“I don’t know what else to tell you. Clients are spending. The business is growing. I’m not seeing any impact from Brexit.”
With the weary look of someone who has answered the same question one too many times, that’s how the CEO of Softcat Plc, Graeme Watt, answered my question about Brexit’s impact on his business.
His head office in the City of London also doubles as one of the company’s 8 regional offices. As our meeting started, staff were pouring in for a 9am start. A bell rang, sales boards lit up and Watt shrugged his shoulders. “All I can say is it’s going well”.
That was early September. Softcat has since released results that reiterated his sentiment. The business grew more than 20% in the last financial year.
Brexit woes not obvious
Softcat should theoretically be doing it tough. It resells IT equipment to small and medium businesses all over the UK. If business sentiment is bad, clients spend less money.
Instead, Softcat’s spend per client was up 17% for the year.
That sentiment wasn’t uncommon. Forager’s Gareth Brown followed my UK trip with some portfolio visits of his own and came back with the same message: good businesses seem to be doing just fine.
What you gonna blame now?
The obvious corollary to that is that many of the businesses blaming Brexit for their woes have a convenient excuse for their poor performance.
An election will be held in the UK on the 12th of December, with Boris Johnson seeking the numbers he needs to force his latest Brexit agreement through parliament. The bookies are saying a Boris win is likely. We are hoping he is successful.
There might be more than a few UK CEOs praying that he is not.
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Forager Funds is a boutique fund manager specialising in a value investing approach. We offer an ASX listed Australian Shares Fund as well as an International Shares Fund both aimed at delivering returns for long term investors.