Last checked at 28 Dec 2018 15:28
28 December 2018
Inspirit Energy Holdings Plc
("Inspirit" or "the Company")
Audited results for the year ended 30 June 2018
Inspirit Energy Holdings Plc today announces its audited results for the year ended 30 June 2018 (the "Accounts").
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. Extracts of the Accounts are set out below.
Contacts: |
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Inspirit Energy Holdings plc |
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John Gunn, Chairman and CEO | +44 (0) 207 048 9400
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Beaumont Cornish Limited www.beaumontcornish.com (Nominated Advisor) |
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Roland Cornish / James Biddle
| +44 (0) 207 628 3396 |
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SVS Securities Plc (Broker) Tom Curran
| +44 (0) 203 700 0093
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More information on Inspirit Energy can be seen at: www.inspirit-energy.com
CHAIRMAN'S STATEMENT
INTRODUCTION
This financial year, Inspirit Energy Holdings plc has maintained its focus on the commercialisation of the Group's micro combined heat and power ("mCHP") boilers.
COMMERCIALISATION AND PROGRESS
During the year, the Group has continued to advance its microCHP boiler closer to towards the goal of commercialisation. To this end, improvements to the design of the Group's Stirling engine technology, including simplification as part of the 'design for manufacture' process and meeting the challenges in new technology development, sourcing cheaper materials and efficiency re-redesign has resulted in the delay in certification and we hope to progress forward with higher output and cheaper cost base in the new year. An impairment to the value of the intangible asset in the financial statements has been recognised in relation to development costs which have not directly contributed to the latest version of the microCHP boiler.
The Group is currently in discussion with a European company that may carry out the certification process with the new cheaper but robust material employed in the latest model.
The applicable market for our technology is global, either as a boiler replacement product or as an add-on to an existing commercial plant room. In the UK there are in excess of 20 million gas boilers installed and more than 1.6 million new and replacement domestic gas boilers are installed each year. This is in addition to almost 300,000 commercial boiler installations each year. Europe as a whole has approximately 70 million boilers installed. These are the first markets to which our technology is applicable.
OUTLOOK
The operating board and I believe that the progress over the last year has been positive. Whilst we remain well positioned in the microCHP boiler technology market, ongoing funding for the development and commercialisation of our product remains a challenge. Accordingly, we continue to manage our resources whilst pushing forward with the product and expect this to continue in 2019.
The Board may consider potentially making investments in complementary areas and technologies that will utilise the Company's existing technical expertise and that may provide a funding stream for the mCHP.
At the same time, the Board continues to consider its options for the future strategy and funding of its operating subsidiary and will provide investors with an update when this review is complete.
J Gunn
Chairman and Chief Executive Officer
28 December 2018
STRATEGIC REPORT
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 2018.
REVIEW OF THE BUSINESS
Inspirit Energy Limited (IEL) 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 boiler 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 "British Engineered" mCHP 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 6 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 takes the waste heat from the boiler and converts it efficiently into electricity, first supplying the property where it is installed and then feeding surplus electricity into the National Grid.
DEVELOPMENTS DURING THE YEAR
On 15 August 2017, the Company announced that it raised £300,000 by issuing 250,000,000 new Ordinary Shares of 0.1p each at a price of 0.12p per Ordinary Share together with a Director's subscription to 41,666,666 shares included in this placing.
On 4 May 2018, the Company announced that it had raised £530,000 in cash from private investors through the issue of Convertible Loan Notes (CLNs) and converted existing debt due to Related Parties and other third-party debt valued at £315,000 into the CLNs. The principal amount of the CLNs are convertible at the higher of either 0.07 p per Ordinary Share of 0.1p each or a discount of 25 per cent. to the previous trading day's closing market share price. The CLNs are interest free, convertible at the Company's option and, in the ordinary course of business, are only repayable by the Company in Ordinary Shares following a conversion notice.
On 6 June 2018, the Company announced that members at a General meeting on the same day, approved the completion of a Capital Reorganisation which comprised of sub-division of shares whereby each existing Ordinary Share of 0.1 pence each in the capital of the Company has been sub-divided into 1 New Ordinary Shares of 0.001 pence each and 1 B Deferred Share of 0.099 pence each. This will result in 1,420,806,859 New Ordinary Shares and 1,420,806,859 B Deferred Shares in issue.
The B Deferred Shares have no rights and the Company will not issue any share certificates or credit CREST accounts in respect of them.
BOARD CHANGES
On 24 April 2018, the Company announced it appointed Mr Anthony Samaha as a Non-Executive Director.
RESULTS AND DIVIDENDS
The Group made a loss after taxation of £953,000 (2017: loss of £419,000). The Group made an impairment of £424,000 in relation the historic capitalised development costs in the year which no longer attributable to the current version of the mCHP boiler, which is included in the above loss.
The Directors do not propose a dividend for the year to 30 June 2018 (2017: £nil)
KEY PERFORMANCE INDICATORS
The key performance indicators used by the Board to monitor the performance of the Group, are set out below:
PLC S | 30 June 2018 | 30 June 2017 |
Net asset value | £1,698,000 | £2,360,000 |
Net asset value - fully diluted per share | 0.15p | 0.20p |
Closing share price | 0.05p | 0.14p |
Market capitalisation | £710,403 | £1,639,130 |
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.
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 expedite the commercialisation of the micro co-generation boiler.
Other risks and uncertainties within the Group are detailed in principle 4 of the Corporate Governance Report.
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.
ASSESSMENT OF BUSINESS RISK
The Board regularly reviews operating and strategic risks. The Group's operating procedures include a system for reporting financial and non-financial information to the Board including:
· reports from management with a review of the business at each Board meeting, focusing on any new decisions/risks arising;
· reports on the performance of investments;
· reports on selection criteria of new investments;
· discussion with senior personnel; and
· consideration of reports prepared by third parties.
Details of other financial risks and their management are given in Note 3 to the financial statements.
ON BEHALF OF THE BOARD
N Jagatia
Director
REPORT OF THE DIRECTORS
The Directors present their annual report on the affairs of the Group, together with the audited financial statements for the year ended 30 June 2018.
PRINCIPAL ACTIVITIES
The principal activity of the Group is that of development and commercialisation of the mCHP boiler.
Details of the Group's principal activity can be found in the Strategic Report.
DIRECTORS
The Directors who held office in the period up to the date of approval of the Financial Statements and their beneficial interests in the 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 2018 | 30 June 2017 | 30 June 2017 | 30 June 2016 | |
J Gunn | 439,696,246 | 439,696,246 | - | - | |
N Jagatia | 2,000,000 | 2,000,000 | - | - | |
A Samaha | - | - | - | - | |
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INDEMNITY OF OFFICERS
The Company maintains appropriate insurance cover against legal action brought against its Directors and officers.
RESEARCH AND DVELOPMENT
For details of the development activities undertaken in the year, please refer to principle 1 of the Corporate Governance Report.
BOARD OF DIRECTORS
The Board is responsible for strategy and performance, approval of major capital projects and the framework of internal controls. To enable the Board to discharge its duties, all Directors receive appropriate and timely information. All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring the Board procedures are followed and that applicable rules and regulations are complied with.
COMMUNICATIONS WITH SHAREHOLDERS
Communications with shareholders are given a high priority. In addition to the publication of an annual report and an interim report, there is regular dialogue with shareholders and analysts. The Annual General Meeting is viewed as a forum for communicating with shareholders, particularly private investors. Shareholders may question the Executive Chairman and other members of the Board at the Annual General Meeting.
INTERNAL CONTROL
The Directors acknowledge they are responsible for the Group's system of internal control and for reviewing the effectiveness of these systems. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of the Group failing to achieve its strategic objectives. It should be recognised that such systems can only provide reasonable and not absolute assurance against material misstatement or loss. The Group has well established procedures which are considered adequate given the size of the business.
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 2018 the Group had a cash balance of £45,000 (2017: £30,000), net current assets of £97,000 (2017: net current liabilities of £361,000) and net assets of £1,698,000 (2017: £2,360,000). The Group raises money for development, capital projects and working capital purposes as and when required and maintains access to the drawdown facility detailed out in note 20. There can be no assurance that the Group's project will become fully developed and reach commercialisation nor that there will be sufficient cash resources available to the Group to do so. Notwithstanding the loss and cash outflows incurred in the year and the requirement for further funds to become available, the Directors have a reasonable expectation that the Group will be able to raise funds to continue in operational existence and use its drawdown facility if required to move its projects towards regulatory sign off and commercialisation. The Group therefore continues to adopt the going concern basis in preparing the Annual Report and Financial Statements. Further details on the Directors assumption and their conclusion thereon are included in Note 2 to the financial statements.
EVENTS AFTER THE REPORTING DATE
On 28 August 2018, the company formally adopted the QCA Corporate Governance Code and this is reproduced below.
CORPORATE GOVERNANCE REPORT Inspirit Energy Holdings PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018
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STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2018
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Company Number: 05075088 |
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| COMPANY | ||
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| 2018 | 2017 |
| 2018 | 2017 |
| Note | £'000 | £'000 |
| £'000 | £'000 |
NON-CURRENT ASSETS |
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Intangible assets | 11 | 2,401 | 2,668 |
| - | - |
Property, plant and equipment | 12 | 45 | 53 |
| - | - |
Investment in subsidiaries | 13 | - | - |
| 2,440 | 2,440 |
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| 2,446 | 2,721 |
| 2,440 | 2,440 |
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CURRENT ASSETS |
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Trade and other receivables | 14 | 415 | 174 |
| 346 | 122 |
Cash and cash equivalents | 15 | 45 | 30 |
| 41 | 30 |
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| 460 | 204 |
| 387 | 152 |
TOTAL ASSETS |
| 2,906 | 2,925 |
| 2,827 | 2,592 |
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT |
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Share capital | 16 | 1,818 | 1,568 |
| 1,818 | 1,568 |
Share premium | 16 | 8,185 | 8,144 |
| 8,185 | 8,144 |
Merger reserve | 18 | 3,150 | 3,150 |
| 3,150 | 3,150 |
Other reserves | 18 | 3 | 206 |
| 3 | 206 |
Reverse acquisition reserve | 18 | (7,361) | (7,361) |
| - | - |
Retained losses |
| (4,097) | (3,347) |
| (11,428) | (10,908) |
TOTAL EQUITY |
| 1,698 | 2,360 |
| 1,728 | 2,160 |
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NON-CURRENT LIABILITIES |
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Borrowings | 20 | 845 | - |
| 845 | - |
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| 845 | - |
| 845 | - |
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CURRENT LIABILITIES |
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Trade and other payables | 19 | 263 | 366 |
| 154 | 233 |
Borrowings | 20 | 100 | 199 |
| 100 | 199 |
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| 363 | 565 |
| 254 | 432 |
TOTAL LIABILITIES |
| 1,208 | 565 |
| 1,099 | 432 |
TOTAL EQUITY AND LIABILITIES |
| 2,906 | 2,925 |
| 2,827 | 2,592 |
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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 £723,000 (2017: loss of £283,000).
These Financial Statements were approved by the Board of Directors on 28 December 2018 and were signed on its behalf by:
N Jagatia
Director
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018
| Attributable to the owners of the parent |
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| Share | Share premium | Other reserves | Merger reserve | Reverse acquisition reserve | Retained losses | Total | |
capital |
| Equity | ||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
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BALANCE AT 30 June 2016 | 1,334 | 8,097 | 206 | 3,150 | (7,361) | (2,829) | 2,597 | |
Loss for the year | - | - | - | - | - | (419) | (419) | |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | - | - | - | - | - | (419) | (419) | |
Share issues | 234 | 58 | - | - | - | - | 292 | |
Share issue costs | - | (11) | - | - | - | - | (11) | |
Debt adjustment | - | - | - | - | - | (99) | (99) | |
TRANSACTIONS WITH OWNERS RECOGNISED DIRECTLY IN EQUITY | 234 | 47 | - | - | - | (99) | 182 | |
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BALANCE AT 30 June 2017 | 1,568 | 8,144 | 206 | 3,150 | (7,361) | (3,347) | 2,360 | |
Loss for the year | - | - | - | - | - | (953) | (953) | |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | - | - | - | - | - | (953) | (953) | |
Share issues | 250 | 50 | - | - | - | - | 300 | |
Share issue costs | - | (9) | - | - | - | - | (9) | |
Share options lapsed | - | - | (203) | - | - | 203 | - | |
TRANSACTIONS WITH OWNERS RECOGNISED DIRECTLY IN EQUITY | 250 | 41 | (203) | - | - | 203 | 291 | |
BALANCE AT 30 June 2018 | 1,818 | 8,185 | 3 | 3,150 | (7,361) | (4,097) | 1,698 | |
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018
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| Attributable to equity shareholders | |||||
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| Retained | Total | |
capital | Merger Reserve | Other reserves | losses | equity | |||
| £'000 | £'000 |
| £'000 | £'000 | £'000 | |
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BALANCE AT 30 June 2016 | 1,334 | 8,097 | 3,150 | 206 | (10,526) | 2,261 | |
Loss for the year | - | - | - | - | (283) | (283) | |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | - | - | - | - | (283) | (283) | |
Share issues | 234 | 58 | - | - | - | 292 | |
Share issue costs | - | (11) | - | - | - | (11) | |
Debt adjustment | - | - | - | - | (99) | (99) | |
TRANSACTIONS WITH OWNERS RECOGNISED DIRECTLY IN EQUITY | 234 | 47 | - | - | (99) | 182 | |
BALANCE AT 30 June 2017 | 1,568 | 8,144 | 3,150 | 206 | (10,908) | 2,160 | |
Loss for the year | - | - | - | - | (723) | (723) | |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR | - | - | - | - | (723) | (723) | |
Share issues | 250 | 50 | - | - | - | 300 | |
Share issue costs | - | (9) | - | - | - | (9) | |
Share options lapsed in the year | - | - | - | (203) | 203 | - | |
TRANSACTIONS WITH OWNERS RECOGNISED DIRECTLY IN EQUITY | 250 | 41 | - | (203) | 203 | 291 | |
BALANCE AT 30 June 2018 | 1,818 | 8,185 | 3,150 | 3 | (11,428) | 1,728 | |
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018
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| COMPANY | ||
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| 2018 | 2017 |
| 2018 | 2017 |
| Note | £'000 | £'000 |
| £'000 | £'000 |
CASH FLOWS FROM OPERATING ACTIVITIES |
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Loss before tax |
| (973) | (457) |
| (723) | (283) |
Depreciation |
| 9 | 11 |
| - | - |
Finance expense |
| 4 | 73 |
| 4 | 73 |
Impairment of development costs |
| 424 | - |
| - | - |
Interco loan provision |
| - | - |
| 318 | (64) |
Other adjustments |
| - | (33) |
| - | (33) |
Decrease/(increase) in trade and other receivables |
| (241) | 192 |
| (224) | (110) |
Increase/(decrease) in trade and other payables |
| (183) | 29 |
| (178) | 2 |
NET CASH USED IN OPERATING ACTIVITIES |
| (960) | (185) |
| (803) | (415) |
CASH FLOWS FROM INVESTING ACTIVITIES |
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Increase in development costs |
| (157) | (173) |
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Purchases of property, plant and equipment |
| - | (1) |
| - | - |
Increase in loan to subsidiary |
| - | - |
| (318) | 64 |
NET CASH (USED IN)/GENERATED FROM INVESTING ACTIVITIES |
| (157) | (174) |
| (318) | 64 |
CASH FLOWS FROM FINANCING ACTIVTIES |
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Gross proceeds from issue of shares |
| 300 | 204 |
| 300 | 204 |
Share issue costs |
| (9) | - |
| (9) | - |
Gross proceeds from new debt |
| 845 | - |
| 845 | - |
Finance costs paid |
| (4) | (73) |
| (4) | (73) |
NET CASH GENERATED FROM FINANCING ACTIVITIES |
| 1,132 | 131 |
| 1,132 | 131 |
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS |
| 15 | (228) |
| 11 | (220) |
Cash and cash equivalents at the beginning of the year |
| 30 | 258 |
| 30 | 250 |
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR | 15 | 45 | 30 |
| 41 | 30 |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018
1 | GENERAL INFORMATION |
| The principal activity of Inspirit Energy Holdings plc during the period was that of developing and commercialising the mCHP boiler. These financial statements show the consolidated results of the Group for the year ended 30 June 2018 together with the comparative results for the year ended 30 June 2017. 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.
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2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. |
| BASIS OF PREPARATION |
| The financial statements have been prepared in accordance with applicable International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee (IFRS IC) as adopted and endorsed by the European Union ("EU") and with the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention and are presented in GBP Pound Sterling, rounded to the nearest £1,000. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4. |
| GOING CONCERN The financial statements have been prepared on the going concern basis. The mCHP boiler development project has not yet reached commercialisation and as such the Group is not generating revenues. An operating loss and cash outflows are expected in the 12 months subsequent to the date of these financial statements. As a result, the Group and Company will need to either raise funding or use the drawdown facility available (see note 20) to provide working capital and fund project development. Based on the board approved forecasts, the Directors have a reasonable expectation that the Group and the Company has access to adequate resources to continue in existence for the foreseeable future. Therefore they continue to adopt the going concern basis of accounting in preparing these financial statements. Money is raised or the drawdown facility used for working capital purposes and to fund project development as and when required. There can be no assurance that the Group's core project will ever be fully developed or reach commercialisation.
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| 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 2018. 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 There were no standards or interpretations effective for the year ended 30 June 2018 that had a material impact on the Group or Company. At the date of authorisation of this document, the following Standards and Interpretations, which have not been applied in these financial statements, were in issue, but not yet effective: |
| · IFRS 9 Financial Instruments · IFRS 15 Revenue from Contracts with Customers · IFRS 16 Leases · IAS 27 (amendments) Equity Method in Separate Financial Statements · IFRS 2 (amendments) Classification and Measurement of Share-based Payment Transactions · IFRIC 23 Uncertainty over Income Tax Treatments · Annual Improvements to IFRS 2015-2017 Cycle The Directors anticipate that the adoption of the above Standards and Interpretations in future periods will have little or no impact on the financial statements of the Company when the relevant Standards come into effect for future reporting periods. |
| SEGMENTAL REPORTING Developing and commercialising the mCHP boiler is the only activity in which the Group is engaged and is therefore considered as the only operating / reportable segment. The financial information therefore of the single segment is the same as that set out in the Group Statement of Comprehensive Income, Group Statement of Financial Position, Group and Company Statement of Changes in Equity and the Group and Company Cash Flow Statement. |
| CURRENT AND DEFERRED INCOME TAX The tax credit for the period comprises current tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised directly in equity. In this case the tax is also recognised directly in other comprehensive income or directly in equity, respectively. The current income tax credit is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company's subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to or recoverable from the tax authorities.
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| FOREIGN CURRENCY TRANSLATION a) FUNCTIONAL AND PRESENTATION CURRENCY 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"). The consolidated Financial Statements are presented in Pounds Sterling (£), which is Group and Company's presentation currency. b) TRANSACTIONS AND BALANCES 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". |
| OPERATING LEASES Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Comprehensive Income on a straight-line basis over the period of the lease. |
| PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the financial period in which they are incurred. Depreciation is calculated to allocate the cost of each class of asset to their residual values over their estimated useful lives, as follows: · Plant and Equipment - 15% reducing balance · Fixtures and Fittings - 20% reducing balance · Motor Vehicles - 5 years, straight line The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount, and are recognised within "Other (Losses)/Gains - Net" in the Statement of Comprehensive Income. |
| INTANGIBLE ASSETS DEVELOPMENT COSTS Development costs relate to expenditure on the development of the mCHP boiler technology. |
| 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 as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. LOANS AND RECEIVABLES Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the Statement of Financial Position date. These are classified as non-current assets. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the Statement of Financial Position. |
| b) RECOGNITION AND MEASUREMENT Financial assets are initially measured at fair value plus transactions costs. Loans and receivables are subsequently carried at amortised cost using the effective interest method, except for short term receivables. |
| c) IMPAIRMENT OF FINANCIAL ASSETS The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset, or a group of financial assets, is impaired. A financial asset, or a group of financial assets, is impaired, and impairment losses are incurred, only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event"), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset, or group of financial assets, that can be reliably estimated. The criteria that the Group uses to determine that there is objective evidence of an impairment loss include: · significant financial difficulty of the issuer or obligor; · a breach of contract, such as a default or delinquency in interest or principal repayments; · the disappearance of an active market for that financial asset because of financial difficulties; · observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio; or · for assets classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost. |
| ASSETS CARRIED AT AMORTISED COST The amount of impairment is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset's original effective interest rate. The asset's carrying amount is reduced, and the loss is recognised in the Statement of Comprehensive Income. As a practical expedient, the Group may measure impairment on the basis of an instrument's fair value using an observable market price. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's 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 banks. |
| FINANCIAL LIABILITIES Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instruments. Financial liabilities are initially measured at fair value, net of transactions costs. They are subsequently measured at amortised cost using the effective interest method. Financial liabilities are derecognised when the Group or Company's contractual obligations expire, are cancelled or are discharged. |
| SHAREHOLDERS' EQUITY Equity comprises the following: · "Share capital" represents the nominal value of equity shares. · "Share premium" represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue. · "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. "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. |
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 £460,000 (2017: £204,000) 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 2018 | Less than 1 year £'000 | Between 1 and 2 years £'000 | Between 2 and 5 years £'000 | Over 5 years £'000 | Total £'000 | Carrying value £'000 |
| Trade and other payables | 263 | - | - | - | 263 | 263 |
| Borrowings | 100 | 845 | - | - | 945 | 945 |
| At 30 June 2017 |
|
|
|
|
|
|
| Trade and other payables | 366 | - | - | - | 366 | 366 |
| Borrowings | 199 | - | - | - | 199 | 199 |
CAPITAL RISK MANAGEMENT
The Group's objectives when managing capital are:
· to safeguard the Group's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;
· to support the Group's growth; and
· to provide capital for the purpose of strengthening the Group's risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes.
4 | CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of Financial Statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. GOING CONCERN As at 30 June 2018 the Group had a cash balance of £45,000 (2017: £30,000), net current assets of £97,000 (2017: net current liabilities of £361,000) and net assets of £1,698,000 (2017: £2,360,000). The Group continues to incur costs in the development and modification of their products and is pre-revenue. Management has made judgements in relation to their ability to raise funding for working capital and product development. There can be no guarantee that sufficient funds will be raised. Further details are included in Note 2. 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 £2,401,000, and £2,440,000, respectively (2017: £2,668,000 and £2,440,000, respectively), have suffered any impairment in accordance with the accounting policy as stated in Note 2. 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 2018 review management has concluded that an impairment of £424,000 is required due to the original electrical components within the boiler requiring a complete redesign. The impairment was based on management's estimates of the time spent developing the electrics being an estimated percentage of the total time spent on development. In respect of development costs, the recoverable amounts of cash-generating units have been determined, based on value-in-use calculations. The value-in-use calculations require the entity 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 11 for further details.
|
5 | DIRECTOR'S AND KEY MANAGEMENT PERSONNEL EMOLUMENTS | ||||
|
| 2018 | 2017 | ||
|
| £ | £ | ||
|
|
|
| ||
| Aggregate emoluments | 122 | 180 | ||
| Social security costs | - | 13 | ||
|
| 122 | 193 | ||
|
|
|
|
|
|
| Name of director | Salary and fees | Benefits | Total 2018 | Total 2017 |
|
| £ | £ | £ | £ |
|
|
|
|
|
|
| J Gunn | 80 | - | 80 | 80 |
| N Jagatia | 28 | - | 28 | 24 |
| N Luke | - | - | - | 76 |
| A Samaha | 2 | - | 2 | - |
| S Gunn* | 12 | - | 12 | 12 |
|
| 122 | - | 122 | 192 |
|
*Key Management Personnel |
|
|
|
|
N Luke resigned from the Company on 17 June 2017.
The number of Directors who contributed to pension schemes during the year was nil (2017: nil).
6 | EMPLOYEE INFORMATION | ||
|
| 2018 | 2017 |
|
| £ | £ |
|
|
|
|
| Wages and salaries | 185 | 180 |
| Social security costs | 8 | 13 |
|
| 193 | 193 |
| In addition to the above a total of £114,000 (2017: £141,000) wages and salaries for employees has been included in Development costs. Average number of persons employed (including executive directors): | ||
|
| 2018 | 2017 |
|
| Number | Number |
| Office and management | 6 | 6 |
| COMPENSATION OF KEY MANAGEMENT PERSONNEL |
| There are no key management personnel other than those disclosed in Note 5. |
7 | LOSS FOR THE YEAR | ||
| Loss for the year is arrived at after charging: |
|
|
|
| 2018 | 2017 |
|
| £'000 | £'000 |
|
| ||
S | Salaries and wages (Note 6) | 193 | 193 |
A | Audit and other fees | 19 | 17 |
| Operating lease rent | 17 | 17 |
| Depreciation | 8 | 10 |
|
| ||
| AUDITOR'S REMUNERATION | ||
| During the year the Group obtained the following services from the Company's auditor: | ||
|
| 2018 | 2017 |
|
| £'000 | £'000 |
| Fees payable to the Company's auditor for the audit of the parent company and the Group financial statements | 19 | 15 |
| Fees payable to the Company's auditor and its associates for other services: |
|
|
| Taxation compliance services | - | 2 |
The 2017 figures relate to the previous auditor.
8 | FINANCE COSTS | ||||
|
| 2018 | 2017 | ||
|
| £'000 | £'000 | ||
| Interest expense: |
|
| ||
| Interest and bank charges | 4 | - | ||
| Other loans | - | 73 | ||
| Total finance costs | 4 | 73 | ||
|
|
|
| ||
9 | INCOME TAX CREDIT | ||
| GROUP | 2018 | 2017 |
|
| £'000 | £'000 |
| Deferred tax | - | - |
| Current R&D tax credit on loss for the year | (20) | (38) |
| Total current tax / (credit) | (20) | (38) |
| 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: | ||
|
| 2018 | 2017 |
|
| £'000 | £'000 |
| Loss before tax from continuing operations | (953) | (457) |
| Loss before tax multiplied by rate of corporation tax in the UK of 19% (2017: 19%) | (181) | (87) |
| Tax effects of: |
|
|
| Expenses not deductible for tax purposes | 108 | 14 |
| Unrelieved tax losses carried forward | 73 | 73 |
| Research and development tax credit | (20) | (38) |
| Total tax | (20) | (38) |
The Group has excess management expenses of approximately £4,800,000 (2017: £4,500,000), capital losses of £150,000 (2017: £150,000) and non-trade financial losses of approximately £119,000 (2017: £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.
10 | 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 £953,000 (2017: £419,000). The weighted number of equity shares in issue during the year was 1,359,376,947 (2017: 973,990,421). 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 17. |
11 | INTANGIBLE ASSETS | |||
| GROUP |
| Development Costs | Total |
| £'000 | £'000 | ||
|
|
| ||
| At 30 June 2016 |
| 2,495 | 2,495 |
| Additions |
| 173 | 173 |
| At 30 June 2017 |
| 2,668 | 2,668 |
| Additions |
| 157 | 157 |
| Impairment |
| (424) | (424) |
| At 30 June 2018 |
| 2,401 | 2,401 |
|
|
|
|
|
No amortisation has been recognised on development costs to date as the assets are still in the development stage and the related products are not yet ready for sale. As such, the value-in-use calculations to support the carrying value of development costs is directly reliant on the availability of future capital funding in order to achieve product accreditation and enter into commercial production.
The recoverable amount of the above cash generating unit has been determined based on value-in-use calculations. The value-in-use calculations use cash flow projections based on financial budgets approved by Management covering a seven-year period. They key estimates in the value-in-use calculation are:
Growth rate - Nonlinear: year on year increase based on director estimations
Discount rate - 30%
Gross margin - 35%
The calculations are not sensitive to probable changes in the key assumptions. The impairment in the year arose due to previously capitalised electrical development costs no longer contributing to the latest mCHP boiler.
Other than the above costs, no expenditure (2017: £0) was incurred in relation to research and development which have been expensed in the year.
12 | PROPERTY, PLANT AND EQUIPMENT |
| ||||
| GROUP | Plant and Equipment | Fixtures and fittings | Motor Vehicles | Total | |
| COST | £'000 | £'000 | £'000 | £'000 | |
| As 30 June 2016 | 81 | 15 | 1 | 97 | |
| Additions | - | - | - | - | |
| As 30 June 2017 | 81 | 15 | 1 | 97 | |
| Additions | - | - | - | - | |
| As at 30 June 2018 | 81 | 15 | 1 | 97 | |
|
|
|
|
|
| |
| DEPRECIATION |
|
|
|
| |
| As at 30 June 2016 | 25 | 8 | 1 | 34 | |
| Charge for year | 9 | 1 | - | 10 | |
| As at 30 June 2017 | 34 | 9 | 1 | 44 | |
| Charge for year | 7 | 1 | - | 8 | |
| As at 30 June 2018 | 41 | 10 | 1 | 52 | |
|
NET BOOK VALUE |
|
|
|
| |
| As at 30 June 2018 | 40 | 5 | - | 45 | |
| As at 30 June 2017 | 47 | 6 | - | 53 | |
No Property, Plant and Equipment is held in the parent company.
13 | INVESTMENT IN SUBSIDIARIES | ||
| COMPANY | 2018 | 2017 |
| SHARES IN GROUP UNDERTAKINGS: | £'000 | £'000 |
| At 1 July | 2,440 | 2,440 |
| Increase in loan to subsidiary | 318 | 64 |
| Provision against the loan balance outstanding | (318) | (64) |
A |
| 2,440 | 2,440 |
Included in the above is an amount of £2,742,000 (2017: £2,424,000) relating to the amount due to the Company by its subsidiary Inspirit Energy Limited. A provision of £2,742,000 (2017: £2,424,000) has been set against this loan balance outstanding.
Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid.
Details of Subsidiary Undertakings are as follows:
| Name of subsidiary | Registered address | Registered capital | Proportion of share capital held | Nature of business |
| Inspirit Energy Limited | c/o Niren Blake Llp 2nd Floor, Solar House, 915 High Road, London, England, N12 8QJ | Ordinary shares £15,230 | 100% | Product development |
| Somemore Limited | Global Investment Strategy Uk Ltd, 2nd Floor, London Wall Buildings, London, EC2M 5PP | Ordinary shares £1 | 100% | Dormant |
| Inspirit Energy Consultancy Limited | 2nd Floor 2 London Wall Buildings, London Wall, London, United Kingdom, EC2M 5PP | Ordinary shares £100 | 100% | Dormant |
14 | TRADE AND OTHER RECEIVABLES |
| |||
|
| GROUP | COMPANY | ||
|
| 2018 | 2017 | 2018 | 2017 |
|
| £'000 | £'000 | £'000 | £'000 |
| Corporation tax* | 58 | 38 | - | - |
| VAT recoverable | 7 | 21 | 5 | 15 |
| Other receivables | 340 | 105 | 335 | 101 |
| Prepayments and accrued income | 10 | 10 | 6 | 6 |
|
| 415 | 174 | 346 | 122 |
\* 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.
Included in other receivables was £270,000 (2017: £nil) relating to convertible loan notes which had not been received prior to the year-end.
15 | CASH AND CASH EQUIVALENTS |
| |||
|
| GROUP | COMPANY | ||
|
| 2018 | 2017 | 2018 | 2017 |
|
| £'000 | £'000 | £'000 | £'000 |
| Cash and cash equivalents | 45 | 30 | 41 | 30 |
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.
16 | SHARE CAPITAL AND SHARE PREMIUM |
|
|
| ||||
|
| Number of ordinary shares | Number of deferred shares | Ordinary shares | Deferred shares | New Deferred B shares | Share premium | Total |
|
|
|
| £ | £ | £ | £ | £ |
| At 30 June 2016 | 936,806,859 | 400,932 | 936,807 | 396,923 | - | 11,247,671 | 12,581,401 |
| Issue of new shares | 234,000,000 | - | 234,000 | - | - | 58,500 | 292,500 |
| Issue costs | - | - | - | - | - | (10,750) | (10,750) |
| At 30 June 2017 | 1,170,806,859 | 400,932 | 1,170,807 | 396,923 | - | 11,295,421 | 12,863,151 |
| Issue of new shares | 250,000,000 | - | 250,000 | - | - | 50,000 | 300,000 |
| Capital Reorganisation | - | - | (1,406,599) | - | 1,406,599 | - | - |
| Issue costs | - | - | - | - | - | (9,765) | (9,765) |
| At 30 June 2018 | 1,420,806,859 | 400,932 | 14,208 | 396,923 | 1,406,599 | 11,335,656 | 13,153,386 |
Both the Deferred shares and the New Deferred B shares have no voting rights.
On 17 August 2017, the Company issued 250,000,000 new ordinary shares at a price of 0.12 pence per share,
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.
17 | SHARE BASED PAYMENTS | |||||
| Share options and warrants can be granted to selected Directors and third-party service providers. There have been no options issued in the year and no share based payment charge has been recognised. Share options and warrants outstanding at the end of the year have the following expiry dates and exercisable prices: | |||||
|
| Weighted Average Exercise Price 2018 | Options and warrants | Weighted Average Exercise Price 2017 | Options and warrants | |
| At 1 July | 0.0067 | 10,783,364 | 0.0067 | 89,783,364 | |
| Granted | - | - | - | - | |
| Exercised | - | - | - | - | |
| Lapsed | 0.0090 | (9,283,364) | 0.0050 | (79,000,000) | |
| At 30 June | 0.0488 | 1,500,000 | 0.0067 | 10,783,364 | |
|
|
|
|
|
| |
| Grant date | Expiry date | Exercise price in £ per share | Number of options and warrants | Number of options and warrants | |
|
|
|
| 2018 | 2017 | |
| 26 April 2011 | 25 April 2021 | 0.0488 | 1,500,000 | 1,500,000 | |
| 30 April 2015 | 29 April 2018 | - | - | 9,283,364 | |
|
|
|
|
|
| |
|
|
| 0.0488 | 1,500,000 | 10,783,364 | |
|
|
|
|
|
| |
18 | OTHER RESERVES | ||||
| Group | Share option reserve | Merger reserve | Reverse acquisition reserve | Total |
|
| £'000 | £'000 | £'000 | £'000 |
| 1 July 2016 | 206 | 3,150 | (7,361) | (4,005) |
| Issue of warrants | - | - | - | - |
| 30 June 2017 | 206 | 3,150 | (7,361) | (4,005) |
| Issue of warrants | - | - | - | - |
| Share options lapsed in year | (203) | - | - | (203) |
| 30 June 2018 | 3 | 3,150 | (7,361) | (4,208) |
Company | Share option reserve | Merger reserve | Total |
| £'000 | £'000 | £'000 |
1 July 2016 | 206 | 3,150 | 3,356 |
Issue of warrants | - | - | - |
30 June 2017 | 206 | 3,150 | 3,356 |
Issue of warrants | - | - | - |
Share options lapsed in year | (203) | - | (203) |
30 June 2018 | 3 | 3,150 | 3,153 |
|
19 | TRADE AND OTHER PAYABLES |
| ||||
|
| GROUP | COMPANY | |||
|
| 2018 | 2017 | 2018 | 2017 | |
|
| £'000 | £'000 | £'000 | £'000 | |
| Trade payables | 58 | 76 | 29 | 21 | |
| Other payables | 152 | 150 | 86 | 111 | |
| Social security and other taxes | 31 | 67 | 18 | 28 | |
| Accrued expenses | 22 | 73 | 21 | 73 | |
|
| 263 | 366 | 154 | 233 | |
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
20 | BORROWINGS |
| |||||
|
| GROUP | COMPANY |
| |||
|
| 2018 | 2017 | 2018 | 2017 |
| |
|
| £'000 | £'000 | £'000 | £'000 |
| |
| Current |
|
|
|
|
| |
| Drawdown facility (see Note 1 below) | 100 | 199 | 100 | 199 | ||
| Total current borrowings | 100 | 199 | 100 | 199 | ||
| Non-current |
|
|
|
| ||
| Convertible loan notes (Note 2 below) | 845 | - | 845 | - | ||
| Total non-current borrowings | 845 | - | 845 | - | ||
| Total borrowings | 945 | 199 | 945 | 199 | ||
Note 1
The Drawdown facility relates to the facility entered into during the prior year 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.
On 30 April 2015, the Company issued warrants to subscribe for 9,283,364 new ordinary shares as part of the unsecured $3,000,000 Debt facility arrangement with YA Global Master SPV Limited ("YA Global"). The issue of the warrants was triggered following the drawdown of the initial Tranche 1, being $400,000, under the terms of the agreement. The terms of the issue of warrants are governed by the Debt Facility agreement, which specify that for every tranche drawn down, the Company is required to issue 25% of the value of the drawdown based on the interbank rate at the nearest possible date and using the average Volume Weighted Average Price ("VWAP") of the Company for the five trading days immediately prior the date of the agreement. Based on those terms, were the Company to drawdown the remaining $2,600,000 they would be required to issue further warrants to subscribe for an estimated total of 99,622,448 new ordinary shares. The Directors do not expect to use the remaining facility in the foreseeable future. On 25 April 2018, YA Global entered into an agreement for Convertible Loan Notes ("CLNs) which converted £100k of the existing drawdown into CLNs (see note 2).
Note 2
The Company during the year raised £530,000 in cash from private investors through the issue of Convertible Loan Notes and converted existing debt due to Related Parties (as further detailed below) and other third-party debt valued at £315,000 into the CLNs. The principal amount of the CLNs are convertible at the higher of either 0.07 p per Ordinary Share of 0.1p each (the "Ordinary Shares" or "Existing Ordinary Shares" and subject to the Capital Reorganisation as set out below) or a discount of 25 per cent. to the previous trading day's closing market share price. The CLNs are interest free, convertible at the Company's option and, in the ordinary course, only are repayable by the Company in Ordinary Shares following a conversion notice. Any Ordinary Shares issued on conversion of the CLNs will rank pari passu with existing Ordinary Shares. Conversion of the CLNs is subject to a restriction that no conversion shall take place in circumstances where as a result of the conversion the Noteholder or any party deemed to be acting in concert with such Noteholder, as defined in the Takeover Code, would own more than 29.9% of the issued share capital of the Company or otherwise trigger a requirement for the Noteholder to make a general offer for the Company pursuant to Rule 9 of the Takeover Code. The CLNs will not be admitted to trading on AIM or any other exchange.
The conversion is at the full discretion of the Company and on conversion, each new Ordinary Share will attract a half warrant (one warrant issued for every two CLNs converted) at the relevant conversion price valid for 12 months from the date of issue.
21 | FINANCIAL INSTRUMENTS BY CATEGORY | |||
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| 2018 | 2017 | |
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| £'000 | £'000 | |
| FINANCIAL ASSETS - LOANS AND RECEIVABLES: |
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| Trade and other receivables (excluding prepayments) | 405 | 165 | |
| Cash and cash equivalents | 45 | 30 | |
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| FINANCIAL LIABILITIES AT AMORTISED COST: |
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| Trade and other payables | 232 | 299 | |
| Borrowings | 944 | 199 | |
| The table providing an analysis of the maturity of the non-derivative financial liabilities has been included in Note 3. | |||
22 | ULTIMATE CONTROLLING PARTY |
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| At the date of signing this report the Directors do not consider there to be one single ultimate controlling party. |
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23 | RELATED PARTY TRANSACTIONS |
| See note 6 for details of director's remuneration in the year. During the year, the Group used Global Investment Strategies UK Ltd ("GIS") to broker a share issue totalling £150,000, of which £95,000 was retained by GIS in relation to historic payments made from the Inspirit client account held by GIS. Additionally, a £95,000 balance owed to GIS in the year was replaced by a CLN of equivalent value. The terms of these CLNs have been disclosed in Note 20. £100,000 in accrued director's fees owed to J Gunn and £20,000 owed to N Jagatia were converted into CLNs of equivalent value. The terms of these CLNs have been disclosed in Note 20. |
| During the year, NKJ Associates Ltd, a company in which N Jagatia is a Director, charged consultancy fees of £28,000 (2017: £24,000). The amount owed to NKJ Associates Ltd at year end is £4,000 (2017: £2,000). |