Inspirit Energy : Annual Report and Accounts for the period ending30 June 2023

Inspirit Energy Holdings plc

Annual Report and Financial Statements

for the year ended 30 June 2023

Company Registration no: 05075088

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Inspirit Energy Holdings plc

COMPANY INFORMATION

DIRECTORS

COMPANY SECRETARY

REGISTERED OFFICE

COMPANY REGISTRATION NUMBER

REGISTRAR AND TRANSFER OFFICE

SOLICITORS

INDEPENDENT AUDITOR

NOMINATED ADVISOR

J Gunn (Chairman and CEO)

N Jagatia (Finance Director)

1. Samaha (Non-Executive Director- Resigned 13.2.23) P Needley (Non-Executive Director -appointed 13.2.23)

N Jagatia

Inspirit Energy Holdings Plc

C/o GIS

200 Aldersgate Street

London

EC1A 4HD

05075088

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

BBK Partnership

Statutory Auditor

1Beauchamp Court

10 Victors Way

Barnes, Herts

EN5 5TZ

Beaumont Cornish Limited

Building 3

566 Chiswick High Road

London

W4 5YA

BROKER	Global Investment Strategy UK Ltd
	200 Aldersgate Street,
	London
	EC1A 4HD
BANKERS	Barclays Bank plc
	1-3 Haymarket Towers
	Humberstone Gate
	Leicester
	LE1 1WA

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Inspirit Energy Holdings plc

CONTENTS

	page
Chairman's statement	3
Strategic report	4-7
Report of the directors	8-17
Independent auditor's report	18-23
Group statement of comprehensive income	24
Group and Company statements of financial position	25
Group statement of changes in equity	26
Company statement of changes in equity	27
Group and Company statements of cash flows	28
Notes to the financial statements	29-46

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Inspirit Energy Holdings plc

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 30 June 2023

During the reporting period, Inspirit Energy Holdings plc (Inspirit) successfully maintained its focus on the application of the Stirling engine in various sectors, 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 has been built and tested in Poland and with the issues in neighbouring Ukraine, sourcing materials and components has still been challenging.

Using a non-branded automotive engine with the same horsepower as the Volvo Penta D13 Engine running at 2400 revolutions per minute, the Company's phase two trial in Poland managed by Inspirit's engineering team, and testing was complete under varying scenarios, each for a duration of approximately one hour, the unit provided consistent performance with peak output reaching 97kw.

After the reporting period, a test visit to our facility in Poland, we identified external manufacturing errors in one component part of the WHR system, this component having been specially manufactured with new heat retaining coatings for the drive that powers the Helix Accelerator, to deliver output of over 130kw. This item has a long lead time for delivery as it needs to be manufactured and tested before installing and proceeding with the final testing of the WHR unit. Although this has caused delays whilst we secured alternative sources to manufacture this component, we are pleased to report that this component is now in design with the manufacturer confirming with confidence that it will meet the system requirements. The team have continued to carry out longevity testing on stage one and two of the WHR system and it is now projected that should be completed by between mid to end of the 2nd quarter of 2024.

The board of Inspirit are very pleased with the team's achievements and the progress that has been made to date. And 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

22 December 2023

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Inspirit Energy Holdings plc

STRATEGIC REPORT

FOR THE YEAR ENDED 30 June 2023

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 2023.

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-leadingmicro-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

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 97 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:

1. 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.

1. 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 2023

1. 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 8th December 2022, the Company announced that it 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.

BOARD CHANGES

P Needley, Non-Executive Director was appointed on 13.2.23 and on the same day, A Samaha stepped down from the board

RESULTS AND DIVIDENDS

The Group made a loss after taxation of £260,000 (2022: loss of £233,000) and net assets as at 30 June 2023 were

£2,402,000 (2022: £2,657,000).

The Directors do not propose a dividend for the year to 30 June 2023 (2022: £nil).

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Inspirit Energy Holdings plc

STRATEGIC REPORT

FOR THE YEAR ENDED 30 June 2023

KEY PERFORMANCE INDICATORS

The key performance indicators (KPI) used by the Board to monitor the performance of the Group, are set out below:

	30 June	30 June
	2023	2022
Net asset value	£2,402,000	£2,657,000
Net asset value - fully diluted per share	0.056p	0.062p
Closing share price	0.026p	0.06p
Market capitalisation	£1,114,670	£2,648,417

The Net asset value decreased but the Market capitalisation increased during the reporting period. The closing share price was 0.026p compared to 0.06p in 2022.

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 10.

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.

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Inspirit Energy Holdings plc

STRATEGIC REPORT

FOR THE YEAR ENDED 30 June 2023

TECHNOLOGY RISK

The Group's success is dependent on its technology and management's ability to market it successfully. There is the risk that the technology could become obsolete or a rival could develop an improved alternative. Management seek to mitigate this by constantly seeking to improve the product, closing watching its competitors and employing skilled personnel.

ASSESSMENT OF BUSINESS RISK

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

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

1. Jagatia
   Director
   22 December 2023

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Inspirit Energy Holdings plc

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 30 June 2023

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 2023.

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:

	Number of	Number of
	ordinary shares	share options and warrants
	30-Jun	30-Jun	30-Jun	30-Jun
	2023	2022	2023	2022
J Gunn **	861,403,363	861,403,363	-	-
N Jagatia	44,857,142	44,857,142	-	-
A Samaha	-	-	-	-
P Needley	-	-	-	-

**861,403,363 Ordinary Shares (direct 657,981,981 Ordinary Shares and indirect via GIS 203,421,382 Ordinary Shares)

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Inspirit Energy Holdings plc

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 30 June 2023

SIGNIFICANT SHAREHOLDERS

On 5th December 2023 the following were interested in 3 percent. or more of the Company's share capital (including Directors, whose interests are also shown above):

	Number of	% of ordinary
	share capital and
	ordinary shares
	voting rights
Name of shareholder
HARGREAVES LANSDOWN (NOMINEES) LIMITED	1,351,965,523	21.5%
HSBC GLOBAL CUSTODY NOMINEE (UK) LIMITED	1,180,307,919	18.8%
INTERACTIVE INVESTOR SERVICES NOMINEES LIMITED	762,814,287	12.1%
HSDL NOMINEES LIMITED	464,579,915	7.4%
VIDACOS NOMINEES LIMITED	536,898,690	8.5%
LAWSHARE NOMINEES LIMITED	426,964,621	6.8%
BARCLAYS DIRECT INVESTING NOMINEES LIMITED	309,818,565	4.9%

INDEMNITY OF OFFICERS

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

RESEARCH AND DEVELOPMENT

For details of the development activities undertaken in the year, please refer to principle 1 of the Corporate Governance Report.

BOARD OF DIRECTORS

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

COMMUNICATIONS WITH SHAREHOLDERS

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

INTERNAL CONTROL

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

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