Earnings Call: H2 2013

Dec 4, 2013

Good morning. Thank you for joining us today. I am delighted to present our full year results. Together with me, we have Darren Fisher, our group finance director. He has been acting very capably during our search for a permanent CFO. That search ended several weeks ago when we appointed Steve Hare as our group CFO. Steve will start early January, and it is my pleasure to introduce Steve Hare to you. Steve, if you would stand up. Thank you. To business with our headlines. I am very pleased to be presenting a strong set of results today. We have doubled our rate of organic growth to 4% this year, with marked acceleration in the second half, with 5% growth in the second half. The 6% organic growth in North America is clearly a highlight. It is great to see the turnaround that our team has achieved in this important market. Our good performance is broad-based with strong execution across the board at Sage. We have remained financially disciplined. We have maintained margins whilst continuing to invest, and we have returned over GBP 1 billion to shareholders over the past two years. GBP 1 billion. We have delivered commercial success across the business. We have gained, on an organic basis, 256,000 new customers, an increase of 12% over last year. Our renewal rate, which has been 81% as long as anyone can remember, I guess, now it is 82%, and that 1% represents GBP 4 million in the year. So a really good set of numbers. What are the strategic highlights? Sage One, where the U.K. is leading the way with over 21,000 paying subscriptions at the year-end. Our U.K. team really did a great job here. Sage ERP X3, where revenue growth accelerated to 12% this year, and our integrated payments strategy is working as evidenced by a 20% growth in payments cross-sell in North America. So great progress. Our technological innovations will only continue to bear fruits if we continue to deliver what customers really want. This is why we measure net promoter scores, NPS, which is a great indicator of long-term success. NPS tracks customers' willingness to recommend Sage. The good news is that NPS has nicely increased across the board at Sage over the past two years. Our strategy is working and growth is accelerating. I will now hand over to Darren. Thank you, Guy, and good morning, everyone. I am going to cover the financial and operational highlights for the year. I want to start with the financial KPIs because for me, they cover a key theme, the financial health of the business. This has been a year of marked improvement in growth. Organic revenue has doubled to 4% from 2% last year. A strong performance. We have maintained margin at 27%, in line with our margin commitment at the start of the year. This reflects both our discipline and the strength of our business as we continue to invest for growth. Underlying EPS has grown 12%, partly reflecting this discipline, but primarily reflecting the buyback and the share consolidation, which reduced our share count during the course of the year. Underlying cash conversion is 112%, demonstrating the continued strong cash generation associated with our business. Turning to financial strength, we have delivered on our leverage commitment of 1x net debt to EBITDA, and interest cover remains strong, notwithstanding the increase in gearing to meet this commitment. It remains materially above our covenant requirement of 4x. The KPI scorecard is demonstrating the business is in good health. Looking ahead, we want to continue the journey we are on to reduce our exposure to cyclical licensed revenues and to drive higher quality revenue streams. How are we doing on this? This slide helps tell the story. The headline message is strong acceleration growth during the year, driven by high quality recurring revenue and good execution across the business. Recurring revenues continued to deliver good growth during a period of economic uncertainty, 6% growth in markets which remain challenging. This is good quality, consistent growth. We were also encouraged to see an improved performance from SSRS this year, supported by a return to growth in the second half. Our strategic shift to recurring revenue continues and now represents 71% of our revenue. Bear in mind that only five years ago, this was 61%. Improving the revenue mix further is at the core of our strategy to deliver accelerated growth on a sustainable basis. Those are the headlines. Let's now turn our attention to revenue sources at the regional level. In Europe, the picture remains mixed. SSRS remains in contraction. We continue to see weakness in new licensed revenue in markets where economic conditions remain challenging, such as in Spain and in France, where our mid-market business, in particular, finds trading difficult. Europe has delivered 5% recurring revenue growth. This is a good performance and reinforces the value customers place in support throughout the economic cycle. In the Americas, we're seeing encouraging evidence of our focus delivering results. SSRS returned to growth in North America, driven by strong performance by Sage ERP X3. Recurring revenue, which is 80% of our revenue in North America, grew 7% for the year. This growth reflects great execution on a number of opportunities, which I'll cover in more detail shortly. AMEA continues to deliver strong growth in both SSRS and recurring revenue, with South Africa again leading the way. Let's now look at trends within the regions more closely. In Europe, organic revenue grew 2% for the year with an acceleration in growth in the second half. The standout performance was the U.K.I., which delivered growth of 5%. The business continued to execute well, in particular on the opportunity presented by the move to real-time information implemented by HMRC. The U.K. business did a really good job at capitalizing on this significant legislative change. France returned to growth in the second half with a good performance in the small business and SME segments, offset by weaker performance in the mid-market business. Germany also returned to growth in the second half, as we expected, having been held back in the first half by a tough grow over comparator. Spain's rate of contraction lessened throughout the year to end at 2%. New business still remains difficult, but we were encouraged that Spain exited the year in modest growth. Sage Pay's growth continued to be very strong at 25%. The business benefited from price increases made in June 2012, resulting in higher growth in 2013. We do not expect to see Sage Pay sustain this level of growth this year. We do, however, expect it to remain a good double-digit growth business like you've seen in the second half. Encouraging progress in Europe, although the mid-market tells us that confidence is still somewhat fragile. North America delivered growth this year of 6%, with 7% in the second half. These numbers speak to the impressive turnaround of the business Guy referenced in his opening remarks. Remember, North America delivered growth of 2% last year. This year, we've broken out the North American performance to show Sage Business Solutions, which is software and support, and Sage Payment Solutions. As you can see, Sage Business Solutions grew 6%. What were the highlights? We executed well on our upsell opportunity with Sage Business Care, our premium support offering, with high-value contracts supporting revenue growth. Continuing the trend at the half year, we've seen further growth in the premium support penetration. Also, the team did a very good job at migrating customers to newer products whilst achieving growth. Real evidence of the strategy in action through effective portfolio management. Our mid-market products performed well. Sage ERP X3 delivered a standout performance. Revenue increased by nearly 50%, and new customer acquisition more than doubled. The payments business delivered solid growth, but really it's about our payments cross-sell opportunity. We've seen our focus on this pay off with a 20% increase in integrated payments cross-sell revenue. This remains a great opportunity for us, and Guy will talk about this a little bit later. All in all, very good progress, and North America is now delivering really good growth. Brazil is not included in organic revenue until 2014. However, the business performed well despite the economic slowdown. The software business, which is predominantly subscription-based, has continued to show double-digit growth, albeit the economic slowdown has had an effect on the content part of the business. Overall, we have built a significant foothold in Brazil, and we are in a great position to benefit from the growth opportunities in this market. In AMEA, organic revenue grew 9%. South Africa continues to perform well with organic revenue growth of 14%. Our core mid-market products, including Sage Evolution, VIP Payroll, and Sage ERP X3, are driving this growth. Growth in the wider African market is becoming increasingly important. Revenue grew 20% and now represents 13% of South Africa's revenue. Sage ERP X3 is doing very well in this market. Australia grew by 1%, reflecting a weak macro environment hitting software revenue. We were pleased, however, with renewals with the existing customer base. Turning to profitability. Underlying operating profit has increased by 2%, which is in line with underlying revenue growth. Margin has been maintained at 27%. This is in line with the commitment we gave at the start of the year to maintain margins during 2013. I am pleased that our disciplined approach has continued in this period. Our regions maintain their margins year on year. They continue to focus on maintaining their profitability while investing in our strategic priorities. Cash flow. I won't spend a lot of time on this slide. However, there are a few points to note. Firstly, cash flow from operations continued to be strong. Underlying cash conversion of 112% demonstrates the key strengths of our business, the ability to generate cash. Secondly, in line with our minimum leverage target, net debt has increased. We have maintained liquidity through increased long-term borrowings at very attractive rates. A capital structure aligned with our financial strategy underpinned by core long-term debt, a healthy platform to support the growth of our business. Our approach to supporting this growth continues to be driven by disciplined capital allocation, investing in the business organically, or through acquisition, or returning cash to our shareholders consistent with our focus on shareholder value. I will illustrate how we drive this approach in practice with my final slide. Let us start with investment and R&D. We have continued to invest in the business organically through disciplined resource allocation while maintaining the margin. We have also invested through targeted M&A with the acquisition of EBS growing our portfolio in Brazil. We have completed selected disposals, focusing the business on the core. The proceeds from the disposals have been returned to shareholders. Our dividend continues to be progressive. We have announced today an increase of 6% in line with the increase at the interim. We have returned GBP 570 million to shareholders in 2013. Finally, we have reported today gearing of 1 times net debt to EBITDA, in line with our commitment to increase leverage. Rigorous capital allocation informs how we support our strategy for growth and how we deliver value for our shareholders. On that note, I will hand back to Guy. Thank you. Thank you, Darren. We shared our strategy for growth with you back in July 2012. You will remember our three cornerstones and our ambition to improve our rate of organic growth to 6% by 2015. Along the way, we have reiterated our 6% goal, but also we have recognized that it would not happen overnight, that it would be progressive. I believe that now we have reached a point where I can not at least say that strategy is working, but also that growth is accelerating. Our strategy for growth starts with focus. That was the first cornerstone. Earlier this year, we streamlined our portfolio with the non-core divestitures. That was important. What is more important is the ongoing allocation of resources, or I should say reallocation of resources. Remember, we are moving resources from our harvest and sunset products to our invest products. The graph here illustrates a significant reallocation of investment. 50% of R&D spend this year was on invest products, up from a third the year before. We are seeing the same trend on sales and marketing investment, albeit at a slower pace as you would expect. Our combined R&D and sales and marketing spend on invest products is up a third in the past 12 months. The message here really is that we are investing significantly for growth, and we are self-funding this investment on our existing business. Let us talk now about our second cornerstone, investing in technology. In the next few minutes, I am going to cover first our technology innovation. I am really going to talk about the technology platforms. Second, I am going to review our commercial project progress on those technology innovations to measure progress. Finally, I will discuss the customer angle. On innovation, we said we would offer a cloud solution for each of our segments, and we are well advanced on this. We have also said we would build connected services to give our customers the complete user experience. Today, they can get their payment solution from us, they can get their mobile apps from us, and then they can get their integrated CRM from us. Because it is all made by Sage, it integrates seamlessly. I want to go into more details now. Sage One first. We built this platform with geographic expansion in mind, so it is easy to localize and extend. Typically, 80% of the development is done in Newcastle with 20% done locally. This allows our team to tailor to the local subtleties in each market, such as quotation in France or debit notes in Spain. It also allows us to launch in new market at pace. We have done Germany in March, and then we have done Spain, France, Portugal, Canada in short succession. Those launches concern Sage One standard, which targets the 1 to 5 employee segment. For the 5 to 25 employee segment, we were really excited to bring to market Sage One Extra to the U.K. last month. It brings a richer range of features, more depth and breadth of functionalities to satisfy more sophisticated businesses. We are bringing our ERP products to the cloud with our hybrid cloud architecture. In order to do this, we build a portal, we call it Sage ERP Online, which will support all our leading ERP products. Again, the common technology here. Two offers are commercially available, Sage 200 online in the U.K., and Sage Murano online in Spain. This offers customers a clear migration path to an online solution with one code base maintained for both the online and the on-premise product. The Sage ERP X3 technology platform is well-established, and we are working on exciting ways to improve it further, including a cloud version, and we will update you on this in 2014. We are delivering on our promise to bring a cloud solution for each of our segments. We are also giving our customers connected services, connected apps, connected features, so that they can enjoy complimentary cloud solutions that connect to their existing on-premise software. Integrated payments is our most significant achievement so far and a great opportunity to drive further growth. In North America, we have built a market-leading platform called Sage Exchange, which enhances the seamless integration of payments. This is another piece of innovative technology. Every accounting or ERP product we have in North America is already connected and works with Sage Exchange. We are excited about mobility too. We introduced the Sage Data Cloud in North America, which gives our customers the advantage of cloud-based apps connected to their ERP. At the North American Sage Summit conference in July, we launched several mobile apps for this platform that allow customers to access their data and process simple transactions on the move on their smartphone or on a tablet. As you can see, technological innovation is thriving at Sage. Now I want to cover how we are performing commercially on these technology innovations. Let us start with Sage One, where the model is scaling well. In the U.K., we have more than tripled the number of paying subscriptions in the past 12 months. What is interesting from a future point of view is that we have 5,000 accountants and bookkeepers in practice signed up to Sage One. On the other hand, we have made slower progress in the U.S. We know it will take time, and we will continue to strengthen our channels, and we will bring Sage One Extra to the U.S. in the summer. Let us move to another commercial success this year, Sage ERP X3. 12 months ago, I told you I was disappointed with 5% growth for Sage ERP X3. I said I wanted to see more. Well, now we are at 12% growth for Sage ERP X3 this year. It is really a good year linked to fast growth in the outside of France markets, France being the historic home market for Sage ERP X3. We are seeing a 32% increase in the number of certified X3 consultants employed by our business partners, which illustrates how much they are investing to deal with more volume. Very encouraging. I continue to expect double-digit growth from this business. I want to touch on my last commercial success on those technological innovation this year, integrated payments. Integration between payment services and the back office is hugely valuable for our customers, and that means it is hugely valuable to us too. It drives customer satisfaction and therefore our NPS score. It increases customer spend and therefore our average revenue. And it is sold as subscription, which drives greater lifetime value. The size of the prize with integrated payments is substantial. As proof point show, we have made great progress again this year in North America, where we now have 12,500 integrated payments customers, and we have increased that revenue by 20%. In North America, we have built a $30 million business with cross-selling integrated payments that did not exist four years ago. In Europe, payments integration is less mature, but we are now starting to promote it in the U.K. To finish with the technology, I want to take for a second the customer angle. Those of you who were at our July Technology Day will recognize here our Sage One customer. She was sitting where Darren sits. Going to the cloud or staying on-premise is not a simple choice for SMEs. And we know that our customers want more than just technology. This is why we are focused on offering choice, in the cloud, not in the cloud, or partially in the cloud. We believe we are reading the pace and scale of technological change correctly, and we are using this to guide our customers to make the right choice for them. For us, customer satisfaction is driven by choice, but it is measured by NPS. And as I said in my introduction, it is increasing across the board at Sage. I am now going to cover the third and final cornerstone of our strategy, which is subscription pricing. Whilst subscription pricing is relatively modest part of our revenue today, it is already making a difference in our business. Let me illustrate some of the ways we sell traditional on-premise products with a subscription relationship. We have won new customers. According to our research, they would not have taken our product. They. Let me start again. We have won new customers who, according to our research, would have taken a product with fewer features if they had bought a perpetual license, so upselling. We have seen upgrades and migrations become accessible for the same reason. Finally, subscription is also helping us reactivate customers who are using a Sage product but have opted out of support. It is still early days, but we are building our subscription pricing capability. Along the way, we have learned that not all subscription pricing leads to a short-term revenue dip. It all depends about the pace and the mix. How does this review of our three cornerstones link to our ambition of 6% organic growth? Our view started with a baseline of 3% growth, which represented our long-term average. Additional growth comes from our strategic actions. 18 months on, what are the key drivers to get us to 6%? Firstly, accelerated growth from invest products. Within the horizons to 2015, we expect to see material contribution from established invest products such as Sage ERP X3, supported by an increasing contribution from emerging products such as Sage One or our hybrid cloud solutions. Secondly, there is the upsell of premium support, cross-sell of payments, and also subscription pricing on our install base. Some of this is not new, but the delta in growth comes from greater focus and best practice sharing across the group. Thirdly, our exposure to higher growth markets, particularly Brazil and Africa. Brazil becomes organic in 2014, and South Africa continues to deliver very strong growth, as you know. The acceleration in growth to 6% supports our margin commitment. To conclude, strategy is working and growth is accelerating. I am confident we will reach our target of 6% growth in 2015. What I hope I have been able to do today is to illustrate the reasons why I am confident. Thank you. Darren and I will now take questions. All right. First one here. I have got a couple of questions, actually. Maybe I will just start first out with the guidance. There is a very confident reiteration of the 6% target, but you are slightly quieter on your aspirations for margin expansion. I am wondering whether you are sort of slightly de-emphasizing the margin target as you invest in some of these new areas. The second one is just a couple of modeling questions, actually. I missed the penetration of premium support. That is a number you normally give. I was wondering if you could have that one. Sterling has obviously strengthened over the last few months. Just at current rates, what do you think the impact of FX is? Thanks. Okay, I will take the first question. Then, Dan, you will take the other two. We did say back in July 2012 that we were expecting to expand margin between 100 and 200 basis points. But clearly that expansion comes with the leverage of higher growth rates. So we expect to see that sort of a hockey stick phenomena. Whereas on revenue, we were very clear back then that this would come gradually. There was no hockey stick on revenue, and that is what we are seeing now. Penetration is 76%. I think the last time we reported it was 74%. And foreign exchange, clearly the way we report our results is neutralized for FX. In terms of guidance, what I would ask is for our team to help you out with the exchange rates we are using on the guidance coming to FY 2014, so they can pick it up with you later. Other question. Right at the back. Morning. Thank you. Milan Radia from Jefferies. Couple of questions. In terms of X3, what is the revenue contribution in percentage terms of that? Is the margin potential of that part of the business greater over time than the core ERP products, the cloud transition within that notwithstanding? Then as you look at sort of pricing levers in the past year and going forward, how much of the organic growth would you say been delivered by pure pricing increases? I think Sage Pay is the only area where you talk about pricing specifically. How much of that 6% do you think will come from that pure pricing lever? Okay. Thank you, Milan. X3 is about 5% of revenue. I don't have an exact figure, and we don't publish specific revenue figure per product that's somewhat commercially sensitive. But on the margin aspect of X3, this is an area where we invest, so the margin today would be lower. The margin potential, clearly the sustainability of the recurring revenue on a product like Sage ERP X3 is very, very significant. So I would expect that margin to improve, but for now, it's actually lower than the rest. But that's the basics of investing. So if you were to ask me, is Sage One as profitable as Sage 50 today? I'd say no, because we're investing on Sage One. Sage 50 is a mature product, so that's quite natural. I don't really know whether the margin can be higher or not than the rest, to be honest. Pricing, so we've singled out the pricing action on Sage Pay because it's been a one-step price increase, significant as opposed to recurring. We've always increased prices around inflation, plus, minus, and that's part of our base case, so that's why we've not singled it out. So when I say we start from the base of 3%, our historic performance, that's included in there. Now within pricing, there's movement to subscription. That generates higher growth because we have a far more stickiness with subscription than with a traditional model of contract. So the new initiatives inside pricing will drive growth, but the traditional share price increase, that's part of our baseline. Okay. Can you talk a bit about the macro landscape and to what extent this could act as a sort of tailwind for you to reach that 6% goal? I know in the past you've not really betted on a significant improvement there, and I know North America is recovering, but there's signs of stabilization. But if Europe starts to really pick up, what impact can that have to your business? Secondly, is there any change in your view with regards to the sort of targeted acquisitions, particularly in other emerging markets, as you look to kind of diversify the geographic base of the business? Are you considering sort of other M&A in that market? Okay. On the macro side, you are right. When we said 6% organic revenue growth goal back in July 2012, we said we were not expecting help from the economy, neither we said would we be able to deliver 6% if GDP was contracting throughout our market. It was neither nor. Since July 2012, we have actually had more headwind than tailwind, to be honest. Europe went into recession pretty much throughout, except Germany. In the past two years, it has been fairly difficult. A bit of tailwind maybe, but if you look at the current situation in mainland Europe, not great. Is that going to get better? Maybe. I always take as a scenario that things are going to stay as they are when I make my projections, because what do I know whether it is going to get better or worse? It is very difficult. South Africa and Brazil, actually, it is more headwind than tailwinds there compared to where we were two years ago. I think it is a mixed picture on the macro, and I would not bet on tailwinds, and I am not betting on tailwinds. In terms of targeted acquisitions, we have said in the past three things. New countries, within countries, additional acquisition such as installed bases of complementary products, mature, and then new technology. Clearly, there is all sorts of ideas that can lead us to make acquisitions in this third category, and that is evolving. But the concept of acquiring new technology, acquiring startups that can bring complement to Sage, where we do not have the know and so on, is very much on the horizon, as it was before. There is no real change, I would say. I am sorry. I will get to you afterwards. Stacy Pollard with J.P. Morgan. A couple of questions, just kind of similar to Milan’s question on margins. Can you talk about margins on subscription revenues and Sage One, and then the long-term potential there? Secondly, will you continue your share buyback program, and what can we expect in FY 2014? Okay. I will take the first question, and Darren can handle the second. Thank you. Yes. Stacy. Subscription is more appealing from a revenue growth. From a margin point of view, we think that it is going to be equivalent to any product. There is a famous question about the first-year hit of not having the upfront license. As I said, if we do it progressively, it is actually already the case. So it is already built into our numbers. We started this some time ago. So every year we have a small portion. The benefit of subscription is really about revenue growth. Think about this. I was wondering if those disposals have had any impact on those renewal rates. Secondly, on Sage One, the run rate of new paying subscriber additions in the second half has more than doubled versus H1. The current run rate seems to be about slightly less than 2,000 subscribers per month. The product has clearly, well, reached a level of maturity in the U.K., and you are launching in new geographies as well. I was wondering, when we think about FY 2014, should the run rate increase further in terms of the new paying subscribers for Sage One? Thanks. Darren, do you want to take the first question? I will take the first one. In terms of renewal rates, you are right. We have had 81% for a long number of years now, so we have now moved to 82%. There are two things to think about here. The first one is subscription contracts are coming into the mix. They have a lower churn rate, so they have a higher renewal rate normally. What you will see over time is that starting to take an effect. Secondly, during the course of this year, we have had legislative change in the U.K., and we had some in Portugal, and that tends to have a little bit of an impact on renewals as well. So there are two things I would be thinking about. So on Sage One, trees do not reach the sky, so we gave you this nice little graph. We have seen the U.K. that our increase has not been linear, it has been by steps. There have been events that created steps. I do not expect to see another doubling of our monthly run rate. That would be too optimistic, I think. As to the other markets, we have been in the U.K. for almost three years now, and it has really taken off this past year. Until then, it was pretty slow. In mainland Europe, especially Germany and France, cloud-based accounting is really, really much less common than it is in the U.K. or in the U.S. I expect this to be a slower uptake in the coming period. Thanks. Well, that brings me on to my question, I guess. The U.S. obviously is a very mature cloud market, and you mentioned earlier Sage One's take-up has been a bit disappointing. Maybe what you are doing to address that. Secondly, on the U.K., you now have been operating for three years. What does the churn rate, if you like, or life cycle of a customer look? Are you losing 10% a year, and therefore, the actual growth rates in new subscribers is higher? Then just finally on subscription, you have given us a run rate revenue base. What is the actual number of customers who are on a subscription contract today? Thanks. Sage One in the U.S. By the way, we do not have the answer to the second question. I do not know what it is, so we will come back to you. On Sage One in the U.S., Sage One, as you will remember from the U.K., is really targeting with Sage 50 and Peachtree, as it was called before. We have always targeted sort of the higher end of the small business segment, 10 employees or more. That is where our price points were. With Sage One, really, we have started in a brand new segment where we have never operated in the U.S. Our brand is certainly not as significant as it is here. It is very clear to me that it is going to take time to get those numbers up. What are we doing about it? One of the things I decided was to give the priority to the U.S. as to the localization of Sage One Extra. The plan is to get this over to the U.S. in the summer. Well, there is always a risk of one or two months more or less here. Because we believe that with Sage One Extra targeting the five to 25 employee segment, this will hit more the sweet spot of where we have been in the U.S. We have also made some internal changes to deal with the fairly low performance, so we have not remained inactive. Your third question about subscription, I am not sure I got it. On private customers. I'm sorry? For Sage One, Michael, or for Sage One- How many subs- On-premise products. All right. Subscription on-premise products, how many customers? We'll have to come back to you. I am sorry about this. Let me try to think. It is in the upper thousands or low teens thousands. That is the order of magnitude, because that is one number I know, and that would be roughly. Now, for instance, in the U.S., we started with our mid-market products, so you would expect relatively low volume. In France, we have been doing very well with reactivating customers in our entry level, in our small business segment with Ciel. So that brings significant volumes right away. But so upper 1,000, low teens, around 10 is easier. Thanks. It is Adam Wood from Morgan Stanley. Just a few. On the payment side, just to follow up on that, you have obviously been rolling out the integration into Continental Europe from the U.K. Could you just give us a quick update on where we are on that and what upside you see from that rollout in terms of further accelerating the growth on the payment side? Maybe on the recurring revenues in total, could you give us a feel for volume versus price growth in that side of the business? I appreciate the premium support has obviously gone quite a way, but there is obviously still mix to go for. Can we continue to expect pricing to go up at a reasonable rate in that business? Finally, just on the margin hockey stick comment, does that mean that the vast majority of the margin expansion you have guided for should be 2015, and therefore, 2014 should be relatively limited? Thank you. All right. I'll take the first question. I'll let you handle the volume price mix. Then there's also the premium contracts, and then the margin. You can do that as well. All right. Payments in mainland Europe. We've launched this in the middle of the year in Germany and Spain. The e-commerce market handled outside of the very large players like Amazon and so on, which is for us, the target market. The U.K. is bigger than France plus Germany plus Spain. The addressable market in the U.K. is vastly superior. We've been going with payments in the U.K. for six years. I forgot exactly, but a long time. The answer is, it's going to be a slow uptake in both Germany and Spain. One, because addressable market is slower. Second, because we're just starting. I expect most of the growth to come from the U.K. Excuse me. In terms of the premium support mix, I mean, you're right. There's two elements to premium support. Clearly, there's the continuation of actually getting people onto premium and also the mix within the tiers. There's still a lot to go for in both of those. We can continue to bring customers up into premium, and we continue to bring people through those tiers. We still think there's quite a bit to go, and we continue to see an increase in the average selling price. On the price volume question, I'm sorry, I didn't quite catch that one. Can you just repeat that one? On the recurring side of the business, just how much of that is volume-driven and how much is coming from price increases? Is that mostly price increases? Yeah. The recurring revenue is made up of three things, and you have to think about it this way. Firstly, there's payments. We've seen some pricing from Sage Pay coming through into the payment side. We've seen volume coming into both of those businesses in the U.K. and the U.S. as well. So there's a mix there. Similarly, subscription, which will be mainly volume. So that sits in the recurring bucket. Then when you get into maintenance and support, clearly what you're seeing there is a mix of price, but also you're seeing this tiering effect through premium, and you're seeing the effect of people coming into premium. So you need to break it down a little bit and think of it as a mix between the two. In terms of the margin hockey stick, you're right. I mean, effectively, what we're saying is we'll continue to invest as we move into FY14. What we'd expect to see is that margin accretion coming through a little bit later, leveraging the acceleration growth that we'll see over that period as well. All right. Well, if there's no more question, I would like to thank you all for coming today, and see you in six months. Thank you.