Sage buoyant in spite of Microsoft competition

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Sage, the UK’s largest listed software company, on Wednesday said it was confident of maintaining strong growth rates in spite of increased competition from Microsoft.

Paul Walker, chief executive, estimated that Microsoft had taken only about 3 per cent of the worldwide market for small business software, with an expensive marketing campaign by the US software group having little effect.

Mr Walker said: “Since Microsoft entered the [accounting] market in 2001 we’ve been able to grow our revenues faster than they have.”

He said Sage, which provides accounting and other business software for mainly small and medium-sized businesses, had an advantage in offering localised products for different countries, and higher levels of support than Microsoft.

Sage is also seeking acquisitions in Germany, Italy, Scandinavia and China, to help push its customer base to 5m next year.

Customer numbers rose from 4.4m to 4.7m in the year to the end of September. Revenues in the period increased by 13 per cent to £776.6m ($1.35bn), mainly boosted by £101m worth of bolt-on acquisitions made during the past financial year. Organic growth was 6 per cent.

Mr Walker said the company – which acquired French rival Adonix for £78.4m last month at the start of the current financial year – was planning to continue its policy of making acquisitions, strengthening its presence in Europe and looking at ways to build its business in China where Sage currently has a very small presence. Longer term, Mr Walker said the company wanted to build a presence in other emerging markets such as India and Brazil.

Pre-tax profits rose 13 per cent to £205.4m, while earnings per share were up from 9.9p to 11.18p.

The total annual dividend was raised from 2.33p to 2.875p, and Sage said it planned to raise this further next year, reducing dividend cover to 3.5 by September 2006, almost a year earlier than it had originally planned.

Sage shares, which have gained about 25 per cent in value in the past year, rose 4p to 234p on Wednesday.

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