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Softcat PLC

Softcat plc Strong performance characterised by additional market share gains

Softcat plc (LON: SCT), a leading UK provider of IT infrastructure products and services, today published its half year results for the six months to 31 January 2019.  The results reflect the Company’s continued ability to gain an increasing share of the market, delivering both very strong profit growth and excellent cash generation.

Financial Summary

Six months ended

31 January

31 January

2019

2018

Growth

£m

£m

%

Revenue1

434.0

358.3

21.1

Gross invoiced income2

607.8

472.8

28.5

Gross profit

94.7

74.8

26.5

Operating profit

33.9

24.1

40.4

Cash Conversion3

103%

103%

n/a

Interim dividend (p)

4.5p

3.3p

36.4

Diluted earnings per share (p)

13.8p

9.8p

40.8

Highlights for the six months to 31 January 2019

· Gross profit up 26.5% to £94.7m (H1 2018: £74.8m)

· Operating profit up 40.4% to £33.9m (H1 2018: £24.1m)

· IFRS 15 adoption has only a presentational impact on revenue, with no impact on profit or cash flow, as previously disclosed

· Added 620 new customers, with total customers up 6.5% (H1 2018: 597 / 6.7%).

· Gross profit per customer growth of 18.7% (H1 2018: 14.5%)

· Performance was once again broad-based with growth generated across all offices, customer segments and technology lines

· London and Leeds office relocations to larger premises have been completed, one further new UK office opening is planned by the end of the calendar year

· Ireland office now has 15 salespeople and good progress is being made in winning new customers and local vendor accreditations

· The Company remains debt free with a cash balance of £52.8m

· Interim dividend of 4.5p per share (up 36%) to be paid on 10 May 2019, with the shares trading ex-dividend on 4 April 2019.

Graeme Watt, Softcat CEO, commented:

“It’s been another period of very strong performance for the Company, characterised by additional market share gains. We have maintained our ongoing and long-term investment in building scale and creating new capabilities, and this has delivered further success against both of our simple strategic goals of doing more business with our existing customers and winning new customers.

We added more than 600 new customers in the period while gross profit per customer grew by almost 20%. Those metrics extended our run of unbroken year-on-year income and profit growth to a 54th quarter.

Alongside the depth and breadth of our technology offering, we believe that the greater part of our competitive advantage manifests itself in the attitude of our people. Their teamwork and collaboration is focussed on delivering outstanding results for our customers and continues to be a key driver of our success. I can’t thank the Softcat team enough for their tremendous contribution so far this year.

For our shareholders, I’m pleased to report a 36% increase in our interim dividend, in line with our unchanged and progressive policy.

The Board expects a full year outcome marginally ahead of previous expectations.”