Results for the six months to 31 March 2023

About this update from Sage Group Plc

[{"type":"text","content":"\n \n The Sage Group plc \n Results for the six months to 31 March 2023 (unaudited) \n Consistent execution drives strong momentum \n Steve Hare, Chief Executive Officer, commented: \n \"Sage performed strongly in the first half, accelerating revenue growth, increasing profitability and making further progress against our strategic priorities. Our investments in technology and in sales and marketing are continuing to drive results, as small and mid-sized businesses increasingly choose Sage as a valued partner to transform the way they work. \n \"Our purpose is to knock down barriers so everyone can thrive. We are committed to delivering innovative, AI-powered services that make our customers' lives easier and their organisations more productive and resilient. Sage's global platform, centred on our expanding digital network, is enabling us to leverage our scale and collective expertise to maximise the significant opportunities we see across our markets. \n \"Small and mid-sized businesses are continuing to digitise, despite the macroeconomic uncertainty, and through our trusted technology and human approach Sage is well positioned to support them. I am confident that our proven strategy will enable us to deliver further efficient growth.\" \n \n \n \n \n \n \n Underlying Financial APMs [1] \n \n \n H1 23 \n \n \n H1 22 [2] \n \n \n Change \n \n \n Organic \n Change \n \n \n \n \n Annualised Recurring Revenue (ARR) \n \n \n £2,100m \n \n \n £1,878m \n \n \n +12% \n \n \n +12% \n \n \n \n \n Underlying Total Revenue \n \n \n £1,087m \n \n \n £989m \n \n \n +10% \n \n \n +10% \n \n \n \n \n Underlying Recurring Revenue \n \n \n £1,039m \n \n \n £925m \n \n \n +12% \n \n \n +12% \n \n \n \n \n Underlying Operating Profit \n \n \n £227m \n \n \n £199m \n \n \n +14% \n \n \n +19% \n \n \n \n \n      % Operating Profit Margin \n \n \n 20.8% \n \n \n 20.2% \n \n \n +0.6 ppts \n \n \n +1.6 ppts \n \n \n \n \n EBITDA \n \n \n £275m \n \n \n £243m \n \n \n +13% \n \n \n \n \n \n \n \n      % EBITDA Margin \n \n \n 25.2% \n \n \n 24.6% \n \n \n +0.6 ppts \n \n \n   \n \n \n \n \n Underlying Basic EPS (p) \n \n \n 15.68p \n \n \n 13.83p \n \n \n +13% \n \n \n \n \n \n \n \n Underlying Cash Conversion \n \n \n 117% \n \n \n 120% \n \n \n -3 ppts \n \n \n \n \n \n \n \n Statutory Measures \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n   \n \n \n \n \n Revenue \n \n \n £1,087m \n \n \n £934m \n \n \n +16% \n \n \n \n \n \n \n \n Operating Profit \n \n \n £157m \n \n \n £204m \n \n \n -23% \n \n \n \n \n \n \n \n      % Operating Profit Margin \n \n \n 14.4% \n \n \n 21.8% \n \n \n -7.4ppts \n \n \n   \n \n \n \n \n Basic EPS (p) \n \n \n 9.78p \n \n \n 14.84p \n \n \n -34% \n \n \n \n \n \n \n \n Dividend Per Share (p) \n \n \n 6.55p \n \n \n 6.30p \n \n \n +4% \n \n \n \n \n \n \n \n Please note that tables may not cast and change percentages may not calculate precisely due to rounding. \n Financial highlights \n ·     Underlying recurring revenue increased by 12% to £1,039m, underpinned by strong Sage Business Cloud growth of 29% to £787m. Underlying total revenue grew by 10% to £1,087m. \n ·     Underlying operating profit increased by 14% to £227m, with margin increasing by 60 basis points to 20.8% driven by operating efficiencies as we scale the Group. \n ·     EBITDA increased by 13% to £275m, with margin increasing by 60 basis points to 25.2%. \n ·     Statutory operating profit decreased by 23% to £157m due to the change in recurring and non recurring items, including a £49m one-off gain in the prior period relating to the disposal of Sage Switzerland. [3] \n ·     Underlying basic EPS up 13% to 15.68p, reflecting the growth in underlying operating profit. \n ·     Continued strong cash performance, with cash conversion of 117% reflecting growth in subscription revenue and continued good working capital management. \n ·     Robust balance sheet, with £1.2bn of cash and available liquidity and net debt to EBITDA of 1.3x. \n ·     Interim dividend up 4% to 6.55p, in line with our progressive policy. \n Strategic and operational highlights \n ·     Underlying annualised recurring revenue (ARR) up 12% to £2,100m (H1 22: £1,878m), reflecting a strong performance across all regions, with growth balanced between new and existing customers. \n ·     £190m of ARR added through new customer acquisition on an organic basis since H1 22, up from £150m in the prior year. \n ·     Cloud native ARR up 30% to £612m (H1 22: £470m), driven by new customers and supported by migrations from cloud connected and desktop products. \n ·     Renewal rate by value of 101%, ahead of last year (H1 22: 100%), with continued good retention rates and strong sales to existing customers. \n ·     Sage Business Cloud penetration of 82% (H1 22: 72%), enabling more customers to connect to Sage's cloud services and ecosystem via Sage's digital network. \n ·     Subscription penetration of 78% (H1 22: 73%), reflecting continued focus on attracting new customers and migrating existing customers to subscription contracts. \n ·     Strong strategic progress, as we expand the availability of global solutions across the Group and scale Sage's digital network to power innovative features and AI-enabled services. \n Outlook \n Building on strong momentum in the first half, we now expect organic recurring revenue growth for FY23 to be in the region of 11%, driven by continued strength in Sage Business Cloud.  We continue to expect other revenue (SSRS) to decline, in line with our strategy.  Operating margins are expected to trend upwards in FY23 and beyond, as we focus on efficiently scaling the Group. \n About Sage \n Sage exists to knock down barriers so everyone can thrive, starting with the millions of small and mid-sized businesses (SMBs) served by us, our partners and accountants. Customers trust our finance, HR and payroll software to make work and money flow. By digitising business processes and relationships with customers, suppliers, employees, banks and governments, our digital network connects SMBs, removing friction and delivering insights. Knocking down barriers also means we use our time, technology and experience to tackle digital inequality, economic inequality and the climate crisis. \n \n \n \n \n Enquiries: \n \n \n Sage: \n \n \n +44 (0) 7341 479956 \n \n \n FGS Global: \n \n \n +44 (0) 20 7251 3801 \n \n \n \n \n \n \n \n James Sandford, Investor Relations \n \n \n Conor McClafferty \n \n \n \n \n \n \n \n David Ginivan , Corporate PR \n \n \n Sophia Johnston \n \n \n \n \n A presentation for investors and analysts will be held at 8.30am UK time. The webcast can be accessed via sage.com/investors or directly via the following link: https://edge.media-server.com/mmc/p/phr76hz5 . To join the conference call, please register via https://register.vevent.com/register/BIe70cc49034ad4da4a1888cdaa81177a1 . \n \n Business Review \n Sage delivered a strong first half, with revenue growth accelerating compared to the prior year, and underlying and organic operating margins trending upwards, driven by consistent strategic execution. \n Overview of results \n The Group achieved underlying recurring revenue growth of 12% to £1,039m (H1 22: £925m) in the first half, underpinned by a 29% increase in Sage Business Cloud revenue to £787m, and underlying total revenue growth of 10% to £1,087m (H1 22: £989m). Regionally, North America increased recurring revenue by 17% to £467m, with a strong performance from Sage Intacct and cloud connected solutions, while UKIA \n [4] grew recurring revenue by 11% to £303m, driven by a strong cloud native performance together with growth in Sage 50 cloud. In Europe, recurring revenue increased by 6% to £269m, with growth across the Sage Business Cloud portfolio partly offset by the disposal of the Swiss business in FY22. \n Organic recurring revenue also grew by 12% to £1,039m (H1 22: £931m), while organic total revenue grew by 10% to £1,087m (H1 22: £992m). \n Our focus on growing cloud revenues has increased Sage Business Cloud penetration to 82%, up 10 percentage points compared to H1 22. We have also continued to grow software subscription revenues, leading to a rise in subscription penetration of 5 percentage points to 78%. As a result of the evolving business mix, 96% of the Group's revenue is now recurring. \n Revenue growth by portfolio \n The portfolio view breaks down Sage's underlying recurring revenue by strategic product portfolio. Our principal focus is to grow Sage Business Cloud, by attracting new customers and migrating existing customers and products to cloud native and cloud connected solutions. Sage Business Cloud customers can connect to a range of cloud services as part of Sage's digital network, leading to deeper customer relationships and higher lifetime values. \n \n \n \n \n Underlying Recurring Revenue by Portfolio [5] \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n Organic \n Change \n \n \n \n \n Cloud native [6] \n \n \n £285m \n \n \n £206m \n \n \n +38% \n \n \n +32% \n \n \n \n \n Cloud connected [7] \n \n \n £502m \n \n \n £403m \n \n \n +25% \n \n \n +25% \n \n \n \n \n Sage Business Cloud \n \n \n £787m \n \n \n £609m \n \n \n +29% \n \n \n +27% \n \n \n \n \n Products with potential to migrate \n \n \n £177m \n \n \n £241m \n \n \n -27% \n \n \n -25% \n \n \n \n \n Future Sage Business Cloud Opportunity [8] \n \n \n £964m \n \n \n £850m \n \n \n +13% \n \n \n +13% \n \n \n \n \n Non-Sage Business Cloud [9] \n \n \n £75m \n \n \n £75m \n \n \n - \n \n \n +1% \n \n \n \n \n Underlying Recurring Revenue \n \n \n £1,039m \n \n \n £925m \n \n \n +12% \n \n \n +12% \n \n \n \n \n Sage Business Cloud Penetration \n \n \n 82% \n \n \n 72% \n \n \n   \n \n \n   \n \n \n \n \n Underlying recurring revenue from cloud native solutions grew by 38% to £285m, driven by Sage Intacct together with other solutions including Sage Accounting, Sage Payroll and Sage HR, largely through new customer acquisition and supported by migrations. Organic cloud native recurring revenue growth, which is adjusted for the contribution from last year's acquisitions of Brightpearl, Futrli and Lockstep, was 32%. \n Underlying recurring revenue from cloud connected solutions increased by 25% to £502m, reflecting good growth in the Sage 50 and Sage 200 franchises driven by existing and new customers, together with significantly faster migration of products to Sage Business Cloud through the integration of cloud functionality.  Overall, the Future Sage Business Cloud Opportunity, which represents products in or with a clear pathway to Sage Business Cloud, has performed strongly with recurring revenue growth of 13%. \n The revenue performance of the Non-Sage Business Cloud portfolio is in line with expectations and reflects the ongoing strategy to focus on solutions with a clear pathway to Sage Business Cloud. \n ARR growth \n Sage's underlying ARR increased by 12% to £2,100m (H1 22: £1,878m), reflecting strong growth balanced between new and existing customers. This was underpinned by cloud native ARR growth of 30% to £612m (H1 22: £470m), with a continued strong performance from Sage Intacct together with other solutions including Sage Accounting, Sage Payroll and Sage HR.  Organic ARR also increased by 12% to £2,100m (H1 22: £1,883m). \n Renewal rate by value of 101% (H1 22: 100%) is ahead of last year reflecting good retention rates and strong sales to existing customers, including a good performance in customer add-ons and targeted price rises. \n In total, Sage has added £190m of ARR through new customer acquisition on an organic basis over the last 12 months, up from £150m [10] a year earlier. \n Progress towards our strategic priorities \n Sage focuses on five strategic priorities that help us create long-term value for our stakeholders, as part of our strategic framework for growth. Our progress towards these priorities is outlined below. \n ·     Scale Sage Intacct : Sage Intacct continues to grow strongly, supported by our focus on product enhancements and sales and marketing optimisation. We have further extended Sage Intacct's reach into new geographies and verticals, including launching Sage Intacct in continental Europe, starting with France. Sage Intacct Construction is making good progress in the US, complemented by the recent acquisition of Corecon, a cloud native project management solution for the construction industry, while Sage Intacct Manufacturing is now available in six countries across the Group. Reflecting this progress, Sage Intacct's ARR grew by 30% in the US over the last year, while outside the US it doubled. \n ·     Expand medium beyond financials : We also aim to drive growth by delivering benefits for mid-sized businesses beyond core accounting. Our AI-powered service to automate accounts payable processes, significantly reducing invoice handling costs and data entry error, has now been launched and is gaining traction with customers on Sage Intacct in the US, Sage 50 in France and Sage Accounting in the UK, with further expansion planned. Following rapid growth in the US and Canada, Sage Intacct Planning, our budgeting and planning tool, is now also available in the UK, South Africa and Australia. \n ·     Build the small business engine : Sage continues to achieve good levels of growth from its small business solutions, including Sage Accounting, Sage HR and Sage 50. In the UK, the number of accountants adopting Sage for Accountants, our accountancy practice management suite, has more than doubled over the last six months to almost 5,000, and building on this success we have now launched Sage for Accountants in Canada. We have also launched a new tier of Sage Accounting in the UK, initially provided through Sage for Accountants, to help those taxpayers with the simplest of tax affairs to digitise their record keeping and tax submissions. \n ·     Scale the network: Sage's digital network enables us to connect organisations to their accountants, tax authorities, customers and suppliers. Scaling the network creates a virtuous circle, with more data powering AI solutions that enable richer customer experiences. We are growing the network by connecting more existing products, expanding the availability of global solutions including Sage Intacct, and developing new solutions such as Sage Active, our cloud-native, multi-legislation business management solution for SMBs, that was built for the European market and recently launched in France. The acquisition of Lockstep has also accelerated our strategy by bringing new AI-driven workflow automation tools to the digital network. \n ·     Learn and disrupt: We continue to learn and invest in disruptive technologies to ensure we remain at the forefront of our markets. We have made strong progress in leveraging our digital network to embed AI-powered features across Sage Business Cloud, helping to automate workflows from data ingestion through to transaction classification. In the first half, we launched our AI-powered accounts payable automation solution, expanded our outlier detection service, and made Sage Intelligent Time, our AI-powered time assistant, available in new markets. Looking ahead, we have a strong AI pipeline, and through continued investment and our strategic partnerships we aim to be a leader in this critical area, helping both Sage and our customers become more effective and more productive. \n Colleagues \n Management continues to focus on building an inclusive, high-performing and accountable culture, in which every colleague can perform at their best. Key to this is our listening strategy, through which colleagues have the opportunity to share experiences and insights. Our most recent all-colleague pulse survey achieved a record 87% response rate and resulted in a strong score for colleague satisfaction. \n To develop and retain the best talent we continue to invest in mentoring and training schemes, both in house and in conjunction with third parties such as London Business School. We have also launched a new internal talent marketplace to enhance workforce mobility and agility. Our holistic approach to colleague wellbeing includes a sharper focus on 'healthy finances' in response to the cost-of-living crisis, and an improved range of benefits to support mental health. \n Sage is committed to creating a diverse and equitable company which fully represents the customers we serve and the communities we recruit from. In December we published our first diversity, equity and inclusion (DEI) impact report, highlighting progress towards our DEI strategy. This included an improvement in gender diversity, with one third of leadership teams meeting our FY26 gender diversity target [11] , up from 19% at the beginning of FY22. We have also enhanced our diversity training and resources, holding education and awareness workshops, and partnering with Neurodiversity in Business to help drive best practice in neurodiversity recruitment, retention and empowerment. \n Sustainability and Society \n Sage plays a key role in supporting SMBs which form the backbone of economies around the world, helping bring prosperity to their owners, employees and communities. Through our Sustainability and Society strategy, Sage supports sustainable and inclusive economic growth so everyone can thrive. During the first half, Sage colleagues, customers and partners contributed over 56,000 volunteering hours to support charitable and environmental causes. \n In December, the Science Based Targets Initiative (SBTi) validated our target to halve our carbon emissions by 2030 against a 2019 baseline, underlining our commitment to achieve net zero emissions by 2040 through robust initiatives addressing our supply chain, properties, products and colleague actions. We are also supporting SMBs on their own journey to net zero, with Sage Earth, our innovative carbon accounting solution acquired in October, now available to support UK-based Sage Accounting and Sage 50 customers looking to measure and improve their environmental footprint.  In addition, we launched a report at COP 27 featuring insights from over 4,000 SMBs across the UK and South Africa, and quantifying their impact and influence on the environment and the economy. \n Through Sage Foundation, which supports Sage's volunteering, fundraising and social partnerships, we aim to support local communities and knock down barriers to entrepreneurship. In the first half, we have continued to support thousands of entrepreneurs in underserved communities with loan funds and grants through our partnerships with Kiva and The BOSS Network. In addition, we are helping to develop STEM skills in over 10,000 young people in the UK through our partnership with the Institute of Engineering and Technology, and we have now also expanded this initiative to Germany. \n Sage has an ESG rating from MSCI of 'AAA', indicating we are a leader in the software and services industry in managing the most significant ESG risks and opportunities. \n   \n Financial Review \n The financial review provides a summary of the Group's results on a statutory and underlying basis, alongside its organic performance. Underlying measures allow management and investors to understand the Group's financial performance adjusted for the impact of foreign exchange movements and recurring and non-recurring items, while organic measures also adjust for the impact of acquisitions and disposals [12] . \n Statutory and underlying financial results \n \n \n \n \n Financial results \n \n \n Statutory \n \n \n Underlying \n \n \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n \n \n North America \n \n \n £483m \n \n \n £376m \n \n \n +28% \n \n \n £483m \n \n \n £420m \n \n \n +15% \n \n \n \n \n UKIA \n \n \n £311m \n \n \n £284m \n \n \n +10% \n \n \n £311m \n \n \n £284m \n \n \n +10% \n \n \n \n \n Europe \n \n \n £293m \n \n \n £274m \n \n \n +7% \n \n \n £293m \n \n \n £285m \n \n \n +3% \n \n \n \n \n Group total revenue \n \n \n £1,087m \n \n \n £934m \n \n \n +16% \n \n \n £1,087m \n \n \n £989m \n \n \n +10% \n \n \n \n \n Operating profit \n \n \n £157m \n \n \n £204m \n \n \n -23% \n \n \n £227m \n \n \n £199m \n \n \n +14% \n \n \n \n \n % Operating profit margin \n \n \n 14.4% \n \n \n 21.8% \n \n \n  -7.4 ppts \n \n \n 20.8% \n \n \n 20.2% \n \n \n  +0.6 ppts \n \n \n \n \n Profit before tax \n \n \n £139m \n \n \n £189m \n \n \n -27% \n \n \n £210m \n \n \n £185m \n \n \n +13% \n \n \n \n \n Net profit \n \n \n £100m \n \n \n £152m \n \n \n -34% \n \n \n £160m \n \n \n £141m \n \n \n +13% \n \n \n \n \n Basic EPS \n \n \n 9.78p \n \n \n 14.84p \n \n \n -34% \n \n \n 15.68p \n \n \n 13.83p \n \n \n +13% \n \n \n \n \n The Group achieved statutory and underlying total revenue of £1,087m in the first half. Statutory total revenue increased by 16% compared to the prior period, reflecting underlying total revenue growth of 10% together with a 6-percentage point foreign exchange tailwind, principally relating to the US Dollar in North America. \n Statutory operating profit decreased by 23% to £157m, reflecting a 14% increase in underlying operating profit to £227m offset by changes in recurring and non-recurring items, including higher M&A related charges and a property restructuring charge in H1 23 together with a one-off gain on the disposal of Sage Switzerland in the prior period (see page 9). \n Statutory basic EPS decreased by 34% to 9.78p, reflecting a higher statutory net finance cost and the post-tax impact of non-recurring items. Underlying basic EPS increased by 13% to 15.68p. \n Revenue - underlying and organic reconciliation to statutory \n \n \n \n \n Total revenue bridge \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n \n \n Statutory \n \n \n  £1,087m \n \n \n  £934m \n \n \n +16% \n \n \n \n \n Recurring items [13] \n \n \n  - \n \n \n £1m \n \n \n \n \n \n \n \n Impact of FX [14] \n \n \n - \n \n \n £54m \n \n \n \n \n \n \n \n Underlying \n \n \n £1,087m \n \n \n £989m \n \n \n +10% \n \n \n \n \n Disposals \n \n \n  - \n \n \n (£5m) \n \n \n \n \n \n \n \n Held for sale \n \n \n - \n \n \n (£2m) \n \n \n \n \n \n \n \n Acquisitions \n \n \n  - \n \n \n £10m \n \n \n \n \n \n \n \n Organic \n \n \n £1,087m \n \n \n £992m \n \n \n +10% \n \n \n \n \n   \n Statutory, underlying and organic total revenue was £1,087m in H1 23. Underlying revenue in H1 22 of £989m reflects statutory revenue of £934m retranslated at current year exchange rates, resulting in a foreign exchange tailwind of £54m, together with a £1m fair value adjustment to deferred income relating to the acquisition of Brightpearl.   \n Organic revenue in H1 22 of £992m reflects underlying revenue of £989m, adjusted for £5m of revenue from Sage's business in Switzerland which was sold during the prior period, £2m of revenue from the South African payroll outsourcing business which was held for sale, and £10m of revenue from Brightpearl, Futrli and Lockstep which were acquired during FY22. \n Revenue by type \n \n \n \n \n Underlying revenue mix \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n \n \n \n \n Software subscription revenue \n \n \n £853m \n \n \n £724m \n \n \n +18% \n \n \n +17% \n \n \n   \n \n \n \n \n Other recurring revenue \n \n \n £186m \n \n \n £201m \n \n \n -7% \n \n \n -7% \n \n \n   \n \n \n \n \n Underlying recurring revenue \n \n \n £1,039m \n \n \n £925m \n \n \n +12% \n \n \n +12% \n \n \n   \n \n \n \n \n Other revenue (SSRS) \n \n \n £48m \n \n \n £64m \n \n \n -24% \n \n \n -22% \n \n \n   \n \n \n \n \n Underlying total revenue \n \n \n £1,087m \n \n \n £989m \n \n \n +10% \n \n \n +10% \n \n \n   \n \n \n \n \n Subscription Penetration \n \n \n 78% \n \n \n 73% \n \n \n   \n \n \n   \n \n \n \n \n Underlying recurring revenue grew by 12% to £1,039m, supported by an 18% increase in software subscription revenue to £853m, reflecting the continued focus on attracting new customers and migrating existing customers to subscription and Sage Business Cloud. The decline in other recurring revenue of 7% to £186m reflects customers migrating from maintenance and support to subscription contracts. Other revenue (SSRS) declined by 24% to £48m, in line with our strategy to transition away from licence sales and professional services implementations. Underlying total revenue increased by 10% in H1 23 to £1,087m. \n Revenue performance by region \n \n \n \n \n North America \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n Underlying total revenue \n \n \n £483m \n \n \n £420m \n \n \n +15% \n \n \n +14% \n \n \n \n \n Underlying recurring revenue \n \n \n £467m \n \n \n £398m \n \n \n +17% \n \n \n +16% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n % Sage Business Cloud Penetration \n \n \n 84% \n \n \n 76% \n \n \n +8 ppts \n \n \n +8 ppts \n \n \n \n \n % Subscription Penetration \n \n \n 77% \n \n \n 70% \n \n \n +7 ppts \n \n \n +7 ppts \n \n \n \n \n Underlying recurring revenue \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n US \n \n \n £405m \n \n \n £343m \n \n \n +18% \n \n \n +16% \n \n \n \n \n Of which Sage Intacct \n \n \n £150m \n \n \n £115m \n \n \n +30% \n \n \n +30% \n \n \n \n \n Canada \n \n \n £62m \n \n \n £55m \n \n \n +13% \n \n \n +13% \n \n \n \n \n North America achieved underlying recurring revenue growth of 17% to £467m and total revenue growth of 15% to £483m. Adjusting for the impact in the US of the acquisitions of Brightpearl and Lockstep during FY22, organic recurring and total revenue growth was 16% and 14% respectively. Sage Business Cloud penetration increased to 84%, up from 76% in the prior year, driven by growth in cloud native and cloud connected solutions, while subscription penetration increased to 77%, up from 70% in the prior year. \n Cloud native growth was driven primarily through Sage Intacct, which delivered strong recurring revenue growth of 30% to £150m, reflecting continued success in attracting new customers and supported by strong sales to existing customers. \n Recurring revenue in the US increased by 18% to £405m, driven by Sage Intacct alongside cloud connected growth across the Sage 200 and Sage 50 franchises, as well as success in migrations to Sage Business Cloud. Total revenue for the US increased by 16% to £420m. \n In Canada, recurring revenue increased by 13% to £62m and total revenue by 11% to £63m, driven mainly by Sage 50 cloud and Sage 200 cloud solutions, together with strong growth in Sage Intacct. \n   \n \n \n \n \n UKIA \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n Underlying total revenue \n \n \n £311m \n \n \n £284m \n \n \n +10% \n \n \n +8% \n \n \n \n \n Underlying recurring revenue \n \n \n £303m \n \n \n £273m \n \n \n +11% \n \n \n +10% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n % Sage Business Cloud Penetration \n \n \n 88% \n \n \n 76% \n \n \n +12 ppts \n \n \n +12 ppts \n \n \n \n \n % Subscription Penetration \n \n \n 89% \n \n \n 87% \n \n \n +2 ppts \n \n \n +2 ppts \n \n \n \n \n Underlying recurring revenue \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n UK & Ireland (Northern Europe) \n \n \n £230m \n \n \n £209m \n \n \n +10% \n \n \n +8% \n \n \n \n \n Africa & APAC \n \n \n £73m \n \n \n £64m \n \n \n +15% \n \n \n +14% \n \n \n \n \n In the UKIA region, underlying recurring revenue grew by 11% to £303m and total revenue grew by 10% to £311m. Adjusting for the impact in the UK & Ireland of the acquisitions of Brightpearl and Futrli during FY22, organic recurring and total revenue growth was 10% and 8% respectively. Sage Business Cloud penetration reached 88%, up from 76% in the prior year, while subscription penetration increased to 89%, up from 87% in the prior year. \n In the UK & Ireland, recurring revenue increased by 10% to £230m, reflecting growth in cloud native solutions, supported by further growth in Sage 50 cloud. Cloud native revenue growth was driven by continued growth in small business solutions, including Sage Accounting, together with Sage Intacct which is now starting to scale rapidly through both the direct and partner channels. Total revenue in the UK & Ireland increased by 10% to £233m. \n Africa & APAC delivered strong recurring revenue growth of 15% to £73m, driven by growth in both cloud native solutions and local products. Total revenue in Africa & APAC increased by 10% to £78m. \n \n \n \n \n Europe \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n Underlying total revenue \n \n \n £293m \n \n \n £285m \n \n \n +3% \n \n \n +4% \n \n \n \n \n Underlying recurring revenue \n \n \n £269m \n \n \n £254m \n \n \n +6% \n \n \n +8% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n % Sage Business Cloud Penetration \n \n \n 70% \n \n \n 61% \n \n \n +9 ppts \n \n \n +8 ppts \n \n \n \n \n % Subscription Penetration \n \n \n 69% \n \n \n 65% \n \n \n +4 ppts \n \n \n +4 ppts \n \n \n \n \n Underlying recurring revenue \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n France \n \n \n £142m \n \n \n £133m \n \n \n +7% \n \n \n +7% \n \n \n \n \n Central Europe \n \n \n £60m \n \n \n £59m \n \n \n +3% \n \n \n +10% \n \n \n \n \n Iberia \n \n \n £67m \n \n \n £62m \n \n \n +7% \n \n \n +7% \n \n \n \n \n Europe achieved underlying recurring revenue growth of 6% to £269m and total revenue growth of 3% to £293m. Adjusting for the impact of the disposal of the Swiss business in FY22, organic recurring revenue growth and total revenue growth was 8% and 4% respectively. Sage Business Cloud penetration increased significantly to 70%, up from 61% in the prior year, while subscription penetration reached 69%, up from 65% in the prior year, driven by growth from new and existing customers together with migrations. \n In France, recurring revenue increased by 7% to £142m, with a strong performance in cloud connected, particularly Sage 200 cloud, together with growth in cloud native solutions. Total revenue in France increased by 5% to £148m. \n Central Europe achieved recurring revenue growth of 3% to £60m, while total revenue decreased by 3% to £71m. Adjusting for the disposal of the Swiss business, organic recurring and total revenue growth in Central Europe was 10% and 3% respectively. Growth in the region was driven by Sage Business Cloud, with a particularly strong performance in HR solutions. \n   \n In Iberia, recurring revenue increased by 7% to £67m, with continued success in cloud connected supported by growth in cloud native solutions. Total revenue grew by 5% to £74m. \n Operating profit \n The Group increased underlying operating profit by 14% to £227m (H1 22: £199m). Underlying operating margin increased by 60 basis points to 20.8% (H1 22: 20.2%), driven by operating efficiencies as we scale the Group.  On an organic basis, adjusting for the full-year impact of acquisitions and disposals during FY22, operating profit increased by 19% to £227m (H1 22: £191m), and margin increased by 160 basis points to 20.8% (H1 22: 19.2%). \n Operating profit - underlying and organic reconciliation to statutory \n \n \n \n \n Operating profit bridge \n \n \n H1 23 \n \n \n H1 22 \n \n \n \n \n   \n \n \n Operating profit \n \n \n Operating margin \n \n \n Operating profit \n \n \n Operating margin \n \n \n \n \n Statutory \n \n \n  £157m \n \n \n 14.4% \n \n \n  £204m \n \n \n 21.8% \n \n \n \n \n Recurring items [15] \n \n \n  £50m \n \n \n - \n \n \n  £34m \n \n \n - \n \n \n \n \n Non - recurring items: \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n ·   Property restructuring \n \n \n £20m \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n ·   Gain on disposal of subsidiaries \n \n \n - \n \n \n - \n \n \n (£49m) \n \n \n - \n \n \n \n \n ·   Reversal of restructuring costs \n \n \n - \n \n \n - \n \n \n (£6m) \n \n \n - \n \n \n \n \n Impact of FX [16] \n \n \n - \n \n \n - \n \n \n £16m \n \n \n - \n \n \n \n \n Underlying \n \n \n £227m \n \n \n 20.8% \n \n \n £199m \n \n \n 20.2% \n \n \n \n \n Disposals \n \n \n - \n \n \n - \n \n \n  - \n \n \n - \n \n \n \n \n Held for sale \n \n \n   - \n \n \n - \n \n \n  (£1m) \n \n \n - \n \n \n \n \n Acquisitions \n \n \n - \n \n \n - \n \n \n (£7m) \n \n \n - \n \n \n \n \n Organic \n \n \n £227m \n \n \n 20.8% \n \n \n £191m \n \n \n 19.2% \n \n \n \n \n The Group achieved a statutory operating profit in H1 23 of £157m (H1 22: £204m). Underlying and organic operating profit of £227m in H1 23 reflects statutory operating profit adjusted for recurring and non-recurring items. Recurring items of £50m (H1 22: £34m) comprise £26m of amortisation of acquisition-related intangibles (H1 22: £18m) and £24m of M&A related charges (H1 22: £15m). In H1 22, there was a further £1m of deferred income adjustment relating to the acquisition of Brightpearl. \n Non-recurring items in H1 23 comprise a £20m charge for a property restructuring programme following a strategic review of the Group's property portfolio. The programme is expected to be completed by 30 September 2023. In the prior year, non-recurring items comprised a £49m gain on disposal from the sale of Sage's business in Switzerland, together with a £6m reversal of employee restructuring costs. \n In addition, the retranslation of H1 22 operating profit at current year exchange rates has resulted in an operating profit tailwind of £16m. This has led to a 60-basis point margin tailwind from foreign exchange to 20.2% (H1 22 underlying as reported: 19.6%). \n Organic operating profit of £191m in H1 22 reflects underlying operating profit of £199m adjusted for £1m of operating profit from the South African payroll outsourcing business, which was held for sale, and £7m of operating losses from businesses acquired during the period. \n   \n EBITDA \n EBITDA was £275m (H1 22: £243m) representing a margin of 25.2%. The increase in EBITDA principally reflects the improvement in underlying operating profit. \n \n \n \n \n \n \n \n H1 23 \n \n \n H1 22 \n \n \n Margin \n \n \n \n \n Underlying operating profit \n \n \n £227m \n \n \n £199m \n \n \n 20.8% \n \n \n \n \n Depreciation & amortisation \n \n \n £28m \n \n \n £28m \n \n \n \n \n \n \n \n Share based payments \n \n \n £20m \n \n \n £16m \n \n \n \n \n \n \n \n EBITDA \n \n \n £275m \n \n \n £243m \n \n \n 25.2% \n \n \n \n \n Net finance cost \n The statutory net finance cost for the period increased to £18m (H1 22: £15m), primarily reflecting the impact of interest on new debt issuances, and is broadly in line with the underlying net finance cost of £17m (H1 22: £14m). \n Taxation \n The underlying tax expense for H1 23 was £50m ( H1 22: £44m ), resulting in an underlying tax rate of 24% ( H1 22: 24 %). The statutory income tax expense for H1 23 was £39m ( H1 22: £37m ), resulting in a statutory tax rate of 28% ( H1 22: 20 %). \n The difference between the underlying and statutory rate in H1 23 primarily reflects non-deductible M&A activity-related items. The H1 23 underlying tax rate is unchanged from H1 22 due to the offsetting impact of an increase in the UK corporation tax rate against a decrease in the French corporate tax rate. \n Earnings per share \n \n \n \n \n \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n \n \n Statutory basic EPS \n \n \n 9.78p \n \n \n 14.84p \n \n \n -34% \n \n \n \n \n Recurring items \n \n \n 4.46p \n \n \n 2.97p \n \n \n \n \n \n \n \n Non-recurring items \n \n \n 1.44p \n \n \n (5.19)p \n \n \n \n \n \n \n \n Impact of foreign exchange \n \n \n                 - \n \n \n                 1.21p \n \n \n \n \n \n \n \n Underlying basic EPS \n \n \n 15.68p \n \n \n 13.83p \n \n \n +13% \n \n \n \n \n Underlying basic EPS increased by 13% to 15.68p, reflecting higher underlying operating profit. \n Statutory basic earnings per share decreased by 34%, with the increase in underlying basic earnings per share offset by the change in post-tax impact of recurring and non-recurring items, including higher M&A related charges and a property restructuring charge in H1 23 together with a one-off gain on the disposal of Sage Switzerland in the prior period. \n Cash flow \n Sage remains highly cash generative with underlying cash flow from operations of £266 m (H1 22: £220 m ), representing underlying cash conversion of 117% (H1 22: 120%). This strong cash performance reflects further growth in subscription revenue and continued good working capital management. Free cash flow of £194 m (H1 22: £167 m ) largely reflects strong underlying cash conversion. \n \n   \n \n \n \n \n Cash flow APMs \n \n \n H1 23 \n \n \n H1 22 (as reported) \n \n \n \n \n Underlying operating profit \n \n \n £227m \n \n \n £183m \n \n \n \n \n Depreciation, amortisation and non-cash items in profit \n \n \n £27m \n \n \n  £26m \n \n \n \n \n Share based payments \n \n \n £20m \n \n \n £16m \n \n \n \n \n Net changes in working capital \n \n \n £2m \n \n \n £3m \n \n \n \n \n Net capital expenditure \n \n \n (£10m) \n \n \n (£8m) \n \n \n \n \n Underlying cash flow from operations \n \n \n £266 m \n \n \n £220m \n \n \n \n \n      Underlying cash conversion % \n \n \n 117 % \n \n \n 120% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Non-recurring cash items \n \n \n (£8m) \n \n \n (£12m) \n \n \n \n \n Net interest paid and derivative financial instruments \n \n \n (£28m) \n \n \n (£14m) \n \n \n \n \n Income tax paid \n \n \n (£35m) \n \n \n (£27m) \n \n \n \n \n Profit and loss foreign exchange movements \n \n \n (£1m) \n \n \n - \n \n \n \n \n Free cash flow \n \n \n £194 m \n \n \n £167m \n \n \n \n \n   \n \n \n \n \n Statutory reconciliation of cash flow from operations \n \n \n H1 23 \n \n \n H1 22 (as reported) \n \n \n \n \n Statutory cash flow from operations \n \n \n £251 m \n \n \n £193m \n \n \n \n \n Recurring and non-recurring items \n \n \n £24m \n \n \n £36m \n \n \n \n \n Net capital expenditure \n \n \n (£10m) \n \n \n (£8m) \n \n \n \n \n Other adjustments including foreign exchange translations \n \n \n £1m \n \n \n (£1m) \n \n \n \n \n Underlying cash flow from operations \n \n \n £266 m \n \n \n £220m \n \n \n \n \n Net debt and liquidity \n Group net debt was £691 m at 31 March 2023 (30 September 2022: £733m), comprising cash and cash equivalents of £575 m (30 September 2022: £489m) and total debt of £1,266m (30 September 2022: £1,222m). The Group had £1,205m of cash and available liquidity at 31 March 2023 (30 September 2022: £1,270m). \n The decrease in net debt in the period is summarised in the table below. \n \n \n \n \n \n \n \n H1 23 \n \n \n H1 22 (as reported) \n \n \n \n \n Net debt at 1 October \n \n \n (£733m) \n \n \n (£247m) \n \n \n \n \n Free cash flow \n \n \n £194 m \n \n \n £167m \n \n \n \n \n New leases \n \n \n (£9m) \n \n \n (£4m) \n \n \n \n \n Disposal of businesses \n \n \n - \n \n \n £38m \n \n \n \n \n Acquisition of businesses \n \n \n (£14m) \n \n \n (£223m) \n \n \n \n \n M&A and equity investments \n \n \n (£16m) \n \n \n (£14m) \n \n \n \n \n Dividends paid \n \n \n (£123m) \n \n \n (£119m) \n \n \n \n \n Share buyback \n \n \n - \n \n \n (£249m) \n \n \n \n \n FX movement and other \n \n \n £10m \n \n \n £1m \n \n \n \n \n Net debt at 31 March \n \n \n (£691 m ) \n \n \n (£650m) \n \n \n \n \n The Group's debt is sourced from a syndicated multi-currency Revolving Credit Facility (RCF), and from sterling and euro denominated bond notes. The Group's RCF was refinanced in December 2022 into a new facility of £630m which expires in December 2027, with an extension option for up to two further years subject to specific provisions.  At 31 March 2023, the RCF was undrawn (H1 22: undrawn). \n The Group's sterling denominated bond notes comprise a £400m 12-year bond , issued in February 2022, with a coupon of 2.875 %, and a £ 350m 10-year bond, with a coupon of 1.625%, issued in February 2021. \n The Group established a Euro Medium Term Note (EMTN) programme in January 2023 and issued €500m of 5-year notes in February 2023, with a coupon of 3.82%. This issuance funded the repayment of the Group's outstanding US private placement loan notes totalling £326m (US$400m), and enabled the Group to extend the maturity of its debt portfolio and to diversify its funding sources. \n Sage has an investment grade issuer credit rating assigned by Standard and Poor's of BBB+ (stable outlook). \n Capital allocation \n Sage maintains a disciplined approach to capital allocation, with a focus on accelerating strategic execution through organic and inorganic investment, including through acquisitions and partnerships to enhance Sage Business Cloud and further develop Sage's digital network. During the period Sage completed the acquisition of Spherics, an innovative carbon accounting solution. \n Sage has a progressive dividend policy, intending to grow the dividend over time while considering the future capital requirements of the Group. Reflecting the Group's strong business performance and cash generation during the first half, we have increased the interim dividend by 4% to 6.55p. The Group also considers returning surplus capital to shareholders. \n \n \n \n \n   \n \n \n H1 23 \n \n \n H1 22 (as reported) \n \n \n \n \n Net debt \n \n \n £691 m \n \n \n £650m \n \n \n \n \n EBITDA (Last Twelve Months) \n \n \n £520m \n \n \n £439m \n \n \n \n \n Net debt/EBITDA Ratio \n \n \n 1.3x \n \n \n 1.5x \n \n \n \n \n The Group's EBITDA over the last 12 months was £520m, resulting in a net debt to EBITDA leverage ratio of 1.3x, down from 1.5x in the prior year principally due to the improvement in EBITDA. Group return on capital employed (ROCE) for H1 23 was 19% (H1 22 as reported: 19%). \n Sage intends to operate in a broad range of 1-2x net debt to EBITDA over the medium term, with flexibility to move outside this range as business needs require. \n Going concern \n The Directors have robustly tested the going concern assumption in preparing these financial statements, taking into account the Group's strong liquidity position at 31 March 2023 and a number of downside sensitivities, and remain satisfied that the going concern basis of preparation is appropriate. Further information is provided in note 1 of the financial statements on page 20. \n External audit tender \n The Group's external auditors, Ernst & Young LLP, were first appointed for the year ended 30 September 2015. In accordance with applicable regulations, which include a requirement for audit tendering at least every 10 years, the Audit and Risk Committee has decided to run a tender process which is expected to conclude later this year. Subject to shareholder approval, this will allow a potential new audit firm to take up the role and conduct the audit for the year ended 30 September 2025. \n   \n Foreign exchange \n The Group does not hedge foreign currency profit and loss translation exposures and the statutory results are therefore impacted by movements in exchange rates. The average rates used to translate the consolidated income statement and to normalise prior year underlying and organic figures are as follows: \n \n \n \n \n Average exchange rates (equal to GBP) \n \n \n H1 23 \n \n \n H1 22 \n \n \n Change \n \n \n \n \n Euro (€) \n \n \n 1.14 \n \n \n 1.19 \n \n \n -4% \n \n \n \n \n US Dollar ($) \n \n \n 1.20 \n \n \n 1.34 \n \n \n -11% \n \n \n \n \n Canadian Dollar (C$) \n \n \n 1.62 \n \n \n 1.70 \n \n \n -5% \n \n \n \n \n South African Rand (ZAR) \n \n \n 21.13 \n \n \n 20.62 \n \n \n +2% \n \n \n \n \n Australian Dollar (A$) \n \n \n 1.78 \n \n \n 1.85 \n \n \n -4% \n \n \n \n \n \n   \n Appendix 1 - Alternative Performance Measures \n Alternative Performance Measures are used by the Group to understand and manage performance. These are not defined under International Financial Reporting Standards (IFRS) or UK-adopted International Accounting Standards (UK-IFRS) and are not intended to be a substitute for any IFRS or UK-IFRS measures of performance but have been included as management considers them to be important measures, alongside the comparable GAAP financial measures, in assessing underlying performance. Wherever appropriate and practical, we provide reconciliations to relevant GAAP measures. The table below sets out the basis of calculation of the Alternative Performance Measures and the rationale for their use. \n \n \n \n \n MEASURE \n \n \n DESCRIPTION \n \n \n RATIONALE \n \n \n \n \n \n \n Underlying (revenue and profit) measures \n \n \n Underlying measures are adjusted to exclude items which in management's judgement need to be disclosed separately by virtue of their size, nature or frequency to aid understanding of the performance for the year or comparability between periods: \n ·   Recurring items include purchase price adjustments including amortisation of acquired intangible assets and adjustments made to reduce deferred income arising on acquisitions, acquisition-related items and unhedged FX on intercompany balances; and \n ·   Non-recurring items that management judge to be one-off or non-operational such as gains and losses on the disposal of assets, impairment charges and reversals, and restructuring related costs. \n Recurring items are adjusted each period irrespective of materiality to ensure consistent treatment. \n Underlying basic EPS is also adjusted for the tax impact of recurring and non-recurring items. \n All prior period underlying measures (revenue and profit) are retranslated at the current year exchange rates to neutralise the effect of currency fluctuations. \n \n \n Underlying measures allow management and investors to compare performance without the effects of foreign exchange movements, one‑off or non-operational items. \n By including part-period contributions from acquisitions, discontinued operations, disposals and assets held for sale of standalone businesses in the current and/or prior periods, the impact of M&A decisions on earnings per share growth can be evaluated. \n \n \n \n \n Organic (revenue and profit) measures \n \n \n In addition to the adjustments made for Underlying measures, Organic measures: \n ·   Exclude the contribution from discontinued operations, disposals and assets held for sale of standalone businesses in the current and prior period; and \n ·   Exclude the contribution from acquired businesses until the year following the year of acquisition; and \n ·   Adjust the comparative period to present prior period acquired businesses as if they had been part of the Group throughout the prior period. \n Acquisitions and disposals where the revenue and contribution impact would be immaterial are not adjusted. \n \n \n Organic measures allow management and investors to understand the like‑for‑like revenue and current period margin performance of the continuing business. \n \n \n \n \n Underlying Cash Flow from Operations \n \n \n Underlying Cash Flow from Operations is Underlying Operating Profit adjusted for non-cash items, net capex (excluding business combinations and similar items) and changes in working capital. \n \n \n To show the cash flow generated by the operations and calculate underlying cash conversion. \n \n \n \n \n Underlying Cash Conversion \n \n \n Underlying Cash Flow from Operations divided by Underlying (as reported) Operating Profit. \n \n \n Cash conversion informs management and investors about the cash operating cycle of the business and how efficiently operating profit is converted into cash. \n \n \n \n \n EBITDA \n \n \n EBITDA is Underlying Operating Profit excluding depreciation, amortisation and share based payments. \n \n \n To calculate the Net Debt to EBITDA leverage ratio and to show profitability before the impact of major non-cash charges. \n \n \n \n \n Annualised recurring revenue \n \n \n Annualised recurring revenue (\"ARR\") is the normalised recurring revenue in the last month of the reporting period, adjusted consistently period to period, multiplied by twelve. Adjustments to normalise reported recurring revenue include those components that management has assessed should be excluded in order to ensure the measure reflects that part of the contracted revenue base which (subject to ongoing use and renewal) can reasonably be expected to repeat in future periods (such as non‑refundable contract sign‑up fees). \n \n \n ARR represents the annualised value of the recurring revenue base that is expected to be carried into future periods, and its growth is a forward‑looking indicator of reporting recurring revenue growth. \n \n \n \n \n Renewal Rate by Value \n \n \n The ARR from renewals, migrations, upsell and cross-sell of active customers at the start of the year, divided by the opening ARR for the year. \n \n \n As an indicator of our ability to retain and generate additional revenue from our existing customer base through up and cross sell. \n \n \n \n \n Free Cash Flow \n \n \n Free Cash Flow is Underlying Cash Flow from Operations minus net interest paid and derivative financial instruments, income tax paid, and adjusted for non-recurring cash items (which excludes net proceeds on disposals of subsidiaries) and profit and loss foreign exchange movements. \n \n \n To measure the cash generated by the operating activities during the period that is available to repay debt, undertake acquisitions or distribute to shareholders. \n \n \n \n \n % Subscription Penetration \n \n \n Underlying software subscription revenue as a percentage of underlying total revenue. \n \n \n To measure the progress of migrating our customer base from licence and maintenance to a subscription relationship. \n \n \n \n \n % Sage Business Cloud Penetration \n \n \n Underlying recurring revenue from the Sage Business Cloud (native and connected cloud) as a percentage of the underlying recurring revenue of the Future Sage Business Cloud Opportunity. \n \n \n To measure the progress in the migration of our revenue base to the Sage Business Cloud by connecting our solutions to the cloud and/or migrating our customers to cloud connected and cloud native solutions. \n \n \n \n \n Return on Capital Employed (ROCE) \n \n \n ROCE is calculated as: \n -     Underlying Operating Profit; minus \n -     Amortisation of acquired intangibles; the result being divided by \n The average (of the opening and closing balance for the period) total net assets excluding net debt, derivative financial instruments, provisions for non-recurring costs, financial liability for purchase of own shares and tax assets or liabilities (i.e. capital employed). \n \n \n As an indicator of the current period financial return on the capital invested in the Company. \n ROCE is used as an underpin in the FY21, FY22 and FY23 PSP awards. \n \n \n \n \n Net debt \n \n \n Net debt is cash and cash equivalents less current and non-current borrowings. \n \n \n To calculate the Net Debt to EBITDA leverage ratio and an indicator of our indebtedness. \n \n \n \n \n   \n   \n Consolidated income statement \n For the six months ended 31 March 2023 \n   \n \n \n \n \n \n \n \n Six months \nended \n31 March \n2023 \nUnderlying \n   \n \n \n Six months \nended \n31 March \n2023 \nAdjustments* \n   \n \n \n Six months \nended \n31 March \n2023 \nStatutory \n   \n \n \n Six months \nended \n31 March \n2022 \nUnderlying as reported \n \n \n Six months \nended \n31 March \n2022 \nAdjustments* \n \n \n \n Six months \nended \n31 March \n2022 \nStatutory \n \n \n \n \n \n Note \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n £m \n \n \n \n \n Revenue \n \n \n 2 \n \n \n 1,087 \n \n \n - \n \n \n 1,087 \n \n \n 935 \n \n \n (1) \n \n \n 934 \n \n \n \n \n Cost of sales \n \n \n \n \n \n (76) \n \n \n - \n \n \n (76) \n \n \n (68) \n \n \n - \n \n \n (68) \n \n \n \n \n Gross profit \n \n \n \n \n \n 1,011 \n \n \n - \n \n \n 1,011 \n \n \n 867 \n \n \n (1) \n \n \n 866 \n \n \n \n \n Selling and \nadministrative expenses \n \n \n (784) \n \n \n (70) \n \n \n (854) \n \n \n (684) \n \n \n 22 \n \n \n (662) \n \n \n \n \n Operating profit \n \n \n 2 \n \n \n 227 \n \n \n (70) \n \n \n 157 \n \n \n 183 \n \n \n 21 \n \n \n 204 \n \n \n \n \n Finance income \n \n \n \n \n \n 4 \n \n \n - \n \n \n 4 \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Finance costs \n \n \n \n \n \n (21) \n \n \n (1) \n \n \n (22) \n \n \n (14) \n \n \n (1) \n \n \n (15) \n \n \n \n \n Profit before income tax \n \n \n 210 \n \n \n (71) \n \n \n 139 \n \n \n 169 \n \n \n 20 \n \n \n 189 \n \n \n \n \n Income tax expense \n \n \n 4 \n \n \n (50) \n \n \n 11 \n \n \n (39) \n \n \n (40) \n \n \n 3 \n \n \n (37) \n \n \n \n \n Profit for the period \n \n \n \n \n \n 160 \n \n \n (60) \n \n \n 100 \n \n \n 129 \n \n \n 23 \n \n \n 152 \n \n \n \n \n * Adjustments are detailed in note 3. \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Earnings per share attributable to \nthe owners of the parent (pence) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n Basic \n \n \n 6 \n \n \n 15.68p \n \n \n   \n \n \n 9.78p \n \n \n 12.62p \n \n \n \n \n \n 14.84p \n \n \n \n \n Diluted \n \n \n 6 \n \n \n 15.49p \n \n \n   \n \n \n 9.66p \n \n \n 12.49p \n \n \n \n \n \n 14.68p \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Consolidated statement of comprehensive income \n For the six months ended 31 March 2023 \n   \n \n \n \n \n   \n \n \n Six months \nended \n31 March \n2023 \n£m \n \n \n Six months \nended \n31 March \n2022 £m \n \n \n \n \n Profit for the period \n \n \n 100 \n \n \n 152 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Other comprehensive income/(expense): \n \n \n   \n \n \n \n \n \n \n \n Items that will not be reclassified to profit or loss: \n \n \n   \n \n \n \n \n \n \n \n Fair value gain on reassessment of equity investment \n \n \n - \n \n \n 30 \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Items that may be reclassified to profit or loss: \n \n \n \n \n \n \n \n \n \n \n Exchange differences on translating foreign operations and net investment hedges \n \n \n (93) \n \n \n 24 \n \n \n \n \n Cash flow hedges \n \n \n (1) \n \n \n - \n \n \n \n \n Exchange differences recycled through income statement on sale of foreign operations \n \n \n - \n \n \n (13) \n \n \n \n \n \n \n \n (94) \n \n \n 11 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Other comprehensive (expense)/income for the period, net of tax \n \n \n (94) \n \n \n 41 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total comprehensive income for the period \n \n \n 6 \n \n \n 193 \n \n \n \n \n The notes on pages 20 to 37 form an integral part of this condensed consolidated half-yearly report. \n \n \n Consolidated balance sheet \n As at 31 March 2023 \n   \n \n \n \n \n \n \n \n Note \n \n \n 31 March \n2023 \n£m \n \n \n 31 March \n2022 \n£m \n \n \n 30 September \n2022 \n Restated* \n£m \n \n \n \n \n Non-current assets \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Goodwill \n \n \n 7 \n \n \n 2,238 \n \n \n 2,082 \n \n \n 2,391 \n \n \n \n \n Other intangible assets \n \n \n 7 \n \n \n 288 \n \n \n 281 \n \n \n 320 \n \n \n \n \n Property, plant and equipment \n \n \n 7 \n \n \n 124 \n \n \n 155 \n \n \n 152 \n \n \n \n \n Equity investments \n \n \n \n \n \n 4 \n \n \n 4 \n \n \n 4 \n \n \n \n \n Trade and other receivables \n \n \n \n \n \n 125 \n \n \n 116 \n \n \n 128 \n \n \n \n \n Deferred income tax assets \n \n \n \n \n \n 35 \n \n \n 34 \n \n \n 19 \n \n \n \n \n Derivative financial instruments \n \n \n \n \n \n 2 \n \n \n - \n \n \n - \n \n \n \n \n \n \n \n \n \n \n 2,816 \n \n \n 2,672 \n \n \n 3,014 \n \n \n \n \n Current assets \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Trade and other receivables \n \n \n \n \n \n 367 \n \n \n 329 \n \n \n 355 \n \n \n \n \n Current income tax asset \n \n \n \n \n \n 37 \n \n \n 28 \n \n \n 39 \n \n \n \n \n Cash and cash equivalents (excluding bank overdrafts) \n \n \n 9 \n \n \n 575 \n \n \n 515 \n \n \n 489 \n \n \n \n \n Assets classified as held for sale \n \n \n 11 \n \n \n - \n \n \n 2 \n \n \n - \n \n \n \n \n \n \n \n \n \n \n 979 \n \n \n 874 \n \n \n 883 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total assets \n \n \n \n \n \n 3,795 \n \n \n 3,546 \n \n \n 3,897 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Trade and other payables \n \n \n \n \n \n (302) \n \n \n (311) \n \n \n (368) \n \n \n \n \n Current income tax liabilities \n \n \n \n \n \n (33) \n \n \n (23) \n \n \n (13) \n \n \n \n \n Borrowings \n \n \n 9 \n \n \n (16) \n \n \n (42) \n \n \n (178) \n \n \n \n \n Provisions \n \n \n \n \n \n (20) \n \n \n (44) \n \n \n (33) \n \n \n \n \n Deferred income \n \n \n \n \n \n (770) \n \n \n (705) \n \n \n (734) \n \n \n \n \n \n \n \n \n \n \n (1,141) \n \n \n (1,125) \n \n \n (1,326) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Non-current liabilities \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Borrowings \n \n \n 9 \n \n \n (1,250) \n \n \n (1,123) \n \n \n (1,044) \n \n \n \n \n Post-employment benefits \n \n \n \n \n \n (19) \n \n \n (23) \n \n \n (19) \n \n \n \n \n Deferred income tax liabilities \n \n \n \n \n \n (14) \n \n \n (24) \n \n \n (17) \n \n \n \n \n Provisions \n \n \n \n \n \n (24) \n \n \n (36) \n \n \n (20) \n \n \n \n \n Trade and other payables \n \n \n \n \n \n (14) \n \n \n (2) \n \n \n (6) \n \n \n \n \n Deferred income \n \n \n \n \n \n (7) \n \n \n (9) \n \n \n (8) \n \n \n \n \n Derivative financial instruments \n \n \n \n \n \n (20) \n \n \n - \n \n \n (60) \n \n \n \n \n \n \n \n \n \n \n (1,348) \n \n \n (1,217) \n \n \n (1,174) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Total liabilities \n \n \n \n \n \n (2,489) \n \n \n (2,342) \n \n \n (2,500) \n \n \n \n \n Net assets \n \n \n \n \n \n 1,306 \n \n \n 1,204 \n \n \n 1,397 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Equity attributable to owners of the parent \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Ordinary shares \n \n \n 8 \n \n \n 12 \n \n \n 12 \n \n \n 12 \n \n \n \n \n Share premium \n \n \n 8 \n \n \n 548 \n \n \n 548 \n \n \n 548 \n \n \n \n \n Translation reserve \n \n \n \n \n \n 113 \n \n \n 53 \n \n \n 206 \n \n \n \n \n Hedging reserve \n \n \n \n \n \n (1) \n \n \n - \n \n \n - \n \n \n \n \n Merger reserves \n \n \n \n \n \n 61 \n \n \n 61 \n \n \n 61 \n \n \n \n \n Retained earnings \n \n \n \n \n \n 573 \n \n \n 530 \n \n \n 570 \n \n \n \n \n Total equity \n \n \n \n \n \n 1,306 \n \n \n 1,204 \n \n \n 1,397 \n \n \n \n \n *Restated for finalisation of the fair value of assets acquired and liabilities assumed in the acquisition of Lockstep, completed in the prior year (see notes 1 & 11). \n \n   \n Consolidated statement of changes in equity \n For the six months ended 31 March 2023 \n   \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n Attributable to owners of the parent \n \n \n \n \n \n \n \n Ordinary \nshares \n£m \n \n \n Share \npremium \n£m \n \n \n Translation \nreserve \n£m \n \n \n Hedging reserve \n £m \n \n \n Merger \nreserves \n£m \n \n \n Retained \nearnings \n£m \n \n \n Total \nequity \n£m \n \n \n \n \n At 1 October 2022 \n \n \n 12 \n \n \n 548 \n \n \n 206 \n \n \n - \n \n \n 61 \n \n \n 570 \n \n \n 1,397 \n \n \n \n \n Profit for the period \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 100 \n \n \n 100 \n \n \n \n \n Other comprehensive expense \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Exchange differences on translating foreign operations and net investment hedges \n \n \n - \n \n \n - \n \n \n (93) \n \n \n - \n \n \n - \n \n \n - \n \n \n (93) \n \n \n \n \n Cash flow hedges \n \n \n - \n \n \n - \n \n \n - \n \n \n (1) \n \n \n - \n \n \n - \n \n \n (1) \n \n \n \n \n Total comprehensive (expense)/income \nfor the period ended 31 March 2023 \n \n \n - \n \n \n - \n \n \n (93) \n \n \n (1) \n \n \n - \n \n \n 100 \n \n \n 6 \n \n \n \n \n Transactions with owners \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Employee share option scheme - value of employee services including deferred tax \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 25 \n \n \n 25 \n \n \n \n \n Proceeds from issuance of treasury shares \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 2 \n \n \n 2 \n \n \n \n \n Purchase of shares by Employee Benefit Trust \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (1) \n \n \n (1) \n \n \n \n \n Dividends paid to owners of the parent \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (123) \n \n \n (123) \n \n \n \n \n Total transactions with owners \nfor the period ended 31 March 2023 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (97) \n \n \n (97) \n \n \n \n \n At 31 March 2023 \n \n \n 12 \n \n \n 548 \n \n \n 113 \n \n \n (1) \n \n \n 61 \n \n \n 573 \n \n \n 1,306 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Attributable to owners of the parent \n \n \n \n \n \n \n \n Ordinary \nshares \n£m \n \n \n Share \npremium \n£m \n \n \n Translation \nreserve \n£m \n \n \n Merger \nreserve \n£m \n \n \n Retained \nearnings \n£m \n \n \n Total \nequity \n£m \n \n \n \n \n At 1 October 2021 \n \n \n 12 \n \n \n 548 \n \n \n 42 \n \n \n 61 \n \n \n 448 \n \n \n 1,111 \n \n \n \n \n Profit for the period \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 152 \n \n \n 152 \n \n \n \n \n Other comprehensive income/(expense) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Exchange differences on translating foreign operations and net investment hedges \n \n \n - \n \n \n - \n \n \n 24 \n \n \n - \n \n \n - \n \n \n 24 \n \n \n \n \n Exchange differences recycled through income statement on sale of foreign operations \n \n \n - \n \n \n - \n \n \n (13) \n \n \n - \n \n \n - \n \n \n (13) \n \n \n \n \n Fair value gain on reassessment of equity investment \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 30 \n \n \n 30 \n \n \n \n \n Total comprehensive income \nfor the period ended 31 March 2022 \n \n \n - \n \n \n - \n \n \n 11 \n \n \n - \n \n \n 182 \n \n \n 193 \n \n \n \n \n Transactions with owners \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Employee share option scheme - value of employee services including deferred tax \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 16 \n \n \n 16 \n \n \n \n \n Proceeds from issuance of treasury shares \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 3 \n \n \n 3 \n \n \n \n \n Dividends paid to owners of the parent \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (119) \n \n \n (119) \n \n \n \n \n Total transactions with owners \nfor the period ended 31 March 2022 \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (100) \n \n \n (100) \n \n \n \n \n At 31 March 2022 \n \n \n 12 \n \n \n 548 \n \n \n 53 \n \n \n 61 \n \n \n 530 \n \n \n 1,204 \n \n \n \n \n \n \n Consolidated statement of cash flows \n For the six months ended 31 March 2023 \n   \n \n \n \n \n \n \n \n Notes \n \n \n Six months \nended \n31 March \n2023 \n £m \n \n \n Six months \nended \n31 March \n2022 \n£m \n \n \n \n \n Cash flows from operating activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Cash generated from continuing operations \n \n \n 9 \n \n \n 251 \n \n \n 193 \n \n \n \n \n Interest paid \n \n \n \n \n \n (28) \n \n \n (14) \n \n \n \n \n Income tax paid \n \n \n \n \n \n (35) \n \n \n (27) \n \n \n \n \n Net cash generated from operating activities \n \n \n \n \n \n 188 \n \n \n 152 \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Cash flows from investing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Disposal of subsidiaries, net of cash disposed \n \n \n \n \n \n - \n \n \n 37 \n \n \n \n \n Acquisition of subsidiaries, net of cash acquired \n \n \n 11 \n \n \n (14) \n \n \n (210) \n \n \n \n \n Purchases of intangible assets \n \n \n 7 \n \n \n (8) \n \n \n (17) \n \n \n \n \n Purchases of property, plant and equipment \n \n \n \n \n \n (2) \n \n \n (4) \n \n \n \n \n Proceeds from disposals of property, plant and equipment \n \n \n \n \n \n - \n \n \n 10 \n \n \n \n \n Interest received \n \n \n \n \n \n 4 \n \n \n - \n \n \n \n \n Net cash used in investing activities \n \n \n \n \n \n (20) \n \n \n (184) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Cash flows from financing activities \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Proceeds from issuance of treasury shares \n \n \n 8 \n \n \n 2 \n \n \n 3 \n \n \n \n \n Proceeds from borrowings \n \n \n 9 \n \n \n 440 \n \n \n 516 \n \n \n \n \n Repayments of borrowings \n \n \n 9 \n \n \n (353) \n \n \n (166) \n \n \n \n \n Net payments for derivative financial instruments \n \n \n \n \n \n (2) \n \n \n - \n \n \n \n \n Capital element of lease payments \n \n \n \n \n \n (10) \n \n \n (9) \n \n \n \n \n Borrowing costs \n \n \n \n \n \n (2) \n \n \n - \n \n \n \n \n Share buyback programme \n \n \n 8 \n \n \n - \n \n \n (249) \n \n \n \n \n Purchase of shares by Employee Benefit Trust \n \n \n 8 \n \n \n (1) \n \n \n - \n \n \n \n \n Dividends paid to owners of the parent \n \n \n 5 \n \n \n (123) \n \n \n (119) \n \n \n \n \n Net cash used in financing activities \n \n \n \n \n \n (49) \n \n \n (24) \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Net increase/(decrease) in cash, cash equivalents and bank overdrafts \n(before exchange rate movement) \n \n \n \n \n \n 119 \n \n \n (56) \n \n \n \n \n Effects of exchange rate movement \n \n \n 9 \n \n \n (33) \n \n \n 4 \n \n \n \n \n Net increase/(decrease) in cash, cash equivalents and bank overdrafts \n \n \n \n \n \n 86 \n \n \n (52) \n \n \n \n \n Cash, cash equivalents and bank overdrafts at 1 October \n \n \n 9 \n \n \n 489 \n \n \n 567 \n \n \n \n \n Cash, cash equivalents and bank overdrafts at period end \n \n \n 9 \n \n \n 575 \n \n \n 515 \n \n \n \n \n \n   \n Notes to the financial information \n For the six months ended 31 March 2023 \n   \n 1.    Group accounting policies \n General information \n The Sage Group plc (\"the Company\") and its subsidiaries (together \"the Group\") is a leading global supplier of finance, HR and payroll software to small and mid-sized businesses . \n This condensed consolidated half-yearly financial report was approved for issue by the board of directors on 16 May 2023. \n The financial information set out above does not constitute the Company's Statutory Accounts. Statutory Accounts for the year ended 30 September 2022 have been delivered to the Registrar of Companies. The auditor's report was unqualified and did not contain statements under section 498 (2), (3) or (4) of the Companies Act 2006. \n Whilst the financial information included in this announcement has been computed in accordance with UK-adopted International Accounting Standards (\"UK-IFRS\") and International Financial Reporting Standards (\"IFRS\") as issued by the International Accounting Standards Board (\"IASB\"), this announcement does not in itself contain sufficient information to comply with IFRS or UK-IFRS. The financial information has been prepared on the basis of the accounting policies and critical accounting estimates and judgements as set out in the Annual Report and Accounts 2022. \n This condensed consolidated half-yearly financial report has been reviewed, not audited. \n The Company is a limited liability company incorporated and domiciled in the UK. The address of its registered office is C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon Tyne, NE28 9EJ. The Company is listed on the London Stock Exchange. \n Basis of preparation \n The financial information for the six months ended 31 March 2023 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, \"Interim Financial Reporting\" as issued by the IASB and as adopted for use in the UK. \n The condensed consolidated half-yearly financial report should be read in conjunction with the annual financial statements for the year ended 30 September 2022, which have been prepared in accordance with UK-IFRS and IFRS as issued by the IASB. \n Going concern \n As at 31 March 2023, the Group had a strong liquidity position with cash and available liquidity of £1.2bn, supported by strong underlying cash conversion of 117% reflecting the strength of the subscription-based business model. The Group's position is further supported by a well-diversified customer base amongst small and medium sized businesses with high quality recurring revenue and strong retention rates. \n In reaching its assessment on going concern, the Directors have reviewed liquidity forecasts for the Group for the period to 30 September 2024 (the going concern assessment period), which reflect the expected impact of economic conditions on trading. In doing so, the Directors have also reviewed the extent to which the macro-economic environment has been considered in building assumptions to support the forecasts. \n Scenario-specific stress testing has been performed, with the level of churn assumptions increased by 75%, and a significant reduction in the level of new customer acquisition and sales to existing customers. In these severe stress scenarios, the Group continues to have sufficient resources to continue in operational existence, without the need to draw down the revolving credit facility or seek additional financing. If more severe impacts occur, controllable mitigating actions to protect liquidity, including the reduction of discretionary spend, are available to the Group should they be required. \n The Directors also reviewed the results of reverse stress testing to provide an illustration of the level of churn and deterioration in new customer acquisition which would be required to exhaust cash down to minimum working capital requirements. The result of the reverse stress testing has highlighted that such a scenario would only arise following a catastrophic deterioration in performance, well in excess of the assumptions considered in the stress testing scenarios. The probability of these factors occurring is deemed to be highly unlikely given the resilient nature of the subscription business model, robust balance sheet, and continued strong cash conversion. \n After making enquiries, the Directors have a reasonable expectation that Sage has adequate resources to continue in operation throughout the going concern assessment period. Accordingly, the consolidated financial information has been prepared on a going concern basis. \n Accounting policies \n The accounting policies adopted in the preparation of these condensed consolidated interim financial statements are consistent with those of the annual financial statements for the year ended 30 September 2022. There has been one new accounting policy adopted in the period relating to cash flow hedges, set out in further detail below. \n Cash flow hedges \n When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivatives is recognised in other comprehensive income and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is recognised in other comprehensive income is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. \n The Group designates the change in fair value of the forward element of forward exchange contracts as the hedging instrument in cash flow hedging relationships. \n If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve are immediately reclassified to profit or loss. \n Adoption of new and revised IFRSs \n There are no new accounting standards which are currently issued but not yet effective which management expects would have a material impact on the Group. \n Critical accounting estimates and judgements \n The preparation of financial statements requires the use of accounting estimates and assumptions by management. It also requires management to exercise its judgement in the process of applying the accounting policies. We continually evaluate our estimates, assumptions and judgements based on available information. The areas involving a higher degree of judgement or complexity are described below. \n Revenue recognition \n Over a third of the Company's revenue is generated from sales to partners rather than end users. The key judgement is determining whether the business partner is a customer of the Group. The key criteria in this determination is whether the business partner has taken control of the product. Considering the nature of Sage's subscription products and support services, this is usually assessed based on whether the business partner has responsibility for payment, has discretion to set prices, and takes on the risks and rewards of the product from Sage. \n Where the business partner is a customer of Sage, discounts are recognised as a deduction from revenue. \n Where the business partner is not a customer of Sage and their part in the sale has simply been in the form of a referral, they are remunerated in the form of a commission payment. These payments are treated as contract acquisition costs. \n Goodwill impairment \n Management has performed a review for indicators of impairment of goodwill as at 31 March 2023. As a result of this review, no indicators of impairment have been identified. \n The carrying value of goodwill and the key assumptions used in performing the annual impairment assessment are disclosed in note 6.1 of the annual financial statements for the year ended 30 September 2022. \n Business combinations \n In the period, the Group finalised the purchase price accounting for Lockstep Network Holdings Inc (\"Lockstep\"), for which the Group acquired 100% of the equity capital and voting rights in August 2022.  At the end of the prior year, the amounts recognised relating to the acquisition were provisional. As a result of the purchase price accounting being finalised, certain adjustments have been recognised in the period, specifically the recognition of intangible assets and deferred tax liabilities, offset by a deduction in the amount of goodwill provisionally recognised in the prior year. Further explanation of the changes is set out in note 11. \n Key areas of judgement include the identification and subsequent measurement of acquired intangible assets, for which an external expert was engaged to support the exercise. The recognised intangible assets included the technology and customer relationships. The fair value of the acquired technology was determined using the relief from royalty method and the customer relationship was determined using a discounted cashflow approach. These valuation techniques incorporate several key assumptions including revenue forecasts and the application of an appropriate discount rate to state future cash flows at their present value. In addition, the relief from royalty method requires the use of an appropriate royalty rate. \n Website \n This condensed consolidated half-yearly financial report for the six months ended 31 March 2023 can also be found on our website: www.sage.com/investors/financial-information/results . \n \n 2.    Segment information \n In accordance with IFRS 8, \"Operating Segments\", information for the Group's operating segments has been derived using the information used by the chief operating decision maker. The Group's Executive Leadership Team (ELT) has been identified as the chief operating decision maker, in accordance with their designated responsibility for the allocation of resources to operating segments and assessing their performance through the Management Performance Reviews. The ELT uses organic and underlying data to monitor business performance. Operating segments are reported in a manner which is consistent with the operating segments produced for internal management reporting. \n The Group is organised into seven key operating segments: North America, UK & Ireland, Central Europe (Germany, Austria and Switzerland), France, Iberia (Spain and Portugal), Africa and the Middle East, and Asia (including Australia). For reporting under IFRS 8, the Group is divided into three reportable segments. These segments are as follows: \n ·     North America \n ·     UK & Ireland \n ·     Europe (Central Europe, France and Iberia) \n The remaining operating segments of Africa and the Middle East, and Asia (including Australia) do not meet the quantitative thresholds for presentation as separate reportable segments under IFRS 8, and so are presented together and described as Africa & APAC. They include the Group's operations in South Africa, the Middle East, Australia, Singapore and Malaysia. \n In previous reporting periods, the UK & Ireland reportable segment was presented as Northern Europe, the Europe reportable segment was presented as International - Central and Southern Europe, and the Africa & APAC segment was presented as International - Africa & APAC. \n The reportable segments reflect the aggregation of the operating segments for Central Europe, France and Iberia. The aggregated operating segments are considered to share similar economic characteristics because they have similar long-term gross margins and operate in similar markets. Central Europe, France and Iberia operate principally within the EU and the majority of their businesses are in countries within the Euro area. \n The revenue analysis in the table below is based on the location of the customer, which is not materially different from the location where the order is received and where the assets are located. \n   \n Revenue by segment \n \n \n \n \n   \n \n \n Six months ended 31 March 2023 \n \n \n \n \n Statutory \n£m \n \n \n Underlying \n£m \n \n \n Organic \n£m \n \n \n Change \nStatutory \n% \n \n \n Change \nUnderlying \n% \n \n \n Change \nOrganic \n% \n \n \n \n \n Recurring revenue by segment \n \n \n   \n \n \n \n \n North America \n \n \n 467 \n \n \n 467 \n \n \n 467 \n \n \n 31% \n \n \n 17% \n \n \n 16% \n \n \n \n \n UK & Ireland \n \n \n 230 \n \n \n 230 \n \n \n 230 \n \n \n 11% \n \n \n 10% \n \n \n 8% \n \n \n \n \n Europe \n \n \n 269 \n \n \n 269 \n \n \n 269 \n \n \n 10% \n \n \n 6% \n \n \n 8% \n \n \n \n \n Africa & APAC \n \n \n 73 \n \n \n 73 \n \n \n 73 \n \n \n 14% \n \n \n 15% \n \n \n 14% \n \n \n \n \n Recurring revenue \n \n \n 1,039 \n \n \n 1,039 \n \n \n 1,039 \n \n \n 19% \n \n \n 12% \n \n \n 12% \n \n \n \n \n Other revenue by segment \n \n \n \n \n \n   \n \n \n \n \n North America \n \n \n 16 \n \n \n 16 \n \n \n 16 \n \n \n (16%) \n \n \n (25%) \n \n \n (26%) \n \n \n \n \n UK & Ireland \n \n \n 3 \n \n \n 3 \n \n \n 3 \n \n \n (19%) \n \n \n (19%) \n \n \n (33%) \n \n \n \n \n Europe \n \n \n 24 \n \n \n 24 \n \n \n 24 \n \n \n (19%) \n \n \n (23%) \n \n \n (21%) \n \n \n \n \n Africa & APAC \n \n \n 5 \n \n \n 5 \n \n \n 5 \n \n \n (30%) \n \n \n (31%) \n \n \n (10%) \n \n \n \n \n Other revenue \n \n \n 48 \n \n \n 48 \n \n \n 48 \n \n \n (20%) \n \n \n (24%) \n \n \n (22%) \n \n \n \n \n Total revenue by segment \n \n \n \n \n \n   \n \n \n \n \n North America \n \n \n 483 \n \n \n 483 \n \n \n 483 \n \n \n 28% \n \n \n 15% \n \n \n 14% \n \n \n \n \n UK & Ireland \n \n \n 233 \n \n \n 233 \n \n \n 233 \n \n \n 10% \n \n \n 10% \n \n \n 7% \n \n \n \n \n Europe \n \n \n 293 \n \n \n 293 \n \n \n 293 \n \n \n 7% \n \n \n 3% \n \n \n 4% \n \n \n \n \n Africa & APAC \n \n \n 78 \n \n \n 78 \n \n \n 78 \n \n \n 9% \n \n \n 10% \n \n \n 12% \n \n \n \n \n Total revenue \n \n \n 1,087 \n \n \n 1,087 \n \n \n 1,087 \n \n \n 16% \n \n \n 10% \n \n \n 10% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n Revenue by segment \n \n \n \n \n   \n \n \n   \n \n \n Six months ended 31 March 2022 \n \n \n \n \n   \n \n \n Statutory £m \n \n \n Underlying adjustments* £m \n \n \n Underlying as reported \n £m \n \n \n Impact of \nforeign \nexchange \n£m \n \n \n Underlying \n£m \n \n \n Organic \nadjustments** \n£m \n \n \n Organic \n£m \n \n \n \n \n Recurring revenue by segment \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n North America \n \n \n 356 \n \n \n 1 \n \n \n 357 \n \n \n 41 \n \n \n 398 \n \n \n 6 \n \n \n 404 \n \n \n \n \n UK & Ireland \n \n \n 208 \n \n \n - \n \n \n 208 \n \n \n 1 \n \n \n 209 \n \n \n 4 \n \n \n 213 \n \n \n \n \n Europe \n \n \n 244 \n \n \n - \n \n \n 244 \n \n \n 10 \n \n \n 254 \n \n \n (4) \n \n \n 250 \n \n \n \n \n Africa & APAC \n \n \n 65 \n \n \n - \n \n \n 65 \n \n \n (1) \n \n \n 64 \n \n \n - \n \n \n 64 \n \n \n \n \n Recurring revenue \n \n \n 873 \n \n \n 1 \n \n \n 874 \n \n \n 51 \n \n \n 925 \n \n \n 6 \n \n \n 931 \n \n \n \n \n Other revenue by segment \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n North America \n \n \n 20 \n \n \n - \n \n \n 20 \n \n \n 2 \n \n \n 22 \n \n \n - \n \n \n 22 \n \n \n \n \n UK & Ireland \n \n \n 4 \n \n \n - \n \n \n 4 \n \n \n - \n \n \n 4 \n \n \n - \n \n \n 4 \n \n \n \n \n Europe \n \n \n 30 \n \n \n - \n \n \n 30 \n \n \n 1 \n \n \n 31 \n \n \n (1) \n \n \n 30 \n \n \n \n \n Africa & APAC \n \n \n 7 \n \n \n - \n \n \n 7 \n \n \n - \n \n \n 7 \n \n \n (2) \n \n \n 5 \n \n \n \n \n Other revenue \n \n \n 61 \n \n \n - \n \n \n 61 \n \n \n 3 \n \n \n 64 \n \n \n (3) \n \n \n 61 \n \n \n \n \n Total revenue by segment \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n North America \n \n \n 376 \n \n \n 1 \n \n \n 377 \n \n \n 43 \n \n \n 420 \n \n \n 6 \n \n \n 426 \n \n \n \n \n UK & Ireland \n \n \n 212 \n \n \n - \n \n \n 212 \n \n \n 1 \n \n \n 213 \n \n \n 4 \n \n \n 217 \n \n \n \n \n Europe \n \n \n 274 \n \n \n - \n \n \n 274 \n \n \n 11 \n \n \n 285 \n \n \n (5) \n \n \n 280 \n \n \n \n \n Africa & APAC \n \n \n 72 \n \n \n - \n \n \n 72 \n \n \n (1) \n \n \n 71 \n \n \n (2) \n \n \n 69 \n \n \n \n \n Total revenue \n \n \n 934 \n \n \n 1 \n \n \n 935 \n \n \n 54 \n \n \n 989 \n \n \n 3 \n \n \n 992 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n * Adjustments are detailed in note 3. \n ** Adjustments relate to the acquisition of Brightpearl, Lockstep and Futrli, disposal of the Group's Swiss business in the prior period and the Group's payroll outsourcing business in South Africa which was classified as held for sale in the prior period. \n   \n Operating profit by segment \n \n \n \n \n Six months ended 31 March 2023 \n \n \n \n \n \n \n \n \nStatutory \n£m \n \n \n Underlying \nadjustments \n£m \n \n \n Underlying \n £m \n \n \n Organic \n£m \n \n \n Change \nStatutory \n % \n \n \n Change \nUnderlying \n% \n \n \n Change \nOrganic \n% \n \n \n \n \n Operating profit by segment \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n North America \n \n \n 43 \n \n \n 42 \n \n \n 85 \n \n \n 85 \n \n \n (27%) \n \n \n 1% \n \n \n 5% \n \n \n \n \n UK & Ireland \n \n \n 35 \n \n \n 25 \n \n \n 60 \n \n \n 60 \n \n \n 4% \n \n \n 13% \n \n \n 25% \n \n \n   \n \n \n \n \n Europe \n \n \n 66 \n \n \n 2 \n \n \n 68 \n \n \n 68 \n \n \n (32%) \n \n \n 37% \n \n \n 39% \n \n \n   \n \n \n \n \n Africa & APAC \n \n \n 13 \n \n \n 1 \n \n \n 14 \n \n \n 14 \n \n \n (11%) \n \n \n 6% \n \n \n 9% \n \n \n   \n \n \n \n \n Total operating profit \n \n \n 157 \n \n \n 70 \n \n \n 227 \n \n \n 227 \n \n \n (23%) \n \n \n 14% \n \n \n 19% \n \n \n   \n \n \n \n \n   \n   \n \n \n \n \n Six months ended 31 March 2022 \n \n \n \n \n \n \n \n \nStatutory £m \n \n \n Underlying adjustments £m \n \n \n Underlying as reported \n £m \n \n \n Impact of foreign exchange \n£m \n \n \n Underlying £m \n \n \n Organic adjustments \n £m \n \n \n Organic \n£m \n \n \n \n \n Operating profit by segment \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n North America \n \n \n 59 \n \n \n 14 \n \n \n 73 \n \n \n 12 \n \n \n 85 \n \n \n (3) \n \n \n 82 \n \n \n \n \n UK & Ireland \n \n \n 34 \n \n \n 17 \n \n \n 51 \n \n \n 1 \n \n \n 52 \n \n \n (4) \n \n \n 48 \n \n \n \n \n Europe \n \n \n 97 \n \n \n (51) \n \n \n 46 \n \n \n 3 \n \n \n 49 \n \n \n - \n \n \n 49 \n \n \n \n \n Africa & APAC \n \n \n 14 \n \n \n (1) \n \n \n 13 \n \n \n - \n \n \n 13 \n \n \n (1) \n \n \n 12 \n \n \n \n \n Total operating profit \n \n \n 204 \n \n \n (21) \n \n \n 183 \n \n \n 16 \n \n \n 199 \n \n \n (8) \n \n \n 191 \n \n \n \n \n   \n Reconciliation of underlying operating profit to statutory operating profit \n \n \n \n \n \n \n \n \n \n \n Six months ended \n31 March 2023 \n£m \n \n \n Six months ended \n31 March 2022 \n£m \n \n \n \n \n North America \n \n \n \n \n \n 85 \n \n \n 85 \n \n \n \n \n UK & Ireland \n \n \n \n \n \n 60 \n \n \n 52 \n \n \n \n \n Europe \n \n \n \n \n \n 68 \n \n \n 49 \n \n \n \n \n Total reportable segments \n \n \n \n \n \n 213 \n \n \n 186 \n \n \n \n \n Africa & APAC \n \n \n \n \n \n 14 \n \n \n 13 \n \n \n \n \n Underlying operating profit \n \n \n \n \n \n 227 \n \n \n 199 \n \n \n \n \n Impact of movement in foreign currency exchange rates \n \n \n \n \n \n - \n \n \n (16) \n \n \n \n \n Underlying operating profit (as reported) \n \n \n \n \n \n 227 \n \n \n 183 \n \n \n \n \n Amortisation of acquired intangible assets \n \n \n \n \n \n (26) \n \n \n (18) \n \n \n \n \n Adjustment to acquired deferred income \n \n \n \n \n \n - \n \n \n (1) \n \n \n \n \n Other M&A activity-related items \n \n \n \n \n \n (24) \n \n \n (15) \n \n \n \n \n Non-recurring items \n \n \n \n \n \n (20) \n \n \n 55 \n \n \n \n \n Statutory operating profit \n \n \n \n \n \n 157 \n \n \n 204 \n \n \n \n \n \n   \n 3.    Adjustments between underlying profit and statutory profit \n \n \n \n \n \n \n \n Six months ended \n31 March 2023 \n \nRecurring \n£m \n \n \n Six months ended \n31 March 2023 \nNon- \nrecurring \n£m \n \n \n Six months ended \n31 March 2023 \n \nTotal \n£m \n \n \n Six months ended \n31 March 2022 \n \nRecurring \n£m \n \n \n Six months ended \n31 March \n2022 \nNon- \nrecurring \n£m \n \n \n Six months ended \n31 March \n2022 \n \nTotal \n£m \n \n \n \n \n M&A activity-related items \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Amortisation of acquired intangibles \n \n \n 26 \n \n \n - \n \n \n 26 \n \n \n 18 \n \n \n - \n \n \n 18 \n \n \n \n \n Gain on disposal of subsidiaries \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (49) \n \n \n (49) \n \n \n \n \n Adjustment to acquired deferred income \n \n \n - \n \n \n - \n \n \n - \n \n \n 1 \n \n \n - \n \n \n 1 \n \n \n \n \n Other M&A activity-related items \n \n \n 24 \n \n \n - \n \n \n 24 \n \n \n 15 \n \n \n - \n \n \n 15 \n \n \n \n \n Other items \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Property restructuring costs \n \n \n - \n \n \n 20 \n \n \n 20 \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Reversal of restructuring costs \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (6) \n \n \n (6) \n \n \n \n \n Total adjustments made to operating profit \n \n \n 50 \n \n \n 20 \n \n \n 70 \n \n \n 34 \n \n \n (55) \n \n \n (21) \n \n \n \n \n Foreign currency movements on intercompany balances \n \n \n 1 \n \n \n - \n \n \n 1 \n \n \n 1 \n \n \n - \n \n \n 1 \n \n \n \n \n Total adjustments made to profit before income tax \n \n \n 51 \n \n \n 20 \n \n \n 71 \n \n \n 35 \n \n \n (55) \n \n \n (20) \n \n \n \n \n Recurring items \n Acquired intangibles are assets which have previously been recognised as part of business combinations or similar transactions. These assets are predominantly brands, customer relationships and technology rights. \n The adjustment to acquired deferred income in the prior year represents the additional revenue that would have been recorded in the period had deferred income not been reduced as part of the purchase price allocation adjustment made for business combinations. \n Other M&A activity-related items relate to advisory, legal, accounting, valuation and other professional or consulting services which are related to M&A activity as well as acquisition-related remuneration and directly attributable integration costs. £4m (six months ended 31 March 2022: £5m) of these costs have been paid in the period, while the remainder is expected to be paid in subsequent periods.    \n Foreign currency movements on intercompany balances occur due to retranslation of unhedged intercompany balances other than those where settlement is not planned or likely in the foreseeable future and resulted in a loss of £1m (six months ended 31 March 2022: loss of £1m). \n Non-recurring items \n Property restructuring costs relate to the reorganisation of a number of leased properties following a strategic review of the Group's property portfolio, as a result of which certain of the Group's properties were either exited or down-sized as part of a consolidated plan. In the current period, costs of £20m consist of impairment of £13m of right of use assets and other related fixed assets that are no longer in use as well as a provision for directly attributable future running costs associated with the properties. The execution of the programme will be completed by 30 September 2023 with further costs expected to be incurred in the second half of the year. \n The gain on disposal of subsidiaries in the prior year of £49m relates to the disposal of the Group's Swiss business. \n Reversal of restructuring costs of £6m in the prior year primarily relates to unutilised provisions recognised in 2021 following the implementation of a business transformation plan to rebalance investment towards the Group's strategic priorities and simplify the business. The reversal is a result of fewer colleagues leaving the business as they were redeployed into other roles. \n 4.    Income tax expense \n The effective tax rate on statutory profit before tax was 28% (six months ended 31 March 2022: 20%) whilst the effective tax rate on underlying profit before tax for continuing operations was 24% (six months ended 31 March 2022: 24%). The effective income tax rate represents the best estimate of the Group's average effective income tax rate expected for the full year, applied to the profit before income tax for the six months ended 31 March 2023. \n The difference between the underlying and statutory rate for the six months ended 31 March 2023 primarily reflects non-deductible other M&A activity-related items. \n 5.    Dividends \n \n \n \n \n \n \n \n Six months ended \n31 March 2023 \n£m \n \n \n Six months ended \n 31 March \n2022 £m \n \n \n Year \nended \n 30 September \n2022 \n£m \n \n \n \n \n Final dividend paid for the year ended 30 September 2021 of 11.63p per share \n \n \n - \n \n \n 119 \n \n \n 119 \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Interim dividend paid for the year ended 30 September 2022 of 6.30p per share \n \n \n - \n \n \n - \n \n \n 64 \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Final dividend paid for the year ended 30 September 2022 of 12.10p per share \n \n \n 123 \n \n \n - \n \n \n - \n \n \n \n \n \n \n \n 123 \n \n \n 119 \n \n \n 183 \n \n \n \n \n \nThe interim dividend of 6.55p per share will be paid on 23 June 2023 to shareholders on the register at the close of business on 2 June 2023. The Company's distributable reserves are sufficient to support the payment of this dividend. This condensed consolidated half-yearly financial report does not reflect this proposed dividend payable. \n   \n 6.    Earnings per share \n Basic earnings per share is calculated by dividing the profit for the period attributable to owners of the parent by the weighted average number of ordinary shares in issue during the period, excluding those held as treasury shares and held by the Employee Benefit Trust, which are treated as cancelled. \n For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive ordinary shares. The Group has one class of potentially dilutive ordinary shares. They are share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the period. \n \n \n \n \n   \n \n \n Underlying \nSix months ended \n31 March \n2023 \n \n \n Underlying \nas reported Six months ended \n31 March \n2022 \n \n \n Underlying \nSix months ended \n31 March \n2022 \n \n \n \nStatutory \nSix months ended \n31 March \n2023 \n \n \n Statutory \nSix months ended 31 March \n2022 \n \n \n \n \n Earnings attributable to owners of the parent \n \n \n   \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Profit for the period \n \n \n 160 \n \n \n 129 \n \n \n 141 \n \n \n 100 \n \n \n 152 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Number of shares (millions) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Weighted average number of shares \n \n \n 1,018 \n \n \n 1,023 \n \n \n 1,023 \n \n \n 1,018 \n \n \n 1,023 \n \n \n \n \n Dilutive effects of shares \n \n \n 12 \n \n \n 10 \n \n \n 10 \n \n \n 12 \n \n \n 10 \n \n \n \n \n \n \n \n 1,030 \n \n \n 1,033 \n \n \n 1,033 \n \n \n 1,030 \n \n \n 1,033 \n \n \n \n \n Earnings per share attributable to owners of the parent (pence) \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Basic earnings per share \n \n \n 15.68 \n \n \n 12.62 \n \n \n 13.83 \n \n \n 9.78 \n \n \n 14.84 \n \n \n \n \n Diluted earnings per share \n \n \n 15.49 \n \n \n 12.49 \n \n \n 13.69 \n \n \n 9.66 \n \n \n 14.68 \n \n \n \n \n   \n \n \n \n \n Reconciliation of earnings \n \n \n Six months ended \n31 March \n2023 \n£m \n \n \n Six months ended \n31 March \n2022 \n£m \n \n \n \n \n Underlying earnings attributable to owners of the parent \n \n \n 160 \n \n \n 141 \n \n \n \n \n Impact of movement in foreign currency exchange rates \n \n \n - \n \n \n (12) \n \n \n \n \n Underlying earnings attributable to owners of the parent (as reported) \n \n \n 160 \n \n \n 129 \n \n \n \n \n Amortisation of acquired intangible assets \n \n \n (26) \n \n \n (18) \n \n \n \n \n Adjustment to acquired deferred income \n \n \n - \n \n \n (1) \n \n \n \n \n Other M&A activity-related items \n \n \n (24) \n \n \n (15) \n \n \n \n \n Foreign currency movements on intercompany balances \n \n \n (1) \n \n \n (1) \n \n \n \n \n Property restructuring costs \n \n \n (20) \n \n \n - \n \n \n \n \n Gain on disposal of subsidiaries \n \n \n - \n \n \n 49 \n \n \n \n \n Reversal of restructuring costs \n \n \n - \n \n \n 6 \n \n \n \n \n Taxation on adjustments \n \n \n 11 \n \n \n 3 \n \n \n \n \n Net adjustments \n \n \n (60) \n \n \n 23 \n \n \n \n \n Earnings - statutory profit for period attributable to owners of the parent \n \n \n 100 \n \n \n 152 \n \n \n \n \n \n   \n 7.    Non-current assets \n \n \n \n \n \n \n \n Goodwill \n £m \n \n \n Other \nintangible \nassets \n £m \n \n \n Property, \nplant and equipment \n£m \n \n \n Total \n £m \n \n \n \n \n Opening net book amount at 1 October 2022* \n \n \n 2,391 \n \n \n 320 \n \n \n 152 \n \n \n 2,863 \n \n \n \n \n Additions \n \n \n - \n \n \n 8 \n \n \n 12 \n \n \n 20 \n \n \n \n \n Acquisition of subsidiary** \n \n \n 8 \n \n \n 4 \n \n \n - \n \n \n 12 \n \n \n \n \n Impairment \n \n \n - \n \n \n - \n \n \n (13) \n \n \n (13) \n \n \n \n \n Depreciation, amortisation and other movements \n \n \n - \n \n \n (33) \n \n \n (22) \n \n \n (55) \n \n \n \n \n Exchange movement \n \n \n (161) \n \n \n (11) \n \n \n (5) \n \n \n (177) \n \n \n \n \n Closing net book amount at 31 March 2023 \n \n \n 2,238 \n \n \n 288 \n \n \n 124 \n \n \n 2,650 \n \n \n \n \n *Opening net book amount restated for finalisation of fair value of assets acquired and liabilities assumed in the acquisition of Lockstep in the prior year (see notes 1 & 11). \n **Assets acquired as part of the acquisition of Spherics (see note 11). \n   \n \n \n \n \n \n \n \n Goodwill \n£m \n \n \n Other \nintangible \nassets \n£m \n \n \n Property, \nplant and \nequipment \n£m \n \n \n Total \n£m \n \n \n \n \n Opening net book amount at 1 October 2021 \n \n \n 1,877 \n \n \n 190 \n \n \n 164 \n \n \n 2,231 \n \n \n \n \n Additions \n \n \n - \n \n \n 4 \n \n \n 8 \n \n \n 12 \n \n \n \n \n Acquisition of subsidiary \n \n \n 176 \n \n \n 110 \n \n \n 2 \n \n \n 288 \n \n \n \n \n Depreciation, amortisation and other movements \n \n \n - \n \n \n ( 24 ) \n \n \n (21) \n \n \n ( 45 ) \n \n \n \n \n Exchange movement \n \n \n 29 \n \n \n 1 \n \n \n 2 \n \n \n 32 \n \n \n \n \n Closing net book amount at 31 March 2022 \n \n \n 2,082 \n \n \n 281 \n \n \n 155 \n \n \n 2,518 \n \n \n \n \n   \n Impairment of property, plant and equipment in the period of £13m relates to property restructuring costs, see note 3. \n \n   \n 8.    Ordinary shares and share premium \n \n \n \n \n \n \n \n \n Number of \n shares \n \n \n \n Ordinary \n Shares \n       £m \n \n \n Share     premium \n       £m \n \n \n Total \n£m \n \n \n \n \n At 1 October 2022 & 31 March 2023 \n \n \n 1,100,789,295 \n \n \n 12 \n \n \n 548 ...

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