Results for the six months ended 31 March 2006

Transcription

1 Results for the six months ended 31 March 2006

2 Financial review

3 Financial highlights Six months ended 31 March 2006 Revenue 455.9m 18%* Earnings before interest, tax and net amortisation 123.1m 22%* Cash flow from operations 153.9m 17% Pre-tax profit 113.7m 19% Earnings per share 6.10p 19% Dividend per share 1.08p 17% *At constant exchange rates Six months ended 31 March

4 Organic revenue growth Consistent growth rate over last 2 years Excludes strong contribution from 2005 and 2006 acquisitions 500m 400m 300m 200m Organic Non-core +5% Acquisitions / disposals 100m 0m 2005 H H1 m at constant exchange rates Six months ended 31 March

5 Revenue sources Total revenue Organic revenue 500m Software Services +5% 400m 300m 200m % % Services +7% 100m Software +2% 0m 38% 35% 2005 H H1 m at constant exchange rates Six months ended 31 March

6 Earnings growth EBITA is best underlying measure EBITA pre share-based payment 2005 H1 m H1 m % growth 21% Amortisation and capitalisation effects excluded Share-based payment Earnings before interest, tax and net amortisation (EBITA) Amortisation of acquired intangible assets (3.6) (0.4) (4.2) (4.6) 22% EBITA margin increased to 27% (2005: 26%*) Revenue growth combined with product and service investments Capitalisation of software development Amortisation of capitalised software development Net capitalisation of software development Forex Operating profit 0.6 (0.2) 0.4 (3.0) (0.3) % *At constant exchange rates Six months ended 31 March

7 UK Organic revenue +4% strong licence sales of core accounts products support: new sales and renewals focus 96m 100m EBITA margin increased to 37% (2005: 36%) cost efficiencies in accountants division investments in customer service 36% margin 2005 H H1 Revenue 37% margin EBITA Six months ended 31 March

8 Mainland Europe Organic revenue +6% increased support sales further migration to premium support services payroll legislation focus shifted from software to services Strong revenue growth in newer businesses Spain +11% organically Adonix acquisition +13% EBITA margin maintained at 22% 153m 173m 205m 100m 22% margin 22% margin 2005 H H1 Revenue EBITA At constant exchange rates Six months ended 31 March

9 North America Small business: organic revenue +7% migration to premium products adoption of premium support services Mid-market: organic revenue +2% product release schedule focused on H2 support retention and reactivation focus 4% overall organic revenue growth and 21% growth in Verus acquisition EBITA margin maintained at 24% 279m 161m 316m 170m 24% margin 24% margin 2005 H H1 Revenue EBITA excluding disposal profit At constant exchange rates Six months ended 31 March

10 Rest of World Organic revenue +14% strong accounts and payroll licence sales support adoption continuing to increase growing payroll services revenues EBITA margin improved to 27% (2005: 18%) revenue growth investment in services and product development 29m 18% margin 33m 27% margin 2005 H H1 Revenue EBITA At constant exchange rates Six months ended 31 March

11 Acquisitions Verus Adonix Logic Control +21% +13% +7% 5m 6m 16m 18m 16m 17m 2005 H H H H H H1 Revenue m at constant exchange rates US February 2006 Enterprise value 184.6m EBITA margin 34% France November 2005 Enterprise value 74.1m EBITA margin 23% Spain July 2005 Enterprise value 54.7m EBITA margin 19% Six months ended 31 March

12 Cash flow and net debt m m m EBITA Cash flow from operations Net debt 30/09/05 (106.9) Depreciation / amortisation 13.3 Interest (4.8) Free cash flow 93.9 Profit on disposal (2.7) Treasury shares (13.3) Working capital change (24.1) Tax (30.0) Acquisitions/disposal (243.4) Deferred income change 38.1 Dividends (25.2) Net capex (13.1) Exchange differences 6.2 Other (4.6) Cash flow from operations Free cash flow 93.9 Net debt 31/03/06 (287.4) Cash:profit conversion 125% Interest cover 23.3x Net debt gearing 23% Six months ended 31 March

13 Business review

14 Review Consistent organic revenue growth Services revenues grew 7%* organically Software revenues impacted by release cycle CRM: fastest growing product CRM organic revenue growth 9%* Newer regions successfully adopted Sage model Recent acquisitions performing well High revenue growth in new territories acquired in 2003 and 2004 High revenue growth and high margins High earnings growth Combined with investments in products and services *At constant exchange rates Six months ended 31 March

15 Revenue growth Small business Increased licence sales from new customers Revenue mix Software Services Further adoption of additional support levels Small business 79m 17% of revenue 96m 21% of revenue Mid-market Light product release schedule in H1 affected licence sales Mid-market 83m 18% of revenue 198m 44% of revenue Improved support adoption and renewal Six months ended 31 March

16 Products Product development programme New analysis, integration and industry features New products to extend our market reach Premium products taking more of sales mix High growth from premium versions of existing products Technology Furthered partnerships with software components suppliers Six months ended 31 March

17 CRM Complete set of CRM product choices Sage CRM and Sage CRM.com adopted by resellers as a significant part of sales mix Leverage ACT! brand Strong growth in corporate sales and workgroups product Strengthen services businesses Strong support revenue growth across all CRM products Six months ended 31 March

18 Services Add value to customer support contracts Increased adoption of premium support Secure recurring revenue with improved customer service Sales focus: new sales, renewals Support / upgrade combined plans Incremental revenue from new services Range of payroll services including outsourcing Six months ended 31 March

19 Acquisitions Adonix, France Industry-specific solutions for real estate and manufacturing For more complex businesses, to automate most business processes Revenue breakdown Advanced solutions for the midmarket Industryspecific 27% Fixed Assets 28% ERP 45% Strong growth since acquisition Six months ended 31 March

20 Acquisitions Verus, US Merchant services provider Merchant Verus Card Processor Card Issuer credit / debit card and cheque services Growing market sustained growth in retail sales card payments: increasing proportion of sales Connects to Verus Card validity Credit availability Transaction risk Credit availability Funds from card issuer Debit customer account Link to Sage accounting software Strong growth since acquisition Revenue minus Verus fee Funds from Card Processor. Receives commission fee Funds from Card Issuer Raise funds Six months ended 31 March

21 Competitive achievements Customer base growth: +285,000 Loyal customers adopting locally-developed premium versions Strong adoption of advanced products Closer to industry communities, e.g. accountants Higher support retention Small business Midmarket New services CRM Merchant services linked to accounts Payroll services extended automation Corporate customers grew to over 40,000 Strong reseller partner adoption Six months ended 31 March

22 Outlook for the rest of 2006 Product releases Premium products for small businesses More industry-specific versions and integration H2 programme Service improvements More support services More processing services: payroll and merchant Acquisitions Further strong contributions from recent acquisitions Acquisition opportunities Six months ended 31 March

23 Supplementary information

24 Organic revenue growth 2005 H H1 % m m growth TOTAL REPORTED % impact of retranslation to H1 FY06 exchange rates TOTAL EXCLUDING FOREX less 2006 acquisitions (Adonix, Verus) (24.5) 18% less 2006 disposal (CPASoftware) less 2005 acquisitions (FLS, C2G, Simultan, Symfonia, Logic Control, Cogestib) less contribution of non-core products (2.6) (7.5) (14.2) (1.6) (37.2) (12.5) ORGANIC % Six months ended 31 March

25 IFRS adjustments by region m 2006 H1 UK Mainland Europe North America Rest of World TOTAL EBITA pre share-based payment Share-based payment (1.2) (1.0) (1.8) (0.2) (4.2) Earnings before interest, tax and net amortisation (EBITA) Amortisation of acquired intangible assets - (3.4) (1.2) - (4.6) Capitalisation of software development Amortisation of capitalised software development Net capitalisation of software development (0.2) (0.2) - (0.1) (0.1) (0.3) 0.3 Operating profit Six months ended 31 March

26 Accounting, Verticals and CRM 2006 H H1 m % of revenue m % of revenue Accounting % % Verticals % % CRM % % TOTAL % % Six months ended 31 March

27 Revenue mix by region UK* North America 30% 11% 17% 18% 38% 21% * Premium versions of small business accounts products reclassed as mid-market GROUP Software Small business 17% Mid-market 18% 35% 16% 49% Services 21% 44% 65% Mainland Europe 8% 24% 38% 62% Rest of World 16% 21% 15% 53% 14% 49% Six months ended 31 March

28 Support contracts thousands 1,600 1,400 1,200 1, Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Rest of World North America Mainland Europe UK Six months ended 31 March

29 UK Revenues Customers* Software Services Total 40.8m 58.7m 99.5m New customers Total customers 27, ,000 Profit Support contracts EBITA 36.4m New support contracts 3,000 EBITA margin 37% Total support contracts 324,000 * Excluding ACT! Six months ended 31 March

30 Mainland Europe Revenues Customers* Software Services 49.5m 103.3m New customers 70,000 Total 152.8m Total customers 1,373,000 Profit Support contracts EBITA 34.1m New support contracts 52,000 EBITA margin 22% Total support contracts 513,000 * Excluding ACT! Six months ended 31 March

31 North America Revenues Customers* Software Services 59.1m 111.2m New customers 171,000 Total 170.3m Total customers 2,642,000 Profit Support contracts EBITA 40.7m** New support contracts 84,000 EBITA margin 24%** Total support contracts 556,000 ** Excluding gain on sale of 2.7m * Excluding ACT! Six months ended 31 March

32 Rest of World Revenues Customers* Software Services 12.2m 21.1m New customers 17,000 Total 33.3m Total customers 269,000 Profit Support contracts EBITA 9.1m New support contracts 4,000 EBITA margin 27% Total support contracts 81,000 * Excluding ACT! Six months ended 31 March