Member Article

Newcastle’s Sage Group on course for organic growth following solid start to the year

Newcastle-headquartered The Sage Group has announced it is on course to achieve desired growth for 2015, today issuing its trading update for the three months ended 31 December 2014.

For the first three months of the year, Group organic revenue increased by 5.3%. The business remains on course to achieve the targets of 6% organic revenue growth and 28% operating margin in 2015, with the anticipated acceleration in revenue growth weighted towards the second half of the financial year, as stated at the time of the 2014 full-year results.

Organic recurring revenue grew by 7.0% for the first quarter, primarily driven by software subscription growth, and organic software and software-related services (“SSRS”) revenue grew by 1.0%.

Organic software subscription revenue growth of 28.8% in the quarter maintains the growth momentum reported with the 2014 full-year results.

All regions contributed to this performance, with Europe delivering particularly good growth on an established software subscription base.

As stated at the time of the 2014 full-year results, areas of weakness continue to be payments in North America and Europe Enterprise, particularly in France, and Management remain focussed on taking actions in these areas.

The Group’s operating cash generation remains strong. The share buyback programme continued during the period and, since 1 October 2014, approximately 3.5 million shares have been repurchased for a consideration of £12.4 million.

Net debt at 31 December 2014, was £542 million (£437 million as at 30 September 2014).

On 16 October 2014, as previously reported, the Group completed the acquisition of PAI Group, Inc. (“PayChoice”), a provider of payroll and HR services for small and medium-sized businesses (“SMBs”) in the US, for a cash consideration of US$157.8 million.

The acquisition accelerates Sage’s move to the Cloud in this market by leveraging PayChoice’s Software as a Service (“SaaS”) platform.

Chief Executive Officer, Stephen Kelly, said: “This is a solid start to the financial year and the overall growth trajectory remains on track.

“I have been privileged to meet many customers in my first 90 days with Sage. SME’s are the growth engine of the economy worldwide and our performance attests to the enduring quality of our relationships with them.

“We look forward to building on this position as a trusted partner to our customers, and to being even more instrumental in supporting their success in the future.”