Half Yearly Report

RNS Number : 1449P

Norman Broadbent PLC

29 September 2011

 



Norman Broadbent plc

("Norman Broadbent" or "the Company")

Norman Broadbent plc, a leading provider of executive search, and leadership consultancy services, today announces its unaudited results for the six months ended 30 June 2011.

Financial highlights

·      Revenue increased to £3.49 million from £3.26 million, an increase of 5.8 per cent on a reduced executive search headcount

·      Operating profit of £0.45 million before restructuring costs, compared to £0.20 million in the same period in 2010

·      Equity shareholders' funds increased to £2.8 million (2010: £0.978 million)

Share placing

·      £1.75m raised through a placing of 2,692,308 new ordinary shares at 65p per share

·      Addition of new institutional investors to the Company's share register

·      Funds intended to be utilised for strategic growth

Banking

·      New, substantially increased, invoice discounting facilities have been put in place in anticipation of strong 2012 UK organic growth

Operational highlights

·      Following retirement of Group CEO Andrew Garner on 31 May, Pierce Casey has become executive chairman

·      Eight senior appointments in the UK search practice announced in the last month, including three managing directors: repositions the business to a Tier 1 firm under Sue O'Brien, UK CEO

·      Jock Lennox appointed chairman of HADIL, the Company's board assessment and evaluation subsidiary

·      Interim joint venture with Alium progressing well

·      Strong results from the Company's Middle Eastern licensee

·      Expectation of an Asian office opening in the next six months

·      Discussions continue on French and German openings, although market uncertainty makes the Company cautious in the short term

·      New client wins are encouraging

Pierce Casey, executive chairman said:

"With our eight UK search appointments (all from top tier competitors) we believe that 2012 should see a substantial increase in UK search revenue.  Moreover, our board level interim and assessment offerings in the UK are developing well, albeit from modest bases.

Internationally, we remain focused on developing a presence in Asia and mainland Europe.

The outlook for the Company in 2012 and beyond looks bright."

For further information please contact:

Norman Broadbent plc                                                                                       020 7484 0000

Pierce Casey / Sue O'Brien / Ben Felton                                                       

Merchant Securities Limited                                                                           020 7628 2200

John East / Simon Clements                                                                              

Pelham Bell Pottinger

Damian Beeley                                                                                                      020 7861 3139

                                                                                                                                07950 481795

                                                                                                                                [e-mail]

Polly Fergusson                                                                                                   020 7861 3923

                                                                                                                                [e-mail]

Notes to Editors

Norman Broadbent plc is a leading provider of executive search and leadership consultancy services. It offers board and executive search services, interim management services; and leadership consultancy services, such as executive assessment and development, talent management, and executive coaching services. Headquartered in London, the group operates globally and has offices in Amman, Barcelona, Beiruit, Dubai, Dublin, Limassol, Milan, Madrid, Paris, Riyadh and Toronto.

For further information visit www.normanbroadbent.com

Chairman's Statement

Introduction

Since the start of 2011 Norman Broadbent plc has made substantial progress towards its objective of building an international Tier 1 executive search business, growing the board assessment and consulting business and broadening its human capital offerings. 

The Group has expanded its capital base with a placing of £1.75 million, reorganised the management structure and refocused its search team with the recruitment of eight senior consultants from Tier 1 firms and specialist boutiques and the departure of six consultants.  The Group has further developed its international reach and successfully continues to broaden and diversify its client base.

Financial Results

Revenue for the six months to 30 June increased to £3.49 million from £3.26 million in the same period in 2010, while operating profit declined from £201,000 to £42,000 after incurring re-structuring costs of £410,000.  Prior to the impact of these costs, the trading profit for the period was £452,000 compared with £201,000 in 2010.

The segmental analysis of the business set out in note 2 shows that revenue in the core executive search business declined from £3,061,000 to £2,850,000 while its profit before tax was £180,000 compared with £101,000 in the previous period.  Income from our overseas operations and interim business increased satisfactorily in the six months.  The maiden revenue from our board assessment and evaluation business, HADIL, was also encouraging.

The decline in search revenue reflected the restructuring of our search team with sixteen consultants active at the period end compared with twenty in the corresponding period in 2010.  Since the end of the reporting period, the hiring of eight senior search consultants has brought our fee-earning headcount to 23, with a demonstrable increase in the quality and experience of the team.

Inevitably, the process of redefining a people business through restructuring involves upfront costs, underperformance by exiting consultants, recruitment costs and the time lag of revenue growth as new hires bed in. The Company expects to incur a further £350,000 of restructuring costs in the second half of the year.

Financial Position

The consolidated balance sheet as at 30 June 2011 was strengthened by the placing of 2.69 million shares at 65p each which raised £1.75 million (before expenses) in June.  The Group's total equity increased to £2.8 million from £0.98 million at 31 December 2010.

The strengthening of the balance sheet and negotiation, subsequent to the period end, of a new enhanced invoice discounting facility from Leumi ABL has provided the Group with much improved flexibility to grow its business organically.

In July the penultimate £250,000 payment of the deferred acquisition for the Norman Broadbent business was paid, leaving a final balance of £300,000 due in July 2012.

Management

Andrew Garner retired from his position as Group CEO on 5 April and resigned from the board at the AGM on 31 May.  The board again expresses its gratitude to Andrew for his years of dedicated service to the business.  As a result, we have reorganised our structure under which I have become executive chairman, and Sue O'Brien has assumed additional responsibilities as CEO, UK Search.

Following our recent senior appointments we now have six managing directors in the executive search business in the UK.  The management board will drive the growth of the business through effective account management strategies and high level client delivery.  The core objectives of the team are to grow revenue and profitability, to maintain high levels of repeat assignments, to grow new client business and to develop the board and non-executive director offering across all functional and sector teams. 

The level of employee engagement across the group is strong and will continue to be monitored as the new team becomes fully integrated.   The focus of the group is to increase Norman Broadbent's market share at board level and the new team is motivated to deliver that challenge.

Business Development

Our recent senior appointments are well known in their own markets and will undoubtedly attract a broader client base.  Moreover, our repeat business levels from existing loyal customers remains strong.

Accordingly, our core focus is on organic revenue growth.  We have a focused plan to further penetrate the FT-SE 350 at both holding company and subsidiary level.  Our primary focus will on the 'C'-suite category (CEO, COO, CFO, and CTO) and non-executive appointments.  In addition, our target market includes private equity (both internal and investee companies), global corporations with a regional London presence and, in co-operation with our overseas offices, joint cross border mandates for global corporates.

Human Asset Development International Limited (HADIL) has retained its core base of existing clients and continues to grow new client opportunities.  Jock Lennox, formerly a senior partner at Ernst & Young, has been appointed as Chairman, bringing top-tier plc director experience to the team.  He is independent non-executive director of Oxford Instruments plc and A&J Mucklow Group plc, non-executive director of Hill & Smith Holdings plc and he also serves as a director of EnQuest plc.

The Group has made considerable progress in re-establishing Norman Broadbent as a high quality and well-known British and international brand and the board believes that the team can substantially accelerate revenue growth in the next few years.

Strategy

In the Annual Report for the year ended 31 December 2010 I outlined the Group's commitment to:

·      Build organically the core UK search business - we have recruited a platform of senior consultants to facilitate strong organic growth in our core UK search practice.

·      Grow the board assessment and evaluation offering - we have appointed Jock Lennox, as chairman of HADIL.  Our interim offering, in partnership with Alium, has started well.

·      Grow the membership of our international network - we have a number of additional international opportunities available to us which we are analysing closely and slowly given the economic climate.

·      Open a small and select number of international offices - taking account of the market conditions we plan to open a single office in Asia in the next six months, requiring only a modest investment.

Trading and outlook

Trading in July and August was subdued reflecting seasonal client holidays and the departure of a number of consultants.  Initial data for September are encouraging. 

Notwithstanding the uncertainty in global markets, having radically restructured our UK executive search business, albeit at some considerable investment, we are confident that return on this investment will have a significant impact as soon as Q1 2012.  Given the brand reputation, the profile of the newly formed team and the high level of repeat business across a broad range of loyal and satisfied clients, we are well placed to deliver strong increases in profitability in 2012 and beyond.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the 6 month period ended 30 June 2011

	Note	Six months ended 30 June 2011 (unaudited)		Six months ended 30 June 2010 (unaudited)		Year ended 31 December 2010 (audited)
			£000		£000		£000
Revenue	2		3,490		3,263		6,111
Cost of operations			(42)		-		(83)
GROSS PROFIT Operating expenses Other income			3,448 (3,433) 27		3,263 (3,062) -		6,028 (5,812) 13
GROUP OPERATING PROFIT/(LOSS)			42		201		229
Net finance cost			(6)		(49)		(53)
Gain / (provision) on disposal of a Group subsidiary			-		822		837
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE INCOME TAX			36		974		1,013
Income tax credit / (expense)			(6)		(6)		58
PROFIT/(LOSS) FOR THE PERIOD			30		968		1,071
Earnings/(loss) per share	4
- Basic			0.37p		32.84p		20.00p
- Diluted			0.36p		32.44p		19.60p
Adjusted  earnings/(loss) per share	4
- Basic			0.67p		5.65p		5.69p
- Diluted			0.66p		5.58p		5.58p

There are no recognised gains and losses other than as stated above.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2011

		As at 30 June 2011 (unaudited)		As at 30 June 2010 (unaudited)	As at 31 December 2010 (audited)
		£000	£000		£000
Non-Current Assets
Intangible assets		1,810	1,750		1,810
Property, plant and equipment		147	204		177
Associates		-	-		5
Deferred tax assets		69	-		69
TOTAL NON-CURRENT ASSETS		2,026	1,954		2,061
Current Assets
Trade and other receivables		2,185	1,894		1,972
Cash and cash equivalents		1,530	1,044		140
TOTAL CURRENT ASSETS		3,715	2,938		2,112
TOTAL ASSETS		5,741	4,892		4,173
Current Liabilities
Trade and other payables		1,237	2,057		1,350
Deferred consideration		250	250		250
Bank overdraft and interest bearing loans		778	838		658
Corporation tax liability		-	1		1
TOTAL CURRENT LIABILITIES		2,265	3,146		2,259
Non-Current Liabilities
Deferred consideration		613	836		759
Interest bearing loans		50	-		177
TOTAL NON-CURRENT LIABILITIES		663	836		936
TOTAL LIABILITIES		2,928	3,982		3,195
TOTAL ASSETS LESS TOTAL
LIABILITIES		2,813	910		978
Issued share capital		5,833	5,804		5,804
Share premium account		8,736	7,095		6,985
Retained earnings		(11,756)	(11,989)		(11,811)
TOTAL EQUITY		2,813	910		978

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the 6 month period ended 30 June 2011

	Attributable to equity holders of the business
	Share Capital £000	Share Premium £000	Retained Earnings £000	Total Equity £000
Balance at 1st January 2010	5,711	4,871	(12,977)	(2,395)
Profit for the period	-	-	968	968
Total recognised income and expense for the period	-	-	968	968
Issue of ordinary shares	93	2,368	-	2,461
Costs relating to issue of shares		(144)	-	(144)
Credit to equity for share based payments	-	-	20	20
Balance at 30th June 2010	5,804	7,095	(11,989)	910
Balance at 1st July 2010	5,804	7,095	(11,989)	910
Profit for the period	-	-	103	103
Total recognised income and expense for the period	-	-	103	103
Issue of ordinary shares	-	-	-	-
Costs relating to issue of shares	-	(110)	-	(110)
Credit to equity for share based payments	-	-	75	75
Balance at 31st December 2010	5,804	6,985	(11,811)	978
Balance at 1st January 2011	5,804	6,985	(11,811)	978
Profit for the period	-	-	30	30
Total recognised income and expense for the period	-	-	30	30
Issue of ordinary shares	29	1,805	-	1,834
Costs relating to share issue	-	(54)	-	(54)
Credit to equity for share based payments	-	-	25	25
Balance at 30th June 2011	5,833	8,736	(11,756)	2,813

CONSOLIDATED STATEMENT OF CASHFLOWS

For the 6 month period ended 30 June 2011

	Notes		Six months ended 30 June 2011 (unaudited)	Six months ended 30 June 2010 (unaudited)	Year ended 31 December 2010 (audited)
			£000	£000	£000
Net cash used in operating activities	(i)		(196)	(257)	(897)
Cash flows from investing activities and servicing of finance
Net finance cost			(6)	(49)	(53)
Dividends received			27	-	13
Payments to acquire tangible fixed assets			(14)	(139)	(184)
Repayment of deferred consideration			(146)	(289)	(366)
Disposal of subsidiary, net of cash disposed of			-	(193)	(178)
Acquisition of other investments			-	-	(65)
Net cash used in investing activities			(139)	(670)	(833)
Cash flows from financing activities
Net cash inflows from equity placing			1,740	1,891	1,805
Increase / (repayment) of secured loans			20	(106)	(219)
Repayment of directors' loans			(7)	-	(13)
(Decrease) / increase in invoice discounting			(28)	121	232
Net cash from financing activities			1,725	1,906	1,805
Net increase in cash and cash equivalents			1,390	979	75
Net cash and cash equivalents at beginning of period			140	65	65
Net cash and cash equivalents at end of period			1,530	1,044	140
Analysis of net funds
Cash and cash equivalents			1,530	1,044	140
Borrowings due within one year			(778)	(838)	(658)
Borrowings due after one year			(50)	-	(177)
Directors loan account			-	(20)	(7)
Deferred consideration			(863)	(1,086)	(1,009)
Net funds			(161)	(900)	(1,711)
Note (i)
Reconciliation of operating profit to net cash from operating activities			Six months ended 30 June 2011 (unaudited)	Six months ended 30 June 2010 (unaudited)	Year ended 31 December 2010 (audited)
Operating profit			42	201	229
Depreciation / impairment of property, plant and equipment			44	40	79
Loss on disposal of property, plant and equipment			-	-	34
Share based payment charge			25	20	71
Dividends received			(27)	-	(13)
Increase in trade and other receivables			(213)	(964)	(1,042)
(Decrease) / increase in trade and other payables			(66)	452	(244)
Loss on disposal of investment			5	-	-
Taxation paid			(6)	(6)	(11)
Net cash used in operating activities			(196)	(257)	(897)

NOTES TO THE FINANCIAL STATEMENTS

1.          ACCOUNTING POLICIES

1.1        Basis of preparation

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The group's statutory financial statements for the year ended 31 December 2010, prepared under International Financial Reporting Standards (IFRS), have been filed with the Registrar of Companies.  The auditor's report on those statements was unqualified.

The interim financial information for the six months ended 30 June 2011, has been prepared in accordance with the AIM Rules for Companies.  The Group has not elected to apply IAS 34 'Interim Financial Reporting'.  The principal accounting policies used in preparing the interim results are those the Group expects to apply in its financial statements for the year ending 31 December 2011 and are unchanged from those disclosed in the Group's Annual Report for the year ended 31 December 2010. The interim financial statements have not been audited.

1.2        Basis of consolidation and business combinations

The group financial statements consolidate those of the Company and of its subsidiary undertakings Garner International Limited, Bancomm Limited, Norman Broadbent Overseas Limited and Human Asset Development International Limited, companies incorporated in England and Wales. 

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, profit before taxation and net assets/ (liabilities) is set out below:

	BUSINESS SEGMENTS
Six months ended 30 June 2011	Executive Search £000	Overseas Royalties £000	Interim £000	Assessment, coaching & talent mgmt. £000	Unallocated £000	Total £000
Revenue	2,850	191	142	307	-	3,490
Cost of sales	(4)	-	-	(38)	-	(42)
Gross profit	2,846	191	142	269	-	3,448
Operating expenses	(2,644)	(115)	(89)	(303)	(234)	(3,385)
Other operating income	27	-	-	-	-	27
Finance costs	(6)	-	-	-	-	(6)
Impairment of investment	-	-	(5)	-	-	(5)
Depreciation and amortisation	(43)	-	-	-	-	(43)
Profit before tax	180	76	48	(34)	(234)	36
Net assets	2,816	-	-	(3)	-	2,813

NOTES TO THE FINANCIAL STATEMENTS

2.          SEGMENTAL ANALYSIS (continued)

i)          Class of Business (continued):

	BUSINESS SEGMENTS
Six months ended 30 June 2010	Executive Search £000	Overseas Royalties £000	Interim £000	Assessment, coaching & talent mgmt. £000	Unallocated £000	Total £000
Revenue	3,061	161	41	-	-	3,263
Cost of sales	-	-	-	-	-	-
Gross profit	3,061	161	41	-	-	3,263
Operating expenses	(2,871)	-		-	(151)	(3,022)
Finance costs	(49)	-	-	-	-	(49)
Depreciation and amortisation	(40)	-	-	-	-	(40)
Provision for disposal of Group subsidiary	-	-	-	-	822	882
Profit before tax	101	161	41	-	671	974
Net assets	910	-	-	-	-	910

	BUSINESS SEGMENTS
Year ended 31 December 2010	Executive Search £000	Overseas Royalties £000	Interim £000	Assessment, coaching & talent mgmt. £000	Unallocated £000	Total £000
Revenue	5,718	326	19	48	-	6,111
Cost of sales	(79)	-	-	(4)	-	(83)
Gross profit	5,639	326	19	44	-	6,028
Operating expenses	(5,298)	(146)	-	(39)	(250)	(5,733)
Other operating income	13
Finance costs	(53)	-	-	-	-	13
Depreciation and amortisation	(79)	-	-	-	-	(53)
Gain on disposal of Group subsidiary	-	-	-	-	837	837
Profit before tax	222	180	19	5	587	1,013
Net assets	943	-	5	30	-	978

The unallocated costs refer to central costs of the Group including salaries, professional and other costs, which are not directly attributable to the delivery of the services.  The four segments shown represent the management information provided to the Board and in the opinion of the directors reflect the nature of the Group's services.

NOTES TO THE FINANCIAL STATEMENTS

2.          SEGMENTAL ANALYSIS (continued)

ii)         Geographic Region:

The analysis by geographic region of the Group's turnover, profit before taxation and net assets/ (liabilities) is set out below:

	BUSINESS SEGMENTS
Six month period ended 30 June 2011	Executive Search £000	Overseas Royalties £000	Interim £000	Assessment, coaching & talent mgmt. £000	Unallocated £000	Total £000
Revenue
United Kingdom	2,519	-	89	195	-	2,803
Europe	270	140	53	112	-	575
Other	61	51	-	-	-	112
Total	2,850	191	142	307	-	3,490
Gross profit
United Kingdom	2,515	-	89	169	-	2,773
Europe	270	140	53	100	-	563
Other	61	51	-	-	-	112
Total	2,846	191	142	269	-	3,448
Profit/(Loss) before tax
United Kingdom	100	-	79	(34)	(234)	(89)
Europe	-	54	49	-	-	103
Other	-	22	-	-	-	22
Total	100	76	128	(34)	(234)	36
Net assets
United Kingdom	2,816	-	-	-	(3)	2,813
Total	2,816	-	-	-	(3)	2,813

	BUSINESS SEGMENTS
Six month period ended 30 June 2010	Executive Search £000	Overseas Royalties £000	Interim £000	Assessment, coaching & talent mgmt. £000	Unallocated £000	Total £000
Revenue
United Kingdom	2,806	-	41	-	-	2,847
Europe	224	135	-	-	-	359
Other	31	26	-	-	-	57
Total	3,061	161	41	-	-	3,263
Gross profit
United Kingdom	2,806	-	41	-	-	2,847
Europe	224	135	-	-	-	359
Other	31	26	-	-	-	57
Total	3,061	161	41	-	-	3,263
Profit/(Loss) before tax
United Kingdom	76	-	41	-	671	788
Europe	56	135	-	-	-	191
Other	(31)	26	-	-	-	(5)
Total	101	161	41	-	671	974
Net liabilities
United Kingdom	910	-	-	-	-	910
Total	910	-	-	-	-	910

NOTES TO THE FINANCIAL STATEMENTS

3.          SEGMENTAL ANALYSIS (continued)

	BUSINESS SEGMENTS
Year ended 31 December 2010	Executive Search £000	Overseas Royalties £000	Interim £000	Assessment, coaching & talent mgmt. £000	Unallocated £000	Total £000
Revenue
United Kingdom	5,335	-	19	25	-	5,379
Europe	282	283	-	23	-	588
Other	101	43	-	-	-	144
Total	5,718	326	19	48	-	6,111
Gross profit
United Kingdom	5,256	-	19	21	-	5,296
Europe	282	283	-	23	-	588
Other	101	43	-	-	-	144
Total	5,639	326	19	44	-	6,028
Profit/(Loss) before tax
United Kingdom	222	-	19	5	587	833
Europe	-	162	-	-	-	162
Other	-	18	-	-	-	18
Total	222	180	19	5	587	1,013
Net liabilities
United Kingdom	943	-	5	30	-	978
Total	943	-	5	30	-	978

Turnover by location is not materially different from turnover by destination.

4.     EQUITY SECURITIES ISSUED

During the six month period ended 30 June 2011, the following equity securities were issued:

-       On 31 March 2011 Mr C Auld, an existing shareholder, exercised warrants over 97,777 ordinary shares of 1p at a price of 45p per share. 

-       On 13 May 2011 61,069 ordinary shares of 1p were issued at a price of 65.5p per share to an employee in lieu of a bonus.

-       On 13 May 2011 the Company issued 1,037,832 options over ordinary shares of 1p to employees and certain members of the Board.  The exercise price is 65.5p and the options vest in equal tranches over the next 3 years.

-       On 30 April 2011 a resolution was passed at the company's Annual General Meeting, approving the placing of 2,692,308 ordinary shares of 1p for a total consideration of £1.75 million.    

An analysis of all ordinary shares issued during the period is shown below:

Issue of ordinary shares during the period	Six months ended 30 June 2011		Six months ended 30 June 2010		Year ended 31 December 2010
	(unaudited)		(unaudited)		(audited)
	Shares	Value	Shares	Value	Shares	Value
	000's	£000	000's	£000	000's	£000
Issue of shares on exercise of warrants	98	44	-	-	-	-
Issue of shares in lieu of employee bonus	61	40	137	77	137	77
Issue of shares for cash	2,692	1,750	4,522	2,035	4,522	2,035
Issue of shares on conversion of directors' loans	-	-	426	192	426	192
Issue of shares on conversion of other loans	-	-	267	157	267	157
Total	2,851	1,834	5,352	2,461	5,352	2,461

NOTES TO THE FINANCIAL STATEMENTS

5.     earnings PER ORDINARY 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:

		Six months ended 30 June 2011	Six months ended 30 June 2010	Year ended 31 December 2010
		(unaudited)	(unaudited)	(audited)
Profit attributable to shareholders		£30,000	£968,000	£1,071,000
Weighted average number of ordinary shares		8,233,881	2,947,571	5,351,530

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 two categories of dilutive potential ordinary shares: share options and warrants. For these options and warrants, 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 warrants and 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.

		Six months ended 30 June 2011	Six months ended 30 June 2010	Year ended 31 December 2010
		(unaudited)	(unaudited)	(audited)
Profit attributable to shareholders		£30,000	£968,000	£1,071,000
Weighted average no. of ordinary shares		8,233,881	2,947,571	5,351,530
- assumed conversion of share options		68,823	31,121	64,970
- assumed conversion of warrants		55,122	5,209	46,608
Weighted average number of ordinary shares for diluted earnings per share		8,357,826	2,983,901	5,463,108

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 impairment of intangibles, charges for share based payments and the one-off gain on the disposal of the group subsidiary in 2010.  It has been calculated to allow shareholders to gain a clearer understanding of the trading performance of the Group.

	Six months ended 30 June 2011			Six months ended 30 June 2010			Year ended 31 December 2010
	£000	Basic    pence per share	Diluted pence per share	£000	Basic    pence per share	Diluted pence per share	£000	Basic    pence per share	Diluted pence per share
Basic earnings
Profit after tax	30	0.37	0.36	968	32.86	32.46	1,071	20.00	19.60
Adjustments
Gain on disposal of subsidiary	-	-	-	(822)	(27.89)	(27.55)	(837)	(15.64)	(15.32)
Share based payment charge	25	0.30	0.30	20	0.68	0.67	71	1.33	1.30
Adjusted earnings	55	0.67	0.66	166	5.65	5.58	305	5.69	5.58

6.     Related party transactions

(a)        Purchase of services:

	Six months ended 30 June 2011 £000	Six months ended 30 June 2010 £000	Year ended 31 December 2010 £000
Adelaide Capital Limited	96	-	20
Anderson Barrowcliff LLP	15	28	43
Total	111	28	63

Adelaide Capital Limited invoiced the Group for the directors' fees (P Casey £50,000, B Stephens £10,000), advisory costs relating to the share placing (£20,000) and business related travel and other costs of P Casey and B Stephens (£16,000).  P Casey and B Stephens are directors of Adelaide Capital Limited.

Taxation and company secretarial services are acquired from Anderson Barrowcliff LLP, an accountancy firm of which R Robinson is a partner.  Anderson Barrowcliff also invoices the Group for R Robinson's director's fees.

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

	Six months ended 30 June 2011 £000	Six months ended 30 June 2010 £000	Year ended 31 December 2010 £000
Adelaide Capital Limited	46	-	10
Anderson Barrowcliff LLP	19	43	11
Total	65	43	21

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

(c)        Loans from related parties:

In order to assist the working capital position, certain directors and shareholders advanced loans to the Group, which are non-interest bearing and have no formal repayment terms. 

	Six months ended 30 June 2011 £000	Six months ended 30 June 2010 £000	Year ended 31 December 2010 £000
Beginning of period	7	212	212
Loans repaid during the year	(7)	-	(13)
Loans converted in to equity during the year	-	(192)	(192)
End of period	-	20	7

Loans from related parties outstanding at the period end were as follows:

	Six months ended 30 June 2011 £000	Six months ended 30 June 2010 £000	Year ended 31 December 2010 £000
A C Garner	-	20	7
End of period	-	20	7

(d)        Personal guarantees from related parties:

At 30 June 2011 A C Garner, a shareholder and former director of the Company had the following personal guarantees:

·           £150,000 as security for the Group bank loan.

7.     COPIES OF THE UNAUDITED INTERIM REPORT

Copies of this report are available on request from the Company's registered office at 12 St James's Square, London, SW1Y 4LB and are also available on the Company's website www.normanbroadbent.com.

Ends

 

END

 

 

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