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| Favourable currency movements boost Sage results |
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FTSE100 business software company Sage defied the economic meltdown to post a 17% increase in group turnover to £748.4m for the half year to 31 March. Jon Wilcox reports. Pre-tax profits were £139.2m, up 14% from the equivalent period last year, but taking currency fluctations out of the equation would have produced a 3% contraction, the company noted. The half year results were helped by the improving strength of Sterling, which stood at an average of $1.48 and €1.14 during the half-year. The company’s UK operation saw turnover flat-line over the past six months, rising from £121.7m in 2008 to £121.9m this half year. Sage’s North American revenues dipped 9% to £304.4m. New software licence sales were disappointing in almost all territories, equating to a 15% drop for the year, but this was offset by growth in subscription fees from recurring service fees and support contracts, which now account for nearly two-thirds (64%) of the group's turnover. The UK's suspended SageLive Cloud accounting prototype did not trouble the group's accountants during the period. CEO Paul Walker confirmed Sage was "experiencing the effects of the weakening global economy in most of our markets," but pointed out that it had won 120,000 new customers. While Walker confirmed "current market conditions will continue throughout the remainder of this financial year", he predicted, "we are well positioned to benefit when markets recover". According to NE Business, Sage laid off 200 UK employees during the period under review, and shortly after the half year ended, it sent a letter inviting its UK workforce to apply for voluntary redundancy. Within the half-year accounts, the cuts were presented as "proactively managing our business" to eliminate annualised costs of £49.3m, equivalent to 4% of 2008's cost base. The restructuring necessitated a £10.1m charge for the first half-year, and £13m more in associated costs have been incurred since 31 March 2009.Having declared a 3% dividend increase to 2.50p per share, the company saw its share price jump 10% following Thursday's results announcement, dipping back to a 5% gain by the end of the day. The full Sage 2009 half-year results announcement is available from the company's investor relations site. |