Sage earnings rise in tough SME environment

LONDON Wed Nov 30, 2011 7:37am GMT

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LONDON (Reuters) - British software firm Sage posted a 8 percent rise in full-year profit, broadly as expected by the market, and said it was working hard to win sales from cautious small and medium-sized enterprises.

"There are clearly significant macro-economic concerns which may impact SMEs, particularly in the eurozone," Chief Executive Guy Berruyer said on Wednesday.

"However, the strengths of our business position us well to deal with the ups and downs of the economic cycle."

The company, which supplies accounting and other business software to more than six million SMEs, reported adjusted pretax profit of 352.6 million pounds on 4 percent higher revenue of 1.33 billion pounds. Adjusted earnings per share rose 16 percent to 20.8 pence.

Newcastle-based Sage's customers took longer to emerge from the last economic downturn than larger corporations, and it posted organic growth in all its regions earlier this year for the first time since 2007.

In September Sage offloaded its U.S. healthcare unit for $320 million (205 million pound) to Vista Equity Partners, recognising an overall loss of between 60 and 70 million pounds on the asset, which was proving a drag on its North American operations.

The group also failed to land a deal to buy Australia's MYOB in the summer, although Berruyer said acquisitions remained a priority.

Sage, which competes with Intuit, increased its total dividend by 25 percent to 9.75 pence a share.

Analysts expected the company to report adjusted pretax profit of 355 million pounds on revenue of 1.47 billion pounds, equating to adjusted earnings per share of 19.9 pence, according to a Thomson Reuters I/B/E/S consensus of 22 brokers.

(Reporting by Paul Sandle)