Pires Investments plc
(Incorporated in England and Wales with registered number 02929801)
Annual Report and
Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
PIRES INVESTMENTS PLC
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
Contents
Company Information
Chairman’s Statement
Strategic Report
Directors’ Report
Report on Remuneration
Statement of Directors’ Responsibilities
Corporate Governance Report
Report of the Independent Auditor
Group Statement of Comprehensive Income
Group and Company Statement of Changes in Equity
Group Statement of Financial Position
Company Statement of Financial Position
Group Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Group Financial Statements
Page
1
2
3
6
8
9
10
11
13
14
15
16
17
18
19
PIRES INVESTMENTS PLC
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
Company Information
Directors
Peter Redmond (Chairman)
Placid Gonzales (Non-Executive Director)
John May (Non-Executive Director)
Secretary
Carly Hines
Registered office
Independent Auditors
Nominated adviser
Broker
Registrars
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
3rd Floor
New Liverpool House
15 – 17 Eldon Street
London
EC2M 7LD
Computershare Investor Services plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
Company Registration
number
02929801
Page | 1
PIRES INVESTMENTS PLC
Chairman’s Statement
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
During the period under review, the Company set about implementing its investment strategy which is
to invest substantially in companies in the resources and energy sectors, either at the pre-IPO stage or
as quoted companies.
From previous announcements, investors will be aware that we have made significant investments in
Rame Energy plc (“Rame”), a renewable energy business which is now quoted on AIM but in which we
invested at the pre-IPO stage, and in two AIM-quoted investing companies, Armstrong Ventures plc
(“Armstrong”) and 3 Legs Resources plc (“3 Legs”), both of which are seeking a reverse takeover. We
also have a modest investment in Kennedy Ventures plc (“Kennedy”), which at the time of making the
investment was a shell company but which has since acquired a majority interest in a tantalite deposit
in Namibia. Demand for tantalite is driven by the increased use of electronic devices. The deposit is
expected to be back in production in the near future and is hoped to be the first of a number of tantalite
asset acquisitions.
Our investment in Rame was made principally at the pre-IPO stage, investing £410,000 in February
2014. We invested a further £55,000 at IPO and made a further modest investment to maintain our
stake in a later fundraising round. Since IPO, Rame has successfully completed a 15 MW wind project
at Raki in Chile and this is expected to be operational imminently; Rame has a 20% continuing equity
interest in the project. Rame has announced the expansion of its pipeline of wind projects in
partnership with Santander from 118MW to 133MW and it plans to commence work on two sites from
this pipeline with a combined size of 54MW during Q4 2015. Having acquired an UK-based solar energy
specialist, Rame has now commenced its first significant solar project in Chile. It has also commenced
its first off-grid wind project, and sold one of its smaller Chilean wind projects on a basis that could
earn it up to $2 million in consideration and fees, while retaining an option to take a 20% equity stake
in that site. While Rame’s share trading performance has been disappointing since IPO, we remain
confident of their business model and we hope to see significant progress over the next twelve months.
While the Rame investment has not borne immediate positive results in stock market terms, we
continue to regard investment in renewable energy to be a potentially fruitful area, though it needs to
be approached selectively, particularly bearing in mind conditions in the local markets where the
projects are situated. With regard to Chile, we took into account what we considered to be its relatively
stable and growing economy, its structural energy deficit and its transparent and user-friendly
renewable energy regime.
We have established a subsidiary, Ventec Renewable Energy Limited, to assist the Company in
identifying, analysing, assessing and structuring renewable energy projects, particularly in wind, in
specific European markets with a view to acquiring or earning an equity position in such projects,
working in partnership with a significant European wind consultancy/developer.
Our investment in Kennedy, although modest, has performed well in overall terms, sitting at a 150%
premium to our investment price and demonstrates what can be achieved through taking stakes in
shell companies and seeking reverse acquisitions.
Close to the end of the financial period, we invested a larger sum - £100,000 - in a placing of shares in
Armstrong in the hope of achieving a similar result. Since then, Armstrong has reviewed a number of
potential reverse takeovers and we are hopeful that it will complete such a transaction in the coming
months. Since the year end, we have also participated with an investment of £80,000 in the refinancing
of 3 Legs, an Isle of Man domiciled AIM-quoted company, for a similar purpose.
We now hold a range of investments in line with our investing strategy and we hope to show positive
returns from these investments in the current trading period. Meanwhile we continue to review the
Company’s expenditure base and options for expanding its capital base.
Peter Redmond
Chairman
29 April 2015
Page | 2
PIRES INVESTMENTS PLC
Strategic Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
Business review and future developments
Investments
During the period under review Pires Investments plc (“the Group”) made the following investments:
The Company converted a loan note into 3,037,037 new ordinary shares in Rame Energy plc (“Rame”).
The Company also subscribed for 308,233 ordinary shares at a price of 18 pence per share and in total
holds 3,345,270 ordinary shares presenting approximately 3.5 per cent of Rame’s issued share capital.
As at year end the market value of the Company’s holding in Rame was £487,938, representing an
unrealised loss of £39,407.
The Company subscribed for 476,190,476 shares in Armstrong Ventures plc (“Armstrong”) at a price of
0.021 pence per share for a consideration of £100,000, representing approximately 13 per cent of
Armstrong’s issued share capital. As at the year end the market value of the Company’s holding in
Armstrong was £130,952, representing an unrealised gain of £30,952.
The Company subscribed for 2,000,000 shares in Kennedy Ventures plc (“Kennedy”) at a price of
£0.0125 pence per share for a consideration of £25,000. As at year end the market value of Kennedy
was £57,500, representing an unrealised gain of £32,500.
Subsequent to 31 October 2014 the Company has subscribed for 34,482,760 ordinary shares in 3Legs
Resources plc for a consideration of £80,000.
Investing Policy
The Group’s investing policy, as disclosed on the website (www.piresinvestments.com) is as follows:
“The Group's Investing Policy is to invest principally, but not exclusively in the resources and energy
sectors. The Group will initially focus on projects located in Asia but will also consider investments in
other geographical regions. The Group 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 Group to complete a transaction.
The proposed investments to be made by the Group 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 Group’s equity interest in a proposed
investment may range from a minority position to 100 per cent ownership.
The Group will identify and assess potential investment targets and where it believes further
investigation is required, intends to appoint appropriately qualified advisers to assist.
The Group 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 Group’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 Group intends to deliver shareholder returns principally through capital growth rather than capital
distribution via dividends. Given the nature of the Group’s Investing Policy, the Group does not intend
to make regular periodic disclosures or calculations of net asset value.
Page | 3
PIRES INVESTMENTS PLC
Strategic Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
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
Group 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 Group.
The Directors confirm that, as required by the AIM Rules, they will at each annual general meeting of
the Group seek shareholder approval of its Investing Policy.”
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
31 October
2014
961,726
0.041
£295,198
31 October
2013
£1,305,635
0.057
£1,195,379
Change %
(26%)
(28%)
(75%)
Identifying suitable targets
The Group is dependent upon the ability of the Directors to identify suitable investment opportunities
and to implement its Investing Policy. There is no guarantee that the Group will be able to source
further opportunities, or complete Investments, at an appropriate price, or at all, as a consequence of
which resources may be expended fruitlessly on investigative work and due diligence.
Market conditions
Market conditions may have a negative impact on the Group’s ability to execute investments in suitable
entities which generate acceptable returns. There is no guarantee that the Group will be successful in
sourcing suitable investments.
Costs associated with potential investments
The Group expects to incur certain third party costs associated with the sourcing of suitable
investments. The Company can give no assurance as to the level of such costs, and given that there can
be no guarantee that negotiations to acquire any given investment will be successful, the greater the
number of deals that do not reach completion, the greater the likely impact of such costs on the Group’s
performance, financial condition and business prospects.
Valuation error
The Group may miscalculate the realisable value of an investment in a project. A lack of reliable
information, errors in assumptions or forecasts and/or inability to successfully implement an
investment, among other factors, could all result in the project having a lower realisable value than
anticipated. If the Group is not able to realise an investment at its anticipated levels of profitability,
projected investment returns could be adversely affected.
Funding
It is likely that, if the Company identifies and wishes to pursue an investment opportunity or a reverse
takeover, it is likely to need to raise further funds for further working or development capital. There is
Page | 4
PIRES INVESTMENTS PLC
Strategic Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
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 Group’s financial instruments and financial risk management policies can be found in
notes 13 and 14 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.
Peter Redmond
Director
29 April 2015
Page | 5
PIRES INVESTMENTS PLC
Directors’ Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
The Directors present their annual report and the audited group financial statements of Pires
Investments plc for the year ended 31 October 2014.
The Company’s shares of 0.1p each are traded on AIM Market of the London Stock Exchange.
Results and dividends
The Group’s loss from continuing activities for the year was £326,909 (2013 loss: £352,634). 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 Group 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 3.
Events after the Reporting Period
Since 31 October 2014, the Company has subscribed for 34,482,760 new ordinary shares in a placing
by 3Legs Resources plc for a consideration of £80,000. The new shares represent approximately 8.0 per
cent of 3Legs total voting rights.
Directors
The following Directors have held office since 1 November 2013:
Peter Redmond
Aamir Quraishi (resigned 18 December 2014)
Christopher Yates (resigned 18 December 2014)
Richard Armstrong (appointed 14 February 2014 and resigned 18 December 2014)
Placid Gonzales and John May were appointed to the Board on 18 December 2014.
Charitable and political donations
No charitable or political donations were made during the year (2013: nil).
Going concern
The financial statements have been prepared on a going concern basis because, as set out in detail in
Note 2 (Going Concern), the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
Page | 6
PIRES INVESTMENTS PLC
Directors’ Report (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
Substantial shareholders
As at 1 April 2015, the Company’s share register showed the following shareholdings representing 3%
or more of the Company’s issued ordinary share capital:
Shareholder
*Ambrosia Investment Limited
Jim Nominees Limited
Pershing Nominees Limited
TD Direct Investing Nominees Limited
*AIMS Consultancy Limited
W B Nominees Limited
XCAP Nominees Limited
Barclayshare Nominees Limited
Ordinary
shares
of 0.1p
each
Number
375,000,000
290,898,591
225,000,000
131,034,577
125,000,000
111,660,000
86,754,000
72,768,566
% of the
issued
ordinary
share capital
16.15%
12.53%
9.69%
5.64%
5.38%
4.81%
3.74%
3.13%
* Emmanouil Vandirlis, a consultant and part of the key management of the Group, indirectly has an
interest in 23.1% of the Company, by way of his controlling shareholding in the above companies and
additional shares held through a nominee account.
Auditor
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
Peter Redmond
Director
29 April 2015
Page | 7
PIRES INVESTMENTS PLC
Report on Remuneration
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
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. 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.
Remuneration of the Directors
During the period, the following remuneration and other benefits were charged to the Company:
Salaries
2014
£
20,000
15,000
12,500
13,616
61,116
Peter Redmond
Aamir Quraishi
Christopher Yates
Richard Armstrong
Total
2014
£
44,000
17,500
18,450
17,866
97,816
Fees
2014
£
24,000
2,500
5,950
4,250
36,700
Total
2013
£
15,000
15,000
35,833
-
65,833
.
Directors’ interests
The Directors’ beneficial interests in the share capital of the Company as at 31 October 2013 and 31
October 2014 were:
Peter Redmond (note 1)
Aamir Quraishi (note 1)
Richard Armstrong
Christopher Yates
Ordinary shares of
0.1p each 31
October 2014
-
-
15,113,436
6,766,819
Ordinary shares of
0.1p each 31
October 2013
-
-
15,113,436
6,766,819
Notes:
1
On 17 April 2012, the Board granted to each of Peter Redmond and Aamir 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 and have lapsed post year end.
Peter Redmond
Director
29 April 2015
Page | 8
PIRES INVESTMENTS PLC
Statement of Directors Responsibilities
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
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 Director’s responsibility also extends to the financial
statements contained therein.
By order of the Board
Peter Redmond
29 April 2015
Director
Page | 9
PIRES INVESTMENTS PLC
Corporate Governance Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
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 Chairman and two other 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 comprised Christopher Yates and Peter Redmond and now
comprises John May 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.
Remuneration Committee
During the year the Remuneration Committee comprised Christopher Yates and Peter Redmond and
now comprises John May and Placid Gonzales. 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 2015
Page | 10
PIRES INVESTMENTS PLC
Independent auditor’s report to the members of Pires Investments Plc
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
We have audited the financial statements of Pires Investments plc for the year ended 31 October 2014
which comprise the statement of comprehensive income, statement of changes in equity, statement
of financial position, 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 Group’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 Group’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 Group and the Group’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 Group’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, Strategic Report, and Report of the Directors
to identify any information that is apparently materially incorrect based on, or materially inconsistent
with the knowledge acquired by us in the course of performing the audit.
A description of the scope of an audit of financial statements is provided on the APB’s website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion the financial statements:
•
•
•
give a true and fair view of the state of the Group and Company’s affairs as at 31 October
2014 and of the Group’s loss for the year then ended;
have been properly prepared in accordance with IFRS 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
Independent auditor’s report to the members of Pires Investments Plc
(continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
Emphasis of Matter – Going Concern
In forming our opinion on the financial statements, which is not modified, we draw your attention to
the disclosures made in note 2 to the financial statements concerning the Group’s ability to continue
as a going concern.
These conditions, along with other matters explained in note 2 to the financial statements, indicate the
existence of a material uncertainty which may cast significant doubt about the ability of the Group to
continue as a going concern. The Directors have plans to manage the cash flows of the Group to enable
it to continue as a going concern. These plans include either raising capital or liquidating quoted
investments to provide the working capital requirements for the next 12 months. The financial
statements do not include the adjustments that would result if the Group were unable to continue as
a going concern.
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 Group, or returns adequate for our
audit have not been received from branches not visited by us; or
the Group 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 2015
Page | 12
PIRES INVESTMENTS PLC
Group Statement of Comprehensive Income
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
CONTINUING ACTIVITIES
Revenue
Investment income
Other income
Total revenue
Gains/losses on investments held at fair value through profit
or loss
Operating expenses
Operating (loss) / profit from continuing activities
(Loss) / profit before taxation from continuing activities
Tax
(Loss)/profit for the period and total comprehensive
income attributable to equity holders of the Company
Notes
6
12
4
8
2014
£
1,833
5,000
6,833
2013
£
4,327
25,050
29,377
(15,981)
(45,939)
(317,761)
(336,072)
(326,909)
(352,634)
(326,909)
(352,634)
-
-
(326,909)
(352,634)
Basic (loss) / earnings per share
Equity holders
Basic and diluted
9
(0.01)p
(0.02)p
The Company has elected to take exemption under section 408 of the Companies Act 2006 not to
present the Parent Company profit and loss accounts. The loss for the Parent Company for the year was
£325,031 (2013: £352,634).
The accounting policies and notes are an integral part of these financial statements.
Page | 13
PIRES INVESTMENTS PLC
Company Statement of Changes in Equity
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
GROUP
Share
Capital
£
11,287,103
Share
Premium
£
2,932,818
Shares to
be issued
£
82,611
Capital
Redemption
Reserve
£
164,667
Retained
Earnings
£
(13,264,430)
Total
£
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
-
11,853,192
-
2,904,840
-
-
-
164,667
(326,909)
(13,943,973)
(326,909)
978,726
Share
Capital
£
11,287,103
Share
Premium
£
2,932,818
Shares to
be issued
£
82,611
Capital
Redemption
Reserve
£
164,667
Retained
Earnings
£
(13,264,430)
Total
£
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
-
11,853,192
-
2,904,840
-
-
-
164,667
(325,031)
(13,942,095)
(325,031)
980,604
Balance at 1 November 2012
Total comprehensive income
for the year ended 31 October
2013
Issue of shares
Share issuance costs
As at 31 October 2013
Total comprehensive income
for the year ended 31 October
2014
As at 31 October 2014
COMPANY
Balance at 1 November 2012
Total comprehensive income
for the year ended 31 October
2013
Issue of shares
Share issuance costs
As at 31 October 2013
Total comprehensive income
for the year ended 31 October
2014
As at 31 October 2014
Page | 14
PIRES INVESTMENTS PLC
(Incorporated in England and Wales with registered number 02929801)
Group Statement of Financial Position
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
Non-current assets
Property, plant and equipment
Investment in subsidiaries
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
Retained earnings
Capital redemption reserve
Total equity
Liabilities
Current liabilities
Trade and other payables
Total liabilities and current liabilities
Total equity and liabilities
Note
10
12
16
17
17
18
2014
£
2,163
-
2,163
2013
£
1,812
-
1,812
698,612
122,396
295,198
1,116,206
1,118,369
84,966
128,588
1,195,379
1,408,933
1,410,745
11,853,192
2,904,840
(13,943,973)
164,667
978,726
11,853,192
2,904,840
(13,617,064)
164,667
1,305,635
139,643
139,643
105,110
105,110
1,118,369
1,410,745
These financial statements were approved and authorised for issue by the Board of Directors on 29
April 2015 and were signed on its behalf by:
Peter Redmond
Director
John May
Director
Page | 15
PIRES INVESTMENTS PLC
(Incorporated in England and Wales with registered number 02929801)
Company Statement of Financial Position
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
Non-current assets
Property, plant and equipment
Investment in subsidiaries
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
Retained earnings
Capital redemption reserve
Total equity
Liabilities
Current liabilities
Trade and other payables
Total liabilities and current liabilities
Total equity and liabilities
Note
10
12
16
17
17
18
2014
£
2,163
18,503
20,666
2013
£
1,812
-
1,812
698,612
124,271
276,698
1,099,581
1,120,247
84,966
128,588
1,195,379
1,408,933
1,410,745
11,853,192
2,904,840
(13,942,095)
164,667
980,604
11,853,192
2,904,840
(13,617,064)
164,667
1,305,635
139,643
139,643
105,110
105,110
1,120,247
1,410,745
These financial statements were approved and authorised for issue by the Board of Directors on 29
April 2015 and were signed on its behalf by:
Peter Redmond
Director
John May
Director
Page | 16
PIRES INVESTMENTS PLC
Group Statement of Cash Flows
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
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
2014
£
2013
£
Note
19
(271,131)
(372,045)
(1,256)
(674,349)
44,722
1,833
(629,050)
(2,109)
(863,206)
732,302
4,327
(128,686)
-
-
-
-
-
500,000
(44,500)
-
455,500
Net (decrease)/increase in cash and cash equivalents
during the year
(900,181)
(45,231)
Cash and cash equivalents at beginning of year
1,195,379
1,240,610
Cash and cash equivalents at end of year
295,198
1,195,379
Page | 17
PIRES INVESTMENTS PLC
Company Statement of Cash Flows
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
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
2014
£
2013
£
Note
19
(289,631)
(372,045)
(1,256)
(674,349)
44,722
1,833
(629,050)
-
-
-
-
(2,109)
(863,206)
732,302
4,327
(128,686)
-
500,000
(44,500)
-
455,500
Net (decrease)/increase in cash and cash equivalents
during the year
(918,681)
(45,231)
Cash and cash equivalents at beginning of year
1,195,379
1,240,610
Cash and cash equivalents at end of year
276,698
1,195,379
Page | 18
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
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.
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.
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
Any consideration of the foreseeable future involved making a judgement, at a particular point in time,
about future events which are inherently uncertain. The ability of the Group to carry out its planned
business objectives is dependent on its continuing ability to raise adequate capital from equity investors
and/or the realisation of quoted investments.
Nevertheless, at the time of approving these financial statements and after making due enquiries, 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 | 19
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
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.
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.
Revenue recognition
Revenue is measured at the fair value of consideration received or receivable and represents amounts
receivable for goods or services provided in the normal course of business, net of discounts, VAT and
other sales-related taxes, and provisions for returns.
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.
Page | 20
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
1. ACCOUNTING POLICIES (continued)
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.
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.
Page | 21
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
1. ACCOUNTING POLICIES (continued)
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 receivables 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”.
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 Group’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 Group'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.
Page | 22
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
1. ACCOUNTING POLICIES (continued)
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.
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS
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.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
estimates are recognised in the period. Judgements and estimates that may affect future periods are as
follows:
GOING CONCERN
The Company’s activities resulted in a loss of £326,909 (2013: Loss of £352,634) and the cash balance was
£295,198 as at 31 October 2014 (2013: £1,195,379). As such, the Company’s operational existence is
dependent on the ability to raise further funding, by way of an equity placing, issuing debt instruments,
by the realisation of quoted investments, or by a reduction in operating costs.
After making enquiries, the Directors have formed a judgement that there is a reasonable expectation
that the Company can secure further adequate resources to continue in operational existence for the
foreseeable future.
For this reason, the Directors continue to adopt the going concern basis in preparing the financial
statements. Whilst there are inherent uncertainties in relation to future events, and therefore no
certainty over the outcome of the matters described, the Directors consider that, based upon financial
projections and dependent on the success of their efforts to complete these activities, the Company will
be a going concern for the next twelve months.
Page | 23
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
2.
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS (continued)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company holds investments that have been designated as held at fair value through profit or loss.
Investment transactions are accounted for on a trade date basis. Assets are de-recognised at the trade
date of the disposal. Assets are sold at their fair value, which comprises the proceeds of sale less any
transaction cost. 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 consolidated statement of comprehensive
income as “Net gains on investments”. 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.
3. BUSINESS AND GEOGRAPHICAL REPORTING
The Company’s operations are solely in the United Kingdom. Its primary trading operation and
activity is the rendering of services and so no segmental analysis of operations is included.
4. OPERATING (LOSS)/PROFIT
Operating (loss) / profit from continuing activities is stated after
charging:
Depreciation of property, plant and equipment
904
296
2014
£
2013
£
5. 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
Fees paid to the Company’s auditors in respect of prior year audit
Fees payable to the Company’s auditor and its associates for other
services:
Other services relating to taxation
All other services
2014
£
14,500
-
-
1,500
-
2013
£
14,500
3,440
-
1,500
2,100
16,000
21,540
Page | 24
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
6.
INVESTMENT INCOME
The Company’s finance income were:
Interest receivable
Dividends receivable
7. REMUNERATION
2014
£
1,583
250
1,833
2013
£
2,941
1,386
4,327
The Company’s employee benefit expense (for continuing and discontinued activities in 2014) was:
Wages and salaries
Social security costs
2014
£
103,966
2,003
2013
£
65,833
4,891
105,969
70,724
The average monthly number of persons employed by the Company, including Directors, during the
year was as follows:
2014
No
4
2013
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.
Page | 25
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
8. TAX EXPENSE
8.
2014
£
2013
£
Factors affecting the tax charge for the year
(Loss)/ profit on ordinary activities before taxation
(326,909)
(352,634)
(Loss)/ profit on ordinary activities before taxation multiplied by the
standard rate of UK corporation tax of 21.83% (2013: 23.41%)
(71,364)
(82,552)
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
-
5,224
-
-
218
-
Tax depreciation in excess of book depreciation
(142)
(424)
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
-
78,863
-
(12,581)
-
-
-
72,004
(3,611)
14,365
-
-
The Company has tax losses available to carry forward against relevant future taxable income and profits
of approximately £2.4 million (2013: £2.0 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.
Page | 26
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
9.
(LOSS)/EARNINGS PER SHARE
(Loss)/profit attributable to the owners of the Company
Continuing Operations
(326,909)
(352,634)
2014
£
2013
£
Weighted average number of shares for calculating basic
loss per share
Basic and diluted loss per share
Continuing Operations
2014
No. of
shares
2013
No. of
shares
2,321,659,864
1,945,616,874
2014
pence
2013
pence
(0.01)
(0.02)
There were no dilutive instruments which would give rise to diluted earnings per share.
10. PROPERTY, PLANT AND EQUIPMENT
Cost
At 1 November 2012
Disposals during the year
At 1 November 2013
Additions during the year
At 31 October 2014
Depreciation
At 1 November 2012
Charge for the year
Disposal during the year
At 1 November 2013
Charge for the year
As at 31 October 2014
Carrying amount
As at 31 October 2014
At 31 October 2013
At 31 October 2012
Computer equipment
£
-
-
2,108
1,255
3,363
-
-
296
904
1,200
2,163
1,812
-
Page | 27
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
11.
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 2014 or 2013.
12.
INVESTMENTS
Investments held at fair value through profit or loss
Investments at fair value brought forward
Purchase of investments
Investment disposals
Provision for impairment of unquoted investments
Movement in investment holding gains
Balance
Categorised as
Level 1 – quoted prices
Level 3 – Unquoted investments
84,966
674,349
(44,723)
(27,777)
11,797
698,612
676,389
22,223
The valuation techniques used by the Group 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
Movement in investment holding gains
Realised loss on disposal of investments
Impairment of Level 3 investments
Net loss on investments held at fair value through profit or loss
Unquoted investments (Level 3)
85,409
(73,613)
(27,777)
(15,981)
The value of the unquoted investments as at 31 October 2014 was £22,223 and the amount comprised
a holding in Shale Energy plc.
Shale Energy plc is an unquoted public company whose focus is the acquisition or development of oil,
gas or shale gas assets principally 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 | 28
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
13.
RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group 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 Group’s objectives when managing capital are:
to safeguard the Group’s ability to continue as a going concern, so that it continues to provide
returns and benefits for shareholders;
to support the Group’s growth; and
to provide capital for the purpose of strengthening the Group’s risk management capability.
The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital
structure and equity holder returns, taking into consideration the future capital requirements of the
Group and capital efficiency, prevailing and projected profitability, projected operating cash flows,
projected capital expenditures and projected strategic investment opportunities. Management regards
total equity as capital and reserves, for capital management purposes.
Credit risk
The Group’s financial instruments, which 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 £428,053 (2013: £1,291,731) comprising cash and
cash equivalents and loans and receivables.
Liquidity risk
Liquidity risk arises from the possibility that the Group 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 Group’s exposure to market price risk mainly arises from potential movements in the fair value of
its investments.
The Group’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%
2014
£
67,640
(67,640)
2013
£
5,697
(5,697)
Page | 29
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
14.
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:
2014
£
2013
£
698,612
108,419
295,198
84,966
96,352
1,195,379
1,102,229
1,376,697
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
15.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Cost
At 1 November 2012
Disposals during the year
At 1 November 2013
Disposals during the year
Additions during the year
At 31 October 2014
Provision for diminution in value
At 1 November 2012
Disposals during the year
At 1 November 2013
Disposals during the year
At 31 October 2014
Net book value
At 31 October 2014
At 31 October 2013
2014
£
62,968
2013
£
51,526
£
100
(100)
-
-
18,503
18,503
100
(100)
-
-
-
18,503
-
Page | 30
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
All principal subsidiaries of the Group are consolidated into the financial statements. At 31 October 2014
the subsidiaries were as follows:
Country of
registration
UK
Germany
UK
Principal
activity
Renewable Energy
Renewable Energy
Dormant
Percentage
holding
100%
90%
100%
Subsidiary undertakings
Ventec Renewable Energy Limited
Ventec Wind 1 GmbH
Energy Investment Opportunities
Limited
16. TRADE AND OTHER RECEIVABLES
Amount held by Insolvency Practitioner in connection
with CVA
Other receivables
Group
2014
£
2013
£
Company
2014
£
2013
£
6,104
16,682
6,104
16,682
102,315
79,670
104,190
79,670
Prepayments and accrued income
13,977
32,236
13,977
32,236
122,396
128,588
124,271
128,588
As described in note 13, the Directors do not consider credit risk to be material to the Company's operations.
17.
ISSUED SHARE CAPITAL
Issued and fully paid:
At 1 November 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
Ordinary shares issued
Share issuance costs
At 31 October 2014
Ordinary shares of 0.1p each
Deferred shares of 5p each
Deferred shares of 4.9p each
Number of
shares
Nominal
value
£
Share
premium
£
1,755,570,856
136,171,197
55,570,856
1,755,571
6,808,560
2,722,972
11,287,103
566,089,008
-
566,089
-
2,932,818
-
-
2,932,818
16,522
(44,500)
2,321,659,864
136,171,197
55,570,856
2,321,660
6,808,560
2,722,972
11,853,192
2,904,840
-
-
2,904,840
-
-
-
-
-
-
2,321,659,864
136,171,197
55,570,856
2,321,660
6,808,560
2,722,972
11,853,192
2,904,840
-
-
2,904,840
Page | 31
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
17.
ISSUED SHARE CAPITAL (continued)
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.
18. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accruals and deferred income
Taxation and social security
Group
2014
£
35,686
2013
£
21,459
Company
2014
£
35,686
2013
£
21,459
26,250
28,187
26,250
28,187
76,675
53,584
76,675
53,584
1,032
1,880
1,032
1,880
139,643
105,110
139,643
105,110
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 | 32
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
19. CASH ABSORBED BY OPERATIONS
Group
(Loss)
Depreciation
Realised (loss)/gain on disposal of investments
Fair value movements in investments
Finance income
Finance costs
Decrease/(increase) in receivables
(Decrease)/increase in payables
Cash absorbed by operations
Company
(Loss)
Depreciation
Realised (loss)/gain on disposal of investments
Fair value movements in investments
Finance income
Finance costs
Decrease/(increase) in receivables
(Decrease)/increase in payables
Cash absorbed by operations
2014
£
2013
£
(343,909)
(352,634)
904
296
73,612
(15,424)
(85,409)
61,363
(1,833)
(4,327)
-
-
32,971
(64,565)
52,533
3,246
(271,131)
(372,045)
2014
£
2013
£
(325,031)
(352,634)
904
296
73,612
(15,424)
(85,409)
61,363
(1,833)
(4,327)
-
-
13,593
(64,565)
34,533
3,246
(289,631)
(372,045)
20. CONTINGENT LIABILITES
At 31 October 2014 and 2013, the Company had no material contingent liabilities.
21. CAPITAL COMMITMENTS
At 31 October 2014 and 2013, the Company had no capital commitments authorised or contracted by the
Directors.
22. POTENTIAL SHARE ISSUES AND SHARE BASED PAYMENTS
Page | 33
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
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:
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
was 0.1p per share and the warrant was able to be exercised at any time up to 20 March 2015. On 17
April 2012, the Company granted warrants to each of Peter Redmond and Aamir 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
was 0.1p per share and the warrants were able to be exercised at any time up to 17 April 2015.
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
139,229,592
0.10p
0.10p
3.00%
50%
3 years
0.0365p
Exercise
price for
the year
Number of
shares to be
issued upon
exercise for the
year ended 31
October
2014
31 October
2014
£
ended
ended
Exercise
price for
the year
31 October
2013
£
0.10p
0.10p
0.10p
0.10p
Outstanding at beginning of
period
Arising during the period
0.10p
139,229,592
-
-
Outstanding at end of period
Exercisable at end of period
0.10p
0.10p
139,229,592
139,229,592
All outstanding warrants had lapsed post year end.
Number of
shares to be
issued upon
exercise price
for the year
ended 31
October 2013
105,334,260
33,965,332
139,229,592
139,229,592
Page | 34
PIRES INVESTMENTS PLC
Notes to the Group Financial Statements (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2014
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 Aamir Quraishi is a director and
the controlling shareholder
2014
£
2,500
2013
£
11,500
Fees for consultancy services supplied by Catalyst Consultancy Limited, a
company beneficially controlled by Peter Redmond and of which he is a
director
24,000
11,000
Fees for consultancy services supplied by City and Westminster Corporate
Finance LLP, a company beneficially owned by John May
13,653
-
Fees for consultancy services supplied by Christopher Yates as a consultant
for services other than director’s duties
5,950
3,500
During the period, a member of key management, Emmanouil Vaindirlis, charged consultancy fees of
£29,167 through a Company of which he is a Director, Newdoor Capital Limited.
24. POST BALANCE SHEET EVENTS
Since 31 October 2014, the Company has subscribed for 34,482,760 new ordinary shares in a placing
by 3Legs Resources plc for a consideration of £80,000. The new shares represent approximately 8.0 per
cent of 3Legs total voting rights.
Page | 35