KPIs

Our corporate strategy is focused on creating value and building a strong, sustainable business with high levels of customer satisfaction. We monitor our performance against a number of different benchmarks which allow us to measure the value we are creating for both our customers and our shareholders.

In selecting these KPIs, we have incorporated our strategic goals set out here.

Consistent and sustainable earnings growth, organic revenue growth and strong cash generation from our businesses are KPIs. Over the year, we performed well against these financial benchmarks and in line with our forecasts at the beginning of the financial year.

We also closely monitor the degree of customer satisfaction relating to our products and services. We take over 9 million calls a year, or over 36,000 calls a day, from all over the world. This customer feedback helps us improve our products and services as well as providing a rich source of input on customer satisfaction levels.

A KPI of customer satisfaction is the level of renewal rates on our service support contracts. Customers who choose to renew their service contracts, upgrade their software or migrate to new Sage products, by definition must have a high degree of satisfaction with Sage. Our renewal rates historically have been over 80% and in 2008 we again achieved this high rate of customer renewal.

Adjusted EPS growth

+3%

Adjusted EPS represents income for the financial year, prior to the amortisation of intangible assets, divided by the weighted average number of ordinary shares in issue during the year. All figures provided above are restated to reflect the neutralisation of foreign exchange movements.

Organic revenue growth

Excluding Sage Healthcare Division

+6%

Organic revenues are derived from our core business operations, excluding the contribution from acquisitions and disposals made in the current and prior year, along with non-core products. Current year revenue is compared to the prior financial year translated on consistent exchange rates to eliminate distortions due to fluctuations in exchange rates.

EBITA margin

23%

EBITA is defined as earnings before interest, tax and amortisation. This measure excludes the effects of amortisation of acquired intangible assets and the net amortisation or capitalisation of software development expenditure. The EBITA margin represents EBITA divided by revenue for the year.

Cash generation from operations

114%

Cash flows from operating activities divided by EBITA provide a measure of the ability of the Group to yield cash from its on−going business to reinvest and fund liabilities. The Group aims to maintain positive cash generation from operations.

Renewal rate on maintenance and support contracts

81%

Customer retention is an important measure of competitiveness in the market. Renewal rates are calculated as the number of maintenance and support contracts which were renewed in the period divided by the number of contracts which were potentially renewable in the period.