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Turnover increased 28% to £504.8m, up from £395.8m the previous year. Operating profit increased 30% to £35.5m. EBITDA improved 31% to £37.3m.
In the last four financial years alone, turnover has increased from £146m to £505m and operating profit has grown from £10m to £35.5m. Softcat has now delivered 36 consecutive quarters of year-on-year growth.
“We were delighted to break through the £500m barrier,” commented Martin Hellawell, Softcat’s CEO. “These exceptional growth rates have been achieved against a backdrop of a market estimated at single digit annual percentage growth. We have taken significant market share to achieve these results.”
Strong growth across the business
All areas of the business enjoyed strong growth. The last financial year saw a marked increase in demand for client device projects, partially due to migrations from Windows XP as Microsoft withdrew technical support for this platform. With the nature of security threats becoming increasingly sophisticated, coupled with IT environments that have become more heterogeneous and complex to manage, security business continued to grow strongly.
Softcat continued to help customers move to and manage a hybrid cloud model where workloads are shared between on-premise, private cloud and public cloud environments. The Company underwent a major development in capability in the services arena, and saw a shift in its customers’ IT departments’ focus from internal operations further towards utilising IT for competitive advantage. These changes combined to fuel the significant growth in services business.
“There is absolutely no shortage of opportunity in the market,” said Colin Brown, Softcat’s managing director. “As organisations strive to seek differentiation and become increasingly agile and cost effective, the role of the IT function only becomes more important. New technology and IT consumption models are often painted as innovations that make IT simpler. But in reality, they invariably create more challenges and complexities for the IT function. The combination of the greater pressure on IT to deliver competitive advantage and the increasingly complex IT environments and choices the IT function faces presents organisations like our own with tremendous opportunities to help IT achieve their goals.”
The three main Softcat offices in Marlow, London and Manchester all produced double-digit revenue and margin growth. A new office in Bristol started trading in February 2014. The Company has also announced its intention to open a Leeds office in early 2015.
Strong progress across all sectors
The service provider segment, both traditional managed service and cloud, is a key vertical market for Softcat. The Company has built on its traditional Microsoft Service Provider Licensing business in this area and now successfully sells a wide range of software, hardware infrastructure and services into this market. This business produced strong growth in the financial year.
Softcat continued to grow its commercial small and mid-market customer base and won a number of significant new accounts in the large enterprise customer segment. One area of particularly exceptional growth was in the public sector market notably in health, education and local government. A large number of new framework awards were announced through the course of the year.
The Company traded with a record 3,000 brand new accounts in the financial year, due in part to the increased investment in new business activities. The number of Softcat accounts spending over £1m in the year showed particularly strong progress in the year.
Rigorous approach to recruitment
A key part of Softcat’s strategy is to recruit exceptional talent, particularly graduates, and then motivate that talent by providing a stimulating, rewarding and highly engaged workplace. In the last financial year the Company increased the number of team members to a total of 673 at year-end, up an incremental 115 on the previous year. In the annual employee satisfaction survey conducted in December 2013, 72% of employees rated Softcat very positively as an employer and 26% positively. Entered in the large company category for the first time, Softcat was named as second in the UK Great Place to Work rankings and sixth in the European Great Place to Work rankings. Softcat were also named as the outright winner for ‘Delivering Excellence in Leadership’.
First class customer service
Softcat believes that by having an exceptionally talented, well trained and highly engaged workforce, its employees are equipped and motivated to provide outstanding levels of service to customers. This engenders high degrees of customer satisfaction and loyalty, and leads to higher levels of customer spend across an ever-developing portfolio of offerings from Softcat. In the annual customer survey conducted in June 2014, the Company produced record results with 77% of customers declaring themselves very satisfied and 22% satisfied. The Company recorded a world-class Net Promoter Score (NPS) of +67 in the survey.
Approximately half Softcat’s growth in the financial year came from new customer acquisitions. The other half was from existing customers spending more with Softcat, largely as a result of them expanding the range of products and services they acquire from the Company. Softcat was named the ‘Large Supplier of the Year’ for the second year in succession at the UK IT Industry Awards.
Strong balance sheet
In light of a number of highly leveraged competitors facing business failures over recent years, the strength of Softcat’s balance sheet is more significant than ever, and is now directly providing competitive advantage for Softcat. This is particularly true when entering into long-term agreements with customers for mission critical IT services. The Company has no debt and at the end of the year cash increased to £37.7m.
Partly due to its organic growth, Softcat’s structure and operations are very simple. The Company has no active subsidiaries, holding companies or overseas operations. It has one core IT and reporting system. But most importantly, it has one culture and one common relentless focus – to be best in its sector in terms of employee satisfaction, customer service and shareholder return.
“Overall it was an amazing year,” concluded Hellawell. “The talent, commitment, camaraderie as well as the blood, sweat and tears of the fabulous Softcat staff made that possible. We owe them a huge debt of gratitude. We were also greatly helped by our extraordinary customers and partners who challenge us and help us develop our business every single day. We’re still very far from the finished article, we keep our feet firmly on the ground, and look forward to a very exciting road ahead.”
Softcat recorded a strong start to its financial year 2015 with continued significant growth in its first quarter ending October 31st 2014.
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