(Adds chief executive comment, share price)
LONDON (AFX) - Sage Group PLC, the UK accounting software supplier, reported an in-line rise in full-year profit, helped by acquisitions and strong sales, and said it was confident about prospects for growth.
The only technology company in the FTSE 100 share index said pretax profit after an amortisation charge was 221.2 mln stg for the year to Sept 30 on revenue up 22 pct to 935.6 mln stg.
Sage, which is based in Newcastle, hiked its dividend by 25 pct to 3.59 pence per share.
'This has been an exciting year for Sage with a number of small and medium-sized enterprises,' Sage chief executive Paul Walker said in a statement.
'We remain confident about our prospects for continued growth through focusing on value-added services, tailored solutions and premium versions of current products.'
At 9.45 am Sage shares were up 9-/12 pence, or 4 pct, at 250-1/2, valuing the company at 3.23 bln stg.
Shore Capital's George O'Connor said he was encouraged by an increase in the profitability of the UK business and Sage's efforts to make its products work with a wider range of technology.
He kept his 'hold' recommendation on the company.
Sage, which has spent more than 600 mln stg on seven acquisitions in the past year in an effort to boost its growth, saw strong growth across its regions.
UK organic revenue growth was 7 pct, mainland Europe was 5 pct and the US recorded 6 pct, recovering after a weak first half.
Sage increased its customer base by around 500,000 to 5.2 mln, with half of the new customers coming from acquisitions.
Revenues from product licences grew by 12 pct and services by 28 pct.
Ahead of the results analysts were hoping for an update on Sage's two big US acquisitions -- US medical software supplier Emdeon Practice Services, acquired for 297 mln stg in August, and payment processor Verus, bought for 185 mln stg in February.
Sage has a strong record in integrating acquired companies quickly and extracting the maximum value from them but some analysts questioned the potential for growth in the US healthcare market when Sage announced the Emdeon acquisition.
In a telephone interview with reporters Walker said Emdeon -- used by 20,000 doctors' practices in the US -- will be kept primarily as a standalone business, renamed Sage Healthcare Division.
He said there was 'significant opportunity' for future growth by selling Emdeon's software to doctors already using other Sage back office software and through the introduction of electronic patient records in the US.
'(Emdeon) have done a good job in building a customer base but I don't think they've been as good as our Sage businesses in developing the add-on services and going back to our customers to sell them additional products,' Walker said.
'There is also a real drive in North America, very much driven by the government, for health records to be made into an electronic format and Emdeon are one of the few businesses that have approval from the government to do this.
'We have a big customer base to go back to to sell our electronic services.'
Sage said it is looking for more acquisitions over the next year and has around 300 mln stg in net debt available for deals, according to finance director Paul Harrison.
He said Sage would continue to focus on three areas for acquisitions -- new products or services; new industries or 'vertical markets' -- such as the move into healthcare through the Emdeon acquisition; and an expansion in Asia, particularly China.
Asked for more detail on Sage's outlook for next year Walker said he was confident that Sage could maintain its 7 pct organic growth rate. nick.huber@afxnews.com nh/tw/nh/tw/nh/ro COPYRIGHT Copyright AFX News Limited 2006. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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