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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 l.jpg

Results for the year ended 30 September 2006


Agenda l.jpg
Agenda

Overview of the year

Financial and regional review

Business review and outlook


Highlights of the year l.jpg
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%



Slide5 l.jpg

5-year growth in adjusted earnings per share

+20%

+13%

+21%

+11%

+11%

EPS 2002-2004 under UK GAAP

EPS 2005-2006 under IFRS




Organic revenue growth l.jpg
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


Revenue sources l.jpg
Revenue sources

Organic revenue

Total revenue

+7%

Services

+8%

65%

62%

Software

+5%

38%

35%

£m at constant exchange rates


Growth in combined software support services revenue l.jpg

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


Earnings growth l.jpg
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


Acquisitions l.jpg
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




Global presence in 19 countries l.jpg
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



Slide17 l.jpg
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


Mainland europe l.jpg
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


North america l.jpg
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


Rest of world l.jpg
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



What is helping us grow l.jpg
What is helping us grow?

Simplicity

Integrity

Agility

Trust

Innovation


Slide23 l.jpg

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


Global crm l.jpg
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%


Technology initiatives l.jpg
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


Acquisition strategy l.jpg
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



Industry specific market presence l.jpg

Health care

Food distribution

Transport

Manufacturing

Real estate/construction

Accountancy practices

Not-for-profit

Retail

Industry-specific market presence


Sage healthcare division shd formerly emdeon l.jpg
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


Revenue mix l.jpg
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


Verus and protx merchant services l.jpg
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)


Objectives and outlook l.jpg
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





Revenue mix by region l.jpg
Revenue mix by region

* Premium versions of small business accounts products reclassed as mid-market



Slide38 l.jpg
UK

* Excluding ACT!


Mainland europe39 l.jpg
Mainland Europe

* Excluding ACT!


North america40 l.jpg
North America

* Excluding ACT!

** Excluding gain on sale of £2.7m


Rest of world41 l.jpg
Rest of World

* Excluding ACT!


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