NORMAN BROADBENT PLC
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014.
2 June 2017
Norman Broadbent plc
("Norman Broadbent", the "Company" or the "Group")
Final Results and Annual Accounts
The board (the "Board") of Norman Broadbent (AIM: NBB) - a provider of Talent
Acquisition and Advisory Services, consisting of board and executive search,
senior interim management, leadership consulting and assessment, and mezzanine
level search - is pleased to announce its final results and annual accounts for
the year ended 31 December 2016.
For further information, please contact:
Norman Broadbent plc 020 7484 0000
Mike Brennan/James Webber
Allenby Capital 020 3328 5656
Virginia Bull/Liz Kirchner
For further information visit http://www.normanbroadbent.com/
CEO's Review for the year ended 31 December 2016
RESULTS FOR THE FINANCIAL YEAR
The table below summarises the results of the Group:
Re-Presented
Year ended Year ended
31 December 31 December
2016 2015
£000 £000
CONTINUING OPERATIONS
REVENUE 5,661 8,274
Cost of sales (735) (1,747)
GROSS PROFIT 4,926 6,527
Operating expenses (6,149) (6,626)
GROUP OPERATING LOSS (1,223) (99)
Net finance cost (54) (41)
Exceptional Items - (194)
LOSS BEFORE TAX (1,277) (334)
Income tax - -
Profit/(Loss) from discontinued 279 (151)
operation
LOSS AFTER TAX (998) (485)
As the table above shows 2016 was a challenging year, in particular the second
half due to a noticeable slowdown in trading post Brexit, coupled with the
exiting of a number of employees and investment in strategically important new
hires. 2016 was also a year of major long lasting change in all parts of the
business and included the disposal of its non-core interest in Social Media
Search ("SMS") at the year end.
Strategic review and fundraising
Following my appointment as Group CEO in April 2016 we carried out a granular
review of each business within the Group, the services we provided and those
who delivered them. This review focused on defining the Group's core brands on
a sector-by-sector and function-by-function basis and examined how the Group's
brands can develop complementary business practices, synergies and create cross
selling opportunities.
The Group raised £2.3m of new equity (before expenses) in September 2016 from
both existing and new institutional shareholders (the "Subscription"). This
growth capital was predominately raised to hire additional fee generating staff
across the Group, repay £350,000 of secured loan notes, and to stabilise our
working capital position.
During 2016 and the early part of 2017 we significantly restructured the
business in line with the outcome of the review. This has involved the
recruitment and promotion of high quality leaders for our brands and has also
resulted in circa 30 members of staff exiting the Group. These new appointments
include an entire new Leadership Team consisting of the:
· Managing Partner of Norman Broadbent Executive Search
· Managing Director of Norman Broadbent Interim
· Group Head of Business Development
· Group Head of Research & Insight
The fully integrated Leadership Team consisting of the heads of each business
(as detailed above) plus myself, the Group CFO/COO, the Managing Director of
Norman Broadbent Solutions (NBS) and the long-standing Head of our Board
Practice now operationally runs the Group.
2016 trading and business review
In light of the fundamental changes which have been made right across the
business there has inevitably been a short-term impact on the Group's revenue
streams. Overall net revenues after associate and interim costs in the
continuing businesses declined to £4,926,000 (2015: £6,527,000). Whilst
operating expenses declined by 7% to £6,149,000 (2015: £6,626,000), the
operating losses from continued operations increased to £1,223,000 (2015: Loss
£99,000).
Of this operating loss, circa £300,000 can be directly attributed to the cost
of leavers (notice periods). In addition, although difficult to accurately
quantify in monetary terms, typically there is a delay in new joiners starting
to bill reflecting the impact of up to 6 months restrictive covenants
applicable to senior movers in the industry.
Note 3 of the Consolidated Financial Statements in the report and accounts
provides a detailed segmental breakdown of the 2016 Group results.
The overall loss was reduced by the £279,000 profit arising on the disposal of
SMS on 31 December 2016. Note 9 of the Consolidated Financial Statements in the
report and accounts provides further detail regarding the disposal.
Norman Broadbent Executive Search ("NBES")
NBES, which provides Board and Executive search services saw revenue decline by
18% to £4,005,000 (2015: £4,885,000), resulting in a £328,000 loss before tax
(2015: Profit £326,000). This decline reflected the significant personnel
restructuring required to ensure that our team in the traditional core of the
Group became more agile and better equipped to meet and exploit the changes,
challenges and opportunities available to it. Along with the recruitment of the
new head of NBES, we have raised - and will continue to raise - the bar
significantly within NBES. The implementation of our strategy is seeing a
significant reshaping of the NBES team.
Norman Broadbent Leadership Consulting ("NBLC")
NBLC revenues (after associate costs) were £252,000 (2015: £473,000), resulting
in a loss before tax of £56,000 (2015: profit of £70,000). NBLC is an important
part of our Group portfolio and offering going forward as clients seek to
assess their existing talent, understand team dynamics, shape culture and
de-risk new hires.
Norman Broadbent Solutions ("NBS")
NBS is our mezzanine-level search business. Formerly known as AGP, NBS was
significantly restructured, repositioned and rebranded at the half year with
the departure of the then business head and a number of senior staff. We have
now reshaped the team by selectively promoting from within and attracting new
talent from competitors. In light of the disruption from the staff changes
revenue declined to £577,000 (2015: £993,000) with a loss before tax of £
357,000 (2015: Loss £100,000).
Unusually for a business operating at this level, NBS now operates on a fully
retained basis. NBS is well positioned with a revitalised and focused team and
a much closer working relationship with other businesses in the Group. As with
NBES, we see significant opportunities in this part of the market as we blend
service lines within our portfolio to provide optimal client solutions ranging
from single hires through to longer-term team builds.
Norman Broadbent Interim Management ("NBIM")
NBIM operates in the senior interim management market and is complimentary to
NBES. NBIM generated net revenues (after interim costs) of £191,000 (2015: £
394,000), resulting in a profit before tax of £60,000 (2015: Loss £124,000).
NBIM was relaunched in October 2016 with the appointment of a new Managing
Director. Following the hiring of an entire new team, NBIM is now positioned to
trade across most of our key areas of market and functional specialisations.
Unlike many Interim providers NBIM is increasingly operating in high margin
markets and in the change/transformation space.
Research and Insight
We have invested in Research & Insight, which, in addition to serving our own
internal requirements, has started to provide complimentary client services
alongside NBES, NBS, NBIM and NBLC. Clients can be provided with research and
market insight which enables them to make more informed 'people',
organisational or business decisions. We see this as an exciting addition to
our portfolio and it is a service we are increasingly offering to executive
search clients.
Financial position
As at 31 December 2016, consolidated net assets were £2,434,000 (2015: £
1,205,000) with net current assets increasing to £825,000 from £166,000 in
2015. Group cash amounted to £963,000 (2015: £448,000).
Net cash outflow from operations in 2016 was £797,000 (2015: £590,000). Net
cash inflow from financing activities amounted to £1,404,000 (2015: £595,000)
relating primarily to the net funds received from the 2016 Subscription offset
by the repayment of the Secured Loan Notes and reduced utilisation of the
invoice discounting facility.
At 31 December 2016 the Group had £444,000 of funds drawn down against the
revolving invoice discounting facility (2015: £918,000) against UK trade
receivables of £634,000 (2015: £1,264,000). Encouragingly, debtor days have
reduced to 43 (2015: 67).
Current trading
Our strategic objective is the creation of multiple revenue streams (including
some recurring/contractual revenue which is deemed to be of higher value) and
reducing our over reliance on 'lumpy' one-off search fees. This blend of
fee-income should allow for a re-rating giving added value to the Group.
I am pleased to report that in the first quarter of 2017 overall Group revenue
was ahead of the Board's plan. Trading was down in April in part due to the
greater than anticipated impact of Easter. The Group has however experienced a
recovery in May trading in line with the Board's plan.
NBLC in particular has performed exceptionally well, exceeding its annual
budget in the first four months of 2017, whilst NBIM was ahead of plan. NBS
performed in line with our expectations in Q1 however like NBES trading was
down in April. The business has performed strongly in May with the most
retainer wins so far this year, and encouragingly we are seeing a noticeable
increase in the level of referrals from our executive search business.
Disappointingly NBES has underperformed against plan. As a result, the Board
has taken decisive action which has resulted in a further significant
restructure in Q1 2017 with a number of execution consultants leaving the
business. We have started the process of replacing those consultants with fee
generating consultants. Since the start of the year 3 new fee generating
consultants have joined NBES (including the new Managing Partner in February).
NBES has now been stabilised and is focussed on growth through the continued
hiring of high calibre fee earners in Q2, and encouragingly new retainer wins
in May are the highest so far this year.
The benefit of the many new hires made across the Group in Q4 2016 and Q1 2017
is expected to be realised during the second half of 2017.
Mike Brennan
Group Chief Executive
2 June 2017
Strategic Report for the year ended 31 December 2016
The business model
Norman Broadbent plc is a provider of Talent Acquisition and Advisory Services,
consisting of board and executive search, senior interim management, leadership
consulting and assessment, and mezzanine level search.
The Group operates through independently managed and separately branded
businesses which trade independently but collectively share a set of core
behavioural and brand values.
Strategy and objectives
The Groups strategy is focussed on further developing and strengthening its
diverse portfolio of Talent Acquisition and Advisory businesses by further
selective hires and concentrating on driving synergies via cross selling.
Results for the financial year
Group revenue from continued operations decreased in the year by 31% to £
5,661,000 (2015: £8,274,000), with gross profit of £4,926,000 (2015: £
6,527,000). NBES fees declined by 18% to £4,005,000 (2015: £4,885,000)
reflecting the reduction in fee generating headcount due to restructure. Net
revenues from NBLC, NBS and NBIM were £1,013,000 (£1,655,000), reflecting the
significant restructuring of NBI and NBS during 2016.
Operating expenditure decreased to £6,149,000 (2015: £6,626,000), reflecting
the impact of the restructuring that took place in all businesses during 2016.
The Group reported an operating loss from continued operations in 2016 of £
1,223,000 (2015: £99,000) and a retained loss of £998,000 (2015: £485,000).
Cash flow and balance sheet
Net cash outflow from operations in 2016 was £797,000 (2015: £590,000). Group
debtor days have decreased to 43 days with net trade receivables at the
year-end standing at £697,000 (2015: £1,570,000). Management continue to
monitor this Key Performance Indicator and aim to maintain debtor days at a
level which is no higher than 60.
Net cash inflow from financing activities amounted to £1,404,000 (2015: £
595,000) relating primarily to the net funds received from the fundraising in
September 2016. At 31 December 2016, the Group had £444,000 of funds drawn down
against the revolving invoice discounting facility (2015: £918,000) against UK
trade receivables of £634,000 (2015: £1,264,000).
Earnings per share
The retained loss for 2016 has resulted in a reported loss per share of 5.36
pence (2015: loss per share 2.59 pence). After adding back the cost of share
based payments the adjusted loss per share was 5.32 pence (2015: loss per share
2.59 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 indicators 2016 2015
Revenue (continued £5,661,000 £8,274,000
operations)
Operating loss £(1,223,000) £(99,000)
Revenue from new clients * 37% 26%
Debtor days 43 days 67 days
* NBES Only
The directors monitor revenue against annual targets, which are adjusted each
year to ensure the Group remains on target to achieve its strategic growth
plan. Further, given the significant investment in new headcount in NBES, NBS
and NBI the directors expect Group revenues and operating profits to improve
over the next few years.
The principal risks faced by the Group in the current economic climate are
considered to be financial, business environment and people related.
Financial
The main financial risks arising from the Group's operations are the adequacy
of working capital, interest rate, liquidity and credit risk. These are
monitored regularly by the Board and are disclosed further in notes 2 and 19 of
the financial statements in the report and accounts.
In September 2016, the Group raised £2,300,000 (before expenses) from existing
and new institutional shareholders. This followed successful share placings in
November 2014, October 2013, November 2012 and May 2011, raising gross amounts
of £500,000, £700,000, £727,000 and £1,750,000 respectively, which have
provided the Group with the financing to progress towards its stated
objectives.
The business is in the later stages of the turnaround process and is budgeted
to be self-funding. In turnarounds there is always a risk that the process
could take longer than anticipated which could lead to short term working
capital pressures. In the event of such an occurrence the company anticipates
working closely with its supportive shareholders to access short term working
capital funding.
Business Environment
Demand for services is affected by global 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 further in the
future then demand for the services offered by the Group could weaken resulting
in lower cash flows.
The Group attempts to mitigate this risk by operating across various diverse
sectors where demand for such services are stronger.
People
The Group's most vital resource remains its employees and the directors remain
committed to retaining and recruiting quality staff who share the Group's
culture and values. In a people intensive business, the resignation of key
staff, which could lead to them taking clients, candidates and colleagues to
another employer, is a significant risk. The Group aims to mitigate this risk
by offering competitive remuneration structures, whilst also insisting on
employment contracts that contain restrictive covenants that limit a leaver's
ability to approach existing clients, candidates and employees.
Cautionary statement
This Strategic Report has been prepared solely to provide additional
information to shareholders to assess the Company's strategies and the
potential for those strategies to succeed.
The Strategic Report contains certain forward-looking statements. These
statements are made by the directors in good faith based on the information
available to them up to the time of their approval of this report and such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such
forward-looking information.
The directors, in preparing this Strategic Report, have complied with s414C of
the Companies Act 2006. The Strategic Report has been prepared for the Group as
a whole and therefore gives greater emphasis to those matters which are
significant to Norman Broadbent plc and its subsidiary undertakings when viewed
as a whole.
Mike Brennan James Webber
Director Director
2 June 2017 2 June 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2016
Re-presented
Note 2016 2015
£000 £000
CONTINUING OPERATIONS
Revenue 1/2 5,661 8,274
Cost of sales (735) (1,747)
Gross profit 2 4,926 6,527
Operating expenses (6,149) (6,626)
Operating loss from continued operations (1,223) (99)
Net finance cost 6 (54) (41)
Non-recurring exceptional Items 7 - (194)
LOSS ON ORDINARY ACTIVITIES BEFORE INCOME 3 (1,277) (334)
TAX
Income tax expense 5 - -
LOSS FROM CONTINUING OPERATIONS (1,277) (334)
DISCONTINUED OPERATIONS
Profit/(Loss) from discontinued operation 8 279 (151)
LOSS FOR THE PERIOD (998) (485)
OTHER COMPREHENSIVE INCOME
- -
Foreign currency translation differences -
foreign operations
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (998) (485)
Loss attributable to:
Owners of the Company (1,304) (452)
Non-controlling interests 306 (33)
(998) (485)
Loss for the year
Total comprehensive income attributable
to:
Owners of the Company (1,304) (452)
Non-controlling interests 306 (33)
(998) (485)
Total comprehensive income for the year
Loss per share
- Basic 9 (5.36)p (2.59)p
- Diluted (5.36)p (2.59)p
Adjusted loss per share
- Basic 9 (5.32)p (2.59)p
- Diluted (5.32)p (2.59)p
Loss per share - continuing operations
- Basic 9 (5.25)p (1.92)p
- Diluted (5.25)p (1.92)p
Adjusted loss per share - continuing
operations
- Basic (5.21)p (1.92)p
- Diluted 9 (5.21)p (1.92)p
2015 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 2016
Notes 2016 2015
£000 £000
Non-Current Assets
Intangible assets 11 1,363 1,363
Property, plant and equipment 12 68 82
Trade and other receivables 14 234 -
Deferred tax assets 5 69 69
TOTAL NON-CURRENT ASSETS 1,734 1,514
Current Assets
Trade and other receivables 14 1,347 2,172
Cash and cash equivalents 15 963 448
TOTAL CURRENT ASSETS 2,310 2,620
TOTAL ASSETS 4,044 4,134
Current Liabilities
Trade and other payables 16 1,041 1,536
Bank overdraft and interest bearing 17 444 918
loans
Corporation tax liability - -
TOTAL CURRENT LIABILITIES 1,485 2,454
NET CURRENT ASSETS 825 166
Non-Current Liabilities
Loan notes 17 - 350
Provisions 22 125 125
TOTAL LIABILITIES 1,610 2,929
TOTAL ASSETS LESS TOTAL LIABILITIES 2,434 1,205
EQUITY
Issued share capital 19 6,143 5,901
Share premium account 19 12,685 10,699
Retained earnings (16,394) (15,101)
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 2,434 1,499
Non-controlling interests - (294)
TOTAL EQUITY 2,434 1,205
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2016
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 1 January 2015 5,901 10,699 (14,649) 1,951 (261) 1,690
Loss for the year - - (452) (452) (33) (485)
Adjustment for discontinued - - - - - -
operation
Total other comprehensive income - - - - - -
Total comprehensive income for the - - (452) (452) (33) (485)
year
Transactions with owners of the
Company, recognised directly in
equity:
Issue of ordinary shares - - - - - -
Credit to equity for share based - - - - - -
payments
Total transactions with owners of
the Company, recognised directly - - - - - -
in equity
Total transactions with owners of - - - - - -
the Company
Balance at 31 December 2015 5,901 10,699 (15,101) 1,499 (294) 1,205
Balance at 1 January 2016
Loss for the year - - (1,304) (1,304) 306 (998)
Adjustment for discontinued - - - - - -
operation
Total other comprehensive income - - - - - -
Total comprehensive income for the - - (1,304) (1,304) 306 (998)
year
Transactions with owners of the
Company, recognised directly in
equity:
Issue of ordinary shares 242 1,986 - 2,228 - 2,228
Credit to equity for share based - - 11 11 - 11
payments
Total transactions with owners of
the Company, recognised directly 242 1,986 11 2,239 - 2,239
in equity
Change in ownership interest in
subsidiaries
Disposal of non-controlling - - - - (12) (12)
interest with
change of control
Total transaction with owners of 242 1,986 11 2,239 (12) 2,227
the Company
Balance at 31 December 2016 6,143 12,685 (16,394) 2,434 - 2,434
Share Capital
This represents the nominal value of shares that have been issued by the
Company.
Share Premium
This reserve records the amount above the nominal value received for shares
issued by the Company. Share premium may only be utilised to write-off any
expenses incurred or commissions paid on the issue of those shares, or to pay
up new shares to be allotted to members as fully paid bonus shares.
Retained Earnings
This reserve comprises all current and prior period retained profits and losses
after deducting any distributions made to the Company's shareholders.
CONSOLIDATED STATEMENT OF CASH FLOW
For the year ended 31 December 2016
Re-presented
Notes 2016 2015
£000 £000
Net cash used in operating activities (i) (797) (590)
Cash flows from investing activities and servicing of
finance
Net finance cost (54) (41)
Payments to acquire tangible fixed assets 12 (24) (22)
Disposal of subsidiary, inclusive of cash 8 (15) -
disposed of
Net cash used in investing activities (93) (63)
Cash flows from financing activities
(Repayment)/Proceeds of borrowings 17 (350) 350
Net cash inflows from equity placing 19 2,228 -
Increase/(Repayment) in invoice discounting 17 (474) 245
Net cash from financing activities 1,404 595
Net increase in cash and cash equivalents 514 (58)
Net cash and cash equivalents at beginning of period 448 506
Effects of exchange rate changes on cash balances held in 1 -
foreign currencies
Net cash and cash equivalents at end of period 963 448
Analysis of net funds
Cash and cash equivalents 963 448
Borrowings due within one year (444) (918)
Net funds (519) (470)
Note (i)
Reconciliation of operating loss to net cash from operating 2016 2015
activities £000 £000
Operating loss from continued operations (914) (99)
Operating loss from discontinued operations (note 8) (30) (147)
Depreciation/impairment of property, plant and equipment 38 45
Exceptional items - (194)
Share based payment charge 11 -
Decrease/(Increase) in trade and other receivables 871 (209)
Profit on sale of Investment (309) -
(Decrease)/Increase in trade and other payables (464) 18
Taxation paid - (4)
Net cash used in operating activities (797) (590)
1. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial
statements are set out below. These policies have been consistently applied to
both years presented unless otherwise stated.
1.1 Basis of preparation
The consolidated financial statements of Norman Broadbent plc ("Norman
Broadbent" or "the Company") have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
(IFRS as adopted by the EU), IFRIC interpretations and the Companies Act 2006
applicable to Companies reporting under IFRS. The consolidated financial
statements have been prepared under the historical cost convention, as modified
by the revaluation of financial assets and liabilities (including derivative
instruments) at fair value through profit or loss. The consolidated financial
statements are presented in pounds and all values are rounded to the nearest
thousand (£000), except when otherwise indicated.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated
financial statements are disclosed in note 1.21 of the report and accounts.
1.1.1 Going concern
The Group reported an operating loss from continued operations in the year to
31 December 2016 of £1.2m compared with an operating loss of £0.1m in 2015. In
September 2016 the Group raised £2.3m of new equity (before expenses) from both
existing and new institutional shareholders which has enabled the business to
restructure further, to hire additional fee generating staff across the Group
and to provide a more stable working capital position.
The Consolidated Statement of Financial Position shows a net asset position at
31 December 2016 of £2.4m (2015: £1.2m) with cash at bank of £1.0m (2015: £
0.4m). At the date that these financial statements were approved the Group had
no overdraft facility, and the only borrowings were its receivable finance
(Leumi ABL) which is 100% secured by the Group's trade receivables.
In light of the current financial position of the Group and on consideration of
the business' forecasts and projections, taking account of possible changes in
trading performance, the directors have a reasonable expectation that the Group
has adequate available resources to continue as a going concern for the
foreseeable future. For these reasons, they continue to adopt the going concern
basis in preparing their annual report and financial statements.
2. SEGMENTAL ANALYSIS
Management has determined the operating segments based on the reports reviewed
regularly by the Board for use in deciding how to allocate resources and in
assessing performance. The Board considers Group operations from both a class
of business and geographic perspective. Each class of business derives its
revenues from the supply of a particular recruitment related service, from
retained executive search through to executive assessment and coaching.
Business segment results are reviewed primarily to operating profit level,
which includes employee costs, marketing, office and accommodation costs and
appropriate recharges for management time.
Group revenues are primarily driven from UK operations, however when revenue is
derived from overseas business the results are presented to the Board by
geographic region to identify potential areas for growth or those posing
potential risks to the Group.
i) Class of Business:
The analysis by class of business of the Group's turnover and profit before
taxation is set out below:
Executive Disc. Un-
2016 Search NBLC NBS NBIM Operation allocated Total
£000 £000 £000 £000 £000 £000 £000
Revenue 4,005 293 577 786 470 - 6,131
Cost of sales (92) (41) (7) (595) - - (735)
Gross profit 3,913 252 570 191 470 - 5,396
Operating expenses (4,195) (308) (918) (127) (497) (566) (6,611)
Depreciation and amort. (29) - (6) - (3) - (38)
Finance costs (17) - (3) (4) - (30) (54)
Profit / (Loss) on - - - - 309 - 309
disposal of investment
Profit/(Loss) before tax (328) (56) (357) 60 279 (596) (998)
2015 Executive Disc. Un-
Search NBLC NBS NBIM Operation allocated Total
£000 £000 £000 £000 £000 £000 £000
Revenue 4,885 601 993 1,791 488 4 8,762
Cost of sales (17) (128) (205) (1,397) - - (1,747)
Gross profit 4,868 473 788 394 488 4 7,015
Operating expenses (4,417) (403) (879) (510) (630) (377) (7,216)
Depreciation and amort. (35) - (5) - (5) - (45)
Finance costs (22) - (4) (8) - (7) (41)
Exceptional items (68) - - - - (126) (194)
Profit/(Loss) before tax 326 70 (100) (124) (147) (506) (481)
ii) Revenue and gross profit by geography
Gross Gross
Revenue Revenue Profit Profit
2016 £000 2015 £000 2016 £ 2015 £
000 000
United Kingdom 6,030 8,607 5,295 6,859
Rest of the world 101 155 101 156
Total 6,131 8,762 5,396 7,015
3. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
2016 2015
£000 £000
Loss on ordinary activities before taxation is stated after charging:
Depreciation and impairment of property, plant and equipment 38 45
Gain on foreign currency exchange - -
Staff costs (see note 4) 4,734 5,554
Operating lease rentals:
Land and buildings 424 424
Auditors' remuneration:
Audit work 49 49
Non-audit work - -
The Company audit fee in the year was £12,500 (2015: £12,000).
4. STAFF COSTS
The average number of full time equivalent persons 2016 2015
(including directors) employed by the Group during the Number Number
period was as follows:
Sales and related services 45 46
Administration 18 21
63 67
Staff costs (for the above persons): £000 £000
Wages and salaries 4,136 4,883
Social security costs 450 502
Defined contribution pension cost 137 169
Share based payment expense 11 -
4,734 5,554
The emoluments of the directors are disclosed as required by the Companies Act
2006 on page 14 in the Directors' Remuneration Report in the report and
accounts. 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
2016 2015
Taxation is based on the loss for the year and comprises: £000 £000
Current tax:
United Kingdom corporation tax at 20% (2014: 20.25%) based on
loss for the year - -
Foreign Tax - 4
Total current tax - 4
Deferred tax:
Origination and reversal of temporary differences - -
Tax charge/(credit) - 4
(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:
2016 2015
£000 £000
Loss on ordinary activities before (998) (481)
taxation
Tax on loss on ordinary activities at
standard UK corporation tax rate of 20% (199) (98)
(2015: 20.25%)
Effects of:
Expenses not deductible 27 19
Foreign tax suffered - 4
Substantial shareholding exemption (62) -
Capital allowances in excess of 4 6
depreciation
Intercompany loan write off 66 -
Pension accrual movement 3 (1)
Adjustment to losses carried forward 161 74
Current tax charge for the year - 4
(c) Deferred tax
Tax losses Total
£000 £000
At 1 January 2015 (69) (69)
Credited to the income statement in 2015 - -
At 31 December 2015 (69) (69)
Credited to the income statement in 2016 - -
At 31 December 2016 (69) (69)
At 31 December 2016 the Group had capital losses carried forward of £8,130,000
(2015: £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 £11,761,103 (2015: £11,812,042) trading losses carried forward, which
includes £8,987,000 losses transferred from BNB Recruitment Consultancy Ltd in
2011. A deferred tax asset of £1,357,834 (2015: £1,355,756) has not been
recognised in the financial statements due to the inherent uncertainty as to
the quantum and timing of its utilisation.
The analysis of deferred tax in the consolidated balance sheet is as follows:
2016 2015
Deferred tax assets: £000 £000
Tax losses carried forward 69 69
Total 69 69
6. NET FINANCE COST
2016 2015
£000 £000
Interest payable on bank loans and overdrafts 54 41
Total 54 41
7. NON-RECURRING EXCEPTIONAL ITEMS
2016 2015
£000 £000
Personnel - 194
Balance at end of period - 194
Non-recurring exceptional items in 2015 comprised costs and contractual
payments incurred by the Group in relation to the restructuring of the Board.
This included the retirement of P Casey and S O'Brien and J Cameron leaving the
Group. They are highlighted in the consolidated statement of comprehensive
income because separate disclosure is considered appropriate in understanding
the underlying performance of the business.
8. DISCONTINUED OPERATION
During 2016, the Group sold its 51% stake in Social Media Search Limited. This
segment was not a discontinued operation or classified as held for sale at 31
December 2015 and the comparative consolidated statement of comprehensive
income has been re-presented to show the discontinued operation separately from
continued operations. Under the terms of the Sale and Purchase Agreement
("SPA"), Norman Broadbent will receive a cash consideration of £325,000 for
Social Media Search. As at the end of May, the company has received £27,050
which equates to 5 payments of £5,410.
Re-presented
2016 2015
£000 £000
Results from discontinued operation
Revenue 470 488
Operating Expenses (500) (635)
Results from operating activities (30) (147)
Net finance cost - -
Exceptional items 655 -
Tax - (4)
Profit/(Loss) on ordinary activities before 625 (151)
taxation
Minority Interest (306) 33
Profit/(Loss) attributable to the owners 319 (118)
Profit on disposal of subsidiary 309 -
Profit for the year from discontinued operations 628 (118)
(attributable to the owners)
The profit from discontinued operations disclosed within the Consolidated
Income Statement of £278,900 consists of the operating loss of £(30,000) and
the profit on disposal of the subsidiary of £309,900. The exceptional item,
relating to the write off of intercompany loan accounts, has been eliminated on
consolidation within the Consolidated Income Statement
2016 2015
£000 £000
Effect of disposal on the financial position of
the Group
Trade and other receivables 42 -
Cash and cash equivalents 15 -
Trade and other payables (31) -
Net assets and liabilities 26 -
Consideration received, satisfied in cash - -
Cash and Cash equivalents disposed of (15) -
Net cash outflow (15) -
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:
2016 2015
Loss attributable to owners of the £ £(452,000)
company (1,304,000)
Weighted average number of ordinary 24,316,626 17,416,487
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.
The grants of options in 2016 have both profitability and share price exercise
criteria.
2016 2015
Loss attributable to owners of the £ £(452,000)
company (1,304,000)
Weighted average number of ordinary 24,316,626 17,416,487
shares
- assumed conversion of share options - -
- assumed conversion of warrants - -
Total 24,316,626 17,416,487
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.
2016 2015
Basic Diluted Basic Diluted
pence per pence per pence per pence per
£000 share share £000 share share
Basic earnings
Loss after tax (1,304) (5.36) (5.36) (452) (2.59) (2.59)
Adjustments
Share based payment charge 11 0.04 0.04 - - -
Adjusted earnings (1,293) (5.32) (5.32) (452) (2.59) (2.59)
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 £541,000 (2015: £119,000).
11. INTANGIBLE ASSETS
Goodwill
arising on
consolidation
£000
Cost
Balance at 1 January 2015 3,690
Balance at 31 December 2015 3,690
Balance at 31 December 2016 3,690
Provision for impairment
Balance at 1 January 2015 2,327
Balance at 31 December 2015 2,327
Balance at 31 December 2016 2,327
Net book value
At 1 January 2015 1,363
At 31 December 2015 1,363
At 31 December 2016 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 2015 1,303 60 1,363
At 31 December 2015 1,303 60 1,363
At 31 December 2016 1,303 60 1,363
HADIL has been re-branded to Norman Broadbent Leadership Consulting.
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 26 of the report and accounts, the directors test the
goodwill for impairment annually. The recoverable amount of the Group's CGUs
are calculated on the present value of their respective expected future cash
flows, applying a weighted average cost of capital in line with businesses in
the same sector. Pre-tax future cash flows for the next five years are derived
from the approved forecasts for the 2017 financial year.
The key assumption applied to the forecasts for the business is that return on
sales for Norman Broadbent is expected to be a minimum of 9% per annum for the
foreseeable future (2015: 15%) and 19% for Human Asset Development
International (2015: 9%). 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 10% (2015:
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 2016 the recoverable value of the
Norman Broadbent CGU is £1,500,000 and the Human Asset Development
International CGU is £611,000. Return on sales would need to fall below 8% for
the Norman Broadbent goodwill to be impaired and below 2% for Human Asset
Development International goodwill to be impaired.
12. PROPERTY, PLANT AND EQUIPMENT
Land and Office and
buildings - computer Fixtures Motor
leasehold equipment and Vehicles Total
£000 £000 fittings £000 £000
£000
J
Cost
Balance at 1 January 2015 84 184 47 - 315
Additions - 22 - - 22
Disposals - - - - -
Balance at 31 December 2015 84 206 47 - 337
Additions - 14 10 - 24
Disposals - (74) - - (74)
Balance at 31 December 2016 84 146 57 - 287
Accumulated depreciation
Balance at 1 January 2015 30 135 45 - 210
Charge for the year 16 28 1 - 45
Disposals - - - - -
Balance at 31 December 2015 46 163 46 - 255
Charge for the year 16 21 1 - 38
Disposals - (74) - - (74)
Balance at 31 December 2016 62 110 47 - 219
Net book value
At 1 January 2015 54 49 2 - 105
38 43 1 - 82
At 31 December 2015
At 31 December 2016 22 36 10 - 68
The Group had no capital commitments as at 31 December 2016 (2015: £Nil).
The above assets are owned by Group companies; the Company has no fixed assets.
13. INVESTMENTS
Shares in
Company subsidiary
undertakings
£000
Cost
Balance at 1 January 2015 5,802
Disposals (see note below) -
Balance at 31 December 2015 5,802
Balance at 31 December 2016 5,802
Provision for impairment
Balance at 1 January 2015 3,926
Balance at 31 December 2015 3,926
Balance at 31 December 2016 3,926
Net book value
At 1 January 2015 1,876
At 31 December 2015 1,876
At 31 December 2016 1,876
In 2016, the Company disposed of its 51% interest in Social Media Search
Limited for a total consideration of £325,000 (see note 8).
At 31 December 2016 the Company held the following ownership interests:
Principal Group investments: Country of
incorporation or Description and
registration and proportion of
operation Principal shares held by the
activities Company
Norman Broadbent Executive England and Wales Executive search 100% ordinary
Search Ltd shares
Norman Broadbent Overseas Ltd England and Wales Executive search 100% ordinary
shares
Norman Broadbent Leadership England and Wales Assessment, 100% ordinary
Consulting Limited coaching and shares
talent mgmt.
NB Solutions Ltd England and Wales Mezzanine level 100% ordinary
search shares
Bancomm Ltd ** England and Wales Dormant 100% ordinary
shares
Norman Broadbent Ireland Ltd* Republic of Dormant 100% ordinary
** Ireland shares
Norman Broadbent Interim England and Wales Interim 75% ordinary
Management Ltd Management shares
* 100 % of the issued share capital of this company is owned by Norman
Broadbent Overseas Ltd.
** These companies are exempt from audit by virtue of provisions in the
Companies Act 2006. Where required limited assurance procedures have been
completed.
14. TRADE AND OTHER RECEIVABLES
Group Company
2016 2015 2016 2015
£000 £000 £000 £000
Trade receivables 711 1,642 - -
Less: provision for impairment (14) (72) - -
Trade receivables - net 697 1,570 - -
Other debtors 326 335 6 6
Prepayments and accrued income 558 267 336 10
Due from Group undertakings - - 4,199 3,673
1,581 2,172 4,541 3,689
Non-Current 234 - 234 -
Current 1,347 2,172 4,307 3,689
Trade 1,581 2,172 4,541 3,689
Non-current trade receivables is in relation to the cash consideration due from
the sale of SMS.
As at 31 December 2016, Group trade receivables of £597,000 (2015: £1,111,000)
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
2016 2015 2016 2014
£000 £000 £000 £000
Up to 3 months 597 1,097 - -
3 to 6 months - 14 - -
6 to 12 months - - - -
597 1,111 - -
The largest amount due from a single trade debtor at 31 December 2016
represents 10% (2015: 11%) of the total trade receivables balance outstanding.
As at 31 December 2016, Group trade receivables of £14,000 (2015: £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:
2016 2015
£000 £000
At 1 January 72 180
Provision for receivable impairment 14 72
Receivables written-off as uncollectable (72) (180)
At 31 December 14 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
2016 2015 2016 2015
£000 £000 £000 £000
Cash at bank and in hand 963 448 843 173
Total 963 448 843 173
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
2016 2015 2016 2015
£000 £000 £000 £000
Trade payables 244 467 41 32
Due to Group undertakings - - 1,536 1,360
Other taxation and social security 322 368 - -
Other payables 65 216 - -
Accruals 410 485 33 43
Total 1,041 1,536 1,610 1,435
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
2016 2015 2016 2015
£000 £000 £000 £000
Current
Bank overdrafts and interest bearing
loans:
Invoice discounting facility (see note 444 918 - -
(a) below)
Secured Loan notes - 350 - 350
Total 444 1,268 - 350
The carrying amounts and fair value of the Group's borrowings, which are all
denominated in sterling, are as follows:
Carrying amount Fair value
2016 2015 2016 2015
£000 £000 £000 £000
Bank overdrafts and interest bearing
loans:
Invoice discounting facility 444 918 444 918
Secured Loan notes - 350 - 350
Total 444 1,268 444 1,268
a) Invoice discounting facilities:
Norman Broadbent Executive Search Limited, NBS and NBIM operate independent
invoice discounting facilities, provided by Leumi ABL Limited. Leumi ABL Ltd
holds all assets debentures for each company (fixed and floating charges) and
also a cross corporate guarantee and indemnity deed dated 20 July 2011. The
financial terms of the facilities are outlined below:
Norman Broadbent Executive Search Limited:
Funds are available to be drawn down at an advance rate of 85% against trade
receivables of Norman Broadbent Executive Search Limited that are aged less
than 120 days, with the facility capped at £1,500,000. At 31 December 2016, the
outstanding balance on the facility of £331,000 (2015: £608,000) was secured by
trade receivables of £441,000 (2015: £775,000). Interest is charged on the
drawn down funds at a rate of 2.40% (2015: 2.50%) above the bank base rate.
NB Solutions Limited:
Funds are available to be drawn down at an advance rate of 85% against trade
receivables of NB Solutions Limited that are aged less than 120 days, with the
facility capped at £750,000. At 31 December 2016, the outstanding balance on
the facility of £22,000 (2015: £186,000) was secured by trade receivables of £
27,000 (2015: £264,000). Interest is charged on the drawn down funds at a rate
of 2.40% (2015: 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 2016, the
outstanding balance on the facility of £92,000 (2015: £124,000) was secured by
trade receivables of £166,000 (2015: £225,000). Interest is charged on the
drawn down funds at a rate of 2.40% (2015: 2.75%) above the bank base rate.
b) Secured Loan Notes
The 2015 Loan Notes were repaid in full in October 2016.
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 2016 2015
£000 £000
Financial Assets
Trade and other receivables 1,581 2,172
Cash and cash equivalents 963 448
Financial Liabilities
Trade and other payables 1,052 1,536
Secured loan notes - 350
Invoice discounting facility 444 918
Corporation tax liability - -
Amortised Cost
Company 2016 2015
£000 £000
Financial Assets
Trade and other receivables 4,541 3,689
Cash and cash equivalents 843 173
Financial Liabilities
Trade and other payables 1,621 1,435
Secured loan notes - 350
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
2016 2015
Allotted and fully paid: £000 £000
Ordinary Shares:
41,633,320 Ordinary shares of 1.0p each (2015: 416 174
17,416,487)
Deferred Shares:
23,342,400 Deferred A shares of 4.0p each (2015: 934 934
23,342,400)
907,118,360 Deferred shares of 4.0p each (2015: 3,628 3,628
907,118,360)
1,043,566 Deferred B shares of 42.0p each (2015: 438 438
1,043,566)
2,504,610 Deferred shares of 29.0p each (2015: 727 727
2,504,610)
5,727 5,727
Total 6,143 5,901
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:
Number of Ordinary Deferred Share
ordinary shares shares premium Total
shares (000s) £000 £000 £000 £000
At 1 January 2015 17,416 174 5,727 10,699 16,600
Proceeds from share placing (note - - - - -
(a) below)
Transaction costs related to share - - - - -
placing
At 31 December 2015 17,416 174 5,727 10,699 16,600
Proceeds from share placing 24,217 242 - 1,986 2,228
Transaction costs related to share - - - - -
placing
At 31 December 2016 41,633 416 5,727 12,685 18,828
a) Share placing in September 2016:
On 19 September 2016, the Company issued 24,216,833 new ordinary 1.0p shares
for a total cash consideration of £2,300,599. Transaction costs of £72,599
were incurred resulting in net cash proceeds of £2,228,000.
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 either seven or ten years.
Movements in the number of share options and their related weighted average
exercise prices are as follows:
Approved EMI share
option scheme
Avg. Number of
exercise options
price per
share (p)
At 1 January 2015 60.72 731,213
Forfeited 59.76 (393,269)
At 31 December 2015 61.84 337,944
Granted 13.50 4,390,550
Forfeited 23.14 (510,607)
At 31 December 2016 16.21 4,217,887
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)
2015 2015
2020 52.50 95,237 95,237
2021 65.50 148,052 242,707
2023 13.50 3,974,597
Total 4,217,886 337,944
Out of the 4,217,886 outstanding options (2015: 337,944), no options were
exercisable at the year end (2015: None) as they were all 'underwater'.
The significant inputs into the model in valuing the 2016 option grant were
weighted average share price of 12 pence at the grant date, exercise price of
13.5p, volatility of 28%, dividend yield of 0% (2011 and 2010: 0%), an expected
option life of 10 years (2011 and 2010: 10 years) and an annual risk-free
interest rate of 0.652%. The expected volatility was estimated by reference to
the historical volatility of the Company's share price and those of UK quoted
companies in a similar business sector. The risk-free interest rate is
estimated as the yield on zero coupon UK government bonds of a term consistent
with the contractual life of the options granted.
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 2016, the total future value of minimum lease payments due
are as follows:
Land and Buildings
2016 2015
£000 £000
Within one year 273 273
Later than one year and not later than five years 1,056 1,056
Total 1,329 1,329
22. PROVISIONS
Group Company
2016 2015 2016 2015
£000 £000 £000 £000
At 1 January 125 125 - -
Provisions made during the year - - - -
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 is provided for in the financial period (2015). 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.
23. 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 £137,000 (2015:
£169,000). At the year end £11,000 of contributions were outstanding (2015: £
7,000).
24. RELATED PARTY TRANSACTIONS
The following transactions were carried out with related parties:
(a) Purchase of services:
2016 2015
£000 £000
Adelaide Capital Limited - 145
Anderson Barrowcliff LLP 21 13
Brian Stephens & Company Ltd 24 30
Scanes Bentley & Associates Ltd - 25
Connecting Corporates Limited 25 35
Total 70 248
Brian Stephens & Company Ltd invoiced the Group for the provision of services
of B Stephens of £20,000 and business related travel costs of £4,000 (2015
total: £30,000). B Stephens is a director of Brian Stephens & Company Ltd. In
the prior year consultancy services were acquired from Scanes Bentley &
Associates Ltd, S Bentley is a director of Scanes Bentley & Associates Ltd.
Further, in the prior year taxation and company secretarial services were
acquired from Anderson Barrowcliff LLP, an accountancy firm of which R Robinson
was a partner until resigning in April 2015. During the year the Group acquired
research services from Connecting Corporates Limited £25,000 (2015: £35,000).
The Group held a 51% stake in Connecting Corporates Limited.
All related party expenditure took place via "arms-length" transactions.
(a) Sale of services
2016 2015
£000 £000
Connecting Corporates Limited - 17
Total - 17
During the prior year the Group recharged group services incurred for the
benefit of Connecting Corporates Limited to Connecting Corporates Limited at
cost £17,000.
All related party transactions took place at "arms-length".
(b) Provision of loans
2016 2015
£000 £000
Connecting Corporates Limited - 40
Total - 40
During the prior year the Group provided additional loans of £40,000 to
Connecting Corporates Limited to support working capital requirements of this
company. The loans are non-interest bearing and are repayable on demand. At the
prior year end, £345,000 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 to 14 of the report and accounts.
(d) Year-end payables arising from the purchases of services:
2016 2015
£000 £000
Adelaide Capital Limited - -
Anderson Barrowcliff LLP 3 8
Brian Stephens & Company Ltd 4 4
Connecting Corporates Limited - -
Total 7 12
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:
2016 2015
£000 £000
Connecting Corporates Limited - 54
Total - 54
Receivables owed by related parties arise from sales transactions and are due
one month after date of purchase. Payables bear no interest.
25. CONTINGENT LIABILITY
The Company is a member of the Norman Broadbent plc Group VAT scheme. As such
it is jointly accountable for the combined VAT liability of the Group. The
total VAT outstanding in the Group at the year-end was £39,000 (2015: £
211,000).
26. AVAILIBILITY OF ACCOUNTS AND NOTICE OF ANNUAL GENERAL MEETING
Copies of the Final Report and Annual Accounts (including the notice of Annual
General Meeting) will be posted to shareholders on 5 June 2017 and will shortly
be available to view on the Company's website ( www.normanbroadbent.com/
information/investor-relations).
Notice is hereby given that the 78th Annual General Meeting ("AGM") of Norman
Broadbent plc will be held at 11am at the Clubhouse, 8 St James's Square,
London, SW1Y 4JU on 28 June 2017.
Norman Broadbent : Final Results and Annual Accounts
June 02, 2017 at 07:59 am
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