Sage Group Plc got London market makers very excited yesterday with its strong interim figures. They’ve been fantastic, gushed one analyst to Reuters as shares in the Newcastle-upon-Tyne accounting software group jumped 87 pence to 915 pence by late afternoon after it posted better than expected figures. Pre-tax profits shot up 71% to ú11.7m – ú8.9m was the consensus prediction in the City – from turnover that almost doubled: up 99% at ú50.6m. Sage’s acquisitions over the past year have made major contributions to the leap in sales and profits. Without them, underlying turnover growth was 21% and operating profits rose by 45%. The combined efforts of Multisoft Financial Systems Ltd and Venture Business Forms in the UK, Timeslips in the US and Saari SA in F rance brought turnover of ú19.9m and operating profits of ú2.7m. Sage prides itself of the level of its sales to its existing customer base and ú22.8m of sales there were only ú1m behind sales to new sites. The French market has acquired much greater significance for Sage since its acquisition of Saari last November. The management team at the Paris-based company has been replaced and cost-cutting measures have resulted in higher margins. Group chairman David Goldman warns, though, that the French market tends to show a strong first half bias. The group has also managed to pay off early ú3m of the ú18.5m loan used to buy Saari. Turnover in France represented a third of the total. The largest market is still the UK, and it too had a good first half, with sales up 70% at 23.4m and operating profits rising 64% to ú8.1m. Multisoft, which previewed its Ultra client-server accoutancy package in February (CI No 2,611) is continuing to invest in new products, and Sage claims to have boosted its sales by 40% since taking over. As well building a new technical support centre in Newcastle (CI No 2,607), Sage plans a new building next door to the headquarters which should be ready by spring 1996: the ú4m cost will be met from cash flow, says Goldman. Revenues and operating profits in the US were up 24% and 25% respectively, largely due to the acquisition of Timeslips. Even allowing for the first half bias, Goldman expects a highly satisfactory outcome for the year. The board recommends an interim dividend of four pence, up 10%.
