Final Results
22 May 2015
Norman Broadbent plc
("Norman Broadbent" or "the Company" or "the Group")
Final Results and Annual Accounts
Norman Broadbent, a leading provider of executive search,
leadership consultancy and complementary recruitment services is pleased to
announce its final results and annual accounts for the year ended 31 December
2014.
- Results reflect start-up losses in emerging businesses and the
exceptional costs associated with regaining control of the Norman Broadbent
brand worldwide
- Group revenue from continuing operations increased by 11% to
£7.6m (2013: £6.8m)
- Gross profit from continuing operations increased by 6% to £7.1m
(2013: £6.7m)
- UK executive search operating profit increased by 273% to
£525,000 (2013: £141,000)
- Revenue from our new subsidiary businesses, AGP, NBIM and SMS
increased to £1.8m (2013: £0.6m)
- Group operating loss from continuing operations decreased to
£932,000 (2013: loss of £1,156,000) reflecting the continued investment in the
new subsidiary businesses
- The Group raised £500,000 in November 2014 through a share
subscription
- Year end cash of £506,000 (2013: £579,000)
- Net assets £1,690,000 (2013: £2,800,000)
- Group successfully restructured in 2014
- Group returned to profitability in Q1 2015
For further information please contact:
Norman Broadbent plc
Pierce Casey/James Webber/Sue O'Brien 020 7484 0000
Sanlam Securities UK Limited
Simon Clements/Virginia Bull 020 7628 2200
RESULTS FOR THE FINANCIAL YEAR
The table below summarises the results of the Group:
Year ended Year ended
31 Dec 31 Dec
2014 2013
£000's £000's
CONTINUING OPERATIONS
REVENUE 7,600 6,821
Cost of sales (522) (162)
GROSS PROFIT 7,078 6,659
Operating expenses (8,010) (7,940)
Other income - 125
GROUP OPERATING LOSS (932) (1,156)
Dividends received - 18
Net finance cost (32) (15)
Exceptional Items (559) -
Loss on disposal of investment (33) -
LOSS BEFORE TAX (1,556) (1,153)
Income tax (8) (19)
Loss from discontinued operation (144) 20
LOSS AFTER TAX (1,708) (1,152)
Group revenue from continued operations increased by 11% to £7.6m
(2013: £6.8m), with gross profit increasing by 6% when compared to 2013. Group
operating losses from continued operations were £0.9m (2013: £1.2m) reflecting
continued investment in our start-up businesses AGP, NBIM and SMS. The loss
after tax, pre-exceptional items and minority interests, was £1.1m (2013:
£1.2m) including £0.9m of losses attributable to the start-up businesses. Note
3 of the Consolidated Financial Statements provides a detailed segmental
breakdown of the 2014 Group results.
Executive search revenue of £5.2m (2013: £5.6m) reflects a fall of
8% in UK executive search revenues to £5.0m from £5.4m in 2013 and an increase
of 59% in overseas executive search revenues to £0.3m from £0.2m in 2013. The
UK executive search revenue decline was offset by a decrease in operating
costs resulting in a considerable improvement in profit before tax to £0.5m
from £0.1m in the previous year.
Assessment, coaching and talent management revenues declined by 59%
to £0.5m (2013: £1.1m) reflecting the sale of our Belgium subsidiary Norman
Broadbent SPRL in May 2014. The UK business, Norman Broadbent Leadership
Consulting ("NBLC"), has been restructured and is now further integrated with
UK executive search and continues to have a high quality product range and is
attracting exciting new clients.
AGP, SMS and NBIM, the three subsidiary businesses established in
early 2013, late 2012 and mid 2014 respectively, have between them generated
£1.8m in revenue (2013: £0.6m). Despite the promising revenue growth, the
start-up losses in AGP and SMS were greater than anticipated and resulted in
the re-modelling of certain aspects of the contingent offering within AGP and
SMS in late 2014.
Revenue from overseas royalties totalled £0.1m (2013: £0.2m), a
decline of 64% as a result of the licenses with Italy, Middle East and Spain
being terminated due to the Board's decision to regain complete control of the
Norman Broadbent brand worldwide. This has allowed your Company to streamline
its international operations, refocussing on our core UK businesses. Further,
your Board has taken the decision to cease its operations in Singapore and,
since year end, also in the USA due to de-minimis contributions to Group
revenues.
CORPORATE DEVELOPMENTS
As part of the Board's decision to regain complete control of the
Norman Broadbent brand worldwide, in 2014 the Group disposed of Norman
Broadbent SPRL (which had a minority 49% shareholder) and its 20 per cent
stake in NBS Norman Broadbent SA for £120,000 and £92,000 respectively. These
disposals resulted in a non-recurring exceptional item, shown as a decrease in
goodwill of £559,000 in the Consolidated Statement of Financial Position, and
a loss on disposal of £36,000 in the Company Statement of Financial Position.
SHARE PLACING
In November 2014, the Group raised £500,000 (£487,500 net of
expenses) through the issue, principally to existing institutional investors,
of 2,617,801 new ordinary shares in the capital of the Company at a price of
19.1 pence per share (the "November Subscription"). The net proceeds of the
November Subscription have been used to fund the recent re-modelling of
certain aspects of the contingent offering within AGP, NBLC and SMS, and for
working capital purposes generally
FINANCIAL POSITION
As at 31 December 2014, consolidated net assets were £1,690,000,
compared to £2,800,000 as at 31 December 2013. Group net current assets
decreased to £278,000 (2013: £762,000). Group cash amounted to £506,000 (2013:
£579,000).
Net cash outflow from operations in 2014 was £453,000 (2013:
£732,000). The start-up losses arising from the development of AGP, NBIM and
SMS resulted in a cash outflow of £869,000. Net cash inflow from financing
activities amounted to £358,000 (2013: £521,000) relating primarily to the net
funds received from the November Subscription.
At 31 December 2014, the only exposure to borrowings was the
Group's revolving invoice discounting facility, and funds drawn down against
this facility decreased by 16% to £673,000 (2013: £802,000) against UK trade
receivables of £999,000 (2013: £1,255,000).
MANAGEMENT AND STAFF
James Webber, our Group CFO and COO, joined the plc Board in
September 2014. James joined the business in March 2014, and his experience
working within the COO office at EY has proved invaluable to the Company. The
Group now comprises just under 80 people in the UK and your Board would like
to express its thanks to all our management teams and staff, particularly in
view of the diversification programme taking place through our new
complementary subsidiaries.
BOARD CHANGES
In light of the successful re-modelling which has taken place since
the November Subscription, I have taken the view that after five years as
Chairman the time is now opportune to retire from the business as it is now
refinanced, refocused and returned to profitability in the first quarter' of
2015. It is my intention to retire from the Board as Chairman and director on
30 June 2015.
In view of my wide industry experience, the Board is pleased to
note that I have offered to nominate through my private investment office a
Non-Executive Director to the Board to assure staff, shareholders and clients
of my continuing interest, and to represent my substantial shareholding.
In order to achieve a seamless handover on my retirement the Board
and I have been in discussion for some time with the Chairman elect, Scanes
Bentley. Scanes, who is being co-opted to the Board with immediate effect, is
a Non-Executive Chairman, Non-Executive Director and strategic advisor to a
number of businesses and most recently was a partner for 12 years at Accenture
where in the last five years he was responsible for running Financial Services
and TMT consulting practices in London.
Further, Bruce Lakefield retired as a Non-Executive Director of the
Company on 10 March 2015. Bruce, who is aged 71 and resident in the United
States is reducing his overseas activities. Finally, Jan Cameron, who in
addition to her role on the Board headed the Group's internal HR function,
left the business in April 2015 to pursue her portfolio career. The Board
wishes to express its gratitude to both Bruce and Jan for their considerable
contributions to the business. As a result, the Board has taken the
opportunity to streamline its reporting structure and has appointed a new HR
executive to take account of our changing requirements who reports to James
Webber as the Group COO.
CURRENT TRADING
I am pleased to report that in the first quarter of 2015, both
revenue and profitability has exceeded management's expectations. The Board is
encouraged and looks to the future with some confidence.
PIERCE CASEY
Executive Chairman
STRATEGIC REPORT
THE BUSINESS MODEL
Norman Broadbent plc is a human capital consulting group which
provides a broad range of people solutions including board and executive
search, senior interim management, leadership consulting and assessment,
executive RPO and contingent recruitment, social media consulting and
research.
The Group operates through independently managed and separately
branded businesses which trade independently but collectively share a set of
core behavioural and brand values.
The Group focusses on providing innovative and targeted solutions
for our clients to help deliver a competitive edge to their businesses.
STRATEGY AND OBJECTIVES
The core elements of the Group's strategy are:
- To develop a diversified group of complementary, human capital
businesses.
- To continue building the core Norman Broadbent UK search business
through the hiring of Tier 1 search professionals.
- To further develop the Norman Broadbent brand, through organic
growth and acquisition.
RESULTS FOR THE FINANCIAL YEAR
Group revenue from continued operations increased in the year by
11% to £7,600,000 (2013: £6,821,000). Board and executive search fees declined
by 6% to £5,245,000 (2013: £5,586,000) reflecting a reduction in fee
generating headcount in the UK search business during the year. Income from
overseas royalties decreased to £76,000 (2013: £212,000) as a result of the
licenses with Italy, Middle East and Spain being terminated due to the Board's
decision to regain complete control of the Norman Broadbent brand worldwide.
Operating expenditure increased by 1% to £8,010,000 (2013:
£7,940,000), reflecting the incremental costs of SMS, AGP and NBIM, the three
recently established subsidiary businesses set up in late 2012, 2013 and
mid-2014 respectively.
The impact of the new subsidiary start-up losses has meant that the
Group reported an operating loss from continued operations in 2014 of £932,000
(2013: £1,156,000) and a retained loss, excluding minority interests, of
£1,489,000 (2013: £1,050,000). The core UK search business reported a profit
before tax of £526,000 (2013: £141,000)
CASH FLOW AND BALANCE SHEET
Net cash outflow from operations in 2014 was £453,000 (2013:
£732,000) with the majority of these funds invested in the development of AGP,
NBIM and SMS. Debtor days (for established businesses) have decreased by 18%
from 68 to 56, with trade receivables at the year-end standing at £1,519,000
(2013: £1,829,000). The decrease in debtor days, despite the commercial
reality of providing services to large blue chip multinational businesses who
often demand payment terms of up to 90 days, is an encouraging trend for the
business. 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 £358,000
(2013: £521,000) relating primarily to the net funds received from an equity
placing of £500,000 in November 2014. At 31 December 2014, the only exposure
to bank borrowings was the Group's invoice discounting facility and funds
drawn down against this facility were £673,000 (2013: £802,000) against UK
trade receivables of £999,000 (2013: £1,255,000).
EARNINGS PER SHARE
The retained loss for 2014 has resulted in a reported loss per
share of 9.85 pence (2013: loss per share 7.85 pence). After adding back the
cost of share based payments the adjusted loss per share was 9.71 pence (2013:
loss per share of 7.40 pence).
GOING CONCERN
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.
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 2014 2013
indicators
Revenue (continued £7,600,000 £6,821,000
operations)
Operating loss £(932,000) £(1,156,000)
Revenue from new clients 38% 38%
*
Employment / Sales 76% 84%
Debtor days * 56 days 68 days
* NBES only as established business
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. Whilst revenues from existing businesses declined in
2014, this trend is expected to reverse in 2015 as new fee generators become
established and given the steady increase in revenues from the new
subsidiaries 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 interest rate, liquidity and credit risk.
In November 2014, the Group raised £500,000 through a subscription
of new shares primarily to fund the re-modelling of certain aspects of the
contingent offering within AGP and for working capital purposes generally.
This fundraising followed successful share placings in October 2013, November
2012 and May 2011, raising £700,000, £727,000 and £1,750,000 respectively,
which have provided the Group with the financing to progress towards its
stated objectives.
The Group is free from long term debt which significantly reduces
its interest rate risk and maintains a commercial finance facility with ample
capacity to support the working capital requirements of the Group as it grows.
Business Environment - Demand for services is affected by global
economic conditions and the level of economic activity in the regions and
industries in which the Group operates. When conditions in the global economy
deteriorate or economic activity slows, many companies hire fewer permanent
employees or rely on internal human resource departments to recruit staff.
Whilst there are signs that the global economy is starting to recover, 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, whilst also
extending its services into new geographic regions, 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.
PIERCE CASEY RICHARD ROBINSON
Executive Chairman Company Secretary
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2014
Re-presented
Note 2014 2013
£000 £000
CONTINUING OPERATIONS
REVENUE 1/3 7,600 6,821
Cost of sales (522) (162)
GROSS PROFIT 3 7,078 6,659
Operating expenses (8,010) (7,940)
Other income - 125
GROUP OPERATING LOSS (932) (1,156)
Dividends received - 18
Net finance cost 7 (32) (15)
Non-recurring exceptional Items 8 (559) -
Profit/(loss) on disposal of investment (33) -
LOSS ON ORDINARY ACTIVITIES BEFORE INCOME 4 (1,556) (1,153)
TAX
Income tax expense 6 (8) (19)
LOSS FROM CONTINUING OPERATIONS (1,564) (1,172)
DISCONTINUED OPERATIONS
Profit/(loss) from discontinued operation 9 (144) 20
LOSS FOR THE PERIOD (1,708) (1,152)
OTHER COMPREHENSIVE INCOME
21 (12)
Foreign currency translation differences -
foreign operations
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (1,687) (1,164)
Loss attributable to:
- Owners of the Company (1,489) (1,050)
- Non-controlling interests (219) (102)
Loss for the year (1,708) (1,152)
Total comprehensive income attributable
to:
- Owners of the Company (1,468) (1,062)
- Non-controlling interests (219) (102)
Total comprehensive income for the year (1,687) (1,164)
Loss per share
- Basic 10 (9.85)p (7.85)p
- Diluted (9.85)p (7.85)p
Adjusted loss per share
- Basic 10 (9.71)p (7.40)p
- Diluted (9.71)p (7.40)p
Loss per share - continuing operations
- Basic 10 (9.22)p (7.92)p
- Diluted (9.22)p (7.92)p
Adjusted loss per share - continuing
operations
- Basic (9.09)p (7.48)p
- Diluted 10 (9.09)p (7.48)p
* 2013 re-presented to show the discontinued operation separately
from continued operations as required by IFRS 5.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2014
Notes 2014 2013
£000 £000
Non-Current Assets
Intangible assets 12 1,363 1,922
Property, plant and equipment 13 105 172
Deferred tax assets 6 69 69
TOTAL NON-CURRENT ASSETS 1,537 2,163
Current Assets
Trade and other receivables 15 1,963 2,339
Cash and cash equivalents 16 506 579
TOTAL CURRENT ASSETS 2,469 2,918
TOTAL ASSETS 4,006 5,081
Current Liabilities
Trade and other payables 17 1,518 1,333
Bank overdraft and interest bearing 18 673 802
loans
Corporation tax liability - 21
TOTAL CURRENT LIABILITIES 2,191 2,156
NET CURRENT ASSETS 278 762
Non-Current Liabilities
Provisions 23 125 125
TOTAL LIABILITIES 2,316 2,281
TOTAL ASSETS LESS TOTAL LIABILITIES 1,690 2,800
EQUITY
Issued share capital 20 5,901 5,875
Share premium account 20 10,699 10,238
Retained earnings (14,649) (13,356)
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 1,951 2,757
Non-controlling interests (261) 43
TOTAL EQUITY 1,690 2,800
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2014
Attributable to owners of the Company
CONSOLIDATED GROUP Non-controlling
Share Share Retained Total interests Total
Capital Premium Earnings Equity £000 Equity
£000 £000 £000 £000 £000
Balance at 1st January 2013 5,857 9,572 (12,353) 3,076 145 3,221
Loss for the year - - (1,050) (1,050) (102) (1,152)
Total other comprehensive income - - (12) (12) - (12)
Total comprehensive income for the year - - (1,062) (1,062) (102) (1,164)
Transactions with owners of the Company, recognised
directly in equity:
Issue of ordinary shares 18 666 - 684 - 684
Credit to equity for share based payments - - 59 59 - 59
Total transactions with owners of the Company,
recognised directly in equity 18 666 59 743 - 743
Balance at 31st December 2013 5,875 10,238 (13,356) 2,757 43 2,800
Balance at 1st January 2014
Loss for the year - - (1,489) (1,489) (219) (1,708)
Adjustment for discontinued operation - - - - 70 70
Total other comprehensive income - - 21 21 - 21
Total comprehensive income for the year - - (1,468) (1,468) (149) (1,617)
Transactions with owners of the Company, recognised
directly in equity:
Issue of ordinary shares 26 461 - 487 - 487
Credit to equity for share based payments - - 20 20 - 20
Total transactions with owners of the Company,
recognised directly in equity 26 461 20 507 - 507
Changes in ownership interest in subsidiaries
Disposal of non-controlling interests with change of - - 155 155 (155) -
control
Total transactions with owners of the Company 26 461 175 662 (155) 507
Balance at 31st December 2014 5,901 10,699 (14,649) 1,951 (261) 1,690
CONSOLIDATED STATEMENT OF CASH FLOW`
For the year ended 31 December 2014
Notes 2014 2013
£000 £000
Net cash used in operating activities (i) (453) (732)
Cash flows from investing activities and servicing of finance
Net finance cost (32) (30)
Dividends received - 18
Payments to acquire tangible fixed assets 13 (17) (122)
Repayment of deferred consideration - (73)
Disposal of subsidiary, inclusive of cash 9 (15) -
disposed of
Net cash inflow from Disposal of investments 92 -
Net cash used in investing activities 28 (208)
Cash flows from financing activities
Net cash inflows from equity placing 20 487 684
(Repayment)Increase in invoice discounting 18 (129) (163)
Net cash from financing activities 358 521
Net increase in cash and cash equivalents (67) (419)
Net cash and cash equivalents at beginning of period 579 1,009
Effects of exchange rate changes on cash balances held in (6) (11)
foreign currencies
Net cash and cash equivalents at end of period 506 579
Analysis of net funds
Cash and cash equivalents 506 579
Borrowings due within one year (673) (802)
Deferred consideration - -
Net funds (167) (223)
Note (i)
Reconciliation of operating loss to net cash from operating 2014 2013
activities
£000 £000
Operating loss from continued operations (932) (1,156)
Operating profit / (loss) from discontinued operations (note (103) 86
8)
Depreciation/impairment of property, plant and equipment 62 89
Share based payment charge 20 59
Decrease in trade and other receivables 199 (72)
Increase in trade and other payables 328 257
Increase in provisions - 125
Taxation paid (29) (121)
Net cash used in operating activities (453) (732)
1. 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.
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 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.
Going concern
The Group reported an operating loss from continued operations in the year to
31 December 2014 of £0.9m compared with an operating loss of £1.2m in 2013.
These consolidated losses whilst greater than anticipated were primarily
driven by losses in the new subsidiary businesses of AGP and SMS (totalling
£0.8m) and continued losses incurred in the wholly owned overseas offices in
Singapore, USA and Belgium (totalling £0.2m).
The Consolidated Statement of Financial Position shows a net asset position at
31 December 2014 of £1.7m (2013: £2.8m) with cash at bank of £0.5m (2013:
£0.6m). At the date that these financial statements were approved the only
bank debt owed by the Company was its invoice discounting facility which is
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, profit before
taxation and net assets/(liabilities) is set out below:
BUSINESS SEGMENTS
2014
Executive Overseas Disc. Un
Search Royalties NBLC AGP SMS NBIM Operation allocated Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Revenue 5,245 76 473 1,077 526 203 120 - 7,720
Cost of sales (54) - (37) (292) (5) (134) (45) - (567)
Gross profit 5,191 76 436 785 521 69 75 - 7,153
Operating (4,700) (11) (578) (1,305) (831) (95) (174) (432) (8,126)
expenses
Other operating - - - - - - - - -
income
Finance costs (26) - - (6) - - - - (32)
Depreciation and (49) - - (5) (4) - (4) - (62)
amort.
Restructuring - - - - - - - - -
costs
Exceptional - - - - - - (41) (559) (600)
items
Loss on disposal - - - - - - - (33) (33)
of investment
Profit/(Loss)
before tax 416 65 (142) (531) (314) (26) (144) (1,024) (1,700)
Net assets 3,918 - (610) (1,048)) (532) (38) - - 1,690
BUSINESS SEGMENTS
2013
Executive Overseas Disc. Un
Search Royalties NBLC AGP SMS NBIM Operation allocated Total
£000 £000 £000 £000 £000 £000 £000 £000 £000
Revenue 5,586 212 467 252 304 - 730 - 7,551
Cost of sales (101) - (57) (1) (3) - (230) - (392)
Gross profit 5,485 212 410 251 301 - 500 - 7,159
Operating (5,608) (107) (648) (674) (512) - (403) (313) (8,265)
expenses
Other operating 143 - - - - - - - 143
income
Finance (costs) (14) - - (1) - - (15) - (30)
/ Income
Depreciation and (73) - - (3) (2) - (11) - (89)
amort.
Profit/(Loss)
before tax (67) 105 (238) (427) (213) - 71 (313) (1,082)
Net assets 3,577 - (430) (470) (229) - 352 - 2,800
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 five 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.
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
2014 Executive Search Overseas Disc. Un-allocated
£000 Royalties NBLC AGP SMS NBIM Operation Total
£000 £000 £000 £000 £000 £000 £000 £000
Revenue
United Kingdom 4,964 - 472 1,033 526 203 - - 7,198
Europe 27 76 - 40 - - 120 - 263
Other 254 - 1 4 - - - - 259
Total 5,245 76 473 1,077 526 203 120 - 7,720
Gross profit
United Kingdom 4,910 - 435 741 521 69 - - 6,676
Europe 27 76 - 40 - - 75 - 218
Other 254 - 1 4 - - - - 259
Total 5,191 76 436 785 521 69 75 - 7,153
Profit/(loss) before tax
United Kingdom 525 - (142) (531) (314) (26) - (432) (920)
Europe - 65 - - - - (144) (592) (671)
Other (109) - - - - - - - (109)
Total 416 65 (142) (531) (314) (26) (144) (1,024) (1,700)
Net assets 3,918 - (610) (1,048) (532) (38) - - 1,690
BUSINESS SEGMENTS
2013 Executive Search Overseas Disc. Un-allocated
£000 Royalties NBLC AGP SMS NBIM Operation Total
£000 £000 £000 £000 £000 £000 £000 £000
Revenue
United Kingdom 5,409 - 461 238 304 - - - 6,412
Europe - 194 - 14 - - 730 - 938
Other 177 18 6 - - - - - 201
Total 5,586 212 467 252 304 - 730 - 7,551
Gross profit
United Kingdom 5,351 - 410 237 301 - - - 6,299
Europe - 194 - 14 - - 500 - 708
Other 134 18 - - - - - - 152
Total 5,485 212 410 251 301 - 500 - 7,159
Profit/(loss) before tax
United Kingdom 141 - (238) (427) (213) - - (313) (1,050)
Europe - 105 - - - - 71 - 176
Other (208) - - - - - - - (208)
Total (67) 105 (238) (427) (213) - 71 (313) (1,082)
Net assets 3,577 - (430) (470) (229) - 352 - 2,800
Turnover by location is not materially different from turnover by destination.
3. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
2014 2013
£000 £000
Loss on ordinary activities before taxation is stated after
charging:
Depreciation and impairment of property, plant and 62 89
equipment
(Gain) / loss on foreign currency exchange (4) (3)
Operating lease rentals:
Land and buildings 424 426
Auditors' remuneration:
Audit work 43 42
Non-audit work - -
The Company audit fee in the year was £12,000 (2013: £12,000).
4. STAFF COSTS
The average number of full time equivalent persons 2014 2013
(including directors)
No. No.
employed by the Group during the period was as
follows:
Sales and related services 38 35
Administration 46 45
84 80
Staff costs (for the above persons): £000 £000
Wages and salaries 5,026 4,950
Social security costs 540 527
Defined contribution pension cost 210 203
Share based payment expense 20 60
5,796 5,740
The emoluments of the directors are disclosed as required by the Companies Act
2006 on page 12 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
2014 2013
Taxation is based on the loss for the £000 £000
year and comprises:
Current tax:
United Kingdom corporation tax at 21.5% 8 19
(2013: 23.25%) based on loss for the
year
Foreign Tax - 51
Adjustment in respect of prior years - -
Total current tax 8 70
Deferred tax:
Origination and reversal of temporary differences - -
Tax charge/(credit) 8 70
(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:
2014 2013
£000 £000
Loss on ordinary activities before (1,700) (1,082)
taxation
Tax on loss on ordinary activities at
standard UK corporation tax rate of
21.5% (2013: 23.25%) (366) (252)
Effects of:
Expenses not deductible 159 33
Foreign tax suffered - 19
Non-taxable income 7 (4)
Capital allowances in excess of 8 9
depreciation
Utilisation of ACT (2) (13)
Marginal rate relief - (2)
Adjustment to losses carried forward 202 280
Current tax charge for the year 8 70
(c) Deferred tax
Tax losses Total
£000 £000
At 01 January 2013 (69) (69)
Credited to the income statement in 2013 - -
At 31 December 2013 (69) (69)
Credited to the income statement in 2014 - -
At 31 December 2014 (69) (69)
At 31 December 2014 the Group had capital losses carried forward of
£8,130,000 (2013: £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 £11,531,767 (2013: £10,843,243) trading losses carried
forward, which includes £8,987,000 losses transferred from BNB Recruitment
Consultancy Ltd in 2011. A deferred tax asset of £1,424,000 (2013: £1,557,000)
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:
2014 2013
Deferred tax assets: £000 £000
Tax losses carried forward 69 69
Total 69 69
6. NET FINANCE COST
2014 2013
£000 £000
Interest payable on bank loans and overdrafts 32 15
Total 32 15
7. EXCEPTIONAL ITEMS
Year ended 31 Year ended 31
December 2014 December 2013
£000 £000
Goodwill disposal Norman Broadbent SPRL 112 -
Goodwill impairment NB Norman Broadbent SA 447 -
Balance at end of period 559 -
The Group disposed of Norman Broadbent SPRL for £120,000 on 8 May
2014, resulting in a disposal of goodwill of £112,000 in the Consolidated
Statement of Financial Position, and a loss on disposal of £128,000 in the
Company Statement of Financial Position. On 27 May 2014, the Group sold its 20
% stake in NBS Norman Broadbent SA for £92,000, which completed on 30 July
2014. The sale resulted in an impairment to goodwill of £446,946 in the
Consolidated Statement of Financial Position and a profit of £92,000.
8. DISCONTINUED OPERATION
On 8 May 2014, the Group sold its 51 % stake in Norman Broadbent
SPRL for £120,000 (compared to a cash investment of £135,000) to existing
management. Norman Broadbent SPRL owned 100% of the issued share capital of
Norman Broadbent S.A.S, which was liquidated in February 2014. The segment was
not a discontinued operation or classified as held for sale at 31 December
2013 and the comparative consolidated statement of comprehensive income has
been re-presented to show the discontinued operation separately from continued
operations.
Year ended Year ended
31 December 31 December 2013
2014 £000 £000
Results from discontinued operation
Revenue 120 730
Operating Expenses (223) (644)
Results from operating activities (103) 86
Net finance cost - (15)
Exceptional items (41) -
Tax - (51)
Results from operating activities, net of tax (144) 20
Minority Interest 70 (10)
Loss/Profit for the period (74) 10
Loss per share
- Basic (0.39p) 0.07p
- Diluted (0.39p) 0.07p
Effect of disposal on the financial position of the Group
Year ended
31 December
2014
£000
Property, plant and equipment 23
Trade and other receivables 126
Cash and cash equivalents * 135
Trade and other payables (48)
Net assets and liabilities 236
Consideration received, satisfied in 120
cash
Cash and Cash equivalents disposed of (135)
Net cash outflow (15)
* Excludes cash balance of £8,000 from
the liquidated position of Norman
Broadbent SAS.
9. 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:
2014 2013
Loss attributable to shareholders £(1,489,000) £(1,050,000)
Weighted average number of ordinary 15,121,429 13,385,224
shares
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.
2014 2013
Loss attributable to shareholders £(1,489,000) £(1,050,000)
Weighted average number of ordinary 15,121,429 13,385,224
shares
- assumed conversion of share options - -
- assumed conversion of warrants - -
Total 15,121,429 13,385,224
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.
2014 2014 2014 2013 2013 2013
Basic Diluted Basic Diluted
pence per pence per pence per pence per
£000 share share £000 share share
Basic earnings
Loss after tax (1,489) (9.85) (9.85) (1,050) (7.85) (7.85)
Adjustments
Share based payment charge 20 0.14 0.14 60 0.45 0.45
Adjusted earnings (1,469) (9.71) (9.71) (990) (7.40) (7.40)
10. 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 £364,000 (2013: £128,000 profit).
11. INTANGIBLE ASSETS
Goodwill
Group arising on
consolidation
£000
Balance at 1 January 2013 3,802
Balance at 31 December 2013 3,802
Disposal (note 8) (112)
Balance at 31 December 2014 3,690
Provision for impairment
Balance at 1 January 2013 1,880
Balance at 31 December 2013 1,880
Impairment in the year (note 8) 447
Balance at 31 December 2014 2,327
Net book value
At 1 January 2013 1,922
At 31 December 2013 1,922
At 31 December 2014 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:
Human Asset
Norman Development
Broadbent International Total
£000 £000 £000
At 1 January 2013 1,862 60 1,922
At 31 December 2013 1,862 60 1,922
At 31 December 2013 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 24, 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 2015 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 13% per annum for
the foreseeable future (2013: 10 %) and 9% for Human Asset Development
International (2013: 7 %). 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 %
(2013: 12 %).
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 2014 the recoverable value of the
Norman Broadbent CGU is £3,000,000 and the Human Asset Development
International CGU is £160,000. Return on sales would need to fall below 6 %
for the Norman Broadbent goodwill to be impaired and below 4 % for Human Asset
Development International goodwill to be impaired.
12. PROPERTY, PLANT AND EQUIPMENT
Land and Office and
Group buildings - computer Fixtures and Motor
leasehold equipment fittings Vehicles Total
£000 £000 £000 £000 £000
Cost
Balance at 1 January 62 236 148 13 459
2013
Additions 81 38 3 - 122
Disposals (59) (99) (87) - (245)
Balance at 31 December 84 175 64 13 336
2013
Additions - 17 - - 17
Disposals - (8) (17) (13) (38)
Balance at 31 December 84 184 47 - 315
2014
Accumulated depreciation
Balance at 1 January 54 147 117 2 320
2013
Charge for the year 20 50 14 5 89
Disposals (59) (99) (87) - (245)
Balance at 31 December 15 98 44 7 164
2013
Charge for the year 15 40 4 3 62
Disposals - (3) (3) (10) (16)
Balance at 31 December 30 135 45 - 210
2014
Net book value
At 1 January 2013 8 89 31 11 139
At 31 December 2013 69 77 20 6 172
At 31 December 2014 54 49 2 - 105
The Group had no capital commitments as at 31 December 2014 (2013: £Nil).
The above assets are owned by Group companies; the Company has no fixed
assets.
13. INVESTMENTS
Shares in
subsidiary
Company undertakings
£000
Cost
Balance at 1 January 2013 6,041
Additions (see note below) 10
Balance at 31 December 2013 6,051
Disposals (see note below) (249)
Balance at 31 December 2014 5,802
Provision for impairment
Balance at 1 January 2013 3,926
Balance at 31 December 2013 3,926
Impairment in the year -
Balance at 31 December 2014 3,926
Net book value
At 1 January 2013 2,115
At 31 December 2013 2,125
At 31 December 2014 1,876
In 2012, the company acquired a 51 % interest in Acker Deboeck and Company for
a total consideration of £249,000. The Group disposed of Norman Broadbent SPRL
for £120,000 on 8 May 2014 (see note 8).
In 2013, the entire issued share capital of £10,000 in Arcus Global Partners
Limited was acquired from Norman Broadbent Executive Search Limited, a wholly
owned subsidiary, to the Company.
In 2014, the company disposed of Norman Broadbent SPRL for £120,000 (see note
8).
At 31 December 2014 the Company held the following ownership interests:
Principal Group investments: Country of
incorporation Description
or and proportion
registration Principal of shares held
and operation activities by the Company
Norman Broadbent Executive England and Executive search 100% ordinary
Search Ltd Wales shares
Norman Broadbent Overseas England and Executive search 100% ordinary
Ltd Wales shares
Norman Broadbent Leadership England and Assessment, 100% ordinary
Consulting Limited Wales coaching and shares
talent mgmt.
AGP NB Ltd (formerly Arcus England and Contingent 100% ordinary
Global Partners) Wales Search shares
Norman Broadbent Inc United States Executive search 100% ordinary
of America shares
The NB Consultancy Singapore Executive search 100% ordinary
(Singapore) Pte. Ltd shares
Connecting Corporates Ltd England and Social Media 51% ordinary
Wales Search & shares
Consulting
Bancomm Ltd England and Dormant 100% ordinary
Wales shares
Norman Broadbent Ireland Republic of Dormant 100% ordinary
Ltd* Ireland shares
Norman Broadbent Interim England and Interim 100% ordinary
Management Ltd Wales Management shares
* 100 % of the issued share capital of this company is owned by Norman
Broadbent Overseas Ltd.
14. TRADE AND OTHER RECEIVABLES
Group Company
2014 2013 2014 2013
£000 £000 £000 £000
Trade receivables 1,519 1,829 - -
Less: provision for impairment (180) (72) - -
Trade receivables - net 1,339 1,757 - -
Other debtors 339 417 6 21
Prepayments and accrued income 285 165 10 4
Due from Group undertakings - - 3,381 2,711
Total 1,963 2,339 3,397 2,736
As at 31 December 2014, Group trade receivables of £995,000 (2013:
£1,197,000) 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
2014 2013 2014 2013
£000 £000 £000 £000
Up to 3 months 943 869 - -
3 to 6 months 31 238 - -
6 to 12 months 21 90 - -
Total 995 1,197 - -
The largest amount due from a single debtor at 31 December 2014 represents
8.9% (2013: 6.8%) of the total trade receivables balance outstanding.
As at 31 December 2014, Group trade receivables of £180,000 (2013: £72,000)
were past their due date and considered impaired. A provision for impairment
for the full amount has been recognised in the financial statements. Movements
on the Group's provision for impairment of trade receivables are as follows:
2014 2013
£000 £000
At 1 January 72 20
Provision for receivable impairment 108 72
Receivables written-off as uncollectable - (20)
At 31 December 180 72
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.
15. CASH AND CASH EQUIVALENTS
Group Company
2014 2013 2014 2013
£000 £000 £000 £000
Cash at bank and on hand 506 579 221 375
Total 506 579 221 375
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.
16. TRADE AND OTHER PAYABLES
Group Company
2014 2013 2014 2013
£000 £000 £000 £000
Trade payables 528 389 58 56
Due to Group undertakings - - 1,295 1,166
Other taxation and social security 226 353 - -
Other payables 163 72 - -
Accruals 601 519 69 65
Total 1,518 1,333 1,422 1,287
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.
17. BORROWINGS
Group Company
Maturity profile of borrowings
2014 2013 2014 2013
£000 £000 £000 £000
Current
Bank overdrafts and interest bearing
loans:
Invoice discounting facility (see note 673 802 - -
(a) below)
Total 673 802 - -
The carrying amounts and fair value of the Group's borrowings, which are all
denominated in sterling, are as follows:
Carrying amount Fair value
2014 2013 2014 2013
£000 £000 £000 £000
Bank overdrafts and interest bearing
loans:
Invoice discounting facility 673 802 673 802
Total 673 802 673 802
a) Invoice discounting facilities:
Norman Broadbent Executive Search Limited, AGP 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 75% 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 2014,
the outstanding balance on the facility of £508,000 (2013: £680,000) was
secured by trade receivables of £682,000 (2013: £1,104,000). Interest is
charged on the drawn down funds at a rate of 2.50% above the bank base rate
(2013: 2.50%).
AGP (NB) Limited:
Funds are available to be drawn down at an advance rate of 75% against trade
receivables of AGP (NB) Limited that are aged less than 120 days, with the
facility capped at £750,000. At 31 December 2014, the outstanding balance on
the facility of £45,000 (2013: £122,000) was secured by trade receivables of
£126,000 (2013: £151,000). Interest is charged on the drawn down funds at a
rate of 2.75% (2013: 2.75%) 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 2014, the
outstanding balance on the facility of £120,000 (2013: £Nil) was secured by
trade receivables of £191,000 (2013: £Nil). Interest is charged on the drawn
down funds at a rate of 2.75% (2013: nil) above the bank base rate.
18. FINANCIAL INSTRUMENTS
The principle 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
Group 2014 2013
£000 £000
Financial Assets
Trade and other receivables 1,963 2,339
Cash and cash equivalents 506 579
Financial Liabilities
Trade and other payables 1,518 1,333
Invoice discounting facility 673 802
Corporation tax liability - 21
Amortised Cost
Company 2014 2013
£000 £000
Financial Assets
Trade and other receivables 3,397 2,736
Cash and cash equivalents 221 375
Financial Liabilities
Trade and other payables 1,422 1,287
In common with all other businesses, the Group is exposed to risks
that arise from its use of financial instruments..
19. SHARE CAPITAL AND PREMIUM
2014 2013
Allotted and fully paid: £000 £000
Ordinary Shares:
17,416,487 Ordinary shares of 1.0p each (2013: 174 148
14,798,686)
Deferred Shares:
23,342,400 Deferred A shares of 4.0p each (2013: 934 934
23,342,400)
907,118,360 Deferred shares of 4.0p each (2013: 3,628 3,628
907,118,360)
1,043,566 Deferred B shares of 42.0p each (2013: 438 438
1,043,566)
2,504,610 Deferred shares of 29.0p each (2013: 2,504,610) 727 727
5,727 5,727
Total 5,901 5,875
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 Deferred Share
ordinary shares shares premium
shares Total
(000s) £000 £000 £000 £000
At 1 January 2013 13,049 130 5,727 9,572 15,429
Proceeds from share placing 1,750 18 - 682 700
(note (a) below)
Transaction costs related to - - - (16) (16)
share placing
At 31 December 2013 14,799 148 5,727 10,238 16,113
Proceeds from share placing 2,617 26 - 474 500
(note (b) below)
Transaction costs related to - - - (13) (13)
share placing
At 31 December 2014 17,416 174 5,727 10,699 16,600
a) Share placing in October 2013:
On 22 October 2013, the Company issued 1,750,000 new ordinary 1.0p
shares for a total cash consideration of £700,000. Transaction costs of
£16,000 were incurred resulting in net cash proceeds of £684,000.
b) Share placing in November 2014:
On 21 November 2014, the Company issued 2,617,801 new ordinary 1.0p
shares for a total cash consideration of £500,000. Transaction costs of
£12,500 were incurred resulting in net cash proceeds of £487,500.
20. SHARE BASED PAYMENTS
20.1 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 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. Number of
exercise options
price per
share (p)
At 1 January 2013 62.92 996,240
Forfeited 61.13 (84,962)
Granted 42.50 91,765
At 31 December 2013 61.20 1,003,043
Forfeited 62.49 (271,829)
At 31 December 2014 60.72 731,214
Share options outstanding at the end of the year have the following expiry
date and exercise prices:
Expiry date Exercise Share options
price per
share (p) 2014 2013
2020 52.50 106,666 169,523
2021 65.50 532,782 741,754
2023 42.50 91,765 91,765
Total 731,214 1,003,042
Out of the 731,214 outstanding options (2013: 1,003,042), no options were
exercisable at the year end (2013: None) as they were all `underwater'.
The weighted average fair value of the share options granted in
2013, determined using the Trinomial Valuation Model, was 23.8 pence (options
granted in 2011: 37.5 pence and options granted in 2010: 21.3 pence). The
significant inputs into the model were weighted average share price of 42.5
pence at the grant date (2011: 65.5 pence and 2010: 52.5 pence), exercise
price shown above, volatility of 75% (2011 and 2010: 75%), 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 3.38% (2011: 3.38% and 2010:
3.65%). 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.
20.2 Warrants
On 14 June 2010, the Company issued warrants over shares in the
Company to two directors on the basis of one warrant for one ordinary share.
The warrants had an exercise price of 45 pence, could be exercised in full or
in part immediately and expired on 31 May 2013.
Movements in the number of warrants and their related weighted average
exercise prices are as follows:
Warrants
Avg. Number of
exercise warrants
price per
share (p)
At 1 January 2013 45.00 166,666
Forfeited 45.00 (166,666)
At 31 December 2013 - -
At 31 December 2014 - -
There were no Warrants outstanding at the end of the year.
See Note 4 for the total expense recognised in the income statement for share
options and warrants granted to directors and employees.
Operating leases
The Group leases all its premises. The terms of the leases vary for each
property and are tenant repairing.
As at 31 December 2014, the total future value of minimum lease payments are
due as follows:
Land and Buildings
2014 2013
£000 £000
Within one year 264 297
Later than one year and not later than five years 1,056 1,028
Total 1,320 1,325
21. PROVISIONS
Group Company
2014 2013 2014 2013
£000 £000 £000 £000
At 1 January 125 - - -
Provisions made during the year - 125 - -
At 31 December 125 125 - -
Current liability - - - -
Non-current liability 125 125 - -
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 has been provided for in the financial period. 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 £210,000 (2013:
£203,000). At the year-end £12,000 of contributions were outstanding (2013:
£23,000).
23. RELATED PARTY TRANSACTIONS
The following transactions were carried out with related parties:
(a) Purchase of services:
2014 2013
£000 £000
Adelaide Capital Limited * 50 52
Anderson Barrowcliff LLP 13 14
Brian Stephens & Company Ltd 30 22
Norman Broadbent SAS - 37
Arquius Colombia SAS - 48
Connecting Corporates Limited 24 11
Total 117 184
During the year Adelaide Capital Limited invoiced the Group for the
directors' fees of P Casey £30,000 and corporate finance services £20,000
(2013 total: £52,000). P Casey is a director of Adelaide Capital Limited.
Brian Stephens & Company Ltd invoiced the Group for the directors' fees of B
Stephens £20,000, £4,000 consultancy and business related travel costs £6,000
(2013 total: £22,000). B Stephens is a director of Brian Stephens & Company
Ltd.
* The amount paid to Adelaide Capital Limited, a wholly owned
company of P Casey, is included in the total sums paid to P Casey of £121,000
for 2014 (see Directors Remuneration Report on page 11).
Taxation and company secretarial services of £13,000 (2013: £9,000)
were acquired from Anderson Barrowcliff LLP, an accountancy firm of which R
Robinson is a partner. The remaining director fees for R Robinson was paid
through PAYE £20,000 (2013 total: £15,000).
During the year the Group acquired research services from
Connecting Corporates Limited £24,000 (2013: £11,000). The Group owns a 51%
stake in Connecting Corporates Limited.
All related party expenditure took place via "arms-length"
transactions.
(a) Sale of services
2014 2013
£000 £000
NBS Norman Broadbent SA 76 175
Norman Broadbent SPRL - 11
Connecting Corporates Limited 13 42
Total 89 228
During the year the Group invoiced NBS Norman Broadbent SA for
royalty income £76,000 (2013: £175,000). The Group sold its 20% stake in NBS
Norman Broadbent SA during 2014.
During the year the Group recharged group services incurred for the
benefit of Connecting Corporates Limited to Connecting Corporates Limited at
cost £13,000 (2013: £42,000).
All related party transactions took place at "arms-length".
(b) Provision of loans
2014 2013
£000 £000
Connecting Corporates Limited 305 275
Total 305 275
During the year the Group provided additional loans to Connecting
Corporates Limited to support working capital requirements of this company
£305,000 (2013: £275,000). The loans are non-interest bearing and are
repayable on demand. At the year end, £305,000 (2013: £275,000) was
outstanding and due to the Group.
(c) 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 12-13.
(d) Year-end payables arising from the purchases of services:
2014 2013
£000 £000
Adelaide Capital Limited 12 -
Anderson Barrowcliff LLP 1 -
Brian Stephens & Company Ltd 6 6
Connecting Corporates Limited 24 11
Norman Broadbent SAS - 37
Arquius Colombia SAS - 19
Total 43 73
Payables to related parties arise from purchase transactions and are due one
month after date of purchase. Payables bear no interest.
(e) Year-end receivables arising from the sale of services:
2014 2013
£000 £000
NBS Norman Broadbent SA - 47
Norman Broadbent SPRL - 5
Connecting Corporates Limited 13 42
Total 13 94
Receivables owed by related parties arise from sales transactions
and are due one month after date of purchase. Payables bear no interest.
24. 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 £67,000
(2013: £147,000).
Under Section 17 of the Landlord and Tenant (Covenants) Act 1995
the Company has a contingent liability in respect of the lease on its previous
registered office, which was assigned to a third party in April 2010. The
Company could be required to meet the financial obligations of the lease
should the assignee default on lease payments. The maximum potential liability
would be £120,000 per annum expiring on 31 December 2015. The directors
believe the likelihood of the assignee defaulting prior to expiry is remote
due to the balance sheet position of the tenant, reviewed in their last
published financial statements in March 2014.
25. POST BALANCE SHEET EVENTS
The Group has taken the decision to cease its operations in
Singapore (NB Consultancy (Singapore) Pte. Ltd). Whilst this has no impact on
the Consolidated Statement of Financial Position, the intercompany loan
balance of £194,000 has been provided for in the 2014 Company Statement of
Financial Position.
Since year end, the Group has taken the decision to cease
operations in the USA (Norman Broadbent Inc). Once the closing date has been
confirmed the Group will review the recoverability of the intercompany loan
balance in the Company Statement of Financial Position.
26. AVAILIBILITY OF ACCOUNTS AND NOTICE OF ANNUAL GENERAL MEETING
Copies of the Final Report and Annual Accounts have been posted to
shareholders and are available to view on the Company's website
(www.normanbroadbent.com/information/investor-relations).
Notice is hereby given that the 76th Annual General Meeting of
Norman Broadbent plc will be held at 11am at The East India Club, 16 St
James's Square, London, SW1Y 4LH on 30 June 2015.