The board of software firm Bytes Technology Group has appointed an independent committee to investigate secret trades of former boss Neil Murphy, sending shares down as much as 14 per cent.
Last month, the long-standing chief executive announced he was stepping down after it emerged that he made several trades in the company’s shares without disclosing them.
In an update to markets on Monday, Bytes revealed details on Murphy’s dodgy dealings. A total of 119 unauthorised transactions took place on 66 trading days between January 2021 and November 2023.
The board said it is “saddened as well as shocked by Mr Murphy’s actions, which it finds hard to comprehend. His actions were entirely at odds with the values of openness, honesty, and transparency which have been and which remain central to the Group’s culture and to its ongoing success.”
Murphy’s resignation was prompted by a voluntary request for information from the Financial Conduct Authority (FCA) on 14 February 2024, which suggested the chief executive may have conducted undisclosed transactions since the company went public in December 2020.
Despite planning to share his draft response to the FCA at a board meeting the following week, Murphy unexpectedly resigned on the morning of the meeting.
A further investigation revealed 15 additional transactions on 10 different trading days conducted by Murphy on behalf of his wife, between December 2021 and November 2023.
The FTSE 250 firm also reported on Monday that both its gross profit and adjusted operating profit for the full financial year 2024 should surpass 12 per cent, with gross invoiced income growth of over 25 per cent.
Bytes said this is thanks to the “very strong demand” for software and IT Services from both corporate and public sector clients. At the end of the year, it has around £89m in cash.
Peel Hunt analysts said this suggests Bytes “delivered efficient operational execution”, rating the company a ‘buy’.
But the strong results failed to please the market and shares in the company tumbled over 14 per cent on Monday morning.
The stock is down nearly 15 per cent since the start of the year, mainly due to the shock resignation of Murphy, which sent shares down 18 per cent.
Commenting on the results, interim chief Sam Mudd said: “Our Board, management and staff should be very proud of the performance delivered last year and celebrating a record year for the Group.
“We remain committed to our successful strategy of delivering great customer service to our existing customers, acquiring new customers and increasing our share of their IT expenditure.
“This strategy is underpinned by our strong vendor relationships and the commercial skills of our people and means we are well-placed to capture the significant growth opportunities ahead of us.”
Bytes has held its outlook for future years.