 the tax authorities.
P a g e | 20
21
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
FOREIGN CURRENCY TRANSLATION
FUNCTIONAL AND PRESENTATION CURRENCY
a)
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 (£), which is the Company’s
functional and the Group’s presentation currency.
TRANSACTIONS AND BALANCES
b)
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”. All other foreign
exchange gains and losses are presented in the Statement of Comprehensive Income within “Other
(Losses)/Gains – Net”.
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.
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.
P a g e | 21
22
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INTANGIBLE ASSETS
DEVELOPMENT COSTS
Development costs relate to expenditure on the development of certain new products and service projects
where the outcome of those projects is assessed as being reasonably certain as regards viability and
technical feasibility. Such expenditure is capitalised and amortised over the expected sales life of the
product, being generally a period not longer than five years commencing in the year the sales of the product
were first made.
Development costs incurred on specific projects 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 and an
appropriate portion of relevant overheads.
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. Assets that are subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. 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.
P a g e | 22
23
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
FINANCIAL ASSETS
CLASSIFICATION
a)
The Group classifies its financial assets in the following categories: at fair value through profit or loss and
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.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets at fair value or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short term.
Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise,
they are classified as non-current.
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.
RECOGNITION AND MEASUREMENT
b)
Regular purchases and sales of financial assets are recognised on the trade date – the date on which the
Group commits to purchasing or selling the asset. Financial assets carried at fair value through profit or loss
is initially recognised at fair value, and transaction costs are expensed in the Statement of Comprehensive
Income. Financial assets are derecognised when the rights to receive cash flows from the assets have
expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of
ownership.
Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and
receivables are subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss
are presented in the Statement of Comprehensive Income within “Other (Losses)/Gains – Net” in the period
in which they arise.
P a g e | 23
24
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
TRADE AND OTHER RECEIVABLES
Trade receivables are amounts due from customers for merchandise sold or services performed in the
ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of
the business if longer), they are classified as current assets. If not they are presented as non-current assets.
Trade receivables are recognised initially at fair value, and subsequently measured at amortised cost using
the effective interest method, less provision for impairment.
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 banks.
FINANCIAL LIABILITIES
The Group’s financial liabilities comprise trade payables. 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.
P a g e | 24
25
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
“Option reserve” represents the cumulative cost of share based payments.
“Retained losses" represents retained losses.
TRADE PAYABLES
Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using
the effective interest rate method.
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.
P a g e | 25
26
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
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 £204,000 (2016: £587,000) 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:
Group
At 30 June 2017
Trade and other payables
Borrowings
At 30 June 2016
Less than
1 year
£’000
366
199
Trade and other payables
Borrowings
320
167
Between 1
and 2 years
£’000
-
Between 2
and 5 years
£’000
-
Over 5
years
£’000
-
-
-
-
-
-
-
-
-
-
Carrying
value
£’000
366
199
Total
£’000
366
199
320
167
320
167
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.
P a g e | 26
27
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
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.
GOING CONCERN
As at 30 June 2017 the Group had a cash balance of £30,000 (2016: £258,000), net current liabilities) /
assets of negative £361,000 (2016: £39,000) and net assets of £2,360,000 (2016: £2,597,000). The Group
continues to incur costs in the development and modification of their products and is pre-revenue.
Therefore the cash flow forecasts for the Group and Company show that further equity and/or borrowings will
be required to complete the final development and external testing of the Group’s mCHP boilers and bring
them into production to get to a cash flow positive position. Although the Directors are confident that further
debt or equity can be raised at a valuation acceptable to the Group there is no guarantee this will be the
case.
IMPAIRMENT OF DEVELOPMENT COSTS AND INVESTMENTS
The Group tests annually whether development costs and investments in the subsidiaries, which have a
carrying value of £2,668,000 and £2,440,000, respectively (2016: £2,495,000 and £2,440,000, respectively),
have suffered any impairment in accordance with the accounting policy as stated in Note 2.
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. As a result of their 2017 review management has concluded that no impairment charge to the
carrying value of investment in subsidiaries is needed, following the £1,800,000 impairment in 2015. See
Note 15 to the Financial Statements.
In respect of development costs, the recoverable amounts of cash-generating units have been determined,
based on value-in-use calculations. The value–in-use calculations require the entity to estimate future cash
flows expected to arise from the cash generating unit and apply a suitable discount rate in order to calculate
present value. The recoverable amount of the development costs have been determined, based on value in
use calculations. These calculations require the use of estimates. The Directors have concluded that no
impairment charge is necessary.
SHARE BASED PAYMENTS
The Group has previously made awards of options and warrants over its unissued share capital to certain
Directors and employees as part of their remuneration package. Certain warrants have also been issued to
shareholders as part of their subscription for shares and to suppliers for various services received.
The fair value of options is determined by reference to the fair value of the options 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, 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 20.
P a g e | 27
28
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
5
SEGMENTAL INFORMATION
The Group’s primary reporting format is business segments and its secondary format is geographical
segments. The Group only operates in a single business and geographical segment. Accordingly no
segmental information for business segment or geographical segment is required.
6
DIRECTORS’ EMOLUMENTS
Aggregate emoluments
Social security costs
Name of director
J Gunn
N Jagatia
N Luke
2017
£
180
13
193
Total
2017
£
80
24
76
180
Salary and
fees
£
Benefits
£
80
24
76
180
-
-
-
-
The Group does not operate a pension scheme and no contributions were paid during the year.
7
EMPLOYEE INFORMATION
Wages and salaries
Social security costs
2017
£
180
13
193
2016
£
187
19
206
Total
2016
£
80
27
80
187
2016
£
187
19
206
In addition to the above a total of £141,000 (2016: £182,000) wages and salaries for employees have been
included in Development costs.
Average number of persons employed (including executive directors):
Office and management
2017
Number
2016
Number
6
7
COMPENSATION OF KEY MANAGEMENT PERSONNEL
There are no key management personnel other than the Directors of the Company (Note 6).
P a g e | 28
29
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
8
LOSS FOR THE YEAR
Loss for the year is arrived at after charging:
S Salaries and wages (Note 7)
A Audit and other fees
Operating lease rent
Depreciation
AUDITOR’S REMUNERATION
During the year the Group obtained the following services from the Company’s auditor:
Fees payable to the Company’s auditor for the audit of the parent company
and the Group financial statements
Fees payable to the Company’s auditor and its associates for other services:
Taxation compliance services
Other assurance services
9
OTHER LOSSES
Financial assets at fair value through profit or loss
Foreign exchange loss on amounts owing to lenders
2017
£’000
193
17
17
11
2016
£’000
206
17
17
16
2017
£’000
2016
£’000
15
2
-
2017
£’000
-
-
-
15
2
-
2016
£’000
-
23
23
The foreign exchange loss noted above represents the movement in the Sterling amount owing to YA Global
Master SPV Limited, as a result of the loan being denominated in US Dollars. See Note 23 for further
details.
10
FINANCE COSTS
Interest expense:
Other loans
2017
£’000
2016
£’000
73
27
P a g e | 29
30
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
11
INCOME TAX CREDIT
GROUP
Current R&D tax credit on loss for the year
2017
£’000
(38)
(38)
2016
£’000
(95)
(95)
The tax on the Group's loss before tax differs from the theoretical amount that would arise using the
weighted average rate applicable to losses of the consolidated entities as follows:
Loss before tax from continuing operations
Loss before tax multiplied by rate of corporation tax in the UK of 19%
(2016: 20%)
Tax effects of:
Expenses not deductible for tax purposes
Unrelieved tax losses carried forward
Research and development tax credit
Total tax
2017
£’000
(457)
(87)
14
73
(38)
(38)
2016
£’000
(553)
(110)
14
96
(95)
(95)
The Group has excess management expenses of approximately £4,500,000 (2016: £4,150,000), capital
losses of £150,000 (2016: £150,000) and non-trade financial losses of approximately £119,000 (2016:
£119,000) 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.
12
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 by both
basic and diluted loss per share for the year are based upon the loss for the year of £419,000 (2016:
£458,000). The weighted number of equity shares in issue during the year was 973,990,421 (2016:
794,406,441).
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 Notes 2.
P a g e | 30
31
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
13
INTANGIBLE ASSETS
GROUP
COST
At 30 June 2015
Additions
At 30 June 2016
Additions
At 30 June 2017
ACCUMULATED AMORTISATION AND IMPAIRMENT
At 1 July 2015 and 1 July 2016
Impairment charge
At 30 June 2016 and 30 June 2017
NET BOOK VALUE
At 30 June 2017
At 30 June 2016
Development
Costs
£’000
2,107
388
2,495
173
Total
£’000
2,107
388
2,495
181
2,668
2,676
-
-
-
-
-
-
2,668
2,668
2,495
2,495
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.
The recoverable amount of the above cash generating unit has been determined based on value-in-use
calculations. The value-in-use calculations use cash flow projections based on financial budgets approved
by Management covering a seven year period. These incorporate potential revenues which are based on
project tenders and projected revenue. Given the nature of the work and the visibility of revenue in the
future, it is considered appropriate not to extend the cash flow workings beyond this period.
The recoverable amount based on value-in-use exceeded the carrying value above. The impairment review
did not identify any impairment for recognition in the current or prior year.
P a g e | 31
32
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
14
PROPERTY, PLANT AND EQUIPMENT
GROUP
COST
As 30 June 2015
Additions
As 30 June 2016
Additions
As at 30 June 2017
DEPRECIATION
As at 30 June 2015
Charge for year
As at 30 June 2016
Charge for year
As at 30 June 2017
NET BOOK VALUE
As at 30 June 2017
As at 30 June 2016
Plant and
Equipment
£’000
81
-
81
-
81
15
10
25
9
34
47
56
Fixtures
and fittings
£’000
15
-
15
-
15
5
3
8
1
9
6
7
15
INVESTMENT IN SUBSIDIARIES
COMPANY
SHARES IN GROUP UNDERTAKINGS:
At 1 July
Transfer from investments
Reverse acquisition
Impairment provision
Non-Current loan due from group undertaking
Transfer from current intercompany receivable
Decrease in loan to group undertaking
Interest on loan
Provision against the loan balance outstanding
A
Motor
Vehicles
£’000
1
-
1
-
1
1
-
1
-
1
-
-
2017
£’000
2,440
-
-
-
Total
£’000
97
-
97
-
97
21
13
34
10
44
53
63
2016
£’000
2,440
-
-
-
2,440
2,440
-
-
(64)
-
64
-
-
361
-
(361)
2,440
2,440
Included in the above is an amount of £2,424,000 (2016: £2,489,000) relating to the amount due to the
Company by its subsidiary Inspirit Energy Limited. A provision of £2,424,000 (2016: £2,489,000) has been
set against this loan balance outstanding.
P a g e | 32
33
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
15
INVESTMENT IN SUBSIDIARIES (continued)
Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid.
Details of Subsidiary Undertakings are as follows:
Name of subsidiary
Country of
incorporation
Registered
capital
Inspirit Energy Limited
England and Wales
Somemore Limited
England and Wales
Ordinary shares
£15,230
Ordinary shares
£1
Proportion of
share capital
held
Nature of
business
100%
Product
development
100%
Dormant
16
INVENTORIES
Work in progress
GROUP
COMPANY
2017
£’000
-
2016
£’000
-
2017
£’000
-
2016
£’000
-
The Directors consider that the carrying amount of inventories is approximately equal to their fair value.
17
TRADE AND OTHER RECEIVABLES
Amounts due from group undertakings*
Corporation tax**
VAT recoverable
Other Debtors
Prepayments and accrued income
GROUP
COMPANY
2017
£’000
-
38
21
106
10
175
2016
£’000
-
308
9
-
12
329
2017
£’000
-
-
15
101
6
122
2016
£’000
-
-
4
-
8
12
*The amount due from group undertakings have been included in the Investment in subsidiaries balance.
See Note 15 for further details.
**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.
18
CASH AND CASH EQUIVALENTS
Cash and cash equivalents
GROUP
COMPANY
2017
£’000
30
2016
£’000
258
2017
£’000
30
2016
£’000
250
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.
P a g e | 33
34
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
19
SHARE CAPITAL AND SHARE PREMIUM
Number of
ordinary shares
Number of
•
deferred
shares
701,147,289
400,932
•
Ordinary
shares
£
Deferred
shares
£
Total
£
701,147 396,923 10,455,230 11,553,300
Share
premium
£
235,659,570
-
-
-
-
-
235,660
-
-
-
-
-
919,341 1,155,001
(45,900)
(45,900)
(81,000)
(81,000)
At 30 June 2015
Issue of new
shares
Issue costs
Warrants issued
At 30 June 2016
936,806,859
400,932
936,807 396,923 11,247,671 12,581,401
Issue of new
shares
Issue costs
234,000,000
-
-
-
234,000
-
-
-
58,500
292,500
(10,750)
(10,750)
At 30 June 2017
1,170,806,859
400,932
1,170,807 396,923 11,295,421 12,863,151
The deferred shares have no voting rights.
In May 2017 the Company issued 234,000,000 new ordinary shares at a price of 0.125 pence per share.
P a g e | 34
35
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
20
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:
At 1 July
Granted
Exercised
Terminated
At 30 June
Grant date
26 April 2011
30 April 2015
20 May 2016
Weighted Average
Exercise Price
2017
Options and
warrants
Weighted Average
Exercise Price
2016
0.0067
-
-
0.0050
89,783,364
-
-
(79,000,000)
0.0067
10,783,364
0.0154
0.0050
-
0.0300
0.0067
Options and
warrants
11,429,984
79,000,000
-
(646,620)
89,783,364
Expiry date
Exercise price
in £ per share
Number of options
and warrants
25 April 2021
29 April 2018
19 May 2017
0.0488
0.0090
-
2017
1,500,000
9,283,364
-
Number of options
and warrants
2016
1,500,000
9,283,364
79,000,000
0.0067
10,783,364
89,783,364
P a g e | 35
36
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
21
OTHER RESERVES
1 July 2015
Issue of warrants
30 June 2016
Issue of warrants
30 June 2017
22
TRADE AND OTHER PAYABLES
Trade payables
Other payables
Amount due to related parties
Social security and other taxes
Accrued expenses
Share
option
reserve
£’000
125
81
206
-
206
Merger
reserve
£’000
Reverse
acquisition
reserve
£’000
3,150
(7,361)
-
-
3,150
(7,361)
Total
£’000
(4,086)
81
(4,005)
-
-
-
3,150
(7,361)
(4,005)
GROUP
COMPANY
2017
£’000
76
150
-
67
73
366
2016
£’000
193
59
-
68
61
381
2017
£’000
21
111
-
28
73
233
2016
£’000
127
59
-
28
60
274
The Directors consider that the carrying amount of trade payables approximates to their fair value.
P a g e | 36
37
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
23
BORROWINGS
Current
Drawdown facility (see Note 1 below)
Related party short term loans (see Note 2
below)
GROUP
2017
£’000
199
46
2016
£’000
121
46
245
167
COMPANY
2017
£’000
2016
£’000
199
46
245
121
46
167
Note 1 The Drawdown facility relates to the facility entered into during the prior year with YA Global Master
SPV Limited, showing the remaining balance outstanding at the year end. The facility is unsecured and
carries an implied interest rate of 10 per cent per annum, repayable in 12 equal monthly instalments.
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. This
is based on the Exchange rate as at 30 June 2016 of $1 / £0.751 and a VWAP of 0.49p. The Directors do not
expect to use the remaining facility in the foreseeable future
P a g e | 37
38
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
24
FINANCIAL INSTRUMENTS BY CATEGORY
The Group’s financial instruments comprise borrowings, cash and cash equivalent, and various items such
as trade receivables and trade payables. The main purpose of these financial instruments is to raise finance
for the Group’s operations.
IAS 39 categories of financial instruments included in the Statement of Financial Position and the headings
in which they are included are as follows:
FINANCIAL ASSETS – LOANS AND RECEIVABLES:
Trade and other receivables (excluding prepayments)
Cash and bank balances
FINANCIAL LIABILITIES AT AMORTISED COST:
Trade and other payables (excluding accruals)
Borrowings
2017
£’000
175
30
160
199
2016
£’000
347
258
320
167
The table providing an analysis of the maturity of the non-derivative financial liabilities has been included in
Note 3.
25
OPERATING LEASE COMMITMENTS
The Group leases an office under a non-cancellable operating lease agreement. The lease term is for one
year and the lease agreement is renewable at the end of the lease period at market rate.
The future aggregate minimum lease payments under non-cancellable operating lease are as follows:
GROUP:
No later than 1 year
2017
£’000
2016
£’000
26
26
26
ULTIMATE CONTROLLING PARTY
At the date of signing this report the Directors do not consider there to be one single ultimate controlling
party.
P a g e | 38
39
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2017
27
RELATED PARTY TRANSACTIONS
During the year, NKJ Associates Ltd, a company in which N Jagatia is a Director, charged consultancy fees
of £24,000 (2016: £27,000). The amount owed to NKJ Associates Ltd at year end is £2,000 (2016:
£10,000).
28
EVENTS AFTER THE REPORTING DATE
On 15th August 2017, the Company announced that it raised £300,000 by issuing 208,333,334 new
Ordinary Shares of 0.1p each at a price of 0.12p per Ordinary Share together with a proposed Director's
subscription of 41,666,666.
P a g e | 39