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Annual Report and Accounts 2024
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Bringing people and
technology together
Our year in numbers Contents
£2,099.8m
Gross invoiced income (GII)
1
(2024: £1,823.0m) +15.2%
£ 217.1m
Revenue
2
(2024: 207.0m) +4.9%
£163.3m
Gross profit (GP)
(2024: £145.8m) +12.0%
£ 2 7, 6 0 0
Average gross profit per customer
(2024: £25,000)
3
+10.4%
£66.4m
Operating profit
(2024: £56.7m) +17.1%
1 Gross invoiced income (GII) is a non-IFRS financial measure that reflects gross
income billed to customers, adjusted for deferred and accrued revenue items.
The reconciliation of GII to revenue is set out in note 3(b) to the consolidated
financial statements.
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, that is, the gross
profit achieved on the contract rather than the gross income billed to the customer.
3 2023/24 average GP per customer has been revised from £24,400 in the Annual
Report and Accounts for 2023/24 to remove year-on-year fluctuations caused
by very small customer variations under a single parent.
Strategic report
Our business
01 This is Bytes Technology Group
06 Chair’s statement
08 CEO’s review
փ Our strategy
փ Investment case
12 Measuring progress –
keyperformanceindicators
14 Our strategy in action
Review of the year
18 Our market environment
20 CFO’s introduction
փ Our business model
23 Operational review
28 Financial review
34 Sustainability review
փ Our people
փ Our communities
փ Our planet
47 Risk report
Disclosure statements
58 Task Force on Climate-related Financial
Disclosures (TCFD)
68 Additional environmental disclosures
72 Non-financial and sustainability
informationstatement
73 Viability statement
74 Section 172 statement
Governance report
76 Chair’s introduction to corporategovernance
78 Board of directors
81 Executive Committee
82 The Board’s year
86 Stakeholder engagement (s.172compliance)
92 Audit Committee report
102 Nomination Committee report
106 ESG Committee report
108 Compliance with the UK
CorporateGovernanceCode
112 Directors’ remuneration report
131 Directors’ report
135 Statement of directors’ responsibilities
Financial statements
137 Independent auditor’s report
147 Consolidated financial statements
151 Notes to the consolidated financialstatements
186 Parent company financialstatements
188 Notes to the financial statements
Other information
197 Glossary
199 Company information
199 Financial calendar
This is Bytes Technology Group
The world runs on technology – and
it’s evolving at a breathtaking speed.
Amobile phone is now a powerful
computer. Data storage has moved
from in-house to the cloud. AI has
swiftly gone from science fiction
tobeing an integral part of daily
lives– and it’s only the beginning.
Digital information is now so valuable
it is under constant and ever more
sophisticated attack.
Technology is a source of competitive advantage. It’s not
just about staying safe – it’s about staying ahead. AtBTG,
we strive to make it easier, helping organisations
succeed in a world of change, through trusted
partnerships and transformative technology.
We’re a value-added
ITreseller focused on:
Subscription software
Security
IT services
AI
Cloud-based solutions
Hybrid infrastructure
We serve around
6,000
customers in
thecorporate
andpublicsectors
Annual Report and Accounts 2024
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STRATEGIC REPORT
1
From our beginnings
in a shop outside
Epsom in 1982, we
listed in London
1
as
aconstituent of the
FTSE 250 in 2020.
We’re made up of two companies bound
byone dynamic, customer-focused culture:
Bytes Software Services (Bytes) and
Phoenix Software (Phoenix). Today,
asone of the UK and Ireland’s leading
software, security, AI and cloud services
specialists, wecontinue to expand, with nine
offices andmore than 1,200 employees
who we empower and inspire to fulfil their
potential. Many of our colleagues have been
with us along time, becoming experts in
their fields and growing with our customers.
Read more about how colleagues are
central to our success on page 36.
Our offices
Manchester
Salford
Dublin
Reading
Sunderland
York
London
Head office
Leatherhead
Portsmouth
We have more than
1,2 0 0
talented colleagues
1 The company has a primary listing on the Main Market of the London Stock
Exchange and a secondary listing on the Johannesburg Stock Exchange.
2 Bytes Technology Group plc
We have a simple but powerful
business model.
We derive our gross profit from two main
sources: margin and fees. Where we invoice
our customers, we pay the vendor and make
a margin on the products sold. This margin
is often enhanced through rebates from
ourvendors. Where the vendor invoices our
customers directly, the vendor pays us a fee
related to the licensing advice and sales
support we provide to the customer. We also
generate profit by providing professional and
managed IT services to our customers, often
aligned to the software we sell to them. Where
the solutions are strategically important to
our vendors, they may pay us additional fees.
What makes us unique is how everyone at BTG
turns that simple model into one that’s truly
value added. Alongside our deep technical
expertise and support services, we live by our
values in everything we do: being passionate,
acting with integrity, working together, being
kind and respectful, and getting business done
while having fun doing it. Our results speak
for themselves – lasting, mutually beneficial
partnerships with employees, customers
and vendors, which drive consistent growth.
Read more details about how our model
delivers profit on page 21.
What our model delivers
Customers
NPS
79
Employees
eNPS
57
Shareholder return
*
Three-year CAGR
17.3%
Communities
Hours volunteered
2,169
* Dividend growth
Annual Report and Accounts 2024
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STRATEGIC REPORT
3
Success comes from serving our customers with
the right technology from the best partners.
We are one of Microsoft’s largest UK
partners by revenue and work hand in
handwith more than 100 other world-
leading vendors who make or distribute
software, hardware and other IT products.
That means we give straightforward,
independent and expert advice on the
rightsolution to our customers, whatever
their size and need.
Read more about how we are evolving
with our customers on page 18.
We have close relationships with more than 100 vendors.
Phoenix Software vendors Bytes Software Services vendors
Key vendors for both companies
Bitdefender
Dell
Fortinet
KeepIT
KnowBe4
Lenovo
ManageEngine
NetApp
Okta
One Identity
Progress
Pure Storage
Quest
Red Hat
ServiceNow
Tanium
Thycotic
Trend Micro
Wasabi
Yubico
Avepoint
Cato Networks
Check Point
Commvault
CyberArk
Darktrace
Forcepoint LLC
Ivanti
Netskope
Rapid7
Ringcentral
Saviynt
Security HQ
Snow
Tenable Network
Veritas
Adobe
AWS
Beyond Trust
Cisco
Citrix
Crowdstrike
Druva
IBM
Microsoft
Mimecast
Oracle
Palo Alto Networks
Proofpoint
Red Hat
Rubrik
SentinelOne
Sophos
Varonis
Veeam
VMware (Broadcom)
Zscaler
4 Bytes Technology Group plc
Throughout this report we aim to demonstrate how we grow by pursuing our
purpose: empowering and inspiring our people to fulfil their potential,
sothey can help our customers make smarter buying decisions and
meet their business objectives through technology.
Our future: bringing people and
transformational technologies
togetherto achieve more.
With technology changing so fast, it’s easy to lose sight of what IT is
really for: driving increased efficiencies, keeping data and networks
safe, adopting new technologies such as AI for a competitive
advantage, and communication. Asexperts in what works now – and
by investing to stay ahead ofwhat’s coming – we’ll continue to make
sure that our customers benefit in the years and decades to come.
Annual Report and Accounts 2024
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STRATEGIC REPORT
5
Patrick De Smedt Chair
Chair’s statement
Our talented people and strong
customer focus helped BTG achieve
another record-breaking year in
2024/25. By continuing to invest
inour business and technical
capabilities we have established
astrong platform for future growth.
Strong performance thanks to a great team
I’m very proud of the performance delivered by the
BTG team this year. In challenging market conditions,
especially in the first half of the year, we achieved
double-digit growth for the full year across our key
performance metrics: gross invoiced income, gross
profit and operating profit. For the first time, BTG
achieved gross invoiced income of over £2 billion – more
than double what the company achieved only four years
ago, and a sign of how far we’ve come in just a few years.
On behalf of the Board, I would like to thank all our
people across the company for their efforts this year
and, importantly, for making BTG a great place to work.
We’re also very appreciative of the continued support
of our customers and vendors, including our largest
partner Microsoft, which we’ve worked with since
the1980s.
Strengthening our Board
Strong leadership has been integral to our success this
year. Sam Mudd, who has worked in our business for
22years, was appointed CEO on 10 May 2024, after a
short period as Interim CEO. Following her long-standing
managing director (MD) role at Phoenix, she has now
proved to be a great leader of BTG as a whole, with a
deep understanding of the business and a very effective
working relationship with our CFO, Andrew Holden. Sam
spent a lot of time engaging with the investor community
and our employees in 2024/25, as well as with our
vendors, among whom she is well respected.
Bytes Technology Group plc6
OUR BUSINESS
In June, we were delighted to welcome two more
independent non-executive directors to our Board:
Ross Paterson and Anna Vikström Persson. Ross, a
highly experienced CFO, was appointed Chair of the
Audit Committee, a role he also holds at a FTSE 100
company, while Anna brings a wealth of human
resources expertise to the Board.
I am very pleased with the composition of the Board,
with our directors’ wide range of experience and skill
sets, and grateful for the excellent support they have
given me asChair this year. Following the changes to
the Board, we remain aligned with the FCA’s UK Listing
Rules, with 57% women on the Board and at least one
director from a minority ethnic background. We also
have women in both the CEO and senior independent
director roles.
Engaging our people and teams
Shruthi Chindalur took over as designated non-executive
director for employee engagement in March 2024. She
spent time at both our businesses, Bytes and Phoenix,
engaging with colleagues and giving feedback tothe
Board. This has helped shape several employee-related
initiatives. Following an engaging town hall meeting
atPhoenix in 2023, we introduced the Board to our
employees at Bytes’s headquarters in Leatherhead
inJuly 2024, outlining the company’s strategic
priorities– with ample time allocated for Q&A.
It was good to see the BTG team continuing to
growthisyear to support future expansion, with our
headcount increasing by nearly 18% across all areas
ofthe business. This included sales people and,
importantly, pre-sales people with technical skills
andservice delivery heads, who support our account
managers byhelping customers understand how to
benefit from the latest technology.
Investing to meet customers’ needs
The Board was also pleased to note the impressive
investment in services in 2024/25. BTG has always
been far more than just a value-added reseller that
provides high-quality licensing advice; the team aims
to deliver outstanding customer service, and that
isreflected in our high customer net promoter score
(NPS) of 79. Withtechnology evolving quickly, it is
crucial that our support and technical services
offerings keep evolving too, especially in the key
areasof multi-cloud adoption and migration,
cybersecurity, AI and data.
Focusing on sustainability
For any responsible business, a strong focus on
sustainability is essential, even more so given the climate
crisis. This year, for the first time, the Board formed an ESG
Committee, which is chaired by Anna Vikström Persson
and oversees progress across all aspects of sustainability.
In June 2024 we received validation from the Science
Based Targets initiative (SBTi) forour near-term and net
zero GHG emissions targets, and further improved our ISS
ESG Corporate Rating, which is now one of the highest
in our peer group. I was also pleased to see the launch
of the Group’s carbon literacy awareness programme,
andthe firm measures taken to further reduce our own
emissions, including expanding our electric vehicle (EV)
scheme and installing solar panels at our York office.
Looking ahead with optimism
The Board is optimistic about the opportunities for
further growth in 2025/26 and beyond, as BTG continues
to provide services that enable organisations to adapt,
grow and succeed. Structural market trends – digital
transformation, security, cloud migration, AI/data – are
in our favour, and are the areas we are investing in.
Ourdisciplined growth strategy also means we have
the flexibility to pursue value-enhancing opportunities
as they arise. We look forward to supporting our
executive team and playing our part in growing the
business in the years to come.
Patrick De Smedt
Chair
12 May 2025
For the first time, BTG achieved gross invoiced income of over
£2 billion – more than double what the company achieved only four
years ago, and a sign of how far we’ve come in just a few years.
Shareholder dividends
BTG’s dividend policy is to distribute 40–50% of
post-tax pre-exceptional earnings to shareholders.
The Board is pleased to propose a gross final
dividend of 6.9 pence per share equating to
£16.6 million. Given the company’s continued
strong performance and cash generation, we
arealso proposing a cash returnto shareholders
with a special dividend of10.0pence per share,
equating to £24.1 million. Ifapproved by
shareholders, thefinal and specialdividend
willbe paid towards the end of July 2025.
Annual Report and Accounts 2024
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STRATEGIC REPORT
7
Sam Mudd CEO
CEO’s review
At BTG we’re driven by a clear vision:
to help organisations succeed in a
world of change, through trusted
partnerships and transformative
technology. I’m proud to say that
in2024/25 we lived up to this vision.
Thanks to our great people, our loyal
customers and our vendors, we
helped more businesses and public
sector organisations than ever meet
their objectives through innovative
ITsolutions.
In doing so we achieved another strong set of financial
results, with demand for our broad suite of products
and services remaining robust even in a challenging
trading environment. Gross invoiced income rose by
15.2% to a record-high £2.1 billion, and operating profit
increased by 17.1% to £66.4 million, extending our run
of double-digit growth.
The strong performance demonstrates the resilience
of our two businesses, Bytes and Phoenix, and the hard
work done by our teams to maintain close, enduring
partnerships with our customers by providing the
straightforward expert and honest advice that we
havebecome known for. Our high customer NPS
scoreof 79 reflects this.
OUR BUSINESS
8 Bytes Technology Group plc
A growth company with a proven strategy
Expanding our business, year after year, is not
something new for us – even before our initial public
offering (IPO) in 2020 wehad a long track record of
growth, in line with our proven strategy. Our ultimate
strategic goal each year is to grow organically by
winning new customers and doing more with our
existing customers. In 2024/25, weachieved both
ofthose aims, with 656 new customers delivering
£4.3 million gross profit, andexisting customers
generating £13.2 million additional gross profit.
Despite increasing competition, we had notable
successes with public sector tenders, retaining
andgaining customer contracts. An example is our
partnership with East Suffolk and North Essex NHS
Foundation Trust. A relationship nurtured over several
years led to collaboration on a major project designed
to transform the way that staff and patients interact, for
a better service for all. You can read more about that
work on page 14.
I’m also delighted that at the end of April 2025, Phoenix
was granted a Royal Warrant for the supply of IT Managed
Services to The King. I’m extremely proud of the Phoenix
team’s commitment to excellence, sustainability and
service that led to this prestigious award.
What gives me great confidence about our prospects
isthat even though we’ve been growing year on year,
we still have plenty of room to expand. Many vendors
have in recent years pivoted to a ‘partner-first strategy’,
which serves us well. We are strongly focused on
software solutions, which, according to market
intelligence firm IDC, is the fastest-growing segment
ofthe IT industry today. Our share of the overall total
addressable market in the UK is still only around 4%.
Our strategy
We aim to grow organically by winning
new customers and doing more
forexisting customers. We will
complement this approach, as
appropriate, with carefully selected
acquisitions that boost our value.
Along with consistently expanding
oursolutions capabilities and
broadening and deepening our
vendor partnerships, we pursue our
strategy by focusing on three key areas:
putting customers first, investing
inour people and our business,
andinvesting in innovation.
Putting customers first
We focus relentlessly on our customers, helping them find
innovative ways to use technology to improve the way they work,
to control costs and to deliver a better service to their own clients.
Read more about how we are helping our customers on
page14.
Investing in our people and our business
Our people drive our success. We need to retain our exceptional
employees to continue to sell effectively and, to meet our growth
ambitions, we need to keep increasing our headcount.
Read more about how we are growing great people on
page 15.
Investing in innovation
From AI to cybersecurity, technology is advancing rapidly. We
invest in innovation to help our customers stay ahead of the pace
of change, manage the risks and make the most of the benefits.
Read more about how we are investing in innovative
services on page 16.
Annual Report and Accounts 2024
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STRATEGIC REPORT
9
CEO’s review continued
Expanding our solutions capabilities and
vendor partnerships
To take advantage of this big opportunity, and in
support of our main strategic goal, we are focused
on increasing our services capabilities and
broadening our vendor partnerships. The pace at
which technology is advancing today is remarkable,
especially in areas such as AI. From our experience
of using Microsoft’s Copilot AI companion in our own
business, we can see the potential to transform for
the better the way that people work.
But these innovations are complicated, which can
make it hard for our customers to find the best
solutions for their businesses. By building our own
advisory and support services around the wide suite
of software solutions we offer – especially in the key
areas of cloudcomputing, security and AI – we can
help our customers better understand and benefit
from the latest technologies.
In 2024/25, we continued to grow our range of
professional and managed IT services. At Bytes, this
included a successful launch of a new Microsoft 24x7
CSP support service, and significant investments
inour procurement advisory services division.
AtPhoenix, we launched a new managed-cost
management and optimisation service for
Microsoft’s Azure cloud platform, and expanded
ourAI teams and our security operations centre.
Wealso focused on enhancing our technical
capabilities, working with our long-standing vendors
to attain top accreditations, and working more
strategically with newer ones, such as Service Now,
Palo Alto Networks and Commvault, to ensure we
can support our customers’ expanding technology
needs. This deep knowledge of our vendors’
software is crucial in enabling us to give our
customers the best advice on the choice of
softwaresolutions and the interoperability
ofdifferent vendors’ products.
And it’s reflected in how some of the world’s
largesttech companies regularly ask us to join
theirexclusive partner advisory councils and
pilotprogrammes. It shows that they value
ourpartnership, commitment, technical skills,
thebusiness we influence for them and, most
importantly, how we work collaboratively and
sometimes exclusively together on opportunities.
The advantages of an experienced
management team
Maintaining close relationships with vendors and
customers is easier when you have extensive
experience and continuity in your business. This is
especially true of our management teams, which
have many decades of software and solutions
reselling experience and, crucially, the passion,
Investment case
01
Proven track record and growth strategy
We have a long track record of strong financial performance,
driven by highly motivated employees delivering the latest
technology to a diverse and loyal customer base. Our growth
strategy supports strong free cash flow that allows us to invest
in our businesses.
5-year GP CAGR 15.6%
Customers served in 2024/25 5,913
02
Attractive market positioning
We have strategic partnerships with many of the world’s leading
software vendors and distribution channels. This includes a
long and deeply embedded relationship with Microsoft, as one
of its largest UK partners by revenue.
More than 1,000 vendors and distributors
One of the biggest UK partners with Microsoft by revenue
03
Compelling growth opportunity
We operate in a vast, growing market, boosted by technological
tailwinds from digital transformation agendas, cloud products,
cybersecurity, and productivity and AI-enabled tools. Our share
of our total addressable market is around 4%, so we have plenty
of room to grow.
Strong GII growth at a record £2.1bn 15.2%
04
Strong team culture
Our dynamic culture, based on trust, collaboration and
innovation, drives our operational excellence and high
employee retention rates, and increases sales productivity,
customer satisfaction and repeat business.
Employee net promoter score (eNPS) 57
10 Bytes Technology Group plc
OUR BUSINESS
expertise and credibility to further grow our company.
Jack Watson and Clare Metcalfe, who have both been
with us for many years, are strong leaders of Bytes
andPhoenix, respectively. I am really pleased with
what they and their teams achieved in 2024/25,
fromdelivering double-digit profit growth in their
businesses, to broadening our customer base and
being among Microsoft’s top partners for the rollout
ofCopilot inthe UK.
Maintaining our strong, inclusive culture
As one of the country’s largest IT resellers, we continue
to attract talented, skilled people who want to be a part
of our journey of success, and we now have more than
1,200 colleagues. As we do every year, we worked hard
to ensure our unique culture that has brought us so far is
maintained, even as we become a bigger company. To
harness the strengths of our two businesses, and protect
our culture as we grow, we will appoint our firstChief
People Officer (CPO) in the 2025/26 financial year.
People are at the heart of business, and I am
committed to improving this year’s eNPS results which,
while still above the industry average, have fallen from
their previous high level of 71 to 57. This change, we
think, reflects a turbulent year both externally, with
theweak economy and political uncertainty, but also
internally, with the necessary transformation and
structural changes in our operations and leadership
teams. That said, we can be very proud of our high
rankin the Great Place to Work survey for the ‘Large
Company’ category – Phoenix at 9th and Bytes at 85th
– and our FTSE Women Leaders Review 2024 report,
in which BTG was named the most improved company
in the FTSE 250 in the ‘Women onBoards’ category.
At a time when progress against the basic principles of
diversity and inclusion is being questioned, challenged
or blocked, it is good to celebrate such moments with
our FTSE peers. As a female CEO, I intend to use my
high profile to continue to identify and remove any
barriers to participation and career progression at
BTG, and will ensure that diversity, equality and
inclusion remain central themes for our business.
Bydoing so, we can fully embrace our colleagues’
unique differences, which lead to better ideas and
insights, and support our strong, innovative culture.
Increasing our geographical footprint
As our headcount has grown, we’ve made it a priority to
provide the right office environments in the right areas.
We want to offer an exciting and vibrant working space
for all our staff, filled with areas to collaborate and
socialise. Following the work done at Phoenix’s offices
in York, we carried out a similar transformation at Bytes’s
Leatherhead office this year. Also at Leatherhead,
weacquired two other buildings in our business park
tocater for our further expansion. We opened new
offices in Portsmouth and Sunderland to be closer
toour customers and hire staff from those areas,
andwe expanded our London office.
A commitment to sustainability
As a responsible business, we are committed to ensuring
that our growth does not come at the expense of the
environment. While we’re not a big greenhouse gas
(GHG) emitter ourselves, the software and services
weprovide do have an impact on the planet, especially
through theenergy required to power AI solutions
andcloud storage. In 2024/25, we reached a crucial
milestone onour path to net zero, with the SBTi validating
our GHG emissions targets. Ourefforts to reduce our
carbon footprint this year included installing solar
panels at our York office andexpanding our EV scheme.
Looking ahead
Turning to the future, we expect that the macroeconomic
conditions will remain challenging and uncertain, but
we know from experience that when times are tough,
organisations look to technology to make them more
efficient and resilient. And our sector has tailwinds: we
are still intheearly stages of the take up of AI-powered
platforms and products, while the need for ever
moresophisticated cybersecurity and cloud-based
products will only increase. With a great team behind
me, I am excited to grow our business further by
meeting customers’ evolving needs as we continue
through2025and beyond.
Sam Mudd
Chief Executive Officer
12 May 2025
By building our own advisory and support services around the wide
suite of software solutions we offer – especially in the key areas of
cloud computing, security and AI – we can help our customers
betterunderstand and benefit from the latest technologies.
Annual Report and Accounts 2024
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STRATEGIC REPORT
11
Measuring progress
Financial
Gross invoiced income
1
£2,099.8m +15.2%
Revenue
2, 3
£217.1m +4.9%
2025 £2,099.8m
2024 £1,823.0m
2023 £1,439.3m
2022 £1,208.1m
2021 £958.1m
2025 £217.1m
2024 £207.0m
2023 £184.4m
2022 £145.8m
20 21 £3 9 3 .6 m
Gross profit £163.3m +12.0% Gross margin
3
75.2%
2025 £163.3m
2024 £145.8m
2023 £129.6m
2022 £107.4m
20 21 £8 9.6m
2025 75.2%
2024 70.4%
2023 70.3%
2022 73.7%
20 21 2 2 . 8 %
Operating profit £66.4m +17.1% Operating profit as % of gross profit 40.7%
2025 £66.4m
2024 £56.7m
2023 £50.9m
2022 £42.2m
2021 £26.8m
2025 40.7%
2024 38.9%
2023 39.3%
2022 39.3%
2021 29.9%
Cash conversion
4
113.8% Cash £113.1m +27.4%
2025 113.8%
2024 116.4%
2023 93.4%
2022 144.7%
20 21 18 2.9%
2025 £113.1m
2024 £88.8m
2023 £73.0m
2022 £67.1m
2021 £20.7m
We track our progress against financial, strategicand sustainability KPIs.
1 Gross invoiced income is a non-IFRS financial measure that reflects gross income billed to customers, adjusted for deferred and accrued revenue
items. The reconciliation of gross invoiced income to revenue is set out in note 3(b) to the consolidated financial statements.
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 – that is, the gross profit achieved on the contract and not the
gross income billed to the customer.
3 The 2022 figures for revenue and gross margin reflect the change in accounting policy under IFRS 15, which took effect from that year and has been
applied in all subsequent periods.
4 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.
5 Revised from 5,978 in Annual Report and Accounts 2023/24 to remove year-on-year fluctuations caused by very small customer variations under a
single parent.
6 Revised from £24,400 in Annual Report and Accounts 2023/24 to remove year-on-year fluctuations caused by very small customer variations under
a single parent.
12 Bytes Technology Group plc
OUR BUSINESS
Strategic Sustainability
Customer numbers 5,913 +1.5%
Employee numbers 1,245 +17.8%
2025 5,913
2024
5
5,828
2023 5,941
2022 5,330
20 21 5,147
2025 1,245
2024 1,057
2023 930
2022 773
20 21 6 8 5
Average gross profit per customer £2 7,6 0 0 +10.4% Employee net promoter score 57
2025 £27,600
2024
6
£25,000
2023 £21,800
2022 £20,100
2021 £17,400
2025 57
2024 71
2023 70
2022 69
20 21 6 9
Renewal rate 109%
2025 109%
2024 109%
2023 116%
2022 111%
20 21 10 7 %
As
part of our ongoing commitment to support positive
change in our environment and communities where we
operate, we continue to make contributions in various
ways to corporate social responsibility activities.
Customer net promoter score 79
2025 79
2024 82
2023 77
2022 64
20 21 6 3
% gross profit from existing customers 97%
2025 97%
2024 97%
2023 96%
2022 93%
20 21 9 5%
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STRATEGIC REPORT
13
Our strategy in action
Putting customers first
Phoenix has worked with East Suffolk and North Essex NHS Foundation Trust
for a number of years and has supported the Trust on many key projects.
Over the past year, Phoenix has worked strategically with the
Trust, providing the software and infrastructure needed to
support its electronic patient record (EPR) system, Epic. Epic
isone of the leading global EPR systems and the Trust selected
this as “the best option for patients and staff, knowing these
systems make patient care much safer”. The EPR will help to
streamline multiple digital systems across Ipswich Hospital,
Colchester Hospital, and five community hospitals in East
Suffolk and North Essex, into one single system.
Mark Caines, Associate Director of ICT, East Suffolk and North
Essex NHS Foundation Trust, says that partnership and openness
are key elements of the successful partnership with Phoenix.
“My team and I can approach them on various levels and that
trusted relationship we have had over the years has significantly
contributed to the success of numerous digital projects and
initiatives across the Trust.”
Keith Martin, Sales Director at Phoenix, says that the dedication
of both teams is what made the project so successful. “By working
closely and collaboratively, East Suffolk and North Essex NHS
Foundation Trust and Phoenix found a solution that met the needs
of its patients and staff. Without that strong relationship, the
project wouldn’t be where it is today.”
Phoenix are a strategic and trusted partner of the Trust,
and that relationship has been really important during
the many projects we have worked on with them.
Mark Caines
Associate Director of ICT, East Suffolk and North Essex NHS Foundation Trust
14 Bytes Technology Group plc
OUR BUSINESS
Investing in people and our business
At BTG we are proud to build the future of IT by offering great apprenticeship
opportunities across a range of business areas, allowing people to earn while
theylearn on the job. This year at Bytes, eight people took part in apprenticeships,
including Callum Ring and Emma de Lemos.
I thoroughly enjoyed undertaking my
apprenticeship. The course content was
extremely relevant and gave me so much
more insight into my specialism. I have
been able to really apply my learnings day
to day and it has given me the confidence
to grow further in my role as a learning
and development consultant, to support
the business’s needs.
Bytes’s motto is to ‘grow great people to
deliver amazing things’, and the backing I
have received from the business and my line
manager to undertake the apprenticeship
has been a true testament to this.
I think when most people begin a degree,
the expectation is that they will gain
specific technical knowledge to begin
acareer in their chosen field. However, a
degree apprenticeship is a little different.
Working at a company like Bytes means
that you’ll pick up technical knowledge
considerably faster than most ‘traditional’
students, as we are living and breathing
the technology that is taught.
The real benefit that I have seen comes
inthe soft skills – understanding how to
speak to customers and allowing them
tounderstand complex technologies
inavery simple way is key to being a
goodconsultant. While completing
theapprenticeship, I was promoted
toMicrosoft security services team
lead,where the soft skills are helping
mefurther. Now it is important to
understand the needs of my team
andlisten to differing points of view,
allofwhich are taught within the
degreeitself.
Emma de Lemos
Learning and development consultant
business partner apprenticeship
(level 5) – achieved a distinction
Callum Ring
Digital and technology solutions degree
apprenticeship, specialising in cloud
solutions (level 6) – achieved a first
Annual Report and Accounts 2024
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STRATEGIC REPORT
15
Our strategy in action continued
Investing in innovation
In 2024, we celebrated 25 years of providing innovative cybersecurity software solutions
and services to our customers, helping them mitigate risks and stay secure in a world
ofrising threats.
WSH is a food and hospitality company serving 2.6 million customers
everyday. They recognised that any disruption from cyberattacks
coulddrastically affect their fast-paced business. But they only had
alimited security budget and lacked the resources to manage potential
vulnerabilities 24/7 across many locations. Bytes found the answer.
Bytes + WSH
Bytes has been an exceptional partner in our
journey to fortify our security measures. Their
support and expertise have made a tangible
difference, and we highly recommend their
services to any organisation looking to
enhancetheir security capabilities.
Jack Mersey
Chief Information Security Officer, WSH
Read the
fullcase study
Shelter is a prominent housing and homeless charity. Safeguarding the
personal data of the people it supports is not just critical for their safety,
butalso in maintaining Shelter’s reputation as a trustworthy organisation.
To ensure the protection of its data, maintain compliance with stringent
industry standards, and to stay ahead of evolving cyber threats,
Shelterturned to Phoenix.
Phoenix + Shelter
We have built a long-standing partnership with
Phoenix based on trust and proven success.
Having collaborated with Phoenix for multiple
services, including Microsoft-related solutions,
for over five years, we felt confident in entrusting
our critical security needs to Phoenix.
Rob Fisher
IT Operations and Security Manager, Shelter
Read the
fullcase study
16 Bytes Technology Group plc
OUR BUSINESS
Review of the year
18 Our market environment
20 CFO’s introduction
փ Our business model
23 Operational review
28 Financial review
34 Sustainability review
փ Our people
փ Our communities
փ Our planet
47 Risk report
Q
Why do customers choose
BTG for cybersecurity?
A
We have more than 25 years
ofexperience in cybersecurity.
Through our team of more than
70specialists, we support
organisations across a range of
security areas, including solutions,
technical, delivery, consultancy
andvendor management.
Lorna Gelstharp
Cybersecurity Solutions Specialist
Annual Report and Accounts 2024
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STRATEGIC REPORT
17
Our market environment
Spending on IT remained robust in the UK in 2024/25, despite political and
ongoing economic uncertainty. Corporate and publicsector organisations
continued to invest in technology to make them more productive, efficient and
secure. New transformative technologies, such as generative AI, attracted
particularly strong interest, as did cybersecurity solutions services.
What trends are shaping UK technology?
Migration to the cloud
Switching from on-premise applications to third-party hosted
software offers more flexibility, scope for analytics, and
sustainable credentials.
Cybersecurity
As the risk and sophistication of cyberattacks increases,
sodoes the need for multilayered protection.
AI and data
AI-enabled tools have the potential to help people become
more productive and creative.
Digitalisation
Organisations are looking to digital technology to improve
theiroperations and create efficiencies.
Cost optimisation
Vendor price rises and economic pressures mean customers
are demanding greater value from their technology solutions
and services.
$5.6tn
Forecast worldwide
IT spending in 2025
1
18.7%
Forecast annual growth in cloud
revenueinthe UK from 2025 to 2029
5
$94bn
Forecast spending on AI-related
servicesin Europe in 2025, up
from$78bnin 2024
2
44%
Increase in global
cyberattacks in 2024
8
Strong growth in global IT spending forecast
Spending on technology worldwide is forecast to grow by 9.8%
in 2025, to $5.6 trillion, according to the research firm Gartner,
as IT budgets keep pace with price rises.
1
In Europe, the
pictureis similar, with IT spending expected to grow by 8.7%,
to$1.3trillion, ‘the highest growth rate in IT spending in a single
year in Europe since the post-pandemic surge in 2021,’ Gartner
noted.
2
Spending in the UK tech market is generally in line with
these global trends.
Cloud and cybersecurity software
andservicesdrive growth
Our main business areas are software and IT services, which
continue to be the two biggest, and fastest-growing, areas
oftechnology. UK revenue from software, which is mainly
cloud-based, is projected to grow by 6.0% annually, between
2025 and 2029, according to the research company Statista.
3
Over the same period, spending on IT services is forecast to
increase by 6.5%.
4
Revenues in the public cloud and cybersecurity
markets are expected to rise by 18.7% and 8.6%, respectively.
5, 6
For all sources and references, see Endnotes on page 199.
18 Bytes Technology Group plc
REVIEW OF THE YEAR
Our target products and services
Software 95% of GII
We sell a wide range of software products from
multiple vendors, mainly purchased as subscription
licences and increasingly hosted in the cloud.
IT services 3% of GII
These include managed IT services around a wide
range of vendor technologies, including 24x7 support
for critical cloud and security offerings; software asset
management and project-oriented consulting services
including IT deployment assistance, cloud migrations
and software cost optimisation; and AI projects.
Hardware 2% of GII
We sell a wide range of hardware, including desktops,
monitors, mobile phones, servers and networking
equipment.
The investments in security highlight the ever-
increasing threat of cyberattacks. A report by the
insurance group QBE in 2024 revealed that 69% of
medium to large businesses in the UK were disrupted
by cyber events in the past 12 months.
7
Initsannual
report, The State of Global Cyber Security 2025, Check
Point reported a 44% year-on-year increase in global
cyberattacks in 2024. It noted the increasing use of
AIby bad actors, and a 58% increase in ‘infostealer’
attacks, where malicious software is used to breach
computer systems and steal sensitive information.
8
Value and flexibility in focus
The essential role of technology in today’s world,
andthe speed at which it’s evolving, means that
organisations are reluctant to pause IT spending
forlong, even in tough economic times. But they are
seeking greater value and flexibility; they want to be
able to control their costs and quickly adapt to changes
in the business environment. Cloud computing, with its
variable costs and hybrid infrastructure, which offers a
mix of cloud and on-site infrastructure, are attractive
for this reason. So too are support services, from
security to AI, which reduces the need to hire in-house
experts. This all plays to our strengths, since we pride
ourselves in providing what customers need, rather
than what might drive our profits in the short term.
Our place in the UK tech sector
We’re one of the UK’s leading value-added resellers
(VARs), providing IT products from a broad range of
technology vendors to a large and diversified base of
private and public sector organisations. Our potential
market is large. UK business-to-business customers buy
a substantial portion of their technology products from
VARs and other resellers and distributors. Currently,
our share of our total addressable market is around
4%. And because no one company dominates the
market, we have a lot of room to expand.
Enabling real-world AI adoption
Interest in AI is surging in the private
and public sectors, with organisations
seeking to improve service delivery,
efficiency and innovation.
Commercial tools accelerate spending
With the release of commercial AI tools, such as Microsoft’s
Copilot, spending on IT services related to AI grew strongly in
2024. In Europe, it reached $78 billion, and is forecast to grow
by 21% in 2025, aided by demand for generative AI (GenAI)
solutions, according to Gartner.
2
According to Microsoft, which partnered with LinkedIn for its
2024 Work Trend Index, three in four knowledge workers now
use GenAI at work, with usage doubling in just six months.
AtBTG, most of our people now use Copilot daily, resulting
inincreased productivity and a reduction in repetitive tasks.
We’ve also seen very strong uptake from our customers to
improve efficiency across their organisations.
Partnering with Microsoft to drive transformation
As a leader in AI implementation in the UK, we’re confident that
the technology will play a significant role in our future growth.
Because true AI adoption doesn’t stop at installation, we have
invested in building dedicated teams focused on change
management, security and skills enablement.
In this new AI era, our strong partnership with Microsoft is
integral to our goal of helping organisations navigate change
confidently and effectively. We bring the on-the-ground
expertise, sector insight, and capabilities needed tomake
AIadoption successful, and Microsoft’s tools, platforms
andinfrastructure allow us to do it at scale.
BTG’s commitment to AI innovation is
unquestionable. They were one of the first
adopters of M365 Copilot internally and
areone of the leading Microsoft partners
helping organisations across the UK with
AItransformation. They have developed and
delivered AI and related security solutions,
creating true impact and results across
industries such as government, healthcare,
education, not-for-profit, retail and legal.
Eleri Gibbon
Small, Medium and Corporate Lead UK, Microsoft
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STRATEGIC REPORT
19
Andrew Holden CFO
CFO’s introduction
In a year marked by economic and
political uncertainty, we proved the
resilience of our business model by
delivering another set of strong
financial results. We saw increased
customer demand in keyareas such
as AI, cybersecurity and cloud
computing, and for our services
offerings, in which we’ve invested
strongly.
At the end of the first half of the financial year we
reported growth in gross profit of 9%. An exceptional
second half saw gross profit grow by 15%. This has
resulted in our full-year gross profit growing by 12% to
£163.3 million, driven by a 15.2% increase in our gross
invoiced income to £2.1 billion. Our operating profit
grew by 17.1% to £66.4 million and we ended the year
with strong cash conversion above our target of 100%.
Helping our customers do more with AI
In recent years we’ve benefited from a few boosts in
our sector, including strong demand after the Covid-19
pandemic and vendor price increases. By the start of
the 2024/25 financial year these had largely played
out, and we faced a flagging economy, exacerbated by
political uncertainty because of the election in the UK.
The weaker business confidence was clear in the first
half of the year, when spending in the corporate sector
was muted, even as the government maintained its
investment in IT. We continued to engage closely with
our customers, benefiting in the second half of the year
as demand in the corporate market picked up and was
maintained in the public sector. Over the full year, the net
number of customers we served rose by 1.5%, to just
under 6,000, and gross profit per customer increased by
10% to £27,600, with existing customers contributing
97% of our total gross profit at a renewal rate of 109%.
REVIEW OF THE YEAR
20 Bytes Technology Group plc
This is in line with our strategy of winning new customers
and then doing more with them each year byproviding
additional products and services to meet their evolving
requirements. Our work with AI products, including
Microsoft’s Copilot, is a good example. During the year
we delivered £1.0 million worth of workshops, funded
through Microsoft incentives, to help our customers
understand the potential benefits of the technology,
and we grew our AI teams so we could provide even
more advice and support. We’ve already seen positive
results: since the launch of Copilot in the second half
ofthe 2023/24 financial year, we’ve seen increased
licence sales and implementation from our customers,
and we expect this trend to continue in the coming years.
Supporting our core software income with
enhanced services offerings
Gross profit from software licence sales rose by 12.0%
to£146.0 million and contributed 89% of our total gross
profit. Alongside this core offering, we are focused
ongrowing our technical and service solutions. We
continued to develop services to support customer
readiness and adoption of AI, and expanded our
in-house AI-dedicated teams, which are creating
bespoke solutions for different sectors of the market.
We’ve also been enhancing our IT services capabilities
for cloud computing and security. Gross profit from
internal services increased by 28.5% to £8.7 million
in2024/25, contributing 5.3% of our total gross profit,
up from 4.6% in 2023/24.
While our growth this year was underpinned by the
gross profit increases in software and internal services,
we saw a 5% fall in hardware growth. After a weak first
half of the year, hardware growth in the second six
months bounced back by more than 50%, compared
tothe same period in 2023/24. In the public sector we
grew gross profit by 18%, and in the corporate sector
by 9% – the latter seeing strong growth of 15% in the
second half of the year following a slow start.
Our operating profit to gross profit ratio of 40.7%
reflects our disciplined approach to cost management
and operating efficiency.
The strength of our finance team
The loyalty of our people played a big part in delivering
these results. Many of our colleagues have been with
us for a long time, and this is certainly the case for
ourfinance teams, both at Group level and in our
operations. Their collective experience and expertise
are great assets, especially during a busy year like this
one, when we’ve been preparing for the changes to
theaccounting software at Bytes and Phoenix, and
redeveloping our business portal, where we transact
with our customers. I’m grateful to all of them for their
hard work this year, but I’d particularly like to thank
Simon Rippon, Finance Director of Phoenix, who
retired after more than 20 years with the business.
WithSimon’s departure, we welcomed Peter Goodrick,
andwe look forward to the benefit of his expertise
andexperience in the industry in the coming years.
Our business model
As a value-added IT reseller, we have
asimple business model that enables
usto achieve consistent growth and to
create value for all our stakeholders.
We build lasting, mutually beneficial partnerships
with our employees, customers and vendors.
We employ people who are passionate about technology and
our customers, including many who are long-serving and have
a high level of technical skills, knowledge and expertise. Our
leadership team is highly experienced.
We have deep relationships with many of the world’s biggest
software companies – we are one of Microsoft’s largest UK
partners by revenue – and work closely with them to
understand the latest transformational technologies.
We serve customers across the corporate and public sectors in the
UK and Ireland, many of whom have been with us for a long time.
This creates a strong value proposition…
For vendors: who get access to a large, growing customer
base, meaning they don’t need to employ their own customer
relationship managers. Our strong relationship with Microsoft
helps open the door to new customers and provides other
vendors a credible entry point to those customers.
For customers: rather than having to listen to many sales
pitches for different IT products, customers rely on us to
advisethem on the best options in the market for their needs.
We know which products work together and we make them easy
to buy. And we have a strong, ever-growing suite of our own
professional and managed IT services, enabling us to provide
comprehensive support on a one-off or day-to-day basis.
…enabling us to earn profits…
When selling software or hardware we earn a margin in one of
two forms:
• • ‘Pure’ margin, where we buy from a vendor at one price and
sell to a customer at a higher price. This often comes with
additional margin in the form of rebate we subsequently
receive from the vendor
• • Fees, where the customer pays the vendor directly and the
vendor rewards us by way of a fee for managing the customer
relationship and providing licensing advice and support to them.
Whether pure margin or fee based, it is all counted as gross
profit – the most important measurement for our business.
We also earn profit from our suite of professional and managed
IT services.
…which we use to invest in our people and
operations, reward shareholders and support
our communities.
Annual Report and Accounts 2024
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STRATEGIC REPORT
21
CFO’s introduction continued
Evolving with our vendors
Our biggest vendor partnership is with Microsoft,
andwe also have deep relationships with many other
world-class software vendors. We work with these
vendors to align our sales efforts and service offerings
with their strategic objectives, and they incentivise us
accordingly through rebates, which is one of the ways
we make a profit (see more details in Our business
model on page 21).
From January 2025, we saw rate reductions in parts of
Microsoft’s Enterprise Agreement (EA) incentive plan.
This represents the continuing shift away from certain
transaction-based rewards, and a greater focus on
activity-based and usage-based incentives, which
aligns strongly with the services part of our strategy.
The Cloud Solution Provider (CSP) programme, which
continues to be fast growing and currently provides
almost one third of our Microsoft incentive payments, is
unaffected. So, while the EA changes will result in lower
incentives under that programme, we expect they will
be offset by the growth we’re already generating across
other schemes as we focus our attention on CSP and
Microsoft cloud, security and AI service activities. We
have a long track record of successfully adapting to
such changes and continuing to work with our vendors
in a mutually beneficial way. We did not see a material
impact from the EA change in 2024/25 and we do not
expect to see one in the coming financial year.
Looking ahead
We will continue to keep a close eye on our growth
inthe coming year, especially in light of ongoing
economic uncertainty. But I am confident that our
strong vendor partnerships and the investments we’ve
made this year and in recent years – in our people,
services, and internal and customer-facing systems –
will stand us in good stead for years to come. With
ourheadcount continuing to grow, reaching 1,245
byyear end, we took the opportunity to acquire the
other two buildings that occupy our office park in
Leatherhead. This will give us enough space not only
for the people we have taken on this year, but also to
accommodate future growth.
In 2025/26, we will also focus on bedding in our new
accounting, operational and marketplace platforms,
ensuring that our culture remains consistent and strong
as we continue to expand, and providing honest, expert
advice to our customers so they can meet their
business objectives through technology.
Andrew Holden
Chief Financial Officer
12 May 2025
I am confident that our strong
vendor partnerships and the
investments we’ve made will
standus in good stead for
yearstocome.
22 Bytes Technology Group plc
REVIEW OF THE YEAR
Operational review
We are made up of two complementary businesses that share one culture – and
adeep commitment to our people, our customers and our vendors. In 2024/25
Bytes and Phoenix delivered strong performance, as we grew our customer
numbers, headcount, geographical footprint, gross profit and our range of offerings.
Robust demand for software,
solutions and services
Across the corporate and public sectors,
growth was led by:
• • Security – with the ever-increasing
threat of cyberattacks, organisations
continue to invest in a wide range of
advanced protection products and
security-focused managed services
to bolster their defences
• • Subscription software – software
contracts are now almost entirely
subscription-based, providing a
strong annuity-based income stream
• • Cloud-based solutions – alongside
the migration of data and applications
to the cloud, organisations are
investing in the latest cloud-based
technologies, including AI
• • IT services – as technology becomes
ever more advanced and purchasing
options more complex, demand is
growing for expert support through
awide range of solutions including
security, cost optimisation and
licencecompliance
• • Hybrid infrastructure – combining
the security and control of on-site
data centres with the flexibility of
cloud services enables organisations
to better manage their IT ecosystems.
Staying agile and increasing
ourrange of services
With the advent of AI-enabled software,
the rapid increase in data and the growing
complexity of cybersecurity, we need to
stay agile and innovative to help our
customers get the most out of the latest
technology. One of the main ways we do
this is through our professional and
managed IT services, which complement
the solutions we sell, and we therefore
saw heightened focus on services this
year from both businesses.
At Bytes, we introduced a 24/7 expert-
level Microsoft support service to
helpcustomers manage their CSP
subscriptions. We also launched a new
network security service, adding to our
strong suite of solutions around
cybersecurity.
At Phoenix we expanded our support and
managed services around a wide range
oftechnologies and increased the vendor
accreditations held by our consultants.
The services provided by our security
operations centre, which is built around
Microsoft’s Sentinel solution, grew strongly
this year, underpinned by our Azure Expert
status. We also continued to expand our IT
professional services, with a key focus on
cloud security and AI solutions.
Staying agile means adapting to vendor
incentive programmes, which is a
continual part of our business; changes
inthese programmes affect the fees and
rebates we receive when selling their
products. Microsoft channel incentives
are frequently changed, and BTG has a
good track record of reacting to these
while maintaining our gross profit levels
on software. For example, towards the
end of this year, Microsoft reduced some
of the rates in its EA incentive plan to
continue the transition of its rewards
froma pure transactional basis towards
services-led activities. This is very much
in line with our own strategy. Atthe same
time, Microsoft maintained the sizeable
incentives available to us in their CSP
programme, which is a high growth
income stream for BTG.
We invested significantly in ramping up our
services capability this year. The level of
experience that we’ve brought in this year
goes beyond anything that we’ve done in the
past 18 years that I’ve worked in this company.
Jack Watson
MD Bytes
Bytes and Phoenix share:
• • BTG’s values, strategic
ambitions, governance
structures
• • Insights and good practice
• • Industry-leading skills
• • Can-do culture
• • Representation and
engagement in Group
ExecutiveCommittee and
steering committees
• • Comparable products
andservices.
The businesses have
theirown:
• • Identities
• • Management teams
• • Individual but complementary
routes to market
• • Customer bases and markets
• • Offices.
Annual Report and Accounts 2024
/
25
STRATEGIC REPORT
23
Operational review continued
Key facts
Bytes Software Services
Markets
Corporate and public sectors across a wide range of industries,
including professional services, manufacturing, retail, central and
local government, and technology, media and telecommunications.
Vendors
Our partners include Microsoft, AWS, Palo Alto Networks,
Check Point, Mimecast, Adobe, Darktrace, Security HQ,
Commvault, LicenseDashboard and Zscaler
HQ Leatherhead, Surrey
Other offices Reading, London, Manchester,
Dublin,Portsmouth
MD Jack Watson
Employees 760
Customers 3,204
Phoenix Software
Markets
Mostly public sector, across a broad range of areas, including
central and local government, charities, education, emergency
services, healthcare and housing. Its in-house developed License
Dashboard platform has clients in North America and Europe.
Vendors
Our partners include Microsoft, VMware, Dell,
Adobe,Sophos,Citrix, Mimecast, Rubrik,
ServiceNow,Verkadaand Tanium
HQ Pocklington, Yorkshire
Other offices Salford, Sunderland
MD Clare Metcalfe
Employees 477
Customers 2,709
Bytes Technology Group (head office)
HQ Leatherhead, Surrey
Employees 8
CEO Sam Mudd
CFO Andrew Holden
24 Bytes Technology Group plc
REVIEW OF THE YEAR
Helping our customers and
ourpeople benefit from AI
At BTG we are proud that both of our
businesses were selected to be part of
the ‘customer zero’ programme for
Microsoft Copilot, an AI-enabled tool
designed to boost productivity. That
meant we were able to use Copilot
internally, ahead of the wider market,
andthen take the lessons we learnt,
including around areas like compliance
and governance, to our customers.
We saw strong customer interest in
Copilot in 2024/25, providing licences to
a broad range of customers, with Bytes
one of Microsoft’s top UK resellers in the
small and medium enterprises market.
Wedelivered £1.0 million worth of
workshops, funded by Microsoft,
wherewe demonstrated Copilot’s
potential and how best to deploy it.
At Phoenix we finished the 2024 calendar
year as one of Microsoft’s leading partners
for Copilot workshop engagements
delivered in the UK and across EMEA –
working with our customers to help them
make the most of the software’s full potential.
We also setup a new AI team to give even
more support and advice to our customers.
Strengthening our teams
andourculture
With our businesses continuing to grow,
we expanded our teams and skills to
maintain our high levels of service. This
year, the number of employees at Bytes
rose by 20% to 760, and at Phoenix by 14%
to 477. We complete the Group with our
head office team of eight, which includes
our CEO and CFO and was bolstered this
year with additional governance and
investor relations expertise.
Both businesses continued their
successful apprentice schemes for sales
and technical staff, which are an excellent
source of talent. We also focused on
helping our existing people increase their
technical capabilities, supplemented by
bringing in expertise to ensure we have
the right specialist skills to keep up with
the evolving technology, and to accelerate
our growth. At Bytes, we recruited,
among others, Hayley Mooney as Chief
Commercial Officer, Ryan Herbert as
Enterprise Sales Director and John
Francis to head up our vendor solutions
department. These three senior sales
leaders bring a wealth of experience in
sales management and direct sales
experience and solution selling.
As we do every year, we worked hard to
maintain our strong culture as we grow.
For example, working with a specialist
consultant, Phoenix published a culture
blueprint in 2024/25, which is relevant
toall staff and especially useful for
onboarding new starters. Read more
onpage 36.
A good marker of our growth is the need
for more office space, and this year Bytes
opened an office in Portsmouth and
increased its office space in London and
Manchester, while Phoenix opened an
office in Sunderland. Most recently Bytes
purchased the two buildings next to its
current main site in Leatherhead to
provide an additional 27,000 square
feetto cater for immediate and future
capacityrequirements.
Empowering accessibility for all with
MicrosoftCopilot
The Charities Aid Foundation exists to improve the effectiveness of both
charities and their donors, distributing more than £1.1 billion to around 250,000
charities in 100 countries each year. The CEO is Neil Heslop, OBE, who, despite
being blind since his 20s, manages his responsibilities effectively with the aid
ofadvanced technology. At Phoenix, we helped Neil use Microsoft Copilot to
transform his own working practices, and to enhance accessibility, efficiency
and collaboration across the organisation.
Read the
fullcase study
Case study
While we always
payattention to our
people and culture,
it’s something we
worked on incredibly
hard in 2024/25.
We’re making sure
that the collaboration
and openness that
has brought us this
farwill continue to
drive us forward.
Clare Metcalfe
MD Phoenix
Annual Report and Accounts 2024
/
25
STRATEGIC REPORT
25
Operational review continued
Delivering growth in 2024/25
Close customer relationships are crucial to our success. We monitor our progress using four key metrics: customer numbers,
ourshare of their business, gross profit per customer and our customer NPS. This year we:
Increased our customer base Maintained a high renewal rate
5,913
This year
5,828
Last year
1
109%
This year
10 9 %
Last year
We did business with numerous new customers this year
including Smartest Energy, Hampshire and Isle of Wight
Healthcare, and Hotel Chocolat at Bytes, and The Royal
Mint, University ofBradford and Tate Modern at Phoenix.
This metric tracks the growth in gross profit from existing
customers. Phoenix did more business with established
customers such as East Suffolk and North Essex NHS
Foundation Trust, the Home Office and DEFRA, and Bytes
with the Financial Ombudsman Service, Elexon and WSH.
Maintained industry-leading NPS Increased gross profit per customer
79
This year
82
Last year
£ 2 7, 6 0 0
This year
£25,000
Last year
2
The score measures the likelihood of our customers
recommending us to others and can range from -100 to +100.
The benefits of a broad customer base
We strive to create lasting relationships with our customers. However, the marketplace is competitive, so we try not to depend
too much on specific customers. In 2024/25, no single customer represented more than 1.3% of our gross profit.
1 Revised from 5,978 in 2023/24 Annual Report to remove year-on-year fluctuations caused by very small customer variations under a single parent.
2 Revised from £24,400 in 2023/24 Annual Report to remove year-on-year fluctuations caused by very small customer variations under a single parent.
Why customers choose us
We strive to help our customers succeed in a world of
change. It’s about much more than using transformational
technology to achieve greater productivity though; we also
want to save them money, strengthen their systems and
secure their data as cyberattacks increase. Our customers
choose Bytes and Phoenix, and stay loyal to us, because:
• • We always act in their best interest. Rather than sell
the customer what we want, we provide what they need.
• • We understand them. Our people are experts in
technology. As importantly, they’re experts in their
customers, because we give them the time to really
understand each customer, and the customer’s industry.
• • Of our continuity and friendly, can-do culture.
Thanks to our relatively high staff retention rates, our
customers often deal with the same account manager
and team, year after year. We propose solutions to
problems and bring a positive attitude.
• • Of our commitment to excellence and honesty. We
always aim to exceed our customers’ expectations, but if
we don’t, or make a mistake, we’re honest about it, and
try to fix it quickly.
• • We support our communities. For many of our
customers, especially in the public sector, we go beyond
the scope of the project with social value offerings for the
benefit of local communities.
26 Bytes Technology Group plc
REVIEW OF THE YEAR
Why vendors partner with us
As an independent reseller, we’re impartial when making
recommendations to our customers. At the same time,
weconsider vendors to be our partners, and we work very
closely with them to deliver the best results for our
customers. Vendors choose to work with Bytes and
Phoenixbecause we:
• • Continually invest in training and development.
Thisenables us to promote our vendors’ products with
knowledge and skill. If we don’t have the right expertise
inour business, we hire people who do.
• • Act with integrity. We only commit to vendor
partnerships after doing due diligence and making sure
that we have the technical delivery capability, and the
market to make it worthwhile. We then deliver on time,
against the plan.
• • Collaborate. We host seminars and events that
bringtogether representatives of leading vendors,
strengthening our mutual understanding of the
challenges faced by customers, and the technologies
that can help.
• • Have a strong record of growth. Vendors know where
we’ve come from – and where we’re going – and want to
align with that.
Deepening our partnerships
withworld-leading vendors
Across BTG, we partner with more
than100 leading vendors who make or
distribute the IT products that we provide
to our customers. While some have been
with us for several decades, including our
biggest partner, Microsoft, others are
new companies working in cutting-edge
areas such as cybersecurity and AI.
In 2024/25 at Bytes, Microsoft was once
again the vendor that contributed most to
our growth. We also did more work with
Palo Alto Networks, Commvault and
Mimecast. At Phoenix, our Microsoft
business also continued to grow. We were
chosen as one of three partners globally
to pilot the new Windows 365 Link device,
which we see as having significant potential
for public sector frontline workers. We are
also the UK launch partner for the device
in 2025. Other vendors we did more with
included ServiceNow, VMware by
Broadcom, Rubrik and Pure Storage.
Our awards in 2024/25
Bytes
• • Sophos MDR Partner of the Year 2024 (UK&I)
• • CATO Networks Reseller of the Year 2024 (EMEA)
• • Palo Alto Networks and Exclusive Networks NetSec Partner
of the Year 2024
• • Check Point Infinity Partner of the Year 2024
• • Axonius Rising Star Award 2024 (EMEA)
Phoenix
• • Sophos Enterprise Partner of the Year 2024
• • Bitdefender Best Strategic Engagement Award 2024
• • Microsoft Global Education Partner of the Year Finalist 2024
• • Adobe Best Services Program 2024 (EMEA)
• • Druva International Partner of the Year 2024
Annual Report and Accounts 2024
/
25
STRATEGIC REPORT
27
Financial review
Income statement
Year ended
28 February 2025
£m
Year ended
29 February 2024
£m
Change
%
Gross invoiced income (GII) 2,099.8 1,823.0 15.2
GII split by product:
Software 2,005.3 1,722.0 16.5
Hardware 33.2 41.4 (19.8)
Services internal
1
34.0 31.5 7.9
Services external
2
27.3 28 .1 (2.8)
Netting adjustment (1,882.7) (1,616.0) 16.5
Revenue 217.1 207.0 4.9
Revenue split by product:
Software 146.0 130.4 12.0
Hardware 33.2 41.4 (19.8)
Services internal
1
34.0 31.5 7.9
Services external
2
3.9 3.7 5.4
Gross profit (GP) 163.3 145.8 12.0
GP/GII % 7.8% 8.0%
Administrative expenses (96.9) (89.1) 8.8
Administrative expenses split:
Employee costs (7 8.1) (71.2) 9.7
Other administrative expenses (18.8) (17.9) 5.0
Operating profit 66.4 56.7 17.1
Operating profit/GP % 40.7% 38.9%
Add back:
Share-based payments 5.1 5.7 (10.5)
Amortisation of acquired intangible assets 0.9 0.9 0.0
Adjusted operating profit (AOP) 72.4 63.3 14.4
Interest income 8.5 5.1 66.7
Finance costs (0.3) (0.4) (25.0)
Share of profit of associate
3
0.0 0.2 (100.0)
Profit before tax 74.6 61.6 21.1
Income tax expense (19.8) (14.7) 34.7
Effective tax rate 26.5% 23.9%
Profit after tax 54.8 46.9 16.8
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 profit of associate.
How we performed in 2024/25
28 Bytes Technology Group plc
REVIEW OF THE YEAR
Overview of 2024/25 results
We achieved another positive set of financial results, with a
15.2% increase in GII, a 12.0% rise in GP, a17.1% increase in
operating profit and more than 100% cashconversion.
We have doubled all these income metrics in our five years as a
listed entity, while sustaining more than 100% cash conversion over
this period and again this year, enabling us to distribute the majority
of these growing earnings to shareholders while maintaining a
strong balance sheet. Our track record of annual double-digit
gross profit growth now runs well over a decade.
Gross invoiced income
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 vendors invoice the customer directly and pay us
afee that is a percentage of their sales value, and that we
recognise within our GII, revenue and GP.
GII has increased by 15.2% year on year, exceeding £2 billion for
the first time to reach £2,099.8 million (2023/24: £1,823.0 million),
driven by software and with continued strong growth in the public
sector, which contributed 65% of total GII (2023/24: 62%). While
growth has reduced compared to 2023/24 (26.7%), the prior
year was boosted by some exceptionally large public sector
contract wins. These are now in their second year and have
become established in our annuity income, with the
agreementsrunning over three to five years.
Revenue
Revenue is reported in accordance with IFRS 15, with hardware
and internal services GII reported gross (principal) and software
and external services GII reported net of cost (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 4.9% 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, our primary measure of sales performance, has grown by
£17.5 million, up 12.0% year on year to £163.3 million (2023/24:
£145.8 million), with the second half of the financial year showing
strongly at more than 15% growth (compared to 9% in the first half).
Breaking this down by income stream, the Group’s two most strategic
focus areas have both achieved double-digit growth. Software
GP is up by 12.0% to £146.1 million (2023/24: £130.4 million),
and with only a very small decline in GP/GII percentage.
Thisachievement factors in the first two months of Microsoft
incentive changes, where we have implemented mitigation
plans to help offset the impact.
Internal services GP is up by 27.9% to £8.7 million (2023/24:
£6.8 million), as we continue to invest significantly in our delivery
staff to drive our security, cloud andAI solutions. We have been
supported in these areas by increasing levels of Microsoft funding,
for both internal investments and customer engagements.
Hardware GP declined by 6.1% to £4.6 million (2023/24:
£4.9 million), with strong growth in the second half of the
financial year offsetting a large decline in the first half.
We have seen good performances from both public and
corporate sectors, each contributing around half of the
£17.5 million growth in GP in absolute terms. Public sector growth
has been achieved while bidding under highly competitive
tenders, either for single contracts or for several contracts in
aggregate, the latter enabling us to gain multiple new clients
from a single bid. Despite more pressure on margins under this
process, public sector GP has grown by 18.2%. Our corporate
GP has grown by 8.9%, increasing by 14.8% in the second half of
the financial year after seeing lower growth in the first half, in part
driven by the weaker hardware performance during that period.
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. Adding AI products such as Copilot will
become part of these contract expansions going forward. This
process is also enhanced by focusing on selling our wide range
of solutions offerings and higher-margin security products,
while maximising our vendor incentives by achieving technical
certifications. We track these customers individually to ensure
that the strategy delivers value for the business, and for our
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 65% in corporate and 35% in the public sector. Despite
public sector competition, our margin (GP/GII) has stood up well,
dropping only slightly from 8.0% in 2023/24 to 7.8% this year – and,
behind this figure, the corporate margin has improved year on year.
Our long-standing relationships with our customers and high
levels of repeat business were again demonstrated in 2024/25,
with 97% of our GP coming from customers that we also traded
with last year (2023/24: 97%), at a renewal rate of 109% – which
measures the GP from existing customers this period compared
to total GP in the prior period. Included within our GP increase of
£17.5 million was £4.3 million from new customers. Aligned to
this, we saw a 1.5% increase in customer numbers (defined as
those generating more than £100 of GP) from 5,828 to 5,913,
while the average GP per customer increased from £25,000 in
2023/24 to £27,600 in 2024/25.
1
1 2023/24 customer numbers and average GP per customer have been revised from 5,978 and £24,400 in Annual Report and Accounts 2023/24 to remove year-on-year
fluctuations caused by very small customer variations under a single parent.
Annual Report and Accounts 2024
/
25
STRATEGIC REPORT
29
Financial review continued
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
frontline 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 lasting relationships
we have established with our customers, vendors and partners.
During the year we have seen total staff numbers rise to 1,245
on our February 2025 payroll, up by 18% from the year-end
position of 1,057 on 29 February 2024.
Employee costs included in administrative expenses rose by
9.7% to £78.1 million (2023/24: £71.2 million). However, this
figure has been affected by:
• • A reduction in share-based payment charges of £0.6 million,
given our first three share option schemes issued post-IPO
have now vested and given that the cost of the new schemes
launched in 2023/24 and 2024/25 have been slightly lower
• • Capitalising £1.4 million of staff costs on to the balance
sheet. 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.
Without the impact of these two items, the underlying increase
in our employee costs is 13.7%.
Other administrative expenses
Other administrative expenses increased by 5.0% to
£18.8 million (2023/24: £17.9 million), including continued
investment in staff welfare and internal systems.
Operating profit
Our operating profit increased by 17.1% from £56.7 million to
£66.4 million, which shows the balance we have achieved
between growing GP in a challenging market while effectively
managing our cost base.
Some of this increase has been positively affected by the
£1.4 million capitalisation of software developers’ staff costs
(previously expensed in the prior year when their work was
focused on maintaining legacy systems) and the £0.6 million
lower share-based payment charge noted earlier. After
adjusting for these, the increase remains strong at 13.4%.
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 at around 38–40%.
The ratio increased to 40.7% (2023/24: 38.9%), but would have
been 39.8% excluding the capitalised staff costs.
In previous results announcements we have also focused on
adjusted operating profit (AOP), which removes the effects of
share-based payment (SBP) charges and amortisation of
acquired intangibles – notably because of the growth of these
SBP charges over the time since IPO, from a near-zero starting
position in 2020/21 of £0.3 million to £5.1 million this year. Given
that we have now moved out of that growth cycle, as older
schemes vest and new schemes are introduced, the current
charges are now viewed to be normalised as business-as-usual
recurring expenses. Similarly, our amortisation charges are
stable at £0.9 million for the current and prior year. So, AOP is
no longer considered to add value to understanding our results.
We will now focus on operating profit, which brings us in line with
other similar businesses in our market segment.
For reference, our AOP has increased by 14.4% to £72.4 million
(2023/24: £63.3 million), and the ratio of AOP to GP has
increased from 43.4% to 44.3%.
Interest income and finance costs
This year has seen significant interest being earned from
money-market deposits, totalling £8.5 million (2023/24:
£5.1 million). While last year included only ten months of
earnings, we have nevertheless substantially increased this
income stream – backed up by our strong cash management,
which has enabled us to place more cash on deposit and for
longer periods.
Our interest income benefits from often having materially higher
cash balances than reported at period ends around our largest
months of trading in March and April (around the UK
Government’s fiscal year end) and June and December (around
some key vendors’ fiscal year ends).
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 EV scheme.
30 Bytes Technology Group plc
REVIEW OF THE YEAR
Share of profit in associate
Following the acquisition of a 25.1% interest in Cloud Bridge
Technologies in April 2023, in accordance with IAS 28 Investments
in Associates and Joint Ventures we account for the Group’s
share of its profits. For 2024/25 we have not recognised any profit
because Cloud Bridge’s set-up costs of investing in overseas
operations have offset its UK profits (2023/24: £0.2 million).
Profit before tax
The combined impact of increased operating profits and high
levels of interest received has seen our profit before tax
increase by 21.1% to £74.6 million (2023/24: £61.6 million).
Income tax expense
The £5.1 million (34.7%) rise in our income tax expense to
£19.8 million (2023/24: £14.7 million) reflects the growth in profit
before tax and, in part, that last year there was one month
included at the previous UK corporate tax rate of 19% (2024/25
fully at 25%) – giving rise to an effective rate of tax of 23.9% in
2023/24. The higher effective rate in 2024/25 of 26.5% is also
because of timing difference movements between current and
deferred tax. So, we expect our long-term effective tax rate to
align to the UK corporate tax rate, given the differences
between accounting profit and taxable profit are substantially
timing in nature.
Profit after tax
Profit after tax increased by 16.8% to £54.8 million (2023/24:
£46.9 million), underlining our growth in operating profit and
interest income, offset by the higher effective rate of tax.
Earnings per share
As a result of this strong growth in profits attributable to owners
of the company, our earnings per share have risen accordingly.
Basic earnings per share are up 16.5% from 19.55 pence to
22.78 pence.
Balance sheet and cash flow
Balance sheet
As at
28 February 2025
£m
As at
29 February 2024
£m
Investment in associate 3.2 3.2
Property plant and equipment 13.6 8.5
Intangible assets 43.5 40.6
Other non-current assets 3.4 4.9
Non-current assets 63.7 57. 2
Trade and other receivables 268.4 221.8
Cash 113.1 88.8
Contract assets 10.0 11.8
Current assets 391.5 322.4
Trade and other payables 327.5 27 7.9
Lease liabilities 0.7 0.4
Contract and tax liabilities 25.7 19.6
Current liabilities 353.9 2 97. 9
Lease liabilities 1.3 1.3
Other non-current liabilities 2.0 2.1
Non-current liabilities 3.3 3.4
Net assets 98.0 78.3
Share capital 2.4 2.4
Share premium 636.4 633.7
Share-based payment reserve 14.9 11.0
Merger reserve (644.4) (644.4)
Retained earnings 88.7 75.6
Total equity 98.0 78.3
Closing net assets stood at £98.0 million (29 February 2024:
£78.3 million), including the Group’s £3.2 million interest (25.1%)
in Cloud Bridge Technologies – which includes our £0.2 million
share of profits since we acquired it in April 2023.
The increase in the value of property, plant and equipment is
primarily attributable to the £5.1 million purchase of 27,000
square feet of office properties immediately adjacent to the
existing Group and Bytes offices in Leatherhead. This space has
the potential to accommodate around 300 employees and will
provide for current and future capacity requirements for
business growth in the coming years.
Annual Report and Accounts 2024
/
25
STRATEGIC REPORT
31
Financial review continued
Intangible assets include the £3.7 million addition of capitalised
software development costs, a combination of internal staff
costs of £1.4 million and £2.3 million of external contractor
costs. As this work continues through the new financial year,
weexpect around a further £3 million of costs to be capitalised
in completing this work. While we are in the development phase,
there is no amortisation of the asset – this will start once we move
to live production mode, scheduled for the latter part of 2025/26.
Net current assets closed at £37.6 million (29 February 2024:
£24.5 million).
Our debtor days at the end of the year stood at 32, and our
average debtor days for the year was 38 (2023/24: 37).
Ourclosing loss allowance provision reduced to £1.7 million,
down from £2.5 million at the February 2024 year end, with
£0.7 million bad debts written off against the provision and
another £0.1 million reduction to reflect our current expected
loss calculated under IFRS 9. We believe this remains a prudent
position, given that the level of write-offs is very low considering
our GII of £2.1 billion.
The Group has paid its suppliers on schedule throughout the
year, with its average creditor days remaining broadly in line with
the prior year at 46 (2023/24: 47) and standing at 36 at the end
of the year (2023/24: 44).
The consolidated cash flow is set out below.
Cash flow
Year ended
28 February
2025
£m
Year ended
29 February
2024
£m
Cash generated from operations 85.6 67.3
Payments for fixed assets (6.4) (1.3)
Payments for intangible assets (3.7) (0.0)
Free cash flow 75.5 66.0
Net interest received 8.3 4.7
Taxes paid (18.9) (15.1)
Lease payments (0.6) (0.2)
Dividends (42.8) (36.6)
Issue of share capital 2.8 –
Investment in associate – (3.0)
Net increase in cash 24.3 15.8
Cash at the beginning of the period 88.8 73.0
Cash at the end of the period 113.1 88.8
Operating profit 66.4 56.7
Cash conversion
(againstoperating profit) 113.8% 116.4%
Cash conversion
(againstAOP) 104.3% 104.3%
Cash at the end of the period was £113.1 million (29 February 2024:
£88.8 million), which is after the payment of dividends totalling
£42.8 million during the period – being the final and special
dividends for 2023/24 and the interim dividend for 2024/25.
32 Bytes Technology Group plc
REVIEW OF THE YEAR