Bytes Technology Group (BTG) shrugged off the continued slack demand for IT products and services to achieve a 14.2% increase in headline earnings per share for the year to 28 February.
Executive chairman David Redshaw says BTG grew its market share and achieved greater efficiencies and cost reductions, allowing it to increase revenue by 29.6% to R3.04 billion and the operating margin from 5% to 5.5%.
"Our growth in revenue is somewhat inflated due to the conversion to rand from sterling revenues at a higher average rate compared with the previous year," Redshaw says.
"The accelerated spend by major corporates in the UK following changes in licensing policy imposed by Microsoft also played a role. Consequently, we expect revenue to grow at a slower rate in the year ahead."
Pre-tax profit increased from R59.72 million to R106.24 million, although attributable income slipped from R43.18 million to R26.55 million.
Headline earnings increased to 72.42c from 63.39c previously.
Redshaw says the achievement of financial targets was especially gratifying in light of the unexpected strengthening of the rand during the second half of the year.
"It is pleasing to report that, for the first time since the formation of BTG from the IT activities of Fintech and Usko, all business segments were profitable and all reported increased operating profits over the previous year."
The greatest improvements were achieved by Document Managed Services and Enterprise Solutions (UK) with increases of 40% and 70% respectively.
<B>Salient figures</B>
Bytes Technology Group results for the year to 28 February 2003.
Previous year`s figures in parentheses, move in square brackets:
Revenue: R3.04b (R2.34b) [+29.6%]
Operating profit: R166.2m (R109.89m) [+51.2%]
Profit before tax: R106.24m (R59.72m) [+77.9%]
Attributable earnings: R26.55m (R43.18m) [-38.5%]
EPS: 17.51c (28.64c) [-38.9%]
HEPS: 72.42c (63.39c) [+14.2%]
Cash generated by operations: R252.12m (R156.33m)
Cash generated by operating activities: R185.52m (R80.47m)
Current assets: R882.3m (R902.5m)
Bank and cash: R260.25m (R221.73m)
Current liabilities: R618.61m (R668.48m)
NAV per share: 346.87c (329.59c)
However, the rand`s strength, combined with a depressed IT services market in the UK, means that UK-based Plato Computer Services, bought in November for lb22.5 million, is expected to deliver low returns in the short-term.
"We expect the rand/sterling exchange rate to continue to have a negative impact on our reported earnings from offshore and on some of our local operations, particularly during the first half of the current financial year," Redshaw says.
"However, we anticipate a good performance from our South African operations. The ongoing rationalisation in our industry ensures that the group will not lack potentially profitable expansion opportunities."
He says no further offshore acquisitions are planned in the foreseeable future.
The group`s share, which closed 10c up at 450c on the JSE yesterday, was unchanged by mid-morning today.
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