Final Results

22 May 2015 Norman Broadbent plc ("Norman Broadbent" or "the Company" or "the Group") Final Results and Annual Accounts Norman Broadbent, a leading provider of executive search, leadership consultancy and complementary recruitment services is pleased to announce its final results and annual accounts for the year ended 31 December 2014. - Results reflect start-up losses in emerging businesses and the exceptional costs associated with regaining control of the Norman Broadbent brand worldwide - Group revenue from continuing operations increased by 11% to £7.6m (2013: £6.8m) - Gross profit from continuing operations increased by 6% to £7.1m (2013: £6.7m) - UK executive search operating profit increased by 273% to £525,000 (2013: £141,000) - Revenue from our new subsidiary businesses, AGP, NBIM and SMS increased to £1.8m (2013: £0.6m) - Group operating loss from continuing operations decreased to £932,000 (2013: loss of £1,156,000) reflecting the continued investment in the new subsidiary businesses - The Group raised £500,000 in November 2014 through a share subscription - Year end cash of £506,000 (2013: £579,000) - Net assets £1,690,000 (2013: £2,800,000) - Group successfully restructured in 2014 - Group returned to profitability in Q1 2015 For further information please contact: Norman Broadbent plc Pierce Casey/James Webber/Sue O'Brien 020 7484 0000 Sanlam Securities UK Limited Simon Clements/Virginia Bull 020 7628 2200 RESULTS FOR THE FINANCIAL YEAR The table below summarises the results of the Group: Year ended Year ended 31 Dec 31 Dec 2014 2013 £000's £000's CONTINUING OPERATIONS REVENUE 7,600 6,821 Cost of sales (522) (162) GROSS PROFIT 7,078 6,659 Operating expenses (8,010) (7,940) Other income - 125 GROUP OPERATING LOSS (932) (1,156) Dividends received - 18 Net finance cost (32) (15) Exceptional Items (559) - Loss on disposal of investment (33) - LOSS BEFORE TAX (1,556) (1,153) Income tax (8) (19) Loss from discontinued operation (144) 20 LOSS AFTER TAX (1,708) (1,152) Group revenue from continued operations increased by 11% to £7.6m (2013: £6.8m), with gross profit increasing by 6% when compared to 2013. Group operating losses from continued operations were £0.9m (2013: £1.2m) reflecting continued investment in our start-up businesses AGP, NBIM and SMS. The loss after tax, pre-exceptional items and minority interests, was £1.1m (2013: £1.2m) including £0.9m of losses attributable to the start-up businesses. Note 3 of the Consolidated Financial Statements provides a detailed segmental breakdown of the 2014 Group results. Executive search revenue of £5.2m (2013: £5.6m) reflects a fall of 8% in UK executive search revenues to £5.0m from £5.4m in 2013 and an increase of 59% in overseas executive search revenues to £0.3m from £0.2m in 2013. The UK executive search revenue decline was offset by a decrease in operating costs resulting in a considerable improvement in profit before tax to £0.5m from £0.1m in the previous year. Assessment, coaching and talent management revenues declined by 59% to £0.5m (2013: £1.1m) reflecting the sale of our Belgium subsidiary Norman Broadbent SPRL in May 2014. The UK business, Norman Broadbent Leadership Consulting ("NBLC"), has been restructured and is now further integrated with UK executive search and continues to have a high quality product range and is attracting exciting new clients. AGP, SMS and NBIM, the three subsidiary businesses established in early 2013, late 2012 and mid 2014 respectively, have between them generated £1.8m in revenue (2013: £0.6m). Despite the promising revenue growth, the start-up losses in AGP and SMS were greater than anticipated and resulted in the re-modelling of certain aspects of the contingent offering within AGP and SMS in late 2014. Revenue from overseas royalties totalled £0.1m (2013: £0.2m), a decline of 64% as a result of the licenses with Italy, Middle East and Spain being terminated due to the Board's decision to regain complete control of the Norman Broadbent brand worldwide. This has allowed your Company to streamline its international operations, refocussing on our core UK businesses. Further, your Board has taken the decision to cease its operations in Singapore and, since year end, also in the USA due to de-minimis contributions to Group revenues. CORPORATE DEVELOPMENTS As part of the Board's decision to regain complete control of the Norman Broadbent brand worldwide, in 2014 the Group disposed of Norman Broadbent SPRL (which had a minority 49% shareholder) and its 20 per cent stake in NBS Norman Broadbent SA for £120,000 and £92,000 respectively. These disposals resulted in a non-recurring exceptional item, shown as a decrease in goodwill of £559,000 in the Consolidated Statement of Financial Position, and a loss on disposal of £36,000 in the Company Statement of Financial Position. SHARE PLACING In November 2014, the Group raised £500,000 (£487,500 net of expenses) through the issue, principally to existing institutional investors, of 2,617,801 new ordinary shares in the capital of the Company at a price of 19.1 pence per share (the "November Subscription"). The net proceeds of the November Subscription have been used to fund the recent re-modelling of certain aspects of the contingent offering within AGP, NBLC and SMS, and for working capital purposes generally FINANCIAL POSITION As at 31 December 2014, consolidated net assets were £1,690,000, compared to £2,800,000 as at 31 December 2013. Group net current assets decreased to £278,000 (2013: £762,000). Group cash amounted to £506,000 (2013: £579,000). Net cash outflow from operations in 2014 was £453,000 (2013: £732,000). The start-up losses arising from the development of AGP, NBIM and SMS resulted in a cash outflow of £869,000. Net cash inflow from financing activities amounted to £358,000 (2013: £521,000) relating primarily to the net funds received from the November Subscription. At 31 December 2014, the only exposure to borrowings was the Group's revolving invoice discounting facility, and funds drawn down against this facility decreased by 16% to £673,000 (2013: £802,000) against UK trade receivables of £999,000 (2013: £1,255,000). MANAGEMENT AND STAFF James Webber, our Group CFO and COO, joined the plc Board in September 2014. James joined the business in March 2014, and his experience working within the COO office at EY has proved invaluable to the Company. The Group now comprises just under 80 people in the UK and your Board would like to express its thanks to all our management teams and staff, particularly in view of the diversification programme taking place through our new complementary subsidiaries. BOARD CHANGES In light of the successful re-modelling which has taken place since the November Subscription, I have taken the view that after five years as Chairman the time is now opportune to retire from the business as it is now refinanced, refocused and returned to profitability in the first quarter' of 2015. It is my intention to retire from the Board as Chairman and director on 30 June 2015. In view of my wide industry experience, the Board is pleased to note that I have offered to nominate through my private investment office a Non-Executive Director to the Board to assure staff, shareholders and clients of my continuing interest, and to represent my substantial shareholding. In order to achieve a seamless handover on my retirement the Board and I have been in discussion for some time with the Chairman elect, Scanes Bentley. Scanes, who is being co-opted to the Board with immediate effect, is a Non-Executive Chairman, Non-Executive Director and strategic advisor to a number of businesses and most recently was a partner for 12 years at Accenture where in the last five years he was responsible for running Financial Services and TMT consulting practices in London. Further, Bruce Lakefield retired as a Non-Executive Director of the Company on 10 March 2015. Bruce, who is aged 71 and resident in the United States is reducing his overseas activities. Finally, Jan Cameron, who in addition to her role on the Board headed the Group's internal HR function, left the business in April 2015 to pursue her portfolio career. The Board wishes to express its gratitude to both Bruce and Jan for their considerable contributions to the business. As a result, the Board has taken the opportunity to streamline its reporting structure and has appointed a new HR executive to take account of our changing requirements who reports to James Webber as the Group COO. CURRENT TRADING I am pleased to report that in the first quarter of 2015, both revenue and profitability has exceeded management's expectations. The Board is encouraged and looks to the future with some confidence. PIERCE CASEY Executive Chairman STRATEGIC REPORT THE BUSINESS MODEL Norman Broadbent plc is a human capital consulting group which provides a broad range of people solutions including board and executive search, senior interim management, leadership consulting and assessment, executive RPO and contingent recruitment, social media consulting and research. The Group operates through independently managed and separately branded businesses which trade independently but collectively share a set of core behavioural and brand values. The Group focusses on providing innovative and targeted solutions for our clients to help deliver a competitive edge to their businesses. STRATEGY AND OBJECTIVES The core elements of the Group's strategy are: - To develop a diversified group of complementary, human capital businesses. - To continue building the core Norman Broadbent UK search business through the hiring of Tier 1 search professionals. - To further develop the Norman Broadbent brand, through organic growth and acquisition. RESULTS FOR THE FINANCIAL YEAR Group revenue from continued operations increased in the year by 11% to £7,600,000 (2013: £6,821,000). Board and executive search fees declined by 6% to £5,245,000 (2013: £5,586,000) reflecting a reduction in fee generating headcount in the UK search business during the year. Income from overseas royalties decreased to £76,000 (2013: £212,000) as a result of the licenses with Italy, Middle East and Spain being terminated due to the Board's decision to regain complete control of the Norman Broadbent brand worldwide. Operating expenditure increased by 1% to £8,010,000 (2013: £7,940,000), reflecting the incremental costs of SMS, AGP and NBIM, the three recently established subsidiary businesses set up in late 2012, 2013 and mid-2014 respectively. The impact of the new subsidiary start-up losses has meant that the Group reported an operating loss from continued operations in 2014 of £932,000 (2013: £1,156,000) and a retained loss, excluding minority interests, of £1,489,000 (2013: £1,050,000). The core UK search business reported a profit before tax of £526,000 (2013: £141,000) CASH FLOW AND BALANCE SHEET Net cash outflow from operations in 2014 was £453,000 (2013: £732,000) with the majority of these funds invested in the development of AGP, NBIM and SMS. Debtor days (for established businesses) have decreased by 18% from 68 to 56, with trade receivables at the year-end standing at £1,519,000 (2013: £1,829,000). The decrease in debtor days, despite the commercial reality of providing services to large blue chip multinational businesses who often demand payment terms of up to 90 days, is an encouraging trend for the business. Management continue to monitor this Key Performance Indicator and aim to maintain debtor days at a level which is no higher than 60. Net cash inflow from financing activities amounted to £358,000 (2013: £521,000) relating primarily to the net funds received from an equity placing of £500,000 in November 2014. At 31 December 2014, the only exposure to bank borrowings was the Group's invoice discounting facility and funds drawn down against this facility were £673,000 (2013: £802,000) against UK trade receivables of £999,000 (2013: £1,255,000). EARNINGS PER SHARE The retained loss for 2014 has resulted in a reported loss per share of 9.85 pence (2013: loss per share 7.85 pence). After adding back the cost of share based payments the adjusted loss per share was 9.71 pence (2013: loss per share of 7.40 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. MONITORING, RISK AND KPIs The directors have a responsibility for identifying risks facing each of the businesses and for putting in place procedures to mitigate and monitor risks. Board meetings incorporate, amongst other agenda items, a review of monthly management accounts, operational and financial KPIs and major issues and risks facing the business. The most important KPIs used in monitoring the business are set out in the following table: Key performance 2014 2013 indicators Revenue (continued £7,600,000 £6,821,000 operations) Operating loss £(932,000) £(1,156,000) Revenue from new clients 38% 38% * Employment / Sales 76% 84% Debtor days * 56 days 68 days * NBES only as established business 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. Whilst revenues from existing businesses declined in 2014, this trend is expected to reverse in 2015 as new fee generators become established and given the steady increase in revenues from the new subsidiaries 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 interest rate, liquidity and credit risk. In November 2014, the Group raised £500,000 through a subscription of new shares primarily to fund the re-modelling of certain aspects of the contingent offering within AGP and for working capital purposes generally. This fundraising followed successful share placings in October 2013, November 2012 and May 2011, raising £700,000, £727,000 and £1,750,000 respectively, which have provided the Group with the financing to progress towards its stated objectives. The Group is free from long term debt which significantly reduces its interest rate risk and maintains a commercial finance facility with ample capacity to support the working capital requirements of the Group as it grows. Business Environment - Demand for services is affected by global economic conditions and the level of economic activity in the regions and industries in which the Group operates. When conditions in the global economy deteriorate or economic activity slows, many companies hire fewer permanent employees or rely on internal human resource departments to recruit staff. Whilst there are signs that the global economy is starting to recover, should conditions deteriorate in the future then demand for the services offered by the Group could weaken resulting in lower cash flows. The Group attempts to mitigate this risk by operating across various diverse sectors, whilst also extending its services into new geographic regions, where demand for such services are stronger. 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 This 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. PIERCE CASEY RICHARD ROBINSON Executive Chairman Company Secretary CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2014 Re-presented Note 2014 2013 £000 £000 CONTINUING OPERATIONS REVENUE 1/3 7,600 6,821 Cost of sales (522) (162) GROSS PROFIT 3 7,078 6,659 Operating expenses (8,010) (7,940) Other income - 125 GROUP OPERATING LOSS (932) (1,156) Dividends received - 18 Net finance cost 7 (32) (15) Non-recurring exceptional Items 8 (559) - Profit/(loss) on disposal of investment (33) - LOSS ON ORDINARY ACTIVITIES BEFORE INCOME 4 (1,556) (1,153) TAX Income tax expense 6 (8) (19) LOSS FROM CONTINUING OPERATIONS (1,564) (1,172) DISCONTINUED OPERATIONS Profit/(loss) from discontinued operation 9 (144) 20 LOSS FOR THE PERIOD (1,708) (1,152) OTHER COMPREHENSIVE INCOME 21 (12) Foreign currency translation differences - foreign operations TOTAL COMPREHENSIVE INCOME FOR THE YEAR (1,687) (1,164) Loss attributable to: - Owners of the Company (1,489) (1,050) - Non-controlling interests (219) (102) Loss for the year (1,708) (1,152) Total comprehensive income attributable to: - Owners of the Company (1,468) (1,062) - Non-controlling interests (219) (102) Total comprehensive income for the year (1,687) (1,164) Loss per share - Basic 10 (9.85)p (7.85)p - Diluted (9.85)p (7.85)p Adjusted loss per share - Basic 10 (9.71)p (7.40)p - Diluted (9.71)p (7.40)p Loss per share - continuing operations - Basic 10 (9.22)p (7.92)p - Diluted (9.22)p (7.92)p Adjusted loss per share - continuing operations - Basic (9.09)p (7.48)p - Diluted 10 (9.09)p (7.48)p * 2013 re-presented to show the discontinued operation separately from continued operations as required by IFRS 5. CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2014 Notes 2014 2013 £000 £000 Non-Current Assets Intangible assets 12 1,363 1,922 Property, plant and equipment 13 105 172 Deferred tax assets 6 69 69 TOTAL NON-CURRENT ASSETS 1,537 2,163 Current Assets Trade and other receivables 15 1,963 2,339 Cash and cash equivalents 16 506 579 TOTAL CURRENT ASSETS 2,469 2,918 TOTAL ASSETS 4,006 5,081 Current Liabilities Trade and other payables 17 1,518 1,333 Bank overdraft and interest bearing 18 673 802 loans Corporation tax liability - 21 TOTAL CURRENT LIABILITIES 2,191 2,156 NET CURRENT ASSETS 278 762 Non-Current Liabilities Provisions 23 125 125 TOTAL LIABILITIES 2,316 2,281 TOTAL ASSETS LESS TOTAL LIABILITIES 1,690 2,800 EQUITY Issued share capital 20 5,901 5,875 Share premium account 20 10,699 10,238 Retained earnings (14,649) (13,356) EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 1,951 2,757 Non-controlling interests (261) 43 TOTAL EQUITY 1,690 2,800 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2014 Attributable to owners of the Company CONSOLIDATED GROUP Non-controlling Share Share Retained Total interests Total Capital Premium Earnings Equity £000 Equity £000 £000 £000 £000 £000 Balance at 1st January 2013 5,857 9,572 (12,353) 3,076 145 3,221 Loss for the year - - (1,050) (1,050) (102) (1,152) Total other comprehensive income - - (12) (12) - (12) Total comprehensive income for the year - - (1,062) (1,062) (102) (1,164) Transactions with owners of the Company, recognised directly in equity: Issue of ordinary shares 18 666 - 684 - 684 Credit to equity for share based payments - - 59 59 - 59 Total transactions with owners of the Company, recognised directly in equity 18 666 59 743 - 743 Balance at 31st December 2013 5,875 10,238 (13,356) 2,757 43 2,800 Balance at 1st January 2014 Loss for the year - - (1,489) (1,489) (219) (1,708) Adjustment for discontinued operation - - - - 70 70 Total other comprehensive income - - 21 21 - 21 Total comprehensive income for the year - - (1,468) (1,468) (149) (1,617) Transactions with owners of the Company, recognised directly in equity: Issue of ordinary shares 26 461 - 487 - 487 Credit to equity for share based payments - - 20 20 - 20 Total transactions with owners of the Company, recognised directly in equity 26 461 20 507 - 507 Changes in ownership interest in subsidiaries Disposal of non-controlling interests with change of - - 155 155 (155) - control Total transactions with owners of the Company 26 461 175 662 (155) 507 Balance at 31st December 2014 5,901 10,699 (14,649) 1,951 (261) 1,690 CONSOLIDATED STATEMENT OF CASH FLOW` For the year ended 31 December 2014 Notes 2014 2013 £000 £000 Net cash used in operating activities (i) (453) (732) Cash flows from investing activities and servicing of finance Net finance cost (32) (30) Dividends received - 18 Payments to acquire tangible fixed assets 13 (17) (122) Repayment of deferred consideration - (73) Disposal of subsidiary, inclusive of cash 9 (15) - disposed of Net cash inflow from Disposal of investments 92 - Net cash used in investing activities 28 (208) Cash flows from financing activities Net cash inflows from equity placing 20 487 684 (Repayment)Increase in invoice discounting 18 (129) (163) Net cash from financing activities 358 521 Net increase in cash and cash equivalents (67) (419) Net cash and cash equivalents at beginning of period 579 1,009 Effects of exchange rate changes on cash balances held in (6) (11) foreign currencies Net cash and cash equivalents at end of period 506 579 Analysis of net funds Cash and cash equivalents 506 579 Borrowings due within one year (673) (802) Deferred consideration - - Net funds (167) (223) Note (i) Reconciliation of operating loss to net cash from operating 2014 2013 activities £000 £000 Operating loss from continued operations (932) (1,156) Operating profit / (loss) from discontinued operations (note (103) 86 8) Depreciation/impairment of property, plant and equipment 62 89 Share based payment charge 20 59 Decrease in trade and other receivables 199 (72) Increase in trade and other payables 328 257 Increase in provisions - 125 Taxation paid (29) (121) Net cash used in operating activities (453) (732) 1. 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. Basis of preparation The consolidated financial statements of Norman Broadbent plc ("Norman Broadbent" or "the Company") 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 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. Going concern The Group reported an operating loss from continued operations in the year to 31 December 2014 of £0.9m compared with an operating loss of £1.2m in 2013. These consolidated losses whilst greater than anticipated were primarily driven by losses in the new subsidiary businesses of AGP and SMS (totalling £0.8m) and continued losses incurred in the wholly owned overseas offices in Singapore, USA and Belgium (totalling £0.2m). The Consolidated Statement of Financial Position shows a net asset position at 31 December 2014 of £1.7m (2013: £2.8m) with cash at bank of £0.5m (2013: £0.6m). At the date that these financial statements were approved the only bank debt owed by the Company was its invoice discounting facility which is secured by the Group's trade receivables. 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. 2. SEGMENTAL ANALYSIS Management has determined the operating segments based on the reports reviewed regularly by the board for use in deciding how to allocate resources and in assessing performance. The Board considers Group operations from both a class of business and geographic perspective. Each class of business derives its revenues from the supply of a particular recruitment related service, from retained executive search through to executive assessment and coaching. Business segment results are reviewed primarily to operating profit level, which includes employee costs, marketing, office and accommodation costs and appropriate recharges for management time. Group revenues are primarily driven from UK operations however, when revenue is derived from overseas business the results are presented to the Board by geographic region to identify potential areas for growth or those posing potential risks to the Group. i) Class of Business: The analysis by class of business of the Group's turnover, profit before taxation and net assets/(liabilities) is set out below: BUSINESS SEGMENTS 2014 Executive Overseas Disc. Un Search Royalties NBLC AGP SMS NBIM Operation allocated Total £000 £000 £000 £000 £000 £000 £000 £000 £000 Revenue 5,245 76 473 1,077 526 203 120 - 7,720 Cost of sales (54) - (37) (292) (5) (134) (45) - (567) Gross profit 5,191 76 436 785 521 69 75 - 7,153 Operating (4,700) (11) (578) (1,305) (831) (95) (174) (432) (8,126) expenses Other operating - - - - - - - - - income Finance costs (26) - - (6) - - - - (32) Depreciation and (49) - - (5) (4) - (4) - (62) amort. Restructuring - - - - - - - - - costs Exceptional - - - - - - (41) (559) (600) items Loss on disposal - - - - - - - (33) (33) of investment Profit/(Loss) before tax 416 65 (142) (531) (314) (26) (144) (1,024) (1,700) Net assets 3,918 - (610) (1,048)) (532) (38) - - 1,690 BUSINESS SEGMENTS 2013 Executive Overseas Disc. Un Search Royalties NBLC AGP SMS NBIM Operation allocated Total £000 £000 £000 £000 £000 £000 £000 £000 £000 Revenue 5,586 212 467 252 304 - 730 - 7,551 Cost of sales (101) - (57) (1) (3) - (230) - (392) Gross profit 5,485 212 410 251 301 - 500 - 7,159 Operating (5,608) (107) (648) (674) (512) - (403) (313) (8,265) expenses Other operating 143 - - - - - - - 143 income Finance (costs) (14) - - (1) - - (15) - (30) / Income Depreciation and (73) - - (3) (2) - (11) - (89) amort. Profit/(Loss) before tax (67) 105 (238) (427) (213) - 71 (313) (1,082) Net assets 3,577 - (430) (470) (229) - 352 - 2,800 The unallocated costs refer to central costs of the Group including salaries, professional and other costs, which are not directly attributable to the delivery of the services. The five segments shown represent the management information provided to the Board and in the opinion of the directors reflect the nature of the Group's services. ii) Geographic Region: The analysis by geographic region of the Group's turnover, profit before taxation and net assets/ (liabilities) is set out below: BUSINESS SEGMENTS 2014 Executive Search Overseas Disc. Un-allocated £000 Royalties NBLC AGP SMS NBIM Operation Total £000 £000 £000 £000 £000 £000 £000 £000 Revenue United Kingdom 4,964 - 472 1,033 526 203 - - 7,198 Europe 27 76 - 40 - - 120 - 263 Other 254 - 1 4 - - - - 259 Total 5,245 76 473 1,077 526 203 120 - 7,720 Gross profit United Kingdom 4,910 - 435 741 521 69 - - 6,676 Europe 27 76 - 40 - - 75 - 218 Other 254 - 1 4 - - - - 259 Total 5,191 76 436 785 521 69 75 - 7,153 Profit/(loss) before tax United Kingdom 525 - (142) (531) (314) (26) - (432) (920) Europe - 65 - - - - (144) (592) (671) Other (109) - - - - - - - (109) Total 416 65 (142) (531) (314) (26) (144) (1,024) (1,700) Net assets 3,918 - (610) (1,048) (532) (38) - - 1,690 BUSINESS SEGMENTS 2013 Executive Search Overseas Disc. Un-allocated £000 Royalties NBLC AGP SMS NBIM Operation Total £000 £000 £000 £000 £000 £000 £000 £000 Revenue United Kingdom 5,409 - 461 238 304 - - - 6,412 Europe - 194 - 14 - - 730 - 938 Other 177 18 6 - - - - - 201 Total 5,586 212 467 252 304 - 730 - 7,551 Gross profit United Kingdom 5,351 - 410 237 301 - - - 6,299 Europe - 194 - 14 - - 500 - 708 Other 134 18 - - - - - - 152 Total 5,485 212 410 251 301 - 500 - 7,159 Profit/(loss) before tax United Kingdom 141 - (238) (427) (213) - - (313) (1,050) Europe - 105 - - - - 71 - 176 Other (208) - - - - - - - (208) Total (67) 105 (238) (427) (213) - 71 (313) (1,082) Net assets 3,577 - (430) (470) (229) - 352 - 2,800 Turnover by location is not materially different from turnover by destination. 3. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 2014 2013 £000 £000 Loss on ordinary activities before taxation is stated after charging: Depreciation and impairment of property, plant and 62 89 equipment (Gain) / loss on foreign currency exchange (4) (3) Operating lease rentals: Land and buildings 424 426 Auditors' remuneration: Audit work 43 42 Non-audit work - - The Company audit fee in the year was £12,000 (2013: £12,000). 4. STAFF COSTS The average number of full time equivalent persons 2014 2013 (including directors) No. No. employed by the Group during the period was as follows: Sales and related services 38 35 Administration 46 45 84 80 Staff costs (for the above persons): £000 £000 Wages and salaries 5,026 4,950 Social security costs 540 527 Defined contribution pension cost 210 203 Share based payment expense 20 60 5,796 5,740 The emoluments of the directors are disclosed as required by the Companies Act 2006 on page 12 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. 5. TAX EXPENSE (a) Tax charged in the income statement 2014 2013 Taxation is based on the loss for the £000 £000 year and comprises: Current tax: United Kingdom corporation tax at 21.5% 8 19 (2013: 23.25%) based on loss for the year Foreign Tax - 51 Adjustment in respect of prior years - - Total current tax 8 70 Deferred tax: Origination and reversal of temporary differences - - Tax charge/(credit) 8 70 (b) Reconciliation of the total tax charge The difference between the current tax shown above and the amount calculated by applying the standard rate of UK corporation tax to the profit before tax is as follows: 2014 2013 £000 £000 Loss on ordinary activities before (1,700) (1,082) taxation Tax on loss on ordinary activities at standard UK corporation tax rate of 21.5% (2013: 23.25%) (366) (252) Effects of: Expenses not deductible 159 33 Foreign tax suffered - 19 Non-taxable income 7 (4) Capital allowances in excess of 8 9 depreciation Utilisation of ACT (2) (13) Marginal rate relief - (2) Adjustment to losses carried forward 202 280 Current tax charge for the year 8 70 (c) Deferred tax Tax losses Total £000 £000 At 01 January 2013 (69) (69) Credited to the income statement in 2013 - - At 31 December 2013 (69) (69) Credited to the income statement in 2014 - - At 31 December 2014 (69) (69) At 31 December 2014 the Group had capital losses carried forward of £8,130,000 (2013: £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 £11,531,767 (2013: £10,843,243) trading losses carried forward, which includes £8,987,000 losses transferred from BNB Recruitment Consultancy Ltd in 2011. A deferred tax asset of £1,424,000 (2013: £1,557,000) 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: 2014 2013 Deferred tax assets: £000 £000 Tax losses carried forward 69 69 Total 69 69 6. NET FINANCE COST 2014 2013 £000 £000 Interest payable on bank loans and overdrafts 32 15 Total 32 15 7. EXCEPTIONAL ITEMS Year ended 31 Year ended 31 December 2014 December 2013 £000 £000 Goodwill disposal Norman Broadbent SPRL 112 - Goodwill impairment NB Norman Broadbent SA 447 - Balance at end of period 559 - The Group disposed of Norman Broadbent SPRL for £120,000 on 8 May 2014, resulting in a disposal of goodwill of £112,000 in the Consolidated Statement of Financial Position, and a loss on disposal of £128,000 in the Company Statement of Financial Position. On 27 May 2014, the Group sold its 20 % stake in NBS Norman Broadbent SA for £92,000, which completed on 30 July 2014. The sale resulted in an impairment to goodwill of £446,946 in the Consolidated Statement of Financial Position and a profit of £92,000. 8. DISCONTINUED OPERATION On 8 May 2014, the Group sold its 51 % stake in Norman Broadbent SPRL for £120,000 (compared to a cash investment of £135,000) to existing management. Norman Broadbent SPRL owned 100% of the issued share capital of Norman Broadbent S.A.S, which was liquidated in February 2014. The segment was not a discontinued operation or classified as held for sale at 31 December 2013 and the comparative consolidated statement of comprehensive income has been re-presented to show the discontinued operation separately from continued operations. Year ended Year ended 31 December 31 December 2013 2014 £000 £000 Results from discontinued operation Revenue 120 730 Operating Expenses (223) (644) Results from operating activities (103) 86 Net finance cost - (15) Exceptional items (41) - Tax - (51) Results from operating activities, net of tax (144) 20 Minority Interest 70 (10) Loss/Profit for the period (74) 10 Loss per share - Basic (0.39p) 0.07p - Diluted (0.39p) 0.07p Effect of disposal on the financial position of the Group Year ended 31 December 2014 £000 Property, plant and equipment 23 Trade and other receivables 126 Cash and cash equivalents * 135 Trade and other payables (48) Net assets and liabilities 236 Consideration received, satisfied in 120 cash Cash and Cash equivalents disposed of (135) Net cash outflow (15) * Excludes cash balance of £8,000 from the liquidated position of Norman Broadbent SAS. 9. EARNINGS PER SHARE i) Basic earnings per share This is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period: 2014 2013 Loss attributable to shareholders £(1,489,000) £(1,050,000) Weighted average number of ordinary 15,121,429 13,385,224 shares 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 two categories of dilutive potential ordinary shares: share options and warrants. For these options and warrants, 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 warrants and 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. 2014 2013 Loss attributable to shareholders £(1,489,000) £(1,050,000) Weighted average number of ordinary 15,121,429 13,385,224 shares - assumed conversion of share options - - - assumed conversion of warrants - - Total 15,121,429 13,385,224 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. 2014 2014 2014 2013 2013 2013 Basic Diluted Basic Diluted pence per pence per pence per pence per £000 share share £000 share share Basic earnings Loss after tax (1,489) (9.85) (9.85) (1,050) (7.85) (7.85) Adjustments Share based payment charge 20 0.14 0.14 60 0.45 0.45 Adjusted earnings (1,469) (9.71) (9.71) (990) (7.40) (7.40) 10. 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 £364,000 (2013: £128,000 profit). 11. INTANGIBLE ASSETS Goodwill Group arising on consolidation £000 Balance at 1 January 2013 3,802 Balance at 31 December 2013 3,802 Disposal (note 8) (112) Balance at 31 December 2014 3,690 Provision for impairment Balance at 1 January 2013 1,880 Balance at 31 December 2013 1,880 Impairment in the year (note 8) 447 Balance at 31 December 2014 2,327 Net book value At 1 January 2013 1,922 At 31 December 2013 1,922 At 31 December 2014 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: Human Asset Norman Development Broadbent International Total £000 £000 £000 At 1 January 2013 1,862 60 1,922 At 31 December 2013 1,862 60 1,922 At 31 December 2013 1,303 60 1,363 In line with International Financial Reporting Standards, goodwill has not been amortised from the transition date, but has instead been subject to an impairment review by the directors of the Group. As set out in accounting policy note 1 on page 24, 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 2015 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 13% per annum for the foreseeable future (2013: 10 %) and 9% for Human Asset Development International (2013: 7 %). 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 9 % (2013: 12 %). 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 2014 the recoverable value of the Norman Broadbent CGU is £3,000,000 and the Human Asset Development International CGU is £160,000. Return on sales would need to fall below 6 % for the Norman Broadbent goodwill to be impaired and below 4 % for Human Asset Development International goodwill to be impaired. 12. PROPERTY, PLANT AND EQUIPMENT Land and Office and Group buildings - computer Fixtures and Motor leasehold equipment fittings Vehicles Total £000 £000 £000 £000 £000 Cost Balance at 1 January 62 236 148 13 459 2013 Additions 81 38 3 - 122 Disposals (59) (99) (87) - (245) Balance at 31 December 84 175 64 13 336 2013 Additions - 17 - - 17 Disposals - (8) (17) (13) (38) Balance at 31 December 84 184 47 - 315 2014 Accumulated depreciation Balance at 1 January 54 147 117 2 320 2013 Charge for the year 20 50 14 5 89 Disposals (59) (99) (87) - (245) Balance at 31 December 15 98 44 7 164 2013 Charge for the year 15 40 4 3 62 Disposals - (3) (3) (10) (16) Balance at 31 December 30 135 45 - 210 2014 Net book value At 1 January 2013 8 89 31 11 139 At 31 December 2013 69 77 20 6 172 At 31 December 2014 54 49 2 - 105 The Group had no capital commitments as at 31 December 2014 (2013: £Nil). The above assets are owned by Group companies; the Company has no fixed assets. 13. INVESTMENTS Shares in subsidiary Company undertakings £000 Cost Balance at 1 January 2013 6,041 Additions (see note below) 10 Balance at 31 December 2013 6,051 Disposals (see note below) (249) Balance at 31 December 2014 5,802 Provision for impairment Balance at 1 January 2013 3,926 Balance at 31 December 2013 3,926 Impairment in the year - Balance at 31 December 2014 3,926 Net book value At 1 January 2013 2,115 At 31 December 2013 2,125 At 31 December 2014 1,876 In 2012, the company acquired a 51 % interest in Acker Deboeck and Company for a total consideration of £249,000. The Group disposed of Norman Broadbent SPRL for £120,000 on 8 May 2014 (see note 8). In 2013, the entire issued share capital of £10,000 in Arcus Global Partners Limited was acquired from Norman Broadbent Executive Search Limited, a wholly owned subsidiary, to the Company. In 2014, the company disposed of Norman Broadbent SPRL for £120,000 (see note 8). At 31 December 2014 the Company held the following ownership interests: Principal Group investments: Country of incorporation Description or and proportion registration Principal of shares held and operation activities by the Company Norman Broadbent Executive England and Executive search 100% ordinary Search Ltd Wales shares Norman Broadbent Overseas England and Executive search 100% ordinary Ltd Wales shares Norman Broadbent Leadership England and Assessment, 100% ordinary Consulting Limited Wales coaching and shares talent mgmt. AGP NB Ltd (formerly Arcus England and Contingent 100% ordinary Global Partners) Wales Search shares Norman Broadbent Inc United States Executive search 100% ordinary of America shares The NB Consultancy Singapore Executive search 100% ordinary (Singapore) Pte. Ltd shares Connecting Corporates Ltd England and Social Media 51% ordinary Wales Search & shares Consulting Bancomm Ltd England and Dormant 100% ordinary Wales shares Norman Broadbent Ireland Republic of Dormant 100% ordinary Ltd* Ireland shares Norman Broadbent Interim England and Interim 100% ordinary Management Ltd Wales Management shares * 100 % of the issued share capital of this company is owned by Norman Broadbent Overseas Ltd. 14. TRADE AND OTHER RECEIVABLES Group Company 2014 2013 2014 2013 £000 £000 £000 £000 Trade receivables 1,519 1,829 - - Less: provision for impairment (180) (72) - - Trade receivables - net 1,339 1,757 - - Other debtors 339 417 6 21 Prepayments and accrued income 285 165 10 4 Due from Group undertakings - - 3,381 2,711 Total 1,963 2,339 3,397 2,736 As at 31 December 2014, Group trade receivables of £995,000 (2013: £1,197,000) were past their due date but not impaired. They relate to customers with no default history. The aging profile of these receivables is as follows: Group Company 2014 2013 2014 2013 £000 £000 £000 £000 Up to 3 months 943 869 - - 3 to 6 months 31 238 - - 6 to 12 months 21 90 - - Total 995 1,197 - - The largest amount due from a single debtor at 31 December 2014 represents 8.9% (2013: 6.8%) of the total trade receivables balance outstanding. As at 31 December 2014, Group trade receivables of £180,000 (2013: £72,000) were past their due date and considered impaired. A provision for impairment for the full amount has been recognised in the financial statements. Movements on the Group's provision for impairment of trade receivables are as follows: 2014 2013 £000 £000 At 1 January 72 20 Provision for receivable impairment 108 72 Receivables written-off as uncollectable - (20) At 31 December 180 72 Other than the impairment provision provided for aged trade receivables above, there are no other material difference between the carrying value and the fair value of the Group's and parent company's trade and other receivables. 15. CASH AND CASH EQUIVALENTS Group Company 2014 2013 2014 2013 £000 £000 £000 £000 Cash at bank and on hand 506 579 221 375 Total 506 579 221 375 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. 16. TRADE AND OTHER PAYABLES Group Company 2014 2013 2014 2013 £000 £000 £000 £000 Trade payables 528 389 58 56 Due to Group undertakings - - 1,295 1,166 Other taxation and social security 226 353 - - Other payables 163 72 - - Accruals 601 519 69 65 Total 1,518 1,333 1,422 1,287 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. 17. BORROWINGS Group Company Maturity profile of borrowings 2014 2013 2014 2013 £000 £000 £000 £000 Current Bank overdrafts and interest bearing loans: Invoice discounting facility (see note 673 802 - - (a) below) Total 673 802 - - The carrying amounts and fair value of the Group's borrowings, which are all denominated in sterling, are as follows: Carrying amount Fair value 2014 2013 2014 2013 £000 £000 £000 £000 Bank overdrafts and interest bearing loans: Invoice discounting facility 673 802 673 802 Total 673 802 673 802 a) Invoice discounting facilities: Norman Broadbent Executive Search Limited, AGP and NBIM operate independent invoice discounting facilities, provided by Leumi ABL Limited. Leumi ABL Ltd holds all assets debentures for each company (fixed and floating charges) and also a cross corporate guarantee and indemnity deed dated 20 July 2011. The financial terms of the facilities are outlined below: Norman Broadbent Executive Search Limited: Funds are available to be drawn down at an advance rate of 75% against trade receivables of Norman Broadbent Executive Search Limited that are aged less than 120 days, with the facility capped at £1,500,000. At 31 December 2014, the outstanding balance on the facility of £508,000 (2013: £680,000) was secured by trade receivables of £682,000 (2013: £1,104,000). Interest is charged on the drawn down funds at a rate of 2.50% above the bank base rate (2013: 2.50%). AGP (NB) Limited: Funds are available to be drawn down at an advance rate of 75% against trade receivables of AGP (NB) Limited that are aged less than 120 days, with the facility capped at £750,000. At 31 December 2014, the outstanding balance on the facility of £45,000 (2013: £122,000) was secured by trade receivables of £126,000 (2013: £151,000). Interest is charged on the drawn down funds at a rate of 2.75% (2013: 2.75%) above the bank base rate. Norman Broadbent Interim Management Limited: Funds are available to be drawn down at an advance rate of 90% against trade receivables of Norman Broadbent Interim Management Limited that are aged less than 120 days, with the facility capped at £750,000. At 31 December 2014, the outstanding balance on the facility of £120,000 (2013: £Nil) was secured by trade receivables of £191,000 (2013: £Nil). Interest is charged on the drawn down funds at a rate of 2.75% (2013: nil) above the bank base rate. 18. FINANCIAL INSTRUMENTS The principle 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 Group 2014 2013 £000 £000 Financial Assets Trade and other receivables 1,963 2,339 Cash and cash equivalents 506 579 Financial Liabilities Trade and other payables 1,518 1,333 Invoice discounting facility 673 802 Corporation tax liability - 21 Amortised Cost Company 2014 2013 £000 £000 Financial Assets Trade and other receivables 3,397 2,736 Cash and cash equivalents 221 375 Financial Liabilities Trade and other payables 1,422 1,287 In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.. 19. SHARE CAPITAL AND PREMIUM 2014 2013 Allotted and fully paid: £000 £000 Ordinary Shares: 17,416,487 Ordinary shares of 1.0p each (2013: 174 148 14,798,686) Deferred Shares: 23,342,400 Deferred A shares of 4.0p each (2013: 934 934 23,342,400) 907,118,360 Deferred shares of 4.0p each (2013: 3,628 3,628 907,118,360) 1,043,566 Deferred B shares of 42.0p each (2013: 438 438 1,043,566) 2,504,610 Deferred shares of 29.0p each (2013: 2,504,610) 727 727 5,727 5,727 Total 5,901 5,875 Deferred A Shares of 4.0p each The Deferred A Shares carry no right to dividends or distributions or to receive notice of or attend general meetings of the company. In the event of a winding up, the shares carry a right to repayment only after the holders of Ordinary Shares have received a payment of £10,000 per Ordinary Share. The company retains the right to cancel the shares without payment to the holders thereof. The rights attaching to the shares shall not be varied by the creation or issue of shares ranking parri passu with or in priority to the Deferred A Shares. Deferred Shares of 4.0p 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 parri passu with or in priority to the Deferred B Shares. Deferred Shares of 29.0p each The Deferred Shares carry no right to dividends or distributions or to receive notice of or attend general meetings of the company. In the event of a winding up, the shares carry the right to repayment only after the holders of Ordinary Shares have received a payment of £10,000 per Ordinary Share. The company retains the right to cancel the shares without payment to the holders thereof. A reconciliation of the movement in share capital and share premium is presented below: No. of Ordinary Deferred Share ordinary shares shares premium shares Total (000s) £000 £000 £000 £000 At 1 January 2013 13,049 130 5,727 9,572 15,429 Proceeds from share placing 1,750 18 - 682 700 (note (a) below) Transaction costs related to - - - (16) (16) share placing At 31 December 2013 14,799 148 5,727 10,238 16,113 Proceeds from share placing 2,617 26 - 474 500 (note (b) below) Transaction costs related to - - - (13) (13) share placing At 31 December 2014 17,416 174 5,727 10,699 16,600 a) Share placing in October 2013: On 22 October 2013, the Company issued 1,750,000 new ordinary 1.0p shares for a total cash consideration of £700,000. Transaction costs of £16,000 were incurred resulting in net cash proceeds of £684,000. b) Share placing in November 2014: On 21 November 2014, the Company issued 2,617,801 new ordinary 1.0p shares for a total cash consideration of £500,000. Transaction costs of £12,500 were incurred resulting in net cash proceeds of £487,500. 20. SHARE BASED PAYMENTS 20.1 Share Options The Company has an approved EMI share option scheme for full time employees and directors. The exercise price of the granted options is equal to the market price of the shares on the date of the grant. The Company has no legal or constructive obligation to repurchase or settle the options or warrants in cash. Options under the Company EMI scheme are conditional on the employee completing three years' service (the vesting period). The EMI options vest in three equal tranches on the first, second and third anniversary of the grant. The options have a contractual option term of ten years. Movements in the number of share options and their related weighted average exercise prices are as follows: Approved EMI share option scheme Avg. Number of exercise options price per share (p) At 1 January 2013 62.92 996,240 Forfeited 61.13 (84,962) Granted 42.50 91,765 At 31 December 2013 61.20 1,003,043 Forfeited 62.49 (271,829) At 31 December 2014 60.72 731,214 Share options outstanding at the end of the year have the following expiry date and exercise prices: Expiry date Exercise Share options price per share (p) 2014 2013 2020 52.50 106,666 169,523 2021 65.50 532,782 741,754 2023 42.50 91,765 91,765 Total 731,214 1,003,042 Out of the 731,214 outstanding options (2013: 1,003,042), no options were exercisable at the year end (2013: None) as they were all `underwater'. The weighted average fair value of the share options granted in 2013, determined using the Trinomial Valuation Model, was 23.8 pence (options granted in 2011: 37.5 pence and options granted in 2010: 21.3 pence). The significant inputs into the model were weighted average share price of 42.5 pence at the grant date (2011: 65.5 pence and 2010: 52.5 pence), exercise price shown above, volatility of 75% (2011 and 2010: 75%), dividend yield of 0% (2011 and 2010: 0%), an expected option life of 10 years (2011 and 2010: 10 years) and an annual risk-free interest rate of 3.38% (2011: 3.38% and 2010: 3.65%). 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. 20.2 Warrants On 14 June 2010, the Company issued warrants over shares in the Company to two directors on the basis of one warrant for one ordinary share. The warrants had an exercise price of 45 pence, could be exercised in full or in part immediately and expired on 31 May 2013. Movements in the number of warrants and their related weighted average exercise prices are as follows: Warrants Avg. Number of exercise warrants price per share (p) At 1 January 2013 45.00 166,666 Forfeited 45.00 (166,666) At 31 December 2013 - - At 31 December 2014 - - There were no Warrants outstanding at the end of the year. See Note 4 for the total expense recognised in the income statement for share options and warrants granted to directors and employees. Operating leases The Group leases all its premises. The terms of the leases vary for each property and are tenant repairing. As at 31 December 2014, the total future value of minimum lease payments are due as follows: Land and Buildings 2014 2013 £000 £000 Within one year 264 297 Later than one year and not later than five years 1,056 1,028 Total 1,320 1,325 21. PROVISIONS Group Company 2014 2013 2014 2013 £000 £000 £000 £000 At 1 January 125 - - - Provisions made during the year - 125 - - At 31 December 125 125 - - Current liability - - - - Non-current liability 125 125 - - At 31 December 125 125 - - On the 6 March 2013 the Company signed a new ten year lease with a five year break for its main office in London. On signing the new lease the Company inherited the office fit-out from the previous tenant. Under the terms of the new lease the Company is obliged to return vacant possession to the landlord with the office returned to its original state. The Company has had the present cost of the future works required to return the office to its original state valued by an independent firm of advisors and this non-current liability of £125,000 has been provided for in the financial period. The Company received a one-off payment of £250,000 in 2013 from the previous tenant in satisfaction of various costs and liabilities that it inherited with the new lease. 22. PENSION COSTS The Group operated several defined contribution pension schemes for the business. The assets of the schemes were held separately from those of the Group in independently administered funds. The pension cost represents contributions payable by the Group to the funds and amounts to £210,000 (2013: £203,000). At the year-end £12,000 of contributions were outstanding (2013: £23,000). 23. RELATED PARTY TRANSACTIONS The following transactions were carried out with related parties: (a) Purchase of services: 2014 2013 £000 £000 Adelaide Capital Limited * 50 52 Anderson Barrowcliff LLP 13 14 Brian Stephens & Company Ltd 30 22 Norman Broadbent SAS - 37 Arquius Colombia SAS - 48 Connecting Corporates Limited 24 11 Total 117 184 During the year Adelaide Capital Limited invoiced the Group for the directors' fees of P Casey £30,000 and corporate finance services £20,000 (2013 total: £52,000). P Casey is a director of Adelaide Capital Limited. Brian Stephens & Company Ltd invoiced the Group for the directors' fees of B Stephens £20,000, £4,000 consultancy and business related travel costs £6,000 (2013 total: £22,000). B Stephens is a director of Brian Stephens & Company Ltd. * The amount paid to Adelaide Capital Limited, a wholly owned company of P Casey, is included in the total sums paid to P Casey of £121,000 for 2014 (see Directors Remuneration Report on page 11). Taxation and company secretarial services of £13,000 (2013: £9,000) were acquired from Anderson Barrowcliff LLP, an accountancy firm of which R Robinson is a partner. The remaining director fees for R Robinson was paid through PAYE £20,000 (2013 total: £15,000). During the year the Group acquired research services from Connecting Corporates Limited £24,000 (2013: £11,000). The Group owns a 51% stake in Connecting Corporates Limited. All related party expenditure took place via "arms-length" transactions. (a) Sale of services 2014 2013 £000 £000 NBS Norman Broadbent SA 76 175 Norman Broadbent SPRL - 11 Connecting Corporates Limited 13 42 Total 89 228 During the year the Group invoiced NBS Norman Broadbent SA for royalty income £76,000 (2013: £175,000). The Group sold its 20% stake in NBS Norman Broadbent SA during 2014. During the year the Group recharged group services incurred for the benefit of Connecting Corporates Limited to Connecting Corporates Limited at cost £13,000 (2013: £42,000). All related party transactions took place at "arms-length". (b) Provision of loans 2014 2013 £000 £000 Connecting Corporates Limited 305 275 Total 305 275 During the year the Group provided additional loans to Connecting Corporates Limited to support working capital requirements of this company £305,000 (2013: £275,000). The loans are non-interest bearing and are repayable on demand. At the year end, £305,000 (2013: £275,000) was outstanding and due to the Group. (c) 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 on page 12-13. (d) Year-end payables arising from the purchases of services: 2014 2013 £000 £000 Adelaide Capital Limited 12 - Anderson Barrowcliff LLP 1 - Brian Stephens & Company Ltd 6 6 Connecting Corporates Limited 24 11 Norman Broadbent SAS - 37 Arquius Colombia SAS - 19 Total 43 73 Payables to related parties arise from purchase transactions and are due one month after date of purchase. Payables bear no interest. (e) Year-end receivables arising from the sale of services: 2014 2013 £000 £000 NBS Norman Broadbent SA - 47 Norman Broadbent SPRL - 5 Connecting Corporates Limited 13 42 Total 13 94 Receivables owed by related parties arise from sales transactions and are due one month after date of purchase. Payables bear no interest. 24. CONTINGENT LIABILITY The Company is a member of the Norman Broadbent plc Group VAT scheme. As such it is jointly accountable for the combined VAT liability of the Group. The total VAT outstanding in the Group at the year-end was £67,000 (2013: £147,000). Under Section 17 of the Landlord and Tenant (Covenants) Act 1995 the Company has a contingent liability in respect of the lease on its previous registered office, which was assigned to a third party in April 2010. The Company could be required to meet the financial obligations of the lease should the assignee default on lease payments. The maximum potential liability would be £120,000 per annum expiring on 31 December 2015. The directors believe the likelihood of the assignee defaulting prior to expiry is remote due to the balance sheet position of the tenant, reviewed in their last published financial statements in March 2014. 25. POST BALANCE SHEET EVENTS The Group has taken the decision to cease its operations in Singapore (NB Consultancy (Singapore) Pte. Ltd). Whilst this has no impact on the Consolidated Statement of Financial Position, the intercompany loan balance of £194,000 has been provided for in the 2014 Company Statement of Financial Position. Since year end, the Group has taken the decision to cease operations in the USA (Norman Broadbent Inc). Once the closing date has been confirmed the Group will review the recoverability of the intercompany loan balance in the Company Statement of Financial Position. 26. AVAILIBILITY OF ACCOUNTS AND NOTICE OF ANNUAL GENERAL MEETING Copies of the Final Report and Annual Accounts have been posted to shareholders and are available to view on the Company's website (www.normanbroadbent.com/information/investor-relations). Notice is hereby given that the 76th Annual General Meeting of Norman Broadbent plc will be held at 11am at The East India Club, 16 St James's Square, London, SW1Y 4LH on 30 June 2015.

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