JSE-listed IT company Bytes Technology Group delivered solid results for the year ended 28 February. This is despite costs related to the disposal of a loss-producing UK subsidiary and once-off tax costs.
In a statement to shareholders yesterday afternoon, the Bytes management team declared its satisfaction with the combined performance of its operations.
The full year saw the group deliver revenue of just over R4 billion, up 18% on last year's R3.4 billion. Operating profit grew 16%, to R325 million off R281 million year-on-year.
However, net profit declined 15%, to R153 million from R181 million in 2006. This was in part due to the South African Revenue Service (SARS) disallowing certain interest deductions claimed by an unnamed financial institution from a structured finance transaction secured in 1998. Full and final settlement of tax consequences of R18 million has been agreed.
The company raised a deferred tax asset of R3 million, representing the capital gains tax impact of the SARS decision, as well as a R16 million deferred tax asset on the assessable loss and deductible temporary differences in an acquired group company.
Bytes' income statement also holds the net tangible asset value of UK subsidiary Plato. Following a decision in the second half of the fiscal year to dispose of this business, a carrying value of the net tangible assets held-for-sale has been impaired by R6 million.
As a result, basic earnings per share decreased 19%, to 85.9c from 105.7c year-on-year. However, the company says its solid performance in adjusted headline earnings per share increasing by 18%, from 109.4c to 129.6c, provides a more accurate measure of its sustainable earnings.
Despite once-off troubles and tight market conditions, Bytes CEO David Redshaw says he is bullish on the company's outlook.
"Last year was yet again characterised by increased levels of competition and margin pressures, exacerbated in the case of several of the group's operations by a worsened exchange rate. Nevertheless, we continue to maintain a high level of confidence that opportunities to sustain growth will continue in the IT market," he says.
The company declared a dividend of 56c - up 26% on 45c in 2006 - to be paid on 21 May. Bytes' share price rose 2.6% yesterday, to close at R14.99.
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