Trading Update
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) plc
Paul Davies
0161 437 9499
Daniel Stewart and Co
Alastair Cade
0207 776 6550
END
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