Group Press Releases

The Sage Group plc (”Sage”), a leading global supplier of business management software solutions for small and medium-sized enterprises (”SMEs”), announces its unaudited results for the year ended 30 September 2008.

Financial highlights

• Revenues increased by 7%* to £1,295.0m (2007: £1,214.1m*)
• EBITA† margin of 23% (2007: 24%*), reflecting recent acquisitions and the planned investment in our North American business
• Adjusted pre-tax profit^ rose by 3% to £273.4m (2007: £265.1m)
• Adjusted earnings per share^ increased by 3% to 14.44p (2007: 14.07p)
• Operating cash flow of £342.0m (2007: £317.1m), representing 114% of EBITA† (2007: 112%)
• Strong balance sheet with net debt to EBITA† of 1.8 times; interest cover of 10.1 times with committed debt facilities of £850m
• Proposed total dividend increased by 3% to 7.21p (2007: 7.00p); dividend cover of 2 times

Operational and strategic highlights

• 6%* organic revenue growth excluding Sage Healthcare Division (2007: 7%*); 3%* organic revenue growth overall
• 10%* total growth in subscription revenues±; representing 61% of our business; combined software/support contracts continue to drive strong growth in subscription revenues
• 2%* total growth in software and software-related services
• Good performance in the UK despite challenging market conditions
• Continued strong growth in Mainland Europe and Rest of World
• New management team in North America focused on driving operational efficiencies
• Customer base increased to 5.8m businesses (2007: 5.5m)

*Foreign currency results for the year ended 30 September 2007 have been retranslated based on the average exchange rates for the year ended 30 September 2008 of $1.97/£1 and €1.31/£1 to facilitate the comparison of results.
^Pre-tax profit and earnings per share figures stated prior to amortisation of intangible fixed assets and neutralisation of foreign exchange movements. A table reconciling adjusted pre-tax profit to statutory profit before taxation is shown in Note 2 on page 12 and a table reconciling adjusted earnings per share to statutory earnings per share is shown in Note 5 on page 14.
†Earnings before interest, tax and amortisation of intangible fixed assets (EBITA).
±Subscription revenues are recurring in nature and include combined software/support contracts, maintenance and support, transaction revenues (payment and health insurance claims processing) and hosted products.

Paul Walker, Chief Executive, commented: “The strength and flexibility of our business model has helped us achieve solid results in difficult market conditions. As markets weakened in the UK and North America, we were rapidly able to adapt to the changing markets and proactively refocus our businesses in these regions. Our businesses in Mainland Europe and Rest of World recorded strong results through a combination of favourable market conditions and good commercial execution.

“We anticipate that the broader economic climate will remain uncertain for the near future. However, our business model, together with consistently strong cash flows, robust balance sheet and high level of recurring revenue streams, provides a solid foundation for our operations. Our large and geographically diverse customer base of over 5m customers also provides many opportunities to meet future demand for business critical solutions designed to help SMEs run their businesses more efficiently in difficult market conditions.

“Whilst we are still early in our new financial year, growth in subscription revenues has continued to offset weakness in software revenues. Although we remain cautious in our outlook, we expect demand for our customer support to continue, which combined with tight cost control and our strong geographic market positions, will allow us to weather these turbulent times.”

A presentation for analysts will be held at 8.30am today at Deutsche Bank, Winchester House, 1 Great Winchester Street, London EC2N 2DB. The presentation will be webcast on www.investors.sage.com.

A live audio broadcast of the presentation and subsequent Q&A will also be available for analysts on the dial-in conference number +44 (0) 1452 568 051, pass code 75430177. A replay of the call will be available for two weeks after the event, on +44 (0)1452 550 000, pass code: 75430177#.

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Enquiries:

The Sage Group plc
+44 (0)191 294 3068
Paul Walker, Chief Executive
Cynthia Alers, Investor Relations Director

Tulchan Communications
+44 (0)20 7353 4200
Susanna Voyle
Stephen Malthouse
Lizzie Morgan