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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sage Group Plc | LSE:SGE | London | Ordinary Share | GB00B8C3BL03 | ORD 1 4/77P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 12.50 | 1.08% | 1,173.00 | 1,174.00 | 1,175.00 | 1,177.50 | 1,163.00 | 1,168.00 | 2,322,481 | 16:35:29 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Prepackaged Software | 2.18B | 211M | 0.2059 | 57.02 | 12.03B |
From Apr 2019 to Apr 2024
TIDMSGE
RNS Number : 7592U
Sage Group PLC
02 April 2019
The Sage Group plc.
2 April 2019
Update and simplification of financial reporting and disclosure
The Sage Group plc. ("Sage") today announces changes to the format of its financial reporting and disclosure in FY19 to simplify and improve clarity of reporting. The amended format will be introduced at the H119 results and subsequently used for future Sage financial reporting.
Key amendments to the reporting disclosure are as follows:
1. Update to portfolio revenue reporting; 2. Amendment to KPIs; and 3. Simplification of the financial reporting structure and layout.
This announcement includes an explanation of these changes as well as financial tables which are either new or have substantively changed from Sage's previous reporting format. Where previously disclosed, historical information has been included in these tables for illustrative purposes.
This announcement contains no new financial information, no historical numbers have been restated and there is no change to revenue recognition definitions on an organic, underlying or statutory basis.
1. Update to portfolio reporting
The portfolio view of organic total revenue was first introduced as part of Sage's FY18 results, breaking down our product portfolio into the following categories:
Portfolio View Cloud native Cloud connected Sage Business Cloud Products with potential to migrate Future Sage Business Cloud Opportunity Other Organic total revenue
We will continue to provide this portfolio disclosure for organic total revenue and from H119 we will also add organic recurring revenue to this portfolio view.
Over time we expect the proportion of organic total revenue and organic recurring revenue within Sage Business Cloud categories to increase, driven by:
- Acquisition of new customers and reactivation of off-plan customers onto cloud native and cloud connected solutions;
- Migration of customers from their existing Sage product to a cloud connected or cloud native solution. Revenue from these customers is reported in Sage Business Cloud revenues from the point of migration onwards; and
- Migration of a product to Sage Business Cloud as the product develops cloud functionality. Upon becoming a cloud or cloud connected solution, revenue from existing subscription customers of that solution is reported as Sage Business Cloud revenue from the start of the period in which the product first migrates to Sage Business Cloud.
Where applicable, our reporting will include a quantification of Sage Business Cloud revenue from customers using products that were not part of the Sage Business Cloud in the prior reporting period, to allow analysis of growth rates for a comparable set of products.
Our strategic focus and therefore the important metrics to consider in this regard are: recurring revenue growth of the Future Sage Business Cloud Opportunity; recurring revenue growth of the business as a whole; and Sage Business Cloud Penetration, which is defined below.
2. Amendments to KPIs
We are adding a number of KPIs to provide enhanced insight into our strategic and financial progress:
Additions
- Sage Business Cloud Penetration: Defined as organic recurring revenue from the Sage Business Cloud as a proportion of the organic recurring revenue of the Future Sage Business Cloud Opportunity. This metric measures progress in the transition of the business to the Sage Business Cloud.
- Total annualised recurring revenue (ARR) growth: ARR is defined as the normalised reported recurring revenue in the last month of the reporting period, adjusted consistently period to period, multiplied by twelve. It represents the annualised value of the recurring revenue base that is expected to be carried into future periods, and its growth is a forward looking indicator of reported recurring revenue growth. Going forward, Sage will disclose total ARR as opposed to Sage Business Cloud ARR, which was a subset of the total number.
As the strategy evolves, a number of KPIs previously disclosed are no longer relevant and have been superseded by more appropriate KPIs:
Superseded KPIs
- Free cash flow as a proportion of revenue: Cash conversion will remain a core element of Sage's strategic focus, and free cash flow in absolute terms will continue to be disclosed. However, to drive simplicity we will focus on Underlying Cash Conversion as the primary reported cashflow metric, removing free cash flow as a proportion of revenue;
- Organic Operating Profit: To drive clarity and simplification, from FY20 onwards reporting will be focused on Statutory and Underlying Operating Profit. As guidance in FY19 was provided on the basis of Organic Operating Profit, it will remain in FY19 reporting;
- G&A as proportion of revenue: Driving efficient back-office operations remains an important objective, but our focus is on delivering efficient growth across the entire business - measured by our recurring revenue growth and overall operating profit margins; and
- Adjusted EPS: For similar reasons to Organic Operating Profit, Sage will no longer report Adjusted EPS. Statutory EPS and Underlying EPS will continue to be disclosed.
3. Simplification of financial reporting structure and layout
Presented below are the key financial tables in the revised reporting format to be implemented in H119. The layout of these tables includes all relevant KPIs. Therefore, the KPI table, formerly disclosed as an appendix to the financial reporting press release, will be removed from H119 onwards.
All information presented below is as per data reported at the relevant reporting date. None of the financial information presented below has been restated and we have disclosed only information that has previously been published or is easily calculated from previously published information.
Historical data which has not been disclosed in this announcement is signposted in the tables below as follows:
- TBD (to be disclosed) refers to data that has not been disclosed historically but will be disclosed in future periods; and
- N/A (not applicable) refers to data that has not been disclosed historically and will not be disclosed in future periods.
Tables that have no substantive changes have not been re-presented and will be disclosed on a consistent basis with previous announcements.
Summary table
Hot Features
Premium
Alternative Performance Measures (APMs)(1) FY18 FY17 Change
-------------------------------------------- ---------- ---------- --------
Organic Financial APMs
-------------------------------------------- ---------- ---------- --------
Organic Total Revenue(2) GBP1,819m GBP1,703m 6.8%
Organic Recurring Revenue GBP1,441m GBP1,352m 6.7%
Organic Operating Profit GBP505m GBP475m 6.3%
% Organic Operating Profit Margin 27.8% 28.0% (20bps)
-------------------------------------------- ---------- ---------- --------
Underlying Financial APMs
-------------------------------------------- ---------- ---------- --------
Underlying Total Revenue GBP1,857m GBP1,795m 3.5%
Underlying Recurring Revenue GBP1,448m GBP1,305m 11.0%
Underlying Operating Profit GBP504m GBP490m 2.9%
% Underlying Operating Profit Margin 27.2% 27.3% (10bps)
Non-Recurring Charge GBP10m GBP70m (85.7%)
Underlying Basic EPS 32.51 31.45 3.4%
-------------------------------------------- ---------- ---------- --------
Strategic APMs
-------------------------------------------- ---------- ---------- --------
Renewal Rate by Value 101% N/A N/A
% Subscription Penetration 46% 39% 700bps
% Sage Business Cloud Penetration TBD N/A N/A
Underlying Cash Conversion 96% 95% 100bps
-------------------------------------------- ---------- ---------- --------
Statutory Measures FY18 FY17 Change
-------------------------------------------- ---------- ---------- --------
Revenue GBP1,846m GBP1,715m 7.6%
Operating Profit GBP427m GBP348m 22.7%
% Operating Profit Margin 23% 20% 300bps
Basic EPS (p) 27.21 27.80 (2.1%)
Dividend Per Share (p) 16.50 15.42 7.0%
---------- ---------- --------
(1) The appendix will provide guidance on the usage and definitions of the Alternative Performance Measures
(2) The purpose of Organic measures is to allow management and investors to understand the like-for-like performance of the continuing business. The Organic Operating Profit reporting does not fulfil this purpose as it is provided for the current period only. A like for like measure would require in some instances including operating costs of acquisitions prior to the acquisition date, where these may be unrepresentative of the cost structure under our ownership.
Portfolio tables(3)
Portfolio view % of
FY18 Revenue Total
Cloud native GBP144m 8%
Cloud connected(4) GBP233m 13%
------------------------------------------- -------------- -------
Sage Business Cloud GBP377m 21%
Products with potential to migrate GBP1,087m 60%
------------------------------------------- -------------- -------
Future Sage Business Cloud Opportunity(5) GBP1,465m 81%
Growth, % 8% -
Other(6) GBP354m 19%
------------------------------------------- -------------- -------
Organic Total Revenue GBP1,819m 100%
Growth, % 7% -
------------------------------------------- -------------- -------
3 As disclosed above, a column for recurring revenue will be added to this table from H1 19 onwards.
4 Revenue from subscription customers using products that are part of Sage's strategic future product portfolio, where that product is based on an originally on-premise offering for which a substantial part of the customer value proposition is now linked to functionality delivered in or through the cloud.
5 Revenue from customers using products that are currently part of - or that management currently believe have a clear pathway to - Sage Business Cloud.
6 Revenue from customers using products for which management does not currently envisage a path to Sage Business Cloud, either because the product addresses a segment outside Sage's core focus, or due to the complexity and expense involved in a migration.
Financial Results
Financial Results Statutory Underlying
----------------------------------
FY18 FY17 % Change FY18 FY17 % Change
---------- ---------- --------- ---------- ----------- ---------
Northern Europe GBP380m GBP368m 3.3% GBP381m GBP368m 3.4%
Central & Southern
Europe GBP625m GBP580m 7.7% GBP625m GBP588m 6.3%
North America GBP574m GBP492m 16.7% GBP584m GBP582m 0.2%
International GBP267m GBP275m (3.0%) GBP267m GBP257m 3.9%
---------- ---------- --------- ---------- ----------- ---------
Group Revenue GBP1,846m GBP1,715m 7.6% GBP1,857m GBP1,795m 3.4%
Operating Profit GBP427m GBP348m 22.7% GBP504m GBP490m 2.9%
% Operating Profit
Margin 23.1% 20.3% 280bps 27.2% 27.3% (10bps)
Profit Before Tax GBP398m GBP342m 16.4% GBP475m GBP442m(7) 7.5%
Net Profit GBP295m GBP257m 14.8% GBP352m GBP345m(7) 2.0%
Basic EPS 27.21p 27.80p (2.1%) 32.51p 31.45p 3.4%
---------- ---------- --------- ---------- ----------- ---------
7 As reported
Underlying & Organic Reconciliations to Statutory
The format and disclosure of this table remain consistent with prior disclosure on organic to statutory reconciliations and is therefore not replicated below.
Organic revenue overview
Organic Revenue Mix FY18 FY17 % Change
------------------------ -----------------------
GBPm % of Total GBPm % of Total
--------------------------- ----------- ----------- ---------- ----------- ---------
Software Subscription
Revenue GBP839m 46% GBP670m 39% 25.2%
Other Recurring Revenue GBP602m 33% GBP681m 40% (11.6%)
----------- ----------- ---------- ----------- ---------
Organic Recurring Revenue GBP1,441m 79% GBP1,352m 79% 6.7%
SSRS Revenue GBP323m 18% GBP300m 18% 7.6%
Processing Revenue GBP55m 3% GBP51m 3% 6.2%
----------- ----------- ---------- ----------- ---------
Organic Total Revenue GBP1,819m 100% GBP1,703m 100% 6.8%
----------- ----------- ---------- ----------- ---------
Regional reporting tables
Northern Europe
Organic Revenue by Category FY18 FY17 Change
----------------------------------- -------- -------- -------
Organic Total Revenue GBP381m GBP373m 2.5%
Organic Recurring Revenue GBP298m GBP294m 1.6%
% Subscription Penetration 47% 38% 900bps
% Sage Business Cloud Penetration TBD N/A N/A
-------- -------- -------
Central & Southern Europe
Organic Revenue by Category FY18 FY17 Change
----------------------------------- -------- -------- -------
Organic Total Revenue GBP625m GBP587m 6.5%
Organic Recurring Revenue GBP475m GBP455m 4.4%
-------- -------- -------
% Subscription Penetration 39% 36% 300bps
% Sage Business Cloud Penetration TBD N/A N/A
-------- -------- -------
Organic Total Revenue FY18 FY17 Change
-------- -------- -------
France TBD N/A 3%
Central Europe TBD N/A 10%
Iberia TBD N/A 9%
-------- -------- -------
North America
Organic Revenue by Category FY18 FY17 Change
----------------------------------- -------- -------- --------
Organic Total Revenue GBP546m GBP489m 11.6%
Organic Recurring Revenue GBP471m GBP417m 12.9%
-------- -------- --------
% Subscription Penetration 48% 35% 1300bps
% Sage Business Cloud Penetration TBD N/A N/A
-------- -------- --------
Organic Total Revenue FY18 FY17 Change
-------- -------- --------
US TBD N/A 8%
Canada TBD N/A 12%
-------- -------- --------
International
Organic Revenue by Category FY18 FY17 Change
----------------------------------- -------- -------- -------
Organic Total Revenue GBP267m GBP254m 4.7%
Organic Recurring Revenue GBP197m GBP186m 6.2%
-------- -------- -------
% Subscription Penetration 59% 56% 300bps
% Sage Business Cloud Penetration TBD N/A N/A
-------- -------- -------
Organic Total Revenue FY18 FY17 Change
-------- -------- -------
Australia & Asia TBD N/A 6%
Africa & Middle east TBD N/A 5%
Latin America TBD N/A 3%
-------- -------- -------
Operating profit
FY18 FY17 % Margin
--------- ---------
Underlying Operating
Profit GBP504m GBP490m 27.3%
Depreciation & amortisation GBP33m GBP33m -
Share based payments GBP5m GBP6m -
--------- --------- ---------
EBITDA GBP542m GBP529m 29.2%
--------- --------- ---------
Earnings per share
FY18 FY17 % Change
------- --------
Statutory Basic EPS 27.21p 27.80p (2.1%)
Recurring and non-recurring
items 5.30p 4.10p -
Impact of Foreign Exchange - (0.45p) -
----------------------------- ------- -------- ---------
Underlying Basic EPS 32.51p 31.45p 3.4%
----------------------------- ------- -------- ---------
Cash Flow
The format and disclosure of this table remain consistent with prior disclosure and is therefore not replicated below.
Debt
FY18 FY17 (as reported)
--------
Net Debt GBP668m GBP813m
EBITDA (Last Twelve Months) GBP542m GBP505m
-------- -------------------
Net Debt/EBITDA Ratio 1.2x 1.6x
-------- -------------------
Foreign exchange
The format and disclosure of this table remain consistent with prior disclosure and is therefore not replicated below.
For enquiries:
The Sage Group plc
+44 (0) 191 294 3457
Lauren Wholley, Investor Relations
About Sage
Sage is the global market leader for technology that helps businesses of all sizes manage everything from money to people - whether they're a start-up, scale-up or enterprise. We do this through Sage Business Cloud - the one and only business management solution that customers will ever need, comprising Accounting, Financials, Sage Intacct, Enterprise Management, People & Payroll and Payments & Banking.
ENDS
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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April 02, 2019 03:30 ET (07:30 GMT)
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