Software group Sage (SGE) said that it had seen a slowdown in new customer acquisition due to coronavirus, with roughly half the level previously expected in April. The group, which provides accountancy software predominately for small- to medium-sized enterprises, said that organic revenue growth would be below the previously guided range of 8 to 9 per cent this year.
The group has suffered from higher levels of decision deferrals, with “a greater level of conservatism across the board”, according to chief executive Steve Hare. Some customers have contacted the group to either cancel subscriptions or ask for help, which Mr Hare said they were dealing with on a case-by-case basis. However, the group is "focused on retaining customers and helping them survive", he added.
Chief financial officer Jonathan Howell said that while the group is determined to invest for the long term, it is taking actions around variable costs including travel and entertainment, restricting elements of its hiring programme and cutting back on marketing spend.
While Sage’s outlook is not clear, the group is supported by strong headline figures from its first half. Operating profit climbed by more than a third to £289m, underpinned by software subscription revenue growth, and recurring revenue nudged up to 88 per cent, approaching the group’s 90 per cent target.
Analysts at Citi forecast pre-tax profits of £372m and EPS of 26p in 2020, rising to £420m and 29p the following year.
| SAGE (SGE) | ||||
| ORD PRICE: | 679p | MARKET VALUE: | £7.4bn | |
| TOUCH: | 679-679.4p | 12-MONTH HIGH: | 826p | LOW: 515p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 149p* | NET DEBT: | 15% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 957 | 198 | 14.2 | 5.79 |
| 2020 | 957 | 275 | 20.6 | 5.93 |
| % change | - | +39 | +45 | +2 |
| Ex-div: | 21 May | |||
| Payment: | 12 Jun | |||
| *Includes intangible assets of £2.3bn, or 209p a share | ||||
