Sage Group Plc · LSE:SGE
Sage — The Sage Group — H1 2016 Earnings Presentation
28 slides from Sage's earnings presentation, May 2016
Slide 1: Sage Group plc results for the six months ended 31 March 2016
Sage Group plc results for the six months ended 31 March 2016
Slide 2: Agenda
Agenda: • Summary Stephen Kelly • CFO review • Progress Chief Executive Officer • Outlook • Q&A 1
Slide 3: Safe harbour statement
Safe harbour statement The following presentation is being made only to, and is only directed which may cause the actual results, performance or achievements of at, persons to whom such presentation may lawfully be communicated the Company, or industry results, to be materially different from any (“
Slide 4: Summary
Summary Encouraging Delivering Momentum Relentless H1 Results Transformation Building Execution 3
Slide 5: Steve Hare, Chief Financial Officer
Steve Hare Chief Financial Officer 4
Slide 6: Financial progress
H1 16 H1 15 Change Organic revenue £747m £703m +6.2% Organic operating profit £189m £186m +1.9% Margin % 25.4% 26.4% Financial Underlying EPS 12.09p 12.28p -1.5% progress Non-recurring items (£29m) - Recurring items (£8m) (£10m) -16.7% Difference between 2015 £3m and 2016 FX rates Statutory Operatin
Slide 7: Strong cash metrics
Underlying cash Underlying Opening net debt £189m flow from £210m operating profit £425m operating activities Free cash flow £142m Depreciation/ Interest (£9m) £15m Amortisation M&A (deferred) (£6m) Strong cash Share-based payments £6m Tax paid (£48m) Net share purchases (£1m) metrics Ordinary divid
Slide 8: Revenue categories
H1 15 H1 16 Software +35% subscription Revenue +10% (Recurring Revenue) categories Other recurring -1% Processing +7% SSRS -6% 7
Slide 9: Software subscriber growth
450 430 Software 410 390 subscriber 370 growth £m 350 330 Growth in ASB of 310 £74m to £425m 290 over last 6 months 270 250 FY15 Sage 50 Payroll NA South Africa Sage 100 Other growth H1 16 Family products France products 8
Slide 10: Regional overview
Europe North America Regional overview International 9
Slide 11: Europe
Europe What went well Subscription momentum increased Recurring Mix - ASB growth of £17m across Sage 50, driven 75% H1 15: 74% by cloud - Take up of auto enrolment modules up 50% Enterprise Europe: 5% growth Revenue H1 16 H1 15 Growth Focus Recurring 301 276 +9% Cross-sell supporting the golden tria
Slide 12: North America
North America What went well c.100% software subscription growth - 25,000 additional subscriptions for Sage 50 35% increase in Payroll supported by 1,800 additional customers Recurring Mix 57% H1 15: 55% Focus Revenue H1 16 H1 15 Growth Payments returned to growth but acceleration of Recurring 146 1
Slide 13: International
International What went well Revenue H1 16 H1 15 Growth Africa revenue growth of 17% Recurring Mix Recurring 66 56 +17% 60%+ growth in Sage X3 71% Processing 4 3 +12% Sage One recent launches H1 15: 64% • Brazil – over 10,000 SSRS 23 29 -19% subscriptions reached Total 93 88 +5% • Australia – over 1
Slide 14: Capacity for growth
Capacity for 19% G&A baseline 139 sites growth (Slide from 2 Dec 2015) £50m Annualised savings 2 year payback 13
Slide 15: Capacity for growth
Transformation H1 Actual Total exceptional cost* (£31m) G&A Opportunity Exceptional cost (£22m) Annual savings secured: People £12m Capacity for Facilities £5m growth Total G&A savings £17m *Cash exceptional (£12m) Total projected transformation cost for FY16 remains at c.£100m, including actions ta
Slide 16: Summary
Summary Solid financial results Investing for accelerated Strong cash flows growth 15
Slide 17: Stephen Kelly, Chief Executive Officer
Stephen Kelly Chief Executive Officer 16
Slide 18: From Invention to Re-imagination
From Invention to Re-imagination PC Era Payroll Payments & HR The Golden Triangle Sage invented business software for computers Accounting Global reach | Tradition of innovation | Trusted 17
Slide 19: Progress
sage Progress
Slide 20: Momentum: Customers for life
Momentum • 10% growth in recurring revenue, with 50% 842k growth in software subscription relationships 561k • Sage X3 delivering value for customers: • 177% Return on Investment Customers • 5 month payback for life • Cross-sell in Africa: 26% y-o-y increase between accounting and payroll 19
Slide 21: Momentum building: Winning in the market
Momentum building • 130% increase in organic traffic to sage.com 17% 10% 11% • 17% Sage X3 revenue growth H1 15 FY15 H1 16 Winning in the market • Sage One continued unit momentum Global: New launches: 10,000 subscriptions 230k 115k >1,000 adds in peak month
Slide 22: Momentum building: Revolutionise business
Momentum building • Exclusive Sage One app on the iOS platform • Sage Marketplace launched to provide Revolutionise partner apps: >50 and growing business • Innovations to be unveiled at Sage Summit 2016 21
Slide 23: Momentum building: Capacity for growth
Momentum building • £50m of G&A savings • Consistent systems – Sage X3 deployed within Sage Capacity for • New global digital marketing campaigns delivering c.2,000 incremental leads per week: growth Campaign launch 3000 2000 1000 0 H1 2016 22
Slide 24: Momentum building: One Sage
Momentum building • Continuing to strengthen the breadth and quality of the management team: New joiners to the top 100 leadership team • People engagement through Sage Foundation: One Sage 2,500 volunteer days donated • Common induction experience for new talent and training available on Sage Acade
Slide 25: Watch-list 12 months on
• New cross-sell team established • New leadership • 7 new ISV partners in H1 Payments • Modest return to growth of 2% YOY North America • Rate of revenue growth nearly doubled to 5% in H1 • Launched Sage 100 Cloud and 300 Cloud • Need to support partners with subscription transition SMB North Watch
Slide 26: Outlook
Outlook Organic Organic revenue growth operating margin at least at least 6% 27% Long-term sustainable growth Improving quality of the margin Constant focus on strong cash conversion 25
Slide 27: Summary
Summary Encouraging Delivering Momentum Relentless H1 Results Transformation Building Execution 26
Slide 28: Q&A
sage Q&A