The board of software company Bytes Technology Group has appointed an independent committee to investigate secret dealings by former chief Neil Murphy, sending shares down as much as 14 percent.
Last month, the longtime CEO announced he would step down after it emerged he had made several trades in the company’s stock without disclosing them.
In an update to the markets on Monday, Bytes disclosed details of Murphy’s questionable dealings. A total of 119 unauthorized transactions took place in 66 trading days between January 2021 and November 2023.
The board said it is “saddened and shocked by Murphy’s actions, which it finds difficult to understand. His actions were completely at odds with the values of openness, honesty and transparency that have been and remain central to the Group’s culture and to its continued success.”
Murphy’s resignation was prompted by a voluntary request for information from the Financial Conduct Authority (FCA) on 14 February 2024, which suggested that the chief executive may have carried out secret transactions since the company went public in December 2020.
Despite planning to share his proposed 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 carried out by Murphy on behalf of his wife, between December 2021 and November 2023.
The FTSE 250 company also reported on Monday that both its gross profit and adjusted operating profit for the full 2024 financial year would exceed 12 percent, with growth of more than 25 percent of billings.
Bytes said this is thanks to the “very strong demand” for software and IT services from both business and public sector customers. At the end of the year it has around £89m in cash.
Peel Hunt analysts said this suggests Bytes “delivered effective operational execution” and rated the company a “buy”.
But the strong result failed to please the market and shares in the company fell over 14 percent on Monday morning.
The stock has fallen nearly 15 percent since the turn of the year, mainly due to Murphy’s shock departure, which sent shares down 18 percent.
Commenting on the results, interim chief executive Sam Mudd said: “Our board, management and staff should be very proud of the performance delivered last year and celebrate 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 growing our share of their IT spend.
“This strategy is supported by our strong supplier relationships and the commercial expertise of our people and means we are well placed to capture the significant growth opportunities that lie ahead.”
Bytes has maintained its outlook for the coming years.
