As has become the norm at Sage Group Plc, the company has once again exceeded expectations with its full-year figures. And for the first time, the Newcastle-based accountancy software company generated more turnover from sales to existing customers than from primary software sales. Pre-tax profits were up 57% to ú22.4m, on turnover that rose 101% to ú102.2m. This included a 10-month contribution from Saari SA in France (CI No 2,437). The French market accounted for 36% of turnover, but only 18% of operating profits, as Saari underwent rationalisation, which in turn resulted in reduced overall group margins. However, margins in the existing businesses rose 1% to a healthy 29%. The increased French presence also resulted in a first half bias, which the company expects to continue. The smaller French company, Ciel SA, already has a 32-bit package for the entry-level accountancy market and is expected to continue to do well. In the UK, the main Sage business made operating profits of ú14.9m from ú30.1m turnover. This almost obscene margin was achieved with the help of the increasing level of support business, with some 161,000 maintenance contracts, up from 119,000 a year ago. Chief executive Paul Walker said around 75% of all calls were not technical software calls, but payroll and other acountancy-related queries. Total UK turnover was up 55% to ú45.5m and operating profits rose 50% to ú16.6m. The Sterling package now has Windows 95 look and feel, and will shortly be available in a full 32-bit version. Sovreign will get the same look and feel from next week. Multisoft is still developing its client-server product. In terms of selling to existing users, forms brought in almost ú10m of sales and upgrades around ú12m. In the US, Telemagic launched a new entry-level product in the summer and DacEasy will launch a new Windows95 product before the year-end. Margins are obviously tighter in the US, but the company is hopeful they can eventually reach 20% and above.

net borrowings

Turnover in the US was up 26% at ú19.9m and operating profits rose 37% to ú3.1m. In terms of finance, the strong cash generation enabled the company to repay ú9m of the ú18.5m loan it took out to finance the acquisition of Saari in the year. Net borrowings at the year-end were ú4.5m, against ú4m cash a year-ago, but that is because of the acquisition. Since the year-end the company has further enhanced its position in France with the acquisition of Sybel Informatique SA (CI No 2,788). The new year has started as the old one left off and the company is aimiing for further margin improvement, especially in France as Saari becomes more integrated. The final dividend of 1.6 pence makes a total of 2.4 pence per share, Sage’s customary 10% rise. Chairman David Goldman is to go part-time to see his family a bit more, with Walker taking over day-to-day running. Goldman was a paragon of understatement as he said I don’t have a lot of hesitation in saying that I am confident of achieving satisfactory results for the current financial year. Sage shares rose 37 pence, or 13% to 317p.