Unaudited Interim Results

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."

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

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

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

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

3. Segmental Analysis

The Board does not review assets and liabilities by segment.

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