9th May 2006 07:00
FOR IMMEDIATE RELEASE 9 May 2006 SAGE PRE-TAX PROFIT UP 19% TO ‚£113.7 MILLION FOR HALF-YEAR ENDED 31 MARCH 2006The Sage Group plc ("Sage"), a leading supplier of accounting and businessmanagement software solutions and related services for small to medium-sizedenterprises ("SMEs"), announces its unaudited results for the half-year ended31 March 2006. These results have been prepared under International FinancialReporting Standards ("IFRS") as adopted for use by the European Union ("EU")that the Group expects to be applicable to the year ending 30 September 2006.Financial highlightsRevenue increased by 18%* to ‚£455.9m (2005: ‚£385.6m*)Pre-tax profit increased by 19% to ‚£113.7m (2005: ‚£95.8m)Earnings per share increased by 19% to 6.10p (2005: 5.14p)EBITA margin increased to 27% (2005: 26%*). (EBITA: earnings before interest,tax and net amortisation)Cash flow from operations represented 125% of EBITA (2005: 134%)Interim dividend raised 17% to 1.08p per share (2005: 0.92p)Operational and strategic highlightsCustomer base expanded to 5.0m businesses (30 September 2005: 4.7m)Organic revenue growth of 5%*, with growth in all regionsCustomer Relationship Management ("CRM") solutions showed revenue growth of 9%*Strong revenue growth in newer Sage territories - Spain, South Africa, Canadaand Australia‚£281m invested in acquisitions to extend existing businesses in US and France -these have shown high revenue growth since acquisitionRegional analysis* First half First half 2006 2005 ‚£m Revenue EBITA Revenue EBITA UK 99.5 36.4 95.6 34.8 Mainland Europe 134.5 29.8 99.9 22.4 North America 164.1 38.7 161.0 38.7 Rest of World 33.3 9.1 29.1 5.3 431.4 114.0 385.6 101.2 Acquisitions: Mainland Europe 18.3 4.3 - - North America 6.2 2.1 - - 24.5 6.4 - - Profit on disposal - 2.7 - - Foreign exchange impact* - - (12.7) (3.0) 455.9 123.1 372.9 98.2 *Foreign currency results for the prior half-year ended 31 March 2005 and otherprior periods referred to, have been retranslated based on the average exchangerates for the half-year ended 31 March 2006 to facilitate the comparison ofresults.Chief Executive, Paul Walker, commented: "The first half of 2006 has progressedas expected, with our expanding customer base of 5 million businessescontinuing to purchase more of our locally-developed software and services.We will continue to evaluate acquisition opportunities that meet the evolvingneeds of customers, whilst satisfying our investment criteria and representinggood value for our shareholders.With a number of new product and service initiatives in place, we expectincreased organic revenue growth for the second half and we therefore continueto view 2006 with confidence."A presentation for analysts will be held at 9.30am today at Deutsche Bank,Winchester House, 1 Great Winchester Street, London EC2N 2DB. The presentationwill also be available at www.sage.com. A live audio broadcast of thepresentation will also be available for analysts. The dial-in number is + 44(0)20 7162 0025. Enquiries:The Sage Group plc +44 (0) 191 294 3068 Tulchan Communications +44 (0) 20 7353 4200 Paul Walker, Chief Executive Julie Foster Paul Harrison, Finance Director Kirstie Hamilton Phil Branston, Investor Relations OverviewWe are pleased to report a revenue increase of 18%* and earnings per sharegrowth of 19%. These results show further progress in our growth strategy,based on fulfilling a greater range of SME business management needs with aportfolio of locally-developed software and services. Group organic revenuegrowth of 5%* reflected our strong market positions, maintained by growth inboth our small business and mid-market divisions.CustomersWe have continued to focus on expanding our customer base and on encouragingexisting customers to adopt the new and enhanced products and services that wehave developed. Key developments in the period were:Our customer base expanded to 5.0 million (30 September 2005: 4.7 million)1.5 million of our customers purchased support contracts and related services(2005: 1.3 million)377,000 of our support service customers purchased added value, premium supportcontracts (2005: 353,000)745,000 of our support service customers chose subscriptions combining softwareupgrades with support (30 September 2005: 678,000)These achievements have further deepened relationships with our customers andas they renew and expand their solutions over time, there will be significantopportunities for our future growth.ProductsWe continued to make progress in extending our solutions to help our customersmanage processes throughout their businesses. In response to customer needs,our annual product development programme continued to improve our product rangein all of our markets. A number of key new products are scheduled for releasein the second half of the year. These products provide industry-specificextensions, new business analysis capabilities and deeper integration betweenSage products. In addition, we continued to cooperate with a range of majortechnology partners in order to make more effective use of their technologiesin developing our products. During the period, our total investment in softwaredevelopment, including ‚£0.5m of capitalised expenditure, represented 31% ofsoftware revenue (2005: 28%*).Our customers have continued to adopt Sage solutions beyond core accounts andpayroll, particularly in industry-specific markets such as manufacturing anddistribution and also in customer relationship management ("CRM"). With organicrevenue growth of 9%*, CRM has continued to be our fastest-growing category ofsolutions. AcquisitionsAcquisitions in high-growth segments of the SME market remain an important partof Sage's growth strategy. We made two significant acquisitions during theperiod, which enhanced our position in existing product markets and alsoextended our business into new service markets. These acquisitions contributedto an increase in the size of our operations to 10,500 employees (31 March2005: 8,200).Adonix S.A. ("Adonix"), acquired in November 2005 for an enterprise value of ‚£74.1m, strengthened our market leading position in France. Adonix brings moreadvanced business management solutions, including industry-specific softwarefor businesses in real estate and manufacturing. These solutions providemigration choices for our large mid-market customer base in France.Verus Financial Management, Inc. ("Verus"), acquired in February 2006 for anenterprise value of ‚£184.6m, provides credit / debit card and cheque processingfor US SMEs, complementing the existing payroll processing services availableto our North American customers. Verus supports over 100,000 merchants inprocessing customer transactions. Such merchant services represent a stronglygrowing market, underpinned by increased use of credit / debit cards and byprogressive adoption of e-commerce. Sage's North American customers are showingclear demand for their card transactions to be both automated and integratedwith their accounting software. To realise this opportunity, we have begun tointegrate Verus services with Sage accounting software.We continue to evaluate further acquisition opportunities to extend ourexisting regional businesses and also to enter adjacent product and servicemarkets and new territories. We remain disciplined in our valuation ofbusinesses and will only acquire businesses that represent good value for ourshareholders. We demonstrated our commitment to shareholder value when, inApril 2006, having announced an offer for Visma ASA, a Scandinavian vendor ofbusiness management solutions for SMEs, we withdrew our interest after a higherbid was made by a third party.After the end of the period, two further acquisitions, Contractor Anywhere andMaster Builder (combined enterprise value approximately ‚£17m, May 2006),extended the North American range of construction solutions. The two businesseshad combined revenues of ‚£8.3m for the year ended 31 July 2005 and have 9,000customers. Both Master Builder, purchased from Intuit Inc. and ContractorAnywhere, a recently-developed mid-market solution, will form part of themigration path to our full mid-market solution, Timberline.Regional reviewUKUK revenues were ‚£99.5m (2005: ‚£95.6m). Organic revenue growth of 4% reflectedgrowth in both small business and mid-market solutions. Core small businessaccounts products showed strong licence revenue growth. In addition,industry-specific product extensions and CRM made rising contributions. In allthese product lines, support revenue growth resulted from the strong licencesales growth over recent periods.The EBITA margin increased to 37% (2005: 36%).Mainland EuropeRevenues in Mainland Europe were ‚£152.8m (2005: ‚£99.9m*). Organic revenuegrowth of 6%* resulted principally from increased customer spend on supportservices. The strongest organic revenue growth was in Spain (11%*) and resultedfrom strong growth in software licence revenues and further adoption of premiumsupport contracts. The acquisition of Adonix extended our presence in the French mid-market withadvanced solutions for our mid-market customers. For the year ended 31December 2004, its last full year prior to acquisition, its revenue was ‚£43.1m*and its EBITA was ‚£9.7m*. Adonix has performed strongly since acquisition, withrevenue growth of 13% compared with the prior year period (pre-ownership).The overall EBITA margin in Mainland Europe was maintained at 22% (2005: 22%*). North AmericaRevenues in North America were ‚£170.3m (2005: ‚£161.0m*). Organic revenuegrowth, excluding the contribution from a small business unit disposed of inJanuary 2006, was 4%*.The small business division showed organic revenue growth of 7%*, resultingfrom new and existing customers adopting premium versions of existing products,together with added-value support and payroll services for these products. The mid-market division showed organic revenue growth of 2%*. This was lowerthan in recent periods due to this year's product release schedule beingweighted to the second half. Support revenues continued to grow strongly as aresult of sustained software licence growth over recent periods. The acquisition of Verus (February 2006) extended the services we offer to USSMEs into credit card processing. Its revenue for the year ended 31 December2005 was ‚£36.5m* and its EBITA was ‚£11.0m. Verus has continued its stronggrowth since acquisition, with revenue growth of 21% compared with the prioryear period (pre-ownership).The overall North American EBITA margin increased to 25% (2005: 24%*),principally as a result of a gain of ‚£2.7m made on disposal of a small businessunit in January 2006. Excluding this gain, underlying margins were unchangedfrom the prior year period at 24%.Rest of WorldThis region contributed revenues of ‚£33.3m (2005: ‚£29.1m*). Organic revenuegrowth was 14%* and was strong in both principal territories. In South Africa,revenue growth resulted from licence sales growth in core accounts and payrollproducts, combined with continued adoption of support contracts by new andexisting customers. In Australia, new payroll products provided a basis forstrong growth in revenues from upgrades, support and related services.The overall EBITA margin for the region rose to 27% (2005: 18%*) as a result ofrevenue growth.Financial reviewThese results are the first the Group has reported under InternationalFinancial Reporting Standards ("IFRS") as adopted by the European Union ("EU")that the Group expects to be applicable to the year ending 30 September 2006. Asummary of the principal impacts of IFRS is shown in note 1.RevenueRevenues grew 18%* to ‚£455.9m (2005: ‚£385.6m*). Organic revenue growth,excluding the contributions of non-core products (3% of revenues) and ofcurrent- and prior-year acquisitions together with a small disposal (combined14% of revenues), was 5%*.Software licence revenues were ‚£161.7m (2005: ‚£147.3m*), showing organic growthof 2%*. Whilst we added 186,000 new customers excluding acquisitions, adoptionof our higher-value mid-market software products was comparatively slowreflecting the fact that the year's principal product releases are due in thesecond half. Services revenues, principally related to the provision of support services,were ‚£294.2m (2005: ‚£238.3m*), representing organic growth of 7%*. Supportservice revenues represented 50% of Group revenues and grew 9%* organically,principally as a result of an increase in spend per customer associated withadoption of additional software and with further take-up of premium support.Our 1.5 million support contracts (2005: 1.3 million) included a growingproportion of contracts providing continuous subscriptions combining softwareupgrades and support.ProfitabilityPre-tax profit increased by 19% to ‚£113.7m (2005: ‚£95.8m) and earnings pershare grew 19% to 6.10p (2005: 5.14p). These results include a gain of ‚£2.7mmade on disposal of a small North American business unit in January 2006.Under IFRS, earnings before interest and tax (EBIT) includes non-cash chargesfor amortisation and excludes capitalised software development expenditure. Theimpacts of these items on the 2005 results are shown in note 1. The Boardmeasures Group and regional performance by using the EBITA (earnings beforeinterest, tax and net amortisation) performance measure. This excludes theimpact of amortisation of acquired intangible assets and also the net impact ofcapitalisation of certain software development and its subsequent amortisation.The EBITA margin was increased to 27% (2005: 26%*).The tax charge gives an effective rate of 31% which is unchanged from the prioryear with the result that earning per share increased by 19%.AcquisitionsDuring the period, we completed two significant acquisitions, for an enterprisevalue of ‚£258.7m. These were Adonix (France, enterprise value ‚£74.1m) and Verus(US, enterprise value ‚£184.6m).Current and prior year acquisitions contributed strong revenue growth, suchthat Group pro-forma revenue growth, with comparative pre-ownership resultsfrom acquisitions added to the prior year period, was 6%. Cash flowThe Group remains highly cash generative with cash flow from operations of ‚£153.9m (2005: ‚£131.7m) representing 125% of EBITA. This strong cash flow meantthat, after expenditure on acquisitions of ‚£281.4m, net debt stood at ‚£287.4mat 31 March 2006 (‚£106.9m at 30 September 2005).DividendIn line with the Group's policy, announced in December 2004, the interimdividend is being raised 17% to 1.08p per share (2005: 0.92p) reflecting theBoard's intention to move dividend cover to 3.5 times for the current year. Thedividend will be payable on 16 June 2006 to shareholders on the register atclose of business on 19 May 2006. BoardOn 6 February 2006, we announced that our Chairman Michael Jackson would beretiring from the Board on 1 August 2006. Michael joined the Board in 1984 andhas been Chairman since 1997. During this period Michael helped guide the Groupthrough its initial growth to become UK market leader, its flotation as alisted company and its international expansion through a series of successfulacquisitions. The Board would like to thank Michael for his substantialcontribution to Sage's growth over the past 22 years. Sir Julian Horn-Smith,who joined the Board on 3 March 2006 and will be retiring as Vodafone's DeputyChief Executive, will become Chairman on 1 August 2006.OutlookThe first half of 2006 has progressed as expected, with our expanding customerbase of 5 million businesses continuing to purchase more of ourlocally-developed software and services.We will continue to evaluate acquisition opportunities that meet the evolvingneeds of customers, whilst satisfying our investment criteria and representinggood value for our shareholders.With a number of new product and service initiatives in place, we expectincreased organic revenue growth for the second half and we therefore continueto view 2006 with confidence.CONSOLIDATED INCOME STATEMENTFor the six months ended 31 March 2006 Six months ended Six months ended Year 31 March 31 March ended 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Unaudited) Note ‚£m ‚£m ‚£m Revenue 1 455.9 372.9 759.6 Operating profit 1 118.8 98.2 199.2 Financial income 1.6 1.1 2.8 Financial expenses (6.7) (3.5) (8.5) Profit before taxation 113.7 95.8 193.5 Taxation 3 (35.2) (29.9) (61.2) Profit for the period 78.5 65.9 132.3 Attributable to: Equity shareholders 78.5 65.9 132.2 Minority interest - - 0.1 Profit for the period 78.5 65.9 132.3 Earnings per share 5 6.10p 5.14p 10.30p(pence) - basic Earnings per share 5 6.05p 5.11p 10.25p(pence) - diluted CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSEFor the six months ended 31 March 2006 Six months ended Six months ended Year 31 March 31 March ended 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Unaudited) ‚£m ‚£m ‚£m Profit for the period 78.5 65.9 132.3 Net exchange adjustments 14.4 (17.2) 13.4offset in reserves Total recognised income for 92.9 48.7 145.7the period CONSOLIDATED BALANCE SHEETAs at 31 March 2006 31 March 31 March 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Unaudited) ‚£m ‚£m ‚£m Goodwill 1,275.4 995.7 1,076.8 Other intangible assets 174.3 13.4 45.4 Property, plant and equipment 126.2 121.2 119.9 Deferred tax assets 13.7 38.5 46.0 Total non-current assets 1,589.6 1,168.8 1,288.1 Inventories 4.3 3.3 3.5 Trade and other receivables 184.2 132.0 149.9 Cash and cash equivalents 88.4 77.9 69.1 Total current assets 276.9 213.2 222.5 TOTAL ASSETS 1,866.5 1,382.0 1,510.6 Trade and other payables (168.0) (133.7) (145.5) Tax liabilities (58.5) (59.5) (60.8) Financial liabilities - Borrowings (0.4) (6.0) (0.2) Deferred consideration (14.9) (2.5) (5.8) Deferred income (269.9) (222.2) (228.3) Total current liabilities (511.7) (423.9) (440.6) Financial liabilities - Borrowings (375.8) (157.1) (176.3) Retirement benefit obligations (2.3) (2.4) (2.3) Deferred tax liabilities (19.4) (3.7) (2.5) Total non-current liabilities (397.5) (163.2) (181.1) TOTAL LIABILITIES (909.2) (587.1) (621.7) NET ASSETS 957.3 794.9 888.9 Share capital 12.9 12.8 12.8 Share premium account 460.9 448.7 451.0 Other reserve 61.1 61.1 61.1 Currency translation reserve 27.8 (17.1) 13.4 Retained earnings 394.6 289.2 350.4 Total shareholders' equity 957.3 794.7 888.7 Minority interest in equity - 0.2 0.2 TOTAL EQUITY 957.3 794.9 888.9 CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 31 March 2006 Six months Six months Year ended 31 March ended 31 March ended 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Unaudited) Note ‚£m ‚£m ‚£m Cash flows from operating 153.9 131.7 241.0activities Interest received 1.6 1.1 2.8 Interest paid (6.4) (3.9) (8.1) Tax paid (30.0) (33.7) (57.3) Net cash from operating 119.1 95.2 178.4activities Cash flows from investing activities Acquisitions of subsidiaries (251.8) (29.4) (101.0)(net of cash acquired) Disposal of subsdiary 8.4 - - Proceeds from sale of property, 2.7 2.1 3.5plant and equipment Purchase of property, plant and (13.9) (6.7) (20.7)equipment Purchase of intangible assets (1.9) - - Development expenditure (0.3) (0.4) (0.7) Net cash used in investing (256.8) (34.4) (118.9)activities Cash flows from financing activities Net proceeds from issue of 10.0 1.8 4.6ordinary share capital Purchase of treasury shares (13.3) - - Finance lease principal (0.4) - 0.9repayment Issue costs on loans (0.2) - - Repayment of borrowings (111.1) (54.0) (209.4) New borrowings 296.2 17.0 173.1 Dividends paid to shareholders (25.2) (22.0) (33.9) Net cash from/(used in) 156.0 (57.2) (64.7)financing activities Net increase/(decrease) in cash 18.3 3.6 (5.2)and cash equivalents Cash and cash equivalents at 1 69.1 74.3 74.3October Effects of exchange rate 1.0 - -changes Cash and cash equivalents 2 88.4 77.9 69.1 NOTESFor the six months ended 31 March 20061 IFRSIFRS financial information presented in this statement has been prepared on thebasis of the policies the directors expect to adopt for the Group's first fullIFRS financial statements for the year to 30 September 2006. These policiesinclude all prevailing and applicable IFRS including International AccountingStandards ("IAS") and interpretations issued by the International AccountingStandards Board ("IASB") and its committees. These standards andinterpretations are subject to ongoing amendment by the IASB and subsequentendorsement by the European Commission and are therefore subject to possiblechange.The Group has taken the exemption available under IFRS 1 from presentingcomparative financial information under IAS 32 and IAS 39 and therefore therelated applicable financial instruments have been accounted for under UK GAAP.Further standards and interpretations may also be issued that will beapplicable for financial years beginning on or after 1 January 2005 or thatwill be applicable to later accounting periods but may be adopted early. TheGroup's first IFRS financial statements may, therefore, be prepared inaccordance with different accounting policies to those used to prepare thefinancial information presented in this announcement. In addition, as IFRS is anew reporting basis for UK companies, accounting practice and interpretationsof accounting standards will develop as companies gain more experience of thenew framework. Accordingly there may be changes in the common approachescurrently adopted and the final application of IFRS in the financial statementsfor the year to 30 September 2006 may be subject to change.The date of transition to IFRS for the Group was 1 October 2004, being thefirst day of the comparative period ("the transition date") and the Group isrequired to prepare a balance sheet as at the transition date ("the transitionbalance sheet") under IFRS.On 27 March 2006 the Group disclosed the unaudited restatement of financialinformation for the Group under IFRS for the six months ended 31 March 2005 andthe year ended 30 September 2005 including the reconciliation of the Group's UKGAAP consolidated income statement, balance sheet and cash flow statement toIFRS. In addition, details of the impacts on the primary segmental disclosureof geographic region were provided.This document is available at www.sage.com/investors/ifrs.pdfAnalysis of results First half First half 2006 2005 Revenue EBITA Operating Revenue EBITA Operating profit profit (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) ‚£m ‚£m ‚£m ‚£m ‚£m ‚£m UK 99.5 36.4 37.0 95.6 34.8 34.9 Mainland 134.5 29.8 26.6 99.9 22.4 22.0Europe North America 164.1 38.7 37.0 161.0 38.7 39.0 Rest of World 33.3 9.1 9.1 29.1 5.3 5.3 431.4 114.0 109.7 385.6 101.2 101.2 Acquisitions: Mainland 18.3 4.3 4.3 - - -Europe North America 6.2 2.1 2.1 - - - 24.5 6.4 6.4 - - - Profit on - 2.7 2.7 - - -disposal Impact of - - - (12.7) (3.0) (3.0)foreign exchange* 455.9 123.1 118.8 372.9 98.2 98.2 * The 2006 trading results from businesses located outside the UK weretranslated into Sterling at the average exchange rates for the period. For ourtwo most significant foreign operating currencies, the US Dollar and the Euro,the resulting rates were ‚£1=$1.75 and ‚£1=¢â€š¬1.46 respectively. Results for theperiod ended 31 March 2005 have been retranslated at these exchange rates tofacilitate the comparison of results. The Group does not hedge thistranslational exposure.EBITA includes a charge for share-based payments of ‚£4.2m (2005: ‚£3.6m).The Board measures Group and regional performance by using the EBITA (earningsbefore interest, tax and net amortisation) performance measure. This excludesthe impact of amortisation of acquired intangible assets and also the netimpact of capitalisation of certain software development and its subsequentamortisation.Reconciliation of EBITA to operating profit 2006 First half 2005 First half (Unaudited) (Unaudited) ‚£m ‚£m EBITA 123.1 98.2 Development cost capitalised 0.6 0.6 Development amortisation (0.3) (0.2) Intangible amortisation (4.6) (0.4) Operating profit 118.8 98.2 The geographical restatement of UK GAAP figures for the period ended 31 March2005 to IFRS is presented below. Further details are available at www.sage.com/investors/ifrs.pdfRevenue - half year ended 31 March 2005 (Unaudited) UK Mainland North Rest of Total Europe America World ‚£m ‚£m ‚£m ‚£m ‚£m UK GAAP 96.7 101.3 155.4 28.2 381.6 IFRS adjustments: IAS 18 - Revenue (1.1) 0.2 (7.8) - (8.7) IFRS 95.6 101.5 147.6 28.2 372.9 Operating profit - half year ended 31 March 2005 (Unaudited) UK Mainland North Rest Total of Europe America World ‚£m ‚£m ‚£m ‚£m ‚£m UK GAAP 36.3 24.0 37.3 5.5 103.1 IFRS adjustments: IFRS 2 - Share-based payment (1.1) (0.9) (1.4) (0.2) (3.6) IAS 18 - Revenue (0.4) 0.4 - - - IAS 19 - Employee benefits - (0.8) (0.4) (0.1) (1.3) EBITA 34.8 22.7 35.5 5.2 98.2 IFRS 3 - Business combinations (amortisation) - (0.3) (0.1) - (0.4) IAS 38 - Intangible assets (development costs) 0.1 (0.1) 0.4 - 0.4 Operating profit 34.9 22.3 35.8 5.2 98.2 2 Analysis of change in net debt At 1 Exchange At 31 movement/ October March 2005 2006 (Audited) Cash other (Unaudited) flow ‚£m ‚£m ‚£m ‚£m Cash and cash equivalents 69.1 18.3 1.0 88.4 Loans due within one year (0.1) (0.3) - (0.4) Finance leases due within one year (0.1) 0.1 - - Loans due after more than one year (175.2) (184.6) (15.3) (375.1) Finance leases due after more than (0.6) 0.3 - (0.3)one year (106.9) (166.2) (14.3) (287.4) 3 TaxationThe taxation charge for the period comprises: Six months ended 31 Six months ended 31 Year March March ended 30 September 2006 2005 2005 (Unaudited) (Unaudited) (Unaudited) ‚£m ‚£m ‚£m UK taxation 13.8 13.2 19.1 Overseas taxation 21.4 16.7 42.1 35.2 29.9 61.2 The taxation charge gives an effective rate of 31% (2005: 31%). 4 Statutory accountsThe unaudited financial information set out above does not constitute theCompany's statutory accounts for the period ended 31 March 2006. The accountingpolicies used as a basis for this interim results announcement are consistentwith those included in the unaudited restatement of financial information forthe year ended 30 September 2005 as highlighted above. The Company'sstatutory accounts for the year ended 30 September 2005, based on UK GAAP havebeen delivered to the Registrar of Companies. The Group results for the year ended 30 September 2005 have been extracted fromthose statutory accounts as adjusted for IFRS in the unaudited restatement offinancial information for the year ended 30 September 2005 highlighted above.The Auditors' Report on the UK GAAP accounts to 30 September 2005 wasunqualified and did not contain a statement under Section 237 of the CompaniesAct 1985. Accounts to 30 September 2006 under IFRS will be delivered in duecourse.5 Earnings per shareThe calculation of basic earnings per ordinary share is based on earnings of ‚£78,470,000 (2005: ‚£65,918,000) being the profit for the period and on1,287,271,933 ordinary 1p shares (2005: 1,282,275,455) being the weightedaverage number of ordinary shares in issue during the period. The diluted earnings per ordinary share is based on profit for the period of ‚£78,470,000 (2005: ‚£65,918,000) and on 1,297,329,036 ordinary 1p shares (2005:1,289,959,970).6 DividendsThe interim dividend of 1.08 pence per share will be paid on 16 June 2006 toshareholders on the register at the close of business on 19 May 2006. ENDSAGE GROUP PLCRelated Shares:
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