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The Sage Group plc unaudited results for the six months ended 31 March 2012

Results at a glance

Continuing operations1 STATUTORY UNDERLYING H1 2012 H1 2011 Change H1 2012 H1 2011 Change Revenue £673.1m £670.4m - £661.2m# £649.0m# +2% EBITA† n/a n/a n/a £180.9m £179.9m +1% Pre-tax profit £167.1m £162.8.4m +3% £176.1m £173.1m +2% Earnings per share 9.06p 8.79p +3% 9.55p 9.35p +2% Interim dividend per share 3.48p 2.68p +30% n/a n/a n/a

1 Excludes the results of discontinued operations (Sage Healthcare) in both periods.

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Financial highlights

  • Organic revenue# growth of 2%* in the period (H1 2011: 5%*), reflecting strong growth in subscription revenues of 5%* offset by a contraction of 4%* in software and software-related services revenue (”SSRS”)
  • EBITA† margin maintained at 27% (H1 2011: 27%*) with continuing investment in strategic initiatives for growth
  • Underlying earnings per share increased by 2%* to 9.55p (H1 2011: 9.35p*), reflecting 2%* growth in underlying pre-tax profit
  • Strong operating cash flow of £207.7m (H1 2011: £222.6m), representing 115% of EBITA†, with net cash of £122.1m at 31 March 2012 (31 March 2011: net debt of £106.0m; 30 September 2011: net debt of £24.9m)
  • Interim dividend increased by 30% to 3.48p per share (H1 2011: 2.68p per share), reflecting the rebasing announced in November 2011 and continued confidence in our business prospects
  • As at 4 May 2012, £147.8m returned to shareholders through the share buyback programme which will continue beyond the return of the Sage Healthcare proceeds

Operational highlights

  • 129,000 new paying customers added in the period (H1 2011: 131,000)
  • Subscription revenues continue to deliver good growth, reflecting progress in premium support and the ongoing strategic shift from software revenue to recurring support contracts
  • 81% renewal rate on support contracts maintained reflecting high quality customer service and value-added features (H1 2011: 81%)
  • Good progress in implementing our web strategy, including our alliance with Microsoft on the Windows Azure Cloud platform and the imminent launch of Sage One in North America

Guy Berruyer, Chief Executive, commented:

“We have delivered a resilient performance in the first half of the year. The inherent strengths of the business are evident in our ability to attract new customers, our strong customer renewal rate and our continued high cash generation. Revenue performance in the period reflects the strategic switch to subscription revenues, which has exceeded our expectations. It also reflects the challenging economic conditions, particularly in Europe, and we remain watchful of the broader business environment in this region. Nevertheless, we have delivered a resilient financial and operational performance.

We have made good progress on our priorities and will increasingly see their impact on the business. We have also renewed our focus on accelerating growth. This involves changing the way we will run our business, including a more disciplined approach to resource allocation, portfolio management and execution.”

* Underlying figures neutralise the impact of foreign exchange movements and exclude amortisation of acquired intangible assets and acquisition costs.

# Organic figures exclude the contributions of current and prior period acquisitions, disposals and non-core products.

† EBITA is defined as earnings before interest, tax, amortisation of acquired intangible assets and acquisition costs; and is after neutralising the impact of foreign exchange movements.

Download the full press release

An analyst presentation will be held at 8.45am today at Deutsche Bank, Winchester House, 1 Great Winchester Street, London EC2N 2DB.

A live webcast of the presentation will be hosted on www.investors.sage.com, dial-in number +44 (0) 20 3140 0668, pin code: 583105#. A replay of the call will also be available for two weeks after the event: Tel: +44 (0) 20 3140 0698, pin code: 384148#.

Enquiries:

The Sage Group plc
+44 (0) 191 294 3068
Guy Berruyer, Chief Executive
Paul Harrison, Chief Financial Officer
Murdo Montgomery, Investor Relations

Tulchan Communications
+44 (0) 20 7353 4200
David Shriver
Lucy Legh