Inspirit Energy : Annual Report and Accounts for the period ending 30 June 2022

CONTENTS

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 30 June 2022

Inspirit Energy Holdings plc (Inspirit) has successfully maintained its focus on the application of the Stirling engine in various sectors during the reporting year, and had been primarily working with its engineering partners on the fine details of the new Waste Heat Recovery (WHR) system for the application on the Volvo marine engine. The unit was built and tested in Poland and with the issues in neighbouring Ukraine, sourcing materials and components had been challenging.

Despite the global slowdown and access to materials, the operating Board believe that the Company has maintained positive progress over the last year in the alternative applications of the Stirling engine and there is strong evidence of the need to refocus our strategic objectives towards these areas that include marine and waste heat recovery. As mentioned last year, we wait to assess the impact on government's ban on oil and gas boilers on new build property from 2025, but there is no clear outcome with existing households gas boiler heating. It should be noted that this is by no means an abandonment of our MicroCHP boiler technology as the underlying technology for the Inspirit charger is applicable to the marine and waste heat recovery applications.

The Company's phase one trial in Poland managed by Inspirit's engineering team, using a non-branded automotive engine, regularly produced a power output of over 34kW during several weeks of testing. This trial was conducted using an automotive engine with the same horsepower as the Volvo Penta D13 Engine running at 2400 revolutions per minute.

Further phase two testing, again conducted in Poland, introduced the use of the Company's technology, the Helix Accelerator. Use of the Helix Accelerator resulted in a near doubling in the power output achieved to 64kW, using the same automotive engine as the phase one trial.

Further testing and development in Poland is currently being undertaken, with an emphasis on endurance and stress testing, simulating varying scenarios, which should be complete before the end of 2022. Our engineering team will be adding additional enhancements to the WHR system as part of this phase three trial programme, where further improvements in the power output are anticipated. To date the performance of the WHR system and its robustness have exceeded the Company's expectations and we look forward to shortly reporting on the results of the phase 3 trial.

Thereafter, Inspirit will seek to enter into a trial phase with Volvo Marine. The board are also actively pursuing commercial discussions with other parties that are active in the commercial automotive sector and WHR.

The board of Inspirit are very pleased with the team's achievements and the progress that has been made to date. Additionally, the board are investigating the potential for the unit to be incorporated as a retrofit for the commercial engine market and in particular certain applications in the haulage market. This includes widening the Company's traditional sphere of operation in Europe and also in Asia and North America.

The operating Board believe that the WHR technology and the application can be applied to marine, waste heat recycling from energy generation, refrigerated transport that uses diesel engines and many more applications.

As per previous years, the board are continuing to assess funding options for the development and commercialisation of our products and will continue to demonstrate prudence in our approach to managing our current resources whilst pushing forward with our product development.

I would like to thank my colleagues for their hard work and commitment to driving the business forward during these challenging times.

J Gunn

Chairman and Chief Executive Officer

05 January 2023

STRATEGIC REPORT

FOR THE YEAR ENDED 30 June 2022

The Directors present their Strategic Report on Inspirit Energy Holdings plc (the "Company") and its subsidiary undertakings (together the "Group") for the year ended 30 June 2022.

REVIEW OF THE BUSINESS

Inspirit Energy Limited (IEL) continues to apply its expertise in the application of the Stirling engine technology in different sectors including Marine and Waste Heat Recovery.

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

DEVELOPMENTS DURING THE YEAR

Despite COVID 19 still having an impact during the beginning of the financial year with lockdowns, supply line issues and general movement in Europe, IEL has been working with its engineering partners on the fine details of the new WHR for the application on the Volvo marine engine.

In addition, IEL successfully assembled and applied the first phase of the WHR unit and with limited testing, the unit provided the highest recorded output of over 34 kW in the first stage build test period. The WHR is a major component in the application for the Volvo Marine engine and other heat recovery applications the Company has been working on whereby waste heat exhaust is recycled and converted to energy.

PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE

The Director's believe they have acted in the way most likely to promote the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act 2006, as modified by the Companies ( Miscellaneous Reporting ) Regulations 2018 are outlined as follows:

1. Employee engagement

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

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

1. Suppliers and customers

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

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