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UK – Nakama reports disappointing first full year results

02 August 2013

Specialist recruitment service provider Nakama Group (NAK: LON) reported disappointing full year results ending 31 March 2013. Nakama Group PLC was created in October 2011 through the merging of Nakama Ltd UK; its subsidiaries in Hong Kong, Sydney, and Melbourne, and Highams Recruitment Ltd. As a result, this report comprises the first full years’ financial results.

Ken Ford, Chairman of Nakama Group, commented: “Our strategy is to build from a strong base in the UK and expand both in our specialist areas internationally and into targeted developing markets. London is a global leader in many of our chosen market sectors and provides a strong hub from which to develop an international client base. Digital media recruitment both into agencies and into corporate marketing departments continues to grow and Highams' traditional business providing technology, business and professional services to the insurance and financial services sector remains firm and increasingly digital."

Nakama provides staff for the Web, Interactive, IT, and Digital Media sectors through the placement of contract and permanent staff across the UK, Europe, Asia, and Australia. Group revenue for the full year across all regions was £16.7 million, with gross profit of £3.98 million, and an operating loss of £174,000. Operating profit before amortisation, tax, and exceptional items was £9,000. 

Revenue for the UK and Europe was £12.86 million; £11.68 million from the UK, representing the Group’s biggest business segment, and £1.19 million from European operations. The UK and European segments reported increased permanent and contract job opportunities, however found it challenging to source good quality candidates. The uncertain job market and economic climate resulted in more people opting to remain in their current job.

Revenue in Australia comprised the biggest business segment in Asia-Pacific with £3.1 million. Revenue for Hong Kong was £462,000, and the newly opening Singapore office reported revenue of £228,000.  Disappointing financial results across Asia-Pacific mainly reflects misconduct issues in the Hong Kong office. The Board was alerted in 2012 that a significant misappropriation of company funds and misreporting had occurred to cover poor trading. The restructuring of the Australia offices also impacted on the financial results.

Looking forward, trading in the first quarter since the year-end has been in line with company expectations. The Group continues to focus on ensuring continuity of performance in each office location with the UK continuing to deliver consistently and Asia-Pacific benefiting from increased staff levels and improving performance on revenues and results. The Board looks to the 2013/14 year as one, in which, it will work to increase turnover and results from the strengthened infrastructure and new offices now in place. 

Following the release of their first full year results, the company’s share price rose +11.11% to 1.25 pence, a drop of -37.5% compared with a year ago. Based on its current share price, the company has a market value of £1.47 million. 

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