Bytes Technology : Financial document (btg results fy26 v14)

About this update from Bytes Technology Group Plc

Results for the year ended 28 February 2026 Tuesday, 12 May 2026 BTG overview Making the complicated simple. Turning leading technologies into solutions. We are specialists 97% Software solutions sales 1 Large, diversified customer base 6fi Customers We grow great people… 1,331 Employees FY26 financials Gross invoiced income £2.3bn 5yr CAGR: 19.6% We have two brands: Private sector focused Public sector focused Leading vendor partner 200+ Vendors Trusted by our customers 70+ Customer NPS … to deliver amazing things 62 eNPS Shareholder returns £74m Five-year total 2 : £205.1m Gross profit £167.3m 5yr CAGR: 13.3% Cash conversion 105.1% 5yr average: 114.7% 97% of gross profit. Including FY26 final dividend and share buyback launched 12 May 2026 2 FY26 at a glance Strategic progress Services gross profit +38% Working with vendors to support customers in discovery and implementation. Adding value through the technology lifecycle with managed services. We segmented our private sector sales force, staying ahead of wider transitions in our industry and supporting sales growth Increasing customer-centricity FY26 results Microsoft incentive changes annualised Returned to double-digit Microsoft gross profit growth in H2, with the enterprise incentive changes annualised Strong cash generation We delivered another year of more than 100% cash conversion, alongside continued investment in the business, supporting £74m returned to shareholders Sector alignment progressing well Increasing focus across our two businesses, one focusing on public sector customers and the other on private sector customers Continuing momentum Exited FY26 with momentum. Expect a return to high single-digit to low double-digit gross profit growth in FY27 Sales momentum for FY27 3 Financial review Financial highlights Gross invoiced income 1 £2.3bn Gross profit £167.3m Operating profit £62.7m +11.5% +2.5% (5.6)% Earnings per share 21.4p Net cash £98.6m Cash conversion 2 105.1% (6.1)% FY25 £113.1m FY25 113.8% Ordinary dividend 3 10.2p Customers 5,916 GP/customer £28.3fi +2% FY25 5,913 +2.4% GII is a non-IFRS alternative performance measure that reflects gross income billed to customers adjusted for deferred and accrued revenue items. Cash conversion is a non-IFRS alternative performance measure that divides cash generated from operations less capital expenditure by operating profit. FY25 interim dividend 3.1p and final dividend 6.9p. 5 Income statement GII up 11.5% with balanced growth across segments Gross profit grew by 2.5%, affected by Microsoft enterprise agreement incentives changes in January 2025 Other income is rental income from the offices acquired in FY25 but not yet occupied Salary costs up 16.7% due to average headcount growth of 12%, senior hires and cost-of-living wage increases Commissions and bonuses down due to lower gross profit growth below internal targets Social security +19.5% due to increased national insurance contributions Share-based payments -85.1% due to lower profitability Interest income down due to lower interest rates Effective tax rate is 26.6%, higher primarily due to a reduced deferred tax asset value of outstanding share options 6 Income analysis - FY and HY trends GII and GP by income stream and sector GP growth (%) Group Private Public Public sector GP growth ahead of private sector The public sector GP was more heavily affected in H1 Microsoft enterprise agreement incentive changes resulted in lower software gross profit growth than GII Services grew strongly on top and bottom line Services margin expansion was driven by mix and cost efficiencies 7 Cash flow Cash flow (£'m) Total Decrease Increase Operating profit (£'m) and cash conversion (%) Cash conversion Operating profit Remain a capital-light business, with average cash conversion >100% since IPO Cash balance a healthy £98.61m after dividend payment of £48.6m and share buyback of £25m Cash conversion for the full year of 105% £4.1m capitalised development spend, upgrading systems to drive efficiency and capture marketplace opportunity (total c.£8m) The £5.1m cash received from the issue of share capital relates to the exercising of c.1.6m share options by participating staff, primarily under our CSOP and ShareSave plans 8 Balance sheet Our strong balance sheet supports large gross receivables and payables balances inherent to our business model Our £98.6m cash position balances our £(79.8)m negative net working capital position We operate with shorter debtor days (38) than creditor days (48), helped by our GII skew to the public sector (66%), which is typically a fast payer 9 Capital allocation hierarchy Maintaining a strong balance sheet through the cycle Organic growth Dividends MGA Return of excess cash Continue our proven strategy of growing our customer base and wallet share with our clients Grow sales capacity (new sales intakes and regional growth) Expand solutions capability (vertical expertise and knowledge) Broaden vendor partnerships (developing technical expertise) Dividend policy is to distribute 40-50% of post-tax pre-exceptional earnings Full year dividend of 10.2p per share (including 7.0p final dividend) Actively monitoring acquisition opportunities to accelerate the implementation of our strategy High-quality bar, with cultural alignment key Focus on cross-sell potential, vendor specialism and solutions expertise Attractive financial profile £25m share repurchase programme completed in FY26 We consider both special dividends and share buybacks as methods to return excess cash The Board has approved another share repurchase of up to £25m , beginning in FY27 10 Business review Strong growth opportunity 1 Large addressable marfiet <3% market share of £82bn total addressable market 1 6k out of 42k customers and c.25-30% average wallet share 2 Structural growth drivers AI - reshaping business processes Cloud - siloed data remains a bottleneck Cybersecurity - rising attack surfaces and regulation 3 Microsoft cornerstone in ICT spending Services - growing complexity requires specialist skills Microsoft spans all software technology pillars Our relationship enables us to lead the market, driving growth in Microsoft and other vendors Significant growth opportunity with new customers and existing customers Software solutions spending forecast to grow by >10% a year 2 Cornerstone of budgets and a gateway to technology decisions Total addressable market in UK&I (2026), derived from internal analysis of various industry sources. European combined software and services growth (2026), derived from internal analysis of various industry sources. 12 How we grow Our growth enablers People Vendors Customers We grow great people to deliver amazing things We turn leading vendor technologies into solutions and services We are a trusted advisor providing expertise, value, choice and dedicated service Engaged Incentivised Collaborative Accountable Services Partnership Outcomes Consumption Customer-centricity Depth and breadth Commercial acumen Sector-specific 13 Our market continues to develop Customer buying is changing. Vendor partner models are changing. Per-seat licensing to consumption Cloud and AI models suit consumption where value tracks usage not licence counts Point products to solutions Rising complexity means integrated, secured & cost-optimised solutions are preferred to isolated SKUs Reseller to partner Customers want advisors and implementors who shape decisions, not just fulfilment 14 Driving customer-centricity Three phases, one thesis: organise around how customers buy and what they need Customer-led segmentation Services-led capability Sector-led go-to-marfiet What we did - FY26 Moved private sector sales from generalist to segmented structure Aligned by customer size: enterprise, corporate and mid-market Technical specialists moved into the same segments as sales teams Complete Why it matters Different customer sizes consume differently. Segmentation improves account management, vendor engagement and services attach rate. FY27 Effect Comparators normalise. Pipelines returned to normal in H2 FY26. What we did - FY26 Grew services GP 38%, using vendor funding upfront in customer lifecycle Technical delivery headcount +8% New Al practice leads appointed: SCOUT, SCAN agents in production Embedded, continuing Why it matters Services carry higher margin and deepen customer relationships. Vendor incentives are shifting toward pre-sales and advisory work. FY27 Effect Services mix continues to grow as a proportion of Group GP. What we did - FY26 Commenced brand refocus: Bytes to private sector, Phoenix to public sector Bytes already 87% private sector GP, Phoenix 98% public sector GP Small internal colleague moves, customer relationships carried across In progress, FY27 Why it matters Private and public sectors engage differently and need different support. Removes internal overlap and competition, and unlocks deeper sector specialisation. FY27 Effect Simpler, more scalable organisation with deeper sector expertise. 15 People: Investing for growth Engagement and culture remains strong eNPS increased to 62 from 57 in FY25 Number of £1m GP sellers increased to 59, with continued strong retention Ranfied 14 2026 FT UK's Best Employer* 343 Sales staff +12% 381 Sales support staff +3% 339 Technical delivery staff +8% 268 Administration staff +6% 1,331 Total staff +7% We're expanding our teams to meet our customers' evolving needs 1 Growth Employee growth of 6.9% (11.9% average) 2 Capability Investment focused on Sales and Technical delivery staff. New practice leads add capability for new AI service demands 3 Expansion Added capacity to existing modern and inviting workspaces, with plans to expand London footprint in FY27 4 Collaboration Continued emphasis on collaboration between account managers, technical sales, consultancy and managed services to deliver innovative joined-up solutions 16 We have restated where we report some employees since the FY25 results. Sales now only includes account managers with technical and vendor sales specialists sitting in Sales support unless they are delivering a service, in which case they are included in Technical delivery. The restatement reduced Sales staff by 98, increased Sales support staff by 87, increased Technical delivery staff by 10 and increased Administration staff by one. People: Driving GP growth Our sales development programme drives sales growth and culture Sales employee average tenure Longer-tenure employees continue to deliver higher GP per customer and greater customer share of wallet growth Engaged Talented Incentivised Culture Gross profit sales per annum Continuing to invest in our sales development programme to drive GP per customer and in new hires 17 Vendors: Strongly positioned for growth Our largest vendor and strategic partner Trusted partner to 200+ vendors 50% FY26 GP Builds trust Microsoft is a cornerstone in customer ICT budgets and spans all software technology pillars, opens the door and builds trust Drives growth Our relationship enables us to lead the market, driving growth in Microsoft and other vendors The Enterprise Agreement incentives Hold top-tier accreditations across our vendor portfolio Deliver value and vendors products with finowledge and sfiill Investment in services capability is strengthening vendor relationships beyond Microsoft changes are now annualised Easy to engage with, to reach a large customer base in a focused way 18 Vendors: Increasing Services GP Moving from Reseller to Partner: Our Services help turn vendors' technologies from point products into solutions for customers 1 Advise Advisory services help customers identify gaps, opportunities and priorities. This helps customers shape decisions before they buy 2 Design Design gives customers confidence a solution will deliver the desired outcome Customer case studies 3 Deliver Delivery encompasses helping customers both deploy and adopt the solution 4 Farrer & Co LLP Microsoft support Leading law firm bought Bytes Microsoft Support Services to deliver: Proactive governance and reporting to maintain operational resilience Assurance that downtime and disruption would be kept to an absolute minimum Hollywood Bowl Data protection Used Microsoft Data Security Envisioning Engagement funding for planning, configuration and testing of certain functionality within Microsoft Purview Strengthened the customer's overall data-security posture Manage and Support Both deepen our customer and vendor relationships 19 AI: positioned to benefit our customers Strongly positioned with Microsoft and customer relationships Customer needs Infrastructure Frontier Firm status Key AI growth foundations Access and identity Compliance Security Key gateway For wider infrastructure and services sales discussions AI Copilot case study Existing customer We support many NHS trusts across our business Specialist public sector and healthcare teams supporting customer growth through IT market change and complexity AI support expansion 2025 trial delivered more than 80 tailored workshops across participating NHS trusts Supporting NHS in 2026 to deploy and adopt Copilot for c.500k employees Reseller to partner Establishing AI use cases and driving adoption Drafting referral letters, prompting techniques, governance, guard-rails and change management 20 AI: The power of an integrated team Aligned with customers as the market accelerates We offer a collaborative, cross-practice approach A challenge such as deploying a secure AI agentic solution is not just an AI tasfi We combine several practices AI To design the models, agents and workflows Infrastructure To build the foundational infrastructure and landing zone Cloud security To implement the necessary safeguards GRC To establish the governance policy and controls ACM To empower and educate users to drive adoption We break down internal silos to provide customers with a single, cohesive team that delivers holistic solutions 21 Summary and outlook Structured and focused strategy to deliver for all our stakeholders Successfully implementing strategic changes to increase customer-centricity and growth Large TAM Strategic changes implemented Strong balance sheet Large addressable market, opportunities supported by growing customer IT spend Group benefits from strong balance sheet and no debt Structural growth Strong partnerships Outloofi FY27 Positioned to capture medium-term growth, including cloud computing, cybersecurity, AI and managed services Strong strategic partnerships with vendors, with continued expansion of services Deliver high single-digit to low double-digit gross profit growth and broadly flat operating profit in FY27 22 Q&A Appendix bytesplc.com Technical guidance Income statement Share based payments c.£1m Amortisation c.£2m Net interest c.£6m Effective tax rate c.25.5% Average basic / diluted shares c.233m / c.241m Cash flow Intangible capex nil Tangible capex c.£2m 24 Environmental Social New Chief People Officer held sessions with employees to gain valuable feedback Expanded social value educational and work-readiness activities alongside partners across the UK Strengthened our leadership coaching programme and Women in Tech initiative Ongoing support to communities through donations, fundraising events and volunteer days EcoVadis silver medals (top 15 %) across both operating companies 2025/26 Scope 1 and Scope 2 GHG reduction targets exceeded - through 100% renewable energy tariffs for our owned offices 10% reduction from prior year in greenhouse gas emissions intensity across Scope 3 First year working with third party on reasonable assurance against ISO 14064 for each scope Introduction of a waste and water policy, with targets to reduce and improve our resource use CDP score B-, ISS ESG B- and top decile scoring with ISS for governance and environment Sustainability integral to our mission Governance Creation of the culture and innovation forum Phase 1 of our Net Zero Transition Plan reviewed by our ESG Committee 25 Vendor awards Microsoft Azure Expert MSP Microsoft Frontier Partner Microsoft Copilot Specialisation Rising Star Consulting Partner of the Year 2025 Microsoft verified Managed Extended Detection and Response (MXDR) solution Adobe Platinum Partner Adobe Education Elite Partner VMware Pinnacle Partner VMware by Broadcom Expert Advantage Partner (EAP) Dell Technologies Titanium Partner Accredited for Dell Professional Services Delivery Broadcom Expert Advantage Partner (EAP) for Consulting Services Check Point Elite Partner Certified Collaborative Support and Professional Services Partner Infinity Partner of the Year 2025 Exposure Management Partner of the Year Rubrik Transform Elite+ Partner ServiceNow Specialist Reseller Partner Nutanix Rising Star 2026 Barracuda's UK Partner of the Year 2025 EMEA Partner of the Year 2026 Enterprise Partner of the Year 2025 26

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