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The Sage Group plc
Annual Report & Accounts 2012
Giving small and medium sized
companies the condence and
freedom to be successful

Table of contents

  • Page 1
    The Sage Group plc Annual Report & Accounts 2012 Giving small and medium sized companies the confidence and freedom to be successful

  • Page 2
    ... our people, the fundamentals of our business are helping our customers achieve their ambitions, giving them the confidence and control they need to succeed. In this year's Annual Report, we recognise some of our customers' successes and the stories behind their businesses. From start-ups to Formula...

  • Page 3
    ...plc | Annual Report & Accounts 2012 1 Financial statements Financial statements Independent auditors' report to the members of The Sage Group plc Group financial statements Notes to the Group financial statements Independent auditors' report to the members of The Sage Group plc Company financial...

  • Page 4
    Donald Brydon, Chairman 2

  • Page 5
    ... value creation for shareholders. 3 The Sage Group plc | Annual Report & Accounts 2012 Financial statements Elsewhere in this Report, the Chief Executive will set out progress against the strategy. A focus on shareholder returns is at the heart of the strategy and the work of the Board. The Board...

  • Page 6
    ... ERP, payroll, accountancy and related software to start-up and small businesses through to mid-market companies. We also have adjacent businesses that support the core, typically involving technology which is highly integrated such as payments and CRM solutions. We develop software specifically for...

  • Page 7
    The Sage Group plc | Annual Report & Accounts 2012 5

  • Page 8
    6

  • Page 9
    ... legislation, tax requirements and accounting practices. Our regions and their contribution to Group revenue Europe 58% Americas 31% AAMEA* 11% * Africa, Australia, Middle East and Asia The Sage Group plc | Annual Report & Accounts 2012 7 Financial statements Governance Performance Overview

  • Page 10
    ... resources to focus on our core business strengths and opportunities for greatest growth. More information on page 20 KPI KPIs The measurement of success is important and we have developed a number of KPIs to measure our performance. We will continue to report on these as evidence of our...

  • Page 11
    ... with our share buyback programme and progressive dividend policy. Despite an uncertain economic environment, we remain confident about our business and our ...Sage Group plc | Annual Report & Accounts 2012 9 Financial statements Investment & R&D Targeted M&A Governance Performance Overview

  • Page 12
    ... success and grow. Our ecosystem We work with over 28,000 business partners and 40,000 accountants who recommend and market Sage products worldwide. Business partners are key not only in promoting our software and services, but also in providing local expertise to customers who demand increasing...

  • Page 13
    The Sage Group plc | Annual Report & Accounts 2012 11

  • Page 14
    12

  • Page 15
    ... being in place, unauthorised copies of software still exist. The internet provides new methods for illegal copying of the technology used in Sage's products and services. The Sage Group plc | Annual Report & Accounts 2012 13 Financial statements The Board is responsible for the operation...

  • Page 16
    ...is the provision of accounting, ERP, payroll, accountancy and related products for customers ranging in size from start-ups to mid-market companies. Importantly, we also have adjacent businesses that support the core, typically involving technology which is highly integrated such as payments and CRM...

  • Page 17
    Guy Berruyer, Chief Executive Officer The Sage Group plc | Annual Report & Accounts 2012 15

  • Page 18
    ..., Mobile Sales and Mobile Service, were showcased at the Sage Summit in July 2012, as examples of products which expand our addressable market and will be integrated into our key accounting products and payments. Payment services represent our largest connected service and our payments businesses in...

  • Page 19
    ... in key high growth markets, enabling a strategy focused on growth * Source: The Economist Intelligence Unit The Sage Group plc | Annual Report & Accounts 2012 17 Financial statements Governance Performance Overview accounting, tax and payroll and regulatory content software. We are excited...

  • Page 20
    Executive Committee Moving Sage forward Our goals are shared collectively and individually by our Executive Committee and senior management as a whole 18

  • Page 21
    ... Ramírez, Klaus-Michael Vogelberg, Paul Harrison, Pascal Houillon, Amanda Jobbins Seated from left to right: Ivan Epstein, Karen Geary, Guy Berruyer, Michael Robinson The Sage Group plc | Annual Report & Accounts 2012 19 Financial statements Governance Performance Overview

  • Page 22
    ... of overlap in: • Target customers Closeness to Sage's core business • Capabilities or technology • Channel partners • Potential to share costs Reallocating resources to our biggest opportunities We have completed a comprehensive review of our core product portfolio and are reallocating...

  • Page 23
    ... advanced service, targeting larger customers with more sophisticated requirements. The Sage Group plc | Annual Report & Accounts 2012 Financial statements We don't just make software products; we use technology to support the success of millions of small and medium sized businesses around the...

  • Page 24
    ... make subscription the default option for key products. In the long-term, the perpetual option will be phased out entirely. Subscription is the latest phase of the natural evolution of our customer relationships Co nn ec d te es rvic se Subscription Premium support Support Connected services...

  • Page 25
    The Sage Group plc | Annual Report & Accounts 2012 23

  • Page 26
    ...% 2008 2009 2010 2011 2012 Financial strength and capital discipline We continued to make progress towards our net debt level of a minimum of 1x EBITDA through a combination of our ongoing share buyback programme, an increase in our total dividend and a number of completed acquisitions. Net debt...

  • Page 27
    ... which were renewed in the period divided by the number of contracts which were potentially renewable in the period. Renewal rates 81% 81% 81% 81% 81% 81% 2008 2009 2010 2011 2012 The Sage Group plc | Annual Report & Accounts 2012 25 Financial statements Research & Development spend by...

  • Page 28
    ... with over six million customers, we have a duty to support small and medium sized companies and we do this by providing products and services that take care of the basics, allowing them to achieve their business ambitions. The Sage Business Index is an important part of helping us to stay close...

  • Page 29
    .../uncertainty in local economic market Decreased consumer confidence In the past six months, has revenue... Don't know 10% Decreased 27% Increased 31% Stayed the same 32% The Sage Group plc | Annual Report & Accounts 2012 27 Financial statements Governance 47.11 47.26 Performance Overview

  • Page 30
    ... the transition of customers to premium support. Software and software-related services include stand-alone software licence sales (including new licences, upgrades and migrations) and professional services, hardware and business forms. Organic revenue growth in the second half of the year was...

  • Page 31
    Paul Harrison, Chief Financial Officer The Sage Group plc | Annual Report & Accounts 2012 29

  • Page 32
    ... after the reporting period Acquisition of Empresa Brasileira de Sistemas Ltda. On 11 October 2012, the Group acquired EBS Empresa Brasileira de Sistemas Ltda. a provider of accounting, business management and tax software in Brazil for a cash consideration of up to £10.5m, including a payment of...

  • Page 33
    ...will launch into mainland Europe starting with Germany Key data £m 2012 2011 Revenue EBITA EBITA margin £775.8m £219.1m 28% £765.1m £220.9m 29% Country revenue France UK & Ireland Spain Germany Sage Pay Europe Others 34% 33% 13% 11% 3% 6% The Sage Group plc | Annual Report & Accounts 2012

  • Page 34
    ... of Sage Business Care, our premium support contract • Sage One, our SaaS solution for start-up and small business, was launched to the US market in May 2012 • Subscription pricing options for our North America mid-market products launched in April 2012 • Strong payments revenue growth...

  • Page 35
    ... business in action The following pages illustrate how we are giving small and medium sized companies the confidence and freedom to be successful 33 The Sage Group plc | Annual Report & Accounts 2012 Financial statements Key data Governance Strategic priorities for FY13 Performance Overview

  • Page 36
    34

  • Page 37
    ...www.investors.sage.com/2012annualreport The Sage Group plc | Annual Report & Accounts 2012 35 Financial statements Originally working with another payment gateway, Housebites were looking to revolutionise their customer experience. They quickly found that Sage Pay's Token product and service were...

  • Page 38
    ... it just wasn't working. Sage One is really efficient, really easy to use; especially for people like me who aren't good with numbers and finances." Sage One key facts • Sage One was developed with customers at its heart. Sole traders, small business owners and accountants have all been involved...

  • Page 39
    The Sage Group plc | Annual Report & Accounts 2012 37

  • Page 40
    38

  • Page 41
    ... on a mobile device or visit www.investors.sage.com/2012annualreport The Sage Group plc | Annual Report & Accounts 2012 39 Financial statements Governance Performance Sage ERP X3 will enable us to automate complex business processes and dramatically increase operational efficiencies Overview

  • Page 42
    ... business needs, changing technologies, competitor activities, compliance and regulatory requirements and the economic environment. Products and services There is a risk to Sage's reputation and future ability to grow as a business if poor quality products and services are released to customers...

  • Page 43
    ... as other companies do, on the laws and regulations in existence, Sage continually polices the unauthorised use of its products. Sage also ensures the secure storage of source code throughout the Group. Mitigation process The Sage Group plc | Annual Report & Accounts 2012 41 Financial statements...

  • Page 44
    .... Agility We have to be responsive to customer needs and market changes and ensure we are agile enough to adapt our products and services to meet these demands. How we change the way we work is about unlocking growth at Sage by shifting a business with multiple histories to becoming a truly global...

  • Page 45
    43

  • Page 46
    ...Centre and Customer Service - large Contact Centre of the year award. In South Africa, we have won 'Best Companies to Work For' in our category for the second year in a row, and most recently in North America - 'Texas Best Company to Work For'. Board diversity 29% Total Members Women % 2012 2011...

  • Page 47
    ... The Sage Group plc | Annual Report & Accounts 2012 45 Financial statements Our local communities are important to us and we actively support a number of charities and community organisations worldwide in order to make a positive impact on the communities in which we live and work. Governance...

  • Page 48
    ... on with growing their business. Supporting local businesses and organisations Helping non-profit organisations with free business software is an important part of what we do. In North America we partner with TechSoup, a body which helps charities manage their operations. In the past year, we have...

  • Page 49
    ... relatively small effort can make a big difference. For example, our US and Canada employees gave away nearly 4,000 unwanted pieces of business clothing to local charity donation centres. The Sage Group plc | Annual Report & Accounts 2012 47 Financial statements Governance Performance Overview

  • Page 50
    ... for Energy and Climate Change ("DECC") in order to calculate our carbon footprint from this usage. It is our policy to report on offices with more than 25 Sage employees. This excludes companies acquired during the year. MWh of energy used within Sage business 2010 2011 2012 22,417 Reducing waste...

  • Page 51
    ...these judgements. The Financial Services Authority requires UK listed companies to explain how...year. I trust you will find the report informative and helpful. Donald Brydon, CBE, Chairman The Sage Group plc | Annual Report & Accounts 2012 49 Financial statements Governance Performance Overview

  • Page 52
    Board of directors Committed leadership Donald Brydon CBE Guy Berruyer Paul Harrison Tamara Ingram OBE Ruth Markland Ian Mason Mark Rolfe 50

  • Page 53
    ... Group plc | Annual Report & Accounts 2012 51 Financial statements Governance Performance The Board of Sage is committed to the highest standards of corporate governance. It provides leadership to the business as a whole, having regard to the interests and views of its shareholders Overview

  • Page 54
    ... the senior executives within the Group. Further details of the work of the Executive Committee are provided on pages 18 and 19. Audit Committee The Audit Committee oversees the Company's financial reporting, risk management and internal control procedures, and the work of its internal and external...

  • Page 55
    ... set out on the Company's website at www.sage.com. To ensure a proper dialogue with directors, the Chairman holds meetings with the non-executive directors without the executive directors to assess their views. The Sage Group plc | Annual Report & Accounts 2012 53 Financial statements Governance...

  • Page 56
    ... the Remuneration report on pages 64 to 73, the Committee undertook a full review of remuneration policy and related consultation with shareholders. It paid particular attention to bonus arrangements in support of the goals of the Group set out on pages 8 and 9. Details of the Company's policies on...

  • Page 57
    ... year under review, the Board is satisfied that the Committee has the resources and expertise to fulfil effectively its responsibilities, including those relating to risks and controls. The Sage Group plc | Annual Report & Accounts 2012 55 Financial statements Governance Performance Overview

  • Page 58
    ...believes that the Company receives particular benefit from tax advice provided by its auditors, given their wide and detailed knowledge of the Group and its international nature. Executive management has the discretion, (subject to certain financial limitations), to obtain taxation services from the...

  • Page 59
    ... Committee Group Board Identify Group Risk and Assurance Director Executive Committee Principal risks Regional and Group management Country CEOs and Functional Heads A n aly s e The Sage Group plc | Annual Report & Accounts 2012 57 Financial statements Governance Performance Overview...

  • Page 60
    ... internal controls and risk management systems to govern the financial reporting process. The requirements for producing financial information are governed by the Group Accounting Manual, against which the Group's external auditors review the financial statements. Financial control requirements are...

  • Page 61
    ..., Secretary 5 December 2012 The Sage Group plc | Annual Report & Accounts 2012 59 Financial statements Communication with shareholders is given high priority. A full Annual Report & Accounts is sent to all shareholders who wish to receive one. The Company also has a website (www.sage.com) which...

  • Page 62
    ... continue to adopt the going concern basis in preparing the accounts. Principal activities The Sage Group plc is a leading global provider of business management software to small and medium sized companies. Sage has over six million customers and more than 13,500 employees in 24 countries covering...

  • Page 63
    ... may be made in accordance with the provisions of the Companies Act 2006 by way of special resolution. The Sage Group plc | Annual Report & Accounts 2012 61 Financial statements Repurchase of shares Governance Performance Overview • divide among the members in specie the whole or any...

  • Page 64
    ... of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period. In preparing these financial statements the directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are...

  • Page 65
    ... same currency. The Group is also exposed to a foreign exchange transaction exposure from the conversion of surplus cash generated by its principal overseas subsidiaries, which would be hedged where appropriate. The Sage Group plc | Annual Report & Accounts 2012 63 Financial statements The Group...

  • Page 66
    ... of the proposed changes are set out on page 66. Remuneration for 2011/12 For the year ending 30 September 2012, underlying pre-tax profit increased by 4%, organic revenue growth was 2% and the profit underpin for annual bonus purposes was achieved; this resulted in annual bonus payments of between...

  • Page 67
    ... met eight times during the year. Attendance is detailed on page 54. Salary Annual bonus (including any deferred amounts) Long-term incentives The Sage Group plc | Annual Report & Accounts 2012 65 Financial statements The Remuneration Committee continues to receive advice from Deloitte, an...

  • Page 68
    ... Component Alignment with strategy/purpose Operation for 2011/12 Operation for 2012/13 Base salary Set at an appropriate level for the role and skills of the individual. Reviewed by reference to companies of a similar size and international scope to Sage, in particular those within the FTSE 100...

  • Page 69
    ... level reflect local market norms, and typically comprise a car benefit (or cash equivalent), private medical insurance, permanent health insurance and life assurance. The Sage Group plc | Annual Report & Accounts 2012 67 Financial statements Governance Performance Overview Policy for 2013...

  • Page 70
    ... period. Details of the contract of service or contract for services of each person who has served as a director of the Company at any time during the financial year are set out below: Mr D H Brydon was appointed to the Board on 6 July 2012 and received the same basic fee (pro-rata) as other non...

  • Page 71
    ...8ear ends. Directors' remuneration The information set out on the following page has been subject to audit as required b8 part 3 of Schedule 8 of the Companies Act 2006. The Sage Group plc | Annual Report & Accounts 2012 69 Financial statements 125 Value (£) Governance Performance Overview

  • Page 72
    ... were £2,518,000 (2011: £4,245,000). • No other payments (including non-cash benefits) were made to third parties in respect of the services of a person who served as a director of the Company at any time during the financial year. • Including gains on share options, the total emoluments...

  • Page 73
    ....00p 258.50p 270.00p Total The Sage Group plc | Annual Report & Accounts 2012 71 Financial statements Notes: • No options were varied during the year. • Options granted to all directors of the Company and its operating subsidiaries throughout the Group under the ESOS that became exercisable...

  • Page 74
    ... in the year ended 30 September 2012 was 298.60p. The market price of a share on 3 March 2009, the date on which these awards were granted was 162.10p. • The vesting of awards granted prior to 2009 under the Performance Share Plan is subject to performance conditions measuring the Group's total...

  • Page 75
    ... Annual Report & Accounts 2012 73 Financial statements Governance Awards are not subject to further performance conditions once granted. No variations were made in the terms of the awards in the year. Mr D H Clayton ceased to be a director of the company on 29 February 2012. The market price...

  • Page 76
    ...' report to the members of The Sage Group plc 75 Group financial statements Our Group financial statements provide a complete picture of our 2012 performance. Consolidated income statement Consolidated statement of comprehensive income Consolidated balance sheet Consolidated statement of changes...

  • Page 77
    ...separately on the parent Company financial statements of The Sage Group plc for the year ended 10 September 2012 and on the information in the Remuneration report that is described as having been audited. Performance Under the Listing Rules we are required to review: Overview We have audited the...

  • Page 78
    ... statement For the year ended 30 September 2012 2012 £m Revenue Cost of sales Gross profit Selling and administrative expenses Operating profit Finance income Finance costs Finance costs - net Profit before income tax Income tax expense Profit for the year from continuing operations Profit/(loss...

  • Page 79
    ... to owners of the parent arising from: - Continuing operations - Discontinued operations 170.6 2.1 172.7 264.5 (67.0) 197.5 The Sage Group plc | Annual Report & Accounts 2012 77 Financial statements Governance Performance Overview Exchange differences on translating foreign operations (66.6)

  • Page 80
    ... (47.4) (1.7) (50.0) (2.0) (404.7) (767.0) (49.7) Liabilities directly associated with non-current assets classified as held for sale Non-current liabilities Borrowings Other financial liabilities Post-employment benefits Deferred income tax liabilities 15.4 - 12.4 13.5 8 9 (200.8) (68.3) (14...

  • Page 81
    ....5) 914.6 13.4 3.2 (1.7) (50.0) (104.0) (139.1) 1,707.8 13.4 3.2 (1.7) (50.0) (104.0) (139.1) 1,707.8 The Sage Group plc | Annual Report & Accounts 2012 79 Financial statements Governance 1.2 Performance (2.6) Overview At 1 October 2011 13.2 513.2 266.8 914.6 1,707.8 - 1,707.8

  • Page 82
    Consolidated statement of cash flows For the year ended 30 September 2012 2012 £m Cash flows from operating activities Cash generated from continuing operations Interest paid Income tax paid Operating cash flows (used in)/generated from discontinued operations Net cash generated from operating ...

  • Page 83
    ... wy the Company (its suwsidiaries) prepared at the end of the reporting period. The accounting policies have ween consistently applied across the Group. Control is achieved where the The Sage Group plc | Annual Report & Accounts 2012 81 Financial statements Governance Performance Overview

  • Page 84
    ... other sales-related taxes. The Group reports revenue under two revenue categories: subscription revenues, which are recurring in nature and include combined software/support contracts, maintenance and support, transaction services (payment processing) and hosted products; and software and software...

  • Page 85
    ... as borrowings. The Sage Group plc | Annual Report & Accounts 2012 83 Financial statements Governance Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Performance Overview

  • Page 86
    ....s r Financial liabilities FinancialsassetssandsliabilitiessaresrecognisedsinsthesGroup'ssbalancessheets whensthesGroupsbecomessaspartystosthescontractualsprovisionsofsthesinstrument.ss Hedge accounting ThesGroupsusessderivativesfinancialsinstrumentsstosmanagesexposuresswheres appropriate...

  • Page 87
    ... of income taxes) is deducted from equity attributable to the owners of the Company until the shares are cancelled or reissued. The Sage Group plc | Annual Report & Accounts 2012 85 Financial statements Governance Performance Overview When a foreign operation is partially disposed of or sold...

  • Page 88
    ... deferred tax provisions in the period in which such determination is made. B Critical accounting estimates and judgements In preparing the consolidated financial statements, management has to make judgements on how to apply the Group's accounting policies and make estimates about the future. The...

  • Page 89
    ...30 September 2011 have been retranslated based on the average exchange rates for the year ended 30 September 2012 of $1.58/£1 and â,¬1.22/£1 to facilitate the comparison of results. The Sage Group plc | Annual Report & Accounts 2012 87 Financial statements Governance Performance Overview In...

  • Page 90
    ...Year ended 30 September 2012 IFRS statutsry sperating Nsn-GAAP EBITA prsfit Adjustment1 £m £m £m IFRS statutory operating profit Adjustment1 £m £m Year ended 30 September 2011 Underlying Non-GAAP Non-GAAP EBITA Currency EBITA constant 2 reported currency impact £m £m £m Change Underlying Non...

  • Page 91
    ...The Sage Group plc | Annual Report & Accounts 2012 89 Financial statements Segment assets include all intangible assets, poopeoty, plant and equipment, inventooies, toade and otheo oeceivables, cash and cash equivalents and tax assets. Segment liabilities compoise mainly toade and otheo payables...

  • Page 92
    ... During the year, the Group (including its overseas subsidiaries) obtained the following services from the Group's auditor at costs as detailed below: 2012 £m 2011 £m Fees payable to the Group's auditor for the audit of parent Company and consolidated accounts Fees payable to the Group's auditor...

  • Page 93
    ....0m (2011: £37.5m) reflects the resolution of a number of historical tax matters with the tax authorities. The Sage Group plc | Annual Report & Accounts 2012 91 Financial statements Governance 2012 £m 2011 £m Performance Salaries and short-term employee benefits 5.0 7.3 Overview 10.3

  • Page 94
    ...the end of the reporting period. Reconciliations of the earnings and weighted average number of shares Underlying 2012 Underlying 2011 Statutory 2012 Statutory 2011 Earnings (£m) Profit for the year from continuing operations Profit/(loss) for the year from discontinued operations Number of shares...

  • Page 95
    ... of members on 15 February 2013. These financial statements do not reflect this dividend payable. The Sage Group plc | Annual Report & Accounts 2012 93 Financial statements Governance Final dividend paid for the year ended 30 September 2011 of 7.07p per share 92.1 - Performance Overview

  • Page 96
    ...Softwar3 H3althcar3, LLC was r3ach3d, r3sulting in an impairm3nt loss on goodwill of £121.5m. Goodwill impairment tests Goodwill ...2012 £m 2011 £m Franc3 UK & Ir3land Spain Sag3 Pay Europ3 G3rmany Switz3rland Poland Portugal North Am3rica - Sag3 Busin3ss Solutions Division - Sag3 Paym3nt Solutions...

  • Page 97
    ... (8.2) 178.7 139.8 The Sage Group plc | Annual Report & Accounts 2012 95 Financial statements Governance The largest CGU is Sage Business Solutions Division, which constitutes approximately 42% of the carrying value of goodwill at the end of the reporting period. The discount rates applied to...

  • Page 98
    ... Accumulated amortisation at 1 October 2010 Continuing operations - Charge for the year - Disposals - Exchange movement Discontinued operations - Charge for the year - Disposals - Reclassification to non-current assets classified as held for sale At 30 September 2011 Net book amount at 30 September...

  • Page 99
    ... 1.0 (3.6) 141.9 101.2 11.9 (8.0) (2.6) 102.5 39.4 56.4 5.6 (4.5) 0.4 (2.6) 55.3 38.0 6.0 (4.1) (1.7) 38.2 17.1 296.0 19.3 (13.1) 1.5 (7.0) 296.7 149.6 21.7 (12.3) (4.5) 154.5 142.2 The Sage Group plc | Annual Report & Accounts 2012 97 Financial statements Governance Performance Overview

  • Page 100
    ...year - Disposals - Exchange movement Discontinued operations - 2harge for the year - Disposals - Reclassification to non-current assets classified as held for sale At 30 September 2011... rentals amounting to £30.9m (2011: £30.0m) relating to the lease of plant and machinery and property have also ...

  • Page 101
    ...amounts reversed Exchange movement Reclassification to non-current assets classified as held for sale At 30 September 29.2 0.5 - 9.9 (3.3) (4.1) (1.9) - 30.3 27.4 - (0.5) 9.3 (4.5) (2.2) (0.2) (0.1) 29.2 The Sage Group plc | Annual Report & Accounts 2012 99 Financial statements Governance The...

  • Page 102
    ...the end of the reporting period is the fair value of each class of receivables mentioned above. The Group held no collateral as security. The directors estimate that the carrying value of trade receivables approximated their fair value. 7.3 Trade and other payables 2012 £m 2011 £m Trade payables...

  • Page 103
    ... cost Total included within staff costs The entire cost is included within selling and administrative expenses. (0.9) 0.4 (1.4) (1.9) (0.9) 0.4 (1.5) (2.0) The Sage Group plc | Annual Report & Accounts 2012 101 Financial statements Governance 2012 years 2011 years Performance Overview

  • Page 104
    ... continued 8 Post-employment benefits vontinued Changes in the present value of the defined benefit obligation 2012 £m 2011 £m At 1 October Exchange movement Service cost Plan participant contributions Interest cost Reclassification Actuarial (loss)/gain on benefit obligation At 30 September...

  • Page 105
    ... operations Exchange movement At 30 September 2012 Liabilities At 1 October 2011 Income statement credit/(charge... Sage Group plc | Annual Report & Accounts 2012 103 Financial statements Governance Performance Overview The Finance Act 2012, which was substantively enacted on 3 July 2012...

  • Page 106
    ....7 10 Operating lease commitments 2012 Property, vehicles, plant and equipment £m 2011 Property, vehicles, plant and equipment £m Total future minimum lease payments under non-cancellable operating leases falling due for payment as follows: Within one year Later than one year and less than five...

  • Page 107
    ... from customers, which the Group is contracted to pay on to another party. A liability for the same amount is included in trade and other payables on the balance sheet and is classified within net debt above. The Sage Group plc | Annual Report & Accounts 2012 105 Financial statements Governance...

  • Page 108
    ... to £4.4m (2011: £4.4m) in respect of these facilities. These issue costs were paid during the year ended 30 September 2010, no issue costs were incurred during the current financial year. These costs are allocated to the income statement over the term of the facility using the effective interest...

  • Page 109
    ... the risk of loss. All counterparties must meet minimum credit rating requirements. The Sage Group plc | Annual Report & Accounts 2012 107 Financial statements Capital risk Governance Performance Long-term borrowings 12.4 9200.8) 9218.1) (192.4) (207.6) Overview For the following...

  • Page 110
    ...income statement. Sucf exposures reflect tfe monetary assets and liabilities of tfe Group tfat are not denominated in tfe operating (or "functional") currency of tfe entity involved. At 30 September 2011 and 30 September 2012, tfese exposures were immaterial to tfe Group. 13.3 Maturity of financial...

  • Page 111
    ...2012 £m 2011 £m In less than one year In more than one year but not more than five years Future finance charges on finance leases Present value of finance lease liabilities 1.3 1.7 3.0 (0.2) 2.8 1.0 2.6 3.6 (0.3) 3.3 The Sage Group plc | Annual Report & Accounts 2012 109 Financial statements...

  • Page 112
    ...,102 Restricted Share Plan The Group's Restricted Share Plan is a long-term incentive plan used in limited circumstances and usually on a one-off basis. During the year the following awards have been made: Date of award Vesting date 2012 number 2011 number 5 December 2011 26 June 2012 5 December...

  • Page 113
    ... life is the average expected period to exercise. The risk free rate of return is the yield on zero-coupon UK government bonds of a term consistent with the assumed option life. The Sage Group plc | Annual Report & Accounts 2012 111 Financial statements Governance 95,540 Performance Overview

  • Page 114
    ...17 10,766 - 3.7 The weighted average share price during the period for options exercised over the year was 294.05p (2011: 282.20p). The Sage Group Performance Share Plan The Performance Share Plan (the "Plan") was approved by shareholders at the Annual General Meeting in 2005 and amended at the...

  • Page 115
    ...2011 Weighted average remaining life years Range of exercise prices Number of shares '000s Expected Contractual Number of shares '000s Expected Contractual N/A - 19,128 1.3 1.3 - 27,304 1.3 1.3 The Sage Group plc | Annual Report & Accounts 2012 113 Financial statements Governance...

  • Page 116
    ... - - 2011 Weighted average remaining life years Range of exercise prices Number of shares '000s Expected Contractual Number of shares '000s Expected Contractual N/A - 720 1.9 1.9 - - - - The Sage Group Savings-related Share Option Plan (the "SAYE Plan") In February 1996, the Company...

  • Page 117
    ... or seven years on the assumption that 20% of options will lapse over the service period as employees leave the Group. The Sage Group plc | Annual Report & Accounts 2012 115 Financial statements Governance the day after the Company's Annual General Meeting; or Performance Overview A tax-free...

  • Page 118
    ... and capital structure continued 14 Equity continued 14.2 Share-based payments continued A reconciliation of option movements over the year is shown below: 2012 Weighted average price £ 2011 Weighted average price £ Number '000s Number '000s Outstanding at 1 October Awarded Forfeited Exercised...

  • Page 119
    ...Note 2012 £m At 1 October Non-controlling interest arising on business combination Non-controlling interest's share of profit of the year At 30 September 16.1 - (2.2) 0.1 (2.1) The Sage Group plc | Annual Report & Accounts 2012 117 Financial statements Governance Performance Overview Other...

  • Page 120
    ... Healthcare is reported in the financial statements as discontinued operations. The financial performance for the period is below: 2012 £m 2011 £m Revenue Selling and administrative expenses Operating profit Finance costs Profit on disposal of Sage Healthcare Cumulative exchange gain in respect...

  • Page 121
    ... with potential synergies with the existing Sage business. 140.9 9.7 150.6 1.6 (2.2) 150.0 The Sage Group plc | Annual Report & Accounts 2012 119 Financial statements Governance Other The entire share capital of TML BVBA Ltd ("TML") was acquired on 1 March 2012 for cash consideration of £2.6m...

  • Page 122
    ...Intangible assets - brands, technology and customer relationships Intangible assets - computer software Property, plant and equipment Inventories Trade and other receivables Cash and cash equivalents Trade and other payables Current borrowings Non-current borrowings Deferred consideration Income tax...

  • Page 123
    ...of subsidiaries Other Disposal of subsidiaries Sage Healthcare Disposal of discontinued operations (146.4) (2.7) (10.0) (3.7) (162.8) 0.1 0.1 198.9 198.9 The Sage Group plc | Annual Report & Accounts 2012 121 Financial statements Governance Performance Overview 16.4 Acquisition-reldted items

  • Page 124
    ... payable for the year ended 2012 (2011: £nil). These arrangements are subject to independent review using external advisers to ensure all transactions are at arm's length. 18 Events after the reporting period 18.1 Share buyback On 30 September 2012 the Group appointed qeutsche Bank AG to manage...

  • Page 125
    ...Ltd Sage Software Sdn Bhd UK UK Ireland France France France France Germany Germany Switzerland Spain Spain Poland Portugal US US Brazil Brazil Canada South Africa Australia Australia Australia Singapore Malaysia Ireland The Sage Group plc | Annual Report & Accounts 2012 123 Financial statements...

  • Page 126
    ... of The Sage Group plc 125 Company financial statements Our Company financial statements provide a complete picture of our 2012 position. Company balance sheet 126 Notes to the Company financial statements Supplementary notes to the Company financial statements. Company accounting policies 127...

  • Page 127
    ... the parent Company financial statements of The Sage Group plc for the year ended 30 September 2012 which comprise the Company balance sheet and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards...

  • Page 128
    ... year Net assets Capital and reserves Called up share capital Share premium account Other reserves Profit and loss account Total shareholders' funds 5 (703.3) (264.3) 1,143.9 8 (199.2) 944.7 9.1 9.2 9.2 9.2 13.3 524.5 (239.6) 646.5 944.7 13.2 513.2 51.6 228.4 806.4 The financial statements...

  • Page 129
    ... Thos polocy os on accordance woth FRS 26, "Fonancoal Instruwents: Recognotoon and Measurewent". The Sage Group plc | Annual Report & Accounts 2012 127 Financial statements Governance Performance Foxed asset onvestwents are stated at cost less provosoon for any dowonutoon on value. Overview

  • Page 130
    ... the financial year ended 30 September 2012 of 6.67p per share which will absorb an estimated £78.2m of shareholders' funds. It will be paid on 8 March 2013 to shareholders who are on the register of members on 15 February 2013. These financial statements do not reflect this dividend payable. 128

  • Page 131
    ... £nil). 7 Capital commitments and contingent liabilities The Company had no capital commitments or contingent liabilities at 30 September 2012 (2011: none). The Sage Group plc | Annual Report & Accounts 2012 129 Financial statements Governance 3 Cash at bank and in hand Performance Overview

  • Page 132
    ...). The Company has incurred total issue costs amounting to £4.4m (2011: £4.4m) in respect of these facilities. These issue costs were paid during the year ended 30 September 2010; no issue costs were incurred during the current financial year. These costs are allocated to the income statement over...

  • Page 133
    ... the scheme are charged to the profit and loss account of the Company in the period to which they relate. The market value of the shares at 30 September 2012 was £2.2m (2011: £9.5m). The Sage Group plc | Annual Report & Accounts 2012 131 Financial statements Governance Performance Overview

  • Page 134
    ... and Tfe Sage Group Plc. During tfe year £0.2m (2011: £nil) was cfarged tfrougf selling and administrative expenses. Tfere were no outstanding amounts payable as at tfe year ended 2012 (2011: £nil). 11 Post balance sheet events For details refer to note 18 in tfe Group financial statements. 132

  • Page 135
    ... to Friday. View this report online, visit sage.investors.com The Sage Group plc Annual Report & Accounts 2012 2012 Interactive Annual Report and Accounts In this year's annual report, we recognise some of our customers' successes and the stories behind their businesses. From start-ups to Formula...

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    The Sage Group plc North Park Newcastle upon Tyne NE13 9AA United Kingdom www.sage.com