Sage’s new chief executive said he was eyeing bolt-on acquisitions as he revealed a new management line-up designed to add “vigour” to the business software group as it emerges from the downturn.
Speaking as he delivered full-year pre-tax profits ahead of forecasts, Guy Berruyer said that while small and medium-sized companies had been slow to emerge from the downturn, Sage was “seeing some signs of improving markets” for its 6m customers and was “cautiously optimistic” about the outlook for 2011.
Newcastle-based Sage has been one of the steadiest UK technology stocks, but growth during the downturn was lacklustre and analysts have criticised the group for being slower than rivals such as UK-based Iris Software and Intuit in moving from selling off the shelf products to a software-as-a-service model.
Mr Berruyer, who succeeded previous chief executive Paul Walker in October, said he was focused on improving Sage’s margins and would be investing in higher growth initiatives. Sage would also improve its web offering and drive its North America operations, where revenues had fallen, he said.
As part of efforts to “energise” Sage, Mr Berruyer has reshuffled his management, giving two Sage stalwarts, who had been in the running for the job of chief executive, enhanced roles.
Paul Harrison, chief financial officer, will be given additional responsibility for mergers and acquisitions. Paul Stobart, head of the UK and Ireland operations, will add Germany, Poland and Switzerland to his existing portfolio.
However, Sue Swenson, chief executive of North America, will retire and be replaced by Pascal Houillon, head of Sage France.
Sage, whose software helps companies manage their finances and payrolls, has bought South Africa’s Netcash for £8.5m.
However, it pulled out of an auction in the summer to buy Italy’s TeamSystem, which went to private equity firm HgCapital for €565m (£475m).
Mr Berruyer said TeamSystem was not the right move for the group. He said Sage, which has at least £300m to spend on deals, was focused on bolt-on acquisitions that could take it into new countries, add complementary products or accelerate its web-based solutions.
Sage on Wednesday reported pre-tax profits for the year to September of £319.9m, up 20 per cent from £267.4m in 2009, on flat revenues of £1.44bn. On an underlying basis, stripping out the affects of foreign exchange movements, pre-tax profits rose 14 per cent to £356m.
Earnings per share were 17.29p, up from 14.46p last time, and Sage said it would propose a final dividend of 5.22p, bringing the full-year pay-out to 7.8p (7.43p).
The shares closed up 5 per cent at 271p as investors were cheered by signs of a pick-up in the second half, strong operating cash flow and a better than expected fall in debt levels to £220m.