SOFTCAT plc
(“Softcat”, the “Company”)
Half Year Results for the six months to 31 January 2024
Softcat plc (LSE: SCT.L), a leading UK provider of IT infrastructure products and services, today publishes its half year results for the six months to 31 January 2024 (“the period”). These results reflect good performance in the period across our key metrics of gross profit and operating profit, coupled with strong cash generation.
| Financial Summary | Six months ended | ||
| 31 January | 31 January | ||
| 2024 | 2023 | Change | |
| £m | £m | % | |
| Revenue1 | 467.2 | 512.4 | (8.8%) |
| Gross invoiced income2 | 1,263.5 | 1,214.7 | 4.0% |
| Gross profit | 196.5 | 177.1 | 11.0% |
| Operating profit | 66.7 | 63.1 | 5.8% |
| Cash conversion3 | 101.1% | 117.8% | (16.7% pts) |
| Interim dividend (p) | 8.5p | 8.0p | 6.3% |
| Earnings per share (p) | 25.6p | 25.0p | 2.4% |
| Diluted earnings per share (p) | 25.5p | 25.0p | 2.0% |
1 Revenue is reported under IFRS 15, the international financial reporting standard for revenue. IFRS 15 requires judgements be made to determine whether Softcat acts as principal or agent in certain trading transactions. These judgements, coupled with slight variations of business model and contractual arrangements between IT Solutions Providers, means the impact of IFRS 15 across the peer group is not uniform. Income prior to the IFRS 15 adjustment is referred to as gross invoiced income, which is an Alternative Performance Measure (APM).
2 Gross invoiced income (GII) reflects gross income billed to customers adjusted for deferred and accrued revenue items. This is an Alternative Performance Measure (APM). For further information on this, please refer to page 22.
3 Cash conversion is defined as net cash generated from operating activities before tax but after capital expenditure, as a percentage of operating profit. This is also an Alternative Performance Measure. For further information on this, please refer to page 22.
Highlights for the six months to 31 January 2024
· Double digit growth in gross profit, our primary measure of income, delivered against a challenging set of comparative numbers.
· Operating profit growth of 5.8% was ahead of our expectations4 and sets a new record for first half operating profit.
· Growth was broad based across technologies and customer segments resulting in increases in both gross profit per customer (+9.6%) and total customer numbers (+1.3%), demonstrating continued progress against our strategy.
· Gross Invoiced Income (GII) grew 4.0% driven by strong growth in software and services partially offset by an anticipated decline in hardware. Revenue declined by (8.8%) driven by the decline in hardware which represents a higher proportion of this metric as software and some of services are netted down under IFRS15.
· Headcount grew 14.6%, reflecting our continued investment in building capabilities and scale to enable long-term market share gains in a growing sector.
· Strong cash generation at 101.1% conversion from operating profit. Closing cash was £112.5m and the Company remains debt free.
· An interim dividend of 8.5p per share will be paid on 22 May 2024 with shares trading ex-dividend on 11 April 2024.
4 Market consensus FY2024 operating profit at 23 October 2023 was £152.4m.
Outlook
Our positive performance over the first six months of the financial year reinforces our expectations to deliver on our full year guidance of double-digit gross profit and high-single digit operating profit growth.
We continue to see significant and expanding opportunities in our market and will maintain our investment approach to building the team, infrastructure and tools to capitalise on this exciting and long-term growth potential.
Graham Charlton, Softcat CEO, commented:
“We are delighted to report a strong set of results and key performance indicators, delivering operating profit ahead of our expectations and double-digit gross profit growth from broad-based demand. The breadth, depth and progressive nature of our offering, delivered via our exceptional people and their relentless dedication to customer service, remains a compelling proposition. We continue to execute against our key objectives to win new customers and sell more to existing customers.
The future opportunity in our industry remains incredibly exciting. AI, data management and cybersecurity, amongst other technologies, continue to drive rapid transformation in technology, and this will generate growth across all areas from the cloud and datacentre to the edge. These incremental tailwinds to an already growing market play perfectly into our comprehensive offering at a time when customers need broader and more integrated support from their partners than ever before. This is a great opportunity for us to further increase our market share and we have therefore continued to invest for future growth, increasing headcount by 14.6%.
This progress was only possible because of the fantastic team at Softcat with our special culture and the attitude of our people remaining key elements of our competitive advantage. I can’t thank our people enough for everything they continue to do for each other and our customers.”
Analyst and Investor call
The management team will host an investor and analyst conference call at 9.30am UK time, on Tuesday, 26 March 2024. To participate in the conference call, please use the following access details:
Conference Call Details:
A live webcast of the presentation will be available at:
https://www.investis-live.com/softcat/65df407fd0d5201200b403ba/bdow
Please register approximately 10 minutes prior to the start of the call.
The announcement and presentation will be available at www.softcat.com from 7.00am and 9.00am respectively.
| Enquiries | |
| Softcat plc: | +44 (0)1628 403 610 |
| Graham Charlton, Chief Executive Officer | |
| Katy Mecklenburgh, Chief Financial Officer | |
| FTI Consulting LLP: | +44 (0)20 3727 1000 |
| Ed Bridges | |
| Matt Dixon |