Weakness in Europe and the continued migration of customers onto subscription-based software has hampered growth at accountancy software provider
European revenues rose a modest 1 per cent to £400m in the 12-month period as decent underlying revenue growth in UK and Ireland and Germany was offset by a 8 per cent slump in sales in Spain and a flat performance in France. The US did little to lift the numbers, either, posting flat revenues of £199m. And although emerging territories, including Africa, Asia and Australia, posted double-digit top-line growth, this segment only account for 11 per cent of the group total.
Moreover, increases in subscription-based software sales have barely offset declines in the traditional software business, with underlying subscription sales rising 5 per cent to £451m and traditional software sales falling 4 per cent to £221m.
Deutsche Bank expects full-year adjusted EPS to fall from 21.5p to 20.1p.
|SAGE GROUP (SGE)|
|ORD PRICE:||269p||MARKET VALUE:||£3.4bn|
|TOUCH:||269-269.2p||12-MONTH HIGH:||225p||LOW: 313.4p|
|DIVIDEND YIELD:||3.9%||PE RATIO:||14|
|NET ASSET VALUE:||126p||NET CASH:||£122.1m|
|Half-year to 31 Mar||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 16 May
Payment: 8 Jun
*Includes intangible assets of £1.83bn, or 143p a share
Sage shares fell 5 per cent post results, but still trade on a full looking 13 times earnings estimates. Moreover, until management reveals its growth strategy in two months time, they are likely to drift lower. Trading sell.
Last IC view: Fairly priced, 280p, 30 Nov 2011