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Sage, the UK’s largest software company, beat expectations with first-half profit of £113.7m ($212m) and committed itself to pursuing acquisitions after last month’s failed takeover of Norway’s Vismus.

The group said it had been right to walk away from Vismus instead of entering a bidding war with HgCapital, a London-based private equity firm, which offered NKr4.3bn ($703m).

Paul Walker, chief executive, told the FT he had “quite a good acquisition pipeline”, including other opportunities in Scandinavia. “There are others in Sweden still,” he said. “This wasn’t the only player in town.” Mr Walker added that there could also be deals in regions where the company was not well established, such as Asia.

Pre-tax profit in the six months to the end of March increased by 19 per cent to £113.7m from £95.8m, while revenue was 18 per cent higher at £455.9m.

Acquisitions in fast-growing markets such as South Africa helped offset slower organic growth in the mature US and UK markets.

Sage shares fell nearly 5 per cent to 252½p after overall organic sales, excluding acquisitions made since 2004, gained 5 per cent. This was “a touch disappointing”, said Kevin Ashton, analyst at Bridgewell Securities, after 6 per cent growth in the past two years.

Sage stressed some of this weakness was in older, non-core products. The bulk of this year’s new software releases would come in the second half, which should improve full-year sales.

Cashflow from operations was £153.9m compared with £131.7m last year. Paul Harrison, finance director, said this gave scope for further cash and debt-financed acquisitions. In the first half, Sage acquired Adonix of France for an enterprise value of £74.1m, and Verus in the US for £184.6m.

Copyright The Financial Times Limited 2017. All rights reserved.
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