Bytes Technology Group this morning briefed the market on its full-year trading performance and investigation into a share-trades storm that saw long-standing CEO Neil Murphy resign.
Here IT Channel Oxygen rounds up the key talking points
1. Double-digit results rise
Bytes stressed that it is continuing to see “very strong demand” for software and IT services from both corporate and public sector clients as it issued a trading update for its year to 29 February 2024.
Gross profit and adjusted operating profit – Bytes’ two key metrics – are both set to grow by over 12%.
The LSE-listed Microsoft partner’s ultimate top line – gross invoiced income – will be up by over 25%, meanwhile (which would put it somewhere in the region of £1.8bn). That represents a deceleration in the 38% GII growth it logged in its bumper first half.
2. But shares down…
Former talisman Murphy resigned abruptly on 21 February after admitting he had made a number of undisclosed share trades.
Bytes’ share price fell by a more than a further 10% this morning as it issued a separate update on its investigation into the saga.
3. Murphy’s resignation ‘unexpected’
Bytes admitted it was caught cold by Murphy’s resignation on 21 February.
According to the statement, Murphy was on that day expected to share his draft response to a voluntary RFI from the Financial Conduct Authority sent a week earlier. The RFI indicated that Murphy may have conducted additional transactions that were not disclosed to the market or the FCA since the Bytes’ IPO in December 2020.
Instead, Murphy resigned as he indicated he had failed to make disclosures related to his share dealings.
In an update on 23 February, Bytes said that Murphy made 119 “unauthorised and undisclosed” share trades between 6 January 2021 and 10 November 2023.
But according to today’s statement, Murphy’s lawyers last week outlined 15 additional transactions conducted by Murphy on behalf of his wife since its IPO.
“Given Mr Murphy’s longstanding leadership position in the Company, the Board of Directors 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,” Bytes stated.
4. Two investigations in quick succession
Paradoxically, Murphy’s resignation comes hot on the heels of a previous investigation into an unrelated share dealing disclosure matter. That investigation was only completed in October.
This 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”),” Bytes said.
Although the recommendations from that investigation have since been implemented, Bytes has appointed another independent committee of the board to probe the latest episode.
“Once the committee has completed its investigation and reported to the Board, the Company will be able to provide a date for the release of its preliminary results for FY24. It is currently envisaged that this will be in late May or early June 2024,” Bytes stated.
5. Interim CEO eyes “significant growth”
Turning back to the trading update, Sam Mudd – the former Phoenix Software MD who has stepped up to the role of Interim CEO, gave an upbeat assessment of the market.
“Our Board, management and staff should be very proud of the performance delivered last year and celebrating a record year for the Group,” she stated.
“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.”
