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Unaudited results for the six months ended 31 March 2013

Unaudited results for the six months ended 31 March 2013 (Sage Group)

Focus and innovation delivering results

Focus and innovation delivering results STATUTORY UNDERLYING H1 2013 H1 2012 Change H1 2013 H1 2012 Change Revenue £708.1m £673.1m +5% £626.3m# £606.7m# +3% EBITA† n/a n/a n/a £190.9m £179.1m +7% Pre-tax (loss)/profit (7.7m) £167.1m +(105%) £184.9m £174.3m +6% Earnings per share (6.28p)1 9.06p +(169%) 10.75p 9.36p +15% Dividend per share 3.69p 3.48p +6% n/a n/a n/a

1 Statutory loss due to £196.5m exceptional item in relation to the disposal of non-core products announced in February 2013


Financial highlights

  • Organic# revenue growth of 3% in the period (H1 2012: 2%), with 6% growth in recurring revenue (H1 2012: 5%) and 3% contraction in software and software-related services revenue (”SSRS”) (H1 2012: 4% contraction)
  • EBITA† margin maintained at 27% (H1 2012: 27%), despite continued investment in growth
  • Underlying* pre-tax profit of £184.9m (H1 2012: £174.3m), an increase of 6%
  • Underlying* earnings per share of 10.75p (H1 2012: 9.36p), an increase of 15%
  • Strong operating cash flow of £208.9m (H1 2012: £207.7m), representing 112%^ of EBITA†
  • Exceptional item of £196.5m relating to the disposals of non-core products
  • Interim dividend of 3.69 pence per share (H1 2012: 3.48 pence per share), an increase of 6%
  • Proposed special dividend of £200m, equivalent to approximately 17 pence per share, after which total cash returned to shareholders in the last eighteen months will approach £1 billion

Delivering on our strategy

Good progress made with our three cornerstones to drive accelerated growth:

  • Focusing our business: disposal of non-core products and material re-allocation of R&D and Sales and Marketing expenditure to Invest products, which represent our high growth opportunities
  • Capturing the technology opportunity: 11,500 paying subscriptionsᵝ (H1 2012: 2,450) for Sage One, our SaaS solution for start-up and small businesses, a four-fold increase in the last 12 months; accelerated roll-out of Sage One to new markets, with Germany launched in March 2013 and Spain and France launching in May and June 2013. For SMB businesses, Sage is on track for the commercial launch of cloud enabled versions of ERP products, Sage 200 in the UK and Sage Murano in Spain. In the mid-market, Sage ERP X3 continues to drive new customers to Sage, delivering stronger revenue growth
  • The benefits of subscription: launch of subscription pricing for key products across major markets with evidence that subscription is an effective mechanism for winning new customers and re-activating off-plan customers
  • New customer additions of 145,000 (H1 2012: 129,000) during the period and renewal rates on support contracts maintained at 81% (H1 2012: 81%)

Guy Berruyer, Chief Executive, said:

“We delivered good growth in recurring revenues, in line with our strategy. We continue to drive significant change through the business, which is delivering results in the face of continued macroeconomic headwinds. We are encouraged by our performance, which we expect to sustain for the remainder of the year, and we remain confident that we will deliver on our strategic and financial goals. In 2011, we set out our intention to move to a minimum net debt level of 1x EBITDA. The Board is pleased to announce we will meet this target with a proposed special dividend of £200m. With over £500m returned through the buyback programme and ordinary dividends paid or declared of £260m, we are delighted to have returned almost £1 billion to shareholders since October 2011, without compromising our ability to invest.”

# Organic revenue excludes the contributions of current and prior period acquisitions, disposals and assets held for sale. The impact of foreign exchange is neutralised in prior period figures.

* Underlying figures exclude amortisation of acquired intangible assets, acquisition-related items, imputed interest and exceptional items, with all adjustments net of tax. The impact of foreign exchange is neutralised in prior period figures.

† EBITA is defined as earnings before interest, tax, amortisation of acquired intangible assets, acquisition-related items and exceptional items. The impact of foreign exchange is neutralised in prior period figures.

^ Cash conversion is cash flows from operating activities, adjusted for cash acquisition-related items and cash exceptional items of £4.0m, divided by EBITA.

ᵝ At 30 September 2012, the number of paying subscriptions for Sage One was 6,190.


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

An analyst presentation will be held at 8.45am today at the London Stock Exchange plc, 10 Paternoster Square, London, EC4M 7LS.

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