LONDON BRIEFING: Sage looks to Business Cloud for sales silver lining

(Alliance News) - Accounting software firm Sage Group on Friday left its full-year outlook unchanged, after what it called a strong first-half performance, with its Business Cloud offering leading a rise in recurring revenue.

In the six months to March 31, Sage recorded pretax profit of GBP189 million, down slightly from GBP190 million in the same period a year prior.

Revenue also was broadly flat, slipping to GBP934 million from GBP937 million. It noted, however, organic revenue was up 5%, driven by Sage Business Cloud growth of 21%.

Meanwhile, annualised recurring revenue rose by 10% to GBP1.78 billion from GBP1.63 billion a year before. "Cloud native" ARR growth was 43%, Sage said.

Sage upped its interim dividend by 5.0% to 6.30 pence from 6.05p.

"Our strategic investment in sales, marketing and innovation has continued to accelerate revenues across Sage Business Cloud, underpinned by increasing levels of new customer acquisition. Cloud native solutions, which now account for around a quarter of group annualised recurring revenue, have performed particularly well," Chief Executive Steve Hare said.

For financial 2022, Sage continues to expect organic recurring revenue growth in the region of 8% to 9%.

Sage shares were up 3.7% early Friday, outperforming the wider FTSE 100 index.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 0.8% at 7,293.58

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Hang Seng: up 2.5% at 19,860.10

Nikkei 225: closed up 2.6% at 26,427.65

S&P/ASX 200: closed up 1.9% at 7,075.10

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DJIA: closed down 103.81 points, or 0.3%, at 31,730.30

S&P 500: closed down 5.10 points, or 0.1%, at 3,930.08

Nasdaq Composite: closed up 6.73 points, or 0.1%, at 11,370.96

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EUR: soft at USD1.0404 (USD1.0417)

GBP: flat at USD1.2221 (USD1.2229)

USD: up at JPY128.64 (JPY128.25)

Gold: down at USD1,823.70 per ounce (USD1,838.71)

Oil (Brent): flat at USD108.49 a barrel (USD108.55)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Friday's key economic events still to come

1100 CEST EU industrial production

0830 EDT US import & export price indexes

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European Commission Vice President Maros Sefcovic called for "honesty about what the [UK] signed up to" amid tensions about a trade agreement to avoid border checks on the island of Ireland. "Honesty about the fact that the EU cannot solve all the problems created by Brexit and the type of Brexit that the [UK] government chose," Sefcovic said speaking in Brussels before lawmakers from the EU and the UK. Earlier on Thursday, UK Foreign Secretary Liz Truss repeated threats to override the Northern Ireland protocol during a phone call with Sefcovic, in favour of a policy that would remove trade barriers between Britain and Northern Ireland. Truss warned Britain "would have no choice but to act" if issues related to the trade agreement persisted in Northern Ireland and if the EU failed to show "the requisite flexibility". The EU had offered Britain "wide-ranging and impactful solutions," but was still waiting for a response from the British government, Sefcovic said in a statement after the call.

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The new Northern Ireland Assembly will meet amid uncertainty over whether the DUP will support the election of a speaker. Ninety MLAs will gather in the chamber after last week's Northern Ireland Assembly election saw Sinn Fein emerge as the largest party for the first time. The DUP has already indicated that it will not nominate for the position of deputy first minister, which will prevent the forming of a new Executive, as part of its protest against the Northern Ireland protocol. Party leader Jeffrey Donaldson said his party will decide on Friday morning whether it will support the election of a speaker.

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International economics expert Swati Dhingra has been appointed to the Bank of England's interest rate-setting committee, as it faces a tough balancing act amid soaring inflation and the threat of recession. The UK Treasury announced that Dhingra will join the bank's nine-strong Monetary Policy Committee in August, replacing current external member Michael Saunders, who leaves after a six-year stint. Dhingra is an associate professor of economics at the London School of Economics, specialising in international economics and applied microeconomics. She will take the number of women sitting on the committee to three, joining Catherine Mann and Silvana Tenreyro.

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BROKER RATING CHANGES

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Jefferies raises Coca-Cola HBC to 'buy' (hold) - price target 2000 (1800) pence

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Jefferies cuts Vodafone to 'hold' (buy) - price target 125 (150) pence

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Credit Suisse cuts Drax to 'underperform' (neutral) - price target 650 (600) pence

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JPMorgan cuts Genel Energy to 'neutral' (overweight) - price target 182 (177) pence

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COMPANIES - FTSE 250

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ContourGlobal said its trading has been "resilient" in the first three months of 2022, and believes it can still perform well despite the "unprecedented turbulence in the global energy markets". The London-based power generation company continued: "We performed ahead of the board's expectations during the quarter, and I am pleased to confirm the first quarter dividend payment of 4.91 US cents per share, representing a 10% year-on-year growth in line with our dividend policy. This is underpinned by strong operating cash flows and a 15% year-on-year growth in adjusted Ebitda to USD208 million. The outlook for the rest of the year is favourable." In the three-month period, revenue was up 53% year on year to USD652 million from USD427 million, with income rising 24% to USD94 million from USD76 million. Net profit stood at USD8 million, down from USD9 million. Production increased 40% to 4,701 gigawatt hours from 3,349 the year prior.

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COMPANIES - SMALL CAP

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Oxford Nanopore Technologies said its sequencing technology has been selected for use by researchers at the University of Washington and Seattle Children's Hospital. The technology will be used by the 1000 Genomes Project initially to sequence 500 of the project's samples. The project's goal "is to gain more scientific insights from the comprehensive genomic dataset and to create a catalogue of structural variation from a diverse set of individuals," Oxford Nanopore said.

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UK Oil & Gas said it has been granted a one-year extension for its work programme at its PEDL137 licence, which contains the producing Horse Hill oil field. The extension, granted by the North Sea Transition Authority, allows UKOG to drill a second well at Horse Hill's Kimmeridge oil pool, with work currently scheduled to begin before September 2023. UKOG owns an 86% stake in Horse Hill, and is the operator, with a 12% stake held by Alba Mineral Resources. Horse Hill is an oil project near Gatwick Airport in southern England. In May, UKOG won a full production permit for the field.

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AQSE-listed Hydrogen Utopia International confirmed it is in discussion with AIM-listed Powerhouse Energy Group over a potential opportunity in Ireland. "HUI has been exploring the possibilities in the region since November 2021and is searching for a JV partner to develop a first of a kind waste to hydrogen facility. There is currently no agreement in place and the PHE board is considering the proposal and how it may become involved in the potential project, which is at a very early stage," Hydrogen Utopia explained.

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Investment vehicle Sivota said it has completed its acquisition of a majority stake in digital marketing engagement platform Apester. Sivota was targeting investments in later-stage, Israeli technology-related firms. The deal, Sivota noted, values Apester at USD16.0 million, and Sivota will now own 58% of its voting rights through preferred seed shares. The deal will be funded by a GBP11.5 million placing and subscription of 11.5 million Sivota shares at 100p. "Apester will be Sivota's first acquisition and is closely aligned with Sivota's strategic principles. Sivota is keen to leverage Apester's existing assets whilst applying forward thinking leadership and insight in order to increase value for Sivota's shareholders over time," the company added.

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Embattled lender Amigo said its creditors have voted to push forward with its new business scheme. The scheme - which is being proposed to settle customer claims following probes from UK regulators into mis-sold loans - required at least 75% of the claims of all creditors vote for it. Amigo noted, at a meeting held on Thursday, over 88% of creditors approved the scheme. It also said, however, that 83% voted for Amigo's wind down scheme. Now, the guarantor loans provider will asked the courts to approve the new business scheme, but should it be turned down, will ask for the wind down scheme to be approved. Amigo said its shares will be suspended while the court decides what scheme to approve. Chief Executive Gary Jennison said: "Our customers have voted in favour of the New Business Scheme, which the board of Amigo believes offers the maximum possible redress to creditors. This is an important step to address the liabilities that arose from historic lending practices under previous management."

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COMPANIES - GLOBAL

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Deutsche Telekom reported an impressive surge in its first quarter net profit thanks to the strength of its US business, leading to the company raising its full-year guidance. The Bonn, Germany-based telecommunications provider reported a net profit of EUR3.95 billion in the first three months of 2022, up significantly from EUR936 million achieved the previous year. Earnings per share multiplied to EUR0.79 from EUR0.20 as revenue climbed 6.2% to EUR28.02 billion from EUR26.39 billion. Service revenue grew further, rising 10% to EUR22.29 billion from EUR20.26 billion. In its home market of Germany, revenue inched up 0.9% against the previous year, which the company said was due the strength of its fixed-network core business. Revenue growth in the US of 9.5% was mainly attributable to exchange rate effects. The US represents 64% of overall operating revenue. The T-Mobile owner said it does not operate any networks in Russia or Ukraine and is discontinuing its developer activities in Russia.

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Friday's shareholder meetings

Derwent London PLC - AGM

Gresham House Energy Storage Fund PLC - GM re amendments to investment policy

Metro Bank PLC - AGM

TT Electronics PLC - AGM

Vulcan Industries PLC - AGM

Wheaton Precious Metals Corp - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

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