IMPACT HOLDINGS (UK) PLC
Impact Holdings (UK) plc
("Impact" or "The Group")
Half Year Results
Impact (AIM: IHUK), the specialist lender, announces its unaudited half year
results for the six months ended 30 September 2015.
Financial Highlights
* Cash and cash equivalents of £0.79 million (£0.63 million 30 September
2014)
* Net assets of £5.59 million (£5.34 million 30 September 2014)
* Debt reduced by 14% year on year to £1.04 million (£1.22 million September
2014)
* Loss after tax of £248,582 (Loss after tax £234,933 30 September 2014)
* Earnings/(loss) per share (9.4p) ((8.9p) 30 September 2014)
Operational Highlights
* Ongoing business re-aligned to focus on recoveries from third parties
* Continued reduction in borrowings from financial institutions
* Continuation of complex litigation
A copy of the half year results is also available on the Group's website
(www.impactholdings.net).
For further information:
Impact Holdings (UK) plc
Paul Davies, Chief Executive Officer Tel: 01928 793 550
Zeus Capital
Andrew Jones / Nick Cowles Tel: 0161 831 1512
CHAIRMAN'S STATEMENT
I report on our unaudited half year financial results for the six months ended
30th September 2015. Revenue of £86,288 and pre-tax losses of £248,582 were in
line with expectations.
The recognition of revenue, normally generated from loans to clients of
solicitor firms, has been suspended pending the outcome of a hearing in the
Supreme Court to be heard in June 2016. The Directors and their legal team
remain confident that the Appeal Court decision handed down in February 2015
will be upheld by the Supreme Court which would result in further recoveries
thereafter from a number of professional indemnity insurers of those solicitor
firms who have defaulted on the loans advanced.
BUSINESS OVERVIEW
The development of the strategic direction of the business has continued with a
reduction in our exposure to third party funders and a withdrawal from new
exposures in the specialty funding market.
We continue to incur upfront legal expenses in seeking to recover loans which
have been previously provided against by the Group. Litigated matters continue
to be concluded successfully however the ongoing costs of the more complex
litigation matters continue to erode positive financial results.
We have recently settled one litigated claim against a firm of former
professional advisors on advantageous terms and are currently awaiting the
Supreme Court's decision which may accelerate settlement of a number of matters
being pursued.
OUTLOOK
The group remains focused on recovering monies owed to it by third parties. The
Board of Directors is committed to the opportunities Identified and continues
to develop this strategy which is expected to provide, over time, enhanced
shareholder value.
Roger Barlow
Non-Executive Chairman
IMPACT HOLDINGS (UK) PLC
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
6 Months 6 Months Year
ended ended Ended
30/09/2015 30/09/2014 31/03/2015
£ £ £
Revenue 86,288 906,376 1,988,087
Cost of Sales (15,727) (376,397) (467,606)
Gross profit 70,561 529,979 1,520,481
(319,145) (764,920) (1,267,812)
Operating expenses
Operating (loss)/profit (248,584) (234,941) 252,669
Interest receivable 2 8 -
(Loss)/profit for the period from
operations before tax (248,582) (234,933) 252,669
- - (10,904)
Tax
(Loss)/Profit for the period (248,582) (234,933) 263,573
(Loss)/earnings per share (pence)
Basic (9.4)p (8.9)p 10.0p
Fully Diluted (8.1)p (7.7)p 8.3p
IMPACT HOLDINGS (UK) PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
As at As at As at
30/09/2015 30/09/2014 31/03/2015
£ £ £
Non-current assets
Goodwill 421,766 421,766 421,766
Property, plant and equipment 866,463 922,024 882,397
Deferred taxation 181,703 171,902 181,074
Current assets 1,469,932 1,493,722 1,485,237
Trade and other receivables
including amounts falling
due after more than one 4,740,741 5,363,700 4,451,612
year
Cash and cash equivalents 790,004 635,866 1,604,945
5,530,745 5,999,566 6,056,557
Total assets 7,000,677 7,493,288 7,541,794
Capital and reserves
Share capital 1,311,201 1,311,201 1,311,201
Shares held by Employee Benefit Trust (45,070) (45,070) (45,070)
Retained earnings 4,325,636 4,075,955 4,574,218
Equity attributable to 5,591,767 5,342,086 5,840,349
equity shareholders of the
parent
Trade and other payables due after
more
than one year 467,376 540,329 481,782
Trade and other payables due in less
than one year 941,534 1,610,873 1,219,663
7,000,677 7,493,288 7,541,794
IMPACT HOLDINGS (UK) PLC
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD
6 Months 6 Months Year
ended ended Ended
30/09/2015 30/09/2014 31/03/2015
£ £ £
Operating activities
Cash (used in)/generated from ( 700,537) 244,246 1,278,528
operations
Net cash generated by operating (700,537) 244,246 1,278,528
activities
Investing activities
Purchase of property, plant and equipment - - (783)
Interest received 2 8 25
Net cash in investing activities
2 8 (758)
Financing Activities
Net decrease in amounts owed to
lending institutions (114,406) (301,073) (365,510)
Net cash outflow from financing (114,406) (301,073) (365,510)
activities
Net (decrease)/increase in
cash and cash equivalents (814,941) (56,819) 912,260
1,604,945 692,685 692,685
Opening cash and cash equivalents
790,004 635,866 1,604,945
Closing cash and cash equivalents
IMPACT HOLDINGS (UK) PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to the equity holders of parent
company
Share Shares Share Profit and Total
Capital held by options loss
EBT account
£ £ £ £ £
Balance as at 31 March 1,311,201 (45,070) 39,349 4,271,296 5,576,776
2014
Profit for the - - - 263,573 263,573
year
Balance as at 31 March 1,311,201 (45,070) 39,349 4,534,869 5,840,349
2015
Net (loss) for the period - - - (248,582) (248,582)
Balance as at 30 September 2015 1,311,201 (45,070) 39,349 4,286,287 5,591,767
Notes to the Interim Financial Statements
1. Accounting policies
This half-year report for the period ended 30 September 2015 has been prepared
on the basis of the accounting policies set out in Impact Holdings (UK) plc's
annual report and financial statements 2015 and in accordance with the
International Financial Reporting Standards as adopted by the European Union
and IAS34, 'Interim financial reporting'.
The half-year report does not constitute statutory financial statements as
defined in section 434 of the Companies Act 2006.
It does not include all of the information and disclosures required for full
annual financial statements, and should be read in conjunction with the annual
report and financial statements for the year ended 31 March 2015.
The financial information contained in this half-year report in respect of the
year ended 31 March 2015 has been produced from the annual report and financial
statements for that year which have been filed with the Registrar of Companies.
The financial statements have been prepared on the historical cost basis,
except for the valuation of financial assets and liabilities. The principal
accounting policies adopted are set out below.
The financial statements have been prepared on a going concern basis.
New and revised accounting standards
At the date of issue of these financial statements, the following accounting
Standards and Interpretations, which have not been applied, were in issue but
not yet effective. The directors do not anticipate that adoption of these will
have a material impact on the financial statements.
IFRS 9 Financial
Instruments
IFRS14 Regulatory Deferral
Accounts
IFRS15 Revenue from
Contracts with Customers
The effect of changes on the group's financial statements as a result of
adopting these standards (where applicable) is not significant. The group has
elected not to adopt any other standards earlier than the proposed effective
dates.
Further detail in relation to the above International Accounting Standards is
available from the IASB's website, www.iasb.org.
Basis of consolidation
The consolidated financial statements of the group incorporate the financial
statements of the company and enterprises controlled by the company (its
subsidiaries) made up to the balance sheet date. Control is achieved where the
company has the power to govern the financial and operating policies of an
investee enterprise so as to obtain economic benefit from its activities.
Subsidiaries are fully consolidated from the effective date of acquisition or
up to the effective date of disposal, as appropriate.
The acquisition method of accounting is used to account for the acquisition of
subsidiaries by the group. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are initially measured at fair
value at the acquisition date irrespective of the extent of any minority
interest.
The excess of cost of acquisition over the fair values of the group's share of
identifiable net assets acquired is recognised as goodwill. Any deficiency of
the cost of acquisition below the fair value of identifiable net assets
acquired (i.e. discount on acquisition) is recognised directly in the income
statement.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
other members of the Group. All intra-group transactions, balances, and
unrealised gains on transactions between Group companies are eliminated on
consolidation. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of a subsidiary, associate or jointly controlled entity
at the date of acquisition. Goodwill on acquisition of subsidiaries is
separately disclosed.
Goodwill is recognised as an asset and reviewed for impairment semi-annually or
on such other occasions that events or changes in circumstances indicate that
it might be impaired. Any impairment is recognised immediately in the income
statement and is not subsequently reversed. Goodwill is allocated to cash
generating units for the purpose of impairment testing.
Goodwill arising on acquisitions before the date of transition to IFRS has been
retained at the previous UK GAAP amounts subject to being tested for
impairment.
Intangible assets
The cost of developing or acquiring computer software including own labour
costs incurred directly in connection with software development, is capitalised
as an intangible asset where the related expenditure is separately identifiable
and where there is reasonable expectation that future economic benefits will
arise from the development. Software costs are amortised using the straight
line method over 3 years. The amortisation charge is included within operating
expenses. Intellectual property and computer development is fully written off
in the period it is incurred.
Interest income and expense
Revenue shown in the profit and loss account represents interest, commission
and arrangement fees receivable on loans made to third parties. Interest income
and expense are recognised in the profit and loss account for all financial
assets and liabilities using the effective interest method, being the rate that
exactly discounts estimated future cash payments or receipts through the
expected life of the financial instrument to the net carrying amount of the
financial asset or financial liability. When calculating the effective interest
rate, the Group includes all establishment and arrangement fees, commissions
and administrative fees paid or received between parties to the contract that
are an integral part of the effective interest rate.
Interest on legal disbursement funding is added to the principal, is calculated
on a daily basis and is repaid to the group at the end of the term of the
agreement.
Financial assets and liabilities
Financial assets and liabilities used by the Group include loans made to third
parties and debt finance received by the Group. Financial assets are recognised
initially at fair value and measured subsequently at amortised cost using the
effective interest method, less provision for impairment. Financial liabilities
are recognised initially at fair value and measured subsequently at amortised
cost.
Bad and doubtful debts
Specific provision is made against all advances considered to be impaired. When
there is reasonable doubt over recovery, provision is made against the
outstanding debt including interest and further interest is suspended until the
directors are satisfied as to the recoverability of the total amount due.
Segmental reporting
No separate segmental reporting information is provided as in the directors'
opinion there are no material segments other than the provision of short term
niche funding solutions.
Leasing
Rentals payable under operating leases are charged to income on a straight line
basis over the term of the lease.
Retirement benefits costs
Payments to defined contribution retirement benefit plans are charged as an
expense as they fall due.
Taxation
The tax expense represents the sum of the current tax expense and deferred tax
expense.
The tax currently payable is based on taxable profit or loss for the year.
Taxable profit or loss differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated by using tax
rates that have been enacted or substantively enacted by the balance sheet
date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or
from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction which affects neither the tax profit
nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled based upon tax
rates that have been enacted or substantively enacted by the balance sheet
date. Deferred tax is charged or credited in the income statement, except when
it relates to items credited or charged directly to equity, in which case the
deferred tax is also dealt with in equity.
Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated depreciation.
Depreciation is charged so as to write off the cost or valuation of assets over
their useful economics lives, using the straight line method on the following
basis:-
Plant and machinery - 3 years
Fixtures, fittings & equipment - 3 years
The directors consider that the freehold properties are maintained in such a
state of repair that its residual value is at least equal to their original
cost. Accordingly, no depreciation is charged on the grounds of immateriality.
Annual impairment reviews are undertaken and provisions made at the end of each
reporting period where necessary.
Equity Instruments
Equity instruments, which are contracts that evidence a residual interest in
the assets of the group after deducting all of its liabilities, are recorded at
the proceeds received, net of direct issue costs.
Provisions
Provisions are recognised when the group has a present obligation as a result
of a past event which it is probable will result in an outflow of economic
benefits that can be reliably estimated.
Share-based payments
Equity-settled share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of equity-settled
share-based payments is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest. Fair
value is measured by use of a binomial model. The expected life used in the
model has been adjusted, based on management's best estimate, for the effect of
non-transferability, exercise restrictions, and behavioural considerations.
At each balance sheet date, the group revises its estimates of the number of
options that are expected to become exercisable. It recognises the impact of
the revision of original estimates, if any, in the income statement and a
corresponding adjustment to reserves over the remaining vesting period. Costs
are recognised in the income statement with a corresponding credit to a share
based payment reserve.
Financial Risk Management
Interest rate risk
The interest rate risks are limited to the revolving credit facilities which
the group has in place. The group has no exposure arising from trading
overseas.
Liquidity risk
The group has to monitor closely its access to bank and other funds and its
ongoing loans and overdrafts to ensure that there are sufficient funds to meet
its obligations.
The Board receives regular debt management forecasts which estimate the cash
inflows and outflows over the next eighteen months, so that management can
ensure that sufficient financing is in place as it is required.
Credit Risk
The group is exposed to the risk that any counterparty to which the group lends
money will be unable to repay the amounts when they fall due. These risks are
managed by ensuring that exposures to individual counterparties and particular
market sectors or loans exhibiting particular attributes are minimized wherever
possible. The Board and Risk Committee monitor such exposures on a regular
basis, with figures being regularly reviewed. In respect of property bridging
loans the group enforces repossession of property where necessary with a view
to holding the asset for resale in order to extinguish the debt. In addition,
impairment provisions are made when it becomes evident that the group may incur
losses at the balance sheet date.
2. Earnings per Ordinary A share
6 Months 6 Months Year
ended ended Ended
30/09/2015 30/09/2014 31/03/2015
£ £ £
(Loss)/profit for the purposes (248,582) (234,933) 263,573
of basic earnings per ordinary
share
Average number of shares basic and 2,662,402 2,662,402 2,662,402
diluted
(9.4)p (8.9)p 10.0p
EPS - basic (pence)
EPS - diluted (pence) (8.1)p (7.7)p 8.3p
3. Trade and other receivables
30/09/2015 30/09/2014 31/03/2015
£ £ £
Trade receivables
-Disbursement funding loans 4,026,598 4,584,612 4,065,173
- Property bridging - 131,371 -
loans 22,026 237,960 42,660
- Other trade debtors
Prepayments and accrued income 692,117 409,757 343,779
4,740,741 5,363,700 4,451,612
4. Trade and other payables amounts falling due within one year
30/09/2015 30/09/2014 31/03/2015
£ £ £
Trade and other payables falling due within
one year
Trade payables 45,911 163,646 18,025
Bank loans 580,044 685,933 680,043
Other taxation and social security 16,404 43,773 19,134
Accruals and deferred 299,175 717,521 502,461
income
941,534 1,610,873 1,219,663
Bank loans include a committed term loan secured by fixed and floating charges
over the assets of the Sutherland Professional Funding Limited supported by a
parent company guarantee to a maximum of £550,000.
5. Trade and other payables falling due after more than one year
30/09/2015 30/09/2014 31/03/2015
£ £ £
Mortgage 467,376 540,329 481,782
The mortgages for Impact Property Management Limited are secured on the group's
freehold properties and supported by a parent company guarantee.
6. The Board of Directors approved the interim report on 17th December 2015.
IMPACT (UK) : Interim Results
December 18, 2015 at 12:31 pm IST
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