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Specialist recruitment and technology provider Nakama Group (NAK:LSE) reported on Thursday that revenue in the six months to September increased by +81% to £8.64 million, following the acquisition of Nakama in October last year.
But the firm, previously known as Highams Systems Services Group, reported losses and troubles in its Hong Kong Office where funds were misappropriated and local management tried to cover up poor trading in the area. This affected the company’s overall financial performance.
“It is with considerable regret that I must advise that the board recently uncovered the significant misappropriation of company funds and of misreporting from the Hong Kong office,” said CEO Stefan Ciecierski.
“Its manager has been instantly dismissed and related debtors are being vigorously pursued. We will pursue all avenues to ensure we recoup what can be recovered. It is a real shame to see the group's creditable performance and the hard work put in by all at Nakama tarnished as a consequence of these events.”
As a precaution the company has made an exceptional item provision of £68,000 for potential bad debt and has written off £52,000 of misreported sales. Lost anticipated revenue and profits, combined with increased spending resulting in the Hong Kong office, lead to a loss of £102,000 in the period.
In the six months to September, the company’s gross profit was up +134% to £2.07 million while operating profit declined to £37,000 from £155,000 a year ago. Net profit fell sharply to £11,000 from £152,000 year-on-year.
Shares plunged by -35% to 1.30 pence in early trading this morning, a new 52-week low and down -56.7% from a year ago. The firm has a market value of £2.36 million.