Pires Investments plc
Annual Report 2016

Plain-text annual report

Pires Investments plc (Incorporated in England and Wales with registered number 02929801) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 PIRES INVESTMENTS PLC Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 Statement of Comprehensive Income Statement of Changes in Equity Statement of Financial Position Statement of Cash Flows Notes to the Financial Statements Page 1 2 3 5 7 8 9 10 12 13 14 15 16 PIRES INVESTMENTS PLC Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 Company Information Directors Peter Redmond (Chairman) Placid Gonzales (Non-Executive Director) John May (Non-Executive Director) Nicholas Lee (Non-Executive Director) Secretary Miles Nicholson Registered office Independent Auditors Nominated adviser Broker Registrars c/o Cooley Services Limited Dashwood House 69 Old Broad Street London EC2M 1QS Welbeck Associates Chartered Accountants and Registered Auditors 30 Percy Street London W1T 2DB Cairn Financial Advisers LLP 62-63 Cheapside Cheyne House Crown Court 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 2016 The results for the financial period under review were disappointing. This was principally due to Rame Energy plc (“Rame”), our largest investment, going into administration and therefore delivering no return to shareholders. The Company’s other investments continued to perform satisfactorily, although this was insufficient to offset the loss on Rame. The Company also made certain disposals during the period that generated a positive return, including part of our investment in Armstrong Investments plc (now EVR Holdings plc). During the period under review, the Company raised £100,000 in new equity via a placing, principally with Ambrosia Investments Limited (“Ambrosia”), at the time our largest shareholder. Following the administration of Rame, Ambrosia also provided a working capital facility of £200,000 which, to date, has not been drawn down. Following the year end, the Company was able to complete further equity placings at 3p per share to raise £675,000 in aggregate, before expenses. Subsequently, the Company has invested £500,000 in Eco (Atlantic) Oil & Gas Limited, an oil exploration company previously listed only on the Toronto Stock Exchange. This company’s shares were admitted to AIM in February 2017 as part of a £5 million fund raising and are currently trading at a premium to the placing price. Costs were reduced during the period but the Board recognises that these remain too high for a company of Pires’ current size and steps have been taken to reduce them further. The Company currently has net assets of approximately £785,000 (2.3p fully diluted per share), which principally comprise cash and investments. Going forward, the Company previously announced that it was looking for a single acquisition or investment rather than focusing on holding multiple investments. This remains the Board’s objective. The Board is reviewing a number of such transactions and is optimistic about bringing one of these opportunities to fruition. In this context, we were pleased to welcome Nicholas Lee onto the Board in February 2017. Nicholas is an experienced corporate financier with an extensive background in smaller quoted companies, in particular in terms of investment and acquisitions. He is Chairman of Paternoster Investments plc, now our largest shareholder. We expect that his assistance will be invaluable in terms of bringing a transaction to fruition in the current trading period. Peter Redmond Chairman 28 April 2017 Page | 2 PIRES INVESTMENTS PLC Strategic Report Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 Business review and future developments Investments During the period under review Pires Investments plc (“the Company”) made the following significant changes to its investments: SalvaRx Group Plc (“SalvaRx”) consolidated its share capital adjusting the Company’s shareholding to 264,827 Ordinary shares. The Company disposed of 12,500 Ordinary shares in SalvaRx for a consideration of £4,148. As at the year end, the market value of the Company’s holding in SalvaRx was £78,221. The Company disposed of 1,020,000 Ordinary shares in EVR Holdings plc (“EVR”) for a consideration of £20,089. As at the year end the market value of the Company’s residual holding in EVR was £25,563. The Company made a number of disposals of its shares in Kennedy Ventures plc (“Kennedy”), disposing of 515,000 ordinary shares for a consideration of £24,518. As at the year end the market value of the Company’s residual holding was £26,618. On the 1 July 2016, Rame Energy Plc (“Rame”) announced that its shares had been suspended from trading on AIM. On 5 August 2016, Rame announced that administrators had been appointed. In the light of this, the Company decided to write off its residual holding of 3,230,000 shares, which at the suspension price had a valuation of £230,138. Going concern The Company’s activities resulted in a loss of £559,637 (2015: loss of £388,253) and, as at 31 October 2016, the Company’s cash balance was £49,448 (2015: £61,825). As such, the Company was dependent on raising additional funding, or reducing its operating costs in order to move forward. However, the Company raised £675,000 in November 2016 by way of two equity placings, and the Directors are in the process of a cost cutting exercise to minimise overheads including Directors’ fees. So whilst there are inherent uncertainties in relation to future events, the Directors consider that, based upon financial projections, the Company will be a going concern for the next twelve months. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements. Investing Policy The Company’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 Company’s financial instruments and financial risk management policies can be found in notes 14 and 15 to the financial statements. Page | 3 PIRES INVESTMENTS PLC Strategic Report Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 2016 £ 130,714 0.011p 49,448 31 October 2015 £ 592,351 0.026p 61,825 Change % (78%) (58%) (20%) Identifying suitable targets The Company 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 Company 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 Company’s ability to execute investments in suitable entities which generate acceptable returns. There is no guarantee that the Company will be successful in sourcing suitable investments. Costs associated with potential investments The Company 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 Company’s performance, financial condition and business prospects. Valuation error The Company 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 Company 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 28 April 2017 Page | 4 PIRES INVESTMENTS PLC Directors’ Report Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 The Directors present their annual report and the audited Company financial statements of Pires Investments plc for the year ended 31 October 2016. On 11 March 2016 the Company announced that it had disposed of the entire issued share capital of Ventec Renewable Energy Limited, a subsidiary of the Company, to Ambrosia Investments 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 Investments Limited settled in cash intercompany liabilities amounting to circa £45,000. 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 0.001p each were consolidated into 9,286,639 Ordinary Shares of 0.25p each. Results and dividends The Company’s loss from continuing activities for the year was £559,637 (2015 loss: £388,253). The Directors are unable to recommend the payment of a dividend, given the deficit on distributable reserves. Principal activities and review of business The principal activities of the Company throughout the year under review and since have been as an investment company which has involved the seeking, investigation and making of investments. The review of the business is contained within the Strategic Report on page 3. Events after the Reporting Period On 2 November 2016 the Company’s broker, Peterhouse Corporate Finance Limited (“Peterhouse”) raised £525,000 gross of expenses, for the Company, through the issue to third party investors of 17,500,000 new ordinary shares in the Company at a placing price of 3 pence per Placing Share. Placees also received one warrant for every two placing shares subscribed for. The warrants have an exercise price of 4.25 pence each, and are exercisable for a period of 18 months from the date of issue, the last exercise date being 2 May 2018. On 28 November 2016, Peterhouse, in reponse to further investor demand, raised £150,000 gross of expenses, for the Company, through the issue of 5,000,000 new ordinary shares at a placing price of 3 pence per Placing Share. Placees also received one warrant for every two placing shares subscribed for. The warrants have an exercise price of 4.25 pence each, and are exercisable for a period of 18 months from the date of issue, the last exercise date being 25 May 2018. Nicholas Lee was appointed as a Non-executive director on 13 February 2017. Directors The following Directors have held office since 1 November 2015: Peter Redmond John May Placid Gonzales Charitable and political donations No charitable or political donations were made during the year (2015: nil). Page | 5 PIRES INVESTMENTS PLC Directors’ Report (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 Substantial shareholders As at 24 April 2017, the Company’s share register showed the following shareholdings representing 3% or more of the Company’s issued ordinary share capital: Paternoster Resources plc Peel Hunt Holdings Limited Lawshare Nominees Limited JIM Nominees Limited TD Direct Investing Nominees (Europe) Limited Stifel Nicolaus Europe Limited Manoli Vaindirlis Ambrosia Investment Limited Winterflood Securities Limited Ordinary shares of 0.25p each Number 8,333,333 3,157,423 2,640,639 2,507,188 1,923,597 1,858,839 1,585,624 1,500,000 1,062,352 % of the issued ordinary share capital 24.58% 9.31% 7.79% 7.40% 5.67% 5.48% 4.68% 4.42% 3.13% Manoli Vaindirlis is the sole shareholder of Ambrosia Investments Limited. 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 28 April 2017 Page | 6 PIRES INVESTMENTS PLC Report on Remuneration Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 Salaries 2016 £ 30,000 - - - - - 30,000 Fees 2016 £ 30,000 25,000 15,000 - - - 70,000 Total 2016 £ 60,000 25,000 15,000 - - - 100,000 Total 2015 £ 60,000 20,833 13,024 6,976 3,750 7,070 111,653 As at 31 October 2016, £52,000 of Directors fees had been deferred for payment. Directors’ interests The Directors’ had no beneficial interests in the share capital of the Company as at 31 October 2015 and 31 October 2016. Peter Redmond Director 28 April 2017 Page | 7 PIRES INVESTMENTS PLC Statement of Directors’ Responsibilities Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 Parent 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: www.piresinvestments.com. The maintenance and integrity of the website is the responsibility of the Directors. The Directors responsibility also extends to the financial statements contained therein. By order of the Board Peter Redmond Director 28 April 2017 Page | 8 PIRES INVESTMENTS PLC Corporate Governance Report Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 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 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 28 April 2017 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 2016 We have audited the Company’s financial statements (the “financial statements”) of Pires Investments plc for the year ended 31 October 2016 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 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 Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Directors and auditor As explained more fully in the Directors' Responsibilities Statements, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition we read all financial and non-financial information in the Chairman’s Statement, 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 Company’s affairs as at 31 October 2016 and of the Company’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 2016 Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: • • • • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or the Company financial statements are not in agreement with the accounting records and returns; or certain disclosures of Directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Jonathan Bradley-Hoare (Senior Statutory Auditor) For and on behalf of Welbeck Associates Chartered Accountants and Statutory Auditor 30 Percy Street London W1T 2DB 28 April 2017 Page | 11 PIRES INVESTMENTS PLC Statement of Comprehensive Income Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 year from continuing activities Loss on disposal of discontinued operations (Loss) for the period and attributable to equity holders of the Company Basic (loss) per share Equity holders From continuing operations From discontinued operations Basic and diluted Notes 6 13 4 8 9 10 10 2016 £ 33 21 54 2015 £ 134 6,200 6,334 (302,463) (80,380) (248,611) (314,207) (551,020) (388,253) (551,020) (388,253) - - (551,020) (388,253) (8,617) - (559,637) (388,253) - - (5.00)p - - (0.02)p The financial statements for the year to 31 October 2015 were prepared on a consolidated basis, so the comparatives have been restated to reflect the results of the Company only in accordance with IFRS. The accounting policies and notes are an integral part of these financial statements. Page | 12 PIRES INVESTMENTS PLC Statement of Changes in Equity Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 Share Capital £ 11,853,192 Share Premium £ 2,904,840 Capital Redemption Reserve £ 164,667 Retained Earnings £ (13,942,095) Total £ 980,604 - 11,853,192 5,285 - - 2,904,840 94,715 (2,000) - 164,667 - - (388,253) (14,330,348) - - (388,253) 592,351 100,000 (2,000) - 11,858,477 - 2,997,555 - 164,667 (559,637) (14,889,985) (559,637) 130,714 Balance at 1 November 2014 Total comprehensive income for the year ended 31 October 2015 As at 31 October 2015 Issue of shares Share issue costs Total comprehensive income for the year ended 31 October 2016 As at 31 October 2016 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) Statement of Financial Position Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 11 16 13 17 18 18 19 Company 2016 £ 230 1 231 152,624 53,865 49,448 255,937 256,168 2015 £ 1,057 18,503 19,560 516,520 76,340 61,825 654,685 674,245 11,858,477 2,997,555 (14,889,985) 164,667 130,714 11,853,192 2,904,840 (14,330,348) 164,667 592,351 125,454 125,454 81,894 81,894 256,168 674,245 These financial statements were approved and authorised for issue by the Board of Directors on 28 April 2017 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 Statement of Cash Flows Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 Cash flows from operating activities (Loss) Depreciation Realised (gain)/loss on disposal of investments Fair value movements in investments Finance income 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 Proceeds from disposal of subsidiary operations Net proceeds from share issues Finance income received net Net cash used in investing activities Cash flows from financing activities Finance cost paid Net cash from financing activities Company 2016 £ 2015 £ (559,637) 827 3,996 298,647 (33) 22,475 43,560 (190,165) - - 61,434 18,321 98,000 33 177,788 (388,253) 1,107 (38,969) 119,349 (134) 47,931 (57,749) (316,718) - (80,600) 182,312 - - 134 101,846 - - - - Net (decrease)/increase in cash and cash equivalents during the year (12,377) (214,873) Cash and cash equivalents at beginning of year 61,825 276,698 Cash and cash equivalents at end of year 49,448 61,825 Page | 15 PIRES INVESTMENTS PLC Notes to the Financial Statements Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 House, 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 financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and IFRIC interpretations as adopted by the European Union applicable to companies reporting under IFRSs. The financial statements have also been prepared under the historical cost convention. For the year ended 31 October 2015, financial statements were prepared on a Group Consolidated basis. The 31 October 2016 financial information has been restated to show the Company financial information as there is no longer the requirement to prepare Group financial statements. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed later in these accounting policies. Going Concern The financial statements have been prepared on the going concern basis. Any consideration of the foreseeable future involves making a judgement, at a particular point in time, about future events which are inherently uncertain. The ability of the Company 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. Page | 16 PIRES INVESTMENTS PLC Notes to the Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 1. ACCOUNTING POLICIES (continued) Statement of compliance The following new and revised Standards and Interpretations have been adopted in the current period by the Company for the first time and do not have a material impact on the Company. 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 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. 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 Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 Company’s balance sheet when the Company becomes a party to the contractual provisions of the instrument. All interest related charges are recognised as an expense in finance cost in the income statement using the effective interest rate method. The Company's financial liabilities comprise trade and other payables. Trade payables are recognised initially at their fair value and subsequently measured at amortised cost less settlement payments. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs. The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Share capital account represents the nominal value of the shares issued. Retained earnings include all current and prior period results as disclosed in the Statement of Comprehensive Income. 2. 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 Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 £559,637 (2015: loss of £388,253) and, as at 31 October 2016, the Company’s cash balance was £49,448 (2015: £61,825). As such, the Company was dependent on raising additional funding, or reducing its operating costs in order to move forward. However, the Company raised £675,000 in November 2016 by way of two equity placings, and the Directors are in the process of a cost cutting exercise to minimise overheads including Directors’ fees. So whilst there are inherent uncertainties in relation to future events, the Directors consider that, based upon financial projections, the Company will be a going concern for the next twelve months. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements. 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 827 1,106 2016 £ 2015 £ Page | 20 PIRES INVESTMENTS PLC Notes to the Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 7. REMUNERATION The Company’s employee benefit expense (for continuing activities in 2016) was: Wages and salaries Social security costs 2016 £ 14,500 - 2015 £ 14,500 - 1,500 1,500 - - 16,000 16,000 2016 £ 33 33 2015 £ 134 134 2016 £ 26,250 1,725 2015 £ 72,782 3,530 27,975 76,312 The average monthly number of persons employed by the Company, including Directors, during the year was as follows: 2016 No 3 2015 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 | 21 PIRES INVESTMENTS PLC Notes to the Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 8. TAX EXPENSE 8. Factors affecting the tax charge for the year (Loss)/ profit on ordinary activities before taxation (551,020) (388,253) (Loss)/ profit on ordinary activities before taxation multiplied by the standard rate of UK corporation tax of 20% (2015: 20%) (110,204) (77,651) 2016 £ 2015 £ Effects of: Expenses not deductible for tax purposes net of income not subject to corporation tax Tax depreciation in excess of book depreciation Gain on disposal of capital assets Tax losses arising in the year carried forward Unrealised taxable losses not subject to tax in the period Share-based payment charge not deductible Tax charge - - (81) 5,225 2,429 (181) 7,794 107,197 102,631 (37,159) - - - - The Company has tax losses available to carry forward against relevant future taxable income and profits of approximately £3.0 million (2015: £2.5 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 Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 9. DISCONTINUED OPERATIONS On 11 March 2016 the Company announced that it had disposed of the entire issued share capital of Ventec Renewable Energy Limited, a subsidiary of the Company, to Ambrosia Investments Limited. See Note 23 – Related party transactions. 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 the intercompany liabilities amounting to circa £45,000 were settled in cash. The results of the discontinued operations, which have been included in the financial statements, were as follows: Income statement Revenue Expenses Loss before tax Attributable tax expense Net loss attributable to discontinued operations Balance sheet Investment in subsidiaries Total non-current assets Trade and other payables Net liabilities 2016 - (8,617) (8,617) - (8,617) 2016 18,502 18,502 (63,500) (44,998) 2015 - - - - - 2015 - - - - Page | 23 PIRES INVESTMENTS PLC Notes to the Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 10. (LOSS)/EARNINGS PER SHARE (Loss)/profit attributable to the owners of the Company Continuing Operations (551,020) (388,253) 2016 £ 2015 £ 2016 No. of Shares 2015 No. of shares Weighted average number of shares for calculating basic loss per share 11,400,805 2,321,659,864 Basic and diluted loss per share Continuing Operations 2016 Pence 2015 pence (5.00) (0.02) There were no dilutive instruments which would give rise to diluted earnings per share. 11. PROPERTY, PLANT AND EQUIPMENT Cost At 1 November 2014 Additions during the year At 1 November 2015 Additions during the year At 31 October 2016 Depreciation At 1 November 2014 Charge for the year Disposal during the year At 1 November 2015 Charge for the year As at 31 October 2016 Carrying amount As at 31 October 2016 At 31 October 2015 Computer equipment £ 3,363 - 3,363 - 3,363 1,200 1,106 - 2,306 827 3,133 230 1,057 Page | 24 PIRES INVESTMENTS PLC Notes to the Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 12. FAIR VALUE MEASUREMENT The table below sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows: Level 1 – valued using quoted prices in active markets for identical assets. Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1. Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data. There were no transfers between Level 1 and Level 3 in 2016 or 2015. 13. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS Investments at fair value brought forward Purchase of investments Investment disposals Movement in investment holding 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 (loss)/gain on disposal of investments Net loss on investments held at fair value through profit or loss Unquoted investments (Level 3) 2016 £ 516,520 - (65,429) (298,467) 2015 £ 698,612 80,600 (143,343) (119,349) 152,624 516,520 130,401 494,297 22,223 22,223 (298,467) (119,349) (3,996) (302,463) 38,969 (80,380) The value of the unquoted investments as at 31 October 2016 was £22,223 and 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 | 25 PIRES INVESTMENTS PLC Notes to the Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 14. RISK MANAGEMENT OBJECTIVES AND POLICIES The Company is exposed to a variety of financial risks which result from both its operating and investing activities. The Company’s risk management is coordinated by the Board of Directors, and focuses on actively securing the Company’s short to medium term cash flows by minimising the exposure to financial markets. The main risks the Company is exposed to through its financial instruments are credit risk, foreign currency risk, liquidity risk and market price risk. Capital risk management The Company’s objectives when managing capital are:    to safeguard the Company’s ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders; to support the Company’s growth; and to provide capital for the purpose of strengthening the Company’s risk management capability. The Company actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Company and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes. Credit risk The Company’s financial instruments, 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 £103,313 (2015: £138,165) comprising cash and cash equivalents and loans and receivables. Liquidity risk Liquidity risk arises from the possibility that the Company might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Company manages this risk through maintaining a positive cash balance and controlling expenses and commitments. The Directors are confident that adequate resources exist to finance current operations. Market price risk The Company’s exposure to market price risk mainly arises from potential movements in the fair value of its investments. The Company’s exposure to price risk on quoted investments is as follows: Change in equity Increase in quoted investments by 10% Decrease in quoted investments by 10% 2016 £ 2015 £ 13,040 49,430 (13,040) (49,430) Page | 26 PIRES INVESTMENTS PLC Notes to the Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 15. FINANCIAL INSTRUMENTS Financial assets by category: The IAS 39 categories of financial asset included in the statement of financial position and the headings in which they are included are as follows: Financial assets: Fair value through profit or loss investments Loans and receivables Cash and cash equivalents Total 2016 £ 130,401 40,895 49,448 220,744 2015 £ 516,520 64,403 61,825 642,748 Financial liabilities by category: The IAS 39 categories of financial liabilities included in the statement of financial position and the headings in which they are included are as follows: Trade and other payables 16. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS Cost At 1 November 2014 Additions during the year At 1 November 2015 Disposals during the year Additions during the year At 31 October 2016 Provision for diminution in value At 1 November 2014 and 1 November 2015 Disposals during the year At 31 October 2016 Net book value At 31 October 2016 At 31 October 2015 2016 £ 53,171 2015 £ 49,066 £ 18,503 - 18,503 (18,502) - 1 - - - 1 18,503 At 31 October 2016 the subsidiaries were as follows: Subsidiary undertaking Energy Investment Opportunities Limited Country of registration UK Principal activity Dormant Percentage holding 100% *Ventec Renewable Energy Limited and its subsidiary Ventec Wind 1 GmbH was disposed of during the year. Page | 27 PIRES INVESTMENTS PLC Notes to the Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 17. TRADE AND OTHER RECEIVABLES Other receivables Prepayments and accrued income Company 2016 £ 40,895 12,970 53,865 2015 £ 64,403 11,937 76,340 As described in note 13, the Directors do not consider credit risk to be material to the Company's operations. 18. ISSUED SHARE CAPITAL Issued and fully paid: At 1 November 2014 and 31 October 2015 Ordinary shares of 0.1p each Deferred shares of 5p each Deferred shares of 4.9p each At 31 October 2016 Ordinary shares issued in the year: 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 of 0.001p each – share reorganisation Ordinary shares of 0.25p each - Consolidation Ordinary shares of 0.25p each Deferred shares of 0.099p each – share reorganisation Deferred shares of 5p each Deferred shares of 4.9p each 2,321,659,864 9,286,639 100,000 9,386,639 2,321,659,864 136,171,197 55,570,856 - 5,285 5,285 2,321,660 6,808,560 2,722,972 11,858,477 2,904,840 92,715 2,997,555 - - - 2,997,555 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. Page | 28 PIRES INVESTMENTS PLC Notes to the Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 18. 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. 19. TRADE AND OTHER PAYABLES Trade payables Other payables Accruals and deferred income Taxation and social security Company 2016 £ 48,570 4,199 72,283 402 125,454 2015 £ 48,221 - 32,828 845 81,894 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 | 29 PIRES INVESTMENTS PLC Notes to the Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 20. CONTINGENT LIABILITES At 31 October 2016 and 2015, the Company had no material contingent liabilities. 21. CAPITAL COMMITMENTS At 31 October 2016 and 2015, the Company had no capital commitments authorised or contracted by the Directors. 22. POTENTIAL SHARE ISSUES AND SHARE BASED PAYMENTS There were no outstanding options or warrants over the ordinary share capital of the Company as at 31 October 2016 (2015: Nil): Number of shares to be issued upon exercise for the year ended 31 October 2016 Exercise price for the year ended 31 October 2016 Number of shares to be issued upon exercise price for the year ended 31 October 2015 Exercise price for the year ended 31 October 2015 £ - - - - - £ 0.10p 139,229,592 - - 0.10p 139,229,592 - - - - - - - - - Outstanding at beginning of period Arising during the period Lapsed during the period Outstanding at end of period Exercisable at end of period Page | 30 PIRES INVESTMENTS PLC Notes to the Financial Statements (continued) Annual Report and Financial Statements FOR THE YEAR ENDED 31 OCTOBER 2016 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 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 Richard Armstrong as a consultant for services other than director’s duties 2016 £ 30,000 2015 £ 30,000 25,000 20,833 15,000 13,024 - 1,344 In March 2016, the Company disposed of its entire investment in its trading subsidiary Ventec Renewable Energy Limited to Ambrosia Investments Limited. Emmanouil Vaindirlis is the sole shareholder of Ambrosia Investments Limited and at the date of disposal Ambrosia and Emmanouil Vaindirlis held interests of 4.42% and 4.68% in Pires Investments Plc respectively. 24. POST BALANCE SHEET EVENTS Issue of equity On 2 November 2016, the Company’s broker, Peterhouse Corporate Finance Limited (“Peterhouse”) raised £525,000 gross of expenses, for the Company, through the issue to third party investors of 17,500,000 new ordinary shares in the Company at a placing price of 3 pence per Placing Share. Placees also received one warrant for every two placing shares subscribed for. The warrants have an exercise price of 4.25 pence each, and are exercisable for a period of 18 months from the date of issue, the last exercise date bring 2 May 2018. On 28 November 2016, Peterhouse, in response to further investor demand, raised £150,000 gross of expenses, for the Company, through the issue of 5,000,000 new ordinary shares at a placing price of 3 pence per Placing Share. Placees also received one warrant for every two placing shares subscribed for. The warrants have an exercise price of 4.25 pence each, and are exercisable for a period of 18 months from the date of issue, the last exercise date being 25 May 2018. On 8 February 2017, the Company subscribed for 3,125,000 ordinary shares in Eco (Atlantic) Oil & Gas Ltd at a price of 16 pence per share for a consideration of £500,000, representing approximately 2.6% of their issued share capital. On 13 February 2017, the Company appointed Nicholas Lee as a Non-executive director. Page | 31 

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