Softcat sees revenues top £1bn, despite Covid impact

Softcat shrugged off the impact of Covid-19 to see annual revenues breach £1bn, the IT services firm confirmed on Tuesday, prompting it to reinstate its dividend.

Sales for the year to 31 July were ahead 8.6% at £1.08bn, while operating profits rose 10.9% to £93.7m. Earnings per share were 38.2p, a 10.4% increase.

Pre-tax profits were £93.6m, compared to £84.8m a year previously.

The firm said it would pay a total ordinary dividend of 16.6p, which included the previously cancelled interim dividend of 5.4p. In aggregate, the ordinary dividend is 11.4% up on the combined interim and final dividend paid out in 2019.

Softcat will also pay a special dividend of 7.6p per share, a 52.5% decline on the same payout a year earlier. The firm said the reduced payout would increase the minimum cash holding of the business from £30m to £45m, which “partly reflects the increase in the size and scale of the business since IPO and is considered prudent in light of the uncertainty created by Covid-19.”

Graeme Watt, chief executive, said: “Despite the impact on demand from corporate customers during the last four months of our financial year, we continued to deliver growth in both our third and fourth quarters.

"We also made continued progress with both new and existing customers, and are pleased to report that our customer base grew by 3% and gross profit per customer was up 8% on a full-year basis.”

Looking ahead, Softcat said the current year had started “well”, but conceded: “However, we do expect corporate customers to continue to be circumspect with their spending over the coming months. This may mean that market conditions remain challenging for a time, but we remain confident in our ability to gain market share.”

The cautious outlook appeared to spook investors, despite the rise in profits and revenues, and by 1215 BST, shares in Softcat were down 7% at 1,153.0p. The rise in operating profits had also been flagged at a trading update in August.