Preliminary Results

Press Release 27th September2013 Impact Holdings (UK) plc ("Impact" or "The Group") Preliminary results for the year ended 31st March 2013 Impact Holdings (UK) plc. (AIM: IHUK), the specialist lender, announces itspreliminary results for the year ended 31st March 2013. Financial Highlights * Group's pre-tax profit of £250,071 (2012: £314,745) * Earnings per share 10.1p (2012: 13.7p) * Reduced exposure to external debt providers from £5.2m to £1.6m * Results ahead of management expectations * Reduced gearing down to 28% from 102% * Cash and cash equivalents of £0.7 million (2012: £1.1 million) * Net assets of £5.6 million (2012: £5.1 million) Commenting on the results Paul Davies, the Chief Executive, said "The groupcontinues to see ongoing progress with expenses under control, a markedreduction in external finance and it continues to actively look for alternativeincome streams to enhance its profitability." 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 The financial information detailed below has been extracted from the AnnualReport and Accounts for the year ended 31st March 2013, which are availablefrom Zeus Capital, 3 Ralli CourtsWest Riverside, Manchester, M3 5FT and on the Company's website(www.impactholdings.net). CHAIRMAN'S STATEMENT INTRODUCTION 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. 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 marked reduction in our exposure to third partyfunders and a withdrawal from new exposures in the specialty funding market. The establishment of Midas Marketing Management Limited in September 2012 whichprovides specialist marketing and business development services to both lawfirms and individual business owners is seen as a marked growth area operatingwithin a highly compliant framework. This initiative will continue to beinvested in over the forthcoming period as we develop our product offering,increase our revenue streams and diversify our product range. Enhanced incomestreams from this operation will hopefully come to fruition in 2013/14 andbeyond albeit we still continue to incur initial set up costs. DIVIDEND No dividend will be declared for the year. OUTLOOK The group remains focused on providing services to the legal and professionalsectors. The Board of Directors is committed to the future growth opportunitiesearmarked and continues to develop this strategy which will provide thefoundation for controlled growth, improved profitability over time and enhancedshareholder value. I should like to place on record my appreciation for the efforts of theexecutive, management and staff during the year. I also appreciate theenthusiasm and support of my fellow directors and thank them for theircontinued encouragement and counsel. Roger Barlow Non-executive Chairman CHIEF EXECUTIVE'S REVIEW INTRODUCTION As previously advised the Board and management team have spent considerableeffort in looking at the strategic direction the business is taking followingthe lack of liquidity in the banking market. This has culminated in thedecision to diversify the Company's product offering and reduce the group'sexposure to financial institutions and re-align the business to provide variousancillary services to the legal and professional sectors. The dedication and commitment of all staff to re-align the business is a creditas they have collectively worked with commitment and resilience to deliver thisperformance. TRADING Commentary on the group's performance is contained within the Chairman'sStatement; however the group continues to see ongoing progress with expensesunder control, a marked reduction in external finance and it continues toactively look for alternative income streams to enhance its profitability. RISK MANAGEMENT The risk management of the business continues to be strengthened with all newand existing counterparty risks regularly assessed by an independent riskcommittee. Credit and fraud risk The group is exposed to the risk that clients owing the group money will notfulfil their obligations. The group regularly reviews credit exposure for everyclient, including the level of security available in the event of default.Nevertheless, credit default risk may arise from events or circumstances thatare difficult to detect and handle, such as fraud. Inadequate security The group is exposed to the risk that security and undertakings upon which itsloan advances are made may reduce in value, so that the group may not recoversome or all of its loan advances in an event of default. This risk is mitigatedby the spread of loans and clients involved, along with a detailed assessmentof the value of the security and undertakings at the time the loans are madeand appropriate ongoing monitoring. Funding and treasury The group relies on a mix of equity funding and uncommitted debt finance fromMercantile Investment Company Limited and Yorkshire Bank in order to maintainan adequate level of working capital and to fund loan advances to the group'sclients. STRATEGIC AND FINANCIAL OBJECTIVES Our objective remains for a cautious, controlled, profitable growth with thegroup concentrating on actively looking for additional income enhancingopportunities. We continue to look for economies of scale and enhance thecontrols in order to allow us to minimise the risks to the business. Paul Davies Chief Executive CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2013 Year Year Ended Ended 31/03/13 31/03/12 £ £ Revenue 1,309,927 1,186,355 Cost of Sales (430,666) (241,816) Gross Profit 879,261 944,539 Other operating expenses (629,273) (630,054) Operating Profit 249,988 314,485 Interest 83 260receivable Profit for the year from operations 250,071 314,745before tax Tax (charge)/ - (9,721)credit Profit for the 250,071 305,024year Earnings per share(pence) Basic 10.1p 13.7p Fully diluted 10.1p 13.4p 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 2013 2013 2012 £ £ Non-current assets Goodwill 421,766 421,766 Property, plant and equipment 921,890 866,825 Deferred taxation 171,892 171,892 1,515,548 1,460,483 Current assets Trade and other receivables including amounts 6,284,896 7,983,892falling due after more than one year Cash and cash equivalents 688,413 1,076,179 Total current assets 6,973,309 9,060,071 Total assets 8,488,857 10,520,554 Equity and Liabilities Share capital 6,411,201 6,211,201 Share premium Account 5,125,291 5,005,288 Shares held by employee benefit trust (45,070) (45,070) Retained earnings (5,844,655) (6,094,726) Issued capital and reserves attributable to 5,646,767 5,076,693Equity holders of the parent Trade and other payables due after more than 540,261 570,391one year Trade and other payables due in less than one 2,301,829 4,873,470year Total Equity and Liabilities 8,488,857 10,520,554 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2013 31/3/13 31/3/12 £ £ Operating activities Cash generated by operations (302,839) 1,805,382 Net cash generated by operating (302,839) 1,805,382activities Investing activities Interest received 83 260 Purchases of property, plant and (71,248) (288,246)equipment Net cash applied/(used) in investing (71,165) (287,986)activities Financing activities Issue of equity share capital 320,003 - Net decrease in amounts owed to lending (333,765) (2,335,282)institutions Net cash outflow from financing (13,762) (2,335,282)activities Net decrease in cash and cash (387,766) (817,886)equivalents Cash and cash equivalents at 1 April 1,076,179 1,894,065 Cash and cash equivalents at end of 31 688,413 1,076,179March CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2013 Attributable to the equity holders of parent company Share Share Share Shares Profit and Total capital premium based held by loss payment EBT account reserve £ £ £ £ £ £ Balance as at 31 6,211,201 5,005,288 172,199 (45,070) (6,571,949) 4,771,669March 2011 Lapse of Share (172,199) 172,199 -Options Net Profit for the - - - - 305,024 305,024year Balance as at 31 6,211,201 5,005,288 - (45,070) (6,094,726) 5,076,693March 2012 Ordinary Shares 200,000 - - - - 200,000Issued Share Premium on - 120,003 - - - 120,003Issued Shares Net Profit for the - - - - 250,071 250,071Year Balance as at 31 6,411,201 5,125,291 - (45,070) (5,844,655) 5,646,767March 2013 The financial information set out in this announcement does not constitute thegroup's financial statements (as defined by s434 of the Companies Act 2006) forthe year ended 31st March 2013. The results for the year ended 31st March 2013are extracted from the Annual Report of Impact Holdings (UK) plc, on which theauditors have issued an unqualified report. Pursuant to AIM Rule 20 copies of the Annual Report may be downloaded from thecompany's web site www.impactholdings.netand will be posted to shareholders onor before 1st October 2013. Further copies will be available from Zeus Capital,3 Ralli Courts, West Riverside, Manchester, M3 5FT. The Annual General Meeting will be held at the Company's registered office,7500 Daresbury Park, Daresbury, Warrington WA4 4BS on 27th November 2013 at8.45am. Notes to the Editor: Impact Holdings (UK) plc through its individual subsidiaries providesfinancial; outsourcing and ancillary services to the legal profession. In addition Impact will fund other opportunities where debt instruments ordebentures provide the primary security and there are opportunities for shortterm bespoke funding where serviceability precludes larger lenders fromentering this area. Impact is regulated by the Office of Fair Trading through which it is licensedto lend under the Consumer Credit Act 1974.