REG - Sage Group PLC (The) - Results for the six months to 31 March 2025
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RNS Number : 7324I Sage Group PLC (The) 15 May 2025
The Sage Group plc
Results for the six months to 31 March 2025
(unaudited)
15 May 2025
Continued strong growth driven by consistent strategic execution
Steve Hare, Chief Executive Officer, commented:
"Sage delivered strong results in the first half of the year, extending our
track record of broad-based growth and significant margin expansion. Our
performance reflects the strength of our accounting, HR and payroll solutions,
underpinned by ongoing investment in our network platform."
"We continue to focus on innovation, transforming customer workflows through
AI-powered services. Just one year after launch, Sage Copilot is delivering
enhanced productivity and insights to thousands of customers across our
portfolio, whilst paving the way for the next generation of AI accounting,
powered by agentic workflows.
"Amid a more volatile and uncertain macroeconomic environment, Sage remains
resilient and diversified. Small and mid-sized businesses continue to adopt
digital technologies to become more productive and efficient. I am confident
that our proven strategy will deliver further long-term value to all our
stakeholders."
Underlying Financial APMs i (#_edn1) H1 25 H1 24 ii (#_edn2) Change Organic
Change
Annualised Recurring Revenue (ARR) £2,454m £2,218m +11% +10%
Underlying Total Revenue £1,242m £1,134m +9% +9%
Underlying Operating Profit £288m £247m +16% +16%
% Underlying Operating Profit Margin 23.2% 21.8% +1.4 ppts +1.4 ppts
Underlying EBITDA £334m £292m +14%
% Underlying EBITDA Margin 26.9% 25.8% +1.1 ppts
Underlying Basic EPS (p) 20.8p 17.7p +17%
Underlying Cash Conversion 115% 127% -12 ppts
Statutory Measures H1 25 H1 24 Change
Revenue £1,242m £1,152m +8%
Operating Profit £255m £215m +18%
% Operating Profit Margin 20.5% 18.7% +1.8 ppts
Basic EPS (p) 18.2p 15.3p +19%
Dividend Per Share (p) 7.45p 6.95p +7%
Please note that tables may not cast and change percentages may not calculate
precisely due to rounding.
Financial highlights
· Underlying total revenue increased by 9% to £1,242m, reflecting
our high-quality subscription-based recurring revenue model.
· Underlying operating profit increased by 16% to £288m, driving a
strong margin increase of 140 basis points to 23.2%, with disciplined cost
management supporting ongoing investment.
· Underlying EBITDA increased by 14% to £334m, with margin
increasing by 110 basis points to 26.9%.
· Statutory operating profit increased by 18% to £255m reflecting
growth in underlying operating profit together with lower acquisition-related
expenses.
· Underlying basic EPS increased by 17% to 20.8p, whilst statutory
basic EPS increased by 19% to 18.2p.
· Strong cash performance, with underlying cash conversion of 115%,
reflecting continued growth in subscription revenue and good working capital
management.
· Robust balance sheet, with £1.2bn of cash and available liquidity,
and net debt to underlying EBITDA of 1.5x.
Shareholder returns
· Interim dividend up 7% to 7.45p, in line with our progressive
policy.
· Share buyback programme extended by up to £200m, as announced
separately today, reflecting Sage's strong cash generation, robust financial
position, and the Board's confidence in Sage's future prospects.
Strategic and operational highlights
· Underlying annualised recurring revenue (ARR) up 11% to £2,454m,
with growth across all regions balanced between new and existing customers.
· Renewal rate by value of 101% (H1 24: 102%), reflecting strong
retention rates and a good level of sales to existing customers.
· Sage Business Cloud revenue increased by 13% to £1,020m (H1 24:
£901m), including cloud native revenue growth of 22% to £425m (H1 24:
£349m).
· Subscription penetration increased to 83% (H1 24: 81%) driven by
growth in subscription revenue of 12% to £1,031m (H1 24: £923m).
· Strong strategic progress as we continue to enhance and expand our
global cloud solutions and deepen our vertical-specific capabilities,
complemented by the recent acquisition of ForceManager.
· Rapidly scaling Sage Copilot, our generative AI-powered assistant;
now available with key products in the UK, US and Europe, delivering enhanced
productivity and insights to customers.
Outlook
Against the background of a more volatile and uncertain macroeconomic
environment, we currently continue to expect organic total revenue growth in
FY25 to be 9% or above. Operating margins are expected to trend upwards in
FY25 and beyond, as we focus on efficiently scaling the Group.
About Sage
Sage exists to knock down barriers so everyone can thrive, starting with the
millions of small and mid-sized businesses (SMBs) served by us, our partners
and accountants. Customers trust our finance, HR and payroll software to make
work and money flow. By digitising business processes and relationships with
customers, suppliers, employees, banks and governments, our digital network
connects SMBs, removing friction and delivering insights. Knocking down
barriers also means we use our time, technology and experience to tackle
digital inequality, economic inequality and the climate crisis.
Enquiries: Sage: +44 (0) 7341 479956 FGS Global: +44 (0) 20 7251 3801
James Sandford, Investor Relations Conor McClafferty
David Ginivan, Corporate PR Sophia Johnston
A presentation for investors and analysts will be held at 8.30am UK time. The
webcast can be accessed via sage.com/investors or directly via the following
link: https://edge.media-server.com/mmc/p/p333t4ss
(https://edge.media-server.com/mmc/p/p333t4ss) . To join the conference
call, please register via
https://register-conf.media-server.com/register/BI0dc9341f066f446d96b7c1637dc01236
(https://register-conf.media-server.com/register/BI0dc9341f066f446d96b7c1637dc01236)
.
Business Review
Sage performed well in the first half of FY25, with continued growth across
all regions, in line with expectations, underpinned by organic and inorganic
investment. Disciplined cost management together with operating efficiencies
supported strong operating profit and margin expansion, driving further growth
in earnings per share and robust cash flows.
Overview of results
The Group increased underlying total revenue by 9% to £1,242m (H1 24:
£1,134m), with all regions contributing to growth. In North America, revenue
grew by 11%, with a good performance from Sage Intacct together with continued
growth in Sage 200 and Sage 50. In the UKIA iii (#_edn3) region, revenue
increased by 9% driven by Sage Intacct together with cloud solutions for small
businesses including Sage 50. In Europe, revenue increased by 8%, with growth
across our accounting, HR and payroll solutions.
Throughout the Group, our principal focus is to grow Sage Business Cloud,
comprising our cloud native iv (#_edn4) and cloud connected v (#_edn5)
solutions, by attracting new customers and delivering further value to
existing customers. Sage Business Cloud solutions enable customers to benefit
from a range of cloud services as part of the Sage Network platform, leading
to deeper customer relationships and higher lifetime values.
As a result, Sage Business Cloud total revenue increased by 13% to £1,020m
(H1 24: £901m), driven by growth in cloud native revenue of 22% to £425m (H1
24: £349m) primarily through new customer acquisition, and by growth in cloud
connected revenue from both existing and new customers.
Underlying recurring revenue increased by 10% to £1,203m (H1 24: £1,095m),
with software subscription revenue up by 12% to £1,031m (H1 24: £923m)
leading to subscription penetration of 83% (H1 24: 81%). As a result, 97% of
the Group's revenue is recurring.
On an organic basis, total revenue grew by 9% to £1,239m (H1 24: £1,137m),
while recurring revenue increased by 9% to £1,200m (H1 24: £1,098m).
ARR growth
ARR increased by 11% to £2,454m (H1 24: £2,218m) on an underlying basis,
reflecting continued growth balanced between new and existing customers. On an
organic basis, ARR increased by 10% to £2,449m (H1 24: £2,224m).
Renewal rate by value of 101% (H1 24: 102%) reflects strong retention rates
and a good level of sales to existing customers, including customer add-ons
and targeted price rises. In total, Sage has added £190m of ARR through new
customer acquisition on an organic basis over the last 12 months, in line with
the prior period.
Performance by region
North America H1 25 H1 24 Change Organic change
US £498m £449m 11% 10%
Canada £70m £62m 12% 12%
Underlying total revenue £568m £511m 11% 11%
In North America, underlying total revenue increased by 11% to £568m, with
growth across Sage's key accounting solutions, particularly among mid-sized
businesses. Recurring revenue grew by 11% to £554m (H1 24: £497m), while
subscription penetration increased to 82%, up from 80% in the prior period.
In the US, total revenue increased by 11% to £498m. Sage Intacct, which now
represents 45% of US revenue, grew by 21% to £223m (H1 24: £184m), driven by
strength in both new and existing customer revenues across key industry
verticals, particularly construction & real estate, not-for-profit and
financial services. Revenue was also driven by growth in Sage 200, with good
levels of upsell to existing customers, together with further growth in Sage
X3 and Sage 50.
In Canada, total revenue grew by 12% to £70m, driven by a good performance
from Sage Intacct, together with growth in Sage 50, which benefitted from a
strong cloud renewal rate and new customer acquisition. In addition, Sage HR
continued to achieve good traction following its Canadian launch last year.
UKIA H1 25 H1 24 Change Organic change
UK & Ireland £271m £248m 9% 9%
Africa & APAC £87m £81m 8% 8%
Underlying total revenue £358m £329m 9% 9%
In the UKIA region, underlying total revenue increased by 9% to £358m, with
further strength across Sage's accounting, HR and payroll solutions. Recurring
revenue also grew by 9% to £350m (H1 24: £322m), while subscription
penetration was 89%, in line with the prior period.
In the UK & Ireland, total revenue grew by 9% to £271m. Sage Intacct, the
largest driver of growth in the region, continued to scale rapidly driven by
accelerating new customer acquisition. Sage 50 also contributed strongly,
together with Sage 200, with growth mainly from existing customers through a
strong renewal rate and higher pricing. In addition, Sage's cloud native
solutions for small businesses, including Sage Accounting, Sage Payroll and
Sage HR continued to deliver good levels of growth. The performance of Sage
Accounting and Sage 50 was supported by the recent launch of Sage Copilot to
customers of both solutions. Revenue was also driven by accountancy practice
management tools, supported by the continued growth of Sage for Accountants.
In Africa and APAC, total revenue grew by 8% to £87m, with continued growth
in Sage Accounting, Sage Payroll and Sage HR driven by good levels of new
customer acquisition and higher pricing. Sage Intacct also performed well,
off a small base. In addition, Sage X3 and local products within the Sage 50
franchise continued to contribute to growth.
Europe H1 25 H1 24 Change Organic Change
France £158m £149m 6% 6%
Central Europe £77m £71m 8% 8%
Iberia £81m £74m 10% 7%
Underlying total revenue £316m £294m 8% 7%
Europe achieved underlying total revenue growth of 8% to £316m, reflecting a
strong performance in Sage 200, Sage X3, HR and payroll solutions. Recurring
revenue grew by 8% to £299m (H1 24: £276m), while subscription penetration
increased to 79%, up from 75% in the prior period.
In France, total revenue grew by 6% to £158m driven mainly by accounting
solutions. Sage X3 contributed significantly to growth, benefitting from
continued strong customer demand. Sage 200, together with HR and payroll
solutions, also performed well. In addition, Sage Intacct saw good early
traction as the solution starts to scale.
Central Europe achieved a total revenue increase of 8% to £77m. Cloud HR and
payroll solutions, which represent around half of the region's revenue, grew
particularly strongly, driven by upsell to existing customers together with
new customer wins. Growth was also driven by Sage 200, mainly through sales to
existing customers.
In Iberia, total revenue grew by 10% to £81m, reflecting strength across Sage
200 and Sage 50 driven by good levels of renewals, higher pricing and new
customers, together with the acquisition in October 2024 of ForceManager, a
cloud native mobile workforce management solution. Growth was further driven
by solutions for accountants, following the recent introduction of Sage for
Accountants into the region.
Adjusting for the impact of the ForceManager acquisition, organic total
revenue grew by 7% in Iberia, and by 7% in the Europe region as a whole.
Strategic progress
At our FY24 results, we set out our refreshed strategic framework for growth,
including three key focus areas: connecting SMBs through our trusted and
thriving network, growing by winning new customers and delighting existing
ones, and delivering productivity and insights driven by AI. Our progress in
each of these areas is outlined below.
Connect
The Sage Network is our platform of cloud products and services that connects
and integrates Sage ecosystem solutions, enabling AI-powered network services
that digitally transform customer workflows. We are focused on scaling the
network, and developing and growing these services. Our accounts payable
automation service is expanding rapidly, with monthly transaction value
tripling in the last 12 months to almost $1.3 billion, while our accounts
receivable solution has received strong industry recognition. We also achieved
good momentum in the provision of embedded payment services to customers
through key partnerships including Stripe, GoCardless and Versapay.
Grow
Our aim is to expand revenues across all products and services, with a focus
on areas with the greatest growth opportunities. We continue to scale Sage
Intacct, our flagship solution for mid-sized businesses, which delivered
further strong growth in the US, expanded rapidly in the UK & Ireland,
Canada and South Africa, and achieved good early traction in France and
Germany. Across the Group, Sage Intacct added in excess of £100m of ARR over
the last 12 months, expanding by over 20% in the US and by over 50% outside
the US.
We also made further progress in the introduction of suites to simplify our
customer proposition, with integrated offerings across the construction,
software, financial services and not-for-profit verticals now helping to drive
new customer growth. Building on its success in the US, we launched Sage
Intacct Construction in the UK market. In Europe, Sage Active growth
accelerated following recent enhancements including the integration of
AI-driven insights and automation capabilities.
Deliver
Sage Copilot, our generative-AI powered assistant, enables us to enhance
productivity, efficiency and growth for our customers. Launched in 2024, Sage
Copilot is now available to selected customers of key products including Sage
Accounting, Sage 50, Sage Active, Sage for Accountants and Sage Intacct, in
the UK, US and Europe. We continue to develop and refine its capabilities,
introducing features to accelerate the monthly close process, analyse
financial performance, and simplify business intelligence, as well as helping
accountants improve client collaboration and practice management. With
continued strong feedback, Sage Copilot is driving value for customers and
revenue for Sage, and our focus is to scale the solution to more products and
customers throughout the Group. We are also leveraging AI to drive internal
productivity in areas including customer success and engineering.
Sustainability and Society
Sage's Sustainability and Society strategy supports our purpose to knock down
barriers so everyone can thrive. It also underscores our commitment to serve
all of our stakeholders, including our colleagues and communities. Over the
last year, Sage was ranked amongst the World's Most Sustainable Companies by
TIME Magazine and Statista, received a Gold sustainability rating from
EcoVadis, obtained an 'A-' leadership score from CDP, maintained its 'AAA' ESG
rating from MSCI, and won the edie 2025 award for Sustainability Reporting
& Communications.
We continue to make good progress across our three sustainability pillars:
Protect the Planet, Tech for Good and Human by Design. During the first half
we delivered over 1,000 sustainability learnings to colleagues, integrated
sustainability into our due diligence processes and published our first human
rights charter. Through Sage Foundation we launched the Sage Impact
Entrepreneurship Programme, helping more than 50 purpose-driven SMBs across
France, the UK and the US to grow and scale their business, as part of our
commitment to invest in and support local businesses and communities.
Financial Review
The financial review provides a summary of the Group's results on a statutory
and underlying basis, alongside its organic performance. Underlying measures
allow management and investors to understand the Group's financial performance
adjusted for the impact of foreign exchange movements and recurring and
non-recurring items, while organic measures also adjust for the impact of
acquisitions and disposals vi (#_edn6) .
Statutory and underlying financial results
Financial results Statutory Underlying
H1 25 H1 24 Change H1 25 H1 24 Change
North America £568m £520m +9% £568m £511m +11%
UKIA £358m £328m +9% £358m £329m +9%
Europe £316m £304m +4% £316m £294m +8%
Total revenue £1,242m £1,152m +8% £1,242m £1,134m +9%
Operating profit £255m £215m +18% £288m £247m +16%
% Operating profit margin 20.5% 18.7% +1.8 ppts 23.2% 21.8% +1.4 ppts
Profit before tax £236m £203m +16% £270m £235m +15%
Profit after tax £180m £156m +16% £206m £180m +15%
Basic EPS 18.2p 15.3p +19% 20.8p 17.7p +17%
The Group achieved statutory and underlying total revenue of £1,242m in H1
25. Statutory total revenue increased by 8%, reflecting underlying total
revenue growth of 9% offset by a one percentage point foreign exchange
headwind, with sterling strengthening across key currencies.
Statutory operating profit increased by 18% to £255m, reflecting a 16%
increase in underlying operating profit to £288m, together with a £6m
decrease in recurring and non-recurring items vii (#_edn7) , mainly relating
to lower acquisition-related expenses.
Statutory basic EPS increased by 19% to 18.2p and underlying basic EPS
increased by 17% to 20.8p, mainly reflecting higher underlying profit, with an
increase in underlying net finance costs offset by a reduction in the weighted
average number of shares as a result of recent share buybacks.
Revenue - underlying and organic reconciliation to statutory
Total revenue bridge H1 25 H1 24 Change
Statutory £1,242m £1,152m +8%
Recurring items - -
Impact of FX - (£18m)
Underlying £1,242m £1,134m +9%
Disposals - -
Acquisitions (£3m) £3m
Organic £1,239m £1,137m +9%
Statutory and underlying total revenue was £1,242m in H1 25. Underlying
revenue in H1 24 of £1,134m reflects statutory revenue of £1,152m
retranslated at current year exchange rates, resulting in a foreign exchange
headwind of £18m. Organic total revenue in H1 25 was £1,239m, reflecting
underlying revenue of £1,242m adjusted for £3m of revenue from the
acquisition of ForceManager during the period. Organic revenue in H1 24 of
£1,137m reflects underlying revenue of £1,134m, adjusted for £2m of revenue
from Anvyl and £1m of revenue from Infineo, which were acquired at the end of
FY24.
Operating profit
The Group increased underlying operating profit by 16% to £288m (H1 24:
£247m), resulting in a strong increase in underlying operating margin of
140bps to 23.2% (FY24: 21.8%). This was driven by revenue growth and operating
efficiencies, with disciplined cost management supporting ongoing investment.
On an organic basis, adjusting for the impact of acquisitions in FY24 and
FY25, operating profit increased by 16% to £288m (FY24: £248m) while margin
was in line with underlying.
Operating profit - underlying and organic reconciliation to statutory
Operating profit bridge H1 25 H1 24
Operating profit Operating margin Operating profit Operating margin
Statutory £255m 20.5% £215m 18.7%
Recurring items viii (#_edn8) £35m - £43m -
Non-recurring items:
· Reversal of employee-related costs - - (£3m) -
· Reversal of restructuring costs - - (£1m) -
· Reversal of property restructuring costs (£2m) - - -
Impact of FX - - (£7m) -
Underlying £288m 23.2% £247m 21.8%
Disposals - - - -
Acquisitions - - £1m -
Organic £288m 23.2% £248m 21.8%
The Group achieved a statutory operating profit in H1 25 of £255m (H1 24:
£215m). Underlying operating profit of £288m in H1 25 reflects statutory
operating profit adjusted for recurring and non-recurring items.
Recurring items of £35m (H1 24: £43m) comprise £22m of amortisation of
acquisition-related intangibles (H1 24: £26m) and £13m of M&A related
charges (H1 24: £17m). Non-recurring items in H1 25 comprise a £2m reversal
of property restructuring costs. In H1 24, non-recurring items comprised a
£3m reversal of employee-related charges for French payroll taxes relating to
previous years and a £1m reversal of restructuring costs. Together, recurring
and non-recurring items reduced by £6m compared to the prior year.
In addition, the retranslation of H1 24 operating profit at current year
exchange rates has resulted in an operating profit headwind of £7m. This has
led to a 20-basis point margin headwind from foreign exchange to 21.8% (H1 24
underlying as reported: 22.0%).
Underlying EBITDA
Underlying EBITDA was £334m (H1 24: £292m) representing a margin of 26.9%.
The increase in underlying EBITDA principally reflects growth in underlying
operating profit.
H1 25 H1 24 Margin
Underlying operating profit £288m £247m 23.2%
Depreciation & amortisation £24m £24m
Share based payments £22m £21m
Underlying EBITDA £334m £292m 26.9%
Net finance cost
The statutory net finance cost for the period increased to £19m (H1 24:
£12m), mainly reflecting lower interest income on deposits, as well as higher
finance costs including new debt issuance. The statutory net finance cost is
broadly in line with the underlying net finance cost of £18m (H1 24: £12m).
Taxation
The underlying tax expense for H1 25 was £64m (H1 24: £55m), resulting in an
underlying effective tax rate of 24% (H1 24: 23%). The underlying effective
tax rate has increased as the Group's higher underlying profit before tax has
reduced the relative impact of its tax incentive claims. The statutory income
tax expense for H1 25 was £56m (H1 24: £47m), resulting in a statutory
effective tax rate of 24% (H1 24: 23%).
Earnings per share (EPS)
H1 25 H1 24 Change
Statutory basic EPS 18.2p 15.3p +19%
Recurring items 2.8p 3.2p
Non-recurring items (0.2)p (0.3)p
Impact of foreign exchange - (0.5)p
Underlying basic EPS 20.8p 17.7p +17%
Underlying basic EPS increased by 17% to 20.8p, principally reflecting the
increase in underlying operating profit. Statutory basic EPS increased by 19%,
reflecting the increase in underlying basic EPS together with lower charges
for recurring and non-recurring items compared to the prior period.
Cash flow
Sage remains highly cash generative with underlying cash flow from operations
of £330m (H1 24: £322m), representing underlying cash conversion of 115% (H1
24: 127%). This strong cash performance reflects further growth in
subscription revenue and continued good working capital management, partly
offset by increased capital expenditure driven by workplace investment. Free
cash flow of £246m (H1 24: £240m) reflects strong underlying cash
conversion.
Cash flow APMs H1 25 H1 24 (as reported)
Underlying operating profit £288m £254m
Depreciation, amortisation and non-cash items in profit £23m £23m
Share based payments £22m £21m
Net changes in working capital £29m £35m
Net capital expenditure (£32m) (£11m)
Underlying cash flow from operations £330m £322m
Underlying cash conversion % 115% 127%
Non-recurring cash items (£6m) (£4m)
Net interest paid (£36m) (£31m)
Income tax paid (£38m) (£46m)
Profit and loss foreign exchange movements (£4m) (£1m)
Free cash flow £246m £240m
Statutory reconciliation of cash flow from operations H1 25 H1 24 (as reported)
Statutory cash flow from operations £330m £297m
Recurring and non-recurring items £28m £35m
Net capital expenditure (£32m) (£11m)
Other adjustments including foreign exchange translations £4m £1m
Underlying cash flow from operations £330m £322m
Net debt and liquidity
Group net debt was £976m at 31 March 2025 (30 September 2024: £738m),
comprising cash and cash equivalents of £574m (30 September 2024: £508m) and
total debt of £1,550m (30 September 2024: £1,246m). The Group had £1,204m
of cash and available liquidity at 31 March 2025 (30 September 2024:
£1,138m).
The increase in net debt in the period is summarised in the table below.
H1 25 H1 24 (as reported)
Net debt at 1 October (£738m) (£561m)
Free cash flow £246m £240m
New leases less disposals (£6m) (£17m)
Acquisition of businesses (£33m) (£3m)
M&A and equity investments (£22m) (£33m)
Dividends paid (£135m) (£129m)
Share buyback (£293m) (£306m)
FX movement and other £5m (£2m)
Net debt at 31 March (£976m) (£811m)
The Group's debt is sourced from sterling and euro denominated notes, together
with a syndicated multi-currency Revolving Credit Facility (RCF).
In March 2025, the Group issued £300m 12-year notes with a coupon of 5.625%
as part of the Group's Euro Medium Term Note (EMTN) programme. This follows
issuance in February 2023 of €500m 5-year notes with a coupon of 3.82% also
under the EMTN programme. Sage's other sterling denominated notes comprise
£400m 12-year notes issued in February 2022 with a coupon of 2.875%, and
£350m 10-year notes issued in February 2021 with a coupon of 1.625%. The
Group's RCF of £630m expires in December 2029, having been extended by one
year in November 2024. As at 31 March 2025, the RCF was undrawn (H1 24:
undrawn).
Sage has an investment grade issuer credit rating assigned by Standard and
Poor's of BBB+ (stable outlook).
Capital allocation
Sage's disciplined capital allocation policy is focused on accelerating
strategic execution through organic and inorganic investment, and delivering
shareholder returns. During the period, Sage completed the acquisition of
Tritium Software, the developer of ForceManager (now rebranded Sage Sales
Management), a cloud native mobile workforce management solution for
field-based sales teams.
Sage has a progressive dividend policy, intending to grow the dividend over
time while considering the future capital requirements of the Group.
Reflecting the Group's strong business performance and cash generation during
the first half, we have increased the interim dividend by 7% to 7.45p per
share (H1 24: 6.95p).
The Group also considers returning surplus capital to shareholders. On 20
November 2024, Sage commenced a share buyback programme of up to £400m, under
which, as at 12 May 2025, a total of 30.7m shares had been purchased for an
aggregate consideration of £383m and subsequently cancelled.
Alongside these results, we have announced an extension to this share buyback
programme of up to £200m, reflecting Sage's strong cash generation, robust
financial position, and the Board's confidence in the Group's future
prospects. Sage continues to have considerable financial flexibility to drive
the execution of its growth strategy. The extended programme is expected to
end no later than 6 August 2025.
H1 25 H1 24 (as reported)
Net debt £976m £811m
Underlying EBITDA (Last Twelve Months) £655m £576m
Net debt/underlying EBITDA ratio 1.5x 1.4x
The Group's underlying EBITDA over the last 12 months was £655m, resulting in
a net debt to underlying EBITDA leverage ratio of 1.5x, up from 1.4x in the
prior year. Sage intends to operate in a broad range of 1x to 2x net debt to
underlying EBITDA over the medium term, with flexibility to move outside this
range as business needs require.
Group return on capital employed (ROCE) for H1 25 was 29% (H1 24 as reported:
23%).
Going concern
The Directors have robustly tested the going concern assumption in preparing
these financial statements, taking into account the Group's strong liquidity
position at 31 March 2025 and a number of downside sensitivities, and remain
satisfied that the going concern basis of preparation is appropriate. Further
information is provided in note 1 of the financial statements on page 19.
Foreign exchange
The Group does not hedge foreign currency profit and loss translation
exposure, and therefore the statutory results are impacted by movements in
exchange rates. The average rates used to translate the consolidated income
statement and to normalise prior year underlying and organic figures are as
follows:
Average exchange rates (equal to GBP) H1 25 H1 24 Change
Euro (€) 1.20 1.16 +3%
US Dollar ($) 1.27 1.25 +1%
Canadian Dollar (C$) 1.80 1.70 +6%
South African Rand (ZAR) 23.12 23.60 -2%
Appendix 1 - Alternative Performance Measures
Alternative Performance Measures are used by the Group to understand and
manage performance. These are not defined under International Financial
Reporting Standards (IFRS) or UK-adopted International Accounting Standards
(UK-IFRS) and are not intended to be a substitute for any IFRS or UK-IFRS
measures of performance but have been included as management considers them to
be important measures, alongside the comparable GAAP financial measures, in
assessing underlying performance. Wherever appropriate and practical, we
provide reconciliations to relevant GAAP measures. The table below sets out
the basis of calculation of the Alternative Performance Measures and the
rationale for their use.
MEASURE DESCRIPTION RATIONALE
Underlying (revenue and profit) measures Underlying measures are adjusted to exclude items which in management's Underlying measures allow management and investors to compare performance
judgement need to be disclosed separately by virtue of their size, nature or without the effects of foreign exchange movements or recurring or
frequency to aid understanding of the performance for the year or non-recurring items.
comparability between periods:
By including part-period contributions from acquisitions, discontinued
· Recurring items include purchase price adjustments including operations, disposals and assets held for sale of standalone businesses in the
amortisation of acquired intangible assets and adjustments made to reduce current and/or prior periods, the impact of M&A decisions on earnings per
deferred income arising on acquisitions, acquisition-related items and share growth can be evaluated.
unhedged FX on intercompany balances; and
· Non-recurring items that management judge to be one-off or
non-operational, such as gains and losses on the disposal of assets,
impairment charges and reversals, and restructuring related costs.
Recurring items are adjusted each period irrespective of materiality to ensure
consistent treatment.
Underlying basic EPS is also adjusted for the tax impact of recurring and
non-recurring items.
All prior period underlying measures (revenue and profit) are retranslated at
the current year exchange rates to neutralise the effect of currency
fluctuations.
Organic (revenue and profit) measures In addition to the adjustments made for Underlying measures, Organic measures: Organic measures allow management and investors to understand the
like‑for‑like revenue and current period margin performance of the
· Exclude the contribution from discontinued operations, disposals and continuing business.
assets held for sale of standalone businesses in the current and prior period;
and
· Exclude the contribution from acquired businesses until the year
following the year of acquisition; and
· Adjust the comparative period to present prior period acquired
businesses as if they had been part of the Group throughout the prior period.
Acquisitions and disposals where the revenue and contribution impact would be
immaterial are not adjusted.
Underlying Cash Flow from Operations Underlying Cash Flow from Operations is Underlying Operating Profit adjusted To show the cash flow generated by the operations and calculate underlying
for non-cash items, net capital expenditure (excluding business combinations cash conversion.
and similar items) and changes in working capital.
Underlying Cash Conversion Underlying Cash Flow from Operations divided by Underlying (as reported) Cash conversion informs management and investors about the cash operating
Operating Profit. cycle of the business and how efficiently operating profit is converted into
cash.
Underlying EBITDA Underlying EBITDA is Underlying Operating Profit excluding underlying To calculate the Net Debt to Underlying EBITDA leverage ratio and to show
depreciation, amortisation and share-based payments. profitability before the impact of major non-cash charges.
Underlying depreciation and amortisation is the statutory equivalent measure,
adjusted for the amortisation of acquired intangibles. Underlying share-based
payments is the statutory equivalent measure, adjusted for M&A-related
share-based payment charges included within other M&A activity related
items.
Annualised recurring revenue Annualised recurring revenue ("ARR") is the normalised recurring revenue in ARR represents the annualised value of the recurring revenue base that is
the last month of the reporting period, adjusted consistently period to expected to be carried into future periods, and its growth is a
period, multiplied by twelve. Adjustments to normalise reported recurring forward‑looking indicator of reporting recurring revenue growth.
revenue involve adjusting for certain components (such as non‑refundable
contract sign‑up fees) to ensure the measure reflects that part of the
revenue base which (subject to ongoing use and renewal) can reasonably be
expected to repeat in future periods.
Renewal Rate by Value The ARR from renewals, migrations, upsell and cross-sell of active customers As an indicator of our ability to retain and generate additional revenue from
at the start of the year, divided by the opening ARR for the year. our existing customer base through up and cross sell.
Free Cash Flow Free Cash Flow is Underlying Cash Flow from Operations minus net interest To measure the cash generated by the operating activities during the period
paid, derivative financial instruments and income tax paid, and adjusted for that is available to repay debt, undertake acquisitions or distribute to
non-recurring cash items (which excludes net proceeds on disposals of shareholders.
subsidiaries) and profit and loss foreign exchange movements.
% Subscription Penetration Underlying software subscription revenue as a percentage of underlying total To measure the progress of migrating our customer base from licence and
revenue. maintenance to a subscription relationship.
Return on Capital Employed (ROCE) ROCE is calculated as underlying Operating Profit, minus As an indicator of the current period financial return on the capital invested
in the Company. ROCE is used as an underpin in the FY21, FY22 and FY23 PSP
amortisation of acquired intangibles, the result being divided by capital awards.
employed, which is the average (of the opening and closing balance for the
period) total net assets excluding net debt, derivative financial instruments,
provisions for non-recurring costs, financial liability for the purchase of
own shares and tax assets or liabilities.
Net debt Net debt is cash and cash equivalents less current and non-current borrowings. To calculate the Net Debt to Underlying EBITDA leverage ratio and an indicator
of our indebtedness.
Consolidated income statement
For the six months ended 31 March 2025
Six months Six months
ended ended
31 March 31 March
2025 2024
(Unaudited) Note £m £m
Revenue 2 1,242 1,152
Cost of sales (90) (82)
Gross profit 1,152 1,070
Selling and administrative expenses (897) (855)
Operating profit 2 255 215
Finance income 7 10
Finance costs (26) (22)
Profit before income tax 236 203
Income tax expense 4 (56) (47)
Profit for the period 180 156
Profit attributable to:
Owners of the parent 180 156
Earnings per share attributable to the owners of the parent (pence)
Basic 6 18.16p 15.31p
Diluted 6 17.86p 15.03p
The notes on pages 19 to 36 form an integral part of these condensed
consolidated half-yearly financial statements.
Consolidated statement of comprehensive income
For the six months ended 31 March 2025
(Unaudited) Six months Six months
ended
ended
31 March
31 March
2025
2024
£m £m
Profit for the period 180 156
Items of other comprehensive income that will not be reclassified to profit or
loss, net of tax:
Fair value reassessment of equity investments (2) -
(2) -
Items of other comprehensive income that may be reclassified to profit or
loss, net of tax:
Exchange differences on translating foreign operations and net investment 33 (29)
hedges
Changes in fair value of foreign currency basis of hedge relationships (2) -
Amortisation of foreign currency basis of hedge relationships 1 -
Cash flow hedges 2 (1)
34 (30)
Other comprehensive income/(expense) for the period, net of tax 32 (30)
Total comprehensive income for the period 212 126
Consolidated balance sheet
As at 31 March 2025
Note 31 March 31 March 30 September
2025
2024
2024*
£m
£m
£m
(Unaudited)
Non-current assets
Goodwill 7 2,201 2,190 2,122
Other intangible assets 7 213 245 228
Property, plant and equipment 7 123 101 108
Equity investments 4 6 6
Trade and other receivables 139 136 137
Deferred income tax assets 99 73 81
Derivative financial instruments 14 13 29
2,793 2,764 2,711
Current assets
Trade and other receivables 451 391 404
Current income tax asset 10 37 16
Cash and cash equivalents 9 574 448 508
Assets classified as held for sale 11 - 7 -
1,035 883 928
Total Assets 3,828 3,647 3,639
Current liabilities
Trade and other payables (464) (371) (405)
Current income tax liabilities (40) (26) (26)
Borrowings 9 (15) (15) (15)
Provisions (17) (15) (22)
Deferred income (870) (803) (758)
(1,406) (1,230) (1,226)
Non-current liabilities
Borrowings 9 (1,535) (1,244) (1,231)
Post-employment benefits (23) (20) (23)
Deferred income tax liabilities (18) (19) (19)
Provisions (23) (27) (25)
Trade and other payables (6) (6) (3)
Deferred income (6) (5) (6)
Derivative financial instruments (12) (8) (13)
(1,623) (1,329) (1,320)
Total liabilities (3,029) (2,559) (2,546)
Net assets 799 1,088 1,093
Equity attributable to owners of the parent
Ordinary shares 8 11 11 11
Share premium 8 548 548 548
Other reserves 8 123 159 88
Retained earnings 117 370 446
Total equity 799 1,088 1,093
*Adjusted for finalisation of the fair value of assets acquired and
liabilities assumed in the acquisition of Infineo SAS (see notes 1 and 11).
Consolidated statement of changes in equity
For the six months ended 31 March 2025
Attributable to owners of the parent
(Unaudited) Ordinary Share Other reserves £m Retained Total
shares
premium
earnings
equity
£m
£m
£m
£m
At 1 October 2024 11 548 88 446 1,093
Adjustment on initial application of IFRS 9 hedge accounting - - 1 (1) -
Adjusted opening shareholders' equity 11 548 89 445 1,093
Profit for the period - - - 180 180
Other comprehensive expense, net of tax
Exchange differences on translating foreign operations and net investment - - 33 - 33
hedges
Changes in fair value of foreign currency basis of hedge relationships - - (2) - (2)
Amortisation of foreign currency basis of hedge relationships - - 1 - 1
Cash flow hedges - - 2 - 2
Fair value reassessment of equity investments - - - (2) (2)
Total comprehensive income - - 34 178 212
for the period ended 31 March 2025
Transactions with owners
Employee share option scheme - value of employee services including deferred - - - 33 33
tax
Proceeds from issuance of treasury shares - - - 3 3
Share buyback programme - - - (407) (407)
Dividends paid to owners of the parent - - - (135) (135)
Total transactions with owners - - - (506) (506)
for the period ended 31 March 2025
At 31 March 2025 11 548 123 117 799
Consolidated statement of changes in equity
For the six months ended 31 March 2024
Attributable to owners of the parent
(Unaudited) Ordinary Share Other reserves Retained Total
shares
premium
£m
earnings
equity
£m
£m
£m
£m
At 1 October 2023 12 548 189 658 1,407
Profit for the period - - - 156 156
Other comprehensive expense
Exchange differences on translating foreign operations and net investment - - (29) - (29)
hedges
Cash flow hedges - - (1) - (1)
Total comprehensive (expense)/income - - (30) 156 126
for the period ended 31 March 2024
Transactions with owners
Employee share option scheme - value of employee services including deferred - - - 33 33
tax
Proceeds from issuance of treasury shares - - - 2 2
Cancellation of ordinary shares (1) - - 1 -
Share buyback programme - - - (351) (351)
Dividends paid to owners of the parent - - - (129) (129)
Total transactions with owners (1) - - (444) (445)
for the period ended 31 March 2024
At 31 March 2024 11 548 159 370 1,088
Consolidated statement of cash flows
For the six months ended 31 March 2025
(Unaudited) Notes Six months Six months
ended
ended
31 March
31 March
2025
2024
£m
£m
Cash flows from operating activities
Cash generated from continuing operations 9 330 297
Interest paid (42) (41)
Income tax paid (38) (46)
Net cash generated from operating activities 250 210
Cash flows from investing activities
Purchase of equity investment - (2)
Acquisition of subsidiaries, net of cash acquired 11 (28) -
Purchases of intangible assets 7 (10) (10)
Purchases of property, plant and equipment 7 (25) (4)
Interest received 7 11
Net cash used in investing activities (56) (5)
Cash flows from financing activities
Proceeds from borrowings 9 297 -
Repayments of borrowings (2) -
Borrowing costs (1) (1)
Capital element of lease payments (9) (8)
Receipt of lease incentive 6 -
Proceeds from issuance of treasury shares 3 2
Share buyback programme 8 (296) (306)
Dividends paid to owners of the parent 5 (135) (129)
Net cash generated used in financing activities (137) (442)
Net increase/(decrease) in cash and cash equivalents 57 (237)
(before exchange rate movement)
Effects of exchange rate movement 9 9 (11)
Net increase/(decrease) in cash and cash equivalents 66 (248)
Cash and cash equivalents at 1 October 9 508 696
Cash and cash equivalents at period end 9 574 448
Notes to the financial information
For the six months ended 31 March 2025
1. Group accounting policies
General information
The Sage Group plc ("the Company") and its subsidiaries (together "the Group")
is a leader in accounting, financial, HR and payroll technology for small and
mid-sized businesses.
These condensed consolidated half-yearly financial statements were approved
for issue by the Board of Directors on 14 May 2025.
The financial information set out above does not constitute the Company's
annual financial statements. Statutory Accounts for the year ended 30
September 2024 have been delivered to the Registrar of Companies. The
auditor's report was unqualified, did not include a reference to any matters
to which the auditor drew attention by way of emphasis without qualifying
their report and did not contain statements under section 498 (2) and (3) of
the Companies Act 2006.
The financial information has been prepared on the basis of the accounting
policies and critical accounting estimates and judgements as set out in the
annual financial statements for the year ended 30 September 2024, unless
otherwise stated. As at 1 October 2024 the Group elected to apply the hedge
accounting requirements in IFRS 9 (Financial Instruments).
These condensed consolidated half-yearly financial statements have been
reviewed, not audited.
The Company is a limited liability company incorporated and domiciled in the
UK. The address of its registered office is C23 - 5 & 6 Cobalt Park Way,
Cobalt Park, Newcastle upon Tyne, NE28 9EJ. The Company is listed on the
London Stock Exchange.
All figures presented are rounded to the nearest £m, unless otherwise stated.
Basis of preparation
The financial information for the six months ended 31 March 2025 has been
prepared in accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and with IAS 34, 'Interim Financial Reporting' as
issued by the International Accounting Standards Board ("IASB") and as adopted
for use in the UK.
These condensed consolidated half-yearly financial statements should be read
in conjunction with the annual financial statements for the year ended 30
September 2024, which have been prepared in accordance with UK-adopted
International Accounting Standards ("UK-IFRS") and International Financial
Reporting Standards ("IFRS") as issued by the IASB.
Going concern
As at 31 March 2025, the Group had a strong liquidity position with cash and
available liquidity of £1.2bn, supported by underlying cash conversion of
115% reflecting the robust subscription-based business model. The Group's
position is further supported by a well-diversified customer base amongst
small and mid-sized businesses with high quality recurring revenue and strong
retention rates.
In reaching its assessment on going concern, the Directors have reviewed
liquidity forecasts for the Group for a period of at least 12 months from the
date of the approval of these financial statements (the going concern
assessment period), which reflect the expected impact of economic conditions
on trading.
Scenario-specific stress testing has been performed, with the level of churn
assumptions increased by 75%, and a significant reduction in the level of new
customer acquisition and sales to existing customers. In these severe stress
scenarios, the Group continues to have sufficient resources to continue in
operational existence, without the need to seek additional financing. If more
severe impacts occur, controllable mitigating actions to protect liquidity,
including the reduction of discretionary spend, are available to the Group
should they be required.
The Directors also reviewed the results of reverse stress testing to provide
an illustration of the level of churn and deterioration in new customer
acquisition which would be required to exhaust liquidity down to minimum
working capital requirements. The result of the reverse stress testing has
highlighted that such a scenario would only arise following a significant
deterioration in performance, well in excess of the assumptions considered in
the stress testing scenarios. The probability of these factors occurring is
deemed to be remote given the resilient nature of the subscription business
model, robust balance sheet, and continued strong cash conversion.
After making enquiries, the Directors have a reasonable expectation that Sage
has adequate resources to continue in operation throughout the going concern
assessment period. Accordingly, these condensed consolidated half-yearly
financial statements have been prepared on a going concern basis.
Accounting policies
As at 1 October 2024 the Group elected to apply the hedge accounting
requirements in IFRS 9 (Financial Instruments). This standard introduces
simplified hedge accounting through closer alignment with the entity's risk
management methodology.
All existing hedge relationships were regarded as continuing hedge
relationships. All such designated hedge relationships under IAS 39 as at 30
September 2024 met the criteria for hedge accounting under IFRS 9 as the
Group's risk management strategies and hedge documentation were aligned to the
new standard.
The Group has adopted the modified transition approach and therefore adjusted
opening retained earnings and other reserve balances for the impact of
adopting IFRS 9 for hedge accounting and has not restated prior period
comparatives.
Under IAS 39, the Group included the cost of hedging within the hedge
relationship. On transition, IFRS 9 allows the choice to separate aspects of
the cost of hedging from the designation within a hedge relationship as part
of the hedging instrument. Under IFRS 9, in relation to the cross-currency
interest rate swaps that are designated in the aforementioned hedge
relationships, the Group has separated the costs relating to currency basis
from the hedge relationship and therefore allocates this component within a
newly recognised cost of hedging reserve.
On transition to IFRS 9, an equity classification adjustment was recognised
for which £3m was credited to the translation reserve and £1m to the cash
flow hedging reserve, offset by £4m debited to the costs of hedging reserve.
The value of the cost of hedging reserve at designation of the hedge
relationship is amortised to the income statement (within finance costs) over
the expected life of the hedge relationship. An adjustment between the cost of
hedging reserve and retained earnings of £1m was recognised on transition to
reflect the cumulative effect of hedging costs that would have been recognised
under IFRS 9 over the life of the Group's existing hedging arrangements up to
the date of adoption.
Other than the changes above, there are no additional accounting differences
applied as a result of the adoption of IFRS 9 for hedge accounting when
compared to the previous accounting policies under IAS 39.
The impact on the six months ended 31 March 2025 is not material and the
transition did not result in any changes in the measurement or classification
of financial instruments as at 1 October 2024.
Adoption of new and revised IFRSs
There are no accounting standards, amendments or interpretations effective for
the first time this financial period that have had a material impact on the
Group. No standards have been early adopted during the period.
The Directors also considered the impact on the Group of new and revised
accounting standards, interpretations, or amendments which have been issued
but were not effective for the Group for the period ended 31 March 2025.
On 9 April 2024, the IASB issued a new standard IFRS 18 "Presentation and
Disclosure in Financial Statements", which, if adopted by the UK Endorsement
Board, will be effective for annual reporting periods beginning on or after 1
January 2027. While IFRS 18 will not impact the recognition or measurement of
items in the financial statements, it will likely result in changes to how
Sage presents certain information. The Group is in the process of assessing
the impact that the application of this standard will have on the Group's
financial statements when first applied.
No other new or revised accounting standards, interpretations, or amendments
which have been issued but were not effective are expected to have a material
impact on the Group's financial statements when first applied.
Accounting estimates and judgements
The preparation of financial statements requires the use of accounting
estimates and judgements by management, including in the application of
accounting policies. We continually evaluate our estimates and judgements
based on available information.
Management has determined that there are no areas of estimation uncertainty
that could be significant under IAS 1 (Presentation of Financial Statements),
being areas of estimation uncertainty with a significant risk of a material
change to the carrying value of assets and liabilities within the next
financial year.
Other key estimates are made when preparing the financial statements, which,
while not meeting the definition of a significant estimate under IAS 1,
involve the measurement of certain material assets or a higher degree of
complexity.
Significant judgements are those made by management in applying our accounting
policies that have a material impact on the amounts presented in the financial
statements.
Management's rationale in relation to these key accounting estimates and
significant judgements are regularly assessed and, where material in value or
in risk, are discussed with the Audit and Risk Committee. These areas are
discussed in further detail below.
Revenue recognition (judgement)
Over a third of the Company's revenue is generated from sales to business
partners rather than end users. The key judgement is determining whether the
business partner is a customer of the Group. The key criteria in this
determination is whether the business partner has taken control of the
product. Considering the nature of Sage's subscription products and support
services, this is usually assessed based on whether the business partner has
responsibility for payment, has discretion to set prices, and takes on the
risks and rewards of the product from Sage.
Where the business partner is a customer of Sage, discounts are recognised as
a deduction from revenue.
Where the business partner is not a customer of Sage and their part in the
sale has simply been in the form of a referral, they are remunerated in the
form of a commission payment. These payments are treated as contract
acquisition costs.
Goodwill impairment (estimate)
The estimates applied in calculating the value in use of the Cash Generating
Units (CGUs) being tested for impairment are a source of estimation
uncertainty. The key estimates considered in the calculation relate to the
future performance expectations of the business and include the average
medium-term revenue growth rate, the long-term growth rate of net operating
cash flows and the discount rate.
Management has performed a review for indicators of impairment of goodwill as
at 31 March 2025. As a result of this review, no indicators of impairment have
been identified.
The carrying value of goodwill and the key estimates used in performing the
annual impairment assessment are disclosed in note 6.1 of the annual financial
statements for the year ended 30 September 2024.
Business combinations (judgement and estimate)
In the period, the Group finalised the purchase price accounting for the
acquisitions of Infineo SAS ("Infineo") and Tritium Software, S.L. ("Tritium
Software") (see note 11). As part of finalising the purchase price accounting,
external independent valuation experts were engaged to support with the
identification and valuation of acquired intangible assets:
· Judgment was required with respect to the identification of
acquired intangible assets, with both technology and customer relationships
being identified. Subsequently, the valuation of those acquired intangible
assets involved key estimates.
· Valuation techniques including the relief from royalty method, the
multi-period excess earnings method and income approach were used to value the
technology and customer relationships. The key estimates requiring
consideration as part of the valuations included the application of a discount
rate and the use of an appropriate royalty rate.
Website
This condensed consolidated half-yearly financial report for the six months
ended 31 March 2025 can also be found on our website:
www.sage.com/investors/financial-information/results
(http://www.sage.com/investors/investor-downloads)
2. Segment information
In accordance with IFRS 8 (Operating Segments) information for the Group's
operating segments has been derived using the information used by the chief
operating decision maker. The Group's Executive Leadership Team ("ELT") has
been identified as the chief operating decision maker, in accordance with
their designated responsibility for the allocation of resources to operating
segments and assessing their performance through the Monthly Performance
Reviews. The ELT uses organic and underlying data to monitor business
performance. Operating segments are reported in a manner which is consistent
with the operating segments produced for internal management reporting.
The Group is organised into three key operating segments:
· North America
· United Kingdom, Ireland, Africa and APAC (UKIA)
· Europe
For reporting under IFRS 8 each of the three operating segments above
represents a reportable segment.
The revenue analysis in the table below is based on the location of the
customer, which is not materially different from the location where the order
is received and where the assets are located.
Revenue by segment
Six months ended 31 March 2025
Statutory Organic Change Change Change
£m
Statutory
Underlying
Organic
£m Organic adjustments*
%
%
%
Underlying £m
£m
Recurring revenue by segment
North America 554 554 - 554 9% 11% 11%
UKIA 350 350 - 350 9% 9% 9%
Europe 299 299 (3) 296 5% 8% 7%
Recurring revenue 1,203 1,203 (3) 1,200 8% 10% 9%
Other revenue by segment
North America 14 14 - 14 1% 2% 2%
UKIA 8 8 - 8 5% 4% 4%
Europe 17 17 - 17 (7%) (4%) (5%)
Other revenue 39 39 - 39 (2%) 0% (1%)
Total revenue by segment
North America 568 568 - 568 9% 11% 11%
UKIA 358 358 - 358 9% 9% 9%
Europe 316 316 (3) 313 4% 8% 7%
Total revenue 1,242 1,242 (3) 1,239 8% 9% 9%
* Adjustments relate to the acquisition of Tritium Software.
Six months ended 31 March 2025
Organic Change Change Change
£m
Statutory
Underlying
Organic
Statutory Organic adjustments*
%
%
%
£m Underlying £m
£m
Total revenue by type
Software subscription revenue 1,031 1,031 (3) 1,028 10% 12% 11%
Other recurring revenue 172 172 - 172 (2%) 0% 0%
Recurring revenue 1,203 1,203 (3) 1,200 8% 10% 9%
Other revenue 39 39 - 39 (2%) 0% (1%)
Total revenue 1,242 1,242 (3) 1,239 8% 9% 9%
* Adjustments relate to the acquisition of Tritium Software.
Six months ended 31 March 2024
Statutory and Underlying as reported Impact of foreign exchange Underlying Organic Organic
£m
£m
£m
adjustments*
£m
£m
Recurring revenue by segment
North America 506 (9) 497 2 499
UKIA 321 1 322 - 322
Europe 285 (9) 276 1 277
Recurring revenue 1,112 (17) 1,095 3 1,098
Other revenue by segment
North America 14 - 14 - 14
UKIA 7 - 7 - 7
Europe 19 (1) 18 - 18
Other revenue 40 (1) 39 - 39
Total revenue by segment
North America 520 (9) 511 2 513
UKIA 328 1 329 - 329
Europe 304 (10) 294 1 295
Total revenue 1,152 (18) 1,134 3 1,137
* Adjustments relate to the acquisition of Infineo and Anvyl, Inc. ("Anvyl")
in the previous year.
Six months ended 31 March 2024
Statutory and Underlying as reported Impact of foreign Underlying Organic Organic
£m
exchange
£m
adjustments*
£m
£m
£m
Total revenue by type
Software subscription revenue 937 (14) 923 3 926
Other recurring revenue 175 (3) 172 - 172
Recurring revenue 1,112 (17) 1,095 3 1,098
Other revenue 40 (1) 39 - 39
Total revenue 1,152 (18) 1,134 3 1,137
* Adjustments relate to the acquisition of Infineo and Anvyl in the previous
year.
Operating profit by segment
Six months ended 31 March 2025
Statutory £m Underlying Underlying Organic Change Change Change
adjustments*
£m
£m
Statutory
Underlying
Organic
£m Organic adjustments **
%
%
%
£m
Operating profit by segment
North America 117 14 131 - 131 36% 27% 28%
UKIA 87 11 98 - 98 17% 5% 5%
Europe 51 8 59 - 59 (8%) 15% 11%
Total operating profit 255 33 288 - 288 18% 16% 16%
* Adjustments are detailed in note 3.
** Adjustments relate to the acquisition of Tritium Software.
Six months ended 31 March 2024
Statutory £m Underlying adjustments* £m Underlying as reported Impact of foreign exchange Underlying Organic adjustments** Organic
£m
£m
£m
£m £m
Operating profit by segment
North America 86 20 106 (3) 103 - 103
UKIA 74 20 94 (1) 93 - 93
Europe 55 (1) 54 (3) 51 1 52
Total operating profit 215 39 254 (7) 247 1 248
* Adjustments are detailed in note 3.
** Adjustments relate to the acquisition of Infineo and asset purchase of
Anvyl in the previous year.
3. Adjustments between underlying and statutory profit
Six months ended 31 March 2025 Six months ended 31 March 2024
Operating Profit Operating Profit
profit before tax profit before tax
£m
£m
£m
£m
Statutory measures 255 236 215 203
Recurring items
· Amortisation of acquired intangibles 22 22 26 26
· Other M&A activity-related items 13 13 17 17
· Foreign currency movements on intercompany balances - 1
- -
Non-recurring items:
· Reversal of property restructuring costs (2) (2) - -
· Reversal of employee-related costs - - (3) (3)
· Reversal of restructuring costs - - (1) (1)
Underlying (as reported) measures 288 270 254 242
Impact of foreign exchange - - (7) (7)
Underlying measures 288 270 247 235
Recurring items
Recurring items impacting operating profit (reported within selling and
administrative costs) and profit before tax comprise:
· Amortisation of acquired intangibles £22m (six months ended 31
March 2024: £26m) which have previously been recognised as part of business
combinations or similar transactions.
· Other M&A activity-related items £13m (six months ended 31
March 2024: £17m) which include advisory, legal, accounting, valuation and
other professional or consulting services which are related to M&A
activity, as well as acquisition-related remuneration and directly
attributable integration costs. £6m (six months ended 31 March 2024: £2m) of
these costs have been paid in the period, while the remainder are expected to
be paid in subsequent periods.
Non-recurring items
Non-recurring items impacting operating profit (reported within selling and
administrative costs) and profit before tax comprise:
· Reversal of property restructuring costs £2m (six months ended 31
March 2025: £nil) arising as a result of a sub-lease entered into for a
property site in North America, which had previously been exited.
· Reversal of employee-related costs of £3m in the prior year
relates to unutilised employee-related provisions recognised in previous years
for French payroll taxes.
· Reversal of restructuring costs of £1m in the prior year relates
to unutilised provisions previously recognised.
In total for the six months ended 31 March 2025, cash paid in respect of
recurring and non-recurring items (some of which was incurred in prior
periods) of £28m, comprised £22m of other M&A activity-related items and
£6m of employee-related costs. (For the six months ended 31 March 2024, cash
paid in respect recurring and non-recurring items of £35m comprised £31m of
other M&A activity-related items, £3m of restructuring costs and £1m of
property restructuring costs).
The tax impact of recurring and non-recurring adjustments between statutory
and underlying profit before tax is £8m, of which £8m relates to recurring
items and £nil relates to non-recurring items (for the six months ended 31
March 2024, the tax impact is £9m, of which £10m relates to recurring items,
and £(1)m relates to non-recurring items). For the impact of these on the
effective tax rates, see note 4.
4. Income tax expense
The effective tax rate on statutory profit before tax was 24% (six months
ended 31 March 2024: 23%) whilst the effective tax rate on underlying profit
before tax for continuing operations was 24% (six months ended 31 March 2024:
23%). The effective income tax rate represents the best estimate of the
Group's average effective income tax rate expected for the full year, applied
to the profit before income tax for the six months ended 31 March 2025.
The Group is in scope of the OECD's Pillar Two global tax reform for the
financial year ended 30 September 2025. Pillar Two is not expected to
materially impact the Group's effective tax rate.
For the period to 31 March 2025, the Group has continued to apply the
mandatory exception to recognising and disclosing information about deferred
tax assets and liabilities related to Pillar Two income taxes.
5. Dividends
Six months ended Six months ended Year
31 March 2025
ended
£m 31 March
30 September
2024
2024
£m
£m
Final dividend paid for the year ended 30 September 2023 of 12.75p per share - 129 129
Interim dividend paid for the year ended 30 September 2024 of 6.95p per share - - 70
Final dividend paid for the year ended 30 September 2024 of 13.50p per share 135 - -
135 129 199
The interim dividend of 7.45 pence per share will be paid on 27 June 2025 to
shareholders on the register at the close of business on 30 May 2025. The
Company's distributable reserves are sufficient to support the payment of this
dividend. These condensed consolidated half-yearly financial statements do not
reflect this proposed dividend payable.
6. Earnings per share
Basic earnings per share is calculated by dividing the profit for the period
attributable to owners of the parent by the weighted average number of
ordinary shares in issue during the period, excluding those held as treasury
shares and held by the Employee Benefit Trust, which are treated as cancelled,
until reissued.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all potentially dilutive ordinary
shares, exercisable at the end of the period.
Underlying Underlying Underlying Statutory Statutory
Six months ended
as reported Six months ended
Six months ended
Six months ended
Six months ended
31 March
31 March
31 March
31 March
2025
2024
2024
2025 31 March
2024
Earnings attributable to owners of the parent (£m)
Profit for the period 206 186 180 180 156
Number of shares (millions)
Weighted average number of shares for basic earnings per share 993 1,016 1,016 993 1,016
Dilutive effects of shares 16 19 19 16 19
Weighted average number of shares for diluted earnings per share 1,009 1,035 1,035 1,009 1,035
Earnings per share attributable to owners of the parent (pence)
Basic earnings per share 20.81 18.22 17.75 18.16 15.31
Diluted earnings per share 20.47 17.89 17.42 17.86 15.03
Reconciliation of earnings Six months ended Six months ended
31 March
31 March
2025
2024
£m
£m
Statutory profit for the period attributable to owners of the parent 180 156
Adjustments:
· Recurring items 36 43
· Non-recurring items (2) (4)
Taxation on adjustments between statutory and underlying profit before tax (8) (9)
Underlying profit for the period attributable to owners of the parent (as 206 186
reported)
Impact of movement in foreign currency exchange rates - (6)
Underlying profit for the period (after exchange movement) attributable to 206 180
owners of the parent
7. Non-current assets
Goodwill Other Property, Total
intangible
plant and equipment
£m
assets
£m £m
£m
Opening net book amount at 1 October 2024* 2,122 228 108 2,458
Additions - 7 31 38
Acquisitions 25 6 - 31
Depreciation, amortisation and other movements - (31) (16) (47)
Exchange movement 54 3 - 57
Closing net book amount at 31 March 2025 2,201 213 123 2,537
* Opening net book amount adjusted for finalisation of fair value of assets
acquired and liabilities assumed in the acquisition of Infineo in the prior
year (see notes 1 & 11).
Goodwill Other Property, Total
£m
intangible
plant and
£m
assets
equipment
£m
£m
Opening net book amount at 1 October 2023 2,245 274 104 2,623
Additions - 9 21 30
Transfer to held for sale - - (7) (7)
Depreciation, amortisation and other movements - (35) (15) (50)
Exchange movement (55) (3) (2) (60)
Closing net book amount at 31 March 2024 2,190 245 101 2,536
8. Equity
Ordinary shares and share premium
Number of Ordinary Share premium Total
shares
Shares
£m
£m
£m
At 1 October 2024 1,071,499,517 11 548 559
Cancellation of shares* (22,188,837) - - -
At 31 March 2025 1,049,310,680 11 548 559
Number of Ordinary Share premium Total
shares
Shares
£m
£m
£m
At 1 October 2023 1,100,789,295 12 548 560
Cancellation of shares (25,920,557) (1) - (1)
At 31 March 2024 1,074,868,738 11 548 559
*Cancellation of shares in the six months ended 31 March 2025 resulted in a
reduction of the nominal value of ordinary shares of less than £1m.
As at 31 March 2025:
· The Group held 61,472,220 treasury shares (30 September 2024:
66,725,007). During the period the Group transferred 5,252,787 treasury shares
to employees in order to satisfy vested awards (six months ended 31 March
2024: 5,173,523).
· The Employee Benefit Trust held 8,211,546 ordinary shares in the
Company (30 September 2024: 8,473,802 ordinary shares). During the period, the
Employee Benefit Trust satisfied the vesting of certain share awards utilising
263,336 ordinary shares (six months ended 31 March 2024: 132,643).
The Employee Benefit Trust did not receive additional funds for the purchase
of shares in the market (six months ended 31 March 2024: £nil).
On 19 November 2024, the Group approved a share buyback programme of its
ordinary shares of up to £400m, which commenced on 20 November 2024 and is
expected to end no later than 3 June 2025.
During the six months ended 31 March 2025, the Group purchased a total of
23,614,479 ordinary shares, of which 22,188,837 were cancelled as at 31 March
2025. The total consideration for those shares purchased in the current period
amounted to £300m, of which £295m had been paid as at 31 March 2025. Of the
expected associated taxes, £1m had been paid as at 31 March 2025.
At 31 March 2025, a liability of £111m is recorded within trade and other
payables representing the remaining amount to be paid under the share buyback
programme announced on 20 November 2024.
Other Reserves
All components of other reserves are presented on a consolidated basis on the
face of the consolidated statement of changes in equity.
Translation reserve Cash flow hedging Reserve Cost of hedging reserve Merger Reserve Total
£m £m £m £m £m
At 1 October 2024 23 4 - 61 88
Adjustment on initial application of IFRS 9 hedge accounting 3 1 (3) - 1
At 1 October 2024 - Adjusted 26 5 (3) 61 89
Exchange differences on translating foreign operations and net investment 33 - - - 33
hedges
Changes in fair value of foreign currency basis of hedge relationships - - (2) - (2)
Amortisation of foreign currency basis of hedge relationships - - 1 - 1
Cash flow hedges - 2 - - 2
At 31 March 2025 59 7 (4) 61 123
On transition to IFRS 9, an equity classification adjustment was recognised
for which £3m was credited to the translation reserve and £1m to the cash
flow hedging reserve, offset by £4m debited to the costs of hedging reserve.
An adjustment between the cost of hedging reserve and retained earnings of
£1m was also recognised on transition to reflect the cumulative effect of
hedging costs that would have been amortised to the income statement under
IFRS 9 over the life of the Group's existing hedging arrangements up to the
date of adoption.
Translation reserve Hedging reserve Merger Reserve Total
£m £m £m £m
At 1 October 2023 124 4 61 189
Exchange differences on translating foreign operations and net investment (29) - - (29)
hedges
Cash flow hedges - (1) - (1)
At 31 March 2024 95 3 61 159
9. Cash flow and net debt
Reconciliation of profit for the year to cash generated from continuing Six months ended Six months ended
operations
31 March
31 March
2025
2024
£m
£m
Profit for the year 180 156
Adjustments for:
Income tax 56 47
Finance income (7) (10)
Finance costs 26 22
Amortisation of intangible assets 31 35
Depreciation of property, plant and equipment 15 15
R&D tax credits (1) -
Equity-settled share-based transactions 25 24
Exchange movement (4) (2)
Changes in working capital:
Increase in trade and other receivables (43) (24)
Decrease in trade and other payables and provisions (47) (41)
Increase in deferred income 99 75
Cash generated from continuing operations 330 297
Reconciliation of net cash flow to movement in net debt Six months ended Six months ended
31 March
31 March
2025
2024
£m
£m
Cash inflows/(outflows) in the year (pre-exchange movements) 56 (237)
Cash (inflows)/outflows from loans and lease liabilities (290) 8
Change in net debt resulting from cash flows (234) (229)
Cash and lease liabilities recognised from acquisitions of subsidiaries or (1) -
similar transactions
Other non-cash movements (8) (18)
Exchange movement 5 (3)
Movement in net debt in the year (238) (250)
Net debt at 1 October (738) (561)
Net debt at 31 March (976) (811)
At Cash flow Non-cash movements Exchange movement At
1 October 2024
£m
£m
£m
31 March 2025
Analysis of change in net debt
£m
£m
Acquisitions
£m
Cash, cash equivalents 508 56 1 - 9 574
Loans due after more than one year (1,156) (295) (2) (2) (2) (1,457)
Lease liabilities due within one year (15) 5 - (5) - (15)
Lease liabilities after more than one year (75) - - (1) (2) (78)
(1,246) (290) (2) (8) (4) (1,550)
Total (738) (234) (1) (8) 5 (976)
At Cash flow Non-cash movements Exchange movement At
1 October 2023
£m
£m
£m
31 March 2024
Analysis of change in net debt
£m
£m
Cash, cash equivalents and bank overdrafts 696 (237) - (11) 448
Liabilities arising from financing activities
Loans due after more than one year (1,171) - (1) 6 (1,166)
Lease liabilities due within one year (14) 8 (9) - (15)
Lease liabilities after more than one year (72) - (8) 2 (78)
(1,257) 8 (18) 8 (1,259)
Total (561) (229) (18) (3) (811)
The Group's debt is sourced from sterling and euro denominated bond notes,
with a syndicated Revolving Credit Facility (RCF) of £630m also available.
Interest coupon* 2025 2024
£m £m
Bonds:
· GBP 350m bond notes 1.63% 350
350
· GBP 400m bond notes 2.88% 400 400
· EUR 500m bond notes 3.82% 419 427
· GBP 300m bond notes 5.63% 300 -
· Unamortised issue and discount costs N/A (11) (9)
Unamortised RCF loan costs N/A (1) (2)
Total 1,457 1,166
* This does not include the impact of cross currency interest rate swaps
entered into in relation to the GBP 350m bond notes and EUR 500m bond notes.
In November 2024, a one-year extension was agreed to the Group's RCF,
resulting in a new maturity in December 2029. At 31 March 2025, £nil of the
RCF was drawn down (30 September 2024: £nil).
During the period, the Group issued sterling denominated bond notes for a
nominal amount of £300m with a maturity date of March 2037. Net cash proceeds
from the issuance were £297m.
10. Financial instruments
The carrying amounts of the following financial assets and liabilities
approximate to their fair values: trade and other payables excluding tax and
social security, trade and other receivables excluding prepayments and accrued
income, lease liabilities, and short-term bank deposits, and cash at bank and
in hand.
The fair value of the sterling and euro denominated bond notes are determined
by reference to quoted market prices and therefore can be considered as a
level 1 fair value as defined within IFRS 13.
The fair value of the cross-currency interest rate swaps held by the Group is
determined using a discounted cash flow valuation technique at market rates
and therefore can be considered as a level 2 fair value as defined within IFRS
13.
The fair value of the swaps held by the Group as at 31 March 2025 was a £2m
net asset, comprised of £14m assets offset by £12m liabilities (31 March
2024: £5m net asset, comprised of £13m assets offset by £8m liabilities).
The Group does not hold any financial liabilities whose fair value would be
considered as a level 3 fair value as defined within IFRS 13.
The respective book and fair values of bond notes and loan notes are included
in the table below.
At 31 March 2025 At 31 March 2024 At 30 September 2024
Book Value Fair Value Book Value Fair Value Book Value Fair Value
£m
£m
£m
£m
£m
£m
Long term-borrowings (excluding lease liabilities) (1,457) (1,332) (1,166) (1,056) (1,156) (1,065)
11. Acquisitions and disposals
Measurement adjustments to business combinations reported using provisional amounts
On 9 September 2024, the Group acquired 100% equity capital and voting rights
of Infineo SAS ("Infineo"), for total cash consideration of £34m.
The net assets acquired and recognised in the financial statements for the
year ended 30 September 2024 were based on a provisional assessment of their
fair value while the Group undertook a valuation of the acquired intangible
assets. Given the timing of the acquisition, the acquisition accounting had
not been finalised by the date the financial statements for the year ended 30
September 2024 were approved for issue by the Board of Directors. During the
period, the valuation and acquisition accounting were approved and completed.
The intangible assets identified and subsequently valued as at the date of
acquisition include:
Valuation Useful economic life
£m
(years)
Acquired intangible assets
Customer relationships 1 10
Technology 8 6
Acquired intangible assets 9
The 2024 comparative information has been restated to reflect the adjustment
to the provisional amounts.
Acquired intangible assets comprise technology, at a fair value of £8m, which
will be amortised over a useful economic life of 6 years and customer
relationships, at a fair value of £1m, which will be amortised over a useful
economic life of 10 years. As a result of the recognition of intangible assets
of £9m, there was an increase in the deferred tax liability of £1m and a
corresponding decrease of £8m to goodwill.
Acquired goodwill of £24m comprises the fair value of the acquired control
premium, workforce in place and the expected synergies. The goodwill has been
allocated to the France CGU where the underlying benefit arising from the
acquisition is expected to be realised. No goodwill is expected to be
deductible for tax purposes. The results of the business are allocated to the
Europe operating segment in line with the underlying operations.
No other adjustments have been made to the provisional fair value of assets
and liabilities reported at 30 September 2024, as set out below:
Fair value of identifiable net assets acquired Previously reported provisional fair values Measurement adjustments Final fair values
£m
£m
£m
Intangible assets - 9 9
Deferred tax liability - (1) (1)
Other identifiable net assets 2 - 2
Fair value of identifiable net assets acquired 2 8 10
Goodwill 32 (8) 24
Total consideration 34 - 34
The increase in amortisation charge on the intangible assets from the
acquisition date to 30 September 2024 was not material and therefore no
adjustment has been made for this. No changes have been identified to the
directly attributable acquisition related costs which were included during the
financial year ended 30 September 2024 in relation to the acquisition.
Acquisitions made during the current period
On 29 October 2024, the Group acquired 100% equity capital and voting rights
of Tritium Software, S.L ("Tritium Software"), a company based in Spain, for a
total consideration of £30m. Tritium Software provides a cloud-native, mobile
workforce management solution for field-based sales teams through its main
product, ForceManager.
Summary of acquisition Total
£m
Cash consideration 28
Deferred consideration 2
Acquisition-date fair value of consideration 30
Fair value of identifiable net assets (5)
Goodwill 25
Fair value of identifiable net assets acquired Total
£m
Acquired intangible assets 6
Other net liabilities (1)
Fair value of identifiable net assets acquired 5
A summary of the acquired intangible assets is set out below: Valuation
£m
Useful economic life
Acquired intangible assets (years)
Customer relationships 1 10
Technology 5 7
Acquired intangible assets 6
Acquired intangible assets comprise technology, at a fair value of £5m, which
will be amortised over a useful economic life of 7 years and customer
relationships, at a fair value of £1m, which will be amortised over a useful
economic life of 10 years.
Acquired goodwill of £25m comprises the fair value of the acquired control
premium, workforce in place and the expected synergies. The goodwill has been
allocated to the Iberia CGU where the underlying benefit arising from the
acquisition is expected to be realised. No goodwill is expected to be
deductible for tax purposes. The results of the business are allocated to the
Europe operating segment in line with the underlying operations.
The outflow of cash and cash equivalents on the acquisition is as follows:
Total
£m
Cash consideration (28)
Cash and cash equivalents acquired 1
Net cash outflow (27)
Transaction costs of £5m relating to the acquisition have been included in
selling and administrative expenses, and classified as other M&A
activity-related items within recurring adjustments between underlying and
statutory results. These costs relate to advisory, legal, and other
professional services. See note 3.
Arrangements have been put in place for retention payments to remunerate
employees of Tritium Software for future services. The total cost of these
arrangements will be recognised in future periods over the retention period,
contingent on employment.
The consolidated income statement reported by Tritium Software for the period
since the acquisition date, includes revenue of £3m and profit after tax of
£nil.
On an underlying and statutory basis, revenue would have increased and profit
after tax would have decreased by an immaterial amount, if Tritium Software
had been acquired at the start of the financial year and included in the
Group's results for the six months ended 31 March 2025.
Disposals and discontinued operations
Discontinued operations and assets and liabilities held for sale
The Group had no discontinued operations during the six-month period ended 31
March 2025 (31 March 2024: none).
There were no assets held for sale at 31 March 2025.
Assets held for sale at 31 March 2024 included the Group's Beaverton property
site, part of the North America operating segment. The sale of the property
site was completed in April 2024. On classification as held for sale, no
adjustment was required to the carrying value of the Beaverton property site
of £7m.
12. Related party transactions
The Group's related parties are its subsidiary undertakings and its key
management personnel, which comprises the Group's Executive Leadership Team
members and the Non-executive Directors. Transactions and outstanding balances
between the parent and its subsidiaries within the Group, and between those
subsidiaries, have been eliminated on consolidation and are not disclosed in
this note.
Key management compensation Six months ended Six months ended
31 March
31 March
2025
2024
£m
£m
Salaries and short-term employee benefits 5 6
Share-based payments 4 4
9 10
Key management personnel are deemed to be members of the Executive Leadership
Team, as defined in the Group's Annual Report and Accounts 2024 and the
Non-executive Directors. Since the signing of the Group's Annual Report and
Accounts 2024, the following changes to the Executive Leadership Team and the
Non-executive Directors have taken place:
· Cath Keers has left her role as Chief Marketing Officer with effect
from 31 December 2024.
· Sangeeta Anand has left her role as a Non-executive Director with
effect from 6 February 2025.
· Lori Mitchell-Keller joined as a Non-executive Director with effect
from 7 February 2025.
13. Events after the balance sheet date
On 15 May 2025, Sage extended its ongoing share buyback programme by up to
£200m. The extended programme is expected to end no later than 6 August 2025.
Managing Risk
Through our risk process, Sage is able to effectively manage our strategic,
operational, commercial, compliance, change and emerging risks. This helps us
to deliver our strategic objectives and goals through risk informed decisions.
The Board's role is to maintain oversight of the key principal and business
risks, together with ensuring that the appropriate committees are managing the
risks effectively. Additionally, the Board reviews the effectiveness of our
risk management approach and challenges our leaders to articulate their risk
management strategies.
Sage continuously evaluates its Principal Risks to ensure they align with our
strategy and reflect our current position on the journey to creating the
world's most trusted, thriving network for SMBs, powered by Sage Copilot.
By monitoring risk and performance indicators related to this strategy,
Principal Risk owners focus on those metrics that signal current performance,
as well as any emerging risks and issues. The management and mitigation
actions described below reflect the Principal Risks and build on those actions
previously reported in the Annual Report and Accounts 2024.
Key - Stakeholder groups
Colleagues Customers Society Shareholders Partners
Risk exposure change
Stable Decreasing Increasing
Principal Risk Risk context Management and mitigation
1. Customer experience We must maintain a sharp focus on the relationship we have with our customers, · Brand-health surveys to provide an understanding of the customer
constantly offering the products, services and experiences they need for perception of the Sage brand and its products, used to inform and enhance our
If we fail to deliver ongoing value to our customers by focusing on their success. If we meet or exceed their expectations, customers will stay with market offerings.
needs over the lifetime of their customer journey, we will not be able to Sage, increasing their lifetime value, and becoming our greatest advocates. By
achieve sustainable growth through renewal. aligning our people, processes and technology with this focus in mind, all · A Market and Competitive Intelligence team to provide insights that
Sage colleagues can help our customers be successful and in turn improve Sage uses to win in the market.
financial performance.
· Proactive analysis of customer activity and churn data, to improve
customer experience.
· Customer Advisory Boards, Customer Design Sessions, and closed-loop
feedback to constantly gather information on customer needs.
· Customer-journey mapping to ensure appropriate strategy alignment
and alignment to Target Operating Model.
· "Customer for life" roadmaps, detailing how products can fit
together, any interdependencies, and migration pathways for current and
potential customers.
· Continuous Net Promoter Score (NPS) surveying
allows us to identify customer challenges rapidly and respond in a timely
manner to emerging trends.
· Sage Membership offered to all customers, providing customers with
access to curated resources, tools, and a connected community of business
leaders.
Trend
Stakeholder alignment
Link to viability scenario
Data breach
Existing or new market disruptor
Global economic shock
Cloud operations failure
Principal Risk Risk context Management and mitigation
2. Execution of product strategy Sage needs to continuously adapt its approach to new technologies and · A robust product organisation supported by a governance model to
challenges. This requires a clear direction and strategic guardrails to enable the way we build products.
If we fail to deliver the capabilities and experiences outlined in our product support our go-to-market offerings. By simplifying our product portfolio and
strategy, we will not meet the needs of our customers or commercial goals. partnering with the right businesses, we can enhance our solutions and drive · Migration framework in key countries to support our customers as
success. they move to the cloud.
· Continued expansion of Sage Intacct outside of North America and
for additional product verticals.
· Enhancing accessibility of Sage cloud products to WCAG 2.1 AA
standard by the end of 2025.
· A strong focus on accountants through a tailored Sage for
Accountants proposition.
· Ongoing deployment of Sage Copilot AI-powered assistant into
existing Sage products, including Sage Intacct and integration into Sage Sales
Management.
Trend
Stakeholder alignment
Link to viability scenario
Existing or new market disruptor
Global economic shock
Cloud operations failure
3. Developing and exploiting new business models Sage must be able to identify, design and deploy new innovations to create new · A business unit solely focused on scaling the Sage Network.
or enhance existing products and capabilities. Unlocking the ability to do
Sage is unable to develop, commercialise and scale new business models to this at pace will enable access to new markets and/or customers early, driving · Continued digitalisation and automation of Sage products through
diversify from traditional Software as a Service (SaaS), especially new revenue and opportunities for the business. Sage Network and AI services.
consumption-based services and those which leverage data.
· Enhanced, consistent digital experience for all Sage Business Cloud
users through the Sage Experience Platform.
· A Strategic Ventures team helps inform the product strategy and
assesses new business opportunities in emerging ecosystems to identify those
that may align with Sage's vision.
· Expansion of Sage's Fintech and Payments ecosystem through
partnership with Stripe to
simplify cashflow management for SMBs.
· Managed growth of the API estate, including enhanced product
development that enables access by third- party API developers and
optimisation of API integrations to improve efficiency.
Trend
Stakeholder alignment
Link to viability scenario
Data breach
Existing or new market disruptor
Global economic shock
Cloud operations failure
Principal Risk Risk context Management and mitigation
4. Route to market We have a blend of channels to communicate with our current and potential · A Global Routes to Revenue Team developing a consistent approach to
customers and ensure our customers receive the right information, on the right taking Sage's products to market.
If we fail to deliver a globally consistent blend of route to market channels products and services, at the right time. Our sales channels include selling
in each market, Sage will miss the opportunity to efficiently deliver the directly to customers through digital and telephone channels, via our · A specific Onboarding Squad enhances user journeys to enable
right capabilities and experiences to our current and future customers. accountant network and through partners, and we will adapt our approach to customer conversion.
target customers in our key verticals. We use these channels to maximise our
marketing and customer engagement activities. This can shorten our sales cycle · Acceleration of new partnerships to support the Sage Network.
and ensure we improve customer retention, maximising our market opportunity.
· Six strategic OKRs focussed on delivery to the market to align
priorities across Sage.
· Centre of Excellence to support our indirect sales and third-party
approach.
· Expansion of relationship with AWS to elevate innovation for SMBs,
demonstrated by Sage's achievement of a 2024 AWS Partner Award.
· Re-establishment of significant presence in Atlanta through
announcement of new North America headquarters.
Trend
Stakeholder alignment
Link to viability scenario
Data breach
Existing or new market disruptor
Global economic shock
Cloud operations failure
5. People and performance As we evolve our priorities, the capacity, knowledge, and leadership skills we · Extensive focus on hiring channels to ensure we are attractive in
need will continue to change. Sage will not only need to attract the right the market through our enhanced employee value proposition and enhanced
If we fail to ensure we have engaged colleagues with the critical skills, talent to navigate change, but will also need to provide an environment where presence through social media such as Glassdoor, Comparably, Twitter,
capabilities and capacity we need to deliver on our strategy, we will not be colleagues can develop to meet these new expectations. LinkedIn, and Facebook.
successful.
By empowering colleagues and leaders to make decisions be innovative and be · Reward mechanisms designed to incentivise and encourage the right
bold in meeting our commitments behaviour, with a focus on ensuring fair and equitable pay in all markets.
Sage will be able to create an attractive working environment. By addressing · A series of Learning Academies and talent programmes to support the
what causes colleague voluntary attrition and embracing the values of development of internal talent including sponsorship programmes, and new
successful colleague engagement and create aligned high-performing teams. Director, graduate, and apprentice programmes.
· An OKR framework to define measurable goals and track outcomes of
colleague success.
· Talent Marketplace solution to support identification of
capabilities and gaps, talent pipeline, development and career pathways, and
mentoring.
· Strategic Workforce Planning Framework across the business.
Trend
Stakeholder alignment
Link to viability scenario
Data breach
Global economic shock
Principal Risk Risk context Management and mitigation
6. Culture The development of a shared behavioural competency that encourages colleagues · Integration of Values and Behaviours into all colleague priorities
to always do the right thing, put customers at the heart of business, and including talent attraction, selection, and onboarding as well as OKRs.
If we do not define, shape and proactively manage our culture in line with our improve innovation is critical in Sage's success. Devolution of decision
brand values, we will be challenged to deliver our strategic priorities and making, and the acceptance of accountability for those decisions, will need to · All colleagues are encouraged to take up to five paid Sage
purpose; we will risk disengaging colleagues, increasing attrition and go hand in hand as the organisation develops and sustains its shared Values Foundation days each year, to support charities and provide philanthropic
impacting our ability to attract and retain diverse talent. and Behaviours, and fosters a culture that provides customers with a rich support to the community.
digital environment.
· A DEI strategy focused on building diverse teams, an equitable
Sage will also need to create a culture of empowered leaders that supports the culture, and fostering inclusive leadership. This is supported by strategic
development of ideas, and that provides colleagues with a safe plans to track progress, ensuring Sage meets its commitments, including no
tolerance of discrimination and equal chances for everyone.
environment allowing for honest disclosures and discussions. Such a trusting
and empowered environment can help sustain innovation, enhance customer · Code of Conduct training for all colleagues (including anti-bribery
success, and encourage the engagement that results in increased market share. and corruption requirements) delivered as snippets, allowing Sage to signpost
relevant training at colleagues' point of need.
· Core e-learning modules rolled out across Sage, with regular
refresher training.
· Whistleblowing and incident-reporting mechanisms in place to allow
issues to be formally reported and investigated.
· High performance culture initiatives, including training and tools
for managers, to help embed this culture across Sage.
Trend
Stakeholder alignment
Link to viability scenario
Data breach
Global economic shock
7. Cyber security Stakeholder trust is central to Sage's growth and cyber security is an · Multi-year cyber security programmes in IT and Product to ensure
essential component of that. Failure to safeguard customer and colleague data Sage is continuously improving, and reduce cyber risk across technology,
If we fail to ensure an appropriate standard of cyber security across the and ensure the availability of our products and critical services could have business processes, and culture.
business, we will not be able to combat cyber threats and will fail to meet severe reputational, legal and financial consequences. This means we must be
our regulatory obligations and lose the trust of our stakeholders. confident our cyber security controls and the culture and awareness of our · Accountability within both IT and Product for all internal and
colleagues are sufficient to mitigate the dynamic and evolving cyber risk external data being processed by Sage. The Chief Information Security Officer
environment, while also supporting the agility and innovation of the business. oversees information security, with a network of Information Security Officers
that directly support the business.
· Formal certification schemes maintained across
the business include internal and external validation of compliance.
· All colleagues are required to undertake awareness training for
cyber security and information management.
· A Cyber Security Risk Management Methodology and standards are
deployed to provide clear requirements and objective risk information on our
assets and systems.
· A Trust and Security Hub and publication of Cyber security for SMBs
report to support our customers and their understanding of cyber security in
Sage products.
Trend
Stakeholder alignment
Link to viability scenario
Data breach
Cloud operations failure
Principal Risk Risk context Management and mitigation
8. Data and AI governance Data is central to the Sage strategy and our ambition to deliver sustainable · Published AI and Data Ethics Principles to ensure we use customer
growth by leveraging AI and expanding the Sage Network. The strategy is data responsibly to achieve our strategy and an ethics checklist, assessing
If Sage fails to collect, process, store and use data in a way which is underpinned by our ability to innovate customer propositions, improve insight adherence to principles.
compliant with regulation, internal policy and our ethical principles we will and decision making, and create new business models and ecosystems. Successful
lose the trust of our stakeholders. ability to use data will accelerate our growth and will be key in helping · Governance policies, processes and tooling to enhance and manage
customers transform how they run and build their businesses and Sage must do the quality and trust in our data.
If we fail to recognise the value of our data and deliver effective data this in a way which is compliant with laws, regulations and in line with our
foundations, we will be unable to realise the full potential of our data values. · The implementation of data architecture and associated data models
assets. that facilitate data sharing and utilisation.
· A Sustainability, AI and Data Ethics Committee, which includes
members from the Executive Leadership Team and Sage Board, governing
activities relating to data and AI ethics.
· All colleagues are required to undertake awareness training for
data protection, with a focus on all relevant data privacy laws and
regulations.
· A Trust and Security Hub to support our customers and their
understanding of cyber security, data privacy, and AI and data ethics in Sage
products.
Trend
Stakeholder alignment
Link to viability scenario
Data breach
Existing or new market disruptor
9. Readiness to scale As Sage continues to build sustainable growth, we continue to focus on scaling · Cost optimisation of cloud-native products and continued migration
our current and future platform-services environment in a rigorous, agile, and of legacy footprint to public cloud.
As Sage's ambition grows, if it fails to ensure its cloud products can build speedy manner to ensure we provide a consistent and healthy cloud platform and
and operate at an industrial, global scale it will erode its competitive associated network. Sage must provide the right infrastructure and operations · Accountability across product owners, underpinned by ongoing risk
advantage. for all customer products, a hosting platform together with the governance to assessments and continuous improvement projects.
ensure optimal service availability, performance, security protection, and
The hosting of its products must achieve economies of scale, aligned to restoration (if required). · Formal onboarding process through ongoing portfolio management.
ambition, in parallel with the ability to accelerate to market with quality.
Both must be achieved with reduced environmental impact and zero customer · Incident and problem management change processes adhered to for all
impact. products and services, with new acquisitions onboarded in less than 90 days.
If not addressed, Sage's cloud products would be less resilient and less able · Service-level objectives including uptime, responsiveness, and mean
to respond to its customer expectations. time to repair.
· Defined real-time demand-management processes and controls, and
also disaster-recovery capability and operational-resilience models.
· A governance framework to optimise operational cost base in line
with key metrics.
· All new acquisitions are required to adopt Sage cloud operation
standards.
Trend
Stakeholder alignment
Link to viability scenario
Data breach
Cloud operations failure
Principal Risk Risk context Management and mitigation
10. Environmental, social, and governance We invest in education, technology, and the environment to give individuals, · Sage's Sustainability and Society strategy, informed by a rigorous
SMBs, and our planet the opportunity to thrive. materiality assessment, focusing on three pillars: Protect the Planet, Tech
If Sage is unable to respond to evolving stakeholder expectations and ESG
for Good, and Human by Design.
regulation, Sage could face fines and potential legal action, damaging Sage's Internally, it is essential that Sage understands the potential impact of
reputation and brand, and diminishing stakeholder trust and credibility. climate change on its strategy and operations and considers appropriate · Ensuring adequate executive oversight through the Sustainability,
mitigations. AI and Data Ethics Committee.
In addition, if Sage fails to respond to the range of opportunities and risks
associated with Sustainability and Sage Foundation, it would be less Societal and governance-related issues are integral to Sage's purpose and · Enabling accountability through integration on ESG measures within
resilient, less competitive, and could put its licence to operate at risk. Values and to the achievement of Sage's strategy. long-term incentive plans.
· An integrated framework for the management of ESG-related risk and,
in particular, physical and transitional climate risks, as detailed by TCFD.
· External limited assurance obtained over selected metrics to ensure
accuracy of sustainability data and claims.
Trend
Stakeholder alignment
Link to viability scenario
Global economic shock
Cloud operations failure
Statement of Directors' Responsibilities
The condensed consolidated half-yearly financial report for the six months
ended 31 March 2025 includes the following responsibility statement.
Each of the Directors confirms that, to the best of their knowledge:
· the Group condensed consolidated half-yearly financial statements,
which have been prepared in accordance with IAS34 "Interim Financial
Reporting", as adopted by the UK and as issued by the IASB, give a true and
fair view of the assets, liabilities, financial position and profit of the
Group; and
· the Half-Yearly Management Report includes a fair review of the
information required by Disclosure Guidance and Transparency Rules 4.2.7R and
4.2.8R, namely:
o an indication of important events that have occurred during the six
months ended 31 March 2025 and their impact on the condensed consolidated
half-yearly financial report, and a description of the principal risks and
uncertainties that the Group faces for the remaining six months of the current
financial year; and
o any related party transactions in the six months ended 31 March 2025
that have materially affected the financial position or performance of the
Group during that period and any changes in the related party transactions
described in the last Annual Report that could have a material effect on the
financial position or performance of the Group in the six months ended 31
March 2025.
The Directors of The Sage Group plc are consistent with those listed in the
Group's Annual Report and Accounts 2024, except for the following changes:
· Sangeeta Anand stepped down from her role as Non-Executive Director
with effect from 6 February 2025.
· Lori Mitchell-Keller was appointed to the Board as a Non-Executive
Director with effect from 7 February 2025.
· During the period, Jonathan Howell announced that he will step down
from his role as Chief Financial Officer, effective 31 December 2025. Jacqui
Cartin will succeed him as Chief Financial Officer, with effect from 1 January
2026.
A list of current directors is maintained on the Group's website: www.sage.com
(http://www.sage.com) .
On behalf of the Board
J Howell
Chief Financial Officer
14 May 2025
INDEPENDENT REVIEW REPORT TO THE SAGE GROUP PLC
Conclusion
We have been engaged by The Sage Group plc ("the Company") to review the
condensed consolidated half-yearly financial statements in the half-yearly
financial report for the six months ended 31 March 2025 which comprises the
Consolidated income statement, the Consolidated statement of comprehensive
income, the Consolidated balance sheet, the Consolidated statement of changes
in equity, the Consolidated statement of cash flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated half-yearly financial statements in
the half-yearly financial report for the six months ended 31 March 2025 is not
prepared, in all material respects, in accordance with IAS 34 Interim
Financial Reporting as adopted for use in the UK, IAS 34 Interim Financial
Reporting as issued by the International Accounting Standards Board ("IASB")
and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's
Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the
UK. 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. We read the other
information contained in the half-yearly financial report and consider whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed consolidated half-yearly financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) 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.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
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 DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with UK-adopted international accounting standards
("UK-IFRS") and International Financial Reporting Standards ("IFRS") as issued
by the IASB.
The directors are responsible for preparing the condensed consolidated
half-yearly financial statements included in the half-yearly financial report
in accordance with IAS 34 as adopted for use in the UK and IAS 34 as issued by
the IASB.
In preparing the condensed consolidated half-yearly financial statements, the
directors are responsible for assessing the Group's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend
to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
consolidated half-yearly financial statements in the half-yearly financial
report based on our review. Our conclusion, including our conclusions relating
to going concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Simon Richardson
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square,
London, E14 5GL
14 May 2025
i (#_ednref1) See Appendix 1 for full definitions and guidance on the usage
of the Alternative Performance Measures.
ii (#_ednref2) To aid comparability, underlying and organic measures for the
prior period have been retranslated at current period exchange rates and
exclude recurring and non-recurring items, while organic measures also adjust
for the impact of acquisitions and disposals. A reconciliation of underlying
and organic measures to statutory measures is set out on pages 6 and 7.
Underlying and organic measures are defined in Appendix 1.
All references to revenue, profit and margin are on an underlying basis unless
otherwise stated.
iii (#_ednref3) United Kingdom, Ireland, Africa and APAC.
iv (#_ednref4) Cloud native solutions run in a cloud environment enabling
access to up-to-date functionality at any time, from any location, via the
internet.
v (#_ednref5) Cloud connected solutions are deployed on premise with
significant functionality delivered through the cloud.
vi (#_ednref6) Underlying and organic revenue and profit measures are
defined in Appendix 1.
vii (#_ednref7) Recurring and non-recurring items are defined in Appendix 1,
and detailed on page 7 and in note 3 of the financial statements.
viii (#_ednref8) Recurring and non-recurring items are defined in Appendix 1
and detailed in note 3 of the financial statements.
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