The governance crisis at computer software company Bytes Technology took another turn today after an investigation accused its long-serving CEO of unauthorised share trading on more than 100 separate occasions.
Neil Murphy, who oversaw the company’s stock market flotation in 2020, abruptly resigned last month after receiving a request for information over his share dealings by the Financial Conduct Authority.
Murphy had told the board he intended to respond to the watchdog’s request before announcing his immediate departure after confessing to 119 unauthorised and undisclosed trades. His lawyers have since identified a further 15 trades conducted by Murphy on behalf of his wife.
Bytes shares fell as much as 14% after markets opened, wiping nearly £200 million from its market cap. They are down about 20% since Muphy’s departure was first announced.
The revelations mark the second investigation in a year by Bytes into share dealing by board members, after a previous probe by the firm found non-exec director Alison Vincent had not properly disclosed details of her share purchases in 2022. Vincent quit the board in October, company filings show.
In a statement Bytes said: “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.
“This revelation came as a shock to the other board members, especially considering the company's previous investigation…which had clearly highlighted to all board members the importance of absolute accuracy and transparency in all matters related to share dealings.”
Bytes also revealed that Murphy had produced error-strewn details of his shareholdings to auditors EY during the company’s last external audit. A reconciliation of shareholdings show Murphy under-represented the size of his holding in the company by more than 250,000 shares.
Bytes said it had hired accountants PwC and law firm Travers Smith to conduct a full investigation into the debacle. The Surrey-based business indicated it would not be able to provide a date for the publication of its preliminary results until the investigation had been concluded, adding that details of the investigation would be passed on to EY as part of its audit process.
Bytes Technology, which was founded in 1982, makes most of its turnover from reselling software and is one of the UK’s biggest resellers of Microsoft’s lucrative Azure cloud services.
60-year-old Murphy joined the company as its sales director in 1997, rapidly rising to become CEO in 2000 and presiding over a period of sustained growth in which revenues more than tripled from around £50 million in 2000 to more than £184 million in 2023, with its headcount swelling to more than 1,000 employees. He previously worked at British software firm ICL, which is now part of Fujitsu.
Bytes today sought to shake-off concerns over the company’s management as it reported double-digit growth in gross profit and said strong demand for software and IT Services from both corporate and public sector clients meant it expected further double digit growth in the year ahead.
Executive director Sam Mudd has replaced Murphy to become Byte’s interim CEO. Mudd today said the firm’s “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."
