12 November 2019 AVEVA Group plc · Strong growth in both Plant and Marine 3D Solid growth in HMI SCADA partly offset by lower sales in pipeline Monitoring & Control due to more selective

Results for the six months ended 30 September 2019

H1 FY20

AVEVA Group plc

12 November 2019

©2019 AVEVA Group plc and its subsidiaries. All rights reserved.2

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 forward-looking statements to reflect events or circumstances occurring after the date on which they are made or to reflect the occurrence of future events.

Highlights

Craig Hayman, CEO

3 ©2019 AVEVA Group plc and its subsidiaries. All rights reserved.

AVEVA delivers on the Digital Twin with strong results and makes continued progress against its medium-term targets

Leading the digitalisation of the industrial

world


AssetPerformance

EngineerProcure

Construct

Operate andOptimise

Plan andSchedule

Monitor andControl

✓ Strong financial performance

Organic constant currency revenue growth 11.9%

Adjusted EBIT growth of 66.5%

Recurring revenue grew 42.1%

✓ Integration on track

Actions to optimise performance yielding results

Launch of AVEVA Unified Engineering and AVEVA Unified Operations Control Centre

✓ Outlook remains positive

Digitalisation is driving strong demand

On track to meet medium-term targets

H1 FY19

336.5

54.4

Growth

16.5%

66.5%

Revenue (£m)

Six months ended 30 September

Adjusted EBIT (£m)

391.9

90.6

Adjusted diluted EPS (pence) 43.31

H1 FY20

65.0%26.25

Results

Broad-based growth in H1 FY20

20% growth* Low single-digit growth* Low double-digit growth* Mid-teens growth*

*Constant currency.

Asia Pacific

£124.3m+48.9%

EMEA£134.7m

+4.4%

Americas£132.9m

+7.2%


Engineering

42% of revenue

Monitor & Control

32% of revenue

APM Planning & Operations

14% of revenue 12% of revenue

Strong growth in both Plant and Marine 3D

Solid growth in HMI SCADA partly offset by lower sales in pipeline Monitoring & Control due to more selective bidding for contracts

Strong growth from AVEVA Predictive Analytics, which achieved a large order win in North America

Strong growth from Planning & Scheduling and Asset Optimisation

Financial Review

James Kidd, Deputy CEO and CFO



Strong financial performance

• Organic constant currency revenue +11.9%

• Constant currency adjusted EBIT +46.5% versus prior year

• Recurring revenue up 1,120bps to 61.9%, assisted by early contract renewals

• Strong balance sheet with net cash and deposits of £58.6m

Results for the six months ended 30 September 2019, H1 FY20

Total revenue

£391.9m

16.5%

Adjusted EBIT

£90.6m

66.5%

Adjusted EBIT margin

23.1%

690bps

Adjusted diluted EPS

43.31p

65.0%

Interim dividend

15.5p

10.7%

Income statement H1 FY20


• Growth driven by strong sales execution, early renewals and some increase in multi-year contracts

• Gross margin improvement driven by a focus on higher margin revenue and the efficient delivery of services

• Strong operating leverage and cost control helped improve adjusted EBIT margin to 23.1%

• Constant currency costs up 3.5%

*Adjusted EBIT, profit before tax, adjusted profit margin and adjusted diluted 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.

Year ended 30 SeptemberH1 FY20

£mH1 FY19

£mChange

Revenue 391.9 336.5 16.5%

Cost of sales (92.3) (92.8) (0.5)%

Gross profit 299.6 243.7 22.9%

Gross margin 76.4% 72.4% 400bps

Operating expenses (209.0) (189.3) 10.4%

Adjusted EBIT* 90.6 54.4 66.5%

Adjusted EBIT margin 23.1% 16.2% 690bps

Net interest (1.5) (0.3) -

Adjusted profit before tax* 89.1 54.1 64.7%

Tax charge 21.3% 21.5% -

Adjusted profit after tax 70.1 42.4 65.3%

Adjusted diluted EPS* (pence) 43.31 26.25 65.0%

Revenue bridge H1 FY20

99


Organic growth of 11.9% including:

• Early contract renewals and expansions that were originally planned for Q3

Inorganic effects include:

• Wonderware Italy: Impact of wholly owned distributor disposed of in April 2019

• MaxGrip: Acquisition completed in April 2019

FX translation

• Translation impacted by the weakening of Sterling versus the prior period thus increasing the value of non-Sterling revenue

300

310

320

330

340

350

360

370

380

390

400

REV

ENU

E £

M

Six months ended 30 September 2019 versus prior year

14.0%

3.2%11.9% 16.5%(1.0)% 0.4%

(2.1)%

H1 FY18Statutory

DeferredRevenueHaircut

H1 FY18Pro Forma

InorganicEffects

H1 FY18Organic

Growth in H1 Reductionin Services

InorganicEffects

FXTranslation

H1 FY19Reported

2.0%

Revenue breakdown H1 FY20


Operational rigour to drive margin and long-term cash flows

• Launch of AVEVA Flex and revised sales incentives resulted in 42.1% growth in recurring revenues

• Recurring revenue as a percentage of overall revenue increased by 1,120bps to 61.9%

• Focus on recurring revenue resulted in lower Initial & perpetual fees

• Training & services reduced due to focus on delivery of higher margin revenue

Six months ended 30 SeptemberH1 FY20

£m% of total

H1 FY19£m

% of total ChangeOrganic constant currency

Rentals & subscriptions 141.0 36.0% 76.8 22.8% 83.6% 76.7%

Support & maintenance 101.5 25.9% 93.9 27.9% 8.1% (0.3)%

Recurring revenue 242.5 61.9% 170.7 50.7% 42.1% 33.6%

Initial fees & perpetual 85.4 21.8% 96.7 28.7% (11.7)% (13.3)%

Training & services 64.0 16.3% 69.1 20.6% (7.4)% (9.5)%

Total 391.9 100% 336.5 100% 16.5% 11.9%

Cost base H1 FY20


• Good cost control: Overall constant currency inflation limited despite significant investments in R&D, Sales and Marketing

• Cost of sales: Efficient delivery of services

• Research & development: Investment in integration and new product launches partly offset by efficiency savings

• Selling & distribution: Investment in Sales, strengthening the marketing team and customer events to showcase AVEVA’s enlarged product portfolio

• Administrative costs: Investment in Finance, Legal and IT

Six months ended 30 September 2019H1 FY20

£mH1 FY19

£mChange

Constant currency

Cost of sales 92.3 92.8 (0.5)% (3.3)%

Research & development 60.1 54.2 10.9% 7.7%

Selling & distribution 98.3 89.1 10.3% 7.0%

Administrative 49.0 44.7 9.6% 5.1%

Net impairment loss on financial assets 1.6 1.4 14.3% 14.3%

Total opex 209.0 189.4 10.3% 6.8%

Total 301.3 282.2 6.8% 3.5%

Exceptional and normalised items H1 FY20


• Acquisition and integration costs:Consultancy costs paid to advisors for transaction and integration support, investment in new systems, and deal related executive retention costs

• Restructuring costs: Severance payments for employees as part of the cost synergy programme

• Amortisation of intangibles: Mainly relates to the amortisation of the fair valued heritage AVEVA intangible assets under acquisition accounting following the combination with the Schneider Electric industrial software business

• Share based payments: Increased due to senior hires and increased employee participation

Six months ended 30 September 2019H1 FY20

£mH1 FY19

£m

Acquisition and integration activities 12.5 7.8

Restructuring costs 1.0 3.0

Profit on the sale of a business (0.2) -

Total exceptional items 13.3 10.8

Amortisation (excl. other software) 45.3 43.8

Share based payments 6.4 4.3

Loss on FX contracts 0.1 0.7

Total normalised items 51.8 48.8

Balance sheet


• Strong balance sheet with £58.6m of net cash and no long-term debt

• Non-current assets mainly reflects goodwill and intangible assets that arose from the combination with the Schneider Electric industrial software business

• Contract assets increased due to revenue recognition on longer-term contracts

• Contract liabilities – lower due to timing of renewals and switch from support contracts to rental & subscription

30 September 2019£m

31 March 2019£m

Non-current assets 1,983.3 1,923.0

Trade and other receivables 204.1 237.9

Contract assets 127.3 100.5

Cash and deposits 78.6 127.8

Other current assets 18.3 11.6

Total assets 2,411.6 2,400.8

Trade and other payables 134.2 156.8

Contract liabilities 148.3 174.6

Loans and borrowings 20.0 -

Shareholders’ equity 1,908.4 1,924.5

Other liabilities 200.7 144.9

Total shareholders’ equity and liabilities 2,411.6 2,400.8

Adjusted EBIT to cash from operating activities H1 FY20


H1 FY20£m

H1 FY19£m

Adjusted EBIT 90.6 54.4

Depreciation 10.1 3.2

R&D tax credit (1.2) (0.8)

Amortisation not normalised 0.8 0.8

Trade and other receivables 6.6 13.8

Trade and other payables (46.0) (19.4)

Exceptional items paid (17.5) (7.0)

Other 0.1 (0.4)

Net cash from operating activities before tax 43.5 44.6

• Cash generated from operating activities before tax reflects the impact of multi-year contracts, the payment of higher sales commissions and bonuses resulting from the successful close to FY19, and restructuring costs paid during the period

• Cash conversion is expected to significantly improve in H2

Integration update


Cost savings and Transitional Service Agreements (TSAs)

• Exited 80% of the TSAs with Schneider Electric

• Cost saving programme on track to deliver £25m of annualised benefit in FY21

Areas of focus

• Moving applications currently hosted by Schneider Electric

• Implementation of the new ERP system is progressing well with roll-out expected during 2020

• Major remaining office consolidations include Houston, Beijing, Tokyo and Sydney

Operational review

Craig Hayman, CEO


Driving the digitalisation of the industrial world• Digitalisation is driving growing demand for industrial software

• AVEVA is optimally placed to capture this demand due to its unique product portfolio, which runs end-to-end from Simulation through to Operations


Energy

Buildings

Food & Beverage

Industrials

MarineMaterials

Utilities

Automotive Retail

Telecom

Finance & Insurance

IT

Progress through the Digitalisation Curve

Source: AVEVA Market Insights

A dominant majority of industry decision

makers now believe that digital

technologies will significantly reshape

their organisations and competitive landscape

in the next five years.

Source: Smart Industry: Digital Transformation: State of the

Initiative survey, 2019

““

Customer win

Suncor chooses AVEVA’s integrated Artificial Intelligencesolutions for its Digital Transformation

About SuncorAn integrated energy company focused on developing one of the world’s largest petroleum resource basins

Business challenges• Need for early warning detection and diagnosis of equipment

health problems and performance optimisation• Support for 4.0 initiative to deliver a digital transformation

strategy to enhance business growth

Solutions providedAVEVA Predictive Analytics and AVEVA Process Optimisation provides predictive solutions that incorporates AI-driven Process Simulation and Machine Learning Predictive Analytics to deliver a warning detection system


Customer win


Worley and AVEVA deliver first Cloud-Based Enterprise Resource Management solution optimised for the EPC market

About WorleyA worldwide leader delivering projects, providing expertise in EPC and offering a wide range of consulting and advisory services

Business challenges• Reducing project costs• For global EPCs to remain competitive, the move from an

on-premises infrastructure to cloud-based enterprise resource management was a necessity

Solutions provided

AVEVA Enterprise Resource Management and AVEVA Everything3D innovative plant project execution software in tandem

AVEVA ERM solution for EPCs to include project-specific functionality; updated catalogues and specifications module

“With AVEVA, we saw a commitment to developing this

solution together to create something best-in-class for

engineering.”Andrew Wood, CEO Worley

Reducing capital project time and cost

NEW: AVEVA Unified Engineering

For Internal Use Only. ©2019 AVEVA Group plc and its subsidiaries. All rights reserved.20

• End-to-end integration of conceptual, front-end design and detailed design

• Integrated process simulation and engineering design

• Multi-discipline teams can collaborate in real-time

• Minimise risk and maximise return on capital

Faster front-end design

50%

Increased engineering

efficiency

30%

Reduction in project

schedule

20%

Saved in total

installed cost

5%

Real-time operational performance management

NEW: AVEVA Unified Operations Centre

• First Unified Operations Centre with industry-specific best practices to help capitalise on digital transformation

• Decisions based on accurate, real-time information

• Integrates and visualises all available data in context

NEW Unified Operations Centre

for Oil & Gas

NEW Unified Operations Centre for Infrastructure

NEW Unified Operations Centre

for Mining

Smart City Atal Nagar

21 For Internal Use Only. ©2019 AVEVA Group plc and its subsidiaries. All rights reserved.


• AVEVA Partner Network launched enabling AVEVA portfolio cross-sell

• Schneider Electric process sales leads through AVEVA’s indirect sales channel

• Divested wholly owned distributor in Italy. Intend to divest wholly owned distributors in Germany and Scandinavia

ChannelSales

DirectSales

Revenue

• Growth across all regions

• Growth in subscription following the launch of AVEVA Flex

• Continued focus on Monitoring & Control with APM gaining traction

Indirect sales channel investment and simplification… …is driving growth

Progress in transition to recurring revenue business model

141.0

101.585.4

64.0

Revenue

£391.9m+16.5%

Recurring % by Business Unit

61.9%Recurring

+83%

+8%

-12%

-7%

Engineering

Planning & Ops

Monitoring & Control

APM

Revenue type

Rental & Subscription

Support & Maintenance

Initial & Perpetual

Training & Services

100%0%


Progress against medium-term targets in H1 FY20

Revenue

Recurring Revenue

Adjusted EBIT

margin

Constant currency growth at least in line

with industrial software market


Increase Recurring Revenue as a

percentage of total revenue to over 60%

Improve adjusted EBIT margin to 30%

+16.5%£391.9m

+42.1%£242.5m

+690bps23.1%

Rental & subscription revenue: Up over 80%

Recurring revenue: up to 61.9% (H1 FY19: 50.7%)

Planned reduction in perpetual licences and training & services

Improvement in gross margin: Higher proportion of software revenue, higher gross margin services, focus on efficient delivery of services

Improvement in EBIT margin: Cost control and operational leverage

Substantial reinvestment: Increased investment in R&D, sales force and marketing

Organic constant currency revenue +11.9%

Sales execution: Strong performance from both direct sales force and channel partners

Marketing investment: Customer events and new marketing leadership

Product integration: Launch of AVEVA Unified Engineering and AVEVA Unified Operations Control Centre to help continued momentum

Set at September 2018 capital markets day

Summary and Outlook

Summary

• Strong sales performance delivering growth across all regions and Business Units

• Excellent progress against medium-term targets

• Strategic benefits of the Combination delivering consistent strong performance

Outlook

• Strong demand for digitalisation and industrial software within the industries we serve

• Confident in the outlook and on track to meet medium-term targets


Appendices


Pro forma revenue by region

Asia Pacific EMEA Americas Total Total Change

£m H1 FY20 H1 FY19 H1 FY20 H1 FY19 H1 FY20 H1 FY19 H1 FY20 H1 FY19

Rentals and subscriptions 58.2 22.2 46.1 40.3 36.7 14.3 141.0 76.8 83.6%

Support and maintenance 23.8 21.8 34.6 30.3 43.1 41.8 101.5 93.9 8.1%

Total recurring revenue 82.0 44.0 80.7 70.6 79.8 56.1 242.5 170.7 42.1%

Initial fees and perpetuals 27.1 26.4 32.9 35.0 25.4 35.3 85.4 96.7 (11.7)%

Training and services 15.2 13.1 21.1 23.4 27.7 32.6 64.0 69.1 (7.4)%

Total 124.3 83.5 134.7 129.0 132.9 124.0 391.9 336.5 16.5%

Change 48.9% 4.4% 7.2% 16.5%


Cash flowSix months ended 30 September 2019

H1 FY20£m

H1 FY19£m

Net cash from operating activities before tax 43.5 44.6

Tax paid (27.6) (8.6)

Capital expenditure (net) (7.2) (3.6)

Net interest (0.2) (0.3)

Acquisition of a subsidiary net of cash acquired (22.2) -

Proceeds from the sale of a subsidiary net of cash (1.5) -

Dividends paid (46.7) (43.5)

Proceeds from borrowing 20.0 1.9

Payment of lease liabilities (7.7) -

Purchase of own shares (3.1) (4.4)

Other 0.6 -

Net (decrease) / increase in net cash (52.1) (13.9)

Foreign exchange movement 3.5 1.8

Opening cash 127.2 105.6

Closing cash 78.6 93.5

Revolving credit facility (20.0) -

Treasury deposits - 0.2

Net cash and treasury deposits 58.6 93.7


Major currencies


Approximate percentage of

revenue

GBP vs. local currencyH1 FY20 average vs. H1

FY19 average

GBP vs. local currency30 September versus H1

FY19 average

GBP vs. local currencyspot rate versus H2 FY19

average

USD 45% (5.5)% (7.6)% (1.1)%

Euro 15% (0.4)% (0.4)% 2.0%

GBP 10% 0.0% 0.0% 0.0%

CAD 5% (3.2)% (5.8)% (1.5)%

KRW 5% 1.4% 0.7% 1.8%

JPY 5% (6.8)% (9.5)% (3.1)%

CNY 5% (0.7)% 0.1% 1.3%

• 3% currency translation benefit seen in H1

• No projected benefit in H2 at current exchange rates

Avenues for growth

Established positionsFocus areaU

pst

ream

Do

wn

stre

am

Ch

em

ical

s

Min

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Po

we

r

F&B

, CP

G

Spe

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he

m

and

Ph

arm

a

Mid

stre

am

Dis

cre

te a

nd

O

EM

Wat

er

Smar

t In

fra

Mar

ine

DiscreteBatch and

HybridProcess

Utilities and Infrastructure


Proportion of revenue

Engineering

Asset Performance Management

Planning & Operations

Monitoring & Control

42%

32%

14%

12%

5-10% 5-10% 5-10%>40%5-10% 5-10%

Definitions & terms• Organic constant currency revenue: Excludes the impact of M&A, deferred revenue haircut of £6.5m in H1 FY19; a currency translation benefit of £10.8m in H1 FY20.

• Constant currency adjusted EBIT growth: Excludes the deferred revenue haircut of £6.5m in H1 FY19; a currency translation benefit of £10.8m in H1 FY20.

• Recurring revenue: Rental & Subscription plus Support & Maintenance revenue.

• Adjusted profit before tax, adjusted EBIT and adjusted earnings per share: Calculated before amortisation of intangible assets (excluding other software), share-based payments, gain/loss on fair value of forward foreign exchange contracts and exceptional items. Adjusted earnings per share also include the tax effects of these adjustments.

• The Combination: The combination between AVEVA Group plc and the Schneider Electric industrial software business that completed on 1 March 2018.

• Heritage AVEVA: AVEVA Group excluding the Schneider Electric industrial software business.

• Heritage SES: The Schneider Electric industrial software business excluding Heritage AVEVA.

• Support & Maintenance: Support and maintenance payments for software acquired through Initial Fees or Perpetual licences.

• Rentals & Subscriptions: Software licenses with a fixed term or licenses that are paid for on a subscription basis.

• Initial Fees & Perpetual: Software licenses with an upfront payment that can then be used if maintenance fees are paid, or licence with no end date for usage.

• APM: Asset Performance Management. Software to maximise Return on asset investments.

• EPC: Engineering, Procurement, and Construction companies.

• AVEVA E3D: The next generation 3D design platform from AVEVA.

• AVEVA Engage: A 3D Decision Support solution for digital assets.

• AVEVA Flex: AVEVA’s rental & subscription offering for Monitoring & Control.

• Wonderware: A software brand that incorporates functions such as Human to Machine Interfaces and Supervisors, Control and Data Acquisition capabilities.

©2019 AVEVA Group plc and its subsidiaries. All rights reserved.31

linkedin.com/company/aveva

@avevagroup

ABOUT AVEVA

AVEVA is a global leader in engineering and industrial software driving digital transformation across the entire asset and operational life cycle of capital-intensive industries.

The company’s engineering, planning and operations, asset performance, and monitoring and control solutions deliver proven results to over 16,000 customers across the globe. Its customers are supported by the largest industrial software ecosystem, including 4,200 partners and 5,700 certified developers. AVEVA is headquartered in Cambridge, UK, with over 4,400 employees at 80 locations in over 40 countries.

aveva.com


Documents

12 November 2019 AVEVA Group plc · Strong growth in both Plant and Marine 3D Solid growth in HMI SCADA partly offset by lower sales in pipeline Monitoring & Control due to more selective