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.