31st May 2007 07:00
31 May 2007 Impact Holdings (UK) plc Trading Update
Following the appointment of the new management team who have undertaken a full review of the company's exposures the Directors feel it would be prudent to provide against a substantial proportion of the Impact Funding (UK) Ltd existing loan book.
These provisions relate to exposure entered into prior to October 2006 and relate to the disbursement funding for the Right To Buy market, where the conversion rate and the replacement ratio of new loans to failed completions has been significantly below the company's original expectations. Consequently, the company will also incur a write down of the goodwill on the acquisition of Impact Funding (UK) Ltd, the subsidiary which has conducted the Right To Buy business. The company is exploring its options under its existing contracts with its Right To Buy providers in order to assess its ability to recover a portion of the outstanding loan book.
In addition, the Directors feel that it would be prudent to make further provisions against an existing term loan and against a portion of the company's solicitor lending relating to a dispute with one individual solicitor's practice.
The Directors expect that the provisions in the accounts for the period ended 31st March 2007 will total approximately ‚£5.6m and the value of goodwill attributable to the acquisition of Impact Funding (UK) Limited will be written down to its estimated recoverable amount of ‚£0.7m. Based on the interim statements as at 30th September 2006 this represents a write off of approximately ‚£1.3 million. The provisions include ‚£4 million for the Right To Buy book, ‚£1.2million for a term loan and ‚£430,000 for the solicitor lending. In addition the company is taking steps to recover a secured loan of ‚£200,000 made to a previous director.
As a result of the above, the Directors have decided not to proceed at this stage with the acquisition of the solicitor lending business as detailed in the RNS dated 1st February 2007.
Bruce Judge the Group Chairman has retired with immediate effect and Richard Kilsby will undertake the role of interim Chairman until a suitable candidate can be found.
Paul Davies, Chief Executive, said
"This is clearly a disappointing development but one that we feel is prudent. The new management team has improved the quality of financial and credit controls and is encouraged by these changes.
Impact Bridging Solutions Limited has the ability to grow a profitable loan book based on short term finance secured on property assets. The bridging business has a funding line in place together with the necessary regulatory licences to operate and has now commenced trading.
The Impact Group continues to have sufficient cash resources and banking facilities to continue to develop the business model and the directors consider there is a growing demand for specialist loans."
Impact Holdings (UK) plcPaul Davies0161 437 9499Daniel Stewart & Co.Alastair Cade0207 776 6550
IMPACT HOLDINGS (UK) PLCRelated Shares:
IHUK.L