2nd Jul 2010 07:00
30 June 2010
IMPACT HOLDINGS (UK) PLC Preliminary results for the year ended 31 March 2010
Impact Holdings (UK) plc, the specialist lending business, announces its preliminary results for the year to 31 March 2010.
FINANCIAL HIGHLIGHTS
The headline financial results reveal:-
* Group's pre-tax profit increased 11.6% to £324,464 (2009: £ 290,634) * Results ahead of management expectations * Cash and cash equivalents up from £0.4 million to £2.2 million * Net assets of £4.5 million (2009: £3.4 million ) * Successful acquisition in December of Sutherland Professional Funding Limited * Earnings per share 23p
Commenting on the results Paul Davies, the 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 controlled organic growth and the Group is pleased to report an 11.6% increase in profits 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."
Further information:
Paul Davies
Chief Executive Officer
Tel: 0161 437 9499
Daniel Stewart & Company plc
Simon Leathers/Oliver Rigby
Tel: 020 7776 6550
CHAIRMAN'S STATEMENT
I was pleased to be appointed Chairman late last year and it gave me great pleasure to oversee the successful acquisition of Sutherland Professional Funding Limited ("Sutherlands") on 30th December 2009.
As stated in previous reports, the financial markets since 2008 have continued to see unprecedented turmoil and this is expected to continue for some time to come. 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 have reduced the availability of credit.
Impact has not been immune to restricted credit lines and increased margins, however, the successful acquisition of Sutherlands gave us access to further banking lines at competitive interest rates thus protecting our margins.
STRATEGY
Despite a continuing difficult economic environment our strategy remains focused on both the short term niche funding market and the provision of services to the legal sector. 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, coupled with a successful acquisition.
We will continue to capitalise on the inflexibility and lack of lending appetite of the larger banks where possible but we remain conscious of the uncertain economic environment in which we trade and the absence of liquidity many businesses are experiencing especially in the legal sector.
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 given the lack of liquidity in the financial markets as a whole.
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 have diminished and we have taken the strategic decision to limit new business in the short term until some normality returns to the economic markets whilst continuing to manage the existing book.
In recent months the Board has successfully renewed key banking facilities and the Group looks forward to continued support from banks and shareholders alike as the business model evolves.
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.
Roger BarlowNon-Executive ChairmanCHIEF EXECUTIVE'S REPORTTRADING
The Group continues to see ongoing progress with expenses under control and improved profitability following the successful acquisition of Sutherlands.
This acquisition complements the existing solicitor lending business and brings with it the following benefits:
* the increased scale of the business has brought a further funding line; * the combined client base will create access to significant cross selling opportunities; * the acquisition has been integrated into the infrastructure and operating platforms of the existing Impact business, creating synergistic gains through economies of scale.
We continue to see further progress in our core businesses but continue to look for alternative income streams to enhance our 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 is for a cautious, controlled, profitable growth with the Group remaining focused on providing services to the legal sector and maximising niche funding opportunities. We intend to combine various subsidiaries to gain economies of scale and continue to enhance the controls in our audit function to allow us to minimize the risks to the business.
The acquisition of Sutherlands is the first step in rolling out this strategy and this, coupled with our existing businesses, will provide the foundation for controlled growth, improved profitability and enhanced shareholder value.
Paul DaviesChief Executive OfficerIMPACT HOLDINGS (UK) PLC
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2010
Year Year Ended Ended 31 03 10 31 03 09 £ £ Revenue 1,679,362 2,044,973 Cost of Sales (448,613) (787,220) Gross Profit 1,230,749 1,257,753 Other operating expenses (907,712) (1,013,915) Operating Profit 323,037 243,838 Interest 1,427 46,796receivable Profit for the year from operations 324,464 290,634before tax Tax credit 725 - Profit for the 325,189 290,634year Earnings per share (pence) Basic and fully diluted 23p 26p
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 continuing.
IMPACT HOLDINGS (UK) PLC
CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2010
2010 2009 £ £ Non-current assets Goodwill 421,766 - Other intangible assets 93,547 119,628 Property, plant and equipment 46,196 42,671 Deferred taxation 190,049 - 751,558 162,299 Current assets Trade and other receivables including 11,914,133 8,832,251amounts falling due after more than one year Cash and cash equivalents 2,213,497 409,573 14,127,630 9,241,824 Total assets 14,879,188 9,404,123Equity and liabilities Share capital 6,211,201 5,666,667 Share premium account 5,005,288 4,759,823 Share based payment reserve 172,199 373,836 Shares held by employee benefit trust (11,645) (26,646) Retained earnings (6,869,172) (7,395,998) Issued capital and reserves attributable to 4,507,871 3,377,682 equity holders of the parent Trade and other payables 10,371,317 6,026,441 14,879,188 9,404,123IMPACT HOLDINGS (UK) PLC
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2010
2010 2009 £ £ Operating activities Cash generated by/(used in) operations 3,008,430 (1,159,938) Net cash generated/(absorbed) by 3,008,430 (1,159,938) operating activities Investing activities Interest received 1,427 46,796 Purchases of other intangible assets (51,147) (89,173) Receipts from sale of tangible assets - 5,448 Acquisition costs (21,345) - Net cash acquired with subsidiary 403,116 - undertaking - (26,646) Acquisition of own shares by Employee Benefit Trust (505) (6,126) Purchases of property, plant and equipment Net cash generated by/(used in) 331,546 (69,701) investing activities Financing activities Share issue expenses (10,000) -
(Decrease)/increase in amounts owed to (1,526,052) 511,524 lending institutions
Net cash (outflow)/inflow from (1,536,052) 511,524 financing activities Net increase/(decrease) in cash and 1,803,924 (718,115) cash equivalents Cash and cash equivalents at 1 April 409,573 1,127,688 Cash and cash equivalents at end of 31 2,213,497 409,573 March
IMPACT HOLDINGS (UK) PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2010
Attributable to the equity holders of parent
Share Share Share Profit and Total capital premium based loss payment account reserve £ £ £ £ £
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
Balance as at 31 March 5,666,667 4,759,823 373,836 (7,395,998) 3,404,328 2009 Net profit for the year - - - 325,189 325,189 Shares issued 544,534 272,715 - - 817,249 Issue expenses - (27,250) - - (27,250) Transfer re lapsed - - (201,637) 201,637 - options
Balance at 31 March 2010 6,211,201 5,005,288 172,199 (6,869,172) 4,519,516
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 31 March 2010. The results for the year ended 31 March 2010 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 9th July 2010. 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 is regulated by The Office of Fair Trading through which it is licensed to lend under Consumer Credit Act 1974.
vendorRelated Shares:
IHUK.L