Norman Broadbent PLC Final Results

RNS Number : 4184I

Norman Broadbent PLC

27 March 2024

Norman Broadbent plc

("Norman Broadbent", the "Company" or "the Group")

Final Results

Significant organic revenue growth driving a return to profitability

Norman Broadbent (AIM: NBB), a leading Executive Search and Interim Management firm, is pleased to announce its audited final results for the year ended 31 December 2023 ("FY23").

Financial highlights

●	Organic revenue growth of 41% to £12.3m (FY22 £8.7m)
	o	Search revenue: up 52% to £8.6m (FY22: £5.7m)
	o	Interim revenue: up 9% to £3.2m (FY22: £2.9m)
●	Group Net Fee Income ("NFI") up 44% to £10.5m (FY22: £7.3m)
●	Underlying EBITDA* of approximately £0.9m, up more than £0.8m (FY22: £0.1m)
●	Return to profitability, with profit before tax of approximately £0.3m, up over £0.6m (FY22: loss before tax £0.3m)
●	Early redemption and conversion of outstanding £0.4m convertible loan notes
●	Net cash flow positive with position improving to £0.4m** as at 31 December 2023 (31 December 2022: net debt £1.1m)
●	Cash balance of £0.8m as at 31 December 2023 (31 December 2022: £0.05m)

* Excludes share based payment charges

**Excluding lease liabilities

Operational highlights

●	Significant investment in headcount to position the Group for further profitable growth
●	Average annual fees per established fee generating employee up 32%
●	Reinforced values and performance-based culture, driving retention levels
●	Continued to develop capability and capacity across the team through improved processes and support technologies

Kevin Davidson, CEO of Norman Broadbent, said:

"I am delighted with the performance of our team, delivering outstanding results in the context of a challenging macro-economic environment. Their dedication and drive has brought the business back to levels of performance not seen in well over a decade.

We have taken the opportunity to invest further in the Company, hiring exceptional people and building our platform to take advantage of the market rebound when it comes. Our ambition remains steadfast and we will continue to pursue our aggressive growth strategy, whilst remaining profitable and cash positive, both organically and potentially through synergistic M&A opportunities.

Looking forward, a motivated and growing team of the highest quality professionals, coupled with a refreshed culture based on values and performance, forms a very strong platform and engine for future growth. Supported by our considerable brand strength and market leading processes and technologies, we are well-positioned for continued success."

The Company's Annual Report and Accounts will be available later today on the Company's website, https://www.normanbroadbent.com/company-documents/

Investor presentation

CEO, Kevin Davidson, and CFO, Mehr Malik, will host a virtual presentation and Q&A session open to all existing and potential investors at 10am this morning.

To register to attend, please use the following link: https://bit.ly/NBB_FY23_results_webinar

For further information please contact:

Norman Broadbent plc

Kevin Davidson, CEO

Mehr Malik, CFO

+44 (0)20 7484 0000

Shore Capital (Nominated Adviser and Broker)

Tom Griffiths / Tom Knibbs (Corporate Advisory)

Henry Willcocks (Corporate Broking)

+44 (0)20 7408 4090

Alma Strategic Communications (Financial Communications Adviser)

Rebecca Sanders-Hewett

Kinvara Verdon

David Ison

normanbroadbent@almastrategic.com

+44 (0)20 3405 0205

About Norman Broadbent:

Norman Broadbent (AIM: NBB) is a professional services firm focused on executive search, senior interim management solutions and bespoke leadership advisory services working across the UK and internationally.

Established as the first UK-headquartered search firm in 1979, the firm has a 40+ year track record of shaping leadership across industries including Consumer, Financial Services, Industrials, Life Sciences, Investor and TMT.

www.normanbroadbent.com

Chairman's statement

2023 saw a transformation across the business. The foundations were built in the previous two years with Norman Broadbent returning to profitability. The growth in 2023 is testimony to the hard work put in by the team and it was another exceptional year both operationally and financially.

The culture present throughout the business is one of teamwork, inclusion, quality and delivery. This has been integral in delivering the results that have been achieved. It's extremely encouraging to see the levels of commitment and ambition across every level of the business. This ambition is led by example from the top by our exceptional and inspirational executive management team.

The team's commitment to delivering world-class leading services to our customers in every aspect of our business is second to none. I believe this sets us apart and has been core to our success.

Throughout 2024, the executive team will continue to invest further in our headcount adding both experienced consultants and researchers. They will continue to reorganise and strengthen our support functions and invest in leading edge technology to bolster this growth.

We have, in common with our peers, been facing some very challenging market conditions, but the quality of our service has allowed the team to not only weather the challenges but post the best numbers for over ten years. A net profit of £0.3 million, NFI of £10.5 million and net cash generated from operating activities of £1.7 million.

The Board's strategy for rapid yet sustainably profitable expansion has been delivered and will provide the platform to continue in the same manner throughout 2024.

I would like to thank the entire Norman Broadbent team for their unwavering commitment, hard work and for the quality of their execution, our clients for partnering with us, for their faith in the excellence of our services and our shareholders for their continued support.

Peter Searle

Chair

26 March 2024

CEO's statement

We achieved a key milestone in 2023, returning the business to profitability, as planned when I joined Norman Broadbent in late 2021. We continued to grow our headcount while also investing in supporting infrastructure and technologies to both modernise and prepare the platform for accelerated future expansion. I am delighted that all of our objectives have so far been met and I am increasingly confident in our ability to position our incredible brand as a global leader in senior executive search and interim management.

During 2023, Norman Broadbent placed leaders across the UK, Europe, the US, Australasia and the Middle East covering multiple sectors and disciplines. As this year has proven, our business is well balanced across both resilient and rapid growth sectors where there is a considerable shortage of leadership talent.

NFI in 2023 grew by 44% to £10.5 million (2022: £7.3 million) and the Company generated underlying EBITDA^* of £0.9 million which represents a positive swing of £0.8 million (2022: EBITDA^* of £0.1 million). Building on the considerable efforts and successes of 2022, the strategic pillars of the business continued to be strengthened during 2023. We will continue to develop our platform in 2024 and beyond as we drive rapid organic growth. We will also continue to identity and explore appropriate opportunities for inorganic growth.

The five strategic priorities for the year ahead continue to be the following:

·	People & Culture
·	Brand & Market positioning
·	Research & Delivery
·	Financial Stability & Performance
·	Business Focus

PEOPLE & CULTURE - driving an ambitious and collaborative culture

Our business is fundamentally about our people and the culture they create and demonstrate both internally and externally. This determines performance, employee retention and attraction, and, ultimately, positive outcomes for all stakeholders. Having invested heavily in the culture reset towards the end of 2021 and the beginning of 2022, we have now established a values driven, ambitious, collaborative and growth oriented culture, underpinned by trust and a commitment to exceptional performance.

We continue to reinforce our cultural anchors through quarterly values awards, engagement surveys, performance reviews, charitable fundraising and community development projects amongst other activities.

The stability of the team is crucial, especially when growing rapidly, and, as in 2022, we were delighted to have had very few regretted leavers in 2023. We recruited a total of fifteen very high calibre and culturally aligned colleagues across fee generation, research, and support in 2023 and secured another three who started at the beginning of 2024.

BRAND & MARKET POSITIONING - combining rich heritage with modern dynamism

Built over 45 years, we are all very proud of the heritage and strength of the Norman Broadbent brand which, coupled with the quality of our people and our culture, will increasingly be the accelerator of our future growth. We are recognised as leaders in the field and this brand strength provides a strong foundation to drive further growth.

The level of mandates in terms of both seniority and fee levels continued to grow throughout 2023. This was a clear mission that we set when I joined the Company and a necessary journey that we are on in re-positioning Norman Broadbent as the pre-eminent executive search and interim leadership partner across our chosen markets. We continued to build our board practice which continued to deliver high-quality Chair, Non-Executive and Executive Director mandates throughout the year across the listed, private (private equity and family owned) and public sectors - a trend which is reflective of our brand elevation and supportive of our future ambitions.

RESEARCH & DELIVERY - meticulous technology enabled processes

Our in-house research team delivers bespoke, value-added research and business intelligence on markets, people, and competitors, helping our clients make better, more informed decisions. As a result of the investments made in our team, processes and the implementation of new software platforms, the productivity, quality, and consistency of our research and delivery function continues to improve, positioning us to scale much more smoothly and effectively. As our growing fee generating headcount becomes established and mandates become increasingly more senior, the need to grow the research team proportionately, from a cost perspective, also reduces making additional net fee income ever more accretive to the bottom line.

FINANCIAL STABILITY & PERFORMANCE - growth and sustainable profitability

In 2023, net cash inflow from operating activities increased significantly to £1.7 million (2022 outflow: £0.03 million) due to the continued focus on improving working capital. The growing levels of profits has further supported cash generation with the Group closing the year with a cash position of £0.8 million (31 December 2022: £0.05 million).

As at 31 December 2023, the Group's balance sheet position was significantly stronger with net assets of £1.4 million (31 December 2022: £0.7 million) reflecting the improvements in profitability, focus on working capital and reduction in borrowings, notably the early redemption and conversion of the convertible loan notes (31 December 2022: £0.4 million) and the reduced utilisation of the invoice discounting facility to £0.2 million (31 December 2022: £0.5 million).

Since our CFO, Mehr Malik, joined us in January 2023, our financial discipline has improved considerably. We have also introduced new technology which is dramatically improving all aspects of the business in a structured and integrated manner. In 2024 we will be further developing this technology stack and, in particular, carefully managing the integration of operating systems to improve the quality and availability of real time management information. As with all investments we have been making, this is not only necessary in modernising the business, but it establishes a platform which is capable of supporting our ambitious future growth plans.

BUSINESS FOCUS - building on our strengths

Whilst continuing to offer a full range of leadership advisory services, the Company has had a clear focus on its executive search brand and being at the forefront of this increasingly valuable market. Norman Broadbent is still recognised as a leader in the field of executive search which drives client engagement and, in turn, opportunities in interim management and other leadership advisory services. Executive search will therefore continue to be the core of the business as we also look to grow interim management (which represented 16% of NFI in FY23) and our other leadership advisory service offerings such as leadership assessment and development.

The fee generation hires made in 2023 have meaningfully expanded the Company's position in the following sectors: Board, Industrial, Retail & Consumer, Private Equity/Venture Capital, HR, Digital & Technology and Change & Transformation across executive search and senior interim management. The sectors we operate in are generally both resilient and currently growing. Approximately 50% of our net fee income in FY23 was generated in industrial and infrastructure segments which continue to attract investment and grow rapidly in the UK and internationally. We have an enviable and growing track record across power, utilities and the entire energy value chain from nuclear and conventional hydrocarbon through the energy transition to renewables of all descriptions, including wind, solar, carbon capture and storage and the emerging hydrogen economy. Working with asset owners, developers, constructors, equipment and service providers, technology innovators and investors, the Company is well placed to capitalise on the continued and forecast buoyancy of each of these sectors.

Within our industrial practice we have also developed a strong and growing capability in chemicals, transportation infrastructure (including civil aviation and aerospace), engineering and construction, marine and shipping, automotive, clean tech and natural resources.

Our Retail & Consumer practice is also well positioned with particular strength and brand recognition across procurement, supply chain and commercial leadership, an area where there is considerable focus and investment. This team has continued to successfully support some of the world's largest consumer brands whilst deepening and broadening our international relationships with them.

We also invested in our Lifesciences team in FY23 and two additional fee earners joined this team in early 2024. Norman Broadbent is established on a number of blue-chip preferred supplier lists in this sector which we are well placed to capitalise on.

The Digital & Technology sector is ever evolving and we continued to support both large clients on complex and large scale digital transformation projects, and also small tech scale ups as they shape leadership teams for the future.

In addition, within our Corporate Functions practice, we placed a growing number of Digital & Technology, HR, Legal and Finance leaders across a multitude of sectors.

Finally, we made key appointments and investments in our board practice in 2023. The Norman Broadbent legacy places our brand very firmly in the boardroom of most organisations, large and small; an opportunity which we do not believe has been appropriately capitalised on in recent years. Our commitment and fresh approach to building our board practice with Diversity, Equity, and Inclusion (DE&I) and Environmental, Social, and Governance (ESG) at its very heart is being very well received. As a powerful conduit to executive search work and broader leadership advisory services, we will continue to grow and develop this proactively in 2024 and beyond.

CURRENT TRADING AND OUTLOOK

We continue to have ambitious, but achievable organic growth targets over the next couple of years which we are confident will deliver NFI in excess of £15 million by 2025 and EBITDA in excess of £1.25 million. Whilst continuing to drive growth, the leadership team remains focussed on overheads and productivity improvements, ensuring that revenues become ever more accretive through a combination of seniority of mandates, economies of scale and efficiency improvements.

Having achieved profitability and positive cash flow in the expected timescales, the Company is managing its resources carefully in order to strike the optimal balance between pace of organic growth, short-term profitability and continued cash generation. As the business is now on a more stable footing and sustainable growth trajectory, corporate development activity will be increased in 2024 to identify and assess the potential for both smaller, strategic acquisitions as well as large-scale transformational opportunities.

The Board continues to monitor carefully the evolving macro-economic climate and believes that the Company is well positioned in what are stable and growing markets, notably across Industrials and, in particular, Energy, Power, Utilities, Chemicals, Transport & Infrastructure, including Civil Aviation. All of these sectors continue to attract significant capital investment whilst also experiencing extreme imbalances in the supply of, and demand for, senior leadership talent.

We are looking to the future with confidence. There are clearly macro-economic headwinds which we are monitoring carefully, but with a heavy bias towards growing and counter-cyclical sectors, a refreshed culture, an absolute focus on quality and the ongoing attraction of exceptionally talented and dedicated colleagues, the Board is confident that the Company can continue to grow rapidly whilst also delivering positive and sustainable EBITDA.

Whilst difficulties were experienced in FY23 by many businesses across executive search and the broader recruitment industry, we have delivered and intend to capitalise on our positive momentum to grow the team further in preparation for a broader economic recovery.

SUMMARY

The results in FY23 demonstrate just how much the turnaround of Norman Broadbent plc has achieved in a short period of time. Having now delivered the strongest results in a decade, the Board and leadership team have their sights very much fixed on an ambitious, but sustainable, growth plan.

Having achieved such strong financial results, whilst growing rapidly in a depressed market, the Board has every confidence in the team and is looking to the future with ever growing optimism and excitement.

Kevin Davidson

Group Chief Executive

26 March 2024

Consolidated Income Statement

For the year ended 31 December 2023

		2023	2022
	Note	£'000	£'000
Revenue	3	12,306	8,697
Cost of sales		(1,731)	(1,350)
Gross profit		10,575	7,347
Operating expenses		(10,163)	(7,608)
Operating profit/(loss)		412	(261)
Net finance cost	7	(103)	(77)
Profit/(loss) before tax	4	309	(338)
Taxation	6	-	-
Profit/(loss) for the year		309	(338)

Earnings per share
Profit/(loss) per share
- Basic	8	0.50p	(0.56)p
- Diluted		0.39p	(0.56)p
Adjusted profit/(loss) per share
- Basic	8	0.91p	(0.34)p
- Diluted		0.71p	(0.34)p

The results for the periods presented above are derived from continuing operations.

The accompanying notes form an integral part of these financial statements.

Consolidated Statement of Comprehensive Income

	2023	2022
	£'000	£'000
Profit/(loss) for the year	309	(338)

Total comprehensive income/(loss) for the year	309	(338)

Attributable to:
Owners of the Company	309	(338)

The accompanying notes form an integral part of these financial statements.

Consolidated Statement of Financial Position

For the year ended 31 December 2023

		2023	2022
	Notes	£'000	£'000
Non-current assets
Intangible assets	10	1,363	1,363
Property, plant and equipment	11	178	402
Total non-current assets		1,541	1,765
Current assets
Trade and other receivables	13	2,901	2,320
Cash and cash equivalents	14	765	50
Total current assets		3,666	2,370

Current liabilities
Trade and other payables	15	3,393	2,006
Bank overdraft and interest-bearing loans	16	207	483
Lease liabilities	20	111	203
Total current liabilities		3,711	2,692
Net current liabilities		(45)	(322)

Non-current liabilities
Bank and other loans	16	113	618
Lease liabilities	20	8	155
Total non-current liabilities		121	773
Total liabilities		3,832	3,465
Total assets less total liabilities		1,375	670

Issued share capital	18	6,365	6,345
Share premium account	18	14,233	14,110
Retained earnings		(19,223)	(19,785)
Total equity		1,375	670

The accompanying notes form an integral part of these financial statements.

These financial statements were approved by the Board of Directors on 26 March 2024

Signed on behalf of the Board of Directors

K Davidson

Director

Company No 00318267

Company Statement of Financial Position

For the year ended 31 December 2023

	Notes	2023	2022
		£'000	£'000
Non-current assets
Investments	12	1,200	1,200
Total non-current assts		1,200	1,200
Current assets
Trade and other receivables	13	155	1,557
Cash and cash equivalents	14	14	6
Total current assets		169	1,563

Current liabilities
Trade and other payables	15	90	52
Bank loans	16	48	46
Total current liabilities		138	98
Net current assets		31	1,465
Non-current liabilities
Bank and other loans	16	113	572
Total non-current liabilities		113	572
Total liabilities		251	670
Total assets less total liabilities		1,118	2,093
Equity
Issued share capital	18	6,365	6,345
Share premium account	18	14,233	14,110
Retained earnings		(19,480)	(18,362)
Total equity		1,118	2,093

The accompanying notes form an integral part of these financial statements.

These financial statements were approved by the Board of Directors on 26 March 2024

Signed on behalf of the Board of Directors

K Davidson

Director

Company No 00318267

Consolidated Statement of Changes in Equity

For the year ended 31 December 2023

Equity attributable to equity holders of Norman Broadbent Plc
	Share Capital	Share Premium	Retained Earnings	Total Equity
	£'000	£'000	£'000	£'000
Balance at 1 January 2023	6,345	14,110	(19,785)	670
Profit for the year	-	-	309	309
Total comprehensive income for the year	-	-	309	309
Credit to equity for share based payments	-	-	253	253
Conversion of convertible loan notes	20	123	-	143
Transactions with owners of the Company	20	123	253	396
Balance at 31 December 2023	6,365	14,233	(19,223)	1,375

Balance at 1 January 2022	6,334	14,080	(19,578)	836
Loss for the year	-	-	(338)	(338)
Total comprehensive income for the year	-	-	(338)	(338)
Credit to equity for share based payments	-	-	131	131
Issue of ordinary shares	11	30	-	41
Transactions with owners of the Company	11	30	131	172
Balance at 31 December 2022	6,345	14,110	(19,785)	670

The accompanying notes form an integral part of these financial statements.

Share Capital

This represents the nominal value of shares that have been issued by the Company.

Share Premium

This reserve records the amount above the nominal value received for shares issued by the Company. Share premium may only be utilised to write off any expenses incurred or commissions paid on the issue of those shares, or to pay up new shares to be allotted to members as fully paid bonus shares.

Retained Earnings

This reserve comprises all current and prior period retained profits and losses after deducting any distributions made to the Company's shareholders and adding any credits for share based payments.

Company Statement of Changes in Equity

For the year ended 31 December 2023

Equity attributable to equity holders of Norman Broadbent Plc
	Share Capital	Share Premium	Retained Earnings	Total Equity
	£'000	£'000	£'000	£'000
Balance at 1 January 2023	6,345	14,110	(18,362)	2,093
Loss for the year	-	-	(1,371)	(1,371)
Total comprehensive income for the year	-	-	(1,371)	(1,371)
Credit to equity for share based payments	-	-	253	253
Conversion of convertible loan notes	20	123	-	143
Total transactions with owners of the Company	20	123	253	396
Balance at 31 December 2023	6,365	14,233	(19,480)	1,118

Balance at 1 January 2022	6,334	14,080	(19,157)	1,257
Profit for the year	-	-	664	664
Total comprehensive income for the year	-	-	664	664
Credit to equity for share based payments	-	-	131	131
Issue of ordinary shares	11	30	-	41
Transactions with owners of the Company	11	30	131	172
Balance at 31 December 2022	6,345	14,110	(18,362)	2,093

The accompanying notes form an integral part of these financial statements.

Share Capital

This represents the nominal value of shares that have been issued by the Company.

Share Premium

This reserve records the amount above the nominal value received for shares issued by the Company. Share premium may only be utilised to write off any expenses incurred, or commissions paid on the issue of those shares, or to pay up new shares to be allotted to members as fully paid bonus shares.

Retained Earnings

This reserve comprises all current and prior period retained profits and losses after deducting any distributions made to the Company's shareholders and adding any credits for share based payments.

Consolidated Statement of Cash Flow

For the year ended 31 December 2023

		2023	2022
	Notes	£'000	£'000
Net cash generated from/(used in) operating activities	(i)	1,712	(33)
Cash flows from investing activities and servicing of finance
Net finance cost		(27)	(51)
Payments to acquire tangible fixed assets	11	(16)	(65)
Net cash used in investing activities		(43)	(116)
Cash flows from financing activities
New loans received		-	400
Repayments of borrowings		(389)	(32)
Payment of lease liabilities		(241)	(200)
Proceeds from issue of share capital	18	-	41
Decrease in invoice discounting	16	(324)	(469)
Net cash used in financing activities		(954)	(260)
Net increase/(decrease) in cash and cash equivalents		715	(409)
Cash and cash equivalents at beginning of period		50	459
Cash and cash equivalents at end of period		765	50
Analysis of net funds
Cash and cash equivalents		765	50
Borrowings due within one year		(207)	(483)
Borrowings due within more than one year		(113)	(618)
Net funds/(debt)	(ii)	445	(1,051)

The accompanying notes (i) and (ii) form an integral part of the Consolidated Statement of Cash Flow.

Note (i)	2023	2022
Reconciliation of operating profit / (loss) to net cash from operating activities	£'000	£'000
Operating profit /(loss) from continued operations	412	(261)
Depreciation/impairment of property, plant and equipment	231	223
Share based payment charge	253	131
Increase in trade and other receivables	(579)	(405)
Increase in trade and other payables	1,395	279
Taxation paid	-	-
Net cash generated from/(used in) operating activities	1,712	(33)

Note (ii)	2023	2022
Reconciliation of movement of debt	£'000	£'000
Net increase/(decrease) in cash and cash equivalents	715	(409)
New loans received	-	(400)
Repayments of borrowings	389	32
Conversion of loan notes to equity	143	-
Decrease in invoice discounting	324	469
Interest accrued	(75)	-
Movement in borrowings for the period	1,496	(308)
Net borrowings at the start of the period	(1,051)	(743)
Net cash/(borrowings) at the end of the period	445	(1,051)

The accompanying notes form an integral part of these financial statements.

Company Statement of Cash Flow

For the year ended 31 December 2023

		2023	2022
	Notes	£'000	£'000
Net cash generated from/(used in) operating activities	(i)	397	(548)
Cash flows from investing activities and servicing of finance
Interest paid		-	(25)
Net cash used in investing activities		-	(25)
Cash flows from financing activities
New loans received		-	400
Repayments of borrowings		(389)	(32)
Proceeds from issue of share capital	18	-	41
Net cash from financing activities		(389)	409
Net increase/(decrease) in cash and cash equivalents		8	(164)
Cash and cash equivalents at beginning of period		6	170
Cash and cash equivalents at end of period		14	6
Analysis of net funds
Cash and cash equivalents		14	6
Borrowings due within one year		(48)	(46)
Borrowings due after one year		(113)	(572)
Net debt	(ii)	(147)	(612)

The accompanying notes (i) and (ii) form an integral part of the Company Statement of Cash Flow.

Note (i)	2023	2022
Reconciliation of operating profit/(loss) to net cash from operating activities	£'000	£'000
Operating (loss)/profit	(1,296)	689
Share based payment charge	253	131
Decrease/(increase) in trade and other receivables	1,402	(172)
Increase/(decrease) in trade and other payables	38	(1,196)
Net cash generated from/(used in) operating activities	397	(548)

Note (ii)	2023	2022
Reconciliation of movement of debt	£'000	£'000
Net increase/(decrease) in cash and cash equivalents	8	(164)
New borrowings	-	(400)
Repayments of borrowings	389	32
Conversion of loan notes to equity	143	-
Interest accrued	(75)	-
Movement in borrowings for the period	465	(532)
Net borrowings at the start of the period	(612)	(80)
Net borrowings at the end of the period	(147)	(612)

The accompanying notes form an integral part of these financial statements.

Notes to the Financial Statements

For the year ended 31 December 2023

1. Significant Accounting Policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to both years presented unless otherwise stated.

1.1 Basis of Preparation

The consolidated financial statements of Norman Broadbent plc ("Norman Broadbent", "the Company" or "the Group") have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and interpretations issued by the International Accounting Standards Board (IASB), UK adopted International Financial Reporting Standards (adopted IFRSs) and with those parts of the Companies Act 2006 applicable to those companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities (including derivative instruments) at fair value through profit or loss. The consolidated financial statements are presented in pounds and all values are rounded to the nearest thousand (£000), except when otherwise indicated.

The preparation of financial statements in compliance with UK adopted IFRS Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 1.19.

1.2 Going Concern

The consolidated financial statements of the Group have been prepared under the assumption the Group operates on a going concern basis, which assumes the Group will be able to discharge its liabilities as they fall due. In confirming the validity of the going concern basis of preparation, the Group has considered the following specific factors:

·	The Group reported an operating profit from continued operations in the year to 31 December 2023 of £0.3m compared with an operating loss of £0.3m in 2022.
·	The consolidated statement of financial position shows a net asset position at 31 December 2023 of £1.4m (2022: £0.7m) with cash at bank of £0.8m (2022: £0.05m).
·	At the date that these financial statements were approved the Group had no overdraft facility, a CBILS loan of £0.2m and its receivable finance facility which is 100% secured by the Group's trade receivables.
·	Management prepares an annual budget and longer-term strategic plan, including an assessment of cash flow requirements, and continue to monitor actual performance against budget and plan throughout the reporting period.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic Report. Based on these factors, management has a reasonable expectation that the Group has and will have adequate resources to continue in operational existence for the foreseeable future.

1.1.2 Changes in Accounting Policy and Disclosures

a. New and amended accounting standards adopted by the Group

The Group adopted the following new and amended relevant IFRS in the year:

·	Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2
·	Definition of Accounting Estimates - Amendments to IAS 8
·	Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12

b. Standards, amendments and interpretations to existing standards that are not yet effective and have not yet been adopted early by the Group

There are a number of standards, amendments to standards, and interpretations which have been issued by the International Accounting Standards Board ("IASB") that are effective in future accounting periods that the Group has decided not to adopt early. Any standards that are not deemed relevant to the operations of the Group have been excluded:

·	Classification of Liabilities as Current or Non-Current - Amendments to IAS 1
·	Leases on sale and leaseback - Amendment to IFRS 16
·	Supplier finance - Amendment to IAS 7 and IFRS 7
·	Lack of Exchangeability - Amendments to IAS 21

The Group is currently assessing the impact of the new accounting standards and amendments. The Group does not believe that these amendments will have a significant impact on the financial statements of the Group.

1.2 Basis of Consolidation

The Group's financial statements consolidate those of the parent company and all of its subsidiaries at 31 December 2023. All subsidiaries have a reporting date of 31 December. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Accounting policies have been applied consistently.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated.

1.3 Goodwill

Goodwill arising on acquisition of subsidiaries is included in the consolidated statement of financial position as an asset at cost less impairment. If the goodwill balance is material, it is tested annually for impairment and carried at cost less accumulated impairment losses. Any impairment is recognised immediately in the income statement and is not subsequently reversed.

1.4 Impairment of Non-Financial Assets

Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

1.5 Financial Assets and Liabilities

Financial assets and liabilities are recognised initially at their fair value and are subsequently measured at amortised cost. For trade receivables, trade payables and other short-term financial liabilities this generally equates to original transaction value.

1.6 Property, Plant and Equipment

The cost of property, plant and equipment is their purchase cost, together with any incidental costs of acquisition.

Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of each asset over its expected useful economic life at the following rates:

·	Office and computer equipment - over three to four years
·	Fixtures and fittings - lower of lease term and four years
·	Land and buildings leasehold - over three to five years
·	Right of use asset - lower of the asset's useful life and the lease term

1.7 Trade Receivables

Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

1.8 Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and deposits held at call with banks. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

1.9 Investments

Investments in subsidiary undertakings are stated at cost less provision for any impairment in value. Investments are tested annually for impairment and whenever events or changes in circumstance indicate that the carrying amount may not be recoverable an impairment loss is recognised immediately for the amount by which the investment's carrying amount exceeds its recoverable value.

1.10 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

1.11 Invoice Discounting Facility

The terms of this arrangement are judged to be such that the risk and rewards of ownership of the trade receivables do not pass to the finance provider. As such the receivables are not derecognised on draw-down of funds against this facility. This facility is recognised as a liability for the amount drawn.

1.12 Trade Payables

Trade payables are non-interest bearing and are initially recognised at fair value and then subsequently measured at amortised cost.

1.13 Foreign Currency Translation

Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in sterling, which is functional currency of Norman Broadbent Plc.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the consolidated income statement within 'net finance cost'. All other foreign exchange gains and losses are presented in the income statement within 'operating expenses'.

1.14 Taxation

Taxation currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the consolidated income statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all material taxable timing differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Such assets and liabilities are not recognised if the temporary difference arises from an initial recognition of goodwill or from the initial recognition (other than in the business combination) of other assets and liabilities in the transaction that affects neither the tax profit nor the accounting profit.

Deferred tax is calculated using the tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited to the consolidated income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

1.15 Revenue Recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group's activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group's activities as described below.

Executive search services

Executive Search services are provided on a retained basis and the Group generally invoices the client at pre-specified milestones agreed in advance at a specific point in time. Revenue is recognised at three stages; retainer, shortlist and completion fee. Revenue is recognised based on delivery of performance obligations at defined stages including resource allocation and search strategy agreement at retainer stage, delivery of candidate shortlist and candidate acceptance of placement.

Short-term contract and interim business

Revenue is recognised for interim business over time as services are rendered, validated by receipt of a client approved timesheet or equivalent. Fixed Term Contracts or Candidate conversions are recognised on client approval and invoice date at a specific point in time.

Assessment, career coaching and talent management

Revenue is recognised in line with delivery. Where revenue is generated by contracts covering a number of sessions then revenue is recognised over the contract term based on the average number of sessions taken up and is invoiced at a specific point in time.

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

1.16 Pensions

The Group operates a number of defined contribution pension schemes for the benefit of certain employees. The costs of the pension schemes are charged to the income statement as incurred.

1.17 Leases

The Group makes the use of leasing arrangements principally for the provision of office space and various office equipment. Rental contracts are typically made for fixed periods of 3 to 5 years but may have extension options.

Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative standalone prices.

However, for leases of property for which the Group is a lessee and for which it has major leases, it has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.

Leases are recognised as a right-of-use asset and a lease liability at the lease commencement date.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

·	Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
·	Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date;
·	Amounts expected to be payable by the Group under residual value guarantees;
·	The exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
·	Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

·	The amount of the initial measurement of lease liability;
·	Any lease payments made at or before the commencement date less any lease incentives received; and
·	Any initial direct costs.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life. Right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of assets.

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.

1.18 Share Option Schemes

For equity-settled share-based payment transactions the Group, in accordance with IFRS 2, measures their value and the corresponding increase in equity indirectly, by reference to the fair value of the equity instruments granted. The fair value of those equity instruments is measured at grant date, the EBITDA Options and SAYE Options using a Binomial option model and the Share Price Options using a Monte Carlo simulation model. The expense is apportioned over the vesting period of the financial instrument and is based on the numbers which are expected to vest and the fair value of those financial instruments at the date of grant. If the equity instruments granted vest immediately, the expense is recognised in full.

1.19 Critical Accounting Judgements and Estimates

a.	Impairment of goodwill - determining whether goodwill is impaired requires an estimation of the value in use of cash-generating units (CGUs) to which goodwill has been allocated. The value in use calculation requires an estimation of the future profitability expected to arise from the CGU and a suitable discount rate in order to calculate present value.
b.	Impairment of investments - determining whether investments are impaired requires an estimation of the value in use of each subsidiary. The value in use calculation requires an estimation of the future profitability expected to arise from each subsidiary and a suitable discount rate in order to calculate present value.
c.	Revenue recognition - revenue is recognised based on estimated timing of delivery of services based on the assignment structure and historical experience. Were these estimates to change then the amount of revenue recognised would vary.
d.	Share-based payments - the expense recognised for share-based payment schemes reflects the number of share options granted that will vest and management's expectations regarding share lapses and non-market performance conditions. All options are subject to both time vesting and performance conditions.

2. Financial Risk Management

The financial risks that the Group is exposed to through its operations are interest rate risk, liquidity risk and credit risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

There have been no substantive changes in the Group's exposure to financial risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods, unless otherwise stated in this note.

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's Executive Committee.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible, without unduly affecting the Group's competitiveness and flexibility. Further details regarding specific policies are set out below:

2.1 Interest Rate Risk

The Group's interest rate risk arises from borrowings linked to the Bank of England Base Rate and affects the invoice discounting facility and the CBILS loan. As interest rates have risen over 2023 the corresponding interest expense to the Group has increased. The Group's management factors these increases into cash flow projections (see liquidity risk below) which indicate that the Group will be able to meet interest expenses under reasonably expected circumstances.

2.2 Liquidity Risk

Liquidity risk arises from the Group's management of working capital and finance charges. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group's policy is to ensure that it will always have sufficient cash and borrowing facilities to allow it to meet its liabilities when they become due. The Group has access to an invoice discounting facility, which provides immediate access to funding when required and is secured by the Group's trade receivables. The Group took advantage of a CBILS loan in November 2020 which is repayable over six years to 2026. The Board receives cash flow projections as well as monthly information regarding cash balances. At the balance sheet date, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under reasonably expected circumstances.

2.3 Credit Risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy to assess the credit risk of new customers before entering contracts.

Each new customer is analysed individually for creditworthiness before the Group's standard payment and delivery terms and conditions are offered. The Board determines concentrations of credit risk by reviewing the trade receivables' ageing analysis.

The Board monitors the ageing of credit sales regularly and at the reporting date does not expect any losses from non-performance by the counterparties other than those specifically provided for (see note 13). The Directors are confident about the recoverability of receivables based on the blue chip nature of its customers, their credit ratings and the very low levels of default in the past.

2.4 Capital Risk Management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

3. Revenue

Group revenues are primarily driven from UK operations. When revenue is derived from overseas business the results are presented to the Board by geographic region to identify potential areas for growth or those posing potential risks to the Group.

i. Class of Business:

The analysis by class of business of the Group's turnover is set out below:

	2023	2022
	£'000	£'000
Revenue - Search	8,585	5,666
Revenue - Interim Management	3,189	2,920
Revenue - Leadership Consulting	501	111
Revenue - Other	31	-
Total	12,306	8,697

ii. Revenue by Geography:

	2023	2022
	£'000	£'000
United Kingdom	9,078	6,660
Rest of the world	3,228	2,037
Total	12,306	8,697

4. Profit/ (Loss) on Ordinary Activities before Taxation

	2023	2022
	£'000	£'000
Profit/ (loss) on ordinary activities before taxation is stated after charging:
Depreciation and impairment of property, plant and equipment	231	223
Employee remuneration (see note 5)	8,143	6,004
Auditors' remuneration:
Audit work	58	51
Non-audit work	-	-

The Company audit fee for the year was £28,990 (2022: £26,640).

5. Employee Remuneration

The average number of full time equivalent employees (including Directors) during the year was as follows:

	2023	2022
	No.	No.
Sales and related services	44	36
Administration	7	9
	51	45

Expenses recognised for employee benefits are analysed below:

	2023	2022
	£'000	£'000
Wages and salaries	6,752	5,095
Social security costs	921	586
Defined contribution pension cost	217	192
Share based payment	253	131
	8,143	6,004

The emoluments of the Directors are disclosed as required by the Companies Act 2006 in the Directors' Remuneration Report. The table of Directors' emoluments has been audited and forms part of these financial statements. This also includes details of the highest paid Director.

6. Taxation

a. Tax charged in the income statement

	2023	2022
	£'000	£'000
Current tax:
UK corporation tax	-	-
Foreign tax	-	-
Total current tax	-	-
Deferred tax:
Origination and reversal of temporary differences	-	-
Tax charge/(credit)	-	-

b. Reconciliation of the total tax charge

The difference between the current tax shown above and the amount calculated by applying the standard rate of UK corporation tax to the profit/(loss) before tax is as follows:

	2023	2022
	£'000	£'000
Profit/ (loss) on ordinary activities before taxation	309	(338)
Tax on profit/(loss) on ordinary activities at standard UK corporation tax rate of 23.5% (2022: 19%)	73	(64)
Effects of:
Expenses not deductible	6	6
Share option costs	60	25
Depreciation in excess of capital allowances	11	(6)
Provision movement	2	(1)
Adjustment to losses carried forward	(152)	40
Current tax charge for the year	-	-

c. Deferred tax

	Tax losses	Total
	£'000	£'000
At 1 January 2023	-	-
Charged/(credited) to the income statement in 2023	-	-
At 31 December 2023	-	-

At 31 December 2023 the Group had capital losses carried forward of £8,129,000 (2022: £8,129,000) and trading losses carried forward of £14,233,510 (2022: £14,879,676). A deferred tax asset has not been recognised as their utilisation in the near future is uncertain.

The analysis of deferred tax in the consolidated balance sheet is as follows:

	2023	2022
	£'000	£'000
Deferred tax assets: Tax losses carried forward	-	-
Total	-	-

7. Net Finance Cost

	2023	2022
	£'000	£'000
Interest payable on leases, invoicing facility and other loans	103	77
Total	103	77

8. Earnings Per Share

i. Basic earnings per share

This is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period:

	2023	2022
	£'000	£'000
Profit/(loss) attributable to owners of the Company	309	(338)
	000's	000's
Weighted average number of ordinary shares	62,104	60,879

ii. Diluted earnings per share

This is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares in the form of employee share options (LTIP and SAYE schemes). For these options a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to the outstanding options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

	2023	2022
	£'000	£'000
Profit/(loss) attributable to owners of the Company	309	(338)
	000's	000's
Weighted average number of ordinary shares	78,572	60,879

iii. Adjusted earnings per share

An adjusted earnings per share has also been calculated in addition to the basic and diluted earnings per share and is based on earnings adjusted to eliminate the effects of charges for share based payments. It has been calculated to allow shareholders to gain a clearer understanding of the trading performance of the Group.

	2023	2023	2023	2022	2022	2022
	£'000	Basic pence per share	Diluted pence per share	£'000	Basic pence per share	Diluted pence per share
Basic earnings
Profit/(loss) after tax	309	0.50	0.39	(338)	(0.56)	(0.56)
Adjustments
Share based payment charge	253	0.41	0.32	131	0.22	0.22
Adjusted earnings	562	0.91	0.71	(207)	(0.34)	(0.34)

9. Profit of Parent Company

As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these accounts. The parent company's loss for the year amounted to £1.4 million (2022: £0.7 million profit).

10. Intangible Assets

		Goodwill arising on consolidation
Group	£'000
Balance at 1 January 2022		3,690
Balance at 31 December 2022		3,690
Balance at 31 December 2023		3,690
Provision for impairment
Balance at 1 January 2022		2,327
Balance at 31 December 2022		2,327
Balance at 31 December 2023		2,327
Net book value
At 1 January 2022		1,363
At 31 December 2022		1,363
At 31 December 2023		1,363

Goodwill acquired through business combinations is allocated to cash-generating units (CGUs) and is shown below:

	Executive Search	Leadership Consulting	Total
	£'000	£'000	£'000
Balance at 1 January 2022	1,303	60	1,363
Balance at 31 December 2022	1,303	60	1,363
Balance at 31 December 2023	1,303	60	1,363

Goodwill has been subject to an impairment review by the Directors of the Group. As set out in accounting policy note 1, the Directors test the goodwill for impairment annually as set out below.

Expected future cash flows for each CGU for over a five year period are derived from the most recent three year financial projections agreed by the board and an assumed net fee and cost growth rate of 5% in years four and five. Although the growth rates of 5% exceeds the long-term growth rate for the economy, they are considered appropriate based on the expected future growth rate of the business. A discount rate of 12.5% (2022: 10%-12.5%), representing the weighted average cost of capital for the Group, in line with businesses in the same sector, is then used to calculate the present value of those cash flows and then aggregated to give an overall valuation.

11. Property, Plant and Equipment

	Land and buildings - leasehold	Right-of-use asset	Office and computer equipment	Fixtures and fittings	Total
	£'000	£'000	£'000	£'000	£'000
Group Cost
Balance at 1 January 2022	94	774	309	50	1,227
Additions	6	34	59	-	99
Disposals	-	-	-	-	-
Balance at 31 December 2022	100	808	368	50	1,326
Additions	-	-	16	-	16
Disposals	(80)	-	(261)	(43)	(384)
Balance at 31 December 2023	20	808	123	7	958
Accumulated depreciation
Balance at 1 January 2022	92	332	227	50	701
Charge for the year	8	168	47	-	223
Disposals	-	-	-	-	-
Balance at 31 December 2022	100	500	274	50	924
Charge for the year	-	176	55	-	231
Disposals	(80)	-	(252)	(43)	(375)
Balance at 31 December 2023	20	676	77	7	780
Net book value
At 1 January 2022	2	442	82	-	526
At 31 December 2022	-	308	94	-	402
At 31 December 2023	-	132	46	-	178

The Group had no capital commitments as at 31 December 2023 (2022: £nil).

12. Investments

	Shares in subsidiary undertakings
		£'000
Company Cost
Balance at 1 January 2022			5,935
Balance at 31 December 2022			5,935
Balance at 31 December 2023			5,935
Provision for impairment
Balance at 1 January 2022			4,735
Impairment for the year			-
Balance at 31 December 2022			4,735
Impairment for the year			-
Balance at 31 December 2023			4,735
Net book value
At 1 January 2022			1,200
At 31 December 2022			1,200
At 31 December 2023			1,200

During the year to 31 December 2023 the Company held the following ownership interests:

Principal investments:	Country of incorporation or registration and operation	Principal activities	Proportion of shares held by the Company
Norman Broadbent Executive Search Limited	England and Wales	Executive search	100% ordinary shares
Norman Broadbent Ireland Ltd	Republic of Ireland	Dormant	100% ordinary shares

The registered office for Norman Broadbent Executive Search Limited is Millbank Tower, 21-24 Millbank London SW1P 4QP. The registered office for Norman Broadbent Ireland Limited is The Merrion Buildings, 18 - 20 Merrion Street, Dublin 2, Ireland.

13. Trade and Other Receivables

	Group		Company
	2023	2022	2023	2022
	£'000	£'000	£'000	£'000
Trade receivables	2,714	2,135	-	-
Less: provision for impairment	(178)	(2)	-	-
Trade receivables - net	2,536	2,133	-	-
Other debtors	43	48	-	-
Prepayments and accrued income	322	139	8	7
Due from Group undertakings	-	-	147	1,550
Total	2,901	2,320	155	1,557
Non-Current	-	-	-	-
Current	2,901	2,320	155	1,557
	2,901	2,320	155	1,557

As at 31 December 2023, Group trade receivables of £1.3m (2022: £1.0m), were past their due date but not impaired, save as referred to below. They relate to customers with no default history. The ageing profile of these receivables is as follows:

	Group		Company
	2023	2022	2023	2022
	£'000	£'000	£'000	£'000
Up to 3 months	1,054	765	-	-
3 to 6 months	214	115	-	-
6 to 12 months	-	55	-	-
Total	1,268	935	-	-

The largest amount due from a single trade debtor at 31 December 2023 represents 12% (2022: 15%) of the total trade receivables balance outstanding.

As at 31 December 2023, £178,000 of group trade receivables (2022: £2,000) were considered impaired. A provision for impairment has been recognised in the financial statements. Movements on the Group's provision for impairment of trade receivables are as follows:

	2023	2022
	£'000	£'000
At 1 January	2	14
Provision for receivable impairment	178	-
Receivables written-off as uncollectable	(2)	(12)
At 31 December	178	2

There is no material difference between the carrying value and the fair value of the Group's and the Company's trade and other receivables.

14. Cash and Cash equivalents

	Group		Company
	2023	2022	2023	2022
	£'000	£'000	£'000	£'000
Cash at bank and in hand	765	50	14	6
Total	765	50	14	6

There is no material difference between the carrying value and the fair value of the Group's and parent Company's cash at bank and in hand.

15. Trade and Other Payables

	Group		Company
	2023	2022	2023	2022
	£'000	£'000	£'000	£'000
Trade payables	343	212	46	8
Other taxation and social security	407	330	(8)	(2)
Other payables	22	24	-	-
Accruals	2,621	1,440	52	46
Total	3,393	2,006	90	52

There is no material difference between the carrying value and the fair value of the Group's and the Company's trade and other payables.

16. Borrowings

	Group		Company
	2023	2022	2023	2022
Current	£'000	£'000	£'000	£'000
Invoice discounting facility (see note (a) below)	159	483	-	-
Loans (see note (b) below)	48	-	48	46

Non-Current Loans (see note (b) below)	113	618	113	572
Total	320	1,101	161	618

The carrying amounts and fair value of the Group's borrowings, which are all denominated in sterling, are as follows:

	Carrying amount		Fair value
	2023	2022	2023	2022
	£'000	£'000	£'000	£'000
Invoice discounting facility	159	483	159	483
Loans (see note (b) below)	161	618	161	618
Total	320	1,101	320	1,101

a. Invoice discounting facilities:

The Group operates an invoice discounting facility with Metro Bank. All Group invoices are raised through Norman Broadbent Executive Search Limited and as such Metro Bank (SME Invoice Finance Ltd) holds an all asset debenture for Norman Broadbent plc and Norman Broadbent Executive Search Limited. Funds are available to be drawn down at an advance rate of 88% against trade receivables of Norman Broadbent Executive Search Limited that are aged less than 120 days with the facility capped at £2.1 million. At 31 December 2023, the outstanding balance on the facility of £0.2 million was secured by trade receivables of £2.5 million. Interest is charged on the drawn down funds at a rate of 2.4% above the bank base rate.

b. Loans

In November 2020 the Group received a CBILS Loan of £250,000 for a term of 6 years. Repayment of capital and interest began in January 2022, and from this month the loan incurs interest at 4.75% above the Metro Bank UK base rate. Metro Bank holds an all asset fixed and floating charge over Norman Broadbent Executive Search Limited linked to this facility.

During May 2022 Downing Strategic Micro-Cap Investment Trust Plc and Moulton Goodies Limited subscribed for £200,000 of Convertible Loan Notes (CLNs) each. Interest was payable at 10% per annum up to the first anniversary date and 12.5% per annum up to the second anniversary date. A second ranking fixed and floating charge over the assets and undertaking of Norman Broadbent plc and Norman Broadbent Executive Search Limited was provided as security. Subsequent to the year end the charge was satisfied in full.

£200,000 of the CLNs plus interest was repaid in May 2023. During November 2023 £100,000 of the CLNs was repaid and the Company allotted 2,047,706 new ordinary shares of 1p each at a conversion price of 7.0 pence per share for the remaining £100,000 of CLNs plus repayment of all interest due and the redemption fee.

17. Financial Instruments

Financial assets and financial liabilities are recognised on the balance sheet when the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the rights to receive cash flows from the asset have expired, or when the Group has transferred those rights and substantially all the risks and rewards of the asset.

Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expired.

The carrying value of each asset and liability is considered to be a reasonable approximation of the fair value.

The following tables show the carrying amounts of financial assets and financial liabilities held by the Group.

	2023	2022
Group	£'000	£'000
Financial assets
Trade and other receivables	2,536	2,133
Other debtors	43	48
	2,579	2,181
Financial liabilities
Trade creditors	343	212
Accruals and deferred income	2,621	1,440
Other payables	22	24
Bank loans - Current	207	483
Bank loans - Non-current	113	618
Lease liabilities - Current	111	203
Lease liabilities - Non-current	8	155
	3,425	3,135

	2023	2022
Company	£'000	£'000
Financial assets
Amounts owed by group undertakings	147	1,550
	147	1,550
Financial liabilities
Trade and other payables	46	8
Accruals and deferred income	52	46
Bank loans - Current	48	46
Bank loans - Non-current	113	572
	259	672

In common with other businesses, the Group is exposed to risks that arise from its use of financial instruments. Details on these risks and the policies set out by the Board to reduce them can be found in note 2.

18. Share Capital and Premium

	2023	2022
	£'000	£'000
Allotted and fully paid Ordinary Shares:
63,865,249 Ordinary shares of 1.0p each (2022: 61,817,510)	638	618
Deferred Shares:
23,342,400 Deferred A shares of 4.0p each (2022: 23,342,400)	934	934
907,118,360 Deferred shares of 0.4p each (2022: 907,118,360)	3,628	3,628
1,043,566 Deferred B shares of 42.0p each (2022: 1,043,566)	438	438
2,504,610 Deferred C shares of 29.0p each (2022: 2,504,610)	727	727
Total	6,365	6,345

Deferred A Shares of 4.0p each

The Deferred A Shares carry no right to dividends or distributions or to receive notice of or attend general meetings of the Company. In the event of a winding up, the shares carry a right to repayment only after the holders of Ordinary Shares have received a payment of £10 million per Ordinary Share. The Company retains the right to cancel the shares without payment to the holders thereof. The rights attaching to the shares shall not be varied by the creation or issue of shares ranking pari passu with or in priority to the Deferred A Shares.

Deferred Shares of 0.4p each

The Deferred Shares carry no right to dividends, distributions or to receive notice of or attend general meetings of the Company. In the event of a winding up, the shares carry a right to repayment only after payment of capital paid up on Ordinary Shares plus a payment of £10,000 per Ordinary Share. The Company retains the right to transfer or cancel the shares without payment to the holders thereof.

Deferred B Shares of 42.0p each

The Deferred B Shares carry no right to dividends or distributions or to receive notice of or attend general meetings of the Company. In the event of a winding up, the shares carry the right to repayment only after the holders of Ordinary Shares have received a payment of £10 million per Ordinary Share. The Company retains the right to cancel the shares without payment to the holders thereof. The rights attaching to the shares shall not be varied by the creation or issue of shares ranking pari passu with or in priority to the Deferred B Shares.

Deferred C Shares of 29.0p each

The Deferred Shares carry no right to dividends or distributions or to receive notice of or attend general meetings of the Company. In the event of a winding up, the shares carry the right to repayment only after the holders of Ordinary Shares have received a payment of £10 million per Ordinary Share. The Company retains the right to cancel the shares without payment to the holders thereof.

A reconciliation of the movement in share capital and share premium is presented below:

	No. of ordinary shares	Ordinary shares	Deferred shares	Share premium	Total
	000's	£'000	£'000	£'000	£'000
At 1 January 2022	60,741	607	5,727	14,080	20,414
Issued during the year	1,076	11	-	30	41
At 31 December 2022	61,817	618	5,727	14,110	20,455
Issued during the year	2,048	20	-	123	143
At 31 December 2023	63,865	638	5,727	14,233	20,598

During the year 2,047,706 Ordinary Shares were issued at a consideration of 7.00 pence per share.

19. Share Based Payments

As at 31 December 2023, the Group maintained two share-based payment schemes for employee remuneration, the Long Term Incentive Plan (LTIP) and the Save As You Earn Scheme (SAYE). Both programmes will be settled in equity.

LTIP

The LTIP is part of the remuneration package of the Group's senior management team. The scheme is an executive Enterprise Management Incentive ("EMI") share option scheme and 4,148,148 options were granted as part of the scheme on 28 July 2023. All options are subject to both time vesting conditions and performance conditions. 50% of the Options are subject to market-based share price performance conditions (the "Share Price Options") and 50% are subject to certain EBITDA performance conditions (the "EBITDA Options").

SAYE

During the year the Company established a tax advantaged SAYE scheme. The scheme is based on eligible employees being granted options over shares with an exercise price of £0.05 per share, which represents a 20 per cent discount to the closing middle market price of a share on 12 June 2023.

Employees agree to opening a sharesave account with the nominated savings carrier and save monthly over a three year saving period. On vesting, participants have a 6-month period to exercise their options.

The Company issued 4,500,000 options on 29 June 2023 (the "SAYE Grant Date"). The SAYE options have no performance conditions attached to them.

Share options and weighted average exercise prices are as follows for the reporting periods presented:

	2023	2023	2022	2022
	Charge	Number of share options	Charge	Number of share options	Vesting period	Expiry date	Performance metrics
Scheme	£'000	000's	£'000	000's	Years	Years
LTIP	243	12,148	131	9,950	3	7	EBITDA and share price
SAYE	10	4,212	-	-	3	0.5 after vesting	None
Total	253	16,360	131	9,950

	LTIP		SAYE
	Weighted average exercise price		Weighted average exercise price
	£	000's	£	000's
At 1 January 2022	-	-	-	-
Granted	-	9,950	-	-
Forfeited	-	-	-	-
At 31 December 2022	-	9,950	-	-
Granted	-	4,148	0.05	4,500
Forfeited	-	(1,950)	0.05	(288)
At 31 December 2023	-	12,148	0.05	4,212

The weighted average remaining contractual life of the options outstanding at the end of 2023 was 5.7 years for the LTIP and 3.1 years for the SAYE scheme (2022: 6.2 years for the LTIP).

The share options granted in 2023 were valued using the following assumptions:

	LTIP - EBITDA Options	LTIP - Share Price Options	SAYE
Option pricing model used	Binomial option model	Monte Carlo simulation	Binomial option model
Weighted average share price at grant date (£)	0.053	0.053	0.055
Exercise price (£)	-	-	0.05
Expiry date	July 2030	July 2030	February 2027
Expected volatility	44.9%	44.9%	43.4%
Expected dividend yield	0.0%	0.0%	0.0%
Risk-free interest rate	4.72%	4.72%	4.72%

20. Leases

All property leases are accounted for by recognising a right-of-use asset and a lease liability, with depreciation and interest expense being charged to the consolidated income statement.

Right-of-use assets are recognised at the commencement date of the lease and they are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. The recognised right-of-use assets are depreciated on a straight-line basis over the shorter of their estimated useful life and the lease term. Right-of-use assets are subject to impairment.

At the commencement date of the lease, lease liabilities are measured at the present value of lease payments to be made over the lease term. The Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.

Consolidation statement	2023	2022
	£'000	£'000
Depreciation expense	(176)	(168)
Operating Profit	(176)	(168)
Finance Costs	(2)	(25)
Profit before Tax	(178)	(193)

Consolidated statement of financial position	Right-of-use assets	Lease liabilities
	£'000	£'000
As at 1 January 2022	442	(498)
Additions	34	(34)
Disposals	-	-
Depreciation expense	(168)	-
Interest expense	-	(26)
Payments	-	200
At 31 December 2022	308	(358)
Additions	-	-
Disposals	-	-
Depreciation expense	(176)	-
Interest expense	-	(2)
Payments	-	241
At 31 December 2023	132	(119)

Impact on consolidated statement of financial position	2023	2022
	£'000	£'000
Right-of-use assets	132	308
Total Assets	132	308
Lease liabilities - less than one year	(111)	(203)
Lease liabilities - more than one year	(8)	(155)
Total Liabilities	(119)	(358)
Equity	13	(50)

21. Pension Costs

The Group operates several defined contribution pension schemes for the business. The assets of the schemes are held separately from those of the Group in independently administered funds. The pension cost represents contributions payable by the Group to the funds and amounted to £217,000 (2022: £192,000). At the year end £22,000 of contributions were outstanding (2022: £14,000).

22. Related Party Transactions

The following transactions were carried out with related parties:

Key management compensation:

Key management includes Executive and Non-Executive Directors. The compensation paid or payable to the directors can be found in the Directors' Remuneration Report.

23. Contingent Liability

The Company is a member of the Norman Broadbent plc Group VAT scheme. As such it is jointly accountable for the combined VAT liability of the Group. The total VAT outstanding in the Group at the year end was £192,000 (2022: £123,000).

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Norman Broadbent (LSE:NBB)
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