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Annual Report and Accounts 2025/26
opportunities
innovation
Unlocking
through
Our year in numbersContents
£2,341.0m
Gross invoiced income (GII)
1
(2025: £2,099.8m) +11.5%
£220.5m
Revenue
2
(2025: 217.1m) +1.6%
£167.3m
Gross profit (GP)
(2025: £163.3m) +2.4%
£28,300
Average gross profit per customer
(2025: £27,600) +2.5%
£62.7m
Operating profit
(2025: £66.4m) -5.6%
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.
Strategic report
Our business
02 This is Bytes Technology Group
04 Chair’s statement
06 CEO’s review
փ Our strategy
փ Investment case
10 Measuring progress –
keyperformanceindicators
12 Our strategy in action
Review of the year
16 Our market environment
18 CFO’s introduction
փ Our business model
21 Operational review
26 Financial review
32 Risk report
44 Sustainability review
փ Our people
փ Our communities
փ Our planet
Disclosure statements
58 Task Force on Climate-related Financial
Disclosures (TCFD)
68 Additional environmental disclosures
74 Non-financial and sustainability
informationstatement
75 Viability statement
76 Section 172 statement
Governance report
78 Chair’s introduction to corporategovernance
80 Board of directors
83 Executive Committee
84 The Board’s year
88 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
129 Directors’ report
133 Statement of directors’ responsibilities
Financial statements
135 Independent auditor’s report
145 Consolidated financial statements
149 Notes to the consolidated financialstatements
182 Parent company financialstatements
184 Notes to the financial statements
Other information
193 Glossary
195 Company information
195 Financial calendar
Technology creates opportunities
toenhance human creativity,
productivity and communication,
reach new markets, serve people
better and keep organisations
anddata safe.
We help 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 and hybrid infrastructure.
We serve nearly 6,000 customers in the private
and public sectors.
STRATEGIC REPORT
1Annual Report and Accounts 2025
/
26
This is Bytes Technology Group
Serving the IT market in the
UKformore than40 years
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have nine offices and more than 1,300
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 46.
Our offices
Manchester
Salford
Dublin
Reading
Glasgow
York
London
Head office
Leatherhead
Portsmouth
We have a simple but
powerfulbusiness model
We generate gross profit from two main sources:
software products resale and service delivery.
Our software profits are derived from 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 vendor
rebates. 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 IT
consultancy and support services to our
customers, often aligned to the software we sell
and underpinned by our deep technical expertise.
Where the solutions are strategically important to
our vendors, they may pay us additional fees or,
increasingly, fund projects in full. What makes BTG
unique is how we deliver our products and services
through a business model that’s truly value added,
creating lasting, mutually beneficial partnerships
with employees, customers and vendors and
living by our values in everything we do.
What our model delivers
Customer NPS
70+
Employee NPS
62
Shareholders
Capital returned over five years*
90%
of profit after tax
Communities
Hours volunteered
2 ,1 5 9
Read more about our business
modelon page 19.
*Dividends and share buybacks, including proposed final dividend for 2025/26.
2 Bytes Technology Group plc
OUR BUSINESS
Success comes from
delivering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 that
make or distribute software, hardware and
other IT products. We can therefore 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 21.
Our future: innovating to unlock
opportunities for our customers
With technology changing so fast, it’s easy
tolose sight of what IT is really for: freeing up
people’s time, keeping data and networks
safe,and enabling better collaboration 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 will reap those benefits in the years
and decades to come.
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.
View Bytes Software Services vendors
View Phoenix Software vendors
Annual Report and Accounts 2025
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26
STRATEGIC REPORT
3
Chair’s statement
BTG this year accelerated
thetransition to becoming a
partner that takes a broader
role in helping customers use
technology to drive business
outcomes, such as identifying
use cases for AI adoption,
deploying new workloads into
the cloud and managing our
customers’ cybersecurity
environments.
Patrick De Smedt Chair
The IT market is changing fast,
energised by new software
companies, innovative products and
disruptive technologies, including
AI. Our responsibility at BTG is to
stay ahead of these changes, and
organise our business in a way that
best serves the needs of our loyal
customers and delivers sustainable
growth over the long term.
Investing for sustainable growth
Despite a challenging market environment during the
year, BTG delivered growth in gross invoiced income
of11.5% to £2.3 billion. While this growth did not
fullyconvert to profit expansion at the levels seen
inprevious years, gross profit increased modestly,
reflecting two key factors. First, changes to Microsoft
enterprise incentive structures, particularly evident
inthe first half of the year, coincided with elevated
renewal activity around the public sector financial
year end in March and April and Microsoft’s own
year end in June. Second, the Group continued to
evolve its private sector sales division from a generalist
model to specialist, customer-segment-focused
teams, as described on page 7. Although this transition
took longer than initially anticipated, it represents an
important step in strengthening BTG’s long-term
capability to support our customers. Operating
profitwas therefore lower than in previous years, as
theGroup continued to make disciplined investments
to support future growth.
The business has now adapted to these changes.
Indeed, adaptation was a key theme for BTG in
2025/26, as we focused on proactively evolving
ourbusiness approach and investing for the future.
Formost of our history, we have been known for
reselling software licences and providing software
asset management. Under the leadership of Sam
Mudd, and with the Board’s support, BTG this year
accelerated the transition to becoming a partner
thattakes a broader role in helping customers use
technology to drive business outcomes, such as
identifying use cases forAI adoption, deploying new
workloads into the cloudand managing our customers’
cybersecurity environments.
Investing in technical capabilities and providing more
managed services will enable us to better respond
towhat our customers are asking for, as they look
tofurther transition their data to the cloud, protect
themselves against security breaches and make their
businesses more efficient. Working with our vendor
partners to deliver more services will also help us sell
more software, so we can further invest in our business
and reward our shareholders.
4 Bytes Technology Group plc
OUR BUSINESS
Strong leadership in a year
oftransformation
As our business continues to adjust to our ever-changing
sector, Sam has led from the front, including explaining
how and why we are evolving, to our people, to our
customer and vendor partners, and to investors and
analysts. Our operational leaders have also guided
their businesses in a year in which both Bytes and
Phoenix adapted to the most recent changes in
Microsoft’s incentive programmes.
As announced, following an assessment of the
rolesrequired to support the Company’s next
phaseofgrowth, it has been decided to split the
currently combined roles of Chief Financial Officer
andChief Operating Officer, held by Andrew Holden.
As part of this change, Andrew will be standing down
asChief Financial Officer when a suitable replacement
has been appointed, at which date he will step down
from the Board. Thereafter, he will remain with the
Company and will transition into the role of Chief
Operating Officer.
Turning to the Board more widely, following the positive
changes in 2024/25, I believe that we currently have
the right mix of knowledge, skills and experience.
Ourrecent board effectiveness review, conducted
externally by Lintstock, also concluded that the Board
continues to be strong and cohesive. I am grateful for
all the support that the directors have given the
business this year.
Maintaining our high-performance culture
On behalf of the Board, I also want to thank all our
people across the business for their hard work. Without
their dedication and commitment we would not be able
to provide the great service that keeps our customers
coming back to us, year after year.
Making sure we maintain our customer-centric and
innovation-focused culture is always a strong priority
for the Board, which is why listening to employees is
soimportant to us. This year, we again held town
hallmeetings at both businesses’ head offices, in
Leatherhead and York, where we talked about the
company’s strategic priorities, and then took questions.
Several directors, including Anna Vikström Persson,
DrErika Schraner and Ross Paterson, also made
additional office visits, while Shruthi Chindalur, our
designated non-executive director for employee
engagement, spent time engaging with people at
bothbusinesses.
Among the feedback we got was that staff would like
more leadership training, especially for people newly
promoted to management. Sam is addressing this,
withthe help of Kally Kang-Kersey, our Chief People
Officer, who is leading the development of BTG’s
long-term people strategy.
Continued focus on sustainability
As the business keeps growing, the Board
remainsconscious of the company’s sustainability
responsibilities. This was the first full year of our ESG
(Environmental, Social and Governance) Committee,
which is chaired by Anna, whose role is tooversee the
delivery of the overall sustainability strategy, including
the transition to net zero. Along withcontinued efforts
to reduce our emissions, our sustainability progress
this year included expanding our carbon literacy
awareness programme and becoming a constituent
ofthe FTSE4Good Index Series.
Looking ahead with confidence
The spirit of agility and adaptability that BTG has shown
this year positions us well to continue to benefit from
the structural demand drivers in the market, from cloud
migration to security and AI. The Board looks forward
to supporting our executive team through another year
of progress.
Patrick De Smedt
Chair
11 May 2026
Shareholder dividend
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 7.0 pence per share
equating to £16.5 million. If approved by
shareholders, the final dividend will be
paidtowards the end of July 2026.
I also want to thank everyone
across the business for their
hardwork, dedication and
commitment.
Annual Report and Accounts 2025
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26
STRATEGIC REPORT
5
CEO’s review
This year I have spent time
engaging with colleagues
across the business, and
have been inspired by their
passion and professionalism
in serving our customers.
Sam Mudd CEO
To succeed in changing markets,
businesses need to constantly
evolve. In 2025/26, I was proud of
theway our teams supported our
many loyal customers bydelivering
great service, while also adjusting
toour ongoing internal evolution
andexternal market changes.
As we focused on evolving our business for continued
growth, realigning our private sector sales team, we
managed the impact of reduced enterprise incentives
from our largest vendor partner, Microsoft. We also
focused on growing our services portfolio and
associated profits and maintaining measured
investments, in line with our strategy. While this
resulted in another year of double-digit gross invoiced
income growth, we however saw modest gross profit
growth and a decline in operating profit.
With organisations continuing to invest in IT solutions,
we maintained our share of wallet among our existing
customers and increased our customer base. As in
prior years, customer retention remained very high at
both Bytes and Phoenix, providing a good foundation
for future growth. And we achieved numerous notable
successes in the public and private sectors. You can
read more about some of our success stories on
pages12 and 14.
Increasing our customer centricity
Customers partner with us – and often stay with us for
many years – because of the broad range of software
solutions we provide, from multi-cloud adoption and
migration to digital storage, cybersecurity and AI. This
is underpinned by our software advisory expertise and
knowledge of procurement routes, which enable us
tohelp our customers obtain the best value. We
continued to build on this strength this year by investing
in pre-sales and technical skills that will allow us to
serve a bigger market in future.
We also evolved our overall approach to meeting our
clients’ needs by expanding our range of in-house
services. Our customers want to benefit from the latest
transformational technology, as we’ve seen from the
strong interest in AI products we provide, including
Microsoft Copilot. We translate complex partner
Watch Sam’s recent conversation
with Microsoft about AI
6 Bytes Technology Group plc
OUR BUSINESS
technology into business outcomes by working
upfrontin the design and implementation and staying
responsible beyond the ‘go-live’ through managed
services. The skills to manage new technology are in
short supply, so organisations are becoming ever-more
reliant on their IT partners. As this service income
stream grows, we will continue to develop and deliver
additional services across our vendor offerings to
support customer readiness and adoption.
In 2025/26 we improved our customer proposition by
realigning our private sector sales team. One of our key
differentiators as a value-added reseller has always
been our customer-centricity: how we engage closely
with our clients to be a trusted partner. Now we have
gone a step further to better understand our private
sector customers’ businesses and provide them with
the right solutions for their needs. At the start of the
financial year, we moved from a generalist private
sector sales structure to having three segment-
focused teams, based on customer size. By ensuring
we have the right people, in the right roles, managing
the right accounts, we have deepened expertise within
each segment.
This shift to sales specialisation is already enabling us
to provide better insights and more relevant solutions
to customers, and aligns us more closely with our
vendor partners, whose own sales teams are often
segmented by customer size. It also allows us to
recruitand train our people in a more targeted way.
This realignment saw an adjustment period for
twomain reasons: very strong trading ahead of
thechange at the end of last year, and relationship
changes. The private sector sales team had a very
strong end to financial year 2024/25 as account
managers worked hard to close the pipeline they
hadbuilt in accounts they were handing over. This had
atemporary adverse impact at the start of 2025/26,
given account managers had to hand over some
relationships and establish pipelines in their
newaccounts.
As the change has bedded in though, we have already
seen tangible results. For example, in the enterprise
sales segment – for customers with more than 10,000
employees – the average deal size increased threefold
during the year, driven by a strong growth in services.
Our public sector sales team structures, which are
aligned by government sector, are unchanged.
Our strategy
We aim to grow organically by winning
new customers and doing more for
existing customers. We complement
this approach, as appropriate, with
carefully selected acquisitions that
increase our value.
Along with consistently expanding
oursolutions and services
capabilities and broadening 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 help our customers on page12.
Investing in our people and our business
Our people drive our success: to sell effectively and meet our
growth ambitions we need to retain our exceptional employees
and keep attracting new talented people.
Read more about how we develop great people on page 13.
Investing in innovation
From cybersecurity to AI, 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 invest in innovative services
onpage 14.
Annual Report and Accounts 2025
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26
STRATEGIC REPORT
7
CEO’s review continued
Investment case
01
Proven track record and growth strategy
We have a long track record of robust financial performance
and long-term growth, driven by highly motivated employees
delivering the latest technology solutions and services to a
diverse and loyal customer base.
Five-year GP CAGR 13.3%
Customers served in 2025/26 5,916
02
High return on capital and cash-generative asset-light model
Our business model of selling software solutions is asset lightand
supports consistently high returns on capital and cash conversion.
Five-year cash conversion 113%
£205 million returned to shareholders
over the past five years
03
Attractive market positioning
We have strategic partnerships with many of the world’s leading
software vendors and distribution channels, including our long
and deeply embedded relationship with Microsoft.
More than 1,000 vendors and distributors
One of the largest UK partners with Microsoft by revenue
04
Compelling growth opportunity
We operate in a vast, growing market, boosted by technological
tailwinds from digital transformation agendas, cloud products,
cybersecurity and AI-enabled tools. Our share of our total
addressable market is 3%, so we have plenty of room to grow.
Strong GII growth 11.5%
05
Strong team culture
Our dynamic culture drives our operational excellence and high
employee retention rates, and increases sales productivity,
customer satisfaction and repeat business.
Employee net promoter score (eNPS) 62
Deepening our vendor relationships
Our credibility in the market comes in part from
workingclosely with the world’s leading software
vendors. In addition to our strong partnership with
Microsoft, we have deepened our relationships
withother key vendors this year by boosting our
technical capabilities, so that we can do more
pre-sales, consultancy and services work based
ontheir technology.
This investment is reflected in the many competitive
awards we have won this year from vendors, including
Axonius, Barracuda, Check Point, Sophos and Varonis.
We also achieved the highest-tier Pinnacle Partner
status from VMware by Broadcom, a significant
achievement. As part of our growth strategy, we aim to
broaden our share of non-Microsoft work. In 2025/26,
we delivered important customer wins in the private
and public sectors, based on solutions from vendors
that we have been working more closely with in recent
years, including Flexera, Druva, Varonis, Rapid7,
Check Point, Cisco, VMware and Zscaler.
Building an even greater place to work
These customer and vendor successes don’t happen
overnight; rather they reflect many months and even
years of hard work by our teams. This year I have
spenttime engaging with colleagues across the
business, and have been inspired by their passion
andprofessionalism in serving our customers. I am
proud of how our people have pulled together and
demonstrated their own resilience at a time of
significant economic uncertainty.
Our Great Place to Work survey results continue to
beimpressive and in the Financial Times’ UK’s Best
Employers ranking we were placed the highest in our
industry and 14thoverall. We are not complacent though,
and are determined to become an even greater place
for talented people to build long and fulfilling careers.
To help make that happen, we hired a chief people
officer this year. Kally Kang-Kersey has now met
withhundreds of employees in several of our offices,
gaining a good sense of what drives our culture, and
how to make it even stronger. Kally is leading our
people strategy, which focuses on attracting top talent,
developing our leaders, evolving our culture, and
modernising and aligning our policies consistently
across our two operations, to make sure that
everybody is treated fairly.
8 Bytes Technology Group plc
OUR BUSINESS
The changes we made this year have set us up strongly for the
futureand I’m excited to continue working with my leadership
teamto evolve our business, bringing our people, customers
andvendors along with us on that journey.
Promoting digital inclusion in
ourcommunities
Along with serving our customers, our people also do
great work in our communities through volunteering
and charitable giving. This year I’ve asked our teams
atboth businesses to prioritise activities where we can
make the most difference through our expertise. We
will therefore focus more strongly on digital inclusion,
including by delivering cyber awareness, digital skills
and technology education to disadvantaged and
underserved groups. The importance and potential
impact of this approach was reinforced for me when
Itook part in a forum at the House of Lords in January
2026, where a group of senior business leaders came
together to shape the direction and intent of the CEO
Steering Council. The group was set up to support
delivery of the government’s ‘opportunity mission’,
which aims to break the link between a child’s
background and their future success.
The road ahead
Turning to the future: while I am mindful of the
pressures created by the ongoing economic
uncertainty, I know our customers will keep looking to
transformative technology to boost their efficiency,
safety and competitiveness. And, as has been the case
for more than four decades, we will be there for them.
The changes we made this year have set us up strongly
for the future and I’m excited to continue working with
my leadership team to evolve our business, bringing
our people, customers and vendors along with us on
that journey.
Sam Mudd
Chief Executive Officer
11 May 2026
Annual Report and Accounts 2025
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STRATEGIC REPORT
9
Measuring progress
Financial
Gross invoiced income
1
£2,341.0m +11.5% Revenue
2, 3
£220.5m +1.6%
2026 £2,341.0m
2025 £2,099.8m
2024 £1,823.0m
2023 £1,439.3m
2022 £1,208.1m
2021 £958.1m
2026 £220.5m
2025 £217.1m
2024 £207.0m
2023 £184.4m
2022 £145.8m
2 0 21 £ 3 9 3 .6 m
Gross profit £167.3 m +2.4% Gross margin
3
75.8%
2026 £167.3 m
2025 £163.3m
2024 £145.8m
2023 £129.6m
2022 £107.4m
2 0 21 £ 8 9.6 m
2026 75.8%
2025 75.2%
2024 70.4%
2023 70.3%
2022 73.7%
2 0 21 2 2 . 8 %
Operating profit £62.7m -5.6% Operating profit as % of gross profit 37.5%
2026 £62.7m
2025 £66.4m
2024 £56.7m
2023 £50.9m
2022 £42.2m
2021 £26.8m
2026 37.5%
2025 40.7%
2024 38.9%
2023 39.3%
2022 39.3%
2021 29.9%
Cash conversion
4
10 5.1% Cash £98.6m -12.8%
202 6 10 5.1%
2025 113.8%
2024 116.4%
2023 93.4%
2022 144.7%
2 0 21 18 2 . 9 %
2026 £98.6m
2025 £113.1m
2024 £88.8m
2023 £73.0m
2022 £67.1m
2 0 21
£ 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.
10 Bytes Technology Group plc
OUR BUSINESS
Strategic
Customer numbers 5,916 + 0.1% Renewal rate 99%
2026 5,916
2025 5,913
2024
5
5,828
2023 5,941
2022 5,330
2 0 21 5,14 7
2026 99%
2025 109%
2024 109%
2023 116%
202 2 111%
2 0 21 10 7 %
Average gross profit per customer £28,300 +2.5% Customer net promoter score 70+
2026 £28,300
2025 £27,600
2024
6
£25,000
2023 £21,800
2022 £20,100
2021 £17,400
2026 70+
2025 79
2024 82
2023 77
2022 64
2 0 21 6 3
% gross profit from existing customers 97%
2026 97%
2025 97%
2024 97%
2023 96%
2022 93%
2 0 21 9 5 %
Sustainability
Employee numbers 1,331 +6.9% Employee net promoter score 62
2026 1,331
2025 1,245
2024 1,057
2023 930
2022 773
2 0 21 6 85
2026 62
2025 57
2024 71
2023 70
2022 69
2 0 21 6 9
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.
Annual Report and Accounts 2025
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STRATEGIC REPORT
11
Our strategy in action
Putting customers first
Bytes + National Express
Phoenix + West Yorkshire Fire and Rescue Service
At BTG we build trusted partnerships with organisations of all types and sizes to help
them get the most out of the transformational technologies shaping the world.
National Express is the UK’s largest coach operator, running
high-frequency scheduled services to hundreds of destinations
across the UK and transporting millions of passengers every
year. To do this it relies on internal and customer-facing digital
platforms to support ticketing and operations, as well as
business-to-consumer and business-to-business revenue
channels. While its legacy infrastructure supported daily
operations, it focused on cost-effectiveness, reliability and
adaptability. In early 2025, National Express partnered with
Bytes to move from an on-premises VMware environment to
acloud-based infrastructure on Amazon Web Services (AWS).
This complex project involved the migration of around 700
servers to AWS, in a series of 25 waves to minimise service
disruption to customers and business operations. National
Express then transitioned into a fully managed AWS platform
service delivered by Bytes. The new, modern infrastructure
hasprovided National Express with greater agility and flexibility
in its technology systems, while reducing running costs and
unlocking future-ready applications and AI to drive further
efficiency and momentum.
What made the project successful was
partnership, trust, and transparency. Bytes
operated as an extension of our team and
broughtdeep AWS capability and joint leadership.
Paul Challis
Chief Information Officer
National Express
West Yorkshire Fire and Rescue Service provides critical
services to more than two million people. Operating from 40 fire
stations across five districts, the firefighters respond to a variety
of emergencies, from fires to road, rail and air crashes, floods
and water rescues, and chemical incidents. But the fire service
felt like it was being held back by its systems and processes,
with administrative tasks proving to be time-consuming and
inefficient. Working with Phoenix, the fire service embarked
onan ambitious, multi-year digital transformation programme
tomodernise its systems, while also supporting people with
accessibility needs. This programme included migrating many
ofthe legacy systems and process flows on to the Microsoft
Power Platform. Phoenix then designed and implemented a
Microsoft Copilot solution featuring the latest AI capabilities.
The benefits were immediate, including significant time savings
and improved accessibility – staff with dyslexia, for example,
can now communicate more effectively and confidently by
usingCopilot in their writing.
We’ve had people say they were
spending fourweeks generating
a report – now it takes justa fewhours.
Kirsty James
Digital Transformation Manager
West Yorkshire Fire and Rescue Service
Read the fullcase study
Read the fullcase study
National Express photo © Michael Molloy Photographer
12 Bytes Technology Group plc
OUR BUSINESS
Investing in people and our business
Myda Carolan – Account Manager, Bytes
Lewis Thomson – AI Workforce Lead, Phoenix
We are proud to build the future of IT by giving people with a passion for technology
theopportunity to develop their skills with us and advance their careers.
Myda, 25, joined Bytes in August 2024. As an account manager, she works
across several areas, including cloud, cybersecurity, AI and modern
workplace solutions, helping organisations adopt technology in a secure
and a practical way. For Myda, IT is more than her job: it’s her passion.
Shesays that she has always been fascinated by how technology can
solveproblems and improve people’s lives and work. Outside the office
shespends a lot of time learning about areas like AI, data and systems
integration, which helps her stay informed of new developments and bring
fresh ideas to her customers. In 2025, Myda’s work was recognised at
the Manchester Young Talent awards, where she was awarded Tech
Professional of the Year.
My focus now is to continue deepening my expertise
inareas like cloud and AI. Bytes is a great environment
tolearn, collaborate and work alongside incredibly
knowledgeable people who encourage your
developmentand give you opportunities to grow.
Lewis, 29, joined Phoenix six years ago. In October 2025, he received
the prestigious Microsoft Most Valuable Professional (MVP) award,
making him the second Phoenix employee to achieve the honour. The
award is given to IT professionals ‘who go above and beyond in sharing
their technical expertise’. Lewis’s path to MVP status has been shaped by
adeep commitment to helping organisations unlock the full potential of
AI-powered productivity tools, in particular Copilot. Alongside guiding
customers through adoption, governance and real-world implementation,
Lewis has run tailored workshops, delivered insights on responsible AI use
and supported customers outside his day-to-day work. He says he was
‘thrilled’ and ‘shocked’ to receive the award, which he thought would be
out of his reach, especially early in his career.
What I’m really passionate about and enjoy is helping
translate what people need into technical solutions.
That’sthe part that often gets lost in translation when
deploying any technology, and I think it’s key to success.
Annual Report and Accounts 2025
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STRATEGIC REPORT
13
Our strategy in action continued
Investing in innovation
Bytes + Farrer & Co LLP
Phoenix + Blaby District Council
We invest in innovative support services to help our customers stay ahead
of the pace of change, manage the risks and make the most of the benefits.
Farrer & Co LLP, founded in 1701 and headquartered in London, is one of
theUK’s most respected law firms, providing legal expertise across private
wealth, corporate services, financial institutions, education and the not-for-
profit sector. The firm, which has more than 630 technology users, required
apartner to provide round-the-clock coverage, proactive governance,
fast-track escalation to Microsoft and assurance of minimal downtime.
TheBytes Microsoft Support Services model ticked all those boxes.
Bytes’s commitment to providing robust, SLA-backed
technical assistance has greatly enhanced our IT
infrastructure and security posture. The 24x7 coverage and
proactive governance have ensured our operations run
smoothly. We have complete confidence in Bytes’s ability
to deliver mission-critical support, and their partnership
has been invaluable to our continued success.
Paul Lovegrove
Head of IT Systems
Farrer & Co LLP
Blaby District Council, in Leicestershire, delivers vital public services to
itscommunity, from planning applications to housing services and bin
collections. With around 400 employees and a lean information and
communication technology (ICT) team, the council depends on secure,
reliable systems to protect sensitive data and maintain service continuity.
As the council built its new ICT environment, it became clear that
outsourcing security operations to a trusted partner was essential.
Blabyneeded a solution that could provide continuous monitoring and
rapid response without overburdening its ICT team. The Phoenix Protect
active response managed service was the ideal fit.
Our regular meetings with Phoenix are incredibly
collaborative. Our primary contact keeps us informed on
current risks, reviews alerts and outlines the ongoing work
needed to keep us protected. It’s a proactive partnership
that gives us confidence in our security posture.
James Hickens
ICT Operations Manager
Blaby District Council
Read the fullcase study
Read the fullcase study
14 Bytes Technology Group plc
OUR BUSINESS
Review of the year
16 Our market environment
18 CFO’s introduction
փ Our business model
21 Operational review
26 Financial review
32 Risk report
44 Sustainability review
փ Our people
փ Our communities
փ Our planet
Bringing people and transformational
technologies together to achieve more.
Annual Report and Accounts 2025
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STRATEGIC REPORT
15
Our market environment
We operate in an attractive business segment, with an
ever-growing addressable market that is currently worth
morethan £80 billion. In 2025/26, IT spending in the UK
wasrobust, which is forecast to continue.
Despite geopolitical and macroeconomic uncertainty, private and public sector organisations
continued to invest in technology to enhance their efficiency, security and productivity.
Cybersecurity services and AI tools attracted particularly strong interest.
The trends shaping UK technology
Cloud migration
Switching from on-site applications to third-party hosted
software offers more flexibility, scope for analytics and
sustainable credentials.
Security
The prevalence and sophistication of cyberattacks is
increasing, making multilayered security and data
protectionessential.
AI and data
The fast-growing range of AI-enabled tools is attracting
stronginterest.
Digitalisation
Digital technology is helping organisations improve their
operations and create efficiencies.
Cost optimisation
Amid vendor price rises and economic pressures, customers
want greater value from their IT solutions and services.
$ 6.15 t n
Forecast worldwide
IT spending in 2026
1
11.1%
Forecast annual growth in IT
spendinginEurope in 2026
2
32%
Forecast increase in
AI-related investment among
UKorganisations in 2026
6
129%
Increase in ‘nationally significant’
cyberattacks in the UK in 2025
3
Robust growth forecast in worldwide IT spending
Technology spending globally is forecast to grow by 10.8% in
2026, to $6.15 trillion, according to Gartner, the business and
technology insights company.
1
This is slightly higher than the
10.3% growth seen in 2025. In Europe, IT spending is expected
to grow by 11.1%, to $1.4 trillion. ‘AI, cloud and cybersecurity are
driving the rise in IT spending for European organisations in
2026’, Gartner reported.
2
Cybersecurity drives growth in the UK
Software resale and IT services delivery are our two main
business areas. They remain the two biggest areas of technology
spend, and among the fastest growing. In 2026, spending on
software and IT services in Europe is expected to grow by 15.6%
and 10.1% respectively, according to Gartner.
2
Spending on
cybersecurity is also expected to grow strongly, with more than
half of UK organisations planning to increase their cybersecurity
budgets by more than 10%, according to the KPMG Global Tech
Report 2026.
3
1, 2, 3, 4, 5, 6 For all sources and references, see endnotes on page 195.
16 Bytes Technology Group plc
REVIEW OF THE YEAR
The evolving threat of cyberattacks on UK
businesses is reflected in the growing
focus on security. In its annual review
published in October 2025, the National
Cyber Security Centre (NCSC) reported
handling a record 204 ‘nationally
significant’ cyberattacks in the year to
August 2025, up from 89 in the previous
12 months.
4
Of a total of 429 incidents
handled by the NCSC, 18 were
categorised as ‘highly significant’,
meaning that they had the potential to
have a serious impact on essential
services. In its Cyber Security Report
2026, Check Point reported that AI was
increasing the threat of attack, enabling
bad actors to ‘move faster, scale more
easily and operate across multiple attack
surfaces simultaneously’.
5
Investment and interest
inAIsurges
Interest in AI continues to grow in the private
and public sectors, with organisations
seeking to improve service delivery,
efficiency and innovation. The release of
commercial AI tools, including Microsoft’s
Copilot, has already spurred spending on
IT services related to AI. In its IT spending
forecast for Europe in 2026, Gartner said
that chief information officers will invest
heavily in software to access new AI
features from their current providers.
2
In the UK, organisations are ready for
widespread AI adoption, according to
Red Hat, the open source solution
provider, which surveyed 100 IT
managers and directors in the UK in 2025.
It found that, along with security, AI is the
top IT priority for UK organisations, which
plan to boost investment in AI by an
average of 32% in 2026.
6
Within AI, the
biggest priority area for organisations is
now agentic AI, which refers to systems
that operate with a high degree of
autonomy and can perform complex
taskswith limited human intervention.
As a leader in AI implementation,
we’reconfident that this fast-evolving
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. Our
strong partnership with Microsoft, with
itsAI-enabled tools, platforms and
infrastructure, is integral to our goal of
helping organisations make AI adoption
successful and, importantly, to drive
customer value. The Red Hat survey
revealed that 89% of organisations say
they are not yet delivering customer value
from their AI investments.
Focus on value and flexibility
The essential role of technology in today’s
world, and the speed of change, means
that organisations are reluctant to pause
IT spending, even in the uncertain
economic times that we are living in.
Butthey want more value and flexibility,
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 reduce the need to
hire in-house experts. This all plays to our
strengths, since we take pride in providing
what customers need, rather than what
might deliver us profits in the short term.
Cybersecurity is now a matter of business survival
and national resilience… The best way to defend
against attacks is for organisations to make
themselves as hard a target as possible.
3
Dr Richard Horne
Chief Executive
National Cyber Security Centre
Our target segments
Software 66% of revenue
We sell a broad range of software
products from leading vendors, mainly
purchased as subscription licences and
increasingly hosted in the cloud.
IT services 20% of revenue
These include IT-managed services
around a wide range of vendor
technologies, including 24x7 support
forcritical cloud and security offerings,
software asset management and
project-orientated consulting services
including IT deployment assistance,
cloud migrations and software cost
optimisation, and AI projects.
Hardware 14% of revenue
We sell a wide range of hardware,
including desktops, monitors,
mobilephones, servers and
networkingequipment.
Our place in the
UK’sITsector
As one of the UK’s leading value-added
resellers (VARs), we provide IT products
from a wide range of technology
vendors to a large and diversified
baseof private and public sector
organisations. Our potential market is
large, since UK business-to-business
customers buy the majority of their
technology products from VARs and
other resellers and distributors.
Currently, our share of our total
addressable market is around 3%. And
because no one company dominates the
market, we have a lot of room to grow.
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STRATEGIC REPORT
17
CFO’s introduction
Over time, we can sell our
clients additional products
provided by our many world-
class vendor partners, as well
as our in-house services to
help them to get the most out
of the latest technology. That
is the big opportunity for us.
Andrew Holden CFO
Our performance this year was
delivered within a challenging
business environment, which
included adapting to significant
changes in Microsoft’s vendor
incentive programme. This was
against the backdrop of heightened
political and economic uncertainty
across the world, withnew leaders
taking office, cross-border conflicts
persisting and trade wars starting.
Across our two operating companies, Bytes and
Phoenix, we managed the impact of these challenges,
building momentum through the year with a stronger
second half. This meant our overall gross invoiced
income grew by 11.5% to £2.3 billion and gross profit
increased by 2.5% to £167.3 million, with the lower
gross profit growth affected by the Microsoft incentive
changes. Revenue (calculated after applying the
agency adjustment to gross invoiced income) is
moreclosely aligned to gross profit with growth of
1.6%to £220.5 million. Our operating profit, however,
decreased by 5.6% to £62.7 million as we navigated
the Microsoft changes, attended to the slower-than-
anticipated bedding in of the sales restructure,
andincreased our cost base in line with continued
investment in our staff and new systems. With this, the
Group revised down its expectation of operating profit
during the year, reflecting the combined impact of these
circumstances. Nevertheless we again ended the year
with strong cash conversion above our target of 100%.
Responding to changes in the industry
As a value-added IT reseller, we have benefited from
tailwinds in our industry for a long time. Microsoft has
been a catalyst for our growth, while the introduction
ofthe public cloud and AI tools, along with the need for
stronger cybersecurity, has also worked in our favour.
These structural demand drivers still exist, and drove
customer spending this year, but their benefits were
countered by other external factors.
The global economic uncertainty in 2025/26 did not
directly affect our business, but it did have an impact on
many of our customers who, as a result, took longer to
make decisions on how to spend their IT budgets. The
vendor incentive programme changes, which provide
the rebates that we receive when selling products, and
which contribute to our gross profit, hada significant
impact during the year because ofMicrosoft’s reduction
of certain transactional enterprise agreement (EA)
incentives from 1 January 2025. The aim was to
encourage reseller partners, like us, to transition
theircustomers to the Cloud Solution Provider (CSP)
programme, which offers higher margins. While we had
success on this front for our private sector customers,
18 Bytes Technology Group plc
REVIEW OF THE YEAR
in the public sector the CSP programme is not
applicable for most customers, so despite Microsoft
applying a smaller EA rate reduction in these cases,
the impact was still harder tomitigate.
We have a good track record of adapting to Microsoft’s
incentive programmes, and had prepared for these
changes by realigning our software and service
offerings. But we did not deliver as well as we had hoped
on our mitigation plans, which included increasing our
cybersecurity sales. Additionally, in the first half of the
year, our private sector segment took a few months to
adjust to our realigned sales structure. Going forward,
I’m confident that the lessons we have learned this
year, along with our ever-expanding pool of world-class
vendors and our products and services, will enable us
to absorb changes to individual incentive programmes.
Continued momentum in our
servicesproposition
For the full year, our gross profit from software licence
sales declined slightly by 0.5% to £145.2 million and
contributed 87% of our total gross profit. Hardware and
external services gross profit increased from small
bases by 0.4% to £4.7 million and 22.9% to £4.8 million
respectively.
Meanwhile, gross profit from internal services rose
by45.3% to £12.6 million, contributing 8% of our total
gross profit. This is up from 5.3% in 2024/25 and aligns
with our goal of providing our customers with more
expert support through in-house services, especially
inthe areas of cybersecurity, AI and cloud computing,
on a one-off or a day-to-day basis.
Turning to our different customer segments, public sector
gross profit grew by 7.4% this year and private sector
gross profit declined by 0.3%. Our overall gross profit
mix for the year was 62% for private sector and 38% for
the public sector, compared to 64% and 36% in the
prior year.
To support the transition to becoming a services-
enabled business, and to make sure we maintain our
service levels as we grow, we continued to invest in
ameasured way in our sales teams, service delivery
staff, vendor and technology specialists and technical
support personnel. Over the year our headcount
grewby 6.9% to 1,331. Alongside this recruitment,
wemaintained our longstanding policy of developing
and promoting people from within the company. This
approach is key to our success in retaining employees
and supporting customer and vendor relationships.
Cost management is always a strong priority, and we
use our operating profit to gross profit ratio to measure
operational effectiveness. This year we achieved a
ratio of 37.5%, down slightly from 40.7% in the prior
year because we made strategic staff and IT
investments while absorbing the impact of the
Microsoft incentive changes.
Our business model
Our simple business model 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.
Our people are passionate about technology and our customers.
Many of them 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 leading
software companies – we are one of Microsoft’s largest UK
partners by revenue – and work closely with them to understand
the latest technologies.
We serve customers across the private 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 trusted partnership 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 for their needs. We know
whichproducts work together and we make them easy to buy.
Our ever-growing suite of our own professional and managed
services enables 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 ways:
• • ‘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 a rebate from the vendor
• • Fees, where the customer pays the vendor directly and the
vendor pays us for managing the relationship and providing
licensing advice and support.
Whether pure margin or fee-based, it is all counted as gross
profit – an 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.
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STRATEGIC REPORT
19
CFO’s introduction continued
Well positioned to benefit from market
opportunities
With a strong balance sheet and no debt, we remain
well positioned to continue to grow our business.
Ourshare of our total addressable technology
market,of around £82 billion, is still small at 3%,
andthe opportunities to benefit from this demand
inour sector are vast.
Microsoft solutions remain the core of our business
andour longstanding partnership is stronger than ever.
For many of our customers and prospective customers,
Microsoft products represent their biggest technology
spend, and being a trusted Microsoft partner gives us
credibility and a foot in the door. Over time we can sell our
clients additional products provided by our many other
world-class vendor partners, as well as our in-house
services to help them to get the most out of the latest
technology. That remains the big opportunity for us.
Our diversified and loyal customer base is another
keyasset. Over the year we worked with nearly 6,000
customers, including many with long relationships with
us and high levels of repeat business. I’m pleased that
our customer retention was again high in 2025/26, with
97% of our gross profit coming from customers that we
also traded with in the prior financial year, at a renewal
rate of 99%.
Looking ahead
In 2026/27, we will continue to closely monitor the
macroeconomic environment to assess the effect
onour business. Our priority is sustainable growth:
winning customers and doing more for them each year,
with a particular focus on services as well as selling
more software from non-Microsoft vendors.
We expect high single-digit to low double-digit
percentage growth in gross profit in 2026/27, with
operating profit broadly flat, as the Group absorbs
around £4.5 million of cost normalisation. This reflects
higher technology costs, following the completion of
strategic projects, and a return to normal bonus levels. It
also reflects our continued investment in people to build
the right skill sets and maintain the high-performing
culture that has made us successful, so that we can
keep providing the best service to our customers.
Andrew Holden
Chief Financial Officer
11 May 2026
Returning capital to our shareholders
Our capital allocation policy prioritises enhancing
business growth, both organically and through
select acquisition opportunities as they arise, and
by returning excess capital to shareholders where
appropriate. We do this through dividends and, at
times, through share buybacks. After considering
our strong balance sheet position and prevailing
share price this year, we announced a £25 million
share repurchase programme on 15 August 2025.
The buyback programme was completed before
the end of the calendar year.
20 Bytes Technology Group plc
REVIEW OF THE YEAR
Operational review
BTG is made up of two complementary businesses that share the same values
and customer-focused culture. In 2025/26, Bytes and Phoenix served more
customers than ever, grew their headcounts, technical capabilities and vendor
partnerships, and expanded their range of services.
Continued demand for
transformational technology
As in recent years, these six key areas
drove our growth:
• • Security – as the risk of
cyberattacksincreases, so does
theneed to strengthen defences
through advanced products and
managed security services
• • Cloud-based solutions –
organisations continue to invest
strongly in the latest cloud-based
technologies to be more cost-
efficient, agile and innovative
• • Subscription software – software
contracts provide us with predictable
annuity-based revenue streams
• • IT services – as technology
continues to evolve, demand is
growing for expert support across
arange of solutions, including
security, cost optimisation and
licencecompliance
• • AI – we see continued strong
interestin thelatest products,
including Microsoft Copilot
• • Hybrid infrastructure – by combining
the control and security of on-site
data centres with the flexibility
ofcloud solutions, organisations can
better manage their IT ecosystems.
Strong focus on services as
thevendor market evolves
While Bytes is focused on private sector
customers and Phoenix on public sector
organisations, they work with many of the
same world-leading software vendors,
including Microsoft, our biggest vendor
partner. In January 2025, Microsoft
amended certain of its partner incentive
schemes, reflecting a continued shift
among vendors to increase the rewards
available to partners for services-led
activities. (Read more in our CFO
reviewon page 18.)
Where this resulted in a reduction in the
fees and rebates we earn when selling
their products, we were able to partly
mitigate the effect of these changes in
2025/26 with greater focus on delivering
more professional and IT managed
services, which complement the solutions
we sell. This was already in line with our
strategy of expanding our range of
services and increasing our technical
capabilities, but at a faster pace, as we
strive to help our customers get the most
out of the latest technology, in particular
cybersecurity, cloud and AI solutions.
Another advantage of providing services
is that they often deliver a steady stream
of income over annual or multi-year
contracts, which is more sustainable
andpredictable than one-off sales.
At Phoenix for example, we strongly
increased our revenue from managed
services, both related to Microsoft
technology and other vendors’ products,
such as Broadcom, Bitdefender and
Sophos. We also increased the vendor
accreditations held by our technical
consultants.
At Bytes too, we grew our professional
and managed services. We also strongly
grew our Microsoft CSP business, as we
continue our transition from being an IT
reseller to being a cloud and cybersecurity
solutions business. While our cybersecurity
growth was muted in a highly competitive
market this year, it remains a big
opportunity for us, and we’ve been
investing in our sales and technical
capabilities, and accreditations with
leading vendors such as Wiz. We also
realigned our private sector sales teams at
Bytes, from a generalist structure to teams
based on the size of the customer. This
allows us to have deeper relationships with
our clients, provide better service and
enhance vendor relationships.
I am exceedingly proud of what we have
achieved this year, with our services
reallytaking off. It goes back to the
building blocks we’ve been putting in
placeover the past five years or so.
Clare Metcalfe
MD Phoenix
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21
Operational review continued
Key facts
Bytes Technology Group
HQ Leatherhead, Surrey
CEO Sam Mudd
CFO Andrew Holden
Bytes Software Services
Markets
Mostly private sector, across a broad range of industries,
including professional services, manufacturing, retail, and
technology, media and telecommunications.
Vendors
Our partners include Microsoft, AWS, Palo Alto, Check Point,
Mimecast, Adobe, Darktrace, SecurityHQ, Commvault,
ServiceNow, Wiz, Recorded Future, CrowdStrike, Zscaler
andGoogle
HQ Leatherhead, Surrey
Other offices Reading, London, Manchester,
Dublin,Portsmouth
Employees 795
Customers 3,085
Phoenix Software
Markets
Mostly public sector, across a wide range of areas, including
central and local government, charities, education, emergency
services, healthcare and housing. Its own License Dashboard
offering has clients in North America and Europe.
Vendors
Our partners include Microsoft, AWS, VMware, Dell, Adobe,
Sophos, Citrix, Mimecast, Rubrik, ServiceNow, BeyondTrust,
Tanium and Zscaler
HQ Pocklington, Yorkshire
Other offices Salford, Sunderland
Employees 527
Customers 2,831
22 Bytes Technology Group plc
REVIEW OF THE YEAR
Innovating to help customers
andour people do more with AI
Advances in AI continue to gather pace.
We are using AI in our business in a
responsible manner, and taking the
lessons we have learned to help our
customers benefit from the technology.
Extensive preparation is key because, to
use AI effectively, organisations first need
to modernise their data, migrate it to the
cloud and put in the right security controls
– all areas where we have expertise. At
Bytes, alongside our Microsoft Azure and
AWS cloud and data offerings, we’ve been
doing more this year with Google Cloud
Platform, which is designed for developers,
and with AI, so we can give our customers
the right solutions for their needs.
At Phoenix, we delivered the highest
number of Microsoft Copilot workshops in
the UK this year and also became a partner
for Microsoft’s Frontier programme,
which gives customers early access to
thelatest AI innovations. We launched an
engineering innovation team this year to
see how we can streamline our ways of
working using the latest technology,
including AI. The team has already
created useful time-saving solutions,
including an automatic peer-checking
tool for parts of our customer contracts
prepared by our technical consultants.
Growing our teams while
maintaining our strong culture
As BTG grows, we need to keep
expanding our teams and increasing
ourskills so we can keep providing the
same high levels of service and stay up to
date with the latest technology. At Bytes,
our headcount increased by 4.6% to 795.
At Phoenix, we achieved the milestone
ofhiring our 500th employee and, at
year end, had 527 colleagues, up 10.5%.
New colleagues at both businesses
included the latest batch of sales and
technical apprentices, who continue to
bea great source of talent. We also hired
people with specialist skills where these
were needed, as well as providing training
for our existing employees to increase
their technical capabilities. Culture is
another crucial area for us. Though
weoperate a hybrid working policy,
wehave maintained our high levels of
engagement, and our attrition rates
remain in line with industry averages.
Leadership training was a key area
offocus and will continue to be in the
coming year. Read more on page 48.
Bytes and
Phoenix share:
• • BTG’s values, strategic ambitions
and governance structures
• • Insights and good practice
• • Industry-leading skills
• • Customer-focused culture
• • Representation and engagement
in Group Executive Committee
and steering committees
• • Comparable products and services
…but have their own:
• • Identities
• • Management teams
• • Individual but complementary
routes to market
• • Customer bases and markets
• • Offices.
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23
Operational review continued
Why customers value us
We strive to help customers succeed
in a world of change, through trusted
partnerships and transformational
technology so they can be more
productive, save money, strengthen
their systems and secure their data.
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; they’re also experts
intheir customers, because we
give them the time to understand
each customer, and the
customer’s industry.
• • We provide continuity and a
friendly, innovative culture.
Ourrelatively high staff retention
rates mean our customers often
deal with the same account
manager and team, year after year.
We propose solutions to problems
and bring a positive attitude.
• • We are committed to
excellence and honesty.
Wealways seek 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
that benefit local communities.
Demonstrating resilience in 2025/26
Our deep customer relationships drive our success. We monitor our
progress using four key metrics: customers numbers, our share of their
business, gross profit per customer and our customer net promoter
score (NPS). This year we:
Increased our customer base
5,916
This year
5,913
Last year
We did business with numerous new customers this year, in both the
public and private sectors.
Maintained a high renewal rate
99%
This year
109%
Last year
This metric tracks the growth in gross profit from existing customers.
We did more business with established customers such as the
HomeOffice and the NHS.
Maintained industry-leading NPS
70+
This year
79
Last year
The score measures the likelihood of our customers recommending
usto others and can range from -100 to +100.
Increased gross profit per customer
£28,300
This year
£ 2 7, 6 0 0
Last year
How our broad, diversified customer base benefits us
We aim to build lasting relationships with our customers but, in a
competitive marketplace, we try not to depend too much on individual
customers. In 2025/26, no single customer represented more than
1.0% of our gross profit.
24 Bytes Technology Group plc
REVIEW OF THE YEAR
Why vendors value us
Because we are an independent
reseller, we give impartial advice to
our customers. But at the same time,
wesee vendors as our partners,
andtogether we work very closely to
give our customers the best results.
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
recruit people who do.
• • We 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.
• • We 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.
• • We have a strong growth
record. Vendors know where
we’ve come from – and where
we’re going – and want to align
with that.
Our awards in 2025/26
Bytes
• • Microsoft Inner Circle Business Applications 2025
• • CRN Channel Awards Cloud Services Partner of the Year 2025
• • Sophos Enterprise Partner of the Year 2025
• • AWS Rising Star Consulting Partner of the Year 2025
• • Microsoft Finalist Partner of the Year – Azure Marketplace 2025
Phoenix
• • Barracuda’s Partner of the Year 2025 (UK)
• • Microsoft Azure Expert Managed Service Provider (MSP)
• • Transform Elite Plus Partner status with Rubrik
• • Microsoft Frontier Partner
• • VMware Expert Advantage Partner status for Consulting Services
• • Nutanix UKI Rising Star Partner of the Year 2025
Expanding our relationships with the leading
softwarevendors
We work closely with more than 100 leading technology companies
whomake or distribute the products that we provide to our customers.
Microsoft has always been our biggest and most important vendor, and
remained so this year. But every year we add new strategic vendors to our
portfolio of software and service offerings, especially in fast-changing
areas such as security and AI.
At Bytes in 2025/26, we grew our cybersecurity partnerships with
CheckPoint, Palo Alto, Recorded Future, Mimecast, CrowdStrike and Wiz.
At Phoenix, we deepened our relationships with ServiceNow, Zscaler and
BeyondTrust and, for cloud platforms, with AWS.
Annual Report and Accounts 2025
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STRATEGIC REPORT
25
Financial review
Income statement
Year ended
28 February 2026
£m
Year ended
28 February 2025
£m
Change
%
Gross invoiced income (GII) 2,341.0 2,099.8 11.5
GII split by product:
Software 2,233.4 2,005.3 11.4
Hardware 31.2 33.2 (6.0)
Services internal
1
39.3 34.0 15.5
Services external
2
37.1 27.3 36.0
Netting adjustment (2,120.5) (1,882.7) 12.6
Revenue 220.5 217.1 1.6
Revenue split by product:
Software 145.2 146.0 (0.5)
Hardware 31.2 33.2 (6.0)
Services internal
1
39.3 34.0 15.5
Services external
2
4.8 3.9 23.0
Gross profit (GP) 16 7. 3 163.3 2.5
GP/GII% 7.1% 7.8%
Other income 0.6 0.1 495.2
Administrative expenses (105.2) (96.9) 8.5
Administrative expenses split:
Employee costs (82.0) (78 .1) 5.1
Other administrative expenses (23.2) (18.8) 22.7
Operating profit 62.7 66.4 (5.6)
Operating profit/GP% 37.5% 40.7%
Interest income 7.6 8.5 (10.7)
Finance costs (0.3) (0.3)
Share of loss of associate
3
(0.2) –
Profit before tax 69.8 74.6 (6.4)
Income tax expense (18.6) (19.8) (6.2)
Effective tax rate 26.6% 26.5%
Profit after tax 51.3 54.8 (6.5)
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 loss of associate.
How we performed in 2025/26
26 Bytes Technology Group plc
REVIEW OF THE YEAR
Overview of 2025/26 results
We delivered another year of double-digit GII growth, more
modest GP growth and a decline in operating profit, as we
maintained measured investments for future growth against the
slower GP growth. Cash generation remained strong, with 105%
cash conversion, enabling £74 million of returns to shareholders
while maintaining a strong balance sheet.
Gross invoiced income
GII reflects gross income billed to our customers 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 vendor partners invoice the
customer directly and pay us a fee that is a percentage of their
sales value, and which we recognise within our GII, revenue
andGP.
GII has increased by 11.5% year on year, to £2,341.0 million
(2024/25: £2,099.8 million), driven by software and strong
growth in services. Growth was balanced across the public
sector (+12.4%) and the private sector (+9.7%), with our mix
remaining weighted to the public sector, which contributed
66%of total GII (2024/25: 65%). Private sector GII benefited
from the transition of more customers to Microsoft’s CSP
programme (where BTG invoices the customers) from
Microsoft’s EA programme (where Microsoft invoices the
customers and pays BTG a rebate).
Revenue
Revenue is reported in accordance with IFRS 15, with hardware
and internal services reported gross (principal) and software
and external services reported net (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 1.6% increase, with
growth in internal services (reported gross) and external
services (reported net) offsetting the reduction in software
(reported net) and hardware (reported gross). 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
£4.0 million, up 2.5% year on year to £167.3 million (2024/25:
£163.3 million), with growth improving in the second six months
to 4.6% (compared to 0.3% in the first half).
Breaking this down by income stream, starting with the
Group’stwo most strategic focus areas, software GP declined
by 0.5% to £145.2 million, with a 0.8% decline in its GP/GII%
to6.5%, while services GP is up by 38.4% to £17.4 million, with
GP/GII margin up benefiting from mix and cost efficiencies.
Wehave been supported in our services growth by increasing
levels of Microsoft funding, for both internal investments and
customer engagements. Hardware grew off a small base by
0.4% to £4.7 million.
Looking across our two main customer sectors, public sector
GP has grown by 7.4%, returning to double-digit growth in the
second half, and private sector GP has declined by 0.3%. Both
sectors were affected by the changes to Microsoft enterprise
agreement (EA) incentives, and the private sector had a
re-adjustment period relating to the private sector sales
realignment in the first half and faced a tough comparator in the
second half (+14.8% growth in private sector GP in the second
half of 2024/25).
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. This process is further enhanced by focusing on
selling our wide range of solutions offerings and higher-margin
security products, while maximising our vendor incentives
through achievement of technical certifications. We track these
customers individually to ensure that the strategy delivers value
for the business, and our other stakeholders, over the duration
of the contracts.
As in previous years, the higher margins available in the private
sector means that our GP remains weighted to the private sector,
which contributed 62% of total GP (2024/25: 65%) despite our
GII being weighted to the public sector. Our GP/GII margin
reduced to 7.1% (2024/25: 7.8%), affected by mix and the
Microsoft EA incentives changes. In the public sector, our margin
(GP/GII) dropped only slightly to 4.1% (2024/25: 4.3%), as strong
higher-margin services growth partly offset lower software
margins after the Microsoft EA incentives changes. In the private
sector, our margin (GP/GII) dropped to 13.0% (2024/25: 14.3%)
as more customers transitioned from Microsoft’s EA programme
(where Microsoft invoices the customers and pays BTG a rebate
at 100% GP/GII margin) to Microsoft’s CSP programme (where
BTG invoices the customers, pays Microsoft the cost of sale and
makes a net GP/GII margin).
Our long-standing relationships with our customers and high
levels of repeat business were again demonstrated in 2025/26,
with 97% of our GP coming from customers that we also traded
with last year (2024/25: 97%), at a renewal rate of 99%
(2024/25: 109%) – which measures the GP from existing
customers in this period compared to total GP in the prior
period. New customers contributed £5.1 million of GP in the year
(2024/25: £4.3 million). We saw customer numbers (defined as
those generating more than £100 of GP) broadly flat at 5,916
from 5,913, while the average GP per customer increased
slightly from £27,600 in 2024/25 to £28,300 in 2025/26.
Annual Report and Accounts 2025
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STRATEGIC REPORT
27
Financial review continued
Other income
This comprises £0.6 million of rental income from the offices
acquired in 2024/25, which we have not fully occupied yet
(2024/25: £0.1 million).
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 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 new colleagues 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 1,331
on our February 2026 payroll, up by 7% from the year-end
position of 1,245 on 28 February 2025.
Employee costs, included in administrative expenses, rose by
5.1% to £82.0 million (2024/25: £78.1 million), with higher costs
from headcount, salary and national insurance contribution
increases partly mitigated by lower variable remuneration,
including a £4.2 million decline in share-based payments.
However, this figure has been affected by the capitalising of
£1.8 million of staff costs on to the balance sheet (2024/25:
£1.4 million). This relates to the salaries of employees who are
developing two 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, which can be found
onpage 159.
Other administrative expenses
Other administrative expenses increased by 22.7% to
£23.2 million (2024/25: £18.8 million). The main increases
comprised systems investment in staff welfare, travel and
entertainment, and insurance: we are investing in systems to
improve employee and customer experience; we continue to
encourage our teams to connect with customers and vendors
aswell as bringing together our hybrid workforce for company
events; and the heightened prevalence of cyberattacks is
increasing insurance premiums for technology suppliers.
As part of the IT platform development project, we have also
spent £2.7 million with a third-party development company to
supplement our own internal resources (2024/25: £2.3 million).
This engagement was taken wholly for this purpose and the
costhas been capitalised in full alongside our own salary costs,
adding a total of £4.1 million to intangible software assets during
the period (2024/25: £3.7 million).
Operating profit
Our operating profit decreased by 5.6% from £66.4 million
to£62.7 million, as employee and other administrative costs
increased against modest GP growth.
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. This decreased to 37.5% (2024/25:
40.7%). Including the capitalised staff costs, the ratio for this
period is 36.6% (2024/25: 39.8%).
28 Bytes Technology Group plc
REVIEW OF THE YEAR
Interest income and finance costs
This year has again seen significant interest being earned
frommoney-market deposits, reducing slightly to £7.6 million
(2024/25: £8.5 million) because of lower interest rates and lower
average cash balances reflecting the around £74 million paid to
shareholders during 2025/26.
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 in June and December
(around some key vendors’ fiscal year ends).
Our finance costs primarily comprise arrangement and
commitment fees associated with our revolving credit facility
(RCF), noting that to date the Group has not drawn down any
amount on the facility. Finance costs also include a small
amount of finance lease interest, including from our staff
electric vehicle (EV) scheme.
Share of loss 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 profit/loss. Our share of its loss
forthe year was £0.2 million (2024/25: £nil).
Profit before tax
The combined impact of decreased operating profits and lower
levels of interest income received has seen our profit before tax
decreasing by 6.5% to £69.8 million (2024/25: £74.7 million).
Income tax expense
Our effective tax rate was 26.6% (2024/25: 26.5%), which is
above the UK statutory rate of 25.0%, primarily because of a
reduction in the deferred tax asset value relating to outstanding
share options.
Profit after tax
Profit after tax decreased by 6.6% to £51.3 million (2024/25:
£54.8 million), with lower operating profit and interest income,
and a marginally higher effective tax rate.
Earnings per share
Basic earnings per share reduced 6.1% from 22.78 pence to
21.40 pence, and diluted earnings per share reduced 5.5% from
21.95 pence to 20.74 pence, reflecting the reduction in profit
after tax, partly offset by a lower average number of shares
resulting from the £25 million share repurchase programme
completed during 2025/26.
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29
Financial review continued
Balance sheet and cash flow
Balance sheet
As at
28 February 2026
£m
As at
28 February 2025
£m
Property, plant and equipment 14.1 13.6
Intangible assets 46.5 43.5
Investment in associate 3.0 3.2
Other non-current assets 2.4 3.4
Non-current assets 66.0 63.7
Contract assets 8.0 10.0
Trade and other receivables 299.9 268.4
Other current assets 1.6 0.0
Cash 98.6 113.1
Current assets 4 0 8.1 391.5
Lease liabilities 1.1 1.3
Other non-current liabilities 4.7 2.0
Non-current liabilities 5.8 3.3
Trade and other payables 359.2 327.5
Contract and tax liabilities 27. 2 25.7
Lease liabilities 0.8 0.7
Current liabilities 3 8 7.2 353.9
Net assets 81.1 98.0
Share capital 2.4 2.4
Share premium 641.5 636.4
Share-based payment reserve 10.8 14.9
Merger reserve (644.4) (644.4)
Retained earnings 70.8 88.7
Total equity 81.1 98.0
Closing net assets stood at £81.1 million (28 February 2025:
£98.0 million), including the Group’s £3.0 million interest (25.1%)
in Cloud Bridge Technologies.
Intangible assets include £7.6 million of capitalised software
development costs, with £4.1 million capitalised in the year,
acombination of internal staff costs of £1.8 million and
£2.3 million of external contractor costs. We expect around
£0.9 million of amortisation on the asset in our next
financialyear.
Our debtor days at the end of the year stood at 38, and our
average debtor days for the year was 39 (2024/25: 38). Our
closing loss allowance provision reduced to £1.3 million, down
from £1.7 million at the February 2025 year end, with £0.7 million
bad debts written off in the year against the provision (2024/25:
£0.7 million).
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 48 (2024/25: 46) and standing at 43 at the end
of the year (2024/25: 36).
Operating with longer creditor days than debtor days results
inanegative working capital position for the business of
£79.8 million (measured as Trade and other receivables and
Contract assets less Trade and other payables and Contract
liabilities). We take this into account when determining the
appropriate amount of cash to hold on the balance sheet.
30 Bytes Technology Group plc
REVIEW OF THE YEAR
The consolidated cash flow is set out below:
Cash flow
Year ended
28 February
2026
£m
Year ended
28 February
2025
£m
Cash generated from operations 71.8 85.6
Payments for fixed assets (1.8) (6.4)
Payments for intangible assets (4.1) (3.7)
Free cash flow 65.9 75.5
Net interest received 7.3 8.3
Taxes paid (18.1) (18.9)
Lease payments (0.9) (0.6)
Dividends (48.6) (42.8)
Issue of share capital 5.1 2.8
Purchase of share capital (25.2) –
Net (decrease)/increase in cash (14.5) 24.3
Cash at the beginning of the period 113.1 88.8
Cash at the end of the period 98.6 113.1
Operating profit 62.7 66.4
Cash conversion
(againstoperating profit) 105.1% 113.8%
Cash at the end of the period was £98.6 million (28 February 2025:
£113.1 million), which is after the payment of dividends totalling
£48.6 million during the period – being the final and special
dividends for 2024/25 and the interim dividend for 2025/26 –
andthe share repurchase programme of £25.2 million (including
£0.2 million of costs).
Cash flow from operations after payments for fixed and intangible
assets (free cash flow) generated a positive cash flow of
£65.9 million (2024/25: £75.5 million). Consequently, the Group’s
cash conversion ratio for the year was 105.1% (2024/25: 113.8%).
We target our long-term sustainable cash conversion at
around100%.
The £5.1 million cash received from the issue of share capital
relates to participating staff exercising share options, primarily
under our 2021 CSOP and SAYE (ShareSave) plans, which
vestedin June 2024 and August 2024, respectively. There is a
corresponding increase in the share premium value in the balance
sheet above.
If required, the Group has access to a committed RCF of
£30 million with HSBC. The facility commenced on 17 May 2023,
replacing the Group’s previous facility for the same amount, and
runs for three years, until 17 May 2026. In May 2026 the Group
extended the facility by three years to 17 May 2029 for the same
value and under the same terms with an optional one-year
extension to 17 May 2030. To date, the Group has not used
thefacility.
Annual Report and Accounts 2025
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31
Maintaining a robust approach to risk
The uncertain external environment this year reinforced
the importance of operating our business in a responsible
and controlled manner, closely monitoring the challenges
while remaining alert to opportunities.
Risk management is an ongoing process.
Throughout the year we carefully assessed
the risks to the Group and reviewed our
policies and procedures to manage them.
We are confident that our enterprise risk
management framework continues to
serve us well, providing a robust
approach to identify and manage risk.
Continuing the trend of recent years,
thegeopolitical and macroeconomic
environment was unsettled in 2025/26.
Russia continued its war in Ukraine and
conflict escalated in the Middle East.
TheUS imposed wide-ranging trade
tariffs, resulting in compromised trade
agreements, and adopted a more
adversarial foreign policy. In the UK,
therewas continuing uncertainty over
government policies. As a result of
allthese factors, businesses and
organisations took longer to make
spending decisions, including on IT.
We also saw more disruption from
cyberattacks in the UK this year across
multiple sectors, including several
well-known retailers. This was a reminder
that not all risks can be prevented, and
that we must be prepared to respond
immediately to unexpected events. At the
same time, cybersecurity represents an
opportunity for our business, being one of
the main areas of technology that we
support our customers with.
Given this unsettled environment this
year, we maintained our cautious
approach to risk at our annual risk
appetite meeting in January 2026.
Managing new and
emergingrisks
We assess current and emerging risks
aspart of our ongoing risk monitoring
process. Through our bottom-up
approach, our subsidiaries take
ownership of continually reviewing and
updating the risks that are considered
important to each business.
In our 2024/25 Annual Report we
identified 14 principal risks that could
have a significant impact on our
operations. This year, we combined two
of those risks – Changes to vendors’
commercial model and Margin pressure
– because of their overlapping impacts
and controls, meaning we now have
13principal risks. Aside from that, there
were no changes to any of the risks
themselves, with no additions or deletions
or reclassifications.
As in previous years, we changed the
status of the risk in some cases. The risk
associated with the new, combined
Commercial model and margin pressure
principal risk was assigned as ‘increase’
(Margin pressure on its own was ‘no
change’ last year, while Changes to
vendors’ commercial model was
‘increase’). The risk status reflects the
changes in vendors’ models and the need
for us to adapt. For the following three
risks we updated the status to ‘increase’:
• • Evolving competition, because of
theincreasing rate of change in
ourmarket
• • Emerging technology, because
ofrapid advances in technology
• • Supply chain management, in line
withthe additional regulatory burden.
This means that we deem ten of our 13
principal risks to have increased during
the year, up from seven in the previous
year, reflecting geopolitical, regulatory
and business landscape changes.
In our two previous Annual Reports we
identified three emerging risks: Climate
change, and its physical and transition
risks, Keeping pace with social change
and Impact of AI. We believe these
remained relevant in 2025/26 and
continued to monitor them closely.
Aswith cybersecurity, which is a risk
andan opportunity, AI presents an
opportunity for our business, because
wesupport our customers to get the
mostout of the technology, and deploy
itin our own business to enhance
productivity and creativity.
Looking ahead
This was our fourth year of working with
PwC as our internal audit partner. We
believe the partnership is delivering value
and we will again work together in the
coming year. The geopolitical and
macroeconomic environment is expected
to remain challenging in 2026/27.
Vigilance is paramount, so we will
continue to closely monitor the evolving
risk landscape and effectiveness of our
processes to manage it.
Andrew Holden
Chief Financial Officer
11 May 2026
32 Bytes Technology Group plc
REVIEW OF THE YEAR
Risk management
BTG Board
Sets Group and operating
company risk tolerance
and sign-off levels
Owns Group risks, and those
localoperating company
risksbestmanaged centrally
Reviews risks using KPIs
and seeks opportunities
toreducerisk impacts
Audit Committee
Reviews Group and operating
company risks
Reviews effectiveness of risk
management frameworks
Ensures operating company
riskprocesses are aligned
Reviews decisions and KPI
objectives to ensure the Board
is controlling risks effectively
Internal review
Using control
standards to
measure risk
management
and control
effectiveness
Risk
framework
External review
Provides assurance and
counters any internal
bias in evaluating risk
management framework,
techniques and control
effectiveness
Operating
companies
Operating company boards
Ensure that risks are managed appropriately, in line with Groupguidance
Set operating company risk objectives, measure risk, authorise/support
change for risk control and own board-level risks
Operating company risk committees
Including forums on cybersecurity, information technology,
theenvironmentand business resilience
Provide information and KPIs and ensure operational changes
reflectriskobjectives and that corrective action is taken by owners
Operating company risk owners
Heads of department are responsible for ensuring risks are owned
andmanaged according to board direction and oversight
Internal experts
Provide expertise on risk
management, tolerance,
treatment and control;
deliver objective advice
toGroup and operating
companies; and ensure
training increases
knowledge and
understanding
Financial
risk
Strategic
risk
Process and
systems risk
Operational
risk
Regulatory
risk
Our risk governance structure
How we manage risk
BTG operates within the information and
communications technology sector in the
UK and Ireland. This means we are
exposed to the risks that financial,
political, regulatory, technological and
legal events might bring – risks that could
adversely affect how or whether we
achieve our strategic, operational,
compliance and reporting objectives.
Based on our enterprise risk management
framework, our approach to risk identifies
and addresses any potential barriers to
achieving our strategic objectives and to
making the most of opportunities for
competitive advantage.
Our approach
The purpose of enterprise risk
management is to achieve three
keyobjectives:
• • Oversight – all critical risks are
identified across BTG, and managed
and monitored using a holistic
approach that is consistent with our
approved risk appetite
• • Ownership and responsibility –
theownership of risk is assigned to
individual senior managers, who are
responsible for identifying, evaluating,
mitigating and reporting our risk
exposure
• • Assurance – the Board, its
committees, BTG’s Executive
Committee and operational
management have reasonable
assurance that we are managing
riskappropriately within defined
levels, and so that it brings value to
ourorganisation.
This enterprise risk management
framework is the foundation of our risk
management approach. It’s tailored to
suit the way we operate – from functional
management, up through our operating
company boards to Group level. It’s about
managing risk across the organisation
and enables us to deliver our strategy.
Our risk appetite
Our enterprise risk management
framework reflects our risk appetite,
which can be defined as cautious with a
low inclination for taking risks that may
result in significant disruption to the
Group’s operations. Our appetite shapes
how we make decisions about how best to
manage our principal risks. We carefully
evaluate the level of operational risk we
are prepared to take.
We seek to minimise the risks from
unforeseen operational failures in our
business and have suitable mechanisms
in place to identify issues and take
necessary actions to minimise losses.
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33
Risk management continued
Day to day, our enterprise risk
management is about:
• • Identifying negative and positive risk
circumstances
• • Assessing how likely or serious those
risks could be
• • Creating and monitoring a strategy
torespond to those risks
• • Creating value for our shareholders
and other stakeholders
• • Helping our businesses achieve their
objectives by proactively minimising
the risk in their business plans.
Our enterprise risk management
framework helps the Board to identify
risks directly, to own risks that are beyond
the risk tolerance of our operating
companies, and to collate a set of
high-impact – or principal – risks relevant
to our whole Group. In identifying risks,
the Board is supported by our executives
and managers across our business who
are experts in their respective areas – for
example, our cybersecurity specialists
monitor cyberthreats.
BTG’s directors have committed the
organisation to a process of risk
management that is aligned to the
principles of the UK Corporate
Governance Code, the Committee of
Sponsoring Organizations of the
Treadway Commission and the ISO 31000
Integrated Enterprise Risk Management
Framework. Our risk methodologies are
also defined through continued research
and development, and are benchmarked
against international best practice.
Although, through the Audit Committee,
our Board has overall responsibility for
risk – including establishing and
maintaining our risk management
framework and internal control systems,
and setting our risk appetite – everyone at
BTG plays a part in protecting our
business from risk and making the most of
our opportunities.
No matter how diligently we monitor our
environment, risks can appear and
accelerate with little or no warning. We
remain confident that the time, resources
and effort we have invested, and will
continue to invest, in managing risk have
prepared and equipped us to manage
threats effectively. We believe this means
we can provide our business, people and
customers with reasonable assurance of
staying secure, and so continue to benefit
from the opportunities in our sector.
Our three emerging risks
The emerging risks we identified in our
previous reporting – Climate change,
Keeping pace with social change and
Impact of AI – continued to be relevant
in2025/26. Our Board manages and
monitors these risks closely, with
oversight from the Audit Committee.
Climate change
The physical risks related to climate
change continue to be an area of
emerging risk, even though they are not
materially affecting our business in the
short to medium term. (See Task Force
onClimate-related Financial Disclosures
(TCFD) on pages 58 to 67.)
The physical impacts of climate change
are a potential risk to our people and
facilities, and to those of our customers
and suppliers. The broader impact of the
effect of climate change globally could
also be a threat to operations within
theUK.
While we’re working to reduce our
ownimpact on the climate, as a non-
manufacturing business one of the
greatest contributions we can make is
bysupporting our customers to use
technology in a sustainable way –
particularly by optimising their IT products
and services in the cloud. We also work
with our suppliers to make sure they are
considering sustainability effects when
developing products.
The Board’s ESG Committee provides
governance and oversight of climate
change and its related risks and
opportunities. This high-level governance
brings independent oversight to our
targets, progress and strategy. During
2025/26, we continued to develop our
strategy, review risks and ensure
transparency in reporting through CDP.
We were also accepted as a constituent
ofthe FTSE4Good index, and we remain
certified to the ISO 14001 environmental
management system across the business.
In our TCFD-compliant disclosures on
pages 58 to 67, we review the latest
climate science using several scenarios to
understand our climate-related risks and
opportunities and the cost to the business
from these risks. None of these risks or
opportunities is considered material.
Keeping pace with social change
In 2022/23, we identified a second
emerging risk around social change,
which we again reviewed in the second
half of 2025/26 and still consider to be
emerging. Changing generational and
cultural attitudes could affect the way we
work and how we need to respond to our
people. To identify changes, we are
closely monitoring recruitment, the
attrition rate and insights from staff.
Our customer and talent pool might be
limited if we are not seen as a progressive
organisation. Younger people in particular
are looking to engage with companies
that do the right thing when it comes to
being a responsible part of society.
We have long identified that our staff
needmore than just fair pay: they need
opportunities to develop, to work flexibly
and for the business to feel like a cultural
fit. We continue to take steps to meet these
expectations, and to build on the actions
already taken – such as increasing
wellbeing initiatives, creating office spaces
to meet employee needs, introducing
Group-wide personal development plans
for all staff and having regular employee
feedback opportunities. We listen regularly
to our employees through forums, portals
and anonymous routes, although we
encourage a culture of openness.
Generational changes have also brought
more open minds, particularly in relation
to gender, race, religion, sexual
orientation and a desire to treat everyone
equally – as well as to accommodating
and celebrating difference. We already
hold these values at our core, but need
tocontinually monitor and keep pace with
these changes. Not doing so could affect
our ability to attract and retain not only
employees but also customers, when they
too start to reflect new social values and
require their supply chain to do the same.
34 Bytes Technology Group plc
REVIEW OF THE YEAR
Impact of AI
In 2023/24, we identified a third emerging
risk: AI and the impact it might have on
our customers and their employees.
Wereviewed this again in January 2026.
Weconsider AI to be an opportunity for
our business, as we expand sales into
areas such as Microsoft’s Copilot and
support our customers to capitalise on
this emerging technology.
However, as well as opportunities,
AIbrings several inherent risks. These
potential risks come from moral, legal and
ethical issues, relating to the information
sources that the AI technology is trained
on and extracting data from – with its
possible copyright and other legal issues
– and the potential replacement of roles
inthe workplace in the longer term. Within
the Group, there are policies, procedures
and a regular technical working group that
discusses AI. We will review feedback
from this working group through our risk
management process as the technology
develops and as its wider impact is better
understood.
Currently, we are using AI within our
business, as are our customers, to
enhance productivity. There is no
indication that customers are reducing
their number of employees, although
there are signs that there are fewer
entry-level positions in some industries.
However, if customers choose not to
recruit this could limit our growth as
usernumbers become static or grow
lessrapidly.
GenAI may also present a cybersecurity
risk because, as it develops, the tool
willallow for more sophisticated
impersonation, such as deepfakes.
Thesecould be used in several ways
tocause financial and reputational
damage, including more convincing
phishing attacks or fake videos conveying
incorrect information. We are developing
our employees’ awareness of this risk
through training on social engineering
and phishing.
There is uncertainty about how, where
and to what extent AI will affect society
too. So, we will continue to review the
risks and opportunities presented by
thisand other emerging technologies.
Our principal risks and uncertainties
In 2025/26, the geopolitical and macroeconomic environment was again unsettled,
but we managed risk well and have maintained our three emerging risks and our
principal risks. We have combined two of those principal risks – taking their number
from 14 to 13 – and updated the impacts and status of some of them, to show if we
expect their impact to ‘increase’, ‘decrease’ or show ‘no change’.
Although provision 29 of the UK Corporate Governance Code 2024 does not affect our
reporting until the 2026/27 financial year, we have analysed our principal risks and the
underlying controls for their materiality according to this provision. The Board will
review the material controls identified through this process in 2026/27 for their
effectiveness and report against them in the subsequent Annual Report.
Summary of changes since 2024/25
1 Economic disruption
Expanded the risk owners in the subsidiary businesses, alongside the CEO.
2 Commercial models and margin pressure
Combined the risks Margin pressure and Changes to vendors’ commercial model.
Defined the risk status as ‘increase’.
3 Inflation
Updated risk with latest figures.
4 Working capital
Updated commentary to include risks from foreign exchange.
5 Vendor concentration
Expanded the risk owners in the subsidiary businesses, and updated commentary.
6 Evolving competition
Changed name from Competition to Evolving competition. Changed status to ‘increase’.
7 Emerging technology
Changed name from Relevance and emerging technology to Emerging technology.
Changed status to ‘increase’.
8 Cyberthreats – direct and indirect
Updated commentary.
9 Business resilience
Changed name from Business continuity failure to Business resilience, to more
accurately reflect the broader scope of this risk. Expanded the risk owners in the
subsidiary businesses.
10 Attract and retain staff while keeping our culture
Changed risk owner from CEO to CPO and expanded the risk owners in the
subsidiary businesses. Changed some mitigation and controls.
11 Supply chain management
Changed status to ‘increase’. Added commentary around failure to prevent fraud
and EU supply chain regulations.
12 Sustainability/ESG
Made minor updates to commentary.
13 Regulatory and compliance
Added CFO as a risk owner, alongside the CEO. Updated the risk to reflect risk from
fines and added a control measure.
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35
Our principal risks and uncertainties continued
Expectation of risk impact
Increase
No change
Decrease
Financial
1 Economic disruption
Risk owner CEO and executive committees of subsidiary companies
The risk
Internationally, political uncertainty with the US
administration continues, with rapid changes to global
tariffs, as well as conflicts in the Middle East and Ukraine.
This risk also includes the uncertainties caused by global
economic pressures and geopolitical risk within the UK.
There is the potential for public sector funding to be
reallocated, although the impact on us is still unknown.
How we manage it
We remained resilient through periods of geopolitical
uncertainty in 2025/26, as we did through previous
periodsof instability such as high inflation, global conflicts,
technology shortages and the UK leaving the EU.
The recent real-life experience of these, and of the rising
cost of living and exchange rate fluctuations, have shown
us to be resilient through tough economic conditions. The
diversity of our client base has also helped us maintain and
increase business in this period. We are not complacent,
however – economic disruption remains a risk, and we
keep our operations under constant review.
Our continued focus on software asset management
means that we advise customers of the most cost-effective
ways to fulfil their software needs. Changes to economic
conditions mean many organisations will look to IT to drive
growth and/or efficiency.
Externally, we have seen more customers looking to avoid
increased staff costs by partnering with their managed
services providers. This may create an opportunity to
accelerate our service offerings.
Financial stress-testing through our Going Concern
Assessment will be reviewed to provide reports back into
the two operating companies.
We will keep a watching brief on the impacts to the public
sector from any government funding reallocation or policy
changes, and how these affect the business.
The impact
Major economic disruption and potentially higher taxes
could see reduced demand for software licensing,
hardware and IT services, which government controls
could compound. Lower demand could also arise from
reduced customer budgets, cautious spending patterns
orclients ‘making do’ with existing IT.
Economic disruption could also affect major financial
markets, including currencies, interest rates, trade and
thecost of borrowing. Economic deterioration like this
could affect our business performance and profitability.
Inflationary pressure could still create an environment in
which customers redirect their spending from new IT
projects to more pressing needs.
36 Bytes Technology Group plc
REVIEW OF THE YEAR
Financial
2 Commercial models and margin pressure
Risk owner CEO and executive committees of subsidiary companies
The risk
BTG faces pressure on profit margins from myriad
directions, including increased competition, changes in
vendors’ commercial behaviour, certain offerings being
commoditised and changes in customer mix or
preferences.
We receive incentive income from our vendors and their
distributors. This partially offsets our costs of sales but
could be significantly reduced or eliminated if the
commercial models are changed significantly.
How we manage it
There are external factors that influence our margins,
suchas economic and political factors, which are beyond
our control. Other factors, such as changing vendor
commercial models, are also mostly beyond our control,
but permit us to take action to bolster our resilience.
Our diverse portfolio of offerings, with a mix of vendors,
software and services, has enabled us to absorb any
changes to vendors’ commercial models – and we
continueto innovate to find new ways to deliver more
valuefor our customers.
Although we receive major sources of funding from specific
vendor programmes, if one source declines, we can offset
it by gaining new certifications in, and selling, other
technologies where new funding is available. Microsoft
forms a significant part of BTG’s gross profit and has
consistently reviewed its incentive programmes to help it
achieve its strategic objectives. BTG has shown its ability
toadapt in line with these changes. We are confident in
ourability to maintain growth over time.
We closely monitor incentive income and make sure staff
are aligned to meet vendors’ goals so that we don’t lose
these incentives. Close and regular communication with all
our major vendors and distributors means we can manage
this risk appropriately. In some areas we have seen a positive
change in vendors’ commercial terms, where we have been
able to adapt practices.
Keeping the correct level of certification/accreditation by
vendor, early deal registration and rebate management are
three methods we use to make sure we are procuring at the
lowest cost and maximising the incentives we earn.
Services delivered internally are consistently measured
against our competition to ensure we remain competitive
and maximise margins.
With our key vendors, we have regular touch points and
quarterly business reviews (QBRs), which ensure close
communication and timely updates of any changes with
ourvendor community.
The impact
Major changes to commercial models, which can occur
with limited notice, could put pressure on our margins and
profitability. In addition, any incentives received are very
valuable and contribute significantly to our operational profits.
3 Inflation
Risk owner CFO
The risk
Inflation in the UK, as measured by the Consumer Price Index
(CPI), was 3.0% in February 2026, having started the financial
year at 2.6% and peaked in summer at 3.8%. This rate
continues to stay above the Bank of England’s target of 2%.
How we manage it
Staffing costs make up most of our overheads, so our
attention has been focused on our employees and their
ability to cope with the rising cost of living.
While we cannot dictate our customers’ budget, our
business model is to build trusted relationships – where
account managers understand our customers and are able
to have pragmatic conversations about what their IT
priorities should be in the current technology landscape.
The impact
Wage inflation and increased fuel and energy costs have
adirect impact on our underlying cost base.
If the market wage is increased to a higher level, then we
potentially have a risk for retaining and attracting
employees and customers.
Our customers will also have increased costs, which will
change their budgets and spending priorities.
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Our principal risks and uncertainties continued
Financial
4 Working capital
Risk owner CFO
The risk
As customers face the challenges of inflation and elevated
interest rates in the current economic environment, there
isa greater risk of an increasing aged debt profile, with
customers slower to pay and the possibility of bad debts.
We have seen enterprise-sized businesses in particular
requesting longer payment terms.
Vendors’ changing payment terms could also have a
significant impact.
The implementation of the UK Government’s Procurement
Act 2023 will affect the payment terms of public sector
customers and affect our supply chain.
We have seen debtor days stabilise as inflation has
reduced, but the number of days has not returned to
historic low levels.
Volatility in foreign exchange rates could also have positive
or negative impacts.
How we manage it
Our credit collections teams are focused on collecting
customer debts on time and maintaining our debtor days
ator below target levels. Debt collection is reported and
analysed continually and escalated to senior management
as required.
We have invested in larger credit collection teams and risk
management. This includes conducting a case-by-case
risk assessment for customer requests for longer
paymentterms.
In the past financial year, BTG has seen a level of write-offs
similar to the prior year, which is still not significant: all our
write-offs are from companies that have become insolvent
or gone into administration.
A large part of a successful outcome is maintaining strong,
open relationships with our customers, understanding
theirissues and ensuring our billing systems deliver
accurate, clear and timely invoicing so that queries can
bequickly resolved.
We believe the UK Procurement Act 2023 will reduce the
risk of extended or ambiguous payment cycles, which have
affected revenue recognition and working capital. The Act
extends through the supply chain, meaning that prime
contractors must pass on timely payments to subcontracted
software developers and service providers. BTG is required
to pass on 30-day payment terms to all subcontracted
goods and/or services suppliers when the Act applies,
providing greater consistency of payment terms.
We monitor and act on this risk through cost control and
efficiency measures such as gross profit per employee and
through operating profit metrics.
The impact
This could adversely affect our businesses’ profitability
and/or cash flow.
38 Bytes Technology Group plc
REVIEW OF THE YEAR
Strategic
5 Vendor concentration
Risk owner CEO and executive committees of subsidiary companies
The risk
Continued strategic focus on top vendors could pose a
potential risk, should that technology be superseded or
exposed to economic down cycles, or if the vendor fails
toinnovate ahead of customer demands.
How we manage it
We work with our vendors as partners – it is a relationship of
mutual dependency because we are their route to the end
customer. We maintain excellent relationships with all our
vendors, and have a particularly good relationship with
Microsoft, which relies on us as a key partner in the UK.
Ourgrowth plans, which involve developing business with
all our vendors, will naturally reduce the risk of relying too
heavily on any single one.
We have a diversified vendor list, as well as a focus on
services and using in-house and third-party specialists,
which diversifies and mitigates some of the vendor
concentration risk.
To ensure we maintain a diversified approach, we use peer
reviews and market intelligence through Gartner analyses
and Megabuyte reviews, as well as having regular
engagement with our vendors, including QBRs.
The impact
Relying too heavily on any one vendor could have an
adverse effect on our financial performance, should the
commercial relationship materially change.
Uptake of AI is expected to increase rapidly. While this
represents an opportunity, the development of AI by a
handful of companies, including Microsoft, has the
potential to further concentrate revenue and profit
acrossfewer vendors.
6 Evolving competition
Risk owner CEO
The risk
Competition in the UK IT market, and the commoditisation
of IT products, may result in BTG being unable to win or
maintain market share.
Mergers and acquisitions have consolidated our
distribution network and absorbed specialist services
companies. This has caused overlap with our own offerings.
A move to direct vendor resale to end customers
(disintermediation) could place more pressure on the
market opportunity. Platforms, like marketplaces, with
direct sales to customers, could also be seen as
disintermediation.
An increase in the use of marketplaces also heightens the
risk of more transactions going through the same route.
Frameworks, particularly in the public sector, are a
procurement route of choice for some customers. We risk
narrowing our route to customers if we are not part of these
frameworks.
AI risks becoming a partial competitor, if it becomes able to
provide accurate and beneficial licensing and infrastructure
advice direct to customers.
The regulatory environment will change the competitive
landscape too, as regulators look to decrease monopolies.
The rate of change in our competitive landscape has
beenincreasing.
How we manage it
We closely watch commercial and technological
developments in our markets.
The threat of disintermediation by vendors has always been
present. We minimise this threat by continuing to increase
the added value we bring to customers directly. This
reduces clients’ desire to deal directly with vendors.
Equally, vendors cannot engage with myriad organisations
globally without the sort of well-established network of
intermediaries that we have.
We currently work with the dominant marketplace
providersand can sell from multiple vendors to our
customers through their platforms. By matching customer
requirements to the vendor’s value proposition, we can
better serve our customers’ needs.
We continue to develop and improve our systems
andprocesses to make transactions easier for our
customers, including expanding and improving our
ownself-service portals.
AI has been identified as an emerging risk, and so will be
explored and monitored for risks and opportunities to
ourbusiness.
Currently, there is no sign of any commoditisation that
would be a serious threat to our business model in the
shortor medium term.
We are aware of the opportunities from regulatory changes
and partnerships to expand our vendor, solution and
services portfolio.
We continue to monitor this changing environment,
including the speed and impact of change.
To measure the impact of competition, we use customer
and loyalty indicators such as NPS scores and feedback.
We use marketing and brand awareness measures to
assess our visibility and engagement with a broader
community.
The impact
This risk could have a material, adverse impact on our
business and profitability, potentially needing a shift in
business operations, including a strategic overhaul of the
products, solutions and services that we offer to the market.
More consolidation could lead to less competition between
vendors and cause prices to value-added resellers, like us,
to rise and service levels to fall. Direct resale to customers
could also increase. This could erode reseller margins,
given the purchase cost is less for the distributor than the
reseller. This could reduce our market, margin and profits.
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