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April 14, 1992

SAGE GROUP SOARS 44% TO #4.3m AS DACEASY BRINGS HOME THE US BACON

By CBR Staff Writer

Sage Group Plc, Newcastle-upon-Tyne achieved its predicted period of unimpeded growth during the first half of 1992, ended March 31 (it’s quite amazing how quickly a company can get its figures out when it’s got good news to report), with pre-tax profits up a commendable 44% at #4.3m on revenues up 85% at #14.5m. Of course this time figures include those of Dallas-based DacEasy Inc, acquired just under a year ago, which increased its profits by 62% to the equivalent of #1.4m during the period, on sales up 14% – a figure wasn’t given here, but for the year to December 31, 1990, DacEasy turned over the equivalent of #8.5m, which gives a rough idea of its size. Since acquisition, DacEasy has achieved or beaten its budget every month, reports Sage chairman and chief executive David Goldman. Some 58% of DacEasy’s sales were to existing customers. Sage is in the process of merging DacEasy with loss-making MainLan Inc to date this has involved the transfer of all MainLan’s Florida-based activities, except sales, to DacEasy’s Dallas base. MainLan Inc’s losses in the first half were down to #115,000 – following the completion of the consolidation with DacEasy, Sage’s US network business is expected to return to profitability. In the first half of 1992, the combined US activities traded at a profit of #1.3m on revenues of #6.4m. In the UK meanwhile, profits rose 7% to #2.9m on revenues up 13% at #8.1m. Here, software sales increased by 16% and, according to Romtec Plc figures, Sage’s share of the market for personal computer-based accounting software, by volume, grew to 63%. Overall, the core UK business grew 24%, excluding the MainLan networks business which, as in the US, had a disappointing year with sales falling 42%, though this is partly attributed to a reduction in product prices. Recurring revenues grew 34% to represent 42% of UK sales. Goldman was particularly encouraged by a 57% growth in software maintenance. The proportion of group recurring revenues from sales of stationery, software, maintenance and training services worldwide increased to 40%, up by 32% from the first half of 1991. Sage now boasts 96,000 registered UK customers and 275,000 in the US, which now seems to be tipping the balance – Goldman hinted last year that the US would likely begin to form the larger half of the business (CI No 1,821). Group development expenditure remains below 4% of revenues. Co-operation between the UK’s Newcastle facility and DacEasy’s team in Dallas is described as working well and bearing fruit. The balance sheet shows #4.1m cash at March 31, up from #1.2m in September; the chairman forecasts maintained growth in the second half, making for a satisfactory full-year performance.

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