The Sage Group plc. Annual Report and Accounts 2025

EMPOWERING

BUSINESSES

STRENGTHENING TRUST

Contents

Strategic Report

1 Financial highlights

2 Sage at a glance

4 Our solutions

6 Market review

8 Our business model

10 Chair’s statement

12 CEO’s review

15 Our strategy

19 Empowering our customers

22 Our key performance indicators

24 Our people and culture

30 Sustainability and Society

35 TCFD

45 Non-financial and sustainability

information statement

46 Section 172(1) statement

48 Financial review

56 Risk management

61 Principal Risks and uncertainties

67 Viability Statement

Supplementary

reporting

Non-Financial

Statement

Impact Book

Governance Report

70 Corporate governance report

71 Governance highlights

72 Chair’s introduction to governance

74 Our leadership

80 Governance framework

90 Stakeholder engagement

102 Nomination Committee Report

109 Audit and Risk Committee Report

117 Directors’ Remuneration Report

152 Directors’ Report

Financial Statements

160 Independent Auditor’s Report to the

members of The Sage Group plc.

174 Consolidated financial statements

180 Notes to the consolidated financial

statements

252 Company financial statements

Additional Information

261 Glossary

264 Shareholder information

Driving a high-

performance mindset

Our purpose drives our day-to-day

actions and our culture defines

how we operate, behave, interact,

make decisions, and get things done.

Customer success

stories

We’re focused on delighting our

customers with strong products

and human support, which builds

loyalty, encouraging them to grow

with Sage.

Our solutions—focused

on customer needs

Our products are mission-critical

for our customers, providing

accounting, HR, and payroll

solutions that are vital to

business operations.

Sage is a leader in accounting, financial, HR, and payroll technology for small and mid-sized

businesses (SMBs), enabling them to streamline operations, make more informed decisions,

and be more productive.

Read about this in

action on pages 4 and5

Read about this in

action on pages 19 to21

Read about this in

action on pages 24 to29

EMPOWERING

BUSINESSES

STRENGTHENING TRUST

Financial highlights

Our year in numbers

About our non-GAAP measures and why we use them

Throughout this Strategic Report, we quote two kinds of non-GAAP measure: underlying and organic. Underlying measures are adjusted to exclude items that

inmanagement’s judgement need to be disclosed separately by virtue of their size, nature, or frequency to aid understanding of the performance for the year

or comparability between periods. Organic measures allow management and investors to understand the like-for-like performance of the business. Prior year

underlying and organic measures (revenue and profit) are retranslated at the current year exchange rates to neutralise the effect of currency fluctuations.

Full definitions of underlying and organic are in note 2 of the financial statements. Reconciliations of statutory revenue, operating profit and basic EPS

totheir underlying and organic equivalents are included in the Financial review starting on page 48.

Underlying total revenue

£2,513m

FY24: £2,290m

Underlying total revenue of £2,513m increased by 10%,

drivenbybroad-based growth in cloud solutions.

Statutory revenue

£2,513m

FY24: £2,332m

Statutory revenue of £2,513m grew by 8%, reflecting underlying

growth in all regions, offset partly by a foreign exchange headwind.

Underlying operating profit

£600m

FY24: £513m

Underlying operating profit grew by 17% to £600m, driven by

revenue growth and an increase in underlying operating profit

margin of 150 basis points (bps) to 23.9%.

Statutory operating profit

£530m

FY24: £452m

Statutory operating profit increased by 17% to £530m,

reflectinggrowth in underlying operating profit together

withloweracquisition related expenses.

Underlying basic earnings per share (EPS)

43.2p

FY24: 36.7p

Underlying basic EPS increased by 18% to 43.2p.

Statutory basic EPS

37.7p

FY24: 32.1p

Statutory basic EPS increased by 18% to 37.7p.

Dividend

21.85p

FY24: 20.45p

Total dividend proposed for the year increased by 7% to 21.85p.

Net cash from operating activities

£660m

FY24: £649m

Net cash generated from operating activities increased by

2% to £660m, reflecting underlying cash conversion of 110%.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Sage at a glance

What we do

Sage exists to knock down barriers so everyone canthrive,

starting with the millions of small and mid-sized businesses

(SMBs) served by us, our partners, and accountants. Customers

trust our finance, HR, and payroll software to make work and

moneyflow.

How we do it

By digitalising business processes and relationships with

customers, suppliers, employees, banks and governments,

our AI-powered platform connects SMBs, removing friction

and delivering insights. Knocking down barriers alsomeans

we use our time, technology, andexperience to tackle digital

inequality, economicinequality, and theclimate crisis.

Our strategy

comprises three key focus areas that help us achieve

our ambition and fulfil our purpose by guiding our

operational and investment decisions.

Grow

Winning new customers and

delightingourexisting ones.

Connect

Connecting SMBs through our

trustedand thriving network.

Deliver

Delivering productivity and

insights driven by AI.

See pages15 to 18

1. Split of total underlying revenue of £2,513m.

2. United Kingdom, Ireland, Africa, and Asia-Pacific.

Our ambition

is to create the world’s

most trusted, thriving

network for SMBs,

Our purpose

is to knock down barriers

so everyone can thrive.

Our strategic framework

Our global reach

45%

North America

26%29%

EuropeUKIA

Sustainability and Society

Sage’s role in society is a vital part of the equation. We seek to integrate sustainability

intooureverydayoperations,helpingtoensure Sage makes a positive societal impact

throughourthreesustainability pillars.

Enabling high performance

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Our stakeholders

are central to our business and we seek to align all our

activities with their interests.

Customers

We build every experience with human insightandingenuity.

Colleagues

We are committed to creating an environment where

colleaguesfeel energised to contribute tothesuccess of SMBs.

Partners

We collaborate with partners throughoutour

ecosystemtohelpdeliver our ambition.

Shareholders

We target sustainable growth in shareholder value.

Society

We tackle digital inequality, economic inequality, and the

climatecrisis, using our time, technology, and experience.

See pages90 to 97 See pages24 to 29

Business highlights

Non-financial highlights

11%

ARR growth

97%

recurring revenue

eSAT

45%

internal fill rate

AAA

MSCI ESG rating

countries where

weoperate

80,036

volunteer hours spent

helping our communities

11,170

colleagues globally

1. eSAT is Sage’s Group wide employee satisfaction score as at 12 September 2025.

2. Internal fill rate of 45% reflects percentage of roles filled by existing colleagues rather than external hires.

3. Headcount data of 11,170 including 84 contractors and excluding eight Non-executive Directors as at 30 September 2025.

4. Volunteer hours measured during working hours in FY25. In FY24 we reported on total volunteering hours, including those outside of work.

Our Values

underpin our culture and

driveourways of working.

We do the right thing.

Human

We make connections

withcustomers,partners,

andcolleagues, through

empathyand care.

Bold

We are curious, courageous,

ambitious, and creative.

Trust

We deliver our promises to

customers, partners, colleagues,

society, and shareholders.

Simplify

We strip away complexity.

See pages30 to 34 for more

about Sage’s sustainability

approach and progress

Protect

the Planet

Tech

for Good

Human

by Design

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Our solutions

Sage serves millions of small and

mid-sized businesses around the world

Ourproducts are mission-critical for our customers, enabling

them to manage accounting, payroll, HR and core business

operations seamlessly. By automating workflows, reducing

manual admin, and delivering actionable insights, our solutions

save our customers time and help them make better decisions.

Small businesses

Owner-led businesses, where small teams or individuals

manage bothfinancial and HR responsibilities, often need

smart, scalable tools to simplify accounting and stay compliant.

We build our small business solutions to support their needs by

helping businesses control costs, manage cash flow efficiently,

and stay focused on growth while navigating changing regulations.

Mid-sized businesses

Our solutions for mid-sized businesses empower finance and

HRteams with intelligent automation and real-time insights

by streamlining workflows, improving forecasting accuracy,

and enabling strategic decision making. As these organisations

evolve and scale, we help them achieve greater efficiency and

resilience while supporting their growth.

Integrated suites

Our integrated product suites combine core accounting

capabilities with HR, payroll, and business management

toolstailored to client specific needs. For mid-market

companies, we offer industry-specific solutions to meet

different sector requirements. These suites feature seamless

functional integration, enabling smooth workflows and

delivering the automation, insights, and compliance

mid-market businesses require.

Sage Platform

The Sage Platform is our foundational technology infrastructure,

enabling rapid deployment of innovations such as Sage

Copilot and AI agents across multiple products. It provides a

unified interface for intelligent assistance within workflows,

while AI helps automate complex, end-to-end processes. For

developers, it offers shared tools, frameworks, and built-in

security guardrails to accelerate delivery. The platform

ensures scalability, security, and compliance, supporting

trusted, human-first AI experiences.

Focused on customer needs

Sage Copilot is our AI-powered productivity assistant

embedded across our products–streamlining tasks,

automating administrative processes, and delivering

accurate, actionable insights.

• For small businesses using Sage Accounting, Sage Active,

and Sage 50, Sage Copilot helps automates invoicing,

payments, and reporting, while monitoring real-time data to

flag anomalies and track profitability. Customers report

saving up to five hours per week and getting paid seven

days faster, while improving cash flow.

• For accounting professionals, Sage Copilot generates

client insights, automates communications, and streamlines

practice management, to deliver greater strategic value.

• For mid-sized businesses using Sage Intacct, Sage Copilot

helps automates month end close and subledger reconciliation

processes and provides real-time variance analysis,

enabling finance teams to focus on strategic insights.

ForSage X3 customers, Sage Copilot delivers operational

intelligence, surfacing real-time insights such as fulfilment

issues, churn risk, and inventory delays. With natural

language chat and a unified 360° view across operations,

it empowers users to make faster, smarter decisions.

Sage Ai is our intelligence engine; a proprietary layer of AI

services that powers Sage Copilot and our AI agents. Built

ondeep domain expertise and trained on trusted data, it

delivers reliable outcomes for customers. Increasingly,

specialist AI agents operate behind the scenes,taking

action on the customer’s behalf within permissioned

boundaries, whether surfaced through SageCopilot or

embedded into product workflows or partner systems.

Eachagent is purpose-built for a specificprocess,

freeingfinance teams to focus on higher value work.

Recentlaunches include Sage’s Finance Intelligence

Agent,as well as other agents, that help accelerate

coretasks such as the month end close.

Our philosophy: authentic intelligence

Our guiding philosophy is to build AI that is ethical, transparent,

and human-first. We seek to create innovative solutions

thatare secure and reliable, with customers remaining in

control of their data and decisions, underpinned by our

commitment to transparency. We believe this authentic

approach helps to strengthen customers’ trust in our

AItechnology, in the decisions they take, and in their

broader business relationships.

Sage for Accountants

Sage for Accountants enables accountants toefficiently manage client data,

accounts and compliance within a single solution. It streamlines practice

management—from data capture to tax filing—helping accountants boost

efficiency, and remain compliant.

Further

information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

1. The Sage 200 product family includes solutions branded Sage 100, Sage200, and Sage 300.

Sage Accounting

Sage Accounting is designed to enable small businesses operating

inanyindustry, as well as accountants and bookkeepers, to manage

theircustomer data, accounts, andpeople in a single solution.

Further

information

Sage Active

Sage Active is an intuitive and multi-legislation solution for

smallbusinesses in Europe to automate accounting, sales,

andpurchasingprocesses.

Further

information

Sage 50 and Sage 200

Our Sage 50 cloud and Sage 200 cloud franchises enable customers to

control their business and gain improved visibility over their finances

andoperations. Sage 50 is designed for small businesses, while Sage 200

offers customisable solutions to meet the needs of mid-sized businesses.

Further

information

Sage Intacct

Sage Intacct helps growing mid-sized organisations thrive in today’s digital

world with proven solutions across accounting, planning, and analytics. The

powerful platform offers deep multi-dimensional insight and AI-powered

automation for organisational agility.

Further

information

Sage X3

Sage X3 provides fast, intuitive, and tailored business management

capabilities forproduct-centric organisations, transforming how

theymanage people, processes, and operations with multi-language,

multi-legislation, and multi-currency capabilities.

Further

information

Sage Payroll

Sage Payroll is an intuitive solution that helps small businesses to run their

payrollreliably and flexibly, including capabilities such as pensions filing,

taxsubmissions, and compliance.

Further

information

Sage HR

Sage HR is designed to make people management easier and help teams

perform attheir best. Sage HR is best suited to small and mid-sized

businesses on site or on-the-go. For businesses that require a turnkey,

modular, low-cost, and easy-to-install solution, Sage HR offers core record

management, leave management, staffscheduling, and expenses services.

Further

information

Sage People

Sage People is an HR and people management solution formid-sized

businesses. It uses powerful automation, comprehensive analytics and

flexibleworkflows to ensure global workforces can adapt and thrive.

Further

information

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

We have a strong global footprint, serving a diverse base of small and mid-sized businesses

(SMBs) across North America, Europe, Africa, Middle East and Asia-Pacific. Our broad geographic

reach and customer diversity provide a powerful vantage point for us to anticipate and respond

to evolving business needs. As digital mega-trends and regulatory tailwinds reshape the business

landscape, we are well positioned to empower SMBs through innovation, compliance, and

productivity-enhancing solutions.

Market review

Our market opportunity

Strategic outlook

SMBs represent an estimated 99%

of firms in our key markets

and they play a vital role in the global economy. Despite

ongoing macroeconomic and geopolitical challenges, SMBs

remain agile and continue to invest in technology tohelp

them thrive. Amid a complex regulatory landscape and

accelerating digital transformation, we support SMBs

withour trusted portfolio of accounting, HR, and payroll

solutions. Through compliance capabilities, AI-powered

innovation, and a connected ecosystem, we continue to

unlock new opportunities for growth, productivity, and

competitive advantage.

Our addressable market

The addressable market for Sage (including organisations

with up to 2,000 employees in all countries where we sell our

solutions) is forecast to be £44bn in 2026 and to continue

growing. This market includes accounting and financial

£44bn

2026

£50bn

2027

Our addressable market

management, human capital management, enterprise resource

planning, payroll, accountant taxation and compliance, and

accounting practice management software across both

cloud and on-premise deployments.

Digitalisation through the ecosystem

SMBs are seeking to digitally transform workflows across

their business ecosystem, reducing their administrative

burden, and improving their working capital. This presents

us with a significant opportunity, as businesses look to

automate financial processes through services suchas

Accounts Receivable (AR) and Accounts Payable (AP)

automation, integrated payments, and third-party

applications. Our strategic partnerships with fintech

andbanking providers further extend ourreach and

enableusto deliver morepersonalised, scalable,

andconnected solutions.

2025

£39bn

1. OECD estimates.

2. Company estimates based on external sources.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

”

Generative AI continues to reshape the technology

landscape and influence the global economic agenda,

with its impact accelerating. AI is advancing more

rapidly than previous technology shifts, driven by

greater accessibility, declining costs, and significant

improvements in model capabilities. These developments

are enabling the development of AI agents capable of

executing complex, end-to-end workflow automation,

and marking a transformative shift in how businesses

operate and compete.

This AI evolution is strengthened by the rise of

domain-specific large language models (LLMs),

which allow businesses to differentiate at scale

andat a competitive cost. We are capitalising on this

opportunity by combining deep subject-matter

expertise with rich proprietary datasets to train

LLMsthat power intelligent, embedded solutions.

Manyofour customers are already realising the

benefits of Sage’s AI capabilities, which align

withourtechnology vision of ending monthly cycles

and delivering continuous accounting, assurance, and

insights. This helps SMBs work smarter, faster, and with

greater confidence.

At the same time, AI introduces new challenges around

data accuracy, privacy, security, and intellectual property

management. We embrace new technologies in a secure

and ethical manner, ensuring customers remain in

control of their data and decisions. Our commitment to

responsible innovation is reflected in our AI and Data

Ethics Principles, which guide the development and

deployment of AI across our products. By embedding

trust our AI strategy, Sage aims to build long-term

confidence in our solutions and ensure that innovation

is aligned with customer values and regulatory expectations.

Trusted AI is driving

transformation

Enabling responsible growth

Technology companies play a critical role in creating a

moresustainable future, by driving innovation, enhancing

efficiency, and providing tools and solutions that enable

businesses to operate sustainably. We are committed to

bringing powerful AI-based products to SMBs and

underrepresented groups, ensuring they don’t get left

behindin the technology revolution, while helping them

growin an environmentally and socially responsible way.

Regulatory tailwinds

Governments across Sage’s key geographies are mandating

digitalisation to drive growth and improve compliance.

These mandates promote interoperability by encouraging

the use of standardised digital formats and Application

Programming Interface (API) driven ecosystems, while

enabling seamless integration across platforms. We expect

this regulatory momentum will drive widespread software

adoption among SMBs.

The UK’s roll out of Making Tax Digital (MTD) for Income Tax

is expected to transform tax administration by digitalising

quarterly reporting for over 1.7 million taxpayers by 2028,

improving visibility of tax liabilities. Starting in April 2026,

the mandate applies to self-employed individuals and

landlords, expanding to lower income thresholds over time.

Thisshift is accelerating demand for compliant software

solutions and presents a strategic opportunity to support

adiverse, underserved market segment.

The EU’s VAT in the Digital Age (ViDA) legislation introduces

mandatory e-invoicing, real-time reporting, and single VAT

registration across member states. Phased from 2025 to 2035,

ViDA simplifies compliance and is expected to generate

substantial economic benefits, including an estimated

€51 billion in savings for businesses. For Sage, ViDA presents

asignificant opportunity to support customers through this

transition by delivering compliant, scalable solutions that

automate invoicing, reporting, and VAT workflows.

“

With a presence across four

continents, we help SMBs

stay ahead of the curve as

digital trends reshape the

future of work.

In parallel, the emergence of Digital ID frameworks for

individuals and businesses across the UK and EU presents

anopportunity for Sage to embed trust and verification

intoeveryday workflows. With Sage ID already used across

our portfolio, Sage is well positioned to unify fragmented

identity signals, such as VAT numbers and payroll IDs, into

asecure, seamless experience.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Our business model

Creating value

for our stakeholders

Creating value

for our stakeholders

Inputs

Customer base

The breadth of our

customer base around

the world gives us a

unique insight into

theneeds of SMBs.

Trusted advisor

Sage is a trusted

brand,providing

award-winning

customer service,

which generates

loyalty andadvocacy

among customers.

People

Caring and engaged

colleagues are

committed to

drivingsuccess

forourcustomers.

Platform

The Sage Platform

is our foundational

technology infrastructure

that accelerates the

delivery of AI-powered

innovation.

Ecosystem

We expand Sage’s

scale and reach

through our

ecosystemof

accountants,

resellers, and

technology partners.

How we attract and retain customers

1. Awareness and land

Attract new customers to Sage through brand awareness, targeted campaigns, the sage.com

website, referrals and partners. Offer guides and trials to prospective customers.

2. Adopt

partners provide training and onboarding to get customers started.

3. Service

Provide digital and human customer support to enhance customer experience, offering

regular check-ins and conducting feedback surveys.

4. Expand

Enable Sage customers to benefit from our expanding portfolio ofcloud-based solutions

andAI-powered services. This increases the value of our product portfolio and enables

Sageto deepen customer relationships.

5. Renew

Create a seamless experience for customers that drives higher satisfaction, helps toretain

customers, and increases adoption of Sage solutions. Recommendations also help attract

new customers to the network.

Customers

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Outputs

Customers

101%

renewal by value

Colleagues

employee satisfaction (eSAT)

Community

80,036

Sage Foundation volunteer

hoursspent helping our

communities

Shareholders

18%

underlying basic EPS growth

21.85p

total dividend for the year

£300m

share buyback announced

See pages90 to 97

tolearn more about

our stakeholders

Our enablers

More customers

Adding customers, end users, and ecosystem participants drives the

networkeffect and allows us to scale new value propositions. Ecosystem

participants (attracted by customer volumes) amplify the network effect.

More data

With more data and data types from network participants, we can capture

dataflows and transactions both within and outside the network.

More insight

Data drives the development of AI-powered solutions through a combination

of understanding customer problems and deploying data science capabilities.

This is enabled by our culture of experimentation and innovation.

More value

These solutions enhance the customer experience and create value for

customers and Sage.

A culture of innovation

and experimentation

Our relentless ambition to help SMBs thrive drives continuous innovation.

Weencourage our colleagues to adopt an experimental mindset, helping to

ensure our workforce remains fit for to an evolving technological landscape.

See pages24 to 29 to learn more about our culture

Our Values

Wedo the right thingand deliver on our promises.

• Being Human through empathy, care, and strong connections.

• Being Boldby being curious, courageous, ambitious, and creative.

• Creating Trust by delivering our promises.

• Simplifying by stripping away complexity.

See pages24 to 29 to learn more about our Values

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Chair’s statement

Introduction

FY25 saw Sage achieve another year of strong progress

anddelivery against our strategy. Acontinued, sharp focus

ongrowth and operational efficiency has resulted in further

significant revenue andearnings expansion. Over thelast

three years, Sage has delivered total underlying revenue

growth of over 30%, while underlying earnings per share (EPS)

hasincreased by an impressive 75%, on a constant currency

basis. At the same time, we have substantially increased

investment in our platform, our products, and oursales

channels. In doing so, I believe we have laid a strong

foundation for theGroup’s future success.

Executing our strategy

Sage is a business that is driven by its purpose: to knock

down barriers so everyone can thrive. Rapid advances in

Artificial Intelligence have provided the means for us to

deliver this for SMBs more effectively than ever before.

Theinvestment we’ve made in our infrastructure and our

platform over recent years makes us exceptionally well

positioned to do so.

Our ambition is to build the world’s most trusted and

thriving network for SMBs, powered by AI. Importantly,

webrought Sage Copilot, our generative AI-based digital

assistant, to market in selected products and geographies,

and thousands of customers are already using it to guide

their decisions and streamline their work. Increasingly, our

next-generation AI agents are automating tasks intelligently,

but always with the customerin control. Over time, AI will

become the foundation of every experience we deliver.

Consistent with our Values, our focus is on delivering practical,

safe, human-first AI that empowers our customers and their

businesses, rather than replacing them—automating their

workflows, removing administrative tasks, and creating

more time for growth and innovation.

SMBs make up 99% of all businesses. They are the “beating

heart” of developed economies and are significant employers

and wealth creators. In contributing to their success, Sage is

also helping to power the global economy, providing benefits

toall our stakeholders while also supporting the long-term

sustainability of the Group.

Empowering our customers

”

“

FY25 saw Sage achieve

another year of strong

progress and delivery

against our strategy.

Andrew Duff

Chair

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Financial performance

Sage delivered a good financial performance for the year,

aswe continued to execute on our strategy and focus on

efficient growth. Underlying revenue increased by 10%

to£2.5bn

, while underlying operating margin improved

by150 basis points to 23.9%, thanks to continued strong

costcontrol. With underlying earnings per share growing by

18% to 43.2 pence, Sage has now delivered three consecutive

years of annual EPS growth in excess of 15%.

Cash generation remains a core strength of Sage, with 97%

ofrevenues recurring and a strong working capital profile.

We continue to carefully allocate our capital, including

acquiring complementary technology and expertise through

M&A. Recent acquisitions include ForceManager, a mobile

workforce management solution, Fyle, an AI-enabled expense

management platform, and Criterion, a provider of unified

HCM software—broadening our capabilities and reach.

In line with our progressive dividend policy, the Board is

proposing a final dividend of 14.40p per share, representing

a total dividend of 21.85p per share, anincrease of 7%. Since

FY20, Sage has returned £2.8bn toshareholders via dividends

and share buybacks, and alongside our FY25 results we are

announcing the return ofafurther £300m via share buybacks

in FY26.

Colleagues and culture

Sage values its people above all, and the culture theyembody

is the driving force behind everything Sage does. Our culture

and Values guide our decisions and shape our behaviours.

Westrive to create an environment where colleagues feel

empowered to deliver exceptional outcomes, by fostering

aculture of high performance, driven by strong, human

leadership. Sage is committed to building a diverse and

inclusive workforce, and I am proud that in 2025 we were

named both as a European Diversity Leader and as one of

theUK’s Best Employers by theFinancial Times.

Governance and the Board

Our philosophy is that strong corporate governance

underpins long-term success, and we seek to maintain

thehighest standards.

In February, we welcomed Lori Mitchell-Keller as a Non-

executive Director. Lori brings a wealth of experience

totherole, strongly complementing the wider Board’s

capabilities. Sangeeta Anand stepped down from the

Boardin February 2025 and did not stand for re-election

atthe 2025 Annual General Meeting.

In March, we announced that Jonathan Howell would step

downas Chief Financial Officer and leave the Board at

theend of the calendar year. I would like to thank Jonathan

forhis outstanding dedication and leadership during his

tenure asboth an executive and non-executive director

overthe past 12 years. He has played a pivotal role in

shapingSage’sstrategic transformation, and we wish

himallthebestfor thefuture.

Jonathan will be succeeded by Jacqui Cartin, who currently

serves as our Group Financial Controller, from January 2026.

Jacqui has exceptional leadership qualities and a deep

understanding of Sage’s business and its success drivers,

and I am looking forward to welcoming her to the Board.

OurBoard Associate programme helps to ensure that the

voice ofcolleagues is consistently heard in the Boardroom.

Our current Board Associate, Amy Cosgrove, is coming to

theendof her term in the role. We are in the process of

appointing our next Board Associate, and I look forward

tosharing details next year.

Sustainability and Society

Our Sustainability and Society strategy supports our

purpose, and underscores our commitment to serve

allofourstakeholders, including our colleagues and

communities. Our performance continues to be recognised

externally. In the last year, Sage was ranked among the

World’s Most Sustainable Companies by TIME magazine,

recognised as one of the World’s Greenest Companies

byNewsweek, and awarded CDP A List for both Climate

Leadership and Supplier Engagement.

Colleague commitment to sustainability through Sage

Foundation—which mobilises colleagues, partners, and

customers through impactful programmes—is nothing

shortof extraordinary. This is a source of pride to colleagues

and contributes to our positive culture. We celebrated

10years of Sage Foundation this year, and during this time it

has raised over$5m globally and facilitated 1.4 million hours

ofvolunteering to support local causes and communities.

Wecontinue to focus on how we can use our unique skills,

resources and experience to deliver impact in areas where

wecan make the greatest difference.

Looking forward to FY26

Sage has made remarkable progress over the last few years,

with the pace of innovation and change only accelerating.

Onbehalf of the Board, I want to thank all our stakeholders—

including our shareholders, customers, partners, and, most

ofall, our colleagues—for your continued support. I am

confident that we will celebrate many more achievements

inthe coming year, as we enter FY26 well positioned for

further growth and success.

Andrew Duff

Chair

18 November 2025

1. Statutory revenue increased by 8% to £2.5bn, reflecting growth inunderlying revenue of 10% offset by a 2 percentage point foreignexchange headwind.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

”

Introduction

Sage delivered another good performance in FY25,

extendingour track record of strong, profitable growth

andmaking significant strategic progress. Guided by our

purpose—to knock down barriers so everyone can thrive—

we’re driving innovation across our portfolio, enhancing

andaccelerating customer benefits, particularly through AI.

As digital transformation changes the business landscape,

our role in supporting small and mid-sized businesses

(SMBs) is becoming more vital than ever—we’re shaping

afuture where Sage eliminates the burden of admin for

SMBsto unlock productivity and power growth.

Over the last three years, we have increased underlying

revenue at a 10% compound annual growth rate—testament

tothe ongoing strength of our offering, and evidence that our

growth is durable, despite macroeconomic uncertainty. We have

also significantly expanded our operating margin and cash

flows, enhancing flexibility and driving shareholder returns.

Our operational performance is supported by our strong

balance sheet, providing the strategic agility to invest in

both organic and inorganic growth. Organic investment

isfocused on enhancing our products and platform,

optimising our go-to-market motion and developing our

people. M&A is also an important driver of technology and

talent, and during FY25 we enhanced our portfolio with two

acquisitions: ForceManager, a mobile sales force management

tool; and Fyle, an expense management platform. Since year

end, wealso welcomed Criterion, a unified HCM software

provider, to our platform.

Beyond our core products and services, we are committed

tosupporting SMBs with the issues they face more broadly.

We advocate on their behalf with policy makers and champion

initiatives such as simplifying carbon reporting. As vital

contributors to the global economy, SMBs drive prosperity,

and Sage is equipping them with tools to lead the way in a

rapidly evolving landscape.

As ever, the constant force behind our achievements is our

people. I would like to extend sincere thanks to our colleagues

at Sage, and to the partners and accountants we work with,

for their continued dedication as we build on our momentum

and shape the future together.

Financial performance

Sage increased underlying total revenue in FY25 by

10%to£2,513m. In North America, revenue grew by 12%

to£1,138m, with a strong performance from Sage Intacct

together with continued growth in Sage 200, Sage X3,

andSage 50. In the UKIA region,revenue increased by 9%,

driven by Sage Intacct, andsupported by further growth

incloud solutions for smallbusinesses. In Europe, revenue

increased by 7%, withgrowth across the portfolio.

Underlying operating profit grew by 17% to £600m, driving a

strong margin increase of 150 basis points to 23.9%. This was

driven by operating efficiencies together with disciplined

cost management, supporting ongoing investment in the

business. Reflecting this progress and the benefit of recent

share buybacks, underlying basic EPS increased by 18% to 43.2p.

CEO’s review

“

We’re shaping a future where Sage

eliminates the burden of admin

forSMBs, freeing up time for

themtogrow their businesses.

Steve Hare

Chief Executive Officer

Unlocking productivity

andpowering growth

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Investment case

Building shareholder value

Growth was broad-based across the portfolio, driven

bycontinued success in our cloud accounting, payroll,

andHRsolutions. Sage Intacct continued to perform

particularly well, while other cloud native solutions,

including Sage Accounting, Sage Payroll, and Sage HR,

alsoperformed strongly. In addition, Sage 200, Sage 50

andSage X3 contributed significantly to growth.

As a result, Sage grew underlying annualised recurring

revenue (ARR) by 11% in line with the prior year, to £2,574m.

Our organic ARR growth rate of 10%, while slightly below

lastyear’s figure of 11%, still reflects a strong performance,

with continued growth balanced between new and existing

customers. In total, Sage added £200m of ARR through new

customer acquisition in FY25. Our renewal rate by value of

101% was driven by strong retention rates and a good level of

sales to existing customers, including customer add-ons and

targeted price rises.

Our strategy for growth

Our performance in FY25 reflects strong progress in

delivering our strategy for growth, which aims to deepen

customer relationships, expand our reach, and enhance the

value we provide to customers. Our strategic framework

includes three key focus areas: connecting SMBs through

ourtrusted and thriving network, growing by winning new

and delighting existing customers, and delivering

productivity and insights driven through AI.

• Connect: The Sage Platform is the foundation for our

trusted and thriving network for SMBs, connecting

products, partners, and customers in an intelligent

ecosystem. As we connect more customers to the platform,

weare expanding the scale and scope of our services,

delivering value and transforming customer workflows.

Wemade good progress, expanding our offering to

automate workflows across theOffice of the CFO,

including accounts payable and accounts receivable,

expense management, payments, HR, and payroll.

• Grow: Our aim is to expand revenues across all products and

services, with a focus on the greatest growth opportunities.

We continue to drive new customer wins, led by Sage Intacct,

where ARR grew by over 20% in the US and by around 50% in

other markets, and supported by the rest of the portfolio.

We also drove value through the expansion of specialist

suites, while targeting the “in-life” growth of existing

customers through focused cross-sell and upsell.

• Deliver: AI is enabling Sage to significantly accelerate

customer benefits. During the year, we scaled Sage Copilot,

our generative AI-powered assistant, in availability and

usage across core products, enabling customers to streamline

tasks and make better decisions. We are further developing

our proposition with the introduction of AI agents to automate

complex tasks across compliance, reconciliation, accounts

payable, and tax. We are also leveraging AI to drive

productivity internally, with benefits across business

areas including engineering and customer support.

You can read more about our progress towards

ourstrategic objectives, on pages 15 to 18

Diversified and differentiated

• Serving a wide range of SMBs across diverse

geographies, with deep expertise across

financials, payroll, and HR.

• Broad ecosystem of partners, accountants, resellers,

andindependent software vendors (ISVs) who enrich

andexpand the reach of our offering.

• Solutions backed by business advice and human

customersupport.

17 countries

Focused on innovation

• Expanding global cloud solutions across

ourmarkets,ledby Sage Intacct.

• Scaling and leveraging our AI-powered platform

totransformtheworkflows of SMBs.

• Launching AI agents to deliver enhanced levels

ofautomation for customers.

• Boosting productivity for SMBs by streamlining

processes and delivering trusted business insights.

£379m R&D spend

in FY25

Delivering efficient, sustainable growth

• Focused on scaling the business, with growth

creating headroom to increase investment and

expand margins.

• Growth supported by favourable SMB drivers,

including the need to raise productivity through

digitalisation andcompliance.

• Strong commitment to sustainability supporting

the long-term performance of Sage.

ARR growth 11% in FY25

Robust financial model

• High-quality revenue base, which is 97%

recurring,with 83% from software subscription.

• Highly cash generative, low capital intensity

business, withunderlying cash conversion

consistently over 100%.

• Organic and inorganic investment balanced

bydividendsandadditional capital returns

toshareholderswhereappropriate.

Cash conversion

110%

in FY25

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Focusing on our customers

Building long-lasting and trusted relationships with

customers and partners is crucial to the success of our

business. Reflecting our commitment to customer success,

Sage Intacct was again ranked first for customer satisfaction

in the G2 Fall 2025 report for accounting software, while

Sage was ranked Best Software Company for 2025 in the

UKand in the top 25 globally, based on G2 user reviews.

We place significant focus on enhancing the customer

experience, measuring sentiment and generating insights

todeliver improvements across our platform. As a result,

weincreased our transactional Net Promoter Score (tNPS)

from 73 in FY24 to 79 in FY25, while also improving our

overall customer satisfaction (cSAT) score.

Contributing to customer experience is excellence in

customer support. In FY25, AI-powered virtual agents

handled more than 200,000 customer interactions, with

aconsistently high resolution rate. These agents not only

streamline query routing, but also free up our human agents

to focus on more complex cases. This is helping us deliver

faster, smarter support while maintaining a strong focus on

overall satisfaction.

Driving customer perception and brand awareness enhances

our market presence while supporting both new customer wins

and existing customer retention. During the year, we elevated

existing relationships while forging new, high-impact

partnerships, such as with the English Football League

(EFL)and the Ladies Professional Golf Association (LGPA).

Engaging and developing our colleagues

Colleagues drive the success of Sage, and at the heart of

thatsuccess is our culture. High levels of motivation and

engagement are key to delivering our goals, and I am proud

that our employee satisfaction score remains high, in the

upper quartile of the global benchmark.

During the year, we continued to support colleagues

inbuilding core skills, including investing in both

ourLeadership Academy and our Professional Skills

Academy. More than 1,800 colleagues took part in culture

enablement sessions designed to boost engagement,

helpingthem build positive habits and take practical action

toenhance performance. The strong uptake across these

programmes reflects the curiosity, ambition, and drive of

ourworkforce—qualities that are recognised and celebrated.

We aim to attract exceptional individuals to Sage. Knocking

down barriers extends to expanding entry routes into the

workplace and, in FY25, we welcomed nearly 400 graduates,

apprentices, and interns. Through our Pathways programme,

we also provide opportunities to those facing employment

challenges, including people with disabilities, returning

professionals, and military veterans. We remain committed

to building a workforce that reflects the diversity of

communities in which we live and work.

Doing business sustainably

Growing sustainably is vital to the long-term success of

Sage, as we seek to deliver extraordinary outcomes for all

ofour stakeholders. In FY25, we made good progress across

our three pillars—Protect the Planet, Tech for Good and

Human by Design—and embedded sustainability across

ouroperations, products, and culture. We are proud of our

continued recognition, including being ranked among the

World’s Most Sustainable Companies 2025 by TIME Magazine

for the second consecutive year, as well as one of the World’s

Greenest Companies by Newsweek.

We are targeting net zero emissions by 2040, with an interim

target of halving our emissions by 2030, against a 2019

baseline, and we continue to make good progress against

these targets. However, our goal goes beyond our own

footprint. We are also championing the role of SMBs in

theglobal energy transition, advocating for simplified

standards and providing the data and insights to help

themmanage their own sustainability journeys.

Underscoring our commitment to create equal access to

skills and growth, we launched our biggest single social

impact initiative to date—the Sage Impact Entrepreneurship

programme. Delivered in partnership with Village Capital,

this programme aims to empower 165 purpose-driven

entrepreneurs over three years with access to funding,

mentorship, training, and Sage products.

Summary and outlook

Sage delivered a good performance in FY25. With our global

platform, trusted brand, and focused innovation strategy,

Sage is exceptionally well positioned to support small and

mid-sized businesses as they adopt AI-enabled services.

This drives confidence in our ability to deliver strong,

sustainable growth and long-term value for all stakeholders.

In FY26, we expect organic total revenue growth to be 9%

orabove. Operating margins are expected to continue

trending upwards in FY26 and beyond, as we focus on

efficiently scaling the Group.

Strategic Report

Our Strategic Report on pages 1 to 68 has been reviewed and

approved by the Board.

Steve Hare

Chief Executive Officer

18 November 2025

CEO’s review continued

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Connect

Connecting SMBs throughour

trusted and thriving network

Grow

Winning new customers and

delighting our existing ones

Deliver

Delivering productivity

andinsights driven by AI

Our strategy

for sustainable growth

Sage

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

The Sage Platform is the foundation for our trusted and thriving

network for small and mid-sized businesses, connecting our

apps, APIs, developer tools and infrastructure into a unified

experience. The platform simplifies and streamlines work,

integrating third-party solutions such as payments together

with Sage’s own capabilities across areas such as Accounts

Payable (AP) automation, Accounts Receivable (AR) automation

and expense management, to address key customer challenges

around cash flow, compliance and workflow automation.

Italso powers embedded services, extending Sage’s core

capabilities into external platforms through banking,

lending and fintech partners, unlocking new monetisation

models and partner routes to market. Every connection,

transaction and data point makes the system smarter,

creating network effects that scale AI innovation

consistently across all Sage products and workflows.

Progress in 2025

• Expanded our AP automation service, withthe monthly

value of invoices processed tripling overthe past

12 months to $2.3bn.

• Recognised as a “Major Player” by IDC for Accounts

Receivable automation for SMBs.

• Formed strategic partnerships with MineralTree to

strengthen our AP automation offering.

• Rolled out Tap to Pay in Sage Accounting across the

UK and Canada, deepening our partnership with Stripe.

• Acquired Fyle, an AI-enabled expense management software.

• Sage Sales Management integrated with Sage Copilot

andis now available to Sage 50 customers in Spain,

theUK,andFrance, and Sage 200 customers in Spain.

• Launched the Sage e-Invoicing portal in France,

preparingover 150,000 customers for e-invoicing.

• Strengthened our embedded services proposition

includingTide (basic accounting), Monzo (MTD),

andArtisTrade (US lending).

Success measures

• Availability and adoption of platform services

• Sage Business Cloud revenue growth

Focus for 2026

By accelerating adoption across the portfolio, we will

drive customer value and unlock the network scale effect,

creating a strategic advantage for Sage through smarter,

more connected services.

Greenidge streamlines AP

with AI-powered automation

”

Greenidge, a Nasdaq-listed energy and cryptocurrency

company, has transformed its finance operations

using Sage Intacct’s AI-powered Accounts Payable

automation service. Previously reliant on manual

invoice processing, the Greenidge team faced

inefficiencies and errors that slowed operations

and strained resources.

Invoices are now processed by AI, where the system

matches them to purchase orders, applies correct

coding, and initiates workflows automatically.

AI also enhances internal controls through outlier

detection, flagging unusual transactions before

they escalate.

With streamlined operations and AI-enhanced

controls, Greenidge’s finance team doubled

productivity while maintaining a lean structure.

Byusing Sage Intacct, Greenidge is empowered

tonavigate market volatility and support multi-

entity growth confidently.

“

We’re now handling more than twice

the volume without expanding the

team. And, more importantly, AI

ensures that everything is consistent,

traceable, and easy to audit.

Christian Mulvihill,

CFO at Greenidge Generation Holdings

For more information

scan or click the QR code

Our strategy continued

Connect

Case study

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

”

Ensuring Sage maximises its market opportunity and

continues to deliver strong growth is fundamental to our

strategy. Our overarching aim is to expand revenues across

all products and services, throughout our geographical

endmarkets. Key initiatives include scaling Sage Intacct

inNorth America and UKIA, establishing Sage Intacct and

Sage Active in Europe, growing our small business solutions

(particularly through accountants) and accelerating growth

through targeted cross-sell and upsell to existing customers.

A key feature of our growth strategy is the shift towards selling

more integrated suite propositions, simplifying the customer

experience and increasing overall lifetime value. We’re

alsoadvancing our vertical strategy, tailoring solutions

toindustry-specific needs across both the medium and

smallbusiness segments, powered by the Sage Platform

andsupported by ecosystem partners.

Progress in 2025

• Sage Intacct continued its strong momentum,

with ARR growth of over 20% in the US and c.50% in

international markets.

• Replatformed Sage X3, to deliver a full cloud-native

experience.

• Sage Active continues to accelerate in Europe.

• Sage Distribution and Manufacturing Operations

(SDMO) launched in France, serving the distribution

andmanufacturing industries.

• Sage 50 and Sage 200 grew across all regions.

• Enhanced the commercial proposition for Sage Intacct

through the expansion of specialist industry suites

andintroduction of multi-year contracts.

• Sage Intacct is scaling rapidly in the UK, with over

1,600 customers, and is gaining early traction in

Franceand Germany.

• Expanded Sage Intacct Construction to the UK,

following its success in US, Canada, and Australia.

• Launched Sage Intacct Accountants in Canada to

support client advisory.

• Driving cross-sell and upsell through add-ons

anddeeper functionality across the portfolio.

Success measures

•ARR growth

• Renewal rate by value

• Customer experience metrics

Focus for 2026

Drive further momentum with new and existing customers

and improve access to products and services through suites.

As Ansell Lighting expanded into new markets

and outgrew its legacy systems, the company

needed a modern cloud solution to streamline

operations and support continued growth. Ansell

Lighting implemented Sage Distribution and

Manufacturing Operations (SDMO), seamlessly

integrating it with the existing Sage Intacct

financial system.

The results included faster processing, improved

remote access, and more efficient bill of materials

(BOM) management. Teams can now multi-task

within the system, accelerating product development

and decision making.

With SDMO, Ansell Lighting is not only operating

more efficiently today but is also well positioned

to scale and innovate for the future.

“

Our technical department

andtheteam raising the bill

of materials are seeing the

mostsignificant improvement.

Their day-to-day experience

has been materially improved.

Chris Squire

IT Project Manager at Ansell Lighting

For more information,

scan or click the QR code

How Ansell Lighting transformed

operations with SDMO

Grow

Case study

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

AI is reshaping how businesses operate, and we are

transforming SMB workflows with practical, accessible

AI-powered solutionsbuilt for real-world needs. Through

SageCopilot, customers are using generative AI to discover

insights and analyse financial information, speeding up

processes such asthe month-end close and improving

confidence in financial data. We are also rapidly growing our

portfolio of AI agents, each one purpose-built for a specific

domain and process. This expanding network tackles specialised

tasks, operating autonomously for our customers. Internally,

we’re adopting a strategic approach to AI across theorganisation

that empowers colleagues and drives transformation.

Progress in 2025

• Sage Copilot is now available to customers across Sage

Accounting, Sage 50, Sage for Accountants, Sage Active,

Sage Intacct, and Sage X3.

• Launched agents including Sage’s MTD for Income Tax

Agent and Finance Intelligence Agent.

• Every Sage Accounting plan includes Sage Copilot and

Sage Earth Carbon Accounting, alongside HR and payroll.

• Launched customer support AI agent, with a consistently

high resolutionrate.

Haneker, a high-end architectural joinery firm inLondon,

turned to Sage Copilot to simplify financialoversight

asthe business scaled. With disconnected systems and

growing complexity, Haneker needed real-time insights

without the burdenof manual reporting.

Sage Copilot now delivers instant visibility into

cashflow, margins, and project spend, surfacing

anomalies such as supplier cost increases before

theyescalate. Beyond numbers, Sage Copilot empowers

theHaneker teamwith shared visibility, enabling faster,

more confident decisions.

For more information,

scan or click the QR code

Haneker gains clarity and

control with

”

“

I use it for visibility. I can check how

we’retracking, what’s outstanding,

and where things look off. It helps

me ask the right questions early.

I don’t need to chase numbers or

waitforsomeone else to run a report.

I can check in quickly and understand

what’s going on. It’s not about replacing

people, it’s about making smarter

decisions with confidence.

Margaret Sadzynska

Managing Director, Haneker

• Partnered with the CPA.com, a subsidiary of the

American Institute of Certified Public Accountants

(AICPA), to explore licensing AICPA resources to train

Sage Copilot.

• Payroll Salary Variance Detection launched in Sage

Copilot for UK Small Business Suites and Accountants.

• Enhanced Sage 50 with AI-powered features such as

natural language search for reporting, data extraction

and classification and fraud detection.

• Sage People includes new tools such as Workforce

Intelligence for AI-powered insights, and access to

personalised learning and wellbeing through Uptime.

• Powered by Sage Copilot, Sage Intacct launched in the

AI Agents and Tools category of the AWS Marketplace.

Success measures

• Sage Copilot availability and engagement

• Internal adoption of AI tools to drive efficiency

Focus for 2026

We will unlock the potential of intelligent autonomous

agents in awave of innovation, grounded intrust,

transparency, and customer empowerment.

Readmoreonpages 19 to 21.

Our strategy continued

Deliver

Case study

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Empowering our customers

The agentic AI

era for CFOs

Our Chief Technology Officer discusses how

Sage is now positioned to bring the potential

of agentic AI and autonomous agents to SMBs

in a wave of innovation.

Where are we currently in our journey toward

agenticAIat Sage?

We’ve embedded AI into our products for over seven

years,sowe’re not at the beginning ofthis journey.

Today, we’re operating at scale with over 40,000 models in

production, generating 3.5 billion predictions annually,

and processing over 40 million documents over the past

year. That depth matters: we’re building on real use,not

starting from zero.

We describe our AI journey in three waves. First was

taskautomation, which we’ve done at scale for years

toremove manual, repetitive work. Second is generative

AI, already livethrough Sage Copilot. And the third—the

wave we’re in now—is agentic AI: autonomous agents

thattake insight-driven action on a customer’s behalf.

We’re focused on leading the agentic AI wave by building

trusted agents for finance workflows and preparing our

platform to integrate with the wider agent ecosystem.

Ascustomers adopt enterprise agents, we’re standardising

on Model Context Protocol (MCP) agent servers and

putting governance in place to keep our products

secure,scalable, and future-ready.

Can you talk about the use cases we’ve

identified foragentic AI?

We’re focusing on areas that free up capacity and

givefinance leaders more flexibility, such as invoice

coding, reconciliation, and cash flow forecasting.

Theseare routine but critical to giving finance teams

confidence in their numbers and the decisions that

follow. Equally valuable, they free finance teams to focus

on more important work. From there, we’re expanding

into areas uniquely suited to the power of agents, such

asautomating the monthly close, preparing Making Tax

Digital (MTD) returns, and monitoring business performance

to identify unseen opportunities and risks. AsCFOs take

on broader advisory roles, agentic AI powers forward-

looking analysis and scenario planning, so finance

canguide the business—not just report on it.

40,000

models in production

3.5bn

predictions annually

40m

documents processed

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Which products have already launched

withAIagents?

We’ve already started embedding AI agents into live

products, with a growing set now operating across

finance and tax workflows. They work within clear

boundaries, so teams getoutcomes they can trust while

staying in control. Every agent follows user-defined

permissions, with full transparency and approvals.

Oneexample is ourFinance Intelligence Agent. It allows

customers to ask questions in natural language and get

instant data, analysis, predictions and recommendations

they can act on. By eliminating the need to run reports or

analyse data externally, it simplifies decision-making

and accelerates outcomes.

Across our products, we’re rolling out agents to take care

ofcorefinance tasks. From managing compliance and

reducingerrors to accelerating the close and cutting

outmanual entry in accounts payable and expenses,

theseagents are arriving quickly across markets to

helpfinance leaders do more with less effort.

How does Sage Copilot workwithAIagents?

Sage Copilot is the experience layer, the way customers

interact with AI in natural language across Sage products.

Itprovides a single, consistent interface, while the

intelligence and execution happen behind the scenes.

At its core is Sage Ai, our proprietary models, trained on

trusted financial data, powering predictions and insights.

Collaborating with it are our AI agents, acting on the

customer’s behalf within permissioned boundaries and

withfull customer transparency. Sometimes they’re

visible, surfaced through Sage Copilot when a customer

requests a task. Othertimes they run quietly in the

background or in partnerenvironments, keeping critical

workflows movingwithout human input.

Together, this creates a seamless system: customers

interactwith Sage Copilot, agents deliver, and the whole

experience is explainable, secure, and designed for the

demands of finance. Our AI Trust Label brings that to

life, giving customers visibility into the principles on

which our products are builtand governed, from the data

they draw on to the logic behind their decisions. It’s a

visible part of our authentic approach, and a reminder

that while we’re moving fast, we’re doing it responsibly,

withtransparency and control at the centre.

And how do AI agents fit withinthe

SagePlatform?

The Sage Platform is the foundation for all Sage Ai. It

combines the financial data our customers already trust,

with the infrastructure needed to build, deploy, and

operate AI responsibly, and the reach to connect those

capabilities across Sage products and the wider ecosystem.

At the heart of this platform is the Sage Ai Factory,

ourscalable infrastructure for developing models

withinasecure trust fabric. To support agentic AI,

we’veevolved thisfoundation into an Agentic AI core,

poweredby our LLM-backed proprietary reasoning

engine and built on Model Context Protocol (MCP)

agentservers. This core allows agents to draw on

Sage-specific skills, tapping into product APIs and

intelligence services, all underpinned by our Data Hub

and Experience Services to maintain accuracy, control,

andsecurity, while creating a consistent experience

acrossproducts. Together, these elements power

aunified agent library, enabling agents to deliver

consistent, precise responses across products. But the

platform is more than tech—it’s a long-term strategic

moat. It connects businesses, accountants, andpartners

through a governed ecosystem that supports secure

datasharing, regulatory compliance, and embedded AI

services. Every transaction and integration strengthens

the system, creating network effects that scale AI

innovationacross workflows.

Anchored in domain-specific data and extended

throughour partner network, the platform creates a

durable competitive advantage and positions Sage to

deliver agentic AI at scale with real business impact.

Empowering our customers continued

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

What sets Sage apart from others

intheAImarket?

Over 40 years of experience, trust, and deep domain

expertise, with extensive, proprietary datasets, are

justafew of Sage’s strongest differentiators. Businesses

want AI from providers they already rely on, and we have

earned that position over decades. It’s also what makes

us anattractive partner. Our collaboration with the

American Institute of CPAs (AICPA), for example, seeks

toalign Sage Ai with professional standards in the US,

toproduce accuracy that others can’t match. Building

that level oftrust takes years, which is why it’sout of

reach for most challengers.

Equally important is how we build our AI. Guided by our

authentic intelligence philosophy, it’s designed for

finance and built to deliver transparent, accountable

outcomes. We customise and train our AI using real-

world data from the millions of transactions that flow

across our platform. Learning from actual customer

activity—not synthetic scenarios—means we can

continually refine our models to reflect the mission-

critical finance workflows businesses run every day.

It’s already delivering results—reducing manual data

entry by up to 90%, helping to double productivity in

accounts payable, andreviewing seven million

transactions amonth foranomalies.

And as we advance agentic AI, we haven’t lost sight of

thefundamentals. Systems of record such as the general

ledger stillmatter. That’s why we’re committed to not

only making Sage the best platform for human users, but

also ensuring it’s the most trusted, capable environment

for agents to run the workflows that power SMBs.

What does success look likeforSageAi?

In the near term, success means leading the agentic

AIwaveby building trusted agents for accounting

andfinance workflows while continuing to develop

thesecure, scalable platform they run on. Our R&D

isfocused on meeting finance standards, creating

models that are flexible and cost-effective, refining

ourmachine learning infrastructure tosupport

automation at scale,and delivering a consistent

AIexperience acrossour portfolio.

Our success is measured by the outcomes we deliver

forcustomers, enabling real-time strategic decision

making byfreeing teams from manual, repetitive tasks.

Delivering these outcomes is about more than technology

—it’s also about leadership. Challengers may talk about

what they intend, but real leadership is about execution

at scale. The companies that win are those that prove

resilient and setthe pace. At Sage, we’re doing just that.

By building ontrusted financial data, deep domain

expertise, and the strength of our partner network, we’re

showing that incumbents with the right strategy don’t

getdisplaced—they lead.

”

“

We’re committed to not

onlymaking Sage the best

platform for human users,

butalso ensuring it’s the

mosttrusted, capable

environment for agents.

Aaron Harris

CTO

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Our key performance indicators

Measuring our progress

Strategic KPIs

Underlying ARR growth

Description

ARR is the normalised reported recurring revenue in the last

month of the reporting period, adjusted consistently period

toperiod, multiplied by 12(FY25: £2,574m). ARR growth

isstated on a comparable foreign exchangebasis, with the

prior period ARR retranslated at the currentyear exchange

rates, to neutralise theeffect of currency fluctuations.

For a full definition, see our Glossary on page 261.

Why we are measuring this

Underlying ARR growth represents the annualised value of

theunderlying recurring revenue base that is expected tobe

carried into future periods, and its growth is a forward-looking

indicator ofreported underlying recurring revenue growth.

Performance

Underlying ARR increased by 11% in FY25, reflecting growth

across all regions balanced between newandexisting customers.

Renewal rate by value

Description

Renewal rate by value is the ARR from renewals, migrations,

upsell, and cross-sell of active customers at the start of the

year, divided by the opening ARR for the year.

Why we are measuring this

Since it does not include new customer acquisition or

reactivation of off-plan customers, renewal rate by value

isanimportant measure of the strength of our existing

customer base.

Performance

Renewal rate by value was 101% in FY25, reflectingstrong

retention rates and a good level ofsalestoexisting customers.

Sage has four strategic KPIs that show the impact and progress of our strategic execution.

Efficient growth

Our objective is to grow the business in a way that is both balanced

and efficient, prioritising not only expansion but also long-term

sustainability. We aim to achieve this through a focus on high-

quality revenue growth and progressive margin improvement,

ensuring that, as the business scales, it does so with increasing

efficiency. This approach enables us to expand profitably while

continuing to reinvest in our products, our platform and our people,

reinforcing the resilience and longevity of our business model.

Progress is measured using the Rule of 40, which combines underlying

ARR growth and underlying EBITDA margin to provide a comprehensive

view of bothtop-line performance and underlying profitability.

Main metrics: Rule of 40

In addition to the KPIs outlined here, details of our

environmental and additional employee-related

metrics are provided in our Non-Financial Statement

Other selected KPIs

Customer experience

We aim to differentiate Sage by delivering unique experiences that

delight customers and drive growth. By placing customer centricity

at the heart of our strategy, we have continued to evolve our customer

experience approach, measuring sentiment through transactional

Net Promoter Score (tNPS). This methodology captures feedback

across a broad range of touchpoints, spanning multiple solutions

and services, andprovides a granular view of the customer experience.

In FY25, we launched Medallia, our new Voice of the Customer

(VoC)platform, which significantly enhances insight across every

interaction. These insights empower our customer support teams

across our regions and functions to make smarter, more informed

decisions. Broader customer insights are also actively shaping

ourstrategy and execution, helping us identify trends and drive

continuous improvement across the organisation.

Main metrics: tNPS, customer experience improvements

11%

2025

2024

11%

2023

11%

101%

2025

2024

101%

2023

102%

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Sage Business Cloud penetration

Description

Sage Business Cloud penetration is the underlying recurring

revenue from Sage Business Cloud solutions as a percentage

oftheunderlying recurring revenue of the Future Sage

Business Cloud Opportunity.

Why we are measuring this

This metric measures progress in the transition of the

business toSage Business Cloud solutions.

Performance

Sage Business Cloud penetration increased to 90% in FY25,

reflecting the further expansion of Sage’s cloud solutions

withinthebusiness mix.

Subscription penetration

Description

Subscription penetration is the underlying software

subscription revenue as a percentage of the underlying

totalrevenue.

Why we are measuring this

This metric shows the progress Sage is making in migrating

customers to subscription.

Performance

Subscription penetration reached 83% in FY25, reflecting

continued growth from subscription contracts.

1. In FY25, underlying recurring revenue from Sage Business Cloud solutions was £2,047m, while underlying recurring revenue from the Future Sage Business

Cloud Opportunity (which includes solutions that are part of, or have a clear pathway to, Sage Business Cloud) was £2,282m.

Employee satisfaction

Understanding how our colleagues experience Sage is essential to

nurturing our culture. One of the ways we monitor and understand

how happy our colleagues are working at Sage is to conduct regular

colleague surveys, including measuring employee satisfaction

(seepage 29).

High response rates and rich insights from these surveys help us

track sentiment and ensure we take meaningful action to protect

and strengthen our culture.

Main metrics: eSAT

Sage Foundation volunteering

Sage Foundation is a valued part of life at Sage and colleagues tell

us it is one of the reasons they enjoy working here. Every colleague

has up to five days of paid volunteering leave each year, allowing

them to make a difference locally and connect with the communities

where we operate.

In FY25, we adopted a new methodology for measuring engagement,

now focusing solely on volunteering during working hours. Previously,

we reported on total volunteering hours, including those outside of

work. This change enables more consistent and comparable impact

measurement across peers and industry benchmarks.

Main metrics: Sage Foundation volunteering hours

Our strategic objectives

See pages 15 to 18

90%

2025

88%

84%

2024

2023

83%

2025

2024

82%

2023

79%

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

”

Our people and culture

The Sage culture

“

Sage’s culture powers

growth—uniting

purpose, performance,

and people to deliver

exceptional outcomes.

Amanda Cusdin

Chief People Officer

Why is culture so important at Sage?

Our purpose is to knock down barriers so everyone

canthrive: this defines what we do, while our culture

defines how wedo it. It’s a shared commitment–it’s not

owned by anyone team, and it shows up in how we work

together, serve our customers, and live our Values: being

Human, Bold,Trust, and Simplify. Together, our culture

and Values guide our decisions, shape our behaviours,

andcreate an environment where colleagues feel

empowered to deliver exceptional outcomes.

In FY25, our employee engagement remained strong.

Weachieved an eSAT score of

76(FY24: 76), with a

response rate of 82%. Colleagues reported a strong

senseof belonging, have a clear sense of the contribution

they make to team goals, and say theyvalue honest and

constructive feedback. This reflects the positive impact

of our continued focus onbuilding a culture of feedback

and accountability.

Our strong internal engagement is mirrored externally.

Our Employer Brand Index improved by 15 points over

FY25, and Sage was ranked #15 on the Financial Times’

Best Places to Work in the UK. These achievements

demonstrate growing recognition of Sage as a Values-

ledorganisation where people come first.

By putting people at the heart of everything we do,

weare building a workplace where everyone can thrive—

today and into the future.

How is Sage’s culture brought to life?

We’ve built momentum by staying true to what

weknowworks. The stability and continuity of our

cultural priorities have provided a strong foundation

forcontinued progress throughout FY25.

We’ve embedded our high-performance culture more

deeply across the organisation—centred on customer

centricity, accountability, and engaging, empowering,

and recognising colleagues. Our monthly manager

enablement sessions raise awareness, provide tools,

andshift mindsets, with more than 71% of people

managers attending these sessions. Deep dive culture

interventions have been running across the business,

with more than 1,800 colleagues participating in

interactive culture enablement sessions designed to

boostengagement and help them take practical action,

buildnew habits, and support high performance.

All colleagues also have the opportunity to build core

skills through the Professional Skills Academy, with a

strong focuson feedback and accountability. We recorded

more than 4,000 completions across the curriculum in

FY25, reinforcing our culture and behaviours that drive

performance and build trust. Critically, 86% of participants

reported applying what they learned, and84% said it

helped them do their jobbetter—demonstrating clear

skill growth and real impact intheflow of work.

A key driver of our culture is strong, human leadership.

InFY25, we continued to invest in building accountable,

future-ready leaders at every level. Our Leadership

Academy remains a powerful platform for leadership

development, with 855 colleagues having completed a

programme in FY25. From aspiring to senior leaders,

we’reequipping our people with the skills andmindset

tolead with impact, drive performance, and rolemodel

the behaviours that shape Sage’s culture.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

”

Finally, we reinforced our commitment to doing the

rightthing, including by refreshing our Personal Data

Protection training,with completion rates of 99%.

“

The Aspiring Leader Programme

really helped me shift my internal

framework from a “me” to “us”

mentality. This helped me focus

onthe collective and how we

can thrive asateam. It made

the transition from individual

contributorto managing a team

alot easier.

Whitney Ragan

Product Design Manager

How is Sage supporting colleagues to work

inan AI world?

We are proud of our progress in Artificial Intelligence

andthe value it unlocks for our customers. Starting

inFY24, we made a significant investment in theroll out

of Sage Copilot, reflecting our commitment toAI product

innovation. To stay ahead of the opportunity AI presents,

we have focused on building AI literacy across our workforce,

across all job roles. This investment is not only a strategic

business imperative, but also a reflection of our belief

that we should support every Sage colleague in adapting

to the evolving world of work.

Starting in FY24, we made Microsoft Copilot Chat

available to colleagues. Building on this momentum,

inFY25 we launched our AI Academy—designed to help

colleagues learn, act, and embed AI in their day-to-day

roles. We’re taking both a global and functional approach,

tailoring learning to areas such as Marketing, Customer

Success, and Engineering.

The AI Academy combines foundational education,

hands-on use cases, and deeper technical upskilling—

including Microsoft and AWS Data & AI certifications on

ourAI tech stack. Data skills are core to this, helping

colleagues use AI and data confidently together. So far,

15,703 AI Course completions have been recorded. Our

growing AI Champions Network is also helping embed

AIpractices across Sage, with early signs of impact

including a 45% increase inAI prompting confidence.

Staying true to our Value of Trust, we launched a global

AIandEthics e-Learning to help colleagues apply

responsible AIprinciples in their work. Partnering

closely with our Legal and Compliance teams, we

provided clear guidance and robust processes for tool

approval and use. We also reinforced the importance

ofhuman skills—such as critical thinking and ethical

judgement—through the Professional Skills Academy

and LinkedIn Learning. These efforts ensure colleagues

are confident using AI responsibly andwith integrity.

What are your priorities for the year ahead?

As our business evolves, so too will our People strategy

—ensuring we can meet both internal and external

demands as a growing global technology company.

InFY26, we will accelerate our efforts to build afuture-

fit workforce: one that moves at pace, embraces bold

innovation, and adopts an AI-first mindset.

Central to achieving our ambition are our leaders. We

willcontinue to focus on developing broader and deeper

leadership capability across the organisation. At the

sametime, we will invest in and scale our Early Careers

Programme, continue to develop and promote internal

talent, and sharpen our understanding of the critical

skillsneeded for long-term success.

These priorities will be underpinned by our Values and

acommitment to fostering an inclusive, collaborative

culture—one where colleagues feel empowered, supported,

andproud to bring their whole selves to work.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

How we attract, develop, and engage

talenttofuel Sage growth

Creating a workforce fit for the future—one that positions

Sage to fuel future growth and deliver extraordinary outcomes

for our customers—requires deliberate and sustained effort.

At the heart of our ambition lies a simple but powerful

principle: having the right talent, doing the right work,

withthe right skills, at the right time.

Prioritising talent attraction was important when we opened

our new North American Flagship Office and Customer Discovery

Centre in Atlanta this year. We launched a boldemployer

brand campaign to attract top salestalent. In justthree and

ahalf months, the campaign generated nearly 15 million

impressions and almost 9,000 applications, representing a

123% increase in application volume. This surge in visibility

and engagement significantly improved thequality of our

candidate pool.

In FY25, we continued to invest in our direct sourcing model,

confident that our Internal Hiring team is best placed to

identify future Sage colleagues. This approach has enabled

strong internal mobility, with many colleagues stepping into

new roles that not only support business outcomes but also

accelerate their personal growth. Our internal fill rate of 45%

demonstrates this approach.

Expanding entry routes into Sage remains a strategic

priority. A strong talent pipeline begins with attracting

exceptional individuals into our Early Careers Programmes.

In FY25, we welcomed 392 Early Careers colleagues into

thebusiness. While this is a positive step, we recognise

theneed to scale further to align with industry benchmarks.

Supporting colleagues at the start of their journey is critical,

and our Sage Ignite Development Programme—now operating

across the Group—plays a central role. This year, the Ignite

Graduate Programme was a finalist for Best Graduate

Development Programme at the Institute of Student Employers’

Annual Awards in June 2025. This recognition underscores

our commitment to delivering structured, high-impact

learning experiences and reinforces graduate development

as a top strategic priority. In FY26, we plan to continue to

invest heavily in this area and scale our early careers

offering, ensuring our graduates have the skills, support,

andopportunities they need to excel and leadconfidently.

As part of our Colleague Engagement strategy, we remain

deeply committed to building a workforce that reflects the

diversity of the communities in which we live and work. We

actively seek out and remove barriers to ensure everyone has

the same opportunity for success. This year, Sage received the

Best Diversity Recruitment Initiative of the Year award for our

Partner Academy Programme at the CRN Women & Diversity

inChannel Awards. This recognition highlights our use of the

Pathways Programme to direct career returners and changers

into the UK’s tech partner ecosystem. The collaboration

between Pathways and the Partner Academy demonstrates

our commitment to creating accessible and inclusive routes

into tech careers for underrepresented talent. Our Sage

Pathways Programme was also recognised witha Vercida

Employer Excellence Award for Best OverallInitiative

We move at pace, innovate constantly, and stay ahead ofour

customers’ needs—which is why we invest in building a

future-fit workforce ready to thrive. Throughour Leadership

Academy, we’re developing capable, accountable leaders

equipped to drive performance and lead through change.

We’realso building critical skills across the organisation

viaour Professional Skills Academy and AI&Data Academy—

developing the human and digital capabilities needed for

success. We are strengthening functional or “craft” skills

through targeted academies in areas such as sales, marketing,

and product, ensuring colleagues are equipped with the

expertise to fuel business and personal growth.

We believe colleagues should be empowered to shape

andown their careers. Now in its second year, our Talent

Marketplace is delivering on its promise—enhancing talent

mobility, increasing workforce agility, and supporting the

growth of a skills-driven workforce aligned with our future

strategy. Adoption rates reached 83% in FY25 and we now

have 314 internal mentors who are ready to support their

colleagues on their skills journey.

Finally, our annual talent cycle and succession planning

processes continue to be vital mechanisms for identifying

and developing future leaders. This year, we’ve seen strong

internal succession success, including at the Executive

Leadership Team level (Jacqui Cartin as incoming CFO).

Our people and culture continued

”

“

The Manager Essentials

Programme became

a powerful space for

reflection and growth,

anddeepened my

leadership toolkit.

Joleen Tarr

Customer Services

Team Manager

When promoted to Team Leader, Joleen Tarr, a Customer

Services Team Manager based in Johannesburg,

wanted to build the leadership skills needed to

stepinto her new role with clarityand purpose.

Byenrolling in the Manager Essentials Programme,

she developed a strongfoundation in leadership,

focusing on key areas such as clear communication,

active coaching, and trust-based accountability.

Promoting internal talent

Case study

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

In FY25, we laid the foundation of the Sales Academy

through pilot programmes to test onboarding pathways

and gather feedback, starting in France with Sage

IntacctAccount Executives, followed by the USwith

SalesDevelopment Representatives. Early results

showed100% satisfaction and75% confidence across

coretopics, prompting expansion to other regions.

Our new Sales Academy fast-tracks onboarding and is already boosting performance

We have developed a global timetable, aligning

foundational and activated skills across six onboarding

weeks, from “Intro to Sage” to “Ready to Go”. This structure

ensures consistency while allowing localisation and

personalisation. The Sales Academy’s infrastructure

includes blended learning journeys and role-specific

activation, supported by a governance model and live

feedback dashboards. Test cases in Atlanta mirrored

the satisfaction scores, and early results suggest new hires

will be hitting targets one week ahead of previous cohorts.

Creating an environment where

everyonecanthrive

To realise our core purpose to knock down barriers so that

everyone can thrive, we must be an inclusive, welcoming

organisation—one where colleagues are respected and

empowered to be their authentic selves, without fear of

discrimination or exclusion. We bring this to life through

three guiding principles:

• Build diverse teams

Offer a range of voices, backgrounds, and experiences to

help us innovate faster, see challenges earlier, and make

the right decisions by better understanding our customers.

• Inclusive culture

Our leaders serve as positive role models and colleagues

feel safe and encouraged to share their experiences.

• Equity by design

Our systems and processes ensure accountability for

diversity, equity, and inclusion sits across the business,

inthe day-to-day decisions being made.

Our FY25 “All About Us” diversity self-declaration rates

reached 60% across all active countries, following the

onboarding of all our colleagues in India this year. This

datagives us insights to better understand inequities and

underrepresentation, and develop solutions toprovide fair

access to opportunities at Sage. In India, the data has also

shown us the proportions of colleagues who are care givers

for one or more family members, prompting us to create a

series of multi-language sessions to better promote our

Employee Assistance Programme, Cleo, and Healthy Mind

Coaches benefits and networks tosupport colleagues.

Our Colleague Success Networks continue to be a key driver

in fostering an inclusive culture and bringing our Values

tolife, with membership now reaching 28% (FY24: 22%).

InFrance, we have introduced the Pride Network. In North

America, our Blacks United in Leadership and Development

(BUILD) Network collaborated with our Foundation Partner,

Access to Capital for Entrepreneurs (ACE) to host the second

Annual Sage Small Business Expo. IntheUKI region, our Embrace

Network partnered with Cyber Security to sponsor the Black

Tech Fest. Our Ability Networks across North America, UKI

and South Africa have supported the launch of the Hidden

Disability Sunflower scheme across over 4,000 colleagues,

to reduce the stigma associated with the conversations

around workplace adjustments. The launch of our Global

Workplace Adjustments and Accommodations Policy has

provided a consistent global framework to ensure colleagues

can access the support they need to perform at their best.

Case study

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Sage gender and ethnicity balance

As part of our commitment to equity and transparency, Sage tracks and publishes data on gender and ethnicity representation

in the regions where it is legally possible to do so, across our global workforce. The table below highlights our current progress

and areas of focus for the Board, Executive Leadership Team (ELT) and their next reporting level. For further DEI information

please see page 106.

Board ELT

ELT and

direct

reports

All

colleagues

Number of people 10 9 70 11,094

Gender Female 4 3 27 4,687

Male 6 6 42 6,289

Non-Binary –––29

Undisclosed –– 189

Ethnicity Asian 1 – 3 505

Black/African/Black S.African/Caribbean/

Black British/African American

––3240

I do not wish to self-identify my race or ethnicity ––2200

Indigenous ––– 8

Multiple Ethnic Groups – – 1 103

Other Ethnic Group –11175

White 9 8 51 3,217

Undisclosed – – 9 6,646

Data as of 30 September 2025.

1. ELT data reflects the information as at 30 September 2025 and includes the Executive Directors as well as Eduardo Rosini, who served as Chief Growth

Officer and a member of the ELT throughout FY25. Steve Hare and Jonathan Howell are included in both the Board and ELT data. The gender balance of our

ELT, excluding Steve and Jonathan, is three females and four males. The gender balance of both the Board and the ELT is expected to change on 1 January

2026 when Jacqui Cartin takes up her new role as CFO (after Jonathan Howell steps down on 31 December 2025).

2. ELT and direct reports include ELT members and those for whom they have direct line management responsibility, excluding administrative andsupport roles.

3. Total number of colleagues of 11,094 excludes 84 contractors and includes eight Non-executive Directors.

Our people and culture continued

Workplace wellbeing is not a standalone programme at Sage

—it’s part of our culture. We create an environment where

every colleague feels safe to speak openly, supported to find

balance, and empowered with the tools to thrive inside and

outside of work. Our approach spans mental, physical, social,

and financial health, enabling colleagues tobring their best

selves to work and grow with confidence.

We deliver a consistent global monthly programme of health

promotion, learning, and awareness that inspires change and

builds the skills needed for sustainable high performance.

Covering topics from stress management and suicide prevention

to menopause, carer support, and mental health leadership

training, we equip managers to provide tailored support and

have doubled our Healthy Mind Coaches in Customer Support.

Our Global Wellbeing Community now connects over 1,900

colleagues, with year-on-year growth embedding wellbeing

deeper into our culture.

We remain focused on healthy finances, and in April, we were

proud to receive the 2025 GEO Award for Best in Financial

Education and Wellbeing (10,000–25,000 employees). This

recognition celebrates our dynamic, human-centred approach

to financial education—an approach that places colleague

empowerment at the heart of our Share Plan strategy.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Evolving how we work: a story of

collaboration, creativity, and connection

We continue to learn that the most effective office moments

are those centred on collaboration, connection, and community.

These moments are not only essential to our culture but also

critical to delivering better business outcomes. We want to

empower colleagues to work in next-generation environments

that inspire creativity, foster collaboration, and support

high performance. Our industry moves at pace—and so

mustwe. That means creating workplace conditions where

work flows naturally, people feel energised, and teams are

motivated to come together with purpose.

In FY25, we updated our Hybrid Working Policy to drive greater

in-person collaboration. This strategic shiftreflects our belief

that purposeful time together drivesfaster decision making,

strengthens relationships, and enhances overall impact.

We’ve also focused on building stronger, more collaborative

teams through tools such as Strengthscope and TetraMap.

InFY25, these helped over 600 colleagues better understand

their own strengths and working styles, improving self-

awareness, communication, and team effectiveness across

the business. In September, we launched People Zone—

aglobally consistent, digital self-service and knowledge

management platform that has simplified and modernised

how we work, connect, and serve our colleagues.

In line with our ongoing Places strategy, FY25 marked

asignificant milestone with the opening of our North

America flagship office in Atlanta. We also completed a

series of office refurbishments, each designed to reflect

ourevolving ways of working. This is part of a broader, multi-

year programme that will reach colleagues across all regions,

with new projects in motion for FY26 and beyond.

People measures & awards

Key metrics helpuskeeptrack of how we’reprogressing:

eSAT

How happy our colleagues are working at Sage (FY24: 76)

45%

Internal fill rate

How successfully we’re providing colleagues the

opportunities to develop their careers at Sage (FY24: 51%)

40%

Gender diversity target

The number of leadership teams (ELT to ELT-4) meeting our

gender diversity target of no more than 60% of men, women,

or non-binary people in any leadership team (FY24:41%)

28%

Colleague Success Network

Colleague participation (FY24: 22%)

#15 on Financial Times best

places to work in the UK

#11 on FTSE Women Leader’s review,

and #3 in the Technology Sector

Best in Financial Education

and Wellbeing

2025 GEO Awards

Best Graduate Development

Programme (Finalist)

2025 Institute of Student

Employers’ Awards

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Sustainability and Society

The Multiplier Effect

• Sage was recognised by Newsweek in the 2025 World’s

Greenest Companies list, receiving a five-star rating.

• Sage ranked again amongst the 500 global companies

in the World’s Most Sustainable Companies 2025 list

by TIME Magazine and Statista.

• For a third year running, Sage was in the 2025

Financial Times Europe Climate Leaders list,

rankingin the top 30 companies.

• Sage won the 2025 edie award for Sustainability

Reporting & Communications.

• Sage was awarded CDP A List for Climate Leadership

andCDP A List for Supplier Engagement.

• Sage maintained its Gold medal on the 2025

EcoVadisrating.

• Sage ranked 15th out of 500 companies in the

Financial Times 2025 Best Employers UK list.

1,767

sustainability learnings delivered to colleagues

inFY25, supporting increasing internal capability

91%

of entrepreneurs who report an increase in their

confidence to scale and grow their business

49%

Sage Foundation Colleague Engagement Rate

against 21.6% industry average

$850,466

funds raised to help our communities thrive

Snapshot of our 2025 highlights

Sharpening our sustainability

strategicdirection

In FY25, we continued to deliver on our Sustainability and

Society strategy and Sage’s purpose: knocking down barriers

so everyone can thrive. We focused our efforts on progressing

our commitments and targets across the three pillars of the

strategy: Protect the Planet, Tech for Good, and Human by

Design. And we continued to embed sustainability into our

operations, products, and culture.

In FY25 we reviewed the effectiveness of the Sustainability

and Society strategy due to evolving stakeholder expectations,

shifting macroeconomic conditions, regulatory developments,

and Sage’s strategic direction. Collaborating with anexternal

provider, we undertook a benchmarking exercise,reviewed

our material issues and interviewed keystakeholders. This

has helped us to prioritise and sharpen our focuseven further.

In FY25 we focused on:

• Review of our material topics: Taking into

consideration Sage’s business strategy, AI and Data Ethics

was classified as strategically significant for the business.

We revised the definition of the topic Innovation to support

customers and SMBs—to better focus our contributions to

advancing social and environmental outcomes. Finally, the

topic of Digital equality, including product accessibility,

was merged respectively with DEI and Local community

investment and support.

• Streamline strategy and reporting: Our Sustainability

and Society strategy remains focused on the three pillars—

Protect the Planet, Tech for Good and Human by Design,

the delivery of which is supported by a number of enablers

and our continuous commitment to embed sustainability

across the business. This year, we have fully integrated

reporting against the Sustainability by Design pillar

within the content of the three main strategy pillars—

demonstrating how we integrate furthersustainability

intoour business and aligning better with regulations

suchas the EU Corporate Sustainability Reporting

Directive(CSRD). Sage’s FY25 Non-Financial Statement

offers a comprehensive overview of our preparedness in

relation to the CSRD.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

• Embedding sustainability: In FY25, our material

impacts, risks and opportunities (IROs) were signed off by

the Sustainability, AI and Data Ethics (SAIDE) Committee

and are now being integrated into our Enterprise Risk

Management (ERM) system, which also holds our Principal

Risks. We have continued to build internal capabilities,

providing training on the evolving sustainability regulations

and continuing to expand our anti-greenwashing awareness

to the Legal team. Additionally, we have continued to embed

sustainability into our policies and into our ongoing due

diligence processes for suppliers, new partners and

mergers and acquisitions.

The Multiplier Effect

• Targets planning: Many of our three-year targets were set

when we created our Sustainability and Society strategy

inFY22 and ended in FY25. For many areas of our strategy,

FY26 is a transition year where we will focus on establishing

a comprehensive baseline for key material areas. During

this period, we will also model scenarios; set interim

milestones; engage stakeholders and continue to report

progress. By dedicating FY26 to these foundational activities,

we will be better positioned to set and achieve meaningful

long-term sustainability targets in subsequent years.

Purpose

To knock down barriers so that everyone can thrive

Protect thePlanet Tech for Good

Enabled by

Human by Design

Get SMBs to net zero

Empowering end-to-end

decarbonisationfor SMBs

Data for Good

Helping SMBsthrive using

anonymised insights from our data

and enabling better decision

making by stakeholders

Diversity, Equity, and Inclusion

(DEI)

Delivering diversity of thought

andaninclusive culture

Get Sage to net zero

EnablingSage to

transitiontoNet Zero

Empowering Entrepreneurs

and Communities

Empowering entrepreneurs and

communities with the skills and

technology they need to thrive

Empowering Colleagues

Giving colleagues the right tools

and environment to thrive

Advocacy Sage FoundationDigital Trust AI & Sage Platform

Sustainability by Design

Core business fundamentals that giveSage a licence to operate as a sustainable business with integrity.

For further detail

visitFY25 Non-

Financial Statement

For further

detailvisit

FY25Impact Book

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Sustainability and Society continued

Key FY25 achievements

Getting Sage to net zero

• We achieved a ‘leadership’ CDP Climate Change rating of A

(2022:B) and joined the CDP Supplier Engagement A-list (2022: C).

• We have progressed well against our interim targets, which were

validated by SBTi in 2023; 89% reduction in absolute Scope 1 and

2 GHG emissions (Target: 50% by 2030); 24% reduction in absolute

Scope 3 GHG emissions (Target: 50% by 2030); 28% reduction in

absolute scope 3 emissions from business travel, employee

commuting and use of sold products.

• In FY25, emissions have reduced by a further 13.4%, keeping us

aligned with our glidepath. This continued progress reinforces

our confidence in the transition plan, while recognising that the

path to net zero is not always linear.

• In FY25, we expanded our support for colleagues to reduce their

Scope 3 emissions and formalised benefits associated with more

sustainable colleague actions. We developed our partnership

withMobilityWays to provide colleagues with access to tools that

help them to reduce their commuting footprint. All colleagues

atSage have access to a Personal Travel Plan, with personalised

recommendations to get into a local office using the most

sustainable locally available option. Continuing our partnership

with Deedster, we have launched more climate challenges to help

colleagues better understand their personal carbon footprint

andguide them on reducing their impact. To date, 724 Sage

colleagues have taken 26,590 climate challenges, resulting in

approximately 137 tonnes saved CO

emissions.

• In FY25, we expanded our use of the Microsoft Carbon Calculator

to Cloud and Enterprise (Office 365 software).

• With Dentsu (our paid media partner) we are implementing a

media carbon calculator, launching in H1 FY26 to support the

carbon optimisation of our media placement strategy.

• Recognising the interconnected nature of environmental impacts

and risks, in FY25, we progressed our LEAP (Locate, Evaluate,

Assess, and Prepare) assessment in alignment with the Taskforce

on Nature-related Financial Disclosures (TNFD) recommendations.

Supporting SMBs in achieving net zero

• Our carbon accounting capabilities are now integrated into the

Sage for Small Business suite, enabling hundreds of thousands

SMBs to measure and manage their emissions.

• In 2025, we launched the Sage Carbon Accounting API, a milestone

that represents the culmination of years of technical development

and collaboration. Designed to accelerate the journey to net zero,

the API gives financial institutions, fintechs, and other platforms

direct access to Sage’s advanced carbon engine via a secure,

public developer portal.

Advocating for enabling policies and standards

• Through Project Perseus, we are supporting the development of

the UK’s physical and technical infrastructure for Scope 2 emissions

data, laying the foundations for a more granular, automated, and

reliable flow of energy data into accounting systems.

• We are active contributors to the Broadway Initiative whose

goalis to help ‘mainstream’ sustainability into the UK economy,

and supporters of Business for Net Zero (B4NZ), helping deliver

the UK’s new Voluntary SME Carbon Reporting Standard.

• In FY25, we were founding partners of Carbon Commons, amajor

new project with Small World Consulting to vastly improve the

quality, accessibility, and transparency of emissions factors

across the market.

• We are also founding members of the Carbon Accounting Alliance,

a new trade body representing the sector’s shared interests and

advancing collaboration, interoperability, and policy influence.

• In FY25, we provided consultation responses to the European

Financial Reporting Advisory Group (EFRAG) VSME and the work

of the OECD Platform on Financing SMEs for Sustainability under

the OECD Committee on SMEs and Entrepreneurship (CSMEE).

• Unlocking sustainable finance for SMEs https://www.sage.com/

en-gb/-/media/files/company/documents/pdf/sustainability-

and-society/2024-reports/unlocking-sustainable-finance-for-

smes-report-cop-29-final.pdf, launched at COP29, urged global

decision-makers to bridge the gap between SMB’s growing

sustainability ambitions and their ability to act, by calling for

simplified reporting standards and access to green finance.

What’s next

By deepening collaboration with our suppliers and improving

the quality and granularity of our data, we aimtoplay an

active role indriving decarbonisation wherewe can make

the most impact. We are preparing regional rollouts of Sage

Earth across France, Spain, andGermany, while expanding

integrations across our product ecosystem, with an ambition

to accelerate decarbonisation at scale and making carbon

tracking astandard part of doing business.

Protect the Planet

Performance against targets

Sage to net zero Achieve net zero by 2040 and reduce absolute Scope 1, 2, and 3 GHG

emissionsby50%by 2030, from a 2019 base year, aligned to SBTi

On track

Support SMBs in

achieving net zero

Help our customers reduce their GHG emissions by 2030 by

providingaccesstocarbon management solutions and expertise

On track

Policy and

advocacy for SMBs

Put SMBs at the forefront of the transition to net zero by making

suretheirvoiceisheard andlobbying for simplified standards

On track

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Key FY25 achievements

Data for Good

Innovation to empower customers and SMBs

• Working with Smart Data Foundry (SDF) and the Centre for

Economics and Business Research (CEBR), we began building

theinfrastructure to securely and ethically share anonymised

data about how small businesses are performing in the real

economy. The Small Business Tracker is a quarterly report

offering real-time insight into the health of UK SMBs. The

lastTracker was published in Q2 2025: https://www.sage.com/

en-gb/company/digital-newsroom/2025/09/01/the-sage-small-

business-tracker-q2-2025/.

• In May 2025, we joined forces with Enterprise Nation and the

Federation of Small Businesses to host an event at the House of

Commons, where we presented the findings gathered by the Small

Business Tracker to industry leaders and policymakers. This data

has helped to convince policymakers on the need to take action to

support the millions of small businesses and entrepreneurs in the

UK, with the Government currently exploring technological solutions

to overcome the barriers that stop business from flowing.

Empowering Entrepreneurs

Local community investment and support

• Sage Foundation’s strategy evolved with two key areas in focus:

Multiply the impact of underserved small and medium businesses

to advance a more sustainable world and empower our communities

with the skills and technology they need to thrive.

• FY25 has been a baseline year to evaluate, learn and improve our

own impact collection as we transition to measuring our success,

as well as embedding it into our new governance and impact

measurement frameworks.

• We launched our biggest single social impact programme—Sage

Impact Entrepreneurship—a three year partnership with Village

Capital, which will empower 165 purpose-driven entrepreneurs

toscale and grow.In its first year, 56 businesses completed the

program withaccess tofunding, mentorship, training and product.

• Sage Foundation saw 80,036 hours volunteered and $850,466

raised to help our communities thrive in FY25.

Building digital trust

Cyber security and data privacy

• We continue to expand and improve our Trust and Security

Hub.The Hub offers relevant cyber security, privacy, and AI

anddataethics advice for UK, US, French, German, Portuguese

andSpanish markets to help SMBs “go digital safely”.

• We have integrated security throughout our product lifecycle,

with regular training for developers, secure software design,

andprompt vulnerability remediation. Our Security Champions

actas force-multipliers within software development and

engineering teams. They ensure that vulnerabilities are

identified and remediated promptly and play a crucial role

inrecognising and addressing security threats early in the

development process.

Tech for Good

Performance against targets

AI and data ethics

• At Sage Future Atlanta we set out our vision for the Agentic

AIerathrough the AI trust label. This initiative is designed

tobringgreater clarity and accountability to how AI is built

andused in business software.

• We have included data accuracy and trustworthiness across key

policies including our AI and Data Ethics Policy and Information

Security Policy, reflecting our commitment to incorporating

datamanagement into our risk management process.

• All colleagues are required to complete mandatory training on

dataprotection, focusing on relevant data privacy laws and

regulations. By monitoring privacy risks, we can process

personaldata to create new and improved products and

servicesand build our digital network.

What’s next

We will continue to evolve our AI and Data Ethics Policy and

monitor compliance with our principles. Our ethics training

will be launched in additional languages and uptake will be

reported on. We will also continue to advocate for fair and

simplified sustainability reporting standards ensuring

SMBsare not left behind. Through Sage Foundation, we

willscale our skills programmes further, to help equip more

people with the skills and technology they need to thrive.

Data for Good Support SMBs and advance the UN Sustainable Development Goals (SDGs)

byusingourdatatocreatevisualisations (reports, trends, analytics)

thatcaninformbetter decision making by 2025

Completed

Empowering

entrepreneurs

Raise $5m for non-profits around the world by 2030

On track

Build digital trust Expand our Trust and Security Hub tosupport SMBs in going digital safelyby2025

Completed

Embed AI and data ethics intothe fabric of Sage by 2025

Completed

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Sustainability and Society continued

Key FY25 achievements

Diversity, Equity and Inclusion

• Currently 40% of leadership teams are reaching our target to

achieve representation of no more than 60% of men, women, or

non-binary people in any leadership team (ELT to ELT-4) by the

end of FY26.

• In line with the Parker Review—a framework for the ethnic

diversity of UK boards—we have set ourselves a target of 20%

ofour Executive Leadership Team (ELT) and ELT-1 (their direct

reports) tobe from an historically underrepresented race or

ethnic group. Wefinished FY25 at 11%.

• During FY25, we welcomed 474 colleagues in India to the All

AboutUs programme, increasing this programme’s reach to

94%of our colleague population.

• We conducted baseline maturity assessments with Lexxic

toassess neuro-inclusion and Workplace Pride, and to better

understand support available at Sage for LGBTQ+ colleagues.

• We developed action plans to close gaps identified in these

assessments for full implementation in FY26.

Product Accessibility

• In FY25, 13 additional products reached the first milestone in our

accessibility journey toward compliance. This brings Sage to a

total of 17 products successfully passing automated accessibility

tests using the Axe tool, aligned with the WCAG 2.1 AA standard.

• Over the past four years, Sage has also conducted 40+ manual

audits to ensure full coverage of the WCAG requirements. We

havereduced the number of accessibility issues identified

during human audits — by roughly one-third to date.

Empowering Colleagues

• 1,767—sustainability learnings delivered to colleagues

inFY25,supporting increasing internal capability.

• We introduced new structured learning paths and interactive

bootcamps via The Cloud Academy, combining expert-led

sessions with self-paced learning to develop cloud skills.

AIconfidence and skills were strengthened through new

education and learning programmes across the business.

• We continued to invest in colleagues at the early stages of

theircareers—such as interns, apprentices, and graduates—

withafocus on building confidence, capability, and supporting

diverse talent development, and we are launching a new

Commercial Graduate Programme in FY26 to strengthen

thispipeline.

• 1,876 leaders went through the High-Performance Culture—

HumanLeader Programme, equipped to role model and

cascadekey behaviours, helping embed cultural change

andbuildcapability across teams.

Wellbeing

• We continue to embed tools and resources that safeguard and

strengthen mental health and wellbeing across our policies,

processes, and day-to-day business practices. In 2025, this

workhas become more deliberate and strategic, with focused

enhancements woven into our DEI programmes and planning—

firmly establishing mental health and wellbeing as a vital

component of equity by design.

Human by Design

Performance against targets

DEI Achieve representation of no more than 60%of men, women, or non-binary people

inany leadership team (ELT to ELT-4) by the end of FY26

Behind track

Achieve 20% ethnically diverse representation by the end

ofFY27inseniorleadershipteams (ELT and ELT-1)

Behind track

Empowering

Colleagues

Colleagues to complete 5,000 Future Fit learnings by 2025

Completed

Achieve a 20% YOY increase in Pathways hires up to 2025,

with500+peoplereceivingwork readiness training each FY

Completed

Double the number of Healthy Mind coaches by 2025

Completed

Product

accessibility

Cloud products to meet Web Content Accessibility

Guidelines (WCAG) criteriaby2025

Behind track

What’s next?

We are committed to building a high-performing, future-

ready workforce by expanding leadership capability,

strengthening critical skills, and embedding continuous

learning. We aim to enhance equity in our policies, processes

and practices by leveraging diversity data, colleague

insights, and increasing focus on providing mechanisms for

continuous feedback. We’re focused on accelerating AI and

data readiness, enabling commercial excellence, and growing

a strong early careers pipeline. We will continue to reduce

digital barriers by embedding accessibility deeper into our

product development culture.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

TCFD

The Task Force on Climate-

related Financial Disclosures

Compliance Statement

FCA Listing Rules

In this report, we set out our climate-related financial

disclosures consistent with all the Task Force on Climate-

related Disclosures (TCFD) recommendations and recommended

disclosures pursuant to Listing Rule 6.6.6 (8) R. This includes

all four TCFD pillars and the 11 recommended disclosures in

the “Implementing the Recommendations of the Task Force

onClimate-related Financial Disclosures’’ published in

October 2021 by the TCFD. We have used TCFD guidance

material including the TCFD technical supplement on the

use of scenario analysis, TCFD Guidance on Metrics, Targets,

and Transition Plans, the TCFD Guidance for All Sectors,

Supplemental Guidance for Non-Financial Groups, TCFD

Final Report and the Annex, TCFD Guidance on Risk Management

Integration and Disclosure, and the Guidance on Scenario

Analysis for Non-Financial Companies. We report against

theTCFDFramework, in line with FCA Listing Rules.

In FY25, we continued our progress in understanding and

reporting against all four pillars of TCFD. We further developed

our understanding of how Sage’s climate risks and opportunities

could financially and operationally impact the business and

identified additional strategic and operational touchpoints

to better take advantage of climate opportunities and manage

climate risks. We outline detailed information on our FY25

progress against TCFD in the table below, together with a

summary of how we are consistent with TCFD recommendations.

Further detail on our transition plan and Sustainability

and Society strategy can be found in ourNon-

Financial Statement—pages 22 to 30 and 6 to 7

Companies Act 2006

Our disclosure also meets the Companies (Strategic Report)

(Climate-related Financial Disclosure) Regulations 2022

amended sections 414C, 414CA, and 414CB of the Companies

Act 2006.

UK Climate-related Financial

Disclosures (CFD)

We comply with the mandatory climate-related financial

disclosure requirements under UK CFD. Our disclosures

areconsistent with the TCFDrecommendations. Under

ourStrategy pillar, we outline the rationale for the chosen

scenarios used to assess the resilience of our business

toclimate, and our timeline for refreshing the analysis

undertaken, so that we continue to monitor how a changing

climate may impact Sage over time.

TCFD Compliance Status

TCFD

recommendation Summary and FY26 priorities

Governance

a) Describe the

board’s oversight

of climate-

related risks and

opportunities.

Governance—

page69 to 73

Fully consistent with TCFD recommendations

The Board retains ultimate accountability for Sage’s approach to climate-related risks and opportunities, as well as the broader ESG

agenda. It is responsible for setting the Group’s risk appetite and ensuring the effectiveness of risk management and internal control

system. Oversight of ESG and climate-related risks is delegated to the Audit and Risk Committee (ARC), which receives regular updates

from management and provides challenge and direction on key issues.

In FY25, the Board and ARC received four updates on sustainability matters through formal Board papers and Committee briefings.

These included progress against Sage’s Sustainability and Society strategy, developments in the Protect the Planet action plan,

andinsights into emerging sustainability trends and their strategic implications for the business. The Board was also involved in

setting climate related performance objectives. Maggie Chan Jones is Sage’s designated Non-executive Director for ESG, supporting

Board oversight and providing specific challenge and guidance onthe ESG agenda. The CEO provides regular updates to the Board,

informed by either attending the quarterly Sustainability, AI, and Data Ethics Committee as a non-member, or debriefs following the

Committee. The Committee membership comprises a subset of Executive Leadership Team (ELT)members and our Board ESG

representative is also a regular non-member attendee.

FY26 priorities

We will continue to monitor the updates and training programmes for the Board and ELT as part of our Sustainability and Society

strategy, including briefings, progress updates, and formal training sessions, ensuring they remain well informed on climate-related

developments and risks.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

TCFD continued

TCFD

recommendation Summary and FY26 priorities

Governance

b) Describe

management’s

role in assessing

and managing

climate-related

risks and

opportunities.

Risk governance—

page 58

Board activities—

page 86

Directors’

Remuneration

report—pages 117

to151

Fully consistent with TCFD recommendations

The CEO and ELT are accountable for Sage’s Climate strategy and our approach to the TCFD recommendations. The Executive Vice

President (EVP) of Sustainability and Sage Foundation have responsibility and oversight our Protect the Planet strategy. Climate risks and

opportunities have assigned owners, whoreceive strategic oversight from the EVP Sustainability and Foundation on a quarterly basis,

during a sustainability risk review meetingcoordinated by the sustainability function.

If further support on mitigation is needed, climate risks and opportunities are raised to the Sustainability, AI, and Data Ethics Committee.

Chaired by the Chief Brand and Corporate Affairs Officer, the Committee meets quarterly, and reviews climate-related matters, monitors

progress against key targets, and ensures alignment with Sage’s strategic objectives. Key outcomes from these meetings are shared with

theCEO and ELT and inform updates to the Board. The Committee uses Sage’s Enterprise Risk Management Framework and the results

ofSage’s climate scenario analysis and double materiality assessments to assess climate-related risks. These insights inform strategic

planning, investment decisions, and risk mitigation actions. We track progress through a dedicated KPI dashboard and climate-related

performance is embedded in executive remuneration. In FY25, a proportion of the Executive Directors’ and ELT’s Performance Share Plan

awards were again linked to strategic non-financial measures, including climate-related targets (see our Remuneration Policy on pages 127

to 131).

FY26 priorities

We will continue to enhance how we are integrating climate-related matters into strategic planning, performance management, reporting,

and due diligence processes. We will also continue to monitor emerging climate-adjacent topics—such as nature and broader sustainability

issues—to ensure consistent and effective oversight across all areas of impact.

TCFD

recommendation Summary and FY26 priorities

Strategy

a) Describe

the climate-

risks and

opportunities

the organisation

has identified

over the short,

medium, and

long term.

See climate risks

and opportunities

table on pages 42

to 44

Further

information can

befound in our

Non-financial

statement

Fully consistent with TCFD recommendations

Reflecting on our progress outlined in our previous disclosures, we continue to improve our understanding, through the use of climate

scenario analyses of climate-related risks and opportunities across short-, medium-, and long-term time horizons, and aim to develop

aholistic understanding of how climate change may impact aspects of Sage’s business strategy, operations, and finances.

Through a qualitative climate scenario analysis, we identified climate-related risks and opportunities; our methodology is outlined

inour FY22 Annual Report. Relevant internal stakeholders assessed risks and opportunities using Sage’s Enterprise Risk Management

(ERM) Framework, taking into consideration likelihood and impact, as well as setting a defined risk appetite (see page 56 to 66 for

further details) and the potential impact to Sage (see Strategy pillar disclosure ‘b’ and ‘c’).

In FY25, our climate-related risks and opportunities remained consistent with previous years. We built on our previous assessment by

undertaking a quantitative climate scenario analysis, to examine the potential financial implications of both physical and transition

climate risks. To support this analysis, we used the “Risilience” climate modelling platform to simulate a range of climate scenarios

andinform our strategic planning. As part of the assessment, we identified physical risks and six key categories of transition risks

related to climate change that may impact our operations, value chain, and stakeholder relationships. These categories are linked

toourexisting climate risk profile, and are outlined below.

Physical risks

Exposure and related vulnerability of Sage’s physical assets to selected climate hazards—coastal flooding, drought/water stress,

flash flood, freezing, heatwave, riverine flood, temperate, and tropical windstorms.

Transition risks

• Policy: Anticipated increases in the cost of emitting greenhouse gases (GHGs) due to evolving climate-related legislation,

including carbon pricing mechanisms and mandatory disclosure requirements.

• Litigation: Potential for legal action against companies perceived to be underperforming on climate commitments or failing

to meet regulatory obligations.

• Customer sentiment: A shift in customer preferences towards more sustainable products and services could reduce demand

for offerings perceived as carbon-intensive, particularly in markets with high climate awareness.

• Investor/market sentiment: Growing scrutiny from investors and financial institutions may lead to reduced access to capital

or higher financing costs for businesses not aligned with net zero pathways or if a company’s transition strategy is perceived as

overly aggressive, diverging from investor expectations.

• Reputation: Increased public and stakeholder pressure on organisations seen as lagging in their climate transition could

impact brand equity, employee engagement, and customer loyalty.

• Technology: The shift towards low-carbon technologies may result in increased operational costs, accelerated depreciation

ofexisting assets, and delivery risks associated with new systems and platforms.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

TCFD

recommendation Summary and FY26 priorities

Strategy

b) Describe

theimpact of

climate-related

risks and

opportunities

onthe

organisation’s

businesses,

strategy, and

financial

planning.

See climate risks

and opportunities

table on pages 42

to 44

Fully consistent with TCFD recommendations

Reviewing the output of our FY25 TCFD-aligned climate change scenario analysis against our strategy, business plan, and operations, we

have not identified any material risks on the Group’s financial results, going concern, viability, businesses, or current strategy in the short,

medium or long term. We evaluated these risks against our internal materiality threshold, defined as a substantive financial or strategic

impact (see page 38 in strategy section ‘c’). We assessed the potential impact on Sage’s cumulative discounted cash flows over three years,

assuming no mitigating actions are in place. The table below shows the risk categories and linked risks from our FY22 qualitative

assessment that were assessed against three warming scenarios: no policy (>4°C), stated policy (2.5°C) and Paris ambition (1.5°C).

Risk categories Linked risks from FY22 qualitative assessment

Policy Increasing cost of energy and carbon

Consumer sentiment Changing customer behaviour and needs

Reputation Reputational damage

Investor sentiment Reputational damage

Liability Reputational damage

Physical Damage to facilities

Technology New: Not identified as a risk in FY22 assessment

Risks arising from climate change and its associated risks are constantly evolving, so we will monitor and evaluate climate-related

impacts and review them in line with our evolving business strategy (see note 1 of the Group financial statements on page 182). In the

table on pages 42 to 44, we provide an overview of our climate risks and opportunities. If we identify material climate-related risks, we

will manage and prioritise these risks based on their financial materiality, as per our Risk Management Framework.

Climate change is considered as part of our strategy and operations. We are well positioned to support global climate awareness

andaction through our products such as Sage Earth (Sage’s carbon accounting offering). In FY25, we continued to deliver against our

NetZero Transition Plan and Climate strategy, obtaining an A-List award from CDP in recognition of our environmental and climate

leadership. This year, initiatives under our Net Zero Transition Plan included completing lifecycle assessments of selected products,

togain more granular data on how our products function and what activities are associated with their operations. This allowed us to

mapthe detailed sources of our emissions from products, enabling more targeted decarbonisation actions. Further details are

outlinedin our Non-Financial Statement which can be found at www.sage.com/en-gb/company/ sustainability-and-society/.

FY26 priorities

We will continue to monitor and assess our climate-related financial risks, working to continuously improve our quantitative modelling.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

TCFD continued

TCFD

recommendation Summary and FY26 priorities

Strategy

c) Describe

theresilience

ofthe

organisation’s

strategy,

takinginto

consideration

different

climate-related

scenarios,

including a

2°Cor lower

scenario.

Fully consistent with TCFD recommendations

In FY25, we refreshed our climate scenario analysis to further evaluate Sage’s strategic resilience to physical and transition risks under

high and low carbon scenarios. We used five climate scenarios and emission pathways: Paris Ambition (1.5°C), Paris Agreement (2°C),

Stated Policy (2.5°C), Current Policy (3°C), and No Policy (>4°C) with temperatures consistent with global warming above pre-industrial

levels by 2100. We selected the five pathways to reflect the IPCC 6th Assessment Report (AR6), with each representing a broad narrative

offuture socio-economic development.

The assessment focused primarily on the short-term horizon (1–5 years), while also considering implications for the medium term (5–15

years) and long term (15-30 years). It was conducted on a ‘no additional mitigation’ basis, assuming no additional mitigations are in place.

Our main assumptions for the FY25 climate scenario analysis were: each emission pathway has a different probability of happening; No

Policy (>4°C) and Paris Ambition (1.5°C) are opposite ends of the stress test. In reality, the future will be a mix of all scenarios. The basis

was our current asset base without factoring in any potential changes over the analysed time horizons. Similarly, potential shifts in our

cloud infrastructure providers or technology stack were not considered, as the software industry is highly dynamic and volatile, with

projections of trends over the analysed time horizons not deemed robust enough. Where company-specific emissions or asset data

wasnot available, industry-average values by sector and region were applied based on external datasets and default model parameters.

In line with previous disclosures, the additional analysis undertaken during FY25 did not identify that climate is a financially material

risk to Sage in the short, medium or long term. As impacts arising from climate change are constantly evolving, we maintain a climate

risk and opportunity register, to ensure a proactive risk management approach with early response.

The results of the FY25 assessment were raised to the Global Risk Committee, with members including General Counsel and Company

Secretary, the Chief Executive Officer, and the Chief Financial Officer, to increase the level of understanding around the types and level

of climate risk that Sage is exposed to.

We have a range of measures and activities in place to manage identified climate change impacts, as detailed between pages 21 and 32

of our Non-Financial Statement.

FY26 priorities

We will focus on gaining a better understanding of how climate interacts with various touchpoints across the business.

TCFD

recommendation Summary and FY26 priorities

Risk Management

a) Describe the

organisation’s

processes for

identifying

andassessing

climate-related

risks.

Principal

Risksand

uncertainties—

page 61 to 66

Fully consistent with TCFD recommendations

We fully align with TCFD recommendations and have embedded climate risk identification, assessment, and management within our

established ERM processes. As above, the results of our FY25 climate scenario analysis indicate that climate-related risks are not

currently financially material to Sage.

We manage climate change as a sub-risk under our ESG Principal Risk, ensuring we reach our desired risk appetite. An operational

climate risk register feeds into our climate sub-risk and helps to monitor the individual climate risks and opportunities that are relevant

toour business.

To address existing and emerging regulatory requirements and best practice, we have a formalised process to identify climate-related

risks and opportunities, which includes:

• Yearly horizon scanning informed by regulatory guidance, climate science, and expert judgement.

• Using climate scenario analysis and double materiality assessment, to prioritise risks and opportunities.

• An operational climate risk register reviewed quarterly by the EVP Sustainability and Foundation, to assess if any risks need to be

escalated to the Sustainability, AI and Data Ethics committee.

Our prioritisation process integrates the financial materiality component of the CSRD-related double materiality assessment, enabling us

to focus detailed reporting and management on the highest priority risks. We monitor lower priority risks and revisit them periodically.

FY26 priorities

We will continue to refine identification and prioritisation processes, leveraging scenario analysis outcomes, and enhancing our climate

risk register accordingly.

TCFD

recommendation Summary and FY26 priorities

Risk Management

b) Describe the

organisation’s

processes for

managing

climate-related

risks.

Principal

Risksand

uncertainties—

page 61 to 66

Fully consistent with TCFD recommendations

Our ERM Framework provides a consistent methodology to manage all risks, including climate-related risks, supporting risk-informed

decision making across the organisation. The Climate team in collaboration with key internal stakeholders, uses the ERM framework to

decide whether to mitigate, transfer, accept, or control exposure for each risk. Risk owners across regions and functions are responsible

for the day-to-day management of climate risks and implementing controls. For example, physical risks are managed by our property

and crisis management teams with contingency and business continuity plans. Reputational damage is overseen by our Corporate

Affairs team.

To strengthen risk management capabilities, we have delivered bespoke training to risk owners and key stakeholders on ESG risk

management and regulatory requirements. This upskilling supports consistent and informed management of climate risks across Sage.

FY26 priorities

We plan to expand our training programme and deepen engagement with internal stakeholders to enhance our risk management practices.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

TCFD

recommendation Summary and FY26 priorities

Risk Management

c) Describe how

processes for

identifying,

assessing, and

managing

climate-related

risks are

integrated

intothe

organisation’s

overall risk

management.

Principal

Risksand

uncertainties—

page 61 to 66

Fully consistent with TCFD recommendations

Climate-related risks are fully integrated within Sage’s ERM Framework, which manages strategic, operational, commercial, financial,

compliance, change, and emerging risks using a consistent methodology.

• ESG is a Principal Risk, with climate change a key sub-risk, ensuring that climate considerations are embedded at the highest

levels of risk governance.

• Functional teams incorporate climate risks relevant to their domain, ensuring risk ownership is clear and embedded operationally.

The sustainability function and the EVP Sustainability and Foundation provide strategic oversight quarterly.

• Our Sustainability team supports the integration by coordinating cross-functional risk assessments and aligning them with our

strategic objectives.

FY26 priorities

We will focus on embedding our FY25 climate scenario analysis insights into broader business risk discussions and conduct an education

campaign to help colleagues understand our impact on the planetary boundaries, including climate change, biodiversity, waste, and water,

and the implications for their daily roles.

TCFD

recommendation Summary and FY26 priorities

Metrics and Targets

a) Disclose the

metrics used by

the organisation

to assess

climate-related

risks and

opportunities

inline with its

strategy and risk

management

process.

Further

information can

befound in our

Non-financial

statement

Fully consistent with TCFD recommendations

Since 2018, we have measured and reported on energy and carbon emissions, providing us with a robust baseline from which to

planourjourney to net zero. We monitor various metrics related to climate risks, such as the percentage of renewable energy used.

Thesemetrics and any related targets are subject to ongoing review and updates, with monitoring and target-setting aligned to

themateriality of the risks.

Group net zero targets

Our carbon emissions calculations are also subject to independent limited assurance. In 2023, the SBTi validated our near-term 2030

commitment. In FY24, the SBTi validated our commitment to become net zero by 2040. Sage uses the SBTi definition of net zero for its

targets (page 62, https://sciencebasedtargets.org/glossary).

We have continued to reduce emissions against our target commitment. Since FY19, our market-based emissions have fallen by 27.8%,

against an SBTi glidepath of 27.2%, reducing from 231,957 tCO

e to 167,444 tCO

e in FY25. Our Non-Financial Statement www.sage.com/

en-gb/company/sustainability-and-society/ outlines the specific actions that will be taken to achieve our near-term 2030 target. We

trackour progress by targets and monitor through our climate risk register (our climate risks and opportunities can be found in the table

onpages 42 to 44).

Related executive remuneration targets

In FY22, we introduced a set of three-year performance measures to include relevant ESG metrics. Every year since FY22, we have

setthree-year performance measure for reducing emissions, in alignment with our SBTi-approved Net Zero Transition Plan. In

FY23theweighting of ESG measures increased from 15% to 20%. Our FY23 performance measures vested this year achieving

ourstretchtarget.

Read more in our Directors’ Remuneration Report on page 137.

Our most recent global emissions footprint is on page 36 of our Non-Financial Statement report.

FY26 priorities

We will continue to monitor and review our climate targets and metrics, providing quantitative disclosures where appropriate.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

TCFD continued

TCFD

recommendation Summary and FY26 priorities

Metrics and Targets

b) Disclose

Scope1,

Scope2,and,

ifappropriate,

Scope 3

greenhouse gas

(GHG) emissions,

and the related

risks.

Further

information can

befound in our

Non-financial

statement

Fully consistent with TCFD recommendations

Sage calculates and discloses emissions from Scope 1, Scope 2 and Scope 3, in compliance with Streamlined Energy and Carbon

Reporting (SECR) regulations.

Scope 1 and 2 emissions: UK and global

Current reporting year

Oct 2024—Sept 2025

Previous reporting year

Oct 2023—Sept 2024

Previous reporting year

Oct 2022—Sept 2023

Total GHG emissions data

UK and

offshore

area

Global

(excluding

UK and

offshore

area)

UK and

offshore

area

Global

(excluding

UK and

offshore

area)

UK and

offshore

area

Global

(excluding

UK and

offshore

area)

Emissions from activities which the Company

ownsorcontrols, including combustion of fuel

andoperation of facilities (Scope 1)/tCO

e 435 714 834 554 196 1,030

Emissions from the purchase of electricity, heat,

steam, or cooling by the Company for its own use

Scope 2 (Indirect) location-based emissions (tCO

e) 679 2,399 878 2,357 738 2,518

Scope 2 (Indirect) market-based emissions (tCO

e) 39 268 14 1,864 13.3 1,395

Total gross Scope 1 and location-based

Scope2emissions (tCO

e) 1,114 3,113 1,713 2,911 933 3,548

Energy consumption* used to

calculateaboveemissions (kWh) 4,530,170 10,151,427 4,921,509 9,539,260 4,217,496 12,202,282

Carbon intensity ratio: location-based CO

e per total

GBP£1,000,000 revenue (Scope 1 and 2)** (tCO

e/revenue) 2.1 1.6 3.6 1.6 2.2 2.0

Scope 3 emissions (indirect) WTT, T&D and WTT (T&D) 289 818 315 702 268 891

1. The table sets out Sage’s mandatory reporting on GHG emissions and global energy use pursuant to the Large and Medium-sized

Companies and Groups (Accounts and Reports) Regulations 2008, as amended by the Companies Act 2006 (Strategic Report and

Directors’ Report) Regulations 2013 and the SECR under the Companies (Directors’ Report) and Limited Liability Partnerships

(Energy and Carbon Report) Regulations 2018.

* Energy consumption includes all energy use related to Scope 1 and 2.

** Global revenue in FY25 is £2,513m for Sage during the reporting period. It was £2,332m for the previous year’s reporting period.

Sage also screens and discloses emissions across all relevant Scope 3 categories as covered within our SBTi target.

In FY25, limited assurance of our GHG report has been provided by Bureau Veritas; a copy of the statement can be found in the

Appendix of our Non-Financial Statement. Further detail on our Scope 1, 2, and3GHG emissions and protocol aligned methodology,

andemissions can be found in our Non-Financial Statement on pages 90 to 104. The Non-Financial Statement canbe found here:

www.sage.com/en-gb/company/sustainability-and-society.

Energy-efficiency actions

Business travel: We continue to manage the risks associated with increased business travel while monitoring external factors, including

rising carbon intensity. In FY25, we enhanced our carbon emissions travel dashboard. Building on the addition of a shadow carbon price

(£200 per tonne) in FY24, we developed a Travel Insights Dashboard with up-to-date travel data, providing colleagues with key insights into

their own travel data. Contextualising travel behaviours alongside peers helps us to work directly with those colleagues to track emissions,

to educate, and support the decarbonisation of business travel.

Colleague engagement: We recognise the critical role that our colleagues play in reducing our carbon emissions. In FY25, we continued

to roll out the launch of the programme with Deedster to combine education and action. Colleagues can complete carbon-saving quizzes

and challenges on the Deedster app. To date, 724 Sage colleagues have taken 26,590 climate challenges, resulting in approximately

137tonnes of CO₂ emissions saved. Additionally, we have continued to expand the reach of our active travel scheme to five additional

countries. In partnership with Liftshare, we are providing colleagues with tools to reduce emissions derived from colleague commuting

and incentivising more sustainable modes of travel. At present, 276 colleagues are actively Liftsharing, resulting in approximately 32,000

road miles and 7.1 tonnes CO₂ emissions saved.

Property related: We continued to manage our sites effectively and efficiently in FY25 via our Sustainable Property strategy, which seeks

to improve the environmental characteristics and efficiency of our property estate. We saw an increase in the use of certified renewable

energy sources, reaching 86% of our total electricity consumption for FY25, compared with 54% in FY24. In FY25, we entered into a

performance-based energy efficiency partnership with a global commercial real estate services firm, at our global headquarters in Cobalt,

Newcastle. This initiative, involving the implementation of sub-metering and energy management software, achieved a 6.6% reduction in

electricity consumption, despite an increase in the occupancy rate due to changes in our Working from Home policy.

Reuse, Resell, Recycle: The IT department continued its “Reuse, Resell, Recycle” policy. This involves collecting old equipment and

ensuring it is upcycled and recycled. Sage sells the equipment to an external party and donates the proceeds to charity.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

TCFD

recommendation Summary and FY26 priorities

Metrics and Targets

b) Disclose

Scope1,

Scope2,and,

ifappropriate,

Scope 3

greenhouse gas

(GHG) emissions,

and the related

risks. Continued.

Further

information can

befound in our

Non-financial

statement

Methodology

Our methodology underlying our disclosed emissions remains consistent with the previous year and is based on the “Environmental

Reporting Guidelines: including streamlined energy and carbon reporting guidance” (March 2019) issued by the Department for

Business, Energy & Industrial Strategy (BEIS) , the predecessor to DESNZ. This methodology is consistent with the World Resources

Institute’s Greenhouse Gas Protocol (GHGP) Corporate Accounting and Reporting Standard. We have also used the UK government

emissions factors for company reporting (published by DESNZ in 2023), combined with the most recent International Energy Agency

(IEA) international conversion factors (2022) for non-UK electricity within our reporting methodology. We have also used EcoAct’s

emission factors tool for Well toTank(WTT) and Transport & Distribution (T&D) for non-UK sites as DESNZ/DBT no longer publishes

them. These emission factors are basedon the specific fuel mix of each country’s electricity generation. For Scope 3 emissions

sources,we have used a combination ofthe Comprehensive Environmental Data Archive (CEDA version 6) and UK government

GHGemission factors. As our data collection improves, we aim to collect more supplier specific data.

Our purchased goods and services calculation has used supplier-specific data from the CDP Supply Chain questionnaire where relevant.

Working with CDP and other partners, we aim to increase the proportion further in subsequent years as more suppliers make use of this

service. In some cases, we have extrapolated total emissions by using available information from part of a reporting period and extending

it to apply to the full reporting year. For example, this has occurred where supplier invoices for the full reporting year were unavailable

prior to the publication of this year’s Annual Report and Accounts. Extrapolations have taken place based on a hierarchy of data

availability in line with the GHGP guidance for carbon accounting. For further details, our methodology document can be found at

www.sage.com/investors/.

Reporting period

Our mandatory GHG reporting period is 1 October 2024 to 30 September 2025 and is aligned with our financial reporting year.

Organisational boundary and responsibility

We report our emissions data using an operational control approach to define our organisational boundary which meets the definitional

requirements of the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and the UK Streamlined Energy &

Carbon Reporting (SECR) regulations 2019 in respect of the energy consumption and emissions for which we are responsible. Under this

approach, we have accounted for 100% of GHG emissions from operations over which Sage has control.

Carbon intensity

To express our annual emissions in relation to a quantifiable factor associated with our operational activities, we have used “annual

revenue” in our intensity ratio calculation as this is the most relevant indication of our growth and provides for a good comparative

measure over time.

TCFD

recommendation Summary and FY26 priorities

Metrics and Targets

c) Describe the

targets used by

the organisation

to manage

climate-related

risks and

opportunities

and performance

against targets

See climate risks

and opportunities

table on pages 42

to 44

See Protect the

Planet targets on

page 32

Further

information can

befound in our

Non-financial

statement

Fully consistent with TCFD recommendations

Targets related to net zero

We have committed to net zero by 2040, and to reduce absolute Scope 1, 2, and 3 emissions by 50% by 2030 against a 2019 baseline.

Wearealso committed to the SBTi, the UN climate change Race to Zero, and the UN Global Compact Business Ambition for 1.5ºC.

We continue to work towards our SBTi-validated carbon targets. Since FY19 our market-based emissions have fallen by 27.8%, against

anSBTi glidepath of 27.2%, reducing from 231,957 tCO

e to 167,444 tCO

e in FY25. See Non-Financial Statement www.sage.com/en-gb/

company/sustainability-and-society/ for more detail on our 2030 target, 2040 targets, and Net Zero Transition Plan.

Targets and metrics related to our climate risks and opportunities

Our Protect the Planet strategy outlines our core climate-related targets, which includes our Net Zero Transition Plan, our target to

support of SMBs in reducing their emissions, and our advocacy for SMBs to enable them to align to sustainability standards. We have

included further detail on thesein our FY25 Non-Financial Statement where our Protect the Planet strategy is discussed in relation

toour double materiality assessment, found here: www.sage.com/en-gb/company/sustainability-and-society/. We have established

metrics tomonitor the progress of our targets and manage or climate related risks. For example, the opportunities for renewable energy

procurement have been via the percentage of electricity sourced from renewable energy contracts. When these contracts approach

renewal, we seek to procure renewable energy.

FY26 priorities

We will continue to monitor the climate targets we have in place, providing quantitative disclosures against targets where possible.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

TCFD continued

Key

Risk assessment period

Short term 1-5 years Medium term 5-15 years Long term 15-30 years

Sage has selected time horizons that harmonise with those of national and

international climate policy and goals, including the 2015 international

ParisAgreement and our three-year strategic plan of the business.

Maturity

High maturity

Quantitative climate scenario analysis performed

Medium maturity

Good understanding, further work desireable

Low maturity

Further work is required to fully impact, mitigate, and adapt

Our key climate-related

risks and opportunities

Quantification

risk categories Risk Maturity

Time

horizon

Climate

scenario

analysis

Transition risks

Consumer

sentiment

Changing

Customer

Behaviour

andNeeds

Sub-type

Market

Sage is closely linked to economic activity and the success of SMB

markets. However, SMB markets are more exposed and lessresilient to the

impacts of climate change. An increase in global disruption due to

climate change could reduce economic activity and lead to a lower

demand for Sage services.

FY25 update

We have strengthened our role as a trusted partner by equipping sales

teams with clear, insight-driven sustainability resources. Wedeveloped

a one-stop suite of sales enablement assets helping colleagues confidently

engage customers. Tailored messaging andtargeted training ensure we

support SMBs effectively amid climate challenges, reinforcing our

commitment to trusted guidance on sustainability.

Long term

(2023 & 2025)

Policy Increasing Cost

of Energy and

Carbon

Sub-type

Regulation and

Technology

Offices, hosting services, and data centres are energy-intensive

operations. If the cost of carbon increases, this could make the

Group’soperating costs more expensive. Sage may need to mitigate

costsand risk through increased carbon efficiency, and/or consider

where these costs are absorbed.

FY25 update

We are minimally impacted by high energy costs and prioritise

absoluteemissions reductions aligned with the SBTi Corporate

Net-Zero Standard,while recognising that high-quality carbon

removalsmaysupport future efforts to address residual emissions.

We are closely tracking updates to the SBTi framework, as

wellasevolving carbon market regulations and potential

futurecarbonprices.These insights will inform our approach

toresidual emissionsand long-term Carbon Removals strategy

https://www.sage.com/en-gb/company/sustainability-and-

society/#reports.

Long term

(2023, 2024,

2025)

Reputation

Investor

sentiment

Liability

Reputational

Damage

Sub-type

Reputation

Stakeholders’ expectations regarding ambitious carbon targets and

climate advocacy are increasing. They are applying greater scrutiny to

how Sage aligns all business activities to its Net Zero Transition Plan.

Sage may suffer reputational damage if targets are missed orifit is

notsufficiently active in this space.

FY25 update

We worked closely with our External Communications team to integrate

sustainability into our reputation monitoring programme tobetter

assess how our Sustainability and Society strategy influences brand

sentiment and stakeholder trust https://www.sage.com/en-gb/company/

sustainability-and-society/#reports.

We continue to monitor stakeholder sentiment on sustainability and

climate-related matters, extending alongside global partners including

WBCSD and Bankers for Net Zero.

Short to

Medium

term

(2025)

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Quantification

risk categories Risk Maturity

Time

horizon

Climate

scenario

analysis

Physical risks

Physical Workforce

Productivity

Sub-type

Chronic & Acute

An increasing number of extreme weather events may leave offices

andhomes unfit for work. This could reduce workforce productivity

bymaking it difficult for employees to work during certain times.

FY25 update

We continue to invest in flexible working structures that support

collaboration and adaptability, balancing local colleague needs

withbusiness priorities to ensure a safe working environment.

Short term

(2022 & 2024)

Physical Damage to

Facilities

Sub-type

Chronic and Acute

Extreme weather events have the potential to disrupt or damage Sage

sites/facilities. Flooding, heatwaves, droughts, and rising sea levels

could all impact our facilities. Insufficiently prepared facilities could be

unable to deal with more frequent and intense occurrences of such events.

FY25 update

In FY24, our Climate team conducted a climate scenario analysis across

all global office locations. This assessment identified North America

as a high-risk region.

In response, Sage’s Business Resilience team developed and implemented

an Extreme Weather & Natural Disasters Playbook for the North America

Executive Management Team (NA EMT). The Playbook was tested through

a tabletop exercise in May 2025, simulating the impact of a major

hurricane on our Atlanta and Lawrenceville offices. The exercise validated

the Playbook, reinforced NA EMT roles and responsibilities, and tested

decision making under pressure. The event also served to strengthen

regional preparedness and resilience.

Short term

(2022, 2024,

2025)

Physical Hosting

Resilience

Sub-type

Chronic & Acute

Sage has a number of centralised public cloud providers, as well as

hosting services. This infrastructure could be vulnerable to persistent

and extreme weather events. These events could become more frequent,

reducing service availability and customer experience.

FY25 update

We work with multiple hosting partners and regularly engage with our

most critical providers to understand how they incorporate climate

risks into their continuity and recovery plans.

In FY25, we continued these engagements, noting that many key

providers adhere to ISO 22301:2019, which supports climate-related

riskmanagement through robust business continuity practices.

Short to

Medium

term

(2022)

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Maturity

Time

horizon

Opportunities

Retaining

andHiring

Superior

Talent

Sub-type

Efficient and

mindful workforce

It is important for employers to demonstrate sustainability as a cultural value. This can help attract and

retainenvironmentally conscious talent. A more climate-informative hiring process can make Sage more

attractive to talent.

FY25 update

In FY25, we introduced a new sustainability onboarding presentation to engage and inspire new hires from

the start, helping them understand Sage’s climate goals and their role in achieving them.

We continued to develop our colleague benefits, including electric vehicle schemes, low-carbon commuting

incentives and hybrid working support. Our partnership with MobilityWays offers personalised travel plans,

while our car-sharing app ‘Liftshare’ has expanded to more sites, reducing commuting emissions.

We also advanced our sustainability learning, with many colleagues completing courses through

Sustainability Unlocked andtaking partinClimate Fresk workshops, enabling them to supportour

decarbonisation efforts.

Short to

Medium

term

Renewable

Energy

Renewable

Energy

Procurement

Sub-type

Energy source

Sage could ingrain renewable energy provision into our facility management plans. This would incentivise Sage

building managers, landlords, and hosting services to develop and innovate more carbon-efficient buildings.

The combined pressure from Sage, its peers, and society can help reduce carbon emissions and costs.*

FY25 update

We are making progress in transitioning to clean energy in support of our 2030 emissions reduction and 2040

net zero targets. In FY25, we secured a carbon-free energy contract for our largest UK site, Cobalt, and opened

our new Atlanta office at Ponce City Market, a low-carbon building with strong sustainability credentials.

We continue to face challenges in expanding renewable energy use across our global estate, particularly in

leased sites and regions with limited access to green tariffs, such as North America and South Africa. Despite

these constraints, we remain committed to working with landlords and monitoring market developments to

identify further procurement opportunities.

Short to

Medium

term

New Products

and Services

Sub-type

Products

andservices

Climate change demands are presenting a new opportunity for Sage to develop products and services for its

SMB customers that will help them tackle the challenges of climate change and put sustainability at the core

oftheir business.

FY25 update

In FY25, we continued to roll out Sage Earth, our carbon accounting solution designed to help small and

mid-sized businesses measure, report, and reduce their emissions. Available in the UK and US, Sage Earth

uses advanced AI and partners with financial institutions, fintechs, and energy providers to expand its reach.

We continue to advocate for simpler climate standards that support SMBs in their net zero journey. Through

collaboration with colleagues, partners, and customers, we aim to align our products and operations with the

Paris Agreement and create lasting climate impact.

Short to

Long term

Enhanced

Brand

Sub-type

Reputation

Sage has an opportunity to help SMBs fight climate change and be their voice for the future, supporting them

when it comes to lobbying for change.

FY25 update

Our sustainability leadership continues to be externally recognised. We upheld our EcoVadis Gold rating,

were once again named one of the UK’s most sustainable companies by TIME, and achieved an A rating from

CDP, reflecting strong progress and transparency on climate action.

Short to

Medium

term

* Site strategy, an opportunity identified in Sage’s Annual Report 2024, has been integrated into renewable energy procurement, to help streamline

initiatives and reporting.

TCFD continued

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Non-financial and sustainability information statement

Human rights

We respect the most fundamental of human rights including no

child labour, no forced labour or modern slaveryand the freedom

ofassociation. We pay special attention to addressing the human

rights identified as potentially higher impact to oursector, through

Respecting privacy and protecting data; Developing inclusive and

accessible products; Responsible development and use ofArtificial

Intelligence (AI); and Protection from modern slavery and promoting

sustainable supply chain practices. We conduct appropriate due diligence

on our partners, and allof our partners and suppliers are required to

adhere to theprinciples set out inthe Supplier and Partner Code

ofConducts, including on human rights. Details on our duediligence

processes continue to be reported in our Modern Slavery Statement

available at www.sage.com/investors/governance.

Governance and oversight

We recognise that assurance over our business activities and those

of our partners and suppliers is essential. During FY25, we monitored

and reported on the completion of our mandatory Code of Conduct

training for all new colleagues. The training is then mandatory for

all colleagues at regular intervals thereafter. You can read more

about our risk management and Principal Risks from pages 56 to 66.

Tax strategy

We publish our tax strategy on our website (www.sage.com/

investors/governance/tax-strategy) and are committed to

managingour tax affairs responsibly and incompliance with

relevant legislation. Our tax strategy is aligned to our Code of

Conduct and Sage’s Values andbehaviours and is owned and

approved by the Audit and Risk Committeeannually.

Anti-Financial Crime

The Board and ELT remain fully committed to upholding our

keyvalue of ‘we do the right thing’, which includes having a

zero-tolerance approach to fraud and other forms of financial

crime.In alignment with the Economic Crime and Corporate

Transparency Act 2023, we continue to take proactive steps to

ensurethat we have reasonable and proportionate procedures in

placeto prevent fraud by persons associated with our business.

Ouranti-financial crime policy and accompanying procedure

makeit clear that Sage expects colleagues to recognise and

reportany concerns or suspicious activity they encounter via

ourinternal reporting and whistleblowing mechanisms, so

thattheycan be thoroughly investigated. Any investigations

concerning incidents of fraud or other financial crime are

reportedto the Audit and Risk Committee, which reviews

theoutcomes of each case.

Anti-bribery and corruption

Sage has an anti-bribery and corruption policy which details our

zero-tolerance approach to all forms of bribery and corruption.

Weuse Transparency International’s Corruption Perceptions Index to

inform our risk based approach to ourdue diligence on customers,

suppliers and partners, which is codified in our third-party due

diligence policy.

Our dedicated Business Due Diligence team supports colleagues

infulfilling their third-party due diligence obligations. We also

require our partners to adopt our position on bribery and corruption

and we support them indoing so by clearly setting out our expectations

in our Partner Code of Conduct.

Sage’s anti-bribery and corruption policy, together with associated

whistleblowing procedures and grievance mechanisms, are designed

to ensure that colleagues and other parties, including contractors

and third parties, are able to report any instances of poor practice

safely through internal channels or an independent organisation.

Allreports received via this or any other reporting mechanism are

thoroughly investigated and reported to the Audit and Risk Committee,

which reviews each case and its outcomes. None of our investigations

during FY25 identified any systemic issues or breaches ofour

obligations underthe Bribery Act 2010.

The anti-bribery and corruption policy is supported by our gifts

&hospitality and conflicts of interest policies and theirsupporting

declaration and approval procedures, as well as periodic checks and

reminders. Further details on our policies and procedures in this

area can be found in the Appendix of the Non-Financial Statement

available at www.sage.com/en-gb/company/sustainability-and-society.

Non-financial and Sustainability

InformationStatement

Information as required byregulation can be found on the

following pages:

Environmental matters pages 30 to 32, and 35 to 44

Our employees pages 24 to 29, and 94

Social matters pages 30 to 34, 45 and 96

Human rights page 45

Anti-corruption

andanti-bribery

page 45

Climate-related

disclosures

pages 35 to 44

Business model pages 8 and 9

KPIs pages 22 and 23

Principal Risks pages 61 to 66

Ethics and governance

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Section 172(1) statement

The Directors of The Sage Group plc. confirm that, throughout

the year, they have acted in good faith and in a manner they

consider most likely to promote the success of the Company

for the benefit of all its shareholders as a whole. In fulfilling

this duty, they have given due consideration to the interests

of Sage’s wider stakeholder community, safeguarded the

Company’s reputation, and supported its long-term sustainability.

This duty is outlined in section 172(1)(a) to (f) of the Companies

Act 2006 (‘section 172’).

Engagement with our stakeholders plays a vital role in

ensuring that our Directors fully understand their needs and

make well-informed decisions that consider different

priorities. However, the Board recognises that stakeholder

priorities may sometimes compete. The Board therefore seeks

to make decisions that best support Sage’s strategy and deliver

sustainable value over time. Stakeholder views are considered

in all matters of strategic significance, and the principles of

section 172 are embedded throughout the organisation, from

Board-level decisions to operational culture.

Details of the principal decisions made during the year

canbe found onpages 88 to 89. Alongside the key decisions

outlined, the table opposite highlights other sections of this

report which explain how the Directors havehad regard to

section 172 factors in FY25.

Board members have undertaken numerous stakeholder

engagement activities throughout the year to understand

stakeholder perspectives and interests. Further information

onthese activities can be found on pages 90 to 97.

Section 172 factors

a) The likely consequences ofany

decision inthelong term

b) The interests of the company’s employees

c) The need to foster thecompany’s

business relationships with suppliers,

customers, and others

d) The impact of the company’s operations

onthe community and theenvironment

e) The desirability ofthecompany

maintaining a reputationfor high

standards of business conduct

f) The need to act fairly as

between members ofthecompany

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

THE

GRO

PLC

. A

NNU

REP

ORT

D A

CCO

UNT

S 2

025

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Further information on how section 172 has been applied by the Directors can be found throughout the Annual Report.

Section 172 factors

Pages

Section 172 factors

Pages

Likely consequences of

decisions in the long term

Impact of operations on the

community and the environment

Interests of our colleagues

Maintaining a reputation for high

standards of business conduct

Acting fairly between members

of the Company

Fostering business relationships

with suppliers, customers, and others

Chair’s statement

Our strategy

Sustainability and Society

TCFD

Principal Risks and uncertainties

Viability Statement

Corporate governance report—

Board activities

Stakeholder engagement

Nomination Committee Report

Directors’ Remuneration Report

Directors’ Report

10 and 11

15 to 18

30 to 34

35 to 44

61 to 66

67 and 68

86 and 87

90 to 97

102 to 108

117 to 151

152 to 158

Chair’s statement

CEO’s review

Sustainability and Society

TCFD

Non-financial and sustainability

information statement (NFSIS)—

Ethics and governance

Principal Risks and uncertainties

Corporate governance report—

Board activities

Stakeholder engagement—Society

10 and 11

12 to 14

30 to 34

35 to 44

61 to 66

86 and 87

91 and 96

Chair’s statement

CEO’s review

Our people and culture

Principal Risks and uncertainties

Chair’s introduction to governance

Corporate governance report—Board activities

Stakeholder engagement—Colleagues

Stakeholder engagement—

Board Associate

Corporate governance report—

Embedding culture

10 and 11

12 to 14

24 to 29

61 to 66

72 and 73

86 and 87

91 and 94

98 and 99

Chair’s statement

CEO’s review

Our people and culture

Sustainability and Society

TCFD

NFSIS—Ethics and governance

Corporate governance report—

Board activities

Stakeholder engagement

Corporate governance report—

Embedding culture

Corporate governance report—

Board performance review

Audit and Risk Committee Report

10 and 11

12 to 14

24 to 29

30 to 34

35 to 44

86 and 87

90 to 97

98 and 99

100 and 101

109 to 116

Corporate governance report

Corporate governance report—

Board activities

Stakeholder engagement—

Shareholders

Directors’ Remuneration Report

Directors’ Report

70 to 101

86 and 87

91 and 97

117 to 151

152 to 158

Our business model

Chair’s statement

CEO’s review

Our strategy

Sustainability and Society

NFSIS—Ethics and governance

Principal Risks and uncertainties

Corporate governance report

Corporate governance report—

Board activities

Stakeholder engagement—

CustomersandSociety

8 and 9

10 and 11

12 to 14

15 to 18

30 to 34

61 to 66

70 to 101

86 and 87

90 to 92 and 96

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Financial review

The Financial review provides a summary of the Group’s

results on a statutory and underlying basis, alongside

itsorganic performance. Underlying measures allow

management and investors to understand the Group’s

financial performance adjusted for the impact of foreign

exchange movements and recurring and non-recurring

items,while organic measures also adjust for the impact

ofacquisitions and disposals.

Introduction

Sage performed well in FY25, with continued growth across

all regions. Disciplined cost management together with

operating efficiencies supported strong operating profit

and margin expansion, driving double-digit growth in

earnings per share and robust cash flows.

Underlying total revenue increased by 10% to £2,513m, with

all regions contributing to growth, including North America

at 12%, the UKIA region at 9%, and Europe at 7%. Growth was

driven by strong demand for our solutions as SMBs continue

to digitalise their accounting, HR, and payroll functions.

Sage’s growth was underpinned by a strong performance

inunderlying ARR, which increased by 11% to £2,574m

(FY24: £2,329m), reflecting good levels of growth from

newand existing customers and strong retention rates.

This led to an increase in underlying recurring revenue of

10% to £2,436m. As a result, 97% of Sage’s total revenue is

recurring, reflecting the high-quality and resilient nature

ofthe Group.

On an organic basis, total revenue grew by 9% to £2,506m

(FY24: £2,296m), while ARR grew by 10% to £2,560m

(FY24: £2,329m).

Underlying operating profit grew by 17% to £600m, leading

to a strong increase in operating margin of 150 basis points

to 23.9%. This was driven by strong revenue growth and

operating efficiencies, with disciplined cost management

supporting ongoing investment.

Reflecting this progress and the impact of recent share

buybacks, underlying basic EPS increased by 18% to 43.2p.

The Group remains highly cash generative. Underlying cash

flow from operations increased by 2% to £660m, underpinned

by cash conversion of 110%, which was mainly driven by

further growth in subscription revenue.

In line with our disciplined approach to capital allocation,

wecontinue to invest in both organic and inorganic growth,

while delivering shareholder returns. The Board is proposing

a final dividend of 14.40p per share, representing a total

dividend in respect of FY25 of 21.85p per share, an increase

of 7%. We have also announced a share buyback programme

of up to £300m, to be executed in FY26, reflecting strong

cash generation, our robust financial position, and the

Board’s confidence in Sage’s future prospects.

Financial review

”

“

Sage delivered another

goodperformance in FY25,

with strategic focus driving

strong, sustainable growth.

Disciplined capital allocation

continues to support margin

expansion, investment, and

shareholder returns.

Jonathan Howell

Chief Financial Officer

1. Figures provided on an underlying basis unless otherwise stated. Underlying and organic revenue and profit measures are defined in the Glossary.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Statutory and underlying financial results

Financial results

Statutory Underlying

FY25 FY24 Change FY25 FY24 Change

North America £1,138m £1,052m +8% £1,138m £1,018m +12%

UKIA

£729m £670m +9% £729m £668m +9%

Europe £646m £610m +6% £646m £604m +7%

Group total revenue £2,513m £2,332m +8% £2,513m £2,290m +10%

Operating profit £530m £452m +17% £600m £513m +17%

Operating profit margin % 21.1% 19.4% +1.7 ppts 23.9% 22.4% +1.5 ppts

Profit before tax £484m £426m +14% £555m £486m +14%

Profit after tax £369m £323m +14% £423m £370m +14%

Basic EPS 37.7p 32.1p +18% 43.2p 36.7p +18%

2. United Kingdom and Ireland, Africa, and Asia-Pacific (APAC).

The Group achieved statutory and underlying total revenue of £2,513m in FY25. Statutory total revenue increased by 8%,

reflecting underlying total revenue growth of 10%, offset by a 2-percentage point foreign exchange headwind, with sterling

strengthening against key currencies.

Statutory operating profit increased by 17% to £530m, reflecting a 17% increase in underlying operating profit to £600m,

together with a £7m decrease in recurring and non-recurring items

, mainly relating to lower acquisition-related expenses.

Statutory and underlying basic EPS increased by 18%, to 37.7p and 43.2p respectively, mainly reflecting higher underlying

profit, with an increase in net finance costs, offset by a reduction in the weighted average number of shares as a result of

recent share buybacks.

Revenue

The Group increased underlying total revenue by 10% to £2,513m (FY24: £2,290m), with all regions contributing to growth. In

North America, revenue grew by 12%, with a strong performance from Sage Intacct together with continued growth in Sage 200

and Sage 50. In the UKIA region, revenue increased by 9%, driven by Sage Intacct together with cloud solutions for small businesses

including Sage 50. In Europe, revenue increased by 7%, with growth across our accounting, payroll, and HR solutions.

Our aim is to efficiently grow revenues across all products and services, by attracting new customers and delivering more

value to existing customers. Sage Business Cloud, comprising our cloud native

and cloud connected

solutions, helps

customers benefit from a growing range of cloud and AI-powered services via the Sage Platform, leading to deeper customer

relationships and higher lifetime values.

As a result, Sage Business Cloud total revenue increased by 13% to £2,083m (FY24: £1,837m), driven by growth in cloud native

revenue of 23% to £885m (FY24: £718m) primarily through new customer acquisition, and by growth in cloud connected

revenue from both existing and new customers.

Underlying recurring revenue increased by 10% to £2,436m (FY24: £2,215m), with software subscription revenue up by 12% to

£2,093m (FY24: £1,876m), leading to subscription penetration of 83% (FY24: 82%). As a result, 97% of the Group’s revenue is recurring.

On an organic basis, total revenue grew by 9% to £2,506m (FY24: £2,296m), whilst recurring revenue grew by 9% to £2,429m

(FY24: £2,221m).

3. Recurring and non-recurring items are defined in the Glossary and detailed in note 3.6 of the financial statements.

4. Cloud native solutions run in a cloud environment enabling access to up-to-date functionality at any time, from any location, via the internet.

5. Cloud connected solutions are deployed on premise with significant functionality delivered through the cloud.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Financial review continued

Revenue by region

North America FY25 FY24 Change

Organic

change

US £997m £891m +12% +11%

Canada £141m £127m +11% +11%

Underlying total revenue £1,138m £1,081m +12% +11%

In North America, underlying total revenue increased by 12% to £1,138m, with growth across Sage’s key accounting solutions,

particularly among mid-sized businesses. Recurring revenue grew by 12% to £1,110m (FY24: £994m), while subscription

penetration increased to 82%, up from 81% in the prior year.

In the US, total revenue increased by 12% to £997m. Sage Intacct, which now represents over 45% of US revenue, grew by 23%

to£461m (FY24: £374m), driven by strength across key industry verticals, particularly construction and real estate, financial

services and not-for-profit, together with an enhanced commercial proposition through the expansion of suites and introduction

of multi-year customer contracts. Revenue was also driven by growth in Sage 200, with good levels of upsell toexisting

customers and higher pricing, together with further growth in Sage X3 and Sage 50.

In Canada, total revenue grew by 11% to £141m, with good performance from Sage Intacct driven by new customers, together with

growth in Sage 50. In addition, Sage HR continued to gain momentum, particularly through cross-sell to existing customers.

Adjusting for the acquisitions of Fyle in FY25 and Anvyl in FY24, organic total revenue grew by 11% in the US, and by 11% in the

North America region as a whole.

UKIA FY25 FY24 Change

Organic

change

UK and Ireland (Northern Europe) £554m £505m +10% +10%

Africa and APAC £175m £163m +7% +7%

Underlying total revenue £729m £668m +9% +9%

In the UKIA region, underlying total revenue increased by 9% to £729m, with further strength across Sage’s accounting, HR,

and payroll solutions. Recurring revenue also grew by 9% to £714m (FY24: £653m), while subscription penetration was 89%,

inline with the prior year.

In the UK and Ireland, total revenue grew by 10% to £554m. Sage Intacct continued to scale rapidly, driven by accelerating

newcustomer acquisition. Sage 50 also contributed strongly, together with Sage 200, supported by a strong renewal rate

andhigher pricing. In addition, Sage’s cloud native solutions for small businesses, including Sage Accounting, Sage Payroll,

andSage HR, delivered good levels of growth. The recent launch of Sage Copilot supported the strong performance of both

Sage 50 and Sage Accounting. Revenue was also driven through the continued growth of Sage for Accountants.

In Africa and APAC, total revenue grew by 7% to £175m, with continued growth in Sage Accounting and Sage Payroll, driven

bynew customer acquisition and higher pricing, together with a strong performance from Sage Intacct. Sage X3 and local

products in the Sage 50 franchise also continued to contribute to growth.

Europe FY25 FY24 Change

Organic

change

France £324m £306m +6% +6%

Central Europe £155m £146m +6% +6%

Iberia £167m £152m +10% +7%

Underlying total revenue £646m £604m +7% +6%

Europe achieved underlying total revenue growth of 7% to £646m, reflecting a strong performance particularly in Sage 200,

Sage X3, HR, and payroll solutions. Recurring revenue grew by 8% to £612m (FY24: £568m), while subscription penetration

increased to 79%, up from 76% in the prior year.

In France, total revenue grew by 6% to £324m, driven by accounting solutions. Sage X3 was a significant contributor of growth,

with continued strong customer demand, while Sage 200 also performed well. In addition, Sage Intacct continued to see early

traction as the solution starts to scale.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Central Europe achieved a total revenue increase of 6% to £155m. HR and payroll solutions, which represent almost half the

region’s revenue, grew strongly, driven by upsell to existing customers together with new customer wins. Growth was also

driven by Sage 200, mainly through sales to existing customers.

In Iberia, total revenue grew by 10% to £167m, reflecting strength across Sage 200 and Sage 50, driven by renewals, higher

pricing, and new customers. Growth was also driven by ForceManager, a mobile workforce management solution acquired in

October 2024. In addition, Iberia achieved good levels of growth from accountants, following the recent introduction of Sage

for Accountants into the region.

Adjusting for the impact of the ForceManager acquisition, organic total revenue grew by 7% in Iberia, and by 6% in the Europe

region as a whole.

Revenue—underlying and organic reconciliation to statutory

Total revenue bridge

FY25 FY24 Change

Statutory £2,513m £2,332m +8%

Impact of FX

– (£42m)

Underlying £2,513m £2,290m +10%

Disposals – –

Acquisitions (£7m) £6m

Organic £2,506m £2,296m +9%

6. Impact of foreign exchange (FX) retranslating FY24 revenue and costs at FY25 average rates.

Statutory and underlying revenue was £2,513m in FY25. Underlying revenue in FY24 of £2,290m reflects statutory revenue of

£2,332m retranslated at current year exchange rates, resulting in a foreign exchange headwind of £42m. Organic revenue in FY25

was £2,506m, reflecting underlying revenue of £2,513m adjusted for £5m of revenue from the acquisition of ForceManager and

£2m from the acquisition of Fyle during the year. Organic revenue in FY24 of £2,296m reflects underlying revenue of £2,290m,

adjusted for £6m of revenue from Anvyl and Infineo, which were acquired at the end of FY24.

Operating profit

The Group increased underlying operating profit by 17% to £600m (FY24: £513m), resulting in a strong increase in underlying

operating margin of 150bps to 23.9% (FY24: 22.4%). This was driven by revenue growth and operating efficiencies, with

disciplined cost management supporting ongoing investment. On an organic basis, adjusting for the impact of acquisitions

inFY24 and FY25, operating profit increased by 16% to £600m (FY24: £515m) while margin was in line with underlying.

Operating profit—underlying and organic reconciliation to statutory

Operating profit bridge

FY25 FY24

Operating

profit

Operating

margin

Operating

profit

Operating

margin

Statutory £530m 21.1% £452m 19.4%

Recurring items

£73m £82m

Non-recurring items

• Reversal of property restructuring (£2m) –

• Reversal of employee-related costs – (£3m)

• Reversal of restructuring costs (£1m) (£2m)

Impact of FX

– (£16m)

Underlying £600m 23.9% £513m 22.4%

Disposals ––––

Acquisitions ––£2m –

Organic £600m 23.9% £515m 22.4%

7. Recurring and non-recurring items are defined in the Glossary and detailed in note 3.6 of the financial statements.

8. Impact of retranslating FY24 revenue at FY25 average rates.

The Group achieved a statutory operating profit in FY25 of £530m. Underlying and organic operating profit of £600m in FY25

reflects statutory operating profit adjusted for recurring and non-recurring items.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Financial review continued

Recurring items of £73m (FY24: £82m) comprise £42m of amortisation of acquisition-related intangibles (FY24: £48m) and

£31m of M&A-related charges (FY24: £34m). Non-recurring items in FY25 comprise a £2m reversal of property restructuring

costs (FY24: £nil) and a £1m reversal of other restructuring costs (FY24: £2m). Non-recurring items in FY24 also comprised

a£3m reversal of employee-related charges for French payroll taxes relating to previous years. Together, recurring and

non-recurring items reduced by £7m compared with the prior year.

In addition, the retranslation of FY24 underlying and organic operating profit at current year exchange rates has resulted

inan operating profit headwind of £16m. This has led to a 30-basis point margin headwind from foreign exchange to 22.4%

(FY24underlying as reported: 22.7%).

Organic operating profit of £515m in FY24 reflects underlying operating profit of £513m adjusted for £2m of operating profit

from Anvyl and Infineo, which were acquired at the end of FY24.

Underlying EBITDA

Underlying EBITDA was £694m (FY24: £605m) representing a margin of 27.6%. The increase in underlying EBITDA principally

reflects the growth in underlying operating profit.

FY25 FY24 Margin

Underlying operating profit £600m £513m 23.9%

Depreciation and amortisation £48m £47m

Share-based payments £46m £45m

Underlying EBITDA £694m £605m 27.6%

Net finance cost

The underlying net finance cost for the FY25 increased to £45m (FY24: £27m), mainly reflecting higher interest expense

following the new debt issuance (see page 54) together with lower interest income on cash and cash equivalents during

theyear. The statutory net finance cost of £46m (FY24: £26m) is broadly in line with the underlying net finance cost.

Taxation

The underlying tax expense for FY25 was £132m (FY24: £116m), resulting in an underlying tax rate of 24% (FY24: 24%).

Thestatutory income tax expense for FY25 was £115m (FY24: £103m), resulting in a statutory tax rate of 24% (FY24: 24%).

Earnings per share

FY25 FY24 Change

Statutory basic EPS 37.7p 32.1p +18%

Recurring items 5.7p 6.3p

Non-recurring items (0.2)p (0.5)p

Impact of foreign exchange – (1.2)p

Underlying basic EPS 43.2p 36.7p +18%

Underlying basic EPS and statutory basic EPS increased by 18% to 43.2p and 37.7p, respectively, mainly reflecting higher

underlying operating profit.

Cash flow

Sage remains highly cash generative, with underlying cash flow from operations increasing by 2% to £660m (FY24: £649m),

representing underlying cash conversion of 110% (FY24: 123%). This strong cash performance reflects growth in subscription

revenue and strength in receivables collection, partly offset by increased capital expenditure due to workplace investment

together with the timing of certain payments to third parties. Free cash flow of £517m (FY24: £524m) reflects robust underlying

cash conversion, offset by higher net interest and income tax.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Cash flow APMs FY25

FY24

(asreported)

Underlying operating profit £600m £529m

Depreciation, amortisation and non-cash items in profit £44m £44m

Share-based payments £46m £45m

Net changes in working capital £26m £55m

Net capital expenditure (£56m) (£24m)

Underlying cash flow from operations £660m £649m

Underlying cash conversion % 110% 123%

Non-recurring cash items (£8m) (£5m)

Net interest paid and derivative financial instruments (£34m) (£25m)

Income tax paid (£101m) (£91m)

Profit and loss foreign exchange movements – (£4m)

Free cash flow £517m £524m

Statutory reconciliation of cash flow from operations FY25

FY24

(asreported)

Statutory cash flow from operations £675m £625m

Recurring and non-recurring items £41m £44m

Net capital expenditure (£56m) (£24m)

Other adjustments including foreign exchange translations – £4m

Underlying cash flow from operations £660m £649m

Net debt and liquidity

Group net debt was £1,189m at 30 September 2025 (30 September 2024: £738m), comprising cash and cash equivalents

of£390m (30 September 2024: £508m) and total debt of £1,579m (30 September 2024: £1,246m). The Group had £1,020m

ofcashand available liquidity at 30 September 2025 (30 September 2024: £1,138m).

The increase in net debt in the period is summarised in the table below:

FY25

FY24

(as reported)

Net debt at 1 October (£738m) (£561m)

Free cash flow £517m £524m

New leases (£28m) (£26m)

Acquisition of businesses (£87m) (£34m)

M&A and equity investments (£33m) (£41m)

Dividends paid (£207m) (£199m)

Share buyback (£605m) (£348m)

Purchase of shares by Employee Benefit Trust – (£55m)

FX movement and other (£8m) £2m

Net debt at 30 September (£1,189m) (£738m)

The Group’s debt is sourced from sterling and euro denominated notes, together with a syndicated multicurrency revolving

credit facility (RCF).

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Financial review continued

The Group’s notes include £300m 12-year notes issued

inMarch 2025 with a coupon of 5.625%, and €500m 5-year

notesissued in February 2023 with a coupon of 3.82%, under

the Group’s Euro Medium Term Note programme. Sage’s other

notes comprise £400m 12-year notes issued in February 2022

with a coupon of 2.875%, and £350m 10-year notes issued in

February 2021 with a coupon of 1.625%.

The Group’s RCF of £630m expires in December 2029 and

wasundrawn at 30 September 2025 (FY24: undrawn). Sage

hasan investment grade issuer rating assigned by Standard

and Poor’s of BBB+ (stable outlook).

Sage debt maturity profile (£m)

RCF

0 200 400 600 800 1,000 1,200

FY27

FY28

FY29

FY30

FY31

FY32

FY33

FY34

FY35

FY36

FY37

Sterling Bond Eurobonds (€500m)

437

350

300

400

630

Capital allocation

Sage’s disciplined capital allocation policy is focused on accelerating strategic execution through organic and inorganic

investment and delivering shareholder returns. During FY25, Sage completed the acquisition of Tritium Software, the developer of

ForceManager (now branded Sage Sales Management), a mobile workforce management solution for field-based sales teams,

and Fyle, an AI-powered expense management platform that transforms how SMBs track and manage expenses.

Sage has a progressive dividend policy, intending to grow the dividend over time while considering the future capital

requirements of the Group. The final dividend proposed by the Board is 14.40p per share, taking the total dividend for

theyearto 21.85p, up 7% compared with the prior year (FY24: 20.45p).

The Group also considers returning surplus capital to shareholders. On 30 July 2025, Sage completed a share buyback

programme, commenced on 20 November 2024 and extended on 15 May 2025, under which a total of 48.2m shares were

purchased for an aggregate consideration of £600m and subsequently cancelled.

Alongside these results, we have announced a further share buyback programme of up to £300m, reflecting Sage’s strong

cashgeneration, robust financial position, and the Board’s confidence in the Group’s future prospects. Sage continues

tohave considerable financial flexibility to drive the execution of its growth strategy.

FY25

FY24

(as reported)

Net debt £1,189m £738m

Underlying EBITDA (last 12 months) 694m £622m

Net debt/underlying EBITDA ratio 1.7x 1.2x

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

The Group’s underlying EBITDA over the last 12 months was £694m, resulting in a net debt to underlying EBITDA leverage ratio

of1.7x, up from 1.2x in the prior year. Sage intends to operate in a broad range of 1x to 2x net debt to underlying EBITDA over the

medium term, with flexibility to move outside this range as business needs require.

Return on Capital Employed (ROCE) for FY25 was 31% (FY24 as reported: 26%)

. A reconciliation of ROCE to our reported measures

isset out below.

Going concern

The Directors have robustly tested the going concern assumption in preparing these financial statements, taking into

account the Group’s strong liquidity position at 30 September 2025 and a number of downside sensitivities, and remain

satisfied that the going concern basis of preparation is appropriate. Further information is provided in note 1 of the

financialstatements on page 181.

Foreign exchange

The Group does not hedge foreign currency profit and loss translation exposure, and the statutory results are therefore

impacted by movements in exchange rates. The average rates used to translate the consolidated income statement and

tonormalise prior year underlying and organic figures are as follows:

Average exchange rates (equal to GBP)

FY25 FY24 Change

Euro (€) 1.18 1.17 +1%

US dollar ($) 1.31 1.27 +3%

Canadian dollar (C$) 1.83 1.73 +6%

South African rand (ZAR) 23.61 23.50 +0%

9. A reconciliation of ROCE to our reported measures is set out below.

Reconciliation of Return on Capital Employed FY25

FY24

(as reported)

Underlying operating profit net of amortisation of acquired intangibles £558m £481m

Net assets less borrowings and cash £1,909m £1,832m

Less:

• Derivative financial instruments (£32m) (£17m)

• Provisions for non-recurring costs £6m £16m

• Financial liability for the purchase of own shares £8m £4m

• Tax assets or liabilities (£49m) (£54m)

Adjusted net assets £1,842m £1,781m

Average adjusted net assets £1,811m £1,870m

Return on Capital Employed 31% 26%

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Our ERM

Framework

Risk management

Risk Management Framework

Our Enterprise Risk Management Framework helps us to manage a wide range of risks,

enabling a consistent approach to identifying, managing, and overseeing risks to support

effective decision making and enhance long-term resilience.

We seek to improve continuously the use and adoption of our

ERM Framework. It isn’t a process that we merely apply to the

business—it is integral to how we make decisions and work

every day,and helps us to achieve our strategic objectives

through risk-informed decision making.

Using our ERM Framework, we expect all regions and functions

to identify risks that could affect the successful execution

of their strategy and operations while managing any risk

exposure, ensuring appropriate controls and plans are in

place. The ERM Framework helps focus our efforts on the

areas that matter most to Sage, providing clarity about risk

tolerances and appetite in a way that facilitates effective

business decisions and ensures we are adequately prepared

to manage risks.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

How we identify risks

Our risk identification process follows an enterprise-wide

“top-down, bottom-up” approach, as follows:

• Top down, we focus on Principal Risks; these are the

mostsignificant risks to our ability to achieve our

strategic objectives.

• Bottom up, we focus on strategic, commercial,

operational,compliance, and change risks (“business

risks”) that arise at regional and functional levels.

Theserisks pose the greatest threat to the success

ofbusiness activities across the Group.

How we assess risks

We analyse all risks for likelihood and impact using a tailored

risk assessment methodology that considers a range of

impacts, including on our customers and colleagues, as well

aspotential financial implications. The analysis considers

risk before any mitigations (inherent risk) andafter all current

mitigations (residual risk). The keybenefit of assessing

inherent risk is that it highlights thepotential risk exposure

if mitigation were to fail completely or not be in place.

How we manage risk

We recognise that eliminating risk is often unfeasible

orundesirable. Instead, we define risk appetite for each

Principal Risk, to provide our leaders with guidance so

theycan make decisions on the level of risk to achieve

theirstrategic objectives. We set our Board-approved risk

appetite statements in collaboration with relevant leaders,

anduse their expertise to ensure these statements align to

our strategy and priorities.

Each Principal Risk is assigned an executive owner, who

isresponsible for overall management, ensuring adequate

controls are in placeand implementing action plans if the

risk falls outside risk appetite.

In addition to Principal Risks, we consider business risks

ataregional or functional level. These risksareowned and

managed within their respective management structures and

reviewed on an ongoing basis. Formal risk review takes place

quarterly with regional and functional leaders.

Risk reporting and monitoring

To fully understand our risk landscape, we consider risks

both individually and collectively. By analysing the

correlation between risks, we can identify those with the

potential to trigger, amplify, or influence other risks. This

exercise informs our scenario analysis, particularly those

scenarios in the Viability Statement on pages 67 and 68.

We monitor Principal Risks against our risk appetite targets

using measures and tolerances, which weevaluate throughout

the year to ensure they align with our strategic objectives.

Business risks are considered from a Group-wide perspective

with input fromour senior leaders, who provide their own

strategic, functional, and emerging-risk perspectives. They

are escalated in line with the Risk Management Policy and

via our ERM Framework to Regional or Functional leadersand

then to the Global Risk Committee. This escalation process

provides organisational visibility to emerging, strategic,

commercial, operational, financial, andcompliance risks

while reinforcing accountability forrisk management and

driving action. As part of the escalation process, we evaluate

whether risks should be included in the current set of Principal

Risks, orwhether a new Principal Risk should be created.

Read more about our Principal Risks

on pages 61 to 66

Risk culture

Culture underpins the effectiveness ofour ERM Framework

and supports an effective control environment. Our Values

help ensure that a culture of managing riskseffectively is

linked to our daily business activities and outcomes. Our

Code of Conduct reinforces these Values and sets clear

expectations across Sage for compliance with ethical

standards. Values form a significant part of our colleague

performance management process, and, in FY25, we continued

to manage culture as a Principal Risk.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Risk management continued

The Board

The Board has overall responsibility for risk management and internal control, including

settingthe Group’s risk appetite and ensuring appropriate governance arrangements are in

place.It promotes a strong risk culture and monitors the internal and external risk environment

toensurethe Group’s Principal Risks remain relevant and aligned with strategic objectives.

For more information on the responsibilities of the Board, please refer to page 80.

Audit and Risk Committee (ARC)

The ARC supports the Board in setting our risk appetite and ensuring that processes are in place to

identify, manage, and mitigate our Principal Risks. At each meeting, ARC reviews the Principal Risks

and their associated appetite targets and metrics, to assess if they are relevant, effective and

aligned to achieving our objectives, and within an acceptable tolerance.

For more information on the responsibilities of the ARC, please refer to page 110.

Global Risk Committee (GRC)

The GRC is responsible for providing direction and support for managing risk across Sage,

including setting and monitoring risk appetite for Principal Risks and driving action to align

riskexposure to strategy. The GRC provides the ARC with information to enable them to discharge

their responsibility for reviewing the Company’s risk management and internal control systems,

including regarding financial reporting.

For more information on the membership and responsibilities of the GRC, please refer to page 81.

Regional and Functional Reviews

The Regional and Functional Reviews monitor key operational and strategic risks that could

impact strategic plans or Sage’s Principal Risks, together with other key strategic, operational,

financial, and compliance risks. All business areas are required to adopt the ERM Framework.

Key risks that could affect the execution of regional or functional strategic plans are reviewed

atleast quarterly with senior leaders, while ensuring that appropriate mitigations are in place.

Where necessary, risks are escalated to the GRC via the ERM framework.

Bottom up Identification and assessment ofrisk exposures atregional and functional level

Top down Oversight, accountability, and assessment of Principal Risks, significant operational risks, and emerging risks

Risk governance

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

First line

All colleagues

Identify, own, operate

First Line comprises all our colleagues who are at

theforefront of the business. They hold the skills and

knowledge needed to help identify and manage risks

withinour business. Colleagues in the first line have

ultimateaccountability for the management and

ownershipof risk, while ensuring we manage risks

withintheERM framework.

Second line

Sage Risk andControls

Guide, support, oversee

Second Line is our Risk and Controls team, which is responsible

for setting the ERM framework, policies, tools, and techniques

to enable the First Line to manage risk effectively. As part of

this role, the team provides support, guidance, and oversight of

First Line risk management, to ensure that we maintain a consistent

approach to managing risk. This includes supporting the

Global Risk Committee, and our Regional andFunctional

leaders in fulfilling their responsibilities.

Third line

Sage Assurance

Independent andobjective

Third Line is our Internal Audit and Assurance team, whose

primary role is to provide independent assurance to ensure

the first two lines are operating effectively. They achieve this

by conducting risk-based reviews of the effectiveness of risk

management, internal controls, and governance. The Internal

Audit and Assurance team is also accountable to the Audit and

Risk Committee, to provide comfort to Sage leadership that

appropriate controls and processes are in place and are

operating effectively.

Three lines model

Our three lines governance model defines clear roles and responsibilities for all colleagues and establishes

accountability for actions and decisions. It also describes how we ensure appropriate oversight, challenge,

andassurance over our business activities.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Risk management continued

Horizon scanning

Global conflicts (e.g. Russia-Ukraine, Israel-Gaza), evolution

in global economic strategies such as US tariffs, energy

shortages, rising interest rates, and inflation are just

someevents that may have a material impact on Sage

andour customers.

To maintain resilience in this continually changing external

landscape, we operate an ongoing horizon scanning process.

This allows us to monitor external events and trends, identify

associated risks, and assess their potential impact on our

colleagues, customers, and partners. We review external

risks at every Global Risk Committee meeting to ensure

weare responding proactively to material events.

Part of our horizon scanning also involves looking beyond

the present by considering emerging risks, via workshops

with representatives across business functions including

Marketing and Customer Experience, Product, Security,

Sustainability, People, Finance, and Strategy.

During these workshops, we consider current external mega-

trends and global threats and opportunities over theshort,

medium, and long term. This process enables ustodefine a

set of key risk scenarios that may have an impact on Sage, as

well as the potential time horizon ofeachscenario. We then

evaluate the extent of planning and mitigation required

toensure Sage is adequately prepared and protected for

ourkey emerging risks. The Global Risk Committee considers

the plans and mitigations, and provides updates to the Audit

and Risk Committee for oversight.

Emerging risk scenario

Time horizon

1–2 years 3–5 years Over 5 years

1. Rapid advances in AI, including agentic systems, intelligent workflows,

andubiquitous AI-powered tools, may change the role of the general ledger,

reshape SMB operating models, and introduce powerful new competitors. If

Sage fails to adapt and differentiate its offerings, it risks loss of relevance,

market share, and profitability.

2. Intense competition across the tech industry for top experts makes it

difficultto attract and retain the skills needed to drive innovation and

maintain product leadership. Without sustained access to this talent,

AIinitiatives risk delay or failure, creating operational, strategic,

reputational,and intellectual property vulnerabilities.

3. The rapid integration of AI and automation is reshaping job roles and required

skills. Many routine tasks are being automated, while demand is rising for

digital, analytical, and creative skills. This shift could lead to reskilling at

scale, talent shortages, and changes in workforce structure.

4. Increasing data localisation requirements, divergent AI regulations, and

emerging technology laws may restrict Sage’s ability to manage and share

data,develop and deploy AI solutions, and deliver on its product strategy.

Thesechanges could drive increased compliance costs, legal and intellectual

property risks, and potential competitive disadvantage.

5. Rising tensions between major economies may disrupt global supply chains,

introduce new trade barriers, drive increasing wage-price inflation or contribute

to a global economic downturn. This could impact Sage’s abilitytoserve customers

in multiple regions and require rapid adaptation toshifting regulations; it may

also result in increased default of SMBs, an increasein customer churn, and a reduced

ability to sell to new or existing customers. Additionally, increased labour costs

in key markets could hamper Sage’s ability to retain and attract talent.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Principal Risks

anduncertainties

The Board and the Audit and Risk Committee conducted

arobust and ongoing assessment of the principal and

emerging risks facing the Group throughout FY25. This

assessment considered the risks that would threaten Sage’s

business model, future performance, solvency or liquidity,

and reputation, and ensured that the risks continued to

alignwith Sage’s business strategy.

The Board retains overall responsibility for setting

Sage’srisk appetite and for risk management and

internalcontrol systems.

In accordance with the UK Corporate Governance Code 2018

(the “Code”), the Board is responsible for reviewing the

effectiveness of the risk management and internal control

systems and confirms that:

• There is an ongoing process for identifying, evaluating,

and managing the Principal Risks faced by the Company.

• The systems have been in place for the year under

reviewand up to the date of approval of the Annual

Reportand Accounts.

• They are reviewed regularly by the Board.

• The systems accord with the FRC guidance on risk

management, internal control, and related financial

andbusiness reporting.

There were no instances of significant control failing

orweakness in FY25.

Read more about our risk management and internal

control systems on pages 56 to 60, and about the

associated work by the Audit and Risk Committee

onpages 109 to 116

Principal Risk Risk context Management and mitigation

1. Customer experience

If we fail to deliver ongoing

value to our customers by

focusing on their needs over

the lifetime of their customer

journey, we will not be able to

achieve sustainable growth

through renewal.

Trend

Stakeholder alignment

Link to viability scenario

Data breach

Existing or new market disruptor

Global economic shock

Cloud operations failure

We must maintain a sharp focus on the

relationship we have with our customers,

offering the products, services and

experiences they need for success.

Ifwemeet or exceed their expectations,

customers will stay with Sage, increasing

lifetime value and becoming our greatest

advocates. By aligning our people, processes

and technology with this focus in mind,

all Sage colleagues help our customers

be successful and in turn improve

financial performance.

• Brand-health surveys to provide an understanding

ofthe customer perception of the Sage brand and

itsproducts, used to inform and enhance our

marketofferings.

• Our Market and Competitive Intelligence team

provides insights that guide our strategy and

support our growth.

• Proactive analysis of customer activity and churn

data, to improve customer experience.

• Customer Advisory Boards, call listening, and

closed-loop feedback to constantly gather

information on customer needs.

• Customer-journey mapping to ensure appropriate

strategy alignment and alignment to our target

operating model.

• “Customer for life” roadmaps, detailing how products

can fit together, any interdependencies, and migration

pathways for current and potential customers.

• Continuous Net Promoter Score (NPS) surveying

toidentify customer challenges and respond in

atimely manner to emerging trends.

• Sage Membership for all customers, providing

customers with access to curated resources, tools,

and a connected community of business leaders.

The following table provides an overview of the Group’s Principal Risks and the way we manage these.

Key—Stakeholder groups Risk exposure change

Stable IncreasingDecreasing

Customers Shareholders

Partners

Society

Colleagues

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Principal Risks and uncertainties continued

Principal Risk Risk context Management and mitigation

2. Execution of

productstrategy

If we fail to deliver the

capabilities and experiences

outlined in our product

strategy, we will not meet

theneeds of our customers

orcommercial goals.

Trend

Stakeholder alignment

Link to viability scenario

Existing or new market disruptor

Global economic shock

Cloud operations failure

Sage needs to adapt continuously

itsapproach to new technologies

andchallenges. This requires a clear

direction and strategic guardrails to

support our go-to-market offerings.

Bysimplifying our product portfolio

andpartnering with the right

businesses,we can enhance our

solutionsand drive success.

• Robust product organisation and governance model,

supported by strategic interlock with our Routes to

Revenue (RtR) teams, aligning the way we deliver

product to meet the needs of SMBs.

• Migration Framework in key countries to support our

customers as they move to the cloud.

• Continued expansion of Sage Intacct outside

NorthAmerica and for additional product verticals.

• Enhancing accessibility of Sage cloud products to

meet Web Content Accessibility Guidelines.

• Focus on accountants through a tailored Sage for

Accountants proposition.

• Ongoing deployment of Sage Copilot AI-powered

assistant into existing Sage products, including Sage

Intacct and integration into Sage Sales Management.

• Developing AI agents for use in our core products.

3. Developing and

exploiting new business

models

Sage is unable to develop,

commercialise, and scale new

business models to diversify

from traditional Software as

aService (SaaS), especially

consumption-based services

and those that leverage data.

Trend

Stakeholder alignment

Link to viability scenario

Data breach

Existing or new market disruptor

Global economic shock

Cloud operations failure

Sage must be able to identify, design and

deploy new innovations to create new or

enhance existing products and capabilities.

Unlocking the ability to do this at pace

will enable access to new markets and/or

customers early, driving new revenue and

opportunities for the business.

• Business unit focused on the Sage Platform

torealise the opportunities with automation of

accounting processes (like Accounts Payable and

Accounts Receivable).

• Sage Platform integrating Sage’s products with AI

and digital services to enhance workflows, improve

customer experiences, and accelerate innovation.

• Enhanced, consistent digital experience for all

SageBusiness Cloud users through the Sage

Experience Platform.

• A team focused on the product strategy and assessing

new business opportunities in emerging ecosystems

to identifythose that may align with our vision.

• Acceleration of Embedded Services by expanding

Sage’s Fintech and Payments ecosystem through

strategic partnerships with Stripe, Monzo and Tide.

• Managed growth of the API estate, including enhanced

product development that enables access by

third-party API developers and optimisation

ofAPIintegrations to improve efficiency.

Key—Stakeholder groups Risk exposure change

Stable IncreasingDecreasing

Customers Shareholders

Partners

Society

Colleagues

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Principal Risk Risk context Management and mitigation

4. Route to market

If we fail to deliver a globally

consistent blend of route to

market channels in each

market, Sage will miss the

opportunity to efficiently

deliver the right capabilities

and experiences to our current

and future customers.

Trend

Stakeholder alignment

Link to viability scenario

Data breach

Existing or new market disruptor

Global economic shock

Cloud operations failure

We have a blend of channels to

communicate with our current and

potential customers and ensure our

customers receive the right information,

on the right products and services, at the

right time. Our sales channels include

selling directly to customers through

digital and telephone channels, via our

accountant network and through partners,

and we will adapt our approach to target

customers in our key verticals. We use

these channels to maximise our marketing

and customer engagement activities. This

can shorten our sales cycle and ensure we

improve customer retention, maximising

our market opportunity.

• Our Global Routes to Revenue team drives a consistent

approach to taking Sage’s products to market.

• Deployment of an enhanced reporting tool to track

go-to-market metrics using standard definitions

across geographies.

• Acceleration of strategic partnerships to strengthen

the Sage Platform.

• Three strategic pillars focused on delivery to the

market to align priorities across Sage.

• Centre of Excellence to support our indirect sales

and third-party approach.

• Sage Discovery Centre at our North American

headquarters in Atlanta reaffirms our commitment

to helping entrepreneurs, communities, and

customers to thrive in the age of AI.

5. People and performance

If we fail to ensure we have

engaged colleagues with the

critical skills, capabilities,

and capacity we need to

deliver on our strategy,

wewillnot be successful.

Trend

Stakeholder alignment

Link to viability scenario

Data breach

Global economic shock

As we evolve our priorities, the capacity,

knowledge, and leadership skills we need

will continue to change. Sage will not

only need to attract the right talent to

navigate change but will also need to

provide an environment where colleagues

can develop to meet these new expectations.

By empowering colleagues and leaders

tomake decisions, be innovative, and be

bold in meeting our commitments, Sage

will be able to create an attractive

working environment. By addressing

what causes colleague voluntary

attrition, and embracing the Values of

successful technology companies, Sage

can increase colleague engagement and

create aligned high-performing teams.

• Focus on hiring channels to ensure we areattractive

in the market through our enhanced employee value

proposition and enhanced presence through social

media such as Glassdoor, Comparably, X, LinkedIn,

and Facebook.

• Reward mechanisms to incentivise and encourage

the right behaviour, with a focus on ensuring fair

andequitable pay in all markets.

• Series of Leadership Academies and talent

programmes to support the development of

internaltalent.

• OKR Framework defines measurable goals and tracks

outcomes of colleague success.

• Enhancing skills and talent technology ecosystem to

identify capabilities and skills gaps, talent pipeline,

development, and career pathways and mentoring.

• Strategic Workforce Planning Framework across

thebusiness.

Key—Stakeholder groups Risk exposure change

Stable IncreasingDecreasing

Customers Shareholders

Partners

Society

Colleagues

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Principal Risks and uncertainties continued

Principal Risk Risk context Management and mitigation

6. Culture

If we do not define, shape and

proactively manage our culture

in line with our brand Values,

we will be challenged to deliver

our strategic priorities and

purpose; we will risk disengaging

colleagues, increasing attrition,

and impacting our ability to

attract and retain diverse talent.

Trend

Stakeholder alignment

Link to viability scenario

Data breach

Global economic shock

The development of a shared behavioural

competency that encourages colleagues

to always do the right thing, put customers

at the heart of business and improve

innovation is critical to Sage’s success.

Devolution of decision making, and the

acceptance of accountability for those

decisions, will need to go hand in hand as

the organisation develops and sustains

its shared Values and Behaviours, and

fosters a culture that provides customers

with a rich digital environment.

We will also need to create a culture

ofempowered leaders that supports the

development of ideas, and that provides

colleagues with a safe environment

allowing for honest disclosures and

discussions. A trusting and empowered

environment can help sustain innovation,

enhance customer success, and encourage

the engagement that results in increased

market share.

• Integration of Values and Behaviours into all

colleague priorities including talent attraction,

selection, and onboarding as well as OKRs.

• All colleagues encouraged to take up to five paid

Sage Foundation days each year, to support charities

and provide philanthropic support to the community.

• DEI strategy focused on building diverse teams, an

equitable culture, and fostering inclusive leadership.

This is supported by strategic plans to track progress,

ensuring we meet our commitments, including

notolerance of discrimination and equal chances

for everyone.

• Code of Conduct training for all colleagues (including

anti-bribery and corruption requirements) delivered

as snippets, so we can signpost relevant training at

colleagues’ point of need.

• Core e-learning modules, with regular refresher

training.

• Whistleblowing and incident-reporting mechanisms

so issues can be formally reported and investigated.

• Scaling Sage culture initiatives, including target

culture measurement framework, leadership

assessments, and alignment of people processes.

7. Cyber security

If we fail to ensure an appropriate

standard of cyber security

across the business, we will

not be able to combat cyber

threats and will fail to meet

our regulatory obligations and

lose the trust of our stakeholders.

Trend

Stakeholder alignment

Link to viability scenario

Data breach

Cloud operations failure

Stakeholder trust is central to Sage’s

growth and cyber security is an essential

component of that. Failure to safeguard

customer and colleague data and ensure

the availability of our products and

critical services could have severe

reputational, legal, and financial

consequences. This means we must be

confident our cyber security controls,

and the culture and awareness of our

colleagues are sufficient to mitigate

thedynamic and evolving cyber risk

environment, while also supporting the

agility and innovation of the business.

• Multi-year cyber security programmes in IT and

Product to ensure we are continuously improving,

and reduce cyber risk across technology, business

processes, and culture.

• Accountability within both IT and Product for

internal and external data being processed by Sage.

• Formal certification schemes maintained across

thebusiness include internal and external validation

of compliance.

• Sage colleagues are required to undertake regular

cyber security awareness training.

• A Cyber Security Risk Management Methodology and

standards are deployed to provide clear requirements

and objective risk information on our assets and systems.

• Sage Security Champions, who help amplify and

embed a secure culture.

• An in-house Cyber Defence Operations team to

proactively detect, respond to, and prevent cyber

threats 24/7.

• Continued investment in strengthening business

resilience and elevating crisis management capabilities.

Read more about our recent crisis

management exercise on page 66

Key—Stakeholder groups Risk exposure change

Stable IncreasingDecreasing

Customers Shareholders

Partners

Society

Colleagues

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Principal Risk Risk context Management and mitigation

8. Data and AI governance

If Sage fails to collect,

process, store, and use data

ina way that is compliant

withregulation, internal

policy, and our ethical

principles, we will lose the

trust of our stakeholders.

If we fail to recognise the

value of our data and deliver

effective data foundations,

wewill be unable to realise the

full potential of our data assets.

Trend

Stakeholder alignment

Link to viability scenario

Data breach

Existing or new market disruptor

Data is central to the Sage strategy

andour ambition to deliver sustainable

growth by leveraging AI and expanding

the Sage Platform. Our strategy is

underpinned by our ability to innovate

customer propositions, improve insight

and decision making, and create new

business models and ecosystems. The

successful ability to use data will

accelerate our growth and will be key

inhelping customers transform how

theyrun and build their businesses,

andwe must do this in a way that

iscompliant with laws and regulations,

andin line with our Values.

• Our AI and Data Ethics Principles ensure the

responsible use of customer data in support of our

strategy, with an ethics checklist in place to assess

adherence to these principles.

• Governance policies, processes, and tooling to

enhance and manage data quality, trust, and privacy.

• The implementation of our AI Governance

Framework, supported by an AI Inventory and AI

assurance process, to ensure that the development

and use ofAI align with our risk appetite and meet

legal, regulatory, ethical, and security requirements.

• Data Privacy Framework governing the collection,

use,and protection of personal data in compliance

with applicable laws and regulations.

• Our Sustainability, AI, and Data Ethics Committee,

which includes members from the Executive Leadership

Team and Sage Board, governs activities relating to

data and AI ethics.

• We require all colleagues to undertake awareness

training for data protection, with a focus on all

relevant data privacy laws and regulations.

• Our Trust and Security Hub supports our customers

and their understanding of cyber security, data

privacy, and AI and data ethics in Sage products.

9. Readiness to scale

As Sage’s ambition grows,

ifitfails to ensure its

cloudproducts can build

andoperate at an industrial,

global scale, it will erode

itscompetitive advantage.

The hosting of its products

must achieve economies of

scale, aligned to ambition,

inparallel with the ability

toaccelerate to market

withquality. Both must

beachieved with reduced

environmental impact

andzero customer impact.

If not addressed, Sage’s cloud

products would be less resilient

and less able to respond to its

customer expectations.

Trend

Stakeholder alignment

Link to viability scenario

Data breach

Cloud operations failure

As Sage continues to build sustainable

growth, we continue to focus on scaling

our platform services environment in

arigorous, agile, and speedy manner

toensure we provide a consistent and

healthy cloud platform and associated

network. We must provide the right

infrastructure and operations for all

ourcustomer products, and ahosting

platform, together with the governance

toensure optimal service availability,

performance, security protection, and

restoration (if required).

• Cost optimisation of cloud native products and

continued migration of legacy footprint topublic cloud.

• Accountability across product owners, underpinned

by ongoing risk assessments and continuous

improvement projects.

• Formal onboarding process through ongoing

portfolio management.

• Incident and problem management change

processes adhered to for all products and services,

with new acquisitions onboarded in a timely manner.

• Service-level objectives including uptime,

responsiveness, and mean time to repair.

• Defined real-time demand-management processes

and controls, and disaster-recovery capability and

operational-resilience models.

• A governance framework to optimise operational

cost base in line with key metrics.

• All new acquisitions required to adopt Sage cloud

operation standards.

Key—Stakeholder groups Risk exposure change

Stable IncreasingDecreasing

Customers Shareholders

Partners

Society

Colleagues

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Principal Risks and uncertainties continued

Principal Risk Risk context Management and mitigation

10. Environmental, social,

and governance

If Sage is unable to respond

toevolving stakeholder

expectations and ESG

regulation, Sage could face

fines and potential legal

action, damaging Sage’s

reputation and brand, and

diminishing stakeholder

trustand credibility.

In addition, if Sage fails

torespond to the range

ofopportunities and risks

associated with Sustainability

and Sage Foundation, it

wouldbe less resilient, less

competitive, and could put

itslicence to operate at risk.

Trend

Stakeholder alignment

Link to viability scenario

Global economic shock

Cloud operations failure

We invest in education, technology, and

the environment to give individuals,

SMBs, and our planet the opportunity

tothrive.

Internally, it is essential that Sage

understands the potential impact

ofclimate change on its strategy

andoperations and considers

appropriate mitigations.

Societal and governance-related issues

are integral to Sage’s purpose and Values

and to the achievement of Sage’s strategy.

• Sage’s Sustainability and Society strategy, informed

by a rigorous materiality assessment, focusing on

three pillars: Protect the Planet, Tech for Good,

andHuman by Design.

• Ensuring adequate executive oversight through

theSustainability, AI, and Data Ethics Committee.

• Enabling accountability through integration of

ESGmeasures within long-term incentive plans.

• An integrated framework to manage ESG-related

riskand physical and transitional climate risks,

asdetailed by TCFD.

• External limited assurance obtained over selected

metrics to ensure accuracy of sustainability data

and claims.

In April 2025, Sage conducted a comprehensive cyber

security simulation exercise for the Crisis Management

Team (CMT) which included the CEO, members of Executive

Leadership Team, and functional leaders. The exercise

was developed by our Business Resilience team in

partnership with a leading UK crisis consultancy. This

scenario was selected due to the credible threat that

cyber-attacks pose to Sage, a risk that is considered

within the Cyber Security Principal Risk. We delivered

Strengthening Crisis Readiness and Resilience

afour-day crisis simulation where participants faced

dynamic challenges, including ransom demands from

attackers, customer inquiries, and media scrutiny,

designed to replicate the intensity and unpredictability

of a cyber crisis. The outcomes tested and validated

our Crisis Management Framework and strengthened

our risk readiness to ensure we remain well-prepared

tonavigate disruption.

Key—Stakeholder groups Risk exposure change

Stable IncreasingDecreasing

Customers Shareholders

Partners

Society

Colleagues

Case study

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Viability Statement

In accordance with provision 31 of the UK Corporate

Governance Code 2018, the Directors set out how they have

assessed the Group’s prospects, the period covered by the

assessment, and the Group’s formal Viability Statement.

The Directors have assessed the prospects of the Group by

considering the Group’s current financial position, its recent

and historic financial performance and forecasts, its business

model and strategy (pages 8 and 9, and 15 to 18) and the

Principal Risks and uncertainties (pages 61 to 66).

The Group’s operational and financially robust position is

supported by:

• A high-quality recurring revenue base

• Resilient cash generation and a robust liquidity position,

with strong underlying cash conversion of 110%, reflecting

the strength of the subscription business model

• A well-diversified small and medium customer base

The Directors have reviewed the period used for the

assessment and determined that three years remains

suitable. The Directors believe that projections overa

three-year period remain appropriate given the relative

predictability of cash flows associated with Sage’s

subscription business during this period. This period

alignsour Viability Statement with our three-year strategic

planning horizon and is appropriate given the nature and

investment cycle of a technology business. Projections

beyond this period are less reliable due to the evolving

technology landscape in whichSage operates.

No scenario modelled over the three-year period leads

toinsufficient liquidity headroom. The Directors have

noreason to believe the Group will not be viable over

alonger period.

Assumptions

The financial forecasts contained in the Group’s three-year

plan make certain assumptions about the composition of

theGroup’s product portfolio, and the ability to acquire new

customers and maintain a strong renewal rate by value

byproviding additional functionalities to our existing

customers. The plan also assumes that the Group continues

to generate resilient cash conversion of more than 100%,

pays debt and interest instalments as they fall due, and

thatthe existing borrowing facilities remain available to

theGroup. Based onthe Group’s current liquidity profile,

debt maturing during the forecast period is assumed to

berefinanced onsimilar terms.

The assessment process

In forming the Viability Statement, the Directors conducted

arobust assessment of the Principal Risks and uncertainties

facing the Group which could impact the business model,

future performance, solvency or liquidity and reputation.

These are reviewed by the Board and the Audit and Risk

Committee quarterly, and are a foundation forthe Group’s

strategic plan. The risk process is outlined inmore detail

onpages 56 to 60.

As part of the assessment, the Group stress-tested the

three-year plan using various severe but plausible scenarios.

Management reviewed the Principal Risks and considered

which might threaten the Group’s viability. None of the

individual risks would in isolation compromise the Group’s

viability, and so we considered several different severe

scenarios where Principal Risks arose in combination. These

scenarios were developed with input from our Global Risk

Committee, whichhas members fromkey functions across

the business.

Under the stress scenarios, churn assumptions were increased

byup to 75% and a reduction by up to 50% of newcustomer

acquisition and sales to existing customers considered.

In all stress scenarios, the Group continues to have sufficient

resources tooperate without triggering the need to renegotiate

debt. Scenarios modelled reflect our latest assessment of

the anticipated impact of the risks identified in line with

theprior year.

The scenarios considered to be the most plausible and

significant in performing the assessment of viability

andthe combination of Principal Risks involved are

shownonthenext page.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

A cross-functional group of senior leaders, including

representatives from Finance, Risk, ESG, Cloud Operations,

IT, Product Marketing, and Legal, estimated the monetary

impact of each scenario and evaluated the possible

consequences on the Group should each scenario arise.

As set out in the Audit and Risk Committee’s report on

pages109 to 116, the Directors reviewed and discussed

theprocess undertaken by management and also reviewed

the results of reverse stress testing performed to provide

anillustration of the level of churn and deterioration in new

customer acquisition which would be required to exhaust cash

down to minimum working capital requirements. The result of

the reverse stress testing has highlighted that such a scenario

would only arise following acatastrophic deterioration in

performance, well in excess of the assumptions considered

inthe viability scenarios set out above.

If the scenarios set out above were to arise, management

would have severaloptions available to maintain the Group’s

financial position, including cost reduction measures, the

arrangement of additional financing and a review of the

sustainability of the dividend policy.

Confirmation of longer term viability

Based on the assessment explained above, the Directors

confirm that they have a reasonable expectation that the

Group will continue to operate and meet its liabilities,

asthey fall due, for at least the next three years.

Viability scenario Linked Principal Risks

i) Data breach

The deliberate targeting or accidental release of customer

datathat breaches data privacy laws and/or societal expectations

in any region could have a significant impact onSage’s reputation

in the market, as well as impact its regulatory compliance with

the various data protection laws towhich Sage is subject.

• Customer experience

• Developing and exploiting new business models

• Route to market

• People and performance

• Culture

• Cyber security

• Data and AI governance

• Readiness to scale

ii) Existing or new market disruptor

The entry of a new player, or the expansion of an existing

marketplayer in the financial and accounting management

space with a free or very low-cost offering or leveraging AI in

anew way to disrupt the accounting software category, that

significantly disrupts Sage’s total market share.

• Customer experience

• Execution of product strategy

• Developing and exploiting new business models

• Route to market

• Data and AI governance

iii) Global economic shock

The crystallisation of a global economic shock that

leadstoaglobal economic downturn or an inflationary

wage-price spiral, resulting in increased default of small

andmedium-sizedbusinesses.

This could lead to a significant increase in customer churn

andareduced ability to sell to new or existing customers.

Additionally, increased labour costs in key markets could

makeit difficult for Sage to retain and attract talent.

• Execution of product strategy

• Developing and exploiting new business models

• Route to market

• Customer experience

• ESG

• People and performance

iv) Cloud operations failure

The risk of an event that causes the live services environment

tobe brought down due to the operating environment being

changed internally through product or system changes, external

or internal cyber-attack, or a key third-party provider being

compromised. The risk also considers the extent to which

hosting infrastructure supporting Sage’s cloud operations could

be physically damaged through an adverse climate event.

• Execution of product strategy

• Developing and exploiting new business models

• Route to market

• Customer experience

• Cyber security

• Readiness to scale

• ESG

• Data and AI governance

Viability Statement continued

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

GOVERNANCE

REPORT

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

UK Corporate Governance Code 2018

Compliance Statement

The Board is pleased to confirm Sage’s compliance with the

provisions of the UK Corporate Governance Code 2018 (the

‘Code’) throughout FY25. A copy of the Code can be found on

the Financial Reporting Council’s (FRC) website: www.frc.org.uk.

The Board remains committed to upholding the highest

standards of corporate governance and during FY25

undertook a comprehensive review of its preparedness

against theUK Corporate Governance Code 2024 (the ‘2024

Code’), in anticipation of the 2024 Code applying to Sage

from 1 October 2025. The Board will present its first report

oncompliance with the 2024 Code in the FY26 Annual Report.

The following pages outline Sage’s governance framework

and introduce the members of the Board, the Executive

Leadership Team, and the work of the Board and its Committees

during FY25. The table below outlines where to find information

on how the Principles set out in the Code areembedded and

applied across Sage.

The Board has continued with its chosen alternative approach

toworkforce engagement, through the Board Associate

Programme, as permitted by the Code. The Programme’s

effectiveness was reviewed during FY25 and it continues

toserve as a valuable communication channel between

Boardmembers and Sage colleagues, providing the Board

with meaningful insights into colleague perspectives to

inform decision making.

Further details on the role of the Board Associate

and its effectiveness can be found on pages 91, 95

and 99

Board Leadership and

CompanyPurpose Page

Purpose and culture 24 to 29, 98 and 99

Shareholder engagement 91 and 97

Colleague engagement 91, 94 and 95

Other stakeholder engagement 46 and 47, 90 to 97

Conflicts of interest 82

Division of Responsibilities

The role of the Board 80

The role of the Board Committees 80

Board composition 81

Committee composition 83

Time commitment 104 and 105

Composition, Succession, and Evaluation

Board composition and succession 104

Diversity, equity, and inclusion 105 to 108

Annual election and re-election of Directors 104

Board performance review 100 and 101

Audit, Risk, and Internal Control Page

Significant reporting and accounting matters 111 to 113

Fair, balanced, and understandable 114

Viability Statement and going concern 67 and 68, and 113

Risk management and internal controls 114

Internal audit 115

External auditor 115

Principal and emerging risks 56 to 66

Remuneration

Remuneration principles 120

Pensions and benefits 127 and 128

Directors’ shareholdings and share interests 147

External advisors 151

Corporate governance report

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Governance highlights

Board ethnicity

2024/25

Asian 1

White 9

2023/24

Asian 2

White 8

Board genderBoard nationality

2024/25

British 8

American 2

2023/24

British 8

American 2

Board tenure

Less than a year

1 to 3 years

3 to 6 years

Over 6 years

Number of Board members

51 43

Governance

14%

Executive updates

38%

Strategy

48%

2024/25

Male 6

Female 4

2023/24

Male 6

Female 4

Directors’ key skills and experience

Andrew

Duff

Steve

Hare

Jonathan

Howell

Dr John

Bates

Jonathan

Bewes

Maggie

Chan

Jones

Annette

Court

Roisin

Donnelly

Derek

Harding

Lori

Mitchell-

Keller

Executive and strategic leadership

Financial acumen

Technology and innovation

Remuneration and people

Audit and risk

Sustainability and environment

Strategy and M&A

Customer-centricity

International experience

Board allocation of time spent in FY25

2. The data reflects Board tenure as at 30 September 2025.

1. Dr John Bates holds dual nationality of British and American. For the purpose of the Board nationality statistics his nationality is stated as British.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Governance at the heart

ofpurposeful leadership

Chair’s introduction to governance

Dear shareholder,

On behalf of the Board, I am pleased to introduce our

Governance Report for the financial year ended

30 September 2025.

This report outlines how the Board oversees corporate

governance across the Group, ensuring that long-term

sustainable success is at the heart of our decision making,

while acting with transparency, openness, and fairness to

ourstakeholders. The report also provides insight into the

key activities of the Board and its Committees in FY25 and

how we seek to ensure the maintenance of effective controls

and processes to monitor and manage strategic risks and

capitalise on opportunities presented by digital transformation

and innovative technology. Our strong culture and shared

Values remain fundamental to the continued success of

thebusiness, and it’s important that theBoard plays its

partin keeping our purpose, strategy, and culture aligned.

Board composition andsuccession

Overseeing and implementing effective succession

planninghas been a key priority for the Board in FY25.

Wewelcomed Lori Mitchell-Keller as a new Non-executive

Director, who wasappointed to the Board in February 2025.

Lori brings acustomer-centric mindset and hasexperience

in scaling, differentiating, and advancing businesses through

technology transformation. Her expertise complements and

enhances the Board’s capabilities. Also inFebruary 2025,

Sangeeta Anand stepped down from the Board in order to

fully focus her time on her other board commitments, and

wewish her well for her future endeavours.

As announced in March 2025, Jonathan Howell informed the

Board of his intention to step down from his role as Chief

Financial Officer on 31 December 2025, having servedon

theBoard for twelve years, with five of those asaNon-

executive Director, and then seven years as ChiefFinancial

Officer. Iam grateful to Jonathan for his outstanding

contribution, commitment, and dedication tothe Board

during his tenure. Jonathan willleave with our best wishes

ashemoves on from executive life. In line with the Group’s

succession plans, Jonathan will be succeeded by Jacqui

Cartin as Chief Financial Officer witheffect from 1 January

2026. Jacqui is exceptionally wellqualified to be the new

Chief Financial Officer of Sageand an outstanding successor.

Iam looking forwardto welcoming Jacqui to the Board.

For more information on our Board composition

andsuccession planning, please seepages 104

and105

Stakeholder engagement

In FY25, we added partners as a key stakeholder, recognising

their strategic importance in helping us drive sustainable

growth and achieve our ambitions for our customers. The

Board and I were pleased to have several opportunities

throughout the year to meet with different stakeholder groups,

allowing us to listen to their feedback and perspectives.

Theseinteractions ensure we gain a thorough understanding

ofdiverse views, which in turn inform and guide the decisions

in the Boardroom.

”

“

Our strong culture and shared

Valuesremain fundamental to the

continued successofthebusiness,

andit’simportantthattheBoard

playsitspart in keeping our purpose,

strategy, and culture aligned.

Andrew Duff

Chair

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

One of the most valued and enjoyable aspects of the Board’s

role is the opportunity to meet and spend time with colleagues

across the Group. The conversations that take place inform

our direct understanding of the sentiment of our colleagues

and their views on the Group’s operations, risks, successes,

and challenges. I would like to thank all those colleagues who

took the time to attend Board events and share their experiences

with us in FY25.In addition to these engagements, our ongoing

Board Associate programme continues to enhance our awareness

bybringing the colleague voice into the Boardroom. All

ofthese interactions give the Board insights as to how the

Group’s high-performance culture is being consistently

embedded at all organisational levels.

Amy Cosgrove, our current Board Associate, will conclude her

tenure in December 2025. I am grateful to Amy for bringing

her valuable insights into the Boardroom, and I wish her

every success as she takes on her next challenge within

Sage.The Board has commenced the process of appointing

hersuccessor, ensuring continued representation of colleagues’

perspectives in the Boardroom.

You can read more on the Board’s engagement

withstakeholders on pages 90 to 97

Details on how the Board is monitoring and

embedding culture can be found on pages 98 and 99

Board performance review

This year the Board undertook an external performance

review led by Manchester Square Partners, an independent

advisory firm. The review process was undertaken between

May and July 2025. I am delighted to confirm that thereview

concluded that the Sage Board wasfunctioning extremely

well and in line with first-class corporate governance

processes, demonstrating strong leadership, rigour, and

support. Positive feedback was also received on individual

Directors and Committee Chairs, noting their time investment,

commitment, and support of the business and the leadership

team. The Board is committed to ongoing improvement and

is developing a plan to address those areasof improvement

identified during the review.

Further details about the FY25 Board performance

review can be found on pages 100 and 101

Annual General Meeting

The 2026 Annual General Meeting (‘2026 AGM’) will be held

onThursday, 5 February 2026 at Sage’s Newcastle office.

Ihopeyou will be able to attend. The Board looks forward

tomeeting shareholders, hearing their views, and answering

any questions. Further details about the 2026 AGM, including

the resolutions to be tabled for shareholder approval, will

beprovided in the Notice of Annual General Meeting, and

shareholders will be notified when it is available to view

onour website.

The year ahead

As I look to the future, I am excited about the opportunities

that lie ahead for the Group. The ongoing support from our

stakeholders remains integral to our continued success, and

Iwould like to take this opportunity to thank all who have

contributed so meaningfully throughout FY25. My appreciation

also extends to my fellow Board members for their invaluable

insight, and to the Executive Leadership Team, whose commitment

and leadership have positioned the Group to deliver sustained

value as we move into the new financial year.

Andrew Duff

Chair

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Our leadership

Board of Directors

Maggie Chan Jones

Independent

Non-executive Director

Lori Mitchell-Keller

Independent

Non-executive Director

Jonathan Bewes

Independent

Non-executive Director

Annette Court

Senior Independent

Director

Dr John Bates

Independent

Non-executive Director

Roisin Donnelly

Independent

Non-executive Director

Andrew Duff

Chair

Steve Hare

Chief Executive

Officer

Jonathan Howell

Chief Financial

Officer

Derek Harding

Independent

Non-executive Director

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Board Chair

Committee Chair Audit and Risk Committee Nomination Committee Remuneration Committee

Key

Andrew Duff

Chair

Appointed

Non-executive Director

on 1 May 2021 and

Non-executive Chair

on1 October 2021

Gender

Male

Ethnicity

White

Nationality

British

Skills

Wealth of experience as a non-executive director

and chair, with a strong track record of transforming

high-profile international businesses. Effective

leader with strategic insights and international

experience. Strong focus on purpose, culture,

customer-centricity, and delivering value for

allstakeholders.

Key previous experience

Non-executive chair and chair of the nomination

committee of Elementis plc

Non-executive chairand chair of the nomination

committee of SevernTrent plc

Senior independent director andchair of the

remuneration committee of Wolseleyplc

Chief executive officer of npower

Key external commitments

Non-executive director of UK Government

Investments Limited

Steve Hare

Chief Executive

Officer

Appointed

3 January 2014

asChiefFinancial

Officer, 31 August 2018

asChief Operating

Officer, and asChief

Executive Officer on

2 November 2018

Gender

Male

Ethnicity

White

Nationality

British

Skills

Significant financial, operational, and transformation

experience, which includes driving change programmes

in several previous roles. Broad knowledge of Sage,

having joined the Board in January 2014 as Chief

Financial Officer. Extensive understanding of the

drivers and priorities needed for the commercial

delivery of Sage’s strategy and in creating a

high-performance culture.

Key previous experience

Operating partner and co-head of the Portfolio Support

Group at the private equity firm Apax Partners

Chief financial officer of Invensys plc and Marconi plc

Group finance director of Spectris plc

Key external commitments

Non-executive director of J Sainsbury plc

Jonathan Howell

Chief Financial

Officer

Appointed

15 May 2013 as Non-

executive Director and as

Chief Financial Officer

on 10 December 2018

Gender

Male

Ethnicity

White

Nationality

British

Skills

Highly experienced group finance director, chair

and non- executive director. Significant financial

and accounting experience, gained across several

sectors to provide substantial insight into the

Group’s financial reporting and risk management

processes. Excellent working knowledge of Sage,

having joined as an independent Non-executive

Director and served as the Chair of the Audit and

Risk Committee.

Key previous experience

Group chief financial officer of Close Brothers

Group plc

Group chief financial officer of London Stock

Exchange Group plc

Non-executive director of EMAP plc

Chair of FTSE International

Key external commitments

Non-executive director and chair of

theauditcommittee of Experian plc

1. Non-executive director and chair of the audit

committee of Whitbread PLC from 1 January 2026.

Dr John Bates

Independent

Non-executive

Director

Appointed

31 May 2019

Gender

Male

Ethnicity

White

Nationality

British, American

Skills

Visionary technologist and highly accomplished

business leader in the fields of technology

innovation and business transformation. Proven

track record of applying cutting edge techniques,

including Artificial Intelligence and Machine

Learning, to revolutionise business areas including

algorithmic trading, smart environments, software

test automation and document process automation.

Key previous experience

Co-founder, president, and chief technology

officerof Apama (pioneer in Streaming Analytics)

Head of industry solutions and chief marketing

officer of Software AG

Chief executive officer of Terracotta, Inc.

(asubsidiary of Software AG)

Executive vice president of corporate strategy and

chief technology officer at Progress Software

Chief executive officer at Plat.One (now part of SAP)

Chief executive officer of the Eggplant Group,

partof Keysight Technologies Inc

Key external commitments

Chief executive officer of SER Group Holding GmbH

Jonathan Bewes

Independent

Non-executive

Director

Appointed

1 April 2019

Gender

Male

Ethnicity

White

Nationality

British

Skills

Wealth of accounting and financial experience

andexperienced audit committee chair. Strong

investment banking experience gained over a

25-year career in the sector. Advised boards of

UKand overseas companies on a wide range of

financial and strategic issues, including

financing,corporate strategy, and governance.

Key previous experience

Investment banking experience with Robert

Fleming, UBS, and Bank of America Merrill Lynch

Chartered accountant with KPMG

Vice-chair, corporate and institutional banking

atStandard Chartered Bank plc

Key external commitments

Senior independent director and chair of the audit

committee of Next plc

Non-executive director and chair of the audit and

risk committee of the Court of the Bank of England

Chair of MONY Group plc

Changes to the Board and to Board Committees

duringFY25 and announced up to the date of this report

• Sangeeta Anand stepped down from the Board on 6 February 2025.

• Lori Mitchell-Keller was appointed to the Board on 7 February 2025.

• Maggie Chan Jones was appointed to the Remuneration Committee

on1 August 2025.

• Jonathan Howell will step down from the Board on 31 December 2025.

• Jacqui Cartin will join the Board as Chief Financial Officer on

1 January2026.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Our leadership continued

Maggie Chan

Jones

Independent

Non-executive

Director

Appointed

1 December 2022

Gender

Female

Ethnicity

Asian

Nationality

American

Skills

Deep international marketing and brand experience

gained from time spent at some of the world’s

largest technology companies. SAP’s first woman

chief marketing officer, responsible for driving

global marketing across more than 180 countries.

Recognised as an industry thought leader in the

marketing and technology sector andwas previously

named as one of the “Most Influential CMO” in the

world by Forbes.

Key previous experience

Non-executive director of Avast plc

Chief marketing officer of SAP

Founder and former chief executive of Tenshey, Inc

Key external commitments

Non-executive board advisor to Ontinue

Non-executive director and designated non-executive

director for workforce engagement of BT Group plc

Vice president and chair of the compensation

committee of the United States Tennis Association

Annette Court

Senior Independent

Director

Appointed

1 April 2019

Gender

Female

Ethnicity

White

Nationality

British

Skills

Experience of serving as chair of a remuneration

committee, as well as in executive and non-

executive director roles at the highest levels,

including as chair of FTSE 100 companies. Strong

technology background combined with a record of

using ecommerce to drive commercial success.

Expertise in mentoring leaders to achieve greater

clarity of purpose and provide a practical approach

to problem-solving.

Key previous experience

Senior independent director of Jardine Lloyd

Thompson Group

Chief executive officer of Europe General

Insurancefor Zurich Financial Services

Chief executive officer of the Direct Line Group

Member of the board of the Association of

BritishInsurers (ABI)

Non-executive director of Foxtons Group plc

Chair of Admiral Group plc

Key external commitments

Chair of WH Smith PLC

Director of Admiral Europe Compañía de Seguros

SAU (AECS)

Roisin Donnelly

Independent

Non-executive

Director

Appointed

3 February 2023

Gender

Female

Ethnicity

White

Nationality

British

Skills

Extensive customer, marketing, and branding

experience brought to the Board, gained during

executive career at Procter & Gamble. Strong

background in digital transformation and data,

andsignificant knowledge and experience of

developing environmental, social and

governance(ESG) strategies at board level.

Key previous experience

Non-executive director of Just Eat plc

Non-executive director of HomeServe Limited

Non-executive director of Holland & Barrett Limited

Non-executive director of Bourne Leisure Limited

Key external commitments

Non-executive director of NatWest Group plc

Non-executive director ofPremier Foods plc

Derek Harding

Independent

Non-executive

Director

Appointed

2 March 2021

Gender

Male

Ethnicity

White

Nationality

British

Skills

Significant financial experience, including

leading business transformations and sharp

financial acumen. Broad experience across a

rangeof commercially focused financial and

operational roles including strategy, investor

relations, and mergers and acquisitions.

Key previous experience

Chief financial officer of Senior plc

Group finance director of Shop Direct

Finance director of Wolseley UK

Chief financial officer of Spectris plc

Key external commitments

President of Spectris Scientific and board

memberof Spectris plc

Lori Mitchell-

Keller

Independent

Non-executive

Director

Appointed

7 February 2025

Gender

Female

Ethnicity

White

Nationality

American

Skills

Global technology leader and strategic advisor

whohas over 30 years of experience of scaling,

differentiating, and advancing businesses

throughtechnology transformation. A strong

trackrecord of spearheading industry-focused

product solutions and growth strategies.

Key previous experience

Vice president of Google Cloud

President of Industry Cloud at SAP

Senior vice president of Product/Solution

Management and Marketing at JDA Software

Chief marketing officer of Manugistics Software

Director of Allegiance Healthcare

Key external commitments

Board member of Mitratech Holdings Inc

Non-executive director of OneStock

Scan or click the QR code

to read more about the

Board of Directors

Board Chair

Committee Chair Audit and Risk Committee Nomination Committee Remuneration Committee

Key

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

About our Board

The Board comprises the Chair, seven independent Non-executive Directors, and two Executive Directors.

There is a clear and distinct division between the roles of the Chair and the Chief Executive Officer. Each has a clearly

definedremit, which is established and agreed by the Board.

As Directors of the Company, both the Non-executive and Executive Directors have the same duties, but distinct roles

ontheBoard, which ensures appropriate accountability and oversight.

Roles and division of responsibilities

Andrew Duff

Chair

• Leadership and effective

operation of the Board

• Sets the Board agenda, and the

style andtone of Board discussions

• Ensures the Board receives

accurate and timely information

• Leads the annual Board

performance review

• Promotes an inclusive and open

culture and debate

• Engages with stakeholders through

structured dialogue and ensuring

their feedback informs and shapes

Board decisions

• Promotes the highest standards of

corporate governance, assisted by

theCompany Secretary, and

demonstrates objective judgement

• Promotes and safeguards the interests

and reputation of the Company

Steve Hare

Chief Executive

Officer

• Provides leadership of the Company,

develops and implements the

Group’s objectives and strategy

• Leads the Executive Leadership

Team and senior management, with a

focus on driving Sage’s operational

and financial performance

• Keeps the Chair and Board informed

onkey issues, shares senior

management’s views to improve

Board discussions, and presents

differing opinions from

management before decisions

arereached

• Maintains an effective internal

controls and risk management

environment to ensure risks are

rigorously managed

• Promotes a strong culture and

ensures Sage operates in line with

itsValues by doing the right thing

Jonathan Howell

Chief Financial

Officer

• Manages the Group’s financial

affairs, including any tax and

treasury matters

• Supports the CEO in implementing

the corporate strategy and

overseeing operational performance

• Ensures effective financial

reporting, processes, and

controlsare in place

• Engages with Sage’s stakeholders,

and manages relationships with

Sage’s investor base

• Provides insights into the Group’s

commercial and financial position

• Recommends the annual budget

and long-term strategic and

financial plan

Annette Court

Senior Independent

Director

• Provides support and acts as

asounding board for the Chair

• Serves as a trusted intermediary

forthe other Directors

• Acts as an alternative contact for

shareholders, if concerns have not

been addressed through normal

channels of communication

• Leads the performance review

ofthe Chair and meets with the

other Non-executives atleast

annually without the Chairpresent

• Together with the Nomination

Committee, leads the Chair

succession process

Dr John Bates, Jonathan

Bewes, Maggie Chan Jones,

Roisin Donnelly,

DerekHarding, and

LoriMitchell-Keller

Independent Non-executive

Directors

• Contribute, challenge, and monitor

the delivery of strategic objectives

and Group performance

• Assist in development, approval,

and review of strategy

• Oversee internal controls and

theEnterprise Risk Management

Framework, and ensure they are

rigorous

• Provide external perspectives,

independent insight, and support

based on relevant experience

• Engage with internal and external

stakeholders and take their views

into account in their decision

making, including the culture

atSage

• Review the succession

planningtogether with the

BoardCommittees, Chair, and

Senior Independent Director

Vicki Bradin

General Counsel and

CompanySecretary

• Ensures the necessary information

flow between the Board and its

Committees, and senior management

to drive Board and Committee

efficiency and effectiveness

• Advises the Board on legal,

compliance, and corporate

governance developments

• Supports the Chair with Board

procedures by facilitating

comprehensive and tailored

inductions, training and

professional development,

andstakeholder engagement

plansfor Non-executive Directors

• Supports the Chair on the

Boardperformance review

The Non-executive Directors’ terms of appointment are available for inspection atSage’s Registered Office.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Executive Leadership Team

Our leadership continued

Amanda Cusdin

Chief People Officer

Amy Lawson

Chief Brand and

CorporateAffairs Officer

Vicki Bradin

General Counsel and

CompanySecretary

Derk Bleeker

Chief Commercial Officer

Aaron Harris

Chief Technology Officer

Walid Abu-Hadba

Chief Product Officer

Steve Hare

Chief Executive Officerand member

of the Executive Leadership Team

See full biography in Board of

Directors, page 75 .

Jonathan Howell

Chief Financial Officer and member

of the Executive Leadership Team

See full biography in Board of

Directors, page 75.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

1. The Executive Leadership Team

composition data in this section

reflects the information as at

30 September 2025 andincludes

theExecutive Directors aswell as

Eduardo Rosini, Chief Growth Officer,

who served asa member of the ELT

throughout FY25.

2. Jonathan Howell’s tenure does not

forthispurpose include time as

Non-executive Director.

Executive Leadership

Team composition

Experience

Technology and innovation

11%

Financial

11%

Customer success

22%

Marketing/Brand

17%

Corporate affairs

Strategy

11%

Colleague success and ESG

17%

Legal, risk and governance

Tenure

1 to 3 years

3 to 6 years

Over 6 years

Number of Executive

Leadership Team

6143

Gender

Male

Female

Walid Abu-Hadba

Chief Product Officer

Appointed

1 January 2022

Skills and experience

Extensive industry experience and leadership

skills gained in the technology sector, with

abreadth of technology sector experience.

Passionate about driving strategy and building

the culture that delivers tangible, customer-

centric solutions.

Joined Sage in 2021, having previously spent

20years at Microsoft as corporate vice president

responsible for the developer and platform

evangelism group, before joining ANSYS, Inc

aschief product officer. Most recently senior

vicepresident of Oracle Developer Tools. Holds

board-level roles in the technology sector and

patents in the field of AI.

Derk Bleeker

Chief Commercial Officer

Appointed

1 October 2019

Skills and experience

Accountable for Sage’s Go to Market teams,

including commercial performance, customer

support, and performance marketing. Joined

Sage in 2014 and has held a number of commercial,

finance, mergers and acquisitions, and strategy

leadership roles, including as Sage’s Chief

Corporate Development and Strategy Officer and

most recently as President—EMEA. Appointed

Chief Commercial Officer on 1 March 2024.

In-depth experience as a leader of corporate

development, gained from working for a global

industrial and medical technology company.

Experience in private equity and as a mergers and

acquisitions specialist in investment banking.

Vicki Bradin

General Counsel and

CompanySecretary

Appointed

1 October 2016

Skills and experience

Leads the Office of the General Counsel, which

includes several teams at Sage, including Legal

and Company Secretariat, Security, Procurement,

Mergers and Acquisitions, AI and Data Governance,

Risk, and Assurance. Extensive corporate legal

experience built over 20 years in global and magic

circle law firms and in-house at large multi-

nationals and UK-Iisted companies.

Contributes in-depth software and technology

sector knowledge and experience across a breadth

of legal areas, including mergers and acquisitions,

litigation, risk, and intellectual property.

Amanda Cusdin

Chief People Officer

Appointed

1 October 2017

Skills and experience

Joined Sage in March 2015, becoming Chief People

Officer in September 2018. Leads our global People

function and has overall executive accountability

for Sage’s Places strategy, creating world-class

workplaces that promote innovation, productivity,

and wellbeing, and amplify the Sage experience for

colleagues and visitors alike.

Before joining Sage, spent 18 years within a

numberof FTSE organisations, working across all

aspects ofHuman Resources to drive change and

transformation, with particular focus on mergers

and acquisitions integration. Passionate about

developing talent and leadership, and creating truly

inclusive organisations which promote diversity.

Aaron Harris

Chief Technology Officer

Appointed

1 April 2019

Skills and experience

Key contributor and creator of Sage’s technology

strategy, and advisor on its software architecture.

More than 20 years of high-tech engineering

experience in business applications and

softwaredevelopment strategies.

Founding leader of Sage Intacct, acquired by

Sagein 2017. Led the company’s product vision

and technology direction, establishing Sage

Intacct as the innovation leader in cloud

financialmanagement solutions.

Amy Lawson

Chief Brand and

CorporateAffairsOfficer

Appointed

1 March 2022

Skills and experience

Joined Sage in 2015, becoming Chief Corporate

Affairs Officer in 2022, and Chief Brand and

Corporate Affairs Officer in 2024. Responsible for

brand and corporate affairs at Sage, including

internal and external reputation and engagement.

Leads our global strategy for communications

and PR, brand and campaigns, public affairs,

sustainability, and Sage Foundation. Former

Board Associate at Sage.

Prior to joining Sage, served as head of the

CabinetOffice media operation as a civil

servantfor the UK government and was Head

ofCommunications for Channel 4 News,

responsible for protecting and promoting the

reputation of the national news programme.

Changes to the Executive Leadership

Team during FY25andannounced

up to the date of thisreport

• Cath Keers stepped down from the Executive

Leadership Team on 31 December 2024.

• Eduardo Rosini stepped down from the

Executive Leadership Team on 31 October 2025.

• Jonathan Howell will step down from the

Executive Leadership Team and the Board

on31 December 2025.

• Jacqui Cartin will join the Executive

Leadership Team when she assumes the

position of Chief Financial Officer on

1 January2026.

• Walid Abu-Hadba will step down from his role

as Chief Product Officer and from the

Executive Leadership Team with effect from

31 March 2026.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Corporate governance report

Governance framework

Our governance framework empowers the Board to

function with optimal efficiency and effectiveness,

ensuring well-informed decision making, robust

oversight, and transparent accountability.

Executive Leadership Team

The Board delegates responsibility for the day-to-day strategic execution and operational management oftheCompanytotheELT,

which is led by the Chief Executive Officer.

The ELT is accountable for executing the Company’s strategy and achieving its commercial objectives. It drives operational

andfinancial performance while operating within established risk management and internal control frameworks, and plays a

criticalrole in fostering and sustaining the Company’s culture. Members of the ELT provide regular updates at Board meetings

andmaintain ongoing dialogue with the Board to ensure alignment, enable support, and encourage constructive challenge.

Shareholders

Shareholders, as the Company’s owners, are instrumental in guiding our governance practices.

More information about our shareholder engagement can be found on pages 91 and 97

Board of The Sage Group plc.

The Board is responsible for the stewardship, strategic direction, and overall performance of the Group. Its role is to promote the

long-term success of the Company by generating sustainable value for shareholders and considering the interests of the Group’s

other stakeholders. The Board monitors the Group’s culture and Values, ensuring they are effectively embedded throughout the

organisation. It also provides constructive challenge to management on the execution of strategy and is accountable for maintaining

robust risk management and internal control systems.

The Board is supported by three Committees, each of which is entrusted with delegated authority to provide rigorous oversight and

focused attention on key matters. The Chair of each Committee reports regularly to the Board, ensuring that all members remain

informed and actively engaged in decision making on delegated issues.

Audit and Risk Committee

Oversees the integrity of theCompany’s

financial and narrative reporting and

ensures themaintenance of robust

internal controls and risk management

systems. It monitors the effectiveness of

internal audit andthe effectiveness of the

externalaudit process and the external

auditor independence andobjectivity.

See pages 109 to 116 forthe Audit

and Risk Committee Report

Nomination Committee

Keeps the structure, size, and composition

of the Board under regular review and

recommends appointments to the Board

and its Committees. It oversees succession

planning for the Board and Executive

Leadership Team, ensuring a diverse

pipeline of talent and promoting diversity

across the Board and the wider Group.

See pages 102 to 108 for the

Nomination CommitteeReport

Remuneration Committee

Sets the Group’s Remuneration Policy

andagrees the remuneration framework for

the Chair, Executive Directors, and Executive

Leadership Team (‘ELT’) members, and

selected senior executives. It does so with

regard to remuneration practices and

policies across the wider workforce within

the Group. It is also responsible for reviewing

the design ofthe Group’s incentive plans and

performance-related pay.

See pages 117 to 151 for the

Remuneration CommitteeReport

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TermsofReference

Scan or click the QRcode

for furtherinsight into

Sageleadership

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Our governance framework enables agile and effective decision making, by providing a clear framework for delegated

responsibilities, whilst ensuring the Group operates within established and robust governance and risk practices.

The governance framework also includes a number of additional supporting corporate and management Committees:

The Group’s subsidiary entities are equally held to the same

rigorous standards of corporate governance and operate

under a well-established delegated authority framework

thatis consistently applied across the Group.

Schedule of matters reserved

Certain key matters requiring Board approval are set out

inaformal schedule of matters reserved, which the Board

reviews annually.

Scan or click the QR Code for the full

schedule of matters reserved fortheBoard

Board composition

The Board recognises that diversity of background, experience,

and perspective among its members is essential to fostering

constructive debate, enhancing decision making, and

supporting overall effectiveness. The composition of the

Board is subject to ongoing review and all Board appointments

follow a formal and rigorous search process, which complements

the comprehensive succession planning activities. The Board

entrusts the Nomination Committee with the responsibility of

ensuring its composition remains appropriate, drawing on the

Committee’s expertise and insight.

The Sustainability,

AIand Data Ethics

Committee

provides oversight for the

direction and progress of

Sage’sSustainability and

Societystrategy, and ongoing

adherence and developments to

the AI and Data Ethics Principles.

Members

: The Committee is

chaired by theChief Brand and

Corporate Affairs Officer, with

membership including the EVP

Sustainability and Foundation, the

EVP Chief Risk Officer, the

General Counsel and Company

Secretary, the Chief Product

Officer, the Chief People Officer,

and the Chief Technology Officer.

Effective from FY26, EVP

People—Routes to Revenue,

Learning and Inclusion,

andVicePresident (‘VP’)

AIandData Governance will

joinasCommittee members,

andthe Chief People Officer

willstep down.

The Mergers and

Acquisitions

Committee (‘M&A

Committee’)

considers proposals to acquire,

divest, and/or make investments

in businesses as outlined in the

Group’s Merger, Acquisition &

Divestiture Policy. This Committee

also oversees updates on integration

of acquisitions in line with an

established cadence. The M&A

Committee is a central part

ofdisciplined and efficient

acquisition, divestiture, and

investment management at Sage.

Members: The Committee is

chaired by the Chief Executive

Officer, with membership

including the Chief Financial

Officer, the General Counsel

andCompany Secretary, and

theChief People Officer.

The Global Risk

Committee (‘GRC’)

oversees Sage’s risk management

activities in order to mitigate

risks and enable opportunities

identified bythe business. It

holdsultimate accountability

foridentifying, assessing, and

managing strategic risks across

the Group. It sets therisk appetite

and approves changes to Sage’s

Principal Risks.

Members: The Committee is

chaired by the General Counsel

and Company Secretary, with

membership including the Chief

Executive Officer and the Chief

Financial Officer. The Chair of the

Audit and Risk Committee attends

regularly, and other Non-executive

Directors are invited to participate

on an ad hoc basis to provide

additional insight and oversight.

The Disclosure Committee

oversees the accuracy, timeliness, and materiality of Group disclosures and announcements, ensuring that Sage meets

itscompliance obligations in accordance with applicable regulations.

Members: The Committee is chaired by the Chair of the Board, with membership including the Chief Executive Officer,

theChief Financial Officer, the Chair of the Audit andRisk Committee, and the General Counsel and Company Secretary.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Non-executive Director

induction programme

Lori Mitchell-Keller

Led by the Company Secretary with input from the

Chair, acomprehensive induction programme was

designed for ournew Non-executive Director, Lori

Mitchell-Keller. The programme featured a tailored

schedule of meetings and a dedicated reading room

via Sage’s secure Board portal to support Lori’s

understanding of the Sage business and the UK

governance landscape.

As part of Lori’s business familiarisation, she met

withthe Executive Leadership Team and senior leaders

across the organisation, gaining valuable insights

intoSage’s strategic priorities, brand positioning,

sustainability strategy, cyber security, and culture.

Board familiarisation included one-to-one sessions

withtheBoard Chair, Committee Chairs, and the

Company Secretary, offering an overview of Board

structure, Committee responsibilities, and governance

processes. Meetings with the Senior Independent

Director supported Lori’sunderstanding of Board

dynamics. Meetings were also held with the Board

Associate, to enable her understanding ofthe

colleague sentiment across the business.

The programme also deepened Lori’s understanding

ofthe current UK corporate governance landscape,

equipping her with valuable insight into the evolving

expectations placed on UK listed companies—particularly

in relation to Board leadership, succession planning,

and the effective discharge of her duties asaDirector.

Managing conflicts of interest

Directors are required to disclose any actual or potential

conflicts of interest to the Board as soon as they arise. At

each Board meeting, the Board formally considers a register

of interests, commitments, and potential conflicts, including

any proposed new external appointments. When appropriate,

the Board gives the necessary approvals in accordance with

our articles of association. Ifany possible conflict exists,

Directors recuse themselves from consideration of the

relevant subject matter.

During FY25, the Board has concluded that no Director had

aconflict that would have a detrimental impact on their

independence and judgement or their time commitment

toSage.

Further information on external directorships

andtime commitments can be found on

pages104and 105

Induction, training, and

professionaldevelopment

On appointment, all new Directors undertake a comprehensive

and tailored induction programme. This programme is

designed to ensure a smooth transition for new Directors to

theBoard, which consists of meetings and events, and takes

into consideration their specific background, experience, and

prospective Committee memberships. This was demonstrated in

the induction programme undertaken byLori Mitchell-Keller,

as outlined inthe panel on the right, which ensured a thorough

understanding of both Sage’s business and the statutory

responsibilities of aDirector. Theprogramme is structured

around key themes: business familiarisation, corporate

governance including Directors’ duties, and Director

development. As part of the business familiarisation theme,

new Directors engage with members of the ELT and senior

management to gain valuable insights into the Company’s

operations and strategic priorities. Directors are regularly

invited to provide feedback throughout their induction, and

the programme isadapted to address any identified needs.

In addition to these responsibilities, Non-executive Directors

participate in tailored briefings and continuous professional

development activities. These sessions are designed to ensure

Directors maintain a comprehensive understanding of the

Group’s operations, industry trends, and regulatory landscape.

The Remuneration Committee receives updates from the

Committee’s remuneration advisors covering governance

and developments in executive remuneration. Separately,

the Audit and Risk Committee spent time at a focused

session in February 2025, examining the implications of

the2024 Code, with particular focus on Provision 29 and

assessing Sage’s readiness to report inline with the 2024

Code’s recommendations.

Corporate governance report continued

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Board and Committee meeting attendance and cross-membership

Key

Board Audit and Risk

Committee

Nomination

Committee

Remuneration

Committee

Board Chair

Committee Chair

Secretary

Directors

Scheduled

Board

Audit and Risk

Committee

Nomination

Committee

Remuneration

Committee

Andrew Duff

– –

Steve Hare

–––

Jonathan Howell

–––

Sangeeta Anand

––

Dr John Bates

–

Jonathan Bewes

–

Maggie Chan Jones

––

Annette Court

Roisin Donnelly

––

Derek Harding ––

Lori Mitchell-Keller

–––

Vicki Bradin

1. Board and Committee meetings during FY25 followed the formal schedule, with 100% attendance at scheduled meetings by respective members. The table

above shows current Committee memberships, each of which complied with the Code throughout the year. Attendance figures for Committee meetings reflect

participation by Committee members only.

2. Sangeeta Anand stepped down from the Board on 6 February 2025.

3. Maggie Chan Jones was appointed to the Remuneration Committee effective 1 August 2025.

4. Lori Mitchell-Keller was appointed to the Board on 7 February 2025.

5. The Company Secretary acts as a Secretary to the Board and all Board Committees.

Schedule of Board meetings

Board meetings are conducted in an environment that

encourages open dialogue, constructive challenge, and

thoughtful debate. The Board maintains a comprehensive

schedule of meetings and a forward-looking agenda to

ensure its time is used most effectively and efficiently,

andis supported by the Company Secretary.Members of

theBoard and Committees are expected toattend every

scheduled meeting and any ad hoc meetings,where possible.

If a Director cannot attend a meeting, due to either exceptional

circumstances or prior commitments, they are encouraged

toprovide comments and observations to the Chair of

theBoard or Committees, so these can be provided at that

meeting. The Board considers its meetings an important

opportunity to meet colleagues at different operating

locations and aims to hold at least two meetings outside of

the UK each year, providing an opportunity to engage with

adiverse group of colleagues, including senior business

leaders. This approach allows the Board to listen to local

colleagues’ perspectives to gain first-hand insight into

thebusiness and ensure that decisions are grounded in

thepracticalities of day-to-day operations.

During the year, five scheduled Board meetings were held,

alongside three meetings of the Nomination Committee, four

ofthe Audit and Risk Committee, and six of the Remuneration

Committee. An additional brief Board call is also scheduled

in March every year to provide an update on any key matters

that management wishes to bring to the Board’s attention.

The scheduled meetings were evenly distributed throughout

the year to support effective oversight and decision making

by the Board. Inaddition, adhoc meetings were convened as

neededtoensure timely responses to emerging matters.

To ensure the whole Board is kept up to date on the key

strategic decisions and discussions of the Committee

meetings, the Chairs of the Audit and Risk, Remuneration,

and Nomination Committees update the Board on their

respective proceedings, while standing papers from each

Committee are also presented to the Board. All Directors

areinvited to attend Committee meetings, regardless of

membership, subject to recusal where matters concern

thempersonally or present a potential conflict of interest.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Corporate governance report continued

The Non-executive Directors devote considerable time to the

Group beyond the schedule of Board and Board Committee

meetings. Their activities include consideration of out-of-

cycle papers and submitted reports and discussion with

thesenior management and other subject-matter experts,

between Board meetings.

The Board appreciates the importance of opportunities to meet

and interact outside of the Boardroom. This includes Board

dinners, where the Board gathers informally to connect and

strengthen Board cohesion.

Board Strategy Day

The Board met in February 2025 for its annual Strategy Day

inour Newcastle offices, which is attended by the ELT and

other senior management. The day was structured to facilitate

in-depth strategic discussions, enabling the Board to review

progress, explore growth opportunities, and assess challenges

across key areas including product development and AI

capabilities, M&A strategy, and the competitive landscape.

The Board also considered the ongoing integration of a

high-performance culture throughout the business. The

agreed actions and key takeaways for management were

noted with updates provided and built into the Board

agendaoverthe course of FY25.

For further information on the Board activities,

refer to pages 86 and 87

Board engagement

Engaging with all our stakeholders is crucial to the

Group’slong-term success. This year, the Board connected

with all key stakeholders to understand their interests and

incorporate them into Board decision making. The Board

also acknowledges the importance of meeting colleagues

outside the formal meeting schedule, via office visits and

walkarounds, which facilitate natural interactions and help

the Board gain a deeper understanding of Sage’s culture.

Further information regarding engagement

activities with our stakeholders can be found

onpages 90 to 97

Board meeting timeline

3 years

Dates and venues of Board meetings are set.

1 year

A rolling agenda of standing and periodic items

iscompiled. This is updated throughout the year

toreflect key developments in the business.

1 month

The Company Secretary prepares the meeting

agendain consultation with the Chair and CEO.

7 working days

Papers are submitted to the Company Secretary

forfinal review.

5 working days

Papers are circulated to the Board via a secure

webportal.

Board meeting

+ 10 working days

Minutes of the meeting and a schedule of actions

aresent to the Chair for review.

Annual General Meeting

The 2025 Annual General Meeting (‘2025 AGM’) was held on

6 February 2025 at Sage’s Newcastle office, as an in-person

meeting. Allour Directors, as well as both the external auditor

for FY24 (EY) and the auditor for FY25 (KPMG), along with

members of senior management, were present in person.

Allresolutions at the 2025 AGM werevoted on a poll and were

passed with over 80% of votes cast in favour. The website is the

principal means by which wecommunicate with our shareholders.

Scan or click the QR code for details

ofourpast Annual General Meetings

The 2026 Annual General Meeting (‘2026 AGM’) is scheduled

tobe held on Thursday, 5 February 2026 at Sage’s Newcastle

office. The 2026 AGM is a keydate in theBoard’s calendar

and presents an important opportunity toengage with

shareholders. In accordance withSage’s articles of association

and the Code, all Directors who wish to continue to serveare

subject to shareholder election or re-election atthe 2026 AGM.

Sage provides shareholders with the opportunity to submit

questions about the business of the 2026 AGM ahead of the

meeting. Further details will be provided to our shareholders

in the Notice ofMeeting for the 2026 AGM.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Sage’s new North

America headquarters:

From Board

decision to

realised vision

120

engagement events

Sage Studio sessions

97.3

NPS score

Scan or click the QR code to find out

more about the Sage Discovery Centre

Scan or click the QR code to find out more

onSage’s new flagship office in Atlanta

1. NPS score calculated from surveys completed by Sage Discovery Centre attendees.

2. Sage Studio is a dedicated space for stakeholders to create and capture content.

Decision

In February 2023, the Board approved thecapital

expenditure for the new North America headquarters,

underpinning the decision by elevating Sage’s brand

presence, meeting sustainability commitments through its

design, and a vision forapremium collaborative workplace

to attract talentand facilitate customer connection.

Vision

Sage’s management team carried out a comprehensive

search to relocate our North America headquarters

within Atlanta. Asustainable site was proposed in Ponce

City Market, to continue our presence ina city with

strategic potential, diverse talent, and a thriving tech

community. Spanning 58,000 square feet over two levels of

a four floor building, the new workspace was conceived as a

hubforinnovation, collaboration, and growth. Surrounded

by local businesses, the unique location provides an

environment for connection and partnerships.

Experience

Inclusivity and accessibility are central to the

officedesign, with flexible workspaces, wellness

rooms, and biophilic features supporting wellbeing.

Every detail, from ergonomic furnishings to multi-

faithquiet spaces, brings the colleague experience

tothe forefront. Sustainability iswoven throughout

thespace, including zero net carbon operations,

LEEDGold certification, and theuse of locally

sourcedGeorgia timber.

Connection

At the heart of the space is the Sage Discovery Centre,

purpose-built as an immersive venue for stakeholder

engagement. In response to customer feedback for

in-person connection with Sage experts, this dynamic

space hosts customers, partners, and community

groups for hands-on technology showcases, events,

andcollaborative workshops.

Realisation

The office opened its doors in March 2025, closely

followed by July’s Sage Discovery Centre launch

event.Customers, partners, local community leaders,

andcolleagues were in attendance to experience the

immersive space for the first time.

In September 2025, the Board visited the completed

flagship office to experience the strategic vision

brought to life. Board members deepened stakeholder

relationships during their visit through a guided office

tour and participation in engagement sessions with

colleagues, customers, and partners, along with a session

with local entrepreneurs run through Sage Foundation.

Forfurther details on stakeholder engagement, please refer

to pages90 to 97.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

February

Key stakeholders considered Activity

Approval

• Review of merger and acquisition

transaction delegation of authority

• EMTN Programme update

• Disclosure Committee Terms ofReference

• Anti-bribery and Corruption, and

Sanctionspolicies

Deep dive

• Board Strategy Day

• FY25 strategic dashboard

Review

• Q1 FY25 performance and results

• Dividend and funding strategy

• Culture and diversity, equity, and

inclusion(‘DEI’)annual update

Board engagement: Newcastle, UK

• UKI business overview

• UKI people and culture overview

• Customer journey walk through

• Colleague engagement lunch

• UKI product demos

• Go to Market and partner updates

Announcements

• Result of Annual General Meeting

Link to Principal Risks

Corporate governance report continued

Recurring updates

Strategy: The Board receives updates on the Group’s strategy

atscheduled Board meetings and holds a Strategy Day every

year.Please refer to page 84 for more details.

Executive: The CEO and CFO report on financial performance,

corporate development, and investor relations are presented at

every scheduledmeeting. A cyber security update is presented

asastanding item at each Board meeting.

Committees: The Board receives regular updates from

theAuditandRisk Committee, the Nomination Committee,

andtheRemuneration Committee.

Governance: Legal and governance updates are received

ateachBoard meeting.

2024 2025

Board activities

November

Key stakeholders considered Activity

Approval

• FY24 Annual Report and Accounts

• Final dividend

• FY25 Rolling Board Agenda

Review

• FY24 Sustainability and Society and Climate Reports

• Annual Non-executive Director fee review

• Go to Market update

• Board Associate update

• FY25 Board Strategy Day agenda

Announcements

• Full FY24 results

Link to Principal Risks

1. The announcements in the Board activities section include relevant press releases from the

monthof the scheduled Board meeting. All financial results and dividend RNS announcements are

approved in principle by the Board, with final approval delegated to the Disclosure Committee.

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

May

Key stakeholders considered Activity

Approval

• Delegated approval to Disclosure Committee:

• Share buyback extension

• H1 FY25 interim dividend

• Audit and Risk, Nomination, and Remuneration

CommitteesTerms of Reference

• Whistleblowing, and Board Diversity, Equity and Inclusionpolicies

Deep dive

• Cyber security strategy review

Review

• H1 FY25 performance and results

• Capital allocation

• Sustainability strategy and reporting

• Go to Market update

• Health and safety and wellbeing annual report

Announcements

• H1 FY25 results

• Share buyback extension

Link to Principal Risks

September

Key stakeholders considered Activity

Approval

• FY26 preliminary budget

• Criterion, Inc (‘Criterion’) acquisition

Deep dive

• Strategic progression and evolution

Review

• FY25 external Board performance recommendations

Board engagement: Atlanta, US

• North America Go to Market update

• Partner and customer roundtable

• Colleague engagement lunch

• Sage Impact Entrepreneurship Programme deep dive

Please see stakeholder engagement on pages 90

to 97 for more information

Please see the principal decisions by the Board on

page89 for the Fyle and Criterion announcements

Link to Principal Risks

Customer experience

Developing and exploiting

newbusiness models

People and performance

Cyber security

Readiness to scale

Execution of

productstrategy

Route to market

Culture

Data and AI

governance

Environmental, social

andgovernance

Key stakeholder groups

Principal Risks

Activity

Strategy and operations

People and culture

Governance

Cyber threat

Customers and innovation

Finance

Risk management

ESG

July

Key stakeholders considered Activity

Approval

• Schedule of matters reserved for the Board

• Share Dealing Code, and Social and External

Communications, and Environmental policies

• Remuneration Committee membership

Deep dive

• Strategic planning update

• European business update

• Annual talent review

Review

• Q3 FY25 performance and results

• Share buyback update

• Three-year financial plan

• Update on Fyle Technologies (‘Fyle’) acquisition

• External Board performance review feedback

• Board Associate update

Board engagement: Frankfurt, Germany

• CEU business overview

• European product focus

• Colleague engagement lunch

• Customer, Go to Market and partner updates

Announcements

• Fyle acquisition

• Q3 FY25 trading update

• Maggie Chan Jones appointment

toRemuneration Committee

Link to Principal Risks

Customers Shareholders

Partners

SocietyColleagues

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Outcomes

The Board maintains

oversight through

progress updates from

senior management

that allow the Board to

review and adjust plans

as situations evolve.

Principal decisions by

theBoard during FY25

The principal decisions and processes described below illustrate how the Board considers the

interests of stakeholders intheir strategic decision making. These decisions were considered

by the Board to have a material impact on our stakeholders during FY25.

Board

information

Board papers fromsenior

management clearly identify

thekeystakeholders impacted.

Where appropriate, they include

summaries of stakeholder

engagement activities and

outcomes. To support effective

decision making, the Board

ensures the quality and

completeness of information

through appropriate due

diligence and seeks assurance

where necessary.

Board information and considerations

Sage announced in March 2025 that Jonathan Howell had informed the Board of his intention to step

downas Chief Financial Officer on 31 December 2025. The CFO succession process was initiated and

ledby the Nomination Committee, with oversight from the full Board, to identify a candidate with both

therequisite technical expertise and a deep understanding of Sage’s strategic priorities, culture,

andValues. Jacqui Cartin, currently serving as EVP Group Financial Controller, was selected following

arigorous assessment process, including formal interviews, where she demonstrated exceptional

leadership, financial acumen, and strategic vision.

Succession planning for key leadership roles is a fundamental element of Sage’s governance framework.

The Board recognises the importance of strategic succession planning at executive levels and its far-

reaching implications, and therefore a range of stakeholders were considered during the succession

planning process. The Board considered how the appointment would support Sage’s high-performance

culture, ensuing that it continues to nurture internal talent, fostering an environment where colleagues

see clear pathways for growth and advancement.

Stakeholders

considered

Section 172 factors

Outcome

Chief Financial Officer

Upon recommendation from the Nomination Committee, the Board appointed Jacqui Cartin as the

ChiefFinancial Officer with effect from 1 January 2026.

In reaching its decision, the Board reaffirmed its commitment to responsible leadership, cultivating

talent from within, and promoting a culture where colleagues can grow, thrive, and contribute meaningfully

toSage’s success. Jacqui’s knowledge of Sage, complemented by her deep technical knowledge, uniquely

positions her to help deliver on Sage’s strategic ambitions and create lasting strategic growth and

sustainable value for all our stakeholders.

For further information on the CFO appointment please see the Nomination Committee

Report on pages 102 to 104

Scan or click

the QR code

forthe CFO

announcement

Decision: Appointment of Chief Financial Officer

Board

strategic

discussion

The Board Chair

encourages open and

constructive challenge,

fostering discussions

that consider different

stakeholder perspectives.

Throughout these

discussions, Directors

actively reflect on their

duties under section 172.

Board

decision

The Board ensures

thatdecision making

issufficiently well

informed, including

longer-term sustainable

impact andvalue

creation for Sage

stakeholders.

Corporate governance report continued

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Board information and considerations

On 20 November 2024, Sage announced the commencement of a £400m share buyback programme,

withan extension to the programme announced on 15 May 2025 for an additional aggregate consideration

of£200m (together the ‘share buyback programmes’). The Board noted that share buyback remains an

efficient method of returning excess capital to shareholders, with feedback from shareholders indicating

strong support for this approach.

Sage’s robust financial position, and its commitment to shareholders to maintain a progressive dividend

policy, were key considerations by the Board in the approval of the interim dividend of 7.45 pence per

share, as announced on 15 May 2025, and final dividend of 14.40p per share, as announced on 19 November

2025 (together the ‘FY25 dividend’). The Board reflected that the share buyback programmes and the FY25

dividend together demonstrate the Board’s confidence in Sage’s future outlook and robust financial position,

while retaining the financial flexibility and resilience necessary to execute the Group’s growth strategy.

The Board plays a vital role in shaping Sage’s strategic direction and, as part of its ongoing oversight,

the Board carefully evaluated the proposed acquisitions of Fyle Technologies (‘Fyle’) and Criterion, Inc.

(‘Criterion’) by assessing the strategic rationales and benefits of the acquisitions. Key factors included the

enhanced functionality Fyle’s expense management technology would bring to Sage’s small and mid-sized

customers and how Criterion’s Human Capital Management strengths would bolster Sage’s offerings to

customers. Consideration was also given to how both Fyle’s and Criterion’s teams would integrate within

Sage, and how new colleagues would be successfully transitioned and supported during integration.

Stakeholders

considered

Section 172 factors

Outcomes

Capital allocation

The Board approved the share buyback programmes, pursuant to which, the Company has repurchased and

cancelled over 48 million shares for an aggregate consideration of £600m.

The Board approved the FY25 dividend (with the final dividend for FY25 remaining subject to shareholder

approval at the 2026 AGM) and noted the dividend growth of 7% year on year.

As announced in July 2025, the Board approved the acquisition of Fyle, and, as more recently announced

inOctober 2025, the acquisition of Criterion. The Board believes that these acquisitions will enhance

Sage’s product ecosystem, providing greater value and improved solutions for customers and partners,

while creating opportunities for colleagues.

These decisions reflect the Board’s ongoing commitment to disciplined capital allocation and financial

resilience. These actions were guided by a comprehensive perspective on stakeholder value creation, while

carefully balancing short- and long-term interests to ensure they are both aligned and mutually supportive.

1. The Board also approved the acquisition of Tritium Software, S.L., the developer of ForceManager

(nowSageSalesManagement), in FY25. For further information, please refer to Principal Decisions

bytheBoardonpage 46 of Sage’s FY24 Annual Report.

Scan or click the

QRcodes to learn

more about the

acquisitions

Fyle acquisition

Criterion acquisition

Decisions: Approval of the share buyback programmes, the FY25 dividend,

andtheacquisitions of Fyle and Criterion.

a) The likely

consequences

ofany decisions

inthe long term

c) The need to foster

thecompany’s business

relationships with

suppliers, customers,

and others

e) The desirability

ofthecompany

maintaining a reputation

for high standards of

business conduct

b) The interests

of the company’s

employees

d) The impact of the

company’s operations

onthe community and

theenvironment

f) The need

toactfairly as

betweenmembers

ofthe company

Section 172 factors

Key stakeholder groups

Customers

Shareholders

Partners

SocietyColleagues

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Stakeholder engagement

Empowering connections,

delivering value

The Board undertakes an annual review of key stakeholder

groups to ensure continued alignment with our purpose and

strategic priorities. As noted in the FY24 Annual Report,

partners were formally recognised as a key stakeholder

groupfrom FY25 onwards, reflecting their critical role

inextending our reach, enhancing our capabilities, and

delivering improved outcomes for Sage customers.

Stakeholder interests are systematically considered in

business decision-making processes across the Group and

are embedded in Board decision-making. Board papers

routinely incorporate stakeholder considerations to support

informed, balanced decisions that reflect diverse perspectives.

While stakeholder interests may occasionally diverge, the

Board strives to balance competing priorities through a fair

and transparent approach, thereby promoting equitable and

sustainable outcomes.

Sage’s section 172 (1) statement on pages 46 and 47 and principal

decisions for FY25 on pages 88 and 89 explain how the Directors

have considered stakeholders in their decision-making.

Understanding and engaging with our stakeholders is fundamental to the delivery of Sage’s

strategy and underpins the long-term, sustainable success of the Company. We establish open,

constructive dialogue with stakeholders, enabling us to strengthen relationships, understand

evolving expectations, and respond meaningfully to feedback.

Customers

Engagement with the Board

Regular updates during Board meetings on:

• Customer insights to understand customer behaviours

andcustomer needs

• Customer feedback and metrics

• Trust, security, and product innovations for customers

Further details on Board engagement

withcustomers are on page 92

Engagement across the Group

• Initiatives for colleagues to understand customer behaviour,

needs andfeedback:

• Internal customer hub for colleagues to access customer

insights

• Global call listening initiative for colleagues to hear first

hand our customers’ experiences

• Strategic acquisitions to bring in new product capabilities

withCriterion, Fyle, and ForceManager (now Sage Sales

Management). Please see pages 89 for further details

• US Customer Supper Clubs launched, providing opportunities

for management to connect directly with customers

• First Sage Day held in August 2025. Hosted at the Sage Discovery

Centre in Atlanta, the event connected customers to colleagues

and industry thought leaders to strengthen customer and

community engagement and impact

• Continued support provided to customers through the evolved

online Trust and Security Hub

Scan or click the QR code to access

ourTrust and Security Hub

Partners

Engagement with the Board

• An update on our partners strategy is provided during

regionalupdates at Board meetings

Further details on Board engagement

withpartnersare on page 93

Engagement across the Group

• Sage’s Partner Centre of Excellence and Partner Network

supports global partner and customer success, fostering a

strong partner ecosystem. Sage Channel Executives deliver

tailored partner onboarding and success plans

• Colleagues connect with partners via events, including:

• June’s Sage Accountants Roadshow in Johannesburg and Cape Town

• Partner conference, Sage Summer Camp 2025 in Berlin in May

• Strategic Partner meeting at the Sage Discovery Centre in

Atlanta in July

• Accountex UK in May

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Colleagues

Engagement with the Board

Regular updates during Board meetings on:

• Colleague sentiment, including Sage’s biannual Pulse Survey

results and key outcomes and actions

• Implementation of the Group’s DEI strategy

• Progress on embedding a high-performance culture across the Group

• Colleague sentiment reports received from the Board

Associatebiannually

Further details on Board engagement with

colleagues areonpages 94 and 95, and in

Boardactivities on pages 86 and 87

Engagement across the Group

• Sage’s “All About Us” voluntary and confidential programme

reached aglobal self-declaration rate of 60% in FY25, following

the onboarding of colleagues in India. The programme provides

insights into equity and representation to inform solutions

• Flexible Working policy updated, and new Sage workplaces

launched to boost collaboration and engagement

• Colleague Success Networks membership increased to 28%

inFY25 from 22% in FY24

• Global Wellbeing Community, a 24/7 Employee Assistance and

whistleblowing hotline, and Healthy Mind Coaches available

• Personal Data Protection learning refreshed, reinforcing

ethicalstandards

• Sage TV Live broadcasts, kick-off events, town halls and

skip-level meetings enable direct engagement between

colleagues and senior leaders

Society

Engagement with the Board

• Annual update on the evolved Sustainability and Society strategy

along with updates on the FY25 sustainability reporting suite and

non-financial disclosures and assurance process

• Sustainability, AI and Data Ethics Committee insights from

attendee Maggie Chan Jones, our Non-executive Director for

ESG, were received by the Board

Further details on Board engagement with society

are on page 96

Engagement across the Group

• Sustainability, AI and Data Ethics Committee updated sustainability

material topics, material impacts, risks, and opportunities

• Embedded sustainability into operations and culture through

policies and supplier onboarding

• Enhanced supplier due diligence for human rights and

labourrelations

• Launched Sage Impact Entrepreneurship Programme,

empowering 165 entrepreneurs over three years

• Sustainability Learning initiative upskilled 1,767 colleagues

globally

Engagement with the Board

• Board Chair meets top shareholders to discuss strategic

progress. Extensive feedback gathered from top shareholders

and proxy agencies on the 2025 Directors’ Remuneration Policy

• Board members’ attendance at 2025 Annual General Meeting

allows engagement with shareholders attending the meeting

• Regular updates on top shareholders, movements in the share

• Approve material investor communications, including the

Annual Report and Accounts, and results announcements

• Investor meeting feedback after full-year and half-year

resultsannouncements and quarterly trading updates

Further details on Board engagement with

shareholders are on page 97

Engagement across the Group

• Senior management and Investor Relations met with shareholders

and analysts to discuss Sage’s strategy and performance

• Six investor roadshows held in the UK and US with senior

management attendance

• A senior management-led webinar covered product, technology,

and go-to-market strategies for investors and analysts

• Annual equity analyst event with senior management

• Annual and interim results reports and presentations

Scan or click the QR code for access to our

investor relations website. This is our

primary digital communications tool

andis available to all shareholders

Shareholders

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Non-executive Director engagement highlights

February

Call listening, Newcastle

Non-executive Director Maggie Chan

Jones participated in call listening with

Customer Support colleagues as part of

the Customer Centricity initiative

May

Sage Future, Atlanta

Non-executive Directors Maggie Chan

Jones, Roisin Donnelly, and Lori Mitchell-

Keller walked the Expo floor and attended

keynote speeches throughout the event,

meeting a wide range of customers

Accountex, London

Board Chair met with customers as Sage

demonstrated how our AI-powered

productshelp businesses to thrive

July

Call listening, Johannesburg

Our Board Chair heard directly from

customers during call listening with

Customer Support colleagues in the

Africaand Middle East (AME)region

2025

We want to be customer-centric every day, and we understand

thatevery customer’s needs and behaviours, triggers and barriers,

priorities and preferences are different. Therefore, we have

developed a robust method of grouping customers with similar

characteristics, which enables us to design, develop, and communicate

more effectively with each segment and persona of customers,

leveraging human insight and expertise to deliver greater value.

Byunderstanding the customers needs and emotions, we measure

success through their eyes, creating a unique Sage experience

thatexceeds expectations and ensures confidence and support

intheir business.

KPIs

Customer experience, renewal rate by value, and Sage Business

Cloud penetration

What customers need from Sage

(i) Enhanced technology that helps them run and grow their business

with ease and efficiency, (ii) trust and security including AI ethics,

(iii) personalised value-added experiences, and (iv) innovation and

future-readiness for AI-driven productivity, connected services,

and sustainability tools.

Outcomes from FY25 engagement initiatives

• Our approach to capturing and leveraging customer feedback

continues to mature. Our transactional Net Promoter Score (tNPS)

has risen from 73 in FY24 to 79 in FY25 and our renewal rate by

value held steady at 101% in FY25, demonstrating customers’

advocacy and commitment to Sage

• The uplift in our Customer Effort Score from 81.7 in FY24 to 82.5 in

FY25 reflects a positive shift in ease and efficiency of customer

interactions, signalling improved customer experience at key

service touchpoints

• Thousands of customer reviews, giving Sage an overall score of 4/5

on Trustpilot, 4.2/5 on G2 and 4.2/5 on Gartner, highlighting the high

regard with which our customers value Sage products

• Implemented global Voice of the Customer platform to deepen

our understanding of customers and guide decision making

through continuous feedback

• Sage was recognised at the UserTesting 2025 illumi awards for

ouruse of customer insights to create better experiences

Stakeholder engagement continued

In September, customers and partners from North

America were hosted at the Sage Discovery Centre for

roundtable discussions with the Board. These sessions

were a valuable opportunity for open dialogue, enabling

Non-executive Directors and senior management to hear

first hand about stakeholder experiences, expectations,

and perceptions of Sage’s products and services.

The conversations offered rich insight into what matters

most to our customers and partners, helping to inform

strategic decision making and strengthen relationships.

The Board gained a deeper understanding of how Sage’s

Values and purpose are reflected in day-to-day interactions,

and how our solutions support businesses to thrive.

Customer and partner

roundtable discussions

Customers

Case study

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Our partners are fundamental to Sage’s ongoing growth and our

unwavering commitment to customer success. By expanding our

market reach and delivering enhanced outcomes across diverse

customer segments, partners amplify the impact of our solutions

and services. We support our partners through a tailored, collaborative

approach that connects customers to Sage’s digital network, facilitating

seamless interactions and value creation. Through these strategic

partnerships, we further our mission to deliver exceptional

experiences and results for customers worldwide.

KPIs

Renewal rate by value and Sage Business Cloud penetration

What partners need from Sage

Partners seek opportunities to create monetisable value and

sustainable growth, and we are committed to enabling that

ambition. Partners want the ability to differentiate their offering

toremain competitive in the market and deliver business impact

tothe evolving needs of customers. They look to Sage for support

with driving growth by accelerating the time they spend on

increasing value and revenue.

Outcomes from FY25 engagement initiatives

• Simplified partner categories introduced to provide clarity on

what partners offer and reflect the diversity of their ecosystem

and products. Partners can adapt their offering to fit their needs

and the needs of our customers

Scanor click the QR code for more

information about the different

categoriesof Sage partners

• The Partner Code of Conduct sets out Sage’s Values and ways of

working, along with the behaviour and ethical standards partners

must demonstrate

• Sage leaders Juha Harkonen, VP Partner Ecosystem & Marketplace

Strategy, and Nancy Sperry, VP Partner Sales, were named in the

prestigious 2025 CRN Channel Chiefs list to recognise their

commitment in empowering our partners and reinforcing Sage’s

position as a leader in enabling partner success

Non-executive Director engagement highlights

May

Sage Future, Atlanta

Non-executive Directors Maggie Chan

Jones, Roisin Donnelly, and Lori Mitchell-

Keller attended Partner Day to connect

with a range of North American partners

July

Partner meeting, Frankfurt

Members of the Board met with a partner as

part of regional updates on partner success

September

Roundtable discussions, Atlanta

The Board engaged with partners and

customers at a roundtable event to hear

first-hand insights into their experiences

with Sage

2025

Women in Tech Networking Breakfast

Sage Future launched in Atlanta, bringing together over

4,000 customers, partners, and colleagues to explore

ourvision for business transformation through AI and

high-performance solutions. The event showcased Sage’s

commitment to customers and partners, and was attended

by Non-executive Directors Maggie Chan Jones, Roisin

Donnelly, and Lori Mitchell-Keller and senior leaders.

A highlight of Sage Future was the Women in Tech

Networking Breakfast, which offered an opportunity to

celebrate the women in Sage’s partner ecosystem through

mentorship and meaningful discussions. Over 60 female

partners and colleagues attended, and a panel discussion

between the three Non-executive Directors and Sage

leaders kicked off the event, with practical advice and

stories on owning career journeys, inclusive communities,

and intentional leadership. The event transitioned into

facilitated table discussions with Sage colleagues, where

partners shared their career experiences and defining

moments, and the importance of allyship and key learnings.

Scan or click the QR code for

further information about

Sage Future Atlanta

Scan or click the QR code

to sign up for upcoming

SageFuture events

Partners

Case study

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Stakeholder engagement continued

Our colleagues are critical to the successful delivery of our strategy,

and we believe in building a high-performing and human-centred

culture that supports each colleague to reach their full potential.

AtSage, we are committed to creating an inclusive environment

where colleagues feel energised to contribute their best work, are

engaged and embrace our purpose and Values, and collaborate to

drive growth, innovation, and positive impact.

KPI

Employee satisfaction

What colleagues need from Sage

Colleagues want to work for a company that genuinely values

theircontributions and provides them with an opportunity

andanenvironment to bring their authentic self to work. They

expect Sage to address crucial societal issues, such as diversity,

sustainability andthe evolving nature of work. Our colleagues

wantto be treated fairly and feel supported with their health,

safetyand wellbeing, while being recognised and rewarded

fortheircontribution.

Outcomes from FY25 engagement initiatives

• 82% of colleagues completed the biannual September 2025 Pulse

Survey, with 15,500 colleague comments and an overall eSAT score

of 76, an increase from 74 in March. Colleagues reported the positive

impact of colleagues and managers who listen and mentor to

drive performance, and their continued confidence to speak up

• Let’s Talk sessions launched in North America, directly addressing

Pulse Survey feedback and fostering leader-colleague connection

• New global People Zone launched in September for streamlined

access to resources and AI-powered support

• Interactive culture enablement sessions and 360 surveys

strengthened feedback and high-performance habits

• Sage is proud to be placed #15 on the Financial Times UK’s

BestEmployers of 2025 list and recognised as one of the World’s

Best Employers 2025 by Forbes

Non-executive Director engagement highlights

February

Colleague Connect, Newcastle

The Board heard directly from Customer

Service and Early Careers colleagues on

life at Sage, opportunities for change,

and future direction

Corporate Affairs All-

Handsmeeting, Newcastle

Non-executive Director Roisin Donnelly

attended as guest speaker at a Q&A

session with Corporate Affairs colleagues

April

Global Risk

Committee, London

Audit and Risk Committee

Chair, Jonathan Bewes,

attended the Global Risk

Committee meeting

July

Colleague Connect, Frankfurt

The Board engaged with colleagues,

discussing Sage’s future focus,

continuous improvement, and

personal career stories

Chair Visit, Johannesburg

Our Board Chair met both formally

and informally with a range of

teams and colleagues during a

two-day office visit

September

Colleague

Connect, Atlanta

The Board joined

North American

colleagues to

hearperspectives

ongrowth

opportunities,

barriers to success,

and elevating

Sage’simpact

2025

placement image

In July, our Board Chair, Andrew Duff, visited our

Johannesburg office in the AMEregion. The visit

signified the Board’s commitment to engaging with

colleagues on the ground, strengthening mutual

understanding of interests, and aligning strategic

priorities with regional execution.

The Chair actively engaged with a wide range of colleagues,

gaining first-hand insight into colleague sentiment,

regional performance, and market dynamics. These

conversations deepened the Board’s understanding

oftheregion’s contribution to Sage’s growth and how

cultureisbeing embedded across the Group, while

alsoproviding colleagues with a clearer view of the

Board’s role in driving long-term value.

A key moment of the visit was the Chair’s participation

ina live Q&A session during the AME All-Hands meeting

toencourage open dialogue and connection. Colleagues

posed questions virtually and in person on a range of

topics, such as Sage’s purpose and culture, growth

opportunities, and shareholder expectations.

Board Chair visit to

Johannesburg office

opportunities, and shareholder expectations.

Colleagues

Case study

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

”

Connecting with purpose:

My journey

as a Board

Associate

Since Sage launched the Board Associate programme in 2017,

it has played a vital role in connecting colleagues with the

Board and deepening organisational understanding of Board

governance. In January 2024, I was honoured to be appointed

to the Board Associate role. Over the last two years, the role

has involved attending Board meetings, observing how

decisions are made, and ensuring the colleague voice is

partof the conversation at the very top.

It’s been an incredible learning experience. I’ve had direct

exposure to leadership at its highest level, new insight into

Board decision making, and the chance to engage deeply

with colleagues across the business. This perspective has

sharpened my own strategic thinking and strengthened the

link between on-the-ground team perspectives and Sage’s

long-term vision.

Highlights so far have included colleague roundtables across

our key hubs, podcasts and interviews with Board members,

and open sessions such as Fireside Chats that created space

for honest dialogue. Sharing Board insights with colleagues,

and elevating their views into Board discussions, helps keep

our strategy and culture grounded in the real experiences of

the people who deliver them.

As I move into the final phase of my tenure, the process to

appoint the next Board Associate is underway. Nominations

come from our Executive Leadership Team, and shortlisted

colleagues go through a multi-stage process, including

interviews with Non-executive Directors and our Chair.

Thisapproach ensures the next Board Associate brings fresh

perspective, strong leadership, and a deep commitment to

representing colleagues at Board level.

Looking ahead, I am committed to making the most of the

final months by strengthening relationships, elevating

colleague dialogue, and continuing to use this unique

vantage point in my leadership. Serving as Board Associate

has been a privilege, and one I will carry forward to champion

trust, human connection, and collaboration across Sage.

2024

November Interview with Audit and Risk Committee

Chair Jonathan Bewes onSage’sapproach

to risk.

Roundtable with colleagues basedinLondon.

2025

January Article published on experience in first

year of role and priorities for second year.

February Roundtable hosted with early careers and

customer service colleagues inNewcastle.

Interview with Remuneration Committee

Chair Roisin Donnelly and EVP Reward,

Global Mobility, People Operations and

Function Leader Tara Gonzalez discussing

theRemuneration Committee.

April Deep dive on Pulse Survey results

withCulture, Engagement, and

ColleagueExperience team.

May Engagement with colleagues

inLondonoffice.

June Article published on Sage Future and

Non-executive Director attendance.

July Roundtable with colleagues in Frankfurt.

September Interview with Non-executive Director

Derek Harding on balancing strategic

leadership roles.

Roundtable with colleagues in Atlanta.

“

It’s been an incredible learning experience. I’ve had direct exposure to

leadership at its highest level, new insight into Board decision making,

and the chance to engage deeply with colleagues across the business.

Amy Cosgrove

EVP People—Routes to Revenue, Learning and Inclusion

Colleague engagement and

communication activities

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Stakeholder engagement continued

placement image

During a visit to Atlanta in September, the Board engaged

with the Sage Impact Entrepreneurship Programme, our

largest-ever social impact programme, delivered through

Sage Foundation.

During a dedicated engagement session, Board members

took part in a mock advisory Board meeting, offering their

expertise to help two programme entrepreneurs navigate

business challenges. Entrepreneurs came prepared with

major strategic challenges, recent milestones, and company

background, and led the session. The discussion focused

on overcoming key growth barriers, with Board members

asking insightful questions, challenging assumptions,

and sharing their expertise to create a dynamic and

authentic Boardroom experience.

The session not only strengthened Sage’s connection to

the communities it serves but also demonstrated how

corporate governance can play a direct role in knocking

down barriers so everyone can thrive.

Sage Impact Entrepreneurship

Programme

We understand that systemic barriers including discrimination,

bias, unequal access to education, and digital resources continue

toaffect opportunities for many individuals and communities.

Weare dedicated to reducing digital and economic inequality and

supporting environmental sustainability by investing in education,

technology, and initiatives that empower individuals, SMBs, and

communities to thrive.

Through Sage Foundation, we break down barriers to digital and

economic inequality, and support environmental sustainability,

through global partnerships, volunteering, and fundraising. By

empowering underserved entrepreneurs and equipping communities

with essential digital and AI skills, we aim to build a more inclusive

and sustainable future.

KPIs

Sage Foundation volunteering

What society needs from Sage

A positive societal and environmental impact, and a commitment

todiversity matters. We are in a great position to help SMBs align

their business practices with societal values, leading to sustainable

growth and long-term success.

Outcomes from FY25 engagement initiatives

• Received a number of awards and accolades for the first time

inFY25, including (i) a five-star rating in the 2025 Newsweek

Greenest Companies list, (ii) a Leadership score for climate

change based on an assessment by CDP, and (iii) edie award for

2025 Sustainability Reporting & Communications

• 56 businesses completed the Sage Impact Entrepreneurship

Programme, with access to funding, mentorship, and training

• In FY25, £3.4m was disbursed to charitable partners around the world

through Sage Foundation, including provision for disaster relief

• Colleagues logged 80,036 volunteering hours during the year, with 49%

of colleagues engaging with volunteering and fundraising in FY25

Scan or click the QR code

forthe2025Impact Book

Non-executive Director engagement highlights

November

Sustainability,

AI and Data

Ethics

Committee

Committee meeting

attended by

Non-executive

Director Maggie

Chan Jones

March

Sustainability,

AI and Data

Ethics

Committee

Committee meeting

attended by

Non-executive

Director Maggie

Chan Jones

June

Sustainability,

AI and Data

Ethics

Committee

meeting attended

by Non-executive

Director Maggie

Chan Jones

May

Sage Future, Atlanta

Non-executive Director

Roisin Donnelly connected

with entrepreneurs at the

SageImpact Summit

September

Sage Impact

Entrepreneurship

Board session,

Atlanta

The Board took part in

mock Board sessions with

entrepreneurs. Please see

the above case study for

more information

2024 2025

Society

Case study

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

We target sustainable growth in shareholder value. Our shareholders are

our owners and providers of equity capital, and are key beneficiaries in

the value we create. Insights and feedback from our shareholders help

shape our strategic direction, guide our investment decisions, and

ensure we stay aligned with our shared vision for success.

KPIs

Underlying ARR growth, renewal rate by value, subscription

penetration and efficient growth

What shareholders need from us

(i) Deliver a return on their investment underpinned through robust

financial and operational performance, (ii) sustainability practices,

risks, and opportunities, (iii) strong leadership and executive

remuneration, and (iv) a culture and shared Values conducive to

goodgovernance and high standards of business ethics.

Outcomes from FY25 engagement initiatives

• Positive interactions with shareholders and analysts, ensuring

aclear understanding of investor perspectives and reinforcing

support for Sage’s management, strategic direction, executive

remuneration, and capital allocation priorities

• Maintained active and constructive relationships with our top

shareholders at multiple organisational levels

• Proactive approach to targeting prospective shareholders,

particularly those based in the US, and to sustaining regular

dialogue with current shareholders. US institutional ownership

stands at around 40%

• Approximately 81% of issued share capital voted at FY25 Annual

General Meeting, with 80.72% of the votes received supporting

the2025 Directors’ Remuneration Policy

Non-executive Director engagement highlights

January

Shareholders meetings,

virtualand in person

Board Chair Andrew Duff and Remuneration

Committee Chair Roisin Donnelly met

with top shareholders to discuss the 2025

Remuneration Policy

Annual Chair’s roadshow, virtual

and in person

The Board Chair held 15 shareholder

meetings as part of an annual roadshow

February

2025 Annual General Meeting,

Newcastle

The Board attended the 2025 Annual

General Meeting

September

Shareholder meeting, London

The Board Chair held a one-to-one meeting

with the governance team of a top shareholder

2025

Roisin Donnelly, Chair of the Remuneration Committee,

alongside Andrew Duff, Chair of the Board, and members

of Sage’s Reward team, led a comprehensive engagement

process with key shareholders ahead of the Board’s

proposal for a new Remuneration Policy at the 2025

Annual General Meeting (the ‘2025 AGM’).

The revised Policy was designed to better align Executive

Director remuneration with Sage’s recent performance,

international scale, and strategic ambition, while

supporting the attraction and retention of top-tier

talentfrom the competitive global talent market.

An extensive consultation process with shareholders took

place in the latter part of FY24 and into FY25 in thelead

up to the 2025 AGM. Initial proposals were shared with

18shareholders, covering 59% of issued share capital.

Feedback received during this initial phase helped to

shape revised proposals, which were communicated in

early FY25 to 46 shareholders (covering 75% of Sage’s

voting rights in total), and to proxy agencies. Further

meetings were held during October and November 2024,

with feedback reflected in the final Policy. Full details of

our initial proposals, together with information on the

changes made as a result of the consultation process,

were published in theFY24 Annual Report and Accounts.

Following this comprehensive engagement, the new

Remuneration Policy was approved with 80.72%

shareholder support.

2025 Directors’ Remuneration Policy

Shareholders

Case study

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Corporate governance report continued

The Board holds ultimate accountability for defining Sage’s

purpose, Values, and strategic direction, and ensuring these

are embedded within the Company’s culture. Culture remains

a standing priority on the Board’s agenda, both as a dedicated

topic and as a lens through which broader strategic matters

are considered. To monitor and assess how effectively culture

is embedded across the organisation, the Board draws on

adiverse range of tools and data sources, including

colleague feedback, functional reporting, deep dives,

andperformance indicators.

These insights enable the Board to evaluate how Sage’s

Values are being lived throughout the business.

The Board also receives regular updates on succession

planning for the ELT and senior management, supporting the

development and retention of high-calibre internal talent.

By leading the way in modelling andcommunicating Sage’s

Values, the Board and ELT supportthe embedding of high-

performance culture anddrive sustainable business outcomes.

We do the right thing

Human

We make connections

with customers,

partners, and

colleagues, through

empathy and care

Bold

We are curious,

courageous,

ambitious, and

creative

Simplify

We strip away

complexity

Trust

We deliver our

promises to customers,

colleagues, society,

and shareholders

Embedding culture—from the

Boardroom to our colleagues

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Board performance

An independent externally led

performance review of the Board

wascarried out in FY25 to ensure

theBoard, its Committees, and the

Directors perform effectively and

uphold high standards of governance.

The scope of the review included

howthe Board is actively involved

insetting and assessing Sage’s

Valuesand culture.

Read more about our Board

Associate’s engagement

activities during FY25

onpage95

Connecting with colleagues

The Board sees the time spent with colleagues as invaluable as it offersmeaningful

insight into Sage’s culture in action. Board members connect withcolleagues across

the regions to gain a deeper understanding of the local culture and regional differences.

These sessions also give colleagues the chance toask questions directlyand see the

Board actively role-modelling Sage’s Values andbehaviours.

The CEO Open Circle brings together high-potential colleagues from across the

business to engage in meaningful dialogue with the CEO ahead of each Board

meeting, with membership refreshed periodically to ensure insights are gathered

from a broad and diverse range of colleagues. This collaborative forum enables

theCEO to gather diverse perspectives onkey agenda items, including strategic

direction, risk, and success metrics. By capturing a broad spectrum of colleague

perspectives, the Open Circle provides the CEO (and the Board via CEO updates) with

valuable insights through inclusive and dynamic discussions to support informed

decision-making.

Read more about colleague engagement on pages 91 , 94 and 95

DEI strategy

The Board’s dedicated DEIPolicy

applies to both the Board and its

Committees, and complements

Sage’sGroup-wide DEI Policy while

setting a consistent, enterprise-wide

tone from the top. The Board receives

regular updates onSage’s DEI strategy

and progress made against our

commitments towards an equitable

and inclusive culture. The DEI

Accountability Board,chaired by

theCEO, plays animportant role

inensuring alignment of the DEI

strategy to business outcomes,

thedesired culture and Sage Values.

Sage’s DEIself-disclosure programme

“AllAbout Us” provides data-driven

insight to understand inequities

andunderrepresentation to provide

solutions that build diverse teams

and an inclusive culture.

Read more about the FY25

Pulse Survey results on

page 94

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Corporate governance report continued

Board Performance Review

The Chair and the Board are committed to continually strengthening and enhancing their

performance, skills, and experience to align with the Group’s strategy and to maintain

effectivedecision making. The annual Board performance review affords the Board,

itsCommittees, and individual Directors with a valuable opportunity to reflect on their

overallperformance, fostering robust governance, leadership, and oversight.

Our Board performance review cycle

In FY25, the annual performance review of the Board was

externally facilitated by Manchester Square Partners (MSP),

an independent advisory firm with no other connection to

Sage and no significant connection to any individual Director.

An outline of the evaluation process is set out opposite.

FY25 externally facilitated Board

performance review process

Scope and framework

March—April 2025

• The scope and evaluation framework were agreed

between MSP and the Chair, supported by the

Company Secretary. The review focused on key

governance attributes and built upon themes

identified in FY24’s Board performance review.

Focus areas included:

• Strategy, opportunities, challenges, and risk

• Values and culture

• Role of the Board and Committees and their

governance, leadership, and engagement

• Structure, composition, and succession planning

Preparation and observations

March—May 2025

• Review of Board documents and structure of meetings

• Attendance by MSP at the Board and Committee

meetings to observe the meeting proceedings

and Board and Committee dynamics

• One-to-one interviews by MSP with the Board,

the Company Secretary, the Chief People Officer,

and the Board Associate

Discuss findings

June—July 2025

• Results evaluated by MSP and discussed

withtheBoard Chair

• Final report presented at the July Board session

• Separate discussion led by the Senior Independent

Director, without the Board Chair present, to

discuss the performance review of the Board Chair

FY26 Action planning

September 2025

• Action plans developed, presented andapproved

1. MSP previously provided coaching services to one Non-executive Director,

who had no direct or indirect involvement in selecting MSP forthis role.

Year 1

2023 internal

evaluation

Year 2

2024 internal

evaluation

Year 3

2025 external

evaluation

FY25 Board performance review findings

Board

Overall, the Sage Board operates to veryhigh standards

ofgovernance, with strong leadership, guidance, and

support, fostering an environment conducive to open

discussion, constructive challenge, and effective debate.

Aparticular strength of the Board lies in its composition

ofhigh-calibre individuals, whose complementary skills

and diverse experiences provide a broad spectrum of

perspectives. Governance matters are managed with

diligence, enabling the Board to devote appropriate

attention to strategic priorities.

Board Committees

The Board Committees continue tooperate effectively,

withstrong leadership from their respective Chairs. The

Committees maintained the confidence and trust of the

Board in their handling of delegated matters, and were

commended for their rigorous approach and clear focus.

Regular and transparent reporting to the Board further

supports the effective discharge of their responsibilities.

Individual Directors

Each Director continues to make an effective contribution

to the Board. The Non-executive Directors have expressed

their satisfaction and pride in serving on the Board,

reflecting the positive and collaborative environment.

Chair

The Chair is held in high regard, leading the Board with a

balanced leadership style that fosters diversity of thought,

encourages open dialogue, and builds trust. His guidance

ensures well-structured discussions, a clear understanding

of strategy and performance, and effective follow-through

on agreed actions.

100

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Update on progress for the focus areas identified for FY25

FY25 areas of focus Actions implemented in FY25

Continue to constructively challenge

management to maintain focus on

driving long-term growth

Maintained commitment to strategic oversight by constructively challenging

management and engaging in robust, insightful debate while ensuring continued

focus on long-term growth and value for stakeholders. Further details of the

Board’s activities in support of this agenda are outlined on pages 86 and 87.

Continue to focus on execution

ofthe technology strategy, with

aparticular focus on AI, Sage

Network, and Sage Copilot

Regular updates on the evolving AI landscape and Sage’s product strategy. The

Board was kept apprised of the launch and commercialisation of Sage Copilot,

our first AI-powered accounting assistant, in key Sage regions.

Provide clarity on M&A

strategyandambition

Regularly reviews the M&A pipeline and engage with acquisitions requiring Board

approval, with focused discussion on M&A strategy at the Board Strategy Day.

Continue to monitor competitor

landscape and Sage’s performance

against the competition

Targeted discussions on competitive landscape and market intelligence, with

ongoing updates provided prior at each Board meeting.

Maintain awareness of emerging

risks, opportunities, and trends

specific to Sage and the industry,

and continue monitoring of successful

delivery of strategy to execution

The Board through its delegation to the Audit and Risk Committee, comprehensively

reviews Principal Risks and emerging risks, ensuring alignment with the Group’s

risk appetite and promptly identifying and evaluating response as needed.

Continue to focus on succession

plans for the Board, and capability

development for key senior

management positions

The Board and Nomination Committee prioritised succession planning in

FY25,appointing a new Non-executive Director and Chief Financial Officer,

anddiscussing succession plans for the Executive Leadership Team.

Continue to monitor how diversity

is being built into talent pipelines

DEI considerations are embedded into all succession planning for the Board,

Committees, and, Executive Leadership Team. The Board also received Group

DEIupdates at the culture deep-dive session at the February 2025 Board meeting.

Ensure culture remains a focus

onBoard agendas (meetings

andengagement)

Regular culture updates to the Board and Nomination Committee, including a

deep-dive at the February 2025 Board meeting. Colleague engagement during

site visits to Newcastle, Frankfurt, and, Atlanta further inform the Board’s

oversight of the Group’s culture.

Ensure Board paper length does

justice to more complex topics

The Company Secretariat collaborates with Board and Committee paper

authors, with targeted external training delivered in FY25 to enhance

submission quality and clarity of all Board papers.

Continue to invite external

speakers, to build knowledge on

strategic discussions and give a

fresh perspective for continuous

education to the Board

An external speaker addressed the Board dinner in September 2025, offering

insights into the evolving landscape of AI.

Focus areas for FY26

• Maintain clear visibility of Sage’s principal strategicenablers, supporting the delivery of its strategicambition

over theshort and medium term.

• Continue to deepen understanding of market trends andcompetitive insight.

• Maintain clear visibility and effective governance ofallBoard succession planning activities.

• Remain cognisant of the evolving cyber risk and cyber security landscape through ongoing cyber reviews,ensuring

robustoversight.

• Shape the Board agenda to maintain an appropriate balance of the time spent between operational oversight and

strategic priorities.

• Continue to monitor progress towards further embedding and maintaining a high-performance culture across the Group.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

101

Corporate governance report continued

Nomination Committee

”

“

A principal focus during

FY25centredon stewarding the

successionprocess for the incoming

CFO, who is set to join the Board

in January 2026, andensuring an

orderly and smoothtransition.

Andrew Duff

Chair of the Nomination Committee

Other Nomination Committee members

Dr John Bates Jonathan Bewes Annette Court

Committee purpose and responsibilities

The Nomination Committee (the ‘Committee’) is responsible

for overseeing the appointment process for Board members

and ensuring robust succession plans are in place forkey

senior leadership roles. It regularly reviews the structure,

size, and composition of the Board and its Committees to

ensure an effective balance of skills, experience, knowledge,

and diversity.

Key responsibilities of the Nomination Committee include:

• Ensuring formal, rigorous, and transparent procedures are

in place for Director appointments and reappointments,

and making recommendations to the Board.

• Championing diversity, equity, and inclusion, while

ensuring all appointments are made on merit against

objective criteria.

• Reviewing Directors’ time commitments to confirm they

can meet their Sage Board responsibilities.

• Overseeing induction programmes for new Board members

and supporting ongoing training.

• Ensuring a high-quality Executive Leadership Team and

senior management are in place, underpinned by credible

succession plans.

Key FY25 activities

February

Non-executive Director succession planning

March

CFO appointment

May

Directors’ time commitments

DEI Policy and Committee Terms of Reference

July

Remuneration Committee appointment

September

ELT succession planning

* Ad hoc meetings.

102

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Dear shareholders,

On behalf of the Nomination Committee, I am pleased to

present the Nomination Committee Report for FY25, which

highlights the vital role of the Committee in maintaining

anoptimum balance of skills, experience, knowledge, and

diversity across the Board and its Committees.

A primary focus for the Committee in FY25 was to ensure

aseamless succession for the Chief Financial Officer

(‘CFO’)role, following Jonathan Howell informing the Board

ofhis intentionto step down on 31 December 2025. In line

with ourcommitment to a rigorous and transparent process

and ongoing succession planning, theCommittee had

conducted a comprehensive and thorough internal review,

and subsequently recommended to the Board the appointment

of Jacqui Cartin as CFO, effective from1 January 2026. This

appointment demonstrates the strength of our internal talent

pipeline and underscores theeffectiveness of our succession

planning, enabling the business to maintain continuity and

leadership stability through the promotion of a high-calibre

internal candidate.

In addition, following a comprehensive and externally facilitated

recruitment process, and after thorough assessment of

candidates against the defined criteria, the Committee was

pleased to recommend to the Board theappointment of Lori

Mitchell-Keller as an independent Non-executive Director.

Lori was appointed tothe Board with effect from 7 February

2025. This followed on from Sangeeta Anand stepping down

from the Board in February 2025, having chosen not to stand

for re-election at the 2025 AGM.

The Committee also recommended the appointment of

Maggie Chan Jones as a member of the Remuneration

Committee, effective from 1 August 2025, following its

annual review of committee composition.

I am pleased to confirm that these appointments followed

rigorous processes, resulting in the enhancement of both the

Board’s and the Remuneration Committee’s collective skills

and expertise in strategically important areas.

The Committee maintained its strong commitment to

diversity, equity, and inclusion throughout the year, with

ongoing oversight at Board level and continued monitoring

progress across the Group. For FY25, the Board’s gender

diversity remained at 40%. The Boardalso continued to meet

the ethnic diversity target referred to inthe Parker Review.

More details on the progress towards our Group-wide DEI

strategy and targets can be found on pages 108. Further

information on the diversity of the Board and Executive

Leadership Team can be found on pages 71 and 79.

The Committee also dedicated considerable time during

theyear to succession planning activities for our Executive

Leadership Team, keeping under review the leadership needs

of the business and ensuring that we continued to invest and

develop our diverse pool of high-potential internal talent.

Following an externally facilitated performance review this

year, I am pleased to report that the process demonstrated

that this Committee continues to operate effectively across

all its responsibilities. Further information on the outcome

of the performance review conducted in FY25 can be found

on pages 100 and 101.

Looking forward, with a new CFO commencing her tenure

inearly 2026, a primary focus for the Committee will beto

ensure a smooth transition for Jacqui as she steps into her

Executive Director role. The Nomination Committee, together

with the Board, iscommitted to providing the necessary

support to enable Jacqui’s success in this critical position.

I would like to thank my fellow Committee members for their

openness, insight, and constructive challenge throughout

the year. Their ongoing dedication and valuable contributions

have been instrumental in enabling the Committee to fulfil

its responsibilities effectively.

Andrew Duff

Nomination Committee Chair

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

103

Board and Board Committee composition

andsuccession planning

The Chair leads the process for new Board appointments,

except in instances when the Committee is dealing with the

Board Chair succession. The Committee follows established

procedures for appointing new Non-executive and Executive

Directors, which are clearly set out in its Terms of Reference.

Over the course of the year, the Committee considered two

Board appointments, with a focus to ensure that the Board’s

composition continues to support Sage’s strategic direction

and high standards of governance.

To facilitate a rigorous and inclusive external selection

process for a new Non-executive Director, the Committee was

supported by the Lygon Group, an independent executive search

company with no other connection to the Company or any of

itsDirectors. TheCommittee met with a shortlist of diverse

candidates, who were assessed on merit against objective

criteria as well as their alignment to Sage Values and culture.

In reaching its recommendation, the Committee also considered

the Board’s collective composition, the existing skillsets of

individual Directors, the skills required for the future, and

how the candidate would integrate with theBoard. On the

Committee’s recommendation, the Board appointed Lori

Mitchell-Keller asa Non-executive Director in February

2025in view of the valuable expertise she would bring while

strengthening the Board’s diversity of thought and strategic

capabilities. On her appointment, Lori undertook a full Board

induction programme, which was designed to help her obtain

a deepunderstanding of her role and responsibilities, and to

support the smooth transition intothe Boardroom. Further

details of Lori’s induction programme can be found on page 82.

The Committee also considered the succession of Sage’s

CFO, following Jonathan Howell informing the Board of his

intention to step down from the role on 31 December 2025.

Inits deliberations, the Committee reviewed the CFO

succession plan, including the requisite skills, knowledge,

financial expertise, stakeholder understanding, and

personalattributes required to succeed in the role. In line

with the Group’s robust succession planning activity, an

internal candidate was identified as the preferred successor.

To assist the Committee in its evaluation, an independent

assessment of the candidate’s readiness was undertaken by

anindependent advisory firm, YSC Consulting, which has

noother connection to the Company or any of its Directors.

Thiscomprehensive review encompassed an analysis of the

candidate’s strengths and areas for development. In addition,

interviews were held with each Committee member, the Chief

Executive Officer, and the Chief People Officer to inform

theCommittee’s recommendation. On the recommendation

oftheCommittee, the Board appointed Jacqui Cartin as the

newCFO with effect from 1 January 2026. The appointment

ofan internal successor demonstrates the robustness of the

succession planning process, and underlines our commitment

to nurturing internal talent, preserving knowledge within the

business and minimising disruption. Further details of how

the Board considered section 172 factors in its approval of

the new CFO can be found on page 88. Membership for all the

Board Committees is reviewed annually to ensure an

optimum combination of skills, experience, knowledge,

anddiversity that supports effective governance and

decision making. Further to such review, theCommittee

recommended to theBoard the appointment of Maggie

ChanJones to the Remuneration Committee. She brings

valuable insight through her understanding of the US

software market and remuneration matters, and draws on

herexperience at Sageand her other externalcommitments.

Maggie Chan Jones’ appointment, effective 1 August 2025,

ensures thatthe Remuneration Committee remains

appropriately resourced, maintaining anoptimum

balanceof relevant skills and perspectives. Nochanges

wererecommended tothe membership of the Auditand

Riskor the Nomination Committees.

Further information on the Board skills

matrixcanbe found on page 71

Annual election and re-election of Directors

Every year, the Committee considers and, if thought fit,

recommends to the Board the election or re-election of

Directors by shareholders at the Annual General Meeting.

Aspart of the annual review process, the Committee reviews

the time commitment, contribution and effectiveness of

each Board member, and, having noted that Jonathan Howell

will step down from his role on 31 December 2025, recommended

tothe Board that each Director be proposed for election or

re-election by shareholders at the 2026 Annual General Meeting.

Lori Mitchell-Keller and Jacqui Cartin will be standing for

election by shareholders for the first time at the 2026 Annual

General Meeting.

Time commitments and external directorships

The Board places significant emphasis on ensuring that

Directors are able to dedicate the time and attention necessary

to fulfil their Sage Board responsibilities effectively. Prior to

appointment, Non-executive Directors are made fully aware

ofthe expected time commitment associated with their role.

AllDirectors are also informed that any proposed additional

external appointments or significant new commitments would

require prior approval of the Board.

The Board maintains ongoing oversight of the number and

nature of external directorships held by its members and

conducts an annual review of their significant external time

commitments. As part of this annual process, consideration

is given by the Committee to internal Sage policies, market

best practice, meeting attendance records, and the scope of

each Director’s external directorships. These assessments enable

the Committee to ensure that allDirectors continue to

contribute meaningfully to Board discussions and decision

making. The Board remains satisfied that no Director is

overboarded and that each continues to perform their duties

to the Sage Board effectively.

In FY25, the Committee considered the proposed external

appointment of Steve Hare as a non-executive director at

JSainsbury plc, with effect from 3 July 2025. Following a

thorough assessment of the anticipated time commitment

associated with this role, the Committee concluded that

Steve Hare would continue to discharge his responsibilities

to the Sage Board effectively. The Committee also recognised

Corporate governance report continued

104

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

that the Sage Board would benefit from the broader insights

and perspectives Steve gains through this non-executive

appointment. Accordingly, the Committee recommended

tothe Board to approve this external appointment.

The Committee also reviewed the proposed appointment of

Jonathan Howell as an independent non-executive director

and chair of the audit committee at Whitbread PLC, effective

from 1 January 2026. The Committee noted that the appointment

would take effect following Jonathan stepping down from

hisrole as an Executive Director at Sage.

The Committee further considered the appointment of Lori

Mitchell-Keller to the board of OneStock, and concluded that

it was satisfied that she would continue to be able to devote

sufficient time to herduties on Sage’s Board and that the

appointment did not represent a conflict. The Committee

recommended that the external appointment be approved

bythe Board following its deliberations.

As disclosed in the FY24 Annual Report, the Committee

reviewed and approved the appointment of Jonathan Bewes

as Chair of MONY Group plc, effective from 1 January 2025.

Further details regarding the Committee’s considerations

relating to this appointment were provided on page 102 of

the FY24 Annual Report.

Succession planning for the Executive

Leadership Team and senior management

To foster an environment of an inclusive culture and ensure

robust succession planning for the Executive Leadership

Team and senior management, the Committee maintains

clear oversight of a diverse pool of senior talent identified

as potential successors. Regular reviews are conducted to

assess candidates’ readiness, evaluating a broad spectrum

of leadership capabilities and personal attributes to ensure

the succession pipeline is both strong and representative of

high-calibre colleagues from diverse backgrounds. As part of

this process, the Committee also considers how Sage attracts

and retains high-calibre individuals and nurtures high-potential

talent to realise their career aspirations. These efforts are

underpinned by Sage’s inclusive, high-performance culture

which remains a critical enabler of the Group’s ability to

succeed in a dynamic and competitive global market.

In FY25, the Committee dedicated time to discussing

succession plans for several key positions, including the

ChiefCommercial Officer, Chief Growth Officer and Chief

Technology Officer. These discussions involved a detailed

review of each of the role’s evolving requirements, the

strength and depth of the succession pipeline, and the

futurecapabilities needed to meet the Group’s strategic

ambitions. One-to-one colleague mentoring conversations

(the Non-executive Director Conversation Programme)

werealso arranged to provide Non-executive Directors

withvaluable exposure to succession pipeline candidates.

This initiative supports both the development of future

leaders and enhances the Directors’ understanding of

emergingsenior talent. Succession planning for the

ExecutiveLeadership Team and senior management

willremain a key focus of the Committee in FY26.

Committee performance and evaluation

The Board is dedicated to upholding the highest standards

of governance and conducts a formal and rigorous evaluation

of its performance, as well as of its Committees, individual

Directors, and the Chair annually.

In FY25, in accordance with the recommendations of the

Code,anexternally facilitated Board performance review

was conducted. As part of this process, the Committee’s

performance was assessed, which included consideration

ofthe effectiveness of the Committee Chair. The findings of

the external performance review affirmed the effectiveness

of the Committee Chair and the strong performance of the

Committee, noting a positive culture ofopen dialogue

andconstructive debate.

Further information on the FY25 external Board

performance review, outcomes and next steps are

available on pages 100 and 101

Diversity, equity, and inclusion

The Committee and the Board conducted its annual review ofthe

Board Diversity, Equity and Inclusion (‘DEI’) Policy. Thepolicy

sets out the DEI approach for the Board and its Committees, with

the intention of fostering inclusive leadership and maintaining

appropriate Board and Committee composition.

While all Board and Committee appointments are based on

merit and objective criteria, the Board remains committed

to promoting diversity, equity, and inclusion. We continue to

meet the targets set out by the FTSE Women Leaders Review,

the Parker Review, and the UK Listing Rules. These commitments,

together with the Board DEI Policy, and other associated global

policies, reflect our broader responsibility to foster inclusive

leadership and reflect the diversity of our global business.

As at 30 September 2025 and the date of this report, the Board

composition meets both the gender and ethnic diversity targets

set out in the UK Listing Rules, with women representing

40%of Board membership, Annette Court serving as one

ofthe specified senior Board positions in her role as Senior

Independent Director, and one Board member being from an

ethnic minority background. Following the appointment of

Jacqui Cartin as an Executive Director and CFO in January

2026, Board gender diversity is expected to increase to 50%,

with women holding two out of four senior Board positions,

thereby potentially exceeding the targets set by the FTSE

Women Leaders Review and the UK Listing Rules.

The Board and senior management believe diversity,

ourstrong culture, and Values remain fundamental to the

continued success of the business, providing the right

blendof perspectives and insights required to meet our

purpose and deliver on our strategic objectives. The Board

and the Committee will continue to monitor progress against

the Board DEI Policy to provide meaningful disclosure in the

Annual Report and Accounts on the policy’s implementation

and progress in meeting its objectives.

Scan or click the QR code to access

theBoard DEI Policy

Further information on the diversity of the

Executive Leadership Team and their direct

reportscan be found on page 28

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

105

UK Listing Rules—Board and executive management diversity reporting

The Committee recognises the requirements under the UK Listing Rules to disclose data in a prescribed format about the

gender identity or sex, and the ethnic background of members of the Board and executive management.

Approach to data collection

The data used for the purpose of our disclosure against Board diversity targets, as set out on this page, was collected as part

of the annual declaration process, whereby the Board and the Executive Leadership Team confirmed their details through

theinternal DEI dashboard or through self-declaration. This self-declaration process is based on individuals voluntarily

self-reporting their personal information, including confirmation of ethnicity and consent for its inclusion in public

reporting. The data in the tables below is used for statistical reporting purposes and is as at our chosen reference date

of30 September 2025. Further information on the gender balance of those in senior management and their direct reports

canbe found on page 79.

Board and executive management gender

Number of

Boardmembers

Percentage

oftheBoard

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in

executive

management

2,3,4

Percentage of

executive

management

2,3,4

Men 6 60% 3 6 67%

Women 4 40% 1 3 33%

Not specified/prefer not to say – – – – –

Board and executive management ethnicity

Number of

Boardmembers

Percentage

oftheBoard

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in

executive

management

Percentage of

executive

management

White British or other White

(including minority White groups) 9 90% 4 8 89%

Mixed/Multiple ethnic groups –––––

Asian/Asian British 110%–––

Black/African/Caribbean/

BlackBritish –––––

Other ethnic group – – – 1 11%

Not specified/prefer not to say –––––

1. The data for the Board members is expected to change on 1 January 2026 as the new CFO, Jacqui Cartin, joins the Board. Jonathan Howell will step down

from the Board on 31 December 2025.

2. As per the UK Listing Rules, executive management within Sage is, for this purpose, the Executive Leadership Team, including the Company Secretary.

3. The data for the executive management is expected to change on 1 January 2026 as Jacqui Cartin joins the Executive Leadership Team.

4. The executive management data reflects the information as at 30 September 2025 and includes the Executive Directors as well as Eduardo Rosini, who served as

Chief Growth Officer and a member of the Executive Leadership Team throughout FY25.

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106

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Board policy

Board DEI Policy objectives Implementation and progress against objectives

All appointments to the Board should be made on merit

against objective criteria which take into account

experience, skills, and the need to ensure an appropriately

diverse balance in the resulting membership of the Board.

The Board and the Committee are committed to ensuring

the composition of the Board exhibits a diverse mix of

skills, personal attributes, professional and industry

backgrounds, geographical experience and expertise,

independence of thought, gender, age, tenure, race,

ethnicity, and broader aspects of diversity which may

include, for instance, disability, sexual orientation,

andsocio-economic background.

Consider candidates for appointment to the Board from

asdiverse a pool of applicants as possible, ensuring that

the recruitment and selection process has been reviewed

tomitigate bias.

The Board and the Committee seek a wide and diverse

listofcandidates for Board appointments who possess a

range of critical skills of value to the Board and relevant

tochallenges and opportunities faced by the Company.

Independent executive search firms help the Company

toidentify candidates from diverse backgrounds which

support the Company’s diversity, equity, and inclusive

culture, always with the aim of securing the very best

candidate for the position.

Continue to meet (or, where appropriate in respect of

futuretargets, work towards meeting) the targets of

theParker and FTSE Women Leaders Reviews and the

UKListingRules, and our internal global gender diversity

target, as far as possible, recognising that there may be

temporary periods when this is not possible; such periods

should be minimised.

The Board and the Committee are satisfied that the Board

continues to meet the recommendation of the Parker

Review, with at least one Board member of ethnic minority.

The Sage Board meets the target set by the UK Listing

Rulesand by the FTSE Women Leaders Review to have one

ofthe senior Board positions (Chair, CEO, CFO, or SID) held

by a woman. It is expected that, when Jacqui Cartin joins

theBoard on 1 January 2026, female representation on the

Board will increase to 50%, with women holding two out of

four senior Board positions. Please refer to page 106 for

further information.

Engage executive search firms that understand Sage’s

Values and approach to diversity, equity, and inclusion,

havesigned up to the Voluntary Code of Conduct on both

gender and ethnic diversity and best practice, and utilise

an open recruitment process for non-executive roles.

The Board engages independent advisory firms to assist with

the selection of non-executive roles. The Lygon Group was

appointed by the Board in FY25 to facilitate the search and

appointment of Lori Mitchell-Keller, who joined the Board as

a Non-executive Director in February 2025. The Lygon Group

has signed up to the Voluntary Code of Conduct on both

gender and ethnic diversity and best practice, and utilises

anopen recruitment process for non-executive roles.

Ensure advertisements, role descriptions, and long lists

reflect the Board’s commitment to diversity, equity, and

inclusion, as set out in this policy.

All role briefs are maintained to reflect the Board’s

policyofconsidering a diverse pool of candidates

withdifferent backgrounds.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

107

Group-wide DEI initiatives

The Group continues to invest in its global DEI strategy, supported by three strategic principles of building diverse teams,

creatingan inclusive culture, and delivering equity by design. Despite shifts in the socio-political landscape in some regions

andresulting decline in DEI commitments, Sage remains unwavering in its dedication to doing the right thing. The Board

receives updates from members of the Executive Leadership Team and seniormanagement on the Group-wide initiatives

which underpin the DEI strategic principles and monitor progress againstkey measures. The alignment of refreshed targets

with our strategic cycle (FY25-FY27) demonstrates our continued commitment to the DEI strategic principles. This, coupled

with the ongoing commitment of executive leaders, senior management, and colleagues, means we are well positioned for

thenext three years. The following table outlines key progress in FY25:

Group-wide initiative Progress in FY25

All About Us colleague participation

This initiative is designed to better understand our

colleagues and encourages them to voluntarily share

insights about themselves.

Sage is committed to a workforce that fully represents the

many different cultures, backgrounds, and viewpoints of its

customers, partners, and communities. When the personal

insights are combined, colleagues’ contributions will

provide an accurate view of Sage’s colleague population

and help Sage to redesign polices, processes, and procedures

to help build an equitable experience for all colleagues.

Participation in FY25 at 60% (FY24: 64%). The global

participation target for the end of FY25 was 60%,

increasingto 65% for FY27.

In FY25, we expanded the All About Us programme with a

successful launch campaign in India, engaging 474 colleagues

and achieving a 69% participation rate among our Indian

workforce. This approach contributed to our global self-

disclosure rate achieving the FY25 target. Sage recognises

that the gathering of data will become increasingly important

as government reporting on pay transparency increases to

encompass other DEI criteria. FY26 will see the launch of

arefreshed programme for Sage colleagues in France.

Colleague Success Network participation

This initiative aims to create an inclusive and welcoming

culture through well-supported colleague communities.

All of Sage’s Colleague Success Networks have the same

overarching goal, aiming to help create and support the

Company’s inclusive culture. The Networks support the

Company’s DEI journey by centring and elevating the voices

of underrepresented communities across disability, race

and ethnicity, and gender. They provide inclusive platforms

for sharing lived experiences and identifying shared challenges,

which are fed back into the DEI strategy.

Participation in the year grew to 28% of colleagues

participating in one or more Networks (FY24: 22%). The

global participation target for the end of FY25 was 20%.

Throughout the year, we continued to support our volunteer-

led Colleague Success Networks through evolving our

framework and governance structure to enhance their

impact, and strengthened the Networks’ partnership with

Sage Foundation. In FY25, we launched two new Networks,

Inclusion Network in France and Gender Alliance Network

inSouth Africa, and broadened the remit of the UK&I Family

Network to the Family & Carers Network.

Sage Group’s global gender diversity goal

Supporting our building diverse teams DEI strategic

principle, our global gender diversity goal is for 65% of our

leadership teams to be gender diverse by FY27. This means

there are no more than 60% men, women or non-binary

people in any leadership team. Our revised FY27 targets are

ambitious but achievable, with targets set at management

and leadership teams at the top four levels of seniority.

Milestone target for FY25 is 50%. 40% of leadership teams

currently meet this target (FY24: 41%).

In FY25, we have evolved our FY27 targets and annual

diversity milestone targets for the top four levels of

seniority. We have also introduced a Sage race/ethnicity

target for FY27 of 20% for senior leadership teams.

The Company acknowledges that continued effort is

essential to continue increasing the percentage of

leadership teams meeting our ambitious targets each

yearand to achieve the overall targets by the end of

FY27todeliver long-term impactful change.

Sunflower Hidden Disabilities Programme

The Programme is a simple tool for colleagues to share that

theyhave a disability, illness, or condition that may not be

immediately visible. As diverse as these conditions are, so

are our colleagues’ individual needs and the support they

require. The sunflower is a globally recognised symbol for

non-visible disabilities, conditions, or chronic illnesses

andwe have chosen to participate in the scheme to reduce

stigma, build understanding, and encourage conversations

between colleagues about the support that they need to

perform at their best.

In FY25, we launched our Sunflower Hidden Disabilities

Programme to all colleagues in the UK, Ireland, and South

Africa. Colleagues with non-visible disabilities have the

option to wear a green sunflower lanyard, bracelet, or pin

badge, or to use a sunflower Microsoft Teams background, to

discreetly let others know that they may require additional

support and understanding to improve their day-to-day

work experience. This year, we distributed 1,400 green

sunflower lanyards, pin badges, and wristbands to

colleagues. Additionally, we provided 1,435 white

sunflowerlanyards, wristbands, pin badges, and

stickerstoallies of the Programme.

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108

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Audit and Risk Committee

”

“

The external audit was a key focus for

the Committee this year, as the Group

transitioned to its new external auditor,

KPMG. Alongside this, the Committee

hasmaintained its focus and oversight

onthe Group’s external reporting,

internalcontrols, and the continued

strengthening of risk management.

Jonathan Bewes

Chair of the Audit and Risk Committee

Other Audit and Risk Committee members

Annette Court Derek Harding

Dear shareholders,

I am pleased to present the Annual Report of the Audit

andRisk Committee (the “Committee”) for FY25. This

reportsets out our role and how we have delivered on it

during the year, while adapting to the changing needs

ofthebusiness. The Committee is central to Sage’s

governance framework, overseeing financial and non-

financial reporting, risk management, and internal

controls.The Committee seeks to ensure the clarity

andreliability of the Group’s financial statements and

non-financial disclosures, and to provide independent

oversight of both internal and external audit activities.

Throughout the year, the Committee maintained close

engagement with both management and the external auditor to

receive updates on ongoing matters. FY25 marked the first

year of the Group’s new external auditor, KPMG LLP (KPMG).

Accordingly, one of the Committee’s key activities during

the year was managing the transition to KPMG, to which a

significant amount of time and attention was dedicated.

Jonathan Bewes

Chair of the Audit and Risk Committee

Key FY25 activities

November

FY24 Full-Year results and Annual Report and Accounts

Net Zero Transition Strategy Update

February

2024 Corporate Governance Code Preparedness

(Deep Dive)

KPMG Audit Transition Update

May

H1 FY25 Interim Results

AI Governance and Data Privacy Update

September

Non-Financial Sustainability Disclosures

FY26 Internal Audit Plan

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

109

Audit and Risk Committee Report continued

Activities and evaluation

During the year, the Committee oversaw the Group’s financial

and non-financial reporting, risk management and internal

control procedures, and the work of Sage Assurance (internal

audit) and the external auditor.

The Committee also received specific updates on several key

matters, including the Group’s preparedness for compliance

with the enhanced internal control recommendations under

the revised UK Corporate Governance Code 2024, the transition

to KPMG as external auditor, the migration of the financial

reporting system in North America, and the evolving risk

framework for Artificial Intelligence (AI) and data governance.

Further details on these matters are provided on page 114.

The Committee’s performance was also reviewed as part of

anexternally facilitated Board performance review process,

which included consideration of the effectiveness of the Chair

of the Committee. The report on this review, shared with both

the Chair of the Board and the Chair of the Committee, supported

the performance and effectiveness of the Committee.

The Committee operated during the year in accordance with

the principles of the Financial Reporting Council’s (FRC)

UKCorporate Governance Code 2018 (the “Code”) and the

associated recommendations set out in the FRC’s Guidance

on Audit Committees.

Role of the Committee

The Committee is an essential part of Sage’s overall

governance framework. The Board has delegated to the

Committee the responsibility to oversee and assess the

integrity of the Group’s financial reporting, internal controls

and risk management (including risk appetite, tolerance,

and strategy), whistleblowing, anti-bribery and fraud, as

wellas the work of Sage Assurance (internal audit) and the

external auditor. With respect to ESG, the Committee is

responsible for monitoring the integrity, accuracy, and

consistency of both ESG and sustainability-related non-

financial disclosures.

These responsibilities are defined in the Committee’s

Termsof Reference, which were reviewed and approved

bytheCommittee and the Board in May 2025.

Composition

The Code requires that at least one member of the Committee

has recent and relevant financial experience. The Disclosure

Guidance and Transparency Rules (DTRs) require that at least

one member has competence in accounting and/or auditing.

The Board is satisfied that these requirements are met, with

Jonathan Bewes being a qualified chartered accountant and

experienced Audit Committee Chair following 25 years in

financial services as a corporate finance advisor in the

investment banking sector. Derek Harding is also considered

to meet these requirements as a chartered accountant who

previously served as chief financial officer at Spectris plc and

remains on the board as an executive director of the group.

Further, the Board considers that the Committee has the

necessary competence and broad experience relevant to the

sector in which Sage operates as required by the Code. Annette

Court is a former chief executive officer with extensive

experience of leading complex, customer focused businesses.

Sangeeta Anand stepped down from the Committee following

her resignation from the Board in February 2025.

There have been no other changes in the composition of the

Committee during the year.

Activities during the year

The Committee held four scheduled meetings during the

year, in line with its Terms of Reference. Details of individual

attendance at scheduled meetings are set out on page 83.

Regular attendees by invitation include the Chair of the

Board, the Chief Executive Officer, the Chief Financial

Officer, the General Counsel and Company Secretary, the

EVPGroup Financial Controller, the EVP Chief Risk Officer,

and the VP Assurance. All Committee meetings are attended

by the external auditor, KPMG. By invitation, other members

of management are invited to present.

The Chair of the Committee reported to the Board on key

matters arising after each Committee meeting. At certain

meetings, the Committee met with the external auditor

andthe VP Assurance, without management being present.

Outside these formal Committee meetings, the Chair of the

Committee met with the Committee’s regular attendees by

invitation, as well as the external auditor.

During the year, the Committee received, considered, and,

where appropriate, challenged:

• Scheduled finance updates on business performance and

significant reporting and accounting matters, including

going concern, from the EVP Group Financial Controller;

• The Group’s half-year results and Annual Report and

Accounts, as well as the accompanying press release,

ahead of their review by the Board;

• A detailed summary of the Group’s tax strategy, which

waspresented by the EVP Group Financial Controller,

andsubsequently approved by the Committee;

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

• Scheduled risk updates, including risk dashboards

outlining both principal and any escalated risks.

TheCommittee also received summary reports and

supplementary briefings from management on selected

Principal Risks and other “in-focus” reviews, in addition

toa general update on business resilience matters;

• The assessment of the Group’s Principal Risk appetites

andconsideration of emerging risks;

• Summary reports of escalated incidents and instances

ofwhistleblowing and fraud, together with status of

investigations and, where appropriate, management

actions to remediate issues identified;

• The internal audit plan and subsequently progress

againstthe plan and results of internal audit activities,

including Sage Assurance reports on internal control

andthe implementation of remedial management

actions,to address issues identified and make internal

control improvements;

• The external audit plan and subsequent updates on

delivery of the external audit and reports from the external

auditor on the Group’s financial reporting and observations

on the internal financial control environment in the course

of its work;

• Updates on the legal and regulatory frameworks relevant

tothe Committee’s areas of responsibility, including an

update on AI, cyber security, and data privacy matters;

• A joint update from the EVP Group Financial Controller

andthe EVP Chief Risk Officer with respect to the Group’s

Viability Statement; and

• Updates from the EVP Sustainability and Foundation on

non-financial disclosures, including ESG metrics and

reporting as well as other ESG compliance and related

reporting matters.

Audit and corporate governance reform

During the year, the Committee received updates from the

EVP Group Financial Controller and EVP Chief Risk Officer

with respect to the Group’s preparedness for compliance

withthe enhanced internal control recommendations under

Provision 29 of the revised UK Corporate Governance Code

2024, which are applicable for the Group from FY27 onwards.

The Group will perform a dry run of procedures to support

compliance with Provision 29 during FY26, with the

Committee supportive of the preparatory work completed

todate. Updates on the dry run will be presented to the

Committee at each meeting throughout FY26.

Review by the Financial Reporting Council

(FRC)

During the year, the Corporate Reporting Review team of

theFinancial Reporting Council (FRC) wrote to the Company

noting that a review of the company’s annual report and

accounts for the year ended 30 September 2024 had been

carried out in accordance with the FRC’s Corporate Reporting

Review Operating Procedures. The review did not identify

anyquestions or queries that the FRC wished to raise with

theCompany. The Committee notes that the FRC’s review

doesnot provide assurance that the annual report and

accounts were correct in all material respects as the FRC’s

roleis not to verify information but to consider compliance

with reporting requirements.

Financial reporting, including significant

reporting and accounting matters

The agenda for every Committee meeting includes a formal

finance update from the EVP Group Financial Controller. This

informs the Committee about developments in the Group’s

reporting and accounting environment, and compliance with

relevant reporting standards. During the year, the Committee

considered how these developments were addressed in

preparing the Group’s financial statements, ensuring that

applicable requirements were appropriately reflected. The

Committee assessed the overall quality of financial reporting

through review and discussion of the significant accounting

matters and the interim and annual financial statements.

The Committee’s review included assessing the appropriateness

of the Group’s accounting policies and practices, confirming

their compliance with financial reporting standards and

relevant statutory requirements, and reviewing the adequacy

of disclosures in the financial statements. In performing its

review of the Group’s financial reporting, the Committee

considered and challenged the work, judgements and

conclusions of management. The Committee also received

reports from the external auditor setting out its view on the

accounting treatments included in the financial statements.

The Committee has also reviewed and considered the

requirements of the FRC’s Audit Committees and the

External Audit: Minimum Standard.

Significant reporting and accounting matters

During the year, the Committee considered a number

ofsignificant reporting and accounting matters which

impacted the Group’s financial statements. The Committee’s

response and challenge over these matters is set out on the

pages that follow:

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

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Audit and Risk Committee Report continued

Significant reporting

andaccountingmatters Response and challenge Cross-reference

Revenue recognition

Revenue recognition continues to

bean important area of focus for

theGroup.

The Group has a detailed revenue

recognition policy for each category

of revenue. This includes the

application of rules relating to

thevarious ways in which the

Groupsells its products.

With over a third of the Group’s

revenue generated through sales to

partners rather than end-users, the

keyjudgement in revenue recognition

is determining whether a business

partner is a customer of the Group.

Considering the nature of Sage’s

subscription products and support

services, this judgement is usually

based on whether the business partner

has responsibility for payment, has

discretion to set prices, and takes on

the risks and rewards of the product

from Sage. Inherently, this assessment

can be judgemental.

• The Committee continues to oversee management’s

application of revenue recognition policies and, during

theyear, has continued to monitor compliance with

financial reporting and accounting controls linked to

revenue recognition. During the year, there have been

nochanges to the Group’s revenue recognition policies.

• The Committee has considered the Group’s revenue

recognition policies with respect to emerging business

models, including revenue earned from services provided

via the Sage Platform, particularly those which are

commercialised on a consumption basis.

• As part of the preparation for the interim and annual

financial statements, the Committee obtained reports

from both management and KPMG, which set out the

application of accounting and reporting treatment

against the revenue recognition policy.

• KPMG provided an update to the Committee on the nature,

extent, and findings from its procedures over revenue

recognition during the year.

See note 3.1 of the

financial statements

on pages 192 to 194.

Carrying value of goodwill

Given the Group’s goodwill

balanceof£2,213m and the

continuingevolution of Sage’s

business model, the annual

assessment of the recoverability

ofgoodwill is a significant area

offocus for the Committee.

During the year, the Group made

twoacquisitions—ForceManager

andFyle. Further information on

bothacquisitions is set out in

note14.1 on page 244 and 245

inthefinancial statements.

• The Committee reviewed and considered the methodology

applied and challenged the key inputs into the impairment

model including areas of estimation and judgement such as

forecast cash flows and discount rates, with consideration

to their appropriateness given the evolving macroeconomic

environment.

• Where appropriate, the Committee acknowledged the

useof external specialists to support and corroborate

management’s inputs.

• The Committee further enquired as to whether any other

reasonable changes in assumptions would result in a

material impairment and therefore require sensitivity

disclosure in the financial statements. The Committee

considered management’s sensitivity testing and agreed

that the possibility of such reasonable changes is remote

and therefore agree with the disclosures provided.

• The Committee considered the level at which goodwill is

tested and concluded a consistent approach to the prior

year is appropriate.

See note 6.1 of the

financial statements

on pages 205 to 207.

112

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Significant reporting

andaccountingmatters Response and challenge Cross-reference

Going concern and

viabilityassessment

Both the going concern and viability

assessment are key areas of focus for

the Committee due to the level of

management judgement required.

In preparing these assessments,

consideration was given to the

macroeconomic environment.

The Committee received a detailed

update from management during the

year which included both reverse and

scenario-specific stress testing.

• The Committee reviewed management’s process for

assessing the Group’s longer-term viability, including

thedetermination of the period over which viability

should be assessed, the appropriateness of the viability

scenarios identified in light of the Group’s Principal

Risksand uncertainties, and the reasonableness of key

assumptions used by management in calculating the

financial impact of a viability scenario arising.

• With consideration to the macroeconomic environment,

the Committee reviewed the key assumptions underpinning

management’s longer-term forecasting, and the sufficiency

and adequacy of future funding requirements. As part of

this review, the Committee considered the level of

available liquidity over the forecast period.

• The Committee reviewed the results of management’s

scenario-specific stress testing for both going concern and

viability, as well as reverse stress testing, the result of which

demonstrated the resilience of the Group’s business model.

• It was noted that under scenario-specific stress

testing,the Group maintains sufficient available

liquidityover the forecast period. The results of reverse

stress testing highlighted that such a scenario would only

arise following a highly significant deterioration in

performance, well in excess of the assumptions in the

scenario-specific stress testing.

• As part of its review and challenge, the Committee took

into consideration updates provided by the EVP Chief

RiskOfficer with respect to the Group’s principal and

emerging risks.

• The Committee approved the disclosures in relation to

both the going concern and viability assessment, and

recommended to the Board the preparation of the

financial statements under the going concern basis.

The Group’s going

concern and viability

statements can be

found on pages 153, 67

and 68, respectively.

Alternative Performance

Measures (APMs)

The Committee closely monitors

management’s interpretation and

definition of APMs, in particular

annualised recurring revenue (ARR).

In addition, the Committee considers

the presentation of APMs in the Group’s

Annual Report and Accounts in the

context of the requirement that they

be fair, balanced, and understandable.

The Committee continues to review and challenge

management’s use of APMs and, as part of the preparation

for the interim and annual financial statements, requests

aclear reconciliation between key APMs and statutory

reporting measures.

There is a continued focus by the Committee on the ARR

APMgiven its importance as a key measure of business

performance. Biannually, an update on ARR performance

isprovided to the Committee.

The Committee has challenged the sufficiency,

adequacy,and clarity of disclosures related to APMs

intheAnnual Report and Accounts, and considers them

tobeappropriately disclosed.

The Committee also reviewed supplementary information

issued alongside the financial statements, including the

Group’s press release, to ensure consistency in the way APMs

are disclosed and presented on a balanced basis alongside

statutory reporting measures.

The definition of

APMs can be located

in the glossary on

pages 261 and 262.

Reconciliations of

statutory revenue,

operating profit,

andbasic earnings

pershare to their

underlying and

organic equivalents

are in the Financial

review starting on

page 48.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

113

Audit and Risk Committee Report continued

Fair, balanced, and understandable

Each year, the Committee advises the Board on whether

theAnnual Report and Accounts taken as a whole are fair,

balanced, and understandable, and provide the information

necessary for shareholders to assess Sage’s position,

performance, business model, and strategy. In reaching

itsconclusion, the Committee considered the results of

management’s assessment of going concern and viability,

together with disclosures relating to the Group’s principal

and emerging risks, reviewed the Annual Report and Accounts

as a whole, and assessed the results of processes undertaken

by management to provide assurance that the Group’s

financial statements were fairly presented.

These processes included an analysis of how the key events

in the year had been described and presented in the Annual

Report and Accounts, how APMs had been defined and

presented, and the outcome of representations received

from country management teams on the application of a

range of financial controls. The Committee also considered

the perspective of the external auditor.

Risk management and internal controls

The Committee assists the Board in its monitoring of the

Company’s internal control and risk management systems,

and in its review of their effectiveness. This monitoring

includes oversight of all material controls, including

financial, operational, regulatory, and compliance controls,

and assessing whether the control systems are fit for purpose

and whether any corrective action is necessary.

During the year, the Committee:

• Reviewed the Principal Risks, their evolution during

theyear, and the associated risk appetites and metrics,

challenging and confirming their alignment to the

continued achievement of Sage’s strategic objectives.

Ateach meeting, the Committee considered and

challenged the ongoing overall assessment of each

risk,their associated metrics and management

actions,and mitigations in place and planned;

• Considered the latest updates on the risk profile

surrounding the use of AI and data privacy more

broadly,including an update on the Group’s AI

governanceframework;

• Received an update from the EVP Chief Risk Officer

onbusiness resilience preparedness, with a focus on

keytopics including product security, enterprise IT

solutions, and crisis management;

• Reviewed and considered an assessment of the

effectiveness of risk management more broadly, and

reviewed updates on fraud risk management and the

Group’s adherence to policies, including Conflicts of

Interest, Anti-Money Laundering, Sanctions, Competition

Law, Anti-Bribery and Corruption, and Modern Slavery;

• Received reports from Sage Assurance and management

oninternal control and monitored the implementation of

management actions to remediate issues identified and

make improvements. The Committee is satisfied that

management’s response to any financial reporting

orinternal financial control issues identified by the

external auditor was appropriate;

• Reviewed at each Committee meeting any escalated

incidents and any instances of whistleblowing and

management actions to remediate any issues identified

(see Incident management, fraud, and whistleblowing

paragraph below for further details); and

• Considered individual incidents and associated actions to

assess whether they demonstrated a significant failings or

weaknesses in internal controls, of which none were identified.

For further details on the Group’s risk management and

internal control systems, its risk-informed decision-making

process and its Principal Risks, refer to the Risk management

section on pages 56 to 60 and Principal Risks and uncertainties

on pages 61 to 66.

Specific areas of focus

The Committee spent time on the following specific areas

offocus during the year to consider and challenge relevant,

current and important issues:

• The Group’s activities to ensure preparedness for the

enhanced internal control recommendations of the

revisedUK Corporate Governance Code 2024, which

included a deep dive session led by management for

Committee members in the first half of FY25;

• The progress relating to the implementation of a new

financial reporting system in the Group’s North America

business; and

• An update on cyber security and data privacy matters,

alongside updates on broader matters relating to the

Group’s strategic initiatives, including the Sage

Platformand use of AI and Machine Learning.

ESG reporting

The Committee received updates from the EVP Sustainability

and Foundation on ESG reporting and compliance matters,

with a focus on the evolving regulatory landscape. As part of

this, the Committee considered the processes andcontrols

in place to ensure the integrity of external ESG reporting, as

well as the plans around assurance. In addition, the

Committee received updates on the Group’s progress towards

achieving its net zero targets.

The Committee reviewed the progress made during the year

relating to the reporting requirements under the EU Corporate

Sustainability Reporting Directive (CSRD), including the

double materiality assessment and reporting approach.

Itisnoted that the European Parliament has voted to delay

theimplementation of CSRD, with further updates expected

on the revised effective implementation date.

Incident management, fraud,

andwhistleblowing

The Committee considered the suitability and alignment

ofthe Incident, Emergency, and Crisis Management, and

Whistleblowing policies, and confirmed the effectiveness

ofthese policies in facilitating appropriate disclosure to

114

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

senior executive management and the Committee. At each

meeting, the Committee received a summary report of any

escalated incidents and instances of whistleblowing and,

together with management, considered whether there were

any thematic issues and identified remediating actions.

As part of this reporting process, the Committee was

notified of all whistleblowing matters raised, including

anyrelating to financial reporting, the integrity of

financialmanagement or that included any allegations

relating to fraud, bribery, or corruption. The Committee

wasalso notified of all non-whistleblowing incidents

exceeding an agreed materiality threshold.

Internal audit

Internal audit is delivered by the in-house Sage Assurance

function. Reporting directly to the Committee, its remit is

toprovide independent and objective assurance over the

Group’s operations and activities, to assist management and

colleagues in fulfilling their responsibility to develop and

maintain appropriate internal controls. The VP Assurance

has direct access to the Chair of the Audit Committee and

meets with the Committee without management present to

allow for open discussion.

The specific objectives, authority, scope, and

responsibilities of Sage Assurance are set out in the Internal

Audit Charter, which is reviewed annually by the Committee.

The Committee also considers and evaluates the level of

Sage Assurance resource and its quality, experience, and

expertise, supplemented as appropriate by third-party

support and subject-matter expertise, to ensure it is

appropriate to provide the required level of assurance.

Additionally, in line with the recommendations of both the

UK Corporate Governance Code and the Chartered Institute

of Internal Auditors’ (IIA) Internal Audit Code of Practice, the

effectiveness of Sage Assurance is reviewed by the Committee

on an annual basis and is also subject to an independent

external quality assessment (EQA) at least once every five

years. In 2025, PwC was appointed to conduct the latest

EQAand assess conformance with the Global Internal Audit

Standards and the IIA’s Code of Practice. Feedback from

theEQA was positive and noted conformance with the IIA

Standards, with the team viewed as being modern, agile,

andvalued. The EQA report was presented and discussed

atthe September 2025 Committee meeting, at which the

Committee endorsed these conclusions.

The Committee reviews and approves the nature and scope

ofthe work of Sage Assurance, and the Sage Assurance plan

was approved by the Committee at the beginning of the

financial year, along with subsequent quarterly updates.

Progress against the plan and the results of Sage Assurance’s

activities, including the quality and timeliness of management

responses, are monitored at each Committee meeting. This

includes a summary of findings from the internal audit plan,

reported at each meeting by Sage Assurance, as well as an

executive summary for each individual internal audit.

Following its review of the Company’s internal control systems,

the Committee considered whether any matter required

disclosure as a significant failing or weakness in internal

control during the year. No such matters were identified.

External audit

In September 2023, the Group announced the Board’s intention

to propose to shareholders that KPMG be appointed as the

Group’s external auditor for the financial year ending

30 September 2025. The audit tender process was described

in detail in the FY23 Annual Report and Accounts, and KPMG’s

appointment was approved by shareholders at the 2025 AGM.

As part of KPMG’s transition and first-year audit, the

following steps have beenundertaken:

• KPMG shadowed EY during its final FY24 audit, including

attending some meetings alongside EY. This included

KPMG’s attendance at the September 2024 and November

2024 Committee meetings.

• Early and regular engagement to ensure an effective audit

process, including review and approval of the FY25 audit

plan by the Committee at the February 2025 meeting.

• A review by KPMG of all significant judgements and

estimates, as well as the Group’s accounting policies.

There were no areas where the Group’s interpretation

differed from that of KPMG.

• Throughout the year, KPMG has provided updates to

theCommittee, noting that no changes to the audit risk

assessment have been proposed against the audit plan

presented at the start of the year.

The external auditor is required to rotate the lead audit

partner every five years. The FY25 audit was the first year

forthe KPMG lead audit partner, Simon Richardson.

The Committee confirms that the Company is, and has

beenthroughout the year under review, in compliance

withthe requirements of The Statutory Audit Services

forLarge Companies Market Investigation (Mandatory Use

ofCompetitive Tender Processes and Audit Committee

responsibilities) Order 2014.

Auditor effectiveness

The Committee is responsible for assessing the effectiveness

of the external auditor. In doing so, the Committee considers

the independence, objectivity, and level of professional

scepticism exercised by the external auditor, as well as the

results of the annual auditor effectiveness review. To fulfil

its responsibility for oversight of the external audit process,

the Committee reviewed and agreed:

• The terms, areas of responsibility, associated duties, and

scope of the audit as set out in the external auditor’s

engagement letter;

• The overall work plan and fee proposal;

• The issues that arose during the course of the audit and

their resolution;

• Key accounting and audit judgements;

• The level of errors identified during the audit; and

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

115

Audit and Risk Committee Report continued

• Control recommendations made by the external auditor.

In addition to the above, specific considerations made by

the Committee during the year included:

• The detail relating to KPMG’s scoping and audit plan

forFY25, which was presented to the Committee at its

February meeting;

• The findings published by the FRC into its view on the

effectiveness of KPMG’s audits;

• The experience and expertise demonstrated by the auditor in

its direct communication with, and support to, the Committee;

• The content, quality of insight, and added value provided

by KPMG’s reports;

• The robustness, including professional scepticism, and

perceptiveness of KPMG in its handling of key accounting

and audit judgements; and

• The interaction between management and the auditor.

At certain Committee meetings, a separate, private meeting

was held between Committee members and the lead audit

partner, Simon Richardson, to encourage open and transparent

feedback. The Chair of the Committee also met with the

external auditor outside of Committee meetings, supporting

effective and timely communication.

During the year, the Committee also received feedback

fromvarious stakeholders across the businesses evaluating

the performance of each assigned audit team. Management’s

report to the Committee included a summary of the findings

of a survey of key Sage colleagues on the quality of the KPMG’s

delivery, communication, and interaction with the various

finance teams across the Group. Management concluded

thatthe working relationship between the finance team and

KPMG across the Group was effective, and the audit had been

carried out in an independent, professional, organised, and

constructive manner, with an appropriate level of challenge

and scepticism over management’s treatment of significant

reporting and accounting matters.

Auditor independence

The Committee is responsible for the development,

implementation, and monitoring of policies and

proceduresto ensure auditor independence. At Sage,

thisisgoverned by the Group’s Auditor Independence

Policy(the “Policy”). The Policy has been in place

throughoutthe year. It specifies the role of the Committee

inreviewing and approving non-audit services in order to

ensure the ongoing independence of the external auditor.

Asummary of non-audit fees paid to the external auditor

isprovided to the Committee on a quarterly basis.

The Policy states that Sage will not use the external auditor

for non-audit services, except in limited circumstances,

andas permitted by the Ethical Standard, where non-audit

services may be provided by the external auditor with

pre-approval by the Committee unless clearly trivial.

This is provided that the approval process set out in

thePolicy is adhered to and that potential threats to

independence and objectivity have been assessed and

safeguards applied to eliminate or reduce these threats

toanappropriate level.

Any non-audit services individually in excess of £75,000

require pre-approval by the Chair of the Committee, as

doany non-audit services where the cumulative total of

previously approved non-audit services in the financial

yearexceed £75,000.

The Committee considered the application of the Policy with

regard to non-audit services and confirms it was properly

and consistently applied during the year. The Policy also

requires that the ratio of audit fees to non-audit fees must

be within Sage’s pre-determined ratio, and non-audit fees

for the year must not exceed 70% of the average of the

external audit fees billed over the previous three years.

In FY25, the ratio of non-audit fees to audit fee was 9%

(FY24: 10%), principally reflecting the fee paid for the

half-year interim review and other permitted assurance

services. A breakdown of total audit and non-audit fees

charged by the external auditor for the year under review

isshown in note 3.2 to the financial statements.

The Committee has also considered the independence

oftheexternal auditor’s partners and staff involved in the

auditof Sage. KPMG has confirmed that all its partners and

staff complied with its ethics and independence policies

andprocedures that are consistent with the FRC’s ethical

standards, including that none of its employees working

onthe audit hold publicly listed securities issued by Sage.

Inaddition, the Committee acknowledges management’s

internal assessment that no employee in a key financial

reporting oversight role has a close relationship with any

KPMG employee that may impact their independence.

Auditor re-appointment

Having considered the summary set out above relating to the

effectiveness and independence of KPMG, the Committee

has recommended to the Board that a resolution to re-

appoint KPMG be proposed to shareholders at the 2026

AGM,for the year ending 30 September 2026. The Board

hasaccepted and endorsed this recommendation.

116

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Directors’ Remuneration Report

Remuneration Committee

”

“

I would like to thank shareholders for their

strong support of our 2025 Directors’

Remuneration Policy. The Committee

isconfident that the Policy is driving

pay for performance and remains strongly

aligned to our business ambition.

Roisin Donnelly

Chair of the Remuneration Committee

Other Remuneration Committee members

Maggie Chan Jones Dr John Bates Annette Court

Composition of the Committee

The Remuneration Committee is composed solely of

independent Non-executive Directors, Maggie Chan

Jones,Dr John Bates and, Annette Court, and is chaired

byRoisin Donnelly. Details of the skills and experience

ofthe Remuneration Committee members can be found

intheir biographies on pages 75 and 76, and in the

skillsmatrix on page 71.

Letter from the Remuneration Committee Chair

page 118

Remuneration at a glance

page 121

Remuneration Committee governance

page 123

Corporate Governance Code considerations

page 125

Remuneration Policy 2025

page 127

Directors’ Annual Remuneration Report

page 132

Statement of implementation of Remuneration

Policyin the following financial year

page 144

Scan or click the QR code for more

information on the Committee’s

Terms of Reference

Activities during FY25

November

• Determined outcomes for 2024 bonus and vesting

levelof 2022 Performance Share Plan (PSP) award

• Approved the 2024 Directors’ Remuneration Report

• Reviewed stakeholder feedback and provided final

approval of the 2025 Directors’ Remuneration Policy

and implementation in 2025

• Approval of Long Term Incentive Plan (LTIP) rules

February

• Reviewed stakeholder feedback and remuneration-related

results from the 2025 AGM

• Reviewed workforce remuneration following the annual review

• Reviewed performance against in-flight incentive plans

• Reviewed remuneration-related policies

March

• Approved CFO transition arrangements

May

• Market update provided by the Committee’s advisors

• Approved the annual review of the Committee’s Terms

of Reference

• Reviewed remuneration arrangements for below Board

executives in the US

• Reviewed performance against in-flight incentive plans

July

• Market update provided by the Committee’s advisors

• Approved structure of 2026 bonus and performance share awards

• Approved 2026 below Board equity allocation policy

• Reviewed workforce remuneration and related policies

• Reviewed performance against in-flight incentive plans

September

• Market update provided by the Committee’s advisors

• Approved targets for 2026 bonus and performance share awards

• Reviewed structure of 2026 remuneration packages

forbelow Board executives

• Approved implementation of the Directors’ Remuneration

Policy for Executive Directors in 2026

• Reviewed share plan rules

• Reviewed performance against in-flight incentive plans

1. Ad hoc meeting.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

117

10%

Underlying total revenue growth

(FY24: £2,290m) £2,513m driven by broad-based

growth in cloud solutions

£600m

Underlying operating profit

(FY24: £513m) 17% increase, driven by revenue

growth and an increase in underlying operating

profit margin of 150 bps to 23.9%

11%

Underlying ARR growth

(FY24: 11%) reflects growth across all regions

balanced between new and existing customers

43.2p

Underlying basic EPS

(FY24: 36.7p) increased by 18%

Undoubtedly, our colleagues are central to our success, and

the broader colleague experience plays an important part

inthe Committee’s decision making. In FY25, our colleague

engagement remained very strong, with eSAT of 76 and a

response rate of 82%, our Employer Brand Index improved

by15 points over the year. These achievements demonstrate

a growing recognition of Sage asa values-led organisation

with colleagues at the heart.

Remuneration updates for Executive

Directors in FY26

We are proposing several changes to FY26 remuneration

arrangements, all of which are consistent with the 2025Policy:

1) Base salary increase for the CEO (as disclosed

inthe 2024 Directors’ Remuneration Report)

In last year’s Remuneration Report, we set out details of

ourextensive review into senior executive remuneration

arrangements. The review highlighted a number of issues,

including a perceived disconnect between pay and performance,

internal relativities, the competitiveness of the global

technology market, the Company’s exposure to the US and

market positioning of remuneration against peers. To

address these issues, we made a number of changes under

our new Remuneration Policy, including a salary increase

forthe CEO phased over two years. Before implementing

thesecond phase of this increase, the Committee carefully

considered performance during FY25 and noted that Sage

has had another year of good financial performance, as

outlined in the performance highlights on this page, and

consistent with our values, our focus has been on delivering

practical, safe, human-first AI that empowers our customers

and their businesses. Our executive team, led by the CEO,

hasbeen a key driver of that performance. Accordingly, the

Committee intends to implement the planned second phase

of the base salary increase and so, with effect from 1 January

2026, the CEO’s base salary will increase to £1,223,313 (15%

increase), as disclosed on page 121 of the 2024 Annual Report

and Accounts. There are no changes to the CEO’s annual

bonus or LTIP opportunity in FY26.

2) Remuneration for incoming CFO in FY26

Jacqui Cartin will be appointed CFO with effect from

1 January 2026. On appointment, her basic remuneration

package will comprise: a basic annual salary of £650,000,

apension contribution of 10% of salary, plus bonus, long-

term incentives, and all other benefits in accordance with

the2025 Policy. The Committee was satisfied that this

package was commensurate with Jacqui’s skills,

qualifications, and experience.

3) Change to FY26 annual bonus plan measures

Our Remuneration Policy incentivises the delivery of our

strategy to achieve sustainable, efficient growth. In FY25,

total revenue was introduced as the primary financial

measure within our annual bonus plan, in alignment with

thekey revenue metrics communicated to the market. To

further reinforce our commitment to sustainable growth

anddrive accelerated ARR growth, a Rule of 40 metric will

be introduced alongside the total revenue measure inFY26.

As noted in our KPIs on page 22, theRule of 40 isacritical

financial benchmark usedtoevaluate the performance and

Dear shareholders,

I am delighted to present the Directors’ Remuneration Report

(the “Report”) for the year ended 30 September 2025 on

behalf of the Remuneration Committee (the “Committee”).

This marks the first year of our 2025 Remuneration Policy

(the“Policy”), following shareholder approval. I would like

tothank shareholders for their engagement during the

extensive consultation process and for the strong support

ofthe Policy at the 2025 AGM. TheCommittee has striven

toensure that the Policy hasbeenimplemented effectively,

aligned to our pay for performance ethos, and driving

forwardSage’s ambition.

The following statement, on pages 118 to 122, provides detail

and context regarding the Committee’s decisions during the

year relating to FY25 incentive outcomes and FY26 remuneration

for Executive Directors. Broader context is provided in an

expanded disclosure explaining remuneration for the wider

workforce on pages 138 to 140.

The Annual Report on Remuneration, set out on pages 132

to151, will be subject to an advisory vote at the 2026 AGM.

Context for FY25 incentive outturns

andFY26remuneration decisions

Sage has delivered another year of strong progress and

delivery against our strategy. As the Board Chairhighlights

inhis statement, a continued, sharp focusongrowth and

operational efficiency has resulted infurther significant

revenue and earnings expansions. Performance highlights

areset out below.

Performance highlights

Directors’ Remuneration Report continued

118

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

efficiency of SaaS organisations. Theannual bonus plan measures for FY26, asset out below, are, in the Committee’s opinion,

the bestway to drive sustainable value creation.

FY26

incentive

How it promotes

theachievement

ofstrategy FY26 measures Weighting

How it will

bemeasured Changes in FY26

Annual bonus Incentivises

management

todeliverstrong

annualrevenue

growth,balanced

bystrategic goals

Total

underlying

revenue growth

40% of bonus See page 261 for the

definitions

ofunderlying

measures

Reduction in weighting from 70% of

bonus to 40% of bonus to enable equal

weighting with the Rule of 40 metric

forFY26

Rule of 40 40% of bonus Underlying ARR

growth plus

underlying

EBITDAmargin.

Seepage 261 for the

definitions

ofunderlying

measures

Introducing this measure reflects

theimportance of our disciplined

approach to balanced growth, focusing

on high-quality revenue and progressive

margin improvement as the business

scales, while supporting continued

investment in future opportunities

Strategic goals 20% of bonus Assessment of

theindividual

Executive

Directors’

performance

against their

strategic goals

None

To avoid overcomplicating the bonus plan, the separate customer metric has been removed for FY26 and relevant customer-

related goals incorporated into Executive Directors’ strategic goals, where appropriate. For completeness, there are no

proposed changes to the FY26 performance share award metrics (basic underlying earnings per share (EPS), relative Total

Shareholder Return (TSR), and ESG). The full set of annual bonus and performance share award measures and related targets

forFY26 aresetout on pages 145 to 146.

Incentivising balanced performance

inFY26in line with our strategy

Balanced growth

The weighting of both total revenue and the Rule of 40 in the

annual bonus, and EPS growth in the LTIP incentivises the

delivery of complementary objectives: achieving high-

quality revenue growth and a gradually improving margin

aswe scale the business efficiently, while investing in

futuregrowth.

A high-quality revenue mix with the ability

toexplore adjacent revenue opportunities

Incentivising total revenue aligns with our market guidance,

and will ensure recurring revenue, which represents 97% of

total revenue and is central to our growth plans, is maximised.

It also supports management in the additional development of

adjacent, high-quality revenue opportunities, including, for

example, certain digital network services. When determining

incentive outcomes, the Committee examines the quality

ofour revenue mix as part of the broader context in which

performance was delivered.

Strategically aligned M&A in a fast-paced sector

Strategically aligned acquisitions enable Sage to accelerate

its strategic progress. The Return on Capital Employed (ROCE)

underpin ensures a continued focus on value creation with

regard to such acquisitions. Revenue, the Rule of 40 and EPS

aremeasured on an underlying basis, so the impact of M&A

decisions on these can be evaluated.

The Committee will review, based on materiality, the impact

of significant acquisitions and disposals on the annual bonus

and LTIP, and judge whether an adjustment to incentive targets

or outcomes is required. Any adjustment would bedisclosed

in the Directors’ Remuneration Report.

Setting target ranges to reward performance

appropriately

The goal of creating value for stakeholders involves a

balance between incentivising high performance relative

toour ambition, and providing fair and competitive reward

aligned with the experience of our external stakeholders. The

Committee determines target ranges for the annual bonus

and LTIP through a robust review process which considers,

where relevant, various factors, including, but not limited to,

the current business plan and budget, historical performance,

peer benchmarks, and market forecasts. This helps to ensure

that remuneration outcomes are appropriate for the level of

performance achieved through the full target ranges.

Assessing quality when determiningoutcomes

When determining incentive outcomes, the Committee

examines various factors, including the broader contextin

which performance was delivered. This includesbalanced

growth, a high-quality revenue mix, and strategically

alignedM&A as components of the shareholder experience.

TheCommittee has the discretion to decide whether and

towhat extent the performance conditions havebeen

met,and, in appropriate circumstances, to override

theformulaic outcome.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

119

Directors’ Remuneration Report continued

Delivering our remuneration principles in FY26

We aim to align the total remuneration for our Executive Directors to our business strategy through a combination

ofsalary,bonus, and long-term incentive schemes underpinned by stretching performance targets. The table below

summarises the remuneration arrangements for our current Executive Directors in FY26, in accordance with the 2025

Policyand our remuneration principles, which are:

Remuneration principles

Drives focus on strategy, purpose, and culture

Market competitive

Simplicity

Aligned with shareholder interests

Element of Policy Purpose Implementation in FY26

Base salary

Enables Sage to attract and retain Executive

Directors of the calibre required to deliver the

Group’sstrategy.

Steve Hare: £1,223,313 (15% increase)

Jacqui Cartin: £650,000 (on appointment from

1 January 2026)

Jonathan Howell: £684,780 (until he steps down

fromhisrole on the Board and his role as CFO

on31 December 2025)

The equivalent average increase for colleagues

eligible for an annual pay award is 3.85% (in respect

ofcolleagues based in the UK).

Pension

Provides a competitive post-retirement benefit, in

away that manages the overall cost to the Company.

10% of base salary in line with the pension benefit for

the UK’s wider workforce.

Benefits

Provide a competitive and cost-effective benefits

package to Executive Directors to assist them in

carrying out their duties effectively.

Standard benefits package plus costs of travel,

accommodation, and subsistence for the Executive

Directors and their partners onSage-related business.

Annual bonus

Rewards and incentivises the achievement ofannual

financial and strategic targets. Aminimum of one

third deferral into shares for three years is compulsory

until the enhanced shareholding guideline is met,

following which the deferral requirement reduces to 15%

of any bonus earned. The remainder is delivered in cash.

Maximum 175% of base salary

40% based on underlying total revenue growth,

40%based on the Rule of 40 metric, and 20% based

onstrategic goals.

Performance

share awards

Support achievement of our strategy by targeting

performance under various financial performance

indicators. Vesting is after three years, and awards

aresubject on vesting to a holding period of two

yearsbefore being released.

Face value of 400% of base salary for Steve Hare

Face value of 300% of base salary for Jacqui Cartin

Jonathan Howell is not eligible for an award in FY26

60% based on underlying EPS with a ROCE underpin,

30% based on relative TSR performance, and 10%

based on an ESG basket of measures.

All-employee

share plans

Provide an opportunity for Executive Directors

tovoluntarily invest in the Company.

Eligible to participate up to the tax-efficient limit of

£500 per month.

Chair and

Non-executive

Director fees

Provide an appropriate reward to attract and retain

high-calibre individuals.

See page 147 of this Report for a list

ofNon-executive Director fees

Shareholding

guideline

The shareholding guideline for the CEO is 500%of

base salary and for the CFO is 350% ofbase salary.

Achievement of this is expected within a maximum

offive years from the time the Executive Director

became subject to theguideline.

The post-employment shareholding guideline

requires Executive Directors to retain shares

following cessation of employment as a Director,

inline with Investment Association guidelines.

Shareholding at 30 September 2025 (inclusive of

deferred shares held, net of tax at the current estimated

marginal tax withholding rate, and Sage shares held by

an Executive Director’s connected person):

Steve Hare 922% of base salary

Jonathan Howell 654% of base salary

See page 147 for more information

onthe shareholding guideline

120

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Remuneration at a glance

Key remuneration outcomes for FY25

Measure Weighting

% of the

overall

maximum

award

Annual bonus Total revenue growth

70% 28.0%

Customer experience 10% 6.9%

CEO performance against personal strategic goals 20% 14.0%

CFO performance against personal strategic goals 20% 16.0%

CEO total bonus opportunity achieved 100% 48.9%

CFO total bonus opportunity achieved 100% 50.9%

Performance

Share Plan

Sage Business Cloud penetration

50% 42.3%

Relative TSR 30% 26.0%

ESG: Reduction in Scope 1, 2, and 3 carbon emissions 7.5% 7.0%

ESG: Sage products with functionality for carbon

accounting

5% 4.0%

ESG: Inclusion Score 3.75% 0.0%

ESG: Gender diversity target 3.75% 0.0%

Total PSP opportunity achieved 100% 79.3%

1. Payment of a bonus for total revenue growth is subject to the achievement of an underpin condition of Group underlying operating profit (UOP) margin of 19.5%.

Group UOP was 24.1% andthe underpin met. Actuals have been retranslated at budgeted foreign currency exchange rates consistent with the basis on which the

targets were set.

2. For any of this portion of the PSP award to vest, underpins relating to ROCE (12.0%), absolute organic revenue growth (>0.0%), and cloud native penetration

(30.0%) must be met across the three-year performance period. ROCE of 25.3%, absolute organic revenue growth of 31.4%, and cloud native penetration

of37.8% were achieved across the performance period, therefore the underpins were met.

FY25 performance and incentive outturns

Sage has delivered another year of strong progress and delivery

against our strategy, with underlying total revenue growth

of9.8% and underlying operating profit margin of24.1% (at

budgeted FX rates consistent with the basis on which the

bonus targets were set); focus continues on scaling the

business, with growth creating the headroom to increase

investment andexpand margins. As outlined in previous

Directors’ Remuneration Reports, the Remuneration

Committee maintains a robust pay-for performance ethos,

supported by highly stretching budget, target and personal

strategic objective ranges relative to bonus opportunity.

This has been reflected in incentive payouts of 48.9% to50.9%

of maximum in the annual bonus and 79.3% ofmaximum in the

PSP award.

Wider workforce context

Our colleagues deliver extraordinary outcomes every day

andit is important for us to ensure they are rewarded fairly,

feel valued, and are advocates for Sage. Colleague engagement

remains strong, with eSAT of76. Across our workforce, our

annual pay review budget is aligned with the external software

market, and pay increases are aligned to performance,

contribution, and the external market. Sage continues

FY25 single figure for total remuneration summary for Executive Directors

26%

19%

55%

Steve Hare

CEO

25% 21%

54%

Jonathan Howell

CFO

Fixed pay Annual bonus Long-term incentives

Fixed pay for FY25

• Base salary

• Benefits

• Pension

See page 132

Annual bonus for FY25

• 9.8% total revenue growth

achieved (at budgeted FX)

• Customer experience

• Personal strategic goals

See pages 133 to 135

PSP awards vesting in FY25

• 89.7% Sage Business Cloud

penetration achieved

• 80th TSR percentile rank

• ESG basket of measures

• Underpins met

See pages 135 and 136

The summary below sets out clearly and transparently the total remuneration paid to our Executive Directors in FY25.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

121

Directors’ Remuneration Report continued

tobean accredited Living Wage Foundation employer.

Additionally, Save and Share, our all-colleague share

plan,enables eligible colleagues to become shareholders

atall levels across the business. Total participation across

all-colleague plans in 2025 was 39% ofeligible colleagues.

Weplace importance onfinancial education and ensuring

colleagues understand our all-colleague plans; this was

externally recognised with the 2025GEO Award for Best

inFinancial Education and Wellbeing (10,000–25,000

employees). Further details explaining remuneration for

thewider workforce can be found on pages 138 to 140.

The Committee also undertook a review of remuneration

andrelated policies for the wider workforce, and deemed

that the remuneration policies and practices for Executive

Directors are aligned to the wider workforce. This is achieved

byconsistent performance measures in the annual bonus

plan, pay principles that are applicable across the entire

workforce, and application of the annual pay review process

consistently across all colleagues.

In view of the above, the Committee is striving to balance

the need for remuneration to reward high performance

andstrategic delivery, to remain competitive within the

global talent market, and to align to the external operating

environment and UK corporate governance requirements.

Engagement with stakeholders

The Committee values input from shareholders and is

committed to ensuring open and transparent dialogue

inregard to executive remuneration. Where appropriate,

theCommittee seeks the views of the largest shareholders

individually and others through shareholder representative

bodies when considering any significant changes to the

Policy. Any feedback received is thoughtfully reviewed

and,where appropriate, changes are implemented. Ahead

ofthe 2026 AGM, the Committee consulted individually

withSage’s top 20 shareholders and proxy agencies on

theproposed changes to Executive Director remuneration

and the annual bonus metrics for 2026. This was initially

inwritten format and included one meeting to discuss the

proposals in detail. Shareholders who responded indicated

their support for the proposals.

Colleague success is critical for Sage, and engaging with the

workforce through meaningful, two-way dialogue underpins

this. The CEO hosts frequent “All-Hands” calls for the whole

workforce, during which he provides Company performance

updates explaining how this translates to the bonus plan.

Colleagues are encouraged to ask questions and the CEO

provides open and transparent answers.

Additionally, Company performance and bonus updates

areperiodically provided on our intranet site and by email;

this ensures that colleagues are able to understand how

thebusiness is performing during the financial year and

theimpact that can have on their reward package.

Colleagues receive a detailed personal reward statement

annually in December outlining their basic salary and

bonusplan structure (where applicable) for the year.

Colleagues have the opportunity to share their thoughts

andfeedback on all topics, including our remuneration

policies and practices, through our “Always Listening”

survey. Originally launched during 2020 in response to

thepandemic, this is a continuous feedback survey which

colleagues can access at any time. In addition, our biannual

colleague Pulse Surveys have a high response rate, demonstrating

that colleagues welcome theopportunity to share their thoughts,

and CEO roundtablesoffer further opportunities for colleagues

to provide direct feedback.

A global Reward and Recognition policy is available to

allcolleagues and applies across the entire workforce.

Furthermore, colleagues are able to access a more detailed

explanation of executive pay through this Report and of our

equity awards through our colleague intranet.

Board changes considered in FY25

As announced on 27 March 2025, Jonathan Howell will step

down from the Board and his role as CFO on 31 December

2025, and will remain employed by Sage until the end of his

notice period on 31 March 2026 in order to assist a successful

transition. Jonathan will remain eligible for a pro-rated

bonus, paid wholly in cash, for the financial year ending

30 September 2026, but will not be eligible to receive a FY26

LTIP award. Inlight of his excellent service to Sage and the

nature of his departure, the Committee determined that

Jonathan should be treated as a good leaver. Accordingly,

hewill retain his unvested Deferred Bonus Plan (DSBP)

awards, and his unvested LTIP awards will be time pro-rated

by reference to the date on which he leaves the Company and

remain subject to performance. There will be no acceleration

of vesting for any unvested equity awards and the awards will

continue to be subject to a two-year holding period.

Concluding remarks

The Committee reviewed the implementation of the Policy

over 2025 and judged it to be operating as intended and with

no deviation from the approved Policy. It determined this

through the periodic review of potential incentive outcomes

and their contribution to the single figure for remuneration;

a consideration of wider business performance including

customer metrics; the experience of shareholders and our

TSR; and the experience of our colleagues.

This letter, along with the broader Directors’ Remuneration

Report, outlines the Group’s approach toremuneration,

which takes into account best practice andmarket trends

while continuing to support the Group’scommercial priorities,

as well as the interests ofshareholders and other stakeholders.

The Committee giveshigh priority to ensuring that there is

aclear link between pay and performance, including a focus

on culture and adherence to the Group’s risk framework, and

that our remuneration outcomes reflect this broader context.

Roisin Donnelly

Chair of the Remuneration Committee

18 November 2025

122

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Remuneration

Committeegovernance

Objectives and responsibilities

The Committee’s main objective is to determine the

framework, broad policy, and levels of remuneration for the

Group’s Chief Executive Officer, the Group’s Chief Financial

Officer, the Chair of the Company, and other executives as

deemed appropriate, ensuring compliance with legal and

regulatory requirements and striving to enhance Sage’s

long-term development.

This framework includes, but is not limited to, establishing

stretching performance-related elements of reward and is

intended to promote the long-term success of the Company.

We achieve this through:

• Providing recommendations to the Board, within

agreedTerms of Reference, on Sage’s framework of

executive remuneration.

• Determining the contract terms, remuneration, and other

benefits for each of the Executive Directors, including

performance share awards, performance-related bonus

schemes, pension rights, and compensation payments,

andaligning such to the Company’s purpose, values,

andculture.

• Reviewing workforce remuneration, and related policies

across the Group and the alignment of incentives and

rewards with culture, taking these into account when

setting the Policy for Executive Directors.

• Determining remuneration for senior executives below

Board level.

• Approving share awards.

• Ensuring the Policy promotes long-term shareholdings by

Executive Directors by ensuring share awards granted are

released on a phased basis and subject to a total vesting

and holding period of five years.

Committee meetings

The Committee held six scheduled meetings during FY25. Details of individual attendance at scheduled meetings are

provided in the table below.

4 November

2024

14 November

2024

26 February

2025

13 May

2025

9 July

2025

9 September

2025

Committee members

Roisin Donnelly

Annette Court

Dr John Bates

Maggie Chan Jones

–––––

1. Maggie Chan Jones was appointed to the Remuneration Committee on 1 August 2025.

Activities of the Committee at a glance

Allocation of time

60% 20% 15% 5%

Determining the Policy and its implementation

Considering the views on remuneration of our stakeholders

and reviewing trends in executive remuneration

Reviewing the effectiveness of the Policy

Other

Note: Allocation of time has been rounded to the nearest 5%.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

123

Directors’ Remuneration Report continued

Activities and evaluation

Details of the Committee’s activities are set out below.

Activities of the Committee

During the year, the Committee focused on the matters summarised in the table below:

Key area of activity Matters considered Outcome

Determining the

Policy and its

implementation

• Determined 2025 bonus targets and bonus

outcomes for 2024.

• Determined PSP outcomes for the 2022 award.

• Approved the 2025 Directors’ Remuneration

Policy.

• Reviewed content of the 2024 Directors’

Remuneration Report.

• CFO transition arrangements.

• 2024 bonus determined at 55.9% to 59.7% of

potential, as disclosed in last year’s Report.

• 2022 PSP determined at 95.1% of the overall

award for vesting, as disclosed in last

year’sReport.

• Shareholder approval of the Policy at the

2025 AGM.

• Approved the 2024 Directors’

RemunerationReport.

• Terms as detailed on pages 122 and 118

respectively of this Report.

Considering

theviews on

remuneration of

ourstakeholders

and reviewing

trends in executive

remuneration

• At least quarterly, the Committee’s advisors

presented on market trends, legislative

change, and corporate governance

requirements in executive remuneration.

• Views of shareholders, proxy voting

agencies, and market insight provided

invaluable context for the Committee’s

deliberations on the implementation of

thePolicy and its effectiveness.

Reviewing the

effectiveness

ofthePolicy

• Reviewed performance against

in-flightincentive plans.

• Reviewed remuneration-related risks.

• Reviewed the structure of remuneration.

• Discussed the base salaries, and the bonus

and LTIP structure for 2026 through the

implementation of the 2025 Policy.

• Determined that the Policy was operating

asintended for FY25.

Other • Reviewed the Committee’s Terms

ofReference.

• Reviewed workforce remuneration

andrelated policies.

• Determined no change needed to the

Committee’s Terms of Reference.

• Considered the implementation of the 2025

Policy in FY26 in light of workforce remuneration.

124

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Corporate Governance

Codeconsiderations

We are fully compliant with the UK Corporate Governance Code 2018. When reviewing the Policy for Executive Directors

anddetermining the approach to pay, in line with the Code, the Committee gives consideration to the following:

Clarity Code provision: remuneration

arrangements should be transparent

andpromote effective engagement

withshareholders and the workforce.

Engaging with stakeholders effectively, in a timely,

transparent, and relevant manner is important for

theCompany. Further details on how we engage

withstakeholders can be found on page 122.

The purpose, strategic alignment, and structure of

eachelement of pay is provided in the Policy and

easilyaccessible on our Company website.

Simplicity Code provision: remuneration structures

should avoid complexity and their rationale

and operation should be easy to understand.

Simplicity is one of our remuneration principles and

guides the design of our remuneration structures.

Remuneration arrangements in place for Executive

Directors are not complex: executives are eligible for an

annual bonus and a performance share award under our

Long Term Incentive Plan, the metrics of which are aligned

to the Company’s strategy. Salaries are reviewed annually

across the whole workforce and benefits including pension

provision are provided in line with local market norms. This

Report provides open and transparent disclosure of executive

remuneration for our workforce and our shareholders.

Risk Code provision: remuneration arrangements

should ensure reputational and other risks

from excessive rewards, and behavioural

risks that can arise fromtarget-based

incentive plans are identified and mitigated.

There is an appropriate mix of fixed and variable pay

andfinancial and non-financial measures and goals in

ourremuneration plans. There are mechanisms in place

toensure alignment with long-term shareholder interests

andthe ongoing performance of the business: one third of

annual bonus is deferred into Sage shares (reducing to 15%

of any bonus earned, once a Director’s enhanced shareholding

guideline is met), a holding period of two years is applicable

to performance share awards, and Executive Directors are

required to build up and maintain a significant holding of

Sage shares both whilst an Executive Director (500% of

salary for the CEO and350% of salary for the CFO) and for

atwo-year period after stepping down from that position

(100% of their “in-employment” guideline for two years

after stepping down as a Director).

The Committee is able to exercise discretion over

theformulaic outcomes of the bonus and performance

share awards to ensure outturns reflect the performance

ofthe Executive Directors and the business.

Malus and clawback provisions are applicable to these

plans in the event of a trigger event.

Predictability Code provision: the range of possible

values of rewards to individual Directors

and any other limits or discretions should

be identified and explained at the time

ofapproving the Policy.

Incentive opportunities are capped with clearly defined

payout schedules, deferral requirements, andholding

periods. Additionally, the Committee is able to exercise

discretion over theformulaic outcomes of the bonus and

performance share awards to ensure outturns reflect the

performance ofthe Executive Directors and the business.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

125

Proportionality Code provision: the link between individual

awards, the delivery of strategy,and the

long-term performance of the Company

should be clear. Outcomes should not

reward poor performance.

Executive Directors’ total remuneration package is

designed to ensure that remuneration increases or

decreases in line with business performance and aligns

theinterests of Executive Directors and shareholders,

specifically with the annual bonus and performance

shareawards rewarding over the short and long term.

Stretching targets over an annual (applicable to annual

bonus) and three-year performance period (applicable

toperformance share awards) are approved by the

Committee and assessed at the end of the performance

period, taking into account the wider business performance

and the internal and external context. The Committee has

overriding discretion over the formulaic outcomes of the

bonus and performance share awards to ensure outturns

reflect performance of Executive Directors, the business,

and the shareholder experience, ensuring that poor

performance is not rewarded.

Alignment

toculture

Code provision: incentive schemes

should drive behaviours consistent with

the Company purpose, values, and strategy.

Incentive schemes are aligned to Sage’s culture. The

bonusplan is split between Company performance

andachievement of strategic goals, which incorporate

non-financial metrics such as employee engagement,

leadership development, inclusion, talent development,

and the community. The Company performance measures

are central to the strategic progression of Sage and the

strategic goal assessments are completed taking into

account outputs and how they have been delivered in

respect of the Company’s Values and Behaviours.

Performance share award measures align to the Company’s

strategic priorities in addition to the wider shareholder

experience through TSR. The ESG measures first introduced

into performance share awards in 2022 and updated for

2026 will help contribute to the achievement of the

Sustainability and Society strategy. Full details of the

proposed measures canbe found on pages 145 and 146.

This Report complies with the requirements of the Large and Medium-sized Companies and Groups (Accounts and Reports)

Regulations 2008 as amended in 2013, the provisions of the UK Corporate Governance Code 2018, the Companies (Miscellaneous

Reporting) Regulations 2018, the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations

2019, and the Listing Rules.

Directors’ Remuneration Report continued

126

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Remuneration Policy 2025

The current Policy was approved by our shareholders at the 2025 AGM and can be found in full in the 2024 Annual Report, or can

be downloaded from www.sage.com/investors.

The table below sets out a summary of key elements of the Policy that shareholders approved at the 2025 AGM on 6 February 2025.

Base salary

Supports the recruitment

andretention of Executive

Directors from a global

talent market of the calibre

required to deliver the

Group’s strategy.

Rewards executives for the

performance of their role.

Set at a level that allows

fully flexible operation

ofour variable pay plans.

Operation

Normally reviewed annually, with any increases applied from January.

When determining base salary levels, consideration is given to factors including the following:

• Pay increases for otheremployees acrosstheGroup;

• The individual’s skills andresponsibilities;

• Pay at companies of asimilar size and international scope to Sage, in particular those

within the FTSE 11–50 (excluding financial services companies); and

• Corporate and individual performance.

Maximum opportunity

Ordinarily, salary increases will be in line with increases awarded to other employees in major

operating businesses of the Group. However, increases may be made above this level at the

Remuneration Committee’s discretion to take account of individual circumstances such as:

• Increase in scope and responsibility;

• The individual’s development and performance in role (e.g.fora new appointment where

base salary may be increased over time rather than set directly at the level of the previous

incumbent or market level); and

• Alignment to market level.

Accordingly, no monetary maximum has been set.

Performance measures

None, although overall performance of the individual is considered by the Remuneration

Committee when setting and reviewing salaries annually.

Pension

Provides a competitive

post-retirement benefit,

inaway that manages the

overall cost to the Company.

Operation

Defined contribution plan (with Company contributions set as a percentage of base salary).

An individual may elect to receive some or all oftheir pension contribution as a cash allowance.

Maximum opportunity

The Company contribution rate for Executive Directors isaligned with the rate available to

the majority of the workforce (currently 10% of salary).

Performance measures

None.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

127

Benefits

Provide a competitive and

cost-effective benefits

package to executives to

assist them to carry out

theirduties effectively.

Operation

The Group provides a rangeofbenefits which may include a car benefit (or cash equivalent),

private medical insurance, permanent health insurance, life assurance, and financial advice.

Additional benefits may alsobe provided in certain circumstances which may include relocation

expenses, housing allowance, school fees, tax return support, and tax equalisation payments.

Business expenses and associated tax thereon mayalso be reimbursed.

Other benefits may be offered if considered appropriate andreasonable by the

Remuneration Committee.

Maximum opportunity

Set at a level which the Remuneration Committee considers:

• Appropriately positioned against comparable roles in companies of a similar size and

complexity in the relevant market; and

• Provides a sufficient level of benefit based on the role and individual circumstances, such

as relocation.

As the costs of providing benefits will depend on theDirector’s individual circumstances,

the Remuneration Committee has not set a monetary maximum.

Performance measures

None.

Annual bonus

Rewards and incentivises

theachievement of

financial and strategic

targets over theyear.

An element of compulsory

deferral, provides a link to

the creation of sustainable

long-term value.

Operation

Performance measures, weightings, and targets areset and payout levels aredetermined by

the Remuneration Committee based on performance against those targets. The Remuneration

Committee may, in appropriate circumstances, override theformulaic outcome and amend

the bonus payout should this not, in the viewofthe Remuneration Committee, reflect

overall business performance or individual contribution.

The default arrangement is that a minimum of one third of any annual bonus earned by

Executive Directors is delivered in deferred share awards with the remainder delivered

incash. The deferral requirement reducesto 15% of any annualbonus earned by Executive

Directors once their enhanced shareholding guideline, as outlined within the shareholding

guideline section of this table, is met.The Committee has discretion to defer bonus in cash

if dealing restrictions prevent share awards being granted. The deferral period will usually

be a minimum ofthree years.

Maximum opportunity

175% of salary.

Up to 50% of the bonus can bepaid for delivering a targetlevel of performance.

Performance measures

At least 70% of the bonus willbe determined by measure(s) of Group financialperformance.

No more than 30% of the bonus will be based on pre-determined financial, strategic, ESG,

oroperational measures appropriate to the individual Director.

The measures that will apply for the financial year 2026 are described in the Directors’

Annual Remuneration Report.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Performance share

awards (PSA)

Motivate and reward the

achievement of long-term

business goals. Support

thecreation of shareholder

value through the delivery of

strong market performance

aligned with the long-term

business strategy. Support

achievement of our strategy.

Operation

PSAswill be granted under theterms of The Sage Groupplc. Long Term Incentive Plan (LTIP).

Awards vest dependent uponthe achievement of performance conditions measured over

aperiod usually of at least three years. Following the end of the performance period, the

performance conditions will be assessed and the percentage of awardsthat will vest will

bedetermined.

The Remuneration Committee may decide that the shares inrespect of which an award vests

will be subject to an additional holding period. Aholding period will normally last for two

years, unless the Remuneration Committee determines otherwise.

The Remuneration Committee has discretion to decide whether and to what extent the

performance conditions have been met and, in appropriate circumstances, to override the

formulaic outcome, taking into account such factors as the performance of the Group, the

experience of the stakeholders and windfall gains. If an event occurs that causes the Remuneration

Committee to consider that anamended or substituted performance condition would be more

appropriate and not materially less difficult to satisfy, the Remuneration Committee may

amend orsubstitute any performancecondition.

Maximum opportunity

Awards vest on the following basis:

• Threshold performance: 20% of the maximum sharesawarded;

• Exceptional performance: 100% of the shares awarded; and

• The vesting schedule related to the levels of performance between threshold and

exceptional, including whether or not this will include interim performance levels,

willbedetermined by the Remuneration Committee on an annual basis and disclosed

inthe relevant Directors’ Annual Remuneration Report forthat year.

Overall individual limit of400% of base salary in respect of a financial year. Implementation

for FY26 is outlined on page 120 of this Report.

Performance measures

Vesting will be subject to performance conditions asdetermined by the Remuneration

Committee onan annual basis.

The performance conditions will initially be underlying EPS, relative TSR, and ESG, although

the Remuneration Committee will retain discretion to include additional or alternative

performance measures which are aligned to the corporate strategy.

At its discretion, the Remuneration Committee mayelect to add additional underpin

performance conditions.

Details of the targets that willapply for awards grantedin 2026 are set out inthe Directors’

Annual Remuneration Report.

All-employee share plans

Provide an opportunity for

Directors (as well as the

general workforce) to

voluntarily invest in

theCompany.

Operation

UK-based Executive Directors are entitled to participate inan HMRC-approved all-employee

plan, the Save and Share Plan. Under this plan, they can make monthly savings over a period

permitted by HMRC, which is currently three years, linked to the grant of an option over Sage

shares. The option price can be at a discount set by HMRC; currently this is a maximum of 20%

of the market value of shares on grant. Options may be adjusted to reflect the impact of any

variation of share capital.

Overseas-based Executive Directors are entitled to participate in any similar all-employee

scheme operated by Sage in theirjurisdiction.

Maximum opportunity

UK participation limits are those set by HMRC from timeto time. Currently this is£500 per

month (or foreign currency equivalent). Limits for participants in overseas schemes are

determined in line with any local legislation.

Performance measures

None.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

129

Chair and Non-executive

Director fees

Provide an appropriate

rewardto attract and retain

high-calibre individuals.

Non-executive Directors

donot participate in any

incentive scheme.

Operation

Fees are reviewed periodically. The fee structureis as follows:

• The Chair is paid a single, consolidated fee;

• The Non-executive Directors are paid a basic fee, plus fees for additional responsibilities

or time commitments such as chairing (and, where appropriate, membership) of Board

Committees and tothe Senior Independent Director; and

• Fees are currently paid in cash, but the Company may choose to provide some of the fees

in shares.

Additional travel allowance payments may be made to the Chair and Non-executive Directors

for time spent travelling internationally onCompany business, for example to attend a Board

meeting. Non-executive Directors may be eligible for benefits such as company car, use of

secretarial support, healthcare, or other benefits that may be appropriate, including where

travel to the Company’s registered office is recognised as a taxable benefit, in which case

aNon-executive Director may receive the grossed-up costsof travel as a benefit.

Maximum opportunity

Set at a level which:

• Reflects the commitment and contribution that is expected from the Chair and

Non-executive Directors; and

• Is appropriately positioned against comparable roles incompanies of a similar size,

complexity, and international scope to Sage, in particular those within the FTSE 11–50

(excluding financial services companies).

Overall fees paid to Directors will remain within the limit stated in our articles of

association, currently £1.75m.Actual fee levels aredisclosed in the Directors’Annual

Remuneration Report for therelevant financial year.

Performance measures

None.

Shareholding guideline

Aligns the interests of

Executive Directors and

shareholders, and

encourages a focus on

long-term performance.

Operation

Whilst in employment, Executive Directors are expected to build up a shareholding worth 500%

of salary in respect of the CEO and 350% of salary in respect of other Executive Directors over

five years from the Director becoming subject tothe guideline. The Remuneration Committee

will review progress towards the guideline on an annual basis and has the discretion to adjust

the guideline in what it feels are appropriate circumstances.

Executive Directors are also expected to remain compliant with this guideline or, if lower,

their actual shareholding at leaving for two years post-cessation of employment. Shares

acquired by an Executive Director in their personal capacity at any time, or shares released

to anExecutive Director prior to11 September 2019, are exempt from this guideline. The

Committee retains discretion to amend or waive this guideline if it is not considered

appropriate in thespecific circumstances.

Notes:

• Annual bonus and PSA performance measures and targets are selected each year so as to align with key financial and operational objectives.

• Awards granted under the Deferred Bonus Plan and as a PSA may:

a. Be made in the form of conditional awards or nil-cost options and may be settled in cash on vesting;

b. Incorporate the right to receive an amount (in cash or shares) equal to the dividends which would have been paid or payable on the shares that vest in the

period up to vesting/release (this amount may be calculated assuming the dividends were reinvested in the Company’s shares on a cumulative basis); and

c. Be adjusted in the event of any variation of the Company’s share capital, demerger, delisting, special dividend, rights issue, or other event which may, in

the opinion of the Remuneration Committee, affect the current or future value of the Company’s shares, or as a result of a participant moving from one

jurisdiction to another or becomes tax resident in a different jurisdiction, and, as a result, there may be adverse legal, regulatory, tax, or administrative

consequences for the participant and/or a member of the Group in connection with an award.

Directors’ Remuneration Report continued

130

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Provisions to withhold (malus) or recover (clawback) sums paid under the annual bonus and PSA in the event of material

negative circumstances, such as a material misstatement in the Company’s audited results, serious reputational damage

orsignificant financial loss to the Company (as a result of the participant’s conduct), an error in assessing the performance

metrics relating to the award, or the participant’s gross misconduct are incorporated into the terms of the PSA, the annual

bonus, and the Deferred Bonus Plan. These provisions may apply up to three years from the release date of a PSA or three years

from the date a cash bonus is paid or a deferred share award is granted. Details of the proposed implementation of those

provisions in the forthcoming year are set out in the Directors’ Annual Remuneration Report.

All Directors submit themselves for re-election annually.

The Remuneration Committee intends to honour any commitments entered into with current or former Directors on their

original terms, including outstanding incentive awards, which have been disclosed in previous remuneration reports and,

where relevant, are consistent with a previous Policy approved by shareholders. Any such payments to former Directors will

beset out in the Remuneration Report as and when they occur.

The Remuneration Committee reserves the right to make any remuneration payments and payments for loss of office

(including exercising any discretions available to it in connection with such payments) notwithstanding that they are not

inline with the Policy set out above, where the terms of the payment were agreed (i) before the Policy set out above came

intoeffect, provided that the terms of the payment were consistent with the shareholder-approved Remuneration Policy in

force at the time they were agreed; or (ii) at a time when the relevant individual was not a Director of the Company and, in the

opinion of the Remuneration Committee, the payment was not in consideration for the individual becoming a Director of the

Company. For these purposes, “payments” includes the Remuneration Committee satisfying awards of variable remuneration

and, in relation to an award over shares, the terms of the payment are “agreed” at the time the award is granted.

The Remuneration Committee may make minor amendments to the Policy (for regulatory, exchange control, tax, or administrative

purposes or to take account of a change in legislation) without obtaining shareholder approval for that amendment.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

131

Directors’ Remuneration Report continued

Directors’ Annual

Remuneration Report

Purpose of this section:

• Provides remuneration disclosures for Executive and Non-executive Directors.

• Details financial measures for the annual bonus plan and performance share awards.

• Illustrates Company performance and how this compares with the pay of Executive Directors.

• Outlines implementation of the 2025 Policy for Executive and Non-executive Directors for 2026.

Single ﬁgure for total remuneration (audited information)

The following table sets out the single ﬁgure for total remuneration for Executive Directors for the ﬁnancial years ended

30 September 2025 and 2024.

(a) Salary/fees

(b) Beneﬁts

(d) PSP awards

(e) Pension

(f) Other

Total fixed

remuneration

Total variable

remuneration

Total

2025

£’000

2024

£’000

2025

£’000

2024

(restated)

£’000

2025

£’000

2024

£’000

2025

£’000

2024

(restated)

£’000

2025

£’000

2024

£’000

2025

£’000

2024

£’000

2025

£’000

2024

(restated)

£’000

2025

£’000

2024

(restated)

£’000

2025

£’000

2024

(restated)

£’000

Executive Directors

S Hare 1,029 904 43 43 881 885 2,506 3,394 103 90 – – 1,175 1,037 3,387 4,279 4,562 5,316

J Howell 665 599 7 7 592 626 1,546 1,863 57 52 – – 729 658 2,138 2,489 2,867 3,147

Non-executive Directors

A Duff 454 415 – – – – – – – – – – 454 415 – – 454 415

S Anand

27 73 4 16 – – – – – – – – 31 89 – – 31 89

J Bates 90 73 – – – – – – – – – – 90 73 – – 90 73

J Bewes 107 96 – – – – – – – – – – 107 96 – – 107 96

M Chan Jones

80 73 16 16 – – – – – – – – 96 89 – – 96 89

A Court

120 99 – – – – – – – – – – 120 99 – – 120 99

R Donnelly

103 83 – – – – – – – – – – 103 83 – – 103 83

D Hall

– 22 – – – – – – – – – – – 22 – – – 22

D Harding 86 73 – – – – – – – – – – 86 73 – – 86 73

L Mitchell-Keller

52 – 8 – – – – – – – – – 60 – – – 60 –

Notes:

1. Sangeeta Anand stepped down from the Board on 6 February 2025.

2. Maggie Chan Jones joined the Remuneration Committee on 1 August 2025.

3. Annette Court was appointed as Senior Independent Director on 1 January 2024 and stepped down as Chair of the Remuneration Committee on 30 April 2024.

4. Roisin Donnelly was appointed as Chair of the Remuneration Committee on 1 May 2024.

5. Drummond Hall retired on 31 December 2023.

6. Lori Mitchell-Keller was appointed as a Non-executive Director on 7 February 2025.

7. Details of salary progression since 2022 for the current Executive Directors are summarised in the “Statement of implementation of Remuneration

Policyinthe following financial year” on page 144 of this Report. Following a review of Non-executive Director fees, the Chair of the Board fee, the

basicNon-executive Director fee, and the Senior Independent Director, additional fees were increased with effect from 1 January 2025. Committee

membership fees for the Audit and Risk Committee, Remuneration Committee, and Nomination Committee were also introduced with effect from

1 January2025. Further details are provided on page 151 of the 2024 Annual Report and Accounts.

8. Benefits provided to the Executive Directors included: car benefits or cash equivalent (Steve Hare only), private medical insurance, permanent health

insurance, life assurance, financial advice, and, where deemed to be a taxable benefit, the grossed-up costs of travel, accommodation, and subsistence

forthe Directors and their partners on Sage-related business if required. Benefits exclude items subject to tax where they are in the nature of business

expenses. Sangeeta Anand, Maggie Chan Jones, and Lori Mitchell-Keller, who are based in the US, each received a £4,000 travel allowance fee for their

attendance at each Board meeting, which required travel from the US (total of 4 meetings), commensurate to the travel time required for attendance

inperson. No tax support was provided to any of the Non-executive Directors in either FY24 or FY25 and the FY24 benefits figure for Maggie Chan Jones

hasbeen restated accordingly.

9. Further information about how the level of FY25 bonus award was determined is provided in the additional disclosures below.

10. The 2025 PSP value for Steve Hare and Jonathan Howell is based on the PSP award granted in financial year 2023, which is due to vest in December 2025.

Theperformance conditions applicable to the awards are outlined on pages 135 to 136 of this Report. The value is based on the number of shares vesting

under the 2023 PSP award multiplied by the average price of a Sage share between 1 July and 30 September 2025, which was £11.512, plus dividend

equivalents accrued. For Steve Hare, £739,282 of the value is attributable to movement in the share price between grant and vesting, and for Jonathan

Howell, £456,212 of the value is attributable to movement in the share price between grant and vesting. No discretion has been exercised by the Committee.

Further detail is set out below in the notes to the table. The values of Steve Hare’s and Jonathan Howell’s 2022 PSPs for 2024 have been restated. The change

in value is as a result of changes in the share price reported in 2024 in line with the methodology set out in the 2013 Reporting Regulations (£10.323) and the

share price actually achieved at vesting (£13.145).

11. Pension emoluments for Steve Hare were equal to 10% of base salary and for Jonathan Howell were equal to 10% of base salary (less a deduction for Employer

National Insurance Contributions). Both elected to receive them as a cash allowance. Maximum pension contribution levels for the wider workforce in the

UK are 10% of salary, subject to contributions from the colleagues themselves.

12. Total fixed remuneration is inclusive of salary/fees, benefits, and pension.

13. Total variable remuneration is inclusive of bonus and PSP awards.

14. Total remuneration for Directors in 2025 was £8,576,000 compared with £9,502,000 in 2024 (updated from the 2024 Directors’ Remuneration Report).

132

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Additional disclosures for single ﬁgure for total remuneration table (audited information)

Annual bonus 2025

The bonus targets for FY25 were set with reference to the strategy for FY25, in particular the achievement of total revenue

growth and improving the customer experience, taking into account the Company’s annual budget and historical performance

in determining the payout curve.

Bonus measure % weighting

Threshold

performance

Target

performance

Stretch

performance

Actual

performance

(atbudget

foreigncurrency

exchange rates)

% of maximum bonus

payable

Total revenue growth 70% 9.5% (21% of

bonuspayable)

10.1% (35% of

bonus payable)

10.9% (70% of

bonus payable)

9.8% 28.0%

Customer experience

scorecard

10% The assessment of the customer experience scorecard is set

outbelowthis table (between 0% and 10% of bonus payable)

6.9%

Strategic measures 20% The assessment of strategic measures is set out below

thistable(between 0% and 20% of bonus payable)

Steve Hare (CEO): 14.0%

of maximum

Jonathan Howell (CFO):

16.0% of maximum

Total Steve Hare:

48.9% of maximum

bonus (85.6% of salary)

Jonathan Howell:

50.9% of maximum

bonus (89.1% of salary)

Notes:

• Payment of a bonus for total revenue growth was subject to the achievement of an underpin condition of Group UOP margin. Group UOP margin was 24.1%,

which exceeded the underpin target of 19.5%.

• Total revenue growth and UOP margin are deﬁned on page 261. Actuals have been retranslated at budgeted foreign currency exchange rates consistent with

the basis on which the targets were set. The Committee considered the movement of foreign currency exchange rates over the year, and determined that the

effect was immaterial and that the use of like-for-like exchange rates was appropriate.

• As the Executive Directors’ shareholding exceeds their respective shareholding guidelines of 500% for the CEO and 350% for the CFO, the bonus deferral

requirement is 15% of the bonus earned deferred into Sage shares for three years.

The Committee determined, after careful consideration of business performance and the interests of Sage’s stakeholders

such as shareholders, customers, and colleagues, that the calculated outcome was appropriate. Consequently, 48.9% and

50.9% ofthe maximum bonus will be awarded to the CEO and CFO, respectively.

Customer experience (10% weighting)

Customer experience was measured in the FY25 annual bonus through Sales and Service tNPS and renewal rate byvalue (RRbV).

Measure Performance commentary

tNPS is a lead indicator of customer experience

and gives immediate insight to a customer’s

experience following a specific customer

touchpoint. tNPS is measured across the

Company to understand customers’ feedback

and generate improvement opportunities.

Throughout FY25, tNPS remained a strategic focus across

the business, resulting in year-on-year improvements across

all business units. This was driven by sustained efforts to

enhance customer access, first contact resolution, and

speed to resolution, particularly within the medium segment.

Additionally, ongoing technology optimisation enabled

customers to access support more efficiently (e.g. via chat

and knowledge materials).

Renewal rate by value demonstrates how Sage

grows value within its current customer portfolio

and is an important measure of the strength of

our existing customer base. 100% and above

shows an increase in customer cohort compared

to the prior year.

As a strategic KPI, renewal rate by value is an important measure

of the strength of our existing customer base and demonstrates

the efficacy of our in-life strategies. Renewal rate by value of

101.4% for FY25 reflects strong retention rates and a good level

of sales to existing customers.

In consideration of these factors, the Committee determined that a bonus of 6.9% of the maximum 10% for this element was an

appropriate award.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

133

Directors’ Remuneration Report continued

Executive Directors’ strategic goals (20% weighting)

Executive Directors’ strategic goals were set by the Committee at the beginning of the financial year, consistent with the

keydeliverables within the annual budget. Targets for strategic goals are considered to be commercially sensitive and are

notdisclosed. However, details of performance achievements that were taken into account by the Committee in coming to

itsassessment of this measure are set out below.

Steve Hare, CEO

Steve Hare was set a range of highly stretching strategic goals linked to the execution of the 2025 budget and long-term strategy

plan. These were:

• Prepare a refreshed strategy to outperform competitors in the small business segment and demonstrate early execution

progress (10% weighting);

• Scale Sage efficiently (20% weighting);

• Instil a high-performance culture (25% weighting);

• Deliver on the promise of the Sage Platform and Copilot (25% weighting); and

• Influence the change agenda (20% weighting).

Personal strategic objectives

The Committee took into account the following performance against those goals:

Prepare refreshed strategy to outperform competitors in the small

business segment and demonstrate early execution progress

Refreshed cross-functional strategies implemented in the small business

segment to accelerate growth. Sage Copilot made available to Sage

Accounting and Sage 50 customers intheUK. Improvements made to brand

perception among UK accountants. Keycampaigns and events have re-

established Sageas a leading and trusted provider in this part of the market.

Key partnerships have been signed with banks and Fintechs, as well as the

EnglishFootball League sponsorship. Overall, the objective was exceeded.

Scale Sage efficiently

Positive progression on operating margin of 23.9% in FY25, with revenue

growth in line with market expectations. Further acceleration needed to achieve

our scaling ambition underpinned by the Rule of 40. Therefore, this objective was

partially met.

Instil a high-performance culture: develop talent, create clarity,

anddrive high performance at all levels

Processes implemented to increase clarity and accountability reflecting

strategic objectives and embedding use of key results (OKRs). Location

strategy implemented increasing the proportion of the workforce based in

flagship and hub locations. Robust succession plans in placefor all ELT roles

and a talented internal successor, Jacqui Cartin, announced as CFO. Overall,

this objective was met.

Deliver on the promise of the Sage Platform and Copilot

Significant progress made towards creating the world’s most trusted network

with the Sage Platform strategy designed and communicated. Sage Copilot

available across key products, including Sage Accounting, Sage Active, Sage

for Accountants, Sage 50, and Sage Intacct. Embedded services growth

exceeded the stretching targets set. Accounts Payable (AP) automation

platform adoption accelerated. Overall, theobjective was met.

Influence the change agenda: become a thought leader and influencer

on the digitalisation and AI agenda in our key geographies

Sage is making a substantial impact through media, policy, and industry

engagement. The CEO is positioned as a leading voice on Sage’s AI strategy

and, throughout the year, had frequent engagement with UK and European

government officials, driving the AI agenda for small and mid-sized businesses

and accountants, including through digital policy, and e-invoicing initiatives.

The objective was exceeded.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

The Committee maintains a robust pay-for-performance ethos, supported by highly stretching budget and target ranges

relative to bonus opportunity. The Committee considers the formulaic calculation in the context of an expectation of high

performance, to ensure strong alignment with shareholder experience and long-term value creation. This approach is

consistent with our track record of setting highly stretching targets, ensuring incentive outcomes are proportionate, and

reflects our culture of continually raising the bar on performance expectations of executives. In consideration of these

factors and the overall performance of the business, the Committee determined that a bonus of 14.0% of the maximum

20%forthis element was an appropriate award.

Jonathan Howell, CFO

Jonathan Howell was set a range of strategic goals linked to the execution of the 2025 budget and long-term strategy plan.

These were:

• Scalable and efficient financial operations (25% weighting);

• Enhance shareholder value (25% weighting);

• Robust financial fundamentals (25% weighting); and

• A diverse team of empowered finance professionals (25% weighting).

Personal strategic objectives

The Committee took into account the following performance against those goals:

Scalable and efficient financial operations

Efficient delivery of year-end and half-year reporting processes. Maintained

accurate and timely forecasting, enabling agile decision makingand cost

discipline. Successful transition of the Company’s auditor toKPMG. Progress

madein driving efficiencies within Treasury. Overall, theobjective was exceeded.

Enhance shareholder value

Maintained high-quality communication with shareholders throughout the

year. Strong engagement with investors and analysts, including six investor

roadshows across the US and UK. The proportion of US shareholders was broadly

maintained at around 40%. Completion of £600m share buyback during FY25.

Therefore, this objective was exceeded.

Robust financial fundamentals

Achieved FY25 revenue growth in line with market expectations, with an

operating margin of 23.9%, demonstrating effective cost management.

Maintained a strong balance sheet including funding, liquidity, and leverage,

with cash conversion over 100%. Credit rating of BBB+ maintained. On

balance, the objective was partially met.

A diverse team of empowered finance professionals

Successfully led the Finance function, driving accountability and execution

across the team. High-quality succession pipeline for key roles in place. High

level of internal vacancy fill rate, with talent developed through Early Careers

and training programmes. eSAT in the Finance function of 78 is ahead of the

Company average. The objective was exceeded.

Overall, under the CFO’s strong leadership, Sage delivered another year of good performance, with strategic focus driving

strong, sustainable growth and margin expansion. Disciplined capital allocation continues to support investment and

shareholder returns. In consideration of these factors and the overall performance of the business, the Committee

determined that a bonus of 16.0% of the maximum 20% for this element was an appropriate award.

PSP awards

Awards granted under the PSP to Steve Hare and Jonathan Howell in December 2022 vest depending on performance against

six measures, measured over three years, from 1 October 2022 to 30 September 2025:

• 50% Sage Business Cloud penetration (with underpins for ROCE, absolute organic revenue growth, and cloud native penetration).

• 30% relative TSR performance against the FTSE 100 (excluding ﬁnancial services and extracting companies).

• 20% ESG (7.5% percentage reduction in Scope 1, 2, and 3 carbon emissions; 5% number of Sage products that have carbon

accounting functionality; 3.75% DEI—inclusion score; and 3.75% DEI—gender diversity).

For each measure, three levels of performance are deﬁned below: threshold, stretch, and exceptional.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

135

Directors’ Remuneration Report continued

Measure

Between threshold (20% vests)

andstretch (80% vests)

Between stretch (80% vests) andexceptional

(100% vests)

Sage Business Cloud Penetration Between 85.0% and 89.0% (with

ROCE of12%, absolute organic

revenue growth>0%, and cloud

native penetrationof 30%)

Between 89.0% and 92.0% (or above) (withROCE

of 12%, absolute organic revenue growth >0%,

and cloud native penetration of 30%)

Relative TSR Between median and upper quartile Between upper quartile and upper decile (or above)

ESG—percentage reduction in Scope 1, 2,

and3carbonemissions between baseline

year FY22 and FY25

Between 6.9% and 13.8% Between 13.8% and 20.7% (or above)

ESG—number of Sage products that

havecarbon accounting functionality

attheend of FY25

Between 3 and 6 Between 6 and 8 (or above)

ESG—inclusion score in Q1/March 2025

Employee Engagement Survey

Between 82 and 84 Between 84 and 86 (or above)

ESG—percentage of leadership teams in

thetop four levels of Sage meeting the

genderdiversity target of no more than

60%ofany one gender at the end of FY25

Between 50% and 65% Between 65% and 80% (or above)

The calculated vesting outcome of the award is detailed below.

Measure Achieved Vesting

Sage Business Cloud Penetration 89.7% 42.3%

Relative TSR 80th percentile 26.0%

ESG

—percentage reduction in Scope 1, 2, and 3 carbon emissions between baseline year FY22

and FY25

18.25% 7.0%

ESG

—number of Sage products that have carbon accounting functionality at the end of FY25

64.0%

ESG

—inclusion score in Q1/March 2025 Employee Engagement Survey 79 0.0%

ESG

—percentage of leadership teamsinthetop four levels of Sage meeting the gender

diversity target of no more than 60% of any one gender at the end of FY25

40% 0.0%

Total 79.3%

Notes:

• Full details of the FY23 PSP performance measures and targets, including baselines were disclosed on pages 175 to 176 of the 2022 Annual Report and Accounts.

• Bureau Veritas UK have conducted an independent third-party limited assurance of the ESG measures reported in accordance with the International

Standard on Assurance Engagements (ISAE) 3000 Revised.

1. ESG measures have been accounted and reported in line with the Sage Basis of Reporting document 2025 as outlined on pages 89 to 113 of the Non-Financial

Statement 2025.

2. The reduction in scope 1, 2, and 3 carbon emissions is related to market-based emissions.

3. Six products with carbon accounting functionality: SBCA UK, Sage 50 UK, Sage Platform, Sage Intacct UK, Sage for Accountants, and Suites for Small Business.

Over the performance period, the ROCE was 25.3% (compared with the underpin of 12%), absolute organic revenue growth

was31.4% (compared with the underpin of positive growth), and cloud native penetration was 37.8% (compared with the

underpin of 30%), meaning that the underpin conditions were achieved.

The Committee determined, after careful consideration of business performance and the interests of Sage’s stakeholders

such as shareholders, customers, and colleagues, that the calculated outcome was appropriate. Consequently, 79.3% of

thetotal award will vest.

The Committee noted that it had satisfied itself, at the time of grant, that there was no issue of windfall gains in respect of this

award. This conclusion had been reached following analysis of the number of shares granted in previous awards to the CEO.

Consequently, the Committee was satisfied that no further adjustment was required in this respect at the time of vesting.

Awards are scheduled to vest on 2 December 2025, and for both Executive Directors will be subject to a two-year holding

period and released on 2 December 2027.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Protect

the Planet

of award

Tech for

Good

of award

Yes No

Underpins met:

ROCE of 12.0% perannum

TSR percentile ranking:

Below median = 0%

ofaward vests

Median = 6% of awardvests

Upper quartile = 24%

ofaward vests

Upper decile = 30%

ofaward vests

Percentage reduction in

Scope 1, 2, and 3 carbon

emissions:*

Below 8.6% = 0%

ofawardvests

8.6% = 1% of

award vests

17.2% = 4% of

award vests

25.8% = 5%

of awardvests

* Reduction between

FY24 and FY27.

EPS in FY27:

Less than 47.5p = 0%

ofaward vests

47.5p = 12% of awardvests

58.0p = 60% of awardvests

This portion of

theaward does

notvest

1. The context for the PSP measures selected for FY25 was provided on page 121 of the 2024 Annual Report and Accounts.

Performance share awards granted in FY25 (audited information)

Awards were granted under the LTIP on 7 February 2025 for the CEO and CFO at a market value of £13.120 per share in the form

ofconditional share awards. In alignment with our business strategy for FY25, performance conditions for awards granted

inFY25 are:

Underlying EPS

60%

of award

TSR

30%

of award

ESG

10%

of award

Vesting is on a straight-line basis between the points. The following key areas are highlighted in relation to the performancemeasures:

• 60% of the awards being determined by EPS aligns with our growth strategy.

• Continued focus on overall Group growth and delivery of shareholder value is achieved by:

• Requiring the achievement of a ROCE underpin of 12.0% p.a. The Committee will exclude from the ROCE calculation,

whereappropriate, any write down that arises from an asset that was acquired prior to the appointment of the current

Executive Directors.

• 10% of the awards being determined by an ESG basket of measures aligns to our Sustainability and Society strategy.

• 30% of the awards being determined by relative TSR performance provides shareholder alignment.

Awards will vest, subject to satisfaction of those performance conditions, in December 2027. A holding period for the PSAs will

apply for two years from the vesting date. No further performance conditions attach to the awards during the holding period.

Type of award

Maximum

number of

Face value

(£)

Face value

(% of salary)

Threshold

vesting

(% of award)

End of performance

period

Steve Hare Performance shares 324,314 4,255,000 400% 20% 30 September 2027

Jonathan Howell Performance shares 156,580 2,054,340 300% 20% 30 September 2027

Note:

1. The face value of the PSAs has been calculated using the market value (middle market quotation) of a Sage share on 29 November 2024 (the last trading day prior

to the grant for all eligible colleagues) of £13.120.

Access to carbon

accounting functionality

viaSage suites:*

Enabling access to carbon

accounting functionality

via Sage for Sage Active

suite in France = 1%

ofaward vests

Enabling access to carbon

accounting functionality

via Sagefor Sage Active

suite in France, Spain, and

Germany = 4% of award vests

Enabling access to carbon

accounting functionality

via Sage for Sage Active

suite in France, Spain,

andGermany, and Sage

Distribution and

Manufacturing

Operations(SDMO)

suite = 5% ofaward vests

* Performance assessed

atthe endof FY27.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

137

Directors’ Remuneration Report continued

39%

of eligible colleagues participated in an

all-employee share plan (Save and Share or

theColleague Share Purchase Plan) in FY25

£7.6m

value delivered to colleagues through share

price appreciation from the Save and Share

maturity and Colleague Share Purchase Plan

purchases in FY25

3.85%

FY25 budgeted salary increase in UK

79%

of colleagues received a base salary increase

in2025 as part of the annual reward review

An Employee Assistance Programme is available

toallcolleagues

Remuneration for

thewiderworkforce

In setting Executive Director remuneration, the Committee

places strong emphasis on understanding and aligning with

theGroup’s broader approach to pay. Remuneration policies

and practices for the wider workforce are reviewed by the

Committee twice annually—once in February following the

annual reward review, and again in July, as part of the

Committee’songoing oversight.

The policies and practices applying to the wider workforce

are broadly consistent with those applying to Executive

Directors. A key distinction is the greater emphasis on

long-term performance and value creation for Executive

Directors, with a significant portion of their remuneration

delivered in Sage shares and subject to additional holding

and post-employment shareholding requirements. The

following table outlines how our remuneration approach for

the wider workforce compares withthat of Executive Directors.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Base salary

Approach for colleagues

Base salary reflects colleagues’ contribution to Sage and their value relative to market.

It is normally reviewed annually, taking into account acolleague’s performance,

contribution, and alignment tothe external market. Anyother factors, such as

gender, race, orsexual orientation, do not impact acolleague’s base pay.

Each role has a market-informed pay range, and colleagues can expect to progress

through the pay range as their contribution increases.

Pay is managed for all colleagues in alignment with local gender pay gap reporting

requirements. Additionally, we are a UK Living Wage Foundation employer.

Annual bonus

Approach for colleagues

Our annual bonus rewards colleagues for their performance and contribution

tocompany success, with reward differentiated to reflect performance levels.

It is calculated based on a percentage of base salary for achievement of goals

which takeinto account a mixture of Company and personal performance. The

percentage of basesalary and split between Company andpersonal performance

varies by seniority (more junior colleagues have a higher weighting of personal

performance as itmore accurately reflects their span of control). Payments are

made on an annual basis.

77% of colleagues participate in Sage’s annual bonus plan (withthe remaining

colleagues eligible for sales incentives).

Pension and benefits

Approach for colleagues

To ensure that every colleague, no matter where they are based, hasaccess to

consistent, meaningful support, we have a number ofglobally available benefits:

• Employee Assistance Programme (EAP): Confidential support forwork, family,

and personal issues, including coaching and counselling for colleagues and

theirfamilies.

• Calm: Access for colleagues and their family members to a mental wellness app.

• Cleo: Access to expert guidance and personalised support for colleagues through

different life stages, such as caring for achild or an ageing family member.

• From Babies with Love: Gifts for new parents following the birth or adoption of

achild on their return to work from parental leave.

Additional benefits are aligned to local market requirements to remain market

competitive. The most prevalent benefits available are annual leave, healthcare,

retirement benefits, and voluntary and lifestyle benefits.

Alignment with

ExecutiveDirectors

The same factors are

considered when

determining base

salaryacross all

colleagues inclusive

ofExecutive Directors.

Alignment with

ExecutiveDirectors

The annual bonus

structure andassociated

metrics are consistent

across bonus-eligible

colleagues and

Executive Directors.

Annual bonuses for

Executive Directors are

subject to a deferral

requirement for a

periodofthree years.

Alignment with

ExecutiveDirectors

Executive Directors

areeligible to receive

arange of market-

aligned benefits and

pension in line with

theUK wider workforce.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

139

Directors’ Remuneration Report continued

Sales incentives

Approach for colleagues

Our sales incentives reward colleagues for their performance and contribution

to company success, with reward differentiated to reflect performance levels.

Sales commission is paid for achievement of sales goals, typically on the value

of contracts sold. Payments are typically made on a monthly basis, in line with

market practice.

All-employee share plans

Approach for colleagues

All-employee share plans provide an opportunity for colleagues to become

shareholders in Sageand share in our long-term success. They are available

in most geographies, where it is practicable to invite colleagues to

participate in line with local regulatory requirements.

Participation in all-employee share plans in FY25 was 39% across both the

Save and Share and Colleague Share Purchase Plan (CSPP). £7.6m of value

was delivered to colleagues through share price appreciation from the Save

and Share maturity and CSPP purchases in FY25.

Long-term incentives

Approach for colleagues

Restricted share awards are granted to around 800 colleagues annually

across the organisation, creating value for our stakeholders through

directalignment with our share price.

Additionally, members of our ELT are eligible to receive performance

shareawards, incentivising the delivery of long-term value creation

andalignment with our strategic framework.

Recognition schemes

Approach for colleagues

A non-financial, global peer-to-peer recognition scheme, “Hi-5”, enables

colleagues to recognise their peers for achievements in line withour values.

For Sales colleagues and partners, the Sage Platinum Club recognises top

sales performance.

Alignment with

ExecutiveDirectors

Executive Directors are

noteligible to receive

salesincentives.

Alignment with

ExecutiveDirectors

Executive Directors

are eligible to

participate in the

Saveand Share Plan

onthesame terms as

all other UK-based

colleagues.

Alignment with

ExecutiveDirectors

The same measures and

targetsfor performance

shareawards are applied

toExecutive Directors

astheELT.

Executive Directors

arenot eligible to

receive restricted share

awards (except in a

recruitment scenario).

Alignment with

ExecutiveDirectors

All colleagues, including

Executive Directors,

canparticipate in Hi-5,

our non-financial

recognition scheme.

Executive Directors

arenot eligible for

adhocrecognition.

1. As detailed in the recruitment section of the Directors’ Remuneration Policy—see pages 134 to 135 of the 2024 Annual Report and Accounts.

140

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Ratio of the pay of the CEO to that of the UK lower quartile, median, and upper quartile colleagues

The table below shows the ratio of the pay of the CEO to that of the UK lower quartile, median, and upper quartile colleagues in

2025, consistent with the Companies (Miscellaneous Reporting) Regulations 2018. As outlined in the Remuneration Committee

Chair’s letter, the treatment of colleagues has provided important context for the Committee’s decisions on executive

remuneration in 2025 and the Committee is consequently satisfied that the median pay ratio for 2025 is consistent with

thepay and progression policies for Sage’s UK employees as a whole.

Year Method

Pay ratio Remuneration values

25th percentile

(lower quartile)

50th percentile

(median)

75th percentile

(upper quartile)

Y25 (25th

percentile)

Y50 (50th

percentile)

Y75 (75th

percentile)

2025 A 106 : 1 71 : 1 47 : 1 Total remuneration £42,995 £64,525 £98,040

Salary only £37,125 £54,749 £65,632

2024 A 108 : 1 73 : 1 48 : 1 Total remuneration £42,631 £63,037 £95,481

Salary only £33,201 £51,500 £76,347

2023 A 101 : 1 68 : 1 46 : 1 Total remuneration £39,536 £58,417 £87,553

Salary only £32,073 £47,669 £57,887

2022 A 65 : 1 43 : 1 29 : 1 Total remuneration £38,056 £57,421 £85,380

Salary only £32,122 £41,945 £48,854

2021 A 70 : 1 46 : 1 31 : 1 Total remuneration £34,807 £53,304 £79,739

Salary only £29,700 £42,103 £79,091

2020 A 55 : 1 36 : 1 23 : 1 Total remuneration £29,865 £45,942 £71,524

Salary only £27,955 £36,116 £56,983

2019 A 95 : 1 62 : 1 38 : 1 Total remuneration £26,463 £40,385 £66,095

Salary only £20,281 £34,184 £51,087

The year-on-year change in the pay ratio is largely driven by variation in business performance-related pay outcomes, such

as the PSP and annual bonus. As the CEO has a larger proportion of his total remuneration linked to business performance

than other colleagues based in the UK, the ratio has decreased compared with last year. This is due to a lower performance

outcome for the FY23 PSP vesting on 2 December 2025, as set out on page 136 of this Report, compared with the FY22 PSP

which vested on 2 December 2024 and is included in the 2024 ratio, and a lower bonus outcome for FY25 compared with the

bonus outcome for FY24.

Notes:

• Under method A, colleague data is based on full-time equivalent pay for UK colleagues as at 30 September 2025. Pay for each colleague is calculated in

accordance with the single figure for remuneration. All components of remuneration except long-term incentives are presented on a full-time equivalent

basis by dividing sums by the average working hours divided by full-time equivalent hours for the portion of the year worked. Colleagues who worked no

hours during the year are excluded from the dataset.

• Method A has been selected as the basis of the disclosure as it is the best reflection of the underlying colleague data required by the Companies

(Miscellaneous Reporting) Regulations 2018.

• Total remuneration comprises salary and benefits. Certain benefits have been omitted from the remuneration of colleagues except the CEO. These

principally comprise sums paid by way of expenses allowance chargeable to UK income tax and not paid through the payroll. Such expenses are typically

irregular and generally immaterial to remuneration and are excluded to enable more meaningful comparison of the ratio of underlying colleague

remuneration over time.

• The CEO’s pay is based on the single figure for remuneration set out on page 132 of this Report. Because a large portion of the CEO’s pay is variable, the pay

ratio is heavily dependent on the outcomes of variable pay plans and, in the case of long-term share-based awards, share price movements. Further

information on these outcomes for the CEO in FY25 is set out on pages 133 to 136 of this Report.

Gender and ethnicity pay

We welcome colleagues of all races, genders and ethnicities, building an inclusive workplace where everyone can belong and

thrive.

Our 2025 UK gender pay gap report shows that the median gender pay gap of 6.95% has reduced from 2024 (9.37%), largely due

to focus on ensuring equitable practices during our hiring and promotion processes. The mean gender pay gap of 5.05% has

increased slightly since 2024 (4.81%), due to a higher number of men in senior roles. For the first time, we are also publishing

our Ireland gender pay gap report (for Sage Hibernia Ltd.)—this highlights a median gender pay gap of 5.51% and a mean

gender pay gap of 3.98%.

For the fifth consecutive year, we have voluntarily reported our UK ethnicity pay gap, which shows a median pay gap of -6.73%

(2024: -3.91%) and a mean pay gap of 2.05% (2024: 5.42%).

The 2025 UK and Ireland gender pay gap reports and UK ethnicity pay gap report are available on the Company’s website.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

141

Change in remuneration of Directors compared with colleagues

The table below shows the annual percentage change in total remuneration of Directors with colleagues employed

byTheSage Group plc. who are not also Directors of the Group.

% change 2024/2025 % change 2023/2024 % change 2022/2023 % change 2021/2022 % change 2020/2021

Salary/

fees

Taxable

benefits

Annual

incentive

Salary/

fees

Taxable

benefits

Annual

incentive

Salary/

fees

Taxable

benefits

Annual

incentive

Salary/

fees

Taxable

benefits

Annual

incentive

Salary/

fees

Taxable

benefits

Annual

incentive

Executive Directors

S Hare 13.8% 1.2% (0.5)% 8.5% (33.7)% (10.9)% 3.8% 48.3% (19.7%) 2.3% 3.8% 49.5% 0.5% (65%) 229%

J Howell 11.1% 3.6% (5.3)% 4.8% (11.8)% (9.5)% 3.3% 7.7% (19.4%) 1.4% 36.3% 47.4% 0.5% (6%) 223%

Non-executive Directors

A Duff

9.3% –% –% 3.8% –% –% –% –% –% 1,500% – – – – –

S Anand

(62.3)% (75.0)% –% 3.8% 33.3% –% 10.5% 200.0% –% 5.6% – – 140% – –

J Bates 23.4% –% –% 3.8% –% –% 10.5% –% –% 5.6% – – 0% – –

J Bewes 11.2% –% –% 7.1% –% –% 10.7% –% –% 5.6% – – 0% – –

M Chan Jones

10.2% 0% –% 24.5% 51.5% –% –% –% –% – – – – – –

A Court

21.7% –% –% 9.7% –% –% 10.7% –% –% 5.6% – – 0% – –

R Donnelly

24.5% –% –% 80.2% –% –% –% –% –% – – – – – –

D Hall

–% –% –% (75.0)% –% –% 8.3% –% –% 4.3% – – 0% – –

D Harding

18.2% –% –% 3.8% –% –% 10.5% –% –% 82.1% – – – – –

L Mitchell-

Keller

–% –% –% ––––– –––––––

Colleagues of

the Company 10.5% 5.0% 4.8% 7.1% 3.9% 3.7% 4.1% 2.4% 24.4% 4.2% 13.8% (8.7%) 5% 29% 6%

Notes:

• The change in the Non-executive Directors’ fees for 2021/2022 and 2022/2023 is due to the increase in the basic Non-executive Director fee, the Audit and

Risk Committee Chair additional fee, and the Remuneration Committee Chair additional fee that took effect from 1 June 2022. Further information can be

found on page 176 of the 2022 Annual Report and Accounts.

• The change in the Non-executive Directors’ fees for 2023/2024 is due to the increase in the basic Non-executive Director fee, the Audit and Risk Committee

Chair additional fee, the Remuneration Committee Chair additional fee, and the Chair of the Board’s fee that took effect from 1 January 2024. Further

information can be found on page 158 of the 2023 Annual Report and Accounts.

• The change in the Non-executive Directors’ fees for 2024/2025 is due to the increase in basic Non-executive Director fee, the Senior Independent Director

additional fee, and the Chair of the Board’s fee that took effect from 1 January 2025, in addition to the Audit and Risk Committee membership fee,

Remuneration Committee membership fee, and Nomination Committee membership fee, which also took effect from 1 January 2025. Further information

can be found on page 151 of the 2024 Annual Report and Accounts.

1. Average colleague pay is based on the dataset used for the CEO pay ratio as set out on page 141 of this Report. It excludes colleagues that joined within the

reporting period, as the dataset for the Company is so small that to leave them in provides a skewed result, making meaningful judgements difficult. The

salary, taxable benefits, and annual incentive are the respective median values in the dataset and may relate to different incumbents. Salaries and fees for

Directors for 2025 are as set out on page 132 of this Report.

2. Steve Hare’s and Jonathan Howell’s taxable benefits for 2025 are as set out on page 132 of this Report. Taxable benefits for colleagues employed by TheSage

Group plc. are based on the dataset used for the CEO pay ratio, as set out immediately following this section.

3. The annual incentive values for Steve Hare and Jonathan Howell for 2025 are as set out on page 132 of this Report. Annual incentives for colleagues employed

by The Sage Group plc. are inclusive of bonus and commission and are based on the dataset used for the CEO pay ratio as set out immediately following this

section. Non-executive Directors are not eligible for annual incentives.

4. Andrew Duff was appointed as a Non-executive Director on 1 May 2021 and accordingly no comparison prior to 2021/2022 can be drawn. The significant

change in his fee for 2021/2022 is due to his fee being pro-rated in 2021 to his start date of 1 May 2021 and his change in role from Non-executive Director

toChair of the Sage Board with effect from 1 October 2021.

5. Sangeeta Anand stepped down from the Board on 6 February 2025. Her taxable benefits reflect the travel allowance she received for attending one Board

meeting during FY25 and four Board meetings during FY24.

6. Maggie Chan Jones was appointed as a Non-executive Director on 1 December 2022 and accordingly no comparison to prior years can be drawn. Her taxable

benefits reflect the travel allowance she received for attending four Board meetings during FY25 and FY24.

7. Annette Court was appointed Senior Independent Director on 1 January 2024 and stepped down as Chair of the Remuneration Committee on 30 April 2024,

resulting in a change of fees for 2023/2024.

8. Roisin Donnelly was appointed as a Non-executive Director on 3 February 2023 and accordingly no comparison to prior years can be drawn. The change inher

fee for 2023/2024 is due to her fee being pro-rated in 2023 to her start date of 3 February 2023 and her appointment as Chair of the Remuneration Committee

on 1 May 2024.

9. Drummond Hall retired on 31 December 2023.

10. Derek Harding was appointed as a Non-executive Director on 2 March 2021 and accordingly no comparison prior to 2021/2022 can be drawn. The significant

change in his fee for 2021/2022 is due to his fee being pro-rated in 2021 to his start date of 2 March 2021.

11. Lori Mitchell-Keller was appointed as a Non-executive Director on 7 February 2025. Her taxable benefits reflect the travel allowance she received for

attending two Board meetings during FY25.

Directors’ Remuneration Report continued

142

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Historical executive pay and Company performance

The table below summarises the Chief Executive Officer’s single ﬁgure for total remuneration, annual bonus payout, and PSP

vesting as a percentage of maximum opportunity for the current year and previous nine years.

CEO 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

CEO single ﬁgure

forremuneration

(in£’000)

Steve Hare

– – 98 2,495 1,557 2,507 2,524 4,358 5,316 4,562

Stephen Kelly

1,7233,5471,690––––––

Annual bonus payout

(as % maximum

opportunity)

Steve Hare – – 0%

94% 18% 60% 88% 68% 56% 49%

Stephen Kelly 69%19%0%–––

PSP vesting (as % of

maximum opportunity)

Steve Hare – – 29% 15% 27% 34% 20% 73% 95% 79%

Stephen Kelly –66%29%––––––

Notes:

1. Steve Hare was appointed Interim COO and CFO on 31 August 2018. Whilst Steve Hare’s job title at 30 September 2018 was Interim COO and CFO, not CEO, heis

regarded as being the equivalent of CEO for the purposes of the disclosure.

2. Stephen Kelly stepped down from the position of CEO on 31 August 2018.

3. Steve Hare waived his entitlement to a bonus in respect of 2018.

Historical Group performance against FTSE 100

The graph below shows the TSR of the Group and the FTSE 100 over the last 10 years. The FTSE 100 Index is the index against

which the TSR of the Group should be measured because of the comparable size of the companies which comprise that index.

Value (£)

30-Sep-15

Sage

FTSE 100 Index

30-Sep-16 30-Sep-17 30-Sep-18 30-Sep-19 30-Sep-20 30-Sep-21 30-Sep-22 30-Sep-23 30-Sep-24 30-Sep-25

100

150

200

250

300

Note:

• This graph shows the value, by 30 September 2025, of £100 invested in The Sage Group plc. on 30 September 2015 compared with the value of £100 invested

in the FTSE 100 Index. The other points plotted are the values at intervening ﬁnancial year ends.

Payments to past Directors (audited information)

No payments were made to past Directors during FY25.

Payments for loss of office (audited information)

No payments were made for loss of office during FY25.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

143

Relative importance of spend on pay

The charts below show the all-employee pay cost (as stated in the notes to the Group financial statements), proﬁt before tax

(PBT), and returns to shareholders by way of dividends and share buybacks for 2024 and 2025.

The information shown in the charts is based on the following:

• Underlying PBT (underlying as reported)—Underlying proﬁt before income tax taken from note 3.6 on page 199. Underlying

PBT has been chosen as a measure of our operational profitability.

• Returns to shareholders—Total dividends taken from note 13.4 on page 241; value of shares purchased during the year taken

from consolidated statement of changes in equity on pages 177 and 178.

• Total colleague pay—Total staff costs from note 3.3 on page 195, including wages and salaries, social security costs,

pension, and share-based payments.

Underlying PBT

(Underlying as reportedin £m)

+£53m

FY25:

555

FY24: 502

Dividends paid to shareholders (£m)

Total dividends

+£8m

FY25:

207

FY24: 199

Value of shares purchased during theyear

+£203m

FY25:

609

FY24: 406

Total colleague pay (£m)

-£15m

FY25:

1,097

FY24: 1,112

Statement of implementation of Remuneration Policy in the following ﬁnancial year

This section provides an overview of how the Committee is proposing to implement the Policy in FY26.

Base salary

Executive Director salaries effective 1 January 2026 have been set by the Remuneration Committee as outlined on

pages 118 to 120 of this Report. The CEO’s salary is as disclosed on page 121 of the 2024 Annual Report and Accounts:

Salary

1 January 2026

Salary

1 January 2025

Salary

1 January 2024

Salary

1 January 2023

Salary

1 January 2022

Steve Hare £1,223,313

(15.0% increase)

£1,063,750

(15.0% increase)

£925,000

(9.9% increase)

£841,500

(4% increase)

£809,000

(3% increase)

Jacqui Cartin

£650,000––––

Jonathan Howell

– £684,780

(13.0% increase)

£606,000

(5% increase)

£577,000

(4% increase)

£555,000

(1.8% increase)

1. Jacqui Cartin appointed as CFO from 1 January 2026.

2. Jonathan Howell steps down from the Board and his role as CFO on 31 December 2025.

Directors’ Remuneration Report continued

144

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Pension and beneﬁts

The CEO and the CFO will continue to receive a pension provision worth 10% of salary, as a contribution to a deﬁned

contribution plan and/or as a cash allowance. The pension for the wider workforce is 10% of salary. Executive Directors

will also receive a standard package of other beneﬁts and, where deemed necessary, the costs of travel, accommodation,

and subsistence for the Directors and their partners on Sage-related business, consistent with that in FY25.

Annual bonus

Key features of the Executive Directors’ annual bonus plan for FY26 are as follows:

• The maximum annual bonus potential is 175% of salary (pro-rated where relevant).

• One third of any bonus earned will be deferred into shares for three years under the Deferred Bonus Plan, unless a Director

is compliant with their enhanced shareholding guideline or in other circumstances set out in the Policy. Ifalready

compliant with their shareholding guideline, the deferral requirement will be reduced to 15% of the bonus earned.

• Annual bonuses awarded in respect of performance in FY26 will be subject to potential withholding (malus) or

recovery (clawback) if speciﬁed trigger events occur within three years of the payment/award of the annual bonus.

Trigger events will include a material misstatement of the audited results, error in calculation of the bonus payout,

serious reputational damage, or signiﬁcant ﬁnancial loss as a result of an individual’s conduct or gross misconduct

which could have warranted an individual’s summary dismissal.

The annual bonus for FY26 for Executive Directors will be determined as detailed below:

As a percentage of maximum bonus opportunity:

Measure

Total revenue growth 40%

Rule of 40 (underlying ARR growth plus underlying EBITDA margin) 40%

Strategic goals 20%

Notes:

1. Executives’ incentives for FY26 will be measured on an underlying basis. This will apply to the total revenue growth and the Rule of 40 in the annual

bonus. The Remuneration Committee will review on a case-by-case basis the impact on underlying measures of significant acquisitions and

disposals and judge whether to adjust incentive targets or outcomes.

The selection of measures reflects the Company’s strategic priorities as outlined on the Remuneration Committee

Chair’s letter on pages 118 to 120. Targets take into account the Company’s internal budgeting, and, where relevant,

analyst forecasts. Therevenue growth measure is based on the definition of underlying measures set out on page 261.

Strategic goals will include diversity, equity, and inclusion metrics, and customer metrics, where relevant. Targets are

not disclosed because they are considered by the Board to be commercially sensitive. Many of the Company’s competitors

are unlisted companies and not required to disclose their targets; the Company’s disclosure could provide its competitors

with a considerable advantage. It is intended for retrospective disclosure to be made in next year’s Report.

When determining incentive outcomes, the Remuneration Committee will examine factors including the broader context

in which performance was delivered. This includes: balanced growth, a high-quality revenue mix, and strategically-

aligned M&A, as components of the shareholder experience. The Remuneration Committee has discretion to decide

whether and to what extent the performance conditions have been met, and in appropriate circumstances to override

the formulaic outcome.

Performance share awards

The Remuneration Committee reviews award sizes annually, taking into account factors such as underlying business

performance, individual performance, and share price movement.

FY26 performance share awards will be granted over shares worth 400% of salary for the CEO and 300% of salary for

Jacqui Cartin (based on salaries effective 1 January 2026 as set out on page 144). Jonathan Howell is not eligible for

aFY26 performance share award.

Vesting of these awards will be subject to satisfaction of the performance conditions detailed on page 146, measured

over the three ﬁnancial years to 30 September 2028.

Measures and weightings are unchanged from FY25. The Remuneration Committee is satisfied that all the targets

represent a degree of challenge proportionate to the potential rewards that may be realised for their achievement in

light of all relevant factors, including the current business plan, historical performance, and analysts’ forecasts.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

145

Underlying EPS (60% of award)

EPS

in FY28

% of award

vesting

Below threshold Below 53.3p 0%

Threshold 53.3p 12%

Exceptional 65.3p 60%

Notes:

1. EPS is measured as the amount of post-tax profit attributable to each ordinary share on an underlying basis.

2. Vesting of this portion of the performance share award is subject to the achievement of 12% p.a. ROCE underpin. ROCE is defined on page 262.

ROCE willbe measured on an underlying basis. The Remuneration Committee will review on a case-by-case basis the impact on underlying measures

of significant acquisitions and disposals, and judge whether to adjust incentive targets or outcomes. The impact of share buybacks will be included.

Relative TSR performance condition (30% of award)

TSR ranking

% of award

vesting

Below threshold Below median 0%

Threshold Median 6%

Stretch Upper quartile 24%

Exceptional Upper decile 30%

Notes:

• TSR performance comprises share price growth and dividends paid. Vesting is on a straight-line basis between the points.

• Sage’s TSR performance will be measured relative to the TSR of the constituents of the FTSE 100, excluding ﬁnancial services and extracting companies.

ESG—Protect the Planet (5% of award)

Delivering on our climate change commitment, this metric addresses reduction in Scope 1, 2, and 3 carbon emissions:

% reduction in

carbonemissions¹

% of award

vesting

Below threshold Below 10.1% 0%

Threshold 10.1% 1%

Stretch 16.5% 4%

Exceptional 18.8% 5%

Notes:

1. Targets are for emissions reduction between FY25 and FY28, aligning to our Net Zero goal by 2040.

Outturns will be independently verified.

Vesting is on a straight-line basis between the points.

ESG—Tech for Good (5% of award)

Supporting customers on their sustainability journey through enabling access to carbon accounting functionality for

Sage Medium customers and through Sage Copilot automations.

Supporting customers on their sustainability journey through enabling access to carbon

accounting functionality for Sage Medium customers and through Sage Copilot automations

% of award

vesting

Below

threshold

Sage Earth available for 50% or less of Medium financial accounting customers in the UK 0%

Threshold Sage Earth available for more than 50% of Medium financial accounting customers in the UK 1%

Stretch Sage Earth available for more than 50% of Medium customers in the UK and France; and

Sage Earth via Copilot skill(s) enabled in at least one Sage suite

Exceptional Sage Earth available for more than 50% of Medium customers in the UK, France and an

additional EU country; and Sage Earth via Copilot skill(s) enabled in multiple Sage suites

Note:

1. At the end of FY25, the industry average benchmarking solution was added to Sage Intacct UK, available to all customers of this product. Performance

will be assessed at the end of FY28, when the Remuneration Committee will determine the availability of Sage Earth to Sage Medium customers

and Sage Earth via Copilot skill(s) enabled in Sage suites.

Performance share awards granted in FY26 will be subject to potential withholding (malus) or recovery (clawback) if

specified trigger events occur prior to the third anniversary of the release date of an award. Trigger events in respect

of PSAs will comprise a material misstatement of the audited results, an error in calculation of the extent of the PSA

vesting, serious reputational damage, or significant financial loss as a result of an individual’s conduct or gross

misconduct which could have warranted an individual’s summary dismissal, or a material failure of risk management.

Directors’ Remuneration Report continued

146

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Non-executive Director remuneration

Non-executive fees, except for the fee for the Chair, are determined by the executive members of the Board plus the Chair.

Thefee for the Chair of the Board is determined by the Remuneration Committee. Consistent with the Investment Association’s

Principles of Remuneration, fees are regularly reviewed to ensure they fairly reflect the time commitment and complexity of

different roles. In consideration of these factors and relevant market data, several adjustments have been made to FY26 fees,

as set out in the table below.

Fees effective

from 1 January

2026

Fees effective

prior to 1

January 2026

Chair of the Board all-inclusive fee £487,000 £465,000

Basic Non-executive Director fee £85,000 £80,000

Senior Independent Director additional fee £27,500 £25,000

Audit and Risk Committee Chair additional fee £27,500 £25,000

Remuneration Committee Chair additional fee £27,500 £25,000

Audit and Risk Committee membership fee £10,000 £10,000

Remuneration Committee membership fee £10,000 £10,000

Nomination Committee membership fee £5,000 £5,000

Directors’ shareholdings and share interests (audited information)

The shareholding guideline for the CEO is 500% of salary and for the CFO is 350% of salary. Executive Directors are expected

to build up the required shareholding within a five-year period of the Executive Director becoming subject to the guideline.

As at 30 September 2025, Steve Hare held shares worth 922% of salary and Jonathan Howell held shares worth 654% of salary.

Values include unvested deferred shares net of tax at the estimated marginal withholding rates and any shares held bythe

Executive Directors’ connected persons. The values for an Executive Director are derived from interests in shares valued

using the average market price of a share in the three months to 30 September 2025 (the last trading day of the financial

year),which was £11.512, and the Executive Director’s basic salary over the same period.

Executive Directors are required to hold Sage shares for a two-year period after stepping down from that position. This

post-employment shareholding guideline is aligned to the Investment Association guidance, such that Executive Directors

are required to remain compliant with 100% of their “in-employment” shareholding guideline for two years after stepping

down as a Director. The Executive Director’s actual shareholding will include any shares acquired through the vesting or

release of shares from share incentive plans (net of tax, where applicable) after the date the Policy was adopted and unvested

shares granted under the Deferred Bonus Plan (net of tax), but excludes shares acquired through purchase and the release of

shares under share incentive plans where the release occurred prior to the Committee’s adoption of the Policy. Additionally,

performance share awards vesting after cessation are subject to a two-year holding period at vesting.

On cessation as an Executive Director, the Committee may subject any relevant portion of an unvested share award preserved

for “good leaver” reasons to the fulfilment of the post-cessation shareholding requirement as a condition of vesting.

Furthermore, for awards granted to an Executive Director on or after 1 October 2019, the Committee may as a condition of

grant require an Executive Director to have a relevant portion of a released share award be released into a nominee account

tobe held on their behalf until such time as the post-cessation shareholding requirement expires.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

147

Interests in shares

The interests as at 30 September 2025 of each person who was a Director of the Company during the year (together with

interests held by his or her connected persons) were:

Director

Ordinary

shares at 30

September

2025

Ordinary

shares at 30

September

2024

S Anand

1,000 1,000

J Bates

16,735 16,735

J Bewes 10,000 10,000

M Chan Jones 10,000 10,000

A Court 7,300 7,300

R Donnelly 10,000 10,000

D Hall

– 10,000

S Hare

540,887 558,291

J Howell 192,946 231,885

D Harding

10,000 10,000

A Duff 13,150 13,150

L Mitchell-Keller

0–

Total 812,018 878,361

Notes:

1. Sangeeta Anand stepped down from the Board on 6 February 2025. This is the balance on that date.

2. Jillian Marie Bates is a person closely associated with Dr Bates. The total for 30 September 2025 includes 16,735 shares held by Jillian Marie Bates.

3. This is the balance at 31 December 2023 on the date Drummond Hall retired.

4. Lucinda Cowley is a person closely associated with Mr Hare. The total for 30 September 2025 includes 30,000 shares held by Lucinda Cowley.

5. Fiona Harding is a person closely associated with Mr Harding. The total for 30 September 2025 includes 10,000 shares held by Fiona Harding.

6. Lori Mitchell-Keller was appointed a Non-executive Director on 7 February 2025.

There have been no changes in the interests of each Director between 30 September 2025 and 18 November 2025, being adate

not more than one month prior to the publication of the notice of the 2026 AGM.

Details of the Executive Directors’ interests in outstanding share awards under the PSP, LTIP, Deferred Bonus Plan, and

all-employee share option plans are set out below.

All-employee share options (audited information)

All Executive Directors are eligible to join the all-employee share plan, the Sage Save and Share Plan, on the same terms

asalleligible colleagues based in their respective local jurisdiction. See note 13.2 of the Group financial statements

onpages 234 to 239 for more detail of this plan. In the year under review, Steve Hare participated in this scheme.

The outstanding all-employee share options granted to each Director of the Company are as follows:

Director

Exercise price

per share

Shares under

option at 1

October 2024

number

Granted

during the

year

number

Exercised

during the

year

number

Lapsed during

the year

number

Shares under

option at 30

September

2025

number

Date

exercisable

S Hare

690p2,608–––2,608

1 August

2026-31

January 2027

Total 2,608–––2,608

Notes:

• Steve Hare participated in the 2023 Save and Share Plan. Under the UK Save and Share Plan rules, the scheme has a three-year saving period. No performance

conditions apply to options granted under this plan. For the 2023 UK Save and Share grant, the exercise price was set at £6.90, a 20% discount on the average

share price on 18 May 2023, 19 May 2023, and 22 May 2023 of £8.614.

• Jonathan Howell did not participate in the 2023 Save and Share Plan. Neither Steve Hare or Jonathan Howell participated in the 2025 Save and Share Plan.

• The market price of a share of the Company at 30 September 2025 (the last trading day of the financial year) was £11.00 (mid-market average) and the lowest

and highest market prices during the year were £9.536 and £13.398, respectively.

Directors’ Remuneration Report continued

148

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Performance Share Plan and Long Term Incentive Plan (audited information)

The outstanding performance awards granted to each Executive Director of the Company under the PSP and for 7 February 2025

under the LTIP are as follows:

Director Grant date

Under award

1October 2024

number

Awarded

during

the year

number

Vested during

the year

number

Lapsed during

the year

number

Under award

30September

2025

number Vesting date

S Hare 7 February 2025 – 324,314 – – 324,314 2 December 2027

1 February 2024 241,514–––241,5144 December 2026

2 December 2022 259,210–––259,2102 December 2025

4 February 2022 258,169 – (245,518) (12,651) – 2 December 2024

758,893 324,314 (245,518) (12,651) 825,038

J Howell 7 February 2025 – 156,580 – – 156,580 2 December 2027

1 February 2024 118,668–––118,6684 December 2026

2 December 2022 159,961–––159,9612 December 2025

4 February 2022 141,690 – (134,747) (6,943) – 2 December 2024

420,319 156,580 (134,747) (6,943) 435,209

Total 1,179,212 480,894 (380,265) (19,594) 1,260,247

Notes:

• The PSP rules expired in 2025. Shareholders approved the LTIP rules at the 2025 AGM. Performance share awards were granted under the LTIP to the Executive

Directors on 7 February 2025, as detailed on page 137.

• No variations were made in the terms of the awards in the year.

• Performance share awards for 2025 were granted to Executive Directors on 7 February 2025. The market price of the awards was £13.120.

• The performance conditions for awards granted in February 2022, December 2022, December 2023, and February 2024 are set out in the respective Reports

forthe year of grant. The performance conditions for awards granted in February 2025 are outlined on page 137.

• The performance conditions for Steve Hare’s and Jonathan Howell’s awards that vested during 2025 are set out on page 143 of the 2024 Report.

• Awards for Steve Hare granted in December 2017 and after are subject to a holding period of two years on vesting. Awards for Jonathan Howell vesting in

2020 and after are subject to a holding period of two years on vesting.

• All PSP and LTIP awards were granted as conditional awards.

Deferred shares (audited information)

The outstanding awards granted to each Executive Director of the Company under The Sage Group Deferred Bonus Plan are as follows:

Director Grant date

Under award

1October 2024

number

Awarded

during

the year

number

Vested during

the year

number

Lapsed during

the year

number

Under award

30September

2025

number Vesting date

S Hare 2 December 2024 – 22,481 – – 22,481 2 December 2027

4 December 2023 28,815 – – – 28,815 4 December 2026

2 December 2022 50,785–––50,7852 December 2025

2 December 2021 35,188 – (35,188) – – 2 December 2024

114,788 22,481 (35,188) – 102,081

J Howell 2 December 2024 – 15,899 – – 15,899 2 December 2027

4 December 2023 20,050–––20,0504 December 2026

2 December 2022 35,221–––35,2212 December 2025

2 December 2021 24,754 – (24,754) – – 2 December 2024

80,025 15,899 (24,754) – 71,170

Total 194,813 38,380 (59,942) – 173,251

Notes:

• Awards are not subject to further performance conditions once granted. The market price of a share on 29 November 2024, the last trading day prior to the

date of the awards made in the year ended 30 September 2025, was £13.120.

• No variations were made in the terms of the awards in the year.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

149

There is a limit on the number of newly issued and treasury shares that can be used to satisfy awards under the Group’s share

schemes in any 10-year period. The limit and the Group’s current position against that limit as at 30 September 2025 (thelast

practicable date prior to publication of this Report) are set out below:

Limit Current position

10% of Group’s share capital can be used for all share schemes 5.6%

Notes:

• The 5% dilution limit for discretionary share plans is no longer applicable, following shareholder approval of the removal of this limit at the 2025 AGM.

The current position consists of shares released during the period plus committed shares inclusive of dividend equivalents

accrued, with the total adjusted for forfeitures and, where applicable, performance for awards which have vested. The Company

has previously satisﬁed all awards through the market purchase of shares or transfer of treasury shares and will continue to

consider the most appropriate approach, based on the relevant factors at the time.

External appointments

Executive Directors are permitted, where appropriate and with Board approval, to take non-executive directorships with other

organisations in order to broaden their knowledge and experience in other markets and countries. Fees received by the Directors

in their capacity as directors of these companies are retained, reﬂecting the personal responsibility they undertake in these

roles. The Board recognises the signiﬁcant demands that are made on Executive and Non-executive Directors and has therefore

adopted a policy that no Executive Director should hold more than one directorship of other listed companies. Except in

exceptional circumstances, where approved in advance by the Chair of the Committee, if an Executive Director holds non-

executive positions at more than one listed company then only the fees from one such company will be retained by the Director.

Steve Hare was appointed as independent non-executive director to the board of J Sainsbury plc with effect from 3 July 2025

and assuch receives an annual fee of £78,697.

Jonathan Howell was appointed as independent non-executive director to the board of Experian plc with effect from

1 May2021 and as such receives an annual fee of €179,250. He was subsequently appointed as audit committee chair with

effectfrom 1 July 2022 and receives an annual fee of €54,250 accordingly. Additionally, non-executive directors required to

undertake intercontinental travel to attend Board meetings receive a supplementary payment of €10,000 per trip, in addition

to any travel expenses.

For the year ended 31 March 2025, he received €251,000, as reported on page 143 of the Experian Annual Report 2025. This is

theonly appointment of this nature he holds.

No formal limit on other board appointments applies to Non-executive Directors under the Policy, but prior approval

(nottobeunreasonably withheld) from the Board is required in the case of any new appointment.

Unexpired term of contract table

Director Date of contract

Unexpired term

ofcontract on

30September 2025,

oron date of

contractif later Notice period under contract

Executive Directors

S Hare 3 January 2014 12 months 12 months from the Company and/or individual

J Howell 10 December 2018 12 months 12 months from the Company and/or individual

Non-executive Directors

J Bates 31 May 2025 2 years 8 months 1 month from the Company and/or individual

J Bewes 1 April 2025 2 years 6 months 1 month from the Company and/or individual

M Chan Jones 1 December 2022 2 months 1 month from the Company and/or individual

A Court 1 April 2025 2 years 6 months 1 month from the Company and/or individual

R Donnelly 3 February 2023 4 months 1 month from the Company and/or individual

A Duff 1 May 2024 1 year 7 months 6 months from the Company and/or individual

D Harding 2 March 2024 1 year 5 months 1 month from the Company and/or individual

L Mitchell-Keller 7 February 2025 2 years 4 months 1 month from the Company and/or individual

Directors’ Remuneration Report continued

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Consideration by the Directors of matters relating to Directors’ remuneration

The following Directors were members of the Committee when matters relating to the Directors’ remuneration for the year

were being considered:

• Annette Court

• Dr John Bates

• Maggie Chan Jones (from 1 August 2025)

• Roisin Donnelly (Chair)

The Committee received assistance from Amanda Cusdin (Chief People Officer), Tara Gonzalez (Executive Vice President,

Reward and Recognition), Vicki Bradin (General Counsel and Company Secretary), and other members of management

(including the CEO and CFO), who may attend meetings by invitation, except when matters relating to their own

remunerationare being discussed.

External advisors

The Committee continues to receive advice from Deloitte LLP, an independent ﬁrm of remuneration consultants appointed

bythe Committee after consultation with the Board. During the year, Deloitte’s executive compensation advisory practice

advised the Committee on developments in market practice, corporate governance, institutional investor views, the

development of the Company’s incentive arrangements, and the review of the Policy. Total fees for advice provided to

theCommittee during the year were £139,370 (charged on a time spent basis).

The Committee is satisﬁed that the advice it has received has been objective and independent.

Deloitte is a founding member of the Remuneration Consultants Group and adheres to its code in relation to executive

remuneration consulting in the UK. Other parts of Deloitte have provided tax advice, speciﬁc corporate ﬁnance support

inthe context of merger and acquisition activity, and unrelated corporate advisory services.

Stitch, a Deloitte business, provided the Sage Reward team with communication support on colleague share plan

communications during 2025.

Statement of shareholding voting

The table below sets out the results of the vote on the 2025 Policy and on the Directors’ Remuneration Report atthe 2025 AGM:

Votes for

number %

Votes against

number %

Votes

cast

Votes

withheld

Remuneration Policy 655,779,523 80.72 156,636,696 19.28 812,416,219 2,511,025

Remuneration Report 789,980,030 97.00 24,471,358 3.00 814,451,388 475,856

Roisin Donnelly

Chair of the Remuneration Committee

18 November 2025

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

151

The Directors present their report together with the audited consolidated financial statements for the financial year ended

30 September 2025 (the ‘Annual Report and Accounts’).

The Annual Report and Accounts contain statements that are not based on current or historical fact and are forward-looking

innature. Please refer to the Disclaimer on pages 157 and 158.

Information included in the Strategic Report

The Directors’ Report, together with the Strategic Report on pages 1 to 68, represents the management report for the purpose of

compliance with the Disclosure Guidance and Transparency Rules (‘DTRs’) 4.1.R.

As permitted under section 414C(11) of the Companies Act 2006 (the ‘Act’), some of the matters required to be included in the

Directors’ Report have instead been included in the Strategic Report, as the Board considers them to be of strategic importance.

Specifically, these are:

Subject matter Page reference

Future business developments 12 to 14—Chief Executive’s Review

Relevant information is also in the Strategic Report on pages 15 to 18

Greenhouse gas emissions,

energyconsumption and

energy-efficiency action

30 to 32—Sustainability and Society

35 to 44—TCFD

Relevant information is also available in our Impact Book on our website www.sage.com

Employment of disabled persons 24 to 29—Our people and culture

Engagement with colleagues 46 and 47—Section 172(1) statement

91, 94 and 95—Colleague engagement

Relevant information is also in the Corporate Governance Report

on pages 98 and 99

Engagement with customers,

suppliersand others

88 to 97—Stakeholder engagement

Relevant information is also in this Directors’ Report on page 153

Important events affecting

theGroupafter the year end

9 and 11 of the Strategic Report

155 of the Directors’ Report

Note 16 of the financial statements on page 247

Corporate governance statement

The DTRs require certain information to be included in a corporate governance statement in the Directors’ Report. This

information can be found in the Corporate Governance report on pages 70 to 151, which is incorporated into this Directors’

Report by reference, and in the case of the information referred to in DTR 7.2.6, in this Directors’ Report.

Disclosure of information under UK Listing Rule 6.6.1R

Sub-section of

Listing Rule 6.6.1.R Detail

Page

Reference

6 Allotments of shares for cash pursuant to the Group employee share schemes 234 to 239

11,12 Shareholder waiver of dividend 156

Results and dividends

The results for the financial year are set out on pages 159 to 259.

Full details of the proposed final dividend payment for the year ended 30 September 2025 are set out on page 242. The Board

is proposing a final dividend of 14.40p per share, following the payment of an interim dividend of 7.45p per share on 27 June

2025 . The proposed total dividend for the year is therefore 21.85p per share.

Directors’ Report

152

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Going concern

After making enquiries, the Directors have a reasonable expectation that Sage has adequate resources to continue in operational

existence over the 18 months to 31 March 2027 (the going concern assessment period). Accordingly, they continue to adopt the going

concern basis in preparing the financial statements. In reaching this conclusion, the Directors have had due regard to the following:

• The Group has a robust balance sheet with £1.0bn of cash and available liquidity as at 30 September 2025 and strong underlying

cash conversion of 110%, reflecting the strength of the subscription business model. Further information on the available

cash resources, including the undrawn revolving credit facility and committed bank facilities, is provided in note 11 of

thefinancial statements on pages 219 to 222.

• The financial position of Sage, its cash flows, financial risk management policies and available debt facilities, which are

described in the financial statements, and Sage’s business activities, together with the factors likely to impact its future

growth and operating performance, which are set out in the Strategic Report on pages 48 to 55.

• The Directors have reviewed liquidity forecasts for the Group for the period to 31 March 2027 (the going concern assessment

period), which reflect the expected impact of economic conditions on trading. In doing so, the Directors have also reviewed

the extent to which the macro-economic environment has been considered in building assumptions to support the forecasts.

Stress testing has been performed with the impact of severe increases in churn and significantly reduced levels of new

customer acquisition and sales to existing customers being considered.

Viability Statement

The full Viability Statement and the associated explanations made in accordance with Provision 31 of the 2018 UK Corporate

Governance Code can be found on pages 67 and 68.

Research and development

During the year, the Group incurred a cost of £379m (2024: £344m) in respect of research and development. Please see note 3.2

of the financial statements on page 194 for further details.

Political donations

No political donations were made in the year.

Relating to the Company’s stakeholders

Employment policy

The Group remains dedicated to fostering a diverse, equitable and inclusive workplace, valuing the unique culture, identity

and experience that each colleague brings. This applies across all the Group’s employment activities ranging from recruitment

to retirement, with candidates and colleagues treated with dignity, care and respect, regardless of their characteristics, identities,

backgrounds, opportunity or lived experiences. In fostering an inclusive culture, the Group ensures that there is no bias or

discrimination in the treatment of persons with disabilities. Applications for employment are welcomed from persons with

disabilities and adjustments are made in consultation with the applicant to ensure that fair opportunity is given so that they

can demonstrate their suitability for the role. Wherever possible, Sagewill undertake any adjustments or retraining required

for any colleague who becomes disabled during theiremployment within the Group. Further details of the Board’s DEI Policy

can be found on page 107, and informationregarding workforce diversity is provided on pages 27, 28, and 108.

Engagement with colleagues

The Group remains strongly committed to engaging with colleagues by ensuring availability of information and consulting

with them on matters of concern to them. Colleagues regularly receive updates on the financial and economic factors

affecting the Group, and the Group regularly seeks direct feedback from colleagues. Many colleagues choose to participate in

the Company’s voluntary all-employee share plans (in eligible countries) and/or may be awarded free shares under the Company’s

discretionary share plans, including a long-term performance share plan. Further details regarding colleague engagement,

our Board Associate and how the Directors have had regard to colleague interests during the year are provided on pages 91, 94

and 95, and 98 and 99 respectively.

Engagement with other stakeholders

Details of engagement with Sage’s other key stakeholders, information on how the Directors have considered their interests

and the effect of that consideration on principal decisions taken by the Board during the year are provided in the Governance

report on pages 88 to 97.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

153

Relating to the Company’s shares

Major shareholdings

As at 30 September 2025, Sage had been notified by the following investors of their interest in its ordinary share capital,

inaccordance with the DTRs:

Name Ordinary shares Percentage of capital

Nature of holding

Aviva Plc 30,110,692 2.99 Direct

BlackRock, Inc. 64,021,267 5.90 Indirect

The Capital Group Companies, Inc. 51,198,348 5.10 Indirect

Lindsell Train Limited 50,214,000 4.97 Indirect

FIL Limited

50,373,561 4.92 Direct and Indirect

FMR LLC 42,556,657 4.22 Indirect

Notes:

1. Percentage as at date of notification. Notification is required when the percentage of voting rights (through shares and financial instruments) held by a

person reaches, exceeds or falls below an applicable threshold specified in the DTRs.

2. In the period from 30 September 2025 to the date of this report, notification was received from FIL Limited regarding an increase in their interest to above

the five per cent threshold, as duly announced on 3 October 2025.

Information provided to Sage under the DTRs is publicly available via the regulatory information service and on Sage’s

website at sage.com.

Share capital

Sage’s share capital is set out on page 233. Sage has a single class of share capital, which is divided into ordinary shares

of1

pence each.

Rights and obligations attaching to shares

Voting

In a general meeting of Sage, the provisions of the Companies Act 2006 apply in relation to voting rights, subject to the

provisions of the articles of association and to any special rights or restrictions as to voting attached to any class of

sharesin Sage (of which there are none). In summary:

• On a show of hands, each qualifying person (being an individual who is a member of Sage, a person authorised to act as

therepresentative of a corporation or a person appointed as a proxy of a member) shall have one vote, except that a proxy

has one vote for and one vote against a resolution if the proxy has been appointed by more than one member and has been

given conflicting voting instructions by those members or has been given discretion as to how to vote; and

• On a poll, every qualifying person shall have one vote for every share which they hold or represent.

No member shall be entitled to vote at any general meeting or class meeting in respect of any shares held by them if any

callor other sum then payable by them in respect of that share remains unpaid. Currently, all issued shares are fully paid.

Deadlines for voting rights

Full details of the deadlines for exercising voting rights in respect of the resolutions to be considered at the Annual General

Meeting to be held on 5 February 2026 will be set out in the Notice of Annual General Meeting.

Dividends and distributions

Subject to the provisions of the Companies Act 2006, Sage may, by ordinary resolution, declare a dividend to be paid to the

members and may fix the time for payment of such dividend, but no dividend shall exceed the amount recommended by the Board.

The Board may pay interim dividends, and also any fixed rate dividend, whenever the financial position of Sage justifies its

payment, in the opinion of the Board. All dividends shall be apportioned and paid pro-rata according to the amounts paid up

on the shares.

Liquidation

If Sage is in liquidation, the liquidator may, with the authority of a special resolution of Sage and any other authority required

by the statutes (as defined in the articles of association):

• Divide among the members in specie the whole or any part of the assets of Sage; or

• Vest the whole or any part of the assets in trustees upon such trusts for the benefit of members as the liquidator shall think

fit but no member shall be compelled to accept any assets upon which there is any liability.

Transfer of shares

Subject to the articles of association, any member may transfer all or any of their certificated shares by an instrument

oftransfer in any usual form or in any other form which the Board may approve. The Board may, in its absolute discretion,

decline to register any instrument of transfer of a certificated share which is not a fully paid share (although not so as to

prevent dealings in shares taking place on an open and proper basis) or on which Sage has a lien.

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154

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

The Board may also decline to register a transfer of a certificated share unless the instrument of transfer is: (i) left at Sage’s

Registered Office, or at such other place as the Board may decide, for registration; and (ii) accompanied by the certificate

forthe shares to be transferred and such other evidence (if any) as the Board may reasonably require to prove the title of the

intending transferor or his or her right to transfer the shares.

The Board may permit any class of shares in Sage to be held in uncertificated form and, subject to the articles of association,

title to uncertificated shares to be transferred by means of a relevant system and may revoke any such permission. Registration

of a transfer of an uncertificated share may be refused where permitted by the statutes (as provided in the articles of association).

Powers of the Company to buyback its own shares

In line with common practice for listed companies, Sage requests shareholder authority at its Annual General Meeting (‘AGM’)

each year to permit the Company to buy back its ordinary shares of 1⁴/₇₇ pence (‘ordinary shares’) in the market (the ‘Buyback

Authorities’). Sage obtained shareholder authority at the AGM held on 6 February 2025 to buy back up to 100,394,226 ordinary

shares in the market (the ‘2025 Buyback Authority’). The 2025 Buyback Authority replaced the shareholder authority obtained

at the AGM held on 1 February 2024 to buy back up to 102,607,262 ordinary shares in the market, which expired at the 2025 AGM

(the ‘2024 Buyback Authority’).

Pursuant to a share buyback programme which started on 20 November 2024 and ended on 2 June 2025 (the ‘2024/2025 Share

Buyback Programme’), a total number of 32,126,997 ordinary shares were purchased of which 12,529,716 ordinary shares were

purchased using the 2024 Buyback Authority and 19,597,281 ordinary shares were purchased using the 2025 Buyback Authority.

The aggregate amount of consideration paid by Sage for ordinary shares purchased under the 2024/2025 Share Buyback

Programme was £399,999,988.45 andthe average price paid per ordinary share was £12.45.

The 2024/2025 Share Buyback Programme was extended (the ‘Extended Programme’), as announced on 15 May 2025. The

Extended Programme commenced on 3 June 2025 and ended on30 July 2025, with a total of 16,082,393 ordinary shares

purchased using the 2025 Buyback Authority. The aggregate amount of consideration paid by Sage for ordinary shares

purchased under the Extended Programme was £199,999,996.18 and the average price paid per ordinary share was £12.44.

Therefore, the total number of ordinary shares purchased under the 2024/2025 Share Buyback Programme and the Extended

Programme is 48,209,390 (of which 12,529,716 ordinary shares were purchased using the 2024 Buyback Authority and 35,679,674

ordinary shares were purchased using the 2025 Buyback Authority) for an aggregate amount of £599,999,984.63. All of the

purchased ordinary shares were subsequently cancelled.

The shares purchased during FY25 represent approximately 4.71% of the called-up share capital of the Company as at 30 September

2025. The 2024/2025 Buyback Programme and the Extended Programme were consistent with Sage’s disciplined capital allocation

policy, andreflected the Board’s confidence in Sage’s future prospects, together with Sage’s strong cash generation and robust

financial position. Please refer to pages 48 to 55 and note 13.4 on page 241 for further information.

Alongside our FY25 results, we are announcing a share buyback programme of up to £300 million, running from 19 November

2025 andexpected to end no later than 19 March 2026 (the ‘2025/2026 Buyback Programme’). The 2025/2026 Buyback Programme

ispermitted under the 2025 Buyback Authority, which will expire at the AGM to be held in February 2026. Shareholder approval

will be sought for a similar authority at the 2026 AGM.

Under the terms of the Buyback Authorities, the minimum price which must be paid for each ordinary share is its nominal

value and the maximum price is the higher of an amount equal to 105% of the average of the middle market quotations for

anordinary share as derived from the London Stock Exchange Daily Official List for the five business days immediately

before the purchase is made and an amount equal to the higher of the price of the last independent trade of an ordinary

shareand the highest current independent bid for ordinary shares on the trading venue where the purchase is carried out

(ineach case exclusive of expenses).

The 2025/2026 Buyback Programme is consistent with the Group’s disciplined capital allocation policy, and reflects the

Board’s confidence in Sage’s future prospects, together with Sage’s strong cash generation and robust financial position.

Sage continues to have considerable financial flexibility to drive the execution of its growth strategy. Shares repurchased

under the 2025/2026 Buyback Programme will be cancelled. Information on transactions in own shares will be made publicly

available via the regulatory information service and on Sage’s website at sage.com.

Amendment of Sage’s articles of association

Any amendments to Sage’ s articles of association may be made in accordance with the provisions of the Companies Act

2006by way of special resolution. Sage’s articles of association were last amended by special resolution at the AGM held

on4 February 2021.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

155

Relating to the Company’s Board

The Board of Directors

The names and full biography of the current Directors are provided onpages74 to 76. Changes to the Board during the year

and up to the date of this report are set out below.

Name Effective date of appointment/departure

Departure

Sangeeta Anand 6 February 2025

Appointment

Lori Mitchell-Keller 7 February 2025

In addition, as announced in March 2025, Jonathan Howell will step down from the Board on 31 December 2025 and will be

succeeded as Chief Financial Officer by Jacqui Cartin, who will join the Board on 1 January 2026.

Appointment and replacement of Directors

Directors shall be not less than two and no more than 15 in number. Directors may be appointed by Sage by ordinary resolution

or by the Board. A Director appointed by the Board holds office until the next AGM and is then eligible for election by the

shareholders, in accordance with Sage’s articles of association.

The Board may from time to time appoint one or more Directors to hold employment or executive office for such period

(subject to the provisions of the Companies Act 2006) and on such terms as they may determine and may revoke or terminate

any such appointment.

Under the articles of association, at every AGM of Sage, every Director who held office as at seven days before the date of the

Notice of Annual General Meeting shall retire from office (but shall be eligible for election or re-election by the shareholders).

Sage may by special resolution (or by ordinary resolution of which special notice has been given) remove, and the Board may

by unanimous decision remove, any Director before the expiration of his or her term of office. The office of Director shall

bevacated if: (i) he or she resigns; (ii) he or she has become physically or mentally incapable of acting as a director and may

remain so for more than three months and the Board resolves that his or her office is vacated; (iii) he or she is absent without

permission of the Board from meetings of the Board for six consecutive months and the Board resolves that his or her office is

vacated; (iv) he or she becomes bankrupt or makes an arrangement or composition with his or her creditors generally; (v) he or

she is prohibited by law from being a director; or (vi) he or she is removed from office pursuant to the articles of association.

Directors’ Interests

A list of Directors’ interests in the ordinary share capital of Sage, their interests in its long-term Performance Share Plan

andDeferred Share Bonus Plan, and details of their options over the ordinary share capital of Sage are given in the Directors’

Remuneration Report on pages 117 to 151.

No Director had a material interest in any significant contract, other than a service contract or contract for services, with

Sage or any of its operating companies at any time during the year.

Directors Indemnities and Insurance

Sage maintains Directors’ and Officers’ liability insurance, which provides appropriate cover for legal action brought against

its Directors. Sage has also granted indemnities (which are qualifying third-party indemnity provisions under the Companies

Act 2006) to each member of the Board, under which it has agreed to indemnify the Directors to the extent permitted by law

and by Sage’s articles of association, in respect of all liabilities incurred in connection with the performance of their duties

as a Director of Sage or any of its subsidiaries. These indemnities were in force throughout the financial year and remain in

force as at the date of this report. Neither these indemnities, nor the Directors’ and Officers’ insurance provide cover in the

event that a Director is proven to have acted fraudulently or dishonestly.

Powers of the Directors

The business of Sage will be managed by the Board which may exercise all the powers of Sage, subject to the provisions of

Sage’s articles of association, the Companies Act 2006 and any resolution of Sage. Authority is sought from shareholders at

each AGM to grant the Directors powers, in line with institutional shareholder guidelines and relevant legislation, in relation

to the issue and buyback by the Company of its shares.

Shares held in the Employee Benefit Trust

The trustee of The Sage Group plc. Employee Benefit Trust (‘EBT’) has agreed not to vote any shares held in the EBT at any

general meeting. If any offer is made to shareholders to acquire their shares, the trustee will not be obliged to accept or

rejectthe offer in respect of any shares which are subject to subsisting awards, but will have regard to the interests of the

award holders and will have power to consult them to obtain their views on the offer. Subject to the above, the trustee may

takeaction with respect to any offer it thinks fair. The trustee has waived its right to dividends on the shares held in the EBT.

Directors’ Report continued

156

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Relating to other matters

Significant agreements

The following significant agreements contain provisions entitling the counterparties to exercise termination or other rights

in the event of a change of control of Sage:

• Under the terms of (i) the €500m 3.820 per cent guaranteed Notes due 15 February 2028 (issued under Sage’s EMTN Programme);

(ii) the £350m 1.625 per cent guaranteed Notes due 25 February 2031; (iii) the £400m 2.875 per cent guaranteed Notes due

8 February 2034,and (iv) the £300m 5.625 per cent Notes due 5 March 2037 (issued under Sage’s EMTN Programme) , which

are all issued by the Company and guaranteed by Sage Treasury Company Limited, a Noteholder has the right to require

theCompany to redeem or repay its Notes on a change of control of the Company where at the time of the occurrence of

thechange of control:

i) the Notes then in issue carry, on a solicited basis, an investment-grade credit rating, which is either downgraded to

non-investment grade or withdrawn (so long as the Notes are not upgraded or reinstated to an investment-grade rating

bythe relevant rating agency, or a replacement investment-grade rating of another rating agency on a solicited basis is

not obtained, in each case within a set period of time), and the relevant rating agency confirms that its rating decision

resulted, in whole or in part, from the occurrence of the change of control; or

ii) the Notes then in issue carry a non-investment grade credit rating from each rating agency then assigning a credit

rating on a solicited basis or no credit rating from any rating agency on a solicited basis.

• Under the terms of the Notes, ‘change of control’ is defined as:

i) any person or any persons acting in concert (as defined in the City Code on Takeovers and Mergers), other than a

holdingcompany (as defined in Section 1159 of the Companies Act 2006, as amended), whose shareholders are or

aretobesubstantially similar to the pre-existing shareholders of the Company, shall become interested (within

themeaning ofPart 22 of the Companies Act 2006, as amended) in (x) more than 50 per cent. of the issued or allotted

ordinary share capital of the Company or (y) shares in the capital of the Company carrying more than 50 per cent. of

thevoting rights normally exercisable at a general meeting of the Company; or

ii) Sage Treasury Company Limited ceases to be a direct or indirect subsidiary of the Company.

• Under a £630m five-year multi-currency revolving credit facility agreement, dated 13 December 2022, and made between,

amongst others, Sage Treasury Company Limited and the facility agent, and guaranteed by the Company, on a change of

control, if any individual lender so requires and after having consulted with Sage Treasury Company Limited in good faith

for not less than 30 business days following the change of control, the facility agent shall, by not less than 10 business days’

notice to Sage Treasury Company Limited, cancel the commitment of that lender and declare the participation of that lender

in all outstanding loans, together with accrued interest and all other amounts accrued under the finance documents,

immediately due and payable, whereupon the commitment of that lender will be cancelled and all such outstanding

amounts will become immediately due and payable. In respect of this revolving credit facility agreement, “control”

isdefined as per Sections 450 and 451 of the Corporation Taxes Act 2010.

• The platform reseller agreement, dated 31 January 2015, relating to the Company’s strategic arrangements with Salesforce.com

EMEA Limited contains a change of control right enabling Salesforce to terminate the agreement in the event there is a

change of control in favour of a direct competitor of Salesforce.com EMEA Limited. The agreement contains post-termination

requirements upon Salesforce to support a transition for up to a specified period. In respect of the platform reseller

agreement with Salesforce.com EMEA Limited, “change of control” occurs where a corporate transaction results in the

owners of the subject entity owning less than 50% of the voting interests in that entity as a result of the corporate transaction.

• All of Sage’s employee share plans contain provisions relating to a change of control of The Sage Group plc. Outstanding

awards and options may vest/become exercisable on a change of control, subject to the satisfaction of any applicable

performance conditions and time pro-rating.

Branch

The Group, through various subsidiaries, has a branch in France. Further details are included in note 17 on pages 248 to 251.

Financial risk management

The Group’s exposure to and management of capital, liquidity, credit, interest rate and foreign currency risk are shown in

note12.6 of the financial statements on pages 231 and 232. Our approach to risk management and our Principal Risks can

befound onpages 56 to 66.

Disclaimer

The purpose of this Annual Report and Accounts is to provide information to the members of Sage. The Annual Report and

Accounts has been prepared for, and only for, the members of Sage, as a body, and no other persons. Sage, its Directors and

employees, agents or advisors do not accept or assume responsibility to any other person to whom this document is shown

orinto whose hands it may come and any such responsibility or liability is expressly disclaimed. The Annual Report and

Accounts contains certain forward-looking statements with respect to the operations, performance and financial condition

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

157

of the Group. By their nature, these statements involve uncertainty, since future events and circumstances can cause results

and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information

available at the date of preparation of this Annual Report and Accounts, and Sage undertakes no obligation to update these

forward-looking statements. Nothing in this Annual Report and Accounts should be construed as a profit forecast.

Statement of Directors’ responsibilities

The Directors are responsible for preparing the Annual Report and Accounts, including the Directors’ Remuneration Report

and the financial statements of the Group and the Company, in accordance with applicable laws and regulations. Company law

requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the

Group financial statements in accordance with UK-adopted International Accounting Standards (UK-IFRS) and the Company

financial statements in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting

Practice), including FRS102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”.

Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair

view of the state of affairs of the Group and the Company and of the profit or loss of the Group and the Company for that period.

In preparing these financial statements, the Directors are required to:

• Select suitable accounting policies and apply them consistently;

• Make judgements and estimates that are reasonable and prudent;

• State whether, for the Group, applicable UK-IFRS have been followed, subject to any material departures disclosed and

explained in the financial statements;

• State whether, for the Company, applicable United Kingdom Accounting Standards (United Kingdom Generally Accepted

Accounting Practice), including FRS 102 (The Financial Reporting Standard applicable in the UK and Republic of Ireland)

have been followed, subject to any material departures disclosed and explained in the financial statements; and

• Prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Group and

theCompany will continue in business.

The Directors are responsible for the maintenance and integrity of Sage’s website. Legislation in the United Kingdom

governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors as at the date of this report, whose names and functions are listed on pages 74 to 76, confirm that:

• To the best of their knowledge, the Group’s financial statements, which have been prepared in accordance with UK-adopted

International Accounting Standards (UK-IFRS), give a true and fair view of the assets, liabilities, financial position and

profit or loss of the Group;

• To the best of their knowledge, the Company’s financial statements, which have been prepared in accordance with United

Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 (The

Financial Reporting Standard applicable in the UK and Republic of Ireland), give a true and fair view of the assets,

liabilities, financial position and profit or loss of the Company; and

• To the best of their knowledge, the Directors’ Report and the Strategic Report include a fair review of the development and

performance of the business and the position of the Group and the Company, together with a description of the Principal

Risks and uncertainties that it faces.

Each Director as at the date of this report further confirms that:

• So far as the Director is aware, there is no relevant audit information of which the Group’s and the Company’s auditor is

unaware; and

• The Director has taken all the steps that they ought to have taken as a Director to make himself/herself aware of any relevant

audit information and to establish that the Group’s and the Company’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

In addition, the Directors as at the date of this report consider that the Annual Report and Accounts, taken as a whole, is fair,

balanced and understandable and provides the information necessary for shareholders to assess the Company’s and the

Group’s position, performance, business model and strategy.

By Order of the Board

Vicki Bradin

Company Secretary 18 November 2025

The Sage Group plc. Company number 02231246

Directors’ Report continued

158

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

FINANCIAL

STATEMENTS

Financial statements

160 Independent Auditor’s Report to the members of The Sage Group plc.

Consolidated financial statements

174 Consolidated income statement

175 Consolidated statement of comprehensive income

176 Consolidated balance sheet

177 Consolidated statement of changes in equity

179 Consolidated statement of cash flows

Notes to the consolidated financial statements

180 1. Basis of preparation and accounting estimates and judgements

185 2. Segment information

191 3. Profit before income tax

201 4. Income tax expense

203 5. Earnings per share

204 6. Intangible assets

210 7. Property, plant and equipment

212 8. Working capital

215 9. Prov isions

217 10. Deferred income tax

219 11. Cash flow and net debt

223 12. Financial instruments

233 13. Equity

243 14. Acquisitions and disposals

247 15. Related party transactions

247 16. Events after the balance sheet date

248 17. Group undertakings

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

159

KPMG LLP’s Independent

Auditor’s Report

To the members of The Sage Group plc

1. Our opinion is unmodified

In our opinion:

• the financial statements of The Sage Group plc give a true and fair view of the state of the Group’s and of the Parent

Company’s affairs as at 30 September 2025, and of the Group’s profit for the year then ended;

• the Group financial statements have been properly prepared in accordance with UK-adopted international

accounting standards;

• the Parent Company financial statements have been properly prepared in accordance with UK accounting standards,

including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; and

• the Group and Parent Company financial statements have been prepared in accordance with the requirements of the

Companies Act 2006.

ADDITIONAL OPINION IN RELATION TO IFRS AS ISSUED BY THE IASB

As explained in note 1 to the Group financial statements, the Group, in addition to applying UK-adopted international

accounting standards, has also applied IFRS Accounting Standards as issued by the International Accounting Standards

Board (“IASB”).

In our opinion, the Group financial statements have been properly prepared in accordance with IFRS Accounting Standards as

issued by the IASB.

What our opinion covers

We have audited the Group and Parent Company financial statements of The Sage Group plc (“the Company”) for the year

ended 30 September 2025 (FY25) included in the Annual Report and Accounts 2025, which comprise:

Group (The Sage Group plc and its subsidiaries) Parent Company (The Sage Group plc)

• Consolidated income statement;

• Consolidated statement of comprehensive income;

• Consolidated balance sheet;

• Consolidated statement of changes in equity;

• Consolidated statement of cash flows; and

• Notes 1 to 17 to the Group financial statements, including

the accounting policies in note 1.

• Company balance sheet;

• Company statement of changes in equity; and

• Notes 1 to 7 to the Parent Company financial statements,

including the accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our

responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate

basis for our opinion. Our audit opinion and matters included in this report are consistent with those discussed and included

in our reporting to the Audit and Risk Committee (“ARC”).

We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical

requirements including the FRC Ethical Standard as applied to listed public interest entities.

160

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

2. Overview of our audit

Factors driving

our view of risks

Our assessment of risks was shaped by a dynamic external

environment, including geopolitical tensions, macroeconomic

shifts, and evolving stakeholder and investor expectations.

Internal factors such as performance pressures also contributed

to potential financial reporting and operational risks. These

elements collectively informed our audit focus and risk

assessment approach.

The Group uses multiple IT systems to process a high volume

oftransactions in order to recognise revenue for the period,

resulting in an area where significant audit effort was required

and, consequently, was identified as a Key Audit Matter for

theGroup.

The carrying amount of investments in subsidiaries held at cost

in The Sage Group plc’s accounts is a material proportion of its

total company assets and, hence, is a Key Audit Matter for The

Sage Group plc accounts only.

Key Audit Matters Item

Revenue recognition

(Group) 4.1

Recoverability

ofinvestments

insubsidiaries

(ParentCompany) 4.2

Audit and Risk

Committee

(‘ARC’)

interaction

During the year, the ARC met four times. KPMG attended all ARC meetings and are provided with

anopportunity to meet with the ARC in private sessions without the Executive Directors being

present. For each Key Audit Matter, we have set out communications with the ARC in item 4,

including matters that required particular judgement for each.

The matters included in the Report of the Audit and Risk Committee on page 109 to 111 are

materially consistent with our observations of those meetings.

Our

independence

We have fulfilled our ethical responsibilities under, and

weremain independent of the Group in accordance with,

UKethical requirements including the FRC Ethical Standard

as applied to listed public interest entities.

We have not performed any non-audit services during

FY25orsubsequently which are prohibited by the FRC

EthicalStandard.

We were first appointed as auditor by the shareholders

fortheyear ended 30 September 2025. The period of total

uninterrupted engagement is for the one financial year

ended30 September 2025.

The Group engagement partner is required to rotate every

fiveyears. As these are the first set of the Group’s financial

statements signed by Simon Richardson, he will be required

to rotate off after the FY29 audit.

All component engagement partners have a tenure of one year.

Total audit fee £5.3m

Audit related

fees(including

interim review)

£0.5m

Other services £Nil

Non-audit fee as a %

of total audit and

audit related fee %

Date first appointed 6 February 2025

Uninterrupted

audittenure

1 year

Next financial

periodwhich

requires a tender

2035

Tenure of Group

engagement partner

1 year

Tenure of component

engagement partners

1 year

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161

KPMG LLP’s Independent Auditor’s Report

To the members of The Sage Group plc continued

Materiality

(item 6 below)

The scope of our work is influenced by our view of

materiality and our assessed risk of material misstatement.

We have determined overall materiality for the Group

financial statements as a whole at £22.0m and for the

Parent Company financial statements as a whole at £20.0m.

We have determined that the Group’s normalised profit

before tax from continuing operations (‘PBTCO’) is the

benchmark for the Group. This is appropriate given the

sector in which the Group operates, its ownership, and the

focus of users. As such, we based our Group materiality on

the Group’s normalised PBTCO, of which it represents 4.6%.

Materiality for the Parent Company financial statements

was determined with reference to a benchmark of Parent

Company’s total assets, of which it represents 0.4%.

Materiality levels used in our audit

Group

GPM

AMPT

HCM

LCM

PLC

22.0

16.5

1.1

16.0

2.4

FY25 £m

20.0

Group Group Materiality

GPM Group Performance Materiality

AMPT Audit Misstatement Posting

Threshold

HCM Highest Component Materiality

LCM Lowest Component Materiality

PLC Parent Company Materiality

Group scope

(item 7 below)

We performed risk assessment procedures to determine

which of the Group’s components are likely to include

risks of material misstatement to the Group financial

statements, what audit procedures to perform at these

components and the extent of involvement required

from our component auditors around the world.

We scoped in:

• Four components (UK, France, North America and

Sage Intacct North America) as quantitatively

significant components; and

• Five other components where we performed

procedures to obtain further audit coverage.

Certain Group transactions originate in various

countries and are processed at the Group’s operating

centres in the US, UK and South Africa. We established

audit teams to perform centralised testing on behalf

ofour component teams in these locations.

In addition, for the remaining components for which

weperformed no audit procedures, we carried out

analysis at an aggregated Group level to reassess our

assessment that there is not a reasonable possibility

ofa material misstatement within these components.

We performed audit procedures in relation to

components that accounted for 83% of Group profit

before tax, and the Parent Company which accounted

for 4% of the Group profit before tax. These components

accounted for 89% of Group total assets (excluding

goodwill and intangibles).

We consider the scope of our audit, as communicated

tothe Audit and Risk Committee, to be an appropriate

basis for our audit opinion.

Coverage of Group

financialstatements

Our audit procedures covered

85%ofGroup revenue:

Group

Revenue

85%

162

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

The impact of

climate change

on our audit

In planning our audit, we considered the potential impacts of risks arising from climate change

on the Group’s business and its financial statements. The Group has set out its targets under its

Net Zero Transition Plan to achieve Net Zero by 2040 and reduce Scope 1, 2, and 3 GHG emissions

by 50% by 2030, from a 2019 base year, aligned to SBTi as disclosed on page 41.

In Note 1 to the consolidated financial statements, the Group has explained how they have

reflected the impact of climate change in their financial statements including how this aligns

with their commitment to achieve net zero emissions by 2040. As described in Note 1, there were

no factors identified that would have a material impact on the Group’s accounting estimates

andjudgements in the current year. The considerations in relation to goodwill impairment

testing are set out in note 6.1.

We have evaluated management’s assessment of the impact of climate-related risks, physical

andtransition risks and their climate-related commitments and assessed whether the impact

ofclimate change has been appropriately reflected by management in reaching their judgements

in relation to modelling future cash flows used in the assessments of goodwill impairment, going

concern and viability and associated disclosures. As part of this evaluation, we performed our

risk assessment to determine if the potential impacts of climate change may materially affect

the financial statements and our audit. We did this by making inquiries of management and

inspecting internal and external reports in order to independently assess the climate-related

risks and their potential impact. We also held discussions with our own climate change

professionals to challenge our risk assessment.

Based on our work, we determined that climate-related risks did not have a significant impact

onour audit and there is no significant impact of these risks on our Key Audit Matters.

We have also read the Group’s disclosures of climate related information in the Strategic Report

and considered consistency with the financial statements and our audit knowledge.

3. Going concern, viability and principal risks and uncertainties

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group

or the Parent Company or to cease their operations, and as they have concluded that the Group’s and the Parent Company’s

financial position means that this is realistic. They have also concluded that there are no material uncertainties that could

have cast significant doubt over their ability to continue as a going concern for at least a year from the date of approval of

thefinancial statements (“the going concern period”).

Going concern

We used our knowledge of the Group, its industry, and the general

economic environment to identify the inherent risks to its business

model and analysed how those risks might affect the Group’s

andParent Company’s financial resources or ability to continue

operations over the going concern period. The risks that we

considered most likely to adversely affect the Group’s and Parent

Company’s available financial resources over this period were:

• Non-renewal of subscriptions by existing customers (‘churn’)

• Decrease in the acquisition of new customers due to competition

We considered whether these risks could plausibly affect the

liquidity in the going concern period, including by assessing the

degree of downside assumptions that, individually and collectively,

could result in a liquidity issue, taking into account the Group’s

current and projected cash and facilities (a reverse stress test).

We also considered whether the going concern disclosure in note 1

tothe financial statements gives a full and accurate description of

the directors’ assessment of going concern, including the identified

risks, dependencies, and related sensitivities.

Accordingly, based on those procedures, we found the directors’

useof the going concern basis of accounting without any material

uncertainty for the Group and Parent Company to be acceptable.

However, as we cannot predict all future events or conditions and

assubsequent events may result in outcomes that are inconsistent

with judgements that were reasonable at the time they were made,

the above conclusions are not a guarantee that the Group or the

Parent Company will continue in operation.

Our conclusions

• We consider that the directors’ use of the going

concern basis of accounting in the preparation

ofthe financial statements is appropriate;

• We have not identified, and concur with the

directors’ assessment that there is not, a material

uncertainty related to events or conditions that,

individually or collectively, may cast significant

doubt on the Group’s or Parent Company’s ability

to continue as a going concern for the going

concern period;

• We have nothing material to add or draw attention

to in relation to the directors’ statement in note 1

to the financial statements on the use of the going

concern basis of accounting with no material

uncertainties that may cast significant doubt over

the Group and Parent Company’s use of that basis

for the going concern period, and we found the

going concern disclosure in note 1 to be

acceptable; and

• The related statement under the UK Listing Rules

set out on page 153 is materially consistent with

the financial statements and our audit knowledge.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

163

KPMG LLP’s Independent Auditor’s Report

To the members of The Sage Group plc continued

Disclosures of emerging and principal risks and longer-term viability

Our responsibility

We are required to perform procedures to identify whether there

isa material inconsistency between the directors’ disclosures

inrespect of emerging and principal risks and the viability

statement, and the financial statements and our audit knowledge.

Based on those procedures, we have nothing material to add or

draw attention to in relation to:

• the directors’ confirmation within the Viability Statement on

page 153 that they have carried out a robust assessment of the

emerging and principal risks facing the Group, including those

that would threaten its business model, future performance,

solvency and liquidity;

• the Principal Risks and Uncertainties disclosures describing

these risks and how emerging risks are identified and explaining

how they are being managed and mitigated; and

• the directors’ explanation in the Viability Statement of how they

have assessed the prospects of the Group, over what period they

have done so and why they considered that period to be

appropriate, and their statement as to whether they have a

reasonable expectation that the Group will be able to continue in

operation and meet its liabilities as they fall due over the period

of their assessment, including any related disclosures drawing

attention to any necessary qualifications or assumptions.

We are also required to review the Viability Statement set out on page

67 and 68 under the UK Listing Rules.

Our work is limited to assessing these matters in the context of only

the knowledge acquired during our financial statements audit. As we

cannot predict all future events or conditions and as subsequent

events may result in outcomes that are inconsistent with judgements

that were reasonable at the time they were made, the absence

ofanything to report on these statements is not a guarantee

astotheGroup’s and Parent Company’s longer-term viability.

Our reporting

We have nothing material to add or draw

attentiontoin relation to these disclosures.

We have concluded that these disclosures

arematerially consistent with the financial

statements and our audit knowledge.

4. Key audit matters

What we mean

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the

financial statements and include the most significant assessed risks of material misstatement (whether or not due to

fraud) identified by us, including those which had the greatest effect on:

• the overall audit strategy;

• the allocation of resources in the audit; and

• directing the efforts of the engagement team.

164

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

We include below the Key Audit Matters together with our key audit procedures to address those matters and our results from

those procedures. These matters were addressed, and our results are based on procedures undertaken, for the purpose of our

audit of the financial statements as a whole. We do not provide a separate opinion on these matters.

4.1 Revenue recognition (Group)

Financial Statement Elements Our results

FY25 FY24

FY25: Acceptable

Revenue £2,513m £2,332m

Description of the Key Audit Matter Our response to the risk

Revenue Recognition

Revenue mainly comprises revenue from subscription

services, and maintenance and support services; and is

typically recognised over the contractual term.

Revenue is computed and recorded across multiple IT

systems that process a high volume of relatively low-value

transactions. Aggregated systematic errors in revenue

recognition could result in incorrect reporting of revenue.

The size of revenue, the fact that it is computed and

recorded across multiple IT systems is reflected in the

allocation of our resources when planning and executing

the audit across the Group.

Our procedures to address the risk included:

• Walkthroughs and controls. We performed walkthroughs

of each significant class of revenue transaction. However,

we did not test the operating effectiveness of any process

level controls.

• Test of details (data analytics). We primarily adopted a

data analytics approach for testing the revenue recognised

in the UK, North America and Sage Intacct North America

components. Our procedures involved testing the full

population of transaction data covering the majority

ofthebilling systems at these components and included

acorrelation analysis between invoiced revenue,

receivables, cash, deferred revenue and revenue

recognised. Where any postings did not follow our

expectations, we inspected their validity by agreeing a

sample of transactions to underlying documents such as

signed contracts, sales invoices and related cash receipt.

• Test of details (non-data analytics). For all other

components where revenue was in-scope, and for billing

systems in the UK component not in scope for data

analytics approach, we tested a statistical sample of

revenue postings by inspecting their validity to underlying

documents such as signed contracts or other appropriate

evidence, recalculated the revenue for the period for the

sample, and compared it to the revenue recognised.

Communications with The Sage Group plc’s Audit and Risk Committee

Our discussions with and reporting to the Audit and Risk Committee included:

• Our approach to the audit of revenue including details of planned substantive procedures (including data analytics)

andthe extent of our control reliance.

• Our conclusions on the appropriateness of the revenue recognised for the period.

Areas of particular auditor judgement

We did not identify any areas of particular auditor judgement

Our results

The results of our testing were satisfactory and we considered the amount of revenue recognised to be acceptable.

Further information in the Annual Report and Accounts: See the Report of the Audit and Risk Committee on page 112 for

details on how the Audit and Risk Committee considered revenue recognition as an area of significant attention, page 192

to194 for the accounting policy on revenue recognition, and note 2.1 and 3.1 for the financial disclosures.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

165

KPMG LLP’s Independent Auditor’s Report

To the members of The Sage Group plc continued

4.2 Recoverability of investments in subsidiaries (Parent Company)

Financial Statement Elements Our results

FY25 FY24

FY25: Acceptable

Investments £3,088m £3,088m

Description of the Key Audit Matter Our response to the risk

Low risk, high value

The carrying amount of the Parent Company’s

investments in subsidiaries represents 65% of

theParentCompany’s total assets.

Their recoverability is not at a high risk of material

misstatement or subject to significant judgement.

However, due to their materiality in the context of the

Parent Company’s financial statements, this is considered

to be the area that had the greatest effect on our overall

Parent Company’s audit.

We performed the tests below rather than seeking to rely on

anyof the Parent Company’s controls because the nature of the

balance is such that we would expect to obtain audit evidence

primarily through the detailed procedures described.

Our procedures included:

• Assessing management’s impairment indicator

assessment: We assessed management’s assessment

forindicators of impairment to understand the relevance

and appropriateness of factors considered by management

in their investment review.

• Assessing the Group goodwill impairment work:

Wereferred to the conclusions reached in the Group

goodwill impairment work to assess whether they gave

riseto any indications of impairment which would be

relevant in assessing the recoverability of Parent

Company’s investment in subsidiaries.

• Assessing component audits: Assessing the work

performed by the component auditors on all components

andconsidering the results of that work on those

components’ profits and net assets.

• Our sector experience: We evaluated the current level

oftrading, including identifying any indications of a

downturn in activity considering our knowledge of the

Group and the industry.

Communications with The Sage Group plc’s Audit and Risk Committee

Our discussions with and reporting to the Audit and Risk Committee included:

• Our approach to the audit of the recoverability of the Parent Company’s investments in subsidiaries

• Our conclusion from our assessment of the impairment indicators based on the procedures stated above.

Areas of particular auditor judgement

We did not identify any area of particular auditor judgement.

Our results

The results of our testing were satisfactory and we found the Parent Company’s conclusion that there is no impairment

ofits investments in subsidiaries to be acceptable.

Further information in the Annual Report and Accounts: See page 255 for the accounting policy on investments in

subsidiaries, and note 2 to the Parent Company’s financial statements for the financial disclosures.

166

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

5. Our ability to detect irregularities, and our response

Fraud – identifying and responding to risks of material misstatement due to fraud

Fraud risk

assessment

To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or

conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity

to commit fraud. Our risk assessment procedures included:

• Enquiring of directors, the Audit and Risk Committee, internal audit and inspection of policy

documentation as to the Group’s high-level policies and procedures to prevent and detect

fraud, including the internal audit function, and the Group’s channel for “whistleblowing”,

aswell as whether they have knowledge of any actual, suspected or alleged fraud.

• Reading Board and Audit and Risk Committee minutes.

• Considering remuneration incentive schemes and performance targets for management

anddirectors.

• Using analytical procedures to identify any unusual or unexpected relationships.

• Using our own forensic professionals with specialised skills and knowledge to assist us

inidentifying the fraud risks based on discussions of the circumstances of the Group.

Risk

communications

We communicated identified fraud risks throughout the audit team and remained alert to any

indications of fraud throughout the audit. This included communication from the Group auditor

to component auditors of relevant fraud risks identified at the Group level and requesting

component auditors to perform procedures at the component level to report to the Group

auditorany identified fraud risk factors or identified or suspected instances of fraud.

Fraud risks

As required by auditing standards, and taking into account possible pressures to meet

performance targets, we performed procedures to address the risk of management override

ofcontrols, in particular the risk that Group and component management may be in a position

tomake inappropriate accounting entries. On this audit, we do not believe there is a fraud risk

related to revenue recognition because of the overall process in place for accounting for the

highvolume and low value revenue transactions and relatively lower and consistent levels of

manual adjustments to revenue. We did not identify any additional fraud risks.

Procedures

toaddress

fraudrisks

In determining the audit procedures, we took into account the results of our evaluation of the

design of some of the Group-wide fraud risk management controls. For further details in respect

of the Group-wide risk management controls refer to the report of the Audit and Risk Committee

on page 114.

We also performed the following procedures:

• Identified journal entries and other adjustments to test at the Group level and at selected

in-scope components based on a determined risk criteria, such as postings to seldom used

accounts or journals posted after the closure of the general ledger, and comparing the

identified entries to supporting documentation.

• Assessing whether the judgements made in making accounting estimates are indicative of

apotential bias.

Laws and regulations – identifying and responding to risks of material misstatement

relating to compliance with laws and regulations

Laws and

regulations risk

assessment

We identified areas of laws and regulations that could reasonably be expected to have a material

effect on the financial statements from our general commercial and sector experience, through

discussion with the directors and other management (as required by auditing standards) and from

inspection of the Group’s regulatory and legal correspondence. We discussed with the directors and

other management the policies and procedures regarding compliance with laws and regulations.

Risk

communications

We communicated identified laws and regulations throughout our team and remained alert

toanyindications of non-compliance throughout the audit. This included communication

fromthe Group auditor to component auditors of relevant laws and regulations identified at the

Group level, and a request for component auditors to report to the Group audit team any instances

of non-compliance with laws and regulations that could give rise to a material misstatement at

the Group level.

Direct laws

context and link

to audit

The potential effect of these laws and regulations on the financial statements varies considerably.

The Group is subject to laws and regulations that directly affect the financial statements including

financial reporting legislation (including related companies legislation), distributable profits

legislation and taxation legislation. We assessed the extent of compliance with these laws and

regulations as part of our procedures on the related financial statement items.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

167

KPMG LLP’s Independent Auditor’s Report

To the members of The Sage Group plc continued

Most significant

indirect law/

regulation areas

The Group is subject to many other laws and regulations where the consequences of non-compliance

could have a material effect on amounts or disclosures in the financial statements, for instance

through the imposition of fines or litigation or the loss of the Group’s license to operate.

Weidentified the following areas as those most likely to have such an effect:

• Data protection laws (requirements from existing data privacy laws)

• Anti-bribery (reflecting the Group’s use of business partners for generating revenue

aswellasvarious incentive plans for business partners)

• Employment law (reflecting the Group’s geographically diverse workforce)

• Contract legislation (reflecting the Group’s use of trademarks, copyrights and patents)

Auditing standards limit the required audit procedures to identify non-compliance with these

laws and regulations to enquiry of the directors and other management and inspection of

regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is

not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.

Context

Context of

theability of

the audit to

detect fraud or

breaches of law

or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected

some material misstatements in the financial statements, even though we have properly planned and

performed our audit in accordance with auditing standards. For example, the further removed

non-compliance with laws and regulations is from the events and transactions reflected in the

financial statements, the less likely the inherently limited procedures required by auditing standards

would identify it. In addition, as with any audit, there remained a higher risk of non-detection of

fraud, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the

override of internal controls. Our audit procedures are designed to detect material misstatement.

We are not responsible for preventing non-compliance or fraud and cannot be expected to detect

non-compliance with all laws and regulations.

6. Our determination of materiality

The scope of our audit was influenced by our application of materiality. We set quantitative thresholds and overlay qualitative

considerations to help us determine the scope of our audit and the nature, timing and extent of our procedures, and in

evaluating the effect of misstatements, both individually and in the aggregate, on the financial statements as a whole.

£22m

Materiality

forthe group

financial

statements

asawhole

What we mean

A quantitative reference for the purpose of planning and performing our audit.

Basis for determining materiality and judgements applied

Materiality for the Group financial statements as a whole was set at £22m. This was determined with

reference to a benchmark of Group normalised profit before tax from continuing operations (‘PBTCO’).

We determined that Group normalised PBTCO is the main benchmark for the Group as we consider

profit before tax, excluding certain identified items, as a key indicator of performance and the

basis for earnings, and therefore the primary focus of an investor.

We normalised the Group’s PBTCO by adding back adjustments that do not represent the normal,

continuing operations of the Group. The items we adjusted for were related to reversals of property

restructuring costs and employee related unutilised provisions. As such, we based our Group

materiality on Group normalised PBTCO of £481m.

Our Group materiality of £22m was determined by applying a percentage to the Group normalised

PBTCO. When using a benchmark of the Group’s normalised PBTCO to determine overall materiality,

KPMG’s approach for listed entities considers a guideline range of up to 5% of the measure. In

setting overall Group materiality, we applied a percentage of 4.6% to the benchmark.

Materiality for the Parent Company financial statements as a whole was set at £20m, determined

with reference to a benchmark of Parent Company’s total assets, of which it represents 0.4%.

168

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

£16.5m

Performance

materiality

What we mean

Our procedures on individual account balances and disclosures were performed to a lower

threshold, performance materiality, so as to reduce to an acceptable level the risk that

individually immaterial misstatements in individual account balances add up to a material

amount across the financial statements as a whole.

Basis for determining performance materiality and judgements applied

We have considered performance materiality at a level of 75% of materiality for the Group financial

statements as a whole to be appropriate.

The Parent Company performance materiality was set at £15m, which equates to 75% of materiality

for the Parent Company financial statements as a whole.

We applied this percentage in our determination of performance materiality because we did not

identify any factors indicating an elevated level of risk.

£1.1m

Audit

misstatement

posting

threshold

What we mean

This is the amount below which identified misstatements are considered to be clearly trivial

from a quantitative point of view. We may become aware of misstatements below this threshold

which could alter the nature, timing and scope of our audit procedures, for example if we identify

smaller misstatements which are indicators of fraud.

This is also the amount above which all misstatements identified are communicated to The Sage

Group plc’s Audit and Risk Committee.

Basis for determining the audit misstatement posting threshold and

judgements applied

We set our audit misstatement posting threshold at 5% of our materiality for the Group financial

statements. We also report to the Audit and Risk Committee any other identified misstatements

that warrant reporting on qualitative grounds.

The overall materiality for the Group financial statements of £22m compares as follows to the main financial statement

caption amounts:

Total Group

revenue

FY25

Group profit

before tax

FY25

Total Group

assets

FY25

Financial statement Caption £2,513m £484m £3,713m

Group Materiality as % of caption 0.9% 4.5% 0.6%

7. The scope of our audit

Group scope

What we mean

How the Group auditor determined the procedures to be performed across the Group.

We applied the revised group auditing standards in our audit of the consolidation financial

statements. The revised standard changes how an auditor approaches the identification of

components, and how the audit procedures are planned and executed across components.

In particular, the definition of a component has changed, shifting the focus from how the entity prepares

financial information to how we, as the group auditor, plan to perform audit procedures to address group

risks of material misstatements (“RMMs”). Similarly, the group auditor has an increased role in

designing the audit procedures as well as making decisions on where these procedures are performed

(centrally and/or at component level) and how these procedures are executed and supervised. As a result,

we assess scoping and coverage in a different way and comparison to prior period coverage figures are

not meaningful. In this report, we provide an indication of scope coverage on the new basis.

We performed risk assessment procedures to determine which of the Group’s components are

likely to include RMMs to the Group financial statements and which procedures to perform at

these components to address those risks.

In total, we identified 85 components, having considered our evaluation of the Group’s

operational structure, geographical locations, the consolidation process and our ability

toperform audit procedures centrally.

Of those, we identified four quantitatively significant components (UK, France, North America

and Sage Intacct North America) which contained the largest percentages of either total revenue

or total assets of the Group, for which we performed audit procedures.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

169

KPMG LLP’s Independent Auditor’s Report

To the members of The Sage Group plc continued

Group scope

continued

Additionally, having considered qualitative and quantitative factors, we selected five additional

components with accounts and/or disclosures contributing to the specific RMMs of the Group

financial statements.

The below summarises where we performed audit procedures:

Component type

Number of components

where we performed

audit procedures

Range of

materiality

applied

Quantitatively significant components 4 £8.1m – £16.0m

Other components where we performed procedures 5 £2.4m – £10.3m

Total 9

The Group also operates share service centres (‘operating centres’) that are relevant to our audit in

the UK, US and South Africa. These operating centres perform accounting and reporting activities

alongside related controls and support the Group’s operating entities. Together, these operating

centres process a substantial portion of the Group’s transactions, the outputs of which relate to

financial information of the reporting components they service and therefore they are not separate

reporting components. Each of the operating centres were subject to specified risk-focused audit

procedures, predominantly the testing of transaction processing and key manual process level

controls operated in the operating centres. Additionally, audit procedures were also performed

ontransactions directly processed at the reporting components. The combination of these audit

procedures constitute the audit for group reporting purposes on those reporting components.

We involved component auditors in performing the audit work on all 9 components. We performed

audit procedures on the items excluded from the normalised Group profit before tax used as the

benchmark for our materiality. We set the component materialities having regard to the mix of

size and risk profile of the Group across the components. We also performed the audit of the

parent company.

Our audit procedures covered 85% of Group revenue and we performed audit procedures in relation

to components that accounted for 83% of total profits and losses that made up the Group profit

before tax, and the Parent Company which accounted for 4% of the Group profit before tax. These

components accounted for 89% of Group total assets excluding goodwill and intangible assets.

Goodwill and intangible assets accounted for 65% of Group’s total assets and procedures over

these,mainly in relation to testing for impairment, were directly performed by the group auditor.

We have also performed audit procedures centrally across the Group, in the following areas:

• Consolidation of the financial information;

• Understanding the IT environment across the Group for key billing and accounting systems;

• Journal entry analysis;

• For UK, North America and Sage Intacct North America components, using technology

toperform a recalculation of the revenue recognised to assess the accuracy of revenue

recordedfor the year and perform a matching to cash receipts to assess the existence

oftheunderlying contract;

• Uncertain tax positions;

• Climate considerations and impact on the financial statements.

We also communicated to the component auditors the result of certain audit procedures performed

centrally but relevant to the component auditors, such as result of the central testing of IT systems

and configurations.

For the remaining components for which we performed no audit procedures, no component

represented more than 1% of Group total revenue or 2% of Group total assets (excluding Goodwill

&Intangibles) or more than 7% of total profits and losses that made up the Group profit before tax.

We performed analysis at an aggregated Group level to re-examine our assessment that there is

nota reasonable possibility of a material misstatement in these components.

170

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Group scope

continued

Impact of controls on Group audit

The Group has a number of IT systems linked to financial reporting. We identified three key ledger

systems relevant to the preparation of Group accounts, in addition to the consolidation system.

With the assistance of our IT auditors, we obtained an understanding of these key ledger systems,

which are maintained centrally and are used by many of the components where we performed

audit procedures.

Having considered the efficiency and effectiveness of approaches to gain the appropriate

auditevidence, we took a predominantly substantive approach to the audit. This included a

data-oriented approach to testing key revenue streams using analytical routines. Given that

wedid not plan to rely on IT controls, a direct testing approach was used over the completeness

and reliability of data used in our substantive procedures, including in relation to our testing

ofautomated and manual journals.

Scope of Parent Company audit

We also performed the audit of the parent company. Our audit of The Sage Group plc company

financial statements was undertaken to the materiality level specified in item 6 above and the scope

of the audit work performed was fully substantive due to its nature of being a holding company.

Group auditor

oversight

What we mean

The extent of the Group auditor’s involvement in work performed by component auditors.

As part of establishing the overall Group audit strategy and plan, we conducted the risk assessment

and planning discussion meetings with component auditors to discuss Group audit risks relevant to

the components, including the key audit matter in respect of the recognition of revenue.

Instructions

We instructed the component auditors as to the significant areas to be covered, including the

relevant risks and the information to be reported back. We worked with our component auditors

throughout the audit to maintain an active dialogue and to determine the overall audit response.

We also released audit notices on a regular basis (as needed) to component auditors to provide

continuous updates regarding the overall audit.

Virtual meetings and calls

We held regular virtual meetings with the component auditors across all locations in scope for

group reporting. These meetings were held to understand the business, any updates to the risk

assessment and any issues and findings. The findings reported to us were discussed in more

detail with component auditors and any further work required was then performed either by the

group auditor or by the component auditors, as appropriate.

Global conferences

We hosted a two-day physical conference in London, UK in January 2025 and two virtual conferences

in June and September 2025. These conferences emphasised key areas of the group audit

instructions, facilitated two-way communication and sharing of risk assessment considerations

including group updates, and allowed us to enhance our understanding of the component audits.

• In January, we held our first global conference which was attended by all in-scope component

auditors. This in-person conference enhanced collaboration and the sharing of understanding

of the Group, notably in our first year as the Group auditors. It also facilitated our discussions

around planning and risk assessment, specifically brainstorming the fraud risk assessment,

our initial scoping and an overview of data and analytics tools used in the audit.

• In June, the first virtual conference covered key group developments, key messages regarding

independence, data analytics, and the group team’s involvement with components, specially

under ISA (UK) 600 revised.

• In September, we held a second virtual conference to provide a further update on risk

assessment, the Group’s year-to-date results and reminders for component reporting.

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

171

KPMG LLP’s Independent Auditor’s Report

To the members of The Sage Group plc continued

Group auditor

oversight

continued

Site visits

We visited the component auditors across all in-scope markets to assess the audit risks and

strategy. At these visits, the results of the planning procedures and further audit procedures

communicated to us were discussed in more detail, and any further work required by us was

thenperformed by the component auditors.

Inspection of work papers

We inspected the work performed by the component auditors for the purpose of the Group audit

and evaluated the appropriateness of conclusions drawn from the audit evidence obtained and

consistencies between communicated findings and work performed, with a particular focus on

areas of component level risk assessment, audit procedures performed in relation in revenue,

journal entries and a selection of specific group level audit risks.

8. Other information in the Annual Report

The directors are responsible for the other information presented in the Annual Report together with the financial statements.

Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit

opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

All other information

Our responsibility

Our responsibility is to read the other information and, in doing so, consider

whether, based on our financial statements audit work, the information therein

is materially misstated or inconsistent with the financial statements or our

audit knowledge.

Our reporting

Based solely on that work we have not identified

material misstatements or inconsistencies in

the other information.

Strategic Report and Directors’ Report

Our responsibility and reporting

Based solely on our work on the other information described above we report to you as follows:

• we have not identified material misstatements in the strategic report and the directors’ report;

• in our opinion the information given in those reports for the financial year is consistent with the financial statements; and

• in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Directors’ Remuneration Report

Our responsibility

We are required to form an opinion as to whether the part of the Directors’

Remuneration Report to be audited has been properly prepared in accordance

with the Companies Act 2006.

Our reporting

In our opinion the part of the Directors’

Remuneration Report to be audited has

been properly prepared in accordance

withthe Companies Act 2006.

Corporate Governance disclosures

Our responsibility

We are required to perform procedures to identify whether there is a material

inconsistency between the financial statements and our audit knowledge, and:

• the directors’ statement that they consider that the annual report and

financial statements taken as a whole is fair, balanced and understandable,

and provides the information necessary for shareholders to assess the

Group’s position and performance, business model and strategy;

• the section of the annual report describing the work of the Audit and Risk

Committee, including the significant issues that the Audit and Risk

Committee considered in relation to the financial statements, and how

these issues were addressed; and

• the section of the annual report that describes the review of the

effectiveness of the Group’s risk management and internal control systems.

Our reporting

Based on those procedures, we have

concluded that each of these disclosures

ismaterially consistent with the financial

statements and our audit knowledge.

We are also required to review the part of the Corporate Governance Report

relating to the Group’s compliance with the provisions of the UK Corporate

Governance Code specified by the UK Listing Rules for our review.

We have nothing to report in this respect.

172

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Other matters on which we are required toreport by exception

Our responsibility

Under the Companies Act 2006, we are required to report to you if, in our opinion::

• adequate accounting records have not been kept by the Parent Company, or

returns adequate for our audit have not been received from branches not

visited by us; or

• the Parent Company financial statements and the part of the Directors’

Remuneration Report to be audited are not in agreement with the

accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not

made; or

• we have not received all the information and explanations we require for

our audit.

Our reporting

We have nothing toreport in theserespects.

9. Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 158, the directors are responsible for: the preparation of the

financial statements including being satisfied that they give a true and fair view; such internal control as they determine is

necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud

or error; assessing the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters

related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or

the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of

assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement

when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they

could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

The Company is required to include these financial statements in an annual financial report prepared under Disclosure

Guidance and Transparency Rule 4.1.17R and 4.1.18R. This auditor’s report provides no assurance over whether the annual

financial report has been prepared in accordance with those requirements.

10. The purpose of our audit work and towhom we owe our responsibilities

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006

and the terms of our engagement by the Company. Our audit work has been undertaken so that we might state to the Company’s

members those matters we are required to state to them in an auditor’s report, and the further matters we are required to state

to them in accordance with the terms agreed with the Company, and for no other purpose. To the fullest extent permitted by

law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for

our audit work, for this report, or for the opinions we have formed.

Simon Richardson (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square

London E14 5GL

18 November 2025

Strategic Report Governance Report Financial Statements Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

173

		2025	2024
	Note	£m	£m
Revenue	2.1, 3.1	2,513	2,332
Cost of sales		(183)	(168)
Gross profit		2,330	2,164
Selling and administrative expenses		(1,800)	(1,712)
Operating profit	2.2, 3.2	530	452
Finance income	3.5	12	19
Finance costs	3.5	(58)	(45)
Profit before income tax		484	426
Income tax expense	4	(115)	(103)
Profit for the year		369	323
Profit attributable to:
Owners of the parent		369	323
Earnings per share attributable to the owners of the parent (pence)
Basic	5	37.74p	32.10p
Diluted	5	37.16p	31.55p

All operations in the year relate to continuing operations.

Consolidated income statement

For the year ended 30 September 2025

174

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

		2025	2024
	Note	£m	£m
Profit for the year		369	323
Items of other comprehensive income that will not be reclassified
to profit or loss, net of tax:
Actuarial gain/(loss) on post-employment benefit obligations	13.4	1	(2)
Fair value reassessment of equity investments		(2)	–
		(1)	(2)
Items that may be reclassified to profit or loss, net of tax:
Exchange differences on translating foreign operations and net investment hedges	13.3	10	(101)
Changes in fair value of foreign currency basis of hedge relationships	13.3	(2)	–
Amortisation of foreign currency basis of hedge relationships	13.3	1	–
		9	(101)
Other comprehensive income/(expense) for the year, net of tax		8	(103)
Total comprehensive income for the year		377	220
Total comprehensive income for the year attributable to:
Owners of the parent		377	220

Consolidated statement of comprehensive income

For the year ended 30 September 2025

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

175

			2024
		2025	(restated)*
	Note	£m	£m
Non-current assets
Goodwill	6.1	2,213	2,122
Other intangible assets	6.2	212	228
Property, plant and equipment	7	144	108
Equity investments		4	6
Trade and other receivables	8.1	144	137
Deferred income tax assets	10	101	81
Derivative financial instruments	12.5	32	29
		2,850	2,711
Current assets
Trade and other receivables	8.1	471	404
Current income tax asset		2	16
Cash and cash equivalents	11.3	390	508
		863	928
Total assets		3,713	3,639
Current liabilities
Trade and other payables	8.2	(433)	(405)
Current income tax liabilities		(39)	(26)
Borrowings	11.4	(17)	(15)
Provisions	9	(21)	(22)
Deferred income	8.3	(845)	(758)
		(1,355)	(1,226)
Non-current liabilities
Borrowings	11.4	(1,562)	(1,231)
Post-employment benefits		(25)	(23)
Deferred income tax liabilities	10	(15)	(19)
Provisions	9	(23)	(25)
Trade and other payables	8.2	(8)	(3)
Deferred income	8.3	(5)	(6)
Derivative financial instruments	12.5	–	(13)
		(1,638)	(1,320)
Total liabilities		(2,993)	(2,546)
Net assets		720	1,093
Equity attributable to owners of the parent
Ordinary shares	13.1	11	11
Share premium		548	548
Other reserves	13.3	(369)	(429)
Retained earnings	13.4	530	963
Total equity		720	1,093

* The comparative balance sheet at 30 September 2024 has been restated as discussed within ‘Basis of preparation’ (see note 1) and adjusted for finalisation of the

fair value of assets acquired and liabilities assumed in the acquisition of Infineo SAS (see notes 1 and 14)

The consolidated financial statements on pages 174 to 251 were approved by the Board of Directors on 18 November 2025 and are

signed on their behalf by:

Jonathan Howell

Chief Financial Officer

Consolidated balance sheet

As at 30 September 2025

176

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

				Attributable to owners of the parent
		Ordinary	Share	Other	Retained	Total
		shares	premium	reserves	earnings	equity
	Note	£m	£m	£m	£m	£m
At 1 October 2024		11	548	(429)	963	1,093
Adjustment on initial application of IFRS 9
hedge accounting		–	–	1	(1)	–
Adjusted opening shareholders’ equity		11	548	(428)	962	1,093
Profit for the year		–	–	–	369	369
Other comprehensive income:
Actuarial gain on post-employment benefit obligations		–	–	–	1	1
Fair value reassessment of equity investments		–	–	–	(2)	(2)
Exchange differences on translating foreign
operations and net investment hedges	13.3	–	–	10	–	10
Changes in fair value of foreign currency basis
of hedge relationships	13.3	–	–	(2)	–	(2)
Amortisation of foreign currency basis
of hedge relationships	13.3	–	–	1	–	1
Total comprehensive income
for the year ended 30 September 2025		–	–	9	368	377
Transactions with owners:
Employee share option scheme—value of employee
services including deferred tax	13.4	–	–	–	57	57
Vesting of share awards and exercise of share options	13.3, 13.4	–	–	50	(41)	9
Share buyback programme	13.4	–	–	–	(609)	(609)
Dividends paid to owners of the parent	13.4, 13.6	–	–	–	(207)	(207)
Total transactions with owners
for the year ended 30 September 2025		–	–	50	(800)	(750)
At 30 September 2025		11	548	(369)	530	720



Consolidated statement of changes in equity

For the year ended 30 September 2025

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

177

					Attributable to owners of the parent (restated)*
		Ordinary	Share	Other	Retained	Total
		shares	premium	reserves*	earnings*	equity
	Note	£m	£m	£m	£m	£m
At 1 October 2023		12	548	(324)	1,171	1,407
Profit for the year		–	–	–	323	323
Other comprehensive expense:
Exchange differences on translating foreign operations
and net investment hedges	13.3	–	–	(101)	–	(101)
Actuarial loss on post-employment benefit obligations		–	–	–	(2)	(2)
Total comprehensive (expense)/income
for the year ended 30 September 2024		–	–	(101)	321	220
Transactions with owners:
Employee share option scheme—value of employee
services including deferred tax	13.4	–	–	–	62	62
Vesting of share awards and exercise of share options	13.4	–	–	50	(41)	9
Cancellation of ordinary shares	13.1, 13.4	(1)	–	1	–	–
Share buyback programme	13.4	–	–	–	(351)	(351)
Purchase of shares by Employee Benefit Trust	13.3, 13.5	–	–	(55)	–	(55)
Dividends paid to owners of the parent	13.4, 13.6	–	–	–	(199)	(199)
Total transactions with owners
for the year ended 30 September 2024		(1)	–	(4)	(529)	(534)
At 30 September 2024		11	548	(429)	963	1,093

* The comparative statement of changes in equity for the year ended 30 September 2024 has been restated as discussed within ‘Basis of preparation’ (see note 1)



Consolidated statement of changes in equity

For the year ended 30 September 2024

178

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

		2025	2024
	Note	£m	£m
Cash flows from operating activities
Cash generated from continuing operations	11.1	675	625
Interest paid		(46)	(43)
Income tax paid		(101)	(91)
Net cash generated from operating activities		528	491
Cash flows from investing activities
Purchase of equity investment		–	(2)
Acquisition of subsidiaries, net of cash acquired	14.1	(82)	(30)
Purchases of intangible assets		(18)	(18)
Purchases of property, plant and equipment	7	(41)	(19)
Proceeds from disposals of property, plant and equipment	7	1	9
Interest received		13	19
Net cash used in investing activities		(127)	(41)
Cash flows from financing activities
Proceeds from borrowings	11.2	297	–
Repayments of borrowings	11.2	(2)	–
Capital element of lease payments	11.2	(17)	(16)
Borrowing costs		(2)	(1)
Receipt of lease incentive		6	–
Share buyback programme	13.4	(605)	(348)
Proceeds from issuance of treasury shares		9	9
Purchase of shares by Employee Benefit Trust	13.3, 13.5	–	(55)
Dividends paid to owners of the parent	13.6	(207)	(199)
Net cash used in financing activities		(521)	(610)
Net decrease in cash and cash equivalents (before exchange rate movement)		(120)	(160)
Effects of exchange rate movement	11.2	2	(28)
Net decrease in cash and cash equivalents		(118)	(188)
Cash and cash equivalents at 1 October	11.2	508	696
Cash and cash equivalents at 30 September	11.2	390	508



Consolidated statement of cash flows

For the year ended 30 September 2025

Governance Report Additional InformationStrategic Report Financial Statements

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

179

1 Basis of preparation and accounting estimates and judgements

Accounting policies applicable across the consolidated financial statements are shown below. Accounting policies that are

specific to a component of the consolidated financial statements have been incorporated into the relevant note.

Basis of preparation

The consolidated financial statements of The Sage Group plc. (the Company) and together with its subsidiaries (the Group) have

been prepared in accordance with UK-adopted International Accounting Standards (UK-IFRS) in conformity with the

requirements of the Companies Act 2006 and also prepared in accordance with International Financial Reporting Standards

(IFRS) as issued by the International Accounting Standards Board (IASB).

UK-IFRS can differ in certain respects from IFRS as issued by the IASB. The differences have no impact on the Group’s

consolidated financial statements for the years presented.

The consolidated financial statements have been prepared under the historical cost convention, except where adopted IFRS

require an alternative treatment. The principal variations from the historical cost convention relate to derivative financial

instruments and equity investments which are measured at fair value. In the current year, treasury share reserve and capital

redemption reserve have been presented separately within other reserves (earlier combined within retained earnings).

This change provides visibility and greater clarity to users of the consolidated financial statements.

The consolidated financial statements of the Group comprise the financial statements of the Company and entities controlled

by the Company (its subsidiaries) prepared at the end of the reporting period. The accounting policies have been consistently

applied across the Group. The Company controls an entity when it is exposed, or has rights, to variable returns from its

involvement with the entity and has the ability to affect those returns through its power over the entity, which is usually from

the date of acquisition.

All figures presented are rounded to the nearest £m, unless otherwise stated.

Impact of application of hedging requirements of IFRS 9 Financial Instruments

As at 1 October 2024, the Group elected to apply the hedge accounting requirements in IFRS 9 Financial Instruments instead of

those in IAS 39 Financial Instruments: Recognition and Measurement. This standard introduces simplified hedge accounting

through closer alignment with the entity’s risk management methodology.

All existing hedge relationships were regarded as continuing hedge relationships. All such designated hedge relationships

under IAS 39 as at 30 September met the criteria for hedge accounting under IFRS 9 as the Group’s risk management strategies

and hedge documentation were aligned to the new standard.

The Group has adopted the modified transition approach and therefore adjusted opening retained earnings and other reserve

balances for the impact of adopting IFRS 9 hedge accounting and has not restated prior period comparatives.

Under IAS 39 the Group included the cost of hedging within the hedge relationship. On transition, IFRS 9 allows the choice to

separate aspects of the cost of hedging from the designation within a hedge relationship as part of the hedging instrument.

Under IFRS 9, in relation to the cross-currency interest rate swaps that are designated in the aforementioned hedge

relationships, the Group has separated the costs relating to currency basis from the hedge relationship and therefore allocates

this component within a newly recognised cost of hedging reserve.

On transition to IFRS 9, an equity classification adjustment was recognised for which £3m was credited to the translation

reserve and £1m to the cash flow hedging reserve, offset by £4m debited to the costs of hedging reserve.

The value of the cost of hedging reserve at designation of the hedge relationship is amortised to the income statement (within

finance costs) over the expected life of the hedge relationship. An adjustment to retained earnings of £1m was recognised on

transition to reflect the cumulative effect of hedging costs that would have been recognised under IFRS 9 over the life of the

Group’s existing hedging arrangements up to the date of adoption.

Other than the changes above, there are no additional accounting differences applied as a result of the adoption of IFRS 9

hedge accounting requirements when compared to the previous accounting policies under IAS 39.

The impact on the year ended 30 September 2025 is not material and the transition did not result in any changes in the

measurement or classification of financial instruments as at 1 October 2024.

Notes to the consolidated financial statements

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1 Basis of preparation and accounting estimates and judgements continued

New or amended accounting standards

There are no accounting standards, amendments, or interpretations effective for the first time this financial year that have had

a material impact on the Group. No standards have been early adopted during the year.

The Directors also considered the impact on the Group of new and revised accounting standards, interpretations, or

amendments which have been issued but were not effective for the Group for the year ended 30 September 2025.

On 9 April 2024, the IASB issued a new standard, IFRS 18 “Presentation and Disclosure in Financial Statements”, which will

replace IAS 1 “Presentation of Financial Statements” which if adopted by the UK Endorsement Board, will be effective for annual

reporting periods beginning on or after 1 January 2027. The key new concepts introduced in IFRS18 relate to:

• The structure of the statement of profit or loss;

• Required disclosures in the financial statements for certain profit or loss performance measures that are reported outside

an entity’s financial statements (that is, management-defined performance measures); and

• Enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes

in general.

While IFRS 18 will not impact the recognition or measurement of items in the financial statements, it will likely result

in changes to how Sage presents certain information. The Group is in the process of assessing the impact that the application

of this standard will have on the Group’s financial statements when first applied.

No other new or revised accounting standards, interpretations, or amendments which have been issued but were not effective

are expected to have a material impact on the Group’s financial statements when first applied.

Going concern

The Group’s business activities, together with the factors likely to affect its future development, performance, and position,

are set out in the Strategic Report on pages 1 to 68.

In preparing these consolidated financial statements, the Directors have reviewed and approved a going concern assessment

which considers the liquidity forecast of the Group for a period of at least 12 months from the date of the approval of these

consolidated financial statements. The liquidity forecast reflects the expected impact of economic conditions on trading,

including the current inflationary environment. More specifically, full consideration has been given to the potential risks and

uncertainties linked to the changing macroeconomic environment, and the possible impact on the Group’s customer base.

In light of this, we note that the Group’s operational and financially robust position is supported by:

• High-quality recurring and subscription-based revenue;

• Resilient cash generation and robust liquidity (see note 11), supported by strong underlying cash conversion of 110%,

reflecting the strength of the subscription business model; and

• A well-diversified small and medium-sized customer base which is geographically diverse.

In preparing the going concern assessment scenario-specific stress testing has been performed, with the level of churn

assumptions increasing by 75%, and a significant reduction in the level of new customer acquisition and sales to existing

customers. Under these scenarios, the Group continues to have sufficient resources to continue in operational existence

without the need to seek additional financing. If more severe impacts occur there are further controllable mitigating actions

which can be taken to protect liquidity, including the reduction of discretionary spend. Stress testing has also been performed

as part of the severe but plausible scenarios (as described within the Viability Statement on 67 to 68).

The Directors have also reviewed the results of reverse stress testing performed to provide an illustration of the level of churn

and deterioration in new customer acquisition which would be required to exhaust available liquidity down to minimum working

capital requirements. The result of the reverse stress testing has highlighted that such a scenario would only arise following a

significant deterioration in performance, well in excess of the assumptions considered in the stress testing scenarios above.

The probability of these factors occurring is deemed to be remote given the resilient nature of the subscription business model,

robust balance sheet, and continued strong cash conversion.

After making enquiries, the Directors have a reasonable expectation that Sage has adequate resources to continue in

operational existence throughout the going concern assessment period. Accordingly, the consolidated and Company financial

information has been prepared on a going concern basis.

Further details for adopting the going concern basis are set out in the Directors’ Report on pages 152 to 158.

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1 Basis of preparation and accounting estimates and judgements continued

Foreign currencies

The consolidated financial statements are presented in sterling, which is the functional currency of the Company and the

presentation currency for the consolidated financial statements.

Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the transactions.

Foreign currency monetary items are translated at the rates prevailing at the end of the reporting period. Non-monetary

items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items and on the retranslation of monetary items are included

in profit or loss for the period, except for foreign currency movements on intercompany balances where settlement is not

planned or likely in the foreseeable future, in which case they are recognised in other comprehensive income. Foreign exchange

movements on external borrowings and derivative financial instruments which are designated as a hedge of the net investment

in its related subsidiaries are recognised in the translation reserve.

The assets and liabilities of the Group’s subsidiaries outside the UK are translated into sterling using period-end exchange

rates. Income and expense items are translated at the average exchange rates for the period. Where differences arise between

these rates, they are recognised in other comprehensive income and the translation reserve. Foreign exchange movements on

derivative financial instruments which are designated in cash flow hedge relationships are included in the profit or loss for the

period, to offset foreign currency movements in the hedged item.

When a foreign operation is partially disposed of or sold, exchange differences that were recorded in other comprehensive

income are recycled in the income statement as part of the gain or loss on sale, with the exception of exchange differences

recorded in equity prior to the transition to IFRS on 1 October 2004, in accordance with IFRS 1 “First-time Adoption of

International Financial Reporting Standards”.

Climate change

In preparing the consolidated financial statements, management has considered the impact of climate change, with particular

reference to the disclosures provided in the Strategic Report.

As a business, we are committed to reducing our carbon emissions and target achieving net zero by 2040. We support our

customers, small and mid-sized businesses, in achieving net zero by sharing the knowledge, technology and skills to be a

driving force for change. We have continued to support more broadly by advocating for enabling policies and standards that

support a transition to a low-carbon economy.

We recognise the importance of identifying and effectively managing the physical and transitional risks that climate change

poses to our operations and consider the impact of climate-related matters, including legislation, on our business.

The climate change scenario analyses and financial quantification of climate risks undertaken in line with Task Force on

Climate-related Financial Disclosures recommendations did not identify any material impact on the Group’s financial results,

going concern or viability. More specifically:

• In preparing the viability assessment, consideration has been given to the potential impact of climate change over the next

three years, as set out in the Strategic Report. No material impact has been identified at this stage.

• Climate change-related factors on matters including residual values, useful lives and depreciation and amortisation

periods which relate to non-current assets have also been considered, with no impact identified at this stage.

• In our future forecasts used for goodwill impairment and the going concern assessment, we have considered the extent

to which costs associated with our climate-related commitments have been considered, as well as broader societal

commitments. These commitments do not have a material impact.

• We have also considered the extent to which climate change could impact longer-term economic growth, which may impact

long-term growth rates used in the goodwill impairment test. Sensitivity testing demonstrates that all cash-generating

units retain sufficient headroom.

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1 Basis of preparation and accounting estimates and judgements continued

Accounting estimates and judgements

The preparation of financial statements requires the use of accounting estimates and judgements by management, including in

the application of accounting policies. We continually evaluate our estimates and judgements based on available information.

Management has determined that there are no areas of estimation uncertainty that could be significant under IAS 1

“Presentation of Financial Statements”, being areas of estimation uncertainty with a significant risk of a material change

to the carrying value of assets and liabilities within the next financial year.

Other key estimates are made when preparing the financial statements, which, while not meeting the definition of a significant

estimate under IAS 1, involve the measurement of certain material assets or a higher degree of complexity.

Significant judgements are those made by management in applying our accounting policies that have a material impact on the

amounts presented in the financial statements.

Management’s rationale in relation to these key accounting estimates and significant judgements are regularly assessed and,

where material in value or in risk, are discussed with the Audit and Risk Committee. These areas are discussed in further

detail below:

Revenue recognition (judgement)

Over a third of the Company’s revenue is generated from sales to business partners rather than end users. The key judgement is

determining whether the business partner is a customer of the Group. The key criterion in this determination is whether the

business partner has taken control of the product. Considering the nature of Sage’s subscription products and support services,

this is usually assessed based on whether the business partner has responsibility for payment, has discretion to set prices,

and takes on the risks and rewards of the product from Sage.

Where the business partner is a customer of Sage, commissions are remunerated in the form of a discount and are recognised

as a deduction from revenue.

Where the business partner is not a customer of Sage and their part in the sale has simply been in the form of a referral, they

are remunerated in the form of a commission payment. These payments are treated as contract acquisition costs (see note 8.1).

Goodwill impairment (estimate)

The estimates applied in calculating the value in use of the cash-generating units being tested for impairment are a source of

estimation uncertainty. The key estimates considered in the calculation relate to the future performance expectations of the

business and include the average medium-term revenue growth rate, the long-term growth rate of net operating cash flows and

the discount rate.

Further information on these key estimates, as well as the level at which goodwill is monitored and the results of sensitivity

analysis are disclosed in note 6.1.

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1 Basis of preparation and accounting estimates and judgements continued

Business combinations (judgement and estimate)

When the Group completes a business combination, the consideration transferred for the acquisition and the identifiable

assets and liabilities are recognised at their fair values. The amount by which the consideration exceeds the net assets

acquired is recognised as goodwill. The application of accounting policies to business combinations involves judgement

and the use of estimates.

In the year, the Group acquired and finalised the purchase price accounting for the acquisitions of Tritium Software, S.L.

("Tritium Software") and Fyle Technologies Private Limited ("Fyle"), and finalised the purchase price accounting for Infineo

SAS ("Infineo") which was acquired in the prior year. As part of finalising the purchase price accounting, external independent

valuation experts were engaged to support with the identification and valuation of acquired intangible assets:

• Judgement was required with respect to the identification of acquired intangible assets, with both technology and customer

relationships being identified. Subsequently, the valuation of those acquired intangible assets involved key estimates.

• Valuation techniques including the relief from royalty method, discounted cash flows, the multi-period excess earnings

method, and the income approach were used to value the technology and customer relationships. The key estimates

requiring consideration as part of the valuations included the application of a discount rate and the use of an appropriate

royalty rate.

• Based on the strategic intent and rationale for the acquisition, and the way in which management intends to monitor the

performance of the business going forward, judgement was also required in allocating the acquired goodwill to the Cash

Generating Units (CGUs).

For further details on the above transactions, see note 14.

Notes to the consolidated financial statements continued

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2 Segment information

This note shows how Group revenue and Group operating profit are generated across the three reportable segments in

which the Group operates as listed in the accounting policy below.

For each reportable segment, revenue and operating profit are compared to prior year in order to understand the

movements in the year. This comparison is provided for statutory, underlying, and organic revenue and statutory,

underlying, and organic operating profit.

• Statutory results reflect the Group’s results prepared in accordance with the requirements of UK-IFRS and IFRS as

issued by the IASB.

• “Underlying” and “underlying as reported” are non-GAAP measures. Underlying measures are adjusted to exclude

items which in management’s judgement need to be disclosed separately by virtue of their size, nature or frequency.

These measures are considered key measures within the business which aid understanding of the performance for the

year and comparability between periods. The items excluded comprise both: a) recurring items which include

purchase price adjustments including amortisation of acquired intangible assets and adjustments made to reduce

deferred income arising on acquisitions, acquisition-related items, and unhedged foreign currency movements on

intercompany balances; and b) non-recurring items that management considers to be one-off or non-operational such

as gains and losses on the disposal of assets, impairment charges and reversals, and restructuring-related costs.

Management applies judgement in determining which items should be excluded from underlying performance.

See note 3.6 for details of these adjustments.

In addition, underlying measures are presented on a constant currency basis with prior year amounts translated at current

year exchange rates. Prior year underlying amounts at prior year exchange rates are “underlying as reported”; prior year

and current year underlying amounts at current year exchange rates are “underlying”.

• “Organic” is a non-GAAP measure. In addition to the adjustments made to the underlying measures, the contributions

from discontinued operations, disposals, and assets held for sale of standalone businesses in the current and prior

period are removed so that results can be compared to the prior year on a like-for-like basis. Results from acquired

businesses are excluded in the year of acquisition. Adjustments are made to the comparative period to present prior

period acquired businesses as if these had been part of the Group throughout the prior period. Acquisitions and

disposals which occurred close to the start of the opening comparative period where the contribution impact would

be immaterial are not adjusted.

In addition, the following reconciliations are made in this note to the extent adjustments have arisen:

• Statutory revenue per segment reconciled to the statutory revenue for the year as per the income statement.

• Statutory operating profit per segment reconciled to the statutory operating profit for the year as per the

income statement.

• Statutory revenue reconciled to underlying revenue per segment (detailing the adjustments made).

• Statutory operating profit reconciled to underlying operating profit per segment (detailing the adjustments made).

Non-GAAP measures should not be viewed in isolation, nor are considered as a substitute for measures reported in

accordance with IFRS.

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2 Segment information continued

Accounting policy

In accordance with IFRS 8 “Operating Segments”, information for the Group’s operating segments has been derived using

the information used by the Chief Operating Decision Maker (CODM). The Group’s Executive Leadership Team (ELT) has

been identified as the CODM, in accordance with their designated responsibility for the allocation of resources to

operating segments and assessing their performance through the Monthly Performance Reviews. The ELT uses organic and

underlying data to monitor business performance. Operating segments are reported in a manner which is consistent with

the operating segments produced for internal management reporting.

The Group is organised into three key operating segments:

• North America

• United Kingdom, Ireland, Africa and APAC (UKIA)

• Europe

For reporting under IFRS 8, each of the three operating segments above represents a reportable segment.

Segment reporting

The tables overleaf show a segmental analysis of the results for continuing operations.

The revenue analysis in the table overleaf is based on the location of the customer, which is not materially different from the

location where the order is received and where the assets are located.

Revenue categories are defined in note 3.1.

Notes to the consolidated financial statements continued

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2 Segment information continued

2.1 Revenue by segment

		Year ended 30 September 2025			Change
	Statutory and	Organic
	Underlying	adjustments*	Organic
	£m	£m	£m	Statutory	Underlying	Organic
Recurring revenue by segment
North America	1,110	(2)	1,108	8%	12%	11%
UKIA	714	–	714	9%	9%	9%
Europe	612	(5)	607	7%	8%	7%
Recurring revenue	2,436	(7)	2,429	8%	10%	9%
Other revenue by segment
North America	28	–	28	13%	17%	17%
UKIA	15	–	15	(3%)	(2%)	(2%)
Europe	34	–	34	(5%)	(4%)	(4%)
Other revenue	77	–	77	1%	3%	3%
Total revenue by segment
North America	1,138	(2)	1,136	8%	12%	11%
UKIA	729	–	729	9%	9%	9%
Europe	646	(5)	641	6%	7%	6%
Total revenue	2,513	(7)	2,506	8%	10%	9%

		Year ended 30 September 2025			Change
	Statutory and	Organic
	Underlying	adjustments*	Organic
	£m	£m	£m	Statutory	Underlying	Organic
Total revenue by type
Software Subscription Revenue	2,093	(7)	2,086	10%	12%	11%
Other Recurring Revenue	343	–	343	(1%)	1%	1%
Recurring revenue	2,436	(7)	2,429	8%	10%	9%
Other revenue	77	–	77	1%	3%	3%
Total revenue	2,513	(7)	2,506	8%	10%	9%

Note:

* Adjustments relate to the acquisition of Tritium Software and Fyle.

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2 Segment information continued

2.1 Revenue by segment continued

					Year ended 30 September 2024
	Statutory and	Impact of
	Underlying as	foreign		Organic
	reported	exchange	Underlying	adjustments*	Organic
	£m	£m	£m	£m	£m
Recurring revenue by segment
North America	1,028	(34)	994	5	999
UKIA	655	(2)	653	–	653
Europe	574	(6)	568	1	569
Recurring revenue	2,257	(42)	2,215	6	2,221
Other revenue by segment
North America	24	–	24	–	24
UKIA	15	–	15	–	15
Europe	36	–	36	–	36
Other revenue	75	–	75	–	75
Total revenue by segment
North America	1,052	(34)	1,018	5	1,023
UKIA	670	(2)	668	–	668
Europe	610	(6)	604	1	605
Total revenue	2,332	(42)	2,290	6	2,296

					Year ended 30 September 2024
	Statutory
	and	Impact of
	Underlying	foreign		Organic
	as reported	exchange	Underlying	adjustments*	Organic
	£m	£m	£m	£m	£m
Total revenue by type
Software Subscription Revenue	1,910	(34)	1,876	6	1,882
Other Recurring Revenue	347	(8)	339	–	339
Recurring revenue	2,257	(42)	2,215	6	2,221
Other revenue	75	–	75	–	75
Total revenue	2,332	(42)	2,290	6	2,296

Note:

* Adjustments relate to the acquisition of Infineo and Anvyl, Inc. (“Anvyl”) in the previous year.

Notes to the consolidated financial statements continued

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2 Segment information continued

2.2 Operating profit by segment

			Year ended 30 September 2025		Change
			Underlying
		Underlying	and
	Statutory	adjustments	Organic
	£m	£m	£m		Statutory Underlying	Organic
Operating profit by segment
North America	231	26	257	21%	14%	15%
UKIA	182	25	207	17%	12%	12%
Europe	117	19	136	12%	31%	28%
Total operating profit	530	70	600	17%	17%	16%

							Year ended 30 September 2024
				Impact of
		Underlying	Underlying as	foreign		Organic
	Statutory	adjustments	reported	exchange	Underlying	adjustments*	Organic
	£m	£m	£m	£m	£m	£m	£m
Operating profit by segment
North America	192	43	235	(11)	224	(1)	223
UKIA	155	33	188	(3)	185	–	185
Europe	105	1	106	(2)	104	3	107
Total operating profit	452	77	529	(16)	513	2	515

Note:

* Adjustments relate to the acquisition of Infineo and Anvyl in the previous year.

The results by segment from continuing operations were as follows:

		North
		America	UKIA	Europe	Group
Year ended 30 September 2025	Note	£m	£m	£m	£m
Revenue		1,138	729	646	2,513
Segment statutory operating profit		231	182	117	530
Finance income	3.5				12
Finance costs	3.5				(58)
Profit before income tax					484
Income tax expense	4				(115)
Profit for the year					369

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2 Segment information continued

2.2 Operating profit by segment continued

Reconciliation of underlying operating profit to statutory operating profit:

		North
		America	UKIA	Europe	Group
Year ended 30 September 2025	Note	£m	£m	£m	£m
Underlying operating profit		257	207	136	600
Amortisation of acquired intangible assets	3.6	(18)	(18)	(6)	(42)
Other acquisition-related items	3.6	(10)	(7)	(14)	(31)
Non-recurring items	3.6	2	–	1	3
Statutory operating profit		231	182	117	530

The results by segment from continuing operations were as follows:

		North
		America	UKIA	Europe	Group
Year ended 30 September 2024	Note	£m	£m	£m	£m
Revenue		1,052	670	610	2,332
Segment statutory operating profit		192	155	105	452
Finance income	3.5				19
Finance costs	3.5				(45)
Profit before income tax					426
Income tax expense	4				(103)
Profit for the year					323

Reconciliation of underlying operating profit to statutory operating profit:

		North
		America	UKIA	Europe	Group
Year ended 30 September 2024	Note	£m	£m	£m	£m
Underlying operating profit as reported		235	188	106	529
Amortisation of acquired intangible assets	3.6	(24)	(20)	(4)	(48)
Other acquisition-related items	3.6	(19)	(13)	(2)	(34)
Non-recurring items	3.6	–	–	5	5
Statutory operating profit		192	155	105	452

No impairment losses are reported by the Group during the year (2024: £nil).

Notes to the consolidated financial statements continued

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2 Segment information continued

2.3 Analysis by geographic location

Management considers countries which generate 10% or more of total Group revenue to be material. Additional disclosures have

been provided below to show the proportion of revenue from these countries.

	2025	2024
Revenue by individually significant countries	£m	£m
USA	997	918
UK	525	479
France	324	309
Other individually immaterial countries	667	626
	2,513	2,332

Management considers countries which contribute 10% or more to total Group non-current assets to be material. Additional

disclosures have been provided below to show the proportion of non-current assets from these countries.

Non-current assets presented below exclude deferred tax assets and financial instruments.

	2025	2024*
Non-current assets by geographical location	£m	£m
USA	1,566	1,491
UK	536	551
France	293	280
Other individually immaterial countries	313	268
	2,708	2,590

Note:

* Adjusted for finalisation of the fair value of assets acquired and liabilities assumed in the acquisition of Infineo SAS (see notes 1 and 14)

3 Profit before income tax

This note sets out the Group’s profit before tax, by looking in more detail at the key operating costs, including

a breakdown of the costs incurred as an employer, research and development costs, the cost of the external audit of the

Group’s financial statements, and finance costs. This note also sets out the Group’s revenue recognition policy.

In addition, this note explains the accounting applied to leases entered into by the Group as a lessee and analyses the

amounts recognised for leases on the balance sheet and in the income statement.

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3 Profit before income tax continued

3.1 Revenue

Accounting policy

The Group reports revenue under two revenue categories and the basis of recognition for each category is described below:

Category and examples		Accounting treatment
Recurring revenue		Recurring revenue is revenue earned from customers for the provision of a good or
Software subscription revenue		service over a contractual term, with the customer being unable to continue to
Other subscription revenue		benefit from the full functionality of the good or service without ongoing payments.
Other recurring revenue		Subscription revenue is recurring revenue earned from customers for the provision
		of a service over a contractual term. In the event that the customer stops paying,
		they lose the legal right to use the software, and the Group has the ability to restrict
		the use of the product or service.
		Other recurring revenue primarily comprises maintenance and support revenue
		provided over a contractual term. In the event that the customer stops paying,
		they lose access to technical product support as well as any non-specified updates,
		upgrades and enhancements. Other recurring revenue also includes transaction
		and agent fees for transactional services which are billed on a consumption
		or per-unit basis.
		Subscription revenue and other recurring revenue are usually recognised on a
		straight-line basis over the term of the contract as control is transferred to the
		customer (including non-specified upgrades, when included). An exception is
		revenue from term licences embedded within a subscription contract for software
		with significant standalone functionality which are expected to recur upon renewal
		of the subscription offering. Revenue for these term licences is recognised when
		control is transferred at inception of each subscription contract period.
		Further, revenue billed on a consumption or per-unit basis is recognised
		as the services are utilised.
Other revenue		Revenue relating to perpetual software licences with significant standalone
Software and software-		functionality and upgrades to such licenses is recognised when the control relating
related services		to the licence has been transferred, which is typically when electronic delivery has
		taken place.
•	Perpetual software licences
•	Upgrades to perpetual licences	Professional services and training revenue is usually recognised when delivered,
•	Professional services	or by reference to the stage of completion of the transaction at the end of the
		reporting period. This assessment is made by comparing the proportion of
•	Training	contract costs incurred to date to the total expected costs to completion.

Identification of performance obligations

When the Group enters into an agreement with a customer, goods and services deliverable under the contract are

identified as separate performance obligations to the extent that the customer can benefit from the goods or services on

their own and that the separate goods and services are considered distinct from other goods and services in the

agreement. Where individual goods and services do not meet the criteria to be identified as separate performance

obligations, they are aggregated with other goods and/or services in the agreement until a separate performance

obligation is identified.

Typically, the products and services outlined in the categories of revenue section qualify as separate performance

obligations and the portion of the contractual fee allocated (or allocated based on the standalone selling prices)

to them is recognised separately. However, certain on-premise subscription contracts, which combine the delivery

of on-premise software and maintenance and support services, require unbundling. Sage’s cloud native services do

not require unbundling as the terms do not provide the customer with a right to terminate the hosting contract and

take possession of the software.

Notes to the consolidated financial statements continued

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3 Profit before income tax continued

3.1 Revenue continued

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Determination of transaction price and standalone selling prices

The Group determines the transaction price it is entitled to in return for providing the promised obligations to the

customer based on the committed contractual amounts, net of sales taxes and discounts. Contract terms generally

are monthly or annual, and customers either pay up-front or over the term of the related service agreement.

The transaction price is allocated between the identified obligations according to the relative standalone selling

prices (SSPs) of the performance obligations. The SSP of each performance obligation deliverable in the contract is

determined according to the prices that the Group would obtain by selling the same goods and/or services included in the

performance obligation to a similar customer on a standalone basis. The Group has established a hierarchy to identify the

SSPs that are used to allocate the transaction price of a customer contract to the performance obligations in the contract.

Where SSPs for on-premise offerings are observable and consistent across the customer base, SSP estimates are derived

from pricing history. Where there are no directly observable estimates available, comparable products are utilised as a

basis of assessment or the residual approach is used. Under the residual approach, the SSP for the offering is estimated

to be the total transaction price less the sum of the observable SSPs of other goods or services in the contract.

Timing of recognition

Revenue is recognised when the respective performance obligations in the contract are delivered to the customer

and payment remains probable.

• Licences for standard on-premise software products are typically delivered by providing the customer with access to

download the software. The licence period starts when such access is granted and the customer therefore has control

over the software. For licences which are dependent on updates for ongoing functionality, the Group recognises

revenue rateably over the term of the contract. Typically, this includes our payroll and tax compliance software.

• Where the Group’s performance obligation is the grant of a right to continuously access a cloud offering for a certain

term, revenue is recognised rateably over the term of the contract.

• Maintenance and support revenue is typically recognised based on time elapsed and thus rateably over the term

of the support arrangement. Typically, the Group’s performance obligation is to stand ready to provide technical

product support and unspecified updates, upgrades, and enhancements on a when-and-if-available basis.

The customers simultaneously receive and consume the benefits of these services.

• Professional services and classroom training revenue are typically recognised as they are delivered. Where the Group

stands ready to provide the service (such as access to learning content), revenue is recognised based on time elapsed

and thus rateably over the service period.

• Consumption-based services are recognised as the services are utilised.

Where revenue is recognised over time in accordance with IFRS 15, it is typically recorded on a daily basis to reflect the

continuous transfer of control. In certain cases, a monthly recognition approach is applied where it provides a reliable

representation of the performance obligation pattern and aligns with the substance of the contractual arrangement.

Identification of contract with the customer

When the Group sells goods or services through a business partner, a key consideration is determining whether the

business partner or the end user is Sage’s customer. The key criterion in this determination is whether the business

partner has taken control of the product. Considering the nature of Sage’s subscription products and support services,

this is usually assessed based on whether the business partner has responsibility for payment, has discretion to set

prices, and takes on the risks and rewards of the product from Sage. See “Accounting estimates and judgements”

in note 1 for details.

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193

3 Profit before income tax continued

3.1 Revenue continued

3.2 Operating profit

Accounting policy

Cost of sales includes items such as third-party royalties, hosting costs, transaction, and credit card fees related to the

provision of payment processing services and the cost of hardware and inventories. These also include the third-party

costs of providing training and professional services to customers. All other operating expenses incurred in the ordinary

course of business are recorded in selling and administrative expenses.

The following items have been included in arriving at operating profit from continuing		2025	2024
operations	Note	£m	£m
Staff costs		1,030	1,006
Depreciation of property, plant and equipment	7	30	29
Amortisation of intangible assets	6.2	60	67
Customer acquisition amortisation expense	8.1	164	157
Other M&A activity-related items	3.6	31	34

The Group incurred £379m (2024: £344m) of research and development expenditure in the year, of which £302m (2024: £300m)

relates to total Group staff costs included above. See note 6.2 for the research and development accounting policy.

Services provided by the Group’s auditor and network firms

During the year, the Group obtained the following services from the Group’s auditor at costs as detailed below:

	2025	2024
	£m	£m
Fees payable to the Group’s auditor for the audit of the Company and the consolidated accounts	3	3
Fees payable to the Group’s auditor for the audit of the Company’s subsidiaries	3	3
Total fees	6	6

Fees payable to the Group’s auditor for audit-related assurance services (including costs relating to the half-year review)

and other non-audit services were less than £1m (2024: less than £1m).

Fees payable in the prior year were those paid to Ernst & Young LLP as the previous incumbent auditor.

A summary of the Board’s policy in respect of the procurement of non-audit services for the Group’s auditor is set out

on pages 115 and 116.

Principal versus agent considerations

When the Group has control of third-party goods or services prior to delivery to a customer, then the Group is the principal

in the sale to the customer. As a principal, receipts from customers and payments to suppliers are reported on a gross

basis in revenue and cost of sales.

If the Group does not have control of third-party goods or services prior to transfer to a customer, then the Group is acting

as an agent for the supplier and revenue in respect of the relevant obligations is recognised net of any related payments

to the supplier and reported revenue represents the margin earned by the Group.

Whether the Group is considered to be the principal or an agent in the transaction depends on analysis by management

of both the legal form and substance of the agreement between the Group and its supplier. This takes into account

whether Sage bears the price, inventory, and performance risks associated with the transaction.

Practical expedients

As the majority of contracts have a term of one year or less, the Group has applied the following practical expedients:

• The aggregate transaction price allocated to the unsatisfied or partially unsatisfied performance obligations at the

end of the reporting period is not disclosed.

• Any financing component is not considered when determining the transaction price.

Notes to the consolidated financial statements continued

194

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

3 Profit before income tax continued

3.3 Employees and Directors

	2025	2024
Average monthly number of people employed (including Directors)	number	number
By segment:
North America	2,757	2,662
UKIA	4,889	5,008
Europe	3,428	3,326
	11,074	10,996

		2025	2024
Staff costs	Note	£m	£m
Wages and salaries		891	907
Social security costs		123	118
Post-employment benefits		32	31
Share-based payments	13.2	51	56
		1,097	1,112

Staff costs include a total of £67m of capitalised commission costs which are amortised over the expected contract life

including probable contract renewals (2024: £67m); see note 8.1.

Post-employment benefits include £1m of costs related to defined benefit plans (2024: £2m) and £31m (2024: £29m) in relation

to defined contribution plans. The associated defined benefit liability is £25m (2024: £23m) and an actuarial gain was

recognised in the period of £1m (2024: £3m loss) in other comprehensive income, gross of a £nil tax charge (2024: £1m benefit).

	2025	2024
Key management compensation	£m	£m
Salaries and short-term employee benefits	10	12
Share-based payments	8	8
	18	20

Key management personnel are deemed to be members of the Group’s Executive Leadership Team and the Non-executive

Directors as shown on pages 74 to 79.

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195

3 Profit before income tax continued

3.4 Leases

Accounting policy

The Group as lessee

The Group recognises lease assets and lease liabilities on the balance sheet for most of its leases to account for the right

to use leased items and the obligation to make future lease payments. Lease liabilities are measured at the present value

of future lease payments over the lease term. The lease term is determined as the non-cancellable term of the lease,

together with any periods covered by an option to extend the lease if the option is reasonably certain to be exercised,

or any periods covered by an option to terminate the lease, if the option is reasonably certain not to be exercised.

Lease payments normally include fixed payments (including in-substance fixed payments), a deduction for any lease

incentives receivable and variable lease payments that depend on an index or a rate. In the event that a lease includes

an exercise price for a purchase option that is reasonably certain to be exercised, or a termination penalty that is

reasonably certain to be incurred, these too are included in lease payments as are any amounts expected to be paid

under any residual value guarantees. Variable lease payments that do not depend on an index or a rate are not included

in the lease liability but are recognised as an expense when incurred.

Lease payments are discounted using the incremental borrowing rate applicable to the lease at the lease commencement

date, as the rate implicit in the lease cannot normally be readily determined. Lease assets are recognised at the amount

of the lease liability, adjusted where applicable for any lease payments made or lease incentives received before

commencement of the lease, direct costs incurred at the commencement of the lease and estimated restoration

costs to be incurred at the end of the lease.

Right-of-use assets are presented within property, plant and equipment, and depreciated on a straight-line basis over the

shorter of their useful life and the lease term. Their carrying amounts are measured at cost less accumulated depreciation

and impairment losses. Lease liabilities are presented within current and non-current borrowings. Over the lease term, the

carrying amounts of lease liabilities are increased to reflect interest on the liability and reduced by the amount of lease

payments made. A lease liability is remeasured if there is a modification, a change in the lease term or a change in lease

payments. The costs of these leases are recognised in the income statement split between the depreciation of the lease

asset and the interest charge on the lease liability. Depreciation is presented within selling and administrative expenses

and interest charges within finance costs.

This policy applies mainly to the Group’s leases for properties and vehicles. For short-term leases with a lease term of 12

months or less and leases of low-value items, the Group has elected to apply the exemptions available under the standard.

For these leases, rentals payable are charged to the income statement on a straight-line basis as an operating expense

presented within selling and administrative expenses. Where rent payments are prepaid or accrued, their balances are

reported under prepayments and accruals respectively. The low-value exemption has been applied to most of the Group’s

leases of IT and other office equipment.

The Group leases various offices and vehicles under non-cancellable lease agreements. Leases of properties have a range

of lease terms, up to a maximum of 15 years. Other leases are generally for lease terms of 3 or 4 years. Property leases

include various contractual terms, most commonly variable lease payments and termination and extension options.

Notes to the consolidated financial statements continued

196

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

3 Profit before income tax continued

3.4 Leases continued

The carrying amounts of right-of-use assets and their movements during the year are presented in note 7.

The carrying amounts of lease liabilities and their movements during the year are below.

		2025	2024
	Note	£m	£m
At 1 October		90	86
Additions		30	24
Disposals		(7)	–
Interest charge in the year	3.5	5	2
Payment of lease liabilities		(21)	(18)
Lease incentives		6	–
Exchange movement		–	(4)
At 30 September		103	90
Presented as:
Borrowings—current	11.4	17	15
Borrowings—non-current	11.4	86	75

The maturity analysis of lease liabilities is included in note 12.2.

Amounts recognised in the income statement for leases are as follows:

		2025	2024
	Note	£m	£m
Depreciation of right-of-use assets	7	15	14
Interest expense charge on lease liabilities	3.5	5	2
Lease expense from short-term leases and leases of low-value assets		2	5
(included in selling and administrative expenses)		22	21

Total cash outflows for leases in the year, including interest payments and outflows related to short-term leases and leases

of low-value assets, was £23m (2024: £23m). Cash flows in relation to short-term leases and leases of low value assets are

reported as part of cash flows from operating activities.

The Group is exposed to potential future increases in variable lease payments that are based on an index or rate, which are

initially measured as at the commencement date, with any future changes in the index or rate excluded from the lease liability

until they take effect. If adjustments to lease payments based on an index or rate take effect, the lease liability will be

reassessed and adjusted against the right-of-use asset.

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197

3 Profit before income tax continued

3.5 Finance income and costs

Accounting policy

Finance income and costs are recognised using the effective interest method. Finance costs are recognised in the

income statement simultaneously with the recognition of an increase in a liability or the reduction in an asset.

Derivative financial instruments are measured at fair value through profit or loss, within finance income and costs,

unless they are designated as a hedging instrument.

Where derivative financial instruments have been designated as hedging instruments in a cash flow hedge, and the

hedging relationship is effective, gains and losses on those instruments are accumulated in the cash flow hedge reserve.

The amount accumulated in the hedging reserve is reclassified to finance income or costs in the same period or periods

during which the expected future cash flows affect the profit or loss. Any ineffective portion of changes in the fair value

of the derivative financial instrument is recognised immediately in finance income or costs.

Where derivative financial instruments have been designated as hedging instruments in a net investment hedge, gains

or losses on those instruments are recognised in finance income and costs only to the extent the hedging relationship

is ineffective. Where the hedging relationship is effective, gains or losses are accumulated in the foreign currency

translation reserve.

Foreign currency movements on intercompany balances are recognised in the income statement unless settlement

is not planned or likely in the foreseeable future, in which case they are recognised in other comprehensive income.

	2025	2024
	£m	£m
Finance income:
Interest income on short-term deposits	12	19
Finance income	12	19
Finance costs:
Finance costs on bond notes	(46)	(37)
Finance costs on bank borrowings	(4)	(4)
Interest charge on lease liabilities	(5)	(2)
Amortisation of issue costs	(2)	(2)
Amortisation of foreign currency basis of hedge relationships	(1)	–
Finance costs	(58)	(45)
Finance costs—net	(46)	(26)

Notes to the consolidated financial statements continued

198

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

3 Profit before income tax continued

3.6 Adjustments between underlying and statutory results

Accounting policy

The business is managed and measured on a day-to-day basis using underlying results. To arrive at underlying results,

certain adjustments are made for items that are individually important (due to their size, nature, or frequency).

Management applies judgement in determining which items should be excluded from underlying performance.

Recurring items

These are items which occur regularly, but the exclusion of which management considers necessary to aid understanding

of the underlying results of the Group. These items mainly relate to merger and acquisition (M&A)-related activity.

By its nature, M&A activity is variable in its impact but is likely to include amortisation of acquired intangible assets,

adjustments to acquired deferred income and acquisition and disposal-related costs, including integration costs relating

to an acquired business and acquisition-related remuneration (which are typically incurred over a period of one year or

more). Unhedged foreign currency movements on intercompany balances that are charged through the income statement

are excluded from underlying results, so that exchange rate impacts do not affect comparisons. Recurring items are

adjusted each year irrespective of materiality to ensure consistent treatment.

Non-recurring items

These are items which are non-recurring and are adjusted on the basis of either their size or their nature. These items

can include, but are not restricted to, gains and losses on the disposal of assets, impairment charges and reversals,

and restructuring-related costs. Whilst these items are described as non-recurring, similar costs, for example in relation

to different restructuring programmes or impairments of other assets, may arise in future periods. As these items are one-

off or non-operational in nature, management considers that their exclusion aids understanding of the Group’s underlying

business performance.

	Operating	Profit	Operating	Profit
	profit	before tax	profit	before tax
	2025	2025	2024	2024
	£m	£m	£m	£m
Statutory measures	530	484	452	426
Recurring
Amortisation of acquired intangibles	42	42	48	48
Other M&A activity-related items	31	31	34	34
Foreign currency movements on intercompany balances	–	1	–	(1)
Non-recurring
Reversal of property restructuring costs	(2)	(2)	–	–
Reversal of restructuring costs	(1)	(1)	(2)	(2)
Reversal of employee-related costs	–	–	(3)	(3)
Underlying (as reported) measures	600	555	529	502
Impact of foreign exchange	–	–	(16)	(16)
Underlying measures	600	555	513	486

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199

3 Profit before income tax continued

3.6 Adjustments between underlying and statutory results continued

Recurring items

Recurring items impacting operating profit (reported within selling and administrative costs) and profit before tax comprise:

• Acquired intangibles are assets which have previously been recognised as part of business combinations or similar

transactions. These assets are predominantly customer relationships and technology rights. Further details including

specific accounting policies in relation to these assets can be found in note 6.2.

• Other M&A activity-related items relate to advisory, legal, accounting, valuation, and other professional or consulting

services which are related to M&A activity as well as acquisition-related remuneration and directly attributable integration

costs. £15m (2024: £5m) of these costs have been paid in the year, while the remainder is expected to be paid in subsequent

financial years.

Non-recurring items

Non-recurring items impacting operating profit (reported within selling and administrative costs) and profit before

tax comprise:

• Reversal of property restructuring costs £2m (2024: £nil) arising as a result of a sub-lease entered into for a property site

in North America, which had previously been exited.

• Reversal of restructuring costs of £1m (2024: £2m) relates to unutilised provisions previously recognised.

• Reversal of employee-related costs of £3m in the prior year relates to unutilised employee-related provisions recognised

in previous years for French payroll taxes.

In total for the year ended 30 September 2025, cash paid in respect of recurring and non-recurring items (some of which was

incurred in prior periods) of £41m, comprised £33m of other M&A activity-related items and £8m of employee-related costs.

(For the year ended 30 September 2024, cash paid in respect recurring and non-recurring items of £44m comprised £39m

of other M&A activity-related items, £3m of restructuring costs and £2m of property restructuring costs.)

The tax impact of recurring and non-recurring adjustments between statutory and underlying profit before tax is £17m, of which

£18m relates to recurring items and £1m tax credit relates to non-recurring items. (For the year ended 30 September 2024 the tax

impact is £17m, of which all £17m relates to recurring items.) For the impact of these on the effective tax rates, see note 4.

Notes to the consolidated financial statements continued

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

4 Income tax expense

This note analyses the tax expense for this financial year which includes both current and deferred tax. Current tax

expense represents the amount payable on this year’s taxable profits and any adjustments relating to prior years.

Deferred tax is an accounting adjustment to recognise liabilities or benefits that are expected to arise in the future

due to differences between the carrying values of assets and liabilities and their respective tax bases.

This note outlines the tax accounting policies, analyses the current and deferred tax expenses in the year and presents

a reconciliation between profit before tax in the income statement multiplied by the UK rate of corporation tax and the

tax expense for the year.

Accounting policy

The taxation expense for the year represents the sum of current tax and deferred tax. The expense is recognised in the

income statement, in the statement of comprehensive income or in equity according to the accounting treatment of the

related transaction.

Current tax is based on the taxable income for the period and any adjustment in respect of prior periods. Current tax

is calculated using tax rates that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax arises due to certain temporary differences between the carrying amounts of assets and liabilities in the

financial statements and the corresponding tax bases (note 10).

		2025	2024
Analysis of expense in the year	Note	£m	£m
Current income tax
Current tax on profit for the year		144	126
Adjustment in respect of prior years		(2)	(1)
Current income tax		142	125
Deferred tax
Origination and reversal of temporary differences		(28)	(21)
Adjustment in respect of prior years		1	(1)
Deferred tax	10	(27)	(22)
The current year tax expense is split into the following:
Underlying tax expense		132	120
Tax credit on adjustments between the underlying and statutory operating profit		(17)	(17)
Income tax expense reported in income statement		115	103





	2025	2024
Tax charge/(benefit) recognised directly in other comprehensive income	£m	£m
Current income tax
Foreign currency derivatives	–	2
Deferred tax
Actuarial gain on post-employment benefit obligations	–	(1)
Foreign currency derivatives	–	(2)
Total tax recognised in other comprehensive income	–	(1)

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201

4 Income tax expense continued

The effective tax rate for the year is lower (2024: lower) than the rate of UK corporation tax applicable to the Group of 25%

(2024: 25%). The differences are explained below:

	2025	2024
	£m	£m
Profit before income tax	484	426
Statutory profit before income tax multiplied by the rate of UK corporation tax of 25% (2024: 25%)	121	106
Tax effects of:
Adjustments in respect of prior years	(1)	(2)
Foreign tax rates in excess of UK rate of tax	–	1
US tax reform	(5)	(4)
Non-deductible expenses and permanent items	9	13
Other corporate taxes (withholding tax, business tax)	5	5
Tax incentive claims	(14)	(16)
At the effective income tax rate of 24% (2024: 24%)	115	103
Income tax expense reported in the income statement	115	103

The underlying effective tax rate for the year is lower (2024: lower) than the rate of UK corporation tax applicable to the Group

of 25% (2024: 25%). The differences are explained below:

	2025	2024
	£m	£m
Underlying profit before income tax	555	502
Underlying profit before income tax multiplied by the rate of UK corporation tax of 25% (2024: 25%)	139	125
Tax effects of:
Adjustments in respect of prior years	(1)	(3)
Foreign tax rates in excess of UK rate of tax	1	1
US tax reform	(5)	(4)
Non-deductible expenses and permanent items	7	12
Other corporate taxes (withholding tax, business tax)	5	5
Tax incentive claims	(14)	(16)
At the effective income tax rate of 24% (2024: 24%)	132	120
Underlying tax expense	132	120

The effective tax rate on statutory profit before tax was 24% (2024: 24%), whilst the effective tax rate on underlying profit before

tax on continuing operations was 24% (2024: 24%).

The statutory and underlying effective tax rates are lower than the UK corporation tax rate applicable to the Group, primarily

due to the innovation tax credits for registered patents and software, and research and development activities which attract

government tax incentives in a number of operating territories.

The Group recognises certain provisions and accruals in respect of tax which involve a degree of estimation and uncertainty

where the tax treatment cannot finally be determined until a resolution has been reached by the relevant tax authority.

This approach resulted in a provision of £39m at 30 September 2025 (2024: £39m).

	2025	2024
Tax charge/(benefit) recognised directly in retained earnings	£m	£m
Current tax
Employee benefits	(7)	(7)
Deferred tax
Employee benefits	1	1
Income tax expense reported in retained earnings	(6)	(6)

Notes to the consolidated financial statements continued

202

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

4 Income tax expense continued

The tax provision is sensitive to a number of issues which are not always within the control of the Group and are often dependent

on the efficiency of the legal processes in the relevant taxing jurisdictions in which the Group operates. Issues can take many

years to resolve and assumptions on the likely outcome have therefore been made by management.

Management has applied the principles set out in IFRIC 23 in determining the measurement of uncertain tax positions.

In making these estimates, management’s judgement was based on various factors including:

• The status of recent and current tax audits and enquiries;

• The results of previous claims; and

• Any changes to the relevant tax environment.

When making this assessment, the Group utilises our specialist in-house tax knowledge and experience of similar situations.

These judgements also, where appropriate, take into consideration specialist tax advice provided by third-party advisors.

Management continually assesses the impact of legislative developments in the jurisdictions in which we operate. The Group

is in scope of the OECD’s Pillar Two global tax reform for the financial year ended 30 September 2025. An assessment of this

legislation has been completed, and it is not expected to materially impact the Group’s effective tax rate in future periods.

5 Earnings per share

This note sets out how earnings per share (EPS) is calculated. EPS is the amount of post-tax profit attributable to each

ordinary share. Diluted EPS shows what the impact would be if all potentially dilutive ordinary shares in respect of

exercisable share options were exercised and treated as ordinary shares at the year end.

This note also provides a reconciliation between the statutory profit figure, which ties to the consolidated income

statement, and the Group’s internal measure of performance, underlying profit. See note 3.6 for details of the adjustments

made between statutory and underlying profit before tax and note 4 for the tax impact on these adjustments.

Accounting policy

Basic earnings per share is calculated by dividing the profit for the year attributable to owners of the parent by

the weighted average number of ordinary shares in issue during the year, excluding those held as treasury shares and held

by the Employee Benefit Trust, which are treated as cancelled, until reissued.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion

of all potentially dilutive ordinary shares, exercisable at the end of the year. The Group has one class of dilutive potential

ordinary shares which are share options granted to employees where the exercise price is less than the average market

price of the Company’s ordinary shares during the year, where the vesting criteria are achieved at year end.

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203

5 Earnings per share continued

		Underlying
		as
	Underlying	reported*	Underlying	Statutory	Statutory
Reconciliations of the earnings and weighted average number of shares	2025	2024	2024	2025	2024
Earnings attributable to owners of the parent** (£m)
Profit for the year	423	382	370	369	323
Number of shares (millions)
Weighted average number of shares	978	1,007	1,007	978	1,007
Dilutive effects of shares	15	18	18	15	18
	993	1,025	1,025	993	1,025
Earnings per share attributable to owners of the parent** (pence)
Basic earnings per share	43.19	37.91	36.73	37.74	32.10
Diluted earnings per share	42.52	37.25	36.09	37.16	31.55

Notes:

* Underlying as reported is at 2024 reported exchange rates.

** All operations in the years relate to continuing operations.

	2025	2024
Reconciliation of earnings	£m	£m
Statutory profit for the year attributable to owners of the parent	369	323
Adjustments:
Amortisation of acquired intangible assets	42	48
Other M&A activity-related items	31	34
Reversal of property restructuring costs	(2)	–
Reversal of restructuring costs	(1)	(2)
Reversal of employee-related costs	–	(3)
Foreign currency movements on intercompany balances	1	(1)
Taxation on adjustments between underlying and statutory profit before tax	(17)	(17)
Net adjustments	54	59
Underlying profit for the year (before foreign exchange movement)	423	382
Foreign exchange movement	–	(16)
Taxation on foreign exchange movement	–	4
Net foreign exchange movement	–	(12)
Underlying profit for the year (after foreign exchange movement) attributable to owners of the parent	423	370

Exchange movement relates to the retranslation of prior year results to current year exchange rates, as shown in the table

on page 55 within the Financial review.

6 Intangible assets

This note provides details of the non-physical assets used by the Group to generate revenues and profits. These assets

include items such as goodwill, and other intangible assets such as brands, customer relationships, computer software,

in-process R&D and technology which have predominantly been acquired as part of business combinations. These assets

are initially measured at fair value, which is the price that would be received to sell an asset in an orderly transaction

between market participants at the measurement date.

Goodwill represents the excess of the amount paid to acquire a business over the fair value of the identifiable net assets

of that business at the acquisition date.

This section also explains the accounting policies applied and the specific judgements and estimates made

by management in arriving at the carrying value of these assets.

Notes to the consolidated financial statements continued

204

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

6 Intangible assets continued

6.1 Goodwill

Accounting policy

Goodwill arising from the acquisition of a subsidiary represents the excess of the consideration transferred, the amount of

any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the

acquiree over the fair value of the Group’s total identifiable net assets acquired. Goodwill is carried at cost less

accumulated impairment losses.

Goodwill previously written off directly to reserves under UK GAAP prior to 1 October 1998 has not been reinstated and is

not recycled to the income statement on the disposal of the business to which it relates.

Goodwill is tested for impairment annually and when circumstances indicate that it may be impaired. Goodwill is

assessed for the purpose of impairment testing, at either the individual cash-generating unit (CGU) level or group of

CGUs, consistent with the level at which goodwill is monitored internally. Impairment is determined by assessing the

recoverable amount of each CGU or group of CGUs to which the goodwill relates. When the recoverable amount of the CGU

or group of CGUs is less than its carrying amount, an impairment loss is recognised.

At recognition, goodwill is allocated to those CGUs expected to benefit from the synergies of the combination.

		2025	2024*
	Note	£m	£m
Cost and net book amount at 1 October		2,122	2,245
Acquisition of subsidiaries	14.1	74	24
Exchange movement		17	(147)
Cost and net book amount at 30 September		2,213	2,122

Note:

* Adjusted for finalisation of fair value of assets acquired and liabilities assumed in the acquisition of Infineo in the prior year.

There are no accumulated impairment charges within goodwill for any of the years presented.

Cash-generating units

The following table shows the allocation of the carrying value of goodwill at the end of the reporting period by CGU or group

of CGUs:

	2025	2024*
	£m	£m
North America	1,375	1,331
UK & Ireland	354	354
France	246	234
Iberia	159	126
Central Europe	55	53
Africa and the Middle East	24	24
	2,213	2,122

Note:

* Adjusted for finalisation of the fair value of assets acquired and liabilities assumed in the acquisition of Infineo (see notes 1 and 14.2) and allocation of

previously unallocated goodwill to the France CGU (£32m), with the remainder allocated to other intangible and deferred tax liabilities (see note 14.2)

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6 Intangible assets continued

6.1 Goodwill continued

Annual goodwill impairment tests

The recoverable amount of a CGU or group of CGUs is determined as the higher of its fair value less costs of disposal and

its value in use. In determining value in use, estimated future cash flows over a three-year period are discounted to their

present value, with a terminal value based on the cash flows in the third year and an assumed long-term growth rate.

The Group performed its annual test for impairment as at 30 June 2025. In all cases, the financial forecasts contained in the

Group’s three-year financial plan form the basis for the cash flow projections for a CGU or a group of CGUs, which is aligned

with the Group’s three-year strategic planning horizon.

Net operating cash flows over the three-year plan period reflect the Group’s current assessment of climate change for each

CGU or group of CGUs. This includes the potential impact on both revenue and cost, including the cost of any associated

commitments made by the Group, which at this stage are not material. Consideration has also been given to the potential

longer-term impacts which are reflected in the long-term growth rates since they are based on independently sourced longer-

term Consumer Prices Index (CPI) forecasts. Reasonably possible changes in the long-term growth rates, considering the

potential impact of climate change, do not materially impact the impairment test.

The key assumptions in the value in use calculations include the discount rate, average medium-term revenue growth rates

and the long-term growth rates of net operating cash flows:

• The average medium-term revenue growth rates represent the compound annual revenue growth for the first three years.

The average medium-term revenue growth rate applied to each CGU’s cash flow projections for plan periods of three years

are calculated using the specific rates used in the preparation of the Group’s three-year plan and reflects rates applicable

to each territory.

• Long-term growth rates of net operating cash flows are assumed to be in line with the long-term CPI forecasts of the

country in which the CGU’s operations are primarily undertaken, reflecting the specific rates for each territory.

Average medium-term operating margins are equal to the expected operating margin across the three-year plan period.

The operating margins over the three-year plan period are based on historical margins specific to each CGU with modest

improvements from expected efficiencies in scaling the business.

Range of rates used across the different CGUs	2025	2024
Average medium-term revenue growth rates*	6%–14%	8%–15%
Long-term growth rates to net operating cash flows	2%–4%	2%–5%

Note:

* Current year average medium-term revenue growth is based on three (2024: three) year compound annual revenue growth and excludes intercompany revenue.

Notes to the consolidated financial statements continued

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6 Intangible assets continued

6.1 Goodwill continued

In accordance with IAS 36, key assumptions for the value in use calculations are disclosed for those CGUs and groups of CGUs

where significant goodwill is held. These are deemed by management to be CGUs or groups of CGUs holding 10% or more of total

goodwill. The discount rate, average medium-term revenue growth rate and long-term growth rate assumptions used for the

value in use calculation for these are shown below:

		Approximate
		local		Average
	Local	discount	Long-term	medium-term
	discount rate	rate (pre-tax)	growth	revenue
2025	(post-tax)	equivalent	rate	growth rate*
North America	9.8%	13.1%	2.3%	14.3%
UK & Ireland	9.9%	13.3%	2.0%	14.0%
France	8.8%	11.7%	1.8%	9.4%

		Approximate		Average
	Local	local discount	Long-term	medium-term
	discount rate	rate (pre-tax)	growth	revenue
2024	(post-tax)	equivalent	rate	growth rate*
North America	10.1%	13.5%	2.2%	15.0%
UK & Ireland	10.1%	13.3%	2.0%	12.6%
France	8.9%	11.9%	1.8%	11.3%

Note:

* Current year average medium-term revenue growth is based on three (2024: three) year compound annual revenue growth and excludes intercompany revenue.

Discount rate

The Group uses a discount rate based on a local Weighted Average Cost of Capital (WACC) for each CGU or group of CGUs,

applying local government bond yields and specific tax rates to each CGU or group of CGUs. The discount rate applied to a CGU

or group of CGUs represents a post-tax rate that reflects the market assessment of the time value of money as at 30 June 2025

and the risks specific to the CGU of group of CGUs, through the inclusion of a country risk premium. As the net operating cash

flows for each CGU or group of CGUs include the expected impact of inflation, a nominal post-tax discount rate is used.

Use of a post-tax discount rate is consistent with the use of post-tax cash flows in the calculations and produces a result that is

not materially different from applying the equivalent pre-tax rate to pre-tax cash flows. For comparison, the equivalent pre-tax

rate has been estimated by grossing up the post-tax rate and is considered to provide a reasonable approximation of the rate

that would have been used if calculations were on a pre-tax basis considering there are no significant timing differences. The

post-tax discount rates applied to CGUs or group of CGUs were in the range of 8.1% (2024: 8.4%) to 16.1% (2024: 17.7%), reflecting

the specific rates for each territory.

Sensitivity analysis

A sensitivity analysis was performed for each of the significant CGUs or groups of CGUs and management concluded that

no reasonably possible change in any of the key assumptions would result in the carrying value of the CGU or group of CGUs

exceeding its recoverable amount. Sensitivity testing assumed a reasonably possible reduction in both average medium-term

revenue growth rates and average medium-term operating margins, as well as an increase in the discount rate.

Impairment charge

No impairment charge was recognised in the year (2024: £nil).

The Group performed its annual test for impairment for all CGUs as at 30 June 2025. The recoverable amount exceeded

the carrying value for each CGU or group of CGUs; accordingly no impairment charge has been recognised in the year.

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207

6 Intangible assets continued

6.2 Other intangibles

Accounting policy

Intangible assets arising on business combinations are recognised initially at fair value at the date of acquisition.

Subsequently they are carried at cost less accumulated amortisation and impairment charges. The main intangible assets

recognised are brands, technology, in-process R&D, computer software, and customer relationships. Amortisation is

charged to the income statement on a straight-line basis over their estimated useful lives.

The estimated useful lives are as follows:

Brand names	1 to 20 years	Customer relationships	4 to 15 years
Technology/In-process R&D (IPR&D)	3 to 8 years	Computer software	2 to 7 years

Other intangible assets that are acquired by the Group are stated at cost, which is the asset’s purchase price and any

directly attributable costs of preparing the asset for its intended use, less accumulated amortisation and impairment

losses if applicable.

The carrying value of intangibles is reviewed for impairment whenever events indicate that the carrying value may not

be recoverable. The recoverable amount is considered to be the higher of the fair value less costs of disposal and value

in use.

Internally generated software development costs qualify for capitalisation when the Group can demonstrate all

of the following:

• The technical feasibility of completing the intangible asset so that it will be available for use or sale;

• Its intention to complete the intangible asset and use or sell it;

• Its ability to use or sell the intangible asset;

• How the intangible asset will generate probable future economic benefits;

• The existence of a market or, if it is to be used internally, the usefulness of the intangible asset;

• The availability of adequate technical, financial and other resources to complete the development and to use

or sell the intangible asset; and

• Its ability to measure reliably the expenditure attributable to the intangible asset during development.

Generally, commercial viability of new products is not proven until all high-risk development issues have been resolved

through testing pre-launch versions of the product. As a result, technical feasibility is proven only after completion

of the detailed design phase and formal approval, which occurs just before the products are ready to go to market.

Accordingly, development costs have not been capitalised. However, the Group continues to assess the eligibility

of development costs for capitalisation on a project-by-project basis.

Costs which are incurred after the general release of internally generated software or costs which are incurred in order

to enhance existing products are expensed in the period in which they are incurred and included within research and

development expense in the financial statements.

Notes to the consolidated financial statements continued

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6 Intangible assets continued

6.2 Other intangibles continued

			Internal	Computer	Customer
	Brands	Technology	IPR&D	software	relationships	Total
	£m	£m	£m	£m	£m	£m
Cost at 1 October 2024	32	335	3	182	203	755
Additions	–	–	–	14	–	14
Acquisition of subsidiaries	–	27	–	–	1	28
Disposals	–	(2)	–	(40)	–	(42)
Exchange movement	1	3	–	–	3	7
At 30 September 2025	33	363	3	156	207	762
Accumulated amortisation at 1 October 2024	32	218	3	136	138	527
Charge for the year	–	27	–	18	15	60
Disposals	–	(2)	–	(40)	–	(42)
Exchange movement	1	2	–	1	1	5
At 30 September 2025	33	245	3	115	154	550
Net book amount at 30 September 2025	–	118	–	41	53	212

			Internal	Computer	Customer
	Brands	Technology	IPR&D	software	relationships	Total
	£m	£m	£m	£m	£m	£m
Cost at 1 October 2023	34	333	3	184	216	770
Additions	–	7	–	14	–	21
Acquisition of subsidiaries*	–	8	–	–	1	9
Disposals	–	–	–	(10)	–	(10)
Exchange movement	(2)	(13)	–	(6)	(14)	(35)
At 30 September 2024*	32	335	3	182	203	755
Accumulated amortisation at 1 October 2023	33	196	3	134	130	496
Charge for the year	1	31	–	19	16	67
Disposals	–	–	–	(10)	–	(10)
Exchange movement	(2)	(9)	–	(7)	(8)	(26)
At 30 September 2024	32	218	3	136	138	527
Net book amount at 30 September 2024*	–	117	–	46	65	228

Note:

* Adjusted for finalisation of fair value of assets acquired and liabilities assumed in the acquisition of Infineo in the prior year.

All amortisation charges in the year have been charged through selling and administrative expenses. Of these amortisation

charges, those relating to acquired intangibles of £42m (primarily technology and customer relationships) have been classified

as a recurring adjustment (2024: £48m); see note 3.6.

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209

7 Property, plant and equipment

This note details the physical assets used by the Group to operate the business and generate revenues and profits.

Assets are shown at their purchase price less depreciation, which is an expense that is charged over the useful life

of these assets to reflect annual usage and wear and tear, and impairment.

Accounting policy

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation on

property, plant and equipment is provided on a straight-line basis to write down an asset to its residual value over its

useful life as follows:

Freehold buildings Up to 50 years

Long leasehold buildings and improvements Shorter of associated lease term and useful life

Plant and equipment 2 to 7 years

Motor vehicles 4 years

Office equipment 2 to 7 years

Right-of-use lease assets Shorter of lease term and useful life

Freehold land is not depreciated.

An item of property, plant and equipment is reviewed for impairment whenever events indicate that its carrying value may

not be recoverable.

Further information on the policy applied to right-of-use lease assets is included in note 3.4.

Notes to the consolidated financial statements continued

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7 Property, plant and equipment continued

		Motor
		vehicles	Right-of-	Right-of-
	Plant and	and office	use assets:	use assets:
	equipment	equipment	Property	Vehicles	Total
	£m	£m	£m	£m	£m
Cost at 1 October 2024	120	23	150	8	301
Additions	39	2	28	2	71
Disposals	(23)	(1)	(9)	–	(33)
Exchange movement	(2)	5	2	–	5
At 30 September 2025	134	29	171	10	344
Accumulated depreciation at 1 October 2024	77	19	90	7	193
Charge for the year	13	2	14	1	30
Disposals	(23)	(1)	(3)	–	(27)
Exchange movement	1	1	2	–	4
At 30 September 2025	68	21	103	8	200
Net book amount at 30 September 2025	66	8	68	2	144

			Motor
			vehicles	Right-of-	Right-of-
	Land and	Plant and	and office	use assets:	use assets:
	buildings	equipment	equipment	Property	Vehicles	Total
	£m	£m	£m	£m	£m	£m
Cost at 1 October 2023	13	124	27	134	7	305
Additions	–	18	1	23	1	43
Disposals	(13)	(13)	(4)	(1)	–	(31)
Exchange movement	–	(9)	(1)	(6)	–	(16)
At 30 September 2024	–	120	23	150	8	301
Accumulated depreciation at 1 October 2023	6	83	23	83	6	201
Charge for the year	–	14	1	13	1	29
Disposals	(6)	(13)	(4)	(1)	–	(24)
Exchange movement	–	(7)	(1)	(5)	–	(13)
At 30 September 2024	–	77	19	90	7	193
Net book amount at 30 September 2024	–	43	4	60	1	108

All depreciation charges in the years presented have been charged through selling and administrative expenses.

In the prior year, the Group disposed of its Beaverton property site with a carrying value of £7m, which was part of the North

America operating segment, for proceeds of £9m. The profit on disposal of the site was recognised through selling and

administrative expenses and proceeds from the sale were recognised through cash flows from investing activities.

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211

8 Working capital

This note provides the amounts invested by the Group in working capital balances at the end of the financial year.

Working capital is made up of trade and other receivables, trade and other payables, and deferred income.

Trade and other receivables are made up of amounts owed to the Group by customers, amounts that we pay to our

suppliers in advance, and incremental costs to acquire a contract. Trade receivables are shown net of an allowance for

expected credit losses. Our trade and other payables are amounts we owe to our suppliers that have been invoiced to us

or accrued by us. They also include amounts due in relation to taxes and social security from our role as an employer.

This note also gives some additional detail on the age and recoverability of our trade receivables, which provides

an understanding of the credit risk faced by the Group as a part of everyday trading. Credit risk is further disclosed

in note 12.6.

8.1 Trade and other receivables

Accounting policy

Trade receivables and contract assets

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective

interest method, less an allowance for expected credit losses.

The Group uses the term “Trade receivables” for contract receivables. These are recognised when the right to

consideration is unconditional. Typically, the Group invoices fees for perpetual licences on contract closure and delivery.

For performance obligations satisfied over time, judgement is required in determining whether a right to consideration

is unconditional. In such situations, a receivable is recognised for the transaction price of the non-cancellable portion

of the contract when the Group starts satisfying the performance obligation, including arrangements where customers

pay over time taking into consideration the contractual terms and the nature of the customer’s payment arrangements.

When revenue recognised in respect of a customer contract exceeds amounts received or receivable from the customer

a contract asset is recognised.

The carrying amounts of trade receivables and contract assets are reduced by allowances for expected credit losses using

the simplified approach under IFRS 9. The Group uses a matrix approach to determine the allowance, with default rates

assessed for each country in which the Group operates. The default rates applied are based on the ageing of the

receivable, past experience of credit losses, and forward-looking information. An allowance for a receivable’s estimated

lifetime expected credit losses is first recorded when the receivable is initially recognised, and subsequently adjusted

to reflect changes in credit risk until the balance is collected. In the event that management considers that a receivable

cannot be collected, the balance is written off.

Incremental costs of obtaining customer contracts

The incremental costs of obtaining customer contracts are capitalised under IFRS 15. Contract acquisition costs primarily

consist of sales commissions earned by the Group’s sales force and business partners.

Judgement is required in determining the amounts to be capitalised, particularly where the commissions are based on

cumulative targets. The Group capitalises such cumulative target commissions for all customer contracts that count

towards the cumulative target but only if nothing other than obtaining customer contracts can contribute to achieving

the cumulative target.

The capitalised assets are amortised over the period during which the related revenue is recognised, which may extend

beyond the initial contract term where the Group expects to benefit from future renewals as a result of incurring the costs.

Typically, either the Group does not pay sales commissions for customer contract renewals or such commissions are not

commensurate with the commissions paid for new contracts. Consequently, the Group amortises sales commissions paid

for new customer contracts on a straight-line basis over the expected contract life including probable contract renewals.

Judgement is required in estimating these contract lives. In exercising this judgement, the Group considers respective

renewal history adjusted for indications that the renewal history is not fully indicative of future renewals.

The amortisation periods range from one year to eight years depending on the type of commission arrangement.

Amortisation of the capitalised costs of obtaining customer contracts is reported within selling and

administrative expenses.

Notes to the consolidated financial statements continued

212

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

8 Working capital continued

8.1 Trade and other receivables continued

	2025	2024
Non-current:	£m	£m
Customer acquisition costs	135	131
Other receivables	5	5
Prepayments	4	1
	144	137

	2025	2024
Current:	£m	£m
Trade receivables	318	275
Less: allowance for expected credit losses	(9)	(10)
Trade receivables—net	309	265
Other receivables	27	24
Prepayments	86	69
Customer acquisition costs	49	46
	471	404

The Group has incurred £170m (2024: £164m) to obtain customer contracts and an amortisation expense of £164m (2024: £157m)

was recognised in operating profit during the year. There were no material contract assets.

	2025	2024
Movements on the Group allowance for expected credit losses of trade receivables were as follows:	£m	£m
At 1 October	10	10
Increase in allowance for expected credit losses	3	4
Receivables written off during the year as uncollectable	(4)	(4)
At 30 September	9	10

The Group’s credit risk on trade and other receivables is primarily attributable to trade receivables. The Group has

no significant concentrations of credit risk since the risk is spread over a large number of unrelated counterparties.

The Group’s businesses implement policies, procedures, and controls to manage customer credit risk. Outstanding balances are

regularly monitored and reviewed to identify any change in risk profile. The Group recognises a loss allowance against trade

receivables using the simplified approach under IFRS 9. The amount of the allowance reflects the lifetime expected credit

losses measured using historical payment default rates determined for each geographical market in which the Group operates.

The historical default rates are adjusted where necessary if they do not reflect the level of future expected credit losses, for

example because of changes in the local economy or other commercial considerations. The allowance for expected credit losses

is calculated using a provision matrix. The amount of the allowance increases as outstanding balances age. A customer balance

is written off when it is considered that there is no reasonable expectation that the amount will be collected and legal

enforcement activities have ceased.

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213

8 Working capital continued

8.1 Trade and other receivables continued

An analysis of the gross carrying amount of trade receivables showing credit risk exposure by age of the outstanding balance

is as follows:

		1–30 days	31–60 days	61–90 days	91+ days
	Not yet due	overdue	overdue	overdue	overdue	Total
Trade receivables at 30 September 2025	£m	£m	£m	£m	£m	£m
Expected credit loss rate	1%	3%	8%	13%	41%	–
Estimated total gross carrying amount at default	276	19	6	4	13	318
Expected credit loss	(3)	(1)	–	–	(5)	(9)

		1–30 days	31–60 days	61–90 days	91+ days
	Not yet due	overdue	overdue	overdue	overdue	Total
Trade receivables at 30 September 2024	£m	£m	£m	£m	£m	£m
Expected credit loss rate	1%	3%	9%	16%	59%
Estimated total gross carrying amount at default	239	17	6	3	10	275
Expected credit loss	(2)	(1)	(1)	–	(6)	(10)

Included in selling and administrative expenses in the income statement is a debit of £7m (2024: debit of £6m) in relation to

receivables credit losses.

The maximum exposure to credit risk at the end of the reporting period is the fair value of each class of receivables mentioned

above. The Group held no collateral as security. The carrying value of trade receivables approximate their fair value.

8.2 Trade and other payables

Accounting policy

Trade payables and other payables are recognised initially at fair value and subsequently measured at amortised cost

using the effective interest method.

	2025	2024
Current trade and other payables can be analysed as follows:	£m	£m
Trade payables	52	38
Other tax and social security payable	47	39
Other payables	38	50
Accruals	296	278
	433	405

	2025	2024
Non-current trade and other payables can be analysed as follows:	£m	£m
Other payables	8	3

Notes to the consolidated financial statements continued

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

8 Working capital continued

8.3 Deferred income

Accounting policy

If amounts received or receivable from a customer exceed revenue recognised for a contract, a contract liability

is recognised. The Group uses the term “deferred income” for a contract liability. Contract liabilities primarily reflect

invoices due or payments received in advance of revenue recognition. Deferred income is unwound as related

performance obligations are satisfied.

In all material respects, current deferred income at 1 October 2024 was recognised as revenue during the year and the current

deferred income recorded at 30 September 2025 is expected to be recognised as revenue in the next financial year. Deferred

income presented in non-current liabilities is expected to be recognised as revenue in more than 12 months. Other than the

recognition and unwind of deferred income from the sale of subscription and maintenance and support contracts, there were

no significant changes in contract liability balances during the year.

9 Provisions

This note provides details of the provisions recognised by the Group, where a liability exists of uncertain timing

or amount. The main estimates in this area relate to legal exposure, employee severance, onerous contracts, interest on

uncertain tax provisions and dilapidation charges.

This section also explains the accounting policies applied and the specific judgements and estimates made by the

Directors in arriving at the value of these liabilities.

Accounting policy

A provision is recognised only when all three of the following conditions are met:

• The Group has a present obligation (legal or constructive) as a result of a past event;

• It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

• A reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the present value of the best estimate of the expenditure required to settle the

present obligation at the end of the reporting period, i.e. the present value of the amount that the Group would rationally

pay to settle the obligation at the balance sheet date or to transfer it to a third party.

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

215

9 Provisions continued

	Restructuring	Legal	Building	Other	Total
	£m	£m	£m	£m	£m
At 1 October 2024	7	15	18	7	47
Additional provision in the year	–	6	2	2	10
Provision utilised in the year	(2)	(8)	(2)	–	(12)
Unused amount reversed	(1)	(1)	(1)	–	(3)
Exchange movement	–	1	1	–	2
At 30 September 2025	4	13	18	9	44

	Restructuring	Legal	Building	Other	Total
	£m	£m	£m	£m	£m
Maturity profile
< 1 year	–	9	3	9	21
1–2 years	1	4	4	–	9
2–5 years	3	–	8	–	11
> 5 years	–	–	3	–	3
At 30 September 2025	4	13	18	9	44

Restructuring provisions are for the estimated costs of Group restructuring activities and mainly relate to employee severance

which remains unpaid at the balance sheet date. These provisions will be utilised as obligations are settled which is currently

expected to be within five years. This includes the non-recurring restructuring costs recognised in previous years, of which £1m

was utilised in the year, which remain unpaid at the balance sheet date.

Legal provisions have been made in relation to ongoing disputes with third parties and other claims against the Group.

The amount and ageing of legal provisions is assessed regularly, based upon internal and external legal advice, as required.

Building provisions relate to dilapidation charges and property-related contracts that have become onerous. The timing

of the cash flows associated with building provisions is dependent on the timing of lease agreement termination.

Other provisions comprise mainly the interest related to uncertain tax penalties and those for the costs of warranty cover

provided by the Group in respect of products sold to third parties. The timing of the cash flows associated with warranty

provisions is spread over the period of warranty with the majority of the claims expected in the first year.

Notes to the consolidated financial statements continued

216

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

10 Deferred income tax

Deferred income tax is an accounting adjustment to recognise liabilities or benefits that are expected to arise in the

future due to differences in the carrying value of assets and liabilities and their respective tax bases. In this note we

outline the accounting policies, movements in the year on the deferred tax account and the net deferred tax asset

or liability at the year end.

A deferred tax asset represents a tax reduction that is expected to arise in a future period.

A deferred tax liability represents taxes which will become payable in a future period as a result of a current

or previous transaction.

Accounting policy

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are

recognised to the extent that it is probable that taxable profits will be available against which deductible temporary

differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill

or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that

affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except

where the Group is able to control the reversal of the temporary difference and it is probable that the temporary

difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the

asset realised based on tax rates that have been enacted or substantively enacted at the end of the reporting period.

Tax assets and liabilities are offset when there is a legally enforceable right and there is an intention to settle the

balances net.

	Other
	intangible					Share
	assets		Accounting			options
	(excluding	Tax	provisions/		Deferred	and	Capitalised
	goodwill)	losses	accruals	Goodwill	revenue	awards	R&D	Other	Total
Deferred tax	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 30 September 2023	(45)	23	10	(24)	16	20	37	1	38
Income statement credit/(debit)	11	(2)	(5)	(1)	(13)	4	27	1	22
Acquisition or disposal of subsidiaries*	(1)	1	–	–	–	–	1	–	1
Other comprehensive income movement	–	–	–	–	–	(1)	–	4	3
Exchange movement	2	(1)	1	1	–	–	(4)	(1)	(2)
At 30 September 2024*	(33)	21	6	(24)	3	23	61	5	62
Income statement credit/(debit)	12	(2)	6	2	12	(2)	7	(8)	27
Acquisition or disposal of subsidiaries	(5)	4	–	–	–	–	–	–	(1)
Exchange movement	(1)	–	–	–	–	–	–	(1)	(2)
At 30 September 2025	(27)	23	12	(22)	15	21	68	(4)	86

Note:

* Adjusted for finalisation of fair value of assets acquired and liabilities assumed in the acquisition of Infineo in the prior year.

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10 Deferred income tax continued

	2025	2024*
The net deferred tax asset at the end of the year is analysed below:	£m	£m
Deferred tax assets	101	81
Deferred tax liabilities	(15)	(19)
Net deferred tax asset	86	62

Note:

* Adjusted for finalisation of fair value of assets acquired and liabilities assumed in the acquisition of Infineo in the prior year.

Deferred tax assets have been recognised in respect of tax losses and other temporary differences giving rise to deferred tax

assets because it is probable that these assets will be recovered. Each of these assets are reviewed to ensure there is sufficient

evidence to support their recognition. Deferred tax liabilities for the taxable temporary differences associated with the Group’s

investments in subsidiaries have been appropriately recognised to the extent that it is probable that the temporary differences

will reverse in the future. Deferred taxes have been provided for the future tax impact of repatriating the Group’s undistributed

earnings, which is consistent with the position in the prior year.

The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction as required

by IAS 12 “Income Taxes”) during the year are shown in the above table. Deferred tax assets and liabilities are only offset where

there is a legally enforceable right of offset and there is an intention to settle the balances net.

Deferred tax assets and liabilities categorised as “other” in the above table include various balances in relation to the

following items:

	2025	2024
	£m	£m
Unremitted earnings	(6)	(7)
Lease liability	12	18
Right-of-use lease assets	(5)	(12)
Other amounts	(5)	6
	(4)	5

The Company has unrecognised carried forward losses of £122m (2024: £134m) available to reduce certain future taxable

profits. Deferred tax assets of £28m (2024: £32m) have not been recognised in respect of these losses due to uncertainty

regarding whether suitable profits will arise in future periods against which the deferred tax asset would reverse. Of these,

£18m (2024: £18m) relate to UK capital losses that are available indefinitely but cannot be used to offset UK trading profit.

In July 2023, the UK Endorsement Board adopted “International Tax Reform-Pillar Two Model Rules (Amendments to IAS 12)”

as issued by the IASB, which introduced a mandatory temporary exception in IAS 12, prohibiting both the recognition and

disclosure of deferred tax assets and deferred tax liabilities that arise from the implementation of the OECD Pillar Two Model

Rules. The Group has applied the mandatory exception under IAS 12 within the consolidated financial statements for the year

ended 30 September 2025.

Notes to the consolidated financial statements continued

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11 Cash flow and net debt

This note analyses our operational cash generation, shows the movement in our net debt in the year, and explains what is

included within our cash balances and borrowings at the year end.

Cash generated from operations is the starting point of our consolidated statement of cash flows. This section outlines

the adjustments for any non-cash accounting items to reconcile our accounting profit for the year to the amount of cash

we generated from our operations.

Net debt represents the amount of cash held less borrowings and overdrafts.

Borrowings are mostly made up of fixed-term external debt which the Group has taken out for general corporate purposes,

including the refinancing of debt and acquisitions. Borrowings also include lease liabilities.

11.1 Cash flow generated from continuing operations

	2025	2024
Reconciliation of profit for the year to cash generated from continuing operations	£m	£m
Profit for the year	369	323
Adjustments for:
Income tax	115	103
Finance income	(12)	(19)
Finance costs	58	45
Amortisation of intangible assets	60	67
Depreciation of property, plant and equipment	30	29
Gain on disposal of property, plant and equipment	(1)	(2)
R&D tax credits	(3)	(2)
Equity-settled share-based transactions	51	56
Exchange movement	–	(4)
Changes in working capital:
Increase in trade and other receivables	(68)	(48)
(Decrease)/increase in trade and other payables and provisions	(3)	20
Increase in deferred income	79	57
Cash generated from continuing operations	675	625

11.2 Net debt

	2025	2024
Reconciliation of net cash flow to movement in net debt	£m	£m
Cash outflows in the year (pre-exchange movements)	(123)	(164)
Cash (inflows)/outflows from loans and lease liabilities	(280)	18
Change in net debt resulting from cash flows	(403)	(146)
Cash and lease liabilities recognised from acquisitions of subsidiaries or similar transactions	1	4
Other non-cash movements	(30)	(28)
Exchange movement	(19)	(7)
Movement in net debt in the year	(451)	(177)
Net debt at 1 October	(738)	(561)
Net debt at 30 September	(1,189)	(738)

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11 Cash flow and net debt continued

11.2 Net debt continued

	At					At
	1 October			Non-cash	Exchange	30 September
	2024	Cash flow	Acquisition	movements	movement	2025
Analysis of change in net debt	£m	£m	£m	£m	£m	£m
Cash and cash equivalents	508	(123)	3	–	2	390
Borrowings
Loans due after more than one year	(1,156)	(295)	(2)	(2)	(21)	(1,476)
Lease liabilities due within one year	(15)	15	–	(17)	–	(17)
Lease liabilities after more than one year	(75)	–	–	(11)	–	(86)
	(1,246)	(280)	(2)	(30)	(21)	(1,579)
Total	(738)	(403)	1	(30)	(19)	(1,189)

	At					At
	1 October			Non-cash	Exchange	30 September
	2023	Cash flow	Acquisition	movements	movement	2024
Analysis of change in net debt	£m	£m	£m	£m	£m	£m
Cash and cash equivalents	696	(164)	4	–	(28)	508
Borrowings
Loans due after more than one year	(1,171)	–	–	(2)	17	(1,156)
Lease liabilities due within one year	(14)	18	–	(20)	1	(15)
Lease liabilities after more than one year	(72)	–	–	(6)	3	(75)
	(1,257)	18	–	(28)	21	(1,246)
Total	(561)	(146)	4	(28)	(7)	(738)

Notes to the consolidated financial statements continued

220

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

11 Cash flow and net debt continued

11.3 Cash and cash equivalents

Accounting policy

For the purpose of preparation of the consolidated statement of cash flows and the consolidated balance sheet, cash and

cash equivalents include cash at bank and in hand, money market funds (MMFs) and short-term deposits with an original

maturity period of three months or less. Bank overdrafts that are an integral part of a subsidiary’s cash management are

included in cash and cash equivalents where they have a legal right of set-off and there is an intention to settle net,

against positive cash balances, otherwise bank overdrafts are classified as borrowings. Cash and cash equivalents are

measured at amortised cost.

	2025	2024
	£m	£m
Cash at bank and in hand	251	292
MMFs and short-term bank deposits	139	216
	390	508

The credit risk on liquid funds is considered to be low, as the Board-approved Group treasury policy limits the value that can

be invested with each approved counterparty to minimise the risk of loss. The Group treasury policy is to place cash and cash

equivalents with counterparties which are well-established banks with high credit ratings where available.

Cash and cash equivalents are classified and measured at amortised cost under IFRS 9 and are therefore subject to the expected

loss model requirements of that standard. However, no material expected credit losses have been identified. At 30 September

2025, 97% (2024: 99%) of the cash and cash equivalents balance was deposited with financial institutions rated at least A- by

Standard & Poor’s.

The Group’s maximum exposure to credit risk in relation to cash and cash equivalents is their carrying amount on the

balance sheet.

11.4 Borrowings

Accounting policy

Interest-bearing borrowings are recognised initially at fair value less attributable issue costs, which are amortised over

the period of the borrowings. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost

with any difference between cost and redemption value being recognised in the income statement over the period of

borrowing on an effective interest basis.

Further information on the policy applied to lease liabilities is included in note 3.4.

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11 Cash flow and net debt continued

11.4 Borrowings continued

	2025	2024
Current borrowings at book value	£m	£m
Lease liabilities	17	15

	2025	2024
Non-current borrowings at book value	£m	£m
Sterling denominated bond notes	1,041	743
Euro denominated bond notes	436	414
Lease liabilities	86	75
Unamortised RCF loan costs	(1)	(1)
	1,562	1,231

		Interest		2025	2024
Borrowings at nominal value	Year issued	coupon*	Maturity	£m	£m
Bonds
GBP 350m bond notes	2021	1.63%	25-Feb-31	350	350
GBP 400m bond notes	2022	2.88%	8-Feb-34	400	400
EUR 500m bond notes	2023	3.82%	15-Feb-28	437	416
GBP 300m bond notes	2025	5.63%	5-Mar-37	300	–

Note:

* This does not include the impact of cross-currency interest rate swaps entered into in relation to the GBP 350m bond notes and EUR 500m bond notes.

The Group’s debt is sourced from sterling and euro denominated bond notes, with a syndicated multi-currency Revolving Credit

Facility (RCF) also available.

Bond notes at 30 September 2025 were £1,477m (30 September 2024: £1,157m), comprised of sterling denominated bond notes

£1,041m (30 September 2024: £743m) and euro denominated bond notes £436m (30 September 2024: £414m).

In November 2024, a one-year extension was agreed to the Group’s RCF, resulting in a new maturity in December 2029.

At 30 September 2025, £nil of the RCF was drawn down (30 September 2024: £nil).

During the period, the Group issued sterling denominated bond notes for a nominal amount of £300m with a maturity date

of March 2037. Net cash proceeds from the issuance were £297m.

Further information on lease liabilities is included in note 3.4.

Notes to the consolidated financial statements continued

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12 Financial instruments

This note shows details of the fair value and carrying value of short- and long-term borrowings, trade and other payables,

trade and other receivables, derivative financial instruments, equity investments, short-term bank deposits, and cash and

cash equivalents. These items are all classified as “financial instruments” under accounting standards. Fair value is the

price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date.

In order to assist users of these consolidated financial statements in making an assessment of any risks relating to

financial instruments, this note also sets out the maturity of these items and analyses their sensitivity to changes in key

inputs, such as interest rates and foreign exchange rates. An explanation of the Group’s exposure to, and management of,

capital, liquidity, credit, interest rate, and foreign currency risk is set out in the financial risk management section at the

end of this note.

Accounting policy

Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to

the contractual provisions of the instrument.

Financial assets are derecognised when the rights to receive cash flows from the asset have expired, or when the Group has

transferred those rights and either has also transferred substantially all the risks and rewards of the asset or has neither

transferred nor retained substantially all the risks and rewards of the asset but no longer has control of the asset.

Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled, or expires.

The Group may use derivative financial instruments to manage its exposures to fluctuating foreign exchange rates and

foreign currency cash flows in relation to external borrowings. These instruments are initially recognised at fair value on

the date the contract is entered into and are subsequently remeasured at their fair value. The method of recognising the

resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the

item being hedged.

At the inception of designated hedge relationships, the Group documents its risk management objectives and strategy for

undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an

ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes

in fair values of hedged items.

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12 Financial instruments continued

The amounts on the consolidated balance sheet that are accounted for as financial instruments, and their classification under

IFRS 9, are as follows:

						IFRS 9 classification
				At fair
				value	At fair value
		At	Derivatives	through	through other
		amortised	used for	profit or	comprehensive
		cost	hedging	loss	income	Total
As at 30 September 2025	Note	£m	£m	£m	£m	£m
Non-current assets
Equity investments		–	–	–	4	4
Trade and other receivables: other receivables	8.1	3	–	2	–	5
Derivative financial instruments—cross-currency
interest rate swaps		–	32	–	–	32
Current assets
Trade and other receivables: trade receivables	8.1	309	–	–	–	309
Trade and other receivables: other receivables	8.1	26	–	1	–	27
Cash and cash equivalents	11.3	390	–	–	–	390
Current liabilities
Trade and other payables excluding other tax and social security	8.2	(386)	–	–	–	(386)
Borrowings	11.4	(17)	–	–	–	(17)
Non-current liabilities
Borrowings	11.4	(1,562)	–	–	–	(1,562)
Trade and other payables: other payables		(8)	–	–	–	(8)
		(1,245)	32	3	4	(1,206)

						IFRS 9 classification
					At fair value
			Derivatives		At fair value through other
		At amortised	used for		through	comprehensive
		cost	hedging profit or loss		income	Total
As at 30 September 2024	Note	£m	£m	£m	£m	£m
Non-current assets
Equity investments		–	–	–	6	6
Trade and other receivables: other receivables	8.1	3	–	2	–	5
Derivative financial instruments—cross-currency
interest rate swaps		–	29	–	–	29
Current assets
Trade and other receivables: trade receivables	8.1	265	–	–	–	265
Trade and other receivables: other receivables	8.1	23	–	1	–	24
Cash and cash equivalents	11.3	508	–	–	–	508
Current liabilities
Trade and other payables excluding other tax and social security	8.2	(366)	–	–	–	(366)
Borrowings	11.4	(15)	–	–	–	(15)
Non-current liabilities
Borrowings	11.4	(1,231)	–	–	–	(1,231)
Trade and other payables: other payables		(3)	–	–	–	(3)
Derivative financial instruments—cross-currency
interest rate swaps	12.5	–	(13)	–	–	(13)
		(816)	16	3	6	(791)

Notes to the consolidated financial statements continued

224

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

12 Financial instruments continued

12.1 Fair values of financial instruments

The carrying amounts of the following financial assets and liabilities approximate to their fair values: trade and other payables

excluding tax and social security, trade and other receivables excluding prepayments and accrued income, lease liabilities, and

short-term bank deposits, and cash and cash equivalents.

Borrowings (excluding lease liabilities)

The fair value of the sterling and euro denominated bond notes are determined by reference to quoted market prices and

therefore can be considered as a level 1 fair value as defined within IFRS 13.

The Group does not hold any financial liabilities whose fair value would be considered as a level 3 fair value as defined

within IFRS 13.

The respective book and fair values of bond notes are included in the table below:

			2025		2024
		Book value	Fair value	Book value	Fair value
	Note	£m	£m	£m	£m
Long-term borrowing (excluding lease liabilities)	11.4	1,476	1,400	1,156	1,065

Contingent consideration receivable

The Group recognises contingent consideration receivable of £3m (2024: £3m) relating to the disposal of Sage Payroll

Solutions in the year ended 30 September 2019. This is classified as a financial asset measured at fair value through profit or

loss. Its fair value is determined using a discounted cash flow valuation technique. The main inputs to the calculation for which

assumptions have been made are the discount rate and the period over which the consideration will be received. This is a level 3

fair value under IFRS 13.

Equity investments

The fair value of the unlisted equity investments held by the Group is determined using a market-based valuation approach.

The significant unobservable inputs used in level 3 fair value measurement are transaction prices paid for identical or similar

instruments of the investee and revenue growth factors.

Derivative financial instruments—cross-currency interest rate swaps

The fair value of the cross-currency interest rate swaps held by the Group is determined using a discounted cash flow valuation

technique at market rates and therefore can be considered as a level 2 fair value as defined within IFRS 13.

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12 Financial instruments continued

12.2 Maturity of financial liabilities

The maturity profile of the undiscounted contractual amount of the Group’s financial liabilities (excluding cross-currency

interest rate swaps) at 30 September was as follows:

				2025
			Trade and
			other payables
		Borrowings:	excluding other
	Borrowings:	lease	tax and social
	bond notes	liabilities	security	Total
	£m	£m	£m	£m
In less than one year	52	19	386	457
In more than one year but not more than five years	600	66	8	674
In more than five years	1,200	35	–	1,235
	1,852	120	394	2,366

				2024
			Trade and
			other payables
		Borrowings:	excluding other
	Borrowings:	lease	tax and social
	bond notes	liabilities	security	Total
	£m	£m	£m	£m
In less than one year	34	18	366	418
In more than one year but not more than five years	527	62	3	592
In more than five years	808	31	–	839
	1,369	111	369	1,849

The maturity profile of the undiscounted contractual amounts of the Group’s cross-currency interest rate swaps, including

expected interest payments, at 30 September was as follows:

			2025
	Receipts	Payments	Total
	£m	£m	£m
In less than one year	11	(13)	(2)
In more than one year but not more than five years	596	(585)	11
In more than five years	356	(327)	29
	963	(925)	38

			2024
	Receipts	Payments	Total
	£m	£m	£m
In less than one year	29	(33)	(4)
In more than one year but not more than five years	605	(612)	(7)
In more than five years	361	(336)	25
	995	(981)	14

Notes to the consolidated financial statements continued

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

12 Financial instruments continued

12.3 Borrowing facilities

The Group has the following undrawn committed revolving credit facility available at 30 September in respect of which all

conditions precedent had been met at that date:

	2025	2024
	£m	£m
Expiring in more than one year but not more than five years	630	630

The facility has been arranged to help finance the expansion of the Group’s activities. This facility incurs commitment

fees at market rates. In November 2024, a one-year extension was agreed to the Group’s RCF, resulting in a new maturity

in December 2029.

12.4 Market risk sensitivity analysis

Financial instruments affected by market risks include borrowings and deposits.

The following analysis is intended to illustrate the sensitivity to changes in market variables, being sterling/US dollar

and sterling/euro exchange rates.

The sensitivity analysis assumes reasonable movements in foreign exchange rates before the effect of tax. Sensitivity

to movements in sterling/US dollar and sterling/euro exchange rates of 10% are shown, reflecting changes of reasonable

proportion in the context of movement in those currency pairs over the last year.

Using the above assumptions, the following table shows the illustrative effect on equity resulting from changes in sterling/US

dollar and sterling/euro exchange rates:

	2025	2024
	Equity	Equity
	gains/(losses)	gains/(losses)
	£m	£m
10% strengthening of sterling versus the US dollar	50	50
10% strengthening of sterling versus the euro	(9)	(9)
10% weakening of sterling versus the US dollar	(65)	(62)
10% weakening of sterling versus the euro	10	11

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12 Financial instruments continued

12.5 Hedge accounting

Accounting policy

As at 1 October 2024, the Group elected to apply the hedge accounting requirements in IFRS 9 Financial Instruments

instead of those in IAS 39 Financial Instruments: Recognition and Measurement. The Group applies hedge accounting to

external borrowings and cross-currency interest rate swap contracts that are designated as a hedge of a net investment in

foreign operations. The portion of the gain or loss on an instrument used to hedge a net investment in a foreign operation

which is determined to be an effective hedge is recognised in other comprehensive income and accumulated in the

foreign currency translation reserve. The ineffective portion is recognised immediately in profit or loss. On disposal

of the net investment, the foreign exchange gains and losses on the hedging instrument are recycled to the income

statement from equity.

Where borrowings denominated in a currency other than sterling, or cross-currency interest rate swap contracts, are used

to hedge the Group’s exposure to foreign currency exchange movements of its net investment in its subsidiaries, these

relationships are designated as net investment hedges for accounting purposes. The hedges are documented and

assessed for effectiveness on an ongoing basis. The Group has separated the costs relating to currency basis from the

hedge relationship and therefore allocates this component within the cost of hedging reserve. The value of the cost of

hedging reserve at designation of the hedge relationship is amortised to the income statement (within finance costs)

over the expected life of the hedge relationship.

The Group applies hedge accounting to certain exchange differences arising between the functional currencies

of a foreign operation and Company, regardless of whether the net investment is held directly or through an

intermediate parent.

The Group applies cash flow hedge accounting to cross-currency interest rate swap contracts that are designated as a

hedge of cash flows arising from foreign currency denominated borrowings. The effective portion of changes in the

fair value of such a derivative is recognised in other comprehensive income and accumulated in the hedging reserve.

The effective portion of changes in fair value of the derivative that is recognised in other comprehensive income is

limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception

of the hedge.

Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. If the

hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging

reserve are immediately reclassified to profit or loss.

The Group designates the change in fair value of the forward element of forward exchange contracts as the hedging

instrument in cash flow hedging relationships. The amount accumulated in the hedging reserve is reclassified to profit

or loss in the same period or periods as the hedged expected future cash flows affect profit or loss.

Notes to the consolidated financial statements continued

228

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

12 Financial instruments continued

12.5 Hedge accounting continued

Net investment hedges

The Group hedges the risk exposure to foreign currency exchange movements of its net investment in its subsidiaries in the US

and Eurozone.

A portion of the Group’s external euro denominated borrowings, relating to the EUR 500m bond, are designated

as hedging instruments.

The underlying risk of the hedging instruments exactly matches the hedged risk as the borrowings and net investments

in subsidiaries are denominated in the same currencies, giving a hedge ratio of 1:1. Hedge ineffectiveness will arise if the

carrying amount of the net investment falls below the carrying amount of the designated borrowings.

The Group designates certain USD cross-currency interest rate swap contracts totalling £557m (USD 750m) (2024: £560m, USD

750m) as hedging instruments to hedge risk exposure to foreign currency exchange movements of its net investment in its

subsidiaries in the US. Sources of ineffectiveness on this hedge relationship will arise from a difference in credit ratings

between the counterparties and modifications to the terms of either the hedged item or the instrument. During the year,

£nil (2024: £nil) has been recognised in the income statement as ineffective.

Changes in the carrying amount of the loan notes relate to foreign exchange movements recognised through other

comprehensive income. The change in the carrying amount of the derivative financial instrument is due to fair value

movements also recognised through other comprehensive income.

The impact of the hedging instrument on the consolidated balance sheet is as follows:

				Change in carrying
				amount as a result of
			Carrying	movements in the year
			amount*	recognised in OCI
As at 30 September 2025		Nominal amount	£m	£m
Non-current borrowings	EUR bond notes**	EUR 70m	61	–
Derivative financial instruments	Cross-currency interest rate swap	USD 429m	(7)	(1)
Derivative financial instruments	Cross-currency interest rate swap	USD 321m	(25)	(2)
			29	(3)

				Change in carrying
				amount as a result of
			Carrying	movements in the year
			amount*	recognised in OCI
As at 30 September 2024		Nominal amount	£m	£m
Non-current borrowings	EUR bond notes***	EUR 156m	130	(6)
Derivative financial instruments	Cross-currency interest rate swap	USD 429m	(6)	(24)
Derivative financial instruments	Cross-currency interest rate swap	USD 321m	(23)	(22)
			101	(52)

Notes:

* Liability/(asset) position.

** Hedge relationship was designated effective from 30 September 2025.

*** Hedge relationship was de-designated effective from 30 September 2024.

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12 Financial instruments continued

12.5 Hedge accounting continued

The cumulative impact of the hedged item on the consolidated balance sheet is as follows:

	2025	2024
	Foreign currency	Foreign currency
	translation reserve	translation reserve
	£m	£m
Net investment in foreign subsidiaries—USD	(32)	(29)
Net investment in foreign subsidiaries—EUR	(–)	(9)
	(32)	(38)

The change in value of the hedged item, being the Group’s net investment in its USD and EUR subsidiaries, recorded through

OCI in the year was £3m (2024: £46m) and £nil (2024: £6m) respectively.

Cash flow hedges

The Group hedges the risk exposure to foreign currency exchange movements of its foreign currency borrowings.

The Group has designated cross-currency interest rate swap contracts (to receive fixed euro and pay fixed sterling) as the

hedging instruments in a cash flow hedge relationship, to mitigate the risk of changes in the denominated cash flows

attributable to the exchange rate related to EUR 300m of the EUR 500m bond notes, for which hedge accounting has

been applied.

The underlying risk of the hedging instruments exactly matches the hedged risk as the hedging instrument and euro borrowings

are arranged on the same payment profile, for the same interest rate and nominal amount, giving a hedge ratio of 1:1.

Hedge ineffectiveness will arise if the carrying amount of the euro borrowings falls below the amount of the cross-currency

swap contract, for example on early repayment of the euro borrowings.

Sources of ineffectiveness on this hedge relationship will arise from a difference in credit ratings between the counterparties

and modifications to the terms of either hedged item or instrument. At 30 September 2025, £nil (2024: £nil) has been recognised

in profit or loss due to ineffectiveness. The hedges are documented and are assessed for effectiveness on an ongoing basis.

Gains and losses initially recognised in other comprehensive income on cross-currency swap contracts are recognised in profit

or loss (within finance costs) in the periods in which the hedged forecast transaction affects profit or loss. A reconciliation

of movements in the hedging reserve in relation to the cash flow hedging instrument is provided in note 13.3.

The impact of the hedging instrument on the consolidated balance sheet is as follows:

				Change in carrying	Change in carrying
				amount as a result	amount as a result
				of net movements	of net movements
			Carrying	in the year	in the year
			amount*	recognised in OCI	recognised in P&L
As at 30 September 2025		Nominal amount	£m	£m	£m
Derivative financial	Cross-currency
instruments	interest rate swap	EUR 300m	–	–	(13)

				Change in carrying	Change in carrying
				amount as a result of	amount as a result of
				net movements in	net movements in
			Carrying	the year recognised	the year recognised
			amount*	in OCI	in P&L
As at 30 September 2024		Nominal amount	£m	£m	£m
Derivative financial	Cross-currency
instruments	interest rate swap	EUR 300m	13	–	11

Note:

* Liability position.

Further information on the Group’s exposure to foreign currency risk and how the risk is managed is included in note 12.6.

Notes to the consolidated financial statements continued

230

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

12 Financial instruments continued

12.6 Financial risk management

The Group’s exposure to and management of capital, liquidity, credit, interest rate and foreign currency risk are

summarised below.

Capital risk

The Group’s objectives when managing capital (defined as net debt plus equity) are to safeguard its ability to continue as a

going concern in order to provide returns to shareholders and benefits for other stakeholders, while maintaining an appropriate

balance of debt and equity funding. The Group manages its capital structure through regular review by the Board and makes

adjustments to it with respect to changes in economic conditions and our strategic objectives. Priorities for capital allocation

are organic and inorganic investment, including through acquisitions of complementary technology and partnerships; the

progressive growth of the dividend; and the return of surplus capital to shareholders, if appropriate. Over the medium term,

the Group plans to operate in a broad range of 1–2x net debt to underlying EBITDA, with flexibility to move outside this range as

the business needs require. A reconciliation of the net debt/underlying EBITDA ratio is provided as part of the capital allocation

disclosure within the Financial review on page 54.

Liquidity risk

The Group manages its exposure to liquidity risk by reviewing cash resources required to meet business objectives through

both short- and long-term cash flow forecasts. The Group has committed facilities which are available to be drawn for general

corporate purposes including working capital. The Treasury function has responsibility for optimising the level of cash across

the business.

Credit risk

The Group’s credit risk primarily arises from trade and other receivables. The Group has a low operational credit risk due to the

transactions being principally of a high-volume, low-value, and short maturity. The Group has no significant concentration

of operational credit risk, with the exposure spread over a large number of well-diversified counterparties and customers.

The credit risk on liquid funds is considered to be low, as the Board-approved Group treasury policy limits the value that can

be invested with each approved counterparty to minimise the risk of loss. All counterparties must meet minimum credit rating

requirements or be specifically authorised as an exception.

Further information on the credit risk management procedures applied to trade receivables is given in note 8.1 and to cash and

cash equivalents in note 11.3. The carrying amounts of trade receivables and cash and cash equivalents shown in those notes

represent the Group’s maximum exposure to credit risk.

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231

12 Financial instruments continued

12.6 Financial risk management continued

Interest rate risk

The Group’s borrowings at 30 September 2025 principally comprise sterling and euro denominated bond notes, which are at

fixed interest rates, and a bank RCF, which is subject to floating interest rates. Additionally, the Group is exposed to interest

rate risk on floating rate deposits. The Group regularly reviews forecast debt, cash and cash equivalents, and interest rates

to monitor this risk. Interest rates on debt and deposits are fixed when management decides this is appropriate.

At 30 September 2025, the Group had £390m (2024: £508m) of cash and cash equivalents, while its borrowings comprised:

• Sterling denominated bond notes of £1,041m (2024: £743m), comprising a nominal £350m bond issued in 2021, a nominal

£400m bond issued in 2022 and a nominal £300m bond issued in 2025. The Group is also party to a cross-currency interest

rate swap in relation to the £350m bond, as a result of which the bond had an effective average fixed interest rate of 2.45%

(2024: 2.45%). The £400m bond has an fixed coupon of 2.88% (2024: 2.88%) and the £300m bond has an effective average

fixed coupon rate of 5.63%.

• Euro denominated bond notes of £436m (2024: £414m). The Group is also party to cross-currency interest rate swaps

in relation to EUR 300m of this nominal EUR 500m bond, as a result of which the bond had an effective average fixed

interest rate of 4.52% (2024: 4.53%).

• Undrawn bank RCF (2024: undrawn).

See note 11.4 for more information.

Foreign currency risk

Although a substantial proportion of the Group’s revenue and profit is earned outside the UK, operating companies generally

only trade in their own currency. The Group is therefore not subject to any significant foreign exchange transactional exposure

within these subsidiaries.

The Group’s principal exposure to foreign currency lies in the translation of overseas profits into sterling; this exposure

is not hedged.

During the year a portion of the Group’s external euro denominated borrowings (EUR 70m of a nominal EUR 500m) were

designated as a hedge of the net investment in its EUR functional entities effective from 30 September 2025.

During the prior year a portion of the Group’s external euro denominated borrowings (EUR 156m of a nominal EUR 500m) were

also designated as a hedge of the net investment in its subsidiaries in the Eurozone. This hedge relationship was de-designated

effective from 30 September 2024.

The Group has cross-currency swap contracts to receive fixed sterling and pay fixed US dollars (£350m, USD 429m;

£264m USD 321m), as well as receive fixed euros and pay fixed sterling (EUR 300m, £264m).

The euro-sterling swap contracts have been designated as the hedging instruments in a cash flow hedge relationship to

mitigate the risk of changes in the cash flows related to the remaining euro denominated borrowings attributable to changes

in exchange rate. The average interest rate of the euro-sterling swap contracts is 4.98%, fixed for the lifetime of the instrument.

See note 12.5.

The US dollar-sterling swap contracts have been designated as a hedge of the Group’s net investment in its subsidiaries

in the US. See note 12.5.

Certain of the Group’s intercompany balances have been identified as part of the Group’s net investment in foreign operations.

Foreign exchange effects on these balances that remain on consolidation are also reflected in the translation reserve.

The Group’s other currency exposures comprise those currency gains and losses recognised in the income statement,

reflecting other monetary assets and liabilities of the Group that are not denominated in the functional currency of the

entity involved. At 30 September 2025 and 30 September 2024, these exposures were immaterial to the Group.

Notes to the consolidated financial statements continued

232

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

13 Equity

This note analyses the movements recorded through shareholders’ equity that are not explained elsewhere in the

consolidated financial statements, being changes in the amount which shareholders have invested in the Group.

The Group utilises share award plans as part of its employee remuneration package. These are set out in more detail

below, along with the costs incurred, and the number of shares outstanding.

Share award plans primarily include:

• Performance Share Awards– Previously awards were granted under the Sage Group Performance Share Plan (“PSP”),

with the last awards granted in December 2024. The Sage Group Long Term Incentive Plan (“LTIP”) was approved in

February 2025 and allows for grants of both performance awards and time-based awards. Subsequently, performance

awards for Directors and senior executives are granted under the LTIP.

• Restricted Share Awards– Previously awards were granted under the Sage Group Restricted Share Plan, with the last

awards granted in December 2024. The LTIP was approved in February 2025 and allows for grants of both performance

awards and time-based awards. Subsequently, restricted awards for colleagues who contribute to Sage’s strategic

outcomes are granted under the LTIP.

• Other Plans–The Sage Save and Share Plan (the “Save and Share Plan”) for employees in eligible countries of the

Group and the Colleague Stock Purchase Plan (the “CSPP Plan”) for US-based employees.

This note also shows the dividends paid in the year and any dividends that are to be proposed and paid post-year end.

Dividends are paid as an amount per ordinary share held.

13.1 Ordinary shares

Accounting policy

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares

or options are shown in equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid,

including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable

to the owners of the Company until the shares are cancelled or reissued.

The balance on the share premium account represents the amounts received in excess of the nominal value of the

ordinary shares.

	2025	2025	2024	2024
Issued and fully paid ordinary shares of 1 4/77 pence each	shares	£m	shares	£m
At 1 October	1,071,499,517	11	1,100,789,295	12
Cancellation of shares*	(48,209,390)	–	(29,289,778)	(1)
At 30 September	1,023,290,127	11	1,071,499,517	11

Note:

* Cancellation of shares in the current year resulted in a reduction of the nominal value of ordinary shares of less than £1m.

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233

13 Equity continued

13.2 Share-based payments

Accounting policy

Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting

conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments

is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the shares that will

eventually vest allowing for the effect of non market-based vesting conditions.

Fair value is measured using the Black-Scholes or the Monte Carlo pricing models, based on observable market prices.

The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-

transferability, exercise restrictions and behavioural considerations.

All outstanding PSPs and performance awards granted from February 2025 under the LTIP are subject to some non-market

performance conditions. The element of the income statement charge relating to market performance conditions is fixed

at the grant date.

At the end of the reporting period, the Group revises its estimates for the number of awards expected to vest.

It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding

adjustment to equity.

The total charge for the year relating to employee share-based payment plans was £51m (2024: £56m), all of which related to

equity-settled share-based payment transactions.

	2025	2024
Plans	£m	£m
Performance Share Awards	5	5
Restricted Share Awards	43	48
Other Plans	3	3
Total	51	56

£5m of the charge for the year (2024: £11m) relates to acquisition-related remuneration and is reported as a recurring

adjustment within other M&A activity-related items. See note 3.6.

Performance Share Awards

Annual grants of performance shares are normally made to Executive Directors and senior executives after the preliminary

declaration of the annual results. Under Performance Share awards, 875,535 (2024: 755,730) awards were made during the year.

Awards for 2023

These performance shares are subject to a service condition and three performance conditions. Performance conditions are

weighted 50% on the achievement of a financial performance target, 30% on the achievement of a TSR target, and 20% on the

achievement of ESG targets.

The financial performance target is based on the achievement of Sage Business Cloud (SBC) Penetration targets for the final

year of the performance period. Where SBC Penetration is between prescribed targets, the extent to which the financial

performance condition is satisfied will be calculated on a straight-line, pro-rata basis within a defined range.

2023 awards	Range 1	Range 2
SBC Penetration (%)	85%–89%	89%–92%
Performance condition satisfied (%)	10%–40%	40%–50%

The performance target relating to TSR measures share price performance against a designated comparator group. Where TSR

is between median and upper quartile, the TSR vesting percentage will be calculated on a straight-line, pro-rata basis between

6% and 24%, and where TSR is between upper quartile and upper decile, the TSR vesting percentage will be calculated on a

straight-line, pro-rata basis between 24% and 30%.

The comparator group for awards granted for 2023 onwards is the companies comprised in the FTSE 100 Index at the start of the

performance period, excluding financial services and extraction companies.

The performance targets relating to ESG are based on the achievement of targets relating to (i) a Protect the Planet condition,

(ii) a Tech for Good condition, and (iii) two Diversity, Equity and Inclusion conditions. Where attainment of each of the ESG

condition are between prescribed targets, the extent to which the ESG performance conditions are satisfied will be calculated

on a straight-line, pro-rata basis within defined ranges as detailed below.

Notes to the consolidated financial statements continued

234

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

13 Equity continued

13.2 Share-based payments continued

The Protect the Planet condition will be measured by reference to the reduction in the Group’s Scope 1, 2 and 3 carbon emissions

during the performance period.

2023 awards	Range 1	Range 2
Reduction in carbon emissions (%)	6.9%–13.8%	13.8%–20.7%
Performance condition satisfied (%)	1.5%–6%	6%–7.5%

The Tech for Good condition will be measured by reference to the number of Sage products that have embedded functionality

for carbon accounting at the end of the performance period.

2023 awards	Range 1	Range 2
Number of products (number)	3–6	6–8
Performance condition satisfied (%)	1%–4%	4%–5%

The Diversity, Equity and Inclusion conditions will be measured by reference to (i) the inclusion score in the employee

engagement survey undertaken in the last financial year of the performance period, and (ii) the percentage of leadership teams

meeting Sage’s global gender diversity target at the end of the performance period.

2023 awards	Range 1	Range 2
Inclusion score (number)	82–84	84–86
Performance condition satisfied (%)	0.75%–3%	3%–3.75%
Percentage of teams (%)	50%–65%	65%–80%
Performance condition satisfied (%)	0.75%–3%	3%–3.75%

Awards for 2024

These performance shares are subject to a service condition and three performance conditions over the 3-year length of the

performance period. Performance conditions are weighted 50% on the achievement of a financial performance target, 30% on

the achievement of a TSR target, and 20% on the achievement of ESG targets.

The financial performance condition is based on the achievement of underlying earnings per share targets at the end of the

performance period. Where underlying EPS is between prescribed targets, the extent to which the financial performance

condition is satisfied will be calculated on a straight-line, pro-rata basis within a defined range.

2024 awards	Range 1	Range 2
Underlying EPS (pence)	37.0–43.0	43.0–46.0
Performance condition satisfied (%)	10%–40%	40%–50%

The performance target relating to TSR measures share price performance against a designated comparator group. Where TSR

is between median and upper quartile, the TSR vesting percentage will be calculated on a straight-line, pro-rata basis between

6% and 24%, and where TSR is between upper quartile and upper decile, the TSR vesting percentage will be calculated on a

straight-line, pro-rata basis between 24% and 30%.

The comparator group for awards granted for 2024 onwards is the companies comprised in the FTSE 100 Index at the start of the

performance period, excluding financial services and extraction companies.

The performance targets relating to ESG are based on the achievement of targets relating to (i) a Protect the Planet condition,

(ii) a Tech for Good condition, and (iii) two Diversity, Equity and Inclusion conditions.

The Protect the Planet condition will be measured by reference to the reduction in the Group’s Scope 1, 2, and 3 carbon

emissions during the performance period.

2024 awards	Range 1	Range 2
Reduction in carbon emissions (%)	8.1%–16.2%	16.2%–24.3%
Performance condition satisfied (%)	1.5%–6%	6%–7.5%

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235

13 Equity continued

13.2 Share-based payments continued

The Tech for Good condition will be measured by reference to the Sage suites that have embedded functionality for carbon

accounting at the end of the performance period.

		Performance condition
2024 awards	Access to carbon accounting functionality through Sage suites	satisfied (%)
Threshold 1	No suites	0%
Threshold 2	Sage for Small Business suite	1%
Threshold 3	Sage for Small Business suite and Sage for Accountants suite	4%
Threshold 4	Sage for Small Business suite, Sage for Accountants suite,	5%
	and Sage for Medium Business suite

The Diversity, Equity and Inclusion conditions will be measured by reference to (i) the percentage of ethnically diverse

colleagues in senior leadership teams, and (ii) the percentage of leadership teams in the top four levels of Sage meeting the

global gender diversity target, at the end of the performance period.

2024 awards	Range 1	Range 2
Percentage of teams—ethnicity (%)	13.0%–16.5%	16.5%–20.0%
Performance condition satisfied (%)	0.75%–3%	3%–3.75%
Percentage of teams—gender (%)	50%–65%	65%–80%
Performance condition satisfied (%)	0.75%–3%	3%–3.75%

Awards for 2025

These performance shares are subject to a service condition and three performance conditions over the 3-year length of the

performance period. Performance conditions are weighted 60% on the achievement of a financial performance target, 30% on

the achievement of a TSR target, and 10% on the achievement of ESG targets.

The financial performance condition is based on the achievement of underlying earnings per share targets at the end of the

performance period. Where underlying EPS is between prescribed targets, the extent to which the financial performance

condition is satisfied will be calculated on a straight-line, pro-rata basis within a defined range.

2025 awards	Range 1
Underlying EPS (pence)	47.5–58.0
Performance condition satisfied (%)	12%–60%

The performance target relating to TSR measures share price performance against a designated comparator group. Where TSR

is between median and upper quartile, the TSR vesting percentage will be calculated on a straight-line, pro-rata basis between

6% and 24%, and where TSR is between upper quartile and upper decile, the TSR vesting percentage will be calculated on a

straight-line, pro-rata basis between 24% and 30%.

The comparator group for awards granted for 2025 onwards is the companies comprised in the FTSE 100 Index at the start of the

performance period, excluding financial services and extraction companies.

The performance targets relating to ESG are based on the achievement of targets relating to (i) a Protect the Planet condition

and (ii) a Tech for Good condition.

The Protect the Planet condition will be measured by reference to the reduction in the Group’s Scope 1, 2, and 3 carbon

emissions during the performance period.

2025 awards	Range 1	Range 2
Reduction in carbon emissions (%)	8.6%–17.2%	17.2%–25.8%
Performance condition satisfied (%)	1%–4%	4%–5%



Notes to the consolidated financial statements continued

236

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

13 Equity continued

13.2 Share-based payments continued

The Tech for Good condition will be measured by reference to the Sage suites that have embedded functionality for carbon

accounting at the end of the performance period.

		Performance condition
2025 awards	Access to carbon accounting functionality through Sage suites	satisfied (%)
Threshold 1	No Sage Active suites	0%
Threshold 2	Sage for Sage Active suite in France	1%
Threshold 3	Sage for Sage Active suite in France, Spain, and Germany	4%
Threshold 4	Sage for Sage Active suite in France, Spain, and Germany, and Sage Distribution	5%
	and Manufacturing Operations (SDMO) suite

Awards were valued using the Monte Carlo option pricing model. Performance conditions were included in the fair value

calculations, which were based on observable market prices at grant date. All options granted under performance share awards

have an exercise price of £nil. The fair value per awards granted and the assumptions used in the calculation are as follows:

	December	February
Grant date	2024	2025
Share price at grant date (£)	13.12	13.12
Number of employees	7	3
Shares under award	390,906	484,630
Vesting period (years)	3	3
Expected volatility	25.3%	24.3%
Award life (years)	3	3
Expected life (years)	3	3
Risk-free rate	3.98%	3.98%
Fair value per award (£)	9.78	9.73

	December	February	May
Grant date	2023	2024	2024
Share price at grant date (£)	11.30	11.74	10.87
Number of employees	8	1	2
Shares under award	466,758	241,514	47,458
Vesting period (years)	3	3	3
Expected volatility	23.4%	23.0%	24.3%
Award life (years)	3	3	3
Expected life (years)	3	3	3
Risk-free rate	4.17%	3.72%	4.25%
Fair value per award (£)	8.82	8.91	10.00

The expected volatility is based on historical volatility over the last three years. The expected life is the average expected

period to exercise. The risk-free rate of return is the yield on zero-coupon UK government bonds of a term consistent with the

assumed award life.

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237

13 Equity continued

13.2 Share-based payments continued

A reconciliation of award movements over the year is shown below:

		2025		2024
		Weighted		Weighted
		average		average
		exercise		exercise
	Number	price	Number	price
	’000s	£	’000s	£
Outstanding at 1 October	2,842	–	2,447	–
Awarded	876	–	756	–
Forfeited	(44)	–	(210)	–
Exercised	(546)	–	(151)	–
Outstanding at 30 September	3,128	–	2,842	–
Exercisable at 30 September	–	–	–	–

		2025		2024
		Weighted		Weighted
		average		average
		remaining		remaining
		life years		life years
Range of exercise prices	Expected	Contractual	Expected	Contractual
N/A	0.9	0.9	0.9	0.9

Restricted Share Awards

Restricted Share Awards granted under the Group’s RSP and LTIP are issued to colleagues who contribute to Sage’s

strategic outcomes.

These contingent share awards are made primarily with service conditions. Executive Directors are not permitted to participate

in the RSP and shares are either purchased in the market or treasury shares are utilised to satisfy vesting awards. These awards

primarily have service conditions, and their fair values are equal to the share price on the date of grant. During the year

4,274,238 (2024: 4,115,981) awards were made, with fair values ranging from 12.30p to 13.12p.

A reconciliation of award movements over the year is shown below:

		2025		2024
		Weighted		Weighted
		average		average
		exercise		exercise
	Number	price	Number	price
	’000s	£	’000s	£
Outstanding at 1 October	15,043	–	18,634	–
Awarded	4,274	–	4,116	–
Forfeited	(975)	–	(1,372)	–
Exercised	(4,807)	–	(6,335)	–
Outstanding at 30 September	13,535	–	15,043	–
Exercisable at 30 September	–	–	–	–

		2025		2024
		Weighted		Weighted
		average		average
		remaining		remaining
		life years		life years
Range of exercise prices	Expected	Contractual	Expected	Contractual
N/A	1.1	1.1	1.3	1.3

Notes to the consolidated financial statements continued

238

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

13 Equity continued

13.2 Share-based payments continued

Other Plans

Other plans comprise The Sage Save and Share Plan (the “Save and Share Plan”), the Colleague Stock Purchase Plan (the “CSPP”)

and acquisition options. These are not considered to be material to the Group’s overall share-based payment arrangements.

The key aspects of the Group’s share option arrangements are explained below.

The Save and Share Plan is a savings-related share option plan for employees of the Group and is available to employees in

the majority of countries in which the Group operates. The UK plan is an HMRC-approved savings-related share option scheme,

and similar arrangements apply in other countries where they are available. The fair value of the options is expensed over

the service period of three years, with a forfeiture assumption included for any anticipated lapses as employees leave

the Group.

During the year, 1,132,772

(2024: 1,423,017) options were granted under the terms of the Save and Share Plan.

The CSPP is an employee share purchase plan and is available to employees within the USA. The fair value of the options is

expensed over the service period of six months, with a forfeiture assumption included for any anticipated lapses as employees

leave the Group.

During the year, 201,585

(2024: 197,730) shares were purchased under the terms of the CSPP.

As part of certain acquisitions, the Group awards certain employees with options proportional to previously held options in the

company acquired. No (2024: nil) options have been granted in the year and no (2024: £nil) costs have been incurred to the

income statement in respect of these acquisition options.

A reconciliation of historic acquisition award movements over the year is shown below:

		2025		2024
		Weighted		Weighted
		average		average
		exercise		exercise
	Number	price	Number	price
	’000s	£	’000s	£
Outstanding at 1 October	533	3.62	705	3.28
Forfeited	(29)	0.92	(42)	0.83
Exercised	(232)	5.08	(130)	2.66
Outstanding at 30 September	272	3.37	533	3.62
Exercisable at 30 September	272	3.37	533	3.62

		2025		2024
		Weighted		Weighted
		average		average
		remaining		remaining
		life years		life years
Range of exercise prices	Expected	Contractual	Expected	Contractual
72p–702p	–	1.5	–	1.5





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13 Equity continued

13.3 Other reserves

All components of other reserves are presented on a consolidated basis on the face of the consolidated statement of changes

in equity.

On transition to IFRS 9, an equity classification adjustment was recognised for which £3m was credited to the translation

reserve and £1m to the cash flow hedging reserve, offset by £4m debited to the cost of hedging reserve.

An adjustment between the cost of hedging reserve and retained earnings of £1m was also recognised on transition to reflect the

cumulative effect of hedging costs that would have been amortised to the income statement under IFRS 9 over the life of the

Group’s existing hedging arrangements up to the date of adoption.

		Cash flow	Cost of		Treasury	Capital
	Translation	hedging	hedging	Merger	share	Redemption
	reserve	reserve	reserve	reserve	reserve	reserve	Total
Other reserves can be analysed as follows:	£m	£m	£m	£m	£m	£m	£m
At 1 October 2024	23	4	–	61	(520)	3	(429)
Adjustment on initial application of IFRS 9 hedge
accounting	3	1	(3)	–	–	–	1
At 1 October 2024—adjusted	26	5	(3)	61	(520)	3	(428)
Exchange differences on translating foreign	10	–	–	–	–	–	10
operations and net investment hedges
Changes in fair value of foreign currency basis of hedge relationships	–	–	(2)	–	–	–	(2)
Amortisation of foreign currency basis of hedge	–	–	1	–	–	–	1
relationships
Vesting of share awards and exercise of share options	–	–	–	–	50	–	50
At 30 September 2025	36	5	(4)	61	(470)	3	(369)

		Cash flow		Treasury	Capital
	Translation	hedging	Merger	share	Redemption
	reserve	reserve	reserve	reserve*	reserve*	Total
Other reserves can be analysed as follows:	£m	£m	£m	£m	£m	£m
At 1 October 2023	124	4	61	(515)	2	(324)
Exchange differences on translating foreign operations
and net investment hedges	(101)	–	–	–	–	(101)
Vesting of share awards and exercise of share options	–	–	–	50	–	50
Cancellation of ordinary shares	–	–	–	–	1	1
Purchase of shares by Employee Benefit Trust	–	–	–	(55)	–	(55)
At 30 September 2024	23	4	61	(520)	3	(429)

* The comparatives at 30 September 2024 have been restated as discussed within ‘Basis of preparation’ (see note 1)

This note further explains the nature and purpose of the translation, hedging, and merger reserves.

Translation reserve

The translation reserve represents the accumulated exchange differences arising since the transition to IFRS from the

following sources:

• The impact of the translation of subsidiaries with a functional currency other than sterling; and

• Exchange differences arising on hedging instruments that are designated hedges of a net investment in foreign

operations, net of tax where applicable.

Cash flow hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used

in cash flow hedges pending subsequent recognition in profit or loss.





Notes to the consolidated financial statements continued

240

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

13 Equity continued

13.3 Other reserves continued

Cost of hedging reserve

The cost of hedging reserve includes the effects of changes in fair value of the foreign currency basis spread of a financial

instrument when the foreign currency basis spread of a financial instrument is excluded from the designation of that financial

instrument as the hedging instrument (consistent with the Group’s accounting policy to recognise non-designated component

of foreign currency derivative in equity). The changes in fair value of the foreign currency basis spread of a financial

instrument, in relation to a transaction-related hedged item accumulated in the cost of hedging reserve, are reclassified to

profit or loss only when the hedged transaction affects profit or loss, or included as a basis adjustment to the non-financial

hedged item. The changes in fair value of the time value of the foreign currency basis spread of a financial instrument, in

relation to a time-period related hedged item accumulated in the cash flow hedging reserve, are amortised to profit or loss

on a rational basis over the term of the hedging relationship.

Merger reserve

Merger reserve brought forward relates to the merger reserve which was present under UK GAAP and frozen on transition to IFRS.

Treasury share reserve

Treasury share are shares in the Company which are owned by the Company itself.

At 30 September 2025, the Group held 59,869,507 (2024: 66,725,007) treasury shares.

During the year, the Group agreed to satisfy the vesting of certain share awards, utilising a total of 6,855,500 (2024: 7,181,463)

treasury shares.

Capital redemption reserve

The balance on the capital redemption reserve represents the aggregate nominal value of all the ordinary shares repurchased

and cancelled.

13.4 Retained earnings

		2025	2024
Retained earnings	Note	£m	£m
At 1 October		963	1,171
Adjustment on initial application of IFRS 9 hedge accounting		(1)	–
At 1 October—adjusted		962	1,171
Profit for the year		369	323
Actuarial gain/(loss) on post-employment benefit obligations, net of tax		1	(2)
Fair value reassessment of equity investments		(2)	–
Employee share option scheme-value of employee services, net of tax		57	62
Vesting of share awards and exercise of share options		(41)	(41)
Share buyback programme		(609)	(351)
Dividends paid to owners of the parent	13.6	(207)	(199)
At 30 September		530	963

Share buyback

On 19 November 2024, the Group entered into a non-discretionary share buyback programme to purchase up to £400m of its

own shares. As announced on 15 May 2025, the programme was extended by up to £200m. The extended programme completed

in July 2025, for a total consideration of £600m plus expected associated fees and taxes, corresponding to the £609m

recognised through retained earnings at the balance sheet date, of which £605m was paid in the current year.

During the year, the Group repurchased a total of 48,209,390 ordinary shares as part of the programme, all of which were

subsequently cancelled.

In the prior year, the Group purchased a total of 29,289,778 ordinary shares as part of a non-discretionary share buyback

programme entered into on 22 November 2023 and completed in April 2024. Consideration of £348m for this share buyback

programme was paid in the prior year.

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241

13 Equity continued

13.5 Employee Benefit Trust

The Employee Benefit Trust (EBT) holds shares in the Company and was set up for the benefit of Group employees. The EBT

purchases the Company’s shares in the market or is gifted these by the Company for use in connection with the Group’s share-

based payments arrangements. These shares are accounted for as treasury shares. Once purchased, shares are not sold back into

the market unless required to settle employee tax liabilities in respect of their share awards. The EBT holds 8,064,848 ordinary

shares in the Company (2024: 8,473,802) at a cost of £72m (2024: £77m) with £nil of shares purchased during the year

(2024: £55m), funded by the Company, and a nominal value of £nil (2024: £nil).

During the year, the EBT satisfied the vesting of certain share awards utilising 420,118 ordinary shares (2024: 1,381,398).

The EBT received £nil (2024: £nil) additional funds for future purchase of shares in the market.

The costs of funding and administering the EBT are charged to the income statement of the Group in the period to which they

relate. The market value of the shares of the Company held by the EBT at 30 September 2025 was £89m (2024: £87m).

13.6 Dividends

Accounting policy

Dividends are recognised through equity when approved by the Company’s shareholders or on payment, whichever

is earlier.

	2025	2024
	£m	£m
Final dividend paid for the year ended 30 September 2024 of 13.50p per share	135	–
(2024: final dividend paid for the year ended 30 September 2023 of 12.75p per share)	–	129
Interim dividend paid for the year ended 30 September 2025 of 7.45p per share	72	–
(2024: interim dividend paid for the year ended 30 September 2024 of 6.95p per share)	–	70
	207	199

In addition, the Directors are proposing a final dividend in respect of the financial year ended 30 September 2025 of 14.40p per

share which will absorb an estimated £138m of shareholders’ funds. The Company’s distributable reserves are sufficient to

support the payment of this dividend. If approved at the AGM on 5 February 2026 the dividend will be paid on 10 February 2026

to shareholders who are on the register of members on 9 January 2026. These consolidated financial statements do not reflect

this proposed dividend payable.



Notes to the consolidated financial statements continued

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14 Acquisitions and disposals

The following note outlines acquisitions and disposals during the year and the accompanying accounting policies. Each

acquisition or disposal during the year is discussed and the effects on the results of the Group are highlighted. Additional

disclosures are presented for disposals and planned disposals that qualify as businesses held for sale or for presentation

as discontinued operations.



Accounting policy

Acquisitions

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of an acquisition is measured as

the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any

non-controlling interests in the acquiree. The acquiree’s identifiable assets, liabilities and contingent liabilities that

meet the conditions for recognition under IFRS 3 “Business Combinations” are recognised at their fair values at the

acquisition date.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date.

Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability are

recognised in the income statement. Contingent consideration that is classified as equity is not remeasured, and its

subsequent settlement is accounted for within equity.

Goodwill represents the excess of the consideration transferred, the amount of any non-controlling interest in the

acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the

Group’s total identifiable net assets acquired. If, after reassessment, the Group’s interest in the net fair value of the

acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the

difference is recognised directly in the consolidated income statement. Any subsequent adjustment to reflect changes in

consideration arising from contingent consideration amendments is recognised in the consolidated income statement.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair

value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

Acquisition-related items such as legal or professional fees are expensed to the income statement as incurred.

Acquisitions of certain legal entities can be accounted for as an asset acquisition, rather than a business combination,

when they satisfy the “concentration test” exemption under IFRS 3 “Business Combinations”. This is often the case where

the value of the acquired legal entity largely comprises a single asset or technology. Where this is applied, no goodwill is

recognised as part of the acquisition accounting.

Businesses held for sale and discontinued operations

The Group classifies the assets and liabilities of a business as held for sale if their carrying amounts will be recovered

principally through a sale of the business rather than through continuing use. These assets and liabilities are measured at

the lower of their carrying amount and fair value less costs to sell. The criteria for classification as held for sale are met

only when the sale is highly probable and the business is available for immediate sale in its present condition. Actions

required to complete the sale must indicate that it is unlikely that significant changes will be made to the plan or that the

decision to sell will be withdrawn. Management must be committed to the sale and completion must be expected within

one year from the date of the classification. Property, plant and equipment and intangible assets are not depreciated

or amortised once classified as held for sale. Assets and liabilities classified as held for sale are presented separately

as current items in the consolidated balance sheet.

A business qualifies as a discontinued operation if it is a component of the Group that either has been disposed of,

or is classified as held for sale, and:

• Represents a separate major line of business or geographical area of operations; and

• Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area

of operations.

Discontinued operations are excluded from the results of continuing operations in both the current and prior years and

are presented as a single amount in the consolidated income statement as profit or loss on discontinued operations.

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243

14 Acquisitions and disposals continued

14.1 Acquisitions

Tritium Software

On 29 October 2024, the Group acquired 100% equity capital and voting rights of Tritium Software, S.L (“Tritium Software”), a

company based in Spain, for a total consideration of £30m. Tritium Software provides a cloud-native, mobile workforce

management solution for field-based sales teams through its main product, Sage Sales Management (previously branded as

ForceManager).

	Total
Summary of acquisition	£m
Cash consideration	28
Deferred consideration	2
Acquisition-date fair value of consideration	30
Fair value of identifiable net assets	(5)
Goodwill	25

	Total
Fair value of identifiable net assets acquired	£m
Acquired intangible assets	6
Other net liabilities	(1)
Fair value of identifiable net assets acquired	5

A summary of the acquired intangible assets is set out below:

		Useful
	Valuation	economic life
Acquired intangible assets	£m	(years)
Customer relationships	1	10
Technology	5	7
Acquired intangible assets	6

Acquired goodwill of £25m comprises the fair value of the acquired control premium, workforce in place and the expected

synergies. The goodwill has been allocated to the Iberia CGU where the underlying benefit arising from the acquisition is

expected to be realised. No goodwill is expected to be deductible for tax purposes. The results of the business are allocated to

the Europe operating segment in line with the underlying operations.

The outflow of cash and cash equivalents on the acquisition is as follows:

	Total
	£m
Cash consideration	(28)
Cash and cash equivalents acquired	1
Net cash outflow	(27)

Transaction costs of £5m relating to the acquisition have been included in selling and administrative expenses, classified as

other M&A activity-related items within recurring adjustments between underlying and statutory results. These costs relate

to advisory, legal, and other professional services. See note 3.6.

Arrangements have been put in place for retention payments to remunerate employees of Tritium Software for future services.

The total cost of these arrangements will be recognised in future periods over the retention period, contingent on employment.

The consolidated income statement includes revenue and loss after tax relating to Tritium Software for the period since the

acquisition date, of which both are immaterial.

Notes to the consolidated financial statements continued

244

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

14 Acquisitions and disposals continued

14.1 Acquisitions continued

Fyle Technologies

On 24 July 2025, the Group acquired a 100% controlling interest in Fyle Technologies Private Limited (“Fyle”). Fyle provides an

AI-powered expense management platform which transforms how SMBs track and manage expenses, with an existing customer

base in the United States.

	Total
Summary of acquisition	£m
Cash consideration	56
Deferred consideration	3
Holdback consideration	4
Acquisition-date fair value of consideration	63
Fair value of identifiable net assets	(14)
Goodwill	49

	Total
Fair value of identifiable net assets acquired	£m
Acquired intangible assets	22
Deferred tax liability	(5)
Other net liabilities	(3)
Fair value of identifiable net assets acquired	14

A summary of the acquired intangible assets is set out below:

		Useful
	Valuation	economic life
Acquired intangible assets	£m	(years)
Technology	22	8
Acquired intangible assets	22

Acquired goodwill of £49m comprises the fair value of the acquired control premium, workforce in place and the expected

synergies. The goodwill has been allocated to the North America CGU where the underlying benefit arising from the acquisition

is expected to be realised. No goodwill is expected to be deductible for tax purposes. The results of the business are allocated

to the North America operating segment in line with the underlying operations.

The outflow of cash and cash equivalents on the acquisition is as follows:

	Total
	£m
Cash consideration	(56)
Cash and cash equivalents acquired	2
Net cash outflow	(54)

Transaction costs of £5m relating to the acquisition have been included in selling and administrative expenses, classified as

other M&A activity-related items within recurring adjustments between underlying and statutory results. These costs relate to

advisory, legal and other professional services. See note 3.6.

Arrangements have been put in place for retention payments to remunerate employees of Fyle for future services, classified as

other M&A activity-related items. The total cost of these arrangements will be recognised in future periods over the retention

period, contingent on employment.

The consolidated income statement includes revenue and loss after tax relating to Fyle for the period since the acquisition

date, of which both are immaterial.

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245

14 Acquisitions and disposals continued

14.2 Measurement adjustments to business combinations reported using provisional amounts

On 9 September 2024, the Group acquired 100% equity capital and voting rights of Infineo SAS (“Infineo”), for total cash

consideration of £34m.

The net assets acquired and recognised in the financial statements for the year ended 30 September 2024 were based on a

provisional assessment of their fair value while the Group undertook a valuation of the acquired intangible assets. Given the

timing of the acquisition, the acquisition accounting had not been finalised by the date the financial statements for the year

ended 30 September 2024 were approved for issue by the Board of Directors. During the period, the valuation and acquisition

accounting were completed and approved.

The intangible assets identified and subsequently valued as at the date of acquisition include:

		Useful
	Valuation	economic life
Acquired intangible assets	£m	(years)
Customer relationships	1	10
Technology	8	6
Acquired intangible assets	9

The 2024 comparative information has been adjusted to reflect the adjustment to the provisional amounts.

As a result of the recognition of intangible assets of £9m, there was an increase in the deferred tax liability of £1m and

a corresponding decrease of £8m to goodwill.

Acquired goodwill of £24m comprises the fair value of the acquired control premium, workforce in place and the expected

synergies. The goodwill has been allocated to the France CGU where the underlying benefit arising from the acquisition is

expected to be realised. No goodwill is expected to be deductible for tax purposes. The results of the business are allocated

to the Europe operating segment in line with the underlying operations.

No other adjustments have been made to the provisional fair value of assets and liabilities reported at 30 September 2024,

as set out below:

	Previously reported	Measurement	Final fair
	provisional fair values	adjustments	values
Fair value of identifiable net assets acquired	£m	£m	£m
Intangible assets	–	9	9
Deferred tax liability	–	(1)	(1)
Other identifiable net assets	2	–	2
Fair value of identifiable net assets acquired	2	8	10
Goodwill	32	(8)	24
Total consideration	34	–	34

The increase in amortisation charge on the intangible assets from the acquisition date to 30 September 2024 was not material

and therefore no adjustment has been made for this. No changes have been identified to the directly attributable-acquisition

related costs which were included during the financial year ended 30 September 2024 in relation to the acquisition.



Notes to the consolidated financial statements continued

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

15 Related party transactions

This note provides information about transactions between the Group and its related parties. A group’s related parties

include any entities over which it has control, joint control, or significant influence, and any persons who are members of

its key management personnel.

The Group’s related parties are its subsidiary undertakings and its key management personnel, which comprises the Group’s

Executive Leadership Team members and the Non-executive Directors. Transactions and outstanding balances between the

Company and its subsidiaries within the Group and between those subsidiaries have been eliminated on consolidation and

are not disclosed in this note. Remuneration paid to the Executive Leadership Team is disclosed in note 3.3.

No other related party transactions occurred during the current year or the prior year.

16 Events after the balance sheet date

Acquisition of Criterion Inc

On 2 October 2025, the Group acquired 100% equity capital and voting rights of Criterion Inc (“Criterion”), a company based

in the United States, for fixed initial consideration of £33m and additional variable consideration of up to £16m, linked to the

future performance of the business. Criterion provides a unified human capital management (HCM) platform which will enhance

Sage’s offering to mid-sized businesses.

Due to the timing of the acquisition being after 30 September 2025, the results of Criterion are not included in our financial

statements for the year ended 30 September 2025 and the acquisition accounting has not yet been completed. In line with

IFRS 3, the purchase price accounting for the acquisition will be finalised within 12 months of the acquisition date.

Share buyback programme

On 18 November 2025, The Sage Group plc. approved a share buyback programme of its ordinary shares of up to £300m, which is

expected to commence on 19 November 2025, and end no later than 19 March 2026.

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247

17 Group undertakings

While we present consolidated results in these financial statements, our structure is such that there are a number of

different operating and holding companies that contribute significantly to the overall result.

Our subsidiaries are located around the world and each contributes to the profits, assets, and cash flow of the Group.

The entities listed below and on the following pages are subsidiaries of the Company or the Group. The Group percentage of

equity capital and voting rights is 100% for all subsidiaries listed below unless indicated otherwise. The results for all of the

subsidiaries have been consolidated within these financial statements.

Country	Name	Registered Office address
Australia	Brightpearl Pty Limited	Suite 60 Level 2, 2 O'Connell Street,
		Parramatta NSW 2150, Australia
Australia	Ocrex Australia Pty. Limited	Level 17, 100	Barangaroo Avenue, Barangaroo NSW 2000,
		Australia
Australia	Sage Business Solutions Pty Ltd	Level 17, 100	Barangaroo Avenue, Barangaroo NSW 2000,
		Australia
Australia	Sage Intacct Australia Pty Limited	Level 17, 100	Barangaroo Avenue, Barangaroo NSW 2000,
		Australia
Australia	Snowdrop Systems Pty Ltd	Level 17, 100	Barangaroo Avenue, Barangaroo NSW 2000,
		Australia
Austria	Sage GmbH	Stella-Klein-Löw-Weg 15, AT-1020, Wien, Austria
Bahamas	Intelligent Apps Holdings Ltd	#2 Bayside Executive Park, West Bay Street & Blake Road,
		Nassau, N.P., The Bahamas, Bahamas
Belgium	Sage S.A.	Rue Picard, 7 boite 100, 1000 Bruxelles Belgique,
		Belgium
Botswana	Sage Software Botswana (Pty) Ltd 1	Plot 50371,	Fairground Office Park, Gaborone, Botswana
Canada	Sage Software Canada Ltd	111, 5th Avenue SW, Suite 3100-C, Calgary AB T2P 5L3,
		Canada
Colombia	ForceManager Colombia, SAS	CRA 21, Number 134-61 apt 805
		Bogotá
France	Sage Holding France SAS	10 Place de Belgique, 92250, La Garenne-Colombes,
		Paris, France
France	Sage Overseas Limited (Branch Registration)	10 Place de Belgique, 92250, Le Garenne Colombes,
		Paris, France
France	Sage SAS	10 Place de Belgique, 92250, La Garenne-Colombes,
		Paris, France
Germany	Best Software (Germany) GmbH	Franklinstraße 61-63 60486, Frankfurt am Main, Germany
Germany	eWare GmbH	Untere Weidenstr. 5, c/o RAè Becker & Koll., 81543,
		München, Germany
Germany	Sage bäurer GmbH	Josefstraße 10, 78166, Donaueschingen, Germany
Germany	Sage CRM Solutions GmbH	Franklinstraße 61-63, 60486, Frankfurt am Main,
		Germany
Germany	Sage GmbH	Franklinstraße 61-63 60486, Frankfurt am Main, Germany
Germany	Sage Management & Services GmbH	Franklinstraße 61-63 60486, Frankfurt am Main, Germany
Germany	Sage Services GmbH	Karl-Heine-Straße 109-111, 04229, Leipzig, Germany
India	Corecon Technologies India Private Limited	The Atrium at Quark City, Zone-D, Lower Ground Floor,	Plot No. A-45, Industrial Focal Point, Chandigarh Sector
		59, Rupnagar, S.A.S.Nagar (Mohali), 160059, Punjab, India
India	Fyle Technologies Private Limited	550, 11th Cross, 2nd Main, MICO Layout, BTM 2nd Stage,
		Bengaluru 560 076, Karnataka
India	Intacct Software Private Limited	No 501 & 502, Tower C, 5th Floor, The Millenia, No. 1 & 2,
		Murphy Road, Bangalore, Karnataka, 560 008, India
India	Lockstep Network India Pvt. Ltd.	1st and 2nd Flr Sky Loft, Creaticity Mall Opp Golf Course,
		Shastrinagar Yerwada, Pune, 411006, India
India	Sage Business Technology (India)	The Atrium at Quark City, Zone -D, Second Floor, A-45,
	Private Limited		Industrial Focal Point, Phase VIII B, Mohali, 160059, India

Notes to the consolidated financial statements continued

248

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

17 Group undertakings continued

Country	Name	Registered Office address
India	Sage Software India Pvt Ltd (in liquidation)	N-34, Lower Ground Floor, Kalkaji, New Delhi, 110 019,
		India
India	VV Finly Technology Pvt. Ltd.	1st Floor, Gopala Krishna Complex, #45/3 Residency
		Road, MG Road, Bangaluru, Karnataka- 560025
		India
Ireland	Ocrex Limited	Number One, Central Park, Leopardstown, Dublin 18,
		Ireland
Ireland	Sage Global Services (Ireland) Limited	Number One, Central Park, Leopardstown, Dublin 18,
		Ireland
Ireland	Sage Hibernia Limited	Number One, Central Park, Leopardstown, Dublin 18,
		Ireland
Ireland	Sage Irish Finance Company Unlimited	Deloitte House, 29 Earlsfort Terrace, , Dublin 2 DO2 AY28
	Company (in liquidation)
Ireland	Sage Technologies Limited	Number One, Central Park, Leopardstown, Dublin 18,
		Ireland
Ireland	Sage Treasury Ireland Unlimited Company	1 Central Park, Leopardstown, Dublin 18,
		Dublin, D18NH10, Ireland
Israel	Budgeta Technologies Ltd	144	Begin Menachem Rd, Tel Aviv, 6492102, Israel
Italy	Sellf S.r.l. (dissolved 2/10/2025)	Via Sile 41, Roncade, Treviso, Italy
Kenya	Sage Software East Africa Limited 1	114 & 115, 1st Floor, Nivina Towers, LR NO. 1870/IX/96,
		Westlands Road, Nairobi, Kenya
Latvia	CakeHR SIA (in liquidation)	Brivibas iela 40-27, Riga, LV-1050, Latvia
Malaysia	Sage Malaysia Business Solutions Sdn. Bhd.	Level 11, 1 Sentral, Jalan Rakyat, Kuala Lumpur Sentral,
		50470	Kuala Lumpur, Malaysia
Mexico	ForceManager S de RL de CV	Avenida Cafetales 1702, Hacienda de Coyoacán,,
		Coyoacán, CDMX, 04970, Mexico
Morocco	Sage Software SARL	Tour Crystal 1, Niveau 9, Bd Sidi Mohamed Ben Abdellah,
		Casablanca, 20030, Morocco
Namibia	Sage Software Namibia (Pty) Ltd	344	Independence Avenue, Windhoek, P O BOX 1571,
		Namibia
Nigeria	Sage Software Nigeria Limited 1	Landmark Towers, 5B Water Corporation Road,
		Victoria Island, Lagos, Nigeria
Poland	Sage Software Poland sp. z o.o.	ul. Towarowa 28, 00-839, Warsaw, Poland
Portugal	Sage Portugal – Software, S.A.	Edifício Porto Office Park. Avenida de Sidónio Pais, 153,
		4.º piso, 4100-467, Porto, Portugal
Romania	Intacct Development Romania SRL	clădirea C-D, The Office, Etaj 1, Cluj-Napoca, Judet Cluj,	Bulevardul 21 DECEMBRIE 1989, Nr. 77, camera C.1.2,
		Romania
Singapore	Sage Singapore Pte. Ltd.	7 Straits View # 12-00, Marina One East Tower, Singapore,
		018936,	Singapore
South Africa	Sage Alchemex (Pty) Ltd	23A Flanders Drive, Mount Edgecombe, Durban, 4321,
		South Africa
South Africa	Sage South Africa (Pty) Ltd*	Floor 6 Gateway West, 22 Magwa Crescent, Waterfall 5-1R,
		Midrand, Gauteng, 2066, South Africa
Spain	Sage Spain Holdco S.L.	Moraleja Building One – Planta 1, Parque Empresarial de
		La Loraleja, Avenida de Europa no19, 28108 Alcobendas,
		Madrid, Spain
Spain	Sage Spain SL 1	Moraleja Building One – Planta 1, Parque Empresarial de
		La Moraleja, Avenida de Europa no19, 28108 Alcobendas,
		Madrid, Spain
Switzerland	Sage Bäurer AG	c/o Legalis Consulting GmbH, Suurstoffi 29, 6343,
		Rotkreuz, Switzerland
United Arab Emirates	Sage Software Middle East FZ-LLC	Premises: 116-120, Floor: 01, Building: 11, Dubai,
		United Arab Emirates
United Kingdom	Brightpearl Limited	C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom

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249

17 Group undertakings continued

Country	Name	Registered Office address
United Kingdom	ForceManager Ltd (in liquidation)	C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon Tyne,
		NE28 9EJ, United Kingdom
United Kingdom	HR Bakery Ltd (in liquidation)	C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon Tyne,
		NE28 9EJ, United Kingdom
United Kingdom	Interact UK Holdings Limited*	C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon Tyne,
		NE28 9EJ, United Kingdom
United Kingdom	Ocrex UK Ltd	C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon Tyne,
		NE28 9EJ, United Kingdom
United Kingdom	Sage (UK) Ltd	C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon Tyne,
		NE28 9EJ, United Kingdom
United Kingdom	Sage Euro Hedgeco 1	C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon Tyne,
		NE28 9EJ, United Kingdom
United Kingdom	Sage Euro Hedgeco 2	C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon Tyne,
		NE28 9EJ, United Kingdom
United Kingdom	Sage Far East Investments Limited	C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon Tyne,
		NE28 9EJ, United Kingdom
United Kingdom	Sage Global Services Limited	C23 - 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon Tyne,
		NE28 9EJ, United Kingdom
United Kingdom	Sage Holding Company Limited*	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United Kingdom	Sage Holdings Limited	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United Kingdom	Sage Irish Investments LLP (in liquidation)	3 Field Court, Gray's Inn, London, WC1R 5EF, United Kingdom
United Kingdom	Sage Irish Investments One Limited	3 Field Court, Gray's Inn, London, WC1R 5EF, United Kingdom
	(in liquidation)*
United Kingdom	Sage Irish Investments Two Limited	3 Field Court, Gray's Inn, London, WC1R 5EF, United Kingdom
	(in liquidation)*
United Kingdom	Sage Online Holdings Limited	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United Kingdom	Sage Overseas Limited	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United Kingdom	Sage People Limited	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United Kingdom	Sage Treasury Company Limited*	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United Kingdom	Sage US LLP	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United Kingdom	Sage USD Hedgeco 1	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United Kingdom	Sage USD Hedgeco 2	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United Kingdom	Sage Whitley Limited	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United Kingdom	Sagesoft	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United Kingdom	Snowdrop Systems Limited	C23 – 5 & 6 Cobalt Park Way, Cobalt Park, Newcastle upon
		Tyne, NE28 9EJ, United Kingdom
United States	Brightpearl, Inc.	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States
United States	Fyle, Inc.	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, Delaware, 19803
United States	Ocrex, Inc.	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States
United States	Sage Budgeta, Inc.	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States
United States	Sage Global Services US, Inc	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States

Notes to the consolidated financial statements continued

250

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

17 Group undertakings continued

Country	Name	Registered Office address
United States	Sage Intacct, Inc.	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States
United States	Sage People, Inc.	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States
United States	Sage Software Holdings, Inc.	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States
United States	Sage Software International, Inc.	425	West Washington Street #4, Suffolk, Suffolk (Independent
		City), VA 23434, United States
United States	Sage Software, Inc.	425	West Washington Street #4, Suffolk, Suffolk (Independent
		City), VA 23434, United States
United States	Sage Software North America	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States
United States	Sage Tempus, Inc.	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States
United States	Softline Holdings USA, Inc.	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States
United States	Softline Software, Inc.	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States
United States	Softline Software USA, LLC	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States
United States	South Acquisition Corp.	Brandywine Plaza, 1521 Concord Pike, Suite 201, Wilmington,
		New Castle County, DE 19803, United States

Notes:

* Direct subsidiary.

1 Group holding in the subsidiary is ≥99% and <100%.

Governance Report Additional InformationStrategic Report Financial Statements

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

251

COMPANY

STATEMENTS

Company financial statements

253 Company balance sheet

254 Company statement of changes in equity

255 Company accounting policies

Notes to the Company financial statements

257 1. Dividends

257 2. Investments

257 3. Cash and cash equivalents

257 4. Debtors

258 5. Trade and other creditors

258 6. Borrowings

258 7. Equit y

252

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Note

2025

£m

2024

(restated)*

£m

Non-current assets

Investments 2 3,088 3,088

Debtors 4

437 417

Deferred tax assets

3 2

3,528 3,507

Current assets

Cash and cash equivalents 3 1 21

Debtors 4

1,229 1,229

1,230 1,250

Current liabilities

Trade and other creditors 5 (52) (35)

Non-current liabilities

Borrowings 6 (1,477) (1,157)

Net assets 3,229 3,565

Capital and reserves

Called up share capital 7.1 11 11

Share premium account

548 548

Other reserves 7.2

(406) (456)

Profit and loss account

3,076 3,462

Total shareholders’ funds

3,229 3,565

* The comparative balance sheet at 30 September 2024 has been restated as discussed within “Company accounting policies”

The Company’s profit for the year was £420m (2024: £58m).

The financial statements on pages 253 to 259 were approved by the Board of Directors on 18 November 2025 and are signed on its

behalf by:

Jonathan Howell

Chief Financial Officer

Company’s registered number 02231246

Company balance sheet

At 30 September 2025

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

253

Attributable to owners of the parent

Called up

capital

£m

premium

£m

Other

reserves

£m

Profit and

loss account

£m

Total

equity

£m

At 1 October 2024 11 548 (456) 3,462 3,565

Profit for the year – – – 420 420

Total comprehensive income for the year ended

30 September 2025

– – – 420 420

Transactions with owners:

Employee share option scheme—value of employee services – – – 51 51

Vesting of share awards and exercise of share options

– – 50 (41) 9

Share buyback programme

– – – (609) (609)

Dividends paid to owners of the parent

– – – (207) (207)

Total transactions with owners for the year ended

30 September 2025

– – 50 (806) (756)

At 30 September 2025 11 548 (406) 3,076 3,229

Attributable to owners of the parent (restated)*

Called up

share capital

£m

premium

£m

Other

reserves

£m

Profit and

loss account

£m

Total

equity

£m

At 1 October 2023 12 548 (452) 3,939 4,047

Profit for the year – – – 58 58

Total comprehensive income for the year ended

30 September 2024

– – – 58 58

Transactions with owners:

Employee share option scheme—value of employee services – – – 56 56

Vesting of share awards and exercise of share options – – 50 (41) 9

Purchase of shares by Employee Benefit Trust – – (55) – (55)

Cancellation of ordinary shares (1) – 1 – –

Share buyback programme – – – (351) (351)

Dividends paid to owners of the parent – – – (199) (199)

Total transactions with owners for the year ended

30 September 2024

(1) – (4) (535) (540)

At 30 September 2024 11 548 (456) 3,462 3,565

* The comparative statement of changes in equity for the year ended 30 September 2024 has been restated as discussed within “Company accounting policies”

Company statement of changes in equity

254

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 (FRS 102) “The Financial

Reporting Standard applicable in the UK and Republic of Ireland”.

Basis of accounting

These financial statements are prepared on the going concern basis, under the historical cost convention, and in accordance

with the Companies Act 2006. The going concern basis is set out in note 1 of the Group consolidated financial statements.

A summary of the more important Company accounting policies, which have been consistently applied to all periods presented,

is set out below.

The Sage Group plc. (the “Company”), a public company limited by shares, is deemed a qualifying entity under FRS 102, and so

may take advantage of the reduced disclosures permitted under the standard. As a result, the following disclosures have not

been provided:

• A statement of cash flows and related disclosures under Section 7 Statement of Cash Flows and Section 3 Financial

Statement Presentation paragraph 3.17(d);

• Disclosures about financial instruments under Section 11 Basic Financial Instruments and Section 12 Other Financial

Instruments Issues paragraphs 12.26 (in relation to those cross-referenced paragraphs from which a disclosure exemption

is available), 12.27, 12.29(a), 12.29(b), and 12.29A; this exemption is permitted as equivalent disclosures are included in the

consolidated financial statements;

• Disclosures about share-based payments under Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and

26.23; this exemption is permitted as the Company is an ultimate parent, the share-based payment arrangements concern

its own equity instruments, its separate financial statements are presented alongside the consolidated financial

statements of The Sage Group plc. and equivalent disclosures are included in those consolidated financial statements; and

• Key management personnel compensation in total under Section 33 Related Party Disclosures paragraph 33.7.

In the Company’s financial statements for the year ended 30 September 2024, the amount paid of £351m relating to a share

buyback was disclosed as a component of treasury shares. As the shares were cancelled upon repurchase, £351m should

have been deducted from the profit and loss reserve. An adjustment has been recognised in these financial statements.

The comparative disclosures in these financial statements have been adjusted as set out in the Company balance sheet,

the Company statement of changes in equity and note 7.2 “Other reserves”. There is no impact on the Group’s consolidated

financial statements.

Foreign currencies

The Company is a UK registered company with both a functional and presentational currency of sterling. Monetary assets and

liabilities expressed in foreign currencies are translated into sterling at rates of exchange prevailing at the balance sheet date.

Transactions in foreign currencies are converted into sterling at the rate prevailing at the dates of the transactions.

All differences on exchange are taken to the profit and loss account.

Investments

Investments are stated at cost less provision for any diminution in value. Any impairment is charged to the profit and loss

account as it arises.

Company profit and loss account

No profit and loss account is presented for the Company as permitted by section 408 of the Companies Act 2006.

Details of the average number of people employed by the Company and the staff costs incurred by the Company are as follows:

Average monthly number of people employed (including Directors)

2025

number

2024

number

By segment:

UKIA 12 14

Staff costs

2025

£m

2024

£m

Wages and salaries 5 5

Social security costs 2 2

7 7

Staff costs are net of recharges to other Group companies.

Company accounting policies

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

255

Auditor’s remuneration

The audit fees payable in relation to the audit of the financial statements of the Company are £47,000 (2024: £50,600).

Directors’ remuneration

Details of the remuneration of Executive and Non-executive Directors and their interest in shares and options of the Company

are given in the audited part of the Directors’ Remuneration Report on pages 117 to 151.

Share-based payments

The Company issues equity-settled share-based payments to certain employees and employees of its subsidiaries. Equity-

settled share-based payments granted to employees of the Company are measured at fair value (excluding the effect of non-

market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-

based payments is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of the shares

that will eventually vest allowing for the effect of non-market-based vesting conditions.

Fair value is measured using the Black-Scholes or the Monte Carlo pricing models. The expected life used in the model

has been adjusted based on management’s best estimate, for the effects of non-transferability, exercise restrictions

and behavioural considerations.

The Company also provides certain employees and employees of its subsidiaries with the ability to purchase the Company’s

ordinary shares at a discount to the current market value at the date of the grant. For awards made to its own employees,

the Company records an expense, based on its estimate of the discount related to shares expected to vest, on a straight-line

basis over the vesting period.

At the end of each reporting period, the entity revises its estimates for the number of options expected to vest. It recognises the

impact of the revision to original estimates, if any, in the profit and loss account, with a corresponding adjustment to equity.

For awards made to subsidiary employees, the fair value of awards made is recognised by the Company through the profit and

loss account. Intergroup recharges to the employing subsidiary, up to the fair value of awards made to employees of that

subsidiary, subsequently reverse the decrease to the profit and loss account.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share

premium when the options are exercised.

Financial instruments

The Company only enters into basic financial instrument transactions that result in the recognition of basic financial assets

and liabilities, including trade and other receivables and payables and loans to and from related parties. These transactions are

initially recorded at transaction price, unless the arrangement constitutes a financing transaction where the transaction is

measured at the present value of the future receipt discounted at a market rate of interest, and subsequently recognised at

amortised cost.

Financial assets

At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of

impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value

of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised

in comprehensive income or expense.

Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled,

or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party, or (c) control of the

asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party

without imposing additional restrictions.

Financial liabilities

Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged,

cancelled or expired.

Dividends

Dividends are recognised through equity when approved by the Company’s shareholders or on payment, whichever is earlier.

Employee Benefit Trust

The Company’s Employee Benefit Trust is considered an extension of the Company and therefore forms part of these

financial statements.

Company accounting policies continued

256

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

1 Dividends

2025

£m

2024

£m

Final dividend paid for the year ended 30 September 2024 of 13.50p per share 135 –

(2024: final dividend paid for the year ended 30 September 2023 of 12.75p per share) – 129

Interim dividend paid for the year ended 30 September 2025 of 7.45p per share

72 –

(2024: interim dividend paid for the year ended 30 September 2024 of 6.95p per share)

– 70

207 199

In addition, the Directors are proposing a final dividend in respect of the financial year ended 30 September 2025 of 14.40p per

share which will absorb an estimated £138m of shareholders’ funds. The Company’s distributable reserves are sufficient

to support the payment of this dividend. If approved at the AGM on 5 February 2026 the dividend will be paid on 10 February

2026 to shareholders who are on the register of members on 9 January 2026. These financial statements do not reflect this

proposed dividend payable.

2 Investments

Equity interests in subsidiary undertakings are as follows:

2025

£m

2024

£m

Cost 3,097 3,097

Provision for diminution in value (9) (9)

Net book value

3,088 3,088

The Directors believe that the carrying value of the investments is supported by their underlying net assets.

Subsidiary undertakings, included in the Group financial statements for the year ended 30 September 2025, are shown in note 17

of the Group financial statements. All of these subsidiary undertakings are wholly owned, unless otherwise indicated in note 17

of the Group financial statements. Subsidiaries are engaged in the development, distribution, and support of business

management software and related products and services for small and medium-sized businesses.

All subsidiaries’ results are included in the Group financial statements. The accounting reference date of all subsidiaries

is 30 September.

3 Cash and cash equivalents

2025

£m

2024

£m

Cash and cash equivalents 1 21

4 Debtors

2025

£m

2024

£m

Prepayments and accrued income 1 –

Amounts owed by Group undertakings 1,662 1,646

Current tax assets

3 –

1,666 1,646

Of amounts owed by Group undertakings £437m (2024: £417m) is due greater than one year. Amounts owed by Group

undertakings are unsecured and attract a rate of interest of 3.8% and SONIA plus 1.6% respectively (2024: 3.8% and

SONIA plus 1.6%).

Notes to the Company financial statements

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THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

257

5 Trade and other creditors

2025

£m

2024

£m

Amounts owed to Group undertakings 1 –

Accruals 51 35

52 35

Amounts owed to Group undertakings are unsecured and non-interest bearing.

6 Borrowings

2025

£m

2024

£m

Sterling denominated bond notes 1,041 743

Euro denominated bond notes 436 414

1,477 1,157

During the year, bond notes were issued in March 2025 for a nominal amount of £300m with a maturity date of March 2037.

Net cash proceeds from the issuance were £297m. For further information, see note 11.4 of the Group consolidated

financial statements.

7 Equity

7.1 Called up share capital

Issued and fully paid ordinary shares of 1

4/77

pence each

2025

£m

2024

£m

At 1 October 1,071,499,517 11 1,100,789,295 12

Cancellation of shares* (48,209,390) – (29,289,778) (1)

At 30 September

1,023,290,127 11 1,071,499,517 11

Note:

* Cancellation of shares in the current year resulted in a reduction of the nominal value of ordinary shares of less than £1m.

See note 13.1 of the Group consolidated financial statements.

7.2 Other reserves

Treasury

reserve

£m

Merger

reserve

£m

Capital

redemption

reserve

£m

Total other

reserves

£m

At 1 October 2024 (520) 61 3 (456)

Vesting of share awards and exercise of share options 50 – – 50

At 30 September 2025

(470) 61 3 (406)

Treasury

share reserve

(restated)*

£m

Merger

reserve

£m

Capital

redemption

reserve

£m

Total other

reserves

(restated)*

£m

At 1 October 2023 (515) 61 2 (452)

Vesting of share awards and exercise of share options 50 – – 50

Cancellation of ordinary shares – – 1 1

Purchase of shares by Employee Benefit Trust (55) – – (55)

At 30 September 2024 (520) 61 3 (456)

Note:

* The comparative treasury share reserve for the year ended 30 September 2024 has been restated as discussed within “Company accounting policies”.



Notes to the Company financial statements continued

258

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

7 Equity continued

7.2 Other reserves continued

Treasury shares

Purchase of treasury shares

At 30 September 2025, the Company held 59,869,507 (2024: 66,725,007) treasury shares.

During the year, the Company agreed to satisfy the vesting of certain share awards, utilising a total of 6,855,500 (2024: 7,181,463)

treasury shares.

Shares purchased under the Company’s buyback programme are either cancelled or are retained in treasury and reissued in

the future. Where the shares are retained as treasury shares, they represent a deduction from equity attributable to owners

of the Company.

On 19 November 2024, the Company entered into a non-discretionary share buyback programme to purchase up to £400m of its

own shares. As announced on 15 May 2025, the programme was extended by up to £200m. The extended programme completed in

July 2025, for a total consideration of £600m plus expected associated fees and taxes, corresponding to the £609m recognised

through retained earnings at the balance sheet date, of which £605m was paid in the current year.

During the year, the Company repurchased a total of 48,209,390 ordinary shares as part of the programme, all of which were

subsequently cancelled.

In the prior year, the Company purchased a total of 29,289,778 ordinary shares as part of a non-discretionary share buyback

programme entered into on 22 November 2023 and completed in April 2024. Consideration of £348m for this share buyback

programme was paid in the prior year.

Employee Benefit Trust

The Employee Benefit Trust (EBT) holds shares in the Company and was set up for the benefit of Group employees. The EBT

purchases the Company’s shares in the market or is gifted these by the Company for use in connection with the Group’s share-

based payments arrangements. Once purchased, shares are not sold back into the market unless required to settle employee tax

liabilities in respect of their share awards. The EBT holds 8,064,848 ordinary shares in the Company (2024: 8,473,802) at a cost of

£72m (2024: £77m) with £nil of shares purchased during the year (2024: £55m), funded by the Company, and a nominal value of

£nil (2024: £nil).

During the year, the EBT utilised 420,118 shares it held to satisfy the vesting of certain share awards (2024: 1,381,398).

The EBT received £nil (2024: £nil) additional funds for future purchase of shares in the market.

The costs of funding and administering the EBT are charged to the profit and loss account of the Company in the period to

which they relate. The market value of the shares of the Company held by the EBT at 30 September 2025 was £89m (2024: £87m).

Governance Report Additional InformationStrategic Report Financial Statements

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

259

ADDITIONAL

INFORMATION

Additional information

261 Glossary

264 Shareholder information

260

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Glossary

Alternative Performance Measures

Alternative Performance Measures are used by the Group to understand and manage performance. These are not defined

underInternational Financial Reporting Standards (IFRS) or UK-adopted International Accounting Standards (UK-IFRS) and

are not intended to be a substitute for any IFRS or UK-IFRS measures of performance but have been included as management

considers them to be important measures, alongside the comparable GAAP financial measures, in assessing underlying

performance. Wherever appropriate and practical, we provide reconciliations to relevant GAAP measures. The table below

sets out the basis of calculation of the Alternative Performance Measures andthe rationale for their use.

Measure Description Rationale

Underlying

(revenue

and profit)

measures

Underlying measures are adjusted to exclude items

which in management’s judgement need to be disclosed

separately by virtue of their size, nature or frequency

toaid understanding of the performance for the year

orcomparability between periods:

• Recurring items include purchase price adjustments

including amortisation of acquired intangible assets

and adjustments made to reduce deferred income

arising on acquisitions, acquisition-related items,

and unhedged FX on intercompany balances; and

• Non-recurring items that management judge to be

one-off or non-operational such as gains and losses

onthe disposal of assets, impairment charges

andreversals, and restructuring related costs.

Recurring items are adjusted each period irrespective

of materiality to ensure consistent treatment.

Underlying basic EPS is also adjusted for the tax impact

of recurring and non-recurring items.

All prior period underlying measures (revenue and

profit) are retranslated at the current year exchange

rates to neutralise the effect of currency fluctuations.

Underlying measures allow management and

investors to compare performance without

theeffects of foreign exchange movements

orrecurring or non-recurring items.

By including part-period contributions

fromacquisitions, discontinued operations,

disposals and assets held for sale of standalone

businesses in thecurrent and/or prior periods,

the impact of M&A decisions onearnings per

share growth can be evaluated.

Organic

(revenueand

profit) measures

In addition to the adjustments made for Underlying

measures, Organic measures:

• Exclude the contribution from discontinued

operations, disposals and assets held for sale

ofstandalone businesses in the current and

priorperiod; and

• Exclude the contribution from acquired businesses

until the year following the year of acquisition;

andAdjust the comparative period to present prior

period acquired businesses as if they had been

partofthe Group throughout the prior period.

Acquisitions and disposals where the revenue

andcontribution impact would be immaterial

arenotadjusted.

Organic measures allow management and

investors to understand the like-for-like

revenue and current period margin

performance of the continuing business.

Underlying

CashFlow from

Operations

Underlying Cash Flow from Operations is Underlying

Operating Profit adjusted for non-cash items, net

capital expenditure (excluding business combinations

and similar items) and changes in working capital.

To show the cash flow generated by

theoperations and calculate underlying

cashconversion.

Strategic Report Governance Report Financial Statements

Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

261

Measure Description Rationale

Underlying

CashConversion

Underlying Cash Flow from Operations divided

byUnderlying (as reported) Operating Profit.

Cash conversion informs management and

investors about the cash operating cycle of

the business and how efficiently operating

profit is converted into cash.

Underlying

EBITDA

Underlying EBITDA is Underlying Operating Profit

excluding underlying depreciation, amortisation

andshare basedpayments.

Underlying depreciation and amortisation is the

statutory equivalent measure, adjusted for the

amortisation of acquired intangibles. Underlying share

based payments is the statutory equivalent measure,

adjusted for M&A-related share based payment charges

included within other M&A activity related items.

To calculate the Net Debt to underlying

EBITDAleverage ratio and to show

profitability before the impact of

majornon-cashcharges.

Annualised

recurring

revenue

Annualised recurring revenue (“ARR”) is the normalised

recurring revenue in the last month of the reporting

period, adjusted consistently period to period, multiplied

by twelve. Adjustments to normalise reported recurring

revenue involve adjusting for certain components (such

asnon-refundable contract sign-up fees) to ensure the

measure reflects that part of the revenue base which

(subject to ongoing use and renewal) can reasonably

beexpected to repeat in future periods.

ARR represents the annualised value ofthe

recurring revenue base that is expected to

becarried into future periods, and its growth

is aforward- looking indicator of reporting

recurring revenue growth.

Renewal Rate

byValue

The ARR from renewals, migrations, upsell and

cross-sell of active customers at the start of the

year,divided by the opening ARR for the year.

As an indicator of our ability to retain and

generate additional revenue from our existing

customer base through upand cross sell.

Free Cash Flow Free Cash Flow is Underlying Cash Flow from

Operationsminus net interest paid, derivative

financialinstruments and income tax paid, and

adjustedfor non-recurring cash items (which

excludesnet proceeds on disposals of subsidiaries)

andprofit and loss foreign exchange movements.

To measure the cash generated by

theoperating activities during the period

thatis available to repay debt, undertake

acquisitions or distribute toshareholders.

% Subscription

Penetration

Underlying software subscription revenue

asapercentage of underlying total revenue.

To measure the migrationour customer

basefromlicence and maintenance

toasubscription relationship.

% Sage

BusinessCloud

Penetration

Underlying recurring revenue from the Sage Business

Cloud as a percentage of the underlying recurring

revenue of the Future Sage Business Cloud Opportunity.

To measure the progress in the migration

ofour revenue base to the Sage Business

Cloudby connecting our solutions to the

cloudand/or migrating our customers to

cloudconnected and cloud native solutions.

Return on

Capital

Employed

(ROCE)

ROCE is calculated as underlying operating profit,

minus amortisation of acquired intangibles, the

resultbeing divided by capital employed, which

istheaverage (of the opening and closing balance

fortheperiod) totalnet assets excluding net debt,

derivative financialinstruments, provisions for

non-recurring costs, financial liability for purchase

ofownshares andtax assets or liabilities.

As an indicator of the current period financial

return on the capital invested in the company.

ROCE is used as an underpin in the FY23, FY24

and FY25 PSP awards.

Net debt Net debt is cash and cash equivalents less current

andnon-current borrowings.

To calculate the Net Debt to underlying

EBITDA leverage ratio and an indicator of

ourindebtedness.

Glossary continued

262

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

AGM

Annual General Meeting

Artificial Intelligence

API

Application Program Interface

CAGR

Compound Annual Growth Rate

CDP

Carbon Disclosure Project

CEO

Chief Executive Officer

CFO

Chief Financial Officer

CGU

Cash Generating Unit

CRM

Customer Relationship Management

DTR

Disclosure Guidance and Transparency Rules

EBITDA

Earnings Before Interest Taxes Depreciation and

Amortisation

Executive Director

ELT

Executive Leadership Team

EPS

Earnings Per Share

ERP

Enterprise Resource Planning

European Union

FCF

Free Cash Flow

FY23

Financial year ending 30 September 2023

FY24

Financial year ending 30 September 2024

FY25

Financial year ending 30 September 2025

GHG

Greenhouse Gas

HCM

Human Capital Management

Human Resources

IFRS

International Financial Reporting Standards

ISV

Independent Software Vendor

KPI

Key Performance Indicator

LLM

Large Language Model

LSE

London Stock Exchange

LTIP

Long Term Incentive Plan

Machine Learning

MTD

Making Tax Digital

NED

Non-Executive Director

NPS

Net Promoter Score

PBT

Profit Before Tax

PSP

Performance Share Plan

R&D

Research and Development

SBC

Sage Business Cloud

SaaS

Software as a Service

SSRS

Software & Software Related Services

TSR

Total Shareholder Return

Strategic Report Governance Report Financial Statements

Additional Information

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

263

Financial calendar

Annual General Meeting 5 February 2026

Dividend payments

FY25 final payable 10 February 2026

Interim payable 3 July 2026

Results announcements

Q1 FY26 trading update 27 January 2026

H1 FY26 interim results 21 May 2026

Q3 FY26 trading update 29 July 2026

FY26 full-year results 19 November 2026

Note:

1. Please note that these dates are provisional and subject to change. Please

access our financial calendar on www.sage.com, which is updated regularly.

2. All dividend payments are subject to Board and, in the case of the final

dividend, shareholders’ approval.

Shareholder and investor information online

More information about our business, products, investors,

media, sustainability, and careers at Sage can be found on

our website at www.sage.com

A dedicated investor information page can be found at

www.sage.com/investors

Enquiries can be directed to Investor Relations via our website.

Electronic shareholder information

Equiniti, the registrar of The Sage Group plc., is able to

notify shareholders by email of the availability of shareholder

information online. Whenever new shareholder information

becomes available, such as Sage’s full-year results, those

shareholders opted in to the scheme will receive an email

notification from Equiniti, enabling them to access, read

and print documents at their convenience.

To take advantage of this service, shareholders should go to

www.shareview.co.uk, where full details of the shareholder

portfolio services are provided. When registering for this

service, shareholders will need to have their 11-character

Shareholder Reference Number to hand, which is shown on

the dividend tax voucher, share certificate or Form of Proxy.

Should shareholders decide at a later date that they do not

want to receive these emails, they may amend their request

by accessing the Shareview Portfolio online and amending

their preferred method of communication.

Annual General Meeting

We consider the Annual General Meeting to be an important

event in our calendar and a significant opportunity to engage

with our shareholders. The 2026 AGM will be held on 5 February

2026. Further details will be set out in the Notice of Annual

General Meeting that accompanies this report and will be

available on our website at www.sage.com.

Advisors

Corporate brokers and financial advisors

J.P. Morgan Cazenove Limited

25 Bank Street, Canary Wharf, London, E14 5JP

Morgan Stanley & Co. International plc

25 Cabot Square, Canary Wharf, London, E14 4QA

Solicitors

Allen Overy Shearman Sterling LLP

One Bishops Square, London, E1 6AD

Principal bankers

Lloyds Bank plc

25 Gresham Street, London, EC2V 7HN

Independent auditor

KPMG LLP

15 Canada Square, London, E14 5GL

Registrars

Equiniti Limited

Highdown House, Yeoman Way, Worthing,

West Sussex, BN993HH

www.shareview.co.uk

Tel: +44 (0)371 384 2030

Lines are open 8.30 am to 5.30 pm

UK time, Monday to Friday (excluding

public holidays in England and Wales).

The Sage Group plc.

Registered Office:

C23—5 & 6 Cobalt Park Way, Cobalt Park,

Newcastle Upon Tyne, United Kingdom, NE28 9EJ

Registered in England Company number 02231246

Shareholder information

264

THE SAGE GROUP PLC. ANNUAL REPORT AND ACCOUNTS 2025

Consultancy, design and production

www.luminous.co.uk

www.sage.com

The Sage Group plc.

C23—5 & 6 Cobalt Park Way,

Cobalt Park,

Newcastle upon Tyne,

NE28 9EJ.

Registered in England

Company number 2231246

Sage exists to knock down barriers so everyone

canthrive, starting with the millions of small and

mid-sized businesses (SMBs) served by us, our partners

andaccountants. Customers trust our finance, HR

andpayroll software tomake work and money flow.

Bydigitalising business processes and relationships

withcustomers, suppliers, employees, banks and

governments, our AI-powered platform connects SMBs,

removing friction and delivering insights. Knocking

downbarriers also means we use ourtime, technology

andexperience to tackle digital inequality, economic

inequality and the climate crisis.