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24 Mar 2021 | 07:37

Softcat hikes interim dividend, lifts full-year expectations

(Sharecast News) - IT infrastructure company Softcat reported "strong" income growth in its first half on Wednesday, as it upped its interim dividend by 18.5% to 6.5p per share. The FTSE 250 firm said gross profit - its key measure of income - was up 20.4% year-on-year in the six months ended 31 December at £134.5m.

That was on the back of a 10.2% improvement in revenue, to £577m.

The board said the second half has started well, adding that the full year was looking to be "significantly ahead" of its prior expectations.

On the operational front, Softcat said the customer base had risen 1.5% to 9,600 despite the ongoing challenges of remote working amid the Covid-19 pandemic.

Headcount, meanwhile, increased to 1,658 at the end of the period - a rise of 177, or 12%, over the past 12 months.

"We did see a reduction in income from some corporate customers during the last quarter of our previous financial year, but during the current period that effect has gradually diminished," said chief executive officer Graeme Watt.

"In addition, the business has benefitted from a temporary reduction to some elements of the cost base, although we expect this to normalise as the second half develops.

"The company has taken no form of government support during the pandemic nor made any headcount reductions and we expect that to continue to be the case."

Watt noted the feedback to the company's annual satisfaction and engagement surveys, with Softcat's customer net promoter score rising to 66 from 60, and its employee net promoter score increasing to 58 from 53.

"Investment in our growth strategy has continued unabated throughout the pandemic and we now carry good momentum into the second half of our financial year," he said.

"Cost savings related to Covid restrictions are expected to dissipate over the next six months but we are optimistic about the growth opportunity in our market.

"The board is confident the company will deliver a full year result significantly ahead of its previous expectations."

At 0853 GMT, shares in Softcat were up 11.1% at 1,732p.
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