Scandal-hit tech champion Wandisco to lay off staff

WANDISCO is to lay off a third of its staff as the Financial Conduct Authority continues an investigation into alleged fraud at the British tech champion.

The company announced yesterday that 30pc of employees will leave as part of a fresh cost-cutting drive.

Ken Lever, the former Biffa boss who is now Wandisco’s executive chairman, said: “Regrettably, the proposed action is a necessary step to responsibly position Wandisco for long-term growth.”

The data replication company suspended its shares from trading on the Aim junior market in March after revealing a suspected $15m (£12.6m) accounting fraud.

An internal investigation found that $15m of revenues and $115m of sales the company had reported were completely invented. Wandisco blamed the “potentially fraudulent irregularities” on “one senior sales employee”.

Forensic accountants from FRP Advisory are now combing through the Sheffield-based company’s books, while the FCA opened an investigation into Wandisco in April. Immediately before the share suspension, Wandisco founder and chief executive David Richards suggested he was pursuing a dual UK-US listing for the £880m company. Megabuyte analyst Tom Kennedy speculated in a client note that the headcount cuts could give the company a lifeline “until early 2024”, highlighting “its long history of heavy cash burn”.

“As we’ve previously noted, there are few, if any, capital-raising routes left for Wandisco,” he added. “Shares are still suspended and investors will feel burned anyway.”

The company had $19m (£15.1m) in the bank at the end of last year. It introduced a four-day working week in February 2022.

Analyst firm Edison withdrew its coverage of Wandisco when the suspected fraud was first revealed, saying at the time: “Due to the nature of the ongoing investigations, we have not been able to speak to the company.”

Prior to uncovering the accounting irregularities, Wandisco was worth almost £1bn. In January, the company said revenues had grown 230pc to $24m in 2022. Yesterday, it warned that the true figure could be as low as $9m.