Sage Group Plc · LSE:SGE
Sage — The Sage Group — FY2016 Earnings Presentation
35 slides from Sage's earnings presentation, November 2016
Slide 1: Sage Group plc results for the year ended 30 September 2016
Sage Group plc results for the year ended 30 September 2016
Slide 2: Safe harbour statement
Safe harbour statement The following presentation is being made only to, and is only directed business strategies and the environment in which the Company will at, persons to whom such presentation may lawfully be communicated operate in the future. Such risks, uncertainties and other factors includ
Slide 3: Agenda
Agenda: • Summary Stephen Kelly • CFO review Chief Executive Officer • Progress @SKellyCEO • Outlook • Q&A # 3 #SageResults
Slide 4: Summary
Summary Results The strategy Phase one delivered is working complete 4 #SageResults
Slide 5: Steve Hare, Chief Financial Officer
Steve Hare Chief Financial Officer @SteveHareCFO # 5 #SageResults
Slide 6: Financial progress
Financial progress FY16 FY15 Change Organic revenue £1,567m £1,477m +6.1% Organic operating profit £427m £391m +9.2% Underlying Margin % 27.2% 26.5% +70bps Underlying EPS 27.8p 25.5p 9.0% Exceptional cost (£108m) - Goodwill impairment - (£62m) Recurring items (£19m) (£20m) Statutory Operating Profit
Slide 7: Strong cash metrics
Strong cash metrics Underlying cash flow Underlying £427m from operating £425m Opening net debt (£425m) operating profit activities Depreciation/ Free cash flow £254m £30m Amortisation Interest (£20m) M&A (£16m) Share-based £8m payments Tax paid (£92m) Ordinary (£145m) Working and Capital dividends
Slide 8: Revenue categories
Revenue categories +6% Software +32% subscription +10% Recurring Revenue Other 0% recurring Processing +6% SSRS -9% FY15 FY16 8 #SageResults
Slide 9: Software subscriber growth
Software subscriber growth Growth in ASB of £130m to £511m over last 12 months 550 14 5 500 17 30 450 15 45 £m 400 511 4 350 381 300 9 #SageResults
Slide 10: Regional overview
Regional overview Europe North America International 10 #SageResults
Slide 11: Europe
Europe What went well Contract renewal rate increased from 84% to 88% UKI, Spain & Germany growth Recurring Mix above 7% and recurring revenue above 10% 28% growth in software subscription 78% revenue FY15: 75% Sage 50 family grew by 10%, triple digit software subscription growth in Sage 50 Accounts
Slide 12: North America
North America What went well Contract renewal rate increased from 87% to 89% 84% growth in software Recurring Mix subscription Triple digit software subscription growth in Sage 50 US and Sage 50 58% Canada FY15: 55% Winning in the market • X3 customers increased by 10% and H2 revenue up 18% • Sage S
Slide 13: International
International What went well Double digit revenue growth in Africa, Middle East and Brazil Recurring revenue growth of 16% Recurring Mix Winning in the market • Sage One subscriptions up 137% and revenue up 110% 70% FY15: 65% • Sage One subscriptions increased by 23,000 both in Brazil and South Afri
Slide 14: Capacity for growth
Capacity for growth Annual savings secured People £21m Facilities £17m Other £13m Total G&A savings £51m Transformation FY16 Actual Total transformation cost (£110m) Of which, G&A (£76m) Further savings opportunities of at least £50m will be pursued in FY17, with a minimum two year payback 14 #SageR
Slide 15: Operating profit margin
Operating profit margin £35m shift of G&A spend into GTM investment 30% 28% -1.2% 2.2% -1.2% 0.9% 26% 24% 27.2% 26.5% 22% 20% Sep-15 G&A Marketing Sales Other Sep-16 15 #SageResults
Slide 16: Summary
Summary Results The strategy Phase one delivered is working complete 16 #SageResults
Slide 17: Stephen Kelly, Chief Executive Officer
Stephen Kelly Chief Executive Officer @SKellyCEO # 17 #SageResults
Slide 18: Sage technology acceleration
Sage technology acceleration Desktop Cloud Intelligent automation 18 #SageResults
Slide 19: Progress
Progress Customers for Life Winning in One Sage the Market Capacity for Revolutionise Growth Business 19 #SageResults
Slide 20: Customers for life
Customers for life Software subscriptions Renewal rate ASB £511m 1,016k 86% £381m 694k 84% 83% £297m 450k FY14 FY15 FY16 FY14 FY15 FY16 FY14 FY15 FY16 20 #SageResults
Slide 21: Winning in the market
Winning in the market Enterprise • X3 organic revenue grew by 18% • 25% increase in customers Scale Up • Sage Live gaining momentum • CBCs scaling Start Up • Sage One paying subscribers up 81% to 313,000 • Sage One Payroll 21 #SageResults
Slide 22: Revolutionise business
Revolutionise business 600+ 316 146 65 Q2 Q3 Q4 Q1 16 16 16 17 Sage Live Award winning Pegg has new users customer numbers technology in 125 countries 22 #SageResults
Slide 23: Capacity for growth
Capacity for growth Marketing expense G&A as % of revenue to staff cost ratio Sage properties Expense 54 61 139 19% 16% Staff cost 78 46 39 FY15 FY16 FY15 FY16 FY15 FY16 23 #SageResults
Slide 24: One Sage
One Sage 25% 32% FY15 FY16 13,000 days volunteered Percentage of women Excellence in Governance through Sage Foundation in leadership roles 56 refreshed policies 24 #SageResults
Slide 25: Doing business the right way
Doing business the right way Community We invest in our community through Sage Foundation Investors Sage Colleagues This provides strong revenue This motivates our growth and returns to investors colleagues and helps attract and the community and retain the best talent Customers / Partners This then
Slide 26: What's next in the transformation?
What’s next in the transformation? Customers for Life Winning in One Sage the Market Capacity for Revolutionise Growth Business 26 #SageResults
Slide 27: What to expect in FY17
What to expect in FY17 FY17 Product UK USA France Spain Germany Canada Brazil RSA Australia 27 #SageResults
Slide 28: What to expect in FY17 - Spain
What to expect in FY17 FY17 – Spain Product UK USA France Spain Germany Canada Brazil RSA Australia 28 #SageResults
Slide 29: What to expect in FY17
What to expect in FY17 FY14 Product UK USA France Spain Germany Canada Brazil RSA Australia 29 #SageResults
Slide 30: What to expect in FY17
What to expect in FY17 30 #SageResults
Slide 31: Outlook FY17
Outlook FY17 Organic Organic revenue growth operating margin at least at least 6% 27% Long-term sustainable growth Continued high quality recurring revenue growth Constant focus on strong cash conversion 31 #SageResults
Slide 32: Summary
Summary Results The strategy Phase one delivered is working complete 32 #SageResults
Slide 33: Q&A
Q&A #SageResults #
Slide 34: Glossary
Glossary Measure /Description Why we use it Underlying Prior period underlying measures are retranslated at the current year exchange rates to neutralise the effect of Underlying measures allow management and currency fluctuations. investors to compare performance without the Underlying operating pr
Slide 35: Glossary
Glossary Measure /Description Processing revenue Processing revenue is revenue earned from customers for the processing of payments or where Sage colleagues process our customers’ payroll. Recurring revenue Recurring revenue is revenue earned from customers for the provision of a good or service, wh