Interim Results

24th Dec 2008 07:00



Not for release, publication or distribution in, or into, The United States, Canada, Australia or Japan

Impact Holdings (UK) plc

("Impact" or "The Group")

Interim Results

Impact Holdings (UK) plc. (AIM: IHUK), the specialist lender, announces its unaudited interim results for the six months ended 30 September 2008.

Financial Highlights

results in line with management expectations

cash and cash equivalents of £0.9 million

consolidation of existing operations on track

EBIT of £131,752

earnings per share 0.17p

pre-tax profit of £190,953

Operational Highlights

successful conclusion to legal dispute as detailed in contingency matter raised in 2008 year end accounts

bank debt facilities operational to support ongoing trading

structured risk management controls in place to support monitoring of existing exposures

potential growth opportunities for primary business lines

For further information:

Impact Holdings (UK) plc

Paul Davies Chief Executive Officer

Tel: +44 (0)161 437 9499

www.impactholdings.net

 

Daniel Stewart & Company plc

Simon Leathers, Corporate Finance

Tel: +44 (0) 20 7776 6550

[email protected]

The financial information for the half year ended 30 September 2008 has been extracted from the interim results, which is available from Daniel Stewart & Company, 36 Becket House, Old Jewry, London EC2R 8DD and on the Company's website (www.impactholdings.net).

CHAIRMAN'S STATEMENT

We are pleased to report our unaudited interim financial results for the six months ended 30th September 2008. Revenue of £1,179,637 and pre-tax profit of £190,953 were in line with expectations, as were cash flows and origination levels. 

The general economic downturn in 2008 has continued to see unprecedented turmoil, with the collapse of the financial markets and the general reduction in global confidence, together with the continuing reduced availability of inter-bank funding constraining the market considerably. The linkage of inter-bank funding to LIBOR has restricted the Financial Institutions capacity to pass on recent base rate cuts to its customers, indeed they continue to review their lending criteria with their credit capacity continuing to be somewhat restricted due to capital constraints. This in itself is reducing liquidity and increases pressure on the continuing reduced availability of credit facilities.

Business Overview

The liquidity and credit crisis which materialized far faster than anyone envisaged, continues to have a profound effect on the availability of funding in the market generally but Impact has continued to secure banking facilities to operate on a day-to-day basis. Increased facilities are presently under negotiation but these facilities will only be taken and utilized on a selective basis due to the present economic uncertainty. The Group remains concerned in particular about the volatility in the property market and the knock on effect to other sectors, including the legal profession and this has led us to take a very conservative approach to funding all transactions until the market returns to a more stable environment.

Impact's funding businesses for both solicitor lending and property bridging continue to operate in a controlled manner and in accordance with management expectations. However, forecasts are for a flat second half of the financial year as a flight to quality is actively managed and counterparties experience the difficult environment.

Through continued refinement and focus on marketing and strong risk management, Impact believes it can increase its market penetration in both the pre-settlement and property arenas when the economic environment returns to some form of normality. Market research shows there is a growing use of structured finance to resolve Personal Litigation, Matrimonial Disputes and Specialty Property related transactions and it is our continued belief that the total addressable market for these aspects of our business can grow significantly in the future.

We are pleased to confirm the contingency referred to in the Statutory Accounts for the year ended 31st March 2008, where one party had disputed the recoverability of the amounts, was successfully resolved in the period following these results. 

Pre-Settlement Funding

Pre-settlement funding is the provision of disbursement funding in pending personal injury cases, as well as providing claimants with advances on their compensation. Impact continues to develop its organic pre-settlement origination activity and continues to look at other market opportunities in the solicitor and professional lending marketplace, while continuing to develop its vertically integrated model as detailed in the March 2008 accounts.

Property Bridging

Bridging finance is the term used to describe non amortising, interest only, short term funding (usually up to 12 months) secured on land or property. Impact's activities involve providing short term finance secured against residential and commercial property, typically through one of the following types of transaction:

Chain-breaking mortgage; 

Property development including site purchase and new-build projects; 

Property conversions and refurbishments;

Acquiring properties where a surveyor recommends a retention;

Buying from auctions;

Equity release. 

Impact's lending decision is based on careful consideration of a client's track record and sector of activity, as well as the proposed loan period and likely valuation of the underlying property at the time of repayment. Loans are usually repaid from refinance or proceeds of sale following, for example, refurbishment or development. 

Given the present uncertainty in the property market, strict underwriting and risk management assessment is adhered to with reduced lending seen due to the present strategy of only lending on low loan to value, low risk transactions.

Outlook

Having regards to the present economic environment, our short term objective is to continue to bolster the credit and risk management controls within the Group as well as ensuring present exposures are actively managed to a successful conclusion, whilst conserving cash for the Group during these uncertain times.

In the longer term our strategic objective is to create a successful nationwide specialist lender capable of delivering profitable results, whilst maintaining control over the commercial and financial risks facing the group.

Richard Kilsby

Non Executive Chairman

 

 

IMPACT HOLDINGS (UK) PLC

UNAUDITED CONSOLIDATED INCOME STATEMENT

 

							6 Months	6 months	Year
							ended	ended	Ended
							30/09/2008	30/09/2007	30/03/2008
							£	£	£
Revenue							1,179,637	679,793	1,590,442
Cost of sales							(498,291)	(285,098)	(615,593)
Gross profit							681,346	394,695	974,849
Exceptional bad debt recoveries/(write off)							13,296	615,287	1,250,345
Exceptional legal and professional fees							-	-	(435,270)
Exceptional impairment of goodwill							-	-	(1,246,529)
Employee benefit expense							-	(269,178)	-
Share based compensation							-	(7,736)	-
Other administrative expenses							(562,890)	(561,296)	(1,590,612)
Total administration expenses							(549,594)	(222,923)	(2,022,066)
Operating profit/(loss)							131,752	171,772	(1,047,217)
Interest receivable							59,201	24,477	74,034
Profit/(loss) for the period from operations before tax							190,953	196,249	(973,183)
Corporation Tax							-	-	-
Profit/(loss) for the period							190,953	196,249	(973,183)
Profit/(loss) per share							0.17	0.17	(0.9)
Basic and Fully Diluted (pence)							0.17	0.17	(0.9)

 

IMPACT HOLDINGS (UK) PLC

 

UNAUDITED CONSOLIDATED BALANCE SHEET

 

As at 30 September 2008
						6 Months	6 months	Year
						ended	ended	Ended
						30/09/2008	30/09/2007	30/03/2008
						£	£	£
Non-current assets
Goodwill						-	700,389	-
Plant and equipment						36,369	24,348	56,583
Intangible assets						55,001	101,388	66,001
						91,370	826,125	122,584
Current assets
Trade and other receivables including amounts falling
due after more than one year						9,427,497	6,293,018	7,955,244
Cash and cash equivalents						863,504	1,351,713	1,127,688
						10,291,001	7,644,731	9,082,932
Total assets						10,382,371	8,470,856	9,205,516
Capital and reserves
Share capital						5,666,667	5,666,667	5,666,667
Share premium account						4,759,823	4,759,823	4,759,823
Share based payment reserve						373,836	381,572	373,836
Retained earnings						(7,495,679)	(6,517,200)	(7,686,632)
Equity attributable to equity shareholders of the parent						3,304,647	4,290,862	3,113,694
Creditors: amounts falling due within one year						7,077,724	4,179,994	6,091,822
						10,382,371	8,470,856	9,205,516

 

IMPACT HOLDINGS (UK) PLC

 

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD

 

						6 Months	6 months	Year
						ended	ended	Ended
						30/09/2008	30/09/2007	30/03/2008
						£	£	£
Operating activities
Cash generated from/(used) in operations						(1,505,337)	(3,048,765)	(4,992,558)
Net cash absorbed by operating activities						(1,505,337)	(3,048,765)	(4,992,558)
Investing activities
Receipts from sale of tangible assets						-	-	15,028
Purchase of property, plant and equipment						360	(13,908)	(48,580)
Interest received						55,384	24,477	74,034
Net cash generated by/(used in) investing activities						55,744	10,569	40,482
Financing activities
Increase in amount owed to lending institutions						1,185,409	2,030,439	3,720,294
Net cash (used in)/from financing activities						1,185,409	2,030,439	3,720,294
Net (decrease)/increase in cash and cash equivalents						(264,184)	(1,007,757)	(1,231,782)
Opening cash and cash equivalents						1,127,688	2,359,470	2,359,470
Closing cash and cash equivalents						863,504	1,351,713	1,127,688

ENDIR DXLFLVLBEFBF

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Related Shares:

IHUK.L