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BYTES TECHNOLOGY GROUP LIMITED -
BYTES TECHNOLOGY GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1911/003874/06)
Share code: BTG
ISIN: ZAE000029526
Unaudited Consolidated interim financial results for the six months ended 31
August 2003
INCOME STATEMENT
Six months Six months Year
Ended ended ended
31 Aug 2003 31 Aug 2002 28 Feb 2003
Figures in R000 (Unaudited) (Unaudited) (Audited)
Revenue 1 322 532 1 767 738 3 035 106
Operating profit 77 146 79 026 183 181
Net finance (costs)/income (10 992) 2 541 (674)
Profit from associates 3 339 1 611 8 663
Profit before goodwill 69 493 83 178 191 170
amortisation and
exceptional items
Goodwill amortisation (66 318) (33 714) (83 887)
Exceptional items - - (1 046)
Profit before taxation 3 175 49 464 106 237
Normal taxation (20 648) (26 417) (58 730)
Deferred tax asset raised - - 16 792
(Loss)/profit after (17 473) 23 047 64 299
taxation
Attributable to outside (11 000) (20 375) (37 748)
shareholders
Attributable to ordinary (28 473) 2 672 26 551
shareholders
Weighted number of shares 152 143 151 344 151 620
in issue (thousands)
Earnings per share (cents) (18.71) 1.77 17.51
Headline earnings per 24.67 23.55 72.42
share (cents)
Adjusted headline earnings 24.67 23.55 53.51
per share (cents)
Declared dividends per - - 16.00
share (cents)
Notes:
1. Headline earnings per
share
Attributable earnings is
reconciled to headline
earnings as follows:
Attributable to ordinary (28 473) 2 672 26 551
shareholders
Goodwill amortised 66 318 33 714 83 887
Profit on disposal of 42 (18) -
fixed assets
Exceptional items - - 1 046
Outside shareholders" (360) (720) (1 675)
portion of exceptional
items and goodwill
amortisation
Headline earnings 37 527 35 648 109 809
Deferred tax asset raised - - (16 792)
Refund of Benefit Fund - - (16 983)
contributions
Tax on refund of Benefit - - 5 095
Fund contributions
Adjusted headline earnings 37 527 35 648 81 129
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 2003, except for the adoption of AC133 on Financial
Instruments. In terms of the statement comparative years have not been restated.
However, the closing balances of financial instruments from the previous year
have been restated, resulting in a decrease of R8,3 million to the group"s
opening accumulated reserves (see statement of changes in equity). The net
effect of AC133 on the results for the period under review is an increase in
attributable profit of R4 million.
3. Diluted earnings per share, diluted headline earnings per share and diluted
adjusted headline earnings per share are not materially different from basic
earnings per share, headline earnings per share and adjusted headline earnings
per share respectively.
4. It is group policy for a dividend to be declared after the end of the
financial year.
BALANCE SHEET
31 Aug 2003 31 Aug 2002 28 Feb 2003
Figures in R000 (Unaudited) (Unaudited) (Audited)
Assets
Non-current assets 713 517 471 156 691 803
Plant and equipment 85 720 99 275 88 714
Investments and loans 35 367 37 472 34 259
Goodwill 492 710 195 699 449 885
Finance lease assets 47 114 70 133 58 161
Deferred taxation 52 606 68 577 60 784
Current assets 828 757 1 193 001 900 942
Inventory 159 959 176 873 175 557
Accounts receivable 477 959 696 500 446 493
Bank and cash 190 839 319 628 278 892
Total assets 1 542 274 1 664 157 1 592 745
Equity and Liabilities 479 725 483 032 527 588
Ordinary shareholders"
equity
Outside shareholders" 1 482 108 354 125 726
interest
Long-term liabilities 349 320 69 586 244 019
Finance lease liabilities 47 114 70 432 58 161
Current liabilities 664 633 932 753 637 251
Accounts payable 517 094 841 662 478 545
Short-term loans 127 474 56 777 108 104
Bank overdraft - - 18 640
Taxation 20 065 34 314 31 962
Total assets 1 542 274 1 664 157 1 592 745
Total equity and
Liabilities
Shares in issue at end of 152 261 151 364 152 100
period (000)
Net asset value per share 315.07 319.12 346.87
(cents)
ABRIDGED CASH FLOW STATEMENT
Six months Six months Year
Ended ended ended
31 Aug 2003 31 Aug 2002 28 Feb 2003
Figures in R000 (Unaudited) (Unaudited) (Audited)
Operating activities 54 957 152 282 167 355
Cash generated by 101 026 100 679 252 124
operations
Changes in working capital 13 626 70 167 (41 868)
Net finance (costs)/income (10 992) 2 541 (674)
Taxation paid (24 366) (2 944) (24 066)
Cash generated by 79 294 170 443 185 516
operating activities
Dividend paid (24 337) (18 161) (18 161)
Net investing activities (251 630) (44 210) (348 815)
Financing activities 127 260 (10 178) 219 978
Net funds (69 413) 97 894 38 518
(utilised)/generated
Cash and cash equivalents
- at beginning of period 260 252 221 734 221 734
- at end of period 190 839 319 628 260 252
STATEMENT OF CHANGES IN EQUITY
Non-
Figures in Share distributable Accumulated
R000 capital reserve deficit Total
Balance at 28 646 712 63 278 (211 196) 498 794
February 2002
(audited)
Profit - - 2 673 2 673
attributable to
shareholders
Dividend paid - - (18 161) (18 161)
Foreign - (355) - (355)
currency
translation
reserve
Issue of share 81 - - 81
capital
Balance at 31 646 793 62 923 (226 684) 483 032
August 2002
(unaudited)
Profit - - 23 878 23 878
attributable to
shareholders
Foreign - 18 544 - 18 544
currency
translation
reserve
Issue of share 2 134 - - 2 134
capital
Balance at 28 648 927 81 467 (202 806) 527 588
February 2003
(audited)
Adjustment to - - (8 273) (8 273)
opening
reserves due
to adoption of
AC133 (see
note 2)
Loss - - (28 473) (28 473)
attributable to
shareholders
Dividend paid - - (24 337) (24 337)
Foreign - 12 708 - 12 708
currency
translation
reserve
Issue of share 512 - - 512
capital
Balance at 31 649 439 94 175 (263 889) 479 725
August 2003
(unaudited)
Segmental analysis
Six months Six months Year
Ended ended ended
31 August 31 August 28 February
2003 2002 2003
Figures in R000 (Unaudited) (Unaudited) (Audited)
Revenue
ICT Infrastructure and 623 170 1 099 898 1 636 851
Services
Software, Consulting and 463 225 369 550 834 959
Document Services
Specialised Equipment and 328 551 365 276 736 276
Services
Total all operations 1 414 946 1 834 724 3 208 086
Less equity accounted (92 414) (66 986) (172 980)
operations
1 322 532 1 767 738 3 035 106
Operating profit
ICT Infrastructure and 11 589 24 884 46 016
Services
Software, Consulting and 15 717 15 702 38 756
Document Services
Specialised Equipment and 60 823 44 329 100 417
Services
88 129 84 915 185 189
Corporate and Other (6 490) (4 213) 5 630
Total all operations 81 639 80 702 190 819
Less equity accounted (4 493) (1 676) (7 638)
operations
77 146 79 026 183 181
Geographical Segments
Revenue by market
South Africa 1 028 156 940 489 1 937 669
United Kingdom 325 895 841 375 1 166 551
Rest of Africa 60 895 52 860 103 866
1 414 946 1 834 724 3 208 086
Operating profit by market
South Africa 82 496 54 628 151 751
United Kingdom (8 926) 19 503 26 855
Rest of Africa 8 069 6 571 12 213
81 639 80 702 190 819
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 Aug 2003 31 Aug 2002 28 Feb 2003
Figures in R"000 (Unaudited) (Unaudited) (Audited)
Depreciation (14 892) (14 072) (35 925)
Foreign exchange (2 015) (2 063) 15 645
(losses)/gains
Capital expenditure 15 077 18 458 47 893
Contingent liabilities 1 241 5 081 2 783
Operating lease
commitments
Payable within the next 12
months:
- property 29 256 29 101 25 549
- plant, equipment and 19 535 21 172 20 103
vehicles
Payable thereafter:
- property 81 209 106 121 60 230
- plant, equipment and 32 731 43 260 38 934
vehicles
Message to stakeholders
Overview
As your directors forecast in their Annual Report to shareholders for the year
ended February 2003, the first half of the current financial year proved to be
particularly challenging. Expectations were for a flat earnings profile with the
UK operations likely to suffer a downturn to be offset by improved performances
from our South African businesses. In the event, the UK operations produced a
worse performance than anticipated and in particular, our recent acquisition,
Plato, incurred an operating loss of around R9 million. Actions to rectify this
situation have been taken and at a trading level, a break-even position has been
established in this operation. Moreover an improved second half is now
envisaged. In respect of the South African (and other African) businesses your
directors are pleased to report that a better than predicted performance was
achieved with broadly based improvements being recorded by most of our
operations, despite general IT market conditions remaining difficult. The
benefits anticipated from the acquisition of the remaining equity in Xerox South
Africa have met our expectations.
Revenues for the period under review showed a drop of some 25% over the previous
year due predominantly to the reduction of revenue in our UK operations
(approximately R515 million). Again a large part of this fall was foreseen due
to the change by Microsoft in licence billing procedures and the adverse trading
environment. Excluding abnormal revenues generated by Bytes UK during the first
half of last year, the group"s total first half revenues increased 11% from
R1,26 billion to R1,4 billion.
RESULTS
Operating profit declined by 2,4% to R77 million (2002: R79 million) as a result
of the downturn in the performance of our UK operations as referred to above.
Notwithstanding this, the performance of the South African and other African
operations, as reflected in the segmental analysis, was most encouraging.
Profit before tax and goodwill amortisation was R69,5 million compared with
R83,2 million for 2002. Increased net finance costs of R13,5 million were the
main contributor to this reduction of R13,7 million (16,5%). However, offsetting
the increased finance costs was the reduction in profits attributable to outside
shareholders (Xerox). This enabled BTG to post headline earnings per share of
24,67 cents (2002: 23,55 cents), an improvement of almost 5%.
Notwithstanding the challenging conditions encountered in the UK, an acceptable
cash generation was achieved. Net borrowings increased by R196 million during
the six month period to end August, despite having incurred acquisition costs on
Bytes Document Solutions of R238 million as well as dividend and tax payments of
R48 million. Satisfactory cash generation is expected to continue for the second
half.
STRATEGIC INTENT
Your directors are concentrating on achieving two key strategic objectives over
the next 6 to 12 months. Firstly, to continue growing BTG"s profitability and,
secondly, to introduce a major black empowerment partner with a significant
equity holding. Operational improvements continue to be implemented both locally
and overseas and these are anticipated to produce both short- and long-term
benefits. In line with policies we have been pursuing over the years, we
continue our transformation initiatives, which are expected to be enshrined in
the proposed ICT Charter. We are also actively participating in the process of
formulating the Charter.
There is little doubt that further consolidations in the South African IT
industry are inevitable and your board continues to examine opportunities in
this area.
CORPORATE GOVERNANCE
In compliance with King II, the roles of chairman and chief executive officer
have been separated. Accordingly, with effect from 2 October 2003, Mr PD Redshaw
will continue as chief executive officer of BTG while Dr WP Venter has assumed
the chairmanship.
PROSPECTS
Your board is confident that headline earnings growth over the 53,51 cents
reported in the prior year will be achieved for the full year.
ACKNOWLEDGEMENTS
The directors again wish to recognise the considerable dedication which all of
BTG"s staff have made during the continuing difficult environment in the IT
industry. They also particularly wish to thank all of their customers and other
stakeholders for their ongoing support.
DIVIDEND
In line with previous years no interim dividend is declared. The full year
dividend will be commensurate with the earnings achieved maintaining the
previous levels of dividend cover.
By order of the board
Dr Bill VENTER DAVID REDSHAW
CHAIRMAN CHIEF EXECUTIVE OFFICER
3 October 2003
Directors: Dr WP Venter (Non-executive Chairman), PD Redshaw * (Chief
Executive), RJ Abraham, T Botha, R Griggs, JBA Horton, DC Radley, PR Riskowitz,
Dr HA Serebro, RE Venter, PL Wilmot
* British
The interim financial results are also available on the Internet at
www.btgroup.co.za
Date: 02/10/2003 04:11:12 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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