North America

Including: United States, Canada
CEO: Sue Swenson

Performance

Total revenues in North America contracted 4%* to £549.9m (2009: £575.8m*). Organic revenues contracted 3%* (2009: 8%* contraction) with an organic contraction of 2%* in the second half of the year. Organic subscription revenues declined 2%* (2009: 2%* contraction), while organic software and software-related services revenues fell 9%* (2009: 23%* contraction). In the second half of the year, organic software and software-related services revenues contracted by 4%*, against a contraction of 13%* for the first half of the year.

Sage Business Solutions, our largest US division, declined organically by 3%* in the year, and by 1%* in the second half of the year. However, we did see good growth in the second half of the year in certain key products such as Simply, ACCPAC and Sage ERP X3. Our mid-market ERP products are well positioned in the market, with a number of compelling releases planned for 2011. Whilst the US entry-level market remains cautious, we have had success in building our position in the Accountants channel, and Peachtree Business Care premium support contracts now account for almost 50% of Peachtree subscription revenue.

Sage Payment Solutions Division saw growth in the number of merchants and spend volumes, but a continued competitive pricing environment. Revenues were therefore flat* in the year. With a flexible platform for integration into other Sage products, cross-sell revenues into the Sage base increased by over 70%* to £7.8m, and this remains a substantial future opportunity.

Sage Healthcare Division has continued to see growth in the Intergy product, and a contraction of the Medical Manager product giving an overall contraction of 5%* on an organic basis. We have made significant progress on our customer service, and we continue to see good customer wins for Intergy, although the impact of the American Recovery and Reinvestment Act (“ARRA”) funding is not expected to have an effect until April 2011 onward. Sage Healthcare Division’s EBITA^† margin showed continued improvement to 20% (2009: 17%*).

The EBITA^† margin was 22% (2009: 18%*). The prior year margin excluding restructuring charges was 20%*.

Marketplace

The business environment for SMEs in North America remains challenging, although we did see some improvement in confidence over the year. Within our North American business we have seen progress across a range of initiatives such as premium support and renewals, cross-sell of payments into our ERP base, the launch of several connected solutions, continued increase in our customer satisfaction and brand awareness scores, and the reinvigoration of our channel partners.

In North America, emerging businesses are seeking lowest cost start-up support while mature businesses are seeking both growth opportunities and more efficient operations through their existing technology investments. Sage’s Billing Boss and Payment Boss solutions address the needs of emerging micro businesses, with online tools delivering the low cost and ubiquitous access they require. For more established and mature businesses Sage launched a series of connected services including eMarketing and ePhilanthropy (for non-profit organisations) which enable these companies to drive low cost business development through cloud computing integrated to back-office systems.

* Underlying figures neutralise the impact of foreign exchange movements and exclude amortisation of acquired intangible assets. Foreign currency results for the prior year ended 30 September 2009 have been retranslated based on the average exchange rates for the year ended 30 September 2010 of $1.56/£1 and €1.15/£1 to facilitate the comparison of results.

^† EBITA is defined as earnings before interest, tax and amortisation of acquired intangible assets.