Impact Holdings (UK) PLC Interim Results

 
TIDMIHUK 
 
Impact Holdings (UK) plc 
 
                           ("Impact" or "The Group") 
 
                                Interim Results 
 
Impact (AIM: IHUK), the specialist lender, announces its unaudited interim 
results for the six months ended 30 September 2013. 
 
Financial Highlights 
 
  * Cash and cash equivalents of GBP0.78 million (GBP1.09 million 30 September 2012) 
  * Net assets of GBP5.65million (GBP5.40 million 30 September 2012) 
  * Debt reduced by 66% year on year to GBP1.58 million (GBP4.73 million September 2012) 
  * Profit after tax of GBP1,904 (GBP3,726 30 September 2012) 
  * Earnings per share 0.1p (0.2p 30 September 2012) 
 
Operational Highlights 
 
  * Ongoing business re-aligned in line with expectations 
  * Continued reduction in borrowings from financial institutions 
  * Growth opportunities for new business lines identified 
 
A copy of the interim 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: [phone] 
 
Zeus Capital 
Nick Cowles/Andrew Jones                              Tel: [phone] 
 
30/12/13 
 
CHAIRMAN'S STATEMENT 
 
I am pleased to report our unaudited interim financial results for the six 
months ended 30th September 2013. Revenue of GBP957,652 and pre-tax profit of 
GBP1,904 were in line with expectations, as the management team continued its 
realignment of the business. 
 
We have previously advised that as a consequence of the ongoing credit crisis 
and new economic environment in which we operate it has been necessary to seek 
out additional revenue streams for the group. 
 
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. 
 
The establishment of Midas Marketing Management Limited in September 2012 which 
provides specialist marketing and business development services to both law 
firms and individual business owners is seen as a growth area operating within 
a highly compliant framework. This initiative will continue to be invested in 
as we develop our product offering, increase our revenue streams and diversify 
our product range. 
 
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. 
 
OUTLOOK 
 
The group remains focused on providing services to the legal and professional 
sectors. The Board of Directors is committed to the future growth opportunities 
earmarked and continues to develop this strategy which will provide the 
foundation for controlled growth, improved profitability over time and 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 
                                         30/09/2013   30/09/2012   31/03/2013 
 
                                                  GBP            GBP            GBP 
 
Revenue                                     957,652      425,104    1,309,927 
 
Cost of Sales                             (520,983)    (112,793)    (430,666) 
 
Gross profit                                436,669      312,311      879,261 
 
Operating expenses                        (434,781)    (308,585)    (629,273) 
 
Operating profit                              1,888        3,726      249,988 
 
Interest receivable                              16            -           83 
 
Profit for the period from 
operations before tax                         1,904        3,726      250,071 
 
Tax                                               -            -            - 
 
Profit for the period                         1,904        3,726      250,071 
 
Earnings per share (pence) 
 
Basic                                          0.1p         0.2p        10.1p 
Fully Diluted                                  0.1p         0.2p        10.1p 
 
 
 
IMPACT HOLDINGS (UK) PLC 
UNAUDITED CONSOLIDATED BALANCE SHEET 
 
                                              As at        As at        As at 
                                         30/09/2013   30/09/2012   31/03/2013 
 
                                                  GBP            GBP            GBP 
 
Non-current assets 
 
Goodwill                                    421,766      421,766      421,766 
 
Property, plant and equipment               934,769      886,690      921,890 
 
Deferred taxation                           171,892      171,892      171,892 
 
                                          1,528,427    1,480,348    1,515,548 
 
Current assets 
 
Trade and other receivables 
including amounts falling 
due after more than one year              6,412,761    7,898,230    6,284,896 
 
Cash and cash equivalents                   782,214    1,095,999      688,413 
 
                                          7,194,975    8,994,229    6,973,309 
 
Total assets                              8,723,402   10,474,577    8,488,857 
 
Capital and reserves 
 
Share capital                             6,411,201    6,411,201    6,411,201 
 
Share premium account                     5,125,291    5,125,291    5,125,291 
 
Shares held by Employee Benefit Trust      (45,070)     (45,070)     (45,070) 
 
Retained earnings                       (5,842,751)  (6,091,000)  (5,844,655) 
 
Equity attributable to equity             5,648,671    5,400,422    5,646,767 
shareholders of the parent 
 
Trade and other payables due after          526,930      548,958      540,261 
more than one year 
 
Trade and other payables due in less      2,547,801    4,525,197    2,301,829 
than one year 
 
                                          8,723,402   10,474,577    8,488,857 
 
 
 
IMPACT HOLDINGS (UK) PLC 
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD 
 
                                           6 Months     6 Months         Year 
                                              ended        ended        Ended 
                                         30/09/2013   30/09/2012   31/03/2013 
 
                                                  GBP            GBP            GBP 
 
Operating activities 
 
Cash generated from operations/(used        180,753      174,014    (302,839) 
in operations) 
 
Income taxes paid                                 -            -            - 
 
Net cash generated by operating             180,753      174,014    (302,839) 
activities 
 
Investing activities 
 
Purchase of property, plant and            (73,888)     (19,865)     (71,248) 
equipment 
 
Interest received                                16            -           83 
 
Net cash used in investing activities      (73,872)     (19,865)     (71,165) 
 
Financing Activities 
 
Net decrease in amounts owed to 
lending institutions                       (13,080)    (454,332)    (333,765) 
 
Issue of share capital                            -      320,003      320,003 
 
Net cash outflow from financing            (13,080)    (134,329)     (13,762) 
activities 
 
Net increase/(decrease) in 
cash and cash equivalents                    93,801       19,820    (387,766) 
 
Opening cash and cash equivalents           688,413    1,076,179    1,076,179 
 
Closing cash and cash equivalents           782,214    1,095,999      688,413 
 
 
 
IMPACT HOLDINGS (UK) PLC 
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
 
                           Attributable to the equity holders of parent company 
 
                                                  Shares  Profit and 
                               Share      Share  held by        loss 
                             capital    premium      EBT     account      Total 
                                   GBP          GBP         GBP          GBP          GBP 
 
Balance as at 31 March     6,211,201  5,005,288 (45,070) (6,094,726)  5,076,693 
2012 
 
Ordinary Shares Issued       200,000          -        -           -    200,000 
 
Share Premium on Issued            -    120,003        -           -    120,003 
Shares 
 
Net Profit for the Year            -          -        -     250,071    250,071 
 
Balance as at 31 March     6,411,201  5,125,291 (45,070) (5,844,655)  5,646,767 
2013 
 
Net profit for the period          -          -        -       1,904      1,904 
 
Balance as at 30           6,411,201  5,125,291 (45,070) (5,842,751)  5,648,671 
September 2013 
 
 
 
Notes to the Interim Financial Statements 
 
1. Accounting policies 
 
This half-year report for the period ended 30 September 2013 has been prepared 
on the basis of the accounting policies set out in Impact Holdings (UK) plc's 
annual report and financial statements 2013 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 2013. 
 
The financial information contained in this half-year report in respect of the 
year ended 31 March 2013 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 revaluation of certain financial instruments. 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 
 
The effect of changes on the group's financial statements as a result of new 
standards issued since the last accounting reference date 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 Impact Holdings (UK) plc (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. 
 
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. 
 
Amounts received in respect of interest on property bridging loans relating to 
future periods are held on the balance sheet as deferred income within trade 
and other payables. 
 
Revenue generated by Midas Marketing Management Limited represents marketing 
fees generated by the business activities. 
 
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 property is maintained in such a state 
of repair that its residual value is at least equal to its carrying value. 
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. 
 
Non-depreciation of freehold property is a departure from the Companies Act 
2006 and is considered necessary by the directors to ensure that the financial 
statements give a true and fair view. 
 
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 
                                             30/09/2013  30/09/2012  31/03/2013 
 
Profit for the purposes of basic earnings 
per ordinary share (GBP)                            1,904       3,726     250,071 
 
Average number of shares -                    2,662,402   2,330,094   2,471,169 
basic and diluted 
 
EPS - basic (pence)                                0.1p        0.2p       10.1p 
 
EPS - diluted (pence)                              0.1p        0.2p       10.1p 
 
 
3. Trade and other receivables 
 
                                             30/09/2013  30/09/2012  31/03/2012 
                                                      GBP           GBP           GBP 
 
Trade receivables 
 
-Disbursement funding loans                   4,516,789   5,998,563   4,849,540 
 
- Property bridging loans                       818,970     917,547     818,286 
 
- Other trade debtors                            41,485     586,478     105,969 
 
Prepayments and accrued income                1,035,517     395,642     511,101 
 
                                              6,412,761   7,898,230   6,284,896 
 
 
4. Trade and other payables amounts falling due within one year 
 
                                             30/09/2013  30/09/2012  31/03/2013 
                                                      GBP           GBP           GBP 
 
Trade and other payables falling due within 
one year 
 
Trade payables                                   42,906      51,893      65,158 
 
Bank loans                                    1,061,308   4,181,793   1,061,057 
 
Other taxation and social security               82,128      18,258      17,061 
 
Accruals and deferred income                  1,361,459     273,253   1,158,553 
 
                                              2,547,801   4,525,197   2,301,829 
 
 
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. 
 
Property bridging loans are uncommitted revolving credit facilities secured by 
secondary charges over all properties where bank funding has been provided. 
 
 
5. Trade and other payables falling due after more than one year 
 
Mortgage                                        526,930     548,958     540,261 
 
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 30 December 2013. 
 
 
 
END