NAK.L Regulatory News (NAK)

15 August 2016

Nakama Group PLC (AIM: NAK)

 ("Nakama" or "the Group")

"The AIM quoted recruitment consultancy working across the UK, Europe, Asia, USA and Australia providing staff for the Web, Interactive, Digital Media sectors, IT and Business Change"

Preliminary Results

For the year ended 31 March 2016

Highlights

Financial

· Net fee income improved by 8 per cent. to £5.73m (2015: £5.32)

· Net fee income percentage increased to 27.3 per cent. (2015: 24.5 per cent.)

· Group revenue decreased by 3 per cent. to £21.0m (2015: £21.7m)

· Revenue across the APAC region increased by 11% per cent.to £6.92m (2015: £6.25m)

· Revenue across the UK region decreased by 8% per cent. to £14.1m (2015: £15.4m)

Operational

· Rob Sheffield appointed as CEO in August 2015

· Angus Watson appointed as CFO in October 2015

· Global internal learning and development training programme underway running from 2015 - 2017

· Infrastructure and operational changes for website and external marketing

· Structural changes to the UK and Highams businesses as of January 2016

· Launch of the New York office

Rob Sheffield, CEO of Nakama, commented:

"During the last year we have changed the organisational structure of the group, spent more on training staff, invested in high calibre sales consultants to increase revenue going forward and opened an office in New York. Accordingly, 2016 will be a year of transition for the Group, ensuring that we can both consolidate on and leverage off the foundations that have been laid for a successful future for Nakama Group plc. We continue to enhance our brand and benefit from our international footprint".

Enquiries:

NOTES TO EDITORS

About Nakama Group plc:

Nakama Group plc is a recruitment group of two branded solutions placing people into specialist and management positions:

· Nakama operates in the digital, creative, media, marketing and technology sectors all over the world from offices in the UK, Asia, Australia and North America.

· The Highams brand specialises in the Financial Services sector, specifically Business Change and IT in Insurance and Wealth Management currently in the UK and Europe.

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

Since forming in 2011, the Group has opened offices in Singapore and New York for Digital, Creative, Media and Marketing.

Our aim is to offer all our services from both our brands in all our locations.

Chairman's Statement

Introduction

The past year has seen much change with the appointment of a new CEO and CFO. With this, a programme of training and change was accelerated to ensure that the right infrastructure is in place to act as a platform for future growth.

Financial results

Net Fee Income ("NFI") improved pleasingly on the prior year by 8 per cent to £5.7m (2015: £5.32m. Group revenue however for the year ended 31 March 2016 decreased slightly by 3 per cent. to £21.0m (2015: £21.7m). Following the new senior appointments last year, we took the opportunity in October to conduct a review of all our business units across the Group globally, covering operations and the structure and delivery of services. The review examined service lines, staff headcount, regional and global growth and IT and infrastructure resources across the business. The actions we have taken to streamline the service support staff, to increase sales staff in key areas and to improve IT support and systems, should, we believe, enable the business to grow more effectively. The launch of the New York business is a strategic step in keeping with the Group's expansion globally; however it has had a direct impact on the Group's net profit.

Whilst organic growth in the short to medium term will serve the business well, the Board believes that for Nakama to achieve its longer-term objectives, the Group must look to grow by acquisition and look to identify complementary businesses that will add to profit, offer potential economies from the consolidation of shared services and whose combination will enable the enlarged business to accelerate growth and add additional service lines in current and new geographies.

Board changes

As announced in August 2015, Rob Sheffield was appointed CEO of the Group. Rob is an experienced senior executive with a track record in leading, sustaining and growing significant businesses, from both start up to more established enterprises.

Kerri Sayers resigned as COO at the end of February 2016 after 21 years of service. We would like to thank her for her contribution and welcome Angus Watson who was appointed CFO of the Group on 30 October 2015.

Strategy

Nakama Group's strategy has continued to concentrate on providing staffing solutions from two highly specialised businesses and brands: Nakama, within the digital, creative, media, marketing and technology sectors and Highams, within the Financial Services sector. Our approach focuses on delivering a local, regional and global solution, while we look to develop and broaden our service offerings across the Group, with an emphasis on providing digital solutions to our clients across recruitment, outsourcing, on-site and consultancy. The vision and ambition of the Board and management team is to be a leading international specialist within the staffing sector, which delivers a quality service to our customers and candidates, and in so doing, creates a flourishing and sustainable business for the long-term benefit of all stakeholders.

The management team has grown substantially over the past year with promotions of key senior staff in Sydney, Melbourne and Singapore, while in London, Hong Kong and Caterham, we have added to individual management teams with the appointment of external hires. We continue to look to recruit further excellent and driven individuals to meet our client and candidate needs.

The website and marketing functions were all upgraded in the period under review. The upgrade encompassed the Group's internal and external communications functions, along with Nakama's on-line marketing capabilities, so as to generate new and increased traffic to all our offices. The business is now in the final phase of commissioning a new database that will enable staff to deliver a seamless and more efficient service to clients and candidates.

There are currently no plans for adding new offices in the next financial year as the Board intends to grow current operations and enhance profitability.

Executives and Staff

The Group retains a strong team of very knowledgeable and long serving staff and we look forward to continuing to build the Nakama Group. The Board would like to acknowledge the loyalty and commitment of all the staff to the Group and we are extremely grateful for their efforts. Again we extend a very warm welcome to all new members of the team.

Outlook

Trading in the first quarter has been in line with internal expectations and Board targets.

At the time of writing the US election is ongoing and the UK has voted to leave the EU. Both of these factors provide a level of uncertainty in two of Nakama's key trading markets as well as globally, which is unwelcome. Whilst the market sectors in which Nakama operates are in high demand, the business needs stable local economies in its current trading locations, stability in current staff numbers and the continued hiring of new sales staff to deliver against less specialised, but much larger competitors. The Group will look both to address these concerns while viewing 2017 as a year in which Nakama can develop organically whilst keeping acquisitive options open.

Ken Ford

Chairman

Date: 12 August 2016

Consolidated income statement

For the year ended 31 March 2016

Consolidated statement of comprehensive income

For the year ended 31 March 2016

Consolidated statement of changes in equity

As at 31 March 2016

Employee

Consolidated statement of cash flows

For the year ended 31 March 2016

of cash flows comprises:

Basis of Preparation

The financial information set out above does not constitute the company's statutory accounts for 2016 or 2015. Statutory accounts for the years ended 31 March 2016 and 31 March 2015 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for the years ended 31 March 2016 and 31 March 2015 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Statutory accounts for the year ended 31 March 2015 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 March 2016 will be delivered to the Registrar in due course.

The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"), IFRIC interpretations and the parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Financial Statements have been prepared under the historical cost convention.

The preparation of Financial Statements in conformity with IFRS require the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial information, including the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.

Copies of the statutory accounts for the year ended 31 March 2016 will be posted to all shareholders. Additional copies will be available from the Company Secretary, Nakama Group plc, Quadrant House, 33/45 Croydon Road, Caterham, Surrey, CR3 6PB and will be available to download from the investor relations section on the Company's website www.nakamagroupplc.com

The weighted average number of shares excludes 183,953 (2015: 183,953) shares held by the Employee Share Benefit Trust.

2. Operating Segments

Operating segments are reported on a geographical basis. 

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

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

● UK - The UK segment includes candidates placed in the UK and Europe

● USA - This start up includes candidates placed in the USA

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 the same product offerings, 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 accounts policies of the operating segments are the same as those described in the summary of significant accounting policies.

The group evaluates performance on the basis of profit or loss from operations before tax not including overhead costs incurred by the head office such as plc AIM related costs not recharged, exceptional items, amortisation and share based payments.

The board does not review assets and liabilities by segment.

The comparisons for 2015:

The Group makes sales to Europe, Asia, USA and Australasia. An analysis of sales revenue by country is given below: