Bytes Technology Group (Bytes) showed satisfactory growth for the group and a significant shift in the geographical split of revenue and profit generation during the first six months. 

David Redshaw, CEO of Bytes, says that the group has, in line with its strategy, grown the contribution of its international component significantly during the period under review with revenues increasing to 46% from 25% and operating profits increasing to 30% from 16%.
The interim results for the six months ended 31 August 2007, show Bytes growing its overall revenues by 44% to R2,83-billion from R1,96-billion fuelled by a large Microsoft order secured from the National Health Services (NHS)  in the United Kingdom of £41-million (about R580-million). Notwithstanding the impact of the NHS deal, revenue increased by a satisfactory 16%.
During the same period operating profit increased by 8% to R170-million from R157-million for the prior period. The operating margin reduced to 6% from 8% for the prior period, but when adjusted for the NHS contract, the percentage rises to 7,5%.  Net interest income increased to R13-million compared with a neutral position in the comparable period.  Headline earnings per share improved by 12,2% from 58,1 cents to 65,2 cents with diluted headline earnings per share increasing by 18% from 46,0 cents to 54,2 cents.
Cash generation was satisfactory with the group’s net cash position moving from a negative R83-million in August 2006 to R137-million positive over the 12 months, an improvement of R220-million of which R100-million was of a temporary nature, relating to the NHS contract.
In reviewing the operational performances, Redshaw says the South African businesses reported a 12% reduction in operating profits from R139-million to R122-million.  He ascribes this reduction to adverse exchange rate movements, delayed orders and certain temporary supply issues in two of the larger operations as the major contributing factors.
"However, we anticipate that both these operations will show improvements during the second half of the year,” he says.
Redshaw pointed out that the group’s international business showed excellent growth with operating profit increasing by 93% from R27-million to R52-million. “In the case of the UK, the improvement was even more pronounced, with a significant increase of 185% to R40-million."
He comments that Bytes spent some R22-million during the period on niche acquisitions in South Africa and is exploring further opportunities locally and in Europe.
In looking ahead, Redshaw indicated that he expects margin pressures to continue in terms of the local IT industry in general. He says Bytes is well placed to meet these challenges based on the diversity of its offering and its geographical spread and he consequently believes that a satisfactory level of headline earnings growth will be achieved for the full year.