Bytes confirms Murphy's departure came amid undisclosed trading probe

18th Mar 2024 07:22

(Sharecast News) - Bytes Technology Group updated the market on the sudden recent resignation of its former chief executive officer Neil Murphy on Monday, confirming it came following revelations of undisclosed share transactions.

The FTSE 250 company said it launched an investigation after the Financial Conduct Authority (FCA) issued a voluntary request for information to Murphy, indicating potential undisclosed transactions.

Murphy's resignation on 21 February came as a surprise, it said, coinciding with the scheduled meeting to discuss his response to the FCA's inquiry.

Subsequent investigations unveiled undisclosed trading of its ordinary shares by Murphy over 66 trading days between 6 January 2021, and 10 November 2023.

Additionally, Murphy conducted 15 transactions on behalf of his wife during the same period.

That had prompted Bytes to revise its director shareholding information for the 2021 to 2023 financial years, revealing inaccuracies in disclosures despite Murphy's representations.

In response to the FCA's inquiry, the company said it was fully cooperating, having provided a detailed response regarding its processes and procedures.

The incident followed a prior investigation earlier in the 2024 financial year concerning a share purchase by a person closely associated (PCA) to a former non-executive director, leading to revisions in the company's policies and disclosures.

At the same time, Bytes signalled a record financial year ended 29 February, with double-digit growth in gross profit and adjusted operating profit.

The company's cash position stood at £89m, reflecting solid performance amidst macroeconomic uncertainties.

Strong demand for software and IT services from corporate and public sector clients contributed to gross invoiced income growth of over 25%.

Looking ahead, Bytes said it was confident in its ability to sustain double-digit growth, supported by vendor partnerships, customer relationships, and dedicated employees.

An independent committee was appointed to investigate Murphy's resignation and share transactions, with outcomes expected to inform future disclosures and financial reporting.

"Our board, management and staff should be very proud of the performance delivered last year and celebrating a record year for the group," said interim chief executive Sam Mudd.

"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 said it expected to release its preliminary results for the 2024 financial year in late May or early June, pending the completion of the investigation.

Reporting by Josh White for Sharecast.com.