Will Sage’s strategy pay dividends?.

One of the key members of the Accountancy Age index of accountancy-related stocks, Sage has provided no end of business interest over the past year.

Indeed, when finance director Paul Harrison finally delivers the preliminary results on Tuesday, he will have been at considerable pains to integrate all the acquisitions made this year.

A quick look at the list of Sage press releases shows the company’s executives to be very hungry indeed for growth through acquisition. Grupo SP in Spain in October and Softline in South Africa in September. In July it was Timberline in the US and the Concept Group in France in January.

That is a lot of companies and this will need to be reflected in the results in some form. No small task for the Sage group FD and his finance team.

Given that acquisition is so central to Sage’s strategy, it must be a full-time job for Harrison to integrate new companies, work out the implications of exchange rate fluctuations and provide the support and analysis needed as the company constantly goes through due diligence procedures before making the decision to buy.

It’s important that the results show that the strategy is paying off.

Even if the company is expected to show group profits of £151m, analysts will be looking at the balance sheet and the relationship between liabilities and assets. The 2002 annual report showed that the company owed creditors £157m although total assets topped £900m.

Those relationships are unlikely to have changed much. And as long as the company’s debt position doesn’t change, analysts and shareholders will have no need to panic. Indeed, in 2002 the earnings before interest, tax, depreciation and amortisation ratio stood at 0.8. If that hasn’t worsened, everyone will be feeling comfortable.

The things likely to really bother those with interests in Sage are beyond the influence of the FD, such as the loss of key management personnel.

In April, it was revealed that founding father and UK MD Graham Wylie was leaving to set up his own company selling Sage products.

The share price dropped 4% at the time to 174.5p. These days it’s around the 178p mark.

That said, the company is driven globally by chief executive Paul Walker and chairman Michael Jackson. They continue to run a tight ship.

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