Sage’s pre-tax profit jumps to £373 million in fiscal 2020

Written by: Wajeeh Khan
November 20, 2020
  • Sage’s pre-tax profit jumps to £373 million in fiscal 2020.
  • Organic operating profit margin jumped to 22.1%.
  • Sage declares 17.25 pence per share of final dividend.

The Sage Group plc (LON: SGE) said on Friday that its pre-tax profit in fiscal 2020 came in higher than last year. The company also highlighted that implementation of its subscription-based strategy was going as planned.  

Sage shares opened a little under 15% down on Friday but jumped back roughly 3% in the next hour. Including the price action, the stock is now exchanging hands at £6.10 per share versus a higher £7.47 per share at the start of the year.

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Sage had plummeted to a low of £5.34 per share in late March, when the impact of COVID-19 was at its peak. Learn more about the different types of stock investments.

Organic operating profit margin jumped to 22.1%

For the financial year that concluded on 30th September, Sage reported £373 million of pre-tax profit, versus the year-ago figure of £361 million. Organic operating profit margin, the British multinational added, slipped to 22.1% in fiscal 2020 as compared to 23.8% last year.

According to Sage:

“This margin reflects continued investment to drive strategic execution, and includes a GBP17 million charge to provide for potential bad debts in connection with COVID-19.”

The COVID-19 crisis has so far infected more than 1.4 million people in the United Kingdom and caused over 53 thousand deaths.

In the terms of annual revenue, Sage plc posted £1.90 billion versus a slightly higher £1.94 billion in fiscal 2019. At £1.59 billion, organic recurring revenue saw an 8.5% growth this year.

Sage declares 17.25 pence per share of final dividend

The Newcastle upon Tyne-based company also said on Friday that software subscription penetration reached 65% in fiscal 2020 while Sage Business Cloud penetration stood at 61%. For the current financial year, the enterprise software company now forecasts a 3% to 5% annualised growth in organic recurring revenue growth.

The board declared 17.25 pence per share of final dividend on Friday. In comparison, Sage had declared a lower 16.91 pence per share of final dividend in fiscal 2019. In separate news from the United Kingdom, Royal Mail said on Thursday its pre-tax profit shrunk to £17 million in fiscal H1.

Sage plc performed fairly upbeat in the stock market last year with an annual gain of close to 25%. At the time of writing, the British multinational enterprise software company is valued at £6.65 billion and has a price to earnings ratio of 19.95.