Norman Broadbent Analyst Q&A: ‘its trajectory towards enhanced profitability’

Nick Spoliar, Research Analyst at WH Ireland caught up with DirectorsTalk to answer a few questions on Norman Broadbent’s interim results.

Q. Nick, you published a note on Norman Broadbent plc (LON:NBB) covering the company interim results, can you give us a quick summary of the results?

A. As the company announced back at the end of July, they made a small EBITDA profit in the half year – however the upside surprise is the extent to which they succeeded in limiting NFI declines. Hence, against an unprecedented backdrop, and with sales not surprisingly down by 15%, NFI declines were held at less than 6%. Net debt was the best part of £1m lower YoY. Most important, the “new” businesses, ie those introduced by Mike Brennan following his appointment as CEO, have continued to grow strongly, with Solutions NFI up 22% and Interim NFI up no less than 48%, reflecting the transformation of the business mix as Executive Search becomes a smaller part of the whole, and topical and resilient activities take centre stage. 

Q. How do you see the outlook for the company?

A. I’m encouraged by the prospect that the company will continue its trajectory towards enhanced profitability and I note that in addition to the upturn generated by the company’s proactive actions (business mix change, costs out), they are also speaking of new growth initiatives (which could include M&A and strategic partnerships). This suggests to me that the team, which now includes the more recent recruit to the senior team, new Finance Director and COO Steve Smith, are continuing to look at new ways of moving the company forward.

Q. How do you see Norman Broadbent in terms of fair value?

A. In the absence of formal forecasts in the market, we have not published a fair value number. However it seems clear that the company’s transformation is generating decent upside prospects as against a share price which has shown little movement over an extended period even while the positive trajectory has been becoming increasingly evidential.

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