Sage shares rise a fifth after jump in operating profits

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Shares in UK software group Sage rose almost a fifth as it reported a jump in annual operating profits, launched a £400mn share buyback and increased its dividend.

The FTSE 100 company, which provides accounting and financial software for small and medium-sized enterprises, posted 9 per cent organic revenue growth and a 43 per cent increase in operating profit to £452mn for the year to September.

Steve Hare, chief executive, said it had achieved “strong, broad-based revenue growth”, adding that SMEs “remain resilient, despite the ongoing macroeconomic uncertainty”.

Free cash flow increased 30 per cent to £524mn, which the company said was supported by underlying cash conversion of 123 per cent “reflecting growth in subscription revenue and continued good working capital management”.

Shares in the company rose 19 per cent in early trading in London.

Sage also proposed a final dividend of 13.5p, increasing its full year dividend by 6 per cent to 20.45p.

The share buyback programme of up to £400mn will start from Wednesday. Sage said the move was consistent with its “disciplined capital allocation policy”, and reflected the board’s confidence in the technology group’s future prospects, “strong” cash generation and “robust” financial position.

The FTSE 100 company said it expected organic revenue growth in its 2025 financial year to be 9 per cent or above and said operating margins were expected to “trend upwards” this year and beyond as it focuses on “efficiently scaling the group”.

Analysts at Citi in a note said there had been “persistent fear of further growth deceleration” among investors and they expected “steady growth dynamics and solid operating execution to be seen favourably”.