REG - Sage Group PLC - Half-year Report <Origin Href="QuoteRef">SGE.L</Origin> - Part 4
03/05/2017 07:06
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established in Newcastle and Johannesburg, enabling the creation of consistent and consolidated systems and processes· Rationalised Management Committee structures·
Policy Approval Committee in place to supervise and approve policies within the Sage-wide policy suite· Customer Business Centres (CBCs) are built around core
systems to underpin operational consistency and expansion, including Salesforce CRM and Sage's own X3 for General Ledger activity. As volumes scale, all new customers for
CBC supported products are being entered directly into these systems · Shared Service Centres (SSCs) in Newcastle and Johannesburg have installed X3 General Ledger
In progress: · Plans for migration of country General Ledgers into X3 is on track with plans· An Excellence in Controls initiative to enhance the supporting
control environment has commenced· Deployment of a Governance, Risk and Compliance technology solution is underway
Information Management and Protection (including cyber)Sage fails to adequately understand, manage and protect information Sage's footprint has developed through a process of acquisition, each arriving with its own processes and activities appropriate to a smaller business, but which did not develop in line with Sage's growth.Harmonising and rationalising these, as necessary, is required to support the 'One Sage' operating model and to allow a business view on all data being held and processed, including management and protection.During 2016, we have broadened the risk to include all data, both internal Sage related information, and external customer related information. · Accountability is established within both OneIT and Product for all internal and external data being processed by Sage. OneIT and Product Services report to the
Strategic alignment: Chief Information Officer and Chief Product Delivery Officer respectively· A network of Information Security Officers supports the business· Formal
One Sage certification schemes are maintained, across appropriate parts of the business, and include internal and external validation of compliance· Secure coding standards
are in place for the development of new code· Structured and ad-hoc IT internal audit activity is undertaken by Sage Assurance against an agreed plan, and reported
to management and the Audit and Risk Committee· A revised Sage information security policy suite has been launched· The Incident Management framework was
revised and updated, to include the rating of incidents and requirements for escalation
In progress: · Information Security is being aligned with the existing Governance structures (Global and Regional Risk Committees), to establish clear
accountability· Awareness training for Information Management and protection continues to be deployed · Data Governance Committee providing direction around
data and Data Protection
Regulatory and Legal FrameworkSage does not understand and operate within the applicable regulatory and legal framework Sage's services operate within a complex regulatory and legal environment. Monitoring this evolving regulatory and legal environment enables timely and appropriate steps to ensure ongoing compliance. · All legal resources across Sage report directly to the General Counsel and Company Secretary· Legal services use internal and external resources to monitor
Strategic alignment: planned and realised changes in legislation· All product contracts are reviewed and approved through Legal Services· An agreed suite of policies is in place
One Sage which supports key legislation, including Data Protection and anti-bribery· A Code of Conduct is in place across the business which provides clarity over how
colleagues are expected to behave. Completion of Code of Conduct training is mandatory for colleagues, and confirmation of understanding is recorded and monitored·
Whistleblowing and Incident Management Policies and procedures are in place, which ensure appropriate treatment of identified events, and management visibility· Sage
Compliance function to re-enforce the drive towards a 100% compliance culture
In progress: · Data Governance Committee providing direction around General Data Protection Regulations (GDPR)
Sage BrandSage does not deliver clear and consistent branding to the market Following several years of acquisition, work continues to develop and harmonise the Sage brand. Whilst it is well recognised and trusted by customers in many core markets, brand awareness remains inconsistent.A clear and consistent brand enables customers to understand Sage values. · A Brand team is in place which has overall responsibility for developing the Sage Brand· All countries must comply with Sage's Brand Governance and Brand
Strategic alignment: Guidelines, which are designed to execute the Sage Masterbrand Strategy. The timeframes for compliance of all products are defined, and any exceptions must be approved
One Sage through the Brand team· A Digital Asset Management (DAM) tool is in place which workflows requests and approvals, and acts as a single information repository·
Brand Library used as a repository for branded assets, and any exceptions from brand guidelines reported to the Chief Marketing Officer· Ongoing reviews of customer
experience are performed (Net Promoter Scores), and output is reviewed across both countries and products to identify variance, and develop improvement plans· Sage
Summits completed across four cities in 2017 (Paris, Berlin, Johannesburg, and Melbourne) Brand awareness campaign launched to improve Brand recognition· The Sage
Foundation operating across Sage, aligned with our values and behaviours
In progress:· Compliance Programme being rolled out, to assess and educate on compliance with Brand Governance and Brand Guidelines· Four Sage Summits taking
place between April and June (London, Madrid, Atlanta, and Toronto)
Partners and Alliances Sage fails to identify, build, enable and maintain appropriate partnerships and alliancesStrategic alignment: There are instances where leveraging partnerships and alliances can support the growth ambitions of Sage.The governance and control around engagement and use must be defined, as well as management of the ecosystem. · A Partner and Alliances team is established to oversee the selection and management of Sage's alliances and partners, including accountability for active
Revolutionise Business management of relationships· Definitions are in place to ensure clarity and consistency over alliances and partners, to enable appropriate and consistent management
of these arrangements· All contracts for alliances and partners require approval through legal services · Defined legal provisions are required for inclusion in
contracts. Any variance in provisions must be recorded as part of the formal contract approval process
In progress:· Ongoing review and development of Sage Partner Programme· A financial model for Sage Partner Programme is being developed
Third Party RelianceSage does not understand and manage its third party ecosystem Several Sage customer service offerings are delivered or supported using third parties, whilst Sage remains accountable for quality of performance.The third party ecosystem must be understood and effectively managed, in order to limit Sage's exposure. · A Procurement function ensures key controls are applied in the selection and on-boarding of third parties· The Procurement function supports the business with
Strategic alignment: the selection of third parties and negotiation of contracts· Legal resources are used in contract negotiation· A Procurement Lifecycle Policy and Procedures are
Revolutionise Business defined, agreed and published. These contain clear roles and responsibilities for colleagues and align with existing processes, including investment approval
In progress: · Implementation of the Procurement Lifecycle Procedures continues, including classifying third parties for business criticality, and associated
actions· Rationalisation of the third party ecosystem is continuing
There are instances where leveraging partnerships and alliances can support the growth ambitions of Sage.The governance and
control around engagement and use must be defined, as well as management of the ecosystem.
· A Partner and Alliances team is established to oversee the selection and management of Sage's alliances and
partners, including accountability for active management of relationships· Definitions are in place to ensure clarity
and consistency over alliances and partners, to enable appropriate and consistent management of these arrangements·
All contracts for alliances and partners require approval through legal services · Defined legal provisions are
required for inclusion in contracts. Any variance in provisions must be recorded as part of the formal contract approval
process
In progress:· Ongoing review and development of Sage Partner Programme· A financial model for Sage Partner
Programme is being developed
Third Party RelianceSage does not understand and manage its third party ecosystem
Strategic alignment:
Revolutionise Business
Several Sage customer service offerings are delivered or supported using third parties, whilst Sage remains accountable for
quality of performance.The third party ecosystem must be understood and effectively managed, in order to limit Sage's
exposure.
· A Procurement function ensures key controls are applied in the selection and on-boarding of third parties· The
Procurement function supports the business with the selection of third parties and negotiation of contracts· Legal
resources are used in contract negotiation· A Procurement Lifecycle Policy and Procedures are defined, agreed and
published. These contain clear roles and responsibilities for colleagues and align with existing processes, including
investment approval
In progress: · Implementation of the Procurement Lifecycle Procedures continues, including classifying third parties
for business criticality, and associated actions· Rationalisation of the third party ecosystem is continuing
Statement of Directors' Responsibilities
The condensed consolidated half-yearly financial report for the six months ended 31 March 2017 includes the following
responsibility statement.
Each of the directors confirms that, to the best of their knowledge:
- the Group consolidated condensed financial statements, which have been prepared in accordance with IAS34, "Interim
Financial Reporting" as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and
profit of the Group; and
- the Directors' report includes a fair review of the development and performance of the business and the position of
the Group, together with a description of the principal risks and uncertainties that it faces.
The Directors also confirm that the Interim Management Report herein includes a fair review of information required by
4.2.8R of the DTR (Disclosure and Transparency Rules).
The directors of The Sage Group plc are consistent with those listed in the Group's 2016 Annual Report and Accounts subject
to the following changes, which took effect from the conclusion of the AGM on 28 February 2017: Ruth Markland and Inna
Kuznetsova stepped down from their roles as non-executive directors; and Soni Jiandani was appointed as a non-executive
director. A list of current directors is maintained on the Group's website: www.sage.com.
On behalf of the Board
S Hare
Chief Financial Officer
2 May 2017
Independent review report to The Sage Group plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 31 March 2017 which comprises Consolidated income statement, Consolidated statement of
comprehensive income, Consolidated balance sheet, Consolidated statement of changes in equity, Consolidated statement of
cash flows and the related explanatory notes 1 to 13. We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company in accordance with guidance contained in International Standard on Review
Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
As disclosed in the group accounting policies, the annual financial statements of the group are prepared in accordance with
IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted
by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the
half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland)
and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months ended 31 March 2017 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
2 May 2017
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