Shell PLC — Annual Report 2017

Nov 30, 2017

Registered number 05104429

Lb-shell plc (formerly Intelligent Energy Holdings plc)

Report for the 14 months ended 30 November 2017

Index

Strategic report

Chairman's statement	2
Business review	4
Principal risks and uncertainties	7
Corporate responsibility	8

Governance

Board of Directors	10
Directors' report	14
Corporate Governance Statement	19
Audit & Risk Committee report	23
Directors' remuneration report	28
Statement of Directors' responsibilities	37

Financial statements

Independent auditor's report	38
Income statement	43
Statement of comprehensive income	44
Statement of financial position	45
Statement of changes in equity	46
Statement of cash flows	47
Notes to the annual financial statements	48

Shareholder information

Strategic report

Chairman's statement

Despite entering 2016/17 with a more streamlined and cost efficient structure than in previous periods and a refocussed commercial strategy, the past period was another difficult and disappointing one for the Company as revenue growth proved elusive.

As at 1 October 2016, and as clearly communicated to the market, the Group, as constituted at the time, had an estimated core underlying cash burn of £1.6 million a month and cash of £20.6 million. As the period progressed the Board:

• undertook detailed discussions with various counterparts on potential trading solutions that would address the Company's revenue and funding or allow funding to be addressed separately;
• reviewed and implemented selected cost control activity, with the proviso as the year progressed of not materially impacting core capabilities to maintain longer term viability to assist in attracting a trading and funding solution;
• sought to align the interests of stakeholders with a view to trying to fund and then to rescue the Company. This was complicated by the Company's consolidated negative EBITDA and ongoing revenue position, combined with the security granted (as part of the shareholder approved refinancing of the Company in May 2016) in favour of the Convertible Loan Note ("CLN") holders, which also meant that conventional debt raising options were not available to the Company;
• in the second half of 2016/17 the Company ran an extensive process for the potential sale of some or all of the Company's business and assets, using Deloitte LLP to project manage this activity;
• received independent legal and financial advice on the duties of the Board to shareholders and to creditors, and on the Board's powers in relation to the sale of the Company's business and assets, from, as appropriate, Pinsent Masons LLP, Deloitte LLP and Stifel Nicolaus Europe Ltd;
• updated the stock market by way of regulatory news service (RNS) announcements on the Company's position at appropriate intervals. These updates also acted in effect as an external message to third parties to make contact if they were interested in acquiring all or part of the Company's business and assets. These third parties would have included parties with which the Company had existing or potential customer or supplier relationships.

Unfortunately, the outcome of the above actions, which represented a wide-ranging market testing against a backdrop of structural constraints, meant that a trading related solution could not be delivered and there was one offer, and one offer only, for the Company's business and assets. This offer was received from Meditor, an existing CLN holder and shareholder for, £19.5m, enacted via its subsidiary, Meditor Energy Ltd (collectively Meditor).

After detailed and extensive discussions with advisors, the Board approved the Meditor purchase, which was completed on 25 October 2017 less than one month prior to the Company exhausting its cash reserves. The offer clearly, therefore, represented the best outcome for the Company's creditors given the circumstances, as well as preserving the jobs of all employees. Unfortunately, it did not leave any value for shareholders. The alternative to this transaction would, in the view of the advisors and the Board, have been an insolvent administration process, which would have returned less value for creditors.

On completion of the sale, the accounting year end has been changed to 30 November in order to reflect the impact of the Meditor transaction. As a result the financial statements have been prepared on a standalone basis and no consolidated information is presented. Therefore, the former trading subsidiaries are not reflected in the accounts and this accurately reflects the position of the Company. The Company itself has ceased trading and Intelligent Energy Limited, which was the Company's principal trading subsidiary, headquartered in Loughborough, came under the ownership of Meditor Energy Limited from 25 October 2017.

Separately, and reflecting the sale of the business, I can confirm that that Board members received their contracted fees for Board membership only until the beginning of October 2017. Since the transaction they have not been paid for their duties or roles in Lb-shell plc and all Directors are now unpaid Nonexecutive Directors of the Company. The Company Secretary is also unpaid. In addition, no termination payments have been made to any Board Director. There have been no changes to the composition of the Board during the period, although to reflect the non trading status of the Company from 25 October 2017, all the Directors became Non-executive Directors from that date.

Business review

Description of the business

Until 25 October 2017, when it sold its constituent business, Lb-shell plc ("the Company") was a holding company for Intelligent Energy Limited ("IEL") and related companies ("the IEL Group") which develop proton-exchange membrane ("PEM") hydrogen fuel cells as a clean energy solution for the distributed energy, diesel replacement, automotive and aerial drone markets. Prior to 25 October 2017, the Company's principal facility and headquarters were in Loughborough, UK and the Company also maintained a presence in selected geographies outside of the UK.

Trading position, funding and KPIs

In addition to prior equity funding, the Company was funded by £30 million of senior secured convertible loan notes 2019 ("Convertible Loan Notes") issued in May 2016 which, if not converted at the option of the Convertible Loan Note holders before maturity, would have fallen due and repayable in full on 17 May 2019.

The Company and IEL Group's cash reserves at 1 October 2016 was £20.6m with an expected cash burn estimated at an average of £1.6m per month on an underlying basis. Entering the year the objective of the business was to generate significant profitable revenue growth and/or additional funding. As noted in the 2015/16 annual report and accounts, this increase in revenue was uncontracted at that time. Therefore, throughout the year, the Company discussed and pursued trading and funding options with input from appointed advisors where appropriate, and with key stakeholders of the Company (which also included principal holders of the Convertible Loan Notes). The preferred option was for a trading solution. This was referenced by the financial KPIs for the Company being revenue, adjusted EBITDA and cash, and the nonfinancial KPIs being number of fuel cell stacks, capacity sold and the number of patent families. While many discussions with potential customers on material trading related opportunities occurred, such discussions did not translate into material signed contracts.

Thus, in tandem with the pursuit of discussions with potential customers, the Directors and advisors assessed all other options available to the Company and the IEL Group whilst recognising the constraints against the more traditional financing solutions. These constraints included the security granted over IEL Group's intellectual property portfolio (as part of the refinancing of the Company in 2016) in favour of the holders of the Convertible Loan Notes, and the Company's equity structure. A further consideration was the need to obtain the consent of a majority by value of the holders of the Convertible Loan Notes before further debt was taken on by the Company that ranked ahead of (or pari passu with) the Company's obligations to the holders of the Convertible Loan Notes. During the period, the Directors also acted to reduce costs further, with action limited by a need to limit the impact on core capability, which could have prevented the Company's sale as a viable business.

The Directors continued to be mindful that, in certain circumstances (and in particular where the level of the Company's remaining cash resources was prejudicing going concern status), the duties of the Directors would switch from seeking to maximising returns for the Company's shareholders to minimising any potential loss to the Company's creditors, including minimising any potential loss to the holders of the Convertible Loan Notes, which represented the Company's major creditors.

In this context, on 22 September 2017 the Company announced that its constrained financial resources, represented by an estimated cash balance of £2.7m at 30 September 2017, meant that the Directors had reluctantly concluded that due to a number of factors there could be little or no value in the Company's shares.

Consequently, the Directors agreed to sell to Meditor Energy Limited (a newly incorporated subsidiary of Meditor European Master Fund Limited):

• the Company's main operating subsidiary, Intelligent Energy Limited following a group reorganisation to place all other subsidiaries of the Company under Intelligent Energy Limited; and
• the Company's remaining business and assets.

for a total consideration of £19,500,000.

This sale, which completed on 25 October 2017, left the Company as a non-trading company.

The consideration from the sale was used to discharge the Convertible Loan Note (representing a 65% return of the applicable principal of the Convertible Loan Note). Meditor European Master Fund Limited, the largest Convertible Loan Note holder, with 85.5% of the Convertible Loan Note, approved the amendments to the Convertible Loan Note instrument required to enable the Company to discharge the Convertible Loan Note (and to release and discharge in full all and any obligations of the Company under the Convertible Loan Note). Under the terms of the Convertible Loan Note instrument dated 17 May 2016, no other votes of Convertible Loan Note holders were needed for that amendment, release and discharge.

The Convertible Loan Note was delisted from The Channel Islands Stock Exchange shortly after its discharge.

No value accrued to shareholders as a result of these transactions.

The transaction structure for the sale to Meditor enabled the Company to avoid the need to seek the prior protection of an administration, which has resulted in the loss to the Convertible Loan Note holders being minimised as compared to any likely outcomes post an administration. This was only undertaken after a wide ranging market testing of alternatives against the backdrop of the structural constraints that have been outlined and, in the opinion of the Board supported by relevant advisors, represented the best outcome for the Company's creditors given the circumstances, as well as saving the jobs of the remaining employees in the business.

Change of name

Further to the sale of the Company's business and assets to Meditor Energy Limited, on 2 November 2017 the Company has changed its name to Lb-shell plc.

Events after the period end and outlook

The Company has extended its accounting reference date from 30 September to 30 November, so as to enable the audited accounts of the Company for the period ended 30 November 2017 to reflect the sale of Intelligent Energy Limited, and of the Company's remaining business and assets, to Meditor Energy Limited and the Company becoming a non-trading entity. This means that that the accounts of the Company do not include the income statement, balance sheet or other financial statements of the disposed trading entities, and more accurately reflects the Company's position.

On 18 December 2017 the Company held a General Meeting of shareholders pursuant to Section 656 of the Companies Act 2006 (with the net assets of a public company being half or less of its called-up share capital) following the completion of the sale to Meditor Energy Limited on 25 October 2017. Following the discussions at that meeting, the Directors confirmed that the intention remained to use the Company's limited remaining cash in the orderly winding down or dissolution of the Company.This aligned with the Directors' view that was no remaining value in the Company's ordinary shares.

Since then discussions have taken place concerning a continuation option for the Company, so that it could remain a going concern. In this context the current board intend to stand down, with the appointment of a new board to explore specific options, with the requisite shareholder approval, that would enable the Company to remain a going concern.

Principal risks and uncertainties

Given the current nature of the Company, the principal risks and uncertainties relate to those that could impact on the Company's ability to continue as a going concern, or absent this, achieve an orderly wind down or dissolution.

With respect to going concern, as described in note 3.2 to the accounts, this is dependent on a new board undertaking a continuation option for the business which would include new funding delivered with the requisite approvals. Due to the inherent nature of such an activity, there is a material uncertainty over its delivery. Should the business not remain a going concern, the nature of its subsequent wind down would depend on any potential claim against the Company that might incur defence costs beyond its limited cash resources. In such a circumstance the Directors would have no alternative but to put the Company into an insolvency process.

Corporate responsibility

Greenhouse gas emissions

The Company is required to report all emission sources under the Companies Act 2006 (Strategic report and Directors' reports) Regulations 43 (See Companies Act 2006 (Strategic report and Directors' reports) Regulations 2013 paragraph 18) in accordance with the principles and requirements of the Greenhouse Gas Protocol, Revised Edition, ISO 14064 Part 1 and DEFRA guidance "Environmental Reporting Guidelines" of June 2013.

As in prior years, material emissions from within the organisational and operational scope and boundaries of the Company are reported. These reported emissions cover all entities over which the Company had financial control as at the period end of 30 November 2017. To maintain consistency, emissions from entities and assets acquired or disposed of during the reporting period (i.e. disposed of before 30 November 2017, or acquired after 1 October 2016) are not accounted for within the reported greenhouse gas data for the period or in the comparison "base year". The Company disposed of all its activities prior to the period end comprising the Company's main operating subsidiary and its remaining business and assets.

Given the activity remaining at the end of the period with no operating subsidiaries and no staff, the Company does not generate material greenhouse gas emissions.

Health & safety

The Company operated as an investment holding company but recognises and accepts its responsibilities in being able to provide a safe and healthy working environment in which its employees work. The Company actively encouraged and supported the adoption of best practice in the companies in which it invested. The Company had no full time employees at the end of the accounting period.

Employee engagement, consultation and development

The Company attaches significant importance to good employee relations, employee engagement and employee development. It recognises its responsibilities for the fair treatment and equality of opportunity of all current and future employees. The Company actively encouraged and supported the adoption of best practice in the companies in which it invested. This included internal communication, regular employee opinion surveys, and meetings between senior management and employee representatives. The Company actively encouraged personal and professional development and actively promoted professional body membership. At the end of the accounting period the Company had no full time employees.

Diversity and employment

The Company is committed to actively promoting equality and diversity and eliminating discrimination in all aspects of its employment and business. The Company aimed to develop an environment that is free from discrimination where all individuals are able to freely contribute their skills and are encouraged to develop to their full potential.

As at the period end the Company had no full time employees and had six male and one female Nonexecutive Directors which included one Director acting as Company Secretary.

Supplier code of conduct

The Company is committed to ensuring that third-party suppliers involved in its supply chain processes operate to certain standards, which include the safe and fair treatment of employees around the world and trying to minimise environmental impact. As an investment holding company the Company's suppliers were principally for the supply of professional and other services.

The Company requires its suppliers to abide by a code of conduct to facilitate the sourcing of products and services from suppliers that share its values and ethics in relation to labour, Health & Safety, business ethics, the environment, modern slavery and human trafficking (see further details below), management systems and anti-bribery and corruption standards.

Anti-slavery and human trafficking

The Company is strongly opposed to the exploitation of workers and does not tolerate forced labour, or labour which involves physical, verbal or psychological harassment, or intimidation of any kind. Further, the Company will not accept human trafficking or the exploitation of children and young people in the business and undertakes to enforce all possible steps to ensure that these high standards are maintained. In compliance with the Modern Slavery Act 2015, which came into force in October 2015 (and applies to financial years ending on or after 31 March 2016), the IEL Group, of which the Company was a member until 25 October 2017, published an anti-slavery and human trafficking statement which was available at IEL's website.

The Strategic Report set out on pages 2 to 9 covering the Chairman's statement, Business review, principal risks and uncertainties and corporate responsibility was approved by the Board of Directors and signed on its behalf by:

John Maguire Company Secretary 28 March 2018

Governance

Board of Directors

Board composition (as at 30 November 2017)

Paul Heiden

Non-executive Chairman, member of the renumeration and nomination committees Appointed 28 September 2012

Other current appointments:

• Senior Independent Director of the London Stock Exchange Group plc
• Senior Independent Director of Meggitt plc

Previous appointments:

• Chief Executive Officer of FKI plc
• Group Finance Director of Rolls-Royce plc
• Director of an Industrial Business at Rolls-Royce plc
• Chairman of Talaris Topco plc (a company owned by the Carlisle Group)
• Non-executive Director of United Utilities, Bunzl plc and Filtrona plc
• Non-executive Chairman of A-Gas Limited

Martin Bloom

Non-executive Director

Appointed 22 June 2012 as an Independent Non-executive Director and 9 June 2016 as interim Chief Executive Officer and Group Chief Executive in December 2016 until 25 October 2017

Other current appointments:

• Non-executive Director of ReneSola Limited
• Non-executive Chairman of MayAir Group plc
• Part time consultant to Intelligent Energy Limited

Previous appointments:

• Non-executive Director of Starcom PLC
• Non-executive Director of Green and Smart Holdings plc
• Group CEO Intelligent Energy PLC

John Maguire

Non-executive Director Chief Financial Officer and Executive Director until 25 October 2017 Appointed 20 January 2012

Other current appointments:

• Non-executive Director of Jee Limited

Previous appointments:

• Chief Financial Officer of Etisalat Nigeria
• Chief Financial Officer of THUS Group plc

• Vice President Finance Japan and Asia, at Cable & Wireless

Michael Muller

Senior Independent Non-executive Director and member of the Audit & Risk, Renumeration and Nomination Committees Appointed 22 June 2012

Other current appointments:

• Chief Technology Officer of ARM Holdings plc
• Director of Cambridge Innovation Capital plc

Previous appointments:

• A founding member of ARM Limited when it was created as a joint venture in 1990 between Apple and Acorn. Occupied the post of Marketing Director and changed roles in 1996 to become Executive VP of Business Development before becoming Chief Technology Officer in 2000.

Dr Caroline Brown

Independent Non-executive Director and member of the Audit & Risk, Renumeration and Nomination Committees

Appointed 2 May 2014

Other current appointments:

• Non-executive Director of Luceco plc
• Non-executive Director of Hydrodec Group plc
• Non-executive Director of Earthport plc
• Non-executive Director of Georgia Capital plc
• Director of Grey's Inn Mansion Limited

Previous appointments:

• Non-executive Director of WSP Group plc
• Non-executive Director of Bridge Energy ASA
• Non-executive Director of Mirland Development Corporation plc
• Chief Financial Officer for a range of companies in diverse sectors and a corporate finance adviser to governments and companies with banks including Merrill Lynch, UBS and HSBC

Zarir J. Cama

Independent Non-executive Director and member of the Audit & Risk, Renumeration and Nomination Committees Appointed 22 June 2012

Other current appointments:

• Non-executive Director of HSBC Private Banking Holdings (Suisse) SA.
• Non-executive Director of Tata Capital Plc
• Non-executive Director of Tata Capital Pte Ltd Singapore and two of its subsidiaries
• Non-executive Director of Quintessence Fragrances Limited
• Director of I.B. Tauris & Co Limited

Previous appointments:

• Group Chief Executive of HSBC India and Malaysia together with significant other positions held over the years in Asia, the Middle East and Europe, including Group General Manager of HSBC Holdings plc

Flavio Guidotti

Non-executive Director and member of the Nomination committee Appointed 15 July 2005

Other current appointments:

• Managing Partner of Explotación San Pedro S.H
• Investment advisor to OSDIPP, a health insurance entity for employees of the private oil industry in Argentina

Previous appointments:

• Account Manager, Corporate Banking at Banque Européenne pour l'Amérique Latine (at the time a Fortis affiliate)
• Manager, Corporate Banking at Royal Bank of Canada
• Held several managerial positions at a regional level with ExxonMobil
• Senior Advisor to the President of the Central Bank of Argentina

The Committees (as at 30 November 2017)

Audit & Risk Committee

Chair: Dr Caroline Brown, Independent Non-executive Director

Name of members	Meetings attended
Dr Caroline Brown (Chair)	5/5
Michael Muller	5/5
Zarir J. Cama	3/5

Other directors who are not members of the relevant committee, are invited to attend by invitation depending on the nature of the business being discussed

Nomination Committee

Chair: Paul Heiden, Non-executive Chairman

Name of members	Meetings attended
Paul Heiden	3/3
Michael Muller	3/3
Dr Caroline Brown	3/3
Zarir J. Cama	3/3
Flavio Guidotti	3/3

Other directors who are not members of the relevant committee, are invited to attend by invitation depending on the nature of the business being discussed

Remuneration Committee

Chair: Zarir J. Cama, Independent Non-executive Director

Name of members	Meetings attended
Zarir J. Cama (Chair)	4/4
Paul Heiden	3/4
Michael Muller	4/4
Dr Caroline Brown	4/4

Other directors who are not members of the relevant committee are invitedto attend by invitation depending on the nature of the business being discussed.

Board Meetings

Name of members	Number Eligible to attend	Number attended
Paul Heiden	12	12
Martin Bloom	12	12
John Maguire	12	12
Michael Muller	12	12
Zarir J. Cama	12	10
Dr Caroline Brown	12	11
Flavio Guidotti	12	12

In addition, ad hoc meetings are held from time to time which are attended by at least a quorum of Directors/Committee members and are convened to deal with specific items of business that are not pre-scheduled into the annual Board and Committee meeting calendar.

Directors' report

The Directors present their report for the 14 months ended 30 November 2017. The Strategic report and Corporate governance statement sections of the annual report are incorporated by reference into this Directors' report.

Trading results

As the Company disposed of its trading business during the period, and has no subsidiaries at the period end, the accounts have been prepared on a stand alone basis. Consequently, there was no reported revenue for the year. The loss before tax was £12.7 million (2016: £225.2 million). This reflected the impairment of the carrying value of the Company's investments on disposal following their disposal to Meditor Energy Limited on 25 October 2017, the net impact of the interest on and the discharge of the CLN and other administration costs. At 30 November 2017 the Company had no non-current assets and had net assets of £352,000. This comprised the net amount of sundry current receivables, payables and cash.

Future business developments and outlook

The Board's assessment and evaluation of future developments and the outlook for the Company's business is included within the strategic report.

Directors

The names of the Directors of the Company as at the date of this report are given on pages 10 to 11. There were no other persons who, at any date during the period ended 30 November 2017, were Directors of the Company. The statement of Directors' responsibilities in relation to the financial statements is set out on page 37. Details of the Directors' service contracts are set out in the Directors' remuneration report on page 28.

Appointment and removal of Directors

The Company's Articles of Association ("Articles") give the Directors the power to appoint and replace other Directors. Under the terms of reference of the Nomination Committee, any appointment must be recommended by the Nomination Committee for approval by the Board.

In accordance with subscription agreements between the Company and each of Meditor European Master Fund Limited ('Meditor'), Evolution Placements Corporation ('EPC') and Yukos International UK B.V. ('Yukos BV'), each of Meditor, EPC and Yukos BV are entitled to appoint one person to be a Non-executive Director of the Company, subject to that person satisfying any relevant requirements of the London Stock Exchange and to the shareholder in question holding shares and/or current share options equal to 10 per cent, or more, of the Company's share capital on a fully diluted basis. Each of these shareholders are entitled to remove any person it so appoints and, in the event that a person it appointed ceases to be a Director, to appoint another person in his or her place. If Meditor, EPC or Yukos BV ceases to hold 10 per cent or more of the Company's share capital on a fully diluted basis, it will procure the resignation of any person it has appointed as a Director of the Company within a reasonable period of receipt of written notice from the Company requiring it to do so.

Flavio Guidotti was appointed to the Board as a Non-executive Director by EPC under the appointment rights summarised above. Neither Meditor nor Yukos BV has appointed a Director to the Board and Yukos BV does not currently hold the requisite number of shares in order to make an appointment.

Beneficial interests in significant contracts

None of the Directors has a material interest in any contract of significance to which the Company or any of its subsidiaries during the period were party during the period ended 30 November 2017.

Directors' authorities

The Directors are responsible for managing the business of the Company and exercise their powers in accordance with the Articles, directions given by shareholder resolution and any statutes and regulations.

Insurance and indemnities

The Directors have the benefit of an indemnity from the Company in respect of its liabilities incurred as a result of their office. This indemnity is provided under the Company's Articles and satisfies the indemnity provisions of the Companies Act 2006.

The Company has taken out an insurance policy in respect of those liabilities for which the Directors may not be indemnified. Neither the indemnity nor the insurance provides cover in the event that a Director is proved to have acted dishonestly or fraudulently.

Annual General Meeting

The AGM of the Company will be held no later than 31 May 2018. The Company will be sending the notice convening its AGM to shareholders by separate mail to the Annual Report (at least 20 working days before the meeting, in accordance with best practice corporate governance guidelines). The notice of AGM will include full details of the resolutions to be proposed, together with explanatory notes in relation to such resolutions.

Capital structure

The table below shows details of the Company's issued ordinary share capital, as at 30 September 2016 and 30 November 2017.

	30 November 2017	30 September 2016
Ordinary shares of 5 pence each	206,239,331	206,239,331

The Company has a single class of shares, being ordinary shares of 5 pence each. Full details of the rights accorded to the holders of these ordinary shares are set out in the Articles. Holders of the ordinary shares also have the rights accorded to them under United Kingdom Company Law, including the right to receive the Company's annual report and financial statements, attend and speak at general meetings, appoint proxies and exercise voting rights. Each ordinary share carries the right to one vote at general meetings of the Company. All ordinary shares currently in issue are fully paid.

During the 14 months ended 30 November 2017 no new ordinary shares were issued or allotted.

Outstanding share options and awards

The Company operates the following share schemes: The Intelligent Energy Limited Share Option Scheme of 2001 (as amended on 1 August 2003) and the Intelligent Energy Holdings plc Share Option Scheme of 2009. As at 30 November 2017 there were no share options outstanding in relation to any of the 2001 and 2009 Schemes.

Sharesave scheme

A sharesave plan was implemented during the year ended 30 September 2015 eligible to all UK employees of Intelligent Energy Limited. Employees participate by making monthly saving contributions over a period of three years, linked to the grant of an option over the Company's shares with an option price at a 20% discount to the market value of the share at grant. 508,679 options were granted under the scheme of which 481,251 (2016: 423,501) have subsequently been forfeited.

Shareholder agreements and transfer restrictions

From time to time, the Company will enter into confidentiality arrangements with proposed counterparties to potential significant transactions, pursuant to which such counterparties (who may from time to time include existing shareholders in the Company) will agree not to trade in the Company's shares pending the announcement (or discontinuance) of that transaction.

With the exception of the above, there are no specific restrictions on the size of a holding or the transfer of ordinary shares and the Directors are not aware of any other agreements between holders of the Company's ordinary shares that may result in restrictions on the transfer of securities or on voting rights.

Substantial shareholdings

As at 30 November 2017 and 28 March 2018 (being the latest practicable date prior to the publication of this document), the Company had received "notifications of major holdings" from the following entities of their shareholdings of 3.0% or more in the Company:

	Holding Holding disclosed as at disclosed as at 30 November 26 March
Shareholder	2017	%	2018	%
Meditor Capital Management	41,991,316	20.36	41,991,316	20.36
Evolution Placements Corporation	21,390,096	10.37	21,390,096	10.37
Yukos International UK BV	11,573,017	5.61	11,573,017	5.61
Hargreaves Lansdown Asset Management	7,961,149	3.86	7,961,149	3.86
Royalton Percy	6,900,000	3.35	6,900,000	3.35%

Dividend policy

Given the intention of the Directors to wind down or dissolve the Company, the Directors do not anticipate paying a dividend in the foreseeable future.

Acquisition of the Company's own shares

The Companies Act 2006 and the Company's Articles permit shareholders to give authority to the Company to purchase its own shares. The Directors are not intending to seek approval from shareholders to grant an authority to authorise the purchase of its own shares pursuant to sections 693 and 701 of the Companies Act, 2006.

Articles of Association

The Company's Articles came into effect upon the Company's IPO on 9 July 2014. No amendments have been made since that date.

Financial instruments

Information about the use of financial instruments by the Company is given in note 20 to the financial statements.

Employees

At the balance sheet date, the Company has no employees.

Political donations

The Company made no political donations during the period ended 30 November 2017 (2016: nil).

Going concern

On 25 October 2017, the Directors announced that the Company would shortly thereafter arrange for the cancellation of the listing of the Company's ordinary shares and that the Company's remaining cash would be used in the orderly winding down or dissolution of the Company.

Subsequent to this date, the Directors have identified a viable continuation option for the Company, which could provide more value for shareholders than a wind down, orderly or potentially otherwise, of the Company, (which is expected to provide no return for shareholders).

This is expected to involve the Company, under the leadership of a new board of directors and subject to the requisite shareholder approvals, acquiring a trading business using the proceeds of future additional funding. The Directors have undertaken discussions regarding this option with an experienced third party Corporate Finance firm, who believe that a suitable new board and a suitable trading business can be identified, and a non binding Heads of Agreement (HoA") has been signed with this party, under terms which the directors are satisfied provide a basis for preparing the financial statements on a going concern basis.

However, at the date of signing of the accounts no business has yet been identified, and there remains a risk that no such business will be identified, and a risk that suitable terms will not be reached.

In the event that the requisite conditions for the continuation option are not met, there is a significant risk that the Directors at the time would need to revert to the previous option of conducting a winding down (orderly or otherwise), or dissolution of the Company.

In addition, the unknown factors with respect to this potential continuation option mean that no financial projections are available with respect to the period subsequent to any recommencement of operations and so it is not possible to consider the future viability of those operations at this time.

Based on the above indications the directors believe that it remains appropriate to prepare the financial statements on a going concern basis. However the Directors have concluded that the factors discussed above represent a material uncertainty that may cast significant doubt regarding the Company's ability to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

International Financial Reporting Standards

The financial statements included within the Company's Annual Report have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

Independent auditor

Each Director at the date of approval of this annual report and financial statements confirms that, so far as they are aware, there is no relevant audit information of which the Company's auditor is unaware, and that they have taken all steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

KPMG LLP has expressed its willingness to continue in office as auditor and a resolution to reappoint them will be proposed at the forthcoming AGM.

Approved by the Board of Directors and signed on its behalf by:

John Maguire Company Secretary 28 March 2018

Corporate governance statement

Governance responsibilities of the Board

Duties and responsibilities of the Board are confirmed via a schedule of matters reserved for its decision. This schedule was adopted by the Board in October 2014 and is based on best practice corporate governance procedures. A copy of this document is shown on the Company's website at http://www.lbshell.com/governance/. Such matters reserved for the Board includes responsibility for the overall leadership and strategic aims and objectives of the Company, capital structure, financial reporting, internal controls, approval of material contracts and major investments, Board membership and corporate governance.

Board composition

The Board is responsible for the effective promotion of corporate objectives, the protection of the interests of all shareholders and stakeholders and for the governance of the Company as a whole.

As at 30 November 2017, the Board was comprised of a Non-executive chairman and six Non-executive Directors (three of which are classed as independent in accordance with the provisions of the UK Corporate Governance Code ("the UK Code")).

Non-executive Directors

The Non-executive Directors have a range of experience, skills and backgrounds that enable them to make a valuable contribution to the Company and provide independent judgement and constructive challenge to the Board. They have a key role to play in setting strategy, scrutinising the performance of management in meeting agreed goals and objectives and monitoring the reporting of performance. They satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and maintained. They are responsible for determining appropriate levels of remuneration of executive Directors and have a prime role to play in appointing and, where necessary, removing executive Directors, and in succession planning.

Non-executive Director independence

The UK Code states that at least half the board, excluding the chairperson, should comprise Non-executive Directors determined by the board to be independent. A smaller company should have at least two independent Non-executive Directors.

The chairperson is presumed under the UK Code not to be independent. However, consideration has been given to the independence of the Company's other Non-executive Directors. The board considers that, as at the end of the period ended 30 November 2017, three of the Non-executive Directors are independent, being Dr Caroline Brown, Zarir J. Cama and Michael Muller. Flavio Guidotti, the remaining Non-executive Director, is not considered to be independent when considered under the UK Code.

Flavio Guidotti was appointed as a Non-executive Director of the Company in 2005 in accordance with the terms of a subscription agreement between the Company and one of its largest shareholders, Evolution Placements Corporation ("'EPC"') and therefore cannot be classed as independent under the provisions of the UK Code. This agreement entitles EPC to appoint one person to be a Non-executive Director of the Company, subject to that person satisfying any relevant requirements of the London Stock Exchange and to EPC (and its connected parties) holding shares and/or current share options equal to 10 per cent, or more, of the Company's share capital on a fully diluted basis.

The role of the chairman

At the reporting date the board consisted ofNon executive Directors only.

Paul Heiden, as Chairman, is responsible for leading and managing the board and ensuring it operates effectively. He promotes a culture of openness, encouraging all board members to involve themselves in debate and apply sufficient challenge regarding major proposals, thus contributing to an effective decisionmaking process. He ensures that shareholder views are discussed at board level and that communication with shareholders and otherstakeholders is effective.

Attendance of Directors at meetings

The table below shows the attendance of Directors at meetings of the board, Audit & Risk Committee, Remuneration Committee and Nomination Committee during the 14 months ended 30 November 2017.

	Board1		Audit & Risk Committee2		Remuneration Committee1, 2		Nomination Committee1, 2
	Number eligible to attend	Number attended	Number eligible to attend	Number attended	Number eligible to attend	Number attended	Number eligible to attend	Number attended
Paul Heiden	12	12	n/a	n/a	4	3	3	3
Martin Bloom	12	12	n/a	n/a	n/a	n/a	n/a	n/a
John Maguire	12	12	n/a	n/a	n/a	n/a	n/a	n/a
Michael Muller	12	12	5	5	4	4	3	3
Zarir J. Cama	12	10	5	3	4	4	3	3
Dr Caroline Brown	12	11	5	5	4	4	3	3
Flavio Guidotti	12	12	n/a	n/a	n/a	n/a	3	3

1. In addition, ad hoc meetings are held from time to time which are attended by at least a quorum of Directors/committee members and are convened to deal with specific items of business that are not pre-scheduled into the annual board and committee meeting calendar.

2. Other Directors, who are not members of the relevant committee, are invited to attend by invitation depending on the nature of the business being discussed.

The role of the senior independent Non-executive Director

Michael Muller was appointed as senior independent Non-executive Director ("Senior Independent Director") in January 2014. The role of the Senior Independent Director is to provide a sounding board for the Chairman, to serve as a focal point to assist in resolving shareholder concerns which have not been resolved by the Chairman or Group Chief Executive Officer, or in circumstances where a shareholder considers that communication with either of these Directors would be inappropriate. The Senior Independent Director also oversees the assessment of the effectiveness of the Chairman's performance, and is available for the other Non-executive Directors to raise any issues or concerns.

Directors' conflicts of interest

The Chairman and the Non-executive Directors are permitted to serve as Directors of non-group companies provided it does not impinge upon their required time commitment to the Company. The Directors are required to declare any Directorships for non-group companies or other appointments which could give rise to actual or potential conflicts of interest.

The Directors have a duty to avoid a direct or indirect interest which conflicts, or may possibly conflict, with the interests of the Company, unless that conflict has been approved by the board. The Articles of Association of the Company give the Directors power to approve conflicts of interest, subject to certain conditions, such as, the meeting being quorate without the Director in question participating and/or that the relevant Director does not participate in a vote. No conflicts of interest were declared during the period ended 30 November 2017.

Annual re-election of Directors

On the basis of a new board of directors looking to pursue a continuation option for the Company, the current Board will not stand for re-election.

Board support

The Company Secretary, in accordance with guidance from the Chairman, ensures that the board and each of its committees receive the necessary information to operate efficiently. All Directors have access to the services of the Company Secretary, who is responsible to the board for ensuring that board procedures are followed and that applicable rules and regulations are complied with. The Company Secretary is also responsible for advising the board, through the Chairman, on all matters of governance and best practice. The Company Secretary also acted as Secretary to the Audit & Risk Committee, Remuneration Committee and the Nomination Committee until 25 October 2017.

The Directors may take independent professional advice on any matter at the Company's expense, if they deem it necessary, in order to carry out their responsibilities effectively.

Board performance evaluation

As part of the board's annual meeting calendar, and in accordance with best practice corporate governance principles, time is set aside for the Chairman to hold meetings with the Non-executive Directors, and for the Non-executive Directors (led by Michael Muller, the Board's Senior Independent Director) to meet without the Chairman present, at least annually.

Under the relevant terms of reference for the committees of the board, the Audit & Risk Committee is required to meet at least four times per year, the Remuneration Committee two times and the Nomination Committee once.

Shareholder engagement

The Company's AGM is used to formally communicate with investors and other formal communication channels include the Annual Report and financial statements, regulatory news announcements and press releases in response to events or routine reporting obligations. This is further supported by the provision of information to shareholders on the Company's website, in particular the Investors section at http://www.lbshell.com/investors-2-2/. All information reported to the market via a regulatory information service also appears on the Company's website as soon as is practicable.

Internal control and risk management

The Company's principal risks and uncertainties are detailed on page 7.

Anti-bribery & corruption

The Company takes very seriously its responsibilities under applicable anti-bribery and corruption legislation including the UK's Bribery Act 2010 and has implemented appropriate measures to ensure compliance. As part of the Company's anti-bribery and corruption policy all Executive Directors and employees of the Company's subsidiaries were required to complete online training, designed to clearly communicate employee responsibilities and likely consequences of non-compliance.

Audit & Risk Committee report

Dr Caroline Brown

Audit & Risk Committee Chair, Independent Non-executive Director

Committee members

(as at 30 November 2017)

Name	Meetings attended
Dr Caroline Brown (Chair)	5/5
Michael Muller	5/5
Zarir J. Cama	3/5

Purpose and aim

The Audit & Risk Committee ("the Committee") is responsible for reviewing a wide range of matters and its key responsibilities are listed below. The Board of Directors has delegated to the Committee responsibility for overseeing the financial reporting, internal control and risk management frameworks within the Company. This Committee is also responsible for making recommendations to the Board in relation to the appointment of both the Company's external and internal auditors.

Committee meetings

Members of the Committee are independent Non-executive Directors who are free from any relationships or circumstances which are likely to affect, or could appear to affect, the Committee members' judgement. In consideration of the relevant guidance contained within the UK Corporate Governance Code ("UK Code"), at least one member of the Committee has recent and relevant financial experience and, at the present time, it is the Board's opinion that the existing Committee members currently have competence relevant to the sector in which the Company operates.

Other members of the Board are also invited to attend meetings of the Committee where this is considered appropriate. Other members of the Board also attend Committee meetings by invitation.

The Committee meets as appropriate. During the 14 months ended 30 November 2017, the Committee met 5 times. Details of Director attendance at Committee meetings held during the 14 months ended 30 November 2017 are shown above.

Responsibilities of the Committee

Full details of the Committee's roles and responsibilities are set out in its terms of reference, which are available from the Company Secretary at the Registered Office. The Committee will ensure that it regularly reviews the terms of reference by which it operates.

The key responsibilities of the Committee are:

• Monitor the integrity of the financial statements of the Company, reviewing all significant financial reporting issues and all judgements which they contain. This includes the annual and half-yearly financial statements, trading/business updates and any other formal announcement relating to the Company's financial performance;

• The categorisation, monitoring and overall effectiveness of the Company's risk assessment and internal control processes;

• Monitor and review the effectiveness of the Company's internal audit function in the context of the overall risk management systems;

• Review and assess the annual internal audit programme;
• Consider and make recommendations to the Board, to be put to shareholders for approval at the Annual General Meeting ('AGM'), in relation to the appointment, re-appointment or removal of the Company's external auditor;
• Oversee the relationship with the external auditor including recommendations on its remuneration, approval of its terms of engagement and assessing annually its independence and objectivity;
• Review and approve the annual external audit plan and ensure that it is consistent with the scope of the audit engagement;
• Review the adequacy and security of the Company's arrangements for its employees and contractors to raise concerns in confidence about possible wrongdoing in financial reporting or other matters. The Committee is responsible for regularly reviewing any matters that have been raised and for ensuring that arrangements are in place to allow for proportionate and independent investigation, as well as appropriate follow up action; and
• Report to the Board on how it has discharged its responsibilities

Committee activities during the 14 months ended 30 November 2017

During the 14 months ended 30 November 2017, the key items for discussion at Committee meetings were as follows:

• Review of the draft period and half-year financial statements, the Report and accounts for the period and the draft announcements;
• The independence, objectivity and effectiveness of the external auditor;
• The appropriateness of the non-audit services provided by the external auditor and the potential impact of such services on their independence;
• Scope and work of the external audit programme;
• Consideration of the external auditor engagement letter and audit fees;
• Scope and work of the internal audit programme and review of internal audit reports produced by B.M. Howarth Limited, the external firm appointed by the Company to carry out the internal audit function;
• Keeping abreast of progress being made in the development of risk management policies within the business, together with regular reviews of the risk register and other internal control mechanisms;
• Review of matters raised under the Company's whistleblowing policy and agreement of appropriate actions/outcomes;
• Review and approval of the Company's annual insurance renewal programme; and
• Accounting and regulatory updates, to include corporate governance matters.

Primary areas of accounting judgement and estimate reviewed by the Committee

In order to discharge its responsibilities in relation to accounting and financial reporting integrity, the Committee carefully considers the key judgements applied in preparation of the financial statements. The Committee's review included consideration of the following key accounting judgements in relation to the financial statements for the 14 months ended 30 November 2017:

• The adjustment of the period from 30 September 2017 to 30 November 2017. This was to allow the impact of the sale of the Company's business on 25 October 2017 to be incorporated into the report and accounts on the basis that is fundamental to understanding the Company's position.
• A review of the going concern status of the Company, given its limited financial resources(further details of this assessment are set out in note 3.2 to the financial statements).

Financial reporting

The review of financial reporting and performance of the external auditor is a primary role of the Committee, as is reporting to the Board on the appropriateness of the half-year and annual financial statements concentrating on, amongst other matters:

• The quality and acceptability of accounting policies and practices;
• The clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements;
• Material areas in which significant judgements have been applied or discussions held with the external auditor; and
• Recommendation to the Board on whether the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's performance, business model and strategy.

External auditor

KPMG LLP has been the Company's external auditor since September 2012. In accordance with the Auditing Practices Board's Ethical Standards for Auditors, the lead audit partner will be rotated every five years. The existing lead audit partner took on responsibility for the Company's external audit during 2015.

Under the UK code, the maximum duration of an engagement for which an auditor can be appointed and reappointed annually before a tender process is required, is 10 successive accounting years. However, a company is permitted to extend the maximum duration of an audit engagement by a further 10 years on the basis of one or more tender processes for an accounting year up to and including that following the conclusion of the 10 year maximum duration. If therefore the external auditor has been reappointed following a tender process for the accounting year following the conclusion of that 10 year maximum duration, the maximum duration of continuous audit engagement is potentially 20 years.

Taking the above into account, the Company would need to have completed an external audit tendering process by September 2022 at the latest. The Committee remains satisfied with the quality, integrity, independence and effectiveness of the work undertaken by KPMG LLP as the Company's external auditor. Accordingly, it is not proposed to put the external audit work of the Company out to tender now but the Committee will keep this matter under review.

The Committee considers the cost-effectiveness, independence and objectivity of the external auditor on a regular basis, agrees their levels of remuneration and reviews the extent of non-audit services they provide. Committee meetings are attended by the external auditor at the invitation of the Committee Chair in order to ensure full communication of matters relating to the audit, including adequacy of controls and any material judgement areas.

The performance of the external auditor is reviewed on an annual basis by the Committee, including the level of service provided. Based on this review, the Committee has concluded that, at the present time, the external auditor is operating effectively and that KPMG LLP continues to prove effective in this role. Therefore, a resolution proposing the re-appointment of KPMG LLP as the Company's external auditor will be proposed at the 2017 AGM, should the Company not have been wound down by that date, together with a further resolution to grant the Board authority to approve their remuneration.

Non-audit services

During the 14 months ended 30 November 2017, the external auditor provided no non audit services for the Company, beyond iXBRL tagging of the accounts for £1,000.

Internal control and risk management

The Committee has overall responsibility for frameworks in relation to internal control and risk management within the business, and for reviewing the effectiveness of such frameworks on a regular basis. Such systems can only be designed to manage and not eliminate risk.

The Company's Executive Directors and senior management team were delegated day-to-day responsibilities for maintaining adequate internal control and risk management systems, via processes coordinated by the Company Secretary.

The Company has in place systems and procedures for exercising control and managing risk, which include the following:

• The formulation and deployment of Company accounting policies and procedures;
• Policies governing the maintenance of accounting records, transaction reporting and key financial control procedures;
• The safeguarding of assetsfrom inappropriate use or from loss and fraud, and ensuring that liabilities are identified and managed;
• Regular operational review meetings which include, as necessary, reviews of internal financial reporting issues and financial control monitoring; and
• Ongoing training and development of appropriately qualified and experienced financial reporting personnel;
• The identification, evaluation, analysis, mitigation and review of risks via the introduction of appropriate risk management policies and risk registers.

The Company's approach to risk management has developed during the past year and has been reviewed on a periodic basis by the Committee.

Internal audit

Towards the end of 2014, and following a thorough tender process, B. M. Howarth Limited were appointed as the external firm to provide the Company and then group with internal audit services.

Given the focus of the business during the period on trading and funding activities and the need to reduce non-core costs, internal audit program activity was reduced during the period. Reports on treasury and banking, purchasing and procurement, facilitities and anti bribery and corruption controls were received and reviewed in the period.

Interaction with the Financial Reporting Council ("FRC")

The FRC's Corporate Governance & Reporting Division carried out a limited scope review ("FRC Review") of the consolidated accounts for Intelligent Energy Holdings plc (now Lb-shell plc) for the year ended 30 September 2016.

As is normal practice, the FRC Review was subject to inherent limitations of scope. The scope of the FRC Review was based on the Company's annual report and accounts and did not benefit from a detailed knowledge of the Company's business or an understanding of the underlying transactions entered into. The FRC Review provided no assurance that the Company's report and accounts were correct in all material respects; the FRC's role is not to verify information provided to it but to consider compliance with reporting requirements. The FRC correspondence relating to the FRC Review was written on the basis that the FRC accepts no liability for reliance on them by the Company or any third party, including but not limited to investors and shareholders.

The FRC Review concluded with recommendations and actions covering the matters below. The FRC Review did not require changes to be made to the Company's annual report and accounts for the year ended 30 September 2016.

• The Company will enhance the accounting policies to clarify that joint development agreements involve the provision of engineering services and are accounted for under the accounting policy for engineering services;
• The revenue recognition accounting policy for the sale of goods will be updated to explain the basis for recognising revenue at the point of despatch;and
• The Company will retrospectively correct the £0.96 million that was misallocated to revenue from engineering services rather than revenue from the sale of goods. This has no impact on the total reported revenue and losses, which remains the same.

The actions above apply to the consolidated accounts rather than to the stand alone accounts of the Company. The accounts now presented for the 14 months ended 30 November 2017 have been prepared for the Company as a stand-alone entity only and do not include consolidated accounts, as the trading subsidiaries of the Company were sold during the period. The reason for this change in presentation is explained in note 2.1 to the accounts. In summary, as at 30 November 2017, the Company was not a parent company and was not required to prepare group accounts.

The Audit Committee is of the opinion that the FRC recommendations have been incorporated into disclosures in the Company's accounts (as appropriate for the stand-alone entity) for the 14 months to 30 November 2017.

Dr Caroline Brown Audit & Risk Committee Chair, Independent Non-executive Director 28 March 2018

Directors' remuneration report

The Board has delegated to the Remuneration Committee responsibility for overseeing the remuneration of the Company's Executive Directors and other senior employees.

Zarir J. Cama

Remuneration Committee Chair, Independent Non-executive Director

Committee members

(as at 30 November 2017)

Name	Meetings attended1
Zarir J. Cama (Chair)	4/4
Michael Muller	4/4
Paul Heiden	3/4
Dr Caroline Brown	4/4

1. Additional ad hoc meetings were also held during the course of the year, which were not pre-scheduled into the annual Board and Committee meeting calendar, to discuss specific matters of business.

Purpose and aim

The Remuneration Committee ("Committee") has overall responsibility for the remuneration policy for all Directors and the Company's Chairman. It is also has responsibility for recommending and monitoring the level and structure of remuneration for senior management. The Committee ensures that the remuneration policy is aligned to the Company's long-term strategic goals. Additionally, it also ensures that the remuneration policy attracts, retains and motivates Executive Directors and senior management of the quality required to run the Company successfully, without paying more than is necessary, having regard for the views of shareholders and other stakeholders.

Committee meetings

All members of the Committee, apart from the Chairman, are independent Non-executive Directors who are free from any relationships or circumstances which are likely to affect, or could appear to affect, the Committee members' judgement. The Group Chief Executive Officer, other members of the Board, the HR Business Partner and external advisers are also invited to attend meetings of the Committee where this is considered appropriate. They are not present when their own remuneration is discussed. Jasbir Uppal was secretary to the Committee until 25 October 2017, which has not met since that date.

The Committee meets as appropriate. During the period ended 30 November 2017, the Committee held 4 pre-scheduled meetings in accordance with the Board and Committee meeting calendar. Details of Director attendance at Committee meetings held during the period ended 30 November 2017 are shown above.

Responsibilities of the Committee

Full details of the Committee's roles and responsibilities are set out within its terms of reference, as agreed by the Board. These are available from the Company Secretary at the Registered Office.

The key responsibilities of the Committee are:

• To determine the policy on the remuneration of senior executives and specific remuneration packages for Executive Directors and the Chairman;

• To recommend and monitor the level and structure of remuneration for senior management;
• when setting remuneration policy for Directors, review and have regard to pay and employment conditions across the Company especially when determining annual salary increases;
• to obtain reliable, up to date information about remuneration in other companies of comparable scale and complexity;
• to approve the design of, and determine targets for, any performance-related pay schemes operated by the Company and approve the total annual payments made under such schemes;
• to review the design of all share incentive plans for approval by the Board and shareholders;
• to ensure that contractual terms on termination and any payments made are fair to the individual and the Company, that failure is not rewarded and that the duty to mitigate loss is appropriately recognised; and
• to oversee any major changes in employee benefits structures throughout the Company and its subsidiaries.

Statement from the Chair of the Remuneration Committee

On behalf of the Board, I present our Director's remuneration report for the year ended 30 November 2017. This report is presented in two sections:

• the Directors remuneration policy this sets out the remuneration policy for Directors which was approved at the 2015 Annual General Meeting on 27 February 2015.
• The report on remuneration this provides details of the amounts earned by Directors in respect of the financial period ended 30 November 2017.

Remuneration decisions in respect of the period ended 30 November 2017

With the disposal of the Company's business on 25 October 2017 and its non trading status, the Directors waived board fees with effect from 1 October 2017.

John Maguire became a Non executive Director of Lb-shell plc on 25 October 2017 and Company Secretary from 1 November 2017.

As at 25 October 2017, being the date of the sale of the business to Meditor Energy Limited, Martin Bloom resigned his employment as Group Chief Executive Officer of the Company and salary and contractual benefits were paid up to that date only.

No bonuses or termination payments were made to any Director in the fourteen month period ended 30 November 2017 or to the date of the signing of these accounts and no future payment to any director is authorised.

Approval

The Director's remuneration report has been approved by the Board.

Zarir J. Cama Remuneration Committee Chair, Independent Non-executive Director 28 March 2018

Directors remuneration policy

Directors' remuneration policy

The Company's policy on Directors' remuneration was approved by shareholders on 27 February 2015 at the 2015 Annual General Meeting. Given the sale of the business and assets to Meditor Energy Limited on 25 October 2017, the policy has not been repeated in this report.

Performance measures

No awards or payments were made in respect of the annual bonus and Performance Share Plan schemes.

Application of clawback and malus to variable remuneration

For up to three years following the payment of an annual bonus award, the Remuneration Committee may require the repayment of some or all of the award if there is a material misstatement or restatement of audited financial results, if the individual has committed gross misconduct or if information comes to light which, had it been known at the relevant time, would have affected a decision as to the extent to which that award would have vested.

Operation of the Defined Bonus Plan, Performance Share Plan and Sharesave Plan

No awards have been made in respect of these schemes and no such awards are planned. If such awards had been made, they would have been subject to clawback and malus provisions.

Early vesting of awards

Options under the Sharesave Plan will vest early in the event of a change of control in accordance with the rules of the Sharesave plan.

Service contracts (as at 30 November 2017)

Intelligent Energy Limited paid all Directors' remuneration until 1 October 2017.

As at 25 October 2017, being the date of the sale to Meditor Energy Limited, Martin Bloom resigned his employment as Group Chief Executive Officer of the Company and salary and contractual benefits were paid up to that date only.

This report includes details of all remuneration paid to, and accrued to, the Directors of the Company by Intelligent Energy Limited, the latter until the date of its sale by the Company on 25 October 2017.

All of the Non-executive Directors signed amendments to their respective contracts of employment waiving all future fees with effect from 1 October 2017.

Name	Original appointment date1	Re-appointment date	Expiry	Notice period
Paul Heiden	28 September 2012	28 September 2015	27 September 2018	Three months
Martin Bloom	9 June 20162	–	(note 5)	Three months
John Maguire	20 January 2012	–	(note 5)	Three months
Michael Muller	22 June 2012	22 June 2015	21 June 2018	Three months
Zarir J. Cama	22 June 2012	22 June 2015	21 June 2018	Three months
Flavio Guidotti	15 July 2005	–	–	Three months3
Dr Caroline Brown	2 May 2014	–	1 May 20174	Three months

• 1. The original appointment dates shown above confirm, other than in the case of Martin Bloom, the original date of appointment for each Director to the Company's board. Revised letters of appointment were then signed by the Chairman and each of the Non-executive Directors on 9 July 2014, being the date of the Company's Admission to the London Stock Exchange. The commencement date shown above for John Maguire confirms his original appointment date as an Executive Director of the Company; Mr Maguire then signed a new service agreement on 19 June 2014, ahead of the Company's Admission to the London Stock Exchange.
• 1. Martin Bloom was originally appointed as a Non-executive Director of the Company on 22 June 2012. The commencement date shown above relates to Mr Bloom's appointment as an executive Director of the Company.
• 1. Flavio Guidotti was appointed as Non-executive Director on 15 July 2005, but subject to the terms of a subscription agreement between Evolution Placements Corporation ("EPC") and the Company dated 21 October 2005. The Company may not serve notice to Mr Guidotti without the consent of EPC unless he has committed a material breach of his duties to the Company or EPC ceases to have the right to nominate a person for election to the Board of the Company.
• 1. Caroline Brown was reappointed as a director at the Annual General Meeting held in March 2017. Her service contract expired on 1 May 2017, and has continued to be rolled forward.
• 1. Martin Bloom and John Maguire became Non Executive Ddirectors from 25 October 2017.

Annual report on remuneration

The following part of the remuneration report is subject to audit, other than the elements explaining the application of the remuneration policy for 2017.

"Single figure" of remuneration

The table below details the total remuneration receivable by each Director for the 14 months ended 30 November 2017 and 12 months ended 30 September 2016.

The accounting periods are not comparable as they cover a different number of months. Remuneration for the month of October 2017 has been included up to 25 October 2017, being the date of the sale of Intelligent Energy Limited and all other business activities to Meditor Energy Limited.

Where necessary, further explanation of the values provided is included in the footnotes to the table or the additional information that follows it.

			Salary	Taxable	Annual
			& fees	Benefits1	bonus	LTIP	Pension2	Total
			£'000	£'000	£'000	£'000	£'000	£'000
Non-executive Chairman
Paul Heiden	14 months	2016/17	100	-	-	-	-	100
	12 months	2015/16	137	-	-	-	-	137
Executive Directors	(note 6)
Martin Bloom4		2016/17	380	12	-	-	17	409
	12 months	2015/16	137	12	-	-	3	152
John Maguire	14 months	2016/17	294	2	-	-	9	305
	12 months	2015/16	275	2	-	-	8	285
Dr Henri Winand3		2016/17	-	-	-	-	-	-
12 months		2015/16	243	-	-	-	12	255
Non-executive Directors
Michael	Muller 14 months	2016/17	46	-	-	-	-	46
	12 months	2015/16	51	-	-	-	-	51
Zarir J Cama	14 months	2016/17	46	-	-	-	-	46
	12 months	2015/16	51	-	-	-	-	51
Flavio Guidotti	14 months	2016/17	40	57	-	-	-	97
	12 months	2015/16	44	57	-	-	-	101
Dr Caroline Brown		2016/17	46	-	-	-	-	46
	12 months	2015/16	51	-	-	-	-	51
Philip Mitchell5		2016/17	-	-	-	-	-	-
	12 months	2015/16	43	-	-	-	-	43

1. In the "single figure" of remuneration table, the value in the "taxable benefits" column is the taxable value of benefits received in the year. These are medical insurance for Martin Bloom and John Maguire, a taxable travel allowance for Flavio Guidotti and for Martin Bloom temporary travel and accommodation expenses for the period of his interim appointment as Group Chief Executive Officer during the financial year 2015/16 and a one-off taxable relocation payment made to him upon his permanent appointment.

2. 1. The pension figure represents the cash value of the Company's pension contributions paid to the executive Directors' personal pension plan or as a cash allowance.
3. 1. Dr Henri Winand stepped down from the board on 9 June 2016. In the table above, his remuneration for 2015/2016 is for the period to the date on which he stepped down from the board.
4. 1. Martin Bloom was appointed Chief Executive Officer on 9 June 2016. His salary and fees for 2015/2016 represents his fees as a Non-executive Director in the period to 8 June 2016 and his salary as an executive Director in the period from and including 9 June 2016.
5. 1. Dr Philip Mitchell stepped down from the Board on 1 July 2016. In 2015/2016 Dr Philip Mitchell served as a Non-executive Director and also provided consultancy services to the Company. The fees referred to above represent both his fees as a Nonexecutive Director and as a consultant, in the case of 2015/2016 until the date on which he stepped down from the board.
6. 1. Martin Bloom and John Maguire became Non-executive Directors on 25 October 2017

2016/17 Annual bonus and deferred bonus plans

No bonuses were earned in the 14 month period to 30 November 2017 or the prior financial year by any Director.

Long-term incentives granted

No long-term incentive awards were granted in the 14 month period to 30 November 2017 or in the prior financial year to any Director.

Base salary and fees

Base salaries are reviewed annually with effect from 1 October. No changes to Executive Directors' salaries were made during the year.

	2016/2017 base annual salary/fee
1 Paul Heiden (Non-executive Chairman)	£100,000
Martin Bloom (Group Chief Executive Officer)	£350,000
John Maguire (Chief Financial Officer)	£275,000
Non-executive Director (basic fee)	£40,000
Additional fee for holding the office of Senior Independent Director	£6,000
Additional fee for holding the office of Chair of the Remuneration Committee or of the Audit & Risk Committee1	£6,000 (per Committee)

1. Paul Heiden has waived the fee payable for chairing the Nomination Committee.

Agreement to waive fees by the Non-executive Directors

All of the Non-executive Directors signed amendments to their respective contracts of employment waiving all future fees with effect from 1 October 2017.

Payments made to former Directors during the financial 14 months ended 30 November 2017

Dr Henri Winand stepped down from the Board on 9 June 2016. Dr Winand received payment in lieu of notice equal to his basic salary, which, in accordance with his service contract, was paid in monthly instalments up to May 2017. These monthly instalments were subject to a reduction equivalent to any other income received by Dr Winand after an initial six month period.

Save as noted above, no payments were made during the 14 month period ended 30 November 2017 to any person who was not a Director when the payment was made but who had previously been a Director.

Statement of Directors' shareholdings and share interests

The interests of the Directors and relevant connected persons in the Company's ordinary shares as at 30 November 2017 are shown in the table below:

	Shares held by the Director and relevant connected persons as at 30 November 2017 (or if earlier, date of termination)1
Paul Heiden (Non-executive Chairman)	415,441
Martin Bloom (Group Chief Executive Officer from 9 June 2016)	Nil
John Maguire (Chief Financial Officer)	381,844
Michael Muller (independent Non-executive Director)	Nil
Zarir J. Cama (independent Non-executive Director)	20,000
Flavio Guidotti (Non-executive Director)	26,002,5962
Dr Caroline Brown (independent Non-executive Director)	Nil

1. A breakdown of vested and unvested shares where the performance conditions have been met is shown below in the section 'Interests in the Company's share plans'. There are currently no unvested share awards where the performance conditions have not been met.

2. The ordinary shares in which Flavio Guidotti is interested are comprised of 21,390,096 ordinary shares held by Evolution Placements Corporation, 4,000,000 ordinary shares held by shareholders of Evolution Placements Corporation (Flavio Guidotti is an investment and business adviser to the shareholders of Evolution Placements Corporation) and 612,500 ordinary shares held by Prismoy International S.A. (a company of which Flavio Guidotti is the beneficial owner).

Interests in the Company's share plans

The Directors did not hold any awards under the Company's share plans as at 30 November 2017 (or if earlier, date of termination). Martin Bloom was not granted any options under the Company's incentive schemes.

The following sections of the Annual report on remuneration are not subject to audit.

Performance graph

The graph below shows the total shareholder return ('TSR') performance for the Company's shares in comparison to the FTSE All-Share Index for the period since Admission (9 July 2014) until 30 November 2017. The FTSE All-Share Index was chosen as the index against which to compare the Company's TSR performance because, in the opinion of the Directors, it illustrates the Company's TSR performance against a broad equity market index of UK companies. The graph shows the value, by the end of the 14 month period ended 30 November 2017, of £100 invested in the Company's shares on Admission compared with £100 invested at that time in the FTSE All-Share Index.

Historical Chief Executive Officer remuneration outcomes

The table below shows details of the total remuneration, annual bonus and Long Term Incentive Plan ("LTIP") vesting (as a percentage of the maximum opportunity) for the Chief Executive Officer for the year ended 30 September 2015, year ended 30 September 2016 and 14 months ended 30 November 2017.

			Year ended 30 September 20161
	Year ended 30 September 2015	Dr Henri Winand	Martin Bloom	14 months ended 30 November 2017
Total remuneration	368,000	255,000	115,000	409,000
Annual bonus as a percentage of maximum opportunity	0%	0%	N/A	N/A
LTIP vesting as a percentage of maximum opportunity	N/A	N/A	N/A	N/A

• 1. Dr Henri Winand stepped down as Chief Executive Officer on 9 June 2016 and Martin Bloom was appointed Group Chief Executive Officer with effect from that date.
• 1. On vesting of the MIP, each participant was entitled to share in a "MIP Pool" based on value realised by shareholders as calculated in accordance with the rules of the MIP. Accordingly, it is not possible to express the value derived as a percentage of the maximum opportunity.

Change in Chief Executive Officer remuneration compared to the change in remuneration of the wider workforce

Given that the employees of the Company comprised only the Board of Directors, it is not considered meaningful to compare the change in the Chief Executive Officer's salary, benefits and bonus with the average percentage change for the rest of the Board of Directors.

Relative importance of spend on pay

Given the above, it is not considered meaningful to compare the percentage change in distributions to shareholders by way of dividend and share buyback with the overall expenditure on pay. There were no distributions to shareholders by way of dividends and share buy backs and remuneration is disclosed in this report.

Consideration by the Directors of matters relating to Directors' remuneration

Advisers

During the period to 30 November 2017, Deloitte LLP provided independent advice in relation to the Committee's consideration of matters relating to remuneration. Deloitte LLP's fees for advice provided to the Remuneration Committee during the 14 months ended 30 November 2017 were £3,750.

Deloitte LLP is a member of the Remuneration Consultants' Group and voluntarily operates under its code of conduct in its dealing with the Remuneration Committee. The Remuneration Committee is satisfied that all advice received was objective and independent.

Shareholder approval of the Company's Directors' remuneration report

At the Company's Annual General Meeting held on 30 March 2017, the votes in respect of the Directors' remuneration report for the year ending 30 September 2016 were as follows:

Resolution	Votes for	% for	Votes against	% against	Votes withheld
To approve the Directors' remuneration report	87,973,306	74.49	30,135,132	25.51	59,500

At the Company's Annual General Meeting held on 27 February 2016, the votes in respect of the Directors' remuneration policy were as follows.

Resolution	Votes for	% for	Votes against	% against	Votes withheld
To approve the Directors' remuneration policy	77,260,860	100	200	0	5,268,073

External appointments

John Maguire serves as a Non-executive Director of Jee Limited, a company outside the Company and IEL Group, from which he received a fee of £4,250 in the period, which he retained.

Martin Bloom was appointed as an executive Director on an interim basis in June 2016 and was appointed permanent Chief Executive Officer with effect from 21 November 2016.

Martin Bloom was a Non-executive Director of the following companies, being outside the Company and IEL Group, and received the following fees which he retained: Renesola (fee £55,935); May Air (fee £42,000); and Green & Smart Holdings (fee £7,500).

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, they are required to prepare the financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union and applicable law.

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 Company and of its profit or loss for that period. In preparing the Company financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable;
• state whether they have been prepared in accordance with IFRSs as adopted by the EU;
• assess the Company's ability to continue as a going concern, disclosing as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic report, Directors' report, Directors' remuneration report and Corporate governance statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the annual financial report

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
• the Strategic report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.

By order of the Board

Chairman Director

Paul Heiden John Maguire 28 March 2018 28 March 2018

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF LB-SHELL PLC

1 Our opinion is unmodified

We have audited the financial statements of Lb-shell plc ("the Company") for the 14-month period ended 30 November 2017 which comprise the Income statement, Statement of comprehensive income, Statement of financial position, Statement of changes in equity, Statement of cash flows, and the related notes, including the accounting policies in notes 1 to 6.

In our opinion the financial statements:

• give a true and fair view of the state of the Company's affairs as at 30 November 2017 and of its loss for the 14-month period then ended;
• have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union; and
• 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 are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the audit committee.

We were appointed as auditor by the directors in September 2012 prior to the Company becoming a public interest entity. The period of total uninterrupted engagement is for the 4 financial periods ended 30 November 2017 as a public-interest entity and 6 financial periods in total. We have fulfilled our ethical responsibilities under, and we remain independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that standard were provided.

2 Material uncertainty related to going concern

	The risk	Our response
Going Concern	Accounting basis and disclosure quality:	Our procedures included:
We draw attention to note 3.2 to the financial statements which indicates that there is an ongoing uncertainty that the group will continue in operation. Following the sale of the Company's business on 25 October 2017, the Directors intended to use the Company's limited remaining cash in	On 25 October 2017, the Directors announced that the Company would shortly thereafter arrange for the cancellation of the listing of the Company's ordinary shares and that the remaining cash would be used in the orderly winding down or dissolution of the Company. Subsequent to this date, the Directors have identified a viable continuation option for the	Supporting documentation: Obtaining the Directors' going concern board paper and critically assessing the validity of their assumptions by comparing against legal documents, in particular the Heads of Agreement, relating to the potential investment.
the orderly winding down or dissolution of the Company. Subsequently the Directors have identified a continuation option for the Company involving the appointment of a new board of	Company, which could provide more value for shareholders than a wind down, orderly or otherwise, of the Company.	Assessment of cash flow projections: Critically assessing the available cash flow projections for the period up to the anticipated completion of the continuation option to identify situations where

directors and acquisition of a trading business using the proceeds of future additional funding.

The Directors however note that a material uncertainty exists over the delivery of the continuation option because the completion of the above mentioned steps is not certain at this time. As a consequence it is not possible to consider the financial projections of the operations subsequent to any acquisition.

These events and conditions, along with the other matters explained in note 3.2, represent a material uncertainty 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.

This is expected to involve the Company appointing a new board of directors and, subject to the requisite shareholder approvals, acquiring a trading business using the proceeds of future additional funding.

The Directors have undertaken discussions regarding this option with an experienced third party Corporate Finance firm, who believe that a suitable new board and a suitable trading business can be identified, and a non-binding Heads of Agreement ('HoA') has been signed with this party.

The completion of the transaction is subject to certain conditions set out in the Heads of Agreement, including, but not limited to the identification of a suitable trading business. No business has yet been identified, and there remains a risk that no such business will be identified or that the other conditions in the Heads of Agreement are not met.

In the event that the conditions set out above are not met, there is a significant risk that the Directors at the time would need to revert to the previous option of conducting a winding down, orderly or otherwise, or dissolution of the Company.

In addition the unknown factors with respect to this plan mean that no financial projections are available with respect to the period subsequent to the recommencement of operations and so it is not possible to consider the future viability of those operations at this time.

The financial statements explain how the Directors have formed a judgement that it is appropriate to prepare the accounts of the Company on a going concern basis. However the Directors have concluded that the factors discussed in note 3.2 represent a material uncertainty that may cast significant doubt regarding the Company's ability to continue as a going concern.

As this assessment involves a consideration of future events there is a risk that the judgement is inappropriate. Furthermore, clear and full disclosure of the facts and the Directors' rationale for the use of the going concern basis of preparation, including that there is a related material uncertainty, is a key financial statement disclosure. Auditing standards require such matters to be reported as a key audit matter.

available funding would not be sufficient to cover the cash requirements of the company.

Assessing transparency:

Evaluating the adequacy of the Company's disclosures in respect of going concern.

Our results

We found the disclosures included in note 3.2 made by the Directors, including the material uncertainty description to be acceptable.

We are required to report to you if the Director' going concern statement under the Listing Rules set out on page 17 is materially inconsistent with our audit knowledge. We have nothing to report in this respect.

3 Key audit matters: our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, 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. Going concern is the most significant key audit matter and is described in section 2 above, there were no other key audit matters. Section 2 summarises the key audit matter in arriving at our audit opinion above, together with our key audit procedures to address that matter and, as required for public interest entities, our results from those procedures. This matter was addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on this matter.

4 Our application of materiality and an overview of the scope of our audit

Materiality for the financial statements as a whole was set at £19,000 (2016: £750,000), determined with reference to a benchmark of Net assets, of which it represents 5.4% (2016: with reference to a benchmark of Gross assets, of which it represents 2.1%).

We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £950 (2016: £50,000), in addition to other identified misstatements that warranted reporting on qualitative grounds.

Our audit of the Company was undertaken to the materiality level specified above and was all performed at the Company's headquarters in Loughborough, United Kingdom.

5 We have nothing to report on the other information in the Annual Report

The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.

Strategic report and directors' report

Based solely on our work on the other information:

• we have not identified material misstatements in the strategic report and the directors' report;
• in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Directors' remuneration report

In our opinion the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

6 We have nothing to report on the other matters on which we are required to report by exception

Under the Companies Act 2006, we are required 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 financialstatements and the part of the Directors' Remuneration Report to be audited 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.

We have nothing to report in these respects.

7 Respective responsibilities

Directors' responsibilities

As explained more fully in their statement set out on page 37, the Directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the 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 they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities

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 other irregularities (see below), or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.

Irregularities – ability to detect

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience and through discussion with the directors and other management (as required by auditing standards).

We had regard to laws and regulations in areas that directly affect the financial statements including financial reporting (including related company legislation) and taxation legislation. We considered the extent of compliance with those laws and regulations as part of our procedures on the related financial statement items.

We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.

As with any audit, there remained a higher risk of non-detection of non-compliance with relevant laws and regulations (irregularities), as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.

8 The purpose of our audit work and to whom we owe our responsibilities

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.

Anthony Hambleton (Senior Statutory Auditor) for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants 31 Park Row, Nottingham, NG1 6FQ 28 March 2018

Income statement

for the 14 months ended 30 November 2017

		14 months ended 30 November 2017	12 months ended 30 September 2016
	Notes	£'000	£'000
Revenue		-	-
Cost of sales		-	-
Gross profit		-	-
Other income	8	10	-
Administration costs
Impairment of subsidiary	8	(10,998)	-
Impairment of JV	8	900	(6,974)
Impairment of receivable from group company	8	-	(215,708)
Other	8	(460)	(212)
Operating loss	8	(10,548)	(222,894)
Analysed as:
Operating loss before exceptional items	8	(450)	(212)
- Exceptional items	9.1	(10,098)	(222,682)
Operating loss after exceptional items		(10,548)	(222,894)
Finance income - gain on discharge of Convertible Loan
Notes	12.1	4,922	-
Finance income - other	12.1	-	3
Finance cost - Convertible Loan Notes	12.2	(7,073)	(2,267)
Loss before tax		(12,699)	(225,158)
Income tax - (deferred tax (non cash) including
exceptional income of £1,061,000, 2016: £nil)	13.1	1,899	803
Loss for period attributable to owners of the Company		(10,800)	(224,355)
Earnings per share (expressed in pence per share)
Basic and diluted earnings per share	14	(5.2)	(116.1)

All of the loss for the period is attributable to the owners of the Company.

The accompanying notes are an integral part of the financial statements.

Statement of comprehensive income

for the 14 months ended 30 November 2017

	14 months ended 30	12 months ended 30
	November	September
	2017	2016
	£'000	£'000
Loss for the period	(10,800)	(224,355)
Other comprehensive income
Items that are or may be subsequently reclassified to profit or loss	-	-
Comprehensive expense for the period attributable to owners of the Company	(10,800)	(224,355)

Statement of financial position

at 30 November 2017

		30 November	30 September
		2017	2016
	Notes	£'000	£'000
Non-current assets
Investments in subsidiaries and joint ventures	15	-	10,132
Current assets
Trade and other receivables	16	62	24,316
Cash and cash equivalents	17	357	106
		419	24,422
Total assets		419	34,554
Current liabilities
Trade and other payables	18	(67)	(978)
Non current liabilities
Deferred tax liability	13.3	-	(1,676)
Liability component of Convertible Loan Notes	19	-	(20,748)
		-	(22,424)
Total liabilities		(67)	(23,402)
Net assets		352	11,152
Equity attributable to owners of the Company
Equity share capital	21	10,312	10,312
Share premium	22	223,299	223,299
Other reserves	22	7,484	12,787
Retained earnings		(240,743)	(235,246)
Total equity		352	11,152

The accompanying notes are an integral part of the financial statements. The financial statements on pages 43 to 72 were approved by the Board of Directors on 28 March 2018 and signed on its behalf by:

P Heiden J Maguire Chairman Chief Financial Officer Company registered number: 5104429

Statement of changes in equity

for the 14 months ended 30 November 2017

			Other reserves
	Equity share capital	Share premium	Equity component of Convertible Loan Notes	Capital reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 October 2015	9,416	222,877	-	7,484	(10,868)	228,909
Loss for the year	-	-	-	-	(224,355)	(224,355)
Total comprehensive (loss) for the year	-	-	-	-	(224,355)	(224,355)
Shares issued	896	422	-	-	-	1,318
Issue of Convertible Loan Notes	-	-	5,303	-	-	5,303
Share-based payment transactions	-	-	-	-	193	193
Share purchase	-	-	-	-	(216)	(216)
Total transactions with owners, recognised directly in equity	896	422	5,303	-	(23)	6,598
Balance at 30 September 2016	10,312	223,299	5,303	7,484	(235,246)	11,152
Loss for the period	-	-	-	-	(10,800)	(10,800)
Total comprehensive (loss) for the period	-	-	-	-	(10,800)	(10,800)
Redemption of Convertible Loan Note	-	-	(5,303)		5,303	-
Total transactions with owners, recognised directly in equity	-	-	(5,303)	-	5,303	-
Balance at 30 November 2017	10,312	223,299	-	7,484	(240,743)	352

Statement of cash flows

for the 14 months ended 30 November 2017

		14 months ended 30 November	12 months ended 30 September
		2017	2016
	Notes	£'000	£'000
Operating activities Loss before tax		(12,699)	(225,158)
Net financing expense	12	7,073	2,264
Impairment of subsidiary	8	10,998	-
Impairment of JV	15	(900)	6,974
Impairment of receivable from group company	16	-	215,708
Gain on discharge of Convertible Loan Notes	12	(4,922)	-
		(450)	(212)
Adjustment for:
Decrease/(increase) in trade and other receivables (Decrease) in trade and other payables		4,788 (187)	(26,152) (248)
Net cash inflow / (outflow) from operating activities		4,151	(26,612)
Investing activities
Interest income	12.1	-	3
Investment in joint venture	15	-	(740)
Proceeds on sale of group companies	9.2	2,835	-
Net cash inflow / (outflow) from investing activities		2,835	(737)
Financing activities
Interest paid on Convertible Loan Notes		(3,900)	(952)
Issue of ordinary share capital	21	-	1,125
Issue of Convertible Loan Notes (net of costs)	19	-	27,176
Discharge of Convertible Loan Notes	9.2	(2,835)	-
Net cash (outflow)/inflow from financing activities		(6,735)	27,349
Increase in cash and cash equivalents		251	-
Cash and cash equivalents at beginning of period	17	106	106
Cash and cash equivalents at end of period	17	357	106

Notes to the financial statements

1 Authorisation of financial statements

The financial statements of Lb-shell plc ("the Company") for the 14 months ended 30 November 2017 were authorised for issue by the Board of Directors on 28 March 2018 and the statement of financial position was signed on the Board's behalf by Paul Heiden and John Maguire. Lb-shell plc is a listed public limited company incorporated and domiciled in England and Wales.

2 Accounts prepared on a stand-alone basis and disposal of business and assets

2.1 Accounts prepared on a stand-alone basis

Under section 399 of the Companies Act 2006, if at the end of a financial period the company is a parent company then the Directors, as well as preparing individual accounts for the year, must prepare group accounts for the year unless the company is exempt from that requirement.

As at the period end, being 30 November 2017, the Company was not a parent company and was not required to prepare group accounts. The Directors have presented these accounts for the Company as a stand-alone entity rather than the group in order to provide clarity about the remaining business and activities. For the avoidance of doubt, these accounts are not consolidated accounts.

2.2 Disposal of the business and assets prior to the period end

In the light of the uncertain outlook for the Company, including availability of funding required for it to remain a going concern, on 25 October 2017 the Board agreed to sell to Meditor Energy Limited (a newly incorporated subsidiary of Meditor European Master Fund Limited):

• the Company's main operating subsidiary, Intelligent Energy Limited following a group reorganisation to place all other subsidiaries of the Company under Intelligent Energy Limited; and
• the Company's investment in joint venture SMILE FC System Corporation ("SMILE JV"); and
• the Company's remaining business and assets

for a total consideration of £19,500,000. This sale left the Company as non-trading.

The consideration of £19,500,000, representing all of the cash available to the Company other than that required to maintain the Company as a non-operating entity, was applied in full and final discharge of all principal, interest and any other amounts owing and other obligations, if any, of the Company to the holders of its £30 million secured, convertible and redeemable loan notes 2019 ("Convertible Loan Notes") issued in May 2016.

The Company's remaining cash, which is limited, is projected to be sufficient to maintain the Company at its current level of activity or alternatively to complete an orderly wind down or dissolution. Any cash remaining after a wind down would, under the terms of the sale agreement with Meditor Energy Limited, be remitted to Meditor Energy Limited as an adjustment to the sale consideration.

3 Basis of preparation

The financial statements have been prepared under a "going concern" basis, in accordance with International Financial Reporting Standards as adopted by the European Union as they apply to the financial statements of the Company for the period ended 30 November 2017 and applied in accordance with the Companies Act 2006.

The accounting policies which follow set out those policies which apply in preparing the financial statements for the 14 months ended 30 November 2017 and have, unless stated otherwise, been applied consistently and to all periods presented in these financial statements. The financial statements have been prepared on a historical cost basis, except where measurement of balance at fair value is required.

The financial statements are presented in Sterling and all values are rounded to the nearest one hundred thousand pounds except when otherwise indicated.

3.1 Change in accounting reference date to 30 November

The Company has extended its accounting reference date from 30 September to 30 November to enable the audited accounts of the Company for the period ended 30 November 2017 to reflect the sale of Intelligent Energy Limited, SMILE JV and the Company's remaining business and assets to Meditor Energy Limited and to reflect the Company becoming a non-trading company.

Accordingly, the current financial statements have been prepared for 14 months from 1 October 2016 to 30 November 2017 and, as a result, the comparative figures stated in the income statement, statement of comprehensive income, statement of changes in equity, statement of cashflows and the related notes are not comparable.

3.2 Going concern

On 25 October 2017, the Directors announced that the Company would shortly thereafter arrange for the cancellation of the listing of the Company's ordinary shares and that the Company's remaining cash would be used in the orderly winding down or dissolution of the Company.

Subsequent to this date, the Directors have identified a viable continuation option for the Company, which could provide more value for shareholders than a wind down, orderly or potentially otherwise, of the Company, (which is expected to provide no return for shareholders).

This is expected to involve the Company, under the leadership of a new board of directors and subject to the requisite shareholder approvals, acquiring a trading business using the proceeds of future additional funding. The Directors have undertaken discussions regarding this option with an experienced third party Corporate Finance firm, who believe that a suitable new board and a suitable trading business can be identified, and a non binding Heads of Agreement ("HoA") has been signed with this party, under terms which the Directors are satisfied provide a basis for preparing the financial statements on a going concern basis.

However, at the date of signing of the accounts no business has yet been identified, and there remains a risk that no such business will be identified, and a risk that suitable terms will not be reached.

In the event that the requisite conditions for the continuation option are not met, there is a significant risk that the Directors at the time would need to revert to the previous option of conducting a winding down (orderly or otherwise), or dissolution of the Company.

In addition, the unknown factors with respect to this potential continuation option mean that no financial projections are available with respect to the period subsequent to any recommencement of operations and so it is not possible to consider the future viability of those operations at this time.

Based on the above indications the directors believe that it remains appropriate to prepare the financial statements on a going concern basis. However the Directors have concluded that the factors discussed above represent a material uncertainty that may cast significant doubt regarding the Company's ability to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

4 Changes in accounting policy and disclosures

4.1 New standards, amendments and interpretations adopted by the Company

No new standards and amendments are applicable to the Company for the 14 months ended 30 November 2017.

4.2 New standards, amendments and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 October 2016 and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the financial statements of the Company.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.

5 Significant accounting estimates and judgements

5.1 Significant accounting estimates

The preparation of financial statements requires the Directors to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the statement of financial position date and the amounts reported for revenues and expenses during the period. The nature of estimation means that actual outcomes could differ from those estimates. The key sources of estimation uncertainty are set out below.

5.2 Share-based payments

The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted and the cost of cash-settled share awards with employees by reference to fair value. Estimating fair value requires the determination of the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions ofthe grant. This also requires determining the most appropriate inputs to the valuation model including the expected life of the option, volatility, forfeiture and dividend yield and making assumptions about them. Subsequent revaluation of the cash-settled liability requires further estimation of fair value at settlement or reporting date. The assumptions and models used are disclosed in note 23.

5.3 Fair value of Convertible Loan Notes

The Company issued Convertible Loan Notes during the year ended 30 September 2016. These Convertible Loan Notes comprised both a liability and an equity element. The equity element is calculated as the net proceeds receivable after deducting the liability element of the Convertible Loan Notes.

The liability element of the Convertible Loan Notes is calculated by discounting the cash flows of the instruments at an interest rate that would be available in the market for an equivalent financial liability. The estimation of this interest rate requires judgement on the part of the Directors.

5.4 Significant judgments in applying the accounting policies

Given the disposal of the Company's investments and businesses during the 14 months ended 30 November 2017, the principal uncertainty and judgment in applying accounting policies relates to the assumption that the Company remains a going concern. The financial statements have been prepared on that basis. Notwithstanding, if the accounts had not been prepared on a going concern basis then there would not have been any adjustments to the financial statements, including to the remaining assets and liabilities which are fixed in value.

6 Summary of significant accounting policies

The accounting policies which follow set out the significant policies which apply in preparing the financial statements for the period ended 30 November 2017.

6.1 Investment in subsidiaries and joint ventures

The Company recognises its investments in subsidiaries and joint ventures at cost. The investment is reviewed on an annual basis to determine whether the carrying amount is recoverable. In the event that the carrying amount is irrecoverable, provision is made to reduce the amount of the investment to the recoverable amount.

6.2 Impairment of assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.

Impairment losses on continuing operations are recognised in the income statement. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior periods. Such reversal is recognised in the income statement unless the asset is carried at a re-valued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

6.3 Trade and other receivables

Trade receivables are recognised and carried at the lower of their original invoiced value and recoverable amount. Where the time value of money is material, receivables are carried at discounted cost. Provision is made when there is objective evidence that the Company will not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as being less than likely.

6.4 Trade and other payables

Trade and other payables are stated at cost. Trade payables are non-interest bearing.

6.5 Cash and cash equivalents and short term deposits

Cash and cash equivalents includes cash in hand, deposits held with banks and other short-term highly liquid investments with original maturities of three months or less. For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

The Company considers all bank deposits with original maturity dates of greater than three months and maturing in less than one year to be short term deposits.

6.6 Financial assets

The classification of financial assets depends on the purpose for which the financial assets were acquired and is determined 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 which are classified as non-current assets. "Accounts receivable", "cash and cash equivalents" and "short term deposits" are classified as "Loans and receivables".

Loans and receivables are measured initially at fair value and then subsequently measured at amortised cost.

6.7 Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, net of directly attributable transaction costs.

Subsequent measurement

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method ("EIR method"). Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the EIR method amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR method. The EIR method amortisation is included in finance cost in the income statement.

De-recognition of financial assets and liabilities

A financial asset or liability is generally de-recognised when the contract that gives rise to it is settled, sold, cancelled or expires.

Compound financial instruments

Compound financial instruments issued by the Company comprise Convertible Loan Notes denominated in Sterling that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.

The liability component of compound financial instruments is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instruments as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the IER method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.

Interest related to the financial liability is recognised in the income statement. On conversion, the financial liability is reclassified to equity and no gain or loss is recognised in the income statement.

6.8 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

6.9 Share-based payments

Employees (including senior executives) of the Company receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments ("equity-settled transactions") and in the form of cash or other assets for amounts based on the price of the Company's equity instruments ("cash-settled transactions").

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted, and is recognised as an expense in the income statement over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award. The fair value is determined using appropriate valuation models relevant to the structure of the scheme and include the Black-Scholes model and the Monte-Carlo model, further details of which are given in note 23.

In valuing equity-settled transactions, no account is taken of any service and performance conditions, other than performance conditions linked to the price of the shares of the Company (market conditions). Any other conditions which are required to be met in order for an employee to become fully entitled to an award, like market performance conditions, are taken into account in determining the grant date fair value.

The grant-date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

At each statement of financial position date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the number of equity instruments that will ultimately vest. The movement in cumulative expense since the previous statement of financial position date is recognised in the income statement, with a corresponding entry in equity.

Where the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognised if this difference is negative.

For cash-settled share awards the services received from employees are measured at fair value and recognised in the income statement as an expense over the vesting period with recognition of a corresponding liability. The fair value of the liability is re-measured at each reporting date and at the date of settlement with changes in fair values recognised in the income statement.

6.10 Leases

Leases where the lessor retains a significant portion of the risks and benefits of ownership of the asset are classified as operating leases and rentals payable are charged in the income statement on a straightline basis over the lease term. Leases of property, plant and equipment where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the commencement of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in current and non-current liabilities as appropriate. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Assets acquired under finance lease are depreciated over the shorter of the useful life of the asset and the lease term.

6.11 Foreign currency translation

The Company's financial statements are presented in Sterling, which is its functional and presentation currency. Transactions in foreign currencies are initially recorded in the functional currency at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the statement of financial position date. All differences are taken to the income statement.

6.12 Segment reporting

The Company's activity was that of holding company owning shares in subsidiary and associated companies which were all sold prior to the balance sheet date of 30 November 2017 (see Note 2.2).

The Company is organised into one business segment being that of holding investments and associated funding. This is the primary way in which the Chief Operating Decision Maker ("CODM") is provided with financial information. The Directors believe that the CODM is the Board of Directors.

Cash generation / (absorption) of the Company and, prior to the sale of the businesses, revenue and EBITDA (earnings before interest, tax, depreciation, amortisation and share of joint venture results) of the investments held by the Company are the cash, revenue and profitability measures provided to the CODM and used in monitoring and managing performance of the business.

6.13 Income taxes

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the statement of financial position date. Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions: where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss; in respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the statement of financial position date. Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise income tax is recognised in the income statement.

6.14 Pensions and other post-retirement benefits

One Director (2016: two Directors) is accruing benefits under a defined contribution scheme, being a money purchase pension scheme which is operated by Intelligent Energy Limited. This is a pension scheme that has an agreed contribution rate from the employee and employer. Contributions are known and agreed in advance. The scheme consists of a grouping of individual pension contracts. Each employee owns their own contract, which benefits from the discount available to Intelligent Energy Limited, in which they can plan and save towards an optimum pension income in their retirement.

6.15 Exceptional items

Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Company. They are material items of income or expense that have been shown separately due to the significance of their nature or amount.

7 Operating segments

The Company complies with IFRS 8 Operating Segments which requires operating segments to be identified and reported upon that are consistent with the level at which results are regularly reviewed by the entity's CODM. The CODM for the Company is the Lb-shell plc Board of Directors.

The Company's activity is holding investments as being its sole operating segment.

Major customers

The Company is an investment holding company and does not have direct customers.

Geographical information

The Company's country of domicile is the United Kingdom.

8 Expenses by nature

	2017	2016
	£'000	£'000
Income
Other (income)	(10)	-
Loss / costs
Impairment of subsidiary (see note 15)	10,998	-
Impairment of SMILE JV (see note 15)	(900)	6,974
Impairment of receivable from group company	-	215,708
Legal and professional costs	442	212
Other expenses	18	-
Total other income and administration costs	10,548	222,894

9 Exceptional charges and "netting off"

9.1 Exceptional charges

Exceptional charges have been recognised within the reported results as follows:

	2017	2016
	£'000	£'000
Exceptional operating income/(costs)
Impairment of subsidiary	(10,998)	-
Impairment of SMILE JV	900	(6,974)
Impairment of receivable from group company	-	(215,708)
	(10,098)	(222,682)
Exceptional finance income
Gain on discharge of Convertible Loan Notes (note 19)	4,922	-
Exceptional charges before taxation	(5,176)	(222,682)
Exceptional income tax
Deferred tax on discharge of Convertible Loan Notes (note	1,061	-
13.1)
Total exceptional charges	(4,115)	(222,682)

The total cash flow during the period in respect of exceptional charges was an inflow of £2,835,000 in respect of the sale of companies (2016: £nil). This is after the "netting off" detailed below.

9.2 "Netting off" of payments for the discharge of Convertible Loan Notes and sale of companies

As set out in note 2.2, the Company sold its main operating subsidiary, Intelligent Energy Limited, SMILE JV and its remaining business and assets to Meditor Energy Limited for consideration of £19,500,000. This consideration was applied to discharge of the Convertible Loan Notes, of which £16,665,000 was due to Meditor European Master Fund Limited ("Meditor") (as a Convertible Loan Note holder) and £2,835,000 was due to other holders of Convertible Loan Notes. Under the contract for the sale of the Company's businesses, the payment to Meditor as Convertible Loan Note holder was offset against the consideration due from Meditor Energy Limited as purchaser. This "netting off" is reflected in the presentation of the statement of cash flows.

10 Auditor's remuneration

	2017	2016
	£'000	£'000
Auditor's remuneration
Audit of the Company financial statements	24	88
Non-audit fees: iXBRL tagging	1	1

Audit fees in prior years were expensed by Intelligent Energy Limited, then a subsidiary of the Company. The table above excludes amounts paid to the auditor of subsidiaries which were sold to Meditor Energy Limited on 25 October 2017.

11 Employees and Directors' emoluments

11.1 Employee benefit expense

The employees of the Company comprised the Directors. The monthly average number of employees, being the Directors, during the periods were as follows:

	2017	2016
	number	number
Executive Directors	2	2

The Executive Directors became Non-Executive Directors from the date of the sale to Meditor Energy Limited on 25 October 2017.

The average number of employees has been calculated for the Executive Directors who were employed full time. The Non-executive Directors have not been included in the above table because of the nature of their duties.

11.2 Directors' emoluments

The aggregate emoluments of the Directors of the Company are set out below

	2017	2016
	£'000	£'000
Aggregate emoluments	1,023	1,103
Pension contributions	26	23
	1,049	1,126

The emoluments of the Directors were paid by the Company's then wholly owned subsidiary, Intelligent Energy Limited. This subsidiary was sold to Meditor Energy Limited on 25 October 2017.

One Director (2016: two Directors) accrued benefits under a defined contribution scheme, being a money purchase pension scheme which is operated by Intelligent Energy Limited.

The former Chief Executive Officer stepped down from the Board on 9 June 2016. He received payment in lieu of notice equal to his basic salary, which, in accordance with his service contract, was paid in monthly instalments up to May 2017. These payments are not shown in the above table.

Detailed disclosures of Director's emoluments are shown in the Directors' remuneration report on page 28 and details of Directors interests in share options and awards are shown on pages 34 which form part of the financial statements.

With effect from 1 October 2017 the Non-executive Directors formally waived their right to receive emoluments. With effect from 25 October 2017, the all future liabilities for payments under the employment contracts of the two executive Directors were assumed by Intelligent Energy Limited.

12 Finance income and expense

12.1 Finance income

	2017 £'000	2016 £'000
Gain on discharge of Convertible Loan Notes (note 19)	4,922	-
Interest receivable on bank deposits	-	3
	4,922	3

The gain on discharge of the Convertible Loan Notes is calculated as the excess of the liability for principal and accrued interest relating to the Convertible Loan Notes as at date of discharge over the consideration of £19,500,000 in full and final discharge of those loan notes.

12.2 Finance expense

	2017 £'000	2016 £'000
Finance expense on Convertible Loan Notes (note 19)	7,073	2,267

The £30 million Convertible Loan Note is classified as a "compound financial instrument" for which the accounting policy is set out in note 6.7.

13 Income tax

13.1 Tax credit in the income statement

	2017	2016
	£'000	£'000
Current income tax
Adjustments relating to prior years	223	540
Deferred tax (note 13.3)
Origination and reversal of temporary differences	615	263
Release on discharge of Convertible Loan Notes	1,061	-
	1,676	263
Income tax credit reported in the income statement	1,899	803

13.2 Factors affecting current tax credit

	2017	2016
	£'000	£'000
(Loss) before tax	(12,699)	(225,158)
Loss before tax multiplied by the standard rate of
corporation tax in the UK of 19 per cent (2016: 20 per cent)	(2,413)	(45,032)
Expenses not deductible for tax	3,344	45,015
Income not taxable	(935)	-
Adjustments in respect of prior years	223	540
Current year losses net of recognition of tax effect of previously
unrecognised tax losses	1,680	280
	1,899	803

13.3 Deferred tax

The movement in deferred tax balances during the periods:

	Balance at beginning of period	Recognised in income statement	Recognised in equity	Balance at end of period
	£'000	£'000	£'000	£'000
2017
Other timing differences	(1,676)	1,676	-	-
Net deferred tax asset	(1,676)	1,676	-	-
2016 Other timing differences	-	263	(1,939)	(1,676)
Net deferred tax asset	-	263	(1,939)	(1,676)

14 Earnings per share

Earnings per share is based on the Company's profit/(loss) attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the period.

	2017	2016
Earnings per share
- Basic (pence)	(5.2)	(116.1)
- Diluted (pence)	(5.2)	(116.1)
Loss for the financial period (£'000)	(10,800)	(224,355)
Weighted average number of shares used:	Number	Number
- Issued ordinary shares at beginning of period	206,239,331	188,325,451
- Effect of ordinary shares issued during the period	-	4,998,481
Basic weighted average number of shares	206,239,331	193,323,932

The impact of share options, share warrants and potential ordinary shares associated with the Convertible Loan Notes has an antidilutive impact on the earnings per share.

Share options, details of which are set out in note 23, and 375,000,000 potential ordinary shares in relation to the convertible debt (2016: 375,000,000) were excluded from the weighted-average number of ordinary shares used in the calculation of the diluted earnings per share because their effect would have been antidilutive.

15 Investments

	Subsidiary	Joint
	undertakings	ventures	total
	£'000	£'000	£'000
At 1 October 2015	9,962	6,234	16,196
Additions	170	740	910
Impairments	-	(6,974)	(6,974)
At 30 September 2016	10,132	-	10,132
Capitalisation of loan receivable by the Company	19,466	-	19,466
Impairments / reversal	(10,998)	900	(10,098)
Disposals	(18,600)	(900)	(19,500)
at 30 November 2017	-	-	-

In the period ended 30 November 2017 and prior to the sale to Meditor Energy Limited, the remaining amount owed by subsidiary undertakings to the Company, being £235,174,000, was extinguished by the issue of new ordinary shares in Intelligent Energy Limited. The increase in the carrying value of the investment in Intelligent Energy Limited represents this amount owing to the Company less the provision of £215,708,000.

The Company's investments in subsidiary undertakings, the SMILE JV and the remaining business were sold to Meditor Energy Limited on 25 October 2017 for consideration of £19,500,000. The legal transfer of the shares held by the Company in the SMILE JV is being transferred to Meditor Energy Limited as soon as reasonably practical and until such time the Company holds the shares on trust for Meditor Energy Limited.

16 Trade and other receivables

	2017	2016
	£'000	£'000
Amounts owed by subsidiary undertakings	-	240,024
Less: Provision for impairment	-	(215,708)
	-	24,316
Other receivables	62	-
	62	24,316

Amounts owed by subsidiary undertakings were denominated in UK Pounds.

During the period ended 30 November 2017, £30,000,000 of the amount owed was interest bearing. However, the interest receivable was deemed non-recoverable by the Company and was waived in the period. This balance was repayable in May 2019 but, at the option of the borrower, could be prepaid in part or in full.

All other balances were interest free and payable on demand.

As at 30 September 2016 amounts receivable from subsidiary undertakings were impaired by £215,708,000 to a recoverable amount of £24,316,000 based on a "value in use" calculation. In the period ended 30 November 2017 and prior to the sale to Meditor Energy Limited, all remaining amounts owed by subsidiary undertakings to the Company, being £235,174,000 owed by Intelligent Energy Limited (before the impairment of £215,708,000), were extinguished by the issue of new ordinary shares in Intelligent Energy Limited.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. There is a concentration of credit risk as the receivables were owing by Intelligent Energy Limited. The Company does not hold any collateral as security.

17 Cash and cash equivalents

	2017 £'000	2016 £'000
Bank current account	357	106

Cash at bank is held on current account and is non-interest bearing. The Company holds its current accounts with major banks in line with the Company's treasury policy.

18 Trade and other payables

	2017 £'000	2016 £'000
Amounts owed to subsidiary undertakings	-	169
Accrued interest on Convertible Loan Notes (note 19)	-	501
Other accruals	67	308
	67	978

Trade and other payables are stated at cost. Trade payables comprised balances owing to then subsidiaries of the Company and were non-interest bearing and due on demand.

19 Convertible Loan Notes

	2017	2016
	£'000	£'000
Carrying amount of liability
As at 1 October	21,249	-
Proceeds from issue of Convertible Loan Notes (30,000,000 notes at £1 par value each)		30,000
Transaction costs		(2,824)
Net proceeds		27,176
Amount classified as equity (net of transaction costs of £752,000)	-	(7,242)
Interest expense (note 12.2)	7,073	2,267
Interest paid	(3,900)	(952)
Discharge on 25 October 2017
Amount repaid (note 9.2)	(2,835)	-
Amount settled (note 9.2)	(16,665)	-
Gain on discharge (note 9.1)	(4,922)	-
At period end	-	21,249
Analysed
Current	-	501
Non-current	-	20,748
	-	21,249

On 17 May 2016 the Company issued £30 million 13 per cent. secured, convertible and redeemable loan notes at a par value.

At the option of each Convertible Loan Note holder, the Convertible Loan Notes could be converted into ordinary shares in the Company at a conversion price of 8 pence per ordinary share at any time up until 17 May 2019 (the "Maturity Date"). The Company had no right to require the Convertible Loan Notes to be redeemed or converted. Unless previously redeemed or converted, the Convertible Loan Notes (together with all accrued but unpaid interest) would automatically be redeemed in full by the Company at par value on the Maturity Date.

Interest at 13.0 per cent. per annum was payable quarterly in arrears on the principal amount outstanding of the Convertible Loan Notes. In the income statement, the interest expense was calculated by applying an effective interest rate of 30.3 per cent on the liability component. The policy regarding financial liabilities is set out in note 6.7.

The Convertible Loan Notes were secured by way of an equitable charge over the Company's shares in its principal subsidiary, Intelligent Energy Limited.

On 25 October 2017 the Company sold its wholly owned subsidiary and the Company's remaining business and assets to Meditor Energy Limited for consideration of £19,500,000. This consideration of £19,500,000, representing all of the cash available to the Company other than that required to maintain the Company as a non-operating entity, was used in full and final discharge of all principal, interest and any other amounts owing and other obligations, if any, of the Company to the Convertible Loan Note holders.

20 Financial instruments

The carrying amount of the financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows

	2017	2016
	£'000	£'000
Trade and other receivables	62	24,316
Cash and cash equivalents	357	106
	419	24,422

Accounting classifications and fair values

When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

All financial assets/liabilities are recorded in the statement of financial position at amortised cost with carrying value being a reasonable approximation of fair value

Accounting classifications and fair values

The following tables show the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

	Carrying amount
	Loans and receivables	Other financial liabilities	Total
30 November 2017	£'000	£'000	£'000
Financial assets not measured at fair value
Trade and other receivables excl. prepayments	62	-	62
Cash and cash equivalents	357	-	357
	419	-	419
Financial liabilities not measured at fair value
Trade and other payables excluding accruals	-	-	-
Liability component of Convertible Loan Notes	-	-	-
	-	-	-

		Carrying amount
	Loans and receivables	Other financial liabilities	Total
30 September 2016	£'000	£'000	£'000
Financial assets not measured at fair value
Trade and other receivables excl. prepayments	24,316	-	24,316
Cash and cash equivalents	106	-	106
	24,422	-	24,422
Financial liabilities not measured at fair value
Trade and other payables excluding accruals	-	169	169
Liability component of Convertible Loan Notes	-	20,748	20,748
	-	20,917	20,917

The book value of the financial assets and financial liabilities not measured at fair value is in all cases considered to be fair value.

Liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.

					Contractual cashflows
	Carrying	On	Less than	4 to 12	1 to 2	2 to 3
	amount	demand	3 months	months	years	years	Total
30 November 2017	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Trade and other payables	-	-	-	-	-	-	-
Convertible loan notes	-	-	-	-	-	-	-
	-	-	-	-	-	-	-

					Contractual cashflows
	Carrying	On	Less than	4 to 12	1 to 2	2 to 3
	amount	demand	3 months	months	years	years	Total
30 September 2016	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Trade and other payables	169	169	-	-	-	-	169
Convertible loan notes	20,748	-	983	2,917	3,900	32,917	40,717
	20,917	169	983	2,917	3,900	32,917	40,886

The holders of the Convertible Loan Notes had the option to convert the loan notes into shares at any time during the period up to maturity on 17 May 2019. The £30 million principal of the Convertible Loan Notes payable on 17 May 2019 included in the above contractual cashflows would arise only if the loan note holders do not convert in which case they are redeemable on maturity.

21 Issued share capital

	2017	2016
Issued, called up and fully paid
— number	206,239,331	206,239,331
— £'000	10,312	10,312

Holders of the ordinary shares of 5p nominal value each are entitled to receive dividends and other distributions and to attend and vote at any general meeting.

No new shares were allotted in the period from 1 October 2016.

The issue of ordinary shares during the period ended 30 November 2017 generated additional gross funds of £nil (2016: £1,125,000) for the Company.

The issue of ordinary shares in the year ended 30 September 2016 comprised: the issue of 14,062,500 ordinary shares at 8p pence per share (proceeds £1,125,000) to Meditor European Master Fund Limited representing half of the arrangement fee related to its underwriting of the Company's £30 million Convertible Loan Note issue as envisaged in the circular sent to shareholders on 23 May 2016; and the issue of 3,851,380 shares for the MIP share award (see note 23).

22 Reserves

Equity share capital

The balance classified as share capital relates to the nominal value of shares on issue of the Company's equity share capital, comprising ordinary shares of nominal value 5 pence each.

Share premium

The balance classified as share premium relates to the aggregate net proceeds less nominal value of shares on issue of the Company's equity share capital.

Other reserves

Equity component of Convertible Loan Notes

The Company issued Convertible Loan Notes with equity and liability elements. The Convertible Loan Note proceeds, after deducting the liability element, is deemed the equity element and has been accounted for in reserves.

On 25 October 2017 a payment of £19,500,000 was made by the Company to the Convertible Loan Note holders in full and final discharge of all principal, interest and any other amounts owing and other obligations, if any, of the Company to the Convertible Loan Note holders. The realised element of £5,303,000 has been transferred to retained earnings.

Merger reserve

The balance classified as other reserves relates to the acquisitions of Advanced Power Sources Limited and Intelligent Energy Limited.

23 Share-based payment plans

An equity-settled total share based payment expense of £nil (2016 £193,000) was recognised in the period.

The Company issued a number of share-based payment plans to employees including share options and share awards as described below.

2001 and 2009 Share Option Schemes

The exercise price of the options was fixed and determined on the date of the grant. The option holders had the option to purchase ordinary shares at the option price between the exercise dates. The fair value of the options was estimated at the grant date using a Black-Scholes model, taking into account the terms and conditions upon which the options were granted. The contractual life of each option granted is varied. The schemes are equity-settled share based payments and there are no cash settlement alternatives.

The 2009 Share Option Scheme was subject to specific performance criteria being met.

The following table illustrates the number and weighted average exercise prices ("WAEP") of, and movements in, the share options during the year in relation to the 2001 and 2009 Share Option Schemes:

	2017	2017 WAEP	2016	2016 WAEP
	number	pence	number	pence
Outstanding at 1 October Exercised during the period	82,500 -	84 -	312,500 -	133 -
Expired during the period	(82,500)	84	(230,000)	150
Outstanding at period end	-	-	82,500	84
Exercisable at period end	-	-	82,500	84

At 30 September 2016 the weighted average remaining contractual life for the 2001 and 2009 scheme share options outstanding was 0.54 years. There were no options granted during the current or prior year under the 2001 or 2009 schemes.

The range of exercise prices for options outstanding under these scheme at 30 September 2016 was 80p to 90p. The share price at 30 September 2016 was 12 pence.

The Company has taken advantage of the exemption in IFRS 1 in respect of equity-settled awards so as to apply IFRS 2 only to those equity-settled awards granted after 7 November 2002.

The following inputs were used in a Black-Scholes model to estimate the value of the options at grant date for the 2001 and 2009 share-based payment plans:

Dividend yield (%)	-
Expected volatility (%)	40%
Risk–free interest rate (%)	0.77%
Expected life of option (years)	2 to 8.5
Weighted average share price (£)	1.00
Model used:	Black-Scholes

The expected life of the options was based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflected the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.

2013 Management Incentive Plan ("MIP")

The Company introduced the HM Revenue & Customs approved MIP during 2013.

The purpose of the MIP was to provide participants with an opportunity to participate directly in the growth of the value of the Company by receiving the MIP award. This allowed the participants to share in a pool of value, "the MIP Pool", which was linked to the growth in the value of the Company's shares. Participants received shares and share options in the Company if the Company was sold, taken over or was floated on a stock exchange ("Exit Event").

Awards were granted to certain employees under the MIP scheme rules on 7 March 2014. The admission to the London Stock Exchange in July 2014 ("IPO") was an Exit Event under the MIP scheme rules. The size of the MIP Pool was determined by reference to 16 per cent. of the difference between the price at which shares were offered to investors in the Company's IPO ("Offer Price") of £3.40 and £2.30. Each participant's share of the MIP Pool was converted into the number of shares (awarded in the form of (a) MIP Share Options and (b) MIP Share Awards) determined by reference to the Offer Price with the MIP Award vesting as follows:

• One third on the date of the IPO;
• One third on the first anniversary of the date of the IPO; and
• One third on the second anniversary of the date of the IPO

During the year ended 30 September 2014 810,000 share options were granted and 5,446,133 shares were awarded to the MIP scheme participants.

MIP Share Options

The following table illustrates the number and weighted average exercise prices ("WAEP") of, and movements in, the share options during the year in relation to the MIP.

	2017	2017 WAEP	2016	2016 WAEP
	number	pence	number	pence
Outstanding at 1 October	300,000	100	650,000	100
Granted during the period	-	-	-	-
Forfeited	(300,000)	-	(350,000)	100
Outstanding at period end	-	-	300,000	100
Exercisable at period end	-	-	300,000	100

One third of the granted share options (270,000 options) vested on 9 July 2014 on listing of the Company on the London Stock Exchange. 190,000 of the remaining options vested on 9 July 2015 and 190,000 vested on 9 July 2016.

At 30 September 2016 the weighted average remaining contractual life for the MIP share options outstanding was 0.5 years. The weighted average fair value of options granted under the MIP, determined by the Monte-Carlo valuation model was 110p per option.

The expected life of the options was based on historical data and the scheme rules option expiry date of April 2017. It was not necessarily indicative of exercise patterns that may have occurred. The expected volatility reflected the assumption that the historical volatility was indicative of future trends, which may also not necessarily have been be the actual outcome. The MIP scheme was equity-settled and the fair value was measured at the grant date.

MIP Share Awards

The following table illustrates the number and weighted average fair value ("WAFV") at grant date of shares awarded, forfeited and vested in relation to the MIP.

	2017	2017	2016	2016
		WAEP		WAEP
	number	pence	number	pence
At 1 October	-	-	1,869,784	104
Forfeited	-	-	(149,283)	104
Vested	-	-	(1,720,501)	-
At period end	-	-	-	-

Share awards were granted on 7 March 2014. On admission of the Company's shares to the London Stock Exchange on 9 July 2014 the first tranche of the share award vested with the MIP participants. Part of the first tranche of the share award was modified by the Company issuing a reduced number of 1,147,487 shares and settling a number of share awards in cash instead of facilitating sales of ordinary shares under the award.

2,137,938 of the share awards vested on 9 July 2015 and 1,720,501 share awards vested on 9 July 2016.

The following inputs were used in a Monte-Carlo model to estimate the value of the options and share awards at grant date for the MIP share-based payment plans:

Dividend yield (%)	-
Grant date	7 March 2014
Expected volatility (%)	39.24%
Risk–free interest rate (%)	1.09%
Expected life of option (years)	3
Share price at grant date (£)	2.50
Model used:	Monte Carlo Algorithm

Sharesave plan

A sharesave plan was implemented during the year ended 30 September 2015 eligible to all UK employees of Intelligent Energy Limited. Employees participated by making monthly saving contributions over a period of three years, linked to the grant of an option over the Company's shares with an option price at a 20% discount to the market price of the share at grant. 508,679 options were granted under the scheme of which 481,251 (2016: 423,501) have subsequently been forfeited.

24 Commitments

The Company has no commitments.

25 Related-party transactions

During the period the Company entered into transactions in the ordinary course of business with other related parties being subsidiary companies. On 25 October 2017 the Company sold all its interests in its subsidiary companies and its SMILE JV to Meditor Energy Limited.

Transactions entered into, and trading balances outstanding at 30 September 2016 and 30 November 2017 with other related parties, are as follows:

		Purchases	Amounts	Amounts
	Sales to	from	owed by	owed to
	related party	related party	related party	related party
	£'000	£'000	£'000	£'000
Subsidiaries (see note below)
2017	-	-	-	-
2016	-	-	240,024	-

The amount owed by related-party subsidiaries at 30 September 2016 referred to the intercompany debt with Intelligent Energy Limited. As detailed in note 16 a provision for impairment of amounts receivable from Intelligent Energy Limited of £215,708,000 was recognised in the year ended 30 September 2016. No change to the provision for impairment was made in the 14 months to 30 November 2017. However, on 25 October 2017 the balance of £235,174,000 (before the abovementioned provision) owing from Intelligent Energy Limited to the Company was extinguished by the issue by Intelligent Energy Limited of ordinary shares to the Company.

Prior to its sale to Meditor Energy Limited on 25 October 2017, Intelligent Energy Limited paid certain expenses related to the Company, being its then shareholder.

Terms and conditions of transactions with related parties

The related-party transactions were made on terms equivalent to those that prevail in arm's length transactions.

Sale of business to Meditor Energy Limited

With respect to the transaction on 25 October 2017, the Board confirms that the sale of the Company's business and assets (which completed on 25 October 2017) was negotiated and agreed on an arm's length basis.

The Board entered into this transaction only after due and appropriate consideration. In particular, before committing to this course of action, the Board:

• undertook detailed discussions with various counterparts on potential trading solutions (notwithstanding the backdrop of a slower evolution of the fuel cell market than had been anticipated);
• sought to align the interests of major stakeholders with a view to trying to rescue the Company;
• reviewed and implemented cost control activity where this did not impact core capabilities. Notwithstanding this activity, the Company had an ongoing underlying cash burn of £1.6m a month which could not be supported from cash reserves. The Company's negative EBITDA and revenue position, combined with the security granted (as part of the refinancing of the Company in May 2016) in favour of the Convertible Loan Note holders, meant that conventional debt raising options were not available to the Company;
• ran an extensive process for the potential sale of some or all of the Company's business and assets, using Deloitte LLP to project manage this activity;
• received independent legal and financial advice on the duties of the Board to shareholders and to creditors, and on the Board's powers in relation to the sale of the Company's business and assets, from Pinsent Masons LLP, Deloitte LLP and Stifel Nicolaus Europe Ltd;
• updated the stock market on the Company's position at appropriate intervals. These updates also acted in effect as an external message to third parties to make contact if they were interested in acquiring all or part of the Company's business and assets. These third parties would have included parties with which the Company had existing or potential customer or supplier relationships.

The outcome of the above actions, which represented a wide-ranging market testing against a backdrop of structural constraints, was one offer, and one offer only, for the Company's business and assets – this offer was from Meditor European Master Fund Limited.

In the opinion of the Board, the Meditor transaction, which completed on 25 October 2017, therefore represented the best outcome for the Company's creditors given the (clearly challenging) circumstances, as well as saving the jobs of the remaining employees in the business.

Key management compensation

Key management personnel are deemed to be the Directors of the Company. The compensation paid or payable to key management for employee services is shown below:

	2017	2016
	£'000	£'000
Salaries and other short-term employee benefits	1,049	1,126
Share-based payments	-	-
Total	1,049	1,126

The expense was recorded in the accounts of Intelligent Energy Limited which was a wholly owned subsidiary of the Company until 25 October 2017 when its entire share capital was sold to Meditor Energy Limited.

26 Contingent assets and liabilities

26.1 Sale of business to Meditor Energy Limited

The following contingent asset and liability arises under the sale and purchase agreement dated 25 October 2017 under which the Company sold its shares Intelligent Energy Limited, SMILE JV and the Company's remaining business and assets to Meditor Energy Limited.

Contingent liability

Immediately prior to completion by the Company of any members' voluntary liquidation, dissolution, strike off or analogous process, the Company shall transfer to Meditor Energy Limited all cash amounts less £1, and unless the parties otherwise agree, all and any other assets owned, held or enjoyed by or that otherwise remain available to Intelligent Energy Limited.

26.2 Other contingent assets or liabilities

There are no lawsuits, actions or administrative, arbitration or other proceedings or governmental investigations pending against or relating to the Company.

Company and shareholder information

Company information

Paul Heiden	Non-executive Chairman
Martin Bloom	Group Chief Executive Officer
John Maguire	Chief Financial Officer
Michael Muller	Senior Independent Non-executive Director
Dr Caroline Brown	Independent Non-executive Director
Zarir J. Cama	Independent Non-executive Director
Flavio Guidotti	Non-executive Director
John Maguire	Company Secretary (from 1 November 2017)

Registered Office

Charnwood Building, Holywell Park, Ashby Road, Loughborough, Leicestershire LE11 3GB

Registered Number

05104429

Website www.lb-shell.com

Auditor

KPMG LLP, St Nicholas House, 31 Park Row, Nottingham NG1 6FQ

Registrar

Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA

Registrar services

Any enquiries relating to shareholdings on the share register, for example transfers of shares, change of name or address, lost share certificates, should be sent to the Registrar at the address shown above. Alternatively, shareholders can call the shareholder helpline.

The shareholder helpline number is 0371 384 2030 or +44 121 415 7047 (if calling from overseas). Lines are open 8.30am to 5.30pm Monday to Friday, excluding public holidays. Calls may be recorded and randomly monitored for security and training purposes.

A number of shareholder services can be accessed online at www.shareview.co.uk including a variety of "how to" guides and the portfolio service, which gives shareholders access to more information on their investments, such as balance movements and indicative share prices.

Stock symbols

Intelligent Energy Holdings plc ordinary shares trade under the following stock symbol: London Stock Exchange: LBP

Forward-looking statements

Certain sections of this Annual Report contain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report. Such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

www.lb-shell.com Lb-shell plc

(Incorporated in England and Wales as a limited company under the Companies Act 2006 with registered number 05104429)

Registered office: Charnwood Building, Holywell Park, Ashby Road, Loughborough, LE11 3GB, UK

© Lb-shell plc- 28 March 2018