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Sage Group plc unaudited results for the six months ended 31 March 2015

Good operational progress – on track to meet 2015 targets

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H1 2015 H1 2014 Change
Organic revenue £682m £642m +6.2%
- Organic recurring revenue £499m £463m +7.7%
- Organic software and software-related services revenue (“SSRS”) £183m £179m +2.4%
Organic operating profit £192m £176m +9.1%
Organic operating profit margin 28.1% 27.4% +70bps
Underlying basic earnings per share (“EPS”) 12.66p 10.88p +16.4%
Underlying cash conversion2 112% 109% +3%
Ordinary dividend per share (“DPS”) 4.45p 4.12p +8%


H1 2015 H1 2014 Change
Revenue £699m £657m +6.5%
Operating profit £183m £174m +5.1%
Profit before income tax £173m £165m +4.9%
Basic EPS 11.86p 10.58p +12.1%

1 Refer to Appendix II on page 15 for information on Non-GAAP measures.

2 Underlying cash conversion is underlying cash flow from operating activities divided by underlying operating profit. Underlying cash flow from operating activities is statutory cash flow from operating activities less net capital expenditure and adjusted for movements on foreign exchange rates and non-recurring cash items. In the prior period, underlying cash flow from operating activities was calculated before net capital expenditure and included movements on foreign exchange, which would have shown underlying cash conversion of 129% in H1 2015 (H1 2014: 110%).


  • Organic recurring revenue growth of 8% in-line with management expectations, with 29% software subscription revenue growth the primary driver. Recurring revenue now accounts for 73% of Group organic revenue (H1 2014: 72%);
  • Organic SSRS revenue growth of 2% was stronger than expected, due to certain one-offs, including a regulatory change in Malaysia, which contributed approximately 50 basis points to Group organic revenue growth;
  • Increased organic operating margin reflects improved operating leverage from organic growth and disciplined cost management and supports the 28% operating profit margin target for the year;
  • Weaker performance in parts of the business, particularly Enterprise Europe and payments and the Small and medium sized business (“SMB”) segment in North America, leads to a cautious outlook for these areas;
  • Sage ERP X3, our global solution for enterprise businesses, grew organic revenue by 10% (H1 2014: 7%);
  • The number of paying subscriptions for Sage One, our global cloud solution for smaller businesses, increased to 115,000* (FY 2014: 86,000; H1 2014: 59,000); and
  • The move to a subscription model continues with over 550,000 software subscription contracts and an annualised subscription value of £260m (FY 2014: £224m).

Stephen Kelly, Chief Executive Officer, said: “We have delivered a good first half performance and remain on track to meet our financial targets this year. Recurring revenue growth of 8% demonstrates the strength of our business and the quality of our customer relationships. The business also enjoyed a number of benefits in the second quarter which, though encouraging, are unlikely to recur in the second half, and so our expectations for the current year remain unchanged.

We have already started making changes to facilitate and underpin our longer-term growth plans. These changes are being carefully introduced to ensure minimum risk to the business. These include organisational and product improvements which will help drive sustainable, profitable growth and build on Sage’s existing strengths. We are at the start of this journey which will take a couple of years to fully implement.

Looking ahead, we have a significant opportunity to strengthen the valuable relationships we have as a trusted partner to millions of Small & Medium Businesses, and to build new ones. The changes we are making will allow us to be even more instrumental in our goal of supporting the success of Small & Medium Businesses globally. We look forward to providing more details on these initiatives at our Capital Markets Day in June.”

The Sage Group plc +44 (0) 191 294 4190
Stephen Kelly, Chief Executive Officer
Steve Hare, Chief Financial Officer
Murdo Montgomery, Investor Relations

Tulchan Communications +44 (0) 20 7353 4200
David Shriver
Jonathan Sibun

An analyst presentation will be held at 8.45am today at the London Stock Exchange plc, 10 Paternoster Square, London, EC4M 7LS. A live webcast of the presentation will be hosted on, dial-in number +44 (0) 20 3139 4830, pin code: 62167535#. A replay of the call will also be available for two weeks after the event: Tel: +44 (0) 20 3426 2807, pin code: 657445#.

Non-GAAP measures
Unless stated otherwise, growth rates in the Chief Executive Officer’s review and Chief Financial Officer’s review are on an organic basis. For information on the calculation of Non-GAAP measures and why they are used, please see Appendix II on page 15.

As a result of rounding throughout this document, it is possible that tables may not cast and change percentages may not calculate precisely.

*Following the incorporation of several existing SaaS products in Germany, France and South Africa into the Sage One portfolio during the prior year, Sage One paying subscriptions have been restated on a like-for-like basis. Without the restatement, Sage One paying subscriptions at 31 March 2015 were 76,000 (30 September 2014: 52,600, 31 March 2014: 35,000)