| Thu 6 May 2004, 16:22 | | REVIEWED CONSOLIDATED FINANCIAL RESULTS FOR THE YE |
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BYTES TECHNOLOGY GROUP - REVIEWED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR
ENDED 29 FEBRUARY 2004
BYTES TECHNOLOGY GROUP
IT Services for the Enterprise
(Registration number 1911/003874/06)
(Incorporated in the Republic of South Africa)
Share code: BTG ISIN: ZAE000029526
Revenue down 14%
Adjusted headline earnings per share up 27%
Operating income up 11%
Dividend up 37%
Reviewed consolidated financial results for the year ended 29 February 2004
Message to our stakeholders
Overview
The directors are pleased to report a good performance by the group for the year
under review. Results during the second half met expectations after the
anticipated lower growth during the first half. This enabled the group to post
an improvement in adjusted headline earnings per share of 27% for the full year.
Contributors to the much improved second half were the return to profitability
of our United Kingdom operations and strong performances by all of the South
African businesses.
It should be noted that the increase in net finance costs relating inter alia to
the purchase of the remaining 50% shareholding in Bytes Document Solutions
(Xerox) was more than offset by the reduced level of profits attributable to
outside shareholders. Whilst the return to profitability of our United Kingdom
operations was most welcome, much work remains to be done to raise profitability
to acceptable levels. A noticeable improvement in the United Kingdom business
environment is assisting in achieving this objective.
We indicated at the interim stage that the board was concentrating on achieving
two key strategic objectives; firstly to continue growing BTG"s profitability
and secondly to introduce a major black empowerment partner. It is gratifying to
report that both of these objectives will have been achieved within the
timeframes envisaged.
Financial Results
Abnormally high revenues from Microsoft licensing in the United Kingdom in the
prior year and the impact of a much stronger rand resulted in a year on year
reduction in the group"s revenues of 14%.
Group operating income rose by 11% to R185 million (R166 million). The operating
income to revenue margin increased to 7.1% from 5.5% in line with management"s
focus on operating efficiencies. Net finance costs rose sharply to R25 million
from a negligible amount the previous year due to higher borrowings emanating
from acquisitions.
Cash generated by operating activities improved to R196 million (R186 million)
despite higher tax and interest payments.
Adjusted headline earnings per share rose by 27% to 67.9 cents (53.5 cents).
After eliminating the effects of goodwill amortisation of R134 million (R84
million), profits attributable to shareholders reduced slightly to R97 million
(R111 million). The group conservatively continues to amortise goodwill over a 5
year period, with on average 3 1/2 years remaining.
Operational Progress
Significant operational efficiencies have been achieved across a broad front
during the year, with most operations realising rationalisation and synergistic
savings. The segmental analysis reflects a significant deterioration in the
performance of the United Kingdom operations due to extremely difficult trading
conditions in that region. It is however pleasing to note that these operations
returned to profitability in the second half, a trend which has continued
subsequent to year end. Further improvements are anticipated to flow as a result
of various structural and organisational steps which have been implemented.
In the year ahead we expect to achieve additional efficiency savings which we
anticipate will assist in offsetting the unrelenting pressures on margins which
our customers continue to exert.
Black Empowerment and Transformation
As reported to shareholders on 9 March 2004 the group has, subject to certain
suspensive conditions, been successful in concluding a 27% equity participation
by the Kagiso group in the South African based operations. Your board is
confident that their involvement will contribute meaningfully to the group"s
growth during the coming years and we welcome Kagiso to our fold.
In addition to the foregoing BTG is rapidly progressing its transformation
initiatives and has made noteworthy progress in this regard. In conjunction with
Altron, our holding company, firm targets and objectives have been set and the
group is fully committed to achieving these over time.
Prospects
Having carefully considered the major factors which influence the group"s
business prospects, the board faces the financial year to February 2005 with
confidence.
Given the issues which restricted profit growth during the first half of last
year, a fundamental earnings improvement on a comparative basis is foreseen at
the interim stage. This should enable the group to post a satisfactory earnings
performance for the full year. Any initial dilution in earnings as a result of
the introduction of Kagiso as our black economic empowerment partner is expected
to be compensated for by the opportunities which our partnership will generate.
No material acquisitions are being considered - rather emphasis is being placed
on reducing the group"s net interest bearing debt of around R147 million.
However, given the group"s strong cashflows, any suitable opportunities which
may be identified will be prudently examined.
Acknowledgements
The board wishes to express its gratitude to all of BTG"s stakeholders,
including shareholders, customers, business partners and staff alike. We look
forward to our partnership with Kagiso, our new black empowered shareholder.
Dividends
The board has noted and recognised the widespread market trends which accord
increased emphasis on dividend payments. Taking into account the group"s
anticipated cashflows and general trading prospects, a dividend of 22 cents per
share is declared, representing an increase of more than 37% over that of the
previous year. Nevertheless the dividend remains three times covered. Future
dividend declarations will be broadly in line with movements in profit
performance.
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.
2004
Last date to trade ordinary shares cum dividend Friday 28 May
Ordinary shares trade ex dividend Monday 31 May
Record date Friday 4 June
Payment date Monday 7 June
Dividend cheques in payment of this dividend to certificated shareholders will
be posted to shareholders on or about Monday 7 June 2004. 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 7 June 2004.
In the case of certificated shareholders, notice of any change of address of
shareholders must reach the transfer secretaries, Computershare Limited PO Box
61051, Marshalltown 2107., on or before Friday 28 May 2004.
Share certificates may not be dematerialised and/or rematerialised between
Monday 31 May 2004 and Friday 4 June 2004, 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 29 February 2004 will
be posted to shareholders during June 2004.
On behalf of the board
Dr Bill Venter David Redshaw Peter Riskowitz
CHAIRMAN CHIEF EXECUTIVE OFFICER GROUP FINANCIAL DIRECTOR
6 May 2004
Income statement
2004 2003
Rmillion (Reviewed) (Audited)
Revenue 2,607.4 3,035.1
Operating income before goodwill 184.6 166.2
amortisation and capital items
Refund of Benefit Fund contributions - 17.0
Net finance costs (25.0) (0.7)
Income from associates 6.7 8.7
Goodwill amortisation (134.1) (83.9)
Capital items (7.5) (1.1)
Income before taxation 24.7 106.2
Normal taxation (49.6) (58.7)
Deferred tax asset raised - 16.8
(Loss)/income after taxation (24.9) 64.3
Attributable to outside shareholders (12.7) (37.7)
Attributable to ordinary shareholders (37.6) 26.6
Weighted number of shares in issue 152.4 151.6
(million)
(Loss)/earnings per share - Basic (cents) (24.68) 17.51
(Loss)/earnings per share - Fully diluted (23.09) 17.25
(cents)
Headline earnings per share - Basic 67.94 72.42
(cents)
Headline earnings per share - Fully 63.57 71.35
diluted (cents)
Adjusted headline earnings per share - 67.94 53.51
Basic (cents)
Adjusted headline earnings per share - 63.57 52.72
Fully diluted (cents)
Declared dividends per share iro that 22.00 16.00
year (cents)
Dividends per share paid (cents) 16.00 12.00
Notes:
1 Headline earnings per share
Attributable (loss)/earnings is
reconciled to headline earnings as
follows:
Attributable to ordinary shareholders (37.6) 26.6
Goodwill amortised 134.1 83.9
Capital items 7.5 1.1
Outside shareholders" portion of capital (0.4) (1.7)
items & goodwill amortisation
Headline earnings 103.6 109.9
Deferred tax asset raised - (16.8)
Refund of Benefit Fund contributions - (17.0)
Tax on refund of Benefit Fund - 5.1
contributions
Adjusted headline earnings 103.6 81.2
2 The principles applied in determining adjusted headline earnings per share are
consistent with those applied in prior years. The directors are of the opinion
that the disclosure of adjusted headline earnings per share, which is in
addition to disclosure required by South African Statements of Generally
Accepted Accounting Practice, provides shareholders with a more meaningful
assessment of the normal and sustainable earnings of the group.
3 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 2003, except for the adoption of AC133 on Financial Instruments. In
terms of the statement comparative figures have not been restated. However, the
fair values of financial instruments from the previous year have been adjusted
by R8.3 million which amount has been debited to opening accumulated reserves
(see statement of changes in equity).
Balance sheet
2004 2003
Rmillion (Reviewed) (Audited)
ASSETS
Non-current assets 627.9 691.8
Plant and equipment 86.5 88.7
Investments & loans 27.2 34.3
Goodwill 431.2 449.9
Finance lease assets 34.1 58.1
Deferred taxation 48.9 60.8
Current assets 662.8 900.9
Inventory 159.7 175.5
Accounts receivable 412.5 446.5
Bank & cash 90.6 278.9
TOTAL ASSETS 1,290.7 1,592.7
Ordinary shareholders" equity 465.0 527.6
Outside shareholders" interest 1.8 125.7
Long term liabilities 145.4 244.0
Finance lease liabilities 34.1 58.1
Current liabilities 644.4 637.3
Accounts payable 491.7 478.6
Short-term loans 118.4 108.1
Bank overdraft 8.4 18.6
Taxation 25.9 32.0
TOTAL EQUITY & LIABILITIES 1,290.7 1,592.7
Shares in issue at end of period 153.3 152.1
(million)
Net asset value per share (cents) 303.43 346.87
Abridged cash flow statement
2004 2003
Rmillion (Reviewed) (Audited)
Operating activities 171.2 167.3
Cash generated by operations 207.1 252.1
Changes in working capital 57.3 (41.8)
Net finance costs (25.0) (0.7)
Taxation paid (43.8) (24.1)
Cash generated by operating activities 195.6 185.5
Dividend paid (24.4) (18.2)
Net investing activities (269.8) (348.8)
Financing activities (79.4) 220.0
Net funds (utilised)/generated (178.0) 38.5
Cash and cash equivalents
- at beginning of year 260.2 221.7
- at end of year 82.2 260.2
Statement of changes in equity
Non- Accumu-
Share distributable Deferred lated
Rmillion capital reserve Equity deficit Total
Balance at 28 646.7 63.3 0.0 (211.2) 498.8
February 2002
(audited)
Income 26.6 26.6
attributable
to
shareholders
Dividend paid (18.2) (18.2)
Foreign 18.2 18.2
currency
translation
reserve
Issue of 2.2 2.2
share capital
Balance at 28 648.9 81.5 0.0 (202.8) 527.6
February 2003
(audited)
Adjustment to (8.3) (8.3)
opening
reserves due
to adoption
of AC133 (see
note 2)
Loss (37.6) (37.6)
attributable
to
shareholders
Dividend paid (24.4) (24.4)
Foreign 6.8 6.8
currency
translation
reserve
Issue of 3.6 3.6
share capital
Cashflow (2.7) (2.7)
hedge
accounting
Balance at 29 652.5 88.3 (2.7) (273.1) 465.0
February 2004
(reviewed)
Abridged segmental analysis
2004 2003
Rmillion (Reviewed) (Audited)
Revenue
ICT Infrastructure & Services 1,201.7 1,636.9
Software, Consulting and Document 1,062.1 1,016.8
Services
Specialised Equipment & Services 477.8 554.4
2,741.6 3,208.1
Corporate and Other 0.1 0.0
Total all operations 2,741.7 3,208.1
Less equity accounted operations (134.3) (173.0)
2,607.4 3,035.1
Operating (loss)/income
ICT Infrastructure & Services 39.8 46.0
Software, Consulting and Document 91.2 76.5
Services
Specialised Equipment & Services 82.0 62.7
213.0 185.2
Corporate and Other (19.3) (11.4)
Total all operations 193.7 173.8
Less equity accounted operations (9.1) (7.6)
184.6 166.2
GEOGRAPHICAL SEGMENTS
Revenue by market
South Africa 2,049.3 1,993.6
United Kingdom 632.3 1,166.5
Rest of Africa 60.0 48.0
2,741.6 3,208.1
Operating (loss)/income by market
South Africa 197.4 143.3
United Kingdom (5.1) 26.9
Rest of Africa 1.4 3.6
193.7 173.8
Includes 100% of revenue from associates and our proportionate share of their
operating profit/(loss).
Supplementary information
2004 2003
Rmillion (Reviewed) (Audited)
Depreciation 29.3 35.9
Foreign exchange gains 2.7 15.6
Capital expenditure 70.4 47.9
Contingent liabilities 0.9 2.8
Operating lease commitments
Payable within the next 12 months:
- property 29.7 25.5
- plant, equipment and vehicles 19.1 20.1
Payable thereafter:
- property 73.0 60.2
- plant, equipment and vehicles 26.5 38.9
This report is available on the company website at www.btgroup.co.za
Date: 06/05/2004 04:11:06 PM Produced by the JSE SENS Department
