Interim pretax profits leapt 19% to £113.7m on revenues increased by 18% to £455.9m. The interim dividend has been hiked by 17% to 1.08p from 0.92p last time.
The headline figures reflect a reasonable all-round performance, with an expansion of its customer base to 5m businesses from 4.7m last time a key driver. Organic revenue growth of 5% also helped. Particularly encouragingly, Sage saw strong revenue growth in newer territories, notably Spain, South Africa, Canada and Australia.
There was revenue growth across all key regions but it was mostly modest, with mainland Europe performing best as revenues there jumped to £152.8m from £100m. Spain notably recorded impressive organic growth of 11%.
The group has been on the acquisition trail, with two significant purchases during the half-year. Adonix, acquired last November for £74m, has strengthened its market leading position in France. US-based Verus Financial, bought in February 2006 for £184.6m, meanwhile has helped to beef up the payroll processing services for North American customers.
Both acquisitions are doing well, with Adonix having performed strongly since its acquisition, with revenue growth of 13% compared with the prior year period (pre-ownership). Verus has also continued its strong growth since acquisition, with revenue growth of 21% compared with the prior year period (pre-ownership).
Last month there was blip in Sage's acquisition strategy as it failed with a £330m bid for Norway's Visma. Today the group said it would continue to consider further acquisition opportunities.
The generally healthy first half turnout is pretty much as Sage expected. It is confident on outlook, with new upcoming product and service initiatives expected to result in increased organic revenue growth over the second half.
Overall then, a decent interim performance with profits coming in slightly ahead of forecasts. The group's reassurance about organic growth going forward is to be welcomed but the market remains concerned that Sage's progress may be yet hampered by stiffening competition from rival Microsoft products and services.
The shares have performed well in recent months, having put on nearly 25% since hitting a six month low of 211p in last October. Performance over the 2006 calendar year has been rather muted, however, with the shares having risen just 3% to yesterday's close of 265.25p.
Today they came for a bit of profit taking as by midmorning the shares were down 6.75p or 2.5% to 258.5p. That leaves them trading on a 2006 forward multiple of 20.5, falling to 18.3 in 2007. The prospective yield is just 1.3%.
