REG - Norman Broadbent PLC - Final Results
31/05/2023 07:00
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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 (£8.70 million) (2021:
£6.55 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 £7.35 million (2021:
£5.86 million)
• Positive underlying EBITDA(1) of £93,000, up £396,000 (2021:
LBITDA of £303,000)
• Improvement in debtor days to 56 (2021: 66 days)
• At 31 December 2022, £483,000 (2021: £952,000) of funds
drawn down against the Company's revolving invoice discounting facility
against UK trade receivables of £2,133,000 (2021: £1,732,000)
• Group cash at 31 December 2022 £50,000 (2021: £459,000).
Net cash outflow from operations in 2022 reduced to £33,000 (2021 outflow:
£446,000)
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/
(https://url.avanan.click/v2/___https:/www.normanbroadbent.com/company-documents/___.YXAxZTpzaG9yZWNhcDphOm86ODI3ZmEyMjM5ZWI1YTc0NjllODM0ZTMwOTg3ZmQ3MDY6NjoxOGQxOmMxNDE4Mzk5OGZhYTAwMzAwNWQ1MDI5NjExOGNlODg4ZTUxYzMxZTliMzc4Njk4ZGUxMjdiNTNkMmY3ZTgxODI6cDpU)
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 (#_ftn1) (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
£000's £000'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 EBITDA1 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 £7.347 million (2021: £5.859
million) and the Company generated underlying EBITDA(1) of £93,000 which
represents a positive swing of £396,000 (2021: LBITDA of £303,000). 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 £33,000 representing an improvement of £413,000 (2021
outflow: £446,000). 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 £670,000
(2021: £836,000) with £483,000 (2021: £952,000) of funds drawn down against
the revolving invoice discounting facility against UK trade receivables of
£2,133,000 (2021: £1,732,000).
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 £15 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 £1.25 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
Note 2022
£'000 2021
£'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 £'000 £'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
(322) (505)
NET CURRENT LIABILITIES
Non-Current Liabilities 16 618 250
Bank and other loans
Lease liabilities 20 155 298
TOTAL NON-CURRENT LIABILITIES 773 548
TOTAL LIABILITIES 3,465 3,427
670 836
TOTAL ASSETS LESS TOTAL LIABILITIES
EQUITY
Issued share capital 18 6,345 6,334
Share premium account 18 14,110 14,080
Retained earnings (19,785) (19,578)
670 836
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
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 Capital Share Premium Retained Earnings Total Equity Non-controlling interests Total Equity
£'000 £'000 £'000 £'000 £'000 £'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 £'000 £'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 £'000 £'000
activities
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
£'000 £'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 (£000), except when otherwise indicated.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated
financial statements are disclosed in note 1.20.
1.1.1 GOING CONCERN
The Group reported an operating loss from continued operations in the year to
31 December 2022 of £0.3m compared with an operating loss of £0.6m in 2021.
Consolidated net current liabilities are £0.3m (2021: £0.5m).
The Consolidated Statement of Financial Position shows a net asset position at
31 December 2022 of £0.7m (2021: £0.8m) with cash at bank of £0.05m (2021:
£0.5m). At the date that these financial statements were approved the Group
had no overdraft facility, a CBILS loan of £0.20m 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 £400,000 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 £1,000) 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 £0.5 million (2021: £1.0 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
£'000 £'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
£'000 £'000 £'000 £'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
£'000 £'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 £50,800 (2021: £43,000).
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):
£'000 £'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
£'000 £'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
£'000 £'000
Profit / (Loss) on ordinary activities before taxation (338) (573)
Tax on profit / (loss) on ordinary activities at standard UK corporation tax (64) (109)
rate of 19% (2021: 19%)
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
£'000 £'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
£8,129,000 (2021: £8,129,000) and trading losses carried forward of
£14,879,676 (2021: £14,497,676). 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
£'000 £'000
Deferred tax assets: - -
Tax losses carried forward
Total - -
7 NET FINANCE COST
2022 2021
£'000 £'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 £(338,000) £(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 £(338,000) £(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
£'000 Basic pence Diluted pence per share £'000 Basic pence Diluted pence per share
per share
per 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 £664,000 (2021: Loss £4,407,000).
10 INTANGIBLE ASSETS
Goodwill arising on consolidation
£'000
Group 3,690
Balance at 1 January 2021
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 Broadbent Leadership Consulting Total
£'000 £'000 £'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 buildings - leasehold Right of Use asset Office and computer equipment Fixtures and fittings Total
£'000 £'000 £'000 £'000 £'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 : £Nil).
12 INVESTMENTS
Shares in subsidiary undertakings
£'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:
Principal Group investments: Country of incorporation or registration and operation Principal activities Description and proportion of shares held by the Company
Norman Broadbent Executive Search Ltd England and Wales Executive search 100% ordinary shares
Norman Broadbent Overseas Ltd England and Wales Non Trading (Dissolved 11(th) Oct 2022) 100% ordinary shares
Norman Broadbent Leadership Consulting Limited England and Wales Assessment, coaching and talent management 100% ordinary shares
(Dissolved 11(th) Oct 2022)
Norman Broadbent Solutions Ltd England and Wales Mezzanine level search (Dissolved 11(th) Oct 2022) 100% ordinary shares
Bancomm Ltd England and Wales Dormant (Dissolved 4(th) Oct 2022) 100% ordinary shares
Norman Broadbent Ireland Ltd Republic of Ireland Dormant 100% ordinary shares
Norman Broadbent Interim Management Ltd England and Wales Interim Management (Dissolved 11(th) October 2022) 100% ordinary shares
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
£'000 £'000 £'000 £'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 £935,000 (2021:
£967,000), 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
£'000 £'000 £'000 £'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
£2,000 (2021: £14,000). Movements on the Group's provision for impairment of
trade receivables are as follows:
2022 2021
£'000 £'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
£'000 £'000 £'000 £'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
£'000 £'000 £'000 £'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
£'000 £'000 £'000 £'000
Maturity profile of borrowings
Current
Invoice discounting facility (see note (a) below) 483 952 - -
Loans (see note (b) below) - - 46 -
Non Current 618 250 572 250
Loans (see note (b) below)
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
£'000 £'000 £'000 £'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 £1,500,000. At December 31 2022, the
outstanding balance on the facility of £0.5m was secured by trade receivables
of £2.1m. 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 £250,000 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 £400,000 nominal value were issued
to Downing Strategic Micro-Cap Investment Trust Plc and Moulton Goodies
Limited, each of whom subscribed £200,000. 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 £'000 £'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 £'000 £'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
£'000 £'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 £10,000 per Ordinary Share. The
Company retains the right to cancel the shares without payment to the holders
thereof. The rights attaching to the shares shall not be varied by the
creation or issue of shares ranking 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 £10,000 per Ordinary Share. The
Company retains the right to transfer or cancel the shares without payment to
the holders thereof.
Deferred B Shares of 42.0p each
The Deferred B Shares carry no right to dividends or distributions or to
receive notice of or attend general meetings of the Company. In the event of a
winding up, the shares carry the right to repayment only after the holders of
Ordinary Shares have received a payment of £10 million per Ordinary Share.
The Company retains the right to cancel the shares without payment to the
holders thereof. The rights attaching to the shares shall not be varied by the
creation or issue of shares ranking 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 £10,000 per Ordinary Share. The Company
retains the right to cancel the shares without payment to the holders thereof.
A reconciliation of the movement in share capital and share premium is
presented below:
No. of Ordinary shares Deferred shares Share Total
ordinary
premium
shares £(000s) £(000s)
£(000s)
(000s) £(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 Exercise price Weighted average Exercise price
(£) Number (£) 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 £nil
(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 £0.07.
Share Price Option
2022 2022 2021 2021
Weighted average Exercise price Weighted average Exercise price
(£) Number (£) 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 £nil
(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 £0.039 -£0.058.
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
£
Equity-settled - EBITDA Option
Option pricing model used Binomial option 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
£
Equity-settled - Share Price Option
Option pricing model used Monte Carlo 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
£ £
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.
Consolidation Statement 2022 2021
£'000 £'000
Depreciation expense (168) (169)
Operating Profit (168) (169)
Finance Costs (25) (27)
Profit before Tax (193) (196)
Consolidated Statement of Financial Position Right-of-use assets Lease liabilities
£'000 £'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 Position 2022 2021
£'000 £'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 £192,000
(2021: £184,000). At the year end £14,000 of contributions were outstanding
(2021: £19,000).
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 £123,000 (2021:
£205,000).
24 POST BALANCE SHEET EVENT
The Company repaid half of the funds raised by the issue of the Convertible
Loan Notes of £400,000 on 19th May 2023. Downing Strategic Micro-Cap
Investment Trust Plc and Moulton Goodies Limited each received a repayment of
£100,000 (plus interest).
(#_ftnref1)
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