Results for the year ended 30 September 2023

About this update from Sage Group Plc

[{"type":"text","content":"\n \n \n \n \n \n \n \n \n   \n \n \n \n \n The Sage Group plc \n Results for the year ended 30 September 2023 (audited) \n 22 November 2023 \n \n \n \n \n   \n   \n Strong performance driven by consistent strategic execution \n Steve Hare, Chief Executive Officer, commented: \n \"Sage performed well in FY23, delivering double-digit revenue growth, increased profitability and strong cash flows. We sustained good momentum throughout the year in all regions, driven by consistent strategic execution. \n \"We continue to help small and mid-sized businesses succeed, providing them with the tools and expertise they need to simplify their accounting and HR processes, streamline their operations, and make more informed business decisions.  Through the Sage Network, we are delivering innovative, AI-powered services to customers, faster and more efficiently than ever before. \n \"Small and mid-sized businesses are continuing to digitalise, despite the macroeconomic uncertainty. We are building a resilient platform to deliver sustained, efficient growth, and I am confident that Sage is well positioned to take advantage of the market opportunity in 2024 and beyond.\" \n \n \n \n \n Underlying Financial APMs [1] \n \n \n FY23 \n \n \n FY22 [2] \n \n \n Change \n \n \n Organic \n Change \n \n \n \n \n Annualised Recurring Revenue (ARR) \n \n \n £2,188m \n \n \n £1,964m \n \n \n +11% \n \n \n +11% \n \n \n \n \n Underlying Total Revenue \n \n \n £2,184m \n \n \n £1,982m \n \n \n +10% \n \n \n +10% \n \n \n \n \n Underlying Recurring Revenue \n \n \n £2,096m \n \n \n £1,875m \n \n \n +12% \n \n \n +11% \n \n \n \n \n Underlying Operating Profit \n \n \n £456m \n \n \n £386m \n \n \n +18% \n \n \n +22% \n \n \n \n \n      % Operating Profit Margin \n \n \n 20.9% \n \n \n 19.5% \n \n \n +1.4 ppts \n \n \n +2.2 ppts \n \n \n \n \n EBITDA \n \n \n £553m \n \n \n £477m \n \n \n +16% \n \n \n \n \n \n \n \n      % EBITDA Margin \n \n \n 25.3% \n \n \n 24.1% \n \n \n +1.2 ppts \n \n \n   \n \n \n \n \n Underlying Basic EPS (p) \n \n \n 32.3p \n \n \n 26.4p \n \n \n +22% \n \n \n \n \n \n \n \n Underlying Cash Conversion \n \n \n 116% \n \n \n 107% \n \n \n +9 ppts \n \n \n \n \n \n \n \n Statutory Measures \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n   \n \n \n \n \n Revenue \n \n \n £2,184m \n \n \n £1,947m \n \n \n +12% \n \n \n \n \n \n \n \n Operating Profit \n \n \n £315m \n \n \n £367m \n \n \n -14% \n \n \n \n \n \n \n \n      % Operating Profit Margin \n \n \n 14.4% \n \n \n 18.9% \n \n \n -4.5 ppts \n \n \n   \n \n \n \n \n Basic EPS (p) \n \n \n 20.7p \n \n \n 25.5p \n \n \n -19% \n \n \n \n \n \n \n \n Dividend Per Share (p) \n \n \n 19.3p \n \n \n 18.4p \n \n \n +5% \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 £2,096m, underpinned by Sage Business Cloud growth of 25% to £1,628m. Underlying total revenue increased by 10% to £2,184m. \n ·     Underlying operating profit grew by 18% to £456m, with margin increasing by 140 bps to 20.9% driven by operating efficiencies as we scale the Group. \n ·     EBITDA increased by 16% to £553m, with margin increasing by 120 bps to 25.3%. \n ·     Statutory operating profit decreased by 14% to £315m, including one-off gains on business disposals in FY22, together with property restructuring and M&A-related charges in FY23. \n ·     Underlying basic EPS increased by 22% to 32.3p. \n   \n ·     Strong underlying cash conversion of 116% reflecting growth in subscription revenue and continued good working capital management. \n ·     Robust balance sheet, with £1.3bn of cash and available liquidity and net debt to EBITDA of 1.0x. \n Shareholder returns \n ·     Proposed final dividend of 12.75p, increasing the full year dividend by 5% to 19.3p, in line with our progressive policy. \n ·     Share buyback programme of up to £350m announced separately this morning, reflecting the Board's confidence in Sage's future prospects, together with Sage's strong cash generation and robust financial position . \n Strategic and operational highlights \n ·     Underlying annualised recurring revenue (ARR) up 11% to £2,188m, reflecting broad-based growth across all regions balanced between new and existing customers. \n ·     £190m of ARR added through new customer acquisition on an organic basis, up from £180m in FY22. \n ·     Cloud native ARR up 28% to £684m (FY22: £534m), driven largely by new customers, with a continued strong performance from Sage Intacct. \n ·     Renewal rate by value of 102% (FY22: 101%), ahead of last year, reflecting increased sales to existing customers and good retention rates. \n ·     Sage Business Cloud penetration of 84% (FY22: 75%), enabling more customers to connect to Sage's cloud services and ecosystem via the Sage Network. \n ·     Subscription penetration of 79% (FY22: 75%), reflecting continued growth from subscription contracts. \n ·     Strong strategic progress including further growth in global cloud solutions across our markets, with continued investment in innovation complemented by the acquisitions of Spherics and Corecon. \n Outlook \n Sage enters FY24 with good momentum driven by consistent strategic execution. Looking ahead, we expect organic total revenue growth in FY24 to be broadly in line with FY23. Operating margins are expected to trend upwards in FY24 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 Caroline Xu, Group Finance \n \n \n Conor McClafferty \n \n \n \n \n \n \n \n James Sandford, Investor Relations \n \n \n Sophia Johnston \n \n \n \n \n \n \n \n David Ginivan , Corporate PR \n \n \n \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/sb4btbwk . To join the conference call, please register via https://register.vevent.com/register/BI46eb1e22ac7245dcbfd330d9d13d3736 . \n   \n Business Review \n Sage delivered a strong financial performance in FY23, including double-digit revenue growth, increased profitability and strong cash flows. \n Overview of results \n The Group achieved underlying recurring revenue growth of 12% to £2,096m (FY22: £1,875m), driven by a 25% increase in Sage Business Cloud recurring revenue to £1,628m (FY22: £1,300m). Underlying total revenue increased by 10% to £2,184m (FY22: £1,982m). As a result, over 96% of the Group's revenue is now recurring. \n On a regional basis, North America increased recurring revenue by 16% to £944m (FY22: £815m), with a strong performance from Sage Intacct and cloud connected solutions. UKIA [3] grew recurring revenue by 10% to £611m (FY22: £557m), driven by increased demand for cloud native solutions as well as Sage 50 cloud. In Europe, recurring revenue increased by 7% to £541m (FY22: £503m), reflecting growth across the Sage Business Cloud portfolio. \n Organic recurring revenue grew by 11% to £2,095m (FY22: £1,882m), while organic total revenue grew by 10% to £2,182m (FY22: £1,986m). \n Revenue 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 the Sage Network, leading to deeper customer relationships and higher lifetime values. \n \n \n \n \n Underlying Recurring Revenue by Portfolio [4] \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n Organic \n Change \n \n \n \n \n Cloud native [5] \n \n \n £596m \n \n \n £445m \n \n \n +34% \n \n \n +30% \n \n \n \n \n Cloud connected [6] \n \n \n £1,032m \n \n \n £855m \n \n \n +21% \n \n \n +21% \n \n \n \n \n Sage Business Cloud \n \n \n £1,628m \n \n \n £1,300m \n \n \n +25% \n \n \n +24% \n \n \n \n \n Products with potential to migrate \n \n \n £316m \n \n \n £429m \n \n \n -26% \n \n \n -26% \n \n \n \n \n Future Sage Business Cloud Opportunity [7] \n \n \n £1,944m \n \n \n £1,729m \n \n \n +12% \n \n \n +12% \n \n \n \n \n Non-Sage Business Cloud [8] \n \n \n £152m \n \n \n £146m \n \n \n +4% \n \n \n +4% \n \n \n \n \n Underlying Recurring Revenue \n \n \n £2,096m \n \n \n £1,875m \n \n \n +12% \n \n \n +11% \n \n \n \n \n Sage Business Cloud Penetration \n \n \n 84% \n \n \n 75% \n \n \n   \n \n \n   \n \n \n \n \n Underlying recurring revenue from cloud native solutions grew by 34% to £596m, driven by Sage Intacct together with other solutions including Sage Accounting, Sage Payroll and Sage HR, through new customer acquisition and growth from existing customers. Organic cloud native recurring revenue growth, which is adjusted for the contribution from acquisitions in the current and prior year, was 30%. \n Underlying recurring revenue from cloud connected solutions increased by 21% to £1,032m, reflecting growth in the Sage 50 and Sage 200 franchises, driven by existing and new customers, together with the continued migration of products to Sage Business Cloud through the integration of cloud functionality.  \n Overall, the Future Sage Business Cloud Opportunity, which represents products in or with a clear pathway to Sage Business Cloud, performed strongly with recurring revenue growth of 12%. The revenue performance of the Non-Sage Business Cloud portfolio was in line with expectations. \n ARR growth \n Sage's underlying ARR increased by 11% to £2,188m (FY22: £1,964m), with growth balanced between new and existing customers. This was underpinned by cloud native ARR growth of 28% to £684m (FY22: £534m), driven by a continued strong performance from Sage Intacct, together with other solutions including Sage Accounting, Sage Payroll and Sage HR. Organic ARR also increased by 11% to £2,186m (FY22: £1,964m). \n Renewal rate by value of 102% was ahead of the prior year (FY22: 101%) reflecting good retention rates and increased sales to existing customers, including a strong performance in customer add-ons and targeted price rises. \n In total, Sage added £190m of ARR through new customer acquisition on an organic basis during the year, up from £180m reported in FY22. \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 : We continue to scale Sage Intacct through product enhancements, extended vertical reach and geographic expansion. During the year, Sage Intacct was launched in continental Europe, starting with France, and with Germany expected to follow. Sage Intacct Construction is making strong progress in the US, complemented by the acquisition in May 2023 of Corecon, a project management solution, while Sage Distribution and Manufacturing Operations (formerly Sage Intacct Manufacturing) has now been launched across seven countries.  In FY23, Sage Intacct's ARR grew by almost 30% in the US and more than 80% outside the US, adding around £100m of ARR to the Group. \n ·     Expand medium beyond financials : We also deliver benefits for mid-sized businesses beyond core accounting, including payroll, HR, planning, analytics, and workflow automation. During the year we launched in Canada and South Africa an integration between Sage Intacct, Sage Payroll and Sage HR, providing a seamless customer experience and helping to drive cross-sell.  We have also expanded the availability of Sage Intelligent Time, an AI-powered time tracking tool, and Sage Intacct Planning, into more markets across the Group. \n ·     Build the small business engine : O ur small business solutions, including Sage Accounting and Sage 50, continue to drive growth in key markets. Sage for Accountants has now been adopted by almost 8,000 accountants in the UK, up from around 2,000 a year ago, and has also been launched in Canada. We have also enhanced our customer proposition in the UK through the introduction of My Sage, an integrated account management tool. In Europe, we have launched Sage Active, a new multi-legislation business management solution for SMBs, now available in France, Spain and Germany. \n ·     Scale the network: Through the Sage Network we connect businesses to their customers, suppliers, tax authorities and banks, providing connected services that automate workflows and streamline operations. In FY23 we enabled more customers to connect to the network by increasing Sage Business Cloud penetration, and we drove participation by introducing new services such as accounts payable automation, which is growing rapidly. We also enabled greater network usage by third-party software providers, generating consumption-based revenue for Sage while expanding and enriching the customer experience. \n ·     Learn and disrupt: We invest in disruptive technologies to drive innovation. AI-powered services are increasingly deployed in products across Sage Business Cloud, automating workflows from data ingestion through to transaction classification.  We recently launched Sage Network Inbox, a connected accounting workflow management tool, and we are developing and testing Sage Copilot, our digital assistant, both incorporating generative AI technology to enable natural language interaction. We also deepened our relationships with key partners including Microsoft and AWS. \n Sustainability and Society \n Our Sustainability and Society strategy is pivotal to how we deliver on Sage's purpose of knocking down barriers so everyone can thrive. In FY23, we evolved this strategy to better reflect our role in society and our transition from commitment to action. \n To help protect the planet, we are targeting net zero carbon emissions by 2040, with an SBTi-validated interim target of halving scope 1, 2 and 3 emissions by 2030 against a 2019 baseline. We also help SMBs on their own journey to net zero, including through Sage Earth (previously Spherics), our innovative carbon accounting solution acquired in October 2022, and through online support via masterclasses. \n We aim to use our technology for good, providing insights that help governments and regulators make better policy decisions for SMBs, and building digital trust in areas such as cyber security and data privacy. Through Sage Foundation, colleagues, their families and our partners dedicated more than 150,000 volunteering hours in FY23 to their communities and, in conjunction with our charity partners, helped more than 10,500 underserved entrepreneurs to grow their businesses. \n We also aim to foster a high-performance culture based on accountability and inclusivity. By prioritising diversity, wellbeing and development, we enable colleagues to collaborate effectively and perform at their best. Currently 34% of leadership teams meet our FY26 gender diversity target [9] , up from 19% at the beginning of FY22. \n During the year, Sage achieved a top-5 ranking in IDC's European Sustainable Strategies and Technologies Index, and was listed among The Times's Top 50 Employers for Gender Equality as well as the FT's Europe Climate Leaders 2023.  Sage has an ESG rating of 'AAA' from MSCI. \n Future revenue reporting changes \n In FY24 we intend to simplify our revenue reporting, to enable continued, clear understanding of progress and performance given the recent evolution of the Group. These changes will include: \n ·     Focusing revenue metrics and analysis on total rather than recurring revenue [10] , as their growth rates increasingly converge reflecting the reduction in other revenue (SSRS). ARR will continue to be provided as one of Sage's strategic KPIs. \n ·     Reporting revenue performance principally on a regional basis going forward. Accordingly, the tables relating to revenue by portfolio and by type will no longer be provided; however, we will continue separately to provide cloud native, Sage Business Cloud and subscription revenue and commentary. \n Further details of these changes will be published in early December.  \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 [11] . \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 FY23 \n \n \n FY22 \n \n \n Change \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n \n \n North America \n \n \n £973m \n \n \n £818m \n \n \n +19% \n \n \n £973m \n \n \n £849m \n \n \n +15% \n \n \n \n \n UKIA \n \n \n £627m \n \n \n £586m \n \n \n +7% \n \n \n £627m \n \n \n £575m \n \n \n +9% \n \n \n \n \n Europe \n \n \n £584m \n \n \n £543m \n \n \n +7% \n \n \n £584m \n \n \n £558m \n \n \n +5% \n \n \n \n \n Group total revenue \n \n \n £2,184m \n \n \n £1,947m \n \n \n +12% \n \n \n £2,184m \n \n \n £1,982m \n \n \n +10% \n \n \n \n \n Operating profit \n \n \n £315m \n \n \n £367m \n \n \n -14% \n \n \n £456m \n \n \n £386m \n \n \n +18% \n \n \n \n \n % Operating profit margin \n \n \n 14.4% \n \n \n 18.9% \n \n \n  -4.5 ppts \n \n \n 20.9% \n \n \n 19.5% \n \n \n  +1.4 ppts \n \n \n \n \n Profit before tax \n \n \n £282m \n \n \n £337m \n \n \n -16% \n \n \n £424m \n \n \n £355m \n \n \n +20% \n \n \n \n \n Profit after tax \n \n \n £211m \n \n \n £260m \n \n \n -19% \n \n \n £329m \n \n \n £269m \n \n \n +22% \n \n \n \n \n Basic EPS \n \n \n 20.7p \n \n \n 25.5p \n \n \n -19% \n \n \n 32.3p \n \n \n 26.4p \n \n \n +22% \n \n \n \n \n The Group achieved statutory and underlying total revenue of £2,184m in FY23. Statutory total revenue increased by 12% compared to the prior year, reflecting underlying total revenue growth of 10% together with a 2-percentage point foreign exchange tailwind, principally relating to the US Dollar in North America. \n Statutory operating profit decreased by 14% to £315m, reflecting an 18% increase in underlying operating profit to £456m offset by a £131m increase in recurring and non-recurring items [12] , including a £53m one-off gain on business disposals in FY22 together with property restructuring and M&A-related charges in FY23. \n Statutory basic EPS decreased by 19% to 20.7p, reflecting lower statutory operating profit, slightly higher statutory net finance costs and the post-tax impact of non-recurring items. Underlying basic EPS increased by 22% to 32.3p, reflecting higher underlying operating profit and a slight reduction in the Group's underlying effective tax rate. \n Revenue - underlying and organic reconciliation to statutory \n \n \n \n \n Total revenue bridge \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n \n \n Statutory \n \n \n  £2,184m \n \n \n  £1,947m \n \n \n +12% \n \n \n \n \n Recurring items \n \n \n  - \n \n \n £2m \n \n \n \n \n \n \n \n Impact of FX [13] \n \n \n - \n \n \n £33m \n \n \n \n \n \n \n \n Underlying \n \n \n £2,184m \n \n \n £1,982m \n \n \n +10% \n \n \n \n \n Disposals \n \n \n  - \n \n \n (£7m) \n \n \n \n \n \n \n \n Acquisitions \n \n \n  (£2m) \n \n \n £11m \n \n \n \n \n \n \n \n Organic \n \n \n £2,182m \n \n \n £1,986m \n \n \n +10% \n \n \n \n \n Statutory and underlying total revenue was £2,184m in FY23. Underlying revenue in FY22 of £1,982m reflects statutory revenue of £1,947m retranslated at current year exchange rates, resulting in a foreign exchange tailwind of £33m, together with a £2m fair value adjustment to deferred income relating to the acquisition of Brightpearl.  \n Organic total revenue in FY23 was £2,182m, reflecting underlying revenue of £2,184m adjusted for £2m of revenue from the acquisition of Spherics and Corecon during the year. Organic revenue in FY22 of £1,986m reflects underlying revenue of £1,982m, adjusted for £5m of revenue from Sage's business in Switzerland and £2m of revenue from the South African payroll outsourcing business, both of which were sold during FY22, and £11m of revenue from Lockstep, Futrli and Brightpearl which were acquired during FY22. \n Revenue by type \n \n \n \n \n Underlying revenue mix \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n \n \n \n \n Software subscription revenue \n \n \n £1,732m \n \n \n £1,484m \n \n \n +17% \n \n \n +16% \n \n \n   \n \n \n \n \n Other recurring revenue \n \n \n £364m \n \n \n £391m \n \n \n -7% \n \n \n -7% \n \n \n   \n \n \n \n \n Underlying recurring revenue \n \n \n £2,096m \n \n \n £1,875m \n \n \n +12% \n \n \n +11% \n \n \n   \n \n \n \n \n Other revenue (SSRS) \n \n \n £88m \n \n \n £107m \n \n \n -18% \n \n \n -18% \n \n \n   \n \n \n \n \n Underlying total revenue \n \n \n £2,184m \n \n \n £1,982m \n \n \n +10% \n \n \n +10% \n \n \n   \n \n \n \n \n Subscription Penetration \n \n \n 79% \n \n \n 75% \n \n \n   \n \n \n   \n \n \n \n \n Underlying recurring revenue grew by 12% to £2,096m, supported by a 17% increase in software subscription revenue to £1,732m, 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 £364m reflects customers migrating from maintenance and support to subscription contracts. Other revenue (SSRS) declined by 18% to £88m, in line with our strategy to transition away from licence sales and professional services implementations. \n Revenue performance by region \n \n \n \n \n North America \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n Underlying total revenue \n \n \n £973m \n \n \n £849m \n \n \n +15% \n \n \n +14% \n \n \n \n \n Underlying recurring revenue \n \n \n £944m \n \n \n £815m \n \n \n +16% \n \n \n +15% \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 86% \n \n \n 79% \n \n \n +7 ppts \n \n \n +7 ppts \n \n \n \n \n % Subscription Penetration \n \n \n 78% \n \n \n 73% \n \n \n +5 ppts \n \n \n +5 ppts \n \n \n \n \n Underlying recurring revenue \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n US \n \n \n £819m \n \n \n £703m \n \n \n +16% \n \n \n +15% \n \n \n \n \n Of which Sage Intacct \n \n \n £312m \n \n \n £241m \n \n \n +30% \n \n \n +30% \n \n \n \n \n Canada \n \n \n £125m \n \n \n £112m \n \n \n +12% \n \n \n +12% \n \n \n \n \n North America achieved underlying recurring revenue growth of 16% to £944m and total revenue growth of 15% to £973m. Adjusting for the impact in the US of the acquisitions of Brightpearl and Lockstep during FY22, organic recurring and total revenue growth was 15% and 14%, respectively. Sage Business Cloud penetration increased to 86%, up from 79% in the prior year, driven by growth in cloud native and cloud connected solutions, while subscription penetration increased to 78%, up from 73% in the prior year. \n Cloud native growth was driven primarily through Sage Intacct, which delivered strong recurring revenue growth of 30% to £312m, reflecting further progress in attracting new customers and continued strong sales to existing customers. \n Recurring revenue in the US increased by 16% to £819m, reflecting growth in Sage Intacct alongside growth in cloud connected solutions, driven by new and existing customers across the Sage 200 and Sage 50 franchises. Total revenue for the US increased by 15% to £846m. \n In Canada, recurring revenue increased by 12% to £125m and total revenue by 11% to £127m, driven mainly by Sage 50 cloud, and supported by strong growth in Sage Intacct. \n \n \n \n \n UKIA \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n Underlying total revenue \n \n \n £627m \n \n \n £575m \n \n \n +9% \n \n \n +8% \n \n \n \n \n Underlying recurring revenue \n \n \n £611m \n \n \n £557m \n \n \n +10% \n \n \n +9% \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 90% \n \n \n 79% \n \n \n +11 ppts \n \n \n +11 ppts \n \n \n \n \n % Subscription Penetration \n \n \n 89% \n \n \n 88% \n \n \n +1 ppts \n \n \n +1 ppts \n \n \n \n \n Underlying recurring revenue \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n UK & Ireland \n \n \n £466m \n \n \n £429m \n \n \n +9% \n \n \n +8% \n \n \n \n \n Africa & APAC \n \n \n £145m \n \n \n £128m \n \n \n +13% \n \n \n +13% \n \n \n \n \n In the UKIA region, underlying recurring revenue grew by 10% to £611m and total revenue grew by 9% to £627m. Adjusting for the impact in the UK & Ireland of the acquisitions of Brightpearl and Futrli during FY22, organic recurring and total revenue growth was 9% and 8%, respectively. Sage Business Cloud penetration reached 90%, up from 79% in the prior year, while subscription penetration increased to 89%, up from 88% in the prior year. \n In the UK & Ireland, recurring revenue increased by 9% to £466m, 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, together with Sage Intacct as we continue to drive scale through both the direct and partner channels. Total revenue in the UK & Ireland increased by 8% to £471m. \n Africa & APAC delivered strong recurring revenue growth of 13% to £145m, driven by growth in cloud native solutions, including Sage Accounting, Sage Payroll and Sage Intacct, and supported by local products. Total revenue in Africa & APAC increased by 11% to £156m. \n \n \n \n \n Europe \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n Underlying total revenue \n \n \n £584m \n \n \n £558m \n \n \n +5% \n \n \n +5% \n \n \n \n \n Underlying recurring revenue \n \n \n £541m \n \n \n £503m \n \n \n +7% \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 73% \n \n \n 64% \n \n \n +9 ppts \n \n \n +8 ppts \n \n \n \n \n % Subscription Penetration \n \n \n 70% \n \n \n 65% \n \n \n +5 ppts \n \n \n +5 ppts \n \n \n \n \n Underlying recurring revenue \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n Organic change \n \n \n \n \n France \n \n \n £284m \n \n \n £264m \n \n \n +7% \n \n \n +7% \n \n \n \n \n Central Europe \n \n \n £123m \n \n \n £115m \n \n \n +7% \n \n \n +10% \n \n \n \n \n Iberia \n \n \n £134m \n \n \n £124m \n \n \n +9% \n \n \n +9% \n \n \n \n \n Europe achieved underlying recurring revenue growth of 7% to £541m and total revenue growth of 5% to £584m. Adjusting for the disposal of the Swiss business in FY22, organic recurring revenue growth and total revenue growth was 8% and 5%, respectively. Sage Business Cloud penetration increased to 73%, up from 64% in FY22, while subscription penetration reached 70%, up from 65% in FY22. \n In France, recurring revenue increased by 7% to £284m, with a strong performance in cloud connected, particularly Sage 200 cloud, supported by growth in cloud native solutions. Total revenue in France increased by 5% to £295m. \n Central Europe achieved recurring revenue growth of 7% to £123m, while total revenue increased by 1% to £142m. Adjusting for the disposal of the Swiss business, organic recurring and total revenue growth in Central Europe was 10% and 5% respectively. Growth in the region was driven by Sage Business Cloud, with a particularly strong performance in HR solutions. \n In Iberia, recurring revenue increased by 9% to £134m, with further progress in cloud connected supported by growth in cloud native solutions. Total revenue grew by 6% to £147m. \n Operating profit \n The Group increased underlying operating profit by 18% to £456m (FY22: £386m). Underlying operating margin increased by 140 basis points to 20.9% (FY22: 19.5%), 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 22% to £457m (FY22: £374m), and margin increased by 220 basis points to 21.0% (FY22: 18.8%). \n Operating profit - underlying and organic reconciliation to statutory \n \n \n \n \n Operating profit bridge \n \n \n FY23 \n \n \n FY22 \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  £315m \n \n \n 14.4% \n \n \n  £367m \n \n \n 18.9% \n \n \n \n \n Recurring items [14] \n \n \n  £103m \n \n \n - \n \n \n  £83m \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 £32m \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n ·   Employee-related costs \n \n \n £9m \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 (£53m) \n \n \n - \n \n \n \n \n ·   Reversal of restructuring costs \n \n \n (£3m) \n \n \n - \n \n \n (£20m) \n \n \n - \n \n \n \n \n Impact of FX [15] \n \n \n - \n \n \n - \n \n \n £9m \n \n \n - \n \n \n \n \n Underlying \n \n \n £456m \n \n \n 20.9% \n \n \n £386m \n \n \n 19.5% \n \n \n \n \n Disposals \n \n \n - \n \n \n - \n \n \n (£1m) \n \n \n - \n \n \n \n \n Acquisitions \n \n \n £1m \n \n \n - \n \n \n (£11m) \n \n \n - \n \n \n \n \n Organic \n \n \n £457m \n \n \n 21.0% \n \n \n £374m \n \n \n 18.8% \n \n \n \n \n The Group achieved a statutory operating profit in FY23 of £315m (FY22: £367m). Underlying operating profit of £456m in FY23 reflects statutory operating profit adjusted for recurring and non-recurring items.  Recurring items of £103m (FY22: £83m) comprise £54m of amortisation of acquisition-related intangibles (FY22: £42m) and £49m of M&A related charges (FY22: £39m). In FY22, there was a further £2m deferred income adjustment relating to the acquisition of Brightpearl. \n Non-recurring items in FY23 comprise a £32m charge for a property restructuring programme undertaken during the year, following a strategic review of the Group's property portfolio, together with a £9m employee-related charge for French payroll taxes relating to previous years. This is partly offset by a £3m (FY22: £20m) reversal of employee restructuring costs. Non-recurring items in FY22 also comprise gains of on the disposals of Sage Switzerland (£49m) and the South African payroll outsourcing business (£4m). \n In addition, the retranslation of FY22 operating profit at current year exchange rates has resulted in an operating profit tailwind of £9m in that year. This has led to a 10-basis point margin tailwind from foreign exchange to 19.5% (FY22 underlying as reported: 19.4%). \n Organic operating profit of £457m in FY23 reflects underlying operating profit of £456m adjusted for £1m of losses from Spherics (now Sage Earth) which was acquired during the year. Organic operating profit of £374m in FY22 reflects underlying operating profit of £386m adjusted for £1m of operating profit from the South African payroll outsourcing business, which was sold during the prior year, and £11m of operating losses from businesses acquired during the prior year.  \n EBITDA \n EBITDA was £553m (FY22: £477m) representing a margin of 25.3%. The increase in EBITDA principally reflects the improvement in underlying operating profit. \n \n \n \n \n \n \n \n FY23 \n \n \n FY22 \n \n \n Margin \n \n \n \n \n Underlying operating profit \n \n \n £456m \n \n \n £386m \n \n \n 20.9% \n \n \n \n \n Depreciation & amortisation \n \n \n £54m \n \n \n £55m \n \n \n \n \n \n \n \n Share based payments \n \n \n £43m \n \n \n £36m \n \n \n \n \n \n \n \n EBITDA \n \n \n £553m \n \n \n £477m \n \n \n 25.3% \n \n \n \n \n Net finance cost \n The statutory net finance cost for the period increased to £33m (FY22: £30m), reflecting the impact of interest on new debt issuances, partly offset by higher interest income on deposits.  The statutory net finance cost is broadly in line with the underlying net finance cost of £32m (FY22: £31m). \n Taxation \n The underlying tax expense for FY23 was £95m (FY22: £86m), resulting in an underlying tax rate of 23% (FY22: 24%). The statutory income tax expense for FY23 was £71m (FY22: £77m), resulting in a statutory tax rate of 25% (FY22: 23%).  The FY23 underlying tax rate has decreased due to the benefit of higher tax incentive claims in the US, UK, and France, partly offset by an increase in the UK corporation tax rate. \n Earnings per share \n \n \n \n \n \n \n \n FY23 \n \n \n FY22 \n \n \n Change \n \n \n \n \n Statutory basic EPS \n \n \n 20.7p \n \n \n 25.5p \n \n \n -19% \n \n \n \n \n Recurring items \n \n \n 8.8p \n \n \n 6.7p \n \n \n \n \n \n \n \n Non-recurring items \n \n \n 2.8p \n \n \n (6.5)p \n \n \n \n \n \n \n \n Impact of foreign exchange \n \n \n                 - \n \n \n                 0.7p \n \n \n \n \n \n \n \n Underlying basic EPS \n \n \n 32.3p \n \n \n 26.4p \n \n \n +22% \n \n \n \n \n Underlying basic EPS increased by 22% to 32.3p, reflecting higher underlying operating profit.  Statutory basic earnings per share decreased by 19%, with the increase in underlying basic earnings per share offset by the change in post-tax impact of recurring and non-recurring items, including one-off gains on business disposals in FY22 together with property restructuring and higher M&A-related charges in the current year. \n Cash flow \n Sage remains highly cash generative with underlying cash flow from operations of £528 m (FY22: £402m), representing underlying cash conversion of 116% (FY22: 107%). This strong cash performance reflects further growth in subscription revenue and continued good working capital management. Free cash flow of £404 m (FY22: £295m) reflects strong underlying cash conversion. \n \n \n \n \n Cash flow APMs \n \n \n FY23 \n \n \n FY22 (as reported) \n \n \n \n \n Underlying operating profit \n \n \n £456m \n \n \n £377m \n \n \n \n \n Depreciation, amortisation and non-cash items in profit \n \n \n £51m \n \n \n  £51m \n \n \n \n \n Share based payments \n \n \n £43m \n \n \n £36m \n \n \n \n \n Net changes in working capital \n \n \n - \n \n \n (£40m) \n \n \n \n \n Net capital expenditure \n \n \n (£22m) \n \n \n (£22m) \n \n \n \n \n Underlying cash flow from operations \n \n \n £528 m \n \n \n £402m \n \n \n \n \n      Underlying cash conversion % \n \n \n 116 % \n \n \n 107% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Non-recurring cash items \n \n \n (£11m) \n \n \n (£23m) \n \n \n \n \n Net interest paid \n \n \n (£24m) \n \n \n (£21m) \n \n \n \n \n Income tax paid \n \n \n (£85m) \n \n \n (£62m) \n \n \n \n \n Profit and loss foreign exchange movements \n \n \n (£4m) \n \n \n (£1m) \n \n \n \n \n Free cash flow \n \n \n £404 m \n \n \n £295m \n \n \n \n \n   \n \n \n \n \n Statutory reconciliation of cash flow from operations \n \n \n FY23 \n \n \n FY22 (as reported) \n \n \n \n \n Statutory cash flow from operations \n \n \n £505 m \n \n \n £368m \n \n \n \n \n Recurring and non-recurring items \n \n \n £41m \n \n \n £55m \n \n \n \n \n Net capital expenditure \n \n \n (£22m) \n \n \n (£22m) \n \n \n \n \n Other adjustments including foreign exchange translations \n \n \n £4m \n \n \n £1m \n \n \n \n \n Underlying cash flow from operations \n \n \n £528 m \n \n \n £402m \n \n \n \n \n Net debt and liquidity \n Group net debt was £561 m at 30 September 2023 (30 September 2022: £733m), comprising cash and cash equivalents of £696 m (30 September 2022: £489m) and total debt of £1,257m (30 September 2022: £1,222m). The Group had £ 1,326 m of cash and available liquidity at 30 September 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 FY23 \n \n \n FY22 (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 £404 m \n \n \n £295m \n \n \n \n \n New leases less disposals \n \n \n (£14m) \n \n \n (£6m) \n \n \n \n \n Disposal of businesses \n \n \n - \n \n \n £43m \n \n \n \n \n Acquisition of businesses \n \n \n (£26m) \n \n \n (£315m) \n \n \n \n \n M&A and equity investments \n \n \n (£30m) \n \n \n (£22m) \n \n \n \n \n Dividends paid \n \n \n (£190m) \n \n \n (£183m) \n \n \n \n \n Share buyback \n \n \n - \n \n \n (£249m) \n \n \n \n \n Purchase of shares by Employee Benefit Trust \n \n \n (£1m) \n \n \n (£32m) \n \n \n \n \n FX movement and other \n \n \n £29m \n \n \n (£17m) \n \n \n \n \n Net debt at 30 September \n \n \n (£561 m ) \n \n \n (£733m) \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 2028, having been extended by one year in November 2023, with an extension option for a further year subject to specific provisions. At 30 September 2023, the RCF was undrawn (FY22: 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 prepayment in March 2023 of the Group's outstanding US private placement loan notes totalling £326m (US$400m) and enabled the Group both 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's disciplined capital allocation policy is focused on accelerating strategic execution through organic and inorganic investment, and delivering shareholder returns. During FY23 Sage completed the acquisition of Spherics, an innovative carbon accounting solution, and Corecon, a construction project management solution. \n Sage has a progressive dividend policy, intending to grow the dividend over time while considering the future capital requirements of the Group. The final dividend proposed by the Board is 12.75p per share, taking the full year dividend to 19.3p, up 5% compared to the prior year (FY22: 18.4p). \n   \n The Group also considers returning surplus capital to shareholders.  Alongside our FY23 results, we have announced a share buyback programme of up to £350m, reflecting the Board's confidence in the future prospects of the Group, together with Sage's strong cash generation and robust financial position. Sage continues to have considerable financial flexibility to drive the execution of its growth strategy. \n \n \n \n \n   \n \n \n FY23 \n \n \n FY22 (as reported) \n \n \n \n \n Net debt \n \n \n £561 m \n \n \n £733m \n \n \n \n \n EBITDA (Last Twelve Months) \n \n \n £553m \n \n \n £468m \n \n \n \n \n Net debt/EBITDA Ratio \n \n \n 1.0x \n \n \n 1.6x \n \n \n \n \n The Group's EBITDA over the last 12 months was £553m, resulting in a net debt to EBITDA leverage ratio of 1.0x, down from 1.6x in the prior year. Sage intends to operate in a broad range of 1x to 2x net debt to EBITDA over the medium term, with flexibility to move outside this range as business needs require. \n Group return on capital employed (ROCE) for FY23 was 19% (FY22 as reported: 18%). \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 30 September 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 21. \n External audit tender \n Following a formal tender process overseen by the Audit and Risk Committee, the Board has approved the appointment of KPMG LLP as external auditor for the financial year ending 30 September 2025, subject to an updated independence confirmation and shareholder approval at Sage's 2025 AGM. The current external auditor, Ernst and Young LLP, will continue in its role for the financial year ending 30 September 2024, subject to shareholder approval at the 2024 AGM. Further details of the tender process and selection criteria are included in Sage's 2023 Annual Report. \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 FY23 \n \n \n FY22 \n \n \n Change \n \n \n \n \n Euro (€) \n \n \n 1.15 \n \n \n 1.18 \n \n \n -3% \n \n \n \n \n US Dollar ($) \n \n \n 1.23 \n \n \n 1.28 \n \n \n -4% \n \n \n \n \n Canadian Dollar (C$) \n \n \n 1.65 \n \n \n 1.63 \n \n \n +1% \n \n \n \n \n South African Rand (ZAR) \n \n \n 22.31 \n \n \n 20.21 \n \n \n +10% \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 or recurring or non-recurring 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 capital expenditure (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 underlying depreciation, amortisation and share based payments.  \n Underlying depreciation and amortisation is the statutory equivalent measure, adjusted for the amortisation of acquired intangibles. Underlying share based payments is the statutory equivalent measure, adjusted for M&A-related share based payment charges included within other M&A activity related items. \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 involve excluding certain components (such as non‑refundable contract sign‑up fees) to ensure the measure reflects that part of the revenue base which (subject to ongoing use and renewal) can reasonably be expected to repeat in future periods. \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, derivative financial instruments and 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 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 underlying Operating Profit, minus \n amortisation of acquired intangibles, the result being divided by capital employed, which is t he 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. \n \n \n As an indicator of the current period financial return on the capital invested in the Company. 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 Consolidated income statement \n For the year ended 30 September 2023 \n   \n \n \n \n \n \n \n \n Note \n \n \n \nUnderlying \n 2023 \n£m \n \n \n   \nAdjustments \n (note 3) \n 2023 \n£m \n \n \n \nStatutory 2023 \n£m \n \n \n \nUnderlying as reported* 2022 \n£m \n \n \n \n \nAdjustments \n (note 3) \n  2022 \n£m \n \n \n   \nStatutory 2022 \n£m \n \n \n \n \n Revenue \n \n \n 2 \n \n \n 2,184 \n \n \n - \n \n \n 2,184 \n \n \n 1,949 \n \n \n (2) \n \n \n 1,947 \n \n \n \n \n Cost of sales \n \n \n \n \n \n                  (156) \n \n \n - \n \n \n (156) \n \n \n (138) \n \n \n - \n \n \n (138) \n \n \n \n \n Gross profit \n \n \n \n \n \n 2,028 \n \n \n - \n \n \n 2,028 \n \n \n 1,811 \n \n \n (2) \n \n \n 1,809 \n \n \n \n \n Selling and administrative expenses \n \n \n \n \n \n (1,572) \n \n \n (141) \n \n \n (1,713) \n \n \n (1,434) \n \n \n (8) \n \n \n (1,442) \n \n \n \n \n Operating profit \n \n \n 2 \n \n \n 456 \n \n \n (141) \n \n \n 315 \n \n \n 377 \n \n \n (10) \n \n \n 367 \n \n \n \n \n Finance income \n \n \n \n \n \n 12 \n \n \n - \n \n \n 12 \n \n \n 1 \n \n \n - \n \n \n 1 \n \n \n \n \n Finance costs \n \n \n \n \n \n (44) \n \n \n (1) \n \n \n (45) \n \n \n (32) \n \n \n 1 \n \n \n (31) \n \n \n \n \n Profit before income tax \n \n \n \n \n \n 424 \n \n \n (142) \n \n \n 282 \n \n \n 346 \n \n \n (9) \n \n \n 337 \n \n \n \n \n Income tax expense \n \n \n 4 \n \n \n (95) \n \n \n 24 \n \n \n (71) \n \n \n (83) \n \n \n 6 \n \n \n (77) \n \n \n \n \n Profit for the year \n \n \n \n \n \n 329 \n \n \n (118) \n \n \n 211 \n \n \n 263 \n \n \n (3) \n \n \n 260 \n \n \n \n \n   \n Profit attributable to: \n Owners of the parent \n \n \n \n \n \n                       329 \n \n \n (118) \n \n \n 211 \n \n \n   \n   \n 263 \n \n \n   \n   \n (3) \n \n \n   \n   \n 260 \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 the owners of the parent (pence) \n \n \n \n \n \n \n \n \n \n \n \n \n \n Basic \n \n \n 6 \n \n \n 32.25p \n \n \n   \n \n \n 20.75p \n \n \n 25.74p \n \n \n \n \n \n 25.47p \n \n \n \n \n Diluted \n \n \n 6 \n \n \n 31.75p \n \n \n   \n \n \n 20.43p \n \n \n 25.44p \n \n \n \n \n \n 25.17p \n \n \n \n \n \nAll operations in the year relate to continuing operations. \n Note: \n * Underlying as reported is at 2022 reported exchange rates. \n Consolidated statement of comprehensive income \n For the year ended 30 September 2023 \n   \n \n \n \n \n \n \n \n   \n   \n \n \n   \n   \n \n \n \n \n   \n \n \n 2023 \n £m \n \n \n 2022 \n £m \n \n \n \n \n Profit for the year \n \n \n 211 \n \n \n 260 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Items of other comprehensive income 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 Actuarial gain on post-employment benefit obligations \n \n \n - \n \n \n 3 \n \n \n \n \n   \n \n \n - \n \n \n 33 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Items of other comprehensive income 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 (82) \n \n \n 177 \n \n \n \n \n Cash flow hedges \n \n \n 4 \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 (78) \n \n \n 164 \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Other comprehensive (expense)/income for the year, net of tax \n \n \n (78) \n \n \n 197 \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Total comprehensive income for the year \n \n \n 133 \n \n \n 457 \n \n \n \n \n   \n Total comprehensive income for the year attributable to: \n \n \n   \n \n \n \n \n \n \n \n Owners of the parent \n \n \n 133 \n \n \n 457 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n The notes on pages 21 to 39 form an integral part of this condensed consolidated yearly report. \n   \n Consolidated balance sheet \n As at 30 September 2023  \n \n \n \n \n \n \n \n Note \n \n \n \n2023 \n £m \n \n \n \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 Goodwill \n \n \n 7 \n \n \n 2,245 \n \n \n 2,391 \n \n \n \n \n Other intangible assets \n \n \n 7 \n \n \n 274 \n \n \n 320 \n \n \n \n \n Property, plant and equipment \n \n \n 7 \n \n \n 104 \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 \n \n Trade and other receivables \n \n \n \n \n \n 138 \n \n \n 128 \n \n \n \n \n Deferred income tax assets \n \n \n \n \n \n 56 \n \n \n 19 \n \n \n \n \n Derivative financial instruments \n \n \n \n \n \n 1 \n \n \n - \n \n \n \n \n \n \n \n \n \n \n 2,822 \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 Trade and other receivables \n \n \n \n \n \n 376 \n \n \n 355 \n \n \n \n \n Current income tax asset \n \n \n \n \n \n 42 \n \n \n 39 \n \n \n \n \n Cash and cash equivalents (excluding bank overdrafts) \n \n \n 9 \n \n \n 696 \n \n \n 489 \n \n \n \n \n \n \n \n \n \n \n 1,114 \n \n \n 883 \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 3,936 \n \n \n 3,897 \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 Trade and other payables \n \n \n \n \n \n (378) \n \n \n (368) \n \n \n \n \n Current income tax liabilities \n \n \n \n \n \n (25) \n \n \n (13) \n \n \n \n \n Borrowings \n \n \n 9 \n \n \n (14) \n \n \n (178) \n \n \n \n \n Provisions \n \n \n \n \n \n (23) \n \n \n (33) \n \n \n \n \n Deferred income \n \n \n \n \n \n (745) \n \n \n (734) \n \n \n \n \n \n \n \n \n \n \n (1,185) \n \n \n (1,326) \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 Borrowings \n \n \n 9 \n \n \n (1,243) \n \n \n (1,044) \n \n \n \n \n Post-employment benefits \n \n \n \n \n \n (19) \n \n \n (19) \n \n \n \n \n Deferred income tax liabilities \n \n \n \n \n \n (18) \n \n \n (17) \n \n \n \n \n Provisions \n \n \n \n \n \n (24) \n \n \n (20) \n \n \n \n \n Trade and other payables \n \n \n \n \n \n (13) \n \n \n (6) \n \n \n \n \n Deferred income \n Derivative financial instruments \n \n \n \n \n \n (7) \n (20) \n   \n \n \n  (8)    \n (60) \n \n \n \n \n \n \n \n \n \n \n (1,344) \n \n \n (1,174) \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 (2,529) \n \n \n (2,500) \n \n \n \n \n Net assets \n \n \n \n \n \n 1,407 \n \n \n 1,397 \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 Ordinary shares \n \n \n 8 \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 \n \n Other reserves \n \n \n 8 \n \n \n 189 \n \n \n 267 \n \n \n \n \n Retained earnings \n \n \n \n \n \n 658 \n \n \n 570 \n \n \n \n \n Total equity \n \n \n \n \n \n 1,407 \n \n \n 1,397 \n \n \n \n \n   \n Note: \n *     Restated for finalisation of the fair value of assets acquired and liabilities assumed in the acquisition of Lockstep (see notes 7 and 11) \n                   \n Consolidated statement of changes in equity \n For the year ended 30 September 2023 \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Ordinary shares \n£m \n \n \n Share premium \n£m \n \n \n Other reserves \n£m \n \n \n Retained earnings \n£m \n \n \n Total \n equity \n£m \n \n \n \n \n At 1 October 2022 \n \n \n 12 \n \n \n 548 \n \n \n 267 \n \n \n 570 \n \n \n 1,397 \n \n \n \n \n Profit for the year \n \n \n - \n \n \n - \n \n \n - \n \n \n 211 \n \n \n 211 \n \n \n \n \n Other comprehensive (expense)/income \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 (82) \n \n \n - \n \n \n (82) \n \n \n \n \n Cashflow hedges \n \n \n - \n \n \n - \n \n \n 4 \n \n \n - \n \n \n 4 \n \n \n \n \n Total comprehensive (expense)/income for the year ended 30 September 2023 \n \n \n - \n \n \n - \n \n \n (78) \n \n \n 211 \n \n \n 133 \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 Employee share option scheme - value of employee services including deferred tax \n \n \n - \n \n \n - \n \n \n - \n \n \n 57 \n \n \n 57 \n \n \n \n \n Proceeds from issuance of treasury shares \n \n \n - \n \n \n - \n \n \n - \n \n \n 11 \n \n \n 11 \n \n \n \n \n Purchase of shares by Employee Benefit Trust \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 (190) \n \n \n (190) \n \n \n \n \n Total transactions with owners for the year ended 30 September 2023 \n \n \n - \n \n \n - \n \n \n - \n \n \n (123) \n \n \n (123) \n \n \n \n \n At 30 September 2023 \n \n \n 12 \n \n \n 548 \n \n \n 189 \n \n \n 658 \n \n \n 1,407 \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n Consolidated statement of changes in equity \n For the year ended 30 September 2022 \n   \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Ordinary shares \n£m \n \n \n Share premium \n£m \n \n \n Other reserves \n£m \n \n \n Retained earnings \n£m \n \n \n Total \n equity \n£m \n \n \n \n \n At 1 October 2021 \n \n \n 12 \n \n \n 548 \n \n \n 103 \n \n \n 448 \n \n \n 1,111 \n \n \n \n \n Profit for the year \n \n \n - \n \n \n - \n \n \n - \n \n \n 260 \n \n \n 260 \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 Exchange differences on translating foreign operations and net investment hedges \n \n \n - \n \n \n - \n \n \n 177 \n \n \n - \n \n \n 177 \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 (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 30 \n \n \n 30 \n \n \n \n \n Actuarial gain on post-employment benefit obligations \n \n \n - \n \n \n - \n \n \n - \n \n \n 3 \n \n \n 3 \n \n \n \n \n Total comprehensive income for the year ended 30 September 2022 \n \n \n - \n \n \n - \n \n \n 164 \n \n \n 293 \n \n \n 457 \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 Employee share option scheme - value of employee services including deferred tax \n \n \n - \n \n \n - \n \n \n - \n \n \n 37 \n \n \n 37 \n \n \n \n \n Proceeds from issuance of treasury shares \n \n \n - \n \n \n - \n \n \n - \n \n \n 7 \n \n \n 7 \n \n \n \n \n Purchase of shares by Employee Benefit Trust \n \n \n - \n \n \n - \n \n \n - \n \n \n (32) \n \n \n (32) \n \n \n \n \n Dividends paid to owners of the parent \n \n \n - \n \n \n - \n \n \n - \n \n \n (183) \n \n \n (183) \n \n \n \n \n Total transactions with owners for the year ended 30 September 2022 \n \n \n - \n \n \n - \n \n \n - \n \n \n (171) \n \n \n (171) \n \n \n \n \n At 30 September 2022 \n \n \n 12 \n \n \n 548 \n \n \n 267 \n \n \n 570 \n \n \n 1,397 \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n Consolidated statement of cash flows \n For the year ended 30 September 2023 \n \n \n \n \n \n \n \n \n \n \n   \n   \n \n \n   \n   \n \n \n \n \n \n \n \n Note \n \n \n 2023 \n  £m \n \n \n \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 \n \n \n 505 \n \n \n 368 \n \n \n \n \n Interest paid \n \n \n \n \n \n (33) \n \n \n (21) \n \n \n \n \n Income tax paid \n \n \n \n \n \n (85) \n \n \n (62) \n \n \n \n \n Net cash generated from operating activities \n \n \n \n \n \n 387 \n \n \n 285 \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 42 \n \n \n \n \n Acquisition of subsidiaries, net of cash acquired \n \n \n 11 \n \n \n (26) \n \n \n (285) \n \n \n \n \n Purchases of intangible assets \n \n \n 7 \n \n \n (17) \n \n \n (40) \n \n \n \n \n Purchases of property, plant and equipment \n \n \n 7 \n \n \n (5) \n \n \n (12) \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 12 \n \n \n 1 \n \n \n \n \n Net cash used in investing activities \n \n \n \n \n \n (36) \n \n \n (284) \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 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 Capital element of lease payments \n \n \n 9 \n \n \n (18) \n \n \n (19) \n \n \n \n \n Borrowing costs \n \n \n \n \n \n (3) \n \n \n (1) \n \n \n \n \n Proceeds from issuance of treasury shares \n \n \n \n \n \n 11 \n \n \n 7 \n \n \n \n \n Share buyback programmes \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 (32) \n \n \n \n \n Dividends paid to owners of the parent \n \n \n 5 \n \n \n (190) \n \n \n (183) \n \n \n \n \n Net cash used in financing activities \n \n \n \n \n \n (114) \n \n \n (127) \n \n \n \n \n Net increase/(decrease) in cash and cash equivalents \n(before exchange rate movement) \n \n \n \n \n \n   \n 237 \n \n \n   \n (126) \n \n \n \n \n Effects of exchange rate movement \n \n \n 9 \n \n \n (30) \n \n \n 48 \n \n \n \n \n Net increase/(decrease) in cash and cash equivalents \n \n \n \n \n \n 207 \n \n \n (78) \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 30 September \n \n \n 9 \n \n \n 696 \n \n \n 489 \n \n \n \n \n   \n   \n Notes to the financial information \n For the year ended 30 September 2023 \n   \n 1.    Group accounting policies \n   \n General information \n The Sage Group plc (the \"Company\") and its subsidiaries (together the \"Group\") is a leading global provider of accounting financial, HR and payroll technology to small and mid-sized businesses. \n The financial information set out above does not constitute the Company's statutory financial statements, which comprise the Annual Report & Accounts and audited annual financial statements for the year ended 30 September 2023 or 2022 but is derived from those financial statements. Statutory financial statements for the year ended 30 September 2022 have been delivered to the Registrar of Companies and those for 2023 will be delivered in December 2023. The auditors have reported on both sets of accounts; their reports were 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 as issued by the IASB or UK-IFRS. The financial information has been prepared on the basis of the accounting policies and accounting estimates and judgements as set out in the Annual Report & Accounts for 2023. \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 All figures presented are rounded to the nearest £m, unless otherwise stated. \n Basis of preparation \n The consolidated financial statements of the Group have been prepared in accordance with UK-IFRS in conformity with the requirements of the Companies Act 2006 and also prepared in accordance with IFRS as issued by the IASB. \n UK-IFRS can differ in certain respects from IFRS as issued by the IASB. The differences have no impact on the Group's consolidated financial statements for the years presented. \n The consolidated financial statements have been prepared under the historical cost convention, except where adopted IFRS require an alternative treatment. The principal variations from the historical cost convention relate to derivative financial instruments and equity investments which are measured at fair value. The financial statements of the Group comprise the financial statements of the Company and entities controlled by the Company (its subsidiaries) prepared at the end of the reporting period. The accounting policies have been consistently applied across the Group. The Company controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity, which is usually from date of acquisition. \n Going Concern \n In preparing these financial statements, the Directors have reviewed and approved a going concern assessment which considers the liquidity forecast of the Group for the period through to 31 March 2025 (the going concern assessment period). The liquidity forecast reflects the expected impact of the economic environment, including the current inflationary environment. More specifically, full consideration has been given to the potential risks and uncertainties linked to the changing macro-economic environment, and the possible impact on the Group's customer base. \n In light of this, we note that the Group's operational and financial robust position is supported by: \n · High-quality recurring and subscription-based revenue; \n · Resilient cash generation and robust liquidity, supported by strong underlying cash conversion of 116%, reflecting the strength of the subscription business model; and \n · A well-diversified small and medium-sized customer base which is geographically diverse. \n In preparing the going concern assessment scenario-specific stress testing has been performed, with the level of churn assumptions increasing by 75%, and a significant reduction in the level of new customer acquisition and sales to existing customers. Under these scenarios, the Group continues to have sufficient resources to continue in operational existence without the need to drawdown on its revolving credit facility or seek additional financing. If more severe impacts occur there are further controllable mitigating actions which can be taken to protect liquidity, including the reduction of discretionary spend. Stress testing has also been performed as part of the severe but plausible scenarios (as described within the Viability Statement in the Annual Report & Accounts for 2023). \n The Directors have also reviewed the results of reverse stress testing performed 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 highly significant deterioration in performance, well in excess of the assumptions considered in the stress testing scenarios above. The probability of these factors occurring is deemed to be remote 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 operational existence throughout the going concern assessment period. Accordingly, the consolidated and parent Company financial information has been prepared on a going concern basis. \n Further details for adopting the going concern basis are set out in the Directors' Report on pages 164 to 165 of the Annual Report & Accounts for 2023. \n Accounting policies \n The accounting policies adopted are consistent with those of the annual financial statements for the year ended 30 September 2023. \n Adoption of new and revised IFRSs \n There are no accounting standards, amendments or interpretations effective for the first time this financial year that have had a material impact on the Group. No standards have been early adopted during the year. \n In July 2023, the UK Endorsement Board adopted 'International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12)' as issued by the IASB. The Amendments introduce a temporary mandatory exception from accounting for deferred taxes arising from the Pillar Two model rules, effective immediately and retrospectively, and the Group has applied this exception. \n The Directors also considered the impact on the Group of new and revised accounting standards, interpretations, or amendments which have been issued but were not effective for the Group for the year ended 30 September 2023. \n None are expected to have a material impact on the consolidated financial statements when first applied. \n   \n Climate change \n In preparing the consolidated financial statements, management has considered the impact of climate change, specifically with reference to the disclosures provided in the Group's Strategic Report within the 2023 Annual Report & Accounts. \n As a business, we are committed to reducing our carbon emissions and target achieving net zero by 2040. We support our customers, small and mid-sized businesses, in achieving net zero by sharing the knowledge, technology and skills to be a driving force for change. We also support more broadly by advocating for enabling policies and standards that support a transition to a low-carbon economy. \n We recognise the importance of identifying and effectively managing the physical and transitional risks that climate change poses to our operations and consider the impact of climate-related matters, including legislation, on our business. The climate change scenario analyses undertaken in line with Task Force on Climate-related Financial Disclosures (TCFD) recommendations did not identify any material impact on the Group's financial results, going concern or viability. More specifically: \n · In preparing the viability assessment, consideration has been given to the potential impact of climate change over the next three years, as set out in the Strategic Report. \n · Climate change related factors on matters including residual values, useful lives and depreciation and amortisation periods which relate to non-current assets have also been considered, with no impact identified at this stage. \n · In our future forecasts used for goodwill impairment and the going concern assessment, we have considered the extent to which costs associated with our climate related commitments have been considered, as well as broader societal commitments. These commitments do not have a material impact. \n · We have also considered the extent to which climate change could impact longer-term economic growth, which may impact long-term growth rates used in the goodwill impairment test. Sensitivity testing demonstrates that all cash-generating units (CGUs) retain sufficient headroom. \n Accounting estimates and judgements \n The preparation of financial statements requires the use of accounting estimates and judgements by management. It also requires management to exercise its judgement in the process of applying the accounting policies. We continually evaluate our estimates and judgements based on available information. \n Management has determined that there are no areas of estimation uncertainty that could be significant under IAS 1, 'Presentation of Financial Statements', being areas of estimation uncertainty with a significant risk of a material change to the carrying value of assets and liabilities within the next financial year. \n Other key estimates are made when preparing the financial statements, which, while not meeting the definition of a significant estimate under IAS 1, involve the measurement of certain material assets or a higher degree of complexity. \n Significant judgements are those made by management in applying our accounting policies that have a material impact on the amounts presented in the financial statements. \n Management's rationale in relation to these key accounting estimates and significant judgements are regularly assessed and, where material in value or in risk, are discussed with the Audit and Risk Committee. These areas are discussed in further detail below: \n Revenue recognition (judgement) \n Over a third of the Company's revenue is generated from sales to business 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 (estimate) \n The estimates applied in calculating the value in use of the CGUs being tested for impairment are a source of estimation uncertainty. The key estimates considered in the calculation relate to the future performance expectations of the business and include the average medium-term revenue growth rate, the long-term growth rate of net operating cash flows and the discount rate. \n Further information on these key estimates, as well as the level at which goodwill is monitored and the results of sensitivity analysis, are disclosed in the annual financial statements for the year ended 30 September 2023. \n Business Combinations (judgement and estimate) \n During the year, 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. During the current year, the purchase price accounting has been finalised, therefore certain adjustments have been recognised in the year. These adjustments include the recognition of intangible assets and deferred tax liabilities, offset by a reduction in the amount of goodwill provisionally recognised in the prior year. Further explanation of the changes are set out in note 11. \n Key areas of judgement and estimation 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 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 estimates 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, which was corroborated against the Group's own royalty rates used for internal transfer pricing purposes as well as external benchmark data. \n 2.    Segment information \n   \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 its 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 and Austria), 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 years, 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 segment Europe reflects 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 customers are in countries within the EU. \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 \n \n \n \n Category \n \n \n Examples \n \n \n \n \n Recurring revenue \n \n \n Subscription revenue \n Other recurring revenue \n \n \n \n \n Other revenue \n \n \n Perpetual software licences \n Upgrades to perpetual licences \n Professional services \n Training \n   \n \n \n \n \n   \n Revenue by segment \n \n \n \n \n                         \n \n \n Year ended 30 September 2023 \n \n \n Change \n \n \n \n \n Statutory \n£m \n \n \n Underlying \n adjustments \n £m \n \n \n Underlying \n£m \n \n \n Organic \n adjustments* \n £m \n \n \n Organic \n£m \n \n \n Statutory \n \n \n Underlying \n \n \n Organic \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 \n \n \n North America \n \n \n 944 \n \n \n - \n \n \n 944 \n \n \n (1) \n \n \n 943 \n \n \n 20% \n \n \n 16% \n \n \n 15% \n \n \n \n \n UK & Ireland \n \n \n 466 \n \n \n - \n \n \n 466 \n \n \n - \n \n \n 466 \n \n \n 9% \n \n \n 9% \n \n \n 8% \n \n \n \n \n Europe \n \n \n 541 \n \n \n - \n \n \n 541 \n \n \n - \n \n \n 541 \n \n \n 10% \n \n \n 7% \n \n \n 8% \n \n \n \n \n Africa & APAC \n \n \n 145 \n \n \n - \n \n \n 145 \n \n \n - \n \n \n 145 \n \n \n 4% \n \n \n 13% \n \n \n 13% \n \n \n \n \n Recurring revenue \n \n \n 2,096 \n \n \n - \n \n \n 2,096 \n \n \n (1) \n \n \n 2,095 \n \n \n 14% \n \n \n 12% \n \n \n 11% \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 \n \n \n North America \n \n \n 29 \n \n \n - \n \n \n 29 \n \n \n - \n \n \n 29 \n \n \n (11%) \n \n \n (14%) \n \n \n (15%) \n \n \n \n \n UK & Ireland \n \n \n 5 \n \n \n - \n \n \n 5 \n \n \n (1) \n \n \n 4 \n \n \n (20%) \n \n \n (20%) \n \n \n (39%) \n \n \n \n \n Europe \n \n \n 43 \n \n \n - \n \n \n 43 \n \n \n - \n \n \n 43 \n \n \n (19%) \n \n \n (21%) \n \n \n (21%) \n \n \n \n \n Africa & APAC \n \n \n 11 \n \n \n - \n \n \n 11 \n \n \n - \n \n \n 11 \n \n \n (17%) \n \n \n (12%) \n \n \n 2% \n \n \n \n \n Other revenue \n \n \n 88 \n \n \n - \n \n \n 88 \n \n \n (1) \n \n \n 87 \n \n \n (16%) \n \n \n (18%) \n \n \n (18%) \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 \n \n \n North America \n \n \n 973 \n \n \n - \n \n \n 973 \n \n \n (1) \n \n \n 972 \n \n \n 19% \n \n \n 15% \n \n \n 14% \n \n \n \n \n UK & Ireland \n \n \n 471 \n \n \n - \n \n \n 471 \n \n \n (1) \n \n \n 470 \n \n \n 9% \n \n \n 8% \n \n \n 7% \n \n \n \n \n Europe \n \n \n 584 \n \n \n - \n \n \n 584 \n \n \n - \n \n \n 584 \n \n \n 7% \n \n \n 5% \n \n \n 5% \n \n \n \n \n Africa & APAC \n \n \n 156 \n \n \n - \n \n \n 156 \n \n \n - \n \n \n 156 \n \n \n 2% \n \n \n 11% \n \n \n 12% \n \n \n \n \n Total revenue \n \n \n 2,184 \n \n \n - \n \n \n 2,184 \n \n \n (2) \n \n \n 2,182 \n \n \n 12% \n \n \n 10% \n \n \n 10% \n \n \n \n \n   \n Notes: \n *  Adjustments relate to the acquisitions of Spherics and Corecon (see note 11). \n   \n Revenue by segment (continued) \n   \n \n \n \n \n \n \n \n Year ended 30 September 2022 \n \n \n \n \n Statutory \n£m \n \n \n Underlying adjustments \n£m \n \n \n Underlying as reported \n£m \n \n \n Impact of foreign exchange \n£m \n \n \n Underlying \n£m \n \n \n Organic \n Adjustments* \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 \n \n \n North America \n \n \n \n \n \n 786 \n \n \n 1 \n \n \n 787 \n \n \n 28 \n \n \n 815 \n \n \n 6 \n \n \n 821 \n \n \n \n \n UK & Ireland \n \n \n \n \n \n 427 \n \n \n 1 \n \n \n 428 \n \n \n 1 \n \n \n 429 \n \n \n 5 \n \n \n 434 \n \n \n \n \n Europe \n \n \n \n \n \n 490 \n \n \n - \n \n \n 490 \n \n \n 13 \n \n \n 503 \n \n \n (4) \n \n \n 499 \n \n \n \n \n Africa & APAC \n \n \n \n \n \n 140 \n \n \n - \n \n \n 140 \n \n \n (12) \n \n \n 128 \n \n \n - \n \n \n 128 \n \n \n \n \n Recurring revenue \n \n \n \n \n \n 1,843 \n \n \n 2 \n \n \n 1,845 \n \n \n 30 \n \n \n 1,875 \n \n \n 7 \n \n \n 1,882 \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 \n \n \n North America \n \n \n \n \n \n 32 \n \n \n - \n \n \n 32 \n \n \n 2 \n \n \n 34 \n \n \n - \n \n \n 34 \n \n \n \n \n UK & Ireland \n \n \n \n \n \n 6 \n \n \n - \n \n \n 6 \n \n \n - \n \n \n 6 \n \n \n - \n \n \n 6 \n \n \n \n \n Europe \n \n \n \n \n \n 53 \n \n \n - \n \n \n 53 \n \n \n 2 \n \n \n 55 \n \n \n (1) \n \n \n 54 \n \n \n \n \n Africa & APAC \n \n \n \n \n \n 13 \n \n \n - \n \n \n 13 \n \n \n (1) \n \n \n 12 \n \n \n (2) \n \n \n 10 \n \n \n \n \n Other revenue \n \n \n \n \n \n 104 \n \n \n - \n \n \n 104 \n \n \n 3 \n \n \n 107 \n \n \n (3) \n \n \n 104 \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 \n \n \n   \n \n \n \n \n \n 818 \n \n \n 1 \n \n \n 819 \n \n \n xx] \n \n \n \n \n \n \n \n \n \n \n \n \n \n North America \n \n \n \n \n \n 818 \n \n \n 1 \n \n \n 819 \n \n \n 30 \n \n \n 849 \n \n \n 6 \n \n \n 855 \n \n \n \n \n UK & Ireland \n \n \n \n \n \n 433 \n \n \n 1 \n \n \n 434 \n \n \n 1 \n \n \n 435 \n \n \n 5 \n \n \n 440 \n \n \n \n \n Europe \n \n \n \n \n \n 543 \n \n \n - \n \n \n 543 \n \n \n 15 \n \n \n 558 \n \n \n (5) \n \n \n 553 \n \n \n \n \n Africa & APAC \n \n \n \n \n \n 153 \n \n \n - \n \n \n 153 \n \n \n (13) \n \n \n 140 \n \n \n (2) \n \n \n 138 \n \n \n \n \n Total revenue \n \n \n \n \n \n 1,947 \n \n \n 2 \n \n \n 1,949 \n \n \n 33 \n \n \n 1,982 \n \n \n 4 \n \n \n 1,986 \n \n \n \n \n   \n Notes: \n   \n *  Adjustments relate to the acquisition of Brightpearl, Lockstep and Futrli, and disposal of the Group's Swiss business and its payroll outsourcing business in South Africa in the prior year. \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 \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 Year ended 30 September 2023 \n \n \n Change \n \n \n \n \n \n \n \n Statutory \n £m \n \n \n Underlying adjustments \n £m \n \n \n Underlying \n £m \n \n \n Organic adjustments £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 \n \n \n North America \n \n \n 127 \n \n \n 71 \n \n \n 198 \n \n \n - \n \n \n 198 \n \n \n 9% \n \n \n 30% \n \n \n 36% \n \n \n \n \n UK & Ireland \n \n \n 59 \n \n \n 55 \n \n \n 114 \n \n \n 1 \n \n \n 115 \n \n \n 2% \n \n \n 6% \n \n \n 14% \n \n \n \n \n Europe \n \n \n 108 \n \n \n 10 \n \n \n 118 \n \n \n - \n \n \n 118 \n \n \n (29%) \n \n \n 25% \n \n \n 26% \n \n \n \n \n Africa & APAC \n \n \n 21 \n \n \n 5 \n \n \n 26 \n \n \n - \n \n \n 26 \n \n \n (49%) \n \n \n (21%) \n \n \n (21%) \n \n \n \n \n Total operating profit \n \n \n 315 \n \n \n 141 \n \n \n 456 \n \n \n 1 \n \n \n 457 \n \n \n (14%) \n \n \n 18% \n \n \n 22% \n \n \n \n \n   \n \n \n \n \n \n \n \n Year ended 30 September 2022 \n \n \n \n \n \n \n \n Statutory \n £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 \n £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 North America \n \n \n 116 \n \n \n 30 \n \n \n 146 \n \n \n 6 \n \n \n 152 \n \n \n (6) \n \n \n 146 \n \n \n \n \n UK & Ireland \n \n \n 58 \n \n \n 47 \n \n \n 105 \n \n \n 1 \n \n \n 106 \n \n \n (5) \n \n \n 101 \n \n \n \n \n Europe \n \n \n 152 \n \n \n (61) \n \n \n 91 \n \n \n 4 \n \n \n 95 \n \n \n - \n \n \n 95 \n \n \n \n \n Africa & APAC \n \n \n 41 \n \n \n (6) \n \n \n 35 \n \n \n (2) \n \n \n 33 \n \n \n (1) \n \n \n 32 \n \n \n \n \n Total operating Profit \n \n \n 367 \n \n \n 10 \n \n \n 377 \n \n \n 9 \n \n \n 386 \n \n \n (12) \n \n \n 374 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \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 \n \n \n \n 2023 \n£m \n \n \n 2022 \n £m \n \n \n \n \n Underlying operating profit by reportable segment \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n North America \n \n \n \n \n \n \n \n \n 198 \n \n \n 152 \n \n \n \n \n Northern Europe \n \n \n \n \n \n \n \n \n 114 \n \n \n 106 \n \n \n \n \n Europe \n \n \n \n \n \n \n \n \n 118 \n \n \n 95 \n \n \n \n \n Total reportable segments \n \n \n \n \n \n \n \n \n 430 \n \n \n 353 \n \n \n \n \n Africa & APAC \n \n \n \n \n \n \n \n \n 26 \n \n \n 33 \n \n \n \n \n Underlying operating profit \n \n \n \n \n \n \n \n \n 456 \n \n \n 386 \n \n \n \n \n Impact of movement in foreign currency exchange rates \n \n \n \n \n \n - \n \n \n (9) \n \n \n \n \n Underlying operating profit (as reported) \n \n \n \n \n \n \n \n \n 456 \n \n \n 377 \n \n \n \n \n Amortisation of acquired intangible assets \n \n \n \n \n \n \n \n \n (54) \n \n \n (42) \n \n \n \n \n Adjustment to acquired deferred income \n \n \n \n \n \n \n \n \n - \n \n \n (2) \n \n \n \n \n Other M&A activity-related items \n \n \n \n \n \n \n \n \n (49) \n \n \n (39) \n \n \n \n \n Non-recurring items \n \n \n \n \n \n \n \n \n (38) \n \n \n 73 \n \n \n \n \n Statutory operating profit \n \n \n \n \n \n \n \n \n 315 \n \n \n 367 \n \n \n \n \n   \n 3.    Adjustments between underlying profit and statutory profit \n \n \n \n \n \n \n \n 2023 \n \nRecurring \n£m \n \n \n 2023 \nNon- \nrecurring \n£m \n \n \n 2023 \n \nTotal \n£m \n \n \n 2022 \n \nRecurring \n£m \n \n \n 2022 \nNon- \nrecurring \n£m \n \n \n  2022 \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 54 \n \n \n - \n \n \n 54 \n \n \n 42 \n \n \n - \n \n \n 42 \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 (53) \n \n \n (53) \n \n \n \n \n Adjustment to acquired deferred income \n \n \n - \n \n \n - \n \n \n - \n \n \n 2 \n \n \n - \n \n \n 2 \n \n \n \n \n Other M&A activity-related items \n \n \n 49 \n \n \n - \n \n \n 49 \n \n \n 39 \n \n \n  - \n \n \n 39 \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 32 \n \n \n 32 \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Employee-related costs \n \n \n - \n \n \n 9 \n \n \n 9 \n \n \n - \n \n \n - \n \n \n - \n \n \n \n \n Reversal of restructuring costs \n \n \n - \n \n \n (3) \n \n \n (3) \n \n \n - \n \n \n (20) \n \n \n (20) \n \n \n \n \n Total adjustments made to operating profit \n \n \n 103 \n \n \n 38 \n \n \n 141 \n \n \n 83 \n \n \n (73) \n \n \n 10 \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 104 \n \n \n 38 \n \n \n 142 \n \n \n 82 \n \n \n (73) \n \n \n 9 \n \n \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 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 year 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. £18m (2022: £14m) of these costs have been paid in the year, while the remainder is expected to be paid in subsequent financial years. \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 (2022: gain £1m). \n Non-recurring items \n Net charges in respect of non-recurring items amounted to £38m (2022: net credit £73m). \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 downsized as part of a consolidated plan. Costs of £32m consist of impairment of £22m of right-of-use assets and other related fixed assets that are no longer in use and therefore fully impaired, as well as a provision of £10m for directly attributable future running costs associated with the properties. The programme was completed in the current year, with no further costs expected to be incurred in the following year. \n Employee-related costs of £9m (2022: £nil) relate to a charge for French payroll taxes relating to previous years. \n The gain on disposal of subsidiaries in the prior year of £53m relates to the disposal of the Group's Swiss business (£49m) and the Group's payroll outsourcing business in South Africa (£4m). \n Reversal of restructuring costs of £3m (2022: £20m) largely relates to unutilised provisions recognised in the year ended 30 September 2021 following the implementation of a business transformation plan. In the prior year, this largely resulted from 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 25% (2022: 23%), whilst the effective tax rate on underlying profit before tax on continuing operations was 23% (2022: 24%). \n The underlying effective tax rate is higher than the UK corporation tax rate applicable to the Group, primarily due to the geographic profile of the Group and the inclusion of local business taxes in the corporate tax expense. This net increase to the rate is offset by innovation tax credits for registered patents and software, and research and development activities which attract government tax incentives in a number of operating territories. The underlying effective tax rate was reduced in the year, principally due to the benefit of increased tax incentive claims in the US, UK, and France, which were partly offset by the impact of an increase in the UK corporate tax rate. \n 5.    Dividends \n \n \n \n \n \n \n \n 2023 \n £m \n \n \n 2022 \n £m \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 (2022: 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 \n \n   \n \n \n \n \n \n \n \n \n \n \n Interim dividend paid for the year ended 30 September 2023 of 6.55p per share \n \n \n 67 \n \n \n - \n \n \n \n \n (2022: interim dividend paid for the year ended 30 September 2022 of 6.30p per share) \n \n \n - \n \n \n 64 \n \n \n \n \n \n \n \n 190 \n \n \n 183 \n \n \n \n \n   \n In addition, the Directors are proposing a final dividend in respect of the financial year ended 30 September 2023 of 12.75p per share. The Company's distributable reserves are sufficient to support the payment of this dividend. If approved at the AGM, it will be paid on 9 February 2024 to shareholders who are on the register of members on 12 January 2024. These financial statements do 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 year attributable to owners of the parent by the weighted average number of ordinary shares in issue during the year, excluding those held as treasury shares and held by the Employee Benefit Trust, which are treated as cancelled, until reissued. \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, exercisable at the end of the year. The Group has one class of dilutive potential ordinary shares, which 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 year, where the vesting criteria are achieved at year-end. \n \n \n \n \n \n \n \n Underlying 2023 \n \n \n Underlying \nas reported* \n 2022 \n \n \n Underlying \n2022 \n \n \n   \n Statutory \n2023 \n \n \n Statutory \n2022 \n \n \n \n \n Earnings attributable to owners of the parent** (£m...

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