(Alliance News) - Nakama Group PLC on Tuesday said it is considering options to improve its cash position as revenue took a hit from coronavirus in the final quarter of its current financial year.
The stock was down 47% in London at 0.45 pence a share in early trade.
The recruitment consultancy company said trading for the year to the end of March has been broadly in line with management's expectations, but during the final quarter it had encountered a number of challenges.
Nakama said coronavirus hurt its revenue in both Hong Kong and Singapore, as local firms are choosing to delay the start dates of new hires until the full impact of the virus has been determined.
Despite this challenge, the Asia region as a whole remains highly attractive, Nakama said, and it expects that the future growth of the business will be focussed on developing its reach there.
Turning to the UK, Nakama said the region remains "challenging" following the changes to IR35, as some clients are potentially looking to move payrolled contractors directly on to their payrolls, thus reducing Nakama's monthly revenue stream.
IR35 allows UK tax collector HMRC to demand additional tax and National Insurance contributions where it determines a contractor is effectively an employee.
Nakama said its cash position remains "severely constrained" and it faces a short-term cash challenge until the full impact of the recent cost reductions has come through. Therefore, the company said it is considering some alternative sources of funding to improve its cash position, but it still urgently requires an injection of capital.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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