Sage Group Plc · LSE:SGE
Sage — The Sage Group — FY2013 Earnings Presentation
36 slides from Sage's earnings presentation, November 2013
Slide 1: Strategy is working, growth is accelerating
Strategy is working, growth is accelerating The Sage Group plc Results for the year ended 30 September 2013
Slide 2: Overview
Overview Guy Berruyer Chief Executive Officer 2
Slide 3: Financial highlights: A strong performance
Financial highlights A strong performance Financial performance Financial discipline Commercial success Organic Organic revenue EBITA new growth margins customer doubled to maintained adds of 4% 256,000 Acceleration Over £1bn 82% in H2 growth returned in contract to 5% 2 years renewal rate At consta
Slide 4: Strategic highlights
Strategic highlights Sage One – more customers, more markets and more partners Hybrid cloud – Sage ERP Online launched Sage ERP X3 – delivered on double-digit growth target Connected services – strong performance in North America with integrated payments Customer satisfaction – improving N
Slide 5: Financial overview
Financial overview Darren Fisher Acting Chief Financial Officer 5
Slide 6: Financial KPIs: Measuring success
Financial KPIs Measuring success KPI Measure FY13 FY12 Financial performance Growth Organic revenue growth1 4% 2% EBITA margin EBITA/Underlying revenue2 27% 27% Profitability Underlying basic EPS growth3 12% -2% Cash generation Underlying cash conversion4 112% 106% Financial strength Net debt/EBITDA
Slide 7: Revenue sources
Revenue sources Strong acceleration in growth Revenue mix 4% organic 31% 29% revenue growth SSRS 6% Recurring organic 69% 71% recurring Flat organic revenue SSRS* revenue growth 2012 2013 *Software and software-related services. At constant exchange rates. 7
Slide 8: Revenue trends
Revenue trends Good performances across the businesses FY13 revenue Europe Americas AAMEA Group SSRS revenue £241.7m £90.7m £67.6m £400.0m Organic revenue growth -2% 2% 7% - Recurring revenue £535.2m £357.5m £83.4m £976.1m Organic revenue growth 5% 7% 11% 6% Total revenue £776.9m £448.2m £151.0m £1,
Slide 9: Europe
Europe An improved performance in H2 Revenue mix Organic revenue growth H1 H2 FY France 7% 3% France -1% 1% - UK & Ireland 11% 33% Spain UK & Ireland 5% 5% 5% Germany £776.9m Spain -4% -1% -2% 13% Sage Pay Germany -1% 3% 1% Others 33% Sage Pay 32% 18% 25% Europe 2% 3% 2% Regional highlights Stand-
Slide 10: Americas
Americas Strong acceleration in growth Revenue mix Organic revenue growth H1 H2 FY Software & support 11% Sage Business 5% 8% 6% Solutions Sage 16% Payment Sage Payment 3% 5% 4% Solutions £448.2m Solutions Brazil 73% Brazil n/a n/a n/a Americas 4% 7% 6% Regional highlights Strong upselling of prem
Slide 11: AAMEA
AAMEA African markets continued to drive growth Revenue mix Organic revenue growth H1 H2 FY 12% South Africa 14% 14% 14% South Africa Australia 2% -1% 1% Australia 30% £151.0m Asia 1% 21% 11% Asia 58% AAMEA 9% 10% 9% Regional highlights South Africa delivered strong growth of 14% Wider African m
Slide 12: Profitability
Profitability Margin discipline maintained EBITA margin 28.3% 28.2% Margins maintained 27.3% 27.3% Cost discipline across all 27.0% 26.9% regions 25.8% Reinvesting in growth 25.7% Organic investment increased Europe Americas AAMEA Group FY12 FY13 At constant exchange rates 12
Slide 13: Cash flow
Cash flow Strong cash generation continues £m £m £m EBITA 375.8 Cash flow from 417.4 Net debt (161.5) operations 1 October 2012 Exceptional items (2.4) Interest (11.2) FCF 268.6 Depreciation/amortisation/ 32.9 Tax (118.6) Acquisitions (20.7) profit on disposal Share-based payments 2.9 Net capex (19.
Slide 14: Capital allocation
Capital allocation Focus on shareholder value Growth Increasing EPS + Increasing dividend Strong cash flow + Returns of surplus capital 14
Slide 15: Strategic review
Strategic review Guy Berruyer Chief Executive Officer 15
Slide 16: Our goal: Accelerating growth
Our goal Accelerating growth Strategy is working, growth is accelerating 16
Slide 17: Focusing our business
Focusing our business Strategy of greater focus is working % of total spend on Invest products 60% Portfolio is self-funding 50% 49% investment in growth 50% 42% 40% 32% increase in R&D and 35% S&M spend on Invest 30% products in last 12 months 20% 6% increase in total R&D and 10% S&M investme
Slide 18: Capturing the technology opportunity
Capturing the technology opportunity Investing for growth Technological Commercial innovation success Customer satisfaction 18
Slide 19: Technological innovation
Capturing the technology opportunity Technological innovation Start-up and Small to medium Mid-market small businesses sized businesses businesses Sage One Sage ERP X3 Hybrid cloud 1 – 25 10 – 200 100 – 500 employees employees employees Sage Sage Payments Mobility 19
Slide 20: Sage One
Capturing the technology opportunity Technological innovation Start-up and small businesses Sage One 1 – 25 employees 20
Slide 21: Hybrid cloud
Capturing the technology opportunity Technological innovation Small to medium sized businesses Hybrid cloud 10 – 200 employees 21
Slide 22: Sage ERP X3
Capturing the technology opportunity Technological innovation Mid-market businesses Sage ERP X3 100 – 500 employees 22
Slide 23: Sage Payments
Capturing the technology opportunity Technological innovation Sage Payments Sage Payments 23
Slide 24: Sage Mobility
Capturing the technology opportunity Technological innovation Sage Sage Mobility Mobility 24
Slide 25: Commercial success: Sage One
Capturing the technology opportunity Commercial success Sage One Sage One paying Success in the UK subscriptions 22,000 Over 21,000 paying subscriptions in 20,000 the UK 18,000 Over 5,000 accountants using 16,000 Accountants Edition in the UK 14,000 12,000 Slower progress in North America 10,000
Slide 26: Commercial success: Sage ERP X3
Capturing the technology opportunity Commercial success Sage ERP X3 % of X3 revenue outside of Strong performance this year France 12% underlying revenue growth Over 500 new customers 50% With more to come … 275 partners certified worldwide, and 40% we’re selectively adding more 30% FY09 FY10 FY
Slide 27: Commercial success: Sage Payments
Capturing the technology opportunity Commercial success Sage Payments Payments cross sell Integrated connected services customer count 15,000 Greater value for customers 14,000 Greater value for Sage 13,000 12,000 Payments integration cross-sell 11,000 20% growth in integrated payments revenue 1
Slide 28: Customer satisfaction
Capturing the technology opportunity Customer satisfaction 28
Slide 29: The benefits of subscription
The benefits of subscription Already making a difference The subscription model offers multiple levers to grow 29
Slide 30: Confidence in achieving 6% organic revenue growth
Confidence in achieving 6% organic revenue growth Historic long term average growth of 3% Strategic actions Invest products Core portfolio High growth markets Illustrative bridge to 6% Supports margin commitment Hist. Invest Core High 2015 average products portfolio growth target growth
Slide 31: Strategy is working, growth is accelerating
Strategy is working, growth is accelerating 31
Slide 32: Questions?
Questions? 32
Slide 33: Appendix: Supplementary information
Appendix Supplementary information 33
Slide 34: Strategic KPIs
Strategic KPIs KPI Measure FY13 FY12 Focusing our business R&D %: split by ‘Invest’, ‘Harvest’ and ‘Sunset’ 50:43:07 35:53:12 Resource optimisation S&M %: split by ‘Invest’, ‘Harvest’ and ‘Sunset’ 49:46:05 42:49:09 Capturing the technology opportunity Number of Sage One paying subscriptions 22,400 6
Slide 35: Segmental analysis
Segmental analysis Year ended 30 September 2013 Europe Americas AAMEA Group Recurring revenue £535.2m £357.5m £83.4m £976.1m SSRS revenue £241.7m £90.7m £67.6m £400.0m Total revenue £776.9m £448.2m £151.0m £1,376.1m Organic1 revenue growth +2% +6% +9% +4% EBITA2 £220.2m £115.0m £40.6m £375.8m EBITA2
Slide 36: Dividends
Dividends Year ended 30 September 2013 Pre-share consolidation Post-share consolidation Interim Final Total Interim Final Total 2012 ordinary dividend 3.48p 6.67p 10.15p 3.66p 7.02p 10.68p 2013 ordinary dividend 3.69p 7.07p 10.76p 3.88p 7.44p 11.32p Growth 6% 6% 6% 6% 6% 6% 2013 special dividend n/a