JuanDB wrote:Apologies, I missed the notification of your reply.

No worries, Juan!

My point around the divestment is that I understand Sage Pay helps Sage customers collect money from their end customers. I would expect the majority of the Sage Pay customers use that solution as an add on to their Sage accounting solution.

A ha, I get it.

So given that the Sage Pay customer will still be a customer of Sage post divestment, what does the divestment achieve?

But presumably they (the customer) are no longer a customer for a "Sage Pay service". For Sage, the divestment must surely mean reduced support costs of the divested product. Perhaps they view that net £ effect to be beneficial. Furthermore, the resources (software and support personnel paid by Sage) previously consumed in the support and maintenance could be diverted to other projects, e.g. the Cloud/SaaS business.

With an ongoing customer relationship it would seem logical to migrate the customers to a partner solution, retain the revenue in exchange for a hit to gross margin in increased COS.

I don't quite understand what you mean here Juan.

I’m not sure you were implying that Sage Pay and Payroll processing are the same solution?

Ok. Not really. The term

Payroll processing is perhaps confusing. In the table I posted in my last, I introduced

Processing (a.k.a. Payroll?) and perhaps this is where the confusion stems. Apologies. I've not yet analysed any Sage report that breaks down revenue regards "solution", only by the means in which (I'm guessing here, see my last post) Sage collect the revenue.

What I had been trying to achieve was to evaluate what I saw as the potential top line impact to Sage as a business, when SagePay is divested. So I looked to the "Segmental Revenue Breakdown" section of the 2018 AR. Unfortunately Sage's accountants provide visibility of product lines, but *seem* broadly speaking to split into the following three:

(Revenue segment)

- Recurring revenue
- Software and Related Services
- Processing revenue

and after googling and trying to read between the lines I reasoned that revenues accrued from "SagePay" (and perhaps others) were reported within the

Processing revenue section. It's quite possible that I was incorrect in making this assumption. However, if I was right, then as the table suggests these revenues contribute a small % of Sage's total and are the area of least growth.

My understanding is Sage Pay is a receivables solution whereas Payroll sits on the payables side.

Based on what you wrote earlier in your last, I understand what you mean. Your understanding is quite possibly correct, I thank you for further enlightening me.

Well, FWIW I bought about £1200 of SGE shares sometime last week at 660p per share. I obviously would have liked cheaper, but 660p seemed to the lowest level of support that the market has offered to them over the last few months.

Matt