INTEL

RECOGNITION

COLLABORATION

PAR

INCLUSI

VALUES

VALUED

RECOGNITION

COMMUNIT

This year an internal project team undertook a review

of Softcat’s values to ensure that they were still

relevant to our business and employees. Having

refreshed the descriptors of the existing four values,

Intelligence, Responsibility, Fun and Passion, we felt that

our commitment to Softcat’s various communities wasn’t

reﬂected strongly enough in the existing values. This led

us to introduce a ﬁfth value, Community. As we

wanted to embed the newvalue in our employees’

minds, we also decided to make ‘Community’ our word

of the year. To us, ‘Community’ means that we believe in

the power of people, encouraging collaboration to

provide support and positively contribute to our

internal and external communities.

COMMUNITY

AT THE HEART

OF EVERYTHING

WE DO

Operational highlights

Strategic report

1 Highlights

2 Strategic roadmap

3 Investment case

4 At a glance

12 Chair’s statement

16 Chief Executive Ofﬁcer’s statement

20 Business model

22 Our market and offering

28 Strategy

30 KPIs

32 Chief Financial Ofﬁcer’s review

34 Section 172 – Stakeholder engagement

38 Social value

43 Task Force on Climate-related Financial

Disclosures (‘TCFD’) and sustainability

59 Risk management

Corporate governance

66 Introduction to corporate governance

68 Board leadership and company focus

70 Governance report

80 Audit Committee report

90 Nomination Committee report

96 Sustainability Committee report

98 Remuneration Committee report

128 Directors’ report

Financial statements

136 Independent auditor’s report

14 4 Statement of proﬁt or loss and other

comprehensive income

14 5 Statement of ﬁnancial position

14 6 Statement of changes in equity

14 7 Statement of cash ﬂows

14 8 Notes to the ﬁnancial statements

175 Company information and

contactdetails

Contents

Operating proﬁt £m

136.1

119.4

93.7

84.5

68.0

Customer base ’000

9.9

9.5

9.2

8.8

Gross proﬁt £m

327.2

235.7

211 . 1

175.2

276.4

Gross proﬁt per customer £’000

33.0

28.4

24.8

23.0

19.9

Revenue £m

1,077.9

784.0

Cash conversion %

76.2

9.7 89.9

88.0

92.0

98.0

Financial highlights

For more information visit:

www.softcat.com

•

Revenue growth: 37%

•

Gross proﬁt growth: 18%

•

Operating proﬁt growth: 14%

•

Cash conversion: 76%

•

Employee engagement: 90%

•

Customer satisfaction: 94%

•

Customer base up by: 200

•

Gross proﬁt per customer growth: 16%

1. The prior year comparatives have been restated in line with

the change in accounting policy for the IFRS IC agenda

decision – IFRS 15 Revenue from Contracts with Customers,

treatment of Software revenue as agent revenue. For further

information, see note 1.5 to the ﬁnancial statements. As a

result, revenue is only available on a comparable basis for

2021 and 2022.

2. Customer base is deﬁned as the number of customers who

have transacted with Softcat in both of the preceding

twelve-month periods.

3. Gross invoiced income (GII) and cash conversion are

alternative performance measures. Please see page 33 for

further deﬁnitions and reconciliations.

Pages

1 to 64 form the Strategic Report ofSoftcat plc forthe

ﬁnancial year ended 31July2022. The Strategic Report has

been approved by the Board of Softcat plc andsignedon

behalf of the Board by Graeme Watt, CEO, and

GrahamCharlton, CFO.

HIGHLIGHTS

2,507.5

1,938.4

1,414.1

1,646.2

Gross invoiced income £m

1Annual Report and Accounts 2022 Softcat plc

Strategic report

A CLEAR DIRECTION

Our strategy is simple, putting both our employees and customers at the heart of everything we do.

STRATEGIC ROADMAP

Our purpose is to help customers use technology to succeed,

by putting our employees ﬁrst.

Our vision

To be the leading IT infrastructure product and services provider in terms of

employee engagement, customer satisfaction and shareholder returns.

Strategy

Acquire more customers. Sell more to existing customers.

Read more on pages 96 to 97

•

major changes to capital, corporate or

management structure; and

•

succession planning for the Board and senior

management.

Matters reserved can be found at www.softcat.com/

about-us/investor-centre/governance.

The Code expects certain roles of the Board to be clearly

setout. The Board has a formal document outlining the

key aspects of the role of the Chair, Chief Executive,

Senior Independent Director (‘SID’), Non-Executive

Directors (‘NEDs’) and Designated Director for

Workforce Engagement. This is regularly reviewed,

and the current version can be found at https://www.

softcat.com/about-us/investor-centre/governance.

•strategy implementation;

•operational, ﬁnancial and competitive

performance;

•commercial developments;

•succession planning below Board level;

•organisational development; and

•maintaining Softcat’s culture.

Corporate governance

71Annual Report and Accounts 2022 Softcat plc

GOVERNANCE REPORT CONTINUED

WHAT THE BOARD

DIDTHISYEAR

The development and implementation of Softcat’s strategy

remained a key focus for the Board. This has been covered in

a number of ways including:

•

recurring updates from the CEO;

•

speciﬁc strategy review discussions with the Board and key

senior management in February 2022; and

•

discussion of critical items to support the growth of the

business, such as the implementation of a new ﬁnance

system and discussion with management on high level

operational plans for the coming year.

The Board knows the importance of being aware of the

views of its key stakeholders. These include our shareholders,

employees, customers and vendors. Duringthe year we

maintained our engagement withstakeholders, which

included the following:

•

the Board met with a major customer. The meeting was

very helpful in gaining perspectives from outside the Board;

•

the Board discussed sustainability with management,

inparticular performance against environmental targets

and commitments, and the development of Softcat’s

plansubmitted and approved by the Science Based

Targets initiative;

•

discussions with investors and analysts, including their

feedback following meetings and after the release of

ourannual and half-year announcements. We maintain

aninvestor relations programme of meetings with existing

and potential shareholders;

•

Vin Murria is Softcat’s Designated Non-Executive Director

for Workforce Engagement. She led, with the other

Non-Executive Directors present, engagements with our

employees at the London and Birmingham ofﬁces;

•

reviewing the feedback from employee surveys. This

includes regular surveys of the managers in the business

and our annual all-employee survey to gauge the

wellbeing and satisfaction of employees;

•

the Chair undertook an investor engagement programme

inviting engagement with our top 50 shareholders and

with the key proxy advisory agencies, to further strengthen

our mutual understanding of governance matters. Martin

updated the Board regularly;

•

the Remuneration Committee Chair engaged with our top

shareholders on the revised Remuneration Policy, which will

be proposed for shareholder approval at the 2022 Annual

General Meeting (see pages 113 to 127);

•

the Board reviewed the outcomes of Softcat’s annual

customer satisfaction survey and the actions to further

improve engagement with customers; and

•

the Audit Committee Chair reached out to our top

shareholders for feedback on key areas of audit focus

forthe coming year.

The Board has a robust process in place for setting

expectations and for regular monitoring of business

performance. During the year thisincluded:

•

review and approval of a three-year plan atthesame time

as the strategy review in order to provide a comprehensive

longer-term outlook. Forecasts in the three-year plan are

subsequently refreshed as needed during the year;

•

approval of an annual budget, followed by a report each

month comparing performance against budget;

•

consideration of year-end and half-year performance

andsubsequent review, approval and publication of the

year-end andhalf-year results;

•

setting of a dividend policy. Determining whether an

interim dividend should be paid and proposals for a

year-end dividend, after taking into account performance,

the Company’s ﬁnancial situation and the needs of the

business and any other relevant circumstances;

•

discussion of the performance and resilience of the business

against the background of certain IT component shortages

in the market and macro-economic pressures; and

•

an update from the Company’s brokers on investor themes

and equity market matters.

Strategy

Performance monitoring

Stakeholder engagement

72 Softcat plc Annual Report and Accounts 2022

During the year the Board:

•

approved the Board succession changes which will

takeeffect in 2023 and commenced the search for a

new CFO;

•

met with many of the members of the Senior Leadership

Team (‘SLT’) and other senior managers in the business.

The CEO provided regular updates to the Board on the

SLT and any changes in key roles in the business;

•

received regular updates on people and HR matters,

including training and development, culture, levels of

employee turnover and diversity and inclusion;

•

considered the results of the annual employee survey

andthe quarterly management team surveys; and

•

engaged with employees in our London and

Birminghamofﬁces.

During the year the Board:

•

increased its focus on environmental strategy, targets and

performance by establishing a Sustainability Committee

of the Board (see pages 96 to 97);

•

approved the appointment of Lynne Weedall as Chair of

the Remuneration Committee. This rebalanced the

workload of the Non-Executive Directors as Karen

Slatford was until that time Chair of both the Nomination

Committee and the Remuneration Committee;

•

monitored the longer-term impact post the COVID-19

pandemic and other macro-economic considerations,

such as inﬂation, on the Company’s performance and

ﬁnances, and the economy more widely;

•

reviewed reports on governance and legalissues,

including developments in corporate governance,

executive remuneration and sustainability;

•

received feedback and comments on governance from

major shareholders;

•

performed a review of Board effectiveness, which was

externally facilitated;

•

reviewed the Company’s risk appetite, principal risks

anduncertainties;

•

considered changes to the delegation of authorities to

management and approved updated terms of reference

for each Committee, in line with best market practice;and

•

received regular governance and regulatoryupdates.

The Board has also:

•

approved the 2022 Annual Report andAccounts;

•

approved the 2022 Notice of AGM; and

•

reviewed monthly reports which analysed key changes

inour shareholder base.

Governance and risk

People, vision and values

Other

Corporate governance

73Annual Report and Accounts 2022 Softcat plc

GOVERNANCE REPORT CONTINUED

COMPOSITION, SUCCESSION

AND EVALUATION

Composition and succession

This is discussed in the report from the Nomination

Committee on pages 90 to 95.

The Company Secretary reviewed the capabilities of RRA to

conduct the evaluation and discussed this with the Chair, who

was satisﬁed with RRA’s strong track record and experience.

The Board approved the appointment of RRA to conduct the

exercise. RRA discussed with the Chair and the Company

Secretary a proposed approach and timing for the Board

evaluation exercise. The Chair approved the approach on

behalf of the Board.

Stage 1: Selection and appointment

RRA reviewed key documents to build on its knowledge of the

operation and activities of the Board, including:

•

Board and Committee papers and minutes covering the

ﬁnancial year; and

•

governance documents such as Matters Reserved to the

Board, the roles of the Board and the terms of reference

for the Committees of the Board.

Stage 2: Document review

Board evaluation process

Each year the performance of the Board is assessed

through an evaluation exercise. In accordance with the UK

Corporate Governance Code, the process this year was

conducted independently by an external company (the

Board having last conducted an external evaluation in

2019). The Board appointed Russell Reynolds Associates

(‘RRA’), which has a well-established board evaluation

team and service, to conduct the evaluation. RRA

supported the Board in respect of the Board succession

changes which will take place in 2023 and also assisted

the Board in its recruitment of Lynne Weedall as a

Non-Executive Director during the year. As a result of its

work with the Board, RRA had developed a deep

understanding in respect of the Board’s composition, its

target skillset, succession planning priorities and longer-

term succession considerations. The Board considered that

RRA would therefore be well placed to conduct the Board

evaluation. Other than the foregoing, RRA has no other

connections with Softcat.

The key stages of the process this year were:

Board evaluation

This is a Board that functions well, with a

good mix of skills and personalities, and

well deﬁned roles between the NEDs

and the Executives. The Board members

are passionate about Softcat and

engaged with the business.”

Extract from the external evaluation report prepared

by Russell Reynolds Associates

RRA observed in person the Board and Committee meetings

in May 2022. This provided useful insight into the work,

dynamics and culture of the Board and its Committees.

Stage 3: Observation

There are good relationships between the

Executive and Non-Executive teams. The NEDs

view the Executive team as being of high

quality, enjoy working with them, and feel they

are listened to. The Executives feel appropriately

challenged in the right areas by the Board and

point to the value these discussions are adding

to the business.”

Extract from the external evaluation report prepared by

Russell Reynolds Associates

74 Softcat plc Annual Report and Accounts 2022

RRA sent an online questionnaire to each Director, asking

them to provide their assessment on a number of critical

areas in respect of the effectiveness of the Board. The areas

included:

•

oversight of strategy, risk, values and purpose;

•

people and composition;

•

Board leadership;

•

structures and processes;

•

use of Board Committees;

•

Board culture; and

•

further self-development of Directors.

RRA collated the questionnaire responses. RRA then

interviewed each Director, selected Executives and the

Company Secretary to validate and gain a better

interpretation of the responses to the questionnaire.

Stage 4: Questionnaires and interviews

RRA prepared a comprehensive report, with the individual

responses of each Director anonymised. A draft of the report

was discussed with the Chair and then distributed to the

Board in July in advance of a Board meeting. RRA attended

the Board meeting to present and discuss its ﬁndings and

recommendations with the Board.

Stage 5: Board report

An action plan was prepared to address points of

recommended improvements. Progress will be tracked

during the year.

Stage 6: Action planning

Outcome

The outcome of the review was once again positive and

concluded that the Board and its Committees continue to function

well, consider the right issues and work in a transparent and

constructive way. There was strong alignment between the

Company’s and the Board’s values and culture. Some of the points

made by RRA included:

•

The Board functions well, with a good mix of skills

andpersonalities, and well-deﬁned roles between

theNon-Executive Directors and the Executives.

•

The Board members are passionate about Softcat and

engaged with the business.

•

Non-Executive Directors contribute openly and broadly across

the range of issues.

•

The Board has an inclusive and open culture, and all

contributions are welcome and discussed by the Board.

•

The Executive team appreciates the support and trust it is given

by the Board.

•

All Board members are well prepared for Board meetings and

spend the necessary time to keep up with the business outside

of the meetings.

•

The Board leadership is very strong, with a Chair valued for his

insights into the business and for his support of the broader

management team. The Board has good support from the

Company Secretary’s team.

RRA’s report included a rating out of ﬁve for each important area

under review. No area scored less than 4.5 and the average score

was 4.7 out of ﬁve. The Board is satisﬁed with this assessment.

Outputs and recommendations

The Board was pleased with the outcome of the independent

Board evaluation, which reﬂects the Directors’ commitment to the

business, strong processes, and positive culture and attitudes for

the successful operation of the Board. RRA has suggested some

minor areas for improvement, which the Board has considered

further. These improvement points include:

•

further deepening the Non-Executive Directors’ understanding

of broader market trends, best practice, market risks and

sustainability to further strengthen strategic oversight and

riskoversight;

•

additional considerations of complementary skills and

experiences which will further strengthen the composition

oftheBoard when considering the next appointment of

Non-Executive Directors;

•

considering ways to support deeper discussions on the most

important topics, for example by holding additional Board

dinners or a pre-Board discussion prior to the annual Board

Strategy Review; and

•

arranging Board discussions on the self-development points

identiﬁed through RRA’s questionnaire and interviews.

The Company Secretary has prepared an action plan based on

the recommendations and the Board’s discussions, which will be

progressed and monitored. An update will be provided in next

year’s Annual Report.

Good progress had been made on the actions arising from the internal

Board evaluation conducted in the previous year. This included:

•

increasing the amount of direct feedback and engagement

between employees and the Board;

•

additional interaction with members of the Senior Leadership

Team at Board meetings; and

•

improving the format and overall usability of certain Board and

Committee papers.

Corporate governance

75Annual Report and Accounts 2022 Softcat plc

GOVERNANCE REPORT CONTINUED

OPERATION OF THEBOARD

Workforce engagement

Vin Murria is the Board’s Designated Director for Workforce

Engagement. After a year of virtual engagements in 2021, Vin

wasvery happy to be able to lead in-person engagements again

during 2022. Engagements this year were held in Softcat’s London

and Birmingham ofﬁces, both of which were attended by the

Non-Executive Directors. Various topics were discussed, including

the Board’s strategic outlook, the role of the Board, retention and

recruitment of staff, work-life balance, progression and pay, and

various commercial and operational matters. The discussions

provided valuable insight and actions were taken following

feedback where appropriate.

Dividend and distributions policy

The Board is responsible for:

•

setting Softcat’s dividend policy;

•

deciding on the Company’s capital structure; and

•

approving any key decisions in respect of capital allocation.

In respect of dividends, the Board approves the interim dividend

and recommends the ﬁnal and any special dividend for

shareholders’ approval. Softcat’s dividend policy remains a

progressive one which targets an annual dividend of between

40% and 50% of the Company’s proﬁts after tax in each ﬁnancial

year before any exceptional items. Subject to any cash requirements

for ongoing investment, the Board will consider returning excess

cash to shareholders over time. In determining the level of dividend in

any year in accordance with the policy, the Board also considers a

number of other factors that inﬂuence the proposed dividend,

which include but are not limited to:

•

the level of available distributable reserves in the Company;

•

future cash commitments and investment needed to sustain the

long-term growth prospects of the business; and

•

potential strategic opportunities.

Softcat’s constitution does not limit or oblige the Company to any

minimum or maximum dividend payments. However, no dividend

may exceed the amount recommended by the Directors and all

dividends shall be paid in accordance with any relevant legislation.

The Audit Committee on behalf of the Board reviews management’s

conﬁrmation that the Company has sufﬁcient distributable reserves

before a dividend payment is made or proposed to shareholders.

The Board then considers the Audit Committee’s review as part of

its process to approve or recommend dividends. Consideration is

also made of the balance on the retained earnings reserve, which

as at 31 July 2022 amounted to £202.5m (as disclosed in the

Statement of ﬁnancial position).

In addition to the reviews of distributable reserves prior to a

dividend being paid or proposed, the Board regularly reviews the

performance of the business, particularly in respect of cash ﬂow,

receivables and the minimum amount of cash required to operate

the business. Since 2020, the Board has approved a minimum

cash holding in the business of £45m. The Board has reviewed the

matter and, given the continuing increase in the size and scale of

the business, has agreed to increase this level to £60m. A special

dividend is also proposed which has been calculated to take into

account the increase in minimum cash holding in the business.

The Directors have proposed a ﬁnal dividend and a special

dividend for the ﬁnancial year ended 31 July 2022. Further

information in respect of the proposed dividends can be found

onpage 33. Softcat is well positioned to continue to fund its

dividend which is well covered by the cash generated by the

business. Details of the Company’s viability and going concern

canbe found on page 64 and pages 133 and 134 respectively.

Details of total dividend distributions for the ﬁnancial year can be

found in note 6 to the ﬁnancial statements.

The Company intends to seek shareholders’ approval at the 2022

AGM to permit the Directors, should they consider exercising the

authority, to repurchase up to 10% of the ordinary issued share

capital. The Directors have no current intention of exercising this

authority, which is sought in the best interest of shareholders to

allow the ﬂexibility to react promptly where such market purchases

may be desirable.

Board development and support

The Chair is responsible, with the assistance of the Company

Secretary, for ensuring that all Non-Executive Directors receive

ongoing training and development. All Directors are provided with

frequent brieﬁngs of current and relevant issues and a twelve-month

forward plan is maintained by the Company Secretary to ensure

that emerging topics or repeat topics which require further debate

by the Board can be effectively scheduled. Topics discussed

during the year included updates on industry trends and competitor

performance, corporate governance and audit reforms, and

developments in sustainability and environmental reporting. The

Board also receives updates on our public reporting commitments,

such as gender pay gap reporting (and ethnic pay gap reporting,

on which Softcat reports voluntarily), tax strategy, creditor payment

practices and risks of modern slavery.

When a new Director has been appointed, it is important to

accelerate their understanding of the business so the Director can

maximise their contribution to the Board and fulﬁl their responsibilities

and duties successfully and effectively. An extensive and tailored

induction programme was conducted following the appointment of

Lynne Weedall in May 2022. The programme included meetings

with the Chair, the Chief Executive Ofﬁcer, the Chief Financial Ofﬁcer,

members of the Senior Leadership Team and other key management,

and representatives from the Company’s Remuneration Committee

advisers, PwC. The Company Secretary also highlighted key

Board documents for Lynne to review, such as the Board’s current

annual Budget, Board Strategy Review and Three Year Plan.

Thishelped to accelerate Lynne’s understanding of the business.

76 Softcat plc Annual Report and Accounts 2022

All Directors have the opportunity to approach the Company

Secretary (who acts as Secretary to the Board and all its

Committees) for advice. The Company Secretary is appropriately

qualiﬁed and highly experienced and is responsible for advising

the Board on certain regulatory, legislative and governance

matters and other ad hoc issues when required. Each Board

meeting includes an update from the Company Secretary on

anymajor developments of which the Board should be aware.

Therole of the Company Secretary also includes:

•

informing the Board of their key obligations as Directors

ofapubliclisted company;

•

assisting the Chair by organising induction and training

programmes and ensuring that all Directors have full and timely

access to all relevant information;

•

developing the agenda for each meeting of the Board

anditsCommittees for approval by the respective Chair;

•

working with the Directors to develop the long-term agenda for

the Board and its Committees to enable them to discharge their

responsibilities effectively; and

•

ensuring that the correct Board procedures are followed, in

accordance with the Company’s constitution, applicable

legislation and good governance practice.

The removal of the Company Secretary is a matter for the Board

asa whole.

Role of the Non-Executive Directors

All of Softcat’s Non-Executive Directors, including the Chair and

SID, are required by their role to perform certain functions to

improve the effectiveness of the Board. In particular they:

•

constructively challenge and contribute to the development

ofstrategy;

•

offer additional perspectives, advice and strategic guidance;

•

scrutinise the performance of management in meeting agreed

goals and objectives;

•

have oversight to ensure compliance with key listed company

requirements;

•

through the Audit Committee, satisfy themselves that ﬁnancial

information is accurate, and that internal controls and systems

ofrisk management are robust;

•

through the Remuneration Committee, take responsibility

fordetermining appropriate levels of remuneration for

seniorexecutives;

•

through the Nomination Committee, undertake the role of

recommending the appointment and, where necessary, the

removal of positions on the Board. Consideration is also given

to diversity, succession planning, employee engagement (led

by the Designated Director) and culture within the business; and

•

through the Sustainability Committee, scrutinise management’s

activities and policies for pursuing Softcat’s sustainability

strategy and achieving its climate-related targets.

Organisation of Board meetings

The following are key features of how our Board and Committee

meetings are organised to support the good governance of

thebusiness:

•

Board meetings are scheduled to consider issues requiring Board

oversight and adequate time for discussion of each agenda

item is provided. Agendas are set to provide the Directors with

opportunities to discuss the longer-term outlook of the business.

Additional meetings are arranged when the need arises;

•

an annual calendar of scheduled Board and Committee

meetings is structured to allow the Board/Committees to review

cyclical and ad hoc items, such as key projects;

•

the Directors have access to key governance documents, such

as the Matters Reserved to the Board, Terms of Reference for

each Committee, and the Delegated Authorities Matrix;

•

Non-Executive Board members make themselves available outside

of scheduled meetings should the need occur. In particular,

theChairs of the standing committees often hold preliminary

planning discussions with the Company Secretary, management

or external advisers to a Committee prior to a meeting;

Corporate governance

77Annual Report and Accounts 2022 Softcat plc

GOVERNANCE REPORT CONTINUED

OPERATION OF THEBOARD CONTINUED

Organisation of Board meetings continued

•

reporting packs are provided for each Board/Committee

meeting, which are designed to be clear, analytical and

concise. Papers are distributed and retained in an electronic

system which is managed by the Company Secretary and this

provides Directors with instant access to papers at any time;

•

reporting packs are normally prepared and presented by

theExecutive Directors and other senior managers. Packs are

distributed by the Company Secretary to the Board around ﬁve

days in advance of Board or Committee meetings. This enables

the reporting packs to be as up to date as possible whilst allowing

sufﬁcient time for their review in advance of the meeting. Verbal

updates cover any subsequent material developments;

•

a summary of the actions arising at Board and Committee

meetings is circulated by the Company Secretary following

each meeting. The Company Secretary then ensures progress

ismade in respect of each action;

•

ﬁnancial updates with commentary are distributed to the

Boardmonthly. This gives the Directors the opportunity to

reviewperformance and any emerging issues in ‘real time’.

Theﬁnancial updates include an assessment of performance

against the annual Budget as approved by the Board, giving

the Board additional analysis on developing Company trends;

•

the development of strategy is led by the Executives with

input,challenge, examination and ongoing testing from

theNon-Executive Directors. A dedicated Board Strategy

Review session is held annually; and

•

Board discussions are held in an open and collaborative

atmosphere of mutual respect allowing for questions, scrutiny

and constructive challenge. This supports decisions on which

theBoard seeks a consensus.

Independence and conﬂicts

The Board, excluding the Chair, is currently comprised of four

independent Non-Executive Directors and two Executive Directors

and therefore complies with the independence requirements of the

Code. Martin Hellawell was formerly the Chief Executive Ofﬁcer

before being appointed as Chair in April2018. The Board

considers for the purposes of the Code thathe was not

independent when he was appointed Chair andthat he remains

not independent.

The Company announced earlier in the year Board succession

changes which will take effect on 1 August 2023. This included

that Graeme Watt, the current Chief Executive Ofﬁcer, will

succeed Martin Hellawell as Chair. Given Graeme’s current

Executive role, for the purposes of the Code he will not be

considered as independent when he succeeds Martin as Chair.

The independence of the Non-Executive Directors is reviewed

annually by the Nomination Committee (described in the

Nomination Committee Report on pages 90 to 95). Their

independence could be impinged where a Director has a conﬂict

of interest, and the Board therefore operates procedures to identify

and manage situations where such a conﬂict could arise. Board

procedures operate to restrict a Director from voting on any matter

in which they have a material personal interest, unless the Board

unanimously decides otherwise. If necessary, Directors are

required to absent themselves from a meeting of the Board while

such matters are being discussed.

During the year, all Directors conﬁrmed that they are able to

allocate sufﬁcient time to discharge their responsibilities effectively

and all Directors continue to devote adequate time to their duties

at Softcat. Directors are also required to notify the Board of any

major changes to their external commitments that arise during the

year with an indication of the time commitment involved.

78 Softcat plc Annual Report and Accounts 2022

RELATIONS WITH

SHAREHOLDERS

Governance engagements

The Board maintains a proactive and constructive programme of

engagement with its stakeholders and recognises within this the

important and valuable role that shareholders play, as owners

ofthe Company. Further information on the Board’s engagement

with its stakeholders is provided on pages 34 to 37.

For the fourth year, the Chair undertook an extensive engagement

programme with the Company’s largest shareholders on governance

matters. Feedback from these sessions was reported back to the

Board to make sure the Board fully understood the views of those

shareholders and the Board discussed whether any actions should

be taken as a result.

As part of an ongoing investor relations programme, there was

extensive interaction with institutional shareholders and market

analysts across the year. The Chief Financial Ofﬁcer provides the

Board with brieﬁngs and reports on these interactions and on any

material changes in the shareholder base of the Company.

The Chair of the Remuneration Committee conducted a

consultation with the Company’s largest shareholders on minor

changes to the Remuneration Policy which will be proposed at the

AGM to be held in December 2022. Please see pages 113 to 127

for more information.

The Chairs of each of the Committees welcome the views and

questions of shareholders at any time. Each of the Committee

Chairs can be contacted via the Company Secretary at

cosec@softcat.com.

In the event that shareholders have any concerns, which the normal

channels of communication to the Chair or Chief Executive have

failed to resolve or for which such contact is inappropriate, our

Senior Independent Director or any independent Non-Executive

Director is available (via cosec@softcat.com) to address such

issues. The Board continues to make itself available, when requested,

for meetings with shareholders on issues relating to the Company’s

governance and strategy.

Annual General Meeting

Due to the additional restrictions on gatherings put in place in

response to the Omicron variant of COVID-19, and to protect the

health and safety of our employees and Directors, shareholders

were encouraged to appoint the Chair as their proxy and not attend

the Company’s 2021 Annual General Meeting (‘AGM’) in person.

This did not affect the shareholders’ right to attend, speak and vote

atthe meeting, if they still wished to do so. Shareholders were given

the opportunity to submit questions to the Directors via email;

however, no such questions were received from shareholders

forthe2021 AGM.

The 2022 AGM will be held on 13 December 2022 at Softcat plc,

Fieldhouse Lane, Marlow SL7 1LW. Details of the meeting and

theresolutions to be proposed are set out in the Notice of

AGMwhich is available to download on our website (www.softcat.

com/about-us/investor-centre/shareholder-information).

The AGM gives shareholders an opportunity to vote on key aspects

of Softcat’s business and to ask questions to the Directors. The

opportunity to submit questions for the Directors via email will be

given again for the 2022 AGM. Details of how to do this can be

found in the Notice of AGM.

Shareholder meetings

Throughout the year, numerous meetings were held with existing and

potential shareholders. These meetings were attended by either the

Chief Executive or the Chief Financial Ofﬁcer or sometimes both,

with the support as needed of the Commercial Finance Director,

whohas responsibility for investor relations. The meetings focused

primarily on trading performance and the implementation of our

business strategy. Any signiﬁcant views expressed by shareholders

are recorded and reported to the Board to keep them up to date

with investor sentiment. In line with the Market Abuse Regulation,

strict protocols are observed to make sure that no unpublished

pricesensitive information is discussed during these meetings.

Results presentation and investor roadshows

The Chief Executive Ofﬁcer and the Chief Financial Ofﬁcer provide

a brieﬁng later in the day after the release of the full-year preliminary

results and also of the half-year results. The brieﬁng is primarily aimed

at institutional holders and market analysts but all stakeholders,

including employees, and all shareholders are welcome to access

the brieﬁng. Any supporting material for the brieﬁng is published on

Softcat’s website and is accessible to all stakeholders and the public.

Following the release of our full-year preliminary results

announcement and our half-year results, the Chief Executive and

Chief Financial Ofﬁcer undertake extensive investor engagement

roadshows (which may be held in person or held virtually).

Feedback from the roadshows and from reports by analysts, by

industry experts and in the media are collated and shared with the

Board to improve the Board’s understanding of their views.

The Board maintains a proactive and

constructive programme of engagement

withitsstakeholders.”

Corporate governance

79Annual Report and Accounts 2022 Softcat plc

AUDIT COMMITTEE REPORT

Introduction

As Chair of the Audit Committee (the ‘Committee’), I am pleased to

present the Committee’s report for the year ended 31 July 2022.

The Committee continues to fulﬁl a vital role in the Company’s

governance framework, providing valuable independent

challenge and oversight of the accounting, ﬁnancial reporting and

internal control processes, risk management, the internal audit

function and the relationship with the external auditor. These pages

outline how the Committee discharged the responsibilities

delegated to it by the Board over the course of the year, the key

issues it has considered during FY2022 and also areas of focus

over the next ﬁnancial year.

Ernst & Young LLP (‘EY’) has been Softcat’s external auditor since

July 2013 and during FY2021 a decision was made to tender the

external audit for the year ending 31 July 2023. Consequently one

of the key activities of the Committee was the audit tender process,

with a signiﬁcant proportion of time devoted to this process.

Following a very comprehensive, high quality and competitive

tender process, the Committee has recommended the

reappointment of EY as auditor to the Board at the 2022 AGM.

Further details of the external audit tender process are set out

onpage 85.

Members

R Perriss (Chair)

K Slatford

V Murria

L Weedall

Attendance of the Audit Committee

Name Committee attendance 2022

R Perriss

V Murria

K Slatford

L Weedall

Total meetings held

Attended Did not attend n/a

1. Karen was unable to attend due to illness.

2. Lynne joined the Committee on 3 May 2022, when she joined the Company

and attended the remaining Committee meeting for the ﬁnancial year.

Internal audit: 18%

External audit: 37%

Financial reporting: 20%

Risk and internal controls:25%



Allocation of time

ACCOUNTABILITY

One of the key activities of the Committee was

the audit tender process, with a signiﬁcant

proportion of time devoted to this process.”

Robyn Perriss

Chair of the Audit Committee

80 Softcat plc Annual Report and Accounts 2022

•

ongoing monitoring of IT general controls and ﬁnancial

reporting controls within the new ﬁnance system;

•

an assessment of the readiness to meet the ﬁnal BEIS proposal

outcomes announced in May 2022, including future actions

and the development of an Audit and Assurance Policy;

•

continued focus on cyber and IT security with a particular

focuson our internal cloud security platforms and business

continuity planning;

•

ongoing maturation of our approach to deﬁning our risk

appetite; and

•

smooth transition to working with a new lead partner of the

external auditor, following the scheduled mandatory rotation

ofthe current partner in accordance with audit regulations.

As noted above, in May 2022, Softcat went live with a new ERP

ﬁnance system. Throughout the year the Committee and the Board

have been kept abreast of the status of the project including key

milestones and decision staging gates together with an appraisal

of costs incurred on the project together with a consideration of

accounting implications such as meeting the criteria for

capitalisation and the appropriate useful economic life.

During the year, the Committee’s core duties remained unchanged

and the usual cadence of activities relating to risk, assurance and

internal controls remained in place. The Committee has also

carried out a review of the independence and effectiveness of

EYas auditor and performed an internal questionnaire-based

review of the effectiveness of the internal audit function.

With the assistance of management, the Committee has reviewed

the content in the Annual Report and Accounts and believes that

this explains our strategic objectives and is fair, balanced and

understandable.

Whilst this Report of the Audit Committee contains some of the

matters addressed during the year, it should be read in conjunction

with the Independent Auditor’s Report starting on page 136 and

indeed the Softcat plc ﬁnancial statements in general. This includes

the signiﬁcant accounting matters and issues in relation to the

Company’s ﬁnancial statements that the Committee has assessed

during the year, which can be found on page 83. This report

explains why the issues were considered signiﬁcant and further

information can be found in the Auditor’s Report from page 136

which covers its key audit matters.

If any shareholders would like to raise any matters with me in

respect of the work of the Committee and our key focus areas

forFY2023, I can be contacted via the Company Secretary at

cosec@softcat.com. I will also be happy to answer any questions

about the work of the Committee at the forthcoming AGM.

Robyn Perriss

Chair of the Audit Committee

24 October 2022

•

reviewing the appropriateness of our published half-year

and full-year results;

•

reviewing the application of ﬁnancial reporting and

governance standards;

•

assessing the Company’s Going Concern and

ViabilityStatements;

•

conﬁrming that the Annual Report and Accounts is fair,

balanced andunderstandable;

•

receiving updates and exercising oversight in relation to

the implementation of a new ﬁnance ERP system to

support greater automation and further strengthen the

ﬁnancial control environment asthe Company continues

to scale;

•

receiving regular updates in relation to IT systems

andsecurity;

•

receiving and discussing internal audit reports on:

– IT asset governance and user access management;

– organisational fraud maturity;

– in-ﬂight and go/no go assurance updates in respect

of the implementation of a new ERP ﬁnance system;

– purchase to pay process;

– commission calculation and process;

•

ongoing monitoring of the status of the proposals for

reforms issued by the Department for Business, Energy &

Industrial Strategy (‘BEIS’) to improve trust in audit and

corporate governance;

•

reviewing the effectiveness of internal audit and internal

controls, discussing the Company’s risk appetite, principal

risks and risk management and reviewing the Company’s

risk register;

•

evaluating the effectiveness and independence of the

external auditor; and

•

discussing the external audit tender process and

approving a proposal to recommend the reappointment

of EY as the statutory auditor from FY2023.

Areas of focus in 2022 included: Focus areas for 2023:

Corporate governance

81Annual Report and Accounts 2022 Softcat plc

Responsibilities

The Committee’s terms of reference are available at www.softcat.

com/investors and in hard copy from the Company Secretary.

These provide the framework for the Committee’s work and can

besummarised as providing oversight of:

•

the appropriateness of the Company’s external

ﬁnancialreporting;

•

the relationship with, and performance of, the external auditor;

•

the Company’s system of internal control, including the risk

management framework, key and emerging risks and the work

of the internal audit function;

•

appropriate controls to detect and prevent fraud; and

•

the Company’s system of compliance activities.

The terms of reference are reviewed at least annually and are

updated as appropriate to ensure there is clarity on the expected

duties of the Committee. A further review of the terms of reference

will be conducted to reﬂect the ﬁnal outcomes and Company

implementation of BEIS’ reforms on the audit market and corporate

governance. In advance of the outcome of the reforms, the

Committee has already approved an express clariﬁcation in its

terms of reference in respect of the legality of dividend payments

and that the Committee reviews that the Company has sufﬁcient

distributable reserves in respect of any proposal to pay a dividend.

A whistleblowing policy and procedure for colleagues to raise

issues regarding possible improprieties in matters of ﬁnancial

reporting or other matters is in place and operated throughout

theyear.

The Company operates anti-bribery and corruption procedures

which support compliance with the Bribery Act 2010, the Criminal

Finances Act 2017 and certain equivalent legislation outside of

theUK.

The Committee reviews the Company’s published tax strategy

andduring the year considered and approved an updated

version. The tax strategy is available on the Company’s website

atwww.softcat.com/corporate-responsibility. The Committee

alsoreviewed the Company’s reporting in respect of payment

practices to suppliers.

During the year the Committee assessed the adequacy of the

existing fraud control framework and received reports from

management in respect of fraud prevention and detection controls.

Management has improved fraud awareness within the Company,

including rolling out refreshed fraud awareness training for all

employees. The Committee recognises this as an important area,

given the evolving nature and increasing sophistication of fraud.

The importance of strong controls over fraud was highlighted in the

audit and governance reforms proposed by BEIS and this area will

continue to be a key responsibility of the Committee as part of the

safeguarding of the Company’s assets.

Membership

The membership of the Committee has been selected with the aim

of providing the range of ﬁnancial and commercial expertise

necessary to meet its responsibilities and the requirements of the

2018 UK Corporate Governance Code (the ‘Code’), which is

applicable for the ﬁnancial year ended 31 July 2022. Given my

experience as a qualiﬁed Chartered Accountant and as a recent

ﬁnance director of a listed UK company, I have been designated

as the ﬁnancial expert on the Committee for the purposes of

theCode.

Vin Murria and Karen Slatford both have considerable sector

experience, in accordance with Code provision 24. Furthermore, in

order to ensure that the Committee continues to have experience

and knowledge relevant to the sector in which Softcat operates,

allof the Non-Executive Directors receive regular updates on

business, regulatory, ﬁnancial reporting, governance and

accounting matters. Biographies of the members of the Committee

are shown on pages 68 and 69. Changes to the membership

ofthe Committee during the year are shown on page 80.

Allmembers are independent Non-Executive Directors of the

Company. The Company Secretary acts as Secretary to the

Committee, supported by the Company Secretarial Assistant.

How the Committee operates

The Committee met formally four times during FY2022 and each

meeting, other than the March meeting (for which Karen Slatford

was unwell), had full attendance. Meetings of the Committee

generally take place on the same day as the Board meeting to

maximise the efﬁciency of interaction with the Board. The Company

Secretary maintains a twelve-month rolling plan to support an

effective process which ensures the Committee reviews all required

matters to effectively discharge its duties.

The external auditor, EY, is invited to each meeting together with the

Company Chair, the Chief Executive, the Chief Financial Ofﬁcer

(‘CFO’), the Company Secretary, the Group Financial Controller,

the Internal Audit Manager, the Commercial Finance Director and

Grant Thornton (which provides a co-sourced internal audit service

to Softcat). This means that each member of the Board is present

atCommittee meetings. However, I shall, as needed, report to the

Board as a separate agenda item on the activity of the Committee

and matters of particular relevance to the Board regarding the

conduct of the Committee’s work. The Board as a whole regularly

reviews the performance of the business via monthly reporting

packs and a CFO’s report at each Board meeting. This provides

the Committee with a good ongoing understanding of the ﬁnancial

standing of the business which accumulates towards the formal

half-year and full-year results.

The Committee sets time aside at the end of each meeting, in

addition to on an ad hoc basis where necessary, to seek the

viewsof the external auditor, in the absence of management. The

Committee also meets separately with the internal auditor during

the year and in between meetings the Committee Chair keeps in

touch as needed with the CFO, other members of the management

team, the internal audit function and the external auditor.

AUDIT COMMITTEE REPORT CONTINUED

ACCOUNTABILITY CONTINUED

82 Softcat plc Annual Report and Accounts 2022

Financial reporting

The Committee’s primary responsibility in relation to the Company’s

ﬁnancial reporting is to review with both management and the

external auditor the appropriateness of the half-year and annual

ﬁnancial statements concentrating on, amongst other matters:

•

the quality and acceptability of accounting policies and practices;

•

the impact of any material changes in accounting policies;

•

material areas in which signiﬁcant judgements have been

applied or where signiﬁcant issues have been discussed with

the externalauditor;

•

the clarity of the disclosures and compliance with ﬁnancial

reporting standards and relevant ﬁnancial and governance

reporting requirements, including the UK Corporate

Governance Code;

•

any correspondence from regulators in relation to our ﬁnancial

reporting; and

•

assisting the Board in an assessment of whether the Annual

Report and Accounts, taken as a whole, is fair, balanced and

understandable and provides the information necessary for

shareholders to assess the Company’s position and prospects,

performance, business model and strategy. This assessment

forms the basis of the advice given to the Board to assist it in

making the statement required by the UK Corporate

Governance Code.

Accounting policies and practices

The Committee received reports from management in relation to

the identiﬁcation of critical accounting judgements, key sources

ofestimation uncertainty, signiﬁcant accounting policies and

proposed disclosure of these in the 2022 Annual Report. The

Committee’s review of how management approached a change

inthe application of IFRS 15 is summarised on page 84 (a fuller

description is provided in note 1 ‘Accounting policies’ to the

ﬁnancial statements). There were no other new material changes

tosigniﬁcant accounting policies adopted during the year.

Following discussions with management and the external auditor,

the Committee approved these critical accounting judgements and

signiﬁcant accounting policies and disclosures, which are set out in

note 1 ‘Accounting policies’ to the ﬁnancial statements.

Signiﬁcant judgements and issues

An important part of the Committee’s responsibilities is to assess

keyissues in respect of published ﬁnancial statements and the

Committee pays particular attention to any matters which it

considers may affect the integrity of Softcat’s ﬁnancial statements,

with a view to satisfying itself that each matter has been treated

appropriately. The signiﬁcant areas of focus considered, and the

actions taken by the Committee, in relation to the 2022 Annual

Report are outlined below.

We discussed these with the external auditor during the year and,

where appropriate, these have been addressed as areas of audit

focus as outlined in the Independent Auditor’s Report on pages

136 to 143.

Matter considered Action

Going concern and viability

In respect of the ﬁnancial statements for the year ended 2022, management prepared analysis modelling

a variety of downside scenarios having regard to the principal risks faced by the business to assess the

Company’s viability and ability to continue as a going concern. The analysis including budgets for

FY2023 and three-year cash projections were presented together with potential mitigating actions which

could be taken in the event of one or more of the downside scenarios occurring. The Committee was

satisﬁed with management’s work and supported the conclusions reached in respect of the Company’s

going concern and longer-term viability (see pages 133 and 134 and page 64 respectively).

The Committee will monitor developments in good practice under the BEIS reform proposals in respect of

potential additional areas and risks on which companies will be expected to have due regard in future

resilience statements.

Inappropriate revenue

recognition: misstatement

ofrevenue recognised at

ornear year end

The Committee has reviewed the Company’s revenue recognition policy and discussed in detail with

management the processes applied to accurately record revenue at period ends. The Committee also

receives detailed monthly reporting on business performance which includes revenue recognition data

and trends. The Committee or the Board discusses the performance and data trends as needed with the

CFO. The Committee has concluded that the timing of revenue recognition is appropriate.

Misstatement of rebate

income

The Committee has taken steps to understand the nature and quantum of supplier rebates received by the

Company. The Committee receives management information on rebates accrued as part of monthly

performance reporting and monitors trends against prior period results. The Committee is satisﬁed with

management’s ability to accurately record rebates earned within the ﬁnancial period.

Corporate governance

83Annual Report and Accounts 2022 Softcat plc

Matter considered Action

Application of IFRS 15

The Committee is aware that inappropriate application of IFRS 15 may result in erroneous presentation

and disclosure of revenue and cost of sales. Management has taken appropriate action and performed

detailed work to ensure that revenue is reported accurately on a principal or agent basis. Softcat

evaluates each revenue stream against known indicators to determine disclosures and presentation.

Theindicators are reviewed quarterly and factor in product mix sold by Softcat. During the year, the IFRS

Interpretation Committee (‘IC’) shared guidance on the “control” criteria which is used to determine

whether companies should recognise revenue from the resale of standard software licences on a net basis

under IFRS 15. Following this guidance, management presented an analysis to the Audit Committee of the

impact of amending its judgement in the Company’s accounts, including a restatement of the prior

ﬁnancial year. Management also presented a revised accounting policy which reﬂected the application

of the IC’s guidance. Please see note 1.5 to the ﬁnancial statements for more information.

EY has audited the disclosures of IFRS 15 and presented the results of their procedures to the Committee.

The above provided the Committee with comfort that an appropriate approach continues to be taken on

the presentation of revenue under IFRS 15, which also incorporates the new guidance from the IC.

Other matters

The Committee also undertook a range of further activities in relation

to the Company’s accounting and external reporting in theyear:

Fair, balanced and understandable

The processes and controls that underpin the Committee’s

assessment of whether the Annual Report and Accounts, taken as

awhole, is fair,balanced and understandable and provide the

information necessary for shareholders to assess the Company’s

position and prospects, performance, business model and strategy

include ensuring that:

•

all team members who provide a material contribution to

drafting the Annual Report and Accounts are fully briefed

bytheCompany Secretary on the fair, balanced and

understandable requirement;

•

an experienced core team is responsible for the co-ordination of

content submissions, veriﬁcation, detailed review and challenge;

•

the Annual Report and Accounts follows a framework which

supports the inclusion of key messaging, market and performance

overviews, principal risks and other governance disclosures.

Sufﬁcient forward-looking information is provided and abalance is

sought between describing potential challenges and opportunities;

•

information in the different parts of the Annual Report and

Accounts isconsistent;

•

the Annual Report and Accounts is written to avoid jargon

where possible andis presented free of unnecessary clutter;

•

senior management conﬁrms that the content in respect of itsareas of

responsibility is considered to be fair, balanced andunderstandable;

•

the Committee receives an early draft of the Annual Report and

Accounts toenable timely review and comment; and

•

the Committee receives a brieﬁng from management which

setsout the key themes and links in the Annual Report and

Accounts which contribute to it being a fair, balanced and

understandabledocument.

Following its review, the Committee is of the opinion that the

2022Annual Report and Accounts, taken as a whole, is fair,

balanced and understandable. This allows the Committee to

provide positive assurance to the Board to assist it in making the

statement required by the Code.

Going concern and viability statements

The Committee has reviewed the Company’s ability to continue to

operate as a going concern for the twelve-month period post the

date of this report and the Company’s assessment of viability over

a period greater than twelve months. In assessing viability, the

Committee has considered the Company’s position presented in

the budget and the three-year plan recently approved by the

Board. The Committee also considered amongst other things a

number of scenarios modelled by management, including a severe

but plausible downside scenario and reverse stress tests carried

out to assess the strength of the Company’s liquidity position.

TheCommittee has concluded that the assumptions and mitigating

actions are appropriate. Further details are set out in the statements

on page 64 and pages 133 and 134 of this Annual Report.

TheCommittee conﬁrms that, following review, it has

recommended both statements for approval by the Board.

External audit

The Committee has primary responsibility for overseeing the

relationship with, and performance of, the external auditor.

Thisincludes making the recommendation on the appointment,

reappointment and removal of the external auditor, assessing

itsindependence on an ongoing basis and negotiating the audit

fee. The Committee is also responsible for considering the most

appropriate time and circumstances, observing applicable

legislation, to conduct a tender for the external audit.

Audit engagement partner rotation

In accordance with the Auditing Practices Board’s Ethical

Standards, the term limit of an audit engagement partner is

ﬁveyears and David Hales will step down as our lead audit

engagement partner following the conclusion of the FY2022 audit

in October 2022. During the 2022 ﬁnancial year, the Committee

worked with EY to ensure a suitable handover process for the new

audit engagement partner. EY conﬁrmed and the Committee

endorsed that Marcus Butler would take over as the new lead

audit partner. EY conﬁrmed that Marcus was independent from

Softcat, with no known conﬂicts of interest. Marcus and David

have been working to ensure a smooth transition. The Committee

would like to thank David for his contribution during his time as

audit engagement partner.

AUDIT COMMITTEE REPORT CONTINUED

ACCOUNTABILITY CONTINUED

Signiﬁcant judgements and issues continued

84 Softcat plc Annual Report and Accounts 2022

Audit tender

EY was appointed as the Company’s auditor in July 2013.

The2014 Competition and Markets Authority Order requires

Softcat to tender its external audit at least every ten years.

Inaccordance with this requirement, we started planning a

competitive tender process in 2021 and undertook the process

during our 2022 ﬁnancial year. The appointment will be

effective for Softcat’s 2023 ﬁnancial year audit.

The process followed the FRC’s guidance on audit tenders.

TheAudit Committee led the process with the assistance of

atender panel made up of the Committee Chair, Vin Murria

(who is a Committee member), the CFO, the Company

Secretary, the Financial Reporting Manager and other key

stakeholders in the audit process.

Conclusion and rationale

The members of the tender panel had scored each of the

candidates’ proposals independently, ensuring a fair and

consistent review of each proposal. The tender panel then met

todiscuss the scores, share their views and further reﬂect on the

proposals. Part of the consideration was given to the long-term

nature of the audit relationship and the balance of the potential

beneﬁts of maintaining EY as auditor versus those of

changingauditor.

Overall, the Committee was impressed by the high quality of the

proposals put forward by each candidate ﬁrm, all of which

demonstrated signiﬁcant commitment to the tender process, and

good understanding of key areas of risk and of Softcat’s values

and culture. All candidates had expressed a strong desire to

beSoftcat’s auditor. The tender panel concluded that the

advantages of EY’s strong audit quality record, established

positive relationship with and understanding of the business and

performance as assessed on the scorecard were greater than

the potential advantages of changing auditor.

A resolution proposing the appointment of EY as Softcat’s

auditor will be put to the shareholders at the 2022 Annual

General Meeting.

October 2021

Timeline ﬁnalised by the Committee

Informal approaches and meetings with potential candidate audit ﬁrms

Candidate ﬁrms conﬁrmed their independence and that they had no conﬂict of interest to potentially act as external auditor

November 2021

Request for proposal (‘RFP’) sent to four candidate ﬁrms, including a ‘challenger’ audit ﬁrm

Clear assessment criteria were subsequently established and communicated to the candidate ﬁrms ahead

of submission date for the RFPs

December 2021

Company presentation day with the candidate ﬁrms. This provided a detailed overview of Softcat

and an opportunity to meet with management

Population of a ‘data room’ with key relevant information for the candidate ﬁrms to consider for their audit proposals

January 2022

Detailed follow-up meetings held with the audit tender panel

Shortlisting of three candidate ﬁrms, including a ‘challenger’ ﬁrm, which were invited to tender

April 2022

Submission of proposals from two of the shortlisted candidate ﬁrms as one ﬁrm withdrew from the process

May 2022

Presentation of tender proposals by shortlisted candidate ﬁrms

Completion of a detailed scorecard on each candidate ﬁrm by each member of the tender panel

Tender panel discussed results and made a recommendation to the Audit Committee to reappoint EY, which was reviewed and

supported by the Audit Committee. A recommendation to reappoint EY was made to the Board and approved

Corporate governance

85Annual Report and Accounts 2022 Softcat plc

Auditor appointment

Following the competitive tender process concluded in May 2022 described above, EY was retained as auditor effective from

ﬁnancial year 2023. A timeline setting out the tenure of EY as auditor and requirements on Softcat to next tender and change auditor

is set out below:

The Committee will continue to review the auditor’s appointment

and the need to tender the audit, ensuring the Company’s best

interests are considered and ensuring compliance with the

requirements of the UK Competition and Markets Authority.

Accordingly, the Company conﬁrms that it complied with the

provisions of the Competition and Markets Authority’s Order

2014 for the ﬁnancial year under review. There are no

contractual obligations restricting Softcat’s choice of

externalauditor.

For the ﬁnancial year ended 31 July 2022, the Committee has

recommended to the Board that EY be reappointed under the

current external audit contract and the Board has endorsed

thatrecommendation. The Board has therefore proposed the

reappointment of EY at the Annual General Meeting to be

heldin December 2022.

Prior to July 2013

Rayner Essex LLP conducted the external audit immediately prior to FY2013

July 2013

EY appointed as auditor and conducted the external audit for FY2013

November 2015

Softcat becomes a publicly listed entity

October 2017

Mandatory change of EY lead auditpartner

May 2022

EY reappointed as auditor, following competitive tender process

October 2022

Mandatory change of EY lead audit partner

By May 2032

Competitive tender, being ten years since last audit tender

By July 2033

Pursuant to legislation, mandatory audit ﬁrm rotation, being up to 20 years since appointment. Option, pursuant to transitional

provisions, to extend this period to 2035, being 20 years since Softcat became a publicly listed company

AUDIT COMMITTEE REPORT CONTINUED

ACCOUNTABILITY CONTINUED

86 Softcat plc Annual Report and Accounts 2022

Audit risk

At the start of the audit cycle we received from EY a detailed

auditplan identifying its audit scope, planning materiality and

assessment of key audit risks.

The audit risk identiﬁcation process is considered a key factor in the

overall effectiveness of the external audit process, and the key risks

for the 2022 ﬁnancial year closely align to the signiﬁcant

judgements and issues above. The key risks identiﬁed included:

•

inappropriate revenue recognition;

•

presentation of revenue in respect of IFRS 15;

•

misstatement of rebate income;

•

a review of the operation of a new ﬁnance ERP system

onﬁnancial reporting; and

•

going concern and viability.

Should the need ever occur, the Committee has the authority

torequest for additional areas to be reviewed if it is deemed

toberelevant for the integrity of Softcat’s ﬁnancial statements.

EY also outlined other areas of audit focus which included a

combination of standing matters usually associated with an

external audit each year and additional matters which reﬂect

potential changes in Softcat’s risk proﬁle, such as exposure to

climate change risk. Key audit risks are regularly reviewed by

theCommittee or the Board.

Working with the external auditor

The external auditor attended all Committee meetings in 2022

andreceived all Committee reading papers (other than papers

inrespect of the competitive audit tender) and minutes. After each

Committee meeting, we hold a private meeting with the external

auditor to provide additional opportunity for open dialogue and

feedback from the Committee and the auditor without management

being present. The external auditor has direct access to the

Committee Chair to raise any concerns outside formal Committee

meetings. Matters typically discussed include:

•

auditor views on the resourcing of internal functions which are

important to Softcat’s control environment;

•

the external auditor’s assessment of business risks;

•

the transparency and openness of interactions with management;

•

conﬁrmation that there has been no restriction in scope placed

on it by management; and

•

the independence of its audit and how the auditor has

exercised professional scepticism.

The Committee Chair, if appropriate, will discuss with management

any actions arising from the private meetings with the external auditor.

Effectiveness of the external audit process

The Committee reviewed the quality of the external audit

throughout the year and considered the performance of EY.

Theeffectiveness of the external audit process is dependent on a

number of factors. These include the quality, continuity, experience

and training of audit personnel, business understanding, technical

knowledge and the degree of rigour applied in the review

processes of the work undertaken, communication of key

accounting and audit judgements, together with appropriate audit

risk identiﬁcation at the start of the audit cycle. The Committee also

took into account an assessment of the ﬁrm-wide Audit Quality

Inspection (‘AQI’) report issued by the FRC in July 2022 together

with EY’s responses to that report. The Committee also noted the

equivalent AQI reports issued in respect of the other audit ﬁrms

which participated in the Company’s tender for the external audit

(see page 85).

Following the conclusion of the 2022 ﬁnancial year, the Committee

conducted an effectiveness evaluation of the external auditor. The

evaluation was led by the Committee Chair and involved issuing a

tailored evaluation questionnaire for completion by the Committee,

by selected managers in the Finance team who regularly work with

EY, and by Grant Thornton (as co-sourced internal auditor). The

results of the survey were shared with the Committee and

discussed. The feedback was positive overall, with the Committee

noting comments about the working relationship and good

engagement between the EY Team and those involved in the audit

process, and the smooth and timely manner in which the audit was

run. Some areas were highlighted as opportunities for

improvements, such as the utilisation of technology within the audit

process as the Company’s control environment matures and

greater functionality is utilised within the new ERP ﬁnance system.

Further opportunities were also identiﬁed to improve the

engagement between EY and the wider business. These areas will

be further discussed with EY for implementation with the new audit

lead partner. Based on the above, the Committee concluded that

EY continued to perform their role well, there had been

appropriate focus and challenge on the primary areas of audit

focus from EY, and that the performance of EY remained effective.

During 2022, an Audit Quality Review Team from the FRC

undertook an inspection of EY’s audit of the Company’s 2021

Financial Statements. As part of that process, the Committee Chair

shared her and the Board’s view of the quality of the EY audit. The

Committee considered the ﬁnal inspection report, which did not

raise any signiﬁcant ﬁndings, and discussed the results and agreed

actions with the lead audit partner. The Committee agreed with the

overall assessment, which was consistent with its own view of the

quality and effectiveness of the external audit.

Corporate governance

87Annual Report and Accounts 2022 Softcat plc

Independence and objectivity

The Committee has a policy governing the engagement of the

external auditor to provide non-audit services. This precludes EY

from providing certain services. The policy is reviewed annually

and was last updated in 2021 (the Committee having agreed in

2022 that no changes were required). The latest version can be

found on the Company’s website at: www.softcat.com/about-us/

investor-centre/governance. All non-audit services provided by

the external auditor are reported to the Committee and a record is

kept so that the total costs regarding non-audit work during a

ﬁnancial year are monitored.

For certain speciﬁc permitted services, the Committee has

pre-approved that EY can be engaged by management, subject

to the policy set out above, and subject to a total of 10% of the

current external audit fee on an annual basis.

For all other services or those permitted services that exceed these

speciﬁed fee limits, I, as Committee Chair, or in my absence

another Committee member, can pre-approve permitted services.

The Committee also received conﬁrmation from EY that there are

no relationships between the Company and EY that may have a

bearing on its independence.

In respect of the audit of the 2022 ﬁnancial statements, the

Committee considered a fee proposal from EY and the Committee

reviewed the quantum and rationale relating to increased costs for

EY to undertake required audits. Audit fees had increased from the

previous year, reﬂecting the ongoing growth of the Company.

Following the receipt of formal assurance that its fees were

appropriate for the scope of the work required, the Committee

agreed a charge from EY of £545,000 for statutory audit services

in respect of the Company’s annual ﬁnancial statements.

In addition to the above statutory audit fee, EY and related

member ﬁrms charged the Company £132,500 for additional

audit fees primarily in connection for the ﬁrst year of auditing

following the implementation of Softcat new ﬁnance ERP system,

NetSuite. The Committee also agreed a fee of £40,000 in respect

of EY’s review of the 2022 half-year results, which was classiﬁed

as a non-audit fee. Further details of the fees paid, for audit and

non-audit services, to EY for the 2022 and 2021 ﬁnancial years

can be found in note 3 to the ﬁnancial statements.

The Committee is aware of the requirements of the Statutory

Auditors and Third Country Auditors Regulations 2016 (the ‘2016

Regulations’). The 2016 Regulations provide for a cap on non-audit

services of a maximum of 70% of the average of the audit fees paid

on a rolling three-year basis. In order to ensure this limit is not

exceeded, the Company shall in usual circumstances seek that

permitted non-audit fees shall not exceed 50% of the average

audit fee over the three preceding ﬁnancial years in each case. The

three-year measurement period covers the 2020, 2021 and 2022

ﬁnancial years and is 6.6%, which is considerably below thecap.

Internal control and risk management

The Committee has the primary responsibility for the oversight

oftheCompany’s system of internal control, including the risk

management framework and the work of the internal audit function

(see below). During the year the Committee closely monitored

theCompany’s internal control and risk management systems and

received regular reports from management and the Internal Audit

Team covering the major risks and/or events faced by the business.

During the year, the Committee considered the proposals in the

BEIS reforms on the audit market and on corporate governance,

including proposals to further strengthen processes and disclosures

on the effectiveness of a company’s internal controls. The Committee

is monitoring developments and considering its potential next steps.

A further update will be provided in next year’s Annual Report.

Assessment of the Company’s system of internal

control, including the risk management framework

The Company’s risk assessment process and the way in which

signiﬁcant business risks are managed is a key area of focus for the

Committee. Our activity here was driven primarily by the Company’s

assessment of its principal risks and uncertainties, as set out on

pages 59 to 63.

The Company has in place an internal control environment to protect

the business from the material risks which have been identiﬁed.

Management is responsible for establishing and maintaining

adequate internal controls over ﬁnancial reporting and the

Committee has responsibility for ensuring the effectiveness of

thesecontrols.

The Committee has completed its review of the effectiveness of the

Company’s system of internal control, including risk management,

during the year and up to the date of this Annual Report, in

accordance with the requirements of the Guidance on Risk

Management, Internal Control and Related Financial and Business

Reporting published by the FRC. As part of the ﬁnancial year-end

process, management presented to the Committee an overview of

the existing control framework and it summarised the key controls

inoperation which underpinned the control environment during

FY2022. Management has documented certain key controls,

including IT general controls, overarching controls for the Finance

department, ﬁnancial management controls, audit risk ﬁnancial

reporting controls, and fraud management.

Management had considered the control environment and

concluded that in its view the controls had been operating

effectively throughout the year and, taken together, provided a high

degree of assurance that the ﬁnancial statements are free from

material misstatement.

Through the processes outlined above, the Audit Committee has

considered all signiﬁcant aspects of the Company’s risk management

and internal control systems for the year and up to the date of this

Annual Report, allowing it to provide positive assurance to the

Board to assist it in making the statements required by the

UKCorporate Governance Code. No signiﬁcant failings or

weaknesses were identiﬁed as a result of the review that may

signiﬁcantly impact the ﬁnancial statements. However, had there

been any such failings or weaknesses, the Committee and the

Board conﬁrm that necessary actions would have been taken

toremedy them.

Internal audit

During the 2022 ﬁnancial year, the Company had an internal audit

function consisting of an internal audit manager (who joined

Softcat during the year) and Grant Thornton LLP (‘Grant Thornton’).

The aim of the internal audit function is to provide independent and

objective assurance on the adequacy and effectiveness of internal

controls, risk management and governance processes. The

appointment and removal of the internal audit function is a matter

reserved to the Committee.

AUDIT COMMITTEE REPORT CONTINUED

ACCOUNTABILITY CONTINUED

88 Softcat plc Annual Report and Accounts 2022

Monitoring and review of the scope, extent and effectiveness of

the activity of the Company’s internal audit function is regularly

considered by the Committee. Management and the internal audit

manager discuss with Grant Thornton the selection of appropriate

areas and controls within the business for internal audit. This is then

presented by Grant Thornton as a proposed annual internal audit

plan prior to the start of each ﬁnancial year. The audit plan is then

reviewed and approved by the Committee. The Committee then

receives updates from Grant Thornton/the internal audit manager

on the audits and receives an audit report on each audit

undertaken, which includes the results of their audits,

recommendations for changes and management action plans

toaddress any unsatisfactory audits or recommendations.

TheCommittee also receives from the internal audit manager

regular progress updates on previously undertaken audits in

orderto ensure those actions have been completed or closed.

The internal audit plan for 2022 covered a broad range of core

ﬁnancial and operational processes and controls, focusing on

speciﬁc risk areas. Reviews were undertaken in the following areas:

•

assurance in relation to the ‘go-live’ decision on the new ERP

ﬁnance system: this was important given the signiﬁcant investment

cost and that it is viewed as a key platform to support Softcat’s

growth ambitions;

•

IT governance and access management: this was important for

Softcat’s IT general controls maturity and to protect sensitive

data and information;

•

security against the risk of fraud: this was particularly relevant

given the potential external prevalence for fraud and increasing

sophistication of fraud attempts; and

•

purchase to pay procedures: this was important following

thechange in Softcat’s ERP ﬁnance system and associated

revised procedures.

During the year the internal audit manager supported the

strengthening of the Company’s internal control environment.

Inparticular, a more formal process to identify and document

keycontrols is underway. This will further improve our assessment

and assurance on the effectiveness of controls.

Approach to developing the 2023 internal audit plan

and scheduled reviews

During the year Grant Thornton worked closely with management

and the Audit Committee Chair on an internal audit plan for 2023.

The plan was formulated considering an ‘audit universe’ which had

been developed in prior years, with consideration of the important

risks facing Softcat and the wider economic and regulatory climate.

The internal audit plan also takes into account the potential impact

of the BEIS consultation and proposed reforms on improving trust in

audit and corporate governance and the emerging themes on

enhanced governance and controls.

During 2023 reviews are planned in the following areas:

•

Internal controls over ﬁnancial reporting: the consultation and

reforms proposed by BEIS (see above) include a strengthening

of controls over ﬁnancial reporting and enhanced reporting

requirements in this regard. Management will be making plans

to comply with the required changes. In preparation for the

expected reforms, a review will be conducted to assess the

current maturity of ﬁnancial reporting processes and controls

and to identify any material gaps/priority actions to further

develop controls over ﬁnancial reporting.

•

Cloud adaptation internally and use of managed services:

cloud usage is growing rapidly in Softcat. The audit will review

and give assurance on governance and usage, to drive further

improvements on the overall control environment.

•

Business continuity and disaster recovery planning: part of

Softcat’s operational effectiveness is to ensure it has robust

plans to operate the business in the event of a major disruption.

The review will focus on Softcat’s business continuity management

and IT disaster recovery arrangements, against good practice.

•

Third party risk management: Softcat relies on a number of IT

third parties to deliver services to its employees and customers.

The review will consider the resilience of the Company against

incidents or problems at a critical third party supplier.

Effectiveness of the internal audit process

Both Grant Thornton and the internal audit manager have had

access to the relevant documentation, premises, functions and

employees to enable it to perform its activities. Grant Thornton is a

major professional services ﬁrm with experience in consulting,

assurance and audit and the relationship with the Audit Committee

is led by an experienced partner of Grant Thornton.

Following the conclusion of the 2022 ﬁnancial year, the Committee

undertook a review of the effectiveness of Grant Thornton’s role as

part of the internal audit function. The evaluation was led by the

Committee Chair and involved issuing tailored evaluation

questionnaires for completion by Softcat management, who had

worked with Grant Thornton on internal audits during the year. A

separate questionnaire was completed by EY (as external auditor),

the Committee and Softcat’s internal audit manager. The results of

the questionnaires were collated, reported to, and discussed by the

Committee. The overall feedback was positive, concluding that

Grant Thornton’s work continues to strengthen the control

environment in the business. Minor recommendations arose from

the evaluation, including the provision of additional expertise within

Grant Thornton to support internal audit reviews in respect of IT

general controls. Implementation of the recommendations will be

further discussed with Grant Thornton. Following the evaluation, the

Committee concluded that Grant Thornton continue to perform well

and remain effective.

Robyn Perriss

Chair of the Audit Committee

24 October 2022

Corporate governance

89Annual Report and Accounts 2022 Softcat plc

Committee Chair’s introduction

I am pleased to present this year’s report from the Nomination

Committee (the ‘Committee’). This has been a busy and important

year for the Committee, as I note the appointment of Lynne Weedall

as a Non-Executive Director and also our signiﬁcant announcement

in July in respect of Board succession changes for the Chair, CEO

and CFO. The Board succession changes which will take place in

2023 reﬂect the Committee’s longer-term succession planning

considerations, which were brieﬂy mentioned in last year’s report.

These changes provide a ﬁrm foundation for effective composition

of the Board over the next few years. More details are provided

below, but I would like to register my thanks to the other Committee

members for their additional time, commitment, support and

contribution during the year.

In addition to considering the changes to the Board, the Committee

also continued its other work. We have ﬁrmly established in the

Committee’s annual calendar a formal update and discussion on

employee culture, which is in addition to the Committee’s annual

review of employee engagement. Diversity and inclusion also

continue to receive a high level of attention by the Committee

andIremain encouraged by the efforts and dedication across

thebusiness to continue making Softcat a more diverse and

inclusive employer. As a Company, we acknowledge that further

improvements are needed on gender and ethnic diversity in some

roles and in management positions, and some progress is being

made in this regard. As explained previously, this is a longer-term

endeavour. More details on the above are in the report which

follows and in the Sustainability section of this Annual Report.

Below Board level, during the year the Committee reviewed and

discussed with the Executive Directors the succession plans for the

Senior Leadership Team (the most senior level of management

below the Board).

If any shareholders or proxy voting advisory agencies would like

toraise any matters with me in respect of the Committee, I can be

contacted via the Company Secretary at cosec@softcat.com.

Members

K Slatford (Chair)

M Hellawell

R Perriss

L Weedall

V Murria

Attendance of the Nomination Committee

Name Committee attendance 2022

K Slatford

M Hellawell

R Perriss

L Weedall

V Murria

Total meetings held

Attended Did not attend n/a

1. Karen missed one Committee meeting due to illness.

2. Lynne joined the Board in May 2022 and she attended each meeting of the

Committee following appointment.

The Board succession changes which will

takeplace in 2023 reﬂect the Committee’s

longer-term succession planning considerations.

These changes provide a ﬁrm foundation for an

effective composition of the Board over the next

few years.”

Karen Slatford

Chair of the Nomination Committee

Board composition,

skillsetandexperience: 22%

Succession planning: 40%

Culture and diversity: 26%

Corporate governance: 12%



Allocation of time

NOMINATION COMMITTEE REPORT

EFFECTIVENESS

90 Softcat plc Annual Report and Accounts 2022

Membership, meetings and operation

oftheCommittee

The members of the Committee are set out above and all the

members are Non-Executive Directors. The Committee is chaired

by an independent Director. The biographies of the members of

theCommittee can be found on pages 68 and 69. The Chief

Executive Ofﬁcer, Chief Financial Ofﬁcer, Chief People Ofﬁcer

and Head of Engagement, Diversity and Inclusion are invited to

attend meetings where appropriate. The Committee met seven

times during the year and meetings generally take place on the

same day as the Board meeting to maximise the efﬁciency of

interaction with the Board. If needed, the Committee Chair will

report to the Board, as a separate agenda item, on the actions

taken by the Committee. The Company Secretary acts as Secretary

to the Committee.

The key responsibilities of the Committee are to advise on

appointments to the Board, to review Board composition and

toreview succession planning both for the Board and senior

management. The Committee also reviews and provides feedback

on the initiatives to improve diversity and inclusion. Carrying out

these responsibilities is critical to ensure the Board and wider

business have plans in place to have the best available talent to

drive the Companyforward.

Any Director who intends to join the Board is required to

discloseall signiﬁcant outside commitments prior to appointment.

On joining the Board, Non-Executive Directors receive a formal

appointment letter, which, amongst other things, identiﬁes the time

commitment expected of them. Each Director continues to devote

sufﬁcient time to meet their Board responsibilities.

The Committee considered and recommended that each Director

willing to stand for re-election be proposed for reappointment at

the 2021 AGM. The Board endorsed all theappointment and

reappointment recommendations oftheCommittee.

The calendar of activities below provides an overview of the

key topics for the Committee during the year.

October 2021

•

Update on Board composition

•

Recommendation to reappoint Directors at the 2021 AGM

•

Approval of the 2021 Nomination Committee Report

December 2021

•

Review of the results of the annual employee satisfaction

survey and planned actions

•

Discussion on employee culture

•

Discussion on diversity and inclusion

•

Discussion on Board composition/Board succession planning

February 2022

•

Discussion on Board composition/Board succession planning

•

Discussion on appointment of a further Non-Executive Director

March 2022

•

Discussion on Board composition/Board succession planning

•

Non-Executive Director update, discussion and

candidateproposal

May 2022

•

Discussion on diversity and inclusion

•

Discussion on Board composition/Board succession planning

•

Update and discussion following Company Chair’s

individual reviews with Board members

July 2022 (two meetings)

•

Recommended proposals for Board composition/

succession planning

•

Discussion of a transition plan for the new CEO in 2023

•

Update on recruitment for a new CFO

•

Review and discussion of succession plans below Board level

Regular or standing items at each Committee

meeting include:

•

Approval of previous Committee meeting minutes and

review of follow-up on outstanding actions

•

Governance updates for Committee discussion or approval

•

Review of and updates to the Committee’s terms ofreference

Key activities during the year

Corporate governance

91Annual Report and Accounts 2022 Softcat plc

Board appointments

I am pleased with the progress made this year on the Board’s

composition and on its succession plans.

As mentioned in last year’s report from the Committee, the Board

had discussed the potential beneﬁts of adding a further Non-

Executive Director, if that person would add further signiﬁcant value

to the Board’s effectiveness, skillset and expertise and be a good

cultural ﬁt. The Committee, on behalf of the Board, deliberated on

this further and concluded that the Board would beneﬁt from the

additional role and a search commenced to select and appoint a

further Non-Executive Director. The Committee considered the

current composition, workload, expertise and skills of the Board,

the Board’s strategic priorities and the attributes best required to

complement the Board. The Committee arranged for a detailed

role description to be prepared and worked with an external

executive search ﬁrm, Russell Reynolds Associates (‘RRA’) to

identify suitable candidates. RRA also conducted the external

evaluation of the Board’s effectiveness this year (see pages 74 to

75) but apart from that RRA has no other business relationship with

the Company. As the Committee remains committed to the Board

having a diverse mix, we will usually only engage with search ﬁrms

which have signed up to the relevant Voluntary Code of Conduct

for Executive Search Firms on diversity and best practice. RRA

subscribes to both the Standard and the Enhanced Voluntary Code

of Conduct for Executive Search Firms. By using such ﬁrms the

Committee can maximise the ability to consider a diverse range of

suitable candidates.

RRA researched and identiﬁed potential candidates for the role

and following initial interviews a shortlist was presented and

discussed with the Committee. Further interviews were held with

ﬁnal candidates. At the conclusion of the process, it was agreed

that Lynne Weedall was our preferred candidate because of her

insights from her executive career and signiﬁcant experience

gained on the boards of other listed companies. Lynne was

appointed to the Board as a Non-Executive Director with effect from

3 May 2022. I am delighted that she stepped in to become Chair of

the Remuneration Committee.

As part of the appointment process, the Committee reviewed the

positions of both Lynne Weedall and Robyn Perriss, who are both

independent Non-Executive Directors of Dr. Martens plc. The

Committee noted that neither Lynne nor Robyn are involved in

executive duties at Dr. Martens and each have a similar obligation

to be independent for Dr. Martens as they do for Softcat.

Consequently, the Committee did not consider that their positions

as independent Non-executive Directors of Softcat are adversely

impacted by their roles on the board of Dr. Martens.

Lynne was provided with an extensive, full and tailored induction

programme, prepared by the Company Secretary and overseen

by the Company Chair. This included meeting members of the

Senior Leadership Team, other senior managers in the business

andPwC, the Remuneration Committee’s external adviser. There

was also a comprehensive handover from me (asthe outgoing

Remuneration Committee Chair) and a brieﬁng from the Company

Secretary so that Lynne could quickly assume the responsibilities of

the Chair of the Remuneration Committee.

The Board, particularly after taking into account the appointment

ofLynne Weedall, now has a stronger and more diverse range

ofskills, experience, mix of tenure, personalities and backgrounds.

Ibelieve that the composition works well and provides the right mix

of challenge and support to the business.

Succession planning

As mentioned in last year’s report, succession planning is very

important to the Committee and for some time particular attention

has been given to longer-term succession planning for the Chair,

CEO and CFO.

In our regular succession planning reviews, Graham Charlton

hasbeen considered a very strong CEO candidate and during

theyear he conﬁrmed his interest in the role to the Committee.

During his seven years as CFO, Graham has developed a

deepunderstanding of the business and in what makes Softcat

successful, not least our culture, which he has championed since

joining. As part the Committee’s consideration of Graham, RRA

prepared a detailed leadership development report which

assessed whether he had the right attributes for the role of CEO.

The report recommended Graham for the role. The Committee

hasalso discussed with Graham his transition plan for moving to

the role of CEO and particular areas of focus on which he will

continue to build on when he assumes the role. The Committee

recommended Graham’s appointment to the Board as it believes

Graham is the right person to lead the business successfully and

through the next stage of its growth.

Martin Hellawell led Softcat in an executive capacity between

2006 and April 2018, when he stepped down as CEO to become

the Non-Executive Chair. The Nomination Committee has regularly

discussed longer-term succession planning for this role, given that

under the rules of the UK Corporate Governance Code his

nine-year term comes to an end in 2024. Graeme Watt, our

current CEO, hadmade the Board aware recently that he was

contemplating retirement as a full-time Executive and he had

expressed an interest in being considered as Martin’s successor.

The Nomination Committee considered this, along with potential

alternative options, and was unanimous that Graeme’s deep

knowledge of the business, Softcat’s culture and its markets made

him the ideal candidate to support the interests of all our

stakeholders. The Nomination Committee therefore recommended

to the Board that Graeme succeed Martin as Non-Executive

Chair. The Board endorsed the recommendation, acknowledging

that the appointment of the CEO into the role of the Chair is not in

line with the recommendations of the UK Corporate Governance

Code. More information about the Board’s compliance with the

UK Corporate Governance Code can be found on page 66.

A search for a CFO to succeed Graham Charlton is underway

which considers external as well as internal candidates.

Following Lynne Weedall’s appointment and the changes which will

occur in 2023, the Board will have improved its overall succession

planning and created a more robust and diverse mix of tenure on

the Board. The Committee keeps an ongoing watch in respect of

the tenures of the Non-Executive Directors and is keeping in mind

that in 2024 we will reach the nine-year tenure in respect of Vin

Murria. The Committee will continue to review the likely retirement

dates and required skills on the Board as part of its longer-term

succession planning and Board composition refreshment.

NOMINATION COMMITTEE REPORT CONTINUED

EFFECTIVENESS CONTINUED

92 Softcat plc Annual Report and Accounts 2022

The Committee works with the Chief People Ofﬁcer and the

CEOand reviews annually the plans which are in place fororderly

succession planning of our Senior Leadership Team (‘SLT’). During

the year there were a number of changes on the SLTand these

were discussed either with the Committee or with theBoard.

Wehave a strong talent pipeline and our review also considers

opportunities to develop a more diverse pipeline in leadership roles.

Board member review process

Martin Hellawell as Company Chair is responsible for conducting

an annual review of the CEO and each Non-Executive Board

member. The CEO performs a similar process with the CFO. The

reviews gather additional feedback to support the good running

ofthe Board. The Board also conducted an externally facilitated

Board effectiveness review which resulted in a positive assessment

of the Board’s performance but equally some valuable pointers on

how to make further improvements. More information on this year’s

effectiveness review can be found in the Governance Report on

pages 74 to 75.

In my capacity as the Senior Independent Director, I led ameeting

of the Non-Executive Directors, without the Company Chair present,

to discuss the Company Chair’s performance. TheNon-Executive

Directors conﬁrmed that they continued to behappy with Martin’s

performance and remain fully supportive.

As a result of the above and following further consideration by

theCommittee, we have recommended to the Board that each

Director be proposed for reappointment at the AGM to be held

inDecember 2022.

Diversity and inclusion

The Board and the Committee devote signiﬁcant time to the issue of diversity and inclusion in the Company and management realises the

importance and beneﬁts of creating a more diverse workforce at all levels in the Company. This continues to be a long-term endeavour

and we recognise it as such.

The Committee is supportive of and recognises the importance of diversity and inclusion both for the effective functioning of the Board

andmore widely in the Company. The Board has a diverse range of experience by way of expertise and background. It recognises the

beneﬁts that different viewpoints can contribute to better decision making and the recent appointment of Lynne Weedall and the future

appointment of a new CFO will make this stronger.

In February 2022, the annual report from the FTSE Women Leaders (which succeeded the Hampton-Alexander Review) was published.

The annual report provides new recommended aspirational targets for gender diversity in FTSE 350 companies by the end of2025:

FTSE Women Leaders: targets for FTSE 350 companies by the

end of 2025 Current Softcat position

Boards of FTSE 350 companies to comprise at least 40% women. Achieved. The Board of Softcat currently comprises 57% women.

FTSE 350 companies to have at least one woman in the chair or

seniorindependent director role on the board, and/or one woman

inthe chief executive or ﬁnance director role in the company.

Achieved. The role of Senior Independent Director is currently held

bya woman.

Leadership teams (as deﬁned) of FTSE 350 companies to comprise

atleast 40% women.

Softcat is included in the annual report of FTSE Women Leaders

published in February 2022, at which time Softcat reported women

comprising 29.3% of leadership roles (as deﬁned). We will continue

our efforts to improve diversity in leadership roles.

I am pleased that Softcat already meets two of the above three new targets and the Committee notes the new target on leadership teams

for FTSE 350 companies to achieve for 2025. As already noted, we recognise that more progress is needed in respect of the diversity

ofour leadership team and this has been discussed with the Committee. The Board currently meets the recommendation set by the Parker

Review that boards should have at least one person of colour. Whilst the Board has reached some of the above targets, it is not the policy

of the Committee to set a quota in terms of the gender or ethnic diversity mix on the Board or its Committees. Our policy, which we have

implemented, is:

•

the primary criterion for an appointment is that it is made on merit;

•

the appointment achieves the best ﬁt with the Board and its Committees; and

•

to keep in mind the beneﬁts of the Board and its Committees having a diverse range of skills, experience and professional backgrounds.

Corporate governance

93Annual Report and Accounts 2022 Softcat plc

NOMINATION COMMITTEE REPORT CONTINUED

EFFECTIVENESS CONTINUED

Diversity disclosures pursuant to Listing Rule 9.8.6R

In April 2022, the UK Financial Conduct Authority (‘FCA’) published its ﬁnal rules to increase the disclosure of diversity on listed company

boards and executive committees. This requires listed companies to disclose in a prescribed format information on the diversity of their

board and executive committee. The Listing Rules (to which Softcat is subject) have been amended to require disclosure of the prescribed

information and the new requirement applies to ﬁnancial years beginning on or after 1 April 2022. The FCA has, however, asked listed

companies to report earlier on a voluntarily basis. The below information has been disclosed on a voluntary basis.

The Listing Rules require listed companies to state whether they have met the certain targets on board diversity. The information in the table

below is at 31 July 2022, which is the date selected as the reference date within the Company’s accounting period. Thetargets set out in

the Listing Rules are that:

•

at least 40% of the individuals on its board of directors are women;

•

at least one of the following senior positions on its board of directors is held by a woman:

–

the chair; or

–

the CEO; or

–

the CFO; or

–

the SID; and

•

at least one individual on its board of directors is from a minority ethnic background.

As at the reference date, the Board of Softcat met all of the above targets.

Gender diversity reporting

Number of

Board members

Percentage of

the Board

Number of

senior positions

on the Board

(CEO, CFO,

SID, Chair)

Number in

Executive

management

Percentage of

Executive

management

Men 3 43% 3 8 80%

Women 4 57% 1 2 20%

Not speciﬁed/prefer not to say — — — — —

Ethnic background diversity reporting

Number of

Board members

Percentage of

the Board

Number of

senior positions

on the Board

(CEO, CFO,

SID, Chair)

Number in

Executive

management

Percentage of

Executive

management

White British or other White (including minority White groups) 6 86% 4 9 90%

Mixed/multiple ethnic groups — — — — —

Asian/Asian British 1 14 % — — —

Black/African/Caribbean/Black British — — — 1 10%

Other ethnic group, including Arab — — — — —

Note:

‘Executive management’ is deﬁned above using the prescribed deﬁnition in the Listing Rules. This is deﬁned as the most senior executive or

managerial body below the Board, including the Company Secretary. At Softcat, this is the Senior Leadership Team (‘SLT’), which has

day-to-day responsibility for the operation of the business, and the Company Secretary. The SLT includes both Executive Directors.

Between 31 July and 24 October 2022, being the date at which this report is approved, there have been no changes in the composition

of the Board. Each member of the Board or Executive management (as deﬁned) has previously conﬁrmed to the Human Resources team

their gender and ethnic background and the above data has been collated from those records.

94 Softcat plc Annual Report and Accounts 2022

Inclusion

The Committee has also received brieﬁngs on the initiatives to

improve inclusion in the business and the Company employs a

dedicated manager to co-ordinate our diversity and inclusion

efforts. The brieﬁngs received by the Committee included not only

diversity regarding gender, but also on ethnicity, sexual orientation,

disability, social mobility and updates on various inclusion activities

such as supporting family wellbeing outside of work. More

information about diversity and inclusion in the business can

befound in the report on Social Value in this Annual Report

onpages 38 to 42.

Assessment of the independence of the

Non-Executive Directors

The Committee and the Board are satisﬁed that the external

commitments of the Company Chair and the other Non-Executive

Directors do not conﬂict with their duties and commitments as

Directors of the Company. Our Directors must:

•

report to the Board any material changes to their commitments;

•

notify the Company Secretary of actual or potential conﬂicts or a

change in circumstances relating to an existing authorisation; and

•

complete an annual conﬂicts questionnaire.

Any conﬂicts identiﬁed are considered and, as appropriate,

authorised by the Board. Each year the Committee reviews

theindependence of the Non-Executive Directors. All

Non-Executive Directors, excluding the Company Chair,

arecurrently considered independent.

Documents available for inspection

Non-Executive Directors are appointed for an initial three-year

term, extendable by a further two additional three-year terms.

Theletters of appointment for Non-Executive Directors and the

service contracts of the Executive Directors are available to

shareholders for inspection at the Company’s registered ofﬁce

during normal business hours. Letters of appointment and service

contracts will be available for inspection at the 2022 AGM.

The formal responsibilities of the Committee are set out in terms

ofreference. During the year the Committee reviewed an update

to the terms of reference, which was subsequently approved by

theBoard. The Committee’s terms of reference are available at

www.softcat.com/about-us/investor-centre/governance.

Karen Slatford

Chair of the Nomination Committee

24 October 2022

Corporate governance

95Annual Report and Accounts 2022 Softcat plc

Introduction

As Chair of the Sustainability Committee (the ‘Committee’), I am

pleased to present the Committee’s inaugural report, for the year

ended 31 July 2022. In March 2022, the Board delegated

authority to the Committee for the monitoring and oversight of

sustainability matters at Softcat. This is a vital function, requiring

speciﬁc dedication of time and effort at a Board level, and is a

further demonstration of the Board’s commitment to sustainability.

This report outlines the key responsibilities of the Committee

delegated to it by the Board, the work it has done over the 2022

ﬁnancial year and the focus of the Committee going forward.

Membership, Committee Chair

andoperationoftheCommittee

The Committee is made up of all of the Directors at Softcat. During

the year, our sustainability governance structure was developed to

better support the business and to clarify responsibilities. Graham

Charlton, the CFO, was originally appointed as Chair of the

Committee. However, following further review, the Committee

recommended in order to increase Board level oversight that a

Non-Executive Director should assume the responsibility. The

Board approved the Committee’s recommendation. As Designated

Non-Executive Director for Workforce Engagement, it is already

my role to monitor, communicate with and engage with one of our

key stakeholder groups, our employees. Our employees have an

important part to play in the sustainability strategy of Softcat, so the

Committee believed I should be appointed Chair as part of my

wider oversight of ESG matters. I am delighted to accept this role

and I would like to thank Graham for his part in establishing the

Committee and its main areas of focus.

Graham retains the Executive lead at Softcat for sustainability.

Wehave a dedicated internal resource for sustainability

atSoftcat,including our Sustainability Lead. The Business

Development Director, who is a member of the Senior Leadership

Team, also has sustainability in his brief. Both the Sustainability

Lead and the Business Development Director attend the meetings

of the Committee.

Attendance of the Sustainability Committee

Name Committee attendance 2022

V Murria

M Hellawell

G Watt

G Charlton

K Slatford

R Perriss

L Weedall

Total meetings held

Attended Did not attend n/a

1. Karen was unable to attend due to illness.

2. Lynne joined the Board in May 2022, after the Committee meeting had

taken place.

In March 2022, the Board delegated authority to

theCommittee for the monitoring and oversight of

sustainability matters at Softcat. This is a vital function,

requiring speciﬁc dedication of time and effort at a

Board level, and is a further demonstration of the

Board’s commitment to sustainability.”

Vin Murria

Chair of the Sustainability Committee

SUSTAINABILITY COMMITTEE REPORT

CORPORATE RESPONSIBILITY

Members

V Murria (Chair) K Slatford

M Hellawell R Perriss

G Watt L Weedall

G Charlton

Setting climate-related strategy: 22%

Reviewing climate-related

disclosures: 17%

Climate-related governance,

compliance and regulation: 44%

Monitoring climate-related

performance against strategy: 17%



Allocation of time

96 Softcat plc Annual Report and Accounts 2022

The Committee met once during the ﬁnancial year, with its

inaugural meeting in March 2022. However, two meetings each

year (March and September) are held. Meeting frequency will

bereviewed to ensure sufﬁcient oversight is maintained by the

Committee. Meetings are scheduled to generally take place on

the same day as the Board meeting to maximise the efﬁciency of

interaction with the Board. If needed, the Committee Chair will

report to the Board, as a separate agenda item, on the actions

taken by the Committee. The Company Secretary acts as Secretary

to the Committee, supported by the Company Secretarial Assistant.

The Committee’s key responsibilities

The key responsibilities of the Committee are:

•

setting the sustainability strategy of Softcat;

•

oversight and monitoring of the performance of the Company

against its sustainability-related goals and targets;

•

monitoring the effectiveness of management’s processes for

identifying and assessing climate-related risks and opportunities;

•

reviewing our formal public disclosures relating to sustainability; and

•

oversight of other areas of corporate social responsibility,

asrequested by the Board.

For more on the Committee’s responsibilities, the Committee’s

termsof reference are available on our website, at: www.softcat.

com/about-us/investor-centre/governance.

For further details on Softcat’s approach to sustainability, please

see pages 43 to 58 of this report and our website at www.softcat.

com/about-us/sustainability.

If any shareholders would like to raise any matters with me in

respect of the work of the Committee, I can be contacted via the

Company Secretary at cosec@softcat.com. I will also be happy

toanswer any questions about the work of the Committee at the

forthcoming AGM.

Vin Murria

Chair of the Sustainability Committee

24 October 2022

The Committee decided that Softcat’s response to climate

change, and our strategy for reducing our emissions, should

remain its primary focus. This is reﬂected in the following

areas covered during 2022:

•

establishing the primary areas of focus of the Committee

through a forward agenda and formal terms of reference;

•

monitoring the Company’s progress against its climate-

related targets and goals, and the appropriateness of these;

•

overseeing management’s progression on the Task Force

on Climate-related Financial Disclosures (‘TCFD’)

compliance and development of internal processes.

Thisincluded the creation of new climate-related risk

andopportunities registers, informed through a climate

scenario risk assessment, and consideration of the steps

needed to integrate climate-related risks into Softcat’s

day-to-day risk management framework;

•

review of sustainability-related disclosures, including the

regulatory emissions disclosures;

•

considering management’s plan to take advantage of

climate-related opportunities and integrate these into

Softcat’s strategy, such as through Softcat’s Enexo

platform (see page 55 for more details); and

•

horizon scanning for future compliance regulations,

obligations and best practice trends.

Areas of focus in 2022 included:

We expect that the focus of the Committee will remain

onclimate change related matters in 2023. However, this

will be kept under review and will be amended, where

necessary, to include other areas of corporate responsibility

to ensure the Committee retains adequate oversight of

matters which are important to Softcat and its stakeholders.

Ianticipate in 2023 the Committee will focus on:

•

progress against our key sustainability targets;

•

further integration of Softcat’s sustainability strategy

intoits overall strategy;

•

oversight of the next stages for the development of our

Enexo platform;

•

the progression of outputs from an ESG materiality

assessment performed in 2022;

•

monitoring preparedness for full compliance with

TCFD;and

•

reviewing Softcat’s level of readiness and approach

forforthcoming disclosure standards, such as the

International Sustainability Standards Board’s

disclosurestandards.

Areas of focus in 2023:

Corporate governance

97Annual Report and Accounts 2022 Softcat plc

Dear shareholder

I am very pleased to present this report as Chair of Softcat’s

Remuneration Committee (the ‘Committee’). This is my ﬁrst report

onremuneration since I joined the Board of Softcat in May 2022.

I would like to thank Karen Slatford, who stepped down as

Committee Chair, for chairing the Committee so effectively and for

her help whilst I transitioned into this role. I would like to thank the

other Committee members for their support and contributions this year.

Business performance

The Company continued to perform well during the year.

Therewas double-digit growth in gross proﬁt and operating

proﬁt.Operational performance was also excellent and we have

continued to invest for future growth. You will see our performance

and progress explained in more detail inthe Strategic Report but

Iwould like to pick out some key achievements, which are a

continuing credit to the business anditsleadership:

• Revenue growth: 37%

• Gross proﬁt growth: 18%

• Operating proﬁt growth: 14%

• Employee engagement: 90%

• Customer satisfaction: 94%

In addition to strong ﬁnancial performance, good employee

engagement and customer satisfaction are vital to Softcat. This is

closely aligned to our strategy to acquire more customers and to

sell more to existing customers. It also encapsulates our corporate

purpose: “to help customers use technology to succeed, by putting

our employees ﬁrst”. We can preserve our competitive edge by

having happy employees and satisﬁed customers and this is reﬂected

in our approach to remuneration for the Executive Directors.

Furtherdetails on our key performance indicators (‘KPIs’) and

theimportance of each KPI can be found on pages 30 and 31.

Members

L Weedall (Chair)

K Slatford

R Perriss

V Murria

Attendance of the Remuneration Committee

Name Committee attendance 2022

L Weedall

K Slatford

V Murria

R Perriss

Total meetings held

Attended Did not attend n/a

1. Lynne joined the Board in May 2022 and attended allCommittee meetings

during the ﬁnancial year afterherappointment.

The Committee concluded that the existing

Remuneration Policy was broadly ﬁt for purpose,

operated well with sufﬁcient ﬂexibility for future growth

and was aligned to Softcat’s strategy… the changes

proposed to the Policy are relatively minor…”

Lynne Weedall

Chair of the Remuneration Committee

Workforce remuneration and

conditions: 33%

Executive remuneration: 21%

Remuneration market practice and

developments: 21%

Corporate governance: 25%



Allocation of time

REMUNERATION COMMITTEE REPORT

LETTER FROM THE CHAIR OF THE

REMUNERATION COMMITTEE

Corporate governance

98 Softcat plc Annual Report and Accounts 2022

Proposed Remuneration Policy (the ‘Policy’)

A revised proposed Policy will be put to shareholders for binding

approval at the Annual General Meeting (‘AGM’) to be held in

December 2022. Our current Policy was approved by shareholders

at the 2019 AGM with a vote of 98.6%, which is a high level of

support. Our current Policy had already incorporated the

recommendations and good points of practice set out in the 2018

UK Corporate Governance Code (the ‘Code’). The Committee

wishes to ensure that any changes do not move the Policy

signiﬁcantly away from one which has gained such widespread

support from shareholders. During the year, the Committee

reviewed the current Policy and considered in advance the

approach it would adopt. The key components were:

• a further review of how well the Policy was aligned to the UK

Corporate Governance Code and any recent changes in

good remuneration practice;

• the ongoing growth of the Company, particularly as Softcat

matures from when it listed on the London Stock Exchange

in2015;

• how well the Policy aligns with Company strategy;

• whether the Policy continues to effectively attract, retain and

motivate executive talent; and

• the high level of shareholder support for the current Policy.

The above parameters allowed the Committee to ensure that any

changes were considered holistically and a comprehensive review

was undertaken. Following review, the Committee concluded that

the existing Policy was broadly ﬁt for purpose, operated well with

sufﬁcient ﬂexibility for future growth and was aligned to Softcat’s

strategy. The Committee also concluded that the Policy was

generally aligned well to the UK Corporate Governance Code

and to the expectations of most investors. That being the case, the

changes proposed to the Policy are relatively minor and designed

to further increase the alignment of the Policy to the UK Corporate

Governance Code and to reﬂect current market practice. Key

changes proposed are:

• we will increase the post-cessation shareholding requirement to

100% of the in-role requirement for two years post-cessation.

The current Policy provides for a post-cessation holding

requirement of 100% in year one and then 50% in year two;

• we will make minor amendments to the Policy (and any

associated Plan Rules in respect of the LTIP and the annual

bonus plan) to extend the malus and clawback event triggers

tofully align it to recent guidance issued by the UK Financial

Reporting Council (‘FRC’). Malus and clawback triggers will

beextended to include events relating to corporate failure;

• in respect of awards under our Long Term Incentive Plan (‘LTIP’),

minor amendments will be made to further clarify the minimum

weighting of ﬁnancial metrics and applicable measures; and

• the Company has recently introduced a salary sacriﬁce

programme for employees (which would result in a beneﬁt in

kind arising) which allows the leasing of electric vehicles for

employees’ personal and business use, commuting, etc. Given

this aligns well with our objectives to reduce environmental

impact, the Committee plans to make this programme available

for all Directors, including Non-Executive Directors. The Policy

will be amendedaccordingly.

The Committee believes that the proposed minor amendments to

the Policy ensures that our remuneration arrangements remain ﬁt for

purpose and maintains strong alignment of shareholders and our

management team as they strive to continue driving the business

forward. We have consulted with our largest shareholders and

with certain proxy advisory agencies and obtained signiﬁcant

shareholder support in respect of our proposed Remuneration

Policy. I trust that we will have your support on the shareholder

resolution at our 2022 AGM.

Remuneration outcomes during the year

Our Board succession plans for 2023 are covered elsewhere in

this Annual Report. From a remuneration perspective, both our

current and proposed Remuneration Policies provide an effective

framework for the Board changes and for orderly succession

plansgenerally.

During the year, the Board/relevant Board Committee regularly

reviewed Softcat’s ﬁnancial and operational performance.

Weconﬁrmed in trading updates during the year that:

• the Company performed well during the year and has once

again delivered double-digit year-on-year growth in gross

invoiced income, gross proﬁt and operating proﬁt. Proﬁt growth

was ahead ofexpectations;

• investment in our growth strategy has continued, including

strong increases in headcount; and

• employees had responded well following the removal of

certain COVID-19 restrictions. The Company had reverted to

ahybrid working policy and our employees were enjoying

being back together in the ofﬁce. Following an employee

engagement survey, our employee net promoter score

remained at the consistently high levels. Softcat was ranked

third for wellbeing by the Great Place to Work Institute.

Corporate governance

99Annual Report and Accounts 2022 Softcat plc

REMUNERATION COMMITTEE REPORT CONTINUED

LETTER FROM THE CHAIR OF THE REMUNERATION COMMITTEE CONTINUED

October 2021

• Review of Remuneration Policy

• Review and approval of the 2021 Remuneration Report

• Update on gender pay gap and ethnic pay gap

performance and reporting

• Consideration and approval of grants of LTIPs to Executive

Directors for FY2022 and other share-based awards to

senior managers below Board level

• Review and determination of vesting outcomes for LTIPs

granted in 2018

• Review of impact of share-based awards on

shareholderdilution

• Review and approval of the annual bonuses awarded

toExecutive Directors and Senior Leadership Team (‘SLT’)

members for FY2021

• Consideration of the annual bonus arrangements for

theExecutive Directors and SLT members for FY2022

• Review of achievement against share ownership targets

forthe Executive Directors

May 2022

• Review and discussion on remuneration benchmarking

forthe SLT

• Review of fees for Non-Executive Directors and the Chair

and associated market practice

• Update on workforce pay and conditions and discussion

ofCompany-wide pay review

• Interim update report on performance of annual bonus plan

and outstanding LTIPs

• Discussion of executive remuneration and approval of

changes for FY2022

• Review of Remuneration Policy to be proposed at the AGM

in 2022

July 2022 (two meetings)

• Review of remuneration aspects of proposed changes

ontheBoard (retirement and appointment of the CEO

andof the Chair)

• Assessment against customer satisfaction and employee

engagement actions which form part of the FY2022 annual

bonus plan for the CEO and CFO

• Update on workforce remuneration, including salary reviews

and bonuses below Board level

• Consideration of proposed approach and timing in respect

of annual bonus and LTIP awards for FY2022

• Update on Remuneration Policy to be proposed at the AGM

in 2022

• Review of remuneration trends and remuneration-related

corporate governance developments for listed companies

• Discussion on all-employee share schemes

Regular or standing items at each Committee

meeting include:

• Approval of previous Committee meeting minutes and

review of follow-up on outstanding actions

• Governance updates for Committee discussion or approval

• Review of and updates to the Committee’s terms of reference

• Review of the outcomes of shareholder voting on the

Remuneration Report

The Company Secretary also prepares a twelve-month rolling

plan for the Committee so that matters can be planned and

considered over the longer term.

Main activities during FY2022

Remuneration outcomes during the year continued

The Board/relevant Board Committee also regularly reviewed key

areas of employee/customer engagement, including:

• the outcomes of our annual customer experience survey and

our employee engagement survey, together with actions to

further maintain engagement;

• a quarterly survey from managers in respect of each member of

the SLT and the key operational functions in the business; and

• workforce engagement sessions.

The strong ﬁnancial performance and maintenance of excellent

relations with employees and customers are reﬂected in a strong

achievement of many of the Company’s KPIs (outlined on pages

30 and 31) and resulted in the following for the annual bonus plan

for FY2022:

• ﬁnancial metrics (operating proﬁt) account for 80% of the

annualbonus for FY2022. Operating proﬁt achieved exceeded

themaximum target set by the Committee, leading to 100%

ofthe maximum annual bonus being earned by the Executive

Directors; and

• non-ﬁnancial metrics account for 20% of the annual bonus for

FY2022 and the focus for FY2022 was on customer and

employee satisfaction. The Committee assessed actions taken

by management during the year and on the consistently high

overall satisfaction/engagement scores. Following review, the

Committee concluded that 80% of the maximum annual bonus

had been achieved by the Executive Directors.

Good performance has been sustained and during the ﬁnancial

year the LTIP awards granted in November 2018 to Graham

Charlton and to Graeme Watt vested. The Committee assessed the

vesting outcomes for the LTIPs and concluded that maximum metrics

of total shareholder return (‘TSR’) and earnings per share (‘EPS’)

had been attained. The LTIP awards therefore vested in full.

100 Softcat plc Annual Report and Accounts 2022

During the year the Committee concluded that all long-term

incentive and annual bonus outcomes were appropriate and no

discretion was exercised to amend any remuneration outcomes for

the Executive Directors. This conclusion was reached after taking

into account relevant matters, such as the performance of the

business and the alignment between the Executive Directors and

the wider workforce in respect of annual variable pay for the year.

In particular the Committee carefully reviewed the outcomes in light

of share price performance in the year, noting the fall from an

historic high point earlier in the ﬁnancial year. It is the Committee’s

view that this reduction in share price is primarily due to the

changing valuation of technology stocks in the market and not due

to any management action. The Committee ﬁrmly believes that the

ﬁnancial and operational performance delivered in the year, as

well as the overall investor experience over a number of years,

represent exceptional management performance and therefore

that the proposed incentive outcomes are appropriate.

In respect of LTIPs, the Committee approved a grant in respect of

FY2023 to the Executive Directors (see page 107). The Committee

considered the fall in the Company’s share price as noted above

and for the same reasons concluded that it would not be

appropriate to reduce the usual award of 150% of salary, but it will

review at vest whether there have been any windfall gains. The

LTIPs granted in 2019 are due to vest in late 2022. Based on

current performance, I would expect the LTIPs, when they vest, to

exceed the threshold performance conditions (EPS and TSR), which

were set and announced at the time of grant. In respect of all LTIPs,

the Committee will as usual determine the extent to which the

performance conditions have been met, along with any other

relevant matter, before formally concluding on the vesting outcome.

Changes in executive remuneration for FY2023

As can be seen from the activities during 2022, the Committee

reviewed executive remuneration and agreed the implementation

of the changes below, all of which are within our existing and

proposed Remuneration Policies. Further details are provided in

theAnnual Report on Remuneration.

Each year management consider whether to award rises in basic

pay across the workforce, in order to maintain the competitiveness

ofour rewards. We reviewed market practice and discussed with

management about the pay and conditions across the Company.

The Committee agreed a rise of 5% for each of the CEO and CFO,

which was in line with the standard pay rises but lower than rises

for many employees in Sales and other roles.

In July 2022, Softcat announced changes to the Board which will

take place in August 2023. This included the retirement of Graeme

Watt as CEO, at which time he will succeed Martin Hellawell as

Non-Executive Chair. The Remuneration Committee conﬁrmed that

Graeme will be treated as a good leaver and further details on the

speciﬁc treatment of his remuneration in respect of his forthcoming

retirement as CEO are contained on page 108 of the Annual

Report on Remuneration. In addition we announced that Graham

Charlton will be promoted to CEO, effective 1 August 2023.

TheRemuneration Committee will determine Graham’s salary

onappointment at that time.

Wider workforce context

Having a dedicated and passionate team and providing excellent

customer service is core to what we do at Softcat and this helps to

drive our exceptional performance. We believe it is right to

recognise and reward our employees through fair remuneration.

We also believe it is important to understand the views of

employees over a wide range of issues, including remuneration.

We continued to receive regular updates on remuneration across

the workforce to ensure the Committee’s deliberations were well

informed. This included actions taken by management to ensure

our rewards remained competitive and additional considerations

by management on the challenges facing many people on the cost

of living crisis. The Committee was pleased to hear of the steps

taken by management to address both points. Please see page 35

for a case study on how management approached pay reviews

for employees this year.

We have taken the opportunity to engage directly with employees

over a number of matters, including on our approach to executive

remuneration. Please see page 111 for more details.

What we have done during the year

The calendar activities (see page 100) summarise the areas of

focus and actions for the Committee during the 2022 ﬁnancial

year, all of which were within the framework of the current

Remuneration Policy.

In conclusion

The Committee has been focused on ensuring that our remuneration

arrangements remain ﬁt for purpose for the future and aimed at

ensuring alignment of both shareholders and our management

team as they strive to continue driving the business forward.

Wehave consulted with our largest shareholders and with certain

proxy advisory agencies and obtained signiﬁcant shareholder

support in respect of the key elements of our proposed

Remuneration Policy.

The Annual Report on Remuneration (pages 105 to 112) together

with this letter will be subject to an advisory shareholder vote at the

forthcoming AGM on13 December 2022. The revised Remuneration

Policy (pages 113 to 127) will be subject to a binding vote at the

AGM. I trust that we will have your support on the resolutions at

our AGM. If shareholders do wish to discuss any issues about

executive remuneration, I can be contacted via the Company

Secretary at cosec@softcat.com.

Lynne Weedall

Chair of the Remuneration Committee

24 October 2022

Notes:

This report has been prepared in accordance with Schedule 8 to the Large and

Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 as

amended and the provisions of the current Corporate Governance Code and the Listing

Rules. The report consists of three sections:

• the Annual Statement by the Remuneration Committee Chair;

• the Annual Report on Remuneration, incorporating:

– an ‘at a glance’ section summarising our Remuneration Policy;

– details of payments made to the Directors and details of the link between

Company performance and remuneration for the 2022 ﬁnancial year; and

• the Directors’ Remuneration Policy.

The Chair’s Annual Statement and the Annual Report on Remuneration will be subject to

anadvisory shareholder vote at the AGM to be held on 13 December 2022 (‘AGM’).

TheDirectors’ Remuneration Policy will be subject to a binding shareholder vote at the AGM.

If approved, the Policy will formally supersede the previous Policy with immediate effect.

Corporate governance

101Annual Report and Accounts 2022 Softcat plc

Introduction

In this section, we set out a summary of our performance and remuneration outcomes for the 2022 ﬁnancial year

and a summary of how we intend to implement our proposed Remuneration Policy for the 2023 ﬁnancial year.

Asstated in the letter from the Chair of the Remuneration Committee, we are proposing to make minimal changes

toour current Remuneration Policy. Our proposed Remuneration Policy is included in full in Part C (pages 113 to

127).

How we performed during the 2022 ﬁnancial year (‘FY2022’) (audited)

In respect of FY2022, the bonus awards payable to Executive Directors were agreed by the Committee having carefully reviewed:

• Financial performance (80% weighting): the Committee considered the Company’s year-end results and any relevant associated

factors in respect of underlying performance.

• Non-ﬁnancial performance (20% weighting): the Committee considered progress against key actions in respect of employee

engagement and customer satisfaction and noted the ongoing strong overall engagement/satisfaction scores.

The performance measures and targets under the Annual and Deferred Bonus Plan for FY2022 and the extent to which they were satisﬁed

are set out below:

Performance condition Weighting Threshold Target Maximum Actual

Actual as

a % of

maximum

opportunity

Annual bonus payout

Graeme

Watt

Graham

Charlton

Operating proﬁt 80% £108.1m £120.1m £132.1m £136.1m 100% £630,175 £420,117

Employee engagement and

customer satisfaction 20% See below 80% £126,035 £84,023

Overall outcome 96% £756,210 £504,140

Employee engagement and customer satisfaction

Priorities Achievements and outcome

Employee engagement

Maintain focus on employee engagement

• Management sought regular employee feedback with1x annual engagement survey,

4x quarterly management surveys and 2x employee pulse surveys conducted during

FY2022. The results of each survey were discussed with the Board/the Nomination

Committee, together with management’s plans which addressed all areas of concern.

• A 13-point action plan was created and followed up from the annual survey results.

• Overall employee engagement achieved remained high at 90%.

• Our employee net promoter score achieved is +52 which is excellent and above

market norms.

• Excellent external rankings for workplace environment: 8th place in the Great Place to

Work/Best Workplaces – Super Large category; 4th place in the UK’s Best Workplaces

for Women 2022 – Super Large category; Glassdoor Excellence in Employee

Wellbeing Award; CRN’s Best Company to Work for – £101m+ category.

Improve feedback relating to ﬂexible working

andpay

• Management focused on the approach to hybrid working, particularly on employees

maintaining strong connections with their colleagues and preserving our unique culture,

which is a vital differentiator for our success. Target of80% satisfaction rate was

overachieved with a result of 85%.

• Following a detailed review of pay in the workforce, pay rises considerably higher than

inprevious years were announced by the CEO and CFO for many roles. This received

favourable feedback from employees. Employee attrition levels are being monitored

andhave reduced.

PART A  AT A GLANCE

REMUNERATION COMMITTEE REPORT CONTINUED

102 Softcat plc Annual Report and Accounts 2022

Priorities Achievements and outcome

Customer satisfaction

Continued attention on customer excellence

• Management implemented its most extensive ever annual customer experience survey

(1,870 respondents in FY2022, compared to 1,248 in FY2021) to engage with more of

our customers than ever before.

• Strong and consistent levels of customersatisfaction achieved at 94%.

• Our customer net promoter score achieved is +55 which is excellent and above

marketnorms.

• A detailed improvement action plan arising from the FY2021 survey was discussed

withthe Board and then implemented. An action plan arising from the FY2022 survey

isunderway.

• An internal training programme (the Voice of the Customer) was developed and rolled

out to improve customer insights into their wants and needs. This enhances a key part of

our strategy to sell more to existing customers.

Prioritise improvements in customer experience

• Deep dives undertaken to further understand customer feedback and expectations

oneCat (our portal for customers to place orders, which accounts for a signiﬁcant

number of customer transactions). Tools were rolled out forcustomer feedback to be

received in real time, to more promptly respond to customer needs and make faster

improvements to the portal. Management gave a demonstration of eCat to the Board,

which showcased improvements made to enhance the user experience.

• Key areas of improvement in our customer Managed Services offering were identiﬁed

and implemented. This has already resulted in improvements in associated customer

satisfaction scores.

• Refresher training successfully rolled out and undertaken by over 99% of employees

onuse of the corporate phone system, toimprove the customer experience when

theycall Softcat.

• Revised customer excellence training programme rolled out to ensure we maintain

ahigh level of customer experience at each stage of the customer journey.

No discretion was exercised by the Committee in relation to the outcome of the annual bonus awards. In respect of the bonus payout up

to 100% of salary, two-thirds will be paid in cash and one-third will be paid by way of deferred shares. In respect of the bonus payout

above 100% of salary, all of this shall be by way of deferred shares.

Long-term incentives awarded in FY2022 (audited)

On 30 November 2021 the following annual awards of nil-cost options under the Company’s Long Term Incentive Plan (‘LTIP’) were

made to the CEO and CFO:

Executive Director

LTIP award

(% of salary)

LTIP award

(shares) Award date Share price

Graeme Watt 15 0 42,282 30/11/21 £18.63

Graham Charlton 15 0 28,188 30/11/21 £18.63

Note:

1. The share price used to determine the award was calculated by reference to the prevailing market price of an ordinary share on the business day prior to the award.

50% of the award will be subject to the Company’s relative TSR performance against the FTSE 250 (excluding real estate and investment

trusts) over a three-year performance period and the remaining 50% will be subject to adjusted EPS targets at the end of the period. Further

details are on page 106.

Corporate governance

103Annual Report and Accounts 2022 Softcat plc

Single ﬁgure remuneration for our Executive Directors

The table below sets out the single total ﬁgure of remuneration and breakdown for each Executive Director in respect of FY2022.

Salary

Taxable

beneﬁt Pension

Total

ﬁxed Bonus

LTIP

Total

variable Total

Graeme Watt (CEO)

£525,146 £4,604 £26,257 £556,007 £756,210 £1,554,917 £2,311,917 £2,867,134

Graham Charlton (CFO)

£350,097 £4,604 £23,236 £377,937 £504,140 £1,036,592 £1,540,732 £1,918,669

Notes:

1. In respect of performance up 100% of salary, two-thirds of the annual bonus earned will be paid in cash and one-third will be deferred into shares (by way of nil-cost options).

Inrespect of performance above 100% of salary, all of the annual bonus earned will be deferred into shares (by way of nil-cost options).

2. LTIP awards made on 21 November 2018 to Graham Charlton and to Graeme Watt vested during FY2022. The award was calculated by reference to a share price of £6.00, which

was the prevailing market price of an ordinary share on the business day preceding the grant. Details of the performance condition (relative TSR and EPS targets) were disclosed in an

announcement to the London Stock Exchange at the time of grant.

3. As a result of full achievement of the performance criteria, nil-cost options over 75,000 shares vested and were subsequently exercised by Graeme during FY2022. The share price

atthe date of vesting (22 November 2021, being the next business day following the third anniversary of the grant) was £19.22 and the LTIP value shown above reﬂects this. The total

value shown above comprises £1,441,500 (the value of the award at vesting) plus a dividend equivalent of £113,417. The value of the LTIP that is attributable to share price

appreciation between grant and vest is £991,500.

4. As a result of full achievement of the performance criteria, nil-cost options over 50,000 shares vested and were subsequently exercised by Graham during FY2022. The share price

atthe date of vesting (22 November 2021, being the next business day following the third anniversary of the grant) was £19.22 and the LTIP value shown above reﬂects this. The total

value shown above comprises £961,000 (the value of the award at vesting) plus a dividend equivalent of £75,592. The value of the LTIP that is attributable to share price appreciation

between grant and vest is £661,000.

Summary of implementation of Policy for 2022/23

A full statement of implementation can be found on page 112. In summary only limited changes are being proposed.

There have been no changes to incentive quantum for either Executive Director, with minor changes to measures:

• For the Annual Bonus, the measures remain 80% based on Operating Proﬁt and 20% based on ESG. The assessment of ESG for

2022/23 will incorporate sustainability in addition to employee and customer objectives.

• For the LTIP, metrics in respect of EPS and TSR will be retained. Following review by the Committee, the weighting between TSR and

EPS in respect of the award to Executive Directors in FY2023 will be slightly changed to 60% EPS and 40% TSR (FY2022 grant 50%

EPS and 50% TSR). The Committee believes this change will further encourage the Executive Directors to focus on the achievement of

superior earnings over the longer term. The EPS targets in respect of the FY2023 grant take into account the announcement by the

Government in October 2022 which conﬁrmed that there will be an increase in corporation tax to 25% from April 2023. The

Committee will consider using its discretion to adjust the EPS targets if there is a further change in the rate of corporation tax.

During the year, the Committee was briefed on the pay reviews and on proposed average increases for the general workforce. In respect

of the Executive Directors, the Committee agreed an increase of 5% in the basic pay for the Executive Directors with effect from 1 August

2022. This level reﬂects a standard pay rise for employees, but is below the level of pay rise received for much of the workforce.

In respect of the Company’s Chair, the Committee conducted a market review which concluded that the Chair’s fee was materially below

the lower quartile for the FTSE 250. Given the evolution and growth of Softcat as well as the high level of contribution and effectiveness of

the Chair, the Committee approved an increase in the Chair’s fee to £200,000 with effect from 1 August 2022. The Committee noted that

this places the Chair’s fee slightly above the FTSE 250 lower quartile benchmark but still considerably below the median benchmark,

despite Softcat being one of the largest companies within the FTSE 250.

The Board (excluding the Non-Executive Directors) is responsible for determining the fees payable to the Non-Executive Directors (‘NED’).

Effective 1 August 2022 fee increases were approved in order to better reﬂect the time commitment and market rate for these roles.

Further details are provided on page 112.

REMUNERATION COMMITTEE REPORT CONTINUED

PART A  AT A GLANCE CONTINUED

104 Softcat plc Annual Report and Accounts 2022

Single total ﬁgure of remuneration (audited)

Executive Directors (audited)

The table below sets out the single total ﬁgure of remuneration and breakdown for each Executive Director in respect of FY2022

andFY2021.

Salary

Taxable

beneﬁts

1,4

Pension

1,2

Total ﬁxed Bonus

3,5

LTIP

Total variable Total

2022

£’000

2 021

£’000

2022

£’000

2 021

£’000

2022

£’000

2 021

£’000

2022

£’000

2 021

£’000

2022

£’000

2 021

£’000

2022

£’000

2 021

£’000

2022

£’000

2 021

£’000

2022

£’000

2 021

£’000

Graeme Watt (CEO)

525.1 477.4 4.6 4.1 26.3 23.9 556.0 505.4 756.7 716.1 1,554.9 1,366.6 2,311.6 2,082.7 2,867.1 2,588.1

Graham Charlton (CFO)

350.1 318.3 4.6 4.1 23.2 15.9 377.9 338.3 504.1 477.4 1,036.6 923.2 1,540.7 1,400.6 1,918.6 1,738.9

Notes:

1. Fixed pay consists of salary, taxable beneﬁts and pensions as set out above.

2. Graham Charlton receives 5% in pension contribution/cash allowance in line with employees; during FY2022 an overpayment exceeded this value against his FY2022 salary by

£5,731. For FY2023 his pension contribution/cash allowance will be adjusted to correct this and ensure that over FY2022 and FY2023 this meets 5% of his salary during those periods.

3. Variable pay consists of bonus and LTIP as set out above. Further details on the LTIPs which vested and were exercised by Graham and by Graeme during the year are provided in the

section ‘Single ﬁgure remuneration for our Executive Directors’ above.

4. See section below setting out details of the beneﬁts provided.

5. Details of the bonus targets, their level of satisfaction and the resulting bonus earned in FY2022 are set out on page 102 to 103.

Non-Executive Directors (audited)

The table below sets out the single total ﬁgure of remuneration and breakdown for each Non-Executive Director.

Non-Executive Director 2021 fees 2022 fees Roles

Martin Hellawell

£157,944 £162,903 Non-Executive Chair

Karen Slatford

£71,301 £78,819 Senior Independent Director and Chair of the Nomination Committee

Vin Murria

£68,525 £63,759 Independent Non-Executive Director, Designated Director for

Workforce Engagement and Chair of the Sustainability Committee

Lynne Weedall

— £15,698 Independent Non-Executive Director and Chair of the Remuneration Committee

Robyn Perriss £61,902 £63,759

Independent Non-Executive Director and Chair of the Audit Committee

Notes:

1. As previously reported, the Remuneration Committee exercised its discretion to allow Martin to continue to receive his health beneﬁts as Chair. The cost of providing this cover during

FY2022 and other P11D beneﬁts was £3,768 (2021: £3,444) and is included in the ﬁgure for Martin’s fees above.

2. In respect of 2021, the fees for Karen Slatford are pro-rated with effect from the respective date of appointment as Chair of the Nomination Committee. In respect of 2022 the fees for

Karen are pro-rated with effect from the respective date she stepped down as Chair of the Remuneration Committee.

3. In respect of 2021, the fees for Vin Murria are pro-rated with effect from the respective date she stepped down as Chair of the Nomination Committee.

4. Lynne joined the Board in May 2022.

Taxable beneﬁts

Beneﬁts in the year for the Executive Directors comprised health beneﬁts such as private health insurance, health cash plan, critical illness,

income protection, dental and life cover. Figures are reported where appropriate.

PART B  ANNUAL REPORT

ONREMUNERATION

Corporate governance

105Annual Report and Accounts 2022 Softcat plc

2022 annual bonus outcomes

In respect of 2022, the bonus awards payable to Executive Directors were agreed by the Committee, having carefully reviewed:

• Financial performance (80% weighting): the Committee considered the Company’s year-end results and any relevant associated

factors in respect of underlying performance.

• Non-ﬁnancial performance (20% weighting): the Committee considered progress against key actions in respect of employee

engagement and customer satisfaction and noted the ongoing strong overall engagement/satisfaction scores.

The annual bonus structure operating for 2023 is explained on pages 104 and 112.

Details of the targets used to determine bonuses in respect of FY2022 and the extent to which they were satisﬁed are shown on pages

102 to 103. These ﬁgures are included in the single ﬁgure table.

Long-term incentives awarded and vested

Awarded in FY2022 (audited)

On 30 November 2021 the following annual awards of nil-cost options under the Company’s Long Term Incentive Plan (‘LTIP’) were

made to the CEO and CFO:

Executive Director

LTIP award

(% of salary)

LTIP award

(shares) Award date Share price

Graeme Watt 15 0 42,282 30/11/21 £18.63

Graham Charlton 15 0 28,188 30/11/21 £18.63

Note:

1. The share price used to determine the award was calculated by reference to the prevailing market price of an ordinary share on the business day prior to the award.

50% of the award is subject to the Company’s relative TSR performance against the FTSE 250 (excluding real estate and investment trusts)

over a three-year performance period to the end of FY24 and the remaining 50% subject to adjusted EPS targets at the end of the period.

These conditions are set out below:

Measure Weighting Details

Adjusted EPS 50% • Nil vesting of this element for adjusted EPS at end of performance

period of less than 49.5p

• 20% vesting (threshold) for achieving 49.5p

• 67% vesting for achieving 53.8p

• Full vesting for achieving 59.4p or above

• Straight-line vesting between 20% and 67% and between 67% and

full vesting

Relative TSR – assessed against the constituents of

the FTSE 250 (excluding real estate and equity

investment trusts)

50%

• Nil vesting for below median performance against the comparators

• 30% vesting (threshold) for median performance

• Full vesting for upper quartile performance

• Straight-line vesting between threshold and full vesting

The EPS targets were set following the end of the 2021 ﬁnancial year based on an assessment of the business and were included in the

2021 Annual Report on Remuneration. The adjusted basic earnings per share for the purposes of the LTIP performance measure is

calculated as basic earnings per share in accordance with IAS 33, adjusted for exceptional items as determined by the Committee.

REMUNERATION COMMITTEE REPORT CONTINUED

PART B  ANNUAL REPORT ONREMUNERATION CONTINUED

106 Softcat plc Annual Report and Accounts 2022

Vested in FY2022 (audited)

Awards under the Company’s LTIP granted in November 2018 to Graham Charlton and to Graeme Watt vested and were exercised by

Graham and Graeme in FY2022. Options over 50,000 shares were granted to Graham and options over 75,000 shares were granted

to Graeme. Vesting of the awards was subject to the following performance conditions (which were disclosed at the time of grant):

Measure Weighting Details

Adjusted EPS 50% • No vesting of this element for adjusted EPS at end of performance

period of below 29.3p

• 20% vesting (threshold) for achieving 29.3p

• Full vesting for achieving 35.7p or above

• Straight-line vesting between threshold and full vesting

Relative TSR – assessed against the constituents

of the FTSE 250 (excluding real estate and

equityinvestment trusts)

50%

• No vesting for below median performance against the comparators

• 30% vesting (threshold) for median performance

• Full vesting for upper quartile performance

• Straight-line vesting between threshold and full vesting

EPS for FY2021 was 48.4p per share and upper quartile performance was achieved in respect of the TSR. Following formal review by the

Committee, the Committee conﬁrmed that full vesting had been achieved in respect of both EPS and TSR. Further details on the LTIPs which

vested are provided in the tables in respect of single ﬁgure remuneration.

To be awarded in FY2023

Vesting of the awards will be subject to the following performance conditions:

Measure Weighting Details

Adjusted EPS 60% • No vesting of this element for adjusted EPS at end of performance

period of below 55.8p

• 20% vesting of this element for adjusted EPS at end of performance

period of 55.8p

• 67% vesting of this element for adjusted EPS at end of performance

period of 59.6p

• Full vesting for 67.0p

• Straight-line vesting between 20% and 67% and between 67%

andfull vesting

Relative TSR – assessed against the constituents of

the FTSE 250 (excluding real estate and equity

investment trusts)

40%

• No vesting for below median performance against the comparators

• 30% vesting (threshold) for median performance

• Full vesting for upper quartile performance

• Straight-line vesting between threshold and full vesting

Pension entitlements (audited)

The Company operates a deﬁned contribution pension scheme which the Executive Directors can participate in, or they can take a cash

supplement in lieu of pension.

In FY2022, both Graham Charlton and Graeme Watt were entitled to 5% of salary either as an employer pension contribution into the

deﬁned contribution scheme or as a pension cash allowance. This is in line with employer pension contributions available for the general

workforce.

None of the Directors receive an entitlement under a deﬁned beneﬁt plan.

Share Incentive Plan (‘SIP’)

There were no free shares awarded in FY2022 (FY2021: nil). Free shares were awarded under the SIP on 11 December 2015, and became

free of any restrictions on the ﬁfth anniversary following the award. Graham was awarded 301 free shares in 2015, which he retained.

The Executive Directors have an entitlement to purchase partnership shares under the SIP. Graham Charlton and Graeme Watt purchased

121 and 124 partnership shares respectively during the year. The total SIP holdings are provided on page 108 as part of the Directors’

share interests table.

Corporate governance

107Annual Report and Accounts 2022 Softcat plc

Payments to past Directors/payments for loss of ofﬁce (audited)

There were no payments for loss of ofﬁce made to Directors in the year.

In July 2022, Softcat announced changes to the Board which will take place in August 2023. This included the retirement of Graeme Watt

as CEO, at which time he will succeed Martin Hellawell as the Non-Executive Chair. The Committee has conﬁrmed that Graeme will be

treated as a good leaver under the terms of the Remuneration Policy and associated plan rules. All remuneration terms and payments are

in line with both the current and the proposed Remuneration Policy. Below are the key elements of Graeme’s remuneration arrangements

in respect of his retirement as CEO:

• Loss of ofﬁce: on stepping down as CEO, Graeme will receive no termination payments from the Company.

• Base pay: this will be paid until the date of retirement. Graeme’s service agreement provides for twelve months’ notice, which will be

deemed as served.

• Pension contributions or allowance: this will be paid until the date of retirement.

• Existing LTIPs: these will pro-rated from the date of grant to the date of retirement. They will vest on the original vesting dates and be

subject to applicable performance conditions.

• Grant of LTIPs expected in November 2022: Graeme will be eligible to participate in this grant. The LTIP will be pro-rated as per the above.

• Deferred bonus shares: these will vest in full on their original respective vesting dates. Deferred awards are not subject to performanceconditions.

• Annual bonus plan: full participation in the FY2022 and FY2023 annual bonus plans.

• Beneﬁts: the Committee has exercised its discretion and permitted Graeme to retain whilst he is Chair the following beneﬁts currentlybeing

provided to him: life assurance, private medical insurance, health cash plan, dental plan, income protection and critical illness cover.

Statement of Directors’ shareholding and share interests (audited)

Director

Shareholding

requirement

(% of salary)

Current

shareholding

(% of salary)

Beneﬁcially

owned

Other shares held Options

Shareholding

requirement

met?

LTIP interests

subject to

performance

conditions

Deferred

shares not

subject to

performance

conditions

Vested and

unexercised Unvested Exercised

Executive Directors

Graeme Watt 200 283 78,670

124,783 53,940

— — — Yes

Graham Charlton 200 528 113,947

83,188 35,960

— —

-—

Yes

Non-Executive Directors

Martin Hellawell

n/a n/a 4,201,857 n/a n/a n/a n/a n/a n/a

Karen Slatford n/a n/a — n/a n/a n/a n/a n/a n/a

Vin Murria n/a n/a 165,397 n/a n/a n/a n/a n/a n/a

Lynne Weedall n/a n/a 1,300 n/a n/a n/a n/a n/a n/a

Robyn Perriss n/a n/a 15,000 n/a n/a n/a n/a n/a n/a

Notes:

1. The Committee has adopted formal shareholding guidelines that will encourage the Executive Directors to build up, over a ﬁve-year period, and then subsequently hold, a shareholding

equivalent to at least 200% of base salary. The shareholding requirement is calculated as follows:

• Shares owned by the Executive Director (and their associates) count towards the ownership target.

• Shares which have vested, but which remain subject to a holding period and/or clawback, count towards the ownership target.

• Unvested shares, which are not subject to a further performance condition, count towards the ownership target on a net of tax basis. This includes deferred awards under the

annualbonus plan.

• Unvested awards and unexercised options which have performance conditions attached do not count towards the ownership target.

2. T his is based on a closing share price of £13.95 on 29 July 2022 (being the last business day before 31 July 2022) and the year-end salaries of the Executive Directors. The calculation

includes the value of ‘Deferred shares not subject to performance conditions’ on a net of tax basis, based on the tax rates applicable on 31 July 2022. Values arenot calculated for

Non-Executive Directors as they are not subject to shareholding requirements.

3. This includes investment in partnership shares under the SIP. Graeme and Graham have each purchased 35 partnership shares between the year end and the date of this report, which

is not included above.

4. This is in respect of previous awards of nil-cost options granted under the Deferred Share Bonus Plan.

5. Includes ordinary shares held by, or in trust for, Martin and/or his family members.

Fees retained for external non-executive directorships by Executive Directors

Executive Directors may hold positions in other companies as Non-Executive Directors and retain the fees. Graeme and Graham currently

hold no such external directorships.

REMUNERATION COMMITTEE REPORT CONTINUED

PART B  ANNUAL REPORT ONREMUNERATION CONTINUED

108 Softcat plc Annual Report and Accounts 2022

Comparison of overall performance and pay

The graph below shows the value of £100 invested in the Company’s shares since listing compared with the FTSE 250 index. Thegraphshows

thetotal shareholder return generated by both the movement in share value and the reinvestment over the same period of dividend income.

The Committee considers that the FTSE 250 is the appropriate index because the Company has been a member of this since the ﬁrst

review of the index since the IPO. This graph has been calculated in accordance with the Regulations. It should be noted that the

Company listed on 18 November 2015 and therefore only has a listed share price for the period of 18 November 2015 to 31 July 2022.

800

900

1,000

400

500

600

200

Total shareholder return

300

100

700

FTSE 250 Softcat

18/11/2015

18/03/2016

18/07/2016

18/11/2016

18/03/2017

18/07/2017

18/11/2017

18/07/2019

18/11/2019

18/03/2020

18/07/2020

18/11/2020

18/03/2021

18/07/2021

18/03/2022

18/07/2022

18/11/2021

18/03/2018

18/07/2018

18/11/2018

18/03/2019

Chief Executive’s historical remuneration

The table below sets out the relative importance of spend on pay in the 2022 ﬁnancial year. All ﬁgures provided are taken from the

relevant Company accounts.

Chief Executive 2022 2 021 2020 2 019 2 018 2 017 2016 2 015

G Watt Total single ﬁgure £2,867,134 £2,588,093 £991,372 £919,518 £305,539 — — —

M Hellawell

— — — — £532,716 £774,908 £562,117 £335,762

G Watt Annual bonus

payment level

achieved

(% of maximum

opportunity)

96 100 72 100 100 — — —

M Hellawell

— — — — 100 100 99 72

G Watt LTIP vesting level

achieved

(% of maximum

opportunity)

100 100 n/a n/a n/a n/a n/a n/a

M Hellawell

n/a n/a n/a n/a n/a n/a n/a n/a

Note:

1. Martin stepped down from his role as Chief Executive on 31 March 2018 and Graeme joined as Chief Executive on 1 April 2018. The single ﬁgure includes remuneration paid for the

role as Chief Executive during the ﬁnancial year.

Relative importance of the spend on pay

The table below sets out the relative importance of spend on pay in the 2022 ﬁnancial year. All ﬁgures provided are taken from the

relevant Company accounts.

Disbursements

from proﬁt in 2022

ﬁnancial year

Disbursements

from proﬁt in 2021

ﬁnancial year

Proﬁt distributed by way of dividend £84.0m £60.8m

Total tax contributions

£41.9m £36.4m

Overall spend on pay, including Executive Directors £148.3m £127.8m

Note:

1. Includes corporation tax and Employer’s national insurance contributions. The total tax contributions have been included because of the size of the contributions in comparison

tootherpayments.

Corporate governance

109Annual Report and Accounts 2022 Softcat plc

REMUNERATION COMMITTEE REPORT CONTINUED

PART B  ANNUAL REPORT ONREMUNERATION CONTINUED

Change in the Directors’ remuneration compared with employees

The table below sets out the annual change in Directors’ remuneration from the previous year compared to the average annual change in

remuneration for all other employees. The notes beneath this table describe how we have calculated the year-on-year change.

% increase/(decrease) in remuneration in

2020 compared with remuneration in 2019

% increase/(decrease) in remuneration in

2021 compared with remuneration in 2020

% increase/(decrease) in remuneration in

2022 compared with remuneration in 2021

Salary or

fees Bonus

Beneﬁts

Salary or

fees Bonus

Beneﬁts

Salary

or fees Bonus

Beneﬁts

Graeme Watt

3% 12 % 0% 3% 43% 37% 10% 6% 12 %

Graham Charlton

3% 12 % (9)% 3% 43% 37% 10% 6% 12 %

Martin Hellawell 3% 0% 1% 0% 0% 1% 5% 0% 9%

Vin Murria

23% 0% 0% 4% 0% 0% (7)% 0% 0%

Robyn Perriss 0% 0% 0% 3% 0% 0% 3% 0% 0%

Karen Slatford

n/a n/a n/a 6% 0% 0% 11 % 0% 0%

Lynne Weedall

n/a n/a n/a n/a n/a n/a n/a n/a n/a

All employees

5% (14)% (14)% 3% 12 % 1% 5% 7% 34%

Notes:

1. For the Directors, the percentage change reﬂects the ﬁgures set out in the single ﬁgure table on page 105. Figures are on an annualised basis where the Director joined or left during the year.

2. Excludes commissions for employees.

3. Includes private medical insurance only for employees.

4. In respect of 2020/21, Vin Murria stepped down as Chair of the Nomination Committee during the year. Fees receivable for these duties were in addition to the fees payable as a

Non-Executive Director.

5. In respect of 2020/21, Karen Slatford was appointed as Chair of the Nomination Committee during the year. Fees receivable for these duties were in addition to the fees payable as

a Non-Executive Director. In respect of 2021/22, Karen stepped down as Chair of the Remuneration Committee during the year.

6. Lynne Weedall joined the Board of Softcat in May 2022.

7. For employees, ﬁgures represent Softcat plc, which is a single entity company. Details are in respect of the average percentage change in respect of the remuneration of employees on a full-time

equivalent basis. In order to make the comparisons meaningful, the average percentage change in respect of each of salary, bonus and beneﬁts for employees is a per capita ﬁgure. The

increase in bonus is due mostly to improved performance versus targets for senior management when compared to the prior year. The beneﬁts values have ﬂuctuated due to change in premiums.

CEO pay ratios

The UK Government requires certain companies with over 250 employees to disclose annually the ratio of their CEO’s single ﬁgure total

remuneration to that of the UK workforce. CEO pay ratio data is presented below for 2022, with comparative ﬁgures for 2019 to 2021,

which were disclosed in previous Directors’ Remuneration Reports. The data shows how the CEO’s single ﬁgure remuneration for 2022 (as

taken from the single ﬁgure remuneration table) compares to equivalent single ﬁgure remuneration for full-time equivalent UK employees,

ranked at the 25th, 50th and 75th percentiles.

Year Method 25th percentile pay ratio Median pay ratio 75th percentile pay ratio

2022 Option A 100:1 64:1 36:1

2 021 Option A 89:1 57:1 32:1

2020 Option A 33:1 21:1 12:1

2 019 Option A 35:1 22:1 12:1

The Government’s methodology of Option ‘A’ has been used to calculate the remuneration of 1,882 employees (FY2021: 1,655) who

were employed on the assessment date of 31 July for each respective ﬁnancial year. All individuals in employment at this date were

included in the calculation, with applicable components of individual remuneration annualised for employees not employed for the full

twelve months. This option was selected given as it was considered to be the most efﬁcient and robust approach in respect of gathering

the required data and in particular was considered to be the most accurate way of identifying the best equivalents of the 25th, 50th and

75th percentiles.

We calculated our total remuneration for full-time equivalent employees to include:

• annual salary and allowances;

• annual bonus earnings (for the period relating to the respective ﬁnancial year);

• gains realised from exercising awards granted under the SIP or LTIP share plans; and

• the value of taxable beneﬁts (including pension contributions).

The above ratio increased from 2021 reﬂecting LTIP awards which vested and were exercised during each period. The value of each

LTIPwhen it was exercised is included in the single remuneration ﬁgure for the year. The ratio further increased in 2022, reﬂecting the

increased value of the LTIP exercised due to a growth in the Company’s share price and in part a 10% increase in the CEO’s base pay,

which was fully disclosed in last year’s Annual Report on Remuneration. The Committee believes that the median pay ratio is consistent with

the Company’s pay, reward and progression policies.

11 0 Softcat plc Annual Report and Accounts 2022

Pay in respect of the CEO and UK workforce is shown in the table below.

CEO All employees

(See single ﬁgure table, page 105) 25th percentile Median 75th percentile

2022 salary £525,146 £21,228 £25,159 £36,945

2022 total pay £2,867,134 £28,574 £44,594 £79,816

Consideration by the Directors of matters relating to Directors’ remuneration

The Board has delegated to the Committee, under agreed terms of reference, responsibility for the Remuneration Policy and for

determining speciﬁc packages for the Executive Directors and other selected members of the senior management team. The Company

consults with key shareholders in respect of the Remuneration Policy and the introduction of new incentive arrangements.

The terms of reference for the Committee are available on the Company’s website, softcat.com/investors, and from the Company

Secretary at the registered ofﬁce.

Our main responsibilities are:

• to determine and agree with the Board the broad Remuneration Policy for the Executive Directors and other selected members of the

senior management team;

• to review the ongoing appropriateness and relevance of the Remuneration Policy; and

• to review any major changes in employee beneﬁt structures throughout the Company and to administer all aspects of any sharescheme.

The Committee receives assistance from the Company Secretary, who attends meetings. The Chief Executive Ofﬁcer, the Chief Financial

Ofﬁcer, the Chief People Ofﬁcer and the Reward, Payroll & HR Operations Manager attend by invitation and when appropriate.

In setting the Remuneration Policy for Directors, the pay and conditions of other employees of the Company are taken into account,

including any base salary increases awarded and the level of employer pension contribution. During the year the Committee received

updates on pay and beneﬁts across the general workforce. The Committee also reviews and approves the remuneration structure for the

management-level tier below the Executive Directors and the proposed framework for annual pay rises and uses this information to ensure

consistency of approach.

The Company does not use remuneration comparison measurements. A formal Employee Forum has been established within the business

where staff can raise any issue they feel to be relevant with the Designated Non-Executive Director for Workforce Engagement (Vin

Murria). There are also regular employee engagement meetings led by the CEO and CFO.

The Committee Chair (assisted by the Chief People Ofﬁcer and the Company Secretary) has directly engaged with a small group of

employee representatives to explain Softcat’s executive remuneration policy and how it aligns with wider Company pay policy. During

the engagement session, the Committee Chair explained the purpose and work of the Committee and the key decisions which were made

during the year. The employee representatives asked questions about executive remuneration and how it aligns to pay elsewhere in the

Company and also provided feedback on pay in certain other roles in the business and were provided with responses. The engagement

provided useful feedback and further assurance to the Committee that executive remuneration is considered to be well-aligned with the

Company’s wider philosophy on pay, particularly in respect of the importance of setting appropriate benchmarks for ﬁxed pay and on the

importance of variable pay as an incentive to drive stretching performance. The Committee believes there is strong alignment between

executive pay, wider workforce pay, the Company’s culture and strategy.

Advisers to the Remuneration Committee

During the ﬁnancial year, PwC advised the Committee on all aspects of the Remuneration Policy for Executive Directors and selected

members of the senior management team. PwC was appointed by the Committee following IPO in November 2015. The Committee is

satisﬁed that no conﬂict of interest exists or existed in the provision of these services.

PwC is a member of the Remuneration Consultants Group and the Voluntary Code of Conduct of that body is designed to ensure

objective and independent advice is given to remuneration committees. Fees of £90,000 (excluding VAT) (2021: £87,750) were

provided to PwC during the year in respect of remuneration advice received.

Statement of voting at general meeting

The table below shows the binding vote approving the Directors’ Remuneration Policy at the 2019 AGM and the advisory vote on the

Annual Report on Remuneration at the 2021 AGM.

Votes for % Votes against % Votes withheld

Directors’ Remuneration Policy (2019 AGM) 161,238,582 98.60 2,296,086 1.40 109

Annual Report on Remuneration (2021 AGM) 169,210,527 97.36 4,591,454 2.64 9,561

Corporate governance

111Annual Report and Accounts 2022 Softcat plc

REMUNERATION COMMITTEE REPORT CONTINUED

PART B  ANNUAL REPORT ONREMUNERATION CONTINUED

Statement of implementation of the Remuneration Policy in the 2022 ﬁnancial year

The Remuneration Committee has reviewed and considered the key components of remuneration to ensure that the Remuneration Policy

(summarised below) is ﬁt for purpose, continues to drive success within the remuneration framework and meets the shareholder and

governance expectations of a FTSE 250 company. In respect of the implementation in 2022/23 below, a revised Remuneration Policy

will be proposed at the 2022 AGM and where applicable the implementation will be subject to the new Remuneration Policy being

approved by shareholders.

Implementation in 2022/23 What was implemented in 2021/22

Base salary For FY2023, base salaries for the CEO and CFO

willbe £551,403 and £367,602.

The above increases represent a rise of 5%, which was

the standard pay rise for employees but lower than

pay rises for much of the workforce.

CEO: £525,146.

CFO: £350,097.

Pension No change. 5% of salary.

Beneﬁts All Directors, including Non-Executive Directors, will

be entitled to participate in the Company salary

sacriﬁce scheme for electric vehicles for personal use

and commuting.

No change.

Annual bonus plan

(‘ABP’)

• Cash

• Deferred share

award

For FY2023 the annual bonus measure will retain

80%based on Operating Proﬁt and 20% based

onrobust ESG goals. In addition to customer and

employee satisfaction, sustainability measures will

beadded.

Maximum opportunity: 150% of salary for CEO

andCFO.

Measures: 80% Operating Proﬁt, 20% ESG (based on

customer and employee satisfaction goals).

LTIP FY2023 LTIP awards:

• 150% of salary for CEO and CFO

• Measures against TSR (40%) and EPS (60%)

• Targets shown on pages 106 to 107

FY2022 LTIP awards:

• 150% of salary for CEO and CFO.

• Measures against TSR (50%) and EPS (50%).

• Targets are shown on pages 106 to 107

Shareholding

requirements

No change. 200% of salary for CEO and CFO.

Chair and

Non-Executive fees

Chair fee: £200,000.

Board fee: £60,000.

Senior Independent Director fee: £13,500.

Committee Chair fee (per Committee): £15,000.

Fee for the Designated Director for Workforce

Engagement (which includes Chair of the Sustainability

Committee): £15,000.

Chair fee: £159,135.

Board fee: £52,167.

Senior Independent Director fee: £5,796.

Committee Chair fee (per Committee) and fee for the

Designated Director for Workforce Engagement:

£11,592.

Lynne Weedall

Chair of the Remuneration Committee

24 October 2022

112 Softcat plc Annual Report and Accounts 2022

PART C  DIRECTORS’

REMUNERATION POLICY

Introduction

In accordance with the remuneration reporting regulations, the

Directors’ Remuneration Policy (the ‘Policy’) as set out below will

become formally effective at the AGM on 13 December 2022,

subject to shareholder approval, and will apply for a period of

three years from the date of approval unless a new Policy is

approved by the Company’s shareholders prior to expiry.

The Company’s core principles of remuneration are:

• to ensure top Executives are attracted, retained and motivated

to drive the Company in its next stage of development;

• to incentivise management in extending the Company’s

leadership in the IT infrastructure solutions industry; and

• to deliver long-term sustainable growth.

The Committee will review annually all elements of remuneration,

including: the base salary, annual bonus levels and annual and

long-term incentive performance conditions for the Executive

Directors and selected members of the senior management team,

drawing on trends and adjustments made to all employees across

the Company and taking into consideration:

• our business strategy;

• overall Company performance;

• market conditions;

• views of key stakeholders of the business;

• corporate governance considerations; and

• changing views of institutional shareholders and their

representative bodies.

The Remuneration Committee is comprised of independent

Non-Executive Directors. The Committee operates within terms

ofreference which:

• authorise it to review and implement the Policy; and

• provide a framework to avoid conﬂicts of interest.

Corporate governance

113Annual Report and Accounts 2022 Softcat plc

Our Remuneration Policy and its link to our Company strategy

The Company’s strategy is laid out on page 28 and 29.

Ensuring the alignment of the proposed Policy to the Company strategy was key for the Remuneration Committee in reﬁning the existing

Policy as proposed below. The key elements of the Company’s strategy and how its successful implementation is linked to the Company’s

remuneration are set out in the following table.

Remuneration Policy (from the dateof

shareholder approval)

Strategic priorities

Generate sector-leading

value for shareholders

Growth in proﬁt

from existing customers Win new customers

Equity

ownership

and retention

of shares

Retain

and reward

Executive team

to deliver the

strategy

Annual bonus

• The maximum bonus

(including any part of the

bonus deferred into an ABP

award) deliverable under

the ABP will not exceed

200% of a participant’s

annual base salary.

Operating proﬁt

The key performance indicator for the Company. The Committee believes

that the Directors should focus on this key metric during the ﬁnancial year to

maintain high proﬁt growth and the success of the business to deliver value

for our shareholders.

Growth in this metric is a direct demonstration of the successful execution of

our business strategy, including winning new customers and growth of

proﬁt from existing customers.

Non-ﬁnancial measures

The Committee also believes in the importance of wider non-ﬁnancial

metrics to measure the success of a business, including the use of

environmental, social and governance (‘ESG’) measures. The Committee

will consider appropriate measures linked to strategic priorities.

LTIP

Maximum annual award is

normally 200% of salary.

Awards will vest at the end of

three years.

For FY2022 the performance

conditions for awards were

equally weighted between:

• adjusted earnings per share

(‘EPS’) growth; and

• comparative total

shareholder return (‘TSR’).

For FY2023, awards will be

weighted 60% EPS and 40%

TSR.

EPS and TSR

The success in

maximising proﬁt

growth will be

measured through the

long-term EPS growth

targeted by the LTIP.

In addition, sustained

value generation will

be reﬂected in the

share price of the

Company, which will

be measured through

the Company’s TSR

performance under

the LTIP.

TSR

The generation of proﬁt

growth targeted by the

annual bonus will help

enhance the value of

the Company, which

will be measured

through the success of

the Company’s TSR

performance against its

comparators (a

performance condition

under the LTIP).

EPS

An incentive to grow this

market in the longer term

is provided through EPS

growth targeted by the

LTIP. The success of this

element of the strategy

should be reﬂected in

long-term TSR

performance.

Share Incentive Plan (‘SIP’)

Minimum shareholding

requirements

• Chief Executive Ofﬁcer:

200% of salary.

• Chief Financial Ofﬁcer:

200% of salary.

REMUNERATION COMMITTEE REPORT CONTINUED

PART C  DIRECTORS’ REMUNERATION POLICY CONTINUED

114 Softcat plc Annual Report and Accounts 2022

Alignment with provision 40 of the UK Corporate Governance Code

As part of its review of the proposed Policy and remuneration practices, the Committee has considered the factors set out in provision 40

of the UK Corporate Governance Code (the ‘Code’). In the Committee’s view, the proposed Policy addresses those factors as set out below:

Provision 40 element How our Remuneration Policy aligns

Clarity

Remuneration

arrangements should be

transparent and promote

effective engagement

with shareholders and

theworkforce.

Our Policy is simple, designed to support long-term, sustainable performance and aligned to our strategy.

It clearly sets out the performance conditions that will be used for the annual bonus and the LTIP, as well

as the maximum potential value of the elements of remuneration and the areas in which discretion can be

applied. Achievement against performance conditions is fully disclosed.

Our Policy is in line with UK corporate governance good practice, which makes it understandable to our

key stakeholders. This also promotes effective stakeholder engagement.

Simplicity

Remuneration structures

should avoid complexity

and their rationale and

operation should be easy

to understand.

Our executive remuneration structure comprises ﬁxed and variable remuneration through the use of

market standard annual bonus and LTIP structures. The performance conditions for variable elements

areclearly communicated to stakeholders and understood by the executive participants. Our executive

reward structures are clearly aligned to the delivery of key strategic indicators of success and this helps

to ensure simplicity. In respect of variable remuneration, we keep this simple by operating just one plan

for our short-term incentive (annual bonus plan) and one plan for longer-term performance (LTIP).

Risk

Remuneration

arrangements should

ensure reputational and

other risks from excessive

rewards, and behavioural

risks that can arise from

target-based incentive

plans, are identiﬁed

andmitigated.

The majority of our Executive Directors’ total remuneration is focused on the long term and provided

inSoftcat shares (through our LTIP and through the deferred share element of the annual bonus plan).

Rewards are aligned to our strategy and are designed for Executive Directors to drive the right behaviours

for both the Company and its shareholders.

We operate minimum shareholding requirements for Executive Directors whilst they are in employment and

for two years post-vesting. Executive Directors must also retain shares (net of sales for taxes and costs)

arising from the exercise of an LTIP for two years. These measures ensure a strong alignment between

Executive Directors and shareholders and discourage unnecessary risk taking by Executive Directors.

Signiﬁcant rewards on the long-term element can only be achieved if there is sustained performance.

Our Remuneration Policy explains, where appropriate, deﬁned limits on the maximum awards which can

be earned. The Committee retains discretion to override formulaic outcomes, if appropriate, on variable

remuneration. Malus and clawback provisions are included in both the annual bonus plan and in the LTIP.

Predictability

The range of possible

values of rewards to

individual directors and

any other limits or

discretions should be

identiﬁed and explained

at the time of approving

the policy.

Our Policy sets out, where applicable, the maximum potential value for each element of remuneration.

Our Policy also explains the use of any discretion. The potential total remuneration outcomes can be

assessed from this and we include both in our Policy and in each Annual Report on Remuneration

illustrations of the application of our Policy. We observe in our share plans the dilution limits set by the

Investment Association (10% in any rolling ten-year period and for executive share plans 5% in any rolling

ten-year period).

Proportionality

The link between

individual awards, the

delivery of strategy and

the long-term

performance of the

company should be clear.

Outcomes should not

reward poor performance.

Remuneration is appropriately balanced between ﬁxed and variable pay and the annual bonus and

LTIP reward the successful implementation of our strategy over the short and long term. Stretching targets

ensure payments are only made for strong corporate performance and for the successful execution

ofourstrategy, providing a direct link between Company performance and individual rewards.

TheCommittee has discretion to override formulaic outcomes to ensure that remuneration always

reﬂectsoverall performance.

Alignment to culture

Incentive schemes should

drive behaviours consistent

with company purpose,

values and strategy.

Executive rewards are aligned to our strategy and are designed for Executive Directors to drive the right

behaviours for both the Company and its shareholders. The performance measures used by the Committee

are designed to help underpin our culture and strategy. The weighting towards long-term remuneration

emphasises the importance of strong performance over the longer term. Our annual bonus plan includes

non-ﬁnancial metrics which support our values and culture on how we do business and this will help us to

maintain a competitive advantage.

Corporate governance

115Annual Report and Accounts 2022 Softcat plc

Remuneration Policy table

Remuneration Policy aim

The Committee has developed a remuneration framework and policy which adhere to practice that is ﬁt for purpose for a

FTSE 250 company. The Committee’s objective is to operate this policy to ensure that our Executive Directors have a remuneration

structure and totalremuneration opportunity that is aligned to Softcat’s business and is competitive when assessed against the market

we compete fortalent in.

Element of remuneration

How it supports the Company’s

short and long-term strategic objectives Operation Maximum opportunity

Salary

Changes from

previous policy: none.

Provides a base level of remuneration

to support recruitment and retention

ofExecutive Directors with the necessary

experience and expertise to deliver the

Company’s strategy.

An Executive Director’s basic salary is set on appointment and reviewed

annually or when there is a change in position or responsibility.

When determining an appropriate level of salary, the Committee considers:

• remuneration practices within the Company;

• the general performance of the Company;

• salaries within the ranges paid by the companies in the comparator

group used for remuneration benchmarking;

• any change in scope, role and responsibilities; and

• the economic environment.

Individuals who are recruited or promoted to the Board may, on occasion,

have their salaries set below the targeted policy level until they become

established in their role. In such cases subsequent increases in salary may

be higher than the general rises for employees until the target positioning

isachieved.

The Committee ensures that maximum salary levels are positioned in line with companies of a similar size to Softcat and validated against

companies operating in a similar sector, so that total remuneration opportunity (base salary, beneﬁts, annual bonus and long-term incentives) for

the Executive Directors is competitive against the market.

When assessing salary levels, the Committee will consider levels in the comparator group, made up of organisations in the FTSE 250 (excluding

ﬁnancial services, real estate and equity investment trusts) and sector peer companies of comparable size to Softcat.

The Committee intends to review the comparator groups each year and may add or remove companies from the group as it considers

appropriate. Any changes to the comparator group will be set out in the section headed Implementation of Remuneration Policy in the following

ﬁnancial year.

In general salary increases for Executive Directors will be in line with the increase for employees.

The Company will set out in the section headed Implementation of Remuneration Policy, in the following ﬁnancial year, the salaries for that year

for each of the Executive Directors.

Beneﬁts

Changes from

previous policy:

following introduction

of a salary sacriﬁce

programme for

employees to lease

electric vehicles, this

Policy speciﬁes that

Directors can

participate.

Provides a beneﬁts package in line

withpractice relative to its comparator

group to enable the Company to recruit

and retain Executive Directors with the

experience and expertise to deliver the

Company’s strategy.

The Executive Directors receive beneﬁts which include, but are not limited

to, private health insurance, life insurance and death in service beneﬁt.

The Committee recognises the need to maintain suitable ﬂexibility in the

beneﬁts provided to ensure it is able to support the objective of attracting

and retaining personnel in order to deliver the Company strategy.

Additional beneﬁts may therefore be offered, such as relocation

allowances on recruitment.

The maximum will be set at the cost of providing the beneﬁts described.

Non-Executive Directors may participate in beneﬁt programmes available

to employees which have the purpose of reducing environmental emissions.

See description of beneﬁts in previous column.

Pensions

Changes from

previous policy: none.

Provides a pension provision in line

withpractice to enable the Company

torecruit and retain Executive Directors

with the experience and expertise to

deliver the Company’s strategy.

Pension arrangements are provided in line with practice to enable the

Company to recruit and retain Executive Directors with the experience

andexpertise to deliver the Company’s strategy.

The Company operates a deﬁned contribution (‘DC’) scheme.

TheExecutive Directors are entitled to receive a maximum employer

contribution into the DC scheme or a salary supplement in lieu of pension

which is in line with the employer contribution for the wider workforce. New

joiners will receive a pension contribution in line with the wider workforce.

The current level is 5% of basic salary per annum. Increases will only be in

line with employer pension contribution in the wider workforce, but shall not

exceed 10% within the period of this Policy.

The maximum contribution into the deﬁned contribution plan or a salary supplement in lieu of pension will be in line with the wider workforce.

This ensures that Softcat’s approach is fully in line with corporate governance expectations and shareholder sentiment to align Executives’

pension with the wider workforce.

REMUNERATION COMMITTEE REPORT CONTINUED

PART C  DIRECTORS’ REMUNERATION POLICY CONTINUED

11 6 Softcat plc Annual Report and Accounts 2022

Remuneration Policy table

Remuneration Policy aim

The Committee has developed a remuneration framework and policy which adhere to practice that is ﬁt for purpose for a

FTSE 250 company. The Committee’s objective is to operate this policy to ensure that our Executive Directors have a remuneration

structure and totalremuneration opportunity that is aligned to Softcat’s business and is competitive when assessed against the market

we compete fortalent in.

Element of remuneration

How it supports the Company’s

short and long-term strategic objectives Operation Maximum opportunity

Salary

Changes from

previous policy: none.

Provides a base level of remuneration

to support recruitment and retention

ofExecutive Directors with the necessary

experience and expertise to deliver the

Company’s strategy.

An Executive Director’s basic salary is set on appointment and reviewed

annually or when there is a change in position or responsibility.

When determining an appropriate level of salary, the Committee considers:

• remuneration practices within the Company;

• the general performance of the Company;

• salaries within the ranges paid by the companies in the comparator

group used for remuneration benchmarking;

• any change in scope, role and responsibilities; and

• the economic environment.

Individuals who are recruited or promoted to the Board may, on occasion,

have their salaries set below the targeted policy level until they become

established in their role. In such cases subsequent increases in salary may

be higher than the general rises for employees until the target positioning

isachieved.

The Committee ensures that maximum salary levels are positioned in line with companies of a similar size to Softcat and validated against

companies operating in a similar sector, so that total remuneration opportunity (base salary, beneﬁts, annual bonus and long-term incentives) for

the Executive Directors is competitive against the market.

When assessing salary levels, the Committee will consider levels in the comparator group, made up of organisations in the FTSE 250 (excluding

ﬁnancial services, real estate and equity investment trusts) and sector peer companies of comparable size to Softcat.

The Committee intends to review the comparator groups each year and may add or remove companies from the group as it considers

appropriate. Any changes to the comparator group will be set out in the section headed Implementation of Remuneration Policy in the following

ﬁnancial year.

In general salary increases for Executive Directors will be in line with the increase for employees.

The Company will set out in the section headed Implementation of Remuneration Policy, in the following ﬁnancial year, the salaries for that year

for each of the Executive Directors.

Beneﬁts

Changes from

previous policy:

following introduction

of a salary sacriﬁce

programme for

employees to lease

electric vehicles, this

Policy speciﬁes that

Directors can

participate.

Provides a beneﬁts package in line

withpractice relative to its comparator

group to enable the Company to recruit

and retain Executive Directors with the

experience and expertise to deliver the

Company’s strategy.

The Executive Directors receive beneﬁts which include, but are not limited

to, private health insurance, life insurance and death in service beneﬁt.

The Committee recognises the need to maintain suitable ﬂexibility in the

beneﬁts provided to ensure it is able to support the objective of attracting

and retaining personnel in order to deliver the Company strategy.

Additional beneﬁts may therefore be offered, such as relocation

allowances on recruitment.

The maximum will be set at the cost of providing the beneﬁts described.

Non-Executive Directors may participate in beneﬁt programmes available

to employees which have the purpose of reducing environmental emissions.

See description of beneﬁts in previous column.

Pensions

Changes from

previous policy: none.

Provides a pension provision in line

withpractice to enable the Company

torecruit and retain Executive Directors

with the experience and expertise to

deliver the Company’s strategy.

Pension arrangements are provided in line with practice to enable the

Company to recruit and retain Executive Directors with the experience

andexpertise to deliver the Company’s strategy.

The Company operates a deﬁned contribution (‘DC’) scheme.

TheExecutive Directors are entitled to receive a maximum employer

contribution into the DC scheme or a salary supplement in lieu of pension

which is in line with the employer contribution for the wider workforce. New

joiners will receive a pension contribution in line with the wider workforce.

The current level is 5% of basic salary per annum. Increases will only be in

line with employer pension contribution in the wider workforce, but shall not

exceed 10% within the period of this Policy.

The maximum contribution into the deﬁned contribution plan or a salary supplement in lieu of pension will be in line with the wider workforce.

This ensures that Softcat’s approach is fully in line with corporate governance expectations and shareholder sentiment to align Executives’

pension with the wider workforce.

Corporate governance

117Annual Report and Accounts 2022 Softcat plc

REMUNERATION COMMITTEE REPORT CONTINUED

PART C  DIRECTORS’ REMUNERATION POLICY CONTINUED

Element of remuneration

How it supports the Company’s

short and long-term strategic objectives Operation Maximum opportunity Performance metrics

Annual and

Deferred

ShareBonus Plan

(the‘Bonus Plan’)

Changes from

previous policy:

malus/clawback

triggers extended.

The Bonus Plan provides a signiﬁcant

incentive tothe Executive Directors linked

to achievement in delivering goals that

are closely aligned with the Company’s

strategy and the creation ofvalue for

shareholders.

In particular, the Bonus Plan supports the

Company’s objectives, allowing the

setting of annual targets based on the

business strategy at the time, meaning

that a wider range of performance

metrics can be used that are relevant

and achievable.

The Committee operates deferral forpart

of the annual bonus earned inshares

under the Bonus Plan. Theadvantage of

deferral is:

• increased alignment between

Executives and shareholders created

through deferral and the increased

equity stake of management in the

Company; and

• amounts deferred in shares are

subject to aDirector’s continuing

employment, which provides an

effective lock-in.

The maximum bonus (including any part of the bonus deferred into share awards)

deliverable under the Bonus Plan will be up to 200% of a participant’s annual

base salary.

The Board will determine the bonus to be delivered following the end ofthe

relevant ﬁnancial year.

The Company will set out, in the section headed Implementation ofRemuneration

Policy, in the following ﬁnancial year, the nature ofthetargets and their weighting

for each year.

Details of the performance conditions, targets and their level ofsatisfaction for the

year being reported on will be set out in theAnnualReport on Remuneration.

The annual bonus will be paid in cash and deferred shares. A minimum level of

deferral into shares of one-third will apply for the ﬁrst 100% of salary awarded as

a bonus. Any bonus awarded above 100% of salary will be deferred into shares.

Deferred bonus share awards vest:

• after a minimum deferral period of three years, during which no performance

conditions will apply; and

• subject to the participant’s continued employment at the end of the deferral

period unless he/she is a good leaver.

The Committee may award dividend equivalents on those shares to plan

participants to the extent that they vest.

The Committee will apply a two-year post-cessation shareholding requirement for

all deferred share awards granted after 5 December 2019 which vest under the

Bonus Plan (see ‘Minimum shareholding requirement’ below).

For FY2023 the maximum opportunity will be 150%

ofsalary. Percentage of bonus maximum earned

forlevels of performance:

Below threshold: 0%.

Threshold: 20%.

Maximum: 100%.

An award under the Bonus Plan is subject to satisfying ﬁnancial and strategic/

operational performance/personal performance conditions and targets measured

overa period of one ﬁnancial year.

A minimum of 50% of the bonus shall be based on ﬁnancial performance measures.

Measures and weightings will be disclosed in the Annual Report on Remuneration for

the year ahead.

The Committee is of the opinion that given the commercial sensitivity arising in relation to

the detailed targets used for the annual bonus, disclosing precise targets for the Bonus

Plan in advance would not be in shareholders’ interests. Targets and performance

achieved will be published at the end of the performance period so shareholders can

fully assess the basis for any payouts under the Bonus Plan.

In exceptional circumstances the Committee retains the discretion to:

• change the performance measures and targets and the weighting attached to the

performance measures and targets partway through a performance year if there is

asigniﬁcant and material event which causes the Committee to believe the original

measures, weightings and targets are no longer appropriate; and

• make downward or upward adjustments to the amount of bonus earned resulting

from the application of the performance measures, if the Committee believes that the

bonus outcomes are not a fair and accurate reﬂection of business performance.

Any adjustments or discretion applied by the Committee will be fully disclosed in the

following year’s Remuneration Report.

The Bonus Plan contains clawback and malus provisions.

Long Term Incentive

Plan (‘LTIP’)

Changes from

previous policy:

malus/clawback

triggers extended.

The purpose of the LTIP is to incentivise

and reward Executive Directors in

relation to long-term performance and

achievement of Company strategy.

This will better align Executive Directors’

interests with the long-term interests

ofthe Company and act as a

retentionmechanism.

The use of comparative TSR measures

the success of the implementation ofthe

Company’s strategy in delivering an

above-market level of return.

The use of EPS ensures Executive

Directors are focused on long-term

ﬁnancial performance to ensure this

ﬂows through to long-term sustainable

EPS growth.

Awards are granted annually to Executive Directors in the form of a

conditional share award, nil-cost option or restricted share award.

Awards will vest at the end of a three-year period subject to:

• the Executive Director’s continued employment at the date

of vesting; and

• satisfaction of the performance conditions.

The Committee may award dividend equivalents on awards to the extent

that these vest.

Awards are subject to a mandatory two-year post-vesting holding

period.The total time period between award and release of shares

istherefore ﬁve years.

The Committee will apply a two-year post-cessation shareholding

requirement for all awards granted after 5 December 2019 which vest

under the LTIP (see ‘Minimum shareholding requirement’ below).

Normal maximum value of up to 200% of salary p.a.

based on the market value at the date of grant set

inaccordance with the rules of the LTIP.

In exceptional circumstances the Committee

maygrant an award with a maximum of up to

250%of salary.

Across the LTIP award metrics up to 25% of the award

willvest for threshold performance.

100% of the award will vest for maximum

performance.

The performance conditions for the 2022 LTIP awards are earnings per share (‘EPS’)

growth and relative total shareholder return (‘TSR’).

At least 50% of the LTIP will be based on ﬁnancial metrics. The Committee may

changethe balance of the measures, or use different measures for subsequent awards,

as appropriate.

No material change will be made to the type of performance conditions without prior

shareholder consultation.

Details of the performance conditions for each award will be disclosed in the Annual

Report on Remuneration for the year ahead.

In exceptional circumstances the Committee retains the discretion to:

• vary, substitute or waive the performance conditions applying to LTIP awards

iftheBoard considers it appropriate and the new performance conditions are

deemed reasonable and are not materially less difﬁcult to satisfy than the

originalconditions; and

• make downward or upward adjustments to the amount vesting under the LTIP

resulting from the application of the performance measures if the Committee believes

that the outcomes are not a fair and accurate reﬂection of business performance.

Any adjustments or discretion applied by the Committee will be fully disclosed in the

following year’s Remuneration Report.

The LTIP contains clawback and malus provisions.

Remuneration Policy table continued

118 Softcat plc Annual Report and Accounts 2022