Strong results place Bytes in good position for future growth

Bytes Technology Group, a wholly owned subsidiary and this year's star performer in the Altron Group, reported outstanding results for the year ended 29 February 2012. This was predominantly on the back of what CEO, Rob Abraham, calls a strong and growing IT market in South Africa.

“It was segments in the local market, such as banking and retail, that especially contributed to excellent performances by Bytes Managed Solutions and Bytes Systems Integration. Their contributions, together with the growth delivered by the rest of the group companies, resulted in a significant increase in our EBITDA and enabled us to grow local revenues by some 9%,” he said.

He further indicated that, despite somewhat negative economic conditions in Britain, Bytes UK, together with the rest of the Bytes companies, also managed to replace some R600 million of revenue following the culmination of the NHS contract in the previous year.

“This highly commendable performance by the majority of our operations resulted in us growing our EBITDA impressively by 11% to R527 million while improving EBITDA margins from 7.8% to 8.7% in the face of flat revenues. I am also proud of our headline earnings performance, which was up by 22% to R253 million, making Bytes the best performer in the Altron Group.”

In reviewing the different businesses in Bytes, Abraham said that, apart from Bytes Document Solutions (BDS) where LaserCom and Nor Paper recorded disappointing performances, the rest of the operations all exceeded expectations.

“We are not worried about BDS as a profit contributor over the long term following some corrective actions in the form of management changes and restructuring of some of the divisions within that business,” he commented.

Abraham highlighted two of the star performers, Bytes Managed Solutions and Bytes Systems Integration. Bytes Managed Solutions, run by Deidre Le Hanie, operates in the retail and financial services markets and has been extremely successful in the last few years in both these sectors. This year, its EBITDA increased by an impressive 18%.

Rob Griggs and his team at Bytes Systems Integration (Bytes SI) also produced record results - especially in terms of the African and Middle Eastern businesses, which, after two years of investment, are now delivering good returns. Together with a good performance by its local businesses, Bytes SI increased revenues by 19% and EBITDA by 27%.

“Of course, Bytes Connect, headed by Andrew Holden, this year substantially improved its EBITDA margins, realising the benefits of the rationalisation of three operations into one. Similarly, highly satisfactory performances were delivered by Bytes People Solutions and Bytes Healthcare Solutions.”

According to Abraham, the significantly higher returns during the past 12 months can also be attributed to strong cost control and an improved performance across the entire portfolio of businesses, which would not have been possible without a strong management team and motivated workforce.

Abraham bases Bytes' success on three things, namely its strong federated business model; its highly competent management team and skilled workforce, and its exclusive distributorships of the world's leading brands.

“It's a strategy that simply cannot fail while we have the market, the people and the best-of-breed technologies to offer to our client base. Along with our good service and consistent delivery on the targets set by our international partners, the group simply has to prosper,” says Abraham.

“I am confident that Bytes is in a good position to build on the momentum we created over the last two years as the largest South African owned IT group. To further support our key growth strategy, we are considering some selected acquisition opportunities, which will complement our current offerings.

“In this regard, I believe the new government sales team that we have put together, alongside the recent acquisition of Unisys Africa, which is an active participant in the public sector, will contribute to us enlarging our service portfolio to this segment of the IT market. We believe the public sector offers huge potential growth as it is currently the biggest local investor in terms of IT expenditure,” he said.

For more information or to arrange an interview, contact:

Marius Venter
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(083) 75 00 444

Success in the IT industry requires a dynamic business model, says Rob Abraham, CEO of Bytes.

“Information technology, like everything else today, has been commoditised and this requires us, as one of the leading players in this field and the biggest locally owned IT group, to consistently find and develop new products and services that will add value to our clients and that will command higher returns.” This is the view of Rob Abraham, CEO of the Bytes Group, which is wholly owned by Altron and which was the star contributor to Altron's year-end results, announced recently.

Abraham believes the local IT market is by no means in a negative phase and said it was segments such as banking and retail that especially contributed to the excellent performances by several of the Bytes companies. For instance, the contribution by Bytes Managed Solutions and Bytes Systems Integration, together with the growth delivered by the rest of the group companies, resulted in a significant increase in EBITDA and enabled Bytes to grow local revenues by some 9%.

He says that although the local market remains extremely competitive with the really big contracts being highly contested where “the winner takes all”, Bytes' good track record, depth of experience and price competitiveness enables it to retain a leading position. He also sees growth potential in gaining more business from the public sector as one of the biggest spenders on IT in the country, expanding selectively into Africa and ensuring that the group remains a key player in new and developing technology, including cloud-based offerings.

In reviewing the sectors in which the group operates, Abraham also commented on the health industry. He welcomes the government's national healthcare initiative as the only solution for the nation's health challenges, although he is not sure that the funding required for such a venture could be raised. He sees Bytes Healthcare Solutions, which is continuing to invest in the development of exciting new offerings, continuing to play an important role in this industry in the future.

Abraham noted that Bytes is already active and highly successful in large parts of the African continent, the Middle East and the UK, and will continue to consider acquisitions in all areas as and when they prove to add value to the group.

“In this regard, I believe the new government sales team we have put together, alongside the recent acquisition of Unisys Africa, which is an active participant in the public sector, will contribute to us enlarging our service portfolio to the public sector segment of the IT market. We believe the public sector offers huge potential growth as it is currently the biggest local investor in terms of IT expenditure,” he said.

In discussing his business approach, Abraham said that Bytes' strategy is industry leadership. “We believe in a federation where our go-to-market strategy is to take the best solution possible to our customer base through independent, specialised business units. All these units are tasked with industry leadership, namely to be either number one or number two in the sector in which they are operating. And the plan is working, as we are indeed leaders in all our markets,” says Abraham.