React Group Regulatory News (REAT)

VERDES MANAGEMENT PLC

(AIM: VMP)

Preliminary announcement of audited results for the year ended 30 September 2012

Verdes Management plc ("Verdes" or "the Company"), the specialist turnaround services provider, is pleased to announce its audited results for the twelve months to 30th September 2012.

Chairman's Statement

For the year ended 30th September 2012

I present the financial statements for the year to 30 September, 2012.

As we reported in the Interim Results for the six months period to 31st March, 2012, we had increased the efficiency of our business model overall but still faced difficult markets in which to secure a mandate for a turnaround transaction involving a UK plc. The banks remained very reluctant to arrange any new debt funding and equity funding in the City overall remained scarce at a record low. We continued to face the challenges of any start up business and were not able to recruit an additional senior executive to assist in the conversion of some mandates which were in the process of being negotiated.

We announced in our Interim Results that we had secured two mandates which were not core to our business model. We were sadly not able to conclude these in large part as a result of the personnel cut back we were required to carry out in the summer which resulted in us having no executive team.

We started from the beginning of the calendar year to explore a number of opportunities to bring alongside a complementary business which would benefit from our status on AiM.

We took steps in the summer to cut our office overhead drastically and also made sure that there are significant controls on our costs and expenditure. We continued to explore options going forward which we felt were in the interests of our shareholders.

Having looked at a number of opportunities, I am pleased to report that we are in the process of completing a financing exercise with certain new investors by which we will, as soon as possible, commence a new business offering which is complementary in the financial services sector.

We have announced some of the steps in relation to the above and I look forward to announcing the successful conclusion of these steps.

Adam Webb

Chairman

Date: 4 March 2013

Verdes Management plc

Income Statement

For the year ended 30th September 2012

The company has no recognised gains or losses other than the results for the

period as set out above.

All amounts relate to continuing operations.

Notes 1 to 17 form part of these financial statements.

Balance Sheet

30th September 2012

These financial statements were approved and authorised for issue by the board and were signed on its behalf by:

R A H Webb

Director

Date: 4 March 2013

Cash Flow Statement

For the year ended 30th September 2012

Statement of Changes in Equity

For the year ended 30th September 2012

Notes to the Financial Statements

For the year ended 30th September 2012

1. Accounting policies

Basis of accounting

The financial statements have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union and as applied in accordance with the provisions of Companies Act 2006.

Standards and interpretations effective in the current period

The following IFRS's which are effective for the first time have been applied in these financial statements. Where adoption is material their effect is detailed below:

• IAS 24 (revised), 'Related party disclosures' has had no material impact on these financial statements;

• Amendment to IFRS 1, 'First time adoption on fixed dates and hyperinflation' has had no impact on these financial statements;

• Amendment to IFRS 7, 'Financial Instruments: Disclosures - Transfers of Financial Assets'

has had no impact on these financial statements;

• Amendment to IFRIC 14, 'The limit on a defined benefit asset minimum funding requirements and their interaction' has had no impact on these financial statements;

• Annual improvements 2010 has had no impact on these financial statements;

New standards and interpretations

As of the date of approval of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:

• IFRS 9 Financial instruments (Effective for periods commencing on or after 1 January 2013);

• IFRS 10 Consolidated financial statements (Effective for periods commencing on or after 1 January 2013);

• IFRS 11 Joint arrangements (Effective for periods commencing on or after 1 January 2013);

• IFRS 12 Disclosure of interests in other entities (Effective for periods commencing on or after 1 January 2013);

• IFRS 13 Fair value measurement (Effective for periods commencing on or after 1 January 2013);

• IAS 27 (Revised) Separate financial statements (Effective for periods commencing on or after 1 January 2013);

• IAS 28 (Revised) Investments in associates and joint ventures (Effective for periods commencing on or after 1 January 2013);

• Amendments to IAS 12: Income taxes: Deferred tax: Recovery of underlying assets (Effective for periods commencing on or after 1 December 2012);

• Amendments to IAS 1: 'Presentation of Financial Statements' - Amendments resulting from Annual Improvements 2009-2011 Cycle (Effective for periods commencing on or after 1 January 2013); and

• Amendments to IAS 19, 'Employee benefits' - post-employment benefits and termination benefits projects 1 (Effective for periods commencing on or after 1 January 2013).

The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the company. The company does not intend to apply any of these pronouncements early.

Revenue

Revenue is recognised by the company in respect of services supplied during the year, exclusive of Value Added Tax. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

- Management ongoing fees are recognised when the services are rendered.

- Success fees are only recognised when all contractual obligations which determine success are satisfied. 

Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and any provision for impairment in value.

Depreciation

Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:

Fixtures, fittings & equip. - 25% straight line

Motor Vehicles - 25% straight line

Investments

Investments held as fixed assets are shown at cost less provision for impairment.

Pensions

Contributions to personal pension plans are recognised as an expense when employees have rendered service entitling them to the contributions.

Taxation

Corporation tax payable is provided on taxable profits at the current rate.

Deferred income taxes are calculated using the liability method on temporary differences. This involves the comparison of the carrying amounts of assets and liabilities in the financial statements with their respective tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the company are assessed for recognition as deferred tax assets. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.

Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised only to the extent that the directors consider that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Financial instruments

Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Investments

All investments are initially recorded at cost, being the fair value of the consideration given and including acquisition costs associated with the investment.

Trade and other receivables

Trade receivables and other receivables are recognised and carried forward at invoice amounts less provisions for any doubtful debts. Bad debts are written off when identified.

Cash and cash equivalents

Cash and cash equivalents are included in the balance sheet at cost. Cash and cash equivalents comprise cash at bank and in hand and short term deposits with an original maturity of three months or less.

2. Loss on ordinary activities before taxation

Loss before taxation is stated after charging:

3. Auditors' remuneration

4. Particulars of employees

Employee costs, including directors' remuneration, were as follows:

The average number of staff employed by the company (including directors) during the financial period amounted to:

5. Directors' Remuneration

The directors' aggregate emoluments in respect of qualifying services were:

The highest paid director received remuneration of £135,920 (2011 ‑ £142,145).

During the year retirement benefits were accruing to 1 director (2011 - 1 director) in respect of defined contribution pension schemes.

6. Finance income and costs

7. Income tax expense

The company has traded at a loss for the current and previous period and has losses brought forward, therefore no provision for taxation was considered necessary.

Deferred Tax

At the period end the unutilized tax losses carried forward of the company are £1,940,219 (2011: £1,150,669). A deferred tax asset has not been recognised in respect of these losses in view of the uncertainty as to whether these losses are available for set off against future profits. The deferred tax asset that is not recognised in the financial statements in relation to losses carried forward of the company amounts to £389,111 (2011: £230,131).

Factors affecting current income tax charge

The tax assessed on the loss on ordinary activities for the period is higher than (2011 - higher than) the standard rate of corporation tax in the UK of 20% (2011 - 20.5%).

8. Earnings per share

The basic earnings per ordinary share is calculated by dividing profit/loss for the year attributable to equity holders of the company less non-equity dividends and other appropriations in respect of non-equity shares by the weighted average number of equity shares in issue during the year.

The diluted earnings per ordinary share is calculated by dividing profit/loss for the year less non-equity dividends and other appropriations in respect of non-equity shares by the weighted average number of equity shares outstanding during the year (after adjusting both figures for the effect of dilutive potential ordinary shares).

The calculation of basic and diluted earnings per ordinary share is based upon the following data:

9. Property, plant and equipment

10. Investments

Listed investments

The fair value of the listed investments at 30 September 2012 was £nil (2011 ‑ £230).

11. Trade and other receivables

12. Trade and other payables

13. Related party transactions

Details of transactions between the company and other related parties are disclosed below.During the period the company was charged £7,000 (2011: £18,000) for directors' services by Prepcare LLP, a limited liability partnership of which R M Phillips is a designated member. At the period end an amount of £nil (2011: £8,266) was payable to Prepcare LLP and is included within trade creditors.

14. Share options

The directors are interested in the following options to subscribe for ordinary shares pursuant to the directors' share option agreement:

The Options are exercisable at a price of £0.01 per £0.001 ordinary share and may be exercised in whole or in part during the period commencing 12 April 2014 to 11 April 2021 subject to achievement of the vesting conditions as established by the Remuneration Committee. No options were exercised in the period. The open market value of the company's shares at the balance sheet date is less than the option price and therefore, R A H Webb is not deemed to have received any share based payment.

15. Share capital

Authorised share capital:

Allotted, called up and fully paid:

Allotted, called up and partly paid:

The fully paid ordinary £0.001 shares carry one vote per share and carry a right to dividends.The fully paid deferred 'B' shares (£0.009 each) do not carry any votes (other than in a class meeting of the B deferred shares) and have no right to a dividend.

The fully paid deferred shares (£0.065 each) do not carry any votes (other than in a class meeting of the £0.065 deferred shares) and have no right to a dividend.

The partly paid ordinary £0.001 shares carry one vote per share and carry a right to dividends. On liquidation of the company, the shareholder acknowledges that the liquidator may require them to pay the balance subscription on any share which has not been paid.

On 12 October 2011, 16,666,667 ordinary shares of 0.1p each were issued at a price of 0.3p per share which were fully paid.

On 3 April 2012, 20,000,000 ordinary shares of 0.1p each were issued at a price of 0.3p per share which were fully paid.

Since the year end the Company has issued a further 239,000,000 ordinary shares for a price of 0.1p per share (total consideration of £239,000).

16. Cash generated/used by operations

17. Going Concern

In common with other businesses in its sector, the company's results of operations involve a number of risks and uncertainties including, but not limited to, current volatility of the economic environment, developments in strategic relationships and dependence on key individuals or customers. These factors could affect the company's future operating results and cause actual results to vary materially from expectations.

The company has generated no revenue in the 12 months to 30th September 2012 and has funded operations from the proceeds of public and private placements of its shares. It does not presently have sufficient funds to meet all of its forecast obligations for the next 12 months and is negotiating with a selection of investors for further funding. Based on discussions already held, the directors of the company have reasonable expectation that the company will receive adequate funding, based on a possible restructuring of the business model along with indications provided by future investors regarding future financing. Accordingly the directors have prepared these accounts on a going concern basis. However whether or not the investors actually provide such funding represents a material uncertainty which casts significant doubt on the company's ability to continue as a going concern and it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustments that would result if the going concern basis were not appropriate.

The Company has no material non-monetary assets or liabilities. In the event that the Going Concern basis no longer applies, no material adjustments to the balance sheet at 30 September 2012 will be required.