Public sector wins underpin growth for Bytes

23rd May 2024 10:20

(Sharecast News) - Bytes Technology Group reported a strong set of preliminary results on Thursday, as gross invoiced income (GII) surged 26.7% to £1.82bn, driven by major contract wins in the public sector, notably with the NHS and HMRC, and sustained demand from corporate clients.

The FTSE 250 IT solutions provider said revenue was up 12.3% year-on-year in the 12 months ended 29 February, to £207m, while gross profit advanced 12.5% to £145.8m, supported by a higher gross profit per customer.

Operating profit climbed 11.4% to £56.7m, and adjusted operating profit was ahead 12.2% at £63.3m, maintaining a stable adjusted operating profit-to-gross profit ratio of 43.4%.

Profit after tax increased 16.1% to £46.9m, bolstered by high levels of interest income that offset the impact of a higher corporation tax rate.

Earnings per share (EPS) rose 15.8% to 19.55p.

Bytes Technology said it achieved full-year cash conversion of 104.3%, reflecting strong cash collection, resulting in closing cash of £88.8m.

The board proposed a final dividend of 6p per share and a special dividend of 8.7p per share, making for a 17.6% increase in the final dividend and a 16% increase in the full-year and special dividends.

On the operational front, Bytes said it maintained a high customer retention rate, with 97% of last year's customers contributing to this year's gross profit at a renewal rate of 109%.

The company increased its headcount by 13.7% to 1,057 employees to meet customer demand, focusing on expanding sales and service delivery teams.

Additionally, Bytes said it opened a new office in London and received numerous industry awards, including recognition from Mimecast, Forcepoint, Rubrik, Checkpoint, CyberArk, and Tenable.

Both Bytes Software Services and Phoenix Software were named among the UK's top 50 Best Workplaces in the Large Company category for 2024, it noted.

Looking ahead, Bytes Technology said it was optimistic about its ability to continue its growth trajectory despite competitive markets and challenging economic conditions.

"I am very pleased to report another set of positive results for BTG, with a 12.2% increase in adjusted operating profit, driven by contributions from all areas of our business," said chief executive officer Sam Mudd.

"Despite the challenging economic climate over the past year, our customers have continued to invest in their IT needs.

"Our gross invoiced income has grown by 26.7%, and our gross profit has risen by 12.5%, as we have expanded our client base in both the public and corporate sectors and increased our share of wallet among existing customers."

Mudd said the group had made strategic investments in personnel, internal systems, and new vendor accreditations to drive future growth and assist customers in "navigating the complexities" of secure IT environments.

"Our strong relationship with Microsoft enables us to capitalise on exciting opportunities such as Copilot, Azure Virtual Solutions, and Business Apps.

"With continued demand for cloud adoption, backup, storage, and security solutions, these will be our key focus areas in 2025.

"Moving forward, through our passionate, talented, and experienced staff, we are well-positioned to continue providing high-quality licensing advice, technical support, and service delivery to meet our customers' needs - this will remain our defining USP."

At 0954 BST, shares in Bytes Technology Group were up 2.45% at 583.44p.

Reporting by Josh White for Sharecast.com.