Inspirit Energy Holdings plc
Annual Report and Financial Statements
for the year ended 30 June 2022
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
8-17
18-23
24
25
26
27
28
Notes to the financial statements
29-46
3
Inspirit Energy Holdings plc
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 30 June 2022
Inspirit Energy Holdings plc (Inspirit) has successfully maintained its focus on the application of the Stirling engine
in various sectors during the reporting year, and had been primarily working with its engineering partners on the fine
details of the new Waste Heat Recovery (WHR) system for the application on the Volvo marine engine. The unit
was built and tested in Poland and with the issues in neighbouring Ukraine, sourcing materials and components had
been challenging.
Despite the global slowdown and access to materials, the operating Board believe that the Company has maintained
positive progress over the last year in the alternative applications of the Stirling engine and there is strong evidence
of the need to refocus our strategic objectives towards these areas that include marine and waste heat recovery. As
mentioned last year, we wait to assess the impact on government's ban on oil and gas boilers on new build property
from 2025, but there is no clear outcome with existing households gas boiler heating. It should be noted that this is
by no means an abandonment of our MicroCHP boiler technology as the underlying technology for the Inspirit
charger is applicable to the marine and waste heat recovery applications.
The Company's phase one trial in Poland managed by Inspirit's engineering team, using a non-branded automotive
engine, regularly produced a power output of over 34kW during several weeks of testing. This trial was conducted
using an automotive engine with the same horsepower as the Volvo Penta D13 Engine running at 2400 revolutions
per minute.
Further phase two testing, again conducted in Poland, introduced the use of the Company's technology, the Helix
Accelerator. Use of the Helix Accelerator resulted in a near doubling in the power output achieved to 64kW, using
the same automotive engine as the phase one trial.
Further testing and development in Poland is currently being undertaken, with an emphasis on endurance and stress
testing, simulating varying scenarios, which should be complete before the end of 2022. Our engineering team will
be adding additional enhancements to the WHR system as part of this phase three trial programme, where further
improvements in the power output are anticipated. To date the performance of the WHR system and its robustness
have exceeded the Company's expectations and we look forward to shortly reporting on the results of the phase 3
trial.
Thereafter, Inspirit will seek to enter into a trial phase with Volvo Marine. The board are also actively pursuing
commercial discussions with other parties that are active in the commercial automotive sector and WHR.
The board of Inspirit are very pleased with the team's achievements and the progress that has been made to date.
Additionally, the board are investigating the potential for the unit to be incorporated as a retrofit for the commercial
engine market and in particular certain applications in the haulage market. This includes widening the Company's
traditional sphere of operation in Europe and also in Asia and North America.
The operating Board believe that the WHR technology and the application can be applied to marine, waste heat
recycling from energy generation, refrigerated transport that uses diesel engines and many more applications.
As per previous years, the board are continuing to assess funding options for the development and
commercialisation of our products and will continue to demonstrate prudence in our approach to managing our
current resources whilst pushing forward with our product development.
I would like to thank my colleagues for their hard work and commitment to driving the business forward during these
challenging times.
J Gunn
Chairman and Chief Executive Officer
05 January 2023
4
Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2022
The Directors present their Strategic Report on Inspirit Energy Holdings plc (the “Company”) and its subsidiary
undertakings (together the “Group”) for the year ended 30 June 2022.
REVIEW OF THE BUSINESS
Inspirit Energy Limited (IEL) continues to apply its expertise in the application of the Stirling engine technology in different
sectors including Marine and Waste Heat Recovery.
The Company is also currently pursuing the development and commercialisation of a world-leading micro–Combined Heat
and Power (“mCHP”) boiler for use in commercial and residential markets. The mCHP boiler is powered by natural gas
or hydrogen and designed to produce hot water (for domestic hot water or central heating) and a simultaneous electrical
output that can be used locally or fed back into the National Grid.
DEVELOPMENTS DURING THE YEAR
Despite COVID 19 still having an impact during the beginning of the financial year with lockdowns, supply line issues and
general movement in Europe, IEL has been working with its engineering partners on the fine details of the new WHR for
the application on the Volvo marine engine.
In addition, IEL successfully assembled and applied the first phase of the WHR unit and with limited testing, the unit
provided the highest recorded output of over 34 kW in the first stage build test period. The WHR is a major component in
the application for the Volvo Marine engine and other heat recovery applications the Company has been working on
whereby waste heat exhaust is recycled and converted to energy.
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE
The Director’s believe they have acted in the way most likely to promote the success of the Company for the benefit of its
members as a whole, as required by s172 of the Companies Act 2006, as modified by the Companies ( Miscellaneous
Reporting ) Regulations 2018 are outlined as follows:
a. Employee engagement
The quality, commitment and effectiveness of the Company's current and future employees are crucial to its continued
success. Employee policies and programmes are designed to encourage employees to become interested in the
Company's activities and to reward employees according to their contribution and capability and the Company's financial
performance. Employee communications are a priority and regular briefings are used to disseminate relevant information.
Employment policies do not discriminate between employees or potential employees on the grounds of colour, race,
ethnic or natural origin, sex, marital status, sexual orientation, religious beliefs or disability. If an employee were to become
disabled whilst in employment and as a result was unable to perform his or her duties, every effort would be made to offer
suitable alternative employment and assistance with retraining.
b. Suppliers and customers
The Company maintains an ongoing dialogue with its potential customers and suppliers and the Company engages in
supplier face-to-face meetings, email and telephone conversations with directors and senior management of key
suppliers. When selecting suppliers and materials, issues such as the impact on the community and the environment
have actively been taken into consideration.
The Company pays its employees and creditors promptly and keeps its costs to a minimum to protect shareholders’
funds. The Executive Directors have agreed to accrue their fees in this reporting period (note 5).
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Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2022
c. Shareholders and investors
The Company is quoted on AIM and its members will be fully aware, through detailed announcements, shareholder
meetings and financial communications, of the Board’s broad and specific intentions and the rationale for its decisions.
Other developments during the year:
On 2nd November 2021, the Company announced that it was in early-stage discussions with a view to entering
into an agreement with a British certification company Enertek International Ltd. Enertek International have won
several development contracts from the government (BEIS) and have gained a vast knowledge in developing
backward compatible Hydrogen products such as: domestic and commercial cookers, domestic and commercial
heating systems etc. They have now gained the knowledge which could be very beneficial to Inspirit in developing
a Hydrogen product, with a view of also looking at our existing products to make them hydrogen powered
backwards compatible without the need to redevelop the core technology.
On 27th June 2022 the company announced that on the first phase of the development of the WHR unit and with
limited testing, the unit provided the highest recorded output of over 34 kW in the first stage build test period.
The WHR is a major component in the application for the Volvo Marine engine and other heat recovery
applications the Company had been working on whereby waste heat exhaust is recycled and converted to
energy.
BOARD CHANGES
None.
RESULTS AND DIVIDENDS
The Group made a loss after taxation of £233,000 (2021: loss of £253,000) and net assets as at 30 June 2022 were
£2,657,000 (2021: £2,890,000).
The Directors do not propose a dividend for the year to 30 June 2022 (2021: £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
2022
30 June
2021
£2,657,000
£2,890,000
0.062p
0.06p
0.074p
0.05p
£2,648,417
£2,135,820
The Net asset value decreased but the Market capitalisation increased during the reporting period. The closing share price
was 0.06p compared to 0.05p in 2021.
6
Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2022
COVID 19 ASSESMENT
During the reporting period, the Company continued to develop its microCHP boiler, Marine engine and Waste Heat
Recovery (WHR) application with its European partners. Specifically, the Company has spent time working to refine
Inspirit's Stirling technology and are continually reviewing the potential supply chain and detailing the product specifics
for potential commercial partners.
The Board recognises that these are still unprecedented times and the risk of COVID-19 still remains current and that this
may still cause disruption to the economy and supply chain for components. As with all businesses, we are not immune
to this risk. After disruption in the prior year to development and testing, this recommenced in the year.
To mitigate any future impact of COVID 19, the Company has maintained communication with its diversified supplier base
with multiple suppliers in different countries. In the event that any country has further lock downs or restrictions we would
be able to swap supplier with minimal impact on our project plan.
KEY RISKS AND UNCERTAINTIES
Early stage product development carries a high level of risk and uncertainty, although the rewards can be outstanding.
At this stage, there is a common risk associated with all pioneering technologically advanced companies in their
requirement to continually invest in research and development. The Group has already made significant investments in
addressing opportunities in the renewable energy sector.
Other risks and uncertainties within the Group are detailed in principle 4 of the Corporate Governance Report.
GOING CONCERN RISK
The Group requires financing to fund its operations through to commercialisation and the stage where it is profit generating
and the Group will seek to raise such funds via placings and short term debt finance. There is the risk that the Group will
not have access to sufficient funds to achieve this. The Group seek to mitigate through forecast preparation, monitoring
and reducing discretionary costs. Further details are 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.
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:
7
Inspirit Energy Holdings plc
STRATEGIC REPORT
FOR THE YEAR ENDED 30 June 2022
•
•
•
•
•
reports from management with a review of the business at each Board meeting, focusing on any new decisions/risks
arising;
reports on the performance of its subsidiary;
reports on selection criteria on the applications of its technology;
discussion with senior personnel; and
consideration of reports prepared by third parties.
Details of other financial risks and their management are given in Note 3 to the financial statements.
ON BEHALF OF THE BOARD
N Jagatia
Director
5 January 2023
8
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2022
The Directors present their annual report on the affairs of the Group and Company, together with the audited financial
statements for the year ended 30 June 2022.
PRINCIPAL ACTIVITIES
The principal activity of the Group and Company is that of development and commercialisation of the mCHP boiler
and application of the stirling technology in other sectors such as marine, waste energy recycling and automotive
truck industries.
Details of the Group’s principal activity can be found in the Strategic Report.
GREENHOUSE GAS (GHG) EMISSIONS
The Group is aware that it needs to measure its operational carbon footprint in order to limit and control its
environmental impact. However, given the very limited nature of its direct activities during the year under review, it
has not been practical to measure its carbon footprint.
The Group only measures the impact of its direct activities, as the full impact of the entire supply chain
of its suppliers cannot be measured practically.
DIRECTORS
The Directors who held office in the period up to the date of approval of the Financial Statements and their beneficial
interests in the Company’s issued share capital at the beginning and end of the accounting year were:
*861,403,363 Ordinary Shares (direct 657,981,981 Ordinary Shares and indirect via GIS 203,421,382 Ordinary
Shares)
SIGNIFICANT SHAREHOLDERS
Number of Number of ordinary shares% of issued ordinary shares% of issued 30-Jun30-Jun30-Jun30-Jun2022%2021%2022 2021J Gunn *861,403,36320.2%861,403,36320.2%--N Jagatia44,857,1421.1%44,857,1421.1%--A Samaha- ---Number ofshare options and warrantsNumber of ordinary shares % of ordinary share capital and voting rights Name of shareholder HSBC GLOBAL CUSTODY NOMINEE (UK) LIMITED1,134,642,82426.6%HARGREAVES LANSDOWN (NOMINEES) LIMITED922,014,50521.6%BARCLAYS DIRECT INVESTING NOMINEES LIMITED426,287,01410.0%INTERACTIVE INVESTOR SERVICES NOMINEES LIMITED401,383,2619.4%LAWSHARE NOMINEES LIMITED386,543,6709.0%HSDL NOMINEES LIMITED306,566,8067.2%VIDACOS NOMINEES LIMITED127,246,7583.0%On 4 January 2023 the following were interested in 3 percent. or more of the Company’s share capital (including Directors, whose interests are also shown above):
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2022
INDEMNITY OF OFFICERS
The Company maintains appropriate insurance cover against legal action brought against its Directors and officers.
RESEARCH AND DEVELOPMENT
For details of the development activities undertaken in the year, please refer to principle 1 of the Corporate
Governance Report.
BOARD OF DIRECTORS
The Board is responsible for strategy and performance, approval of major capital projects and the framework of
internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely information.
All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring the
Board procedures are followed and that applicable rules and regulations are complied with.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority. In addition to the publication of an annual report and an
interim report, there is regular dialogue with shareholders and analysts. The Annual General Meeting is viewed as a
forum for communicating with shareholders, particularly private investors. Shareholders may question the Executive
Chairman and other members of the Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Group's system of internal control and for reviewing the
effectiveness of these systems. The risk management process and systems of internal control are designed to
manage rather than eliminate the risk of the Group failing to achieve its strategic objectives. It should be recognised
that such systems can only provide reasonable and not absolute assurance against material misstatement or loss.
The Group has well established procedures which are considered adequate given the size of the business.
MATTERS COVERED IN THE STRATEGIC REPORT
The business review, results, review of KPI’s and future developments are included in the Strategic Report and
Chairman’s Statement.
GOING CONCERN
As at 30 June 2022 the Group had a cash balance of £160,000 (2021: £561,000), net current liabilities of £366,000
(2021: net current assets of £87,000) and net assets of £2,657,000 (2021: £2,890,000). The Group has maintained
its core spend during the year whilst still managing to move its projects forward and post year end secured a $250,000
loan facility. There can be no assurance that the Group’s projects will become fully developed and reach
commercialisation nor that there will be sufficient cash resources available to the Group to do so.
The Directors have reviewed a detailed forecast based on the funds expected to be raised and forecasted expenditure.
Having made due and careful enquiry, the Directors acknowledge that funds will need to be raised within the next 12
months to enable the Group to meets its obligations as they fall due, however, the Directors are confident that the
required funds will successfully be raised through the issue of equity and/or debt to fund its operations over the next
12 months.
The Directors, therefore, have made an informed judgement, at the time of approving financial statements, that the
Group is a going concern but they acknowledge that the dependence on raising further funds during the next 12
months represents a material uncertainty. The Auditors have made reference to going concern by way of a material
uncertainty.
10
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2022
EVENTS AFTER THE REPORTING DATE
On 8th December 2022, the Company announced that it has entered into a short-term, un-secured debt facility of up
to US$250,000 (approximately £205,075) (the “Facility”). Under the Facility Inspirit initially drew down US$80,000
(approximately £65,624) (the “Initial Advance”). The Facility is with Riverfort Global Opportunities PCC Limited, and
the proceeds of the advance are for general working capital.
The Facility has a 12-month term and allows Inspirit to draw down funds (“Advances”) which will be repayable within
6 months in either cash or shares at the Noteholders’ discretion in respect of the Initial Advance and thereafter at the
agreement of the Company and Riverfort. If the debt is repaid in shares, they will be repaid at 130% of the Reference
Price being the average of the five (5) daily VWAPs preceding the Drawdown Date in respect of the relevant Advance
(the “Fixed Premium Placing Price”). In the event that Inspirit completes any share placing during the Term of the
relevant Advance and the share placing price is below the Fixed Premium Placing Price, the Fixed Premium Placing
Price will be amended to be the relevant share placing price. Inspirit will issue the Noteholder with warrants in respect
of each Advance so as to represent 50% of the value of the relevant Advance, divided by the relevant Reference
Price; the warrants will have an exercise price of Fixed Premium Placing Price and a 48 month term.
Inspirit drew down US$80,000 as the Initial Advance and issued Riverfort with warrants to the value of 50% of the
Initial Advance at the reference price of 0.03376 pence being 97,191,943 warrants. These warrants will have a term
of 48 months and will be exercisable at 130% of the reference price being 0.04388 pence.
The Facility will attract 1.5% interest per month based on the value of the outstanding indebtedness payable in cash
and an implementation fee of 6% of any Advances if settled in cash or 8% if issued in Shares. Accordingly, Inspirit
will issued 15,550,710 Ordinary Shares of 0.001p each (“Shares”) at a price of 0.03376 pence each for the
implementation fee in respect of the Initial Advance (the “Initial Shares”). The Facility contains a right of first refusal
clause allowing Riverfort to match the terms of any alternative debt/ structured funding the Company may seek during
the term of the Facility.
11
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2022
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
directors have prepared the group and parent company financial statements in accordance with UK-adopted
international accounting standards. Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of affairs of the group and the parent company
and of the profit or loss of the group and the parent company for that period. In preparing these financial statements,
the directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
•
•
state whether applicable UK-adopted international accounting standards have been followed, subject to any
material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group
and the parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the
group and the parent company and enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the group and the parent company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions. The Company is compliant with AIM Rule 26 regarding
the Company’s website. See www.inspirit-energy.com.
DISCLOSURE OF INFORMATION TO AUDITOR
In the case of each person who was a Director at the time this report was approved:
•
•
so far as that director is aware there is no relevant audit information of which the Company’s auditor is unaware;
and
that director has taken all steps that the director ought to have taken as a director to make himself aware of any
relevant audit information and to establish that the Company’s auditor is aware of that information.
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
5 January 2023
12
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2022
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 and Waste
Heat Recovery (WHR) applications. Inspirit achieved a number of significant
milestones including increseing the output of its WHR to over 30kW.
These milestones continue to demonstrate strategic direction as an R&D company
in this niche sector. The operating Board has worked throughout to identify differing
potential applications for the technology where there is significant potential for
growth, as well as considering the future strategy and funding of its operating
subsidiary..
The Directors believe that the positive progress over the last year in the alternative
applications of the Stirling technology in the Marine and Waste Heat Recovery (WHR)
sectors is strong evidence of the need to refocus our strategic objectives towards
these areas. It should be noted that this is by no means an abandonment of our
MicroCHP boiler technology – on the contrary, we are actively looking into the
application of the technology in the rapidly emerging hydrogen market. Additionally,
with the continued growth demand for electric cars, the Board will be looking at the
automotive sector to utilise the Stirling engine to provide a source of power to charge
electric motor cars.
The Group will also potentially make investments in complementary areas and
technologies that will utilise the Group's existing technical expertise.
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
investors can keep themselves updated about the current Company’s position by
visiting the INSP’s website http://www.inspirit-energy.com.
3) Considering
stakeholders and
social
responsibilities and
their implications
for long term
success
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
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2022
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.
/
Non-compliance.
Regulatory
legal
adherence
Implementing and
monitoring of robust
health and safety
measures at
workplace.
Robust policies and
procedures to be
followed.
Maintaining effective
communication with
the Company’s
Auditors and NOMAD
on a regular basis.
Loss of
licences
resulting in
inability to
comply with
the regulatory
/ legal
requirements.
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Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2022
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.
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.
Delays in
activity
internally and
externally
would lead to
consumption
of working
capital
Large proportion of
the development work
is successfully
complete.
Diversification of
suppliers and partners
to meet delivery of
activity.
Regulatory
environment in
domestic
power market
External:
Changes in
legislation regarding
domestic power
market.
Potential to
undermine
microchip
boiler
product.
Understanding
regulatory
environment and
adapting system
accordingly.
Product Risk
Internal:
Failure to develop
commercial
product.
Potential for
significant
financial loss.
Testing of product
Certification.
Understanding of
market place and
competition.
The above matrix is kept up to date and regularly reviewed as changes arise in order
to mitigate risks.
5) Maintain the board
as a well-
functioning and
balanced team led
by the chair
This section does not comply with the requirements of the QCA Code as the board
composition does not include a Non-Executive Chairman and two Non-Executive
Directors.
At the date of this publication the Board comprises of the Chairman (John Gunn), the
Chief Financial Officer (Nilesh Jagatia) and the independent Non-Executive Director
(Anthony Samaha). Further detail about the skills and capabilities of these directors
are set out in principle six below.
15
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2022
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 group Octagonal Ltd and AIM
quoted Limitless Earth Plc (LME). Nilesh has been involved with several IPO’s and
was previously Group Finance Director of an AIM quoted Online Media and
Publishing Company for a period of five years until July 2012. Nilesh has over 20
years’ experience, including senior financial roles in divisions of both Universal Music
Group and Sanctuary Group plc. He served as a Finance Director for an independent
record label that expanded into the US. Nilesh is a qualified accountant and holds a
degree in finance.
Non-Executive Director: Anthony Samaha
Mr Samaha is a Chartered Accountant (Australia) who has over 20 years’ experience
in accounting and corporate finance. Mr Samaha has worked for over 10 years with
international accounting firms, including Ernst & Young, principally in corporate
finance, and mergers and acquisitions. He has extensive experience in the listing and
management of AIM quoted companies and is currently Executive Director of AIM
traded Reabold Resources Plc.
6) Directors
experience, skills
and capabilities
16
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2022
7) Evaluation of the
Board’s
performance
8) Promoting
corporate culture,
ethical values and
behaviours
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 pride ourselves in high ethical standards. INSP has zero tolerance for bribery
and corruption among our employees.
9) Maintenance of
governance
structures and
processes to
support good
decision making by
the board
This section complies with the requirements of the QCA Code.
The Board is responsible for the ultimate decision making, the structures and
processes adopted by INSP. The Board is headed by the Chairman. In order to
comply with the Companies Act 2006 or QCA code the Board recognises that it must
comply with the following principles set out by the Act:
-
-
-
-
-
duty to exercise independent judgement;
duty to exercise reasonable care, skill and due diligence;
duty to avoid conflicts of interest;
duty not to accept benefits from third parties; and
duty to declare interest in a proposed transaction or arrangement.
The Chairman is responsible for leading the Board, sets the agenda and ensures it is
an effecting working group at the head of the Company. The Chairman is also
responsible for promoting a culture of openness and effective communication with
shareholders and to ensure that all board members receive accurate, timely and clear
information.
The Executive Directors are responsible for day to day running of the Company and
effective communications with the Board and the Shareholders. They represent the
Company to ensure quality of information provision, they challenge and monitor
performance of the teams, and they set business plans and targets for the Company.
Non-Executive Director:
is an
independent director. This is to reinforce the Group’s commitment to a transparent
INSP has one Non-Executive Director who
17
Inspirit Energy Holdings plc
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 30 June 2022
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.
10) Shareholders
communication
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.
18
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2022
Opinion
We have audited the financial statements of Inspirit Energy Holdings Plc (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 30 June 2022 which comprise the Consolidated Statement of Comprehensive
Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company
Statements of Changes in Equity, the Consolidated and Company Statements of Cash Flows and notes to the
financial statements, including significant accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and UK-adopted international accounting standards and as regards the
parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 30 June 2022 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards;
the parent company financial statements have been properly prepared in accordance with UK-adopted
international accounting standards and as applied in accordance with the provisions of the Companies Act
2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the group and parent company in accordance
with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which indicates that the group incurred a loss of £233k
during the year ended 30 June 2022, the group’s current liabilities exceeded its total assets by £366k at that date
and that the group and company are reliant on raising further finance in the next 12 months in order to fund
forecasted expenditure over this period. As stated in note 2, these events or conditions, along with the other matters
as set forth in note 2, indicate that a material uncertainty exists that may cast significant doubt on the company’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director’s use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the company’s ability to continue to adopt the going concern basis of accounting included reviewing
and challenging cashflow forecasts, and related key assumptions, prepared by management covering the going
concern period, discussing their strategies regarding future fund raises and assessing the likelihood of the
required funds being successfully raised by considering the funds required and the group and company’s ability to
raise such funds.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds
for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. We also
determine a level of performance materiality which we use to assess the extent of testing needed to reduce to an
appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds
19
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2022
materiality for the financial statements as a whole. In determining our overall audit strategy, we assessed the level
of uncorrected misstatements that would be material for the financial statements as a whole.
Materiality for the consolidated financial statements was set as £79,000 (2021: £87,000) based upon net assets.
Materiality has been based upon net assets which we determined, in our professional judgement, to be the key
principal benchmark relevant to members of the parent company in assessing the financial performance of the
group due to the number of risks identified relating to assets within the Consolidated Statement of Financial
Position and the relative size of gross assets, liabilities and equity compared to the Consolidated Statement of
Comprehensive Income. Performance materiality and the triviality threshold for the consolidated financial
statements was set at £63,200 (2021: £69,600) and £3,950 (2021: £4,350) respectively given our accumulated
knowledge of the group, the number of risks identified and the assessed risk level.
Materiality for the parent company was set as £64,000 (2021: £86,000) based upon net assets. Net assets was
considered to be an appropriate basis due to the fact that the parent company is non-revenue earning and holds
significant material balances through investments in its subsidiaries and other assets and cash held. Performance
materiality and the triviality threshold for the parent company was set at £51,200 (2021: £68,800) and £3,200 (2021:
£4,300) respectively given our accumulated knowledge of the group, the number of risks identified and the assessed
risk level.
We also agreed to report any other differences below that threshold that we believe warranted reporting on
qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular we looked at areas involving significant accounting estimates and judgements by the
directors and considered future events that are inherently uncertain, such as the recoverable value of the capitalised
development costs. We also addressed the risk of management override of internal controls, including among other
matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to
fraud.
A full scope audit was performed on the complete financial information of both components of the group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section we have determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter
How our scope addressed this matter
Carrying value of Intangible Assets
Carrying value of intangible assets of £3.0m (2021:
£2.8m). Refer to Note 4: Critical Accounting Estimates.
Intangible Assets is the largest asset within the financial
statements and represents the asset (development of its
Stirling technology) from which, if successful, the group
will generate revenue.
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
20
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2022
There is a risk that the development costs capitalised
during the year do not meet the recognition criteria of IAS
38 Intangible Assets.
Since the Group are still in the process of developing their
technology and have not yet begun generating revenue
from said technology, there is also the risk that the
carrying value of the intangible asset is impaired.
Carrying Value of Investment in Subsidiaries
Carrying value of investment in subsidiaries of £2.4m
(2021: £2.4m). Refer to Note 4: Critical Accounting
Estimates.
Investments in subsidiaries is the largest asset within the
Parent Company’s Statement of Financial Position and
represents its investment in the subsidiary whose
principal activity is the development of its Stirling
technology from which, if successful, the group will
generate revenue.
There is the risk that the carrying value of the investment
in subsidiary is impaired since the subsidiary is loss
making and has yet to become revenue generating.
• 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.
The positive developments in the year with respect to the
application of the Stirling technology to the marine
industry demonstrated the commercial potential of
Inspirit’s technology and thus indicate that the capitalised
development costs as at 30 June 2022 are materially
recoverable.
Successful commercialisation of the group’s Stirling
technology is reliant on project completion, the availability
of sufficient funds (see the “Material uncertainty related to
going concern” section above for our conclusion in
respect of the directors’ use of the going concern basis of
accounting in the preparation of the financial statements)
and the required regulatory approvals being obtained. It
is drawn to the users’ attention that none of these matters
are certain. Failure to achieve the above may result in an
impairment to the assets capitalised.
Our work in this area included:
• Obtaining the directors’ assessment of impairment
and reviewing and challenging the key estimates
and judgements used therein; and
• 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
The positive developments in the year with respect to the
application of the Stirling technology to the marine
industries demonstrated the commercial potential of
Inspirit’s technology and thus indicate that the investment
in the subsidiary, the entity conducting said development,
as at 30 June 2022 is materially recoverable.
Successful commercialisation of the group’s Stirling
technology is reliant on project completion, the availability
of sufficient funds (see the “Material uncertainty related to
going concern” section above for our conclusion in
respect of the directors’ use of the going concern basis of
accounting in the preparation of the financial statements)
and the required regulatory approvals being obtained. It
is drawn to the users’ attention that none of these matters
21
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2022
is certain. Failure to achieve the above may result in an
impairment to the carrying value of investments.
Other information
The other information comprises the information included in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are responsible for the other information contained within the annual
report. Our opinion on the group and parent company financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained
in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
•
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation
of the group and parent company financial statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the
group and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no realistic alternative but to do so.
22
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2022
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• We obtained an understanding of the group and parent company and the sector in which they operate to
identify laws and regulations that could reasonably be expected to have a direct effect on the financial
statements. We obtained our understanding in this regard through management, industry research and
experience of the sector.
• We determined the principal laws and regulations relevant to the group and parent company in this regard
to be those arising from UK Company Law, rules applicable to issuers on the AIM Market and UK-adopted
international accounting standards.
• We identified areas of laws and regulations that could reasonably be expected to have a material effect on
the financial statements from our sector experience and through discussion with the directors. We
considered the event of compliance with those laws and regulations as part of our procedures on the related
financial statement items. We communicated laws and regulations throughout our audit team and remained
alert to any indications of non-compliance throughout the audit of the group.
• We designed our audit procedures to ensure the audit team considered whether there were any indications
of non-compliance by the group and parent company with those laws and regulations. These procedures
included, but were not limited to:
o Discussions with management regarding compliance with laws and regulations by the parent
company and the subsidiary;
o Reviewing legal expenses incurred in the year;
o Reviewing board minutes; and
o Review of regulatory news announcements made.
• We also identified the risks of material misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management
override of controls, that there was potential for management bias in relation to the impairment of
capitalised development costs and investments in subsidiaries and we addressed this by challenging the
assumptions and judgements made by management when auditing these significant accounting estimates.
• As in all of our audits, we addressed the risk of fraud arising from management override of controls by
performing audit procedures which included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; discussing with management as to whether there had been any
instances or suspicions of fraud within the subsidiaries and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those
leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases
the more that compliance with a law or regulation is removed from the events and transactions reflected in the
financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also
greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
23
Inspirit Energy Holdings plc
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC
FOR THE YEAR ENDED 30 June 2022
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
05 January 2023
15 Westferry Circus
Canary Wharf
London E14 4HD
24
Inspirit Energy Holdings plc
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 June 2022
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
2022
£’000
(329)
(329)
(329)
96
(233)
2021
£’000
(277)
(277)
(277)
24
(253)
- Basic and diluted earnings per share
9
(0.005p)
(0.007p)
(attributable to owners of the parent)
25
Inspirit Energy Holdings plc
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 June 2022
Company Number: 05075088
GROUP
COMPANY
Note
2022
£’000
2021
£’000
2022
£’000
2021
£’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
CURRENT LIABILITIES
Trade and other payables
Borrowings
TOTAL LIABILITIES
TOTAL EQUITY AND
LIABILITIES
10
11
12
13
14
15
15
17
18
2,998
2,773
25
-
30
-
3,023
2,803
107
160
267
37
561
598
-
1
2,440
2,441
6
158
164
-
1
2,440
2,441
7
554
561
3,290
3,401
2,605
3,002
2,103
9,783
3,150
3
(7,361)
(5,021)
2,103
9,783
3,150
3
(7,361)
(4,788)
2,103
9,783
3,150
3
-
2,103
9,783
3,150
3
-
(12,994)
(12,463)
2,657
2,890
2,045
2,576
533
100
633
633
411
100
511
511
460
100
560
560
326
100
426
426
3,290
3,401
2,605
3,002
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent
Company Statement of Comprehensive Income.
The loss for the Parent Company for the year was £531,000 (2021: loss of £331,000).
These Financial Statements were approved by the Board of Directors on 5 January 2023 and were signed on its behalf
by
N Jagatia
Director
26
Inspirit Energy Holdings plc
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 June 2022
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 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
BALANCE AT 30 June 2021
2,103
9,783
Loss for the year
TOTAL COMPREHENSIVE
INCOME FOR THE YEAR
-
-
-
-
BALANCE AT 30 June 2022
2,103
9,783
-
-
-
-
-
3
-
-
3
-
-
-
-
-
-
-
-
-
-
(253)
(253)
(253)
(253)
-
-
757
(30)
727
3,150
(7,361)
(4,788)
2,890
-
-
-
-
(233)
(233)
(233)
(233)
3,150
(7,361)
(5,021)
2,657
27
Inspirit Energy Holdings plc
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 June 2022
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 2020
1,967
9,192
3,150
3
(12,132)
2,180
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
-
-
-
-
-
BALANCE AT 30 June 2021
2,103
9,783
3,150
Loss for the year
TOTAL COMPREHENSIVE
LOSS FOR THE YEAR
-
-
-
-
-
-
BALANCE AT 30 June 2021
2,103
9,783
3,150
-
-
-
-
-
3
-
-
3
(331)
(331)
(331)
(331)
757
(30)
-
727
(12,463)
(531)
2,576
(531)
(531)
(531)
(12,994)
2,045
28
Inspirit Energy Holdings plc
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 June 2022
CASH FLOWS FROM OPERATING
ACTIVITIES
Loss after tax
Depreciation
Interco loan provision
Tax credit
Decrease/(increase) in trade and other
receivables
Increase 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
14
GROUP
GROUP
2022
£’000
2021
£’000
COMPANY
2022
£’000
Note
(233)
(253)
5
-
(96)
3
121
24
7
-
(24)
(6)
50
42
(531)
-
258
-
2
133
-
COMPANY
2021
£’000
(331)
1
85
-
(2)
35
-
(176)
(184)
(138)
(212)
(225)
(108)
-
-
(2)
-
(225)
(110)
-
-
-
(401)
561
160
757
(30)
727
433
128
561
-
-
(258)
(258)
-
-
-
(396)
554
158
-
(2)
(85)
(87)
757
(30)
727
428
126
554
29
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
1
GENERAL INFORMATION
The principal activity of Inspirit Energy Holdings plc during the period was that of developing and
commercialising the mCHP boiler and in the prior year started to refocus its expertise in the application of the
Stirling engine technology in different sectors including Marine and Waste Heat Recovery.
These financial statements show the consolidated results of the Group for the year ended 30 June 2022
together with the comparative results for the year ended 30 June 2021.
Inspirit Energy Holdings plc is a company incorporated and domiciled in England and Wales and quoted on
the Alternative Investment Market of the London Stock Exchange. The address of its registered office is 200
Aldersgate Street, London, EC1A 4HD.
2
SUMMARY OF SIGNIFICANT 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 UK-adopted International Accounting
Standards and with the Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical cost convention and are presented in GBP
Pound Sterling, rounded to the nearest £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
As at 30 June 2022 the Group had a cash balance of £160,000 (2021: £561,000), net current liabilities of
£366,000 (2021: net current assets of £87,000) and net assets of £2,657,000 (2021: £2,890,000). The Group
has maintained its core spend during the year whilst still managing to move its projects forward and post year
end secured a $250,000 loan facility. There can be no assurance that the Group’s projects will become fully
developed and reach commercialisation nor that there will be sufficient cash resources available to the Group
to do so.
The Directors have reviewed a detailed forecast based on the funds expected to be raised and forecasted
expenditure. Having made due and careful enquiry, the Directors acknowledge that funds will need to be
raised within the next 12 months to enable the Group to meets its obligations as they fall due, however, the
Directors are confident that the required funds will successfully be raised through the issue of equity and/or
debt to fund its operations over the next 12 months.
The Directors, therefore, have made an informed judgement, at the time of approving financial statements,
that the Group is a going concern but they acknowledge that the dependence on raising further funds during
the next 12 months represents a material uncertainty. The Auditors have made reference to going concern
by way of a material uncertainty.
.
30
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
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 2022.
Subsidiaries are entities over which the Group has control. The Group controls an entity when it is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The Group obtains and exercises control through voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are considered when assessing
whether the company controls another entity.
The cost of acquisition is measured as the fair value of the assets acquired, equity instruments issued and
liabilities incurred or assumed at the date of exchange. Acquisition related costs are expensed as incurred.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also
eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting
policies used into line with those used by the Group.
STATEMENT OF COMPLIANCE
The new and amended standards and interpretations which were applied forthe first time in the annual
reporting period commenting 1 July 2021 have not had a material effect on the Group and Company financial
statements.
NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET ADOPTED
The standards, amendments and interpretations which are in issue but not yet mandatorily effective are not
expected to have a material effect on the Group or Company financial statements.
SEGMENTAL REPORTING
Developing and commercialising the mCHP boiler and its related technology is the only activity in which the
Group is engaged and is therefore considered as the only operating / reportable segment. The Group
currently only operates in the UK. The financial information therefore of the single segment is the same as
that set out in the Group Statement of Comprehensive Income and Group Statement of Financial Position.
CURRENT AND DEFERRED INCOME TAX
The tax credit for the period comprises an estimated Research and Development taxation credit to be received
in respect of Research and Development costs incurred during the year. Tax is recognised in the Statement
of Comprehensive Income, except to the extent that it relates to items recognised directly in equity. In this case
the tax is also recognised directly in other comprehensive income or directly in equity, respectively.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit and is accounted for
using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable
profits will be available against which deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises from initial recognition of goodwill or from the
initial recognition (other than in a business combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries and associates, and interests in joint ventures, except where the Company is able to control
31
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
the reversal of the temporary difference and it is probable that the temporary difference will not reverse in
the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled, or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to
items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax assets and liabilities on a net basis.
The current income tax credit is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Company’s subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis
of amounts expected to be paid to or recoverable from the tax authorities.
FOREIGN CURRENCY TRANSLATION
a)
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.
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
32
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount, and are
recognised within “Other (Losses)/Gains – Net” in the Statement of Comprehensive Income.
INTANGIBLE ASSETS - DEVELOPMENT COSTS
Development costs relate to expenditure on the development of the mCHP boiler technology and applications
of the underlying engine technology.
Development costs incurred on the project are capitalised when all the following conditions are satisfied:
•
•
•
•
•
•
completion of the intangible asset is technically feasible so that it will be available for use or sale;
the Group intends to complete the intangible asset and use or sell it;
the Group has the ability to use or sell the intangible asset;
the intangible asset will generate probable future economic benefits;
there are adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset; and
the expenditure attributable to the intangible asset during its development can be measured reliably.
Directly attributable costs that are capitalised as part of the product include any employee costs directly related
to the development of the asset and appropriate expenditure which directly furthers the development of the
project.
Other development expenditure that does not meet these criteria is recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent
period.
IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets that have an indefinite useful life, are not subject to amortisation and are tested annually for impairment.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at each reporting date. See note 4 for more
information on the impairment assessment performed by management.
FINANCIAL ASSETS
a) CLASSIFICATION
The Group classifies its financial assets as loans and receivables. The classification depends on the purpose
for which the financial assets were acquired. Management determines the classification of its financial assets
at initial recognition.
LOANS AND RECEIVABLES
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12 months
after the Statement of Financial Position date. These are classified as non-current assets. The Group’s loans
33
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of
Financial Position.
b) RECOGNITION AND MEASUREMENT
Financial assets are initially measured at fair value plus transactions costs.
Loans and receivables are subsequently carried at amortised cost using the effective interest method, except
for short term receivables.
c) IMPAIRMENT OF FINANCIAL ASSETS
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired,
and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset (a “loss event”), and that loss event (or events)
has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can
be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
•
•
•
•
•
significant financial difficulty of the issuer or obligor;
a breach of contract, such as a default or delinquency in interest or principal repayments;
the disappearance of an active market for that financial asset because of financial difficulties;
observable data indicating that there is a measurable decrease in the estimated future cash flows
from a portfolio of financial assets since the initial recognition of those assets, although the decrease
cannot yet be identified with the individual financial assets in the portfolio; or
for assets classified as available-for-sale, a significant or prolonged decline in the fair value of the
security below its cost.
ASSETS CARRIED AT AMORTISED COST
The amount of impairment is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows (excluding future credit losses that have not been incurred),
discounted at the financial asset’s original effective interest rate. The asset’s carrying amount is
reduced, and the loss is recognised in the Statement of Comprehensive Income. As a practical
expedient, the Group may measure impairment on the basis of an instrument’s fair value using an
observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised (such as an improvement
in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in
the Statement of Comprehensive Income.
CASH AND CASH EQUIVALENTS
In the consolidated Statement of Cash Flows, cash and cash equivalents comprise cash in hand and
deposits held at call with bank.
FINANCIAL LIABILITIES
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the
Group becomes a party to the contractual provisions of the instruments. Financial liabilities are initially
measured at fair value, net of transactions costs. They are subsequently measured at amortised cost
using the effective interest method.
Financial liabilities are derecognised when the Group or Company’s contractual obligations expire, are
cancelled or are discharged.
34
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
SHAREHOLDERS’ EQUITY
Equity comprises the following:
• “Share capital” represents the nominal value of equity shares.
• “Share premium” represents the excess over nominal value of the fair value of consideration
received for equity shares, net of expenses of the share issue.
• “Share option reserve” represents the cumulative cost of share based payments.
• “Merger reserve” and “Reverse Acquisition reserve” represents historical reserves formed upon
previous Business Combinations entered into by the Company that fall outside the scope of
IFRS 3.
• “Retained losses" represents retained losses.
BORROWINGS
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the Statement of Comprehensive Income over the period of the borrowings, using the
effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the end of the reporting period.
BORROWINGS COSTS
Borrowing costs are recognised in profit or loss in the period in which they are incurred.
SHARE BASED PAYMENTS
The Group operates equity-settled, share-based schemes, under which it receives services from employees
or third-party suppliers as consideration for equity instruments (options and warrants) of the Group. The Group
may also issue warrants to share subscribers as part of a share placing. The fair value of the equity-settled
share based payments is recognised as an expense in the Statement of Comprehensive Income or charged
to equity depending on the nature of the service provided or instrument issued. The total amount to be
expensed or charged is determined by reference to the fair value of the options granted:
•
•
•
including any market performance conditions;
excluding the impact of any service and non-market performance vesting conditions (for example,
profitability or sales growth targets, or remaining an employee of the entity over a specified time
period); and
including the impact of any non-vesting conditions (for example, the requirement for employees to
save).
In the case of warrants the amount charged to equity is determined by reference to the fair value of the services
received if available. If the fair value of the services received is not determinable, the warrants are valued by
reference to the fair value of the warrants granted as described previously.
Non-market vesting conditions are included in assumptions about the number of options or warrants that are
expected to vest. The total expense or charge is recognised over the vesting period, which is the period over
which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity
revises its estimates of the number of options that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original estimates, if any, in the Statement of
Comprehensive Income or equity as appropriate, with a corresponding adjustment to a separate reserve in
equity.
When the options are exercised, the Company issues new shares. The proceeds received, net of any directly
attributable transaction costs, are credited to share capital (nominal value) and share premium.
35
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
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 £267,000 (2021: £598,000) 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 2022
Trade and other payables
Borrowings
At 30 June 2021
Less
than 1
year
£’000
533
100
Trade and other payables
Borrowings
411
100
Between 1
and 2 years
£’000
-
Between
2 and 5
years
£’000
-
Over
5
years
£’000
-
-
-
-
-
-
-
-
-
-
Carrying
value
£’000
533
100
Total
£’000
533
100
411
100
411
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
36
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures
and projected strategic investment opportunities. Management regards total equity as capital and reserves, for
capital management purposes.
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of Financial Statements in conformity with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities,
income and expenses. Estimates and judgements are continually evaluated and are based on historical
experience and other factors including expectations of future events that are believed to be reasonable under the
circumstances.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
RECOVERABLE VALUE OF R&D TAX DEBTOR
The Corporation tax receivable in Note 13 relates to the firm’s Research & Development tax reclaim that the firm
is expected to receive once it files its corporation tax returns. The directors have assessed the R&D tax
debtor as being fully recoverable based on historic successful submissions and post year end the company
recovered £28,000. The balance relates to R&D costs incurred in FY2022 for which the claim has not been filed
and will be filed on the publication of the audited accounts and submission of its corporation tax return.
IMPAIRMENT OF DEVELOPMENT COSTS AND INVESTMENT IN SUBSIDIARIES
The Group tests annually whether development costs and investments in the subsidiaries, which have a carrying
value of £2,998,000 and £2,440,000 respectively (2021: £2,773,000 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 2022 review
management has concluded that no impairment is required.
The value–in-use calculations require management to estimate future cash flows expected to arise from the
cash generating unit, once commercial production is achieved, and apply a suitable discount rate in order to
calculate present value. These calculations require the use of estimates. See Note 10 for further details.
Following other sources of products interest during the year, management have focussed the value-in-use
calculations on licensing sales rather than product sales. This has been done as management consider that the
revenues are more near term in nature and note that it uses the same core developed technology. Given the
product’s nature, the core estimates have remained broadly consistent with prior years.
Note that the recoverability of the capitalised development costs and the investment in subsidiaries is dependent
on sufficient funds being raised as and when required up to the point of commercialisation. Due to the
dependence on raising further funds to meet forecasted expenditure over the next 12 months, the Auditors have
made reference to going concern by way of a material uncertainty.
37
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
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
2022
£’000
2021
£’000
144
6
150
Total
2022
£’000
80
40
12
12
144
144
6
150
Total
2021
£’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 (2021: nil).
6
EMPLOYEE INFORMATION
Wages and salaries
Social security costs
2022
£’000
2021
£’000
237
2
239
240
6
246
Included in the above is a total of £92,885 (2021: £96,331) wages and salaries for employees which has been
included in Development costs.
Average number of persons employed (including executive directors and excludes the Non Executive Director -
Anthony Samaha):
Office and management
COMPENSATION OF KEY MANAGEMENT PERSONNEL
There are no key management personnel other than those disclosed in Note 5.
2022
Number
2021
Number
4
4
38
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
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
FX expense/credit
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)
2022
£’000
146
25
7
-
2021
£’000
150
20
7
-
2022
£’000
2021
£’000
25
20
2022
£’000
-
(96)
(96)
2021
£’000
-
(24)
(24)
The tax on the Group's loss before tax differs from the theoretical amount that would arise using the average rate
applicable to losses of the consolidated entities as follows:
Loss before tax from continuing operations
Loss before tax multiplied by rate of corporation tax in the UK of 19% (2021:
19%)
Tax effects of:
Expenses not deductible for tax purposes
Unrelieved tax losses carried forward
Research and development tax credit
Total tax
2022
£’000
2021
£’000
(329)
(277)
(63)
(53)
-
63
(96)
(96)
-
53
(24)
(24)
The Group has excess management expenses of approximately £5,781,000 (2021: £5,450,000), capital losses
of £150,000 (2021: £150,000) and non-trade financial losses of approximately £119,000 (2021: £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.
39
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
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 £233,000 (2021:
£253,000). The weighted number of equity shares in issue during the year was 4,271,640,186 (2021:
3,399,326,136).
In accordance with IAS 33, basic and diluted earnings per share are identical as the effect of the exercise
of share options and warrants would be to decrease the loss per share and therefore deemed anti-dilutive.
Details of share options and warrants that could potentially dilute earnings per share in future periods are
set out in Note 16.
10
INTANGIBLE ASSETS
GROUP
At 30 June 2020
Additions
At 30 June 2021
Additions
At 30 June 2022
Development
Costs
Total
£’000
£’000
2,666
107
2,773
225
2,666
107
2,773
225
2,998
2,998
No amortisation has been recognised on development costs to date as the assets are still in the development
stage and the related products are not yet ready for sale. As such, the value-in-use calculations to support the
carrying value of development costs is directly reliant on the availability of future capital funding in order to
achieve product accreditation and enter into commercial production. Additions during the year included
£92,885 (2021: £96,331) of capitalised wages.
The recoverable amount of the above cash generating unit has been determined based on value-in-use
calculations and includes revenue from stirling applications in marine, commercial truck, Inspirit Charger (boiler
technology) with Hydrogen application and waste recycling activities. The value-in-use calculations use cash flow
projections based on financial budgets approved by Management covering a five year period. They key estimates
in the value-in-use calculation are:
Growth rate – Nonlinear year on year increases based on directors’ estimations following discussion with a number
of potential partners.
Discount rate – 30% Historically, the company used a discount rate of 15%, however in FY2021 the board took
a prudent view of increasing the rate to 30% due to Covid-19 and the global downturn with it’s impact on the
economy. Although the global economic outlook has improved, the board have been prudent in maintaining the
30% discount rate.
The gross margin is derived from licensing the technology and it is remained consistent with the margin assumed
in the 2021 impairment assessment.
40
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
11
PROPERTY, PLANT
AND EQUIPMENT
GROUP
Plant and
Equipment
Fixtures
and fittings
Motor
Vehicles
Total
COST
As at 30 June 2020
Additions
As at 30 June 2021
Additions
As at 30 June 2022
DEPRECIATION
As at 30 June 2020
Charge for year
As at 30 June 2021
Charge for year
As at 30 June 2022
NET BOOK VALUE
As at 30 June 2022
As at 30 June 2021
£’000
£’000
£’000
£’000
84
2
86
-
86
53
6
59
4
63
23
27
15
-
15
-
15
11
1
12
1
13
2
3
1
-
1
-
1
1
-
1
-
1
-
-
100
2
102
-
102
65
7
72
5
77
25
30
41
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
12
INVESTMENT IN SUBSIDIARIES
COMPANY
SHARES IN GROUP UNDERTAKINGS:
At 1 July
Increase in loan to subsidiary
Provision against the loan balance outstanding
A
2022
£’000
2,440
258
(258)
2,440
2021
£’000
2,440
75
(75)
2,440
Included in the above is an amount of £3,304,595 (2021: £3,046,513) relating to the amount due to the
Company by its subsidiary Inspirit Energy Limited. A provision of £3,304,595 (2021: £3,046,513) has been set
against this loan balance outstanding.
Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid.
Details of Subsidiary Undertakings are as follows:
Name of subsidiary
Registered address Registered capital
Proportion of
share capital held
Nature of
business
Inspirit Energy Limited**
Company No.07160673
c/o Niren Blake LLP
2nd Floor, Solar
House, 915 High
Road, London,
England, N12 8QJ
Ordinary shares
£15,230
100%
Product
development
*** 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
2022
£’000
96
11
-
107
2021
£’000
24
13
-
37
2022
£’000
-
6
-
6
2021
£’000
-
7
-
7
*The Corporation tax repayable relates to the R&D tax claim receivable from HMRC.
The Directors consider that the carrying amount of receivables is approximately equal to their fair value and
under IFRS 9 that they are held at amortised cost
42
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
14
CASH AND CASH EQUIVALENTS
Cash and cash equivalents
GROUP
COMPANY
2022
£’000
160
2021
£’000
561
2022
£’000
158
2021
£’000
554
The Directors consider the carrying amount of cash and cash equivalents approximates to their fair value.
All of the Group and Company’s cash and cash equivalents are held with institutions with an AA credit rating.
15
SHARE CAPITAL AND SHARE PREMIUM
Number of
ordinary
shares
Number
of
deferred
shares
Ordinary
shares
Deferred
shares
New
Deferred
B shares
Share
premium
Total
£
£
£
£
£
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
4,271,640,186
400,932
299,292
396,923
1,406,599
12,933,447
15,036,261
At 30 June
2020
Issue of
New Shares
Issue costs
At 30 June
2021
At 30 June
2022
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.
43
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
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
2022
Options and
warrants
Weighted
Average
Exercise Price
2021
Options and
warrants
-
-
0.00075
500,000,000
At 1 July
Granted
At 30 June
0.00075
500,000,000
0.00075
500,000,000
Grant date
Expiry date
Exercise price in
£ per share
Number of
options and
warrants
03-Jun-21*
02-Jun-23
0.00075
0.00075
2022
500,000,000
500,000,000
Number of
options and
warrants
2021
500,000,000
500,000,000
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 2022.
17
TRADE AND OTHER PAYABLES
GROUP
2022
£’000
2021
£’000
Trade payables
Other payables
54
54
56
56
Social security and other taxes
35 46
Accrued expenses
388
255
533
411
COMPANY
2022
£’000
17
57
-
386
460
2021
£’000
17
55
-
254
326
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
44
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
18
BORROWINGS
Current
Drawdown facility (see Note 1 below)
Total current borrowings
Note 1
GROUP
2022
£’000
2021
£’000
COMPANY
2022
£’000
100
100
100
100
100
100
2021
£’000
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.
19 ANALYSIS OF CHANGES IN NET DEBT
As at 1 July
2021
Cashflows
Acquired
Repayment
Non-Cash
movement
As at 30
June 2022
561
(401)
-
-
-
160
£000s
Cash at bank
and in hand
£000s
As at 1 July
2021
Cashflows
Acquired
Repayment
Non-Cash
movement
As at 30
June 2022
Borrowings
100
-
-
-
-
100
45
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
20
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
2022
£’000
2021
£’000
-
160
54
100
-
561
54
100
The table providing an analysis of the maturity of the non-derivative financial liabilities has been included in Note
3.
21 ULTIMATE CONTROLLING PARTY
At the date of signing this report the Directors do not consider there to be one single ultimate controlling party.
22 RELATED PARTY TRANSACTIONS
See note 6 for details of director’s remuneration in the year.
During the year, NKJ Associates Ltd, a company in which N Jagatia is a Director, charged consultancy fees of
£40,000 (2021: £40,000). The amount owed to NKJ Associates Ltd at year end is £112,000 (2021: £72,000).
Amount of fees due to John Gunn at 30 June 2021 was £240,000 (2021: £160,000) and the amount of fees
due to Anthony Samaha at 30 June 2022 was £10,000 (2021: £18,000).
Both John Gunn and Nilesh Jagatia are Directors of Global Investment Strategy UK Limited (GIS) and GIS held
cash in its Inspirit Energy Holdings Plc’s client account at 30 June 2022 totalling £134,276 (2021: £183,000)
and this balance is included in cash and cash equivalents.
23 EVENTS AFTER THE REPORTING DATE
On 8th December 2022, the Company announced that itentered into a short-term, un-secured debt facility of
up to US$250,000 (approximately £205,075) (the “Facility”). Under the Facility Inspiritinitially draw down
US$80,000 (approximately £65,624) (the “Initial Advance”). The Facility is with Riverfort Global Opportunities
PCC Limited, and the proceeds of the advance are for general working capital.
The Facility has a 12-month term and allows Inspirit to draw down funds (“Advances”) which will be repayable
within 6 months in either cash or shares at the Noteholders’ discretion in respect of the Initial Advance and
thereafter at the agreement of the Company and Riverfort. If the debt is repaid in shares, they will be repaid at
130% of the Reference Price being the average of the five (5) daily VWAPs preceding the Drawdown Date in
respect of the relevant Advance (the “Fixed Premium Placing Price”). In the event that Inspirit completes any
share placing during the Term of the relevant Advance and the share placing price is below the Fixed Premium
Placing Price, the Fixed Premium Placing Price will be amended to be the relevant share placing price. Inspirit
will issue the Noteholder with warrants in respect of each Advance so as to represent 50% of the value of the
relevant Advance, divided by the relevant Reference Price; the warrants will have an exercise price of Fixed
Premium Placing Price and a 48 month term.
Inspirit drew down US$80,000 as the Initial Advance and issued Riverfort with warrants to the value of 50% of
the Initial Advance at the reference price of 0.03376 pence being 97,191,943 warrants. These warrants will
have a term of 48 months and will be exercisable at 130% of the reference price being 0.04388 pence.
46
Inspirit Energy Holdings plc
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 June 2022
The Facility will attract 1.5% interest per month based on the value of the outstanding indebtedness payable in
cash and an implementation fee of 6% of any Advances if settled in cash or 8% if issued in Shares. Accordingly,
Inspirit will issued 15,550,710 Ordinary Shares of 0.001p each (“Shares”) at a price of 0.03376 pence each for
the implementation fee in respect of the Initial Advance (the “Initial Shares”). The Facility contains a right of first
refusal clause allowing Riverfort to match the terms of any alternative debt/ structured funding the Company
may seek during the term of the Facility.