Nakama publishes interim results
Chairman Ken Ford said the following:
"The interim results for the half-year to 30 September 2013, show a stable revenue stream for the Group as a whole and a small increase in Net Fee Income (NFI) for the period along with a small loss.
"We continue to work hard on hiring new staff into the teams in all offices and at all levels, on the back of the increased level of requirements from our existing and new clients since the beginning of our financial year. Competition remains challenging, both on hiring new staff internally and for clients alike and candidates are still reluctant to change roles in the current market.
"We report steady revenue of £8.63m (2012: £8.64m) and a 3 per cent increase in Net fee income (NFI) to £2.13m (2012: £2.08m). The NFI percentage improved on prior periods to average 25% compared to 24% at the year end and previous interims, which is as a result of increased permanent placement fees overall.
"As shown in the segmental analysis in note 3, we have increased our revenue in the APAC region by 38%, although UK revenues have decreased as a result of there being fewer contractors on site compared to the first half of last year. Permanent revenue has however pleasingly increased, which has led to the increased NFI overall. Staff levels in APAC also rose as per our expectations and whilst the UK staff levels have not increased overall, we have hired new team members during the period.
"Along with our international competitors the strengthening of the pound, particularly over the last quarter has impacted the results in APAC mainly from the Australian dollar exposure, and an exchange loss of £47k, which is included in administrative expenses and relates to intercompany debt currency translation, which is a non cash item.
"We are currently in line with our expectations for the first half of the year and anticipate an improved second half. The Munich office, which was small and unprofitable, was closed during the period.
"The first half of this trading year in APAC has been positive. We have continued to focus on our core objectives, namely business development across the corporate and agency sector encompassing a local, regional and global strategy. We aim to concentrate our efforts on expanding new and existing client relationships, cross-selling services globally, the continued hiring of staff in key locations, the training and development of existing staff and increasing the volume of business and conversion rates across the business.
"Mobile and advertising revenue has continued to grow alongside visual and social media. We see social conversion becoming more integrated and more multi-channel, which pushes the demand for skills in this area. The need for skill sets in and around "big data" is also a driver for increased demand across the region.
"The market remains competitive with managed service providers and internal recruiters continuing to provide competition across the general recruitment market. Hiring issues do exist across APAC, but these are not to do with mobility of talent, but rather with local regions continuing to increase restrictions on external hires. These restrictions make it difficult to fill highly skilled roles where no local talent possess the skill set and we see this situation as a continued challenge to growth across the recruitment sector in APAC. However, with our global network of talent expanding and with our continued drive to specialise and increase headcount across the region, we are well positioned to continue to grow revenue and NFI and build market share across the region.
"The first half of this year has seen growth in terms of internal head count in the London office and NFI. Nakama London has also has seen a significant uplift in temporary, freelance and contract requirements issued by clients and we have become increasingly efficient at converting these requirements, resulting in a positive impact on billings.
"We have launched a new Marketing Interim Division in London, which has contributed to revenues in this period. This division is primarily focused on building new commercial relationships with blue-chip consumer brands within their digital and technology teams, by providing high-value senior marketeers, who are required to deliver an immediate impact to these organisations.
"Permanent revenues in all markets have shown some improvement and this is most notable within the Performance Marketing, Data and Mobile and E-commerce sectors. We face competition from rival firms in these areas, but with our established brand and a track record of delivery, we will continue to profitably leverage off our brand and competitive advantage.
"Highams continues to specialise within the Insurance and Financial Services verticals to provide our clients with the best available talent for complex Business & IT Change and Transformation programmes.
"Our contractor services have seen a competitive first half of the year, during which we have worked hard and successfully to develop new accounts and to develop contract placement opportunities, so as to grow our contractor numbers, which declined following the end of client programmes last year.
"Our strategy is paying off with new client wins in the Wealth Management, London Market Insurance and the Life & Pensions sectors. These in turn are generating contract opportunities and a demand for high level strategic skills, in addition to the PMO, Business / Systems Analysts, and Test Analysts, for which we are known.
"While trading conditions in the UK remain challenging, we have pleasingly made some important strategic hires and increased our ability to deliver within a broader set of digital markets. We expect to continue to build on these foundations across the board and grow net fee income over forthcoming trading periods.
"Furthermore, we have seen client growth across the APAC regions, with increased demand in the media and technology spaces, e-commerce, SEM/SEO throughout the region. Pleasingly the digital market continues to grow, as clients all look to expand their internal capabilities.
"We are therefore optimistic for the second half and look forward to meeting head on, what is still a challenging marketplace, but one on which we feel we are strategically well-placed to capitalise.