Bytes' NHS deal loss hits revs – but biz margins rise

Bytes Technology Group's (BTG) top line took a hammering in fiscal 2012 ended February from the loss of a Microsoft Enterprise Agreement with the NHS – but efforts to push up gross margins boosted the bottom line.

The Surrey-based reseller saw sales fall 16 per cent to £125m for the 12 months as two NHS true-ups in the previous financial year amounting to £50m were not repeated. Its profits, however, climbed 11 per cent to £5m.

This serves to show that large government agreements are not always the lucrative margin-maker they are sometimes perceived to be.

Neil Murphy, UK boss at BTG, said the firm had worked hard to minimise the impact of the lost licensing deals, boosting organic sales growth by £15m and acquiring Security Partnerships – which duly delivered £7m in turnover in seven months.

"The decline was [partially] offset by a surge in local government and local NHS spending. We also had a bigger push into mid-sized corporates in the north and south of Britain," Murphy told The Register.

Murphy said Bytes had grown its gross profit by paying "closer attention to margins" and building sales in services areas including Software Asset Management. He would not expand further.

He said the "more challenging areas of the market" included "the City", the finance sector in general and central government.

UK staff numbers for the year stood at 250, including the 30 employees who joined from Security Partnership. Bytes made the acquisition last summer, and the business is now fully integrated into the group.

Bytes – which has a software, Xerox and security division – has made a bunch of acquisitions in the past half-decade or so, consuming Xerox houses Xclusive in 2006 and Planflow in 2008.

Murphy said: "We are hoping to make another acquisition in the next five months to further complement our cloud and managed services businesses." ®