Sage Annual Report 2008
Total Page:16
File Type:pdf, Size:1020Kb
Go online to access The Sage Group plc 2008 Annual Report and for PDF downloads. www.investors.sage.com A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 8 www.investors.sage.com Annual Report and Accounts 2008 www.sage.com The Sage Group plc North Park Newcastle upon Tyne www.sage.com NE13 9AA The Sage Group plc Annual Report and Accounts 2008 Sage is one of the leading global suppliers of Contents business management software and services to About Sage 01 Financial highlights 02 Chairman’s welcome small and medium-sized enterprises (“SMEs”). 04 Group overview Business review Operating in 26 countriesworldwide,we help 06 Group strategy and performance 30 Regional review 10 Our business and markets 30 UK & Ireland 10 What we do, who we are, how we work 32 Mainland Europe our customers manage their businesses more 12 Marketplace overview 34 North America 16 Business structure 36 Rest of World 18 Customer experience 38 Financial review efficiently through the provision of locally 20 Distribution channels 42 Risk 22 Acquisition strategy 24 Corporate responsibility tailored products and quality customer support. 28 Key performance indicators Governance 44 Board of Directors and advisers 49 Corporate governance statement 46 Directors’ repor t 54 Remuneration report Financial statements 66 Financial statements – Group 112 Additional information 69 Notes to the accounts – Group 112 Shareholder information 106 Independent auditors’ report – Group Key performance indicators (“ KPI s”) 107 Financial statements – Company 108 Notes to the accounts – Company Adjusted EPS** growth EBITA † margin Organic revenue growth 111 Independent auditors’ repor t–Company Excluding Sage Healthcare Division * +3% 23% +6% Designed and produced by Radley Yeldar. www.ry.com Board photography by Andy Wilson 2007: +13% 2007: 24%* 2007: +7%* Printed in England by CTD This report is printed on Take 2 Silk which is FSC certified and contains Cash generation from operations Renewal rates on maintenance 75% recycled and de-inked pulp from post consumer waste and 25% ECF and support contracts (Elemental Chlorine Free) virgin pulp. This report was printed by an FSC and ISO 14001 certified printer using vegetable oil and soya based inks. FSC – Forest Stewardship Council. This ensures that there is an audited 114% 81% chain of custody from the tree in the well-managed forest through to the For more information about this year’s finished document in the printing factory. 2007: 112% 2007: 81% KPIs go to page 28 ISO 14001 – A pattern of control for an environmental management system against which an organisation can be credited by a third party. The CO 2 emissions from the production and distribution of this report have been neutralised through investment in the Sichuan Province Hydro Power Project in western China. The project displaces electricity generated by fossil-fuel power plants and will generate emission reductions of an estimated 360,000 tCO 2 equivalent between 2006 and 2012, verified and certified to the Voluntary Carbon Standard. www.investors.sage.com Go online to access The Sage Group plc 2008 Annual Report and for PDF downloads. www.investors.sage.com A n n u a l R e p o r t a n d A c c o u n t s 2 0 0 8 www.investors.sage.com Annual Report and Accounts 2008 www.sage.com The Sage Group plc North Park Newcastle upon Tyne www.sage.com NE13 9AA The Sage Group plc Annual Report and Accounts 2008 Sage is one of the leading global suppliers of Contents business management software and services to About Sage 01 Financial highlights 02 Chairman’s welcome small and medium-sized enterprises (“SMEs”). 04 Group overview Business review Operating in 26 countriesworldwide,we help 06 Group strategy and performance 30 Regional review 10 Our business and markets 30 UK & Ireland 10 What we do, who we are, how we work 32 Mainland Europe our customers manage their businesses more 12 Marketplace overview 34 North America 16 Business structure 36 Rest of World 18 Customer experience 38 Financial review efficiently through the provision of locally 20 Distribution channels 42 Risk 22 Acquisition strategy 24 Corporate responsibility tailored products and quality customer support. 28 Key performance indicators Governance 44 Board of Directors and advisers 49 Corporate governance statement 46 Directors’ repor t 54 Remuneration report Financial statements 66 Financial statements – Group 112 Additional information 69 Notes to the accounts – Group 112 Shareholder information 106 Independent auditors’ report – Group Key performance indicators (“ KPI s”) 107 Financial statements – Company 108 Notes to the accounts – Company Adjusted EPS** growth EBITA † margin Organic revenue growth 111 Independent auditors’ repor t–Company Excluding Sage Healthcare Division * +3% 23% +6% Designed and produced by Radley Yeldar. www.ry.com Board photography by Andy Wilson 2007: +13% 2007: 24%* 2007: +7%* Printed in England by CTD This report is printed on Take 2 Silk which is FSC certified and contains Cash generation from operations Renewal rates on maintenance 75% recycled and de-inked pulp from post consumer waste and 25% ECF and support contracts (Elemental Chlorine Free) virgin pulp. This report was printed by an FSC and ISO 14001 certified printer using vegetable oil and soya based inks. FSC – Forest Stewardship Council. This ensures that there is an audited 114% 81% chain of custody from the tree in the well-managed forest through to the For more information about this year’s finished document in the printing factory. 2007: 112% 2007: 81% KPIs go to page 28 ISO 14001 – A pattern of control for an environmental management system against which an organisation can be credited by a third party. The CO 2 emissions from the production and distribution of this report have been neutralised through investment in the Sichuan Province Hydro Power Project in western China. The project displaces electricity generated by fossil-fuel power plants and will generate emission reductions of an estimated 360,000 tCO 2 equivalent between 2006 and 2012, verified and certified to the Voluntary Carbon Standard. www.investors.sage.com 01 About Sage 01–05 Business review 06–43 Governance 44–65 Financial statements 66–112 Financial highlights Revenue Adjusted pre-tax profit** £1,295.0m £273.4m +7% * +3% (2007: £1,214.1m *) (2007: £265.1m) Total dividend EBITA † 7.21 p £29 9.8m +3% +1% * (2007: 7.00p) (2007: £297.0m*) * Foreign currency results for the year ended 30 September 2007 have been retranslated based on the average exchange rates for the year ended 30 September 2008 of $1.97/£1 and B1.31/£1 to facilitate the comparison of results. † Earnings before interest, tax and amortisation of intangible fixed assets (“EBITA”). ** Pre-tax profit and earnings per share figures stated prior to amortisation of intangible fixed assets and after neutralisation of foreign exchange movements. For a five year comparison of these financial highlights go to page 06 For a five year comparison of the total dividend go to page 02 02 “Our large and international customer base, the flexibility of our business model and our consistently strong cash flows position us favourably to manage the current market conditions.” To see Tony’s biography please go to page 44 Total dividend “The UK and North America recorded respectable growth, and our businesses 7.21p in Mainland Europe and Rest of World +3% pence reported another year of strong growth.” 2008 7.21 2007 7.00 2006 3.59 2005 2.88 2004 2.33 0.000 1.442 2.884 4.326 5.768 7.210 03 Dear Shareholder As a result, we are increasing the full year dividend by This has been a challenging year with volatile and difficult 3% to 7.21p per share (2007: 7.00p per share), with a market conditions. After a resilient performance in the first proposed final dividend of 4.78p per share (2007: 5.73p half of the year, the Group saw softening customer per share, following the rebasing of our dividend policy demand in the second half, most notably in software which was reflected in our final dividend in the second and software-related services. half of the prior year). Despite these market conditions, the Group reported a Management changes solid performance for the year. The UK and North America David Clayton joined the Board on 1 October 2007 as recorded respectable growth, and our businesses in Group Strategy and Mergers and Acquisitions Director. Mainland Europe and Rest of World reported another On 1 November 2007, Ian Mason, Chief Executive of year of strong growth. Electrocomponents plc, joined the Board as a non- Subscription revenues, including combined software/ executive director. Mark Rolfe, formerly Finance Director of support contracts, performed strongly in all our markets, Gallaher Group plc, joined the Board on 1 December 2007 driving growth in established markets such as the UK, and became chair of the Audit Committee on 1 April 2008. France, South Africa and Australia, as well as in our newer We were also very pleased to welcome Sue Swenson to markets of Poland, Spain, China and Malaysia. Software the Group as CEO, North America. Sue joined us in March and software-related services reported modest growth, 2008 and brings a formidable record of achievements to affected by both the macro-economic conditions and the our North American business. trend for customers increasingly to purchase combined software/support contracts. People We now employ over 14,500 people (2007: 13,900), Financial strength and our employees are at the heart of our strategy The Group remains highly cash generative and our balance continuously to improve our customers’ experience.