2nd May 2018 09:24
LONDON (Alliance News) - Sage Group PLC said Tuesday there are no material changes to its financial 2018 guidance, which the FTSE 100 accounting software company provided in early April.
Sage reported Tuesday 6.3% growth in organic revenue in the half-year to March 31 - slowing from 7.4% the year before - reflecting a previously flagged slowdown in recurring revenue growth to 6.4% from 11% in the first half of 2017.
The company raised its interim dividend by 8.2% to 5.65 pence, noting its "strong" cash conversion rate of 99%.
Sage posted a 5.0% decrease in pretax profit to GBP171 million from GBP180 million the year before. This is despite increasing revenue by 7.1% to GBP899 million from GBP840 million the previous year.
Sage reported an organic operating profit margin of 24.5% for the six months ended March, down from 25.3% a year before. It says this is consistent with "front-loading investments" and a reduction in general administrative expenses.
The software firm said its revenue growth was impacted by "inconsistent operational execution" in driving recurring revenue growth, particularly in the UK. It also said it experienced "some contract licence slippage" in its Enterprise division in Africa Middle East and the US.
Sage claim the "root causes" of the execution issues have been identified and management has "already made changes".
The company says its guidance for the financial year 2018 remains at the changed 7% organic revenue growth - down from the original 8% - with organic operating profit margin unchanged at 27.5%.
Chief Executive Officer Stephen Kelly said: "The significant market opportunity, as outlined at Capital Markets Day, is compelling and unchanged. Sage Business Cloud remains the most comprehensive cloud platform in the market to capitalise on this opportunity. Organic revenue growth in H1 18 was around £5m below our expectations, due to slower and more inconsistent sales execution than we had planned for. We have already started the implementation of robust plans to address these execution issues and to accelerate our growth through high-quality recurring revenue throughout the rest of FY18 and beyond. The revised revenue guidance for FY18 reflects the H1 18 performance, but also our absolute commitment to ensuring we focus on driving high-quality subscription revenue, aligned with the strategy."
Shares in Sage opened up 2.8% at 654.20 pence each.
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