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Inspirit Energy Hlds (INSP)

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Friday 05 December, 2014

Inspirit Energy Hlds

Final Results

RNS Number : 0147Z
Inspirit Energy Holdings PLC
05 December 2014
 

                                                                                    5 December 2014

 

 

Inspirit Energy Holdings plc

("INSP" or the "Company")

 

Audited results for the year ended 30 June 2014and Notice of AGM

 

INSP today announces its audited results for the year ended 30 June 2014. 

 

Copies of the Company's Annual Report and Accounts will be sent to shareholders and will be available on the Company's website www.inspirit-energy.com today. Further copies may be obtained directly from the Company's Registered Office at Inspirit Energy Holdings plc, 2nd Floor, 2 London Wall Buildings, London EC2M 5PP

 

As previously announced,  the notice of Annual General Meeting ("AGM") has been posted to shareholders. The AGM will be held at the offices of the Company, 2 London Wall buildings, London EC2M 5PP on 23 December 2014 at 11 am.

 

 

 

Contacts:

 

John Gunn, INSP - +44 (0) 207 048 9400

 

Antonio Bossi / David Coaten, Westhouse Securities - +44 (0) 207 048 9400

 



The financial information set out below does not constitute the Company's statutory accounts for the periods ending 30 June 2014 or 30 June 2013.  The financial information for 2014 and 2013 is derived from the statutory accounts for those years.  The statutory accounts for 2013 have been delivered to the Registrar of Companies.  The statutory accounts for 2014 will be delivered to the Registrar of Companies following the Company's annual general meeting.  The auditors, PKF Littlejohn LLP, have reported on the 2014 and 2013 accounts. The reports were unqualified and did not contain any statements required under either s498 (2) or s498 (3) of the Companies Act 2006.  This preliminary announcement has been prepared on the basis of the accounting policies as stated in the financial statements for the period ended 30 June 2014.  The information included in this preliminary announcement is based on the Company's financial statements, which are prepared in accordance with International Financial Reporting Standards (IFRS).

 

 



 

 

 

INSPIRIT ENERGY HOLDINGS PLC

CHAIRMANS STATEMENT

for the year ended 30 June 2014

 

INTRODUCTION

 

Since Inspirit Energy Holdings Plc's interim results, important steps in the commercialisation of the Company micro combined heat and power (mCHP) boiler have been achieved and the Group shows great progress in delivering its business plan.

 

COMMERCIALISTION AND PROGRESS

 

The Group has entered the stage of finalising commercial design and committing to tooling with a number of its engineering partners and suppliers. The significant investment made demonstrates the Group's progress towards achieving full certification approval and commercialisation of the Group's highly efficient mCHP (micro Combined Heat and Power) micro co-generation boilers.

 

A demonstration facility in Sheffield has been installed to establish the suitability of the mCHP boiler for customers and allow technical staff to provide familiarisation training to installers.

 

A significant testing and field trial agreement entered into with Utilitywise Plc will allow the Group to test the appliance in a range of demand cycles including full and partial utilisation and in several high-profile installation sites in the UK.

 

The mCHP appliance has been designed with the help of the company's engineering and manufacturing partners:

 

·      Adigo - advising on the remodelling of the original heater head and regenerator components of the Stirling Engine design for the final appliance;

·      GE Precision - developing and manufacturing the internals of the Stirling Engine with FEA analysis of the Crankcase, Piston and Rhombic Drive Assembly that converts heat energy into the motion required to generate the electrical output;

·      Sentec - design of the control system including the user interface, diagnostics and management of the supply back into the Grid;

·      Enertek - design of the gas combustion system, heat recovery system; and

·      Malvern - build trial units and will help to bring the product to market when fully commercialised.

 

On 26 June 2014, the Company raised £1,000,000 to fund the commercialisation phase of the Inspirit mCHP boiler.

 

On 11 September 2014, Dr John Bannister joined the management team as a full time consultant to the Company and special advisor to the Board.

 

The Board would like to take this opportunity for thanking all of the Company's staff and consultants for their hard work during the year and our shareholders for their support.

 

The progress over the last year has been very positive and I hope we continue to make great progress in achieving our goal of technological commercialisation.

 

 

 

D Lenigas

Non-executive Chairman

5 December 2014

 

 

INSPIRIT ENERGY HOLDINGS PLC

STRATEGIC REPORT

for the year ended 30 June 2014

The Directors present their Strategic Report on Inspirit Energy Holdings plc ("the Group") for the year ended 30 June 2014.

 

The Strategic Report is a new statutory requirement under section 414A of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 and is intended to provide fair, balanced and understandable information that enables the Directors to be satisfied that they have complied with section 172 of the Companies Act 2006, which sets out the Directors' duty to promote the success of the Group and Company.

 

REVIEW OF THE BUSINESS

 

Inspirit Energy Holdings Plc, acquired Inspirit Energy Limited and began trading on the London Stock Exchange, AIM markets on 26 July 2013. The Company is now exclusively focused on commercialising the Group's unique and highly efficient micro co-generation boiler.

 

The Company's objective is to generate returns to shareholders via investment in renewable energy through development of environmental or renewable energy products and services.

 

Inspirit Energy Limited is currently pursuing the development and commercialisation of a world-leading micro Combined Heat and Power (mCHP) boiler for use in commercial and residential markets. The mCHP boier is powered by natural gas and designed to produce hot water (for Domestic Hot Water or Central Heating) and a simultaneous electrical output that can be used locally or fed back into the National Grid.

 

Inspirit Energy's new washing machine-sized mCHP micro co-generation boiler is one of the industry's most powerful and energy efficient mCHP appliances for its size with simultaneous generation of up to 15 kilowatts of thermal output and up to 3 kilowatts of electrical output. The mCHP boiler has been designed to be low maintenance and can be installed by a certified gas-safe tradesman. The appliance's patented engine will take the waste heat from the boiler and convert it efficiently into electricity; first supplying the property where it is installed and feeding surplus electricity into the National grid.

 

The developments made in the mCHP micro co-generation boiler shows the great progress that the Company has made during the year and the platform for success in the future.

 

Inspirit intends to explore opportunities to market and /or licence the underlying technology.

 

DEVELOPMENTS DURING THE YEAR

 

On 13 September 2013, the Company entered into a £472,000 placing and an Equity Swap Agreement with YA Global Master SPV, Ltd. at 2.8 pence per share.

 

On 26 September 2013, the Company announced that UK HM Revenue & Customs had accepted the Company's application to join both the Enterprise Investment Scheme ("EIS") and the Venture Capital Trust ("VCT") Scheme, which are designed to offer a range of tax reliefs for investors.

 

On 14 October 2013, the Company announced an agreement with Sentec Ltd, for the final stage development of its mCHP controls package. This will provide the appliance control and an energy management system that will feed back into the National Grid.

 

On 9 January 2014, the Company announced a contract with Enertek International Ltd to assist with the final mass manufacturing specifications and designs for the mCHP boiler's key heating components. Enertek will assist the Company in obtaining the necessary certifications required to sell this unique appliance initially in the UK and European market places.

 

On 27 January 2014, the Company signed a manufacturing agreement with Malvern Boilers Ltd, to produce the initial volumes of its mCHP boilers.

 

On 24 February 2014, the Company signed an agreement with Caring Homes Group, to install the mCHP boiler into one of their care homes for the purpose of key customer testing and verification to demonstrate economic viability of the appliance.

 

On 26 June 2014, the Company raised £1,000,000 through the issue of 71,428,571 new ordinary shares of 0.1p each at a price of 1.4p per placing share to fund the next important commercialisation phase of mCHP boiler.

 

BOARD CHANGES

 

On 26 July 2013, Neil Luke was appointed as an Executive Director and Chief Operating Officer of the Company.

 

On 11 September 2013, David Lenigas was appointed as Non-Executive Chairman of the Company.

 

RESULTS AND DIVIDENDS

 

The Group made a loss after taxation of £1,293,000 (2013: loss of £78,000).  The loss included an exceptional write-down of £663,000 goodwill on consolidation relating to Inspirit Energy Holdings Plc. The Directors do not propose a dividend for the year to 30 June 2014 (2013: £nil).

 

KEY PERFORMANCE INDICATORS

 

The key performance indicators are set out below: 

 

PLC STATISTICS

30 June

2014

30 June

2013

Change %

 

Net asset value

£2,098,000

£59,000

+3456%

Net asset value - fully diluted per share

0.32p

0.08p

+300%

Closing share price

0.0112p

0.0125p

-50%

Market capitalisation

£914,244

£7,342,276

+703%

 

 

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 technological advanced companies in their requirement to continually invest in research and development. The Group has already made significant investments in addressing opportunities in the renewable energy sector.

 

The Group has raised funds during the period as discussed in the 'Developments during the year' above. The Directors feel that while this is sufficient for operating forecasts, further funding requirements are necessary to commercialise the micro co-generation boiler.

 

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

 

The principal financial risk faced by the Company is liquidity risk. The Company's financial instruments included borrowings and cash which it used to finance its operations. At the year end, borrowings did not include borrowings supplied from the bank..

 The Company has no significant concentrations of credit risk.

 

ASSESSMENT OF BUSINESS RISK

 

The Board regularly reviews operating and strategic risks.  The Group's operating procedures include a system for reporting financial and non-financial information to the Board including:

 

·      reports from management with a review of the business at each Board meeting, focusing on any new decisions/risks arising;

·      reports on the performance of investments;

·      reports on selection criteria of new investments;

·      discussion with senior personnel; and

·      consideration of reports prepared by third parties.

 

Details of other financial risks and their management are given in the notes to the financial statements.

 

GOING CONCERN

 

The Group meets its day-to-day working capital requirements through its ability to raise funds when required.  The current economic conditions continue to create uncertainty, particularly over (a) the level of demand for the Group's products; and (b) the availability of funding available for the foreseeable future.  The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of resources available to it.

 

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  The Group therefore continues to adopt the going concern basis in preparing its consolidated Financial Statements.

 

FUTURE DEVELOPMENTS

 

The Company intends to explore opportunities to manufacture or license out the underlying technology and the Directors believe that in some instances, the patents owned by Inspirit may be also used in the development of products other than a mCHP appliance. A prototype of the appliance has been independently tested and shown to be capable of simultaneous generation of up to 15kW thermal and up to 3kW electrical output. Once development of the appliance has been completed and commercialised, the Directors expect that the appliance will initially be marketed in the UK and Europe and eventually worldwide. Additional revenue streams may be possible through product licensing, sales of warranties and further development of the product.

 

On 1 July 2014, the Company concluded a more detailed manufacturing partnership agreement with Malvern Boilers Ltd. The agreement will see the company and Malvern working closer together to achieve the joint goals of producing the initial trial boilers for evaluation sites and placing Malvern in the controlling role of managing the production introduction and supply chain.

 

On 18 September 2014, the Company agreed to issue 3,398,056 new ordinary shares of 0.1p each in the Company as settlement for professional fees.

 

On 18 September 2014 the Company announced that Calor Gas Limited agreed to the installation of a mCHP boiler at one of its customer sites.

 

On 27 October 2014 the Company announced it had reached the stage of finalising its commercial design and committing to tooling with a number of its engineering partners and suppliers.

 

ON BEHALF OF THE BOARD

 

J Gunn

Director

5 December 2014

 

 

INSPIRIT ENERGY HOLDINGS PLC

REPORT OF THE DIRECTORS

for the year ended 30 June 2014

 

The Directors present their annual report on the affairs of the Group, together with the audited financial statements for the year ended 30 June 2014.

 

PRINCIPAL ACTIVITIES

 

The principal activity of development and commercialisation of the mCHP boiler.

 

Details of the Group's principal activities can be found in the Strategic Report. 

 

DIRECTORS

 

The Directors who held office in the period up to the date of approval of the Financial Statements and their beneficial interests in the Group's issued share capital at the beginning and end of the accounting year were:


Number of

ordinary shares

Number of

share options and warrants


30 June

2014

30 June

2013

30 June

2014

30 June

2013

D Lenigas1

6,000,000

-

-

-

J Gunn

369,743,438

9,240,160

-

375,000

J Nazhat

-

-

-

-

N Jagatia

-

-

-

-

N Luke2

-

-

-

-

1Appointed 11 September 2013

2Appointed 26 July 2013

 

INDEMNITY OF OFFICERS

 

The Company maintains appropriate insurance cover against legal action brought against its Directors and officers.

 

SUBSTANTIAL INTERESTS

 

The Company is aware that at 5 November 2014, the following shareholdings in excess of 3% of the issued share capital of the Company:


Number of

ordinary shares

Percentage of

issued share capital




John Gunn

369,743,438

56.1%

Rothschild Nominees Limited

29,950,817

4.5%

Jim Nominees Limited

23,164,842

3.5%

 

POLICY AND PRACTICE ON PAYMENT OF CREDITORS

The Company's policy is to agree terms of payment with suppliers.  These normally provide for settlement within 30 days of the date of the invoice, except where other arrangements have been negotiated.  It is the policy of the Company to abide by the agreed terms of payment, provided the supplier performs according to the terms of the contract.

 

CORPORATE GOVERNANCE

 

The Board has not adopted the UK Corporate Governance Code; this is only a requirement for premium listed companies and the Board does not consider it appropriate for a company of the size and nature of Inspirit Energy Holdings plc. The Board has, however, adopted the requirements of the Corporate Governance Guidelines for Smaller Companies published by the Quoted Companies Alliance, although, until an independent non-executive director is appointed, Neil Luke will chair each of the committees.

 

BOARD OF DIRECTORS

 

The Board is responsible for strategy and performance, approval of major capital projects and the framework of internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely information. All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring the Board procedures, are followed and that applicable rules and regulations are complied with.

 

AUDIT COMMITTEE

 

The Audit Committee is currently chaired by Neil Luke and includes Jubeenh Nazhat and Nilesh Jagatia. The committee provides a forum for reporting by the Group‟s external auditors. The committee is also responsible for reviewing a wide range of matters, including half-year and annual results before their submission to the Board, and for monitoring the controls that are in force to ensure the integrity of information reported to shareholders. The Audit Committee will advise the Board on the appointment of external auditors and on their remuneration for both audit and non-audit work, and will discuss the nature, scope and results of the audit with the external auditors. The committee will keep under review the cost effectiveness and the independence and objectivity of the external auditors.

 

The Audit Committee is responsible for ensuring the "right tone at the top" and that the ethical and compliance commitments of management and employees are understood throughout the Group.

 

REMUNERATION COMMITTEE

 

The Remuneration Committee is chaired by Neil Luke and includes Jubeenh Nazhat and Nilesh Jagatia. The committee is responsible for making recommendations to the Board, within agreed terms of reference, on the Group's framework of executive remuneration and its cost. The Remuneration Committee determines the contract terms, remuneration and other benefits for the executive directors, including performance related bonus schemes and compensation payments. The Board itself determines the remuneration of the non-executive directors.

 

COMMUNICATIONS WITH SHAREHOLDERS

 

Communications with shareholders are given a high priority.  In addition to the publication of an annual report and an interim report, there is regular dialogue with shareholders and analysts.  The Annual General Meeting is viewed as a forum for communicating with shareholders, particularly private investors.  Shareholders may question the Executive Chairman and other members of the Board at the Annual General Meeting.

 

INTERNAL CONTROL

 

The Directors acknowledge they are responsible for the Group's system of internal control and for reviewing the effectiveness of these systems. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of the Group failing to achieve its strategic objectives. It should be recognised that such systems can only provide reasonable and not absolute assurance against material misstatement or loss. The Group has well established procedures which are considered adequate given the size of the business.

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The Directors are responsible for preparing the Annual Report of the Directors and the financial statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare financial statements for each financial year.  Under that law the directors have prepared the group and parent company financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU").  Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the directors are required to:

 

·      select suitable accounting policies and then apply them consistently

·      make judgments and accounting estimates that are reasonable and prudent

·      state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.  Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Company is compliant with AIM Rule 26 regarding the Company's website.

 

DISCLOSURE OF INFORMATION TO AUDITOR

 

In the case of each person who was a Director at the time this report was approved:

 

·      so far as that director is aware there is no relevant audit information of which the Company's auditor is unaware: and

·      that director has taken all steps that the director ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

 

INDEPENDENT AUDITOR

 

The auditor, PKF Littlejohn LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

 

PKF Littlejohn LLP has signified its willingness to continue in office as auditor.

 

ON BEHALF OF THE BOARD

 

 

N Jagatia

Director

5 December 2014

 

 

 

 

INSPIRIT ENERGY HOLDINGS PLC

GROUP STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 June 2014



2014

2013



£'000

£'000

CONTINUING OPERATIONS:




Revenue


-

-

Administrative expenses


(506)

(42)

Impairment of goodwill


(663)

-

Other losses - net


(197)

-

OPERATING LOSS


(1,366)

(42)

Finance costs


(11)

(53)

LOSS BEFORE INCOME TAX


(1,377)

(95)

Income tax credit


84

17

LOSS FOR THE YEAR (ATTRIBUTABLE TO OWNERS OF THE PARENT)


(1,293)

(78)

Other comprehensive income


-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(ATTRIBUTABLE TO OWNERS OF THE PARENT)


(1,293)

(78)

EARNINGS PER SHARE




- Basic and fully diluted earnings per share

(attributable to owners of the parent)


(0.24p)

(0.02p)

 

 

 

INSPIRIT ENERGY HOLDINGS PLC

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2014


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 1 July 2012

15

737

23

-

-

(451)

324

Loss for the year

-

-

-

-

-

(78)

(78)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

-

-

-

-

-

(78)

(78)

TRANSACTIONS WITH OWNERS

-

-

-

-

-

-

-

BALANCE AT 30 June 2013

15

737

-

-

(529)

246









BALANCE AT 1 July 2013

15

737

23

-

-

(529)

246

Loss for the year

-

-

-

-

-

(1,293)

(1,293)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

-

-

-

-

-

(1,293)

(1,293)

Shares issued

154

2,153

-

-

-

-

2,307

Share issue costs

-

(53)

-

-

-

-

(53)

Share based payments

60

735

-

-

-

-

795

Share warrants exercised

7

59

-

-

-

-

66

Cancellation of share warrants

-

-

(23)

-

-

23

-

Conversion of convertible loan

10

40

-

-

-

-

50

Reverse acquisition

806

3,275

110

3,150

(7,361)

-

(20)

TRANSACTIONS WITH OWNERS

1,037

6,209

87

3,150

(7,361)

23

3,145

BALANCE AT 30 June 2014

1,052

6,946

3,150

(7,361)

(1,799)

2,098

 

INSPIRIT ENERGY HOLDINGS PLC

COMPANY STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2014

 


Attributable to equity shareholders


Share

  capital

Share premium

 

Other reserves

Retained

losses

Total

equity


£'000

£'000

£'000

£'000

£'000

BALANCE AT 1 July 2012

460

3,888

105

(4,076)

377

Loss for the year

-

-

-

(448)

(448)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

-

-

-

(448)

(448)

Shares issued

8

92

-

-

100

Share based payment

1

18

19

-

38

Conversion of convertible loan

2

14

(14)

-

2

TRANSACTIONS WITH OWNERS

11

124

5

-

140

BALANCE AT 30 June 2013

(as previously reported)

471

4,012

110

(4,524)

69

Prior period adjustment

-

-

-

(10)

(10)

BALANCE AT 30 June 2013

(restated)

471

4,012

110

(4,534)

59







BALANCE AT 1 July 2013

471

4,012

110

(4,534)

59

Loss for the year

-

-

-

(646)

(646)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

-

-

-

(646)

(646)

Reverse acquisition

350

3,150

-

-

3,500

Shares issued

154

2,153

-

-

2,307

Share issue costs

-

(53)

-

-

(53)

Share based payments

60

735

-

-

795

Share warrants exercised

7

59

-

-

66

Conversion of convertible loan

10

40

-

-

50

TRANSACTIONS WITH OWNERS

581

6,084

-

-

6,665

BALANCE AT 30 June 2014

1,052

10,096

110

(5,180)

6,078

 

 

INSPIRIT ENERGY HOLDINGS PLC

STATEMENT OF FINANCIAL POSITION

As at 30 June 2014

Company Number: 05075088


GROUP


COMPANY

 



2014

2013


2014

Restated

2013



£'000

£'000


£'000

£'000

NON-CURRENT ASSETS







Intangible assets


1,060

769


-

-

Property, plant and equipment


12

6


-

-

Investments


-

-


-

740

Investment in subsidiaries


-

-


4,643

-

Trade and other receivables


-

-


-

115



1,072

775


4,643

855








CURRENT ASSETS







Inventories


5

5


-

-

Trade and other receivables


1,204

31


1,539

35

Derivative financial instruments


-

-


-

-

Cash and cash equivalents


67

1


59

-



1,276

37


1,598

35

TOTAL ASSETS


2,348

812


6,241

890

EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT







Share capital


1,052

15


1,052

471

Share premium


6,946

737


10,096

4,012

Other reserves


110

23


110

110

Merger reserve


3,150

-


-

-

Reverse acquisition reserve


(7,361)

-


-

-

Retained losses


(1,799)

(529)


(5,180)

(4,534)

TOTAL EQUITY


2,098

246


6,078

59

NON-CURRENT LIABILITIES







Trade and other payables


-

-


-

411

Borrowings


-

-


-

52



-

-


-

463

CURRENT LIABILITIES







Trade and other payables


250

566


163

368



250

566


163

831

TOTAL LIABILITIES


250

566


163

831

TOTAL EQUITY AND LIABILITIES


2,348

812


6,241

890

 

 

 

INSPIRIT ENERGY HOLDINGS PLC

STATEMENT OF CASH FLOWS

For the year ended 30 June 2014



GROUP


COMPANY

 



2014

2013


2014

2013



£'000

£'000


£'000

£'000

CASH FLOWS FROM OPERATING ACTIVITIES







Loss before tax


(1,377)

(95)


(646)

(448)

Depreciation


1

1


-

-

Finance income


-

-


-

(4)

Finance expense


11

53


6

31

Share based payment expense


795

-


795

-

Share warrants exercised


66

-


66

-

Impairment of goodwill


663

-


-

-

Decrease/(increase) in trade and other receivables


80

(58)


(364)

(107)

(Increase)/decrease in trade and other payables


(652)

124


(260)

428

CASH (USED BY)/GENERATED FROM OPERATING ACTIVITIES


(413)

25


(403)

(100)

Interest paid


(11)

(48)


(6)

-

Income tax credit received


17

100


-

-

NET CASH (USED BY)/GENERATED FROM OPERATING ACTIVITIES


(407)

77


(409)

(100)

CASH FLOWS FROM INVESTING ACTIVITIES







Payments to acquire intangible assets


(291)

(126)


-

-

Payments to acquire property, plant and equipment


(7)

-


-

-

NET CASH FROM INVESTING ACTIVITIES


(298)

(126)


-

-

CASH FLOWS FROM FINANCING ACTIVTIES







Net proceeds from issue of share capital


771

-


871

100

Loan to group undertaking


-

-


(403)

-

Interest received


-

-


-

-

NET CASH FROM FINANCING ACTIVITIES


771

-


468

100

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS


66

(49)


59

-

Cash and cash equivalents at the beginning of the year


1

50


-

-

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR


67

1


59

-

 

 

INSPIRIT ENERGY HOLDINGS PLC

GENERAL INFORMATION

The principal activity of Inspirit Energy Holdings Plc during the period was that of developing and commercialising the mCHP boiler.

 

On 25 July 2013 the Company completed the acquisition of Inspirit Energy Limited, and now owns all of that company's issued share capital. These financial statements show the consolidated results of the Group for the year ended 30 June 2014; the comparative results (30 June 2013) are presented for the Company only.

 

Inspirit Energy Holdings Plc is a company incorporated and domiciled in England and Wales and quoted on the Alternative Investment Market of the London Stock Exchange. The address of its registered office is 2nd Floor, 2 London Wall Buildings, London, EC2M 5PP, United Kingdom. On 25 July 2013 the Company changed its name from KleenAir Systems International Plc to Inspirit Energy Holdings Plc.

 

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below.  These policies have been consistently applied to all the periods presented, unless otherwise stated.

BASIS OF PREPARATION

 

The consolidated Financial Statements of Inspirit Energy Holdings Plc have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) as adopted by the European Union and the parts of Companies Act 2006 applicable to companies reporting under IFRS.

 

The consolidated Financial Statements have been prepared under the historical cost convention, as modified by financial assets (including derivative instruments) at fair value through the profit or loss.

 

The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates.  It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated Financial Statements.

 

GOING CONCERN

 

The Group's activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report on pages 4 to 6. It also includes the Group's objectives, policies and processes for managing its business risk objectives, which includes its exposure to technology, customer and other operational risks. 

 

The Directors have prepared cash flow forecasts for the Group and Company which reflect the Group's and Company's forecast cash inflows and costs.

 

On 26 June 2014 the Company raised £1m in equity. The cash flow forecasts for the Group and Company show that further equity and/or borrowings will be required to complete the development and testing of the Group's mCHP boiler and bring it into production. Although the Directors are confident that further equity can be raised at a valuation acceptable to the Company there is no guarantee this will be the case. In the event that further equity cannot be raised or insufficient equity is raised the Company has the benefit of a standby loan agreement with John Gunn and David Lenigas who have undertaken to provide loans of up to £600,000 over the next 12 months, as the Company may reasonably require. Any such loans will be made on terms no less favourable than generally available commercial loans.

 

It is envisaged by the Directors that existing cash resources together with these forecast cash inflows will provide adequate funds for Inspirit Energy Holdings Plc and its subsidiary undertakings for the foreseeable future. The Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group and Company has adequate resources to continue in operational existence for the foreseeable future.  For this reason the Directors continue to adopt the going concern basis in preparing the financial statements.

 

PRIOR PERIOD ADJUSTMENT

 

The Company omitted a transaction in the year ended 30 June 2013 that has resulted in a prior period restatement in the opening profit and loss account for 30 June 2014. The effect of the prior period error is that an adjustment to the Statement of Financial Position. As a result, a decrease to retained losses brought forward and an increase to liabilities.

 

The impact of the prior period error has been retrospectively applied in accordance with IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors'.

 

Consultancy expenses that were paid for by Inspirit Limited for and on behalf of the Company were not recognised as an additional liability as at 30 June 2013.  As a result of the prior period error, the following adjustments were made to the financial statements:




2013


As of 1 July 2013


£


Net increase in retained losses brought forward


(10,000)


Net increase in liabilities


10,000

 

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 Inspirit Energy Limited made up to 30 June 2014.

 

Subsidiaries are entities over which the Group has control.  Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.  The Group obtains and exercises control through voting rights.  The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the company controls another entity.

 

The Company acquired Inspirit Energy Limited on 25 July 2013 through a share exchange.  As the shareholders of Inspirit Energy Limited have control of the legal parent, Inspirit Energy Holdings Plc, the transaction has been accounted for as a reverse acquisition in accordance with IFRS 3 "Business Combinations".  Consequently, although the Financial Statements are prepared in the name of the legal parent, they are in substance a continuation of those of the legal subsidiary.  The following accounting treatment has been applied in respect of the reverse acquisition:

 

·      the assets and liabilities of the legal subsidiaries within Inspirit Energy Limited are recognised and measured in the consolidated financial statements at their pre-combination carrying amounts, without restatement to fair value;

 

·      the equity structure appearing in the consolidated financial statements reflects the equity structure of the legal parent, Inspirit Energy Holdings Plc, including the equity instruments issued to effect the business combination;

 

·      comparative numbers presented in the consolidated financial statements are those reported in the financial statements of the legal subsidiaries consolidated within Inspirit Energy Limited.

 

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.

 

 

INCOME TAX CREDIT

 

GROUP

2014

2013


£'000

£'000

Current tax credit on loss for the year

(84)

(17)


(84)

(17)

The tax on the Group's loss before tax differs from the theoretical amount that would arise using the weighted average rate applicable to losses of the consolidated entities as follows:


2014

2013


£'000

£'000

Loss before tax from continuing operations

(1,377)

(95)

Loss before tax multiplied by rate of corporation tax in the UK of 20% (2013: 20%)

(275)

(19)

Tax effects of:



Expenses not deductible for tax purposes

207

1

Unrelieved tax losses carried forward

68

18

Research and development tax credit

(84)

(17)

Total tax

(84)

(17)

The Group has excess management expenses of approximately £3,037,000 (2013: £1,379,000), capital losses of £150,000 (2013: £150,000) and non-trade financial losses of approximately £119,000 (2013: £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.

 

 

EARNINGS PER SHARE

 

Loss per ordinary share has been calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of shares in issue during the year. The calculations by both basic and diluted loss per share for the year are based upon the loss for the year of £1,293,000 (2013: £78,000). The weighted number of equity shares in issue during the year was 546,838,937 (2013: 350,000,000).

 

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 the Notes.

 

 

INTANGIBLE ASSETS

 


GROUP

 

COST

 Development Costs

£'000

Total

£'000


At 1 July 2012

-

644

644


Additions

-

125

125


At 30 June 2013

-

769

769


Additions

-

291

291


Reverse acquisition

663

-

663


At 30 June 2014

663

1,060

1,723







ACCUMULATED AMORTISATION AND IMPAIRMENT





At 1 July 2012 and 30 June 2013

-

-

-


Impairment charge

663

-

663


At 30 June 2014

663

-

663







NET BOOK VALUE





At 30 June 2013

-

769

769


At 30 June 2014

-

1,060

1,060

The Goodwill relating to the Parent Company is attributable to the benefits derived from the listing of the Parent Company and reflects the cost of the reverse acquisition and admission to AIM.  The Directors have reviewed the carrying value of Goodwill at 30 June 2014 and consider that a complete impairment provision is required in the year.

 

No amortisation has been recognised on development costs to date as the assets are still in the development stage and the related products are not yet ready for sale. 

 

The  recoverable  amount  of  the  above  cash-generating  unit  has  been  determined  based  on  value- in-use calculations. No goodwill is allocated to the Group's cash generating unit as this related to the Parent Company as explained above.  The value-in-use calculations use cash flow projections based on financial budgets approved by Management covering a seven year period. These incorporate potential revenues which are based on project tenders and projected revenue.  Given the nature of the work and the visibility of revenue in the future, it is considered appropriate not to extend the cash flow workings beyond this period. 

 

The recoverable amount based on value-in-use exceeded the carrying value above.  The impairment review did not identify any impairment for recognition in the current or prior year.

 

INVESTMENTS

 

COMPANY

2014

2013


£'000

£'000

At 1 July

740

740

Transfer to Investment in Subsidiary

(740)

-


-

740

 

 

INVESTMENTS IN SUBSIDIARIES

 


COMPANY

2014

2013


SHARES IN GROUP UNDERTAKINGS:

£'000

£'000


At 1 July 2013

-

-


Transfer from investments

740

-


Reverse acquisition

3,500

-



4,240

-


Loans due from group undertakings

403

-



4,643

-

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

Parent company

Registered capital

Proportion of share capital held

Nature of business


Inspirit Energy Limited

England and Wales

Inspirit Energy Holdings Plc

Ordinary shares

£15,230

100%

Product development


Somemore Limited

England and Wales

Inspirit Energy Limited

Ordinary shares

£1

100%

Dormant

 

DERIVATIVE FINANCIAL INSTRUMENTS

 



GROUP          

COMPANY



2014

2013

2014

2013



£'000

£'000

£'000

£'000


Equity swaps

-

-

-

-

 

Included within derivative financial instruments are amounts receivable pursuant to an equity swap agreement to be settled across 12 monthly instalments based on a formal agreement related to the difference between the prevailing market price of the Company's ordinary shares in any month and a benchmark share price of 3.08 pence.  Hence the net funds to be received by the Company are dependent on the future performance price of the Company's ordinary shares.

 

The Directors' concluded that the fair value of the derivative financial instruments at 30 June 2014 is £nil (2012: £nil).

 

SHARE CAPITAL AND SHARE PREMIUM

 








Number of ordinary shares

Number of 'B' ordinary shares

Number of deferred shares

 

 

Ordinary shares

 

'B' Ordinary shares

 

 

Deferred shares

 

 

Share premium

Total





£

£

£

£

£

At 1 July 2012

62,603,190

1,221,200

400,932

62,603

1,221

393,923

3,887,762

4,348,509

Issue of new shares

8,333,333

-

-

8,333

-

-

91,667

100,000

Share based payment

612,982

-

-

613

-

-

17,776

18,389

Conversion of convertible notes

1,590,000

-

-

1,590

-

-

14,310

15,900

At 30 June 2013

73,139,505

1,221,200

400,932

73,139

1,221

396,923

4,011,515

4,482,798

Issue of new shares on acquisition

350,000,000

-

-

350,000

-

-

3,150,000

3,500,000

Issue of new shares

154,110,886

-

-

154,111

-

-

2,152,889

2,307,000

Share based payments

60,088,753

-

-

60,089

-

-

735,061

795,150

Share warrants exercised

7,000,000

-

-

7,000

-

-

58,800

65,800

Conversion of convertible loans

10,000,000

-

-

10,000

-

-

40,000

50,000

Share conversion from "B" to "A" shares

1,221,200

(1,221,200)

-

1,221

(1,221)

-

-

-

Share issue costs

-

-

-

-

-

-

(52,500)

(52,500)

At 30 June 2014

655,560,344

-

400,932

655,560

-

396,923

10,095,765

11,148,248

 

The "B" ordinary shares and deferred shares have no voting rights.

 

On 28 June 2013, the Company announced the proposed acquisition of the remaining share capital of Inspirit Energy Limited for an aggregate deemed consideration of £3.5 million, to be satisfied by the issue of 350,000,000 new ordinary shares in the Company. The acquisition constituted a reverse takeover under the AIM Rules.

 

At the same time as the acquisition of the remaining share capital of Inspirit Energy Limited, the Company raised £410,000 (gross) through a subscription for 41.0 million new ordinary shares at a price of 1 pence per share. As part of the subscription, the subscribers were issued with one warrant for every two subscription shares, comprising a total of 20.5 million warrants. The warrants are exercisable into ordinary shares at a price of 1 pence per ordinary share at any time within 12 months from the date of re-admission to AIM. In addition, the whole of the £50,000 convertible loan provided by Hebolux S.A. converted into 10,000,000 new ordinary shares at the date of re-admission.

 

On 9 August 2013, the Company issued 1,250,000 new ordinary shares to Ascend Capital Plc for the provision of corporate finance services.

 

On 29 August 2013, the Company raised £175,000 (gross) through the issue of 13,461,537 of new ordinary shares at a price of 1.3 pence per share.

 

On 4 September 2013, the Company converted existing debt held by Global Investment Strategy (UK) Ltd and John Gunn. The total debt and accrued interest of £706,680.25 was satisfied by the allotment of 54,360,019 ordinary shares of 0.1p each in at a conversion price of 1.3p each.

 

On 13 September 2013, the Company entered into a £472,000 Placing and an Equity Swap Agreement with YA Global Master SPV, Ltd. ("YAGM") at 2.8 pence per share. YAGM subscribed for a total of 16,857,142 new ordinary shares at a price of 2.8 pence per share for a gross consideration of £472,000. Of this amount, £236,000 will be paid back to YAGM under the Equity Swap Agreement from which the Company is expected to receive a base amount of £19,666.67 per month for a 12 month period, depending on the future price performance of the Company's shares.

 

On 17 September 2013, the Company issued 1,978,733 new ordinary shares in settlement of professional fees.

 

On 6 November 2013, the Company has received a conversion notice from a warrant holder to exercise warrants over 1,000,000 ordinary shares at an exercise price of 1 pence per share.

 

On 25 February 2014, The Company raised £250,000 through the issue of 11,363,636 new ordinary shares of 0.10p each in the Company at a price of 2.2p per share via direct subscriptions.

 

On 22 May 2014, the Company has received a conversion notice from a warrant holder to exercise warrants over 6,000,000 ordinary shares at an exercise price of 1 pence per share.

 

On 26 June 2014, the Company has raised £1,000,000 through the issue of 71,428,571 new ordinary shares of 0.1p each in the Company at a price of 1.4p per placing share via direct subscriptions.

 

 

SHARE BASED PAYMENTS

Share options and warrants are granted to selected Directors and third party service providers.

 

Share options and warrants outstanding at the end of the year have the following expiry dates and exercisable prices:

 


Weighted Average Exercise Price

2014

Options and warrants

Weighted Average Exercise Price

2013

Options and warrants

 

At 1 July

0.2984

3,412,620

0.3611

2,766,000

 

Granted

0.0100

20,500,000

0.0300

646,620

 

Exercised

0.0100

(7,000,000)

-

-

 

Terminated

0.2114

(1,266,000)

-

-

 

At 30 June

0.0566

15,646,620

0.2984

3,412,620

 






 

Grant date

Expiry date

Exercise price in £ per share

Number of options and warrants

Number of options and warrants

 




2014

2013

 

18 April 2011

17 April 2021

0.3500

-

750,000

 

18 April 2011

17 April 2021

0.0100

-

516,000

 

26 April 2011

25 April 2021

0.4875

1,500,000

1,500,000

 

13 Sept 2012

12 Sept 2015

0.0300

646,620

646,620

 

26 July 2013

25 July 2014

0.0100

13,500,000

-

 



0.0566

15,646,620

3,412,620

 






 

The share options and warrants originally granted in 2011 within Inspirit Energy Limited have now been terminated.

The total weighted average contractual life of the outstanding options and warrants at 30 June 2014 was 0.72 years (2013: 6.53 years).

The fair value of the share options and warrants were determined using the Black Scholes valuation model. The parameters used are detailed below:

 

Option granted on:

26 April 2011

13 September 2012

26 July 2013

Shares and warrants under option

1,500,000

646,620

20,500,000

Option life (years)

10

3

1

Share price (pence per share) at grant date

4.50

3.00

1.15

Risk free rate

3.71%

3.71%

2.50%

Expected volatility

10%

10%

0%

Expected dividend yield

Nil

Nil

Nil

Marketability discount

5%

5%

0%

Fair value per option granted

1.254

0.330

0.270

Exercise price

4.875

3.000

1.000

 

For the 2011 and 2012 options and warrants, the expected volatility is based on historical volatility for the 6 months prior to the grant date.  For those granted on 26 July 2013, there was no historic volatility as the Company re-listed on AIM.  The risk free rate of return is based on zero yield government bonds for a term consistent with the option life.

 

Based on materiality, the total fair value of the options and warrants granted in the year has not resulted in a change to the Statement of Comprehensive Income for the year 30 June 2014 (2013: £nil).

 

OTHER RESERVES

 


Share

 option reserve

Merger reserve

Reverse acquisition reserve

Total


£'000

£'000

£'000

£'000

1 July 2013

23

-

-

23

Share based payments

-

-

-

-

30 June 2013

23

-

-

23

Cancellation of share warrants

(23)

-

-

(23)

Reverse acquisition

110

3,150

(7,361)

(4,101)

30 June 2014

110

3,150

(7,361)

(4,101)

 

BUSINESS COMBINATIONS

 

During the year ended 30 June 2011 the Company acquired 17.05% of the share capital of Inspirit Energy Limited for £740,000. 

 

On 26 July 2013, the Company acquired the remaining 82.95% of the share capital and obtained control of Inspirit Energy Limited for £3,500,000.  Inspirit Energy Limited is an unlisted company registered in the United Kingdom operating in the clean tech and renewable sector.  The acquisition is in line with the Company's overall strategy as an investment company.

 

The acquisition has been treated as a reverse acquisition hence accounted for in accordance with IFRS 3, as set out in the accounting policies.  The following table summarises the consideration paid for Inspirit Energy Holdings Plc through the reverse acquisition and the amounts of the assets acquired and liabilities assumed at the acquisition date.

 

In accordance with IFRS 3, goodwill under a reverse acquisition is calculated on the net assets of the legal parent.  The goodwill of £663,000 arising from the acquisition is attributable to the value of the parent company.  The Directors do not consider goodwill reflects an increase in the Group's assets and therefore have impaired the goodwill in full.

 

 


Consideration at 26 July 2013


£'000


Equity instruments in issue (73,139,505 ordinary shares at 1p each)


731


TOTAL CONSIDERATION


731






Recognised amounts of identifiable assets acquired and liabilities assumed


£'000


Cash and cash equivalents


-


Investments


740


Trade and other receivables


159


Trade and other payables


(779)


Borrowings


(52)


TOTAL IDENTIFIED NET ASSETS


68


GOODWILL


663





In a reverse acquisition, the acquisition date fair value of the consideration transferred by Inspirit Energy Limited is based on the number of equity instruments that Inspirit Energy Limited would have had to issue to the owners of Inspirit Energy Holdings Plc to give the owners of Inspirit Energy Holdings Plc the same percentage of equity interests that results from the reverse acquisition.  However, in the absence of a reliable valuation of Inspirit, the cost of the combination was calculated using the fair value of all the pre-acquisition issued equity instruments of Inspirit Energy Holdings Plc at the date of acquisition.  The fair value was based on the published price of Inspirit Energy Holdings Plc shares on 26 July 2013 immediately prior to the acquisition.

 

 

RELATED PARTY TRANSACTIONS

 

Global Investment Strategy (UK) Limited

 

Mr J Gunn is a Shareholder and Director of Global Investment Strategy (UK) Limited ("GIS").  Ms J Nazhat is also Director of GIS.

 

The Company entered into an unsecured loan facility on 28 June 2013 with GIS for an aggregate maximum amount of £350,000. Amounts may be drawdown at the discretion of the Company. Interest is payable on any drawdown at 5 per cent above the base rate of HSBC Bank plc. Any amount drawdown under the loan facility shall be repayable 18 months from the date of the loan facility. No amounts were drawn down under this facility as at 30 June 2013. GIS hold a fixed and floating charge over all assets of the Company.

 

On 4 September 2013, the Company converted existing debt held by GlS and John Gunn. The total debt and accrued interest of £706,680.25 was satisfied by the allotment of 54,360,019 ordinary shares of 0.1p each in at a conversion price of 1.3p each.

 

Other related parties

 

On 28 June 2013, the Company entered into a Discretionary Drawdown Facility ("DDF") with Mr D Lenigas, non-executive Chairman, which provides the Company with an equity facility up to a maximum aggregate limit of £70,000. The facility is available for drawdown at any time, and for any specified amount at the Company's discretion, up to 17 May 2015. Mr D Lenigas is entitled to commission at 6.0% of any amount received by the Company in accordance with the terms of the facility.

 

On 9 August 2013, the Company issued 1,250,000 new ordinary shares to Ascend Capital Plc for the provision of corporate finance services, of which Mr N Jagatia is a Director. 

 

On 26 June 2014, John Gunn, a Director of the Company, has agreed to invest £50,000 in a placing by subscribing to 3,571,429 placing shares at 1.4p per share.  At 30 June 2014, this amount is included within other receivables. 

 

During the year, Montpelier Law Ltd, a company in which J Nazhat is a Director, charged corporate services fees of £37,000. The amount owed to Montpelier Law Ltd at year end is £4,000.

 

During the year, NKJ Associates Ltd, a company in which N Jagatia is a Director, charged consultancy fees of £14,000. The amount owed to NKJ Associates Ltd at year end is £2,000.

 

EVENTS AFTER THE REPORTING DATE

 

On 1 July 2014, the Company has concluded a more detailed manufacturing partnership agreement with Malvern Boilers Ltd. This agreement will see the companies working closer together to achieve the joint goals of producing the initial trial boilers for evaluation sites by the end of October 2014 and placing Malvern in the controlling role of managing the production introduction and supply chain.

 

On 11 September 2014, Dr John Bannister joined the management team as a full time consultant to the Company and special advisor to the Board.

 

On 18 September 2014, the Company has agreed to issue 3,398,056 new ordinary shares of 0.1p each in the Company as settlement for professional fees.

 


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