Redcentric PLC (LON:RCN) has scrapped its dividend after a forensic investigation into its accounts, but said there was no evidence of theft.
The IT firm stunned its supporters in November when it warned of serious problems with its balance sheet.
A review by accountant Deloitte and law firm Nabarro found profits were wrongly calculated for a number of years with revenues being overstated and costs understated in broadly equal proportions.
Profits were inflated by approximately £20.8mln, with £5.9mln of this in the latest half year.
Net debt at 30 September was £34.4 mln, much higher than previously stated.
The dividend has been scrapped because of the debt position but RedCentric said interim revenues would be £53mln and underlying profit £9.1mln, which were indicative of the likely second half performance.
Changes have been made to billing and credit control, while banks have agreed to waive some loan covenants.
Shares fell 11% to 80p.