REG - Norman Broadbent PLC - Interim Results
24/07/2023 07:00
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RNS Number : 8515G Norman Broadbent PLC 24 July 2023
24 July 2023
Norman Broadbent plc
("Norman Broadbent" or the "Company" or the "Group")
Interim results for the six months ended 30 June 2023
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 2023 ("H1 2023").
Financial Highlights
· Revenue growth of 54% to £6.1m (H1 2022: £3.9m).
· Underlying(1) EBITDA of £0.27m up almost 400% (H1 2022:
£0.06m).
- Reflects the improvements made in the culture, brand, headcount
growth and quality and seniority of mandates secured.
· Profit after tax of £8,000 (H1 2022: loss after tax £72,000).
First profitable H1 since 2019.
· Net cash generated by operating activities of £0.05m (H1 2022:
net cash used (£0.50m)).
· Repaid £0.2m of Convertible Loan Notes ("CLNs") in May 2023.
- The balance of £0.2m is expected to be repaid before the second
anniversary of issue.
Operational Highlights
· Net fee income ("NFI") up 58% to £5.2m (H1 2022: £3.3m).
- Q2 2023 NFI increased by 50% to £2.7m (Q2 2022: £1.8m).
- Executive Search NFI grew by 58% to £4.1m (H1 2022: £2.6m).
- Interim Management NFI was up 43% to £1.0m (H1 2022: £0.7m).
- £1.0m of NFI generated in June 2023 alone the highest achieved
under the new management team to date in a single month
· Average new search fee value increased by 43% and average NFI per
fee earner up 13% compared to H1 2022.
· 35% growth in fee earner headcount since 30 June 2022 with
additional high-quality hires in train for H2 2023.
· Implementation of improved technology platforms in 2023 with new
finance system, HR platform and expense management tool, all of which will
provide improved management information and support accelerated growth.
1 Underlying EBITDA excludes share based payment charges
Kevin Davidson, CEO of Norman Broadbent, said: "I am delighted to be
announcing such strong results which demonstrate the quality and dedication of
the team and the culture of excellence which we have established together over
the past couple of years. This platform has enabled us to retain and hire
exceptional talent in a market which continues to be extremely competitive.
We have strengthened the business in all areas with economies of scale and
efficiency improvements beginning to benefit the bottom line. Having delivered
a profit after tax for the first time since H1 2019, the substantial carried
forward tax losses of over £14m begin to be of significant value as we expect
to deliver sustainable and accelerated growth in the years ahead.
Despite a challenging market, we look forward with confidence and excitement
about what can be achieved again at Norman Broadbent. Looking ahead, we
remain conscious of the macro-economic environment, but continue to see a
strong pipeline of opportunities giving us confidence as we head into H2. I
thank everyone in the team for their continued dedication, our clients for
choosing to work with us and our investors for their continued support."
For further Information, please contact:
Norman Broadbent plc
020 7484 0000
Kevin Davidson, CEO
Mehr Malik, CFO
Shore Capital (Nominated Adviser and Broker)
020 7408 4090
Tom Griffiths / Tom Knibbs (Corporate Advisory)
Henry Willcocks (Corporate Broking)
Copies of this announcement are available on the Company's website at
www.normanbroadbent.com.
CEO's Statement
Norman Broadbent has delivered considerable growth in headcount, capability
and capacity in H1 2023 whilst also generating positive EBITDA. With NFI up
58% and underlying EBITDA up almost 400%, we are delighted to have delivered
the Company's best results for some time.
New hires continue to establish themselves rapidly and H1 2023 has seen us
deepen our capabilities and reach across our key sectors and corporate
functions, including Industrial, Investor, Digital & Technology,
Life-Sciences, Finance and Change & Transformation. As we enter H2 2023,
the Company has already secured an additional fee earner to accelerate the
development of our Board Practice. There are other fee generating hires in
process and we remain disciplined in terms of quality and cultural alignment
on all prospective recruits.
In H1 2023, the Company placed leaders across the UK and Europe, the US, South
America, the Middle East and Asia. It has purposefully developed its
international client base and brand over the past two years and it is very
pleasing to see that 29% of H1 2023's NFI was generated from international
assignments (H1 2022: 24%). This international spread of business enables
the Company to capitalise fully on global key accounts, secure the most senior
mandates, mitigate risk and open multiple fronts for continued growth. The
Board does not declare the payment of an interim dividend (2022: nil pence).
As it has scaled, the Company has also focused heavily on processes, systems
and team development to ensure efficiency and consistency. This, coupled
with the rapidly rising quality and seniority of mandates, has enabled the
Company to grow NFI in an increasingly accretive way as efficiencies are
realised within the research and support teams.
Summarised Financial Results:
The table below summarises the financial results for the Group:
Six months to 30 Jun Six months to 30 Jun Year ended
2023 2022 31 Dec
2022
£000's £000's £000's
(unaudited) (unaudited) (audited)
Revenue 6,057 3,936 8,697
Cost of sales (879) (640) (1,350)
Gross profit (Net Fee Income) 5,178 3,296 7,347
Operating expenses (4,907) (3,241) (7,254)
Underlying EBITDA 1 (#_ftn1) 271 55 93
Share based payment charge (82) - (131)
EBITDA 189 55 (38)
Depreciation and amortisation (111) (104) (223)
Group operating profit/(loss) before tax 78 (49) (261)
Net finance cost (70) (23) (77)
Profit/(loss) before tax 8 (72) (338)
Income tax expense - - -
Profit/(loss) after tax 8 (72) (338)
Financial Position
As at 30 June 2023, equity shareholders' funds were £0.76m (30 June 2022:
£0.764m), with net current liabilities of £0.762m (30 June 2022: £0.646m).
Cash and cash equivalents at 30 June 2023 amounted to £81,000 (30 June 2022:
£64,000). Net debt (excluding lease liabilities had improved to £1.2m (30
June 2022: £1.4m) reflecting partial repayment of the CLNs. Net debt
post-lease liabilities at 30 June 2023 had reduced to £1.4m (30 June 2022:
£1.8m).
Net cash inflow from operations was £52,000 (H1 2022: outflow of £495,000)
and net cash inflow from financing activities amounted to £8,000 (H1 2022:
inflow of £173,000).
Outlook
Despite the extremely challenging economic backdrop, Norman Broadbent has
continued to deliver against its successful revitalisation and growth agenda,
delivering rapid and sustainable profit growth.
As the Company continues to re-establish itself as a pre-eminent force in
executive search and senior interim management across the UK and
internationally, the Board is monitoring carefully the evolving macro-economic
climate. The Board continues to believe that the Company is very well
positioned in more 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, HR and Change & Transformation.
With considerable forward momentum, the Board is confident of delivering
strong results in H2 2023 and is increasingly confident about achieving its
medium-term target of £1.25 million of EBITDA by 2025.
Kevin Davidson
Chief Executive
24 July 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2023
Note Six months ended Six months ended Year ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (unaudited)
£000 £000 £000
Revenue 2 6,057 3,936 8,697
Cost of Sales (879) (640) (1,350)
Gross profit (Net Fee Income) 5,178 3,296 7,347
Operating expenses (5,100) (3,345) (7,608)
Operating profit / (loss) from continued operations 78 (49) (261)
Net finance cost (70) (23) (77)
Profit /(loss) on ordinary activities before income tax 8 (72) (338)
Income tax expense - -
8 (72) (338)
Total comprehensive profit / (loss) for the period
Profit/(loss) per share 3
- Basic 0.01p (0.12p) (0.56p)
- Diluted 0.01p (0.12p) (0.56p)
Adjusted profit/(loss) per share
- Basic 0.14p (0.12p) (0.34p)
- Diluted 0.14p (0.12p) (0.34p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
Note As at As at As at
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (unaudited)
£000 £000 £000
Non-current assets
Intangible assets 1,363 1,363 1,363
Property, plant and equipment 301 472 402
Total non-current assets 1,664 1,835 1,765
Current assets
Trade and other receivables 3,143 1,998 2,320
Cash and cash equivalents 81 64 50
Total current assets 3,224 2,062 2,370
Total assets 4,888 3,897 4,135
Current Liabilities
Trade and other payables 2,609 1,260 2,006
Bank Loans and Loan Note 4 1,140 1,256 483
Lease liabilities 237 192 203
Total current liabilities 3,986 2,708 2,692
Net current liabilities (762) (646) (322)
Non Current Liabilities
Lease liabilities 9 242 155
Bank Loan and Loan Note 4 133 183 618
142 425 773
Total liabilities 4,128 3,133 3,465
Total assets less total liabilities 760 764 670
Equity
Issued share capital 6,345 6,334 6,345
Share premium account 14,110 14,080 14,110
Retained earnings (19,695) (19,650) (19,785)
Total equity 760 764 670
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Share Capital Share Premium Retained Earnings Total Equity
£000 £000 £000 £000
Balance at 1 January 2022 6,334 14,080 (19,578) 836
Loss for the period - - (72) (72)
Total comprehensive loss for the period - - (72) (72)
Balance at 30 June 2022 (unaudited) 6,334 14,080 (19,650) 764
Balance at 1 July 2022 6,334 14,080 (19,650) 764
Loss for the period - - (266) (266)
Total other comprehensive income - - - -
Total comprehensive loss for the period - - (266) (266)
Transactions with owners of the Company, recognised directly in equity
Issue of ordinary shares 11 30 - 41
Credit to equity for share based payments - - 131 131
Total transactions with owners of the Company 11 30 131 172
Balance at 31 December 2022 (audited) 6,345 14,110 (19,785) 670
Balance at 1 January 2023 6,345 14,110 (19,785) 670
Profit for the period - - 8 8
Total comprehensive profit for the period - - 8 8
Transactions with owners of the Company, recognised directly in equity:
Credit to equity for share based payments - - 82 82
Balance at 30 June 2023 (unaudited) 6,345 14,110 (19,695) 760
CONSOLIDATED STATEMENT OF CASH FLOW
For the six months ended 30 June 2023
Note Six months ended 30 June 2023 (unaudited) Six months ended 30 June 2022 (unaudited) Year ended
31 December 2022
(audited)
£000 £000 £000
Net cash generated by / (used in) operating activities (i) 52 (495) (33)
Cash flows from investing activities and servicing of finance
Net finance cost (18) (23) (51)
Payments to acquire tangible fixed assets (11) (50) (65)
(116)
Net cash generated by / (used in) investing activities (29) (73)
Cash flows from financing activities
Repayment of borrowings (257) (22) (32)
Proceeds from issue of capital - - 41
Increase / (decrease) in invoice discounting 386 (141) (469)
New Loans received - 400 400
Payment of finance lease liabilities (121) (64) (200)
Net cash from financing activities 8 173 (260)
Net (decrease)/ increase in cash and cash equivalents 31 (395) (409)
Net cash and cash equivalents at beginning of period 50 459 459
Effects of exchange rate changes on cash balances held in foreign currencies - - -
Net cash and cash equivalents at end of period 81 64 50
Analysis of net funds (pre lease liabilities)
Cash and cash equivalents 81 64 50
Borrowings due within one year (1,140) (1,256) (483)
Borrowings due within more than one year (133) (183) (618)
Net debt (1,192) (1,375) (1,051)
Note (i)
Reconciliation of operating profit to net cash from operating activities Six months ended 30 June 2023 (unaudited) Six months ended 30 June 2022 (unaudited) Year ended 31 December 2022
(audited)
(261)
Operating profit / (loss) from continued operations 78 (49)
Depreciation/amortisation of property, plant and equipment 111 104 223
Share based payment charge 82 - 131
(Increase)/decrease in trade and other receivables (823) (83) (405)
Increase/(decrease) in trade and other payables 604 (467) 279
Net cash generated by / (used in) operating activities 52 (495) (33)
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
1.1 Basis of preparation
The financial information set out in these interim financial statements 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 2022, 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 2023, 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
2023 and are unchanged from those disclosed in the Group's Annual Report for
the year ended 31 December 2022. 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 Principal activities Description and proportion of shares held by the Company
Norman Broadbent Executive Search Ltd England and Wales Executive Search 100 per cent ordinary shares
Norman Broadbent (Ireland) Ltd Republic of Ireland Dormant 100 per cent ordinary shares
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 by class of business:
Revenue £'000
Six Months Ended Six Months Ended Year Ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Search 4,062 2,555 5,666
Interim Management 1,776 1,378 2,920
Leadership consulting 219 3 111
Total 6,057 3,936 8,697
ii) 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 December 30 June 30 June 31 December
2023 2022 2022 2023 2022 2022
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
United Kingdom 4,513 3,159 6,660 3,652 2,519 5,627
Rest of World 1,544 777 2,037 1,526 777 1,720
Total 6,057 3,936 8,697 5,178 3,296 7,347
3. Profit/(LOSs) PER ORDINARY SHARE
i) Basic profit/(loss) 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:
Six Months Ended Year Ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Profit/(loss) attributable to shareholders (£) 8,000 (72,000) (338,000)
Weighted average number of ordinary shares 61,817,510 60,740,575 60,879,205
ii) Diluted profit/(loss) per share:
This is calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all potentially dilutive issues of
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 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 2023 Six months ended 30 June 2022 Year ended 31 December 2022
(unaudited) (unaudited) (audited)
Profit/(loss) attributable to shareholders (£) 8,000 (72,000) (338,000)
Weighted average no. of ordinary shares 61,817,510 60,740,757 60,879,205
Weighted average number of ordinary shares for diluted earnings per share 61,817,510 60,740,757 60,879,205
iii) Adjusted profit/(loss) per share
Adjusted profit/(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 2023 Six months ended 30 June 2022 Year ended 31 December 2022
(unaudited) (unaudited) (audited)
Basic Diluted Basic Diluted Basic Diluted
pence per pence per pence per pence per pence per pence per
share share share share share share
£000 £000 £000
Basic earnings
Profit/(loss) after tax 8 0.01 0.01 (72) (0.12) (0.12) (338) (0.56) (0.56)
Adjustment
Share based payment charge 82 0.13 0.13 - - - 131 0.22 0.22
Adjusted earnings 90 0.14 0.14 (72) (0.12) (0.12) (207) (0.34) (0.34)
4. BORROWINGS
Six months ended Six months ended Year ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
£000 £000 £000
Invoice discounting facility (see note (a) below) 869 811 483
Loans (see note (b) below) 404 628 618
Total 1,273 1,439 1,101
(a) Invoice discounting facility
The Group operates an invoice discounting facility with Metro Bank. All
Group invoices are raised through Norman Broadbent Executive Search Limited
and as such Metrobank (SME Invoice Finance Limited) holds an all asset
debenture for Norman Broadbent plc and Norman Broadbent Executive Search
Limited. At as 30 June 2023, the outstanding balance on the facility of
£0.9m was secured by trade receivables of £2.7m. 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 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.
On 20 May 2022, a total of £400,000 nominal value of CLNs were issued to
Downing Strategic Micro-Cap Investment Trust Plc and Moulton Goodies Limited,
each of whom subscribed £200,000. On 19 May 2023, £200,000 nominal value of
CLNs was repaid. Each of Downing Strategic Micro-Cap Investment Trust Plc
and Moulton Goodies Limited holds £100,000 of CLNs of which up to 50% of the
outstanding amount is convertible plus any compounded interest in accordance
with the terms of the secured loan instrument and security provided by Norman
Broadbent Executive Search Limited.
1 (#_ftnref1) Underlying EBITDA excludes share based payment charges
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