Peachtree 2012 Annual Report Download - page 30

Financial and operating review
Financial results
Organic revenue
growth
2%*
2011: 4%*
Underlying EPS
growth
-2%*
2011: 16%*
EBITA margin
maintained at
27%
2011: 27%*
Full year
dividend of 10.15p
per share up
4%
2011: 9.75p
per share
Profitability
EBITA† increased by 3%* to £366.4m* (2011: £356.0m*) with
the Group’s EBITA† margin maintained at 27% (2011: 27%*).
The mixed market conditions in which we are operating call for
agility in our business and focused resource allocation to protect
protability, whilst investing in our growth initiatives. During the
year, we invested in growth opportunities, including products such
as Sage ERP X3, Sage One and markets such as Brazil, whilst
protecting margins in weaker markets like Spain.
Net nance costs declined to £10.6m (2011: £12.5m). The
reduction in nance costs is primarily driven by reduced interest
charges as the Group was in a net cash position for an extended
period during the year. The average interest rate on borrowings
during the year was 4.59% (2011: 3.96%). The income tax
expense of £95.4m (2011: £74.8m), and the effective tax rate of
29% (2011: 23%) reect an anticipated increase due to one-off
favourable settlements in the prior year. Underlying earnings
per share from continuing operations declined by 2%* to 19.86p
(2011: 20.28p*) as a result of the increased tax charge. Statutory
basic earnings per share from continuing operations for the
year ended 30 September 2012 declined by 4% to 18.63p
(2011: 19.44p). Statutory diluted earnings per share from
continuing operations declined by 4% to 18.60p (2011: 19.29p).
Cash flows
The Group remains highly cash generative with an operating cash
ow of £383.8m (2011: £405.1m), representing 106%^ of EBITA
(2011: 111%). After interest, tax, net capital expenditure and
discontinued operations, free cash ow was £247.9m. The net
inow from acquisitions and disposals completed in the year was
£36.2m. After dividends paid of £136.5m, share buybacks of
£297.5m and other movements of £13.3m, including exchange
movements, net debt stood at £161.5m at 30 September 2012
(30 September 2011: £24.9m).
Balance sheet and capital structure
Debt and facilities
The Group has net debt of £161.5m at 30 September 2012
(2011: £24.9m). The Group is funded through retained earnings
and multi-currency revolving credit facilities totalling £338.3m
(2011: £358.3m) (US$271.0m and €214.0m tranches), which expire
in 2015. At 30 September 2012, £15.0m of these facilities were
drawn (2011: £nil). In addition, the Group has US private placement
loan notes at 30 September 2012 of £185.8m (US$300.0m)
(2011: £192.6m, US$300.0m). The Group continues to monitor
opportunities to enhance and diversify its funding sources in the
current capital market conditions.
Reconciliation of operating to statutory results
EBITA† to operating profit 2012 £m 2011 £m Variance %
EBITA†366.4 356.0 +3%
Impact of movements in foreign
currency exchange rates –9.5
366.4 365.5 –
Adjustments (21.5) (22.2)
Operating prot 344.9 343.3 –
Underlying to statutory
basic earnings per share 2012 pence 2011 pence Variance %
Underlying basic EPS
(continuing operations) 19.86 20.28 -2%
Impact of movements in foreign
currency exchange rates –0.56
19.86 20.84 -5%
Adjustments (1.23) (1.40)
Statutory basic EPS (continuing
operations) 18.63 19.44 -4%
Adjustments relate to amortisation of acquired intangible assets, acquisition-
related items and imputed interest, net of taxation.
Revenue
Revenue from continuing operations was £1,340.2m which
increased by 3%* compared to the prior year (2011: £1,334.1m*).
Organic revenue grew by 2%* compared to the prior year.
Total subscription revenue was £922.7m (2011: £860.0m*) which
grew organically by 6%*, beneting from growth in premium
subscription contracts and payment services. Subscription revenue
is recurring in nature and include stand-alone support, combined
software and maintenance and support, and payment services.
Total revenue for software and software-related services were
£417.5m (2011: £439.1m*), which declined organically by 5%*,
reecting challenging macro-economic conditions, most notably
in the mid-market, and our strategy of increasing our recurring
revenue. The majority of the contraction was attributable to weak
market conditions, particularly in France and Spain. Elsewhere,
SSRS was more affected by a shift to recurring revenue, reecting
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 3%*,
compared to 2%* in the rst half of the year. The anticipated
stronger performance in North America and the continued strong
growth in AAMEA were offset by a weakening economic
environment in Europe, particularly in France.
# Organic gures exclude the contributions of current and prior year acquisitions, disposals and non-core products.
* Underlying gures neutralise the impact of foreign exchange movements and exclude amortisation of acquired intangible assets, acquisition-related items and imputed interest.
† EBITA is dened as earnings before interest, tax, amortisation of acquired intangible assets and acquisition-related items and is after neutralising the impact of foreign exchange movements.
^ Cash generation from operations represents cash ows from operating activities divided by EBITA. EBITA for cash generation purposes is after acquisition-related items.
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