Inspirit Energy Regulatory News (INSP)

22 December 2023

Inspirit Energy Holdings Plc

("Inspirit" or "the Company")

ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2023

Inspirit Energy Holdings Plc today announces its audited results for the year ended 30 June 2023 (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, 200 Aldersgate Street, London EC1A 4HD. Extracts of the Accounts are set out below.

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

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU No. 596/2014) AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.

More information on Inspirit Energy can be seen at: www.inspirit-energy.com

For further information please contact:

STRATEGIC REPORT FOR THE YEAR ENDED 30 June 2023

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-leading micro-Combined Heat and Power ("mCHP") boiler for use in commercial and residential markets. The mCHP boiler is powered by natural gas or hydrogen and designed to produce hot water (for domestic hot water or central heating) and a simultaneous electrical output that can be used locally or fed back into the National Grid.

DEVELOPMENTS DURING THE YEAR

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:

a. Employee engagement

The quality, commitment and effectiveness of the Company's current and future employees are crucial to its continued success. Employee policies and programmes are designed to encourage employees to become interested in the Company's activities and to reward employees according to their contribution and capability and the Company's financial performance. Employee communications are a priority and regular briefings are used to disseminate relevant information.

Employment policies do not discriminate between employees or potential employees on the grounds of colour, race, ethnic or natural origin, sex, marital status, sexual orientation, religious beliefs or disability. If an employee were to become disabled whilst in employment and as a result was unable to perform his or her duties, every effort would be made to offer suitable alternative employment and assistance with retraining.

b. Suppliers and customers

The Company maintains an ongoing dialogue with its potential customers and suppliers and the Company engages in supplier face-to-face meetings, email and telephone conversations with directors and senior management of key suppliers. When selecting suppliers and materials, issues such as the impact on the community and the environment have actively been taken into consideration. 

The Company pays its employees and creditors promptly and keeps its costs to a minimum to protect shareholders' funds. The Executive Directors have agreed to accrue their fees in this reporting period (note 5).

c. Shareholders and investors

The Company is quoted on AIM and its members will be fully aware, through detailed announcements, shareholder meetings and financial communications, of the Board's broad and specific intentions and the rationale for its decisions.

Other developments during the year:

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).

KEY PERFORMANCE INDICATORS

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

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.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The principal financial risk faced by the Group is liquidity risk. The Group's financial instruments included borrowings and cash which it used to finance its operations. At the year end, borrowings did not include any borrowings supplied from the Group's principal bank, Barclays Bank Plc. More information is given in Note 3 to the Financial Statements. The Group has no significant concentrations of credit risk.

CAPITAL RISK MANAGEMENT

The Group's objectives when managing capital are to safeguard the Group's and Company's ability to continue its activities and bring its products to market. Capital is defined based on the total equity of the Company. The Company monitors its level of cash resources available against future planned activities and may issue new shares in order to raise further funds from time to time.

MANAGEMENT AND KEY PERSONNEL

The risk of high turnover of staff and other specialist staff recruitment issues would have an impact on operation and reputation. The Board provides recognition and support for well performing existing employees and has implemented and monitors robust health and safety measures at the workplace.

TECHNOLOGY RISK

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

ASSESSMENT OF BUSINESS RISK

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

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

· reports on the performance of its subsidiary;

· reports on selection criteria on the applications of its technology;

· discussion with senior personnel; and

· consideration of reports prepared by third parties.

Details of other financial risks and their management are given in Note 3 to the financial statements.

ON BEHALF OF THE BOARD

N Jagatia

Director

22 December 2023

REPORT OF THE DIRECTORSFOR 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:

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

SIGNIFICANT SHAREHOLDERS

INDEMNITY OF OFFICERS

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

RESEARCH AND DEVELOPMENT

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

BOARD OF DIRECTORS

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

COMMUNICATIONS WITH SHAREHOLDERS

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

INTERNAL CONTROL

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

MATTERS COVERED IN THE STRATEGIC REPORT

The business review, results, review of KPI's and future developments are included in the Strategic Report and Chairman's Statement.

GOING CONCERN

As at 30 June 2023 the Group had a cash balance of £51,000 (2022: £160,000), net current liabilities of £786,000 (2022: net current assets of £366,000) and net assets of £2,402,000 (2022: £2,657,000). The Group has maintained its core spend during the year whilst still managing to move its projects forward and post year end secured a $250,000 loan facility and raised £200,000 cash from a cash placing in November 2023. There can be no assurance that the Group's projects will become fully developed and reach commercialisation nor that there will be sufficient cash resources available to the Group to do so.

The Directors have reviewed a detailed forecast based on the funds expected to be raised and forecasted expenditure. Having made due and careful enquiry, the Directors acknowledge that funds will need to be raised within the next 12 months to enable the Group to meets its obligations as they fall due, however, the Directors are confident that the required funds will successfully be raised through the issue of equity and/or debt to fund its operations over the next 12 months.

The Directors, therefore, have made an informed judgement, at the time of approving financial statements, that the Group is a going concern but they acknowledge that the dependence on raising further funds during the next 12 months represents a material uncertainty. The Auditors have made reference to going concern by way of a material uncertainty.

EVENTS AFTER THE REPORTING DATE

On 14th November 2023, the company announced that it has raised £200,000 through the placing (the "Placing") of 2,000,000,000 ordinary shares of 0.001 pence each in the share capital of the Company ("Ordinary Shares") at 0.01 pence per Ordinary Share (the "Placing Shares") and the proceeds of the fundraise will be used for general working capital purposes.

John Gunn, the Company's Chairman and Chief Executive Officer participated in the Placing by subscribing for 470,000,000 shares and Nilesh Jagatia, the Company's Chief Financial Officer will be subscribing for 20,000,000 shares. After the Placing, John Gunn will directly and indirectly have a holding of 1,331,403,363 Ordinary Shares representing an interest of 21.18% and, Nilesh Jagatia will have a holding of 64,857,142 Ordinary Shares representing an interest of 1.03% of the enlarged share capital. 

Following admission of the Placing Shares, the Company's enlarged issued share capital will comprise 6,287,190,896 Ordinary Shares.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

Company law requires the Directors to prepare financial statements for each financial year. Under that law the directors have prepared the group and parent company financial statements in accordance with UK-adopted international accounting standards. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and the parent company and of the profit or loss of the group and the parent company for that period. In preparing these financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgments and accounting estimates that are reasonable and prudent;

· state whether applicable UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

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

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

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

DISCLOSURE OF INFORMATION TO AUDITOR

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

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

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

INDEPENDENT AUDITOR

A resolution that BBP Partnership be re-appointed will be proposed at the annual general meeting. BBK Partnership have indicated their willingness to continue in office.

ON BEHALF OF THE BOARD

N Jagatia

Director

22 December 2023

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF INSPIRIT ENERGY HOLDINGS PLC

FOR THE YEAR ENDED 30 June 2023

Opinion

We have audited the financial statements of Inspirit Energy Holdings Plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2023 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company Statements of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

In our opinion:

· the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 30 June 2023 and of the group's loss for the year then ended;

· the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;

· the parent company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and

· the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 2 in the financial statements, which indicates that the group incurred a loss of £260k during the year ended 30 June 2023, the group's current liabilities exceeded its current assets by £786k at that date and that the group and company are reliant on raising further finance in the next 12 months in order to fund forecasted expenditure over this period. As stated in note 2, these events or conditions, along with the other matters as set forth in note 2, indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the company's ability to continue to adopt the going concern basis of accounting included reviewing and challenging cashflow forecasts, and related key assumptions, prepared by management covering the going concern period, discussing their strategies regarding future fund raises and assessing the likelihood of the required funds being successfully raised by considering the funds required and the group and company's ability to raise such funds.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Our application of materiality

The scope of our audit was influenced by our application of materiality. The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures.  We also determine a level of performance materiality which we use to assess the extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. In determining our overall audit strategy, we assessed the level of uncorrected misstatements that would be material for the financial statements as a whole.

Materiality for the consolidated financial statements was set as £66,000 (2022: £79,000) based upon net assets. Materiality has been based upon net assets which we determined, in our professional judgement, to be the key principal benchmark relevant to members of the parent company in assessing the financial performance of the group due to the number of risks identified relating to assets within the Consolidated Statement of Financial Position and the relative size of gross assets, liabilities and equity compared to the Consolidated Statement of Comprehensive Income. Performance materiality and the triviality threshold for the consolidated financial statements was set at £50,000 (2022: £63,200) and £1,000 (2022: £3,950) respectively given our accumulated knowledge of the group, the number of risks identified and the assessed risk level.

Materiality for the parent company was set as £50,000 (2022: £64,000) based upon net assets. Net assets was considered to be an appropriate basis due to the fact that the parent company is non-revenue earning and holds significant material balances through investments in its subsidiaries and other assets and cash held. Performance materiality and the triviality threshold for the parent company was set at £37,000 (2022: £51,200) and £1,000 (2022: £3,200) respectively given our accumulated knowledge of the group, the number of risks identified and the assessed risk level.

We also agreed to report any other differences below that threshold that we believe warranted reporting on qualitative grounds.

Our approach to the audit

In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular we looked at areas involving significant accounting estimates and judgements by the directors and considered future events that are inherently uncertain, such as the recoverable value of the capitalised development costs. We also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

A full scope audit was performed on the complete financial information of both components of the group.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section we have determined the matters described below to be the key audit matters to be communicated in our report.

Other Matter

The financial statements of Inspirit Energy Holdings plc for the period ended 30 June 2022, were audited by another auditor who expressed an unmodified opinion on those statements on 05 January 2023

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

· the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

· the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

· adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

· the parent company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the group and parent company financial statements, the directors are responsible for assessing the group and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

· the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

· we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the company's operating sector;

· we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the group and the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, environmental and health and safety legislation;

· we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

· identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the group's and the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

· making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

· considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations

To address the risk of fraud through management bias and override of controls, we:

· performed analytical procedures to identify any unusual or unexpected relationships;

· tested journal entries to identify unusual transactions;

· assessed whether judgements and assumptions made in determining the accounting estimates set out in the financial statements were indicative of potential bias; and

· investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

· agreeing financial statement disclosures to underlying supporting documentation;

· reading the minutes of meetings of those charged with governance;

· enquiring of management as to actual and potential litigation and claims; and

· reviewing correspondence with HMRC, relevant regulators including the Health and Safety Executive, and the company's legal advisors.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Suraj Shah BFP ACA FCCA (Senior Statutory Auditor)

for and on behalf of BBK Partnership

Chartered Accountants

& Statutory Auditors

1 Beauchamp Court

10 Victors Way

Barnet

Hertfordshire

EN5 5TZ

Date: .............................................

GROUP STATEMENT OF COMPREHENSIVE INCOME FOR

THE YEAR ENDED 30 JUNE 2023

STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2023

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 £444,642 (2022: loss of £531,000).

These Financial Statements were approved by the Board of Directors on 22 December 2023 and were signed on its behalf by

N Jagatia

Director

GROUP STATEMENT OF CHANGES IN EQUITY

COMPANY STATEMENT OF CHANGES IN EQUITY

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2023

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.

Following other sources of products interest during the year, management have focussed the value-in-use calculations on licensing sales rather than product sales. This has been done as management consider that the revenues are more near term in nature and note that it uses the same core developed technology. Given the product's nature, the core estimates have remained broadly consistent with prior years.

Note that the recoverability of the capitalised development costs and the investment in subsidiaries is dependent on sufficient funds being raised as and when required up to the point of commercialisation. Due to the dependence on raising further funds to meet forecasted expenditure over the next 12 months, the Auditors have made reference to going concern by way of a material uncertainty.

The number of Directors who contributed to pension schemes during the year was nil (2022: nil).

The Group has excess management expenses of approximately £6,041,000 (2022: £5,781,00), capital losses of £150,000 (2022: £150,000) and non-trade financial losses of approximately £119,000 (2022: £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.

No amortisation has been recognised on development costs to date as the assets are still in the development stage and the related products are not yet ready for sale. As such, the value-in-use calculations to support the carrying value of development costs is directly reliant on the availability of future capital funding in order to achieve product accreditation and enter into commercial production. Additions during the year included £93,357 (2022: £92,885) of capitalised wages.

The recoverable amount of the above cash generating unit has been determined based on value-in-use calculations and includes revenue from stirling applications in marine, commercial truck, Inspirit Charger (boiler technology) with Hydrogen application and waste recycling activities. The value-in-use calculations use cash flow projections based on financial budgets approved by Management covering a five year period. They key estimates in the value-in-use calculation are:

Growth rate - Nonlinear year on year increases based on directors' estimations following discussion with a number of potential partners.

Discount rate used for the directors impairment review was 30% (2022 30%). Historically, the company used a discount rate of 15%, however in FY2021 the board took a prudent view of increasing the rate to 30% due to Covid-19 and the global downturn with it's impact on the economy. Although the global economic outlook has improved, the board have been prudent in maintaining the 30% discount rate.

The gross margin is derived from licensing the technology and it is remained consistent with the margin assumed in the 2022 impairment assessment.

Included in the above is an amount of £3,515,314 (2022: £3,304,595) relating to the amount due to the Company by its subsidiary Inspirit Energy Limited. A provision of £3,515,314 (2022: £3,304,595) 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:

*** Inspirit Energy Limited (Co No 07160673) is entitled and has taken exemption under section 479a of the Companies Act 2006. No members of Inspirit Energy Limited have required the company to obtain an audit of its accounts for the year in question in accordance with section 476 of the Companies Act 2006

\* The Corporation tax repayable relates to the R&D tax claim receivable from HMRC.

The Directors consider that the carrying amount of receivables is approximately equal to their fair value and under IFRS 9 that they are held at amortised cost

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.

Both the Deferred shares and the New Deferred B shares have no voting rights.

On 6 June 2018, the Company announced that members, at a General meeting on the same day, had approved the completion of a Capital Reorganisation which comprised the sub-division of shares whereby each existing Ordinary Share of 0.1 pence each in the capital of the Company was sub-divided into 1 New Ordinary Shares of 0.001 pence each and 1 Deferred B Share of 0.099 pence each. This resulted in 1,420,806,859 New Ordinary Shares and 1,420,806,859 Deferred B Shares in issue.

On 8th November 2022, 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 Directors consider that the carrying amount of trade and other payables approximates to their fair value