28 January 2010
Nexus Management plc
("Nexus", the "Group" or the "Company")
Final results for the year ended 30 September 2009
The Board of Nexus Management Plc, the AIM quoted provider of specialist IT
Managed Services, is pleased to announce its final results for the year ended
30 September 2009.
Highlights:
* Turnover increased 43 per cent to £5.48 million (2008: £3.82 million)
* Nerd Force & Resilience contributed approximately 80 per cent of increase
in turnover
* Revenue from ongoing operations grew 19 per cent to £4.50 million (2008: £
3.80 million)
* £3.7 million impairment of value of shareholding and loans in PD Financial
adversely effects year end results
* Operating profit from existing operations increased 71 per cent to £0.43
million (2008: £0.25 million)*
*Excluding Resilience and before exceptional items
Roger Richardson, Chief Executive, commented:
"In spite of the turbulent economic environment Nexus' core business performed
well. Turnover for the year ended 30 September 2009 increased to £5.5 million
and revenue from ongoing operations grew by 19per cent, reflecting a healthy
appetite for the Company's managed services.
"We have taken a prudent and pragmatic view of every issue facing the Company
and some tough decisions were made but I am confident the Company is now in a
position to look towards 2010 with cautious optimism. The write-downs
associated with PD Financial have had a negative impact on last year's figures,
but we start the new financial year with a clean slate. Conditions remain
challenging but I am confident we will see growth in 2010 and this will lead to
a significantly improved financial performance."
This announcement has been extracted from the accounts. The full Report and
accounts can be found on the Nexus website at www.nexusmgmt.com
Board Changes
The Company also announces that Richard Jaques, non-executive director, has
notified the Board of his intention not to stand for re-election at the
forthcoming AGM in order that he can concentrate on his other business
interests.
Pete Paterson, Chairman, commented:
"I would like to thank Richard for his support and advice during his time as a
director of the Company and I wish him well in the pursuit of his other
business interests"
FURTHER ENQUIRIES
Nexus Management Plc
Roger Richardson, Chief Executive Tel: 01862 812 107
Merchant John East Securities Limited (Nominated Adviser)
Simon Clements/David Worlidge Tel: 020 7628 2200
Daniel Stewart & Company plc (Broker)
Christopher Theis Tel: 020 7776 6550
Bishopsgate Communications Ltd
Robyn Samuelson/Siobhra Murphy Tel: 020 7562 3350
nexus@bishopsgatecommunications.com
CHAIRMAN'S STATEMENT
I am pleased to be able to report that, despite a desperate economic collapse
in world markets and confidence, your Group has emerged from these straitened
times and following a retrenchment is, I believe, in a position from which it
can move forward with confidence. Some very hard decisions have had to be taken
to make this possible and the effect of some of these is reflected in the
results for the year under review. The Board has taken a prudent and pragmatic
view of any and every issue faced by the Group in the last year and we believe
that this has established a basis from which the Group can now move forward.
Despite the difficult economic background, Nexus's core business in the USA has
performed well in the year to 30 September 2009. Its business model of having a
large number of smaller clients paying monthly for their services has fared
better in these tough economic times compared with certain of its competitors
whose revenues are derived from a small number of large clients.
When it became clear the turmoil in the financial markets would impact our
businesses management took steps at an early stage to identify cost cutting
opportunities. This resulted in significant savings being made in the level of
overheads, particularly those related to being a public company.
The Nerd Force Franchise Company performance for the year under review was very
disappointing. This was largely due to the initial focus being on building the
number of franchisees as fast as possible rather than concentrating on their
quality. This has resulted in bad debt write downs relating to the non payment
of franchise fees and slower than expected growth of "managed services" sales.
The focus has now been shifted to identify higher quality franchisee candidates
and the Board's expectation is that this will yield more stable and fruitful
growth. In addition, Nerd Force Franchise Company has now launched in the UK
and business has started to trickle in. It is expected that this will grow at a
faster rate as we progress through the current financial year.
We acquired the Resilience Technology Corporation business during the year and
despite our high expectations for this business its trading performance has
been disappointing. However, it was in this business that some of our major
cost savings were made and the business is now under the direct control of our
own senior management. These steps were taken at the earliest opportunity to
mitigate the financial impact on the group. Since the year end, cash collection
from customers has improved significantly which in turn has enabled Resilience
Technology Corporation to pay down a significant amount of the debt that was
restricting its trading activities. However, sales in the current year have
been slower than we had hoped for but we remain confident that our management
team will be able to rectify this, albeit that we do not expect these higher
level of sales to be delivered until the second half of the current financial
year. Nonetheless, other factors in the market give us hope that things will
improve for Resilience Technology Corporation in particular, Checkpoint based
firewalls and our Websense appliances.
The events surrounding PD Financial over the last few years have been very
disappointing, especially after the positive impact this business had on the
Group's financial performance following initial investment. Consequently, in
the accounts for the year ended 30 September 2009 we have deemed it prudent to
write down this investment in full.
In summary, this has been a challenging year. Despite management's efforts,
larger forces than we could control impacted us all. Confidence can be a fickle
bedfellow but for my part, I am hopeful of a better result in the current
financial year, albeit conditions remain very challenging.
Pete Paterson
Chairman
CHIEF EXECUTIVE OFFICER'S STATEMENT
Financials
Turnover for the year ended 30 September 2009 increased to £5.5 million from £
3.8 million with Nerd Force Franchise Company and Resilience Technology
Corporation responsible for approximately 80 per cent of this increase. Revenue
from existing core operations grew 19 per cent year on year to £4.49m (2008: £
3.79m), demonstrating a healthy appetite for the Company's managed services
despite difficult economic trading conditions.
Operating profit from existing operations (excluding Resilience Technology
Corporation) and before exceptional items increased from £0.25 million to £0.43
million, which was a very creditable performance in a difficult marketplace
which highlights the underlying strength of the core Nexus businesses.
The loss from acquired operations was £1.03 million due to the poor trading
performance of Resilience Technology Corporation. As we have previously
announced, significant management changes have been made and we have now
stabilised this business unit and believe it can contribute to the Group's
trading performance in the current financial year.
Nerd Force Franchise Company finished the year to 30 September 2009 with a
small loss mainly due to write downs relating to defaults on payments for new
sales franchises. The franchises that have been the subject of the defaults
have reverted to the Company and are available for future sales. However the
loss of momentum when franchisees default affects a small company like Nerd
Force Franchise Company disproportionately compared to a much larger franchise
operation.
Following the loss of PD Financial's banking arrangement and being largely
unable to trade the Board decided to write off £3.7 million relating to the
Company's equity investment and loans in PD in the results for the year ended
30 September 2009.
The loss before taxation after exceptional items, comprising impairment of
available for sale assets, provision for bad debts and impairment of goodwill,
amounting to £3.71 million was £4.56 million compared to a profit before
taxation of £0.2 million in the previous financial year. Net Assets as at 30
September 2009 were £0.52 million including cash and cash equivalents of £0.16
million.
Review of activities
The Group continues to offer managed services, from helpdesk to hosted email,
to SME clients. The Group continues to offer managed services to SME clients
ranging from help desk to hosted email. Following the addition of Nerd Force
Franchise Company we can now reach smaller companies and private individuals
from a minimal cost base.
The acquisition of Resilience Technology Corporation gives the Company a
product set aimed at the largest companies in the world. These products can
also be re-built to provide a lower cost solution to smaller companies, which
form part of the core operations. An example of this is our 9000 series device
that is built for the Websense application delivering a product aimed at the
150 to 500 user company.
The management team will, where possible, continue to seek increased levels of
cross selling between the various businesses within the Group. In particular,
the Company will be seeking to identify high calibre franchisees for its Nerd
Force business that are capable of generating significant levels of managed
service revenue for the Group from their client base.
Outlook
After such a difficult financial year resulting in a number of exceptional
write downs the Board is confident that it has stabilised the business and is
now seeking to turnaround the loss-making divisions as soon as possible. Cost
savings have been made in all the operating businesses and the Board is hopeful
that it can now generate increased sales and build up its recurring revenue
base, particularly in Resilience Technology Corporation, in order to return the
Group to profitability in the current financial year.
In the quarter ended 31 December 2009, the Group saw some clients reducing
their spend and delays in orders consistent with the economic climate.
Resilience Technology Corporation performed much better than in previous
quarters, recording a modest loss, but was unable to ship some significant
orders. PD Financial is still in discussions with financial partners, but our
stance remains very cautious regarding its future.
In summary, 2009 was a very challenging financial year but the Board believes
it has now taken the difficult steps to stabilise the business and remains
cautiously optimistic about the 2010 financial year.
Roger Richardson
Chief Executive Officer
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2009
Year ended Year ended
30 September 2009 30 September 2008
£ £ £ £
Continuing Operations Notes
Revenue
Existing operations 4,498,786 3,790,907
Acquired operations 977,520 26,942
Discontinued operations - 7,208,000
Less share of associates - (7,208,000)
Continuing operations 5,476,306 3,817,849
Cost of sales (2,539,662) (1,858,796)
Gross profit 2,936,644 1,959,053
Operating expenses (3,952,002) (1,699,207)
Amortisation of intangible (63,729) -
assets
Foreign exchange adjustment 556,972 -
Share based payment expense (77,640) (10,351)
Administrative expenses (3,536,399) (1,709,558)
Operating profit/(loss)
Existing operations 432,244 252,721
Acquired operations (1,031,999) (3,226)
Continuing operations (599,755) 249,495
Exceptional items
Impairment of available for (2,285,478) -
sale assets
Provision for bad debts (1,419,837) -
Impairment of goodwill (2,925) (53,973)
(Loss)/profit after (4,307,995) 195,522
exceptional items
Finance income 3 34,429 18,865
Finance costs 3 (283,415) (16,266)
(Loss)/profit before tax (4,556,981) 198,121
Tax 4 - -
Retained (loss)/profit for (4,556,981) 198,121
the year from continuing
operations
Discontinued operations
Profit for the period from - 331,194
share of associate
Profit on disposal of - 568,414
associate
899,608
Attributable to equity (4,556,981) 1,097,729
holders of the parent
(Loss)/earnings per share
Basic 5 (0.504)p 0.129p
Diluted 5 (0.504)p 0.127p
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO THE EQUITY
SHAREHOLDERS OF THE PARENT FOR THE YEAR ENDED 30 SEPTEMBER 2009
Group Share Share Retained Foreign Available Share Total
capital premium earnings exchange for sale options
account reserve investment reserve
reserve
£ £ £ £ £ £ £
As at 1 2,126,804 3,956,145 (4,078,785) 3,098 - 802,155 2,809,417
October 2007
Profit for the - - 1,097,729 - - - 1,097,729
year
Movement in - - - (62,465) 416,709 - 354,244
the year
Shares issued 40,971 126,092 - - - - 167,063
Share based - - - - - 10,351 10,351
payment charge
As at 30 2,167,775 4,082,237 (2,981,056) (59,367) 416,709 812,506 4,438,804
September 2008
As at 1 2,167,775 4,082,237 (2,981,056) (59,367) 416,709 812,506 4,438,804
October 2008
Loss for the - - (4,556,981) - - - (4,556,981)
year
Movement in - - - (27,856) (416,709) - (444,565)
the year
Shares issued 282,488 774,234 - - - - 1,056,722
Share issue - (54,000) - - - - (54,000)
costs
Share based - - - - - 77,640 77,640
payment charge
As at 30 2,450,263 4,802,471 (7,538,037) (87,223) - 890,146 517,620
September 2009
CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2009
30 September 30 September
2009 2008
£ £
ASSETS Notes
Non-current assets
Property, plant and equipment 6 387,879 316,175
Intangible assets 8 1,027,028 21,549
Goodwill 7 1,081,589 463,456
Available-for-sale investments - 1,363,501
2,496,496 2,164,681
Current assets
Inventories 9 491,087 536
Trade and other receivables 10 511,989 2,683,444
Cash and cash equivalents 11 163,994 374,916
1,167,070 3,058,896
Total assets 3,663,566 5,223,577
LIABILITIES
Current liabilities
Trade and other payables 12 (1,851,955) (512,170)
Loans and other borrowings (318,166) (2,888)
Obligations under finance leases (79,432) (48,589)
(2,249,553) (563,647)
Non-current liabilities
Trade and other payables 12 (60,904) -
Loans and other borrowings (581,551) -
Obligations under finance leases (80,547) (42,537)
Deferred tax - (178,589)
(723,002) (221,126)
Provisions for liabilities and charges 13 (173,391) -
Total liabilities (3,145,946) (784,773)
Total assets less liabilities 517,620 4,438,804
EQUITY
Shareholders' equity
Called up share capital 2,450,263 2,167,775
Share premium 4,802,471 4,082,237
Other reserves 802,923 1,169,848
Retained earnings (7,538,037) (2,981,056)
Total equity attributable to the equity 517,620 4,438,804
holders of the parent
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2009
30 September 30 September
2009 2008
£ £
CONTINUING OPERATIONS Notes
Cash flows from operating activities
(Loss)/profit before tax (4,556,981) 198,121
Adjustments for:
Interest paid 167,845 16,266
Interest received (34,429) (18,865)
Impairment of goodwill 2,925 53,973
Amortisation of customer list 63,729 -
Impairment of available for sale assets 2,285,453 -
Provision for bad debts 1,419,837 -
Depreciation 135,952 86,165
Currency exchange adjustment (737,579) (48,018)
Operating cash flows before movements in (1,253,248) 287,642
working capital
Share option costs 77,640 10,351
(Increase)/Decrease in inventories (490,525) 201
(Increase) in trade and other receivables (74,879) (186,719)
Increase in provisions for liabilities and 173,391 -
charges
Increase/(Decrease)in trade and other 1,555,957 (218,995)
payables
Cash (used in) operations (11,664) (107,520)
Interest paid (167,845) (16,266)
Net cash (used in) operating activities (179,509) (123,786)
Investing activities
Interest received 34,429 18,865
Acquisition of intangible (1,064,638) (21,549)
Acquisition of goodwill (593,000) (103,984)
Purchase of shares in associate - (76,046)
Purchases of property, plant and equipment (67,692) (109,647)
Net cash (used in) investing activities (1,690,901) (292,361)
Financing activities
Proceeds from issue of share capital 229,052 -
Premium on issue 646,152 -
Share issue costs (54,000) -
Increase in/(Repayment of) borrowings 909,288 (3,838)
(Repayment of) obligations under finance (71,004) (1,131)
lease
Net cash generated from/(used in) 1,659,488 (4,969)
financing activities
Net cash (used in) continuing operations (210,922) (421,116)
DISCONTINUED OPERATIONS
Net cash from investing activities - 311,543
Net cash from discontinuing operations - 311,543
Net decrease in cash and cash equivalents (210,922) (109,573)
Cash and cash equivalents at beginning of 374,916 484,489
year
Cash and cash equivalents at end of year 11 163,994 374,916
NOTES TO THE PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2009
1. GOING CONCERN
As described in the Income Statement shown above, the Group recorded a loss of
£4,556,981 including an operating loss of £599,755. The directors have taken
steps aimed at returning the Group to profitability. However, the losses
recorded in the year ended 30 September 2009 have substantially reduced the
liquid resources of the Group.
Recognising the liquidity challenges facing the business the following actions
have taken place:
* The directors have carried out a strategic review of the Group's businesses
and reduced the overhead base where appropriate to assist the Group with
returning to profitability.
* Agreements have been reached with certain creditors to repay the
liabilities owed to them over agreed extended payment plans.
* On 20 January 2010 certain directors formally agreed to defer the payment
period of loan and interest payments due to them totalling £68,406 to 12
December 2010.
The directors of the Group have prepared detailed projections and cash flow
forecasts through to 30 September 2011. In considering these cash flow
forecasts, the directors have carefully considered the assumptions and
sensitivities and have concluded that the Group can remain within the level of
available finance. However, in arriving at this view, the directors are
cognisant of the fact that given the nature of the Group's business and in the
current economic climate there are inherent risks surrounding the achievability
of the Group's forecast sales and margins and the timing of cash flows,
including, inter alia, the continuation and extension of credit terms in line
with those assumed within the cash flow forecasts.
The projections prepared identify the Company's newest subsidiary undertakings,
Resilience Technology Corporation and Nerd Force Franchise Company will require
continuing financial support from its fellow Group entities for the foreseeable
future. However, the projections show that both Resilience Technology
Corporation and Nerd Force Franchise Company will return to operational
profitability (excluding plc management charges) during the year ended 30
September 2010 and be able to repay their debt due to the holding company at 30
September 2009 of £995,417 and £408,192 respectively, in the longer term. The
projections also support the carrying value of the intangible assets held on
the Group balance sheet of £1,853,389.
The directors of the Group have concluded that the combination of these
circumstances represent a material uncertainty. However, having considered
these uncertainties, the Directors have a reasonable expectation that the Group
has adequate resources to continue in operational existence in the foreseeable
future and as such has prepared the accounts on the going concern basis.
2. BASIS OF PREPARATION
These financial statements have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and
Interpretations (collectively IFRS) issued by the International Accounting
Standards Board (IASB) as adopted by European Union ("adopted IFRSs"), and are
in accordance with IFRS as issued by the IASB.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2008 and 2009, but is
derived from those accounts. Statutory accounts for 2008 have been delivered to
the Registrar of Companies and those for 2009 will be delivered following the
Company's Annual General Meeting. The Auditors have reported on those accounts;
their reports were unqualified and did not contain statements under the
Companies Act 1985, sections 237(2) or (3).
3. NET FINANCE COSTS
2009 2008
£ £
Finance Expense
Interest on finance lease 32,463 4,476
Interest on factoring 23,658 -
Interest on other borrowings 111,724 11,790
Other interest 115,570 -
283,415 16,266
Finance Income
Interest on held for available-for-sale 34,033 17,342
investments
Interest on cash and cash equivalents 396 1,523
34,429 18,865
4, TAXATION
2009 2008
i) Current tax charge £ £
The tax charge comprises:
UK taxation
Corporation tax at 23.30% (2008: 28%) - -
Non-UK taxation
Current - -
- -
Deferred taxation
Origination and reversal of temporary - -
differences
- -
ii) Tax reconciliation
The taxation expense/(credit) on the profit for the year differs from the
amount computed by applying the corporation tax rate to the profit before tax
for the following reasons:
2009 2008
£ £
(Loss)/Profit on ordinary activities before tax (4,556,981) 1,097,729
Theoretical tax charge at 23.30% (2008: 28%) (1,061,726) 307,364
Effects of:
Expenses (including goodwill) not deductible for 923,447 (29,849)
tax purposes
Capital allowances in excess of depreciation (12,371) 6,079
Income not taxable (95,237) -
Other tax adjustments - (81,903)
Effect of associate's results - (91,831)
Adjustments in respect of prior periods - (159,156)
Utilisation of losses b/f (41,410) -
Unrelieved losses c/f 306,563 49,296
Under provision of tax (19,266) -
- -
Total tax charge for the year - -
iii) Deferred tax recognised directly in equity
The following taxation has been recognised directly in equity within the
statement of changes in equity attributable to equity shareholders of the
parent:
2009 2008
£ £
Available for sale investments - 178,589
Factors that may affect future tax charges
At 30 September 2009 the Group has tax losses of approximately £1,021,877
(2008: £474,059) to set against future profits of the same trade.
A deferred tax asset of £286,126 (2008: £132,737) arising from the tax losses
in place has not been recognised. Although the directors ultimately expect
sufficient taxable profits to arise, there is currently insufficient evidence
to support the recognition of a deferred tax asset in these financial
statements.
5. (LOSS)/EARNINGS PER SHARE
Basic
Basic (loss)/earnings per share is calculated by dividing the (loss)/profit
attributable to equity holders of the Company by the weighted average number of
ordinary shares in issue during the year.
Diluted
The weighted average number of the Group's ordinary shares used in the
calculation of diluted earnings per share has been adjusted for the effect of
potentially dilutive share options granted under the Group's share option
schemes. (Potentially dilutive share options are options with an exercise price
less than the middle market price at 30 September 2009)
2009 2008
(Loss) Weighted Loss Profit Weighted Earnings
attributable average attributable average
to equity Number of per share to equity Number of per share
holders of shares holders of shares
the parent the parent
£ £ £ £
Basic EPS (4,556,981) 904,469,792 (0.00504) 1,097,729 851,468,137 0.00129
calculation
Effect of 251,945,859 16,056,741
dilutive options
Diluted EPS (4,556,981) 1,156,415,651 (0.00504) 1,097,729 867,524,878 0.00127
calculation
In the current year the Group has made a loss and the potential share options
are therefore anti-dilutive.
6. PROPERTY, PLANT AND EQUIPMENT
Group Motor Short Fixtures and Office and Total
leasehold fittings computer
vehicles improvements equipment
£ £ £ £ £
Cost
At 1 October 2007 - 226,023 27,876 500,309 754,208
Additions - 3,540 22,239 134,618 160,397
Currency exchange - 28,062 - 59,710 87,772
adjustment
At 1 October 2008 - 257,625 50,115 694,637 1,002,377
Additions - 93,996 13,951 78,303 186,250
Disposals - - - (25,033) (25,033)
Transfers 12,432 - (12,432) - -
Currency exchange 1,699 35,238 (831) 75,568 111,674
adjustment
At 30 September 14,131 386,859 50,803 823,475 1,275,268
2009
Accumulated
depreciation
At 1 October 2007 - 81,320 26,754 422,939 531,013
Provided in the - 14,827 750 70,588 86,165
year
Currency exchange - 22,325 - 46,699 69,024
adjustment
At 1 October 2008 - 118,472 27,504 540,226 686,202
Provided in the 4,834 21,466 2,797 106,855 135,952
year
Disposals - - - (25,033) (25,033)
Currency exchange (124) 3,291 6,888 80,213 90,268
adjustment
At 30 September 4,710 143,229 37,189 702,261 887,389
2009
Net Book Value
At 30 September 9,421 243,630 13,614 121,214 387,879
2009
At 30 September - 139,153 22,611 154,411 316,175
2008
At 30 September - 144,703 1,122 77,370 223,195
2007
Included in the total net book value of £387,879 is £152,646 (2008: £78,337) in
respect of assets held under hire purchase agreements. The categories of these
assets are short leasehold improvements £61,995, computer and office equipment
£82,408 and motor vehicles £8,243.
The depreciation charged to the Income Statement in the year in respect of such
assets is £65,375 (short leasehold improvements £697, computer and office
equipment £59,968 and motor vehicles £4,710). (2008: £41,639).
The Company had no property, plant and equipment.
7. GOODWILL
Goodwill on Purchased Total
consolidation
goodwill
£ £ £
Cost
At 1 October 2007 641,137 5,000 646,137
Additions - 205,303 205,303
At 1 October 2008 641,137 210,303 851,440
Currency exchange adjustment - 28,059 28,059
Additions - 592,999 592,999
At 30 September 2009 641,137 831,361 1,472,498
Impairment
At 1 October 2007 329,011 5,000 334,011
Impairment charge 53,973 - 53,973
At 1 October 2008 382,984 5,000 387,984
Currency exchange adjustment - - -
Impairment charge 2,925 - 2,925
At 30 September 2009 385,909 5,000 390,909
Net book value
At 30 September 2009 255,228 826,361 1,081,589
At 30 September 2008 258,153 205,303 463,456
At 30 September 2007 312,126 - 312,126
2009 2008
FixIT Worldwide Limited 255,228 258,153
Nerd Force Franchise Company 265,855 205,303
Resilience Technology Corporation 560,506 -
1,081,589 463,456
The recoverable amount has been determined on the basis of value in use to the
business. Goodwill is valued using a 5 year discounted cash flow model, based
on Directors' forecasts, using an estimated growth rate of 2% and a cost of
capital rate of 7%. Past experience has shown growth to be in excess of 2%, and
the Directors believe the cost of capital rate to be conservative.
Business combinations
On 14 March 2009 the Group acquired trade and assets to form Resilience
Technology Corporation for a consideration of £1,130,504, satisfied by cash and
shares.
Details of the net assets acquired and goodwill are as follows:
£
Purchase consideration:
Cash paid 577,108
Direct costs relating to the acquisition 7,110
Deferred cash/shares 553,396
Total purchase consideration 1,137,614
Fair value of liabilities acquired 487,530
Fair value of intangible net assets acquired (1,064,638)
Goodwill 560,506
Fair value Acquiree's
carrying
amount
£ £
Customer list 1,064,638 -
Property, plant and equipment 3,211 3,211
Inventory 521,716 742,573
Cash 15,701 15,701
Trade and other receivables 237,944 237,944
Trade and other payables (480,879) (480,879)
Deferred income (785,223) (785,223)
Net assets acquired 577,108 (266,673)
Purchase consideration settled in cash 577,108
Direct costs 7,110
Total cash consideration 584,218
Cash and cash equivalents of subsidiary acquired (15,701)
Cash outflow on acquisition 568,517
The deferred cash/shares value is £553,396. This will be settled in either cash
or shares at the option of the seller. The number of shares will be determined
by the average bid share price for the 20 days previous to the seller
converting its loan.
Since the date of acquisition, the revenue and loss included for Resilience
Technology Corporation in the results of the group were:
Revenue £977,520
Loss £1,251,975
8. INTANGIBLE ASSETS
Group Customer Brand and Total
trade names
List
£ £ £
Cost
At 1 October 2007 - - -
Additions - 21,549 21,549
At 1 October 2008 - 21,549 21,549
Currency exchange adjustment - 2,945 2,945
Additions 1,064,638 - 1,064,638
At 30 September 2009 1,064,638 24,494 1,089,132
Amortisation
At 1 October 2007 - - -
Provided in the year - - -
At 1 October 2008 - - -
Provided in the year 62,104 - 62,104
At 30 September 2009 62,104 - 62,104
Net book value
At 30 September 2009 1,002,534 24,494 1,027,028
At 30 September 2008 - 21,549 21,549
At 30 September 2007 - - -
2009 2008
Nerd Force Franchise Company 24,494 21,549
Resilience Technology Corporation 1,002,534 -
1,027,028 21,549
9. INVENTORIES
2009 2008
£ £
Raw materials and components 491,087 536
In the year ended 30 September 2009, raw materials recognised as cost of sales
amounted to £189,977 (2008 - £Nil). There has been no write down of inventories
to net realisable value in 2009 (2008 - £Nil).
The company had no inventories at 30 September 2009.
10. TRADE AND OTHER RECEIVABLES
2009 2008
£ £
Trade receivables 414,966 357,442
Amounts owed by group undertakings - -
VAT recoverable - -
Other receivables 40,755 2,207,316
Prepayments and accrued income 56,268 118,686
511,989 2,683,444
Within Group trade receivables, a balance of £80,664 (2008: nil) is subject to
a charge in respect of an invoice financing facility that the group has with
its bankers. At the balance sheet date £64,531 (2008: nil) included in loans
and other borrowings was due to the providers of this facility in respect of
debtors that they have not yet recovered.
Included in the Company total above is £1,820,818 (2008:nil) relating to
debtors due after more than one year.
There is no material variance between carrying and fair values.
11. CASH AND CASH EQUIVALENTS
2009 2008
£ £
Cash at bank and on hand 163,994 374,916
163,994 374,916
Cash, cash equivalents and bank overdrafts include the following for the
purposes of the cash flow statement:
2009 2008
£ £
Cash and cash equivalents 163,994 374,916
163,994 374,916
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term
highly liquid investments with a maturity of three months or less.
Reconciliation of net cash flow to movements in net funds and analysis of net
funds:
At 1 October Cash flow Exchange At 30
2008 movement September 2009
£ £ £ £
Cash in hand and at 374,916 (210,922) - 163,994
bank
374,916 (210,922) - 163,994
12. TRADE AND OTHER PAYABLES
2009 2008
£ £
Trade payables 683,216 175,431
Amounts owed by group undertakings - -
Other payables 213,751 182,319
Accruals and deferred income 1,015,892 154,420
1,912,859 512,170
There is no material variance between carrying and fair values.
Included in the Group total above is £60,904 (2008: £nil) relating to amounts
falling due after more than one year.
13. PROVISIONS FOR LIABILITIES AND CHARGES
The Group has provided for additional liabilities of an uncertain nature. These
liabilities are deemed present obligations as a result of past events and the
likelihood of an economic outflow is deemed probable. However, the timing of
when these liabilities will crystallize is uncertain.
2009 2008
£ £
Interest and penalties on late payment of US 115,570 -
payroll taxes
Employee litigation 45,260 -
Legal fees 12,561 -
173,391 -
One of the Group's subsidiaries, Resilience Technology Corporation, has an
outstanding liability for payroll taxes in the USA. It is probable that the IRS
will impose penalties on Resilience Technology Corporation in accordance with
the IRS tax regime. The Directors have provided an amount of 100% of the
payroll tax liability.
A legal claim has been made against Resilience Technology Corporation from a
former employee. This claim has not yet been fully settled, but the Directors
believe that there is a probable chance of an economic outflow and have
provided their best estimate accordingly.
The Directors have made a provision in connection with expected legal fees that
will arise, associated with the recovery of funds from an escrow account.
14. CONTINGENT ASSETS AND LIABILITIES
Contingent Liabilities
A legal claim has been made against one of the Group's subsidiaries, Resilience
Technology Corporation, from former employees of the Company. This claim is for
$175,000 plus fines and legal costs. However, the Director's having taken legal
advice and believe the likelihood of a cash outflow is not probable and as such
no provision has been made in these financial statements.
On the acquisition of the trade and assets by Resilience Technology
Corporation, there was a contingent consideration of an estimated £653,625
relating to the issue of 78,750,000 shares in Nexus Management Plc. However,
the contingent consideration would only become payable if certain EBITDA
targets of Resilience Technology Corporation are met. As the likelihood of
meeting these criteria is not considered probable, no liability is reflected in
these financial statements.
15. RELATED PARTY TRANSACTIONS
The key management personnel of the Group comprise members of the Nexus
Management Plc Board of Directors and Managing Directors of subsidiary
undertakings.
The key management personnel compensation is as follows:
2009 2008
£ £
Remuneration including benefits in kind and 757,255 649,748
pension
Share based payments 76,614 3,836
833,869 653,584
Company
At 30 September 2009 the following amounts were due from/(owed to) related
companies:
2009 2008
£ £
Nexus Management EMEA Limited 398,184 337,783
Nexus Management Inc 399,928 329,735
FixIT Worldwide Limited - (24,375)
PC Medics Group Limited 17,281 17,281
Nerd Force Franchise Company 408,192 270,791
Resilience Technology Corporation 995,417 -
Transaction with Directors
The following loans were received from directors and related parties during the
year.
Loan Balance at Interest
Year End Charged
£ £ £
Janet Richardson 49,000 49,000 3,240
Jeremy Lister 8,500 8,500 510
Boris Adlam 10,436 10,436 -
At 30 September 2009 67,936 67,936 3,750
Boris Adlam's interest due at 30 September 2009 was £470.
Guarantees
Nexus Management plc has provided a parent company guarantee to the landlord of
the property at 120 Moorgate, London in respect of the lease of the premises.
16. DIVIDEND
The Directors have not recommended a dividend.
17. COPIES OF THE REPORT & ACCOUNTS
Copies of the Report and Accounts will be posted to shareholders shortly, will
be available from the Company's registered office 120 Moorgate, London EC2M 6UR
and will be available from the Company's website www.nexusmgmt.co.uk.