TIDMSCT
RNS Number : 0250R
Softcat PLC
24 October 2023
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
GBPm GBPm
Revenue(a) 985.3 1,077.9 (8.6%)
Gross invoiced income(b) 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 GBP122.6m
(FY2022: GBP97.3m).
-- Outlook: Double digit gross profit growth anticipated to
continue. Expectations(d) 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:
https://www.investis-live.com/softcat/651bcb2537a2c50c0033265b/vavaa
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
Forward-looking statements
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". By their nature, such
statements involve risk and uncertainty since they relate to future
events and circumstances. Actual results may, and often do, differ
materially from any forward-looking statements.
Any forward-looking statements in this announcement reflect
management's view with respect to future events as at the date of
this announcement. Save as required by law or by the Listing Rules
of the UK Listing Authority, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement following any change in its expectations or to reflect
subsequent events or circumstances following the date of this
announcement.
This announcement has been determined to contain inside
information.
Chief Executive Officer's Review
Sales Strategy and Execution
Our sales strategy remains unchanged: we continue to look to
acquire new customers and gain an ever greater share of wallet with
existing customers.
Gross profit growth, our primary measure of income, grew by
14.2% despite very strong comparative figures, and our annual
customer engagement survey, completed by a larger set of customers
than ever before, delivered very positive results with an NPS of 62
(FY2022: 55) showing improvements across every category.
Our customer base grew by 1.9%, passing through 10,000. We
continue to benefit from their insight and feedback on where they
are taking their technology in the years to come and the problems
they are trying to solve. Gross profit per customer also grew
strongly, up 12.2% in the year, as we retained our focus on
delivering high quality service and solutions for both existing and
new customers.
The opportunity we have across all segments of our customer base
for further wallet share gains in the years to come, capitalising
on the full breadth and depth of our technology proposition across
software, hardware and services, and within datacentre, security
networking and workplace technologies, is as exciting as ever.
We estimate that our share of the addressable UK market is
around 5%. While conditions were challenging during the second half
of the year, with customers noticeably slowing their rate of
investment and some larger, more complex deals being delayed or
subject to more stringent procurement processes, we remain as
positive as ever about the medium- and long-term prospects for our
industry. We have the largest commercial team in the UK market and
will continue to invest with intent across all functions as we
build capacity and new capabilities to maintain our relevance in a
market evolving at pace.
We will also maintain our position as a key partner to both
established and emerging technology vendors, evolving our skills
around the ever-changing portfolios of services and products coming
to market.
People and Culture
Our culture remains as strong as ever as evidenced by the
results of our annual employee satisfaction survey which showed an
employee NPS of 63 (as surveyed in October 2022 (FY2022: 52)).
Despite our growth in headcount, we continue to not only preserve
our strong culture but also evolve it as society adjusts to the
world of hybrid working. Having a highly motivated and engaged
workforce was the founding principle of Softcat 30 years ago and
remains our number one priority, allowing us to attract and retain
talented people with an outstanding attitude. Our employees
reported that they were particularly happy with our stance on
remote working and inclusivity.
Hybrid working at Softcat has settled into a healthy and natural
rhythm - staff have the freedom to choose a formula that works for
them and we have worked hard to foster an understanding that
circumstances are different for everyone and that there isn't an
easily prescribed formula that can be mandated across the business.
At the same time, it is clear that as an organisation we benefit
from as much time as possible spent together and it has been highly
encouraging to see our people's response to that. Our offices are
vibrant during the middle of the week when teams interact and our
partners visit, but also purposefully populated by those who need
the space at either end of the working week.
Our annual Kick Off event was hosted face to face in September
2023 for the second time since the pandemic, proving to be a bigger
success than ever based on employee feedback and very motivating
for the 2,100 employees who attended. Our partner forum and charity
ball were also hosted in person and it's terrific to see how both
Softcat people and our partners enjoy coming together as a single
team.
The labour market eased during the year and we were able to
increase headcount by 20.5%. This represents rapid expansion of our
sales team (up 24.1%) as well as strong growth in supporting
specialist and technical teams (up 13.5%). Expansion of the
business operations teams was slower (up 11.3%) following very
significant investment during FY2022 in those teams to support the
new finance system implementation and other developments.
Our learning and development initiatives continue to bear fruit
and we are delighted with the number of employees going through our
various programmes including the Sales Development Programme, the
Specialist Acceleration Programme, our Tech Starter programme and
other initiatives including inclusivity, sustainability and cyber
security training.
Our leadership transition was completed smoothly during the
summer of 2023 as previously communicated. Katy Mecklenburgh joined
us as CFO on 19 June and has settled excellently into the Softcat
culture. I'd like to formally welcome her to the Company and am
very confident she has a big role to play in our future
success.
Ease of doing business
During the previous year we implemented a new finance system,
alongside which we developed new data management processes and
integration layers. This has established a modern system
architecture which we are now augmenting with external data feeds,
creating exciting new possibilities for analytics and reporting.
This in turn can form the basis for new ways of working and,
potentially, the application of AI technology to advance our
operating model in significant ways. For example, enabling
automated lead generation, enhancing the efficiency of our account
managers to navigate the enormity and complexity of our customer
proposition, and significantly more effective resource
allocation.
We also continue to invest in developing the skills and digital
platforms necessary to embrace new distribution and consumption
models. This includes the adoption of the various marketplaces
released by the public cloud providers and distributors, as well as
the growing number of subscription-based hardware offerings. Demand
for these innovations is variable but developing and we have the
plans in place to ensure we are best placed to support both
customers and vendors as they reach maturity.
Addressable market
Along with the trends discussed above that we are seeing in the
distribution and consumption of IT infrastructure, the market is
also witnessing rapid introduction of new and exciting
technologies.
Hybrid models of compute and storage, placing data and workloads
in the most appropriate and cost-effective location for the task,
are producing more thoughtful approaches from customers on the
design of their environments and that plays strongly into our
design and advice capabilities.
The impact of AI is building rapidly. Datacentres, wherever they
are located, are beginning to be designed around the need to handle
the demands of this new technology and we only see this increasing.
Datacentres are already created for specific needs, but we expect
even greater differentiation around specific tasks to be
increasingly factored into design choices. Perhaps the most
significant impact from AI in the short term comes from its
deployment in mainstream desktop applications. This will have
immediate implications for the cost of those applications, the
technology being expensive to run, but also promises exciting new
productivity gains and possibly even the transformation of some
elements of the operating model for certain customers. Apart from
the licensing of AI-enabled applications, customers will also need
to think about where they are hosted and the devices they are
deployed upon. Operating systems will need to be refreshed and
end-user device estates re-evaluated. Cyber security continues to
be a major concern for customers and while AI is already being
deployed within security software, its application will also
transform the threat landscape. As a result, we expect to see
continued innovation in this space which will mean the constant
upgrading of organisation's defences will only become a greater
necessity.
Our UK customers continue to ask for our support in their
overseas operations, and so we have invested further in our
multinational operation across Europe, APAC and the US. We now have
9 people operating out of our US branch and a desire to add more
resource as that business grows. This presence in the US will
enable us to better understand that market, providing insights that
will benefit our wider operations and inform future strategy.
Diversity, Inclusion and Sustainability
Our word of the year in FY2023 was 'Connect' and it has been
great to see the Company settle well into a productive hybrid
working pattern this year , evidenced by a strong employee NPS
score mentioned of 63. We were also featured in the top 50 Great
Places to Work in Europe.
Our community networks have once again played a strong role in
developing the organisation towards being a more inclusive place to
work. This has included raising awareness across the Company of
minority groups through our ongoing allyship programme, and we have
continued to support The Technology Channel for Racial Equality to
improve racial equality across our industry. 17% of Softcat
employees are now from ethnic minority backgrounds.
From a gender diversity perspective, we have met our first
target of 35% women in the business, well ahead of schedule, and
this includes now having 36% female representation on our senior
leadership team . We were pleased to be recognised by Great Places
to Work in the following categories:
o 1(st) in the UK's Best Workplaces in Tech
o 6(th) in the UK's Best Workplace for Women
We were also pleased to be awarded the Bronze Award by Stonewall
for the progress we have made for our LGBTQ+ community and were
ranked 124(th) in the UK Workplace Equality Index. We have collated
data for the first time on our employees sexual orientation,
disability, neurodiversity, and socio-economic background to better
inform company policy in a number of areas in the future.
We were delighted to be able to host our Charity Ball again
during last financial year, for the first time since the pandemic,
and in total, across the year, raised GBP470,000 for charitable
causes.
During the year we received more recognition for the strides we
are making with our carbon reduction plans. We were awarded
five-star status by HP in their partner programme and were named
Lenovo ESG Partner of the Year.
We continue to work through key industry bodies and contribute
to thought leadership in this space and were involved with CRN,
Canalys, GTDC, and PWC to influence change across the channel with
respect to product data, circular economy and other sustainability
initiatives.
The development of Enexo, our in-house sustainability reporting
and action planning platform, is ongoing. During the year we have
seen more uptake from customers, suppliers and partners to measure
and manage the impact of scopes 1-3 in our value chain.
Company-wide training has also been carried out, reaching 98%
adoption during our first round of carbon literacy coaching.
We have also worked hard to improve our compliance with TCFD
reporting requirements - satisfying 9 of the 11 recommended
disclosures.
A huge thank you again to the very special team we have at
Softcat for their efforts during the past year. The Company is in
great health and perfectly positioned for future growth.
Board composition and succession planning
Lynne Weedall was appointed as interim Chair of the Nomination
Committee and interim Senior Independent Director (SID) in January
2023 following the resignation of Karen Slatford on health grounds.
Following a review of Board composition, the Board is pleased to
confirm with immediate effect that Lynne is appointed as Chair of
the Nomination Committee on a permanent basis. The Company
announced in August 2023 that Jacqui Ferguson will join the Board
as a Non-Executive Director in January 2024. The Board has agreed
that Lynne will retain the role of interim SID, which will
transition to Jacqui on a permanent basis at some point in
2024.
Chief Financial Officer's Review
Financial Summary FY2023 FY2022 Change
Revenue GBP985.3m GBP1,077.9m (8.6%)
Revenue split
Software GBP188.8m GBP150.0m 25.9%
Hardware GBP610.6m GBP797.9m (23.5%)
Services GBP185.9m GBP130.0m 42.9%
Gross invoiced income
(GII) 1 GBP2,563.3m GBP2,507.5m 2.2%
GII split
Software GBP1,543.5m GBP1,365.3m 13.0%
Hardware GBP617.8m GBP810.2m (23.7%)
Services GBP402.0m GBP332.0m 21.1%
Gross profit (GP) GBP373.8m GBP327.2m 14.2%
Gross profit margin 37.9% 30.4% 7.5%
Operating profit GBP140.9m GBP136.1m 3.5%
Operating profit margin 14.3% 12.6% 1.7%
Gross profit per customer
2 GBP37.0k GBP33.0k 12.2%
Customer base 3 10.1k 9.9k 1.9%
Cash conversion 4 93.2% 76.2% 17.0%
1 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.
2 Gross profit per customer is defined as GP divided by the
customer base.
3 Customer base is defined as the number of customers who have
transacted with Softcat in both of the preceding twelve-month
periods.
4 Cash conversion ratio is net cash generated from operating
activities before taxation, net of 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 9.
Gross profit, revenue and gross invoiced income
Softcat operates in a fast-growing and constantly changing
market, catering to the IT infrastructure requirements of corporate
entities and public sector organisations across the UK and Ireland.
Our strategy is to provide a comprehensive range of technology
solutions (spanning workplace, datacentre, cloud, networking and
security solutions) across software, hardware and services,
delivered through highly engaged employees who provide exceptional
customer service, to attract new customers and increase sales to
our existing customer base.
Our FY2023 results reflect our ability to continue to deliver
against this strategy. Gross profit (GP), our primary measure of
income, grew by 14.2% to GBP373.8m, in line with expectations,
against a tough FY2022 comparable in which a mid-market customer
accounted for marginally more than 10% of our Gross Invoiced Income
(GII), primarily driven by one-off, low-margin datacentre hardware
sales.
Excluding these FY2022 one-off transactions, GP growth was broad
based and underlying software, services and hardware GP all grew
double-digit. Hardware sales were also impacted by soft market
demand for client devices but this was offset by strong underlying
growth in networking and datacentre solutions. After adjusting for
the one-off transactions, all technology areas also grew
double-digit with particularly strong growth in networking, as
supply chain issues receded during the year, and in security, which
continues to be an area of focus for our customers. Growth was also
strong across all customer segments, with double-digit underlying
growth across enterprise, mid-market and public sector,
demonstrating our continued relevance across our target
markets.
In the second half of the year GP grew by 11.2%, following a
very strong first half performance of 17.9%, with growth impacted
by customers delaying some discretionary spend and large projects
being slower to close as customers applied stricter procurement
processes.
FY2023 revenue declined by (8.6)%, driven by a (23.7)% decline
in hardware GII. This decline in hardware GII, which is reported on
a gross basis within the revenue number (unlike software and some
services revenue which are netted down), was driven by the one-off
transactions in the base year as mentioned above. Excluding these
one-off transactions hardware GII increased marginally compared to
the prior year.
GII growth of 2.2% was driven by strong growth in both software
and services, up by 13.0% and 21.1% respectively, largely offset by
the decline in hardware sales mentioned above. GII grew more slowly
than GP in the period, with GP as a percentage of GII expanding by
1.5%. Margin expansion was driven by the FY2022 one-off
transactions, which diluted the comparative gross margin and
several positive mix effects, with the year-on- year decline in
lower margin client devices, and strong growth in higher margin
datacentre, networking and security solutions driving a positive
margin impact.
Customer KPIs
During the year average GP per customer grew by 12.2% to
GBP37.0k (2022: GBP33.0k) and the customer base increased to
10,100, up 1.9% on the prior year. We won new customers from a
broad range of industries with initial sales balanced across our
core business lines, consistent with sales to existing customers as
described above.
Despite this further strong progress and being confirmed again
as the largest reseller in the UK by CRN, our industry remains
highly fragmented. Our latest estimates, based on multiple industry
sources including CRN and Gartner, suggest we have around 5% of
total addressable market value. This comprises a trading
relationship with c.20% of potential customers with whom we have an
average share of wallet of c.20% - 25%. As a result, we continue to
have a fantastic opportunity for future growth by continuing to
concentrate on our simple strategy of seeking to sell deeper into
existing accounts by building trust and loyalty over time, while
gradually expanding our customer base year on year.
Operating profitability and investment in future growth
Operating profit of GBP140.9m (FY2022: GBP136.1m) increased by
3.5% year-on-year reflecting the 14.2% increase in GP offset by a
21.9% rise in operating costs. Cost growth was in line with
expectations, driven by increased commissions due to higher GP,
alongside a 19.8% increase in average headcount, investments in pay
and IT and a return to pre COVID-19 levels of staff events and
travel.
The investment in headcount was across all areas of the business
including sales operations, technical capabilities, and core
support functions to ensure we are appropriately resourced to
support future growth. Average salary costs increased by 7.5% over
the year, driven by inflationary pay awards across existing staff
and an increase in new hire salaries reflecting the current
inflationary environment and ensuring we remain competitive within
the market.
Cost growth decelerated in H2 to 12.7% compared to 32.4% in H1.
This was driven by several factors: firstly lower GP growth
resulted in lower commissions in H2 compared to H1; secondly the
phasing of the new ERP system implementation costs, with more
impacting H2 than H1 in FY2022; thirdly travel and entertainment
costs which remained constrained in H1 FY2022 due to COVID-19 but
returned to normal in H2 with in person customer meetings and
incentive trips back to pre-pandemic levels; and lastly, while the
full year cost was broadly in-line, bad debt write-offs
year-on-year were more front half weighted in FY2023.
As a result of the investments in headcount, wages and salaries,
IT and travel and entertaining our operating to GP margin decreased
to 37.7 % (2022: 41.6%) as forecast and previously
communicated.
Corporation tax charge
The effective tax rate for 2023 was 21.0% (2022: 18.9%),
reflecting the increase in the UK statutory rate to 25.0% from
19.0% in April 2023 together with the relatively marginal impact of
non-deductible expenses and share-based payment transactions. Our
tax strategy continues to be focused on paying the right amount of
tax in the right jurisdiction, at the right time.
Cash and balance sheet
Cash conversion, defined as net cash generated from operating
activities before tax but after capital expenditure, as a
percentage of operating profit, was 93.2% (2022: 76.2%). The
improvement on prior year reflects a return to normal levels of
year-end receivables following a temporary expansion last year
following the implementation of a new finance system and is towards
the top of the target range of 85%-95%.
Cash at the FY2023 balance sheet date was GBP122.6m (FY2022:
GBP97.3m) and the company remains debt free.
Under our capital allocation framework the first priority is to
invest behind future organic growth and our second priority is to
deliver on our progressive ordinary dividend policy. Additional
excess capital is then either allocated to strategic investments or
returned to shareholders. In FY2023, as outlined above we have
continued to invest in people costs and IT to further drive organic
growth and the proposed ordinary dividend is an increase of 4.6%
vs. FY2022, while excess cash will be returned to shareholders via
a special dividend.
Dividend
A final ordinary dividend of 17.0p per share has been
recommended by the Directors and if approved by shareholders will
be paid on 19 December 2023. The final ordinary dividend will be
payable to shareholders whose names are on the register at the
close of business on 10 November 2023. Shares in the Company will
be quoted ex-dividend on 9 November 2023. The last day for dividend
reinvestment plan ('DRIP') elections to be received is 28 November
2023.
In line with the Company's stated intention to return excess
cash to shareholders a further special dividend payment of 12.6p
has been proposed. This has been calculated taking into account an
increase in the minimum cash holding from GBP60m to GBP75m,
reflecting the continued growth of the business. If approved this
will also be paid on 19 December 2023 alongside the final ordinary
dividend. This will bring the total amount returned to shareholders
since becoming a public company to GBP476.2m.
Alternative Performance Measures
The Company uses two non-Generally Accepted Accounting Practice
(non-GAAP) financial measures in addition to those reported in
accordance with IFRS. The Directors believe that these non-GAAP
measures which are set out below, assist in providing additional
useful information on the underlying trends, sales performance and
position of the Company.
Consequently, non-GAAP measures are used by the Directors and
management for performance analysis, planning and reporting and
have remained consistent with the prior year. These non-GAAP
measures comprise gross invoiced income (or 'GII') and cash
conversion.
1. Gross invoiced income is a measure which correlates closely
to the cash received by the business and therefore aids the users
understanding of working capital movements in the statement of
financial position and the relationship to sales performance and
the mix of products sold. Gross invoiced income reflects gross
income billed to customers adjusted for deferred and accrued
revenue as reported in the IFRS measure. A reconciliation of IFRS
Revenue to gross invoiced income is provided within Note 2 of the
financial statements.
2. Cash conversion ratio is net cash generated from operating
activities before taxation, net of capital expenditure, as a
percentage of operating profit. Cash conversion is an indicator of
the Company's ability to convert profits into available cash. A
reconciliation to the adjusted measure for cash conversion is
provided below:
2023 2022
GBP'000 GBP'000
Net cash generated from operating activities 104,802 83,644
Income taxes paid 29,793 25,344
Cash generated from operations 134,595 108,988
Purchase of property, plant and equipment (2,544) (1,890)
Purchase of intangible assets (701) (3,334)
Cash generated from operations, net of capital
expenditure 131,350 103,764
Operating Profit 140,898 136,145
Cash conversion ratio 93.2% 76.2%
Principal Risks and Uncertainties
The principal and emerging risks facing the Company have been
identified and evaluated by the Board. In summary, principal risks
include:
Risk Potential impacts Management and mitigation
BUSINESS STRATEGY
Failure to respond -- Loss of competitive -- Insight from ongoing
to market changes advantage industry analysis and subscriptions
including technology -- Reduced number input into annual strategy
offering, channel of customers and process
disintermediation, profit per customer -- Regular insights into
competitor landscape customer priorities including
and customer climate-related through
needs. the annual customer experience
(slight increase survey results and 'voice
in net risk) of the customer' surveys.
Multi-layered relationship
with strategic vendors and
executive sponsor alignment
-- Regular Quarterly Business
Reviews with vendors
OPERATIONAL
Customer dissatisfaction -- Reputational -- Dedicated Customer experience
(no change in damage team, who manage and escalate
net risk) -- Loss of customers customer dissatisfaction
-- Financial penalties cases
-- ISO20000-1 IT Service
Management and ISO-9001
Quality management certified
-- Ongoing customer service
excellence training
-- 'Big-deal review' process
Cyber security -- Inability to -- ISO27001 accredited processes.
risk & business deliver customer Company-wide information
interruption services security policy and mandatory
risk -- Reputational security-related training
(no change in damage -- Regular testing of disaster
net risk) -- Financial loss recovery plans and business
-- Customer dissatisfaction continuity plans
-- Established and documented
processes for incident management,
change of control, etc.
-- Ongoing upgrades to network.
-- All employees issued
with corporate devices with
standardised access monitoring
and control
-- Key software used is
from large multi-national
companies who have a 99.9%
SLA and who also provide
us with SOC2 reports that
provide assurance on their
processes and controls
-- Annual penetration test
by a third party
FINANCIAL
Macro-economic -- Short-term supply -- Customer base is well
factors including chain disruption diversi ed in terms of both
impact on customer -- Reduced margins revenue concentration but
sentiment, in -- Reduced customer also public and commercial
ationary pressures, demand sector exposure
interest and -- Reduced profit -- Close dialogue with supply
foreign currency per customer chain partners
volatility -- Higher operating -- Annual budget considers
(no change in costs the operating profit growth
net risk) -- Customer insolvencies expectations of the markets
and cash collection -- Operating costs are budgeted
challenges and reviewed regularly
-- Going concern and viability
statements are underpinned
by robust analysis of scenarios
Ineffective -- Increased bad -- Robust credit assessment
working capital debts process including use of
management (no -- Increased cost trade credit insurance
change in net of operations -- Regular review of the
risk) aged debt position by management
-- Defined treasury policy
covering liquidity management
processes and thresholds
-- Regular cash forecasting,
actual reporting and variance
analysis to highlight any
adverse trends and allow
sufficient time to respond
Failure to retain -- Uncompetitive -- Budgeting process and
competitive pricing leading regular reviews ensure costs
terms with our to loss of business are managed appropriately
suppliers and/or -- Reduced profitability/margins and in consideration of
right size our gross profit growth. Any
cost base compared out of budget spend needs
to gross profit management level approval
generated. -- Rebates form an important,
(no change in but only minority, element
net risk) of total operating pro t.
In addition, Rebate programmes
tend to be industry standard
and not speci c to the Company,
while vendor aligned teams
ensure we optimise available
rebate structures
-- Ongoing training to sales
and operations teams to
keep pace with new vendor
programmes
PEOPLE
Loss of culture -- Reduced staff -- Culture sits at the heart
(no change in engagement of all changes that are
net risk) -- Negative impact made in Softcat. There is
on customer service regular communication from
-- Loss of talent Senior Leadership Team members
to employees at 'Kick off'
and 'All Hands' calls about
the importance of culture
-- Regional offices with
empowered local management
-- Quarterly management
satisfaction survey with
feedback acted upon
-- Regular staff events
and incentives
-- Enhanced internal communication
processes and events
Talent, Capability -- Lack of strategic -- Succession planning process
& Leadership direction in place.
risk -- Reduced staff -- Experienced and broad
(no change in engagement senior management team
net risk) -- Loss of talent -- Investment in robust
-- Loss of competitive recruitment and selection
advantage processes
-- Attrition tracked and
action taken as necessary
Regulatory
and Compliance
Compliance with -- Financial penalties -- Presence of a second
existing regulation/legislation -- Reputational line function (Governance
and being prepared damage Risk & Control, Information
for emerging -- Loss of customers Security, Legal and Company
regulation/legislation Secretarial)
(new risk) -- Management committee
in place to review second
line progress and report
to the Audit Committee
-- Ongoing engagement with
specialist third parties
where required
Climate change
In our consideration of emerging risks, climate change continues
as an area requiring greater analysis. During the year, in line
with the approach recommended by the Task Force on Climate-related
Financial Disclosures ('TCFD'), we conducted a formal assessment of
the potential impact of climate change to our business and supply
chain. Climate change is already a component of the risk of failure
to respond to market changes when considering the needs of our
customers and how products, services and solutions might be
affected by the drive towards carbon neutrality. We also have
robust business interruption plans in the event of a disruption to
our business. Our current analysis concluded that no other climate
change-related risk is a principal risk which needs to be
incorporated into the list of principal risks shown.
Going Concern
Please refer to note 2.1 under 'Basis of preparation'.
Cautionary Statement
This preliminary announcement has been prepared solely to
provide additional information to shareholders to assess the
Company's strategies and the potential for those strategies to
succeed. The preliminary announcement should not be relied on by
any other party or for any other purpose.
In making this preliminary announcement, the Company is not
seeking to encourage any investor to either buy or sell shares in
the Company. Any investor in any doubt about what action to take is
recommended to seek financial advice from an independent financial
advisor authorised by the Financial Services and Markets Act
2000.
Statement of Directors' responsibilities in relation to the
financial statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable United
Kingdom law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the Company's financial statements in
accordance with UK-adopted international accounting standards
('IFRSs').
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the Company for that period.
In preparing these financial statements the directors are
required to:
-- select suitable accounting policies in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors and
then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRSs is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the Company's financial position and financial
performance;
-- state that UK-adopted international accounting standards have
been followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Company financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a strategic report, directors' report,
directors' remuneration report and corporate governance statement
that comply with that law and those regulations. The Directors are
responsible for the maintenance and integrity of the corporate and
financial information included on the Company's website.
Fair and balanced reporting
Having taken advice from the Audit Committee, the Board
considers the Annual Report and Accounts, taken as a whole, is
fair, balanced and understandable and that it provides the
information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
Responsibility statement pursuant to FCA's Disclosure Guidance
and Transparency Rule 4 (DTR 4)
Each Director of the Company confirms that (solely for the
purpose of DTR 4) to the best of his or her knowledge:
-- the financial statements, prepared in accordance with
UK-adopted international accounting standards give a true and fair
view of the assets, liabilities, financial position and profit of
the Company;
-- the Annual Report, including the Strategic Report, includes a
fair review of the development and performance of the business and
the position of the Company, together with a description of the
principal risks and uncertainties that they face; and
-- they consider the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Company's position, performance,
business model and strategy.
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 July 2023
2023 2022
GBP'000 GBP'000
Note
Revenue 3 985,300 1,077,946
Cost of sales (611,466) (750,736)
Gross profit 373,834 327,210
Administrative expenses (232,936) (191,065)
Operating profit 140,898 136,145
Finance income 1,171 252
Finance cost (205) (253)
Profit before taxation 141,864 136,144
Income tax expense 4 (29,835) (25,739)
Profit for the year 112,029 110,405
Foreign exchange differences on
translation of foreign branches (204) 3,562
Net gain/(loss) on cash flow hedge (799) -
(1,003) 3,562
Total comprehensive income for
the year 111,026 113,967
Profit attributable to:
Owners of the Company 112,029 110,405
Total comprehensive income attributable
to:
Owners of the Company 111,026 113,967
Basic earnings per ordinary share
(pence) 10 56.2 55.5
Diluted earnings per ordinary share
(pence) 10 56.0 55.3
All results are derived from continuing operations.
Statement of Financial Position
As at 31 July 2023
2023 2022
GBP'000 GBP'000
Note
Non-current assets
Property, plant and equipment 11,348 11,270
Right-of-use-assets 9,969 6,162
Intangible assets 7,155 7,978
Deferred tax asset 2,997 2,508
31,469 27,918
Current assets
Inventories 6 3,591 5,104
Trade and other receivables 7 490,041 541,424
Income tax receivable - 296
Cash and cash equivalents 122,621 97,316
616,253 644,140
Total assets 647,722 672,058
Current liabilities
Trade and other payables 8 (359,627) (419,108)
Contract liabilities 9 (23,851) (31,564)
Lease liabilities (2,734) (2,716)
Income tax payable (6) -
(386,218) (453,388)
Non-current liabilities
Contract liabilities 9 (3,032) (3,620)
Lease liabilities (7,027) (3,950)
(10,059) (7,570)
Total liabilities (396,277) (460,958)
Net assets 251,445 211,100
Equity
Issued share capital 12 100 100
Share premium account 4,979 4,979
Cash flow hedge reserve (799) -
Reserves for own shares - -
Foreign exchange translation reserve 3,358 3,562
Retained earnings 243,807 202,459
Total equity 251,445 211,100
Statement of Changes in Equity
For the year ended 31 July 2023
Cash
flow Reserves
Share Share hedge Transl-ation for own Retained Total
capital premium reserve reserve shares earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 August
2021 100 4,979 - - - 174,065 179,144
Profit for the period - - - - - 110,405 110,405
Impact of foreign exchange
reserves - - - 3,562 - - 3,652
Total comprehensive
income for the year - - - 3,562 - 110,405 113,967
Share-based payment
transactions - - - - - 2,541 2,541
Dividends paid - - - - - (84,020) (84,020)
Dividend equivalents
paid - - - - - (215) (215)
Tax adjustments - - - - - (317) (317)
Balance at 31 July
2022 100 4,979 - 3,562 - 202,459 211,100
Balance at 1 August
2022 100 4,979 - 3,562 - 202,459 211,100
Profit for the period - - - - - 112,029 112,029
Impact of foreign exchange
reserves - - - (204) - - (204)
Net (loss) on cash flow
hedge - - (799) - - - (799)
Total comprehensive
income for the year - - (799) (204) - 112,029 111,026
Share-based payment
transactions - - - - - 3,330 3,330
Dividends paid - - - - - (74,175) (74,175)
Dividend equivalents
paid - - - - - (66) (66)
Tax adjustments - - - - - 230 230
Balance at 31 July
2023 100 4,979 (799) 3,358 - 243,807 251,445
Statement of Cash Flows
For the year ended 31 July 2023
2023 2022
GBP'000 GBP'000
Note
Net cash generated from operating
activities 11 104,802 83,644
Cash flows from investing activities
Finance income 1,171 252
Purchase of property, plant and equipment (2,544) (1,890)
Purchase of intangible assets (701) (3,334)
Net cash used in investing activities (2,074) (4,972)
Cash flows from financing activities
Issue of share capital - -
Dividends paid 5 (74,175) (84,020)
Payment of principal portion of lease
liabilities (2,839) (2,369)
Payment of interest portion of lease
liabilities (205) (253)
Net cash used in financing activities (77,219) (86,642)
Net increase/(decrease) in cash
and cash equivalents 25,509 (7,970)
Exchange (losses)/gains on cash and
cash equivalents (204) 3,562
Cash and cash equivalents at beginning
of year 97,316 101,724
Cash and cash equivalents at end
of year 122,621 97,316
Notes to the Financial Information
1.1 General information
Softcat plc (the "Company") is a public limited company,
incorporated and domiciled in the UK. Its registered address is
Fieldhouse Lane, Marlow, Buckinghamshire, SL7 1LW.
The annual financial information presented in this preliminary
announcement does not constitute the Company's statutory accounts
for the years ended 31 July 2023 or 2022 but is based on, and
consistent with, that in the audited financial statements for the
year ended 31 July 2023, and those financial statements will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. The auditor's report on those financial
statements was unmodified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498(2) or
(3) of the Companies Act 2006.
2. Accounting policies
2.1 Basis of preparation
These financial statements have been prepared in accordance with
UK-adopted international accounting standards (IFRS) in accordance
with the requirements of the Companies Act 2006. IFRS includes the
application of International Financial Reporting Standards ('IFRS')
as issued by the International Accounting Standards Board ('IASB')
and the IFRS Interpretations Committee ('IFRIC')
interpretations.
These financial statements have been prepared under the
historical cost convention and are presented in the Company's
presentational and functional currency of Pounds Sterling and all
values are rounded to the nearest thousand ('GBP'000'), except when
otherwise stated.
The Company applied all standards and interpretations issued by
the IASB that were effective as at 1 August 2022. The accounting
policies set out below have, unless otherwise stated (see below),
been applied consistently to all periods presented in these
financial statements.
The potential climate change-related risks and opportunities to
which the Company is exposed, as identified by management, are
disclosed in the Company's TCFD disclosures in the Annual Report.
Management has assessed the potential financial impacts relating to
the identified risks and exercised judgement in concluding that
there are no material financial impacts of the Company's climate
related risks and opportunities on the financial statements. These
judgements will be kept under review by management as the future
impacts of climate change depend on environmental, regulatory and
other factors outside of the Company's control which are not all
currently known.
Going Concern
Overview
In considering the going concern basis for preparing the
financial statements, the Directors consider the Company's
objectives and strategy, its principal risks and uncertainties in
achieving its objectives and its review of business performance and
financial position, which are all set out in the Strategic Report
(see pages 28 to 31) and Chief Financial Officer's review sections
(see pages 34 to 35]) of this Annual Report. Given the current
macro-economic environment and considering the latest guidance
issued by the FRC the Directors have undertaken a fully
comprehensive going concern review.
The Company has modelled three scenarios in its assessment of
going concern. These are:
-- The base case;
-- The severe but plausible case; and
-- The reverse stress test case.
Further details, including the analysis performed and conclusion
reached, are set out below.
The Directors have reviewed detailed financial forecasts for a
thirteen-month period from the date of this report (the going
concern period) until 30 November 2024. All the forecasts reflect
the payment of the FY2023 dividend of GBP59.0m which will be paid
in December 2023 subject to approval at the AGM.
The Company operates in a resilient industry. Our UK Corporate
customer base spend is increasingly non-discretionary as IT
continues to be vital to gain competitive advantage in an
increasingly digital age. Public Sector, a large and fast-growing
area of the business, continues to invest in technology to provide
efficient services to the public and this has continued apace
despite the pandemic and recent turbulence in the UK economy. The
Company strategy remains unchanged and will continue to focus on
increasing the customer base and spend per customer during the
going concern period.
Liquidity and financing position
At 31 July 2023, the Company held instantly accessible cash and
cash equivalents of GBP122.6m, with net current assets of
GBP230.0m. Note 21 to the financial statements in the Annual Report
includes the Company's objectives, policies and processes for
managing its capital, its financial risk management and its
exposures to credit risk and liquidity risk. Operational cash flow
forecasts for the going concern period are sufficient to support
the business with the GBP75.0m cash floor set by the Board not
being breached.
There is a sufficient level of liquidity headroom post
mitigation across the going concern forecast period in base and
severe but plausible scenarios considered and outlined in more
detail below.
Challenging economic environment
Management have, in all three scenarios, considered the
principal challenges to short term business performance which are
expected to be;
-- An economic downturn in the UK economy, aided by high
broad-based inflation and increasing interest rates; and
-- Higher risk of credit losses
Despite the challenging economic environment, the Company has
traded well, delivering double-digit year-on-year growth in gross
profit and operating profit growth in line with expectations,
following an expected rebound in travel and entertainment costs,
following periods of reduced spend due to the COVID-19 pandemic.
The Board continue to monitor the global and national economic
environment and organise operations accordingly.
Base case
The base case, which was approved by the Board in October 2023,
takes into account the FY2024 budget process which includes
estimated growth and increased cost across the going concern period
and is consistent with the actual trading experience through to
September 2023. The key inputs and assumptions in the base case
include:
-- Continued revenue growth in line with historic rates;
-- rebate income continues to be received in proportion to cost of sales as in FY2023;
-- employee commission is incurred in line with the gross margin; and
-- increased levels of cost to reflect continued investment in
our people and the businesses IT infrastructure.
The Company has taken a measured approach to the base case and
has balanced the expected trading conditions with available
opportunities in an increasingly resilient area of customer spend,
which is supported by the current financial position. In making our
forecasts we balanced our customer needs alongside employee
welfare. Year to date trading to the end of September 2023 is
consistent with the base case forecast.
Severe but plausible case
Given the current economic challenges facing our customer base
and supply chain, we have modelled a severe but plausible scenario.
In this case we have modelled a decline in revenue, versus the base
case, which is below any historic trend and more severe than
experienced during the height of the pandemic. Further impacts of
this scenario such as reduced margins and greater credit losses
have also been considered.
The key inputs and assumptions, compared to the base case,
include:
-- an average 7.5% reduction in revenue,
-- reduced gross profit margins of 1% in the period;
-- additional bad debt write offs of GBP5m across the forecast period;
-- extending the debtor days from historic levels achieved and
no change to historic supplier payment days;
-- paying a reduced interim dividend in line with lower
profitability but still within the range set out in the dividend
policy; and
-- both commission cost and rebate income adjusted downwards in
line with reduced profitability and cost of sales, but at the same
percentage rates as in the base case.
The purpose of this scenario was to consider if there was a
significant risk that the Company would move to being cash negative
in any of the months in the going concern period. Even at these
lower levels of activity, which the Directors believe is a highly
unlikely outcome, the Company continues to be profitable and
maintains a positive cash balance at all times. Despite this,
management have modelled further cost saving and working capital
action (see mitigating actions) that will enable the Company to
mitigate the impact of reduced cash generation further and achieve
the Boards desired minimum cash position, should this scenario
occur. The Directors are confident that they can implement these
actions if required.
Mitigating actions
There are several potential management actions that have not
been included in the severe but plausible forecast and it is
estimated that the total cash impact of these actions is in excess
of a GBP21m cost reduction on an annualised basis and additional
annual working capital savings of GBP30m. The actions which if
implemented would offset the reduced activity:
-- bonus costs scaled back in line with performance;
-- no interim dividend in H2 of FY2024;
-- savings in discretionary areas of spend;
-- delayed payment to suppliers foregoing early settlement discount; and
-- short term supplier payment management.
The mitigations are deemed achievable and reasonable as the
Company benefits from a flexible business model with a high
proportion of costs linked to performance.
Reverse stress test
The Directors have performed a reverse stress test exercise to
assess the impact on liquidity, should a scenario more extreme than
the severe but plausible scenario occur. The impact of these
conditions, when combined, would place a strain on liquidity and
raise short term concerns to the business, however, would not
result in cash falling below a nil position. The conditions go
significantly further than the severe but plausible scenario and
reflect a scenario that the business consider remote.
The four combined stresses modelled, compared to the base case,
are as follows:
-- reduction of 15% in Gross invoiced income, compared to the base case;
-- reduced achievable gross margin by 3%;
-- additional bad debt write offs of GBP10m per year across the forecast period; and
-- extending the debtor days by three days from historic levels
achieved and no change to historic supplier payment days.
All four inputs are greater than the business has ever
experienced in its history. In the modelled scenario, prior to
mitigations, cash may not be sufficient for day to day
operations.
Whilst the Board considers such a scenario to be remote a
programme of further actions to mitigate the impact, in excess of
those set out above, would be actioned should the likelihood of
such a scenario increase. The Board considers the forecasts and
assumptions used in the reverse stress test, as well as the event
that could lead to it, to be remote.
Going concern conclusion
Based on the forecast and the scenarios modelled, together with
the performance of the Company to date, the Directors consider that
the Company has sufficient liquidity headroom to continue in
operational existence for the thirteen-month period from the date
of this report (the going concern period) until 30 November 2024.
Accordingly, at the October 2023 Board meeting, the Directors
concluded from this analysis it was appropriate to continue to
adopt the going concern basis in preparing the financial
statements. Should the impact of these conditions be even more
prolonged or severe than currently forecast by the Directors under
the severe but plausible case scenario, the Company would need to
implement additional operational or financial measures.
Accounting policies
The preliminary announcement for the year ended 31 July 2023 has
been prepared in accordance with the accounting policies as
disclosed in Softcat plc's Annual Report and Accounts 2023, as
updated to take effect of any new accounting standards applicable
for the year.
3. Segmental information
The information reported to the Company's Chief Executive
Officer, who is considered to be the chief operating decision maker
for the purposes of resource allocation and assessment of
performance, is based wholly on the overall activities of the
Company. The Company has therefore determined that it has only one
reportable segment under IFRS 8, which is that of "value-added IT
reseller and IT infrastructure solutions provider". The Company's
revenue, results and assets for this one reportable segment can be
determined by reference to the statement of profit or loss and
other comprehensive income and statement of financial position. An
analysis of revenues and gross invoiced income by product, which
form one reportable segment, is set out below:
Revenue by type
2023 2022
GBP'000 GBP'000
Software 188,797 150,000
Hardware 610,638 797,897
Services 185,865 130,049
985,300 1,077,946
Gross invoiced income by type
2023 2023
GBP'000 GBP'000
Software 1,543,501 1,365,343
Hardware 617,844 810,241
Services 401,963 331,953
2,563,308 2,507,537
Revenue and gross invoiced income can also be disaggregated by
type of business:
Revenue by type of business
2023 2022
GBP'000 GBP'000
Small and medium 555,541 535,823
Enterprise 253,229 222,064
Public sector 176,530 320,059
985,300 1,077,946
Gross invoiced income by type of business
2023 2022
GBP'000 GBP'000
Small and medium 1,103,851 1,169,255
Enterprise 512,839 427,249
Public sector 946,618 911,033
2,563,308 2,507,537
Gross invoiced income reflects gross income billed to customers
adjusted for deferred and accrued revenue items and is consistent
with our previous application of IAS 18. Softcat will continue to
report gross invoiced income as an alternative financial KPI as
this is a measure which correlates closely to the cash received by
the business and therefore aids the users understanding of working
capital movements in the statement of financial position and the
relationship to sales performance and the mix of products sold. The
impact of IFRS 15 and principal versus agent consideration is an
equal reduction to both revenue and cost of sales.
During the year there was no direct customer (FY2022: one) that
individually accounted for greater than 10% of both the Company's
total revenue and gross invoiced income, and a considerably lower
proportion of gross profit. Gross invoiced income and revenue
generated from this customer in FY2022 was GBP251.3m and GBP227.5m
respectively.
Reconciliation of gross invoiced income
to revenue
2023 2022
GBP'000 GBP'000
Gross invoiced income 2,563,308 2,507,537
Income to be recognised as agent under
IFRS 15 (1,578,008) (1,429,573)
Revenue 985,300 1,077,964
The total revenue for the Company has been derived from its
principal activity as an IT reseller. Substantially all of this
revenue relates to trading activities undertaken in the United
Kingdom.
4. Taxation
2023 2022
GBP'000 GBP'000
Current Tax
Current income tax charge in the year 30,414 25,979
Adjustment in respect of current income
tax in previous years (160) 52
Foreign tax effects - 1
Deferred Tax
Temporary differences (419) (293)
Total tax charge for the year 29,835 25,739
5. Dividends
2023 2022
GBP'000 GBP'000
Declared and paid during the year:
Special dividend on ordinary shares (12.6p
per share (2022: 20.5p)) 25,122 40,806
Final dividend on ordinary shares (16.6p
per share (2022: 14.4p)) 33,098 28,663
Interim dividend on ordinary shares (8.0p
per share (2022: 7.3p)) 15,955 14,551
74,175 84,020
A final dividend of 17.0p per share has been recommended by the
Directors and if approved by shareholders will be paid on 19
December 2023. The final ordinary dividend will be payable to
shareholders whose names are on the register at the close of
business on 10 November 2023. Shares in the Company will be quoted
ex-dividend on 9 November 2023. The dividend reinvestment plan
('DRIP') election date is 28 November 2023.
In line with the Company's stated intention to return excess
cash to shareholders, a further special dividend payment of 12.6p
has been proposed. If approved this will also be paid on 19
December 2023 alongside the final ordinary dividend.
The Board recommends the final and special dividend for
shareholders' approval.
6. Inventories
2023 2022
GBP'000 GBP'000
Finished goods and goods for resale 3,591 5,104
The amount of any write down of inventory recognised as an
expense in the year was GBPnil in both years.
7. Trade and other receivables
2023 2022
GBP'000 GBP'000
Trade and other receivables 429,569 497,308
Provision against receivables (3,920) (4,958)
Net trade receivables 425,649 492,350
Unbilled receivables 34,508 26,192
Prepayments 6,344 4,338
Accrued income 9,270 10,534
Deferred costs 14,270 8,010
490,041 541,424
8. Trade and other payables
2023 2023
GBP'000 GBP'000
Trade payables 254,907 280,769
Other taxes and social security 13,699 23,078
Accruals 90,222 115,261
Other creditors 799 -
359,627 419,108
9. Contract liabilities
Contract liabilities are comprised of:
2023 2022
GBP'000 GBP'000
Deferred income 26,883 35,184
Deferred income is further broken down
as:
Short term deferred income 23,851 31,564
Long term deferred income 3,032 3,620
26,883 35,184
10. Earnings per share
2023 2022
Pence Pence
Earnings per share
Basic 56.2 55.5
Diluted 56.0 55.3
The calculation of the basic earnings per share and diluted
earnings per share is based on the following data:
2023 2022
GBP'000 GBP'000
Earnings
Earnings for the purposes of earnings
per share being profit for the year 112,029 110,405
The weighted average number of shares is given below:
2023 2022
000's 000's
Number of shares used for basic earnings
per share 199,237 198,976
Number of shares expected to be issued
at nil consideration following exercise
of share options 922 656
Number of shares used for diluted earnings
per share 200,159 199,632
11. Notes to the cash flow statement
2023 2022
GBP'000 GBP'000
Cash flow from operating activities
Operating profit 140,898 136,145
Depreciation of property, plant and
equipment 2,466 2,373
Depreciation of right-of-use assets 2,127 1,594
Amortisation of intangibles 1,525 558
Loss on disposal of fixed assets - -
Dividend equivalents paid (66) (215)
Cost of equity settled employee share
schemes 3,330 2,541
Operating cash flow before movements
in working capital 150,280 142,996
Decrease in inventories 1,513 33,307
(Increase)/decrease in trade and other
receivables 51,383 (211,694)
(Decrease)/increase in trade and other
payables (68,581) 144,379
Cash generated from operations 134,595 108,988
Income taxes paid (29,793) (25,344)
Net cash generated from operating activities 104,802 83,644
12. Share capital
2023 2022
GBP'000 GBP'000
Allotted and called up
Ordinary shares of 0.05p each 100 100
Deferred shares* of 1p each - -
100 100
*At 31 July 2023 deferred shares had an aggregate nominal value
of GBP189.33 (2022: GBP189.33).
Deferred shares do not have rights to dividends and do not carry
voting rights.
13. Post balance sheet events
Dividend
A final dividend of 17.0p per share has been recommended by the
Directors and if approved by shareholders will be paid on 19
December 2023. The final ordinary dividend will be payable to
shareholders whose names are on the register at the close of
business on 10 November 2023. Shares in the Company will be quoted
ex-dividend on 9 November 2023. The dividend reinvestment plan
('DRIP') election date is 28 November 2023.
In line with the Company's stated intention to return excess
cash to shareholders, a further special dividend payment of 12.6p
has been proposed. If approved this will also be paid on 19
December 2023 alongside the final ordinary dividend.
Corporate Information
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial information differs from
legislation in other jurisdictions.
Directors
G Watt
G Charlton
K Mecklenburgh
R Perriss
V Murria
L Weedall
M Prakash
Secretary
Luke Thomas
Company registration number
02174990
Registered office
Solar House
Fieldhouse Lane
Marlow
Buckinghamshire
SL7 1LW
Auditor
Ernst & Young LLP
1 More London Place
London
SE1 2AF
Softcat plc LEI
213800N42YZLR9GLVC42
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR FLFVDILLVFIV
(END) Dow Jones Newswires
October 24, 2023 02:05 ET (06:05 GMT)
Grafico Azioni Softcat (LSE:SCT)
Storico
Da Apr 2024 a Mag 2024
Grafico Azioni Softcat (LSE:SCT)
Storico
Da Mag 2023 a Mag 2024
