Nakama : Annual Report 2020 15/12/20

NAKAMA GROUPPLC

ANNUAL REPORT & FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

ANNUAL REPORT & FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

NET FEE INCOME £'000

5,311

4,134

2,914

2018 2019 2020

REVENUE £'000

16,792

13,408

9, 719

Financial Overview

Group revenue decreased by 27.5 per cent. to £9.7m (2019: £13.4m)‌

Net fee income reduced by 29.5 per cent. to £2.9m (2019: £4.1m)‌

Net fee income percentage decreased to 30.0 per cent. (2019: 30.8 per cent.)

Operating profit moved to a loss of £182,000 (2019: profit £91,000)‌

	2020	2019
	£'000	£'000
Revenue	9,719	13,408
NFI (Net fee income)	2,914	4,134
EBITDA	(92)‌‌	424
Operating (loss)/profit for the financial year	(182)‌‌	91
Profit from discontinued operations	-	266
(Loss)/profit for the financial year before tax	(114)‌‌	354
Net current assets	56	176
Equity	87	202
(Loss)/earnings pershare	(0.10)p	0.27p

* EBITDA - Earnings before interest, tax, depreciation and amortization

2018 2019 2020

CONTENTS





Group at a glance

Our markets

Nakama Group plc is a recruitment group of two branded solutions placing people into specialist and management positions; the Nakama businesses operate in the digital, creative, media, marketing and technology sectors from offices in the UK and Asia. The UK also specialises in the Financial Services sector, specifically Business Change and IT in Insurance and Investment Management, through the Highams brand. We offer services in recruitment - permanent & contract/ freelance, search and project management.

Our consultants, contractors and applicants

Our speciality is finding excellent career opportunities and assignments for senior digital, IT, business and professional services

talent. We are constantly developing our relationships and networks to ensure we obtain the best available positions for such talent, whilst ensuring that their skills and personalities are compatible with the needs of our clients. Ultimately, it's people who transform, improve & grow business.

Our people

At Nakama, we work hard to develop and maintain long-term

relationships with our clients, contractors and applicants. To do this, we focus on the development and retention of our experienced staff to ensure they are among the most knowledgeable in the industry, both in terms of recruitment best practice and the niche markets in which Nakama operates.

We believe in specialisation, technology, network - all with the right people.

Visit us online for further information at

www.nakamagroupplc.com

OVERVIEW

Group at a glance	1
Chairman's statement	2
CEO's report	3
Directors	4
Directors and advisers	5

STRATEGIC REVIEW

Strategic report	6
Key risks of the Group	7

GOVERNANCE

Report of the Directors	9
Statement of Directors' responsibilities	10
Section 172 statement	11
Corporate governance	12
Directors' remuneration report	14
Independent auditor's report	15

FINANCIALS

Consolidated income statement	18
Consolidated statement of comprehensive income	18
Consolidated statement of financial position	19
Consolidated statement of changes in equity	20
Consolidated statement of cash flows	21
Notes to the financial statements	23
Company statement of financial position	41
Company statement of changes in equity	42
Notes to the Company financial statements	43

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WWW.NAKAMAGROUPPLC.COM

STOCK CODE: NAK | NAKAMA GROUP PLC

Chairman's Statement

Strategy

Nakama Group's strategy is to support the talent acquisition programmes of high growth companies across multiple industries. We provide permanent and contract recruitment solutions to a broad range of clients across Europe and Asia Pacific geographies.

The primary objective of the executive management team is to focus on delivering acceptable returns for shareholders and take advantage of the opportunities in the sectors in which we operate.

2020 has been another challenging period for the Group: the onset of COVID 19 has had an immediate impact on the group and has seen trading decline accordingly. As a business we took immediate and decisive action which saw us take advantage of the various government support schemes. We immediately implemented a working from home strategy and reduced our cost base in line with our reduced levels of trading.

In the UK the proposed changes to IR35 (since revised) also had a big impact on our contractor business and the deferral of these changes came too late. As a result, our UK contractor business declined during the year.

Financial

Due to the Covid-19 pandemic the Group's revenues for the year ended 31 March 2020 were lower by 27.6% compared to the prior year at £9.7m (2019: £13.4m) and Net Fee Income ("NFI") was 29.3% lower at £2.9m (2019: £4.1m). This reduction in revenue was primarily a result of poor overall consultant performance. We are disappointed not to increase revenues and saw a reduction in EBITDA to negative £76,000 (2019: £424,000).

Outlook and summary

2020 has been an incredibly challenging year, however, I am very proud of the way we have met these challenges and continued to trade. We have recently announced a sale of our trading businesses to Sanderson Group as it has become increasingly clear that without an injection of capital the Group may not be able to continue to trade. Further details of the proposed disposal are set out in a circular sent to shareholders on 10 December 2020. Should the proposed disposal, which is subject to shareholder approval, proceed the Company will become an AIM Rule 15 cash shell. As such, the Company , will either be required to make an acquisition or acquisitions constituting a reverse takeover under AIM Rule 14 on or before the date falling six months from the date of becoming a cash shell or be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least

£6 million) failing which, the Company's shares would then be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading on AIM would be cancelled six months from the date of any suspension should the suspension not have been lifted beforehand.

This has been a difficult journey for the Company and our teams across the Group have worked hard in trying to reposition the business onto a more positive footing. I would like to thank our valued members of staff for their hard work during a prolonged challenging period.

Tim Sheffield

Chairman

11 December 2020

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NAKAMA GROUP PLC | STOCK CODE: NAK

ANNUAL REPORT & FINANCIAL STATEMENTS 2020