Slide 1: Good operational progress – on track to meet 2015 targets
Good operational progress – on track to meet 2015 targets The Sage Group plc Results for the six months ended 31 March 2015
Slide 2: Safe Harbour
Safe Harbour The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the
Slide 3: Stephen Kelly, Chief Executive Officer
Stephen Kelly Chief Executive Officer 3
Slide 4: A good first half performance, with additional momentum from some one-offs
A good first half performance, with additional momentum from some one-offs 6% 8% 73% Organic Organic Organic revenue recurring recurring growth revenue revenue growth 29% 28% 16% Organic software Organic Underlying subscription operating profit basic EPS revenue margin growth growth 4
Slide 5: On track to deliver 2015 financial targets
On track to deliver 2015 financial targets 8% organic recurring revenue growth underpins confidence… …but much work ahead 5
Slide 6: Steve Hare, Chief Financial Officer
Steve Hare Chief Financial Officer 6
Slide 7: H1 2015 overview
H1 2015 overview H1 2015 H1 2014 Change Organic revenue £682m £642m +6% Organic operating profit £192m £176m +9% Margin % 28.1% 27.4% +70bps Underlying profit before tax £182m £167m +9% Tax charge (£45m) (£47m) -3% Profit for the period £136m £119m +14% Underlying earnings per share 12.66p 10.88p +1
Slide 8: Revenue growth
Revenue growth Software subscription the primary driver Key organic revenue growth movements H1 2014 to H1 2015 700 682 675 657 650 0 642 625 600 H1 2014 statutory Foreign Acquisitions and H1 2014 organic SSRS Software Maintenance and Payments Other recurring H1 2015 organic revenue exchange Disposa
Slide 9: Group operating profit margin
Group operating profit margin On track to meet the 28% target 70bps increase in organic margin reflects improved operating leverage 4.2% 3.5% 27.4% 27.4% 28.1% H1 2014 underlying Foreign exchange Acquisitions and H1 2014 organic Revenue growth Cost growth H1 2015 organic operating profit disposals o
Slide 10: Europe
Europe A good performance driven by subscription Revenue bridge (£m) Regional highlights 380 Increase in organic revenue growth to 5% (H1 2014: 3%) 5% 8% organic recurring revenue 365 growth (H1 2014: 6%) underpins performance 0 France and UKI primary drivers, led by subscription initiatives 3
Slide 11: Americas
Americas Slower growth, reflecting mixed performance Revenue bridge (£m) Regional highlights 225 Americas organic revenue growth of 4% 4% (H1 2014: 6%) North America organic revenue 0 growth of 4% (H1 2014: 6%) reflects 210 mixed performance - weakness in payments and SMB* - offset by encouragin
Slide 12: AAMEA
AAMEA One-off sales in Malaysia support continued strength in South Africa Revenue bridge (£m) Regional highlights 80 AAMEA organic revenue growth of 19% (H1 2014: 12%) inflated by one- off software sales in Malaysia 19% South Africa maintained strong double digit organic revenue growth of 16% (
Slide 13: Resource and capital allocation
Resource and capital allocation Investing in our best growth opportunities % of total spend on Future products* • R&D and S&M reallocation towards Future product portfolio 69% has continued: 66% 65% 58% 58% 27% increase in R&D and S&M spend on Future 55% products versus prior period 45% 35% 25% R&
Slide 14: Cash flow
Cash flow Strong cash generation continues £m £m £m Underlying operating Underlying cash flow from Opening net debt 193 216 (437) profit (A) operating activities 1 October 2014 Depreciation / 15 Net interest (10) FCF 165 amortisation/impairment Share-based payments 5 Taxation (60) M&A (98) Exchange
Slide 15: The move to subscription
The move to subscription Progressive move to subscription continues to grow the recurring revenue base Organic revenue split by type 8% 8% 18% of revenue is 15% 18% 2% software 2% subscription Recurring revenue 47% 45% 73% of total 28% 27% revenue is recurring H1 2014 H1 2015 SSRS Maintenance and su
Slide 16: The move to subscription
The move to subscription Building a higher quality revenue base for the future Organic annualised value of software subscriber base 275 Over 265 550,000 255 £260m software 245 235 16% subscription growth 225 contracts 215 £m 205 195 185 ca.90% 175 renewal 165 rate for 155 subscription 145 contracts
Slide 17: Stephen Kelly, Looking ahead
Stephen Kelly Looking ahead 17
Slide 18: Scorecard
Scorecard Good progress but much work to do 8% Organic 10% recurring Europe Growth of revenue growth North Sage X3 in Europe Enterprise America SMB Sage One £260m North customer ASB1 value America acquisition Payments rate 1Annualised subscriber base 18
Slide 19: 6 month progress
6 month progress Global products acceleration Empowering collaboration across Sage Functional reporting Focussing organisation on customers Strengthening management team Solid foundations 19
Slide 20: Outlook
Outlook • Confidence in FY15 targets • Improving the quality of revenue growth • Managing operational risks as we drive business improvements 20
Slide 21: Invitation: capital markets day June 2015
Invitation Join us at our capital markets day 24 June 2015 21
Slide 22: Questions?
Questions? 22
Slide 23: Segmental analysis
Segmental analysis Period ended 31 March 2015 Europe Americas AAMEA Group Organic recurring revenue £272m £184m £44m £499m Organic SSRS revenue £106m £40m £37m £183m Total organic revenue £378m £223m £81m £682m Organic revenue growth +5% +4% +19% +6% Europe Americas AAMEA Group Opening contracts at
Slide 24: Strategic KPIs
Strategic KPIs KPI Measure H1 2015 FY 2014 H1 2014 Focusing our business R&D %: split by ‘Future’:’Growth’:’Heritage’ 69:28:03 62:35:03 58:38:04 Resource optimisation S&M %: split by ‘Future’:’Growth’:’Heritage’ 66:32:02 57:39:04 59:38:03 Capturing the technology opportunity Adoption of cloud Number
Slide 25: Financial KPIs
Financial KPIs KPI H1 2015 FY 2014 H1 2014 Organic revenue growth 6.2% 4.9% 4.9% Organic operating profit margin 28.1% 27.5% 27.4% Underlying basic earnings per share growth 16.4% 8.2% 8.3% Underlying cash conversion* 112% 102% 109% Net debt leverage 1.2:1 1.1:1 0.9:1 Interest cover 16x 17x 19x *Und
Slide 26: Non-GAAP measures
Non-GAAP measures Measure Description Why we use it Underlying Prior period underlying measures are retranslated at the current year exchange rates to Underlying measures allow management and investors to compare neutralise the effect of currency fluctuations. performance without the potentially dis