29th Jun 2011 07:00
Press Release 29 June 2011
Not for release, publication or distribution in, or into, The United States,
Canada, Australia or Japan Impact Holdings (UK) plc ("Impact" or "The Group") Preliminary results for the year ended 31st March 2011
Impact Holdings (UK) plc. (AIM: IHUK), the specialist lender, announces its preliminary results for the year ended 31st March 2011.
Financial Highlights
* Group pre-tax profit of £301,219 (2010: £324,464) * Results in line with management expectations * Reduced exposure to external debt providers * Cash and cash equivalents of £1.9 million (2010: £2.2 million) * Net assets of £4.8 million (2010: £4.5 million) * Earnings per share 13p (2010: 23p)
Commenting on the results Paul Davies, Chief Executive, said "The enhanced Board and management team have spent considerable effort in improving the risk management, operational and financial controls within the business. This has resulted in a period of stability in what has probably been the most challenging and uncertain economic environment seen in recent times.
This performance is a credit to the management and staff, who have collectively worked with commitment and resilience to deliver this performance."
For further information:
Impact Holdings (UK) plc.
Paul Davies Chief Executive Officer Tel: +44 (0)1928 793 550 www.impactholdings.net
Zeus Capital
Alex Clarkson / Tom Rowley Tel: +44 (0)161 831 1512
Tel: +44 (0) 161 831 1512
The financial information detailed below has been extracted from the Annual Report and Accounts for the year ended 31st March 2011, which are available from Zeus Capital, Ralli Courts West, Riverside, Manchester, M3 5FT and on the Company's website ( www.impactholdings.net).
CHAIRMAN'S STATEMENTINTRODUCTION
As stated in previous reports the financial markets since 2008 have continued to see unprecedented turmoil and this is expected to continue with the Banks still failing to meet their lending targets to small and medium sized businesses. This turmoil has contributed to a lack of liquidity for many businesses and consequently stifled growth across the world economy. Financial Institutions globally have increased their margins, reviewed their lending criteria and implemented more rigorous credit processes, which has reduced the availability of credit.
The Impact Group has not been immune to restricted credit lines and increased margins.
THE BOARD
The Board remains committed to adhering to strong Corporate Governance and operating within a framework of prudent controls which ensures the future risks of the business are controlled and managed by a separate Risk Committee.
We have continued to enhance the Board of Impact and confirmed the appointment of Justin Bates in November 2010 as non-executive director. Justin has corporate finance and AIM experience and is a Senior Vice President of Keefe, Bruyette & Woods who specialise in providing advice to financial services companies. Justin's appointment re-inforced the Group's desire to achieve its strategic and growth aspirations.
I would like to place on record the Board's appreciation to Richard Kilsby who retired from the Board in October 2010. He does however, remain a substantial and committed shareholder.
STRATEGY
As you may be aware we completed the purchase of our new headquarters located in Daresbury, near Warrington, Cheshire in January 2011 and this provides sufficient square footage to deliver our growth targets.
The business of solicitor disbursement funding continues to be our core market albeit we have adopted a more conservative approach given the lack of liquidity in the financial markets as a whole. Moving forward, our core market of short term niche funding solutions will be supplemented by the development of new initiatives such as the provision of outsourcing services to other entities whilst pursuing acquisition and organic growth opportunities. I am pleased to report that in both operational and performance terms the Group was able to make material progress in a number of areas, with the objective of pursuing a vertical integration strategy as previously reported. Sutherland Professional Funding Limited has now been fully integrated into the Group as part of those efforts.
Since the Group instigated its property bridging business in 2007 to fund short term property transactions there has been a severe downturn in the property market and the "credit crunch" has resulted in an unprecedented effect on the marketplace. As a consequence the refinancing options for bridging loan transactions diminished and we have taken the strategic decision not to write new business in the short term until some normality returns to the economic markets whilst continuing to manage our existing book.
DIVIDEND
No dividend will be declared for the year.
OUTLOOK
I believe the Group is well positioned to react to the development of new opportunities including considering potential acquisitions. The proposed strategy will provide a foundation for controlled growth and enhanced profitability moving forward.
I should like to place on record my appreciation for the efforts of the executive management and staff during the year. I also appreciate the enthusiasm and support of my fellow directors and thank them for their continued encouragement and counsel.
Roger BarlowNon-executive ChairmanCHIEF EXECUTIVE'S REVIEWTRADING
Commentary on the Group's performance is contained within the Chairman's Statement however the Group continues to see ongoing progress with expenses under control and is actively looking for alternative income streams to enhance its profitability.
RISK MANAGEMENT
The risk management of the business continues to be strengthened with all new and existing counterparty risks regularly assessed by an independent risk committee. This committee consists of the key executives within the group who between them have over 60 years experience in risk management and financial analysis.
Credit and fraud risk
The Group is exposed to the risk that clients owing the Group money will not fulfil their obligations. The Group regularly reviews credit exposure for every client, including the level of security available in the event of default. Nevertheless, credit default risk may arise from events or circumstances that are difficult to detect and handle, such as fraud.
Inadequate security
The Group is exposed to the risk that security and undertakings upon which its loan advances are made may reduce in value, so that the Group may not recover some or all of its loan advances in an event of default. This risk is mitigated by the spread of loans and clients involved, along with a detailed assessment of the value of the security and undertakings at the time the loans are made and appropriate ongoing monitoring.
Funding and treasury
The Group relies on a mix of equity funding and both committed and uncommitted debt finance from Barclays Bank, Manchester Building Society and Yorkshire Bank in order to maintain an adequate level of working capital and to fund loan advances to the Group's clients.
STRATEGIC AND FINANCIAL OBJECTIVES
Our objective remains for a cautious, controlled, profitable growth with the Group concentrating on its core activities however we are now actively looking for additional income enhancing opportunities. We continue to look for economies of scale and continue to enhance the controls in our risk management function in order to allow us to minimise the risks to the business.
Paul DaviesChief ExecutiveIMPACT HOLDINGS (UK) PLC
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2011
Year Year Ended Ended 31/03/11 31/03/10 £ £ Revenue 1,554,389 1,679,362 Cost of Sales (377,518) (448,613) Gross Profit 1,176,871 1,230,749 Other operating expenses (877,129) (907,712) Operating Profit 299,742 323,037 Interest 1,477 1,427receivable Profit for the year from operations 301,219 324,464before tax Tax (charge)/ (3,996) 725 credit Profit for the 297,223 325,189year Earnings per share (pence) Basic and fully diluted 13p 23p
No separate statement of other comprehensive income has been presented as all such gains and losses have been dealt with in the consolidated income statement.
All activities are considered to be continuing.
IMPACT HOLDINGS (UK) PLC
CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2011
2011 2010 £ £ Non-current assets Goodwill 421,766 421,766 Other intangible assets 46,263 93,547 Property, plant and equipment 599,820 46,196 Deferred taxation 181,613 190,049 1,249,462 751,558 Current assets Trade and other receivables including amounts 9,322,186 11,914,133falling due after more than one year Cash and cash equivalents 1,894,065 2,213,497 11,216,446 14,127,630 Total assets 12,465,713 14,879,188Equity and liabilities
Share capital 6,211,201 6,211,201
Share premium account 5,005,288 5,005,288
Share based payment reserve 172,199 172,199
Shares held by Employee Benefit Trust (45,070) (11,645)
Retained earnings (6,571,949) (6,869,172)
Issued capital and reserved attributable to 4,771,669 4,507,871
Equity holders of the parent
Trade and other payables due after more than one year 395,955 -
Trade and other payables due in less than one year 7,298,089 10,371,317
Total equity and liabilities 12,465,713 14,879,188
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2011
31/3/11 31/3/10 £ £ Cash generated by operations 2,796,555 3,008,430 Income taxes paid (4,635) - Net cash generated by operating 2,791,920 3,008,430 activities Investing activities Interest received 1,477 1,427 Purchases of other intangible assets - (51,147) Acquisition costs - (21,345) Net cash acquired with subsidiary - 403,116 undertaking ( 45,070) - Acquisition of own shares by Employee Benefit Trust (583,977) (505) Purchases of property, plant and equipment Net cash generated by investing (627,570) 331,546 activities Financing activities Share issue expenses - (10,000) (Decrease) in amounts owed to lending (2,483,782) (1,526,052) institutions Net cash (outflow) from financing (2,483,782) (1,536,052) activities Net (decrease)increase in cash and cash (319,432) 1,803,924equivalents Cash and cash equivalents at 1 April 2,213,497 409,573 Cash and cash equivalents at end of 31 1,894,065 2,213,497 March
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2011
Attributable to the equity holders of the parent company
Share Share Share Shares Profit and Total capital premium based held by loss payment EBT account reserve £ £ £ £ £ £ Balance as at 31 March 5,666,667 4,759,823 373,836 (26,626) (7,395,998) 3,377,7022009 Net profit for the - - - - 325,189 325,189 year Shares issued 544,534 272,715 - - - 817,249 Issue expenses - (27,250) - - - (27,250) Movement on shares - - - 14,981 - 14,981 held by EBT Transfer re lapsed - - (201,637) - 201,637 - options Balance at 31 March 6,211,201 5,005,288 172,199 (11,645) (6,869,172) 4,507,8712010 Net profit for the - - - - 297,223 297,223 year Movement on shares - - - (33,425) - (33,425) held by EBT
Balance as at 31 March 6,211,201 5,005,288 172,199 (45,070) (6,571,949) 4,771,669 2011
The financial information set out in this announcement does not constitute the group's financial statements (as defined by s434 of the Companies Act 2006) for the year ended 31st March 2011. The financial information for the year ended 31st March 2011 has been extracted from the Annual Report of Impact Holdings (UK) plc, on which the auditors have issued an unqualified report.
Pursuant to AIM Rule 20 copies of the Annual Report may be downloaded from the company's web site, www.impactholdings.net, www.impactholdings.netand will be posted to shareholders on or before 15th July 2011.
The AGM will be held at 9.00am on Tuesday 27th September 2011 at the Company's registered office, 7500 Daresbury Park, Daresbury, Warrington WA4 4BS.
Notes to the Editor:
Impact Holdings (UK) plc through its individual subsidiaries provides short term funding solutions, loans administration and management support services in two specific areas:
1. The legal disbursement market.
2. Property based bridging and development market.
In addition Impact will fund other opportunities where debt instruments or debentures provide the primary security and there are opportunities for short term bespoke funding where serviceability precludes larger lenders from entering this area.
Impact is regulated by the Office of Fair Trading through which it is licensed to lend under the Consumer Credit Act 1974.
XLONRelated Shares:
IHUK.L