TIDMNAK
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 GBP1.5 million (2018: GBP2.7 million; *Adjusted: GBP2.2 million)
-- Permanent placement revenues of GBP1.0 million (2018: GBP1.7
million; *Adjusted GBP1.4 million)
-- Contractor revenues were GBP3.7 million (2018: GBP6.3 million; *Adjusted GBP5.6 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 GBP20,000 (2018: profit of GBP186,000; *Adjusted GBP223,000)
-- 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 6 Months 6 Months
to to to
30-Sep-19 30-Sep-18 30-Sep-18
*Adjusted
GBP'000 GBP'000 GBP'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 6 Months 6 Months
to to to
For the six months to 30 September 30-Sep-19 30-Sep-18 30-Sep-18
2019
*Adjusted
GBP'000 GBP'000 GBP'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 6 186 247
----------- ----------- -----------
*Adjusted figures exclude discontinued operations of Nakama
Melbourne and Nakama Sydney
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
As at 30 September 2019
Employee Currency Retained
share reserve earnings
Share Share Merger benefit Total
capital premium reserve reserve equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
31 Mar
30 Sep 2019 2019
GBP'000 GBP'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 6 months
to to
30 Sep 2019 30 Sep 2018
GBP'000 GBP'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
(GBP'000) except when otherwise indicated.
2. Earnings per share
6 months 6 months
to 30 Sep to 30
2019 Sep 2018
Unaudited Unaudited
Weighted Weighted
average Average
number
number of Earnings of Earnings
Profit shares per share Profit shares per share
GBP'000 '000 p GBP'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
GBP'000 GBP'000 GBP'000
Revenue from external customers 884 3,883 4,767
------------- ------------
Segment profit/(loss) before tax (3) 15 12
------------- ------------ ------------
Asia Pacific UK Total
30 Sept 30 Sept 18
18 30 Sept 18
GBP'000 GBP'000 GBP'000
Revenue from external customers 2,239 5,792 8,031
------------- ------------
Segment profit before tax 190 37 227
------------- ------------ ------------
Asia Pacific UK Total
30 Sept 30 Sept 18
18 30 Sept 18
*Adjusted *Adjusted *Adjusted
GBP'000 GBP'000 GBP'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
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END
IR CKBDPABDDABD
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