REG - Softcat PLC - Preliminary Results
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RNS Number : 2901E Softcat PLC 22 October 2025
SOFTCAT plc
('Softcat', the 'Group')
Preliminary results for the year ended 31 July 2025
Another record performance, alongside investment in future growth
Softcat plc (LSE: SCT.L), a leading UK provider of IT infrastructure products
and services, today announces its full year results for the twelve months to
31 July 2025. These results reflect another year of record performance and
successful strategic execution, delivering strong progress across our key
financial metrics and enabling significant investment to drive future growth.
Year ended
Financial Summary
31 July 31 July
2025 2024 Change
£m £m
Gross invoiced income(a) 3,617.0 2,852.2 26.8%
Gross profit 494.3 417.8 18.3%
Underlying operating profit(a) 180.1 154.1 16.9%
Underlying cash conversion (%)(a) 95.6% 95.9% (0.3)ppts
Underlying basic earnings per share (p) (a) 69.5p 59.7p 16.4%
Total ordinary dividend (p) 29.3p 26.6p 10.2%
Final ordinary dividend (p) 20.4p 18.1p 12.7%
Special dividend (p) 16.1p 20.9p (23.0)%
Statutory measures
Revenue 1,458.4 962.6 51.5%
Operating profit 172.9 154.1 12.2%
Basic earnings per share (p) 66.6p 59.7p 11.6%
Highlights for the year ended 31 July 2025
● Strong gross profit growth of 18.3% and underlying operating profit(a) growth
of 16.9% driven by continued strength in the base business, together with an
outstanding second half performance supported by larger solutions projects.
● GII growth of 26.8% reflects good performance across technologies and customer
segments, aided by the contribution from very large, low margin deals.
● Further significant investment to underpin future growth, spanning IT, data
and digital projects, new sales and HR systems, our office network and our
people.
● Completed our first-ever acquisition with the purchase of Oakland, a data and
AI consultancy, which provides new capabilities in an area of growing demand.
● Statutory operating profit of £172.9m grew by 12.2%, including £7.2m of
non-underlying costs recognised in the year, mainly relating to systems
investment.
● Strong underlying cash conversion(a) of 95.6%, with closing net cash and cash
equivalents of £182.3m (FY2024: £158.5m).
● A final ordinary dividend of 20.4p, resulting in a full year dividend of
29.3p, up 10.2%, together with a special dividend of 16.1p.
● Outlook: Our FY2026 outlook remains consistent with that provided in our
August trading update. Given the phasing of large projects in both FY2025 and
FY2026 we expect underlying operating profit growth in the current year to be
first half weighted.
(a) See page 12 for full definitions and further reconciliations of
Alternative Performance Measures (APMs).
(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 APM.
Graham Charlton, Softcat CEO, commented,
"I'm very pleased to report another record performance for Softcat, which
marks a milestone achievement of 20 consecutive years of double-digit gross
profit growth. The strength of our business model and our consistent strategic
execution underpin our continuing ability to scale and invest for future
growth. Our outstanding performance in FY2025 and the sustainability of our
growth model are a tribute to our special culture and the ongoing evolution of
our offering.
We have never been in a better position to address the increasingly complex
needs of customers, who are adapting to rapid developments across all facets
of their technology. During the year, we completed our first acquisition,
bolstering our data, automation and AI capabilities in an exciting growth
segment. And we have once again proven our ability to deliver larger and more
complex solutions projects, an area we have been investing in for a number of
years.
I would like to thank all our people for their incredible commitment and
support to each other, and in going above and beyond for customers, delivering
exceptional service with a positive attitude. Our strong performance provides
us with the confidence to accelerate investment in our own systems and
processes, ensuring that we have a modern and efficient infrastructure, to
reinforce our competitive advantage and deliver on the significant growth
opportunities ahead."
Outlook
Looking ahead, Softcat remains well positioned to deliver significant growth
by making further market share gains in a growing market. Our FY2026 outlook
remains consistent with that provided in our FY2025 trading update on 28
August.
Excluding the significant incremental contribution from large projects in
FY2025, the Board expects to deliver low double-digit gross profit growth and
high single-digit underlying operating profit growth in FY2026(c). Including
the significant incremental contribution from large deals in the comparative
period, this translates to reported rates of high single-digit gross profit
growth and low single-digit growth in underlying operating profit.
The second half of FY2025 was exceptionally strong, reflecting the
contribution from larger solutions projects. Our guidance for FY2026 includes
the committed pipeline of further large projects. While dependent on customer
and vendor schedules, these are expected to be delivered in the first half.
This means growth in underlying operating profit in FY2026 will be first half
weighted.
(c) Underlying operating profit is adjusted to remove non-underlying items,
including acquisition-related expenses such as the fair value of deferred
contingent consideration, and implementation costs of the new sales and HR
systems. Excluding the significant incremental contribution from large deals
in FY2025, underlying operating profit is c.£170m.
Analyst and investor call
The management team will host an investor and analyst conference call at
9.30am UK time, on Wednesday, 22 October 2025. To join the conference call,
please use the following webcast link:
https://brrmedia.news/SCT_FY25 (https://brrmedia.news/SCT_FY25)
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.
Chief Executive Officer's Review
Performance and market conditions
I am delighted with how Softcat has performed in FY2025, delivering
outstanding growth in most of our key metrics and overachieving our targets
set at the beginning of the year, even against the backdrop of a continued
challenging trading environment. We have delivered another record year, taking
our unbroken track record of double-digit gross profit growth to 20 years,
over which time we have also delivered consecutive annual growth in GII and
underlying operating profit. Our continued success is due to our special
culture and the strength of our diverse customer relationships, supported by
the breadth and depth of our product and service offering and we remain
resolutely focused on maintaining our competitive advantage in these important
areas.
During the year we grew customer numbers, up 1.6% year-on-year, and sold more
to those customers, with an increase of 16.5% in gross profit per customer.
Growth was once again broad-based across different customer segments and
technology areas. We were also successful in winning and delivering some large
datacentre projects, reflecting the benefit of investments we have made over
recent years in our capability to deliver larger and more complex
solutions.
We have continued to develop and make progress against our strategy, and we
remain confident in our ability to take additional market share. Our proven
business model and consistent execution continue to underpin Softcat's
success. To drive further progress and scale, we are focused on four key
growth engines across our business: our special culture, sales and customer
excellence, the breadth and quality of our offering, and operational
excellence. Our continued investment in these areas ensures our long-term
relevance to customers and will further enhance the customer and employee
experience.
Customer priorities and technology trends
Our customers are focused on driving value from their technology spend,
aligning their investments closely with business outcomes, to drive
productivity and innovation. With our strategic focus and deep understanding
of an increasingly complex and rapidly changing IT landscape, we are well
placed to support their needs. Our ability to assemble multi-disciplinary
teams means we can deliver transformation projects and deploy effective
solutions at scale, driving growth and providing competitive advantage.
As a result, we are seeing continued demand from customers across the entire
breadth of our technology proposition. This is being driven by the ongoing
evolution of every type of workspace, through to optimising cost, performance,
and resilience across hybrid estates, and keeping network architecture
connected and protected. Cyber security remains in focus for many customers,
as pressure grows to demonstrate resilience and compliance in the face of
rising threats. While an upsurge in demand for data organisation, storage and
consumption is reshaping technology investment, as customers look to harness
AI.
Our latest annual customer experience survey highlighted data security as the
most common technology priority, reflecting the need for organisations to
adapt to changing regulations, protect against emerging cyber threats and
ensure comprehensive governance to safely benefit from all forms of AI
innovation. Our customers are at varying stages of maturity in terms of their
data journey, but the common desire is to embed more AI and automation into
their systems and workflows, both within existing applications and through
bespoke proprietary development. In June, we hosted a customer summit, a
unique event delivered in partnership with Microsoft, to help business leaders
understand the art of the possible and where to focus their efforts. The clear
message was that organisations need to be investing in their data journey
today to realise the benefits of agentic AI, or risk falling behind. This was
a core part of the rationale for our acquisition of Oakland.
The volume and quality of data is paramount to leveraging the benefits of AI
and this places significant pressure on all elements of IT infrastructure. To
deliver the transformative insights and business outcomes that customers
expect, there will be considerable additional requirements for data centre
capacity, connectivity, security, storage, and workload management, across
both cloud platforms and hybrid infrastructures.
Strategic developments
Our evolved technology proposition has been embedded throughout the year,
simplifying how we present our offer to customers and vendors, as well as
employees. We can now showcase a clearly organised set of products and
services to customers developed around the major components of modern IT
infrastructure, with the flexibility to rapidly adapt to vendor innovation.
Alongside the ongoing investment in our own data and digital strategies, we
will ensure that our customer proposition remains relevant and easy to engage
with.
A further benefit of clearly framing our technology proposition, is the
ability to accurately pinpoint areas for future development, or where our
presence is underweight. For example, by introducing our data, automation and
AI tower, we quickly identified a need for greater capability in data services
to improve our market positioning.
The acquisition of Oakland expands our addressable market, providing us with a
presence in data and AI consulting that would have taken years to build
organically, and having initially worked together as partners, we were
delighted to join forces with a company and management team which is very
closely culturally aligned. Pleasingly, the customer and vendor reaction has
been very positive, and the number of sales qualified leads is slightly ahead
of our expectations at this stage. The deal process has also allowed us to
build our M&A muscle, as we develop capabilities and experience that can
support future strategic acquisitions.
During the year, we evolved our UK vendor management framework. The framework
allows us to work more effectively with our strategic partners and is clearly
aligned with our growth strategy and technology proposition. With our
technology and vendor propositions now in place, our focus is on supporting
their success through investment in our own technology and Data and Digital
strategy to drive future growth.
We continue to be drawn into overseas markets by our customers, serving more
of their operations outside the UK and Ireland, which is driving growth in our
multinational customer base. As we seek to grow our share of large and complex
customers, multinational presence remains strategically important to us, now
comprising an extensive network of branches across Europe, APAC and an office
with c.20 employees in Virginia, USA.
The feedback from our customers confirms we are on the right track. Our annual
Customer Experience Survey received a record level of responses in FY2025 with
an unchanged 98% customer satisfaction score and a net promoter score of 64
(FY2024: 63). This exemplifies a truly differentiated level of customer
service and reflects an institutional commitment to customer success.
Investment for future growth
Our desire to invest for future growth remains undiminished, focused on the
four key growth engines spanning our business. Our vision is to build a
business which is increasingly relevant to customers, automated, smarter and
easier to interact with. This will improve both customer outcomes and employee
experience, ensuring that our uniquely rich combination of products and
technical and service offerings can be delivered to the right customer at the
right time, in a way that works for them. This means investing more in our own
technology including our data and digital strategies.
During the year, we started work on a multi-year project to implement and
enrich a new cloud-based sales system. Our incumbent system has been in use
for over 20 years and is not compatible with our growth ambitions. In
Microsoft Dynamics 365, we have selected a contemporary platform that will
reduce reliance on manual processes, connect with other core Group systems and
enable us to leverage integrated AI functionality. The first phase will be
focused on building foundations that, with future development and
optimisation, will deliver significant benefits both to our customer
interactions and employee experience.
In addition, we are also upgrading our HR system and are mindful that these
parallel developments require significant project management and robust
controls. This will be enabled through support from our internal technology,
audit, risk management and governance teams, which have expanded over recent
years.
We have also significantly invested in our office network as part of a
Group-wide upgrade programme, which reflects our continued expansion and our
ongoing focus on creating vibrant and welcoming working environments. We
relocated three offices during the year, starting with our new Birmingham
office in November 2024, while in March 2025 we moved our London office to one
of the single largest floorplates in the City, followed by the opening of our
new Bristol office in April 2025. In addition to seeing an uplift in
office-based collaboration, these modern spaces enable us to provide more
accessible, centrally located facilities that enhance wellbeing and allow room
for further growth. They also encourage even greater partnership between our
people, vendors and customers.
People and culture
Softcat is a special place to work that will always put our people and culture
first. Our unique culture has driven our success to date and is at the heart
of our differentiated customer service. We devote enormous time and effort to
preserving and evolving that culture, and as we continue to grow, we are
empowering more and more of our people to lead this through initiatives such
as the formalisation of local office leadership structures. Our culture is one
of openness and transparency and is focussed on reward and recognition for
outstanding attitude and results, centred around the needs of our customers.
This creates the virtuous cycle of trust that results in stronger and deeper
customer relationships, enabling further investment in our proposition, and
reinforcing our competitive advantage over time.
During FY2025, average headcount grew by 7.3% year-on-year to 2,639. The new
hires continue to be concentrated across our technical, specialist and sales
support functions, as we build our capability to do more with existing
customers.
Softcat champions inclusivity, sustainability and active engagement through
our employee-led community groups. These include our diversity and inclusion
networks and the Founders Group, helping employees connect with our purpose
and roots, together with Love2Give, our charitable giving and volunteering
initiative. We remain committed to increasing our female gender balance, with
a target of 40% female representation by 2030, compared with the current
position of 37%. During the year, Softcat joined the Business Disability forum
to further our commitment to disability inclusion, while mental health also
continues to be a focus area and this year we launched a new employee
assistance programme.
Recognition for our efforts is received not only from our employees, but also
through external awards. We continue to participate in the Great Place to Work
survey and retain our position in the UK's Best Workplaces™ list within the
Super Large category. We have also retained our status as a certified Great
Place to Work in the UK and in Ireland, while achieving recognition for the
first time in this category in the US. We are also proud to be recognised as a
2025 Best Workplace for Development, for Wellbeing and for Women.
Sustainability
We strive for a sustainable future and one where our people and planet can
prosper. 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 continue to prioritise initiatives within our business that support our
approach to climate change, including those that minimise our direct impact on
the environment and increase collaboration with our partners and supply chain
to influence indirect effects. By widening access to sustainable solutions and
services, we are helping customers to make purchasing decisions that
accelerate their own decarbonisation efforts. We have recently launched our
first certified carbon neutral service for global third-party maintenance and
monitoring, in collaboration with Softcat partner Park Place Technologies.
This demonstrates our continued commitment in this area and builds on
achieving carbon neutrality status for one of our biggest services, Softcat
Cisco Support, and our Managed Device Lifecycle Service in the prior year.
We also recognise the need for large organisations to support and protect our
natural world. During the year, we joined forces with 12 of our suppliers in a
pioneering biodiversity partnership, believed to be the first channel
volunteering collaboration of its kind in our industry. This opens up new ways
for our entire value chain to strengthen relationships while delivering
outcomes that align with sustainability priorities.
Chief Financial Officer's Review
Financial Summary FY2025 FY2024 Change
Gross invoiced income split
Software £2,074.5m £1,807.5m 14.8%
Hardware £992.2m £568.5m 74.5%
Services £550.3m £476.2m 15.5%
Total gross invoiced income1 £3,617.0m £2,852.2m 26.8%
Revenue split
Software £227.2m £213.5m 6.4%
Hardware £985.7m £561.2m 75.6%
Services £245.5m £187.9m 30.6%
Total revenue £1,458.4m £962.6m 51.5%
Gross profit £494.3m £417.8m 18.3%
Gross profit margin2 13.7% 14.6% (0.9%) pts
Underlying operating profit3 £180.1m £154.1m 16.9%
Underlying operating profit margin2 5.0% 5.4% (0.4%) pts
Non-underlying items £(7.2)m - -
Statutory operating profit £172.9m £154.1m 12.2%
Gross profit per customer4 £48.5k £41.7k 16.5%
Customer base4 10.2k 10.0k 1.6%
Underlying cash conversion5 95.6% 95.9% (0.3) 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 12.
2 Gross profit margin and operating profit margin are both calculated as a
percentage of gross invoiced income.
3 Underlying operating profit and underlying operating profit margin are APMs.
For further information on this, please refer to page 12.
4 Gross profit per customer is defined as Gross profit divided by the customer
base. Customer base is defined as the number of customers who have transacted
with Softcat in both of the preceding twelve-month periods. During the year,
we undertook an exercise to improve the quality of our customer data, which
included aligning all trading entities with a relevant parent company where
necessary, resulting in a small reduction in the overall customer number. For
comparability, the customer data and associated average GP per customer in
prior years has also been amended in line with the revised methodology.
5 Underlying cash conversion is defined as net cash generated from operating
activities before taxation and any acquisition related cashflows, including
deferred consideration outflows, net of capital expenditure, as a percentage
of underlying operating profit. This is also an APM. For further information
on this, please refer to page 12.
Gross profit, revenue and gross invoiced income
Our FY2025 results reflect the strength of our business model and ongoing
successful strategic execution. We continue to support the technology solution
needs of a diverse range of new and existing customers through our
comprehensive breadth of expertise, product offering and services, together
with exceptional levels of customer service delivered by our highly engaged
employees.
Gross profit (GP), our primary measure of income, grew by 18.3% to £494.3m.
Market conditions have remained challenging, with continued macroeconomic and
geopolitical uncertainty, and our performance in this context highlights the
resilience of our business model. We have a broad portfolio of solutions and
serve a wide and varied customer base, and it is this diversity, complemented
by our expanding capabilities in the delivery of larger and more complex
solutions projects, that enables us to deliver sustainable growth.
GP growth was broad-based across enterprise, mid-market and public sector
customer segments with all growing double-digit, led by mid-market, which
reflects the contribution from larger solutions projects in the second half.
By technology area, GP growth continued to be driven by security, reflecting
the ongoing customer focus on cyber investments, alongside growth in data
centres and networking, where demand was broad-based and supplemented by the
larger solutions projects. Workplace GP growth was more modest reflecting the
impact of Microsoft incentive changes and ongoing subdued demand for devices.
By product type, software, hardware and services GP all grew double-digit.
Hardware growth was supported by datacentre and networking infrastructure,
server and compute sales, with a significant contribution to growth coming
from the larger solutions projects delivered in the second half. Software GP
growth was broad-based across technologies and services growth was boosted by
some large, high margin support service deals, albeit impacted by a strong
base comparator.
Revenue is reported in accordance with IFRS 15 with some transactions
(generally hardware, professional services and internally delivered support
and managed services) reported gross (principal) and others (generally
software and externally provided support and managed 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 and
to support understanding of key balance sheet movements. FY2025 revenue grew
overall by 51.5% driven by: (1) hardware revenue growth of 75.6% reflecting
strong datacentre, networking, server and compute sales, supported by larger
solutions projects in the second half. Hardware accounts for a much higher mix
of revenue than GII and this is the main reason total revenue growth is higher
than GII growth; (2) services revenue growth of 30.6%, reflecting a higher
share of internally-delivered services (reported on a gross basis), including
particular success in support services deals mentioned above; and (3) software
revenue growth of 6.4% which was below GII growth of 14.8%, reflecting mix
into low margin public sector deals and the impact of Microsoft changes.
GII increased 26.8% to £3,617.0m, mainly driven by strong growth in hardware
(74.5%), as discussed above. Software GII grew by 14.8% with particular
strength in cyber and networking software, while services growth of 15.5% was
driven by internal services alongside third-party support deals. GII grew
ahead of GP during the year primarily due to the dilutive impact of larger
solutions projects at lower margin, resulting in GP as a percentage of GII
declining year-on-year to 13.7% (FY2024: 14.6%).
As shown in the table below, GII growth accelerated to 32.8% in H2 compared
with 19.3% in H1, largely reflecting the contribution of larger solutions
projects in the second half. GII grew ahead of GP in each half resulting in a
steady reduction in gross margin across the year. In H1, this reflected
dilution in software margin as well as the impact of several large, low margin
deals, while in H2, the impact was driven by a small number of sizeable
transactions relating to larger, low margin solutions projects.
H1 FY2025 H1 FY2024 Change H2 FY2025 H2 FY2024 Change
GII £1,507.1m £1,263.5m 19.3% £2,109.9m £1,588.7m 32.8%
GP £220.2m £196.5m 12.1% £274.1m £221.3m 23.9%
GP/GII % 14.6% 15.6% (1.0) pts 13.0% 13.9% (0.9) pts
Customer KPIs
During the year, GP per customer grew by 16.5% to £48.5k (FY2024: £41.7k)
and the customer base expanded by 1.6%, to 10.2k (FY2024: 10.0k).
As the longevity of the relationship with our customers increases, the GP
transacted with them also increases. Over time, customers tend to buy across
more technology areas and an increasing range of vendors. Loyalty, as
measured by a lower rate of customer churn, also significantly increases. We
track this by measuring core KPIs among those customers transacting over £1k
of GP with us each year, at which point average churn drops significantly. The
number of customers in this more stable cohort, grew by 3.7% to more than 8.2k
during the year, with the average GP delivered from each of those customers
expanding by 14.1% to £60.1k.
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 industry sources, indicates that
our total addressable market in the UK and Ireland in 2025 is more than
£87bn, growing at an annual average rate of around 10%. This includes the
expanded opportunity in data and AI that we've unlocked through our
acquisition of Oakland. We estimate that 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, with an average 20-25% share of wallet. We
therefore continue to see a significant future growth opportunity, which is
supportive of our strategy to attract new customers and go deeper with our
existing customers.
Operating profitability and investment in future growth
Underlying operating profit of £180.1m (FY2024: £154.1m) increased by 16.9%
year-on-year. This reflects the GP growth of 18.3%, partially offset by a
19.1% rise in underlying operating costs.
Underlying operating cost growth was driven by increased commissions and other
variable pay broadly in line with commissionable GP growth and a 11.2%
increase in wages and salaries, with average headcount growth of 7.3%,
reflecting a more measured level of expansion as we leverage the significant
headcount growth in recent years, and average salary per head growth of 3.7%.
In addition, four months of the step up in Employers' National Insurance
Contributions are reflected in second half costs. During the year, we expanded
our internal IT team, and moved three offices to new, larger sites with
associated increased costs. We also realised some FX losses and took an
impairment on our Marlow freehold site during the year.
As a result of the above, the ratio of underlying operating profit to gross
profit has marginally decreased to 36.4% (FY2024: 36.9%).
Statutory operating profit of £172.9m (FY2024: £154.1m) increased by 12.2%
year-on-year, reflecting the impact of non-underlying costs of £7.2m (FY2024:
£Nil).
Non-underlying costs
Non-underlying costs recognised during the year include system development
costs of £5.3m relating to the implementation of the new cloud-based sales
system and HR system, neither of which meet the criteria for capitalisation.
This treatment is in line with the IFRS Interpretations Committee's decision
clarifying how arrangements in respect of cloud-based Software as a Service
('SaaS') systems should be accounted for. In addition, there is a £1.9m
charge relating to the acquisition of Oakland, consisting of £0.7m in
transaction costs, £1.0m in respect of the fair value of deferred
consideration and amortisation of acquired intangibles of £0.2m.
Corporation tax charge
The effective tax rate for FY2025 was 25.4% (FY2024: 25.3%) 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
Cash and cash equivalents at the FY2025 balance sheet date increased by
£23.8m to £182.3m (FY2024: £158.5m), after total dividend payments during
the year of £95.7m, and the Group remains debt free.
Underlying cash conversion, defined as net cash generated from operating
activities before tax and any acquisition related cashflows, including
deferred consideration outflows, net of capital expenditure, as a percentage
of underlying operating profit, was 95.6% (FY2024: 95.9%). This strong
performance reflects continued good working capital management, offset by
investment in offices and IT systems.
Our capital allocation policy remains unchanged, prioritising long-term
investment in organic growth to facilitate further share gains in our
expanding 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 (such as Oakland, which was completed during the year), or
international expansion, or is returned to shareholders. During the year, 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, developing our data and digital platforms, and investing in core
systems and IT capability.
Following an annual review of the Group's working capital requirements, we
have also decided to raise the cash floor required for operational needs by
20% from £75m to £90m, effective in FY2026. The cash floor was last raised
two years ago, during which time the Group's GII has grown by 41%. Given that
timings of trade receivables and payables are typically closely aligned, this
modest increase in the cash floor provides us with the flexibility to pursue
strategic customer wins as our business expands and average deal sizes grow.
Finance net income
During the year, net interest income totalled £5.3m (FY2024: £5.3m). During
the year, higher interest income earned on cash and cash equivalents was
offset by an increase in lease liability interest costs following several
office relocations.
Dividend
A final ordinary dividend of 20.4p per share (FY2024: 18.1p), amounting to
£40.8m (FY2024: £36.2m), has been recommended by the Board of Directors.
This brings the total dividend for the year to 29.3p per share (FY2024:
26.6p). If approved by shareholders, the final ordinary dividend will be
payable on 16 December 2025, to shareholders whose names are on the register
at the close of business on 7 November 2025. Shares in the Group will be
quoted ex-dividend on 6 November 2025. The last day for dividend reinvestment
plan ('DRIP') elections is 25 November 2025.
In line with the Group's stated intention to return excess cash to
shareholders, a further special dividend payment of 16.1p per share has been
proposed. If approved by shareholders, this will also be paid on 16 December
2025 alongside the final ordinary dividend. This will bring the total amount
returned to shareholders since becoming a public company to £661.9m.
Acquisition of Oakland
In April 2025, Softcat acquired Oakland Group Services Limited, a specialist
provider of data and AI consultancy services, significantly enhancing our
capability in an exciting growth segment. The acquisition was settled by an
initial cash payment of £8.0m, with further contingent payments over the next
three years depending on performance.
Statement of Financial Position
Revenue and cost of sales have not been recognised for a large specific order
in FY2025, in line with revenue recognition criteria under IFRS15. However,
the customer has paid Softcat upfront and, in turn, Softcat has paid the
supplier upfront for the full order value. This has contributed to £290.3m of
the increase in contract liabilities (Note 10), reflecting the associated rise
in deferred income as revenue cannot yet be recognised.
Inventory levels (Note 6) rose primarily due to goods held or in transit
related to this order, contributing £149.5m to the overall increase. A
contract fulfilment asset of £72.6 million (Note 8) has also been recognised
for goods delivered that have not yet met the criteria for revenue
recognition.
Within trade and other receivables (Note 7), the increase in deferred costs is
largely associated with this order, which relate to goods not yet received by
Softcat.
Alternative Performance Measures
The Group uses several 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. These non-GAAP measures comprise
gross invoiced income (or 'GII'), underlying operating profit and underlying
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 2 of the financial
statements.
2. Underlying operating profit reflects statutory operating profit, adding back
non-underlying costs. Non-underlying costs comprise items which, in the
opinion of management, should be identified and excluded to provide a
consistent and comparable view of the underlying performance of the Group's
ongoing business. They are unusual because of their size, nature (one-off,
non-trading costs) or incidence.
When evaluating the nature of an item, management considers the following
factors, both individually and in combination:
● whether the item is related to activities outside the Group's primary business
activities;
● the specific circumstances that led to the recognition of the item;
● the likelihood that the item will recur; and
● whether an item is cash or non-cash
Non underlying costs 2025 2024
£'000 £'000
Acquisition costs 722 -
Acquisition - contingent consideration liability 1,026 -
Acquisition - amortisation of acquired intangibles 214 -
Major system development costs 5,269 -
7,231 -
1. Underlying cash conversion ratio comprises net cash generated from
operating activities before taxation and any acquisition related cashflows,
including deferred consideration outflows, net of capital expenditure, as a
percentage of underlying operating profit. Underlying cash conversion is an
indicator of the Group's ability to convert profits into available cash. In
the year ended 31 July 2024 the cash conversion ratio did not incorporate
underlying costs or acquisition related cashflows however, as these were nil,
no prior year restatement is required. A reconciliation to the adjusted
measure for cash conversion is provided below:
2025 2024
£'000 £'000
Net cash generated from operating activities 140,714 115,608-
Income taxes paid 46,775 39,226
Cash generated from operations 187,489 154,834
Purchase of property, plant and equipment (11,783) (1,115)
Purchase of intangible assets (3,444) (6,017)
Cash generated from operations, net of capital expenditure 172,262 147,702
Underlying operating profit 180,131 154,064
Underlying cash conversion ratio 95.6% 95.9%
Net cash generated from operating activities includes £5.3m of non-underlying
costs. Acquisition related cashflows not included in the underlying cash
conversion ratio are the acquisition of subsidiaries net of cash acquired of
£7.4m and acquisition costs of £0.7m, both of which are included in
investing activities.
2. Underlying basic earnings per ordinary share reflect statutory
basic earnings per ordinary share, adjusted for the profit after tax impact of
non-underlying costs.
2025 2024
Pence Pence
Underlying earnings per share - Basic 69.5 59.7
The calculation of the basic earnings per share is based on the following
data:
2025 2024
£'000 £'000
Earnings
Earnings for the purposes of earnings per share being profit for the year 133,008 119,044
Non-underlying costs
Tax effect of non-underlying costs 7,231 -
Underlying earnings for the purposes of earnings per share, being profit for (1,371) -
the year
138,868
119,044
The tax effect of non-underlying costs varies depending on the nature of the
costs.
The weighted average number of shares is given below:
2025 2024
000's 000's
Number of shares used for basic earnings per share 199,690 199,490
Principal risks and uncertainties
The principal and emerging risks facing the Group have been identified and
evaluated by the Board. 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
· Investment in customer-supporting internal IT systems
Cyber security risk & business interruption risk · Inability to deliver managed customer services · ISO27001 accredited processes. Group-wide information security
policy and mandatory security-related training
(slight increase in net risk) · Prolonged system outage may result in lost sales opportunities
and failure to deliver on key business objectives · Regular testing of disaster recovery plans and business
continuity plans
· Reputational damage
· Simulation exercises will be conducted in FY2026
· Financial loss
· Established and documented processes for incident management,
· Customer dissatisfaction change of control, etc.
· Access controls aligned with zero trust principles
· Training and awareness including regular phishing tests
· Key software used is from large multi-national companies who have
a 99.9% SLA and who also provide us with SOC 2 reports that provide assurance
on their processes and controls
· Annual penetration test by a third party
· Adoption of NIST 2.0 framework, a recognised cyber maturity
framework
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
· Policies and procedures to manage foreign exchange exposures
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
· Clear delegation of authority ensuring decisions are escalated
appropriately including to the Board, where relevant
· Group-wide maximum credit exposure per customer (across invoiced
and orders yet to be fulfilled inclusive of multi-year deals) of £75m where
specific criteria are met
· Support from vendors for multi-year credit risk for unfulfilled
orders is regularly sought
· 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 or Board 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 and Risk Committee
· Ongoing engagement with specialist third parties where required
Climate change
Climate change is already a part of the compliance with existing
regulation/legislation and being prepared for emerging regulation/legislation
risk. 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 above.
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 Group'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 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.
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
Group's financial statements in accordance with UK-adopted international
accounting standards ('IFRS').
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 Group and of the profit or loss of the Group 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 Group'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 Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the Group financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Group
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 Group's website.
Fair and balanced reporting
Having taken advice from the Audit and Risk 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 Group'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 Softcat Plc 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 Group;
● the Annual Report, including the Strategic Report, includes a fair review of
the development and performance of the business and the position of the Group,
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 Group's position, performance, business model and strategy.
Group Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 July 2025
2025 2024
£'000 £'000
Note
Revenue 3 1,458,411 962,633
Cost of sales (964,133) (544,880)
Gross profit 494,278 417,753
Administrative expenses (314,147) (263,689)
Underlying operating profit 180,131 154,064
Non-underlying costs (7,231) -
Operating profit 172,900 154,064
Finance income 7,350 5,778
Finance cost (2,048) (443)
Profit before taxation 178,202 159,399
Income tax expense 4 (45,194) (40,355)
Profit for the year 133,008 119,044
Foreign exchange differences on translation of foreign branches and
subsidiaries
(885) (620)
Net (loss)/gain on cash flow hedge (26) 514
(911) (106)
Total comprehensive income for the year 132,097 118,938
Profit attributable to:
Owners of the Parent Company 133,008 119,044
Total comprehensive income attributable to:
Owners of the Parent Company 132,097 118,938
66.6 59.7
Basic earnings per ordinary share (pence) 11
Diluted earnings per ordinary share (pence) 11 66.2 59.4
All results are derived from continuing operations.
Group Statement of Financial Position
As at 31 July 2025
2025 2024
£'000 £'000
Note
Non-current assets
Property, plant and equipment 16,898 9,832
Right-of-use-assets 31,790 10,066
Intangible assets and goodwill 20,632 11,608
Investments 50 -
Deferred tax asset 843 2,571
70,213 34,077
Current assets
Inventories 6 151,901 2,916
Trade and other receivables 7 713,149 585,302
Contract fulfilment assets 8 72,606 -
Income tax receivable 1,776 -
Cash and cash equivalents 182,282 158,454
1,121,714 746,672
Total assets 1,191,927 780,749
Current liabilities
Trade and other payables 9 (471,465) (430,082)
Contract liabilities 10 (333,206) (31,980)
Lease liabilities (4,279) (2,253)
Income tax payable - (1,141)
(808,950) (465,456)
Non-current liabilities
Contract liabilities 10 (13,284) (9,151)
Lease liabilities (30,911) (8,105)
(44,195) (17,256)
Total liabilities (853,145) (482,712)
Net assets 338,782 298,037
Equity
Issued share capital 13 100 100
Share premium account 4,979 4,979
Cash flow hedge reserve (311) (285)
Foreign exchange translation reserve 1,853 2,738
Retained earnings 332,161 290,505
Total equity 338,782 298,037
Group Statement of Changes in Equity
For the year ended 31 July 2025
Share capital Share premium Cash flow hedge reserve Transl-ation reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 August 2023 100 4,979 (799) 243,807 251,445
3,358
Profit for the year - - - - 119,044 119,044
Impact of foreign exchange reserves - - - - (620)
(620)
Hedging reserve movement - - 514 - 514
-
Total comprehensive income/(expense) for the year - - 514 119,044 118,938
(620)
Share-based payment transactions - - - - 3,612 3,612
Dividends paid - - - - (76,048) (76,048)
Dividend equivalents paid - - - - (98) (98)
Tax adjustments - - - - 182 182
Other - - - - 6 6
Balance at 31 July 2024 100 4,979 (285) 2,738 290,505 298,037
Balance at 1 August 2024 100 4,979 (285) 290,505 298,037
2,738
Profit for the year - - - - 133,008 133,008
Impact of foreign exchange reserves - - - - (885)
(885)
Hedging reserve movement - - (26) - - (26)
Total comprehensive income/(expense) for the year - - (26) 133,008 132,097
(885)
Share-based payment transactions - - - - 4,188 4,188
Dividends paid - - - - (95,704) (95,704)
Dividend equivalents paid - - - - (95) (95)
Tax adjustments - - - - 259 259
Other - - - -
Balance at 31 July 2025 100 4,979 (311) 1,853 332,161 338,782
Group Statement of Cash Flows
For the year ended 31 July 2025
2025
2024
£'000 £'000
Note
Net cash generated from operating activities 12 140,714 115,608
Cash flows from investing activities
Finance income 7,350 5,778
Acquisition of subsidiaries, net of cash acquired (7,417) -
Acquisition associated costs (722)
Purchase of property, plant and equipment (11,783) (1,115)
Purchase of intangible assets (3,444) (6,017)
Net cash used in investing activities (16,016) (1,354)
Cash flows from financing activities
Issue of share capital - -
Dividends paid 5 (95,704) (76,048)
Payment of principal portion of lease liabilities (395) (1,929)
Payment of interest portion of lease liabilities (2,048) (443)
Net cash used in financing activities (98,147) (78,420)
Net increase in cash and cash equivalents 26,551 35,834
Exchange losses on cash and cash equivalents (2,723) (1)
Cash and cash equivalents at beginning of year 158,454 122,621
Cash and cash equivalents at end of year 182,282 158,454
Notes to the Consolidated Financial Information
1. General information
Softcat plc (the 'Group) is a public limited company, incorporated and
domiciled in England and Wales. Its registered address is Fieldhouse Lane,
Marlow, Buckinghamshire, SL7 1LW.
The annual financial information presented in this preliminary announcement
does not constitute the Group's statutory accounts for the years ended 31 July
2025 or 2024 but is based on, and consistent with, that in the audited
financial statements for the year ended 31 July 2025, and those financial
statements will be delivered to the Registrar of Companies following the
Group'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 Group's presentational and functional
currency of Pounds Sterling and all values are rounded to the nearest thousand
('£'000'), except when otherwise stated.
The Group applied all standards and interpretations issued by the IASB that
were effective as at 1 August 2024. 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
Group is exposed, as identified by management, are disclosed in the Group's
Climate-related Financial Disclosures ('CFD') 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 Group'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 Group's control which are not all currently
known.
Going Concern
Overview
These financial statements have been prepared on a going concern basis
covering at least the twelve month period from the date of signing the
financial statements.
In considering the going concern basis for preparing the financial statements,
the Directors consider the Group and 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 16 to 19) and Chief Financial Officer's review
sections (see pages 22 to 25 of the 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 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 case.
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
October 2026. All the forecasts reflect the payment of the FY2025 dividend of
£73.0m which will be paid in December 2025 subject to approval at the AGM.
Liquidity and financing position
At 31 July 2025, the Group held instantly accessible cash and cash equivalents
of £182.3m, with net current assets of £312.8m. 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
recently increased £90.0m 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 interest rates; and
● higher risk of credit losses.
Despite the challenging economic environment, the Group and Company have
traded well, delivering double-digit year-on-year growth in gross profit and
operating profit growth is ahead of 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 October 2025, takes into
account the FY2026 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 2026. 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
FY2025;
● employee commission is incurred in line with the gross margin; and
● increased levels of cost to reflect continued investment in our people and the
business's 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. In making our forecasts we balanced our customer needs alongside
employee welfare. Year to date trading to the end of September 2026 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 recent
historic trend or recent event. 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 £4.8m 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 three days;
● paying a reduced interim 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 and 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 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 action
(see mitigating actions) that will enable the Group to mitigate the impact of
reduced cash generation further and achieve the Board's 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 offset the reduced activity 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 test
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 90%;
● reduction in gross margin of 8%; and
● extending the debtor days by an additional eight 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 remote.
Going concern conclusion
Based on the forecast and the scenarios modelled, together with the
performance of the Group and Company to date, the Directors consider that the
Group and Company have 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 October 2026. Accordingly, at the October
2025 Board meeting, the Directors concluded from this analysis it was
appropriate to continue to adopt the going concern basis in preparing the
Consolidated 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 and Company 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.
Accounting policies
The preliminary announcement for the year ended 31 July 2025 has been prepared
in accordance with the accounting policies as disclosed in Softcat plc's
Annual Report and Accounts 2025, as updated to take effect of any new
accounting standards applicable for the year.
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 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
2025 2024
£'000 £'000
Software 227,242 213,520
Hardware 985,724 561,238
Services 245,445 187,875
1,458,411 962,633
Gross invoiced income by type
2025 2024
£'000 £'000
Software 2,074,532 1,807,468
Hardware 992,184 568,450
Services 550,243 476,233
3,616,959 2,852,151
Revenue and gross invoiced income can also be disaggregated by type of
business:
Revenue by type of business
2025 2024
£'000 £'000
Small and medium 914,190 473,985
Enterprise 318,380 298,434
Public sector 225,841 190,214
1,458,411 962,633
Gross invoiced income by type of business
2025 2024
£'000 £'000
Small and medium 1,730,301 1,157,007
Enterprise 675,629 597,320
Public sector 1,211,029 1,097,824
3,616,959 2,852,151
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 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. 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
2025 2024
£'000 £'000
Gross invoiced income 3,616,959 2,852,151
Income to be recognised as agent under IFRS 15 (2,158,548) (1,889,518)
Revenue 1,458,411 962,633
The total revenue for the Group has been derived from its principal activity
as an IT reseller.
During the period there was one direct customer (2024: none) that individually
accounted for greater than 10% of the Group's total revenue, and a
considerably lower proportion of gross profit. Revenue generated from this
customer in FY25 was £326.7m. The revenues related to this direct customer
were predominantly derived within the US subsidiary of the Group.
Substantially all of the remaining revenue relates to trading undertaken in
the United Kingdom.
4. Taxation
2025 2024
£'000 £'000
Current tax
Current income tax charge in the year 44,142 40,338
Adjustment in respect of current income tax in previous years (332) (465)
Foreign tax effects 55 84
Deferred tax
Temporary differences 1,329 398
Total tax charge for the year 45,194 40,355
5. Dividends
2025 2024
£'000 £'000
Declared and paid during the year:
Special dividend on ordinary shares (20.9p per share (2024: 12.6p)) 41,752 25,113
Final dividend on ordinary shares (18.1p per share (2024: 17.0p)) 36,158 33,965
Interim dividend on ordinary shares (8.9p per share (2024: 8.5p)) 17,794 16,970
95,704 76,048
A final dividend of 20.4p per share has been recommended by the Directors and
if approved by shareholders will be paid on 16 December 2025. The final
ordinary dividend will be payable to shareholders whose names are on the
register at the close of business on 7 November 2025. Shares in the Company
will be quoted ex-dividend on 6 November 2025. The dividend reinvestment plan
('DRIP') election date is 25 November 2025.
In line with the Group's stated intention to return excess cash to
shareholders, a further special dividend payment of 16.1p has been proposed.
If approved this will also be paid on 16 December 2025 alongside the final
ordinary dividend.
The Board recommends the final and special dividend for shareholders'
approval.
6. Inventories
2025 2024
£'000 £'000
Finished goods, goods in transit and goods for resale 151,901 2,916
The increase in inventories at the year end is predominantly driven by
inventory held and in transit for a specific customer, yet to be delivered. As
control of the goods has not passed to the customer at year end, the revenue
and the related cost of sale have not been recognised.
The amount of any write down of inventory recognised as an expense in the year
was £nil in both years.
7. Trade and other receivables
2025 2024
£'000 £'000
Trade and other receivables 547,398 504,488
Provision against receivables (4,450) (3,122)
Net trade receivables 542,948 501,366
Unbilled receivables 59,412 40,487
Prepayments 10,336 6,982
Accrued income 17,579 10,279
Deferred costs 82,874 26,188
713,149 585,302
8. Contract assets
2025 2024
£'000 £'000
Contract fulfilment assets 72,606 -
The increase in contract fulfilment assets at the period end is driven by a
specific order where Softcat have delivered goods to the customer but have not
yet met the revenue recognition criteria under IFRS 15.
9. Trade and other payables
2025 2024
£'000 £'000
Trade payables 285,893 290,869
Other taxes and social security 20,814 17,009
Accruals 163,989 121,919
Other creditors 769 285
471,465 430,082
10. Contract liabilities
Contract liabilities are comprised of:
2025 2024
£'000 £'000
Deferred income 346,490 41,131
Deferred income is further broken down as:
Short term deferred income 333,206 31,980
Long term deferred income 13,284 9,151
346,490 41,131
The increase in contract liabilities at the period end is driven by a specific
order where Softcat has the obligation to transfer goods or services but the
obligations have not yet been met. When consideration is paid before goods are
transferred, a contract liability is recognised. This occurs infrequently and
is usually to support the needs of the customer.
11. Earnings per share
2025 2024
Pence Pence
Earnings per share
Basic 66.6 59.7
Diluted 66.2 59.4
The calculation of the basic earnings per share and diluted earnings per share
is based on the following data:
2025 2024
£'000 £'000
Earnings
Earnings for the purposes of earnings per share being profit for the year 133,008 119,044
The weighted average number of shares is given below:
2025 2024
000's 000's
Number of shares used for basic earnings per share 199,690 199,490
Number of shares expected to be issued at nil consideration following exercise
of share options
1,163 1,026
Number of shares used for diluted earnings per share 200,853 200,516
12. Notes to the cash flow statement
2025 2024
£'000 £'000
Cash flow from operating activities
Operating profit 172,900 154,064
Depreciation of property, plant and equipment 3,117 2,631
Depreciation of right-of-use assets 3,818 2,429
Amortisation of intangibles 3,551 1,564
Dividend equivalents paid (95) (98)
Impairment of property, plant and equipment 1,300 -
Loss on disposal of property, plant and equipment 385 -
Gain on disposal of right-of-use assets (314) -
Acquisition associated costs 722
Loss on foreign exchange 2,723 -
Cost of equity settled employee share schemes 4,188 3,612
Operating cash flow before movements in working capital 192,295 164,202
(Increase)/decrease in inventories (148,985) 675
Increase in trade and other receivables and contract fulfilment assets (199,324) (95,261)
Increase in trade and other payables and contract liabilities 343,503 85,218
Cash generated from operations 187,489 154,834
Income taxes paid (46,775) (39,226)
Net cash generated from operating activities 140,714 115,608
13. Share capital
2025 2024
£'000 £'000
Allotted and called up
Ordinary shares of 0.05p each 100 100
Deferred shares* of 1p each - -
100 100
*At 31 July 2025 deferred shares had an aggregate nominal value of £189.33
(2024: £189.33).
Deferred shares do not have rights to dividends and do not carry voting
rights.
14. Business combinations
Acquisitions in the period
On 4 April 2025, the Group acquired 100% of the share capital of Oakland Group
Services Limited, a non-listed company based in the United Kingdom and
specialising in the provision of data platform, data strategy, data
governance, data analytics and artificial intelligence consultancy. The Group
acquired Oakland Group Services Limited because it significantly enhances the
Group's capability in providing these services to existing and new customers.
The details of the business combination are as follows:
2025
Fair value of consideration transferred £'000
Amount settled in cash 7,998
Fair value of contingent consideration 1,450
Total 9,448
Acquisition costs charged to expenses 722
The fair value of the identifiable assets and liabilities of Oakland Group
Services Limited as at the date of acquisition was:
Fair value recognised on acquisition
Non-current assets £'000
Property, plant and equipment 85
Right-of-use assets 1,133
Intangible assets 2,400
Investments 50
Total non-current assets 3,668
Current assets
Trade and other receivables 2,015
Income tax receivable 21
Cash and cash equivalents 581
Total current assets 2,617
Total assets 6,285
Current liabilities
Trade and other payables (1,764)
Lease liabilities (272)
Total current liabilities (2,036)
Non-current liabilities
Deferred tax liability (671)
Lease liabilities (861)
Total non-current liabilities (1,532)
Total liabilities (3,568)
Total identifiable net assets at fair value 2,717
Goodwill on acquisition 6,731
Consideration transferred settled in cash (7,998)
Cash and cash equivalents acquired 581
Net cash outflow on acquisition (7,417)
Consideration transferred
The acquisition of Oakland Group Services Limited was settled in cash
amounting to £8.0m. The purchase agreement included additional contingent
consideration with service conditions and contingent consideration without
service conditions.
The additional consideration without service conditions of £1.6m is payable
only if the average profit performance for Oakland's 2026, 2027 and 2028
financial years exceeds targeted levels agreed by both parties. The additional
consideration will be payable on 31 March 2027 and 31 March 2028. The
contingent consideration liability recognised represents the present value of
the Group's probability-weighted estimate of the cash outflow. It reflects
management's probability-weighted estimate achieving the base case, downside
case and upside case targets. The liability for additional contingent
consideration with service conditions of £1m, therefore not classified as
consideration transferred under IFRS3, is disclosed as Other Employment Costs.
As at 31 July 2025, there have been no changes in the estimate of the probable
cash outflow. Acquisition-related costs amounting to £0.7m are not included
as part of consideration transferred and have been recognised as an expense in
the Consolidated statement of profit or loss and other comprehensive income,
as part of administrative expenses.
In the post-acquisition period Oakland has contributed £1.8m to revenue and
£0.3m to loss before tax to the Group results before amortisation of acquired
intangibles. If acquired on 1 August 2024 Oakland would have contributed net
revenue of £7.1m and loss before tax of £1.0m to the Group results before
amortisation of acquired intangibles.
Identifiable net assets
The fair value of the trade and other receivables acquired as part of the
business combination amounted to £2.0m. As of the acquisition date, the
Group's best estimate of the contractual cash flow not expected to be
collected amounted to £0.01m.
As part of the acquisition, the Group obtained a minority equity interest in a
private limited company. The investment does not provide the Group with
control or significant influence over the investee and has therefore been
recognised as a financial asset.
15. Post balance sheet events
Dividend
A final dividend of 20.4p per share has been recommended by the Directors and
if approved by shareholders will be paid on 16 December 2025. The final
ordinary dividend will be payable to shareholders whose names are on the
register at the close of business on 7 November 2025. Shares in the Company
will be quoted ex-dividend on 6 November 2025. The dividend reinvestment plan
('DRIP') election date is 25 November 2025.
In line with the Group's stated intention to return excess cash to
shareholders, a further special dividend payment of 16.1p has been proposed.
If approved this will also be paid on 16 December 2025 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 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
R Perriss
L Weedall
M Prakash
J Ferguson
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
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