Norman Broadb Regulatory News (NBB)

28 May 2014 Norman Broadbent plc ("Norman Broadbent" or "the Group" or "the Company") Final Audited Results Norman Broadbent, a leading provider of executive search,leadership consultancy services and complementary recruitment services,announces its audited financial results for the year ended 31 December 2013. FINANCIAL HIGHLIGHTS - The Group continued to support its comprehensive diversification programmein 2013 with substantial additional investment in the two new businesses andit is anticipated that the investment process will be completed during 2014 - James Webber, our new CFO, joined the management team in early March 2014.In addition to being CFO, James has now been appointed by the Board to beGroup Chief Operating Officer with immediate effect. James brings extensiveexperience in business services to Norman Broadbent, having worked in theoffice of the COO of EY, and has a background in corporate finance at a seniorlevel - In May 2014, the Company sold Norman Broadbent SPRL, our 51 per cent. ownedBelgium subsidiary which has been rebranded to Executive Talent Development,and has mutually agreed to end its licence agreement and sell our 20 per cent.holding in Norman Broadbent Spain, resulting in a refocused core executivesearch and leadership consulting business in the UK and USA - To further strengthen our Norman Broadbent brand, we aredelighted to announce that Arcus Interim Partners will be renamed NB Interimwith Justin Whitehouse who joined us earlier this year as the ManagingDirector - Results summary: 2013 2012 Revenue £000 £000 Executive Search * 5,639 6,673Assessment coaching & talent management 1,144 586Arcus 252 -Connecting Corporates 304 36Overseas royalties 212 339 7,551 7,634Operating loss (1,070) (38)Dividends received 18 -Finance cost (30) (35)Loss before tax (1,082) (73)Tax charge (70) (42)Loss after tax (1,152) (115) Loss attributable to: - Owners of the Company (1,050) (127) - Minority interest (102) 12Loss for the year (1,152) (115) EPS - basic (7.85)p (1.16)pEPS - adjusted (7.40)p (0.52)p * Includes Interim in 2012 - Group revenue in the year was broadly flat at £7,551,000 (2012: £7,634,000) - UK executive search operating profit increased to £141,000 compared with£114,000 in the previous year - Group operating loss increased to £1,070,000 compared with a loss of £38,000in the previous year reflecting, inter alia, the continued investment in thenew subsidiary businesses (start-up losses of £640,000) and losses of £81,000from the post year end discontinued Paris office (2012: nil) combined with thelosses of £208,000 from the offices in Singapore and the USA(2012: nil) - Year end cash of £579,000 (2012: £1,009,000) - No bank debt other than the invoice discounting facility - The Group raised £700,000 in October 2013 primarily to provide growthcapital for the accelerated development of the two new subsidiary businesses - Net assets of £2,800,000 (2012: £3,221,000) Pierce Casey, Chairman of Norman Broadbent, said: "In 2013 we continued to invest in growing our enhanced suite ofservice offerings and your Board believes that our management teams are wellplaced to successfully execute our broadened strategy profitably. Since yearend, your Company has streamlined its international operations, refocusing onour core executive search and leadership consulting businesses in the UK andUSA, and Arcus and Connecting Corporates. Your Board has sold Norman Broadbent SPRL, our 51 per cent. ownedBelgian subsidiary to existing management. The company has been rebranded toExecutive Talent Development. We wish Michel Debeock and his colleagues everysuccess for the future. Further, following discussions with our colleagues inNorman Broadbent Spain (in which we hold a 20 per cent. equity interest) wehave mutually agreed to end our license agreement and sell our 20 per cent.holding to the other existing shareholders. We wish Krista Walochik, Chairman,and her colleagues every success in their re-branded independent business. Finally, in March 2014 the Board terminated the Norman Broadbentexecutive search and leadership consulting licenses in Italy and the MiddleEast /North Africa both on a mutually agreed basis. This renewed focus now provides for a streamlined Group, withcontrol of the Norman Broadbent brand worldwide." For further information please contact: Norman Broadbent plcPierce Casey/Sue O'Brien/James 020 7484 0000Webber Sanlam Securities UK LimitedSimon Clements/Virginia 020 7628 2200Bull/Catherine Miles Notes to Editors Norman Broadbent plc is a leading provider of senior and boardexecutive search and leadership consultancy and assessment services. ThroughArcus Global Partners the Group also provides specialist contingent offerings,including RPO and interim solutions. Connecting Corporates through SocialMedia Search provides digital research to assist in house recruitment and viaWinning Work assists professional service firms to drive sales by bespokeexploitation of social media. Headquartered in London, the Group also hasoffices in Los Angeles with a representative office in Singapore. For further information visit www.normanbroadbent.com CHAIRMAN'S STATEMENT INTRODUCTION Norman Broadbent plc (the "Norman Broadbent" or Company" or the"Group") is a human capital consultancy group operating both in the UK andoverseas. RESULTS FOR THE FINANCIAL YEAR The table below summarises the results of the Group: 2013 2012 Revenue £000 £000 Executive Search * 5,639 6,673Assessment coaching & talent management 1,144 586Arcus 252 -Connecting Corporates 304 36Overseas royalties 212 339 7,551 7,634 Operating loss (1,070) (38)Dividends received 18 -Finance cost (30) (35)Loss before tax (1,082) (73)Tax charge (70) (42)Loss after tax (1,152) (115)Loss attributable to: - Owners of the Company (1,050) (127) - Minority interest (102) 12Loss for the year (1,152) (115) EPS - basic (7.85)p (1.16)pEPS - adjusted (7.40)p (0.52)p * Includes Interim in 2012 Group revenue decreased marginally to £7,551,000 from £7,634,000 in2012, while the operating loss increased to £1,070,000 compared with a loss of£38,000 in the previous year. The loss after tax, pre-minority interests, was£1,152,000 compared to £115,000 in 2012. Executive search revenue of £5,639,000 (2012: £6,673,000) reflectsa fall of 15.7 per cent. in UK executive search revenues to £5,409,000 from£6,413,000 in 2012 and an increase of 18.6 per cent. in overseas executivesearch revenues to £230,000 from £194,000 in 2012. The reduction in UKexecutive search revenues reflected a reduction in fee generating headcountduring the year, but with higher profitability. The table below summarises the operating losses and profits of the Group: 2013 2012 (Loss)/Profit £000 £000 Executive Search * (148) 180Assessment coaching & talent management (86) (115)Arcus (427) -Connecting Corporates (213) 3Overseas royalties 105 220Central costs (313) (361)Loss before tax (1,082) (73)Tax charge (70) (42)Loss after tax (1,152) (115)Loss attributable to: - Owners of the Company (1,050) (127) - Minority interest (102) 12Loss for the year (1,152) (115) EPS - basic (7.85)p (1.16)pEPS - adjusted (7.40)p (0.52)p * Includes Interim in 2012 The executive search operating loss for the period included a UKexecutive search operating profit of £141,000 (2012: £114,000). Overseasexecutive search operating losses amounted to £289,000 (2012: nil). Theoverseas executive search operating losses reflected £208,000 of operatinglosses in Singapore and the USA (2012: nil) and £81,000 to the French office(2012: nil). Assessment, coaching and talent management revenues grew by 95 percent. to £1,144,000 (2012: £586,000) reflecting a full 12 month performance ofour Belgium subsidiary Norman Broadbent SPRL (2012: 2 months) and broadly flatUK Assessment, coaching and talent management revenues. The operating loss of£86,000 (2012: £115,000 loss) reflected profitable operations in Belgium and aloss in the UK as the business was repositioned following the death of itsfounder in late 2012. The UK business, under the leadership of Carole Bodell,now has a high quality product range and is attracting exciting new clients. AGP (previously known as Arcus Global Partners) and ConnectingCorporates, the two new subsidiary businesses established in early 2013 andlate 2012 respectively, have between them generated £556,000 in revenue (2012:£36,000) and as anticipated generated start-up losses totalling £640,000(2012: Profit £3,000), reflecting inter alia the accelerated hiring of keypersonnel. Revenue from overseas royalties totalled £212,000 (2012: £339,000),a decline of 37 per cent. as a result of the difficult trading conditionsexperienced by licensees in Italy and the Middle East. CORPORATE DEVELOPMENTS AND BRAND MANAGEMENT The Company has invested substantially in AGP and ConnectingCorporates, both of which have now built strong teams and are creatingpromising revenue streams from quality corporate clients. We anticipate thatboth businesses, while absorbing resources in the short term, will becomeprofitable during the year. Since year end, your Company has streamlined its internationaloperations, refocussing on our core executive search and leadership consultingbusinesses in the UK and USA, and AGP and Connecting Corporates. The Board has sold Norman Broadbent SPRL, our 51 per cent. ownedBelgian subsidiary to existing management. The Company has been rebranded toExecutive Talent Development. We wish Michel Debeock and his colleagues everysuccess for the future. Further, following discussions with our colleagues inNorman Broadbent Spain (in which we hold a 20 per cent. equity interest) wehave mutually agreed to end our license agreement and sell our 20 per cent.holding to the other existing shareholders. We wish Krista Walochik, Chairman,and her colleagues every success in their re-branded independent business. Finally, in March 2014 the Board terminated the Norman Broadbentexecutive search and leadership consulting licenses in Italy and the MiddleEast /North Africa both on a mutually agreed basis. The decision reflected thede-minimus revenues arising from these licenses and offices due to localmarket conditions, and in the case of the Middle East / North Africa asignificant downsizing of its executive search team. This refocusing has provided the Board with the opportunity toreview how best to enhance the value of the Norman Broadbent brand and IPinternationally. SHARE PLACING In October 2013, the Group raised £700,000 (£684,000 net ofexpenses) through the issue, principally to existing institutional investors,of 1,750,000 new ordinary shares in the capital of the Company at a price of40 pence per share (the "October Subscription"). The proceeds are being utilised primarily to accelerate the growthof AGP and Connecting Corporates. FINANCIAL POSITION The consolidated Group statement of financial position wasstrengthened through the October subscription. As at 31 December 2013,consolidated net assets were £2,800,000, compared to £3,221,000 as at 31December 2013. Group net current assets decreased to £762,000 (2012:£1,091,000). Group cash amounted to £579,000 (2012: £1,009,000). Net cash outflow from operations in 2013 was £732,000 (2012:£250,000) with £640,000 of these funds reflecting the start-up losses arisingfrom the development of Arcus and Connecting Corporates. Net cash inflow fromfinancing activities amounted to £521,000 (2012: £959,000) relating primarilyto the net funds received from the October Subscription. At 31 December 2013, the only exposure to bank borrowings was theGroup's revolving invoice discounting facility, and funds drawn down againstthis facility were £802,000 (2012: £965,000) against UK trade receivables of£1,255,000 (2012: £1,450,000). DIVERSITY OF PRODUCT OFFERINGS; STRATEGIC OUTLOOK To further reinforce the Norman Broadbent brand, Arcus GlobalPartners has been rebranded as AGP , and Arcus Interim Partners has beenrenamed NB Interim Management with Justin Whitehouse, who joined us earlierthis year, as the Managing Director. With the additions of AGP, NB Interim Management and ConnectingCorporates, and refocussing on our core executive search and leadershipconsulting businesses, the Group is positioning itself to ensure our businessis fit for purpose in an ever evolving recruitment market and to meet ourclient's needs across the spectrum. - Norman Broadbent retains its focus on board, Chairman, Executiveand Non-Executive directors and senior executive level search services with afocus on "Beyond the Obvious" solutions and building better boards withdiverse skill sets. - NB Interim Management a dedicated senior interim managementservice focussed on enhanced client returns on investment and long termbenefits. - NB Leadership Consulting focus on bespoke board and seniormanagement assessment and development services for corporates, professionalservice providers and private equity companies. - AGP: An innovative and flexible recruitment business offeringclients a solution driven approach including single assignments, talentpooling and executive RPO. - Connecting Corporates: A social media consultancy that helpsbuild and manage executive profiles for business development, networking,outplacement or employee brand positioning. - Social Media Search: A digital business that creates rapidturnaround lists for in-house recruiters, creating virtual communities forfuture hiring programmes and pre-qualified candidates for specific hiringneeds. APPOINTMENT OF GROUP CHIEF OPERATING OFFICER AND STAFF James Webber, our new CFO, joined the management team in earlyMarch 2014 enabling a smooth handover from Ben Felton who, as previouslyannounced, resigned with effect from 30 March 2014 to take up a position at alarger organisation. We thank Ben for his role over the past five years andwish him every success in his new role. In addition to being CFO, James hasnow been appointed by the Board to Group Chief Operating Officer withimmediate effect James brings extensive experience in business services toNorman Broadbent, having worked in the office of the COO of EY, and has abackground in corporate finance at a senior level. The expanded Group now comprises 80 people in the UK and your Boardwould like to express its thanks to all our management teams and staff,particularly in view of the diversification programme taking place through ournew complementary subsidiaries. CURRENT TRADING Trading in January and February 2014 in UK executive search wasstrong whilst March 2014 was disappointing. Overall, Group revenues in thefirst quarter of 2014 were marginally ahead of the same period last year. Forthe second quarter to 30 June 2014 the UK executive search team anticipates anencouraging performance based on activity to date and the current strongpipeline, and our start up bespoke contingency, and digital start ups arecontributing to growing revenues in a satisfactory way. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2013 Note 2013 2012 £000 £000 REVENUE 1/2 7,551 7,634Cost of sales (392) (208) GROSS PROFIT 2 7,159 7,426 Operating expenses (8,354) (7,133)Other income 125 - GROUP OPERATING (LOSS)/PROFIT) (1,070) 293 BEFORE RESTRUCTURING COSTS Re-structuring costs 4 - (331) GROUP OPERATING LOSS (1,070) (38) Dividends received 18 -Net finance cost 7 (30) (35) LOSS ON ORDINARY ACTIVITIES BEFORE INCOME TAX 3 (1,082) (73) Income tax expense 6 (70) (42) LOSS FOR THE YEAR (1,152) (115) OTHER COMPREHENSIVE INCOME Foreign currency translation differences - foreign (12) 2operations TOTAL COMPREHENSIVE INCOME FOR THE YEAR (1,164) (113) Loss attributable to:- Owners of the Company (1,050) (127)- Non-controlling interests (102) 12 Loss for the year (1,152) (115) Total comprehensive income attributable to:- Owners of the Company (1,062) (127)- Non-controlling interests (102) 14 Total comprehensive income for the year (1,164) (113) Loss per share 8- Basic (7.85)p (1.16)p- Diluted (7.85)p (1.16)pAdjusted loss per share 8- Basic (7.40)p (0.52)p- Diluted (7.40)p (0.52)p CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2013 Notes 2013 2012 £000 £000Non-Current AssetsIntangible assets 10 1,922 1,922Property, plant and equipment 11 172 139Deferred tax assets 6 69 69 TOTAL NON-CURRENT ASSETS 2,163 2,130 Current AssetsTrade and other receivables 13 2,339 2,267Cash and cash equivalents 14 579 1,009 TOTAL CURRENT ASSETS 2,918 3,276TOTAL ASSETS 5,081 5,406 Current LiabilitiesTrade and other payables 15 1,333 1,075Deferred consideration 16/17 - 73Bank overdraft and interest bearing loans 16/17 802 965Corporation tax liability 21 72 TOTAL CURRENT LIABILITIES 2,156 2,185NET CURRENT ASSETS 762 1,091 Non-Current LiabilitiesProvisions 21 125 - TOTAL LIABILITIES 2,281 2,185TOTAL ASSETS LESS TOTAL LIABILITIES 2,800 3,221 EQUITYIssued share capital 18 5,875 5,857Share premium account 18 10,238 9,572Retained earnings (13,356) (12,353)EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY 2,757 3,076Non-controlling interests 43 145TOTAL EQUITY 2,800 3,221 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2013 Attributable to owners of the Company Non- Share Share Retained Total controlling Total Capital Premium Earnings Equity interests Equity £000 £000 £000 £000 £000 £000 Balance at 1st January 2012 5,833 8,758 (12,297) 2,294 - 2,294Loss for the year - - (127) (127) 12 (115)Total other comprehensive income - - - - 2 2Total comprehensive income for the year - - (127) (127) 14 (113) Transactions with owners of the Company,recognised directly in equity:Issue of ordinary shares 24 814 - 838 - 838Credit to equity for share based payments - - 71 71 - 71 Acquisition of subsidiary withnon-controlling interests - - - - 131 131 Total transactions with owners of theCompany, recognised directly in equity 24 814 71 909 131 1,040 Balance at 31st December 2012 5,857 9,572 (12,353) 3,076 145 3,221 Balance at 1st January 2013Loss 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 - 684Credit to equity for share based payments - - 59 59 - 59 Total transactions with owners of theCompany, recognised directly in equity 18 666 59 744 - 744 Balance at 31st December 2013 5,875 10,238 (13,356) 2,757 43 2,800 CONSOLIDATED STATEMENT OF CASH FLOW For the year ended 31 December 2013 Notes 2013 2012 £000 £000 Net cash used in operating activities (i) (732) (250) Cash flows from investing activities and servicing of financeNet finance cost (30) (35)Dividends received 17 -Payments to acquire tangible fixed assets 11 (122) (92)Repayment of deferred consideration (73) (408)Net cash inflow on acquisition of subsidiary 23 - 181 Net cash used in investing activities (208) (354) Cash flows from financing activitiesNet cash inflows from equity placing 18 684 727Repayment of secured loans - (109)(Repayment)Increase in invoice discounting 16 (163) 341 Net cash from financing activities 521 959 Net increase in cash and cash equivalents (419) 355Net cash and cash equivalents at beginning of period 1,009 650Effects of exchange rate changes on cash balances held in foreign (11) 4currenciesNet cash and cash equivalents at end of period 579 1,009 Analysis of net fundsCash and cash equivalents 579 1,009Borrowings due within one year (802) (965)Deferred consideration - (73) Net funds (223) (29) Note (i)Reconciliation of operating loss to net cash from operating activities 2013 2012 £000 £000 Operating loss (1,070) (38)Depreciation/impairment of property, plant and equipment 89 84Share based payment charge 60 71Increase in trade and other receivables (72) (438)Increase in trade and other payables 257 165Increase in provisions 125 -Taxation paid (121) (94) Net cash used in operating activities (732) (250) NOTES TO THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES The principle 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. The areas involving a higher degree of judgement or complexity, orareas where assumptions and estimates are significant to the consolidatedfinancial statements are disclosed in the notes to the financial statements. The financial information set out above does not comprise theCompany's statutory accounts for the periods ended 31 December 2013 or 31December 2012. Statutory accounts for 31 December 2012 have been delivered tothe Registrar of Companies and those for 31 December 2013 will be deliveredfollowing the Company's Annual General Meeting. The auditors have reported onthose accounts; their report was unqualified, did not include references toany matters to which the auditors drew attention by way of emphasis of matterwithout qualifying their report and did not contain statements under section498(2) or (3) of the Companies Act 2006 in respect of the accounts for 2013 orfor 2012. Going concern The Group reported an operating loss in the year to 31 December 2013 of £1.07million compared with an operating loss of £0.04 million in 2012. Theseconsolidated losses were primarily driven by the expected start-up losses oftwo new subsidiary businesses established in early 2013 (totalling £0.71million) and continued losses incurred in the wholly owned overseas offices inSingapore, USA and France (totalling £0.29 million) which were established inthe last 24 months. The Consolidated Statement of Financial Position shows a strong net assetposition at 31 December 2013 of £2.80 million (2012: £3.22million) with cashat bank of £0.58 million (2012: £1.01 million). At the date that thesefinancial statements were approved the only bank debt owed by the Company wasits invoice discounting facility which is secured by the Group's tradereceivables. 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 SEGMENTS2013 Assessment, Arcus Global Social Media Executive Overseas coaching & Partners Search & Un- Search Royalties talent mgmt. Consulting allocated Total £000 £000 £000 £000 £000 £000 £000 Revenue 5,639 212 1,144 252 304 - 7,551Cost of sales (101) - (287) (1) (3) - (392)Gross profit 5,538 212 857 251 301 - 7,159 Operating expenses (5,724) (107) (934) (674) (512) (313) (8,264)Other operating income 142 - - - - - 142Finance (costs) / income (31) - 2 (1) - - (30)Depreciation and amort. (73) - (11) (3) (2) - (89)Loss before tax (148) 105 (86) (427) (213) (313) (1,082) Net assets 3,537 - (37) (470) (229) - 2,800 BUSINESS SEGMENTS 2012 Assessment, Social Media Executive Overseas coaching & Search & Un- Search Royalties talent mgmt. Interim Consulting allocated Total £000 £000 £000 £000 £000 £000 £000 Revenue 6,607 339 586 66 36 - 7,634Cost of sales (118) - (89) - (1) - (208)Gross profit 6,489 339 497 66 35 - 7,426 Operating expenses (5,931) (119) (612) - (32) (357) (7,051)Other operating income - - - - - - -Re-structuring costs (331) - - - - - (331)Finance costs (31) - - - - (4) (35)Depreciation and amort. (82) - - - - - (82)Profit/(loss) before tax 114 220 (115) 66 3 (361) (73) Net assets 3,129 - 89 - 3 - 3,221 The 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, profitbefore taxation and net assets/ (liabilities) is set out below: BUSINESS SEGMENTS2013 Assessment, Arcus Global Social Media Executive Overseas coaching & Partners Search & Un- Search Royalties talent mgmt. Consulting allocated Total £000 £000 £000 £000 £000 £000 £000RevenueUnited Kingdom 5,409 - 461 238 304 - 6,412Europe 53 194 677 14 - - 938Other 177 18 6 - - - 201Total 5,639 212 1,144 252 304 - 7,551Gross profitUnited Kingdom 5,351 - 410 237 301 - 6,299Europe 53 194 447 14 - - 708Other 134 18 - - - - 152Total 5,538 212 857 251 301 - 7,159Profit/(loss) before taxUnited Kingdom 141 - (238) (427) (213) (313) (1,051)Europe (81) 105 152 - - - 176Other (208) - - - - - (208)Total (148) 105 (86) (427) (213) (313) (1,082)Net assetsUnited Kingdom 3,537 - (37) (470) (229) - 2,800Total 3,537 - (37) (470) (229) - 2,800 BUSINESS SEGMENTS2012 Assessment, Social Media Executive Overseas coaching & Search & Un- Search Royalties talent mgmt. Interim Consulting allocated Total £000 £000 £000 £000 £000 £000 £000RevenueUnited Kingdom 6,413 - 471 66 36 - 6,986Europe 148 275 114 - - - 537Other 46 64 1 - - - 111Total 6,607 339 586 66 36 - 7,634Gross profitUnited Kingdom 6,302 - 428 66 35 - 6,831Europe 148 275 69 - - - 492Other 39 64 - - - - 103Total 6,489 339 497 66 35 - 7,426Profit/(Loss) before taxUnited Kingdom 114 - (63) 66 3 (361) (241)Europe - 157 (51) - - - 106Other - 63 (1) - - - 62Total 114 220 (115) 66 3 (361) (73)Net assetsUnited Kingdom 3,129 - 89 - 3 - 3,221Total 3,129 - 89 - 3 - 3,221 Turnover by location is not materially different from turnover by destination. 3. LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 2013 2012 £000 £000Loss on ordinary activities before taxation is stated after charging: Depreciation and impairment of property, plant and equipment 89 84(Gain) / loss on foreign currency exchange (3) 16Operating lease rentals:Land and buildings 426 327Auditors' remuneration:Audit work 42 34Non-audit work - - The Company audit fee in the year was £12,000 (2012: £11,500). 4. RESTRUCTURING COSTS Re-structuring costs include residual personnel costs relating to the hiringof new consultants in 2011, exiting of under-performing staff and externalrecruitment consultancy costs relating to the new hires. These items have been highlighted in the consolidated statement ofcomprehensive income because separate disclosure is considered appropriate inunderstanding the underlying performance of the business. 2013 2012 £000 £000 Personnel - 331 Total re-structuring costs - 331 5. STAFF COSTS The average number of full time equivalent persons (including directors) 2013 2012 employed by the Group during the period was as follows: No. No. Sales and related services 35 25Administration 45 30 80 55 Staff costs (for the above persons): £000 £000 Wages and salaries 4,950 4,605Social security costs 527 476Defined contribution pension cost 203 206Share based payment expense 60 71 5,740 5,358The emoluments of the directors are disclosed as required by the Companies Act2006 in the Directors' Remuneration Report. The table of directors' emolumentshas been audited and forms part of the financial statements. This alsoincludes details of the highest paid director. 6. TAX EXPENSE (a) Tax charged in the income statement 2013 2012 Taxation is based on the profit for the year and comprises: £000 £000 Current tax:United Kingdom corporation tax at 23.25% (2012: 24.5%) based on profit forthe year 19 29 Foreign Tax 51 13Adjustment in respect of prior years - - Total current tax 70 42 Deferred tax:Origination and reversal of temporary differences - - Tax charge/(credit) 70 42 (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: 2013 2012 £000 £000 Loss on ordinary activities before taxation (1,082) (73) Tax on loss on ordinary activities at standard UK corporation tax rateof 23.25% (2012: 24.5%) (252) (18) Effects of:Expenses not deductible 33 32Foreign tax suffered 19 18Non-taxable income (4) (1)Capital allowances in excess of depreciation 9 14Utilisation of ACT (13) (2)Marginal rate relief (2)Adjustment to losses carried forward 280 (1) Current tax charge for the year 70 42 (c) Deferred tax Tax losses Total £000 £000 At 01 January 2012 (69) (69)Credited to the income statement in 2012 - - At 31 December 2012 (69) (69)Credited to the income statement in 2013 - - At 31 December 2013 (69) (69) At 31 December 2013 the Group had capital losses carried forward of£8,130,000 (2012: £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 £10,843,243 (2012: £10,000,000) trading losses carriedforward, which includes £8,987,000 losses transferred from BNB RecruitmentConsultancy Ltd in 2011. A deferred tax asset of £1,557,000 has not beenrecognised in the financial statements due to the inherent uncertainty as tothe quantum and timing of its utilisation. The analysis of deferred tax in the consolidated balance sheet isas follows: 2013 2012 Deferred tax assets: £000 £000 Tax losses carried forward 69 69 Total 69 69 7. NET FINANCE COST 2013 2012 £000 £000 Interest payable on bank loans and overdrafts 30 35 Total 30 35 8. EARNINGS PER SHARE i) Basic earnings per share This is calculated by dividing the profit attributable to equityholders of the Company by the weighted average number of ordinary shares inissue during the period: 2013 2012 Loss attributable to shareholders £(1,050,000) £(127,000) Weighted average number of ordinary shares 13,385,224 10,929,676 ii) Diluted earnings per share This is calculated by adjusting the weighted average number ofordinary shares outstanding to assume conversion of all dilutive potentialordinary shares. The Company has two categories of dilutive potential ordinaryshares: share options and warrants. For these options and warrants, acalculation is done to determine the number of shares that could have beenacquired at fair value (determined as the average annual market share price ofthe Company's shares) based on the monetary value of the subscription rightsattached to the outstanding warrants and options. The number of sharescalculated as above is compared with the number of shares that would have beenissued assuming the exercise of the share options. 2013 2012 Loss attributable to shareholders £(1,050,000) £(127,000) Weighted average number of ordinary shares 13,385,224 10,929,676- assumed conversion of share options - -- assumed conversion of warrants - - Total 13,385,224 10,929,676 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. 2013 2013 2013 2012 2012 2012 Basic pence per Diluted pence Basic pence per Diluted pence share per share share per share £000 £000Basic earningsLoss after tax (1,050) (7.85) (7.85) (127) (1.16) (1.16)AdjustmentsShare based payment charge 60 0.45 0.45 71 0.64 0.64 Adjusted earnings (990) (7.40) (7.40) (56) (0.52) (0.52) 9. PROFIT OF PARENT COMPANY As permitted by Section 408 of the Companies Act 2006, the incomestatement of the parent company is not presented as part of these accounts.The parent company's profit for the year amounted to £128,000 (2012:£192,000). 10. INTANGIBLE ASSETS Goodwill arising on consolidationGroup £000 Balance at 1 January 2012 3,690 Additions (note 24) 112 Balance at 31 December 2012 3,802 Balance at 31 December 2013 3,802 Provision for impairmentBalance at 1 January 2012 1,880 Balance at 31 December 2012 1,880 Balance at 31 December 2013 1,880 Net book valueAt 1 January 2012 1,810 At 31 December 2012 1,922 At 31 December 2013 1,922 Goodwill 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 Development Norman Broadbent International £000 £000 Total £000 At 1 January 2012 1,750 60 1,810 At 31 December 2012 1,862 60 1,922 At 31 December 2013 1,862 60 1,922 The goodwill attributed to the Norman Broadbent entity can be splitinto two further CGU's, cash generated from the retained Executive Search andleadership consultancy business of £1,212,000 (2012: £1,212,000) and cashgenerated from International Royalties of £650,000 (2012: £650,000). In line with International Financial Reporting Standards, goodwillhas not been amortised from the transition date, but has instead been subjectto an impairment review by the directors of the Group. As set out inaccounting policy note 1, 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 2014 financial year. The key assumption applied to the forecasts for the business isthat return on sales for Norman Broadbent is expected to be a minimum of 10per cent per annum for the foreseeable future (2012: 10 per cent) and 7 percent. for Human Asset Development International (2012: 7 per cent). Return onsales defined as the expected profit before tax on net revenue. There are onlyminimal non cash flows included in profit before tax. The rate used todiscount the forecast cash flows is 12 per cent (2012: 12 per cent). The five year forecasts have been prepared using conservativerevenue growth rates to reflect the uncertainty that is still present in theeconomy. Based on the above assumptions, at 31 December 2013 the recoverablevalue of the Norman Broadbent CGU is £2,600,000 and the Human AssetDevelopment International CGU is £400,000. Return on sales would need to fallbelow 7 per cent for the Norman Broadbent goodwill to be impaired and below 2per cent for Human Asset Development International goodwill to be impaired. 11. PROPERTY, PLANT AND EQUIPMENT Land and Office and buildings - computer Fixtures and Motor leasehold equipment fittings Vehicles Total £000 £000 £000 £000 £000 CostBalance at 1 January 2012 62 176 129 - 367Additions - 53 - - 53Arising on acquisition of subsidiaries - 7 19 13 39Disposals - - - - - Balance at 31 December 2012 62 236 148 13 459 Additions 81 38 3 - 122Disposals (59) (99) (87) - (245) Balance at 31 December 2013 84 175 64 13 336 Accumulated depreciationBalance at 1 January 2012 32 98 106 - 236Charge for the year 22 49 11 2 84Disposals - - - - - Balance at 31 December 2012 54 147 117 2 320 Charge for the year 20 50 14 5 89Disposals (59) (99) (87) - (245) Balance at 31 December 2013 15 98 44 7 164 Net book valueAt 1 January 2012 30 78 23 - 131 At 31 December 2012 8 89 31 11 139 At 31 December 2013 69 77 20 6 172 The Group had no capital commitments as at 31 December 2013 (2012: £Nil). The above assets are owned by Group companies; the Company has no fixedassets. 12. INVESTMENTS Shares in subsidiary undertakingsCompany £000 CostBalance at 1 January 2012 5,786 Additions (see note below) 255 Balance at 31 December 2012 6,041 Additions (see note below) 10 Balance at 31 December 2013 6,051 Provision for impairmentBalance at 1 January 2012 3,926 Balance at 31 December 2012 3,926 Impairment in the year - Balance at 31 December 2013 3,926 Net book valueAt 1 January 2012 1,860 At 31 December 2012 2,115 At 31 December 2013 2,125 During the year, the entire issued share capital of £10,000 inArcus Global Partners Limited was acquired from Norman Broadbent ExecutiveSearch Limited, a wholly owned subsidiary, to the Company. In 2012, the company acquired a 51 per cent interest in AckerDeboeck and Company for a total consideration of £248,000 (see note 24). TheCompany also incorporated wholly owned subsidiaries in Singapore and USA, withcombined share capital of £7,000. Funding for the growth of these subsidiarieswill be provided through Group treasury in the form of inter-company loans. At 31 December 2013 the Company held the following ownership interests: Principal Group investments: Country of incorporation Principal activities Description and proportion or registration and of shares held by the operation Company Norman Broadbent Executive Search Ltd England and Wales Executive search 100% ordinary sharesNorman Broadbent Overseas Ltd England and Wales Executive search 100% ordinary sharesNorman Broadbent Leadership Consulting England and Wales Assessment, coaching 100% ordinary sharesLimited (formerly Human Asset Development and talent mgmt.International Ltd) Arcus Global Partners Ltd England and Wales Contingent Search 100% ordinary shares Norman Broadbent Inc United States of America Executive search 100% ordinary sharesThe NB Consultancy (Singapore) Pte. Ltd Singapore Executive search 100% ordinary sharesNorman Broadbent SPRL Belgium Executive search, 51% ordinary shares assessment, coaching and talent mgmt.Norman Broadbent S.A.S.*** France Executive search 51% ordinary shares Connecting Corporates Ltd England and Wales Social Media Search & 51% ordinary shares Consulting Bancomm Ltd England and Wales Dormant 100% ordinary sharesNorman Broadbent Ireland Ltd** Republic of Ireland Dormant 100% ordinary sharesSubstantial Shareholdings:NBS Norman Broadbent SA* Spain Executive search, 20% ordinary shares assessment, coaching and talent mgmt. * 20% of the issued share capital of this company is owned by Norman BroadbentOverseas Ltd, a wholly owned subsidiary of the Company. ** 100% of the issued share capital of this company is owned by NormanBroadbent Overseas Ltd. *** 100% of the issued share capital of this company is owned byNorman Broadbent SPRL which is 51% owned by the Company. 13. TRADE AND OTHER RECEIVABLES Group 2013 2012 £000 £000 Trade receivables 1,829 1,655Less: provision for impairment (72) (20)Trade receivables - net 1,757 1,635 Other debtors 417 354Prepayments and accrued income 165 278Due from Group undertakings - - Total 2,339 2,267 As at 31 December 2013, Group trade receivables of £1,197,000(2012: £836,000) were past their due date but not impaired. They relate tocustomers with no default history. The aging profile of these receivables isas follows: Group 2013 2012 £000 £000 Up to 3 months 869 8003 to 6 months 238 16 to 12 months 90 35 Total 1,197 836 The largest amount due from a single debtor at 31 December 2013represents 6.8% (2012: 10.86%) of the total trade receivables balanceoutstanding. As at 31 December 2013, Group trade receivables of £72,000 (2012:£20,000) were past their due date and considered impaired. A provision forimpairment for the full amount has been recognised in the financialstatements. Movements on the Group's provision for impairment of tradereceivables are as follows: 2013 2012 £000 £000 At 1 January 20 87 Provision for receivable impairment 72 20Receivables written-off as uncollectable (20) (87) At 31 December 72 20 Other 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. 14. CASH AND CASH EQUIVALENTS Group 2013 2012 £000 £000 Cash at bank and on hand 579 1,009 Total 579 1,009 There 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. 15. TRADE AND OTHER PAYABLES Group 2013 2012 £000 £000 Trade payables 389 479Due to Group undertakings - -Other taxation and social security 353 317Other payables 72 75Accruals 519 204 Total 1,333 1,075 There is no material difference between the carrying value and thefair value of the Group's and parent company's trade and other payables. 16. BORROWINGS GroupMaturity profile of borrowings 2013 2012 £000 £000 CurrentBank overdrafts and interest bearing loans:Invoice discounting facility (see note (a) below) 802 965 802 965Deferred consideration - 73 802 1,038 Total 802 1,038 The carrying amounts and fair value of the Group's borrowings,which are all denominated in sterling, are as follows: Carrying amount Fair value 2013 2012 2013 2012 £000 £000 £000 £000 Bank overdrafts and interest bearing loans 802 965 802 965Deferred consideration - 73 - 73 Total 802 1,038 802 1,038 a) Invoice discounting facilities: Norman Broadbent Executive Search Limited and Arcus Global PartnersLimited operate independent invoice discounting facilities, provided by LeumiABL Limited, which are secured by the trade receivables of the respectivecompanies and also a cross corporate guarantee and indemnity deed dated 20July 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 thatare aged less than 120 days, with the facility capped at £1,500,000. At 31December 2013, the outstanding balance on the facility of £680,000 (2012:£965,000) was secured by trade receivables of £1,104,000 (2012:£1,450,000).Interest is charged on the drawn down funds at a rate of 2.50% above the bankbase rate (2012: 2.75%). Arcus Global Partners Limited: Funds are available to be drawn down at an advance rate of 85%against trade receivables of Arcus Global Partners Limited that are aged lessthan 120 days, with the facility capped at £750,000. At 31 December 2013, theoutstanding balance on the facility of £122,000 (2012: £Nil) was secured bytrade receivables of £151,000. Interest is charged on the drawn down funds ata rate of 2.75% above the bank base rate. 17. FINANCIAL INSTRUMENTS The principle financial instruments used by the Group, from whichfinancial instrument risk arises, are summarised below. All financial assetsand liabilities are measured at amortised cost which is not considered to bematerially different to fair value. Amortised CostGroup 2013 2012 £000 £000 Financial AssetsTrade and other receivables 2,383 2,267Cash and cash equivalents 579 1,009 Financial LiabilitiesTrade and other payables 1,333 1,075Bank overdrafts and interest bearing loans 802 965Deferred consideration - 73Corporation tax liability 21 72 In common with all other businesses, the Group is exposed to risksthat arise from its use of financial instruments. Details on these risks andthe policies set out by the Board to reduce them can be found in Note 2 of thefinancial statements. 18. SHARE CAPITAL AND PREMIUM 2013 2012 Allotted and fully paid: £000 £000 Ordinary Shares:14,798,686 Ordinary shares of 1.0p each (2012: 13,048,686) 148 130Deferred Shares:23,342,400 Deferred A shares of 4.0p each (2012: 23,342,400) 934 934907,118,360 Deferred shares of 0.4p each (2012: 907,118,360) 3,628 3,6281,043,566 Deferred B shares of 42.0p each (2012: 1,043,566) 438 4382,504,610 Deferred shares of 29.0p each (2012: 2,504,610) 727 727 5,727 5,727 Total 5,875 5,857 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 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 bythe creation or issue of shares ranking parri passu with or in priority to theDeferred A Shares. Deferred Shares of 0.4p 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 bythe creation or issue of shares ranking parri passu with or in priority to theDeferred B Shares. 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 Ordinary Deferred Share shares shares shares premium Total (000s) £000 £000 £000 £000 At 1 January 2012 10,608 106 5,727 8,758 14,591 Proceeds from share placing (note (a) 2,122 21 - 721 742below)Transaction costs related to share - - - (15) (15)placingShares issued on acquisition 319 3 - 108 111 At 31 December 2012 13,049 130 5,727 9,572 15,429 Proceeds from share placing (note (b) 1,750 18 - 682 700below)Transaction costs related to share - - - (16) (16)placing At 31 December 2013 14,799 148 5,727 10,238 16,113a) Share placing in November 2012: On 13 November 2012, the Company issued 2,121,600 new ordinary 1.0pshares for a total cash consideration of £742,000. Transaction costs of£15,000 were incurred resulting in net cash proceeds of £727,000. b) 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. 19. SHARE BASED PAYMENTS 19.1 Share Options The Company has an approved EMI share option scheme for full timeemployees and directors. The exercise price of the granted options is equal tothe market price of the shares on the date of the grant. The Company has nolegal or constructive obligation to repurchase or settle the options orwarrants in cash. Options under the Company EMI scheme are conditional on theemployee completing three years' service (the vesting period). The EMI optionsvest in three equal tranches on the first, second and third anniversary of thegrant. The options have a contractual option term of ten years. Movements in the number of share options and their related weightedaverage exercise prices are as follows: Approved EMI share option scheme Avg. exercise price Number of options per share (p) At 1 January 2012 63.01 1,182,058 Forfeited 63.05 (185,818) At 31 December 2012 62.92 996,240 Forfeited 61.13 (84,962)Granted 42.50 91,765 At 31 December 2013 61.20 1,003,042 Share options outstanding at the end of the year have the following expirydate and exercise prices: Expiry date Exercise price per Share options share (p) 2013 2012 2020 52.50 169,523 198,0942021 65.50 741,754 798,1462023 42.50 91,765 - Total 1,003,042 996,240 Out of the 1,003,042 outstanding options (2012: 996,240), nooptions were exercisable at the year end (2012: 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. 19.2 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 weightedaverage exercise prices are as follows: Warrants Avg. exercise price per share (p) Number of warrants At 1 January 2012 45.00 166,666 At 31 December 2012 45.00 166,666 Forfeited 45.00 (166,666) At 31 December 2013 - - There were no Warrants outstanding at the end of the year. See Note 6 of the report and accounts for the total expenserecognised in the income statement for share options and warrants granted todirectors and employees. 20. LEASES Operating leases The Group leases all its premises. The terms of the leases vary foreach property and are tenant repairing. As at 31 December 2013, the total future value of minimum leasepayments are due as follows: Land and Buildings 2013 2012 £000 £000 Within one year 297 156Later than one year and not later than five years 1,028 - Total 1,325 156 On the 6 March 2013 the directors signed a new lease for theCompany's principle office at 12 St James's Square, London on substantiallyimproved financial terms. The new lease commences on 30 April 2013 for 10years with the option to break after 5 years. 21. PROVISIONS Group 2013 2012 £000 £000 At 1 January - -Provisions made during the year 125 - At 31 December 125 - Current liability - -Non-current liability 125 - At 31 December 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 from the previous tenant insatisfaction of various costs and liabilities that it inherited with the newlease. The net balance of this receipt has been reported within Other Incomein the Consolidated Statement of Comprehensive Income. 22. PENSION COSTS The Group operated several defined contribution pension schemes forthe business. 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 £203,000 (2012:£206,000). At the year end £23,000 of contributions were outstanding (2012:£18,000). 23. BUSINESS COMBINATIONS There were no business combinations during 2013. On the 1 November2012, the Company obtained control of Acker Deboeck and Company SPRL, anexecutive search and leadership consultancy business headquartered inBrussels, by acquiring 51 per cent of the shares and voting interests in thecompany. The acquisition of Acker Deboeck, renamed Norman Broadbent SPRL inJanuary 2013, extended the European reach of the Norman Broadbent executivesearch brand whilst significantly enhancing the leadership consulting andboard evaluation services of the Group. The following summarises the major classes of considerationtransferred and the recognised amounts of assets acquired and liabilitiesassumed at the acquisition date. Consideration transferred: 2012 £000 Cash 137Equity instruments (319,285 ordinary 1.0p shares - note 20) 111 Total 248 (a) Equity Instruments issued - the fair value of the ordinaryshares issued was based on the listed share price of the Company at 1 November2012 of 35 pence per share. Identifiable assets acquired and liabilities assumed: £000 Property, plant and equipment 39Trade and other receivables 74Cash and cash equivalents 318Trade and other payables (29)Corporation tax (135) Total 267 The following fair values were determined on a provisional basis: (a) Trade receivables comprise gross contractual amounts of £60,000and £14,000 of assignment related expenses due to be recharged to clients.Whilst there is no expectation or track record of bad debts in the company,should any of the outstanding invoices become uncollectable then an adjustmentto the fair value of trade receivables would be necessary. (b) The corporation tax liability of £135,000 represents aprovision for the expected tax liability of the company calculated by anindependent tax firm. Once the formal year end tax computation has beenprepared any material adjustments to the provision would need to be factoredin to the acquisition calculation. No new information has been obtained in the 12 months from theacquisition date which would require the acquisition accounting to be revisedby a material amount. Goodwill: Goodwill was recognised as a result of the acquisition as follows: £000 Total consideration transferred 248Non-controlling interests, based on their proportionate interest in the recognised amountsof assets and liabilities of Acker Deboeck 131Fair value of identifiable net assets (267) Total 112 The goodwill is attributable mainly to the skills and technicaltalent of Acker Deboeck's employees and the enhanced revenue generatingability of the Group, particularly the leadership consulting and boardevaluation services, for which Acker Deboeck has a demonstrable track recordof delivering. Acquisition-related costs: The Company incurred acquisition related legal costs of £10,000.These costs were included in "operating expenses" in the consolidatedstatement of comprehensive income in 2012. 24. RELATED PARTY TRANSACTIONS The following transactions were carried out with related parties: (a) Purchase of services: 2013 2012 £000 £000 Adelaide Capital Limited 52 141Anderson Barrowcliff LLP 14 31Brian Stephens & Company Ltd 22 5Norman Broadbent SAS 37 8Arquius Colombia SAS 48 -Connecting Corporates Limited 11 - Total 184 185 During the year Adelaide Capital Limited invoiced the Group for thedirectors' fees of P Casey £31,000 and corporate finance services £21,000(2012 total: £141,000). P Casey is a director of Adelaide Capital Limited.Brian Stephens & Company Ltd invoiced the Group for the directors' fees of BStephens £20,000 and business related travel costs £2,000 (2012 total:£5,000). B Stephens is a director of Brian Stephens & Company Ltd. Taxation and company secretarial services of £9,000 were acquiredfrom Anderson Barrowcliff LLP, an accountancy firm of which R Robinson is apartner. Anderson Barrowcliff also invoiced the Group for R Robinson'sdirector's fees £5,000. The remaining director fees for R Robinson was paidthrough PAYE £15,000 (2012 total: £31,000). During the year the Group incurred fee splits relating to jointlyexecuted overseas searches £37,000 from Norman Broadbent SAS (2012: £8,000).The Group owns a 51% stake in Norman Broadbent SAS. During the year the Group incurred fee splits relating to jointlyexecuted overseas searches £48,000 from Arquius Colombia SAS (2012: nil). TheGroup owns a 20% stake in NBS Norman Broadbent SA which owns 95% of ArquiusColombia SAS. During the year the Group acquired research services fromConnecting Corporates Limited £11,000 (2012: nil). The Group owns a 51% stakein Connecting Corporates Limited. All related party expenditure took place via "arms-length" transactions. (a) Sale of services 2013 2012 £000 £000 NBS Norman Broadbent SA 175 253Norman Broadbent SPRL 11 -Connecting Corporates Limited 42 - Total 228 253 During the year the Group invoiced NBS Norman Broadbent SA forroyalty income £175,000 (2012: £253,000). The Group owns a 20% stake in NBSNorman Broadbent SA. During the year the Company invoiced Norman Broadbent SPRL formanagement fees £11,000 (2012: nil). During the year the Group recharged group services incurred for thebenefit of Connecting Corporates Limited to Connecting Corporates Limited atcost £42,000 (2012: nil). All related party transactions took place at "arms-length". (b) Provision of loans 2013 2012 £000 £000 Connecting Corporates Limited 275 - Total 275 - During the year the Group provided loans to Connecting CorporatesLimited to support working capital requirements of this company £275,000(2012: nil). The loans are non-interest bearing and are repayable on demand.At the year end, £275,000 (2012: nil) was outstanding 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 in the financial statements. (d) Year-end payables arising from the purchases of services: 2013 2012 £000 £000 Adelaide Capital Limited - 21Anderson Barrowcliff LLP - 6Brian Stephens & Company Ltd 6 4NBS Norman Broadbent SA - 5Connecting Corporates Limited 11 -Norman Broadbent SAS 37 -Arquius Colombia SAS 19 - Total 73 36 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: 2013 2012 £000 £000 NBS Norman Broadbent SA 47 68Norman Broadbent SPRL 5 -Connecting Corporates Limited 42 - Total 94 68 Receivables owed by related parties arise from sales transactionsand are due one month after date of purchase. Payables bear no interest. 25. 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 £147,000(2012: £162,000). 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 financial health and balance sheet position of the tenant, reviewedin their last published financial statements in March 2013. 26. POST BALANCE SHEET EVENTS On 8 May 2014, the Group sold its 51 per cent. stake in NormanBroadbent SPRL for £120,000 (compared to a cash investment of £137,000) toexisting management. The consideration represents 51 per cent. of the netasset value of Norman Broadbent SPRL. Post year end this will result in animpairment in the Consolidated Statement of Financial Position of goodwill of£112,000, and a loss on disposal of the investment of £128,000 in the CompanyStatement of Financial Position. On 27 May 2014, the Group agreed to sell its20 per cent. stake in NBS Norman Broadbent SA. The transaction, whilstbinding, is due for completion on 30 July 2014. Post completion the Group willreview the carrying value of goodwill in the Consolidated Statement ofFinancial Position, and calculate the profit on disposal of the investment inthe Company Statement of Financial Position. 27. AVAILABILITY OF REPORT AND ACCOUNTS Copies of the report and accounts will be posted to shareholdersshortly and will be available on request from the Company's registered officeat 12 St James's Square, London, SW1Y 4LB. Copies are also available on theCompany's website: www.normanbroadbent.com.