Shares in software firm Bytes Technology Group, which has its Northern HQ in Manchester’s City Tower, slumped 14 per cent this morning on the news that an independent committee is to investigate the secret trading of former CEO Neil Murphy.
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 today, Bytes revealed further details on the circumstances of Murphy’s departure – a total of 119 unauthorised transactions took place on 66 trading days between January 2021 and November 2023. 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 update read:
“Mr Murphy’s resignation was prompted by a voluntary request for information (“RFI”) from the Financial Conduct Authority (“FCA”), which was sent to Mr Murphy on 14 February 2024,” the update began. “The RFI indicated that Mr Murphy may have conducted additional transactions that were not disclosed to the market or the FCA since the Company’s IPO. Mr Murphy informed the Board that he would share his draft response to the FCA’s inquiries at a scheduled Board meeting on 21 February 2024. However, on the morning of this meeting, Mr Murphy unexpectedly resigned with immediate effect, indicating that he had failed to make disclosures related to his share dealings, and this was announced by the Company on the same day.
“As subsequently notified to the Company and announced on 23 February 2024, it transpired that Mr Murphy had engaged in unauthorized and undisclosed trading of the Company’s Ordinary Shares on 66 trading days between 6 January 2021 to 10 November 2023, totalling 119 transactions. This revelation came as a shock to the other Board members, especially considering the Company’s previous investigation during 2023 into an unrelated share dealing disclosure matter (as further described below) which had clearly highlighted to all Board members the importance of absolute accuracy and transparency in all matters related to share dealings by directors, PDMRs, and persons closely associated with them (“PCAs”).
Subsequently, on 12 March 2024, Mr. Murphy’s lawyers provided the Company with additional information outlining 15 additional transactions on 10 different trading days conducted by Mr Murphy on behalf of his wife, between 29 December 2021 and 20 November 2023. The Company disclosed this information to the London Stock Exchange (LSE) and Johannesburg Stock Exchange (JSE) on 13 March 2024. Additionally, on 12 March 2024, Mr. Murphy, through his legal representatives, reiterated that there were no further relevant transactions.”
The board added that it is “saddened as well as shocked” by Murphy’s actions given his “longstanding leadership position in the Company.”
Separately, the board issued a scheduled trading update for the year ended 29 February 2024, which was a record year for the group with double-digit growth of around 12% in both gross profit and adjusted operating profit.
The company’s cash position stood at £89m, and “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.
“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.”
