Richard Longdon Chief Executive Chief Financial Officer .../media/Aveva/English/... · PDMS licences Greater efficiency Expanded user footprint Positive effect as AVEVA E3D starts

Results for the year ended 31 March 2013

Richard Longdon – Chief Executive James Kidd – Chief Financial Officer Derek Brown – Head of Investor Relations

Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.

Safe Harbor Statement

During (and in this) presentation we make forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from any future results or developments expressed or implied from the forward-looking statements. Each forward-looking statement speaks only as of today and save to the extent required by the applicable law or regulation, we do not undertake any obligation to update or renew any forward-looking statement.

2


Richard Longdon Chief Executive

3


Strategic highlights

Record results, another year of double-digit organic growth

Major milestone achieved with Enterprise Solutions moving into profitability for the first time

Successful launch of AVEVA Everything3D™ (AVEVA E3D™)

Further expanded Engineering & Design Systems footprint with new products

Stepped up investment in India with new R&D facility

Announced the intention to return £100 million to shareholders via a special dividend, representing half of cash

Retain significant cash balance and the flexibility and headroom

to continue to pursue acquisition opportunities

4


Oil & Gas

Power

Marine

Other

Fundamental drivers

Oil & Gas Power Marine

Other markets

Size and complexity of projects continues to increase

Regulatory, compliance, health & safety

Industry CAPEX now > $1 trillion*

EPC backlogs remain strong

Global energy demand to rise by 36% 2011-2030**

Investment in nuclear in China and India

Continued CAPEX on conventional power

Korean yards now seeing >50% of backlog from offshore

Commercial shipbuilding weak, particularly affecting China

Naval shipbuilding and drive to fuel efficiency are areas of some activity

New industry specific applications for Metals & Mining

Chemical & Petrochemical

Pulp & Paper

Pharmaceutical *Global Data, Oil & Gas

Capital Expenditure

Outlook H1 2012

**BP Global Energy Outlook 2030, Jan 2013

5


AVEVA – global operational performance

Americas Brazil weakness affected Latin America Good progress in Canada The US an area of renewed focus in 2013/14

EMEA Key customers are very busy Benefit from the strong performance in ES Strong rental renewals

Asia Pacific Particular strength in SEA, and strong growth in India Key strategic win with CNPC Japan and Korea steady performance

• 48 offices in 30 countries

6


EDS - Engineering & Design Systems

Continued strong growth

Brazil impact offset by other fast growing markets

Successful launch of AVEVA E3D

Focus on driving sales of AVEVA E3D to new customers to gain market share

Upfront investment in technical sales

Image Courtesy of RuzGazEngineering. © Copyright RGE Group

7


EDS – Customer examples

Lesedi Nuclear Services (PDMS, Instrumentation, Diagrams)

JPNOR Engenharia (Integrated Engineering & Design)

Synergy Engineering (Laser Modeller) – Brownfield modification

EDF (Diagrams and Schematics)

PAENAL Yard (AVEVA Marine) - Offshore steelwork and outfitting

Image Courtesy of EDF. © Copyright EDF

Oil & Gas

Power

Marine

8


ES - Enterprise Solutions

Major milestone with move into profitability

Tight cost control, improved delivery model

Improved service utilisation

Further penetration into the OOs, additional momentum via upsell to EPCs

Software/service mix improved to 55/45 (2012: 51/49)

Image Courtesy of AMEC. © Copyright AMEC

9


ES – Customer examples

Meta Petroleum (AVEVA NET) – Owner Operator

AMEC (EAM) – EPC

Jinling Shipyard (AVEVA NET) – Multi-site collaborative shipbuilding

Sredne Nevsky (AVEVA ERM) – Planning and optimisation

ADMA OPCO (AVEVA NET) – Owner Operator

Image Courtesy of AMEC. © Copyright AMEC

Oil & Gas

Marine

10


- The opportunity

Higher list price

Offset of PDMS licences

Greater efficiency

Expanded user footprint

Positive effect as AVEVA E3D starts at 15% above current PDMS list price

Most AVEVA customers have not paid list price, with different discounts depending on volumes and longevity of contract

The true revenue uplift is the delta in price between AVEVA E3D

and PDMS licences

AVEVA E3D is on average 25-30% more efficient than competing products, so customers could use fewer licences

AVEVA E3D has more functionality which extends into new user areas, resulting in the potential for additional seats e.g. 2 drafting, cloud applications, etc.

Volume discounts will still apply to AVEVA E3D

Typically technology improvements have driven increased use of design tools

Multiple variables will affect migration from PDMS to AVEVA E3D

11


- Migration to AVEVA E3D over the long term

5-8 year time frame

Evaluation/early adoption on new projects

Large EPCs begin to standardise Efficiency gains create competitive advantage Key reference accounts

AVEVA E3D feeds through into EPC ecosystem and market share gains accrue Mandates from OOs AVEVA E3D platform begins to enable new business models, for example the cloud, generating additional seats

Some long term projects remain on PDMS, these subside over time

PDMS remains integral amongst some of the most cautious customers

Emerging markets adoption

x

y

Phase 1 Phase 2 Phase 3 Phase 4 Phase 5

Rate and phases of adoption…

12


- Conservative target market

Existing customer…

• Attracted to evaluate by efficiency benefits

• Strategic decision to adopt for new projects

• Long sales cycle

• Takes evaluation licences

• Mixed environment with ongoing migration

• Difficult to predict timing to full adoption

New customer…

“AVEVA E3D ‘go to market’ strategy: drive sales to new

accounts – market share gains”

13


- The financial model

Higher list

price

Push for more

rentals

New

commercial

agreement –

adds time to

sales process

Fewer

discounts

Aggressive

anti-piracy

Investment

in technical

sales and

winning

market share

AVEVA E3D

more intuitive

– potentially

less training

required

AVEVA E3D

is an ongoing

R&D project

– Cloud, etc.

Implications for the financial model

14


- tracking success

Adoption

within PDMS

installed

base

% penetration

100%

0%

Number

of new

seats won

# of new seats won

n

0

PDMS installed base Engineering Design

Tools market

We are focused on driving market share gains over the long term

The pay-as-

you-go ‘token’

licences are a

grey area as

they are not

‘seat’ based

15


James Kidd CFO

16


Financial highlights

March 2013

March 2012

Total revenue £220.2m £195.9m 12%

Underlying revenue (ex acquisitions, constant currency) £218.9m £194.6m 12%

Adjusted* profit before tax £70.7m £62.3m 13%

Adjusted* basic EPS (pence) 74.87p 63.81p 17%

Adjusted profit before tax margin 32.1% 31.8%

Final dividend per share (pence) 19.5p 17.0p 15%

Special dividend £100m -

Net cash £190.4m £179.0m 6%

17


Summary income statement (statutory)

March 2013 £m

March 2012 £m

Total revenue 220.2 195.9 12%

Cost of sales (16.1) (16.1)

Research and Development costs (35.5) (32.1) 11%

Selling and distribution expenses (87.6) (75.0) 17%

Administrative expenses (18.6) (16.2) 15%

Net interest receivable 1.2 1.2

Normalised items 7.1 4.6

Adjusted profit before tax 70.7 62.3 13%

Reported profit before tax 63.6 57.7

Income tax (18.1) (17.7)

Profit after tax 45.5 40.0

Adjusted profit margin 32.1% 31.8%

Adjusted basic EPS 74.87p 63.81p 17%

18


Summary balance sheet

March 2013 £m

March 2012 £m

Non-current assets 82.1 62.3

Accounts receivable (net of provision £4.8m (2012 - £3.4m) 74.1 63.7

Other receivables 8.0 5.1

Net cash and deposits 190.4 179.0

Total assets 354.6 310.1

Other liabilities 49.4 45.2

Deferred revenue 36.6 33.5

Pension liabilities 17.0 9.9

Shareholders’ equity 251.6 221.5

Total shareholders’ equity and liabilities 354.6 310.1

Debtors increased due to strong Q4

Deferred revenue up 9%

Pension deficit increased due to discount rate

19


Underlying revenue growth Headline revenue +12%

Organic, constant currency revenue +12%

– 1.7% negative impact from currency (principally the Euro)

– 2.3% from acquisition (Bocad = 10 months contribution)

£m

195.9

218.9

5.1 - 3.8

180

185

190

195

200

205

210

215

220

225

230

Reported Revenue 2011/12

Organic c/c Revenue 2012/13

Bocad FX Reported Revenue 2012/13

220.2

20


54.4

98.8

42.4

24.6 220.2

0

50

100

150

200

250

Annual fees Rental fees Initial licence fees Services Total revenue

£m

47.8

90.1

37.3

20.7

+14%

+10%

+14%

+19% +12%

195.9

20

12

20

13

Revenue by category Recurring revenue +11%,

70% of total sales

Rental licence income +10%, steady at 51% of software revenue

Annual fees +14%

Initial fees +14%

21


Profit analysis New products require

investment in sales technical, product strategy & marketing

Just over half the Op Ex increase relates to inflation

Annualised impact will be seen in 2013/14

Some further areas of investment planned

62.3

19.1 - 8.8

- 1.5

- 0.4 70.7

55

60

65

70

75

80

85

90

31-Mar-12 Additional revenue

Additional Op EX

Additional Bad debt charge

Bocad loss

31-Mar-13

£m

Sales technical, product strategy

Expansion in regions, Owner Operators

Office investment & other cost increases

Key to Op Ex

22


Engineering & Design Systems

March 2013 £m

March 2012 £m

Revenue 189.5 172.5 10%

Annual fees 49.0 43.1 14%

Rental licence fees 93.3 86.9 7%

Recurring revenue 142.3 130.0

Initial licence fees 36.3 33.2 9%

Services 10.9 9.3 17%


Operating costs (45.4) (39.0) 16%

Contribution 144.1 133.5 8%

EDS organic constant currency growth 9%

Rental growth driven by global EPCs, weakness in Brazil

Investment in product strategy/marketing and sales technical resources

23


Enterprise Solutions

Backlog £14.7m (2012 - £12.7m)

Software/service mix improved to 55%/45% (2012 – 51%/49%)

Focus on R&D, service delivery and sales capture delivering cost benefits

March 2013 £m

March 2012 £m

Revenue 30.7 23.5 31%

Annual fees 5.3 4.7 13%

Rental licence fees 5.5 3.3 67%

Recurring revenue 10.8 8.0

Initial licence fees 6.2 4.1 51%

Services 13.7 11.4 20%


Operating costs (28.7) (27.9) 3%

Contribution 2.0 (4.4)

24


EMEA –benefit from ES growth, global EPCs and strong performance in Russia & Middle East

Americas – progress with large EPCs, decline in Brazil

Asia driven by strong performance in China and India

AVEVA – global performance

Americas

£39.3m (2012 - £38.2m)

Growth 3%

EMEA

£107.6m (2012 - £93.3m)

Growth 15%

Asia Pacific

£73.3m (2012 - £64.4m)

Growth 14%

25


Movements in net cash position

Operating cash conversion

at 97%

£12.5 million net cost of

acquisitions

Dividend +14% over prior

year

179.0

60.3 - 19.6

- 4.5

- 12.5

-14.6

2.3 190.4

160

170

180

190

200

210

220

230

240

250

Net cash 31-Mar-12

Cash from

operations Tax Cap Ex Acquisitions

(net) Dividend FX/Other Net cash

31-Mar-13

£m

26


Return of capital

Focused on delivering shareholder value

Intention to return £100 million via special dividend

This represents £1.46 per share

AGM approval – 9 July

Flexibility to pursue acquisitions

• Post dividend net cash c.£100m • Post-tax cash generation £40m +

27


Outlook

Extending technology and thought leadership

– AVEVA E3D and new product pipeline

Focused and disciplined approach to acquisitions

Drive profitable expansion in Enterprise Solutions

Broad exposure across multiple growth markets

High recurring revenues

Sustainable growth

Continued investment in business

28


Appendices

29


Summary cash flow

March 2013 £m

March 2012 £m

Net cash from operating activities 60.3 64.7

Tax paid (19.6) (16.9)

Capital expenditure (net) (4.5) (3.1)

Acquisitions (12.5) (5.7)

Interest received (net) 1.6 1.4

Purchase of own shares (0.6) (0.6)

Dividends paid (14.6) (12.8)

Net increase in cash 10.1 27.0

Foreign exchange movement 1.3 (1.2)

Opening cash and deposits 179.0 153.2

Closing cash and deposits 190.4 179.0

30


Investor communications calendar

Trading updates AVEVA will no longer automatically issue trading updates in October/April prior to the interims/prelims. AVEVA plans to provide updates to the market as follows: Financial year 2013/14 July 2013 Interim Management Statement

November 2013 Interim results

January 2014 Interim Management Statement

May 2014 Preliminary results

Other events September 2013 Investor/analyst briefing in Houston, TX November 2013 Annual Capital Markets Day, London

31


AVEVA products and competitive landscape

ASPEN

HEXAGON

BENTLEY

DASSAULT

SIEMENS

ASPEN

SIEMENS

Conceptual Design FEED

Detailed Design

Construction & Commissioning Operations Decommissioning

BENTLEY

HEXAGON

Engineering Design Systems

DASSAULT

SAP

IN-HOUSE SOLUTIONS

IN HOUSE SOLUTIONS POINT SOLUTIONS

Project phase 2-6 years (c.$1.6 billion) Operations phase up to 50 years (>$2 billion)

AUTODESK

Enterprise Solutions

32


Definition of terms

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 PBT Profit Before Tax 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.

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.

Enterprise Solutions backlog Contracted Enterprise Solutions revenue that has not yet been recognised but which is expected to be recognised in the next 12 months. Revenue backlog also includes 12 months of annual fees.

33

Documents

Richard Longdon Chief Executive Chief Financial Officer .../media/Aveva/English/... · PDMS licences Greater efficiency Expanded user footprint Positive effect as AVEVA E3D starts