logo-loader
RNS
Nakama Group PLC

Nakama Group Plc - Unaudited Interim Results

RNS Number : 7408W
Nakama Group Plc
13 December 2019
 

13 December 2019                                                                                                       

                                                                                                                       

 

 

Nakama Group plc

("Nakama" or the "Group")

 

Unaudited Interim Results

 

Nakama Group plc (AIM: NAK), the AIM quoted recruitment consultancy working across UK and Asia, providing recruitment services for the web, interactive, digital media, IT and business change sectors, announces its half year report for the six months ended 30 September 2019.

 

Highlights

 

·  Progress made towards gaining financial stability and winning new business by leveraging client relationships

·     Progress made to making the business more stable, particularly from a personnel perspective

·     Net fee income ("NFI") of £1.5 million (2018: £2.7 million; *Adjusted: £2.2 million)

·     Permanent placement revenues of £1.0 million (2018: £1.7 million; *Adjusted £1.4 million)

·     Contractor revenues were £3.7 million (2018: £6.3 million; *Adjusted £5.6 million)

·     Overall headcount reduced by 30% to 40, reducing the Company's cost base

·     H1 performance was a significant reduction on H1 2018, however a marked improvement on H2 2018

·     Profit before tax of £20,000 (2018: profit of £186,000; *Adjusted £223,000)

·    Challenges ahead due to the Group's tight cash position, caused primarily by debtor collection issues in Hong Kong

·     The Board are considering restructuring options

 

*Adjusted figures exclude discontinued operations of Nakama Melbourne and Nakama Sydney

 

Robert Thesiger, Chief Executive Officer of Nakama Group, commented: "The first half of 2019/20 has seen numerous challenges across the Group. However, I am encouraged with the results and resultant relative stability that the business is now displaying compared to H2 2018."

 

 

Enquiries:

 

Nakama Group plc

www.nakamaglobal.com

Robert Thesiger, Chief Executive Officer

00 44 18 8334 1144

Tim Sheffield, Chairman

00 44 20 7236 2400

 

 

Allenby Capital Limited (Nominated Adviser & Broker)

www.allenbycapital.com

Nick Naylor / Nicholas Chambers

00 44 20 3328 5656

 

About Nakama Group plc:

 

Nakama Group plc (AIM: NAK) is a recruitment consultancy which places people into specialist and management positions in the digital, data, creative, media, marketing and technology disciplines with offices in the UK and Asia. The UK operation also specialises in the insurance and wealth management sectors, specifically in business change and IT, through the brand Highams Recruitment.

 

The Group's speciality is finding excellent career opportunities and assignments for senior digital, IT, business and professional services talent. The team at Nakama seek to develop their relationships and networks to ensure the Group obtains the best available positions for such talent, whilst ensuring that the skills and personalities of its staff are compatible with the need of its clients.

 

Nakama Group plc was created in October 2011 through the acquisition of Nakama Ltd UK and its subsidiaries in Hong Kong, Singapore and Sydney by AIM listed Highams Systems Services Group plc.

 

 

Chief Executive's review

 

The main challenge that the Group inherited from 2018 related to employee engagement and, as a result of several factors, we made some key decisions relating to staff. We have replaced both Managing Directors of our London and Hong Kong offices in the first three months of H1 and furthermore, with the implementation of a robust performance management program, we have seen several staff exit the business due to underperformance. Staff headcount has been somewhat supplemented by the hiring of experienced consultants, particularly in Hong Kong and London and headcount has been further increased with the recruitment of dedicated researchers across the Group. Overall headcount has decreased year on year as we continue to manage the cost base in line with revenues to ensure the business returns to profitability.

 

The business has seen a marked increase in communication across the Group and this has led to leveraging client relationships across our offices. Furthermore, we have introduced a more regional focus in Asia so that our business units can diversify into new locations and better leverage existing client relationships. We have seen success from this, particularly from our Hong Kong office that has generated revenue both within Japan and Singapore. In addition, our Highams business has been leveraging its relationships for our Nakama London business.

 

Our Highams business continues to deliver solid results and it is now key that we grow this business into other of the Group's existing locations, specifically Asia. Our Nakama London office has continued to find trading challenging but with a renewed focus on client delivery we have begun to see more stability in recent months.

 

Overall, the business has seen many challenges in H1 but compared to H2 2018/19, we have gained stability in personnel, greater leverage of our client base and communication between offices and a renewed focus on our core markets.

 

Outlook

 

The UK remains a particularly challenging recruitment environment with the general election, BREXIT and proposed changes to IR35 all combining to produce an uncertain outlook for the Group. The political unrest in Hong Kong remains a concern but, as yet, we have not seen this have a material impact on trading.

 

The Asia region, as a whole, remains highly attractive and future growth of the business will be focussed on developing our Highams brand in to both Hong Kong and Singapore whilst also expanding our Nakama business more regionally. We will continue to manage the business in accordance with driving profitability and shareholder value.

 

Whilst trading in the first half of the current year has been broadly in line with management's expectations for the year to date, the Group's financial stability has come under increasing pressure as a result of several recent cash squeezes. The primary cause of this is as a result of the political and economic unrest in Hong Kong which has led to unscheduled delays in the Group receiving customer payments.  This has had a knock on impact on the Group's cash position.

 

It is the Board's belief that the Group requires an injection of capital in order for it to continue to implement its short-term growth plans. Discussions in recent months with Nakama's major shareholders have led the Board to conclude that an equity fundraise would be difficult to complete. Consequently, the Board are considering a number of restructuring options to improve the Group's cash position.

 

The Board will make further announcements in due course.

 

Robert Thesiger

Chief Executive Officer

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

For the six months to

30 September 2019

 

 

 

6 Months to

 

 

6 Months to

 

 

6 Months to

 

 

 

 

30-Sep-19

 

30-Sep-18

 

30-Sep-18

 

 

 

 

 

 

 

 

*Adjusted

 

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

4,767

 

8,031

 

7,010

 

Cost of sales

 

 

(3,237)

 

(5,366)

 

(4,829)

 

Net Fee Income

 

 

1,530

 

2,665

 

2,181

 

 

 

 

32%

 

33%

 

31%

 

Administrative cost

 

 

(1,503)

 

(2,454)

 

(1,947)

 

Operating profit

 

 

27

 

211

 

234

 

Finance costs

 

 

(7)

 

(25)

 

(11)

 

Profit on ordinary activities before taxation

 

 

20

 

186

 

223

 

Tax expense

 

 

(8)

 

-

 

-

 

Profit for the period attributable to equity shareholders

 

 

12

 

186

 

223

 

 

 

 

 

 

 

 

 

 

 

Profit per share

 

 

 

 

 

 

 

 

 

Basic and diluted profit per share from continuing operations

 

       0.01 p

 

0.16 p

 

     0.19 p

 

                                       

 

 

*Adjusted figures exclude discontinued operations of Nakama Melbourne and Nakama Sydney

 

  

 

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

 

6 Months to

 

 

6 Months to

 

 

6 Months to

For the six months to 30 September 2019

 

 

30-Sep-19

 

30-Sep-18

 

30-Sep-18

 

 

 

 

 

 

 

*Adjusted

 

 

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

Profit for the period

 

 

12

 

162

 

223

Foreign currency translation difference

 

 

(6)

 

24

 

24

Total recognised income and expense for the period attributable to equity shareholders

 

 

6

 

186

 

 

 

 

*Adjusted figures exclude discontinued operations of Nakama Melbourne and Nakama Sydney

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

 

 

 

 

As at 30 September 2019

 

 

 

 

 

 

 

 

 

Share capital

 

Share premium

 

Merger reserve

Employee share benefit reserve

 

 

 

Total equity

Currency reserve

Retained earnings

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

At 1 April 2018

1,602

2,580

90

(61)

(13)

(4,337)

(139)

 

 

 

 

 

 

 

 

Profit for the year

 

 

 

 

 

323

323

Other comprehensive Loss

 

 

 

 

18

 

18

Total Comprehensive loss for the year

 

 

 

 

18

323

341

 

 

 

 

 

 

 

 

At 1 April 2019

1,602

2,580

90

(61)

5

(4,014)

202

 

 

 

 

 

 

 

 

Profit for the six months

 

 

 

 

 

12

12

Other comprehensive Income

 

 

 

 

(6)

 

(6)

Total Comprehensive profit for the 6 months

 

 

 

 

(6)

12

6

At 30 September 2019

1,602

2,580

90

(61)

(1)

(4,002)

208

 

Consolidated balance sheet

 

 

As at 30 September 2019

 

 

 

 

 

 

  30 Sep 2019

  31 Mar 2019

 

 

 

 

£'000

£'000

Assets

 

 

Non-current Assets

 

 

Property, plant and equipment

17

8

Deferred Tax asset

18

18

Total

35

26

 

 

 

Current assets

 

 

Trade and other receivables

1,677

1,599

Cash and cash equivalents

8

166

 

 

 

Total

1,685

1,765

Total assets

1,720

1,791

 

 

 

Liabilities

 

 

Current Liabilities

 

 

Trade and other payables

(991)

(1,151)

Borrowings

(521)

(438)

Total

(1,512)

(1,589)

Net assets

208

202

 

 

 

 

 

 

Equity

 

 

Ordinary shares

1,602

1,602

Share premium

2,580

2,580

Merger reserve

90

90

Employee share benefit trust reserve

(61)

(61)

Currency reserve

12

18

Retained earnings

(4,015)

(4,027)

Total equity

208

202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

to 30 September 2019

 

 

 

 

 

 

    6 months to

30 Sep 2019

    6 months to

30 Sep 2018

 

£'000

£'000

Cash flows from operating activities

 

 

Profit before taxation

20

186

Depreciation of property, plant and equipment

4

18

Net finance costs  

7

25

Tax credit/(paid)                                                                           

(8)

-

(Increase)/Decrease in trade and other receivables

(78)

483

Decrease in trade and other payables

(160)

(154)

Net cash generated by operating activities

(215)

558

Cash flows from investing activities

 

 

Purchase of property plant and equipment

(13)

-

Net cash outflow from investing activities

(13)

-

Financing activities

 

 

Increase/(Decrease) in borrowings

83

(546)

Finance cost paid

(7)

(25)

Net cash outflow from financing activities

76

(571)

Net changes in cash and cash equivalents

(152)

(13)

Cash and cash equivalents, beginning of year

166

141

Effect of foreign exchange rate movements

(6)

55

Cash and cash equivalents at end of period

8

183

 

  

Notes to the Interim Report

 

1. Basis of Preparation

 

This unaudited consolidated interim financial information has been prepared in accordance with Financial Reporting Standard 100 Application of Financial Reporting Requirements ("FRS100") and Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS 101"). It does not constitute the Group's statutory financial statements for those periods. The principal accounting policies used in preparing the interim results are those the Group expects to apply in its financial statements for the year ending 31 March 2020. The comparative financial information for the half year ended 30 September 2018 has not been audited. A copy of the full year audited statutory financial statements for the year ending 31 March 2019 has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2)-498(3) of the Companies Act 2006.


The financial information in the Interim Report is presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.

 

 

2. Earnings per share

 

 

 

 

6 months to 30 Sep 2019 Unaudited

 

 

6 months to 30 Sep 2018 Unaudited

 

 

 

 

 

 

 

Weighted

 

 

Weighted

 

 

 

 

 

 

 

average

 

 

  Average

 

 

 

 

 

 

 

number of

Earnings

 

number of

Earnings

 

 

 

 

 

Profit

shares

per share

  Profit

shares

per share

 

 

 

 

 

£'000

'000

p

£'000

'000

p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share

12

117,791

0.01

186

117,791

0.16

 

 

 

                                           

 

 

 

3. Segmental Analysis

 

The Group has 2 main reportable segments based on the location from which revenue is derived:

 

 

 

 

Asia Pacific - This segment includes Hong Kong, Singapore and Australia.

 

 

 

 

 

UK - The segment includes candidates placed in the UK.

 

 

 

 

 

 

These segments are monitored by the board of directors.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Factors that management used to identify the Group's reportable segments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group's reportable segments are strategic business units that, although supplying very similar service offering, operate in distinct markets and are therefore managed on a day to day basis by separate teams.

 

 

 

 

 

 

 

 

 

 

 

Measurement of operating segment profit or loss, assets and liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group evaluates performance on the basis of profit or loss from operations before tax, head office costs and amortisation.

 

 

                     

   The Board does not review assets and liabilities by segment.

 

 

 

 

Asia Pacific

UK

Total

 

30 Sep 2019

30 Sep 2019

30 Sep 2019

 

£'000

£'000

£'000

 

 

 

 

 Revenue from external customers

884

3,883

4,767

 

Segment profit/(loss) before tax

(3)

15

12

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

UK

Total

 

30 Sept 18

30 Sept 18

30 Sept 18

 

£'000

£'000

£'000

 

 

 

 

 Revenue from external customers

2,239

5,792

8,031

 

Segment profit before tax

190

37

227

 

 

                  

 

Asia Pacific

UK

Total

 

30 Sept 18

30 Sept 18

30 Sept 18

 

*Adjusted

£'000

*Adjusted £'000

*Adjusted £'000

 

 

 

 

 Revenue from external customers

1,227

5,792

7,019

 

Segment profit before tax

229

37

266

 

                              

*Adjusted figures exclude discontinued operations of Nakama Melbourne and Nakama Sydney             


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
IR CKBDPABDDABD
NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of...

FOR OUR FULL DISCLAIMER CLICK HERE

9 min read