03/12-2008 11:20

Sage reports rise in annual profits

Accountancy software firm Sage reported a 3% rise in annual profits to £273 million but warned of weakening UK and US markets in recent months.

The group, which serves 5.8 million businesses, said despite a 10% rise in UK subscription revenues, software sales slowed in the second half to September 30.

Total revenues were up 7% to £1.3 billion, with UK revenues up 10% to £245.7 million and sales of its flagship UK product, Sage 50, ahead by 8%.

Newcastle-based Sage, which employs around 14,500 people, grew its European revenues by 15%, while US turnover rose just 1%.

Chief executive Paul Walker said the "strength and flexibility" of its business model helped achieve solid results in difficult market conditions.

"As markets weakened in the UK and North America, we were rapidly able to adapt to the changing markets and proactively focus our businesses in these regions."

He said growth in subscription revenues and demand for customer service continued to offset weakness in software in the new financial year.

Shares in the FTSE 100 Index company were more than 1% higher after the full-year results met most City expectations.

Panmure Gordon stockbrokers said the 10% growth in subscription revenues was the highlight, offset by continued pressure in United States and the healthcare segment in particular after an 11% revenues drop.

Analyst George O'Connor said: "Sage flags up the resilience of its business model, but overall guidance is cautious, as the global economy continues to deteriorate."

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