REG - Bytes Technology Grp - Audited Results
Today 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20260512:nRSL8758Da&default-theme=true
RNS Number : 8758D Bytes Technology Group PLC 12 May 2026
12 May 2026
Bytes Technology Group Plc
(BTG or the Group or the company)
Audited results for the year ended 28 February 2026
Bytes Technology Group plc (LSE: BYIT, JSE: BYI), one of the UK and Ireland's
leading software, security, AI and cloud solutions specialists, today
announces its financial results for the year ended 28 February 2026 (FY26).
Financial performance
Year ended 28 February 2026 Year ended 28 February 2025 % change year on year
Gross invoiced income (GII)(1) £2,341.0m £2,099.8m 11.5
Revenue(2) £220.5m £217.1m 1.6
Gross profit (GP) £167.3m £163.3m 2.5
Operating profit £62.7m £66.4m (5.6)
Operating profit/GP% 37.5% 40.7%
Cash £98.6m £113.1m (12.8)
Cash conversion(3) 105.1% 113.8%
Earnings per share (pence) 21.4 22.8 (6.1)
Final dividend per share (pence) 7.0 6.9 1.4
Financial highlights
- GII increased 11.5%, with 11.4% growth in software and 24.6% in
services.
- GP increased 2.5%, with H1 GP decline of 0.3% improving to 4.6% growth
in H2 as the one-year adverse effect of the Microsoft incentive changes ended
in January 2026, and the strategic refinement of the private sector sales
structure to strengthen medium-term growth settled.
- Public sector GP up 7.4%, despite Microsoft partner incentive change
impact.
- Private sector GP decreased marginally by 0.3% due to the refinement
of sales structure to increase customer centricity (which launched at the
start of the year), and some Microsoft incentives impact.
- Operating profit was 5.6% lower because of slower GP growth and
investment in people to drive future growth.
- Strong balance sheet with closing cash of £99m and 105% cash
conversion, with £74m returned to shareholders in FY26, including the £25m
share buyback.
- Final ordinary dividend of 7.0p, resulting in a full-year dividend of
10.2p together with a new £25m share buyback.
(1) GII is a non-International Financial Reporting Standards (IFRS)
alternative performance measure that reflects gross income billed to customers
adjusted for deferred and accrued revenue items. GII has a direct influence on
our movements in working capital.
(2) Revenue is reported in accordance with IFRS 15 Revenue from Contracts with
Customers. Under this standard, the Group is required to exercise judgement to
determine whether the Group is acting as principal or agent in performing its
contractual obligations. Revenue in respect of contracts for which the Group
is determined to be acting as an agent is recognised on a 'net' basis (the GP
achieved on the contract and not the gross income billed to the customer). Our
key financial metrics of GII, GP, adjusted operating profit and cash
conversion are unaffected by this judgement.
(3) Cash conversion is a non-IFRS alternative performance measure that divides
cash generated from operations less capital expenditure (together, free cash
flow) by operating profit.
Operational highlights
- New private sector sales structure implemented to increase customer
centricity and medium-term growth through closer alignment with customers' and
vendors' needs, impacted H1 with momentum improving in H2.
- Existing customers contributing 97% of our GP in this year (FY25: 97%),
at a renewal rate of 99% (FY25: 109%), with £5m of gross profit contributed
by new customers.
- Year-end headcount growth of 6.9% to 1,331, with ongoing investment in
sales and service delivery teams.
- Strong progress on increasing services gross profit through using
vendor funding to support customers in discovery and implementation, as well
as attaching more managed services to support customers through the whole
technology lifecycle.
- Ranked 14th in the FT's UK's Best Employers list, the highest of any
reseller.
- Received multiple vendor and industry awards, including from AWS,
Axonius, Barracuda, Checkpoint, Commvault, Cyera, Exclusive Networks,
Microsoft, Nutanix, ServiceNow, Sophos, Varonis, Veeam and VMWare, as well as
a Royal Warrant.
- Moved into the first of the two buildings acquired in FY25, adjacent
to our existing Leatherhead office, adding capacity to our existing modern and
inviting workspaces.
- The currently combined roles of CFO and COO will be split in FY27 to
support our next phase of growth. Current CFO Andrew Holden will transition
into the role of COO, and will stand down as CFO once a suitable replacement
has been appointed.
Sam Mudd, Chief Executive Officer, said:
"This has been a year of adaptation and evolution against a more challenging
market backdrop. We focused on optimising our business for continued growth,
segmenting our private sector sales team to better align with our customers
and vendors, managing Microsoft's transition of incentives to
consumption-based and service-led funding, and increasing our services
portfolio and associated profits, in line with our strategy. We maintained our
share of wallet with existing customers, as they invested in their IT
requirements; continued to expand our client base in both the public and
private sectors, with significant framework wins in defence, and private
sector enterprise client wins in retail and the energy sector; while
continuing to drive momentum through the year.
"As Agentic AI and associated technologies continue to be deployed, our
customers need an integrated delivery model. This will almost always need a
deep understanding of the domain the customer operates in, and the associated
data and services, to help the customer adapt within the changing
technological landscape. We are well positioned, as a Microsoft Frontier
Partner, to be the partner for our customers on this journey.
"Our passionate, talented, dedicated and experienced staff remain central to
our success. Their ability to provide high-quality licensing advice, technical
enablement and support continues to differentiate us in the market and gives
us confidence as we look ahead. I would like to thank all our teams for their
continued commitment and hard work."
"I want to thank Andrew for his five-year contribution to the Group as CFO and
as a Board member. We are pleased that we will be retaining his longstanding
knowledge of the business and deep operational experience as he transitions to
the COO role."
Outlook
Over the year, we have further positioned ourselves to be well placed to
benefit from the structural demand drivers we see in our markets, including
hybrid cloud computing, cybersecurity, services and AI. Our focus remains on
implementing our growth strategy through our enablers: Our People, Our
Vendors, and how we bring these together into Our Customer proposition. We are
increasing our customer centricity, extending our strong vendor partnerships
and leveraging the technical skills of our service delivery teams to drive our
growth through this next technological phase.
Our FY27 outlook remains consistent with that provided in our FY26 trading
update on 24 March. The Board expects to deliver high single-digit to low
double-digit percentage growth in GP, with operating profit broadly flat, as
the Group absorbs c.£4.5m of cost normalisation relating to higher technology
costs following the completion of strategic projects and a return to normal
bonus levels. We have now passed the anniversary of the Microsoft incentive
changes and the tough comparative from the private sector sales realignment,
and have seen strong momentum continue into the early weeks of FY27,
reinforcing our confidence in the year ahead.
Analyst and investor presentation
A presentation for sell-side analysts and investors will be held today at
09:00 (BST) via a video webcast that can be accessed at:
https://stream.brrmedia.co.uk/broadcast/69aeeade3254580013ad35c5
(https://stream.brrmedia.co.uk/broadcast/69aeeade3254580013ad35c5)
A recording of the webcast will be available after the event at bytesplc.com
(http://www.bytesplc.com/) . The announcement and presentation will be
available at bytesplc.com (http://www.bytesplc.com/) from 07:00 and 09:00
(BST), respectively.
Enquiries:
Bytes Technology Group plc Tel: +44 (0)1372 418500
Sam Mudd, Chief Executive Officer Email: IR@bytesplc.com (mailto:IR@bytesplc.com)
Andrew Holden, Chief Financial Officer
James Zaremba, Investor Relations
Sodali & Co Tel: +44 (0)2072 501446
Elly Williamson Email: btg@info.sodali.com (mailto:btg@info.sodali.com)
Tilly Abraham
Samuel Hillary
Forward-looking statements
This announcement includes statements that are, or may be deemed to be,
'forward-looking statements'. By their nature, forward-looking statements
involve risk and uncertainty because they relate to future events and
circumstances. Actual results may, and often do, differ materially from
forward-looking statements.
Any forward-looking statements in this announcement reflect the Group's view
with respect to future events as at the date of this announcement. Except as
required by law or by the UK Listing Rules of the Financial Conduct Authority,
the Group undertakes no obligation to publicly revise any forward-looking
statements in this announcement following any change in its expectations or to
reflect events or circumstances after the date of this announcement.
_________________________________________________________________________________________
Chief Executive Officer's review
Performance and market overview
BTG delivered its FY26 results against a more challenging market backdrop,
during a period of structural change in how the IT market is evolving. While
these changes do not alter the medium‑term growth opportunity, they do
require us to adapt to remain well positioned.
Customers continue to shift towards consumption‑based models, a trend
accelerated by cloud and AI adoption. At the same time, demand is moving from
individual point products to integrated solutions as IT environments become
more complex. Together, these dynamics increase the importance of partners
that can help customers realise value, deliver outcomes, and manage technology
across its lifecycle.
Against this backdrop, we made good progress on strategic refinements to
optimise the business for medium‑term growth. We transitioned our private
sector sales team to a structure aligned by customer size, enabling more
tailored solutions for enterprise, corporate and mid‑market customers. While
this transition impacted FY26 growth, momentum improved in H2 and positions us
well for FY27.
We also navigated a transition in incentives from Microsoft towards
consumption‑based and services‑led funding. During our 40 year partnership
with Microsoft, we have navigated several such shifts. In each case, being
asked to do more has created opportunities to widen our competitive advantage.
In FY26, this included expanding our services capability, supported by vendor
funding that enabled us to engage customers earlier in the discovery and
implementation phases and to attach multi-year managed services across the
technology lifecycle. As a result, services gross profit grew by 38%, and we
returned to double-digit Microsoft gross profit growth in H2.
Overall, we delivered another year of double-digit GII growth, more modest GP
growth and a decline in operating profit, as we maintained measured
investments for future growth against the slower GP growth. Cash generation
remained strong, with 105% cash conversion, enabling £74 million of returns
to shareholders while maintaining a strong balance sheet.
Customers
As a value-added reseller, our growth opportunity lies with selling more
software and services to our existing customers and winning new customers. We
do this always with outcomes in mind, such as optimising cost, reducing risk
or delivering transformation. Being customer-centric and ensuring that we have
the best possible customer engagement, trust and service are key to driving
this growth. Our strategy to achieve this is by further aligning how and what
we sell, with how and what our different customer groups buy. How our
customers buy varies by process, such as via frameworks and tenders or via
relationships and by decision makers, such as procurement or IT buyers. What
our customers buy varies between large organisations looking for and capable
of managing a broad range of best-of-breed technologies, to smaller
organisations looking for more integrated solutions. Our customers' buying is
changing as our market and vendor models are also changing. We are making the
strategic refinements below to be fully aligned with our customers across
sectors and segments to drive medium term growth.
Customer-centricity: FY26 Private sector sales segmentation
In FY26, we realigned our private sector sales organisation to deepen customer
engagement and support sustained growth over time. At the start of the year,
we moved from a generalist model to a segmented sales structure, by tailoring
our sales teams to our customers' size (enterprise >10k seats, corporate
2-10k seats, mid-market <2k seats, and channel). The segmentation improved
our customer proposition by enhancing account management, vendor relationships
and solution/service delivery. It resulted in an adjustment period as account
managers adapted to the changes with momentum improving in H2 particularly
around services.
Our account managers bring value to our customers by understanding their needs
and ways of working, and being able to offer a range of solutions tailored to
those needs - which differ between enterprise, corporate and mid-market
customers. Our sales segmentation positions us to deliver more tailored
engagement strategies and more relevant solution recommendations, and to share
more valuable insights from similar-sized customers to enhance the outcomes we
can deliver for all our customers.
Our vendors typically segment their sales organisations around end-customer
size, and our shift to a segmented structure intentionally enhances and
streamlines vendor engagement in our sales processes to drive better
commercial agreements and facilitate more sales leads.
Our realignment also included moving our internal specialist teams in
technology areas (such as cloud, cyber, digital workspace) and vendor
specialist teams into the same segments as the sales teams, to further drive
solution design and delivery tailored to customers' needs.
The segmentation enhances our ability to sell more services to our customers,
a key growth area over the medium term in partnership with key vendors such as
Microsoft. Customers of different sizes consume services differently. Large
corporates look to supplement well-resourced internal teams, while smaller
organisations need fully outsourced design, implementation and support, which
is even more prominent with the changing technological landscape and growth in
AI solutions.
The segmentation resulted in an adjustment period as relationships
transitioned. The change required account managers to hand over some
relationships and establish pipelines in their new accounts, which returned to
normal levels in H2. In addition, the private sector sales team had a very
strong end to FY25 (15% H2 FY25 GP growth, following 3% in H1 FY25), as
account managers worked hard on closing pipelines they had built in accounts
they were going to be handing over, with comparatives normalising as we move
into FY27.
Importantly, retention has remained very high, consistent with prior periods,
among both our sales team and customer base.
Customer-centricity: FY27 Transition to stronger sector sales and brands
Looking ahead to FY27, we are further sharpening our go-to-market approach,
with a smaller but strategic change to focus Bytes solely on the private
sector and Phoenix solely on the public sector.
Bytes primarily served the private sector, which accounted for 87% of its GP
in FY26, and Phoenix had a dedicated public sector proposition, which
accounted for 98% of its GP in FY26. Each business has operated with a small
overlap in customer sectors, so by moving Bytes' public sector team to sit
under Phoenix, and Phoenix's private sector team to sit under Bytes, we will
achieve a number of benefits. First, it enables the minority of sales
relationships that move to be grown and accelerated more successfully within
an organisation that specialises in selling to that sector. Private and public
sector organisations engage differently and require different support,
solutions and services. Second, removing internal competition enables greater
collaboration across the Group, allowing us to better leverage existing scale
around services and vendor partnerships and reduce duplication. We think the
need for tailored services will only continue to increase as our customers' AI
adoption increases the demands on their technology infrastructure. Third, it
makes us simpler for vendors to engage with. Vendors typically have separate
private sector and public sector sales teams, so these teams can now achieve
the same reach by only dealing with one entity.
The transition is being carefully sequenced and managed, with a small number
of colleagues moving within the Group. Importantly, any sales team account
manager who moves will have their customer relationship carried across, so the
customer-sales relationship points will be maintained and continuous
throughout.
Vendors
Our value to vendors comes from finding opportunities for their technology to
deliver business goals for customers, and then enabling the implementation and
driving adoption to deliver an outcome. In short, our value comes from
understanding customers and the ability to turn products into solutions. We
continue to invest in people and services behind our sales force so we have
depth and balance across licensing and technicals skills, and can help
customers make the right commercial decisions and then realise value
technically. Our scale also helps us operationalise vendor funding initiatives
so we can deliver a smooth experience for customers from pre-sale through to
post-sale delivery and achieve clear outcomes. This year we were awarded one
of the largest Microsoft End Customer Investment Fund projects globally for
our work helping the NHS deploy and adopt Copilot.
Examples of our services delivery capability include a consultancy team with
expertise across the entire Microsoft Cloud and AI portfolio; our security
operation centre and 24x7 Microsoft Cloud Solutions Provider (CSP) support
offering; plus governance, risk and compliance (GRC), and software asset
management (SAM) solutions, including licensing-spend optimisation supported
by our own IP in the form of Quantum and License Dashboard.
Microsoft partnership and partner incentive changes
Microsoft is our largest vendor relationship, accounting for around half of
our GP. It also remains a key gateway to growth, engagement and trust with our
customers, where it accounts for a significant share of their software budgets
and of their incremental investment, particularly into cloud, cybersecurity,
and data and AI.
For AI, Microsoft's incumbent position in workspace technology via M365
provides solid foundations for AI products/development where governance is a
key challenge. Customers often have much of the relevant governance framework
(e.g. identity, data access, data security, compliance) operating under their
M365 licensing to deploy AI tools quickly and securely.
Microsoft partner incentives evolve over time, just as technology and the way
that organisations use it evolve. We have a good track record of incorporating
these changes, while maintaining our GP levels.
Microsoft changed the mix of partner incentives on 1 January 2025, reducing
certain of its transactional enterprise agreement (EA) incentives to shift
partner focus to the larger consumption-based incentives available under the
Cloud Solution Provider (CSP) programme, and growing incentives available for
pre-sale and adoption services. In the public sector, where CSP is a less
viable alternative because of discounts only available under EAs, a smaller
rate reduction applied. We prepared and realigned our software and services
offerings, as we have often done in the past, with heightened focus on
transitioning private sector customers to CSP and providing more services to
all customers, both in line with our existing strategy.
The change in Microsoft incentives led to a temporary reduction in our
Microsoft software GP growth to 3.3% for the year with a 3.5% decline in H1,
when the majority of EA renewals take place, and a return to double-digit
growth in H2. The impact of the changes was partly mitigated in both segments,
by our ongoing focus on driving growth in higher-margin services, where a
growing portion of Microsoft incentives are focused. Our Microsoft GII
increased 11.5% year on year, with growth in both private and public sectors.
We are also now recognised as a Frontier Partner in this agentic era.
Deepening our vendor relationships
Our customers value breadth but not at the expense of depth. In addition to
our strong partnership with Microsoft, we have deepened our relationships with
other key vendors this year by boosting our technical capabilities, so that we
can do more pre-sales, consultancy and services work based on their
technology. We have genuine scale, but not at the expense of expertise.
This investment is reflected in the many awards we have won this year from
vendors, including Axonius, Barracuda, Checkpoint, Sophos and Varonis. We also
achieved the highest tier Pinnacle Partner status from VMware by Broadcom, a
significant achievement. As part of our growth strategy, we aim to broaden our
share of non-Microsoft work. In FY26, we delivered important customer wins in
the private and public sectors, based on solutions from vendors that we have
been working more closely with in recent years, such as Flexera, Rubrik,
SentinelOne and VMware.
People
Our people are the lifeblood of our organisation. We are proud of the energy
and dedication our teams bring to supporting customers and delivering
outstanding service. Their adaptability and resilience in the face of both
internal transformation and external market shifts have been exceptional and,
as a management team, we are extremely pleased to have improved this year's
employee Net Promoter Score (eNPS) to 62 (FY25: 57) and to be recognised in
FT's UK's Best Employers ranking where we were placed the highest in our
industry and 14th overall. We are not complacent though, and are determined to
become an even greater place for talented people to build long and fulfilling
careers.
We have enhanced our team by hiring of an experienced Chief People Officer
(CPO), responsible for leading the development of a long-term people strategy
to underpin scalable growth, customer excellence and a high-performance
culture. Our collaborative, team-based culture is a key driver of customer
excellence enabling our account managers, technical sales, consultancy and
managed services employees to deliver innovative joined-up solutions.
Our hiring was measured in FY26, taking into account our lower GP growth, with
headcount increasing 6.9% to 1,331 and growth focusing on sales staff to
support future growth and technical delivery staff to meet growing services
demands. We also continued to expand our capabilities, appointing new practice
leads to meet emerging AI service demands and introducing new sales leaders
with deep vertical or segment expertise.
We have also invested in our internal systems, customer-facing platforms and
office environments to expand and enhance employee experience, drive
operational efficiency and make it easier for customers to do business with
us. These investments are designed to support both our people and our
customers in equal measure. In H2, we fitted out the first of the two
buildings acquired in FY25, adjacent to our existing Leatherhead office,
adding capacity to our existing modern and inviting workspaces, and made plans
to expand our London footprint in FY27. Internal systems increasingly include
AI agents such as SCOUT, which helps account managers explore our services
catalogue, and SCAN, which converts meeting transcripts into structured
commercial outputs. We are in production with a referrals engine that
automates much of what is a very time-consuming process.
I want to extend my sincere thanks to all our staff for their hard work,
professionalism and unwavering commitment to the business.
Dividend and share buyback
Our dividend policy is to distribute 40-50% of the Group's post-tax
pre-exceptional earnings to shareholders by way of normal dividends.
Accordingly, we are pleased to confirm that the Board has proposed a final
dividend of 7.0 pence per share that, subject to shareholder approval, will be
paid on 31 July 2026 to shareholders on the register at 17 July 2026. In
addition we announced a new £25m share repurchase programme.
Continued focus on environment, social and governance
Our approach to responsible business and environment, social and governance
(ESG) is aimed at building a sustainable business and long-term stakeholder
value. Our strategy is underpinned by our purpose and values, which foster an
aligned culture across the organisation.
We met our Scope 2 target in 2021/22 and have since maintained zero Scope 2
market-based emissions through the purchase of renewable electricity. This
year, we surpassed our Scope 1 target with a 68% reduction in emissions from
2020/21. We will continue to work on reducing these and our Scope 3
emissions. We have engaged a third-party to verify our emissions against ISO
14064 and are aiming to have external validation in due course. During the
year, we again scored well with our CDP disclosure and ISS ESG ratings, and
improved our EcoVadis score, with both operating entities being in the top 15%
of rated companies. This year, we were also included as a constituent of the
FTSE4GOOD index.
We continue to monitor developments around the forthcoming UK Sustainability
Reporting Standards, which is the UK's adoption of the IFRS S1 and S2
standards, and will align with these when required. The standards incorporate
the recommendations of the Task Force on Climate-related Financial Disclosures
(TCFD), so we expect to be in a good position to transition, having fully
complied with the TCFD's recommendations previously. Within our businesses, we
support the evolution to greener transport initiatives and have continued our
carbon literacy awareness programme.
Our strong culture remains a driving force throughout the Group. We continue
to develop our people with learning and training opportunities, and have
expanded our apprenticeship scheme. In addition to training our own staff, we
have worked with partners across the country to deliver in-person educational
sessions, focused on IT, with young people and adults. As part of our social
value commitments, we support sessions with under-privileged and
under-represented groups to engage them with the possibilities of a career in
tech, but also to support the basic skills for entering the workforce. During
FY26, we continued to support our communities through various donations,
fundraising events and volunteer days for charities such as the Wildlife Aid
Foundation and St Leonard's Hospice.
Chief Financial Officer's review
Year ended 28 February 2026 Year ended 28 February 2025 Change
Income statement £'m £'m %
Gross invoiced income (GII) 2,341.0 2,099.8 11.5
GII split by product:
Software 2,233.4 2,005.3 11.4
Hardware 31.2 33.2 (6.0)
Services internal(1) 39.3 34.0 15.5
Services external(2) 37.1 27.3 36.0
Netting adjustment (2,120.5) (1,882.7) 12.6
Revenue 220.5 217.1 1.6
Revenue split by product:
Software 145.2 146.0 (0.5)
Hardware 31.2 33.2 (6.0)
Services internal(1) 39.3 34.0 15.5
Services external(2) 4.8 3.9 23.0
Gross profit (GP) 167.3 163.3 2.5
GP/GII% 7.1% 7.8%
Other income 0.6 0.1 495.2
Administrative expenses (105.2) (96.9) 8.5
Administrative expenses split:
Employee costs (82.0) (78.1) 5.1
Other administrative expenses (23.2) (18.8) 22.7
Operating profit 62.7 66.4 (5.6)
Operating profit/GP% 37.5% 40.7%
Interest income 7.6 8.5 (10.7)
Finance costs (0.3) (0.3)
Share of loss of associate(3) (0.2) -
Profit before tax 69.8 74.6 (6.4)
Income tax expense (18.6) (19.8) (6.2)
Effective tax rate 26.6% 26.5%
Profit after tax 51.3 54.8 (6.5)
(1) Provision of services to customers using the Group's own internal
resources.
(2) Provision of services to customers using third-party contractors.
(3) Cloud Bridge Technologies, 25.1% share of loss of associate.
Gross invoiced income
GII reflects gross income billed to our customers and has a direct influence
on our movements in working capital. However, it does not capture all the IT
spend we help our customers with because, in some cases, our vendor partners
invoice the customer directly and pay us a fee that is a percentage of their
sales value, and which we recognise within our GII, revenue and GP.
GII has increased by 11.5% year on year, to £2,341.0m (FY25: £2,099.8m),
driven by software and strong growth in services. Growth was balanced across
the public sector (+12.4%) and the private sector (+9.7%), with our mix
remaining weighted to the public sector, which contributed 66% of total GII
(FY25: 65%). Private sector GII benefited from the transition of more
customers to Microsoft's CSP programme (where BTG invoices the customers) from
Microsoft's EA programme (where Microsoft invoices the customers and pays BTG
a rebate).
Revenue
Revenue is reported in accordance with IFRS 15, with hardware and internal
services reported gross (principal) and software and external services
reported net (agent), which means revenue reflects changes in the mix of
business but is often not a good indicator of underlying growth.
This reporting of revenue as a mix of GP and GII across the four income
streams has given rise to a 1.6% increase, with growth in internal services
(reported gross) and external services (reported net) offsetting the reduction
in software (reported net) and hardware (reported gross). Given revenue is a
mix of metrics, we focus on GP to provide a consistent measure of our sales
and profit performance.
Gross profit
GP, our primary measure of sales performance, has grown by £4.0m, up 2.5%
year on year to £167.3m (FY25: £163.3m), with growth improving in H2 to 4.6%
growth (compared to 0.3% in H1).
Breaking this down by income stream, starting with the Group's two most
strategic focus areas, software GP declined by 0.5% to £145.2m, with a 0.8%
decline in its GP/GII% to 6.5%, while services GP is up by 38.4% to £17.4m,
with GP/GII margin up benefiting from mix and cost efficiencies. We have been
supported in our services growth by increasing levels of Microsoft funding,
for both internal investments and customer engagements. Hardware grew off a
small base by 0.4% to £4.7m.
Looking across our two main customer sectors, public sector GP has grown by
7.4%, returning to double-digit growth in H2, and private sector GP has
declined by 0.3%. Both sectors were affected by the changes to Microsoft
enterprise agreement incentives, and the private sector had a re-adjustment
period relating to the private sector sales realignment in H1 and faced a
tough comparator in H2 (+14.8% growth in private sector GP in H2 FY25).
The growth in the public sector again demonstrates the Group's strategy of
winning new customers and then expanding share of wallet. Our objective is to
ensure we build our profitability within each contract over its term,
typically three to five years, by adding additional higher-margin products
into the original agreement as the customers' requirements grow and become
more advanced. This process is further enhanced by focusing on selling our
wide range of solutions offerings and higher-margin security products, while
maximising our vendor incentives through achievement of technical
certifications. We track these customers individually to ensure that the
strategy delivers value for the business, and our other stakeholders, over the
duration of the contracts.
As in previous years, the higher margins available in the private sector means
that our GP remains weighted to the private sector, which contributed 62% of
total GP (FY25: 65%) despite our GII being weighted to the public sector. Our
GP/GII margin reduced to 7.1% (FY25: 7.8%), affected by mix and the Microsoft
EA incentives changes. In the public sector, our margin (GP/GII) dropped only
slightly to 4.1% (FY25: 4.3%), as strong higher-margin services growth partly
offset lower software-margins after the Microsoft EA incentives changes. In
the private sector, our margin (GP/GII) dropped to 13.0% (FY25: 14.3%) as more
customers transitioned from Microsoft's EA programme (where Microsoft invoices
the customers and pays BTG a rebate at 100% GP/GII margin) to Microsoft's CSP
programme (where BTG invoices the customers, pays Microsoft the cost of sale
and makes a net GP/GII margin).
Our long-standing relationships with our customers and high levels of repeat
business were again demonstrated in FY26, with 97% of our GP coming from
customers that we also traded with last year (FY25: 97%), at a renewal rate of
99% (FY25: 109%) - which measures the GP from existing customers in this
period compared to total GP in the prior period. New customers contributed
£5.1m of GP in the year (FY25: £4.3m). We saw customer numbers (defined as
those generating more than £100 of GP) broadly flat at 5,916 from 5,913,
while the average GP per customer increased slightly from £27,600 in FY25 to
£28,300 in FY26.
Other income
This comprises £0.6m of rental income from the offices acquired in FY25,
which we have not fully occupied yet (FY25: £0.1m).
Administrative expenses
This includes employee costs and other administrative expenses, as set out
below.
Employee costs
Our success in growing the business continues to be as a direct result of the
investments we have made over the years in our frontline sales teams, vendor
and technology specialists, service delivery staff and technical support
personnel, backed up by our marketing, operations and finance teams. It has
been, and will remain, a carefully managed aspect of our business.
In addition to continuing to hire new colleagues to ensure we have the
expertise required to provide our clients with the best service, our
commitment to develop, promote and expand from within the existing employee
base, giving our people careers rather than just employment, is at the heart
of our progress as a business. This has contributed to long tenure from our
employees, which in turn supports the lasting relationships we have
established with our customers, vendors and partners.
During the year we have seen total staff numbers rise to 1,331 on our February
2026 payroll, up by 7% from the year-end position of 1,245 on 28 February
2025.
Employee costs, included in administrative expenses, rose by 5.1% to £82.0m
(FY25: £78.1m), with higher costs from headcount, salary and national
insurance contribution increases partly mitigated by lower variable
remuneration, including a £4.2m decline in share-based payments. However,
this figure has been affected by the effects of capitalising £1.8m of staff
costs on to the balance sheet (FY25: £1.4m). This relates to the salaries of
employees who are developing two new IT platforms: one to provide a
'marketplace' gateway for our customers to more seamlessly purchase products
online from a range of vendors, and the other to enable us to improve our
operational processes around customer order processing. This treatment is in
line with our accounting policy for intangible assets, which can be found in
our Annual Report.
Other administrative expenses
Other administrative expenses increased by 22.7% to £23.2m (FY25: £18.8m).
The main increases comprised: systems investment, travel and entertainment and
insurance. We are investing in systems to improve employee and customer
experience. We continue to encourage our teams to connect with both customers
and vendors as well as bringing together our hybrid workforce for company
events. The heightened prevalence of cyber-attacks increases insurance
premiums for technology suppliers.
As part of the IT platform development project, we have also spent £2.7m with
a third-party development company to supplement our own internal resources
(FY25: £2.3m). This engagement was taken wholly for this purpose and the cost
has been capitalised in full alongside our own salary costs, adding a total of
£4.1m to intangible software assets during the period (FY25: £3.7m).
Operating profit
Our operating profit decreased by 5.6% from £66.4m to £62.7m, as employee
and other administrative costs increased against modest GP growth.
Our operating efficiency ratio, which measures operating profit as a
percentage of GP, is a key performance indicator in understanding the Group's
operational effectiveness in running day-to-day operations. This decreased to
37.5% (FY25: 40.7%). Including the capitalised staff costs, the ratio for this
period is 36.6% (FY25: 39.8%).
Interest income and finance costs
This year has again seen significant interest being earned from money-market
deposits, reducing slightly to £7.6m (FY25: £8.5m) because of lower interest
rates and lower average cash balances reflecting the c.£74m paid to
shareholders during FY26.
Our interest income benefits from often having materially higher cash balances
than reported at period ends around our largest months of trading in March and
April (around the UK Government's fiscal year end) and in June and December
(around some key vendors' fiscal year ends).
Our finance costs primarily comprise arrangement and commitment fees
associated with our revolving credit facility (RCF), noting that to date the
Group has not drawn down any amount on the facility. Finance costs also
include a small amount of finance lease interest, including from our staff
electric vehicle (EV) scheme.
Share of loss in associate
Following the acquisition of a 25.1% interest in Cloud Bridge Technologies in
April 2023, in accordance with IAS 28 Investments in Associates and Joint
Ventures we account for the Group's share of its profit/loss. Our share of its
loss for the year was £0.2m (FY25: £nil).
Profit before tax
The combined impact of decreased operating profits and lower levels of
interest income received has seen our profit before tax decreasing by 6.5% to
£69.8m (FY25: £74.6m).
Income tax expense
Our effective tax rate was 26.6% (FY25: 26.5%), which is above the UK
statutory rate of 25.0%, primarily because of a reduction in the deferred tax
asset value relating to outstanding share options.
Profit after tax
Profit after tax decreased by 6.5% to £51.3m (FY25: £54.8m), with lower
operating profit and interest income, and a marginally higher effective tax
rate.
Earnings per share
Basic earnings per share reduced 6.1% from 22.78p to 21.40p, and diluted
earnings per share reduced 5.5% from 21.95p to 20.74p, reflecting the
reduction in profit after tax, partly offset by a lower average number of
shares resulting from the £25m share repurchase programme completed during
FY26.
Balance sheet and cash flow
28 February 28 February
2026 2025
Balance sheet £'m £'m
Property, plant and equipment 14.1 13.6
Intangible assets 46.5 43.5
Investment in associate 3.0 3.2
Other non-current assets 2.4 3.4
Non-current assets 66.0 63.7
Contract assets 8.0 10.0
Trade and other receivables 299.9 268.4
Other current assets 1.6 0.0
Cash 98.6 113.1
Current assets 408.1 391.5
Lease liabilities 1.1 1.3
Other non-current liabilities 4.7 2.0
Non-current liabilities 5.8 3.3
Trade and other payables 359.2 327.5
Contract and tax liabilities 27.2 25.7
Lease liabilities 0.8 0.7
Current liabilities 387.2 353.9
Net assets 81.1 98.0
Share capital 2.4 2.4
Share premium 641.5 636.4
Share-based payment reserve 10.8 14.9
Merger reserve (644.4) (644.4)
Retained earnings 70.8 88.7
Total equity 81.1 98.0
Closing net assets stood at £81.1m (28 February 2025: £98.0m), including the
Group's £3.0m interest (25.1%) in Cloud Bridge Technologies.
Intangible assets include £7.6m of capitalised software development costs,
with £4.1m capitalised in the year, a combination of internal staff costs of
£1.8m and £2.3m of external contractor costs. We expect around £0.9m of
amortisation on the asset in our next financial year.
Our debtor days at the end of the year stood at 38, and our average debtor
days for the year was 39 (FY25: 38). Our closing loss allowance provision
reduced to £1.3m, down from £1.7m at the February 2025 year end, with £0.7m
bad debts written off in the year against the provision (FY25: £0.7m).
The Group has paid its suppliers on schedule throughout the year, with its
average creditor days remaining broadly in line with the prior year at 48
(FY25: 46) and standing at 43 at the end of the year (FY25: 36).
Operating with longer creditor days than debtor days results in a negative
working capital position for the business of £79.8m (measured as Trade and
other receivables and Contract assets less Trade and other payables and
Contract liabilities). We take this into account when determining the
appropriate amount of cash to hold on the balance sheet.
The consolidated cash flow is set out below:
Year ended 28 February 2026 Year ended 28 February 2025
Cash flow £'m £'m
Cash generated from operations 71.8 85.6
Payments for fixed assets (1.8) (6.4)
Payments for intangible assets (4.1) (3.7)
Free cash flow 65.9 75.5
Net interest received 7.3 8.3
Taxes paid (18.1) (18.9)
Lease payments (0.9) (0.6)
Dividends (48.6) (42.8)
Issue of share capital 5.1 2.8
Purchase of share capital (25.2) -
Net (decrease)/increase in cash (14.5) 24.3
Cash at the beginning of the period 113.1 88.8
Cash at the end of the period 98.6 113.1
Operating profit 62.7 66.4
Cash conversion (against operating profit) 105.1% 113.8%
Cash at the end of the period was £98.6m (28 February 2025: £113.1m), which
is after the payment of dividends totalling £48.6m during the period - being
the final and special dividends for FY25 and the interim dividend for FY26 -
and the share repurchase programme of £25.2m (including £0.2m of costs).
Cash flow from operations after payments for fixed and intangible assets (free
cash flow) generated a positive cash flow of £65.9m (FY25: £75.5m).
Consequently, the Group's cash conversion ratio for the year was 105.1% (FY25:
113.8%). We target our long-term sustainable cash conversion at around 100%.
The £5.1m cash received from the issue of share capital relates to
participating staff exercising share options, primarily under our 2021 CSOP
and SAYE (ShareSave) plans, which vested in June 2024 and August 2024,
respectively. There is a corresponding increase in the share premium value in
the balance sheet above.
If required, the Group has access to a committed RCF of £30m with HSBC. The
facility commenced on 17 May 2023, replacing the Group's previous facility for
the same amount, and runs for three years, until 17 May 2026. In May 2026 the
Group extended the facility by three years to 17 May 2029 for the same value
and under the same terms with an optional one-year extension to 17 May 2030.
To date, the Group has not used the facility.
Proposed dividend
As stated above, the Group's dividend policy is to distribute between 40% and
50% of post-tax pre-exceptional earnings to shareholders. Accordingly, the
Board is pleased to propose a gross final dividend of 7.0p per share. The
aggregate amount of the proposed dividend expected to be paid out of retained
earnings at 28 February 2026, but not recognised as a liability at the end of
the financial year, equates to £16.5m. Our capital allocation policy is that
excess cash following organic investment and any M&A is returned to
shareholders. We consider both special dividends and share buybacks as methods
to return excess capital. If approved by shareholders, the final dividend will
be payable on 31 July 2026 to all ordinary shareholders who are registered as
such at the close of business on the record date of 17 July 2026.
The salient dates applicable to the dividend are as follows:
Dividend announcement date Tuesday, 12 May 2026
AGM at which dividend resolutions will be proposed Thursday, 9 July 2026
Currency conversion determined and announced together with the South African Monday, 13 July 2026
(SA) tax treatment by 1100 (SAST)
Last day to trade cum dividend (SA register) Tuesday, 14 July 2026
Commence trading ex-dividend (SA register) Wednesday, 15 July 2026
Last day to trade cum dividend (UK register) Wednesday, 15 July 2026
Commence trading ex-dividend (UK register) Thursday, 16 July 2026
Record date Friday, 17 July 2026
Payment date Friday, 31 July 2026
Additional information required by the Johannesburg Stock Exchange:
1. The GBP:ZAR currency conversion will be determined and published on
SENS on 13 July 2026.
2. A dividend withholding tax of 20% will be applicable to all
shareholders on the South African register unless a shareholder qualifies for
exemption not to pay such dividend withholding tax.
3. The dividend payment will be made from a foreign source (UK).
4. At 12 May 2026, being the declaration announcement date of the
dividend, the company had a total of 236,370,093 shares in issue (with no
treasury shares).
5. No transfers of shareholdings to and from South Africa will be
permitted between 13 July 2026 and 17 July 2026 (both dates inclusive). No
dematerialisation or rematerialisation orders will be permitted between 15
July 2026 and 17 July 2026 (both dates inclusive).
Managing new and emerging risks
We assess current and emerging risks as part of our ongoing risk monitoring
process. While we remain vigilant, we take confidence from the resilience that
our business has shown through various external crises in recent years.
In our last Annual Report, we identified 14 principal risks that could have a
significant impact on our operations. This year, we combined two of those
risks - Changes to vendors' commercial model and Margin pressure - because of
their overlapping impacts and controls, meaning we now have 13 principal
risks. Aside from that, there were no changes to any of the risks themselves,
with no additions or deletions or reclassifications.
As in previous years, we changed the status of the risk in some cases. The
risk associated with the new, combined Commercial model and margin pressure
principal risk was assigned as 'increase' (Margin pressure on its own was 'no
change' last year, while Changes to vendors' commercial model was 'increase').
The risk status reflects the changes in vendors' models and the need for us to
adapt. For the following three risks we updated the status to 'increase':
· Evolving competition, because of the increasing rate of change in
our market
· Emerging technology, because of rapid advances in technology
· Supply chain management, in line with the additional regulatory
burden.
This means that we deem ten of our 13 principal risks to have increased during
the year, up from seven in the previous year, reflecting geopolitical,
regulatory and business landscape changes.
In our two previous annual reports we identified three emerging risks: Climate
change, and its physical and transition risks, Keeping pace with social change
and Impact of AI. We believe these remained relevant in 2025/26 and continued
to monitor them closely. As with cybersecurity, which is a risk and an
opportunity, AI presents an opportunity for our business, because we support
our customers to get the most out of the technology, and deploy it in our own
business to enhance productivity and creativity.
Summary of changes since FY25
Risk name Changes we made
1. Economic disruption Expanded the risk owners in the subsidiary businesses, alongside the CEO.
2. Commercial models and margin pressure Combined the risks Margin pressure and Changes to vendors' commercial model.
Defined the risk status as 'increase'.
3. Inflation Updated risk with latest figures.
4. Working capital Updated commentary to include risks from foreign exchange.
5. Vendor concentration Expanded the risk owners in the subsidiary businesses, and updated commentary.
6. Evolving Competition Changed name from Competition to Evolving competition. Changed status to
'increase'.
7. Emerging technology Changed name from Relevance and emerging technology to Emerging technology.
Changed status to 'increase'.
8. Cyberthreats - direct and indirect Updated commentary.
9. Business resilience Changed name from Business continuity failure to Business resilience, to more
accurately reflect the broader scope of this risk. Expanded the risk owners in
the subsidiary businesses
10. Attract and retain staff while keeping our culture Changed risk owner from CEO to CPO and expanded the risk owners in the
subsidiary businesses. Changed some mitigation and controls.
11. Supply chain management Changed status to 'increase'. Added commentary around failure to prevent fraud
and EU supply chain regulations.
12. Sustainability/ESG Made minor updates to commentary.
13. Regulatory and compliance Added CFO as a risk owner, alongside the CEO. Updated the risk to reflect risk
from fines and added a control measure.
Our principal risks and uncertainties
Financial 1. Economic disruption Risk owner CEO and executive committees of subsidiary companies
Increase
The risk How we manage it
Internationally, political uncertainty with the US administration continues, We remained resilient through periods of geopolitical uncertainty in 2025/26,
with rapid changes to global tariffs, as well as conflicts in the Middle East as we did through previous periods of instability such as high inflation,
and Ukraine. global conflicts, technology shortages and the UK leaving the EU.
This risk also includes the uncertainties caused by global economic pressures The recent real-life experience of these, and of the rising cost of living and
and geopolitical risk within the UK. There is the potential for public-sector exchange rate fluctuations, have shown us to be resilient through tough
funding to be reallocated, although the impact on us is still unknown. economic conditions. The diversity of our client base has also helped us
maintain and increase business in this period. We are not complacent, however
- economic disruption remains a risk, and we keep our operations under
constant review.
Our continued focus on software asset management means that we advise
customers of the most cost-effective ways to fulfil their software needs.
Changes to economic conditions mean many organisations will look to IT to
drive growth and/or efficiency.
Externally, we have seen more customers looking to avoid increased staff costs
by outsourcing their IT to managed services. This may create an opportunity to
accelerate our service offerings.
Financial stress-testing through our Going Concern Assessment will be reviewed
to provide reports back into the two operating companies.
We will keep a watching brief on the impacts to the public sector from any
government cuts to funding or policy changes, and how these effect the
business.
The impact
Major economic disruption and potentially higher taxes could see reduced
demand for software licensing, hardware and IT services, which government
controls could compound. Lower demand could also arise from reduced customer
budgets, cautious spending patterns or clients 'making do' with existing IT.
Economic disruption could also affect major financial markets, including
currencies, interest rates, trade and the cost of borrowing. Economic
deterioration like this could affect our business performance and
profitability. Inflationary pressure could still create an environment in
which customers redirect their spending from new IT projects to more pressing
needs.
2 Commercial models and margin pressure Risk owner CEO and executive committees of subsidiary companies
Increase
The risk
BTG faces pressure on profit margins from myriad directions, including There are external factors that influence our margins, such as economic and
increased competition, changes in vendors' commercial behaviour, certain political factors, which are beyond our control. Other factors, such as
offerings being commoditised and changes in customer mix or preferences. changing vendor commercial models, are also mostly beyond our control, but
permit us to take action to bolster our resilience.
We receive incentive income from our vendors and their distributors. This
partially offsets our costs of sales but could be significantly reduced or Our diverse portfolio of offerings, with a mix of vendors, software and
eliminated if the commercial models are changed significantly. services, has enabled us to absorb any changes to vendors' commercial models -
and we continue to innovate to find new ways to deliver more value for our
customers.
Although we receive major sources of funding from specific vendor programmes,
if one source declines, we can offset it by gaining new certifications in, and
selling, other technologies where new funding is available. Microsoft forms a
significant part of BTG's gross profit and has consistently reviewed its
incentive programmes to help it achieve its strategic objectives. BTG has
shown its ability to adapt in line with these changes. We are confident in our
ability to maintain growth over time.
We closely monitor incentive income and make sure staff are aligned to meet
vendors' goals so that we don't lose these incentives. Close and regular
communication with all our major vendors and distributors means we can manage
this risk appropriately. In some areas we have seen a positive change in
vendors' commercial terms, where we have been able to adapt practices.
Keeping the correct level of certification/accreditation by vendor, early deal
registration and rebate management are three methods we use to make sure we
are procuring at the lowest cost and maximising the incentives we earn.
Services delivered internally are consistently measured against our
competition to ensure we remain competitive and maximise margins.
With our key vendors, we have regular touch points and quarterly business
reviews (QBRs), which ensure close communication and timely updates of any
changes with our vendor community.
The impact
Major changes to commercial models, which can occur with limited notice, could
put pressure on our margins and profitability. In addition, any incentives
received are very valuable and contribute significantly to our operational
profits.
3 Inflation Risk owner CFO
Decrease
The risk How we manage it
Inflation in the UK, as measured by the Consumer Price Index (CPI), was 3.0% Staffing costs make up most of our overheads, so our attention has been
in February 2026, having started the financial year at 2.6% and peaked in focused on our employees and their ability to cope with the rising cost of
summer at 3.8%. This rate continues to stay above the Bank of England's target living.
of 2%.
While we cannot dictate our customers' budget, our business model is to build
trusted relationships - where account managers understand our customers and
are able to have pragmatic conversations about what their IT priorities should
be in the current technology landscape.
The impact
Wage inflation and increased fuel and energy costs have a direct impact on our
underlying cost base.
If the market wage is increased to a higher level, then we potentially have a
risk for retaining and attracting employees and customers.
Our customers will also have increased costs, which will change their budgets
and spending priorities.
4 Working capital Risk owner CFO
Increase
The risk How we manage it
As customers face the challenges of inflation and elevated interest rates in Our credit collections teams are focused on collecting customer debts on time
the current economic environment, there is a greater risk of an increasing and maintaining our debtor days at or below target levels. Debt collection is
aged debt profile, with customers slower to pay and the possibility of bad reported and analysed continually and escalated to senior management as
debts. We have seen enterprise-sized businesses in particular requesting required.
longer payment terms.
Vendors' changing payment terms could also have a significant impact.
We have invested in larger credit collection teams and risk management. This
includes conducting a case-by-case risk assessment for customer requests for
longer payment terms.
The implementation of the UK Government's Procurement Act 2023 will affect the
payment terms of public sector customers and affect our supply chain.
In the past financial year, BTG has seen a level of write-offs similar to the
prior year, which is still not significant: all our write-offs are from
We have seen debtor days stabilise as inflation has reduced, but the number of companies that have become insolvent or gone into administration.
days has not returned to historic low levels.
A large part of a successful outcome is maintaining strong, open relationships
Volatility in foreign exchange rates could also have positive or negative with our customers, understanding their issues and ensuring our billing
impacts. systems deliver accurate, clear and timely invoicing so that queries can be
quickly resolved.
We believe the UK Procurement Act 2023 will reduce the risk of extended or
ambiguous payment cycles, which have affected revenue recognition and working
capital. The Act extends through the supply chain, meaning that prime
contractors must pass on timely payments to subcontracted software developers
and service providers. BTG is required to pass on 30-day payment terms to all
subcontracted goods and/or services suppliers when the Act applies, providing
greater consistency of payment terms.
We monitor and act on this risk through cost control and efficiency measures
such as gross profit per employee and through operating profit metrics.
The impact
This could adversely affect our businesses' profitability and/or cash flow.
Strategic 5 Vendor concentration Risk owner CEO and executive committees of subsidiary companies
No change
The risk How we manage it
Continued strategic focus on top vendors could pose a potential risk, should We work with our vendors as partners - it is a relationship of mutual
that technology be superseded or exposed to economic down cycles, or if the dependency because we are their route to the end customer. We maintain
vendor fails to innovate ahead of customer demands. excellent relationships with all our vendors, and have a particularly good
relationship with Microsoft, which relies on us as a key partner in the UK.
Our growth plans, which involve developing business with all our vendors, will
naturally reduce the risk of relying too heavily on any single one.
We have a diversified vendor list, as well as a focus on services and using
in-house and third-party specialists, which diversifies and mitigates some of
the vendor concentration risk.
To ensure we maintain a diversified approach, we use peer reviews and market
intelligence through Gartner analyses and Megabuyte reviews, as well as having
regular engagement with our vendors, including QBRs.
The impact
Relying too heavily on any one vendor could have an adverse effect on our
financial performance, should the commercial relationship materially change.
Uptake of AI is expected to increase rapidly. While this represents an
opportunity, the development of AI by a handful of companies, including
Microsoft, has the potential to further concentrate revenue and profit across
fewer vendors.
6 Evolving competition Risk owner CEO
Increase
The risk How we manage it
Competition in the UK IT market, or the commoditisation of IT products, may We closely watch commercial and technological developments in our markets.
result in BTG being unable to win or maintain market share.
The threat of disintermediation by vendors has always been present. We
Mergers and acquisitions have consolidated our distribution network and minimise this threat by continuing to increase the added value we bring to
absorbed specialist services companies. This has caused overlap with our own customers directly. This reduces clients' desire to deal directly with
offerings. vendors.
A move to direct vendor resale to end customers (disintermediation) could Equally, vendors cannot engage with myriad organisations globally without the
place more pressure on the market opportunity. Platforms, like marketplaces, sort of well-established network of intermediaries that we have.
with direct sales to customers, could also be seen as disintermediation.
We currently work with the dominant marketplace providers and can sell from
multiple vendors to our customers through their platforms. By matching
customer requirements to the vendor's value proposition, we can better serve
An increase in the use of marketplaces also heightens the risk of more our customers' needs.
transactions going through the same route.
We continue to develop and improve our systems and processes to make
Frameworks, particularly in the public sector, are a procurement route of transactions easier for our customers, including expanding and improving our
choice for some customers. We risk narrowing our route to customers if we are own self-service portals.
not part of these frameworks.
AI has been identified as an emerging risk, and so will be explored and
AI risks becoming a partial competitor, if it becomes able to provide accurate monitored for risks and opportunities to our business.
and beneficial licensing and infrastructure advice direct to customers.
Currently, there is no sign of any commoditisation that would be a serious
The regulatory environment will change the competitive landscape too, as threat to our business model in the short or medium term.
regulators look to decrease monopolies.
We are aware of the opportunities from regulatory changes and partnerships to
expand our vendor, solution and services portfolio.
The rate of change in our competitive landscape has been increasing.
We continue to monitor this changing environment, including the speed and
impact of change.
To measure the impact of competition, we use customer and loyalty indicators
such as NPS scores and feedback. We use marketing and brand awareness measures
to assess our visibility and engagement with a broader community.
The impact
This risk could have a material, adverse impact on our business and
profitability, potentially needing a shift in business operations, including a
strategic overhaul of the products, solutions and services that we offer to
the market.
More consolidation could lead to less competition between vendors and cause
prices to value-added resellers, like us, to rise and service levels to fall.
Direct resale to customers could also increase. This could erode reseller
margins, given the purchase cost is less for the distributor than the
reseller. This could reduce our market, margin and profits.
7 Emerging technology Risk owner CEO and executive committees of subsidiary companies
Increase
The risk How we manage it
As the technology and security markets evolve rapidly and become more complex, We defend our position by keeping abreast of new technologies and the
the risk exists that we might not keep pace and so fail to be considered for innovators who develop them. We do this by joining industry forums and taking
new opportunities by our customers. seats on new technology committees. We have expanded the number and range of
our subject-matter experts, who stay ahead of developments in their areas and
communicate this internally and externally. This is in addition to
strengthening our internal capabilities with an innovation and engineering
team and by expanding and adapting our service offerings.
We stay relevant to our customers by:
· Continuing to offer them expert advice and innovative solutions
· Specialising in high-demand areas
· Holding superior levels of certification
· Maintaining our good reputation and helping clients find the
right solutions in a complex, often confusing IT marketplace.
Listening to our customers is integral to our approach, ensuring we are aware
of changing requirements. We are giving more focus to customer communications
and marketing, to increase brand awareness. We measure the impact of this
through an annual customer NPS score
By identifying and developing bonds with emerging companies, we maintain good
relationships with them as they grow and give our customers access to their
technologies.
As with our Vendor concentration risk, our research process includes peer
reviews and market intelligence through Gartner analyses and Megabuyte
reviews, as well as having regular engagement with our vendors, such as
through QBRs.
The impact
Customers have wide choice and vast opportunities to research options. If we
do not offer cutting-edge products and relevant services, we could lose sales
and customers, which would affect our profitability.
Processes and systems 8 Cyberthreats - direct and indirect Risk owner CTOs of subsidiary companies
Increase
The risk How we manage it
Breaches in the security of electronic and other confidential information that We use intelligence-driven analysis, including research by our internal
BTG collects, processes, stores and transmits may give rise to significant digital forensics team, to protect ourselves. This work provides insights into
liabilities and reputational damage. Recent high-profile ransomware attacks at vulnerable areas and the effects of any breaches, which allow us to strengthen
UK businesses, and geopolitical instability, has heightened our focus on our security controls.
cybersecurity risk.
Internal IT policies and processes are in place to mitigate some of these
Risks arise from cyber crime, third-party risks associated with cloud risks, including regular training, working-abroad procedures and the use of
providers, insider threats (including accidental, compromised insider and enterprise-level security software.
malicious intent) and risks associated with data protection.
We have established controls that separate customer systems and mitigate
cross-breaches. Our cyberthreat-level system also lets us tailor our approach
and controls in line with any intelligence we receive. Our two subsidiaries
share insights and examples of good practice on security controls with one
another. Both businesses use a security operations centre and have internal
specialists to provide up-to-date threat analysis.
We maintain ISO 27001, CE, CE+ (cyber essentials) and NHS DSPT certifications
to protect our and our customers' data.
Our CISO produces quarterly reports for the two businesses, which are shared
with BTG's Board and senior leadership.
Our internal auditors periodically review the management of risks associated
with cyberthreats.
The impact
If a hacker accessed our IT systems, they might infiltrate one or more of our
customer areas. This could provide indirect access, or the intelligence
required to compromise or access a customer environment.
This would increase the chance of first- and third-party risk liability, with
the possible effects of regulatory breaches, loss of confidence in our
business, reputational damage and potential financial penalties.This could
also result in significant disruption to our business.
Operational 9 Business resilience Risk owner Executive committees of subsidiary companies
No change
The risk How we manage it
Any failure or disruption of BTG's technology, information, people or The subsidiary companies have built and are improving business continuity
processes (TIPP) may negatively affect our ability to deliver to our plans, which incorporate all elements of TIPP that are significant to the
customers, cause reputational damage and lose us market share. operations of BTG.
Technology and information
Our CTOs and heads of IT manage and oversee our IT infrastructure, network,
systems and business applications. This includes regular disaster recovery
testing and building resilience into systems with failovers and backups.
Ongoing reviews make sure we have a high level of compliance and uptime. This
means our systems are highly effective and fit for purpose.
For business continuity, we use different sites and solutions to limit the
impact of service outage to customers. Where possible, we use active
resilience solutions - designed to withstand or prevent loss of services in an
unplanned event - rather than just disaster-recovery solutions and facilities,
which restore normal operations after an incident.
People and processes
Employees are encouraged to work from home or take time off when sick, to
avoid transmitting illness within the workplace. We also have processes to
mitigate any single point of failure, and that resiliency is built into
employees' skillsets.
The risk is also mitigated through policies and process implementation such as
Phoenix achieving ISO 22301 and Bytes implementing an incident management
policy.
Our efforts to reduce the risk from insider threats are multifaceted and
involve pre-employment screening, contracts, training, identifying higher-risk
individuals and technology to reduce potential data loss.
Regular internal audits are conducted in TIPP areas that are key to
operations. Findings and actions are defined, time bound and owned, leading to
improvements and reducing risk.
This risk is reviewed through frequent risk assessments and business
continuity plan testing.
The impact
Systems and IT infrastructure are key to our operational effectiveness.
Failures or significant downtime could hinder our ability to serve customers,
sell solutions or invoice.
Major outages in systems that provide customer services could limit clients'
ability to extract crucial information from their systems or manage their
software.
Increased automation means a heavier reliance on technology. Although it can
reduce human error, it can also potentially increase our reliance on other
vendors.
People are a huge part of our operational success, and processes rely on
people as much as technology to deliver effectively to our customers. Insider
threats, intentional or otherwise, could compromise our ability to deliver
and damage our reputation. Employee illness and absence - if in significant
numbers, such as a communicable disease in a particular team - could make
effective delivery difficult.
10 Attract and retain staff while keeping our culture Risk owner CPO and executive committees of subsidiary companies
Increase
The risk How we manage it
The success of BTG's business and growth strategy depends on our ability to We continually strive to be the best company to work for in our sector.
attract, recruit and retain a talented employee base. Being able to offer
competitive remuneration is an important part of this.
One of the ways we manage this risk is by growing our own talent pools. We've
used this approach successfully in our graduate intakes for sales, for
Several factors are affecting this, including: example. BTG also runs an extensive apprenticeship programme across multiple
business divisions. We also review the time that management has to coach new
· Salary and benefit expectations staff. We have conducted talent reviews and identified pathways for promotion.
· BTG's high rate of growth
· Skills shortage in emerging, high-demand areas, such as AI and We've also organically grown and set up new geographical offices, to attract
data local talent. In addition, we have employed more recruiters directly in the
business, which has enabled quicker ad-to-hire times, as well as employees
· Fully remote/flexible working being expected that are a better cultural fit.
· With remote or hybrid working becoming the norm, potential
employees in traditionally lower-paid geographical regions being able to work
remotely in higher-paying areas like London. In July 2025, we appointed a CPO, who is engaged with employees and working on
strategies to maintain our culture and improve staff welfare.
Maintaining our culture is important to retaining current staff. BTG regularly
engages with employees through surveys, such as the employee Net Promoter
Score (eNPS) and Great Places to Work. Feedback from these and other sources
is used to review and develop our employee benefits. We maintain our small
company feel through regular communications, clubs, charity events and social
events. We aim to absorb growth while keeping our culture.
To measure the impact of the risk and success of our controls we use the eNPS
score and feedback, attrition rates and third-party feedback sites.
Although we are seeing the inherent risk increase, our continued focus in this
area means we have seen the residual risk remain stable.
The impact
The double impact from scarcity of appropriate candidates for new roles and
salary expectations will challenge our ability to attract and retain the
talent pool we need to deliver our planned growth.
We may lose talented employees to competitors.
11 Supply chain management Risk owner Executive committees of subsidiary companies
Increase
The risk How we manage it
Failure to understand suppliers may lead to regulatory, reputational and Supplier set-up forms include questions to ask suppliers to disclose
financial risks, if they expose our business to practices that we would not information relating to compliance and adherence to our Supplier Code of
tolerate in our own operations. The time and effort to monitor and audit Conduct. Any unethical, illegal or corrupt behaviour that comes to light is
suppliers is considered a risk, as is the risk from failure to prevent fraud. escalated and appropriate action is taken. Onboarding questionnaires have been
reviewed and improved.
There is a risk to our business if we engage with suppliers that:
Phoenix has a supply chain manager, and Bytes has a third-party compliance
· Provide unethical working conditions and pay officer focused on supply chain management. Bytes has also established a
cross-disciplinary group to work on managing suppliers. With increasing
· Are involved in financial mismanagement and unethical behaviour regulations in the EU, we have invested more in supplier due diligence, with
additional criteria for onboarding.
· Cause environmental damage
· Operate in sanctioned regions.
We have conducted an internal audit risk assessment to identify controls to
prevent fraud.
The impact
The impact to the business is across multiple streams from legal, financial
and reputational to ethical and environmental.
Regulatory 12 Sustainability/ESG Risk owner Group Sustainability Manager
Increase
The H
ris o
k w
w
The e
gro m
win a
g n
imp a
ort g
anc e
e i
of t
sus
tai O
nab u
ili r
ty B
and o
ESG a
for r
our d
cus m
tom a
ers n
, a
inv g
est e
ors s
and a
emp n
loy d
ees m
mea o
ns n
we i
nee t
d o
to r
sta s
y t
at h
the i
for s
efr r
ont i
of s
rep k
ort c
ing l
and o
dis s
clo e
sur l
e, y
esp ,
eci w
all i
y t
giv h
en o
tha v
t e
req r
uir s
eme i
nts g
and h
sta t
nda f
rds r
are o
con m
tin t
ual h
ly e
upd E
ate S
d. G
Fai a
lur n
e d
to t
do h
so e
wou A
ld u
put d
the i
Gro t
up C
at o
ris m
k m
of i
fin t
anc t
ial e
pen e
alt s
ies .
and
rep
uta
tio T
nal h
dam e
age G
. r
o
u
p
S
u
s
t
a
i
n
a
b
i
l
i
t
y
M
a
n
a
g
e
r
c
o
n
t
i
n
u
e
s
t
o
d
r
i
v
e
s
u
s
t
a
i
n
a
b
i
l
i
t
y
r
e
p
o
r
t
i
n
g
a
n
d
i
n
i
t
i
a
t
i
v
e
s
,
a
n
d
t
o
w
o
r
k
w
i
t
h
a
n
a
p
p
o
i
n
t
e
d
t
h
i
r
d
p
a
r
t
y
t
o
p
r
o
v
i
d
e
g
u
i
d
a
n
c
e
a
n
d
a
s
s
u
r
a
n
c
e
o
n
r
e
p
o
r
t
e
d
d
a
t
a
.
E
n
v
i
r
o
n
m
e
n
t
a
l
m
a
n
a
g
e
m
e
n
t
s
y
s
t
e
m
s
a
r
e
a
l
s
o
i
n
p
l
a
c
e
a
n
d
c
e
r
t
i
f
i
e
d
b
y
I
S
O
1
4
0
0
1
.
O
u
r
S
u
s
t
a
i
n
a
b
i
l
i
t
y
S
t
e
e
r
i
n
g
C
o
m
m
i
t
t
e
e
e
n
a
b
l
e
s
d
e
c
i
s
i
o
n
m
a
k
e
r
s
f
r
o
m
a
c
r
o
s
s
t
h
e
G
r
o
u
p
t
o
w
o
r
k
t
o
w
a
r
d
s
a
c
o
m
m
o
n
g
o
a
l
a
n
d
r
e
p
o
r
t
o
n
c
h
a
l
l
e
n
g
e
s
.
T
h
e
B
o
a
r
d
a
l
s
o
h
a
s
a
n
E
S
G
C
o
m
m
i
t
t
e
e
,
w
h
i
c
h
p
r
o
v
i
d
e
s
o
v
e
r
s
i
g
h
t
a
n
d
i
n
p
u
t
t
o
o
u
r
E
S
G
s
t
r
a
t
e
g
y
a
n
d
p
r
o
g
r
e
s
s
.
W
e
m
a
k
e
d
i
s
c
l
o
s
u
r
e
s
t
h
r
o
u
g
h
s
e
v
e
r
a
l
c
h
a
n
n
e
l
s
,
i
n
c
l
u
d
i
n
g
I
S
S
E
S
G
r
a
t
i
n
g
s
,
C
D
P
a
n
d
E
c
o
V
a
d
i
s
.
T
h
e
S
c
i
e
n
c
e
B
a
s
e
d
T
a
r
g
e
t
s
i
n
i
t
i
a
t
i
v
e
(
S
B
T
i
)
v
a
l
i
d
a
t
e
d
o
u
r
n
e
a
r
-
t
e
r
m
a
n
d
n
e
t
z
e
r
o
t
a
r
g
e
t
s
a
s
p
a
r
t
o
f
o
u
r
p
r
o
g
r
a
m
m
e
t
o
d
r
i
v
e
s
u
s
t
a
i
n
a
b
i
l
i
t
y
t
h
r
o
u
g
h
b
e
s
t
p
r
a
c
t
i
c
e
a
p
p
r
o
a
c
h
e
s
.
W
e
u
s
e
f
e
e
d
b
a
c
k
f
r
o
m
d
i
s
c
l
o
s
u
r
e
s
t
o
g
u
i
d
e
c
h
a
n
g
e
s
i
n
t
h
e
b
u
s
i
n
e
s
s
.
A
s
d
i
s
c
l
o
s
u
r
e
m
e
t
h
o
d
o
l
o
g
i
e
s
s
t
a
y
c
u
r
r
e
n
t
,
s
o
s
h
o
u
l
d
t
h
e
b
u
s
i
n
e
s
s
,
w
h
e
r
e
p
o
s
s
i
b
l
e
a
n
d
r
e
l
e
v
a
n
t
.
I
n
2
0
2
5
,
f
a
i
l
u
r
e
t
o
p
r
e
v
e
n
t
f
r
a
u
d
l
e
g
i
s
l
a
t
i
o
n
c
a
m
e
i
n
.
W
e
h
a
v
e
r
e
v
i
e
w
e
d
t
h
e
p
o
t
e
n
t
i
a
l
r
i
s
k
a
n
d
e
n
h
a
n
c
e
d
o
u
r
c
o
n
t
r
o
l
s
t
o
e
n
s
u
r
e
w
e
a
r
e
a
d
e
q
u
a
t
e
l
y
p
r
o
t
e
c
t
e
d
t
o
a
v
o
i
d
u
n
i
n
t
e
n
t
i
o
n
a
l
m
i
s
i
n
f
o
r
m
a
t
i
o
n
.
O
u
r
B
o
a
r
d
m
a
n
a
g
e
s
a
n
d
m
o
n
i
t
o
r
s
t
h
i
s
r
i
s
k
c
l
o
s
e
l
y
,
w
i
t
h
o
v
e
r
s
i
g
h
t
f
r
o
m
t
h
e
E
S
G
a
n
d
t
h
e
A
u
d
i
t
C
o
m
m
i
t
t
e
e
s
.
The
imp
act
Fal
lin
g
beh
ind
exp
ect
ati
ons
or
our
pee
rs
may
lea
d
to
cha
lle
nge
s
aro
und
:
-
Leg
al
com
pli
anc
e,
suc
h
as
adh
eri
ng
to
glo
bal
sta
nda
rds
-
Ret
ain
ing
cus
tom
ers
,
as
the
y
pus
h
to
red
uce
emi
ssi
ons
-
Inv
est
or
rel
ati
ons
,
suc
h
as
mee
tin
g
cri
ter
ia
for
ESG
fun
ds
-
Att
rac
tin
g
and
ret
ain
ing
emp
loy
ees
,
as
you
nge
r
gen
era
tio
ns
see
k
to
wor
k
for
mor
e
pur
pos
e
-dr
ive
n
bus
ine
sse
s.
13 Regulatory and compliance Risk owner CEO and CFO
Increase
The H
ris o
k w
w
Our e
bus m
ine a
ss n
fac a
es g
inh e
ere i
nt t
ris
ks W
fro e
m e
evo n
lvi g
ng a
reg g
ula e
tor e
y x
and t
com e
pli r
anc n
e a
lan l
dsc e
ape x
s. p
Cha e
nge r
s t
in s
law a
s, n
reg d
ula w
tio o
ns r
and k
ind c
ust l
ry o
sta s
nda e
rds l
cou y
ld w
sig i
nif t
ica h
ntl e
y x
aff t
ect e
our r
ope n
rat a
ion l
s, a
fin u
anc t
ial h
sta o
bil r
ity i
and t
rep i
uta e
tio s
n. -
i
n
c
l
u
d
i
n
g
t
h
r
o
u
g
h
i
n
t
e
r
n
a
l
a
n
d
e
x
t
e
r
n
a
l
a
u
d
i
t
s
a
n
d
p
a
i
d
-
f
o
r
c
o
n
s
u
l
t
a
n
c
y
-
t
o
a
d
v
i
s
e
o
n
e
x
p
e
c
t
e
d
c
h
a
n
g
e
s
t
o
r
e
g
u
l
a
t
i
o
n
s
a
n
d
t
h
e
G
r
o
u
p
'
s
r
e
s
p
o
n
s
e
t
o
t
h
e
m
.
W
e
a
l
s
o
m
o
n
i
t
o
r
r
e
g
u
l
a
t
o
r
y
d
e
v
e
l
o
p
m
e
n
t
s
.
I
n
d
i
v
i
d
u
a
l
s
w
i
t
h
r
e
s
p
o
n
s
i
b
i
l
i
t
i
e
s
i
n
t
h
e
b
u
s
i
n
e
s
s
s
t
a
y
u
p
t
o
d
a
t
e
w
i
t
h
c
h
a
n
g
e
s
i
n
t
h
e
i
r
f
i
e
l
d
t
h
r
o
u
g
h
p
r
o
f
e
s
s
i
o
n
a
l
m
e
m
b
e
r
s
h
i
p
s
a
n
d
t
r
a
d
e
p
u
b
l
i
c
a
t
i
o
n
s
,
a
n
d
t
h
r
o
u
g
h
d
i
r
e
c
t
l
y
f
o
l
l
o
w
i
n
g
r
e
g
u
l
a
t
o
r
y
a
n
d
c
o
m
p
l
i
a
n
c
e
b
o
d
i
e
s
.
I
n
t
e
r
n
a
l
a
u
d
i
t
s
a
l
s
o
h
e
l
p
u
s
i
d
e
n
t
i
f
y
a
n
y
a
c
t
i
o
n
s
w
e
n
e
e
d
t
o
m
a
i
n
t
a
i
n
o
r
e
n
h
a
n
c
e
c
o
m
p
l
i
a
n
c
e
.
W
e
w
o
r
k
t
o
e
n
h
a
n
c
e
i
n
t
e
r
n
a
l
c
o
n
t
r
o
l
s
.
C
o
m
p
l
i
a
n
c
e
t
e
a
m
s
i
n
e
a
c
h
o
p
e
r
a
t
i
n
g
c
o
m
p
a
n
y
h
o
l
d
a
r
e
g
i
s
t
e
r
o
f
p
o
l
i
c
i
e
s
a
n
d
o
r
g
a
n
i
s
e
r
e
v
i
e
w
s
,
u
p
d
a
t
e
s
a
n
d
s
i
g
n
-
o
f
f
s
w
i
t
h
p
o
l
i
c
y
o
w
n
e
r
s
t
o
m
a
k
e
s
u
r
e
p
o
l
i
c
i
e
s
a
r
e
k
e
p
t
c
u
r
r
e
n
t
.
O
u
r
s
t
e
e
r
i
n
g
c
o
m
m
i
t
t
e
e
s
,
o
p
e
r
a
t
i
n
g
c
o
m
p
a
n
y
b
o
a
r
d
m
e
e
t
i
n
g
s
a
n
d
B
T
G
B
o
a
r
d
m
e
e
t
i
n
g
s
a
r
e
f
o
r
u
m
s
f
o
r
r
a
i
s
i
n
g
a
n
d
d
i
s
c
u
s
s
i
n
g
c
h
a
n
g
e
s
t
h
a
t
a
f
f
e
c
t
m
u
l
t
i
p
l
e
a
r
e
a
s
o
f
t
h
e
b
u
s
i
n
e
s
s
.
The
imp
act
Ope
rat
ion
al
tea
ms
and
pro
ces
ses
fac
e
adm
ini
str
ati
ve
bur
den
s
and
eff
ect
s
und
er
rap
idl
y
cha
ngi
ng
reg
ula
tio
ns.
Fai
lin
g
to
kee
p
up
wit
h
reg
ula
tor
y,
rep
ort
ing
and
com
pli
anc
e
cha
nge
s
cou
ld
lea
d
to
fin
es
(fo
r
exa
mpl
e,
GDP
R
and
the
Eco
nom
ic
Cri
me
and
Cor
por
ate
Tra
nsp
are
ncy
Act
(EC
CTA
)),
leg
al
cha
lle
nge
s
and
rep
uta
tio
nal
dam
age
.
If
reg
ula
tor
y
com
pli
anc
e
is
not
mai
nta
ine
d,
the
re
are
ris
ks
to
the
Gro
up
and
to
ind
ivi
dua
ls,
whi
ch
cou
ld
lea
d
to
exp
ens
ive
leg
al
cha
lle
nge
s
and
rep
uta
tio
nal
dam
age
to
the
bus
ine
ss
amo
ng
all
sta
keh
old
ers
.
Going concern disclosure
The Group has performed a full going concern assessment from 28 February 2026
for the period up to 31 August 2027. As outlined in the Chief Financial
Officer's review above, trading during the year demonstrated the Group's
strong performance in the period and our resilient operating model. The Group
has a healthy liquidity position with £98.6m of cash and cash equivalents
available at 28 February 2026. The Group also has access to a committed RCF
that covers the going concern period to 31 August 2027 and that remains
undrawn. The directors have reviewed trading and liquidity forecasts for the
Group, as well as continuing to monitor the effects of macroeconomic,
geopolitical and climate-related risks on the business. The directors have
also considered a number of key dependencies, which are set out in the Group's
principal risks report, and include BTG's exposure to inflation pressures,
credit risk, liquidity risk, currency risk and foreign exchange risk. The
Group continues to model its base case, severe-but-plausible and stressed
scenarios, including mitigations, consistently with those disclosed in the
annual financial statements for the year ended 28 February 2025, and with the
key assumptions summarised within the financial statements below. Under all
scenarios assessed, the Group would remain cash positive throughout the whole
of the going concern period without needing to use the RCF.
Going concern conclusion
Based on the analysis described above, the Group has sufficient liquidity
headroom through the forecast period. The directors therefore have reasonable
expectation that the Group has the financial resources to enable it to
continue in operational existence for the period up to 31 August 2027.
Accordingly, the directors conclude it to be appropriate that the consolidated
financial statements be prepared on a going concern basis.
Responsibility statement pursuant to the Financial Conduct Authority's
Disclosure and Transparency Rule 4 (DTR 4)
Each director of the company confirms that (solely for the purpose of DTR 4)
to the best of their knowledge that:
· The financial information in this document, prepared in accordance
with the applicable UK law and applicable accounting standards, gives a true
and fair view of the assets, liabilities, financial position and result of the
Group taken as a whole
· The Chief Executive Officer's and Chief Financial Officer's reviews
include a fair review of the development and performance of the business and
the position of the Group taken as a whole, together with a description of the
principal risks and uncertainties that they face.
On behalf of the Board.
Sam Mudd
Andrew Holden
Chief Executive Officer Chief Financial Officer
12 May 2026
Bytes Technology Group plc
Consolidated statement of profit or loss
For the year ended 28 February 2026
Year ended 28 February 2026 Year ended 28 February 2025
Note £'000 £'000
Revenue 3 220,562 217,134
Cost of sales (53,251) (53,880)
Gross profit 167,311 163,254
Administrative expenses 4 (104,278) (96,936)
(Increase) / decrease in loss allowance on trade receivables 16 (301) 108
Operating profit 62,732 66,426
Finance income 7 7,577 8,486
Finance costs 7 (319) (291)
Share of loss of associate 12 (158) (8)
Profit before taxation 69,832 74,613
Income tax expense 8 (18,550) (19,772)
Profit after taxation 51,282 54,841
Profit for the period attributable to owners of the parent company 51,282 54,841
Pence Pence
Basic earnings per ordinary share 27 21.40 22.78
Diluted earnings per ordinary share 27 20.74 21.95
The consolidated statement of profit or loss has been prepared on the basis
that all operations are continuing operations.
There are no items to be recognised in other comprehensive income, and hence
the Group has not presented a statement of other comprehensive income.
Bytes Technology Group plc
Consolidated statement of financial position
As at 28 February 2026
As at 28 February 2026 As at 28 February 2025
Note £'000 £'000
Assets
Non-current assets
Property, plant and equipment 9 14,082 13,581
Right-of-use assets 10 1,754 1,641
Intangible assets 11 46,482 43,475
Investment in associate 12 3,027 3,185
Contract assets 13 697 1,773
Deferred tax asset 8 - 59
Total non-current assets 66,042 63,714
Current assets
Inventories - 14
Contract assets 13 8,027 9,973
Trade and other receivables 16 299,887 268,454
Current tax asset 1,527 -
Cash and cash equivalents 17 98,646 113,076
Total current assets 408,087 391,517
Total assets 474,129 455,231
Liabilities
Non-current liabilities
Lease liabilities 10 (1,138) (1,269)
Contract liabilities 14 (2,067) (2,034)
Deferred tax liabilities 8 (2,587) -
Total non-current liabilities (5,792) (3,303)
Current liabilities
Trade and other payables 18 (359,197) (327,533)
Contract liabilities 14 (27,178) (25,245)
Current tax liabilities - (439)
Lease liabilities 10 (842) (668)
Total current liabilities (387,217) (353,885)
Total liabilities (393,009) (357,188)
Net assets 81,120 98,043
Equity
Share capital 19 2,364 2,411
Share premium 19 641,514 636,432
Share-based payment reserve 10,833 14,879
Merger reserve 20 (644,375) (644,375)
Retained earnings 70,784 88,696
Total equity 81,120 98,043
The consolidated financial statements were authorised for issue by the Board
of directors on 11 May 2026 and were signed on its behalf by:
Sam
Mudd
Andrew Holden
Chief Executive
Officer
Chief Financial Officer
Bytes Technology Group plc
Consolidated statement of changes in equity
For the year ended 28 February 2026
Attributable to owners of the company
Share capital Share premium Other reserves Merger reserve Retained earnings Total equity
Note £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 March 2024 2,404 633,650 11,050 (644,375) 75,607 78,336
Total comprehensive income for the year - - - - 54,841 54,841
Dividends paid 23(b) - - - - (42,843) (42,843)
Shares issued during the year 19 7 2,782 - - - 2,789
Transfer to retained earnings 26 - - (1,091) - 1,091 -
Share-based payment transactions 26 - - 5,049 - - 5,049
Tax adjustments 8 - - (129) - - (129)
Balance at 28 February 2025 2,411 636,432 14,879 (644,375) 88,696 98,043
Total comprehensive income for the year - - - - 51,282 51,282
Dividends paid 23(b) - - - - (48,618) (48,618)
Shares issued during the year 19 18 5,082 - - - 5,100
Transfer to retained earnings 26 - - (4,611) - 4,611 -
Share-based payment transactions 26 - - 751 - - 751
Tax adjustments 8 - - (251) - - (251)
Purchase and cancellation of own shares 19 (65) - 65 - (25,000) (25,000)
Costs of share purchases 19 - - - - (187) (187)
Balance at 28 February 2026 2,364 641,514 10,833 (644,375) 70,784 81,120
Bytes Technology Group plc
Consolidated statement of cash flows
For the year ended 28 February 2026
Year ended 28 February 2026 Year ended 28 February 2025
Note £'000 £'000
Cash flows from operating activities
Cash generated from operations 21 71,827 85,635
Interest received 7 7,577 8,486
Interest paid 7 (239) (224)
Income taxes paid (18,121) (18,930)
Net cash inflow from operating activities 61,044 74,967
Cash flows from investing activities
Payments for property, plant and equipment 9 (1,816) (6,358)
Payments for intangible asset 11 (4,097) (3,709)
Net cash outflow from investing activities (5,913) (10,067)
Cash flows from financing activities
Proceeds from issues of shares 19 5,100 2,789
Purchase of own shares for cancellation 19 (25,000) -
Cost incurred on purchase of own shares 19 (187) -
Principal elements of lease payments 10 (856) (606)
Dividends paid to shareholders 23(b) (48,618) (42,843)
Net cash outflow from financing activities (69,561) (40,660)
Net (decrease) / increase in cash and cash equivalents (14,430) 24,240
Cash and cash equivalents at the beginning of the financial year 113,076 88,836
Cash and cash equivalents at end of year 17 98,646 113,076
Bytes Technology Group plc
Notes to the consolidated financial statements
For the year ended 28 February 2026
1 Accounting policies
1.1 General information
Bytes Technology Group plc, together with its subsidiaries ('the Group' or
'the Bytes business') is one of the UK's leading providers of IT software
offerings and solutions, with a focus on cloud and security products. The
Group enables effective and cost-efficient technology sourcing, adoption and
management across software services, including in the areas of security and
cloud. The Group aims to deliver the latest technology to a diverse and
embedded non-consumer customer base and has a long track record of delivering
strong financial performance. The Group has a primary listing on the Main
Market of the London Stock Exchange (LSE) and a secondary listing on the
Johannesburg Stock Exchange (JSE).
1.2 Basis of preparation
The Group's consolidated financial statements have been prepared in accordance
with UK-adopted International Accounting Standards (IAS) in conformity with
the requirements of the Companies Act 2006.
The Group's material accounting policies and presentation considerations on
both the current and comparative periods are detailed below.
The financial information contained in this preliminary announcement does not
constitute the Group's statutory accounts for the years ended 28 February 2026
or 28 February 2025. The statutory accounts for the year ended 28 February
2026
will be filed with the Registrar of Companies in due course. The auditors
report on these accounts was not qualified or
modified and did not contain any statement under Sections 498(2) or (3) of the
Companies Act 2006. A separate
announcement will be made in accordance with Disclosure and Transparency Rules
(DTR) 6.3 when the annual report and audited financial statements for the year
ended 28 February 2026 are made available on the Company's website,
which is expected to be in May 2026.
In adopting the going concern basis for preparing the financial statements,
the directors have considered the business activities and the Group's
principal risks and uncertainties in the context of the current operating
environment. This includes the current geopolitical environment, the current
challenging economic conditions, and reviews of future liquidity headroom
against the Group's revolving credit facilities, during the period under
assessment. The approach and conclusion are set out fully in note 1.3.
The consolidated financial statements comprise the financial statements of the
Company and its subsidiaries, see note 1.6.1 and 1.6.2, and have been prepared
on a historical cost basis, as modified to include derivative financial assets
and liabilities at fair value through the consolidated statement of profit or
loss.
1.3 Going concern
The Group's ability to continue as a going concern is dependent on it
maintaining adequate levels of resources to continue to operate for the
foreseeable future. The directors have considered the principal risks, which
are set out in the Group's strategic report, in addition to risks such as the
Group's exposure to credit risk, liquidity risk, currency risk and foreign
exchange risk as described in note 22.
When assessing the Group's ability to continue as a going concern, the
directors have reviewed the year-to-date financial results, as well as
detailed financial forecasts for the going concern assessment period up to 31
August 2027, being over 15 months after the authorisation of these financial
statements.
The assumptions used in the financial forecasts are based on the Group's
historical performance and management's extensive experience of the industry.
Taking into consideration the Group's principal risks, the impact of the
current economic conditions and geopolitical environment, and future
expectations, the forecasts have been stress-tested through a number of
downside scenarios to ensure that a robust assessment of the Group's working
capital and cash requirements has been performed.
Operational performance and operating model
Following the previous years of strong growth since it listed in December
2020, the Group has again achieved double-digit growth in gross invoiced
income (GII) this year, but only a small increase in gross profit (GP) and a
small reduction in operating profit. Nevertheless, it finished the year with
cash conversion over 100% and £98.6 million of cash which was after returning
£74 million to shareholders by way of dividends and share buyback payments
(28 February 2025: cash £113.1 million).
During the year, customers have continued to move their software products and
data off-site and into the cloud, requiring the Group's advice and ongoing
support around this, as well as needing flexibility and added security. We are
also seeing growing requirements for artificial intelligence (AI)
functionality within IT applications and a demand for guidance and support
from our customers. These activities are illustrated by the very strong growth
in the Group's internal services GP by 45% in the year which captures the wide
range of solution technology areas offered and the Groups' proven ability to
deliver them.
Resilience also continues to be built into the Group's operating model from:
· Wide ranging customer base across public and private sectors and with
no customer contributing more than 1% of GP in the period.
· High levels of repeat business due to the nature of licensing schemes
and service contracts, meaning subscriptions need to be renewed for the
customer to continue to enjoy the benefit of the product or service.
· Microsoft relationship strength with around 68% of the Group's GII
and around 50% of GP generated from sales of Microsoft products and associated
service solutions, this continues to be a very important partnership for both
sides. The Group has achieved a high level of Microsoft specialisations (22)
and solution partner designations (10) in numerous technology areas. These are
key in underpinning the Group's strategic focus around driving growth in cloud
computing, cyber security and AI.
· Back-to-back sales model meaning that the Group is not exposed to
inventory risk.
As a result of these factors described above, the directors believe that the
Group operates in a resilient industry, which will enable it to return to its
profitable growth trajectory, following the reversal in growth for the first
time this past year.
Macroeconomic and geopolitical risks
The Group remains very aware of the risks that exist in the wider economy.
Over the past year we have seen continued risks arising from macroeconomic and
geopolitical factors which align to those identified in our principal risks
statement, including the ongoing conflicts in Ukraine, Iran and the wider
Middle East creating potential supply problems, product shortages and general
price rises.
The Board monitors these macroeconomic and geopolitical risks on an ongoing
basis including:
· Cost of sales inflation and competition leading to margin pressure -
Our commercial model is based on passing on supplier price increases to our
customers.
· Wage inflation - While we have already aligned staff salaries to
market rates, further expected rises have been factored into the financial
forecasts.
· Interest rates - The Group has no debt exposure, nor has it ever
needed to call on its revolving credit facility (RCF). We place cash on the
money markets to generate significant interest income.
· Economic conditions impacting on customer spending - We have seen
increased spending by our customers, because IT may be a means to efficiencies
and savings elsewhere.
· Economic conditions impacting on customer payments - We have seen our
average debtor days of 39 remaining very close to that in previous years and
with only £0.7 million of bad debt in the year.
· Tariffs impacting the Group directly or indirectly - As we are
neither a significant exporter nor importer of goods, we do not expect this
will have a direct material impact on the profitability of the business.
· Physical supply chain obstacles - We are not dependent on the
movement of goods, as software sales are the dominant element of our income,
and we have a wide supply chain across multiple technology areas.
· Increased fuel & commodity prices - We are not a heavy consumer
of gas, electricity or fuel, and hence these costs only represent a very small
proportion of our overheads.
· Climate change risks - The Group does not believe that the effects of
climate change will have a material impact on its operations and performance
over the going concern assessment period.
Liquidity and financing position
At 28 February 2026, the Group held instantly accessible cash and cash
equivalents of £98.6 million.
The consolidated balance sheet shows net current assets of £20.9 million at
year end; this amount is after the Group paid final and special dividends for
the prior year totalling £41.0 million, an interim dividend for the current
year of £7.6 million and a share buyback costing £25.2 million. Post year
end the Group has remained cash positive and this is expected to remain the
case with continued profitable operations in the future and customer receipts
collected ahead of making the associated supplier payments.
The Group has access to a committed RCF of £30 million with HSBC. The
facility, in place since IPO in December 2020, has recently been extended for
three years, until 17 May 2029. The facility includes a non-committed £45
million accordion to increase the availability of funding should it be
required for future activity. To date, the Group has not been required to use
either its previous or current facilities, and we do not forecast use of the
new facility over the going concern assessment period.
Approach to cash flow forecasts and downside testing
The going concern analysis reflects the actual trading experience through the
financial year to date, Board-approved budgets to 28 February 2027 and
detailed financial forecasts for the period up to 31 August 2027, being the
going concern assessment period. The Group has taken a measured approach to
its forecasting and has balanced the expected trading conditions with
available opportunities.
In its assessment of going concern, the Board has considered the potential
impact of the current economic conditions and geopolitical environment as
described above. If any of these factors leads to a reduction in spending by
the Group's customers, there may be an adverse effect on the Group's future
GII, GP, operating profit, and debtor collection periods. Under such
downsides, the Board has factored in the extent to which they might be offset
by reductions in headcount, recruitment freezes and savings in pay costs
(including commissions and bonuses). As part of the stressed scenario, where
only partial mitigation of downsides is possible, the Board confirmed that the
RCF would not need to be used during the going concern period up to 31 August
2027.
Details of downside testing
The Group assessed the going concern by comparing a base case scenario to two
downside scenarios and in each of the downside cases taking into consideration
two levels of mitigation, 'full' and 'partial'. These scenarios are set out
below.
· Base case was forecast using the Board-approved budget for the year
ending 28 February 2027 and extended across the first six months of the
following year to 31 August 2027.
· Downside case 1, Severe but plausible, modelled gross invoiced income
reducing by 10% year on year, gross profit reducing by 15% year on year and
debtor collection periods extending by five days, in each case effective from
June 2026.
· Downside case 2, Stressed, modelled both gross invoiced income and
gross profit reducing by 30% year on year and debtor collection periods
extending by ten days, again in each case effective from June 2026.
· Partial mitigation measures modelled immediate "self-mitigating"
reduction of commission in line with falling gross profit, freezing
recruitment of new heads and not replacing natural leavers from September
2026, freezing future pay from March 2027 (as current year rises are already
committed) and freezing rises in general overheads from March 2027.
· Full mitigation measures modelled additional headcount reductions
from March 2027, in line with falling gross profit.
The pay and headcount mitigations applied in the downside scenarios are within
the Group's control and, depending on how severe the impacts of the modelled
downside scenarios are, the Group could activate further levels of mitigation.
For example:
· those relating to headcount freezes or reductions could be
implemented even more quickly than indicated above to respond to downward
trends as, considering the sudden and significant falls in profitability and
cash collections modelled under both downsides, we would not wait for a full
three months before taking any action.
· we would also be able to take more action to lower our operating cost
base, given the flexibility of our business model.
· a natural reduction in the level of shareholder dividends would
follow, in line with the modelled reductions in profit after tax.
Therefore, the Board believes that all mitigations have been applied prudently
and are within the Group's control.
Under all scenarios assessed, the Group would remain cash positive throughout
the whole of the going concern period and therefore with no requirement to
call upon the revolving credit facility and remaining compliant with the bank
facility covenants. Dividends are forecast to continue to be paid in line with
the Group's dividend policy to distribute 40-50% of the post-tax
pre-exceptional earnings to shareholders.
The directors consider that the level of stress-testing is appropriate to
reflect the potential collective impact of all the macroeconomic and
geopolitical matters described and considered above.
Reverse stress test
The scenario analysis undertaken included reverse stress testing that involved
constructing scenarios that would threaten the Group's viability, because of
either (a) the Group exhausting all its available cash and its committed bank
facilities and/or (b) a breach of the covenant tests underpinning the Group's
banking facilities. The Group then assessed the likelihood of those scenarios
occurring. Having reviewed the reverse stress test, the directors have
concluded that the set of assumptions required to cause exhaustion of cash and
bank facilities, and/or a breach of bank covenants, is unlikely to occur.
Going concern conclusion
Based on the analysis described above, the Group has sufficient forecast
liquidity headroom through the forecast period. The directors therefore have
reasonable expectation that the Group has the financial resources to enable it
to continue in operational existence for the period up to 31 August 2027,
being the going concern assessment period. Accordingly, the directors conclude
it to be appropriate that the consolidated financial statements be prepared on
a going concern basis.
1.4 Critical accounting estimates and judgements
The preparation of the consolidated financial statements requires the use of
accounting estimates which, by definition, will seldom equal the actual
results. Management also needs to exercise judgement in applying the Group's
accounting policies. Estimates and judgements are continually evaluated and
are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
This note provides an overview of the areas that involved estimates or
judgements and whether any are considered critical due to their complexity or
risk impact.
(i) Critical estimates and judgements
There are no critical areas of judgement. There are no critical areas of
estimation uncertainty that may have a significant risk of resulting in a
material adjustment to the carrying amounts of assets and liabilities in the
next financial year.
(ii) Other estimates and judgements
Areas involving non-critical accounting estimates and judgements are:
· Principal versus agent (see note 1.10).
When recognising revenue, the Group is required to assess whether its role in
satisfying its various performance obligations is to provide the goods or
services themselves (in which case it is considered to be acting as principal)
or arrange for a third party to provide the goods or services (in which case
it is considered to be acting as agent). Where it is considered to be acting
as principal, the Group recognises revenue at the gross amount of
consideration to which it expects to be entitled. Where it is considered to be
acting as agent, the Group recognises revenue at the amount of any fee or
commission to which it expects to be entitled or the net amount of
consideration that it retains after paying the other party.
To determine the nature of its obligation, the standard primarily requires
that an entity shall:
(a) Identify the specified goods or services to be provided to the customer
(b) Assess whether it controls each specified good or service before that good
or service is transferred to the customer by considering if it:
a. is primarily responsible for fulfilling the promise to provide the
specified good or service
b. has inventory risk before the specified good or service has been
transferred to a customer
c. has discretion in establishing the price for the specified good or
service.
The specific judgements made for each revenue category are discussed in the
accounting policy for revenue as disclosed in note 1.10.
The Group considers the determination of principal versus agent to be well
established within the business processes. Therefore, management has concluded
that the level of judgement is consistent with prior year and is not
considered to be significant.
· Estimation of recoverable amount of goodwill (see notes 1.15 and 11).
The Group tests annually whether goodwill has suffered any impairment, in
accordance with the accounting policy stated in note 1.15. The recoverable
amounts of the relevant cash generating units (CGUs) have been determined
based on value-in-use calculations in respect of future forecasts which
require the use of assumptions. The growth rates used in the short-term
forecasts are based on historical growth rates achieved by the Group and
longer-term cash flow forecasts (beyond a five-year period) are extrapolated
using the estimated growth rates disclosed in note 11. The forecast cash flows
are discounted, at the rates disclosed in note 11, to determine the CGUs
value-in-use. The sensitivity of changes in the estimated growth rates and the
discount rate are disclosed in note 11.
· Provisions (see note 1.24).
IAS 37 Provisions, Contingent Liabilities and Contingent Assets requires a
provision to be recognised when an entity has a present obligation (legal or
constructive) because of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate can be made of the obligation. If any of
the conditions for recognition are not met, no provision is recognised, and an
entity may instead have a contingent liability. Contingent liabilities are not
recognised, but explanatory disclosures are required, unless the possibility
of an outflow in settlement is remote. The Group makes provision for future
tax liabilities and assets in relation to its unexercised share options. This
requires judgement to be made in respect of the Group share price at the time
of exercise which crystalises the future liability or asset.
· Property, plant and equipment (see note 1.20).
The Group classifies owner occupied properties as property, plant and
equipment. Where tenancies were assumed upon acquisition of the properties and
rental income are earned, this requires judgement as to whether the properties
are property, plant and equipment or investment property taking into account
the evaluation of terms and conditions of the arrangement and intention of
future use.
· Estimation of recoverable amount of investment in associate (see note
12).
The Group tests annually whether its investment in associate has suffered any
impairment, in accordance with the accounting policy stated in note 1.15
Impairment of non-financial assets.
· Share-based payments (see note 26).
Expenses are recorded throughout the vesting period, with key judgments
involving the estimation of forfeiture rates and assessment of non-market
performance conditions. These key judgements are updated at each reporting
date when assessing the likely number of options that will vest on completion
of the relevant performance periods.
1.5 New standards, interpretations and amendments adopted by the Group
(a) New and amended standards adopted by the Group
The Group has applied the following standard or amendments for the first time
in the annual reporting period commencing 1 March 2025:
· Lack of exchangeability - Amendments to IAS 21
The amendments listed above did not have any impact on the amounts recognised
in current or prior periods and are not expected to affect future periods.
(b) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that
are not mandatory for the year ended 28 February 2026 and have not been
adopted early by the Group. These standards are not expected to have a
material impact on the Group in the current or future reporting periods.
· Classification and measurement of financial instruments - Amendments
to IFRS 7 and IFRS 9
· Nature-dependent electricity contracts - Amendments to IFRS 9 and
IFRS 7
The Group is assessing the impact of IFRS 18 Presentation and disclosure in
financial statements as adopted by the UK Endorsement Board, which will be
effective for reporting periods beginning on or after 1 January 2027.
1.6 Principles of consolidation
1.6.1 Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group
controls an entity where the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect
those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
Inter-company transactions, balances and unrealised gains on transactions
between Group companies are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the transferred
asset. Accounting policies of subsidiaries have been changed where necessary
to ensure consistency with the policies adopted by the Group.
1.6.2 Associate
An associate is an entity over which the Group has significant influence.
Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control
over those policies. The Group's investment in its associate is accounted for
using the equity method.
Under the equity method, the investment in an associate is initially
recognised at cost. The carrying amount of the investment is adjusted to
recognise changes in the Group's share of net assets of the associate since
the acquisition date. The statement of profit or loss reflects the Group's
share of profit of the associate. Where there is objective evidence that the
investment in associate is impaired, the amount of the impairment is
recognised within 'Share of profit of associate' in the statement of profit or
loss.
1.7 Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker who views the Group's
operations on a combined level, given they sell similar products and services,
and substantially purchase from the same suppliers and under common customer
frameworks. The Group has determined that, consistent with the prior year, it
has only one reportable segment under IFRS 8, which is that of 'IT solutions
provider'.
1.8 Finance income and costs
Finance income comprises interest income on funds invested. Interest income is
recognised as it accrues in profit or loss, using the effective interest
method.
Finance costs comprises interest expense on borrowings and the unwinding of
the discount on lease liabilities, that are recognised in profit or loss as it
accrues using the effective interest method.
1.9 Foreign currency translation
(i) Functional and presentation currency
Items included in the consolidated financial statements of each of the Group's
entities are measured using the currency of the primary economic environment
in which the entity operates ('the functional currency').
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions, and from
the translation of monetary assets and liabilities denominated in foreign
currencies at year-end exchange rates, are generally recognised in profit or
loss. They are deferred in equity if they relate to qualifying cash flow
hedges and qualifying net investment hedges or are attributable to part of the
net investment in a foreign operation.
All foreign exchange gains and losses are presented in the statement of profit
or loss on a net basis, within 'other gains/(losses)'.
1.10 Revenue recognition
Revenue recognition principles across all revenue streams
The Group recognises revenue on completion of its performance obligations at
the fixed transaction prices specified in the underlying contracts or orders.
There are no variable price elements arising from discounts, targets, loyalty
points or returns. Where the contract or order includes more than one
performance obligation, the transaction price is allocated to each obligation
based on their stand-alone selling prices. These are separately listed as
individual items within the contract or order.
In the case of sales of third-party products and services, the Group's
performance obligations are satisfied by fulfilling its contractual
requirements with both the customer and the supplier (which may be direct with
the product vendor), ensuring that orders are processed within any contractual
timescales stipulated. In the case of sales of the Group's own in-house
products and internal services, this includes the Group fulfilling its
contractual responsibilities with the customer.
Software
The Group acts as an advisor, analysing customer requirements and designing an
appropriate mix of software products under different licensing programmes.
This may include a combination of cloud and on-premise products, typically
used to enhance users' productivity, strengthen IT security or assist in
collaboration. The way in which the Group satisfies its performance
obligations depends on the licensing programme selected.
Direct software sales - the Group's performance obligation is to facilitate
software sales between vendors and customers, but the Group is not party to
those sales contracts. Supply and activation of the software licences,
invoicing and payment all take place directly between the vendor and the
customer. The transaction price for the customer is set by the vendor with no
involvement from the Group. Therefore, the Group does not control the licences
prior to their delivery to the customer and hence acts as agent. The Group is
compensated by the vendor with a fee based on fixed rates set by the vendor
applied to the customer transaction price and determined according to the
quantity and type of products sold. Revenue is recognised as the fee received
from the vendor on a point in time basis when the vendor's invoicing to the
customer takes place.
Indirect software sales - the Group's performance obligation is to fulfil
customers' requirements through the procurement of appropriate on-premise
software products, or cloud-based software, from relevant vendors. Operating
as a reseller, the Group invoices, and receives payment from, the customer
itself. Whilst the transaction price is set by the Group at the amount
specified in its contract with the customer, the software licensing agreement
is between the vendor and the customer. The vendor is responsible for issuing
the licences and activation keys, for the software's functionality, and for
fulfilling the promise to provide the licences to the customer. Therefore, the
Group acts as agent and revenue is recognised as the amount retained after
paying the software vendor. As a reseller, the Group recognises indirect
software sales revenue on a point-in-time basis once it has satisfied its
performance obligations. This takes two main forms as follows:
In the case of cloud-based software sales, the Group arranges for third-party
vendors to provide customers with access to software in the cloud. As the
sales value varies according to monthly usage, revenue is recognised once the
amount is confirmed by the vendor and the Group has analysed the data and
advised the customer. This is because the responsibilities of the Group to
undertake such activities mean that these performance obligations are
satisfied at each point usage occurs and the Group has a right to receive
payment.
In the case of licence sales (non cloud-based software) arising from
fixed-price subscriptions where the customer makes an up-front payment, the
Group recognises revenue when the contract execution or order is fulfilled by
the Group because its performance obligation is fully satisfied at that point.
Typically, these take the form of annual instalments where the Group is
required to undertake various contract review activities at each anniversary
date.
Hardware - resale of hardware products
The Group's activities under this revenue stream comprise the sale of hardware
items such as servers, laptops and devices. For hardware sales, the Group acts
as principal, as it assumes primary responsibility for fulfilling the promise
to provide the goods and for their acceptability, is exposed to inventory risk
during the delivery period and has discretion in establishing the selling
price.
Revenue is recognised at the gross amount receivable from the customer for the
hardware provided and on a point-in-time basis when delivered and control has
passed to the customer.
Services internal - provision of services to customers using the Group's own
internal resources
The Group's activities under this revenue stream comprise the provision of
consulting services using its own internal resources. The services provided
include, but are not limited to, helpdesk support, cloud migration,
implementation of security solutions, infrastructure, and software asset
management services. The services may be one-off projects where completion is
determined on delivery of contractually agreed tasks, or they may constitute
an ongoing set of managed service or support contract deliverables over a
contract term which may be multi-year.
When selling internally provided services, the Group acts as principal as
there are no other parties involved in the process. Revenue is recognised at
the gross amount receivable from the customer for the services provided. The
Group recognises revenue from internally provided consulting services on an
over-time basis, unless they are short term one-off projects. This is because
the customer benefits from the Group's activities as the Group performs them.
Where one-off projects are completed in less than a month the revenue is
recognised when the work has been completed and the customer has confirmed all
performance conditions have been satisfied. For longer service projects
extending over more than one month the Group applies an inputs basis by
reference to the hours expended to the measurement date, and the day rates
specified in the contract, subject to sign off of milestones agreed with the
customer. For managed services and support contracts the revenue is recognised
evenly over the contract term.
Services external - provision of services to customers using third-party
contractors
The Group's activities under this revenue stream comprise the sale of a
variety of IT services which are provided by third-party contractors. These
may be similar to the internally provided consulting services, where the Group
does not have the internal capacity at the time required by the customer or
may be services around different IT technologies and solutions where the Group
does not have the relevant skills in-house.
Whilst the transaction price is set by the Group at the amount specified in
its contract with the customer, when selling externally provided services, the
Group acts as agent because responsibility for delivering the service relies
on the performance of the third-party contractor. If the customer is not
satisfied with their performance, the third party will assume responsibility
for making good the service and obtaining customer sign-off. The Group will
not pay the third party until customer sign-off has been received. Revenue is
recognised at the amount retained after paying the service provider for the
services delivered to the customer on a point-in-time basis. The Group does
not control the services prior to their delivery and its performance
obligations are satisfied at the point the service has been delivered by the
third party and confirmed with the customer.
1.11 Contract costs, assets and liabilities
Contract costs
Incremental costs of obtaining a contract
The Group recognises the incremental costs of obtaining a contract when those
costs are incurred. For revenue recognised on a point-in-time basis, this is
consistent with the transfer of the goods or services to which those costs
relate. For revenue recognised on an over-time basis, the Group applies the
practical expedient available in IFRS 15 and recognises the costs as an
expense when incurred because the amortisation period of the asset that would
otherwise be recognised is less than one year.
Costs to fulfil a contract
The Group recognises the costs of fulfilling a contract when those costs are
incurred. This is because the nature of those costs does not generate or
enhance the Group's resources in a way that enables it to satisfy its
performance obligations in the future and those costs do not otherwise qualify
for recognition as an asset.
Contract assets
The Group recognises a contract asset for accrued revenue. Accrued revenue is
revenue recognised from performance obligations satisfied in the period that
has not yet been invoiced to the customer.
Contract assets also include costs to fulfil services contracts (deferred
costs) when the Group is invoiced by suppliers before the related performance
obligations of the contract are satisfied by the third party. Deferred costs
are measured at the purchase price of the associated services received.
Deferred costs are released from the consolidated statement of financial
position in line with the recognition of revenue on the specific transaction.
Contract liabilities
The Group recognises a contract liability for deferred revenue when the
customer is invoiced before the related performance obligations of the
contract are satisfied. A contract liability is also recognised for payments
received in advance from customers. Contract liabilities are recognised as
revenue when the Group performs its obligations under the contract to which
they relate.
1.12 Rebates and incentives from suppliers
As a value-added IT reseller, the Group can earn incentive income from
suppliers in addition to any profit made on the underlying transactions.
Rebates from software and hardware sales
Where the Group invoices a customer directly, it may receive additional
rebates from suppliers. These are accounted for in the period in which they
are earned and are based on commercial agreements with suppliers. Rebates
earned are mainly determined by the type and quantity of products within each
sale but may also be volume-purchase related. They are generally short term in
nature, with rebates earned but not yet received typically relating to the
preceding month's or quarter's trading. Rebate income is recognised in cost of
sales in the consolidated statement of profit or loss and rebates earned but
not yet received are included within trade and other receivables in the
consolidated statement of financial position.
Fees from software sales
When the Group sells on behalf of a vendor who invoices the customer, the
Group earns a fee from the vendor for managing the customer relationship and
providing licensing advice and support to them. As noted above in note 1.10
under Direct software sales, the fee is recognised in revenue when the
vendor's invoicing to the customer takes place. Fees recognised but not yet
received are included within trade and other receivables in the consolidated
statement of financial position.
1.13 Income tax
The income tax expense or credit for the period is the tax payable on the
current period's taxable income, based on the applicable income tax rate for
each jurisdiction, adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated based on the tax laws enacted or
substantively enacted at the end of the reporting period in the countries
where the company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions, where appropriate, based on amounts expected to be
paid to the tax authorities.
Deferred income tax is provided for in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not accounted for if it
arises from initial recognition of an asset or liability in a transaction
other than a business combination that, at the time of the transaction,
affects neither accounting nor taxable profit or loss. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantially
enacted by the end of the reporting period and are expected to apply when the
related deferred income tax asset is realised, or the deferred income tax
liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary
differences between the carrying amount and tax bases of investments in
foreign operations where the Group is able to control the timing of the
reversal of the temporary differences and it is probable that the differences
will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset where there is a legally
enforceable right to offset current tax assets and liabilities and where the
deferred tax balances relate to the same taxation authority. Current tax
assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent
that it relates to items recognised in other comprehensive income or directly
in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
1.14 Leases
Group as a lessee
The Group leases a property and various motor vehicles. Lease agreements are
typically made for fixed periods but may have extension options included.
Lease terms are negotiated on an individual basis and contain different terms
and conditions. The lease agreements do not impose any covenants, but leased
assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at
the date at which the leased asset is available for use by the Group. Each
lease payment is allocated between the liability and finance cost. The finance
cost is charged to profit or loss over the lease period to produce a constant
periodic rate of interest on the remaining balance of the liability for each
period. The right-of-use asset is depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. The Group is
depreciating the right-of-use assets over the lease term on a straight-line
basis.
Assets and liabilities arising from a lease are initially measured at the net
present value of the minimum lease payments. The net present value of the
minimum lease payments is calculated as follows:
· Fixed payments, less any lease incentives receivable
· Variable lease payments that are based on an index or a rate
· Amounts expected to be payable by the lessee under residual value
guarantees
· The exercise price of a purchase option if the lessee is reasonably
certain to exercise that option
· Payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the
lease; where this rate cannot be determined, the Group's incremental borrowing
rate is used.
Right-of-use assets are measured at cost comprising the following:
· The net present value of the minimum lease payments
· Any lease payments made at, or before, the commencement date less any
lease incentives received
· Any initial direct costs.
Payments associated with short-term leases and leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12 months or less. Low-value
assets comprise IT equipment and small items of office furniture.
Depreciation
Depreciation is recognised in profit or loss for each category of assets on a
straight-line basis over the lease term.
The estimated useful lives for the current and comparative periods are as
follows:
· Buildings, 8 years
· Motor vehicles, 2 to 3 years.
The depreciation methods, useful lives and residual values are reassessed
annually and adjusted if appropriate. Gains and losses arising on the disposal
of leased assets are included as capital items in profit or loss.
Group as a lessor
Leases in which the Group does not transfer substantially all the risks and
rewards incidental to ownership of an asset are classified as operating
leases. Rental income arising accounted for on a straight-line basis over the
lease term and is included in the statement of profit or loss.
1.15 Impairment of non-financial assets
Goodwill and intangible assets that have an indefinite useful life are not
subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might be
impaired. Other assets are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount might not be recoverable. An
impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset's fair value less costs of disposal and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets (cash
generating units). Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at the end of
each reporting period.
1.16 Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions
repayable without penalty on notice of not more than 24 hours. Cash
equivalents are highly liquid investments that mature in no more than three
months from the date of acquisition and that are readily convertible to known
amounts of cash with insignificant risk of change in value.
For purposes of the consolidated statement of cash flows, cash and cash
equivalents consist of cash and short-term deposits as defined above.
1.17 Trade receivables
Trade receivables are amounts due from customers for merchandise sold or
services rendered in the ordinary course of business. Trade receivables are
recognised initially at the amount of consideration that is unconditional,
i.e. fair value and subsequently measured at amortised cost using the
effective interest method, less loss allowance. Prepayments and other
receivables are stated at their nominal values.
1.18 Inventories
Inventories are measured at the lower of cost and net realisable value
considering market conditions and technological changes. Cost is determined on
the first-in first-out methods. Work and contracts in progress and finished
goods include direct costs and an appropriate portion of attributable overhead
expenditure based on normal production capacity. Net realisable value is the
estimated selling price in the ordinary course of business, less the estimated
costs of completion and selling expenses.
1.19 Financial instruments
Financial instruments comprise trade and other receivables (excluding
prepayments), investments, cash and cash equivalents, non-current loans,
current loans, bank overdrafts, derivatives and trade and other payables.
Recognition
Financial assets and liabilities are recognised in the Group's statement of
financial position when the Group becomes a party to the contractual
provisions of the instruments. Financial assets are recognised on the date the
Group commits to purchase the instruments (trade date accounting).
Financial assets are classified as current if expected to be realised or
settled within 12 months from the reporting date; if not, they are classified
as non-current. Financial liabilities are classified as non-current if the
Group has an unconditional right to defer payment for more than 12 months from
the reporting date.
Classification
The Group classifies financial assets on initial recognition as measured at
amortised cost, fair value through other comprehensive income (FVOCI), or fair
value through profit or loss (FVTPL) based on the Group's business model for
managing the financial asset and the cash flow characteristics of the
financial asset.
Financial assets are classified as follows:
· Financial assets to be measured subsequently at fair value (either
through other comprehensive income (OCI) or through profit or loss)
· Financial assets to be measured at amortised cost.
Financial assets are not reclassified unless the Group changes its business
model. In rare circumstances where the Group does change its business model,
reclassifications are done prospectively from the date that the Group changes
its business model.
Financial liabilities are classified and measured at amortised cost except for
those derivative liabilities and contingent considerations that are measured
at FVTPL.
Measurement on initial recognition
All financial assets and financial liabilities are initially measured at fair
value, including transaction costs, except for those classified as FVTPL which
are initially measured at fair value excluding transaction costs. Transaction
costs directly attributable to the acquisition of financial assets or
financial liabilities at FVTPL are recognised immediately in profit or loss.
Subsequent measurement: financial assets
Subsequent to initial recognition, financial assets are measured as described
below:
· FVTPL - these financial assets are subsequently measured at fair
value and changes therein (including any interest or dividend income) are
recognised in profit or loss
· Amortised cost - these financial assets are subsequently measured at
amortised cost using the effective interest method, less impairment losses.
Interest income, foreign exchange gains and losses and impairments are
recognised in profit or loss. Any gain or loss on derecognition is recognised
in profit or loss
· Equity instruments at FVOCI - these financial assets are subsequently
measured at fair value. Dividends are recognised in profit or loss when the
right to receive payment is established. Other net gains and losses are
recognised in OCI. On derecognition, gains and losses accumulated in OCI are
not reclassified to profit or loss.
Subsequent measurement: financial liabilities
All financial liabilities, excluding derivative liabilities and contingent
consideration, are subsequently measured at amortised cost using the effective
interest method. Derivative liabilities are subsequently measured at fair
value with changes therein recognised in profit or loss.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from
the assets have expired or have been transferred and the Group has transferred
substantially all risks and rewards of ownership. Financial liabilities are
derecognised when the obligations specified in the contracts are discharged,
cancelled or expire. On derecognition of a financial asset or liability, any
difference between the carrying amount extinguished and the consideration paid
is recognised in profit or loss.
Offsetting financial instruments
Offsetting of financial assets and liabilities is applied when there is a
legally enforceable right to offset the recognised amounts and there is an
intention to settle on a net basis or realise the asset and settle the
liability simultaneously. The net amount is reported in the statement of
financial position.
Impairment
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all trade
receivables.
To measure the expected credit losses, trade receivables have been grouped
based on credit risk characteristics and the days past due.
The expected credit loss (ECL) rates are based on the payment profiles of
sales over a 12-month period before 28 February 2026, 28 February 2025, and 1
March 2024 respectively and the corresponding historical credit losses
experienced within this period. The historical loss rates are reviewed and
adjusted to reflect current and forward-looking information on macroeconomic
factors affecting the ability of the customers to settle the
receivables.
Trade receivables are written off where there is no reasonable expectation of
recovery. Indicators that there is no reasonable expectation of recovery.
Indicators that there is no reasonable expectation of recovery include, among
others, the failure of a debtor to engage in a repayment plan with the Group,
and a failure to make contractual payments for a period of greater than 120
days past due.
Impairment losses on trade receivables are presented as net impairment losses
within operating profit. Subsequent recoveries of amounts previously written
off are credited against the same line item.
Derivatives
Derivatives are initially recognised at fair value on the date that a
derivative contract is entered into as either a financial asset or financial
liability if they are considered material. Derivatives are subsequently
remeasured to their fair value at the end of each reporting period, with the
change in fair value being recognised in profit or loss.
1.20 Property, plant and equipment
Owned assets
Property, plant and equipment is measured at cost less accumulated
depreciation and impairment losses. When components of an item of property,
plant and equipment have different useful lives, those components are
accounted for as separate items of property, plant and equipment.
Property acquired and held for future use and development as owner-occupied
property is included in owned property.
Cost includes expenditure that is directly attributable to the acquisition of
the asset. Purchased software that is integral to the functionality of the
related equipment is capitalised as part of that equipment.
Subsequent costs
The Group recognises in the carrying amount of an item of property, plant and
equipment the cost of replacing part of such an item when the cost is
incurred, if it is probable that future economic benefits embodied within the
item will flow to the Group and the cost of such item can be measured
reliably. The carrying amount of the replaced item of property, plant and
equipment is derecognised. All other costs are recognised in profit or loss as
an expense when incurred.
Depreciation
Depreciation is recognised in profit or loss for each category of assets on a
straight-line basis over their expected useful lives up to their respective
estimated residual values. Land is not depreciated.
The estimated useful lives for the current and comparative periods are as
follows:
· Buildings, 20 to 50 years
· Leasehold improvements (included in land and buildings), shorter of
lease period or useful life of asset
· Plant and machinery, 3 to 20 years
· Motor vehicles, 4 to 8 years
· Furniture and equipment, 5 to 20 years
· IT equipment and software, 2 to 8 years
The depreciation methods, useful lives and residual values are reassessed
annually and adjusted if appropriate. Gains and losses arising on the disposal
of property, plant and equipment are included in profit or loss.
1.21 Intangible assets
Goodwill
Goodwill is measured as described in note 1.15. Goodwill on acquisitions of
subsidiaries is included in intangible assets. Goodwill is not amortised, but
it is tested for impairment annually, or more frequently if events or changes
in circumstances indicate that it might be impaired and is carried at cost
less accumulated impairment losses. Gains and losses on the disposal of an
entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose of impairment
testing. The allocation is made to those cash generating units or groups of
cash generating units that are expected to benefit from the business
combination in which the goodwill arose. The units or groups of units are
identified at the lowest level at which goodwill is monitored for internal
management purposes.
Brands and customer relationships
Brands and customer relationships acquired in a business combination are
recognised at fair value at the acquisition date. They have a finite useful
life and are subsequently carried at cost less accumulated amortisation and
impairment losses. Amortisation is recognised in profit or loss on a
straight-line basis over their expected useful lives.
The useful lives for the brands and customer relationships are as follows:
· Customer relationships, 10 years
· Brands, 5 years.
Software
Costs associated with maintaining software programs are recognised as an
expense as incurred. Development costs that are directly attributable to the
design and testing of identifiable and unique software products controlled by
the Group are recognised as intangible assets where the following criteria are
met:
· It is technically feasible to complete the software so that it will
be available for use
· Management intends to complete the software and use or sell it
· There is an ability to use or sell the software
· It can be demonstrated how the software will generate probable future
economic benefits
· Adequate technical, financial and other resources to complete the
development and to use or sell the software are available
· The expenditure attributable to the software during its development
can be reliably measured.
Amortisation is recognised in profit or loss on a straight-line basis over
their expected useful lives. The useful lives for software is 2 to 8 years.
Research and development
Research expenditure and development expenditure that do not meet the criteria
above are recognised as an expense as incurred. Development costs previously
recognised as an expense are not recognised as an asset in a subsequent
period.
1.22 Trade and other payables
Trade payables, sundry creditors and accrued expenses are obligations to pay
for goods or services that have been acquired in the ordinary course of
business from suppliers. They are accounted for in accordance with the
accounting policy for financial liabilities as included above. Amounts
received from customers in advance, prior to confirming the goods or services
required, are recorded as other payables. Upon delivery of the goods and
services, these amounts are recognised in revenue. Other payables are stated
at their nominal values.
1.23 Borrowings
Borrowings are initially recognised at fair value, net of transaction costs
incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using
the effective-interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that
it is probable that some or all of the facility will be drawn down. In this
case, the fee is deferred until the drawdown occurs. To the extent that there
is no evidence that it is probable that some or all of the facility will be
drawn down, the fee is capitalised as a prepayment for liquidity services and
amortised over the period of the facility to which it relates.
1.24 Provisions
Provisions are recognised when the Group has a present legal or constructive
obligation because of past events, for which it is probable that an outflow of
economic benefits will be required to settle the obligation, and where a
reliable estimate can be made of the amount of the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax discount
rate that reflects current market assessments of the time value of money and,
where appropriate, the risks specific to the liability.
1.25 Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual
leave and accumulating sick leave, that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the
related service are recognised in respect of employees' services up to the end
of the reporting period and are measured at the amounts expected to be paid
when the liabilities are settled. The liabilities are presented as current
employee benefit obligations in the balance sheet.
Post-employment obligations
The Group operates various defined contribution plans for its employees. Once
the contributions have been paid, the Group has no further payment
obligations. The contributions are recognised as employee benefit expense when
they are due. Prepaid contributions are recognised as an asset to the extent
that a cash refund or a reduction in the future payments is available.
Termination benefits
Termination benefits are payable when employment is terminated by the Group
before the normal retirement date, or when an employee accepts voluntary
redundancy in exchange for these benefits. The Group recognises termination
benefits at the earlier of the following dates: (a) when the Group can no
longer withdraw the offer of those benefits; and (b) when the Group recognises
costs for a restructuring that is within the scope of IAS 37 and involves the
payment of termination benefits. In the case of an offer made to encourage
voluntary redundancy, the termination benefits are measured based on the
number of employees expected to accept the offer. Benefits falling due more
than 12 months after the end of the reporting period are discounted to present
value.
Share-based payments
Equity settled share-based payment incentive scheme
Share-based compensation benefits are provided to particular employees of the
Group through the Bytes Technology Group plc share option plans. Information
relating to all schemes is provided in note 26.
Employee options
The fair values of options granted under the Bytes Technology Group plc share
option plans are recognised as an employee benefit expense, with a
corresponding increase in equity. The total amount to be expensed is
determined by reference to the fair value of the options granted. The
share-based payment reserve comprises the fair value of share awards granted
which are not yet exercised. The amount will be reversed to retained earnings
as and when the related awards vest and are exercised by employees.
The total expense is recognised over the vesting period, which is the period
over which all the specified vesting conditions are to be satisfied. At the
end of each period, the Group revises its estimates of the number of options
issued that are expected to vest based on the service conditions. It
recognises the impact of the revision to original estimates, if any, in profit
or loss, with a corresponding adjustment to equity.
1.26 Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares are recognised as a deduction
from equity, net of any tax effects.
When share capital recognised as equity is repurchased, the amount of the
consideration paid, including directly attributable costs, is recognised as a
deduction from equity.
1.27 Dividends
Dividends paid on ordinary shares are classified as equity and are recognised
as distributions in equity.
1.28 Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
· The profit attributable to owners of the company, excluding any costs
of servicing equity other than ordinary shares
· By the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued
during the year and excluding treasury shares.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of
basic earnings per share to consider:
· The after-income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares
· The weighted average number of additional ordinary shares that would
have been outstanding, assuming the conversion of all dilutive potential
ordinary shares.
1.29 Rounding of amounts
All amounts disclosed in the consolidated financial statements and notes have
been rounded off to the nearest thousand, unless otherwise stated.
2 Segmental information
Description of segment
The information reported to the Group's Chief Executive Officer, who is
considered to be the chief operating decision maker for the purposes of
resource allocation and assessment of performance, is based wholly on the
overall activities of the Group. The Group has therefore determined that it
has only one reportable segment under IFRS 8, which is that of 'IT solutions
provider'. The Group's revenue, results, assets and liabilities for this one
reportable segment can be determined by reference to the consolidated
statement of profit or loss and the consolidated statement of financial
position. An analysis of revenues by product lines and geographical regions,
which form one reportable segment, is set out in note 3.
3 Revenue from contracts with customers
3(a) Disaggregation of revenue from contracts with customers
The Group derives revenue from the transfer of goods and services in the
following major product lines and geographical regions:
Year ended 28 February 2026 Year ended 28 February 2025
Revenue by product £'000 £'000
Software 145,208 146,002
Hardware 31,266 33,216
Services internal 39,312 34,032
Services external 4,776 3,884
Total revenue from contracts with customers 220,562 217,134
Software
The Group's software revenue comprises the sale of various types of software
licences (including both cloud-based and non-cloud-based licences),
subscriptions and software assurance products.
Hardware
The Group's hardware revenue comprises the sale of items such as servers,
laptops and other devices.
Services internal
The Group's internal services revenue comprises internally provided consulting
services through its own internal resources.
Services external
The Group's external services revenue comprises the sale of externally
provided training and consulting services through third-party contractors.
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Revenue by geographical regions
United Kingdom 211,904 209,854
Europe 4,988 4,112
Rest of world 3,670 3,168
220,562 217,134
3(b) Gross invoiced income by type
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Software 2,233,393 2,005,289
Hardware 31,266 33,216
Services internal 39,312 34,032
Services external 37,077 27,267
2,341,048 2,099,804
Gross invoiced income 2,341,048 2,099,804
Adjustment to gross invoiced income for income recognised as agent (2,120,486) (1,882,670)
Revenue 220,562 217,134
Gross invoiced income reflects gross income billed to customers adjusted for
movements in deferred and accrued revenue items amounting to a £5.9 million
reduction (2025: £7.7 million reduction). The Group reports gross invoiced
income as an alternative performance measure as management believes this
measure allows further understanding of business performance and volume of
activity in respect of working capital and cash flow.
4 Material administrative expenses
The Group has identified several items included within administrative expenses
which are material due to the significance of their nature and/or amount.
These are listed separately here to provide a better understanding of the
financial performance of the Group:
Year ended 28 February 2026 Year ended 28 February 2025
Note £'000 £'000
Depreciation of property, plant and equipment 9 1,314 1,255
Depreciation of right-of-use assets 10 706 509
Amortisation of acquired intangible assets 11 880 880
System support and maintenance(1) 6,171 4,670
Share-based payment expenses 26 751 5,049
Expenses relating to short-term leases 10 433 348
Foreign exchange losses 198 55
Rental income (625) (105)
(1) Year‑on‑year movement driven business growth, increased headcount and
implementation of new systems.
5 Employees
Year ended 28 February 2026 Year ended 28 February 2025
Employee benefit expense: £'000 £'000
Employee remuneration (including directors' remuneration (1)) 63,775 55,497
Commissions and bonuses 24,884 24,837
Social security costs 12,008 9,762
Pension costs 2,340 2,009
Share-based payments expense 26 751 5,049
103,758 97,154
Classified as follows:
Cost of sales 21,723 19,098
Administrative expenses 82,035 78,056
103,758 97,154
(1) Directors' remuneration is included in the directors' remuneration report.
Year ended 28 February 2026 Year ended 28 February 2025
The average monthly number of employees during the year was: Number Number
Sales - account management 331 378
Sales - support and specialists 367 251
Service delivery 325 290
Administration 265 231
1,288 1,150
The employee benefit expenses in relation to the service delivery employees
are included within cost of sales.
6 Auditors' remuneration
During the year, the Group obtained the following services from the company's
auditors and its associates:
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Fees payable to the company's auditors and its associates for the audit of the 304 316
parent company and consolidated financial statements
Fees payable to the company's auditors and its associates for other services:
Audit of the financial statements of the company's subsidiaries 442 450
Non-audit services (1) 110 105
856 871
(1) Non-audit services in the current and prior year relate to the auditors'
review of our interim report issued in October of each year.
7 Finance income and costs
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Finance income
Bank interest received ((1)) 7,577 8,486
Finance income 7,577 8,486
Finance costs
Interest expense on financial liabilities measured at amortised cost (239) (224)
Interest expense on lease liability (80) (67)
Finance costs (319) (291)
(1) Interest received on cash deposited on money market
8 Income tax expense
The major components of the Group's income tax expense for all
periods are:
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Current income tax charge in the year 16,392 19,175
Adjustment in respect of current income tax of previous years (57) (18)
Total current income tax charge 16,335 19,157
Deferred tax charge / (credit) in the year 2,233 604
Adjustments in respect of prior year (18) 11
Deferred tax charge 2,215 615
Total tax charge 18,550 19,772
Reconciliation of total tax charge
The tax assessed for the year differs from the standard rate of
corporation tax in the UK applied to profit before tax:
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Profit before income tax 69,832 74,613
Income tax charge at the standard rate of corporation tax in the UK of 25% 17,458 18,653
(2024: 25%)
Effects of:
Non-deductible expenses 1,127 1,124
Adjustment to previous periods (75) (7)
Effect of share of profit of associate 40 2
Income tax charge reported in profit or loss 18,550 19,772
Amounts recognised directly in equity
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Aggregate current and deferred tax arising in the reporting period and not
recognised in net profit or loss or other comprehensive income but directly
credited/(charged) to equity:
Deferred tax: share-based payments (431) (160)
Current tax: share-based payments 180 31
(251) (129)
The Base Erosion and Profit Shifting Pillar Two model rules apply to
multinational enterprises with revenues exceeding €750 million. Group
revenues do not exceed €750 million and therefore the rules do not apply to
the Group.
As at 28 February 2026 As at 28 February 2025
Deferred tax (liability) / asset - net £'000 £'000
The balance comprises temporary differences attributable to:
Intangible assets (348) (568)
Property, plant and equipment (3,188) (2,088)
Employee benefits 6 6
Provisions 297 74
Share-based payments 646 2,635
(2,587) 59
As at 28 February 2026 As at 28 February 2025
Net deferred tax (liability) / asset reconciliation £'000 £'000
At 1 March 59 834
Intangible assets 220 220
Property, plant and equipment (1,100) (1,029)
Employee benefits - 5
Provisions 223 1
Share-based payments (1,558) 188
Charge to profit or loss (2,215) (615)
Share-based payments (431) (160)
Charge to equity (431) (160)
Carrying amount at end of year (2,587) 59
The deferred tax asset and deferred tax liabilities carrying amounts at the
end of the year are set off as they arise in the same jurisdiction and as such
there is a legally enforceable right to offset.
9 Property, plant and equipment
Freehold land and buildings Furniture, fittings and equipment
Computer equipment Computer software Motor vehicles
Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 1 March 2024 9,778 5,006 1,324 1,266 86 17,460
Additions 5,760 549 46 - 3 6,358
Disposals - (1) - - (24) (25)
At 28 February 2025 15,538 5,554 1,370 1,266 65 23,793
Additions 1,122 563 122 - 9 1,816
Disposals (799) (1,688) (732) (637) (30) (3,886)
At 28 February 2026 15,861 4,429 760 629 44 21,723
Depreciation
At 1 March 2024 2,937 4,028 1,094 861 62 8,982
On disposals - (1) - - (24) (25)
Charge for the year 384 600 47 211 13 1,255
At 28 February 2025 3,321 4,627 1,141 1,072 51 10,212
On disposals (798) (1,688) (732) (637) (30) (3,885)
Charge for the year 513 594 60 138 9 1,314
At 28 February 2026 3,036 3,533 469 573 30 7,641
Net book value
At 28 February 2025 12,217 927 229 194 14 13,581
At 28 February 2026 12,825 896 291 56 14 14,082
In the prior year the Group acquired property, for £5.4 million, adjacent to
its offices in Leatherhead. Part of the property acquired is subject to
existing operating lease agreements. Since the property was acquired by the
Group for use as owner-occupied offices, the property has been included in
owned property.
10 Leases
Group as a lessee
Amounts recognised in the balance sheet
Buildings Motor vehicles Total
Right-of-use assets £'000 £'000 £'000
Cost
At 1 March 2024 1,377 891 2,268
Additions - 739 739
At 28 February 2025 1,377 1,630 3,007
Additions - 856 856
Disposal - (47) (47)
At 28 February 2026 1,377 2,439 3,816
Depreciation
At 1 March 2024 738 119 857
Charge for the period 145 364 509
At 29 February 2025 883 483 1,366
On disposals - (10) (10)
Charge for the period 145 561 706
At 28 February 2026 1,028 1,034 2,062
Net book value
At 1 March 2024 639 772 1,411
At 28 February 2025 494 1,147 1,641
At 28 February 2026 349 1,405 1,754
As at 28 February 2026 As at 28 February 2025 As at 1 March 2024
Lease liabilities £'000 £'000 £'000
Current 842 668 423
Non-current 1,138 1,269 1,314
1,980 1,937 1,737
There were additions of £0.9 million to the right-of-use assets in the
financial year ended 28 February 2026 (2025: £0.7 million).
Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to
leases:
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Depreciation charge of right-of-use assets 706 509
Interest expense (included in finance cost) 80 67
Expense relating to short-term leases (included in administrative expenses) 433 348
Changes in liabilities arising from financing activities
As at 1 March 2025 As at 28 February 2026
Additions Disposal Cash flows Interest
£'000 £'000 £'000 £'000 £'000 £'000
Lease liabilities 1,937 856 (37) (856) 80 1,980
Total liabilities from financing activities 1,937 856 (37) (856) 80 1,980
As at 1 March 2024 Interest As at 28 February 2025
Additions Disposal Cash flows
£'000 £'000 £'000 £'000 £'000 £'000
Lease liabilities 1,737 739 - (606) 67 1,937
Total liabilities from financing activities 1,737 739 - (606) 67 1,937
Group as a lessor
Contractual maturity of undiscounted operating lease receipts
The following table details the Group's remaining contract maturity for
operating leases on the Group during the year. The table is based on
undiscounted contractual receipts.
Within 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Over 5 years
Operating lease receivables £'000 £'000 £'000 £'000 £'000 £'000
28 February 2026 464 464 244 87 87 72
28 February 2025 464 464 464 244 87 159
11 Intangible assets
Goodwill Customer relationships Brand Software Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 March 2024 37,493 8,798 3,653 - 49,944
Additions - - - 3,709 3,709
At 28 February 2025 37,493 8,798 3,653 3,709 53,653
Additions - - - 4,097 4,097
At 28 February 2026 37,493 8,798 3,653 7,806 57,750
Amortisation
At 1 March 2024 - 5,645 3,653 - 9,298
Charge for the year - 880 - - 880
At 28 February 2025 - 6,525 3,653 - 10,178
Charge for the year - 880 - 210 1,090
At 28 February 2026 - 7,405 3,653 210 11,268
Net book value
At 28 February 2025 37,493 2,273 - 3,709 43,475
At 28 February 2026 37,493 1,393 - 7,596 46,482
During the year the Group capitalised internal software development costs of
£4.1 million (2025: £3.7 million).
Determination of recoverable amount
The carrying value of indefinite useful life intangible assets, being
goodwill, are tested annually for impairment. For each CGU and for all periods
presented, the Group has assessed that the value in use represents the
recoverable amount. The future expected cash flows used in the value-in-use
models are based on management forecasts, over a five-year period, and
thereafter a reasonable rate of growth is applied based on current market
conditions. For the purpose of impairment assessments of goodwill, the
goodwill balance is allocated to the operating units which represent the
lowest level within the Group at which the goodwill is monitored for internal
management purposes.
A summary of the goodwill per CGU, as well as assumptions applied for
impairment assessment purposes, is presented below:
Long-term growth rate Discount rate Goodwill carrying amount
28 February 2026 % % £'000
Bytes Software Services 2 9.30 14,775
Phoenix Software 2 9.30 22,718
37,493
Long-term growth rate Discount rate Goodwill carrying amount
28 February 2025 % % £'000
Bytes Software Services 2 9.20 14,775
Phoenix Software 2 9.20 22,718
37,493
Growth rates
The Group used what it considers to be a conservative growth rate of 2% which
was applied beyond the approved budget and forecast periods. The growth rate
was consistent with publicly available information relating to long-term
average growth rates for the market in which the respective CGU operated.
Discount rates
Discount rates used reflect both time value of money and other specific risks
relating to the relevant CGU. Post-tax discount rates have been applied. The
difference between the value-in-use calculated using the post-tax discount
rates and the value-in-use calculated using pre-tax discount rates is not
material.
Sensitivities
The impacts of variations in the calculation of value-in-use of assumed growth
rate and post-tax discount rates applied to the forecast future cash flows of
the CGUs have been estimated as follows:
Bytes Software Services Phoenix Software
28 February 2026 £'000 £'000
Headroom 492,895 228,114
1% increase in the post-tax discount rate applied to the forecast future cash (68,853) (32,385)
flows
1% decrease in the post-tax discount rate applied to the forecast future cash 90,968 42,792
flows
0.5% increase in the terminal growth rate 32,314 15,209
0.5% decrease in the terminal growth rate (28,171) (13,259)
Bytes Software Services Phoenix Software
28 February 2025 £'000 £'000
Headroom 702,044 212,605
1% increase in the post-tax discount rate applied to the forecast future cash (94,207) (31,522)
flows
1% decrease in the post-tax discount rate applied to the forecast future cash 124,953 41,843
flows
0.5% increase in the terminal growth rate 44,492 14,940
0.5% decrease in the terminal growth rate (38,714) (13,000)
None of the above sensitivities, taken either in isolation or aggregated,
indicates a potential impairment. The directors consider that there is no
reasonable possible change in the assumptions used in the sensitivities that
would result in an impairment of goodwill.
12 Investment in an associate
The Group has a 25.1% interest in Cloud Bridge Technologies Limited, a company
with a principal place of business in the United Kingdom. The Group's interest
in Cloud Bridge Technologies Limited is accounted for using the equity method.
As at 28 February 2026 As at 28 February 2025
£'000 £'000
Current assets 11,047 7,980
Non-current assets 405 108
Current liabilities (9,340) (5,016)
Non-current liabilities (439) (771)
Equity 1,673 2,301
Group's share in equity - 25% 420 578
Goodwill 2,607 2,607
Group's carrying amount of the investment 3,027 3,185
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Revenue 34,881 28,920
Cost of sales (29,625) (26,755)
Administrative expenses (5,874) (2,340)
Finance costs (50) (56)
Profit before tax (668) (231)
Income tax expense 43 198
Profit for the period (625) (33)
Group's share of profit for the period (158) (8)
The associate requires the Group's consent to distribute its profits. The
Group does not foresee giving such consent at the reporting date. The
associate had no contingent liabilities or capital commitments as at 28
February 2026.
In preparing the financial statements, the Group has considered whether there
are impairment indicators present which would require an adjustment to be made
to the £3.0 million carrying amount of the investment as at 28 February 2026.
Management have considered several qualitative factors in respect of the Cloud
Bridge business including historic track record of revenue growth, increase in
customer opportunities and pipeline, attainment of key vendor accreditations,
development of internal systems to deliver cost savings and efficiencies, and
expansion of operations in other territories. Combined with current
performance metrics and the forecasts produced, the Group concludes there to
be no impairment of the carrying amount of the investment at the reporting
date.
13 Contract assets
As at 28 February 2026 As at 28 February 2025
£'000 £'000
Contract assets 8,724 11,746
As at 28 February 2026 As at 28 February 2025
Contract assets is further broken down as: £'000 £'000
Short-term contract assets 8,027 9,973
Long-term contract assets 697 1,773
8,724 11,746
Contract assets include £2.6 million (2025: £1.7 million) of deferred costs
relating to internal services contracts, and the recognition of accrued
revenue of £6.1 million (2025: £10.0 million) for certain large software
orders where performance obligations were satisfied in the period but not yet
invoiced to the customer at the period end.
14 Contract liabilities
As at 28 February 2026 As at 28 February2025
£'000 £'000
Contract liabilities 29,245 27,279
As at 28 February 2026 As at 28 February 2025
Contract liabilities is further broken down as: £'000 £'000
Short-term contract liabilities 27,178 25,245
Long-term contract liabilities 2,067 2,034
29,245 27,279
During the year, the Group recognised £25.2 million (2025: £19.3 million) of
revenue that was included in the contract liability balance at the beginning
of the period. This liability arises where revenue has been deferred when the
customer is invoiced before the related performance obligations of the
contract are satisfied, and the deferral of certain large payments received in
advance from customers.
15 Financial assets and financial liabilities
This note provides information about the Group's financial instruments,
including:
· An overview of all financial instruments held by the Group
· Specific information about each type of financial instrument
· Accounting policies
· Information about determining the fair value of the instruments,
including judgements and estimation uncertainty involved.
The Group holds the following financial instruments:
As at 28 February 2026 As at 28 February 2025
Financial assets Note £'000 £'000
Financial assets at amortised cost:
Trade receivables 16 290,193 259,224
Other receivables 16 6,750 6,917
296,943 266,141
As at 28 February 2026 As at 28 February 2025
Financial liabilities Note £'000 £'000
Financial liabilities at amortised cost:
Trade and other payables - current, excluding payroll tax and other statutory 322,865 301,669
tax liabilities
Lease liabilities 10 1,980 1,937
324,845 303,606
The Group's exposure to various risks associated with the financial
instruments is discussed in note 22. The maximum exposure to credit risk at
the end of the reporting period is the carrying amount of each class of
financial assets mentioned above.
16 Trade and other receivables
As at 28 February 2026 As at 28 February 2025
£'000 £'000
Financial assets
Gross trade receivables 291,479 260,883
Less: impairment allowance (1,286) (1,659)
Net trade receivables 290,193 259,224
Other receivables 6,750 6,917
296,943 266,141
Non-financial assets
Prepayments 2,944 2,313
2,944 2,313
Trade and other receivables 299,887 268,454
(i) Classification of trade receivables
Trade receivables are amounts due from customers for goods sold or services
performed in the ordinary course of business. They are generally due for
settlement within 30 days and are therefore all classified as current. Trade
receivables are recognised initially at the amount of consideration that is
unconditional, unless they contain significant financing components, in which
case they are recognised at fair value. The Group holds the trade receivables
with the objective of collecting the contractual cash flows, and so it
measures them subsequently at amortised cost using the effective interest
method. Details about the Group's impairment policies are provided in note
1.19.
(ii) Fair values of trade receivables
Due to the short-term nature of the current receivables, their carrying amount
is considered to be the same as their fair value.
(iii) Credit risk
Ageing and impairment analysis (excluding finance lease assets)
Current Past due 0 to 30 days Past due 31 to 60 days Past due 61 to 120 days Past due 121 to 365 days
Total
28 February 2026 £'000 £'000 £'000 £'000 £'000 £'000
Expected loss rate 0.06% 0.22% 2.34% 4.23% 36.69%
Gross carrying amount - trade receivables 248,956 28,200 8,168 4,209 1,946 291,479
Loss allowance 141 62 191 178 714 1,286
Current Past due 0 to 30 days Past due 31 to 60 days Past due 61 to 120 days Past due 121 to 365 days
Total
28 February 2025 £'000 £'000 £'000 £'000 £'000 £'000
Expected loss rate 0.07% 0.26% 2.90% 10.93% 44.84%
Gross carrying amount - trade receivables 232,118 17,495 5,201 4,189 1,880 260,883
Loss allowance 162 45 151 458 843 1,659
The closing loss allowances for trade receivables reconcile to the opening
loss allowances as follows:
As at 28 February 2026 As at 28 February 2025
Trade receivables £'000 £'000
Opening loss allowance at 1 March 1,659 2,490
Increase / (decrease) in loss allowance recognised in profit or loss during 301 (108)
the period
Receivables written off during the year as uncollectable (674) (723)
Closing loss allowance 1,286 1,659
Impairment losses on trade receivables are presented as net impairment losses
within operating profit. Subsequent recoveries of amounts previously written
off are credited against the same line item.
(iv) Other receivables
Other receivables include accrued rebate and other vendor incentive income of
£5.3 million (2025: £5.6 million).
17 Cash and cash equivalents
As at 28 February 2026 As at 28 February 2025
£'000 £'000
Cash at bank and in hand 5,246 6,276
Short-term deposits 93,400 106,800
98,646 113,076
Short-term deposits are made for varying periods of between one day and one
month, depending on the immediate cash requirements of the Group and earn
interest at the respective short-term deposit rates.
18 Trade and other payables
As at 28 February 2026 As at 28 February 2025
£'000 £'000
Trade and other payables 218,542 179,003
Accrued expenses 115,290 122,666
Payroll tax and other statutory liabilities 25,365 25,864
359,197 327,533
Trade payables are unsecured and are usually paid within 45 days of
recognition. Accrued expenses include accruals for purchase invoices not
received and other accrued costs such as bonuses and commissions payable at
year end.
The carrying amounts of trade and other payables are considered to be the same
as their fair values, due to their short-term nature.
19 Share capital and share premium
Number of shares Nominal value Share premium Total
Allotted, called up and fully paid £'000 £'000 £'000
At 1 March 2024 240,356,898 2,404 633,650 636,054
Shares issued during the year 711,367 7 2,782 2,789
At 28 February 2025 241,068,265 2,411 636,432 638,843
Shares issued during the year 1,775,559 18 5,082 5,100
Cancellation of own shares (6,473,731) (65) - (65)
At 28 February 2026 236,370,093 2,364 641,514 643,878
Ordinary shares have a nominal value of £0.01. All ordinary shares in issue
rank pari passu and carry the same voting rights and entitlement to receive
dividends and other distributions declared or paid by the Group. The company
does not have a limited amount of authorised share capital.
Information related to the company's share option schemes, including options
issued during the financial year and options outstanding at the end of the
reporting period is set out in note 26.
In August 2025, the company commenced a share repurchase programme to purchase
its own ordinary shares. The total number of shares bought back was 6,473,731
representing 2.69% of the ordinary shares in issue. All the shares bought back
were cancelled. The shares were acquired on the open market for a
consideration (excluding costs) of £25.0 million. The average price paid was
£3.86. Costs amounting to £0.2 million were incurred on the purchase of own
shares in relation to stamp duty charges and broker expenses.
20 Merger reserve
As at 28 February 2026 As at 28 February 2025
£'000 £'000
Balance at 1 March 2024, 28 February 2025 and 28 February 2026 (644,375) (644,375)
(644,375) (644,375)
The merger reserve of £644.4 million arose in December 2019, on the date that
the Group demerged from its previous parent company. This is an accounting
reserve in equity representing the difference between the total nominal value
of the issued share capital acquired in Bytes Technology Limited of £1.10 and
the total consideration given of £644.4 million.
21 Cash generated from operations
Year ended 28 February 2026 Year ended 28 February 2025
Note £'000 £'000
Profit before taxation 69,832 74,613
Adjustments for:
Depreciation and amortisation 4 3,110 2,644
Loss on disposal of property, plant and equipment 1 -
Non-cash employee benefits expense - share-based payments 4 751 5,049
Share of loss of associate 158 8
Finance income 7 (7,577) (8,486)
Finance costs 7 319 291
Decrease in contract assets 3,022 2,699
Increase in trade and other receivables (31,433) (46,639)
Decrease in inventories 14 46
Increase in trade and other payables 31,665 49,616
Increase in contract liabilities 1,965 5,794
Cash generated from operations 71,827 85,635
22 Financial risk management
This note explains the Group's exposure to financial risks and how these risks
could affect the Group's future financial performance. Current year
consolidated profit or loss and statement of financial position information
has been included where relevant to add further context.
Management monitors the liquidity and cash flow risk of the Group carefully.
Cash flow is monitored by management on a regular basis and any working
capital requirement is funded by cash resources or access to the revolving
credit facility.
The main financial risks arising from the Group's activities are credit,
liquidity and currency risks. The Group's policy in respect of credit risk is
to require appropriate credit checks on potential customers before sales are
made. The Group's approach to credit risk is disclosed in note 16.
The Group's policy in respect of liquidity risk is to maintain readily
accessible bank deposit accounts to ensure that the company has sufficient
funds for its operations. The cash deposits are held in a mixture of
short-term deposits and current accounts which earn interest at a floating
rate.
The Group's policy in respect of currency risk, which primarily exists as a
result of foreign currency purchases, is to either sell in the currency of
purchase, maintain sufficient cash reserves in the appropriate foreign
currencies which can be used to meet foreign currency liabilities, or take out
forward currency contracts to cover the exposure.
22(a) Derivatives
Derivatives are only used for economic hedging purposes and not speculative
investments.
The Group has taken out forward currency contracts during the periods
presented but has not recognised either a forward currency asset or liability
at each period end as the fair value of the foreign currency forwards is
considered to be immaterial to the consolidated financial statements due to
the low volume and short-term nature of the contracts. Similarly, the
amounts recognised in profit or loss in relation to derivatives were
considered immaterial to disclose separately.
22(b) Foreign exchange risk
The Group's exposure to foreign currency risk at the end of the reporting
period, was as follows:
As at 28 February 2026 As at 28 February 2025
USD EUR NOK USD EUR NOK
£'000 £'000 £'000 £'000 £'000 £'000
Trade receivables 14,522 6,777 - 11,348 3,945 -
Cash and cash equivalents 3,469 773 - 3,627 155 -
Trade payables (21,401) (5,791) (55) (18,663) (3,529) (53)
(3,410) 1,759 (55) (3,688) 571 (53)
The following table demonstrates the profit before tax sensitivity to a
possible change in the currency exchange rates with GBP, all other variables
held constant.
As at 28 February 2026 As at 28 February 2025
GBP:USD GBP:EUR GBP:NOK GBP:USD GBP:EUR GBP:NOK
£'000 £'000 £'000 £'000 £'000 £'000
5% strengthening in GBP 162 (84) 3 176 (27) 3
5% weakening in GBP (179) 93 (3) (194) 30 (3)
The aggregate net foreign exchange gains/losses recognised in profit or loss
were:
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Total net foreign exchange losses in profit or loss 198 55
22(c) Liquidity risk
(1) Cash management
Prudent liquidity risk management implies maintaining sufficient cash to meet
obligations when due. The Group generates positive cash flows from operating
activities and these fund short-term working capital requirements. The Group
aims to maintain significant cash reserves and none of its cash reserves is
subject to restrictions. Access to cash is not restricted and all cash
balances could be drawn on immediately if required. Management monitors the
levels of cash deposits carefully and is comfortable that for normal operating
requirements; no further external borrowings are currently required.
At 28 February 2026, the Group had cash and cash equivalents of £98.6
million, see note 17. Management monitors rolling forecasts of the Group's
liquidity position (which comprises its cash and cash equivalents) on the
basis of expected cash flows generated from the Group's operations. These
forecasts are generally carried out at a local level in the operating
companies of the Group in accordance with practice and limits set by the Group
and take into account certain down-case scenarios.
(2) Revolving Credit Facility
On 17 May 2023 the Group entered into a new three-year committed Revolving
Credit Facility (RCF) for £30 million including an optional one-year
extension to 17 May 2027, and a non-committed £20 million accordion to
increase the availability of funding should it be required for future
activity. This facility incurred an arrangement fee of £0.1 million, being
0.4% of the new funds available. The Group has so far not drawn down any
amount on either the previous or new facility and to the extent that there is
no evidence that it is probable that some or all of the facility will be drawn
down, the fees are capitalised as a prepayment and amortised over the initial
three-year period of the facility. The facility also incurs a commitment fee
and utilisation fee, both of which are payable quarterly in arrears. Under the
terms of both the previous and new facilities, the Group is required to comply
with the following financial covenants:
· Interest cover: EBITDA (earnings before interest, tax, depreciation
and amortisation) to net finance charges for the past 12 months shall be
greater than 4.0 times
· Leverage: net debt to EBITDA for the past 12 months must not exceed
2.5 times.
The Group has complied with these covenants throughout the reporting period.
As at 28 February 2026 and 28 February 2025, the Group had net finance income
and has therefore complied with the interest cover covenant. The Group has
been in a net cash position as at 28 February 2026 and 28 February 2025 and
has therefore complied with the Net debt to EBITDA covenant. In May 2026 the
Group extended the RCF by three-years to 17 May 2029. This extension has
increased the non-committed accordion to £45 million and is subject to the
same financial covenants noted above.
(3) Contractual maturity of financial liabilities
The following table details the Group's remaining contractual maturity for its
financial liabilities based on undiscounted contractual payments:
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total contractual cash flows Carrying amount
28 February 2026 Note £'000 £'000 £'000 £'000 £'000 £'000
Trade and other payables 18 322,865 - - - 322,865 322,865
Lease liabilities 10 873 742 419 - 2,034 1,980
323,738 742 419 - 324,899 324,845
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total contractual cash flows Carrying amount
28 February 2025 Note £'000 £'000 £'000 £'000 £'000 £'000
Trade and other payables 18 301,669 - - - 301,669 301,669
Lease liabilities 10 726 689 627 - 2,042 1,937
302,395 689 627 - 303,711 303,606
23 Capital management
23(a) Risk management
For the purpose of the Group's capital management, capital includes issued
capital, ordinary shares, share premium and all other equity reserves
attributable to the equity holders of the parent. The primary objective of
the Group's capital management is to maximise shareholder value.
The Group manages its capital structure and makes adjustments in light of
changes in economic conditions and the requirements of shareholders. To
maintain or adjust the capital structure, the Group may adjust the dividend
payment to shareholders, return capital to shareholders or issue new shares.
To ensure an appropriate return for shareholders' capital invested in the
Group, management thoroughly evaluates all material revenue streams,
relationships with key vendors and potential acquisitions and approves them by
the Board, where applicable. The Group's dividend policy is based on the
profitability of the business and underlying growth in earnings of the Group,
as well as its capital requirements and cash flows. The Group's dividend
policy is to distribute 40-50% of the Group's post-tax pre-exceptional
earnings to shareholders in respect of each financial year. Subject to any
cash requirements for ongoing investment, the Board will consider returning
excess cash to shareholders over time.
23(b) Dividends
2026 2025
Pence per share Pence per share
Ordinary shares £'000 £'000
Interim dividend paid 3.2 7,604 3.1 7,469
Special dividend paid 10.0 24,269 8.7 20,936
Final dividend paid 6.9 16,745 6.0 14,438
Total dividends attributable to ordinary shareholders 20.1 48,618 17.8 42,843
Dividends per share is calculated by dividing the dividend paid by the number
of ordinary shares in issue. Dividends are paid out of available distributable
reserves of the company. For this purpose all retained earnings of the company
are available distributable reserves.
The Board has proposed a final ordinary dividend of 7.0 pence per share for
the year ended 28 February 2026 to be paid to shareholders on the register as
at 17 July 2026. The aggregate of the proposed dividends expected to be paid
on 31 July 2026 is £16.5 million. The proposed dividends per ordinary shares
are subject to approval at the Annual General Meeting and are not recognised
as a liability in the consolidated financial statements.
24 Capital commitments
At 28 February 2026, the Group had £Nil capital commitments (28 February
2025: £Nil).
25 Related-party transactions
In the ordinary course of business, the Group carries out transactions with
related parties, as defined by IAS 24 Related
Party Disclosures. Apart from those disclosed elsewhere in the consolidated
financial statements, material transactions
for the year are set out below:
25(a) Transactions with key management personnel
Key management personnel are defined as the directors (both executive and
non-executive) of Bytes Technology Group plc, Bytes Software Services Limited
and Phoenix Software Limited. Details of the compensation paid to the
directors of Bytes Technology Group plc as well as their shareholdings in the
Group are disclosed in the remuneration report.
Compensation of key management personnel of the Group
The remuneration of key management personnel, which consists of persons who
have been deemed to be discharging managerial responsibilities, is set out
below in aggregate for each of the categories specified in IAS 24 Related
Party Disclosures.
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Short-term employee benefits 3,515 4,591
Post-employment pension benefits 119 121
Total compensation paid to key management 3,634 4,712
The amounts disclosed in the table are the amounts recognised as an expense
during the reporting period related to key management personnel including
executive directors.
Key management personnel received a total of 522,725 share option awards
(2025: 376,082) at a weighted average exercise price of £0.17 (2025: £0.21).
Share-based payment charges include £1,708,222 (2025: £1,570,816) in respect
of key management personnel, refer to note 26 for details on the Group's
share-based payment incentive schemes.
25(b) Subsidiaries and associates
Interests in subsidiaries are set out in note 28 and the investment in
associate is set out in note 12.
25(c) Outstanding balances arising from sales/purchases of services
Group companies made purchases from the associate of £6.7 million (2025:
£4.9 million) and sales to the associate of £0.2 million (2025: £0.1
million) during the year with a trade payable balance of £0.9 million (2025:
£0.1 million) at the year end.
26 Share-based payments
The Group accounts for its share option awards as equity-settled share-based
payments. The fair value of the awards granted is recognised as an expense
over the vesting period. The amount recognised in the share-based payment
reserve will be reversed to retained earnings as and when the related awards
vest and are exercised by employees. As noted in the prior year Annual Report,
one third of the annual bonus for the financial year ended 28 February 2026
awarded to each of the Company's executive directors is deferred in shares for
two years. This deferral has resulted in the granting of the awards under the
Deferred Bonus Plan during the year.
Performance Incentive Share Plan
Options granted under the Performance Incentive Share Plan (PISP) are for
shares in Bytes Technology Group plc. The exercise price of the options is a
nominal amount of £0.01. Performance conditions attached to the awards
granted in the current year are employee-specific, in addition to which,
options will only vest if certain employment conditions are met. The fair
value of the share options is estimated at the grant date using a Monte Carlo
option pricing model for the element with market conditions and Black-Scholes
option-pricing model for non-market conditions. The normal vesting date shall
be no earlier than the third anniversary of the grant date and not later than
the day before the tenth anniversary of the grant date. There is no cash
settlement of the options available under the scheme. During the year the
Group granted 1,048,300 (2025: 961,569) options. For the year ended 28
February 2026, 195,974 (2025: 47,463) options were forfeited, 666,059 options
were exercised (2025: 57,583) and 44,818 (2025: nil) options expired. This was
the first year that performance related options vested and a number of the
performance criteria were not achieved resulting in a higher number of
forfeitures during the year.
Company Share Option Plan
Options granted under the Company Share Option Plan (CSOP) are for shares in
Bytes Technology Group plc. The exercise price of the options granted in the
current year was determined by the average of the last three dealing days
prior to the date of grant. There are no performance conditions attached to
the awards, but options will only vest if certain employment conditions are
met. The fair value at grant date is estimated at the grant date using a
Black-Scholes option-pricing model. The normal vesting date shall be no
earlier than the third anniversary of the grant date and not later than the
day before the tenth anniversary of the grant date. There is no cash
settlement of the options available under the scheme. During the year the
Group granted no (2025: nil) options. For the year ended 28 February 2026,
81,100 (2025: 174,897) options were forfeited, 1,009,207 (2025: 217,000)
options were exercised and 116,977 (2025: nil) options expired.
Save as You Earn Scheme
Share options were granted to eligible employees under the Save As You Earn
Scheme (SAYE) during the year. Under the SAYE scheme, employees enter a
three-year savings contract in which they save a fixed amount each month in
return for their SAYE options. At the end of the three-year period, employees
can either exercise their options in exchange for shares in Bytes Technology
Group plc or have their savings returned to them in full. The exercise price
of the options represents a 20% discount to the exercise price of the CSOP
awards. The fair value at grant date is estimated using a Black-Scholes
option-pricing model. There is no cash settlement of the options. During the
year the Group granted 489,323 (2025: 449,394) options. For the year ended 28
February 2026, 439,656 (2025: 214,641) options were forfeited, 78,071 (2025:
425,868) options were exercised and 326,207 (2025: 32,865) options expired.
The higher level of forfeitures during the year reflects the reduction in
share price during the year, resulting in a higher number of staff withdrawing
from the scheme.
Deferred Bonus Plan
Options granted under the Deferred Bonus Plan (DBP) are for shares in Bytes
Technology Group plc. The exercise price of the options is a nominal amount of
£0.01. There are no performance conditions attached to the awards, but
options will only vest if certain employment conditions are met. The fair
value at grant date is estimated at the grant date using a Black-Scholes
option-pricing model. The normal vesting date shall be no earlier than the
second anniversary of the grant date. During the year the Group granted 43,171
(2025: 16,675) options. For the year ended 28 February 2026, 21,772 (2025:
10,916) options were exercised. No options were forfeited or expired in the
current or prior period.
There were no cancellations or modifications to the awards in 2026 or 2025.
Share-based payment employee expenses
Year ended 28 February 2026 Year ended 28 February 2025
£'000 £'000
Equity settled share-based payment expenses 751 5,049
The share-based payment charges are expensed over the vesting period to
reflect the expected number of options which will vest for each plan at each
vesting date. Key judgments are made involving the estimation of future
forfeiture rates and achievement of performance conditions. These judgements
are updated at each reporting date when assessing the likely number of options
that will vest on completion of the relevant performance periods.
Movements during the year
The following table illustrates the number and weighted average exercise
prices (WAEP) of, and movements in, share options during the year:
28 February 2026 28 February 2026 28 February 2025 28 February 2025
Number WAEP Number WAEP
Outstanding at 1 March 9,060,276 £3.14 8,813,260 £3.52
Granted during the year 1,580,794 £1.30 1,428,249 £1.44
Forfeited during the year (716,730) £3.08 (437,001) £3.96
Exercised during the year (1,775,109)(1) £2.87 (711,367)(1) £3.92
Expired during the year (503,965) £3.66 (32,865) £4.00
Outstanding at 28 February 7,645,266 £2.79 9,060,276 £3.14
Exercisable at 28 February 4,007,132 £4.55 2,802,279 £4.02
(1) The weighted average share price at date of exercise was £5.03 (2025:
£5.09).
The weighted average expected remaining contractual life for the share options
outstanding at 28 February 2026 was 1.02 years (2025: 1.53 years).
The weighted average fair value of options granted during the year was £3.19
(2025: £3.93).
The range of exercise prices for options outstanding at the end of the year
was £0.01 to £5.00 (2025: £0.01 to £5.00).
The tables below list the inputs to the models used for the awards granted
under the below plans for the years ended 28 February 2026 and 28 February
2025:
28 February 2026 28 February 2026 28 February 2026
Assumptions PISP SAYE DBP
Weighted average fair value at measurement date £3.55 - £4.34 £0.62 £5.05
Expected dividend yield 3.96% - 4.86% 5.53% 0.00%
Expected volatility 35% - 40% 40% 35%
Risk-free interest rate 3.76% - 3.85% 3.69% 3.73%
Expected life of options 3 years 3 years 2 years
Weighted average share price £5.06 - £4.12 £3.61 £5.06
Model used Black-Scholes and Monte Carlo Black-Scholes Black-Scholes
28 February 2025 28 February 2025 28 February 2025
Assumptions PISP SAYE DBP
Weighted average fair value at measurement date £5.11 £1.33 £5.58
Expected dividend yield 1.56% 1.76% 0.00%
Expected volatility 34% 34% 33%
Risk-free interest rate 4.31% 3.74% 4.47%
Expected life of options 3 years 3 years 2 years
Weighted average share price £5.59 £4.94 £5.59
Model used Black-Scholes and Monte Carlo Black-Scholes Black-Scholes
The expected life of the options is based on current expectations and is not
necessarily indicative of exercise patterns that may occur. The expected
volatility reflects the assumption that the historical volatility of the
company and publicly quoted companies in a similar sector to the company over
a period similar to the life of the options is indicative of future trends,
which may not necessarily be the actual outcome.
27 Earnings per share
The Group calculates earnings per share (EPS) on several different bases in
accordance with IFRS and prevailing South Africa requirements.
Year ended 28 February 2026 Year ended 28 February 2025
pence pence
Basic earnings per share 21.40 22.78
Diluted earnings per share 20.74 21.95
Headline earnings per share 21.40 22.78
Diluted headline earnings per share 20.74 21.95
Adjusted earnings per share 22.64 25.07
Diluted adjusted earnings per share 21.94 24.16
27(a) Weighted average number of shares used as the denominator
Year ended 28 February 2026 Year ended 28 February 2025
Number Number
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share and headline earnings per share
239,627,247 240,750,619
Adjustments for calculation of diluted earnings per share and diluted headline
earnings per share:
- share options ((1)) 7,599,407 9,060,276
Weighted average number of ordinary shares and potential ordinary shares used
as the denominator in calculating diluted earnings per share and diluted
headline earnings per share
247,226,654 249,810,895
(1) Share options
Share options granted to employees under the Save As You Earn Scheme, Company
Share Option Plan and Bytes Technology Group plc performance incentive share
plan are considered to be potential ordinary shares. They have been included
in the determination of diluted earnings per share on the basis that all
employees are employed at the reporting date, and to the extent that they are
dilutive. The options have not been included in the determination of basic
earnings per share. Details relating to the share options are disclosed in
note 26.
27(b) Headline earnings per share
The Group is required to calculate headline earnings per share (HEPS) in
accordance with the JSE Listing Requirements. The table below reconciles the
profits attributable to ordinary shareholders to headline earnings and
summarises the calculation of basic and diluted HEPS:
Year ended 28 February 2026 Year ended 28 February 2025
Note £'000 £'000
Profit for the period attributable to owners of the company 51,282 54,841
Adjusted for:
Loss on disposal of property, plant and equipment 21 1 -
Tax effect thereon - -
Headline profits attributable to owners of the company 51,283 54,841
27(c) Adjusted earnings per share
Adjusted earnings per share is an alternative performance measure used as a
target for the PSP awards made in 2022, 2023 and 2024. It is calculated by
dividing the adjusted profits attributable to ordinary shareholders by the
total number of ordinary shares in issue at the end of the year. Adjusted
profit is calculated by excluding the impact of the following items:
· Share-based payment charges
· Acquired intangible assets amortisation.
The table below reconciles the profit for the financial year to adjusted
earnings and summarises the calculation of adjusted EPS:
Year ended 28 February 2026 Year ended 28 February 2025
Note £'000 £'000
Profits attributable to owners of the company 51,282 54,841
Adjusted for:
- Amortisation of acquired intangible assets 4 880 880
- Deferred tax effect on above (220) (220)
- Share-based payment charges 26 751 5,049
- Deferred tax effect on above 1,558 (188)
Adjusted profits attributable to owners of the company 54,251 60,362
28 Subsidiaries
The Group's subsidiaries included in the consolidated financial statements are
set out below. The country of incorporation is also their principal place of
business.
Country of incorporation Ownership interest
Name of entity Principal activities
Bytes Technology Holdco Limited ((1)) UK 100% Holding company
Bytes Technology Limited UK 100% Holding company
Bytes Software Services Limited UK 100% Providing cloud-based licensing and infrastructure and security sales within
both the private and public sectors
Phoenix Software Limited UK 100% Providing cloud-based licensing and infrastructure and security sales within
both the private and public sectors
Blenheim Group Limited ((2)) UK 100% Dormant for all periods
License Dashboard Limited ((2)) UK 100% Dormant for all periods
Bytes Security Partnerships Limited ((2)) UK 100% Dormant for all periods
Bytes Technology Group Holdings Limited ((2)) UK 100% Dormant for all periods
Bytes Technology Training Limited ((2)) UK 100% Dormant for all periods
(1 ) Bytes Technology Holdco Limited is held directly by the company. All
other subsidiary undertakings are held indirectly by the company.
(2 ) Taken advantage of the audit exemption set out within section 479A of
the Companies Act 2006 for the year ended 28 February 2025.
The registered address of all of the Group subsidiaries included above is
Bytes House, Randalls Way, Leatherhead, Surrey, KT22 7TW.
29 Events after the reporting period
As disclosed in note 22(c)(2) the Group entered into a three-year extension of
the RCF.
After year-end, the Board agreed to implement a new share repurchase programme
to purchase the Company's shares for an aggregate value of up to £25.0
million.
There are no other events after the reporting period that require disclosure.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FFLLFQELFBBF
Copyright 2019 Regulatory News Service, all rights reservedRecent news on Bytes Technology
See all newsREG - Bytes Technology Grp - Audited Results
AnnouncementREG - Bytes Technology Grp - Share Repurchase Programme
AnnouncementREG - Bytes Technology Grp - Board change
AnnouncementREG - Bytes Technology Grp JPMorgan Chase & Co - Holding(s) in Company
AnnouncementREG - Bytes Technology Grp - Total Voting Rights
Announcement