Shares in Softcat (SCT) rose 5 per cent after the IT infrastructure specialist reported strong results for the full year, complete with a dividend hike (including specials) of 15 per cent. Encouragingly, the net cash position was stable despite a shareholder return amounting to £40.9m during FY2017. And new customers continued to flock: customer numbers rose to 13,000 from 12,200 a year earlier.
Revenues and gross profits were helped by growth in the fast-expanding public sector business, which was buoyed by a large central government deal signed in the first half. That said, this low-margin contract was one contributor to the fall in overall gross margin (from 18 per cent to 16.4 per cent). Other dilutive factors included the non-recurring impact of procurement savings in 2016, and currency-led vendor price increases.
The security and services businesses were “two stand-out performers”. Management says security and networking comprises around 25 per cent of group revenues. Demand has risen as companies prepare themselves for new general data protection regulations, to be enforced in 2018, with pressure building after major cyber-attacks such as Wannacry.
Analysts at Credit Suisse forecast adjusted pre-tax profits of £55.9m for the year ending July 2018, with EPS of 21.3p, up from £51.6m and 19.7p in 2017.
| SOFTCAT (SCT) | ||||
| ORD PRICE: | 460p | MARKET VALUE: | £909m | |
| TOUCH: | 458-460p | 12-MONTH HIGH: | 468p | LOW: 280p |
| DIVIDEND YIELD: | 2.0%* | PE RATIO: | 23 | |
| NET ASSET VALUE: | 44.7p | NET CASH: | £61.6m | |
| Year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 505 | 35.6 | na | nil |
| 2015** | 596 | 39.8 | 16.3 | nil |
| 2016 | 672 | 42.4 | 16.9 | 5.3 |
| 2017* | 833 | 50.3 | 20.4 | 9.0 |
| % change | +24 | +19 | +21 | +70 |
| Ex-div: | 02 Nov | |||
| Payment: | 15 Dec | |||
| *Excludes special dividend of 13.5p (same dates apply). **Softcat listed in November 2015 | ||||
