Norman Broadb Regulatory News (NBB)

Norman Broadbent plc

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

Interim Results

Norman Broadbent plc (AIM: NBB) - a leading provider of Talent Acquisition & Advisory Services, comprising Board and Executive Search, Interim Management, Research & Insight, Leadership Consulting & Assessment, and executive-level Recruitment Solutions today announces its unaudited interim results for the six months ended 30 June 2017.

Highlights

· Phase One of the turnaround completed; Phase Two of the turnaround underway

· New Senior Leadership Team appointed across all NB brands

· New fee-earning hires ahead of plan and contributing

· Gary Browning appointed as a Senior Advisor to the Board

· Losses significantly reduced from the six months to 31 December 2016

· New Group CFO in final stage of appointment

· Equity placing to raise £1.23m to be shortly announced

Mike Brennan, CEO of Norman Broadbent, said:

"The company has completed Phase One of its restructuring and is now well positioned to move forward with confidence and anticipates announcing the details of an equity placing later this morning as we move into Phase Two of our plan".

For further information please contact:

Norman Broadbent plc

Mike Brennan/Frank Carter 020 7484 0000

WH Ireland Limited

Adrian Hadden/ Jessica Cave/ Alex Bond 020 7220 1666

Notes to Editors

Norman Broadbent plc is a leading provider of Talent Acquisition & Advisory Services. These comprise Board and Executive Search, Interim Management, Research & Insight, Leadership Consulting & Assessment, and executive-level Recruitment Solutions.

For further information visit www.normanbroadbent.com

CEO Review:

As set out in table below in the 6 months to 30 June 2017 the Group incurred an operating loss of £667,000 (2016: loss £62,000) on turnover of £3,292,000 (2016: £3,366,000).

This comparison belies the very substantial progress made by the Group in the period both in the completion of the first, defensive consolidation, phase of its business plan and the improvement in trading as compared to the 6 months to 31 December 2016 which had resulted in an operating loss of £1,161,000 on turnover of £2,295,000.

In the period we have seen significant changes in personnel, proposition and process across the businesses. The changes in personnel reflect the filling of important senior leadership positions, the replacement of underperforming consultants and newer, more robust internal recruitment process. The more diverse portfolio of offerings has enabled an encouraging increase in cross selling by each of our businesses, and clients have responded well to the development of enhanced service lines and a more integrated offering.

We now have a more diverse offering, with varied revenue streams and less reliance on executive search, a service line which continues to be an important offering. We are now positioning ourselves to move into Phase 2, the Growth Phase, of the strategic plan which will seek to scale up our businesses and move forward.

Summarised Financial Results:

The table below summarises the results for the Group.

Norman Broadbent Executive Search ("NBES")

NBES underwent substantial restructuring during the first 6 months of 2017. This has included significant investment in new hires, including the appointment of Tim Hammett as Managing Partner and the departure of a number of underperforming legacy consultants. The process of dealing with legacy departures is now complete, and the new consultant hires made in Q1/Q2 2017 are ahead of plan. As a result of the restructure and subsequent reinvestment, revenues fell to £1,430,000 from £2,351,000 in H1 2016, resulting in a loss of £566,000 (Profit £329,000). Encouragingly, NBES has had its highest new retainer wins so far this year in the month of September.

Norman Broadbent Interim Management ("NBIM")

NBIM was re-launched at the end of 2016 with the hiring of Angela Hickmore as Managing Director. While still an early stage business, the Board is pleased with its progress to date. The business now has four senior billing consultants, three of which were hired in H1 2017. Gross revenues increased to £807,000 from £402,000 in H1 2016, resulting in a loss of £113,000 (Profit £13,000). This loss reflects an anticipated time lag from the hiring of new consultants to their generation of revenue.

Norman Broadbent Leadership Consulting ("NBLC") 

NBLC has performed exceptionally well in H1 2017. Revenues increased to £662,000 from £199,000, resulting in a profit before tax of £365,000 (Loss £4,000). As announced on the 4th July 2017, NBLC won a significant contract with a FTSE 250 company to provide executive assessment, research and insight services over a three-year period (we expect the benefit of this to begin to materialise in Q4 2017).

NB Solutions ("NBS")

NBS has performed broadly in line with the previous reporting period. While revenues declined by 5% to £393,000 from £414,000 in H1 2016, resulting in a loss of £62,000 (Loss £32,000), the revenues for the 6 months to June 2017 were more than double the £163,000 earned in the second half of 2016, reflecting the impact of the restructuring that took place in June 2016 . Going forward, management focus for NBS is to increase headcount in order to grow the business to adequate scale.

Research & Insight ("R&I")

Although not a separate reporting line, we have continued to invest in R&I capabilities with strategic hiring. The R&I team now not only serves our own internal requirements, but provides complementary client services to our other businesses.

Financial Position

Equity shareholders' funds were £1,755,000 as at 30 June 2017 (£2,434,000 at 31 December 2016), with net current assets of £154,000 (£825,000 at 31 December 2016). Cash and cash equivalents at 30 June 2017 amounted to £304,000 (£963,000 at 31 December 2016), reflecting continued investment and restructuring in all businesses. The balance on the Group's revolving invoice discounting facility was £833,000 (£444,000 at 31 December 2016), reflecting a trade receivables balance of £1,104,000 (£634,000 at 31 December 2016).

Net cash outflow from operations was £1,024,000 (£797,000 at 31 December 2016) and net cash inflow from financing activities amounted to £304,000 (£1,404,000 at 31 December 2016).

Appointment of Gary Browning

The Board was very pleased to announce the appointment of Gary Browning as a Consultant and Strategic Adviser in August 2017. Gary's role will be to provide advice and support in the areas of strategic opportunities, market and competitive developments and to assist in the execution of Norman Broadbent's growth plan. Gary Browning's appointment brings the benefit of over 20 years' relevant sector experience to the Company. Gary joined Penna Consulting plc, the international human resources consulting group, in 2002. He was Chief Executive from 2005, when the business was capitalised at approximately £25.0m, until 2016 when the business was sold to ADECCO S.A. for £105m.

Board Changes

James Webber, Group CFO, informed the Board of his intention to resign from the Company in August. An offer has been extended to a potential candidate. On behalf of the Board I would also like to thank James for his significant contribution to Norman Broadbent over the last 4 years.

Outlook

The business is now positioned to move onto Phase Two of its business plan which aims to build on the work carried out to date, upscale all of our businesses and become self-funding and profitable. In order to fund Phase Two, the company has been in discussion with its existing institutional shareholders and a number of new investors and anticipates shortly announcing the details of a proposed placing to raise up to £1.23m.

Mike Brennan

Group CEO

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six month period ended 30 June 2017

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2017

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six month period ended 30 June 2017

CONSOLIDATED STATEMENT OF CASH FLOW

For the six month period ended 30 June 2017

NOTES TO THE FINACIAL 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 2016, 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 2017, 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 2017 and are unchanged from those disclosed in the Group's Annual Report for the year ended 31 December 2016. 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:

* 100 per cent of the issued share capital of this company is owned by Norman Broadbent Overseas Ltd.

2. copies of the unaudited interim report

Copies of this report are available on request from the Company's registered office at 12 St James's Square, London, SW1Y 4LB and are also available on the Company's website at www.normanbroadbent.com.

3. SEGMENTAL ANALYSIS

Management has determined the operating segments based on the reports reviewed regularly by the Board for use in deciding how to allocate resources and in assessing performance. The Board considers Group operations from both a class of business and geographic perspective.

Each class of business derives its revenues from the supply of a particular recruitment related service, from retained executive search through to executive assessment and coaching. Business segment results are reviewed primarily to operating profit level, which includes employee costs, marketing, office and accommodation costs and appropriate recharges for management time.

Group revenues are primarily driven from UK operations, however when 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 and profit before taxation is set out below:

ii) Revenue and gross profit by geography:

4. earnings PER ORDINARY SHARE

i) Basic earnings 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:

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 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.

iii) Adjusted earnings per share

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 charges for share based payments. It has been calculated to allow shareholders to gain a clearer understanding of the trading performance of the Group.

5. PROVISIONS

On the 6 March 2013 the Company signed a ten year lease with a five year break for its main office in London. On signing the new lease the Company inherited the office fit-out from the previous tenant. Under the terms of the new lease the Company is obliged to return vacant possession to the landlord with the office returned to its original state. The Company had the present cost of the future works required to return the office to its original state valued by an independent firm of advisors and this liability of £125,000 is provided for in the financial period. In July 2017, the Company exercised the lease break option.

6. DISCONTINUED OPERATION

On 31 December 2016, the Group sold its 51% stake in Social Media Search Limited. The comparative consolidated statement of comprehensive income has been re-presented to show the discontinued operation separately from continued operations. Under the terms of the Sale and Purchase Agreement ("SPA"), Norman Broadbent will receive a cash consideration of £325,000 for Social Media Search. As at the end of June, the company has received £32,502 which equates to 6 payments of £5,417. 

The profit in 2016 from discontinued operations disclosed within the Consolidated Income Statement of £278,900 consists of the operating loss of £(30,000) and the profit on disposal of the subsidiary of £309,900. The exceptional item, relating to the write off of intercompany loan accounts, has been eliminated on consolidation within the Consolidated Income Statement.

7. RELATED PARTY TRANSACTIONS

Brian Stephens & Company Limited invoiced the Group for the directors' fees and corporate finance services of B Stephens (£10,000) and business related travel costs of £2,000. B Stephens is a director of Brian Stephens & Company Limited.

During the prior period the Group acquired research services from Connecting Corporates Limited of £7,000. The Group owned a 51 per cent stake in Connecting Corporates Limited.

All related party expenditure took place via "arms-length" transactions.

The payables to related parties arise from purchase transactions and are due one month after date of purchase. The payables bear no interest.