- Title:
Final Results and Annual Accounts - Time:
07:00:07 - Date:
24 May 2021 - Category:
Results - ID:
5062Z
Norman Broadbent plc
("Norman Broadbent", the "Company" or the "Group")
Final Results and Annual Accounts
The board (the "Board") of Norman Broadbent (AIM: NBB), a leading London listed Professional Services firm offering a diversified portfolio of integrated Leadership Acquisition & Advisory Services (Board & Leadership Search, Senior Interim Management, Research & Insight, Leadership Consulting & Assessment, and executive level Talent Solutions), is pleased to announce its final results and annual accounts for the year ended 31 December 2020.
Highlights
· Year on year NFI decrease of 18% driven by Covid 19 pandemic largely mitigated by quick and decisive cost control measures
· Positive EBITDA and gross margin increase to 80%
· 15 day improvement in debtors days (to 57 days) assisting with Group liquidity
· £250,000 Coronavirus Business Interruption Loan secured in December 2020
· New Invoice Finance Facility active in early 2021 resulted in improved cashflow into the Group
· 25% of 2020 Group NFI generated by internal referrals further evidencing collaborative business culture
· Further improved NFI mix evidences ongoing creation of a more balanced Group
A copy of the audited 2020 Annual Report (including the notice of Annual General Meeting ("AGM")) will be sent to shareholders today. The Annual Report will be available on the Company's website in due course, https://www.normanbroadbent.com/investor-relations
The Company's AGM will be held at 10am on the 7th Floor, Millbank Tower, 21-24 Millbank, London SW1P 4QP (and by Zoom conference software meeting) on 25th June 2021.
Mike Brennan, Group CEO of Norman Broadbent Group said:
"The Group came into 2020 with good momentum and plans for further growth. We opened a new office in the North of England, relocated to better Central London offices, and were actively seeking to appoint additional team members in both centres. Then, like many businesses, we were impacted by the Covid-19 pandemic.
The early and very decisive actions taken by us, combined with our broader portfolio of services and collaborative and innovative culture, meant we were better placed to respond to these challenges than others. It was not easy, but our team rose to the challenge!
I would like to thank our shareholders for their continuing support, and our clients for placing their trust in us. I would also like to pay a personal tribute to our team who showed real commitment during the Covid-19 crisis. It is an honour to be their CEO, and I am proud of their achievements, much of which is down to their hard work, loyalty, and dedication."
For further information, please contact:
| Norman Broadbent plc
|
020 7484 0000 |
| WH Ireland Limited |
020 7220 1666 |
RESULTS FOR THE FINANCIAL YEAR
The table below summarises the results of the Group:
|
|
Year ended |
Year ended |
|
|
31-Dec |
31-Dec |
|
|
2020 |
2019 |
|
|
£000's |
£000's |
| CONTINUING OPERATIONS |
|
|
| REVENUE |
7,816 |
11,486 |
| Cost of sales |
(1,530) |
(3,879) |
| NET FEE INCOME (GROSS PROFIT) |
6,286 |
7,607 |
| Operating expenses |
(6,217) |
(7,369) |
| EBITDA |
69 |
238 |
| Depreciation and amortisation |
(222) |
(93) |
| GROUP OPERATING PROFIT / (LOSS) |
(153) |
145 |
| Net finance cost |
(40) |
(61) |
| PROFIT / (LOSS) BEFORE TAX |
(193) |
84 |
| Income tax |
- |
- |
| PROFIT / (LOSS) AFTER TAX |
(193) |
84 |
Strategic review
Since my appointment as Group CEO, our team has worked hard to build the 'new' Norman Broadbent Group. Our approach - to build a complementary, relevant, and synergistic range of services - proved to be of significant benefit during the pandemic as the needs of clients shifted during unprecedented times. As the need for our Search-driven service slowed during the pandemic for example, calls for Interim Management expertise grew as clients wanted short-term immediate solutions to previously unencountered business problems. Our aim has always been to build a 'hedged' and balanced business which could cater to client needs at different points in their evolution or the economic cycle. This portfolio approach coupled with our collegiate team-based approach enabled us to trade through the pandemic.
2020 trading and business review
In 2020, as a direct result of the Covid 19 Pandemic, Group turnover reduced to £7,816,000 (2019: £11,486,000) whilst overall net revenues after associate and interim costs in the continuing businesses reduced to £6,286,000 (2019: £7,607,000). Although we continued to invest in innovative entrepreneurial talent, a focus on cost management ensured that operating expenses reduced significantly to £6,217,000 (2019: £7,369,000). EBITDA has reduced from £238,000 in 2019 to £69,000 in 2020.
In October 2020, the Group agreed to acquire the outstanding non controlling interest of 25% in Norman Broadbent Interim Management Ltd for a combination of cash and Norman Broadbent PLC shares. This formed part of a restructuring exercise which has now combined all existing Norman Broadbent trading subsidiaries into the Norman Broadbent Executive Search business. This has allowed a simplified and more cost effective business structure. Additionally, the business has reorganised to operate under a number of client focused sector and functional based hubs.
Financial position
As at 31 December 2020, consolidated net assets were £1,106,000 (2019: £1,365,000) with net current liabilities of (£504,000) (2019: Net Current Liabilities of (£219,000). Group cash amounted to £367,000 (2019: £432,000).
Net cash inflow from operations in 2020 was £515,000 (2019 outflow: £182,000). Net cash outflow from financing activities amounted to £492,000 (2019: inflow £21,000).
At 31 December 2020 the Group had £577,000 (2019: £950,000) of funds drawn down against the revolving invoice discounting facility against UK trade receivables of £1,449,000 (2019: £2,733,000).
The Directors continue to monitor and manage the Group's working capital carefully.
Covid-19
As concerns about Covid-19 began to emerge in March, we moved swiftly to ensure we were appropriately positioned to deal with a period of extended uncertainty. Staffing changes were made, and a small number of team members were furloughed or released from their contracts. Our remaining colleagues moved quickly to remote working.
As the business embraced technology to assist in remote working and continued candidate and client interaction, trading continued uninterrupted as staff seamlessly adapted to the new working environment.
This not only highlights the agility of the Norman Broadbent team, but also evidences the strength of our 40-year old brand and how the Group's more diverse portfolio of services are particularly relevant in today's markets. Building on those strengths and our investment in digital marketing, both Interim and Solutions have seen continued business opportunities from existing and new clients.
With a slowdown in the market (particularly in Search) there was some reduction in revenues. These however were largely offset by the sensible and prudent cost measures taken. Additional emphasis was placed on cash collections and we subsequently saw a reduction in debtor days during 2020. This, combined with modest positive EBITDA, helped protect cashflow and the Group's cash position.
Arrangements for AGM
The AGM will take place on June 25th, 2021 at 10 AM. In light of Covid-19, shareholder attendance at the meeting will be primarily via Zoom conferencing software. Shareholders attending via Zoom who wish to vote on the AGM's resolutions will need to do so by proxy. Full details on how to gain access to the meeting and vote by proxy are provided in the notes to the notice of AGM set out in the Notice of AGM.
Board Changes
Alan Howarth joined the Board as Non Executive Chair on 1st August 2020 replacing Brian Stephens who resigned from the Board on 26th August 2020. The Board would like to thank Brian for his considerable contributions over the past 10 years and we wish him well for the future.
Summary
Having posted a positive set of 2019 Group results, we came into 2020 with good momentum and plans for further growth. We opened a new office in the North of England, relocated to better Central London offices, and were actively seeking to appoint additional team members in both centres. Then, we, like many businesses, were impacted by the Covid-19 pandemic.
The early and decisive actions taken by us, combined with our broader portfolio of services have continued into 2021 and leave us better placed to respond to these challenges than many. Similarly, our collaborative and innovative culture will stand us in good stead when compared to more traditional and siloed competitors.
I and the Board would like to thank our shareholders for their continuing support, and our clients for placing their trust in us. I would also like to pay tribute to our team who have made considerable sacrifices during the Covid-19 crisis. It is an honour to be their CEO, and I am proud of their achievements, much of which is down to their hard work, dedication, and commitment.
Mike Brennan
Group Chief Executive
21 May 2020
THE BUSINESS MODEL
The Norman Broadbent Group is a leading Professional Services firm focussing on Talent Acquisition & Advisory Services. Since our formation nearly 40 years ago we have developed a range of complementary services consisting of Board & Leadership Search, Senior Interim Management, Research & Insight, Leadership Consulting, and Solutions. With a range of services designed to meet customer needs at different stages in their growth or the economic cycle, our innovative and flexible approach enables us to help clients in a creative and bespoke way. By operating within sector 'hubs' as opposed to siloed service lines, we are able to service clients better and more collaboratively. As a result of this collaboration, c.25% of 2020 NFI was generated via internal cross-referrals.
STRATEGY AND OBJECTIVES
The Group's strategy is to further develop, strengthen and scale our complementary portfolio of Talent Acquisition & Advisory services. This could be achieved via further selective hires, new partnerships and greater innovation. Ultimately our aim is to help clients make better informed, more effective buying decisions to ensure successful outcomes.
RESULTS FOR THE FINANCIAL YEAR
Group revenue from continued operations reduced in the year by 32% to £7,816,000 (2019: £11,486,000), with gross profit of £6,286,000 (2019: £7,607,000).
Operating expenditure decreased to £6,439,000 (2019: £7,462,000).
The Group EBITDA has reduced to £69,000 in 2020, (2019 EBITDA : £238,000) with an operating loss from continued operations in 2020 of £153,000 (2019 operating profit £145,000) and a retained loss in 2020 of £193,000 (2019: retained profit £84,000).
CASH FLOW AND BALANCE SHEET
Net cash inflow from operations in 2020 was £515,000 (2019: net cash outflow from operations £182,000). Net trade receivables at the year-end were £1,449,000 (2019: £2,733,000).
Net cash outflow from financing activities was £492,000 (2019: net cash inflow of £21,000). At 31 December 2020, the Group had £577,000 (2019: £950,000) of funds drawn down against the revolving invoice discounting facility against UK trade receivables of £1,449,000 (2019: £2,733,000).
EARNINGS PER SHARE
The retained loss for 2020 has resulted in a reported loss per share of 0.59 pence (2019: profit per share 0.04 pence).
GOING CONCERN
In light of the current financial position of the Group and on consideration of the business' forecasts and projections, taking account of possible changes in trading performance, the Directors have a reasonable expectation that the Group has adequate available resources to continue as a going concern for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing their annual report and financial statements.
DIRECTORS' DUTIES
The Directors of the Company, as those of all UK companies must act in accordance with a set of general duties. These duties are detailed in section 172 of the UK Companies Act 2006 which is summarised as follows :
'A Director of a company must act in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole and, in doing so have regard (amongst other matters) to :
· the likely consequences of any decisions in the long-term;
· the interests of the company's employees;
· the need to foster the company's business relationships with suppliers, clients and others;
· the impact of the company's operations on the community and environment;
· the desirability of the company maintaining a reputation for high standards of business conduct, and
· the need to act fairly as between shareholders of the Company'
As part of their induction, a Director is briefed on their duties and they can access professional advice on these, from the Company Secretary, Nomad, or if they judge it necessary, from an independent advisor. The following paragraphs summarise how the Directors fulfil their duties:
MONITORING, RISK AND KPIs
The Directors have a responsibility for identifying risks facing each of the businesses and for putting in place procedures to mitigate and monitor risks. Our Board meetings incorporate, amongst other agenda items, a review of monthly management accounts, operational and financial KPIs, major issues and monthly update and review of a risk register that addresses the risks facing the business.
The most important KPIs used in monitoring the business are set out in the following table:
| Key performance indicators |
2020 |
|
2019 |
| NFI |
£6,286,000 |
|
£7,607,000 |
| EBITDA |
£69,000 |
|
£238,000 |
| Debtor days |
57 days |
|
72 days |
The Directors monitor revenue against annual targets, which are adjusted each year to ensure the Group remains on target to achieve its strategic growth plan. Further, given the significant restructuring and refocus of the group in the recent past, the Directors expect Group revenues and operating profits to improve over the next few years.
The principal risks faced by the Group in the current economic climate are considered to be financial, business environment and people related.
Financial - The main financial risks arising from the Group's operations are the adequacy of working capital, interest rate, liquidity and credit risk. These are monitored regularly by the Board and are disclosed further in notes 2 and 17 of the financial statements.
The business is in the later stages of the turnaround process and is budgeted to be self-funding. In turnarounds there is always a risk that the process could take longer than anticipated which could lead to short term working capital pressures. In the event of such an occurrence the Company anticipates working closely with its supportive shareholders to access short term working capital funding.
Business Environment - Demand for services is affected by global and UK specific economic conditions and the level of economic activity in the regions and industries in which the Group operates. When conditions in the economy deteriorate or economic activity slows, many companies hire fewer permanent employees or rely on internal human resource departments to recruit staff.
The Group attempts to mitigate this risk by operating across various diverse sectors where demand for such services is stronger.
Covid-19 Pandemic - on 23 March 2020 the UK economy was placed in a state of lockdown as part of the Government's response to the emerging pandemic. The Group reacted by making staffing changes with a small number of individuals furloughed or released from their contracts with the remaining team members moving to remote working. As the lockdown was lifted, the Group's offices have reopened with the majority of staff continuing to work remotely.
The Group was successful in securing a £250,000 CBILS loan and also rearranged a more favourable Invoice Finance Facility in early 2021. Combined with improved collections and debtor days, these facilities have helped to improve the Group's liquidity.
People - The Group's most vital resource remains its employees and the Directors remain committed to retaining and recruiting quality staff who share the Group's culture and values. In a people intensive business, the resignation of key staff, which could lead to them taking clients, candidates and colleagues to another employer, is a significant risk. The Group aims to mitigate this risk by offering competitive remuneration structures, whilst also insisting on employment contracts that contain restrictive covenants that limit a leaver's ability to approach existing clients, candidates and employees.
CAUTIONARY STATEMENT
The Group's Strategic Report has been prepared solely to provide additional information to shareholders to assess the Company's strategies and the potential for those strategies to succeed.
The Strategic Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
The Directors, in preparing this Strategic Report, have complied with s414C of the Companies Act 2006. The Strategic Report has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Norman Broadbent plc and its subsidiary undertakings when viewed as a whole.
Mike Brennan Steve Smith
Director Director
21 May 2020 21 May 2020
|
|
|
2020 |
2019 |
|
|
Note |
£'000 |
£'000 |
| CONTINUING OPERATIONS |
|
|
|
| Revenue |
1 |
7,816 |
11,486 |
| Cost of sales |
|
(1,530) |
(3,879) |
| Gross profit |
3 |
6,286 |
7,607 |
| Operating expenses |
|
(6,439) |
(7,462) |
| Operating profit /(loss) from continued operations |
|
(153) |
145 |
| Net finance cost |
7 |
(40) |
(61) |
| PROFIT / (LOSS) ON ORDINARY ACTIVITIES BEFORE INCOME TAX |
4 |
(193) |
84 |
| Income tax expense |
6 |
- |
- |
| PROFIT / (LOSS) FROM CONTINUING OPERATIONS |
|
(193) |
84 |
|
|
|
|
|
|
|
|
|
|
| PROFIT / (LOSS) FOR THE PERIOD |
|
(193) |
84 |
|
|
|
|
|
| TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE YEAR |
|
(193) |
84 |
| Profit / (loss) attributable to: |
|
|
|
| - Owners of the Company |
|
(322) |
22 |
| - Non-controlling interests |
|
129 |
62 |
| Profit / (loss) for the year |
|
(193) |
84 |
|
|
|
|
|
| Total comprehensive income / (loss) attributable to: |
|
|
|
| - Owners of the Company |
|
(322) |
22 |
| - Non-controlling interests |
|
129 |
62 |
| Total comprehensive income / (loss) for the year |
|
(193) |
84 |
|
|
|
|
|
| Profit / (loss) per share |
|
|
|
| - Basic |
8 |
(0.59)p |
0.04p |
| - Diluted |
|
(0.59)p |
0.04p |
| Adjusted profit / (loss) per share |
|
|
|
| - Basic |
8 |
(0.59)p |
0.06p |
| - Diluted |
|
(0.59)p |
0.06p |
| profit / (loss) per share - continuing operations |
|
|
|
| - Basic |
8 |
(0.59)p |
0.04p |
| - Diluted |
|
(0.59)p |
0.04p |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
2019 |
|
|
|
Notes |
£'000 |
£'000 |
|
| Non-Current Assets |
|
|
|
|
| Intangible assets |
10 |
1,363 |
1,363 |
|
| Property, plant and equipment |
11 |
332 |
87 |
|
| Prepayments and accrued income |
13 |
145 |
65 |
|
| Deferred tax assets |
6 |
69 |
69 |
|
| TOTAL NON-CURRENT ASSETS |
|
1,909 |
1,584 |
|
| Current Assets |
|
|
|
|
| Trade and other receivables |
13 |
1,547 |
2,948 |
|
| Cash and cash equivalents |
14 |
367 |
432 |
|
| TOTAL CURRENT ASSETS |
|
1,914 |
3,380 |
|
| TOTAL ASSETS |
|
3,823 |
4,964 |
|
| Current Liabilities |
|
|
|
|
| Trade and other payables |
15 |
1,645 |
2,315 |
|
| Loan notes |
16 |
- |
119 |
|
| Bank overdraft and interest bearing loans |
16 |
577 |
950 |
|
| Provisions |
21 |
- |
215 |
|
| Obligations under finance leases |
20 |
196 |
- |
|
| TOTAL CURRENT LIABILITIES |
|
2,418 |
3,599 |
|
|
NET CURRENT LIABILITIES |
|
(504) |
(219) |
|
|
|
|
|
|
|
| Non Current Liabilities Bank Loans |
16 |
250 |
- |
|
| Obligations under finance leases |
20 |
49 |
- |
|
| TOTAL NON-CURRENT LIABILITIES |
|
299 |
- |
|
|
|
|
|
|
|
| TOTAL LIABILITIES |
|
2,717 |
3,599 |
|
|
TOTAL ASSETS LESS TOTAL LIABILITIES |
|
1,106 |
1,365 |
|
|
EQUITY |
|
|
|
|
| Issued share capital |
18 |
6,279 |
6,266 |
|
| Share premium account |
18 |
13,763 |
13,706 |
|
| Retained earnings |
|
(18,936) |
(18,632) |
|
|
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY |
|
1,106 |
1,340 |
|
| Non-controlling interests |
|
- |
25 |
|
| TOTAL EQUITY |
|
1,106 |
1,365 |
|
These financial statements were approved by the Board of Directors on 21 May 2021
Signed on behalf of the Board of Directors
M Brennan S Smith
Director Director
Company No 00318267
|
|
Notes |
2020 |
2019 |
|
|
|
£'000 |
£'000 |
| Non-Current Assets |
|
|
|
| Investments |
12 |
1,686 |
1,643 |
| Prepayments and accrued income |
13 |
66 |
65 |
| TOTAL NON-CURRENT ASSETS |
|
1,752 |
1,708 |
| Current Assets |
|
|
|
| Trade and other receivables |
13 |
5,383 |
5,391 |
| Cash and cash equivalents |
14 |
12 |
14 |
| TOTAL CURRENT ASSETS |
|
5,395 |
5,405 |
| TOTAL ASSETS |
|
7,147 |
7,113 |
| Current Liabilities |
|
|
|
| Loan notes |
16 |
- |
119 |
| Trade and other payables |
15 |
1,605 |
1,646 |
| TOTAL CURRENT LIABILITIES |
|
1,605 |
1,765 |
| NET CURRENT ASSETS |
|
3,790 |
3,640 |
| Non Current Liabilities |
|
|
|
| Bank Loans |
16 |
250 |
- |
| TOTAL NON CURRENT LIABILITIES |
|
250 |
- |
| TOTAL LIABILITIES |
|
1,855 |
1,765 |
| TOTAL ASSETS LESS TOTAL LIABILITIES |
|
5,292 |
5,438 |
| EQUITY |
|
|
|
| Issued share capital |
18 |
6,279 |
6,266 |
| Share premium account |
18 |
13,763 |
13,706 |
| Retained earnings |
|
(14,750) |
(14,624) |
| TOTAL EQUITY |
|
5,292 |
5,348 |
|
|
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 2019 |
6,266 |
13,706 |
(18,667) |
1,305 |
(37) |
1,268 |
| Profit for the year |
|
|
22 |
22 |
62 |
84 |
| Total comprehensive income for the year |
|
|
22 |
22 |
62 |
84 |
| Credit to equity for share based payments |
|
|
13 |
13 |
|
13 |
| Total transactions with owners of the Company, recognised directly in equity |
|
|
13 |
13 |
|
13 |
| Total transactions with owners of the Company |
|
|
13 |
13 |
|
13 |
|
|
|
|
|
|
|
|
| Balance at 31 December 2019 |
6,266 |
13,706 |
(18,632) |
1,340 |
25 |
1,365 |
|
|
|
|
|
|
|
|
| Balance at 1 January 2020 |
6,266 |
13,706 |
(18,632) |
1,340 |
25 |
1,365 |
| Loss for the year |
- |
- |
(322) |
(322) |
129 |
(193) |
| Total comprehensive income for the year |
|
|
(322) |
(322) |
129 |
(193) |
| Transactions with owners of the Company, recognised directly in equity: |
|
|
|
|
|
|
| Issue of ordinary shares |
13 |
57 |
- |
70 |
- |
70 |
|
Credit to Equity for Share Based Payments |
- |
- |
3 |
3 |
- |
3 |
| Total transactions with owners of the Company |
13 |
57 |
3 |
73 |
- |
73 |
|
Purchase of non-controlling interests |
|
|
15 |
15 |
(154) |
(139) |
| Total transactions with owners of the company |
13 |
57 |
18 |
88 |
(154) |
(66) |
| Balance at 31 December 2020 |
6,279 |
13,763 |
(18,936) |
1,106 |
- |
1,106 |
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.
|
|
Attributable to owners of the Company |
|||
|
|
Share |
Share |
Retained Earnings |
Total Equity |
| COMPANY |
£'000 |
£'000 |
£'000 |
£'000 |
| Balance at 1 January 2019 |
6,266 |
13,706 |
(14,625) |
5,347 |
| Loss for the year |
- |
- |
(12) |
(12) |
| Total comprehensive income for the year |
- |
- |
(12) |
(12) |
| Transactions with owners of the Company, recognised directly in equity: |
|
|
|
|
| Credit to equity for share based payments |
|
|
13 |
13 |
| Issue of ordinary shares |
|
|
- |
- |
| Balance at 31 December 2019 |
6,266 |
13,706 |
(14,624) |
5,348 |
| Balance at 1 January 2020 |
|
|
|
|
| Loss for the year |
|
|
(129) |
(129) |
| Total comprehensive income for the year |
|
|
(129) |
(129) |
| Transactions with owners of the Company, recognised directly in equity: |
|
|
|
|
| Credit to equity for share based payments |
- |
- |
3 |
3 |
| Issue of ordinary shares |
13 |
57 |
- |
70 |
| Balance at 31 December 2020 |
6,279 |
13,763 |
(14,750) |
5,292 |
Share Capital
This represents the nominal value of shares that have been issued by the Company.
Share Premium
This reserve records the amount above the nominal value received for shares issued by the Company. Share premium may only be utilised to write off any expenses incurred, or commissions paid on the issue of those shares, or to pay up new shares to be allotted to members as fully paid bonus shares.
Retained Earnings
This reserve comprises all current and prior period retained profits and losses after deducting any distributions made to the Company's shareholders.
CONSOLIDATED STATEMENT OF CASH FLOW
For the year ended 31 December 2020
|
|
|
2020 |
2019 |
|
|
Notes |
£'000 |
£'000 |
| Net cash inflow/(used) in operating activities |
(i) |
515 |
(182) |
| Cash flows from investing activities and servicing of finance |
|
|
|
| Net finance cost |
|
(23) |
(61) |
| Payments to acquire tangible fixed assets |
11 |
(65) |
(30) |
| Net cash used in investing activities |
|
(88) |
(91) |
| Cash flows from financing activities |
|
|
|
| Repayment of borrowings |
16 |
(119) |
(153) |
| New Loans received |
|
250 |
- |
| Payment of finance lease liabilities |
|
(180) |
- |
| Proceeds from issue of share capital |
|
(70) |
- |
| Increase/(Decreased) invoice discounting |
16 |
(373) |
174 |
| Net cash from financing activities |
|
(492) |
21 |
| Net decrease in cash and cash equivalents |
|
(65) |
(252) |
| Net cash and cash equivalents at beginning of period |
|
432 |
684 |
| Effects of exchange rate changes on cash balances held in foreign currencies |
|
- |
- |
| Net cash and cash equivalents at end of period |
|
367 |
432 |
| Analysis of net funds |
|
|
|
| Cash and cash equivalents |
|
367 |
432 |
| Borrowings due within one year |
|
(577) |
(1,069) |
| Borrowings due within more than one year |
|
(250) |
- |
| Net debt |
(ii) |
(460) |
(637) |
Note(i)
Reconciliation of operating profit / (loss) to net cash from operating activities
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Operating profit /(loss) from continued operations |
(153) |
145 |
| Depreciation/impairment of property, plant and equipment |
222 |
93 |
| Share based payment charge |
7 |
13 |
| Fixed Asset Write Off |
3 |
5 |
| Decrease/(Increase) in trade and other receivables |
1,321 |
(703) |
| (Decrease)/Increase in trade and other payables |
(670) |
290 |
| Decrease in Provisions |
(215) |
(25) |
| Taxation paid |
- |
- |
| Net cash generated from operating activities |
515 |
(182) |
Note (ii)
Reconciliation of movement of debt
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Net decrease in cash and cash equivalents |
(65) |
(252) |
| New Borrowings |
(250) |
- |
| Repayment of Borrowings |
119 |
153 |
| Decrease/(Increase) invoice discounting |
373 |
(174) |
| Exchange difference on cash and cash equivalents |
- |
- |
| Movement in Borrowings for the Period |
177 |
(273) |
| Net Borrowings at the Start of the Period |
(637) |
(364) |
| Net Borrowings at the end of the Period |
(460) |
(637) |
COMPANY STATEMENT OF CASH FLOW
For the year ended 31 December 2020
|
|
|
2020 |
2019 |
|
|
Notes |
£'000 |
£'000 |
| Net cash used in operating activities |
(i) |
(151) |
(93) |
| Cash flows from investing activities and servicing of finance |
|
|
|
| Interest paid |
|
(8) |
(20) |
| Disposal of Investments |
|
(44) |
- |
| Net cash used in investing activities |
|
(52) |
(20) |
| Cash flows from financing activities |
|
|
|
| Proceeds/(Repayment) of borrowings |
16 |
(119) |
(153) |
| New Loans |
|
250 |
- |
| Net cash inflows from equity placing |
18 |
70 |
- |
| Net cash from financing activities |
|
201 |
(153) |
| Net (decrease) in cash and cash equivalents |
|
(2) |
(266) |
| Net cash and cash equivalents at beginning of period |
|
14 |
280 |
| Net cash and cash equivalents at end of period |
|
12 |
14 |
|
Analysis of net funds |
|
|
|
| Cash and cash equivalents |
|
12 |
14 |
| Borrowings due within one year |
|
- |
(119) |
| Borrowings due after one year |
|
(250) |
- |
| Borrowings after one year Net funds |
(ii) |
(238) |
(105) |
Note (i)
Reconciliation of operating profit / (loss) to net cash from operating activities
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Operating profit/(loss) |
(120) |
8 |
| Share based payment charge |
3 |
13 |
| Decrease/(Increase) in trade and other receivables |
6 |
(198) |
| (Decrease)/Increase in trade and other payables |
(40) |
84 |
| Net cash used operating activities |
(151) |
(93) |
Note (ii)
Reconciliation of movement of debt
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Net (decrease)/increase in cash and cash equivalents |
(2) |
(266) |
| New Borrowings |
(250) |
- |
| Repayment of Borrowings |
119 |
153 |
| Movement in Borrowings for the Period |
(133) |
(113) |
| Net Borrowings at the Start of the Period |
(105) |
8 |
| Net Borrowings at the end of the Period |
(238) |
(105) |
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.
The consolidated financial statements of Norman Broadbent plc ("Norman Broadbent" ,"the Company" or "the Group") have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS as adopted by the EU), IFRIC interpretations and the Companies Act 2006 applicable to Companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities (including derivative instruments) at fair value through profit or loss. The consolidated financial statements are presented in pounds and all values are rounded to the nearest thousand (£000), except when otherwise indicated.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 1.21.
The Group reported an operating loss from continued operations in the year to 31 December 2020 of £0.2m compared with an operating profit of £0.1m in 2019.
The Consolidated Statement of Financial Position shows a net asset position at 31 December 2020 of £1.1m (2019: £1.4m) with cash at bank of £0.4m (2019: £0.4m). At the date that these financial statements were approved the Group had no overdraft facility, a CBILS loan of £0.25m and its receivable finance facility (Metrobank) which is 100% secured by the Group's trade receivables.
Early 2020 saw the outbreak of the Covid-19 pandemic. This resulted in significant global economic disruption and recovery is expected to be relatively slow and uncertain.
In light of the current financial position of the Group and on consideration of the business' forecasts and projections which have taken account of the impact of Covid-19 and of in trading performance, the Directors have a reasonable expectation that the Group has adequate available resources to continue as a going concern for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing their annual report and financial statements.
The following have been applied for the first time from 1 January 2020 but did not have a material impact on the financial statements:
· IFRS 3 (amendment) Business Combinations
· IAS 1 (amendment) Presentation of Financial Statements
· IAS 8 (amendments) Accounting Policies, Changing in Accounting Estimates and Errors
· IFRS 17 - Insurance Contracts
· IFRS 9, IFRS 7 and IAS 39 (amendment) Financial Instruments
· IFRS 16 (amendments) Leases was adopted during the year. See note 20 for impact on the financial statements.
b) Standards, amendments and interpretations to existing standards that are not yet effective
The following newly issued but not yet effective standards, interpretations and amendments, Mandatory for accounting periods commencing on or after 1 January 2021:
· IAS 1 - Presentation of Financial Statements
· IFRS 9, IFRS 7 and IAS 39 (amendments) Financial Instruments
· IFRS 4 (amendments) Insurance contracts
· IAS 16 (amendments) Property, Plant and Equipment
· IAS 37 (amendments) Provisions, Contingent Liabilities and Contingent Assets
· IFRS 3 (amendments) Business Combinations
· IAS 41 (amendments) Agriculture
The Directors do not expect that the adoption of the Standards and amendments listed above will have a material impact on the financial statements of the Company in future periods. Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these Standards until a detailed review has been completed.
Business combinations are accounted for using the acquisition method as at the acquisition date - i.e. when control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.
The Group measures goodwill at the acquisition date as:
· the fair value of the consideration transferred; plus
· the recognised amount of any non-controlling interests in the acquiree; plus
· if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less
· the net amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.
The subsidiaries financial statements were not prepared under IFRS but adjustments were made to bring all the accounting policies in line with IFRS.
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.
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.
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.
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).
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.
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
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.
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.
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.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is recognised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
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.
Trade payables are non-interest bearing and are initially recognised at fair value and then subsequently measured at amortised cost.
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.
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.
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'.
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.
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 are provided on a retained basis and the Group generally invoices the client at pre-specified milestones agreed in advance. Typically, this will be in three stages; retainer, shortlist and completion fee. Revenue is recognised on completion of defined stages of work during the recruitment process including the completion of a candidate shortlist and placement of a candidate. The Solutions business is a more flexible model and on occasions will invoice in two stages, initiation and completion. Revenue is deferred for any invoices raised but unearned at the year end.
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.
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.
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.
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.
The company 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.
Until the 2018 financial year, leases of property, plant and equipment were classified as either finance leases or operating leases. 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 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.
A discontinued operation is a component of the Group that either has been disposed of, or is classified as held for sale, and represents a separate major line of business or geographical area of operations. Profit or loss from discontinued operations, including prior year components of profit or loss, is presented in a single amount in the income statement. This amount comprises the post-tax profit or loss of discontinued operations. The disclosures for discontinued operations in the prior year relate to all operations that have been discontinued by the reporting date of the latest period presented.
For equity-settled share-based payment transactions the Group, in accordance with IFRS 2, measures their value and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. The fair value of those equity instruments is measured at grant date, using the trinomial method. The expense is apportioned over the vesting period of the financial instrument and is based on the numbers which are expected to vest and the fair value of those financial instruments at the date of grant. If the equity instruments granted vest immediately, the expense is recognised in full.
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 is 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) Share Options - fair value of options granted is determined using the trinomial valuation model. The significant inputs into the model are share price at grant date, expected price, expected option life and risk free rate.
d) 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.
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:
The Group's interest rate risk arises from short term borrowings issued at a variable interest rate. At 31 December 2020 the balance outstanding on the invoice discounting facility was £0.6 million (2019: £0.9 million) and this balance increases and decreases in line with the outstanding trade receivables.
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.
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.
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.
Management has determined the operating segments based on the reports reviewed regularly by the Board for use in deciding how to allocate resources and in assessing performance. The Board considers Group operations from both a class of business and geographic perspective. Each class of business derives its revenues from the supply of a particular recruitment related service, from retained executive search through to executive assessment and coaching. Business segment results are reviewed primarily to operating profit level, which includes employee costs, marketing, office and accommodation costs and appropriate recharges for management time.
Group revenues are primarily driven from UK operations. However when revenue is derived from overseas business the results are presented to the Board by geographic region to identify potential areas for growth or those posing potential risks to the Group.
The analysis by class of business of the Group's turnover and profit before taxation is set out below:
|
|
NBES |
NBLC |
NBS |
NBIM |
|
Unallocated |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
| Revenue |
2,124 |
321 |
1,647 |
3,724 |
|
- |
7,816 |
| Cost of sales |
(9) |
(57) |
3 |
(1,467) |
|
- |
(1,530) |
| Gross profit |
2,115 |
264 |
1,650 |
2,257 |
|
- |
6,286 |
| Operating expenses |
(2,677) |
(452) |
(1,740) |
(1,348) |
|
- |
(6,217) |
| Depreciation and amort. |
(217) |
- |
(3) |
(2) |
|
- |
(222) |
| Finance costs |
(5) |
(1) |
(5) |
(4) |
|
(25) |
(40) |
| Profit/(Loss) before tax |
(784) |
(189) |
(98) |
903 |
|
(25) |
(193) |
|
|
NBES |
NBLC |
NBS |
NBIM |
|
Unallocated |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
| Revenue |
3,335 |
278 |
1,830 |
6,043 |
|
- |
11,486 |
| Cost of sales |
(9) |
(62) |
- |
(3,808) |
|
- |
(3,879) |
| Gross profit |
3,326 |
216 |
1,830 |
2,235 |
|
- |
7,607 |
| Operating expenses |
(3,502) |
(286) |
(1,618) |
(1,971) |
|
8 |
(7,369) |
| Depreciation and amort. |
(89) |
- |
(2) |
(2) |
|
- |
(93) |
| Finance costs |
(15) |
(6) |
(6) |
(14) |
|
(20) |
(61) |
| Profit/(Loss) before tax |
(280) |
(76) |
204 |
248 |
|
(12) |
84 |
|
|
2020 |
2019 |
2020 |
2019 |
|
|
Revenue |
Revenue |
Gross Profit |
Gross Profit |
| United Kingdom |
7,143 |
10,804 |
5,613 |
6,925 |
| Rest of the world |
673 |
682 |
673 |
682 |
| Total |
7,816 |
11,486 |
6,286 |
7,607 |
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Profit / (Loss) on ordinary activities before taxation is stated after charging: |
|
|
| Depreciation and impairment of property, plant and equipment |
222 |
93 |
| Gain on foreign currency exchange |
- |
- |
| Staff costs (see note 5) |
4,853 |
5,725 |
| Operating lease rentals: |
|
|
| Land and buildings |
- |
187 |
| Auditors' remuneration: |
|
|
| Audit work |
38 |
49 |
| Non-audit work |
- |
- |
The Company audit fee in the year was £38,000 (2019: £49,000).
The average number of full time equivalent persons (including Directors) employed by the Group during the period was as follows:
|
|
2020 |
2019 |
|
|
No. |
No. |
| Sales and related services |
34 |
36 |
| Administration |
13 |
16 |
|
|
47 |
52 |
Staff costs (for the above persons):
|
|
£'000 |
£'000 |
| Wages and salaries |
4,165 |
4,933 |
| Social security costs |
550 |
626 |
| Defined contribution pension cost |
138 |
153 |
| Share based payment expense |
- |
13 |
|
|
4,853 |
5,725 |
The emoluments of the Directors are disclosed as required by the Companies Act 2006 in the Directors' Remuneration Report in the Annual Report. The table of Directors' emoluments has been audited and forms part of these financial statements. This also includes details of the highest paid Director.
Taxation is based on the loss for the year and comprises:
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Current tax: |
|
|
| United Kingdom corporation tax at 19% (2019: 19%) based on loss for the year |
- |
- |
| Foreign Tax |
- |
- |
| Total current tax |
- |
- |
| Deferred tax: |
|
|
| Origination and reversal of temporary differences |
- |
- |
| Tax charge/(credit) |
- |
- |
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:
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Profit / (Loss) on ordinary activities before taxation |
(193) |
22 |
| Tax on profit / (loss) on ordinary activities at standard UK corporation tax rate of 19% (2019: 19%) |
(37) |
5 |
| Effects of: |
|
|
| Expenses not deductible |
9 |
16 |
| Substantial shareholding exemption |
|
|
| Capital allowances in excess of depreciation Depreciation in Exces of Capital Allowances |
(2) |
12
|
| Provision Movement Group Relief |
3 1 |
|
| Losses bought forward utilised |
|
(73) |
| Adjustment to losses carried forward |
26 |
40 |
| Current tax charge for the year |
- |
- |
|
|
Tax losses |
Total |
|
|
£'000 |
£'000 |
| At 1 January 2020 |
(69) |
(69) |
| At 31 December 2020 |
(69) |
(69) |
| Credited to the income statement in 2020 |
- |
- |
| At 31 December 2020 |
(69) |
(69) |
At 31 December 2020 the Group had capital losses carried forward of £8,129,000 (2019: £8,130,000). A deferred tax asset has not been recognised for the capital losses as the recoverability in the near future is uncertain. The Group also has £14,131,421 (2019: £13,974,127) trading losses carried forward, which includes £8,987,000 losses transferred from BNB Recruitment Consultancy Ltd in 2011. A deferred tax asset of £1,277,079 (2019: £1,281,415) has not been recognised in the financial statements due to the inherent uncertainty as to the quantum and timing of its utilisation.
The analysis of deferred tax in the consolidated balance sheet is as follows:
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Deferred tax assets: Tax losses carried forward |
69 |
69 |
| Total |
69 |
69 |
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Interest payable on Loan Notes and Invoicing facility |
40 |
61 |
| Total |
40 |
61 |
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:
|
|
2020 |
2019 |
| Profit/(Loss) attributable to owners of the company |
(322,000) |
22,000 |
| Weighted average number of ordinary shares |
54,217,990 |
53,885,570 |
| Total |
54,217,990 |
53,885,570 |
This is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares in the form of employee share options. For these options a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to the outstanding options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
The grants of options in 2019 and 2018 have both profitability and share price exercise criteria.
|
|
2020 |
2019 |
| Profit/(Loss) attributable to owners of the company |
(322,000) |
22,000 |
| Weighted average number of ordinary shares |
54,217,990 |
53,885,570 |
| Total |
54,217,990 |
53,885,570 |
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.
|
|
2020 |
2020 |
2020 |
2019 |
2019 |
2019 |
|
|
£'000 |
Basic pence |
Diluted pence per share |
£'000 |
Basic pence |
Diluted pence per share |
| Basic earnings |
|
|
|
|
|
|
| Profit/(Loss) after tax |
(322) |
(0.59) |
(0.59) |
22 |
0.04 |
0.04 |
| Adjustments |
|
|
|
|
|
|
| Share based payment charge |
- |
- |
- |
13 |
0.02 |
0.02 |
| Adjusted earnings |
(322) |
(0.59) |
(0.59) |
35 |
0.06 |
0.06 |
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 £128,000 (2019: £12,000).
|
|
Goodwill arising on consolidation |
|
|
£'000 |
| Group Balance at 1 January 2019 |
3,690 |
| Balance at 31 December 2019 |
3,690 |
| Balance at 31 December 2020 |
3,690 |
| Provision for impairment |
|
| Balance at 1 January 2019 |
2,327 |
| Balance at 31 December 2019 |
2,327 |
| Balance at 31 December 2020 |
2,327 |
| Net book value |
|
| At 1 January 2019 |
1,363 |
| At 31 December 2019 |
1,363 |
| At 31 December 2020 |
1,363 |
Goodwill acquired through business combinations is allocated to cash-generating units (CGU) identified at entity level. The carrying value of intangibles allocated by CGU is shown below:
|
|
Norman Broadbent |
Norman Broadbent Leadership Consulting |
Total |
|
|
£'000 |
£'000 |
£'000 |
| At 1 January 2019 |
1,303 |
60 |
1,363 |
| At 31 December 2019 |
1,303 |
60 |
1,363 |
| At 31 December 2020 |
1,303 |
60 |
1,363 |
In line with International Financial Reporting Standards, goodwill has not been amortised from the transition date, but has instead been subject to an impairment review by the Directors of the Group. As set out in accounting policy note 1, the Directors test the goodwill for impairment annually. The recoverable amount of the Group's CGUs are calculated on the present value of their respective expected future cash flows, applying a weighted average cost of capital in line with businesses in the same sector. Pre-tax future cash flows for the next five years are derived from the approved forecasts for the 2021 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 4% per annum for the foreseeable future (2019: 5%) and 5% for Norman Broadbent Leadership Consulting (2019: 20%). Return on sales defined as the expected profit before tax on net revenue. There are only minimal non cash flows included in profit before tax. The rate used to discount the forecast cash flows is 8% (2019: 8%).
The five year forecasts have been prepared using conservative revenue growth rates to reflect the uncertainty that is still present in the economy. Based on the above assumptions, at 31 December 2020 the recoverable value of the Norman Broadbent CGU is £2,033,784 and the Norman Broadbent Leadership Consulting CGU is £445,398.
|
|
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 2019 |
84 |
- |
176 |
211 |
471 |
| Additions |
- |
- |
30 |
- |
30 |
| Disposals |
- |
- |
- |
(5) |
(5) |
| Balance at 31 December 2019 |
84 |
- |
206 |
206 |
496 |
| Additions |
10 |
408 |
48 |
7 |
473 |
| Disposals |
|
|
- |
(163) |
(163) |
| Balance at 31 December 2020 |
94 |
408 |
254 |
50 |
806 |
| Accumulated depreciation |
|
|
|
|
|
| Balance at 1 January 2019 |
83 |
- |
142 |
91 |
316 |
| Charge for the year |
- |
- |
17 |
76 |
93 |
| Disposals |
- |
- |
- |
- |
- |
| Balance at 31 December 2019 |
83 |
- |
159 |
167 |
409 |
| Charge for the year |
4 |
163 |
18 |
37 |
222 |
| Disposals |
- |
|
- |
(157) |
(157) |
| Balance at 31 December 2020 |
87 |
163 |
177 |
47 |
474 |
| Net book value |
|
|
|
|
|
| At 1 January 2019 |
1 |
- |
34 |
120 |
155 |
| At 31 December 2019 |
1 |
- |
47 |
39 |
87 |
| At 31 December 2020 |
7 |
245 |
77 |
3 |
332 |
The Group had no capital commitments as at 31 December 2020 (2019 : £Nil).
|
|
Shares in subsidiary undertakings |
|
|
£'000 |
| Company Cost |
|
| Balance at 1 January 2019 |
5,796 |
|
|
|
| Balance at 31 December 2019 |
5,796 |
| Additions |
139 |
| Balance at 31 December 2020 |
5,935 |
|
Provision for impairment |
|
| Balance at 1 January 2019 |
4,153 |
| Impairment for the year |
- |
| Balance at 31 December 2019 |
4,153 |
| Impairment for the year |
96 |
| Balance at 31 December 2020 |
4,249 |
| Net book value |
|
| At 1 January 2019 |
1,643 |
| At 31 December 2019 |
1,643 |
| At 31 December 2020 |
1,686 |
At 31 December 2020 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 |
Executive search |
100% ordinary shares |
| Norman Broadbent Leadership Consulting Limited |
England and Wales |
Assessment, coaching and talent mgmt. |
100% ordinary shares |
| Norman Broadbent Solutions Ltd |
England and Wales |
Mezzanine level search |
100% ordinary shares |
| Bancomm Ltd ** |
England and Wales |
Dormant |
100% ordinary shares |
| Norman Broadbent Ireland Ltd* ** |
Republic of Ireland |
Dormant |
100% ordinary shares |
| Norman Broadbent Interim Management Ltd |
England and Wales |
Interim Management |
100% ordinary shares |
* 100 % of the issued share capital of this company is owned by Norman Broadbent Overseas Ltd.
** These companies are exempt from audit by virtue of provisions in the Companies Act 2006. Where required limited assurance procedures have been completed.
The registered office for the subsidiaries are Millbank Tower, 21-24 Millbank London SW1P 4QPP with the exception of Norman Broadbent Ireland Limited.
|
|
Group |
Company |
||
|
|
2020 |
2019 |
2020 |
2019 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
| Trade receivables |
1,509 |
2,782 |
- |
- |
| Less: provision for impairment |
(60) |
(49) |
- |
- |
| Trade receivables - net |
1,449 |
2,733 |
- |
- |
| Other debtors |
88 |
180 |
66 |
125 |
| Prepayments and accrued income |
155 |
100 |
15 |
14 |
| Due from Group undertakings |
- |
- |
5,368 |
5,317 |
| Total |
1,692 |
3,013 |
5,449 |
5,456 |
| Non-Current |
145 |
65 |
66 |
65 |
| Current |
1,547 |
2,948 |
5,383 |
5,391 |
|
|
1,692 |
3,013 |
5,449 |
5,456 |
Non-current trade receivables are in relation to the cash consideration due from the sale of SMS in 2016.
As at 31 December 2020, Group trade receivables of £797,000 (2019: £1,408,000), were past their due date but not impaired, save as referred to below. They relate to customers with no default history. The aging profile of these receivables is as follows:
|
|
Group |
Company |
|||
|
|
2020 |
2019 |
2020 |
2019 |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
| Up to 3 months |
595 |
1,120 |
- |
- |
|
| 3 to 6 months |
128 |
197 |
- |
- |
|
| 6 to 12 months |
74 |
91 |
- |
- |
|
| Total |
797 |
1,408 |
- |
- |
|
The largest amount due from a single trade debtor at 31 December 2020 represents 8% (2019: 7%) of the total trade receivables balance outstanding.
As at 31 December 2020, £60,000 of group trade receivables (2019: £49,000 ) 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:
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| At 1 January |
49 |
- |
| Provision for receivable impairment |
11 |
49 |
| Receivables written-off as uncollectable |
- |
- |
| At 31 December |
60 |
49 |
There are no material difference between the carrying value and the fair value of the Group's and parent Company's trade and other receivables.
|
|
Group |
Company |
||
|
|
2020 |
2019 |
2020 |
2019 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
| Cash at bank and in hand |
367 |
432 |
12 |
14 |
| Total |
367 |
432 |
12 |
14 |
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.
|
|
Group |
Company |
||
|
|
2020 |
2019 |
2020 |
2019 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
| Trade payables |
150 |
588 |
18 |
79 |
| Due to Group undertakings |
- |
- |
1,518 |
1,481 |
| Other taxation and social security |
535 |
649 |
- |
- |
| Other payables |
30 |
33 |
- |
- |
| Accruals |
930 |
1,045 |
69 |
86 |
| Total |
1,645 |
2,315 |
1,605 |
1,646 |
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.
|
|
Group |
Company |
||
|
|
2020 |
2019 |
2020 |
2019 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
| Maturity profile of borrowings Current |
|
|
|
|
| Bank overdrafts and interest bearing loans: |
|
|
|
|
| Invoice discounting facility (see note (a) below) |
577 |
950 |
- |
- |
| Secured loan notes |
- |
119 |
- |
119 |
| Non Current Bank Loans |
250 |
- |
250 |
|
| Total |
827 |
1,069 |
250 |
119 |
The carrying amounts and fair value of the Group's borrowings, which are all denominated in sterling, are as follows:
|
|
Carrying amount |
Fair value |
||
|
|
2020 |
2019 |
2020 |
2019 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
| Bank overdrafts and interest bearing loans: |
|
|
|
|
| Invoice discounting facility |
577 |
950 |
577 |
950 |
| Secured loan notes |
- |
119 |
- |
119 |
| Bank Loans |
250 |
- |
250 |
- |
| Total |
827 |
1,069 |
827 |
1,069 |
Norman Broadbent Executive Search Limited, NBS, NBIM and NBLC operate independent invoice discounting facilities, provided by Bibby Financial Services Limited. Bibby Financial Services Limited holds all assets debentures for each company (fixed and floating charges) and also a cross-corporate guarantee and indemnity deed dated 20 August 2019. The financial terms of the facilities are outlined below:
In February 2021 the Group terminated the contract with Bibby Financial Services Limited and opened a new invoice discounting facility with Metro Bank.
Funds are available to be drawn down at an advance rate of 80% against trade receivables of Norman Broadbent Executive Search Limited that are aged less than 120 days, with the facility capped at £2,000,000. At 31 December 2020, the outstanding balance on the facility of £241,865 (2019: £217,679) was secured by trade receivables of £681,269 (2019: £717,619). Interest is charged on the drawn down funds at a rate of 2.50% (2019: 2.50%) above the bank base rate.
Funds are available to be drawn down at an advance rate of 80% against trade receivables of Norman Broadbent Solutions Limited that are aged less than 120 days, with the facility capped at £2,000,000. At 31 December 2020, the outstanding balance on the facility of £126,483 (2019: £227,997) was secured by trade receivables of £219,534 (2019: £592,863). Interest is charged on the drawn down funds at a rate of 2.50% (2019: 2.50%) above the bank base rate.
Funds are available to be drawn down at an advance rate of 90% against trade receivables of Norman Broadbent Interim Management Limited that are aged less than 120 days, with the facility capped at £2,000,000. At 31 December 2020, the outstanding balance on the facility of £180,425 (2019: £453,086) was secured by trade receivables of £466,342 (2019: £1,300,602). Interest is charged on the drawn down funds at a rate of 2.50% (2019: 2.50%) above the bank base rate.
Funds are available to be drawn down at an advance rate of 90% against trade receivables of Norman Broadbent Leadership Consulting Limited that are aged less than 120 days, with the facility capped at £2,000,000. At 31 December 2020 the outstanding balance on the facility of £102,269 (2019: £52,220) was secured by trade receivables of £84,300 (2019: £61,883). Interest is charged on the drawn down funds at a rate of 2.50% above the bank base rate.
b) Secured Loan Note
The secured loan note was fully repaid during the year.
In November 2020 the Group received a CBILS Loan of £250,000 for a term of 6 years. No capital or interest is payable in the first 12 months. Thereafter the loan incurs interest at 4.75% above the Metro Bank UK base rate (0.1% at date of signing).
The principal financial instruments used by the Group, from which financial instrument risk arises, are summarised below. All financial assets and liabilities are measured at amortised cost which is not considered to be materially different to fair value.
|
|
Amortised Cost |
|
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Group Financial Assets |
|
|
| Trade and other receivables |
1,449 |
2,913 |
| Other debtors |
36 |
- |
|
|
1,485 |
2,913 |
| Financial Liabilities |
|
|
| Trade creditors |
150 |
2,315 |
| Accrual and deferred income |
929 |
- |
| Other creditors |
30 |
- |
| Secured loan notes |
- |
119 |
|
|
|
|
| Bank Loans - Current |
577 |
950 |
| Bank Loans - Greater than one year |
250 |
- |
|
|
1,936 |
3,384 |
|
|
Amortised Cost |
|
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Company Financial Assets |
|
|
| Trade and other receivables |
66 |
5,317 |
| Amounts owed by group undertakings |
5,368 |
- |
|
|
|
|
| Financial Liabilities |
|
|
| Trade and other payables |
18 |
1,644 |
| Amounts owed to group undertakings |
1,518 |
- |
| Secured loan notes |
- |
119 |
| Accruals and deferred income |
69 |
- |
| Bank loans - Greater than one year |
250 |
- |
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.
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Allotted and fully paid: Ordinary Shares: |
|
|
| 55,218.870 Ordinary shares of 1.0p each (2019: 53,885,570) |
552 |
539 |
| Deferred Shares: |
|
|
| 23,342,400 Deferred A shares of 4.0p each (2019: 23,342,400) |
934 |
934 |
| 907,118,360 Deferred shares of 0.4p each (2019: 907,118,360) |
3,628 |
3,628 |
| 1,043,566 Deferred B shares of 42.0p each (2019: 1,043,566) |
438 |
438 |
| 2,504,610 Deferred C shares of 29.0p each (2019: 2,504,610) |
727 |
727 |
| Total |
6,279 |
6,266 |
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.
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.
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.
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 (000s) |
Deferred shares (000s) |
Share (000s) |
Total (000s) |
| At 1 January 2019 |
53,885 |
539 |
5,727 |
13,706 |
19,972 |
|
|
|
|
|
|
|
| At 31 December 2019 |
53,885 |
539 |
5,727 |
13,706 |
19,972 |
|
|
|
|
|
|
|
| Issued during the year |
1,333 |
13 |
- |
57 |
70 |
| At 31 December 2020 |
55,218 |
552 |
5,727 |
13,763 |
20,042 |
|
|
|
|
|
|
|
The Company has an approved EMI share option scheme for full time employees and Directors. The exercise price of the granted options is equal to the market price of the shares on the date of the grant. The Company has no legal or constructive obligation to repurchase or settle the options or warrants in cash..
Options under the Company EMI scheme are conditional on the employee completing three years' service (the vesting period). The EMI options vest in three equal tranches on the first, second and third anniversary of the grant. The options have a contractual option term of either seven or ten years.
Movements in the number of share options and their related weighted average exercise prices are as follows:
|
|
Approved EMI |
|
|
|
Avg. exercise price per share (p) |
Number of options |
| At 1 January 2019 |
14.41 |
3,549,147 |
| Granted |
- |
- |
| Forfeited |
- |
- |
| At 31 December 2019 |
14.41 |
3,549,147 |
| Granted |
- |
- |
| Forfeited |
13.50 |
(1,643,614) |
| At 31 December 2020 |
14.41 |
1,905,533 |
Share options outstanding at the end of the year have the following expiry date and exercise prices:
|
|
Exercise price per share |
Share options |
|
|
|
2020 |
2019 |
|
| 2021 |
65.5 |
53,681 |
62,153 |
| 2023 |
13.5 |
1,851,852 |
2,051,852 |
| 2024 |
13.5 |
- |
380,951 |
| 2025 |
13.5 |
- |
1,054,191 |
| Total |
|
1,905,533 |
3,549,147 |
Out of the 1,905,533 outstanding options (2019: 3,549,147), no options were exercisable at the year-end (2019: None) as they were all 'underwater'.
The significant inputs into the model in valuing the 2019 option grant were weighted average share price of 12 pence at the grant date, exercise price of 13.5p, volatility of 28%, dividend yield of 0% (2019 and 2018: 0%), an expected option life of 10 years (2019 and 2018: 10 years) and an annual risk-free interest rate of 0.652%. The expected volatility was estimated by reference to the historical volatility of the Company's share price and those of UK quoted companies in a similar business sector. The risk-free interest rate is estimated as the yield on zero coupon UK government bonds of a term consistent with the contractual life of the options granted. No share options were granted during 2020, therefore the same assumptions were used as per the prior year. There was no significant change in the company or shareholding during 2020.
The Group leases its premises and signed a 2 year lease for its London Headquarters in Millbank Tower, London effective March 2020. The Group has adopted IFRS 16 for treatment of the lease.
Under IFRS 16 Leases, 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 rentals charges have been replaced with depreciation and interest expense.
Set out below are the new accounting policies of the Group upon adoption of 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 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 straightline 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
Rent 180
Depreciation expense (163)
Operating profit 17
Finance costs (17)
Profit before tax -
Consolidated Statement of Financial Position
As at 1 January 2020 Right of use assets Lease Liabilities
Additions 408 (408)
Disposals - -
Depreciation expense (163) -
Interest expense - (17)
Payments - 180
As at 31 December 2020 245 (245)
Impact on Consolidated Balance Sheet
Right-of-use assets 245
Total Assets 245
Lease liabilities - less than one year (196)
Lease liabilities - more than one year (49)
Total Liabilities (245)
Equity -
|
|
|
|
For the 2019 financial statements the Group reccognised the Lease as an Operating Lease, as the lease was terminating in March 2020 and it was not considered material for treatment under IFRS16.
As at 31 December 2020, the total future value of minimum lease payments due are as follows:
|
|
Land and Buildings |
|
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| Operating Lease within one year |
- |
28 |
| Later than one year and not later than five years |
- |
- |
| Total |
- |
28 |
|
|
|
|
|
|
Group |
|
|
|
2020 |
2019 |
|
|
£'000 |
£'000 |
| At 1 January |
215 |
240 |
| Provisions made during the year |
- |
- |
| Provisions Utilised during the year |
(215) |
(25) |
| At 31 December |
- |
215 |
| Current liability |
- |
215 |
| Non-current liability |
- |
- |
| At 31 December |
- |
215 |
The Group moved its headquarters in March 2020 to Millbank Tower, London. There are no dilapidations requirements under the lease and therefore no provision for dilapidations has been made.
The liability relating to dilapidations in the previous headquarters was settled in full during 2020.
The Group operated several defined contribution pension schemes for the business. The assets of the schemes were held separately from those of the Group in independently administered funds. The pension cost represents contributions payable by the Group to the funds and amounts to £195,000 (2019: £155,000). At the year-end £16,000 of contributions were outstanding (2019: £16,000).
The following transactions were carried out with related parties:
|
|
2020 |
2019 |
|
|
£000 |
£000 |
| Brian Stephens & Company Ltd |
9 |
20 |
| Total |
9 |
20 |
Brian Stephens & Company Ltd invoiced the Group for the provision of services of B Stephens of £9,000 (2019 total: £20,000). B Stephens is a director of Brian Stephens & Company Ltd.
All related party expenditure took place via "arms-length" transactions.
Key management includes Executive and Non-Executive Directors. The compensation paid or payable to the directors can be found in the Directors' Remuneration Report in the Annual Report.
|
|
2020 |
2019 |
|
|
£000 |
£000 |
| Brian Stephens & Company Ltd |
- |
- |
| Total |
- |
- |
Payables to related parties arise from purchase transactions and are due one month after date of purchase. Payables bear no interest.
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 £383,000 (2019: £481,000).
Final Results and Annual Accounts 07:00:0724 May 2021Results5062Z