REG - Softcat PLC - Half-year Report
19/03/2025 07:15
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RNS Number : 2041B Softcat PLC 19 March 2025
SOFTCAT plc
('Softcat', the 'Group')
Half year results for the six months to 31 January 2025
Strong first half performance with positive momentum
Softcat plc (LSE: SCT.L), a leading UK provider of IT infrastructure products
and services, today announces its half year results for the six months to 31
January 2025 ('the period').
These results demonstrate continued successful strategic execution, enabling
the delivery of further strong growth in gross profit and operating profit,
together with healthy cash generation. Our performance in the period, coupled
with an encouraging second half pipeline, provides us with the confidence to
upgrade full year operating profit guidance.
Financial Summary Six months ended
31 January 31 January
2025 2024 Change
£m £m
Gross invoiced income(a) 1,507.1 1,263.5 19.3%
Revenue(b) 545.6 467.2 16.8%
Gross profit 220.2 196.5 12.1%
Operating profit 73.7 66.7 10.4%
Cash conversion %(c) 110.9% 101.1% 9.8ppts
Interim dividend (p) 8.9p 8.5p 4.7%
Basic earnings per share (p) 28.7p 25.6p 12.3%
Highlights for the six months to 31 January 2025
● Continued double-digit growth of 12.1% in gross profit and 19.3% in gross
invoiced income, reflecting broad-based success across technology areas and
customers.
● Strong operating profit growth of 10.4%, delivering another record first half
profit.
● Further targeted strategic investment to underpin future growth, with
headcount up 6.0% on the prior period.
● Continually evolving technology and service proposition supports our ability
to take market share and add further scale in a growing industry.
● Strong cash conversion of 110.9%, with closing cash of £141.0m.
● Interim ordinary dividend growth of 4.7% to 8.9p, in line with progressive
policy.
● Outlook: operating profit growth in the first six months of the financial year
is slightly ahead of the Board's expectations. We continue to expect to
deliver another year of double-digit gross profit growth in FY2025, with
operating profit growth now expected to be low double-digit, up from high
single-digit previously.
( )
(a) 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 9.
(b) 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).
(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 9.
Graham Charlton, Softcat CEO, commented,
"We have continued to successfully implement our strategy, resulting in a
first half performance slightly above our initial expectations and an upgrade
to full year guidance, despite the persistent backdrop of generally more
challenging trading conditions. Our progress is attributable to the breadth of
our offering and sustainability of our growth model, powered by Softcat's
special culture and the differentiated customer service it delivers.
We are excited by the rapid pace of innovation across our industry, with more
organisations embedding AI and automation into their systems and processes.
Our existing capabilities and continued investment mean we are well positioned
to support the evolving technological needs of our customers, enabling us to
sustainably grow market share. Should a compelling opportunity arise, our
financial strength also provides us with the flexibility to accelerate further
through acquisitions.
As ever, these results are only possible thanks to the tremendous efforts of
the entire Softcat team. I would like to thank all our people for their
positive attitude, customer focus and outstanding support for each other.
Reflecting the strength of collaboration between our people, customers and
partners, we have an incredible opportunity to build on our current momentum
and further improve our market-leading UK position."
Outlook
Operating profit growth in the first six months of the financial year is
slightly ahead of the Board's expectations. We continue to expect to deliver
another year of double-digit gross profit growth in FY2025, with operating
profit growth now expected to be low double-digit, up from high single-digit
previously, supported by an encouraging second half pipeline.
Softcat operates in a significant and growing market, and we continue to
invest to capitalise on this exciting growth potential, to drive further
market share gains.
Analyst and investor call
The management team will host an investor and analyst conference call at
9.30am UK time, on Wednesday, 19 March 2025. To join the conference call,
please use the following webcast link:
https://brrmedia.news/SCT_HY_25
(https://stream.brrmedia.co.uk/broadcast/67b88734118fdd713443dbc5)
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
Michael Watts, Head of Investor Relations
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 Financial Conduct Authority,
the Group 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. The
responsible individual for insider information at Softcat plc is Luke Thomas
(Company Secretary).
Chief Executive Officer's Review
Performance and market conditions
We have continued to successfully execute on our strategy, delivering another
strong performance in the period, which was slightly ahead of our
expectations. These results are particularly pleasing given the ongoing
challenges within the UK economy and are testament to the quality of our
business. Our success reflects the resilience and sustainability of our growth
model, which is based upon the breadth of our product offering and the trust
placed in us by a large and diverse customer base.
During the period we made further good progress against our two key strategic
goals: winning new customers, up 1.4% year-on-year, and selling more to
existing customers, with an increase of 10.7% in gross profit (GP) per
customer. Growth was once again broad-based but especially strong in security,
networking and data centre infrastructure, with a number of customers making
significant investments in these technologies.
We continue to invest in the long-term relevance of our offering, building
further depth in our data, AI and automation capabilities. In addition, we
are bolstering our own internal data and systems to generate insights and
analysis that can be leveraged by our sales teams, further enhancing the
customer experience and improving collaboration with our vendor partners.
While our growth to date has been entirely organic, the strength of our
financial position means that we could also complement the development of our
offering through acquisitions, should a compelling opportunity arise.
We are excited by the pace at which our industry is innovating, providing us
with significant opportunities for growth in the years ahead, supported by our
unique culture and the richness of our customer proposition. In the near term,
we have a confident outlook for the remainder of this financial year,
resulting in an upgrade to our operating profit growth guidance for the full
year. This is based on the strength of our execution in the first half as well
as an encouraging second half pipeline.
Customer priorities and technology trends
Technology plays a critical role in many organisations, to help drive growth,
increase productivity and efficiency, and to improve customer experience. The
rapid pace of technological innovation places huge demands on organisations to
invest in the right IT solutions and services at the right time. Softcat helps
customers to navigate this increasingly complex IT landscape, supporting their
unique requirements by enabling them to harness the latest innovations, deploy
effective solutions and achieve greater success. Softcat has done this
successfully for years, and we believe we are better placed than ever given
the investments we have continued to make through different economic and
technology cycles.
Our annual customer experience survey highlighted cyber security as the most
common customer priority, reflecting the relentless development of new cyber
threats and the need to protect proliferating and increasingly sensitive data
and operating systems. This means organisations must constantly adapt to
emerging methods of attack, alongside implementing comprehensive monitoring to
mitigate security risks. We are also seeing a significant increase in
organisations embedding AI and automation into their systems and processes,
either hosted in the cloud or deployed at the edge of the network, both within
existing applications or through bespoke proprietary development. All this
innovation is encouraging more organisations to promote a data-driven culture
across their operations which in turn creates demand across multiple areas of
our technology proposition.
The anticipated refresh cycle for end user devices is showing some signs of
momentum but is not yet a significant driver of industry growth.
Strategic developments
Our strategic framework, alongside further investment in our own data and
digital strategies, enables us to deliver a highly relevant customer
proposition, while also accommodating the rapid pace of vendor innovation. The
five pillars of our technology proposition cover all aspects of modern IT
infrastructure and, by framing our offering in this way, we make our services
more easily accessible.
We have also established a service offering across each of these five
technology towers, covering advisory, architecture, implementation, support
and managed, and recently appointed a new Service Operations Director. This
new role will ensure that what is now one of the UK's largest and most diverse
infrastructure services offerings is continually enhanced and delivered to the
right customers in an efficient manner at the right time.
As part of our investment in our data and digital strategy, and in common with
many of our customers, we are investing in the Microsoft ecosystem as part of
our own technology stack. We have rolled out Microsoft Copilot across our
employee base, enabling new ways of working and improving both productivity
and quality of work. We have also recently selected Microsoft Dynamics to
replace our current sales system. This will enable us to improve our customer
and employee experience by leveraging integrated AI functionality between core
systems.
Work has taken place during the period on our evolved UK vendor management
framework, which is due to be launched later this year. The framework will
allow us to work more effectively with our strategic vendors and is clearly
aligned with our growth strategy and technology proposition.
We have also continued to invest in our capabilities to serve large and
complex customers, alongside growing our multinational customer base. We now
have an extensive network of branches in Europe, APAC and an office in
Virginia, USA. As we pursue further growth by serving more of our customers'
operations outside the UK and Ireland, we expect to continue expanding our
international footprint and recently established a presence in Germany.
People and culture
Nurturing Softcat's unique culture will always be at the centre of our
strategy; it forms the foundation of our ongoing success in delivering
exceptional customer service and sustainable growth. Our relentless efforts in
maintaining Softcat's special culture create an environment where our people
display enormous passion, working collaboratively and support each other as
they strive to meet the needs of customers. This creates the cycle of trust
that results in customers placing more of their requirements through us,
fuelling further investment in our offering, and reinforcing our key
competitive advantages. In our annual employee engagement survey, undertaken
in October 2024, we achieved an employee net promoter score of 55 (FY2024:
59), which remains at a market-leading level.
We have continued to invest in our people and during the first half we
increased total headcount by 6.0% year-on-year to 2,617 with new hires focused
across our technical, specialist and sales support functions, as we build our
capability to do more with existing customers. We anticipate net headcount
expansion for the full year to be in the range of 6-8%.
Softcat champions diversity, equity, and inclusion through employee community
groups, inclusion training, and strategic partnerships. By fostering an
inclusive culture, we create a workplace where all employees thrive. We are
delighted to have received excellent recognition for our efforts, not only
from our people, but also through external awards. Softcat won the Best
Diversity Initiative Award at the CRN Channel Awards in October 2024, with our
entry highlighting the work we have done to meet our ambition of reaching a
35% female gender balance (now raised to a new target of 40%). At the same
event, we also won the Cultural Inclusion Company of the Year Award and were
highly commended in the Equitable Place to Work and Championing Diversity
Award. Elsewhere, Softcat has been recognised in the Fortune 100 Best
Companies to Work for in Europe, which showcases the best large and
multinational organisations successfully creating cultures that put people
first.
Our continued fast pace of growth and our focus on creating vibrant and
welcoming office environments, have necessitated moves to new locations across
several of our office sites. In November 2024, we settled into our new
Birmingham office, which has seen average daily attendance increase by a fifth
since opening. In March 2025, we moved our London presence to one of the
single largest floorplates in the City, and a new Bristol office will also
open soon. These changes enable us to provide facilities to enhance wellbeing
and collaboration between our people, vendors and customers, and ensure that
we can continue to successfully scale across all our UK regions.
Sustainability
We are focused on making progress across all areas of sustainability in the IT
industry. Our integrated approach to implementing innovative environmental
strategies, impactful social initiatives, and robust governance, helps us
deliver on our sustainability commitments, while our close collaboration with
partners and customers empowers them to achieve their own sustainability
goals, creating a ripple effect of positive change.
We remain committed to minimising our direct impact on the environment and
supporting wider industry efforts to reduce emissions. Mandatory
sustainability training ensures a Group-wide commitment to these goals. Our
successful transition to renewable energy, where possible, across our office
locations and the resulting decline in our Scope 2 carbon emissions, was
recently recognised as Net Zero Project of the Year at the CRN Sustainability
in Tech Awards.
Our "8 Steps to Sustainable Success" framework is helping our customers
decarbonise through the adoption of sustainable solutions and services. We
offer tailored pre-purchase guidance, asset optimisation and post-use
recycling solutions, enabling customers to extend product lifecycles and
generate measurable environmental benefits that support the circular economy.
Chief Financial Officer's Review
Financial Summary H1 FY2025 H1 FY2024 Change
Gross invoiced income split
Software £942.8m £769.5m 22.5%
Hardware £326.6m £275.6m 18.5%
Services £237.7m £218.4m 8.8%
Total gross invoiced income(1) £1,507.1m £1,263.5m 19.3%
Revenue split
Software £105.9m £96.2m 10.1%
Hardware £324.6m £273.1m 18.9%
Services £115.1m £97.9m 17.6%
Total revenue £545.6m £467.2m 16.8%
Gross profit £220.2m £196.5m 12.1%
Gross profit margin(2) 14.6% 15.6% (1.0%) pts
Operating profit £73.7m £66.7m 10.4%
Operating profit margin(2) 4.9% 5.3% (0.4%) pts
Gross profit per customer(3) £43.1k £38.9k 10.7%
Customer base(4) 10.3k 10.1k 1.4%
Cash conversion(5) 110.9% 101.1% 9.8% pts
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 page 9.
2 Gross profit margin and operating profit margin are both calculated as a
percentage of gross invoiced income.
3 Gross profit per customer is defined as Gross profit divided by the customer
base.
4 Customer base is defined as the number of customers who have transacted with
Softcat in both of the preceding twelve-month periods.
5 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 9.
Gross profit, revenue and gross invoiced income
Our H1 FY2025 results reflect the resilience of our business model and
consistent success in strategic execution. We continue to support the IT
infrastructure needs of new and existing customers through our comprehensive
range of technology solutions, served by highly engaged employees providing
superior customer service.
Gross profit (GP), our primary measure of income, grew by 12.1% to £220.2m,
consistent with full year guidance for low double-digit growth and slightly
ahead of our expectations for the first half. Market conditions have remained
relatively challenging with continued macroeconomic uncertainty, and our
performance in these conditions highlights the resilience of our business
model, including the benefit of having a very broad portfolio of solutions
catering to a diverse customer base.
GP growth was broad based across enterprise, mid-market and public sector
customer segments with all growing high single-digit or double-digit. By
technology area GP growth was driven by security, reflecting the continued
prioritisation by customers of investment in cyber, alongside growth in data
centres and networking, where demand was broad-based and supplemented by some
larger orders. Workplace growth was impacted by slower recovery in client
devices and some margin dilution on certain products.
By product type, hardware, software and services GP also all grew high
single-digit or double-digit. Hardware growth was supported by datacentre and
networking infrastructure, server and compute sales. Software GP growth was
broad-based across technologies and services growth was driven by some large,
high margin support service deals in the period.
Revenue is reported in accordance with IFRS 15 with some transactions
(generally hardware and internally delivered services) reported gross
(principal) and others (generally software and externally provided services)
reported net (agent) which can make revenue trends hard to understand. We
therefore continue to report GII to help provide a clearer view of underlying
growth. H1 FY2025 revenue grew overall by 16.8% driven by: (1) an 18.5%
increase in hardware GII due to strong datacentre, networking, server and
compute sales; (2) software revenue growth of 10.1% was lower than GII growth
of 22.5%, due to a lower software gross margin, reflecting product mix and a
mix into high volume, low margin, transactions in the period; and (3) services
revenue growth of 17.6%, reflecting a higher share of internally-delivered
services, which are reported on a gross basis, and particular success in
support services mentioned above.
GII increased 19.3% to £1,507.1m, driven by strong growth in software and
hardware, as discussed above, while services grew by 8.8% supported by strong
growth in high margin internal services. GII grew ahead of GP reflecting the
impact of several higher volume, low margin sales in the period, together with
the dilution in software margin described above, resulting in GP as a
percentage of GII declining year-on year to 14.6% (H1 FY2024: 15.6%).
Customer KPIs
During the period, GP per customer grew by 10.7% to £43.1k (H1 FY2024:
£38.9k) and the customer base expanded by 1.4%, to 10.3k (H1 FY2024: 10.1k).
As the longevity of the relationship with our customers increases, the GP
transacted with them also increases. Over time, customers buy across more
technology areas and an increasing range of vendors. Loyalty, as measured by
lower rate of customer churn, also significantly increases. We track this
effect by measuring core KPIs among those customers transacting over £1k of
GP with us each year, at which point average churn drops significantly. This
number of customers in this more stable cohort, grew at 4.9% to over 8.0k
during the period, with the average GP delivered from each of those customers
expanding by 7.0% to £54.9k.
The long tail of customers with whom we interact less often, along with
customers who have not purchased from Softcat in the last 12 months or at all,
constitute future growth opportunities. The balance between winning new
customers and doing more with existing customers is integral to our Account
Manager model and strategic goals.
Internal analysis, incorporating data from multiple sources (Gartner, HG
Insights, CRN and ICG), indicates that our market share remains around 5% in
the UK. We serve approximately 20% of the customers in our target market in
the UK, based on those who trade with us in two consecutive 12-month periods,
which implies a 25% average share of wallet. This analysis suggests there
remains a significant future growth opportunity and is supportive of our
strategy to attract new customers and go deeper with our existing customers.
Operating profitability and investment in future growth
Operating profit of £73.7m (H1 FY2024: £66.7m) increased by 10.4%
year-on-year, ahead of our expectations, driven by the over delivery of gross
profit, with the GP growth of 12.1% partially offset by a 12.9% rise in
operating costs.
Operating cost growth was driven by increased commissions broadly in line with
GP growth and a 10.7% increase in wages and salaries, including average
headcount growth of 6.6%, reflecting a more measured level of investment as we
leverage the significant headcount growth in recent periods. Moves to new
office sites also contributed to increased operating costs during the period.
Our new London office was the main driver behind the increase in right-of-use
assets, lease liabilities and property, plant and equipment.
As a result of the ongoing investments we are making in the long-term future
of our business, the ratio of operating profit to gross profit has marginally
decreased to 33.5% (H1 FY2024: 34.0%).
Corporation tax charge
The effective tax rate for H1 FY2025 was 25.2% (H1 FY2024: 25.2%) and
marginally higher than the UK statutory rate of 25.0% due to the impact of
non-deductible expenses. Our tax strategy continues to be focused on paying
the right amount of tax in the right jurisdiction, at the right time.
Cash flow and cash conversion
The Group entered the period with £158.5m of cash and cash equivalents before
paying an aggregate final ordinary and special dividend of £77.9m in December
2024. This was largely offset by strong cash generation during the first half,
resulting in cash and cash equivalents at the end of the period of £141.0m
(H1 FY2024: £112.5m). The Group remains debt free.
Cash conversion, defined as net cash generated from operating activities
before tax but after capital expenditure, as a percentage of operating profit,
was 110.9% (H1 FY2024: 101.1%). This strong performance reflects continued
good working capital management, alongside the timing impact of certain
customer transactions, including £16.0m paid up front by a single customer.
Excluding this advanced customer payment, cash conversion would have been
89.2%, within our target cash conversion range of 85%-95%.
Our capital allocation policy remains unchanged, prioritising long-term
investment in organic growth to facilitate further share gains in our growing
addressable market; secondly to maintain a progressive ordinary dividend.
Remaining excess capital is then either allocated to compelling strategic
investments, which could include bolt-on acquisitions to expand our portfolio
offering, or is returned to shareholders. During the period, we have continued
to invest in our key priority to drive the long-term growth potential of
Softcat, by increasing headcount, investing in new office capacity and
developing our data and digital platforms.
Finance net income
In the period, net interest income totalled £3.1m (H1 FY2024: £1.5m). The
year-on-year increase was driven by improved management of cash and cash
equivalents held in interest bearing accounts.
Dividend
An interim ordinary dividend of 8.9p per share (H1 FY2024: 8.5p), amounting to
£17.8m (H1 FY2024: £17.0m), has been approved by the Board of Directors.
This is in line with our updated approach to pay one-third of the previous
year's ordinary dividend as an interim dividend in the current year. The
interim dividend will be payable on 21 May 2025, to shareholders whose names
are on the register at the close of business on 11 April 2025. Shares in the
Group will be quoted ex-dividend on 10 April 2025. The last day for dividend
reinvestment plan ('DRIP') elections is 29 April 2025.
Alternative Performance Measures
The Group 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 Group.
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 user's 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 3 of the interim
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 Group's ability to convert profits into
available cash. A reconciliation to the adjusted measure for cash conversion
is provided below:
H1 2025 H1 2024
£'000 £'000
Net cash generated from operating activities 65,329 51,198
Income taxes paid 24,281 19,082
Cash generated from operations 89,610 70,280
Purchase of property, plant and equipment (4,896) (682)
Purchase of intangible assets (2,997) (2,115)
Cash generated from operations, net of capital expenditure 81,717 67,483
Operating Profit 73,662 66,731
Cash conversion ratio 110.9% 101.1%
Excluding an advance customer payment, cash conversion in H1 FY2025 would have
been 89.2%.
Principal Risks and Uncertainties
The principal and emerging risks facing the Group have been identified and
evaluated by the Board.
In assessing the Group's likely financial performance for the second half of
the current financial year, these risks and uncertainties should be considered
in addition to the comments made under the heading "outlook" in the Chief
Executive Officer's Review.
In summary, principal risks include:
Risk Potential impacts Management and mitigation
BUSINESS STRATEGY
Failure to respond to market changes including technology offering, channel · Loss of competitive advantage · Insight from ongoing industry analysis and subscriptions input
disintermediation, competitor landscape and customer needs.
into annual strategy process
· Reduced number of customers and profit per customer
(no change in net risk)
· Regular insights into customer priorities including
climate-related through the annual customer experience survey results and
'voice of the customer' surveys. Multi-layered relationship with strategic
vendors and executive sponsor alignment
· Regular Quarterly Business Reviews with vendors
· Regular meetings between senior representatives from sales,
technology and vendor management teams to review technology and market trends
and customer propositions.
OPERATIONAL
Customer dissatisfaction · Reputational damage · Dedicated Customer experience team, who manage and escalate
customer dissatisfaction cases
(no change in net risk) · Loss of customers
· ISO20000-1 IT Service Management and ISO-9001 Quality management
· Financial penalties certified
· Ongoing customer service excellence training
· 'Big-deal review' process
Cyber security risk & business interruption risk · Inability to deliver customer services · ISO27001 accredited processes. Group-wide information security
policy and mandatory security-related training
(no change in net risk) · Reputational damage
· Regular testing of disaster recovery plans and business
· Financial loss continuity plans
· Customer dissatisfaction · 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 factors, including geo-political conditions, impact on customer · Short-term supply chain disruption · Customer base is well diversified in terms of both revenue
sentiment, inflationary pressures, interest and foreign currency volatility
concentration but also public and commercial sector exposure
· Reduced margins
(no change in net risk)
· Close dialogue with supply chain partners
· Reduced customer demand
· Market conditions are factored in our annual budgeting process
· Reduced profit per customer
· Operating costs are budgeted and reviewed regularly
· Higher operating costs
· Going concern and viability statements are underpinned by robust
· Customer insolvencies and cash collection challenges analysis of scenarios
Ineffective working capital management, including customer credit risk · Increased bad debts · Robust credit assessment process including use of trade credit
relating to both in-year and multi-year deals (no change in net risk)
insurance
· Increased cost of operations
· Regular review of the 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 competitive terms with our suppliers and/or right- size our · Uncompetitive pricing leading to loss of business · Budgeting process and regular reviews ensure costs are managed
cost base compared to gross profit generated.
appropriately and in consideration of gross profit growth. Any out of budget
· Reduced profitability/margins spend needs management level approval
(no change in net risk)
· Rebates form an important, but only minority, element of total
operating profit. In addition, Rebate programmes tend to be industry standard
and not specific to the Group, 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 engagement · Culture sits at the heart of all changes that are made in
Softcat. There is regular communication from Senior Leadership Team members
(no change in net risk) · Negative impact on customer service to employees at 'Kick Off' and 'All Hands' calls about the importance of
culture
· Loss of talent
· Regional offices with empowered local management
· Quarterly management satisfaction survey and annual all-employee
survey with feedback acted upon
· Regular staff events and incentives
· Enhanced internal communication processes and events
Talent, Capability & Leadership risk · Lack of strategic direction · Succession planning process in place.
(no change in net risk) · Reduced staff engagement · Experienced and broad senior management team
· Loss of talent · Investment in robust recruitment and selection processes
· Loss of competitive advantage · Attrition tracked and action taken as necessary
Regulatory and Compliance
Compliance with existing regulation/legislation and being prepared for · Financial penalties · Significant investment in a second line of defence function (Risk
emerging regulation/legislation
Assurance and Process Improvement, Information Security, Legal and Company
· Reputational damage Secretarial teams)
(no change in net risk)
· Loss of customers · 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 the prior year, in line with the approach recommended by the Taskforce on
Climate-related Financial Disclosures ('TCFD') and pursuant to the Companies
(Strategic Report) (Climate-related Financial Disclosure) Regulations 2022
('UK CFD'), we conducted a formal assessment of the potential impact of
climate change to our business and supply chain. Please see our 2024 Annual
Report and Accounts, pages 60 to 82 for more information. 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. Our most
recent 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.
These risks and uncertainties have not changed significantly since those
published in the 31 July 2024 Annual Report.
Going Concern
Please refer to note 2 under 'Basis of preparation'.
Cautionary Statement
This report has been prepared solely to provide additional information to
shareholders to assess the Group's strategies and the potential for those
strategies to succeed. The Interim Management Report should not be relied on
by any other party or for any other purpose.
In making this report, the Group 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.
Directors' Responsibility Statement
The Directors confirm that, to the best of their knowledge:
● the condensed set of financial statements, which has been prepared in
accordance with UK adopted IAS 34 Interim Financial Reporting, has been
prepared in accordance with the applicable set of accounting standards, gives
a true and fair view of the assets, liabilities, financial position and profit
or loss of the Group;
● the Interim Management Report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
● the Interim Management Report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
Neither the Group nor the Directors accept any liability to any person in
relation to the half-year financial report except to the extent that such
liability could arise under English law. Accordingly, any liability to a
person who has demonstrated reliance on any untrue or misleading statement or
omission shall be determined in accordance with section 90A and schedule 10A
of the Financial Services and Markets Act 2000.
Graham Charlton Katy Mecklenburgh
Chief Executive Officer Chief Financial Officer
18 March 2025 18 March 2025
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the six months ended 31 January 2025
Six months ended Year ended
31 January
31 July
2025 2024 2024
Unaudited Unaudited Audited
Note
£'000 £'000 £'000
Revenue 3 545,584 467,152 962,633
Cost of sales (325,379) (270,638) (544,880)
Gross profit 220,205 196,514 417,753
Administrative expenses (146,543) (129,783) (263,689)
Operating profit 73,662 66,731 154,064
Finance income 3,682 1,650 5,778
Finance cost (629) (165) (443)
Profit before taxation 76,715 68,216 159,399
Income tax expense 4 (19,328) (17,169) (40,355)
Profit for the period 57,387 51,047 119,044
Other comprehensive income
Other comprehensive income that may be reclassified to profit or loss in
subsequent periods:
Net gain on cash flow hedge 1,627 677 514
Foreign exchange differences on translation of foreign branches and 119 2 (620)
subsidiaries
Total other comprehensive income/(loss) 1,746 679 (106)
Total comprehensive income for the period 59,133 51,726 118,938
Profit attributable to:
Owners of the Parent Company 57,387 51,047 119,044
Total comprehensive income attributable to:
Owners of the Parent Company 59,133 51,726 118,938
Basic earnings per Ordinary Share (pence) 12 28.7 25.6 59.7
Diluted earnings per Ordinary Share (pence) 12 28.6 25.5 59.4
All results are derived from continuing operations.
Condensed Consolidated Statement of Financial Position
As at 31 January 2025
Six months ended Year ended
31 July
31 January
2025 2024 2024
Unaudited Unaudited Audited
Note
£'000 £'000 £'000
Non-current assets
Property, plant and equipment 13,342 10,755 9,832
Right-of-use assets 6 26,752 8,779 10,066
Intangible assets 13,422 8,548 11,608
Deferred tax asset 2,497 2,623 2,571
56,013 30,705 34,077
Current assets
Inventories 7 21,335 3,992 2,916
Trade and other receivables 8 609,508 496,822 585,302
Cash and cash equivalents 141,045 112,455 158,454
Income tax receivable 3,980 2,184 -
775,868 615,453 746,672
Total assets 831,881 646,158 780,749
Current liabilities
Trade and other payables 9 (440,812) (349,271) (430,082)
Contract liabilities 10 (69,328) (36,278) (31,980)
Income tax payable - - (1,141)
Lease liabilities 6 (3,422) (2,385) (2,253)
(513,562) (387,934) (465,456)
Non-current liabilities
Contract liabilities 10 (12,497) (6,227) (9,151)
Lease liabilities 6 (24,913) (6,391) (8,105)
(37,410) (12,618) (17,256)
Total liabilities (550,972) (400,552) (482,712)
Net assets 280,909 245,606 298,037
Equity
Issued share capital 14 100 100 100
Share premium account 4,979 4,979 4,979
Cash flow hedge reserve 1,342 (122) (285)
Foreign exchange revaluation reserve 2,857 3,360 2,738
Retained earnings 271,631 237,289 290,505
Total equity 280,909 245,606 298,037
Condensed Consolidated Statement of Changes in Equity (unaudited)
Share capital Share premium Translation reserve Cash flow hedge reserve Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 August 2023 100 4,979 3,358 (799) 243,807 251,445
Profit for the period - - - - 51,047 51,047
Impact of foreign exchange on reserves - - 2 - - 2
Net gain on cash flow hedge - - - 677 - 677
Total comprehensive income for the period - - 2 677 51,047 51,726
Share-based payment transactions - - - - 1,699 1,699
Dividends paid - - - - (59,069) (59,069)
Dividend equivalents paid - - - - (98) (98)
Tax adjustments - - - - (97) (97)
Balance at 31 January 2024 100 4,979 3,360 (122) 237,289 245,606
Balance at 1 August 2024 100 4,979 2,738 (285) 290,505 298,037
Profit for the period - - - - 57,387 57,387
Impact of foreign exchange on reserves - - 119 - - 119
Net gain on cash flow hedge - - - 1,627 - 1,627
Total comprehensive income for the period - - 119 1,627 57,387 59,133
Share-based payment transactions - - - - 1,652 1,652
Dividends paid - - - - (77,907) (77,907)
Dividend equivalents paid - - - - (99) (99)
Tax adjustments - - - - 93 93
Balance at 31 January 2025 100 4,979 2,857 1,342 271,631 280,909
Condensed Consolidated Statement of Cash Flows
For the six months ended 31 January 2025
Six months ended Year ended
31 July
31 January
2025 2024 2024
Unaudited Unaudited Audited
Note
£'000 £'000 £'000
Net cash generated from operating activities 13 65,329 51,198 115,608
Investing activities
Finance income 3,682 1,650 5,778
Purchase of property, plant and equipment (4,896) (682) (1,115)
Purchase of intangible assets (2,997) (2,115) (6,017)
Net cash used in investing activities (4,211) (1,147) (1,354)
Financing activities
Issue of share capital - - -
Dividends paid 5 (77,907) (59,069) (76,048)
Payment of principal portion of lease liabilities 6 (110) (985) (1,929)
Payment of interest portion of lease liabilities 6 (629) (165) (443)
Net cash used in financing activities (78,646) (60,219) (78,420)
Net (decrease)/increase in cash and cash equivalents (17,528) (10,168) 35,834
Exchange gains/(losses) on cash and cash equivalents 119 2 (1)
Cash and cash equivalents at beginning of period 158,454 122,621 122,621
Cash and cash equivalents at end of period 141,045 112,455 158,454
Notes to the Consolidated Financial Information
1. General information
The Directors of Softcat plc (the "Group") present their Interim Report and
the unaudited Condensed Consolidated Interim Financial Statements for the six
months ended 31 January 2025 ("Condensed Consolidated Interim Financial
Statements").
Softcat plc is a public limited company, incorporated and domiciled in England
and Wales. Its registered address is Solar House, Fieldhouse Lane, Marlow,
Buckinghamshire, SL7 1LW.
The Condensed Consolidated Interim Financial Statements have been reviewed,
but not audited, by Ernst & Young LLP and were approved by the Board of
Directors on 18 March 2025. The financial information contained in this report
does not constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006. The Condensed Consolidated Interim Financial
Statements should be read in conjunction with the Annual Report and Financial
Statements for the year ended 31 July 2024, which have been prepared in
accordance with UK-adopted international accounting standards (IFRS) in
accordance with the requirements of the Companies Act 2006. The Annual Report
and Financial Statements for the year ended 31 July 2024 were approved by the
Board of Directors on 23 October 2024 and delivered to the Registrar of
Companies. The auditor's report on those financial statements was unqualified,
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
Basis of preparation
These Condensed Consolidated Interim Financial Statements have been prepared
in accordance with UK adopted International Accounting Standard ("IAS") 34
Interim Financial Reporting and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
The Condensed Consolidated Interim Financial Statements are presented in
Pounds Sterling, rounded to the nearest thousand ('£'000'), unless otherwise
stated. They were prepared under the historical cost convention.
The accounting policies adopted in the preparation of the Condensed
Consolidated Interim Financial Statements are consistent with those applied in
the preparation of the Group's Financial Statements for the year ended 31 July
2024.
Going Concern
The Directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, a period to at least 31
March 2026.
Overview
In considering the going concern basis for preparing this financial
information, the Directors consider the Group'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
Chief Financial Officer's review.
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 Group 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 cases.
Further details, including the analysis performed and conclusion reached, are
set out below.
The Directors have reviewed detailed financial forecasts for a twelve-month
period from the date of this report (the going concern period) until 31 March
2026.
Liquidity and financing position
At 31 January 2025 the Group held instantly accessible cash and cash
equivalents of £141m, with net current assets of £262m. Note 1 to the
financial statements in the Annual Report includes the Group'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 desired liquidity position 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 interest rates; and
● Higher risk of credit losses.
Despite the challenging economic environment, the Group has traded well,
delivering double-digit year-on-year growth in gross profit and operating
profit growth in line with expectations. 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 March 2025, takes into
account the FY2025 budget process which includes estimated growth and
increased cost across the going concern period and is consistent with the
actual trading experience through to February 2025. 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
FY2024;
● 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 Group 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. Year to date trading to the end of February 2025 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 worse than any
historic trend and more severe than experienced during the height of the
COVID-19 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 5% reduction in revenue;
● reduced gross profit margins of 0.5% in the period;
● additional bad debt write offs of £4.2m per annum, across the forecast
period;
● an average 5% reduction in rebates;
● extending the debtor days from historic levels achieved and no change to
historic supplier payment days by an additional 3 days;
● paying a reduced final dividend in line with lower profitability but still
within the range set out in the dividend policy; and
● commission cost 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 Group 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 Group continues to be
profitable and maintains a positive cash balance at all times. Despite this,
management have modelled further cost saving and working capital actions (see
mitigating actions) that will enable the Group 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, including significant cost reduction
measures and additional annual working capital savings. The actions which if
implemented would include:
● 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 Group benefits
from a flexible business model with a high proportion of costs linked to
performance.
Reverse stress tests
The Directors have performed an analysis of each variable used in the severe
but plausible case that would, standalone, trigger a threat to the going
concern status of the business. This reverse stress testing goes beyond what
is considered in the severe but plausible scenario to understand the limits of
the business model.
Before a negative cash balance within the going concern period is likely, the
following key inputs and assumptions, compared to the base case, would be
required:
● a reduction in sales of 100%;
● reduction in gross margin of 10ppts;
● extending the debtor days by an additional 12 days
The Board considers the forecasts and assumptions used in the reverse stress
tests, as well as the events that could lead to it, to be extremely remote.
Going concern conclusion
Based on the forecast and the scenarios modelled, together with the
performance of the Group to date, the Directors consider that the Group has
sufficient liquidity headroom to continue in operational existence for the
twelve-month period from the date of this report (the going concern period)
until 31 March 2026. Accordingly, at the March 2025 Board meeting, the
Directors concluded from this analysis it was appropriate to continue to adopt
the going concern basis in preparing the Condensed Consolidated Interim
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 Group would need to implement additional
operational or financial measures.
In relation to the identified potential climate change-related risks and
opportunities, the Directors do not believe there would be a material impact
on cash flows in the going concern period.
Critical accounting judgements and key sources of estimation uncertainty
When applying the Group's accounting policies, management must make several
key judgements involving estimates and assumptions concerning the future. Key
judgements management have made are those which have the most significant
effect on the amounts recognised in the financial statements. Key sources of
estimation uncertainty are those assumptions concerning the future and other
key sources of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year.
The key judgements and sources of estimation uncertainty reported in the
financial statements for the year ended 31 July 2024 are still relevant. There
have been no new areas of significant accounting judgement or key sources of
estimation uncertainly arising from operations in the first six months of the
financial year to 31 July 2025, nor in the months to the date of publication
of this interim report.
Changes to accounting standards
No new standards or amendments became effective in the period to 31 January
2025 which have had a material effect on the financial statements.
3. Segmental information
The information reported to the Group'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 Group. The Group 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 Group's revenue,
results and assets for this one reportable segment can be determined by
reference to the Condensed Consolidated Statement of Profit or Loss and Other
Comprehensive Income and Condensed Consolidated Statement of Financial
Position. An analysis of revenues by product, which form one reportable
segment, is set out below:
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue by type
Software 105,940 96,142 213,520
Hardware 324,584 273,102 561,238
Services 115,060 97,908 187,875
545,584 467,152 962,633
Gross invoiced income by type
Software 942,784 769,509 1,807,468
Hardware 326,572 275,590 568,450
Services 237,705 218,371 476,233
1,507,061 1,263,470 2,852,151
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue by type of business
Small and medium 336,006 264,634 473,985
Enterprise 127,346 120,234 298,434
Public sector 82,232 82,284 190,214
545,584 467,152 962,633
Gross invoiced income by type of business
Small and medium 736,212 578,877 1,157,007
Enterprise 306,070 260,557 597,320
Public sector 464,779 424,036 1,097,824
1,507,061 1,263,470 2,852,151
Gross invoiced income reflects gross income billed to customers adjusted for
deferred and accrued revenue items. Softcat continues to report gross invoiced
income as an alternative financial KPI as this measure allows a consistent,
year on year, understanding of gross income billed, business performance and
position and correlates closely to working capital movements. The impact of
IFRS 15 and principal versus agent consideration is an equal reduction to both
revenue and cost of sales.
Reconciliation of gross invoiced income to revenue
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited Unaudited Audited £'000
£'000 £'000
Gross invoiced income 1,507,061 1,263,470 2,852,151
Income recognised as agent under IFRS 15 (961,477) (796,318) (1,889,518)
Revenue 545,584 467,152 962,633
The total revenue for the Group has been derived from its principal activity
as an IT reseller. Substantially all this revenue relates to trading
undertaken in the United Kingdom.
4. Taxation
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Current Tax
Current period 19,205 17,065 40,338
Adjustment in respect of current income tax in previous years. - - (465)
Foreign tax effects - - 84
Deferred Tax
Temporary differences 123 104 398
Total tax charge for the period 19,328 17,169 40,355
The income tax expense was recognised based on management's best estimate of
the annual income tax rate expected for the full financial year, applied to
the profit before tax for the half year ended 31 January 2025. On this basis,
the Group's tax charge was £19.3m (H1 2024: £17.2m). The half year effective
tax charge being 25.2% (H1 2024: 25.2%).
5. Dividends
Six months ended Year ended
31 January 31 July
2025 2024 2024
Declared and paid during the period Unaudited £'000 Unaudited £'000 Audited £'000
Interim dividend - - 16,970
Final dividend 36,159 33,956 33,965
Special dividend 41,748 25,113 25,113
77,907 59,069 76,048
An interim dividend of 8.9p per share, amounting to a total dividend of
£17.8m, was declared post period end and is to be paid on 21 May 2025 to
those on the share register at the close of business on 11 April 2025.
6. Right-of-use assets and lease liabilities
Leases - as a lessee
Softcat has lease contracts for various properties and offices across the
country, used for its operations. Property leases generally have lease terms
of between 3 and 10 years. A number of these contracts include extension and
termination options which are discussed below.
Set out below are the carrying amounts of right-of-use assets recognised and
movements during the period:
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited Unaudited £'000 Audited £'000
£'000
Property leases
Opening right-of-use asset 10,066 9,970 9,969
Additions 18,087 - 2,526
Depreciation (1,401) (1,191) (2,429)
Closing right-of-use asset 26,752 8,779 10,066
Set out below are the carrying amounts of lease liabilities included under
current and non-current liabilities and the movements during the period:
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited £'000 Unaudited £'000 Audited £'000
Property leases
Opening lease liability 10,358 9,761 9,761
Additions 18,087 - 2,526
Accretion of interest 629 165 443
Payments (739) (1,150) (2,372)
Closing lease liability 28,335 8,776 10,358
Current lease liability 3,422 2,385 2,253
Non-current lease liability 24,913 6,391 8,105
28,335 8,776 10,358
On 27 September 2024, the Group signed a property lease in relation to
relocating the London sales hub. The right-of-use asset and lease liability
additions from this contract were £15.1m. Associated leasehold improvements
increased property, plant and equipment by £2.7m.
Softcat had no variable lease expenses charged or income from sub-leases
credited to the Condensed Consolidated Statement of Profit or Loss and Other
Comprehensive Income, nor any sale and leaseback transactions.
Softcat has several lease contracts that include termination options. These
options are negotiated by management to provide flexibility in managing the
leased-asset portfolio to align to business needs. Management exercises
significant judgement in determining whether these options are reasonably
certain to be exercised.
As at 31 January 2025, the undiscounted potential future rental payments
relating to periods following the exercise date of termination options that
are not included in the lease term were £Nil (H1 2024: £Nil).
Lease charges related to low value and short-term leases recognised in the
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive
Income was £38,787 (H1 2024: £23,433).
7. Inventories
Six months ended Year ended
31 January
31 July
2025 2024 2024
Unaudited Unaudited £'000 Audited £'000
£'000
Finished goods and goods for resale 21,335 3,992 2,916
The increase in stock is predominantly driven by stock in transit for a
specific customer yet to be delivered. As control of the goods had not passed
to the customer at the period end, the revenue and cost of sale have not been
recognised.
8. Trade and other receivables
Six months ended Year ended
31 January
31 July
2025 2024 2024
Unaudited £'000 Unaudited £'000 Audited £'000
Trade receivables 499,267 432,161 504,488
Allowance for expected credit losses (3,672) (3,718) (3,122)
Net trade receivables 495,595 428,443 501,366
Unbilled receivables 67,797 37,476 40,487
Prepayments 5,886 4,147 6,982
Accrued income 11,505 10,898 10,279
Deferred costs 27,384 15,858 26,188
Other receivables 1,341 - -
609,508 496,822 585,302
The increase in unbilled receivables is predominantly driven by a specific
order where Softcat's contractual obligation had been fulfilled but was not
invoiced to the customer at the period end.
9. Trade and other payables
Six months ended Year ended
31 January
31 July
2025 2024 2024
Unaudited Unaudited £'000 Audited £'000
£'000
Trade payables 302,293 217,987 290,869
Other taxes and social security 13,580 24,259 17,009
Accruals 124,939 107,025 121,919
Other creditors - - 285
440,812 349,271 430,082
10. Contract liabilities
Contract liabilities is split as:
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited Unaudited Audited £'000
£'000
£'000
Current deferred income 69,328 36,278 31,980
Non-current deferred income 12,497 6,227 9,151
81,825 42,505 41,131
Contract balances
Deferred income includes goods or services to be delivered to customers by
Softcat for which there is a contractual obligation arising from receipt of
consideration or amounts due from the customer. Of this balance, £16.0m
relates to a single customer advance and a further £15.0m relates to orders
for which goods were in transit for another single customer at the period end.
The remaining balances on these accounts have moved in line with the activity
of the business and customer base. As at 31 January 2025, £81.8m remains on
the Condensed Consolidated Statement of Financial Position as a contract
liability. Softcat expects that £69.3m of the balance as at 31 January 2025
will be released in the following 12 months with the balance released within
2-5 years. Of the £41.1m balance as at 31 July 2024, £21.8m has been
recognised in this period.
11. Financial instruments
The Group's principal financial liabilities comprise trade and other payables
including lease liabilities. The primary purpose of these financial
liabilities is to finance the Group's operations. The Group has trade and
other receivables and cash that derive directly from its operations.
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited £'000 Unaudited £'000 Audited £'000
Financial assets
The financial assets of the Group were as follows:
Cash at bank and in hand 141,045 112,455 158,454
Trade receivables, other receivables and accrued income 576,238 476,818 552,132
717,283 589,273 710,586
Financial liabilities
The financial liabilities of the Group were as follows:
Trade payables (302,293) (217,987) (290,869)
Accruals (124,939) (107,025) (121,919)
Lease liabilities (28,335) (8,776) (10,358)
(455,567) (333,788) (423,146)
The Directors consider that the carrying amounts for all financial assets and
liabilities (excluding lease liabilities) approximate to their fair value.
12. Earnings per share (EPS)
Six months ended Year ended
31 January 31 July
2025 2024 2024
Earnings per share Unaudited Pence Unaudited Pence Audited Pence
Basic 28.7 25.6 59.7
Diluted 28.6 25.5 59.4
The calculation of the earnings per share and diluted earnings per share is
based on the following data:
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited Unaudited Audited £'000
£'000
£'000
Earnings
Earnings for the purposes of EPS, being profit for the period 57,387 51,047 119,044
The weighted average number of shares is given below:
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited 000's Unaudited 000's Audited 000's
Number of shares used for basic earnings per share 199,623 199,415 199,490
Number of shares expected to be issued at nil consideration following exercise 1,227 1,127 1,026
of share options
Number of shares used for diluted earnings per share 200,850 200,542 200,516
13. Notes to the cash flow statement
Reconciliation of operating profit to net cash inflow from operating
activities
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited £'000 Unaudited £'000 Audited £'000
Operating profit 73,662 66,731 154,064
Depreciation of property, plant and equipment 1,386 1,275 2,631
Depreciation of right-of-use assets 1,401 1,190 2,429
Amortisation of intangibles 1,183 722 1,564
Dividend equivalents paid (99) (98) (98)
Cost of equity-settled employee share schemes 1,652 1,699 3,612
Operating cash flow before movements in working capital 79,185 71,519 164,202
(Increase)/decrease in inventories (18,419) (401) 675
Increase in trade and other receivables (22,865) (6,781) (95,261)
Increase in trade and other payables and contract liabilities 51,709 5,943 85,218
Cash generated from operations 89,610 70,280 154,834
Income taxes paid (24,281) (19,082) (39,226)
Net cash generated from operating activities 65,329 51,198 115,608
14. Share capital
Six months ended Year ended
31 January
31 July
2025 2024 2024
Unaudited Unaudited £'000 Audited £'000
£'000
Ordinary shares of 0.05p each 100 100 100
Deferred shares of 1p each - - -
100 100 100
15. Related party transactions
Dividends to Directors
The following Directors, who served as Directors for either the whole or part
of the interim period, were paid the following dividends:
Six months ended Year ended
31 January 31 July
2025 2024 2024
Unaudited Unaudited Audited £'000
£'000
£'000
G Watt 53 32 44
G Charlton 46 40 53
K Mecklenburgh - - -
J Ferguson - - -
V Murria 65 49 63
R Perriss 6 4 6
L Weedall 1 - -
M Prakash - - -
171 125 166
Except for the above, there were no other significant related party
transactions.
16. Post balance sheet events
Dividend
An interim dividend of 8.9p per share, amounting to a total dividend of
£17.8m was declared post period end and is to be paid on 21 May 2025 to those
on the share register at the close of business on 11 April 2025.
INDEPENDENT REVIEW REPORT TO SOFTCAT PLC
Conclusion
We have been engaged by the Group to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
January 2025 which comprises Condensed Consolidated Statement of Profit or
Loss and Other Comprehensive Income, Condensed Consolidated Statement of
Financial Position, Condensed Consolidated Statement of Changes in Equity,
Condensed Consolidated Statement of Cash Flows and Explanatory Notes 1 to 16.
We have read the other information contained in the half yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of
consolidated financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of consolidated financial statements in the
half-yearly financial report for the six months ended 31 January 2025 is not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34 and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1 and 2, the annual financial statements of the Group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of consolidated financial statements included in this
half-yearly financial report has been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial Reporting"
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Group a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Group in accordance with guidance contained
in International Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity"
issued by the Financial Reporting Council. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the Group,
for our work, for this report, or for the conclusions we have formed.
Ernst & Young LLP
London
18 March 2025
Corporate Information
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Group'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
J Ferguson
R Perriss
L Weedall
M Prakash
Secretary
L Thomas
Company registration number
02174990
Softcat LEI
213800N42YZLR9GLVC42
Registered office
Solar House
Fieldhouse Lane
Marlow
Buckinghamshire
SL7 1LW
Auditor
Ernst & Young LLP
1 More London Place
London
SE1 2AF
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