results for the half year ended 31 march 2005
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Results for the half-year ended 31 March 2005 - PowerPoint PPT Presentation


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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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organic growth

Revenue

Operating profit

+6%

+5%

é

é

Organic growth

Organic

Non-core

Acquisitions

£m at constant exchange rates

revenue sources
Revenue sources

Total revenue

Organic growth

Total

6%

62%

62%

Software

8%

Services

6%

38%

38%

At constant exchange rates

profitability
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%

slide7

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

mainland europe

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

north america continued
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

rest of world

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

acquisitions financial trends
AcquisitionsFinancial trends

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

international financial reporting standards
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
business portfolio
Business portfolio
  • Consistent revenue mix
  • Growth in all segments
  • Growth in all regions
  • Growth in all product groups
  • No competitor has this breadth
decentralised structure
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

slide21

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

slide22

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

support contracts
Support contracts

thousands

Rest of World

North America

Mainland Europe

UK

return on capital employed
Return on capital employed

Post-tax operating profit / Goodwill

* H1 2005 figures annualised

slide32

UK

* Excluding CRM

slide38

Rest of World

* Excluding CRM

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