Norman Broadbent plc (LON:NBB) Chief Executive Officer Mike Brennan caught up with DirectorsTalk for an exclusive interview to discuss final results, COVID-19, new offices, M&A work and what investors can expect in the coming months.
Q1: Mike, some pretty impressive final results just published. Can you talk us through the highlights?
A1: So, the key thing here is that we saw an £800,000 positive swing at bottom line during 2019 so that pushed the group into profit, I think on a normalised basis, we’ve not been in profit for a number of years. So that’s quite an important milestone for us as a management team and as a business.
We saw our revenue increase year on year by 22%, we net fee income up by 14% year on year, we had great performances from our interim management business, they were up 51% year on year and our solutions business was up 53% year on year. So, all in all, it was a strong year.
One of the really pleasing aspects of our results for me personally this year as well was that we’ve got an executive search business, which does actually throw off new business opportunities for other parts of the group and we’ve created this much stronger, more collegiate business culture now. So effectively, search, our solutions business, our interim business, they’re all referring business to each other so 23% of our net fee income in 2019 is generated as a direct result of colleagues referring business to each other.
Q2: So, what were the key changes that has turned everything around and brought Norman Broadbent back into positive territory?
A2: I think a lot of it’s to do with the culture so like I said before, more collegiate, more collaborative.
We are organizing ourselves now more around sectors so instead of going to market where people in our business talk about their own personal service line, people now sit in front of clients and we have open discussions about their problems, issues, concerns, future risks, and we can then bring one of five different services to the table to help our clients.
So, it’s much more of a client-focused business, it’s much more about trying to help clients resolve problems so that change in mindset in the business, not only has it helped our clients, it’s obviously helped the business and colleagues.
The net result of that is that we’ve had this set of results now where we’ve seen some really good performances from across the business, which has created a much more balanced group with revenue streams from different service lines, which then creates more resilience.
So, it’s a win-win all around and I think they’re the big pieces that have really driven our success in 2019.
Q3: Thinking COVID-19, how have you coped with that?
A3: So, we came out of the blocks really strongly at the beginning of 2020, everybody was really up for 2020, really strong, positive feeling across the team. We obviously opened our new office in the north of England, we relocated to, I think better, bigger offices, in central London in SW1 so we started off really strongly.
Now obviously COVID hit us towards the end of March, as I’ve mentioned to you before, I went through an epidemic, pandemic, whatever you want to call it, when I was based out in Asia during the SARS crisis so I’d experienced some of this, but obviously not as extreme as what we’ve gone through now.
We were very proactive, we planned very carefully but very quickly, we made sure all our tech was in place, we made sure that everybody was tooled up to work from home. We got the protocols in place for how our teams would work with each other and essentially, we just bought the whole business together as one group.
So, when we went into lockdown, it was very seamless, we’ve got a very strong digital marketing operation so we’ve been engaging with existing and new clients for a number of years now digitally. That really came into its own, because whereas a lot of our competition were scared to ring clients, we weren’t, we wanted to go out and help them and we were able to do a lot of that digitally, which helped us get a lot of good conversations going, which really helped us trade quite well during the crisis.
I think you probably saw the trading statement that came out a few months ago, we talked very openly about how we weren’t burning cash, we were generating cash and we were EBITDA positive.
Q4: As you mentioned, you’ve opened new offices in the North of England and bigger premises in London, how has everybody settled in there?
A4: Well, we actually reopened both offices, I think it’s about four weeks ago now, and again, just as we went into lockdown quite quickly, we wanted to come out of it quite quickly so we were ahead of the curve there.
We made sure that we were what’s called COVID-secure in both sites so that means that people can feel comfortable about being in the office. Now we’re not forcing the issue and making people come back to work, I think we have to make sure that people feel they can travel safely and securely, they may have their own issues to contend with in terms of family.
So, we’re being very, very careful about how we manage things, some people are coming back into the office as and when, I’m in the office today. I’m talking to you from our office, there’s a few colleagues in here but in the main, we’re being very careful about how we come back.
I think there’ll be a big review in the coming weeks about how we do it, but for us, it’s all about being safe and being secure.
Q5: Now I also hear that you’re looking to do some M&A work, can you tell us more about that, Mike?
A5: We feel in a good position, we’ve got a really strong team in our business, we’ve got people in our business who have got a lot of, I think, potential for the future, particularly around leadership and management and we’ve got a really, really strong leadership team here, the people that sit around me, they’ve got a lot of bandwidth and a lot of experience. We also think we’ve got the platform right in the company, we’ve now got these five different service lines, as I’ve talked about, we’re really on top of values, technology, particularly digital marketing to get our message out so we think now’s the time for us to start to scale up.
We could definitely add other people into the business, we could definitely look at maybe joint ventures, partnerships, M&A work so that we can start to broaden the group out.
So smaller businesses, for example, are having difficulty scaling, they might only do one thing and they might want to be more relevant to their client. Joining forces with us would mean that suddenly they go from having one service line to five. It’s things like that where we can be very additive, very quickly that appeal to us and should appeal to partners.
So, we are actively looking, we’re on the hunt and if we can find something and it makes sense, we’ll make every effort to do it.
Q6: Now, not only are you cash-positive, I understand that you’re now debt-free?
A6: Yes, so we had a loan note, and despite everything that we’ve been going through, we were very determined to make sure that we pay that down. So, we’ve been on a program paying that down, and we made the final payment a couple of weeks ago, which means the company’s completely debt-free now, and long may that last.
Q7: Finally, what else should investors be looking out for over the year from Norman Broadbent?
A7: Well, I’d like to think that we’ll be able to put out another trading update towards the end of July. I think it’s really important that we communicate with our shareholders but I think now more than ever, we need to be communicating with our shareholders as and when we can and when it’s appropriate.
So although we put a trading update out a couple of months ago, I do think at the end of July, if we’re able to, we should and that will give investors a good idea as to how the business has traded in the first half during the pandemic, and maybe shed a bit of light on how we think the rest of the year is going to pan out.
So, there should be something out, I think, in the next four weeks on H1 trading updates.