Britain's Sage feels sales hit from crisis, but hikes dividend
Reuters
Published May 13, 2020 02:35AM ET
Updated May 13, 2020 05:20AM ET
By Paul Sandle
LONDON (Reuters) - Sage Group 's (L:SGE) sales to new customers in April were roughly half the level expected as it felt the effects of a sharp economic downturn caused by the coronavirus pandemic.
The supplier of software to small and medium sized firms said on Wednesday its organic revenue growth rose 5.7% to 935 million pounds ($1.15 billion) and organic operating profit was up 3% to 213 million pounds for the six months to end-March.
Sage said it still expected recurring revenue to grow in the full year, but it would not be at the 8% to 9% it had previously targeted. Organic recurring revenue rose by a better-than-expected 10.3% in the first half.
"We don't know what the level of new customer acquisition will be and also we don't know what the level of existing customer churn will be because of the potential business failures," Chief Executive Steve Hare said.
Sage bucked a trend among major companies of cutting dividends by raising its half-year payout by 2.5% to 5.93 pence a share.
The company's balance sheet had been strengthened by the proceeds of a disposal and the cancellation of a share buyback.
"We have the financial resources," Hare told Reuters. "We are not making use of any government support schemes, we are not furloughing any of our people and I think it's important that we continue to support all of our stakeholders."
Hare said Sage was offering support to some customers who were struggling to pay monthly subscriptions after their own revenues were wiped out by lockdown measures.
"We are having lots of conversations with our customers," he said. "On a case-by-case basis we are offering some payment forgiveness short-term, it is very much a targeted approach."
Sage shares were up 3% at 675 pence at 0900 GMT
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.