Hiring young graduates and training them as sellers and service staff drove up revenues at Softcat (SCT) in the reported period, while robust demand for cyber security, data storage and other lucrative offerings widened its margins. As a result, the FTSE 250-listed provider of managed IT services delivered a 9 per cent rise in underlying operating profits to £44.2m.
Softcat's cost of sales benefited from £3.4m in one-off procurement savings, but exclude those and the gross margin still widened by 0.2 percentage points to 17.4 per cent. Management increased average headcount by just over a fifth, fuelling double-digit growth in sales of hardware, software and services. Combined with its focus on more profitable high-tech offerings, the upshot was that its customer base grew by 8 per cent to 12,200, and underlying gross profit per customer rose 6 per cent.
The group credited its customer service focus for helping it win a larger share of mid-sized businesses, large enterprises and public sector organisations. Sales to the latter group generated 29 per cent of turnover, up from 26 per cent.
Broker Credit Suisse expects adjusted pre-tax profits of £48.5m in the year to July 2017, giving EPS of 19.4p up from £47m and 19.1p in FY2016.
| SOFTCAT (SCT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 299p | MARKET VALUE: | £590m | |
| TOUCH: | 298.7-299.8p | 12-MONTH HIGH: | 384p | LOW: 240p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 44p | NET CASH: | £62.4m | |
| Year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 396 | 27.4 | 11.8 | na |
| 2014 | 505 | 35.6 | 14.7 | na |
| 2015** | 596 | 39.8 | 16.3 | na |
| 2016 | 672 | 42.4 | 16.9 | 5.3† |
| % change | +13 | +7 | +4 | - |
Ex-div: 17 Nov Payment: 16 Dec **Softcat listed in November 2015 †Excludes special dividend of 14.2p a share, to be paid in December | ||||
