The mid-week hiatus meant I missed the live audiocast of Sage’s full year results but the playback left me open mouthed. CEO Paul Walker made a lot of noise about growth but there was nothing he could do to disguise the fact that the US market has been a massive disappointment (see p24) and in particular the troubled Emdeon (now Sage Healthcare division) which grew 1% and contributed 7% EBITA. Nor could he avoid the fact that Sage’s brand strength in products like Peachtree have not been enough to put a spurt into US growth. Walker mollified analysts by doubling the dividend and pointing to strong cashflow.
UK performance was strong with margins at 37% but as I have said before regarding Oracle, how long will customers continue to support a company that produces such high net returns for product that’s basically in maintenance mode and with the meagre R&D budget being put into product integration.
There was almost no word on saas development. Instead, Walker said you could argue Sage is already a services business. That’s one interpretation but it’s not mine.
The real killer is profit growth. Despite top line revenue growth of 24% to £1.15bn, PBT was £223mill compared to £221mill in FY06. The company spins the PBT increase to 14% but that’s a fiction.
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