Peachtree 2013 Annual Report Download - page 33

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Underlying operating profit (“EBITA”)
Reconciliation of EBITA
to operating profit
2013
£m
2012
£m
EBITA 375.8 366.4
Impact of movements in foreign
currency exchange rates –0.6
375.8 367.0
Exceptional items (188.2) –
Other non-GAAP adjustments (7.1) (21.5)
Statutory operating profit 180.5 345.5
EBITA increased by 2%, in line with underlying revenue
growth, to £375.8m (2012: £367.0m) with the Group’s
EBITA margin maintained at 27% (2012: 27%). This
growth in EBITA was achieved despite the disposal
of a number of non-core products during the year and
continued investment in our best growth opportunities,
which include Sage One, Sage ERP X3 and our
payments businesses.
Statutory operating profit decreased to £180.5m
(2012: £344.9m). Statutory operating profit
includes amortisation of acquired intangible assets,
acquisition-related items, goodwill impairment,
fair value adjustments and exceptional items.
Net exceptional items of £188.2m are included
in statutory operating profit, primarily as a consequence
of completing the disposal of certain non-core products
during the year.
Net finance costs
Net finance costs increased to £16.4m (2012: £10.6m).
This was due to an increase in gross debt as the Group
moved towards meeting its leverage target. The
increase in debt during the year was due to drawdowns
on the revolving credit facility and the USD$400m US
private placement refinancing which completed in May
2013. The additional drawdowns funded returns of cash
to shareholders through the share buyback programme
and the payment of a special dividend in June 2013.
The lower coupon rate on the US private placement
loan notes reduced the average interest rate on
borrowings during the year to 3.78% (2012: 4.59%).
Taxation
The income tax expense of £116.6m (2012: £95.4m),
which includes an exceptional tax charge of £17.4m
on the disposal of the non-core products, represents
an effective tax rate of 71% (2012: 29%). Adjusting for
this exceptional charge, the effective tax rate is 28%
(2012: 29%). This is in excess of the standard rate
of UK tax due to the higher tax rates applicable in
the other jurisdictions in which we operate.
The income tax charge and the total tax paid in the year
are underpinned by Sage’s tax policy, which is aligned
with the overall goals of the business including Sage’s
vision, strategy, code of ethics and guiding principles.
We seek to manage our tax affairs in a responsible and
transparent manner, to comply with relevant legislation
and with due regard to our reputation. Our approach
is in line with the principles issued by the Confederation
of British Industry (“CBI”) in May 2013. Sage’s tax policy
has been agreed by the Board, with progress being
monitored by the Group Audit Committee. The policy
has been shared with the UK tax authorities.
Basic earnings per share
Reconciliation of underlying to
statutory basic earnings per share
2013
£m
2012
£m
Underlying basic EPS
(continuing operations) 22.27 19.86
Impact of movements in foreign
currency exchange rates –0.01
22.27 19.87
Exceptional items (net of tax) (17.59) –
Other non-GAAP adjustments
(net of tax) (0.71) (1.24)
Statutory basic EPS
(continuing operations) 3.97 18.63
Underlying basic earnings per share increased by 12%
to 22.27p (2012: 19.87p) as a result of profit growth and
a reduction in the average number of shares in issue to
1,168.8m (2012: 1,282.2m) due to the share buyback
programme and the share consolidation effected in
June 2013.
Statutory basic earnings per share declined by 79%
to 3.97p (2012: 18.63p) primarily due to losses on
completed non-core disposals in North America
and Europe.
Europe Americas AAMEA
Group
Underlying
Foreign
exchange
Adjustments
to EBITA
Group
statutory
Revenue from continuing operations
FY13 (£m) 776.9 448.2 151.0 1,376.1 – – 1,376.1
FY12 (£m) 788.4 416.5 139.8 1,344.7 (4.5) –1,340.2
Change (%) (1%) +8% +8% +2% +3%
EBITA/Operating profit
FY13 (£m) 220.2 115.0 40.6 375.8 –(195.3) 180.5
FY12 (£m) 222.0 107.3 37.7 367.0 (0.6) (21.5) 344.9
Change (%) (1%) +7% +8% +2% (48%)
31The Sage Group plc | Annual Report & Accounts 2013
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