Norman Broadbent Q&A: Net fee income outperformed the market (LON:NBB)

Norman Broadbent Group

Norman Broadbent plc (LON:NBB) Chief Executive Officer Mike Brennan caught up with DirectorsTalk for an exclusive interview to discuss interim results, the change in business mix, coping during COVID-19 and the outlook for the company going forward.

Q1: Now, you’ve just published a positive set of interim results against a challenging backdrop, can you just talk us through the highlights?

A1: So, everybody knows what we’ve been going through this year, it’s been a remarkable and very disruptive market but thankfully we’ve traded through quite successfully.

We took some very early actions, we were very decisive very quickly, we obviously run a very agile, very creative business model which I think as neatly dovetail into this very disruptive market.

So, what we’ve seen is, at a very top level, we’ve seen net fee income only impacted by 5.7% when you compare it with this time last year, that compares with market averages that are sat somewhere between 30% and 50% down so we’ve definitely outperformed the market.

Some real highlights in the business, our interim business that deals with very high end consultants; interim CFOs, interim Procurement Directors, that kind of thing, they’re actually up 48% on this time last year and our solutions business, which is part of our search solutions offering, they are plus 22% so remarkable set of results on those levels.

We’ve seen really good cash collection so we’ve got a new CFO, he incredibly started pretty much the week we went into lockdown so he’s had a real baptism of fire but he’s put some great processes in place. Our debtor day used to be 72 days, now we’ve got them at exactly at 48 days and, again, that’s all about the fact that we’re doing some quality business with some high quality clients and they’ll pay on time for a good service.

So, really, all in all, I think we we’ve come out the last six months in good shape, positive EBITDA, some really innovative work we’ve been doing from a clients so really proud of the team.

Q2: How has the business mix changed over this period?

A2: So, when I first came in, we were doing a 79% of our NFI in the executive search business, what we’ve done is we’ve got a brought through these new and interesting service lines to give our clients more choice, in terms of how they work with us and how we can help them.

What’s happened is the search business, we’ve not dumped it down or anything like that, what’s happened is the other businesses have now started to mature so we’ve got a much more balanced business. A big part of the strategy was to bring new, more high value revenue into the business at recurring, contracted revenue like we get from interim, like we get from our leadership consulting business, that’s created much more of a balance now.

So, the search business is below 50% of our revenue and I think you’ll find that the interim and the solutions business accounts for the lion’s share of it now so we’ve managed to get a really nice balance across the business.

What that’s done is that’s made us more resilient so as markets have changed or reacted to COVID and we found certain parts of our business under pressure, other parts of our business have actually flourished. So, one’s managed to offset the other quite neatly so it’s  so very great hedge, very countercyclical.

Q3: It has been a very challenging period for all during this pandemic, how has Norman Broadbent coped during the period?

A3: We’ve got a really strong team and we’ve got a really strong management team, I personally went through the SARS crisis in Hong Kong so I’ve got first-hand experience of a pandemic, admittedly, not on this scale so I had a sense as to what might be coming.

So, we planned ahead quite early, we executed the plan very quickly and we were very decisive. We’ve done a number of things which I think were quite important so our communications across the business has been extremely strong, all the employee engagement surveys that we’ve been doing since the pandemic started have really highlighted how good the comms was.

So, we’ve been very open about our internal performance, we’ve been very open about the targets that we need to achieve as a business on a month by month basis and where we are. We’re very good at sharing and talking about success and recognising success in the business, it’s very difficult to win business in an environment like this so when people are winning great deals, we want to talk about it, we want to recognize them and we want to share and celebrate with them. So, we’ve done a lot of that.

I think, all in all, we’ve managed as a team extremely well, very collegiate, very collaborative, a fantastic amount of cross selling going on in the business, lots of referrals between colleagues, I think 22% of our NFI came out of internal referrals in the first six months, highest it’s ever been which I think, again, says an awful lot about the team.

So, there’s lots of different things to be honest which have helped us keep going. We managed to get people back into the office over the last few weeks, we opened our offices, probably about 10 weeks ago, maybe even more than that so COVID-secure. People felt confident to come back, we just started to get them to come back and they were enjoying being back, working with each other and then obviously we had the announcement that we had the other day from the Prime Minister. So, we’ve just gone straight back to working from home, all very seamless.

I’m in the office today, I’m the only person here just to talk to you but we’ll have a few more people in, we’ve got our main Board meeting here tomorrow so we’ll have a few people in and out. What we’ve said to everybody is it’s your personal choice if you want to come into the office, if you need to be here, come here, it’s safe but if you’d rather be at home.

Q4: Finally, Mike, how do you view the outlook for Norman Broadbent?

A4: I’m really confident and when we went into the pandemic, we were in a good place, we’ve worked really well as a team during the pandemic, as I’ve just outlined, so we’ve got a really strong foundation.

The leadership team that we’ve got here, the people that sit around me, there’s a huge amount of bandwidth there so we’re going to start to really push them to take on more responsibility in the business. We’ve then got some people elsewhere in the business that we’re now developing through, they’re going to start to step up into bigger roles in the business.

We made no secret in our announcement to the market that we intend to get involved in some corporate productivity so we’re making some significant hires so we’re going to announce two managing director level appointments this week, one of which is in life sciences, we’ve struggled there in the past and we now really want to make it work there.

We’ve got some strategic tuck-in’s that we’re looking at as well, team lifts so, we’re not going to overtrade and overexpand too quickly but we are looking at this as an opportunity for us to bring some new people into the business so that we can add to them and they can add to us and get some scale.

The platform’s great, it works, everything is selling well, our clients are working well with us, it’s just a case of bringing some more high quality people into the business to add to what we’ve already got.

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