Preliminary Results

28th February 2011

Verdes Management plc (formerly X-Phonics plc)

Preliminary results for the year ended 30th September 2010

Chairman's Statement

I am pleased to present the audited results for the 12 months to 30 September 2010 for Verdes Management plc ("Verdes" or "The Company"), previously named X-Phonics plc. The change of name, approved at a General Meeting of the Company on 27 September 2010, followed the investment into the Company by Verdes Management Limited and represented a strategic change in the direction of the business. As such, the financials contained within this set of results relate in the main to the business activities of X-Phonics plc over the 12 months prior to the change of name and strategic direction.

Because of the change in strategy and discontinuance of the music businesses there are no continuing revenues. There is an exceptional credit to continuing administrative expenses of £76,333 (2009: £nil) resulting from the cancelation of amounts due to directors of the company.

Revenues of £78,324 (2009: £94,066) were generated from the discontinued businesses and after cost of sales and overheads of £82,086 (2009: £77,128) and a gain on disposal of the music businesses of £105,393 (2009: £nil), a profit of £101,631 (2009: £16,938) was made for the year.

Verdes Management plc has been established to act as a turnaround advisory business offering services to stakeholders, as well as facilitating investment opportunities in companies in need of restructuring. Verdes has a clear strategic approach to identifying potential opportunities. The Company's intention is to target distressed and underperforming UK companies, mostly publically listed, worth between approximately £50 million - £250 million across a broad range of sectors, excluding natural resources.

The Company has made good progress over the past five months. We have successfully raised £1,276,250 of new equity since late December 2010. As mentioned in our placing document last September, there had always been a need for the Company to raise additional monies. These new funds enable the Company to focus on its key objectives and provide the necessary capital to expand the business to a point where it can most efficiently identify and execute deals. Whilst the Company is not ruling out a fund raising at an unspecified future date, Verdes is sufficiently capitalised to meet all needs for the foreseeable future. I am delighted to welcome the new shareholders to our register and we appreciate the continued support of the existing owners of our shares.

As a fledgling company we have been under resourced to date. I am pleased to report that Verdes is in the process of selectively recruiting personnel in order to increase our resource and improve our chances of success in securing appropriate mandates.

A further, major milestone in the development of the Company was the recent announcement of the establishment of the Panel. The Panel comprises a number of individuals with an extensive range of key skill sets and City experience, who share the vision and values of Verdes. The Panel'sprimary remit is to assist in sourcing and executing business opportunities and, moreover, their combined expertise is expected to enhance the success of Verdes' future projects. The Company will continue to source deal opportunities independently from the Panel. Although only recently established I have been impressed with the energy, interest and input the Panel has provided Verdes.

The current volatility of the economic environment and the difficult trading conditions which many UK companies currently face continues to create an environment in which the Verdes' business model can thrive. This opinion is reinforced by the large number of discussions we have held with individuals and companies from a broad spectrum of the financial sector. We are receiving referrals from a number of city houses, lawyers and financial advisers. This confirms the need for institutional activity and therefore the attractiveness of Verdes' services. The Management team, led by Adam Webb, is continuing to examine a number of new business situations which it believes could prove to be significant value enhancing transactions for the Company. However whilst many opportunities exist it is of paramount importance that Verdes becomes involved in projects that we are able to execute successfully. At this early stage of our development we want to build up a successful track record of rescuing businesses and helping their fortunes to turnaround.

As an example of our activity to date, in November 2010 Verdes led a consortium seeking to acquire the assets, from administration, of a small quoted hotel chain located in the East of England. The proposal we submitted included a credible business plan to improve the specification of the properties and over-haul the food offering by hiring chefs of renown thus greatly enhancing the experience for guests. The restructured group was intended as a vehicle with which to add on further units with a view to an exit strategy of three to five years. Unfortunately on this occasion our consortium lost out to another bidder.

I would like to thank my fellow Directors, employees and advisers of the Company for all of their hard work over the past five months. Verdes Management plc is still a young company but I believe it has built a solid platform from which to move forward onto the next stage of growth. Given the strength of our balance sheet, as well as the valuable expertise of our Board, Panel and employees, Verdes is well placed to access and take advantage of the opportunities available in the current market and I look forward to updating shareholders on further progress in the coming months.

John Matthews

Chairman

28th February 2011

Enquiries:

The accounts for the year ended 30 September 2010 will be posted to shareholders shortly and laid before the Annual General Meeting to be held at The Little Ship Club, 3 Cranes Wharf, Bell Wharf Lane, City of London, EC4R 3TB at 12.00 noon on 28th March, 2011.

Copies will also be available via the website (www.verdes-group.com) in accordance with AIM Rule 26.

Consolidated Group Income Statement

For the year ended 30th September 2010

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

period as set out above.

Notes 1 to 19 form part of these financial statements.

Group Balance Sheet

30th September 2010

These financial statements were approved by the directors on 28th February 2011 and are signed on their behalf by:

M D Hosie

Notes 1 to 19 form part of these financial statements.

Consolidated Group Cash Flow Statement

For the year ended 30th September 2010

Notes 1 to 19 form part of these financial statements.

Consolidated Group Statement of Changes in Equity

For the year ended 30th September 2010

Notes 1 to 19 form part of these financial statements.

Notes to the Financial Statements

For the year ended 30th September 2010

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.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and all group undertakings. Verdes Management plc (formerly X-Phonics plc) was incorporated on 17 May 2005 and on 1 July 2005 the company acquired the entire share capital of X-Phonics Music Limited by way of a share for share exchange. As the shareholders were the same before and after this transaction, the share for share exchange qualifies as a common control transaction and falls outside the scope of IFRS 3, Business Combinations. No goodwill has been recorded and the difference between the parent company's cost of investment and X-Phonics Music Limited's share capital and share premium has historically been presented as a merger reserve within equity on consolidation. On 28 September 2010, the company disposed of X-Phonics Music Limited and as a result the merger reserve has been eliminated on consolidation at 30 September 2010.

Revenue

Revenue compromises amounts recognised by the group in respect of goods and services supplied, exclusive of VAT and trade discounts.

Advances to artistes

Advances to artistes and expenses incurred supporting new acts are assessed and the value of the un-recouped portion to be included in debtors is determined by the prospects of future recoupement, based on past sales performance, current popularity and projected sales.

In the period ended 30th September 2010 (2009: £nil), no such carry forward of expenditure was considered appropriate.

Music publishing and record royalties and record producer services

Music publishing and record royalties are accounted for on a notified earnings basis, with any advances, if any, carried forward until the end of the relevant contract period. Royalties received for record producer services are accounted for on a cash basis. Royalties payable are expensed on an accruals basis except that music publishing advances are carried forward and recognised as an asset, where such advances relate to proven artistes or songwriters and where it is estimated that sufficient future royalties will be recouped against those advances.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is allocated on acquisition to cash-generating units that are anticipated to benefit from the combination. Goodwill is not amortised but is reviewed annually for impairment. Impairment is determined by assessing the recoverable amount of a cash-generating unit to which the goodwill relates. This estimate of recoverable amount is performed at each balance sheet date. The estimate of recoverable amount requires significant judgement, and is based on a number of factors such as the near-term business outlook for the cash-generating unit, including both its operating profit and operating cash flow performance. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised.

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:

Leasehold Property - over the period of the lease

Fixtures & Fittings - 20% straight line

Motor Vehicles - 25% straight line

Equipment - 20% straight line

Leasing and Hire purchase agreements

Assets obtained under hire purchase contracts and finance leases are capitalised as tangible non-current assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in liabilities net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the income statement so as to produce a constant periodic rate of charge on the net obligation outstanding in each period. Assets held under hire purchase agreements are capitalised and disclosed under tangible non-current assets at their fair value. The capital element of the future payments is treated as a liability and the interest is charged to the income statement on a straight line basis.

Operating lease agreements

Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.

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 consolidated 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 group 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.

Foreign Currencies

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate ruling on the date of the transaction. Exchange gains and losses are recognised in the income statement.

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. Exceptional administrative expenses

During the year, as part of the company re-structuring, M D Hosie and R F Davies agreed to waive previous amounts owed to them (for Director services) of £40,333 and £36,000 respectively.

5. Discontinued operations

On 28 September 2010, the company disposed of it music business and operations by way of a disposal of its subsidiary companies X-Phonics Music Limited, X-Phonics Music Publishing Limited, X-Phonics Productions Limited and White Noise Music Limited. The proceeds of sale were £1 for each company however owing to the net liability position of the subsidiaries at the date of disposal, a gain has been recognised on this disposal. The disposal of the music business is consistent with the Company's policy to focus on its new turnaround business service from 28 September 2010. Details of the assets and liabilities disposed of are displayed below in this note.

The combined results of the discontinued operations (the music business) included in the income statement at set out below. The comparative profit and cash flows from discontinued operations have been represented to include those operations classified as discontinued in the current period.

6. Particulars of employees

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

The aggregate remuneration costs of the above were:

7. Directors' emoluments

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

8. Finance income and costs

9. Income tax expense

The company has traded at a profit for the period although has losses brought forward, therefore no provision for taxation is considered necessary.

Deferred Tax

At the period end the unutilized tax losses carried forward of the company are £511,992 (2009: £566,906). A deferred tax asset has not been recognised in respect of these losses in view of the uncertainty as to the level of future taxable profits. The deferred tax asset that is not recognised in the financial statements in relation to losses carried forward of the company amounts to £107,518 (2009: £119,050).

Factors affecting current income tax charge

The tax assessed on the loss on ordinary activities for the period is lower than the standard rate of corporation tax in the UK of 21% (2009 - 21%).

10. 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:

11. Property, plant and equipment

Hire purchase agreements

Included within the net book amount of £9,714 is £nil (2009 - £3,167) relating to assets held under hire purchase agreements.

12. Trade and other receivables

13. Trade and other payables

14. Obligations under finance leases

Future commitments under hire purchase agreements are as follows:

15. Related party transactions

Transactions between the company and its subsidiaries, which are related parties of the company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the group and other related parties are disclosed below.

During the period group companies were charged £nil (2009: £19,408) by Kerr Douglas Limited, a company under the control of M D Hosie. This cost is made up of £nil (2009: £7,333) in respect of director's services, and £nil (2009: £12,075) in respect of bookkeeping services provided by M D Hosie's wife. During the year M D Hosie agreed to waive £40,333 in regard to amounts owing to Kerr Douglas Limited for directors' services (in earlier years). At the period end a VAT inclusive amount of £3,340 (2009: £75,380) was payable to Kerr Douglas Limited and is included within trade and other payables.

During the year R F Davies agreed to waive £36,000 in regard to amounts owing to him for directors' services (in earlier years). At the period end a VAT inclusive amount of £nil (2009: £37,103) was payable to R F Davies and is included within other payables. During the year, R F Davies also agreed to waive loan balances payable to him by the group of £26,703. At the period end an amount of £nil (2009: £66,703) is repayable to R F Davies and is included within trade and other payables.

During the year, R A H Webb provided a £10,000 loan to the Company which is included within trade and other payables at the year end.

16. Share capital

Authorised share capital:

Allotted, called up and fully 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 and have no right to a dividend.

On 27 September 2010 the Company's share capital was consolidated whereby each of the then existing 66,214,920 issued ordinary shares of 1p each was subdivided into one ordinary share of 0.1p and one 'B' deferred share of 0.9p.

On 28 September 2010, 41,416,666 ordinary shares of 0.1p each were issued at a price of 0.3p per share which were fully paid.

On 28 September 2010, 29,885,023 ordinary shares of 0.1p each were issued at a price of 0.4p per share which were fully paid.

On 28 September 2010, 12,500,000 ordinary shares of 0.1p each were issued at a price of 0.2p per share which were fully paid.

Since the year end the Company has issued a further 172,083,498 ordinary shares for a total consideration of £1,282,000.

17. Cash generated/used by operations

18. Subsidiary undertakings

Details of the Company's subsidiaries in the year were as follows:

All subsidiaries were disposed of on 28 September 2010 and no longer form part of the group.