Norman Broadbent plc share price, company news, analysis and interviews

Norman Broadbent plc (LON:NBB) Chief Executive Officer Mike Brennan caught up with DirectorsTalk for an exclusive interview to discuss their latest trading update, how their strategy played out during the pandemic, how clients are preparing for a post-pandemic world and their plans for the future.

Q1: Norman Broadbent released a trading update today to the market for the year ended 31st of December 2020. Mike, can you talk us through the update please?

A1: So, we’ve been pretty good at keeping the market updated over these last few years on a regular basis about trading. Obviously, we’ve been through a huge transformation as a business, and we’ve now come through that successfully. So really, we wanted to get a trading up there out as quickly as we possibly could this year, just so that we could really let our shareholders know how we traded during the pandemic.

So, we posted positive EBITDA, which I think is a real achievement when you bear in mind everything that we’ve been through, group net fee income was slightly down, we were down by about 18%. I think that compares very favorably with a lot of other quoted companies in our space, so I feel that we’ve performed really well.

We’ve kept our gross margins up, so they actually had increased so they’re up at 79%, that was good to see and we have been managing things like debtor days quite successfully as well, so we’ve managed to get them down so we’re collecting cash quickly. Obviously, we’ve got a very strong blue chip client base, so it’s not like we’ve got people going bust on us.

We got to CBILS loan through, which we announced last year, so that added another £250,000 into the bank and we’ve got a new invoice discount facility as well so what that’s done is it’s actually got an increased our overall liquidity as a business.

So, it was a good set of results, I think, bearing in mind everything we’ve been through.

Q2: How has the strategy played out during the pandemic?

A2: Well, it’s played out well, it’s a good question actually because there are still a lot of people who operate in our space and they’re very much sort of one trick ponies, they just do one thing. Because we’ve developed this portfolio of complimentary services, we’ve now got six different service lines and it means that as our clients have faced real challenges this year, we’ve been able to step up and help them. Very early on in the pandemic, a lot of firms like ours, they kind of shrunk back and they were scared to talk to clients, we actually got on the front foot, we went out to clients and we said, look, these are all the things we can do for you, how can we help you?

So, it could be that they needed help looking at a new market so therefore the user research team, it could be that they needed some help going through some kind of change or transformation so therefore they need a short-term skills, so they used our interim consultancy practice. It could be that they wanted to see how effective their people will be in this sort of the new world post pandemic so therefore they used our assessment services. We had people looking to upgrade staff or bring different types of staff in so therefore our search business, we were able to deploy them or a combination of all six different services.

So, I think the strategy has paid off very well and what I am really pleased to see is that all of our services now, that we offer to our clients, people are buying them, people want to use them and we’re getting more and more repeat business from our clients.

So, I really feel that we’ve done the right thing by our company, by our employees, by our shareholders, but above all, I think we’ve done the right thing by our clients.

Q3: Now you mentioned a new world post-pandemic, how are clients preparing for the post-pandemic market? Are they preparing?

A3: Yes, they are so what I think we saw during the pandemic was we saw some businesses and some leaders within those businesses and teams performed really well, the danger is when you’re in a situation such as this, you’re focusing on the here and now and obviously we have to do that, we have to sort of manage and live day by day.

But a lot of the really smart business leaders were actually thinking, what’s this going to look like when it’s over? What part do we play as a business or as an individual or as a team in that sort of new world so a lot of them have been doing assessment work?

So, they’ve been looking at their teams and thinking, are these people right for this sort of this new world that we’re going to enter? If not, why not? Can we develop them? What do those development plans look like? If we can’t develop them, can we upgrade them? Can we bring in new people so therefore the search teams come in and work on that. It could be that they’re going through huge transformation, getting ready for this new world that they’re going to get involved in and therefore they want that short term interim, 3, 6, 9, 12 months type of consulting activity. Boards are changing so we need a different type of Board director in a lot of instances now, so our Board Advisory team is stepping up.

So, some clients are really on the front foot on this and there will be a lot of companies that will hit the wall, which should be really sad to see, but the flip side of that is in this sort of Darwinian moment, there will be a lot of new companies or companies who have successfully pivoted that will rise out of this and they will do really well.

Q4: What are Norman Broadbent’s plans for the future?

A4: Well, we’re really positive about the future. We think there’s a lot of opportunity out there for a business such as ourselves and we’ve got some very, very supportive shareholders.

We do want to scale the business so I think there are a number of different ways that we can do that. There are smaller businesses that might only provide one or two services to their clients so we’re talking with those kind of businesses about how we partner with them so that we can supply our services through them. So, those companies, literally overnight, will become much stronger in terms of the portfolio of services they can offer to their clients and obviously that benefits us because we can deliver the work for them. So, we’ve got that kind of stuff going on.

We‘re then in conversations with individuals to join the business, particularly in thrive sectors so we are actively bring in new people into our company and then, of course we’re on the M&A trail.

So, companies that might be a bit smaller than us or the same size as us, it could be that you’ve got owner-managed businesses who were looking to sell in the next 12-18 months, well obviously those plans have been set back quite significantly. It could be that we’re able to, in some way, partner with them, partially or wholly, which helps give them the exit that they want and obviously it helps us build and scale our business for our clients, for our employees, and for our shareholders.

Norman Broadbent plc (LON:NBB) Chief Executive Officer Mike Brennan and Chief Financial Officer Steve Smith caught up with DirectorsTalk for an exclusive interview to discuss the recent funding update, Angela Hickmore’s role in the business, how clients are reacting to the new proposition, assessment and development, interim business, growth plans and trading in the second half.

Q1: You provided a funding update to the market recently, the new funding facilities sound pretty good Steve. Now, I’ve heard them being described as giving Norman Broadbent a cash cushion for going into 2021, what impact will they have on the company?

A1: Well, there’s two elements to this effectively, we have a new CBILS facility with Metro Bank, it’s a £250,000 pound facility which is effective immediately and we’ve just arranged a new invoice discounting facility, again with Metro on improved terms.

So, it gives us combined extra liquidity in the business and it just allows us to look at potential small tuck-ins, M&A, and a level of extra liquidity in terms of growing the business, looking at improving headcount and things by that.

So, yes, it’s a cash cushion but it’s going allow us to invest and grow in 2021.

Q2: And do you have many companies in your sights at the moment? Is that something that you’re actively looking at?

A2: Well, we’ve already recently brought in a new MD into our pharma life sciences sector, and a new MD into the tech digital sector. We have a couple of small teams that we’re talking to at the moment in terms of bringing into the business and we’ve got three or four small potential acquisitions where we’re at various stages.

So, there’s quite a lot going on to be fair.

Q3: Now, Mike, I gather you’ve promoted Angela Hickmore to Group MD. Can you tell us more about Angela’s role and what she brings to the business?

A3: Angela was the first senior appointment I made when I came in as CEO four and a half years ago so she’s been right at the heart of this transformation that we’ve been driving through the business. She had a small stake in a subsidiary business which we bought out and what that did is that allowed her to then take on a much broader role in the business and she stepped up into that.

So, she effectively runs all our operations group-wide, she’s a phenomenally experienced person within our industry and, on a personal level, I wouldn’t say she’s an act of God but she’s certainly a force of nature. She’s just very, very dynamic, very entrepreneurial and I think, actually, her stepping into this position probably makes her one of the most senior women in our industry in the UK.

I think it says a lot about our organization, how far it’s moved that we’ve now got a lady such as Angela sat right at the right top of the organisation working with Steve and I so she’s got a really big job but thankfully she’s full of energy and full of vim to get it done.

Q4: How are clients reacting to the new proposition?

A4: Good, so I think one of the things that’s helped us get through the pandemic has been the fact that we’ve got a much broader range of services now that we can offer to clients and as clients have navigated through some quite tricky waters this year, we’ve been able to help them in lots of different ways. It could be interim, it could be research and insight, the assessment business is doing really well and then of course we’ve got our standard recruitment service offerings now, but obviously even they’re evolving.

So, as we move into next year, under Angela’s leadership, managing that whole organic growth piece, I’m very, very confident that the proposition will keep landing well with clients.

Q5: Now, I did hear that you ramping up your activity in the assessment and development space, can you talk me through how your clients are using this service line?

A5: So, it used to be used very much around selection so putting science into making sure you select and appoint the right candidate is it in summary.

What we found is, during the pandemic a lot of companies have realised that the leaders they have that they thought were great, aren’t that great, that the teams or the managers that they thought were fit for purpose are not.

As they move into this new normal and they’re rethinking what their business looks like, they’ve got to make sure that their people are fit, not just fit for now but fit for the future. So, what we’re doing is we’re using assessment to help a lot of clients identify those people that are great and work well so they’re fine. Also, with that group of people, have they got some development needs, what are they and then we help them build development plans so that they can really get them ready for the future.

Then, obviously, you’ve got some people who are just not going to make it, no matter what we do with them so in that instance, what we’re doing there is we’re helping clients build a business case to hire new people and then they hire them against that grid of what good looks like.

So, it’s a phenomenally powerful tool that we’ve got and clients are embracing it very fully so I expect us to be a lot busier in that space than we have been in the past.

Q6: How has the interim business performed this year, Mike? Can you just explain for us what it does?

A6: The interim business, again, that was always a hedge within our busines so when you get into a situation where the permanent improvement market slows down, for whatever reason, what you’ll often find is that companies still have needs but they don’t want to necessarily commit to a full-time hire but they might commit to somebody on a six-month contract. Because we’ve got so much change driving through the market now, because there’s been this forced disruption, a lot of companies are now rethinking their business models, they’re finding out what works, what doesn’t work so they have to bring in some instant expertise.

What we do with our interim businesses is we can have a call with a client on a Friday and we can have a group of consultants starting work for them the following week. So, they’re kind of an instant resource and it’s all around change, transformation so it could be around a financial problem that the pandemic unearthed, it could be that the operating models not right, it could be that the client wants to move into a new market.

If they don’t have that expertise in their business, they come to us and we find it for them and then we put them on a three, six, nine, twelve month contract to help them fix it. Once it’s fixed, they switch off and they move on so it’s gone really, really well during the pandemic.

Q7: Just turning to you Steve, how are the growth plans going? I gather that you’re in the market actively talking to other companies and teams to join forces with NBB?

A7: Absolutely so, as I mentioned earlier, we’re talking to two or three teams at the moment and we’re particularly looking at sort of growth sectors so high-tech digital, life sciences and HR. We’ve got the business based and set up on what we call a hub basis now so we’re working in verticals and we’ve identified where we have gaps in our organisations.

So, we’re out looking to fill those gaps so it will be a combination of teams, specific individuals, we’ve just made a couple of hires in our consumer area. Additionally, small potential acquisitions and, again, in the tech space, we’ve got an interesting deal that we’re looking at at the moment and another in a sort of a science-type area.

Growth plans are obviously organic but also, we’re trying to expand the business through mergers and acquisitions as well.

I think the key thing as well, just to add, our shareholders are very keen that we do game changing series of deals so that’s why we’re not just doing the organic growth that we’ve talked about, but we’ve got that inorganic piece as well.

So, the way that we divvied things up is Angela’s very much about driving the organic piece and Steve and I are very much focused on the inorganic piece.

Q8: Finally, Steve, how has trading been in the second half of the year for Norman Bradbent and when do you plan on updating the market?

A8: So, I’ve actually only been with the business since March and one of the things I’ve been really impressed with is the resilience and in very tough times, this business is traded pretty well to be fair.

Second half, we are pretty much on expectations, we are a little bit down on NFI compared to prior year but we put a whole bunch of cost measures in place to basically mitigate that. So, it feels like we’re coming into November and December in a pretty good position compared to prior year and we’re going to kind of finish off pretty strong.

So, we will put an update out into the market very early in 2021 and I think it’s going to be a positive message.