SOFTCAT plc
(“Softcat”, the “Company”)
Preliminary results for the year ended 31 July 2023
Another year of strong organic growth, profitability and cash generation
Softcat plc (LSE: SCT.L), a leading UK provider of IT infrastructure products and services, today announces its full year results to 31 July 2023. The results demonstrate continued strong growth enabling both sustained investment to support our future ambitions and the proposal of a progressive ordinary dividend and a special dividend.
| Financial Summary | Year ended | ||
| 31 July | 31 July | ||
| 2023 | 2022 | Change | |
| £m | £m | ||
| Revenuea | 985.3 | 1,077.9 | (8.6%) |
| Gross invoiced incomeb | 2,563.3 | 2,507.5 | 2.2% |
| Gross profit | 373.8 | 327.2 | 14.2% |
| Operating profit | 140.9 | 136.1 | 3.5% |
| Cash conversion %c | 93.2% | 76.2% | |
| Total ordinary dividend (p) | 25.0p | 23.9p | |
| Final dividend (p) | 17.0p | 16.6p | |
| Special dividend (p) | 12.6p | 12.6p | |
| Basic earnings per share (p) | 56.2p | 55.5p | 1.3% |
Highlights for the year ended 31 July 2023
· Strong performance across both halves of the year, extending our record of unbroken organic year-on-year growth in gross invoiced income, gross profit and operating profit.
· Double-digit gross profit per customer growth, while also attracting new customers, driving further growth in the customer base.
· Continued investment across all areas of the business, including headcount growth of 20.5%.
· A final dividend of 17.0p, resulting in a full year total ordinary dividend of 25.0p, up 4.6%, and the special dividend maintained at 12.6p.
· Strong balance sheet position with cash conversion of 93.2% (FY2022: 76.2%) with cash and cash equivalents of £122.6m (FY2022: £97.3m).
· Outlook: Double digit gross profit growth anticipated to continue. Expectationsd for operating profit for FY2024 unchanged, with growth second half weighted.
a Revenue is reported under IFRS 15, the international accounting 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).
b Gross invoiced income 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 the CFO Report on page 7.
c 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 the CFO Report on page 7.
d Market expectations refers to the mean Analyst consensus operating profit estimate as at the 23rd October 2023, available at https://www.softcat.com/about-us/investor-centre.
Graham Charlton, Softcat CEO, commented,
“I am pleased to report on our FY2023 results which represent another record year for Softcat. Our unique culture and relentless dedication to delivering the best customer service in the industry continue to serve us well.
We once again made progress on both selling deeper into existing customers, with double-digit gross profit per customer growth, while also attracting new customers, delivering 1.9% growth in the customer base.
We continued our investments for future growth, growing headcount by 20.5% to 2,315, by investing across all departments. We are evolving our customer offering in response to the changing technology landscape, keeping pace with emerging customer needs. The rate of change in our industry, with respect to the technology we are selling, the channels through which it is sold and the way it is consumed, is significant. However, the customers’ need for advice and support in navigating this increasing complexity and the need to deploy the right technology for their circumstances to remain competitive, is constant. This gives organisations like Softcat an exciting opportunity to take a bigger share of an ever-growing market.
The Company remains in a very strong financial position, and we have great confidence in our long-term growth and cash generation. In recognition of this, we are again recommending the payment of a special dividend.
A huge thank you to all the fantastic people at Softcat for their incredible dedication to each other and our customers, their efforts and attitude continue to be the bedrock of our success. I’d also like to thank our partners for their support and look forward to another exciting year ahead.”
Outlook
The Company is well positioned to continue to deliver double-digit gross profit growth through the year, driving further market share gains. We expect full year FY2024 operating profit to be in line with market expectations.
We expect the operating profit growth to be second half weighted, with modest growth in the first half of the year principally reflecting the strong gross profit performance in the comparative period in the first half.
We see significant and expanding opportunity in our market and will continue to invest to capitalise on this exciting growth potential.
Analyst and investor call
The management team will host an investor and analyst briefing at 9.30am UK time, on Tuesday 24 October 2023. To join the briefing, please use the following access details:
Webcast Link:
Please register approximately 10 minutes prior to the start of the call.
For further information, please contact:
| Softcat plc: | +44 (0)1628 403 403 |
| Graham Charlton, Chief Executive Officer | |
| Katy Mecklenburgh, Chief Financial Officer | |
| FTI Consulting LLP: | +44 (0)20 3727 1000 |
| Ed Bridges | |
| Matt Dixon |