Sage eyes Europe warily - UPDATE

5th Dec 2012 07:07

Accountancy software group Sage said it had grown revenues slightly over the past year but was keeping a close eye on conditions in Europe, particularly France.Organic revenue growth, which strips out acquisitions and disposals, was up 2% in the year, marking a slowdown from the 4% growth in 2011.The company saw 6% growth in subscription revenue, but was hit by a 5% drop in software and software-related service revenue.Underlying pre-tax profit was up 4% to £356.3m but underlying earnings per share dropped to 19.86p from 20.28p the year before.The company put the latter down to an increase in tax rate from 23% to 29%.It also cut its final dividend to 6.67p per share from 7.07p in 2011, however, the total dividend for the year was up 4% at 10.15p.Chief Executive Guy Berruyer said a feature of the year had been the variable trading performance by geography. "Europe's performance reflected good growth by the UK and Germany, offset by the impact of weaker markets in France and Spain," he said."North America delivered the anticipated improvement in the second half of the year while AAMEA [Africa, Australia, Middle East and Asia] continued to deliver very strong growth. "As we look forward, the global macro-economic outlook remains uncertain and we are watchful of the environment in Europe, particularly in France," he added. "Nothing to scintillate"Jefferies, which kept its 'hold' rating on the shares today, said that the results "offer little by way of data points to drive a firm investment view in either direction". The broker said the figures provided "nothing to scintillate"."Organic growth is likely to remain a challenge in FY13E and we posit that management needs to remain on the front foot with respect to acquisition opportunities in higher-growth regions and segments," Jefferies said.Both Investec and Panmure Gordon reiterated their 'sell' ratings for the stock today, while Canaccord Genuity reduced its recommendation to 'hold'.Shares were down 3.66% at 299.8p this afternoon.