24 Jul 2023 07:00
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).
· Underlying1 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 2023 | Six months to 30 Jun 2022 | Year ended 31 Dec 2022 |
£000's (unaudited) | £000's (unaudited) | £000's (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] | 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 |
|
| - | - | ||
Total comprehensive profit / (loss) for the period |
| 8 | (72) | (338) | ||
|
|
| ||||
|
|
| ||||
|
| |||||
|
|
|
|
| ||
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 |
|
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|
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) | ||
Net cash generated by / (used in) investing activities |
(29) |
(73) | (116) | |||
| ||||||
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 Borrowings due within more than one year | (1,140) (133) | (1,256) (183) | (483) (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) | |||
Operating profit / (loss) from continued operations |
|
78 |
(49) | (261) | ||
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 |
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| ||||||
Share based payment charge | 82 | 0.13 | 0.13 | - | - | - | 131 | 0.22 | 0.22 |
|
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Adjusted earnings | 90 | 0.14 | 0.14 | (72) | (0.12) | (0.12) | (207) | (0.34) | (0.34) |
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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] Underlying EBITDA excludes share based payment charges