Bytes Technology: NHS and HMRC contracts help lift profit as dividend hiked

IT provider Bytes Technology has posted an uptick in income and operating profit as new and existing clients invest in their software.

In its half year results for the six months ended 31 August, Bytes said gross invoiced income jumped by 13.7 per cent to £1.2bn, largely driven by software and from public sector contract wins such as the NHS and HMRC.

However, shares in the British company tumbled around six per cent after it said hardware fared worse, leading to a 2.9 per cent drop in revenue, which dipped from £108.7m to £105.5m.

Operating profit rose 16.3 per cent to £35.6m, up from £30.6m, while gross profit also increased by nine per cent to £82.1m.

Chief executive Sam Mudd said: “I am pleased to report another set of positive results for [Bytes Technology Group], with a strong increase in operating profit, driven by continued demand for our broad range of software, solutions and services.

“Despite the challenging economic climate and political uncertainty over the past six months, we have increased our share of wallet amongst our existing customers as they continued to invest in their IT needs. We have also expanded our client base in both the public and corporate sectors,” she added.

Bytes has hiked its interim dividend to 3.1p per share, a 14.8 per cent increase on last year’s interim 2.7p. In May, the company also raised its final dividend by 16 per cent.

It believes it is “well positioned” to benefit from high demand for its markets including cloud computing, cyber security and AI for the remainder of its financial year 2025.

Mudd continued: “Our strong relationships with Microsoft and other top tier vendors allow us to seize exciting opportunities in cloud adoption, workload migrations, storage, security, and virtualisation technologies. Meanwhile, we continue to collaborate with our customers to enable their teams to roll-out the use of emerging AI technology, such as Copilot.

“With sustained demand in all these areas, and our expanding technical capabilities, these will be our key focus areas in the remainder of FY25 and beyond,” she explained.

It follows a misconduct scandal involving Bytes’s long-standing former boss, Neil Murphy.

In February, Murphy announced he was stepping down after it emerged that he failed to disclose several trades he had made in the company’s shares.

An investigation found that a total of 119 unauthorised transactions took place on 66 trading days between January 2021 and November 2023, sending the London-listed stock plummeting.