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Results for the half-year ended 31 March 2005

Results for the half-year ended 31 March 2005. 10 May 2005. Financial highlights. Financial review. Revenue. Operating profit. +6%. +5%. é. é. Organic growth. Organic. Non-core. Acquisitions. £m at constant exchange rates. Revenue sources. Total revenue. Organic growth. Total 6%.

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Results for the half-year ended 31 March 2005

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  1. Results for the half-year ended 31 March 2005 10 May 2005

  2. Financial highlights

  3. Financial review

  4. Revenue Operating profit +6% +5% é é Organic growth Organic Non-core Acquisitions £m at constant exchange rates

  5. Revenue sources Total revenue Organic growth Total 6% 62% 62% Software 8% Services 6% 38% 38% At constant exchange rates

  6. Profitability Group operating profit margin 27% (2004: 27%) Organic 80% of operating profit Acquisitions and non-core 20% of operating profit High-margin sales to existing customers (82% of revenue) sustained underlying profitability Improved sales to existing customers Increased investment • Research & development • Infrastructure • Marketing Cost efficiencies in research and development, administration Operating margin -0.5pp to 28% Operating margin +3.9pp to 24%

  7. Operating profit Revenue UK • Organic revenue +5% • growth in both small business and mid-market • successful upgrade programmes • Margin 38% • high-margin sales to customer base • infrastructure investment: £2m £97m £91m 38%margin 40%margin

  8. Operating profit Revenue Mainland Europe • Organic revenue +6% • stimulus from payroll legislation • France (mid-market) the main growth driver • migration to more sophisticated software and support • Germany/Switzerland • growth despite challenging market • Acquisitions • Simultan (January 2005) • Symfonia (April 2005) • Organic operating margin 23% (2004: 24%) £101m £90m 24%margin 23%margin At constant exchange rates

  9. North AmericaOrganic revenue

  10. North Americacontinued • 7% organic revenue growth • premium support take-up • upgrade and add-on sales • new sales channels: sales consultants • Organic operating margin 23% (2004: 22%) • Acquisitions and non-core: £40m revenue and £11m operating profit • ACCPAC improved margins • FLS augments payroll services business £155m £129m 24%margin 23%margin Operatingprofit Revenue At constant exchange rates

  11. Operating profit Revenue Rest of World • South Africa & Australia • increasing support penetration • upgrade programmes • additional products for customer base, e.g. payroll • South-East Asia • profitable mid-market business • Margins improved • sales to existing customers • cost efficiencies • Developing small business divisions £28m £17m 19% margin 15% margin At constant exchange rates

  12. AcquisitionsFinancial trends * Comparable period includes pre-acquisition results. All at constant exchange rates.

  13. Cash flow and net debt

  14. International Financial Reporting Standards • IFRS reporting starts in 2006 H1 • Three principal impacts • expense share-based payments • capitalise and amortise different classes of intangible assets on acquisitions • capitalise and amortise certain development expenditure • Analyst teach-in, September 2005

  15. Business review

  16. Business portfolio • Consistent revenue mix • Growth in all segments • Growth in all regions • Growth in all product groups • No competitor has this breadth

  17. Customer needs Supporting business processes

  18. Decentralised structure Local products Accounting and business rules vary by country Locally-based R & D ensures rapid response Local support Accounting queries require local knowledge Support feedback drives R & D Local marketing Local brands dominate volume market Local accountants and customers provide leads

  19. Adapting our products to customer needs

  20. Meeting local business needs: UKAutomating Payroll

  21. Customer Migration Software • Large base of businesses outgrowing original software • Migration programmes generated 45,000 sales • Continued investment in this activity Support • Extra support on existing solutions: 272,000 premium contracts • Customers moving to new solutions with new support • Higher support penetration in mid-market solutions Total accounting customers 4,500,000 860,000 > 25 employees 660,000 Not using mid-market product Total support contracts 1,300,000 Premium contracts 272,000

  22. Market environment Software • Assets: local model, customer base, resellers • Addressing market in new sales channels • Global vendors have partial coverage • Outgrowing local vendors Competitor SAP CORPORATE MID-MARKET Microsoft LOCAL VENDORS SMALL BUSINESS Intuit Support • SMEs need IT partner • Market-leading service • Service demands becoming more sophisticated MID-MARKET SMALL BUSINESS

  23. Review and Outlook

  24. Supplementary information

  25. Organic revenue growth

  26. Revenue sources

  27. Revenue mix

  28. Accounting, Verticals and CRM

  29. Support contracts thousands Rest of World North America Mainland Europe UK

  30. Return on capital employed Post-tax operating profit / Goodwill * H1 2005 figures annualised

  31. UK * Excluding CRM

  32. France

  33. Germany / Switzerland

  34. Spain

  35. North AmericaSmall business * Excluding CRM

  36. North AmericaMid-market * Excluding CRM

  37. Rest of World * Excluding CRM

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