REG - Norman Broadbent PLC - Final Results
27/03/2024 07:00
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RNS Number : 4184I Norman Broadbent PLC 27 March 2024
27 March 2024
Norman Broadbent plc
("Norman Broadbent", the "Company" or "the Group")
Final Results
Significant organic revenue growth driving a return to profitability
Norman Broadbent (AIM: NBB), a leading Executive Search and Interim Management
firm, is pleased to announce its audited final results for the year ended 31
December 2023 ("FY23").
Financial highlights
● Organic revenue growth of 41% to £12.3m (FY22 £8.7m)
o Search revenue: up 52% to £8.6m (FY22: £5.7m)
o Interim revenue: up 9% to £3.2m (FY22: £2.9m)
● Group Net Fee Income ("NFI") up 44% to £10.5m (FY22: £7.3m)
● Underlying EBITDA* of approximately £0.9m, up more than £0.8m (FY22:
£0.1m)
● Return to profitability, with profit before tax of approximately £0.3m, up
over £0.6m (FY22: loss before tax £0.3m)
● Early redemption and conversion of outstanding £0.4m convertible loan notes
● Net cash flow positive with position improving to £0.4m** as at 31 December
2023 (31 December 2022: net debt £1.1m)
● Cash balance of £0.8m as at 31 December 2023 (31 December 2022: £0.05m)
* Excludes share based payment charges
**Excluding lease liabilities
Operational highlights
● Significant investment in headcount to position the Group for further
profitable growth
● Average annual fees per established fee generating employee up 32%
● Reinforced values and performance-based culture, driving retention levels
● Continued to develop capability and capacity across the team through improved
processes and support technologies
Kevin Davidson, CEO of Norman Broadbent, said:
"I am delighted with the performance of our team, delivering outstanding
results in the context of a challenging macro-economic environment. Their
dedication and drive has brought the business back to levels of performance
not seen in well over a decade.
We have taken the opportunity to invest further in the Company, hiring
exceptional people and building our platform to take advantage of the market
rebound when it comes. Our ambition remains steadfast and we will continue to
pursue our aggressive growth strategy, whilst remaining profitable and cash
positive, both organically and potentially through synergistic M&A
opportunities.
Looking forward, a motivated and growing team of the highest quality
professionals, coupled with a refreshed culture based on values and
performance, forms a very strong platform and engine for future growth.
Supported by our considerable brand strength and market leading processes and
technologies, we are well-positioned for continued success."
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)
Investor presentation
CEO, Kevin Davidson, and CFO, Mehr Malik, will host a virtual presentation and
Q&A session open to all existing and potential investors at 10am this
morning.
To register to attend, please use the following link:
https://bit.ly/NBB_FY23_results_webinar
(https://bit.ly/NBB_FY23_results_webinar)
For further information please contact:
Norman Broadbent plc +44 (0)20 7484 0000
Kevin Davidson, CEO
Mehr Malik,
CFO
Shore Capital (Nominated Adviser and Broker) +44 (0)20 7408 4090
Tom Griffiths / Tom Knibbs (Corporate Advisory)
Henry Willcocks (Corporate Broking)
Alma Strategic Communications (Financial Communications Adviser) normanbroadbent@almastrategic.com
Rebecca Sanders-Hewett +44 (0)20 3405 0205
Kinvara Verdon
David Ison
About Norman Broadbent:
Norman Broadbent (AIM: NBB) is a professional services firm focused on
executive search, senior interim management solutions and bespoke leadership
advisory services working across the UK and internationally.
Established as the first UK-headquartered search firm in 1979, the firm has a
40+ year track record of shaping leadership across industries including
Consumer, Financial Services, Industrials, Life Sciences, Investor and TMT.
www.normanbroadbent.com
(https://url.avanan.click/v2/___http:/www.normanbroadbent.com___.YXAxZTpzaG9yZWNhcDphOm86YzVkZGY3MWU5YmI4YjU3NzU2ZWIzMDc3OGYxNzk0YzQ6Njo0ZjRmOjA4ZTJhNzUyMGY0NzYwYTU0MjhlMzUyODQ1NmNjNmRlNWEyMDJiMTdhOTVlNTZiYmQ1ODI2NDJhODNlZDY1MjE6cDpU)
Chairman's statement
2023 saw a transformation across the business. The foundations were built in
the previous two years with Norman Broadbent returning to profitability. The
growth in 2023 is testimony to the hard work put in by the team and it was
another exceptional year both operationally and financially.
The culture present throughout the business is one of teamwork, inclusion,
quality and delivery. This has been integral in delivering the results that
have been achieved. It's extremely encouraging to see the levels of commitment
and ambition across every level of the business. This ambition is led by
example from the top by our exceptional and inspirational executive management
team.
The team's commitment to delivering world-class leading services to our
customers in every aspect of our business is second to none. I believe this
sets us apart and has been core to our success.
Throughout 2024, the executive team will continue to invest further in our
headcount adding both experienced consultants and researchers. They will
continue to reorganise and strengthen our support functions and invest in
leading edge technology to bolster this growth.
We have, in common with our peers, been facing some very challenging market
conditions, but the quality of our service has allowed the team to not only
weather the challenges but post the best numbers for over ten years. A net
profit of £0.3 million, NFI of £10.5 million and net cash generated from
operating activities of £1.7 million.
The Board's strategy for rapid yet sustainably profitable expansion has been
delivered and will provide the platform to continue in the same manner
throughout 2024.
I would like to thank the entire Norman Broadbent team for their unwavering
commitment, hard work and for the quality of their execution, our clients for
partnering with us, for their faith in the excellence of our services and our
shareholders for their continued support.
Peter Searle
Chair
26 March 2024
CEO's statement
We achieved a key milestone in 2023, returning the business to profitability,
as planned when I joined Norman Broadbent in late 2021. We continued to grow
our headcount while also investing in supporting infrastructure and
technologies to both modernise and prepare the platform for accelerated future
expansion. I am delighted that all of our objectives have so far been met and
I am increasingly confident in our ability to position our incredible brand as
a global leader in senior executive search and interim management.
During 2023, Norman Broadbent placed leaders across the UK, Europe, the US,
Australasia and the Middle East covering multiple sectors and disciplines. As
this year has proven, our business is well balanced across both resilient and
rapid growth sectors where there is a considerable shortage of leadership
talent.
NFI in 2023 grew by 44% to £10.5 million (2022: £7.3 million) and the
Company generated underlying EBITDA(*) of £0.9 million which represents a
positive swing of £0.8 million (2022: EBITDA(*) of £0.1 million). Building
on the considerable efforts and successes of 2022, the strategic pillars of
the business continued to be strengthened during 2023. We will continue to
develop our platform in 2024 and beyond as we drive rapid organic growth. We
will also continue to identity and explore appropriate opportunities for
inorganic growth.
The five strategic priorities for the year ahead continue to be the
following:
· People & Culture
· Brand & Market positioning
· Research & Delivery
· Financial Stability & Performance
· Business Focus
PEOPLE & CULTURE - driving an ambitious and collaborative culture
Our business is fundamentally about our people and the culture they create and
demonstrate both internally and externally. This determines performance,
employee retention and attraction, and, ultimately, positive outcomes for all
stakeholders. Having invested heavily in the culture reset 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.
We continue to reinforce our cultural anchors through quarterly values awards,
engagement surveys, performance reviews, charitable fundraising and community
development projects amongst other activities.
The stability of the team is crucial, especially when growing rapidly, and, as
in 2022, we were delighted to have had very few regretted leavers in 2023. We
recruited a total of fifteen very high calibre and culturally aligned
colleagues across fee generation, research, and support in 2023 and secured
another three who started at the beginning of 2024.
BRAND & MARKET POSITIONING - combining rich heritage with modern
dynamism
Built over 45 years, we are all very proud of the heritage and strength of the
Norman Broadbent brand which, coupled with the quality of our people and our
culture, will increasingly be the accelerator of our future growth. We are
recognised as leaders in the field and this brand strength provides a strong
foundation to drive further growth.
The level of mandates in terms of both seniority and fee levels continued to
grow throughout 2023. This was a clear mission that we set when I joined the
Company and a necessary journey that we are on in re-positioning Norman
Broadbent as the pre-eminent executive search and interim leadership partner
across our chosen markets. We continued to build our board practice which
continued to deliver high-quality Chair, Non-Executive and Executive Director
mandates throughout the year across the listed, private (private equity and
family owned) and public sectors - a trend which is reflective of our brand
elevation and supportive of our future ambitions.
RESEARCH & DELIVERY - meticulous technology enabled processes
Our in-house research team delivers bespoke, value-added research and business
intelligence on markets, people, and competitors, helping our clients make
better, more informed decisions. As a result of the investments made in our
team, processes and the implementation of new software platforms, the
productivity, quality, and consistency of our research and delivery function
continues to improve, positioning us to scale much more smoothly and
effectively. As our growing fee generating headcount becomes established and
mandates become increasingly more senior, the need to grow the research team
proportionately, from a cost perspective, also reduces making additional net
fee income ever more accretive to the bottom line.
FINANCIAL STABILITY & PERFORMANCE - growth and sustainable
profitability
In 2023, net cash inflow from operating activities increased significantly to
£1.7 million (2022 outflow: £0.03 million) due to the continued focus on
improving working capital. The growing levels of profits has further supported
cash generation with the Group closing the year with a cash position of £0.8
million (31 December 2022: £0.05 million).
As at 31 December 2023, the Group's balance sheet position was significantly
stronger with net assets of £1.4 million (31 December 2022: £0.7 million)
reflecting the improvements in profitability, focus on working capital and
reduction in borrowings, notably the early redemption and conversion of the
convertible loan notes (31 December 2022: £0.4 million) and the reduced
utilisation of the invoice discounting facility to £0.2 million (31 December
2022: £0.5 million).
Since our CFO, Mehr Malik, joined us in January 2023, our financial discipline
has improved considerably. We have also introduced new technology which is
dramatically improving all aspects of the business in a structured and
integrated manner. In 2024 we will be further developing this technology stack
and, in particular, carefully managing the integration of operating systems to
improve the quality and availability of real time management information. As
with all investments we have been making, this is not only necessary in
modernising the business, but it establishes a platform which is capable of
supporting our ambitious future growth plans.
BUSINESS FOCUS - building on our strengths
Whilst continuing to offer a full range of leadership advisory services, the
Company has had a clear focus on its executive search brand and being at the
forefront of this increasingly valuable market. Norman Broadbent is still
recognised as a leader in the field of executive search which drives client
engagement and, in turn, opportunities in interim management and other
leadership advisory services. Executive search will therefore continue to be
the core of the business as we also look to grow interim management (which
represented 16% of NFI in FY23) and our other leadership advisory service
offerings such as leadership assessment and development.
The fee generation hires made in 2023 have meaningfully expanded the Company's
position in the following sectors: Board, Industrial, Retail & Consumer,
Private Equity/Venture Capital, HR, Digital & Technology and Change &
Transformation across executive search and senior interim management. The
sectors we operate in are generally both resilient and currently growing.
Approximately 50% of our net fee income in FY23 was generated in industrial
and infrastructure segments which continue to attract investment and grow
rapidly in the UK and internationally. We have an enviable and growing track
record across power, utilities and the entire energy value chain from nuclear
and conventional hydrocarbon through the 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.
Within our industrial practice we have also developed a strong and growing
capability in chemicals, transportation infrastructure (including civil
aviation and aerospace), engineering and construction, marine and shipping,
automotive, clean tech and natural resources.
Our Retail & Consumer practice is also well positioned with particular
strength and brand recognition across procurement, supply chain and commercial
leadership, an area where there is considerable focus and investment. This
team has continued to successfully support some of the world's largest
consumer brands whilst deepening and broadening our international
relationships with them.
We also invested in our Lifesciences team in FY23 and two additional fee
earners joined this team in early 2024. Norman Broadbent is established on a
number of blue-chip preferred supplier lists in this sector which we are well
placed to capitalise on.
The Digital & Technology sector is ever evolving and we continued to
support both large clients on complex and large scale digital transformation
projects, and also small tech scale ups as they shape leadership teams for the
future.
In addition, within our Corporate Functions practice, we placed a growing
number of Digital & Technology, HR, Legal and Finance leaders across a
multitude of sectors.
Finally, we made key appointments and investments in our board practice in
2023. The Norman Broadbent legacy places our brand very firmly in the
boardroom of most organisations, large and small; an opportunity which we do
not believe has been appropriately capitalised on in recent years. Our
commitment and fresh approach to building our board practice with Diversity,
Equity, and Inclusion (DE&I) and Environmental, Social, and Governance
(ESG) at its very heart is being very well received. As a powerful conduit to
executive search work and broader leadership advisory services, we will
continue to grow and develop this proactively in 2024 and beyond.
CURRENT TRADING AND OUTLOOK
We continue to have ambitious, but achievable organic growth targets over the
next couple of years which we are confident will deliver NFI in excess of £15
million by 2025 and EBITDA in excess of £1.25 million. Whilst continuing to
drive growth, the leadership team remains focussed on overheads and
productivity improvements, ensuring that revenues become ever more accretive
through a combination of seniority of mandates, economies of scale and
efficiency improvements.
Having achieved profitability and positive cash flow in the expected
timescales, the Company is managing its resources carefully in order to strike
the optimal balance between pace of organic growth, short-term profitability
and continued cash generation. As the business is now on a more stable footing
and sustainable growth trajectory, corporate development activity will be
increased in 2024 to identify and assess the potential for both smaller,
strategic acquisitions as well as large-scale transformational
opportunities.
The Board continues to monitor carefully the evolving macro-economic climate
and believes that the Company is well positioned in what are stable and
growing markets, notably across Industrials and, in particular, Energy, Power,
Utilities, 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.
We are 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.
Whilst difficulties were experienced in FY23 by many businesses across
executive search and the broader recruitment industry, we have delivered and
intend to capitalise on our positive momentum to grow the team further in
preparation for a broader economic recovery.
SUMMARY
The results in FY23 demonstrate just how much the turnaround of Norman
Broadbent plc has achieved in a short period of time. Having now delivered the
strongest results in a decade, the Board and leadership team have their sights
very much fixed on an ambitious, but sustainable, growth plan.
Having achieved such strong financial results, whilst growing rapidly in a
depressed market, the Board has every confidence in the team and is looking to
the future with ever growing optimism and excitement.
Kevin Davidson
Group Chief Executive
26 March 2024
Consolidated Income Statement
For the year ended 31 December 2023
2023 2022
Note £'000 £'000
Revenue 3 12,306 8,697
Cost of sales (1,731) (1,350)
Gross profit 10,575 7,347
Operating expenses (10,163) (7,608)
Operating profit/(loss) 412 (261)
Net finance cost 7 (103) (77)
Profit/(loss) before tax 4 309 (338)
Taxation 6 - -
Profit/(loss) for the year 309 (338)
Earnings per share
Profit/(loss) per share
- Basic 8 0.50p (0.56)p
- Diluted 0.39p (0.56)p
Adjusted profit/(loss) per share
- Basic 8 0.91p (0.34)p
- Diluted 0.71p (0.34)p
The results for the periods presented above are derived from continuing
operations.
The accompanying notes form an integral part of these financial statements.
Consolidated Statement of Comprehensive Income
2023 2022
£'000 £'000
Profit/(loss) for the year 309 (338)
Total comprehensive income/(loss) for the year 309 (338)
Attributable to:
Owners of the Company 309 (338)
The accompanying notes form an integral part of these financial statements.
Consolidated Statement of Financial Position
For the year ended 31 December 2023
2023 2022
Notes £'000 £'000
Non-current assets
Intangible assets 10 1,363 1,363
Property, plant and equipment 11 178 402
Total non-current assets 1,541 1,765
Current assets
Trade and other receivables 13 2,901 2,320
Cash and cash equivalents 14 765 50
Total current assets 3,666 2,370
Current liabilities
Trade and other payables 15 3,393 2,006
Bank overdraft and interest-bearing loans 16 207 483
Lease liabilities 20 111 203
Total current liabilities 3,711 2,692
Net current liabilities (45) (322)
Non-current liabilities
Bank and other loans 16 113 618
Lease liabilities 20 8 155
Total non-current liabilities 121 773
Total liabilities 3,832 3,465
Total assets less total liabilities 1,375 670
Issued share capital 18 6,365 6,345
Share premium account 18 14,233 14,110
Retained earnings (19,223) (19,785)
Total equity 1,375 670
The accompanying notes form an integral part of these financial statements.
These financial statements were approved by the Board of Directors on 26 March
2024
Signed on behalf of the Board of Directors
K Davidson
Director
Company No 00318267
Company Statement of Financial Position
For the year ended 31 December 2023
Notes 2023 2022
£'000 £'000
Non-current assets
Investments 12 1,200 1,200
Total non-current assts 1,200 1,200
Current assets
Trade and other receivables 13 155 1,557
Cash and cash equivalents 14 14 6
Total current assets 169 1,563
Current liabilities
Trade and other payables 15 90 52
Bank loans 16 48 46
Total current liabilities 138 98
Net current assets 31 1,465
Non-current liabilities
Bank and other loans 16 113 572
Total non-current liabilities 113 572
Total liabilities 251 670
Total assets less total liabilities 1,118 2,093
Equity
Issued share capital 18 6,365 6,345
Share premium account 18 14,233 14,110
Retained earnings (19,480) (18,362)
Total equity 1,118 2,093
The accompanying notes form an integral part of these financial statements.
These financial statements were approved by the Board of Directors on 26 March
2024
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 2023
Equity attributable to equity holders of Norman Broadbent Plc
Share Capital Share Premium Retained Earnings Total Equity
£'000 £'000 £'000 £'000
Balance at 1 January 2023 6,345 14,110 (19,785) 670
Profit for the year - - 309 309
Total comprehensive income for the year - - 309 309
Credit to equity for share based payments - - 253 253
Conversion of convertible loan notes 20 123 - 143
Transactions with owners of the Company 20 123 253 396
Balance at 31 December 2023 6,365 14,233 (19,223) 1,375
Balance at 1 January 2022 6,334 14,080 (19,578) 836
Loss for the year - - (338) (338)
Total comprehensive income for the year - - (338) (338)
Credit to equity for share based payments - - 131 131
Issue of ordinary shares 11 30 - 41
Transactions with owners of the Company 11 30 131 172
Balance at 31 December 2022 6,345 14,110 (19,785) 670
The accompanying notes form an integral part of these financial statements.
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 adding any credits for share based payments.
Company Statement of Changes in Equity
For the year ended 31 December 2023
Equity attributable to equity holders of Norman Broadbent Plc
Share Capital Share Premium Retained Earnings Total Equity
£'000 £'000 £'000 £'000
Balance at 1 January 2023 6,345 14,110 (18,362) 2,093
Loss for the year - - (1,371) (1,371)
Total comprehensive income for the year - - (1,371) (1,371)
Credit to equity for share based payments - - 253 253
Conversion of convertible loan notes 20 123 - 143
Total transactions with owners of the Company 20 123 253 396
Balance at 31 December 2023 6,365 14,233 (19,480) 1,118
Balance at 1 January 2022 6,334 14,080 (19,157) 1,257
Profit for the year - - 664 664
Total comprehensive income for the year - - 664 664
Credit to equity for share based payments - - 131 131
Issue of ordinary shares 11 30 - 41
Transactions with owners of the Company 11 30 131 172
Balance at 31 December 2022 6,345 14,110 (18,362) 2,093
The accompanying notes form an integral part of these financial statements.
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 adding any credits for share based payments.
Consolidated Statement of Cash Flow
For the year ended 31 December 2023
2023 2022
Notes £'000 £'000
Net cash generated from/(used in) operating activities (i) 1,712 (33)
Cash flows from investing activities and servicing of finance
Net finance cost (27) (51)
Payments to acquire tangible fixed assets 11 (16) (65)
Net cash used in investing activities (43) (116)
Cash flows from financing activities
New loans received - 400
Repayments of borrowings (389) (32)
Payment of lease liabilities (241) (200)
Proceeds from issue of share capital 18 - 41
Decrease in invoice discounting 16 (324) (469)
Net cash used in financing activities (954) (260)
Net increase/(decrease) in cash and cash equivalents 715 (409)
Cash and cash equivalents at beginning of period 50 459
Cash and cash equivalents at end of period 765 50
Analysis of net funds
Cash and cash equivalents 765 50
Borrowings due within one year (207) (483)
Borrowings due within more than one year (113) (618)
Net funds/(debt) (ii) 445 (1,051)
The accompanying notes (i) and (ii) form an integral part of the Consolidated
Statement of Cash Flow.
Note (i) 2023 2022
Reconciliation of operating profit / (loss) to net cash from operating £'000 £'000
activities
Operating profit /(loss) from continued operations 412 (261)
Depreciation/impairment of property, plant and equipment 231 223
Share based payment charge 253 131
Increase in trade and other receivables (579) (405)
Increase in trade and other payables 1,395 279
Taxation paid - -
Net cash generated from/(used in) operating activities 1,712 (33)
Note (ii) 2023 2022
Reconciliation of movement of debt £'000 £'000
Net increase/(decrease) in cash and cash equivalents 715 (409)
New loans received - (400)
Repayments of borrowings 389 32
Conversion of loan notes to equity 143 -
Decrease in invoice discounting 324 469
Interest accrued (75) -
Movement in borrowings for the period 1,496 (308)
Net borrowings at the start of the period (1,051) (743)
Net cash/(borrowings) at the end of the period 445 (1,051)
The accompanying notes form an integral part of these financial statements.
Company Statement of Cash Flow
For the year ended 31 December 2023
2023 2022
Notes £'000 £'000
Net cash generated from/(used in) operating activities (i) 397 (548)
Cash flows from investing activities and servicing of finance
Interest paid - (25)
Net cash used in investing activities - (25)
Cash flows from financing activities
New loans received - 400
Repayments of borrowings (389) (32)
Proceeds from issue of share capital 18 - 41
Net cash from financing activities (389) 409
Net increase/(decrease) in cash and cash equivalents 8 (164)
Cash and cash equivalents at beginning of period 6 170
Cash and cash equivalents at end of period 14 6
Analysis of net funds
Cash and cash equivalents 14 6
Borrowings due within one year (48) (46)
Borrowings due after one year (113) (572)
Net debt (ii) (147) (612)
The accompanying notes (i) and (ii) form an integral part of the Company
Statement of Cash Flow.
Note (i) 2023 2022
Reconciliation of operating profit/(loss) to net cash from operating £'000 £'000
activities
Operating (loss)/profit (1,296) 689
Share based payment charge 253 131
Decrease/(increase) in trade and other receivables 1,402 (172)
Increase/(decrease) in trade and other payables 38 (1,196)
Net cash generated from/(used in) operating activities 397 (548)
Note (ii) 2023 2022
Reconciliation of movement of debt £'000 £'000
Net increase/(decrease) in cash and cash equivalents 8 (164)
New borrowings - (400)
Repayments of borrowings 389 32
Conversion of loan notes to equity 143 -
Interest accrued (75) -
Movement in borrowings for the period 465 (532)
Net borrowings at the start of the period (612) (80)
Net borrowings at the end of the period (147) (612)
The accompanying notes form an integral part of these financial statements.
Notes to the Financial Statements
For the year ended 31 December 2023
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, International Accounting
Standards and interpretations issued by the International Accounting Standards
Board (IASB), UK adopted International Financial Reporting Standards (adopted
IFRSs) and with those parts of the Companies Act 2006 applicable to those
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 compliance with UK adopted IFRS
Accounting Standards 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 1.19.
1.2 Going Concern
The consolidated financial statements of the Group have been prepared under
the assumption the Group operates on a going concern basis, which assumes the
Group will be able to discharge its liabilities as they fall due. In
confirming the validity of the going concern basis of preparation, the Group
has considered the following specific factors:
· The Group reported an operating profit from continued operations in the year
to 31 December 2023 of £0.3m compared with an operating loss of £0.3m in
2022.
· The consolidated statement of financial position shows a net asset position at
31 December 2023 of £1.4m (2022: £0.7m) with cash at bank of £0.8m (2022:
£0.05m).
· At the date that these financial statements were approved the Group had no
overdraft facility, a CBILS loan of £0.2m and its receivable finance facility
which is 100% secured by the Group's trade receivables.
· Management prepares an annual budget and longer-term strategic plan, including
an assessment of cash flow requirements, and continue to monitor actual
performance against budget and plan throughout the reporting period.
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. Based on these factors, management has a reasonable expectation that
the Group has and will have adequate resources to continue in operational
existence for the foreseeable future.
1.1.2 Changes in Accounting Policy and Disclosures
a. New and amended accounting standards adopted by the
Group
The Group adopted the following new and amended relevant IFRS in the year:
· Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2
· Definition of Accounting Estimates - Amendments to IAS 8
· Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to IAS 12
b. Standards, amendments and interpretations to existing
standards that are not yet effective and have not yet been adopted early by
the Group
There are a number of standards, amendments to standards, and interpretations
which have been issued by the International Accounting Standards Board
("IASB") that are effective in future accounting periods that the Group has
decided not to adopt early. Any standards that are not deemed relevant to the
operations of the Group have been excluded:
· Classification of Liabilities as Current or Non-Current - Amendments to IAS
1
· Leases on sale and leaseback - Amendment to IFRS 16
· Supplier finance - Amendment to IAS 7 and IFRS 7
· Lack of Exchangeability - Amendments to IAS 21
The Group is currently assessing the impact of the new accounting standards
and amendments. The Group does not believe that these amendments will have a
significant impact on the financial statements of the Group.
1.2 Basis of Consolidation
The Group's financial statements consolidate those of the parent company and
all of its subsidiaries at 31 December 2023. All subsidiaries have a reporting
date of 31 December. Subsidiaries are consolidated from the date of their
acquisition, being the date on which the Group obtains control, and continue
to be consolidated until the date that such control ceases. Accounting
policies have been applied consistently.
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. If the goodwill balance is material, it is tested annually for
impairment and carried at cost less accumulated impairment losses. Any
impairment is recognised immediately in the income statement and is not
subsequently reversed.
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 recognised on a straight-line basis to write down the cost
less estimated residual value of each asset over its expected useful economic
life at the following rates:
· Office and computer equipment - over three to four years
· Fixtures and fittings - lower of lease term and four years
· Land and buildings leasehold - over three to five years
· Right of use asset - lower of the asset's useful life and the lease term
1.7 Trade Receivables
Trade receivables are amounts due from customers for 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 transaction price. They are
subsequently measured at amortised cost using the effective interest method,
less provision for impairment. A provision for the impairment of trade
receivables is established when there is objective evidence that the Group
will not be able to collect all amounts due according to the original terms of
the receivables.
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 Foreign Currency Translation
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 functional currency of Norman
Broadbent Plc.
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 income statement, 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 income statement within 'net
finance cost'. All other foreign exchange gains and losses are presented in
the income statement within 'operating expenses'.
1.14 Taxation
Taxation currently payable is based on the taxable profit for the year.
Taxable profit differs from net profit as reported in the consolidated income
statement 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 consolidated income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
1.15 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.
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. Revenue is recognised at three stages; retainer,
shortlist and completion fee. Revenue is recognised based on delivery of
performance obligations at defined stages including resource allocation and
search strategy agreement at retainer stage, delivery of candidate shortlist
and candidate acceptance of placement.
Short-term contract and interim business
Revenue is recognised for interim business over time 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 at a specific point in time.
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.
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.
1.16 Pensions
The Group operates a number of defined contribution pension schemes for the
benefit of certain employees. The costs of the pension schemes are charged to
the income statement as incurred.
1.17 Leases
The Group makes the use of leasing arrangements principally for the provision
of office space 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 Group 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 Group 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.
Leases are recognised as a right-of-use asset and a lease liability at the
lease commencement date.
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 Group under residual value guarantees;
· The exercise price of a purchase option if the Group is reasonably certain to
exercise that option; and
· Payments of penalties for terminating the lease, if the lease term reflects
the Group 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 Group,
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 Group 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 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.
1.18 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 and SAYE 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.
1.19 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 share-based payment schemes
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 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 borrowings linked to the Bank of
England Base Rate and affects the invoice discounting facility and the CBILS
loan. As interest rates have risen over 2023 the corresponding interest
expense to the Group has increased. The Group's management factors these
increases into cash flow projections (see liquidity risk below) which indicate
that the Group will be able to meet interest expenses under reasonably
expected circumstances.
2.2 Liquidity Risk
Liquidity risk arises from the Group's management of working capital and
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 and borrowing facilities to
allow it to meet its liabilities when they become due. The Group has access to
an invoice discounting facility, which provides immediate access to funding
when required and is secured by the Group's trade receivables. The Group took
advantage of a CBILS loan in November 2020 which is repayable over six years
to 2026. 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. Revenue
Group revenues are primarily driven from UK operations. 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 is set out below:
2023 2022
£'000 £'000
Revenue - Search 8,585 5,666
Revenue - Interim Management 3,189 2,920
Revenue - Leadership Consulting 501 111
Revenue - Other 31 -
Total 12,306 8,697
ii. Revenue by Geography:
2023 2022
£'000 £'000
United Kingdom 9,078 6,660
Rest of the world 3,228 2,037
Total 12,306 8,697
4. Profit/ (Loss) on Ordinary Activities before Taxation
2023 2022
£'000 £'000
Profit/ (loss) on ordinary activities before taxation is stated after
charging:
Depreciation and impairment of property, plant and equipment 231 223
Employee remuneration (see note 5) 8,143 6,004
Auditors' remuneration:
Audit work 58 51
Non-audit work - -
The Company audit fee for the year was £28,990 (2022: £26,640).
5. Employee Remuneration
The average number of full time equivalent employees (including Directors)
during the year was as follows:
2023 2022
No. No.
Sales and related services 44 36
Administration 7 9
51 45
Expenses recognised for employee benefits are analysed below:
2023 2022
£'000 £'000
Wages and salaries 6,752 5,095
Social security costs 921 586
Defined contribution pension cost 217 192
Share based payment 253 131
8,143 6,004
The emoluments of the Directors are disclosed as required by the Companies Act
2006 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. Taxation
a. Tax charged in the income statement
2023 2022
£'000 £'000
Current tax:
UK corporation tax - -
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/(loss)
before tax is as follows:
2023 2022
£'000 £'000
Profit/ (loss) on ordinary activities before taxation 309 (338)
Tax on profit/(loss) on ordinary activities at standard 73 (64)
UK corporation tax rate of 23.5% (2022: 19%)
Effects of:
Expenses not deductible 6 6
Share option costs 60 25
Depreciation in excess of capital allowances 11 (6)
Provision movement 2 (1)
Adjustment to losses carried forward (152) 40
Current tax charge for the year - -
c. Deferred tax
Tax losses Total
£'000 £'000
At 1 January 2023 - -
Charged/(credited) to the income statement in 2023 - -
At 31 December 2023 - -
At 31 December 2023 the Group had capital losses carried forward of
£8,129,000 (2022: £8,129,000) and trading losses carried forward of
£14,233,510 (2022: £14,879,676). A deferred tax asset has not been
recognised as their utilisation in the near future is uncertain.
The analysis of deferred tax in the consolidated balance sheet is as
follows:
2023 2022
£'000 £'000
Deferred tax assets: - -
Tax losses carried forward
Total - -
7. Net Finance Cost
2023 2022
£'000 £'000
Interest payable on leases, invoicing facility and other loans 103 77
Total 103 77
8. Earnings Per Share
i. Basic earnings per share
This is calculated by dividing the profit/(loss) attributable to equity
holders of the Company by the weighted average number of ordinary shares in
issue during the period:
2023 2022
£'000 £'000
Profit/(loss) attributable to owners of the Company 309 (338)
000's 000's
Weighted average number of ordinary shares 62,104 60,879
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 (LTIP and SAYE schemes). 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.
2023 2022
£'000 £'000
Profit/(loss) attributable to owners of the Company 309 (338)
000's 000's
Weighted average number of ordinary shares 78,572 60,879
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.
2023 2023 2023 2022 2022 2022
£'000 Basic pence per share Diluted pence per share £'000 Basic pence per share Diluted pence per share
Basic earnings
Profit/(loss) after tax 309 0.50 0.39 (338) (0.56) (0.56)
Adjustments
Share based payment charge 253 0.41 0.32 131 0.22 0.22
Adjusted earnings 562 0.91 0.71 (207) (0.34) (0.34)
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 £1.4 million (2022: £0.7 million
profit).
10. Intangible Assets
Goodwill arising on consolidation
Group £'000
Balance at 1 January 2022 3,690
Balance at 31 December 2022 3,690
Balance at 31 December 2023 3,690
Provision for impairment
Balance at 1 January 2022 2,327
Balance at 31 December 2022 2,327
Balance at 31 December 2023 2,327
Net book value
At 1 January 2022 1,363
At 31 December 2022 1,363
At 31 December 2023 1,363
Goodwill acquired through business combinations is allocated to
cash-generating units (CGUs) and is shown below:
Executive Search Leadership Consulting Total
£'000 £'000 £'000
Balance at 1 January 2022 1,303 60 1,363
Balance at 31 December 2022 1,303 60 1,363
Balance at 31 December 2023 1,303 60 1,363
Goodwill has 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 as set out below.
Expected future cash flows for each CGU for over a five year period are
derived from the most recent three year financial projections agreed by the
board and an assumed net fee and cost growth rate of 5% in years four and
five. Although the growth rates of 5% exceeds the long-term growth rate for
the economy, they are considered appropriate based on the expected future
growth rate of the business. A discount rate of 12.5% (2022: 10%-12.5%),
representing the weighted average cost of capital for the Group, in line with
businesses in the same sector, is then used to calculate the present value of
those cash flows and then aggregated to give an overall valuation.
11. Property, Plant and Equipment
Land and buildings - leasehold Right-of-use asset Office and computer equipment Fixtures Total
and fittings
£'000 £'000 £'000 £'000 £'000
Group Cost
Balance at 1 January 2022 94 774 309 50 1,227
Additions 6 34 59 - 99
Disposals - - - - -
Balance at 31 December 2022 100 808 368 50 1,326
Additions - - 16 - 16
Disposals (80) - (261) (43) (384)
Balance at 31 December 2023 20 808 123 7 958
Accumulated depreciation
Balance at 1 January 2022 92 332 227 50 701
Charge for the year 8 168 47 - 223
Disposals - - - - -
Balance at 31 December 2022 100 500 274 50 924
Charge for the year - 176 55 - 231
Disposals (80) - (252) (43) (375)
Balance at 31 December 2023 20 676 77 7 780
Net book value
At 1 January 2022 2 442 82 - 526
At 31 December 2022 - 308 94 - 402
At 31 December 2023 - 132 46 - 178
The Group had no capital commitments as at 31 December 2023 (2022: £nil).
12. Investments
Shares in subsidiary undertakings
£'000
Company Cost
Balance at 1 January 2022 5,935
Balance at 31 December 2022 5,935
Balance at 31 December 2023 5,935
Provision for impairment
Balance at 1 January 2022 4,735
Impairment for the year -
Balance at 31 December 2022 4,735
Impairment for the year -
Balance at 31 December 2023 4,735
Net book value
At 1 January 2022 1,200
At 31 December 2022 1,200
At 31 December 2023 1,200
During the year to 31 December 2023 the Company held the following ownership
interests:
Principal investments: Country of incorporation or registration and operation Principal activities Proportion of shares held by the Company
Norman Broadbent Executive Search Limited England and Wales Executive search 100% ordinary shares
Norman Broadbent Ireland Ltd Republic of Ireland Dormant 100% ordinary shares
The registered office for Norman Broadbent Executive Search Limited is
Millbank Tower, 21-24 Millbank London SW1P 4QP. The registered office for
Norman Broadbent Ireland Limited is The Merrion Buildings, 18 - 20 Merrion
Street, Dublin 2, Ireland.
13. Trade and Other Receivables
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Trade receivables 2,714 2,135 - -
Less: provision for impairment (178) (2) - -
Trade receivables - net 2,536 2,133 - -
Other debtors 43 48 - -
Prepayments and accrued income 322 139 8 7
Due from Group undertakings - - 147 1,550
Total 2,901 2,320 155 1,557
Non-Current - - - -
Current 2,901 2,320 155 1,557
2,901 2,320 155 1,557
As at 31 December 2023, Group trade receivables of £1.3m (2022: £1.0m),
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
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Up to 3 months 1,054 765 - -
3 to 6 months 214 115 - -
6 to 12 months - 55 - -
Total 1,268 935 - -
The largest amount due from a single trade debtor at 31 December 2023
represents 12% (2022: 15%) of the total trade receivables balance
outstanding.
As at 31 December 2023, £178,000 of group trade receivables (2022: £2,000)
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:
2023 2022
£'000 £'000
At 1 January 2 14
Provision for receivable impairment 178 -
Receivables written-off as uncollectable (2) (12)
At 31 December 178 2
There is no material difference between the carrying value and the fair value
of the Group's and the Company's trade and other receivables.
14. Cash and Cash equivalents
Group Company
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Cash at bank and in hand 765 50 14 6
Total 765 50 14 6
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
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Trade payables 343 212 46 8
Other taxation and social security 407 330 (8) (2)
Other payables 22 24 - -
Accruals 2,621 1,440 52 46
Total 3,393 2,006 90 52
There is no material difference between the carrying value and the fair value
of the Group's and the Company's trade and other payables.
16. Borrowings
Group Company
2023 2022 2023 2022
Current £'000 £'000 £'000 £'000
Invoice discounting facility (see note (a) below) 159 483 - -
Loans (see note (b) below) 48 - 48 46
Non-Current 113 618 113 572
Loans (see note (b) below)
Total 320 1,101 161 618
The carrying amounts and fair value of the Group's borrowings, which are all
denominated in sterling, are as follows:
Carrying amount Fair value
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Invoice discounting facility 159 483 159 483
Loans (see note (b) below) 161 618 161 618
Total 320 1,101 320 1,101
a. Invoice discounting facilities:
The Group operates an invoice discounting facility with Metro Bank. All Group
invoices are raised through Norman Broadbent Executive Search Limited and as
such Metro Bank (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 Limited that are aged less than 120 days
with the facility capped at £2.1 million. At 31 December 2023, the
outstanding balance on the facility of £0.2 million was secured by trade
receivables of £2.5 million. 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 Limited linked to this facility.
During May 2022 Downing Strategic Micro-Cap Investment Trust Plc and Moulton
Goodies Limited subscribed for £200,000 of Convertible Loan Notes (CLNs)
each. Interest was payable at 10% per annum up to the first anniversary date
and 12.5% per annum up to the second anniversary date. A second ranking fixed
and floating charge over the assets and undertaking of Norman Broadbent plc
and Norman Broadbent Executive Search Limited was provided as security.
Subsequent to the year end the charge was satisfied in full.
£200,000 of the CLNs plus interest was repaid in May 2023. During November
2023 £100,000 of the CLNs was repaid and the Company allotted 2,047,706 new
ordinary shares of 1p each at a conversion price of 7.0 pence per share for
the remaining £100,000 of CLNs plus repayment of all interest due and the
redemption fee.
17. Financial Instruments
Financial assets and financial liabilities are recognised on the balance sheet
when the Group becomes a party to the contractual provisions of the
instrument. Financial assets are derecognised when the rights to receive cash
flows from the asset have expired, or when the Group has transferred those
rights and substantially all the risks and rewards of the asset.
Financial liabilities are derecognised when the obligation specified in the
contract is discharged, cancelled or expired.
The carrying value of each asset and liability is considered to be a
reasonable approximation of the fair value.
The following tables show the carrying amounts of financial assets and
financial liabilities held by the Group.
2023 2022
Group £'000 £'000
Financial assets
Trade and other receivables 2,536 2,133
Other debtors 43 48
2,579 2,181
Financial liabilities
Trade creditors 343 212
Accruals and deferred income 2,621 1,440
Other payables 22 24
Bank loans - Current 207 483
Bank loans - Non-current 113 618
Lease liabilities - Current 111 203
Lease liabilities - Non-current 8 155
3,425 3,135
2023 2022
Company £'000 £'000
Financial assets
Amounts owed by group undertakings 147 1,550
147 1,550
Financial liabilities
Trade and other payables 46 8
Accruals and deferred income 52 46
Bank loans - Current 48 46
Bank loans - Non-current 113 572
259 672
In common with 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
2023 2022
£'000 £'000
Allotted and fully paid
Ordinary Shares:
63,865,249 Ordinary shares of 1.0p each 638 618
(2022: 61,817,510)
Deferred Shares:
23,342,400 Deferred A shares of 4.0p each 934 934
(2022: 23,342,400)
907,118,360 Deferred shares of 0.4p each 3,628 3,628
(2022: 907,118,360)
1,043,566 Deferred B shares of 42.0p each 438 438
(2022: 1,043,566)
2,504,610 Deferred C shares of 29.0p each 727 727
(2022: 2,504,610)
Total 6,365 6,345
Deferred A Shares of 4.0p each
The Deferred A Shares carry no right to dividends or distributions or to
receive notice of or attend general meetings of the Company. In the event of a
winding up, the shares carry a right to repayment only after the holders of
Ordinary Shares have received a payment of £10 million per Ordinary Share.
The Company retains the right to cancel the shares without payment to the
holders thereof. The rights attaching to the shares shall not be varied by the
creation or issue of shares ranking 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 million 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 Ordinary shares Deferred shares Share premium Total
000's £'000 £'000 £'000 £'000
At 1 January 2022 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
Issued during the year 2,048 20 - 123 143
At 31 December 2023 63,865 638 5,727 14,233 20,598
During the year 2,047,706 Ordinary Shares were issued at a consideration of
7.00 pence per share.
19. Share Based Payments
As at 31 December 2023, the Group maintained two share-based payment schemes
for employee remuneration, the Long Term Incentive Plan (LTIP) and the Save As
You Earn Scheme (SAYE). Both programmes will be settled in equity.
LTIP
The LTIP is part of the remuneration package of the Group's senior management
team. The scheme is an executive Enterprise Management Incentive ("EMI")
share option scheme and 4,148,148 options were granted as part of the scheme
on 28 July 2023. 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").
SAYE
During the year the Company established a tax advantaged SAYE scheme. The
scheme is based on eligible employees being granted options over shares with
an exercise price of £0.05 per share, which represents a 20 per cent discount
to the closing middle market price of a share on 12 June 2023.
Employees agree to opening a sharesave account with the nominated savings
carrier and save monthly over a three year saving period. On vesting,
participants have a 6-month period to exercise their options.
The Company issued 4,500,000 options on 29 June 2023 (the "SAYE Grant Date").
The SAYE options have no performance conditions attached to them.
Share options and weighted average exercise prices are as follows for the
reporting periods presented:
2023 2023 2022 2022
Charge Number of share options Charge Number of share options Vesting period Expiry date Performance metrics
Scheme £'000 000's £'000 000's Years Years
LTIP 243 12,148 131 9,950 3 7 EBITDA and share price
SAYE 10 4,212 - - 3 0.5 after vesting None
Total 253 16,360 131 9,950
LTIP SAYE
Weighted average exercise price Weighted average exercise price
£ 000's £ 000's
At 1 January 2022 - - - -
Granted - 9,950 - -
Forfeited - - - -
At 31 December 2022 - 9,950 - -
Granted - 4,148 0.05 4,500
Forfeited - (1,950) 0.05 (288)
At 31 December 2023 - 12,148 0.05 4,212
The weighted average remaining contractual life of the options outstanding at
the end of 2023 was 5.7 years for the LTIP and 3.1 years for the SAYE scheme
(2022: 6.2 years for the LTIP).
The share options granted in 2023 were valued using the following
assumptions:
LTIP - EBITDA Options LTIP - Share Price Options SAYE
Option pricing model used Binomial option model Monte Carlo simulation Binomial option model
Weighted average share price at grant date (£) 0.053 0.053 0.055
Exercise price (£) - - 0.05
Expiry date July 2030 July 2030 February 2027
Expected volatility 44.9% 44.9% 43.4%
Expected dividend yield 0.0% 0.0% 0.0%
Risk-free interest rate 4.72% 4.72% 4.72%
20. Leases
All property leases are accounted for by recognising a right-of-use asset and
a lease liability, with depreciation and interest expense being charged to the
consolidated income statement.
Right-of-use assets are recognised 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. The recognised
right-of-use assets are depreciated on a straight-line basis over the shorter
of their estimated useful life and the lease term. Right-of-use assets are
subject to impairment.
At the commencement date of the lease, lease liabilities are 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 2023 2022
£'000 £'000
Depreciation expense (176) (168)
Operating Profit (176) (168)
Finance Costs (2) (25)
Profit before Tax (178) (193)
Consolidated statement of financial position Right-of-use assets Lease liabilities
£'000 £'000
As at 1 January 2022 442 (498)
Additions 34 (34)
Disposals - -
Depreciation expense (168) -
Interest expense - (26)
Payments - 200
At 31 December 2022 308 (358)
Additions - -
Disposals - -
Depreciation expense (176) -
Interest expense - (2)
Payments - 241
At 31 December 2023 132 (119)
Impact on consolidated statement of financial position 2023 2022
£'000 £'000
Right-of-use assets 132 308
Total Assets 132 308
Lease liabilities - less than one year (111) (203)
Lease liabilities - more than one year (8) (155)
Total Liabilities (119) (358)
Equity 13 (50)
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 £217,000
(2022: £192,000). At the year end £22,000 of contributions were outstanding
(2022: £14,000).
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 £192,000 (2022:
£123,000).
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