The founders of Wandisco experienced a decline in their paper wealth amounting to over £50 million after the company’s shares resumed trading following a four-month suspension. The suspension was due to the discovery of significant irregularities and potential fraud in the company’s revenue and sales bookings for the previous year. Wandisco issued a warning that its revenue for 2022 could be as low as £7 million, significantly lower than the previously estimated £19 million.
Shares plummeted by 96.3%, or 1261p, to 49p when trading resumed on AIM. This decline in share value resulted in a significant decrease in the wealth of Wandisco’s founders, David Richards and Yeturu Aahlad. Richards saw the value of his stake drop from £24 million to £901,600, while Aahlad witnessed his paper wealth plunge from £32.6 million to £1.22 million.
Although the founders resigned on April 3, Wandisco maintained that their departure was unrelated to the ongoing independent investigation conducted by advisory firm FRP, which uncovered millions of pounds worth of false revenue and sales bookings for 2022. The investigation also revealed that a senior employee was responsible for these errors.
Furthermore, it was discovered that Wandisco’s actual revenue for the previous year was £7.4 million, far below the previously reported £18 million. Bookings also decreased from the previously declared £97 million to £8.7 million. In response to these revelations, the company announced plans to reduce its global workforce by approximately 30%.
In other market news, London’s FTSE 100 index experienced its sixth consecutive session of gains, with a 0.17% increase, and the FTSE 250 grew by 0.03%. US corporate giants, such as BlackRock and Goldman Sachs, expressed optimism regarding UK stocks, stating that British equities were attractive and certain sectors, including banking and energy, could rebound if global market sentiment improves.
Croda International maintained its forecasts despite a decline in sales and profit in the first half of 2023. The company’s sales fell by 21.9% to £880.9 million, while profit plunged by 79.8% to £128.7 million. However, Croda still expects profit for the year to range between £370 million and £400 million.
Mining companies rallied on the hope that China would introduce a stimulus package to support its economy. Antofagasta saw a 6.6% increase in shares, Anglo American gained 4.8%, Rio Tinto rose by 4.2%, and Glencore edged up by 0.7%.
On the other hand, Auto Trader shares experienced a decline of 2.3% after JP Morgan lowered its rating and target price for the online car dealer’s stock. Reach, the owner of Daily Mirror, saw its shares surge by 19% as it remained on track to achieve cost-cutting goals and meet profit forecasts, despite a decrease in profits and digital sales.
Compass Group reported a 15% increase in revenues in the three months ending in June, supporting its target of an 18% overall revenue increase by September. However, shares fell by 5.2%. Private equity group Bridgepoint also experienced a decline in shares after a significant decrease in investment income in the first half of the year.
Finally, AMTE Power, a Scottish battery cell maker, witnessed a substantial increase in shares by 213% as progress was made in securing necessary funds to sustain the business.
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