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Bytes Technology Group Limited - Unaudited consolidated interim financial
results for the six months ended 31 August 2002
Bytes Technology Group Limited
IT Services for the Enterprise
(Registration number 1911/003874/06)
(Incorporated in the Republic of South Africa)
Share code: BTG ISIN ZAE 000029526
Significant revenue growth 55%
Operating profit R79 million 75%
Headline earnings 23.55 cents 65%
Sound balance sheet
Unaudited consolidated interim financial results for the six months ended 31
August 2002
Income statement
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2002 2001 2002
Figures in R000 (Unaudited) (Unaudited) (Audited)
Revenue 1 767 738 1 138 640 2 341 498
Continuing operations 1 767 738 1 126 065 2 328 923
Discontinuing - 12 575 12 575
operations
Operating profit 79 026 45 128 109 889
Continuing operations 79 170 51 889 116 647
Discontinuing (144) (6 761) (6 758)
operations
Investment income 13 791 15 660 16 626
Finance costs (11 250) (17 125) (15 317)
Profit/(loss) from 1 611 (246) 840
associates
Profit before 83 178 43 417 112 038
goodwill
amortisation and
exceptional items
Goodwill amortisation (33 714) (29 988) (67 198)
Exceptional items - 3 178 14 881
Profit before 49 464 16 607 59 721
taxation
Normal taxation (26 417) (13 839) (25 574)
Deferred tax asset - - 34 766
raised
Profit after taxation 23 047 2 768 68 913
Attributable to (20 375) (9 181) (25 737)
outside shareholders
Attributable to 2 672 (6 413) 43 176
ordinary shareholders
Weighted number of 151 344 150 442 150 733
shares in issue
(thousands)
Earnings/(loss) per 1.77 (4.26) 28.64
share - Basic (cents)
Headline earnings per 23.55 14.26 63.39
share - Basic (cents)
Adjusted headline 23.55 14.26 40.33
earnings per share -
Basic (cents)
Notes:
1. Headline earnings
Attributable earnings
is reconciled to
headline earnings as
follows:
Attributable to 2 672 (6 413) 43 176
ordinary shareholders
Goodwill amortised 33 714 29 988 67 198
Profit on disposal of (18) (30) (4)
fixed assets
Exceptional items - (3 178) (14 881)
Outside shareholders` (720) 1 079 61
portion of
exceptional items &
goodwill amortised
Headline earnings 35 648 21 446 95 550
Deferred tax asset - - (34 766)
raised
Adjusted headline 35 648 21 446 60 784
earnings
2. The unaudited interim financial results have been prepared in accordance with
South African statements of Generally Accepted Accounting Practice. The
accounting policies used in the preparation of the unaudited interim financial
results are consistent with those used in the annual financial statements for
the year ended 28 February 2002.
Abridged cash flow statement
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2002 2001 2002
Figures in R000 (Unaudited) (Unaudited) (Audited)
Operating activities 152 282 (20 892) 80 473
Cash generated by 100 678 63 779 156 325
operations
Changes in working capital 70 167 (75 561) (30 915)
Net finance income/(costs) 2 541 (1 465) 1 309
Taxation paid (2 944) (7 645) (46 246)
Cash generated by/(utilised 170 442 (20 892) 80 473
in) operating activities
Dividend paid (18 160) - -
Net investing activities (44 210) (39 652) (61 407)
Financing activities (10 178) 8 656 56 332
Net funds 97 894 (51 888) 75 398
generated/(utilised)
Cash and cash equivalents 221 734 146 336 146 336
- at beginning of period
- at end of period 319 628 94 448 221 734
Balance sheet
31 August 31 August 28 February
2002 2001 2002
Figures in R000 (Unaudited) (Unaudited) (Audited)
ASSETS
Non-current assets 471 156 417 866 529 343
Fixed assets 99 275 91 574 105 061
Investments & loans 37 472 43 703 33 722
Goodwill 195 699 251 462 222 498
Finance lease assets 70 133 - 100 447
Deferred taxation 68 577 31 127 67 615
Current assets 1 193 001 692 188 902 497
Inventory 176 873 179 608 177 392
Accounts receivable 696 500 418 132 503 371
Bank & cash 319 628 94 448 221 734
TOTAL ASSETS 1 664 157 1 110 054 1 431 840
Ordinary shareholders` 483 032 449 744 498 794
equity
Outside shareholders` 108 354 86 304 87 978
interest
Long-term liabilities 69 586 33 009 76 141
Finance lease liabilities 70 432 - 100 447
Current liabilities 932 753 540 997 668 480
Accounts payable 841 662 505 922 588 424
Short-term loans 56 777 43 70 168
Taxation 34 314 35 032 9 888
TOTAL EQUITY & LIABILITIES 1 664 157 1 110 054 1 431 840
Shares in issue at end of 151 364 150 608 151 336
period (000)
Net asset value per share 319.12 298.62 329.59
(cents)
Statement of changes in equity
Non-
Share distributable Accumulated
Figures in R000 capital reserve deficit Total
Balance at 28 643 102 63 700 (254 372) 452 430
February 2001
(audited)
Attributable to (6 413) (6 413)
shareholders
Foreign currency 2 630 2 630
translation
reserve
Issue of shares 1 097 1 097
Balance at 31 644 199 66 330 (260 785) 449 744
August 2001
(unaudited)
Attributable to 49 589 49 589
shareholders
Share liability 1 728 1 728
reversed
Foreign currency (4 780) (4 780)
translation
reserve
Issue of shares 2 513 2 513
Balance at 28 646 712 63 278 (211 196) 498 794
February 2002
(audited)
Attributable to 2 672 2 672
shareholders
Dividend paid (18 160) (18 160)
Foreign currency (355) (355)
translation
reserve
Issue of shares 81 81
Balance at 31 646 793 62 923 (226 684) 483 032
August 2002
(unaudited)
Abridged segmental analysis
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2002 2001 2002
Figures in R000 (Unaudited) (Unaudited) (Audited)
Revenue
Managed Networking Services 133 065 103 111 196 875
Enterprise Solutions (UK) 841 375 294 728 650 209
Digital Healthcare 50 312 16 606 81 005
Solutions
Document Management 461 836 391 693 817 210
Services
Enterprise Wide Information 211 023 202 917 400 367
Products & Services
Business Communication 75 101 73 915 156 637
Solutions
Software Products & 62 012 59 701 107 625
Solutions
Total continuing operations 1 834 724 1 142 671 2 409 928
Discontinuing operations - 12 575 12 575
Total all operations 1 834 724 1 155 246 2 422 503
Less equity accounted (66 986) (16 606) (81 005)
operations
1 767 738 1 138 640 2 341 498
Operating profit/(loss)
before goodwill and
exceptional items
Managed Networking Services 3 128 (3 890) (464)
Enterprise Solutions (UK) 19 708 9 525 18 820
Digital Healthcare 1 832 (246) 840
Solutions
Document Management 56 104 30 993 75 863
Services
Enterprise Wide Information 5 750 12 698 18 852
Products & Services
Business Communication 186 1 481 6 301
Solutions
Software Products & (1 858) (4 169) (3 517)
Solutions
Other (4 069) 5 251 792
Total continuing operations 80 781 51 643 117 487
Discontinuing operations (144) (6 761) (6 758)
Total all operations 80 637 44 882 110 729
Less equity accounted (1 611) 246 (840)
operations
79 026 45 128 109 889
Includes 100% of revenue from associates and our proportionate share of their
operating profit/(loss).
Supplementary information
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2002 2001 2002
Figures in R000 (Unaudited) (Unaudited) (Audited)
Capital commitments - 2 431 -
Capital expenditure 18 458 11 418 99 467
Contingent liabilities 5 081 - 5 756
Depreciation 14 072 11 759 36 064
Operating lease commitments
Payable within the next 12
months:
- property 29 101 25 753 28 654
- plant, equipment and 21 172 10 747 23 794
vehicles
Payable thereafter:
- property 106 121 99 894 112 309
- plant, equipment and 43 260 15 813 48 156
vehicles
Message to stakeholders
Overview
The broadly based improvement in results achieved since the group`s major
restructuring some 18 months ago has continued with increased momentum during
the period under review as the benefits of greater focus, higher levels of
productivity, increased customer acceptance and improved morale favourably
impacted operations. Your directors are of the opinion that these factors will
yield further improvements in the second half.
Results
The group posted an operating profit of R79,0 million (2001: R45,1 million) and
a profit before tax, goodwill amortisation and exceptional items of R83,2
million (2001: R43,4 million).
Headline earnings per share were 23,55 cents (2001: 14,26 cents). Net cash
balances were R319 million, up by approximately R98 million during the period
under review after dividend payments of R18 million and additional operating
investments of R44 million. Good control of working capital contributed R70
million to the improved cash flow.
Operations
Our Managed Networking Services business generated a much better performance by
maintaining the improvements it achieved during the second half of the previous
year.
The UK operation achieved a remarkable improvement with operating profit
increasing 106% in rand terms (53% in sterling terms) to R19,7 million.
Digital Healthcare Solutions, in which the group owns 40%, improved its
contribution to R1,83 million (2001: loss R0,25 million).
Our core Document Management Services business improved operating profits by 81%
to R56,1 million, a noteworthy achievement in our largest operation.
Enterprise Wide Information Products and Services continues to be affected by
the reduced level of spend in its markets, especially the financial services
area. Its operating profits reduced by 55% to R5,75 million. Some improvement is
foreseen in the second half, however the full year performance is likely to be
below that of the previous year.
Our Business Communications Solutions operation had a difficult first half in a
tough market. However the full year results should be in line with the previous
year.
It is disappointing to report that our Software Products and Solutions business
showed losses (albeit sharply reduced) for the six month period. This included
R1,4 million of once-off restructuring costs. Substantial business recently
secured will ensure a solid profit performance both for the second half and
indeed the full year.
Discontinuing operations which incurred an operating loss of R6,76 million in
the first six months of last year, were not material during the current year.
Accordingly the overall improvement in operating profit of 75% reduces to 53% in
the case of continuing operations.
Strategic intent
As reported previously, considerable emphasis has been placed in acquiring an IT
services company in the UK to give a broader base and critical mass to our
current operations. As announced in the press on Friday, 27 September 2002, the
group has concluded, subject to shareholder and regulatory approvals, the
acquisition of Plato Computer Services, an IT services company in the UK, which
will fulfil the requirements stated above. Whilst in the immediate future little
or no improvement in earnings per share will be realised, substantial benefits
should be obtained in the medium- to long-term.
In regard to South Africa the group is well positioned to take advantage of the
significant opportunities which will continue to present themselves as a
consequence of the ongoing shake-out in the IT industry.
The board will continue to carefully balance short-term profitability
requirements with longer term strategic purpose.
Prospects
The rate of growth in earnings recorded during the first six months over the
comparable period last year, was particularly high due to the effect of loss
making operations in the prior year. Accordingly, this rate of growth will not
be sustained in the second half, notwithstanding which your directors continue
to remain confident in the growth prospects of the group. An increase in
headline earnings per share over the 40,33 cents (excluding the benefit of
raising a deferred tax asset) reported in the 2002 financial year is anticipated
for the full year ending February 2003.
Dividend
In line with the company`s policy no interim dividend is declared. A dividend
commensurate with increased earnings per share is likely for the full year.
On behalf of the Board
David Redshaw Peter Riskowitz
Executive Chairman Group Financial Director
3 October 2002
This report is available on the company website at www.btgroup.co.za.
Date: 02/10/2002 03:05:00 PM Produced by the JSE SENS Department
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