The Sage Group plc audited results for the year ended 30 September 2014

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1Refer to Appendix II on page 16 for information on Non-GAAP measures.

2Prior year statutory and underlying figures include the contribution of non-core products disposed of in March and April 2013. The prior year statutory operating profit includes a £186m non-recurring item relating to these disposals. Current year statutory operating profit includes a £44m goodwill impairment relating to the Brazilian operations.

On track to deliver the 2015 financial targets of 6% organic revenue growth and 28% operating profit margin

• Key financial milestones achieved for 2014 with organic revenue growth of 5% (2013: 4%) and organic operating profit margin of 27.5% (2013: 27.1%);
• Software subscription revenue growth of 28% (2013: 13%) the primary driver of organic revenue growth;
• Organic recurring revenue growth increased to 7% (2013: 6%), with organic SSRS revenue contracting by 1% (2013: flat);
• Improved revenue mix with recurring revenue representing 73% of Group revenue (2013: 71%); and
• Recurring revenue growth, with strong subscription growth, underpins confidence in meeting 2015 targets.

Sound execution against strategic priorities sees subscription base increase and cloud momentum build

• The move to higher quality software subscription revenue continued, with a 29% increase in the organic annualised value of the software subscriber base to £220m (2013: £170m);
• Subscription is driving increased customer loyalty, which is reflected in an increase in the recurring contract renewal rate to 83% (2013: 82%);
• Strong momentum for Sage One as a small business global cloud solution; present in 10 markets and ca.150% increase in paying subscriptions to 86,000 (2013: 35,000*), driven by strong run-rates in the UK & Ireland ("UKI") and South Africa; and
• Disciplined resource allocation continued with 17% increase in R&D# and S&M^ expenditure on "Invest" products.

Stephen Kelly, Chief Executive Officer, said: “I would like to thank Guy Berruyer for leading Sage to deliver an encouraging set of results with a strong finish to the year. I reconfirm the Board’s financial targets for 2015 and recognise the 2014 results as an important milestone on the path to meeting them. Our financial performance demonstrates the strength of Sage’s global business and the quality of relationships it has with millions of SME customers worldwide.

Looking ahead, I believe that Sage, as a trusted partner to our customers, can be even more instrumental in supporting the success of SMEs around the world. I look forward to building on Sage’s technology leadership, both in the cloud and on-premise, together with our outstanding customer support, to the benefit of our current and future SME customers."

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 www.sage.com/investors, dial-in number +44 (0) 20 3139 4830, pin code: 17266415#. A replay of the call will also be available for two weeks after the event: Tel: +44 (0) 20 3426 2807, pin code: 651519#.

Non-GAAP measures

Unless stated otherwise, growth rates in the Performance review, Operating review and Financial 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 16.

Rounding

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