Johannesburg, 10 Oct 2005
Notwithstanding market pressures, Bytes Technology Group (BTG) reported a satisfactory set of results for the six months which reflects in full for the first time the inclusion of the businesses acquired from CS Holdings and the consolidation of 100% of Digital Healthcare Solutions.
The aggregate impact on revenues from these acquisitions was approximately R240 million or 17% out of a total increase of 23%.
Chief Executive Officer of BTG, David Redshaw, said: "The market sectors in which the group operates continue to offer satisfactory opportunities for growth for most of our solutions and products, but the pressure on margins remains relentless. In the light of these pressures coupled with the firmness of the rand and inflation running at low levels, we are satisfied with the organic growth in revenue of 6%."
Redshaw said the group`s operating income improved by 35% from R95 million to R128 million. Headline earnings improved to 46.5c or 31% over the earnings of 35.4c for the prior corresponding period. Attributable earnings at R73 million were R149 million higher than the equivalent prior period, R130 million of which is due to the goodwill impairment charge made in the previous year," he said.
BTG`s headline earnings per share were negatively effected (4.7c) by the obligatory inclusion of changes to accounting standards to ensure compliance with International Financial Reporting Standards (IFRS) while the effect on the previous year was considerably lower (1.4c). This is largely due to the straight-lining effect of the re-signing of a long-term lease on the ex-CS Holdings premises in Midrand which necessitated an additional charge to headline earnings of approximately R4 million in the period under review.
Referring to the group`s net cash position, Redshaw said it moved from R63 million at February 2005 to a net borrowing position of R171 million at August 2005, but he is confident that this position will be significantly improved by year-end. Acquisitions totalling R143 million, the payment of a dividend of R55 million, increased tax payments and a somewhat greater than expected increase in working capital were the main contributors to this outflow.
Redshaw commented positively on the performance of the group`s operations and said he was particularly pleased that the acquired businesses from CS Holdings performed according to expectations. "Our United Kingdom operations have also showed significant improvement and are once again contributing to the group`s bottom line," he said.
During the period under review BTG acquired the outstanding 61% shareholding which it did not already own in Digital Healthcare Solutions, resulting in the latter becoming a wholly-owned subsidiary. The interest held by Altron in Technology Acceptances Receivables, the vehicle which provides finance in respect of the IT offerings of the operations within BTG, was also acquired, as well as Nicor Outsource Processing, a digital print bureau in KZN.
Redshaw said that given the increased market acceptance and recognition of the group resulting from continuing improvements in financial performance, BTG is well placed to take advantage of any opportunities that present themselves, thereby ensuring adequate growth for the foreseeable future. He expects headline earnings for the second half to exceed those for the comparable period last year, which will result in a satisfactory performance for the full year.
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