Inspirit Energy Holdings plc
Annual Report and Financial Statements
for the year ended 30 June 2020
Company Registration no: 05075088
1
Inspirit Energy Holdings plc
COMPANY INFORMATION
DIRECTORS
J Gunn (Chairman and CEO)
N Jagatia (Finance Director)
A Samaha (Non-Executive Director)
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 Dickinson LLP
The Broadgate Tower
20 Primrose Street
London
EC2A 2EW
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
Beaumont Cornish Limited
Building 3
566 Chiswick High Road
London
W4 5YA
Global Investment Strategy UK Ltd
2nd Floor
2 London Wall Buildings
London
EC2M 5PP
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 and Company statements of financial position
Group statement of changes in equity
Company statement of changes in equity
Group and Company statements of cash flows
Notes to the financial statements
page
3
4
8
17
23
24
25
26
27
28
3
Inspirit Energy Holdings plc
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 30 June 2020
During the financial year ended 30th June 2020, Inspirit Energy Holdings plc has maintained its focus on the application
of the Stirling engine in various sectors as well as progressing the commercialisation efforts of the Group’s micro
combined heat and power (“mCHP”) boilers amidst the backdrop of the challenges posed by the COVID-19-pandemic.
Despite these market headwinds, the Inspirit achieved a number of significant milestones including the signing of a letter
of support with world-leading marine engine manufacturer Volvo Penta for the development of a Waste Heat Recovery
system as well as entering discussions with a leading gasification technology company regarding a possible collaboration.
These milestones demonstrate how the previous year has been an important one for the business and its strategic
direction. The operating Board has worked throughout to identify differing potential applications for the technology where
there is significant potential for growth, as well as considering the future strategy and funding of its operating subsidiary.
As recently announced by the UK Government and set out in its Energy White Paper entitled ‘Powering our net zero
future’, new measures will be introduced to advance the decarbonisation of heat and transport including the switching of
home heating, at scale, to low-carbon alternatives with the Government outlining a ‘decisive shift’ away from new gas
boiler installations which are expected to be phased out by mid-2030s.
The operating Board and I believe that the positive progress over the last year in the alternative applications of the Stirling
technology in the Marine and Waste Heat Recovery (WHR) sectors is strong evidence of the need to refocus our strategic
objectives towards these areas. It should be noted that this is by no means an abandonment of our MicroCHP boiler
technology – on the contrary, we are actively looking into the application of the technology in the rapidly emerging
hydrogen market. Additionally, with the continued growth demand for electric cars, the Board will be looking at the
automotive sector to utilise the Stirling engine to provide a source of power to charge electric motor cars.
We are continuing to assess funding options for the development and commercialisation of our products and will continue
to demonstrate prudence in our approach to managing our current resources whilst pushing forward with our product
development. As we move into a transformational period for the business, I would like to personally thank my colleagues
for their hard work and commitment to driving the business forward whilst keeping one another safe and well during these
challenging times.
J Gunn
Chairman and Chief Executive Officer
24 December 2020
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Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2020
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 2020.
REVIEW OF THE BUSINESS
Inspirit Energy Limited (IEL) is currently in the process of refocusing its expertise in the application of the Stirling engine
technology in different sectors including Marine and Waste Heat Recovery.
The Company is also currently pursuing the development and commercialisation of a world-leading micro Combined Heat
and Power (“mCHP”) boiler for use in commercial and residential markets. The mCHP boiler is powered by natural gas
or hydrogen and designed to produce hot water (for domestic hot water or central heating) and a simultaneous electrical
output that can be used locally or fed back into the National Grid.
DEVELOPMENTS DURING THE YEAR
During the beginning of the financial year, the Company embarked on multiple applications for the Stirling technology and
were in advance discussions with a large car/marine engine manufacturer to develop a unit for the shipping industry with
current output of 11.68kw. We were also in discussions with our European manufacturing partners and sourcing supply
chains and agreed a letter of support for the development of a Waste Heat Recovery ("WHR") system with Volvo Penta,
a world-leading supplier of power solutions for marine and industrial applications. As Volvo have many diverse interests
in other industries, Inspirit Energy and Volvo are also reviewing many other applications which can utilise our technology.
During the last 6 months of the financial year, the Covid pandemic spread globally. In these unprecedented times and
given the actions that global governments took to control COVID-19, our European partners assisting with the
development of the Inspirit Charger ceased operations and temporarily diversified into the manufacturing of Personal
Protection Equipment (PPE) due to the high demand around Europe and the world. We were advised that as the demand
decreases for medical supplies and their supply chain for materials recover availability, they will be returning to their
normal engineering manufacturing sector and would therefore be able to assist with the testing of our microCHP boiler
technology.
To reduce the impact of Covid, Inspirit Energy are diversifying our supplier base with multiple suppliers in different
countries. If any country has further lockdowns or restrictions, we would be able to swap suppliers with minimal impact
on our project plan.
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE
The Director’s believe they have acted in the way most likely to promote the success of the Company for the benefit of its
members as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
• Consider the likely consequences of any decision in the long term,
• Act fairly between the members of the Company,
• Maintain a reputation for high standards of business conduct,
• Consider the interests of the Company’s employees,
•
• Consider the impact of the Company’s operations on the community and the environment.
Foster the Company’s relationships with suppliers, customers and others, and
The Company is quoted on AIM and its members will be fully aware, through detailed announcements, shareholder
meetings and financial communications, of the Board’s broad and specific intentions and the rationale for its decisions.
When selecting suppliers and materials, issues such as the impact on the community and the environment have actively
been taken into consideration.
The Company pays its employees and creditors promptly and keeps its costs to a minimum to protect shareholders
funds.
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Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2020
DEVELOPMENTS DURING THE YEAR
During the beginning of the financial year, the Company embarked on multiple applications for the Stirling technology and
were in advance discussions with a large car/marine engine manufacturer, to develop a unit for the shipping industry with
current output of 11.68kw and were in discussions with our European manufacturing partners and sourcing supply chains.
During the last 6 months of the financial year, the Covid pandemic spread globally. In these unprecedented times and
given the actions that Global Governments took to control COVID-19, our European partners assisting with our Inspirit
charger went into lockdown and temporarily diversified their manufacturing into producing Personal Protection Equipment
(PPE) due to the high demand over Europe and rest of the World. We were advised that as the demand decreases for
medical supplies and their supply chain for materials recover availability, they will be returning to their normal engineering
manufacturing sector and would therefore be able to assist with the testing of our microCHP boiler technology. Inspirit
achieved a number of significant milestones during and after the reporting period including the signing of a letter of
support with world-leading marine engine manufacturer Volvo Penta for the development of a Waste Heat Recovery
system as well as entering discussions with a leading gasification technology company regarding a possible collaboration.
Other developments during the year:
On 18 November 2019, the Company announced that it had raised £300,000 through the placing of 249,999,998 ordinary
shares of 0.001 pence each in the share capital of the Company at 0.12 pence per Ordinary Share.
On 25 November 2019, the Company announced that it had received conversion notices from the Convertible Loan Notes
(CLN’s) issued on 4 May 2018. The Company issued 1,148,571,422 Ordinary Shares at a price of 0.07p per Ordinary
Share with an admission date of 29 November 2019. £41,000 CLN’s rained outstanding at this date. Each of the Ordinary
shares issued attached one half of a warrant valid for 12 months from the date of issue of the new shares. John Gunn,
Chairman and CEO was issued 142,857,142 ordinary shares after converting his CLN and Nilesh Jagatia, Finance
Director was issued 28,571,428 ordinary shares after converting his CLN. Both John Gunn and Nilesh Jagatia were issued
one half a warrant attached to the terms of the original CLN valid for 12 months from the date of issue of the new shares.
On 5 December 2019, the Company announced that it had received conversion notices from the Convertible Loan Notes
(CLN’s) issued on 4 May 2018. The Company issued 54,000,002 Ordinary Shares at a price of 0.07p per Ordinary Share
with an admission date of 10 December 2019. £3,200 CLN’s remained outstanding at this date. Each of the Ordinary
shares issued attached one half of a warrant valid for 12 months from the date of issue of the new shares.
On 24 December 2019, the Company announced that it had received conversion notices from the Convertible Loan Notes
(CLN’s) issued on 4 May 2018. The Company issued 4,571,433 Ordinary Shares at a price of 0.07p per Ordinary Share
with an admission date of 6 January 2020. 2019. £Nil CLN’s remained outstanding at this date. Each of the Ordinary
shares issued attached one half of a warrant valid for 12 months from the date of issue of the new shares.
BOARD CHANGES
None.
RESULTS AND DIVIDENDS
The Group made a loss after taxation of £199,000 (2019: loss of £239,000) and net assets were £2,416,000 (2019:
£1,459,000).
The Directors do not propose a dividend for the year to 30 June 2020 (2019: £nil).
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Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2020
KEY PERFORMANCE INDICATORS
The key performance indicators used by the Board to monitor the performance of the Group, are set out below:
PLC S
Net asset value
Net asset value – fully diluted per share
Closing share price
Market capitalisation
COVID 19 ASSESMENT
30 June
2020
30 June
2019
£2,416,000
£1,459,000
0.10p
0.05p
0.10p
0.0275p
£1,451,891
£390,722
During the financial year, the Board recognised that these were unprecedented times and that the necessary actions
global Governments took to control COVID-19 were inevitably causing disruption to the economy. As with all businesses,
we were not immune to this and were experiencing movement and lock down restrictions in the UK and Europe. As a
result, our European partners and Marine counterparts were reviewing constantly the timeline in resuming development
and discussions of our multi product application. Our European partners assisting with our Inspirit charger went into
lockdown and temporarily diversified their manufacturing into producing Personal Protection Equipment (PPE) due to the
high demand over Europe and the world. After the reporting period, both European manufacturing and marine
counterparts remained in lockdown until autumn 2020.
Looking forward, whilst our counterparts recover from lockdown, we advanced our discussions with out marine
counterpart on adapting our Inspirit Charger engine on two versions of their marine engines. The board believe that the
"Inspirit Charger " is over 50% compatible for the marine engine application and would reduce considerable time in
research and development.
To mitigate impact of COVID, the Company is diversifying our supplier base with multiple suppliers in different countries.
In the event that any country has further lock downs or restrictions we would be able to swap supplier with the minimal
impact on our project plan.
KEY RISKS AND UNCERTAINTIES
Early stage product development carries a high level of risk and uncertainty, although the rewards can be outstanding.
At this stage, there is a common risk associated with all pioneering technologically advanced companies in their
requirement to continually invest in research and development. The Group has already made significant investments in
addressing opportunities in the renewable energy sector.
Other risks and uncertainties within the Group are detailed in principle 4 of the Corporate Governance Report.
GOING CONCERN RISK
The Group requires financing to fund its operations through to revenue generation. There is the risk that the Group will
not have access to sufficient funds to achieve this. The Group seek to mitigate through forecast preparation and
monitoring.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The principal financial risk faced by the Group is liquidity risk. The Group’s financial instruments included borrowings and
cash which it used to finance its operations. At the year end, borrowings did not include any borrowings supplied from the
Group’s principal bank, Barclays Bank Plc. More information is given in Note 3 to the Financial Statements. The Group
has no significant concentrations of credit risk.
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Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2020
CAPITAL RISK MANAGEMENT
The Group’s objectives when managing capital are to safeguard the Group’s and Company’s ability to continue its
activities and bring its products to market. Capital is defined based on the total equity of the Company. The Company
monitors its level of cash resources available against future planned activities and may issue new shares in order to raise
further funds from time to time.
MANAGEMENT AND KEY PERSONNEL
The risk of high turnover of staff and other specialist staff recruitment issues and this would have an impact on operation
and reputation. The Board provides recognition and support for well performing existing employees and has Implemented
and monitors robust health and safety measures at the workplace.
TECHNOLOGY RISK
The Group’s success is dependent on its technology and management’s ability to market it successfully. There is the risk
that the technology could become obsolete or a rival could develop an improved alternative. Management seek to mitigate
this by constantly seeking to improve the product, closing watching its competitors and employing skilled personnel.
ASSESSMENT OF BUSINESS RISK
The Board regularly reviews operating and strategic risks. The Group’s operating procedures include a system for
reporting financial and non-financial information to the Board including:
•
•
•
•
•
reports from management with a review of the business at each Board meeting, focusing on any new decisions/risks
arising;
reports on the performance of 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.
ON BEHALF OF THE BOARD
N Jagatia
Director
24 December 2020
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2020
The Directors present their annual report on the affairs of the Group and Company, together with the audited financial
statements for the year ended 30 June 2020.
PRINCIPAL ACTIVITIES
The principal activity of the Group and Company is that of development and commercialisation of the mCHP boiler
and application of the sterling technology in other sectors.
Details of the Group’s principal activity 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 Company’s issued share capital at the beginning and end of the accounting year were:
J Gunn
N Jagatia
A Samaha
Number of
ordinary shares
Number of
share options and warrants
30 June
2020
30 June
2019
30 June
2020
30 June
2019
507,983,664
439,696,246
71,428,571*
30,571,428
2,000,000
14,285,714*
-
-
-
-
-
-
*warrant conversion price of 0.07p per share and issued on 22 November 2019
INDEMNITY OF OFFICERS
The Company maintains appropriate insurance cover against legal action brought against its Directors and officers.
RESEARCH AND DVELOPMENT
For details of the development activities undertaken in the year, please refer to principle 1 of the Corporate
Governance Report.
BOARD OF DIRECTORS
The Board is responsible for strategy and performance, approval of major capital projects and the framework of
internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely information.
All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring the
Board procedures are followed and that applicable rules and regulations are complied with.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority. In addition to the publication of an annual report and an
interim report, there is regular dialogue with shareholders and analysts. The Annual General Meeting is viewed as a
forum for communicating with shareholders, particularly private investors. Shareholders may question the Executive
Chairman and other members of the Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Group's system of internal control and for reviewing the
effectiveness of these systems. The risk management process and systems of internal control are designed to
manage rather than eliminate the risk of the Group failing to achieve its strategic objectives. It should be recognised
that such systems can only provide reasonable and not absolute assurance against material misstatement or loss.
The Group has well established procedures which are considered adequate given the size of the business.
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2020
MATTERS COVERED IN THE STRATEGIC REPORT
The business review, results, review of KPI’s and future developments are included in the Strategic Report and
Chairman’s Statement.
GOING CONCERN
As at 30 June 2020 the Group had a cash balance of £128,000 (2019: £40,000), net current liabilities of £285,000
(2019: net current liabilities of £304,000) and net assets of £2,416,000 (2019: £1,495,000). The Group raises money
for development, capital projects and working capital purposes as and when required and has raised £257,500 post
year end by exercise of warrants by warrant holders. The Group has also successfully reduced its core spend during
the year whilst still managing to move its projects forward and is in negotiations to renew its expired drawdown facility.
There can be no assurance that the Group’s projects will become fully developed and reach commercialisation nor
that there will be sufficient cash resources available to the Group to do so.
Whilst further funds will likely be raised next year in order to fund the product development activities, the key
justification for the Group be a going concern is that the committed cost base is very low compared to the current cash
reserves and thus discretionary costs can be reduced/deferred/eliminated as and when needed during the going
concern period.
EVENTS AFTER THE REPORTING DATE
On 3rd November 2020, the Company announced that it had announced that the Company has agreed into a letter of
support for the development of a Waste Heat Recovery ("WHR") system following a successful model design and
application demonstration with Volvo Penta, a world-leading supplier of power solutions for marine and industrial
applications.
On 3rd November 2020, the Company announced that it had received Warrant Conversion notices for £150,000 at
0.07 per share on the Warrants attached to Convertible Loan Notes (CLN's) issued on the 4th May 2018.
On 4th November 2020, the Company announced that it had announced that that it is in discussions regarding a
possible collaboration with an engineering company with expertise in advanced gasification.
On 16 November 2020, the Company announced that it had received warrant conversion notices for £107,500 at
0.07 p per share on the Warrants attached to Convertible Loan Notes (CLN's) issued on the 4 May 2018 to the
Directors of the Company and accordingly issued 153,571,427 Ordinary Shares. The ordinary shares in relation to
the converted warrants consisted of: the Chairman and CEO, John Gunn was issued 71,428,571 new Ordinary Shares
of 0.001p each; Global Investment Strategy UK Ltd (A company with direct control by John Gunn) was issued
67,857,142 new Ordinary shares and Nilesh Jagatia, Finance Director, was issued 14,285,714 Ordinary Shares
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2020
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
directors have prepared the group and parent company financial statements in accordance with 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 parent company and of the profit or loss of the group and the parent company for that period. In
preparing these financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
•
•
state whether applicable 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 group
and the parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the
group and the parent company and enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the group and the parent company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions. The Company is compliant with AIM Rule 26 regarding
the Company’s website. See www.inspirit-energy.com.
DISCLOSURE OF INFORMATION TO AUDITOR
In the case of each person who was a Director at the time this report was approved:
•
•
so far as that director is aware there is no relevant audit information of which the Company’s auditor is unaware:
and
that director has taken all steps that the director ought to have taken as a director to make himself aware of any
relevant audit information and to establish that the Company’s auditor is aware of that information.
INDEPENDENT AUDITOR
A resolution that PKF Littlejohn LLP be re-appointed will be proposed at the annual general meeting. PKF Littlejohn
LLP have indicated their willingness to continue in office.
ON BEHALF OF THE BOARD
N Jagatia
Director
24 December 2020
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2020
CORPORATE GOVERNANCE REPORT
Inspirit Energy Holdings plc
Quoted Companies Alliance Code (“QCA Code”)
Principles:
Application:
1) Strategy and
business model to
promote long-term
values for
shareholders
This section complies with the requirements of the QCA Code.
Inspirit Energy Holdings plc has maintained its focus on the application of the
Stirling engine in various sectors as well as progressing the commercialisation
efforts of the Group’s micro combined heat and power (“mCHP”) boilers amidst the
backdrop of the challenges posed by the COVID-19-pandemic. Despite these
market headwinds, Inspirit achieved a number of significant milestones including
the signing of a letter of support with world-leading marine engine manufacturer
Volvo Penta for the development of a Waste Heat Recovery system as well as
entering discussions with a leading gasification technology company regarding a
possible collaboration.
These milestones demonstrate how the previous year has been a pivotal one for the
business and its strategic direction as an R&D company. The operating Board has
worked throughout to identify differing potential applications for the technology
where there is significant potential for growth, as well as considering the future
strategy and funding of its operating subsidiary.
As recently announced by the UK Government and set out in its Energy White Paper
entitled ‘Powering our net zero future’, new measures will be introduced to advance
the decarbonisation of heat and transport including the switching of home heating, at
scale, to low-carbon alternatives with the Government outlining a ‘decisive shift’ away
from new gas boiler installations which are expected to be phased out by mid-2030s.
The Directors believe that the positive progress over the last year in the alternative
applications of the Stirling technology in the Marine and Waste Heat Recovery (WHR)
sectors is strong evidence of the need to refocus our strategic objectives towards
these areas. It should be noted that this is by no means an abandonment of our
MicroCHP boiler technology – on the contrary, we are actively looking into the
application of the technology in the rapidly emerging hydrogen market. Additionally,
with the continued growth demand for electric cars, the Board will be looking at the
automotive sector to utilise the Stirling engine to provide a source of power to charge
electric motor cars.
The Group will also potentially make investments in complementary areas and
technologies that will utilise the Group's existing technical expertise.
2) Meeting and
understanding
shareholders needs
and expectations
This section complies with the requirements of the QCA Code.
INSP has a close and ongoing relationship with its shareholders. The Company also
places great importance on effective and timely communication with its shareholders.
Shareholders are encouraged to attend the Company’s meetings (including the
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2020
3) Considering
stakeholders and
social
responsibilities and
their implications
for long term
success
Annual General Meeting) to provide feedback and to actively engage with the
management on a regular basis. Furthermore, the INSP’s shareholders and investors
can keep themselves updated about the current Company’s position by visiting the
INSP’s website http://www.inspirit-energy.com.
This section complies with the requirements of the QCA Code
INSP’s Board recognises that the long-term success of the Group is reliant on efforts
of its employees, consultants, suppliers, regulators and stakeholders.
Employees: In order to support employees’ growth and enforce social responsibilities
INSP’s Board has implemented systems to monitor and evaluate employees’
performance and to encourage well performing employees to progress further by
supporting them to attend courses. Employees’ performance is monitored through a
process designed to encourage open and confidential communication between the
management and the employees on a regular basis.
Consultants: The Board recognises that consultants play a vital part for INSP as they
bring knowledge and expertise for specific areas, and in some instances, they also
provide training for existing staff.
Suppliers: INSP maintains a good working relationship with its suppliers to provide
for its growing business and to support its existing needs.
Regulators: The Board monitors and implements any legal or regulatory changes
where possible both domestically and overseas and is fully committed to compliance.
Stakeholders: INSP encourages its shareholders to actively participate in meetings
and shareholders are provided with the opportunity to give feedback on a regular
basis.
4) Risk Management
This section complies with the requirements of the QCA Code.
The risks in the Group are managed by the audit committee which is responsible to
the Board to work closely with the executive directors to identify, implement and
manage risks faced by the Group.
INSP has robust controls and procedures in place to manage internal controls of the
Company and these are considered to be appropriate to the size and complexity of
the organisation. The audit committee has been set up to evaluate and manage
significant risks faced by the Group.
Control is established mainly through the Group’s directors who monitor and support
the day to day running of the Group and where possible comply with the Boards’ and
shareholders concerns and requirements.
INSP has identified and implemented the following risks and controls to mitigate risks:
Activity:
Risk
Impact
Control(s)
Management
High turnover of
staff and other
recruitment issues.
Operational
and
reputational
impact.
Recognition and
support for well
performing existing
employees.
Implementing and
monitoring of robust
health and safety
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2020
/
Non-compliance.
Regulatory
legal
adherence
Strategic
Failure of systems
and controls.
Financial
Internal: Inadequate
systems and
controls of
accounting in place
and
liquidity risk.
External:
Market and credit
crisis;
Short term liquidity
freezes;
Commercialisation
Brexit.
measures at
workplace.
Loss of
licences
resulting in
inability to
comply with
the regulatory
/ legal
requirements.
Robust policies and
procedures to be
followed.
Maintaining effective
communication with
the Company’s
Auditors and NOMAD
on regular basis.
Loss of key
data and
inability to
operate
effectively.
Loss of
business.
Inability to
continue
trading as a
going
concern.
Disaster recovery
policy to be followed in
case of crisis.
Maintaining strong IT
systems and controls
in place.
The Board to regularly
review operating and
strategic risks.
The audit committee to
provide adequate and
sufficient information
to the Company’s
external auditors.
Robust capital and
liquidity levels in place
alongside effective
accounting systems
and controls.
Regulatory
environment in
domestic
power market
External:
Changes in
legislation regarding
domestic power
market.
Potential to
undermine
microchip
boiler
product.
Understanding
regulatory
environment and
adapting system
accordingly.
Product Risk
Internal:
Failure to develop
commercial product.
Potential for
significant
financial loss.
Testing of product
Certification.
Understanding of
market place and
competition.
The above matrix is kept up to date and regularly reviewed as changes arise in order
to mitigate risks.
5) Maintain the board
as a well-
functioning and
balanced team led
by the chair
This section does not comply with the requirements of the QCA Code as the board
composition does not include a Non-Executive Chairman and two Non-Executive
Directors.
At the date of this publication the Board comprises of the Chairman (John Gunn), the
Chief Financial Officer (Nilesh Jagatia) and the independent Non-Executive Director
(Anthony Samaha). Further detail about the skills and capabilities of these directors
are set out in the principle six below.
P a g e | 13
14
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2020
The letter of appointment of the Company’s Directors and Secretary are available for
inspection at the Company’s registered office and all directors are subject to re-
election at intervals of no more than three years.
The Board is responsible for strategy and performance of major capital projects and
the framework of internal controls. All directors have access to seek independent
advice should they feel that their knowledge of the given task is insufficient. There is
a clear balance between the executive director and the non-executive director.
Furthermore, the directors liaise with the Company Secretary (Nilesh Jagatia), who
is responsible for compliance with the Board procedures and that applicable rules
and regulations are complied with.
The Board meets quarterly. The Board established the following committees; Audit
Committee and Remuneration Committee. All Directors are encouraged to participate
and attend meetings on a regular basis and the attendance is closely monitored.
Despite the QCA recommendation of having two independent directors INSP has
adopted to have only one non-executive director and a joint role of Chief Executive
Director and the Chairman as they feel that this is appropriate to the current size and
complexity of the organisation. INSP is still in the R&D phase of its business cycle
and therefore relies on a team of consultants in developing the product. Following
conclusion of this process, certification is managed externally, and then commercial
trials would commence. As such the role of the Board, at this stage, is to oversee this
process, review strategy, hold high level discussions regarding possible commercial
trials and ensure adequate funding. As such, the current Board is deemed sufficient.
As and when the business develops beyond this stage the Board will review its
requirements at this stage. The Group is actively looking to appoint an additional non
executive director to provide a balance of the non executive directors and executives
as per the QCA.
This section complies with the requirements of the QCA Code.
The Chairman: John Gunn
Mr Gunn is the founder of INSP and a 24.4% ( Direct and indirect) shareholder of the
Company. Mr Gunn is also the managing director and majority shareholder of Global
Investment Strategy UK Limited and a majority shareholder of Octagonal Plc. With a
career spanning over 30 years in the financial services industry, Mr Gunn began his
career in 1987 at Hoare Govett and has since worked at Carr Sheppards Limited,
Assicurazioni Generali S.p.A. and Williams de Broe, where he was a senior
investment manager until 2002.
Chief Financial Officer: Nilesh Jagatia
Mr Jagatia currently serves as Finance Director at INSP and also currently holds
Finance Director position with AIM quoted Octagonal Plc and Limitless Earth Plc
(LME). Nilesh has been involved with several IPO’s and was previously Group
Finance Director of an AIM quoted Online Media and Publishing Company for a
period of five years until July 2012. Nilesh has over 20 years’ experience, including
senior financial roles in divisions of both Universal Music Group and Sanctuary Group
plc. He served as a Finance Director for an independent record label that expanded
into the US. Nilesh is a qualified accountant and holds a degree in finance.
Non-Executive Director: Anthony Samaha
Mr Samaha is a Chartered Accountant (Australia) who has over 20 years’ experience
in accounting and corporate finance. Mr Samaha has worked for over 10 years with
international accounting firms, including Ernst & Young, principally in corporate
finance, and mergers and acquisitions. He has extensive experience in the listing and
management of AIM quoted companies and is currently Executive Director of AIM
traded Reabold Resources Plc.
P a g e | 14
6) Directors
experience, skills
and capabilities
15
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2020
7) Evaluation of the
Board’s
performance
8) Promoting
corporate culture,
ethical values and
behaviours
9) Maintenance of
governance
structures and
processes to
support good
decision making by
the board
In addition to the Board directors above INSP uses Beaumont Cornish Limited as
their nominated adviser (NOMAD), Hill Dickinson LLP to assist with legal and
regulatory matters and FTB ITC Services Ltd to support the IT systems.
This section complies with the requirements of the QCA Code.
INSP is fully committed to uphold Directors independence and to regularly evaluate
their performance.
Where appropriate, INSP sets targets which the Directors have to adhere to. Each
Director is assigned with an individual target which is linked to the corporate and
financial targets of the Group. Career support, development and training may also be
provided to the Directors where necessary.
This section complies with the requirements of the QCA Code.
INSP is committed to ethical conduct and to the governance structures that ensure
that the Group delivers long term value and earns the trust of its shareholders. The
shareholders are encouraged at General Meetings to express their views and
expectations in an open and respectful dialogue.
The Board is fully aware that their conduct impacts the corporate culture of the Group
as a whole and that this will impact the future performance of the Group. The Directors
are invited to provide an open comprehensive dialogue and constructive feedback to
the employees, and to promote ethical values and behaviours within the Group.
INSP also believes that doing business honestly, ethically, with integrity helps to build
long-term, trusting relationship with our employees, customers, suppliers and
stakeholders. Our Code of business Conduct means that our employees understand
that we provide ourselves in high ethical standards. INSP has zero tolerance for
bribery and corruption among our employees.
This section complies with the requirements of the QCA Code.
The Board is responsible for the ultimate decision making, the structures and
processes adopted by INSP. The Board is headed by the Chairman. In order to
comply with the Companies Act 2006 or QCA code the Board recognises that it must
comply with the following principles set out by the Act:
-
-
-
-
-
duty to exercise independent judgement;
duty to exercise reasonable care, skill and due diligence;
duty to avoid conflicts of interest;
duty not to accept benefits from third parties; and
duty to declare interest in a proposed transaction or arrangement.
The Chairman is responsible for leading the Board, sets the agenda and ensures it is
an effecting working group at the head of the Company. The Chairman is also
responsible for promoting culture of openness and effective communication with
shareholders and to ensure that all board members receive accurate, timely and clear
information.
The Executive Directors are responsible for day to day running of the Company and
effective communications with the Board and the Shareholders. They represent the
Company to ensure quality of information provision, they challenge and monitor
performance of the teams, and they set business plans and targets for the Company.
Non-Executive Director INSP has one Non-Executive Director who is an independent
director. This is to reinforce the Group’s commitment to a transparent and effective
P a g e | 15
16
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2020
governance structure which encourages and provides ample opportunity for
challenge and deliberation. The Non-Executive Director’s objective is to scrutinise the
performance of the Board and senior management as well as to monitor performance,
agree goals and objectives. They will satisfy themselves on the integrity of financial
information and that financial controls and systems of risk management are robust
and fit for purpose. The Non-Executive Director is also closely working with
Remuneration Committee as they are responsible for determining appropriate levels
of remuneration of Executive Directors and have a prime role in appointing / removing
senior management.
The Company established the following committees to help with processes,
structures and support good decision making by the Board.
Audit Committee – The Audit Committee is currently chaired by Anthony Samaha and
its other member is Nilesh Jagatia . The Committee provides a forum for reporting by
the Group’s external auditors. The committee is also responsible for reviewing a wider
range of matters, including half-year and annual results before their submission to
the board, as well as monitoring the controls that are in force to ensure the integrity
of information reported to shareholders. The Audit Committee will advise the Board
on the appointment of external auditors and on their remuneration for both audit and
non-audit work, and it will also discuss the nature, scope and results of the audit with
the external auditors. The committee will keep under review the cost effectiveness,
the independence and objectivity of the external auditors.
Remuneration Committee – The Remuneration Committee is currently chaired by
Anthony Samaha and its other member is John Gunn. The Committee is responsible
for making recommendations to the Board, within agreed terms of reference, on the
Company’s framework of executive remuneration and costs. The Remuneration
Committee determines the contract terms, remuneration and other benefits for the
Executive Directors,
related bonus schemes and
compensation payments. The Board itself determines the remuneration of the non-
executive directors.
including performance
It is recognised that if the Group grows, it may be necessary to review the current
structure in order to provide better segregation of the responsibilities and clear lines
of reporting, that are consistent with industry standards.
This section complies with the requirements of the QCA Code.
The Company recognises that its shareholders are imperative for future growth and
prosperity of the Company. The Shareholders are treated equally both in relation to
participation at meetings and in the exercising of voting rights. INSP’s shareholders
are encouraged to attend the annual general meetings and the Company provides
regulatory news updates and any other matters the Board feels fit. The Company
maintains the following website https://www.inspirit-energy.com/investors for
investor relations.
10) Shareholders
communication
P a g e | 16
17
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2020
Opinion
We have audited the financial statements of Inspirit Energy Holdings Plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 30 June 2020 which comprise the Consolidated Statement
of Comprehensive Income, the Consolidated and Parent Company Statement of Financial Position, the
Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent
Company Statements of Cash Flow 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 and as regards the parent company financial statements, as applied in accordance with
the provisions of the Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 30 June 2020 and of the group’s and parent company’s loss for the year
then ended;
the group financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs
as adopted by the European Union and as applied in accordance with the provisions of the
Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
group and parent company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and
we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require
us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties
that may cast significant doubt about the group’s or the parent company’s ability to continue to
adopt the going concern basis of accounting for a period of at least twelve months from the date
when the financial statements are authorised for issue.
P a g e | 17
18
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2020
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative
thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit
procedures.
Materiality for the group financial statements was set at £73k (2019: £73k). This was calculated based
on 3% of the net assets which we determined, in our professional judgment, to be the key principal
benchmark within the financial statements relevant to members of the parent company in assessing
financial performance of the group.
Materiality for the parent company financial statements was set at £68k (2019: £68k), determined with
reference to a benchmark of 3% of the net assets, for the same reason as the Group.
We agreed to report to those charged with governance all corrected and uncorrected misstatements we
identified through our audit with a value in excess of £3.65k (2019: £3.65k). We also agreed to report
any 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, Inspirit Energy Plc, Inspirit Energy Limited and Somemore Limited were subject
to full scope audit procedures in accordance with ISA (UK) 600 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 audit 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 below in the key audit matters section of this report.
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
How the scope of our audit responded to the key
audit matter
Recoverability of Intangible Assets
Carrying value of intangible assets of £2.7m (2019:
£2.6m) Refer to Note 4: Critical Accounting
Estimates
Intangible Assets is the largest amount within the
financial statements and represents the asset
Our work in this area included:
• Obtaining management’s assessment of
impairment and reviewing and challenging the
key estimates and judgements used therein;
• Performing sensitivity analysis on the key
areas of estimation/judgement and verifying to
P a g e | 18
19
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2020
(development of its Stirling technology) from which,
if successful, the Group will generate revenue.
There is a risk that the development costs
capitalised during the year do not meet the
recognition criteria of IAS 38 “Intangible Assets”.
There is also the risk that the carrying value of the
intangible asset is impaired.
Going Concern
As at 30 June 2020 the Group had cash reserves
totalling £128k. As the Group is non-revenue
generating, there is a reliance on raising funds
through issuing debt and/or equity. Additional
funds may need to be raised during the going
concern assessment period
future
capital
operations
requirements. In addition, the Group has not
in accordance with
historically performed
and meet working
fund
to
supporting documentation where possible
including benchmarking against companies in
the same industry;
• Substantive
testing on
to
intangible assets to ensure they are eligible to
be capitalised under IAS 38; and
the additions
• Reviewing disclosures
in
the
financial
statements to ensure compliance with IFRS.
Upon discussing developments in the year with
Management and testing the additions in the year,
the costs capitalised in the year were found to be
capitalised in accordance with IAS 38.
The positive developments in the year with respect
to the application of the Stirling technology to the
Marine and Waste Heat Recovery industries
demonstrated the commercial potential of Inspirit’s
technology and thus indicate that the capitalised
development costs as at 30 June 2020 are
materially recoverable.
Successful commercialisation of
the Group’s
Stirling technology is reliant both on project
completion, sufficient funds and the required
regulatory approvals being obtained. It is drawn to
the users’ attention that none of these matters is
certain. Failure to achieve the above may result in
an impairment to the assets capitalised.
Furthermore, the successful commercialisation of
the application of the Stirling engine technology is
reliant on further testing and, should results be
positive, further discussions with the interested
parties.
Our work in this area included:
▪ A detailed review of budgets and cash
flow forecasts including challenging key
assumptions used;
▪ Comparing actual performance to budget;
P a g e | 19
20
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2020
budget. As such there is the risk that the Group
is not a going concern.
▪ Challenging management as to when the
Group’s core product is likely to achieve
commercial sales;
▪ Evaluating the track record of
assumptions used versus actual results in
order to assess the historical accuracy of
the Group’s forecasting;
▪ Discussions with management;
▪ Reviewing the Group’s cash position as
at the date of approval of the financial
statements, and understanding the
available headroom under the loan facility
agreement; and
▪ Considering the impact of COVID-19 on
the Group’s ability to remain a going
concern.
Upon review it was ascertained that the Group’s
latest cash reserves exceed their committed costs
over the going concern period. As such, the
application of the going concern assumption is
appropriate.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information. Our
opinion on the group and parent company financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. 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.
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.
P a g e | 20
21
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2020
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate
•
for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and
returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the
preparation of the group and parent company financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the group and parent company financial statements, the directors are responsible for
assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
P a g e | 21
22
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2020
anyone, other than the company and the company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Joseph Archer (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
24 December 2020
15 Westferry Circus
Canary Wharf
London E14 4HD
P a g e | 22
23
Inspirit Energy Holdings plc
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 June 2020
Note
7
8
CONTINUING OPERATIONS:
Administrative expenses
OPERATING LOSS
LOSS BEFORE INCOME TAX
Income tax credit
NET LOSS AND TOTAL COMPREHENSIVE
INCOME LOSS FOR THE YEAR ATTRIBUTABLE TO
THE OWNERS OF THE PARENT
EARNINGS PER SHARE
2020
£’000
(240)
(240)
(240)
41
(199)
2019
£’000
(264)
(264)
(264)
25
(239)
- Basic and diluted earnings per share
9
(0.009p)
(0.017p)
(attributable to owners of the parent)
P a g e | 23
24
Inspirit Energy Holdings plc
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 June 2020
Company Number: 05075088
GROUP
COMPANY
Note
2020
£’000
2019
£’000
2020
£’000
2019
£’000
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Investment in subsidiaries
CURRENT ASSETS
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
10
11
12
13
14
15
15
2,666
2,570
35
-
38
-
2,701
2,608
49
128
177
63
40
103
-
-
-
-
2,440
2,440
2,440
2,440
4
126
130
9
38
47
2,878
2,711
2,570
2,487
1,967
9,192
3,150
3
1,818
8,185
3,150
3
1,967
9,192
3,150
3
-
1,818
8,185
3,150
3
-
Reverse acquisition reserve
(7,361)
(7,361)
Retained losses
TOTAL EQUITY
NON-CURRENT LIABILITIES
Borrowings
CURRENT LIABILITIES
Trade and other payables
Borrowings
TOTAL LIABILITIES
TOTAL EQUITY AND
LIABILITIES
18
17
18
(4,535)
(4,336)
(12,132)
(11,852)
2,416
1,459
2,180
1,304
-
-
362
100
462
462
845
845
307
100
407
1,252
-
-
290
100
390
390
845
845
238
100
338
1,183
2,878
2,711
2,570
2,487
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 £280,000 (2019: loss of £262,000).
These Financial Statements were approved by the Board of Directors on 24 December 2020 and were signed on its
behalf by
N Jagatia
Director
P a g e | 24
25
Inspirit Energy Holdings plc
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 June 2020
Attributable to the owners of the parent
Share
capital
Share
premium
Other
reserves
Merger
reserve
Reverse
acquisition
reserve
Retained
losses
Total
Equity
£’000
£’000
£’000
£’000
£’000
£’000 £’000
BALANCE AT 30 June 2018
1,818
8,185
Loss for the year
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
TRANSACTIONS WITH OWNERS
RECOGNISED DIRECTLY IN
EQUITY
BALANCE AT 30 June 2019
Loss for the year
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
Share issues
Share issue costs
Share options lapsed
TRANSACTIONS WITH OWNERS
RECOGNISED DIRECTLY IN
EQUITY
-
-
-
-
-
-
1,818
8,185
-
-
149
-
-
-
-
1,028
(21)
-
149
1,007
BALANCE AT 30 June 2020
1,967
9,192
3
-
-
-
3
-
-
-
-
-
0
3
3,150
(7,361)
(4,097)
1,698
-
-
-
-
-
-
(239)
(239)
(4,336)
1,459
-
-
3,150
(7,361)
(4,336)
1,459
-
-
-
-
-
0
-
-
-
-
-
0
(199)
(199)
(4,535)
1,260
-
-
-
0
1,177
(21)
-
1,156
3,150
(7,361)
(4,535)
2,416
P a g e | 25
26
Inspirit Energy Holdings plc
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 June 2020
Attributable to equity shareholders
Share
capital
£’000
Share
premium
£’000
Merger
Reserve
Other
reserves
£’000
Retained
losses
£’000
BALANCE AT 30 June 2018
1,818
8,185
3,150
Loss for the year
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
TRANSACTIONS WITH OWNERS
RECOGNISED DIRECTLY IN
EQUITY
-
-
-
-
-
-
-
-
-
BALANCE AT 30 June 2019
1,818
8,185
3,150
Loss for the year
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
Share issues
Share issue costs
Share options lapsed in the year
TRANSACTIONS WITH OWNERS
RECOGNISED DIRECTLY IN
EQUITY
-
-
149
-
-
-
-
1,028
(21)
-
149
1,007
-
-
-
-
-
-
3
-
-
-
3
-
-
-
-
-
-
Total
Equity
£’000
1,728
(424)
(424)
(11,428)
(424)
(424)
-
-
(11,852)
(280)
(280)
-
-
-
-
1,304
(280)
(280)
1,177
(21)
-
1,156
BALANCE AT 30 June 2020
1,967
9,192
3,150
3
(12,132)
2,180
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27
Inspirit Energy Holdings plc
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 June 2020
GROUP
GROUP
COMPANY
COMPANY
Note
2020
£’000
2019
£’000
2020
£’000
2019
£’000
CASH FLOWS FROM OPERATING
ACTIVITIES
Loss after tax
Depreciation
Interco loan provision
Tax credit
Decrease/(increase) in trade and other
receivables
Increase/(decrease) in trade and other
payables
Tax received
NET CASH (USED IN) / GENERATED FROM
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING
ACTIVITIES
Development costs
Purchase of tangible fixed assets
Increase in loan to subsidiary
NET CASH USED IN INVESTING
ACTIVITIES
CASH FLOWS FROM FINANCING
ACTIVITIES
Gross proceeds from issue of shares
Share issue costs
NET CASH GENERATED 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
15
(199)
(239)
(280)
(424)
6
-
(41)
9
87
46
7
-
(25)
340
44
37
-
75
-
5
84
-
-
207
-
273
85
-
(92)
164
(116)
141
(96)
(169)
(3)
-
-
-
(99)
(169)
300
(21)
279
88
40
128
-
-
-
(5)
45
40
-
-
(75)
(75)
300
(21)
279
88
38
126
-
-
(143)
(143)
-
-
-
(2)
40
38
During the year ended 30 June 2020, the following major non-cash transactions occurred:
-
£876,000 of borrowings and other creditors were settled via the issue of shares
P a g e | 27
28
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
1
GENERAL INFORMATION
The principal activity of Inspirit Energy Holdings plc during the period was that of developing and
commercialising the mCHP boiler and is currently in the process of refocusing its expertise in the application
of the Stirling engine technology in different sectors including Marine and Waste Heat Recovery
These financial statements show the consolidated results of the Group for the year ended 30 June 2020
together with the comparative results for the year ended 30 June 2019.
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 financial statements have been prepared in accordance with applicable International Financial Reporting
Standards (“IFRS”) and IFRS Interpretations Committee (IFRS IC) as adopted and endorsed by the European
Union (“EU”) and with the Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical cost convention and are presented in GBP
Pound Sterling, rounded to the nearest £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 financial statements are disclosed in Note 4.
GOING CONCERN
The financial statements have been prepared on the going concern basis. The mCHP boiler development
project has not yet reached commercialisation and as such the Group and Company are not generating
revenues. However, the Group is refocusing its strategy towards alternate applications of its existing
technology in other lucrative sectors. These sectors include marine, waste heat recovery and automotive
industries. An operating loss and cash outflows are expected in the 12 months subsequent to the date of
these financial statements and therefore the Group will need to manage its cash resources appropriately.
Based on the board approved forecasts which includes consideration of all relevant matters, the Directors
have a reasonable expectation that the Group and the Company has access to adequate resources to
continue in existence for the foreseeable future and therefore they continue to adopt the going concern basis
of accounting in preparing these financial statements. The forecasts include continued focus on cash
management and, if required, accruing Directors fees without seeking to accelerate potential revenue streams
as well as Director guarantees over the settlement of certain liabilities and deferral of their remuneration. There
can be no assurance that the Group’s projects will ever be fully developed or reach commercialisation.
P a g e | 28
29
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
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 2019.
Subsidiaries are entities over which the Group has control. The Group controls an entity when it is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The Group obtains and exercises control through voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are considered when assessing
whether the company controls another entity.
The cost of acquisition is measured as the fair value of the assets acquired, equity instruments issued and
liabilities incurred or assumed at the date of exchange. Acquisition related costs are expensed as incurred.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also
eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting
policies used into line with those used by the Group.
STATEMENT OF COMPLIANCE
The Group and Company have applied the following new and amended standards for the first time for its
annual reporting period commencing 1 July 2019:
IFRS 16, ‘Leases’;
•
• Prepayment Features with Negative Compensation – Amendments to IFRS 9;
•
Long-term Interests in Associates and Joint Ventures – Amendments to IAS 28;
• Annual Improvements to IFRS Standards 2015-2017 Cycle;
• Plan Amendments, Curtailment or Settlement – Amendments to IAS 19;
•
• Definition of Material – Amendments to IAS 1 and IAS 8.
Interpretation 23 ‘Uncertainty over Income Tax Treatments’; and
These new and amended standards have not had a material effect on the Group and Company financial
statements.
NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET ADOPTED
A number of new standards and amendments to standards and interpretations are effective for annual
periods beginning after 1 July 2019 and have not been applied in preparing these consolidated financial
statements. None of these is expected to have a significant effect on the consolidated financial statements
of the Group.
SEGMENTAL REPORTING
Developing and commercialising the mCHP boiler and its related technology is the only activity in which the
Group is engaged and is therefore considered as the only operating / reportable segment. The Group
currently only operates in the UK. The financial information therefore of the single segment is the same as
that set out in the Group Statement of Comprehensive Income, Group Statement of Financial Position.
CURRENT AND DEFERRED INCOME TAX
The tax credit for the period comprises Research and Development taxation credit received during the year.
Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items
P a g e | 29
30
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
recognised directly in equity. In this case the tax is also recognised directly in other comprehensive income or
directly in equity, respectively.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The current income tax credit is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Company’s subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis
of amounts expected to be paid to or recoverable from the tax authorities.
NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ADOPTED BY THE
GROUP AND COMPANY
The Group and Company have applied the following new and amended standards for the first time for its
annual reporting period commencing 1 July 2019:
IFRS 16, ‘Leases’;
•
• Prepayment Features with Negative Compensation – Amendments to IFRS 9;
Long-term Interests in Associates and Joint Ventures – Amendments to IAS 28;
•
• Annual Improvements to IFRS Standards 2015-2017 Cycle;
• Plan Amendments, Curtailment or Settlement – Amendments to IAS 19;
•
• Definition of Material – Amendments to IAS 1 and IAS 8.
Interpretation 23 ‘Uncertainty over Income Tax Treatments’; and
These new and amended standards have not had a material effect on the Group and Company financial
statements.
NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET ADOPTED
A number of new standards and amendments to standards and interpretations are effective for annual periods
beginning after 1 July 2020 and have not been applied in preparing these consolidated financial statements.
None of these is expected to have a significant effect on the consolidated financial statements of the Group.
FOREIGN CURRENCY TRANSLATION
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”).
FUNCTIONAL AND PRESENTATION CURRENCY
The consolidated Financial Statements are presented in Pounds Sterling (£), which is Group and Company’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”.
LEASES
The Group as lessee
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31
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
The Group assesses whether a contract is or contains a lease, at the inception of the contract. The Group
recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in
which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (such as tablets and personal computers, small items of office furniture and
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
telephones). For these leases, the Group recognises the lease payments as an administrative expense on a
straight-line basis over the term of the lease unless another systematic basis is more representative of the
time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Group uses its incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise:
•
Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
• Variable lease payments that depend on an index or rate, initially measured using the index or rate
•
•
at the commencement date;
The amount expected to be payable by the lessee under residual value guarantees;
The exercise price of purchase options, if the lessee is reasonably certain to exercise the options;
and
• Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option
to terminate the lease.
The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the lease
payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use
asset) whenever:
•
•
The lease term has changed or there is a significant event or change in circumstances resulting in
a change in the assessment of exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a revised discount rate.
The lease payments change due to changes in an index or rate or a change in expected payment
under a guaranteed residual value, in which cases the lease liability is remeasured by discounting
the revised lease payments using an unchanged discount rate (unless the lease payments change
is due to a change in a floating interest rate, in which case a revised discount rate is used).
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in
which case the lease liability is remeasured based on the lease term of the modified lease by
discounting the revised lease payments using a revised discount rate at the effective date of the
modification.
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments
made at or before the commencement day, less any lease incentives received and any initial direct costs.
They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of the lease term and the useful life of the
underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset
reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated
over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The right-of-use assets are presented within ‘Property, Plant and Equipment’ in the consolidated statement
of financial position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any
identified impairment loss as described in the ‘Property, Plant and Equipment’ policy.
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32
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
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33
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to the Statement of Comprehensive Income
during the financial period in which they are incurred.
Depreciation is calculated to allocate the cost of each class of asset to their residual values over their estimated
useful lives, as follows:
• Plant and Equipment – 15% reducing balance
Fixtures and Fittings – 20% reducing balance
•
• Motor Vehicles – 5 years, straight line
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount, and are
recognised within “Other (Losses)/Gains – Net” in the Statement of Comprehensive Income.
INTANGIBLE ASSETS - DEVELOPMENT COSTS
Development costs relate to expenditure on the development of the mCHP boiler technology and applications
of the underlying engine technology.
Development costs incurred on the project are capitalised when all the following conditions are satisfied:
•
•
•
•
•
•
completion of the intangible asset is technically feasible so that it will be available for use or sale
the Group intends to complete the intangible asset and use or sell it
the Group has the ability to use or sell the intangible asset
the intangible asset will generate probable future economic benefits
there are adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset, and
the expenditure attributable to the intangible asset during its development can be measured reliably.
Directly attributable costs that are capitalised as part of the product include any employee costs directly related
to the development of the asset and appropriate expenditure which directly furthers the development of the
project.
Other development expenditure that does not meet these criteria is recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent
period.
IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets that have an indefinite useful life, are not subject to amortisation and are tested annually for impairment.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Fo
P a g e | 33
34
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at each reporting date. See note 4 for more
information on the impairment assessment performed by management.
FINANCIAL ASSETS
a) CLASSIFICATION
The Group classifies its financial assets as loans and receivables. The classification depends on the purpose
for which the financial assets were acquired. Management determines the classification of its financial assets
at initial recognition.
LOANS AND RECEIVABLES
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12 months
after the Statement of Financial Position date. These are classified as non-current assets. The Group’s loans
and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of
Financial Position.
b) RECOGNITION AND MEASUREMENT
Financial assets are initially measured at fair value plus transactions costs.
Loans and receivables are subsequently carried at amortised cost using the effective interest method, except
for short term receivables.
c) IMPAIRMENT OF FINANCIAL ASSETS
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired,
and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset (a “loss event”), and that loss event (or events)
has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can
be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
•
•
•
•
•
significant financial difficulty of the issuer or obligor;
a breach of contract, such as a default or delinquency in interest or principal repayments;
the disappearance of an active market for that financial asset because of financial difficulties;
observable data indicating that there is a measurable decrease in the estimated future cash flows
from a portfolio of financial assets since the initial recognition of those assets, although the decrease
cannot yet be identified with the individual financial assets in the portfolio; or
for assets classified as available-for-sale, a significant or prolonged decline in the fair value of the
security below its cost.
ASSETS CARRIED AT AMORTISED COST
The amount of impairment is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted
at the financial asset’s original effective interest rate. The asset’s carrying amount is reduced, and the loss is
recognised in the Statement of Comprehensive Income. As a practical expedient, the Group may measure
impairment on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s
P a g e | 34
35
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
credit rating), the reversal of the previously recognised impairment loss is recognised in the Statement of
Comprehensive Income.
CASH AND CASH EQUIVALENTS
In the consolidated Statement of Cash Flows, cash and cash equivalents comprise cash in hand and deposits
held at call with bank
FINANCIAL LIABILITIES
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group
becomes a party to the contractual provisions of the instruments. Financial liabilities are initially measured at
fair value, net of transactions costs. They are subsequently measured at amortised cost using the effective
interest method.
Financial liabilities are derecognised when the Group or Company’s contractual obligations expire, are
cancelled or are discharged.
SHAREHOLDERS’ EQUITY
Equity comprises the following:
“Share capital” represents the nominal value of equity shares.
“Share premium” represents the excess over nominal value of the fair value of consideration received
•
•
for equity shares, net of expenses of the share issue.
•
•
previous Business Combinations entered into by the Company that fall outside the scope of IFRS 3.
•
“Share option reserve” represents the cumulative cost of share based payments.
“Merger reserve” and “Reverse Acquisition reserve” represents historical reserves formed upon
“Retained losses" represents retained losses.
BORROWINGS
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in
the Statement of Comprehensive Income over the period of the borrowings, using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the end of the reporting period.
BORROWINGS COSTS
Borrowing costs are recognised in profit or loss in the period in which they are incurred.
SHARE BASED PAYMENTS
The Group operates equity-settled, share-based schemes, under which it receives services from employees or third-party
suppliers as consideration for equity instruments (options and warrants) of the Group. The Group may also issue warrants
to share subscribers as part of a share placing. The fair value of the equity-settled share based payments is recognised
as an expense in the Statement of Comprehensive Income or charged to equity depending on the nature of the service
provided or instrument issued. The total amount to be expensed or charged is determined by reference to the fair value of
the options granted:
P a g e | 35
36
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
•
•
•
including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions (for example, profitability or
sales growth targets, or remaining an employee of the entity over a specified time period); and
including the impact of any non-vesting conditions (for example, the requirement for employees to save).
In the case of warrants the amount charged to equity is determined by reference to the fair value of the services received
if available. If the fair value of the services received is not determinable, the warrants are valued by reference to the fair
value of the warrants granted as described previously.
Non-market vesting conditions are included in assumptions about the number of options or warrants that are expected to
vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of
options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to
original estimates, if any, in the Statement of
Comprehensive Income or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.
When the options are exercised, the Company issues new shares. The proceeds received, net of any directly attributable
transaction costs, are credited to share capital (nominal value) and share premium.
3 FINANCIAL RISK MANAGEMENT
The Group is exposed to a variety of financial risks which result from both its operating and investing activities. The
Group’s risk management is coordinated by the Board of Directors, and focuses on actively securing the Group’s short to
medium term cash flows by minimising the exposure to financial markets.
The main risks the Group is exposed to through its financial instruments are market risk (including market price risk), credit
risk and liquidity risk.
MARKET PRICE RISK
The Group’s exposure to market price risk mainly arises from potential movements in the pricing of its products. The
Group manages this price risk within its long-term strategy to grow the business and maximise shareholder return.
CREDIT RISK
The Group’s financial instruments that are subject to credit risk are cash and cash equivalents and loans and receivables.
The credit risk for cash and cash equivalents is considered negligible since the counterparties are reputable financial
institutions.
The Group’s maximum exposure to credit risk is £176,000 (2018: £103.000) 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:
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37
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
3
FINANCIAL RISK MANAGEMENT (continued)
Group
At 30 June 2020
Trade and other payables
Borrowings
At 30 June 2019
Trade and other payables
Borrowings
Less than 1
year
£’000
362
Between 1 and
2 years
£’000
-
Between 2
and 5 years
£’000
-
Over 5
years
£’000
-
100
307
100
-
845
-
-
-
-
-
-
Total
£’000
362
100
307
945
Carrying
value
£’000
362
100
307
945
CAPITAL RISK MANAGEMENT
The Group’s objectives when managing capital are:
•
•
•
to safeguard the Group’s ability to continue as a going concern, so that it continues to provide returns
and benefits for shareholders;
to support the Group’s growth; and
to provide capital for the purpose of strengthening the Group’s risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure
and equity holder returns, taking into consideration the future capital requirements of the Group and capital
efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures
and projected strategic investment opportunities. Management regards total equity as capital and reserves, for
capital management purposes.
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of Financial Statements in conformity with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities,
income and expenses. Estimates and judgements are continually evaluated and are based on historical
experience and other factors including expectations of future events that are believed to be reasonable under the
circumstances.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
IMPAIRMENT OF DEVELOPMENT COSTS AND INVESTMENT IN SUBSIDIARIES
The Group tests annually whether development costs and investments in the subsidiaries, which have a carrying
value of £2,666,000 and £2,440,000 respectively (2019: £2,570,000 and £2,440,000 respectively) have suffered
any impairment in accordance with the accounting policy as stated in Note 2.
The core development to date on the mCHP and Stirling technology is the base technology that will be applied
the Marine, Waste Heat Recovery and automotive sectors that the company will be focusing on in the future.
When a review for impairment is conducted, the recoverable amount is determined based on value in use
calculations prepared on the basis of management’s assumptions and estimates. As a result of their 2020 review
management has concluded that no impairment is required.
The value–in-use calculations require management to estimate future cash flows expected to arise from the cash
generating unit, once commercial production is achieved, and apply a suitable discount rate in order to calculate
present value. These calculations require the use of estimates. See Note 10 for further details.
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38
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
.Following other sources of products interest during the year, management have focussed the value-in-use
calculations on licensing sales rather than product sales. This has been done as management consider that the
revenues are more near term in nature and note that it uses the same core developed technology. Given the
product’s nature, the core estimates have remained broadly consistent with an increase in gross margin given the
shift in focus to licensing which is consider will provide a higher margin than product sales.
CASH AND CASH EQUIVALENTS CLASSIFICATION
During the year-ended 30 June 2020, Management made a change in judgment regarding the liquidity of cash
balances held on their behalf by another entity. This change in judgment led to these balances to be classified as
cash and cash equivalents rather then other debtors.
5 DIRECTOR’S AND KEY MANAGEMENT PERSONNEL EMOLUMENTS
Aggregate emoluments
Social security costs
Name of director
J Gunn
N Jagatia
A Samaha
S Gunn*
*Key Management Personnel
2020
£’000
2019
£’000
144
6
150
Total
2020
£’000
80
40
12
12
144
134
-
134
Total
2019
£’000
80
30
12
12
134
Short Term
Benefits
£’000
Other
Benefits
£’000
80
40
12
12
144
-
-
-
-
-
The number of Directors who contributed to pension schemes during the year was nil (2019: nil).
6
EMPLOYEE INFORMATION
Wages and salaries
Social security costs
2020
£’000
2019
£’000
144
6
150
149
14
163
In addition to the above a total of £93,000 (2019: £148.000) wages and salaries for employees has been included
in Development costs.
P a g e | 38
39
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
Average number of persons employed (including executive directors):
Office and management
COMPENSATION OF KEY MANAGEMENT PERSONNEL
There are no key management personnel other than those disclosed in Note 5.
2020
Number
2019
Number
4
3
7
LOSS FOR THE YEAR
Loss for the year is arrived at after charging:
Salaries and wages (Note 6)
S
Audit and other fees
A
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
8
Taxation
GROUP
Deferred tax
Current tax
Total current tax / (credit)
2020
£’000
150
20
-
6
2019
£’000
163
18
9
7
2020
£’000
2019
£’000
18
18
2020
£’000
-
(41)
(42)
2019
£’000
-
(25)
(25)
The tax on the Group's loss before tax differs from the theoretical amount that would arise using the average rate
applicable to losses of the consolidated entities as follows:
P a g e | 39
40
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
8
Taxation (continued)
Loss before tax from continuing operations
Loss before tax multiplied by rate of corporation tax in the UK of 19% (2019:
19%)
Tax effects of:
Expenses not deductible for tax purposes
Unrelieved tax losses carried forward
Research and development tax credit
Total tax
2020
£’000
2019
£’000
(240)
(264)
(46)
(50)
-
46
(41)
(41)
-
50
(25)
(25)
The Group has excess management expenses of approximately £5,200,000 (2019: £5,000,000), capital losses
of £150,000 (2019: £150,000) and non-trade financial losses of approximately £119,000 (2019: £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.
9
EARNINGS PER SHARE
Earnings per ordinary share has been calculated by dividing the loss attributable to equity holders of the
Company by the weighted average number of shares in issue during the year. The calculations of both
basic and diluted earnings per share for the year are based upon the loss for the year of £199,000 (2019:
£239,000). The weighted number of equity shares in issue during the year was 2,305,913,967 (2019:
1,420,806,859).
In accordance with IAS 33, basic and diluted earnings per share are identical as the effect of the exercise
of share options and warrants would be to decrease the loss per share and therefore deemed anti-dilutive.
Details of share options and warrants that could potentially dilute earnings per share in future periods are
set out in Note 16.
10
INTANGIBLE ASSETS
GROUP
At 30 June 2018
Additions
At 30 June 2019
Additions
At 30 June 2020
Development
Costs
Total
£’000
£’000
2,401
169
2,570
96
2,401
169
2,570
96
2,666
2,666
No amortisation has been recognised on development costs to date as the assets are still in the development
stage and the related products are not yet ready for sale. As such, the value-in-use calculations to support the
carrying value of development costs is directly reliant on the availability of future capital funding in order to
achieve product accreditation and enter into commercial production.
P a g e | 40
41
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
10
INTANGIBLE ASSETS (continued)
The recoverable amount of the above cash generating unit has been determined based on value-in-use
calculations and includes revenue from sterling application in marine and waste recycling activities . The value-
in-use calculations use cash flow projections based on financial budgets approved by Management covering a
six-year period. They key estimates in the value-in-use calculation are:
Growth rate – Nonlinear: year on year increase based on director estimations
Discount rate – 15%
The calculations are not sensitive to probable changes in the key assumptions.
11
PROPERTY, PLANT AND
EQUIPMENT
GROUP
COST
As 30 June 2018
Additions
As at 30 June 2019
Additions
As at 30 June 2020
DEPRECIATION
As at 30 June 2018
Charge for year
As at 30 June 2019
Charge for year
As at 30 June 2020
NET BOOK VALUE
As at 30 June 2020
As at 30 June 2019
Plant and
Equipment
Fixtures
and
fittings
Motor
Vehicles
Total
£’000
£’000
£’000 £’000
81
-
81
3
84
41
6
47
6
53
31
34
15
-
15
-
15
10
1
11
-
11
4
4
1
-
1
-
1
1
-
1
-
1
-
-
97
-
97
3
100
52
7
59
6
65
35
38
No Property, Plant and Equipment is held in the parent company.
P a g e | 41
42
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
12
INVESTMENT IN SUBSIDIARIES
COMPANY
SHARES IN GROUP UNDERTAKINGS:
At 1 July
Increase in loan to subsidiary
Provision against the loan balance outstanding
A
2020
£’000
2,440
75
(75)
2,440
2019
£’000
2,440
207
(207)
2,440
Included in the above is an amount of £2,961,446 (2019: £2,885,000) relating to the amount due to the
Company by its subsidiary Inspirit Energy Limited. A provision of £2,961,446 (2019: £2,885,000) has been set
against this loan balance outstanding.
Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid.
Details of Subsidiary Undertakings are as follows:
Name of subsidiary
Registered address Registered capital
Proportion of
share capital held
Nature of
business
Inspirit Energy Limited**
Company No.07160673
Somemore Limited
Company No.07152291
Inspirit Energy
Consultancy Limited
Company no 11190342
c/o Niren Blake LLP
2nd Floor, Solar
House, 915 High
Road, London,
England, N12 8QJ
Global Investment
Strategy Uk Ltd, 2nd
Floor, London Wall
Buildings, London,
EC2M 5PP
2nd Floor 2 London
Wall Buildings,
London Wall,
London, United
Kingdom, EC2M 5PP
Ordinary shares
£15,230
100%
Product
development
Ordinary shares
£1
100%
Dormant
Ordinary shares
£100
100%
Dormant
*** Inspirit Energy Limited ( Co No 07160673) company is entitled and has taken exemption under
section 479a of the Companies Act 2006. No members of Inspirit Energy Limited have required the
company to obtain an audit of its accounts for the year in question in accordance with section 476 of
the Companies Act 2006
13
TRADE AND OTHER RECEIVABLES
GROUP
COMPANY
Corporation tax*
VAT recoverable
Other receivables
Prepayments and accrued income
2020
£’000
41
8
-
-
49
2019
£’000
46
6
5
6
63
*The Corporation tax repayable relates to the R&D tax claim receivable from HMRC.
2020
£’000
-
3
1
-
4
2019
£’000
-
3
-
6
9
P a g e | 42
43
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
13
TRADE AND OTHER RECEIVABLES (continued)
The Directors consider that the carrying amount of receivables is approximately equal to their fair value and
under IFRS 9 that they are held at amortised cost)
.
14
CASH AND CASH EQUIVALENTS
Cash and cash equivalents
GROUP
COMPANY
2020
£’000
128
2019
£’000
40
2020
£’000
126
2019
£’000
38
The Directors consider the carrying amount of cash and cash equivalents approximates to their fair value.
All of the Group and Company’s cash and cash equivalents are held with institutions with an AA credit rating.
15
SHARE CAPITAL AND SHARE PREMIUM
Number of
ordinary
shares
Number of
deferred
shares
Ordinary
shares
Deferred
shares
New
Deferred
B shares
Share
premium
Total
1,420,806,859
400,932
14,208
396,923 1,406,599
11,335,656
13,153,386
£
£
£
£
£
1,420,806,859
400,932
14,208
396,923 1,406,599
11,335,656
13,153,386
1,482,976,188
-
148,298
-
-
-
-
-
1,027,702
1,176,000
-
(20,625)
(20,625)
2,903,783,047
400,932
162,506
396,923 1,406,599
12,342,733
14,308,761
At 30 June
2018
At 30 June
2019
Issue of
New
Shares
Issue costs
At 30 June
2020
Both the Deferred shares and the New Deferred B shares have no voting rights.
On 6 June 2018, the Company announced that members, at a General meeting on the same day, had
approved the completion of a Capital Reorganisation which comprised the sub-division of shares whereby
each existing Ordinary Share of 0.1 pence each in the capital of the Company was sub-divided into 1 New
Ordinary Shares of 0.001 pence each and 1 Deferred B Share of 0.099 pence each. This resulted in
1,420,806,859 New Ordinary Shares and 1,420,806,859 Deferred B Shares in issue.
P a g e | 43
44
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
16
SHARE BASED
PAYMENTS
Share options and warrants can be granted to selected Directors and third-party service providers.
Share options and warrants outstanding at the end of the year have the following expiry dates and
exercisable prices:
Weighted
Average
Exercise
Price
2020
0.0488
-
-
-
At 1 July
Granted
Exercised
Lapsed
Options and
warrants
Weighted
Average
Exercise Price
Options and
warrants
1,500,000
603,544,429
-
-
2019
0.0067
-
-
10,783,364
-
-
0.009
(9,283,364)
At 30 June
0.012725
605,044,429
0.0488
1,500,000
Grant date
Expiry date
Exercise price
in £ per share
26-Apr-11
20-Nov-19
02-Dec-19
24-Dec-19
25-Apr-21
19-Nov-20
01-Dec-20
23-Dec-20
0.0488
0.0007
0.0007
0.0007
Number of
options and
warrants
Number of
options and
warrants
2020
2019
1,500,000
1,500,000
574,258,711
27,000,001
2,285,717
0.012725
605,044,429
1,500,000
17
TRADE AND OTHER PAYABLES
Trade payables
Other payables
GROUP
2020
£’000
56
-
2019
£’000
50
85
Social security and other taxes
33 25
Accrued expenses
224
362
147
307
COMPANY
2020
£’000
16
55
-
219
290
2019
£’000
8
85
-
145
238
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
P a g e | 44
45
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
18
BORROWINGS
Current
Drawdown facility (see Note 1 below)
Total current borrowings
Non-current
Convertible loan notes (Note 2 below)
Total non-current borrowings
Total borrowings
Note 1
GROUP
2020
£’000
2019
£’000
COMPANY
2020
£’000
2019
£’000
100
100
-
-
100
100
100
845
845
945
100
100
-
-
100
100
100
845
845
945
The Drawdown facility relates to the facility entered into during 2017 with YA Global Master SPV Limited. The
facility is unsecured and carries an implied interest rate of 10 per cent per annum, repayable in 12 equal monthly
instalments and has now lapsed. The directors are seeking to renew.
On 30 April 2015, the Company issued warrants to subscribe for 9,283,364 new ordinary shares as part of the
unsecured $3,000,000 Debt facility arrangement with YA Global Master SPV Limited (“YA Global”). The issue
of the warrants was triggered following the drawdown of the initial Tranche 1, being $400,000, under the terms
of the agreement. The terms of the issue of warrants are governed by the Debt Facility agreement, which specify
that for every tranche drawn down, the Company is required to issue 25% of the value of the drawdown based
on the interbank rate at the nearest possible date and using the average Volume Weighted Average Price
(“VWAP”) of the Company for the five trading days immediately prior the date of the agreement. Based on those
terms, were the Company to drawdown the remaining $2,600,000 they would be required to issue further
warrants to subscribe for an estimated total of 99,622,448 new ordinary shares. The Directors do not expect to
use the remaining facility in the foreseeable future. On 25 April 2018, YA Global entered into an agreement for
Convertible Loan Notes (“CLNs) which converted £100k of the existing drawdown into CLNs (see note 2).
Note 2
In May 2018, the Company raised £530,000 in cash from private investors through the issue of Convertible Loan
Notes and converted existing debt due to Related Parties (as further detailed below) and other third-party debt
valued at £315,000 into the CLNs. The principal amount of the CLNs are convertible at the higher of either 0.07p
per Ordinary Share of 0.1p each (the "Ordinary Shares" or "Existing Ordinary Shares" and subject to the Capital
Reorganisation as set out below) or a discount of 25 per cent. to the previous trading day's closing market share
price. The CLNs are interest free, convertible at the Company's option and, in the ordinary course, only are
repayable by the Company in Ordinary Shares following a conversion notice. Any Ordinary Shares issued on
conversion of the CLNs will rank pari passu with existing Ordinary Shares. Conversion of the CLNs is subject to
a restriction that no conversion shall take place in circumstances where as a result of the conversion the
Noteholder or any party deemed to be acting in concert with such Noteholder, as defined in the Takeover Code,
would own more than 29.9% of the issued share capital of the Company or otherwise trigger a requirement for
the Noteholder to make a general offer for the Company pursuant to Rule 9 of the Takeover Code. The CLNs
will not be admitted to trading on AIM or any other exchange.
Majority of the CLN’s were converted on 29 November 2019 and 3rd December 2019.
P a g e | 45
46
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2020
19 FINANCIAL INSTRUMENTS BY CATEGORY
FINANCIAL ASSETS – LOANS AND RECEIVABLES:
Trade and other receivables (excluding prepayments, VAT and corporation tax)
Cash and cash equivalents
FINANCIAL LIABILITIES AT AMORTISED COST:
Trade and other payables
Borrowings
2020
£’000
2019
£’000
-
128
89
100
5
40
160
945
The table providing an analysis of the maturity of the non-derivative financial liabilities has been included in Note
3.
20 ULTIMATE CONTROLLING PARTY
At the date of signing this report the Directors do not consider there to be one single ultimate controlling party.
21 RELATED PARTY TRANSACTIONS
See note 6 for details of director’s remuneration in the year.
During the year, NKJ Associates Ltd, a company in which N Jagatia is a Director, charged consultancy fees of
£40,000 (2019: £30,000). The amount owed to NKJ Associates Ltd at year end is £62,000 (2019: £32,000).
22 EVENTS AFTER THE REPORTING DATE
On 3rd November 2020, the Company announced that it had announced that the Company has agreed into a
letter of support for the development of a Waste Heat Recovery ("WHR") system following a successful model
design and application demonstration with Volvo Penta, a world-leading supplier of power solutions for marine
and industrial applications.
On 3rd November 2020, the Company announced that it had received Warrant Conversion notices for £150,000
at 0.07 per share on the Warrants attached to Convertible Loan Notes (CLN's) issued on the 4th May 2018.
On 4th November 2020, the Company announced that it had announced that that it is in discussions regarding
a possible collaboration with an engineering company with expertise in advanced gasification.
On 16 November 2020, the Company announced that it had received warrant conversion notices for £107,500
at 0.07 p per share on the Warrants attached to Convertible Loan Notes (CLN's) issued on the 4 May 2018 to
the Directors of the Company and accordingly issued 153,571,427 Ordinary Shares. The ordinary shares in
relation to the converted warrants consisted of the Chairman and CEO, John Gunn was issued 71,428,571 new
Ordinary Shares of 0.001p each; Global Investment Strategy UK Ltd (A company with direct control by John
Gunn) was issued 67,857,142 new Ordinary shares and Nilesh Jagatia, Finance Director, was issued 14,285,714
Ordinary Shares
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