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Results for the year ended 30 September 2006

Results for the year ended 30 September 2006. Agenda. Overview of the year Financial and regional review Business review and outlook . Highlights of the year. 2006 strong year, in both existing business and recently acquired businesses Strong organic growth of 7%, recovered in H2 to 8%

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Results for the year ended 30 September 2006

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  1. Results for the year ended 30 September 2006

  2. Agenda Overview of the year Financial and regional review Business review and outlook

  3. Highlights of the year • 2006 strong year, in both existing business and recently acquired businesses • Strong organic growth of 7%, recovered in H2 to 8% • Strong performance by established product lines • Line 50 (UK) up 13% • Line 100 (France) up 11% • MAS 500 (US) up 17% • Newer products and territories also contributing strongly • South Africa and Australasia up 17% • Simply Accounting (Canada) up 15% • Spain up 10%

  4. Financial highlights

  5. 5-year growth in adjusted earnings per share +20% +13% +21% +11% +11% EPS 2002-2004 under UK GAAP EPS 2005-2006 under IFRS

  6. Significant year for acquisitions

  7. Financial review

  8. Organic revenue growth • Improved growth rate over last 2 years • Excludes strong contribution from 2005 and 2006 acquisitions • Acquisitions consolidated into organic growth after full year contribution Acquisitions / disposals Organic Non-core +7% +6% £m at constant exchange rates

  9. Revenue sources Organic revenue Total revenue +7% Services +8% 65% 62% Software +5% 38% 35% £m at constant exchange rates

  10. Organic revenue growth of combined contracts = 12% Growth in combined software/support services revenue 2005 2006 Combined support contract revenue 53% Combined support contract revenue 51% Standard support contract revenue 47% Standard support contract revenue 49% *At constant exchange rates

  11. Earnings growth • EBITA margin 27% (2005: 27%*) • EBITA is the most accurate measure • Amortisation and capitalisation effects excluded • Revenue growth and product and service investments both drive margin *At constant exchange rates

  12. Acquisitions Adonix Emdeon Verus +23% +24% é £41m é £29m £33m £23m £9m France November 2005 Enterprise value £75m EBITA margin 18%* US February 2006 Enterprise value £171m EBITA margin 39%* US September 2006 Enterprise value £306m EBITA margin 11%* *post acquisition £m at constant exchange rates Revenue

  13. Cash flow and net debt

  14. Regional review

  15. Global presence in 19 countries GREENLAND SWEDEN ICELAND RUSSIAN FEDERATION FINLAND CANADA NORWAY ESTONIA LATVIA GERMANY UK & IRELAND DENMARK LITHUANIA BELARUS POLAND NETHERLANDS BELGIUM KAZAKHSTAN FRANCE MONGOLIA AUSTRIA SWITZERLAND US UZBEKISTAN BULGARIA SPAIN GEORGIA KYRGYZSTAN NORTHKOREA GREECE TURKEY TURKMENISTAN TAHKISTAN ITALY PORTUGAL CHINA SOUTHKOREA JAPAN SYRIA AFGHANISTAN IRAN IRAQ TUNISIA MOROCCO PAKISTAN ALGERIA NEPAL LIBYA EGYPT WESTERN SAHARA UAE SAUDIARABIA MEXICO TAIWAN INDIA OMAN VIETNAM MYANMAR CUBA MAURITANIA LAOS MALI NIGER CHAD THAILAND SUDAN YEMEN GUATEMALA HONDURAS SENEGAL PHILIPPINES NICARAGUA CAMBODIA BURKINA GUINEA NIGERIA COSTA RICA ETHIOPIA VENEZUELA GHANA PANAMA SRILANKA COTED’IVOIRE CENTRALAFRICAN REPUBLIC LIBERIA GUYANA MALAYSIA CAMEROON FRENCHGUIANA COLOMBIA SURINAME SOMALIA UGANDA KENYA CONGO GABON ECUADOR DEMOCRATICREPUBLIC OFCONGO SINGAPORE TANZANIA PAPUANEW GUINEA INDONESIA BRAZIL PERU ANGOLA ZAMBIA BOLIVIA MOZAMBIQUE MADAGASCAR ZIMBABWE NAMIBIA BOTSWANA PARAGUAY AUSTRALIA SOUTHAFRICA URUGUAY CHILE ARGENTINA NEWZEALAND • 23,000 business partners and certified consultants promoting our products • 40,000 professional advisors recommending Sage product

  16. Organic revenue H1 vs H2

  17. UK • Organic revenue +7% • strong growth in established products • Line 50 up 13% • introduction of new products • Line 1000, Start-up • focus on integrated product suites • successful combination of software/support contracts • EBITA margin 37% (2005: 37%) £205m £193m 37%margin 37%margin Revenue EBITA

  18. Mainland Europe • Organic revenue +5% • Spain +10% • France +4% • Germany/Switzerland +2% • Poland +15% (y-o-y) • Strong growth in CRM and industry-specific products • EBITA margin 22% (2005: 22%) £300m £204m 22%margin 22%margin Revenue EBITA At constant exchange rates

  19. North America • Organic revenue +6% • recovery in H2 • Small Business Division +10% • strong contribution from all products • Peachtree, Simply, ACT! had a particularly strong year • Mid-Market Division +4% • good performance from MAS 500 and ACCPAC products • EBITA margin 24% (2005: 24%) • excluding one-off gain on disposal £362m £312m 24%margin 24%margin Revenue EBITA excluding disposal profit At constant exchange rates

  20. Rest of World • Organic revenue +17% • strong performances from South African accounting and payroll products • Australia core products again strong • growing presence in new markets • EBITA margin 27% (2005: 24%) • growth in organic revenue improved margin £69m £58m 24%margin 27%margin Revenue EBITA At constant exchange rates

  21. Business review and outlook

  22. What is helping us grow? Simplicity Integrity Agility Trust Innovation

  23. Growing customer base • 5.2 million customers • 553,000 businesses added this year • SME remains our focus • Basis of our strong market position • Dynamic source of migrations and upgrades • Recurring revenues through service support contracts Results from six months ended 31 March 2006

  24. Global CRM • Organic growth +8% • reorganised on a global basis end 2005 • Comprehensive range of products • ACT! – entry level • Sage CRM and SageCRM.com hosted version – mid-market • SalesLogix – industry-specific application 5% 5% 19% 71%

  25. Technology initiatives • We remain committed to developing local products for local markets • Standardise on technologies where appropriate • Offer choice where appropriate • MySQL partnership announced October 2006

  26. Acquisition strategy • Clear and consistent acquisition strategy • Based on our core competency: knowledge and experience of the SME market • Three principles to acquisition strategy: • Broaden our product lines • Enter new geographic regions • Add new industry-specific applications to our product lines • More than accounting software provider: 40% of revenues come from other products like CRM, industry-specific and payroll

  27. Changing revenue mix of our products 2005 2006

  28. Health care Food distribution Transport Manufacturing Real estate/construction Accountancy practices Not-for-profit Retail Industry-specific market presence

  29. Sage Healthcare Division (SHD, formerly Emdeon) • Doctors’ practices in the US are classic SMEs • Time and resource constrained • Require IT support to better manage business opportunities • SHD concentrates on the small practices: 1-10 doctors • 96% of practices in this market segment • 90% of customers on combined software/support contracts • Parallels with Sage’s practice management solutions for accountancy practices • Application of Sage’s expertise in rationalising cost base • Opportunity to cross-sell back-office products in future

  30. Revenue mix • Software • Practice Management • Electronic Health Records • Support • adoption and renewal rates > 90% • Network services: information and transaction tools • eligibility assessment, insurance claim tracking, patient bill statements • used by 64% of EPS customers

  31. Verus and Protx: Merchant Services • Provision of payment services tailored to needs of SMEs • Cost effective • Easy implementation • Designed to help SMEs manage their businesses better • Front office application with tie-in to both front and back office functions • CRM, POS, other payment services • Stock control, invoicing, accounting • Both growing strongly (y-on-y)

  32. Objectives and outlook • Build on current strong position in the SME market to sustain organic growth • Maintain strong competitive positions in all markets • Improve margins and growth at Sage Healthcare Division • Integration of other 2006 acquisitions • Expand merchant services business • Initial implementation of MySQL • Continue to pursue acquisition opportunities in the SME market

  33. Supplementary information

  34. Organic revenue growth

  35. Operating profit by region

  36. Revenue mix by region * Premium versions of small business accounts products reclassed as mid-market

  37. Support contracts thousands

  38. UK * Excluding ACT!

  39. Mainland Europe * Excluding ACT!

  40. North America * Excluding ACT! ** Excluding gain on sale of £2.7m

  41. Rest of World * Excluding ACT!

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