LONDON -- Sage (LSE:SGE), which provides financial management software, services and support to small and medium-sized businesses, has just released its final results for the year to Sept. 30, 2012.
Organic revenue growth for the year was 2% (down on 2011's 4%), with 6% growth in subscription revenue -- which now represents around two-thirds of overall revenue -- offsetting a 5% contraction in software and software-related service revenue. But according to the company, better growth during the second half, particularly in North America, at least demonstrates improved momentum.
Underlying pre-tax profit was up by 4%, at 356 million pounds, although an increase in the tax rate meant that underlying earnings per share dropped 2% to 19.86 pence. Even so, a proposed final dividend of 6.67 pence per share will result in a total dividend for the year of 10.15 pence per share, an increase of 4%.
The latest dividend hike means Sage has now raised its dividend for 21 consecutive years. From just 0.161 pence per share in 1991, there's been a 63-fold increase to this year's 10.15 pence per share -- that's an effective annual rate of more than 20%.
Guy Berruyer, chief executive of Sage, commented:
We delivered a solid performance in the context of a macro-economic environment which remained difficult in most of our markets. We achieved strong growth in recurring revenue and focused on disciplined resource allocation, protecting margins at the same time as investing for growth. We are committed to driving strategic change and I am pleased with the momentum we have established with our growth initiatives.
As we look forward, the global macro-economic outlook remains uncertain and we are watchful of the environment in Europe, particularly in France. We are making good progress with our strategy for accelerating growth and remain confident we will continue to deliver on our strategic and financial goals.
But at 308 pence, Sage's shares trade at more than 16 times today's earnings figure and yield 3.4%. So, despite Sage's good track record, the company's immediate rating may not look that attractive.
However, there are other shares in the market today that boast durable dividend records but trade at more reasonable valuations.
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