TIDMNBB
RNS Number : 2863R
Norman Broadbent PLC
29 June 2020
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
leading London listed Professional Services firm offering a
diversified portfolio of integrated Leadership Acquisition &
Advisory Services (Board & Leadership Search, Senior Interim
Management, Research & Insight, Leadership Consulting &
Assessment, and executive level Talent Solutions) - is pleased to
announce its final results and annual accounts for the year ended
31 December 2019.
Highlights
-- Norman Broadbent Group returns to profit
-- Revenue increase YOY by GBP2.1m (+22%)
-- Net Fee Income (NFI) increased YOY by GBP1.0m (+14%)
-- Group Profit before tax of GBP84k, an improvement of GBP0.8m from 2018
-- Interim Management NFI increased by GBP0.8m (+51%) to GBP2.2m
-- Solutions NFI increased by GBP0.6m (+53%) to GBP1.8m
-- Executive Search NFI decreased by GBP0.4m (-11%) to GBP3.3m
-- 23% of 2019 Group NFI generated via internal referrals
evidencing collaborative business culture
-- Further improved NFI mix evidences ongoing creation of a more balanced Group
A copy of the audited 2019 Annual Report (including the notice
of Annual General Meeting ("AGM")) will be sent to shareholders
today. The Annual Report will be available on the Company's website
in due course,
https://www.normanbroadbent.com/investor-relations
The Company's AGM will be held at 10am on the 7th Floor,
Millbank Tower, 21-24 Millbank, London SW1P 4QP (and by Zoom
conference software meeting) on 28th July 2020.
Mike Brennan, Group CEO of Norman Broadbent Group said:
"Having posted a positive set of 2019 Group results, we came
into 2020 with good momentum and plans for further growth. We
opened a new office in the North of England, relocated to better
Central London offices, and were actively seeking to appoint
additional team members in both centres. Then, we, like many
businesses, were impacted by the Covid-19 pandemic.
Notwithstanding that, the early and decisive actions taken by
us, combined with our broader portfolio of services, leaves us
better placed to respond to these challenges than many. Similarly,
our collaborative and innovative culture will stand us in good
stead when compared to more traditional and siloed competitors.
I and the Board would like to thank our shareholders for their
continuing support, and our clients for placing their trust in us.
I would also like to pay tribute to our team, all of whom have made
considerable sacrifices in recent months. It is an honour to be
their CEO, and I am proud of their achievements, much of which is
down to their hard work, dedication, and commitment."
For further information, please contact:
Norman Broadbent plc
Mike Brennan / Steve Smith 020 7484 0000
WH Ireland Limited
Adrian Hadden / Darshan Patel / Matthew
Chan 020 7220 1666
CEO's Review
RESULTS FOR THE FINANCIAL YEAR
The table below summarises the results of the Group:
Year ended Year ended
31-Dec 31-Dec
2019 2018
GBP000's GBP000's
---------- ----------
CONTINUING OPERATIONS
REVENUE 11,486 9,414
Cost of sales (3,879) (2,770)
---------- ----------
NET FEE INCOME (GROSS PROFIT) 7,607 6,644
Operating expenses (7,462) (7,308)
---------- ----------
GROUP OPERATING PROFIT / (LOSS) 145 (664)
---------- ----------
Net finance cost (61) (77)
---------- ----------
PROFIT BEFORE TAX 84 (741)
Income tax - -
---------- ----------
PROFIT / (LOSS) AFTER TAX 84 (741)
---------- ----------
Strategic review
Since my appointment as Group CEO, our team has worked hard to
build the 'new' Norman Broadbent Group. During 2019 we continued
our focus on identifying client needs/future risks, leveraging
synergies between our complementary service lines, increasing
internal collaboration and crafting bespoke solutions. This means
that irrespective of the service line clients first connect with,
we always aim to deliver tailored innovative solutions drawing on
our full range of resources rather than supplying a traditional,
transactional, siloed service. I am pleased to report that clients
are reacting positively to our approach. This has been reflected in
the trajectory of our 2019 results which has seen continued
Revenue/NFI growth and a return to profitability. I am delighted
that after much hard work and commitment, our efforts are being
rewarded and we are increasingly seen as an agile, relevant,
customer focused Professional Services business.
2019 trading and business review
In 2019, Group turnover increased to GBP11,486,000 (2018:
GBP9,414,000) whilst overall net revenues after associate and
interim costs in the continuing businesses increased to
GBP7,607,000 (2018: GBP6,644,000). Although we continued to invest
in innovative entrepreneurial talent, a focus on cost management
ensured that operating expenses increased only marginally to
GBP7,462,000 (2018: GBP7,308,000). Operating profit from continuing
operations was GBP145,000 which is a very welcome positive swing
from the 2018 operating loss of GBP664,000.
In addition to the commentary on the individual business areas
set out below, note 3 of the Consolidated Financial Statements
provides a detailed segmental breakdown of the 2019 Group
results.
Norman Broadbent Executive Search ("NBES")
During 2019 NBES Net Fee Income decreased by 11% to GBP3,326,000
(2018: GBP3,725,000) off the back of lower headcount. The loss
before tax increased to GBP280,000 (2018: loss GBP260,000).
NBES is the leading contributor of cross referrals within the
Group, generating GBP871,000 in new business for other teams. This
level of cross referral is directly linked to the positive, more
collegiate, cultural change which has occurred in the Group. The
increase in internal referrals contributed significantly to our
2019 results.
Norman Broadbent Interim Management ("NBIM")
NBIM is now established in our key areas of market and
functional specialisations and has successfully leveraged the
heritage high-end Norman Broadbent brand. As businesses are facing
increasingly complex short-term challenges, much of NBIM's activity
is focused on client mandates to find and place senior level, high
impact Interim professionals. Unlike many Interim providers, NBIM
does not focus on the transactional commoditised lower margin end
of the market. NBIM generated Net Fee Income (after interim costs)
of GBP2,235,000 (2018: GBP1,484,000) resulting in a profit of
GBP248,000 (2018 GBP87,000).
Norman Broadbent Solutions ("NBS")
Following a change in leadership in 2018, NBS has further
improved its performance and enhanced its proposition/market
position. This has enabled us to successfully promote staff from
within whilst attracting new talent from competitors. Net Fee
Income increased to GBP1,830,000 (2018: GBP1,196,000) generating a
profit before tax of GBP204,000 (2018 GBP74,000). We see
significant opportunities in 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.
Research and Insight ("R&I")
R&I not only supports our own internal requirements, but
also provides complementary services to clients. R&I is an
important strategic differentiator and an enabler of follow-on
work, particularly for NBES and NBS. Clients can be provided with
research, market insight and business intelligence enabling them to
make more informed 'people', organisational or commercial decisions
and is available across all our service areas. The revenue arising
is included within the Search business.
Norman Broadbent Leadership Consulting ("NBLC")
NBLC saw NFI (after associate costs) decrease from GBP239,000 in
2018 to GBP216,000 in 2019. This resulted in a loss before tax of
GBP76,000 in 2019 compared with a loss before tax of GBP38,000 in
2018. We are committed to NBLC and have recently invested in
additional leadership to help fuel growth.
Financial position
As at 31 December 2019, consolidated net assets were
GBP1,365,000 (2018: GBP1,268,000) with net current liabilities of
GBP219,000 (2018: Net Current Liabilities of GBP454,000). Group
cash amounted to GBP432,000 (2018: GBP684,000).
Net cash outflow from operations in 2019 was (GBP182,000) (2018:
Inflow GBP354,000). Net cash inflow from financing activities
amounted to GBP21,000 (2018: outflow GBP103,000).
At 31 December 2019 the Group had GBP950,000 (2018: GBP776,000)
of funds drawn down against the revolving invoice discounting
facility against UK trade receivables of GBP2,733,000 (2018:
GBP2,076,000).
The Directors continue to monitor and manage the Group's working
capital carefully.
Covid-19
As concerns about Covid-19 began to emerge in March, we moved
swiftly to ensure we were appropriately positioned to deal with a
period of extended uncertainty. Staffing changes were made, and a
small number of team members were furloughed or released from their
contracts. Our remaining colleagues moved quickly to remote
working.
As the business embraced technology to assist in remote working
and continued candidate and client interaction, trading continued
uninterrupted as staff seamlessly adapted to the new working
environment.
This not only highlights the agility of the Norman Broadbent
team, but also evidences the strength of our 40-year old brand and
how the Group's more diverse portfolio of services are particularly
relevant in today's markets. Building on those strengths and our
investment in digital marketing, both Interim and Solutions have
seen continued business opportunities from existing and new
clients.
With a slowdown in the market (particularly in Search) there has
been some reduction in revenues to date. These however have been
offset by the sensible and prudent cost measures taken. Additional
emphasis has been placed on cash collections and we have
subsequently seen a reduction in debtor days during 2020. This,
combined with modest positive EBITDA in March, April, and May,
helped protect cashflow and the Group's cash position.
Prior to lockdown, the Group successfully relocated its London
office to Millbank Tower, SW1 while also opening new operations in
the North of England. A full risk assessment of the Group's office
accommodation has now taken place and, while those staff looking to
restart office-based working can return to a compliant and safe
working environment, we anticipate operating flexibility (office
and working from home) for some time.
Arrangements for AGM
The AGM will take place on July 28(th,) 2020 at 10 AM. In light
of Covid-19, shareholder attendance at the meeting will be
primarily via Zoom conferencing software. Shareholders attending
via Zoom who wish to vote on the AGM's resolutions will need to do
so by proxy. Full details on how to gain access to the meeting and
vote by proxy are provided in the notice of Annual General Meeting
sent to Shareholders.
Board Changes
Steve Smith joined the Company and the Board as CFO and COO on
30 March 2020 replacing Will Gerrand who has left the Group. The
Board would like to thank Will for his contributions over the past
two and a half years and we wish him well for the future. Steve,
along with our senior leadership team, has already proven
exceptional in helping us deal with the challenges presented by
Covid-19.
There is currently a process underway to recruit and appoint a
new Non-Executive Chair to the board. Brian Stephens is due to
retire from the Board by rotation. Brian has indicated that, while
he will be offering himself for re-election at the upcoming AGM,
having been a Director for 10 years, he is intending to stand down
from the Board following a period of hand over to the new
Non-Executive Chair.
Outlook
Having posted a positive set of 2019 Group results, we came into
2020 with good momentum and plans for further growth. We opened a
new office in the North of England, relocated to better Central
London offices, and were actively seeking to appoint additional
team members in both centres. Then, we, like many businesses, have
been impacted by the Covid-19 pandemic.
While the likely duration and overall severity of Covid-19's
economic impact is not yet known, we assume it will take some time
for the overall UK search and recruitment market to recover.
Accordingly, it is too early to have a definitive view on its
ultimate impact on the outcome for the year to December 2020.
Notwithstanding that, the early and decisive actions taken by
us, combined with our broader portfolio of services, leaves us
better placed to respond to these challenges than many. Similarly,
our collaborative and innovative culture will stand us in good
stead when compared to more traditional and siloed competitors.
I and the Board would like to thank our shareholders for their
continuing support, and our clients for placing their trust in us.
I would also like to pay tribute to our team. who have made
considerable sacrifices during the Covid-19 crisis. It is an honour
to be their CEO, and I am proud of their achievements, much of
which is down to their hard work, dedication, and commitment.
Mike Brennan
Group Chief Executive
26 June 2020
Strategic Report
THE BUSINESS MODEL
The Norman Broadbent Group is a leading Professional Services
firm focussing on Talent Acquisition & Advisory Services. Since
our formation nearly 40 years ago we have developed a range of
complementary services consisting of Board & Leadership Search,
Senior Interim Management, Research & Insight, Leadership
Consulting, and Solutions. With a range of services designed to
meet customer needs at different stages in their growth or the
economic cycle, our innovative and flexible approach enables us to
help clients in a creative and bespoke way. By operating within
sector 'hubs' as opposed to siloed service lines, we are able to
service clients better and more collaboratively. As a result of
this collaboration, c.23% of 2019 NFI was generated via internal
cross-referrals.
STRATEGY AND OBJECTIVES
The Group's strategy is to further develop, strengthen and scale
our complementary portfolio of Talent Acquisition & Advisory
services. This could be achieved via further selective hires, new
partnerships and greater innovation. Ultimately our aim is to help
clients make better informed, more effective buying decisions to
ensure successful outcomes.
RESULTS FOR THE FINANCIAL YEAR
Group revenue from continued operations increased in the year by
22% to GBP11,486,000 (2018: GBP9,414,000), with gross profit of
GBP7,607,000 (2018: GBP6,644,000). NBES NFI decreased by 11% to
GBP3,326,000 (2018: GBP3,725,000) off the back of lower headcount.
NFI from NBLC, NBS and NBIM was GBP4,281,000 (2018: GBP2,919,000),
reflecting the significant development of NBI and NBS during
2019.
Operating expenditure increased to GBP7,462,000 (2018:
GBP7,308,000), reflecting the increased sales related bonuses
payable in relation to 2019.
The Group reported an operating profit from continued operations
in 2019 of GBP145,000 (2018: operating loss GBP664,000) and a
retained profit of GBP84,000 (2018: retained loss GBP741,000).
CASH FLOW AND BALANCE SHEET
Net cash outflow from operations in 2019 was GBP182,000 (2018:
net cash inflow from operations GBP354,000). Net trade receivables
at the year-end were GBP2,733,000 (2018: GBP2,076,000).
Net cash inflow from financing activities was GBP21,000 (2018:
net cash outflow of GBP103,000). At 31 December 2019, the Group had
GBP950,000 (2018: GBP776,000) of funds drawn down against the
revolving invoice discounting facility against UK trade receivables
of GBP2,733,000 (2018: GBP2,076,000).
EARNINGS PER SHARE
The retained profit for 2019 has resulted in a reported profit
per share of 0.04 pence (2018: loss per share 1.42 pence). After
adding back the cost of share based payments, the adjusted profit
per share was 0.06 pence (2018: loss per share 1.38 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.
DIRECTORS' DUTIES
The Directors of the Company, as those of all UK companies must
act in accordance with a set of general duties. These duties are
detailed in section 172 of the UK Companies Act 2006 which is
summarised as follows :
'A Director of a company must act in the way they consider, in
good faith, would be most likely to promote the success of the
company for the benefit of its shareholders as a whole and, in
doing so have regard (amongst other matters) to :
-- the likely consequences of any decisions in the long-term;
-- the interests of the company's employees;
-- the need to foster the company's business relationships with suppliers, clients and others;
-- the impact of the company's operations on the community and environment;
-- the desirability of the company maintaining a reputation for
high standards of business conduct, and
-- the need to act fairly as between shareholders of the Company'
As part of their induction, a Director is briefed on their
duties and they can access professional advice on these, from the
Company Secretary, Nomad, or if they judge it necessary, from an
independent advisor. The following paragraphs summarise how the
Directors' fulfil their duties:
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 2019 2018
------------- --------------
Revenue (continued operations) GBP11,486,000 GBP9,414,000
Operating profit / (loss) GBP145,000 (GBP664,000)
Debtor days 72 days 61 days
------------- --------------
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
restructuring and refocus of the group in the recent past, 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 17 of the financial
statements.
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
and UK specific economic conditions and the level of economic
activity in the regions and industries in which the Group operates.
When conditions in the economy deteriorate or economic activity
slows, many companies hire fewer permanent employees or rely on
internal human resource departments to recruit staff.
The Group attempts to mitigate this risk by operating across
various diverse sectors where demand for such services is
stronger.
Covid-19 Pandemic - on 23 March 2020 the UK economy was placed
in a state of lockdown as part of the Government's response to the
emerging pandemic. The Group has reacted by making staffing changes
with a small number of individuals furloughed or released from
their contracts with the remaining team members moving to remote
working. As the lockdown is lifted, the Group's offices have
reopened with the majority of staff continuing to work
remotely.
Despite reduced revenue as a result of the crisis, trading in
March, April and May has been EBITDA positive reflecting the action
taken by management. The Board anticipates, market conditions
permitting, a staged return of furloughed employees during
2020.
However if the impact of the pandemic were to lead to further
reductions in the size of the UK recruitment and search markets or
continue over an extended period with reductions in or the removal
of the government support measures this could have an adverse
impact on the group's trading and liquidity.
The Group anticipates that the Government's support measures are
likely to continue and that schemes such as the Coronavirus
Business Interruption Loan Scheme (CBILS) packages (currently
unavailable to the Group) may see a change in criteria.
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
The Group's 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 Steve Smith
Director Director
26 June 2020 26 June 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
2019 2018
Note GBP'000 GBP'000
-------- -------------
CONTINUING OPERATIONS
Revenue 1 11,486 9,414
Cost of sales (3,879) (2,770)
-------- -------------
Gross profit 3 7,607 6,644
Operating expenses (7,462) (7,308)
-------- -------------
Operating profit /(loss) from continued
operations 145 (664)
Net finance cost 7 (61) (77)
-------- -------------
PROFIT / (LOSS) ON ORDINARY ACTIVITIES
BEFORE INCOME TAX 4 84 (741)
Income tax expense 6 - -
-------- -------------
PROFIT / (LOSS) FROM CONTINUING OPERATIONS 84 (741)
-------- -------------
PROFIT / (LOSS) FOR THE PERIOD 84 (741)
-------- -------------
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR
THE YEAR 84 (741)
-------- -------------
Profit attributable to:
- Owners of the Company 22 (763)
- Non-controlling interests 62 22
-------- -------------
Profit / (loss) for the year 84 (741)
-------- -------------
Total comprehensive income / (loss) attributable
to:
- Owners of the Company 22 (763)
- Non-controlling interests 62 22
-------- -------------
84 (741)
-------- -------------
Total comprehensive income / (loss) for
the year
Profit / (loss) per share
- Basic 8 0.04p (1.42)p
- Diluted 0.04p (1.42)p
Adjusted profit / (loss) per share
- Basic 8 0.06p (1.38)p
- Diluted 0.06p (1.38)p
profit / (loss) per share - continuing
operations
- Basic 8 0.04p (1.42)p
- Diluted 0.04p (1.42)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
2019 2018
Notes GBP'000 GBP'000
-------- --------
Non-Current Assets
Intangible assets 10 1,363 1,363
Property, plant and equipment 11 87 155
Prepayments and accrued income 13 65 135
Deferred tax assets 6 69 69
-------- --------
TOTAL NON-CURRENT ASSETS 1,584 1,722
-------- --------
Current Assets
Trade and other receivables 13 2,948 2,175
Cash and cash equivalents 14 432 684
-------- --------
TOTAL CURRENT ASSETS 3,380 2,859
-------- --------
TOTAL ASSETS 4,964 4,581
-------- --------
Current Liabilities
Trade and other payables 15 2,315 2,025
Loan notes 16 119 272
Bank overdraft and interest bearing loans 16 950 776
Provisions 21 215 240
Corporation tax liability - -
-------- --------
TOTAL CURRENT LIABILITIES 3,599 3,313
-------- --------
NET CURRENT LIABILITES (219) (454)
-------- --------
TOTAL LIABILITIES 3,599 3,313
-------- --------
TOTAL ASSETS LESS TOTAL LIABILITIES 1,365 1,268
-------- --------
EQUITY
Issued share capital 18 6,266 6,266
Share premium account 18 13,706 13,706
Retained earnings (18,632) (18,667)
-------- --------
EQUITY ATTRIBUTABLE TO OWNERS OF THE
COMPANY 1,340 1,305
Non-controlling interests 25 (37)
-------- --------
TOTAL EQUITY 1,365 1,268
-------- --------
These financial statements were approved by the Board of
Directors on 26 June 2020
Signed on behalf of the Board of Directors
M Brennan S Smith
Director Director
Company No 00318267
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
Notes 2019 2018
GBP'000 GBP'000
-------- --------
Non-Current Assets
Investments 12 1,643 1,643
Prepayments and accrued income 13 65 135
-------- --------
TOTAL NON-CURRENT ASSETS 1,708 1,778
-------- --------
Current Assets
Trade and other receivables 13 5,391 5,123
Cash and cash equivalents 14 14 280
-------- --------
TOTAL CURRENT ASSETS 5,405 5,403
-------- --------
TOTAL ASSETS 7,113 7,181
-------- --------
Current Liabilities
Loan notes 16 119 272
Trade and other payables 15 1,646 1,562
-------- --------
TOTAL CURRENT LIABILITIES 1,765 1,834
-------- --------
NET CURRENT ASSETS 3,640 3,569
-------- --------
TOTAL LIABILITIES 1,765 1,834
-------- --------
TOTAL ASSETS LESS TOTAL LIABILITIES 5,348 5,347
-------- --------
EQUITY
Issued share capital 18 6,266 6,266
Share premium account 18 13,706 13,706
Retained earnings (14,624) (14,625)
-------- --------
TOTAL EQUITY 5,348 5,347
-------- --------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
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 1st January
2018 6,266 13,706 (17,923) 2,049 (59) 1,990
Loss for the year - - (763) (763) 22 (741)
Total comprehensive income
for the year (763) (763) (22) (741)
-------- -------- --------- ------- --------------- -------
Transactions with owners
of the Company, recognised
directly in equity:
Issue of ordinary shares - - - - - -
Credit to equity for share
based payments - - 19 19 - 19
-------- -------- --------- ------- --------------- -------
Total transactions with
owners of the Company,
recognised directly in
equity - - 19 19 - 19
-------- -------- --------- ------- --------------- -------
Total transactions with
owners of the Company - - 19 19 - 19
-------- -------- --------- ------- --------------- -------
Balance at 31st December
2018 6,266 13,706 (18,667) 1,305 (37) 1,268
-------- -------- --------- ------- --------------- -------
Balance at 1st January
2019 6,266 13,706 (18,667) 1,305 (37) 1,268
-------- -------- --------- ------- --------------- -------
Profit for the year 22 22 62 84
Total comprehensive income
for the year 22 22 62 84
-------- -------- --------- ------- --------------- -------
Transactions with owners
of the Company, recognised
directly in equity:
Issue of ordinary shares - - - - - -
Credit to equity for share
based payments 13 13 13
-------- -------- --------- ------- --------------- -------
Total transactions with
owners of the Company,
recognised directly in
equity - - 13 13 - 13
-------- -------- --------- ------- --------------- -------
Total transaction with
owners of the Company - - 13 13 - 13
-------- -------- --------- ------- --------------- -------
Balance at 31st December
2019 6,266 13,706 (18,632) 1,340 25 1,365
-------- -------- --------- ------- --------------- -------
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.
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
Attributable to owners of the Company
-------------------------------------------
Share Share Retained
Capital Premium Earnings Total Equity
COMPANY GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- --------- ------------
Balance at 1st January 2018 6,266 13,706 (14,039) 5,933
Loss for the year - - (605) (605)
-------- -------- --------- ------------
Total comprehensive income for
the year - - (605) (605)
-------- -------- --------- ------------
Transactions with owners of the
Company, recognised directly
in equity:
Credit to equity for share based
payments 19 19
Issue of ordinary shares - -
-------- -------- --------- ------------
Balance at 31st December 2018 6,266 13,706 (14,625) 5,347
-------- -------- --------- ------------
Balance at 1st January 2019
Loss for the year (12) (12)
-------- -------- --------- ------------
Total comprehensive income for
the year (12) (12)
-------- -------- --------- ------------
Transactions with owners of the
Company, recognised directly
in equity:
Credit to equity for share based
payments - - 13 13
Issue of ordinary shares - - - -
-------- -------- --------- ------------
Balance at 31st December 2019 6,266 13,706 (14,624) 5,348
-------- -------- --------- ------------
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 2019
2019 2018
Notes GBP'000 GBP'000
------- -------
Net cash used in operating activities (i) (182) 354
Cash flows from investing activities
and servicing of finance
Net finance cost (61) (77)
Payments to acquire tangible fixed assets 11 (30) (168)
Net cash used in investing activities (91) (245)
------- -------
Cash flows from financing activities
Proceeds/(Repayment) of borrowings 16 (153) (28)
Net cash inflows from equity placing 18 - -
Increase/(Repayment) in invoice discounting 16 174 (75)
------- -------
Net cash from financing activities 21 (103)
------- -------
Net (decrease)/increase in cash and cash
equivalents (252) 6
Net cash and cash equivalents at beginning
of period 684 678
Effects of exchange rate changes on cash
balances held in foreign currencies - -
------- -------
Net cash and cash equivalents at end
of period 432 684
------- -------
Analysis of net funds
Cash and cash equivalents 432 684
Borrowings due within one year (1,069) (1,048)
Borrowings due within more than one year - -
------- -------
(Net debt)/cash (ii) (637) (364)
------- -------
Note (i)
Reconciliation of operating profit / (loss) to net cash from
operating activities
2019 2018
GBP'000 GBP'000
------- -------
Operating profit /(loss) from continued operations 145 (664)
Depreciation/impairment of property, plant and
equipment 93 60
Share based payment charge 13 19
Fixed Asset Write Off 5 -
Decrease/(Increase) in trade and other receivables (703) (22)
(Decrease)/Increase in trade and other payables 290 846
(Decrease)/Increase Provisions (25) 115
Taxation paid - -
------- -------
Net cash generated from operating activities (182) 354
------- -------
Note (ii)
Reconciliation of movement of debt
2019 2018
GBP'000 GBP'000
------- -------
Net (decrease)/increase in cash and cash equivalents (252) 6
New Borrowings - -
Repayment of Borrowings 153 28
(Increase)/Repayment in invoice discounting (174) 75
Exchange difference on cash and cash equivalents - -
------- -------
Movement in Borrowings for the Period (273) 109
Net Borrowings at the Start of the Period (364) (473)
------- -------
Net Borrowings at the end of the Period (637) (364)
------- -------
COMPANY STATEMENT OF CASH FLOW
For the year ended 31 December 2019
2019 2018
Notes GBP'000 GBP'000
------- -------
Net cash used in operating activities (i) (93) (244)
Cash flows from investing activities
and servicing of finance
Interest paid (20) (36)
Net cash used in investing activities (20) (36)
------- -------
Cash flows from financing activities
Proceeds/(Repayment) of borrowings 16 (153) (28)
Net cash inflows from equity placing 18 - -
------- -------
Net cash from financing activities (153) (28)
------- -------
Net (decrease) in cash and cash equivalents (266) (308)
Net cash and cash equivalents at beginning
of period 280 588
------- -------
Net cash and cash equivalents at end
of period 14 280
Analysis of net funds
Cash and cash equivalents 14 280
Borrowings due within one year (119) (272)
Net funds (ii) (105) 8
------- -------
Note (i)
Reconciliation of operating profit / (loss) to net cash from
operating activities
2019 2018
GBP'000 GBP'000
------- -------
Operating profit/(loss) 8 (569)
Share based payment charge 13 19
Decrease/(Increase) in trade and other receivables (198) 374
(Decrease)/Increase in trade and other payables 84 (68)
Net cash used operating activities (93) (244)
------- -------
Note (ii)
Reconciliation of movement of debt
2019 2018
GBP'000 GBP'000
------- -------
Net (decrease)/increase in cash and cash equivalents (266) (308)
New Borrowings - -
Repayment of Borrowings 153 28
------- -------
Movement in Borrowings for the Period (113) (280)
Net Borrowings at the Start of the Period 8 288
------- -------
Net Borrowings at the end of the Period (105) 8
------- -------
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2019
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 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 (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 1.21.
1.1.1 Going concern
The Group reported an operating profit from continued operations
in the year to 31 December 2019 of GBP0.1m compared with an
operating loss of GBP0.7m in 2018.
The Consolidated Statement of Financial Position shows a net
asset position at 31 December 2019 of GBP1.4m (2018: GBP1.3m) with
cash at bank of GBP0.4m (2018: GBP0.7m). At the date that these
financial statements were approved the Group had no overdraft
facility, and secured loan notes of GBP0.1m and its receivable
finance (Bibby Financial Services) which is 100% secured by the
Group's trade receivables.
Early 2020 saw the outbreak of the Covid-19 pandemic. This has
already resulted in significant global economic disruption and as
the pandemic develops this disruption will continue over the months
to come.
In light of the current financial position of the Group and on
consideration of the business' forecasts and projections which have
taken account of the impact of Covid-19 and 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.
1.1.2 Changes in accounting policy and disclosures
a) New standards, interpretations and amendments effective
The following have been applied for the first time from 1
January 2019 but did not have a material impact on the financial
statements:
-- IFRS 3 (amendment) Business Combinations
-- IFRS 9 (amendment) Financial Instruments
-- IFRS 11 (amendment) Joint Arrangements
-- IFRS16 - Leases
-- IFRIC 22 - Foreign Currency Transactions and Advance Consideration
-- IFRIC 23 - Uncertainty over Income Tax Treatments
b) Standards, amendments and interpretations to existing standards that are not yet effective
The following newly issued but not yet effective standards,
interpretations and amendments, Mandatory for accounting periods
commencing on or after 1 January 2020:
-- IFRS 3 (amendment) Business Combinations
-- IFRS 7 (amendment) Financial Instruments
-- IFRS 17 - Insurance Contracts
-- IAS 1 - Presentation of Financial Statements
-- IAS 8 (amendments) - Accounting Policies, Changing in Accounting Estimates and Errors
Under the IFRS 17, insurance contract liabilities will be
calculated as the present value of future insurance cash flows with
a provision for risk
The Directors do not expect that the adoption of the Standards
and amendments listed above will have a material impact on the
financial statements of the Company in future periods. Beyond the
information above, it is not practicable to provide a reasonable
estimate of the effect of these Standards until a detailed review
has been completed.
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.
The subsidiaries financial statements were not prepared under
IFRS but adjustments were made to bring all the accounting policies
in line with IFRS.
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
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.
Fees paid on the establishment of loan facilities are recognised
as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case,
the fee is deferred until the draw-down occurs. To the extent there
is no evidence that it is probable that some or all of the facility
will be drawn down, the fee is recognised as a pre-payment for
liquidity services and amortised over the period of the facility to
which it relates.
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. 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 (NBES, NBS)
Executive Search services are provided on a retained basis and
the Group generally invoices the client at pre-specified milestones
agreed in advance. 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. NBS is a more flexible model and on occasions will
invoice in two stages, initiation and completion. 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.
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.
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
Costs in respect of operating leases are charged on a
straight-line basis over the lease term. Benefits received and
receivable as an incentive to sign an operating lease are
recognised on a straight line basis over the lease term, unless
another systematic basis is representative of the time pattern of
the lessee's benefit from the use of the leased assets.
1.19 Profit or loss from discontinued operations
A discontinued operation is a component of the Group that either
has been disposed of, or is classified as held for sale, and
represents a separate major line of business or geographical area
of operations. Profit or loss from discontinued operations,
including prior year components of profit or loss, is presented in
a single amount in the income statement. This amount comprises the
post-tax profit or loss of discontinued operations. The disclosures
for discontinued operations in the prior year relate to all
operations that have been discontinued by the reporting date of the
latest period presented.
1.20 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, using the
trinomial method. 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.
1.21 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) Share Options - fair value of options granted is determined
using the trinomial valuation model. The significant inputs into
the model are share price at grant date, expected price, expected
option life and risk free rate.
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.
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 2019 the balance
outstanding on the invoice discounting facility was GBP0.9 million
(2018: GBP0.8 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
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:
2019
NBES NBLC NBS NBIM Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- ------- ----------- -------
Revenue 3,335 278 1,830 6,043 - 11,486
Cost of sales (9) (62) - (3,808) - (3,879)
------- ------- ------- ------- ----------- -------
Gross profit 3,326 216 1,830 2,235 - 7,607
Operating expenses (3,502) (286) (1,618) (1,971) 8 (7,369)
Depreciation and
amort. (89) - (2) (2) - (93)
Finance costs (15) (6) (6) (14) (20) (61)
------- ------- ------- ------- ----------- -------
Profit/(Loss) before
tax (280) (76) 204 248 (12) 84
------- ------- ------- ------- ----------- -------
2018
NBES NBLC NBS NBIM Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- ------- ----------- -------
Revenue 3,737 345 1,196 4,136 - 9,414
Cost of sales (12) (106) - (2,652) - (2,770)
------- ------- ------- ------- ----------- -------
Gross profit 3,725 239 1,196 1,484 - 6,644
Operating expenses (3,908) (272) (1,115) (1,384) (569) (7,248)
Depreciation and
amort. (57) - (2) (1) - (60)
Finance costs (20) (5) (5) (12) (35) (77)
Profit/(Loss) before
tax (260) (38) 74 87 (604) (741)
------- ------- ------- ------- ----------- -------
ii) Revenue and gross profit by geography
2019 2018 2019 2018
Revenue Revenue Gross Profit Gross Profit
------- ------- ------------ ------------
United Kingdom 10,804 8,671 6,925 5,901
Rest of the world 682 743 682 743
------- ------- ------------ ------------
Total 11,486 9,414 7,607 6,644
------- ------- ------------ ------------
4 PROFIT / (LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION
2019 2018
GBP'000 GBP'000
------- -------
Profit / (Loss) on ordinary activities before
taxation is stated after charging:
Depreciation and impairment of property, plant
and equipment 93 60
Gain on foreign currency exchange - -
Staff costs (see note 5) 5,725 5,474
Operating lease rentals:
Land and buildings 187 270
Auditors' remuneration:
Audit work 49 47
Non-audit work - -
------- -------
The Company audit fee in the year was GBP49,000 (2018:
GBP47,000).
5 STAFF COSTS
The average number of full time equivalent persons (including
Directors) employed by the Group during the period was as
follows:
2019 2018
No. No.
---- ----
Sales and related services 36 37
Administration 16 18
---- ----
52 55
---- ----
Staff costs (for the above persons):
GBP'000 GBP'000
------- -------
Wages and salaries 4,933 4,746
Social security costs 626 567
Defined contribution pension cost 153 142
Share based payment expense 13 19
------- -------
5,725 5,474
------- -------
The emoluments of the Directors are disclosed as required by the
Companies Act 2006 in the Directors' Remuneration Report in the
Annual 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:
2019 2018
GBP'000 GBP'000
------- -------
Current tax:
United Kingdom corporation tax at 19% (2018:
19%) based on loss for the year - -
Foreign Tax - -
------- -------
Total current tax - -
------- -------
Deferred tax:
Origination and reversal of temporary differences - -
------- -------
Tax charge/(credit) - -
------- -------
(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:
2019 2018
GBP'000 GBP'000
------- -------
Profit / (Loss) on ordinary activities before
taxation 22 (763)
------- -------
Tax on profit / (loss) on ordinary activities
at standard UK corporation tax rate of 19% (2018:
19%) 5 (145)
Effects of:
Expenses not deductible 16 17
Substantial shareholding exemption
Capital allowances in excess of depreciation 12 6
Provision Movement 1
Pension accrual movement (2)
Losses bought forward utilised (73) (30)
Adjustment to losses carried forward 40 153
------- -------
Current tax charge for the year - -
------- -------
(c) Deferred tax
Tax losses Total
GBP'000 GBP'000
---------- -------
At 1 January 2019 (69) (69)
---------- -------
At 31 December 2019 (69) (69)
---------- -------
Credited to the income statement in 2019 - -
At 31 December 2019 (69) (69)
---------- -------
At 31 December 2019 the Group had capital losses carried forward
of GBP8,130,000 (2018: GBP8,130,000). 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 GBP13,974,127 (2018:
GBP14,133,106) trading losses carried forward, which includes
GBP8,987,000 losses transferred from BNB Recruitment Consultancy
Ltd in 2011. A deferred tax asset of GBP1,281,415 (2017:
GBP1,285,075) 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:
2019 2018
GBP'000 GBP'000
------- -------
Deferred tax assets:
Tax losses carried forward 69 69
------- -------
Total 69 69
------- -------
7 NET FINANCE COST
2019 2018
GBP'000 GBP'000
------- -------
Interest payable on Loan Notes and Invoicing
facility 61 77
------- -------
Total 61 77
------- -------
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:
2019 2018
------------ ------------
Profit/(Loss) attributable to owners of the company 22,000 (763,000)
------------ ------------
Weighted average number of ordinary shares 53,885,570 53,885,570
------------ ------------
Total 53,885,570 53,885,570
------------ ------------
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.
The grants of options in 2019 and 2018 have both profitability
and share price exercise criteria.
2019 2018
---------- ----------
Profit/(Loss) attributable to owners of the company 22,000 (763,000)
---------- ----------
Weighted average number of ordinary shares 53,885,570 53,885,570
---------- ----------
Total 53,885,570 53,885,570
---------- ----------
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.
2019 2019 2019 2018 2018 2018
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 22 0.04 0.04 (763) (1.42) (1.42)
------- ----------- ---------- ------- ----------- ----------
Adjustments
Share based payment
charge 13 0.02 0.02 19 0.04 0.04
------- ----------- ---------- ------- ----------- ----------
Adjusted earnings 35 0.06 0.06 (744) (1.38) (1.38)
------- ----------- ---------- ------- ----------- ----------
9 PROFIT OF PARENT COMPANY
As permitted by Section 408 of the Companies Act 2006, the
income statement of the parent company is not presented as part of
these accounts. The parent company's loss for the year amounted to
GBP12,000 (2018: GBP605,000).
10 INTANGIBLE ASSETS
Goodwill
arising
on consolidation
GBP'000
-----------------
Group
Balance at 1 January 2018 3,690
Balance at 31 December 2018 3,690
-----------------
Balance at 31 December 2019 3,690
-----------------
Provision for impairment
Balance at 1 January 2018 2,327
Balance at 31 December 2018 2,327
-----------------
Balance at 31 December 2019 2,327
Net book value
At 1 January 2018 1,363
-----------------
At 31 December 2018 1,363
-----------------
At 31 December 2019 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:
Norman Broadbent
Leadership
Norman Broadbent Consulting Total
GBP'000 GBP'000 GBP'000
---------------- ---------------- -------
At 1 January 2018 1,303 60 1,363
---------------- ---------------- -------
At 31 December 2018 1,303 60 1,363
---------------- ---------------- -------
At 31 December 2019 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, 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 2019 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 (2018: 10%) and
20% for Norman Broadbent Leadership Consulting (2018: 19%). 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 8% (2018:
9%).
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 2019 the recoverable value of the Norman Broadbent CGU is
GBP1,440,000 and the Norman Broadbent Leadership Consulting CGU is
GBP1,906,000.
11. PROPERTY, PLANT AND EQUIPMENT
Land and Office and
buildings computer Fixtures
- leasehold equipment and fittings Total
GBP'000 GBP'000 GBP'000 GBP'000
------------ ---------- ------------- -------
Group
Cost
Balance at 1 January 2018 84 162 57 303
Additions - 14 154 168
Disposals - - - -
------------ ---------- ------------- -------
Balance at 31 December 2018 84 176 211 471
------------ ---------- ------------- -------
Additions - 30 - 30
Disposals - - (5) (5)
------------ ---------- ------------- -------
Balance at 31 December 2019 84 206 206 496
------------ ---------- ------------- -------
Accumulated depreciation
Balance at 1 January 2018 78 128 50 256
Charge for the year 5 14 41 60
Disposals - - - -
------------ ---------- ------------- -------
Balance at 31 December 2018 83 142 91 316
------------ ---------- ------------- -------
Charge for the year - 17 76 93
Disposals - - - -
------------ ---------- ------------- -------
Balance at 31 December 2019 83 159 167 409
------------ ---------- ------------- -------
Net book value
At 1 January 2018 6 34 7 47
------------ ---------- ------------- -------
At 31 December 2018 1 34 120 155
------------ ---------- ------------- -------
At 31 December 2019 1 47 39 87
------------ ---------- ------------- -------
The Group had no capital commitments as at 31 December 2019
(2018: GBPNil).
The above assets are owned by Group companies; the Company has
no fixed assets.
12 INVESTMENTS
Shares in
subsidiary
undertakings
GBP'000
-------------
Company
Cost
Balance at 1 January 2018 5,796
-------------
Balance at 31 December 2018 5,796
-------------
Balance at 31 December 2019 5,796
-------------
Provision for impairment
Balance at 1 January 2018 4,153
Impairment for the year -
-------------
Balance at 31 December 2018 4,153
-------------
Impairment for the year -
-------------
Balance at 31 December 2019 4,153
-------------
Net book value
At 1 January 2018 1,643
-------------
At 31 December 2018 1,643
-------------
At 31 December 2019 1,643
-------------
At 31 December 2019 the Company held the following ownership
interests:
Description and
Country of incorporation proportion of
Principal Group or registration shares held by
investments: and operation Principal activities the Company
----------------------- ------------------------- --------------------- --------------------
Norman Broadbent England and Wales Executive search 100% ordinary
Executive Search shares
Ltd
Norman Broadbent England and Wales Executive search 100% ordinary
Overseas Ltd shares
Norman Broadbent England and Wales Assessment, coaching 100% ordinary
Leadership Consulting and talent mgmt. shares
Limited
Norman Broadbent England and Wales Mezzanine level 100% ordinary
Solutions Ltd search shares
Bancomm Ltd ** England and Wales Dormant 100% ordinary
shares
Norman Broadbent Republic of Ireland Dormant 100% ordinary
Ireland Ltd* ** shares
Norman Broadbent England and Wales Interim Management 75% ordinary shares
Interim Management
Ltd
* 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.
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
---------------- ----------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- -------
Trade receivables 2,782 2,076 - -
Less: provision for impairment (49) - - -
------- ------- ------- -------
Trade receivables - net 2,733 2,076 - -
Other debtors 180 98 125 -
Prepayments and accrued income 100 136 14 208
Due from Group undertakings - - 5,317 5,050
------- ------- ------- -------
Total 3,013 2,310 5,456 5,258
------- ------- ------- -------
Non-Current 65 135 65 135
Current 2,948 2,175 5,391 5,123
------- ------- ------- -------
3,013 2,310 5,456 5,258
------- ------- ------- -------
Non-current trade receivables are in relation to the cash
consideration due from the sale of SMS in 2016.
As at 31 December 2019, Group trade receivables of GBP1,408,000
(2018: GBP1,885,000), were past their due date but not impaired,
save as referred to below. They relate to customers with no default
history. The aging profile of these receivables is as follows:
Group Company
---------------- ----------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- -------
Up to 3 months 1,120 1,747 - -
3 to 6 months 197 120 - -
6 to 12 months 91 18 - -
------- ------- ------- -------
Total 1,408 1,885 - -
------- ------- ------- -------
The largest amount due from a single trade debtor at 31 December
2019 represents 7% (2018: 8%) of the total trade receivables
balance outstanding.
As at 31 December 2019, GBP49,000 of group trade receivables
(2018: no group trade receivables) were considered impaired. A
provision for impairment has been recognised in the financial
statements. Movements on the Group's provision for impairment of
trade receivables are as follows:
2019 2018
GBP'000 GBP'000
------- -------
At 1 January - -
Provision for receivable impairment 49 -
Receivables written-off as uncollectable - -
------- -------
At 31 December 49 -
------- -------
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
---------------- ----------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- -------
Cash at bank and in hand 432 684 14 280
------- ------- ------- -------
Total 432 684 14 280
------- ------- ------- -------
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
---------------- ----------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------- ------- ------- -------
Trade payables 588 650 79 80
Due to Group undertakings - - 1,481 1,437
Other taxation and social security 649 765 - -
Other payables 33 35 - -
Accruals 1,045 575 86 45
------- ------- ------- -------
Total 2,315 2,025 1,646 1,562
------- ------- ------- -------
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
---------------- ----------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Maturity profile of borrowings
Current
Bank overdrafts and interest
bearing loans:
Invoice discounting facility
(see note (a) below) 950 776 - -
Secured loan notes 119 272 119 272
------- ------- ------- -------
Total 1,069 1,048 119 272
------- ------- ------- -------
The carrying amounts and fair value of the Group's borrowings,
which are all denominated in sterling, are as follows:
Carrying amount Fair value
----------------- ----------------
2019 2018 2019 2017
GBP'000 GBP'000 GBP'000 GBP'000
-------- ------- ------- -------
Bank overdrafts and interest
bearing loans:
Invoice discounting facility 950 776 950 776
Secured loan notes 119 272 119 272
-------- ------- ------- -------
Total 1,069 1,048 1,069 1,048
-------- ------- ------- -------
a) Invoice discounting facilities:
Norman Broadbent Executive Search Limited, NBS, NBIM and NBLC
operate independent invoice discounting facilities, provided by
Bibby Financial Services Limited. Bibby Financial Services Limited
holds all assets debentures for each company (fixed and floating
charges) and also a cross-corporate guarantee and indemnity deed
dated 20 August 2019. 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 80%
against trade receivables of Norman Broadbent Executive Search
Limited that are aged less than 120 days, with the facility capped
at GBP2,000,000. At 31 December 2019, the outstanding balance on
the facility of GBP217,679 (2018: GBP369,969) was secured by trade
receivables of GBP717,619 (2018: GBP860,137). Interest is charged
on the drawn down funds at a rate of 2.50% (2018: 2.40%) above the
bank base rate.
Norman Broadbent Solutions Limited:
Funds are available to be drawn down at an advance rate of 80%
against trade receivables of Norman Broadbent Solutions Limited
that are aged less than 120 days, with the facility capped at
GBP2,000,000. At 31 December 2019, the outstanding balance on the
facility of GBP227,997 (2018: GBP139,813) was secured by trade
receivables of GBP592,863 (2018: GBP263,604). Interest is charged
on the drawn down funds at a rate of 2.50% (2018: 2.40%) 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 GBP2,000,000. At 31 December 2019, the outstanding balance on
the facility of GBP453,086 (2018: GBP246,441) was secured by trade
receivables of GBP1,300,602 (2018: GBP701,821). Interest is charged
on the drawn down funds at a rate of 2.50% (2018: 2.40%) above the
bank base rate.
Norman Broadbent Leadership Consulting
Funds are available to be drawn down at an advance rate of 90%
against trade receivables of Norman Broadbent Leadership Consulting
Limited that are aged less than 120 days, with the facility capped
at GBP2,000,000. At 31 December 2019 the outstanding balance on the
facility of GBP52,220 (2018: GBP19,861) was secured by trade
receivables of GBP61,883 (2018: GBP50,474). Interest is charged on
the drawn down funds at a rate of 2.50% above the bank base
rate.
b) Secured Loan Notes
The GBP300,000 loan note was issued in August 2017 with an
interest rate of 12%.
The loan note was repaid in full after the year end
17 FINANCIAL INSTRUMENTS
The principal 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
----------------
2019 2018
GBP'000 GBP'000
------- -------
Group
Financial Assets
Trade and other receivables 2,913 2,204
------- -------
Financial Liabilities
Trade and other payables 2,315 2,027
Secured loan notes 119 272
Invoice discounting facility 950 776
------- -------
Amortised Cost
----------------
2019 2018
GBP'000 GBP'000
------- -------
Company
Financial Assets
Trade and other receivables 5,317 5,058
------- -------
Financial Liabilities
Trade and other payables 1,644 1,562
Secured loan notes 119 272
------- -------
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
2019 2018
GBP'000 GBP'000
------- -------
Allotted and fully paid:
Ordinary Shares:
53,885,570 Ordinary shares of 1.0p each (2018:
53,885,570) 539 539
------- -------
Deferred Shares:
23,342,400 Deferred A shares of 4.0p each (2018:
23,342,400) 934 934
907,118,360 Deferred shares of 0.4p each (2018:
907,118,360) 3,628 3,628
1,043,566 Deferred B shares of 42.0p each (2018:
1,043,566) 438 438
2,504,610 Deferred C shares of 29.0p each (2018:
2,504,610) 727 727
------- -------
5,727 5,727
------- -------
Total 6,266 6,266
------- -------
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) (000s) (000s) (000s) (000s)
--------- -------- -------- -------- -------
At 1 January 2018 53,885 539 5,727 13,706 19,972
At 31 December 2018 53,885 539 5,727 13,706 19,972
--------- -------- -------- -------- -------
At 31 December 2019 53,885 539 5,727 13,706 19,972
--------- -------- -------- -------- -------
19 SHARE BASED PAYMENTS
19.1 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. exercise
price per Number of
share (p) options
------------- ---------
At 1 January 2018 14.54 3,098,511
Granted 13.50 1,054,191
Forfeited 13.50 (603,555)
------------- ---------
At 31 December 2018 14.41 3,549,147
------------- ---------
Granted - -
Forfeited - -
------------- ---------
At 31 December 2019 14.41 3,549,147
------------- ---------
Share options outstanding at the end of the year have the
following expiry date and exercise prices:
Share options
---------- --------------------
Exercise
Expiry date price per
share
(p) 2019 2018
---------- --------- ---------
2021 65.5 62,153 62,153
2023 13.5 2,051,852 3,036,358
2024 13.5 380,951 -
2025 13.5 1,054,191 -
---------- --------- ---------
Total 3,549,147 3,098,511
---------- --------- ---------
Out of the 3,549,147 outstanding options (2018: 3,549,147), no
options were exercisable at the year-end (2018: None) as they were
all 'underwater'.
The significant inputs into the model in valuing the 2019 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% (2018 and 2017: 0%), an expected option life of 10 years (2018
and 2017: 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. No share options were granted during 2019,
therefore the same assumptions were used as per the prior year.
There was no significant change in the company or shareholding
during 2019.
20 LEASES
Operating leases
The Group leases its premises and the lease is tenant
repairing.
As at 31 December 2019, the total future value of minimum lease
payments due are as follows:
Land and Buildings
--------------------
2019 2018
GBP'000 GBP'000
--------- ---------
Within one year 28 160
Later than one year and not later than five years - 32
--------- ---------
Total 28 192
The Group has subsequently signed a two year
lease for its London Head Office in Millbank
Tower, London SW1P 4QP
21 PROVISIONS
Group
2019 2018
GBP'000 GBP'000
------- -------
At 1 January 240 125
Provisions made during the year - 115
Provisions Utilised during the year (25) -
------- -------
At 31 December 215 240
------- -------
Current liability 215 240
Non-current liability - -
------- -------
At 31 December 215 240
------- -------
The Company moved its head office in April 2018. The Company has
agreed a final dilapidations figure of GBP215,000 for its previous
head office in St James Square. The amount is repayable at
GBP20,000 per month with a final payment of GBP15,000, commencing 1
January 2020.
22 PENSION COSTS
The Group operated several defined contribution pension schemes
for the business. The assets of the schemes were held separately
from those of the Group in independently administered funds. The
pension cost represents contributions payable by the Group to the
funds and amounts to GBP155,000 (2018: GBP142,000). At the year-end
GBP16,000 of contributions were outstanding (2018: GBP19,000).
23 RELATED PARTY TRANSACTIONS
The following transactions were carried out with related
parties:
(a) Purchase of services:
2019 2018
GBP000 GBP000
------ ------
Brian Stephens & Company Ltd 20 20
Total 20 20
------ ------
Brian Stephens & Company Ltd invoiced the Group for the
provision of services of B Stephens of GBP20,000 (2018 total:
GBP20,000). B Stephens is a director of Brian Stephens &
Company Ltd.
All related party expenditure took place via "arms-length"
transactions.
(b) Key management compensation:
Key management includes Executive and Non-Executive Directors.
The compensation paid or payable to the directors can be found in
the Directors' Remuneration Report in the Annual Report.
(c) Year-end payables arising from the purchases of services:
2019 2018
GBP000 GBP000
------ ------
Brian Stephens & Company Ltd - 2
------ ------
Total - 2
------ ------
Payables to related parties arise from purchase transactions and
are due one month after date of purchase. Payables bear no
interest.
24 CONTINGENT LIABILITY
The Company is a member of the Norman Broadbent plc Group VAT
scheme. As such it is jointly accountable for the combined VAT
liability of the Group. The total VAT outstanding in the Group at
the year-end was GBP481,000 (2018: GBP377,000).
25 POST BALANCE SHEET EVENT
Early 2020 saw the outbreak of the Covid-19 pandemic. This has
already resulted in significant global economic disruption and as
the pandemic develops this disruption will continue over the months
to come. This is considered to be a non-adjusting event affecting
the Group since year end, disclosure of the Board's consideration
on going concern has been made in note 1 of these financial
statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEDFWMESSELM
(END) Dow Jones Newswires
June 29, 2020 02:00 ET (06:00 GMT)
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