| Thu 8 May 2003, 16:00 | | Bytes Technology Group Limited - Reviewed Consolid |
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Bytes Technology Group Limited - Reviewed consolidated financial results for the
year ended 28 February 2003
Bytes Technology Group Limited
(Registration number 1911/003874/06)
(Incorporated in the Republic of South Africa)
Share code: BTG
ISIN: ZAE 000029526
29%
Revenue increase by
Adjusted headline earnings per share up 32%
Operating profit increased by 42%
Dividend of 16 cents per share up by 33%
Reviewed consolidated financial results for the year ended 28 February 2003
Income statement
Year ended Year ended
28 February 28 February
2003 2002
Figures in R000 (Reviewed) (Audited)
Revenue 3 035 106 2 341 498
Continuing operations 3 035 106 2 328 923
Discontinued operations - 12 575
Operating profit 166 198 109 889
Continuing operations 166 252 116 647
Discontinued operations (54) (6 758)
Refund of Benefit Fund contributions 16 983 -
Operating profit after Benefit Fund 183 181 109 889
refund
Investment income 20 606 16 626
Finance costs (21 280) (15 317)
Profit from associates 8 663 840
Profit before goodwill amortisation and 191 170 112 038
exceptional items
Goodwill amortisation (83 887) (67 198)
Exceptional items (1 045) 14 881
Profit before taxation 106 238 59 721
Normal taxation (58 730) (25 574)
Deferred tax assets raised 16 791 34 766
Profit after taxation 64 299 68 913
Attributable to outside shareholders (37 748) (25 737)
Attributable to ordinary shareholders 26 551 43 176
Weighted number of shares in issue 151 620 150 733
(thousands)
Earnings per share - Basic (cents) 17.51 28.64
Earnings per share - Fully diluted 17.25 28.64
(cents)
Headline earnings per share - Basic 72.42 63.39
(cents)
Headline earnings per share - Fully 71.35 63.39
diluted (cents)
Adjusted headline earnings per share - 53.51 40.33
Basic (cents)
Adjusted headline earnings per share - 52.71 40.33
Fully diluted (cents)
Declared dividend per share (cents) 16.00 12.00
Notes:
1. Headline earnings per share
Earnings per share are reconciled to headline earnings per share as follows:
Attributable earnings 26 551 43 176
Goodwill amortisation 83 887 67 198
Exceptional items 1 045 (14 881)
Outside shareholders" portion of exceptional (1 675) 61
items & goodwill amortisation
Headline earnings 109 808 95 554
Deferred tax assets raised (16 791) (34 766)
Refund of Benefit Fund contributions (16 983) -
Tax on refund of Benefit Fund contributions 5 095 -
Adjusted headline earnings 81 129 60 788
2. The reviewed 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 reviewed financial results are
consistent with those used in the annual financial statements for the year ended
28 February 2002.
Abridged cash flow statement
Year ended Year ended
28 February 28 February
2003 2002
Figures in R000 (Reviewed) (Audited)
Operating activities 167 355 80 473
Cash generated by operations 252 124 156 325
Changes in working capital (41 868) (30 915)
Net finance (costs)/income (674) 1 309
Taxation paid (24 066) (46 246)
Cash generated by operating activities 185 516 80 473
Dividend paid (18 161) -
Net investing activities (348 815) (61 407)
Financing activities 219 978 56 332
Net funds generated 38 518 75 398
Cash and cash equivalents - at beginning 221 734 146 336
of year
- at end of year 260 252 221 734
Balance sheet
28 February 28 February
2003 2002
Figures in R000 (Reviewed) (Audited)
Assets
Non-current assets 691 803 529 343
Fixed assets 88 714 105 061
Investments & loans 34 259 33 722
Goodwill 449 885 222 498
Finance lease assets 58 161 100 447
Deferred taxation 60 784 67 615
Current assets 882 302 902 497
Inventory 175 557 177 392
Accounts receivable 446 493 503 371
Bank & cash 260 252 221 734
Total Assets 1 574 105 1 431 840
Ordinary shareholders" equity 527 588 498 794
Outside shareholders" interest 125 726 87 978
Long-term liabilities 244 019 76 141
Finance lease liabilities 58 161 100 447
Current liabilities 618 611 668 480
Accounts payable 478 545 588 424
Short-term loans 108 104 70 168
Taxation 31 962 9 888
Total Equity & Liabilities 1 574 105 1 431 840
Shares in issue at end of year (000) 152 100 151 336
Net asset value per share (cents) 346.87 329.59
Statement of changes in equity
Non-
Share distributable Accumulated
Figures in R000 capital reserve deficit Total
Balance at 28 February 643 63 700 (254 372) 452 430
2001 (audited) 102
Attributable to - - 43 176 43 176
ordinary shareholders
Other movements - 1 728 - 1 728
Foreign currency - (2 150) - (2 150)
translation reserve
Issue of shares 3 610 - - 3 610
Balance at 28 February 646 63 278 (211 196) 498 794
2002 (audited) 712
Attributable to - - 26 551 26 551
ordinary shareholders
Dividend paid - - (18 161) (18 161)
Foreign currency - 18 189 - 18 189
translation reserve
Issue of shares 2 215 - - 2 215
Balance at 28 February 648 927 81 467 (202 806) 527 588
2003 (reviewed)
Abridged segmental analysis
Year Year
ended ended
28 February 28 February
2003 2002
Figures in R000 (Reviewed) (Audited)
Revenue
Managed Networking Services 189 146 196 875
Enterprise Solutions (UK) 1 123 668 650 209
Systems Integration & Consulting 42 883 -
Digital Healthcare Solutions 98 277 81 005
Document Management Services 950 843 817 210
Enterprise Wide Information Products & 423 047 400 367
Services
Business Communication Solutions 156 699 156 637
Software Products & Solutions 148 820 107 625
Total continuing operations 3 133 383 2 409 928
Discontinued operations - 12 575
Total all operations 3 133 383 2 422 503
Less equity accounted operations (98 277) (81 005)
3 035 106 2 341 498
Operating profit
Managed Networking Services 3 232 (464)
Enterprise Solutions (UK) 32 015 18 820
Systems Integration & Consulting 3 544 -
Digital Healthcare Solutions 7 044 840
Document Management Services 106 259 75 863
Enterprise Wide Information Products & 21 530 18 852
Services
Business Communication Solutions 6 667 6 301
Software Products & Solutions 4 304 (3 517)
Corporate & Other (11 299) 792
Total continuing operations 173 296 117 487
Discontinued operations (54) (6 758)
Total all operations 173 242 110 729
Less equity accounted operations (7 044) (840)
166 198 109 889
Includes 100% of revenue from associates and our proportionate share of their
operating profit.
Supplementary information
Year ended Year ended
28 February 28 February
2003 2002
Figures in R000 (Reviewed) (Audited)
Capital expenditure 47 042 99 467
Contingent liabilities 2 783 5 756
Depreciation 35 925 36 064
Operating lease commitments
Payable within the next 12 months:
- property 25 549 28 654
- plant, equipment and vehicles 20 103 23 794
Payable thereafter:
- property 60 230 112 309
- plant, equipment and vehicles 38 934 48 156
Message to stakeholders
General overview
The directors are pleased to report that the results for BTG have met their
expectations during a year in which demand for IT products and services
continued to exhibit two main distinctive trends, namely a static market and
unrelenting pressure on margins. BTG has effectively mitigated these two factors
through market share gains, greater efficiencies and cost reductions.
These achievements enabled the group to show revenue growth of 29% and to
increase operating margins in continuing operations from 5% to 5.5% of sales, an
improvement of 10%. The revenue growth was however somewhat exaggerated,
particularly during the first half of the year, due to the conversion to rand of
sterling revenues at a higher average rate than was the case in the previous
year, coupled with an accelerated spend by major corporates in the UK following
changes in licensing policy imposed by Microsoft. Accordingly revenue growth in
the year ahead is expected to be at a slower rate.
The substantial and unexpected strengthening of the rand during the second half
of the year made the achievement of our financial targets particularly
gratifying.
Financial results
Revenue rose by almost 30% from R2,34 billion to R3,03 billion. Operating profit
from continuing operations increased 42% to R166 million, up from R117 million
the previous year. Profit before goodwill amortisation and exceptional items,
excluding the refund of Benefit Fund contributions, rose by 55% from R112
million to R174 million. Adjusted headline earnings per share (refer note 1 to
the income statement above) reached 53,5 cents (R81,1 million), up in excess of
32% from the 40,3 cents (R60,8 million) recorded a year earlier.
Cash performance for the year was again satisfactory, with R185 million of cash
being generated by operating activities against R80 million in the previous
year. These increased cash resources were offset by expenditure on acquisitions
of R349 million, leaving the group with net borrowings of R50 million at year
end compared with positive balances of R130 million a year earlier.
Operational progress
It is pleasing to report that, for the first time since the formation of BTG
from the IT activities of Fintech and USKO, all business segments were
profitable and all reported increased operating profits over the previous year.
The greatest improvements were achieved by Document Management Services and
Enterprise Solutions (UK) with increases of 40% and 70% respectively. The gains
realised by Software Products and Solutions, Managed Networking Services and
Digital Healthcare Solutions were also particularly pleasing. Losses on
discontinued operations reduced to a negligible R0,1 million against R6,8
million in the 2002 financial year.
No internal restructuring of a material nature is anticipated during the coming
year.
Acquisitions
As reported to shareholders in the press BTG concluded the purchase of Plato
Computer Services, an IT services company in the United Kingdom at the end of
November 2002 for an amount of 22,5 million. The current strength of the rand
and the depressed IT services market in the United Kingdom will however
negatively impact profitability in the short term. Notwithstanding these factors
the strategic rationale for the acquisition remains valid.
As recently announced in the press, BTG has concluded, subject to the successful
conclusion of certain suspensive conditions, the acquisition of Xerox Limited"s
50% plus one share in Xerox South Africa for R235 million. Following this
transaction, Xerox South Africa will become wholly owned by BTG and it is
intended that its operations will be divisionalised into BTG at that time.
Last year we advised shareholders that BTG was considering the acquisition from
its parent company, Altron, of a business which provides leasing finance for
products and services supplied by BTG operations. Due to the extended period
required to finalise the Plato acquisition, and the proposal to acquire the
outstanding 50% of Xerox South Africa as aforementioned, it has not been
possible to proceed with this acquisition. It is, however, our intention to do
so at the appropriate time.
Black Empowerment
During the year the group concluded black empowerment initiatives in several
areas of our operations notably in Managed Networking Services, Enterprise Wide
Information Products and Services and Business Communication Systems. All of
these initiatives are proving successful and form part of our ongoing Black
Economic Empowerment strategies. Further initiatives are planned during the year
ahead.
Prospects
Forecasting future performance has always been difficult and certainly it has
been made more so at a time of the high volatility which prevails in many of the
markets in which BTG operates. There is no doubt that the current rand /
sterling exchange rate will have a negative effect on our reported earnings from
offshore and on some of our local operations, particularly during the first half
of the current financial year. However we envisage that in the aggregate our
South African operations will continue to perform satisfactorily, and this
should enable the group to produce an increase in earnings for the full year. It
is however anticipated that earnings growth for the first half, when compared
with the corresponding period last year, may be somewhat difficult to achieve.
Your directors remain confident that BTG"s market standing, product and service
offerings, and future prospects will continue to position the group as one of
the premier IT players in South Africa. The ongoing rationalisation in our
industry ensures that the group will not lack potentially profitable expansion
opportunities. However, no further offshore acquisitions are planned in the
foreseeable future.
Gearing and future financing
The acquisition of Plato Computer Services and the proposed acquisition of the
outstanding shareholding in Xerox South Africa for cash will raise the gearing
of the group to a higher level than has been the case in the recent past. The
relative ease with which facilities have been secured against the backdrop of
the group"s strong positive cash generation, mirrors the directors" confidence
in a reasonably rapid return to lower gearing levels during the next twelve
months. Interest cover and the group"s debt service ratio remain at an
acceptable level.
The capital structure of the group will remain under constant review in light of
the many expansion opportunities referred to earlier.
Declaration of dividend no 2
Notice is hereby given that a dividend of 16 (sixteen) cents per ordinary share
of no par value, payable in the currency of the Republic of South Africa, has
been declared payable to all shareholders of BTG recorded as such in the
register of the company at the close of business on Friday 30 May 2003.
Trading in the STRATE environment requires settlement within five business days,
and in accordance with STRATE"s settlement procedures, the following dates will
apply to the dividend:
2003
Last date to trade ordinary shares "cum" dividend Friday 23 May
Ordinary shares trade "ex" dividend Monday 26 May
Record date Friday 30 May
Payment date Monday 2 June
Dividend cheques in payment of this dividend to certificated shareholders will
be posted to shareholders on or about Monday 2 June 2003. Electronic payment to
certificated shareholders will be undertaken simultaneously.
Shareholders who have dematerialised their share certificates will have their
accounts at their CSDP or broker credited on Monday 2 June 2003.
In the case of certificated shareholders, notice of any change of address of
shareholders must reach the transfer secretaries, Computershare Investor
Services Limited, on or before Friday 23 May 2003.
Share certificates may not be dematerialised and/or rematerialised between
Monday 26 May 2003 and Friday 30 May 2003, both days inclusive.
Review by Independent Auditors
The Group"s auditors, KPMG Inc., have reviewed these year end results. Their
unqualified review report is available for inspection at the company"s
registered office during normal office hours.
Annual report
The annual report and financial statements for the year to 28 February 2003 will
be posted to shareholders during June 2003.
On behalf of the Board
David Redshaw Peter Riskowitz
Executive Chairman Group Financial Director
8 May 2003
This report is available on the company website at www.btgroup.co.za.
