25th Sep 2009 07:00
25 September 2009
IMPACT HOLDINGS (UK) PLC Preliminary results for the year ended 31 March 2009
Impact Holdings (UK) plc, the specialist lending business, announces its preliminary results for the year to 31 March 2009.
FINANCIAL HIGHLIGHTS
The headline financial results reveal:-
* The Group's first pre-tax profit of 290,634 * Cash and cash equivalents of 0.4 million * Net assets of 3.4 million * Consolidation of existing operations on track * Earnings per share 26p
Commenting on the results Paul Davies, the Chief Executive, said "The Board and Management have spent considerable effort in improving the risk management, operational and financial controls within the business. This has resulted in a period of controlled organic growth and the Group has been able to report its first pre-tax profit 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.
TRADING
The credit and liquidity crisis which materialised in the latter part of 2007 has had a profound effect on the availability of funding in the market generally. Impact has continued to work closely with its funders and continues to have their full support and enjoy sufficient banking facilities for its operational needs.
The proposed acquisition of Sutherland Professional Funding Limited will improve profitability and growth opportunities together with providing access to a further banking line. This acquisition underlines our strategic objective of delivering a Group of businesses that delivers integrated solutions to the legal sector and will provide a further avenue to grow the Group's core activities.
We are seeing an increasing appetite for creative short term funding solutions primarily due to the economic environment. However, the present economic uncertainty, deteriorating credit risk of counterparties in general and the volatility in the property market have led us to continue to take a very conservative approach to funding new transactions or entering into new lending relationships.
The Group's strategy continues to be to develop the business and we have identified a number of new opportunities which will hopefully come to fruition should the proposed Legal Services Act be passed. This would offer the opportunity of investment in a Law firm that could monitor and manage the personal injury cases we fund."
Further information:Paul DaviesChief Executive OfficerTel: 0161 437 9499Daniel Stewart & Company plcSimon Leathers/Oliver RigbyTel: 020 7776 6550CHAIRMAN'S STATEMENT
The financial markets have continued to see unprecedented turmoil with the crisis stemming from the systematic failure of the world inter banking system which has contributed to a lack of liquidity for many businesses.
This lack of liquidity has continued to impact on the availability of much needed funding and has constrained growth across the world economy as banks have systematically increased their margins. In addition to this increase in margins, Financial Institutions have reviewed their lending criteria and implemented more rigorous credit processes which have reduced the availability of credit.
Impact has not been immune to this and the restriction on the availability of increased banking lines and upward pressure on interest rates within the market could restrict growth as this situation is forecast to continue for the foreseeable future.
There remain considerable opportunities in our niche sector and the recent announcement that the Group had signed heads of terms to acquire Sutherland Professional Funding Limited reinforces this. The Group had been providing outsourced Loans Administration, Information Technology, Risk Management and Audit services to Sutherlands as part of its due diligence process. The directors of both businesses acknowledged the compelling merits of integrating the two businesses onto a common platform with the knowledge that this would deliver immediate growth and profitability.
We remain conscious of the uncertain economic environment in which we trade and the lack of liquidity many businesses are experiencing.
The business of solicitor lending, in relation to funding disbursements on personal injury cases, continues to be our core market albeit we have adopted a more conservative approach within the credit risk function.
The Group instigated its property bridging business to fund short term property transactions in July 2007 but the severe downturn in the property market and the "credit crunch" has resulted in an unprecedented effect on the marketplace. The Banks and Building Societies reduced the availability of mortgages and as a consequence the refinancing options for bridging loan transactions have diminished. This lack of liquidity has therefore resulted in a strategic decision to restrict new exposures to lower loan to values and only to lend where a refinancing is not perceived to be problematic.
In recent months the Board has successfully renewed its banking facilities and the Group looks forward to continued support from banks and shareholders alike as the business model evolves.
The management continues to work closely with its advisers to maximise shareholder value.
OUTLOOK
I believe the Group is well positioned to react to and develop new niche opportunities and feel the proposed strategy of providing services to the legal sector and looking at niche lending opportunities will provide a foundation for controlled growth and enhanced profitability.
I should like to place on record my appreciation for the efforts of the executive, management and staff during this period. I also appreciate the enthusiasm and support of my fellow directors and thank them for their continued encouragement and counsel.
OPERATING AND FINANCIAL REVIEW
Impact has achieved another year of progress in the implementation of its restructuring strategy against what has been unprecedented economic turmoil.
The results achieved are a credit to the management team but the Board remains fully aware of the current economic climate and is focused on delivering its strategic objectives in a controlled and structured way.
Richard KilsbyNon-Executive ChairmanCHIEF EXECUTIVE'S REPORTPEOPLE
The key to the success of Impact's ongoing business continues to be its ability to attract high calibre individuals who can deliver the strategy and growth.
Impact has continued to bolster its Board and management with the appointment of Roger Barlow as Non-Executive Chairman designate, David Hughes as Legal Director and the appointment on 22 September 2009 of Stuart Burn as Operations Director.
Roger is FCA qualified and is presently Chairman of the Marsden Building Society having previously been a senior Audit Partner with KPMG before becoming a board member of various private and public companies. He was Executive Director and CFO of Libertas Capital Group plc, an AIM listed company, until November 2007, and thereafter served as a Non Executive Director.
David is a Solicitor and Member of the Law Society and has, during his successful career to date, held a number of senior positions, the most recent of which was as a Partner of Yaffe Jackson Ostrin, Solicitors where he was responsible primarily for dealing with major commercial clients of the practice on property related matters. David also has considerable property interests in both the UK and Europe and acts in an advisory capacity on all legal matters and property related matters for the Group.
Stuart has been promoted to Operations Director having joined the business in April 2008 as Head of Finance. Stuart was previously Practice Director of Cooper Kenyon Burrows Solicitors and has held senior positions in a number of large law firms both in the North East and North West of England. Stuart has considerable knowledge of managing solicitor practices and this detailed knowledge is an asset in managing solicitor disbursement funding. Stuart is also a Director of Rosemount (Whitley Bay) Management Company Limited. Stuart does not hold any shares in IHUK and there are no further disclosures required under Schedule 2(g) of the AIM Rules for Companies.
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 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 strategic objective continues to create a successful Group of companies delivering a diverse range of services to the Legal sector together with niche funding opportunities.
Our financial objective is to deliver shareholder value by reporting profitable results whilst maintaining control over the commercial and financial risks facing the Group.
Paul DaviesChief Executive Officer
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2009
Year Year ended ended 31/03/09 31/03/08 GBP GBP Revenue 2,044,973 1,590,442 Cost of sales (787,220) (615,593) Gross profit 1,257,753 974,849 Other operating expenses (1,013,915) (1,590,612) Exceptional: Bad debt recovery - 815,075 Goodwill impaired - (1,246,529) Operating profit/(loss) 243,838 (1,047,217) Interest receivable 46,796 74,034 Profit/(loss) for the year from operations 290,634 (973,183)before tax Tax expense - _______- Profit/(loss) for the year 290,634 (973,183) ____ ___ ________ Earnings/(loss) per share (pence) 26p ( restated) Basic and Fully Diluted (86p)
No separate consolidated statement of recognised gains and losses has been presented as all such gains and losses have been dealt with in the consolidated income statement.
All activities are continuing.
CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2009
2009 2008 GBP GBP Non-current assets Goodwill - - Other intangible assets 119,628 66,001 Property, plant and equipment 42,671 56,583 ______ ________ 162,299 122,584 Current assets
Trade and other receivables including 8,832,251 7,955,244 amounts falling due after more than
one year Cash and cash equivalents 409,573 1,127,688 ________ ________ 9,241,824 9,082,932 ________ _________ Total assets 9,404,123 9,205,516 Equity and liabilities Share capital 5,666,667 5,666,667 Share premium account 4,759,823 4,759,823 Share based payment reserve 373,836 373,836 Shares held by employee benefit trust (26,646) 7,686,632) Retained earnings (7,395,998) Issued capital and reserves 3,377,682 3,113,694 attributable to equity holders of the parent Trade and other payables 6,026,441 6,091,822 9,404,123 9,205,516
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2009
2009 2008 GBP GBP Operating activities Cash generated used in operations (1,159,938) (4,992,558)
Net cash absorbed by operating activities (1,159,938) (4,992,558)
Investing activities Interest received 46,796 74,034 Acquisition of subsidiaries, net of cash - -acquired Purchases of other intangible assets (89,173) - Receipts from sale of tangible assets 5,448 15,028 Acquisition of own shares by Employee (26,646) -Benefit Trust (6,126) (48,580)Purchases of property, plant and equipment
Net cash (used in)/generated by investing (69,701) 40,482 activities
Financing activities Increase in amounts owed to lending 511,524 3,720,294institutions Net cash from financing activities 511,524 3,720,294
Net decrease in cash and cash equivalents (718,115) (1,231,782)
Cash and cash equivalents at 1 April 1,127,688 2,359,470 Cash and cash equivalents at end of 31 409,573 1,127,688March
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2009
Attributable to the equity holders of parent
Share Share Share based Profit and Total loss capital premium payment account reserve GBP GBP GBP GBP GBP
Balance as at 1 April 2007 5,666,667 4,759,823 373,836 (6,713,449) 4,086,877
Net loss for the year - - - (973,183) (973,183) Balance at 31 March 2008 5,666,667 4,759,823 373,836 (7,686,632) 3,113,694 Net profit for the year - - - 290,634 290,634 Total recognised income and expense Balance at 31 March 2009 5,666,667 4,759,823 373,836 (7,395,998) 3,404,328NotesOperating profit/(loss)
Profit/(Loss) from operations has been arrived at after charging/(crediting):
Year ended Year ended 31/3/09 31/3/08 GBP GBP Depreciation of owned assets 14,592 18,128 Amortisation of intellectual property 35,546 48,027 Rentals under operating leases 42,406 39,756 Staff costs 532,063 540,562 Exceptional bad debt recovery - 815,025 Exceptional goodwill impaired - 1,246,529 Auditors remuneration for - statutory audit services 48,435 40,185 - tax compliance and advisory services 10,113 8,643 - corporate recovery services - 159,840
The financial information set out in this announcement does not constitute the Group's financial statements (as defined by s240 of the Companies Act 1985) for the year ended 31 March 2009. The results for the year ended 31 March 2009 are 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 website www.impactholdings.net and will be posted to shareholders on or before 30 September 2009. further copies will be available from Daniel Stewart & Company plc, 36 Becket House, Old Jewry, London EC2R 8DD.
Notes to the Editor:
Impact Holdings (UK) plc through its individual subsidiaries provides short term funding solutions, loans administration and IT 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 id regulated by The office of fair trading through which it is licensed to lend under Consumer Credit Act 1974 and the Financial Services Authority for regulated lending.
END
vendorRelated Shares:
IHUK.L