Preliminary results for the year ended 31st March 2014

Press Release 30th September 2014 Impact Holdings (UK) plc ("Impact" or "The Group") Preliminary results for the year ended 31st March 2014 Impact Holdings (UK) plc. (AIM: IHUK), the specialist lender,announces its preliminary results for the year ended 31st March 2014. Financial Highlights - Group's pre-tax profit of £97,088 (2013: Restated profit £45,340) - Earnings per share 3.7p (2013: Restated 1.8p) - Further reduced exposure to external debt providers - Cash and cash equivalents of £0.7 million (2013: £0.7 million) - Net assets of £5.58 million (2013: Restated £5.44 million) Commenting on the results Paul Davies, the Chief Executive, said"Trading results remain suppressed whilst the group's lending subsidiarycompanies continue to pursue complex litigation against errant borrowers andprofessional advisors. Following on from recent successful recoveries andcases concluded in our favour the directors anticipate that the litigationprocess is likely to be successfully concluded within the next two years." For further information: Impact Holdings (UK) plc. Paul Davies Chief Executive Officer Tel: +44 (0)1928 793 550 www.impactholdings.net Zeus CapitalNick Cowles/Andrew Jones Tel +44 (0)161 831 1512 Notes to the Editor: Impact Holdings (UK) plc through its individual subsidiariesprovides financial outsourcing and ancillary services to the legal profession. In addition Impact will fund other opportunities where debtinstruments or debentures provide the primary security and there areopportunities for short term bespoke funding where serviceability precludeslarger lenders from entering this area. Impact is regulated by the Office of Fair Trading through which itis licensed to lend under the Consumer Credit Act 1974. The financial information detailed below has been extracted from the AnnualReport and Accounts for the year ended 31st March 2014, which are availablefrom Zeus Capital, 82 King Street, Manchester, M2 4WQ and on the Company'swebsite (www.impactholdings.net). CHAIRMAN'S STATEMENT We have previously advised that as a consequence of the ongoing credit crisisand new economic environment in which we operate it has been necessary to seekout additional revenue streams for the group. As previously advised the Board and management team continues to spend considerableeffort in looking at the strategic direction the business is taking following thelack of liquidity in the banking market. This has culminated in the decision todiversify the Company's product offering and reduce the group's exposure tofinancial institutions. PRIOR PERIOD ADJUSTMENT The 2013 financial statements have been restated as a consequence of a priorperiod adjustment details of which are shown in note 4 BUSINESS REVIEW Trading results remain suppressed whilst the group's lendingsubsidiary companies continue to pursue complex litigation against errantborrowers and professional advisors. Following on from recent successfulrecoveries and cases concluded in our favour the directors anticipate that thelitigation process is likely to be successfully concluded within the next twoyears. CAPITAL STRUCTURE On 28th March 2014 the High Court confirmed the Board's proposalthat had previously been approved by the shareholders to implement a capitalreduction and increase the distributable reserves of the Group in order tosupport the Group's ability to pay dividends, should it be desirable to do soin the future. THE BOARD The Board remains committed to adhering to strong Corporate Governance andoperating within a framework of prudent controls which ensures the future risksof the business are controlled and managed. STRATEGY The development of the strategic direction of the business has continued inthis financial year with a further reduction in our exposure to third party funders.This peaked at £10.0m in March 2010 and now stands at £1.5m as at 31 March 2014. OUTLOOK The group remains focused on providing services to the legal and business sectors.The Board of Directors is committed to the future growth opportunities earmarked andcontinues to develop this strategy which will provide the foundation for controlledgrowth, increased profitability over time and enhanced shareholder value. The dedication and commitment of all staff to re-align the business is a credit asthey have collectively worked with commitment and resilience to deliver this performance. I should like to place on record my appreciation for the efforts ofthe executive, management and staff during the year. I also appreciate theenthusiasm and support of my fellow directors and thank them for theircontinued encouragement and counsel. DIVIDEND No dividend will be declared for the year. Roger Barlow Non-executive Chairman CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2014 Restated Year Year ended Ended 31/03/2014 31/03/2013 £ £ Revenue 1,740,529 1,035,310 Cost of Sales (1,307,442) (413,906) Gross Profit 433,087 621,404 Exceptional operating expenses (1,904,412) 566,667Operating expenses (1,513,615) (3,418,027) (1,142,814) (576,147) Operating (Loss)/profit (2,984,940) 45,257 Exceptional interest receivable and similar income 3,082,028 83 Profit for the year from operations before tax 97,088 45,340 Tax (charge) - (1,697) Profit for the year attributable to the owners of the parent 97,088 43,643Earnings per share (pence) Basic 3.7p 1.8p Diluted 3.7p 1.8p Other than as disclosed in the consolidated Income Statement and theConsolidated Statement of Changes in Equity there are no further gains orlosses. Accordingly, no separate statement of other comprehensive income hasbeen presented. All activities are considered to be continuing. CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2014 Restated 2014 2013 £ £ Non-current assetsGoodwill 421,766 421,766Property, plant and equipment 918,580 921,890Deferred taxation 170,195 170,195 1,510,541 1,513,851 Current assetsTrade and other receivables including amounts falling due after more thanone year 5,973,186 8,289,589Cash and cash equivalents 692,685 690,242 6,665,871 8,979,831Total assets 8,176,412 10,493,682 Equity and liabilities Share capital 1,311,201 6,411,201Share premium account - 5,125,291Shares held by Employee Benefit Trust (45,070) (45,070)Retained earnings 4,310,645 (6,051,083)Issued capital and reserves attributable to parent 5,576,776 5,440,339 Trade and other payables due after more than one year 540,335 540,261Trade and other payables due in less than one year 2,059,301 4,513,082Total equity and liabilities 8,176,412 10,493,682 These financial statements were approved by the board on 29 September 2014 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2014 Restated 2014 2013 £ £ Operating activitiesCash generated/(absorbed) by operations 456,145 (102,843) Net cash generated/(absorbed) by operating activities 456,145 (102,843) Investing activities Interest received 25 83Purchases of property, plant and equipment (34,914) (71,248)Net cash (used) in investing activities (34,889) (71,165) Financing activities Issue of equity share capital - 320,003Loan incepted 500,000 -Loan repaid (500,000) -Net decrease in other amounts owed to lending institutions (418,813) (531,932)Net cash outflow from financing activities (418,813) (211,929) Net increase/(decrease) in cash and cash equivalents 2,443 (385,937) Cash and cash equivalents at 1 April 690,242 1,076,179 Cash and cash equivalents at 31 March 692,685 690,242 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2014 Share Share Shares Share Profit and Total Capital premium held by options loss account EBT £ £ £ £ £ £ Balance at 31 March 2012 6,211,201 5,005,288 (45,070) - (6,094,726) 5,076,693Ordinary shares issued 200,000 - - - - 200,000Share premium on issued shares - 120,003 - - - 120,003Net profit for the year - - - - 250,071 250,071Balance at 31 March 2013 6,411,201 5,125,291 (45,070) - (5,844,655) 5,646,767Prior period adjustment (note 4) - - - - (206,428) (206,428)Restated balance at 31 March 2013 6,411,201 5,125,291 (45,070) - (6,051,083) 5,440,339Net profit for the year - - - - 97,088 97,088Share premium reduction - (5,125,291) - - 5,125,291 -Cancellation of ordinary B shares (5,100,000) - - - 5,100,000 -Share options - - - 39,349 - 39,349Balance at 31 March 2014 1,311,201 - (45,070) 39,349 4,271,296 5,576,776 Notes 1. The financial information set out in this announcement does notconstitute the group's financial statements (as defined by s434 of theCompanies Act 2006) for the year ended 31st March 2014. The results for theyear ended 31st March 2014 are extracted from the Annual Report of ImpactHoldings (UK) plc, on which the auditors have issued an unqualified reportwhich includes an emphasis of matter. 2. Pursuant to AIM Rule 20 copies of the Annual Report may bedownloaded from the company's web site www.impactholdings.netand will beposted to shareholders shortly. Further copies will be available from ZeusCapital, 3 Ralli Courts, West Riverside, Manchester, M3 5FT. 3. The Annual General Meeting will be held at the Company'sregistered office, 7500 Daresbury Park, Daresbury, Warrington WA4 4BS on 17thDecember 2014 at 8.45am. 4. Prior period adjustment During preparation of this year's financial statements, the directors becameaware of a material error in the 2013 statements. Shortly after the end of theprevious financial period the lender of one of the group's subsidiarycompanies agreed by negotiation, subject to future performance, to grant adiscount on the introduction of a third party lender. On advice from theprevious auditors, which the directors accepted, this transaction was treatedas an adjusting post balance sheet event and included in the 2013 figureswhere appropriate. As the agreement was made shortly after the end of the 2013financial year the transaction should have been treated as an un-adjustingpost balance sheet event. A review has been undertaken by the directors following the appointment of newauditors of both the 2014 and 2013 financial results. The directors have re-statedthe 2013 financial statements to remove the transaction, together with the associatedor linked adjustments thereto from the 2013 financial statements and include themwhere appropriate in the 2014 statements. The directors have amended the financialstatements to re-state the 2013 figures and disclose the relevant amendments in 2014as a prior year adjustment. The removal of the discount and the associated or linked adjustments have had thefollowing effect on the 2013 financial statements: the removal of the discount hasincreased other operating expenses by £2,504,459, reduced cost of sales by £16,760and increased trade and other payables due in less than one year by £2,487,699; theremoval of a provision against recoverability of trade receivables has reduced otheroperating expenses by £2,004,693 and increased trade and other receivables by thesame amount; the removal of legal fees and professional fees relating to thetransaction together with the removal of a bonus provision and other sundry costshas reduced other operating expenses and trade payables due in less than one yearby £276,446. Bad debts recovered previously stated as revenue of £274,617 has beenoffset against bad debts provided in operating expenses. The balance at bank hasbeen adjusted by £1,829 as part of these adjustments. These adjustments requiredthe deferred tax charge to be adjusted by £1,697. The net effect of these adjustmentsis to reduce profits by £206,428. The above transactions were then reversed whenre-introduced into the 2014 financial statements. Exceptional interest and similarincome in 2014 relates to the discount. Exceptional operational expenses in 2014relates to provisions against recoverability of trade receivables. As a result, comparative figures for the year ended 31 March 2013 have been adjusted as follows: Previously 2013 RestatedProfit for the year stated Adjustment 2013 £ £ £Revenue 1,309,927 (274,617) 1,035,310Cost of sales (430,666) 16,760 (413,906)Gross profit 879,261 (257,857) 621,404Other operating expenses (629,273) 53,126 (576,147)Operating profit 249,988 (204,731) 45,257Interest received 83 2 83Operating profit after interest 250,071 - (204,731) 45,340Tax charge - (1,697) (1,697) Profit for the year after tax 250,071 (206,428) 43,643 Net assets Trade and other receivables including amountsfalling due after more than one year 6,284,896 2,004,693 8,289,589Deferred tax 171,892 (1,697) 170,195Cash and cash equivalents 688,413 1,829 690,242Trade and other payables due in lessthan one year (2,301,829) ( (2,211,253) (4,513,082)Retained earnings (5,844,655) (206,428) (6,051,083)