Nakama Group PLC (LON:NAK) have seen their shares crash on Tuesday as revenues took a bruising from the ongoing coronavirus epidemic.
There is no doubt that the coronavirus now has become a global crisis, and millions of Chinese stocks, businesses and indexes have been wiped off following the spread.
Global Governments are now taking a heavy approach to stop any risk of spread or contamination, however it seems that the disease has already hit the UK with a numerous number of cases being reported.
Nakama, who hold operations in Hong Kong, London, Singapore and have other operations in Asia have seen their revenues bashed following the coronavirus outbreak.
Nakama shares crashed 23.53% on Tuesday afternoon and trade at 0.65p. 11/2/20 12:58BST.
The recruitment firm said that trading to the end of March has met expectations, however the final quarter presented challenges.
Nakama said that revenue was bruised by the outbreak of coronavirus in both Hong Kong and Singapore, as local businesses look to delay new hiring until the virus assessment has been fully completed.
“The impact of Coronavirus on revenues for both Hong Kong and Singapore have been immediately felt. As a result of the curbs on movement of people imposed by regional governments, firms are currently choosing to delay, in some cases indefinitely, the start dates of new hires until the full impact of the virus has been determined, directly impacting revenue recognition for the Group. Furthermore, recruitment activity generally has been immediately impacted by the effects of Coronavirus. Despite this immediate challenge, the Asia region, as a whole, remains highly attractive and it is expected that the future growth of the business will be focussed on developing the Group’s reach in region.”
In the UK, Nakama said that the region remains “challenging” following the changes to IR35, which has reduced Nakama’s monthly revenue figures.
The firm concluded by saying:
“At the start of the calendar year the decision was made to relocate the Nakama UK office to Caterham, where the Highams business is based. Management are pleased with the positive response this has received from employees to date. Furthermore, as a result of the implementation of the new robust performance management programme, the Managing Director of the Singapore office exited the business and has been replaced internally.
While headcount in the Group has decreased year on year, the Board believes that these reductions are necessary in order to bring the cost base in line with revenues to ensure the business continues to be profitable going forward.
The Group’s cash position remains severely constrained and the Company faces a short-term cash challenge until the full impact of the recent cost reductions has come through. The Board are considering several alternative sources of funding to improve the Group’s cash position, but the Group still urgently requires an injection of capital.”