Partner Article

Sage cuts debt levels

Software giant Sage has announced it has cut its debt by £50m in three months - prompting analysts to predict a return to the acquisition trail for the firm.

The Newcastle-based plc reduced its debt from £439m to £392 between September and December last year, the company said in a statement to the market.

The firm said it remained comfortably within its banking covenants with committed financing facilities in place until 2011.

Chief executive Paul Walker said: “We continue to navigate successfully the challenging market conditions through our focus on high quality customer service.

“We have seen no change to the environment over the period and our first quarter results were in line with expectations.

“Our proven business model and the loyalty of our large, geographically diverse customer base give us confidence that we are well positioned for these conditions and the eventual market recovery.”

An analyst’s note from international institution Piper Jaffray said the news could be a sign that Sage is moving closer to making large acquisitions amid easing financial constraints.

The note said: “This level of debt leaves Sage comfortably within its banking covenants and is gradually paving the way for Sage to be able to again look at sizeable acquisitions.

“These acquisition opportunities remain key, in our view, in order for Sage to reignite its earnings growth.”

Sage, which employs 1,200 people in the North East and 13,400 worldwide, saw its global revenues climb 11% to £1.44bn in the year ending September 2009.

Shares in Sage reached a high of 238.30p earlier today, after opening at 238.30p.

This was posted in Bdaily's Members' News section by Ruth Mitchell .