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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| The Sage Group Plc | LSE:SGE | London | Ordinary Share | GB00B8C3BL03 | ORD 1 4/77P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,326.50 | 1,326.50 | 1,327.50 | 1,330.00 | 1,323.00 | 1,329.00 | 265,927 | 14:03:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Prepackaged Software | 2.33B | 323M | 0.3209 | 41.38 | 13.35B |
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RNS Number:1374C
Sage Group PLC
8 December 1999
SAGE PROFITS UP 56% TO #74.3M FOR YEAR TO 30 SEPTEMBER 1999
The Sage Group plc ("Sage"), the leading supplier of accounting software and
related products for personal computers, announces its unaudited results for
the year ended 30 September 1999.
KEY POINTS:
+ Turnover increased by 60% to #307.0m (1998: #191.5m)
+ Operating profits rose by 57% to #79.9m (1998: #50.8m before exceptional
profits of #1.2m)
+ Pre-tax profits up 56% to #74.3m (1998: #47.6m)
+ Underlying organic growth of 26% in turnover and 46% in operating profit
+ Earnings per share up 46% to 42.24p (1998: 28.85p)
+ Dividends for the year raised 10% to 3.51p per share net (1998: 3.19p)
+ Operating cash flows improved to #110.9m (1998: #54.2m)
+ Support revenue reaches #100.5m, an increase of 74%
+ Geographical analysis:
1999 1998
#m Turnover Operating Turnover Operating
profit profit
UK 79.7 38.0 59.8 29.2
France 73.5 19.8 53.1 10.4
Germany 20.7 (1.8) 25.7 0.8
USA 87.5 21.0 49.8 10.2
261.4 77.0 188.4 50.6
Discontinued - - 3.1 0.2
Acquisitions - UK 19.5 1.5 - -
- USA 26.1 1.4 - -
307.0 79.9 191.5 50.8
Chairman, Michael Jackson commented:
"With a significant and growing number of businesses using our products and
services we believe we are well positioned to build on our achievements to
date and we look forward with anticipation to the challenges of the new
millennium.
The new year has started strongly and the Board remains confident about the
prospects for the full year".
ENQUIRIES: Paul Walker, Chief Executive, or Aidan Hughes, Finance
Director, on 0207 831 3113 today and on 0191 225 3000 thereafter, or Giles
Sanderson or Jon Earl of Financial Dynamics.
ISSUED BY: Financial Dynamics, Holborn Gate, 26 Southampton Buildings,
London, WC2A 1PB. Telephone: 0207 831 3113.
INTRODUCTION
We are pleased to be reporting another year of substantial growth for Sage,
with turnover up 60%, operating profits up 57%, pre-tax profit up 56% and
earnings per share up 46%. Allowing for the impact of acquisitions in the
current and previous financial years, our continuing businesses showed
underlying organic growth of 26% in turnover and 43% in operating profit.
We have also seen a valuable contribution from the acquisitions we made this
year. The purchases of Peachtree Software, Inc. in the US, and Tetra plc in
the UK were important strategic developments. We have also consolidated our
market leading position in Europe by making further acquisitions in the UK and
Portugal during the year and Switzerland since the year end.
RESULTS, DIVIDENDS AND FINANCE
In the year ended 30 September 1999, we increased turnover by 60% to #307.0m
(1998: #191.5m). Our operating profits rose by 57% to #79.9m (1998: #50.8m)
and pre-tax profits improved by 56% to #74.3m (1998: #47.6m). Earnings per
share increased by 46% to 42.24p (1998: 28.85p).
Sage's performance in the second half of the year was strong and was boosted
by a full six months of contribution from both Peachtree and Tetra. We had
648,000 support contracts at the end of the year (1998: 370,000) which
generated over #100.5m (1998: #57.9m) of revenue.
We are proposing a final dividend of 2.33p (net) per share (1998: 2.12p)
making a total of 3.51p (net) per share (1998: 3.19p) for the year - an
increase of 10%. Subject to shareholders' approval, the final dividend will
be paid on 1 March 2000 to shareholders on the register at the close of
business on 4 February 2000.
Cash generation continues to be strong across the Group with #110.9m of
operating cash flow generated in the year. After interest, tax and dividends
this gave free cashflow of #83.2m. Acquisitions cost #184.2m satisfied by
#143.6m cash and #40.6m by an issue of 1.9m new ordinary shares. The funding
of the #143.6m cash element came from a new #40.0m five-year term loan,
existing cash resources and an issue of 3.5m new shares generating #65.9m
after costs. Peachtree, acquired on 26 February 1999 and Tetra on 7 April
1999 cost #90.5m and #81.1m respectively. The businesses held #8.6m of cash
upon acquisition. Capital expenditure and other movements during the year
totalled #10.4m resulting in net debt at 30 September 1999 of #58.3m (1998:
#62.0m).
OPERATIONAL REVIEW
Our business in the UK has shown robust growth this year. Turnover at Sage
Software Limited was up by 33%, with 90,000 more registered users of our
products. We now have 187,000 support contracts in the UK, up 22% on last
year. This, together with a strong performance from upgrades, has helped
sustain operating profit margins.
We also made two acquisitions this year in the UK. First, we purchased Tetra
plc, satisfying demand from our dealers and our customers for a more
sophisticated product line. With Tetra we can now access an expanded value
added reseller channel and have the appropriate products with which to extend
our market presence both in the UK and internationally. Second, we acquired
Taxsoft Limited which enables us to build ever closer links within the
professional accountants' community. As well as being valuable customers,
accountants have a high degree of influence over their own clients' choice of
products.
The French businesses have delivered an outstanding performance this year.
Turnover has increased 38% to #73.5m, with operating profit increasing by 91%
to #19.8m. We have seen significant all round growth including a substantial
increase in support contracts which now total 199,000. We have continued to
improve both our marketing and channel management during the year and this has
enabled us to benefit from the demand for replacement systems as a result of
Y2K and the introduction of the Euro.
In Germany, with the demise of the old "free licence" business model, we are
now able to apply the same principles of operation that we use in the rest of
the Group. The channel is more focused and customer service levels are
improving and we are well placed to capitalise on opportunities in this
market.
In the US, we have seen substantial growth at Sage Software, Inc., with
turnover up by 32% to #64.9m on an annualised basis. Operating profits for
the year were #16.1m, an improvement of 90% on last year, with a significant
contribution coming from a 38% increase in support contracts to 38,000.
With the acquisition of Peachtree, we have gained a strategic position in the
US retail market. Peachtree now has 136,000 support contracts including
96,000 under its tax update programme. We have seen improvements in the level
of customer service since the acquisition and have a co-ordinated marketing
approach with Sage Software Inc.
The time tracking and recording division, based in Dallas, achieved 27% growth
in the year demonstrating its leading position in this market.
E-COMMERCE
The Internet continues to be fundamental to the development of our businesses
around the world. Our approach is based, as ever, on our customers' needs and
aspirations. Quite simply, our aim is to provide our customers with all the
tools they need to get their businesses up and running on the web.
In the short term this means helping them to get connected, and then to
encourage them to use the web proactively. We have created at www.sage.com a
web site specifically designed to meet the needs of small and medium-sized
businesses. At www.sage.com we have on offer a broad range of relevant on-
line products, services and content, some our own and some from third parties,
which will enable our customers to make the most of the web. In addition we
have developed a simple web site creation tool so that our customers can build
their own web sites for free and in less than 30 minutes. In just over six
months nearly 2,000 customers have started to build or have built their own
web sites, and demand remains strong.
Advanced, and chargeable, versions of our web site creation tool which will
enable customers to build their own web shops will be made available in
January 2000. Investment continues to be made in other ASP (Application
Services Provider) services including ASP versions of our payroll and
accounting software products. The first of these will be brought to market by
Peachtree in the Spring of 2000.
We are also investing in all of our existing PC based software products to
make them web-enabled. Our vision is that customers should be able to access
the web and all the benefits it can bring directly from our PC software. We
are embedding more and more web-based features in to our PC software products
such as credit checking, address verification and parcel tracking, and this
process will continue throughout 2000. As a result of this activity we
believe that our range of PC accounting and payroll products will remain
highly attractive to new customers.
Unlike many others in the Internet world, we see the Value Added Reseller
community as being central to our success. Small businesses need a great deal
of support and expert advice to make the most of the web and, very
importantly, need this resource to be close at hand. Our reseller community,
which now numbers more than 15,000 around the world, is perfectly placed to
provide this local service and to give our 2 million customers the help they
need to achieve their own Internet ambitions. In November 1999 we launched an
accreditation scheme in the UK for our resellers to become E-Business Centres
and within one month more than 500 had signed up. This programme is now being
rolled out world-wide. We are convinced that our resellers will be a pivotal
resource as we set out to realise our ambitions to encourage our customers to
start down the path to e-commerce.
Partnership is important in the connected world. Alliances improve our global
reach and make our projects cost-effective. Across the world, we have many
collaborative agreements with leading players, including IBM and Microsoft.
We believe that our close understanding of the needs of our customers,
combined with the strength of the Sage brand, our reputation for providing
support of the highest quality and the strength and breadth of our reseller
community, provides us with an ideal platform from which to build our business
in the e-commerce world.
PEOPLE
We recognise the need to make the best use of knowledge throughout our
organisation. This year, we have taken steps to strengthen our central team,
introducing people with critical knowledge and best practice methods from our
sites throughout the Group. We have made significant appointments within our
business development team, and further senior appointments to ensure high
quality leadership for our ASP initiatives.
BOARD APPOINTMENT
Guy Berruyer, who currently is the Chief Executive of our French businesses,
has been invited to join the Board of The Sage Group plc. He will take up
this appointment on 1 January 2000, becoming responsible for all our
operations in mainland Europe. Guy's extensive international business
experience will help Sage make further progress on the continent.
OUTLOOK
With a significant and growing number of businesses using our product and
services we believe we are well positioned to build on our achievements to
date and we look forward with anticipation to the challenges of the new
millennium.
The new year has started strongly and the Board remains confident about the
prospects for the full year.
Michael Jackson Paul Walker
Chairman Chief Executive
UNAUDITIED CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 September 1999
Continuing Operations 1999 1998
Total Total
Acquisitions
#'000 #'000 #'000 #'000
Turnover 261,446 45,595 307,041 191,547
Cost of sales (23,727) (8,666) (32,393) (19,112)
Gross profit 237,719 36,929 274,648 172,435
Selling and
administrative expenses (160,731) (33,979) (194,710) (121,674)
Operating profit 76,988 2,950 79,938 50,761
Profit on disposal of - 1,232
businesses
Interest receivable 2,195 1,486
Interest payable and
similar charges (7,820) (5,844)
Profit on ordinary
activities before
taxation 74,313 47,635
Taxation on profit on
ordinary activities (23,780) (15,243)
Profit on ordinary
activities after taxation 50,533 32,392
Equity minority interest (74) -
Profit for the financial
year 50,459 32,392
Equity dividends (4,280) (3,700)
Amount transferred to
reserves 46,179 28,692
Earnings per share
(pence) - basic 42.24p 28.85p
Earnings per share
(pence) - diluted 41.69p 28.48p
Net dividend per share
(pence) 3.51p 3.19p
UNAUDITED CONSOLIDATED BALANCE SHEET
As at 30 September 1999
1999 1998
#'000 #'000
Fixed assets
Intangible assets 186,319 -
Tangible assets 36,728 31,087
223,047 31,087
Current assets
Stocks 2,254 1,965
Debtors 54,214 41,005
Cash at bank and in hand 31,589 36,274
88,057 79,244
Creditors: amounts falling due within one year (85,620) (64,947)
Net current assets 2,437 14,297
Total assets less current liabilities 225,484 45,384
Creditors: amounts falling due after more than
one year (86,947) (90,305)
Deferred maintenance income (63,194) (34,838)
Equity minority interest (165) -
75,178 (79,759)
Capital and reserves
Called up equity share capital 1,219 1,160
Share premium account 152,297 85,373
Merger reserve 40,545 -
Profit and loss account (118,883) (166,292)
Equity Shareholders' funds 75,178 (79,759)
UNAUDITED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 30 September 1999
1999 1998
#'000 #'000
Profit for the financial year 50,459 32,392
Translation of foreign currency net investments
and related borrowings (1,034) 1,396
Total recognised gains and losses relating to the
year 49,425 33,788
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 1999
1999 1998
#'000 #'000
Net cash inflow from operating activities 110,897 54,200
Returns on investments and servicing of finance
Interest received 2,195 1,486
Interest paid (7,571) (4,651)
Issue cost of loans (384) -
Interest element of finance lease rental payments
(529) (493)
Net cash outflow from returns on investments and
servicing of finance (6,289) (3,658)
Taxation
Corporation tax (including ACT) paid (17,509) (11,262)
Capital expenditure
Payments to acquire tangible fixed assets (10,413) (8,815)
Receipts from sales of tangible fixed assets 312 827
Net cash outflow from capital expenditure (10,101) (7,988)
Acquisitions and disposals
Purchase of subsidiary undertakings:
Net cash consideration - current year acquisitions
(134,144) (136,387)
- prior year acquisitions (835) 498
Sale of businesses - net cash received - 9,803
Net cash outflow from acquisitions and disposals (134,979) 126,086)
Equity dividends paid (3,898) (3,326)
Cash outflow before financing and management of
liquid resources (61,879) (98,120)
Management of liquid resources
Increase in short term deposits (7,948) -
Financing
Shares issued 67,406 73,508
Share issue costs (703) -
Movement in loan funding (8,350) 51,337
Repayment of capital element of finance leases (417) (299)
Net cash inflow from financing 57,936 124,546
(Decrease)/increase in cash in the year (11,891) 26,426
NOTES
1. Geographical analysis
1999 1998
Turnover Operating Turnover Operating
profit profit
#'000 #'000 #'000 #'000
UK 79,690 38,066 59,780 29,176
France 73,588 19,774 53,230 10,346
Germany 20,685 (1,806) 25,686 816
USA 87,483 20,954 49,777 10,204
261,446 76,988 188,473 50,542
Discontinued - - 3,074 219
operation
Acquisitions - UK 19,488 1,540 - -
- USA 26,107 1,410 - -
307,041 79,938 191,547 50,761
2. Net Debt
Analysis of change in net debt (inclusive of finance leases)
At Cash Acquisitions Exchange At
1 Oct flows Movement 30 Sept
1998 1999
#'000 #'000 #'000 #'000 #'000
Net cash at bank and
in hand 33,248 (20,333) 8,652 (210) 21,357
Short term deposits - 7,948 - - 7,948
Debt (95,279) 9,151 (911) (521) (87,560)
(62,031) (3,234) 7,741 (731) (58,255)
Short term deposits are included within cash at bank and in hand in the
balance sheet.
3. Taxation
The taxation charge for the year comprises:
1999 1998
#'000 #'000
UK taxation 12,106 9,792
Overseas taxation 11,674 5,451
23,780 15,243
4. The unaudited financial information set out above does not constitute the
Company's statutory accounts for the year ended 30 September 1999.
Statutory accounts to 30 September 1998 have been delivered to the
Registrar of Companies and those to 30 September 1999 will be delivered
in due course. The Group results for the year ended 30 September 1998
(as amended for the adoption of FRS10 "Goodwill and Intangible Assets")
have been extracted from those statutory accounts. The Auditors' Report
on the accounts to 30 September 1998 was unqualified and did not contain
a statement under Section 237 of the Companies Act 1985.
5. The calculation of basic earnings per share is based on earnings of
#50.5m (1998: #32.4m) and on 119,467,663 Ordinary 1p shares (1998:
112,281,193) being the weighted average number of shares in issue during
the period. Diluted earnings per share is based on earnings of #50.5m
(1998: #32.4m) and on 121,019,395 Ordinary 1p shares (1998: 113,725,070)
Ordinary 1p shares, being the adjusted weighted average of shares after
dilutive share options.
6. The final dividend of 2.33 pence per share (net) will be paid on 1 March
2000 to shareholders on the register at the close of business on 4
February 2000.
7. Goodwill arising on the acquisitions in the period has been capitalised
within Intangible assets in accordance with FRS10 "Goodwill and
Intangible Assets". As permitted by the transitional provisions of
FRS10, goodwill arising on acquisitions in previous periods has been
eliminated against the profit and loss account reserve and accordingly
reserve balances have been restated.
We have concluded that goodwill is an inseparable part of the value of
businesses acquired this year and should not be amortised as it has an
indefinite useful economic life. There will be an annual review of the
carrying value of this asset.
8. The Annual Report and Accounts will be posted to shareholders shortly and
thereafter copies of the Report and Accounts will be available from the
Secretary, The Sage Group plc, Sage House, Benton Park Road, Newcastle
upon Tyne, NE7 7LZ.
END
FR ZLMGZMNMLLMZ
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