Final Results

RNS Number : 7215B

Norman Broadbent PLC

20 April 2012

 



Norman Broadbent plc

("Norman Broadbent" or "the Company")

Norman Broadbent plc, a leading provider of executive search, and leadership consultancy services, today announces its audited results for the year ended 31 December 2011.

Financial highlights

·      Revenue increased to £6.9 million from £6.11 million for the year ended 31 December 2010, an increase of 13 per cent

·      Operating profit of £0.3 million before restructuring costs, compared with £0.37 million in 2010

·      Investment of £0.8 million in restructuring costs during 2011 to re-configure UK search practice

Share placing and financial position

·      £1.75 million raised in May 2011 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 following the placing

·      Funds being used for strategic growth

·      Equity shareholders' funds increased to £2.29 million (2010: £0.98 million)

·      New, substantially increased, invoice-discounting facilities put in place during 2011

Operational highlights

·      10 senior appointments in the UK search practice, including three managing directors and the establishment of a dedicated board practice

·      Business repositioned to a tier 1 firm under Sue O'Brien, UK CEO

·      Singapore and United States subsidiaries established (Q1 2012)

·      Additional offices opened in Latin America and Tunisia through our international licence partners

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

·      Interim joint venture established with Alium Partners

·      Satisfactory results from the Company's international licence partners

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

·      Strong new client wins in 2011, an increase of 52 per cent over 2010

·      Despite the consultant re-structuring in the year, retention of existing clients remains strong

Pierce Casey, Executive Chairman of Norman Broadbent, said:

"During 2011 the executive search consultant team in London was re-structured substantially, coupled with the formation of a new board practice. The rapport within the re-structured team has been very encouraging with a marked increase in new clients alongside strong retention within our established client base.

"We are very pleased with our international expansion with new subsidiaries in Singapore and the United States and, through our licence partners, new offices in Latin America and North Africa.

"Core UK search revenues were up 16 per cent in Q1 2012 as compared with Q1 2011 in a tough market which is encouraging."

For further information please contact:

Norman Broadbent plc                                                            020 7484 0000

Pierce Casey/Sue O'Brien/Ben Felton                                       

Merchant Securities Limited                                                    020 7628 2200

Simon Clements/Virginia Bull                                                     

Pelham Bell Pottinger

Damian Beeley                                                                          020 7861 3139

                                                                                                07950 481795

                                                                                                [e-mail]

Stephanie Sheffrin                                                                      020 7861 3932

                                                                                                [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, Singapore, Los Angeles, Tunis and Bogota.

For further information visit www.normanbroadbent.com

Chairman's statement

INTRODUCTION

Norman Broadbent plc (the "Company" or the "Group") is a human capital consultancy which operates principally as a global executive search business headquartered in London.  In partnership with our licencees we also operate in Spain, Italy, the Middle East and North Africa.  We have recently extended our reach through new subsidiaries in Singapore and the United States.  In addition, the Company offers board level coaching and assessment, through our wholly owned subsidiary Human Asset Development International Limited (HADIL). The Company offers a board level interim service in association with our global strategic partner Alium Partners.

Following a share placing in May 2011 raising £1.75 million, the Company embarked on a fundamental restructure and expansion of the core executive search business through the appointment of 10 senior executives, the creation of a new board practice and the development of our board level coaching and assessment business.

Overseas coverage has been increased, resulting in recent (post balance sheet) openings of wholly-owned subsidiaries in the US and of an 80 per cent subsidiary in Singapore in association with our Middle East / North Africa (MENA) licencee.  In addition our Spanish licencee has opened an office in Latin America and our MENA licencee has opened an office in Tunisia.  The Company is committed to further overseas diversification in line with client demand and on a revenue-led basis.

RESULTS FOR THE FINANCIAL YEAR

The table below summarises the results for the Group:

Revenue	2011 £000	2010 £000
Executive Search	5,929	5,718
HADIL	591	48
Interim	47	19
Overseas royalties	333	326
	6,900	6,111
Group operating profit before restructuring costs	301	373
Restructuring costs	(802)	(144)
Operating (loss)/profit	(501)	229
Finance cost	(34)	(53)
One-off gain on disposal of subsidiary	-	837
(Loss)/profit before tax	(535)	1,013
Tax credit/(charge)	(26)	58
(Loss)/profit after tax	(561)	1,071
EPS - basic	(5.96)p	20.00p
EPS - adjusted	(5.16)p	5.69p

Revenue for the year rose to £6.9 million, an increase of 13 per cent, while operating profit before the well-flagged restructuring costs (referred to in the Chairman's statement for the six months ended 30 June 2011) was £301,000, reduced from £373,000. 

As anticipated, 2011 was a year of significant change in terms of the core London executive search team with 10 new senior appointments, eight of whom joined in the second half of the year.  The immediate impact of a substantial number of consultants leaving and joining, on a virtually overlapping basis, is a decline in short term revenue. Therefore, the modest 4 per cent increase in UK Executive Search revenue from £5.72 million to £5.93 million was satisfactory and in-line with our expectations.

In the Chairman's statement for the six months to 30 June 2011, I also stated that "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".  I am pleased to report that UK Executive Search revenues have increased 16 per cent in Q1 2012 compared with Q1 2011. This has been achieved in a tough market where other public recruitment companies are facing flat or declining UK revenues.

Our board assessment and evaluation business generated revenues of £591,000 in its first full year which was satisfactory.  While the net revenue of the board level interim service was modest at £47,000 it provided additional benefits through our ability to provide a fuller service offering to our clients.

Overseas royalties increased marginally to £333,000, reflecting growth from the Middle East, a small decrease from Spain and flat revenues in Italy.  The Company sees North America as a long term core market, best serviced on a subsidiary basis and, in tandem with the incorporation of our US subsidiary, has terminated its small historic relationship in Canada.

In the Chairman's statement for the six months ended 30 June 2011, I reported restructuring costs of £410,000 for that period with an estimated £350,000 for the second half of 2011, making a total of £760,000.  The actual annual charge of £802,000 was marginally ahead of that figure.

The operating loss, after the £802,000 restructuring costs, was £501,000 compared with an operating profit of £229,000 last year.  The loss after taxation was £561,000 compared with a profit after taxation of £1,071,000 in 2010, which included a one-off gain on disposal of a subsidiary of £837,000.

FINANCIAL POSITION

The consolidated group balance sheet was strengthened during the year by the placing in May of 2.69 million shares at 65 pence each raising £1.75 million for the Company. Consolidated group net assets at 31 December 2011 were £2.29 million (2010: £0.98 million).  Cash at bank as at 31 December 2011 was £0.65 million (2010: £0.14 million).  During the year, the Company paid £250,000 of deferred consideration, repaid £150,000 of term loans and invested heavily in the planned restructuring, along with upfront investment in the launch of Singapore and the US which took place in 2012.

BUSINESS DEVELOPMENT

During the year our client base diversified and broadened with revenue from new clients representing 54 per cent of turnover compared with 31 per cent in 2010.  Included in the new clients were six FTSE 100, and five FTSE 250 companies.  Despite the restructuring of our consultant team we have retained our existing client base.  This is a tribute both to our long-term team members and the 10 senior executives recruited from tier 1 and strategic boutique search firms during the year. The rapport within the restructured team has been most encouraging.

The introduction of our board practice in September 2011 has been successful both as a stand-alone offering, and as a springboard for our senior executive offering. 

We have also strengthened co-operation with our overseas licencees and, following the formation of our new Singapore and US subsidiaries, we are increasingly able to offer our clients global solutions. 

We have also put increased emphasis on improved research, "best in class" information technology and focused marketing events in a drive to maximise our business development efforts.  The launch of the Norman Broadbent Quarterly Board Index has created an enthusiastic response from clients and journalists alike.

STRATEGY

I set out the Company's Strategy in the Chairman's statement accompanying the results for the six months to 30 June 2011.

Demonstrably, we have made good progress in the past six months including:

̶    Increasing UK search revenue materially in Q1 2012

̶    The expansion of our international network to Latin America

̶    The creation of subsidiaries in Singapore and the US

We are reviewing a number of additional development opportunities with a view to further expanding our search and assessment/coaching offerings in the UK and overseas. We believe that continued internationalisation, coupled with broadened human capital offerings is fundamental to growing substantial shareholder value.

CURRENT TRADING AND OUTLOOK

Our core UK executive search practice increased revenue by 16 per cent in the first quarter to 31 March 2012, compared with the first quarter last year.  This level of increased revenue, on a profitable basis, is encouraging.

In common with our industry peer group we find it difficult to predict the timing of a robust recovery in the UK.  Consequently we will continue to focus on gaining market share through our experienced consultants delivering a superior service.  We will also selectively grow our international business.

Following the completion of the restructure, we anticipate a profitable result for the full year, notwithstanding start-up costs in Singapore and the US.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2011

	Note		2011		2010
				£000		£000
REVENUE	2			6,900		6,111
Cost of sales				(109)		(83)
GROSS PROFIT	2			6,791		6,028
Operating expenses				(6,515)		(5,668)
Other income				25		13
GROUP OPERATING PROFIT BEFORE RE-STRUCTURING COSTS				301		373
Re-structuring costs	4			(802)		(144)
GROUP OPERATING (LOSS)/PROFIT				(501)		229
Net finance cost	7			(34)		(53)
Share of profit of associates	13			-		-
Gain on disposal of a Group subsidiary	24			-		837
(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE INCOME TAX	3			(535)		1,013
Income tax (expense)/credit	6			(26)		58
(LOSS)/PROFIT FOR THE YEAR				(561)		1,071
(Loss)/earnings per share	8
- Basic				(5.96)p		20.00p
- Diluted				(5.96)p		19.60p
Adjusted (loss)/earnings per share	8
- Basic				(5.16)p		5.69p
- Diluted				(5.16)p		5.58p

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2011

	Notes	2011		2010
			£000		£000
Non-Current Assets
Intangible assets	10		1,810		1,810
Property, plant and equipment	11		131		177
Associates	13		-		5
Deferred tax assets	6		69		69
TOTAL NON-CURRENT ASSETS			2,010		2,061
Current Assets
Trade and other receivables	14		1,829		1,972
Cash and cash equivalents	15		650		140
TOTAL CURRENT ASSETS			2,479		2,112
TOTAL ASSETS			4,489		4,173
Current Liabilities
Trade and other payables	16		980		1,350
Deferred consideration	17		300		250
Bank overdraft and interest bearing loans	17		734		658
Corporation tax liability			-		1
TOTAL CURRENT LIABILITIES			2,014		2,259
NET CURRENT  ASSETS/(LIABILITIES)			465		(147)
Non-Current Liabilities
Deferred consideration	17		181		759
Interest bearing loans	17		-		177
TOTAL LIABILITIES			2,195		3,195
TOTAL ASSETS LESS TOTAL
LIABILITIES			2,294		978
Issued share capital	19		5,833		5,804
Share premium account	19		8,758		6,985
Retained earnings			(12,297)		(11,811)
TOTAL EQUITY			2,294		978

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2011

	Attributable to equity holders of the business
CONSOLIDATED GROUP	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 year	-	-	1,071	1,071
Total recognised income and expense for the year	-	-	1,071	1,071
Issue of ordinary shares	93	2,114	-	2,207
Credit to equity for share based payments	-	-	95	95
Balance at 31st December 2010	5,804	6,985	(11,811)	978
Balance at 1st January 2011	5,804	6,985	(11,811)	978
Loss for the year	-	-	(561)	(561)
Total recognised income and expense for the year	-	-	(561)	(561)
Issue of ordinary shares	29	1,773	-	1,802
Credit to equity for share based payments	-	-	75	75
Balance at 31st December 2011	5,833	8,758	(12,297)	2,294

CONSOLIDATED STATEMENT OF CASHFLOWS

For the year ended 31 December 2011

	Notes	2011		2010
			£000		£000
Net cash used in operating activities	(i)		(561)		(897)
Cash flows from investing activities and servicing of finance
Net finance cost			(35)		(53)
Dividends received			25		13
Payments to acquire tangible fixed assets	11		(33)		(184)
Repayment of deferred consideration			(528)		(366)
Disposal of subsidiary, net of cash disposed of	24		-		(178)
Acquisition of other investments	23		-		(65)
Net cash used in investing activities			(571)		(833)
Cash flows from financing activities
Net cash inflows from equity placing	19		1,750		1,805
Repayment of secured loans			(116)		(219)
Repayment of directors' loans			(7)		(13)
Increase in invoice discounting			14		232
Net cash from financing activities			1,641		1,805
Net increase in cash and cash equivalents			510		75
Net cash and cash equivalents at beginning of period			140		65
Net cash and cash equivalents at end of period			650		140
Analysis of net funds
Cash and cash equivalents			650		140
Borrowings due within one year			(734)		(658)
Borrowings due after one year			-		(177)
Directors' loan account			-		(7)
Deferred consideration			(481)		(1,009)
Net funds			(565)		(1,711)
Note (i)
Reconciliation of operating (loss)/profit to net cash from operating activities			2011 £000		2010 £000
Operating (loss)/profit			(501)		229
Depreciation/impairment of property, plant and equipment			79		79
Loss on disposal of property, plant and equipment			-		34
Share based payment charge			75		71
Dividends received			(25)		(13)
Decrease/(increase) in trade and other receivables			144		(1,042)
Decrease in trade and other payables			(306)		(244)
Taxation paid			(27)		(11)
Net cash used in operating activities			(561)		(897)

NOTES TO THE FINANCIAL STATEMENTS

1.       ACCOUNTING POLICIES

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.  The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in the notes to the Report and Accounts. 

The financial information set out above does not comprise the Company's statutory accounts for the periods ended 31 December 2011 or 31 December 2010. Statutory accounts for 31 December 2010 have been delivered to the Registrar of Companies and those for 31 December 2011 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their report was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis of matter without qualifying their report and did not contain statements under section 498(2) or (3) of the Companies Act 2006 in respect of the accounts for 2011 or for 2010.

Going concern

The Group reported an operating loss in the year to 31 December 2011 of £501,000 compared with an operating profit of £229,000 in 2010.  However these losses were primarily driven by one-off planned restructuring costs totalling £802,000, which are not expected to be repeated in 2012.   In order to ensure the Group continues to operate as a going concern and to maintain a strong balance sheet the directors took a number of actions in 2011:

·           On 31 May 2011 the Company raised £1,750,000 by the subscription of new equity shares as stated in the Chairman's statement on page 2.  The cash was primarily raised to drive profitable growth of the UK Search business through the hiring of Tier 1 search consultants and to fund modest international growth.  

·           In June 2011, the Group entered into an agreement with a new commercial finance company providing an improved invoicing discounting facility (facility increased from £700,000 to £1,500,000 with an advance rate of 75% of trade receivables compared with 60% previously).  This provided an immediate boost to working capital of £150,000 and most importantly provides the financial headroom to support a significant increase in future trading.  

·           The search business employed 10 new senior consultants during the year.  They all have proven track records of individually generating revenue levels above the current group average, which is expected to improve both revenue and profit margins.  

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

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
2011	Executive Search £000	Overseas Royalties £000	Interim £000	Assessment coaching & talent mgmt. £000	Unallocated £000	Total £000
Revenue	5,929	333	47	591	-	6,900
Cost of sales	(50)	-	-	(59)	-	(109)
Gross profit	5,879	333	47	532	-	6,791
Operating expenses	(5,336)	(119)	-	(580)	(401)	(6,436)
Other operating income	25	-	-	-	-	25
Re-structuring costs	(512)	-	-	-	(290)	(802)
Finance costs	(34)	-	-	-	-	(34)
Depreciation and amortisation	(79)	-	-	-	-	(79)
Profit/(Loss) before tax	(57)	214	47	(48)	(691)	(535)
Net assets	2,312	-	-	(18)	-	2,294

	BUSINESS SEGMENTS
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	(5,154)	(146)	-	(39)	(250)	(5,589)
Other operating income	13	-	-	-	-	13
Re-structuring costs	(144)	-	-	-	-	(144)
Finance costs	(53)	-	-	-	-	(53)
Depreciation and amortisation	(79)	-	-	-	-	(79)
Provision for 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.

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
2011	Executive Search £000	Overseas Royalties £000	Interim £000	Assessment coaching & talent mgmt. £000	Unallocated £000	Total £000
Revenue
United Kingdom	5,284	-	34	356	-	5,674
Europe	333	263	10	235	-	841
Other	312	70	3	-	-	385
Total	5,929	333	47	591	-	6,900
Gross profit
United Kingdom	5,234	-	34	309	-	5,577
Europe	333	263	10	223	-	829
Other	312	70	3	-	-	385
Total	5,879	333	47	532	-	6,791
Profit/(Loss) before tax
United Kingdom	(57)	-	34	(40)	(691)	(754)
Europe	-	164	10	(8)	-	166
Other	-	50	3	-	-	53
Total	(57)	214	47	(48)	(691)	(535)
Net assets
United Kingdom	2,312	-	-	(18)	-	2,294
Total	2,312	-	-	(18)	-	2,294

	BUSINESS SEGMENTS
2010	Executive Search £000	Overseas Royalties £000	Interim £000	Assessment coaching & talent mgmt. £000	Unallocated £000	Total £000
Revenue & Gross Profit
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 assets
United Kingdom	943	-	5	30	-	978
Total	943	-	5	30	-	978

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

3.       (LOSS) / PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

		2011	2010
		£000	£000
(Loss) / Profit on ordinary activities before taxation is stated after charging:
Depreciation and impairment of property, plant and equipment		79	79
Loss on foreign currency exchange		19	13
Operating lease rentals:
Land and buildings		305	356
Auditors' remuneration:
Audit work		33	30
Non-audit work		-	-

          The Company audit fee in the year was £10,000 (2010: £11,000).  

4.       RE-STRUCTURING COSTS

Re-structuring costs include personnel costs relating to the hiring of new consultants, exiting of under-performing staff and external recruitment consultancy costs relating to the new hires.

These items have been highlighted in the consolidated statement of comprehensive income because separate disclosure is considered appropriate in understanding the underlying performance of the business.  For the purposes of consistency, similar re-structuring costs incurred in 2010 have been separately identified below and on the face of the consolidated statement of comprehensive income.

		2011	2010
		£000	£000
Personnel		677	90
Consultancy		125	54
Total re-structuring costs		802	144

5.       STAFF COSTS

The average number of full time equivalent persons (including directors) employed by the Group during the period was as follows:		2011 No.		2010 No.
Sales and related services			23	20
Administration			30	28
			53	48
Staff costs (for the above persons):			£000	£000
Wages and salaries			4,254	3,269
Social security costs			439	373
Defined contribution pension cost			177	127
Share based payment expense (note 20)			75	71
			4,945	3,840

The emoluments of the directors are disclosed as required by the Companies Act 2006 on page 9 of the Report and Accounts in the Directors' Remuneration Report

6.        TAX EXPENSE

(a)     Tax charged in the income statement

Taxation is based on the profit for the year and comprises:		2011 £000		2010 £000
Current tax:
United Kingdom corporation tax at 26.5% (2010: 28%) based on profit for the year			26	27
Adjustment in respect of prior years			-	(16)
Total current tax			26	11
Deferred tax:
Origination and reversal of temporary differences			-	(69)
Tax charge/(credit)			26	(58)

(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:

			2011	2010
			£000	£000
(Loss)/profit on ordinary activities before taxation			(535)	1,013
Tax on loss on ordinary activities at standard UK corporation tax rate of 26.5% (2010: 28%)			(142)	284
Effects of:
Expenses not deductible			50	56
Gain on disposal of group subsidiary			-	(234)
Adjustment in respect of prior year			-	(16)
Non-taxable income			(7)	(4)
Capital allowances in excess of depreciation			12	(23)
Utilisation of ACT			(4)	(23)
Utilisation of losses brought forward			-	(44)
Adjustment to losses carried forward			113	36
Recognition of deferred tax balances			-	(69)
Other adjustments			4	(21)
Current tax charge/(credit) for the year			26	(58)

 (c)    Deferred tax

			Tax losses	Total
			£000	£000
At 01 January 2010			-	-
Credited to the income statement in 2010			(69)	(69)
At 31 December 2010			-	-
Credited to the income statement in 2011			-	-
At 31 December 2011			(69)	(69)

At 31 December 2011 the Group had capital losses carried forward of £8,130,000 (2010: £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 £10,000,000 (2010: £496,000) trading losses carried forward, which includes £8,987,000 losses transferred from BNB Recruitment Consultancy Ltd in the year.   A deferred tax asset of £1,740,000 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:

		2011	2010
Deferred tax assets:		£000	£000
Tax losses carried forward		69	69
Total		69	69

7.       NET FINANCE COST

		2011	2010
		£000	£000
Interest payable on bank loans and overdrafts		(35)	(53)
Total		(35)	(53)

8.       EARNINGS PER SHARE

i)        Basic earnings per share

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

		2011		2010
(Loss)/Profit attributable to shareholders			£(561,000)	£1,071,000
Weighted average number of ordinary shares			9,416,510	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.

		2011		2010
(Loss)/Profit attributable to shareholders			£(561,000)	£1,071,000
Weighted average number of ordinary shares			9,416,510	5,351,530
- assumed conversion of share options			49,272	64,970
- assumed conversion of warrants			55,343	46,608
Total			9,521,125	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.

	2011	2011	2011	2010	2010	2010
	£000	Basic    pence per share	Diluted pence per share	£000	Basic    pence per share	Diluted pence per share
Basic earnings
(Loss)/Profit after tax	(561)	(5.96)	(5.96)	1,071	20.00	19.60
Adjustments
Gain on disposal of subsidiary	-	-	-	(837)	(15.64)	(15.32)
Share based payment charge	75	0.80	0.80	71	1.33	1.30
Impairment of intangible assets	-	-	-	-	-	-
Adjusted earnings	(486)	(5.16)	(5.16)	305	5.69	5.58

9.       PROFIT OF PARENT COMPANY

As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these accounts.  The parent company's loss for the year amounted to £150,000 (2010: loss of £139,000).

10.     INTANGIBLE ASSETS

Group				Goodwill arising on consolidation £000
Balance at 1 January 2010				3,630
Additions (Note 23)				60
Balance at 31 December 2010				3,690
Additions				-
Balance at 31 December 2011				3,690
Provision for impairment
Balance at 1 January 2010				1,880
Balance at 31 December 2010				1,880
Balance at 31 December 2011				1,880
Net book value
At 1 January 2010				1,750
At 31 December 2010				1,810
At 31 December 2011				1,810

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

		Norman Broadbent £000	Human Asset Development International £000	Total £000
At 1 January 2010		1,750	-	1,750
At 31 December 2010		1,750	60	1,810
At 31 December 2011		1,750	60	1,810

The goodwill attributed to the Norman Broadbent entity can be split into two further CGU's, cash generated from the retained Executive Search business of £1,100,000 (2010: £1,100,000) and cash generated from International Royalties of £650,000 (2010: £650,000).

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 18 of the Report and Accounts, the directors test the goodwill for impairment annually.  The recoverable amount of the Group's CGUs are calculated on the present value of their respective expected future cash flows, applying a weighted average cost of capital in line with businesses in the same sector.  Pre-tax future cash flows for the next five years are derived from the approved forecasts for the 2012 financial year.

The key assumption applied to the forecasts for the business is that return on sales is expected to be a minimum of 10% per annum for the foreseeable future.  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 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 2011 the recoverable value of the Norman Broadbent CGU is £3,088,000 and Human Asset Development International CGU is £306,000.  Return on sales would need to fall below 7% for Norman Broadbent goodwill to be impaired and below 2% for Human Asset Development International goodwill to be impaired.

11.      PROPERTY, PLANT AND EQUIPMENT

Grou	Land and buildings - leasehold £000	Office and computer equipment £000	Fixtures and fittings £000	Total £000
Cost
Balance at 1 January 2010	17	283	80	380
Additions	66	77	41	184
Disposals	-	(215)	7	(208)
Balance at 31 December 2010	83	145	128	356
Additions	-	32	1	33
Disposals	(21)	(1)	-	(22)
Balance at 31 December 2011	62	176	129	367
Accumulated depreciation
Balance at 1 January 2010	14	188	72	274
Charge for the year	19	47	13	79
Disposals	-	(184)	10	(174)
Balance at 31 December 2010	33	51	95	179
Charge for the year	20	48	11	79
Disposals	(21)	(1)	-	(22)
Balance at 31 December 2011	32	98	106	236
Net book value
At 1 January 2010	3	95	8	106
At 31 December 2010	50	94	33	177
At 31 December 2011	30	78	23	131

The Group had no capital commitments as at 31 December 2011 (2010: £Nil). 

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

12.     INVESTMENTS

Company					Shares in subsidiary undertakings
					£000
Cost
Balance at 1 January 2010					7,328
Additions (Note 23)					60
Disposal of subsidiary (Note 24)					(1,602)
Balance at 31 December 2010					5,786
Additions					-
Balance at 31 December 2011					5,786
Provision for impairment
Balance at 1 January 2010					5,528
Impairment in the year					-
Disposal of subsidiary (Note 24)					(1,602)
Balance at 31 December 2010					3,926
Impairment in the year					-
Balance at 31 December 2011					3,926
Net book value
At 1 January 2010					1,800
At 31 December 2010					1,860
At 31 December 2011					1,860

Principal Group investments:		Country of incorporation or registration and operation	Principal activities	Description and proportion of shares held by the Company
Norman Broadbent Executive Search Ltd (formerly Garner International Ltd)		England and Wales	Executive search	100% ordinary shares
Bancomm Ltd		England and Wales	Dormant	100% ordinary shares
Norman Broadbent Overseas Ltd		England and Wales	Executive search	100% ordinary shares
Human Asset Development International Ltd		England and Wales	Assessment, coaching and talent mgmt.	100% ordinary shares
NBBI Limited*		England and Wales	Interim Management	100% ordinary shares
Substantial Shareholdings:
NBS Norman Broadbent SA**		Spain	Executive Search	20% ordinary shares

* The 100% shareholding in this company is owned by Norman Broadbent Executive Search Ltd, a wholly owned subsidiary of the Company.

** The 20% shareholding in this company is owned by Norman Broadbent Overseas Ltd, a wholly owned subsidiary of the Company.

13.     INVESTMENTS IN ASSOCIATES

		2011 £000		2010 £000
At 1 January			5	-
Acquisition of shares in associate			5	5
Share of profit*			-	-
Consolidation of wholly owned subsidiary (see note below)			(10)	-
At 31 December			-	5

* Share of profit is after deducting tax and non-controlling interest in associates.

On 14 June 2010, Norman Broadbent Executive Search Ltd, a wholly owned subsidiary of Norman Broadbent plc, acquired a 50% interest in NBBI Limited, a new company established to provide Interim Management services.  In June 2011, Norman Broadbent Executive Search Ltd obtained the remaining 5,000 ordinary shares in NBBI Limited which has become a wholly owned subsidiary (see note 12).

14.     TRADE AND OTHER RECEIVABLES

		Group		Company
		2011 £000	2010 £000	2011 £000	2010 £000
Trade receivables		1,319	1,584	-	-
Less: provision for impairment		(87)	(145)	-	-
Trade receivables - net		1,232	1,439	-	-
Other debtors		185	258	40	31
Prepayments and accrued income		412	275	6	10
Due from Group undertakings		-	-	1,262	565
Total		1,829	1,972	1,308	606

As at 31 December 2011, Group trade receivables of £820,000 (2010: £555,000) 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
		2011 £000	2010 £000	2011 £000	2010 £000
Up to 3 months		624	413	-	-
3 to 6 months		31	86	-	-
6 to 12 months		165	56	-	-
Total		820	555	-	-

The largest amount due from a single debtor at 31 December 2011 represents 11.07% (2010: 20.16%) of the total trade receivables balance outstanding.

As at 31 December 2011, Group trade receivables of £87,000 (2010: £145,000) were past their due date and 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:

		2011 £000		2010 £000
At 1 January			145	142
Provision for receivable impairment			87	145
Receivables written-off as uncollectable			(145)	(142)
At 31 December			87	145

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
		2011 £000	2010 £000	2011 £000	2010 £000
Cash at bank and on hand		650	140	366	102
Total		650	140	366	102

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
		2011 £000	2010 £000	2011 £000	2010 £000
Trade payables		369	479	59	125
Due to Group undertakings		-	-	764	586
Other taxation and social security		323	359	(11)	70
Other payables		122	239	-	50
Directors' loans		-	7	-	7
Accruals		166	266	25	40
Total		980	1,350	837	878

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		2011 £000	2010 £000	2011 £000	2010 £000
Current
Bank overdrafts and interest bearing loans:
Invoice discounting facility		625	610	-	-
Interest bearing loan		109	48	109	48
		734	658	109	48
Deferred consideration		300	250	300	250
Directors' loans		-	7	-	7
		1,034	915	409	305
Non-Current
In more than one year but no more than two:
Interest bearing loans		-	163	-	163
Deferred consideration		181	300	181	300
In more than two years but no more than five:
Interest bearing loan		-	14	-	14
Deferred consideration		-	459	-	459
		181	936	181	936
Total		1,215	1,851	181	1,241

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

		Carrying amount		Fair value
		2011 £000	2010 £000	2011 £000	2010 £000
Bank overdrafts and interest bearing loans		734	835	734	835
Deferred consideration		481	1,009	481	1,009
Directors' loans		-	7	-	7
Total		1,215	1,851	1,215	1,851

a)       Bank overdrafts and interest bearing loans

The interest bearing loan is secured by a fixed and floating charge over the assets of the Group and by a separate all money guarantee of a restricted amount from A C Garner.  The following debenture is also in place as security for the bank loan:

·           Unlimited debenture dated 15 June 2011 over the assets of Norman Broadbent plc;

Interest on the loan is charged at 3.5% above the bank base rate (2010: 4.0%) is being repaid monthly up to 31 December 2012. 

b)       Invoice discounting facility

Norman Broadbent Executive Search Limited operates an invoice discounting facility.  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 2011, the outstanding balance on the facility of £625,000 (2010: £610,000) was secured by trade receivables of £1,229,000 (2010: £1,334,000) and a cross corporate guarantee and indemnity deed dated 20 July 2011.  Interest is charged on the drawn down funds at a rate of 2.75% above the bank base rate (2010: 1.75%).  

c)       Deferred consideration

The balance outstanding at 31 December 2011 is due to be settled by a cash payment of £300,000 on 30 June 2012 and £181,000 of additional payments equivalent to royalty income and dividends from an overseas licensee.   These additional payments will be made quarterly and will continue until the balance has been fully settled.  This element of the deferred consideration can only be settled through the income received from the overseas licensee with no recourse to the Company should the revenue stream reduce or cease completely in the future.  The balance outstanding on the deferred consideration is non-interest bearing.   

d)       Directors'  and other loans

Directors' and other loans are non-interest bearing and are repayable on demand.

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		2011 £000	2010 £000
Financial Assets
Trade and other receivables		1,829	1,972
Cash and cash equivalents		650	140
Financial Liabilities
Trade and other payables		980	1,350
Bank overdrafts and interest bearing loans		734	835
Deferred consideration		481	1,009
Corporation tax liability		-	1

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

19.     SHARE CAPITAL AND PREMIUM

Allotted and fully paid:		2011 £000	2010 £000
Ordinary Shares:
10,607,801 Ordinary shares of 1.0p each (2010: 7,719,446)		106	77
Deferred Shares:
23,342,400 Deferred A shares of 4.0p each (2010: 23,342,400)		934	934
907,118,360 Deferred shares of 0.4p each (2010: 907,118,360)		3,628	3,628
1,043,566 Deferred B shares of 42.0p each (2010: 1,043,566)		438	438
2,504,610 Deferred shares of 29.0p each (2010: 2,504,610)		727	727
		5,727	5,727
Total		5,833	5,804

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 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 A Shares.

Deferred Shares of 0.4p each

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

Deferred B Shares of 42.0p each

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

Deferred Shares of 29.0p each

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

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

	No. of ordinary shares (000s)	Ordinary shares £000	Deferred shares £000	Share premium £000	Total £000
At 1 January 2010	71,022	711	5,000	4,871	10,582
Pre-consolidation (note a):
- proceeds from shares issued in lieu of bonus	4,116	41	-	36	77
Share consolidation (note b)	(72,634)	(727)	727	-	-
Post-consolidation (note c):
- proceeds from shares issued	4,522	45	-	1,990	2,035
- shares issued in lieu of loans	693	7	-	342	349
- transaction costs	-	-	-	(254)	(254)
At 31 December 2010	7,719	77	5,727	6,985	12,789
Proceeds from share placing (note d)	2,692	27	-	1,723	1,750
Transaction costs related to share placing	-	-	-	(54)	(54)
Shares issued on conversion of options/warrants	118	1	-	53	54
Shares issued to employees	79	1	-	51	52
At 31 December 2011	10,608	106	5,727	8,758	14,591

a)       Pre-consolidation share issue:

On 28 January 2010, the Company issued 4,116,104 shares to employees in lieu of bonus.  The fair value of the shares issued amounted to £77,000.

b)       Share consolidation:

On 14 June 2010, a General Meeting of the Company was held and resolutions passed which resulted in changes to the issued share capital as follows:

·           every 30 existing ordinary shares were consolidated into 1 new ordinary share of 30 pence; and

·           each of the issued ordinary shares of 30 pence resulting from the consolidation were then subdivided into, and re-designated as, one new ordinary share with nominal value 1pence and one new deferred share with nominal value 29 pence.

c)       Post-consolidation share issue:

At the General Meeting of the Company on 14 June 2010, resolutions were also passed to allot the following share capital:

·           4,522,221 new ordinary 1 penny shares for a total cash consideration of £2,035,000;

·           692,615 new ordinary 1 penny shares in full consideration of existing loans with a fair value of £349,000, which included directors' loans of £192,000.

The transaction costs relating to the above share allotments totalled £254,000, including a share based payment charge of £24,000 relating to the warrants issued to Mr C Auld on 14 June 2010.  These costs, directly related to the issue of new shares, have been written off against share premium, as permitted under Section 610 of the Companies Act 2006.

d)       Share placing in 2011:

At the Annual General Meeting of the Company on 31 May 2011, a special resolution was passed to allot 2,692,308 new ordinary 1 penny shares for a total cash consideration of £1,750,000.

20.     SHARE BASED PAYMENTS

20.1   Share Options

The Company has an approved EMI share option scheme for full time employees and directors and an unapproved share option scheme under which options to subscribe for the Company's shares have been granted to connected parties.  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.

Options under the unapproved scheme may be exercised in whole but not in part within three years of the grant.

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

		Approved EMI share option scheme		Unapproved share option scheme
		Avg. exercise price per share (p)	Number of options	Avg. exercise price per share (p)	Number of options
At 1 January 2010		168.90	58,614	168.90	26,625
Granted		52.50	333,333	-	-
Forfeited		168.90	(4,736)	-	-
Exercised		-	-	-	-
At 31 December 2010		68.70	387,211	168.90	26,625
Granted		65.50	955,393	-	-
Forfeited		96.82	(141,499)	168.90	(26,625)
Exercised		52.50	(19,047)	-	-
At 31 December 2011		63.01	1,182,058	-	-

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

Expiry date		Exercise price per share (p)	Share options
			2011	2010
2011		168.90	-	26,625
2017		168.90	-	53,878
2020		52.50	226,665	333,333
2021		65.50	955,393
Total			1,182,058	413,836

Out of the 1,182,058 outstanding options (2010: 413,836), 75,555 options were exercisable at the year end (2010: 80,503).

The weighted average fair value of the share options granted during the year, determined using the Trinomial Valuation Model, was 37.5 pence (2010: 21.3 pence).  The significant inputs into the model were weighted average share price of 65.5 pence at the grant date (2010: 52.5 pence), exercise price shown above, volatility of 75% (2010: 85%), dividend yield of 0% (2010: 0%), an expected option life of 10 years (2010: 10 years) and an annual risk-free interest rate of 3.38% (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 and a connected party on the basis of one warrant for one ordinary share.   The warrants have an exercise price of 45 pence, can be exercised in full or in part immediately and expire on 31 May 2013.

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

				Warrants
				Avg. exercise price per share (p)	Number of warrants
At 1 January 2010				90.00	28,333
Granted				45.00	264,443
Forfeited				-	-
Exercised				-	-
At 31 December 2010				49.35	292,776
Granted				-	-
Forfeited				90.00	(28,333)
Exercised				45.00	(97,777)
At 31 December 2011				45.00	166,666

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

Expiry date		Exercise price per share (p)	Warrants
			2011	2010
2011		90.00	-	28,333
2013		45.00	166,666	264,443
Total			166,666	292,776

Out of the 166,666 outstanding warrants (2010: 292,776), 166,666 warrants were exercisable in the year (2010: 292,776).

See Note 6 for the total expense recognised in the income statement for share options and warrants granted to directors and employees.

21.     LEASES

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 2011, the total future value of minimum lease payments are due as follows:

	Land and Buildings
	2011 £000	2010 £000
Within one year	440	352
Later than one year and not later than five years	117	537
Total	557	889

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 £177,000 (2010: £127,000). All costs were fully paid at the year end.

23.     BUSINESS COMBINATIONS

          On 2^nd December 2010, the Company acquired the trade of Human Asset Development International ('HADIL'), an established and highly-regarded provider of psychological assessment, talent audit, executive coaching and applied research services, for a total consideration of £60,000.  HADIL is a complementary addition to the services of the Group and it is both scalable and does not create conflicts of interest with the executive search business.  The Company did not acquire any independently identifiable assets or liabilities with the trade and as such the consideration of £60,000 has been wholly attributable to goodwill on acquisition (Note 10). 

On 14 June 2010, Norman Broadbent Executive Search Ltd, a wholly owned subsidiary of Norman Broadbent plc, acquired 50% of the issued share capital in NBBI Limited for £5,000 (Note 13).  In June 2011, Norman Broadbent Executive Search Limited obtained the remaining 5,000 ordinary shares in NBBI Limited at par, which has become a wholly owned subsidiary (see note 13).

24.        GAIN / (PROVISION) ON DISPOSAL OF SUBSIDIARY

On 26 March 2010, the trade, employees and fixed assets of BNB Recruitment Consultancy Limited and Bancomm Limited, both 100% owned subsidiaries of the Company, were transferred to Norman Broadbent Executive Search Limited (formerly Garner International Limited), a fellow Group subsidiary, for a total consideration of £90,627.  This transfer was a planned initiative to consolidate the operations of the executive search business following the acquisition of three Norman Broadbent trading companies in December 2008.

On 15 April 2010 BNB Recruitment Consultancy Limited was placed into voluntary creditors' liquidation.  The company had net liabilities, including inter-company debts, of £1.65 million. 

Between 1 January 2010 and 15 April 2010 when the liquidator was appointed, BNB Recruitment Consultancy Limited generated revenues of £185,000 and incurred expenditure of £404,000. These amounts are accounted for in the consolidated statement of comprehensive income on a line by line basis in 2010.  The net loss for the period was offset by the release of a £226,000 provision, made in the 31 December 2009 financial statements to reflect the subsidiary accounts having been prepared on a break-up basis.  

The disposal of the subsidiary and its net liabilities led to a gain in the Group consolidated financial statements in 2010 of £837,000, detailed below.  The assets and liabilities of the company are disclosed at their carrying value as at 15 April 2010 when the company left the Group.

BNB Recruitment Consultancy Limited	2011 £000	2010 £000
Trade and other receivables	-	(92)
Cash and cash equivalents	-	(48)
Trade and other payables	-	881
Legal costs associated with liquidation	-	(130)
Release/(provide) for preparation of subsidiary accounts on a break-up basis	-	226
Total	-	837

The disposal of the subsidiary had the following impact on the Group cash position:

	2011 £000	2010 £000
Cash at bank and in hand (BNB Recruitment Consultancy Limited)	-	(48)
Legal and professional costs incurred by the Group relating to the disposal	-	(130)
Total	-	(178)

25.     RELATED PARTY TRANSACTIONS    

The following transactions were carried out with related parties:

(a)      Purchase of services:

	2011 £000	2010 £000
Adelaide Capital Limited	166	20
Anderson Barrowcliff LLP	35	43
Andrew Garner Associates Limited	261	-
Total	462	63

During the year Adelaide Capital Limited invoiced the Group for the directors' fees (P Casey £100,000, B Stephens £20,000), advisory costs relating to the share placing (£20,000) and business related travel costs (£26,000) of P Casey and B Stephens.  P Casey and B Stephens are directors of Adelaide Capital Limited.

Taxation and company secretarial services of £15,000 were 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 (£20,000).

Andrew Garner Associates Limited invoiced the Group for director's fees (£256,000) and expenses (£5,000) of A C Garner during the year.  A C Garner is a director of Andrew Garner Associates Limited. 

(b)      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 9 of the Report and Accounts.

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

	2011 £000	2010 £000
Adelaide Capital Limited	19	10
Anderson Barrowcliff LLP	4	11
Total	23	21

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

(d)      Loans from related parties:

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

	2011 £000	2010 £000
At 1 January	7	212
Loans repaid during the year	(7)	(13)
Loans converted in to equity during the year (note 19 c)	-	(192)
At 31 December	-	7

The loans from directors outstanding at the year-end were as follows:

	2011 £000	2010 £000
A C Garner (retired as a director on 30 June 2011)	-	7
At 31 December	-	7

(e)      Personal guarantees:

At 31 December 2011 A C Garner had a personal guarantees of £109,000 as security for the Group bank loans.

26.     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 £115,000 (2010: £193,000).

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. 

27.         AVAILABILITY OF REPORT AND ACCOUNTS

 

Copies of the report and accounts will be posted to shareholders shortly and will be available on request from the Company's registered office at 12 St James's Square, London, SW1Y 4LB from 23 April 2012. Copies are also available on the Company's website: www.normanbroadbent.com

 

END

 

 

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