Interim report
Page 1
Half-ear Report Released : 19/03/2025 07:00 RNS Number : 2041B Softcat PLC 19 March 2025 SOFTCAT plc ('Softcat', the 'Group') Half year results for the six months to 31 January 2025 Strong first half performance with positive momentum Softcat plc (LSE: SCT.L), a leading UK provider of IT infrastructure products and services, today announces its half year results for the six months to 31 January 2025 ('the period'). These results demonstrate continued successful strategic execution, enabling the delivery of further strong growth in gross profit and operating profit, together with healthy cash generation. Our performance in the period, coupled with an encouraging second half pipeline, provides us with the confidence to upgrade full year operating profit guidance. Financial Summary Six months ended 31 January 31 January 2025 2024 Change £m £m Gross invoiced incomea 1,507.1 1,263.5 19.3% Revenue b 545.6 467.2 16.8% Gross profit 220.2 196.5 12.1% Operating profit 73.7 66.7 10.4% Cash conversion %c 110.9% 101.1% 9.8ppts Interim dividend (p) 8.9p 8.5p 4.7% Basic earnings per share (p) 28.7p 25.6p 12.3% Highlights for the six months to 31 January 2025 ● Continued double-digit growth of 12.1% in gross profit and 19.3% in gross invoiced income, reflecting broad- based success across technology areas and customers. ● Strong operating profit growth of 10.4%, delivering another record first half profit. ● Further targeted strategic investment to underpin future growth, with headcount up 6.0% on the prior period. ● Continually evolving technology and service proposition supports our ability to take market share and add further scale in a growing industry. ● Strong cash conversion of 110.9%, with closing cash of £141.0m. ● Interim ordinary dividend growth of 4.7% to 8.9p, in line with progressive policy. ● Outlook: operating profit growth in the first six months of the financial year is slightly ahead of the Board's
Page 2
expectations. We continue to expect to deliver another year of double-digit gross profit growth in FY2025, with operating profit growth now expected to be low double-digit, up from high single-digit previously. a 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 the CFO Report on page 9. 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 Alternative Performance Measure (APM). c Cash conversion is defined as net cash generated from operating activities before tax but after capital expenditure, as a percentage of operating profit. This is also an Alternative Performance Measure. For further information on this, please refer to the CFO Report on page 9. Graham Charlton, Softcat CEO, commented, "We have continued to successfully implement our strategy, resulting in a first half performance slightly above our initial expectations and an upgrade to full year guidance, despite the persistent backdrop of generally more challenging trading conditions. Our progress is attributable to the breadth of our offering and sustainability of our growth model, powered by Softcat's special culture and the differentiated customer service it delivers. We are excited by the rapid pace of innovation across our industry, with more organisations embedding AI and automation into their systems and processes. Our existing capabilities and continued investment mean we are well positioned to support the evolving technological needs of our customers, enabling us to sustainably grow market share. Should a compelling opportunity arise, our financial strength also provides us with the flexibility to accelerate further through acquisitions. As ever, these results are only possible thanks to the tremendous efforts of the entire Softcat team. I would like to thank all our people for their positive attitude, customer focus and outstanding support for each other. Reflecting the strength of collaboration between our people, customers and partners, we have an incredible opportunity to build on our current momentum and further improve our market-leading UK position." Outlook Operating profit growth in the first six months of the financial year is slightly ahead of the Board's expectations. We continue to expect to deliver another year of double-digit gross profit growth in FY2025, with operating profit growth now expected to be low double-digit, up from high single-digit previously, supported by an encouraging second half pipeline. Softcat operates in a significant and growing market, and we continue to invest to capitalise on this exciting growth potential, to drive further market share gains. Analyst and investor call The management team will host an investor and analyst conference call at 9.30am UK time, on Wednesday, 19 March 2025. To join the conference call, please use the following webcast link: https://brrmedia.news/SCT_HY_25 Please register approximately 10 minutes prior to the start of the call. For further information, please contact:
Page 3
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. This announcement has been determined to contain inside information. The responsible individual for insider information at Softcat plc is Luke Thomas (Company Secretary). Chief Executive Officer's Review Performance and market conditions We have continued to successfully execute on our strategy, delivering another strong performance in the period, which was slightly ahead of our expectations. These results are particularly pleasing given the ongoing challenges within the UK economy and are testament to the quality of our business. Our success reflects the resilience and sustainability of our growth model, which is based upon the breadth of our product offering and the trust placed in us by a large and diverse customer base. During the period we made further good progress against our two key strategic goals: winning new customers, up 1.4% year-on-year, and selling more to existing customers, with an increase of 10.7% in gross profit (GP) per customer. Growth was once again broad-based but especially strong in security, networking and data centre infrastructure, with a number of customers making significant investments in these technologies. We continue to invest in the long-term relevance of our offering, building further depth in our data, AI and automation capabilities. In addition, we are bolstering our own internal data and systems to generate insights and analysis that can be leveraged by our sales teams, further enhancing the customer experience and improving collaboration with our vendor partners. While our growth to date has been entirely organic, the strength of our financial position means that we could also complement the development of our offering through acquisitions, should a compelling opportunity arise. We are excited by the pace at which our industry is innovating, providing us with significant opportunities for growth in the years ahead, supported by our unique culture and the richness of our customer proposition. In the near term, we have a confident outlook for the remainder of this financial year, resulting in an upgrade to our operating profit growth guidance for the full year. This is based on the strength of our execution in the first half as well as an encouraging second half pipeline. Customer priorities and technology trends Technology plays a critical role in many organisations, to help drive growth, increase productivity and efficiency, and to improve customer experience. The rapid pace of technological innovation places huge demands on organisations
Page 4
to invest in the right IT solutions and services at the right time. Softcat helps customers to navigate this increasingly complex IT landscape, supporting their unique requirements by enabling them to harness the latest innovations, deploy effective solutions and achieve greater success. Softcat has done this successfully for years, and we believe we are better placed than ever given the investments we have continued to make through different economic and technology cycles. Our annual customer experience survey highlighted cyber security as the most common customer priority, reflecting the relentless development of new cyber threats and the need to protect proliferating and increasingly sensitive data and operating systems. This means organisations must constantly adapt to emerging methods of attack, alongside implementing comprehensive monitoring to mitigate security risks. We are also seeing a significant increase in organisations embedding AI and automation into their systems and processes, either hosted in the cloud or deployed at the edge of the network, both within existing applications or through bespoke proprietary development. All this innovation is encouraging more organisations to promote a data-driven culture across their operations which in turn creates demand across multiple areas of our technology proposition. The anticipated refresh cycle for end user devices is showing some signs of momentum but is not yet a significant driver of industry growth. Strategic developments Our strategic framework, alongside further investment in our own data and digital strategies, enables us to deliver a highly relevant customer proposition, while also accommodating the rapid pace of vendor innovation. The five pillars of our technology proposition cover all aspects of modern IT infrastructure and, by framing our offering in this way, we make our services more easily accessible. We have also established a service offering across each of these five technology towers, covering advisory, architecture, implementation, support and managed, and recently appointed a new Service Operations Director. This new role will ensure that what is now one of the UK's largest and most diverse infrastructure services offerings is continually enhanced and delivered to the right customers in an efficient manner at the right time. As part of our investment in our data and digital strategy, and in common with many of our customers, we are investing in the Microsoft ecosystem as part of our own technology stack. We have rolled out Microsoft Copilot across our employee base, enabling new ways of working and improving both productivity and quality of work. We have also recently selected Microsoft Dynamics to replace our current sales system. This will enable us to improve our customer and employee experience by leveraging integrated AI functionality between core systems. Work has taken place during the period on our evolved UK vendor management framework, which is due to be launched later this year. The framework will allow us to work more effectively with our strategic vendors and is clearly aligned with our growth strategy and technology proposition. We have also continued to invest in our capabilities to serve large and complex customers, alongside growing our multinational customer base. We now have an extensive network of branches in Europe, APAC and an office in Virginia, USA. As we pursue further growth by serving more of our customers' operations outside the UK and Ireland, we expect to continue expanding our international footprint and recently established a presence in Germany. People and culture Nurturing Softcat's unique culture will always be at the centre of our strategy; it forms the foundation of our ongoing success in delivering exceptional customer service and sustainable growth. Our relentless efforts in maintaining Softcat's special culture create an environment where our people display enormous passion, working collaboratively and support each other as they strive to meet the needs of customers. This creates the cycle of trust that results in customers placing more of their requirements through us, fuelling further investment in our offering, and reinforcing our key competitive advantages. In our annual employee engagement survey, undertaken in October 2024, we achieved an employee net promoter score of 55 (FY2024: 59), which remains at a market-leading level. We have continued to invest in our people and during the first half we increased total headcount by 6.0% year-on-year to 2,617 with new hires focused across our technical, specialist and sales support functions, as we build our
Page 5
capability to do more with existing customers. We anticipate net headcount expansion for the full year to be in the range of 6-8%. Softcat champions diversity, equity, and inclusion through employee community groups, inclusion training, and strategic partnerships. By fostering an inclusive culture, we create a workplace where all employees thrive. We are delighted to have received excellent recognition for our efforts, not only from our people, but also through external awards. Softcat won the Best Diversity Initiative Award at the CRN Channel Awards in October 2024, with our entry highlighting the work we have done to meet our ambition of reaching a 35% female gender balance (now raised to a new target of 40%). At the same event, we also won the Cultural Inclusion Company of the Year Award and were highly commended in the Equitable Place to Work and Championing Diversity Award. Elsewhere, Softcat has been recognised in the Fortune 100 Best Companies to Work for in Europe, which showcases the best large and multinational organisations successfully creating cultures that put people first. Our continued fast pace of growth and our focus on creating vibrant and welcoming office environments, have necessitated moves to new locations across several of our office sites. In November 2024, we settled into our new Birmingham office, which has seen average daily attendance increase by a fifth since opening. In March 2025, we moved our London presence to one of the single largest floorplates in the City, and a new Bristol office will also open soon. These changes enable us to provide facilities to enhance wellbeing and collaboration between our people, vendors and customers, and ensure that we can continue to successfully scale across all our UK regions. Sustainability We are focused on making progress across all areas of sustainability in the IT industry. 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 remain committed to minimising our direct impact on the environment and supporting wider industry efforts to reduce emissions. Mandatory sustainability training ensures a Group-wide commitment to these goals. Our successful transition to renewable energy, where possible, across our office locations and the resulting decline in our Scope 2 carbon emissions, was recently recognised as Net Zero Project of the Year at the CRN Sustainability in Tech Awards. Our "8 Steps to Sustainable Success" framework is helping our customers decarbonise through the adoption of sustainable solutions and services. We offer tailored pre-purchase guidance, asset optimisation and post-use recycling solutions, enabling customers to extend product lifecycles and generate measurable environmental benefits that support the circular economy. Chief Financial Officer's Review Financial Summary H1 FY2025 H1 FY2024 Change Gross invoiced income split Software Hardware Services £942.8m £326.6m £237.7m £769.5m £275.6m £218.4m 22.5% 18.5% 8.8% Total gross invoiced income 1 £1,507.1m £1,263.5m 19.3% Revenue split Software Hardware Services £105.9m £324.6m £115.1m £96.2m £273.1m £97.9m 10.1% 18.9% 17.6% Total revenue £545.6m £467.2m 16.8% Gross profit £220.2m £196.5m 12.1% Gross profit margin2 14.6% 15.6% (1.0%) pts Operating profit £73.7m £66.7m 10.4% Operating profit margin2 4.9% 5.3% (0.4%) pts Gross profit per customer3 £43.1k £38.9k 10.7% Customer base4 10.3k 10.1k 1.4%
Page 6
Cash conversion5 110.9% 101.1% 9.8% 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 9. 2 Gross profit margin and operating profit margin are both calculated as a percentage of gross invoiced income. 3 Gross profit per customer is defined as Gross profit divided by the customer base. 4 Customer base is defined as the number of customers who have transacted with Softcat in both of the preceding twelve-month periods. 5 Cash conversion is defined as net cash generated from operating activities before tax but after capital expenditure, as a percentage of operating profit. This is also an Alternative Performance Measure. For further information on this, please refer to page 9. Gross profit, revenue and gross invoiced income Our H1 FY2025 results reflect the resilience of our business model and consistent success in strategic execution. We continue to support the IT infrastructure needs of new and existing customers through our comprehensive range of technology solutions, served by highly engaged employees providing superior customer service. Gross profit (GP), our primary measure of income, grew by 12.1% to £220.2m, consistent with full year guidance for low double-digit growth and slightly ahead of our expectations for the first half. Market conditions have remained relatively challenging with continued macroeconomic uncertainty, and our performance in these conditions highlights the resilience of our business model, including the benefit of having a very broad portfolio of solutions catering to a diverse customer base. GP growth was broad based across enterprise, mid-market and public sector customer segments with all growing high single-digit or double-digit. By technology area GP growth was driven by security, reflecting the continued prioritisation by customers of investment in cyber, alongside growth in data centres and networking, where demand was broad-based and supplemented by some larger orders. Workplace growth was impacted by slower recovery in client devices and some margin dilution on certain products. By product type, hardware, software and services GP also all grew high single-digit or double-digit. Hardware growth was supported by datacentre and networking infrastructure, server and compute sales. Software GP growth was broad-based across technologies and services growth was driven by some large, high margin support service deals in the period. Revenue is reported in accordance with IFRS 15 with some transactions (generally hardware and internally delivered services) reported gross (principal) and others (generally software and externally provided 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. H1 FY2025 revenue grew overall by 16.8% driven by: (1) an 18.5% increase in hardware GII due to strong datacentre, networking, server and compute sales; (2) software revenue growth of 10.1% was lower than GII growth of 22.5%, due to a lower software gross margin, reflecting product mix and a mix into high volume, low margin, transactions in the period; and (3) services revenue growth of 17.6%, reflecting a higher share of internally-delivered services, which are reported on a gross basis, and particular success in support services mentioned above. GII increased 19.3% to £1,507.1m, driven by strong growth in software and hardware, as discussed above, while services grew by 8.8% supported by strong growth in high margin internal services. GII grew ahead of GP reflecting the impact of several higher volume, low margin sales in the period, together with the dilution in software margin described above, resulting in GP as a percentage of GII declining year-on year to 14.6% (H1 FY2024: 15.6%). Customer KPIs During the period, GP per customer grew by 10.7% to £43.1k (H1 FY2024: £38.9k) and the customer base expanded by 1.4%, to 10.3k (H1 FY2024: 10.1k). As the longevity of the relationship with our customers increases, the GP transacted with them also increases. Over time, customers buy across more technology areas and an increasing range of vendors. Loyalty, as measured by lower rate of customer churn, also significantly increases. We track this effect by measuring core KPIs among those customers transacting over £1k of GP with us each year, at which point average churn drops significantly. This number of customers in this more stable cohort, grew at 4.9% to over 8.0k during the period, with the average GP
Page 7
delivered from each of those customers expanding by 7.0% to £54.9k. 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 multiple sources (Gartner, HG Insights, CRN and ICG), indicates that our market share remains around 5% in the UK. 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, which implies a 25% average share of wallet. This analysis suggests there remains a significant future growth opportunity and is supportive of our strategy to attract new customers and go deeper with our existing customers. Operating profitability and investment in future growth Operating profit of £73.7m (H1 FY2024: £66.7m) increased by 10.4% year-on-year, ahead of our expectations, driven by the over delivery of gross profit, with the GP growth of 12.1% partially offset by a 12.9% rise in operating costs. Operating cost growth was driven by increased commissions broadly in line with GP growth and a 10.7% increase in wages and salaries, including average headcount growth of 6.6%, reflecting a more measured level of investment as we leverage the significant headcount growth in recent periods. Moves to new office sites also contributed to increased operating costs during the period. Our new London office was the main driver behind the increase in right- of-use assets, lease liabilities and property, plant and equipment. As a result of the ongoing investments we are making in the long-term future of our business, the ratio of operating profit to gross profit has marginally decreased to 33.5% (H1 FY2024: 34.0%). Corporation tax charge The effective tax rate for H1 FY2025 was 25.2% (H1 FY2024: 25.2%) 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 The Group entered the period with £158.5m of cash and cash equivalents before paying an aggregate final ordinary and special dividend of £77.9m in December 2024. This was largely offset by strong cash generation during the first half, resulting in cash and cash equivalents at the end of the period of £141.0m (H1 FY2024: £112.5m). The Group remains debt free. Cash conversion, defined as net cash generated from operating activities before tax but after capital expenditure, as a percentage of operating profit, was 110.9% (H1 FY2024: 101.1%). This strong performance reflects continued good working capital management, alongside the timing impact of certain customer transactions, including £16.0m paid up front by a single customer. Excluding this advanced customer payment, cash conversion would have been 89.2%, within our target cash conversion range of 85%-95%. Our capital allocation policy remains unchanged, prioritising long-term investment in organic growth to facilitate further share gains in our growing 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, or is returned to shareholders. During the period, 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 and developing our data and digital platforms. Finance net income In the period, net interest income totalled £3.1m (H1 FY2024: £1.5m). The year-on-year increase was driven by improved management of cash and cash equivalents held in interest bearing accounts. Dividend
Page 8
An interim ordinary dividend of 8.9p per share (H1 FY2024: 8.5p), amounting to £17.8m (H1 FY2024: £17.0m), has been approved by the Board of Directors. This is in line with our updated approach to pay one-third of the previous year's ordinary dividend as an interim dividend in the current year. The interim dividend will be payable on 21 May 2025, to shareholders whose names are on the register at the close of business on 11 April 2025. Shares in the Group will be quoted ex-dividend on 10 April 2025. The last day for dividend reinvestment plan ('DRIP') elections is 29 April 2025. Alternative Performance Measures The Group uses two 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 and have remained consistent with the prior year. These non-GAAP measures comprise gross invoiced income (or 'GII') and 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 3 of the interim financial statements. 2. Cash conversion ratio is net cash generated from operating activities before taxation, net of capital expenditure, as a percentage of operating profit. Cash conversion is an indicator of the Group's ability to convert profits into available cash. A reconciliation to the adjusted measure for cash conversion is provided below: H1 2025 £'000 H1 2024 £'000 Net cash generated from operating activities 65,329 51,198 Income taxes paid 24,281 19,082 Cash generated from operations 89,610 70,280 Purchase of property, plant and equipment (4,896) (682) Purchase of intangible assets (2,997) (2,115) Cash generated from operations, net of capital expenditure 81,717 67,483 Operating Profit 73,662 66,731 Cash conversion ratio 110.9% 101.1% Excluding an advance customer payment, cash conversion in H1 FY2025 would have been 89.2%. Principal Risks and Uncertainties The principal and emerging risks facing the Group have been identified and evaluated by the Board. In assessing the Group's likely financial performance for the second half of the current financial year, these risks and uncertainties should be considered in addition to the comments made under the heading "outlook" in the Chief Executive Officer's Review. In summary, principal risks include: Risk Potential impacts Management and mitigation BUSINESS STRATEGY Failure to respond to market changes including technology offering, channel disintermediation, competitor landscape and customer needs. (no change in net risk) · Loss of competitive advantage · Reduced number of customers and profit per customer · Insight from ongoing industry analysis and subscriptions input into annual strategy process · 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
Page 9
representatives from sales, technology and vendor management teams to review technology and market trends and customer propositions. OPERATIONAL Customer dissatisfaction (no change in net risk) · Reputational damage · Loss of customers · Financial penalties · Dedicated Customer experience team, who manage and escalate customer dissatisfaction cases · ISO20000-1 IT Service Management and ISO-9001 Quality management certified · Ongoing customer service excellence training · 'Big-deal review' process Cyber security risk & business interruption risk (no change in net risk) · Inability to deliver customer services · Reputational damage · Financial loss · Customer dissatisfaction · ISO27001 accredited processes. Group- wide information security policy and mandatory security-related training · Regular testing of disaster recovery plans and business continuity plans · Established and documented processes for incident management, change of control, etc. · Ongoing upgrades to network. · All employees issued with corporate devices with standardised access monitoring and control · Key software used is from large multi- national companies who have a 99.9% SLA and who also provide us with SOC2 reports that provide assurance on their processes and controls · Annual penetration test by a third party FINANCIAL Macro-economic factors, including geo- political conditions, impact on customer sentiment, inflationary pressures, interest and foreign currency volatility (no change in net risk) · Short-term supply chain disruption · Reduced margins · Reduced customer demand · Reduced profit per customer · Higher operating costs · Customer insolvencies and cash collection challenges · Customer base is well diversified in terms of both revenue concentration but also public and commercial sector exposure · Close dialogue with supply chain partners · Market conditions are factored in our annual budgeting process · Operating costs are budgeted and reviewed regularly · Going concern and viability statements are underpinned by robust analysis of scenarios Ineffective working capital management, including customer credit risk relating to both in-year and multi- year deals (no change in net risk) · Increased bad debts · Increased cost of operations · Robust credit assessment process including use of trade credit insurance · 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 · Uncompetitive pricing leading to loss of business · Budgeting process and regular reviews ensure costs are managed appropriately and in consideration of gross profit
Page 10
right- size our cost base compared to gross profit generated. (no change in net risk) · Reduced profitability/margins growth. Any out of budget spend needs management level approval · 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 (no change in net risk) · Reduced staff engagement · Negative impact on customer service · Loss of talent · Culture sits at the heart of all changes that are made in Softcat. There is regular communication from Senior Leadership Team members to employees at 'Kick Off' and 'All Hands' calls about the importance of culture · 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 (no change in net risk) · Lack of strategic direction · Reduced staff engagement · Loss of talent · Loss of competitive advantage · Succession planning process in place. · Experienced and broad senior management team · Investment in robust recruitment and selection processes · Attrition tracked and action taken as necessary Regulatory and Compliance Compliance with existing regulation/legislation and being prepared for emerging regulation/legislation (no change in net risk) · Financial penalties · Reputational damage · Loss of customers · Significant investment in a second line of defence function (Risk Assurance and Process Improvement, Information Security, Legal and Company Secretarial teams) · Management committee in place to review second line progress and report to the Audit Committee · Ongoing engagement with specialist third parties where required Climate change In the prior year, in line with the approach recommended by the Taskforce on Climate-related Financial Disclosures ('TCFD') and pursuant to the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 ('UK CFD'), we conducted a formal assessment of the potential impact of climate change to our business and supply chain. Please see our 2024 Annual Report and Accounts, pages 60 to 82 for more information. Climate change is already a component of the risk of failure to respond to market changes when considering the needs of our customers and how products, services and solutions might be affected by the drive towards carbon neutrality. Our most recent analysis concluded that no other climate change-related risk is a principal risk which needs to be
Page 11
incorporated into the list of principal risks shown. These risks and uncertainties have not changed significantly since those published in the 31 July 2024 Annual Report. Going Concern Please refer to note 2 under 'Basis of preparation'. Cautionary Statement This report 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 Interim Management Report should not be relied on by any other party or for any other purpose. In making this report, 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. Directors' Responsibility Statement The Directors confirm that, to the best of their knowledge: ● the condensed set of financial statements, which has been prepared in accordance with UK adopted IAS 34 Interim Financial Reporting, has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; ● the Interim Management Report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and ● the Interim Management Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein). Neither the Group nor the Directors accept any liability to any person in relation to the half-year financial report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A and schedule 10A of the Financial Services and Markets Act 2000. Graham Charlton Katy Mecklenburgh Chief Executive Officer Chief Financial Officer 18 March 2025 18 March 2025 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended 31 January 2025 Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited Unaudited Audited
Page 12
Note £'000 £'000 £'000 Revenue 3 545,584 467,152 962,633 Cost of sales (325,379) (270,638) (544,880) Gross profit 220,205 196,514 417,753 Administrative expenses (146,543) (129,783) (263,689) Operating profit 73,662 66,731 154,064 Finance income 3,682 1,650 5,778 Finance cost (629) (165) (443) Profit before taxation 76,715 68,216 159,399 Income tax expense 4 (19,328) (17,169) (40,355) Profit for the period 57,387 51,047 119,044 Other comprehensive income Other comprehensive income that may be reclassified to profit or loss in subsequent periods: Net gain on cash flow hedge 1,627 677 514 Foreign exchange differences on translation of foreign branches and subsidiaries 119 2 (620) Total other comprehensive income/(loss) 1,746 679 (106) Total comprehensive income for the period 59,133 51,726 118,938 Profit attributable to: Owners of the Parent Company 57,387 51,047 119,044 Total comprehensive income attributable to: Owners of the Parent Company 59,133 51,726 118,938 Basic earnings per Ordinary Share (pence) 12 28.7 25.6 59.7 Diluted earnings per Ordinary Share (pence) 12 28.6 25.5 59.4 All results are derived from continuing operations. Condensed Consolidated Statement of Financial Position As at 31 January 2025 Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited Unaudited Audited Note £'000 £'000 £'000 Non-current assets Property, plant and equipment 13,342 10,755 9,832 Right-of-use assets 6 26,752 8,779 10,066 Intangible assets 13,422 8,548 11,608
Page 13
Deferred tax asset 2,497 2,623 2,571 56,013 30,705 34,077 Current assets Inventories 7 21,335 3,992 2,916 Trade and other receivables 8 609,508 496,822 585,302 Cash and cash equivalents 141,045 112,455 158,454 Income tax receivable 3,980 2,184 - 775,868 615,453 746,672 Total assets 831,881 646,158 780,749 Current liabilities Trade and other payables 9 (440,812) (349,271) (430,082) Contract liabilities 10 (69,328) (36,278) (31,980) Income tax payable - - (1,141) Lease liabilities 6 (3,422) (2,385) (2,253) (513,562) (387,934) (465,456) Non-current liabilities Contract liabilities 10 (12,497) (6,227) (9,151) Lease liabilities 6 (24,913) (6,391) (8,105) (37,410) (12,618) (17,256) Total liabilities (550,972) (400,552) (482,712) Net assets 280,909 245,606 298,037 Equity Issued share capital 14 100 100 100 Share premium account 4,979 4,979 4,979 Cash flow hedge reserve 1,342 (122) (285) Foreign exchange revaluation reserve 2,857 3,360 2,738 Retained earnings 271,631 237,289 290,505 Total equity 280,909 245,606 298,037 Condensed Consolidated Statement of Changes in Equity (unaudited) Share capital Share premium Translation reserve Cash flow hedge reserve Retained earnings Total £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 August 2023 100 4,979 3,358 (799) 243,807 251,445 Profit for the period - - - - 51,047 51,047 Impact of foreign exchange on reserves - - 2 - - 2 Net gain on cash flow hedge - - - 677 - 677 Total comprehensive income for the period - - 2 677 51,047 51,726 Share-based payment transactions - - - - 1,699 1,699 Dividends paid - - - - (59,069) (59,069) Dividend equivalents paid - - - - (98) (98) Tax adjustments - - - - (97) (97) Balance at 31 January 2024 100 4,979 3,360 (122) 237,289 245,606
Page 14
Balance at 1 August 2024 100 4,979 2,738 (285) 290,505 298,037 Profit for the period - - - - 57,387 57,387 Impact of foreign exchange on reserves - - 119 - - 119 Net gain on cash flow hedge - - - 1,627 - 1,627 Total comprehensive income for the period - - 119 1,627 57,387 59,133 Share-based payment transactions - - - - 1,652 1,652 Dividends paid - - - - (77,907) (77,907) Dividend equivalents paid - - - - (99) (99) Tax adjustments - - - - 93 93 Balance at 31 January 2025 100 4,979 2,857 1,342 271,631 280,909 Condensed Consolidated Statement of Cash Flows For the six months ended 31 January 2025 Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited Unaudited Audited Note £'000 £'000 £'000 Net cash generated from operating activities 13 65,329 51,198 115,608 Investing activities Finance income 3,682 1,650 5,778 Purchase of property, plant and equipment (4,896) (682) (1,115) Purchase of intangible assets (2,997) (2,115) (6,017) Net cash used in investing activities (4,211) (1,147) (1,354) Financing activities Issue of share capital - - - Dividends paid 5 (77,907) (59,069) (76,048) Payment of principal portion of lease liabilities 6 (110) (985) (1,929) Payment of interest portion of lease liabilities 6 (629) (165) (443) Net cash used in financing activities (78,646) (60,219) (78,420) Net (decrease)/increase in cash and cash equivalents (17,528) (10,168) 35,834 Exchange gains/(losses) on cash and cash equivalents 119 2 (1) Cash and cash equivalents at beginning of period 158,454 122,621 122,621 Cash and cash equivalents at end of period 141,045 112,455 158,454 Notes to the Consolidated Financial Information
Page 15
1. General information The Directors of Softcat plc (the "Group") present their Interim Report and the unaudited Condensed Consolidated Interim Financial Statements for the six months ended 31 January 2025 ("Condensed Consolidated Interim Financial Statements"). Softcat plc is a public limited company, incorporated and domiciled in England and Wales. Its registered address is Solar House, Fieldhouse Lane, Marlow, Buckinghamshire , SL7 1LW. The Condensed Consolidated Interim Financial Statements have been reviewed, but not audited, by Ernst & Young LLP and were approved by the Board of Directors on 18 March 2025. The financial information contained in this report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The Condensed Consolidated Interim Financial Statements should be read in conjunction with the Annual Report and Financial Statements for the year ended 31 July 2024, which have been prepared in accordance with UK-adopted international accounting standards (IFRS) in accordance with the requirements of the Companies Act 2006. The Annual Report and Financial Statements for the year ended 31 July 2024 were approved by the Board of Directors on 23 October 2024 and delivered to the Registrar of Companies. The auditor's report on those financial statements was unqualified, 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 Basis of preparation These Condensed Consolidated Interim Financial Statements have been prepared in accordance with UK adopted International Accounting Standard ("IAS") 34 Interim Financial Reporting and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. The Condensed Consolidated Interim Financial Statements are presented in Pounds Sterling, rounded to the nearest thousand ('£'000'), unless otherwise stated. They were prepared under the historical cost convention. The accounting policies adopted in the preparation of the Condensed Consolidated Interim Financial Statements are consistent with those applied in the preparation of the Group's Financial Statements for the year ended 31 July 2024. Going Concern The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period to at least 31 March 2026. Overview In considering the going concern basis for preparing this financial information, the Directors consider the Group'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 Chief Financial Officer's review. 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 cases. 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 March 2026.
Page 16
Liquidity and financing position At 31 January 2025 the Group held instantly accessible cash and cash equivalents of £141m , with net current assets of £262m . Note 1 to the financial statements in the Annual Report includes the Group's obje ctives, 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 desired liquidity position 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 has traded well, delivering double-digit year-on-year growth in gross profit and operating profit growth in line with 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 March 2025, takes into account the FY2025 budget process which includes estimated growth and increased cost across the going concern period and is consistent with the actual trading experience through to February 2025. 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 FY2024; ● employee commission is incurred in line with the gross margin; and ● increased levels of cost to reflect continued investment in our people and the businesses 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. Year to date trading to the end of February 2025 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 worse than any historic trend and more severe than experienced during the height of the COVID-19 pandemic. 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 £4.2m per annum, 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 3 days; ● paying a reduced final 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 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
Page 17
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 actions (see mitigating actions) that will enable the Group to mitigate the impact of reduced cash generation further and achieve the Boards 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 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 tests 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 100%; ● reduction in gross margin of 10ppts; ● extending the debtor days by an additional 12 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 extremely remote. Going concern conclusion Based on the forecast and the scenarios modelled, together with the performance of the Group to date, the Directors consider that the Group has 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 March 2026. Accordingly, at the March 2025 Board meeting, the Directors concluded from this analysis it was appropriate to continue to adopt the going concern basis in preparing the Condensed Consolidated Interim 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 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. Critical accounting judgements and key sources of estimation uncertainty When applying the Group's accounting policies, management must make several key judgements involving estimates and assumptions concerning the future. Key judgements management have made are those which have the most significant effect on the amounts recognised in the financial statements. Key sources of estimation uncertainty are those assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The key judgements and sources of estimation uncertainty reported in the financial statements for the year ended 31 July
Page 18
2024 are still relevant. There have been no new areas of significant accounting judgement or key sources of estimation uncertainly arising from operations in the first six months of the financial year to 31 July 2025, nor in the months to the date of publication of this interim report. Changes to accounting standards No new standards or amendments became effective in the period to 31 January 2025 which have had a material effect on the financial statements. 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 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income and Condensed Consolidated Statement of Financial Position. An analysis of revenues by product, which form one reportable segment, is set out below: Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Revenue by type Software 105,940 96,142 213,520 Hardware 324,584 273,102 561,238 Services 115,060 97,908 187,875 545,584 467,152 962,633 Gross invoiced income by type Software 942,784 769,509 1,807,468 Hardware 326,572 275,590 568,450 Services 237,705 218,371 476,233 1,507,061 1,263,470 2,852,151 Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Revenue by type of business Small and medium 336,006 264,634 473,985 Enterprise 127,346 120,234 298,434 Public sector 82,232 82,284 190,214 545,584 467,152 962,633 Gross invoiced income by type of business Small and medium 736,212 578,877 1,157,007 Enterprise 306,070 260,557 597,320 Public sector 464,779 424,036 1,097,824 1,507,061 1,263,470 2,852,151 Gross invoiced income reflects gross income billed to customers adjusted for deferred and accrued revenue items. Softcat
Page 19
continues to report gross invoiced income as an alternative financial KPI as this measure allows a consistent, year on year, understanding of gross income billed, business performance and position and correlates closely to working capital movements. 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 Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Gross invoiced income 1,507,061 1,263,470 2,852,151 Income recognised as agent under IFRS 15 (961,477) (796,318) (1,889,518) Revenue 545,584 467,152 962,633 The total revenue for the Group has been derived from its principal activity as an IT reseller. Substantially all this revenue relates to trading undertaken in the United Kingdom . 4. Taxation Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Current Tax Current period 19,205 17,065 40,338 Adjustment in respect of current income tax in previous years. - - (465) Foreign tax effects - - 84 Deferred Tax Temporary differences 123 104 398 Total tax charge for the period 19,328 17,169 40,355 The income tax expense was recognised based on management's best estimate of the annual income tax rate expected for the full financial year, applied to the profit before tax for the half year ended 31 January 2025. On this basis, the Group's tax charge was £19.3m (H1 2024: £17.2m ). The half year effective tax charge being 25.2% (H1 2024: 25.2%). 5. Dividends Six months ended 31 January Year ended 31 July 2025 2024 2024 Declared and paid during the period Unaudited £'000 Unaudited £'000 Audited £'000 Interim dividend - - 16,970 Final dividend 36,159 33,956 33,965 Special dividend 41,748 25,113 25,113 77,907 59,069 76,048 An interim dividend of 8.9p per share, amounting to a total dividend of £17.8m , was declared post period end and is to be paid on 21 May 2025 to those on the share register at the close of business on 11 April 2025.
Page 20
6. Right-of-use assets and lease liabilities Leases - as a lessee Softcat has lease contracts for various properties and offices across the country, used for its operations. Property leases generally have lease terms of between 3 and 10 years. A number of these contracts include extension and termination options which are discussed below. Set out below are the carrying amounts of right-of-use assets recognised and movements during the period: Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Property leases Opening right-of-use asset 10,066 9,970 9,969 Additions 18,087 - 2,526 Depreciation (1,401) (1,191) (2,429) Closing right-of-use asset 26,752 8,779 10,066 Set out below are the carrying amounts of lease liabilities included under current and non-current liabilities and the movements during the period: Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Property leases Opening lease liability 10,358 9,761 9,761 Additions 18,087 - 2,526 Accretion of interest 629 165 443 Payments (739) (1,150) (2,372) Closing lease liability 28,335 8,776 10,358 Current lease liability 3,422 2,385 2,253 Non-current lease liability 24,913 6,391 8,105 28,335 8,776 10,358 On 27 September 2024, the Group signed a property lease in relation to relocating the London sales hub. The right-of-use asset and lease liability additions from this contract were £15.1m . Associated leasehold improvements increased property, plant and equipment by £2.7m . Softcat had no variable lease expenses charged or income from sub-leases credited to the Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income, nor any sale and leaseback transactions. Softcat has several lease contracts that include termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio to align to business needs. Management exercises significant judgement in determining whether these options are reasonably certain to be exercised. As at 31 January 2025, the undiscounted potential future rental payments relating to periods following the exercise date of termination options that are not included in the lease term were £Nil (H1 2024: £Nil). Lease charges related to low value and short-term leases recognised in the Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income was £38,787 (H1 2024: £23,433). 7. Inventories Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited Unaudited Audited
Page 21
£'000 £'000 £'000 Finished goods and goods for resale 21,335 3,992 2,916 The increase in stock is predominantly driven by stock in transit for a specific customer yet to be delivered. As control of the goods had not passed to the customer at the period end, the revenue and cost of sale have not been recognised. 8. Trade and other receivables Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Trade receivables 499,267 432,161 504,488 Allowance for expected credit losses (3,672) (3,718) (3,122) Net trade receivables 495,595 428,443 501,366 Unbilled receivables 67,797 37,476 40,487 Prepayments 5,886 4,147 6,982 Accrued income 11,505 10,898 10,279 Deferred costs 27,384 15,858 26,188 Other receivables 1,341 - - 609,508 496,822 585,302 The increase in unbilled receivables is predominantly driven by a specific order where Softcat's contractual obligation had been fulfilled but was not invoiced to the customer at the period end. 9. Trade and other payables Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Trade payables 302,293 217,987 290,869 Other taxes and social security 13,580 24,259 17,009 Accruals 124,939 107,025 121,919 Other creditors - - 285 440,812 349,271 430,082 10. Contract liabilities Contract liabilities is split as: Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Current deferred income 69,328 36,278 31,980 Non-current deferred income 12,497 6,227 9,151 81,825 42,505 41,131 Contract balances
Page 22
Deferred income includes goods or services to be delivered to customers by Softcat for which there is a contractual obligation arising from receipt of consideration or amounts due from the customer. Of this balance, £16.0m relates to a single customer advance and a further £15.0m relates to orders for which goods were in transit for another single customer at the period end. The remaining balances on these accounts have moved in line with the activity of the business and customer base. As at 31 January 2025, £81.8m remains on the Condensed Consolidated Statement of Financial Position as a contract liability. Softcat expects that £69.3m of the balance as at 31 January 2025 will be released in the following 12 months with the balance released within 2-5 years. Of the £41.1m balance as at 31 July 2024, £21.8m has been recognised in this period. 11. Financial instruments The Group's principal financial liabilities comprise trade and other payables including lease liabilities. The primary purpose of these financial liabilities is to finance the Group's operations. The Group has trade and other receivables and cash that derive directly from its operations. Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Financial assets The financial assets of the Group were as follows: Cash at bank and in hand 141,045 112,455 158,454 Trade receivables, other receivables and accrued income 576,238 476,818 552,132 717,283 589,273 710,586 Financial liabilities The financial liabilities of the Group were as follows: Trade payables (302,293) (217,987) (290,869) Accruals (124,939) (107,025) (121,919) Lease liabilities (28,335) (8,776) (10,358) (455,567) (333,788) (423,146) The Directors consider that the carrying amounts for all financial assets and liabilities (excluding lease liabilities) approximate to their fair value. 12. Earnings per share (EPS) Six months ended 31 January Year ended 31 July 2025 2024 2024 Earnings per share Unaudited Pence Unaudited Pence Audited Pence Basic 28.7 25.6 59.7 Diluted 28.6 25.5 59.4 The calculation of the earnings per share and diluted earnings per share is based on the following data: Six months ended 31 January Year ended 31 July 2025 2024 2024
Page 23
Unaudited £'000 Unaudited £'000 Audited £'000 Earnings Earnings for the purposes of EPS, being profit for the period 57,387 51,047 119,044 The weighted average number of shares is given below: Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited 000's Unaudited 000's Audited 000's Number of shares used for basic earnings per share 199,623 199,415 199,490 Number of shares expected to be issued at nil consideration following exercise of share options 1,227 1,127 1,026 Number of shares used for diluted earnings per share 200,850 200,542 200,516 13. Notes to the cash flow statement Reconciliation of operating profit to net cash inflow from operating activities Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Operating profit 73,662 66,731 154,064 Depreciation of property, plant and equipment 1,386 1,275 2,631 Depreciation of right-of-use assets 1,401 1,190 2,429 Amortisation of intangibles 1,183 722 1,564 Dividend equivalents paid (99) (98) (98) Cost of equity-settled employee share schemes 1,652 1,699 3,612 Operating cash flow before movements in working capital 79,185 71,519 164,202 (Increase)/decrease in inventories (18,419) (401) 675 Increase in trade and other receivables (22,865) (6,781) (95,261) Increase in trade and other payables and contract liabilities 51,709 5,943 85,218 Cash generated from operations 89,610 70,280 154,834 Income taxes paid (24,281) (19,082) (39,226) Net cash generated from operating activities 65,329 51,198 115,608 14. Share capital Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 Ordinary shares of 0.05p each 100 100 100 Deferred shares of 1p each - - - 100 100 100
Page 24
15. Related party transactions Dividends to Directors The following Directors, who served as Directors for either the whole or part of the interim period, were paid the following dividends: Six months ended 31 January Year ended 31 July 2025 2024 2024 Unaudited £'000 Unaudited £'000 Audited £'000 G Watt 53 32 44 G Charlton 46 40 53 K Mecklenburgh - - - J Ferguson - - - V Murria 65 49 63 R Perriss 6 4 6 L Weedall 1 - - M Prakash - - - 171 125 166 Except for the above, there were no other significant related party transactions. 16. Post balance sheet events Dividend An interim dividend of 8.9p per share, amounting to a total dividend of £17.8m was declared post period end and is to be paid on 21 May 2025 to those on the share register at the close of business on 11 April 2025. INDEPENDENT REVIEW REPORT TO SOFTCAT PLC Conclusion We have been engaged by the Group to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 January 2025 which comprises Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income, Condensed Consolidated Statement of Financial Position, Condensed Consolidated Statement of Changes in Equity, Condensed Consolidated Statement of Cash Flows and Explanatory Notes 1 to 16. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of consolidated financial statements. Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half-yearly financial report for the six months ended 31 January 2025 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. Basis for Conclusion We conducted our review in accordance with International Standard on Review Engagements 2410 ( UK) "Review of Interim
Page 25
Financial Information Performed by the Independent Auditor of the Entity" (ISRE) issued by the Financial Reporting Council. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing ( UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. As disclosed in note 1 and 2, the annual financial statements of the Group are prepared in accordance with UK adopted international accounting standards. The condensed set of consolidated financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting" Conclusions Relating to Going Concern Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern. Responsibilities of the directors The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. In preparing the half-yearly financial report, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the review of the financial information In reviewing the half-yearly report, we are responsible for expressing to the Group a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report. Use of our report This report is made solely to the Group in accordance with guidance contained in International Standard on Review Engagements 2410 ( UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group, for our work, for this report, or for the conclusions we have formed. Ernst & Young LLP London 18 March 2025 Corporate Information
Page 26
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 J Ferguson R Perriss L Weedall M Prakash Secretary L Thomas Company registration number 02174990 Softcat LEI 213800N42YZLR9GLVC42 Registered office Solar House Fieldhouse Lane Marlow Buckinghamshire SL7 1LW Auditor Ernst & Young LLP 1 More London Place London SE1 2AF This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com. RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy. END IR ZZGMFZRRGKZZ