REG - Norman Broadbent PLC - Interim Results
09/09/2024 07:00
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RNS Number : 3278D Norman Broadbent PLC 09 September 2024
9 September 2024
Norman Broadbent plc
("Norman Broadbent", the "Company" or the "Group")
Interim results for the six months ended 30 June 2024
Norman Broadbent (AIM: NBB), a leading Executive Search and Interim
Management firm, is pleased to announce its unaudited interim results for the
six months ended 30 June 2024 ("H1 2024").
Financial Highlights
· Revenue of £5.0m, down 18% (H1 2023: £6.1m)
· Net fee income ("NFI") of £4.5m, down 13% on an exceptional H1 2023 (H1 2023:
£5.2m) and up 36% on H1 2022 (H1 2022: £3.3m)
· Underlying(1) EBITDA of £0.13m, £0.1m bad debt provision (H1 2023: £0.27m)
· Net debt (excluding lease liabilities) of £0.7m, a 42% improvement (H1 2023:
net debt £1.2m)
· Net cash used in operations of £1.0m; reflecting the timing of annual bonus
payments which are made to employees during the first half of the subsequent
year and acknowledging that fee-generation in FY 2023 was exceptionally strong
year-on-year ("YoY")
Operational Highlights
· 20% growth in fee earner headcount YoY, positioning the Company to capitalise
on a recovery, with additional hires taking place in H2 2024
· Implementation of improved technology platforms including integration of
Microsoft Power BI to enhance data visualisation, reporting capabilities and
decision-making processes
· Awarded a Two Star accreditation by employee engagement specialist Best
Companies for an 'outstanding' level of workplace engagement
· New head office lease secured in a higher quality and more cost-effective
building in the City of London
1 Underlying EBITDA excludes share based payment charges
Kevin Davidson, CEO of Norman Broadbent, said:
"The pressures across the recruitment sector have been well-publicised, and
growth has been made even more challenging when compared with an exceptional
H1 2023 for the Company. Despite this, we continue to win and deliver good
quality mandates, and importantly, NFI is still up considerably compared to H1
2022. Taking a longer-term view, the Company is in good health and we remain
focused on positioning the Company to capitalise on the recovering market.
While we cannot influence market conditions, we can control how we adapt to
them. A key focus in the year to date has therefore been to carefully manage
overheads while continuing to make progress by upgrading and developing our
talent, enhancing our systems and processes, and reinforcing the culture that
underpins the Company.
While the timing of a recovery remains hard to predict, there are some
positive signs beginning to emerge across the industry. Our average monthly
retainer income in Q3 2024 is already slightly up on both Q1 and Q2 2024, in
line with reports that the contraction of the labour market is easing. With
the action we are taking to build on the positive transformation activity of
recent years, we are in good shape to emerge strongly and quickly once
conditions improve."
Copies of this announcement are available on the Company's website, at
www.normanbroadbent.com (http://www.normanbroadbent.com)
Investor Presentation:
CEO Kevin Davidson and CFO Mehr Malik will host a virtual presentation and
Q&A session open to all existing and potential shareholders at 11am this
morning. To register to attend, please use the following link:
https://bit.ly/NBB_H124_results_webinar
(https://bit.ly/NBB_H124_results_webinar)
Contacts:
Norman Broadbent plc +44 (0)20 7484 0000
Kevin Davidson, CEO
Mehr Malik, CFO
Shore Capital (Nominated Adviser and Broker) +44 (0)20 7408 4090
Tom Griffiths / Tom Knibbs (Corporate Advisory)
Henry Willcocks (Corporate Broking)
Alma (Financial Communications Adviser) +44 (0)20 3405 0205
Rebecca Sanders-Hewett normanbroadbent@almastrategic.com (mailto:normanbroadbent@almastrategic.com)
Kinvara Verdon
David Ison
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
(https://url.avanan.click/v2/___http:/www.normanbroadbent.com___.YXAxZTpzaG9yZWNhcDphOm86OTdhMTRmYzIzZWY1YzM5MDNmNTdhN2E3NGVmZjI1OGI6NjpjYTk0OjY2MDg2Zjg4M2UxOTVmMGJiZDJkMTg4MTNhYjhhODAyNGRhZjkyMDIwNWMyZTE0YTRiOTZlNGIzZDNjMjU5N2Y6cDpU)
CEO's Statement
Norman Broadbent has delivered growth in headcount, capability and capacity in
H1 2024 whilst also continuing to generate positive EBITDA. This has been
achieved amidst a challenging period for the recruitment sector and positions
Norman Broadbent for future growth when the market recovers.
Additional and improved fee earners
New hires continue to establish themselves and H1 2024 has seen us deepen our
capabilities and reach across key sectors and corporate functions, including
Industrial, Investor, Digital & Technology, Life Sciences, Finance and
Change & Transformation. Since the period end, the Company has already
secured additional fee earners to bolster and expand our footprint in
Renewable Energy, Clean Technology and Civil Aviation. There are other fee
generating hires in process both in the UK and the US and we remain
disciplined in terms of quality and cultural alignment on all prospective
recruits.
Expanded our practices and gathered momentum
Whilst building out our capabilities across our established verticals such as
Industrials (including chemicals, aerospace and aviation, energy, power,
utilities, automotive and mining), Retail & Consumer and Technology, we
re-established other practices in areas where the Company historically
operated and the brand remains strong such as Board, Investor and Life
Sciences. Each of these presents considerable growth opportunities and has
been gathering momentum.
Successful international expansion
In H1 2024, the Company worked on projects across the UK and Europe, the US,
Asia and the Middle East. 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 2024's NFI was generated from international assignments (H1
2023: 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.
Reinforced our culture and brand
We continue to focus on culture as the bedrock of the Company, recognising
that the attraction, retention, motivation and development of talent is the
driver for growth and value creation. Being shortlisted at the Small Cap
Network Awards for our work around ED&I and being recognised as
outstanding in terms of employee engagement by Best Companies are both
testament to our commitment to one another.
Enhanced systems, processes and premises
As part of our efforts to strengthen the Company during the period, we
enhanced our productivity through the implementation of improved technology,
including the integration of Microsoft Power BI to enhance data visualisation,
reporting capabilities and decision-making processes. We have also
strengthened our client and candidate feedback processes to ensure continuous
improvement and greater responsiveness to market needs.
We have secured a new head office lease in a higher quality, and more cost
effective, building in the City of London which better reflects the evolution
of Norman Broadbent's brand and its growth ambitions.
The Board practice has conducted a number of board effectiveness reviews this
year along with placing Chairs and other non-executive directors in blue chip
companies from AIM quoted mid-caps to public sector and privately owned
enterprises. Recommitting to this space clearly drives brand penetration
across key decision makers, providing much pull through business opportunities
across the Group.
The Investor practice works closely with other verticals to ensure a
collaborative approach to developing and executing business. This team has
secured work in 2024 in the UK and US, supporting investors (primarily VC and
PE) and their portfolios with leadership challenges across industrial,
consumer, life sciences and financial services. As relationships expand and
deepen across this sector and the economic landscape recovers, the growth from
this team could be considerable.
We have successfully re-established our Healthcare & Life Science Practice
with three fee earners in Manchester and Cambridge. Whilst this is a vast
sector offering considerable room for further expansion, we have already made
great progress on the manufacturing, generics, diagnostics and biotech areas
of the market. This team has already secured mandates in the UK, Czechia,
Germany, India, the US and the Kingdom of Saudi Arabia.
Focused M&A strategy
Whilst maintaining our focus on organic growth, the Company continues to
actively identify and explore synergistic acquisition opportunities.
Dividend
The Board does not declare the payment of an interim dividend (2023: nil
pence).
Summarised Financial Results:
The table below summarises the financial results for the Group:
Six months ended 30 Jun 2024 Six months ended 30 Jun 2023 Year ended 31 Dec 2023
£000's (unaudited) £000's (unaudited) £000's
(audited)
Revenue 5,042 6,057 12,306
Cost of sales (565) (879) (1,731)
Gross profit (Net Fee Income) 4,477 5,178 10,575
Operating expenses (4,348) (4,907) (9,679)
Underlying EBITDA(1) 129 271 896
Share based payment charge (83) (82) (253)
EBITDA 46 189 643
Depreciation and amortisation (102) (111) (231)
Group operating (loss)/profit before interest and tax (56) 78 412
Net finance cost (17) (70) (103)
(Loss)/profit before tax (73) 8 309
Income tax expense - - -
(Loss)/profit after tax (73) 8 309
Financial Position
As at 30 June 2024, equity shareholders' funds were £1.4m (30 June 2023:
£0.8m). Total liabilities have reduced by £1.5m to £2.6m reflecting
improvements in working capital management with significantly less reliance on
financing facility and early redemption and conversion of convertible loans
during 2023 (30 June 2023: £4.1m).
Net debt (excluding lease liabilities) improved to £0.7m YoY (30 June 2023:
£1.2m). Net cash used in operations of £1.0m, reflective of the timing of
annual bonus payments which are made to employees during the first half of the
subsequent year. The fee-generation in FY 2023 was exceptionally strong, with
bonus cash outflows during H1 2024. Cash and cash equivalents at 30 June 2024
amounted to £48k (30 June 2023: £81k).
Outlook
While the market remains tough, as reported in recent announcements by
virtually all companies in our sector, several industry indicators suggest a
gradual stabilisation is underway. We are seeing pockets of increased activity
and are encouraged by the gradually improving retainer income so far in Q3
2024. However, given the inherent quarter-to-quarter variability in the
Company and uncertainty around the pace of the broader recovery, it is
difficult to say with any certainty whether we are back on a positive
trajectory or if this is an isolated uptick.
We continue to take steps to manage the Company through the challenging
conditions while maintaining sufficient levels of investment to ensure that we
capitalise on the opportunities presented by the recovery and have the means
to continue to pursue our long-term growth ambitions. Crucially, we have
strengthened our fee earning talent considerably, both in terms of quality and
headcount, and have ambitious plans to continue in the same vein in the second
half and beyond. The Board believes this is the right strategy to deliver
sustainable and profitable long-term growth.
Looking ahead, the new hires we have made in H1 2024 and those anticipated in
the second half coupled with the hard work that has taken place behind the
scenes to strengthen our operations give us confidence that, assuming the
market improves as expected, we will meet our target of £1.25 million of
EBITDA in 2025.
Kevin Davidson
Chief Executive
09 September 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2024
Note Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
£000 £000 £000
Revenue 2 5,042 6,057 12,306
Cost of Sales (565) (879) (1,731)
Gross profit (Net Fee Income) 4,477 5,178 10,575
Operating expenses (4,533) (5,100) (10,163)
Operating (loss)/profit from continued operations (56) 78 412
Net finance cost (17) (70) (103)
(Loss)/profit on ordinary activities before income tax (73) 8 309
Income tax expense - - -
(73) 8 309
Total comprehensive (loss)/profit for the period
(Loss)/profit per share 3
- Basic (0.11p) 0.01p 0.50p
- Diluted (0.11p) 0.01p 0.39p
Adjusted profit per share
- Basic 0.02p 0.14p 0.91p
- Diluted 0.00p 0.14p 0.71p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2024
Note As at As at As at
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
£000 £000 £000
Non-current assets
Intangible assets 1,363 1,363 1,363
Property, plant and equipment 251 301 178
Total non-current assets 1,614 1,664 1,541
Current assets
Trade and other receivables 2,315 3,143 2,901
Cash and cash equivalents 48 81 765
Total current assets 2,363 3,224 3,666
Total assets 3,977 4,888 5,207
Current Liabilities
Trade and other payables 1,668 2,609 3,393
Bank Loans and Loan Note 4 633 1,140 207
Lease liabilities 117 237 111
Total current liabilities 2,418 3,986 3,711
Net current assets/(liabilities) (55) (762) (45)
Non Current Liabilities
Lease liabilities 87 9 8
Bank Loan and Loan Note 4 87 133 113
174 142 121
Total liabilities 2,592 4,128 3,823
Total assets less total liabilities 1,385 760 1,375
Equity
Issued share capital 6,395 6,345 6,365
Own shares reserve (30) - -
Share premium account 14,233 14,110 14,233
Retained earnings (19,213) (19,695) (19,223)
Total equity 1,385 760 1,375
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2024
Share Capital Share Premium Shares held by EBT Retained Earnings Total Equity
£000 £000 £000 £000 £000
Balance at 1 January 2023 6,345 14,110 0 (19,785) 670
Profit for the period - - - 8 8
Total comprehensive profit for the period - - - 8 8
Credit to equity for share based payments - - - 82 82
Balance at 30 June 2023 (unaudited) 6,345 14,110 - (19,695) 760
Balance at 1 July 2023 6,345 14,110 - (19,695) 760
Profit for the period - - - 301 301
Total other comprehensive income - - - - -
Total comprehensive profit for the period - - - 301 301
Credit to equity for share based payments - - - 171 171
Conversion of convertible loan notes 20 123 - - 143
Total transactions with owners of the Company 20 123 - 171 314
Balance at 31 December 2023 (audited) 6,365 14,233 - (19,223) 1,375
Balance at 1 January 2024 6,365 14,233 - (19,223) 1,375
Loss for the period - - - (73) (73)
Total comprehensive loss for the period - - - (73) (73)
Issue of shares 30 - - - 30
Shares acquired by the EBT - - (30) - (30)
Credit to equity for share based payments - - - 83 83
Balance at 30 June 2024 (unaudited) 6,395 14,233 (30) (19,213) 1,385
CONSOLIDATED STATEMENT OF CASH FLOW
For the six months ended 30 June 2024
Note Six months ended 30 June 2024 (unaudited) Six months ended 30 June 2023 (unaudited) Year ended
31 December 2023
(audited)
£000 £000 £000
Net cash generated by / (used in) operating activities (i) (1,010) 52 1,712
Cash flows from investing activities and servicing of finance
Net finance cost (7) (18) (27)
Payments to acquire tangible fixed assets (28) (11) (16)
(35) (43)
Net cash generated by / (used in) investing activities (29)
Cash flows from financing activities
Repayment of borrowings (31) (257) (389)
Increase / (decrease) in invoice discounting 423 386 (324)
Payment of finance lease liabilities (64) (121) (241)
328
Net cash from financing activities 8 (954)
Net (decrease)/ increase in cash and cash equivalents (717) 31 715
Net cash and cash equivalents at beginning of period 765 50 50
48
Net cash and cash equivalents at end of period 81 765
Analysis of net funds (pre lease liabilities)
Cash and cash equivalents 48 81 765
Borrowings due within one year (633) (1,140) (207)
Borrowings due within more than one year (87) (133) (113)
(672)
Net (debt)/ funds (1,192) 445
Note (i)
Reconciliation of operating profit to net cash from operating activities Six months ended 30 June 2024 (unaudited) Six months ended 30 June 2023 (unaudited) Year ended 31 December 2023
(audited)
(56) 412
Operating profit / (loss) from continued operations 78
Depreciation of property, plant and equipment 102 111 231
Share based payment charge 83 82 253
(Increase)/decrease in trade and other receivables 586 (823) (579)
Increase/(decrease) in trade and other payables (1,725) 604 1,395
(1,010)
Net cash generated by / (used in) operating activities 52 1,712
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 435 of the Companies
Act 2006. The Group's statutory financial statements for the year ended 31
December 2023, 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 2024, 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
2024 and are unchanged from those disclosed in the Group's Annual Report for
the year ended 31 December 2023. 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
2024 2023 2023
(unaudited) (unaudited) (audited)
Search 3,897 4,048 8,585
Interim Management 1,061 1,776 3,189
Leadership consulting 67 219 501
Other 17 14 31
Total 5,042 6,057 12,306
ii) Revenue by geography:
Revenue £'000
Six Months Ended Six Months Ended Year Ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
United Kingdom 3,930 4,513 9,078
Rest of World 1,112 1,544 3,228
Total 5,042 6,057 12,306
3. (LOSs)/Profit PER ORDINARY SHARE
i) Basic (loss)/profit per share:
This is calculated by dividing the (loss)/profit 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
2024 2023 2023
(unaudited) (unaudited) (audited)
(Loss)/profit attributable to shareholders (£'000) (73) 8 309
Weighted average number of ordinary share (000's) 63,865 61,818 62,104
ii) Diluted (loss)/profit 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 2024 Six months ended 30 June 2023 Year ended 31 December 2023
(unaudited) (unaudited) (audited)
(Loss)/profit attributable to shareholders (£'000) (73) 8 309
Weighted average no. of ordinary shares (000's) 63,865 61,818 62,104
Weighted average number of ordinary shares for diluted earnings per share 79,901 61,818 78,464
iii) Adjusted (loss)/profit per share
Adjusted (loss)/profit 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 2024 Six months ended 30 June 2023 Year ended 31 December 2023
(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 (73) (0.11) (0.09) 8 0.01 0.01 309 0.50 0.39
Adjustment
Share based payment charge 83 0.13 0.11 82 0.13 0.13 253 0.41 0.32
Adjusted earnings 10 0.02 0.00 90 0.14 0.14 562 0.91 0.71
4. BORROWINGS
Six months ended Six months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Invoice discounting facility (see note (a) below) 582 869 159
Loans (see note (b) below) 138 404 161
Total 720 1,273 320
(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 2024, the outstanding balance on the facility of
£0.6m was secured by trade receivables of £2.1m. 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 2023, 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.
During 2023, Convertible Loan Notes (CLNs) to Downing Strategic Micro-Cap
Investment Trust Plc and Moulton Goodies Limited for £200,000 each were fully
redeemed and repaid. £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.
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