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FINANCIAL REPORT
This document contains a review of the company’s financial performance for 2012 including profit and loss statement, balance sheet and cash flow statement.
The following financial statements have been audited by Nexus’ auditor, AUDIT ALLIANCE, certified public accountants. All figures are in USD unless stated otherwise.
1. Financial performance highlights
Overall, Nexus’ 2012 financial performance exceeded expectations and achieved a total profit of $47k, which was above the forecasted amount of $23K. This resulted in Nexus generatingsufficient profit to cover last year’s loss of $14k and to retain a surplus of $33k.
Nexus generated $915k of total revenue in 2012; of which $651k came from grants received and $262k from revenue generating activities; technical assistance and carbon asset management were the main generators of revenue. The remaining $2K came from various other sources of revenue. In 2012, Nexus still heavily relied on two core grants to cover its structural costs. This reliance will lessen once the core activities generate sufficient revenue. Nexus’ expenses for 2012 totaled $868k, a 27% overall increase from 2011. Human resources costs ($497k) accounted for 57% of these expenses, a 50% increase from 2011. The remaining 43% of expenses occurred from non-human resources areas, a 6% increase from 2011; however, 41% of these are direct project expenses and are fully funded.
2. Profit and loss statement
The following table lists and compares Nexus’ actual expenses and revenue of 2012 with the actual expenses and revenues of 2011.
Table 1: Revenue and expenses of 2011 and 2012
2011 2012 % Change
Revenue
Revenue from grants $ 564,280 $ 651,745 16%
Revenue from activities $ 107,815 $ 261,723 152% Other - foreign exchange gains/
losses, refunds $ 2,731 $ 1,942 (29%)
Total revenue $ 674,826 $ 915,410 36%
Expenses
Internal human resources $ 249,751 $ 445,375 78%
External experts $ 81,916 $ 51,794 (37%)
Travel $ 125,376 $ 108,240 (14%)
Offices, equipment, IT $ 63,105 $ 75,623 20%
Events, communication and
marketing $ 41,572 $ 24,367 (41%)
Grants to members $ 15,000 $0 (100%)
Professional services $ 91,943 $ 141,315 54%
Financial charges, tax $ 12,532 $ 21,780 74%
Total expenses $ 681,195 $ 868,494 27% Profit / (Loss) $ (6,369) $ 46,916
• Revenue
2012 saw revenue generated by activities increase by 143% compared to 2011; with significant success being achieved in identifying carbon buyers and securing long term contracts. The following activities saw revenue increases from 2011: carbon asset management, technical assistance services, and for the first time Nexus saw revenue come from short / medium term consultancies. Revenue generated from carbon asset management and technical assistance is the result of seeds sown in 2011 and Nexus is now recognized as a reliable and competitive player in these fields.
Historical donors continued to show confidence in Nexus and supported various projects, events and member projects. New donors were also secured.
• Expenses
The change in internal human resources costs is mostly due to having a larger number of staff throughout the year in both offices. The 78% increase in internal human resources costs correlates with the 80% increase in equivalent full time positions from 2011 to 2012
.
In 2012, revenue generating activities covered 30% of the total expenses; this is a significant increase from 2011.
3. Balance sheet
The following table lists and compares Nexus’ actual assets and liabilities of 2012 with the actual assets and liabilities of 2011.
Table 2: 2011 and 2012 balance sheet
2011 2012
Assets
Current assets
Cash and cash equivalent $ 211,561 $ 168,993
Inventories $ 30,582 $ 13,722
Trade receivables $ 3,894 $ 670,410
Other receivables $ 157,463 $ 321,609
Total current assets $ 403,500 $ 1,174,734 Non-current assets
Property, plant and
equipment $ 12,210 $ 3,837
Total non current assets $ 12,210 $ 3,837 Other assets
Deposits $ 5,820 $ 5,689
Prepayments $ 7,498 $ 306
Total other assets $ 13,318 $ 5,995 Total assets $ 429,028 $ 1,184,565
Liabilities
Current liabilities
Trade payables $ 5,026 $ 477,342
Other payables $ 53,461 $ 67,515
Amount due to member $ 111,544 $ 100,238
Deferred grants $ 272,814 $ 506,371
Total liabilities $ 442,845 $ 1,151,466
Net assets ($ 13,817) $ 33,099
Funds
Retained surplus ($ 13,817) $ 33,099
Total accumulated funds ($ 13,817) $ 33,099
• Assets
From 2011 to 2012, current assets have almost tripled to $1,175k. Most of this growth occurred in trade receivables. The increase in trade receivables was mainly due to Nexus’ growth of activities from carbon asset management and technical assistance. Other receivables referred to Nexus’ accrued revenue for the technical assistance provided to member as part of the revolving fund as well as the accrued grant from EDB. Nexus has not identified any risk of non-payment.
• Liabilities
Current liabilities grew from $443k in 2011 to $1,151k in 2012 (+161%). The largest increase was in the trade payables. The purchase of carbon credits from Nexus’ member has increased Nexus trade payables.
4. Statement of cash flow
Table 3 provides Nexus cash flow statement for the financial year ending on 31st December 2012.
Table 3: 2011 and 2012 cash flow statement
2011 2012
Cash flow from operating activities
Total gain/loss ($ 6,369) $ 46,916
Adjustment for depreciation $ 11,033 $ 8,374
Operating cash flows before working
capital changes $ 4,664 $ 55,290
Changes in working capital
Inventories ($ 30,582) $ 16,860
Trade and other receivables ($ 172,341) ($ 823,339)
Trade and other payables $ 328,591 $ 719,927
Net cash provided by/(used in) operating
activities $ 130,332 ($ 31,262)
Cash flow from investing activities
Additions to property, plant and
equipment ($ 23,243) $ 0
Net cash provided by/(used in) investing
activities ($ 23,243) $ 0
Cash flow from financing activities
Changes in Amount due to member $ 104,472 ($ 11,306)
Net cash provided by/(used in) financing
activities $ 104,472 ($ 11,306)
Net increase/(decrease) in cash and cash
equivalents $ 211,561 ($ 42,568)
Cash and cash equivalents
Beginning of financial year $ 0 $ 211,561
End of financial year $ 211,561 $ 168,993
There has been a net decrease in cash and cash equivalents between 2011 and 2012.
The decrease in cash and cash equivalent is a result of an increase in cash used for operating activities due to 2012 strong growth. In 2013 and beyond, given the growth foreseen, a new source of working capital will be needed.
5. Changes in Funds
Table 4 (below) demonstrates Nexus’ change in funds for the financial year ending on 31st
December 2012.
Table 4: Changes in funds in 2011 and 2012
Funds
2012
Beginning of financial year ($ 13,817) Total profit/(loss) for the
year $ 46,916
End of financial year $ 33,099
2011
Beginning of financial year ($ 7,448) Total profit/(loss) for the
year ($ 6,369)
End of financial year ($ 13,817)
2012 was the first year where Nexus generated a profit. The retained surplus at December 31st 2012
Annual Financial Report 2012| Page 9 of 9
