REG - Bytes Technology Grp - Interim Results
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RNS Number : 1916D Bytes Technology Group PLC 14 October 2025
14 October 2025
BYTES TECHNOLOGY GROUP plc
('BTG', 'the Group')
Results for the six months ended 31 August 2025
Bytes Technology Group plc (LSE: BYIT, JSE: BYI), one of the UK's leading
software, security, cloud and AI services specialists, today announces its
half year results for the 6 months ended 31 August 2025 (H1 FY26).
Financial performance (£'million) H1 FY26 (six months ended 31 August 2025) H1 FY25 (six months ended 31 August 2024) % change year on year
Gross invoiced income (GII)(1) £1,342.0m £1,230.2m 9.1
Revenue(2) £108.1m £105.5m 2.5
Gross profit (GP) £82.4m £82.1m 0.4
Operating profit £33.1m £35.6m (7.0)
Operating profit/GP% 40.2% 43.4%
Cash £82.3m £71.5m 15.1
Cash conversion(3) 34.4% 56.2%
Cash conversion (rolling 12 months)(3) 104.7% 112.6%
Earnings per share (pence) 12.03 12.67 (5.1)
Interim dividend per share (pence) 3.2 3.1 3.2
Financial highlights
- GII increased 9.1%, with 8.9% growth in software and 15.1% in
services.
- GP increased 0.4%. Segmentally public sector, more impacted by
Microsoft's partner incentive changes, was +1.6% and corporate, which adjusted
to the new sales structure launched at the start of the year, was -0.6%.
Software GP down 3.5% was offset by strong growth in services which increased
over 40% consistent with our strategic objective to grow services income and
profit.
- Operating profit down 7.0%, with higher headcount, salary and national
insurance costs only partly mitigated by lower variable remuneration.
- Strong balance sheet with closing cash of £82.3m.
- Interim dividend of 3.2p, increased by 3.2% from last year's interim
dividend (H1 FY25: 3.1 pence).
- Outlook: We remain confident of delivering a full year outcome within
the range of market expectations.
(1) GII is a non-International Financial Reporting Standard (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 gross profit achieved on the contract and not the gross
income billed to the customer). Our key financial metrics of gross invoiced
income, gross profit, 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. It is calculated over both the current
6 month reporting period and over a rolling 12 months, the latter taking the
previous 12 months free cash flow divided by the previous 12 months operating
profit, in order to reflect seasonal variations between the two halves of the
year.
Operational highlights
- New corporate sales structure has settled after an adjustment period.
- Customers that traded with BTG in the prior year contributed 98% of
our GP in this half year (H1 FY25: 98%)
- Headcount up 12.0% year-on-year to 1,266 (up 1.7% since 28 February
2025).
- Received multiple vendor awards including from Axonius, Barracuda,
Checkpoint, Sophos, Varonis and VMWare.
- Both Bytes Software Services and Phoenix Software named among the UK's
top 100 Best Workplaces 2025 with Phoenix Software in the top 10.
Sam Mudd, Chief Executive Officer, said:
"We delivered a resilient performance, building positive momentum through the
period as we settled into our new corporate sales structure. Despite the
challenging economic climate, and our internal and industry changes over the
past six months, we have maintained our share of wallet amongst our existing
customers as they continued to invest in their IT needs and we have continued
to expand our client base in both the public and corporate sectors.
We are particularly pleased that retention has remained very high, consistent
with prior periods, amongst both our sales team and customer base which
provides a solid foundation for future growth. We are also pleased with how
our teams adapted to the changes to Microsoft's partner incentives for
Enterprise Agreements; successfully transitioning corporate customers to the
higher margin Microsoft Cloud Solution Provider program, and broadening our
software portfolio and doubling down on services across the business, again
providing solid foundations for future growth.
Our passionate, talented, and experienced staff continue to position BTG to
provide high-quality licensing advice, technical enablement and support to
meet our customers' needs. This differentiates us from the competition and
underpins our confidence for the remainder of the year. I would like to extend
my gratitude to our teams for their hard work and dedication to the business."
Current trading and outlook
We are well positioned to benefit from the structural demand drivers we see in
our markets including cloud computing, cyber security and AI for the remainder
of FY26. We have a strong pipeline and have started H2 FY26 well but are
mindful that comparatives will be impacted by the particularly strong trading
performance we saw in the last few months of the prior financial year. We
remain confident of delivering a full year outcome within the range of market
expectations.
Analyst and investor presentation
A presentation for sell-side analysts and investors will be held today at
9:00am (BST) via a video webcast that can be accessed using the link:
https://brrmedia.news/BYIT_HY_26 (https://brrmedia.news/BYIT_HY_26)
A recording of the webcast will be available after the event at
www.bytesplc.com (http://www.bytesplc.com) . The announcement and presentation
will be available at www.bytesplc.com (http://www.bytesplc.com) from 7.00am
and 9.00am (BST), respectively.
Enquiries
Bytes Technology Group plc Tel: +44 (0)1372 418 500
Sam Mudd, Chief Executive Officer
Andrew Holden, Chief Financial Officer
James Zaremba, Investor Relations
Email: ir@bytesplc.com
Sodali & Co Tel: +44 (0)20 3984 0174
Elly Williamson
Tilly Abraham
Email: btg@info.sodali.com (mailto:btg@info.sodali.com)
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 since 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. Save 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.
About Bytes Technology Group plc
BTG is one of the UK's leading providers of IT software offerings and
solutions, with a focus on cloud, security, and AI products. The Group enables
effective and cost-efficient technology sourcing, adoption and management
across software services, including in the areas of security and the cloud. It
aims to deliver the latest technology to a diverse range of customers across
corporate and public sectors 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 and a secondary listing on the Johannesburg Stock Exchange.
_______________________________________________________________________________
Chief Executive Officer's review
Performance overview
H1 FY26 was a resilient set of results for BTG, with a 9.1% increase in gross
invoiced income, a 0.4% rise in gross profit, and a 7.0% decrease in operating
profit. This performance reflects the relative resilience of our business in
the face of the challenging economic climate, an adjustment period as we
realigned our corporate sales structure, and the impact from changes to
Microsoft's partner incentives for Enterprise Agreements.
We are pleased to have settled into our new corporate sales structure and to
have navigated eight months under the new Microsoft partner incentives for
Enterprise Agreements. We remain confident in our growth strategy and believe
we are well-positioned to benefit from the structural demand drivers we see in
our markets, including cloud computing, cyber security and AI.
Value proposition
Customers choose to partner with BTG because of the broad range of solutions
and services we offer, including multi-cloud migration and adoption, digital
transformation, storage, and a wide array of security products. Many have
built long standing relationships with us over many years underpinned by our
excellent software advisory expertise and knowledge around procurement routes,
which enables us to guide customers on best value. We intend to double down on
this strength by investing further in pre-sales and specialist technical
skills, allowing us to service a larger market and scale up to meet our
customers' broad needs.
We have seen strong interest in AI products, including Microsoft's Copilot for
M365 and we continue to develop and deliver associated in-house services to
support customer readiness and adoption. We will continue to expand our
existing in-house AI-dedicated teams, creating repeatable sector-specific
solutions with broader data and generative AI (GenAI) services across our
vendor offerings as this income stream continues to grow.
In addition to our partnership with Microsoft, we have also continued to
deepen our relationships with other key partners and are especially pleased to
have been recognised with new awards by leading industry vendors including
Axonius, Barracuda, Checkpoint, Sophos, Varonis and VMWare, reflecting the
status and high esteem that the Group has with global technology leaders.
These awards are highly competitive and our success is testament to the
expertise of our staff and the customer success stories that we deliver.
Corporate sales team changes
We realigned our corporate sales team at the start of the year from a
generalist structure into customer-segment focused teams based on customers'
seat counts (enterprise >10k seats, corporate 2-10k seats, and mid-market
<2k seats). This will improve our customer proposition by enhancing account
management, vendor relationships and solution/service delivery but resulted in
an adjustment period as account managers adapted to the changes.
Our account managers bring value to our customers by understanding their
needs, and ways of working, and being able to share the experiences that other
customers facing similar challenges have had. At the account manager level,
segmentation should support better understanding of customer environments,
more tailored engagement strategies and more relevant solution
recommendations; as the needs and ways of engagement differ between
enterprise, corporate and mid-market customers. By grouping account management
teams around similar customer types, the structure should foster more
collaboration on what similar customers are doing and what is working well
enhancing the quality of customer interactions and outcomes.
Our account managers are generally co-selling technology alongside vendor
sales teams who are often segmented by customer size internally. Our
segmentation, mirroring some vendors' setups, should create stronger
seller-to-seller relationships as our account managers work more closely with
fewer vendor counterparts and drive better commercial agreements.
Our account managers work with internal specialists aligned to technology
areas, such as cloud, cyber, digital workspace etc., and / or vendors. These
specialist teams have also been aligned to the same segments as the sales
teams to support more tailored solution design and delivery to customer's
needs.
In addition, segmentation aligns with our transition to be able to deliver
more services to our client base (and our investment in this area in
partnership with key vendors such as Microsoft). Fundamentally organisations
of different sizes have different propensities to consume services via
partners - from the large corporates looking to supplement well-resourced
internal teams, to smaller organisations who have a desire to fully outsource
design, implementation and support of their technology vision. Our
segmentation lends itself to fully capitalising on the service opportunities
within our client base as we enable sales teams to tailor their messaging
specifically.
The realignment resulted in an adjustment period for broadly two reasons: very
strong trading ahead of the change; and relationship changes. The Corporate
sales team had a very strong end to FY25 (15% H2 gross profit growth following
3% in H1) as account managers worked hard on closing pipeline they had built
in accounts they were going to be handing over. The change required account
managers to hand over around 750 relationships and establish pipelines in
their new accounts.
Importantly retention has remained very high, consistent with prior periods,
amongst both our sales team and customer base. Both stakeholder groups are
also now broadly positive about the change after some initial instances of
reticence.
Our public sector sales teams have operated with a segmentation by vertical
for some time and benefit from the focus this brings.
Microsoft partner incentive changes
Microsoft partner incentives are constantly evolving, and we have a good track
record of reacting to these while maintaining gross profit levels.
Last year, Microsoft reduced certain of its transactional Enterprise Agreement
(EA) incentives from 1 January 2025. This encouraged partners to focus on
transitioning customers from the EA program to Microsoft's Cloud Solution
Provider (CSP) program, where margins are higher for partners. In the public
sector, where CSP is a less viable alternative due to 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 corporate customers to CSP and providing
more services to all customers, both in line with our existing strategy.
We were able to manage the impact in the first six months of this financial
year, which includes high levels of renewals in March and April around the
public sector year end and June around Microsoft's year end. Our Microsoft
software gross profit declined 3.5% year-on-year, with Corporate growing
slightly, benefitting from transitioning customers to CSP, and public sector
declining. We were able to offset this pressure on software profit in both
segments, but particularly in public sector, with strong growth in higher
margin services in-line with our strategy and where a growing portion of
Microsoft incentives are focused. Our Microsoft Gross Invoiced Income
increased 7.6% year-on-year with growth across both Corporate and Public
Sector.
We expect a smaller impact in the second half of this financial year for two
reasons: the enterprise incentive changes only impact four months, having
taken effect on 1 January 2025; and price increases for EAs, set to come into
effect on 1 November 2025, will make CSP relatively more attractive for
customers.
Going forward we believe our wide vendor landscape and extensive range of
products and services will enable us to absorb individual program changes such
as this and drive our continued growth, and that our strength with customers
with fewer than 5,000 employees remains a sweet spot with our vendors who
value our efficient reach into this part of the market.
Our people: the heart of our success
Our people are the lifeblood of our organisation. Over the past few months, I
have been able to spend more time engaging with colleagues across all levels
of the business, gaining valuable insight into the passion, professionalism,
and commitment that drives our success. Since July, I've been supported by our
first Chief People Officer, Kally Kang-Kersey, who is leading the development
of a long-term People Strategy to underpin scalable growth, customer
excellence, and a high-performance culture.
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.
To support our growth ambitions, we continue to invest in targeted recruitment
across front-end sales, delivery, and enabling functions. Headcount increased
by 12.0% year-on-year to 1,266 (1.7% since 28 February 2025), and we expect
continued growth in the second half. This reflects our confidence in the
market and our commitment to building capability where it matters most.
We are also investing in our internal systems, customer-facing platforms, and
office environments to 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.
Looking ahead, our People Strategy will focus on attracting top talent,
developing future-fit leadership, evolving our culture, and modernising our
people operations. We are committed to building an inclusive, high-performance
workplace where every individual can thrive and contribute to our shared
success.
I want to extend my sincere thanks to all our staff for their hard work,
professionalism, and unwavering commitment to the business.
Continued focus on environment, social and governance (ESG)
Our approach to responsible business and ESG is aimed at helping to build a
sustainable future and create long-term value for the Group and its
stakeholders. Our strategy is underpinned by our purpose and values, which
foster an aligned culture across the organisation. During the period, we
further progressed our ESG initiatives in the following ways.
Constituent of the FTSE4Good Index Series
In July 2025, FTSE Russell (the trading name of FTSE International Limited and
Frank Russell Company) confirmed that Bytes Technology Group had been
independently assessed according to the FTSE4Good criteria, and had satisfied
the requirements to become a constituent of the FTSE4Good Index Series.
Created by the global index provider FTSE Russell, the FTSE4Good Index Series
is designed to measure the performance of companies demonstrating strong ESG
practices. The FTSE4Good indices are used by a wide variety of market
participants to create and assess responsible investment funds and other
products.
We continue to monitor the progress of the IFRS S1 and S2 standards being
adopted by the UK Government, through the UK Sustainability Reporting
Standards. We submitted a response to the recent Department for Business and
Trade consultation, have engaged with our external auditors on updates and
maintain the expectation that we will be in a good position to transition to
the new reporting requirements, having fully complied with the TCFD's
recommendations in our last Annual Report. As part of the continual
publication of our net zero efforts, we have submitted our annual disclosure
to CDP. Our York office has gained the benefits of the solar panels that were
installed in FY25 and have produced 158,000 kWh of energy, with 83% of this
used by the business.
Building stronger partnerships
Employee support and wellbeing continue to be key focus areas for the Group,
with wellbeing days and our hybrid working policy enabling happier and
healthier employees. We continue to measure employee satisfaction through the
annual employee Net Promoter Score (eNPS) survey and will be able to provide
an update at the full year. Understanding diversity within our business has
also been a focus across the Group, with the roll-out of voluntary
self-reporting for gender, ethnicity, disability and neurodiversity. A more
detailed understanding of the demographics of our business will aid in
attracting and retaining talent and support innovation through diversity of
thought.
Our strong culture remains a driving force behind our successful growth. We
continue to support this through staff events, incentive trips and the
development of our people with continued learning and training opportunities.
Our apprenticeship scheme has matured into more areas of the business and into
degree-level apprenticeship programmes.
Engagement and support for our communities has strengthened this year, with
new charity partnerships being forged, one example being Muscle Help
Foundation, which has itself supported one of our own employees. We continue
to work with the Wildlife Aid Foundation, through volunteering and during H1
FY26, we raised over £20,000 for St. Leonard's Hospice.
Chief Financial Officer's review
H1 FY26 H1 FY25 Change
Income statement £'m £'m %
Gross invoiced income (GII) 1,342.0 1,230.2 9.1
GII split by product:
Software 1,292.4 1,187.2 8.9
Hardware 14.6 12.5 16.8
Services internal(1) 19.0 16.6 14.5
Services external(2) 16.1 13.9 15.8
Netting adjustment (1,234.0) (1,124.7) 9.7
Revenue 108.1 105.5 2.5
Revenue split by product:
Software 72.1 74.7 (3.5)
Hardware 14.6 12.5 16.8
Services internal(1) 19.0 16.6 14.5
Services external(2) 2.4 1.7 41.2
Gross profit (GP) 82.4 82.1 0.4
GP/GII % 6.1% 6.7%
Other income 0.4 -
Administrative expenses (49.7) (46.5) 6.9
Administrative expenses split:
Employee costs (39.4) (37.2) 5.9
Other administrative expenses (10.3) (9.3) 10.8
Operating profit 33.1 35.6 (7.0)
Operating profit/GP% 40.2% 43.4%
Interest income 5.6 6.0 (6.7)
Finance costs (0.2) (0.2)
Share of profit of associate(3) - 0.1
Profit before tax 38.6 41.5 (7.0)
Income tax expense (9.6) (11.1) (13.5)
Effective tax rate 24.9% 26.7%
Profit after tax 29.0 30.4 (4.6)
(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 profits
Gross invoiced income (GII)
GII reflects gross income billed to our customers, with some small adjustments
for deferred and accrued items - mainly relating to managed service contracts
where the income is recognised over time - 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 which is a percentage of their sales
value, and which we recognise within our GII, revenue and GP.
GII increased by 9.1% year on year, with growth coming from all our income
streams and balanced across public sector (+8.5%) and corporate (+10.6%).
Corporate GII benefitted from the transition of more customers to Microsoft's
CSP programme (where BTG invoices the customers) from Microsoft's EA program
(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 2.5% increase, because the growth in software GP
(reported net) is outweighed by the reduction in the hardware GII (reported
gross). So, 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)
GP, our primary measure of sales performance, has grown by £0.3m, up 0.4%
year on year to £82.4m (H1 FY25: £82.1m).
Breaking this down by income stream: for the Group's two most strategic focus
areas, software GP declined by 3.5% to £72.1m, with a 0.7% decline in its
GP/GII%, while internal services GP is up by 46.3% to £6.0m, with GP/GII
margin up to over 30% benefitting from mix and cost efficiencies. Hardware and
external services both grew off small bases by 25.0% to £2.0m and 41.2% to
£2.4m respectively.
Looking across our two main customer segments, public sector GP has grown by
1.6% and corporate GP has declined by 0.6%. Both segments were impacted by the
changes to Microsoft enterprise agreement incentives and the corporate segment
had a readjustment period relating to the sales structure realignment.
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 corporate sector
means that our overall GP mix for the year continues to stand at 62% in
corporate and 38% in the public sector. Our GP/GII margin reduced to 6.1% (H1
FY25 6.7%) impacted by mix and the Microsoft EA incentives changes. In the
public sector our margin (GP/GII) dropped only slightly from 3.6% in H1 FY25
to 3.3% this year as strong higher margin services growth partly offset lower
Software margin post the Microsoft EA incentives changes. In corporate our
margin (GP/GII) dropped to 12.6% (H1 FY25 14.0%) 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 was again demonstrated in H1 FY26 with 98% of our GP coming from
customers that we also traded with last year (H1 FY25: 98%), at a renewal rate
of 98% (which measures the GP from existing customers this period compared to
total GP in the prior period).
Other income
This comprises £0.4m of rental income from the offices acquired in FY25 which
we have not fully occupied yet.
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 front-line 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 in line with growth and 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 long relationships we have established
with our customers, vendors, and partners.
During the half year we have seen total staff numbers rise to 1,266 on our
August 2025 payroll, up by 1.7% from the year-end position of 1,245 on 28
February 2025 and up 12.0% over the full year period since 31 August 2024.
Employee costs, included in administrative expenses, rose by 5.9% to £39.4m
(H1 FY25: £37.2m) with higher costs from headcount, salary and national
insurance contribution increases partly mitigated by lower variable
remuneration including a £0.8m decline in share based payments. However, this
figure has been impacted by the effects of capitalising £0.7m of staff costs
onto the balance sheet (H1 FY25 £0.7m). This relates to the salaries of
employees who are developing 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 and Accounts.
Other administrative expenses
Other administrative expenses increased by 10.8% to £10.3m (H1 FY25: £9.3m)
including continued investment in staff welfare and internal systems.
As part of the software development project referred to above, we have also
spent £1.6m with a third party development company to supplement our own
internal resources (H1 FY25: £0.9m). This engagement was taken wholly for
this purpose and the cost has been capitalised in full alongside our own
salary costs, making a total of £2.3m added to intangible software assets
during the period (H1 FY25: £1.6m).
Operating profit
Our operating profit decreased by 7.0% from £35.6m to £33.1m, as higher
costs from headcount, salary and national insurance contribution increases
were partly mitigated by lower variable remuneration including share based
payments against stable gross profit.
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. We aim to sustain it in excess
of 38% and have achieved this, albeit it decreased to 40.2% (H1 FY25: 43.4%).
Including the capitalised staff costs, the ratio for this period is 39.3% (H1
FY25: 42.5%).
Interest income and finance costs
This half year has again seen significant interest being earned from money
market deposits, reducing slightly to £5.6m (H1 FY25: £6.0m) due to lower
interest rates on a higher cash balance. There is some seasonal impact here,
due to the timing of the largest Microsoft enterprise agreements which
primarily transact in our first six months, and hence our interest earnings
will be lower in our second half.
Our finance costs primarily comprise arrangement and commitment fees
associated to our revolving credit facility (RCF), noting that to date the
Group has not drawn down any amount. This balance also includes a small amount
of finance lease interest on our right-of-use assets, including from our staff
electric vehicle (EV) scheme.
Profit before tax
The combined impact of decreased operating profits and lower levels of
interest received has seen our profit before tax decreasing by 7.0% to £38.6m
(H1 FY25: £41.5m).
Income tax expense
The £1.5m (13.5%) decrease in our income tax expense to £9.6m (H1 FY25:
£11.1m) reflects the decline in profits described above and a lower effective
rate of tax of 24.9% (H1 FY25: 26.7%). The higher effective rate in H1 FY25 of
26.7% was attributed to a restatement of the deferred tax asset from February
2024 relating to our unexercised share options, given the reduction in the
share price in H1 FY25 from February 2024.
Profit after tax
Profit after tax decreased by 4.6% to £29.0m (H1 FY25: £30.4m), with lower
operating profit and interest income, partly offset by the lower effective
rate of tax.
Earnings per share
Basic earnings per share reduced 5.1% from 12.67p to 12.03p and diluted
earnings per share reduced 4.7% from 12.19p to 11.62p.
Balance sheet and cash flow
As at
31 August 28 February
2025 2025
Balance sheet £'m £'m
Investment in associate 3.2 3.2
Property plant and equipment 13.9 13.6
Intangible assets 45.4 43.5
Other non-current assets 3.1 3.4
Non-current assets 65.6 63.7
Trade and other receivables 259.0 268.4
Cash 82.3 113.1
Current tax asset 0.4 0.0
Contract assets 12.6 10.0
Current assets 354.3 391.5
Trade and other payables 301.7 327.5
Lease liabilities 0.8 0.7
Contract and tax liabilities 21.8 25.7
Provisions 12.5 0.0
Current liabilities 336.8 353.9
Lease liabilities 1.2 1.3
Other non-current liabilities 4.5 2.0
Non-current liabilities 5.7 3.3
Net assets 77.4 98.0
Share capital 2.4 2.4
Share premium 641.3 636.4
Share-based payment reserve 13.1 14.9
Merger reserve (644.4) (644.4)
Retained earnings 64.9 88.7
Total equity 77.4 98.0
Closing net assets stood at £77.4m (28 February 2025: £98.0m and 31 August
2024: £77.6m) including the Group's £3.2m interest (25.1%) in Cloud Bridge
Technologies.
Intangible assets includes the £2.3m addition in the period of capitalised
software development costs, a combination of internal staff costs of £0.7m
and £1.6m of external contractor costs, both referred to above. This relates
to 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. The 'marketplace' platform is now complete at a
cumulative capex of £3.4m over FY25 and H1 FY26 and the cost will start to be
amortised in H2 FY26 at an annualised rate of c.£0.4m pa. Work on the second
platform continues through the second-half of the year and while we are in
development phase, there is no amortisation of the asset, amortisation will
commence once we move to live production mode, scheduled for early FY27. We
expect the combined asset to stand at c.£8m by our February 2026 year end.
There is an unrelated £0.4m amortisation which is included in the current
income statement in respect of the historic customer relationships intangible
asset carried on the balance sheet.
Net current assets closed at £17.5m (28 February 2025: £37.6m and 31 August
2024: £24.3m).
Our debtor days at the end of the half year stood at 44 (H1 FY25: 41), and our
average debtor days for the period was 38 (H1 FY25: 37). Our closing loss
allowance provision at 31 August 2025 reduced to £1.3m, down from £1.7m at
the February 2025 year end, with £0.4m bad debts written off against the
provision. We note that our gross trade receivables have reduced since year
end and the level of write offs is very low considering our GII of £1.3bn.
The Group has paid its suppliers on schedule through the year, with its
average creditor days remaining in line with prior year at 49 for the six
months and standing at 52 at the end of the period.
A provision of £12.5 million has also been recognised through retained
earnings, in relation to the £25m share repurchase program announced on 15
August 2025, for estimated further purchases after the end of the reporting
period up to 14 October 2025, being the end of the Market Abuse Regulations
(MAR) period, during which the Company cannot vary or terminate its
instructions to the brokers and whereby it is probable that an outflow of
resources will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation..
The consolidated cash flow is set out below:
H1 FY26 H1 FY25
Cash flow £'m £'m
Cash generated from operations 14.7 22.0
Payments for fixed assets (1.0) (0.4)
Payments for intangible assets (2.3) (1.6)
Free cash flow 11.4 20.0
Net interest received 5.5 5.9
Taxes paid (10.0) (9.5)
Lease payments (0.4) (0.2)
Dividends (41.0) (35.4)
Issue of share capital 4.9 1.9
Purchase of share capital (1.1) -
Net decrease in cash (30.8) (17.3)
Cash at the beginning of the period 113.1 88.8
Cash at the end of the period 82.3 71.5
Operating profit 33.1 35.6
Cash conversion 34.4% 56.2%
Cash conversion (rolling 12 months) 104.7% 112.6%
Cash at the end of the period was £82.3m (31 August 2024: £71.5m), which is
after the payment of dividends totalling £41.0m during the period - being the
final and special dividends for FY25.
Cash flow from operations after payments for fixed and intangible assets (free
cash flow) generated a positive cash flow of £11.4m (H1 FY25: £20.0m). The
Group's cash conversion ratio for the year measured as free cash flow divided
by operating profit was 34.4% in the period (H1 FY25: 56.2%). Whilst we target
our long-term sustainable cash conversion at 100%, we typically achieve a
lower figure in H1 given the seasonality of our cash flows, particularly
around the timing of receipts and payments for our large Microsoft enterprise
agreements. For reference, our rolling 12 month cash conversion measured
across the full year up to the end of August has exceeded the 100% target.
The £4.9m cash received from the issue of share capital relates to the
exercising of circa 1.6m share options by participating staff, primarily under
our 2021 and 2022 CSOP and PSP plans. There is a corresponding increase in the
share premium value in the balance sheet above.
The £1.1m cash outflow from the purchase of share capital relates to the
£25m share repurchase programme discussed below with the remaining £23.9m
outflow from the programme expected to occur in H2 FY26.
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, with an optional
one year extension to 17 May 2027. To date, the Group has not utilised the
facility.
Share repurchase
We announced a £25m share repurchase programme on 15 August 2025. Our capital
allocation policy prioritises enhancing business growth, both organically and
through select inorganic opportunities as they arise, and returning excess
capital to shareholders (through normal dividends, and also through special
dividends and/or share buybacks), where appropriate. Our board continuously
reviews capital allocation opportunities and after considering the Group's
strong balance sheet position and prevailing share price, the Board decided
that it would be beneficial to return capital to shareholders through a share
repurchase.
Interim dividend
The Group's dividend policy is to distribute 40-50% of post-tax
pre-exceptional earnings to shareholders. Accordingly, the Board is pleased to
declare a gross interim dividend of 3.2 pence per share. The aggregate amount
of the interim dividend expected to be paid out of retained earnings at 31
August 2025, but not recognised as a liability at the end of the half year, is
£7.6m.
The salient dates applicable to the dividend are as follows:
Dividend announcement date Tuesday, 14 October 2025
Currency conversion determined and announced together with the South African Monday, 3 November 2025
(SA) tax treatment on SENS by 11:00
Last day to trade cum dividend (SA register) Tuesday, 4 November 2025
Commence trading ex-dividend (SA register) Wednesday, 5 November 2025
Last day to trade cum dividend (UK register) Wednesday, 5 November 2025
Commence trading ex-dividend (UK register) Thursday, 6 November 2025
Record date Friday, 7 November 2025
Payment date Friday, 21 November 2025
Additional information required by the Johannesburg Stock Exchange:
1. The GBP:ZAR currency conversion will be determined and published on
SENS on Monday, 3 November 2025.
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 Tuesday, 14 October 2025, being the declaration announcement date
of the dividend, the company had a total of 239,090,507 shares in issue (with
no treasury shares).
5. No transfers of shareholdings to and from South Africa will be
permitted between Monday, 3 November 2025 and Friday, 7 November 2025 (both
dates inclusive). No dematerialisation or rematerialisation orders will be
permitted between Wednesday, 5 November 2025 and Friday, 7 November 2025 (both
dates inclusive).
Principal risks
The Group Board has overall responsibility for risk. This includes maintaining
our enterprise risk management (ERM) framework and internal control systems
and setting our risk appetite. In doing this, it receives support from our
Audit Committee, our internal audit partner and our executive management
teams. However, through their skills and diligence, everyone in the Group
plays a part in protecting our business from risk and making the most of our
opportunities.
We have identified principal risks and uncertainties that could have a
significant impact on the Group's operations, based on risks identified
through each of the operating companies, which we assign to five categories:
financial, strategic, process and systems, operational and regulatory. BTG's
management reviews each principal risk looking at its level of severity, where
it overlaps with other risks, the speed at which it is changing and its
relevance to the Group. We consider the principal risks both individually and
collectively, so that we can appreciate the interplay between them and
understand the entire risk landscape.
For us, risk management is a continuous journey, requiring review throughout
the year. It starts with defining our risk appetite, which was unchanged this
year, as we maintained our cautious approach. Our ERM framework enables us to
identify and manage risk, and we believe that it continues to serve us well
with the inclusion of risk management as a standing agenda item at each of the
subsidiary board meetings illustrating the Group's bottom-up approach to risk.
The ongoing unsettled geopolitical and macroeconomic environment, particularly
Russia's war in Ukraine and the continuing tensions across the Middle East has
served as a strong reminder of the importance of having a robust, agile
approach to managing risk. Our ongoing risk monitoring process enables us to
assess current and emerging risks, and while we remain vigilant, our business
has performed strongly through various external crises in recent years,
demonstrating its resilience.
Our 14 principal risks which were set out in our last Annual Report have been
updated and included below. Whilst the risks themselves have not changed, with
no additions or deletions, in some cases we have updated the status of the
risk, but for the majority there has been no change since the Annual Report
was published.
Additionally, we continue to monitor our three emerging risks relating to the
physical risk from climate change, keeping pace with social change, and the
impact of AI.
Financial 1 Economic disruption Risk owner CEO
No change
The risk How we manage it
Internationally, there is political uncertainty with the US administration. We have so far continued to perform well during high inflation, the conflicts
Imposing global tariffs, resulting in reciprocal tariffs, could lead to in the Middle East and Ukraine, and the UK leaving the EU.
inflation. In addition, the conflicts in the Middle East and Ukraine continue.
The recent real-life experience of these, and of the rising cost of living and
This risk also includes the uncertainties caused by global economic pressures exchange rate fluctuations, have shown us to be resilient through tough
and geopolitical risk within the UK. 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.
There is the potential for public sector funding to be cut, although the size
of this is still unknown.
We cannot mitigate the NI increases directly, but indirectly we are aiming to
increase productivity by using AI tools. Three quarters of our employees have
a GenAI licence and, in a recent assessment of usage, the productivity
increase was equivalent to 26 full-time-equivalent roles.
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.
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 could be
compounded by government controls. Lower demand could also arise from reduced
customer budgets, cautious spending patterns or clients 'making do' with
existing IT.
Economic disruption could also affect the 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 Margin pressure Risk owner MDs of subsidiary businesses
No change
The risk How we manage it
BTG faces pressure on profit margins from myriad directions, including Profit margins are affected by many factors at customer and micro levels.
increased competition, changes in vendors' commercial behaviour, certain
offerings being commoditised and changes in customer mix or preferences.
We can control some of the factors that influence our margins but some, such
as economic and political factors, are beyond our control.
In the past year we have sought to maintain margins where possible. Our
diverse portfolio of offerings, with a mix of vendors, software and services,
has enabled us to absorb any changes - and we continue to innovate to find
new ways to deliver more value for our customers. Services delivered
internally are consistently measured against our competition to ensure we
remain competitive and maximise margins.
Keeping the correct level of certification 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.
This risk area is reviewed monthly.
The impact
These changes could have an impact on our business performance and
profitability.
3 Changes to vendors' commercial model Risk owner CEO
No change
The risk We maintain a diverse portfolio of vendor products and services. Although we
receive major sources of funding from specific vendor programmes, if one
We receive incentive income from our vendors and their distributors. This source declines, we can offset it by gaining new certifications in, and
partially offsets our costs of sales but could be significantly reduced or selling, other technologies where new funding is available. Microsoft forms a
eliminated if the commercial models are changed significantly. 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.
The impact
These incentives are very valuable and contribute to our operational profits.
Significant changes to the commercial models could put pressure on our
profitability.
4 Inflation Risk owner CFO
No change
The risk How we manage it
Inflation in the UK, as measured by the Consumer Price Index (CPI), was 2.8% Staffing costs make up most of our overheads, so our attention has been
in February 2025. At August 2025 this is now 3.8%. This rate is above the focused on our employees and their ability to cope with the rising cost of
Bank of England's target of 2%. living.
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 our competitors increase wages 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. Our customers will also have increased costs, which
will change their budgets and spending priorities.
5 Working capital Risk owner CFO
No change
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. required.
The implementation of the UK Government's Procurement Act 2023 will affect the We have invested in larger credit collection teams and risk management.
payment terms of public sector customers and affect our supply chain.
In the past financial year, BTG has seen a higher level of write-offs than
Vendors' changing payment terms could also have a significant impact. before, but these still aren't significant: all our write-offs are from
companies that have become insolvent or gone into administration.
We have seen debtor days stabilise as inflation has reduced, but the number of
days is yet to return to historic low levels. A large part of a successful outcome is maintaining strong, open relationships
with our customers, understanding their issues and ensuring our billing
systems deliver accurate, clear and timely invoicing so that queries can
be quickly resolved.
The impact
This could adversely affect our businesses' profitability and/or cash flow.
Strategic 6 Vendor concentration Risk owner CEO
No change
The risk We work with our vendors as partners - it is a relationship of mutual
dependency because we are their route to the end customer. We maintain
Over-reliance on any one technology or supplier could pose a potential risk, excellent relationships with all our vendors, and have a particularly good
should that technology be superseded or exposed to economic down cycles, or if relationship with Microsoft, which relies on us as a key partner in the UK.
the vendor fails to innovate ahead of customer demands 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.
The impact
Relying too heavily on any one vendor could have an adverse effect on our
financial performance, should that relationship break down.
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.
7 Competition Risk owner CEO
No change
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
An increase in the use of marketplaces also heightens the risk of more multiple vendors to our customers through their platforms. By matching
transactions going through the same route. customer requirements to the vendor's value proposition, we can better serve
our customers' needs.
Frameworks, particularly in the public sector, are a procurement route of
choice for some customers. We risk narrowing our route to customers if we are We continue to develop and improve our systems and processes to make
not part of these frameworks. transactions easier for our customers, including expanding and improving our
own self-service portals.
AI risks becoming a partial competitor, if it becomes able to provide accurate
and beneficial licensing and infrastructure advice direct to customers. AI/machine learning has been identified as an emerging risk, and so will be
explored and monitored for risks and opportunities to our business.
The regulatory environment will change the competitive landscape too, as
regulators look to decrease monopolies. Currently, there is no sign of any commoditisation that would be a serious
threat to our business model in the short or medium term.
We are aware of the opportunities from regulatory changes and partnerships to
expand our vendor, solution and services portfolio.
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.
8 Relevance and emerging technology Risk owner CEO
No change
The risk How we manage it
As the technology and security markets evolve rapidly and become more complex, We stay relevant to our customers by:
the risk exists that we might not keep pace and so fail to be considered for
new opportunities by our customers.
· 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.
We defend our position by keeping abreast of new technologies and the
innovators who develop them. We do this by joining industry forums and
sitting 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. As well as bolstering our internal
capabilities through the creation of an innovation and engineering team.
We are giving more focus to customer communications and marketing, to increase
brand awareness.
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. This is core to our business, so the risk from this is
relatively low.
The impact
Customers have wide choice and endless 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 9 Cyberthreats - direct and indirect Risk owner CTOs of subsidiary businesses
Increase focus
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.
liabilities and reputational damage.
This work provides insights into vulnerable areas and the effects of any
breaches, which allow us to strengthen our security controls.
Internal IT policies and processes are in place to mitigate some of these
risks, including regular training, working abroad procedures and the use of
enterprise-level security software.
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.
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.
Operational 10 Business continuity failure Risk owner CTOs of subsidiary businesses
No change
The risk How we manage it
Any failure or disruption of BTG's people, processes and IT infrastructure may Our CTOs and heads of IT manage and oversee our IT infrastructure, network,
negatively affect our ability to deliver to our customers, cause reputational systems and business applications.
damage and lose us market share.
All our operational teams are focused on the latest vendor products and
educate sales teams appropriately.
Regular IT audits have identified areas for improvement, while 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.
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
make sure there is not a 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 Software Services 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. 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.
11 Attract and retain staff while keeping our culture Risk owner CEO
Increase focus
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: 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.
· 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
machine learning local talent.
· 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 Chief People Officer, who is engaged with
employees and working on strategies to maintain our culture and improve our
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 this and other feedback
avenues 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.
The impact
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.
12 Supply chain management Risk owner CEO
No change
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. escalated and appropriate action is taken.
There is a risk to our business if we engage with suppliers that: Onboarding questionnaires have been reviewed and improved.
· Provide unethical working conditions and pay.
· Are involved in financial mismanagement and unethical behaviour. Phoenix has appointed a supply chain manager, and Bytes has appointed a
third-party compliance officer focused on supply chain management. Bytes has
· Cause environmental damage. also established a cross-disciplinary group to work on managing suppliers.
· Operate in sanctioned regions.
We consider the impact from shipping risks to be lower, given that only a
small part of our profit and revenue come from hardware.
The impact
The impact to the business is across multiple streams from legal, financial,
reputational, ethical and environmental.
Escalating conflicts could also affect our supply chain - for example,
rerouting shipping around southern Africa adds journey time and increases
carbon emissions.
13 Sustainability/ESG Risk owner Group Sustainability Manager
Increasing
The risk How we manage it
The growing importance of sustainability and ESG for our customers, investors Our Board manages and monitors this risk closely, with oversight from the ESG
and employees means we need to stay at the forefront of reporting and and Audit Committees.
disclosure, as regulations are continually updated. Failure to do so would put
the Group at risk of financial penalties and reputational damage.
The Group Sustainability Manager continues to drive sustainability reporting
and initiatives, and to work with an appointed third party to provide guidance
and assurance on reported data. Environmental management systems are also in
place and certified by ISO 14001.
Our Sustainability Steering Committee enables decision makers from across the
Group to work towards a common goal and report on challenges. In June 2024, we
enhanced the governance of ESG, by establishing a Board-level ESG Committee.
Disclosures are made through several channels, including ISS ESG ratings, CDP
and EcoVadis. We had our near-term and net zero targets validated by the SBTi,
as part of our programme to drive sustainability through best practice
approaches. Feedback from disclosures is used to guide changes in the
business. So, as disclosure methodologies stay current, so should the
business, where possible and relevant.
In 2025 'failure to prevent fraud' legislation came in. We have reviewed the
potential risk and put controls in place to avoid misinformation.
The impact
Falling behind expectations or our peers may lead to challenges around:
· Legal compliance, such as adhering to global standards
· Retaining customers, as they push to reduce emissions
· Investor relations, such as meeting criteria for ESG funds
· Attracting and retaining employees, as younger generations seek to
work for more purpose-driven businesses.
14 Regulatory and compliance Risk owner CEO
No change
The risk How we manage it
Our business faces inherent risks from evolving regulatory and compliance We engage external experts. BTG works closely with external authorities,
landscapes. Changes in laws, regulations and industry standards could including through internal and external audits and paid-for consultancy, to
significantly affect our operations, financial stability and reputation. advise on expected changes to regulations and the Group's response to them.
We monitor regulatory developments. Individuals with responsibilities in the
business stay up to date with changes in their field through professional
memberships and trade publications, and through directly following regulatory
and compliance bodies.
We work to enhance internal controls. Compliance teams in each operating
company hold a register of policies and organise reviews, updates and
sign-offs with policy owners to make sure policies are kept current.
Our steering committees, operating company board meetings and BTG Board
meetings are forums for raising and discussing changes that affect multiple
areas of the business.
The impact
Operational teams and processes face administrative burdens and effects under
rapidly changing regulations.
Failing to keep up with regulatory, reporting and compliance changes could
lead to fines, legal challenges and reputational damage.
If regulatory compliance is not maintained, there are risks to the Group and
to individuals, which could lead to expensive legal challenges and
reputational damage to the business among all stakeholders.
Going concern disclosure
The Group has performed a full going concern assessment from 31 August 2025
for the period up to 28 February 2027. As outlined in the Chief Financial
Officer's review above, trading during the first half of the year demonstrated
the Group's resilient operating model. The Group has a healthy liquidity
position with £82.3m of cash and cash equivalents available at 31 August
2025. The Group also has access to a committed revolving credit facility that
runs until 17 May 2026, with an optional one-year extension to 17 May 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 including 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. Under all scenarios assessed, the Group would remain cash
positive throughout the whole of the going concern period without needing to
utilise the revolving credit facility.
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 28 February 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 his/her knowledge:
· 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
14 October 2025
Interim condensed consolidated statement of profit or loss
For the six months ended 31 August
Six months ended Year ended
31 August 31 August 28 February
2025 2024 2025
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Revenue 3 108,082 105,472 217,134
Cost of sales (25,680) (23,355) (53,880)
Gross profit 82,402 82,117 163,254
Other income 396 - 105
Administrative expenses (49,677) (46,504) (96,933)
Operating profit 33,121 35,613 66,426
Finance income 4 5,646 5,979 8,486
Finance costs 4 (158) (158) (291)
Share of profit/(loss) of associate - 72 (8)
Profit before taxation 38,609 41,506 74,613
Income tax expense 5 (9,578) (11,059) (19,772)
Profit after taxation 29,031 30,447 54,841
Profit for the period attributable to owners of the parent company 29,031 30,447 54,841
Pence Pence Pence
Basic earnings per ordinary share 16 12.03 12.67 22.78
Diluted earnings per ordinary share 16 11.62 12.19 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.
Interim condensed consolidated statement of financial position
As at As at As at
31 August 31 August 28 February
2025 2024 2025
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 13,947 8,215 13,581
Right-of-use assets 1,659 1,517 1,641
Intangible assets 6 45,369 41,848 43,475
Investment in associate 3,185 3,265 3,185
Contract assets 1,438 1,327 1,773
Deferred tax assets - 525 59
Total non-current assets 65,598 56,697 63,714
Current assets
Inventories 14 17 14
Contract assets 12,579 10,898 9,973
Trade and other receivables 7 258,993 211,756 268,454
Current tax asset 456 - -
Cash and cash equivalents 8 82,300 71,507 113,076
Total current assets 354,342 294,178 391,517
Total assets 419,940 350,875 455,231
Liabilities
Non-current liabilities
Lease liabilities (1,153) (1,337) (1,269)
Contract liabilities (4,150) (2,049) (2,034)
Deferred tax liabilities (382) - -
Total non-current liabilities (5,685) (3,386) (3,303)
Current liabilities
Trade and other payables 9 (301,729) (250,593) (327,533)
Contract liabilities (21,830) (17,059) (25,245)
Current tax liabilities - (1,732) (439)
Lease liabilities (773) (520) (668)
Provisions 10 (12,500) - -
Total current liabilities (336,832) (269,904) (353,885)
Total liabilities (342,517) (273,290) (357,188)
Net assets 77,423 77,585 98,043
Equity
Share capital 2,424 2,408 2,411
Share premium 641,290 635,554 636,432
Other reserves 13,147 12,539 14,879
Merger reserve (644,375) (644,375) (644,375)
Retained earnings 64,937 71,459 88,696
Total equity 77,423 77,585 98,043
Interim condensed consolidated statement of changes in equity (unaudited)
Attributable to owners of the company
Share Share Other Merger Retained Total
capital premium reserves reserve earnings equity
Note £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 March 2025 2,411 636,432 14,879 (644,375) 88,696 98,043
Total comprehensive income for the period - - - - 29,031 29,031
Dividends - - - - (41,014) (41,014)
paid
13
Shares issued during the 16 4,858 - - - 4,874
year 11
Transfer to retained - - (3,500) - 3,500 -
earnings 15
Share-based payment transactions 15 - - 1,717 - - 1,717
Tax - - 48 - - 48
adjustments
5
Purchase and cancellation of own shares 10,11 (3) - 3 - (2,755) (2,755)
Costs of share - - - - (21) (21)
purchases 10
Provision for purchase of own shares 10 - - - - (12,500) (12,500)
Balance at 31 August 2025 2,424 641,290 13,147 (644,375) 64,937 77,423
Balance at 1 March 2024 2,404 633,650 11,050 (644,375) 75,607 78,336
Total comprehensive income for the period - - - - 30,447 30,447
Dividends paid 13 - - - - (35,373) (35,373)
Shares issued during the year 4 1,904 - - - 1,908
Transfer to retained earnings 15 - - (778) - 778 -
Share-based payment transactions 15 - - 2,489 - - 2,489
Tax adjustments 5 - - (222) - - (222)
Balance at 31 August 2024 2,408 635,554 12,539 (644,375) 71,459 77,585
Balance at 1 March 2024 2,404 633,650 11,050 (644,375) 75,607 78,336
Total comprehensive income for the period - - - - 54,841 54,841
Dividends paid 13 - - - - (42,843) (42,843)
Shares issued during the year 7 2,782 - - - 2,789
Transfer to retained earnings 15 - - (1,091) - 1,091 -
Share-based payment transactions 15 - - 5,049 - - 5,049
Tax adjustments 5 - - (129) - - (129)
Balance at 28 February 2025 2,411 636,432 14,879 (644,375) 88,696 98,043
Interim condensed consolidated statement of cash flows
Period ended 31 August Period ended 31 August Year ended 28 February
2025 2024 2025
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Cash flows from operating activities
Cash generated from operations 12 14,696 22,009 85,635
Interest received 5,646 5,979 8,486
Interest paid (122) (113) (224)
Income taxes paid (9,984) (9,483) (18,930)
Net cash inflow from operating activities 10,236 18,392 74,967
Cash flows from investing activities
Payments for property, plant and equipment (993) (354) (6,358)
Payments for intangible asset (2,334) (1,642) (3,709)
Net cash outflow from investing activities (3,327) (1,996) (10,067)
Cash flows from financing activities
Proceeds from issue of shares 4,874 1,908 2,789
Purchase of own shares for cancellation 10 (1,148) - -
Cost incurred on purchase of own shares 10 (9) - -
Principal elements of lease payments (388) (260) (606)
Dividends paid to shareholders 13 (41,014) (35,373) (42,843)
Net cash outflow from financing activities (37,685) (33,725) (40,660)
Net (decrease)/increase in cash and cash equivalents (30,776) (17,329) 24,240
Cash and cash equivalents at the beginning of the financial period 113,076 88,836 88,836
Cash and cash equivalents at end of period 8 82,300 71,507 113,076
Notes to the interim condensed consolidated financial statements
1. Accounting policies
1.1 General information
The interim condensed consolidated financial statements of Bytes Technology
Group plc, together with its subsidiaries ("the Group" or "the Bytes
business") for the six months ended 31 August 2025 were authorised for issue
in accordance with a resolution of the directors on 13 October 2025.
The Company is a public limited company, incorporated and domiciled in the UK.
Its registered address is Bytes House, Randalls Way, Leatherhead, Surrey, KT22
7TW.
The Group 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 annual consolidated financial statements of the Group will be prepared in
accordance with UK-adopted International Accounting Standards.
The interim condensed consolidated financial statements for the six months
ended 31 August 2025 have been prepared in accordance with UK-adopted
International Accounting Standard ("IAS") 34 Interim Financial Reporting.
The interim condensed consolidated financial statements have been reviewed,
but not audited, by Ernst & Young LLP and were approved by the Board of
Directors on 13 October 2025. The financial information contained in this
report does not constitute statutory accounts within the meaning of section
434 of the Companies Act 2006. The interim condensed consolidated financial
statements should be read in conjunction with the annual consolidated
financial statements for the year ended 28 February 2025, which were prepared
in accordance with UK-International Accounting Standards in conformity with
the requirements of the Companies Act 2006. The annual financial statements
for the year ended 28 February 2025 were approved by the Board of Directors on
12 May 2025 and have been delivered to the registrar. The auditor's report on
those financial statements was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under section 498(2) or (3)
of the Companies Act 2006.
The Group's interim condensed consolidated financial statements comprise the
interim condensed consolidated statement of profit or loss, interim condensed
consolidated statement of financial position, interim condensed consolidated
statement of changes in equity and interim condensed consolidated statement of
cash flows and the notes thereto.
All amounts disclosed in the Group's interim condensed consolidated financial
statements and notes have been rounded off to the nearest thousand, unless
otherwise stated.
Going concern
The going concern of the Group is dependent on maintaining adequate levels of
resources to continue to operate for the foreseeable future. The directors
have considered the principal risks, which are set out above, in addition to
day-to day risks such as the Group's exposure to credit risk, liquidity risk,
currency risk and foreign exchange risk.
When assessing the going concern of the Group, the directors have reviewed the
year-to-date financial actuals, the cash position at 31 August 2025, and the
financial forecasts for the period up to 28 February 2027, being the going
concern assessment period.
The assumptions used in the financial forecasts are based on the Group's
historical performance, current trading results, 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
The Group finished the period with £82.3 million of cash and profit before
tax for the six months of £38.6 million, continuing in its strategic
direction around growing industry demands for cloud, cybersecurity, and AI
solutions, underpinned by managed services. Although the current period of
reporting has seen gross profit broadly flat year on year and a 7% reduction
in operating profit, this performance was affected by reductions in certain
Microsoft incentives and an increase in national insurance costs. The Group
also made the decision to restructure the sales division into specialised,
customer segment focused teams which took longer than expected to generate
incremental profit. The restructure is expected to have a positive impact in
future periods and we are not aware of further revisions to vendor incentives
within the going concern assessment period.
Notwithstanding the above, the Group's core operating model remains consistent
with prior years and provides a strong and stable platform for the future. The
key elements are explained in further detail on pages 151-153 in the annual
financial statements for the year ended 28 February 2025.
Resilience continues to be built into the model from the Group's wide customer
base, high levels of repeat business, strong vendor relationships, and the
back-to-back nature of most of its sales with demand driven by our customers
navigating the complexities of agile, yet secure, IT environments.
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 due to the risks of
cyber-attacks. We are also seeing growing requirements for artificial
intelligence (AI) functionality within IT applications and a demand for
guidance and support from our customers to capitalise on this emerging
technology. In line with these industry trends, we have achieved substantial
growth in profit from our wide range of service offerings and we expect this
to continue.
As a result, the directors believe that the Group continues to operate in a
resilient industry, which will enable it to return to a profit growth
trajectory but are also vigilant to the risks which 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, notably economic disruption, inflation, and
attraction and retention of staff. The Board monitors these macroeconomic and
geopolitical risks on an ongoing basis. They are considered further below.
Macroeconomic risks
• Cost of sales inflation and competition leading to margin pressure -
While pricing from our suppliers may be at risk of increasing, as they too
face the same macroeconomic pressures as ourselves, our commercial model is
based on passing on supplier price increases to our customers so this can
generate positive results for the Group. We also see pressure from our
customers, notably in the public sector space where new business must often be
won under highly competitive tendering processes but where we then have a
strong track record of monetising the account over the longer term. The
changes we have experienced in the Microsoft incentives this period has
resulted in a reduction in our GP/GII margin from 6.7% last year to 6.1% this
period, but we have been able to mitigate this through the growth in our
higher margin service business.
• Wage inflation - The business has been facing pressure from wage
inflation over the past years. Where strategically required, we have increased
salaries to retain key staff in the light of approaches from competitors,
especially where staff have specialist or technical skills. We monitor our
staff attrition rate and have maintained a level around 14% and do not believe
there has been any significant outflow of staff due to being uncompetitive
with salaries. We have a strong, collaborative and supportive culture and
offer our staff employment in a business that is robust, and they are proud
of. This is a key part of our attraction and retention strategy.
In addition, when we look at our key operational efficiency ratio of operating
profit/GP, we have achieved just over 40% which is in line with our target
level, demonstrating control over costs. While we have already aligned staff
salaries to market rates, further expected rises have been factored into the
financial forecasts in line with those awarded in the past year.
• Interest rates - While interest rates have been high in the past two
years, they have now appeared to stabilise and started to fall. The Group has
no debt exposure, nor has it ever needed to call on its revolving credit
facility (RCF). Due to the timing difference, we see in our cash flow model
between customer receipts and supplier payments, we place cash on the money
markets through our monthly cash cycle. While interest rates may fall further
in the coming months, we still see substantial interest income opportunity
over the going concern period generating £5.6 million of interest income in
the reporting period.
• Economic conditions impacting on customer spending - We have seen
continued spending by our customers, with GII up by 9.1%. As our customers
undergo IT transformation, trending to the cloud, automation and managed
service, and with growing cybersecurity concerns also heightening the
requirements for IT security, we are seeing ongoing demand. IT spend may also
be a means to efficiencies and savings elsewhere. Our business model also
provides resilience with our income spread over many customers in repeat
software subscription programmes and annual service support contracts with
high renewal rates.
• Economic conditions impacting on customer payments - Across the
period we have seen our average debtor days of 38 remaining in line with the
previous year. There is limited evidence that customers ultimately do not pay,
and we have only suffered £0.3 million of bad debt during the period against
GII of £1.3 billion. We were comfortably carrying sufficient loss allowance
to cover this.
• Tariffs impacting the Group directly or indirectly - Recently we
have seen the introduction of import tariffs by certain countries which will
increase the cost of imported goods within the global supply chain. 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 within
the going concern period. This is a fast-moving matter which we will therefore
continue to monitor closely for further changes, and in particular for any
indirect impact on our customers' spending and payments, as noted above.
Geopolitical risks
The current geopolitical environment, including the ongoing conflicts in
Ukraine and the Middle East, has created potential supply problems, product
shortages and general price rises, particularly in relation to fuel, gas and
electricity.
• In terms of supply chain, we are not significantly or materially
dependent on the movement of goods, so physical trade obstacles are not likely
to affect us directly, with hardware only making up 1% of our GII during the
period. Nevertheless, we have ensured that we have a number of suppliers with
substitute, or alternative, technologies that we can rely on if one supplier
cannot meet our requirements or timescales.
• Software sales, though, continue to be the dominant element of our
overall GII and so are not inherently affected by cross-border issues.
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
review period. Climate risks are considered fully in the Task Force on
Climate-related Financial Disclosures (TCFD) included in the Annual Report for
the year ended 28 February 2025.
Liquidity and financing position
At 31 August 2025, the Group held instantly accessible cash and cash
equivalents of £82.3 million, and the balance sheet shows net current assets
of £17.5 million; these amounts are after the Group paid final and special
dividends for the prior year totalling £41.0 million.
The Group has access to a committed RCF of £30 million 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. The facility
includes 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. To date, the Group has not been required to use
either its previous or current facilities, and we do not forecast use of the
current facility over the going concern assessment period.
Going concern assessment
The Group continues to forecast cashflows under a base case scenario modelled
on latest projections for the current year and following year, and then two
downside scenarios, severe but plausible and stressed, both of which include
certain appropriate mitigations. This approach to stress testing is consistent
with the disclosure on pages 154 and 155 in the annual financial statements
for the year ended 28 February 2025.
In its assessment, the Board has considered the potential impact of the
current economic conditions and geopolitical environment as described above.
Whilst there is resilience against such pressures, 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 gross invoiced income, gross profit,
operating profit, and debtor collection periods.
In the most stressed scenario, we have forecast both gross invoiced income and
gross profit falling by 30% year on year, commencing in December 2025, and
debtor days increasing by 10 at that same point in time. 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.
Under such downsides the Board have factored in the extent to which they might
be partially offset by freezes in recruitment, pay rises and general costs
(including a natural reduction in commissions and bonuses if gross profit
falls) and with further mitigation measures including reductions in headcount
(through natural attrition by not replacing leavers). These mitigations are
within the control of the Group to implement quickly in response to any
downward trends should they be necessary.
Under all scenarios assessed, the Group would remain cash positive throughout
the whole of the going concern period. 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.
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 28 February 2027, being
the going concern assessment period. Accordingly, the directors conclude it to
be appropriate that the interim condensed consolidated financial statements be
prepared on a going concern basis.
1.3 Critical accounting estimates and judgements
The preparation of the interim condensed 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.
The accounting estimates and judgements adopted for these interim condensed
consolidated financial statements are consistent with those of the previous
financial year as disclosed in the Group's annual report and accounts for the
year ended 28 February 2025.
1.4 New standards, interpretations and amendments adopted by the Group
There were no new standards, interpretations and amendments adopted by the
Group during the period to 31 August 2025 that have a material impact on the
interim condensed consolidated financial statements of the Group.
1.5 Changes in accounting policies and disclosures
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are the same as those set out in the Group's
annual consolidated financial statements for the year ended 28 February 2025.
1.6 Other income
Other income comprises rental income.
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 interim condensed
consolidated statement of profit or loss and the interim condensed
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:
Period ended 31 August 2025 Period ended 31 August 2024 Year ended 28 February 2025
Unaudited Unaudited Audited
Revenue by product £'000 £'000 £'000
Software 72,101 74,719 146,002
Hardware 14,579 12,464 33,216
Services internal 19,042 16,619 34,032
Services external 2,360 1,670 3,884
Total revenue from contracts with customers 108,082 105,472 217,134
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.
Period ended 31 August 2025 Period ended 31 August 2024 Year ended 28 February 2025
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue by geographical regions
United Kingdom 104,131 102,178 209,854
Europe 2,165 1,928 4,112
Rest of world 1,786 1,366 3,168
108,082 105,472 217,134
Period ended 31 August 2025 Period ended 31 August 2024 Year ended 28 February 2025
Unaudited Unaudited Audited
3(b) Gross invoiced income by type £'000 £'000 £'000
Software 1,292,359 1,187,279 2,005,289
Hardware 14,579 12,464 33,216
Services internal 19,042 16,619 34,032
Services external 16,060 13,887 27,267
1,342,040 1,230,249 2,099,804
Gross invoiced income 1,342,040 1,230,249 2,099,804
Adjustment to gross invoiced income for income recognised as agent (1,233,958) (1,124,777) (1,882,670)
Revenue 108,082 105,472 217,134
Gross invoiced income reflects gross income billed to customers adjusted for
deferred and accrued revenue items amounting to a net increase of £3.5
million (2024: £1.0 million increase; 28 February 2025: £7.7 million
reduction). The Group reports gross invoiced income as an alternative
financial KPI as management believes this measure allows further understanding
of business performance particularly in respect of working capital and cash
flow.
4. Finance income and costs
Period ended 31 August 2025 Period ended 31 August 2024 Year ended 28 February 2025
Unaudited Unaudited Audited
£'000 £'000 £'000
Bank interest received 5,646 5,979 8,486
Finance income 5,646 5,979 8,486
Interest expense on financial liabilities (122) (113) (224)
Interest expense on lease liability (36) (45) (67)
Finance costs (158) (158) (291)
5. Income tax expense
Income tax expense is recognised based on management's estimate of the
weighted average effective annual income tax rate expected for the full
financial year. The estimated average annual rate used for the period to 31
August 2025 is 24.8%, compared to 26.6% for the period to 31 August 2024.
The estimate is based on the timing and quantity of capital expenditure and
exercises of share options in the period extrapolated for the full year and
hence different rates arise between periods.
The major components of the Group's income tax expense for all
periods are:
Period ended 31 August 2025 Period ended 31 August 2024 Year ended 28 February 2025
Unaudited Unaudited Audited
£'000 £'000 £'000
Current income tax charge 9,269 10,972 19,157
Deferred tax charge 309 87 615
Total tax charge 9,578 11,059 19,772
Period ended 31 August Period ended 31 August 2024 Year ended 28 February 2025
2025 Unaudited Audited
Unaudited
Amounts recognised directly in equity £'000 £'000 £'000
Aggregate deferred tax arising in the reporting period and not recognised in
net profit or loss or other comprehensive income but directly charged or
credited to equity:
Deferred tax: share-based payments charge (132) (222) (160)
Current tax: share-based payments credit 180 - 31
48 (222) (129)
6. Intangible assets
Customer relationships
Goodwill Brand Software Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 March 2024 37,493 8,798 3,653 - 49,944
Additions - - - 1,642 1,642
At 31 August 2024 37,493 8,798 3,653 1,642 51,586
Additions - - - 2,067 2,067
At 28 February 2025 37,493 8,798 3,653 3,709 53,653
Additions - - - 2,334 2,334
At 31 August 2025 37,493 8,798 3,653 6,043 55,987
Amortisation
At 1 March 2024 - 5,645 3,653 - 9,298
Charge for the period - 440 - - 440
At 31 August 2024 - 6,085 3,653 - 9,738
Charge for the period - 440 - - 440
At 28 February 2025 - 6,525 3,653 - 10,178
Charge for the period - 440 - - 440
At 31 August 2025 - 6,965 3,653 - 10,618
Net book value
At 31 August 2024 37,493 2,713 - 1,642 41,848
At 28 February 2025 37,493 2,273 - 3,709 43,475
At 31 August 2025 37,493 1,833 - 6,043 45,369
7. Trade and other receivables
As at 31 August 2025 As at 31 August 2024 As at 28 February 2025
Unaudited Unaudited Audited
Financial assets £'000 £'000 £'000
Gross trade receivables 243,367 196,881 260,883
Less: loss allowance (1,314) (2,172) (1,659)
Net trade receivables 242,053 194,709 259,224
Other receivables 13,493 13,854 6,917
255,546 208,563 266,141
Non-financial assets
Prepayments 3,447 3,193 2,313
3,447 3,193 2,313
Trade and other receivables 258,993 211,756 268,454
The reduction in the loss allowance since 28 February 2025 relates to the
write-off of £345,00 of debts against the existing provision with no impact
on the consolidated statement of profit or loss.
8. Cash and cash equivalents
As at 31 August 2025 As at 31 August 2024 As at 28 February 2025
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash at bank and in hand 8,800 71,507 6,276
Short-term deposits 73,500 - 106,800
82,300 71,507 113,076
9. Trade and other payables
As at 31 August 2025 As at 31 August 2024 As at 28 February 2025
Unaudited Unaudited Audited
£'000 £'000 £'000
Trade and other payables 236,561 190,137 179,003
Accrued expenses 60,855 56,707 122,666
Payroll tax and other statutory liabilities 4,313 3,749 25,864
301,729 250,593 327,533
10. Share repurchase programme
On 15 August 2025 the Company announced a Share Repurchase Programme under
which it has entered into an agreement with its brokers, Numis Securities
Limited and Peel Hunt LLP, to purchase the Company's shares for an aggregate
value of up to £25.0 million. The brokers will manage the purchases on a
discretionary basis, purchasing shares within pre-set parameters on the open
market and making their trading decisions independently of the Company. The
Company intends to cancel all shares purchased under the Programme.
At 31 August 2025 the Company had repurchased 693,116 shares for a total
consideration of £2.75 million plus costs of £21,000. The purchase has been
treated as a distribution though retained earnings. Of this amount £1.15
million (plus costs of £9,000) was paid at the period end with the balance of
£1.6 million (plus costs of £12,000) accrued and paid on 1 September 2025.
At the reporting date 293,116 of these shares had been cancelled and the
remainder were cancelled on 3 September 2025.
A provision of £12.5 million has also been recognised through retained
earnings for estimated further purchases after the end of the reporting period
up to 14 October 2025, being the end of the Market Abuse Regulations (MAR)
close period, during which the Company cannot vary or terminate its
instructions to the brokers and whereby it is probable that an outflow of
resources will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation. This estimate is based on the
recent volumes and anticipated share price based on historical trading data.
The £9.75 million remaining balance of the Repurchase Program to the maximum
£25.0 million is disclosed as a contingent liability for purchases up to this
amount post the interim results reporting date of 14 October 2025.
11. Share capital and share premium
In the six months to 31 August 2025 the Company issued 1,636,456 shares as a
result of employees exercising share options with a corresponding increase in
share capital of £16,000 and in share premium of £4.9 million.
The Company also made a transfer from the share capital account to other
reserves (capital redemption) for £3,000 in respect of the nominal value of
shares cancelled under the Share Repurchase Programme up to the reporting date
(see note 10).
12. Cash generated from operations
Period ended 31 August 2025 Period ended 31 August 2024 Year ended 28 February 2025
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Profit before taxation 38,609 41,506 74,613
Adjustments for:
Depreciation and amortisation 1,389 1,286 2,644
Loss on disposal of property, plant and equipment 1 - -
Non-cash employee benefits expense - share based payments 17 1,717 2,489 5,049
Finance income - net (5,488) (5,821) (8,195)
Share of profit of associate - (72) 8
(Increase)/decrease in contract assets (2,271) 2,220 2,699
Decrease/(increase) in trade and other receivables 9,461 10,059 (46,639)
Decrease in inventories - 43 46
(Decrease)/increase in trade and other payables (27,423) (27,324) 49,616
(Decrease)/increase in contract liabilities (1,299) (2,377) 5,794
Cash generated from operations 14,696 22,009 85,635
13. Dividends
Period ended 31 August 2025 Period ended 31 August 2024 Year ended 28 February 2025
Unaudited Unaudited Audited
Declared and paid during the period £'000 £'000 £'000
Interim dividend - - 7,469
Final dividend 16,745 14,438 14,438
Special dividend 24,269 20,935 20,936
Total dividends attributable to ordinary shareholders 41,014 35,373 42,843
Dividends not recognised at 31 August 2025
Since the end of the half year the directors have recommended the payment of
an interim dividend of 3.2 pence per fully paid ordinary share (2024: 3.1
pence). The aggregate amount of the proposed dividend expected to be paid on
21 November 2025 out of retained earnings at 31 August 2025, but not
recognised as a liability at the end of the half year, is £7.6 million.
14. 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'. Group
companies made purchases from the associate of £3.3 million (2024: £2.3
million) during the six months ended 31 August 2025, with a trade payable of
£0.7 million at 31 August 2025 (28 February 2025: £0.5 million).
15. Share-based payments
For the six months ended 31 August 2025, 1,549,398 share options were granted
to eligible employees under the PISP, SAYE and DBP schemes (2024: 1,427,638
share options were granted). 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.
Period ended 31 August 2025 Period ended 31 August 2024 Year ended 28 February 2025
Unaudited Unaudited Audited
£'000 £'000 £'000
Share-based payment employee expenses 1,717 2,489 5,049
1,717 2,489 5,049
16. Earnings per share
The Group calculates earnings per share (EPS) on several different bases in
accordance with IFRS and prevailing South Africa requirements. The Group is
required to calculate headline earnings per share (HEPS) in accordance with
the JSE Listing Requirements.
Period ended 31 August 2025 Period ended 31 August 2024 Year ended 28 February 2025
Unaudited Unaudited Audited
pence pence pence
Basic earnings per share 12.03 12.67 22.78
Diluted earnings per share 11.62 12.19 21.95
Headline earnings per share 12.03 12.67 22.78
Diluted headline earnings per share 11.62 12.19 21.95
16(a) Weighted average number of shares used as the denominator
Period ended 31 August 2025 Period ended 31 August Year ended 28 February 2025
Unaudited 2024 Audited
Unaudited
Number Number Number
Weighted average number of ordinary shares used as the denominator in 241,410,480 240,222,961 240,750,619
calculating both basic EPS and HEPS
Adjustments for calculation of both diluted EPS and diluted HEPS:
- share options((1)) 8,475,071 9,515,378 9,060,276
Weighted average number of ordinary shares and potential ordinary shares used 249,885,551 249,738,339 249,810,895
as the denominator in calculating both diluted EPS and diluted HEPS
(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.
16(b) Headline earnings per share
The table below reconciles the profits attributable to owners of the company
to headline profits attributable to owners of the company:
Period ended 31 August 2025 Period ended 31 August 2024 Year ended 28 February 2025
Unaudited Unaudited Audited
£'000 £'000 £'000
Profits attributable to owners of the company 29,031 30,447 54,841
Adjusted for:
- Loss on disposal of property, plant and equipment 1 - -
Headline profits attributable to owners of the company 29,032 30,447 54,841
17. Events after the reporting period
There were no events after the period that require disclosure, other than what
is disclosed in note 10.
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