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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Softcat Plc | LSE:SCT | London | Ordinary Share | GB00BYZDVK82 | ORD �0.0005 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2.00 | 0.12% | 1,632.00 | 1,638.00 | 1,641.00 | 1,643.00 | 1,591.00 | 1,591.00 | 166,174 | 16:35:25 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Computer Related Svcs, Nec | 985.3M | 112.03M | 0.5614 | 29.18 | 3.27B |
From May 2019 to May 2024
TIDMSCT
RNS Number : 8820M
Softcat PLC
19 October 2016
SOFTCAT plc
("Softcat", the "Company")
Preliminary Results for the twelve months to 31 July 2016
Strong performance, GBP28m special dividend proposed
Softcat plc (LSE: SCT.L), a leading UK provider of IT infrastructure products and services, today publishes its first set of full year results to 31 July 2016. The results demonstrate strong revenue and profit growth during the period.
Hot Features
Premium
Twelve months
Financial Summary ended
31 July 31 July
2016 2015 Growth
-------- -------- -------
GBP'000 GBP'000 %
Revenue 672,351 596,084 12.8
Gross profit 120,717 102,775 17.5
--------------------------- -------- -------- -------
Adjusted operating
profit* 46,751 40,586 15.2
--------------------------- -------- -------- -------
Operating profit 42,190 39,582 6.6
Dividends paid 43,453 7,298
Proposed Final dividend
(p) 3.6
Proposed Special dividend
(p) 14.2
Adjusted diluted earnings
per share** (p) 19.1 16.5 15.8
Diluted earnings per
share (p) 16.9 16.0 5.6
*Adjusted operating profit is defined as operating profit before exceptional items and share-based payment charges.
**Adjusted diluted earnings per share is defined as profit after tax before exceptional items and share based payment charges divided by the weighted average number of shares including the dilutive effect of share options.
Highlights for the twelve months to 31 July 2016
-- Gross profit up 17.5% to GBP120.7m (2015: GBP102.8m) -- Gross profit margin up 0.8% pts to 18.0% (2015: 17.2%) -- Gross profit includes the benefit of a one-off procurement saving of GBP3.4m (2015: nil) -- Adjusted operating profit up 15.2% to GBP46.8m (2015: GBP40.6m) -- Cash conversion(*) of 85.5% -- Net cash position at year end of GBP62.4m -- Adjusted diluted earnings per share up 15.8% -- Customer numbers up 7.5% on prior year (2015: 6.5%) -- Average headcount up 21%, driven by record sales and service staff recruitment -- Glasgow operation launched
(*Cash conversion is defined as cash flow from operations before tax but after capital expenditure, as a percentage of operating profit)
Martin Hellawell, Softcat CEO commented
"We are pleased to report continued strong organic growth at Softcat with 12.8% revenue growth, 17.5% growth in gross profit and 15.2% growth in adjusted operating profit, achieved against a backdrop of very modest growth in the UK economy which has equally been reflected in the IT market.
We have continued to win large numbers of new customers and earn increased spend from our existing customers. This has been achieved by our relentless focus on customer service, which is in turn driven by an excellent and engaged team of people at Softcat. We were delighted to be named as the UK's No.1 Best Workplace by the Great Places to Work Institute in April 2016.
Other recent notable highlights include entering the FTSE 250, the opening of our Glasgow branch, an incremental 133 people joining our organisation in the last financial year, and a plethora of industry awards including HP Enterprise Partner of the Year, Cisco UK&I Commercial Partner of the Year and Sophos UK&I Partner of the Year"
Analyst meeting
A results presentation for analysts and investors will be held today at the offices of FTI Consulting: 9(th) Floor, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. Registration will open at 09.15 for an 09.30 start. Materials from this presentation will be available online at www.softcat.com from 09.00. A copy of this announcement will also be available online from 07.00.
Enquiries
Softcat plc: +44 (0)1628 403 403
Martin Hellawell, Chief
Executive Officer
Graham Charlton, Chief
Financial Officer
+44 (0)20 3727 1
FTI Consulting LLP: 000
Ed Bridges
Dwight Burden
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 UK Listing Authority, the Company 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.
Chief Executive Officer's Review
The Company continued to perform well and deliver growth significantly ahead of the market during the year. Gross profit, our key measure of growth, was up by 17.5% which demonstrates the business is still taking significant market share from competitors. Softcat has now delivered 44 consecutive quarters of revenue and profit growth. This includes both the third and fourth quarters of our financial year when demand from our customers remained solid despite the distraction of the referendum and subsequent political developments. In fact, the Company grew at an even faster rate during the second half.
We saw higher growth in the more complex solutions areas of security, networking and data centre infrastructure than in the more commodity workplace computing area of our business. This contributed to the increase in gross profit margin in the period from 17.2% to 18.0%. This growth in gross margin flowed through strongly to operating profit and cash generation despite the extra costs of running the business as a PLC. As a result, we are delighted to be recommending a special dividend of 14.2p per share, on top of a final dividend of 3.6p per share.
The simple but effective growth strategy laid out during the IPO has continued to serve us well and will remain the Company's focus during the coming year; to continue to build scale and develop our offering to drive increases in both customer numbers and gross profit per customer.
In 2016 Softcat grew both customer numbers and gross profit per customer by 7.5% and 9.2%, respectively, and further increases in those metrics will again be a target during 2017. We categorise our customers into three broad groups: commercial (SMB/mid-market), public sector and enterprise. All three segments grew strongly and in line with our expectations, with income from public sector expanding from 26% to 29% of total revenue. Our reliance on individual accounts remains very low, with our largest customer accounting for just 1% of revenue in 2016.
To build scale we have continued to recruit more people into sales, technical specialist and service roles to advise on, implement and support technology for customers. The business will continue to target people that share a strong work ethic, are team players, who exhibit passion and resilience and who, more than anything, are motivated to provide customers with the very best standards of service. Softcat was named No.1 Best Workplace by the Great Places to Work Institute this year and continues to recruit great people who will contribute to a proud tradition of a highly engaged workplace which we believe ultimately drives our success. After the opening of our Glasgow office in February 2016, we now have six branches all within the UK. From a nucleus of 6 existing staff, we now have a team of 29 in Glasgow following the September 2016 intake. All Softcat branches grew well in the last financial year and we are targeting further headcount growth in all offices this year.
The expansion of our offering has driven the investment in technical and service staff. The relevance and need for the role Softcat plays in the market is as strong as ever, with vendors increasingly looking to the channel to serve the core mid-market. Customers are faced with ever more complex technology choices and need to keep pace in a world where IT can increasingly deliver competitive advantage. Softcat's role as trusted advisor with both a deep and broad skill base positions us well, both now and for the future. This is reflected in the growth achieved across all three revenue streams of software, hardware and services detailed in the CFO review below. Revenue from services grew most strongly as a result of both our ability to work with and resell vendor services, as well as an increase in Softcat's own service capability, and now represents 15% of total income (2015: 14%).
Competition remains as fierce as ever. Despite the Company's long record of market share growth there is no room for complacency and Softcat will continue to develop its product and service offering with the aim of staying ahead of the pack in everything we do. This will include further development of our product and service offering for both on premise and cloud technologies.
This has been a busy year for Softcat. It hasn't been an easy year - it never is and never will be. We constantly need to prove our worth to existing and new customers in a very competitive market. As well as the IPO, we also had the lead up to the EU referendum and the aftermath to contend with. While it is always difficult to know exactly what is affecting demand in our industry, we did see some customers making slower decisions leading up to the vote. That meant we had to compete even harder to achieve our goals, which we did. In the aftermath of the referendum, we have seen no obvious impact on trading in what remains a tough and fiercely competitive market. For many years we have demonstrated our ability to grow and gain market share in that environment and we look forward to the road ahead with confidence.
Outlook
Trading during the first 10 weeks of FY17 has been satisfactory.
Our marketplace is highly competitive and following the EU referendum the business environment is uncertain. However, the Board believes the Company is well placed to grow its market share in 2017 and it will maintain its focus on delivering profitable growth and strong cash conversion.
Chief Financial Officer's Review
Financial Summary FY16 FY15 Growth
-------------------- ------------ ------------ ---------
Revenue GBP672.4m GBP596.1m 12.8%
-------------------- ------------ ------------ ---------
Revenue split
Software GBP320.0m GBP287.5m 11.3%
Hardware GBP250.7m GBP223.8m 12.0%
Services GBP101.7m GBP84.8m 19.9%
-------------------- ------------ ------------ ---------
Gross profit GBP120.7m GBP102.8m 17.5%
-------------------- ------------ ------------ ---------
Gross profit
margin 18.0% 17.2% 0.8% pts
-------------------- ------------ ------------ ---------
Adjusted operating
profit GBP46.8m GBP40.6m 15.2%
-------------------- ------------ ------------ ---------
Adjusted operating
profit margin 7.0% 6.8% 0.2% pts
-------------------- ------------ ------------ ---------
Operating profit GBP42.2m GBP39.6m 6.6%
-------------------- ------------ ------------ ---------
(46.5%
Cash conversion 85.5% 132.0% pts)
-------------------- ------------ ------------ ---------
Revenue and gross profit
Softcat achieved revenue growth of 12.8% during the year, up to GBP672.4m, with gross margin also rising to 18.0% (2015: 17.2%). As a result, gross profit grew strongly, up 17.5% to GBP120.7m (2015: GBP102.8m). This includes the impact of GBP3.4m non-recurring procurement savings within cost of sales. Excluding this impact, gross profit grew by 14.1% and gross margin was 17.4%, and this underlying performance reflects continued progress against the Company's strategic goals of winning new customers and growing income from existing customers.
Excluding the non-recurring savings, growth in gross profit margin was driven by the Company's ability to capitalise on customer demand for complex technology solutions, such as networking and security software and datacentre infrastructure. This was true across all customer segments and growth was evident in both public sector and corporate accounts. In keeping with recent years, income from public sector customers expanded as a proportion of total revenue to 29% (2015: 26%).
Revenue mix across technology categories (software, hardware and services) was largely unchanged. Services income expanded slightly as a proportion of the total from 14% to 15%, mainly reflecting strong growth in the resale of vendor service products as well as the expansion of the Company's internal services capability.
Customer KPIs FY16 FY15 Growth ------------------ -------- -------- ------- Customer numbers 12.2k 11.4k 7.5% ------------------ -------- -------- ------- Gross profit per customer GBP9.9k GBP9.0k 9.2% ------------------ -------- -------- -------
Customer numbers were up 7.5% (2015: 6.5%), reflecting the positive impact of the acceleration in new graduate hires into the sales force during the past 18 months.
Gross profit per customer rose by 9.2%, or 6.2% when the procurement saving impact is adjusted out (2015: 9.0%). The modest reduction in underlying gross profit per customer growth is expected during a period of high new customer additions due to dilution in average tenure. The Company typically sees close correlation between customer tenure (which is also closely tied to sales force tenure) and GP per customer.
Revenue remains well dispersed across the customer base, with the largest customer accounting for just 1% of total income.
Adjusted operating profit
Adjusted operating profit increased by 15.2% to GBP46.8m, including a net benefit of GBP2.6m from the one-off procurement savings (after commission costs). Excluding the one-off benefit adjusted operating profit grew by 8.9%. This reflects the rise in gross profit, partially offset by new costs of public company governance of GBP1.1m (2015: GBP0.2m). Excluding both the net impact of the one-off and the governance costs adjusted operating profit increased 11.0%. This is a strong result in the context of significant investments in the form of new graduate account managers as well as services and technical staff.
Adjusted operating profit margin of 7.0% (2015: 6.8%) was up slightly on prior year due to the rise in gross profit margin.
To support the Company's growth strategy a sixth office was opened during the year. The new location in Glasgow welcomed its first graduate recruits during the third financial quarter. Previous new openings in Bristol (2014) and Leeds (2015) both delivered good growth in 2016. In line with our existing operating model, the incremental non-staff costs of the Glasgow office do not represent a significant increase in the Company's cost base (<GBP0.3m p.a.).
Operating profit
Operating profit of GBP42.2m (2015: GBP39.6m) is 6.6% up on the prior period reflecting the growth in adjusted operating profit, counterbalanced by exceptional IPO costs of GBP3.7m (2015: GBP1.0m), and share-based payment charges of GBP0.9m (2015: GBP0.0m).
Corporation tax charge
The effective tax rate for 2016 was 21.8% (2015: 21.8%). This reflects the offsetting impacts of a reduction in the blended standard rate of UK corporation tax applicable to the period from 20.67% to 20.00%, set against the non-deductible nature of some expenses related to the IPO. The Company has a net deferred tax asset carried forward of GBP426k at the balance sheet date, mainly in respect of share-based payment reliefs which will be applied to future periods.
Cash and balance sheet
Cash conversion was strong at 85.5% (2015: 132%), reflecting the ongoing close management of working capital balances as the business continues to grow. Cash conversion was exceptionally strong during 2014-2015 due to improved debtor and creditor management in those years. In 2016 closing net assets, excluding cash, as a percentage of revenue was constant year on year at 3.7% (2015: 3.6%), demonstrating the maintenance of the lean position developed over the previous periods.
The Company's balance sheet reflects the nature of the business, being both simple and efficient. As a result of our partnerships with distributors and vendors, stock holdings are kept to an absolute minimum and the value of inventory recognised at year end mainly reflects goods in transit.
The Company closed the year with an aggregate cash balance of GBP62.4m and no debt, after the payment of pre-IPO and interim dividends in the year totalling GBP43.5m.
Dividend
A final dividend of 3.6p per share has been recommended by the directors and if approved by shareholders will be paid on 16 December 2016. The record date will be 18 November and the shares will trade ex-dividend on 17 November.
In line with the Company's stated intention to return excess cash to shareholders over time, the Board has proposed a further special dividend payment of 14.2p per share. If approved by shareholders at the Company's AGM this would also be paid alongside the final dividend in December 2016, and would bring total cash returned to shareholders since IPO to GBP38.5m.
Principal Risks and Uncertainties
The principal risks facing the Company have been identified and evaluated by the Board. In summary, these include:
Risk Potential Management & mitigation
impacts
---------------- --------------------------------------------- ------------------------------------------------------------
BUSINESS STRATEGY
--------------------------------------------------------------- ------------------------------------------------------------
Customer
dissatisfaction * Reputational damage * Graduate training programme
* Loss of competitive advantage * Ongoing vendor training for sales staff
* Annual customer survey with detailed follow-up on
negative responses
* Process for escalating cases of dissatisfaction to MD
& CEO
---------------- --------------------------------------------- ------------------------------------------------------------
Failure to
evolve our * Loss of customers * Processes in place to act on customer feedback about
technology new technologies
offering
with changing * Reduced profit per customer
customer * Training and development programme for all technical
needs staff
* Regular business reviews with all vendors
* Sales specialist teams aligned to emerging
technologies to support general account managers
* Regular specialist and service offering reviews with
senior management
---------------- --------------------------------------------- ------------------------------------------------------------
OPERATIONAL
--------------------------------------------------------------- ------------------------------------------------------------
Cyber security
* Inability to deliver customer services * Company-wide information security policy
* Reputational damage * Appropriate induction and training procedures for all
staff
* Financial loss
* External penetration testing programme undertaken
* ISO 27001 accreditation
---------------- --------------------------------------------- ------------------------------------------------------------
Disruption
to Managed * Customer dissatisfaction * Operation of back-up operations centre and data
Services centre platforms
operations
* Business interruption
* Established processes to deal with incident
management, change control, etc.
* Reputational damage
* Continued investment in operations centre management
* Financial loss and other resources
* Ongoing upgrades to network
* Regular testing of DR plans
---------------- --------------------------------------------- ------------------------------------------------------------
FINANCIAL
--------------------------------------------------------------- ------------------------------------------------------------
Profit margin
pressure * Reduced margins * Ongoing training to sales and operations team to keep
including pace with new vendor programmes
rebates
* Rebate programmes are industry standard and not
specific to the Company
* Rebates form an important but only minority element
of total operating profits
---------------- --------------------------------------------- ------------------------------------------------------------
PEOPLE
--------------------------------------------------------------- ------------------------------------------------------------
Culture change
* Reduced staff engagement * Culture embedded in the organisation over a long
history
* Negative impact on customer service
* Branch structure with empowered local management
* Quarterly staff survey with feedback acted upon
* Regular staff events and incentives
---------------- --------------------------------------------- ------------------------------------------------------------
Poor leadership
* Lack of strategic direction * Succession planning process
* Deteriorating vendor relationships * Experienced and broad senior management team
* Reduced staff engagement
---------------- --------------------------------------------- ------------------------------------------------------------
Going Concern
The financial position of the Company, its cash flows, and liquidity position are described in the Chief Financial Officer's Review above.
The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and have therefore continued to adopt the going concern basis in preparing the financial statements.
Cautionary Statement
This preliminary announcement has been prepared solely to provide additional information to shareholders to assess the Company's strategies and the potential for those strategies to succeed. The preliminary announcement should not be relied on by any other party or for any other purpose.
In making this preliminary announcement, the Company 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.
Statement of profit or loss and other comprehensive income
For the year ended 31 July 2016
2016 2015
GBP'000 GBP'000
Note
Revenue 3 672,351 596,084
Cost of sales (551,634) (493,309)
---------- ----------
Gross profit 120,717 102,775
Administrative expenses (78,527) (63,193)
---------- ----------
Operating profit 42,190 39,582
Adjusted operating profit 46,751 40,586
Exceptional items 4 (3,673) (999)
Share - based payments
charge (888) (5)
---------- ----------
Finance income 213 195
---------- ----------
Profit before taxation 42,403 39,777
Income tax expense 5 (9,245) (8,660)
---------- ----------
Profit for the year attributable
to owners of the Company 33,158 31,117
---------- ----------
Total comprehensive income
for the year attributable
to owners of the Company 33,158 31,117
========== ==========
Basic earnings per Ordinary
Share (pence) 9 16.9p 16.3p
Diluted earnings per Ordinary
Share (pence) 9 16.9p 16.0p
Adjusted basic earnings
per Ordinary Share (pence) 9 19.2p 16.7p
Adjusted diluted earnings
per Ordinary Share (pence) 9 19.1p 16.5p
========== ==========
All results are derived from continuing operations.
Statement of Financial Position
As at 31 July 2016
2016 2015
GBP'000 GBP'000
Assets Note
Non-current assets
Property, plant and equipment 6,391 6,997
Intangible assets 667 458
Deferred tax asset 426 678
---------- ----------
Total non-current assets 7,484 8,133
Current assets
Inventories 4,611 2,652
Trade and other receivables 7 132,787 121,952
Cash and cash equivalents 62,361 74,642
---------- ----------
Total current assets 199,759 199,246
---------- ----------
Total assets 207,243 207,379
========== ==========
Liabilities
Current liabilities
Trade and other payables 8 (115,527) (108,053)
Income tax payable (4,352) (3,510)
---------- ----------
Total current liabilities (119,879) (111,563)
---------- ----------
Net assets 87,364 95,816
========== ==========
Equity
Issued share capital 99 98
Share premium account 4,454 3,942
Other reserves (3,531) (3,994)
Retained earnings 86,342 95,770
---------- ----------
Total equity 87,364 95,816
========== ==========
Statement of Changes in Equity
For the year ended 31 July 2016
Reserve
for
Share Share own Retained Total
capital premium shares earnings equity
--------- --------- -------- ---------- ---------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 August
2015 98 3,942 (3,994) 95,770 95,816
Total comprehensive
income for the year - - - 33,158 33,158
Share-based payment
transactions - - - 572 572
Dividends paid - - - (43,453) (43,453)
Shares issued in
year 1 512 - - 513
Tax adjustments - - - 295 295
Own share movement
during the year - - 463 - 463
--------- --------- -------- ---------- ---------
Balance at 31 July
2016 99 4,454 (3,531) 86,342 87,364
Balance at 1 August
2014 95 2,865 (1,469) 70,808 72,299
Total comprehensive
income for the year - - - 31,117 31,117
Share-based payment
transactions - - - 5 5
Dividends paid - - - (7,298) (7,298)
Shares issued in
year 3 1,077 - - 1,080
Tax adjustments - - - 1,234 1,234
Own share movement
during the year - - (2,525) (96) (2,621)
--------- --------- -------- ---------- ---------
Balance at 31 July
2015 98 3,942 (3,994) 95,770 95,816
Statement of Cash Flows
For the year ended 31 July 2016
2016 2015
--------- --------
GBP'000 GBP'000
Note
Net cash generated from
operating activities 10 29,925 47,411
Cash flows from investing
activities
Finance income 213 195
Purchase of property,
plant and equipment (1,190) (2,217)
Purchase of intangible
assets (536) (288)
Proceeds from asset disposals 11 4
--------- --------
Net cash used in investing
activities (1,502) (2,306)
Cash flows from financing
activities
Issue of share capital 513 977
Deferred purchase share
proceeds 1,773 676
Dividends paid 6 (43,453) (7,311)
Own share transactions 463 (2,525)
--------- --------
Net cash generated used
in financing activities (40,704) (8,183)
--------- --------
Net (decrease)/increase
in cash and cash equivalents (12,281) 36,922
Cash and cash equivalents
at beginning of year 74,642 37,720
--------- --------
Cash and cash equivalents
at end of year 62,361 74,642
========= ========
Notes to the Financial Information
1. General information
Softcat plc (the "Company") is a public limited company, incorporated and domiciled in the UK. Its registered address is Fieldhouse Lane, Marlow, Buckinghamshire, SL7 1LW.
The annual financial information presented in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 July 2016 or 2015 but is based on, and consistent with, that in the audited financial statements for the year ended 31 July 2016, and those financial statements will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 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 2.1 Basis of preparation
Whilst the financial information included in this announcement has been compiled in accordance with International Financial Reporting Standards ("IFRS") this announcement does not itself contain sufficient information to comply with IFRS.
The Financial Statements are presented in Pounds Sterling, rounded to the nearest GBPthousand, unless otherwise stated. They were prepared under the historical cost convention.
Going concern
For reasons noted above, the financial information has been prepared on the going concern basis, which assumes that the Company will continue to be able to meet its liabilities as they fall due for the foreseeable future, being a period of at least twelve months from the date of signing the financial statements. At the date of approving the financial statements, the Directors are not aware of any circumstances that could lead to the Company being unable to settle commitments as they fall due during the twelve months from the date of signing these financial statements.
Changes to accounting standards
There have been no changes to accounting standards during the year which have had or are expected to have any significant impact on the Company.
Accounting policies
The preliminary announcement for the year ended 31 July 2016 has been prepared in accordance with the accounting policies as disclosed in Softcat plc's Annual Report and Accounts 2015, as updated to take effect of any new accounting standards applicable for the year.
Exceptional items
Items which are material either because of their size or their nature, or which are non-recurring, are presented within administrative expenses on the face of the statement of comprehensive income. These costs related to the Company's Listing on the premium main market of the London Stock Exchange in November 2015.
Share based payment charges
The share based payment charge includes a fair value charge of GBP572,156 (FY15: GBP5,000) and a charge for employer's national insurance contributions of GBP315,794 (FY15: GBPnil), which become payable on exercise of share options and long term incentive awards.
Adjusted operating profit
In arriving at adjusted operating profit, both exceptional items and share based payment charges are removed in order to help present a more accurate picture of the Company's underlying performance.
3. Segmental information
The information reported to the Company'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 Company. The Company 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 Company's revenue and results and assets for this one reportable segment can be determined by reference to the statement of comprehensive income and statement of financial position. An analysis of revenues by product, which form one reportable segment, is set out below:
Revenue by type
2016 2015
GBP'000 GBP'000
Software 319,978 287,469
Hardware 250,692 223,845
Services 101,681 84,770
-------- --------
672,351 596,084
======== ========
The total revenue for the Company has been derived from its principal activity as an IT reseller. Substantially all of this revenue relates to trading undertaken in the United Kingdom.
4. Exceptional items
Operating profit for the year has been arrived at after charging:
2016 2015
GBP'000 GBP'000
IPO costs 3,673 999
All IPO costs incurred relate to the Company's listing on the London Stock Exchange in November 2015.
5. Taxation
2016 2015
GBP'000 GBP'000
Current Tax
Current income tax charge
in the year 9,179 8,970
Adjustment in respect of
current income tax in previous
years (7) (6)
Deferred Tax
Temporary timing differences 73 (304)
Total tax charge for the
year 9,245 8,660
6. Ordinary Dividends
2016 2015
GBP'000 GBP'000
Declared and paid during
the year, prior to IPO and
share reorganisation:
Ordinary dividend on ordinary
shares 36,765 6,622
Ordinary dividend on 'MR'
shares 864 240
Ordinary dividend on 'A'
ordinary shares 2,469 449
-------- --------
40,098 7,311
Declared and paid during
the year, post IPO and share
reorganisation:
Ordinary dividend on ordinary
shares 3,355 -
-------- --------
43,453 7,311
Adjustment in respect of
prior year - (13)
-------- --------
43,453 7,298
The dividends paid in the six months ended 31 January 2016 were paid prior to the reorganisation of share capital, see note 11, and therefore are shown as dividends split between the pre reorganisation share classes.
An interim dividend of 1.7p per share, amounting to a total dividend of GBP3.36m was paid on 29 April 2016 to those on the share register on 1 April 2016.
The Board recommends a final dividend of 3.6p per ordinary share and a special dividend of 14.2p per ordinary share to be paid on 16 December 2016 to all ordinary shareholders who were on the register of members at the close of business on 18 November 2016. Shareholders will be asked to approve the final and special dividends at the AGM on 8 December 2016.
7. Trade and other receivables
2016 2015
-------- --------
GBP'000 GBP'000
Trade and other receivables 123,833 112,943
Provision against receivables (1,265) (1,008)
-------- --------
Net trade receivables 122,568 111,935
Called up share capital not
paid - 1,783
Other debtors 59 49
Prepayments 4,764 3,785
Accrued Income 5,396 4,400
-------- --------
132,787 121,952
8. Trade and other payables
2016 2015
-------- --------
GBP'000 GBP'000
Trade payables 67,759 71,213
Other taxes and social security 11,778 9,209
Accruals 24,000 23,361
Deferred Income 11,990 4,270
-------- --------
115,527 108,053
9. Earnings per share
2016 2015
------ ------
Pence Pence
Earnings per share
Basic 16.9 16.3
Diluted 16.9 16.0
Adjusted earnings per share
Basic 19.2 16.7
Diluted 19.1 16.5
The calculation of the basic and adjusted earnings per share and diluted earnings per share is based on the following data:
2016 2015
-------- --------
GBP'000 GBP'000
Earnings
-------- --------
Earnings for the purposes
of earnings per share being
profit for the year 33,158 31,117
-------- --------
Adjusted Earnings
Profit for the year 33,158 31,117
Exceptional costs 3,673 999
Share based payment charge 888 5
Tax effect of adjusting items (97) (57)
-------- --------
Earnings for the purposes
of adjusted earnings per
share 37,622 32,064
-------- --------
The weighted average number of shares is given below:
2016 2015
-------- --------
000's 000's
Number of shares used for
basic earnings per share 196,040 191,540
Number of shares deemed to
be issued at nil consideration
following exercise of share
options 696 3,228
-------- --------
Number of shares used for
diluted earnings per share 196,736 194,768
-------- --------
10. Notes to the cash flow statement
2016 2015
--------- ---------
GBP'000 GBP'000
Cash flow from operating activities
Operating profit 42,190 39,582
Depreciation of property,
plant and equipment 1,796 1,794
Amortisation of intangibles 327 353
(Profit)/loss on disposal
of fixed assets (9) 28
Cost of equity settled employee
share schemes 572 5
--------- ---------
Operating cash flow before
movements in working capital 44,876 41,762
(Increase)/decrease in inventories (1,961) 1,830
Increase in trade and other
receivables (12,608) (22,425)
Increase in trade and other
payables 7,474 33,563
--------- ---------
(7,095) 12,968
Cash generated from operations 37,781 54,730
Income taxes paid (7,856) (7,319)
--------- ---------
Net cash generated from operating
activities 29,925 47,411
========= =========
11. Share capital
2015
---------
GBP'000
Authorised
Pre reorganisation
Ordinary shares of 1p each 112
'MR' shares of 1p each 2
'A' ordinary shares of 1p
each 6
---------
120
Limits on authorised share capital were removed
on re-registration as a public limited company.
Allotted and called up 2015
---------
GBP'000
Pre reorganisation
Ordinary shares of 1p each 90
'MR' shares of 1p each 2
'A' ordinary shares of 1p
each 6
---------
98
2016
---------
GBP'000
Post reorganisation
Ordinary shares of 0.05p
each 99
Deferred shares* of 0.01p
each -
---------
99
*At 31 July 2016 deferred shares had an aggregate nominal value of GBP189.33
On 12 November 2015, pursuant to special resolutions of the Company and conditional upon admission to the official list of the FCA (which took place on 18 November 2015), it was resolved that:
-- 188,500 'MR' shares of GBP0.01 each be redesignated as ordinary shares of GBP0.01 each and their rights varied accordingly;
-- 588,322 'A' ordinary shares of GBP0.01 each be redesignated as ordinary shares of GBP0.01 each and their rights varied accordingly;
-- 18,933 'A' ordinary shares of GBP0.01 each be redesignated as deferred shares of GBP0.01 each; and
-- each ordinary share of GBP0.01 be sub-divided into 20 ordinary shares of GBP0.0005 each.
No issued ordinary shares of 0.0005p each were unpaid at 31 July 2016 (2015: 5,060,000 unpaid).
12. Post balance sheet events
Dividend
The Board recommends a final dividend of 3.6p per ordinary share and a special dividend of 14.2p per ordinary share to be paid on 16 December 2016 to all ordinary shareholders who were on the register of members at the close of business on 18 November 2016. Shareholders will be asked to approve the final and special dividends at the AGM on 8 December 2016.
Corporate Information
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions.
Directors
G L Charlton
L Ginsberg
M J Hellawell
V Murria
P Ventress
B Wallace
Secretary
Capita Company Secretarial Services Limited
40 Dukes Place
London
EC3A 7NH
Company registration number
02174990
Registered office
Solar House
Fieldhouse Lane
Marlow
Buckinghamshire
SL7 1LW
Auditor
Ernst & Young LLP
1 More London
London
SE1 2AF
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFFRITLTLIR
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October 19, 2016 02:00 ET (06:00 GMT)
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