Continuing strong performance and business transformation - Seite 2

Business Transformation

• The transformation remains on track and progress has been made in FY16 with a targeted organic operating margin of 27.2% (FY15: 26.5%) achieved for the full year;
• Phase one of the transformation is now complete:
  • General and administrative (G&A) expense as a proportion of revenue has reduced to 16.5% (FY15: 18.7%);
  • Annualised savings of £51m secured within G&A which are being reinvested into go-to-market functions of sales and marketing, with an exceptional cost of £110m recognised in FY16 (£76m of which is associated to G&A savings);
  • Senior Management Team is now established to drive forward the next phase of the transformation.
    
    
• Phase two of the transformation begins in FY17:
  • Increased focus on new customer acquisition through innovative new product launches and continued user experience improvements;
  • Continued investment for growth through sales and marketing: we are expanding the Customer Business Centres (CBC) to provide integrated digital marketing, sales and services;
  • FY17 annualised cost savings of at least £50m identified with payback of less than two years.

Success in our technology strategy

• Sage One paying subscriptions increase of 81% to 313,000 subscriptions. 54% increase in Sage One revenue in the year;
• X3 revenue growth of 18% in the year and an increase in paying customers of 25%;
• Sage Live launched in two countries in February 2016 and was awarded most innovative product of 2016 by Salesforce.com;
• Sage 50 Accounts delivered triple digit organic subscription software revenue growth in the UKI, US and Canada;
• Sage 50, 100 and 300 cloud innovation and product delivered to market;
• Sage Pegg launch with users in 125 countries -- the world's first Chatbot for an accounting engine.

Stephen Kelly, Chief Executive Officer said:

"FY16 saw Sage continue to deliver on the commitment made at our June 2015 Capital Markets Day to perform and transform. The organic revenue growth of 6% is driven by higher quality recurring revenue, which grew at the fastest rate in a decade. The strategy is working -- with customers embracing closer relationships with Sage, evidenced by a 46% increase in the number of subscription contracts and a contract retention rate of 86%.