Bytes Technology Group (BTG) announced an increase of 48% in headline earnings per share to 37c for the six months to 31 August 2004. This was achieved on the back of an improvement in operating income by 26% from R77 million to R97 million, coupled with a reduction of 27% in finance costs to R8 million from R11 million.
Chief Executive, David Redshaw, said: "Two major factors which materially affected the period under review were the effect of the acquisition last year of the remaining 50% shareholding in our Xerox operation as well as a turnaround in the results of the United Kingdom businesses."
He said the group`s cash generation continued to be positive with net interest bearing debt reducing to a negligible level by the end of the period and he expects that the group`s net cash holding will be positive by year-end, provided the effects of acquisitions and directly related structural changes are excluded.
"The improvement in our group`s South African revenues of 8% is very satisfactory in the light of the slow recovery in the IT market and the relatively strong rand which continued to depress revenue levels during the period under review," said Redshaw.
A slower than anticipated recovery in the performance of Plato in the United Kingdom led to the board adopting a prudent approach by effecting a R100 million goodwill impairment, thus reducing the group`s aggregate remaining goodwill to R265 million, of which R94 million relates to Plato. "However, the performance of our UK operations, including Plato, had shown an improvement over the same period last year," he said.
With reference to BTG`s recent announcement regarding its intention to acquire the entire issued share capital in CS Holdings, Redshaw said: "The transaction is subject to the approval of the competition authorities and final acceptance of the offer by CS Holdings shareholders, but it is hoped that the transaction will be completed by the end of October. We are confident this acquisition will be beneficial not only to BTG shareholders and customers but also for all of CS Holdings` stakeholders."
Redshaw said the recent publication of CS Holdings` results for the year to June 2004 reflected a number of extraordinary and once off charges necessitated by certain events which have plagued that company in the recent past. Nevertheless he is satisfied that the business of CS Holdings is sustainable under normal operating conditions and he anticipates that the acquisition will, in due course, generate benefits for BTG.
"We have formed strong relationships with our black empowerment partner, Kagiso, whose contributions are already at a meaningful level," said Redshaw.
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