Bytes Technology Group (BTG) reported a strong performance for the year ended 29 February 2004 with a 27% improvement on adjusted headline earnings per share and an increase of more than 37% in its dividend declared of 22c per share.
Chief Executive Officer of BTG, David Redshaw, said: "It should be noted that the increase in net finance costs relating inter alia to the purchase of the remaining 50% shareholding in Bytes Document Solutions (Xerox) was more than offset by the reduced level of profits attributable to outside shareholders. While the return to profitability of our United Kingdom (UK) operations was most welcome, much work remains to be done to raise profitability to acceptable levels.
"Abnormally high revenues from Microsoft licensing in the UK in the prior year coupled with the impact of a much stronger rand resulted in a year-on-year reduction in our group`s revenues of 14%."
He said the group`s operating profit rose by 11% to R185 million (R166 million) and operating profit to revenue margin increased to 7.1% from 5.5% in line with management`s focus on operating efficiencies. Net finance costs rose sharply to R25 million from a negligible amount the previous year due to higher borrowings emanating from acquisitions.
Redshaw said cash generated by operating activities increased to R196 million (R186 million) despite higher tax, dividend and interest payments. "Adjusted headline earnings per share rose by 27% to 67.9c (53.5c). If the effects of goodwill amortisation of R134 million (R84 million) is eliminated, profits attributable to shareholders reduced slightly to R97 million from R111 million the previous year.
"We have achieved significant operational efficiencies across a broad front during the year, with most operations realising rationalisation and synergistic savings. Although the segmental analysis reflects a significant deterioration in the performance from the UK operations due to extremely difficult trading conditions in that region, it is pleasing to note that these operations returned to profitability in the second half, a trend which has been continued subsequent to year-end. We also expect the structural and organisational steps that were undertaken to achieve additional efficiency savings which we anticipate will assist in offsetting the unrelenting pressures on margins in the year ahead," said Redshaw.
He referred to the announcement on 9 March 2004 that the group has, subject to certain conditions, been successful in concluding an equity participation of 27% by the Kagiso group in the South African-based operations. "We are confident that Kagiso`s involvement will contribute meaningfully to the group`s progress during the coming years. BTG is also making progress in terms of its transformation initiatives and we have, in conjunction with Altron, our holding company, set some firm targets and objectives and is fully committed to achieving these over time," he said.
Looking ahead, Redshaw said that given the issues which restricted profit growth during the first half of last year, a fundamental earnings improvement on a comparative basis is foreseen at the interim stage and that this will enable the group to post a satisfactory earnings performance for the full year. Any initial dilution in earnings, resulting from the introduction of Kagiso as the black economic empowerment partner, is expected to be compensated for by the many opportunities which such a partner is expected to help generate.
"We are not considering any material acquisitions, but are focusing on reducing the group`s net interest bearing debt of around R147 million. However, given our strong cash flows, we will examine any suitable opportunities which may be identified," said Redshaw.
Share
Editorial contacts