Tuesday, 8 December 2015

IMPACT HOLDINGS #IHUK

IMPACT HOLDINGS PLC

#IHUK

 

Buys - 3250 @ 87.4999p and 2536 @ 91p 

What does it do?

The core strategy of Impact Holdings (UK) plc is that through its individual subsidiaries the Group provides short term funding solutions, loans administration, accounting, IT and infrastructure support services in two specific categories:

1. The legal market;
2. Property based bridging and development market.

Impact will also look at other bespoke funding opportunities where serviceability precludes

mainstream lenders from entering the space 

Group Organisation


Impact Costs Limited


Impact Costs aims to deliver a one stop solution for all Costs needs. It offers costing in all categories of work, whether it be claimant or defendant, public or private paying. Its aim is to be market leaders and we feel that with our combination of well trained and highly efficient personnel supported by effective IT systems, we can offer an unparalleled quality of service to all of our clients.

Impact Funding Solutions Ltd


Impact Funding Solutions is a specialist provider of short term funding solutions to the Solicitor market on an entirely business to business basis secured on a case specific loan secured on individual Consumer Credit Agreements (CCAs). IFSL is registered under a Full Consumer Credit Licence (No 597638) and Data Protection Licence (No Z9753173). Our aim is to be the loan provider of choice for the solicitor market based on core relationships and professional knowledge of their requirements.

Impact differentiates itself to its target market through Speed, Service, Innovation, Transparency and Flexibility. This delivery affords the pricing model. All Loans will attach to a case specific event, with a clear range of exit possibilities.

The blend of relationships and skills within Impact is unique and will engender a high level of interest in the service offered and quality introductions.

Impact Bridging Solutions Ltd


Impact Bridging Solutions is a provider of short term bridging loans secured against property.

You will not find Impact in the yellow pages – it works purely via business referral through a selected network of professional introducers such as Finance brokers, banks, solicitors, accountants, insolvency practitioners, property agents and other finance providers.

Impact is dedicated to the timely provision of property backed bridging finance. Whatever the challenge Impact has the necessary in-house skills and commerciality to ensure a highly professional approach and rapid delivery of funds.

Sutherland Professional Funding Ltd


Sutherlands was acquired by Impact on 30th December 2009 having commenced trading in November 1997 with a strategy to provide loans to the accountancy, insurance and legal professions.
Based at Impact’s Head Office in Manchester, Sutherland operates throughout the UK and establishes and maintains strong relationships with the practices to, and through, which it provides finance.
Sutherland offers finance both to law firms and individual clients of legal practices in relation to:-
  • Personal injury fees and outlays funding; and
  • General fees and outlays funding.

Shareholders 

Mercantile Investment Company Limited - 28.29%
John G Russell (Transport) Limited - 23.2%
JG Russell - 11.55%
G.J. Litster - 8.01%
R Kilsby - 5.92%
P.J.Davies - 3.79%
Impact Benefit Trustee Ltd - 3.15%

So FF or non-notifiable percentage = 16.09%

Financials


£ Millions£ Millions£ Millions£ Millions£ Millions
Income Statement31 Mar '1531 Mar '1431 Mar '1331 Mar '1231 Mar '11
Revenue1.991.741.041.191.55
Operating Profit / Loss0.25(2.98)0.050.310.30
Net Interestn/a3.08n/an/an/a
Pre tax Profit0.250.100.050.310.30
Post tax Profit0.260.100.040.310.30
Profit for the Period0.260.100.040.310.30
Equity Holders of Parent Company0.260.100.040.310.30
Minority Interestsn/an/an/an/an/a

Current Mcap - £2.5mill
Cash - £1.6mill
EV - £0.9mill
Net Assets = £5.84mill

Now the raw figure of £250k pre tax profit for last year doesnt tell the entire story. The second half actually contributed around £490k as the first half had considerable legal expenses to try and regain loans. This was money well spent as they have been awared £1mill from AIG http://www.lse.co.uk/share-regulatory-news.asp?shareprice=IHUK&ArticleCode=929opbfx&ArticleHeadline=Update_on_Litigation 


Valuations (stockopedia)

Discounted cash flow implied valuation = 115.1p
Relative to sector = 300.01p
Net current asset value = 166p
Net net working capital = 123.64p
Tangible book value = 206.63p

Price to Book Value 0.40 (industy median 1.16)
Price to Tang. Book 0.43 (Industry median 1.29)
Price to Free Cashflow 1.80 (industry median 1.85)
Price to Sales 1.15 (industry median 2.32)
EV to EBITDA 2.38 (industry median 56.6) 





Piotroski F-Score 9/9

Buying rationale

With an mcap over half cash this is an unusual AIM nanocap business. It has Net assets over double mcap as well. Some of the net assets are in the form of debts owed that they are successfully collecting via the courts, having been awared £1mill from AIG earlier in the year. They think they will be free of these legal proceedings within a year. They have an increasing revenue and profit and they underlying profit growth, half on half is very impressive. As it is the business is very undervalued, if/when the interims in dec show any further increases in rev/profit then it will be even more undervalued. Having discussed this quite a bit with smallcap guru SmudgeDan, we decided to buy this morning



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