Top technology company listed on the JSE reports R78.5 million decrease in profit
Bytes Technology Group reported on Tuesday that its after-tax profit for the financial year ended 28 February 2026 decreased by £3.5 million (R78.46 million) compared to the prior year.
The company’s profit after tax declined from £54.8 million (R1.23 billion) to £51.3 million (R1.15 billion), a 6.5% decrease.
It also reported reduced operating profit and operating efficiency. Operating profit was down by 5.6% from £66.4 million to £62.7 million.
Meanwhile, the company’s operating efficiency ratio, its operating profit as a percentage of gross profit, dropped from 40.7% to 37.5%.
However, the results weren’t all bad news. Revenue was up by 1.6% from £217.1 million to £220.5 million, and Bytes reported double-digit growth in Gross Invoiced Income (GII).
The company reported an 11.5% increase in GII to £2.34 billion. This top-line growth was broad-based, driven by an 11.4% increase in software and a substantial 24.6% increase in services.
Bytes also reported a strong rebound and momentum in the second half of the year, while gross profit increased by 2.5% year-on-year.
It said gross profit improved from a 0.3% decline in the first half to 4.6% growth in the second half of the year, as strategic adjustments and market transitions settled.
“This has been a year of adaptation and evolution against a more challenging market backdrop,” said Bytes Group chief executive officer, Sam Mudd.
Mudd said the company focused on optimising its business for ongoing growth, segmenting its private sector sales team to better align with customers and vendors.
Bytes also managed Microsoft’s transition of incentives to consumption-based and service-led funding, and increased its services portfolio and associated profits in line with its strategy.
“We maintained our share of wallet with existing customers, as they invested in their IT requirements, and continued to expand our client base in both the public and private sectors,” said Mudd.
“We saw significant framework wins in defence, and private sector enterprise client wins in retail and the energy sector, while continuing to drive momentum through the year.”
Mudd said that as agentic AI and associated technologies continue to be deployed, Bytes’ customers need an integrated delivery model.
“This will almost always need a deep understanding of the domain the customer operates in, and the associated data and services,” he said.
“This is to help the customer adapt within the changing technological landscape. We are well-positioned, as a Microsoft Frontier Partner, to be the partner for our customers on this journey.”
Operating profit outlook flat
Bytes explained that there had been stagnation in the private sector, which accounted for 62% of the company’s gross profit, while the public sector saw growth.
Its private sector business experienced a 0.3% decline in gross profit. This drop was attributed to the strategic realignment of the private-sector sales team and to changes in Microsoft’s incentives.
“Over the year, we have further positioned ourselves to be well placed to benefit from the structural demand drivers we see in our markets, including hybrid cloud computing, cybersecurity, services and AI,” Bytes stated.
“Our FY27 outlook remains consistent with that provided in our FY26 trading update on 24 March.”
Bytes’s board of directors expected to deliver high single-digit to low double-digit percentage growth in gross profit, with operating profit broadly flat.
This was as the company absorbed roughly £4.5 million (R100.9 million) of cost normalisation relating to higher technology costs following the completion of strategic projects and a return to normal bonus levels.
“We have now passed the anniversary of the Microsoft incentive changes and the tough comparative from the private sector sales realignment,” stated Bytes.
“We have also seen strong momentum continue into the early weeks of FY27, reinforcing our confidence in the year ahead.”
Bytes said it returned £74 million (R1.66 billion) to shareholders during the financial year, which included dividends and a £25 million (R560.7 million) share buyback.
The board announced a final ordinary dividend of 7.0p (R1.57), resulting in a full-year dividend of 10.2p (R2.29).
| Metric | FY26 | FY25 | % change |
|---|---|---|---|
| Revenue | £220.5m | £217.1m | +1.6% |
| Gross Invoiced Income | £2,341.0m | £2,099.8m | +11.5% |
| Gross profit | £167.3m | £163.3m | +2.5% |
| Operating profit | £62.7m | £66.4m | -5.6% |
| Profit after tax | £51.3 | £54.8m | -6.5% |
| Cash | £98.6m | £113.1m | -12.8% |
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