Final Results and Annual Accounts

RNS Number : 8880N

Norman Broadbent PLC

14 May 2018

 

Norman Broadbent plc

("Norman Broadbent", the "Company" or the "Group")

Final Results and Annual Accounts

The board (the "Board") of Norman Broadbent (AIM: NBB) - a leading Professional Services firm specifically focussing on Leadership Acquisition & Advisory Services (Board & Leadership Search, Senior Interim Management, Research & Insight, Leadership Consulting & Assessment, and executive level Recruitment Solutions) - is pleased to announce its final results and annual accounts for the year ended 31 December 2017.

Highlights

·      Overall revenue increased by £0.86m (+15%) to £6.5m with lower, but higher quality headcount. New businesses grew substantially in line with the strategy to create a more balanced business of high quality revenue

·      Cross selling between brands has increased significantly resulting in c.50% of NB Solutions deals being generated by NB Executive Search

·      NB Interim revenues increased by £1.1m (140%), NB Leadership Consulting revenues increased by £0.4m (148%), NB Solutions revenue increased £0.2m (45%), and our recently (2018 H2) launched Research & Insight service starting to contribute. These increases are offset by the decline in Search revenues (due to the transformation) of £0.9m (-23%)

·     Strong Q4 for NB Executive Search

·     Loss after tax increased by £0.6m (60%) to £1.6m reflecting restructuring costs and associated short term impact on fee earner numbers in Search but masked a strong Q4 2017 performance

·      April 2018 office relocation to generate £300k in savings pa for lease duration

·      Group now more relevant and competitive in terms of pricing, proposition and people  

·     Trading update: Q4 2017 strongest quarter for new wins and revenue during the last financial year - positive trend continuing into Q1 2018; Q1 2018 ahead of Board plan at EBITDA and revenue level. In summary significant progress made, but still a way to go in completing this phase of our transformation.

For further information, please contact:

Norman Broadbent plc Mike Brennan / Will Gerrand	020 7484 0000
WH Ireland Limited Adrian Hadden / Jessica Cave / Alex Bond	020 7220 1666

 

CEO's Review for the year ended 31 December 2017

RESULTS FOR THE FINANCIAL YEAR

The table below summarises the results of the Group:

	Year ended	Year ended
	31-Dec	31-Dec
	2017	2016
	£000's	£000's
CONTINUING OPERATIONS
REVENUE	6,523	5,661
Cost of sales	(1,484)	(735)
GROSS PROFIT	5,039	4,926
Operating expenses	(6,599)	(6,149)
GROUP OPERATING LOSS	(1,560)	(1,223)
Net finance cost	(42)	(54)
LOSS BEFORE TAX	(1,602)	(1,277)
Income tax	-	-
Profit/(Loss) from discontinued operation	-	279
LOSS AFTER TAX	(1,602)	(998)

Strategic review and fundraising

The increased loss from continuing operations for the full year of 2017 is disappointing but conceals the considerable progress made in the implementation of Phase 2 of our turnaround. This progress has been against the backdrop of a fundamental change in how we go about our business. There has been a relentless focus on the quality of our work and people, the development of a more collegiate approach to servicing our client's needs, including leveraging the synergies between our brands to devise innovative solutions for our clients rather than industry standard offerings. The positive impact of these changes was reflected in the Q4 revenue run rates of the underlying business units. This trend has continued into 2018.

The key appointments made during the past 18 months are now entrenched and have settled in well with long-standing team members. As we continue to recruit externally and to promote from within, our focus has been on the identification of high quality innovative and collegiate professionals, who are team-players and culturally in tune with the 'new' Norman Broadbent.

A significant appointment and major source of change was the recruitment of Tim Hammett as Head of Norman Broadbent Executive Search. Tim joined us in February 2017 and has driven significant change through this part of the business. Will Gerrand, an experienced CFO and proven operator within the industry, joined as Group CFO/COO in October 2017 and has made a significant and positive impact on the Group.

The Group raised £1.23 million of new equity (before expenses) in September 2017 from existing institutional shareholders along with £300,000 in Secured Loan Notes. This additional investment was to help accelerate the Company's growth plans, to enable a move to more modern Central London offices, and for working capital purposes.

A key aspect of the turnaround programme has been relocation. Our St James's offices, whilst in a beautiful location, were expensive, inefficient, under-utilised and do not reflect the 'new' Norman Broadbent Group. After a significant amount of effort, we secured more modern offices which are not only brand enhancing and more efficient, but will create annualised savings in excess of £300,000 from the second half of 2018.

I'm delighted that after much hard work and commitment, our efforts are slowly being rewarded. The percentage of cross-referred work is higher than it has ever been since I joined, and the new approach has been reflected in the level of wins and revenue achieved in Q4 2017 and Q1 2018.

2017 trading and business review

As noted above a major part of our efforts during 2017 focussed on bringing in more innovative, entrepreneurial talent into the Group. The combination of new talent and our core performing Fee Earners has helped create a more uniformly collegiate, commercial and high performing culture. This change in culture led to a number of staff exiting the business. The impact of the cost of individuals leaving during 2017 is estimated to be circa £750,000, (2016: £300,000). There is also the related issue of the time taken by new employees to start generating consistent revenue. In a number of cases we have found that the new culture has enabled new joiners to generate revenue earlier than the traditionally anticipated 6 month fallow period.

The fundamental changes being driven through the Group have inevitably had a short-term impact on both costs and revenue generating capacity. Despite this Group turnover increased to £6,523,000 (2016: £5,661,000) whilst overall net revenues after associate and interim costs in the continuing businesses increased to £5,039,000 (2016: £4,926,000). Inevitably the cost of investing in refocusing the Group saw operating expenses increase to £6,599,000 (2016: £6,149,000), and as a result operating losses from continued operations widened to £1,560,000 (2016: £1,223,000).

In addition to the commentary below note 3 of the Consolidated Financial Statements in the report and accounts provides a detailed segmental breakdown of the 2017 Group results.

Norman Broadbent Executive Search ("NBES")

NBES was the part of the group most significantly impacted by the costs associated with the implementation of the much-needed change during 2017. This resulted in a number of staff exits and new hires. During this period revenue declined by 24% to £3,061,000 (2016: £4,005,000) resulting in a £1,005,000 loss before tax (2016: Loss £328,000). The process of change in NBES, subject to a small number of potential targeted hires, is now largely complete and the foundations for a return to growth have been laid with increased activity evidenced by 2017's highest quarter's sales taking place in Q4.

In addition the impact of the programme of change is reflected in the greatly increased levels of cross referrals from NBES to other business units. Some 30% of NBIM deals and 50% of NBS deals were originated by NBES. This compares to prior years when there were negligible levels of referred work. This reflects the move from a siloed business unit outlook to the client focussed solutions based approach now adopted across the Group.

Norman Broadbent Interim Management ("NBIM")

Following NBIM's relaunch in October 2016 under a new Managing Director and the hiring of an entire new team, NBIM is now trading across the majority of our key areas of market and functional specialisations. Unlike many Interim providers NBIM is increasingly operating in the less transactional/commoditised and higher margin markets. As businesses are facing increasingly complex short term challenges, NBI is frequently mandated to find and place Interim experts.

As planned we invested heavily in 2017 in rebuilding our Interim business. NBIM generated net revenues (after interim costs) of £711,000 (2016: £191,000) resulting in a loss before tax of £237,000 (2016: profit £60,000). We anticipate that 2018 will see further substantial growth in this business.

Norman Broadbent Solutions ("NBS")

Having been significantly restructured, repositioned and rebranded in 2016, NBS has both successfully promoted staff from within and attracted new talent from competitors. Revenue increased to £842,000 (2016: £577,000) and its loss before tax reduced to £14,000 (2016: loss before tax of £357,000).

As with NBES, we see significant opportunities in this part of the market as we blend service lines within our portfolio to provide optimal client solutions ranging from single hires through to longer-term team builds.

Research and Insight ("R&I")

During 2017 we began to invest in R&I, which, in addition to serving our own internal requirements, has started to provide complementary services to clients. R&I is an important strategic differentiator and an enabler of follow-on work, particularly Executive Search. Clients can be provided with research, market insight and business intelligence enabling them to make more informed 'people', organisational or commercial decisions. We see this as an exciting addition to our portfolio and it is a service we are increasingly offering to clients as part of our overall Advisory offering. The revenue arising is included within the Search business.

Norman Broadbent Leadership Consulting ("NBLC")

NBLC produced a greatly improved trading performance in 2017 with repeat client business in particular being reflected in a very strong first half of the year. NBLC revenues (after associate costs) were £516,000 (2016: £252,000), resulting in a profit before tax of £294,000 (2016: Loss £56,000).

Financial position

As at 31 December 2017, consolidated net assets were £1,990,000 (2016: £2,434,000) with net current assets decreasing to £316,000 from £825,000 in 2016. Group cash amounted to £678,000 (2016: £963,000).

Net cash outflow from operations in 2017 was £2,079,000 (2016: £797,000). Net cash inflow from financing activities amounted to £1,851,000 (2016: £1,404,000) relating primarily to the net funds received from the 2017 Subscription, Secured Loan Notes and utilisation of the invoice discounting facility.

At 31 December 2017 the Group had £851,000 of funds drawn down against the revolving invoice discounting facility (2016: £444,000) against UK trade receivables of £1,371,000 (2016: £634,000).

The Directors continue to monitor and manage the Group's working capital very carefully.

Property

On 21st March 2018, Norman Broadbent plc signed a lease to secure new Central London premises of 5,335 sq. feet in Portland House, London SW1. The move, completed on the 30th of April 2018, will enable us to operate out of a brand-enhancing, more modern and efficient, purpose built office reflective of the 'new' Norman Broadbent Group.

This is a significant move for the Company as not only will it generate annualised cost savings during the term of the lease of over £300,000 starting from mid-year 2018, but also provides additional capacity to grow.

Current trading

The ongoing reinvention of Norman Broadbent Group is progressing. Our broader, more integrated service proposition is landing well with clients, the business is increasingly competitive, and culturally we are more innovative and collegiate. In summary, the Group is now more relevant and competitive in terms of pricing, proposition and people.

I can report that the first quarter of 2018 at revenue and EBITDA level was ahead of the Board's plan.

While significant progress has been made in terms of new services, hires and our premises move, collegiate working, there is still a way to go in completing this phase of our transformation.

On behalf of the Board I would like to thank our shareholders for their continuing support, our clients for placing their trust in us, and finally our team. We are quite rightly proud of what we are achieving, much of which is down to the hard work, dedication and commitment of my colleagues.

MIKE BRENNAN

Group Chief Executive

11 May 2018

Strategic Report for the year ended 31 December 2017

THE BUSINESS MODEL

Norman Broadbent plc is a leading Professional Services firm with a specific focus on Talent Acquisition & Advisory Services. Since our formation nearly 40 years ago, we have developed a range of complementary service lines consisting of Board & Leadership/Executive Search, Senior Interim Management, Research & Insight, Leadership Consulting & Assessment, and executive level Recruitment Solutions.

The Group operates through independently managed and separately branded businesses which trade independently but collectively share a set of core behavioural and brand values.

STRATEGY AND OBJECTIVES

The Groups strategy is focussed on further developing and strengthening its complementary portfolio of Talent Acquisition and Advisory services via further selective hires and concentrating on driving synergies via cross selling.

RESULTS FOR THE FINANCIAL YEAR

Group revenue from continued operations increased in the year by 15% to £6,523,000 (2016: £5,661,000), with gross profit of £5,039,000 (2016: £4,926,000). NBES fees declined by 24% to £3,061,000 (2016: £4,005,000) reflecting the short term impact on the number of fee earners. Net revenues from NBLC, NBS and NBIM were £2,044,000 (2016: £1,013,000), reflecting the significant restructuring of NBI and NBS during 2016.

Operating expenditure increased to £6,599,000 (2016: £6,149,000), reflecting the costs of the restructuring that took place in all businesses during 2016.

The Group reported an operating loss from continued operations in 2017 of £1,560,000 (2016: £1,223,000) and a retained loss of £1,602,000 (2016: £998,000).

CASH FLOW AND BALANCE SHEET

Net cash outflow from operations in 2017 was £2,079,000 (2016: £797,000). Reflecting the improved revenues in Q4, Group debtor days increased to 78 days with net trade receivables at the year-end standing at £1,371,000 (2016: £697,000). Management continue to monitor this Key Performance Indicator and aim to maintain debtor days at a level which is no higher than 60.

Net cash inflow from financing activities amounted to £1,851,000 (2016: £1,404,000) relating primarily to the net funds received from the fundraising in September 2017. At 31 December 2017, the Group had £851,000 of funds drawn down against the revolving invoice discounting facility (2016: £444,000) against UK trade receivables of £1,371,000 (2016: £634,000).

EARNINGS PER SHARE

The retained loss for 2017 has resulted in a reported loss per share of 3.52 pence (2016: loss per share 5.36 pence). After adding back the cost of share based payments the adjusted loss per share was 3.48 pence (2016: loss per share 5.32 pence).

GOING CONCERN

In light of the current financial position of the Group and on consideration of the business's forecasts and projections, taking account of possible changes in trading performance, the directors have a reasonable expectation that the Group has adequate available resources to continue as a going concern for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing their annual report and financial statements.

MONITORING, RISK AND KPIs

The directors have a responsibility for identifying risks facing each of the businesses and for putting in place procedures to mitigate and monitor risks. Board meetings incorporate, amongst other agenda items, a review of monthly management accounts, operational and financial KPIs and major issues and risks facing the business.

The most important KPIs used in monitoring the business are set out in the following table:

Key performance indicators	2017	2016
Revenue (continued operations)	£6,523,000	£5,661,000
Operating loss	(1,560,000)	(1,223,000)
Debtor days	78 days	43 days

The directors monitor revenue against annual targets, which are adjusted each year to ensure the Group remains on target to achieve its strategic growth plan. Further, given the significant restructuring and refocus of the group, the directors expect Group revenues and operating profits to improve over the next few years.

The principal risks faced by the Group in the current economic climate are considered to be financial, business environment and people related.

Financial - The main financial risks arising from the Group's operations are the adequacy of working capital, interest rate, liquidity and credit risk. These are monitored regularly by the Board and are disclosed further in notes 2 and 19 of the financial statements.

In September 2017, the Group raised £1,230,000 (2016: £2,300,000) from institutional shareholders.

The business is in the later stages of the turnaround process and is budgeted to be self-funding. In turnarounds there is always a risk that the process could take longer than anticipated which could lead to short term working capital pressures. In the event of such an occurrence the company anticipates working closely with its supportive shareholders to access short term working capital funding.

Business Environment - Demand for services is affected by global and UK specific economic conditions and the level of economic activity in the regions and industries in which the Group operates. When conditions in the economy deteriorate or economic activity slows, many companies hire fewer permanent employees or rely on internal human resource departments to recruit staff. Whilst it appears that the global economy is still growing and the impact of Brexit on the UK economy is lower than expected, should conditions deteriorate in the future then demand for the services offered by the Group could weaken resulting in lower cash flows.

The Group attempts to mitigate this risk by operating across various diverse sectors where demand for such services are stronger.

People - The Group's most vital resource remains its employees and the directors remain committed to retaining and recruiting quality staff who share the Group's culture and values. In a people intensive business, the resignation of key staff, which could lead to them taking clients, candidates and colleagues to another employer, is a significant risk. The Group aims to mitigate this risk by offering competitive remuneration structures, whilst also insisting on employment contracts that contain restrictive covenants that limit a leaver's ability to approach existing clients, candidates and employees.

CAUTIONARY STATEMENT

This Strategic Report has been prepared solely to provide additional information to shareholders to assess the Company's strategies and the potential for those strategies to succeed.

The Strategic Report contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

The directors, in preparing this Strategic Report, have complied with s414C of the Companies Act 2006. The Strategic Report has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Norman Broadbent plc and its subsidiary undertakings when viewed as a whole.

Mike Brennan                                              Will Gerrand

Director                                                          Director

11 May 2018                                                   11 May 2018

 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2017

		2017	2016
	Note	£'000	£'000
CONTINUING OPERATIONS
Revenue	1	6,523	5,661
Cost of sales		(1,484)	(735)
Gross profit	3	5,039	4,926
Operating expenses		(6,599)	(6,149)
Operating loss from continued operations		(1,560)	(1,223)
Net finance cost	7	(42)	(54)
LOSS ON ORDINARY ACTIVITIES BEFORE INCOME TAX	4	(1,602)	(1,277)
Income tax expense	6	-	-
LOSS FROM CONTINUING OPERATIONS		(1,602)	(1,277)
DISCONTINUED OPERATIONS
Profit (Loss) from discontinued operation	8	-	279
LOSS FOR THE PERIOD		(1,602)	(998)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		(1,602)	(998)
Loss attributable to:
- Owners of the Company		(1,543)	(1,304)
- Non-controlling interests		(59)	306
Loss for the year		(1,602)	(998)
Total comprehensive income attributable to:
- Owners of the Company		(1,543)	(1,304)
- Non-controlling interests		(59)	306
		(1,602)	(998)
Total comprehensive income for the year
Loss per share
- Basic	9	(3.52)p	(5.36)p
- Diluted		(3.52)p	(5.36)p
Adjusted loss per share
- Basic	9	(3.48)p	(5.32)p
- Diluted		(3.48)p	(5.32)p
Loss per share - continuing operations
- Basic	9	(3.52)p	(5.25)p
- Diluted		(3.52)p	(5.25)p
Adjusted loss per share - continuing operations
- Basic		(3.52)p	(5.21)p
- Diluted	9	(3.52)P	(5.21)p

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2017

		2017	2016
	Notes	£'000	£'000
Non-Current Assets
Intangible assets	11	1,363	1,363
Property, plant and equipment	12	47	68
Prepayments and accrued income	14	195	234
Deferred tax assets	6	69	69
TOTAL NON-CURRENT ASSETS		1,674	1,734
Current Assets
Trade and other receivables	14	2,093	1,347
Cash and cash equivalents	15	678	963
TOTAL CURRENT ASSETS		2,771	2,310
TOTAL ASSETS		4,445	4,044
Current Liabilities
Trade and other payables	16	1,179	1,041
Loan notes	17	300	-
Bank overdraft and interest bearing loans	17	851	444
Provisions	22	125	-
Corporation tax liability		-	-
TOTAL CURRENT LIABILITIES		2,455	1,485
NET CURRENT ASSETS		316	825
Non-Current Liabilities
Provisions	22	-	125
TOTAL LIABILITIES		2,455	1,610
TOTAL ASSETS LESS TOTAL LIABILITIES		1,990	2,434
EQUITY
Issued share capital	19	6,266	6,143
Share premium account	19	13,706	12,685
Retained earnings		(17,923)	(16,394)
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY		2,049	2,434
Non-controlling interests		(59)	-
TOTAL EQUITY		1,990	2,434

These financial statements were approved by the Board of Directors on 11 May 2018 2018

Signed on behalf of the Board of Directors

M Brennan                                      W Gerrand

Director                                             Director

Company No 00318267

 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2017

CONSOLIDATED GROUP

	Attributable to owners of the Company
	Share Capital	Share Premium	Retained Earnings	Total Equity	Non-controlling interests	Total Equity
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1st January 2016	5,901	10,699	(15,101)	1,499	(294)	1,205
Loss for the year			(1,304)	(1,304)	306	(998)
Adjustment for discontinued operation
Total other comprehensive income
Total comprehensive income for the year			(1,304)	(1,304)	306	(998)
Transactions with owners of the Company, recognised directly in equity:
Issue of ordinary shares	242	1,986	-	2,228	-	2,228
Credit to equity for share based payments	-	-	11	11	-	11
Total transactions with owners of the Company, recognised directly in equity	242	1,986	11	2,239	-	2,239
Change in ownership interest in subsidiaries
Disposal of non-controlling interest with change of control					(12)	(12)
Total transactions with owners of the Company	242	1,986	11	2,239	(12)	2,227
Balance at 31st December 2016	6,143	12,685	(16,394)	2,434	-	2,434
Balance at 1st January 2017	6,143	12,685	(16,394)	2,434	-	2,434
Loss for the year			(1,543)	(1,543)	(59)	(1,602)
Adjustment for discontinued operation
Total other comprehensive income
Total comprehensive income for the year			(1,543)	(1,543)	(59)	(1,602)
Transactions with owners of the Company, recognised directly in equity:
Issue of ordinary shares	123	1,021	-	1,144	-	1,144
Credit to equity for share based payments			14	14		14
Total transactions with owners of the Company, recognised directly in equity	123	1,021	14	1,158	-	1,158
Total transaction with owners of the Company	123	1,021	14	1,158	-	1,158
Balance at 31st December 2017	6,266	13,706	(17,923)	2,049	(59)	1,990

 

Share Capital

This represents the nominal value of shares that have been issued by the Company.

Share Premium

This reserve records the amount above the nominal value received for shares issued by the Company. Share premium may only be utilised to write-off any expenses incurred or commissions paid on the issue of those shares, or to pay up new shares to be allotted to members as fully paid bonus shares.

Retained Earnings

This reserve comprises all current and prior period retained profits and losses after deducting any distributions made to the Company's shareholders.

CONSOLIDATED STATEMENT OF CASH FLOW
For the year ended 31 December 2017

		2017	2016
	Notes	£'000	£'000
Net cash used in operating activities	(i)	(2,079)	(797)
Cash flows from investing activities and servicing of finance
Net finance cost		(42)	(54)
Payments to acquire tangible fixed assets	12	(16)	(24)
Disposal of subsidiary, inclusive of cash disposed of	8	-	(15)
Net cash used in investing activities		(58)	(93)
Cash flows from financing activities
Proceeds/(Repayment) of borrowings	17	300	(350)
Net cash inflows from equity placing	19	1,144	2,228
Increase/(Repayment) in invoice discounting	17	407	(474)
Net cash from financing activities		1,851	1,404
Net (decrease)/increase in cash and cash equivalents		(286)	514
Net cash and cash equivalents at beginning of period		963	448
Effects of exchange rate changes on cash balances held in foreign currencies		1	1
Net cash and cash equivalents at end of period		678	963
Analysis of net funds
Cash and cash equivalents		678	963
Borrowings due within one year		(1,151)	(444)
Borrowings due within more than one year		-	-
(Net debt)/cash		(473)	519

Note (i)

Reconciliation of operating loss to net cash from operating activities

	2017	2016
	£'000	£'000
Operating loss from continued operations	(1,560)	(914)
Operating profit /(loss) from discontinued operations (note 8)	-	(30)
Depreciation/impairment of property, plant and equipment	37	38
Share based payment charge	14	11
Decrease/(Increase) in trade and other receivables	(707)	871
Profit on sale of Investment	-	(309)
(Decrease)/Increase in trade and other payables	137	(464)
Taxation paid	-	-
Net cash used in operating activities	(2,079)	(797)

 NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2017

1.       SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to both years presented unless otherwise stated.

1.1     Basis of preparation

The consolidated financial statements of Norman Broadbent plc ("Norman Broadbent" or "the Company") have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS as adopted by the EU), IFRIC interpretations and the Companies Act 2006 applicable to Companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities (including derivative instruments) at fair value through profit or loss. The consolidated financial statements are presented in pounds and all values are rounded to the nearest thousand (£000), except when otherwise indicated.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 1.21.

1.1.1 Going concern

The Group reported an operating loss from continued operations in the year to 31 December 2017 of £1.6m compared with an operating loss of £1.2m in 2016. In September 2017 the Group raised £1.2m of new equity (before expenses) from existing institutional shareholders which has enabled the business to restructure further, to hire additional fee generating staff across the Group and to provide a more stable working capital position.

The Consolidated Statement of Financial Position shows a net asset position at 31 December 2017 of £2.0m (2016: £2.4m) with cash at bank of £0.7m (2016: £1.0m). At the date that these financial statements were approved the Group had no overdraft facility, and secured loan notes of 0.3m and its receivable finance (Leumi ABL) which is 100% secured by the Group's trade receivables.

In light of the current financial position of the Group and on consideration of the business' forecasts and projections, taking account of possible changes in trading performance, the directors have a reasonable expectation that the Group has adequate available resources to continue as a going concern for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing their annual report and financial statements.

2        SEGMENTAL ANALYSIS

Management has determined the operating segments based on the reports reviewed regularly by the Board for use in deciding how to allocate resources and in assessing performance. The Board considers Group operations from both a class of business and geographic perspective. Each class of business derives its revenues from the supply of a particular recruitment related service, from retained executive search through to executive assessment and coaching. Business segment results are reviewed primarily to operating profit level, which includes employee costs, marketing, office and accommodation costs and appropriate recharges for management time.

Group revenues are primarily driven from UK operations, however when revenue is derived from overseas business the results are presented to the Board by geographic region to identify potential areas for growth or those posing potential risks to the Group.

i)        Class of Business:

The analysis by class of business of the Group's turnover and profit before taxation is set out below:

2017

	Executive Search	NBLC	NBS	NBIM	Disc Operation	Unallocated	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Revenue	3,061	728	842	1,892	-	-	6,523
Cost of sales	(66)	(212)	(25)	(1,181)	-	-	(1,484)
Gross profit	2,995	516	817	711	-	-	5,039
Operating expenses	(3,954)	(215)	(824)	(942)	-	(627)	(6,562)
Depreciation and amort.	(31)	(1)	(4)	(1)	-	-	(37)
Finance costs	(15)	(6)	(3)	(5)	-	(13)	(42)
Profit/(Loss) before tax	(1,005)	294	(14)	(237)	-	(640)	(1,602)

2016

	Executive Search	NBLC	NBS	NBIM	Disc Operation	Unallocated	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Revenue	4,005	293	577	786	470	-	6,131
Cost of sales	(92)	(41)	(7)	(595)	-	-	(735)
Gross profit	3,913	252	570	191	470	-	5,396
Operating expenses	(4,195)	(308)	(918)	(127)	(497)	(566)	(6,611)
Depreciation and amort.	(29)	-	(6)	-	(3)	-	(38)
Finance costs	(17)	-	(3)	(4)	-	(30)	(54)
Exceptional items	-	-	-	-	309	-	309
Profit/(Loss) before tax	(328)	(56)	(357)	60	279	(596)	(998)

ii)       Revenue and gross profit by geography

	2017	2016	2017	2016
	Revenue	Revenue	Gross Profit	Gross Profit
United Kingdom	6,196	6,030	4,712	5,295
Rest of the world	327	101	327	101
Total	6,523	6,131	5,039	5,396

3        LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION

	2017	2016
	£'000	£'000
Loss on ordinary activities before taxation is stated after charging:
Depreciation and impairment of property, plant and equipment	37	38
Gain on foreign currency exchange	-	-
Staff costs (see note 5)	4,652	4,734
Operating lease rentals:
Land and buildings	409	424
Auditors' remuneration:
Audit work	45	49
Non-audit work	-	-

The Company audit fee in the year was £14,000 (2016: £12,500).

4        STAFF COSTS

The average number of full time equivalent persons (including directors) employed by the Group during the period was as follows:

	2017	2016
	No.	No.
Sales and related services	32	45
Administration	17	18
	49	63

Staff costs (for the above persons):

	£'000	£'000
Wages and salaries	4,037	4,136
Social security costs	458	450
Defined contribution pension cost	143	137
Share based payment expense	14	11
	4,652	4,734

The emoluments of the directors are disclosed as required by the Companies Act 2006 on page ˜ in the Directors' Remuneration Report. The table of directors' emoluments has been audited and forms part of these financial statements. This also includes details of the highest paid director.

5        TAX EXPENSE

(a)      Tax charged in the income statement

Taxation is based on the loss for the year and comprises:

	2017	2016
	£'000	£'000
Current tax:
United Kingdom corporation tax at 19% (2016: 20.25%) based on loss for the year	-	-
Foreign Tax	-	-
Total current tax	-	-
Deferred tax:
Origination and reversal of temporary differences	-	-
Tax charge/(credit)	-	-

(b)      Reconciliation of the total tax charge

The difference between the current tax shown above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is as follows:

	2017	2016
	£'000	£'000
Loss on ordinary activities before taxation	(1,602)	(998)
Tax on loss on ordinary activities at standard UK corporation tax rate of 19.25% (2016: 20%)	(305)	(199)
Effects of:
Expenses not deductible	23	27
Substantial shareholding exemption		(62)
Capital allowances in excess of depreciation	4	4
Intercompany loan write off	-	66
Pension accrual movement	(3)	3
Losses bought forward utilised	(56)
Adjustment to losses carried forward	337	161
Current tax charge for the year	-	-

(c)      Deferred tax

	Tax losses	Total
	£'000	£'000
At 1 January 2017	(69)	(69)
At 31 December 2017	(69)	(69)
Credited to the income statement in 2017
At 31 December 2017	(69)	(69)

At 31 December 2017 the Group had capital losses carried forward of £8,130,000 (2016: £8,130,000). A deferred tax asset has not been recognised for the capital losses as the recoverability in the near future is uncertain. The Group also has £13,510,042 (2016: £11,761,103 ) trading losses carried forward, which includes £8,987,000 losses transferred from BNB Recruitment Consultancy Ltd in 2011. A deferred tax asset of £1,288,061 (2016: £1,355,756) has not been recognised in the financial statements due to the inherent uncertainty as to the quantum and timing of its utilisation.

The analysis of deferred tax in the consolidated balance sheet is as follows:

	2017	2016
	£'000	£'000
Deferred tax assets: Tax losses carried forward	69	69
Total	69	69

6        NET FINANCE COST

	2017	2016
	£'000	£'000
Interest payable on bank loans and overdrafts	42	54
Total	42	54

7        DISCONTINUED OPERATION

In 2016, the Group sold its 51% stake in Social Media Search Limited. Under the terms of the Sale and Purchase Agreement ("SPA"), Norman Broadbent will receive a cash consideration of £325,000 for Social Media Search. As at the end of April, the company had received £81,000 of the deferred consideration.

	2017	2016
	£'000	£'000
Results from discontinued operation
Revenue	-	470
Operating Expenses	-	(500)
Results from operating activities	-	(30)
Net finance cost	-	-
Exceptional items	-	655
Tax	-	-
Profit/(loss) on ordinary activities before taxation	-	625
Minority Interest	-	(306)
Profit/(Loss) attributable to the owners	-	319
Profit on disposal of subsidiary	-	309
	-	628

The profit from discontinued operations disclosed within the 2016 Consolidated Income Statement of £278,900 consists of the operating loss of (£30,000) and the profit on disposal of the subsidiary of £309,900. The 2016 exceptional item, relating to the write off of intercompany loan accounts, has been eliminated on consolidation within the Consolidated Income Statement.

Effect of disposal on the financial position of the Group

Trade and other receivables	-	42
Cash and cash equivalents	-	15
Trade and other payables	-	(31)
Net assets and liabilities	-	26
Consideration received, satisfied in cash	-	-
Cash and Cash equivalents disposed of	-	(15)
Net cash outflow	-	(15)

8        EARNINGS PER SHARE

i)        Basic earnings per share

This is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period:

	2017	2016
Loss attributable to owners of the company	(1,543,350)	(1,304,000)
Weighted average number of ordinary shares	43,882,363	24,316,626
Total	43,882,363	24,316,626

ii)       Diluted earnings per share

This is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares in the form of employee share options. For these options a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to the outstanding options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

The grants of options in 2017 have both profitability and share price exercise criteria.

	2017	2016
Loss attributable to owners of the company	(1,543,350)	(1,304,000)
Weighted average number of ordinary shares	43,882,363	24,316,626
Total	43,882,363	24,316,626

iii)      Adjusted earnings per share

An adjusted earnings per share has also been calculated in addition to the basic and diluted earnings per share and is based on earnings adjusted to eliminate the effects of charges for share based payments. It has been calculated to allow shareholders to gain a clearer understanding of the trading performance of the Group.

		2017	2017	2016	2016	2016
	£'000	Basic pence per share	Diluted pence per share	£'000	Basic pence per share	Diluted pence per share
Basic earnings
Loss after tax	(1,543)	(3.52)	(3.52)	(1,304)	(5.36)	(5.36)
Adjustments
Share based payment charge	14	0.04	0.04	11	0.04	0.04
Adjusted earnings	(1,529)	(3.48)	(3.48)	(1,293)	(5.32)	(5.32)

9        PROFIT OF PARENT COMPANY

As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these accounts. The parent company's loss for the year amounted to £649,000 (2016: £541,000).

10      INTANGIBLE ASSETS

	Goodwill arising on consolidation
	£'000
Group Balance at 1 January 2016	3,690
Balance at 31 December 2016	3,690
Balance at 31 December 2017	3,690
Provision for impairment
Balance at 1 January 2016	2,327
Balance at 31 December 2016	2,327
Balance at 31 December 2017	2,327
Net book value
At 1 January 2016	1,363
At 31 December 2016	1,363
At 31 December 2017	1,363

Goodwill acquired through business combinations is allocated to cash-generating units (CGU) identified at entity level. The carrying value of intangibles allocated by CGU is shown below:

	Norman Broadbent	Norman Broadbent Leadership Consulting	Total
	£'000	£'000	£'000
At 1 January 2016	1,303	60	1,363
At 31 December 2016	1,303	60	1,363
At 31 December 2017	1,303	60	1,363

In line with International Financial Reporting Standards, goodwill has not been amortised from the transition date, but has instead been subject to an impairment review by the directors of the Group. As set out in accounting policy note 1 on page 31 of the report and accounts, the directors test the goodwill for impairment annually. The recoverable amount of the Group's CGUs are calculated on the present value of their respective expected future cash flows, applying a weighted average cost of capital in line with businesses in the same sector. Pre-tax future cash flows for the next five years are derived from the approved forecasts for the 2017 financial year.

The key assumption applied to the forecasts for the business is that return on sales for Norman Broadbent is expected to be a minimum of 10% per annum for the foreseeable future (2016: 9%) and 19% for Norman Broadbent Leadership Consulting (2016: 19%). Return on sales defined as the expected profit before tax on net revenue. There are only minimal non cash flows included in profit before tax. The rate used to discount the forecast cash flows is 9% (2016: 10%).

The five year forecasts have been prepared using conservative revenue growth rates to reflect the uncertainty that is still present in the economy. Based on the above assumptions, at 31 December 2017 the recoverable value of the Norman Broadbent CGU is £1,635,000 and the Norman Broadbent Leadership Consulting CGU is £313,000.

11.     PROPERTY, PLANT AND EQUIPMENT

	Land and buildings - leasehold	Office and computer equipment	Fixtures and fittings	Total
	£'000	£'000	£'000	£'000
Group Cost
Balance at 1 January 2016	84	206	47	337
Additions	-	14	10	24
Disposals	-	(74)	-	(74)
Balance at 31 December 2016	84	146	57	287
Additions	-	16	-	16
Disposals	-	-	-	-
Balance at 31 December 2017	84	162	57	303
Accumulated depreciation
Balance at 1 January 2016	46	163	46	255
Charge for the year	16	21	1	38
Disposals	-	(74)	-	(74)
Balance at 31 December 2016	62	110	47	219
Charge for the year	16	18	3	37
Disposals	-	-	-	-
Balance at 31 December 2017	78	128	50	256
Net book value
At 1 January 2016	38	43	1	82
At 31 December 2016	22	36	10	68
At 31 December 2017	6	34	7	47

The Group had no capital commitments as at 31 December 2017 (2016: £Nil).

The above assets are owned by Group companies; the Company has no fixed assets.

12      INVESTMENTS

	Shares in subsidiary undertakings
	£'000
Company Cost
Balance at 1 January 2016	5,802
Disposals	-
Balance at 31 December 2016	5,802
Disposals (see note below)	(6)
Balance at 31 December 2017	5,796
Provision for impairment
Balance at 1 January 2016	3,926
Balance at 31 December 2016	3,926
Impairment for the year	227
Balance at 31 December 2017	4,153
Net book value
At 1 January 2016	1,876
At 31 December 2016	1,876
At 31 December 2017	1,643

In 2017, the Company wrote off the value of dormant overseas subsidiaries.

At 31 December 2017 the Company held the following ownership interests:

Principal Group investments:	Country of incorporation or registration and operation	Principal activities	Description and proportion of shares held by the Company
Norman Broadbent Executive Search Ltd	England and Wales	Executive search	100% ordinary shares
Norman Broadbent Overseas Ltd	England and Wales	Executive search	100% ordinary shares
Norman Broadbent Leadership Consulting Limited	England and Wales	Assessment, coaching and talent mgmt.	100% ordinary shares
NB Solutions Ltd	England and Wales	Mezzanine level search	100% ordinary shares
Bancomm Ltd **	England and Wales	Dormant	100% ordinary shares
Norman Broadbent Ireland Ltd*  **	Republic of Ireland	Dormant	100% ordinary shares
Norman Broadbent Interim Management Ltd	England and Wales	Interim Management	75% ordinary shares

*   100 % of the issued share capital of this company is owned by Norman Broadbent Overseas Ltd.

**         These companies are exempt from audit by virtue of provisions in the Companies Act 2006. Where required limited assurance procedures have been completed.

The registered office for the subsidiaries are Portland House, Bressenden Place London SW1E 5BH with the exception of Norman Broadbent Ireland.

13      TRADE AND OTHER RECEIVABLES

	Group		Company
	2017	2016	2017	2016
	£'000	£'000	£'000	£'000
Trade receivables	1371	711	-	-
Less: provision for impairment	-	(14)	-	-
Trade receivables - net	1371	697	-	-
Other debtors	334	326	5	6
Prepayments and accrued income	583	558	283	336
Due from Group undertakings	-	-	5,344	4,199
Total	2,288	1,581	5,632	4,541
Non-Current	195	234	195	234
Current	2,093	1,347	5,437	4,307
	2,288	1,581	5,632	4,541

Non-current trade receivables is in relation to the cash consideration due from the sale of SMS.

As at 31 December 2017, Group trade receivables of £838,000 (2016: £597,000) were past their due date but not impaired. They relate to customers with no default history. The aging profile of these receivables is as follows:

	Group		Company
	2017	2016	2017		2016
	£'000	£'000	£'000		£'000
Up to 3 months	820	597	-		-
3 to 6 months	18	-	-		-
6 to 12 months	-	-	-	-
Total	838	597	-		-

The largest amount due from a single trade debtor at 31 December 2017 represents 14% (2016: 10%) of the total trade receivables balance outstanding.

As at 31 December 2017, no group trade receivables (2016: £14,000) were past their due date and considered impaired. No provision for impairment has been recognised in the financial statements. Movements on the Group's provision for impairment of trade receivables are as follows:

	2017	2016
	£'000	£'000
At 1 January	14	72
Provision for receivable impairment	-	14
Receivables written-off as uncollectable	(14)	(72)
At 31 December	-	14

Other than the impairment provision provided for aged trade receivables above, there are no other material difference between the carrying value and the fair value of the Group's and parent Company's trade and other receivables.

14      CASH AND CASH EQUIVALENTS

	Group		Company
	2017	2016	2017	2016
	£'000	£'000	£'000	£'000
Cash at bank and in hand	678	963	588	843
Total	678	963	588	843

There is no material difference between the carrying value and the fair value of the Group's and parent Company's cash at bank and in hand.

15      TRADE AND OTHER PAYABLES

	Group		Company
	2017	2016	2017	2016
	£'000	£'000	£'000	£'000
Trade payables	602	244	51	41
Due to Group undertakings	-	-	1,521	1,536
Other taxation and social security	292	322	-	-
Other payables	21	65	-	-
Accruals	264	410	58	33
Total	1,179	1,041	1,630	1,610

There is no material difference between the carrying value and the fair value of the Group's and parent company's trade and other payables.

16      BORROWINGS

	Group		Company
	2017	2016	2017	2016
	£'000	£'000	£'000	£'000
Maturity profile of borrowings Current
Bank overdrafts and interest bearing loans:
Invoice discounting facility (see note (a) below)	851	444	-	-
Secured Loan notes	300	-	300	-
Total	1,151	444	300	-

The carrying amounts and fair value of the Group's borrowings, which are all denominated in sterling, are as follows:

	Carrying amount		Fair value
	2017	2016	2017	2016
	£'000	£'000	£'000	£'000
Bank overdrafts and interest bearing loans:
Invoice discounting facility	851	444	851	444
Secured Loan notes	300	-	300	-
Total	1151	444	1151	444

a)       Invoice discounting facilities:

Norman Broadbent Executive Search Limited, NBS and NBIM operate independent invoice discounting facilities, provided by Leumi ABL Limited. Leumi ABL Ltd holds all assets debentures for each company (fixed and floating charges) and also a cross corporate guarantee and indemnity deed dated 20 July 2011. The financial terms of the facilities are outlined below:

Norman Broadbent Executive Search Limited:

Funds are available to be drawn down at an advance rate of 85% against trade receivables of Norman Broadbent Executive Search Limited that are aged less than 120 days, with the facility capped at £1,500,000. At 31 December 2017, the outstanding balance on the facility of £456,291 (2016: £331,000) was secured by trade receivables of £555,244 (2016: £441,000). Interest is charged on the drawn down funds at a rate of 2.40% (2016: 2.40%) above the bank base rate.

Norman Broadbent Solutions Limited:

Funds are available to be drawn down at an advance rate of 85% against trade receivables of Norman Broadbent Solutions Limited that are aged less than 120 days, with the facility capped at £750,000. At 31 December 2017, the outstanding balance on the facility of £136,271 (2016: £22,000) was secured by trade receivables of £166,500 (2016: £27,000). Interest is charged on the drawn down funds at a rate of 2.40% (2016: 2.40%) above the bank base rate.

Norman Broadbent Interim Management Limited:

Funds are available to be drawn down at an advance rate of 90% against trade receivables of Norman Broadbent Interim Management Limited that are aged less than 120 days, with the facility capped at £750,000. At 31 December 2017, the outstanding balance on the facility of £225,454 (2016: £92,000) was secured by trade receivables of £251,076 (2016: £166,000). Interest is charged on the drawn down funds at a rate of 2.40% (2016: 2.40%) above the bank base rate.

Norman Broadbent Leadership Consulting

Funds are available to be drawn down at an advance rate of 85% against trade receivables of Norman Broadbent Leadership Consulting Limited that are aged less than 120 days, with the facility capped at £750,000. At 31 December 2017, the outstanding balance on the facility of £33,113 was secured by trade receivables of £38,659. Interest is charged on the drawn down funds at a rate of 2.40% above the bank base rate.

b)       Secured Loan Notes

The £350,000 2015 Loan Notes were repaid in full in October 2016. A new £300,000 loan note was issued on 21 August 2017, it bears interest at 12%.

17      FINANCIAL INSTRUMENTS

The principal financial instruments used by the Group, from which financial instrument risk arises, are summarised below. All financial assets and liabilities are measured at amortised cost which is not considered to be materially different to fair value.

	Amortised Cost
	2017	2016
	£'000	£'000
Group Financial Assets
Trade and other receivables	1,965	1,329
Financial Liabilities
Trade and other payables	1,179	1,041
Secured loan notes	300	-
Invoice discounting facility	851	444

	Amortised Cost
	2017	2016
	£'000	£'000
Company Financial Assets
Trade and other receivables	5,609	4,531
Financial Liabilities
Trade and other payables	1,630	1,610
Secured loan notes	300	-

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. Details on these risks and the policies set out by the Board to reduce them can be found in Note 2 of the report and accounts.

18      SHARE CAPITAL AND PREMIUM

	2017	2016
	£'000	£'000
Allotted and fully paid: Ordinary Shares:
53,885,570 Ordinary shares of 1.0p each (2016: 41,633,320 )	539	416
Deferred Shares:
23,342,400 Deferred A shares of 4.0p each (2016: 23,342,400)	934	934
907,118,360 Deferred shares of 4.0p each (2016: 907,118,360)	3,628	3,628
1,043,566 Deferred B shares of 42.0p each (2016: 1,043,566)	438	438
2,504,610 Deferred shares of 29.0p each (2016: 2,504,610)	727	727
	5,727	5,727
Total	6,266	6,143

Deferred A Shares of 4.0p each

The Deferred A Shares carry no right to dividends or distributions or to receive notice of or attend general meetings of the Company. In the event of a winding up, the shares carry a right to repayment only after the holders of Ordinary Shares have received a payment of £10,000 per Ordinary Share. The Company retains the right to cancel the shares without payment to the holders thereof. The rights attaching to the shares shall not be varied by the creation or issue of shares ranking parri passu with or in priority to the Deferred A Shares.

Deferred Shares of 4.0p each

The Deferred Shares carry no right to dividends, distributions or to receive notice of or attend general meetings of the Company. In the event of a winding up, the shares carry a right to repayment only after payment of capital paid up on Ordinary Shares plus a payment of £10,000 per Ordinary Share. The Company retains the right to transfer or cancel the shares without payment to the holders thereof.

Deferred B Shares of 42.0p each

The Deferred B Shares carry no right to dividends or distributions or to receive notice of or attend general meetings of the Company. In the event of a winding up, the shares carry the right to repayment only after the holders of Ordinary Shares have received a payment of £10 million per Ordinary Share. The Company retains the right to cancel the shares without payment to the holders thereof. The rights attaching to the shares shall not be varied by the creation or issue of shares ranking parri passu with or in priority to the Deferred B Shares.

Deferred Shares of 29.0p each

The Deferred Shares carry no right to dividends or distributions or to receive notice of or attend general meetings of the Company. In the event of a winding up, the shares carry the right to repayment only after the holders of Ordinary Shares have received a payment of £10,000 per Ordinary Share. The Company retains the right to cancel the shares without payment to the holders thereof.

A reconciliation of the movement in share capital and share premium is presented below:

	No. of ordinary shares (000s)	Ordinary shares (000s)	Deferred shares (000s)	Share premium (000s)	Total (000s)
At 1 January 2016	17,416	174	5,727	10,699	16,600
Proceeds from share placing (note (a) below)	24,217	242	-	1,986	2,228
At 31 December 2016	41,633	416	5,727	12,685	18,828
Proceeds from share placing	12,252	123	-	1,021	1,144
At 31 December 2017	53,885	539	5,727	13,706	19,972

a)       Share placings in September 2017 and 2016.

On 29 September 2017, the Company issued 12,252,250 new ordinary 1.0p shares for a total cash consideration of £1,225,225. Transaction costs of £81,444 were incurred resulting in net cash proceeds of £1,143,781. On 19 September 2016, the Company issued 24,216,833 new ordinary 1.0p shares for a total cash consideration of £2,300,599. Transaction costs of £72,599 were incurred resulting in net cash proceeds of £2,228,000.

19      SHARE BASED PAYMENTS

19.1   Share Options

The Company has an approved EMI share option scheme for full time employees and directors. The exercise price of the granted options is equal to the market price of the shares on the date of the grant. The Company has no legal or constructive obligation to repurchase or settle the options or warrants in cash.

Options under the Company EMI scheme are conditional on the employee completing three years' service (the vesting period). The EMI options vest in three equal tranches on the first, second and third anniversary of the grant. The options have a contractual option term of either seven or ten years.

Movements in the number of share options and their related weighted average exercise prices are as follows:

	Approved EMI  share option scheme
	Avg. exercise price per share (p)	Number of options
At 1 January 2016	61.84	337,944
Granted	13.50	4,390,550
Forfeited	23.14	(510,607)
At 31 December 2016	16.21	4,217,887
Granted	13.50	380,951
Forfeited	18.95	(1,500,327)
At 31 December 2017	14.54	3,098,511

Share options outstanding at the end of the year have the following expiry date and exercise prices:

	Exercise price per share (p)	Share options
Expiry date		2017	2016
2020	52.5	-	95,237
2021	65.5	62,153	148,052
2023	13.5	3,036,358	3,974,597
Total		3,098,511	4,217,887

Out of the 3,098,511 outstanding options (2016: 4,217,886), no options were exercisable at the year end (2016: None) as they were all 'underwater'.

The significant inputs into the model in valuing the 2017 option grant were weighted average share price of 12 pence at the grant date, exercise price of 13.5p, volatility of 28%, dividend yield of 0% (2011 and 2010: 0%), an expected option life of 10 years (2011 and 2010: 10 years) and an annual risk-free interest rate of 0.652%. The expected volatility was estimated by reference to the historical volatility of the Company's share price and those of UK quoted companies in a similar business sector. The risk-free interest rate is estimated as the yield on zero coupon UK government bonds of a term consistent with the contractual life of the options granted. Minimal share options were granted during 2017, therefore the same assumptions were used as per the prior year. Also there were no significant change in the company or shareholding during 2017.

20      LEASES

Operating leases

The Group leases its premises. The terms of the leases vary for each property and are tenant repairing.

As at 31 December 2017, the total future value of minimum lease payments due are as follows:

	Land and Buildings
	2017	2016
	£'000	£'000
Within one year	82	273
Later than one year and not later than five years	-	1,056
Total	82	1,329

21      PROVISIONS

	Group
	2017	2016
	£'000	£'000
At 1 January	125	125
Provisions made during the year	-	-
At 31 December	125	125
Current liability	125	-
Non-current liability	-	125
At 31 December	125	125

On the 6 March 2013 the Company signed a new ten year lease with a five year break for its main office in London. On signing the new lease the Company inherited the office fit-out from the previous tenant. Under the terms of the new lease the Company is obliged to return vacant possession to the landlord with the office returned to its original state. The Company has had the present cost of the future works required to return the office to its original state valued by an independent firm of advisors and this non-current liability of £125,000 is provided for in the financial period (2015). The entity moved premises in April 2018, the provision above will be payable once agreed within the next 12 months therefore reclassified as current. The Company received a one-off payment of £250,000 in 2013 from the previous tenant in satisfaction of various costs and liabilities that it inherited with the new lease.

22      PENSION COSTS

The Group operated several defined contribution pension schemes for the business. The assets of the schemes were held separately from those of the Group in independently administered funds. The pension cost represents contributions payable by the Group to the funds and amounts to £142,000 (2016: £137,000). At the year end £10,000 of contributions were outstanding (2016: £11,000).

23      RELATED PARTY TRANSACTIONS

The following transactions were carried out with related parties:

(a)      Purchase of services:

	2017	2016
	£0	£0
Brian Stephens & Company Ltd	24	24
Connecting Corporates Limited	-	25
Total	24	49

Brian Stephens & Company Ltd invoiced the Group for the provision of services of B Stephens of £20,000 and business related travel costs of £4,000 (2016 total: £24,000). B Stephens is a director of Brian Stephens & Company Ltd. During the prior year the Group acquired research services from Connecting Corporates Limited £25,000. The Group held a 51% stake in Connecting Corporates Limited in 2016.

All related party expenditure took place via "arms-length" transactions.

24      RELATED PARTY TRANSACTIONS

(a)      Key management compensation:

Key management includes Executive and Non-Executive Directors. The compensation paid or payable to the directors can be found in the Directors' Remuneration Report on page 13-15 of the report and accounts.

(b)      Year-end payables arising from the purchases of services:

	2017	2016
	£0	£0
Brian Stephens & Company Ltd	6	4
Total	6	4

Payables to related parties arise from purchase transactions and are due one month after date of purchase. Payables bear no interest.

25      CONTINGENT LIABILITY

The Company is a member of the Norman Broadbent plc Group VAT scheme. As such it is jointly accountable for the combined VAT liability of the Group. The total VAT outstanding in the Group at the year-end was £122,000 (2016: £39,000).

26      POST BALANCE SHEET EVENTS

On 21st March 2018, Norman Broadbent plc signed a lease to secure new Central London premises of 5,335 sq. feet in Portland House, London SW1. The move, in April 2018, will enable us to operate out of a brand-enhancing, more modern and efficient, purpose built office reflective of the 'new' Norman Broadbent Group.

27      AVAILIBILITY OF ACCOUNTS AND NOTICE OF ANNUAL GENRAL MEETING

Copies of the Final Report and Annual Accounts (including the notice of Annual General Meeting) will be posted to shareholders on 14^th of May 2018 and will shortly be available to view on the Company's website (www.normanbroadbent.com/information/investor-relations).

Notice is hereby given that the 79th Annual General Meeting ("AGM") of Norman Broadbent plc will be held at 10am on the 10^th Floor, Portland House, Bressenden Place, London SW1E 5BH on 6 June 2018.

 

 

END

 

 

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