Positive update by Sage fails to impress the City

Apr 15 2008 by Andrew Mernin, The Journal

A POSITIVE trading update from the UK’s largest software maker Sage failed to impress the City yesterday as shares fell almost seven points.

The Newcastle company, headed by chief executive Paul Walker, yesterday said it expects financial results for the six-month period to March 2008 to be in line with analysts’ forecasts.

According to the average of 11 analysts forecasts made for the period, this could see Sage record sales of around £617m and pre-tax profits of £129m.

A note by analysts Cazenove in response to the trading update, said: “Sage remains our favourite defensive UK software name.

“The company is benefiting significantly from recent currency moves which will more than balance any negative developments in its licences revenue business.” However, the update failed to lift the market, as its share price fell 6.8 points to 191.70p.

Investor relations director Cynthia Alers said the company had coped well in 2008 despite tough economic times, and hopes to create more jobs in the North East in the second half of the year as it continues to upgrade its products.

She said: “We feel our business model is solid. No company is exempt from the credit crisis but none of our customers pay cash upfront and we have a strong balance sheet so we haven’t been affected too much.”

Sage was floated on the London Stock Exchange in 1989 and today employs 13,900 people worldwide – including around 1,400 people at its headquarters in Newcastle.

PAGE TWO: More Sage analysis.