Bytes Technology Group (BTG) grew headline earnings per share (including the raising of deferred tax assets) by 48% to 127.7c from 86.4c for the year ended 28 February 2006. Adjusted headline earnings per share, excluding the raising of deferred tax assets, increased by 27% to 109.4c. A dividend of 45c per ordinary share was declared which represents an increase of 40% over that of the previous year.
BTG`s cash generation significantly improved during the second half of the year and returned to a net funds position of over R77 million by year-end, compared to R62 million the prior year, notwithstanding expenditure on acquisitions of around R150 million, an increased dividend payment of R55 million (R34 million) and additional working capital requirements occasioned by an increase in revenue of over R500 million.
Chief Executive Officer, David Redshaw, said revenues grew by 19% on the back of a fully consolidated set of results from Digital Healthcare Solutions which were equity accounted in the prior year. The inclusion of the operations acquired from CS Holdings (CSH) for a full 12 months as well as the group`s organic growth of 10% further enhanced revenues. "The organic growth reflects a significant real increase in business volumes in a market where decreasing selling prices are the norm," said Redshaw.
Operating income rose by 28% to R282 million from R221 million the prior year with the operating margin improving to 8.1% from 7.6%. Net financing costs remained static at R15 million notwithstanding the cash outflows referred to earlier. Headline earnings increased by 55% to R209 million from R135 million. However, when the effect of raising deferred tax assets are excluded, adjusted headline earnings - a far more representative figure of sustainable earnings - rose by 33% to R179 million from R135 million the prior year.
Redshaw said BTG`s United Kingdom operations have substantially recovered during the year under review with operating profits increasing to R18 million compared with a break-even position in the previous year.
"Our South African operations had a satisfactory year with operating income increasing by 16% to R256 million from R221 million the year before. Systems Integration, Managed Services, Specialised Solutions and Digital Healthcare Solutions performed particularly well and increased their market share. Bytes Document Solutions, our Xerox operation, has maintained its profit levels in a competitive market with an increase of over 25% in unit sales. This bodes well for future annuity income in the form of consumables and maintenance revenues.
"Although lower prices due to technology changes and exchange rates continue to impact our Xerox operations` top line revenues, this nevertheless increased by approximately 10%," said Redshaw.
He said BTG`s strategy remains one of considered growth both organically and by acquisition and that the group is well positioned to take advantage of the opportunities, both in terms of the consolidation in the South African IT industry as well as further expansion abroad.
"We intend to expand our international operations over the next few years in a careful and progressive manner and to this end we have finalised the purchase of a Xerox trading partner to the south of London post year-end and are actively involved in discussions with further similar businesses in the United Kingdom. It is our intention, in close co-operation with Xerox United Kingdom, to become their largest partner in that territory," said Redshaw.
With regards to BTG`s progress in terms of black economic empowerment, Redshaw said the group, which has Kagiso as a 27% partner in BTG South Africa, has made considerable strides in transformation during the year under review and follows a board approved and monitored transformation policy.
"We have to date adopted three schools in underprivileged communities and have developed and equipped multimedia centres that directly affect the lives of over 5 000 black students. We are pleased to report that the Financial Mail, in conjunction with Empowerdex, has rated BTG as 10th overall of the Top 200 JSE listed companies and fourth in the ICT sector, in terms of overall BBBEE and transformation," he said.
Looking ahead, Redshaw said he expects BTG to show continued profit growth. "Our mission remains to balance long-term growth ambitions with ongoing return to shareholders, fully justifying their confidence in the group," said Redshaw.
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