SOFTCAT LTD ANNUAL REPORT AND ACCOUNTS REPORT AND ACCOUNTS ANNUAL LTD SOFTCAT 2015 SOFTCAT LTD ANNUAL REPORT AND ACCOUNTS 2015 SOFTCAT IS A LEADING IT INFRASTRUCTURE PROVIDER We are Softcat. We provide corporate and public sector organisations with software licensing, workplace technology, data centre infrastructure, networking and security combined with all the services they require to design, implement, support and manage these solutions; on premise or in the cloud. We are passionate about what we do and are relentless in our pursuit of excellence; we like enthusiasm, humility, energy and positivity. We try not to take ourselves too seriously but we are a very serious business with revenues approaching £600m and growing very quickly. We care passionately about two things: employee satisfaction and customer service. We believe the former drives the latter. PG04 PG10 PG12 To find more about To read our To read our our Business Model Chairman’s Statement Chief Executive’s Statement CONTENTS Strategic Report Directors’ Report and Financial Statements 1 Financial and Operational Highlights 23 Directors’ Report 2 Company Overview 25 Independent Auditor’s Report 4 Business Model 26 Statement of Profit or Loss and other 6 Our Markets Comprehensive Income 8 Our History 27 Statement of Financial Position 10 Chairman’s Statement 28 Statement of Changes in Equity 12 Chief Executive’s Statement 29 Statement of Cash Flows 16 Financial Review 30 Notes to the Financial Statements 18 Corporate Social Responsibility 20 Board of Directors 22 Statement of Principal Risks and Uncertainties Strategic Report Directors' Report Financial Statements At year ended 31 July 2015 FINANCIAL AND OPERATIONAL HIGHLIGHTS REVENUE £M GROSS PROFIT £M • Revenue growth: 18% 2015 596.1 2015 102.8 • Adjusted operating profit growth: 14% 2014 504.8 2014 88.5 2013 395.8 2013 70.5 • Cash conversion: 132% 2012 304.1 2012 56.3 2011 219.2 2011 43.3 • New office opens in Leeds • Growth achieved across all business lines and offices EMPLOYEE NUMBERS* ADJUSTED OPERATING PROFIT £M • Employee satisfaction: 98% 2015 794 2015 40.6 2014 673 2014 35.5 • Customer satisfaction: 99% 2013 558 2013 28.1 2012 432 2012 23.2 2011 333 2011 16.4 99% 2nd Customer Satisfaction Rating Best Large Workplace in the UK (79% very satisfied and 20% satisfied) (The Great Place to Work Institute) Net Promoter Score +73 * At year ended 31 July 2015. For more information, please visit: 1 www.softcat.com COMPANY OVERVIEW SOURCING Our aim is simple – to be the leading company in our sector in terms of employee engagement, customer satisfaction and financial performance. SUPPORTING DELIVERING Softcat is a leading provider of IT infrastructure to organisations in the UK. Softcat also enjoys a growing public sector corporate and public sector organisations. This includes business which has been particularly successful in health, workplace technology, networking and security and education and local government. Softcat has developed a large customer base of UK service providers through its leadership in data centre infrastructure as well as the services Service Provider Licensing Agreement (‘SPLA’) licensing. These required to design, implement, support and manage service provider customers are increasingly seeking to offer these solutions either on premise, in the cloud cloud-based solutions to their end customers and Softcat is able to or a combination of both. offer them our infrastructure solutions. We do not develop bespoke software applications for organisations Each customer is served by one of our over 330 account managers or specialise in any industry specific, vertical application but can who are generally office based but frequently attend face to face partner with third-party organisations for these requirements. Our meetings. The account manager is supported by specialists in focus is providing the IT infrastructure and services to keep these their various fields, technical teams, sales assistants and an online applications performing, highly available and secure – allowing our portal through which approximately 25% of all customer orders customers to concentrate on the systems that provide differentiation are now placed. to their businesses. The Company’s headquarters are in Marlow, Buckinghamshire Our offering is broad and customisable. We have some customers with branch offices in Manchester, London, Bristol and Leeds. who just buy products from us, others run their full platform from Support operations run 24/7 from our Operations Centres. We Softcat’s own data centres; and every combination is available also employ a number of staff from home and can service between those two extremes. customers nationwide. Softcat predominantly trades with organisations in the UK but can also facilitate international We work with hundreds of different hardware and software vendors fulfilment through its global distributor and local partner network. to bring the best and largest range of technology to our customers In addition to our offices we have two Softcat data centres located as well as a number of specialist service providers to complement in Tier 3 third-party facilities in London and Manchester, enabling the services that are provided by our in-house teams. us to provide cloud and managed services to those clients who choose to consume their IT in that manner. Softcat benefits from a very diverse customer base in all sectors of the market. The Company traditionally served the small to medium- sized business (‘SMB’) customer segment but as the Company has expanded we are pleased to be trading with a growing number of larger organisations including some of the very largest enterprise 2 Softcat Ltd Annual Report and Accounts 2015 Strategic Report Directors' Report Financial Statements OUR LOCATIONS LEEDS MANCHESTER LONDON BRISTOL MARLOW AWARD WINNING PARTNERSHIPS For more information, please visit: 3 www.softcat.com BUSINESS MODEL Softcat’s business model is very simple. Four key interlinked fundamental pillars have determined and will continue to determine our success. RECRUIT THE BE A GREAT PLACE RIGHT PEOPLE TO WORK Our first pillar for success is to recruit great people with The second and, in our opinion, most important outstanding potential. To fuel and support the growth pillar in our business model is that we strive to of the business, Softcat has continuously invested in be a great place to work. We have an extremely bringing new talent into the organisation. Over the last open and vibrant culture. Nobody has an office; six years headcount has increased from 246 to 794 everyone, including the executive leadership reflecting a significant recruitment drive. Unlike many of team, has a desk in the same open space. We our competitors, Softcat recruits most of its talent direct communicate constantly within the organisation from university or recruits those who did not follow to ensure everyone knows what we are doing, higher education at the early stages of their careers. why we are doing it and to ensure employee’s Our main driver for opening regional offices has been ideas are listened to and acted upon. to increase the potential catchment area for talent to join the organisation. People are rewarded for success and many of our long-standing employees are shareholders We work with universities across the country, hold of the organisation. We offer lots of training and recruitment open days every single week and see development opportunities, as well as social thousands of candidates each year before selecting programmes, including incentive trips, charity those that are right for Softcat. More than anything, we events, staff parties and sports teams. In 2010 look for exceptional people with the right attitude and we became the Sunday Times No.1 Best the ability to play in a team. Every two months a new Company to Work For in our category and in group of trainees joins the Company and are put 2015 the Great Place to Work Institute named through a month of intensive training. That training and Softcat as the No. 2 Best Workplace in the UK development continues throughout their Softcat careers. (Large Category), and No. 8 in Europe. Being a This recruitment programme gives us a steady stream of great place to work was a priority for our exceptional and well trained talent to develop the founder, Peter Kelly, when setting up the business business in both sales and technical disciplines. and this remains so for the current Board today. We also firmly believe that happy, engaged, enthusiastic and motivated staff do a great job for our customers. 4 Softcat Ltd Annual Report and Accounts 2015 Strategic Report Directors' Report Financial Statements PROVIDE CONSTANTLY DEVELOP OUR OUTSTANDING LEVELS OFFERING AND THE CUSTOMERS OF CUSTOMER SERVICE AND MARKETS WE SERVE The third pillar of our strategy is to provide truly outstanding In simple terms our strategy is to sell more to existing customers and levels of service to our customers and we believe that is a win new customers. Ten years ago Softcat was ostensibly a Microsoft direct function of the talent we recruit, the training we give software licensing provider to the SMB community but has been them and the level of engagement our employees have with transformed since then. We have a strong track record of developing the Company. We are proud of the Softcat offering, of the new revenue streams and becoming market leaders with them. Our vendors we represent and of the services we provide. success in workplace computing, data centre infrastructure, IT services, However, at least on paper, there is little difference between cloud, security and networking would all be good examples of that. what we and a handful of other competitors do in the market. The business mix is now resilient with no over-dependence on any The difference lies in our people – they are highly skilled, single vendor, client, vertical market or offering. The business mix will passionate about their work and great ambassadors for evolve with the changing requirements of our customers.