Norman Broadb Regulatory News (NBB)

NORMAN BROADBENT PLC - Half-yearly Report

PR Newswire

London, September 29

30 September 2015

Norman Broadbent plc

(“Norman Broadbent” or “the Company” or “the Group”)

Interim Results

Norman Broadbent, a leading provider of executive search, leadership consultancy and complementary recruitment services, today announces its unaudited results for the six months ended 30 June 2015.

Financial highlights

Revenue from continuing operations increased by 31 per cent to £4.89m (2014: £3.73m)

Gross profit from continuing operations increased by 5 per cent to £3.79m (2014: £3.60m)

Group returned to profitability, posting an operating profit of £0.06m compared with a prior year operating loss of £0.34m in 2014

Norman Broadbent Executive Search (“NBES”) revenue increased by 10 per cent to £2.78m (2014: £2.53m)

NBES profit before tax increased by 51 per cent to £0.34m (2014: £0.22m)

Group cash and cash equivalents were £0.4m (2014: £0.2m)

Net assets of £1.6m (31 December 2014: £1.7m)

Operational highlights

Group returned to operational profitability

Profitable growth in NBES

Continued investment in new consultants across the Group, notably in AGP

New management team, with Scanes Bentley joining the Group as Executive Chairman

Strong momentum in the new subsidiary businesses

Scanes Bentley, Executive Chairman of Norman Broadbent, said:

“Our results for the first six months of 2015 are strong and the results indicate that NBES and Norman Broadbent Leadership Consulting (“NBLC”) performed well and our enhanced suite of service offerings made considerable progress. After a strong H1, and a good performance in the traditionally challenging month of July, NBES has experienced slower trading in August and September. I am confident that we are addressing the issues that affect both the short term trading challenges and the longer term strategic positioning of the business”.

For further information please contact:

Norman Broadbent plcScanes Bentley/James Webber 020 7484 0000

Sanlam Securities UK Limited Simon Clements/Virginia Bull 020 7628 2200

Notes to Editors

Norman Broadbent plc is a leading provider of senior and board executive search and leadership consultancy and assessment services. Through AGP the Group also provides specialist contingent offerings, including RPO solutions. Norman Broadbent Interim Management provides a dedicated senior interim management service focussed on enhanced client returns on investment and long term benefits. Social Media Search provides digital research to assist in house recruitment as well as assisting professional service firms to drive sales by bespoke exploitation of social media.

For further information visit www.normanbroadbent.com

Chairman’s Review

Financial Results

The table below summarises the results for the Group.

Norman Broadbent has completed an improved first half, increasing revenues by 31 per cent to £4.89m (2014: £3.73m). The Group returned to operational profitability, with an operating profit of £0.06m as compared to an operating loss of £0.34m in the six month period to 30 June 2014.

NBES showed a material improvement, with revenue increasing by 10 per cent to £2.78m (2014: £2.53m) and profit before tax increasing by 51 per cent to £0.34m (2014: £0.22m). NBLC also showed substantial progression in trading with revenues increasing by 58 per cent to £0.37m (2014: £0.23m) and profit before tax increasing to £0.06m (2014: loss £0.10m).

The strong performance in NBES and NBLC was partially offset by the continued, but reduced, investment in AGP, Norman Broadbent Interim Management (“NBIM”) and Social Media Search (“SMS”), totalling £0.18m (2014: £0.29m). We have completed the restructuring of AGP and SMS and the Board is hopeful that both businesses will be trading profitably month on month by the end of 2015. Recognising the potential for immediate growth in AGP, we have invested in new consultants, as well as promoting our own talent, resulting in a 300 per cent increase in billing consultants since the end of 2014.

As announced in our 2014 results, the Board has ceased all of its international operations, closing our Singapore and USA operations. The strategy of the Board is to continue to focus on organic growth within the strengthening UK market, whilst exploring accretive acquisition opportunities as and when they become available.

Financial Position

Equity shareholders’ funds were £1.6m as at 30 June 2015 (£1.7m as at 31 December 2014), with net current assets of £0.2m (£0.2m as at 31 December 2014). Cash and cash equivalents at 30 June 2015 stood at £0.4m, down from £0.5m at 31 December 2014, reflecting the continued investment in the new businesses and the non-recurring exceptional cost of £0.1m. The balance on the Group’s revolving invoice discounting facility was £1.0m (£0.7m at 31 December 2014), reflecting a trade receivables balance of £1.6m (£1.3m at 31 December 2014).

New Management

As highlighted in the 2014 results, Pierce Casey retired from the Board as Chairman and Director on 30 June 2015. Pierce’s retirement followed Bruce Lakefield and Jan Cameron leaving the business in March and April 2015 respectively. As announced on 1 July 2015, Sue O’Brien resigned from the Board and left the Company at the end of August. In light of these changes, I was appointed as Executive Chairman with immediate effect.

The Board is in the process of reviewing its structure given the changes in senior management over the last nine months. The Board is actively seeking a Group CEO who we hope to be in place during the first quarter of 2016.

Current Trading

After a strong first half of 2015, NBES performed well in the traditionally challenging month of July, although the business has experienced slower trading in August and September.

Since the period end, trading in AGP and NBLC has been encouraging and SMS, whilst still refining its core offering, is beginning to show signs of profitable growth. We are continuing to refocus the executive interim offering of NBIM which has required greater investment than anticipated.

In light of the slower trading in NBES in August and September certain large shareholders have indicated their ongoing support to ensure we continue to build on the turnaround to profitable growth - putting the necessary structure in place to allow the company to scale. 

Scanes BentleyExecutive Chairman

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the six month period ended 30 June 2015

* Re-presented to show the discontinued operation separately from continued operations as required by IFRS 5.

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAs at 30 June 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the six month period ended 30 June 2015

CONSOLIDATED STATEMENT OF CASH FLOWFor the six month period ended 30 June 2015

* Includes £125,000 exceptional costs.

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 2014, 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 2015, 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 2015 and are unchanged from those disclosed in the Group’s Annual Report for the year ended 31 December 2014. The interim financial statements have not been audited.

1.2 Basis of consolidation and business combinations

The 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) Geographic Region:

The analysis by geographic region of the Group’s turnover and profit before taxation is set out below:

Turnover by location is not materially different from turnover by destination. The unallocated costs refer to central costs of the Group including salaries, professional and other costs, which are not directly attributable to the delivery of the services. The six segments shown represent the management information provided to the Board and in the opinion of the directors reflect the nature of the Group’s services.

4. EQUITY SECURITIES ISSUED

During the six month period ended 30 June 2015 no equity securities were issued.

5. 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 two categories of dilutive potential ordinary shares; share options and warrants. For these options and warrants, 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 warrants and 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 the effects of impairment of intangibles and charges for share based payments. It has been calculated to allow shareholders to gain a clearer understanding of the trading performance of the Group.

6. PROVISIONS

On the 6 March 2013 the Company signed a new 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 has 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 non-current liability of £125,000 has been provided for in the financial period. The Company received a one-off payment of £250,000 in 2013 from the previous tenant in satisfaction of various costs and liabilities that it inherited with the new lease.

7. EXCEPTIONAL ITEMS

8. DISCONTINUED OPERATION

Since year end, the Group has taken the decision to cease operations in the USA (Norman Broadbent Inc) and Singapore (NB Consultancy (Singapore) Pte. Ltd). The segments were not a discontinued operation or classified as held for sale at 31 December 2014 and the comparative consolidated statement of comprehensive income has been re-presented to show the discontinued operation separately from continued operations.

9. RELATED PARTY TRANSACTIONS

Adelaide Capital Limited invoiced the Group for the services of P Casey (£149,000). P Casey is a director of Adelaide Capital Limited. Included in this £149,000 is a one off contractual payment of £125,000. Brian Stephens & Company Ltd invoiced the Group for the directors’ fees and corporate finance services of B Stephens (£15,000) and business related travel costs of £4,000. B Stephens is a director of Brian Stephens & Company Ltd.

Taxation and company secretarial services of £5,000 were acquired from Anderson Barrowcliff LLP, an accountancy firm of which R Robinson is a partner. 

During the period the Group acquired research services from Connecting Corporates Limited £23,000. The Group owns a 51 per cent stake in Connecting Corporates Limited.

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

During the period the Group recharged group services incurred for the benefit of Connecting Corporates Limited to Connecting Corporates Limited at cost £8,000.

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