Bytes Technology posts record adjusted operating profit

The FTSE 250 company said revenue was up 5% for the 12 months ended 28 February, at £393.6m, while gross profit grew 13% to £89.6m.

It reported record adjusted operating profit of £37.5m, representing growth of 18% over the prior year.

Bytes said it expanded its customer base by 4% to 5,147 at year end, while increasing average gross profit per customer to £17,400, from £16,100 in the prior year.

Cash conversion remained “strong”, the board said, resulting in a net cash position of £20.7m at year-end, even after £48.6m of pre-IPO dividends paid and £16.7m of deferred consideration payments to acquire the B shares held by management in Bytes Technology and Blenheim Group.

The company said its headcount increased 13% during the year to 685.

Looking at its current trading, Bytes said that two months into the new financial year it was performing “well”, with gross profit in line with its expectations and showing growth on the “already strong” prior year comparatives, especially in the public sector.

It attributed the strong performance to high levels of customer satisfaction, effective sales execution and to a market which had seen IT spending remain robust through the pandemic.

Bytes said it was still investing in its sales and technical capabilities, and expected to see some increase in other overheads as lockdown eased and in-person customer interaction picked back up.

The board said that, while the economic backdrop remained uncertain as the pandemic continued, it was confident in delivering its growth strategy and capitalising on the market opportunity.

It said its dividend policy is to distribute between 40% and 50% of the group's profit after tax before any exceptional items to shareholders, as it disclosed in the initial public offering prospectus.

The first dividend was intended to be declared as an interim dividend for the year ending 28 February 2022, and then on an ongoing basis.

“This has been a landmark year for Bytes,” said chief executive officer Neil Murphy.

“At the start of the pandemic and throughout the remainder of the year, our colleagues maintained a high level of service to our customers, helping them to adapt to new working patterns.

“During the period, we achieved a successful IPO which provides the group with a strong platform to take advantage of the tremendous opportunities we see in the market.”

Murphy said the company’s first set of results as a listed business showed it was “taking great strides” in delivering on its long-term strategy for growth.

“Bytes' recent inclusion in the FTSE 250 is further recognition of the progress we've made since listing, and we look forward to raising our profile with investors further.

“Looking ahead, we remain confident that Bytes is well-positioned to enhance its market share and capitalise on the exciting market opportunities ahead.”

At 0857 BST, shares in Bytes Technology Group were up 0.48% at 520p.