AVEVA Group plc Results for the year ended 31 March 2014
www.aveva.com
This presentation may include predictions, estimates, intentions, beliefs and other statements that are or may be construed as being forwardlooking. 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.
Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Strategic highlights Strong growth in revenue and profitability in FY14 10% organic, constant currency revenue growth Recurring revenue steady at 70% Group margin now at 33% (2013 – 32%) Significant progress with AVEVA E3D™ Complex Oil & Gas Cap Ex investment has continued to grow Tougher discretionary spending backdrop has affected ES „One AVEVA‟ solution response to customer-buying priorities
3 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Financial highlights FY 2014
FY 2013
Total revenue
£237.3m
£220.2m
8%
Constant currency revenue
£242.1m
£220.2m
10%
Adjusted* profit before tax
£78.3m
£70.6m
11%
Adjusted* basic EPS
89.1p
74.7p
19%**
Adjusted* profit before tax margin
33.0%
32.1%
Final dividend per share
22.0p
19.5p
Special dividend paid of 147 pence
£100.0m
-
Net cash
£117.5m
£190.4m
£70.2m
£60.3m
Operating cash flow before tax
13%
16%
* 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. ** After adjusting for the effect of the share consolidation and the related reduction in interest income following the associated special dividend of £100 million, the underlying adjusted basic earnings per share rose by 16% to 86.59 pence.
4 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Summary income statement (statutory) FY 2014 £m
FY 2013 £m
Growth
Total revenue
237.3
220.2
8%
Cost of sales
(17.4)
(16.1)
Research and Development costs
(38.3)
(35.5)
8%
Selling and distribution expenses
(93.0)
(87.6)
6%
Administrative expenses
(20.1)
(18.6)
8%
Net interest receivable
0.5
1.1
Normalised items
9.3
7.1
Adjusted* profit before tax
78.3
70.6
11%
Reported profit before tax
69.0
63.5
9%
(18.0)
(18.1)
51.0
45.4
33.0%
32.1%
89.1
74.7
Income tax Profit after tax Adjusted* profit margin Adjusted* basic EPS (pence)
12%
19%
5
Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Summary balance sheet March 2014 £m
March 2013 £m
Non-current assets
74.0
82.1
Accounts receivable (net of provision £5.1m (2013 - £4.8m))
77.8
74.1
8.6
8.0
Net cash and deposits
117.5
190.4
Total assets
277.9
354.6
Other liabilities
47.5
49.4
Deferred revenue
36.5
36.6
Pension liabilities
8.9
17.0
Shareholders‟ equity
185.0
251.6
Total shareholders‟ equity and liabilities
277.9
354.6
Other receivables
6 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Global performance Rental fees Initial fees
EMEA
Annual fees
£112.0m
Training & services
(2013 - £107.6m)
Americas
Growth +4%
£38.4m
Asia Pacific
£86.9m
(2013 - £39.3m) Growth -2%
(2013 - £73.3m) Growth +19%
North America mid-teens growth, Latin America broadly flat + effect of currency
Robust growth in Central and Western EMEA, soft demand in Russia and Middle East
Strong performance in South Korea
7
Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Revenue by category 250 48.4 42.4
200
24.6
21.9
237.3
-11%
220.2 +10%
+14%
Rental fees +11%
109.9
ILF +14% FY 2013
+11%
100
50
54.4
FY 2014
98.8
150
Recurring revenue at 70%
57.1 +5%
0 Annual fees
Rental fees
Initial licence fees
Services
Total revenue
8 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Currency effect on revenue Translation effect of overseas subsidiaries FY14* Material movement in average rates vs FY13 £4.8 million (2%) negative impact on revenue H1 benefit £2.3 million; H2 headwind £7.1 million FY15* If spot rates remain at March „14 levels – 4-5% headwind to revenue in FY15
Impact principally in H1
*See appendix for further detail on exchange rates
9 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Profit analysis
Operational gearing after investment in sales, product strategy and marketing for new products and backoffice systems
Adjusted profit before tax margin 33% (2013 – 32%)
Inflation continues to have an effect on cost base
95
90 17.1
(8.8)
85
80
(0.6)
78.3
75
70.6
EDS = £3.0m
70
ES = £0.5m 65
Sales = £3.1m Admin = £2.2m
60 FY13
Additional revenue
Additional Op Ex
Reduction in net interest
FY14
10 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Engineering & Design Systems FY 2014 £m
FY 2013 £m
Growth
211.5
189.5
12%
51.4
49.0
Rental licence fees
105.5
93.3
Recurring revenue
156.9
142.3
Initial licence fees
45.5
36.3
9.1
10.9
Total revenue
211.5
189.5
Operating costs
(48.5)
(45.4)
Contribution
163.0
144.1
Revenue Annual fees
Services
10%
12%
13%
EDS organic constant currency growth 14% Rental fees up 13% from large EPCs Strong growth in ILF driven by Asia Pacific 11 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Enterprise Solutions FY 2014 £m
FY 2013 £m
Growth
25.9
30.7
16%
Annual fees
5.7
5.3
Rental licence fees
4.5
5.5
Recurring revenue
10.2
10.8
Initial licence fees
2.9
6.2
Services
12.8
13.7
Total revenue
25.9
30.7
(29.3)
(28.7)
(3.4)
2.0
Revenue
Operating costs Contribution
6%
16%
-
Backlog £10.7m (30/09/13 - £11.4m; 31/03/13 - £14.4m) „One AVEVA‟ pull-through effect as customers focus on integrated offerings Pressure on discretionary spend amongst customers 12 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Movement in net cash position 400
350
300
70.2
(18.2) (4.9)
250
200
(100)
190.4
150
(16.5) (3.5)
117.5
100
50
0 FY13
Cash from operations
Tax
Cap Ex
Special dividend
Dividend
FX/Other
FY14
Operating cash conversion at 102% Cash flow from operations +16%, after £2.5 million pension payment £100 million special dividend paid in August 2013
13
Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
„One AVEVA‟ The „One AVEVA‟ approach – common products sold differently to each type of customer by one sales force EPCs and OOs have different buying priorities – EPCs need technology advantage, capital project-led – OOs want solutions to improve operational profitability and reduce risk
AVEVA‟s increasingly broad product portfolio meets both of these customer requirements Token licensing and product integration reinforces this trend
14 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
What this means for customers
Cost Time Risk
Quality Collaboration Decision-making
Project efficiency Asset optimisation 15 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
AVEVA E3D™ update • Clearly differentiated product • Pace of adoption and pricing are fully on track
• Good momentum of Global Accounts licensing AVEVA E3D™ – These include KBR, Worley Parsons, Foster Wheeler, Jacobs Engineering, Shell, Siemens Power
• Token licensing helping to drive adoption amongst larger customers • Underpinning long-term sustainable growth ambitions
16 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Oil & Gas – complexity and cost Current Oil Price
Energy Mix 2035
E&P Spend
$110 bbl
$723bn
Capital IQ
(2013: $682bn)
Barclays Capital
Gas consumption 1990-2035
26% Gas
(23% in 2013)
BP Energy Outlook
• Growing demand for cleaner energy, particularly in OECD, prompts potential “Golden age of gas” • Shale gas developments in the US are driving Onshore Unconventional Cap Ex, potential to supply international markets
Source: Douglas Westwood
300
EMEA
250
The Americas
• National Oil Companies share of resources is now 93%
Asia Pacific
$ billion
200
Onshore Unconventional Cap Ex 2007-2017
• Super majors under pressure to be more cost efficient
150
100
50
0 2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: Douglas Westwood
17 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Source: AVEVA 2014 ©
Managing complexity, risk and cost
18 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Power – long term growth World Population
Energy Consumption
China & India Population
Geohive
EIA
Geohive
+56% 2010-40
7.2bn
42% of Global
45
Global Electricity Generation Forecast 2005-2040
EMEA 40
Trillion Killowatthours
35
The Amercas
Rising populations are driving the demand for more power
Developing Non-OECD countries are the source of future energy consumption growth
The largest capacity additions will be gas in developed countries and coal in developing nations
Nuclear is also seen as a key element to add capacity to the grid for China and India
30 25 20 15 10 5 0 2005
2010
500
2015
2020
2025
2030
2035
2040
Source: EIA
Increase in Total Capacity 2013-2040
Coal Gas
400 Capacity Additions (GW)
Nuclear 300
200
100
0 China -100
India
Other Asia Pacific
Russia
The Americas
EMEA
Source: Douglas Westwood
19 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Marine – signs of recovery Marine Orderbook $163bn (2011: $291bn)
Offshore Orderbook $182bn (2011: $137bn)
Global GDP Growth
Clarksons
Clarksons
IMF
Orderbook (CGT millions)
30
Completions
180
New Orders
160
25
Order Book
140
20
120 100
15
80 10
60 40
5
20 0
0
New Orders & Completions (CGT Millions)
New Orders, Completions and Total Order book 200
The global economy drives marine trade and transportation
Vessels ordered in the boom period prior to the crash came on-stream during the recession, resulting in chronic overcapacity that stifled orders
Today, the global economy has stabilised and new orders increased in 2013
The offshore area of the marine industry has been growing consistently which includes speciality vessels such as LNG carriers
Source: AVEVA
2011
31%
2012
2013
3.6%
54% Offshore Commercial Naval
Source: DSME, World Leader in Ocean Technology, March 2014
20 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Outlook Extending our technology leadership, particularly in Cloud and Mobile „One AVEVA‟ – common product set sold to each type of customer by one sales force Broad exposure to multiple growth markets High recurring revenues Good sustainable growth, whilst continuing to invest in the business
21 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Appendix
Summary cash flow FY 2014 £m
FY 2013 £m
70.2
60.3
(18.2)
(19.6)
-
(12.5)
(4.9)
(4.5)
1.1
1.6
(0.7)
(0.6)
(116.5)
(14.6)
(69.0)
10.1
(3.9)
1.3
Opening cash and deposits
190.4
179.0
Closing cash and deposits
117.5
190.4
Net cash from operating activities Tax paid Acquisitions Capital expenditure (net) Interest received (net) Purchase of own shares Dividends paid Net decrease in cash Foreign exchange movement
23 Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Currency – FY14 effect Currency
EMEA
A: Average rate FY’14
B: Average rate FY’13
Delta (A / B)
16% 1.19
1.23
-3%
NOK
9.54
9.14
+4%
RUB
52.55
49.30
+7%
35%
-4%
INR
96.16
86.23
+12%
JPY
159.42
131.12
+22%
KRW
1,738.60
1,769.63
-2%
AUD
1.71
1.46
+17%
Americas
49%
-5%
USD
1.59
1.58
-
BRL
3.59
3.18
+13%
MXP
20.54
20.68
-
100%
FY’14 rev impact
-
EUR
Asia Pacific
Total
% of FY’14 revenue
-2%
24
Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Currency –annualised for FY15 Currency
A: Average rate FY’14
B: Spot rate (31/03/14)
Delta (B / A)
EMEA
FY’15 rev impact**
-2-3%* EUR
1.19
1.21
+2%
NOK
9.54
10.0
+5%
RUB
52.55
59.83
+14%
Asia Pacific
-4-5% INR
96.16
99.62
+4%
JPY
159.42
171.11
+7%
KRW
1,738.60
1,782.37
+3%
AUD
1.71
1.80
+5%
Americas
-4-5% USD
1.59
1.66
+4%
BRL
3.59
3.77
+5%
MXP
20.54
21.77
+6%
Total * Excluding UK sterling revenues
-4-5% ** If we assume same regional revenue split as FY‟14
25
Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
AVEVA products and competitive landscape
Conceptual Design
FEED
Detailed Design
Construction & Commissioning
Project phase 2-6 years (c.$1.6 billion)
Operations
Operations phase up to 50 years (>$2 billion)
AVEVA ES
AVEVA EDS
Aspen
Aspen
Bentley
Bentley
Hexagon
Hexagon SIEMENS
SIEMENS
SAP
Autodesk Dassault In-house solutions
Decommissioning
Dassault In-house solutions Point solutions
26
Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Customer examples 2013/14
AMEC – 5 year baseline agreement, standardising on IE&D
Fluor and Jacobs Engineering – Multi year agreements provide strategic platform for growth
Petroleum Development Oman – Mandate AVEVA 4D construction management system (ERM plus AVEVA NET)
Bruce Steel – First Bocad project in Canadian oil-sands, competitive replacement
APLNG (Conoco Phillips, Origin Energy, Sinopec) – AVEVA NET for project information control and handover
Compania Minera Milpo S.S.A. – Mining company with headquarters in Lima; first AVEVA NET contract in Peru 27 Copyright © 2014 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 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.
Constant currency
The period‟s reported result restated to reflect the previous year‟s 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.
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.
28
Copyright © 2014 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
