TIDMNXS
24 January 2011
Nexus Management plc
("Nexus", the "Group" or the "Company")
Final results for the year ended 30 September 2010
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 2010.
Highlights:
* Turnover increased by 13.7% to GBP5.8 million (2009: GBP5.1 million)
* Gross profit increased by 19.2% to GBP3.1m (2009: GBP2.6m)
* Reduced trading loss of GBP136,000 (2009: GBP883,000)
* Strong performance from wholly owned subsidiary, Resilience Technology Corp
("Resilience")
* Resilience hardware now certified to run on latest version of Checkpoint
(R70) which allows the Company to target sales from larger clients
Post-period Highlights
* Significant three year contract win for Resilience in December 2010 with UK
based blue-chip organisation worth $1 million over the term of the
contract.
Roger Richardson, Chief Executive, commented:
"I am broadly pleased with how the group traded in a tough economic year. The
Group has started the new financial year well and traded in-line with
management expectations in the first quarter.
"We remain confident, albeit at this early stage, that the Group will deliver
an improved trading performance in the coming year and the entire management
team remains focused on delivering increased profitability."
This announcement has been extracted from the accounts. The full Report and
Accounts can be found on the Nexus website at www.nexusmanagementplc.com
FURTHER ENQUIRIES
Nexus Management plc
Roger Richardson, Chief Executive Tel: 01862 812 107
Merchant Securities Limited (Nominated Adviser)
Simon Clements/David Worlidge Tel: 0207 628 2200
Rivington Street (Broker)
Jon Levinson Tel: 0207 562 3351
Bishopsgate Communications Ltd
Duncan McCormick/Deepali Schneider/Natalie Tel: 0207 562 3350
Quinn
nexus@bishopsgatecommunications.com
CHAIRMAN'S STATEMENT
I am happy to report that, after making a difficult transition from operating
in better economic times to facing up to the challenging conditions that exist
today, the Group is beginning to see the "green shoots" of recovery.
During 2008, the major world economies went into free fall; companies, which
had been well structured and well run, were suddenly denied their lifeblood,
capital - or access to it. Nexus's investment in PD Financial Corp (PDF) was no
longer experiencing the growth it had previously enjoyed and the investment
made in Nerd Force, which was acquired to support sales from PDF, was
struggling to gain traction. In the 2008/9 financial year we wrote off the PD
Financial investment and in the 2009/10 financial year we sold Nerd Force. In
my mind we have now cleared out the old cupboard and we have laid a new floor.
The results for the 2009/10 financial year show an operating loss of GBP136,000
and a loss of GBP1 million after all exceptional items, including those that are
non-recurring, have been taken into account. However, the future is looking a
lot brighter; your executive team has introduced Nexus's management philosophy
to Resilience and this investment is beginning to generate a return for
shareholders. I am pleased to report that, in the current financial year the
Group is already performing in-line with management's expectations, not only
within Resilience, but also in the managed services operations and is showing
an improvement at the Group operating profit level compared to the previous
year.
Your executive management team has worked hard to put the Group in a stable
position and I believe they will now go on to deliver an improved financial
performance for the current financial year. In 2008/9 the Group lost GBP4.6
million; in 2009/10 it lost GBP1 million; from this point forward I believe the
Group will go from strength to strength. The tough, but realistic approach
taken by the executive team makes me proud and I thank them, on your behalf,
for their hard headed persistence. It is this persistence that has guided the
Group through the worst economic crisis this country has known in recent times
and set us on a new course which reflects the realities of the current economic
conditions.
Lastly, I thank those who have worked so diligently for the Group during this
very difficult time. I believe they will now be able to enjoy the fruits of
their efforts and loyalty as the Group, with its feet firmly on the ground,
begins to produce the operating performance of which I have always believed it
was capable.
Pete Paterson
Chairman
CHIEF EXECUTIVE OFFICER'S STATEMENT
Financials
Against the backdrop of an economy in recession for most of the year, I am
pleased with how the Group has performed.
Turnover for the year ended 30 September 2010 increased by approximately GBP
800,000 to GBP5.8 million (2009: GBP5.1 million). During the period under review,
the Group was able to reduce its cost base resulting in a lower trading loss of
GBP136,000 for the 12 month ended 30 September 2010 (2009: GBP883,000 loss). This
is a significant improvement in the year which was largely due to a strong
performance from Resilience Technology Corp ("Resilience"), the Group's wholly
owned subsidiary.
We were expecting to sign a significant contract in September 2010 which was
unfortunately delayed until December 2010. This delay led to the Group
reporting operating losses for the period under review but conversely will
benefit the current financial year.
Resilience
In its first full year within the Group, Resilience has performed well, making
a significant contribution to Group overheads and demonstrating an improvement
compared with the previous six months of our ownership. This business supplies
high end firewall appliances directly, or via resellers, to the world's largest
companies and inevitably this can lead to delays and uncertainty as to timing
of new orders. I am confident that Resilience will continue to enhance
shareholder value in the future.
Review of activities
In early summer of 2010 we completed the payout to the former owners of
Resilience at a substantial discount; this has allowed us to plan with more
certainty the future of the division. During the year Resilience hardware was
certified to run on the latest version of Checkpoint (R70), a vital upgrade if
we are to secure orders from large clients.
In August we divested the group of the Nerd Force franchise company and the
rights to operate that brand in the Americas. Although we recognize that the
Group has suffered an immediate loss on disposal, the Board believes that this
decision will in fact have a positive effect on the business going forward.
Nerd Force was loss making, consuming a large amount of cash and taking up a
significant amount of management time. It is the Board's belief that these
resources could be put to better use in the Group's more mature subsidiaries.
Our Nexus UK company found new clients hard to come by during the year and
subsequently had to closely control its expenditure in order to deliver a small
profit.
Nexus in the US had a difficult start to the year but began to see an
improvement in the second half of the year.
Outlook
The Group has traded in-line with management expectations in the first quarter
of the current financial year and we remain confident, albeit at this early
stage, that the Group will deliver an improved trading performance which is
very encouraging given the outlook for the economic climate. The entire
management team remains focused on delivering increased profitability in the
current financial year.
Roger Richardson
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 SEPTEMBER
2010
Notes Year ended Year ended
30 September 30 September
2010 2009
GBP GBP
Revenue 5,849,728 5,064,399
Cost of sales (2,747,253) (2,488,166)
Gross profit 3,102,475 2,576,233
Operating expenses excluding exceptional (3,238,540) (3,459,424)
expenses
Operating loss before exceptional items (136,065) (883,191)
Exceptional items (442,167) (3,315,000)
Operating loss (578,232) (4,198,191)
Finance income 4 7 34,429
Finance costs 4 (107,326) (279,264)
Loss before tax (685,551) (4,443,026)
Tax 5 - -
Loss for the year from continuing (685,551) (4,443,026)
operations
Discontinued operations
Loss for the year from discontinued (314,190) (113,955)
operations
Loss for the year (999,741) (4,556,981)
Attributable to equity holders of the (999,741) (4,556,981)
parent
Loss per share
Basic and diluted 6 (0.0946)p (0.504)p
Continuing operations basic and diluted 6 (0.0649)p (0.491)p
There is no difference between the loss on ordinary activities before taxation
and the accumulated loss for the two financial periods and their historic cost
equivalent.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ATTRIBUTABLE TO THE EQUITY
SHAREHOLDERS OF THE PARENT FOR THE YEAR ENDED 30 SEPTEMBER 2010
Share Share Retained Foreign Other r Share Total
capital premium earnings exchange eserve options
account reserve reserve
GBP GBP GBP GBP GBP GBP GBP
As at 1 2,167,775 4,082,237 (2,981,056) (59,367) 416,709 812,506 4,438,804
October 2008
Profit 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
As at 1 2,450,263 4,802,471 (7,538,037) (87,223) - 890,146 517,620
October 2009
Loss for the - - (999,741) - - - (999,741)
year
Movement in - - - (12,372) - - (12,372)
the year
Shares issued 298,475 227,372 - - - - 525,847
Convertible - - - - 38,876 - 38,876
loan notes
Share based - - - - - 54,252 54,252
payment charge
As at 30 2,748,738 5,029,843 (8,537,778) (99,595) 38,876 944,398 124,482
September 2010
CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2010
Notes 30 September 30 September
2010 2009
GBP GBP
ASSETS
Non-current assets
Property, plant and equipment 7 381,479 387,879
Intangible assets 9 902,482 1,027,028
Goodwill 8 661,025 1,081,589
1,944,986 2,496,496
Current assets
Inventories 10 376,282 491,087
Trade and other receivables 11 453,654 511,989
Cash and cash equivalents 380,833 163,994
1,210,769 1,167,070
Total assets 3,155,755 3,663,566
LIABILITIES
Current liabilities
Trade and other payables 12 (1,796,723) (1,851,955)
Loans and other borrowings (298,253) (318,166)
Obligations under finance leases (63,904) (79,432)
(2,158,880) (2,249,553)
Non-current liabilities
Trade and other payables 12 (73,429) (60,904)
Loans and other borrowings (636,980) (581,551)
Obligations under finance leases (97,841) (80,547)
Provisions for liabilities and charges 13 (64,143) (173,391)
(872,393) (896,393)
Total liabilities (3,031,273) (3,145,946)
Total assets less liabilities 124,482 517,620
EQUITY
Shareholders' equity
Called up share capital 2,748,738 2,450,263
Share premium 5,029,843 4,802,471
Other reserves 883,679 802,923
Retained earnings (8,537,778) (7,538,037)
Total equity attributable to the equity 124,482 517,620
holders of the parent
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2010
30 September 30 September
2010 2009
GBP GBP
CONTINUING OPERATIONS
Cash flows from operating activities
Loss before tax (994,386) (4,556,981)
Adjustments for:
Interest paid 88,631 167,845
Interest received (7) (34,429)
Impairment of goodwill 255,228 2,925
Amortisation of customer list 108,721 63,729
Impairment of available for sale assets - 2,285,453
Provision for bad debts - 1,419,837
Loss on disposal of subsidiary 308,835 -
Depreciation 134,841 135,952
Currency exchange adjustment (24,129) (737,579)
Operating cash flows before movements in (122,266) (1,253,248)
working capital
Share option costs 54,252 77,640
Decrease/(Increase) in inventories 114,805 (490,525)
Decrease/(Increase) in trade and other 12,884 (74,879)
receivables
(Decrease)/Increase in provisions for (109,248) 173,391
liabilities and charges
Increase in trade and other payables 43,965 1,555,957
Cash used in operations (5,608) (11,664)
Interest paid (88,631) (167,845)
Net cash used in operating activities (94,239) (179,509)
Investing activities
Interest received 7 34,429
Acquisition of intangible - (1,064,638)
Acquisition of goodwill (96,510) (593,000)
Proceeds from disposal of subsidiary 126,155 -
Legal costs on disposal of subsidiary (3,720) -
Purchases of property, plant and (32,863) (67,692)
equipment
Net cash used in investing activities (6,931) (1,690,901)
Financing activities
Proceeds from issue of share capital - 229,052
Premium on issue - 646,152
Share issue costs - (54,000)
Increase in borrowings 410,779 909,288
Repayment of obligations under finance (92,024) (71,004)
lease
Net cash generated from financing 318,755 1,659,488
activities
Net cash generated from/(used in) 217,585 (210,922)
continuing operations
DISCONTINUED OPERATIONS
Net cash from investing activities (746) -
Net cash from discontinuing operations (746) -
Net increase/(decrease) in cash and cash 216,839 (210,922)
equivalents
Cash and cash equivalents at beginning of 163,994 374,916
year
Cash and cash equivalents at end of year 380,833 163,994
NOTES TO THE PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2010
1. GOING CONCERN
The Group recorded a loss of GBP999,741 including an operating loss on existing
businesses (before amortisation, foreign exchange and share based payments) of
GBP136,065. The directors have taken steps aimed at returning the Group to
profitability and are confident the Group is able to generate positive cash
flow from operations going forward. However, the losses recorded in the year
ended 30 September 2010 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.
The directors of the Group have prepared detailed projections and cash flow
forecasts through to 30 September 2012. 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 Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence in the foreseeable future and as
such have prepared the financial statements on the going concern basis.
2. BASIS OF PREPARATION
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2009 and 2010, but is
derived from those accounts. Statutory accounts for 2009 have been delivered to
the Registrar of Companies and those for 2010 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. DISPOSAL OF SUBSIDIARY
During the year, the group disposed of the Nerd Force Franchise Company
subsidiary. The details of the disposal are:
2010
Total
GBP GBP
Disposal proceeds (126,504)
Net assets and liabilities disposed of
Cash and cash equivalents 349
Motor vehicles 5,594
Trade and other receivables 163,755
Trade and other payables (30,143)
Obligations on finance leases (3,446)
136,109
Goodwill and intangible assets written off 295,510
Legal costs 3,720
Reported loss on disposal 308,835
Nexus is carrying a contingent asset for franchises for Europe and the rest of
the world. These are a possible future benefit, but are being held at zero
value.
4. NET FINANCE COSTS
2010 2009
GBP GBP
Finance Expense
Interest on finance lease 43,767 32,463
Interest on factoring 18,695 23,658
Interest on other borrowings 46,055 111,724
Other interest - 115,570
108,517 283,415
Finance Income
Interest on held for available-for-sale investments - 34,033
Interest on cash and cash equivalents 7 396
7 34,429
5. TAXATION
2010 2009
i) Current tax charge GBP GBP
The tax charge comprises:
UK taxation
Corporation tax at 23.30% (2009: 23.30%) - -
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:
2010 2009
GBP GBP
Loss on ordinary activities before tax (999,741) (4,556,981)
Theoretical tax charge at 23.30% (2009: 23.3%) (232,940) (1,061,726)
Effects of:
Expenses (including goodwill) not deductible for 69,946 923,447
tax purposes
Capital allowances in excess of depreciation (3,928) (12,371)
Income not taxable - (95,237)
Other timing differences (47,789) -
Loss on disposal of subsidiary 71,959 -
Adjustments in respect of prior periods (45,111) -
Utilisation of losses b/f - (41,410)
Unrelieved losses c/f 187,863 306,563
Under provision of tax - (19,266)
- -
Total tax charge for the year - -
Factors that may affect future tax charges
At 30 September 2010 the Group has tax losses of approximately GBP2,168,538
(2009: GBP1,021,877) to set against future profits of the same trade.
A deferred tax asset of GBP505,269 (2009: GBP286,126) 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.
6. LOSS PER SHARE
Basic
Basic loss per share is calculated by dividing the loss 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 2010)
2010 2009
(Loss) Weighted Loss (Loss) Weighted Loss
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
GBP GBP GBP GBP
Basic EPS (999,741) 1,056,288,534 (0.000946) (4,556,981) 904,469,792 (0.00504)
calculation
Effect of 471,279,150 251,945,859
dilutive options
Diluted EPS (999,741) 1,527,567,684 (0.000946) (4,556,981) 1,156,415,651 (0.00504)
calculation
Discontinued (314,190) 1,056,288,534 (0.000297) (113,955) 904,469,792 (0.00013)
operations
basic and
diluted EPS
In the current year the Group has made a loss and the potential share options
are therefore anti-dilutive.
Potential dilutive items
2010 2009
Weighted average Number Weighted average Number
of shares of shares
Loan note 1 93,750,000 -
Loan note 2 43,750,000 -
Warrants 42,857,413 -
Share options 290,922,007 251,945,989
471,279,150 251,945,989
As the current year shows a loss, the other potential dilutive items are
anti-dilutive and therefore do not alter the EPS calculations.
7. PROPERTY, PLANT AND EQUIPMENT
Group Motor Short Fixtures Office and Total
leasehold and computer
vehicles improvements fittings equipment
GBP GBP GBP GBP GBP
Cost
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 1 October 2009 14,131 386,859 50,803 823,475 1,275,268
Additions - 26,309 2,606 106,350 135,265
Disposals (14,131) - (647) (6,425) (21,203)
Currency exchange - 2,407 230 4,286 6,923
adjustment
At 30 September 2010 - 415,575 52,992 927,686 1,396,253
Accumulated
depreciation
At 1 October 2008 - 118,472 27,504 540,226 686,202
Provided in the year 4,834 21,466 2,797 106,855 135,952
Disposals - - - (25,033) (25,033)
Currency exchange (124) 3,291 6,888 80,213 90,268
adjustment
At 1 October 2009 4,710 143,229 37,189 702,261 887,389
Provided in the year 4,010 28,630 6,280 99,931 138,851
Disposals (8,720) - (647) (6,425) (15,792)
Currency exchange - 631 159 3,536 4,326
adjustment
At 30 September 2010 - 172,490 42,981 799,303 1,014,774
Net Book Value
At 30 September 2010 - 243,085 10,011 128,383 381,479
At 30 September 2009 9,421 243,630 13,614 121,214 387,879
At 30 September 2008 - 139,153 22,611 154,411 316,175
Included in the total net book value of GBP381,479 is GBP169,243 (2009: GBP152,646)
in respect of assets held under hire purchase agreements. The categories of
these assets are short leasehold improvements of GBP58,229 and computer and
office equipment of GBP111,014. The motor vehicles were disposed of as part of
the disposal of Nerd Force Franchise Company. The depreciation charged to the
Income Statement in the year in respect of such assets is GBP79,710 (short
leasehold improvements of GBP4,209, computer and office equipment of GBP72,964 and
motor vehicles of GBP2,537). (2009: GBP41,639).
The Company had no property, plant and equipment.
8. GOODWILL
Goodwill on Purchased Total
consolidation
Goodwill
GBP GBP GBP
Cost
At 1 October 2008 641,137 210,303 851,440
Currency exchange adjustment - 28,059 28,059
Additions - 592,999 592,999
At 1 October 2009 641,137 831,361 1,472,498
Currency exchange adjustment - 8,735 8,735
Additions - 96,510 96,510
Disposals - (275,581) (275,581)
At 30 September 2010 641,137 661,025 1,302,162
Impairment
At 1 October 2008 382,984 5,000 387,984
Currency exchange adjustment - - -
Impairment charge 2,925 - 2,925
At 1 October 2009 385,909 5,000 390,909
Currency exchange adjustment - - -
Impairment charge 255,228 - 255,228
Disposal - (5,000) (5,000)
At 30 September 2010 641,137 - 641,137
Net book value
At 30 September 2010 - 661,025 661,025
At 30 September 2009 255,228 826,361 1,081,589
At 30 September 2008 258,153 205,303 463,456
2010 2009
FixIT Worldwide Limited - 255,228
Nerd Force Franchise Company - 265,855
Resilience Technology Corporation 661,025 560,506
661,025 1,081,589
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.
9. INTANGIBLE ASSETS
Group Customer Brand and Total
trade names
List
GBP GBP GBP
Cost
At 1 October 2008 - 21,549 21,549
Currency exchange adjustment - 2,945 2,945
Additions 1,064,638 - 1,064,638
At 1 October 2009 1,064,638 24,494 1,089,132
Currency exchange adjustment 7,617 435 8,052
Disposals - (24,929) (24,929)
At 30 September 2010 1,072,255 - 1,072,255
Amortisation
At 1 October 2008 - - -
Provided in the year 62,104 - 62,104
At 1 October 2009 62,104 - 62,104
Currency exchange adjustment (1,052) - (1,052)
Provided in the year 108,721 - 108,721
At 30 September 2010 169,773 - 169,773
Net book value
At 30 September 2010 902,482 - 902,482
At 30 September 2009 1,002,534 24,494 1,027,028
At 30 September 2008 - 21,549 21,549
2010 2009
Nerd Force Franchise Company - 24,494
Resilience Technology Corporation 902,482 1,002,534
902,482 1,027,028
10. INVENTORIES
2010 2009
GBP GBP
Raw Materials 266,471 379,017
DX Units 109,811 112,070
Total Inventories 376,282 491,017
In the year ended 30 September 2010, raw materials recognised as cost of sales
amounted to GBP312,119 (2009: GBP189,977). There has been no write down of
inventories to net realisable value in 2010 (2009: GBPNil). The DX units have
been identified as very slow moving rechargeable stock that is held as
replacement units for existing clients. They have been included in inventories
at estimated net realisable value.
The company had no inventories at 30 September 2010.
11. TRADE AND OTHER RECEIVABLES
2010 2009
GBP GBP
Trade receivables 277,333 414,966
Amounts owed by group undertakings - -
VAT recoverable - -
Other receivables 23,179 40,755
Prepayments and accrued income 153,142 56,268
453,654 511,989
Within Group trade receivables, a balance of GBP174,666 (2009: GBP80,664) is
subject to a charge in respect of an invoice financing facility that the group
has with its bankers. At the balance sheet date GBP136,958 (2009: GBP64,531)
included in loans and other borrowings was due to the providers of this
facility in respect of debtors that they have not yet recovered.
There is no material variance between carrying and fair values.
12. TRADE AND OTHER PAYABLES
2010 2009
GBP GBP
Trade payables 836,880 683,216
Other payables 248,150 213,751
Accruals and deferred income 785,122 1,015,892
1,870,152 1,912,859
Included within Other payables for the total above is GBP73,429 (2009: GBP60,904)
relating to amounts falling due after more than one year.
There is no material variance between carrying and fair values.
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.
2010 2009
GBP GBP
Interest and penalties on late payment of 31,627 115,570
US payroll taxes
Employee litigation 30,618 45,260
Legal fees 1,898 12,561
64,143 173,391
One of the Group's subsidiaries, Resilience Technology Corporation, has an
outstanding liability for payroll taxes in the USA. Resilience has agreed a
payment plan with the IRS to cover all liabilities, including penalties.
A legal claim has been made against Resilience Technology Corporation from a
former employee. This claim was awarded in favour of the former employee, but
has not yet been fully settled. A payment plan has been agreed with the former
employee and is being adhered to.
The Directors have made a provision in connection with expected legal fees that
will arise, associated with the potential 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 Directors, having taken legal
advice 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 GBP653,625
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. DIVIDEND
The Directors have not recommended a dividend.
16. 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.nexusmanagementplc.co.uk.
END
Nexus Management (LSE:NXS)
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