IT infrastructure specialist Softcat (SCT) notes that it operates in a “large and fragmented” industry, rendering the future growth opportunity “just as strong as ever”. Lending weight to this sentiment, management now expects the full-year outcome for 2019 to be “marginally ahead of previous expectations”. Such optimism is underpinned by solid numbers for the six months to 31 January 2019, during which Softcat won 620 new customers – up from 600 a year earlier – lifting total customers by 6.5 per cent. Gross profit per customer grew by 18.7 per cent, up from 14.5 per cent last year.
The top line reflected the adoption of new accounting rules pertaining to revenue recognition. Softcat explains that this has “only a presentational impact”, with no trickle-down effect on earnings or cash flow. Indeed, gross invoiced income – denoting gross income billed to customers, adjusted for deferred and accrued revenue items – grew by 28.5 per cent to £608m. Operating profits climbed by 40.4 per cent to £33.9m, albeit thanks to the effects of short-term operating leverage on higher-than-anticipated income growth. The gross profit to operating profit ratio is expected to “normalise” in the second half, having improved by 3.6 percentage points in the first.
House broker Credit Suisse expects adjusted pre-tax profits of £77.6m and EPS of 31.2p for the year to 31 July 2019, against £68.1m and 27.6p in FY2018.
| SOFTCAT (SCT) | ||||
| ORD PRICE: | 856p | MARKET VALUE: | £1.7bn | |
| TOUCH: | 855-857p | 12-MONTH HIGH: | 906p | LOW: 551p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 41p | NET CASH: | £52.8m | |
| Half-year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 358 | 24.1 | 9.8 | 3.3 |
| 2019 | 434 | 34.0 | 13.9 | 4.5 |
| % change | +21 | +41 | +42 | +36 |
| Ex-div: | 4 Apr | |||
| Payment: | 10 May | |||
