Pires Investments plc
(Incorporated in England and Wales with registered number 02929801)
Annual Report and
Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
PIRES INVESTMENTS PLC
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
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
6
8
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22
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24
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26
PIRES INVESTMENTS PLC
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
Company Information
Directors
Peter Redmond (Chairman)
John May (Non-Executive Director)
Nicholas Lee (Non-Executive Director)
Secretary
Robert Porter
Registered office
Independent Auditors
Nominated adviser
Broker
Registrars
c/o Cooley Services Limited
Dashwood House
69 Old Broad Street
London
EC2M 1QS
PKF Littlejohn LLP
1 Westferry Circus
London E14 4HD
Cairn Financial Advisers LLP
Cheyne House
Crown Court
62-63 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 2018
The Board is happy to announce much improved results for the financial year ended 31 October 2018 as
compared with the previous year. The Company achieved a profit before taxation of £322,069 compared
to a loss before taxation of £142,916 for 2017. Operating costs were significantly reduced during the
year to £252,929 (2017: £338,973).
The principal factor behind the improved results was the increase in the value of our investments which
almost doubled to £1,029,526, after allowing for share disposals during the period amounting to
£264,882 which includes realised gains of £89,192. Since the period end, the value of the investment
portfolio has increased by an additional 45% to £1,490,000 following further share price rises in
investments held.
The main factor behind the improved performance was the increase in the value of our holding in ECO
(Atlantic) Oil and Gas Limited although our other investments, principally SalvaRx plc (“SalvaRx”), also
made significant advances. Since the year end, there have been significant changes in SalvaRx which are
described in the Directors Report in the section ‘Events after the Reporting Period’.
In February 2019, the Board raised additional equity funds by way of a placing to raise £781,720 at a
price of 2.4p per share, a modest discount to the then market price of the shares. As markets continue to
be uncertain, the Board believed that it was prudent to raise some additional funds at this stage to
ensure that the Company is well placed for the future and better able to take advantage of opportunities
as they arise.
Taking account of this placing and the increased value of the Company’s investments, the Company’s net
assets have now risen to around £2.35 million and comprise virtually wholly of cash and tradeable
quoted shares. As previously stated, the Board considers that the Company not only represents a much
more attractive investment partner but also has the resources to diversify its portfolio and to make
investments from time to time on a scale which could significantly enhance shareholder value.
The Board will continue to seek value enhancing investments whether by taking minority holdings or by
direct acquisition.
Peter Redmond
Chairman
29 April 2019
Page | 2
PIRES INVESTMENTS PLC
Strategic Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
Business review and future developments
Investments
During the year, the Company disposed of some of its holdings in SalvaRx Group plc, and Eco (Atlantic) Oil
and Gas Limited. The Company also exercised its warrants to subscribe for additional shares in Eco
(Atlantic) Oil and Gas Limited. As at 31 October 2018, the Company’s principal investments comprised:
Investment
SalvaRx Group plc
Kazera Global plc
Eco (Atlantic) Oil and Gas Limited
Total
Value (£)*
60,397
19,619
949,510
1,029,526
*based on the market valuation of the respective companies’ shares at 31 October 2018.
Going concern
The Company’s activities resulted in a profit of £322,069 (2017: loss of £142,916) and, as at 31 October
2018, the Company’s cash balance was £48,028 (2017: £241,142).
The Company’s administrative expenses in the 12 month period from the signing of these financial
statements may exceed the Company’s cash balance as at 31 October 2018, however, the Company has
since realised cash on the disposal of some investments and raised £781,720, gross of expenses, from a
share placing on 26 February 2019. The Company also retains a portfolio of listed investments some of
which could be readily realised on the open market to meet a possible shortfall if it were to arise.
The Directors therefore consider that, based upon their 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 12 and 13 to the financial statements.
Page | 3
PIRES INVESTMENTS PLC
Strategic Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
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
2018
£
949,617
0.028p
48,028
31 October
2017
£
627,548
0.018p
241,142
Change %
51%
56%
(80)%
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 on investigative work and due diligence without achieving a return.
Market conditions
Market conditions may have a negative impact on the Company’s ability to make 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 may 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, 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.
Political and Country Risk – EU Referendum
The Company is quoted in the United Kingdom (UK) and operates in the UK and European Union (EU). As
a result of the Referendum, the Company may be subject to the impact of the UK leaving the European
Union. As a result, given the ongoing uncertainty surrounding the situation the Company is monitoring
matters and seeking advice as to how to mitigate the risks arising if and when they may occur.
Page | 4
PIRES INVESTMENTS PLC
Strategic Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
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 2019
Page | 5
PIRES INVESTMENTS PLC
Directors’ Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
The Directors present their annual report and the audited Company financial statements of Pires
Investments plc for the year ended 31 October 2018.
The Company’s Ordinary Shares are traded on AIM Market of the London Stock Exchange under the ticker
PIRI.
Results and dividends
The Company’s profit from continuing activities for the year was £322,069 (2017 loss: £142,916). The
Directors are not recommending the payment of a dividend (2017:nil).
Principal activities and review of business
The principal activity of the Company throughout the year under review and since has been as an
investment company involved in the seeking, investigation,making of and sale of investments.
The review of the business is contained within the Strategic Report on page 3.
Events after the Reporting Period
On 8 January 2019, the shareholders of SalvaRx Group PLC approved the sale of the Company's 94.2 per
cent interest in SalvaRx Limited to Portage Biotech Inc. ("Portage") in exchange for new shares in
Portage. Portage is a company quoted on the Canadian Securities Exchange. Through the acquisition of
SalvaRx holding in SalvaRx Limited, Portage acquired the operating business’s of SalvaRx.
Shares thus acquired by SalvaRx have subsequently been distributed to it’s shareholders. As a result the
company now holds 1,558,620 shares in Portage in addition to it’s holding of 86,590 shares in SalvaRx.
In February 2019, the Company raised a further £781,720, gross of expenses, through the issue of
32,571,660 new ordinary shares at a placing price of 2.4 pence per share.
Directors
The following Directors have held office since 1 November 2017:
Peter Redmond
John May
Nicholas Lee
Charitable and political donations
No charitable or political donations were made during the year (2017: nil).
Page | 6
PIRES INVESTMENTS PLC
Directors’ Report (continued)
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
Substantial shareholders
As at 25 April 2019, the Company’s share register showed the following shareholdings representing 3%
or more of the Company’s issued ordinary share capital:
JIM Nominees Limited
Global Prime Partners Limited
Lawshare Nominees Limited
Interactive Investor Services Nominees Limited
Ordinary
shares
of 0.25p
each
Number
32,749,319
11,105,000
4,271,298
2,560,874
% of the issued
ordinary share
capital
49.27%
16.71%
6.43%
3.85%
16,149,993 shares within the Jim Nominees holding are beneficially owned by Riverfort Global
Opportunities plc, of which Nicholas Lee, a director of the Company, is also the Investment Director.
10,000,000 shares within Global Prime Partners Limited are beneficially owned by Resource Early Stage
Opportunities Company.
3,050,000 shares within Lawshare Nominees Limited are beneficially owned by “The SIPP of Nicholas
Clark”.
The Directors had no beneficial interests in the share capital of the Company as at 31 October 2018 and
31 October 2017, or throughout these respective periods.
Auditor
PKF Littlejohn LLP has expressed its 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 2019
Page | 7
PIRES INVESTMENTS PLC
Report on Remuneration
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
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. 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
Nick Lee
Salary and fees
2018
£
21,977
25,000
-
25,000
71,977
Total
2018
£
21,977
25,000
-
25,000
71,977
Total
2017
£
36,000
24,332
10,866
17,000
88,198
As at 31 October 2018, £nil Directors fees (2017: £24,500) have been deferred for payment. All
remuneration is considered to relate to short term benefits.
Directors’ interests
The Directors’ had no beneficial interests in the share capital of the Company as at 31 October 2018 and
31 October 2017.
Peter Redmond
Director
29 April 2019
Page | 8
PIRES INVESTMENTS PLC
Statement of Directors’ Responsibilities
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
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
29 April 2019
Page | 9
PIRES INVESTMENTS PLC
Corporate Governance Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
The Company’s shares are traded on AIM and on 28 August 2018, the Company formally adopted the QCA
Corporate Governance Code and this is reproduced below. 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 auditor’s 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 Nicholas Lee. 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.
Compliance with Governance Code
Following a recent consultation by the London Stock Exchange, new AIM Rules were published in March
2018. One of the key amendments is in respect of AIM Rule 26 (as set out in AIM Notice 50), which now
requires AIM companies to state on their website which recognised corporate governance code they
apply and how they have applied that code.
The Board of Directors of Pires Investments PLC (“Pires” or “the Company”) is committed to developing
and applying high standards of corporate governance. The Board of Directors has applied the QCA Code,
revised in April 2018 as devised by the Quoted Companies Alliance.
Page | 10
PIRES INVESTMENTS PLC
Corporate Governance Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
The Quoted Companies Alliance is the independent membership organisation that champions the
interests of small to mid-size quoted companies. The QCA Code takes key elements of good governance
and applies them in a manner which is workable for the different needs of growing companies.
A revised version of the QCA Code (the “Revised Code”) was published in April 2018, based on the
‘comply or explain’ principle.
The QCA Code is constructed around ten broad principles (accompanied by an explanation of what these
principles entail, under ‘application’) and a set of disclosures. The Code states what is considered to be
appropriate arrangements for growing companies, and asks companies to provide an explanation about
how they are meeting the principles through the prescribed disclosures.
The table below sets out the principles, the application recommended by the QCA code. It then sets out
how the Company complies with these requirements and departures from code, and provides links to
appropriate disclosures. These are based upon the recommended disclosures provided in the QCA
code.
These disclosures were last reviewed on the 27 September 2018.
Principles:
1. Establish a strategy
and business model
which promote long-
term value for
shareholders
Application:
The Company is an Investing Company and the Board has adopted a
strategy appropriate for its status.
The Company's Investing Policy is to invest principally, but not
exclusively in the resources and energy sectors and is set out in full on
the Company’s website.
The Company may be either an active investor and acquire control of a
single company or it may acquire non-controlling shareholdings. Once
a target has been identified, additional funds may need to be raised by
the Company to complete a transaction.
The proposed investments to be made by the Company may be in
either quoted or unquoted securities made by direct acquisition and
may be in companies, partnerships or joint ventures; or direct
interests in projects and can be at any stage of development. The
Company’s equity interest in a proposed investment may range from a
minority position to 100 per cent. ownership.
The Company will identify and assess potential investment targets and
where it believes further investigation is required, intends to appoint
appropriately qualified advisers to assist.
The Company intends to deliver shareholder returns principally
through capital growth rather than capital distribution via dividends.
Given the nature of the Company’s Investing Policy, the Company does
not intend to make regular periodic disclosures or calculations of net
asset value.
The objective of the Directors is to generate capital appreciation and
any income generated by the Company will be applied to cover costs
or will be added to the funds available to further implement the
Page | 11
PIRES INVESTMENTS PLC
Corporate Governance Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
Investment Policy.
In view of this, it is unlikely that the Directors will recommend a
dividend in the early years. However, they may recommend or declare
dividends at some future date depending on the financial position of
the Company.
2. Seek to understand
and meet shareholder
needs and
expectations
The Board is committed to maintaining good communication and
having constructive dialogue with its shareholders. Institutional
shareholders and analysts have the opportunity to discuss issues and
provide feedback at meetings with the Company.
In addition, all shareholders are encouraged to attend the Company’s
Annual General Meeting.
Investors also have access to current information on the Company
though its website, www.piresinvestments.com.
3. Take into account
wider stakeholder and
social responsibilities
and their implications
for long-term success
The Board recognises that the long-term success of the Group is
reliant upon the efforts of its directors. The Company does not
currently have any other employees, and upon its contractors,
suppliers and regulators.
4. Embed effective risk
management,
considering both
opportunities and
threats, throughout
the organisation
The Board has put in place a range of processes and systems to ensure
that there is close Board oversight and contact with its key resources
and relationships.
For example, the Board ensures that all key relationships with, for
example, customers and suppliers are the responsibility of, or are
closely supervised by, one of the directors or the Company’s
accountant.
In addition to its other roles and responsibilities the Audit and
Compliance Committee (see composition details in Corporate
Governance section of website) is responsible to the Board for
ensuring that procedures are in place, and are being effectively
implemented to identify, evaluate and manage the significant risks
faced by the Company.
The risk assessment matrix below sets out those risks, and identifies
their ownership and the controls that are in place.
This matrix is updated as changes arise in the nature of risks or the
controls that are implemented to mitigate them. The Audit
Committee reviews the risk matrix and the effectiveness of scenario
testing on a regular basis.
Page | 12
PIRES INVESTMENTS PLC
Corporate Governance Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
The following principal risks, and controls to mitigate them, have been
identified:-
Activity
Risk
Management Recruitment and
retention of key
staff
Impact
Reduction in
operating
capability
Regulatory
adherence
Strategic
Breach of rules
or product
requirements
Damage to
reputation
Inadequate
disaster
recovery
procedures
Liquidity, market
and credit risk.
Financial
Censure or
withdrawal of
authorization
Inability to
secure new
customers.
Loss of key
operational
and financial
data.
Inability to
continue as
going concern.
Control(s)
Stimulating and
safe working
environment.
Balancing salary
with longer term
incentive plans.
Strong compliance
regime
Effective
communications
with shareholders.
Secure off-site
storage of data.
Robust financial
controls and
procedures in
place.
The directors have established procedures, as represented by this
statement, for the purpose of providing a system of internal control. In
addition there are a range of Company policies that are reviewed at
least annually by the Board. These policies cover matters such as share
dealing and insider legislation. The Board currently takes the view that
an internal audit function is not considered necessary or practical due
to the size of the Company and due to the close day to day executive
control exercised by the Chairman, with the oversight / review of the
other directors. However, the Board will continue to monitor the
need for an internal audit function.
The annual review of internal control and financial reporting
procedures did not highlight any issues warranting the introduction of
an internal audit function. It was concluded, given the current size and
transparency of the operations of the Company, that an internal audit
function was not required.
As noted in the Strategic Report in the Annual Report, 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.
Page | 13
PIRES INVESTMENTS PLC
Corporate Governance Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
5. Maintain the board as
a well-functioning,
balanced team led by
the chair
The Board comprised, the Chairman Peter Redmond, who has key
responsibility for the day to day management and two non- executive
directors, John May and Nicholas Lee.
The Board is assisted by Robert Porter with respect to financial
accounting and as Company Secretary.
The time commitment formally required by the Company is an
overriding principal that each director will devote as much time as is
required to carry out the roles and responsibilities that the director
has agreed to take on. Biographical details of the current directors are
set out within Principle Six below.
Executive and non-executive directors are subject to re-election
intervals as prescribed in the Company’s Articles of Association.
At each Annual General Meeting one-third of the Directors, who are
subject to retirement by rotation shall retire from office. They can
then offer themselves for re-election. The letters of appointment of all
directors are available for inspection at the Company’s registered
office during normal business hours.
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.
The Board meets as regularly as necessary given its AIM status. It has
established an Audit Committee and a Remuneration Committee,
particulars of which appear hereafter. The Board agreed that
appointments to the Board are made by the Board as a whole and so
has not created a Nominations Committee.
Board Meetings
The Board retains full control of the Company with day-to-day
operational control delegated to the Chairman and the Non-Executive
Directors. The full Board meets on occasions it considers necessary.
The Directors believe that their broad collective experience together
with their extensive network of contacts will assist them in the
identification, evaluation and funding of suitable investment
opportunities. When necessary, other external professionals will be
engaged to assist in the due diligence of prospective opportunities.
The Directors will also consider appointing additional directors with
relevant experience if the need arises.
In the past 12 months there have been 6 board meetings and the
Audit and Remuneration Committee has met on 2 occasions
respectively.
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PIRES INVESTMENTS PLC
Corporate Governance Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
Attendance at the board meeting is set out below:
Peter Redmond 6/6
John May 6/6
Nicholas Lee 6/6
6. Ensure that between
them the directors
have the necessary up-
to-date experience,
skills and capabilities
The Board currently consists of three directors and, in addition, the
Company uses the services of Robert Porter for ad hoc financial
accounting and advisory services and also to act as Company
Secretary.
Nicholas Lee, although a non-executive director, is not considered
independent as he is a director of Riverfort Global Opportunities plc
that has a Substantial Shareholding (26%) in Pires.
John May is currently the Company's only independent non-executive
director.
The Company notes the guidance in the QCA Code is for a company to
have at least two independent non-executive directors. However, the
Directors are satisfied that the Company's board composition is
currently appropriate but is committed to reviewing the situation in
the forthcoming financial year with the objective of appointing a
further independent non-executive director.
Peter Redmond, Chairman
Peter is a corporate financier with over 30 years of experience in
corporate finance and venture capital. He has acted on and assisted a
wide range of companies to attain a listing over many years on the
Unlisted Securities Market, the Main Market of the London Stock
Exchange and AIM, whether by IPO or in many cases via reverse
takeovers, across a wide range of sectors, ranging from technology
through financial services to natural resources and, in recent years has
done so as a director of the companies concerned. He was a founder
director of Cleeve Capital plc (now Satellite Solutions Worldwide
Group plc) and Mithril Capital plc (now Be Heard Group plc), both
listed on the Standard List, and took a leading role in the
reconstruction and refinancing of AIM-quoted Kennedy Ventures plc
and 3Legs Resources plc (now SalvaRx Group plc). He is a director of
Hemogenyx plc and URA Holdings plc.
John May - Director
John is a Fellow of the Institute of Chartered Accountants in England
and Wales. He is the Managing Partner of City & Westminster
Corporate Finance LLP, an FCA registered partnership. He is chairman
of the Small Business Bureau Limited and The Genesis Initiative
Limited, lobbying groups for small business to the UK Parliament. Mr
May has been the principal of his own chartered accountancy practice
since 1994. From 1977 to 1994, Mr May was a senior partner with
what is now Crowe UK, where he served for eight years on the
managing board and for nine years as chairman of its Thames Valley
offices. In his capacity as UK national marketing partner and head of its
property consultancy division, he was a director of its UK and
Page | 15
PIRES INVESTMENTS PLC
Corporate Governance Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
international associations. Mr May was finance director of AIM listed
Security Research Group plc, until December 2005 and Tomco Energy
Plc until July 2011 and a non-executive director of AIM listed
Petrolatina Energy plc until March 2012. He is the executive chairman
of Red Leopard Holdings plc and was non-executive chairman of
Hayward Tyler Group Plc until August 2017 which were both listed on
AIM.
Nicholas Lee - Director
Nicholas has more than 25 years of experience in international
investment banking and working as a company director. Nicholas was
with Dresdner Kleinwort and its antecedent firms from 1988 to 2009,
starting at Kleinwort Benson Group plc and rising to Managing
Director, Head of Banking, Hedge Fund Solutions Group. Previously as
a Managing Director in mergers and acquisitions at Dresdner Kleinwort
Wasserstein, Nicholas advised leading companies from a number of
different industries, including the natural resources, financial services,
consumer and retail sectors. Nicholas is currently Investment Director
of AIM-listed Riverfort Global Opportunities plc and a director of
Immotion Group plc. Nicholas qualified as a chartered accountant
with Coopers & Lybrand and has an MA in engineering from St John's
College, Cambridge.
Evaluation of Board Performance:
Internal evaluation of the Board, the Committees and individual
directors is important and will develop as the status of the Company
changes in the future. The expectation is that board reviews will be
undertaken on annual basis in the form of peer appraisal,
questionnaires and discussions to determine the effectiveness and
performance in various areas. The Company currently has the
Chairman (Peter Redmond) in an executive capacity.
The Chairman is the person responsible for guiding the business of the
Board and ensuring long-term strategic focus and investments. The
QCA Code recommends that this role should be undertaken as a non-
executive role.
As the Company develops and grows, it is committed to strengthen
and reorganise the Board with the appointment of further
experienced non-executive directors in order to maintain appropriate
balance.
The Company undertakes to review the appropriateness of the role of
an executive Chair in the following year in the context of its overall
strategy.
7. Evaluate board
performance based on
clear and relevant
objectives, seeking
continuous
improvement
8. Promote a corporate
culture that is based on
ethical values and
behaviours
Corporate Culture:
The Board recognises that their decisions regarding strategy and risk
will impact the corporate culture of the Company as a whole and that
this will impact the performance of the Company.
The Board is very aware that the tone and culture set by the Board will
greatly impact all aspects of the Company as a whole. The Company
does not currently have any other employees.
Therefore, the importance of sound ethical values and behaviour is
Page | 16
PIRES INVESTMENTS PLC
Corporate Governance Report
Annual Report and Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
crucial to the ability of the Company to successfully achieve its
corporate objectives.
The Board places great importance on this aspect of corporate life and
seeks to ensure, through regular discussions between all directors,
that this flows through all that the Company does.
The Board assessment of the culture within the Company at the
present time is one where there is respect for all individuals, there is
open dialogue within the Company and there is a commitment to best
practice operations.
The Board is able to ensure ethical behaviour and values are
recognised and respected through its due diligence process when
directing the investing strategies of the Company. All investment
decisions are made in furtherance of the Company’s strategy and
business model.
9. Maintain governance
Maintain Appropriate Governance Structures and Processes:
structures and
processes that are fit
for purpose and
support good decision-
making by the board
The Board schedule provides for quarterly meetings and, in addition,
meets ad-hoc as required. Similarly for the Audit and Remuneration
Committees.
Notwithstanding the above the Board and its Committees receive
appropriate and timely information prior to each meeting; a formal
agenda is produced for each meeting, and Board and Committee
papers are distributed several days before meetings take place. Any
Director may challenge Company proposals and decisions are taken
democratically after discussion.
Any Director who feels that any concern remains unresolved after
discussion may ask for that concern to be noted in the minutes of the
meeting, which are then circulated to all Directors. Any specific actions
arising from such meetings are agreed by the Board or relevant
Committee and then followed up by the Company’s management.
10. Communicate how the
Company is governed
and is performing by
maintaining a dialogue
with shareholders and
other relevant
stakeholders
The Company communicates with shareholders through the Annual
Report and Accounts, full-year and half-year announcements, the
Annual General Meeting (AGM) and one-to-one meetings with large
existing or potential new shareholders.
A range of corporate information (including all Company
announcements and presentations) is also available to shareholders,
investors and the public on the Company’s corporate website,
www.piresinvestments.com.
Peter Redmond
Director
29 April 2019
Page | 17
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 2018
Opinion
We have audited the financial statements of Pires Investments Plc (the ‘Company’) for the year ended 31
October 2018 which comprise the income statement, the statement of comprehensive income, the
Company statements of changes in equity, the Company statements of financial position, the Company
statements of cash flows, and notes to the financial statements, including a summary of significant
accounting policies. 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.
In our opinion, the financial statements:
•
•
•
give a true and fair view of the state of the Company’s affairs as at 31 October 2018 and of its
profit for the year then ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require
us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties
that may cast significant doubt about the Company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Page | 18
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 2018
Key audit matter
Investments
The Company holds assets at fair value
through profit and loss of £1,029,526 as at 31
October 2018. There is a risk that these
investments are not valued correctly in
accordance with
‘Fair Value
Measurement’.
IFRS 13
How we addressed it
• We confirmed ownership of each investment held;
• We compared the year end share price from external
sources to those used by management;
• We tested the disclosures made within the financial
statement to ensure compliance with IFRS.; and
• We assessed whether management’s assumptions
were reasonable in light of the measurement
objectives under IFRS 13.
Our application of materiality
Materiality for the Company financial statements as a whole was set at £ 48,265 (2017: £42,000).
This has been calculated as 5% of the benchmark of Net Assets (2017: 5% of the benchmark of Gross
Assets), which we have determined, in our professional judgment, to be one of the principal benchmarks
within the financial statements relevant to members of the Company in assessing financial performance.
We report to the directors all corrected and uncorrected misstatements we identified through our audit
with a value in excess of £2,413 (2017: 2,100), in addition to other audit misstatements below that
threshold that we believe warranted reporting on qualitative grounds.
An overview of the scope of our audit
As part of designing our audit, we determined materiality, as above, and assessed the risk of material
misstatement in the financial statements. In particular, we looked at areas involving significant
accounting estimates and judgement by the directors and considered future events that are inherently
uncertain. We also addressed the risk of management override of internal controls, including evaluating
whether there was evidence of bias by the directors that represented a risk of material misstatement
due to fraud.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report, other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Page | 19
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 2018
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept, or returns adequate for our audit have not
been received from branches not visited by us; or
•
the 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.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 8, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Page | 20
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 2018
Use of our report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in an Auditors' Report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Joseph Archer (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
London, United Kingdom
29 April 2019
1 Westferry Circus
Canary Wharf
London E14 4HD
Page | 21
PIRES INVESTMENTS PLC
Statement of Comprehensive Income
FOR THE YEAR ENDED 31 OCTOBER 2018
CONTINUING ACTIVITIES
Income
Other Income
Total income
Notes
6
2018
£
11
11
2017
£
8
8
Gain on investments held at fair value through profit or loss
11
574,987
196,049
Operating expenses
Operating profit / (loss) from continuing activities
Profit / (loss) before taxation from continuing activities
Tax
(252,929)
(338,973)
322,069
(142,916)
322,069
(142,916)
-
-
4
8
Profit / (loss) for the year from continuing activities
322,069
(142,916)
Other Comprehensive Income
Total Comprehensive Income attributable to equity
holders of the Company
-
-
322,069
(142,916)
Basic profit / (loss) per share
Equity holders
Basic and diluted
9
0.95p
(0.43)p
The accounting policies and notes are an integral part of these financial statements.
Page | 22
PIRES INVESTMENTS PLC
Statement of Changes in Equity
FOR THE YEAR ENDED 31 OCTOBER 2018
Share
Capital
£
11,858,477
Share
Premium
£
2,997,555
Capital
Redemption
Reserve
£
164,667
Retained
Earnings
£
(14,889,985)
Total
£
130,714
-
56,250
-
583,500
-
-
(142,916)
-
(142,916)
639,750
Balance at 1 November 2016
Loss and total comprehensive
income for the year
Issue of shares
As at 31 October 2017
11,914,727
3,581,055
164,667
(15,032,901)
627,548
Profit and total comprehensive
profit for the year
As at 31 October 2018
-
11,914,727
-
3,581,055
-
164,667
322,069
(14,710,832)
322,069
949,617
Share Capital – amount subscribed for share capital at the nominal amount
Share Premium – amount subscribed for share capital above the nominal amount
Capital Redemption Reserve – own shares purchased by the Company
Retained earnings – cumulative gains and losses recognised
The accounting policies and notes are an integral part of these financial statements.
Page | 23
PIRES INVESTMENTS PLC
(Incorporated in England and Wales with registered number 02929801)
Statement of Financial Position
AT 31 OCTOBER 2018
Non-current assets
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
14
11
15
16
16
17
2018
£
1
1
2017
£
1
1
1,029,526
11,357
48,028
1,088,911
1,088,912
543,421
9,875
241,142
794,438
794,439
11,914,727
3,581,055
11,914,727
3,581,055
(14,710,832) (15,032,901)
164,667
627,548
164,667
949,617
139,295
139,295
166,891
166,891
1,088,912
794,439
These financial statements were approved and authorised for issue by the Board of Directors on 29 April
2019 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 | 24
PIRES INVESTMENTS PLC
Statement of Cash Flows
FOR THE YEAR ENDED 31 OCTOBER 2018
Cash flows from operating activities
Profit / (Loss)
Depreciation
Realised (gain) on disposal of investments
Fair value movements in investments
Finance income
(Increase) / decrease in receivables
(Decrease) / increase 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
2018
£
2017
£
322,069
-
(82,192)
(492,795)
(11)
(1,482)
(27,596)
(282,007)
-
(176,000)
264,882
-
(142,916)
230
(44,205)
(151,844)
(8)
43,990
41,437
(253,316)
-
(520,000)
325,252
-
Finance income received net
Net cash generated /(used) in investing activities
11
88,893
8
(194,740)
Cash flows from financing activities
Net proceeds from share issues
Net cash from financing activities
-
-
639,750
639,750
Net (decrease) / increase in cash and cash equivalents
during the year
(193,114)
191,694
Cash and cash equivalents at beginning of year
241,142
49,448
Cash and cash equivalents at end of year
48,028
241,142
Page | 25
PIRES INVESTMENTS PLC
Notes to the Financial Statements
FOR THE YEAR ENDED 31 OCTOBER 2018
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.
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.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has
been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood
of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation, using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest
expense.
Page | 26
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
1. ACCOUNTING POLICIES (continued)
STATEMENT OF COMPLIANCE
There were no standards or interpretations effective for the year ended 31 October 2018 that had a material
impact on the Company. At the date of authorisation of this document, the following Standards and
Interpretations, which have not been applied in these financial statements, were in issue, but not yet effective:
•
•
•
•
•
•
•
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
IAS 27 (amendments) Equity Method in Separate Financial Statements
IFRS 2 (amendments) Classification and Measurement of Share-based Payment Transactions
IFRIC 23 Uncertainty over Income Tax Treatments
Annual Improvements to IFRS 2015-2017 Cycle
The Directors anticipate that the adoption of the above Standards and Interpretations in future periods will have
little or no impact on the financial statements of the Company when the relevant Standards come into effect for
future reporting periods.
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.
Income tax
Income tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively. Current income tax is calculated on the results shown in the
Financial Statements and according to local tax rules, using tax rates enacted or substantially enacted by the Statement
of Financial Position date.
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 | 27
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
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 | 28
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
1. ACCOUNTING POLICIES (continued)
Financial assets
(a) Classification
The Company classifies its financial assets in the following categories: at fair value through profit or loss, loans and
receivables, and available for sale. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at initial recognition.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading and include investments the Board
of Directors expect to trade within the next 12 months. Details of these assets and their fair value is included in note 11.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. They are included in current assets, except for maturities greater than 12 months after the end of the
reporting period. These are classified as non-current assets. The Company’s loans and receivables comprise ‘ other
receivables and prepayments’ and ‘cash and cash equivalents’ in the Statement of Financial Position.
(b) Recognition and measurement
Regular purchases and sales of financial assets are recognised on the trade-date, being the date on which the Company
commits to purchase or sell the asset. Investments are initially recognised at fair value with transaction costs expensed
for all financial assets. Financial assets carried at fair value through profit or loss are initially recognised at fair value,
and transaction costs are expensed in the Income Statement. Financial assets are derecognised when the rights to
receive cash flows from the investments have expired or have been transferred and the Company has transferred
substantially all risks and rewards of ownership. Available for sale financial assets and financial assets at fair value
through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised
cost using the effective interest method. Gains or losses arising from changes in the fair value of the ‘financial assets at
fair value through profit or loss’ category are presented in the Statement of Comprehensive Income within ‘Other
(losses)/gains – net’ in the period in which they arise.
(c) Impairment of financial assets
The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or
a group of financial assets is impaired. A significant or prolonged decline in the fair value of equity investments and
securities below its cost is also evidence that the assets are impaired. If any such evidence exists the cumulative loss –
measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that
financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss. Cash and
cash equivalents Cash and cash equivalents comprise cash in hand and bank balances.
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.
Page | 29
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
The share premium account represents premiums received on the initial issuing of the share capital. Any transaction
costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
Share capital account represents the nominal value of the shares issued.
Retained earnings include all current and prior period results as disclosed in the Statement of Comprehensive Income.
2.
CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS
The preparation of the financial statements in conformity with IFRS requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Although these estimates are based on management’s best
knowledge of the amounts, events or actions, actual results ultimately may differ from these estimates.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
In certain circumstances, where fair value cannot be readily established, the Company is required to make judgements
over carrying value impairment, and evaluate the size of any impairment required.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are
recognised in the period. Judgements and estimates that may affect future periods are as follows:
The Directors do not consider there to be any significant estimates or judgements made in the financial statements as
the critical drivers of the business, being investments, are all valued on observable market prices.
As a result of an HMRC investigation in the year, the VAT status of the Company changed. Following consultation, the
Directors have made a judgement in respect of the amount including penalties that may be owed (see note 17). This
estimate is based on all available information and the actual amount payable to HMRC may differ from the estimate
made.
3. BUSINESS AND GEOGRAPHICAL REPORTING
An operating segment is a component of the Company that engages in business from which it may earn revenues
and incur expenses. The Company has only one operating segment, being the investment in companies or assets
in the natural resources, agribusiness sectors and information technology and blockchain sector. Therefore, the
financial information of the single segment is the same as that set out in the statement of comprehensive income,
the statement of financial position, the statement of changes in equity and the statement of cash flows.
4. OPERATING LOSS
Operating loss from continuing activities is stated after charging:
Depreciation of property, plant and equipment
Provision against VAT receivable
2018
£
-
-
2017
£
230
68,157
Page | 30
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
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. OTHER INCOME
The Company’s other income was:
Interest receivable
7. REMUNERATION
The Company’s employee emoluments expense was:
Emoluments
Social security costs
2018
£
18,000
3,200
-
21,200
2018
£
11
11
2017
£
15,000
1,500
-
16,500
2017
£
8
8
2018
£
21,977
871
2017
£
26,500
1,779
22,848
28,279
The average monthly number of persons employed by the Company, including Directors, during the year was as
follows:
2018
No
3
2017
No
3
Details of Directors’ emoluments, 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. The Directors are the only employees of the Company and are
considered to be the key management personnel.
Page | 31
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
8. TAX EXPENSE
Factors affecting the tax charge for the year
Profit /(Loss) on ordinary activities before taxation
Profit / (Loss)/ profit on ordinary activities before taxation multiplied by the
standard rate of UK corporation tax of 19.0% (2017: 19.4%)
Effects of:
Expenses not deductible for tax purposes net of income not subject to
corporation tax
Income not taxable for tax purposes
Deferred tax not recognised
Tax charge
2018
£
2017
£
322,069
(142,916)
61,193
(27,726)
9,500
137
(109,248)
-
38,555
27,589
-
-
The Company has tax losses available to carry forward against relevant future taxable income and profits of
approximately £6.6 million (2017: £3.4 million) in respect of which no deferred tax asset has been recognised
due to the uncertainty as to when profits will be generated against which to relieve said asset.
Where it is anticipated that future taxable profits will be available against which these losses will be utilised a
deferred tax asset is recognised.
No deferred tax has been recognised in the year (2017:nil) and the tax charge for the year was nil (2017: nil).
9.
PROFIT / (LOSS) PER SHARE
Profit / (Loss) attributable to the owners of the Company
Continuing Operations
322,069
(142,916)
2018
£
2017
£
2018
No. of
Shares
2017
No. of
shares
Weighted average number of shares for calculating basic loss per share
33,900,805
33,521,353
Basic and diluted profit / (loss) per share
Continuing Operations – basic and diluted
0.95
(0.43)
2018
Pence
2017
Pence
There is no diluted earnings per share in 2018 due to the fact that all warrants had lapsed during the period.
There was no diluted earnings per share in 2017 as the entity was loss making.
Page | 32
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
10. FAIR VALUE MEASUREMENT
The table below sets out the fair value measurements using the 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 2018 or 2017.
11.
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 on investments held at fair value through profit or loss
Movement in investment holding gains
Realised gain on disposal of investments
Net gain on investments held at fair value through profit or loss
Quoted Investments level 1
2018
£
543,421
176,000
2017
£
152,624
520,000
(182,690)
(281,047)
492,795
1,029,526
151,844
543,421
1,029,526
537,310
-
6,111
492,795
82,192
574,987
151,844
44,205
196,049
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting
date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer,
broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held
by the Company is the current bid price. These instruments are included in Level 1. Instruments included in Level
1 comprise primarily LSE/AIM equity investments.
Unquoted investments (Level 3)
The value of the unquoted investments as at 31 October 2017 was £6,111 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
Company has impaired the carrying value to £nil at 31 October 2018.
Page | 33
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
12. 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 £48,028 (2017: £241,142) 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%
2018
£
2017
£
102,953
53,731
(102,953)
(53,721)
Page | 34
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
13. FINANCIAL INSTRUMENTS
Financial assets by category:
Financial assets:
Fair value through profit or loss investments
Loans and receivables
Cash and cash equivalents
Total
Financial liabilities by category:
Trade and other payables
14.
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Cost
At 1 November 2016
Disposals during the year
At 1 November 2017
Disposals during the year
Additions during the year
At 31 October 2018
Provision for diminution in value
At 1 November 2016 and 1 November 2017
Disposals during the year
At 31 October 2018
Net book value
At 31 October 2018
At 31 October 2017
2018
£
2017
£
1,029,526
-
48,028
1,077,554
537,310
-
241,142
778,452
2018
£
139,295
2017
£
68,476
£
1
-
1
-
-
1
-
-
-
1
1
At 31 October 2018 the subsidiary was as follows:
Subsidiary undertaking
Renewable Energies (Investments) Limited
Country of
registration
UK
Principal
activity
Dormant
Percentage
holding
100%
Consolidated financial statements have not been prepared as they are exempt in accordance with section 402
of the Companies Act 2006.
Page | 35
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
15. TRADE AND OTHER RECEIVABLES
Prepayments
2018
£
11,357
11,357
2017
£
9,875
9,875
As described in note 12, the Directors do not consider credit risk to be material to the Company's operations.
The directors consider that the carrying amount of trade and other receivables is approximately equal to their
fair value.
16.
ISSUED SHARE CAPITAL
Ordinary shares
Deferred shares
Number of
shares
Nominal
value
£
Number of
shares
Nominal
value
£
Share
Premium
£
Issued and fully paid:
At 1 November 2016
11,400,805
28,502
11,829,975
2,997,555
Ordinary shares issued in the
year:
Ordinary shares of 0.25p each
Ordinary shares of 0.25p each
Share issue costs
17,500,000
5,000,000
-
43,750
12,500
-
-
-
-
481,250
137,500
(35,250)
At 31 October 2017 and 2018
33,900,805
84,752
11,829,975
3,581,055
Share issues during the previous year:
On 2 November 2016, the Company issued 17,500,000 ordinary shares of 0.25p each for cash at 3p per share,
raising funds of £525,000 before expenses.
On 28 November 2016, the Company issued 5,000,000 ordinary shares of 0.25p each for cash at 3p per share,
raising funds of £150,000 before expenses.
Rights of ordinary shareholders
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.
Rights of deferred shareholders
None of the classes 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.
Page | 36
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
16.
ISSUED SHARE CAPITAL (continued)
Options and Warrants
There were no outstanding options. The warrants over the ordinary share capital of the Company were issued
during the year ended 31 October 2017 lapsed and nil are outstanding as at 31 October 2018 as detailed below.
(2017: 11,250,000):
Number of
shares to be
issued upon
exercise for the
year ended 31
October
2018
Exercise
price for the
year ended
31 October
2018
£
Exercise
price for the
year ended
31 October
2017
£
Number of
shares to be
issued upon
exercise for the
year ended 31
October
2017
-
-
-
-
-
11,250,000
-
11,250,000
-
4.25 pence
-
-
11,250,000
-
-
-
4.25 pence
-
11,250,000
-
Outstanding at beginning of period
Arising during the period
Lapsed during the period
Outstanding at end of period
Exercisable at end of period
The warrants on 8,750,000 shares had an exercise price of 4.25 pence each, and were exercisable for a period of
18 months from the date of issue, the last exercise date being 2 May 2018.
The warrants on 2,500,000 shares had an exercise price of 4.25 pence each, and were exercisable for a period of
18 months from the date of issue, the last exercise date being 25 May 2018.
Both tranches of warrants lapsed unexercised in May 2018.
17. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accruals and deferred income
Provisions
Taxation and social security
2018
£
50,387
1,600
32,630
50,000
4,678
2017
£
64,229
3,646
98,415
-
601
139,295
166,891
The directors consider the carrying amounts of trade payables to be a reasonable approximation of their fair
value.
The provision relates to amounts that may be payable to HMRC in connection with the investigation of the
Companies VAT status.
18. CONTINGENT LIABILITES
At 31 October 2018 and 2017, the Company had no material contingent liabilities.
Page | 37
PIRES INVESTMENTS PLC
Notes to the Financial Statements (continued)
FOR THE YEAR ENDED 31 OCTOBER 2018
19. CAPITAL COMMITMENTS
At 31 October 2018 and 2017, the Company had no capital commitments authorised or contracted by the
Directors.
20. RELATED PARTY TRANSACTIONS
Ultimate controlling party
The Directors do not consider there to be a single ultimate controlling party.
Remuneration of key management personnel
The remuneration of the directors can be found in the Directors report on page 8 and in Note 7. The related
party disclosures in respect of this remuneration represent the only related party disclosures requires and are
disclosed below:
Fees:
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, an LLP controlled by John May as Managing Partner.
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 ACL Capital Limited, a company of
which Nicholas Lee is a director
2018
£
13,000
2017
£
18,000
25,000
24,332
-
10,866
13,000
8,500
21. POST BALANCE SHEET EVENTS
On 27 February 2019 the Company placed 32,571,660 new ordinary shares at a price of 2.4 pence per share,
raising gross proceeds of £781,720.
Page | 38