Update on financial reporting

RNS Number : 9821I
Sage Group PLC
08 December 2022
 

Update on financial reporting

 

8 December 2022

As announced in Sage's FY22 results on 16 November 2022, Sage intends to evolve its financial reporting by giving greater emphasis to underlying revenue and profit measures, and by amending the presentation of its regional reporting. These changes will be introduced in Sage's Q1 23 trading update, and will apply to Sage's future financial reporting. Further details are set out below.

To facilitate comparison with prior periods, the appendix to this announcement sets out key reporting figures for FY22 reflecting these changes. Sage's primary annual and interim financial statements and notes to the accounts will not be impacted.

Focus on underlying measures

In addition to statutory financial reporting measures, Sage also provides non-GAAP Alternative Performance Measures (APMs) including underlying and organic measures, to help assess financial performance. Underlying measures allow management and investors to understand the performance of the Group on a constant currency basis excluding recurring and non-recurring items, while organic measures also adjust for the impact of acquisitions and disposals[1].

Going forward, Sage will provide financial metrics and analysis including the breakdown of revenue by category, by strategic product portfolio and by region, together with Annualised Recurring Revenue (ARR), on an underlying basis alongside organic growth rates.  Sage Business Cloud penetration and subscription penetration will also be provided on an underlying basis. Previously this information was provided primarily on an organic basis. Certain organic revenue and profit measures including recurring and total revenue by region will continue to be provided in the interim and full year results. 

Sage believes that these changes will enable a clearer understanding of both the organic and inorganic performance of the Group.

Change to regional reporting

Sage also intends to amend the presentation of its regional reporting, to reflect recent changes to the way in which the Group manages its operations. Going forward, Sage will report performance across the following regions: North America, comprising the US, Sage Intacct and Canada; UKIA, comprising Northern Europe (UK & Ireland) and Africa & APAC; and Europe, comprising France, Central Europe and Iberia.

 

Enquiries:

Sage:

+44 (0) 7721 599502

FGS Global:

+44 (0) 20 7251 3801


James Sandford, Investor Relations

Conor McClafferty


David Ginivan, Corporate PR

Sophia Johnston

 



 

APPENDIX - FY22 underlying measures[2]

 

Underlying measures (£m)

Q1 22

H1 22

Q3 22 YTD

FY 22






Recurring revenue by portfolio[3]

 

 

 

 

Cloud native

90

191

308

435

Cloud connected

190

385

589

842

Sage Business Cloud

280

576

897

1,277

Products with potential to migrate

117

228

343

426

Future Sage Business Cloud Opportunity

397

804

1,240

1,703

Non-Sage Business Cloud

35

70

105

142






Recurring revenue by region

 

 

 

 

North America

174

357

562

787

UKIA[4]

134

273

417

568

Europe

124

244

366

490






Recurring revenue by category





Software subscription

337

688

1,064

1,464

Other recurring

95

186

281

381






Total recurring revenue

432

874

1,345

1,845

Other revenue (SSRS)

31

61

84

104

Total revenue

463

935

1,429

1,949






Underlying operating profit


183


377

 


 


 

Annualised Recurring Revenue (ARR)


1,809


2,057

 of which cloud native

 

448 

 

560 

 

Breakdown of revenue by region

 

Underlying measures (£m)

Recurring revenue

Total revenue

H1 22

FY 22

H1 22

FY 22






North America





US

305

674

323

704

  o f which Sage Intacct

102

231

105

237

Canada

52

113

54

115






UKIA





Northern Europe (UK & Ireland)

208

428

212

434

Africa and APAC

65

140

72

153






Europe





France

128

258

136

273

Central Europe

56

112

71

136

Iberia

60

120

67

134

 



[1] APMs including underlying and organic measures are defined in Appendix 1 (on pages 13 and 14) of Sage's FY22 full year results announcement, dated 16 November 2022.

[2] The figures set out above are provided at FY22 exchange rates. In line with Sage's APM definitions, they will be retranslated at current period exchange rates when reported as comparator figures during FY23, to enable the Group's performance to be assessed on a constant currency basis.

[3] As Other revenue (SSRS) now accounts for only 5% of total revenue, the breakdown of revenue by strategic product portfolio will only be provided on a recurring revenue basis going forward.

[4] United Kingdom, Ireland, Africa and APAC

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