Norman Broadb Regulatory News (NBB)

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 toannounce its final results and annual accounts for the year ended 31 December2014. - 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 plcPierce Casey/James Webber/Sue O'Brien 020 7484 0000 Sanlam Securities UK LimitedSimon 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'sCONTINUING OPERATIONS REVENUE 7,600 6,821Cost of sales (522) (162) GROSS PROFIT 7,078 6,659Operating expenses (8,010) (7,940)Other income - 125 GROUP OPERATING LOSS (932) (1,156) Dividends received - 18Net 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. Groupoperating losses from continued operations were £0.9m (2013: £1.2m) reflectingcontinued investment in our start-up businesses AGP, NBIM and SMS. The lossafter tax, pre-exceptional items and minority interests, was £1.1m (2013:£1.2m) including £0.9m of losses attributable to the start-up businesses. Note3 of the Consolidated Financial Statements provides a detailed segmentalbreakdown of the 2014 Group results. Executive search revenue of £5.2m (2013: £5.6m) reflects a fall of8% in UK executive search revenues to £5.0m from £5.4m in 2013 and an increaseof 59% in overseas executive search revenues to £0.3m from £0.2m in 2013. TheUK executive search revenue decline was offset by a decrease in operatingcosts resulting in a considerable improvement in profit before tax to £0.5mfrom £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 NormanBroadbent SPRL in May 2014. The UK business, Norman Broadbent LeadershipConsulting ("NBLC"), has been restructured and is now further integrated withUK executive search and continues to have a high quality product range and isattracting exciting new clients. AGP, SMS and NBIM, the three subsidiary businesses established inearly 2013, late 2012 and mid 2014 respectively, have between them generated£1.8m in revenue (2013: £0.6m). Despite the promising revenue growth, thestart-up losses in AGP and SMS were greater than anticipated and resulted inthe re-modelling of certain aspects of the contingent offering within AGP andSMS in late 2014. Revenue from overseas royalties totalled £0.1m (2013: £0.2m), adecline of 64% as a result of the licenses with Italy, Middle East and Spainbeing terminated due to the Board's decision to regain complete control of theNorman Broadbent brand worldwide. This has allowed your Company to streamlineits 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 Grouprevenues. CORPORATE DEVELOPMENTS As part of the Board's decision to regain complete control of theNorman Broadbent brand worldwide, in 2014 the Group disposed of NormanBroadbent SPRL (which had a minority 49% shareholder) and its 20 per centstake in NBS Norman Broadbent SA for £120,000 and £92,000 respectively. Thesedisposals resulted in a non-recurring exceptional item, shown as a decrease ingoodwill of £559,000 in the Consolidated Statement of Financial Position, anda 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 ofexpenses) through the issue, principally to existing institutional investors,of 2,617,801 new ordinary shares in the capital of the Company at a price of19.1 pence per share (the "November Subscription"). The net proceeds of theNovember Subscription have been used to fund the recent re-modelling ofcertain aspects of the contingent offering within AGP, NBLC and SMS, and forworking 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 assetsdecreased 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 andSMS resulted in a cash outflow of £869,000. Net cash inflow from financingactivities amounted to £358,000 (2013: £521,000) relating primarily to the netfunds received from the November Subscription. At 31 December 2014, the only exposure to borrowings was theGroup's revolving invoice discounting facility, and funds drawn down againstthis facility decreased by 16% to £673,000 (2013: £802,000) against UK tradereceivables of £999,000 (2013: £1,255,000). MANAGEMENT AND STAFF James Webber, our Group CFO and COO, joined the plc Board inSeptember 2014. James joined the business in March 2014, and his experienceworking within the COO office at EY has proved invaluable to the Company. TheGroup now comprises just under 80 people in the UK and your Board would liketo express its thanks to all our management teams and staff, particularly inview of the diversification programme taking place through our newcomplementary subsidiaries. BOARD CHANGES In light of the successful re-modelling which has taken place sincethe November Subscription, I have taken the view that after five years asChairman the time is now opportune to retire from the business as it is nowrefinanced, refocused and returned to profitability in the first quarter' of2015. It is my intention to retire from the Board as Chairman and director on30 June 2015. In view of my wide industry experience, the Board is pleased tonote that I have offered to nominate through my private investment office aNon-Executive Director to the Board to assure staff, shareholders and clientsof my continuing interest, and to represent my substantial shareholding. In order to achieve a seamless handover on my retirement the Boardand I have been in discussion for some time with the Chairman elect, ScanesBentley. Scanes, who is being co-opted to the Board with immediate effect, isa Non-Executive Chairman, Non-Executive Director and strategic advisor to anumber of businesses and most recently was a partner for 12 years at Accenturewhere in the last five years he was responsible for running Financial Servicesand TMT consulting practices in London. Further, Bruce Lakefield retired as a Non-Executive Director of theCompany on 10 March 2015. Bruce, who is aged 71 and resident in the UnitedStates is reducing his overseas activities. Finally, Jan Cameron, who inaddition 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 Boardwishes to express its gratitude to both Bruce and Jan for their considerablecontributions to the business. As a result, the Board has taken theopportunity to streamline its reporting structure and has appointed a new HRexecutive to take account of our changing requirements who reports to JamesWebber as the Group COO. CURRENT TRADING I am pleased to report that in the first quarter of 2015, bothrevenue and profitability has exceeded management's expectations. The Board isencouraged and looks to the future with some confidence. PIERCE CASEYExecutive Chairman STRATEGIC REPORT THE BUSINESS MODEL Norman Broadbent plc is a human capital consulting group whichprovides a broad range of people solutions including board and executivesearch, senior interim management, leadership consulting and assessment,executive RPO and contingent recruitment, social media consulting andresearch. The Group operates through independently managed and separatelybranded businesses which trade independently but collectively share a set ofcore behavioural and brand values. The Group focusses on providing innovative and targeted solutionsfor 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 capitalbusinesses. - To continue building the core Norman Broadbent UK search businessthrough the hiring of Tier 1 search professionals. - To further develop the Norman Broadbent brand, through organicgrowth and acquisition. RESULTS FOR THE FINANCIAL YEAR Group revenue from continued operations increased in the year by11% to £7,600,000 (2013: £6,821,000). Board and executive search fees declinedby 6% to £5,245,000 (2013: £5,586,000) reflecting a reduction in feegenerating headcount in the UK search business during the year. Income fromoverseas royalties decreased to £76,000 (2013: £212,000) as a result of thelicenses with Italy, Middle East and Spain being terminated due to the Board'sdecision 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 threerecently established subsidiary businesses set up in late 2012, 2013 andmid-2014 respectively. The impact of the new subsidiary start-up losses has meant that theGroup 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 profitbefore 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 commercialreality of providing services to large blue chip multinational businesses whooften demand payment terms of up to 90 days, is an encouraging trend for thebusiness. Management continue to monitor this Key Performance Indicator andaim 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 equityplacing of £500,000 in November 2014. At 31 December 2014, the only exposureto bank borrowings was the Group's invoice discounting facility and fundsdrawn down against this facility were £673,000 (2013: £802,000) against UKtrade receivables of £999,000 (2013: £1,255,000). EARNINGS PER SHARE The retained loss for 2014 has resulted in a reported loss pershare of 9.85 pence (2013: loss per share 7.85 pence). After adding back thecost 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 onconsideration of the business' forecasts and projections, taking account ofpossible changes in trading performance, the directors have a reasonableexpectation that the Group has adequate available resources to continue as agoing concern for the foreseeable future. For these reasons, they continue toadopt the going concern basis in preparing their annual report and financialstatements. MONITORING, RISK AND KPIs The directors have a responsibility for identifying risks facingeach of the businesses and for putting in place procedures to mitigate andmonitor risks. Board meetings incorporate, amongst other agenda items, areview of monthly management accounts, operational and financial KPIs andmajor issues and risks facing the business. The most important KPIs used in monitoring the business are set outin the following table: Key performance 2014 2013indicatorsRevenue (continued £7,600,000 £6,821,000operations)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 areadjusted each year to ensure the Group remains on target to achieve itsstrategic growth plan. Whilst revenues from existing businesses declined in2014, this trend is expected to reverse in 2015 as new fee generators becomeestablished and given the steady increase in revenues from the newsubsidiaries the directors expect Group revenues and operating profits toimprove over the next few years. The principal risks faced by the Group in the current economicclimate are considered to be financial, business environment and peoplerelated. Financial - The main financial risks arising from the Group'soperations are interest rate, liquidity and credit risk. In November 2014, the Group raised £500,000 through a subscriptionof new shares primarily to fund the re-modelling of certain aspects of thecontingent offering within AGP and for working capital purposes generally.This fundraising followed successful share placings in October 2013, November2012 and May 2011, raising £700,000, £727,000 and £1,750,000 respectively,which have provided the Group with the financing to progress towards itsstated objectives. The Group is free from long term debt which significantly reducesits interest rate risk and maintains a commercial finance facility with amplecapacity to support the working capital requirements of the Group as it grows. Business Environment - Demand for services is affected by globaleconomic conditions and the level of economic activity in the regions andindustries in which the Group operates. When conditions in the global economydeteriorate or economic activity slows, many companies hire fewer permanentemployees or rely on internal human resource departments to recruit staff.Whilst there are signs that the global economy is starting to recover, shouldconditions deteriorate in the future then demand for the services offered bythe Group could weaken resulting in lower cash flows. The Group attempts tomitigate this risk by operating across various diverse sectors, whilst alsoextending its services into new geographic regions, where demand for suchservices are stronger. People - The Group's most vital resource remains its employees andthe directors remain committed to retaining and recruiting quality staff whoshare the Group's culture and values. In a people intensive business, theresignation of key staff, which could lead to them taking clients, candidatesand colleagues to another employer, is a significant risk. The Group aims tomitigate this risk by offering competitive remuneration structures, whilstalso insisting on employment contracts that contain restrictive covenants thatlimit a leaver's ability to approach existing clients, candidates andemployees. CAUTIONARY STATEMENT This Strategic Report has been prepared solely to provideadditional information to shareholders to assess the Company's strategies andthe 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 theinformation available to them up to the time of their approval of this reportand such statements should be treated with caution due to the inherentuncertainties, including both economic and business risk factors, underlyingany such forward-looking information. The directors, in preparing this Strategic Report, have compliedwith s414C of the Companies Act 2006. The Strategic Report has been preparedfor the Group as a whole and therefore gives greater emphasis to those matterswhich are significant to Norman Broadbent plc and its subsidiary undertakingswhen viewed as a whole. PIERCE CASEY RICHARD ROBINSONExecutive Chairman Company Secretary CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2014 Re-presented Note 2014 2013 £000 £000CONTINUING OPERATIONS REVENUE 1/3 7,600 6,821Cost 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 - 18Net 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)TAXIncome 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 attributableto:- 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)pAdjusted loss per share- Basic 10 (9.71)p (7.40)p- Diluted (9.71)p (7.40)pLoss per share - continuing operations- Basic 10 (9.22)p (7.92)p- Diluted (9.22)p (7.92)pAdjusted loss per share - continuingoperations- Basic (9.09)p (7.48)p- Diluted 10 (9.09)p (7.48)p * 2013 re-presented to show the discontinued operation separatelyfrom continued operations as required by IFRS 5. CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2014 Notes 2014 2013 £000 £000Non-Current AssetsIntangible assets 12 1,363 1,922Property, plant and equipment 13 105 172Deferred tax assets 6 69 69 TOTAL NON-CURRENT ASSETS 1,537 2,163 Current AssetsTrade and other receivables 15 1,963 2,339Cash and cash equivalents 16 506 579 TOTAL CURRENT ASSETS 2,469 2,918TOTAL ASSETS 4,006 5,081 Current LiabilitiesTrade and other payables 17 1,518 1,333Bank overdraft and interest bearing 18 673 802loansCorporation tax liability - 21 TOTAL CURRENT LIABILITIES 2,191 2,156NET CURRENT ASSETS 278 762 Non-Current LiabilitiesProvisions 23 125 125 TOTAL LIABILITIES 2,316 2,281TOTAL ASSETS LESS TOTAL LIABILITIES 1,690 2,800 EQUITYIssued share capital 20 5,901 5,875Share premium account 20 10,699 10,238Retained earnings (14,649) (13,356)EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 1,951 2,757Non-controlling interests (261) 43TOTAL 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 3,221Loss 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, recogniseddirectly in equity:Issue of ordinary shares 18 666 - 684 - 684Credit to equity for share based payments - - 59 59 - 59Total 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 2014Loss for the year - - (1,489) (1,489) (219) (1,708)Adjustment for discontinued operation - - - - 70 70Total other comprehensive income - - 21 21 - 21Total comprehensive income for the year - - (1,468) (1,468) (149) (1,617)Transactions with owners of the Company, recogniseddirectly in equity:Issue of ordinary shares 26 461 - 487 - 487Credit to equity for share based payments - - 20 20 - 20Total transactions with owners of the Company,recognised directly in equity 26 461 20 507 - 507Changes in ownership interest in subsidiariesDisposal of non-controlling interests with change of - - 155 155 (155) -controlTotal 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 financeNet finance cost (32) (30)Dividends received - 18Payments to acquire tangible fixed assets 13 (17) (122)Repayment of deferred consideration - (73)Disposal of subsidiary, inclusive of cash 9 (15) -disposed ofNet cash inflow from Disposal of investments 92 - Net cash used in investing activities 28 (208) Cash flows from financing activitiesNet 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 1,009Effects 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 fundsCash and cash equivalents 506 579Borrowings due within one year (673) (802)Deferred consideration - - Net funds (167) (223) Note (i)Reconciliation of operating loss to net cash from operating 2014 2013activities £000 £000 Operating loss from continued operations (932) (1,156)Operating profit / (loss) from discontinued operations (note (103) 868)Depreciation/impairment of property, plant and equipment 62 89Share based payment charge 20 59Decrease in trade and other receivables 199 (72)Increase in trade and other payables 328 257Increase in provisions - 125Taxation paid (29) (121) Net cash used in operating activities (453) (732) 1. ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of thesefinancial statements are set out below. These policies have been consistentlyapplied to both years presented unless otherwise stated. Basis of preparation The consolidated financial statements of Norman Broadbent plc ("NormanBroadbent" or "the Company") have been prepared in accordance withInternational Financial Reporting Standards as adopted by the European Union(IFRS as adopted by the EU), IFRIC interpretations and the Companies Act 2006applicable to Companies reporting under IFRS. The consolidated financialstatements have been prepared under the historical cost convention, asmodified by the revaluation of financial assets and liabilities (includingderivative instruments) at fair value through profit or loss. The preparation of financial statements in conformity with IFRS requires theuse of certain critical accounting estimates. It also requires management toexercise its judgement in the process of applying the Group's accountingpolicies. Going concern The Group reported an operating loss from continued operations in the year to31 December 2014 of £0.9m compared with an operating loss of £1.2m in 2013.These consolidated losses whilst greater than anticipated were primarilydriven by losses in the new subsidiary businesses of AGP and SMS (totalling£0.8m) and continued losses incurred in the wholly owned overseas offices inSingapore, USA and Belgium (totalling £0.2m). The Consolidated Statement of Financial Position shows a net asset position at31 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 onlybank debt owed by the Company was its invoice discounting facility which issecured by the Group's trade receivables. In light of the current financial position of the Group and on considerationof the business' forecasts and projections, taking account of possible changesin trading performance, the directors have a reasonable expectation that theGroup has adequate available resources to continue as a going concern for theforeseeable future. For these reasons, they continue to adopt the goingconcern basis in preparing their annual report and financial statements. 2. SEGMENTAL ANALYSIS Management has determined the operating segments based on the reports reviewedregularly by the board for use in deciding how to allocate resources and inassessing performance. The Board considers Group operations from both a classof business and geographic perspective. Each class of business derives its revenues from the supply of a particularrecruitment related service, from retained executive search through toexecutive assessment and coaching. Business segment results are reviewedprimarily 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 revenueis derived from overseas business the results are presented to the Board bygeographic region to identify potential areas for growth or those posingpotential risks to the Group. i) Class of Business: The analysis by class of business of the Group's turnover, profit beforetaxation and net assets/(liabilities) is set out below: BUSINESS SEGMENTS2014 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 - 7,720Cost 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)expensesOther operating - - - - - - - - -incomeFinance costs (26) - - (6) - - - - (32)Depreciation and (49) - - (5) (4) - (4) - (62)amort.Restructuring - - - - - - - - -costsExceptional - - - - - - (41) (559) (600)itemsLoss on disposal - - - - - - - (33) (33)of investmentProfit/(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 SEGMENTS2013 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 - 7,551Cost 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)expensesOther operating 143 - - - - - - - 143incomeFinance (costs) (14) - - (1) - - (15) - (30)/ IncomeDepreciation 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 - 2,800The unallocated costs refer to central costs of the Group including salaries,professional and other costs, which are not directly attributable to thedelivery of the services. The five segments shown represent the managementinformation provided to the Board and in the opinion of the directors reflectthe nature of the Group's services. ii) Geographic Region: The analysis by geographic region of the Group's turnover, profit beforetaxation and net assets/ (liabilities) is set out below: BUSINESS SEGMENTS2014 Executive Search Overseas Disc. Un-allocated £000 Royalties NBLC AGP SMS NBIM Operation Total £000 £000 £000 £000 £000 £000 £000 £000RevenueUnited Kingdom 4,964 - 472 1,033 526 203 - - 7,198Europe 27 76 - 40 - - 120 - 263Other 254 - 1 4 - - - - 259Total 5,245 76 473 1,077 526 203 120 - 7,720Gross profitUnited Kingdom 4,910 - 435 741 521 69 - - 6,676Europe 27 76 - 40 - - 75 - 218Other 254 - 1 4 - - - - 259Total 5,191 76 436 785 521 69 75 - 7,153Profit/(loss) before taxUnited 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 SEGMENTS2013 Executive Search Overseas Disc. Un-allocated £000 Royalties NBLC AGP SMS NBIM Operation Total £000 £000 £000 £000 £000 £000 £000 £000RevenueUnited Kingdom 5,409 - 461 238 304 - - - 6,412Europe - 194 - 14 - - 730 - 938Other 177 18 6 - - - - - 201Total 5,586 212 467 252 304 - 730 - 7,551Gross profitUnited Kingdom 5,351 - 410 237 301 - - - 6,299Europe - 194 - 14 - - 500 - 708Other 134 18 - - - - - - 152Total 5,485 212 410 251 301 - 500 - 7,159Profit/(loss) before taxUnited Kingdom 141 - (238) (427) (213) - - (313) (1,050)Europe - 105 - - - - 71 - 176Other (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 £000Loss on ordinary activities before taxation is stated aftercharging: Depreciation and impairment of property, plant and 62 89equipment(Gain) / loss on foreign currency exchange (4) (3)Operating lease rentals:Land and buildings 424 426Auditors' remuneration:Audit work 43 42Non-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 asfollows: Sales and related services 38 35Administration 46 45 84 80 Staff costs (for the above persons): £000 £000 Wages and salaries 5,026 4,950Social security costs 540 527Defined contribution pension cost 210 203Share based payment expense 20 60 5,796 5,740The emoluments of the directors are disclosed as required by the Companies Act2006 on page 12 in the Directors' Remuneration Report. The table of directors'emoluments has been audited and forms part of these financial statements. Thisalso 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 £000year and comprises: Current tax:United Kingdom corporation tax at 21.5% 8 19(2013: 23.25%) based on loss for theyearForeign Tax - 51Adjustment in respect of prior years - - Total current tax 8 70Deferred 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 amountcalculated by applying the standard rate of UK corporation tax to the profitbefore tax is as follows: 2014 2013 £000 £000 Loss on ordinary activities before (1,700) (1,082)taxation Tax on loss on ordinary activities atstandard UK corporation tax rate of21.5% (2013: 23.25%) (366) (252)Effects of:Expenses not deductible 159 33Foreign tax suffered - 19Non-taxable income 7 (4)Capital allowances in excess of 8 9depreciationUtilisation 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 recognisedfor 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 carriedforward, which includes £8,987,000 losses transferred from BNB RecruitmentConsultancy 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 inherentuncertainty as to the quantum and timing of its utilisation. The analysis of deferred tax in the consolidated balance sheet isas follows: 2014 2013Deferred tax assets: £000 £000 Tax losses carried forward 69 69 Total 69 696. NET FINANCE COST 2014 2013 £000 £000 Interest payable on bank loans and overdrafts 32 15 Total 32 157. 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 May2014, resulting in a disposal of goodwill of £112,000 in the ConsolidatedStatement of Financial Position, and a loss on disposal of £128,000 in theCompany 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 July2014. The sale resulted in an impairment to goodwill of £446,946 in theConsolidated 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 BroadbentSPRL for £120,000 (compared to a cash investment of £135,000) to existingmanagement. Norman Broadbent SPRL owned 100% of the issued share capital ofNorman Broadbent S.A.S, which was liquidated in February 2014. The segment wasnot a discontinued operation or classified as held for sale at 31 December2013 and the comparative consolidated statement of comprehensive income hasbeen re-presented to show the discontinued operation separately from continuedoperations. 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 23Trade and other receivables 126Cash and cash equivalents * 135Trade and other payables (48) Net assets and liabilities 236 Consideration received, satisfied in 120cashCash and Cash equivalents disposed of (135) Net cash outflow (15) * Excludes cash balance of £8,000 fromthe liquidated position of NormanBroadbent SAS. 9. EARNINGS PER SHARE i) Basic earnings per share This is calculated by dividing the profit attributable to equity holders ofthe Company by the weighted average number of ordinary shares in issue duringthe period: 2014 2013 Loss attributable to shareholders £(1,489,000) £(1,050,000) Weighted average number of ordinary 15,121,429 13,385,224shares ii) Diluted earnings per share This is calculated by adjusting the weighted average number of ordinary sharesoutstanding to assume conversion of all dilutive potential ordinary shares.The Company has two categories of dilutive potential ordinary shares: shareoptions and warrants. For these options and warrants, a calculation is done todetermine 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 theoutstanding warrants and options. The number of shares calculated as above iscompared with the number of shares that would have been issued assuming theexercise of the share options. 2014 2013 Loss attributable to shareholders £(1,489,000) £(1,050,000) Weighted average number of ordinary 15,121,429 13,385,224shares- 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 additionto the basic and diluted earnings per share and is based on earnings adjustedto eliminate the effects of charges for share based payments. It has beencalculated to allow shareholders to gain a clearer understanding of thetrading 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 shareBasic earningsLoss after tax (1,489) (9.85) (9.85) (1,050) (7.85) (7.85)AdjustmentsShare 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 ofthe parent company is not presented as part of these accounts. The parentcompany's loss for the year amounted to £364,000 (2013: £128,000 profit). 11. INTANGIBLE ASSETS GoodwillGroup 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 impairmentBalance at 1 January 2013 1,880 Balance at 31 December 2013 1,880 Impairment in the year (note 8) 447Balance at 31 December 2014 2,327 Net book valueAt 1 January 2013 1,922 At 31 December 2013 1,922 At 31 December 2014 1,363Goodwill acquired through business combinations is allocated tocash-generating units (CGU) identified at entity level. The carrying value ofintangibles 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 1,363In line with International Financial Reporting Standards, goodwill has notbeen amortised from the transition date, but has instead been subject to animpairment review by the directors of the Group. As set out in accountingpolicy note 1 on page 24, the directors test the goodwill for impairmentannually. The recoverable amount of the Group's CGUs are calculated on thepresent value of their respective expected future cash flows, applying aweighted 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 theapproved forecasts for the 2015 financial year. The key assumption applied to the forecasts for the business is that return onsales for Norman Broadbent is expected to be a minimum of 13% per annum forthe foreseeable future (2013: 10 %) and 9% for Human Asset DevelopmentInternational (2013: 7 %). Return on sales defined as the expected profitbefore tax on net revenue. There are only minimal non cash flows included inprofit 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 growthrates to reflect the uncertainty that is still present in the economy. Basedon the above assumptions, at 31 December 2014 the recoverable value of theNorman Broadbent CGU is £3,000,000 and the Human Asset DevelopmentInternational 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 AssetDevelopment International goodwill to be impaired. 12. PROPERTY, PLANT AND EQUIPMENT Land and Office andGroup buildings - computer Fixtures and Motor leasehold equipment fittings Vehicles Total £000 £000 £000 £000 £000 CostBalance at 1 January 62 236 148 13 4592013Additions 81 38 3 - 122Disposals (59) (99) (87) - (245) Balance at 31 December 84 175 64 13 3362013 Additions - 17 - - 17Disposals - (8) (17) (13) (38) Balance at 31 December 84 184 47 - 3152014 Accumulated depreciationBalance at 1 January 54 147 117 2 3202013Charge for the year 20 50 14 5 89Disposals (59) (99) (87) - (245) Balance at 31 December 15 98 44 7 1642013 Charge for the year 15 40 4 3 62Disposals - (3) (3) (10) (16) Balance at 31 December 30 135 45 - 2102014 Net book valueAt 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 fixedassets. 13. INVESTMENTS Shares in subsidiaryCompany undertakings £000 CostBalance 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 impairmentBalance 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 valueAt 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 fora total consideration of £249,000. The Group disposed of Norman Broadbent SPRLfor £120,000 on 8 May 2014 (see note 8). In 2013, the entire issued share capital of £10,000 in Arcus Global PartnersLimited was acquired from Norman Broadbent Executive Search Limited, a whollyowned subsidiary, to the Company. In 2014, the company disposed of Norman Broadbent SPRL for £120,000 (see note8). 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% ordinarySearch Ltd Wales sharesNorman Broadbent Overseas England and Executive search 100% ordinaryLtd Wales sharesNorman Broadbent Leadership England and Assessment, 100% ordinaryConsulting Limited Wales coaching and shares talent mgmt. AGP NB Ltd (formerly Arcus England and Contingent 100% ordinaryGlobal Partners) Wales Search sharesNorman Broadbent Inc United States Executive search 100% ordinary of America sharesThe NB Consultancy Singapore Executive search 100% ordinary(Singapore) Pte. Ltd sharesConnecting Corporates Ltd England and Social Media 51% ordinary Wales Search & shares ConsultingBancomm Ltd England and Dormant 100% ordinary Wales sharesNorman Broadbent Ireland Republic of Dormant 100% ordinaryLtd* Ireland sharesNorman Broadbent Interim England and Interim 100% ordinaryManagement Ltd Wales Management shares* 100 % of the issued share capital of this company is owned by NormanBroadbent 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 21Prepayments and accrued income 285 165 10 4Due from Group undertakings - - 3,381 2,711 Total 1,963 2,339 3,397 2,736As at 31 December 2014, Group trade receivables of £995,000 (2013:£1,197,000) were past their due date but not impaired. They relate tocustomers with no default history. The aging profile of these receivables isas 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 represents8.9% (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 impairmentfor the full amount has been recognised in the financial statements. Movementson 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 72Receivables written-off as uncollectable - (20) At 31 December 180 72Other than the impairment provision provided for aged tradereceivables above, there are no other material difference between the carryingvalue and the fair value of the Group's and parent company's trade and otherreceivables. 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 375There is no material difference between the carrying value and thefair 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 56Due to Group undertakings - - 1,295 1,166Other taxation and social security 226 353 - -Other payables 163 72 - -Accruals 601 519 69 65 Total 1,518 1,333 1,422 1,287There is no material difference between the carrying value and the fair valueof the Group's and parent company's trade and other payables. 17. BORROWINGS Group CompanyMaturity profile of borrowings 2014 2013 2014 2013 £000 £000 £000 £000 CurrentBank overdrafts and interest bearingloans: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 alldenominated in sterling, are as follows: Carrying amount Fair value 2014 2013 2014 2013 £000 £000 £000 £000 Bank overdrafts and interest bearingloans: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 independentinvoice discounting facilities, provided by Leumi ABL Limited. Leumi ABL Ltdholds all assets debentures for each company (fixed and floating charges) andalso a cross corporate guarantee and indemnity deed dated 20 July 2011. Thefinancial 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 tradereceivables of Norman Broadbent Executive Search Limited that are aged lessthan 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) wassecured by trade receivables of £682,000 (2013: £1,104,000). Interest ischarged 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 tradereceivables of AGP (NB) Limited that are aged less than 120 days, with thefacility capped at £750,000. At 31 December 2014, the outstanding balance onthe 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 arate 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 tradereceivables of Norman Broadbent Interim Management Limited that are aged lessthan 120 days, with the facility capped at £750,000. At 31 December 2014, theoutstanding balance on the facility of £120,000 (2013: £Nil) was secured bytrade receivables of £191,000 (2013: £Nil). Interest is charged on the drawndown 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 financialinstrument risk arises, are summarised below. All financial assets andliabilities are measured at amortised cost which is not considered to bematerially different to fair value. Amortised CostGroup 2014 2013 £000 £000 Financial AssetsTrade and other receivables 1,963 2,339Cash and cash equivalents 506 579 Financial LiabilitiesTrade and other payables 1,518 1,333Invoice discounting facility 673 802Corporation tax liability - 21 Amortised CostCompany 2014 2013 £000 £000 Financial AssetsTrade and other receivables 3,397 2,736Cash and cash equivalents 221 375 Financial LiabilitiesTrade and other payables 1,422 1,287 In common with all other businesses, the Group is exposed to risksthat arise from its use of financial instruments.. 19. SHARE CAPITAL AND PREMIUM 2014 2013Allotted and fully paid: £000 £000 Ordinary Shares:17,416,487 Ordinary shares of 1.0p each (2013: 174 14814,798,686)Deferred Shares:23,342,400 Deferred A shares of 4.0p each (2013: 934 93423,342,400)907,118,360 Deferred shares of 4.0p each (2013: 3,628 3,628907,118,360)1,043,566 Deferred B shares of 42.0p each (2013: 438 4381,043,566)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 distributionsor to receive notice of or attend general meetings of the company. In theevent of a winding up, the shares carry a right to repayment only after theholders of Ordinary Shares have received a payment of £10,000 per OrdinaryShare. The company retains the right to cancel the shares without payment tothe holders thereof. The rights attaching to the shares shall not be varied bythe creation or issue of shares ranking parri passu with or in priority to theDeferred A Shares. Deferred Shares of 4.0p each The Deferred Shares carry no right to dividends, distributions orto receive notice of or attend general meetings of the company. In the eventof a winding up, the shares carry a right to repayment only after payment ofcapital paid up on Ordinary Shares plus a payment of £10,000 per OrdinaryShare. The company retains the right to transfer or cancel the shares withoutpayment to the holders thereof. Deferred B Shares of 42.0p each The Deferred B Shares carry no right to dividends or distributionsor to receive notice of or attend general meetings of the company. In theevent of a winding up, the shares carry the right to repayment only after theholders of Ordinary Shares have received a payment of £10 million per OrdinaryShare. The company retains the right to cancel the shares without payment tothe holders thereof. The rights attaching to the shares shall not be varied by the creation orissue of shares ranking parri passu with or in priority to the Deferred BShares. Deferred Shares of 29.0p each The Deferred Shares carry no right to dividends or distributions orto receive notice of or attend general meetings of the company. In the eventof a winding up, the shares carry the right to repayment only after theholders of Ordinary Shares have received a payment of £10,000 per OrdinaryShare. The company retains the right to cancel the shares without payment tothe holders thereof. A reconciliation of the movement in share capital and share premiumis 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 16,600a) Share placing in October 2013: On 22 October 2013, the Company issued 1,750,000 new ordinary 1.0pshares 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 1.0pshares 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 employeesand directors. The exercise price of the granted options is equal to themarket price of the shares on the date of the grant. The Company has no legalor constructive obligation to repurchase or settle the options or warrants incash. Options under the Company EMI scheme are conditional on the employeecompleting three years' service (the vesting period). The EMI options vest inthree 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 averageexercise 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 60.72 731,214Share options outstanding at the end of the year have the following expirydate and exercise prices: Expiry date Exercise Share options price per share (p) 2014 2013 2020 52.50 106,666 169,5232021 65.50 532,782 741,7542023 42.50 91,765 91,765 Total 731,214 1,003,042Out of the 731,214 outstanding options (2013: 1,003,042), no options wereexercisable at the year end (2013: None) as they were all `underwater'. The weighted average fair value of the share options granted in2013, determined using the Trinomial Valuation Model, was 23.8 pence (optionsgranted in 2011: 37.5 pence and options granted in 2010: 21.3 pence). Thesignificant inputs into the model were weighted average share price of 42.5pence at the grant date (2011: 65.5 pence and 2010: 52.5 pence), exerciseprice shown above, volatility of 75% (2011 and 2010: 75%), dividend yield of0% (2011 and 2010: 0%), an expected option life of 10 years (2011 and 2010: 10years) 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 historicalvolatility of the Company's share price and those of UK quoted companies in asimilar business sector. The risk-free interest rate is estimated as the yieldon zero coupon UK government bonds of a term consistent with the contractuallife of the options granted. 20.2 Warrants On 14 June 2010, the Company issued warrants over shares in theCompany 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 orin part immediately and expired on 31 May 2013. Movements in the number of warrants and their related weighted averageexercise 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 shareoptions and warrants granted to directors and employees. Operating leases The Group leases all its premises. The terms of the leases vary for eachproperty and are tenant repairing. As at 31 December 2014, the total future value of minimum lease payments aredue as follows: Land and Buildings 2014 2013 £000 £000 Within one year 264 297Later than one year and not later than five years 1,056 1,028 Total 1,320 1,32521. 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 afive year break for its main office in London. On signing the new lease theCompany inherited the office fit-out from the previous tenant. Under the termsof the new lease the Company is obliged to return vacant possession to thelandlord with the office returned to its original state. The Company has hadthe present cost of the future works required to return the office to itsoriginal state valued by an independent firm of advisors and this non-currentliability of £125,000 has been provided for in the financial period. TheCompany received a one-off payment of £250,000 in 2013 from the previoustenant in satisfaction of various costs and liabilities that it inherited withthe new lease. 22. PENSION COSTS The Group operated several defined contribution pension schemes for thebusiness. The assets of the schemes were held separately from those of theGroup in independently administered funds. The pension cost representscontributions 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 52Anderson Barrowcliff LLP 13 14Brian Stephens & Company Ltd 30 22Norman Broadbent SAS - 37Arquius Colombia SAS - 48Connecting Corporates Limited 24 11 Total 117 184 During the year Adelaide Capital Limited invoiced the Group for thedirectors' 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 BStephens £20,000, £4,000 consultancy and business related travel costs £6,000(2013 total: £22,000). B Stephens is a director of Brian Stephens & CompanyLtd. * The amount paid to Adelaide Capital Limited, a wholly ownedcompany of P Casey, is included in the total sums paid to P Casey of £121,000for 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 RRobinson is a partner. The remaining director fees for R Robinson was paidthrough PAYE £20,000 (2013 total: £15,000). During the year the Group acquired research services fromConnecting 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 175Norman Broadbent SPRL - 11Connecting Corporates Limited 13 42 Total 89 228 During the year the Group invoiced NBS Norman Broadbent SA forroyalty income £76,000 (2013: £175,000). The Group sold its 20% stake in NBSNorman Broadbent SA during 2014. During the year the Group recharged group services incurred for thebenefit of Connecting Corporates Limited to Connecting Corporates Limited atcost £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 ConnectingCorporates Limited to support working capital requirements of this company£305,000 (2013: £275,000). The loans are non-interest bearing and arerepayable on demand. At the year end, £305,000 (2013: £275,000) wasoutstanding and due to the Group. (c) Key management compensation: Key management includes Executive and Non-Executive Directors. Thecompensation 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 6Connecting Corporates Limited 24 11Norman Broadbent SAS - 37Arquius Colombia SAS - 19 Total 43 73 Payables to related parties arise from purchase transactions and are due onemonth 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 - 47Norman Broadbent SPRL - 5Connecting Corporates Limited 13 42 Total 13 94 Receivables owed by related parties arise from sales transactionsand 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 VATscheme. As such it is jointly accountable for the combined VAT liability ofthe 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 1995the Company has a contingent liability in respect of the lease on its previousregistered office, which was assigned to a third party in April 2010. TheCompany could be required to meet the financial obligations of the leaseshould the assignee default on lease payments. The maximum potential liabilitywould be £120,000 per annum expiring on 31 December 2015. The directorsbelieve the likelihood of the assignee defaulting prior to expiry is remotedue to the balance sheet position of the tenant, reviewed in their lastpublished financial statements in March 2014. 25. POST BALANCE SHEET EVENTS The Group has taken the decision to cease its operations inSingapore (NB Consultancy (Singapore) Pte. Ltd). Whilst this has no impact onthe Consolidated Statement of Financial Position, the intercompany loanbalance of £194,000 has been provided for in the 2014 Company Statement ofFinancial Position. Since year end, the Group has taken the decision to ceaseoperations in the USA (Norman Broadbent Inc). Once the closing date has beenconfirmed the Group will review the recoverability of the intercompany loanbalance 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 toshareholders 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 ofNorman Broadbent plc will be held at 11am at The East India Club, 16 StJames's Square, London, SW1Y 4LH on 30 June 2015.