Inspirit Energy Holdings plc
Annual Report and Financial Statements
for the year ended 30 June 2021
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
Inspirit Energy Holdings Plc
C/o GIS
200 Aldersgate Street
London
EC1A 4HD
COMPANY REGISTRATION NUMBER
05075088
REGISTRAR AND TRANSFER OFFICE
SOLICITORS
INDEPENDENT AUDITOR
NOMINATED ADVISOR
BROKER
BANKERS
Share Registrars Limited
Molex House
The Millennium Centre
Crosby Way
Farnham
Surrey
GU9 7XX
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
200 Aldersgate Street,
London
EC1A 4HD
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
page
3
4-7
8-16
17-22
23
24
25
26
27
Notes to the financial statements
28-45
3
Inspirit Energy Holdings plc
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 30 June 2021
Inspirit Energy Holdings plc (Inspirit) has maintained its focus on the application of the Stirling engine in various sectors
during the year, and during the last few months of the financial year ended 30 June 2021, COVID 19 restrictions eased
and Inspirit had been working with its engineering partners on the fine details of the new Waste Heat Recovery (WHR)
system for the application on the Volvo marine engine. Details on the electrical and the main mechanical systems are
near completion, and it is hoped that by the end of 2021 all major items of the WHR system will be complete, with a view
to having the designs for a full working prototype that can be put into testing and manufacture.
Despite the global slowdown and access to materials, the operating Board believe that the company has maintained a
positive progress over the last year in the alternative applications of the Stirling engine and there is strong evidence of
the need to refocus our strategic objectives towards these areas that include marine and waste heat recovery. We wait
to assess the impact on government’s ban on oil and gas boilers on new build property from 2025, but there is no clear
outcome with existing households gas boiler heating. It should be noted that this is by no means an abandonment of our
MicroCHP boiler technology as over 65% of the technology for the Inspirit charger is applicable to the marine and waste
heat recovery applications. The Company is in discussion with an organisation that can modify and re-engineer the heater
head that is potentially applicable in the rapidly emerging hydrogen market.
As per prior years, the board are continuing to assess funding options for the development and commercialisation of our
products and will continue to demonstrate prudence in our approach to managing our current resources whilst pushing
forward with our product development.
I would like to personally thank my colleagues for their hard work and commitment to driving the business forward during
these challenging times.
J Gunn
Chairman and Chief Executive Officer
29 December 2021
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Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2021
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 2021.
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
Despite COVID 19 impacting the year with lockdowns, supply line issues and general movement in Europe, IEL had been
working with its engineering partners on the fine details of the new WHR for the application on the Volvo marine engine.
In addition, IEL developed and applied a new innovative technology that will become an integral part of the of WHR
System. Whilst still in the early stages of development, the Inspirit Helix Accelerator system (IHA), works alongside the
WHR system taking the heat from the original source and increasing it via an exothermic reaction demonstrated to be at
least 26%. Essentially, the heat source that passes though the IHA is amplified to provide a greater heat source for the
Stirling engine, resulting in greater power output and efficiency. The Company believes that this technology, along with
the Stirling technology that Inspirit Energy has also developed, makes this system more innovative than anything currently
on the market. IHA has other applications where the current heat source is in a lower threshold and the traditional use of
Stirling technology would not seem a benefit to recover lost energy.
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE
The Director’s believe they have acted in the way most likely to promote the success of the Company for the benefit of its
members as a whole, as required by s172 of the Companies Act 2006.
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 2021
Other developments during the year:
On 3rd November 2020, the Company announced that it had entered 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 is in discussions regarding a possible collaboration with
an engineering company with expertise in advanced gasification.
On 16th 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
On 27th May 2021, the Company announced that it had raised a gross amount of £500,000 through the placing
of 1,000,000,000 ordinary shares of 0.001 pence each in the share capital of the Company at 0.05 pence per
Ordinary Share. For every two Placing Shares they subscribed to, placees will also receive one warrant over
Ordinary Shares valid for 24 months from the date of issue exercisable at 0.075 pence per Ordinary Share.
BOARD CHANGES
None.
RESULTS AND DIVIDENDS
The Group made a loss after taxation of £253,000 (2020: loss of £199,000) and net assets were £2,891,000 (2020:
£2,416,000).
The Directors do not propose a dividend for the year to 30 June 2021 (2020: £nil).
KEY PERFORMANCE INDICATORS
The key performance indicators (KPI) used by the Board to monitor the performance of the Group, are set out below:
PLC S
Net asset value
Net asset value – fully diluted per share
Closing share price
Market capitalisation
30 June
2021
30 June
2020
£2,891,000
£2,416,000
0.074p
0.05p
0.10p
0.05p
£2,135,820
£1,451,891
The Net asset value and Market capitalisation have increased during the period due to the placing and warrant
conversions during the reporting period. The closing share price has maintained the same price during these
unprecedent times and provides a positive reflection on the company.
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Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2021
COVID 19 ASSESMENT
During the reporting period, the Group continued to develop its microCHP boiler, Marine engine and Waste Hear Recovery
(WHR) application with its European partners. Specifically, the Company has spent time working to refine Inspirit's Stirling
technology, reviewing the potential supply chain and detailing the product specifics for potential commercial partners.
This progress was achieved despite the significant issues resulting from the COVID-19 pandemic in Europe, which was
instrumental in causing some of these European partners to cease trading and therefore necessitated their replacement
with other competent manufacturers.
The Board recognises that these are still unprecedented times and that the necessary actions Global and European
Governments are taking to control COVID-19 are inevitably causing disruption to the economy and supply chain for
components. As with all businesses, we are not immune to this and experienced movement and lock down restrictions in
the UK and Europe. As a result, our European partners and Marine counterparts are constantly reviewing the timeline in
resuming development and testing of our technology.
Despite supply and manufacturing issues I identified above, the Company developed and applied a new innovative
technology that will become an integral part of the of WHR System. Whilst still in the early stages of development,
the Inspirit Helix Accelerator system (IHA), works alongside the WHR system taking the heat from the original source and
increasing it via an exothermic reaction demonstrated to be at least 26%. Essentially, the heat source that passes though
the IHA is amplified to provide a greater heat source for the Stirling engine, resulting in greater power output and
efficiency. The Company believes that this technology, along with the Stirling technology that Inspirit Energy has also
developed, makes this system more innovative than anything currently on the market.
To mitigate the impact of COVID 19, the Company has diversified their supplier base with multiple suppliers in different
countries. In the event that any country has further lock downs or restrictions we would be able to swap supplier with
minimal impact on our project plan.
KEY RISKS AND UNCERTAINTIES
Early stage product development carries a high level of risk and uncertainty, although the rewards can be outstanding.
At this stage, there is a common risk associated with all pioneering technologically advanced companies in their
requirement to continually invest in research and development. The Group has already made significant investments in
addressing opportunities in the renewable energy sector.
Other risks and uncertainties within the Group are detailed in principle 4 of the Corporate Governance Report.
GOING CONCERN RISK
The Group requires financing to fund its operations through to 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. Further details are on page 9.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The principal financial risk faced by the Group is liquidity risk. The Group’s financial instruments included borrowings and
cash which it used to finance its operations. At the year end, borrowings did not include any borrowings supplied from the
Group’s principal bank, Barclays Bank Plc. More information is given in Note 3 to the Financial Statements. The Group
has no significant concentrations of credit risk.
CAPITAL RISK MANAGEMENT
The Group’s objectives when managing capital are to safeguard the Group’s and Company’s ability to continue its
activities and bring its products to market. Capital is defined based on the total equity of the Company. The Company
monitors its level of cash resources available against future planned activities and may issue new shares in order to raise
further funds from time to time.
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Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2021
MANAGEMENT AND KEY PERSONNEL
The risk of high turnover of staff and other specialist staff recruitment issues would have an impact on operation and
reputation. The Board provides recognition and support for well performing existing employees and has implemented
and monitors robust health and safety measures at the workplace.
TECHNOLOGY RISK
The Group’s success is dependent on its technology and management’s ability to market it successfully. There is the risk
that the technology could become obsolete or a rival could develop an improved alternative. Management seek to mitigate
this by constantly seeking to improve the product, closing watching its competitors and employing skilled personnel.
ASSESSMENT OF BUSINESS RISK
The Board regularly reviews operating and strategic risks. The Group’s operating procedures include a system for
reporting financial and non-financial information to the Board including:
•
•
•
•
•
reports from management with a review of the business at each Board meeting, focusing on any new decisions/risks
arising;
reports on the performance of 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
29 December 2021
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2021
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 2021.
PRINCIPAL ACTIVITIES
The principal activity of the Group and Company is that of development and commercialisation of the mCHP boiler
and application of the stirling technology in other sectors.
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
Number of
ordinary shares
Number of
share options and warrants
30 June
2021
30 June
2020
30 June
2021
30 June
2020
861,403,363
507,983,664
44,857,142
30,571,428
0
0
71,428,571*
14,285,714*
A Samaha
*Warrant conversion price of 0.07p per share and issued on 22 November 2019
**861,403,363 Ordinary Shares (direct 657,981,981 Ordinary Shares and indirect via GIS 203,421,382 Ordinary
Shares)
-
-
-
-
INDEMNITY OF OFFICERS
The Company maintains appropriate insurance cover against legal action brought against its Directors and officers.
RESEARCH AND DEVELOPMENT
For details of the development activities undertaken in the year, please refer to principle 1 of the Corporate
Governance Report.
BOARD OF DIRECTORS
The Board is responsible for strategy and performance, approval of major capital projects and the framework of
internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely information.
All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring the
Board procedures are followed and that applicable rules and regulations are complied with.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority. In addition to the publication of an annual report and an
interim report, there is regular dialogue with shareholders and analysts. The Annual General Meeting is viewed as a
forum for communicating with shareholders, particularly private investors. Shareholders may question the Executive
Chairman and other members of the Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Group's system of internal control and for reviewing the
effectiveness of these systems. The risk management process and systems of internal control are designed to
manage rather than eliminate the risk of the Group failing to achieve its strategic objectives. It should be recognised
that such systems can only provide reasonable and not absolute assurance against material misstatement or loss.
The Group has well established procedures which are considered adequate given the size of the business.
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2021
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 2021 the Group had a cash balance of £561,000 (2020: £128,000), net current assets of £88,000 (2020:
net current liabilities of £285,000) and net assets of £2,891,000 (2020: £2,416,000). The Group has maintained 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 and/or eliminated as and when needed during the
going concern period. The directors believe the group to have sufficient cash reserves at present to meet the group’s
obligations over the following 12 months, however, the Directors have committed to providing support of up to
£150,000 over this period should working capital shortfalls arise. Therefore the directors consider it appropriate to
prepare the financial statements on the going concern basis.
The Directors acknowledge that COVID-19 has had and is likely to continue to have an adverse impact on the global
economy and capital markets. The Directors are however confident that the Group remains a going concern in spite
of these expected impacts due to its current cash reserves, its low committed cost base and the aforementioned
support from Directors’ should working capital shortfalls arise.
EVENTS AFTER THE REPORTING DATE
On 2nd November 2021, the company announced that it was in early-stage discussions with a view to entering into
an agreement with a British certification company Enertek International Ltd. Enertek International have won several
development contracts from the government (BEIS) and have gained a vast knowledge in developing backward
compatible Hydrogen products such as: domestic and commercial cookers, domestic and commercial heating
systems etc. They have now gained the knowledge which could be very beneficial to Inspirit in developing a Hydrogen
product, with a view of also looking at our existing products to make them hydrogen powered backwards compatible.
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2021
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
accounting standards in conformity with the Companies Act 2006. 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 international accounting standards in conformity with the requirements of the
Companies Act 2006 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
29 December 2021
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2021
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.
The Company 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 Annual General Meeting) to provide feedback and to actively engage
with the management on a regular basis. Furthermore, the INSP’s shareholders and
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2021
3) Considering
stakeholders and
social
responsibilities and
their implications
for long term
success
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.
The 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
the Board has
implemented systems to monitor and evaluate employees’
performance and to encourage well performing employees to progress further by
supporting them to attend courses. Employees’ performance is monitored through a
process designed to encourage open and confidential communication between the
management and the employees on a regular basis.
Consultants: The Board recognises that consultants play a vital part for INSP as they
bring knowledge and expertise for specific areas, and in some instances, they also
provide training for existing staff.
Suppliers: INSP maintains a good working relationship with its suppliers to provide
for its growing business and to support its existing needs.
Regulators: The Board monitors and implements any legal or regulatory changes
where possible both domestically and overseas and is fully committed to compliance.
Stakeholders: INSP encourages its shareholders to actively participate in meetings
and shareholders are provided with the opportunity to give feedback on a regular
basis.
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 Board’s and
shareholders concerns and requirements.
INSP has identified and implemented the following risks and controls to mitigate risks:
Activity:
Risk
Impact
Control(s)
Management
High turnover of
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
measures at
workplace.
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2021
/
Non-compliance.
Regulatory
legal
adherence
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 a regular basis.
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.
Covid 19
Loss of key
data and
inability to
operate
effectively.
Loss of
business.
Inability to
continue
trading as a
going
concern.
Delays in
activity
internally and
externally
would lead to
consumption
of working
capital
Regulatory
environment in
domestic
power market
External:
Changes in
legislation regarding
domestic power
market.
Potential to
undermine
microchip
boiler
product.
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.
Large proportion of
the development work
is successfully
complete.
Diversification of
suppliers and partners
to meet delivery of
activity.
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.
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2021
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 principle six below.
The letter of appointment of the Company’s Directors and Secretary are available for
inspection at the Company’s registered office and all directors are subject to re-
election at intervals of no more than three years.
The Board is responsible for strategy and performance of major capital projects and
the framework of internal controls. All directors have access to seek independent
advice should they feel that their knowledge of the given task is insufficient. There is
a clear balance between the executive director and the non-executive director.
Furthermore, the directors liaise with the Company Secretary (Nilesh Jagatia), who
is responsible for compliance with the Board procedures and that applicable rules
and regulations are complied with.
The Board meets quarterly. The Board established the following committees; Audit
Committee and Remuneration Committee. All Directors are encouraged to participate
and attend meetings on a regular basis and the attendance is closely monitored.
Despite the QCA recommendation of having two independent directors INSP has
opted to have only one non-executive director and a joint role of Chief Executive
Director and the Chairman as they feel that this is appropriate to the current size and
complexity of the organisation. INSP is still in the R&D phase of its business cycle
and therefore relies on a team of consultants in developing the product. Following
conclusion of this process, certification is managed externally, and then commercial
trials would commence. As such the role of the Board, at this stage, is to oversee this
process, review strategy, hold high level discussions regarding possible commercial
trials and ensure adequate funding. As such, the current Board is deemed sufficient.
As and when the business develops beyond this stage the Board will review its
requirements at this stage. The Group is actively looking to appoint an additional non-
executive director to provide a balance of the non-executive directors and executives
as per the QCA.
This section complies with the requirements of the QCA Code.
The Chairman: John Gunn
Mr Gunn is the founder of INSP and a 20.2% ( Direct and indirect) shareholder of the
Company. Mr Gunn is also the managing director and majority shareholder of Global
Investment Strategy UK Limited and a majority shareholder of Octagonal Plc. With a
career spanning over 30 years in the financial services industry, Mr Gunn began his
career in 1987 at Hoare Govett and has since worked at Carr Sheppards Limited,
Assicurazioni Generali S.p.A. and Williams de Broe, where he was a senior
investment manager until 2002.
Chief Financial Officer: Nilesh Jagatia
Mr Jagatia currently serves as Finance Director at INSP and also currently holds the
Finance Director position with a Financial Services G group Octagonal Ltd and AIM
quoted 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
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 2021
Group and Sanctuary Group plc. He served as a Finance Director for an independent
record label that expanded into the US. Nilesh is a qualified accountant and holds a
degree in finance.
Non-Executive Director: Anthony Samaha
Mr Samaha is a Chartered Accountant (Australia) who has over 20 years’ experience
in accounting and corporate finance. Mr Samaha has worked for over 10 years with
international accounting firms, including Ernst & Young, principally in corporate
finance, and mergers and acquisitions. He has extensive experience in the listing and
management of AIM quoted companies and is currently Executive Director of AIM
traded Reabold Resources Plc.
In addition to the Board directors above INSP uses Beaumont Cornish Limited as
their nominated adviser (NOMAD), Hill Dickinson LLP to assist with legal and
regulatory matters and FTB ITC Services Ltd to support the IT systems.
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 and with integrity helps to
build long-term, trusting relationship with our employees, customers, suppliers and
stakeholders. Our Code of business Conduct means that our employees understand
that we 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
P a g e | 15
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
16
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2021
responsible for promoting a culture of openness and effective communication with
shareholders and to ensure that all board members receive accurate, timely and clear
information.
The Executive Directors are responsible for day to day running of the Company and
effective communications with the Board and the Shareholders. They represent the
Company to ensure quality of information provision, they challenge and monitor
performance of the teams, and they set business plans and targets for the Company.
INSP has one Non-Executive Director who
Non-Executive Director:
is an
independent director. This is to reinforce the Group’s commitment to a transparent
and effective governance structure which encourages and provides ample
opportunity for challenge and deliberation. The Non-Executive Director’s objective is
to scrutinise the performance of the Board and senior management as well as to
monitor performance, agree goals and objectives. They will satisfy themselves on the
integrity of financial information and that financial controls and systems of risk
management are robust and fit for purpose. The Non-Executive Director is also
closely working with the Remuneration Committee as they are responsible for
determining appropriate levels of remuneration of Executive Directors and have a
prime role in appointing / removing senior management.
The Company established the following committees to help with processes,
structures and support good decision making by the Board.
Audit Committee – The Audit Committee is currently chaired by Anthony Samaha and
its other member is Nilesh Jagatia. The Committee provides a forum for reporting by
the Group’s external auditors. The committee is also responsible for reviewing a wider
range of matters, including half-year and annual results before their submission to
the board, as well as monitoring the controls that are in force to ensure the integrity
of information reported to shareholders. The Audit Committee will advise the Board
on the appointment of external auditors and on their remuneration for both audit and
non-audit work, and it will also discuss the nature, scope and results of the audit with
the external auditors. The committee will keep under review the cost effectiveness,
the independence and objectivity of the external auditors.
Remuneration Committee – The Remuneration Committee is currently chaired by
Anthony Samaha and its other member is John Gunn. The Committee is responsible
for making recommendations to the Board, within agreed terms of reference, on the
Company’s framework of executive remuneration and costs. The Remuneration
Committee determines the contract terms, remuneration and other benefits for the
Executive Directors,
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.
P a g e | 16
10) Shareholders
communication
17
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2021
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 2021 which comprise the Group Statement of Comprehensive Income, the
Group and Company Statement of Financial Position, the Group Statement of Changes in Equity, the Company
Statement of Changes in Equity and the Group and Company Statement of Cash Flows and notes to the financial
statements, including significant accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and international accounting standards in conformity with the requirements of the
Companies Act 2006 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
affairs as at 30 June 2021 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006;
the parent company financial statements have been properly prepared in accordance with international
accounting standards in conformity with the requirements of the Companies Act 2006 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
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment
of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included
reviewing cashflow forecasts covering the next 12 months and challenging the key inputs and assumptions
underpinning said forecasts, ascertaining the group’s current cash position, understanding the level of support to be
provided by the directors and obtaining proof of the directors’ commitments to provide said support.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group's or parent company’s ability to
continue as a going concern for a period of at least twelve months from when the financial statements are authorised
for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds
for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. We also
determine a level of performance materiality which we use to assess the extent of testing needed to reduce to an
appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds
materiality for the financial statements as a whole. In determining our overall audit strategy, we assessed the level
of uncorrected misstatements that would be material for the financial statements as a whole.
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 2021
Materiality for the consolidated financial statements was set as £87,000 (2020: £73,000) based upon net assets.
Materiality has been based upon net assets which we determined, in our professional judgement, to be the key
principal benchmark relative to members of the parent company in assessing the financial performance of the group..
Performance materiality and the triviality threshold for the consolidated financial statements was set at £69,600
(2020: £58,400) and £4,350 (2020: £3,650) respectively.
Materiality for the parent company was set as £86,000 (2020: £68,000) based upon net assets, though capped so
as to be below group materiality. Net assets was considered to be an appropriate basis due to the fact that the parent
company is non-revenue earning and holds significant material balances through investments in its subsidiaries and
other assets and cash held. Performance materiality and the triviality threshold for the Company was set at £68,800
(2020: £54,400) and £4,300 (2020: £3,400) respectively.
We also agreed to report any other differences below that threshold that we believe warranted reporting on
qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular we looked at areas involving significant accounting estimates and judgements by the
directors and considered future events that are inherently uncertain, such as the recoverable value of the capitalised
development costs. We also addressed the risk of management override of internal controls, including among other
matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to
fraud.
A full scope audit was performed on the complete financial information of both components of the group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
Key Audit Matter
Recoverability of Intangible Assets
Carrying value of intangible assets of £2.8m (2020:
£2.7m). Refer to Note 4: Critical Accounting Estimates.
Intangible Assets is the largest amount within the
financial statements and
the asset
(development of its Stirling technology) from which, if
successful, the group will generate revenue.
represents
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.
How the scope of our audit responded to the key audit
matter
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 supporting
documentation
including
benchmarking against companies in the same
industry;
possible
where
• Substantive testing of the additions to intangible
assets to ensure they are eligible to be capitalised
under IAS 38; and
• Reviewing disclosures in the financial statements to
ensure compliance with IFRS.
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 2021
Going concern
the Group
As at 30 June 2021 the Group had cash reserves
totalling £561k. As
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 to fund future operations and meet working
capital requirements. In addition, the Group has not
historically performed in accordance with budget. As
such there is the risk that the Group is not a going
concern.
Upon discussing developments
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.
in
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 2021 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;
▪ 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 and obtaining
evidence that support can be given where
required;
▪ 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.
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 2021
Based on support being available from Directors ,if
it
required,
is
financial
to prepare
considered reasonable
statements on the going concern basis.
to cover any potential shortfall
the
Other information
The other information comprises the information included in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are responsible for the other information contained within the annual
report. Our opinion on the group and parent company financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the course of the
audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
•
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation
of the group and parent company financial statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the
group and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no realistic alternative but to do so.
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 2021
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
•
•
We obtained an understanding of the group and parent company and the sector in which they operate to
identify laws and regulations that could reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through discussions with management,
industry research and experience of the sector.
We determined the principal laws and regulations currently relevant to the group and parent company in
this regard to be those arising from UK Company Law, rules applicable to issuers on the AIM Market and
international accounting standards.
• We identified areas of laws and regulations that could reasonably be expected to have a material effect on
the financial statements from our sector experience and through discussion with the Directors. We
considered the event of compliance with those laws and regulations as part of our procedures on the related
financial statement items. We communicated laws and regulations throughout our audit team and remained
alert to any indications of non-compliance throughout the audit of the group.
• We designed our audit procedures to ensure the audit team considered whether there were any indications
of non-compliance by the group with those laws and regulations. These procedures included, but were not
limited to:
o Discussions with Management regarding compliance with laws and regulations by the parent
company and all components;
o Reviewing board minutes; and
o Review of regulatory news announcements made.
• As in all of our audits, we addressed the risk of fraud arising from management override of controls by
performing audit procedures which included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases
the more that compliance with a law or regulation is removed from the events and transactions reflected in the
financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also
greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
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 2021
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's
members as a body, for our audit work, for this report, or for the opinions we have formed.
Joseph Archer (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
29 December 2021
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 2021
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
2021
£’000
(277)
(277)
(277)
24
(253)
2020
£’000
(240)
(240)
(240)
41
(199)
- Basic and diluted earnings per share
9
(0.007p)
(0.009p)
(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 2021
Company Number: 05075088
GROUP
COMPANY
Note
2021
£’000
2020
£’000
2021
£’000
2020
£’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
Reverse acquisition reserve
Retained losses
TOTAL EQUITY
NON-CURRENT LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
TOTAL LIABILITIES
TOTAL EQUITY AND
LIABILITIES
10
11
12
13
14
15
15
17
18
2,773
2,666
30
-
35
-
2,803
2,701
37
561
598
49
128
177
-
1
2,440
2,441
7
554
561
-
-
2,440
2,440
4
126
130
3,401
2,878
3,002
2,570
2,103
9,783
3,150
3
(7,361)
(4,788)
1,967
9,192
3,150
3
(7,361)
(4,535)
2,103
9,783
3,150
3
-
1,967
9,192
3,150
3
-
(12,463)
(12,132)
2,890
2,416
2,576
2,180
-
-
-
-
411
100
511
511
362
100
462
462
326
100
425
425
290
100
390
390
3,401
2,878
3,002
2,570
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 £331,000 (2020: loss of £280,000).
These Financial Statements were approved by the Board of Directors on 29 December 2021 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 2021
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 2019
1,818
8,185
3
3,150
(7,361)
(4,336)
1,459
Loss for the year
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
Share issues
Share issue costs
TRANSACTIONS WITH
OWNERS RECOGNISED
DIRECTLY IN EQUITY
-
-
-
-
149
-
1,028
(21)
149
1,007
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(199)
(199)
(199)
(199)
-
-
-
1,177
(21)
1,156
BALANCE AT 30 June 2020
1,967
9,192
3
3,150
(7,361)
(4,535)
2,416
Loss for the year
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
Share issues
Share issue costs
TRANSACTIONS WITH
OWNERS RECOGNISED
DIRECTLY IN EQUITY
-
-
136
-
-
-
621
(30)
136
591
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(253)
(253)
(253)
(253)
-
-
757
(30)
727
BALANCE AT 30 June 2021
2,103
9,783
3
3,150
(7,361)
(4,788)
2,890
P a g e | 25
26
Inspirit Energy Holdings plc
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 June 2021
Attributable to equity shareholders
Share
capital
£’000
Share
premium
£’000
Merger
Reserve
£’000
Other
reserves
£’000
Retained
losses
£’000
Total
Equity
£’000
BALANCE AT 30 June 2019
1,818
8,185
3,150
3
(11,852)
1,304
BALANCE AT 30 June 2020
1,967
9,192
3,150
3
(12,132)
Loss for the year
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
Share issues
Share issue costs
TRANSACTIONS WITH
OWNERS RECOGNISED
DIRECTLY IN EQUITY
-
-
149
-
-
-
1,028
(21)
149
1,007
-
-
-
-
-
-
-
-
-
-
Loss for the year
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
Share issues
Share issue costs
TRANSACTIONS WITH
OWNERS RECOGNISED
DIRECTLY IN EQUITY
-
-
136
-
-
-
622
(30)
136
592
-
-
-
-
-
-
-
-
-
-
(280)
(280)
(280)
(280)
-
-
-
1,177
(21)
1,156
2,180
(331)
(331)
(331)
(331)
757
(30)
-
727
BALANCE AT 30 June 2021
2,103
9,784
3,150
3
(12,463)
2,576
P a g e | 26
27
Inspirit Energy Holdings plc
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 June 2021
GROUP
GROUP
2021
£’000
2020
£’000
COMPANY
2021
£’000
COMPANY
2020
£’000
Note
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 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 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
(253)
(199)
(331)
(280)
7
-
6
-
(24)
(41)
(6)
50
42
9
87
46
1
85
-
(2)
35
-
-
75
-
5
84
-
(184)
(92)
(212)
(116)
(108)
(2)
-
(110)
757
(30)
727
433
128
561
(96)
(3)
-
(99)
300
(21)
279
88
40
128
-
(2)
(85)
(87)
757
(30)
727
428
126
554
-
-
(75)
(75)
300
(21)
279
88
38
126
P a g e | 27
28
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
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 2021
together with the comparative results for the year ended 30 June 2020.
Inspirit Energy Holdings plc is a company incorporated and domiciled in England and Wales and quoted on
the Alternative Investment Market of the London Stock Exchange. The address of its registered office is 200
Aldersgate Street, London, EC1A 4HD.
2
SUMMARY OF SIGNIFICANT 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) 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 and
Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial statements are disclosed in Note 4.
GOING CONCERN
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.
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 and/or eliminated as and when
needed during the going concern period. The directors believe the group to have sufficient cash reserves at
present to meet the group’s obligations over the following 12 months, however, the Directors have committed
to providing support of up to £150,000 over this period should working capital shortfalls arise. Therefore the
directors consider it appropriate to prepare the financial statements on the going concern basis.
The Directors acknowledge that COVID-19 has had and is likely to continue to have an adverse impact on
the global economy and capital markets. The Directors are however confident that the Group remains a going
concern in spite of these expected impacts due to its current cash reserves, its low committed cost base and
the aforementioned support from Directors’ should working capital shortfalls arise.
P a g e | 28
29
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
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 2021.
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 2020:
Standard
IFRS 3 (amendments)
IFRS standards (amendments)
IAS 1 (amendments)
IAS 8 (amendments)
IFRS 9, IAS 39 and IFRS 7
(amendments)
Impact on initial application
Definition of a Business
References to the Conceptual Framework
Definition of Material
Definition of Material
Interest Rate Benchmark Reform
Effective date
01 January 2020
01 January 2020
01 January 2020
01 January 2020
01 January 2020
These new and amended standards have not had a material effect on the Group and Company financial
statements.
P a g e | 29
30
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET ADOPTED
At the date of approval of these financial statements, the following standards and interpretations which have
not been applied in these financial statements were in issue but not yet effective (and in some cases had not
been adopted by the UK):
Standard
IFRS standards (amendments)
Impact on initial application
Interest rate benchmark reform
IFRS 3 (amendments)
IAS 37 (amendments)
Business combinations
Onerous contracts
IFRS standards (amendments)
2018-2020 annual improvement cycle
IAS 16 (amendments)
Proceeds before intended use
IFRS 17
IFRS 17 (amendments)
IAS 1 (amendments)
Insurance Contracts
Insurance contracts
Reclassification of liabilities as current or non-
current
Effective date
01 January 2021
01 January 2022
01 January 2022
01 January 2022
01 January 2022
01 January 2023
01 January 2023
01 January 2023
The new and amended Standards and Interpretations which are in issue but not yet mandatorily effective is
not expected to be material.
SEGMENTAL REPORTING
Developing and commercialising the mCHP boiler and its related technology is the only activity in which the
Group is engaged and is therefore considered as the only operating / reportable segment. The Group
currently only operates in the UK. The financial information therefore of the single segment is the same as
that set out in the Group Statement of Comprehensive Income and Group Statement of Financial Position.
CURRENT AND DEFERRED INCOME TAX
The tax credit for the period comprises 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
recognised directly in equity. In this case the tax is also recognised directly in other comprehensive income or
directly in equity, respectively.
The current income tax credit is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Company’s subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis
of amounts expected to be paid to or recoverable from the tax authorities.
FOREIGN CURRENCY TRANSLATION
a)
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 the Group’s presentation
and Company’s functional currency.
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31
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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”.
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.
P a g e | 31
32
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Directly attributable costs that are capitalised as part of the product include any employee costs directly related
to the development of the asset and appropriate expenditure which directly furthers the development of the
project.
Other development expenditure that does not meet these criteria is recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent
period.
IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets that have an indefinite useful life, are not subject to amortisation and are tested annually for impairment.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at each reporting date. See note 4 for more
information on the impairment assessment performed by management.
FINANCIAL ASSETS
a) CLASSIFICATION
The Group classifies its financial assets as loans and receivables. The classification depends on the purpose
for which the financial assets were acquired. Management determines the classification of its financial assets
at initial recognition.
LOANS AND RECEIVABLES
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12 months
after the Statement of Financial Position date. These are classified as non-current assets. The Group’s loans
and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of
Financial Position.
b) RECOGNITION AND MEASUREMENT
Financial assets are initially measured at fair value plus transactions costs.
Loans and receivables are subsequently carried at amortised cost using the effective interest method, except
for short term receivables.
c) IMPAIRMENT OF FINANCIAL ASSETS
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired,
and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset (a “loss event”), and that loss event (or events)
has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can
be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
•
•
•
significant financial difficulty of the issuer or obligor;
a breach of contract, such as a default or delinquency in interest or principal repayments;
the disappearance of an active market for that financial asset because of financial difficulties;
P a g e | 32
33
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
•
•
observable data indicating that there is a measurable decrease in the estimated future cash flows
from a portfolio of financial assets since the initial recognition of those assets, although the decrease
cannot yet be identified with the individual financial assets in the portfolio; or
for assets classified as available-for-sale, a significant or prolonged decline in the fair value of the
security below its cost.
ASSETS CARRIED AT AMORTISED COST
The amount of impairment is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows (excluding future credit losses that have not been incurred),
discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is
reduced, and the loss is recognised in the Statement of Comprehensive Income. As a practical
expedient, the Group may measure impairment on the basis of an instrument’s fair value using an
observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised (such as an improvement
in the debtor’s
credit rating), the reversal of the previously recognised impairment loss is recognised in the Statement
of Comprehensive Income.
CASH AND CASH EQUIVALENTS
In the consolidated Statement of Cash Flows, cash and cash equivalents comprise cash in hand and
deposits held at call with bank.
FINANCIAL LIABILITIES
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the
Group becomes a party to the contractual provisions of the instruments. Financial liabilities are initially
measured at fair value, net of transactions costs. They are subsequently measured at amortised cost
using the effective interest method.
Financial liabilities are derecognised when the Group or Company’s contractual obligations expire, are
cancelled or are discharged.
SHAREHOLDERS’ EQUITY
Equity comprises the following:
• “Share capital” represents the nominal value of equity shares.
• “Share premium” represents the excess over nominal value of the fair value of consideration received
for equity shares, net of expenses of the share issue.
• “Share option reserve” represents the cumulative cost of share based payments.
• “Merger reserve” and “Reverse Acquisition reserve” represents historical reserves formed upon
previous Business Combinations entered into by the Company that fall outside the scope of
IFRS 3.
• “Retained losses" represents retained losses.
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34
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
BORROWINGS
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the Statement of Comprehensive Income over the period of the borrowings, using the
effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the end of the reporting period.
BORROWINGS COSTS
Borrowing costs are recognised in profit or loss in the period in which they are incurred.
SHARE BASED PAYMENTS
The Group operates equity-settled, share-based schemes, under which it receives services from employees
or third-party suppliers as consideration for equity instruments (options and warrants) of the Group. The Group
may also issue warrants to share subscribers as part of a share placing. The fair value of the equity-settled
share based payments is recognised as an expense in the Statement of Comprehensive Income or charged
to equity depending on the nature of the service provided or instrument issued. The total amount to be
expensed or charged is determined by reference to the fair value of the options granted:
•
•
•
including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions (for example,
profitability or sales growth targets, or remaining an employee of the entity over a specified time
period); and
including the impact of any non-vesting conditions (for example, the requirement for employees to
save).
In the case of warrants the amount charged to equity is determined by reference to the fair value of the services
received if available. If the fair value of the services received is not determinable, the warrants are valued by
reference to the fair value of the warrants granted as described previously.
Non-market vesting conditions are included in assumptions about the number of options or warrants that are
expected to vest. The total expense or charge is recognised over the vesting period, which is the period over
which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity
revises its estimates of the number of options that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original estimates, if any, in the Statement of
Comprehensive Income or equity as appropriate, with a corresponding adjustment to a separate reserve in
equity.
When the options are exercised, the Company issues new shares. The proceeds received, net of any directly
attributable transaction costs, are credited to share capital (nominal value) and share premium.
P a g e | 34
35
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
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 £599,000 (2020: £176,000 comprising cash and cash equivalents
and loans and receivables.
LIQUIDITY RISK
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities. The Group manages this risk through maintaining a positive
cash balance and controlling expenses and commitments. The Directors are confident that adequate resources
exist to finance current operations.
The following table summarises the maturity profile of the Group’s non-derivative financial liabilities with agreed
repayment periods. The table has been drawn up based on contractual undiscounted cash flows based on the
earliest repayment date on which the Group can be required to pay. The table includes both interest and principal
cash flows. To the extent that the interest flows are floating rate, the undiscounted amount is derived from the
interest rate curves at the balance sheet date:
Group
At 30 June 2021
Trade and other payables
Borrowings
At 30 June 2020
Trade and other payables
Borrowings
Less than
1 year
£’000
411
100
326
100
Between 1
and 2 years
£’000
-
Between 2
and 5 years
£’000
-
Over 5
years
£’000
-
-
-
-
-
-
-
-
-
-
Carrying
value
£’000
411
100
Total
£’000
411
100
326
100
326
100
CAPITAL RISK MANAGEMENT
The Group’s objectives when managing capital are:
•
•
•
to safeguard the Group’s ability to continue as a going concern, so that it continues to provide returns
and benefits for shareholders;
to support the Group’s growth; and
to provide capital for the purpose of strengthening the Group’s risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure
and equity holder returns, taking into consideration the future capital requirements of the Group and capital
efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures
and projected strategic investment opportunities. Management regards total equity as capital and reserves, for
capital management purposes.
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36
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
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 £2,773,000 and £2,440,000 respectively (2020: £2,666,000 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, Hydrogen and automotive sectors that the company will be focusing on in the
future.
When a review for impairment is conducted, the recoverable amount is determined based on value in use
calculations prepared on the basis of management’s assumptions and estimates. As a result of their 2021 review
management has concluded that no impairment is required.
The value–in-use calculations require management to estimate future cash flows expected to arise from the
cash generating unit, once commercial production is achieved, and apply a suitable discount rate in order to
calculate present value. These calculations require the use of estimates. See Note 10 for further details.
Following other sources of products interest during the year, management have focussed the value-in-use
calculations on licensing sales rather than product sales. This has been done as management consider that the
revenues are more near term in nature and note that it uses the same core developed technology. Given the
product’s nature, the core estimates have remained broadly consistent with 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 in 2021 and
2020 to be classified as cash and cash equivalents rather than other debtors.
P a g e | 36
37
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
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
2021
£’000
2021
£’000
144
6
150
Total
2021
£’000
80
40
12
12
144
144
6
150
Total
2020
£’000
80
40
12
12
144
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 (2020: nil).
6
EMPLOYEE INFORMATION
Wages and salaries
Social security costs
2021
£’000
2020
£’000
144
6
150
144
6
150
In addition to the above a total of £96,331 (2020: £93,000) wages and salaries for employees has been included
in Development costs.
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.
2021
Number
2020
Number
4
4
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38
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
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
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 charge / (credit)
2021
£’000
150
20
7
2020
£’000
150
20
6
2021
£’000
2020
£’000
20
18
2021
£’000
-
(24)
(24)
2020
£’000
-
(41)
(41)
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:
Loss before tax from continuing operations
Loss before tax multiplied by rate of corporation tax in the UK of 19% (2020:
19%)
Tax effects of:
Expenses not deductible for tax purposes
Unrelieved tax losses carried forward
Research and development tax credit
Total tax
2021
£’000
2020
£’000
(277)
(240)
(53)
(46)
-
53
(24)
(24)
-
46
(41)
(41)
The Group has excess management expenses of approximately £5,450,000 (2020: £5,200,000), capital losses
of £150,000 (2020: £150,000) and non-trade financial losses of approximately £119,000 (2020: £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.
P a g e | 38
39
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
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 £253,000 (2020:
£199,000). The weighted number of equity shares in issue during the year was 3,399,326,136 (2020:
2,305,913,967).
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 2019
Additions
At 30 June 2020
Additions
At 30 June 2021
Development
Costs
Total
£’000
£’000
2,570
96
2,666
107
2,570
96
2,666
107
2,773
2,773
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.
The recoverable amount of the above cash generating unit has been determined based on value-in-use
calculations and includes revenue from stirling application in marine, Inspirit Charger (boiler technology), waste
recycling and Hydrogen application activities. The value-in-use calculations use cash flow projections based on
financial budgets approved by Management covering a five year period. They key estimates in the value-in-use
calculation are:
Growth rate – Nonlinear year on year increases based on directors’ estimations following discussion with a
number of potential partners.
Discount rate – 30%
P a g e | 39
40
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
11
PROPERTY, PLANT
AND EQUIPMENT
GROUP
Plant and
Equipment
Fixtures
and fittings
Motor
Vehicles
Total
COST
As at 30 June 2019
Additions
As at 30 June 2020
Additions
As at 30 June 2021
DEPRECIATION
As at 30 June 2019
Charge for year
As at 30 June 2020
Charge for year
As at 30 June 2021
NET BOOK VALUE
As at 30 June 2021
As at 30 June 2020
£’000
£’000
£’000
£’000
81
3
84
2
86
47
6
53
6
59
27
31
15
-
15
-
15
11
-
11
1
12
3
4
1
-
1
-
1
1
-
1
-
1
-
-
97
3
100
2
102
59
6
65
7
72
30
35
P a g e | 40
41
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
12
INVESTMENT IN SUBSIDIARIES
COMPANY
SHARES IN GROUP UNDERTAKINGS:
At 1 July
Increase in loan to subsidiary
Provision against the loan balance outstanding
A
2021
£’000
2,440
75
(75)
2,440
2020
£’000
2,440
207
(207)
2,440
Included in the above is an amount of £3,046,513 (2020: £2,961,446) relating to the amount due to the
Company by its subsidiary Inspirit Energy Limited. A provision of £3,046,513 (2020: £2,961,446) 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
Dissolved 12 January
2021
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
Ordinary shares
£15,230
100%
Product
development
Ordinary shares
£1
100%
Dormant
*** Inspirit Energy Limited (Co No 07160673) is entitled and has taken exemption under section 479a
of the Companies Act 2006. No members of Inspirit Energy Limited have required the company to
obtain an audit of its accounts for the year in question in accordance with section 476 of the
Companies Act 2006
13
TRADE AND OTHER RECEIVABLES
Corporation tax*
VAT recoverable
Other receivables
GROUP
COMPANY
2021
£’000
24
13
-
37
2020
£’000
41
8
-
49
2021
£’000
-
7
-
7
2020
£’000
-
3
1
4
*The Corporation tax repayable relates to the R&D tax claim receivable from HMRC.
P a g e | 41
42
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
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
2021
£’000
561
2020
£’000
128
2021
£’000
554
2020
£’000
126
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
1,482,976,188
-
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
1,367,857,139
-
136,786
-
-
-
-
-
-
-
620,714
757,500
(30,000)
(30,000)
4,271,640,186
400,932
299,292
396,923
1,406,599
12,933,447
15,036,261
At 30 June
2019
Issue of
New Shares
Issue costs
At 30 June
2020
Issue of
New Shares
Issue costs
At 30 June
2021
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 | 42
43
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
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
2021
0.00075
0.0007
0.0007
At 1 July
Granted
Exercised
Lapsed
Options and
warrants
605,044,429
500,000,000
(367,857,139)
(237,187,290)
Weighted
Average
Exercise Price
2020
0.0488
Options and
warrants
1,500,000
0.0007
603,544,429
-
-
-
-
At 30 June
0.00075
500,000,000
0.0488
605,044,429
Grant date
Expiry date
Exercise price in
£ per share
Number of
options and
warrants
2021
-
-
-
-
Number of
options and
warrants
2020
1,500,000
574,258,711
27,000,001
2,285,717
605,044,429
0.00075
0.00075
500,000,000
500,000,000
25-Apr-21
0.0488-
19-Nov-20
01-Dec-20
23-Dec-20
02-Jun-23
0.0007
0.0007
0.0007
26-Apr-11
20-Nov-19
02-Dec-19
24-Dec-19
03-Jun-21*
On 27th May 2021, the Company announced that it had raised a gross amount of £500,000 through the
placing of 1,000,000,000 ordinary shares of 0.001 pence each in the share capital of the Company at 0.05
pence per Ordinary Share. For every two Placing Shares they subscribed to, placees will also receive one
warrant over Ordinary Shares valid for 24 months from the date of issue exercisable at 0.075 pence per
Ordinary Share. The warrants awarded did not fall under the scope of IFRS 2 therefore no share-based
payment expense has been recognised in the year ended 30 June 2021.
P a g e | 43
44
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
17
TRADE AND OTHER PAYABLES
Trade payables
Other payables
GROUP
2021
£’000
54
56
2020
£’000
56
-
Social security and other taxes
46 33
Accrued expenses
255
411
224
362
COMPANY
2021
£’000
17
55
-
253
325
2020
£’000
16
55
-
219
290
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
18
BORROWINGS
Current
Drawdown facility (see Note 1 below)
Total current borrowings
Non-current
Convertible loan notes
Total non-current borrowings
Total borrowings
Note 1
GROUP
2021
£’000
2020
£’000
COMPANY
2021
£’000
100
100
-
-
100
100
-
-
100
100
-
-
2020
£’000
100
100
-
-
100
100
100
100
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.
P a g e | 44
45
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2021
19 FINANCIAL INSTRUMENTS BY CATEGORY
FINANCIAL ASSETS AT AMORTISED COST:
Trade and other receivables (excluding prepayments, VAT and corporation tax)
Cash and cash equivalents
FINANCIAL LIABILITIES AT AMORTISED COST:
Trade and other payables
Borrowings
2021
£’000
2020
£’000
-
561
54
100
-
128
89
100
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 (2020: £40,000). The amount owed to NKJ Associates Ltd at year end is £72,000 (2020: £62,000).
Amount of fees due to John Gunn at 30 June 2021 was £160,000 (2020: £150,000) and the amount of fees
due to Anthony Samaha at 30 June 2021 was £18,000 (2020: £6,000).
Both John Gunn and Nilesh Jagatia are Directors of Global Investment Strategy UK Limited (GIS) and GIS held
cash in its Inspirit Energy Holdings Plc’s client account at 30 June 2021 totalling £183,000 (2020: £125,000)
and this balance is included in cash and cash equivalents.
22 EVENTS AFTER THE REPORTING DATE
On 2 November 2021, the company announced that it was in early-stage discussions with a view to entering into
an agreement with a British certification company Enertek International Ltd. Enertek International have won
several development contracts from the government (BEIS) and have gained a vast knowledge in developing
backward compatible Hydrogen products such as: domestic and commercial cookers, domestic and commercial
heating systems etc. They have now gained the knowledge which could be very beneficial to Inspirit in developing
a Hydrogen product, with a view of also looking at our existing products to make them hydrogen powered
backwards compatible.
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