Pires Investments plc
(Incorporated in England and Wales with registered number 02929801)
Annual Report and
Financial Statements
for the year ended 31 October 2013
PIRES INVESTMENTS PLC
Contents
Company Information
Chairman’s Statement
Investment Review
Strategic Report
Directors’ Report
Report on Remuneration
Statement of Directors’ Responsibilities
Corporate Governance Report
Report of the Independent Auditor
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Financial Position
Statement of Cash Flows
Notes to the Financial Statements
Page
1
2
3
4
6
8
9
10
11
13
14
15
16
17
PIRES INVESTMENTS PLC
Company Information
Directors
Secretary
Registered office
Auditors
Nominated adviser
Broker
Registrars
P Redmond (chairman)
R J Armstrong
A A Quraishi
C J Yates
R C Porter ACA
c/o Morrison & Foerster
CityPoint
One Ropemaker Street
London
EC2Y 9AW
Welbeck Associates
Chartered Accountants and Registered Auditors
30 Percy Street
London
W1T 2DB
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
Registered number
02929801
Page | 1
PIRES INVESTMENTS PLC
Chairman’s Statement
During the period under review, Pires made a number of investments in quoted and unquoted stocks
pursuant to its investment strategy, which is to invest principally in the resources and energy sector.
We looked closely at a number of pre-IPO and other opportunities during the period and this resulted
in the Company making its first significant such investment in the new financial year.
In July 2013, the Company raised £500,000 before expenses by way of the issue of 500 million new
ordinary shares at a price of 0.1p per share. As at 31 October 2013 the Company had cash resources
of approximately £1.2m (2012: £1.3m).
The cornerstone investee company is Rame Energy plc (“Rame”), in which we invested on a pre-IPO
basis in February 2014 and which was admitted to trading on AIM on 10 April of this year. Our initial
investment of £410,000 was in the form of a convertible loan note which was convertible at a
minimum 25% discount to the IPO placing price. In addition, we invested a further £55,000 on
admission in ordinary shares at the placing price; further details of the investment will be found on
page 3 of this document under the heading “Investment Review”.
Rame is a well-established UK based international specialist energy producer with a strong presence
in Latin America, in particular Chile. Since establishing an office there in 2006, it has been involved in
the construction of a significant proportion of wind power projects in that country, developing and
implementing power solutions for many of Chile’s major mining and industrial corporations. It has
developed its own portfolio of projects and is now in the process of becoming an independent power
producer in its own right, with significant equity positions in its future developments. We believe that
it now has the capacity to make a quantum leap from being a well-respected but modest-sized
consultancy company to becoming a substantial player in the energy industry in Chile, which is widely
regarded as a stable and rapidly growing economy. The Board believes that the implementation of
these plans will result in the further enhancement of the value of the Company’s investment.
The Board believes that the investment in Rame will set the pattern for the Company’s future
investments. Our objective is to provide capital at the pre-IPO stage to well-established companies
that are seeking to come to the market in the near term and where the Board believes that the
Company’s funding and assistance can hasten this process. Although we are looking at other resource
and energy projects currently, we are also reviewing opportunities outside of this sector.
The Directors remain mindful of the need to restrain costs and generate additional income streams.
The Board believes that the Company is now moving forward in a positive way and it looks forward to
further positive developments in the current trading period.
Peter Redmond
Chairman
29 April 2014
Page | 2
PIRES INVESTMENTS PLC
Investment Review
Rame Energy plc
On 10 February 2014, Pires announced an investment of £410,000 in Rame Energy plc (“Rame”) via a
three year convertible loan note, convertible at a minimum 25% discount to its IPO price, with
automatic conversion should Rame’s IPO occur within six months of Pires’ investment. Rame was
admitted to AIM on 4 April 2014 and Pires’ convertible loan noted therefore converted into 3,037,037
new ordinary shares in Rame, valued at £547,000. Pires subscribed for an additional 308,233 new
ordinary shares as part of the IPO placing at 18p per share, at a cost of £55,000. Pires therefore now
has 3,345,270 ordinary shares in Rame, representing 3.5% of the issued share capital of Rame. Pires
also has warrants to subscribe for 125,000 new ordinary shares in Rame at the placing price until
February 2017.
Rame raised $3.6 million by way of pre-IPO investment and a further £2.1 million by way of a placing
of new ordinary shares and convertible loan notes on admission to AIM.
Rame is a UK-based specialist international energy producer, established in 2002, and with a strong
and experienced management team. Rame has a well-established presence in the Chilean wind
power market and experience in a wide range of power resources, including solar and diesel power. It
has been at the forefront of wind power development in Chile, developing projects for Barrick Gold,
Anglo American and Antofagasta Minerals among others.
It is now capitalising on its experience and expertise to develop, own and operate power generation
projects, with its initial focus being in Chile and thereafter globally as dictated by the needs of its
clients. Rame plans to become a niche independent power producer taking full advantage of
opportunities created by increasing energy costs and demands in power intensive industrial activities
such as mining.
Rame has entered into binding agreements with Santander Investment Chile for the co-financing of
15MW of wind farms across two project sites in Chile, with conditional loan agreements in place with
Chilean bank, Banco BICE, to provide the debt package for the projects. It also has agreed indicative
terms for the financing of another 9MW Chilean wind farm project where binding terms have now
been executed for a 10 year power purchase agreement . Rame has a 20% interest in the equity of
the initial two projects, with an option to acquire the balance, and is expected to have a minimum
20% interest in the third.
Rame has a portfolio of 28 onshore wind energy assets in Chile which, based on the Company’s
estimations using wind data and industry standard software, have a potential installed capacity in
excess of 1.4 GW. Its next two projects are expected to provide 84MW of power at an advanced stage
of development. Rame intends, subject to financing, to install approximately 300 MW of wind, solar,
biomass and diesel projects over the next three years.
Shale Energy plc
Pires has a shareholding of 31,105 5p ordinary shares in Shale Energy plc with a book value of
£27,995. It is seeking to acquire interests in shale energy licences in the UK; and it has been in
negotiations to acquire an interest in a company holding such licences, though the outcome of these
negotiations is at present uncertain.
Page | 3
PIRES INVESTMENTS PLC
Strategic Report
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 and this policy was re-adopted at the Annual General Meeting held on 21 March
2013. The policy is to invest, principally but not exclusively, in the resources and energy sectors and
full details of the policy are set out below.
Investing Policy
The Company's Investing Policy is to invest principally, but not exclusively in the resources and energy
sectors. The Company will initially focus on projects located in Asia but will also consider investments
in other geographical regions. The Company may be either an active investor and acquire control of a
single company or it may acquire non-controlling shareholdings. Once a target has been identified,
additional funds may need to be raised by the Company to complete a transaction.
The proposed investments to be made by the Company may be in either quoted or unquoted
securities made by direct acquisition and may be in companies, partnerships or joint ventures, or
direct interests in projects and can be at any stage of development. The Company’s equity interest in
a proposed investment may range from a minority position to 100 per cent ownership.
The Company will identify and assess potential investment targets and where it believes further
investigation is required, intends to appoint appropriately qualified advisers to assist.
The Company proposes to carry out a comprehensive and thorough project review process in which
all material aspects of any potential investment will be subject to rigorous due diligences, as
appropriate. It is likely that the Company’s financial resources will be invested in a small number of
projects or investments or potentially in just one investment which may be deemed to be a reverse
takeover under the AIM Rules. Where this is the case, it is intended to mitigate risk by undertaking an
appropriate due diligence process. Any transaction constituting a reverse takeover under the AIM
Rules will require shareholder approval. The possibility of building a broader portfolio of investment
assets has not, however, been excluded.
The Company intends to deliver shareholder returns principally through capital growth rather than
capital distribution via dividends. Given the nature of the Company’s Investing Policy, the Company
does not intend to make regular periodic disclosures or calculations of net asset value.
The Directors believe that their broad collective experience together with their extensive network of
contacts will assist them in the identification, evaluation and funding of suitable investment
opportunities. When necessary, other external professionals will be engaged to assist in the due
diligence of prospective opportunities. The Directors will also consider appointing additional directors
with relevant experience if the need arises.
The objective of the Directors is to generate capital appreciation and any income generated by the
Company will be applied to cover costs or will be added to the funds available to further implement
the Investment Policy. In view of this, it is unlikely that the Directors will recommend a dividend in the
early years. However, they may recommend or declare dividends at some future date depending on
the financial position of the Company.
Page | 4
PIRES INVESTMENTS PLC
Strategic Report
Key performance indicators
The key performance indicators are set out below:
Net asset value
Net asset value – fully diluted per share
Cash and cash equivalents
Principal business risks and uncertainties
Market Risks
31 October
2013
£1,305,635
0.057p
£1,195,379
31 October
2012
£1,202,769
0.069p
£1,240,610
Change %
+9%
-17%
-4%
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.
Financial risk management objectives and policies
Details of the Company’s financial instruments and financial risk management policies can be found in
notes 14 and 15 to the financial statements.
Assessment of Business Risk
The Board regularly reviews operating and strategic risks and considers in such reviews financial and
non-financial information including:
•
•
•
•
a review of the business at each Board meeting, focusing on any new decisions/risks arising;
the performance of investments;
selection criteria of new investments; and
reports prepared by third parties.
C J Yates
Director
29 April 2014
Page | 5
PIRES INVESTMENTS PLC
Directors’ Report
The Directors present their annual report and the audited financial statements of Pires Investments
Plc for the year ended 31 October 2013.
The Company’s shares of 0.1p each are traded on AIM Market of the London Stock Exchange.
Results and dividends
The Company’s loss from continuing activities for the year was £352,634 (2012 profit: £348,688). The
2012 result benefitted from a gain of £1,526,949 arising from the creditors' voluntary arrangement
which was approved during the year and was after charging £825,211 arising from discontinued
activities.
The Directors are unable to recommend the payment of a dividend, given the deficit on distributable
reserves.
Principal activities and review of business
The principal activities of the Company throughout the year under review and since have been as an
investment company which has involved the seeking, investigation and making of investments.
The review of the business is contained within the Strategic Report on page 4.
Events after the Reporting Period
Since 31 October 2013, the Company has made an investment of £410,000 in Rame Energy plc by way
of a convertible loan. On 10 February 2014, the Company’s convertible loan note was converted into
3,037,037 new ordinary shares In Rame Energy plc, which would realise £547,000 at the placing price.
In addition, as part of the IPO for Rame Energy, the Company subscribed for 308,233 new ordinary
shares in Rame Energy. Following the conversion and subscription the Company has an interest of
3,345,270 ordinary shares, representing approximately 3.5 per cent of Rame Energy’s issued share
capital.
Directors
The following Directors have held office since 31 October 2012:
P Redmond
A A Quraishi
C J Yates
R J Armstrong (appointed 14 February 2014)
Charitable and political donations
No charitable or political donations were made during the year (2012: nil).
Going concern
The financial statements have been prepared on a going concern basis because, as set out in detail in
Note 1 (Going Concern), the Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future.
Substantial shareholders
As at 15 April 2014, either the Company had been notified in accordance with Chapter 5 of the
Disclosure and Transparency Rules of the following holdings, or the Company’s share register showed
the following shareholdings representing 3% or more of the Company’s issued ordinary share capital:
Page | 6
PIRES INVESTMENTS PLC
Directors’ Report (continued)
Shareholder
Ambrosia Investment Limited
Gledhow Investments plc
Jim Nominees Limited
W B Nominees Limited
XCAP Nominees Limited
TD Direct Investing Nominees Limited
AIMS Consultancy Limited
L R Nominees Limited
Euroclear Nominees Limited
Auditor
Ordinary shares
of 0.1p each
Number
375,000,000
200,000,000
198,007,117
180,500,000
151,254,000
127,707,624
125,000,000
121,302,731
70,000,000
% of the issued
ordinary share
capital
16.15%
8.61%
8.53%
7.77%
6.51%
5.50%
5.38%
5.22%
3.02%
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.
By order of the Board
C J Yates
Director
29 April 2014
Page | 7
PIRES INVESTMENTS PLC
Report on Remuneration
Policy on Directors’ remuneration
The policy of the Board is to provide remuneration packages designed to attract, motivate and retain
Directors of the calibre necessary to maintain the Company’s position and to reward them for
enhancing shareholder value. It aims to provide sufficient levels of remuneration to do this, but to
avoid paying more than is necessary. The remuneration will reflect the Directors’ responsibilities and
time commitment and, where appropriate, will contain incentives to deliver the Company’s
objectives.
Remuneration of the Directors
During the period, the following remuneration and other benefits were charged to the Company:
P Redmond (see notes 1 &2 below)
A A Quraishi (see notes 1 &2 below)
C J Yates (see notes 1 &3 below)
P D Collins (see 3 below)
M C Woodcock (see note 3 below)
Salaries
2013
£
-
-
27,083
-
-
27,083
Fees
2013
£
15,000
15,000
8,750
-
-
38,750
Total
2013
£
15,000
15,000
35,833
-
-
65,833
Total
2012
£
8,125
8,125
38,187
688
3,667
58,792
Notes:
1
In addition, companies or businesses in which Mr Redmond, Mr Quraishi and Mr Yates were
interested were paid consultancy fees in respect of services provided and disbursements
totalling £11,000, £13,942 and £3,500 respectively.
2 Mr Redmond and Mr Quraishi were each, in April 2012, 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 was recognised in the Statement of Comprehensive Income for the year ended
31 October 2012.
In respect of the year ended 31 October 2012, these numbers represented 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.
3
Directors’ interests
The Directors’ beneficial interests in the share capital of the Company as at 31 October 2012 and 31
October 2013 were:
Ordinary shares of
0.1p each 31 October
2013
-
-
-
6,766,819
Ordinary shares of
0.1p each 31 October
2012
-
-
-
200,000
P Redmond (note 1)
A A Quraishi (note 1)
R J Armstrong (note 2)
C J Yates
Notes:
1
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
R J Armstrong was appointed as a non-executive director of the company on 14 February 2014.
Mr Armstrong has an interest of 15,113,436 ordinary shares in the Company
2
C J Yates
Director
29 April 2014
Page | 8
PIRES INVESTMENTS PLC
Statement of Directors Responsibilities
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 Company 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 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 Company 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.
Publication of Accounts on the Company Website
Financial statements are published on the Company’s website. The maintenance and integrity of the
website is the responsibility of the Directors. The Directors’ responsibility also extends to the financial
statements contained therein.
By order of the Board
C J Yates
Director
29 April 2014.
Page | 9
PIRES INVESTMENTS PLC
Corporate Governance Report
The Company’s shares are traded on AIM and, accordingly, compliance with the revised UK Corporate
Governance Code is not mandatory. However, the Company has sought to comply with the principles
underlying the provisions of the Code in so far as it considers them to be appropriate for a company
of this size and nature. The Board is accountable to the Company’s shareholders for good corporate
governance. This report and the Remuneration Report describe how the Company applies the
provisions of good corporate governance.
Directors
The Board currently consists of the Non-executive Chairman and three other Non-executive Directors
whilst it is seeking investment opportunities. It is responsible for approving Company policy and
strategy and for implementing it with support from consultants. The Directors will review the
composition of the Board on a regular basis. All Directors have access to advice from the Company
Secretary and independent professional advice at the Company’s expense.
Relations with shareholders
The Company values the views of its shareholders and recognises their interest in the Company’s
strategy and performance. The Annual General Meeting is used to communicate with investors and
they are encouraged to participate and the Directors are available to answer questions. Separate
resolutions are proposed on each issue so that they can be given proper consideration.
Audit Committee
During the year the Audit Committee initially comprised Aamir Quraishi and Peter Redmond and now
comprises Peter Redmond and Christopher Yates. 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.
Remuneration Committee
During the year the Remuneration Committee initially comprised Aamir Quraishi and Peter Redmond
and now comprises Peter Redmond and Christopher Yates. 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.
Internal control
The Board is committed to the maintenance of effective internal controls. The Board recognises its
responsibility for maintaining a strong system of internal control to safeguard shareholders’
investment and the Company’s assets and for reviewing its effectiveness. The system of internal
financial control is designed to provide reasonable, but not absolute, assurance against material
misstatement or loss.
The Board has determined that there is currently no requirement for an internal audit function whilst
it is seeking investment opportunities. However, the Directors will continue to review the
requirement for an internal audit function on a regular basis.
Peter Redmond
Director
29 April 2014
Page | 10
PIRES INVESTMENTS PLC
Report of the Independent Auditor
We have audited the financial statements of Pires Investments Plc for the year ended 31 October
2013 which comprise the income statement, statement of changes in equity, balance sheet,
statement of cash flows and the related notes to the financial statements. 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.
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, 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 includes 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 Company’s affairs as at 31 October 2013 and of
the Company’s loss for the year then ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union;
and
have been properly prepared in accordance with the requirements of 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.
Page | 11
PIRES INVESTMENTS PLC
Report of the Independent Auditor (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 Company, or returns adequate for
our audit have not been received from branches not visited by us; or
the Company financial statements are not in agreement with the accounting records and
returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Jonathan Bradley-Hoare (Senior Statutory Auditor)
For and on behalf of Welbeck Associates
Chartered Accountants and Statutory Auditor
30 Percy Street
London
W1T 2DB
29 April 2014
Page | 12
PIRES INVESTMENTS PLC
Statement of Comprehensive Income
CONTINUING ACTIVITIES
Revenue
Investment income
Other income
Total revenue
Losses on investments held at fair value through profit or
loss
Operating expenses
Exceptional credit arising from CVA
Operating (loss) / profit from continuing activities
Finance costs
(Loss) / profit before taxation from continuing activities
Tax
(Loss) / profit for the year from continuing activities
Loss on disposal of discontinued operations
(Loss)/profit for the period and total comprehensive
income attributable to equity holders of the Company
Basic (loss) / earnings per share
Equity holders
From continuing operations
From discontinued operations
Basic and diluted
Note:
2013
£
2012
(see note
below)
£
Notes
5
13
3
6
8
9
4,327
25,050
29,377
835
28,500
29,335
(45,939)
-
(336,072)
(348,562)
-
1,526,949
(352,634)
1,207,722
-
(33,823)
(352,634)
1,173,899
-
-
(352,634)
1,173,899
-
(825,211)
(352,634)
348,688
10
10
(0.02)p
-
(0.02)p
0.12p
(0.08)p
0.04p
The financial statements for the year to 31 October 2012 were prepared on a consolidated basis, so
the comparatives have been restated to reflect the results of the Company only.
Page | 13
PIRES INVESTMENTS PLC
Statement of Changes in Equity
Share
Capital
£
9,587,103
Share
Premium
£
3,017,818
Shares to
be issued
£
-
Capital
Redemption
Reserve
£
164,667
Retained
Earnings
£
(13,632,330)
Total
£
(862,742)
-
1,700,000
-
-
11,287,103
-
-
(104,212)
19,212
2,932,818
-
82,611
-
-
82,611
-
-
-
-
164,667
348,688
-
-
19,212
(13,264,430)
348,688
1,782,611
(104,212)
38,424
1,202,769
-
566,089
-
11,853,192
-
16,522
(44,500)
2,904,840
-
(82,611)
-
-
-
-
-
164,667
(352,634)
-
-
(13,617,064)
(352,634)
500,000
(44,500)
1,305,635
Balance at 1 November 2011
Total comprehensive income
for the year ended 31 October
2012
Issue of shares
Share issuance costs
Cost of share based payments
As at 31 October 2012
Total comprehensive income
for the year ended 31 October
2013
Issue of shares
Share issuance costs
As at 31 October 2013
Page | 14
PIRES INVESTMENTS PLC
(Incorporated in England and Wales with registered number 02929801)
Statement of Financial Position
Non-current assets
Property, plant and equipment
Investments in subsidiary undertakings
Total non-current assets
Current assets
Investments
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Issued share capital
Share premium
Equity share capital to be issued (including
premium)
Retained earnings
Capital redemption reserve
Total equity
Liabilities
Current liabilities
Trade and other payables
Total liabilities and current liabilities
Total equity and liabilities
Note
11
16
13
17
18
18
19
2013
£
1,812
-
1,812
2012
£
-
-
-
84,966
128,588
1,195,379
1,408,933
1,410,745
-
89,023
1,240,610
1,329,633
1,329,633
11,853,192
2,904,840
-
11,287,103
2,932,818
82,611
(13,617,064)
164,667
1,305,635
(13,264,430)
164,667
1,202,769
105,110
105,110
126,864
126,864
1,410,745
1,329,633
These financial statements were approved and authorised for issue by the Board of Directors on 29
April 2014 and were signed on its behalf by:
C J Yates
Director
Page | 15
PIRES INVESTMENTS PLC
Statement of Cash Flows
Cash flows from operating activities
Net cash absorbed by operating activities
Cash flows from investing activities
Payments to acquire tangible fixed assets
Payments to acquire investments
Proceeds of disposal of investments
Finance income received net
Net cash used in investing activities
Cash flows from financing activities
Net (repayments)/advances on borrowings
Cash from subscriptions for new shares
Expenses of share issue
Finance cost paid
Net cash from financing activities
Net (decrease)/increase in cash and cash equivalents
during the year
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2013
£
2012
£
(372,045)
(297,905)
Note
20
(2,109)
(863,206)
732,302
4,327
(128,686)
-
500,000
(44,500)
-
455,500
-
-
-
835
835
(26,531)
1,700,000
(85,000)
(50,789)
1,537,680
(45,231)
1,240,610
1,240,610
1,195,379
-
1,240,610
Page | 16
PIRES INVESTMENTS PLC
Notes to the Financial Statements
1. ACCOUNTING POLICIES
General Information
Pires Investments plc (“the Company”) was throughout the year an investing company with an investing
policy adopted on 16 April 2012 and re-adopted on 21 March 2013.
In the previous year, the Company and its then subsidiaries were the operators of leisure activities.
These businesses ceased to operate or were disposed of by 16 April 2012.
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 financial statements are prepared in Pounds Sterling, because that is the currency of the primary
economic environment in which the Company operates.
Principal accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to all periods presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) and IFRIC interpretations as adopted by the European Union applicable to companies
reporting under IFRSs. The financial statements have also been prepared under the historical cost
convention.
For all periods up to and including the year ended 31 October 2012, financial statements were prepared
on a Group Consolidated basis. The 31 October 2012 financial information has been restated to show
the Company financial information as there is no longer the requirement to prepare Group financial
statements.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying
the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial statements are disclosed later in
these accounting policies.
Going Concern
The financial statements have been prepared on the going concern basis.
The Directors have prepared cash flow forecasts through to 30 April 2015, which show that the
Company will have sufficient available cash resources to provide for its future requirements. In
preparing their forecasts the Directors have given due regard to the risks and uncertainties affecting the
business as set out in the Strategic Report and the liquidity risk disclosed in note 14.
On this basis, the Directors have a reasonable expectation that the Company has adequate resources to
continue operating for the foreseeable future. For this reason they continue to adopt the going concern
basis in preparing the Company’s financial statements.
Page | 17
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
1. ACCOUNTING POLICIES (continued)
Statement of compliance
The Directors anticipate that the adoption of new standards which are in issue but not yet effective and
have not been early adopted by the Company will be relevant to the Company but will not result in
significant changes to the Company’s accounting policies. These are:
Amendments resulting from Annual improvements 2010-2012 Cycle
Effective for
accounting
periods
beginning on or
after:
1 July 2014
Amendments resulting from Annual improvements 2011-2013 Cycle
1 July 2014
Deferral of mandatory effective date of IFRS 7 and amendments to
transition disclosures
Deferral of mandatory effective date of IFRS 9 and amendments to
transition disclosures
Consolidated Financial Statements – Amendments for investment
entities
Joint arrangements
Disclosure of Interests in Other Entities – Amendments for investment
entities
Employee Benefits – Amended to clarify the requirements that relate
to how contributions from employees or third parties that are linked to
service should be attributed to periods of service.
Amendments for investment entities
Investment in associates
Financial Instruments: Presentation – Amendments to application
guidance on the offsetting of financial assets and financial liabilities
Impairment of assets
Amendments resulting from Annual improvements 2010-2012 Cycle
Financial Instruments: Recognition and Measurement – Amendments
for novation of derivatives
Levies
Consolidated financial statements – Identification of the concept of
control of an entity and the requirement to include in consolidated
accounts
1 January 2015
1 January 2015
1 January 2014
1 January 2014
1 January 2014
1 July 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 July 2014
1 January 2014
1 January 2014
1 January 2014
IFRS
2,8,16,24,36
IFRS
3,13,IAS 40
IFRS 7
IFRS 9
IFRS 10
IFRS 11
IFRS 12
IAS 19
IAS 27
IAS 28
IAS 32
IAS 36
IAS 38
IAS 39
IFRIC 21
IFRS 10
The Directors anticipate that the adoption of the above Standards and Interpretations in future periods
will have little or no impact on the Financial Statements of the Company.
Critical judgments and key sources of estimation uncertainty
The preparation of the financial statements in conformity with IFRS requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Although
these estimates are based on management’s best knowledge of the amounts, events or actions, actual
results ultimately may differ from these estimates.
Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the
circumstances.
In certain circumstances, where fair value cannot be readily established, the Company is required to
make judgements over carrying value impairment, and evaluate the size of any impairment required.
Page | 18
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
1. ACCOUNTING POLICIES (continued)
The major area in which estimates and judgements are most important is the valuation of investments
and such estimates and judgements are made on the basis described under “Financial assets designated
at fair value through profit or loss” below in this note 1.
Depreciation
Computer equipment is measured at cost less provision for depreciation. Depreciation is provided on
these assets at 33 1/3% of cost per annum which is calculated to write off the cost less estimated
residual value of the assets over their expected useful lives.
Income recognition
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. Dividend income is
recognised at the time any market share price is adjusted to exclude the right to receive such dividend
or, if there is no such adjustment, when received.
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 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 Company intends to settle its current tax assets and liabilities on a net basis.
Share based awards
The Company has applied the requirements of IFRS 2 Share based payment.
All services received in exchange for the grant of any share based remuneration are measured at their
fair values. These are indirectly determined by reference to the fair value of the share options/warrants
awarded. Their value is appraised at the grant date and excludes the impact of any non-market vesting
conditions (for example, profitability and sales growth targets).
Share based payments are ultimately recognised as an expense in the Statement of Comprehensive
Income with a corresponding credit to the retained earning reserve in equity, net of deferred tax where
applicable. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting
period, based on the best available estimate of the number of share options/warrants expected to vest.
Non-market vesting conditions are included in assumptions about the number of options/warrants that
are expected to become exercisable. Estimates are subsequently revised if there is any indication that
the number of share options/warrants expected to vest differs from previous estimates. No adjustment
is made to the expense or share issue cost recognised in prior periods if fewer share options ultimately
are exercised than originally estimated.
Page | 19
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
1. ACCOUNTING POLICIES (continued)
Upon exercise of share options, the proceeds received net of any directly attributable transaction costs
up to the nominal value of the shares issued are allocated to share capital with any excess being
recorded as share premium.
Where share options are cancelled, this is treated as an acceleration of the vesting period of the
options. The amount that otherwise would have been recognised for services received over the
remainder of the vesting period is recognised immediately within the Statement of Comprehensive
Income.
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.
Investments in subsidiaries
Investments in subsidiaries are stated in the Company's statement of financial position at cost less any
attributable impairment losses.
Financial assets
The Company classifies its financial assets into one of the following categories, cash and cash
equivalents, loans and receivables and investments held at fair value through profit or loss depending
on the purpose for which the asset was acquired. The Company has not classified any of its financial
assets as held to maturity, held for trading or available for sale.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and current and deposit balances at banks, 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.
Loans and receivables
Loans and receivable from third parties are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest rate method.
Financial assets designated at fair value through profit or loss
All short term investments are designated upon initial recognition as held at fair value through profit or
loss (FVTPL). Investment transactions are accounted for on a trade date basis. Assets are de-recognised
at the trade date of the disposal. Investments are initially measured at fair value plus incidental
acquisition costs. Subsequently, they are measured at fair value in accordance with IAS 39. This is either
the bid price or the last traded price, depending on the convention of the exchange on which the
investment is quoted. The fair value of the financial instruments in the balance sheet is based on the
quoted bid price at the balance sheet date, with no deduction for any estimated future selling cost.
Unquoted investments are valued by the directors using primary valuation techniques such as recent
transactions, last price and net asset value. Changes in the fair value of investments held at fair value
through profit or loss and gains and losses on disposal are recognised in the Statement of
Comprehensive Income as “Net change in fair value of investments”.
Page | 20
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
1. ACCOUNTING POLICIES (continued)
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance
sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or
more events that occurred after the initial recognition of the financial asset, the estimated future cash
flows of the investment have been impacted.
Financial liabilities
Financial liabilities are recognised in the Company’s balance sheet when the Company becomes a party
to the contractual provisions of the instrument. All interest related charges are recognised as an
expense in finance cost in the income statement using the effective interest rate method.
The Company's financial liabilities comprise trade and other payables.
Trade payables are recognised initially at their fair value and subsequently measured at amortised cost
less settlement payments.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the company
after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the
proceeds received net of direct issue costs.
The share premium account represents premiums received on the initial issuing of the share capital. Any
transaction costs associated with the issuing of shares are deducted from share premium, net of any
related income tax benefits.
Share capital account represents the nominal value of the shares issued.
Retained earnings include all current and prior period results as disclosed in the Statement of
Comprehensive Income.
2. BUSINESS AND GEOGRAPHICAL REPORTING
The Company’s operations are solely in the United Kingdom. Following the disposal of the
Company’s trading operations its only trading activity is rendering services and so no segmental
analysis of operations is included.
3. OPERATING (LOSS)/PROFIT
Operating (loss) / profit from continuing activities is stated after
charging:
Depreciation of property, plant and equipment
Cost of share based payments (see note 24)
2013
£
296
-
2012
£
50
19,212
Page | 21
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
4. AUDITORS REMUNERATION
During the year the Company obtained the following services from the Company’s auditor (in respect of
continuing and discontinuing activities):
Fees payable to auditors for the audit of the Company’s financial
statements
2013
£
14,000
2012
£
10,000
Fees paid to the Company’s auditors in respect of prior year audit
3,440
-
Fees payable to the Company’s auditor and its associates for other
services:
Audit of the Company’s subsidiaries pursuant to legislation
-
1,000
Other services relating to taxation
All other services
1,500
2,100
-
250
21,040
11,250
All other services in the current year relate to accountancy services in relation to a former subsidiary
and those of the previous year are costs associated with company formation.
5.
INVESTMENT INCOME
The Company’s finance income were:
Interest receivable
Dividends receivable
6. FINANCE COSTS
The Company’s finance costs were:
Interest payable on bank loans and overdrafts
Other interest payable and finance costs
2013
£
2,941
1,386
4,327
2013
£
-
-
-
2012
£
835
-
835
2012
£
(21,328)
(12,495)
(33,823)
Page | 22
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
7. REMUNERATION
The Company’s employee benefit expense (for continuing and discontinued activities in 2012) was:
Wages and salaries
Social security costs
Share based payments (all in respect of Directors)
2013
£
65,833
2012
£
124,792
4,891
12,804
-
19,212
70,724
156,808
The average monthly number of persons employed by the Company, including Directors, during the
year was as follows:
2013
No
3
2012
No
3
Details of Directors’ emoluments, including details of warrants awarded, are given in the Report on
Remuneration. These disclosures form part of the audited financial statements of the Company. The
Directors of the Company are considered to represent key management of the Company as defined by
IFRS.
8. TAX EXPENSE
Factors affecting the tax charge for the year
(Loss)/ profit on ordinary activities before taxation
(352,634)
348,688
(Loss)/ profit on ordinary activities before taxation multiplied by the
standard rate of UK corporation tax of 23.41% (2012: 24.83%)
(82,552)
86,579
2013
£
2012
£
Effects of:
Extraordinary CVA gain not taxable
Expenses not deductible for tax purposes net of income not subject to
corporation tax
Provisions against amounts due from subsidiaries
Tax depreciation in excess of book depreciation
Loss on disposal of capital assets
Tax losses arising in the year carried forward
Tax losses of prior year offset against realised investment gains
Unrealised taxable losses not subject to tax in the period
Share-based payment charge not deductible
Tax charge
-
(379,192)
218
12,716
-
186,300
(424)
-
72,004
(3,611)
14,365
-
-
-
6,209
82,617
-
-
4,771
-
Page | 23
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
8. TAX EXPENSE (continued)
The Company has tax losses available to carry forward against relevant future taxable income and profits
of approximately £2.0 million (2012: £1.9 million) in respect of which no deferred tax asset has been
recognised.
Where it is anticipated that future taxable profits will be available against which these losses will be
utilised a deferred tax asset is recognised.
9. DISCONTINUED ACTIVITIES
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 in the year ended 31 October 2012. As referred to above, Rother
Valley Steam Railway was treated as having ceased business in October 2011, during the year ended 31
October 2011. The consideration for the disposals was £25,002 together with the discharge by the
acquirer of certain loans outstanding at the date of transaction totalling £190,230. The net loss
attributable to discontinued activities comprised loss on disposal, and provision against the value, of
equity shares of £25,201 and the write off of intra company debts of £800,010. As a result the total loss
on disposal of discontinued operations was £825,211.
During the year to 31 October 2012, discontinued activities generated £25,000 from investing activities
and absorbed £26,529 from financing activities.
10.
(LOSS)/EARNINGS PER SHARE
(Loss)/profit attributable to the owners of the Company
Continuing Operations
Discontinued Operations
Weighted average number of shares for calculating basic loss per
share
Basic and diluted loss per share
Continuing Operations
Discontinued Operations
2013
£
2012
£
(327,634)
1,173,899
-
(825,211)
(327,634)
348,688
2013
No. of
shares
2012
No. of
shares
1,945,616,874
954,477,964
2013
£
(0.02)
-
(0.02)
2012
£
0.12
(0.08)
0.04
There were no dilutive instruments which would give rise to diluted earnings per share.
Page | 24
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
11. PROPERTY, PLANT AND EQUIPMENT
Computer equipment
Cost
At 1 November 2011
Disposals during the year
At 1 November 2012
Additions during the year
At 31 October 2013
Depreciation
At 1 November 2011
Charge for the year
Disposal during the year
At 1 November 2012
Charge for the year
As at 31 October 2013
Carrying amount
As at 31 October 2013
At 31 October 2012
At 31 October 2011
£
361
(361)
-
2,108
2,108
50
50
(100)
-
296
296
1,812
-
311
12. FAIR VALUE MEASUREMENT
The table below sets out the fair value measurements using the IFRS 7 fair value hierarchy.
Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is
significant to the fair value measurement of the relevant asset as follows:
Level 1 – valued using quoted prices in active markets for identical assets.
Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices
included within Level 1.
Level 3 – valued by reference to valuation techniques using inputs that are not based on observable
market data.
There were no transfers between Level 1 and Level 3 in 2013 or 2012.
Page | 25
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
13.
INVESTMENTS
Investments held at fair value through profit or loss
Investments at fair value at 1 November 2012
Purchase of investments
Investment disposals
Gain on disposal of investments
Movement in investment holding losses
Investments at fair value at 31 October 2013
Categorised as
Level 1 – quoted prices
Level 3 – Unquoted investments
-
863,207
(732,302)
15,424
(61,363)
84,966
56,971
27,995
The valuation techniques used by the Company are explained in the accounting policy note, “financial
assets designated at fair value through profit or loss”.
Gains / (losses) on investments held at fair value through profit or loss
Realised gain on disposal of investments
Movement in investment holding losses
Net loss on investments held at fair value through profit or loss
15,424
(61,363)
(45,939)
Unquoted investments (Level 3)
The value of the unquoted investments as at 31 October 2013 was £27,995 and the amount comprised
a holding in Shale Energy PLC.
Shale Energy PLC is an independent gas business and emerging coal bed methane and shale gas
developer. The Company is focused on producing shale gas through sites based in the UK. The holding
is valued on the basis of evaluation of subsequent pre-IPO fundraising. The latest fundraising price and
liquidity of private investors are reflected in determining the fair value of the investment holding. The
Directors consider this value to be supported by information they have received over the course of the
financial year.
Page | 26
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
14. RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company is exposed to a variety of financial risks which result from both its operating and
investing activities. The Company’s risk management is coordinated by the Board of Directors, and
focuses on actively securing the Company’s short to medium term cash flows by minimising the
exposure to financial markets.
The main risks the Company is exposed to through its financial instruments are credit risk, foreign
currency risk, liquidity risk and market price risk.
Capital risk management
The Company’s objectives when managing capital are:
•
to safeguard the Company’s ability to continue as a going concern, so that it continues to provide
returns and benefits for shareholders;
to support the Company’s growth; and
to provide capital for the purpose of strengthening the Company’s risk management capability.
•
•
The Company actively and regularly reviews and manages its capital structure to ensure an optimal
capital structure and equity holder returns, taking into consideration the future capital requirements
of the Company and capital efficiency, prevailing and projected profitability, projected operating cash
flows, projected capital expenditures and projected strategic investment opportunities. Management
regards total equity as capital and reserves, for capital management purposes.
Credit risk
The Company’s financial instruments, that are subject to credit risk, are cash and cash equivalents and
loans and receivables. The credit risk for cash and cash equivalents is considered negligible since the
counterparties are reputable financial institutions.
The Company’s maximum exposure to credit risk is £1,291,731 (2012: £1,313,486) comprising cash and
cash equivalents and loans and receivables.
Liquidity risk
Liquidity risk arises from the possibility that the Company might encounter difficulty in settling its
debts or otherwise meeting its obligations related to financial liabilities. The Company manages this
risk through maintaining a positive cash balance and controlling expenses and commitments. The
Directors are confident that adequate resources exist to finance current operations.
Market price risk
The Company’s exposure to market price risk mainly arises from potential movements in the fair value
of its investments.
The Company’s exposure to price risk on quoted investments is as follows:
Change in equity
Increase in quoted investments by 10%
Decrease in quoted investments by 10%
2013
£
5,697
(5,697)
2012
£
-
-
Page | 27
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
15. FINANCIAL INSTRUMENTS
Financial assets by category:
The IAS 39 categories of financial asset included in the statement of financial position and the headings
in which they are included are as follows:
Financial Assets
Fair value through profit or loss investments
Loans and receivables
Cash and cash equivalents
Total
Financial liabilities by category:
2013
£
84,966
96,352
2012
£
-
72,876
1,195,379
1,240,610
1,376,697
1,313,486
The IAS 39 categories of financial liabilities included in the statement of financial position and the
headings in which they are included are as follows:
Trade and other payables
16.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Cost
At 1 November 2011
Disposals during the year
At 1 November 2012
Disposals during the year
At 31 October 2013
Provision for diminution in value
At 1 November 2011
Disposals during the year
At 1 November 2012
Disposals during the year
At 31 October 2013
Net book value
At 31 October 2013 and 31 October 2012
Subsidiary undertakings
2013
£
51,526
2012
£
91,982
£
10,436,164
(10,436,064)
100
(100)
-
10,435,961
(10,435,861)
100
(100)
-
-
During the year the company disposed of its last remaining subsidiary. The loss on disposal had been
fully provided for in the previous year.
Page | 28
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
17. TRADE AND OTHER RECEIVABLES
Amount held by Insolvency Practitioner in connection with CVA
Other receivables
Prepayments and accrued income
2013
£
16,682
79,670
32,236
2012
£
17,303
55,573
16,147
128,588
89,023
As described in note 14, the Directors do not consider credit risk to be material to the Company's
operations.
18. SHARE CAPITAL
Issued and fully paid:
At 1 November 2011
Ordinary shares of 5p each
Deferred shares of 5p each
Ordinary shares issued
Share issuance costs
Share based payments
At 31 October 2012
Ordinary shares of 0.1p each
Deferred shares of 5p each
Deferred shares of 4.9p each
Ordinary shares issued
Share issuance costs
At 31 October 2013
Ordinary shares of 0.1p each
Deferred shares of 5p each
Deferred shares of 4.9p each
Number of
shares
Nominal
value
£
Share
premium
55,570,856
2,778,543
3,017,818
136,171,197
6,808,560
-
9,587,103
3,017,818
1,700,000,000
1,700,000
-
-
-
-
-
(104,212)
19,212
1,755,570,856
1,755,571
2,932,818
136,171,197
6,808,560
55,570,856
2,722,972
-
-
11,287,103
2,932,818
566,089,008
566,089
16,522
-
-
(44,500))
2,321,659,864
2,321,660
2,904,840
136,171,197
6,808,560
55,570,856
2,722,972
-
-
11,853,192
2,904,840
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).
Page | 29
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
18. SHARE CAPITAL (continued)
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. On 5 August 2013, the Company
allotted 500,000,000 new ordinary shares for cash at a price of 0.1p per share.
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 at 31 October 2013 and 31
October 2012 was 2,021,791 exercisable at a price of £1.19 each. The warrants expired on 2 December 2013
and none of the warrants outstanding at 31 October 2013 were exercised.
The Company has also issued warrants to subscribe 6% of the issued share capital of the Company from
time to time as detailed in note24
19. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accruals and deferred income
Taxation and social security
2013
£
21,459
2012
£
60,370
28,187
25,000
53,584
34,882
1,880
6,612
105,110
126,864
The fair value of trade and other payables has not been disclosed as, due to their short duration,
management considers the carrying amounts recognised in the statement of financial position to be a
reasonable approximation of their fair value.
Page | 30
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
20. CASH ABSORBED BY OPERATIONS
(Loss)/profit
Depreciation
Realised gain on disposal of investments
Fair value movements in investments
Loss on disposal of discontinued activities
Extraordinary credit from CVA
Share based payments
Finance income
Finance costs
Decrease/(increase) in receivables
(Decrease)/increase in payables
Cash absorbed by operations
2013
£
2012
£
(327,634)
348,688
296
(15,424)
61,363
50
-
-
-
-
-
774,205
(1,526,949)
19,212
(4,327)
(835)
-
50,789
(64,565)
(89,929)
(21,754)
126,864
(372,045)
(297,905)
21. CONTINGENT LIABILITES
At 31 October 2013 and 2012, the Company had no material contingent liabilities.
22. CAPITAL COMMITMENTS
At 31 October 2013 and 2012, the Company had no capital commitments authorised or contracted by
the Directors.
23. RELATED PARTY TRANSACTIONS
Ultimate controlling party
The Directors do not consider there to be a single ultimate controlling party.
Transactions with Directors
Fees for consultancy services and disbursements supplied by Benedict
Investments Limited, a company of which AA Quraishi is a director and the
controlling shareholder
2013
£
2012
£
11,500
7,027
Fees for consultancy services supplied by Catalyst Consultancy Limited, a
company beneficially controlled by P Redmond and of which he is a director
11,000
13,750
Fees for consultancy services supplied by C J Yates as a consultant for
services other than director’s duties
3,500
-
Page | 31
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
23. RELATED PARTY TRANSACTIONS (continued)
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
-
3,000
24. SHARE BASED PAYMENTS
The Company has been subject to the following potential share issue obligations during the year, none
of which are share based payments of the current year:The Company had a share option scheme for all
employees of the Company and its subsidiaries from time to time. 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 remained unexercised after a period of 10 years
from the date of grant, the options expired. Options were forfeited if the employee left the Company
(or the relevant subsidiary) before the options vested and were exercisable for a period of no more than
six months after his leaving. At 1 November 2011, there were options extant over 91,428 ordinary
shares exercisable at a price of 87.5 pence per share which lapsed by 31 October 2012. At 31 October
2012 and 2013, there were no options extant under the scheme.
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.
In April 2012, the Company granted warrants, as described above, 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. Due to the increase in the total number of issued ordinary
shares of the Company during year ended 31 October 2013, the warrants granted rights to subscribe a
number of ordinary shares increased by 33,965,332 in the year.
The Directors have used the Black Scholes option pricing model to estimate the fair value of the
warrants applying the assumptions below:
Number of shares arising from
warrants granted
Grant date share price
Exercise share price
Risk free rate
Expected volatility
Option life
Calculated fair value per share
105,334,260
0.10p
0.10p
3.00%
50%
3 years
0.0365p
Page | 32
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
24. SHARE BASED PAYMENTS (continued)
The estimated fair value of the warrants granted in 2012 £38,424 has been charged to the
statement of comprehensive income and share premium. All warrants were outstanding at the
year end.
Exercise
price for
the year
Number of
shares to be
issued upon
exercise for the
year ended 31
October
2013
ended
ended
Number of
shares to be
issued upon
exercise price
for the year
ended 31
October 2012
Exercise
price for
the year
31 October
2012
£
-
105,334,260
-
33,965,332
0.10p
105,334,260
-
-
-
139,229,592
139,229,592
0.10p
0.10p
105,334,260
105,334,260
31 October
2013
£
0.10p
0.10p
-
0.10p
0.10p
Outstanding at beginning of
period
Arising during the period
Exercised during the period
Outstanding at end of period
Exercisable at end of period
25. POST BALANCE SHEET EVENTS
Since 31 October 2013, the Company has made an investment of £410,000 in Rame Energy plc by way of
a convertible loan. On 10 February 2014, the Company’s convertible loan note was converted into
3,037,037 new ordinary shares In Rame Energy plc, which would realise £547,000 at the placing price. In
addition, as part of the IPO for Rame Energy, the Company has subscribed for 308,233 new ordinary
shares in Rame Energy. Following the conversion and subscription the Company has an interest of
3,345,270 ordinary shares, representing approximately 3.5 per cent of Rame Energy’s issued share
capital.
Page | 33