LONDON (ShareCast) - (Sharecast News) - Sage Group scrapped its £250m share buyback as the accounting software company predicted the Covid-19 crisis would hit revenue growth in the second half of the financial year.
The FTSE 100 group said in the six months to the end of March organic recurring revenue was ahead of guidance but that other revenue fell with the decline accelerating as the coronavirus emergency intensified.

Sage said it expected the global economic downturn to lead to customers deferring purchases with an impact on sales and more business failures, increasing the churn rate among its customers.

In the year to the end of September growth in organic revenue, which makes up 90% of sales, will be below previous guidance of 8% to 9%. The decline in other revenue will accelerate significantly with an impact on margins, it said.

Sage said it had a strong balance sheet but that to support its financial strength it would cancel its plans to buy £250m of its own shares. The buyback programme was suspended on 18 March after £6m of shares had been bought.

The company said: "Sage is a resilient business supported by high-quality recurring revenues and a diversified customer base of small and medium businesses. However, the sharp downturn in global economic activity caused by the spread of Covid-19 is expected to have a broad impact on businesses generally."

Sage said it had about £1.3bn of liquidity including £900m of cash and cash equivalents and more than £400m of undrawn credit under its revolving facility that expires in 2025. Net debt at the end of March is estimated to be well below earnings.

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