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Results for the six months ended 31 August 2022 and cash dividend declaration
Bytes Technology Group plc
(Incorporated in England and Wales)
(Registered number: 12935776)
LEI: 213800LA4DZLFBAC9O33
Share code: BYI
ISIN: GB00BMH18Q19
("BTG”, or “the Group”)
26 October 2022
Results for the six months ended 31 August 2022 and cash dividend declaration
Strong first half extending our track record of double-digit growth
Bytes Technology Group plc (LSE: BYIT, JSE: BYI), one of the UK’s leading software, security and cloud
services specialists, today announces its half year results for the 6 months ended 31 August 2022 (‘H1 FY23’).
Neil Murphy, Chief Executive Officer, said:
“We have made a really positive start to the year and extended our long track record of consistent double-digit
growth both before and since our listing in 2020. This performance reflects robust demand from both corporate
and public sectors, with our customers showing a continued appetite to invest in their IT requirements despite
the macroeconomic environment.
A key part of our success can be traced to the high-quality customer service that sits at the centre of our
business and makes us so competitive in our markets. For this, I would like to extend my thanks to our people
who do an outstanding job supporting our clients.
The new ways of working brought about by the Covid pandemic have become entrenched and we believe the
conditions we are operating in represent the new normal. Thanks to our best-in-class expertise and partnerships
with the world’s leading vendors, we are well placed to continue serving our customers’ needs and are confident
that the Group is well positioned for the remainder of the financial year”.
Financial performance
£’million H1 FY23 (six H1 FY22 (six % change
months ended 31 months ended 31 year-on-year
August 2022) August 2021)
(restated)
Gross invoiced income (‘GII’)1 £786.2m £638.2m 23.2%
Revenue2 £93.5m £73.1m 27.9%
Gross profit (‘GP’) £65.5m £52.9m 23.8%
Gross margin % (GP/Revenue) 70.1% 72.4%
GP/GII % 8.3% 8.3%
Operating profit £27.3m £23.2m 17.7%
Adjusted operating profit (‘AOP’)3 £29.8m £25.0m 19.2%
Cash £35.8m £42.9m (16.6%)
Cash conversion4 (2.8%) 107.5%
Earnings per share (pence) 9.06 7.72 17.4%
Headline earnings per share (pence) 9.06 7.72 17.4%
Adjusted earnings per share5 (pence) 10.11 8.48 19.2%
Interim dividend per share (pence) 2.4 2.0 20%
The restatement in H1 FY22 is in respect of the Revenue and Gross margin % as described below.
Group highlights for the six months ended 31 August 2022
- GII increased 23.2% to £786.2 million (H1 FY22: £638.2 million), with this strong growth spread across all
areas of the business – software, hardware and services – and generated from both the corporate and public
sector customers.
- Revenue increased 27.9% to £93.5 million (H1 FY22: £73.1 million – restated). Following recent guidance
issued by the IFRS Interpretation Committee, and in line with developing clear and consistent practice within
our industry, we are now accounting for all software revenue on an agency, or “net” basis. Previously, the
element of software revenue comprising indirect licence sales of non-cloud licences and licences not requiring
critical updates had been recognised “gross”. Hence this change in judgement has resulted in a reduction in
our statutory revenue figures. The prior year revenue and cost of sales figures have been re-stated accordingly
and further details of this change are set out in the Chief Financial Officer’s review on page 7 and in note 1.5
of the interim financial statements. Our key financial metrics of gross invoiced income, gross profit, adjusted
operating profit and cash conversion are unaffected by this change.
- GP growth of 23.8% to £65.5 million (H1 FY22: £52.9 million), reflected across both public and corporate
sectors and with increased GP per customer.
- Gross margin at 70.1% (H1 FY22: 72.4%) reflects the impact of the revenue agency adjustment noted above,
whereby the majority of our GII is accounted for on a net basis.
- GP/GII % is the margin measure which management scrutinise most closely, and this has been maintained at
a strong 8.3% considering competitive pressures and challenging macro-economic conditions.
- Operating profit increased 17.7% to £27.3 million (H1 FY22: £23.2 million); noting also that H1 FY23 has a
£0.7 million higher share-based payment (SBP) charge compared to H1 FY22.
- AOP which management believe is a better measure of underlying profitability increased by 19.2% to £29.8
million (H1 FY22: £25.0 million).
- Cash at 31 August 2022 was £35.8 million (H1 FY22: £42.9m) which is after the payment of dividends totalling
£29.7 million during the past 12 months of which £24.9 million was paid during H1 FY23.
- Cash conversion reduction in the first half of the financial year illustrates the sensitivity of this ratio to even
small delays in payment from customers, given that it is measured over a fixed period rather than as a rolling
average. However, the Group has not experienced any bad debt write offs in the period and over a longer
period, we target a sustainable cash conversion ratio of 100%. Management is confident cash conversion will
return to higher levels in H2 FY23. This is discussed further in the Chief Financial Officer’s review on page 9.
- Earnings per share increased 17.4% to 9.06 pence (H1 FY22: 7.72 pence).
- Adjusted earnings per share increased 19.2% to 10.11 pence (H1 FY22: 8.48 pence), which the Board believes
is a more representative measure than basic earnings per share as it removes the impact of amortisation of
purchased intangibles and SBP charges.
- The Board is pleased to declare an interim dividend of 2.4 pence per share which will be paid on Friday, 2
December 2022 to shareholders on the register as at Friday, 18 November 2022. This is a 20% increase over
last year’s interim dividend, reflecting the strong growth in AOP.
- Notable business highlights in the period include:
- Bytes Software Services being named Microsoft Partner of the Year for Operational Excellence in 2022
from over 3,900 partner entries globally.
- Winning almost 300 new customers across the Group.
- Achieving 120% renewal rate from existing Group customers (which measures the GP from existing
customers this period compared to total GP in the prior period).
- The Group reaching 58% employee participation across its Share Save plans.
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 cash dividend of 2.4 pence per share.
The aggregate amount of the interim dividend expected to be paid out of retained earnings at 31 August 2022,
but not recognised as a liability at the end of the half year, is £5.7 million. The salient dates applicable to the
dividend are as follows:
Dividend announcement date Wednesday, 26 October 2022
Currency conversion determined and announced together with Monday, 14 November 2022
the South African (SA) tax treatment on SENS
Last day to trade cum dividend (SA register) Tuesday, 15 November 2022
Commence trading ex-dividend (SA register) Wednesday, 16 November 2022
Last day to trade cum dividend (UK register) Wednesday, 16 November 2022
Commence trading ex-dividend (UK register) Thursday, 17 November 2022
Record date Friday, 18 November 2022
Payment date Friday, 2 December 2022
Additional information required by the Johannesburg Stock Exchange:
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 26 October 2022, 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, 15 November
2022 and Friday, 18 November 2022 (both dates inclusive). No dematerialisation or rematerialisation
orders will be permitted between Wednesday, 16 November 2022 and Friday, 18 November 2022 (both
dates inclusive).
Current trading and outlook
After a successful H1 FY23 with a continuation of double-digit growth across key financial metrics, the business
carries strong momentum going into the second six months of FY23. We have already made a good start in this
second half, although we remain mindful of the domestic and global macroeconomic pressures. Our successful
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, makes us confident that the Group is well
positioned for the remainder of the financial year.
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://event.on24.com/wcc/r/3984277/2BC7C63DAB56981CD98D31952C4AFD53
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
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/2022/jse/isse/BYIE/H1FY23SENS.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 and the cloud. 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. 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).
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.
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 period. Amortisation of acquired intangible
assets and share-based payment charges are excluded in arriving at Adjusted earnings. The calculation is set
out in note 15 of the financial statements.
The Group has a primary listing on the Main Market of the London Stock Exchange and a secondary listing on
the Johannesburg Stock Exchange.
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 26-10-2022 08:00:00
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