Sage to help clients weather the crunch
May 7 2009 by Andrew Mernin, The Journal
A breakdown of Sage's financials
Sage reported its half-year results yesterday to 31 March. Here we take a closer look at the North East software giant's results:
Financial overview
Financial overview
Statutory revenues increased by 17% to £748.4m (H1 2008: £640.4m), enhanced by favourable currency movements
- On a currency neutral basis, revenues contracted 3%* (H1 2008: growth of 9%*) EBITA† margin increased to 24% excluding restructuring charges; EBITA† margin maintained at 23% including restructuring charges (H1 2008: 23%*) Statutory pre-tax profit of £139.2m (H1 2008: £122.6m), an increase of 14%
On a currency neutral basis, adjusted pre-tax profit^ contracted 3% to £159.3m (H1 2008: £164.1m) and excluding restructuring costs increased 3% to £169.4m
Operating cash flow of £187.0m (H1 2008: £187.4m), representing 111% of EBITA†
Strong balance sheet with a ratio of net debt to EBITDA† of 1.6x; interest cover of 13.2x with committed debt facilities of £830m to 2011
Interim dividend raised 3% to 2.50p per share (H1 2008: 2.43p per share), reflecting reliable cash flows and the strength of our business model
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Operational overview
Strong control of our cost base with annualised savings of £49.3m (equating to 4% of the full year 2008 cost base) with associated restructuring charges of £10.1m in the first half of the year; and an additional £13.0m cost incurred since 31 March 2009 to date
4%* organic revenue contraction (H1 2008: 5%* organic revenue growth), reflecting a contraction of 15%* in organic software and software-related services revenues, offset by good organic subscription revenue growth
Organic subscription± revenue growth of 7%* in the UK and Mainland Europe; 14%* growth in Rest of World, contraction of 3%* in North America, giving 2%* growth for the Group
Renewal rates of support contracts maintained at 81% with continued strength in premium support and overall revenue growth in many of our product lines
Average of 40,000 customer support calls taken per day
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Chief Executive Paul Walker said: “Our businesses have delivered a resilient first half performance in challenging economic conditions as customers continued to rely on Sage as a trusted partner in running their businesses more efficiently in difficult markets. After a robust performance last year, we are now experiencing the effects of the weakening global economy in most of our markets, with customers delaying software purchasing decisions. However, demand for high-quality customer support remains strong. We are proactively managing our business for these demanding market conditions and, in the current financial year to date, we have successfully eliminated annualised costs of £49.3m, representing 4% of the full year 2008 cost base.
“We anticipate that current market conditions will continue throughout the remainder of this financial year. However, we are confident that our market-leading portfolio of products and services, high-quality customer support, well established distribution channels and loyal, geographically diverse customer base mean we are well positioned to benefit when markets recover.”
