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Softcat end of year results to surpass expectations

Softcat hikes dividend by 18.5% to 6.4p per share

Softcat (LON:SCT) outperformed its own upgraded forecasts at the halfway stage of the financial year as the IT company remained resilient during the pandemic.

The FTSE 250 company expects to surpass its full-year expectations too as it has further invested in its growth strategy during the past 12 months.

Total headcount was 1,658 at the end of January, up 12% from the year before, while the IT company said it did not make use of government support.

While cost savings on account of the coronavirus pandemic are expected to shrink over the second half of the year, Softcat said it is positive over its potential to grow its market.

During H1 to 31 January 2021, Softcat’s revenue rose by 10% to £577m, while pre-tax profit jumped up 29% to £57m as reduced costs increased the company’s operating profit.

The interim dividend, which will be paid out in May, was raised by 18.5% to 6.4p per share.

Despite the widespread move to remote working, Softcat’s customer base rose to 9,600 by 1.5%, as the public sector held steady and corporate demand resurged following a dip early on in 2020.

The Sofcat share price rose by 11% to 1,731p on Wednesday as markets opened.

Graeme Watt, chief executive of Softcat, commented on the results:

“We are pleased with the strong performance in the first half of the financial year in which we continued to grow and take share in a market that has remained relatively resilient during the pandemic.  We did see a reduction in income from some corporate customers during the last quarter of our previous financial year, but during the current period that effect has gradually diminished.” 

“In addition, the business has benefitted from a temporary reduction to some elements of the cost base, although we expect this to normalise as the second half develops.  The Company has taken no form of government support during the pandemic nor made any headcount reductions and we expect that to continue to be the case.  We have been delighted to be able to put part of our Marlow head office to good use as a Covid vaccination centre over the past few months and this will continue into the summer.”

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