Norman Broadbent (LSE:NBB) — Interim results for the six months ended 30 June 2026

0:02 Afternoon, and welcome to the NORMAN BROADBENT PLC investor presentation. Situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Kevin Davison, CEO. Good afternoon, sir. Thank you, Lily, and good afternoon, everybody. We're delighted to be presenting NORMAN BROADBENT's financial year twenty six interim results to you today. With you from NORMAN BROADBENT, you have myself, Kevin Davidson. I have been the CEO since September 2021, and my colleague, Mehra Malik, who joined as CFO in early twenty twenty three.

1:02 We've been busy on a number of fronts, and we're delighted to be updating you on our progress in the first half of twenty twenty six. The key headlines from today are, following our record breaking 2025 results, we had a slower start to 2026 in terms of net fee income, but momentum was firmly reestablished in quarter two, and this has been carried forward so far into the second half of the year. As per the plan, we've been investing in growth in our core UK based executive search offering, whilst also building capability and capacity internationally and across broader leadership and consulting services.

1:49 And finally, with the improved momentum and contracted revenues in place, despite continued market challenges, we are confident in a strong second half to the year. So for those of you who are less aware of the brand, NORMAN BROADBENT is the oldest UK headquartered executive search firm with over forty five years of rich heritage. We serve clients globally across over 80 countries to date. And for those who have seen this slide before, you will note that the map is now global. In 2022, we expanded our UK office network from London and Knutsford to also include Edinburgh and Aberdeen.

2:36 And in the last eighteen months, we've also now recruited team members in The Middle East, The US, Australia, and Norway. In recent years, we have focused our efforts back on building the core of executive and nonexecutive search alongside developing our interim management offering. We do also provide broader leadership advisory services, which is an area we are better positioned to build and scale now that the business turnaround is complete. It's also worth noting that we're the only UK listed executive search firm. And for anyone less familiar with the model, unlike general staffing and recruitment businesses, all of our work is at the senior end of organizations.

3:23 Our executive search work, which does represent the bulk of our revenues, is all retained with our fees being paid in three stages. The first, a project instigation, the second, on the delivery of a shortlist, and the third, upon placement. This provides us with some visibility of future revenue streams and ensures our resources are committed to commercial projects. Here is a snapshot of some of the clients we partner with. You will see a lot of recognizable brands, many of which we have preferred supplier status with, and we deliver multiple projects for every year.

4:12 I'm also delighted to share the new vertical of civil society, education, and public sector, which has been established through the acquisition of society earlier in the year. We have also strengthened leadership of the consumer markets team and added two seasoned fee earners to the investor team, which is focused specifically, excuse me, on the private equity sector both in The UK and internationally. In h one twenty twenty six, 71% of our revenue came from clients that we had previously worked with. This is very similar to the start in 2025, and it demonstrates a healthy repeat business platform whilst also underscoring our commitment to new business development.

5:03 I'm now gonna pass over to Maher to run through our h one financial highlights. Thanks, Kevin. We'll take a few minutes to walk you through the key movements in our financial performance for the first half of twenty twenty six. The first half performance should be viewed against an exceptionally strong comparative period. Q four twenty twenty five delivered a record NFI of 3,300,000. That performance benefited from a number of candidate placements completing in December rather than January as originally anticipated. As a result, income was brought forward into the prior year. This timing effect reduced January income relative to the expectations and resulted in q one NFI of 2,200,000.

5:59 It was pleasing to see performance rebound in quarter two with NFI recovering to 3,100,000. The underlying momentum has been rebuilt during the period with retainer income, a lead indicator of NFI, increasing by 28% from q one to q two. This improvement is encouraging and is further supported by a healthy work in progress balance entering half two of twenty twenty six. Underlying EBITDA was a loss of naught 200,000 compared with a profit of naught 800,000 in half one twenty twenty five. This movement reflects the planned investment in headcount during the year, combined with the impact of a slow start to trading and a more challenging macroeconomic environment.

6:51 Our sales and related headcount has increased by nine hires in the period. This includes the colleagues who have joined us through the society acquisition. As we have said previously, our new fee earners join joiners take typically twelve to eighteen months to bed in before reaching the fee earning capacity we would expect at maturity. This means that EBITDA is naturally suppressed as we invest ahead of income growth. We remain disciplined around our cost base, but our planned investment in head count, in addition to the costs associated with the acquisition and the capital reduction, resulted in a loss before tax of nought 500,000. The net debt at the half year was nought 800,000.

7:39 This reflects the lower cash generation from the slower start to the year and the timing of annual bonus payments made during this half, which related to the strong performance delivered in FY twenty five. Importantly, we remain very comfortable with the cash flow profile and expect the cash position to strengthen in the second half as the improved trading converts into cash. The completion of the share capital reduction is a positive milestone for us. It has simplified our capital structure and created distributable reserves. This provides us with the opportunity to consider future cash returns to shareholders while continuing to invest in longer term value creation.

8:28 I will now hand you back to Kevin. Thank you, Meherr. This slide shows our net fee income for the first half over the past five years. As you can see, whilst NFI does vary on a quarterly basis, the directional trend since 2021 has been clearly positive. Following a record year in 2025, we did begin this year with a weaker pipeline, which impacted q one performance. Positive momentum since January enabled us to deliver a stronger q two this year than in any previous year, and this momentum has continued so far into the second half. And let's not forget what a great performance this is by the team during a quarter where the Iran conflict and domestic politics have been ever present challenges.

9:23 This demonstrates how resilient our platform now is. We'll now look in some more detail at the progress we've made in scaling the business. Where we are today. Having completely transformed and modernized the business over the past few years, we have established a much stronger platform on which to scale in the next phase of our journey. We will continue to invest in the core, but this will also include a diversification of service lines, which complement and strengthen our executive search offering as well as internationalization. We're already making good progress on all of these fronts. By more rapidly scaling the company, we will generate enhanced equity value for investors through improved earnings, cash generation, and return on capital.

10:16 Greater scale will also provide greater resilience. There will be increasingly less concentration risk around star performers, significant clients, particular geographies or markets. Our success to date has been through organic growth. Recruitment of high quality fee earners will continue to be the driving force as we scale, building capacity in the areas we have identified as presenting the most opportunities for us. I'd like to now cover some of the initiatives we've been focused on and what we have achieved. Firstly, our track record of successfully growing market verticals speaks for itself and includes civil aviation and aerospace, life sciences and health care, chemicals, private equity, travel and hospitality, board, and our functional practice covering human resources, people, and culture.

11:22 The acquisition of society and our successful UK government framework award also provide a new and exciting vertical for us to grow and invest in. Secondly, in addition to further scaling our executive search and inter management teams, we have begun to develop broader leadership advisory services in a disciplined manner and have recruited a senior individual to lead this. These additional services enable us to become more deeply embedded with our clients and better positioned to commercially leverage already established relationships. For example, we have piloted and are now in the process of launching an onboarding accelerator program, which alongside our psychometric testing tools will be sold with every search.

12:15 We have also successfully sold our first volume leadership assessment program. This is with a global company, which we haven't worked with before, initially supporting them in The Middle East, but with the potential to expand this engagement globally. We will also have the opportunity to now leverage that relationship to secure search mandates with a new client. Thirdly, our growth is also now increasingly international. By strengthening our presence in lucrative overseas markets, we will be able to scale in a more material and balanced way. This includes two new Fiornaire appointments in The Middle East and one in Houston in the first half twenty twenty six. We're also seeking opportunities to more rapidly accelerate organic growth through the potential of recruiting entire teams.

13:08 These are hard to find and to execute but can be more value creative than m and a. Finally, there continues to be a rapid advancement in technology and AI in particular, which we're tracking and assessing. Tools are reaching varying degrees of maturity now where we can see potential opportunity for adoption and tangible benefit to the business, especially when extrapolated over the scale we are targeting. We continue to manage capital in a prudent way to support growth across all of these areas, whilst also continuing to look for more significant strategic investment opportunities such as m and a. We have adopted a disciplined approach to corporate development from identification, engagement, and assessment of potential acquisition targets.

14:09 Whilst we have passed on most of these where we couldn't get comfortable with the risk factors, we were delighted to report earlier in the year our successful acquisition of society. The team are incredibly culturally aligned with ours. They operate in adjacent and complementary sectors, have excellent market credibility and track record, and importantly, there's a considerable opportunity for us to invest and scale through them. We were able to negotiate excellent terms, and the integration has been incredibly smooth. Already, the combination of our scale and their specialism has enabled us to win mandates neither of us would have secured in the past. And there are a great deal more to tackle together, not least the UK government framework award, which we announced last month and which runs for a minimum of three years.

15:12 Underpinning everything is our people and our culture. When I joined five years ago, we were a company in survival mode, and we're now one position for and demonstrating growth. We've expanded the SLT to ex we've expanded the SLT and empowered them to drive growth in their respective markets. We have doubled sales and related staff whilst also fundamentally transforming the business. We promote from within at all levels, and we've developed a structured route from research to fee earning, which ensures greater retention and enhanced organic growth. Driving all of this is our culture. We reset this at the outset, and we continue to invest.

16:00 We were delighted to achieve a three star world class recognition from best companies. This is the highest level of recognition, and very few companies achieve this standard. Finally, the society acquisition, as already covered, has been such a success because of the people in both teams and our completely aligned cultures and values. Finally, I will turn to our outlook. So looking ahead, despite a slower start to the year and continued challenging markets, the wind is in our sails.

16:50 Q two was our best on record in terms of total NFI and retainer income, which is the lead indicator of a growing pipeline. This momentum has continued into q three. And whilst time to placement has with a number of clients stretched, we are confident in delivering a strong second half to the year. As per our stated plan to scale the business, we have made great strides and continue to do so. We're growing quality headcount across multiple markets and service lines, which should drive enhanced shareholder returns. Thank you for your attention, and we're now ready to take any questions. That's great. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you the recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

17:52 We have received number of questions throughout today's presentation. And if I may just start off with the first question here, which reads as follows. Good q two performance. Are you on track for the second half? Yes. We are very confident about a strong performance in the second half. I think we covered that quite well in the presentation. The retainer income has grown, over q two, and we've maintained that momentum into q three. That's the bit that clearly we have the most visibility over. Placements are a little bit less predictable in terms of the timeline to placement, and there have been some more elongated process. It's just with degrees of confidence from some clients, but we have got the momentum. The retainer income levels continue to be strong, and our pipeline's in a very good shape. So q three is is tracking very well.

18:49 That's great. Just turning to the next question here. How exposed are you to The Middle East? The Middle East business has held up really well. I I think that's probably a reflection of the the clients that we work with in The Middle East and their global, their global nature. So we haven't been impacted too dramatically in The Middle East. And, actually, we're quite confident that when things do stabilize in the region, that there's gonna be quite considerable investment, and we're very well positioned to be able to capitalize on that. That's great. Just handing to the next question here. What was the ideal acquisition for NORMAN BROADBENT? We've got some real optionality on this, and I I I think society was a great acquisition for us. Again, as we covered in the presentation, the terms of the deal were very good.

19:42 They were very culturally aligned with us operating in adjacent sectors where we didn't have too much previous exposure. Great opportunity for us to scale in another in another on another platform. So we're gonna continue to look for other tuck in, bolt on type opportunities such as society, but we also look at, you know, more significant opportunities where we can add, you know, more scale in the the medium to short term. But we're really, really focused on growing our equity value over the next two two to three years, and that's our focus. That's great. Just moving on here. What currency do you have to grow in The US?

20:29 So the NORMAN BROADBENT brand historically was known in The US, but the brand itself wouldn't have as much strength as it had maybe a decade or so ago. However, a number of us, have got very, very strong relationships and networks across The US, and a lot of our clients are US clients that we support in The US and internationally. So we've already got the footholds in the market. I think the PLC status does help to some extent, but it's really based on the relationships that the individuals here have already got and the people that we're recruiting. Actually, I mentioned a project that our society colleagues secured recently, which they wouldn't have secured had they not been part of NORMAN BROADBENT, and, equally, we would not have secured had we not made the acquisition in society.

21:26 That was also complemented by the fact that we've got people based in The US. This is a US headquartered international development organization, and it certainly gave them comfort that we had a presence in The US. Thank you. Just turning to the next question. Are you comfortable with working capital management? Sales were down, yet debtors were up. Equally, creditors are significantly significantly down, necessitating the need for an ID line. I'll I'll pass over to Meherr for you know, I am comfortable with working capital management. I think it was fairly well covered in the presentation, but I'll pass to Meherr to make a few more comments on that. Yeah. And I would say we we are comfortable with this. It's a similar position to one that we've been in in previous years.

22:16 Half one is typically gonna be sort of using up more cash than half two because our bonus payments are made in the first half, and that there's no significance of the debt is being up. We we have some big clients in The UAE and Saudi who take sometimes a bit of time to pay us, but but they do always pay us. We don't have any bad debt. And the creditors would would have gone down because we've got we have the significant annual bonuses that went out, at the end of the half. So that's that's fine. Thank you. Do you still have the 14 to £15,000,000 tax losses available? Yep. We do. We had about just over 15,500,000 at the end of the year. That's great. Just turning to the next question.

23:03 Do you need to invest significantly in systems and technology, and how are you positioning the business for AI? We have already invested in heavily in systems and technology and including AI. We've got most of the tools that we utilize have got some AI enablement, such as the behavioral assessment tool, which we utilize, and a number of our market mapping tools. You know, we are very much a consultancy firm, so the kind of existential challenges that AI have had in the broader recruitment sector don't impact executive search to nearly the same extent. There's clearly productivity enhancements that we can have through increased use of AI, and we are exploring tools right now which could offer a more holistic solution. At the moment, it's quite a fragmented toolkit, but there's definitely some other tools there now that are coming to more mature stages than it would have been a couple of years ago that give us the opportunity to consolidate that toolkit.

24:12 That's great. Just moving on. When do we see the EBITDA generation from the headcount investment? Well, when our fee owners join, they they start generating NFI within twelve six to twelve months, really. They can break even at at various points in time, but but typically sort of it's around twelve months. And then once they sort of settled in into the business, we expect them to sort of be doing the fee earning capacity, like I said earlier, at full maturity by about eighteen months. That's great. Are the staff numbers stated averages or period end numbers? How many additional heads do you anticipate adding during h two? So they're period end numbers.

24:59 In terms of additional heads, I probably wouldn't anticipate quite as many in the second half, but, look, we're in the market all the time for good quality talent. If they help drive that value creation over the next two to three years whilst, you know, obviously, within constraints of our working capital, then we will then we will look to hire good quality people. So I wouldn't imagine it's nine, but I wouldn't put a specific number on it. We'll hire talent where we can. Thank you. You discussed your decision to decline a potential acquisition opportunity during h one. What are the key facets that you look for when considering m and a? I think, again, we've touched on that in the in the presentation. I mean, top of the list is cultural alignment with our team. We've invested so much in culture, and I do believe that that is one of our absolute differentiators.

25:55 So if the cultural alignment isn't there, we would we would move on. Sectoral focus. So, you know, if we were acquiring a company that does largely what we do, there's a real challenge in terms of integration and competition over sectors, clients, etcetera. So, again, that's why society was great because they're in the not for profit public sector and higher education where we didn't play at all. But if we did, it was very marginal. So any opportunities where companies operate in adjacent sectors or they can meant the work that we already do in a sector, we would consider, but top of the list is gonna be cultural cultural alignment.

26:45 It's it's it's gonna be top of the list. That's great. And just turning to the next question here. What more can you share about the potential transformational acquisition which you walked away from in h one twenty twenty six, which is mentioned in the interim results announcement? So I think, you know, when we talk about cultural alignment, that opportunity tick the boxes. Strong culture, retained staff well, well respected by clients. It ultimately came down to some of the financial factors there, which, you know, clearly are critical. I think the business was in a position where there was some real vulnerabilities around some key people. I think the structure of the business in terms of the the support infrastructure and the costs that we would have to incur if we went through a corporate acquisition there. Just the the risk factors were just too high for us to proceed with that, but I think it that just underscores the quality of the balance sheet that we look at there. Ultimately, that was a financial decision whilst the cultural alignment was there. And, sexually, they would have augmented our team very well, but the financial risk just didn't stack up for us.

27:59 That's great. And just, the final question we have here reads, how quickly do you feel you'll be able to grow the leadership consultancy business? So that is growing. Now that takes a bit of time, you know, as does the search business, but we have got momentum there now also. So we've what we've been doing is productizing a number of the service offerings, which we did already have. So such as coaching, onboarding coaching particularly, so we can attach that to every search mandate where we can provide consultancy support in the first hundred days of the person starting. We've institutionalized that now and rolled out to the team to sell that with every single search. We'll be doing that from the beginning of q four.

28:46 The beauty of that is that most of the delivery is done by third party associates, so we're not carrying the fixed cost of the individuals that deliver the service. So our investments gone into developing the methodology, the support collateral, etcetera, etcetera, but the execution of it will be done by associates. We have also now won our first programmatic leadership assessment, project with a client, which is actually based in The Middle East, one which I I did mention in the presentation we haven't worked with before. That's fairly modest in scale, but the opportunity now is we build the track record of delivering these, you know, is is enormous. So it will take some time, but we've got some momentum, you know, with us on the leadership consulting space now as well. And I think, we'll continue to see that over, you know, the years to come on a number of fronts from the broader leadership assessment, but also, other consultancy services. So onboarding coaching, but also that can include succession planning, coaching, etcetera, etcetera.

30:00 That's great. Thank you for answering all those questions you have from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which you know is particularly important to the company, Kevin, could I please just ask you for a few closing comments? Yeah. Thanks, Lily, and thank you everyone for your attention again. Probably just summarize with, you know, we're really comfortable with where we are, you know, halfway through the year. We've been focused on strategic headcount growth whilst delivering, you know, our medium term p and l targets. We're really confident with the momentum and the retainer income that we've been able to sustain over what can be tricky summer months. So we're very positive in the outlook for the second half and for the scaling of the business in the years to come.

30:50 Thank you, everyone. That's great. Thank you for updating investors today. If I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.