The Sage Group Plc is coming to the market by way of a placing of 5,726,591 ordinary shares, 769,231 of them new, at a price of 130p per share, representing 35.1% of the company’s enlarged share capital, announced Schroder Securities Ltd yesterday; at this placing price, which represents a price-earnings multiple of 10.3 based on […]
The Sage Group Plc is coming to the market by way of a placing of 5,726,591 ordinary shares, 769,231 of them new, at a price of 130p per share, representing 35.1% of the company’s enlarged share capital, announced Schroder Securities Ltd yesterday; at this placing price, which represents a price-earnings multiple of 10.3 based on pre-tax profit for the year to September 30 of UKP2.9m, Sage is capitalised at UKP21.2m, making the Newcastle-Upon-Tyne accountancy software developers the twelth largest placed company in the North-East. Before flotation, chairman and chief executive Graham Goldman and technical director Graham Wylie both had holdings of 20.1%; Grosvenor Venture Capital had 22%, and entrepreneur Philip Lever and ex-director Paul Muller had 16.5% and 9% respectively. Now, Goldman has 14.6% and Wylie 17.2%; Grosvenor has released around a third of its original holding to keep 14.7%; Lever has 9%, while Muller, with whom Sage was involved in litigation, now has no financial interest. After deducting the cost of the flotation, which was put at UKP500,000, Sage will receive about UKP500,000 in new money: this will go towards developing a site near its headquarters for further office, production and warehouse accommodation, which will cost an estimated UKP3m to UKP3.5m – its net cash position at September 30 was UKP2.4m. The company also plans to invest in improving products and adding new ones – especially in the networking line that now makes up a significant part of overall business. Goldman said there were no immediate plans to make acquisitions, but if the time was right the company would look to expand by taking over companies not neccessarily in the software line: computer stationery, in which the company presently enjoys high profit margins, was cited as one possible area of growth by acquisition. Sage’s turnover for the year ending September 30 was UKP9.3m, which represents an average compound growth rate over the last five years of 83%. The core of its business is still the accountancy software range, which includes the Sterling and Businesswise packages: overall, this range accounted for UKP5.2m sales last year; the MainLan range of networking products produced UKP2.0m sales, while the fast growing computer stationary area accounted for UKP1.4m. Sky, which was taken over by Sage in October of last year, has since the acquisition recorded sales of UKP685,000 on its more advanced range of accountancy products, and is now running at a profit – as a whole, Sage made a net profit for the year of UKP1.96m against a net last time of UKP1.04m. Unusually for an information technology company, Sage announced that its dividend policy was to pay 6% gross at the placing price, meaning that the dividend on last year’s figures would have been twice covered: Sage says it is doing this because it considers itself a cash-generative business.