Hermes Pac. Regulatory News (HPAC)

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

26 September 2022

HERMES PACIFIC INVESTMENTS PLC

(the "Company")

Final results for the year ended 31 March 2022

Hermes Pacific Investments Plc (AIM: HPAC) today reports its financial results for the year ended 31 March 2022 ("Period" or "Year")

Chairman's statement

I am pleased to report the results of Hermes Pacific Investments Plc for the year ended 31 March 2022. During the Year, the Company had no revenues as it does not have any operating business and the Company made a loss of £105,000, which is marginally lower than the loss of £106,000 reported for the previous financial year. We continued our focus to minimise our costs whilst we looked for opportunities to deploy our cash. At the financial year end the Company had net assets of £3,486,000 (FY21: £3,554,000). During the Period we adopted a new investment policy focused principally, but not exclusively in the property sector and we are pleased that post the Period end we identified a suitable opportunity and purchased a two-bedroom leasehold flat and a single garage in Westcliff-on-sea, Southend-on-Sea.

Review of the Company's activities

The Company is an investing company and has previously made some investments in line with its investing policy in companies involved in financial activities within the emerging market sector. These investments have performed in line with management's expectations. We are in a good position from a balance sheet perspective and our cash balance as at 31 March 2022 stood at £3.284 million (FY21: £3.395 million). During the Year we have continued to evaluate possible suitable opportunities to deploy our cash resources but did not identify any transaction that met our criteria. However, as mentioned above, we are delighted to have completed on the purchase of a two-bedroom leasehold flat and a single garage in Westcliff-on-sea, Southend-on-Sea post the Period end. Our total comprehensive loss for the year was £68,000 compared to a loss of £55,000 for the previous financial year. There was a gain of £37,000 on investments held by the Company.

During the Period no further investments were made. A new investment policy, focused principally, but not exclusively in the property sector, was adopted by the Company following shareholder approval on 14 December 2021. Further details of the new investment policy adopted during the Period are set out below. .

New investing policy

The Company's new investing policy is to invest principally, but not exclusively in the property sector within Europe and the Middle East ("New Investment Policy"). Accordingly, the New Investing Policy is as follows:-

The investments to be made by the Company may be either quoted or unquoted; in debt and/or in equity instruments, may be in companies, partnerships, joint ventures; or direct interests in property or property projects (either residential or commercial property). The Company's equity interest in a proposed investment may range from a minority position to 100 per cent. ownership.

The Directors believe there are opportunities to invest in and acquire commercial and/or residential properties where the properties may be undervalued and/or suitable for redevelopment to enhance capital value.

The Company will identify and assess potential properties and where it believes further investigation is required, and subject to assessment of potential risk, intends to appoint appropriately qualified advisers to assist. Where further investigation is required, the Company intends to carry out a comprehensive and thorough investment review process in which all material aspects of any potential property investment will be subject to due diligence.

The Company's financial resources may be invested in a small number of properties or investments or potentially in just one investment which may be deemed to be a reverse takeover of the Company under the AIM Rules. Where this is the case, it is intended to mitigate the risk by undertaking an appropriate due diligence process. Any transaction constituting a reverse takeover under the AIM Rules would require Shareholders' approval. The possibility of building a broader portfolio of properties has not, however, been excluded. The Company may also continue to review and investigate non-property related investments as it has done to date.

The Company's investments may take the form of equity, debt or convertible instruments. Investments may be made in all types of assets falling within the remit of the New Investing Policy and there will be no investment restrictions. Proposed investments may be made in either quoted or unquoted companies and structured as a direct acquisition, joint venture or as a direct interest in a project or property. The Directors may consider it appropriate to take an equity interest in any proposed investment which may range from a minority position to 100 per cent ownership. The Company may be either an active investor or passive investor. Where the Company is an active investor, it may seek representation on the board of investee companies.

Post Period end highlights

The Company has purchased a two-bedroom leasehold flat and a single garage in Westcliff-on-sea, Southend-on-Sea as announced on 19 May 2022. The purchase price of £594,907 has been funded from the Company's existing cash resources. This flat has been now been rented out on assured shorthold tenancy agreement.

Haresh Kanabar

Chairman

26 September 2022

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2022

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2022

The financial statements were approved and authorised for issue by the board of directors on 26 September 2022 and signed on its behalf by:

Haresh Kanabar

Director

Company number: 05239281

CASH FLOW STATEMENT for the YEAR ended 31 March 2022

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2022

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2022

1. General information

Statement of compliance

2. Accounting policies

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the company's financial statements.

Going concern

The financial statements have been prepared on a going concern basis as, after making appropriate enquiries, the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future at the time of approving the financial statements.

Critical accounting estimates and judgments

The preparation of financial statements in conformity with UK adopted international accounting standards requires management to make judgements, estimates and assumptions that affect the application of the company's accounting policies with respect to the carrying amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting year. The judgements, estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, including current and expected economic conditions. Although these judgements, estimates and associated assumptions are based on management's best knowledge of current events and circumstances, the actual results may differ. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised and in any future years affected.

Management have not made any material estimates or judgements that may result in a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Deferred taxation

Deferred taxation is provided in full using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised, or the deferred tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly liquid funds with original maturities of three months or less and bank overdrafts.

Investments

The company carries its investments at fair value. Gains and losses are either recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

Financial instruments

Financial assets and liabilities are recognised in the balance sheet when the company becomes party to the contractual provisions of the instrument.

Trade and other receivables

Trade receivables are measured at cost less any provision necessary when there is objective evidence that the company will not be able to collect all amounts due.

Trade and other payables

Trade and other payables are not interest bearing and are measured at original invoice amount.

3. Operating loss

4. Auditors' remuneration

5. Directors' emoluments

6. Employees and staff costs

The company has no employees. Staff costs comprises payments made in respect of services provided by the directors.

7. Taxation

The company has approximately £4.1m (2021: £4m) of trading losses to carry forward and offset against future trading profits

8. Loss per share

9. Investments

The directors have elected to hold the investments at fair value through OCI as it is their intention to hold these for the long term

10. Cash and cash equivalents

11. Trade and other receivables

12. Trade and other payables

13. Share capital

All ordinary shares rank equally in respect of shareholders' rights.

The deferred shares have no voting and dividend rights. On winding up of the company, they will be entitled to the nominal value only after all ordinary shareholders receive the nominal value of their shares plus £10m per share.

As at 31 March 2022 and 31 March 2021 the authorised share capital was 3,500,000 ordinary shares of 100p and 200,000,000 deferred shares of 9.5p.

14. Financial Instruments

Financial risk management

The company's activities expose the company to a number of risks including credit risk, interest rate risk and liquidity risk. The Board manages these risks through a risk management programme. The fair value of the company's assets and liabilities at 31 March 2022 are not materially different from their book value.

The fair value measured is categorised within level 1 of the fair value hierarchy.

Credit risk

The company monitors credit risk on an on-going basis and manages risk by concentrating on trading and placing bank deposits with reliable counterparties. The company has no significant concentration of credit risk associated with trading counterparties. Credit risk predominantly arises from cash and cash equivalents. 

Interest rate risk

The company has interest bearing assets. Interest bearing assets comprise cash balances which earn interest at a variable rate. The financial liabilities in the current year are all non-interest bearing. The company has not entered into derivatives transactions and has not traded in financial instruments during the period under review. The entire company's debt is non-interest bearing there would be no effect on the company if interest rates changed.

Liquidity risk

The company seeks to manage liquidity risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. All cash and cash equivalents are immediately accessible. 

Price risk

The company's exposure to equity securities price risk arises from investments held by the company and classified in the statement of financial position either as at fair value through other comprehensive income or at fair value through profit or loss. The risk is managed by regular reviews of the portfolio of investments held to ensure that exposure to price movements is within acceptable limits. 

The maturity dates of the company's financial instruments are shown below and are based on the period outstanding at the balance sheet date up to the contractual maturity date.

15. Cash flows from operating activities

16. Related party transactions

Key Management Personnel and Director Transactions

A number of key management personnel, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial and operating policies of these entities.

A number of these entities transacted with the company during the year. The terms and conditions of these transactions with key management personnel and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm's length basis.

The aggregate value of transactions related to key management personnel and entities over which they have control or significant influence was £33,600 (2021: £42,800).

During the year, the company used the services of Poonam & Roshni Limited totalling £21,600 (2021: £21,600). H Kanabar is a director of both companies. No balance was outstanding at the year end (2021: Nil).

During the year the company used the services of Thirty Acre Stables totalling £12,000 (2021: £12,000). J Morton is the owner of that business. No balance was outstanding at the year end (2021: Nil).

The compensation of key management is as disclosed in the directors' emoluments note.

17. Events after the end of the reporting period

Subsequent to the reporting date, the company purchased an investment property for £594,907.