sage half year 2010 presentation

8/9/2019 Sage Half Year 2010 Presentation

1/31

Interim resultsmon s en e arc


2/31

Financial hi hli hts

-

H1 FY10 Statutory Underlying

Revenue 718.9m -4% -2%*

Pre-tax profit 177.5m^ +15% +11%^

Earnings per share 9.59p^ +16% +12%^

Dividend per share 2.58p +3%

2

t constant exc ange rates an on an organ c as s

^Stated prior to amortisation of intangible fixed assets and after neutralisation of foreign exchange movements

Earnings before interest, tax and amortisation of intangible fixed assets (EBITA)


3/31

Stron H1 erformance

Reduction in rate of or anic revenue decline to 2%(compared to a contraction of 6% for the half-year

ended 30 September 2009)

EBITA margin increased to 25% following cost savingsfrom restructurin in 2009

Operating cash generation remained high at 130% of

Continued dividend progression: 3% increase in interimdividend to 2.58p per share

3

At constant exchange rates


4/31

Our riorities for 2010

Continuin to be a trusted artner to SMEs includinprovision of high quality support - renewal rates remain

at 81%

Innovating to meet evolving market needs, particularlyconnected business solutions and lobal roll out of

Sage ERP X3

Operational and financial improvements in NorthAmerica

4


5/31

nanc a rev ew


6/31

Revenue sources for H1

Total revenue -3% Organic revenue

700m

800m

Group organic revenue -2%274 248

500m

600m

Software and software-relatedservices revenue

Licence, Training -8%

37% 34%

471 471300m

400mProfessional services

Business forms, Hardware

Subscri tion revenue

63% 66%

100m

200m Combined software/supportcontracts

Maintenance and support

Transaction revenues

+1%

0m

H1 FY09 H1 FY10

Software and software-related services Subscription

6



7/31

Im rovin or anic revenuetrends

10% 8%

8%

10%UK

Mainland Europe

North America

2%4%

Group

1% 0%0%

-2%

0%

H1 FY08 H2 FY08 H1 FY09 H2 FY09 H1 FY10

-4%-2%

-5%

-5% -5%

-4%

-6%

-2%

-6%

-4%

-9%-8%

-10%

-8%

7



8/31

Cost efficienc drives mar in

EBITA margin increased to+130 bps25%

26%

25%

Cost savings made in FY09+130 bps

24%

Planned investments falllargely in H2 FY1022.7%

24.0%

25.3%22%

20%

21%

ReportedEBITA margin

H1 FY09*

H1 FY09cost of

restructuring*

EBITA marginH1 FY09excluding

restructuring*

H1 FY10margin uplift

ReportedEBITA margin

H1 FY10

8

*At constant exchange rates


9/31

H1 cash flow and net debt

m m m

EBITA 181.9Cash flow fromoperations 236.6

Net debt1 October 2009 (439.4)

Depreciation/amortisation/profit ondisposal

15.0 Interest/issue costs (5.1) Free cash flow 192.4

Acquisitions- . .

/disposals.

Working capital change (17.5) Net capex (10.5) Dividends (64.7)

change

55.1 FX translation (2.5)

Exchange differences (1.8) Other 5.0

Cash flow fromoperations

236.6 Free cash flow 192.4Net debt31 March 2010

(305.3)

9

conversion

130% Interest cover 34.9x

cover

3.0x


10/31

Balance sheet

e e : . x

Covenant 4.0x

Goodwill and intangible assets 2,284.9 2,424.1

Property, plant and equipment 141.2 148.2

Net deferred tax (24.8) (19.4)

Matures in 2011

$300m rivate lacement notes

Net working capital 62.0 92.1

Deferred income (452.7) (453.1)

issued in the period

Strong working capital control

. .

Retirement benefit obligations (10.8) (4.8)

Acquisition deferred (1.6) (2.7)

1,911.2 2,089.4

Net debt (305.3) (557.8)

10

Net assets 1,605.9 1,531.6


11/31

eg ona rev ew


12/31

Stron UK erformance

100m

120m

122m 122m

Organic and headline revenueunchanged Subscription +5%

122m 122m80m Software and software-related services -11%

Sage Paycontinued to grow strongly

Accountants Practice Solutions erformed well

40m

m

with enhanced service levels HR, payroll and verticals markets remainedweak

37%margin

37%margin

0m

20m marginmargin Irish business impacted by economy

EBITA margin 37% (H1 FY09: 36%)

Revenue EBITA

H1 FY09 H1 FY10

was 36%

12



13/31

Resilient erformance inMainland Europe

281m 270m220m

240m

260m

280m

281m 270m

Total revenues declined 4%

Organic revenue decline of 2%

269m 275m160m

180m

200m

Software and software-related services -6%

France resilient at 1% organic growth, with

80m

100m

120m

Sound Spanish business impacted by weakeconomy revenues -9%

German flat with ood erformance in

37%margin

37%margin

0m

20m

40m

60m 24%margin

23%margin

support and payroll, offsetting a softermid-market

H1 FY09 H1 FY10

Revenue EBITA

Margin in H1 FY09 excluding restructuring

costs was 23%

13



14/31

Pro ress in North America

Total revenues contracted 6% and 5%

250m

300m m270morganic

Subscription -2% organic

- -

150m

200m

organic

Improving revenue trend for business

100m SBS contracted 6% organically continuedcustomer caution impacting new licences

Sage Payment Solutions Division contracted 2%

37%margin

0m

50m

margin marginorganically - growth in merchants

Sage Healthcare Division contracted 4%

organically - impact of stimulus expected in FY11

Sage Payment Solutions Division

Sage Healthcare Division EBITA margin 22% (H1 FY09: 18%)

Margin in H1 FY09 excluding restructuring costs

14

age us ness o u ons v s on

Sage Healthcare margin 19% (H1 FY09: 15%) At constant exchange rates


15/31

Stron subscri tion rowth inRest of World

100m 100m

Revenue growth of 4% headline andorganic

Subscription +13% 50m

m

55m 57m

Software and software-related services -4%

South Africa still grew strongly at 5%40m

Australia grew 4% with strongperformance by Handisoft20m

EBITA margin 23% (H1 FY09: 21%)0m

10m 23%margin

21%margin

H1 FY09 H1 FY10

Revenue EBITA

15



16/31

us ness rev ew

an ou oo


17/31

Stron relationshi with our

customers

age s a rus e par ner o > m cus omersworldwide

SMEs have delayed upgrading and investing in newbusiness management solutions

SMEs are cautious of new technology but prepared tospend where it brings real business benefits

17


18/31

Customers rel on Sa e for

support

Maintenance and support (M&S) renewal rates stable at

81% Higher renewals in mid-market where value is greater:

-

M&S revenue* 148.4m 255.7m 404.1m

S lit 37% 63%

M&S contracts 1,012 814 1,826

Split 55% 45%M&S renewal rates 76% 90% 81%

* For H1 FY10

18


19/31

Growth of remium su ort

Evolution of su ort

90%

100%

59

4741

60%

70%

80%

64 67 67

40%

50%

4153

10%

20%

Basic0%

FY05 FY06 FY07 FY08 FY09 H1 FY10

Combined

19

Split by volume of contracts


20/31

Connected business solutions

The technolo world is divided over where data andapplications should reside desktop vs web vs hybrid

The desktop will remain relevant for most SMEs,

complemented by web-enabled services - offers richfunctionality for low total cost of ownership

Online accounting will be attractive for some SMEs,

particularly small and micro, and web-nativebusinesses

20


21/31

Deliverin value to customers

Different views of the same data in online solutions

Opening up data to non-accounting users such as sales, , ,

web/mobile access

21


22/31

We are well laced to deliver

connected business solutions

Sage 100 Anywhere

Sage Fundraising Online

ou on

22


23/31

Global collaboration

Common a roach and technolo standards fordelivering connected business solutions

Launched Sage ERP X3across the Group to meet

growing demand for Global solutions for upper mid-market

Decentralised structure enables us to be agile and

remain close to customer

23


24/31

Pa ment rocessin

Closel linked to ERP

Opportunities across our markets,

local payments ecosystem

Sage Payin UK continued to growrapidly, Sage Payment Solutions-

Announced acquisition of Netcash inSouth Africa, providing paymentprocessing services

24


25/31

Well ositioned for lon term

profitable growth

Improving revenue trends and increase in margin

Specific opportunity in markets such as payments andea care

Longer term opportunity to provide connected businesssolutions to our customers

25


26/31

upp emen ary


27/31

Re ional rofile

Revenue

H1 FY10

H1 FY10

revenue

EBITA

H1 FY10

EBITA

marginm

Groupm

%

UK 122.0 17% 44.9 37%

Mainland Europe 270.0 38% 63.7 24%

. .

Rest of World 57.3 8% 13.1 23%

Total 718.9 100% 181.9 25%

27


28/31

UK

Revenue EBITA

Subscription 89.3m EBITA 44.9m

Software and software-related services 32.7m

Total 122.0m EBITA margin 37%

New in the period 22,000 4,000

At 31 March 2010 825,000 364,000

28


29/31

Mainland Euro e

Revenue EBITA





At 31 March 2010 1,713,000 672,000

29


30/31

North America

Revenue EBITA




*


At 31 March 2010 3,166,000 618,000

30

* Excluding ACT!


31/31

Rest of World

Revenue EBITA





At 31 March 2010 565,000 172,000

31

sage half year 2010 presentation

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