The Times: “work cut out to survive long-term.”12 Sep 2023 06:10
Losses have widened and revenue has slumped at WANdisco as the crisis-hit software company continues to count the cost of an alleged sales fraud.
Turnover tumbled to $3 million in the six months to the end of June, from $5.8 million a year ago, while bookings — the total value of contracts signed — fell to $2.8 million, from $7.3 million. Pre-tax, half-year losses rose from $7 million a year ago to $22.5 million.
WANdisco, which from next month will be known as Cirata, said its customers had paused “commercial activities with the company due to the uncertainty surrounding the business”.
Shares in the data software specialist were suspended in March after it said it had discovered a sales and accounting scam. An investigation by FRP Advisory, the consultancy, concluded that about $15 million of recorded revenue and $115 million of sales bookings linked with a senior employee had been illegitimate.
As of the end of June, the group’s net assets were worthless, the company said, but it completed an emergency $30 million fundraising on July 4 and now has enough cash to keep trading for at least 12 months. It returned to Aim, London’s junior stock market, in July.
Stephen Kelly, 61, the chief executive who was drafted in to turn around the company, said: “Sadly, very little from the past deserves preservation, except for the excellence of the technology, strong engineering, marquee customers and loyal committed colleagues. Nearly every other aspect of our business is in the process of necessary radical change.”
He said WANdisco had conducted a “root and branch” review of “everything we need to do to create a world-class growth company worthy of its investors, customers and colleagues”. It has cut more than 40 per cent of its staff, to 112, and is prepared to “further significantly reduce the cost base during the coming year” if necessary.
The business suffered $6.9million in exceptional costs related to the scandal, including emergency fundraising, legal advice and public relations fees.
Full-year bookings are expected to be between $7.1 million and $8.8 million, down from $11.4 million last year.
Tom Kennedy, a senior analyst at Megabuyte, said that bosses clearly had “been working hard to steady the ship and have made reasonable progress on several key areas, including the Hail Mary fundraise.
“However, despite these efforts, we reiterate that, given remaining cash reserves, continued cash burn and limited scope to reduce costs further, WANdisco has its work cut out to survive long-term.”
Shares in WANdisco fell a further 51⁄4p, or 7.9 per cent, to 61p yesterday.
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