TIDMNBB
RNS Number : 0893B
Norman Broadbent PLC
31 May 2023
Norman Broadbent plc
("Norman Broadbent", the "Company" or the "Group")
FINAL RESULTS
Norman Broadbent (AIM: NBB), a leading London quoted Executive
Search and Interim Management firm offering a diversified portfolio
of integrated Leadership Acquisition & Advisory Services, is
pleased to announce its audited final results for the year ended 31
December 2022 ("FY22").
FINANCIAL HIGHLIGHTS
-- Organic revenue growth of 33% to (GBP8.70 million) (2021:
GBP6.55 million). Search revenue increased year-on-year by 30.9%,
and interim revenue by 49.8% with focus on delivering core
services
-- Net Fee Income ('NFI') grew by 25% to GBP7.35 million (2021: GBP5.86 million)
-- Positive underlying EBITDA(1) of GBP93,000, up GBP396,000 (2021: LBITDA of GBP303,000)
-- Improvement in debtor days to 56 (2021: 66 days)
-- At 31 December 2022, GBP483,000 (2021: GBP952,000) of funds
drawn down against the Company's revolving invoice discounting
facility against UK trade receivables of GBP2,133,000 (2021:
GBP1,732,000)
-- Group cash at 31 December 2022 GBP50,000 (2021: GBP459,000).
Net cash outflow from operations in 2022 reduced to GBP33,000 (2021
outflow: GBP446,000)
STRATEGIC HIGHLIGHTS
-- Reset and reinforced values and performance-based culture
whilst substantially growing fee generating and research headcount
in both search and senior interim leadership
-- Average fees up 50% over the previous year
-- Investment in upgrading marketing team and brand refresh to
reflect our modern and dynamic business
-- Expanded and developed research and delivery team to improve
capability and capacity through improved processes and support
technologies
-- Platform now in place to fuel and support accelerated growth
The Company's Annual Report and Accounts will be available later
today on the Company's website,
https://www.normanbroadbent.com/company-documents/
Kevin Davidson , Group CEO of Norman Broadbent plc said:
"I am delighted with the dedication of the entire team with FY22
representing a turning point in the performance of the business
bringing it back to pre-pandemic levels with considerable forward
momentum. A refreshed culture based on values and performance with
a substantially larger fee generating and support team along with
investments in new technology, business processes and a greatly
enhanced brand image, reflected through our new logo, website and
collateral, coalesce to form a very strong platform and engine for
future growth, both organic and inorganic
With average fee levels up 50% within FY22, Norman Broadbent is
rapidly re-establishing its position at the senior end of the
executive search and interim management industry, realigning with
the brands incredibly strong and trusted heritage. "
[1] (Underlying EBITDA excludes share based payment charges)
For further Information, please contact:
Norman Broadbent plc 020 7484 0000
Kevin Davidson, CEO
Mehr Malik, CFO
Shore Capital ( Nominated Adviser and Broker) 020 7408 4090
Tom Griffiths / Tom Knibbs (Corporate Advisory)
Henry Willcocks (Corporate Broking)
CHAIRMAN'S STATEMENT
Since my appointment as Chair in June 2021, the Company has
undergone significant and very positive change which has put it
back onto a path of profitable growth.
Following the subsequent arrival of Kevin Davidson as CEO in
September 2021 and the appointment of Mehr Malik as CFO in January
2023, an exceptional leadership team has been appointed. Huge steps
forward have been made in defining our culture, growing the
headcount with quality hires and creating a clear vision for the
future.
This has translated into significant business growth and
positive underlying EBITDA in 2022.
A culture of genuine inclusion with a focus on Equality,
Diversity and Inclusion (ED&I) and an unwavering commitment to
customer service and delivery has been installed. The client facing
team has been enhanced by a significant number of experienced new
hires and the research team has been expanded to keep pace.
I am extremely pleased with the ongoing performance of the new
team and their actions to date. There is a palpable shift in energy
and optimism across the business and the future is exciting.
The Board's strategy for sustainably profitable expansion has
been vindicated and will be continued through the remainder of 2023
and into 2024.
Pleasingly, the Company's accelerated growth continued in the
first quarter of 2023 both at the top and bottom lines. With a
number of new hires still to join, we expect this trend to continue
for the remaining quarters of the year.
I would like to thank the entire team for their unwavering
commitment, our clients for partnering with us and our shareholders
for their continued support.
Peter Searle
Chair
30th May 2023
CEO's REVIEW
RESULTS FOR THE YEAR
The table below summarises the Group's results:
Year ended Year ended
31-Dec 31-Dec
2022 2021
GBP000's GBP000's
---------- ----------
CONTINUING OPERATIONS
REVENUE 8,697 6,549
Cost of sales (1,350) (690)
---------- ----------
NET FEE INCOME (GROSS PROFIT) 7,347 5,859
Operating expenses (7,254) (6,162)
---------- ----------
UNDERLYING EBITDA 1 93 (303)
Share based payment charge (131) -
---------- ----------
LBITDA (38) (303)
Depreciation and amortisation (223) (229)
---------- ----------
GROUP OPERATING LOSS (261) (532)
---------- ----------
Net finance cost (77) (41)
---------- ----------
LOSS BEFORE TAX (338) (573)
---------- ----------
Income tax - (69)
LOSS AFTER TAX (338) (642)
---------- ----------
2022 was a pivotal year in the turnaround of Norman Broadbent.
Our strategic objective was to establish the platform necessary to
support and accelerate sustainable growth, whilst also delivering
improved revenues and to report a positive underlying EBITDA(1) for
the year. I am delighted that all of these objectives were met and,
with considerable forward momentum taking us into 2023, I am
confident that we have the business back on a very positive
trajectory.
Net Fee Income ('NFI') in 2022 grew by 25% to GBP7.347 million
(2021: GBP5.859 million) and the Company generated underlying
EBITDA(1) of GBP93,000 which represents a positive swing of
GBP396,000 (2021: LBITDA of GBP303,000). The strategic pillars of
the business were all appropriately redefined and considerably
strengthened during 2022. This refreshed platform will drive and
support the Company's rapid growth projections, organically and
inorganically, should appropriate opportunities arise.
The 5 strategic priorities for the year ahead continue to be the
following:
CULTURE
Culture is the fundamental building block of any organisation,
necessary to drive performance, improve employee retention and
attraction, and deliver positive outcomes for all stakeholders. We
have invested heavily in the culture reset which was necessary
towards the end of 2021 and the beginning of 2022. We have now
established a values driven, ambitious, collaborative and growth
oriented culture, underpinned by trust and a commitment to
exceptional performance.
Following this reset, we undertook independent quarterly
employee engagement surveys throughout 2022, with the results
showing an 'engaged' or 'highly engaged' workforce in every period.
Our results were consistently above average for businesses of a
similar size.
Furthermore, we had virtually zero regretted leavers in 2022
whilst recruiting 17 very high calibre and culturally aligned
colleagues across fee generation, research and marketing.
(1) (Underlying EBITDA excludes share based payment charges)
MARKET POSITIONING
The level of mandates in terms of both seniority and fee levels
has grown consistently throughout 2022 which is demonstrated by our
average fee levels having increased by 50% during the year. This
was a clear mission that we set when I joined the Company and a
necessary journey that we are on in re-establishing Norman
Broadbent as the pre-eminent executive search and interim
leadership partner across our chosen markets. Our board practice
also delivered a growing number of high-quality mandates throughout
the year across plc, the private (private equity and family owned)
and public sectors - a trend which is reflective of our brand
elevation and supportive of our future ambitions.
We recruited an experienced Head of Marketing & Business
Development in the summer of 2022 and following the culture reset,
refreshed the Company's logo, redesigned the website and all
collateral to better represent the modern, dynamic and values-based
consultancy which we are. We are also investing in software and
staff training to ensure that we have the capacity, without
compromising the high levels of quality, necessary to support the
rapid increase in demand for client materials.
RESEARCH AND DELIVERY
In 2022, the research team more than doubled in size and a new
breed of Principals was recruited and developed who are capable of
handling complex project management and delivery tasks, thereby
freeing up fee generating capacity. In addition, the Company
invested in a new CRM and assignment management software platform
to support improvements in internal processes.
As a result of investments in our team and processes, the
productivity, quality and consistency of our research function has
improved considerably and we are now in a position to scale much
more smoothly and effectively given the more defined processes,
divisions of labour and career paths adopted.
The appointment of a Chief Operating Officer to drive
improvements in service levels, productivity and consistency across
the organisation delivered considerable value in 2022 with a number
of further strengthening initiatives underway for 2023.
FINANCIAL STABILITY AND PERFORMANCE
In 2022, net cash outflow from operating activities was closer
to neutral with a net outflow of GBP33,000 representing an
improvement of GBP413,000 (2021 outflow: GBP446,000). Our focus in
the year has been on improving working capital management; which
continues into 2023.
As at 31 December 2022, the Group had consolidated net assets of
GBP670,000 (2021: GBP836,000) with GBP483,000 (2021: GBP952,000) of
funds drawn down against the revolving invoice discounting facility
against UK trade receivables of GBP2,133,000 (2021:
GBP1,732,000).
Whilst investing in growth, we have been disciplined over costs
and I am delighted that in December 2022 we were able to sub-let
some space in the London office to absorb some of the overcapacity.
The income from this entirely offsets the ongoing costs associated
with the new Aberdeen and Edinburgh offices which were opened in
August 2022 and October 2022 respectively.
We have an excellent new CFO in Mehr Malik who joined on 16
January 2023 and is having an immediate impact. Under her
stewardship, in 2023, the support and finance functions will be
modernised with better use of technology to ensure the platform is
efficient and scalable.
BUSINESS FOCUS
Whilst continuing to offer a full range of leadership advisory
services, the Company has had a clear focus on its executive search
brand and re-establishing its position at the forefront of this
increasingly fragmented market. Norman Broadbent is still
recognised as a leader in the field of executive search but, in
recent years one which had dropped off the radar of many. Executive
search will continue to be the core of the business as we also grow
interim management (represented 21% of NFI in 2022) and our other
leadership advisory service offerings.
The fee generation hires made in 2022 meaningfully expand the
Company's position in the following sectors: Industrial, Retail
& Consumer, Private Equity/Venture Capital, HR, Legal and
Change & Transformation across executive search and senior
interim management.
During 2022, Norman Broadbent placed leaders across the UK,
Europe, the US and Middle East. Placements were also made in Asia
and leadership advisory projects completed in Africa. The Company
has established itself on a number of Preferred Supplier Lists
('PSLs') with substantial blue-chip clients operating
internationally, especially in the Natural Resources and burgeoning
Energy sectors. Norman Broadbent has a considerable track record
across these value chains from nuclear and conventional hydrocarbon
through energy transition to renewables of all descriptions,
including wind, solar, carbon capture and storage and the emerging
hydrogen economy. Working with asset owners, developers,
constructors, equipment and service providers, technology
innovators and investors, the Company is well placed to capitalise
on the continued and forecast buoyancy of each of these
sectors.
Our growing Retail & Consumer practice is also well
positioned with particular strength and brand recognition across
procurement, supply chain and commercial leadership where there is
considerable focus throughout the industry with associated
investment. The Company has also secured a position on a number of
significant PSLs in this sector and is leveraging its deep
functional expertise to support a broad range of executive search
and interim leadership requirements across the market.
CURRENT TRADING AND OUTLOOK
Norman Broadbent is very much back on track compared to where
the business has been for a number of years. We have ambitious, but
achievable organic growth targets over the next couple of years
which we are confident will double NFI to GBP15 million by 2025.
The Board continues to focus on overheads and productivity
improvements as the Company grows which will enable it to deliver a
target EBITDA of GBP1.25 million in 2025 as growth becomes ever
more accretive through seniority of mandates, economies of scale
and efficiency improvements. The lease on the Company's London
office ends in September 2024. This should enable the Company to
seamlessly relocate to a more appropriately sized and better
located office, suitable for modern working practices by late 2024.
The Board anticipates office relocation would provide annual cost
savings.
The previously announced regional growth in Scotland is
progressing well with a team leader appointed and an established
team of six seasoned executive search and interim management
professionals hired. The Edinburgh and Aberdeen offices are now
open and, adding to the Company's existing locations in London and
Knutsford, these will provide excellent national coverage in major
decision making and HQ hubs. As our work overseas continues to
grow, it remains our intention to establish international offices
in order to better capitalise on our expanding track record and
client network.
The Company is managing its resources carefully in order to
strike the optimal balance between pace of organic growth,
short-term profitability and cash generation. As the business is
now on a more stable footing and sustainable growth trajectory,
corporate development activity will be increased in 2023 to
identify and assess the potential for smaller, strategic
acquisitions and large-scale transformational opportunities in the
future.
The Board continues to monitor carefully the evolving
macro-economic climate and believes that the Company is well
positioned in stable and growing markets, notably across
Industrials and, in particular, Energy, Power, Chemicals, Transport
& Infrastructure, including Civil Aviation. All of these
sectors continue to attract significant capital investment whilst
also experiencing extreme imbalances in the supply of, and demand
for, senior leadership talent. The Company is also effectively
leveraging its functional expertise across these markets,
particularly in Digital & Tech, Finance, Change &
Transformation, HR and Legal.
Norman Broadbent plc is looking to the future with confidence.
There are clearly macro-economic headwinds which we are monitoring
carefully, but with a heavy bias towards growing and
counter-cyclical sectors, a refreshed culture, an absolute focus on
quality and the ongoing attraction of exceptionally talented and
dedicated colleagues, the Board is confident that the Company can
continue to grow rapidly whilst also delivering positive and
sustainable EBITDA.
SUMMARY
2022 marked the beginning of the turnaround of Norman Broadbent
plc; returning to pre-pandemic levels, delivering 25% growth in NFI
and a positive underlying EBITDA(1) with very strong forward
momentum into 2023.
With the team, culture, tools and processes in place to
re-establish our place at the forefront of the executive search and
interim leadership market, the Board is looking to the future with
great optimism and excitement.
Kevin Davidson
Group Chief Executive
30th May 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
2022 2021
Note GBP'000 GBP'000
------------ ------------
CONTINUING OPERATIONS
Revenue 1 8,697 6,549
Cost of sales (1,350) (690)
------------ ------------
Gross profit 3 7,347 5,859
Operating expenses (7,608) (6,391)
------------ ------------
Operating profit /(loss) from continued operations (261) (532)
Net finance cost 7 (77) (41)
------------ ------------
PROFIT / (LOSS) ON ORDINARY ACTIVITIES BEFORE
INCOME TAX 4 (338) (573)
Income tax expense 6 - (69)
------------ ------------
PROFIT / (LOSS) FROM CONTINUING OPERATIONS (338) (642)
------------ ------------
PROFIT / (LOSS) FOR THE PERIOD (338) (642)
------------ ------------
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE
YEAR (338) (642)
------------ ------------
Profit / (loss) attributable to:
- Owners of the Company (338) (642)
- Non-controlling interests - -
------------ ------------
Profit / (loss) for the year (338) (642)
------------ ------------
Total comprehensive income / (loss) attributable
to:
- Owners of the Company (338) (642)
- Non-controlling interests - -
------------ ------------
Total comprehensive income / (loss) for the
year (338) (642)
------------ ------------
Profit / (loss) per share
- Basic 8 (0.56)p (1.14)p
- Diluted (0.56)p (1.14)p
Adjusted profit / (loss) per share
- Basic 8 (0.34)p (1.14)p
- Diluted (0.34)p (1.14)p
profit / (loss) per share - continuing operations
- Basic 8 (0.56)p (1.14)p
- Diluted (0.56)p (1.14)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
2022 2021
Notes GBP'000 GBP'000
-------- --------
Non-Current Assets
Intangible assets 10 1,363 1,363
Property, plant and equipment 11 402 526
TOTAL NON-CURRENT ASSETS 1,765 1,889
-------- --------
Current Assets
Trade and other receivables 13 2,320 1,915
Cash and cash equivalents 14 50 459
-------- --------
TOTAL CURRENT ASSETS 2,370 2,374
-------- --------
TOTAL ASSETS 4,135 4,263
-------- --------
Current liabilities
Trade and other payables 15 2,006 1,727
Bank overdraft and interest bearing loans 16 483 952
Lease liabilities 20 203 200
TOTAL CURRENT LIABILITIES 2,692 2,879
NET CURRENT LIABILITIES (322) (505)
Non-Current Liabilities
Bank and other loans 16 618 250
Lease liabilities 20 155 298
-------- --------
TOTAL NON-CURRENT LIABILITIES 773 548
TOTAL LIABILITIES 3,465 3,427
-------- --------
TOTAL ASSETS LESS TOTAL LIABILITIES 670 836
-------- --------
EQUITY
Issued share capital 18 6,345 6,334
Share premium account 18 14,110 14,080
Retained earnings (19,785) (19,578)
-------- --------
EQUITY ATTRIBUTABLE TO OWNERS OF THE
COMPANY 670 836
Non-controlling interests - -
-------- --------
TOTAL EQUITY 670 836
-------- --------
These financial statements were approved by the Board of
Directors on 30(th) May, 2023
Signed on behalf of the Board of Directors
K Davidson
Director
Company No 00318267
` CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
CONSOLIDATED GROUP
Attributable to owners of the Company
----------------------------------------------------------------
Share Share Retained Total Non-controlling Total
Capital Premium Earnings Equity interests Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- --------- ------- --------------- -------
Balance at 1 January
2021 6,279 13,763 (18,936) 1,106 - 1,106
Loss for the year - - (642) (642) - (642)
-------- -------- --------- ------- --------------- -------
Total comprehensive income
for the year - - (642) (642) - (642)
-------- -------- --------- ------- --------------- -------
Issue of ordinary shares 55 317 - 372 - 372
-------- -------- --------- ------- --------------- -------
Transactions with owners
of the Company, recognised
directly in equity 55 317 - 372 - 372
-------- -------- --------- ------- --------------- -------
Transactions with owners
of the Company 55 317 - 372 - 372
-------- -------- --------- ------- --------------- -------
Balance at 31 December
2021 6,334 14,080 (19,578) 836 - 836
-------- -------- --------- ------- --------------- -------
Balance at 1 January
2022 6,334 14,080 (19,578) 836 - 836
Loss for the year - - (338) (338) - (338)
-------- -------- --------- ------- --------------- -------
Total comprehensive income
for the year - - (338) (338) - (338)
-------- -------- --------- ------- --------------- -------
Transactions with owners
of the Company, recognised
directly in equity
-------- -------- --------- ------- --------------- -------
Credit to equity for share
based payments - - 131 131 - 131
Issue of ordinary shares 11 30 - 41 - 41
-------- -------- --------- ------- --------------- -------
Transactions with owners
of the Company 11 30 131 172 - 172
-------- -------- --------- ------- --------------- -------
Balance at 31 December
2022 6,345 14,110 (19,785) 670 - 670
-------- -------- --------- ------- --------------- -------
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 and credits for share based payments.
CONSOLIDATED STATEMENT OF CASH FLOW
For the year ended 31 December 2022
2022 2021
Notes GBP'000 GBP'000
------- -------
Net cash inflow/(used) in operating
activities (i) (33) (446)
Cash flows from investing activities
and servicing of finance
Net finance cost (52) (14)
Payments to acquire tangible fixed assets 11 (65) (55)
------- -------
Net cash used in investing activities (116) (69)
------- -------
Cash flows from financing activities
New loans received 400 -
Repayments of borrowings (32) -
Payment of finance lease liabilities (200) (140)
Proceeds from issue of share capital 18 41 372
Increase/(decreased) invoice discounting 16 (469) 375
------- -------
Net cash from financing activities (260) 607
------- -------
Net (decrease)/increase in cash and
cash equivalents (409) 92
Net cash and cash equivalents at beginning
of period 459 367
------- -------
Net cash and cash equivalents at end
of period 50 459
------- -------
Analysis of net funds
Cash and cash equivalents 50 459
Borrowings due within one year (483) (952)
Borrowings due within more than one year (618) (250)
------- -------
Net debt (ii) (1,051) (743)
------- -------
Note(i) Reconciliation of operating profit / (loss) to net cash
from operating activities
2022 2021
Reconciliation of operating profit / (loss)
to net cash from operating activities GBP'000 GBP'000
------- -------
Operating profit /(loss) from continued operations (261) (532)
Depreciation/impairment of property, plant and
equipment 223 227
Share based payment charge 131 -
Decrease/(increase) in trade and other receivables (405) (223)
(Decrease)/increase in trade and other payables 279 82
Taxation paid - -
------- -------
Net cash generated from operating activities (33) (446)
------- -------
Note (ii) Reconciliation of movement of debt 2022 2021
GBP'000 GBP'000
------- -------
Net increase/(decrease) in cash and cash equivalents (409) 92
New loans received (400) -
Repayments of borrowings 32 -
Decrease/(increase) invoice discounting 469 (375)
Exchange difference on cash and cash equivalents - -
------- -------
Movement in borrowings for the period (308) (283)
Net borrowings at the start of the period (743) (460)
------- -------
Net borrowings at the end of the Period (1,051) (743)
------- -------
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
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" ,"the Company" or "the Group") have been
prepared in accordance with International Financial Reporting
Standards as adopted by the UK (IFRS as adopted by the UK), 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 (GBP000), 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 1.20.
1.1.1 GOING CONCERN
The Group reported an operating loss from continued operations
in the year to 31 December 2022 of GBP0.3m compared with an
operating loss of GBP0.6m in 2021. Consolidated net current
liabilities are GBP0.3m (2021: GBP0.5m).
The Consolidated Statement of Financial Position shows a net
asset position at 31 December 2022 of GBP0.7m (2021: GBP0.8m) with
cash at bank of GBP0.05m (2021: GBP0.5m). At the date that these
financial statements were approved the Group had no overdraft
facility, a CBILS loan of GBP0.20m and its receivable finance
facility (Metrobank) which is 100% secured by the Group's trade
receivables. A convertible loan note instrument issued by two major
shareholders in May 2022 has provided a further GBP400,000 of
funding.
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Strategic Report. In light of the current
financial position of the Group and on consideration of the
business' forecasts and projections which have taken account of
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.
1.1.2 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
a) New and amended accounting standards adopted by the Company
There are no new standards impacting the Company that will be
adopted in the financial statements for the period ended 31
December 2022, and which have given rise to changes in the
Company's accounting policies.
b) Standards, amendments and interpretations to existing
standards that are not yet effective and have not yet been adopted
early by the Company
c)
There are a number of standards, amendments to standards, and
interpretations which have been issued by IASB that are effective
in future accounting periods that the Company has decided not to
adopt early
The following standards and amendments are effective after 31
December 2022:
-- IFRS 17 Insurance Contracts - Applicable to annual reporting
periods beginning on or after 1 January 2023
-- Classification of Liabilities as Current or Non-Current
(Amendments to IAS 1) - Annual reporting periods beginning on or
after 1 January 2023
-- Amendments to IFRS 17 - Annual reporting periods beginning on or after January 2023
-- Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2) - Annual reporting periods beginning on
or after 1 January 2023
-- Definition of Accounting Estimates (Amendments to IAS 8) -
Annual reporting periods beginning on or after 1 January 2023
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12) - Annual reporting
periods beginning on or after 1 January 2023
The Company is currently assessing the impact of the new
accounting standards and amendments. The Company does not believe
that these amendments will have a significant impact on the
financial statements of the Company.
OTHER
The Company does not expect any other standards issued by IASB,
but not yet effective, to have material impact on the Company.
1.2 BASIS OF CONSOLIDATION AND BUSINESS COMBINATIONS
1.2.1 BUSINESS COMBINATIONS
Business combinations are accounted for using the acquisition
method as at the acquisition date - i.e. when control is
transferred to the Group. Control is the power to govern the
financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, the Group takes
into consideration potential voting rights that are currently
exercisable.
The Group measures goodwill at the acquisition date as:
-- the fair value of the consideration transferred; plus
-- the recognised amount of any non-controlling interests in the
acquiree; plus
-- if the business combination is achieved in stages, the fair
value of the pre-existing equity interest in the acquiree; less
-- the net amount (generally fair value) of the identifiable
assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in profit or loss. Transaction costs, other
than those associated with the issue of debt or equity securities,
that the Group incurs in connection with a business combination are
expensed as incurred.
Any contingent consideration payable is measured at fair value
at the acquisition date. If the contingent consideration is
classified as equity, then it is not remeasured and settlement is
accounted for within equity. Otherwise, subsequent changes in the
fair value of the contingent consideration are recognised in profit
or loss.
1.2.2 NON-CONTROLLING INTERESTS
For each business combination, the Group elects to measure any
non-controlling interests in the acquiree either at fair value or
at their proportionate share of the acquiree's identifiable net
assets, which are generally at fair value.
Changes in the Group's interest in a subsidiary that do not
result in a loss of control are accounted for as transactions with
owners in their capacity as owners. Adjustments to non-controlling
interests are based on a proportionate amount of the net assets of
the subsidiary. No adjustments are made to goodwill and no gain or
loss is recognised in profit or loss.
1.2.3 SUBSIDIARIES
Subsidiaries are all entities (including special purpose
entities) over which the Group has the power to govern the
financial and operating policies generally accompanying a
shareholding of more than one half of the voting rights. The
existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing if the
Group controls another entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated.
1.3 GOODWILL
Goodwill arising on acquisition of subsidiaries is included in
the Consolidated Statement of Financial Position as an asset at
cost less impairment. For the purpose of impairment testing,
goodwill is allocated to each of the Group's cash-generating units
expected to benefit from the synergies of the combination.
Cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently where there is
an indication that the unit may be impaired. If the recoverable
amount of the cash-generating unit is less than the carrying amount
of the unit, the impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to the unit and then to
other assets of the unit pro-rata on the basis of the carrying
amount of each asset in the unit. An impairment loss recognised for
goodwill is not reversed in a subsequent period.
1.4 IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets that have an indefinite useful life, for example
goodwill, are not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset's fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units).
1.5 FINANCIAL ASSETS AND LIABILITIES
Financial assets and liabilities are recognised initially at
their fair value and are subsequently measured at amortised cost.
For trade receivables, trade payables and other short-term
financial liabilities this generally equates to original
transaction value.
1.6 PROPERTY, PLANT AND EQUIPMENT
The cost of property, plant and equipment is their purchase
cost, together with any incidental costs of acquisition.
Depreciation is calculated so as to write off the cost of the
assets, less their estimated residual values, over the expected
useful economic lives of the assets concerned. The principal annual
rates used for this purpose are:
Office and computer equipment - 25% - 50% per annum on cost
Fixtures and fittings - 25% - 33% per annum on cost (or over the
life of the lease whichever is shorter)
Land and buildings leasehold - over 3 - 5 years straight
line
Right of use asset - straight line over shorter of estimated
useful life and lease term
1.7 TRADE RECEIVABLES
Trade receivables are amounts due from customers for merchandise
sold or services performed in the ordinary course of business. If
collection is expected in one year or less (or in the normal
operating cycle of the business if longer), they are classified as
current assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
1.8 CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand and deposits held
at call with banks. Bank overdrafts are shown within borrowings in
current liabilities on the balance sheet.
1.9 INVESTMENTS
Investments in subsidiary undertakings are stated at cost less
provision for any impairment in value. Investments are tested
annually for impairment and whenever events or changes in
circumstance indicate that the carrying amount may not be
recoverable an impairment loss is recognised immediately for the
amount by which the investment's carrying amount exceeds its
recoverable value.
1.10 BORROWINGS
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the
effective interest method.
1.11 INVOICE DISCOUNTING FACILITY
The terms of this arrangement are judged to be such that the
risk and rewards of ownership of the trade receivables do not pass
to the finance provider. As such the receivables are not
derecognised on draw-down of funds against this facility. This
facility is recognised as a liability for the amount drawn.
1.12 TRADE PAYABLES
Trade payables are non-interest bearing and are initially
recognised at fair value and then subsequently measured at
amortised cost.
1.13 OPERATING SEGMENTS
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has
been identified as the Group Executive Committee that makes
strategic decisions.
1.14 FOREIGN CURRENCY TRANSLATION
a) Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency'). The consolidated financial statements are presented in
sterling, which is the Company's functional and the Group's
presentation currency.
b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the Consolidated Statement of Comprehensive
Income, except when deferred in equity as qualifying cash flow
hedges and qualifying net investment hedges.
Foreign exchange gains and losses that relate to borrowings and
cash and cash equivalents are presented in the Consolidated
Statement of Comprehensive Income within 'net finance income'. All
other foreign exchange gains and losses are presented in the income
statement within 'operating expenses'.
1.15 TAXATION
Taxation currently payable is based on the taxable profit for
the year. Taxable profit differs from net profit as reported in the
statement of comprehensive income because it excludes items of
income and expense that are taxable or deductible in other years
and it further excludes items that are never taxable or deductible.
The Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all material taxable timing differences
and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary
difference arises from an initial recognition of goodwill or from
the initial recognition (other than in the business combination) of
other assets and liabilities in the transaction that affects
neither the tax profit nor the accounting profit.
Deferred tax is calculated using the tax rates that have been
enacted or substantively enacted at the balance sheet date.
Deferred tax is charged or credited to the statement of
comprehensive income, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also
dealt with in equity.
1.16 REVENUE RECOGNITION
Revenue comprises the fair value of the consideration received
or receivable for the sale of goods and services in the ordinary
course of the Group's activities and is recognised at a specific
point in time. Revenue is shown net of value-added tax, returns,
rebates and discounts and after eliminating sales within the Group.
The Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits
will flow to the entity and when specific criteria have been met
for each of the Group's activities as described below.
a) Executive search services
Executive Search services are provided on a retained basis and
the Group generally invoices the client at pre-specified milestones
agreed in advance at a specific point in time. Typically, this will
be in three stages; retainer, shortlist and completion fee. Revenue
is recognised on completion of defined stages of work during the
recruitment process including the completion of a candidate
shortlist and placement of a candidate. Revenue is deferred for any
invoices raised but unearned at the year end.
b) Short-term contract and interim business
Revenue is recognised as services are rendered, validated by
receipt of a client approved timesheet or equivalent. Fixed Term
Contracts or Candidate conversions are recognised on client
approval and invoice date and are invoiced at a specific point in
time.
c) Assessment, career coaching and talent management
Revenue is recognised in line with delivery. Where revenue is
generated by contracts covering a number of sessions then revenue
is recognised over the contract term based on the average number of
sessions taken up and is invoiced at a specific point in time.
d) Interest income
Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset's net carrying amount.
1.17 PENSIONS
The Group operates a number of defined contribution funded
pension schemes for the benefit of certain employees. The costs of
the pension schemes are charged to the income statement as
incurred.
1.18 LEASES
The Group leases its offices and various office equipment.
Rental contracts are typically made for fixed periods of 3 to 5
years but may have extension options.
Contracts may contain both lease and non-lease components. The
company allocates the consideration in the contract to the lease
and non-lease components based on their relative standalone
prices.
However, for leases of property for which the company is a
lessee and for which it has major leases, it has elected not to
separate lease and non-lease components and instead accounts for
these as a single lease component.
From 1 January 2019, leases are recognised as a right-of-use
asset and a corresponding liability at the date at which the leased
asset is available for use by the company.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- Fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
-- Variable lease payments that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date;
-- Amounts expected to be payable by the company under residual
value guarantees;
-- The exercise price of a purchase option if the company is
reasonably certain to exercise that option; and
-- Payments of penalties for terminating the lease, if the lease
term reflects the company exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liability. The
lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be readily determined, which is
generally the case for leases in the company, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and
conditions.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the
following:
-- The amount of the initial measurement of lease liability;
-- Any lease payments made at or before the commencement date
less any lease incentives received; and
-- Any initial direct costs.
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. If the company is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated over the underlying
asset's useful life. Right-of-use assets are tested for impairment
in accordance with IAS 36 Impairment of assets.
Payments associated with short-term leases of equipment and
vehicles and all leases of low-value assets (items less than
GBP1,000) are recognised on a straight-line basis as an expense in
profit or loss. Short-term leases are leases with a lease term of
12 months or less. Low-value assets comprise IT equipment and small
items of office furniture.
1.19 SHARE OPTION SCHEMES
For equity-settled share-based payment transactions the Group,
in accordance with IFRS 2, measures their value and the
corresponding increase in equity indirectly, by reference to the
fair value of the equity instruments granted. The fair value of
those equity instruments is measured at grant date, the EBITDA
Options using a Binomial option model and the Share Price Options
using a Monte Carlo simulation model. The expense is apportioned
over the vesting period of the financial instrument and is based on
the numbers which are expected to vest and the fair value of those
financial instruments at the date of grant. If the equity
instruments granted vest immediately, the expense is recognised in
full.
1.20 CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
a) Impairment of goodwill - determining whether goodwill is
impaired requires an estimation of the value in use of
cash-generating units (CGUs) to which goodwill has been allocated.
The value in use calculation requires an estimation of the future
profitability expected to arise from the CGU and a suitable
discount rate in order to calculate present value.
b) Impairment of investments - determining whether investments
are impaired requires an estimation of the value in use of each
subsidiary. The value in use calculation requires an estimation of
the future profitability expected to arise from each subsidiary and
a suitable discount rate in order to calculate present value.
c) Revenue recognition - revenue is recognised based on
estimated timing of delivery of services based on the assignment
structure and historical experience. Were these estimates to change
then the amount of revenue recognised would vary.
d) Share-based payments - the expense recognised for the
share-based payments scheme, reflects the number of share options
granted that will vest and management's expectations regarding
share lapses and non-market performance conditions. All options are
subject to both time vesting and performance conditions.
2 FINANCIAL RISK MANAGEMENT
The financial risks that the Group is exposed to through its
operations are interest rate risk, liquidity risk and credit
risk.
The Group's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
There have been no substantive changes in the Group's exposure
to financial risks, its objectives, policies and processes for
managing those risks or the methods used to measure them from
previous periods, unless otherwise stated in this note.
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's Executive Committee.
The Board receives monthly reports from the Group Chief
Financial Officer, through which it reviews the effectiveness of
the processes put in place and the appropriateness of the
objectives and policies it sets. The overall objective of the Board
is to set policies that seek to reduce risk as far as possible,
without unduly affecting the Group's competitiveness and
flexibility. Further details regarding specific policies are set
out below:
2.1 INTEREST RATE RISK
The Group's interest rate risk arises from short term borrowings
issued at a variable interest rate. At 31 December 2022 the balance
outstanding on the invoice discounting facility was GBP0.5 million
(2021: GBP1.0 million) and this balance increases and decreases in
line with the outstanding trade receivables.
2.2 LIQUIDITY RISK
Liquidity risk arises from the Group's management of working
capital and the finance charges. It is the risk that the Group will
encounter difficulty in meeting its financial obligations as they
fall due. The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, the Group monitors its
requirements on a rolling monthly basis. The Board receives cash
flow projections as well as monthly information regarding cash
balances. At the balance sheet date, these projections indicated
that the Group expected to have sufficient liquid resources to meet
its obligations under reasonably expected circumstances.
2.3 CREDIT RISK
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group is mainly exposed to credit
risk from credit sales. It is Group policy to assess the credit
risk of new customers before entering contracts.
Each new customer is analysed individually for creditworthiness
before the Group's standard payment and delivery terms and
conditions are offered. The Board determines concentrations of
credit risk by reviewing the trade receivables' ageing
analysis.
The Board monitors the ageing of credit sales regularly and at
the reporting date does not expect any losses from non-performance
by the counterparties other than those specifically provided for
(see Note 13). The Directors are confident about the recoverability
of receivables based on the blue chip nature of its customers,
their credit ratings and the very low levels of default in the
past.
2.4 CAPITAL RISK MANAGEMENT
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
The Group sets the amount of capital it requires in proportion
to risk. The Group manages its capital structure and makes
adjustments to it in the light of changes in economic conditions
and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
3 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
revenue level.
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 is
set out below:
2022 2021
GBP'000 GBP'000
------- -------
Revenue - Search 5,666 4,330
Revenue - Interim Management 2,920 1,949
Revenue - Leadership Consulting 111 270
------- ---------
8,697 6,549
Cost of sales (1,350) (690)
------- ---------
Gross profit 7,347 5,859
Operating expenses (7,254) (5,854)
Depreciation and amortisation (223) (229)
Restructuring costs - (308)
Share based payment charge (131) -
Finance costs (77) (41)
------- ---------
Profit/(Loss) before tax (338) (573)
------- ---------
ii) Revenue and gross profit by geography
2022 2021 2022 2021
Revenue Revenue Gross Profit Gross Profit
GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------------ ------------
United Kingdom 6,660 5,717 5,627 5,027
Rest of the world 2,037 832 1,720 832
------- ------- ------------ ------------
Total 8,697 6,549 7,347 5,859
------- ------- ------------ ------------
4 PROFIT / (LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION
2022 2021
GBP'000 GBP'000
------- -------
Profit / (Loss) on ordinary activities before
taxation is stated after charging:
Depreciation and impairment of property, plant
and equipment 223 227
Staff costs (see note 5) 6,004 4,555
Auditors' remuneration:
Audit work 51 43
Non-audit work - -
------- -------
The Company audit fee for the year was GBP50,800 (2021:
GBP43,000).
5 STAFF COSTS
The average number of full time equivalent persons (including
Directors) employed by the Group during the year was as
follows:
2022 2021
No. No.
---- ----
Sales and related services 36 30
Administration 9 15
---- ----
45 45
---- ----
Staff costs (for the above persons):
GBP'000 GBP'000
------- -------
Wages and salaries 5,095 3,952
Social security costs 586 419
Defined contribution pension cost 192 184
-------
131 4,555
------- -------
The emoluments of the Directors are disclosed as required by the
Companies Act 2006 on page 22 in the Directors' Remuneration
Report. The table of Directors' emoluments has been audited and
forms part of these financial statements. This also includes
details of the highest paid Director.
6 TAX EXPENSE
(a) Tax charged in the income statement
Taxation is based on the loss for the year and comprises:
2022 2021
GBP'000 GBP'000
------- -------
Current tax:
United Kingdom corporation tax at 19% (2021:
19%) based on loss for the year - -
Foreign Tax - -
------- -------
Total current tax - -
------- -------
Deferred tax:
Origination and reversal of temporary differences - 69
------- -------
Tax charge/(credit) - 69
------- -------
(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:
2022 2021
GBP'000 GBP'000
------- -------
Profit / (Loss) on ordinary activities before
taxation (338) (573)
------- -------
Tax on profit / (loss) on ordinary activities
at standard UK corporation tax rate of 19% (2021:
19%) (64) (109)
Effects of:
Expenses not deductible 6 7
Share option costs 25 -
Depreciation in excess of capital allowances (6) 32
Provision movement (1) 1
Group relief - -
Release of deferred tax asset - 69
Adjustment to losses carried forward 40 69
------- -------
Current tax charge for the year - 69
------- -------
(c) Deferred tax
Tax losses Total
GBP'000 GBP'000
At 1 January 2022 - -
Charged to the income statement in 2022 - -
---------- -------
At 31 December 2022 - -
---------- -------
At 31 December 2022 the Group had capital losses carried forward
of GBP8,129,000 (2021: GBP8,129,000) and trading losses carried
forward of GBP14,879,676 (2021: GBP14,497,676). A deferred tax
asset has not been recognised for the capital losses as the
recoverability in the near future is uncertain.
The analysis of deferred tax in the consolidated balance sheet
is as follows:
2022 2021
GBP'000 GBP'000
------- -------
Deferred tax assets:
Tax losses carried forward - -
------- -------
Total - -
------- -------
7 NET FINANCE COST
2022 2021
GBP'000 GBP'000
------- -------
Interest payable on leases, invoicing facility
and other loans 77 41
------- -------
Total 77 41
------- -------
8 EARNINGS PER SHARE
i) Basic earnings per share
This is calculated by dividing the profit attributable to equity
holders of the Company by the weighted average number of ordinary
shares in issue during the period:
2022 2021
------------ ------------
Profit/(Loss) attributable to owners of the company GBP(338,000) GBP(642,000)
------------ ------------
Weighted average number of ordinary shares 60,879,205 56,487,344
------------ ------------
Total 60,879,205 56,487,344
------------ ------------
ii) Diluted earnings per share
This is calculated by adjusting the weighted average number of
ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The Company has one category of dilutive
potential ordinary shares in the form of employee share options.
For these options a calculation is done to determine the number of
shares that could have been acquired at fair value (determined as
the average annual market share price of the Company's shares)
based on the monetary value of the subscription rights attached to
the outstanding options. The number of shares calculated as above
is compared with the number of shares that would have been issued
assuming the exercise of the share options.
2022 2021
------------ ------------
Profit/(Loss) attributable to owners of the company GBP(338,000) GBP(642,000)
------------ ------------
Weighted average number of ordinary shares 60,879,205 56,487,344
------------ ------------
Total 60,879,205 56,487,344
------------ ------------
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.
2022 2022 2022 2021 2021 2021
Diluted Diluted
Basic pence pence per Basic pence pence per
GBP'000 per share share GBP'000 per share share
------- ----------- ---------- ------- ----------- ----------
Basic earnings
Profit/(Loss)
after tax (338) (0.56) (0.56) (642) (1.14) (1.14)
------- ----------- ---------- ------- ----------- ----------
Adjustments
Share based payment
charge 131 0.22 0.22 - - -
------- ----------- ---------- ------- ----------- ----------
Adjusted earnings (207) (0.34) (0.34) (642) (1.14) (1.14)
------- ----------- ---------- ------- ----------- ----------
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 profit for the year amounted
to GBP664,000 (2021: Loss GBP4,407,000).
10 INTANGIBLE ASSETS
Goodwill
arising on
consolidation
GBP'000
--------------
Group
Balance at 1 January 2021 3,690
Balance at 31 December 2021 3,690
--------------
Balance at 31 December 2022 3,690
--------------
Provision for impairment
Balance at 1 January 2021 2,327
Balance at 31 December 2021 2,327
--------------
Balance at 31 December 2022 2,327
--------------
Net book value
At 1 January 2021 1,363
At 31 December 2021 1,363
--------------
At 31 December 2022 1,363
--------------
Goodwill acquired through business combinations is allocated to
cash-generating units (CGU) identified at divisional level. The
carrying value of intangible assets allocated by CGU is shown
below:
Norman
Broadbent
Norman Leadership
Broadbent Consulting Total
GBP'000 GBP'000 GBP'000
---------- ----------- -------
At 1 January 2021 1,303 60 1,363
---------- ----------- -------
At 31 December 2021 1,303 60 1,363
---------- ----------- -------
At 31 December 2022 1,303 60 1,363
---------- ----------- -------
In line with International Financial Reporting Standards,
goodwill has not been amortised from the transition date, but has
instead been subject to an impairment review by the Directors of
the Group. As set out in accounting policy note 1 on page 41, 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 2023
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 5% per annum for the foreseeable future (2021: 5%).
Return on sales is 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%-12.5% (2021: 10%).
11. PROPERTY, PLANT AND EQUIPMENT
Land and Right of Office
buildings Use asset and computer Fixtures
- leasehold equipment and fittings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ---------- ------------- ------------- -------
Group
Cost
Balance at 1 January 2021 94 408 254 50 806
Additions - 366 55 - 421
Disposals - - - - -
------------ ---------- ------------- ------------- -------
Balance at 31 December 2021 94 774 309 50 1,227
------------ ---------- ------------- ------------- -------
Additions 6 34 59 - 99
Disposals - - - - -
------------ ---------- ------------- ------------- -------
Balance at 31 December 2022 100 808 368 50 1,326
------------ ---------- ------------- ------------- -------
Accumulated depreciation
Balance at 1 January 2021 87 163 177 47 474
Charge for the year 5 169 50 3 227
Disposals - - - - -
------------ ---------- ------------- ------------- -------
Balance at 31 December 2021 92 332 227 50 701
------------ ---------- ------------- ------------- -------
Charge for the year 8 168 47 - 223
Disposals - - - - -
------------ ---------- ------------- ------------- -------
Balance at 31 December 2022 100 500 274 50 924
------------ ---------- ------------- ------------- -------
Net book value
At 1 January 2021 7 245 77 3 332
------------ ---------- ------------- ------------- -------
At 31 December 2021 2 442 82 - 526
------------ ---------- ------------- ------------- -------
At 31 December 2022 - 308 94 - 402
------------ ---------- ------------- ------------- -------
The Group had no capital commitments as at 31 December 2022
(2021 : GBPNil).
12 INVESTMENTS
Shares in
subsidiary
undertakings
GBP'000
-------------
Company
Cost
Balance at 1 January 2021 5,935
-------------
Balance at 31 December 2021 5,935
-------------
Balance at 31 December 2022 5,935
-------------
Provision for impairment
Balance at 1 January 2021 4,249
Impairment for the year 486
Balance at 31 December 2021 4,735
-------------
Impairment for the year -
-------------
Balance at 31 December 2022 4,735
-------------
Net book value
At 1 January 2021 1,686
-------------
At 31 December 2021 1,200
-------------
At 31 December 2022 1,200
-------------
During the year to 31 December 2022 the Company held the
following ownership interests:
Description
Country of incorporation and proportion
Principal Group or registration of shares held
investments: and operation Principal activities by the Company
----------------------- ------------------------- ----------------------- ----------------
Norman Broadbent England and Wales Executive search 100% ordinary
Executive Search shares
Ltd
Norman Broadbent England and Wales Non Trading (Dissolved 100% ordinary
Overseas Ltd 11 (th) Oct 2022) shares
Norman Broadbent England and Wales Assessment, coaching 100% ordinary
Leadership Consulting and talent management shares
Limited (Dissolved 11
(th) Oct 2022)
Norman Broadbent England and Wales Mezzanine level 100% ordinary
Solutions Ltd search (Dissolved shares
11 (th) Oct 2022)
Bancomm Ltd England and Wales Dormant (Dissolved 100% ordinary
4 (th) Oct 2022) shares
Norman Broadbent Republic of Ireland Dormant 100% ordinary
Ireland Ltd shares
Norman Broadbent England and Wales Interim Management 100% ordinary
Interim Management (Dissolved 11 shares
Ltd (th) October
2022)
The registered office for the subsidiaries are Millbank Tower,
21-24 Millbank London SW1P 4QPP with the exception of Norman
Broadbent Ireland Limited.
13 TRADE AND OTHER RECEIVABLES
Group Company
---------------- ----------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- -------
Trade receivables 2,135 1,746 - -
Less: provision for impairment (2) (14) - -
------- ------- ------- -------
Trade receivables - net 2,133 1,732 - -
Other debtors 48 127 - -
Prepayments and accrued income 139 56 7 14
Due from Group undertakings - - 1,550 1,371
------- ------- ------- -------
Total 2,320 1,915 1,557 1,385
------- ------- ------- -------
Non-Current - - -- -
Current 2,320 1,915 1,557 1,385
------- ------- ------- -------
2,320 1,915 1,557 1,385
------- ------- ------- -------
As at 31 December 2022, Group trade receivables of GBP935,000
(2021: GBP967,000), were past their due date but not impaired, save
as referred to below. They relate to customers with no default
history. The ageing profile of these receivables is as follows:
Group Company
------------------ -----------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- ------- --------
Up to 3 months 765 811 - -
3 to 6 months 115 136 - -
6 to 12 months 55 20 - -
-------- -------- ------- --------
Total 935 967 - -
-------- -------- ------- --------
The largest amount due from a single trade debtor at 31 December
2022 represents 15% (2021: 9%) of the total trade receivables
balance outstanding.
As at 31 December 2022 group trade receivables considered
impaired were GBP2,000 (2021: GBP14,000). Movements on the Group's
provision for impairment of trade receivables are as follows:
2022 2021
GBP'000 GBP'000
------- -------
At 1 January 14 60
Provision for receivable impairment - -
Receivables written-off as uncollectable (12) (46)
------- -------
At 31 December 2 14
------- -------
There are no material difference between the carrying value and
the fair value of the Group's and parent Company's trade and other
receivables.
14 CASH AND CASH EQUIVALENTS
Group Company
---------------- ----------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- -------
Cash at bank and in hand 50 459 6 170
------- ------- ------- -------
Total 50 459 6 170
------- ------- ------- -------
There is no material difference between the carrying value and
the fair value of the Group's and parent Company's cash at bank and
in hand.
15 TRADE AND OTHER PAYABLES
Group Company
---------------- ----------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- -------
Trade payables 212 184 8 26
Due to Group undertakings - - - 1,157
Other taxation and social security 330 344 (2) (4)
Other payables 24 151 - -
Accruals 1,440 1,048 46 69
------- ------- ------- -------
Total 2,006 1,727 52 1,248
------- ------- ------- -------
There is no material difference between the carrying value and
the fair value of the Group's and parent company's trade and other
payables.
16 BORROWINGS
Group Company
---------------- ----------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- -------
Maturity profile of borrowings
Current
Invoice discounting facility
(see note (a) below) 483 952 - -
Loans (see note (b) below) - - 46 -
Non Current
Loans (see note (b) below) 618 250 572 250
------- ------- ------- -------
Total 1,101 1,202 618 250
------- ------- ------- -------
The carrying amounts and fair value of the Group's borrowings,
which are all denominated in sterling, are as follows:
Carrying amount Fair value
----------------- ----------------
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
-------- ------- ------- -------
Bank overdrafts and interest
bearing loans:
Invoice discounting facility 483 952 483 952
Loans (see note (b) below) 618 250 618 250
-------- ------- ------- -------
Total 1,101 1,202 1,101 1,202
-------- ------- ------- -------
a) Invoice discounting facilities:
The Group operates an invoice discounting facility with Metro
Bank. All Group invoices are raised through Norman Broadbent
Executive Search Ltd and as such Metrobank (SME Invoice Finance
Ltd) holds an all asset debenture for Norman Broadbent plc and
Norman Broadbent Executive Search Limited. Funds are available to
be drawn down at an advance rate of 88% against trade receivables
of Norman Broadbent Executive Search Ltd that are aged less than
120 days with the facility capped at GBP1,500,000. At December 31
2022, the outstanding balance on the facility of GBP0.5m was
secured by trade receivables of GBP2.1m. Interest is charged on the
drawn down funds at a rate of 2.4% above the bank base rate.
b) Loans
In November 2020 the Group received a CBILS Loan of GBP250,000
for a term of 6 years. Repayment of capital and interest began in
January 2022, and from this month the loan incurs interest at 4.75%
above the Metro Bank UK base rate. Metro Bank holds an all asset
fixed and floating charge over Norman Broadbent Executive Search
Ltd linked to this facility.
On 20th May 2022 convertible loan notes of GBP400,000 nominal
value were issued to Downing Strategic Micro-Cap Investment Trust
Plc and Moulton Goodies Limited, each of whom subscribed
GBP200,000. The loan notes are only convertible after the first
anniversary date, up to 50% of the outstanding amount plus any
compounded interest in accordance with the terms of the secured
loan instrument and security provided by Norman Broadbent Executive
Search Ltd.
17 FINANCIAL INSTRUMENTS
The principal financial instruments used by the Group and
Company, 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
----------------
2022 2021
Group GBP'000 GBP'000
------- -------
Financial assets
Trade and other receivables 2,133 1,732
Other debtors 48 127
------- -------
2,181 1,859
------- -------
Financial liabilities
Trade creditors 212 184
Accrual and deferred income 1,440 1,048
Other creditors 24 151
Bank Loans - Current 483 952
Bank Loans - Greater than one year 618 250
------- -------
2,777 2,585
------- -------
Amortised Cost
----------------
2022 2021
Company GBP'000 GBP'000
------- -------
Financial Assets
Amounts owed by group undertakings 1,550 1,371
------- -------
1,550 1,371
------- -------
Financial liabilities
Trade and other payables 8 26
Amounts owed to group undertakings - 1,157
Accruals and deferred income 46 69
Bank loans - greater than one year 572 250
------- -------
626 1,502
------- -------
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.
18 SHARE CAPITAL AND PREMIUM
2022 2021
GBP'000 GBP'000
------- -------
Allotted and fully paid:
Ordinary Shares:
61,817,510 Ordinary shares of 1.0p each (2021:
60,740,757) 618 607
------- -------
Deferred Shares:
23,342,400 Deferred A shares of 4.0p each (2021:
23,342,400) 934 934
907,118,360 Deferred shares of 0.4p each (2021:
907,118,360) 3,628 3,628
1,043,566 Deferred B shares of 42.0p each (2021:
1,043,566) 438 438
2,504,610 Deferred C shares of 29.0p each (2021:
2,504,610) 727 727
------- -------
Total 6,345 6,334
------- -------
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 GBP10,000 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 pari 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 GBP10,000 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 GBP10 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 pari passu with
or in priority to the Deferred B Shares.
Deferred C 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 GBP10,000 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 Ordinary Deferred Share
shares shares shares premium Total
(000s) GBP(000s) GBP(000s) GBP(000s) GBP(000s)
--------- ---------- ---------- ---------- ----------
At 1 January 2021 55,218 552 5,727 13,763 20,042
Issued during the year 5,523 55 - 317 372
--------- ---------- ---------- ---------- ----------
At 31 December 2021 60,741 607 5,727 14,080 20,414
Issued during the year 1,076 11 - 30 41
--------- ---------- ---------- ---------- ----------
At 31 December 2022 61,817 618 5,727 14,110 20,455
--------- ---------- ---------- ---------- ----------
During the year 1,076,753 Ordinary Shares were issued at a
consideration of 3.75 pence per share.
19 SHARE BASED PAYMENTS
The Company operates an equity-settled share-based payment
scheme for employees of the group. The scheme is an executive
Enterprise Management Incentive ("EMI") share option scheme. The
company granted 9,950,000 options as part of the scheme on 17 March
2022. All options are subject to both time vesting conditions and
performance conditions. 50% of the Options are subject to
market-based share price performance conditions (the "Share Price
Options") and 50% are subject to certain EBITDA performance
conditions (the "EBITDA Options").
Time vesting conditions
A quarter of the options vest on each anniversary of the grant
date up to the fourth anniversary (17 March 2026). No options can
be exercised until at least the second anniversary of the grant
date (24 months).
EBITDA performance conditions
Subject to the time vesting conditions, the EBITDA Options will
vest subject to the achievement of certain EBITDA targets in any
financial year from the grant date to the year ending 31 December
2025.
The EBITDA performance conditions are classed as non-market
performance conditions. As such, these are not directly captured in
the option valuation but are considered when calculating the
associated P&L charge of the EBITDA Options.
Share Price performance condition
Subject to the time vesting condition, the Share Price Options
will vest in quarters subject to the Company's 3-month average
share price meeting certain targets at any time from the grant date
up to 30 June 2026.
The share price performance conditions are classified as a
market-based performance condition.
The Share Price Option can only vest following the achievement
of both the relevant time based and Share Price performance
conditions. The date on which a Share Price condition could be met
may differ to the applicable time vesting date.
EBITDA Options
2022 2022 2021 2021
Weighted average Weighted average
Exercise price Exercise price
(GBP) Number (GBP) Number
Outstanding at 1 January - - - -
Granted during the
year - 4,975,000 - -
Forfeited during the
year - - - -
Outstanding at 31
December - 4,975,000 - -
----------------- ---------- ----------------- -------
The exercise price of the options outstanding at 31 December
2022 was GBPnil (2022: n/a) and their weighted average remaining
contractual life was 6.2 years (2021 n/a).
None of the options outstanding at 31 December 2022 had vested
(2021: n/a).
The weighted average fair value of each option granted during
2022 was GBP0.07.
Share Price Option
2022 2022 2021 2021
Weighted average Weighted average
Exercise price Exercise price
(GBP) Number (GBP) Number
Outstanding at 1 January - - - -
Granted during the
year - 4,975,000 - -
Forfeited during the
year - - - -
Outstanding at 31
December - 4,975,000 - -
----------------- ---------- ----------------- -------
The exercise price of the options outstanding at 31 December
2022 was GBPnil (2022: n/a) and their weighted average remaining
contractual life was 6.2 years (2021 n/a).
None of the options outstanding at 31 December 2022 had vested
(2021: n/a).
The weighted average fair value of each option granted during
2022 ranged between GBP0.039 -GBP0.058.
The following information is relevant in the determination of
the fair value of options granted during the year under the
equity-settled share-based payment schemes operated by the
Company
2022
GBP
Equity-settled - EBITDA Option
Binomial option
Option pricing model used model
Weighted average share price at grant date 0.07
Exercise price -
Weighted average contractual life of the options
(in years) 7 years
Expected volatility 58.9%
Expected dividend yield 0.0%
Risk-free interest rate 1.31%
----------------
2022
GBP
Equity-settled - Share Price Option
Monte Carlo
Option pricing model used simulation
Weighted average share price at grant date 0.07
Exercise price -
Weighted average contractual life of the options
(in years) 7 years
Expected volatility 58.9%
Expected dividend yield 0.0%
Risk-free interest rate 1.31%
----------------
The volatility assumption, measured at the standard deviation of
expected share price returns, is based on a weighted average
statistical analysis of the company's daily share price over a
4-year basis.
The share-based remuneration expense disclosed in key management
personnel compensation compromises:
2022 2021
GBP GBP
------- ----
Share-based payment recognised in the income
statement 130,581 nil
------- ----
20 LEASES
The Group has adopted IFRS Leases 16 for its treatment of the
lease properties in Millbank Tower, London, and Booth Park,
Knutsford and Rubislaw Terrace, Aberdeen.
Under IFRS 16, the Group has recognised within the Consolidated
Balance Sheet a right-of-use asset and a lease liability for all
applicable leases. Within the Consolidated Income Statement,
operating lease rental charges have been replaced with depreciation
and interest expense.
Set out below are the accounting policies of the Group under
IFRS 16, which have been applied from the date of initial
application.
Right-of-use assets : The Group recognises right-of-use assets
at the commencement date of the lease and they are measured at
cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made
at or before the commencement date less any lease incentives
received. Unless the Group is reasonably certain to obtain
ownership of the leased asset at the end of the lease term, the
recognised right-of-use assets are depreciated on a straight line
basis over the shorter of its estimated useful life and the lease
term. Right-of-use assets are subject to impairment.
Lease liabilities : At the commencement date of the lease, the
Group recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The Group uses the
incremental borrowing rate at the lease commencement date if the
interest rate implicit in the lease is not readily
determinable.
2022 2021
Consolidation Statement GBP'000 GBP'000
-------- --------
Depreciation expense (168) (169)
-------- --------
Operating Profit (168) (169)
Finance Costs (25) (27)
-------- --------
Profit before Tax (193) (196)
-------- --------
Right-of-use Lease
assets liabilities
Consolidated Statement of Financial Position GBP'000 GBP'000
------------ ------------
As at 1 January 2021 245 (245)
Additions 366 (366)
Disposals - -
Depreciation expense (169) -
Interest expense - (27)
Payments - 140
------------ ------------
At 31 December 2021 442 (498)
------------ ------------
Additions 34 (34)
Disposals - -
Depreciation expense (168) -
Interest expense - (25)
Payments - 200
------------ ------------
At 31 December 2022 308 (357)
------------ ------------
Impact on Consolidated Statement of Financial 2022 2021
Position GBP'000 GBP'000
------------ ------------
Right-of-use assets 308 442
------------ ------------
Total Assets 308 442
------------ ------------
Lease liabilities - less than one year (203) (200)
Lease liabilities - more than one year (155) (298)
------------ ------------
Total Liabilities (358) (498)
------------ ------------
Equity (50) (56)
------------ ------------
21 PENSION COSTS
The Group operates several defined contribution pension schemes
for the business. The assets of the schemes are held separately
from those of the Group in independently administered funds. The
pension cost represents contributions payable by the Group to the
funds and amounted to GBP192,000 (2021: GBP184,000). At the year
end GBP14,000 of contributions were outstanding (2021:
GBP19,000).
22 RELATED PARTY TRANSACTIONS
The following transactions were carried out with related
parties:
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.
23 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 GBP123,000 (2021: GBP205,000).
24 POST BALANCE SHEET EVENT
The Company repaid half of the funds raised by the issue of the
Convertible Loan Notes of GBP400,000 on 19th May 2023. Downing
Strategic Micro-Cap Investment Trust Plc and Moulton Goodies
Limited each received a repayment of GBP100,000 (plus
interest).
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END
FR SDEFUSEDSEDI
(END) Dow Jones Newswires
May 31, 2023 02:00 ET (06:00 GMT)
Norman Broadbent (LSE:NBB)
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