Pires Investments plc
(Incorporated in England and Wales with registered number 02929801)
Annual report and financial statements
for the year ended 31 October 2012
PIRES INVESTMENTS PLC
CONTENTS
COMPANY INFORMATION
CHAIRMAN’S STATEMENT
DIRECTORS’ REPORT
CORPORATE GOVERNANCE REPORT
AIM RULE COMPLIANCE REPORT
INDEPENDENT AUDITOR’S REPORT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
STATEMENTS OF CHANGES IN EQUITY
BALANCE SHEETS
STATEMENTS OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
Page
2
3
4
7
9
10
12
13
14
15
16
1
PIRES INVESTMENTS PLC
COMPANY INFORMATION
COMPANY INFORMATION
Directors
Secretary
Registered office
Auditor
Nominated Adviser
Broker
Registrar
P Redmond (chairman)
A A Quraishi
C J Yates
T V Le Druillenec
C J Yates MA ACA
c/o Morrison & Foerster
CityPoint
One Ropemaker Street
London
EC2Y 9AW
Welbeck Associates
Chartered Accountants
31 Harley Street
London
W1G 9QS
Cairn Financial Advisers LLP
61 Cheapside
London
EC2V 6AX
Peterhouse Corporate Finance Limited
31 Lombard Street
London
EC3V 9BQ
Computershare Investor Services Plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
Company Registration Number
02929801
2
PIRES INVESTMENTS PLC
CHAIRMAN'S STATEMENT
Pires is an investing company focusing on investment in the resources and energy sectors. On
12 April 2013, the Company announced that it had implemented its investing policy, and as a
consequence its shares will continue to trade on in accordance with AIM Rule 15.
During the course of the year, the Board reviewed a number of prospective reverse
transactions, one in particular to a relatively advanced stage. We continue to review
opportunities and certain transactions are under active review at present.
As I explained at the time of the interim results, the profit for the period arises purely from the
accounting treatment from the reduction of creditors following the Company Voluntary
Arrangement (“CVA”) which took place in the early part of 2012 and from the previous
activities of the Company being treated as “discontinued activities”.
At the time of the CVA and reorganisation, £1.7 million was raised by way of new equity
capital. Of this sum, £100,209 has been paid to settle with creditors under the CVA and
£158,711 of professional and related costs were incurred in relation to the CVA, reorganisation
and refinancing. Operating costs of £178,637 were incurred during the year after the approval
of the CVA in part due to the need to resolve certain historic issues which were not covered by
the CVA. The Board continues to take steps to reduce outgoings for the future.
While the Company continues to look for reverse takeover transactions, it is also looking to
take advantage of opportunities to seed transactions at a pre-IPO stage with the intention of
incubating them to come to market in a way which will enhance the value of Pires initial
holding. We have made one such investment, at this stage on a small scale, in a shale oil
project. We have also invested in a range of liquid quoted investments as announced on 12
April 2013. The Company will re-present its investing policy to shareholders for approval by
shareholders at the forthcoming Annual General Meeting.
The Company is now in a position to move forward in a positive manner and your board is
confident of taking it forward with substantive transactions during the current financial year.
Peter Redmond
Chairman
26 April 2013
3
PIRES INVESTMENTS PLC
DIRECTORS' REPORT
for the year ended 31 October 2012
Results and dividends
The Group’s profit for the year before taxation on continuing activities was £1,094,395 (2011 loss
restated: £469,841). The profit for the period after tax and including discontinued activities was
£781,476 (2011 loss: £1,779,886). The 2012 result benefitted from a gain of £1,526,949 arising from
the creditors' voluntary arrangement which was approved during the year.
The Directors are unable to recommend the payment of a dividend, given the deficit on distributable
reserves.
Principal activities
The principal activities of the Group since 16 April 2012 (being the date on which the creditors' voluntary
arrangement and group restructuring were approved) have been as an investment company which has
involved the seeking of and investigating of investment opportunities although to date no investments
have been made. The Principal activities of the Group until 16 April 2012 were operating the museum
and restaurant facility in Ringwood and the classic car refurbishment business.
Post balance sheet events
Note 26 gives details of certain events which have taken place since the balance sheet date.
Business review and future developments
At the General Meeting held on 16 April 2012, members approved the adoption of an investing policy for
the Company to invest, principally but not exclusively, in the resources and energy sectors and full
details of the policy adopted were set out in a circular to members dated 22 March 2012 and are set out
on the Company’s website.
Principal risks and uncertainties
Market Risks
The value of the Company’s assets will depend, to a significant degree, on the Company’s ability to
identify and make suitable investments in a reasonable timeframe. The Directors intend that appropriate
due diligence be carried out by the Company on potential prospects, but there is an inherent risk in
investing in companies or businesses.
Funding
It is likely that, if the Company identifies and wishes to pursue an investment opportunity or a reverse
takeover, it may need to raise further funds for further working or development capital. There is no
guarantee that the then prevailing market conditions will allow for such a fundraising or that new
investors will be prepared to invest on a basis which is acceptable to shareholders.
Key performance indicators
The Directors consider that, pending the making of investments, the key performance indicator of the
Company is its cash position and net asset value which is reviewed on a monthly basis.
Directors
The following Directors have held office since 31 October 2011:
P Redmond (appointed 16 April 2012)
A A Quraishi (appointed 16 April 2012)
C J Yates
P D Collins (resigned 16 April 2012)
M C Woodcock (resigned 16 April 2012)
Financial risk management
Details of the Group’s financial instruments and financial risk management policies can be found in note
3 to the financial statements.
4
PIRES INVESTMENTS PLC
DIRECTORS' REPORT (continued)
for the year ended 31 October 2012
Creditor payment policy and practice
The Group’s policy concerning the payment of creditors is to:
•
•
•
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in
contracts; and
pay in accordance with the Group’s contractual and other legal obligations.
The number of days outstanding between receipt of invoices and date of payment, calculated by
reference to the amount owed to trade creditors including amounts in accruals at the year end as a
proportion of the amounts invoiced by suppliers during the year after the CVA was 119 days (2011: 329
days).
Going concern
The Directors consider that the Company has adequate finance for the Company for the foreseeable
future and accordingly these accounts have been prepared on a going concern basis.
Directors’ interests
The Directors’ beneficial interests in the share capital of the Company as at 31 October 2011, 31 October
2012 and 26 April 2013 were:
Ordinary
shares of
0.1p each
26 April
2013
Ordinary
shares of
0.1p each
31
October
2012
(note 1)
Ordinary
shares of
5p each
31
October
2011 (note
2)
N/A
2,211,432
2,211,432
-
-
-
-
-
-
N/A
1,926,153
3,632,195
200,000
3,632,195
200,000
P D Collins (note 3)
P Redmond (note 4)
A A Quraishi (note 4)
M C Woodcock
C J Yates
Notes:
1
2
3
4
In the case of Directors who resigned during the year, at the date of resignation
In the case of Directors appointed during the year, at the date of appointment
P D Collins had interests in share options during the period and these are detailed in the Corporate
Governance Report
On 17 April 2012, the Board granted to each of P Redmond and A A Quraishi a warrant over 1.5%
of the Company’s issued ordinary share capital from time to time exercisable at 0.1p per new
ordinary share at any time up to 17 April 2015
Substantial shareholders
As at 26 April 2013, the Company had been notified in accordance with Chapter 5 of the Disclosure and
Transparency Rules of the following holdings. Save for those holdings shown below, the Directors are not
aware of any beneficial holdings by an individual shareholder or group of connected shareholders whose
aggregate holding is 3% or more of the current issued ordinary share capital.
Shareholder
Gledhow Investments plc
Otterswick UK Limited
C A Windham
% of the issued
ordinary share capital
11.39%
9.22%
3.07%
5
PIRES INVESTMENTS PLC
DIRECTORS' REPORT (continued)
for the year ended 31 October 2012
Charitable and political donations
No charitable or political donations were made during the year (2011: nil).
Auditor
Welbeck Associates were appointed by the Directors on 27 March 2012. Welbeck Associates have
expressed their willingness to continue in office as auditor and a resolution to re-appoint them will be
proposed at the forthcoming Annual General Meeting.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the financial statements in accordance with applicable law
and regulations. Company law requires the Directors to prepare financial statements for each financial
year. Under that law the Directors are required to prepare the Group financial statements in accordance
with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4
of the IAS Regulation and have also chosen to prepare the Parent Company financial statements under
IFRSs as adopted by the EU. 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 the profit or loss of the Group for that period. In preparing those financial statements,
International Accounting Standard 1 requires the Directors to:
•
•
•
•
•
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
make judgements and accounting estimates that are reasonable and prudent
provide additional disclosures when compliance with the specific requirements in IFRSs are
insufficient to enable users to understand the impact of particular transactions, other events and
conditions on the entity’s financial position and financial performance; and
make an assessment of the Company’s ability to continue as a going concern.
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 the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Disclosure of information
In the case of each of the persons who are acting as Directors of the Company at the date when this
report was approved:-
•
•
so far as each of the Directors is aware, there is no relevant audit information (as defined in the
Companies Act 2006) of the which the Company’s auditor is not aware; and
each of the Directors has taken all the steps that he ought to have taken as a Director to make
himself aware of any relevant audit information (as defined) and to establish that the Company’s
auditor is aware of that information.
The Directors are also responsible for the maintenance and integrity of the investor information
contained on the website. Legislation in the UK concerning the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
By order of the Board
T V Le Druillenec
Company Secretary
26 April 2013
6
PIRES INVESTMENTS PLC
CORPORATE GOVERNANCE REPORT
for the year ended 31 October 2012
Unaudited information
As an AIM listed company, Pires Investments plc is not required to comply with the provisions of the
Combined Code. However, the Directors recognise the importance of sound corporate governance,
whilst taking into account the size and nature of the Company. As such, the Directors intend to comply
with the main provisions of the Combined Code in so far as practicable given the Company’s size and the
constitution of the Board.
During the year, the Board has met on a formal basis as necessary and generally at least once per
quarter. At those meetings a report from the Finance Director has been presented and discussed and
potential investments considered. The Board considers risk and strategy at each meeting.
During the year, an Audit Committee comprised Peter Collins (Chairman) and Mike Woodcock until their
resignations and is now comprised of Aamir Quraishi and Peter Redmond. The Committee has met with
the auditors and considered the results and the audit process, and has satisfied itself as to the auditor’s
independence during the year.
The Company has a Remuneration Committee which comprised Peter Collins (Chairman) and Mike
Woodcock until their resignations and now comprises Aamir Quraishi and Peter Redmond as Chairman.
The policy of the Company on remuneration is to reward individual performance so as to promote the
best interests of the Company and enhance shareholder value. The remuneration of Directors is
approved by the Board. Individual Directors do not participate in decisions concerning their own
remuneration.
Share-based payments
For some years, the Company operated a share option scheme for all employees of the Group but by the
end of the year all extant options had lapsed. At the start of the year, P D Collins held an option to
acquire 1,828 shares in the Company which lapsed at the end of six months following his resignation.
On 16 April 2012, the Company granted a warrant in favour of Peterhouse Partnership (2012) Limited
over 3% of the issued share ordinary share capital of the Company from time to time, exercisable at
0.1p per share at any time up to 20 March 2015.
On 17 April 2012, the Company granted a warrant in favour of each of Peter Redmond and Aamir
Quraishi over 1.5% of the issued share ordinary share capital of the Company from time to time,
exercisable at 0.1p per share at any time up to 17 April 2015.
The part of this report set out below is included within the scope of the auditor’s opinion on pages 10
and 11.
Audited information
Remuneration of the Directors
During the period, the following remuneration and other benefits were charged to the Company:
Salaries
Fees
P Redmond
A A Quraishi
C J Yates (see note below)
P D Collins (see note below)
M C Woodcock (see note below)
£
-
-
38,187
-
3,667
41,854
£
8,125
8,125
-
688
-
Total
2012
£
8,125
8,125
38,187
688
3,667
Total
2011
£
-
-
56,250
15,000
80,000
Note
In respect of the current year, this number represents the gross salary and fees paid to the Director during the year and the amount
settled under the CVA in respect of unpaid salary and fees.
7
16,938
58,792
151,250
PIRES INVESTMENTS PLC
CORPORATE GOVERNANCE REPORT (continued)
for the year ended 31 October 2012
In addition, companies in which Mr Redmond and Mr Quraishi were interested were paid consultancy
fees in respect of services provided and disbursements totalling £13,750 and £7,027 respectively.
Mr Redmond and Mr Quraishi were each granted a warrant to subscribe 1.5% of the Company's issued
share capital from time to time and a total of £19,212 for these share based payments has been
recognised in the Consolidated Statement of Comprehensive Income.
On behalf of the Board
C J Yates
Director
26 April 2013
8
PIRES INVESTMENTS PLC
AIM RULE COMPLIANCE REPORT
for the year ended 31 October 2012
Pires Investments plc is traded on AIM and, as such under AIM Rule 31 the Company is required to:
•
•
•
•
•
have in place sufficient procedures, resources and controls to enable its compliance with the AIM
Rules;
seek advice from its nominated adviser (“Nomad”) regarding its compliance with the AIM Rules
whenever appropriate and take that advice into account;
provide the Company’s Nomad with any information it requests in order for the Nomad to carry out
its responsibilities under the AIM Rules for Companies and the AIM Rules for Nominated Advisers;
ensure that each of the Company’s Directors accepts full responsibility, collectively and
individually, for compliance with the AIM Rules; and
ensure that each Director discloses, without delay, all information which the Company needs in
order to comply with AIM Rule 17 (Disclosure of Miscellaneous Information) insofar as that
information is known to the Director or could with reasonable diligence be ascertained by the
Director.
In order to ensure that these obligations are met, they are considered by the whole Board.
Having reviewed relevant Board papers, and met with the Nomad to ensure that such is the case, the
Board is satisfied that the Company’s obligations under AIM Rule 31 have been satisfied during the year
under review.
9
PIRES INVESTMENTS PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PIRES INVESTMENTS PLC
We have audited the consolidated and parent financial statements of Pires Investments Plc for the year
ended 31 October 2012, which comprises the consolidated income statement and statement of
comprehensive income, consolidated and Company balance sheets, consolidated and Company
statement of changes in equity, consolidated and Company statement of cash flows, and the related
notes on pages 12 to 31. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European
Union and as regards the Parent Company financial statements as applied in accordance with the
provisions of the Companies Act 2006.
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 auditors’ 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.
Respective responsibilities of Directors and auditor
As explained more fully in the Directors' Responsibilities Statements set out on page 6, the Directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This included an assessment of: whether the
accounting policies are appropriate to the Company’s circumstances and have been consistently applied
and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors;
and the overall presentation of the financial statements. In addition we read all financial and non-
financial information in the Chairman’s Statement, Directors’ Report and Statement of Corporate
Governance to identify material inconsistencies with the audited financial statements. If we become
aware of any apparent material misstatements or inconsistencies we consider the implications for our
report.
Opinion on financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group and Parent Company’s
affairs as at 31 October 2012 and of the Group’s and Parent Company’s profit for the year then
ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted
by the European Union;
the Parent Company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union and as applies in accordance with the provisions of the Companies
Act 2006; and
the financial statements have been properly prepared in accordance with the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
•
The information given in the Directors’ Report for the financial period for which the financial
statements are prepared is consistent with the financial statements.
10
PIRES INVESTMENTS PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PIRES INVESTMENTS PLC (continued)
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us
to report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the Parent Company, or returns adequate for
our audit have not been received from branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting records and
returns; or
certain disclosures of Directors’ remunerations specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Jonathan Bradley-Hoare (Senior Statutory Auditor)
For and on behalf of Welbeck Associates
Chartered Accountants
Statutory Auditors
31 Harley Street
London
W1G 9QS
Date: 26 April 2013
11
PIRES INVESTMENTS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 October 2012
Note
2012
CONTINUING ACTIVITIES
Revenue
Administrative expenses
Exceptional credit arising from CVA
Operating profit/(loss) from continuing activities
Finance income
Finance costs
6
7
8
£
-
(382,600)
1,526,949
2011
(restated)
£
195
(405,747)
-
1,144,349
(405,552)
835
(50,789)
4
(64,293)
Profit/(loss) before taxation from continuing
activities
Tax
1,094,395
-
10
(469,841)
-
Profit/(loss) for the period from continuing activities
1,094,395
(469,841)
Loss from discontinued activities
11
(312,919)
(1,310,045)
Profit/(loss) for the period attributable to equity
holders of the Company
781,476
(1,779,886)
Basic earnings/(loss) per share
Equity holders
From continuing activities
From continuing and discontinued activities
Diluted earnings/(loss) per share
Equity holders
From continuing activities
From continuing and discontinued activities
12
12
12
12
0.11p
0.08p
0.11p
0.08p
(0.85)p
(3.20)p
N/A
N/A
The comparative figures for 2011 have been restated to reflect the effect of discontinued
activities.
12
PIRES INVESTMENTS PLC
STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 October 2012
Group
Balance at 1 November
2010
Loss for the year ended 31
October 2011
At 31 October 2011
Loss for the year ended
31 October 2012
Issue of shares
Cost of share based
payments
At 31 October 2012
Company
Balance at 1 November
2010
Loss for the year ended 31
October 2011
At 31 October 2011
Loss for the year ended
31 October 2012
Issue of shares
Cost of share based
payments
At 31 October 2012
Share
capital
Share
premium
£
£
Shares
to be
issued
Capital
redemption
reserve
£
Retained
earnings
Total
£
£
9,587,103 3,017,818
-
164,667 (12,343,611)
425,977
-
-
9,587,103 3,017,818
-
-
-
(1,779,886) (1,779,886)
164,667 (14,123,497) (1,353,909)
-
1,700,000 (104,212) 82,611
-
-
-
11,287,103 2,932,818 82,611
-
19,212
-
-
781,476
781,476
- 1,678,399
-
19,212
38,424
164,667 (13,322,809) 1,144,390
Share
capital
Share
premium
Shares
to be
issued
£
£
Capital
redemption
reserve
£
Retained
earnings
Total
£
£
9,587,103 3,017,818
-
164,667 (12,120,529)
649,059
-
164,667 (13,632,330)
(1,511,801) (1,511,801)
(862,742)
-
-
348,688
348,688
- 1,678,399
-
19,212
38,424
164,667 (13,264,430) 1,202,769
-
-
9,587,103 3,017,818
-
-
-
1,700,000 (104,212) 82,611
-
-
-
11,287,103 2,932,818 82,611
-
19,212
13
PIRES INVESTMENTS PLC
(Incorporated in England and Wales with registered number 02929801)
BALANCE SHEETS
at 31 October 2012
Non-current assets
Goodwill
Property, plant and equipment
Investments in subsidiaries
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Note
13
14
15
16
17
Group
2012
£
-
-
-
-
-
86,794
1,241,015
1,327,809
2011
£
-
489,532
-
489,532
552,736
21,283
1,049
575,068
Company
2012
£
-
-
-
-
-
89,023
1,240,610
1,329,633
2011
£
-
167,611
203
167,814
-
932,009
-
932,009
1,327,809
1,064,600
1,329,633
1,099,823
Issued share capital
18
Share premium
11,287,103
2,932,818
9,587,103
3,017,818
11,287,103
2,932,818
9,587,103
3,017,818
Equity share capital to be issued
(including premium)
18
Retained earnings
Capital Redemption Reserve
Total equity
Liabilities
Non-current liabilities
Borrowings
Total non-current liabilities
Current liabilities
Borrowings
Trade and other payables
Total current liabilities
19
19
20
82,611
(13,322,809)
164,667
1,144,390
-
(14,123,497)
164,667
(1,353,909)
82,611
(13,264,430)
164,667
1,202,769
-
(13,632,329)
164,667
(862,741)
-
-
4,234
4,234
-
-
-
-
-
183,419
183,419
1,143,605
1,270,670
2,414,275
-
126,864
126,864
1,083,512
879,052
1,962,564
Total liabilities
183,419
2,418,509
126,864
1,962,564
Total equity and liabilities
1,327,809
1,064,600
1,329,633
1,099,823
These financial statements were approved and authorised for issue by the Board of Directors on 26 April
2013 and were signed on its behalf by:
C J Yates
Director
14
PIRES INVESTMENTS PLC
STATEMENTS OF CASH FLOWS
for the year ended 31 October 2012
Note
Group
2012
£
2011
£
Company
2012
£
2011
£
Cash flows from operating activities
Net cash absorbed by operating
activities
21
(295,049)
(15,418)
(297,905)
(21,747)
Cash flows from investing activities
Payments to acquire tangible fixed assets
Proceeds of disposal of fixed assets
Finance income received
-
21,667
835
(11,619)
-
-
Net cash used in investing activities
22,502
(11,619)
-
-
835
835
(361)
-
-
(361)
Cash flows from financing activities
Net (repayments)/advances on borrowings
Cash from subscriptions for new shares
Expenses of share issue
Repayment of bank loans
Repayment of vendor mortgage loan
Repayments of obligations under hire
purchase contracts
Finance costs paid
(51,698)
1,700,000
(85,000)
-
-
238,977
-
-
(125,000)
(5,949)
(26,531)
1,700,000
(85,000)
-
-
210,794
-
-
(125,000)
(5,949)
-
(50,789)
(17,297)
(64,290)
-
(50,789)
-
(57,789)
Net cash from financing activities
1,512,513
26,441
1,537,680
22,056
Net (decrease)/increase in cash and
cash equivalents during the year
Cash and cash equivalents at beginning of
year
1,239,966
(596)
1,240,610
(52)
1,049
1,645
-
52
-
Cash and cash equivalents at end of
year
1,241,015
1,049
1,240,610
15
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 October 2012
1 GENERAL INFORMATION
Pires Investments plc (“the Company”) and its subsidiaries (together “the Group”) were during the year property developers
and consultants and the operators of leisure activities. By the end of the year, the activities of property developers and
consultants had ceased and also the Group's activity of operating the Rother Valley Country Park had ceased and, as a result,
all of these activities are reported as discontinued activities. At a general meeting of the Company held on 16 April 2012, the
Company adopted an investing policy and later that day disposed of all the Group’s remaining trading activities.
The Company is a limited liability company incorporated and domiciled in England .
The address of the registered office is c/o Morrison & Foerster, CityPoint, One Ropemaker Street, London EC2Y 9AW.
These Group financial statements are prepared in Pounds Sterling, because that is the currency of the primary economic
environment in which the Group operates.
Statement of compliance
The financial statements comply with IFRS as adopted by the European Union. At the date of authorisation of these financial
statements the following Standards and Interpretations affecting the Company, which have not been applied in these financial
statements, were in issue, but not yet effective. The company does not plan to adopt these standards early.
IFRS 10
IFRS 12
IFRS 13
Consolidated Financial Statements – Identification of the concept of
control of an entity and the requirement to include in consolidated
accounts
Disclosure of Interests in Other Entities
Fair Value Measurement
lAS 1 (amended)
Presentation of Items of Other Comprehensive Income
lAS 12 (amended) Deferred Tax: Recovery of Underlying Assets
lAS 19 (revised)
Employee Benefits
The Directors have not yet evaluated the effect of these standards on the financial statements.
2 SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
Effective for accounting
periods beginning on or after:
1 January 2013
1 January 2013
1 January 2013
1 July 2012
1 January 2012
1 January 2013
The consolidated financial statements have been prepared under the historical cost convention and in accordance with
applicable International Financial Reporting Standards (IFRS) as adopted by the European Union.
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own profit and loss
account for the year. Pires Investments plc reported a profit for the financial year of £348,688 (2011: loss of £1,511,801).
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 31 October 2012. Control is achieved where the Company has the power to govern the
financial and operating policies of an investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired during the year are included in the consolidated income statement from the effective date
of acquisition. Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting
policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree. The acquiree’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS are recognised at their fair value at the acquisition date.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of
the identifiable assets and liabilities of a subsidiary, at the date of acquisition. Goodwill is initially recognised as an asset at
cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset
is reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash generating units expected to benefit
from the synergies of the combination. Cash generating units to which goodwill has been allocated are tested for impairment
annually, or more frequently when there is an indication that the unit maybe impaired. If the recoverable amount of the cash
generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying
amount of each asset in the unit. Any impairment loss recognised for goodwill is not reversed in a subsequent period.
16
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Depreciation
Freehold land is not depreciated and is included at its historical cost, which includes capitalised borrowing costs while it is part
of a development project. The carrying value is reviewed as at the balance sheet date to determine whether market value
exceeds historical cost and any appropriate impairment charge is made.
Plant and computer equipment and leasehold improvements are measured at cost less provision for depreciation. Depreciation
is provided on these assets at rates calculated to write off the cost less estimated residual value of the assets over their
expected useful lives at the following rates:-
Plant and equipment
Leasehold improvements
Income recognition
25% to 50% of cost per annum
Remaining life of the lease
Turnover of the leisure operations run on a cash basis is recognised on receipt of cash or, if later, on provision of the service.
Turnover of the leisure operations in respect of which services are invoiced is recognised when the service is provided.
Turnover of the consultancy business represented the fair value of services provided during the year on such assignments,
recognised as the assignment progresses and the right to consideration is earned. Fair value reflects the amounts expected to
be recoverable from customers and is based on time spent and costs incurred to date as a percentage of total anticipated
contract costs. Unbilled turnover is included within receivables.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount.
Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when
there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income
taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Share based awards
The Group has applied the requirements of IFRS 2 Share based payment.
The Group issues equity settled payments to certain employees. Equity settled share based payments are measured at fair
value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the
grant date of the equity settled share based payments is expensed on a straight line basis over the vesting period, based on
the Group’s estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.
Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on
management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable,
direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and
condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price
less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Investments in subsidiaries
Investments in subsidiaries are stated in the Company's balance sheet at cost less any attributable impairment losses.
17
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
2 SIGNIFICANT ACCOUNTING POLICIES (continued)
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Financial assets
Financial assets are recognised in the Group’s balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
The Group’s financial assets are classified into the following specific categories: ‘loans and receivables’ and ‘cash and cash
equivalents’. The classification depends on the nature and purpose of the financial assets and is determined at the time of
initial recognition.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective
interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-
term receivables when the recognition of interest would be immaterial.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid
investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in
value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a residual interest in the assets of the Company and the Group after
deducting all of its liabilities.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
3 FINANCIAL RISK MANAGEMENT
The Group's financial instruments comprise cash, liquid resources and various items, such as debtors and creditors, which arise
directly from its operations. It is, and has been throughout the year of review, the Group's policy that financial derivatives
shall not be used.
The main risks arising from the Group's financial instruments are interest rate risk and liquidity risk.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the
cost of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets to reduce debts. At present,
the Group is unable to pay dividends or return capital to shareholders. At the balance sheet date, the Group had no debt
(2011: £1,147,839 which represented 84.8% of the deficit on shareholders’ total equity).
Credit risk
The Company is subject to limited credit risk on income relating to credit sales in Oak Heritage. The level of trade receivables
is not considered significant in the overall context of the group’s activities.
Liquidity risk
At the balance sheet date, the Group had significant cash balances and the financial statements have been prepared on the
going concern basis.
18
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
3 FINANCIAL RISK MANAGEMENT (continued)
Interest rate risk profile of financial assets and liabilities
At the balance sheet date, the Group had the following interest bearing financial assets and liabilities.
Fixed rate financial liabilities
Other loans
Hire purchase liabilities
Floating rate financial assets and liabilities
2012
£
-
-
-
2012
£
2011
£
(322,608)
(22,794)
(345,402)
2011
£
Net cash and cash equivalents/(bank overdraft)
1,241,015
(32,338)
Bank loan
Vendor mortgage loan
Fair value of financial instruments
-
-
(125,000)
(644,051)
1,241,015
(801,389)
The Group's financial instruments, which comprise cash and short term deposits and bank overdrafts are carried at cost, which
is also considered to be equivalent to their fair value.
Profile of financial instruments
Group
Financial assets
Loans and receivables
Cash and cash equivalents
Financial liabilities (at amortised cost)
Trade payables and accruals
Hire purchase liabilities
Vendor mortgage loan
Other loans
Bank loan and overdraft
Company
Financial assets
Amounts owed by group undertakings
Loans and receivables
Cash and cash equivalents
19
2012
£
70,647
1,241,015
2011
£
17,809
1,049
1,311,662
18,858
2012
£
2011
£
144,352
888,031
-
-
-
-
22,794
644,051
322,608
158,387
144,352
2,035,871
2012
£
-
72,876
1,240,610
2011
£
928,675
-
-
1,313,486
928,675
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
3 FINANCIAL RISK MANAGEMENT (continued)
Financial liabilities (at amortised cost)
Trade payables and accruals
Amounts due to group undertakings
Bank loan and overdraft
Vendor mortgage loan
Other loans
2012
£
2011
£
120,252
665,505
-
-
-
-
74,388
127,674
644,051
311,787
120,252
1,823,405
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
During the year, the Company realised all its trading assets and raised funds by an equity issue as a result of which there are
no critical estimates or judgements to make in respect of the year save the valuation of share-based payments. The areas
where accounting estimates and judgements were considered critical in the reporting of financial performance of the previous
financial period was the impairment review of goodwill.
Goodwill impairment
Goodwill was tested annually for impairment. This test required estimates and judgements to be made in respect of the future
of the Group’s activities. Further details of the impairment review undertaken can be found in note 13.
Share based payments
In prior years, the Group has made awards of options over its unissued share capital to certain Directors and employees as
part of their remuneration package and all such options awarded have lapsed by the end of the year.
On 16 April 2012, the Company granted a warrant to Peterhouse Capital Limited which gave Peterhouse Capital Limited the
right to subscribe new ordinary shares of 0.1p each representing up to 3% of the issued share capital of the Company from
time to time. The subscription price for the exercise of this warrant is 0.1p per share and the warrant may be exercised at any
time up to 20 March 2015. On 17 April 2012, the Company granted warrants to each of P Redmond and A A Quraishi which
each gave the holder the right to subscribe new ordinary shares of 0.1p each representing up to 1.5% of the issued share
capital of the Company from time to time. The subscription price for the exercise of these warrants is 0.1p per share and the
warrants may be exercised at any time up to 17 April 2015.
The valuation of these options involved making a number of critical estimates relating to price volatility, future dividend yields,
expected life of the options and forfeiture rates. These assumptions have been described in more detail in note 25.
5 SEGMENTAL ANALYSIS
The Group's only continuing activity is seeking investment opportunities and as such no segmental analysis is appropriate
6 REVENUE
The Group's revenue from continuing activities is split between the sale of goods and the rendering of services as follows:
Sale of goods
Rendering of services
7 OPERATING PROFIT/(LOSS)
Operating profit/(loss) from continuing activities is stated after charging:
Depreciation of property, plant and equipment
Cost of share based payments (see note 25)
20
2012
2011
£
-
-
-
£
-
195
195
2012
2011
£
50
19,212
£
50
-
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
7 OPERATING PROFIT/(LOSS) (continued)
Auditor’s remuneration:
During the year the Group obtained the following services from the Company’s auditor (in respect of continuing and
discontinued activities):
Fees payable to the Company’s auditor for the audit of the Parent
Company and the consolidated financial statements
Fees payable to the Company’s auditor and its associates for other
services:
Audit of the Company’s subsidiaries pursuant to legislation
Other services relating to taxation
All other services
2012
£
2011
£
10,000
13,500
1,000
-
250
5,000
1,000
2,700
11,250
22,200
All other services in the current year relate to costs associated with company formation. Of the above remuneration payable in
respect of 2011, £7,200 was payable to the Company’s previous auditors and of that the amounts payable for all other services
comprised financial reporting and IFRS compliance advice of £2,100 and ixBRL tagging support of £600.
8 FINANCE COSTS
The Group’s finance costs were:
Interest receivable
Interest payable on bank loans and overdrafts
Other interest payable and finance costs
9 EMPLOYEE BENEFIT EXPENSE
The Group’s employee benefit expense (for continuing and discontinued activities) was:
Wages and salaries
Social security costs
Contributions to defined contribution pension schemes
Share based payments (all in respect of Directors)
2012
2011
£
835
£
4
(21,328)
(29,461)
(45,694)
(18,599)
(49,954)
(64,289)
2012
£
2011
£
147,961
873,142
14,701
-
19,212
48,390
40,402
-
181,874
961,934
The average monthly number of persons employed by the Group, including Directors, during the year was as follows:
2012
2011
No
4
No
55
Details of Directors’ emoluments, including details of share option schemes, are given in the Corporate Governance Report.
These disclosures form part of the audited financial statements of the Group. The Directors of the Parent Company are
considered to represent key management of the Group as defined by IFRS.
21
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
10 TAX EXPENSE
Current tax
Factors affecting the tax charge for the year
Profit/(loss) on ordinary activities before taxation
Profit/(loss) on ordinary activities before taxation multiplied by the
standard rate of UK corporation tax of 24.83% (2011: 26.83%)
Effects of:
Extraordinary CVA gain not taxable
Expenses not deductible for tax purposes
Provisions against amounts due from subsidiaries and other consolidation
adjustments not allowed for tax purposes
Impairment of freehold land value not deductible for tax purposes
Balancing charges on disposal of fixed assets and capital allowances in
excess of depreciation
Loss on disposal of capital assets
Tax losses arising in the year utilised
Share-based payment charge not deductable
Tax charge
2012
2011
£
-
£
-
781,476
(1,779,886)
194,067
(477,603)
(379,192)
2,888
238,830
-
70
-
-
309,548
(14,539)
11,897
6,234
-
(53,059)
156,088
4,771
-
-
-
The Company has tax losses available to carry forward against relevant future taxable income and profits of approximately
£1.9 million (2011 Group: £3.15 million) in respect of which no deferred tax asset has been recognised. Tax losses of other
members of the Group are unlikely to continue to be available for offset against future profits.
Where it is anticipated that future taxable profits will be available against which these losses will be utilised a deferred tax
asset is recognised.
22
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
11 DISCONTINUED ACTIVITIES
In January 2011, Rotherham Metropolitan Borough Council gave notice that it was terminating the Development Agreement
between itself and the Company's subsidiary, Oak Ventures Limited, with effect from the end of January 2011 and property
development activity therefore ceased. In addition, following the resignation of the Directors responsible for the Company's
property consultancy activities, the Company decided to cease these activities as well. In October 2011, Rotherham
Metropolitan Borough Council terminated the interim management agreement and associated lease pursuant to which the
Company's subsidiary Rother Valley Country Park Limited managed the Rother Valley Country Park and this activity together
with the operation by the Company's subsidiary Rother Valley Steam Railway Limited of a miniature railway within the Park
ceased and were also treated as discontinued activities. At the start of the year, the assets of Rother Valley Country Park
Limited were realised as far as possible before that company was liquidated on 16 March 2012.
On 16 April 2012, the Company sold two subsidiaries, Oak Heritage Limited and Rother Valley Steam Railway Limited, and also
sold the assets of a further subsidiary, Ringwood Town & Country Experience Limited. The activities of Oak Heritage Limited
and Ringwood Town & Country Experience Limited are treated as discontinued activities. As referred to above, Rother Valley
Steam Railway was treated as having ceased business in October 2011, during the previous year. The consideration was
£25,002 and the discharge by the acquirer of certain loans outstanding at the the date of acquisition totalling £190,230.
The results of the discontinued activities are as follows:
Revenue
Administrative expenses
Operating loss on discontinued activities
Finance costs
Loss on disposal of discontinued activities
Impairment provision
Operating loss on discontinued activities
Attributable tax expense
Net loss attributable to discontinued activities
2012
2011
(restated)
£
£
50,213
1,226,862
(78,833)
(1,383,167)
(28,620)
(156,305)
(544)
(283,755)
-
-
-
(1,153,740)
(312,919)
(1,310,045)
-
-
(312,919)
(1,310,045)
During the year discontinued activities consumed £49,986 (2011: £71,751) of the Group's net operating cash flows, generated
£21,667 (2011: consumed £11,258) from investing activities and generated £38,330 (2011: £24,345) from financing
activities.
12 EARNINGS/(LOSS) PER SHARE
The basic earnings/(loss) per share from continuing activities is based on a profit for the year of £1,094,395 (2011 restated:
loss £469,841) and that from continuing and discontinued activities on a profit for the year of £781,476 (2011: loss
£1,779,886) and the weighted average number of ordinary shares in issue for the year of 954,477,964 (2011: 55,570,856).
Warrants to subscribe an aggregate of 6% of the Company's issued share capital from time to time at 0.1p per share, as
described in note 18, were issued during the year and diluted earnings per share are computed using 966,300,516 ordinary
shares.
At 31 October 2011, there were potentially 91,428 shares that could be issued under the terms of options and these lapsed
during the year. In addition at 31 October 2012 and 2011 there were also 2,021,791 warrants originally issued in 2003
exercisable at 119p per share that will potentially reduce future earnings per share.
23
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
13 GOODWILL
Group
Cost
At 1 November 2010 & 31 October 2011
Disposal on dissolution of subsidiary
At 31 October 2012
Provision for impairment
At 1 November 2010 & 31 October 2011
Disposal on dissolution of subsidiary
At 31 October 2012
Net book value
At 1 November 2010, 31 October 2011 and 2012
£
10,828,446
(10,828,446)
-
10,828,446
(10,828,446)
-
-
Goodwill arose on the acquisition of Oak Ventures Limited on 1 December 2003 and the issue by the Group of 490,313,015
Ordinary shares of the then nominal value of 1p each at a value of 2.06p per share in exchange for the whole of the issued
share capital of Oak Ventures Limited.
The goodwill arising on the acquisition was attributable primarily to the fact that Oak Ventures Limited had been granted
preferred developer status by Rotherham Metropolitan Borough Council (“RMBC”) to develop a major entertainment and leisure
complex (the “YES! Project”).
In January 2011, RMBC gave notice that it was terminating the Development Agreement with effect from the end of January
2011. The Directors concluded that the goodwill previously recognised had been fully impaired. The Directors consequently
made an impairment provision against the whole of the carrying value of the goodwill with an appropriate charge being made in
the statement of comprehensive income for the year ended 31 October 2010.
24
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
14 PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 November 2010
Additions during the year
At 31 October 2011
Additions during the year
Disposals during the year
At 31 October 2012
Depreciation
At 1 November 2010
Charge for the year
Impairment provision
At 31 October 2011
Charge for the year
Freehold
land
Leasehold
improvements
Plant and
equipment
Total
£
£
£
£
1,321,040
209,654
204,098
1,734,792
-
-
11,619
11,619
1,321,040
209,654
215,717
1,746,411
-
-
-
-
(1,321,040)
(209,654)
(215,717)
(1,746,411)
-
-
-
1,153,740
1,153,740
-
-
-
-
18,303
19,968
-
38,271
6,656
28,881
35,987
47,184
55,955
-
1,153,740
64,868
1,256,879
50
6,706
Disposals during the year
(1,153,740)
(44,927)
(64,918)
(1,263,585)
At 31 October 2012
Carrying amount
At 31 October 2012
At 31 October 2011
At 31 October 2010
-
-
-
-
-
-
-
-
167,300
171,383
150,849
489,532
1,321,040
191,351
175,217
1,687,608
At 31 October 2012, there were no assets held on hire purchase agreements (2011 net book value: £31,552). No depreciation
(2011: £14,496) has been charged in the year on these assets.
Company
Cost
At 1 November 2010
Additions during the year
At 1 November 2011
Disposals during the year
At 31 October 2012
Depreciation
At 1 November 2010
Charge for the year
Impairment provision
At 1 November 2011
Charge for the year
Disposal during the year
As at 31 October 2012
Carrying amount
As at 31 October 2012
At 31 October 2011
At 31 October 2010
Freehold land
Plant and
equipment
£
1,321,040
-
£
-
361
Total
£
1,321,040
361
1,321,040
361
1,321,401
(1,321,040)
(361)
(1,321,401)
-
-
-
1,153,740
1,153,740
-
-
-
50
-
50
50
-
-
50
1,153,740
1,153,790
50
(1,153,740)
(100)
(1,153,840)
-
-
-
-
-
-
167,300
311
167,611
1,321,040
-
1,321,040
25
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
15 INVESTMENTS IN SUBSIDIARIES
Company
Cost
At 1 November 2010 and 31 October 2011
Disposals during the year
At 31 October 2012
Provision for diminution in value
At 1 November 2010 and 31 October 2011
Disposals during the year
At 31 October 2012
Net book value
At 31 October 2012
At 1 November 2010 and 31 October 2011
Subsidiary undertakings
Total
£
10,436,164
(10,436,064)
100
10,435,961
(10,435,861)
100
-
203
At 31 October 2012, the Company's only subsidiary was Ringwood Town & Country Experience Limited, a company
incorporated in England and Wales with issued share capital of £100 which was wholly owned directly by the Company.
Ringwood Town & Country Experience Limited carried on a business of a museum and restaurant and it ceased to trade on 16
April 2012. Provision has been made in the accounts of the Company against the book value of the shares capital (£100) and
of the amount owed by the subsidiary to the Parent (£616,478). This company is included in the consolidated financial
statements.
During the year, the Company sold the entire issued share capitals of Oak Heritage Limited and Rother Valley Steam Railway
Limited for an aggregate consideration of £2. This resulted in a loss of £129,829 with the discharge of liabilities by the
purchaser and the elimination of intra group balances.
During the year, the Company's subsidiary Rother Valley Country Park Limited was put into compulsory liquidation resulting in
a loss of £2 to the Company.
Also during the year, Oak Ventures Limited, Time Afloat Limited and Yorkshire Entertainment Sensation Limited were dissolved
resulting in neither profit nor loss to the Company.
16 INVENTORIES
Memorabilia and vehicles
17 TRADE AND OTHER RECEIVABLES
Trade receivables
Amounts owed by group undertakings
Amount held by Insolvency Practitioner in connection
with CVA
Other receivables
Prepayments
Group
2012
£
-
-
Group
2012
£
-
-
17,303
53,344
16,147
86,794
2011
£
552,736
552,736
2011
£
17,809
-
-
-
3,474
Company
2012
2011
£
-
-
£
-
-
Company
2012
2011
£
-
-
17,303
55,573
16,147
£
-
928,675
-
-
3,334
21,283
89,023
932,009
As described in note 3, the Directors do not consider credit risk to be material to the Group's operations.
Amounts owed by subsidiary undertakings to the Parent Company are stated net of a provision for irrecoverable amounts of
£616,478 (2011: £2,631,075).
26
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
18 SHARE CAPITAL
Authorised
5,468,468,206 ordinary shares of 0.1p each (2011: 163,828,803 ordinary
shares of 5p each)
136,171,197 (2011: 136,171,197) deferred shares of 5p each
55,570,856 (2011: nil) deferred shares of 4.9p each
Allotted and fully paid:
1,755,570,856 ordinary shares of 0.1p each (2011: 55,570,856 ordinary
shares of 5p each)
136,171,197 (2011: 136,171,197) deferred shares of 5p each
55,570,856 (2011: nil) deferred shares of 4.9p each
2012
£
2011
£
5,468,468
8,191,440
6,808,560
6,808,560
2,722,972
-
15,000,000
15,000,000
1,755,571
2,778,543
6,808,560
6,808,560
2,722,972
-
11,287,103
9,587,103
In a general meeting held on 16 April 2012, a special resolution was approved to subdivide each ordinary share of 5p into a
share of 4.9p each (which was re-designated as a deferred share) and a share of 0.1p each (which continued to be an ordinary
share).
On 18 April 2012, the Company placed 1,000,000,000 new ordinary shares of 0.1p each at par and on 24 April 2012 placed a
further 700,000,000 such shares at the same price. In aggregate, the placings generated net proceeds to the Company of
£1,615,000 after the costs of the placing.
Pursuant to the CVA, the Company allotted 66,089,008 new ordinary shares on 19 November 2012 at a value of 0.125p per
share in part settlement of unsecured debt subject to the CVA. Such settlement has been treated as occurring at the year end
and has been taken into account in establishing the amount due to the Company as shown in note 17.
The holders of the ordinary shares are entitled to one vote for each share held on a poll. They are also entitled to receive
dividends declared in proportion to the number of shares held (subject to any right of another class, and none currently exists,
to receive a preferred dividend) and, on a return of capital and subject to the limited participation rights of the holders of the
two classes of deferred shares detailed below and any subsequently created class of shares with preferential rights, to
participate in such return in proportion to the number of shares held.
Neither class of deferred shares have any voting or dividend rights and only have rights to a repayment of the nominal value of
the shares and then only after a £100,000 per ordinary share has been returned to each holder of ordinary shares. The
Company has the right to acquire for cancellation each entire class of deferred share for an aggregate consideration of 1p and
the Company intends to exercise such right in due course.
Warrants
The Company issued warrants on 24 October 2003 entitling warrant holders to subscribe in cash at a price of 2.38p per
Ordinary 1p share for up to 101,419,687 Ordinary shares. Following the exercise of warrants and restructurings of the
Company’s share capital, the number of warrants outstanding is 2,021,791 (2011: 2,021,791) exercisable at a price of £1.19
each. The warrants can be exercised on 1 December in any year up to and including 2013.
On 16 April 2012, the Company granted a warrant to Peterhouse Capital Limited which gave Peterhouse Capital Limited the
right to subscribe new ordinary shares of 0.1p each representing up to 3% of the issued share capital of the Company from
time to time. The subscription price for the exercise of this warrant is 0.1p per share and the warrant may be exercised at any
time up to 20 March 2015. On 17 April 2012, the Company granted warrants to each of P Redmond and A A Quraishi which
each gave the holder the right to subscribe new ordinary shares of 0.1p each representing up to 1.5% of the issued share
capital of the Company from time to time. The subscription price for the exercise of these warrants is 0.1p per share and the
warrants may be exercised at any time up to 17 April 2015.
Options
Details relating to options to subscribe for ordinary shares in the Company (all of which had lapsed by the year end) are set out
in note 25 below.
27
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
19 BORROWINGS
Current liabilities
Bank loan
Bank overdraft
Hire purchase liabilities
Vendor mortgage loan
Other loans
Non-current liabilities
Hire purchase liabilities
Group
2012
£
-
-
-
-
-
-
-
2011
£
125,000
33,386
18,560
644,051
322,608
1,143,605
4,234
Company
2012
£
-
-
-
-
-
-
-
2011
£
125,000
2,674
-
644,051
311,787
1,083,512
-
The bank loan was secured by fixed and floating charges over the Company's assets and by a debenture over the assets of
Rother Valley Country Park Limited which company had also provided a guarantee in respect of this bank loan. This loan was
discharged as part of the arrangements for the disposal of the Company's shares in Oak Heritage Limited and Rother Valley
Steam Railway Limited and the assets of Ringwood Town & Country Experience Limited.
The vendor mortgage loan represented the amount payable to the vendor of freehold land purchased by the Group in the year
ended 31 October 2007 and was secured on that land. During the year this land was disposed of to the vendor at its impaired
value in partial settlement of the loan, with the balance of the loan becoming an unsecured creditor under the CVA.
Of the other loans, £222,008 are secured on various assets owned by subsidiaries of the Company and were in part discharged
as part of the arrangements for the disposal of the Company's shares in Oak Heritage Limited and Rother Valley Steam Railway
Limited and the assets of Ringwood Town & Country Experience Limited with the balance of the loans becoming an unsecured
loan under the CVA. The remaining loans had no formal terms and were unsecured creditors under the CVA.
20 TRADE AND OTHER PAYABLES
Amounts owed to group undertakings
Trade payables and accruals
Taxation and social security
Group
Company
2012
2011
2012
£
-
£
-
£
-
2011
£
74,388
144,352
888,031
120,252
665,505
39,067
382,639
6,612
139,159
183,419
1,270,670
126,864
879,052
The average credit period taken for trade payables at the end of the year is 119 days (2011: 329 days).
28
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
21 CASH ABSORBED BY OPERATIONS
Profit/(loss)
Depreciation
Impairment of fixed asset
Loss on disposal of fixed assets
Loss on disposal of discontinued activities
Extraordinary credit from CVA
Share based payments
Finance income
Finance costs
Decrease/(increase) in inventories
Group
2012
£
2011
£
Company
2012
£
2011
£
781,476
(1,779,886)
348,688
(1,511,801)
6,706
55,955
-
1,153,740
6,714
283,755
(1,526,949)
19,212
(835)
50,789
10,597
-
-
-
-
(4)
64,293
27,048
50
-
-
774,205
(1,526,949)
19,212
(835)
50,789
-
50
1,153,740
-
-
-
-
(4)
57,793
15,000
Decrease/(increase) in receivables
(70,971)
60,216
(89,929)
(96,162)
(Decrease)/increase in payables
144,457
403,220
126,864
359,637
Cash absorbed by operations
22 OPERATING LEASE COMMITMENTS
(295,049)
(15,418)
(297,905)
(21,747)
The Group leased its museum and restaurant premises under non-cancellable operating lease agreements. The future
aggregate minimum lease payments under non-cancellable operating leases are as follows:
Within one year
In more than one year but less than five years
Over five years
2012
£
-
-
-
-
2011
£
28,100
112,401
126,451
266,952
The Company has no commitments under operating lease arrangements
23 CONTINGENT LIABILITES
At 31 October 2012, the Company had guaranteed the obligations of its then subsidiary Rother Valley Country Park Limited
(which is now in liquidation) in connection with the interim management agreement with Rotherham Metropolitan Borough
Council. At that date, the Company had also indemnified an insurer which had provided a bond in favour of the South
Yorkshire Pension Authority in connection with amounts owed by the Company's subsidiary Rother Valley Country Park Limited
to that pension fund under certain circumstances. These contingent liabilities were disclosed under the CVA and the Company
no longer has a contingent liability in respect of such contingent liabilities.
At 31 October 2012, neither the Company nor the Group has any material contingent liabilities.
29
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
24 RELATED PARTY TRANSACTIONS
Ultimate controlling party
The Directors do not consider there to be a single ultimate controlling party.
Company – transactions with subsidiaries
Management charge rendered to Oak Heritage Limited by the Company in
respect of services provided
Management charge rendered to Oak Ventures Limited by the Company in
respect of services provided
2012
£
-
-
2011
£
24,000
27,500
Management charge rendered to Rother Valley Country Park Limited by
28,500
165,000
the Company in respect of services provided
Management charge rendered to Ringwood Town & Country Experience
Limited by the Company in respect of services provided
Provisions against amounts due to the Company from Rother Valley Steam
Railway Limited, Oak Heritage Limited and Ringwood Town & Country
Experience Limited were made in full during the year to the extent not
previously provided, giving rise to a charge to the statement of
comprehensive income
Group and Company – transactions with Directors
Arrangement fee for the guarantees provided by S B Lewis in respect of
the £250,000 bank loan utilised by the Company to purchase the access
land adjacent to the YES! Project
Fees for consultancy services and disbursements supplied by Benedict
Investments Limited, a company of which AA Quraishi is a director and the
controlling shareholder
Fees for consultancy services supplied by Catalyst Consultancy Limited, a
company beneficially controlled by P Redmond and of which he is a
director
Fees paid for financial advisory services rendered by Corporate Finance
Partners Limited, a company of which C J Yates is a director (but who did
not render the services and had no beneficial interest in the fee). The fee
was subject to the CVA and this amount represents the amount paid in
cash and shares
-
17,000
750,008
27,500
2012
2011
£
-
£
5,000
7,027
13,750
3,000
-
-
-
30
PIRES INVESTMENTS PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended 31 October 2012
25 SHARE BASED PAYMENTS
The Company had a share option scheme for all employees of the Group. Options were exercisable at a price equal to the
average quoted market price of the Company’s shares on the date of grant. The vesting period varied between 1 and 4 years.
If the options remain unexercised after a period of 10 years from the date of grant, the options expire. Options are forfeited if
the employee leaves the Group before the options vest and were exercisable for a period of no more than six months after his
leaving.
Details of the share options outstanding during the year are as follows:
Outstanding at the beginning of the year
Lapsed during the period
Outstanding at the end of the period
2012
2012
2011
2011
Number of
options
Exercise
price
Number of
options
Exercise price
91,428
91,428
0
87.5p
87.5p
582,856
491,428
91,428
87.5p
87.5p
87.5p
All options were vested by 31 October 2010 and no subsequent expense has been recognised in respect of the share based
payments in the form of the options referred to above.
In April 2012, the Company granted warrants, as described in note 18, over an aggregate of 6% of the issued ordinary share
capital of the Company from time to time. These warrants may be exercised at any time up to their expiry date and vested on
issue. £38,424 has been recognised in these financial statements in respect of these warrants. The Directors have used the
Black Scholes model to value these warrants applying the assumptions set out below:
Number of shares subject of the warrants granted
Share price at grant date
Warrant exercise price
Expected volatility
Expected life
Risk free rate of return
Expected dividend yield
Fair value of warrant per share
Total fair value of award
26 POST BALANCE SHEET EVENTS
Warrants
granted April
2012
105,334,260
0.10p
0.10p
50.00%
3 years
3.00%
0.00%
0.0365p
£38,424
On 19 November 2012, the Company issued 66,089,008 new ordinary shares to unsecured non-preferential creditors of the
Company who had been subject to the CVA in accordance with the approved terms of the CVA to satisfy 5p in the £ of the debt
due to such creditors with each share valued for these purposes at 0.125p per share. In addition to cash payments to
preferential unsecured creditors of £17,598, cash payments of £82,611 (representing 5p in the £) had been made during the
year to non-preferential unsecured creditors under the CVA and as there was a commitment to issue such shares as part of the
CVA arrangements to match the cash payments, the issue of such shares has been reflected in the balance sheet as at 31
October 2012.
31