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Bytes Technology Group plc
(Incorporated in England and Wales)
(Registered number: 12935776)
LEI: 213800LA4DZLFBAC9O33
Share code: BYI
ISIN: GB00BMH18Q19
("BTG”, or “the Group”)
25 October 2023
Results for the six months ended 31 August 2023 and declaration of cash dividend
Strong first half extending our track record of double-digit growth
BTG (LSE: BYIT, JSE: BYI), one of the UK and Ireland’s leading software, security, AI, and cloud services
specialists, today announces its half year results for the 6 months ended 31 August 2023 (‘H1 FY24’).
Neil Murphy, Chief Executive Officer, said:
“I am delighted that we have delivered another strong financial performance over the first half of the year. Our
success in the period was driven by the combination of our skilled workforce and strong vendor relationships,
which have once again enabled us to support our customers and grow our business. We are pleased that our
customer and staff satisfaction levels continue to be amongst the best in our industry.
“While the economic backdrop remains mixed, we have continued to see strong demand from our corporate and
public sector customers for security, cloud adoption, digital transformation, hybrid datacentres and remote
working solutions. This has allowed us to invest in our business, growing our headcount to more than 1,000 for
the first time while equipping our people with the skills to advise customers on the latest software, services, and
hardware offerings.
“A shift to Artificial Intelligence (AI) products will be one of the defining trends in the IT Services sector in the
coming years, and we are well-placed to capitalise on that opportunity. We stand to benefit from our long-
standing relationship with Microsoft, whose Copilot product we are already trialling and will be available more
widely in the near future. We are also looking forward to working with our other vendor partners that are
developing AI software tools.
“Looking ahead, we have made a good start to the second half of the year and are well-placed for the remainder
of the financial year.”
Financial performance
£’million H1 FY24 (six H1 FY23 (six % change
months ended 31 months ended 31 year-on-year
August 2023) August 2022)
Gross invoiced income (‘GII’)1 £1,081.6m £786.2m 37.6%
Revenue2 £108.7m £93.5m 16.3%
Gross profit (‘GP’) £75.3m £65.5m 15.0%
Gross margin % (GP/Revenue) 69.3% 70.1%
GP/GII % 7.0% 8.3%
Operating profit £30.6m £27.3m 12.1%
Adjusted operating profit (‘AOP’)3 £33.9m £29.8m 13.8%
AOP/GP % 45.0% 45.5%
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Cash £51.7m £35.8m 44.4%
Cash conversion4 48.7% (2.8)%
Cash conversion (rolling 12 months)4 107.2% 65.3%
Earnings per share (pence) 10.60 9.06 17.0%
Headline earnings per share (pence 10.60 9.06 17.0%
Adjusted earnings per share5 (pence) 11.71 10.11 15.8%
Interim dividend per share (pence) 2.7 2.4 12.5%
Financial highlights
International Financial Reporting Standard measures (IFRS):
- Revenue increased 16.3% to £108.7 million (H1 FY23: £93.5 million).
- GP growth of 15.0% to £75.3 million (H1 FY23: £65.5 million) was driven by higher GII and increased GP per
customer of £16,300 (H1 FY23: £14,800).
- Gross margin was broadly stable at 69.3% (H1 FY23: 70.1%).
- Operating profit increased by 12.1% to £30.6 million (H1 FY23: £27.3 million).
Alternative performance measures (non-IFRS):
- GII increased by 37.6% to £1,081.6 million (H1 FY23: £786.2 million), exceeding £1 billion in H1 for the first
time. The exceptional level of growth was underpinned by some large, strategically important, contract wins in
the public sector (most notably with the NHS and HMRC) and by continued demand from corporate customers.
- The reduction in GP/GII% to 7.0% (H1 FY23: 8.3%) reflects the impact of these large contracts transacting at
a reduced margin in the initial year of the agreements.
- AOP increased by 13.8% to £33.9 million (H1 FY23: £29.8 million); AOP as a percentage of GP has remained
in line with the previous year at 45.0% as we continue to invest in the business.
- Adjusted earnings per share increased 15.8% to 11.71 pence (H1 FY23: 10.11 pence).
- Half year cash conversion of 48.7% (H1 FY23: (2.8%)) is in line with our expectations, reflecting the seasonal
timing of cash flows and weighting to the second half of the financial year. Our rolling cash conversion for the
year ended 31 August 2023 stood at 107.2%, meeting our sustainable annual target of 100%.
Interim dividend
- Interim dividend of 2.7 pence per share, a 12.5% increase on last year’s interim dividend (H1 FY23: 2.4p).
Operational highlights
- Strong levels of demand for security, cloud adoption, digital transformation, hybrid datacentres and remote
working solutions have underpinned the Group’s continued growth in H1 FY24.
- 98% of GP came from customers that traded with BTG last year (H1 FY23: 97%), at a renewal rate of 113%.
- Increased headcount by 10% since the FY23 year end to service high levels of customer demand, with over
1,000 staff at the half year.
- The Group enrolled in Microsoft’s early access programme for Copilot, an AI assistant feature for Microsoft
365 applications, to improve productivity internally and in preparation to support our customers.
- Both Bytes Software Services and Phoenix Software named among the UK’s Best Workplaces in Tech in Great
Place to Work’s Large and Super Large Category.
- Phoenix Software named Microsoft’s Global Modern Endpoint Management Partner of the Year 2023.
- In April 2023, the Group acquired a 25.1% interest in Amazon Web Services (AWS) partner, Cloud Bridge
Technologies, to bolster our multi-cloud strategy in the years to come.
Interim dividend
As stated above, the Group’s dividend policy is to distribute 40% of post-tax pre-exceptional earnings to
shareholders. Accordingly, the Board is pleased to declare a gross interim dividend of 2.7 pence per share. The
aggregate amount of the interim dividend expected to be paid out of retained earnings at 31 August 2023, but
not recognised as a liability at the end of the half year, is £6.5 million.
The salient dates applicable to the dividend are as follows:
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Dividend announcement date Wednesday, 25 October 2023
Currency conversion determined and announced together with the Monday, 13 November 2023
South African (SA) tax treatment on SENS by 11.00
Last day to trade cum dividend (SA register) Tuesday, 14 November 2023
Commence trading ex-dividend (SA register) Wednesday, 15 November 2023
Last day to trade cum dividend (UK register) Wednesday, 15 November 2023
Commence trading ex-dividend (UK register) Thursday, 16 November 2023
Record date Friday, 17 November 2023
Payment date Friday, 1 December 2023
Additional information required by the Johannesburg Stock Exchange:
The GBP:ZAR currency conversion will be determined and published on SENS on Monday, 13 November 2023
1. A dividend withholding tax of 20% will be applicable to all shareholders on the South African register unless
a shareholder qualifies for exemption not to pay such dividend withholding tax.
2. The dividend payment will be made from a foreign source (UK).
3. At 25 October 2023, being the declaration announcement date of the dividend, the Company had a total of
239,482,333 shares in issue (with no treasury shares).
4. No transfers of shareholdings to and from South Africa will be permitted between Tuesday, 14 November
2023 and Friday, 17 November 2023 (both dates inclusive). No dematerialisation or rematerialisation
orders will be permitted between Wednesday, 15 November 2023 and Friday, 17 November 2023 (both
dates inclusive).
Current trading and outlook
We reported another strong performance in H1 FY24, extending our track record of delivering robust double-
digit growth across our key financial metrics.
The business has started the second half of the year well, continuing the momentum delivered in H1 FY24.
Whilst we remain mindful of the challenging macroeconomic environment and geopolitical uncertainty in Ukraine
and the Middle East, we are confident in our ability to capitalise on the growth opportunities we see ahead. The
Group’s proven strategy of acquiring new customers and then growing our share of wallet, building on our strong
vendor relationships and the technical and commercial skills of our people, ensures we are well placed to
continue our progress over the remainder of FY24.
Analyst and investor presentation
A presentation for analysts and investors will be held today via webcast at 9:30am (BST). Please find below
access details for the webcast:
Webcast link:
https://stream.brrmedia.co.uk/broadcast/651d406c8fb8fe0aea8cc7f6
A recording of the webcast will be available after the event at www.bytesplc.com.
The announcement and presentation will be available at www.bytesplc.com from 7.00am and 9.00am (BST),
respectively.
Enquiries
Bytes Technology Group plc Tel: +44 (0)1372 418 500
Neil Murphy, Chief Executive Officer
Andrew Holden, Chief Financial Officer
Headland Consultancy Ltd Tel: +44 (0)20 3805 4822
Stephen Malthouse
Henry Wallers
Jack Gault
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Forward-looking statements
This announcement includes statements that are, or may be deemed to be, ‘forward-looking statements’. By
their nature, forward-looking statements involve risk and uncertainty since they relate to future events and
circumstances. Actual results may, and often do, differ materially from forward-looking statements.
Any forward-looking statements in this announcement reflect the Group’s view with respect to future events as
at the date of this announcement. Save as required by law or by the Listing Rules of the UK Listing Authority,
the Group undertakes no obligation to publicly revise any forward-looking statements in this announcement
following any change in its expectations or to reflect events or circumstances after the date of this
announcement.
Short-form announcement
This short-form announcement is the responsibility of the directors and is only a summary of the information in
the full announcement and does not contain full or complete details. Any investment decision should be based
on the full announcement that has been published on SENS
https://senspdf.jse.co.za/documents/2023/jse/isse/BYIE/H1FY24.pdf and is also available on our website
https://www.bytesplc.com/. The full announcement is also available at our registered office for inspection, at no
charge, during office hours. Copies of the full announcement may be requested by contacting Headland
Consultancy on telephone: +44 (0) 20 3805 4822 or email: bytes@headlandconsultancy.com
About Bytes Technology Group plc
BTG is one of the UK's leading providers of IT software offerings and solutions, with a focus on cloud and
security products. The Group enables effective and cost-efficient technology sourcing, adoption, and
management across software services, including in the areas of security, cloud and AI solutions. It aims to
deliver the latest technology to a diverse range of customers across corporate and public sectors and has a long
track record of delivering strong financial performance.
The Group has a primary listing on the Main Market of the London Stock Exchange and a secondary listing on
the Johannesburg Stock Exchange.
1 ‘Gross invoiced income’ (‘GII’) is a non-International Financial Reporting Standard (IFRS) alternative performance measure
that reflects gross income billed to customers adjusted for deferred and accrued revenue items. The effect of these
adjustments for the year ended 28 February 2023 is included on p146 of the annual report and accounts for that period. GII
has a direct influence on our movements in working capital, reflects our risks and shows the performance of our sales teams.
2 ‘Revenue’ is reported in accordance with IFRS 15, Revenue from Contracts with Customers. Under this standard the Group
is required to exercise judgment to determine whether the Group is acting as principal or agent in performing its contractual
obligations. Revenue in respect of contracts for which the Group is determined to be acting as an agent is recognised on a
‘net’ basis (the gross profit achieved on the contract and not the gross income billed to the customer). Our key financial
metrics of gross invoiced income, gross profit, adjusted operating profit and cash conversion are unaffected by this
judgement.
3 ‘Adjusted operating profit’ is a non-IFRS alternative performance measure that excludes from operating profit the effects of
significant items of expenditure which are non-recurring events or do not reflect our underlying operations. Amortisation of
acquired intangible assets and share-based payment charges are both excluded. The reconciliation of adjusted operating
profit to operating profit is set out in the Chief Financial Officer’s review below.
4‘Cash conversion’ is a non-IFRS alternative performance measure that divides cash generated from operations less capital
expenditure (together, ‘free cash flow’) by adjusted operating profit. It is calculated over both the current reporting period and
over a rolling 12 months, the latter taking the previous 12 months free cash flow divided by the previous 12 months adjusted
operating profit, in over to reflect any seasonal variations during the full year up to the reporting date.
5 ‘Adjusted earnings per share’ is a non-IFRS alternative performance measure that the Group calculates by dividing the
profit after tax attributable to owners of the company, adjusted for the effects of significant items of expenditure which are
non-recurring events or do not reflect our underlying operations (‘Adjusted earnings’), by the weighted average number of
ordinary shares in issue during the year. Amortisation of acquired intangible assets and share-based payment charges are
excluded in arriving at Adjusted earnings. The calculation is set out in note 16 of the interim condensed consolidated
financial statements.
Sponsor: Investec Bank Limited
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