Sage Soars After Distributor Purge

Half-year profit jumps 20 per cent, but exchange rate hits overall sales

Sage has seen an increase in sales after the accountancy software vendor ended all of its relationships with its distributors last year.

For the six months ended 31 March, Sage increased profit by 20 per cent, up to #19 million. Sage chairman David Goldman said: ?This has pushed up sales in the UK. Our dealers are happier now because they are not competing with price-cutting mail-order companies.?

But overall sales for the half-year were up just two per cent, to #73 million ? a small increase which was blamed on exchange rates.

?Most of our sales are overseas,? said Goldman, ?and we were affected by the strength of the pound.?

Sage estimated that volumes were depressed by #5.5 million because of exchange rate conditions. Turnover was also affected by rationalisation in Sage France, where overlapping products and services were cut.

Sage also announced that it was to overhaul the channel of KHK, the largest German accounting software vendor, which it bought in February, to bring it into line with group trading methods.

KHK traditionally sells master licences to its dealers, which then sell multiple copies to users. Sage, which sells single site licences through its dealers, wants to bring KHK into line with the rest of Europe.

According to Sage, the move will lead to ?a more predictable marketing model and to revenue growth as well as margin improvement?.