REG - Norman Broadbent PLC - Interim Results
16/08/2022 07:01
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RNS Number : 0735W Norman Broadbent PLC 16 August 2022
16 August 2022
Norman Broadbent plc
("Norman Broadbent", "NBB", the "Company" or the "Group")
Interim Results
Norman Broadbent plc (AIM: NBB), a leading London quoted Executive Search and
Interim Management firm offering a diversified portfolio of integrated
Leadership Acquisition & Advisory Services, is pleased to announce its
unaudited interim results for the six months ended 30 June 2022 ("H1 2022").
Highlights
· Revenue up 28% to £3.96m (H1 2021: £3.10m)
· Net Fee Income ("NFI") up 20% to £3.30m (H1 2021: £2.75m)
driven mainly by growth in Executive Search
· Positive EBITDA of £55k with considerable forward momentum
· Days Sales Outstanding ("DSO") reduced to 45 days at 30 June 2022
(31 December 2021: 66 days)
· 50% growth in the number of fee earners since the start of 2022
with four further key hires made already in H2 2022
· Established on a number of Preferred Supplier Lists ("PSLs") with
substantial international blue-chip clients
· Expansion into Scotland with the hiring of seasoned executive
search and interim management professionals and the upcoming opening of a new
office in Aberdeen
Kevin Davidson, Norman Broadbent plc CEO, said: "I am delighted with H1 2022's
performance and our forward momentum, generating EBITDA whilst also growing
headcount significantly with very high calibre individuals in key markets.
Despite the challenging economic back-drop, I remain confident in the shape
and position the business is now in to deliver sustainable and accelerated
growth in both NFI and EBITDA in H2 2022 and beyond."
For further Information, please contact:
Norman Broadbent plc
020 7484 0000
Peter Searle, Chairman
Kevin Davidson, CEO
Steve Smith, CFO/COO
Shore Capital (Nominated Adviser and Broker) 020
7408 4090
Tom Griffiths / Tom Knibbs (Corporate Advisory)
Henry Willcocks (Corporate Broking)
CEO's Statement
NBB has delivered considerable growth in headcount, capability and capacity in
H1 2022 whilst also generating positive EBITDA of £55,000 and a significant
reduction in DSO to 45 days as at 30 June 2022. With NFI up 20% over H1
2021, and new hires establishing themselves quickly, the Company is carrying
some very positive momentum into H2 2022. Continuing to build on this, the
business has already secured an additional four fee earners to start in H2
2022 with more in the pipeline. The £400,000 Convertible Loan Note secured in
May 2022 via two of the Company's significant shareholders was to support this
rapid headcount growth and the Company is delighted that to date all new
appointments have delivered revenue earlier than forecast.
The hires already secured for H2 2022 will bolster and expand the Company's
position in Retail & Consumer, Finance, HR and Legal across executive
search and senior interim management. The Company is also continuing to focus
on growth across its other core sectors and functions, including Industrial,
Retail & Consumer, Financial Services, Digital & Tech, Financial
Officers and Change & Transformation. It is also expanding its Research
& Insights team proportionately and has brought in a seasoned Marketing
leader to better drive brand penetration and elevation across all markets. A
new contemporary website will be launched within the coming weeks, including
an exciting brand refresh.
In H1 2022, NBB placed leaders across the UK and Europe, the US and the Middle
East and has also secured mandates in Africa and AsiaPac early in H2 2022.
The Company has established itself on a number of PSLs with substantial
blue-chip clients operating internationally, specifically in the Natural
Resources and burgeoning Energy sectors. NBB has a considerable track record
across these value chains 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 these sectors.
NBB's growing Retail & Consumer practice is also well positioned with
particular strength and brand recognition across procurement and supply chain
leadership where there is considerable focus across the industry and
supporting investment. The Company has also secured a position on a number of
significant PSLs in this sector and is leveraging its deep functional
expertise to support a broad range of executive search and interim leadership
requirements across the market.
Outlook
The previously announced regional growth in Scotland is progressing well with
a team leader appointed and an established team of seven seasoned executive
search and interim management professionals hired. The team will be moving
shortly into well-located offices in Aberdeen which have been secured on
excellent terms. A physical Edinburgh office is expected to be established
by the end of Q1 2023. Adding to the Company's existing locations in London
and Knutsford, these will provide excellent national coverage in major
decision making and HQ hubs.
As the Company continues to re-establish its position as the pre-eminent force
in executive search and senior interim management across the UK and
internationally, the Board continues to monitor carefully the evolving
macro-economic climate. The Board believes that the Company is currently
very well positioned in stable and growing markets, notably across Industrials
and, in particular, Energy, Power, 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. The Company is also effectively
leveraging its functional expertise across these markets, particularly in
Digital & Tech, Finance and Change & Transformation.
NBB is 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
whilst also delivering positive EBITDA.
Kevin Davidson
Chief Executive
16 August 2022
Summarised Financial Results:
The table below summarises the financial results for the Group:
Six months to 30 June Six months to 30 June Year ended
2022 2021 31 Dec
2021
£000's £000's £000's
(unaudited) (unaudited) (audited)
Revenue 3,936 3,095 6,549
Cost of sales (640) (348) (690)
Gross profit (Net Fee Income) 3,296 2,747 5,859
Operating expenses (3,241) (2,741) (5,854)
Adjusted EBITDA (pre-restructuring costs) 55 6 5
Restructuring costs - - (308)
EBITDA 55 6 (303)
Depreciation and amortisation (104) (143) (229)
Group Operating Loss before tax (49) (137) (532)
Net finance cost (23) (6) (41)
Loss before tax (573)
Income tax expense - - (69)
Loss after tax (72) (143) (642)
Financial Position
Equity shareholders' funds were £764,000 as at 30 June 2022 (£836,000 as at
31 December 2021, £963,000 as at 30 June 2021), with net current liabilities
of £646,000 (net current liabilities £505,000 at 31 December 2021, £672,000
at 30 June 2021). Cash and cash equivalents at 30 June 2022 amounted to
£64,000 (£459,000 at 31 December 2021, £83,000 at 30 June 2021).
Net cash outflow from operations was £495,000 (Net cash inflow from
operations was £446,000 at 31 December 2021) and net cash outflow from
financing activities amounted to £173,000. (£607,000 inflow at 31 December
2021).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six month period ended 30 June 2022
Note Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended
(unaudited) (unaudited) 31 December 2021
(audited)
£000 £000 £000
Revenue 2 3,936 3,095 6,549
Cost of Sales (640) (348) (690)
Gross profit (Net Fee Income) 3,296 2,747 5,859
Operating expenses (3,345) (2,884) (6,391)
Operating loss from continued operations (49) (137) (532)
Net finance cost (23) (6) (41)
Loss on ordinary activities before income tax (72) (143) (573)
Income tax expense - - (69)
(72) (143) (642)
Total comprehensive loss for the period
Loss per share 3
- Basic (0.12p) (0.26p) (1.14p)
- Diluted (0.12p) (0.26p) (1.14p)
Adjusted loss per share
- Basic (0.12p) (0.26p) (1.14p)
- Diluted (0.12p) (0.26p) (1.14p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Note As at As at As at
30 June 30 June 31 December 2021
2022 2021
(unaudited) (unaudited) (audited)
£000 £000 £000
Non-current assets
Intangible assets 1,363 1,363 1,363
Property, plant and equipment 472 179 526
Trade and other receivables - 254 -
Deferred tax - 69 -
Total non-current assets 1,835 1,865 1,889
Current assets
Trade and other receivables 1,998 1,200 1,915
Cash and cash equivalents 64 83 459
Total current assets 2,062 1,283 2,374
Total assets 3,897 3,148 4,263
Current Liabilities
Trade and other payables 1,260 1,369 1,727
Bank Loans and Loan Note 4 445 20 -
Bank overdraft and interest bearing loans 4 811 461 952
Lease liabilities 192 105 200
Total current liabilities 2,708 1,955 2,879
Non Current Liabilities
Lease 242 - 298
liabilities
4
183
230
250
Bank
Loan
425
230
548
Total Non Current Liabilities
Net current liabilities (646) (672) (505)
Total liabilities 3,133 2,185 3,427
Total assets less total liabilities 764 963 836
Equity
Issued share capital 6,334 6,279 6,334
Share premium account 14,080 13,763 14,080
Retained earnings (19,650) (19,079) (19,578)
Total equity 764 963 836
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six month period ended 30 June 2022
Attributable to owners of the Company
CONSOLIDATED GROUP
Share Capital Share Premium Retained Earnings Total Equity
£000 £000 £000 £000
Balance at 1 January 2021 6,279 13,763 (18,936) 1,106
Loss for the period - - (143) (143)
Total comprehensive loss for the period - - (143) (143)
Balance at 30 June 2021 6,279 13,763 (19,079) 963
Balance at 1 July 2021 6,279 13,763 (19,079) 963
Loss for the period - - (499) (499)
Total other comprehensive income - - - -
Total comprehensive loss for the period - - (499) (499)
Transactions with owners of the Company recognised directly in equity:
Issue of ordinary shares 55 317 - 372
Credit to equity for share based payments - - - -
Total transactions with owners of the Company, recognised directly in equity 55 317 - 372
Changes in ownership interest in subsidiaries - - - -
Total transactions with owners of the Company 55 317 (499) (127)
Balance at 31 December 2021 6,334 14,080 (19,578) 836
Balance at 1 January 2022 6,334 14,080 (19,578) 836
Loss for the period - - (72) (72)
Total other comprehensive income - - - -
Total comprehensive loss for the period - - (72) (72)
Transactions with owners of the Company, recognised directly in equity:
Credit to equity for share based payments - - - -
Balance at 30 June 2022 6,334 14,080 (19,650) 764
CONSOLIDATED STATEMENT OF CASH FLOW
For the six month period ended 30 June 2022
Note Six months ended 30 June 2022 (unaudited) Six months ended 30 June 2021 (unaudited) Year ended 31 December 2021
(audited)
£000 £000 £000
Net cash used in operating activities (i) (495) (34) (446)
Cash flows from investing activities and servicing of finance
Net finance cost (23) (6) (14)
Payments to acquire tangible fixed assets (50) (21) (55)
Net cash used in investing activities (73) (27) (69)
Cash flows from financing activities
Repayment of borrowings (22) - -
Proceeds from issue of capital - - 372
Increase / (decrease) in invoice discounting (141) (116) 375
New Loans received 400 - -
Payment of finance lease liabilities (64) (107) (140)
Net cash from financing activities 173 (223) 607
Net (decrease)/ increase in cash and cash equivalents (395) (284) 92
Net cash and cash equivalents at beginning of period 459 367 367
Effects of exchange rate changes on cash balances held in foreign currencies - - -
Net cash and cash equivalents at end of period 64 83 459
Analysis of net funds
Cash and cash equivalents 64 83 459
Borrowings due within one year (1,256) (461) (952)
Borrowings due within more than one year (183) (250) (250)
Net debt (1,375) (628) (743)
Note (i)
Reconciliation of operating profit to net cash from operating activities Six months ended 30 June 2022 (unaudited) Six months ended 30 June 2021 (unaudited) Year ended 31 December 2021
(audited)
Operating loss from continued operations (49) (137) (532)
Depreciation/amortisation of property, plant and equipment 104 143 227
Fixed Asset Write Off - - -
(Increase)/decrease in trade and other receivables (83) 238 (223)
Increase/(decrease) in trade and other payables (467) (278) 82
Net cash used in operating activities (495) (34) (446)
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
1.1 Basis of preparation
The financial information set out in this interim report does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. The
Group's statutory financial statements for the year ended 31 December 2021,
prepared under International Financial Reporting Standards (IFRS), have been
filed with the Registrar of Companies. The auditor's report on those
statements was unqualified.
The interim financial information for the six months ended 30 June 2022, has
been prepared in accordance with the AIM Rules for Companies. The Group has
not elected to apply IAS 34 'Interim Financial Reporting'. The principal
accounting policies used in preparing the interim results are those the Group
expects to apply in its financial statements for the year ending 31 December
2022 and are unchanged from those disclosed in the Group's Annual Report for
the year ended 31 December 2021. The interim financial statements have not
been audited.
1.2 Basis of consolidation and business combinations
Group financial statements consolidate those of the Company and of the
following subsidiary undertakings:
Principal Group investments: Country of incorporation or registration and operation
Description and proportion of shares held by the Company
Principal activities
Norman Broadbent Executive Search Ltd England and Wales Executive Search 100 per cent ordinary shares
Norman Broadbent Overseas Ltd England and Wales Dormant 100 per cent ordinary shares
Norman Broadbent Leadership Consulting Ltd England and Wales Dormant 100 per cent ordinary shares
Norman Broadbent Solutions Ltd England and Wales Dormant 100 per cent ordinary shares
Norman Broadbent Interim Management Ltd England and Wales Dormant 100 per cent ordinary shares
Norman Broadbent (Ireland) Ltd* Republic of Ireland Dormant 100 per cent ordinary shares
Bancomm Ltd England and Wales Dormant 100 per cent ordinary shares
* 100 per cent. of the issued share capital of this company is owned by Norman
Broadbent Overseas Ltd.
2. SEGMENTAL ANALYSIS
Group revenues are primarily driven from UK operations. However, when revenue
is derived from overseas business, the results are presented to the Board by
geographic region to identify potential areas for growth or those posing
potential risks to the Group.
i) Revenue and gross profit by geography:
Revenue £'000 Gross Profit £'000
Six Months Ended Year Ended Six Months Ended Year Ended
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2022 2021 2021 2022 2021 2021
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
United Kingdom 3,159 2,627 5,717 2,519 2,279 5,027
Rest of the World 777 468 832 777 468 832
Total 3,936 3,095 6,549 3,296 2,747 5,859
3. LOSs PER ORDINARY SHARE
i) Basic loss per share:
This is calculated by dividing the profit attributable to equity holders of
the Company by the weighted average number of ordinary shares in issue during
the period:
Six months ended 30 June 2022 Six months Year ended
ended 31 December
30 June 2021 2021
(unaudited) (unaudited) (audited)
Loss attributable to shareholders (£) (72,000) (143,000) (642,000)
Weighted average number of ordinary shares 60,740,575 55,218,903 56,487,344
ii) Diluted loss 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 issued share options which are potentially dilutive. 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.
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2020
(unaudited) (unaudited) (audited)
Loss attributable to shareholders (£) (72,000) (143,000) (642,000)
Weighted average no. of ordinary shares 60,740,757 55,218,903 56,847,344
Weighted average number of ordinary shares for diluted earnings per share 60,740,757 55,218,903 56,847,344
iii) Adjusted loss per share
Adjusted loss per share has also been calculated in addition to the basic and
diluted loss per share and is based on losses adjusted to eliminate charges
for share based payments. It has been calculated to allow shareholders to gain
a clearer understanding of the trading performance of the Group.
Six months ended 30 June Six months ended 30 June 2021 Year ended 31 December 2021
2022
Basic pence per share Diluted pence per share Basic pence per share Diluted pence per share Basic pence per share Diluted pence per share
£000 £000 £000
Basic earnings
Loss after tax (72) (0.12) (0.12) (143) (0.26) (0.26) (642) (1.14) (1.14)
Adjustment
Share based payment charge - - - - - - - - -
Adjusted earnings (72) (0.12) (0.12) (143) (0.26) (0.26) (642) (1.14) (1.14)
4. BORROWINGS
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2020
(unaudited) (unaudited) (audited)
£000 £000 £000
Convertible loan note (see note a below) 400 - -
Invoice discounting facility (see note b below) 811 461 952
Bank Loans (see note c below) 228 250 250
Total 1,439 711 1,202
(a) Convertible Loan Note
In May 2022 the Company received an additional investment of £400,000 by way
of the issue and subscription of Convertible Loan Notes ("Loan Notes").
Under the terms of a Secured Convertible Loan Note Instrument, Downing
Strategic Micro-Cap Investment Trust PLC and Moulton Goodies Limited, each
agreed to subscribe for £200,000 of secured Loan Notes which were issued on
20th May 2022.
Principal key terms of the Loan Note
The investment comprised the subscription of 400,000 Loan Notes each having a
nominal value of £1, being in aggregate £400,000, for a period of 2 years,
which can be extended at the agreement of all parties.
The Company pays interest on the principal amount of the Loan Notes which has
not been repaid or converted as follows:
1. For the period up to and including the first anniversary date (20th May
2023) at a rate of 10% per annum;
2. For the period from the first anniversary date to the date of maturity
(20th May 2023 - 20(th) May 2024) at a rate of 12.5% per annum;
3. For any period beyond the maturity date at a rate of 30% per annum.
The Company can redeem the Loan Notes at any time, subject to a redemption fee
of 2.5% in the first year and 10% thereafter. The Loan Notes are only
convertible after the first anniversary date at the Loan Note holders' sole
option, and a maximum of 50% of the principal amount of Loan Notes outstanding
plus any compounded interest unpaid can be converted to equity at a conversion
value of 7 pence per Ordinary Share.
Related Party Transaction
Downing Strategic Micro-Cap Investment Trust PLC and Moulton Goodies Limited
are both substantial shareholders of the Company and therefore are classified
as related parties under the AIM Rules for Companies. The directors of the
Company having consulted with the Company's nominated adviser, considered that
the terms of the Loan Notes were fair and reasonable insofar as the Company's
shareholders are concerned.
(b) Invoice discounting facility
In February 2021, the Company opened a new invoice discounting facility with
Metro Bank. The Company's previous facility was with Bibby Financial Services
Limited. All Group invoices are raised through Norman Broadbent Executive
Search Ltd from the start of 2021 and, as such, Metro Bank (SME Invoice
Finance Ltd) holds an all asset debenture for Norman Broadbent plc and Norman
Broadbent Executive Search Ltd Funds are available to be drawn down at an
advance rate of 88% against trade receivables of Norman Broadbent Executive
Search Ltd that are aged less than 120 days with the facility capped at
£1,500,000. Interest is charged on the draw down funds at a rate of 2.4%
above the Metro Bank UK's base rate.
(c) Bank 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 that
month the loan incurs interest at 4.75% above the Metro Bank UK's base rate.
Metro Bank holds an all asset fixed and floating charge over Norman Broadbent
Executive Search Ltd linked to this facility.
5. copies of the unaudited interim report
Copies of this report are available on request from the Company's registered
office at Millbank Tower, 21-24 Millbank, London SW1P 4QP and are also
available on the Company's website at www.normanbroadbent.com
(http://www.normanbroadbent.com) .
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