Interim Results

RNS Number : 6086S

Norman Broadbent PLC

14 September 2010

 



For Immediate Release                                                                                                   14 September 2010

Norman Broadbent plc

("the Group")

Interim Results for the six months to 30 June 2010

Norman Broadbent plc, a leading provider of executive search, and leadership consultancy services, announces its interim results for the six month period ended 30 June 2010.

Financial Highlights

·     Revenue of £3.26 million (2009: £3.43 million), with an increase in core executive search revenues to £3.06 million (2009: £2.83 million).

·     Return to profitability resulting in profit before tax of £974,000, including a one off gain of £822,000, (2009: loss of £660,000).

·     Earnings per share of 32.84p (2009: loss per share of 28.45p).

·     Transformation of  balance sheet through a reduction in the Norman Broadbent acquisition cost of £3.46 million and capital raising of £2.04 million, resulting in net assets of £910,000 (2009: deficit of £2.40 million).

Operational Highlights

·     Successful integration of business under core Norman Broadbent brand.

·     Move to single London location in St James Square.

·     Increased levels of activity in core Executive Search market with revenues increasing by 8.3% to £3.06 million.

·     Launch of NB: Board Interim , a joint venture with Russam GMS.

·     Successful recruitment campaign with three new key search consultants hired to date.

·     Ongoing discussions in connection with further overseas expansion.

Pierce Casey, Chairman, said:

"The six months to 30 June 2010 have transformed the Group.  We have completed the recapitalisation of the Company, the re-negotiation of the deferred consideration due on the Norman Broadbent acquisition, the integration of our brands under the Norman Broadbent name and the move to a single head office in St James Square.  We have returned to profitability and now have the financial resources available to expand our operations both in the UK and overseas.

As a result we are well placed to take advantage of increasing levels of activity in our core markets both in the UK and overseas.  It is already evident that a re-capitalised Norman Broadbent is ideally positioned to both retain and attract top calibre talent."

Norman Broadbent plc	Tel: [phone]
Andrew Garner/Sue O'Brien/Ben Felton
Merchant Securities Limited	Tel: [phone]
John East/Simon Clements
Buchanan Communications Limited	Tel: [phone]
Tim Anderson / Isabel Podda/Christian Goodbody

CHAIRMAN'S STATEMENT

Financial results for the six months to 30 June 2010

I am pleased to be able to report that your company returned to profitability in the six month period ended 30 June 2010, with a profit before taxation of £974,000 compared to a loss for the comparable period in 2009 of £660,000, on a turnover of £3.26 million (30 June 2010: £3.43 million).  Earnings per share were 32.84p (30 June 2009: loss per share 28.45p).

The return to profitability was achieved through increased executive search revenues delivering higher margins, coupled with reduced costs.  Search revenues increased 8.3% to £3.06 million despite a 33% reduction in the number of fee earners, which resulted in a 59% average increase in billings per fee earner.

The results also include a one off gain of £822,000 on the disposal of BNB Recruitment Consultancy Limited, a wholly owned subsidiary that was placed into creditors' voluntary liquidation during the period.

As a result of the recent share issue which raised £2.04 million and the renegotiation of the price of the Norman Broadbent acquisition, the Company's balance sheet has been transformed with positive net assets at 30 June 2010 of £910,000, despite a write down in goodwill of £5.30 million, as compared to a deficit of £2.40 million at 31 December 2009. The net amount of deferred consideration now due in relation to the Norman Broadbent acquisition has been reduced from £5.07 million at 30 June 2009 to £1.09 million, of which £561,000 is to be satisfied from overseas royalties and is without recourse to the Company. The next cash instalment payable is £250,000, due in June 2011. Cash balances at the end of the period were in excess of £1.0 million, with modest bank debt of £340,000, excluding the revolving receivable financing which stood at 35 per cent of trade debtors as at 30 June 2010.  Since the period end debtor days have been reduced, and moving forward tighter working capital control will be implemented.

Recent and future developments

In light of the increased search activity which we have experienced with our existing clients, and a general recovery in a number of business sectors, particularly financial services and pharmaceuticals, the Company is committed to growing the sales teams targeting these markets.  Since 30 June 2010, three experienced search consultants have joined the Company and with the brand attracting significant interest three more hires are expected by the year end.

The events of recent years following the financial crisis, increased regulation and the complexity of financial reporting has made the need to find outstanding Chairman and Non Executive Directors a pressing matter, and we are building a specialist practice to respond to this.  We aim to be a market leader in this area, including boardroom mentoring.

On 14 June 2010, we announced the creation of NB: Board Interim, a joint venture with Russam GMS.  This was launched in July and provides a unique approach to the provision of Interim Board executives.  This venture has been well received by existing clients and is a positive addition to the portfolio of services offered by the Group.  As well as focussing on the growth of our London office the Board continues to seek opportunities to extend our licensed offices beyond Spain, Italy, Canada and the Middle East into the USA and Latin America.  We plan to initiate a core presence in Hong Kong to service South East Asia within the next 12 months, together with a further expansion of the Group's non-search related human capital services.

Outlook

Following the corporate re-organisation in June 2010 and the move to a single office in St James's Square, London, the Company is well set to benefit from the improved level of activity in the Executive Search market place, which is likely to require additional investment both in the UK and overseas, funded, in the absence of a substantial acquisition, from our internal resources.

Pierce Casey

Chairman

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Notes	Six months ended 30 June 2010		Six months ended 30 June 2009		Year ended 31 December 2009
		(unaudited)		(unaudited)		(audited)
		£000		£000		£000
Revenue	2	3,263		3,431		6,033
Cost of operations		(3,062)		(4,074)		(9,287)
Other income		-		-		57
GROUP OPERATING PROFIT/(LOSS)		201		(643)		(3,197)
Net finance costs		(49)		(17)		(24)
Gain/ (Provision) on disposal of a group subsidiary	5	822		-		(226)
PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION		974		(660)		(3,447)
Tax expense		(6)		(12)		(9)
PROFIT/(LOSS) FOR THE FINANCIAL PERIOD		968		(672)		(3,456)
Earnings/(Loss) per share - basic	4	32.84p		(28.45)p		(146.17)p
Earnings/(Loss) per share - diluted	4	32.44p		(28.45)p		(146.17)p
There are no recognised gains and losses other than as stated above. Accordingly, no Statement of Other Comprehensive Income has been included.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2010

	As at 30 June 2010			As at 30 June 2009			As at 31 December 2009
		(unaudited)			(unaudited)			(audited)
	£000	£000		£000	£000		£000	£000
Goodwill		1,750			7,049			1,750
Property, plant and equipment		204			223			106
TOTAL NON-CURRENT ASSETS		1,954			7,272			1,856
Trade and other receivables	1,894			1,505			1,021
Cash and cash equivalents	1,044			51			65
TOTAL CURRENT ASSETS		2,938			1,556			1,086
TOTAL ASSETS		4,892			8,828			2,942
TOTAL CURRENT LIABILITIES		(3,146)			(4,239)			(4,251)
Non-current liabilities		(836)			(4,217)			(1,086)
TOTAL LIABILITIES		(3,982)			(8,456)			(5,337)
TOTAL ASSETS LESS TOTAL LIABILITIES		910			372			(2,395)
Issued share capital		5,804			5,709			5,711
Share premium account		7,095			4,868			4,871
Retained earnings		(11,989)			(10,205)			(12,977)
TOTAL EQUITY		910			372			(2,395)

CONSOLIDATED STATEMENT OF CASHFLOWS & NOTES

		Six months ended 30 June 2010		Six months ended 30 June 2009		Year ended 31 December 2009
		(unaudited)		(unaudited)		(audited)
	Notes	£000		£000		£000
Net cash from operating activities	(i)	(257)		(673)		(307)
Cash flows from investing activities and servicing of finance
Interest paid		(49)		(17)		(24)
Dividends received						57
Payments to acquire tangible fixed assets		(139)		(58)		(87)
Disposal of subsidiary	(ii)	(193)		-		-
Net cash used in investing activities		(381)		(75)		(54)
Cash flows from financing activities
Net cash inflow from equity placing	(iii)	1,891		-		5
Repayment of secured loans		(106)		(102)		(210)
(Repayment)/advances of loans from directors		-		160		160
Payment of transaction costs		-		-		(40)
Increase in invoice discounting		121		246		156
Repayment of deferred consideration		(289)		(148)		(287)
Net cash from financing activities		1,617		156		(217)
Net movement in cash and cash equivalents		979		(592)		578
Net cash and cash equivalents at beginning of period		65		643		643
Net cash and cash equivalents at end of period		1,044		51		65
Analysis of net funds
Cash and cash equivalents		1,044		51		65
Borrowings due within one year		(838)		(810)		(712)
Borrowings due after one year		-		(211)		(111)
Directors loan account		(20)		(260)		(260)
Deferred consideration		(1,086)		(5,066)		(1,468)
Net funds		(900)		(6,296)		(2,486)

CONSOLIDATED STATEMENT OF CASHFLOWS & NOTES (continued)

Note (i) Reconciliation of operating profit to net cash from operating activities		Six months ended 30 June 2010		Six months ended 30 June 2009		Year ended 31 December 2009
		(unaudited)		(unaudited)		(audited)
		£000		£000		£000
Operating profit/(loss)		201		(643)		(3,197)
Depreciation of property plant and equipment		40		34		179
Share based payment charge		20		-		12
Impairment of goodwill		-		-		1,880
Dividends received		-		-		(57)
(Increase)/decrease in trade and other receivables		(964)		508		992
Increase/(decrease) in trade and other payables		452		(514)		205
Provision for preparation of subsidiary accounts on a break-up basis		-		-		(226)
Taxation paid		(6)		(58)		(95)
Net cash from operating activities		(257)		(673)		(307)

Note (ii) Net cash outflow on disposal of subsidiary		Six months ended 30 June 2010		Six months ended 30 June 2009		Year ended 31 December 2009
		(unaudited)		(unaudited)		(audited)
		£000		£000		£000
Cash and cash equivalents		(48)		-		-
Legal fees relating to disposal		(145)		-		-
Consideration received		-		-		-
Net cash outflow on disposal of subsidiary		(193)		-		-

Note (iii) Net cash inflow from equity placing		Six months ended 30 June 2010		Six months ended 30 June 2009		Year ended 31 December 2009
		(unaudited)		(unaudited)		(audited)
		£000		£000		£000
Issue of ordinary shares for cash		2,035		-		5
Professional fees directly relating to share issue		(144)		-		-
Net cash inflow from equity placing		1,891		-		5

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Attributable to equity holders of the business
	Share Capital £000	Share Premium £000	Retained Earnings £000	TOTAL EQUITY £000
Balance at 1 January 2009	5,709	4,868	(9,533)	1,044
Comprehensive income for the period
Profit or loss	-	-	(672)	(672)
Total comprehensive income for the period	-	-	(672)	(672)
Balance at 30 June 2009	5,709	4,868	(10,205)	372
Balance at 1 July 2009	5,709	4,868	(10,205)	372
Comprehensive income for the period
Profit or loss	-	-	(2,784)	(2,784)
Total comprehensive income for the period	-	-	(2,784)	(2,784)
Transactions with owners
Issue of ordinary shares	2	3	-	5
Share based payment expense	-	-	12	12
Total transactions with owners	2	3	12	17
Balance at 31 December 2009	5,711	4,871	(12,977)	(2,395)
Balance at 1 January 2010	5,711	4,871	(12,977)	(2,395)
Comprehensive income for the period
Profit or loss	-	-	968	968
Total comprehensive income for the period	-	-	968	968
Transactions with owners
Issue of ordinary shares	93	2,368	-	2,461
Costs relating to issue of shares	-	(144)	-	(144)
Share based payment expense	-	-	20	20
Total transactions with owners	93	2,224	20	2,337
Balance at 30June 2010	5,804	7,095	(11,989)	910

NOTES TO THE UNAUDITED INTERIM REPORT

1.             ACCOUNTING POLICIES

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 2009, 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 2010, 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 2010 and are unchanged from those disclosed in the Group's Annual Report for the year ended 31 December 2009.  The interim financial statements have not been audited.

BASIS OF CONSOLIDATION

The group financial statements consolidate those of the Company and of its subsidiary undertakings Garner International Limited, Bancomm Limited and Norman Broadbent Overseas Limited, companies incorporated in England and Wales.  They also consolidate the financial statements of BNB Recruitment Consultancy Limited, a wholly owned subsidiary up to 15 April 2010 when the company was placed into voluntary creditors' liquidation.  Profits or losses on intra-group transactions are eliminated in full. 

2.             SEGMENTAL ANALYSIS

i) Class of Business:

The analysis by class of business of the Group's turnover, profit before taxation and net assets/ (liabilities) is set out below:

	Turnover
	Six months ended 30 June 2010 £000	Six months ended 30 June 2009 £000	Year ended 31 Dec 2009      £000
Class of business
Executive Search	3,061	2,826	5,249
Overseas Royalties	161	125	277
Interim Management (Note 1)	41	480	507
	3,263	3,431	6,033

Note 1: In 2009 the turnover attributed to interim management reported above, was presented gross of cost of sale, which was £366,000 to 30 June 2009 (31 December 2009: £379,000).  Net fee income (revenue less cost of the interim managers) was therefore £114,000 to 30 June 2009 (31 December 2009: £128,000).

In July 2009, the company ceased trading under the previous interim business model, which had historically been a loss making function of the business.

2.                SEGMENTAL ANALYSIS (continued)

	Profit/(Loss) before tax
	Six months ended 30 June 2010 £000	Six months ended 30 June 2009 £000	Year ended 31 Dec 2009      £000
Class of business
Profit/(Loss) from Executive Search	150	(694)	(1,419)
Profit/(Loss) from Overseas Royalties	161	125	277
Profit/(Loss) from Interim Management	41	9	(14)
Corporate central costs	(151)	(83)	(161)
Impairment of goodwill	-	-	(1,880)
Gain/ (Provision) on disposal of a group subsidiary	822	-	(226)
Net finance (costs)/income	(49)	(17)	(24)
Profit/(loss) before tax	974	(660)	(3,447)

	Net assets/(liabilities)
	Six months ended 30 June 2010 £000	Six months ended 30 June 2009 £000	Year ended 31 Dec 2009      £000
Class of business
Executive Search	910	372	(2,395)

ii) Geographic Region:

The analysis by geographic region of the Group's turnover, profit before taxation and net assets/ (liabilities) is set out below:

	Turnover
	Six months ended 30 June 2010 £000	Six months ended 30 June 2009 £000	Year ended 31 Dec 2009      £000
Geographical analysis by destination
United Kingdom:
- Executive Search	2,806	2,674	5,000
- Interim Management	41	480	507
	2,847	3,154	5,507
Europe:
- Executive Search	224	26	69
- Overseas Royalties	135	125	250
	359	151	319
Other
- Executive Search	31	126	180
- Overseas Royalties	26	-	27
	57	126	207
	3,263	3,431	6,033

2.                SEGMENTAL ANALYSIS (continued)

	Profit/(loss) before tax
	Six months ended 30 June 2010 £000	Six months ended 30 June 2009 £000	Year ended 31 Dec 2009      £000
Geographical analysis by destination
United Kingdom
- Executive Search	125	(611)	(1,246)
- Interim Management	41	9	(14)
- Central, finance and exceptional costs	622	(100)	(2,291)
	788	(702)	(3,551)
Europe:
- Executive Search	56	7	17
- Overseas Royalties	135	125	250
	191	132	267
Other
- Executive Search	(31)	(90)	(190)
- Overseas Royalties	26	-	27
	(5)	(90)	(163)
	974	(660)	(3,447)
	Net assets/(liabilities)
	Six months ended 30 June 2010 £000	Six months ended 30 June 2009 £000	Year ended 31 Dec 2009      £000
Geographical analysis by destination
United Kingdom:
- Executive Search	910	372	(2,395)

Turnover by location is not materially different from turnover by destination.

3.             EQUITY SECURITIES ISSUED

On 14 June 2010, a General Meeting of the Company was held and resolutions passed which resulted in changes to the issued ordinary share capital as follows:

-       a consolidation of the Company's existing ordinary share capital on the basis of 1 new ordinary one pence share for every 30 existing shares;

-       the allotment of 4,522,221 new ordinary one pence shares for a total cash consideration of £2,035,000;

-       the allotment of 692,615 new ordinary shares in full consideration of existing loans totalling £349,058, which included directors loans of £191,673.  

An analysis of all equity securities issued during the period, is shown below:

3.             EQUITY SECURITIES ISSUED (continued)

Issue of ordinary shares during the period	Six months ended 30 June 2010		Six months ended 30 June 2009		Year ended 31 December 2009
	(unaudited)		(unaudited)		(audited)
	Shares	Value	Shares	Value	Shares	Value
	000's	£000	000's	£000	000's	£000
Issue of shares for cash	4,522	2,035	-	-	6	5
Issue of shares on conversion of directors' loans	426	192	-	-	-	-
Issue of shares on conversion of other loans	267	157	-	-	-	-
Issue of shares in lieu of employee bonus (Note 1)	137	77	-	-	-	-
	5,352	2,461	-	-	6	5

Note 1: The shares issued in lieu of employee bonuses were issued before the 30:1 consolidation on 14 June 2010, however all figures on the above table are expressed in post consolidation terms.  The actual number of shares issued in lieu of bonus was 4,116,104 which is equivalent to the 137,203 post consolidation shares shown above.

4.             earnings PER ORDINARY SHARE

i) Basic earnings per share: 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:

		Six months ended 30 June 2010	Six months ended 30 June 2009	Year ended 31 December 2009
		(unaudited)	(unaudited)	(audited)
		£000	£000	£000
Profit attributable to equity holders		968,000	(672,000)	(3,456,000)
Weighted average no. of ordinary shares		2,947,571	2,361,851	2,364,301

ii) Diluted earnings per share: 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 market share price for the period 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.

		Six months ended 30 June 2010	Six months ended 30 June 2009	Year ended 31 December 2009
		(unaudited)	(unaudited)	(audited)
Profit attributable to equity holders		968,000	(672,000)	(3,456,000)
Weighted average no. of ordinary shares		2,947,571	2,361,851	2,364,301
- assumed conversion of share options		31,121	-	-
- assumed conversion of warrants		5,209	-	-
Weighted average number of ordinary shares for diluted earnings per share		2,983,901	2,361,851	2,364,301

The calculations for comparative periods for both basic and diluted losses per share have been restated based on the new consolidated ordinary share capital.

5.             DISPOSAL OF SUBSIDIARY

On 26 March 2010, the trade, employees and fixed assets of BNB Recruitment Consultancy Limited and Bancomm Limited, both 100% owned subsidiaries of Norman Broadbent plc, were transferred to Garner International Limited, a fellow group subsidiary, for a total consideration of £90,627.  This transfer was a planned initiative to consolidate the operations of the executive search business following the acquisition of three Norman Broadbent trading companies in December 2008.

On 15 April 2010 BNB Recruitment Consultancy Limited was placed into voluntary creditors' liquidation.  The company had net liabilities, including inter-company debts, of £1.65 million. 

Between 1 January 2010 and 15 April 2010 when the liquidator was appointed, BNB Recruitment Consultancy Limited generated revenues of £185,000 and incurred expenditure of £399,000. These amounts are accounted for in the consolidated statement of comprehensive income on a line by line basis.  These losses are offset by the release of a £226,000 provision, made in the 31 December 2009 financial statements to reflect the subsidiary accounts having been prepared on a break-up basis.   

The disposal of the subsidiary and its net liabilities has led to a gain in the group consolidated financial statements of £822,000, detailed below.  The assets and liabilities of the company are disclosed at their carrying value as at 15 April 2010.

BNB Recruitment Consultancy Limited		Six months ended 30 June 2010	Six months ended 30 June 2009	Year ended 31 December 2009
		(unaudited)	(unaudited)	(audited)
		£000	£000	£000
Legal costs associated with liquidation		(145)	-	-
Trade and other receivables		(92)	-	-
Cash and cash equivalents		(48)	-	-
Trade and other payables		881	-	-
Release/ (Provision) for preparation of subsidiary accounts on a break-up basis		226	-	(226)
		822	-	(226)

6.             COPIES OF THE UNAUDITED INTERIM REPORT

Copies of the 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 www.normanbroadbent.com.

 

END

 

 

IR QXLFFBKFZBBL