Plexus was confident.
Plexus filed accounts which misstated its turnover, profits, and headcount, and omitted multimillion pound transactions, it has emerged.
"During the preparation of the financial statements for the year ended 31 March 2020, the LLP discovered several errors in financial statements for the year ended 2019 ", Plexus conceded in its 2020 accounts, which it filed 11 months late last week.
The personal injury defendant firm's 2020 accounts reveal that in its 2019 accounts, Plexus:
- overstated its revenue by £1.4m, incorrectly recording revenue as £58m, not £56.6m
- overstated its profits by £1.9m, incorrectly recording a profit of £11m, not £9.1m, equivalent to an erroneous uplift of 20%
- overstated its debtors by £3.8m, incorrectly recording that it was owed £33.1m not £29.3m
- understated its creditors by £3.1m, incorrectly recording that it owed £8.9m, not £12m
Asked why RSM UK Audit was replaced as the firm's auditor in 2020, Plexus told RollOnFriday that, "Following the private equity investment in March 2019, PwC, one of the world’s leading accountancy firms, was appointed as the firm’s auditor and tax advisor".
The arrival of Origin Equity's £15m investment was greeted in 2019 with a fanfare of positive PR, and Plexus's then-Chief Executive Fiona Scott claimed that, unlike an IPO or merger, "This approach doesn’t compromise management control". It compromised her control, however, as within six months she was out of Plexus and Origin Equity's co-founder, Olivia Roberts, was the new Plexus CEO. A few months later, Senior Partner Andrew McDougall, who led the buy-out of Plexus when the Parabis Group collapsed in 2015, followed Scott out the door.
Plexus's 2019 accounts failed to include the large pay-offs which accompanied these shifts in ownership, including the fact that £13.5m was paid into Plexus by Origin, then paid out again to a company half-owned by McDougall. The transactions "were omitted from the 2019 accounts in error", the 2020 accounts state.
The sheer number of material mistakes suggests that someone involved in compiling Plexus's accounts was either wildly drunk or far worse at maths than they claimed. Plexus would not tell RollOnFriday who was responsible for the fiasco.
One of the most baffling mistakes saw Plexus record dozens more staff than it actually had, stating in the 2019 accounts that its headcount was 996, when it was actually 948.
- incorrectly stated that its 46 equity partners were paid an average of £306k, rather than £260k, in 2019 (their income dropped to £106k in 2020).
- "incorrectly recognised" over £2 million of work it should have written off, "due to the requisite processes and accounting practices not being in place"
- omitted to disclose a "contingent liability for indemnities" payable to two employees, totalling £223k (the firm declined to elaborate on the reason for the payments)
- wrongly stated that Plexus was liable for £860k of property repairs if its leases were terminated
- failed to include details of an "Onerous Contract" which obliged Plexus to work for legacy Parabis Group clients for free, resulting in unrecoverable costs of £250k
One of the most startling admissions was that Plexus took £146k from a "customer" without issuing an invoice, and because it had "neither been billed to the customer nor recorded", the money never showed up in the accounts. "This treatment was not in line with the accounting policies of the LLP", said the firm.
Under the Companies Act 2006, directors are under a legal duty not to file false information with Companies House, and knowingly or recklessly delivering misleading or false information is a criminal offence. Plexus told RollOnFriday, "The firm has complied with all its regulatory obligations and the SRA is not investigating the firm in relation to these legacy matters".
Asked whether Plexus's claim a month ago that its accounts would “show that the business is in robust financial health, with a strong balance sheet and cash reserves" was accurate given the utter batshittery they actually revealed, the firm insisted that its 2020 results "show that the business is in robust financial health with a strong balance sheet, net assets of around £20m and net cash of around £4m. The firm’s profits of around £5m in FY20 have continued to grow into FY21 and beyond".
Plexus's accounts for 2021 are already a month overdue, and the holding company's 2020 accounts are now almost a year late.