Shareholder returns

Compound Annual growth rate

  2017 2016
Compound Annual growth rate    
- Since IPO 29.3% 26.4%
- Over last five years 42.7% 34.8%
- Over last three years 51.7% 34.1%
- Over last year 73.3% 24.2%


Performance

These ratios demonstrate the compound annual growth rate in shareholder returns assuming reinvestment of Return of Values, but not ordinary dividends. The periods covered are to 30 April 2017 from the IPO in May 2005, over the last five years from 30 April 2012, over the last three years from 30 April 2014 and over the last year from 30 April 2016. We continue to believe that with low single digit revenue growth, our industry leading margins and strong cash conversion we are able to deliver shareholder returns of 15% to 20% per annum over the long-term.

 

Financial performance

Our financial performance KPIs helped us to monitor our progress towards our 2017 revenue and EBITDA growth targets.

Revenue decline

  2017  2016
Revenue decline (0.9)% (2.0)%


Performance

Revenue comprises total revenues compared with the prior year at pro-forma constant currency (“CCY”).

 


Adjusted EBITDA margin

  2017 2016
Adjusted EBITDA margin 47.2% 45.2%


Performance

Adjusted EBITDA is the Adjusted Operating Profit prior to depreciation and amortization of purchased software. The Adjusted EBITDA margin represents Adjusted EBITDA divided by revenue for the year on a pro-forma CCY.

 


Underlying Adjusted EBITDA margin

  2017 2016
Underlying Adjusted EBITDA margin 46.4% 44.2%


Performance

Underlying Adjusted EBITDA removes the impact of net capitalization of product development costs and foreign currency gains and losses from Adjusted EBITDA. The Underlying Adjusted EBITDA margin represents Underlying Adjusted EBITDA divided by revenue for the year on a pro-forma CCY.

 


Cash conversion

  2017 2016
Cash conversion 102.0% 87.9%

 

Performance

This ratio is calculated using the cash flows generated from operations divided by Adjusted EBITDA less exceptional items – the result indicates that the Group is generating cash from its on-going business which can be used to reinvest in the development of the business including financing acquisitions, funding liabilities and paying dividends to shareholders.

 


Free cash flow

  2017 2016
Free cash flow $409.2m $238.5m


Performance

Free cash flow is defined as cash generated from operations less interest paid, bank loan costs, tax paid and payment for intangible assets and property, plant and equipment.

 


Free cash flow per fully diluted share

  2017 2016:
Free cash flow per fully diluted share $1.724 $1.046

 

Performance 

Free cash flow divided by the weighted average number of fully diluted shares.

 


Diluted Adjusted EPS

  2017 2016
Diluted Adjusted EPS 175.65c 146.70c

 

Performance

Diluted Adjusted EPS is calculated by taking profit after tax, prior to exceptional items, amortization of purchased intangibles and share based compensation charges, and tax attributable to these charges divided by the weighted average number of fully diluted ordinary shares in issue during the year. This measure indicates the ability of the Company to continue to adopt a progressive dividend policy.

 

Financial strength and capital discipline

Our financial strength and capital discipline KPIs are used to monitor our gearing and interest cover levels. Our target Net Debt to Facility EBITDA ratio is 2.5 times.

Net debt to Facility EBITDA

  2017 2016
Net debt to Facility EBITDA 2.1 times 1.9 times

 

Performance

Net value of borrowings less cash and prepaid facility arrangements fees expressed as a multiple of the Facility EBITDA. For FY16 this is the calculated position at 30 April 2016 prior to the Completion of the acquisition of Serena Software Inc. Once completed the pro-forma net debt to Facility EBITDA multiple at 2 May 2016 increased to 2.51 times.

 


Interest cover

  2017 2016
Interest cover 6.6 times 5.4 times

 

Performance

Adjusted Operating Profit expressed as a multiple of finance costs.

 


Revolving Facility Covenant

  2017 2016
Revolving Facility Covenant Not applicable as less than 35% of facility drawn >140% headroom

 

Performance 

The Group is subject to an aggregate net leverage covenant only in circumstances where more than 35% of the Revolving Facility is outstanding at a fiscal quarter end.

 

Growth metrics – medium term

Following the announcement of the acquisition of TAG, we set out a four phase plan that envisaged a reduction in revenue in FY16, stabilization of revenue in FY17 and growth in FY18. Our strategy is to grow overall revenue by low single digit in the medium‑term.

Group Revenue

  2017 2016
Group Revenue $1,380.7m $1,392.7m

 

Performance

Revenue comprises total revenues compared with the prior year at pro-forma CCY. This represents a reduction of 0.9% which is at the top of management’s guidance range of zero to minus 2% given at the beginning of the financial year.

 


SUSE revenue

  2017 2016
SUSE revenue $303.4m $250.4m

 

Performance

This is the total revenues for the SUSE Product Portfolio compared with the prior year at pro-forma CCY.

 


SUSE - TCV

  2017 2016
SUSE – TCV $339.1m $303.8m

 

Performance

Total Contract Value (“TCV”) represents the gross billings in the year compared with the prior year at pro-forma CCY.

 


SUSE - ACV

  2017 2016
SUSE – ACV $220.1m $190.3m

 

Performance

Annual Contract Value (“ACV”) measures the first 12 months duration of TCV compared with the prior year at pro-forma CCY.

 


Visual COBOL revenue

  2017 2016
Visual COBOL revenue $44.3m $36.2m

 

Performance

This is the total revenues for the Visual COBOL products compared with the prior year at CCY.

 


Enterprise revenue

  2017 2016
Enterprise revenue $51.9m $45.7m

 

Performance

This is the total revenues for the Enterprise suite of products within Mainframe Solutions compared with the prior year at CCY.

 


Identity Access & Security Licence revenue

  2017 2016 
Identity Access & Security Licence revenue $48.6m  $51.7m 

 

Performance

This is the total Licence revenues for the relevant suite of products compared with the prior year at pro-forma CCY.