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AVEVA Group plc

Results for the six months


ended 30 September 2015

10 November 2015

This presentation may include predictions, estimates, intentions, beliefs and


other statements that are or may be construed as being forward-looking. While
these forward-looking statements represent our current judgment on what the
future holds, they are subject to risks and uncertainties that could result in
actual outcomes differing materially from those projected in these statements.
No statement contained herein constitutes a commitment by AVEVA to perform
any particular action or to deliver any particular product or product features.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect our opinions only as of the date of this presentation.
The Company shall not be obliged to disclose any revision to these forwardlooking statements to reflect events or circumstances occurring after the date
on which they are made or to reflect the occurrence of future events. This
presentation concerns AVEVA's latest financial results. This morning, AVEVA
released an announcement providing an update on AVEVA's proposed
acquisition of selected industrial software assets from Schneider Electric. For
regulatory reasons, we are not able to provide you with any additional new
details on (or answer questions relating to) that transaction. Therefore, if you
have any questions regarding the proposed transaction, please refer to this
morning's update announcement.

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

CEO review
Richard Longdon, CEO
3

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Highlights
Resilient financial performance
Significant Forex impact on revenue and profit in H1
Underlying growth in recurring revenue
AVEVA Everything3D (AVEVA E3D) revenue doubled* in the period
Good growth in schematics, fabrication and laser modelling

Good progress against strategic objectives


Sales execution was strong in the first half

Growing presence onshore and downstream


Diversifying our end markets
Growth of new product and solution-sales

Update on proposed Schneider Electric software acquisition


* Excluding acquisitions and at constant currency
4

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Resilient financial performance


Sept 2015
Solid first half with revenue in line with expectations at
85.1m* (2014 - 85.9m)
Recurring revenue increased to 64.3m* (2014 - 61.8m)
Forex impact was material in the period

Growth in EMEA, lower activity in Asia and the Americas


Revenue from AVEVA E3D +97%* in H1, with 320 customers
New business helped offset weakness in Oil & Gas segment

* Excluding acquisitions and at constant currency


5

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Strategic progress
Sales execution
One AVEVA and More than 3D initiatives are delivering
measurable results
New business
Sales to new customers
Cross-sales to existing customers

Future business development


New product pilots
Pipeline improved during the second fiscal quarter

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Strategic progress
Onshore and downstream
Diversifying end markets
Oil & Gas now <40% of total sales (2014 c.45%)

Engineering data management


Solution spans all industry sectors
Growing usage within EPC Global Accounts
AVEVA Engineering, AVEVA NET and AVEVA ISM

Brownfield engineering
Thought leadership on the Digital Asset

AVEVA E3D, AVEVA Laser Modeller and AVEVA NET

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Strategic progress
Diversifying our end markets
Food processing
Integrated design and workflow management solution for one of the
largest global suppliers of process plant to the industry
Dairy, beverage, brewery, food, pharmaceutical and chemical processing

Building Information Management (BIM)


Strong proposition in UK infrastructure
AVEVA information management solutions have been proven over many
years in the process industries

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Strategic progress
New product and solution sales
Fabricators
AVEVA E3D combined with FabTrol and Bocad
Full integration across the steel fabrication value chain
Increasing market share

Increasing sales of AVEVA Integrated Engineering & Design


Schematics
AVEVA Laser technologies

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Dubai, October 2015


Update from the AVEVA World Summit
Key themes this year
Decision Support
Design in Context
Cloud
The Digital Asset

Highlights
Major Norwegian OO asset visualisation and information management
EDF/NNB GenCo meeting the BIM challenge for Hinkley Point C
Hitachi-GE Nuclear developing IE&D for overseas nuclear projects
Jacobs creating a Digital Asset for brownfield projects

10

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AVEVA Engage
The future of decision support

11

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The Trusted Living Pointcloud


Enhanced brownfield working

12

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AVEVA Cloud Services


Powerful architecture for engineering design

13

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End markets
Other 15-20%*
Recent successes in
Food Processing and
other process plant

Oil and Gas 35-40%


Expanding downstream
and onshore, brownfield
plays to laser modelling
strengths, investing in
North America, robust LT
drivers

Chemical/PetroChem 5-10%
North America a particularly
active market, projects typically
lower complexity but good
opportunity for LT growth

Shipbuilding 15-20%
Stable outlook but no
signs of a sustained
recovery, global GDP
remains the key
industry driver

Power 10-15%
Positioned for newbuild in developing
countries, replacement
& life extension
elsewhere, nuclear a
significant LT
opportunity

* All revenue percentage ranges are approximations


14

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Proposed Schneider assets acquisition


As announced on 20 July, AVEVA has signed a non-binding
term sheet to acquire the software assets of Schneider
Electric
Transformational acquisition for AVEVA
Both parties are working towards finalising due diligence and
agreeing the detailed terms in December 2015, with
completion expected to occur by mid 2016

15

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Financial review
James Kidd, CFO
16

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Financial highlights
Sept
2015

Sept
2014

Change

Total revenue

82.0m

85.9m

5%

Organic constant currency revenue*

85.1m

85.9m

1%

Adjusted** profit before tax

9.3m

17.1m

46%

Adjusted** profit before tax*

13.7m

17.1m

20%

Adjusted** basic EPS

10.06p

20.50p

51%

Adjusted** profit before tax margin

11.3%

19.9%

6.0p

5.5p

9%

105.7m

116.4m

9%

30.9m

22.5m

37%

Interim dividend per share


Net cash
Operating cash flow before tax

*Organic constant currency revenue/profit is defined as the periods reported revenue/profit restated to reflect the previous years average exchange rates and
excludes the revenue/profit from acquisitions.
**Adjusted profit before tax, adjusted profit margin and adjusted basic earnings per share are calculated before amortisation of intangible assets (excluding other
software), share-based payments, gain/loss on the fair value of forward foreign exchange contracts and exceptional items. In addition, adjusted basic earnings per
share also includes the tax effects of these adjustments.

17

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Summary income statement


Organic
m

Acqns
m

Sept 2015
m

Sept 2014
m

Total revenue

78.7

3.3

82.0

85.9

Cost of sales

(6.4)

(0.5)

(6.9)

(7.5)

Gross profit

72.3

2.8

75.1

78.4

(62.9)

(2.9)

(65.8)

(61.6)

0.3

9.4

(0.1)

9.3

17.1

(10.1)

(2.9)

Reported PBT

(0.8)

14.2

Income tax

(1.8)

(3.5)

(Loss)/profit after tax

(2.6)

10.7

Adjusted profit margin

11.3%

19.9%

Adjusted basic EPS (pence)

10.06p

20.50p

Operating expenses
Net interest receivable
Adjusted PBT
Normalised items

18

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Organic revenue by category


Sept 2015
Reported
m

Sept 2015
Constant
currency*
m

Sept 2014
Reported
m

Constant
currency
change

Annual fees

29.0

31.4

29.7

6%

Rental licence fees

30.4

32.9

32.1

2%

Recurring revenue

59.4

64.3

61.8

4%

Initial licence fees

11.0

11.9

14.6

(18%)

Services

8.3

8.9

9.5

(6%)

Total

78.7

85.1

85.9

(1%)

Annual fees up 6% following ILF sales in 2014/15 and price increases


Rental licences grew 2% - growth in non-3D products and AVEVA E3D offsetting some volatility
ILF decrease reflects difficult market conditions in Oil & Gas and shipbuilding
* Revenue on a constant currency basis is defined as the periods reported revenue restated to reflect the previous years average exchange rates and excludes the
revenue from acquisitions of 8over8 and FabTrol.

19

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Global performance

Rental fees
Initial fees

EMEA

46.3m*

Annual fees
Training and services

(Reported 40.9m)
(2014 - 43.7m)

Americas

10.8m*

Asia Pacific

(Reported 10.4m)
(2014 - 12.4m)

28.0m*
(Reported 27.4m)
(2014 - 29.8m)

Solid performance in NA
Brazil market continues
to be tough

Growth of 6%
Weak conditions in
Oil & Gas
Upselling of non-3D

Recurring revenue
solid
ILFs impacted
China market weak

* Revenue is stated on an organic, constant currency basis.

20

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Organic cost base


Sept
2015
Reported
m

Sept 2015
Constant
currency
m

Sept
2014
Reported
(Restated**)
m

6.4

6.8

7.5

(9%)

Research & Development

11.9

12.4

13.9

(11%)

Selling and distribution

37.3

39.1

37.1

5%

Administrative

13.7

13.1

10.6

24%

Total opex

62.9

64.6

61.6

5%

Total costs

69.3

71.4

69.1

3%

Cost of sales

Constant
currency
change

Costs are stated on an adjusted basis*

Research & Development benefited from in-house facility in India and lower discretionary spend

Selling and distribution up due to increased commission and annualised cost of 2014/15 hires

Administrative expenses increased due to investment in IT and NI on share options. PY includes a FX gain of 1.5m

* After adjusting for amortisation of intangible assets (excluding other software), share-based payments, gain/loss on the fair value of forward foreign exchange
contracts and exceptional items. This also excludes the costs from acquisition of 8over8 and FabTrol.
** The allocation of costs between selling and distribution and administrative expenses has been amended to allocate costs on a functional basis rather than a
geographic basis. There has been no impact on profit.

21

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Reporting
As highlighted at the FY15 results, segments have changed
Primary segments are the geographic regions
Revenue and profit reported by region

Classification of costs has been updated


Split of costs between selling & distribution and administrative amended

Costs now allocated on a functional basis rather than geographic


Comparatives restated; no impact on profit

22

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Movement in net cash position


250

200

150

million

30.9

(6.1)

(0.8)

(3.1)

(16.0)
(3.0)

103.8

105.7

100

50

0
31-Mar-15

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Cash from
operations

Tax

Cap Ex

Acquisitions

Dividends

FX/other

Strong cash collection in H1 driving 37% increase in cash from operations before tax

Cash flow includes the cost of FabTrol (3.1m)

30-Sep-15

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Summary balance sheet

24

Sept 2015
m

Sept 2014
m

Non-current assets

90.5

69.5

Accounts receivable (net of provision 6.0m (2014 - 6.0m))

40.6

46.0

Other receivables

11.3

7.5

Net cash and deposits

105.7

116.4

Total assets

248.1

239.4

Other liabilities

30.9

24.6

Deferred revenue

35.1

30.9

Pension liabilities

8.0

12.7

Shareholders equity

174.1

171.2

Total shareholders equity and liabilities

248.1

239.4

Non-current assets increased due to acquisitions of FabTrol and 8over8

Strong cash collection in H1

Pension liabilities decreased 4.7m lower UK DB scheme liabilities due to higher discount rate
Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Summary and outlook


Richard Longdon, CEO
25

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Outlook
Core strengths continue to deliver success
Industry-leading technology
First-class customer service
Resilient business model

Focus on new business


Supported by One AVEVA and More than 3D

Further diversify end-markets


Expect to achieve full year result in line with
Boards expectations

26

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2015
AVEVA
Solutions
Limited
and
subsidiaries.All
Allrights
rights reserved.
reserved.
Copyright
2015
AVEVA
Solutions
Limited
and
itsits
subsidiaries.

Appendices

27

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Revenue by category
Annual
fees
m

Rental
fees
m

Recurring
revenue
m

Initial
licence
fees
m

Training
and
services
m

Total
m

Reported

30.6

31.2

61.8

11.2

9.0

82.0

Acquisitions

(1.6)

(0.8)

(2.4)

(0.2)

(0.7)

(3.3)

Organic, reported

29.0

30.4

59.4

11.0

8.3

78.7

Currency effect

2.4

2.5

4.9

0.9

0.6

6.4

Organic, constant
currency*

31.4

32.9

64.3

11.9

8.9

85.1

Sept 2014

29.7

32.1

61.8

14.6

9.5

85.9

6%

2%

4%

(18%)

(6%)

(1%)

Organic, constant
currency* change

* Organic constant currency revenue is defined as the periods reported revenue restated to reflect the previous years
average exchange rates and excludes the revenue from acquisitions of 8over8 and FabTrol.

28

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Revenue by geography

29

Asia Pacific
m

EMEA
m

Americas
m

Total
m

Reported

28.1

41.8

12.1

82.0

Acquisitions

(0.7)

(0.9)

(1.7)

(3.3)

Organic, reported

27.4

40.9

10.4

78.7

Currency effect

0.6

5.4

0.4

6.4

Organic, constant currency

28.0

46.3

10.8

85.1

Sept 2014

29.8

43.7

12.4

85.9

Organic, constant currency


change

(6%)

6%

(13%)

(1%)

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Cost analysis
Cost of
sales
m

Research &
Development
m

Selling and
distribution
m

Administrative
expenses
m

Total
m

6.9

16.8

40.0

19.0

82.7

Normalised
adjustments

(3.6)

(1.3)

(5.1)

(10.0)

Acquisitions

(0.5)

(1.3)

(1.4)

(0.2)

(3.4)

Organic reported

6.4

11.9

37.3

13.7

69.3

Currency effect

0.4

0.5

1.8

(0.6)

(2.1)

Adjusted, organic
constant currency

6.8

12.4

39.1

13.1

71.4

Sept 2014 adjusted*

7.5

13.9

37.1

10.6

69.1

Organic constant
currency change

(9%)

(11%)

5%

24%

3%

Reported

* The allocation of costs between selling and distribution and administrative expenses has been amended to allocate costs
on a functional basis rather than a geographic basis. There has been no impact on profit.

30

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Summary cash flow


Sept 2015
m

Sept 2014
m

Net cash from operating activities

30.9

22.5

Tax paid

(6.1)

(7.9)

Acquisitions

(3.1)

Capital expenditure (net)

(0.8)

(1.7)

0.3

0.4

(0.1)

(0.3)

(16.0)

(14.0)

5.1

(1.0)

(3.2)

(0.1)

Opening cash and deposits

103.8

117.5

Closing cash and deposits

105.7

116.4

Interest received (net)


Purchase of own shares
Dividends paid
Net increase/(decrease) in cash
Foreign exchange movement

31

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Currency translation effect on revenue FY16


Currency

A: Average
rate FY15

B: Spot rate
30/09/15

Delta
(A / B)

EUR

1.274

1.349

(5.6%)

NOK

10.779

12.898

(16.4%)

RUB

72.436

99.896

(27.5%)

EMEA

50%

Indicative
impact on
FY16
revenue

(10-12%)

CNY

9.927

9.651

+2.9%

INR

98.530

100.416

(1.8%)

JPY

176.760

181.620

+2.7%

KRW

1709.880

1814.280

(5.8%)

AUD

1.846

2.174

(15.1%)

Asia Pacific

32

% of FY15
revenue

32%

(2-3%)

USD

1.614

1.517

+6.0%

BRL

3.975

6.218

(36.1%)

MXP

22.094

25.899

(14.7%)

Americas

18%

(6-7%)

Total

100%

(6-7%)

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Definition of terms

33

Item

Definition

Initial Licence Fee

Initial Licence Fee (ILF) - users are charged an initial licence fee per seat together with an obligatory
annual fee.

Annual Fee

Charged in association with an ILF providing customer support and maintenance, which includes core
updates. Users must pay the annual fee in order to maintain the right to use the software.

Rental licence model

An alternative to the ILF plus annual fee model, there are three different types of rental licence:
Monthly invoicing, contractual period (typically one year, invoiced up front) or token licensing.

Token-based licensing

The user pays for a 'basket of tokens representing licences to use different software products over a
defined period of time. The customer can draw down on these licences as required.

Revenue recognition

ILFs recognised upfront after usual delivery and acceptance conditions are met. Annual fees
recognised ratably over the period (typically 12 months). Rental licences - an estimated licence
element is recognised up front, and the remaining maintenance element is recognised ratably over the
contracted period. Services are recognised on a percentage complete basis.

Revenue by geography

The sales force is organised into three geographic regions. Revenue is allocated based on where the
contracting entity of the customer is based. AVEVA's Global Accounts often choose to purchase
software in one geography for use in another.

Recurring revenue

Annual fees plus rental fees.

Adjusted costs/PBT

Adjusted to exclude the effects of amortisation of intangibles (excluding software), share-based


payments, gain/loss on fair value of forward foreign exchange contracts and exceptional items.

Constant currency

The periods reported revenues and costs restated to reflect the previous years average exchange
rates, for the purpose of a constant currency comparison.

Adjusted EPS

Adjusted PBT is used to calculate the adjusted earnings per share, after an adjustment for the tax
effect of the items adjusted.

Cash conversion

Cash flow from operations divided by the operating profit for the period, measured as a percentage.

Copyright 2015 AVEVA Solutions Limited and its subsidiaries. All rights reserved.