Sage under a cloud as shares slump on back of profits decline
ACCOUNTING software company Sage Group slumped 91p to 588.8p, the benchmark’s biggest weight yesterday, despite saying it would ramp up spending in its cloud platform.
The Newcastle-based group reported a 3.7pc decline in underlying operating profit to £391m for the year to September.
Revenue, however, grew nearly 4pc to £1.77bn due to strong sales in its North America and Northern European markets.
Steve Hare, chief executive, said: “We’ve delivered a strong performance in full-year 2020, achieving recurring revenue growth in line with the guidance we gave at the beginning of the year, despite the pandemic.”
Sage said it would increase spending in its cloud software offering – to capture small businesses – and warned of knocks of up to 3pc on its margin in 2021.
Shares closed at their lowest level since April.
This was not enough to dampen optimism that returned yesterday, marking the end to a seesaw week.
The prospects of easing restrictions over Christmas, hopes of a Brexit trade deal with the European Union and Pfizer announcing it will file for an emergency approval of its coronavirus vaccine pushed London’s blue chips higher.
Meanwhile, figures showed British shoppers continued to spend more for the sixth month running after sales rose 1.2pc last month, compared to September, according to the Office for National Statistics. Consumers started Christmas shopping early.
It came as an index of consumer confidence from market research firm GFK improved from minus 33 to minus 31 last month, slightly better than economists’ expectations of a minus 34 reading.
Separately, public sector borrowing from April to October was also the highest since records began in 1993 at £214.9bn, up £169.1bn from last year, the ONS said.
It more than doubled from £10.8bn in October 2019 to £22.3bn last month, marking an October record. However, it came in lower than the £36.1bn borrowed in September and below economists’ estimates of £31bn.
The FTSE 100 inched up 17 points to 6,351.45, adding 0.5pc through the five days to log its third straight week of gains. The pound also edged 0.2pc higher against the US dollar to $1.328.
Among other movers, miners Antofagasta and Glencore gained 38p to £11.35 and 4.62p to 195.1p, respectively, as the price of copper rose, while British Land slipped 5.5p to 474.6p after Barclays cut its target price on the stock.