Results round-up

Sage Group tumbled on Friday as it cut its full-year guidance to reflect "inconsistent operational execution".

In an update for the six months to the end of March 2018, the software company said it now expects around 7% organic revenue growth for FY18, down from previous guidance of 8%. Guidance for the organic operating margin was unchanged at 27.5%.

Organic revenue growth and subscription growth was lower than management expectations due to inconsistent operational execution. Sage reported organic revenue growth of 6.3% for the period, down from 7.4% growth in the first half of the previous year, as it took a hit from a drop in recurring revenue growth and contract licence slippage in the enterprise segment.

Meanwhile, software subscription growth came in at 25.3%, down from 30.6% in the same period a year ago, but software and software-related services growth was 7.1% compared to a decline of 7.3%.

Sage’s rolling mid-term guidance remains that organic revenue growth will reach 10% on a sustainable basis and organic operating margins will be at least 27%. The company said further cost savings of 500 basis points will be delivered over this period and either reinvested for growth or realised as an increase to operating margin. Over the long-term, the group aims to achieve organic operating margins of at least 30%.

Chief executive officer Stephen Kelly said: "Growth in H1 18 was lower than our expectations as the pace of execution has been slower than we planned. The market opportunity as outlined at capital markets day 2018 remains unchanged.

“The revised revenue guidance targets for FY18 reflect both the performance in H1 18, but also our diligence in ensuring that we focus on recurring revenue to drive sustainable acceleration throughout the rest of FY18 as a platform into FY19. We will provide a further update on our plans at our H1 18 results announcement on 2 May 2018."

At 0850 BST, the shares were down 15% to 570p.

Rolls-Royce updated the market on the ongoing Trent 1000 engine in-service issues on Friday, having outlined its management of the issues and the estimated costs relating to implementing its solutions in its full-year results in early March.

The FTSE 100 company said that, as part of its ongoing inspection and testing of those engines, it had decided to carry out additional engine inspections to those previously planned.

It said that the increased inspection frequency was driven by its further understanding of the durability of the Trent 1000 Package C compressor - a condition that was highlighted earlier in the year.

The inspections would be supported by service management and flight operations guidance to airlines, to be issued by the airworthiness authorities.

That would lead to additional disruption for customers, Rolls-Royce explained.

There were 380 Package C engines currently in-service with airlines, with the new regime having no impact on Trent 1000 Package B engines or Trent 1000-TEN engines.

While the compressor technical issue was known at the time of the company’s results, the requirement for more regular inspections would lead to higher than previously guided cash costs being incurred during 2018, the board confirmed.

The board said it was reprioritising various items of discretionary spend to mitigate the incremental cash costs, and its guidance for 2018 free cash flow remained unchanged for 2018 of around £450m.

"Our focus is on supporting our customers and doing all we can to minimise any impact on their operations," said CEO Warren East.

"We sincerely regret the disruption this will cause to our customers and our team of technical experts and service engineers is working around the clock to ensure we return them to full service as soon as possible.

"We will be working closely with Boeing and affected airlines to minimise disruption wherever possible."