Pires Investments plc
Annual Report 2015

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Pires Investments plc (Incorporated in England and Wales with registered number 02929801) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 PIRES INVESTMENTS PLC Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 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 and Company Statement of Financial Position Group and Company Statement of Cash Flows Notes to the Group Financial Statements Page 1 2 3 5 7 8 9 10 12 13 14 15 16 PIRES INVESTMENTS PLC Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 Company Information Directors Peter Redmond (Chairman) Placid Gonzales (Non-Executive Director) John May (Non-Executive Director) Secretary Miles Nicholson Registered office Independent Auditors Nominated adviser Broker Registrars c/o Cooley Services Limited Dashwood 69 Old Broad Street London EC2M 1QS 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 2015 The results for the year under review are disappointing – although the level of losses sustained in the first half were stemmed, the Company continued to make losses at a reduced level in the second half of the period. The principal factors contributing to the loss were the continuing poor performance of the share price of the Company’s principal investment, Rame Energy plc (“Rame”), the lack of progress on the European wind projects of our subsidiary, Ventec Renewable Energy Limited (“Ventec”), and the level of the Company’s operating costs relative to its modest asset base. Other than Rame, our investments particularly in Kennedy Ventures plc (“Kennedy”) and 3 Legs Resources plc (“3Legs”) performed satisfactorily, although the size of these investments mean that gains are more than offset by the decrease in the share price of Rame. Rame has recently announced a significant round of non-equity financing which should enable it to take a number of its wind projects to the ready to build stage and on the 28 April 2016 announced its intention to carry out a £2.8m equity private placement at 9p per share and an intention to make an open offer on the same terms to existing shareholders. As shareholders will be aware, Kennedy acquired a controlling stake in a tantalite project in Namibia – under Kennedy’s management, this has now returned to production. 3Legs Resources, which became an its Polish shale gas projects, acquired a cancer investing company following the disposal of immunotherapy business – SalvaRx – on 22 March 2016 by means of a reverse transaction into 3Legs – which changed its name to SalvaRx Group plc (“SALV”). Since the reverse transaction SALV has announced significant developments which give it an interest in two further compounds which are progressing to human trials in the coming year, plus significant off-balance sheet funding for one of these projects. The Company has partially realised some of its investments and intends to continue this process in the coming months. The projects which Ventec was pursuing in the European wind sector did not prove possible to take forward and consequently, as announced by the Company on 11 March 2016, Ventec was disposed of to Ambrosia Investments, our largest shareholder. The consideration for the disposal was £2 and in addition Ambrosia agreed to settle intercompany liabilities amounting to circa £45,000. This disposal recovered most of the costs incurred in the venture. Subsequent to the year end the Company undertook a share capital reorganisation in order to reduce the par value of its shares to below the market price, which allows the Company to raise additional equity finance. Following a review of the Company’s activities, the Board concluded that the strategy of investing in developing companies as they came to market was not practical without much more substantial funds for the purpose. In continuing to implement its investing policy, the Company will now adopt a more focussed approach and would also consider using the Company to undertake a reverse transaction. Prior to 31 October 2015, in order to conserve working capital, the Board reviewed the cost structure of the Company and took steps to reduce expenditure. An operating plan has now been adopted which will bring about a further significant cost reduction, including a reduction in directors’ remuneration to a level consistent with the Company’s size and status. It is the board’s intention to raise additional funds in the near future by way of a placing, a further announcement will be made in due course. Peter Redmond Chairman 29 April 2016 Page | 2 PIRES INVESTMENTS PLC Strategic Report Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 Business review and future developments Investments During the period under review Pires Investments plc (“the Company”) made the following significant changes to its investments: On 13 February 2015, the Company subscribed for 34,482,760 new Ordinary shares in a placing by 3Legs Resources PLC ("3Legs") for a consideration of £80,600. The 34,482,760 new Ordinary shares represented approximately 8.0 per cent of 3Leg's total voting rights. 3Legs is an Isle of Man company whose shares are traded on AIM. The Company subsequently disposed of 8,000,000 Ordinary shares for a consideration of £19,849, representing a gain of 6% over the price paid. As at the year end the market value of the Company’s holding in 3Legs was £84,083. During the period under review the Company disposed of 300,095,238 Ordinary shares in Armstrong Ventures plc (“Armstrong”) for a consideration of £71,750, representing a 14% gain over the price paid. As at the year end the market value of the Company’s residual holding in Armstrong was £27,295. During the period, the Company made a number of disposals of its Ordinary shares in Kennedy Ventures plc (“Kennedy”), disposing of 978,000 ordinary shares for a consideration of £80,688, representing a 660% gain over the price paid. As at the year end the market value of the Company’s residual holding was £61,320. During the period, the Company disposed of 100,000 Ordinary shares in Rame Energy plc out of its total holding of 3,485,270 Ordinary shares, representing a 34% loss over the price paid. As at the year end the market value of the Company’s residual holding was £321,601. Going concern The Company’s activities resulted in a loss of £454,698 (2014: Loss of £326,909) and the cash balance was £61,825 as at 31 October 2015 (2014: £295,198). 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. Investing Policy The Group’s investing policy was approved by shareholders on 16 April 2012 and implemented in accordance with the requirements of Rule 15 of the AIM Rules (as in force at that time) on 12 April 2013. A copy of the investing policy is available on the website (www.piresinvestments.com). 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. Page | 3 PIRES INVESTMENTS PLC Strategic Report Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 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 2015 £524,028 0.023p £61,825 31 October 2014 £978,726 0.042p £295,198 Change % (46%) (46%) (79%) Identifying suitable targets The Group is dependent upon the ability of the Directors to identify suitable investment opportunities in accordance with 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 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. 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 2016 Page | 4 PIRES INVESTMENTS PLC Directors’ Report Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 The Directors present their annual report and the audited group financial statements of Pires Investments plc for the year ended 31 October 2015. The Company’s Ordinary Shares are traded on AIM Market of the London Stock Exchange under the ticker PIRI. On 31 March 2016 shareholders approved a capital reorganisation under which, inter alia, the 2,321,659,864 Ordinary Shares of 0.1p each were consolidated into 9,286,639 Ordinary Shares of 0.25p each. Results and dividends The Group’s loss from continuing activities for the year was £454,698 (2014 loss: £326,909). 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 On 11 March 2016 the Company announced that it had disposed of the entire issued share capital of Ventec, a subsidiary of the Company, to Ambrosia Investment Limited. The Company, prior to the disposal, obtained an independent valuation for Ventec which confirmed the directors’ view that the subsidiary had nil economic value. Consideration for the disposal was £2 and in addition Ambrosia settled in cash intercompany liabilities amounting to circa £45,000. On 31 March 2016 shareholders approved a share reorganisation of Ordinary Shares and a buy-back of Deferred Shares. Under the reorganisation of Ordinary Shares 2,321,659,864 Ordinary Shares of 0.1p each were consolidated into 9,286,639 Ordinary Shares of 0.25p each. The buy-back of Deferred Shares, which carry no economic value, has not yet been finalised and the intention is that all Deferred Shares in existence will be cancelled. Directors The following Directors have held office since 1 November 2014: Peter Redmond John May (appointed 18 December 2014) Placid Gonzales (appointed 18 December 2014) Richard Armstrong (resigned 18 December 2014) Aamir Quraishi (resigned 18 December 2014) Christopher Yates (resigned 18 December 2014) Charitable and political donations No charitable or political donations were made during the year (2014: nil). Page | 5 PIRES INVESTMENTS PLC Directors’ Report (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 Substantial shareholders As at 1 April 2016, the Company’s share register showed the following shareholdings representing 3% or more of the Company’s issued ordinary share capital: Ambrosia Investment Limited JIM Nominees Limited (Jarvis) Pershing Nominees Limited (MDCLT) TD Direct Investing Nominees (Europe) Limited (SMKTNOMS) AIMS Consultancy Limited W B Nominees Limited Wealth Nominees Limited (Nominee) XCAP Nominees Limited (Nominee) Barclayshare Nominees Limited Auditor Ordinary shares of 0.25p each Number 1,700,000 1,163,594 900,000 524,138 500,000 446,640 416,425 351,016 291,074 % of the issued ordinary share capital 18.3% 12.5% 9.7% 5.6% 5.4% 4.8% 4.5% 3.8% 3.1% 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 2016 Page | 6 PIRES INVESTMENTS PLC Report on Remuneration Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 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: Peter Redmond John May Placid Gonzales Aamir Quraishi Christopher Yates Richard Armstrong Directors’ interests Salaries 2015 £ 30,000 - - 6,976 3,750 5,726 46,452 Fees 2015 £ 30,000 20,833 13,024 - - 1,344 65,201 Total 2015 £ 60,000 20,833 13,024 6,976 3,750 7,070 111,653 Total 2014 £ 44,000 - - 17,500 18,450 17,866 97,816 The Directors’ beneficial interests in the share capital of the Company as at 31 October 2014 and 31 October 2015 were: Peter Redmond John May Placid Gonzales Aamir Quraishi (note 1) Christopher Yates (note 1) Richard Armstrong (note 1) Ordinary shares of 0.1p each 31 October 2015 - - - - - - Ordinary shares of 0.1p each 31 October 2014 - - - - 6,766,819 15,113,436 Notes: 1 2 Aamir Quraishi, Christopher Yates and Richard Armstrong resigned as directors 18 December 2014. On 16 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. These have lapsed during the year. Peter Redmond Director 29 April 2016 Page | 7 PIRES INVESTMENTS PLC Statement of Directors Responsibilities Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 Statement of Directors’ responsibilities The Directors are responsible for preparing the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and have also chosen to prepare the 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 Group and Parent Company and of the profit or loss of the Group for that period. In preparing those financial statements, International Accounting Standard 1 requires the Directors to: • properly select and apply accounting policies; • present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; • make judgements and accounting estimates that are reasonable and prudent • provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and • make an assessment of the Group’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: www.piresinvestments.com. 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 Director 29 April 2016 Page | 8 PIRES INVESTMENTS PLC Corporate Governance Report Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 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 until 18 December 2014 and since then has comprised 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 until 18 December 2014 and since then has comprised 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 undertaking its current activities. However, the Directors will continue to review the requirement for an internal audit function on a regular basis. Peter Redmond Director 29 April 2016 Page | 9 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 2015 We have audited the Group and Parent Company financial statements (the “financial statements”) of Pires Investments plc for the year ended 31 October 2015 which comprise the Group statement of comprehensive income, Group statement of changes in equity, Company statement of financial position, Company 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 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 Company and the Company 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 2015 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 Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements. Page | 10 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 2015 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 2016 Page | 11 PIRES INVESTMENTS PLC Group Statement of Comprehensive Income Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 CONTINUING ACTIVITIES Revenue Investment income Other income Total revenue Losses on investments held at fair value through profit or loss Operating expenses Operating (loss) from continuing activities (Loss) before taxation from continuing activities Tax (Loss) for the period and attributable to equity holders of the Company Basic (loss) per share Equity holders Basic and diluted Notes 2015 £ 2014 £ 6 12 4 8 134 6,200 6,334 1,833 5,000 6,833 (80,380) (15,981) (380,652) (317,761) (454,698) (326,909) (454,698) (326,909) - - (454,698) (326,909) 9 (0.02)p (0.01)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 £388,253 (2014: £325,031). The accounting policies and notes are an integral part of these financial statements. Page | 12 PIRES INVESTMENTS PLC Company Statement of Changes in Equity Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 GROUP Share Capital £ 11,853,192 Share Premium £ 2,904,840 Capital Redemption Reserve £ 164,667 Retained Earnings £ (13,617,064) Total £ 1,305,635 - - - 11,853,192 - - - 2,904,840 - - - 164,667 (326,909) - - (13,943,973) (326,909) - - 978,726 - 11,853,192 - 2,904,840 - 164,667 (454,698) (14,398,671) (454,698) 524,028 Share Capital £ 11,853,192 Share Premium £ 2,904,840 Capital Redemption Reserve £ 164,667 Retained Earnings £ (13,617,064) Total £ 1,305,635 - - - 11,853,192 - - - 2,904,840 - - - 164,667 (325,031) - - (13,942,095) (325,031) - - 980,604 - 11,853,192 - 2,904,840 - 164,667 (388,253) (14,330,348) (388,253) 592,351 Balance at 1 November 2013 Total comprehensive income for the year ended 31 October 2014 Issue of shares Share issuance costs As at 31 October 2014 Total comprehensive income for the year ended 31 October 2015 As at 31 October 2015 COMPANY Balance at 1 November 2013 Total comprehensive income for the year ended 31 October 2014 Issue of shares Share issuance costs As at 31 October 2014 Total comprehensive income for the year ended 31 October 2015 As at 31 October 2015 The accounting policies and notes are an integral part of these financial statements. Page | 13 PIRES INVESTMENTS PLC (Incorporated in England and Wales with registered number 02929801) Group and Company Statements of Financial Position Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 Note 10 12 16 17 17 Group 2015 £ 1,057 - 1,057 2014 £ 2,163 - 2,163 Company 2015 £ 2014 £ 1,057 2,163 18,503 19,560 18,503 20,666 516,520 50,561 61,825 628,906 629,963 698,612 122,396 295,198 1,116,206 1,118,369 516,520 76,340 61,825 654,685 674,245 698,612 124,271 276,698 1,099,581 1,120,247 11,853,192 2,904,840 (14,398,671) 164,667 524,028 11,853,192 2,904,840 (13,943,973) 164,667 978,726 11,853,192 2,904,840 (14,330,348) 164,667 592,351 11,853,192 2,904,840 (13,942,095) 164,667 980,604 18 105,935 139,643 81,894 139,643 105,935 139,643 81,894 139,643 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 629,963 1,118,369 674,245 1,120,247 These financial statements were approved and authorised for issue by the Board of Directors on 29 April 2016 and were signed on its behalf by: Peter Redmond Director John May Director The accounting policies and notes are an integral part of these financial statements. Page | 14 PIRES INVESTMENTS PLC Group and Company Statements of Cash Flows Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 Cash flows from operating activities (Loss) Depreciation Realised (gain)/loss on disposal of investments Fair value movements in investments Finance income (Increase)/decrease in receivables Increase/(decrease) in payables Net cash used in 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 Finance cost paid Net cash from financing activities Net (decrease)/increase in cash and cash equivalents during the year Group Company 2015 £ 2014 £ 2015 £ 2014 £ (454,698) 1,106 (38,969) 119,349 (134) 71,835 (33,708) (335,219) (343,909) 904 73,612 (85,409) (1,833) 32,971 52,533 (271,131) (388,253) 1,107 (38,969) 119,349 (134) 47,931 (57,749) (316,718) (325,031) 904 73,612 (85,409) (1,833) 13,593 34,533 (289,631) - (80,600) 182,312 134 101,846 (1,256) (674,349) 44,722 1,833 (629,050) - (80,600) 182,312 134 101,846 (1,256) (674,349) 44,722 1,833 (629,050) - - - - - - - - (233,373) (900,181) (214,873) (918,681) Cash and cash equivalents at beginning of year 295,198 1,195,379 276,698 1,195,379 Cash and cash equivalents at end of year 61,825 295,198 61,825 276,698 Page | 15 PIRES INVESTMENTS PLC Notes to the Group Financial Statements Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 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 Cooley Services Limited, Dashwood, 69 Old Broad Street, London, EC2M 1QS. 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 consolidated 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 consolidated 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 The financial statements have been prepared on the going concern basis. 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. 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. Basis of consolidation The Group’s consolidated financial statements incorporate the financial statements of Ventec Renewable Energy Limited (the “Company”) and entities controlled by the Company. Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Inter- company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Page | 16 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 1. ACCOUNTING POLICIES (continued) Statement of compliance The following new and revised Standards and Interpretations have been adopted in the current period by the Group for the first time and do not have a material impact on the group. IFRS 10 IFRS 12 Consolidated financial statements Disclosures of interests in other entities A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and not early adopted. None of these are expected to have a significant effect on the consolidated financial statements of the Group. 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. 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. Page | 17 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 1. ACCOUNTING POLICIES (continued) 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. 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. Page | 18 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 1. ACCOUNTING POLICIES (continued) 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. 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. Page | 19 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS (continued) 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 £454,698 (2014: Loss of £326,909) and the cash balance was £61,825 as at 31 October 2015 (2014: £295,198). 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. 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) Operating (loss) from continuing activities is stated after charging: Depreciation of property, plant and equipment 1,106 904 2015 £ 2014 £ Page | 20 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 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 payable to the Company’s auditor and its associates for other services: Other services relating to taxation All other services 6. INVESTMENT INCOME The Company’s finance income was: Interest receivable Dividends receivable 7. REMUNERATION The Company’s employee benefit expense (for continuing activities in 2015) was: Wages and salaries Social security costs 2015 £ 14,500 - 2014 £ 14,500 - 1,500 1,500 - - 16,000 16,000 2015 £ 134 - 134 2014 £ 1,583 250 1,833 2015 £ 72,782 3,530 2014 £ 103,966 2,003 76,312 105,969 The average monthly number of persons employed by the Company, including Directors, during the year was as follows: 2015 No 3 2014 No 4 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 | 21 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 8. TAX EXPENSE 8. 2015 £ 2014 £ Factors affecting the tax charge for the year (Loss)/ profit on ordinary activities before taxation (454,698) (326,909) (Loss)/ profit on ordinary activities before taxation multiplied by the standard rate of UK corporation tax of 20% (2014: 21.83%) (90,940) (71,364) Effects of: 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 Gain on disposal of capital assets Tax losses arising in the year carried forward Tax losses of prior year offset against realised investment gains - - (181) 7,794 5,224 - (142) - 107,197 78,863 - Unrealised taxable losses not subject to tax in the period (23,870) (12,581) Share-based payment charge not deductible Tax charge - - - - The Company has tax losses available to carry forward against relevant future taxable income and profits of approximately £2.5million (2014: £2.4 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 | 22 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 9. (LOSS)/EARNINGS PER SHARE (Loss)/profit attributable to the owners of the Company Continuing Operations (454,698) (326,909) 2015 £ 2014 £ 2015 No. of shares 2014 No. of shares Weighted average number of shares for calculating basic loss per share 2,321,659,864 2,321,659,864 Basic and diluted loss per share Continuing Operations 2015 pence 2014 pence (0.02) (0.01) There were no dilutive instruments which would give rise to diluted earnings per share. 10. PROPERTY, PLANT AND EQUIPMENT Cost At 1 November 2013 Additions during the year At 1 November 2014 Additions during the year At 31 October 2015 Depreciation At 1 November 2013 Charge for the year Disposal during the year At 1 November 2014 Charge for the year As at 31 October 2015 Carrying amount As at 31 October 2015 At 31 October 2014 Computer equipment £ 2,108 1,255 3,363 - 3,363 296 904 - 1,200 1,106 2,306 1,057 2,163 Page | 23 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 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 2015 or 2014. 12. 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 Gains / (losses) on investments held at fair value through profit or loss Movement in investment holding gains Realised gain 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) 2015 £ 698,612 80,600 (143,343) - (119,349) 2014 £ 84,966 674,349 (44,723) (27,777) 11,797 516,520 698,612 494,297 676,389 22,223 22,223 (119,349) 38,969 - (80,380) 85,409 (73,613) (27,777) (15,981) The value of the unquoted investments as at 31 October 2015 was £22,223 and the amount comprised a holding in Evolution Energy E&P plc (previously named Shale Energy plc). Evolution Energy E&P plc is an unquoted public company whose focus is the acquisition or development of oil, gas or shale gas assets principally in the UK and USA. 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 | 24 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 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 £112,386 (2014: £428,053) 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% 2015 £ 2014 £ 49,430 67,640 (49,430) (67,640) Page | 25 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 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: 2015 £ 516,520 38,624 61,825 616,969 2014 £ 698,612 108,419 295,198 1,102,229 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 2013 Additions during the year At 1 November 2014 Disposals during the year Additions during the year At 31 October 2015 Provision for diminution in value At 1 November 2013 Disposals during the year At 1 November 2014 Disposals during the year At 31 October 2015 Net book value At 31 October 2015 At 31 October 2014 2015 £ 73,107 2014 £ 62,968 £ - 18,503 18,503 - - 18,503 - - - - - 18,503 18,503 Page | 26 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 15. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS (continued) All principal subsidiaries of the Group are consolidated into the financial statements. At 31 October 2015 the subsidiaries were as follows Subsidiary undertaking Ventec Renewable Energy Limited* Ventec Wind 1 GmbH* Energy Investment Opportunities Limited Country of registration UK Germany UK Principal activity Renewable Energy Renewable Energy Dormant Percentage holding 100% 90% 100% *Ventec Renewable Energy Limited and its subsidiary Ventec Wind 1 GmbH were disposed of after the year end as detailed in note 24, Post Balance Sheet Events. 16. TRADE AND OTHER RECEIVABLES Amount held by Insolvency Practitioner in connection with with the CVA Other receivables Group 2015 £ 2014 £ Company 2015 £ 2014 £ - 6,104 - 6,104 38,624 102,315 64,403 104,190 Prepayments and accrued income 11,937 13,977 11,937 13,977 50,561 122,396 76,340 124,271 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 2013 and 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 £ 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 - Ordinary shares issued in the year - - At 31 October 2015 Ordinary shares of 0.1p each Deferred shares of 5p each Deferred shares of 4.9p each 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 | 27 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 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. On 31 March 2016 shareholders approval a capital reorganisation under which: (a) the ordinary shares of 0.1p each were sub-divided into one ordinary share of 0.001p each and one deferred share of 0.099p each; (b) the ordinary shares of 0.001p each were consolidated on the basis of one ordinary share of 0.25p for every 250 ordinary shares of 0.001p each; (c) the deferred shares of 5p each, 4.9p each and 0.099p each are to be bought back by the company for cancellation from the proceeds of the issue of one ordinary share of 0.25p at a price of £1 18. TRADE AND OTHER PAYABLES Trade payables Other payables Accruals and deferred income Taxation and social security Group 2015 £ 72,262 - 32,828 845 2014 £ 35,686 26,250 76,675 1,032 Company 2015 £ 48,221 - 32,828 845 2014 £ 35,686 26,250 76,675 1,032 105,935 139,643 81,894 139,643 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 | 28 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 19. CONTINGENT LIABILITES At 31 October 2015 and 2014, the Company had no material contingent liabilities. 20. CAPITAL COMMITMENTS At 31 October 2015 and 2014, the Company had no capital commitments authorised or contracted by the Directors. 21. POTENTIAL SHARE ISSUES AND 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: 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. The warrants expired unexercised. 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 warrants expired unexercised. Number of shares to be issued upon exercise for the year ended 31 October 2015 Exercise price for the year ended 31 October 2015 Number of shares to be issued upon exercise price for the year ended 31 October 2014 Exercise price for the year ended 31 October 2014 £ £ Outstanding at beginning of period 0.10p 139,229,592 0.10p 139,229,592 Arising during the period Lapsed 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 Page | 29 PIRES INVESTMENTS PLC Notes to the Group Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2015 22. 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 Fees for consultancy services supplied by Catalyst Corporate Consultants Limited, a company beneficially controlled by Peter Redmond and of which he is a director Fees for consultancy services supplied by City and Westminster Corporate Finance LLP, a company beneficially owned by John May Fees for consultancy services supplied by Placid P. Gonzales & Associates, a company beneficially owned by Placid Gonzales and of which he is a director. Fees for consultancy services supplied by Christopher Yates as a consultant for services other than director’s duties Fees for consultancy services supplied by Richard Armstrong as a consultant for services other than director’s duties 2015 £ - 2014 £ 2,500 30,000 24,000 20,833 13,653 13,024 - - 5,950 1,344 - During the period, a member of key management, Emmanouil Vaindirlis, charged consultancy fees of £35,000 (2014: £29,167) through a Company of which he is a Director, Newdoor Capital Limited. 23. POST BALANCE SHEET EVENTS Reconstruction of Share Capital On 31 March 2016 shareholders approved a capital reorganisation under which: (a) the ordinary shares of 0.1p each were sub-divided into one ordinary share of 0.001p each and one deferred share of 0.099p each; (b) the ordinary shares of 0.001p each were consolidated on the basis of one ordinary share of 0.25p for every 250 ordinary shares of 0.001p each; (c) the deferred shares of 5p each, 4.9p each and 0.099p each are to be bought back by the company for cancellation from the proceeds of the issue of one ordinary share of 0.25p at a price of £1. Disposal of Ventec Renewable Energy Limited ("Ventec") On 10 March 2016, Pires disposed of the entire issued share capital of Ventec Renewable Energy Limited (“Ventec”) and its subsidiary Ventec Wind 1 GmbH to Ambrosia Investment Limited, a substantial shareholder of the Company. Ventec was formed in July 2014 with a view to entering into a number of European renewable energy projects. Ultimately it was not possible to complete such transactions. Prior to the disposal, Pires obtained an independent valuation for Ventec and its subsidiary which confirmed the directors’ view that the subsidiary had nil economic value. Consideration for the disposal was £2 and additionally the purchaser settled intercompany liabilities amounting to circa £45,000 due from Ventec to Pires. Page | 30

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