Sage Group Plc · LSE:SGE
Sage — The Sage Group — FY2012 Earnings Presentation
35 slides from Sage's earnings presentation, November 2012
Slide 1: Focus on short-term delivery whilst executing strategy
Focus on short-term delivery whilst executing strategy The Sage Group plc Results for the year ended 30 September 2012 1
Slide 2: Overview
Overview Guy Berruyer Chief Executive Officer 2
Slide 3: Financial highlights
Financial highlights Strong Organic# EBITA† operating revenue margin cash flow of growth of maintained at £383.8m representing 2%* 27% 106%^ of EBITA £437m Organic# Underlying returned to revenue PBT growth shareholders growth of of 4%* during the 3%* in H2 year *Underlying figures neutralise the im
Slide 4: Delivering on our strategy: Accelerating growth
Delivering on our strategy Accelerating growth 4
Slide 5: Delivering on our strategy: Accelerating growth
Delivering on our strategy Accelerating growth • Double long-term historic average organic revenue growth rate from 3% to 6% by 2015 • EBITA margin increase of 1 to 2 percentage points over the same period 5
Slide 6: Financial Overview
Financial Overview Paul Harrison Chief Financial Officer 6
Slide 7: Revenue sources
Revenue sources Strong growth in recurring revenues Total revenue 2% Total organic £439m £417m revenue 34% 31% growth SSRS Subscription 6% £923m Organic 66% £860m 69% -5% subscription Organic SSRS* revenue growth revenue growth 2011 2012 At constant exchange rates 7 * Software and software-related s
Slide 8: Revenue trends
Revenue trends Shift to recurring revenues reduces exposure to more cyclical licence market Subscription SSRS Total 8% 7% 6% 6% 5% 4% 3% 2% 2% 2% 5 year revenue mix 0% -2% 69% -4% 61% -4% -5% -6% -6% 2008 2009 2010 2011 2012 -8% H1 12 H2 12 FY 12 Subscription SSRS At constant exchange rates 8
Slide 9: Regional review
Regional review Variable market conditions 9
Slide 10: Europe: North-South divide
Europe North-South divide Revenue mix Organic revenue growth by country H1 H2 FY France 6% 3% France 1% -1% Flat UK 11% 34% Spain UK & Ireland 4% 3% 4% Germany 13% Spain -8% -6% -7% Sage Pay Others Germany 7% 3% 5% 33% Sage Pay 23% 27% 25% Europe 1% 1% 1% Regional highlights • Total revenue £775.8m
Slide 11: North America: Improved H2 growth
North America Improved H2 growth Organic revenue growth Regional highlights • Total revenue £399.5m (2011: £395.8m), H1 H2 FY organic subscription growth of 4% and organic 1% 3% 2% SSRS contraction of 6% • Acceleration in organic growth in H2 • Strong performance for premium support Proportion of co
Slide 12: Brazil: Opening new growth opportunities
Brazil Opening new growth opportunities Regional highlights • Total revenue £12.2m and EBITA £3.0m • Progress in first three months in-line with expectations • Management team strengthened • Complementary acquisitions of Cenize and EBS 12
Slide 13: AAMEA: Double-digit growth
AAMEA Double-digit growth Revenue mix Organic revenue growth by country H1 H2 FY 11% South Africa 15% 17% 16% South Africa Australia 8% 7% 7% Australia Asia 31% Asia 11% -3% 4% 58% AAMEA 12% 11% 12% Regional highlights • Total revenue £152.7m (2011: £138.2m), organic subscription growth of 15% and o
Slide 14: Margin: Disciplined execution maintains margin
Margin Disciplined execution maintains margin • Restructuring in Spain reduces Europe margins 28.9% 28.2% 27.4% 27.3% • Offset by stronger AAMEA margin 27.0% 25.8% 25.5% 24.7% Europe Americas AAMEA Group 2011 2012 At constant exchange rates 14
Slide 15: Cash flow: Strong cash generation continues
Cash flow Strong cash generation continues £m £m £m EBITA 366.4 Cash flow from 383.8 Net debt (24.9) continuing operations 1 October 2011 Depreciation/amortisation/ 29.0 Cash flow from (2.3) Free cash flow 247.9 profit on disposal discontinued operations Share-based payments 1.3 Interest (8.9) Acqui
Slide 16: Financial KPIs
Financial KPIs Measuring success KPI Measure FY12 FY11 Financial performance Growth Organic# revenue growth 2%* 4%* Margin EBITA†/Revenue 27% 27%* Profitability Underlying EPS growth -2%* 16%* Cash generation Net cash from operations/EBITA 106%^ 111%^ Financial strength Net debt/EBITDA against state
Slide 17: Capital structure
Capital structure A rigorous approach to capital allocation Growth Increasing EPS + Increasing dividend Strong cash flow + Returns of surplus capital 17
Slide 18: Our ambition: Accelerating growth remains our priority
Our ambition Accelerating growth remains our priority Cornerstones of our growth strategy 18
Slide 19: Focusing our business: Optimising the portfolio
Focusing our business Enabling growth through focus What we are doing: • Optimising the portfolio • Reallocating investment • Leveraging global scale and assets Optimising the portfolio • Clear assessment of our core business • Clear criteria for assessing strategic and commercial fit of other busin
Slide 20: Focusing our business: Reallocating investment
Focusing our business Enabling growth through focus What we are doing: • Optimising the portfolio • Reallocating investment • Leveraging global scale and assets Reallocating investment • Core products categorised as Invest / Harvest / Sunset • Re-allocation of resources to Invest products underway •
Slide 21: Focusing our business: Leveraging global scale
Focusing our business Enabling growth through focus What we are doing: • Optimising the portfolio • Reallocating investment • Leveraging global scale and assets Leveraging global scale and assets • Global product strategy • Global technology strategy • Global subscription strategy • Creation of Grou
Slide 22: Our ambition: Accelerating growth
Our ambition Accelerating growth Cornerstones of our growth strategy 22
Slide 23: Cloud solution for each core segment
Capturing the technology opportunity Cloud solution for each core segment Start-up and Small and medium Mid-market small businesses sized businesses businesses Sage One Hybrid cloud Sage ERP X3 23
Slide 24: Sage One
Capturing the technology opportunity Sage One Our global SaaS platform for start-up and small business 2012 headlines • Good momentum in UK & Ireland with over 7,500 paying customers at end November • Accelerated run-rate • Building channel, ecosystem and network 2013 priorities • Grow UK customer b
Slide 25: Hybrid cloud
Capturing the technology opportunity Hybrid cloud Bringing our main products for the SMB segment to the cloud 2012 headlines • Development work with Sage 200 “hybrid” and Sage Murano • Sage 200 “hybrid” in controlled release phase in the UK 2013 priorities • Sage Murano launch in Spain • Development
Slide 26: Sage ERP X3
Capturing the technology opportunity Sage ERP X3 Compelling offering for the mid-market customer 2012 headlines • Driving value for customers: - Subscription service launched in the US - Launch of Sage ERP X3 v6.5 including integrated payments • International momentum: - 5% organic revenue growth wi
Slide 27: Mobility
Capturing the technology opportunity Mobility http://www.youtube.com/watch?v=yhDo8ahFws8 Scan this code with a QR reader on your mobile device to see how Sage North America are developing for mobile 27
Slide 28: Payments
Capturing the technology opportunity Payments Integration with core accounting application is our USP 2012 headlines • 25% organic revenue growth in UK & Ireland • 18% growth in cross-sell revenue in North America 2013 priorities • Driving number of integrated customers in existing markets • Europea
Slide 29: The benefits of subscription: Premium support
The benefits of subscription Premium support remains a core strength of Sage • 81% renewal rate on contracts • 8% organic revenue growth in premium contracts • 71% of contracts now premium in nature At constant exchange rates 29
Slide 30: The benefits of subscription: Subscription pricing
The benefits of subscription Subscription pricing is the emerging phase Significant growth opportunity for Sage • Subscription pricing still represents a modest percentage of overall revenues – Annualised value of subscriber base of £80.5m • Launched a number of subscription pricing options in the U
Slide 31: Strategic KPIs
Strategic KPIs Measuring success KPI Measure FY12 FY11 Capturing the technology opportunity Number of Sage One paying customers 6,100 1,000 Adoption of cloud products Number of hybrid cloud customers 115 n/a Mid-market Sage ERP X3 revenue growth 5% 13% Integration of payments Number of customers ado
Slide 32: Summary
Summary • Our strategy is clear, our focus on execution is resolute and we have established momentum • Macroeconomic outlook remains uncertain but we have experience of running our business in this environment • We remain confident in our ability to deliver on our financial and strategic goals 32
Slide 33: Questions?
Questions? 33
Slide 34: Appendix: Supplementary Information
Appendix Supplementary Information 34
Slide 35: Segmental analysis
Segmental analysis Year ended 30 September 2012 Europe Americas* AAMEA Group Subscription revenue £516.1m £324.2m £82.4m £922.7m SSRS revenue £259.7m £87.5m £70.3m £417.5m Total revenue £775.8m £411.7m £152.7m £1,340.2m Organic revenue growth +1% +2% +12% +2% EBITA £219.1m £106.1m £41.2m £366.4m EBI