Sage Group Plc says it is on course to meet market expectations of a 29% increase in revenue to $1.2 billion in the year to September 30 while pre-tax income is likely to show a 20% rise to $327.7 million.
The accountancy and business software vendor to the SME sector said that organic revenue grew by 6% and the overall figures was boosted by its $97.4 million acquisition in July 2003 for Timberline Software Inc and its purchase in December for $110 million of Computer Associates’ business software subsidiary ACCPAC International Inc.
While its core organic growth in North America only rose 5%, these acquisitions enabled its North American revenue to rise 30% to 287 million pounds ($519.5 million) with an operating margin of approximately 22%.
Margins were squeezed by the poor performance of its acquisitions. Timberline, which provides accounting and cost-estimation software for construction and real estate companies, contributed 34 million pounds ($61.5 million) with a 12% operating margin.
ACCPAC, which offers a broad range of software covering accountancy, manufacturing, point of sale, EDI, ecommerce, CRM and warehouse management software, also had a 12% operating margin and contributed 34 million pounds ($61.5 million) to revenue.
Newcastle, UK-based Sage is much more profitable on its home patch where it enjoys 39% margins and revenue rose 9% to 186 million pounds ($336.7 million). In mainland Europe, revenue increased 22% to 170 million pounds ($307.7 million) with 24% margins.
Sage is dipping its toes in the rest of the world following its acquisition in November 2003 of Softline Ltd, which supplies accounting, payroll and taxation software to companies in South Africa, Australia and South Africa. AACPAC also has operations in the area and together they contributed 45 million pounds ($81 million) at an operating margin of 24%.
While Sage’s prediction that earnings per share will increase by 21% to 9.9p ($0.18) will please the city, the company will again have to focus on more acquisitions to keep up growth rates.