Focus and innovation delivering results

Focus and innovation delivering results

The Sage Group plc

Results for the half year ended 31 March 2013

2

Overview Guy Berruyer Chief Executive Officer

Financial highlights A good performance

3 At constant exchange rates

Organic

revenue

growth of

3%

6% increase

in underlying

PBT

Proposed

£200m

special

dividend

Delivery on

1x net debt to

EBITDA

target

145,000 new

customers

74% of

contracts are

premium

Strategic highlights

Delivering on our drivers of growth

Focus on growth opportunities and disposals of

non-core products

Winning new small businesses with Sage One

Launching cloud versions of major ERP products

Continued international success with Sage ERP X3

Leveraging cross-sell opportunity of integrated payments

Early success with subscription pricing options

4

5

Financial Overview Paul Harrison Chief Financial Officer

Revenue sources Strong growth in recurring revenues

6

Total revenue

£446m £495m

£220m

£213m

H112 H113

SSRS

RecurringRevenue

3%

Organic

revenue

growth

6%

Organic

recurring

revenue

growth

3%

Organic SSRS*

revenue

contraction

33%

67%

30%

70%

*Software and software-related services

At constant exchange rates

Revenue trends Shift to recurring revenue continues

7

5%

-4%

2%

6%

-5%

2%

6%

-3%

3%

-6%

-4%

-2%

0%

2%

4%

6%

8%

Recurring revenue SSRS Total

H112 FY12 H113


Regional review Robust performance in variable market conditions

8

Europe A good performance in difficult markets

9

Regional highlights

Total revenue £403.2m (H1 2012: £396.5m), organic recurring revenue growth of 5% and organic SSRS

contraction of 5%

Good growth from the UKI, driven by changes to payroll filing legislation

Weakness in France continued, particularly at mid-market level

Germany contraction as a result of particularly strong prior period comparator

Rate of contraction in Spain decreased

Sage Pay continued to grow strongly

34%

32%

13%

10%

3% 8% France

UK

Spain

Germany

Sage Pay

Others

Revenue mix

H113 H112 FY12

France -1% 1% Flat

UK & Ireland 5% 4% 4%

Spain -4% -8% -7%

Germany -1% 7% 5%

Sage Pay 32% 23% 25%

Europe 2% 1% 1%

Organic revenue growth by country


Americas Continuing to build momentum

10

Regional highlights

Total revenue £230.3m (H1 2012: £200.0m),

organic recurring revenue growth of 7%

and organic SSRS contraction of 4%

Strong demand for premium support

Good traction for Sage ERP X3

18% growth in integrated payments cross-

sell revenue

Brazil performed well despite slowdown in

economy

• Revenue of £24.6m

• EBITA of £5.9m

H113 H112 FY12

4% 1% 2%

Organic revenue growth

Proportion of contracts

which are premium in North America

51%

45%

50%

0%

10%

20%

30%

40%

50%

60%

FY12 Non-coredisposals

FY12restated

H113


AAMEA African markets continued to drive growth

11

Regional highlights

Total revenue £74.6m (H1 2012: £69.2m), organic recurring revenue growth of

12% and organic SSRS growth of 4%

South Africa and African markets continued to show good growth

Strong performance from Sage ERP X3

Slowdown in Australia due to sluggish economy

59% 30%

11%

South Africa

Australia

Asia

Revenue mix

H113 H112 FY12

South Africa 14% 15% 16%

Australia 2% 8% 7%

Asia 1% 11% 4%

AAMEA 9% 12% 12%

Organic revenue growth by country/region


Profitability Margin discipline continues

Margin discipline across all

regions

Supports reinvestment in

growth

12

28.2%

24.8%

25.7%

26.9%

28.3%

24.7%

26.8%

27.0%

Europe Americas AAMEA Group

H112 H113


Cash flow Strong cash generation continues

£m £m £m

EBITA 190.9 Cash flow from

operations

208.9 Net debt

1 October 2012

(161.5)

Acquisition costs (0.1) Interest (5.3) Free cash flow 158.7

Dep’n/amort’n/profit on

disposal

15.9

Tax (41.8) Acquisitions (9.3)

Share-based payments 2.8 Net capex (3.1) Disposals 56.0

Working capital change (54.4) Dividends (79.3)

Deferred income change 50.6 Share buyback (179.0)

Exchange

movement/other

3.2

Exchange movement (14.1)

Other (2.3)

Cash flow from

operations

208.9 Free cash flow 158.7 Net debt

31 March 2013

(230.8)

Cash generation 112%^ Interest cover 29x FCF Dividend cover 3.6x

13 ^Cash conversion is cash flows from operating activities, adjusted for cash acquisition-related items and cash exceptional items of £4.0m, divided by EBITA.

Capital structure Meeting our leverage target

14

What we are doing

Special dividend of £200m

• EGM in June

Delivers on our through cycle

gearing target of 1x net debt

to EBITDA

Almost £1 billion returned to

shareholders since October

2011

Delivers on our commitment

to shareholders

£500m

£260m

£200m

Share buyback Ordinary dividends Special dividend

£960m

Capital structure Our rigorous approach to capital allocation remains

15

Increasing

EPS

Strong

cash flow

Growth

Increasing

dividend

Returns of

surplus

capital

+

+

Financial KPIs Measuring success

KPI

Measure

H113

H112

Financial performance

Growth Organic# revenue growth 3% 2%

Margin EBITA†/Revenue 27% 27%

Profitability Underlying* EPS growth 15% 2%

Cash generation Net cash from operations/EBITA† 112%^ 115%^

Financial strength

Balance sheet Net debt/EBITDA against stated target 0.6:1 n/a

Interest cover 29x 33x

16

KPI

Measure

H113

Focusing our business

Resource optimisation R&D %: split by ‘Invest’, ‘Harvest’ and ‘Sunset’ 41:47:12

Sales & Marketing %: split by ‘Invest’, ‘Harvest’ and ‘Sunset’ 47:46:07

*Underlying figures exclude amortisation of acquired intangible assets, acquisition-related items, imputed interest and exceptional items, with all adjustments net of tax. The impact of foreign exchange is neutralised in prior period

figures. #Organic revenue excludes the contributions of current and prior period acquisitions, disposals and assets held for sale. The impact of foreign exchange is neutralised in prior period figures. †EBITA is defined as earnings

before interest, tax, amortisation of acquired intangible assets, acquisition-related items and exceptional items. The impact of foreign exchange is neutralised in prior period figures. ^Cash conversion is cash flows from operating

activities, adjusted for cash acquisition-related items and cash exceptional items of £4.0m, divided by EBITA.

Our goal Accelerating growth

17

Cornerstones of our growth strategy

Focusing our business Enabling growth through focus

18

What we are doing:

Optimising the portfolio

Reallocating investment

Non-core disposals

Disposal of non-integrated CRM products Sage ACT! and Sage

SalesLogix

Disposal of five vertical products

• C&I, ATL and Automotive in France, Aytos in Spain, Sage Nonprofit

Solutions in North America

Disposed of UK Construction after the period end

Brazil

Completed acquisition of EBS

Focusing our business Enabling growth through focus

19

What we are doing:

Optimising the portfolio



Core products categorised as Invest/Harvest/Sunset

Re-allocation of resources to Invest products

• Invest R&D expenditure: 41% (FY12: 35%)

• Invest Sales & Marketing expenditure: 47% (FY12: 42%)

Leveraging the centralisation of R&D in NA, the UK and France

Our goal Accelerating growth

20

Cornerstones of our growth strategy

Capturing the technology opportunity Cloud solution for each core segment

21

Sage One

Start-up and

small businesses

1 – 20

employees

Hybrid cloud

Small and medium

sized businesses

10 – 200

employees

Sage ERP X3

Mid-market

businesses

100 – 500

employees

Capturing the technology opportunity Technology Advisory Group

22

Rajat Taneja

• Chair of TAG

• CTO of Electronic Arts

• Formerly of Microsoft

Alex Gounares

• CEO of Concurix Corp.

• Formerly of AOL

• Advisor to Bill Gates at Microsoft

Pierre Samec

• CTO of TriZetto

• Formerly CTO of Expedia

• Strong background in BI

External, independent industry leaders and internal Sage experts

Capturing the technology opportunity Sage One

The model is scaling well

23

Good momentum with adoption

Four-fold increase in Sage One

subscriptions to 11,500 and clear

momentum in UKI

Increasing the addressable market

• Accelerating launches into Germany

and Spain, France to follow

• Features added in North America

• Launch of Sage One Extra in UKI

later in the year

22,500 paying subscriptions for Sage

SaaS solutions in this segment

Sage One

Start-up and

small businesses

1 – 20

employees

Capturing the technology opportunity Hybrid cloud

Bringing our main products for the SMB segment to the cloud

24

On track for commercial launch

Upcoming launch of cloud versions

of Sage 200 and Sage Murano

Development work enables:

• accelerated launch of new ERP

solutions in France, Germany

and North America

• Integration with mobile devices

Hybrid cloud

Small and medium

sized businesses

10 – 200

employees

Compelling offering for the mid-market customer

25

Capturing the technology opportunity Sage ERP X3

Successful product on a global scale

Improved performance during the

period

• 8% organic revenue growth with

26% organic revenue growth

outside of France

• 47% of global revenue now

generated outside of France

Internationalisation has been a key

part of success

Sage ERP X3

Mid-market

businesses

100 – 500

employees


Capturing the technology opportunity Sage ERP X3

Compelling offering for the mid-market customer

20%

30%

40%

50%

FY09 FY10 FY11 FY12 H113

% of X3 revenue outside of France

% revenue outside France

Successful product on a global scale

Improved performance during the

period

• 8% organic revenue growth with

26% organic revenue growth

outside of France

• 47% of global revenue now

generated outside of France

Internationalisation has been a key

part of success


Integration with core accounting application is our USP

27

Capturing the technology opportunity Payments

Strong performance continues across Sage’s payments businesses

Leveraging the cross-sell opportunity in North America

• 18% organic growth in cross-sell revenue in North America

• Over 12,000 customers adopting integrated payments

Build out of Sage Pay commercial model in Europe

• Good growth in Sage Pay in the UK

• Sage Pay launched successfully in Germany and Spain


The benefits of subscription Premium support remains a core strength of Sage

10% organic revenue growth in premium contracts

74% of contracts now premium in nature

81% renewal rate on contracts


The benefits of subscription Subscription pricing is the

emerging phase

Significant growth opportunity for Sage

Organic annualised value of subscriber base of £95m

• Measured transition

• Alongside existing traditional license offering

Launched a number of subscription pricing options in North America, Europe and AAMEA

• Sophisticated targeting of subscription to specific customer profiles to drive adoption:

‒ New customers

‒ Migration/upselling

‒ Off-plan customers


Strategic KPIs Commercial appeal of our products and services drives 145,000 new customers in the period KPI

Measure

H113 FY12

Capturing the technology opportunity

Adoption of cloud products Number of Sage One paying subscriptionsᵝ 11,500 6,190

Number of hybrid cloud paying subscriptionsᵝ 500 115

Mid-market Sage ERP X3 organic# revenue growth 8% 5%

Integration of payments Number of customers adopting integrated payments

solutions

12,000 9,700

The subscription model

Customer adoption Organic# annualised value of subscriber base £95m £84m

Customers

Loyalty Renewal rate 81% 81%

30 #Organic revenue excludes the contribution of current and prior period acquisitions, disposals and assets held for sale. The impact of foreign exchange is neutralised in prior period figures.

ᵝAt 30 September 2012, the number of paying customers for Sage One and hybrid cloud were 6,100 and 115 respectively.

Summary

Our strategy is clear, our focus on execution is resolute and we have

momentum

We have delivered significant returns to shareholders whilst investing

for growth

We are confident we will deliver on our financial and strategic goals

31

Questions?

32

33

Appendix

Supplementary Information

Segmental analysis Half year ended 31 March 2013

Europe

Americas

AAMEA

Group

Recurring revenue £271.3m £181.6m £42.2m £495.1m

SSRS revenue £131.8m £48.7m £32.4m £213.0m

Total revenue £403.2m £230.3m £74.6m £708.1m

Organic# revenue growth +2% +4% +9% +3%

EBITA† £113.9m £57.0m £20.0m £190.9m

EBITA† margin +28% +25% +27% +27%

Opening support contracts 1,115,000 687,000 191,000 1,993,000

Non-core disposals (13,000) (29,000) - (42,000)

Restated opening position 1,102,000 658,000 191,000 1,951,000

New support contracts (4,000) 11,000 11,000 18,000

Total support contracts 1,098,000 669,000 202,000 1,969,000

34 #Organic revenue excludes the contribution of current and prior period acquisitions, disposals and assets held for sale. The impact of foreign exchange is neutralised in prior period figures. †EBITA is defined as earnings

before interest, tax, amortisation of acquired intangible assets, acquisition-related items and exceptional items.

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Focus and innovation delivering results