Sage Group Plc · LSE:SGE
Sage — The Sage Group — H1 FY2011 Earnings Presentation
32 slides from Sage's earnings presentation, May 2011
Slide 1: The Sage Group plc Interim results for the six months ended 31 March 2011
The Sage Group plc Interim results for the six months ended 31 March 2011
Slide 2: Introduction
Introduction Guy Berruyer Chief Executive
Slide 3: Financial highlights
Financial highlights 4% 25.6% 4% Organic# revenue EBITA† margin Growth in growth underlying* EPS 4% 123% Growth in interim Cash flow: EBITA† dividend # Organic figures exclude the contributions of current and prior period acquisitions, disposals and non-core products and are stated after neutralisat
Slide 4: Operational highlights
Operational highlights • Continued growth momentum in H1 • North America returns to organic revenue growth • 131,000 new paying customers added • Progress made against 4 priorities 4
Slide 5: Financial Review
Financial Review Paul Harrison Group Finance Director
Slide 6: H1 financials
H1 financials • Return to organic revenue growth in all regions • Margins stable, investments progressing • Continued strong cash generation at 123% of EBITA • Renewal rates maintained at 81% • 4% increase in interim dividend 6
Slide 7: H1 revenue sources
H1 revenue sources Total revenue +4% Group £800m organic revenue +4% £700m 253 246 34% 34% £600m £500m SSRS* 490 469 organic revenue £400m 66% 66% +4% £300m £200m Subscription £100m organic revenue +4% £0m H1 FY10 H1 FY11 Subscription SSRS* At constant exchange rates *Software and software-related s
Slide 8: Organic revenue trends
Organic revenue trends 15% 15% 13% Europe North America AAMEA 10% 10% 10% 8% Group 5% 5% 5% 5% 5% 4% 5% 4% 3% 2% 0% -1% 1% 0% -2% -3% -4% -2% -2% -5% -4% -5% -5% -6% -9% -8% -10% H1 FY08 H2 FY08 H1 FY09 H2 FY09 H1 FY10 H2 FY10 H1 FY11 At constant exchange rates 8
Slide 9: Organic SSRS revenue trends
Organic SSRS revenue trends 15% 14% Europe 10% North America 10% AAMEA 6% 4% Group 5% 5% 5% 4% 1% 4% 0% 2% 0% -2% 0% -4% -5% -7% -4% -4% -10% -12% -8% -13% -11% -16% -15% -13% -15% -16% -20% -18% -22% -25% -24% H1 FY08 H2 FY08 H1 FY09 H2 FY09 H1 FY10 H2 FY10 H1 FY11 At constant exchange rates 9
Slide 10: Maintenance and support
Maintenance and support Premium organic revenue growth 20% 15% 15% • Over 1.9m support contracts 10% in total 7% 5% 5% 5% • Support renewal rates stable 0% at 81% -5% • Premium support organic -6% revenue growth 5% -10% H1 FY11 Europe North America (exc. Sage Healthcare) Sage Healthcare AAMEA Group
Slide 11: Margins and investment
Margins and investment • EBITA margin 25.6%, continuing to invest for growth • Areas of investment: − Sage ERP X3 worldwide expansion − Connected services and online business solutions − Customer service, particularly in the UK − Sage Healthcare 11
Slide 12: H1 cash flow and net debt
H1 cash flow and net debt £m £m £m Cash flow from Net debt EBITA 190.3 233.6 (219.8) operations 1 October 2010 Depreciation/ amortisation/profit on 15.8 Interest/issue costs (6.1) Free cash flow 171.0 disposal Acquisitions Share-based payments 3.9 Tax (41.2) 0.1 /disposals Working capital change (36
Slide 13: H1 balance sheet
H1 balance sheet Balance sheet Mar Mar • Net debt/EBITDA: 0.3x £m 2011 2010 − Covenant <3.0x EBITDA • PBIT/Interest: 27.1x Goodwill and intangible assets 2,189.4 2,284.9 Property, plant and equipment 148.4 141.2 − Covenant >4.0x Net deferred income tax (28.8) (24.8) Net working capital 63.3 62.0 • D
Slide 14: Regional Review
Regional Review Paul Harrison Group Finance Director
Slide 15: Europe
Europe • Total and organic revenue grew 5% £450m − Subscription +5% £400m − Software and software-related services +5% £402m £350m £383m − UK & Ireland grew 4% with strong execution in the small business segment and good £300m demand in the accountants’ market £250m − 5% growth in France with good p
Slide 16: North America
North America • Total revenue flat, organic revenue £300m grew 1% − Subscription +1% £270m £271m £250m − Software and software-related services flat − ERP solutions performed well in improving £200m markets − In verticals, Nonprofit Solutions performed £150m well, construction market remains challen
Slide 17: AAMEA
AAMEA • Total revenue grew 13%, organic £80m revenue grew 10% £70m − Subscription +15% £70m − Software and software-related services +6% £60m £62m − 15% growth in South Africa with good £50m performance by core Pastel and VIP products £40m − Progress made in selling into Africa with £30m good future
Slide 18: Business Review
Business Review Guy Berruyer Chief Executive
Slide 19: Priorities for Sage - progress
Priorities for Sage - progress Improving organic revenue growth Driving margins in the medium term Leveraging the web Re-engaging in acquisition opportunities 19
Slide 20: Priorities for Sage - progress
Priorities for Sage - progress Improving organic revenue growth Driving margins in the medium term Leveraging the web Re-engaging in acquisition opportunities 20
Slide 21: Organic revenue growth is improving
Organic revenue growth is improving • Improving conditions in most markets • Gaining an increased number of new paying customers • Good progress in Sage ERP X3 with 11% growth • Strong demand for payments with 18% growth • Continued evolution of support range including connected services At constant
Slide 22: North America back to organic revenue growth
North America back to organic revenue growth • Focus on execution in an improving market • 1% organic revenue growth overall − Sage Healthcare contracted 5% − North America excluding Sage Healthcare grew 4% • Good demand for ERP solutions • Strong performance from payments • Pascal Houllion took ove
Slide 23: Sage Healthcare poised to benefit from stimulus
Sage Healthcare poised to benefit from stimulus Organic • Intergy good performance with revenue Product Revenue growth bookings well ahead of revenue Intergy £38.5m +8% • Stimulus impact expected in H2 53% of total • Strong KLAS ranking Medical £25.6m -16% Manager 36% of total • Margin 14% (H1 FY10:
Slide 24: Payments
Payments • Payments cycle closely linked to accounting • Integration offering significant advantage • In the US, cross-sell now 20% of payments revenue and growing rapidly • Strategy to extend Sage Pay into Europe • Overall, payments 18% organic revenue growth At constant exchange rates 24
Slide 25: Innovation to leverage the web
Innovation to leverage the web Connected services • Extending the reach of on-premise into Cloud • Stand-alone or component of support Online business solutions • New solutions for small business segment • Cloud versions of mid-market products offering flexibility and choice Sage ERP Accpac Online 2
Slide 26: Sage Business Index
Sage Business Index • 6,000 small businesses across the world surveyed • Businesses in Germany were the most confident, followed closely by France, UK, US and Canada. In Spain they were the least confident • Businesses open to new technology and the web • Gradually improving markets, customers ready
Slide 27: Conclusion
Conclusion • Organic revenue growth in all regions in the period • Investing to improve organic revenue growth • Innovating to enhance customer experience • Continued progress expected in the second half of the year 27
Slide 28: Supplementary Information
Supplementary Information
Slide 29: Regional profile
Regional profile Revenue H1 FY11 EBITA EBITA H1 FY11 revenue H1 FY11 margin % of H1 FY11 £m £m Group % Europe 401.5 54% 115.8 29% North America 270.9 37% 57.9 21% AAMEA 70.3 9% 16.6 24% Total 742.7 100% 190.3 26% 29
Slide 30: Europe
Europe Revenue EBITA Subscription £245.7m EBITA £115.8m Software and software-related services £155.8m Total £401.5m EBITA margin 29% Customers Support contracts New in the period 59,000 40,000 At 31 March 2011 2,620,000 1,084,000 30
Slide 31: North America
North America Revenue EBITA Subscription £207.5m EBITA £57.9m Software and software-related services £63.4m Total £270.9m EBITA margin 21% Customers* Support contracts New in the period 49,000 18,000 At 31 March 2011 3,290,000 651,000 * Excluding ACT! 31
Slide 32: AAMEA
AAMEA Revenue EBITA Subscription £36.6m EBITA £16.6m Software and software-related services £33.7m Total £70.3m EBITA margin 24% Customers Support contracts New in the period 23,000 10,000 At 31 March 2011 619,000 195,000 32