Client wins spark Sage profits hike
May 11, 2004
Accountancy software group Sage today said winning new customers had helped it grow profits by 17 per cent in unchanged market conditions.
The Newcastle-based company, which has offices in Winnersh, added 146,000 new clients during the six months to March 31 and increased software sales to its existing customer base.
This performance was achieved despite companies maintaining a tight grip on budgets as
the US and Europe started to recover from the recent economic downturn.
Sage - the last surviving technology group in the FTSE 100 Index - posted pre-tax profits of £86.7 million and a 23 per cent rise in turnover to £332.5 million.
Software sales, which account for 38 per cent of all the company's revenues, grew 15 per cent, but the major driver was its support services arm as clients spent more on getting the best out of existing systems.
The improvement in total revenues was also enhanced by first contributions from three acquisitions, especially in North America, where Sage does one third of all its business.
Timberline, which sells software to the US construction and property sectors, generated
revenues of £17.2 million following its acquisition for £56 million in September.
Sage chairman Michael Jackson said: "While market conditions are substantially unchanged, these strong results show our growth strategy is gaining momentum in each of our core markets. We therefore continue to view 2004 with confidence."
Sage, which employs more than 8,000 people worldwide including around 1,600 staff in the UK, sells software solutions and other services for small to medium-sized enterprises (SMEs).
Its UK business grew revenues by seven per cent to £90.8 million through strong sales of products and services to existing customers. Particular success was achieved through higher sales of software upgrades to payroll customers, Sage said.
Conditions in mainland Europe remained challenging by comparison, although the group benefited from the acquisition of Spanish accounting software business SP. Revenues lifted by 24 per cent to £88.8 million during the period. Profitability in North America was boosted by higher sales of accountancy software
and a reorganisation into two divisions targeting small businesses and larger firms.