TIDMAVV
RNS Number : 3925A
AVEVA Group PLC
29 May 2019
29 May 2019
AVEVA GROUP PLC
RESULTS FOR THE YEARED 31 MARCH 2019
AVEVA delivers strong growth, outlook remains positive
AVEVA Group plc ('AVEVA' or 'the Group') announces its results
for the year ended 31 March 2019. The statutory results(1) show 12
months of trading for the heritage Schneider Electric industrial
software business ('SES') in the comparative period to March 2018,
together with one month of the heritage AVEVA business. To provide
further understanding of the combined trading performance and to
improve transparency, non-statutory results are also shown for the
combined Group on a pro forma basis(2) . Statutory and pro forma
results are shown on an IFRS 15 basis in both periods.
Summary results
Year ended 31 March 2019 2018 Change
Results shown on a combined pro forma basis(2)
Revenue GBP775.2m GBP692.5m 11.9%
---------- ---------- --------
Adjusted EBIT(3) GBP184.5m GBP154.0m 19.8%
---------- ---------- --------
Adjusted(3) diluted earnings
per share 90.90p 71.59p 27.0%
---------- ---------- --------
Statutory results shown on a reverse acquisition basis(1)
Revenue GBP766.6m GBP486.3m 57.6%
---------- ---------- --------
Profit before tax GBP46.7m GBP34.5m 35.4%
---------- ---------- --------
Diluted earnings per share 20.90p 39.72p (47.4)%
---------- ---------- --------
Highlights
-- On a pro forma basis, revenue for the combined Group grew
11.9% to GBP775.2m (FY18: GBP692.5m) and adjusted EBIT grew 19.8%
to GBP184.5m (FY18: GBP154.0m)
-- Recurring revenue(4) grew to 54.3% (FY18: 51.6%) and pro
forma adjusted EBIT margin increased to 23.8% (FY18: 22.2%)
-- On a statutory basis, revenue grew 57.6% to GBP766.6m (FY18:
GBP486.3m) and PBT was GBP46.7m (FY18: GBP34.5m)
-- Final dividend up 7.4% to 29.0 pence per share (FY18: 27.0p)
-- Net cash and deposits GBP127.8m (FY18: GBP95.8m)
-- Outlook remains positive and AVEVA is on-track to meet its medium-term targets
Chief Executive Officer, Craig Hayman said:
"AVEVA delivered a strong performance in its first full year as
a combined company and integration has progressed well across all
functions of the business. Digitalisation is accelerating in the
industries we serve, driving ongoing growth in demand for
industrial software. AVEVA is well placed to capture this demand by
working with its customers to turn opportunities into business
value, delivering solutions across the asset and operations
lifecycle. We remain confident in the outlook and in meeting our
medium-term targets of delivering revenue growth at least in-line
with the industrial software market, increasing recurring revenue
as a percentage of overall revenue to 60% and improving AVEVA's
Adjusted EBIT margin to 30%."
Notes
(1) Statutory results are stated under reverse acquisition
accounting principles and therefore the results for the 12 months
to 31 March 2018 include 12 months of heritage SES and one month of
heritage AVEVA.
(2) Pro forma results include results for both heritage SES and
heritage AVEVA for the 12 months to 31 March 2018 and exclude a
negative adjustment to revenue of GBP8.6m for the 12 months to 31
March 2019 reflecting an acquisition accounting adjustment to
deferred revenue on the opening balance sheet.
(3) Adjusted Earnings Before Interest and Tax (EBIT) and
adjusted earnings per share are 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 includes the
tax effects of these adjustments. When expressed on a pro forma
basis they are also calculated before the acquisition accounting
adjustment to deferred revenue.
(4) Recurring revenue is defined as rental and subscriptions
software licence revenue plus support and maintenance revenue.
Enquiries:
AVEVA Group plc
Matt Springett, Head of Investor Relations
Tel: 01223 556 676
FTI Consulting LLP
Edward Bridges / Dwight Burden / Harry Staight
Tel: 020 3727 1000
Conference call and webcast
AVEVA will host a conference call and webcast, for registered
participants, at 09:30 (BST) today.
To register for the webcast and access the presentation
materials please visit: www.aveva.com/Investors
Conference calls dial in details:
Telephone: +44 (0) 207 1928 000 / +1 631 5107 495
Conference call code: 9474901
Conference call participants will be able to ask questions
during the Q&A session, but those on the webcast will be in a
listen only mode.
A replay of the call will be made available later in the
day.
Chief Executive's review
Summary
AVEVA delivered a strong performance in its first full year as a
combined company, both in terms of trading in the period and making
progress towards medium-term targets.
On a statutory basis revenue was up 57.6% to GBP766.6 million
(FY18: GBP486.3 million). Profit before tax (PBT) was GBP46.7
million (FY18: GBP34.5 million). This revenue growth primarily
reflected the combination of heritage AVEVA with the heritage SES
business (the Combination), together with the organic growth of
both businesses. The relatively small increase in statutory PBT was
primarily due to the amortisation of intangible assets related to
the Combination.
On a pro forma basis, the enlarged Group achieved revenue growth
of 11.9% to GBP775.2 million (FY18: GBP692.5 million) and growth in
adjusted EBIT of 19.8% to GBP184.5 million (FY18: GBP154.0
million). On a constant currency basis, revenue increased 12.4%.
Constant currency is calculated by restating the period's reported
results to reflect the previous year's average exchange rates.
Detailed constant currency analysis has not been provided because
there is no material difference between actual and constant
currency results.
This growth was driven by increasing demand for industrial
software and good sales execution, including an increase in
multi-year commitments from key customers.
AVEVA made significant progress with integrating the heritage
AVEVA and SES product portfolios, launching a combined product
offering at the Group's global customer event, the AVEVA World
Summit, in October 2018. Since then, several key customers have
expanded the range of software that they buy from AVEVA across the
asset and operational lifecycle.
The Group has emerged from the year with a strong, integrated
product portfolio with which to drive its customers' digitalisation
journeys.
Trading and markets
The industries that AVEVA serves are making increasing use of
technology to reduce both capital and operating costs. This is
being driven by ongoing technological mega trends that are enabling
the digitalisation of the industrial world, notably the industrial
internet of things, data visualisation and artificial intelligence,
together with competitive pressures to reduce costs and increase
output.
This is driving growth in demand for industrial software and
there are some signs that the rate of market growth is
accelerating. AVEVA is optimally placed to help its customers
digitalise, due to its end-to-end product portfolio, which runs
from simulation through design and construction to operations, as
well as having established market-leading positions serving
process, marine, batch and hybrid industries.
End markets
The industries that AVEVA serves are at the early stages of a
digitalisation growth curve, when compared to other industries. We
believe that the current addressable market for AVEVA's products of
approximately GBP15 billion is likely to grow significantly
(Sources: ARC, Gartner, company reports).
Around 40% of AVEVA's revenue comes from the Oil & Gas end
market and the Group has become more diversified since the
Combination with Marine, Chemicals & Petrochemicals, Packaged
Goods (such as Food & Beverage and Pharma), Power and Metals
& Mining accounting for 5% to 10% of revenue each. Other
markets include Water & Wastewater, Infrastructure and Discrete
Manufacturing.
Within Oil & Gas, the Group has become more diversified than
before the Combination, with approximately 15% of the total revenue
relating to upstream capital related projects, 15% to the
downstream end market and 10% to mid-stream.
Although AVEVA has historically seen some variation in growth
due to end market conditions within specific cyclical industries,
notably Oil & Gas and Marine, the ongoing structural growth
drivers in each of our end markets are strong.
In Oil & Gas overall end market conditions were moderately
positive, with an increase in both capital and operating
expenditure across the upstream, mid-stream and downstream
segments. AVEVA benefited from a slight increase in capital
expenditure related to upstream Oil & Gas projects, growth in
mid-stream as pipeline capacity expanded and ongoing digitalisation
in downstream, particularly by national oil companies.
In Marine, end market conditions remained subdued, although
strong sales execution drove wins in growth areas, such as the
construction of cruise ships, and product upgrades.
Forthcoming 2020 International Maritime Organisation emissions
regulations are expected to drive retrofit investments in operating
vessels and design changes in new vessels. Linked to this, the
refining industry is expected to make investments in existing
capacity to meet new fuel mix requirements and make technology
investments to ensure agility in supply chain processes to rapidly
respond to new demand patterns as the regulations are implemented.
As a result, both these markets are expected to generate additional
opportunities for AVEVA's portfolio.
The Group's other end markets such as Power and Food &
Beverages are largely non-cyclical and are primarily driven by
structural growth as industries make increasing use of technology
to drive efficiency.
In Power, existing generation facilities are maximising the life
of their capital assets and investing in technologies to ensure
safe and reliable operation, with high availability. AVEVA's
capability in predictive asset analytics and reliability centric
maintenance coupled with engineering information management,
addresses a core requirement in these industries. With the shift to
renewables, generation assets are moving from large consolidated
units to networks of distributed assets. These will require
scalable systems for monitoring and control and coordination of
operations. AVEVA's portfolio in real time control and information
management is highly suited to the evolving needs of the power
generation sector.
Geographical performance
AVEVA delivered growth across all its geographies.
We saw improving execution from the direct and indirect sales
channels, the latter of which represented approximately one-third
of total revenue. Channel sales growth was solid double digit
overall and broadly spread, with around two-thirds of our
distributors growing revenues by more than 10%.
The Group achieved major order wins with customers including
Covestro, ADNOC, China Petroleum, KBR, MV Werften and Sinopec.
The analysis of revenue by region on a pro forma basis was as
follows:
Reported
GBPm Asia Pacific EMEA Americas Total change
Rentals and subscriptions 49.8 107.8 61.8 219.4 40.2%
Support and maintenance 48.6 74.6 78.6 201.8 0.3%
--------------------------- ------------- ------ --------- ------ ---------
Total recurring revenue 98.4 182.4 140.4 421.2 17.8%
Initial fees and
perpetuals 57.3 86.6 67.7 211.6 6.1%
Training and services 27.8 48.8 65.8 142.4 5.2%
--------------------------- ------------- ------ --------- ------ ---------
Total 183.5 317.8 273.9 775.2 11.9%
Change 3.4% 19.6% 9.9% 11.9%
EMEA revenue increased 19.6% to GBP317.8 million (FY18: GBP265.8
million) on a pro forma basis. AVEVA delivered growth across a
broad range of geographies and end-user markets. Key order wins in
the first half of the year came from the Marine industry where
AVEVA's capabilities and our customers' technical excellence in
Norway and Germany helped to fulfil market demand for complex
speciality and cruise vessels. In the second half, AVEVA saw strong
demand in downstream Oil & Gas, with competitive wins across
Spain, Italy and Turkey.
AVEVA also performed well in Food & Beverage, Power and
Mining, where the Group delivered a digitalised mine for a leading
operator in South Africa. Other areas of demand included discrete
manufacturing, with wins in Automotive.
Americas revenue increased 9.9% to GBP273.9 million (FY18:
GBP249.3 million) on a pro forma basis. AVEVA achieved strong
growth in Latin America where there has been an improvement in end
market conditions. In North America, AVEVA achieved large order
wins in the EPC and Oil & Gas sectors, and saw good growth
through its channel distribution partners as end users modernise
and upgrade Monitoring & Control software.
Asia Pacific revenue increased 3.4% to GBP183.5 million (FY18:
GBP177.4 million) on a pro forma basis, with good growth in China,
particularly in the Oil & Gas end market. We continued to see
major customers in the Oil & Gas market moving forward on their
digital transformation journey with AVEVA across the region.
Conditions in the Marine market continued to be subdued and this
impacted growth in the Group's core Marine end markets of Japan and
Korea.
Business unit performance
Engineering, which consists of design and simulation software,
is the largest of AVEVA's business areas, representing around 43%
of total revenue. It performed well during the year, delivering
high-teens revenue growth.
The Group achieved solid revenue growth in the core product
areas from both the heritage AVEVA and heritage SES businesses,
Engineering & Design and Process Simulation respectively, with
substantial revenue synergies coming through cross-selling to large
customers.
Sales of engineering software for industrial plants were strong,
whereas marine-related revenue was broadly flat, reflecting end
market conditions. Material revenue synergies are expected in
Marine in the medium-term as Monitoring & Control and Asset
Performance Management solutions are introduced to complement the
Group's existing market-leading engineering design offer.
Monitoring & Control, which comprises Human to Machine
Interface and Supervisory Control and Data Acquisition (HMI SCADA)
products, is the second largest of AVEVA's business areas,
representing around 32% of total revenue. During the year, AVEVA
introduced new product releases for InTouch HMI, Citect SCADA and
System Platform. A combination of customers upgrading software and
favourable end market conditions across Discrete, Hybrid, Process
and Infrastructure, drove mid-single digit revenue growth, with a
particularly good performance from channel sales.
As part of the Group's strategy to grow recurring revenues,
AVEVA Flex, a token-based rental & subscription selling model
was introduced for Monitoring & Control during the second half
of the year.
The Group has also launched AVEVA Flex to its channel partners,
making it easy for them to bring a compelling subscription offering
to their customers for the first time.
Asset Performance Management (APM) represents around 14% of the
Group's total revenue. AVEVA's APM offering is strongly
differentiated. It addresses the broadest dimensions of APM using
design and engineering information, real-time and historical
operational data, and maintenance execution workflows, together
with model-based machine learning for predictive asset
analytics.
This differentiation and a growing overall market for APM
solutions, resulted in revenue growth for AVEVA of 20%, making APM
the fastest growing portfolio for the Group.
The Group has partnered with MaxGrip, a company that optimises
asset performance with Reliability Centred Maintenance (RCM)
solutions for the last few years. AVEVA acquired MaxGrip's software
assets shortly after the financial year end, to augment AVEVA's APM
offering by providing a templated approach to asset strategy
optimisation and RCM software for risk-based maintenance.
Additionally, MaxGrip's rich library of asset fault codes and
remediations will enhance the power of AVEVA's predictive asset
analytics capabilities and accelerate the deployment of artificial
intelligence for prescriptive maintenance.
Planning & Operations represents around 11% of the Group's
total revenue. The business unit achieved high single digit revenue
growth during the year, despite a planned reduction in sales of
services.
All areas of the Planning & Operations business grew
(Operations Execution, Operations Optimisation and Trading,
Planning & Scheduling) driven by the ongoing trend towards
digital transformation in AVEVA's customer base. Operations
Execution and Trading, Planning & Scheduling both achieved
mid-teens growth, with strong order wins from the Energy, Mining
and Packaged Goods sectors. In particular, the Unified Supply Chain
Management Planning & Scheduling software is achieving strong
growth due to its ability to help major oil companies achieve
significant savings for every barrel of oil produced.
Integration
Integration of the heritage AVEVA and SES businesses has
progressed well. Management structures were integrated across all
functions, AVEVA exited the majority of the Transitional Service
Agreements (TSAs) with Schneider Electric and made progress towards
moving to common group-wide IT systems. This included moving to a
single Customer Relationship Management (CRM) system and putting in
place preparations to move onto a common group wide Enterprise
Resource Planning (ERP) system in 2020.
The integration of the sales team has been particularly
successful, leading to improved sales momentum and cross
selling.
There has been a strong focus on cultural integration. AVEVA
LIFE values of Limitless possibilities, Integrity always,
Flexibility together and Excellence every day have been introduced
across the business and have become core to employee behaviour.
Progress against our medium-term targets
In September 2018 AVEVA outlined new medium-term targets. These
targets and progress against them is summarised below.
Medium-term revenue growth
The Group aims to grow medium-term revenue on a constant
currency basis at least in line with the blended growth rate of the
industrial software market.
This revenue growth target reflects AVEVA expecting to grow its
underlying software business in excess of market growth rates,
driven by a combination of the strength of the Group's market
positions, sales execution, revenue synergies and additional value
levers, including pricing and more sophisticated management of
discounting.
As previously indicated, this above-market growth is expected to
be partly offset in terms of reported revenue by the impact of a
phased transition towards greater rental and subscription revenue,
together with potentially lower growth rates in services
revenue.
Progress report: AVEVA delivered revenue growth of 12.4% on a
constant currency basis. This growth was driven by strong sales
execution, which was enabled by the early integration of the sales
force. The growth rate benefited from cross selling of our combined
product portfolio to our enlarged customer base and certain
multi-year contracts which have been partly recognised upfront in
terms of revenue.
During the year, substantial investments were made in sales and
marketing to drive growth. These included investments in
leadership, sales training events, additional sales people,
customer events and an expanded marketing team. New hires included
a new Chief Marketing Officer to help drive efficiency and
effectiveness in marketing performance, and a Head of Global
Partners to drive channel partner sales.
Measures were also taken to increase yield by introducing
consistent group-wide governance around allowable discounting and
the application of price increases.
AVEVA benefited from its relationship with Schneider Electric.
In addition to being a shareholder, Schneider acts as a sales
channel for AVEVA and is a customer, buying software for its own
industrial automation needs. Sales to Schneider and through
Schneider as a distribution partner grew 9.9% to GBP80.1 million
(FY19: GBP72.9 million) in total. This growth was driven
principally by sales made through Schneider to third party end
customers, reflecting the company's differentiated global
distribution capabilities.
Medium-term adjusted EBIT margin
The Group aims to increase adjusted EBIT margins to 30%. This
margin improvement is expected to be driven by a combination of
revenue growth, previously announced cost savings, cost control and
a focus on high margin revenue growth through pricing and revenue
mix optimisation.
Adjusted EBIT is calculated as profit from operations before
amortisation of intangible assets (excluding other software),
share-based payments, gain/loss on fair value of forward foreign
exchange contracts and exceptional items.
Progress report: AVEVA's adjusted EBIT margin on pro-forma
revenue increased to 23.8% (FY18: 22.2%). This improvement was
driven by the strong revenue growth. The overall increase in costs
was beyond our objective of inflationary growth, albeit with much
of the overrun being due to success-based costs associated with
outperformance versus budgeted revenue.
Recurring Revenue
AVEVA aims to grow the proportion of recurring revenue to total
revenue to over 60% in the medium term. Recurring revenue is
defined as rental and subscriptions software licence revenue plus
support and maintenance revenue. This will be driven by growing
software as part of the revenue mix and by increasing the mix of
rental and subscriptions revenue as a proportion of new software
revenue in a financial year.
The transition to greater levels of recurring revenue is
expected to increase long-term free cash flow generation. Rentals
and subscriptions offer customers benefits including greater
flexibility, lower up-front costs and simplicity in pricing. These
benefits are reflected in higher customer lifetime value of a
rental and subscriptions model versus a perpetual licence
model.
Progress report: AVEVA made good progress during the year and
grew recurring revenue as a proportion of overall revenue to 54.3%
(FY18: 51.6%).
For FY20, sales incentives structures have been modified to
encourage recurring revenue growth with a focus on driving rental
and subscription revenue versus initial and perpetual licences.
Incentives also favour software versus services.
The Group has seen strong demand for Cloud-based solutions. The
Group won 37 new Cloud customers, taking the total to 57 (FY18:
20). Annualised Cloud revenues also increased nearly threefold. We
are seeing strong demand for enterprise scale Cloud purchases with
customer wins from major oil companies in particular.
Outlook
Demand for AVEVA's products is strong, driven by the ongoing
digitalisation of the industrial world and stable conditions in key
end markets. Therefore, the outlook remains positive and AVEVA is
on-track to meet its medium-term targets of delivering revenue
growth at least in line with the industrial software market,
increasing recurring revenue as a percentage of overall revenue to
60% and improving Adjusted EBIT margin to 30%.
Craig Hayman
Chief Executive Officer
29 May 2019
Finance Review
Overview
The statutory results for the year ended 31 March 2019 are
stated under acquisition accounting principles and therefore the
comparative period (i.e. for the year to 31 March 2018) only
includes the results of the heritage AVEVA business for one
month.
To enhance understanding of these results and improve
transparency, non-statutory summary results are also shown for the
combined AVEVA Group on a pro forma basis in this commentary. These
include both heritage SES and heritage AVEVA for the year to 31
March 2018 and exclude an adjustment to revenue of GBP8.6 million
for the year to 31 March 2019, which reflects an acquisition
accounting adjustment to deferred revenue on the opening balance
sheet. We anticipate that this will be the last year of results
where a pro forma presentation will be required.
These results have been prepared under the new revenue
recognition standard, IFRS 15. The impact of IFRS 15 was to reduce
revenue by GBP12.1 million on a pro forma basis in the prior year,
versus revenue recognised using the previous accounting standard,
IAS 18 and to reduce selling and administrative expenses by GBP0.5
million. On a statutory basis, the impact on revenue of adoption of
IFRS 15 was GBP12.8 million and to reduce selling and
administrative expenses by GBP0.5 million (see note 2).
Statutory results for the year ended 31 March 2019
Revenue for the period was GBP766.6 million which was up 57.6%
(FY18: GBP486.3 million). This change was primarily due to the
organic growth of the Group in the year together with the fact that
the comparative period only included one month of the heritage
AVEVA business.
The Group reported statutory profit before tax of GBP46.7
million (FY18: GBP34.5 million). The increase in revenue did not
materially drop through to profit due to the full year amortisation
charge for intangibles together with the acquisition and
integration costs related to the Combination.
Pro forma results
The following table shows the composition of the pro forma
results and the reconciliation of these to the statutory reported
results.
Statutory Normalised Exceptional Adjusted Revenue Pro forma Pro forma
2019 items* items 2019 haircut 2019 2018 Change
GBPm GBPm GBPm GBPm GBPm GBPm GBPm %
Revenue 766.6 - - 766.6 8.6 775.2 692.5 11.9%
Cost of sales (193.2) - 1.9 (191.3) - (191.3) (177.6) 7.7%
------------------------ ---------- ----------- ------------ --------- --------- ---------- ---------- -------
Gross profit 573.4 - 1.9 575.3 8.6 583.9 514.9 13.4%
R&D (178.0) 61.8 1.7 (114.5) - (114.5) (99.0) 15.7%
Selling & distribution (235.6) 26.3 12.6 (196.7) - (196.7) (179.1) 9.8%
Admin. expenses (106.3) 11.7 12.7 (81.9) - (81.9) (80.3) 2.0%
Net impairment
loss from financial
assets (6.3) - - (6.3) - (6.3) (2.5) -
------------------------ ---------- ----------- ------------ --------- --------- ---------- ---------- -------
Operating expenses (526.2) 99.8 27.0 (399.4) - (399.4) (360.9) 10.7%
EBIT 47.2 99.8 28.9 175.9 8.6 184.5 154.0 19.8%
Finance revenue 0.2 - - 0.2 - 0.2 1.0 -
Finance expense (0.7) - - (0.7) - (0.7) (3.8) -
Profit before
tax 46.7 99.8 28.9 175.4 8.6 184.0 151.2 21.7%
Tax charge (12.9) (18.1) (4.4) (35.4) (1.7) (37.1) (35.5) 4.5%
Profit after
tax 33.8 81.7 24.5 140.0 6.9 146.9 115.7 27.0%
Diluted EPS
(pence) 20.90 90.90 71.59 27.0%
------------------------ ---------- ----------- ------------ --------- --------- ---------- ---------- -------
* Normalised items include amortisation of intangible assets
(excluding other software), share-based payments and gain/loss on
fair value of forward foreign exchange contracts.
Revenue was GBP775.2 million, which was up 11.9% compared to the
previous year (FY18: GBP692.5 million). EBIT grew 19.8% to GBP184.5
million (FY18: GBP154.0 million), primarily due to the revenue
growth, higher gross margin and operational leverage.
While the integration of the enlarged Group has progressed to a
point where it is becoming difficult to split out the performance
of the heritage AVEVA and SES businesses, revenue growth from the
heritage AVEVA products was approximately 14% and growth from the
heritage SES products was approximately 11%.
During the year the Group increased the proportion of rental
contracts sold on a multi-year versus one year basis and we expect
this trend to continue. Longer-term contracts provide more reliable
cash flows and when sold using token licensing, help to encourage
customers to buy more of the AVEVA product portfolio. They are also
favoured by customers as they provide certainty of terms and
conditions over a longer period.
Foreign exchange translation moderately impacted growth in the
period primarily due to Sterling having strengthened versus the US
Dollar resulting in a small difference. On a constant currency
basis revenue growth was 12.4%.
Revenue by type on a pro forma basis is set out below:
GBPm 2019 % of total 2018 % of total Change
Rentals and subscriptions 219.4 28.3% 156.5 22.6% 40.2%
Support and maintenance 201.8 26.0% 201.1 29.0% 0.3%
Total recurring
revenue 421.2 54.3% 357.6 51.6% 17.8%
Initial fees and
perpetuals 211.6 27.3% 199.5 28.8% 6.1%
Training and services 142.4 18.4% 135.4 19.6% 5.2%
--------------------------- ------ ----------- ------ ----------- -------
Pro forma total 775.2 100.0% 692.5 100.0% 11.9%
Deferred revenue
haircut (8.6)
--------------------------- ------ ----------- ------ ----------- -------
Statutory revenue 766.6
--------------------------- ------ ----------- ------ ----------- -------
Revenue overview
Rental and subscription
Rental and subscriptions revenue grew 40.2% to GBP219.4 million
(FY18: GBP156.5 million). This growth was driven by a focus on
increasing recurring revenue and included the benefit of partly
up-front revenue recognition on certain multi-year contracts.
AVEVA will focus on growing these recurring revenues again in
FY20, supported by new salesforce incentives to promote sales of
these contracts over initial and perpetual licences and services.
Although rental and subscription contracts can reduce revenue
recognition in the short-term, they lead to higher longer-term
product yields and cash generation.
Support and maintenance
Support and maintenance revenue was broadly flat at GBP201.8
million (FY18: GBP201.1 million). Although AVEVA grew initial and
perpetual licences in the prior year which have associated support
and maintenance revenues, this growth was offset by certain
customers switching from support and maintenance to new rental
contracts as the Group seeks to grow subscription revenues.
Initial fees and perpetuals
Initial fees and perpetual revenue grew 6.1% to GBP211.6 million
(FY18: GBP199.5 million). This growth was driven by increased sales
in the Monitoring & Control area of the business led by the
indirect channel, which benefited from new product releases and
good market demand, and which did not have a rental and
subscription offer for customers in place until the latter part of
the year.
Training and services
Training and services revenue grew 5.2% to GBP142.4 million
(FY18: GBP135.4 million). This growth was primarily due to
increasing demand for initial implementation work associated with
the sale of APM and Planning & Operations products.
AVEVA will continue to focus on high gross margin sales of
software revenue in FY20, supported by sales incentivisation
together with a planned reduction in certain lower-margin
services.
Profit before tax and cost management
The revenue growth drove a 19.8% increase in pro forma EBIT to
GBP184.5 million (FY18: GBP154.0 million).
Total normalised costs were GBP590.7 million (FY18: GBP538.5
million), an increase of 9.7% over the previous year. This growth
was above AVEVA's target of inflationary cost increases. The
majority of the increase related to growth in cost of sales, sales
commissions and financial performance related bonuses due to the
strong growth.
In addition to this, decisions were made to accelerate
investment in sales, marketing and product integration during the
year in the context of positive market conditions. These
incremental investments included the hiring of new people and
greater expenditure on customer marketing, for example regional and
global customer events.
On an underlying basis, AVEVA has been implementing a cost
synergies programme through rationalisation of duplicated
functions, the implementation of common systems, shared services
for back office functions, real estate consolidation, and enhanced
R&D effectiveness.
The Group is targeting annualised cost synergies of
approximately 5% of total FY18 costs, representing some GBP25
million, which will be fully implemented by the end of the 2020
financial year. More than half of these were implemented by the end
of the 2019 financial year, with most of these flowing through to
the results in the year.
An analysis of total expenses is summarised below:
Net impairment
Cost Selling loss from
of and Admin. financial
GBPm sales R&D distribution expenses assets Total
Statutory 193.2 178.0 235.6 106.3 6.3 719.4
Amortisation - (61.8) (26.3) - - (88.1)
Share based payments - - - (11.2) - (11.2)
Loss on FX contracts - - - (0.5) - (0.5)
Exceptional items (1.9) (1.7) (12.6) (12.7) - (28.9)
---------------------- ------- ------- -------------- ---------- --------------- -------
Normalised costs 191.3 114.5 196.7 81.9 6.3 590.7
2018 177.6 99.0 179.1 80.3 2.5 538.5
Change 7.7% 15.7% 9.8% 2.0% - 9.7%
Cost of sales increased 7.7% to GBP191.3 million (FY18: GBP177.6
million) and the gross margin improved to 75.3% (FY18: 74.4%). The
cost of sales increase primarily related to revenue growth with
higher associated channel partner and third-party royalty costs,
together with some investments into the Customer Support
function.
Research & Development costs were GBP114.5 million (FY18:
GBP99.0 million) representing an increase of 15.7%. However, in
FY19 no R&D investment was capitalised (FY18: GBP9.9 million).
The remaining increase was due to investment in product integration
and new product launches, being partly offset by cost
synergies.
Selling and distribution expenses were GBP196.7 million (FY18:
GBP179.1 million), a 9.8% increase versus the prior year. The
majority of this increase related to higher sales commissions
following better than budgeted sales performance. In addition to
this, substantial investments were made during the year in Sales,
both in terms of new recruits and training. Investments were also
made in strengthening the marketing team and in customer events to
showcase AVEVA's enlarged product portfolio.
Administrative expenses were GBP81.9 million (FY18: GBP80.3
million) an increase of 2.0%. This reflected underlying cost
reductions being offset by higher bonus accruals in relation to the
strong performance, national insurance costs related to share
options and new senior hires. In addition, there were increased
costs from establishing capabilities and skills in the support
functions such as IT, HR, Finance and Legal where certain services
did not transfer over from Schneider Electric and were not covered
by the TSA e.g. legal team, treasury, IT support.
Net impairment loss from financial assets represents the
impairment of accounts receivable during the year of GBP6.3 million
(FY18: GBP2.5 million).
Normalised and exceptional items
The following exceptional and other normalised items have been
excluded in presenting the pro forma results:
Pro forma year ended
31 March
GBPm 2019 2018
Acquisition and integration
activities 23.0 29.5
Restructuring costs 5.9 2.9
Movement in provision for
sales taxes - (3.0)
Impairment of R&D - 15.0
------------------------------- ---------- -----------
Total exceptional items 28.9 44.4
------------------------------- ---------- -----------
Amortisation (excl. other
software) 88.1 50.5
Share based payments 11.2 4.0
Loss / (gain) on FX contracts 0.5 (0.6)
------------------------------- ---------- -----------
Total normalised items 99.8 53.9
------------------------------- ---------- -----------
Acquisition and integration activities principally related to
consultancy costs paid to advisors for integration support, a
provision for an onerous lease, investment in new systems, deal
related executive retention costs, legal and accounting fees and
additional temporary resources required as a result of the
combination.
Restructuring costs related to severance payments for employees
in a number of global office locations as part of the cost synergy
programme, the cost benefits of which are now starting to flow
though. This included the closing of 10 offices in duplicate
locations and the costs of exiting certain lower margin services
business.
The increase in amortisation related to the amortisation of the
fair valued heritage AVEVA intangible assets under acquisition
accounting following the Combination.
Acquisition and integration and restructuring costs paid in the
period were GBP18.9 million.
Taxation
The statutory tax charge was GBP12.9 million (FY18: credit of
GBP6.0 million). The effective rate of tax of 27.6% differs from
the US (FY18: UK) corporation tax rate of 24% because of higher
rates of overseas tax and overseas losses in certain locations for
which no deferred tax asset has been recognised. The tax rate has
benefited from R&D tax incentives in the UK and the US.
The pro forma adjusted tax rate was 20.2% (FY18: 23.5%) and is
expected to remain at around this level in FY20.
Earnings per share (EPS)
Statutory diluted EPS was 20.90 pence (FY18: 39.72 pence). The
reduction was due to a greater number of shares being in issue on
average as a result of the Combination. On a pro forma adjusted
diluted basis EPS grew 27.0% to 90.90 pence (FY18: 71.59
pence).
Dividends
The Board proposes a final dividend of 29.0 pence per share at a
cost of GBP46.8 million (FY18: 27.0 pence per share at a cost of
GBP43.5 million). The final dividend will be payable on 2 August
2019 to shareholders on the register on 5 July 2019.
The total dividend for the year was 43.0 pence (FY18: 27.0 pence
as no interim dividend was paid).
AVEVA intends to maintain its existing progressive dividend
policy, taking account of the earnings profile of the Group.
Balance sheet
The Group balance sheet presented as at 31 March 2019 reflects
the goodwill and intangible assets that arose from the Combination
resulting in non-current assets of GBP1,923.0 million (31 March
2018: GBP1,992.9 million). Net measurement period adjustments of
GBP15.3 million were made to goodwill during the first year of the
Combination including reassessment of the values of certain
intangible assets and adjustment to the consideration for the
payment to Schneider Electric of GBP17.4 million under the
completion accounts mechanism.
Trade receivables at 31 March 2019 were GBP174.9 million (31
March 2018: GBP146.9 million) reflecting the strong sales towards
the year end. Contract assets increased to GBP100.5 million from
GBP67.6 million at 31 March 2018, largely due to the impact of the
multi-year contracts closed in the financial year. Contract
liabilities representing deferred revenue were GBP174.6 million (31
March 2018: GBP141.7 million).
Cash flows
Cash generated from operating activities before tax was GBP169.1
million compared to GBP91.2 million in the previous year on a
statutory basis. Conversion of adjusted EBIT to operating cash flow
before tax was 91.7%, reflecting improved credit control, although
the rate was lower than historic levels due to the acquisition and
integration and restructuring costs during the period, of which
GBP18.9 million were paid in cash.
During the second half GBP19.4 million was paid to Schneider
Electric in relation to the final completion accounts adjustment in
relation to the Combination.
At 31 March 2019 net cash and treasury deposits were GBP127.8
million (FY18: GBP95.8 million).
Events since the balance sheet date
After the period end, AVEVA acquired the software assets of
MaxGrip for EUR25 million (approximately GBP21.8 million) and
disposed of a small distribution business in Italy for
approximately GBP1.3 million.
James Kidd
Deputy CEO & CFO
29 May 2019
Review of principal risks and uncertainties
Risk Management Approach
Whilst refreshing and building on existing risk management
processes in the heritage AVEVA and Schneider Electric Software
businesses, management has considered the risks faced by the new
merged AVEVA throughout 2018 and early 2019. A number of corporate
level risks have been identified and are being monitored, 12 of
which are considered by the Board to be the Principal Risks to
AVEVA over the next 12-18 month period.
Strategic Internal Risks
Risk Mitigation
------------------------------------------- ---------------------------------------------
Talent Acquisition & Retention During the last 12 months, AVEVA
AVEVA is heavily reliant on the has invested in its in-house talent
people it employs around the world acquisition expertise to boost
and if we are unable to attract this capability. Other mitigating
or retain the niche skills and activities include partnerships
experience we need to drive the with universities, an employee
business forward, creating innovation referral programme and communicating
and growth, this could materially our culture.
impact the success of our business.
AVEVA endeavours to ensure that
The technology sector is competitive employees are motivated in their
when seeking talent and the AVEVA work and there are regular appraisals,
brand must remain attractive within with staff encouraged to develop
each country it operates, particularly their skills. Annually there is
to niche skills such as developers, a Group-wide salary review that
technical sales, services, consultants rewards strong performance and
and leadership. ensures salaries remain competitive.
Commission and bonus schemes help
to ensure the success of AVEVA
and individual achievement is appropriately
rewarded.
------------------------------------------- ---------------------------------------------
Move to Subscription Model Whilst AVEVA is ambitious to gain
AVEVA's strategic move further the benefits of more widely adopting
towards a subscription based licence subscription-based licensing and
model is designed to offer customers to provide the benefits of this
improved flexibility when addressing model to its customers, the expansion
their software needs. It could is initially being introduced within
however fail to create the improved the Monitoring & Control business
recurring revenue and cashflow unit of AVEVA. This will allow
generation expected for AVEVA if AVEVA to both manage the risk and
customers do not utilise the subscription understand the model better.
offering.
AVEVA will continue to offer traditional
This is a new principal risk for licensing models throughout as
AVEVA reflecting the importance further mitigation.
of the strategic objective of a
move towards a subscription licensing A transition strategy is in place
model. and continues to be closely monitored.
------------------------------------------- ---------------------------------------------
Cloud Initiatives AVEVA has a dedicated Cloud Development
AVEVA is committed to providing Operations team in place to ensure
market-leading, value-adding, reliable that Cloud offerings fully meet
and secure cloud services to its customer expectations. This team
customers and is therefore investing works closely with the Portfolio
in this initiative. This investment Management team so that Cloud offerings
requires careful management otherwise are aligned with the right portfolio
AVEVA risks not realising anticipated of products. In addition, there
returns in addition to reputational is a dedicated commercial function
damage. working with customers and listening
closely to their feedback.
This is a new principal risk for
AVEVA reflecting the ever-increasing
demand for cloud-based services
from customers and the criticality
for AVEVA to meet these demands.
------------------------------------------- ---------------------------------------------
Digital Transformation Agenda Alongside careful management of
AVEVA's strategy to capitalise the right Digital Transformation
on the opportunities of digital strategy, AVEVA further mitigates
transformation could ultimately this risk by having in place a
fail or not provide the expected dedicated Sales and Consulting
levels of return, leading to increased team, targeted marketing campaigns,
costs, reputational damage or lost continued portfolio rationalisation
market positions. and use case prioritisation.
This is a new principal risk for
AVEVA reflecting the digitisation
of industry trend and the importance
of AVEVA in being strategically
aligned with it.
------------------------------------------- ---------------------------------------------
Integration & Synergies AVEVA has appointed a senior executive
Integration and realisation of as an Integration Lead and external
synergies remains as a principal integration consultants have been
risk for AVEVA. Throughout the engaged throughout the merger process.
next 12 months, failure to continue
to effectively integrate the heritage There are many ongoing workstreams
AVEVA and SES businesses could in progress which are managing
lead to poor operational efficiency day to day integration activities
and anticipated synergy targets including HR, Finance, IT, Real
not being realised. Estate and Communications. These
are being supported by an established
There are many areas that AVEVA governance structure that includes
must continually and carefully close monitoring of the progress
manage so that a successful integration being made.
takes place, including management
of costs, integration of systems,
controls, processes and management
reporting.
------------------------------------------- ---------------------------------------------
External Risks
Risk Mitigation
---------------------------------------- ---------------------------------------------
Competitors AVEVA carefully monitors customer
AVEVA operates in highly competitive requirements, trends and other suppliers
markets. Other technology companies operating within our chosen markets.
could acquire, merge or move We invest in innovation and strive
into AVEVA's market space to to offer superior products to meet
compete with AVEVA's offering these market trends.
creating a material threat, or
existing competitors could respond Further areas of specific mitigation
quicker to market demands and include leveraging our relationship
trends resulting in reduced market with Schneider Electric, attractive
share and missed growth opportunities proposals for additional complimentary
for AVEVA. products for existing customers
and flexibility to meet changing
This is an increased principal market demands and competitive forces.
risk for AVEVA reflecting the
increased competitive focus on
market trends such as digitisation
of industry.
---------------------------------------- ---------------------------------------------
Dependency on Cyclical Markets Given the 2018 merger, AVEVA now
AVEVA's revenue is predominantly has an increased portfolio of products
derived from customers operating available to customers operating
in markets which are mainly cyclical in non-cyclical markets such as
in nature such as Oil & Gas and Food & Beverages and Utilities.
Marine. As and when those markets Further strategic initiatives will
reach downturn stages, our customers also be undertaken to strengthen
have less funding available for our offerings in those markets.
capital projects, including the
purchase of AVEVA's software Our extensive global presence also
products. Significant end market provides some mitigation from over-reliance
downturns could materially impact on key geographic markets.
AVEVA's revenues and profits.
AVEVA's strategic move towards a
subscription-based licensing model
also further mitigates this risk
as it can offer customers greater
flexibility over their expenditure.
---------------------------------------- ---------------------------------------------
AVEVA Products Implicated in AVEVA products are extensively tested
Industrial Accidents or Customer prior to commercial launch. In addition,
Cyber Attack AVEVA has a robust Security Development
Our software products are complex Lifecycle as a key component of
and new products or enhancements our overall software development
may contain undetected errors, process and has created formal and
failures, performance problems collaborative relationships with
or defects which may impact our third-party security researchers
strong reputation with our customers and security organisations to proactively
or create financial implications. ensure our software is as safe and
secure as is reasonable.
This is a new principal risk
for AVEVA reflecting the increased
portfolio of products in the
AVEVA range, their functionality
and increasing threats in the
external cyber environment.
---------------------------------------- ---------------------------------------------
Cyber Attack AVEVA has a low tolerance to this
Threats within the global cyber risk and utilises multiple layers
environment continue to grow. of cyber security threat defences
AVEVA depends on its IT systems including access control, encryption,
and should we be specifically firewalls, etc. Additionally, regular
targeted by a cyber-attack or external penetration testing is
be impacted by a general global conducted across critical corporate
cyber incident, this could potentially and online services.
lead to suspension of some operations,
regulatory breaches and fines,
reputational damage, loss of
customer and employee information
and loss of customer confidence.
---------------------------------------- ---------------------------------------------
Regulatory Compliance Local management are supported by
AVEVA is required to comply with local professional advisers and
both international and local further oversight is maintained
laws, regulations and tax legislation from the corporate legal and finance
in each of the jurisdictions functions.
in which it operates. Significant
changes in these laws and regulations In addition, AVEVA uses compliance
or failure to comply with them policies and guidance materials,
could lead to liabilities or communications & training platforms
reputational damage. for its employees and external partners.
---------------------------------------- ---------------------------------------------
Operational Risks
Risk Mitigation
-------------------------------------- ------------------------------------
Internal IT Systems AVEVA has appointed an experienced
AVEVA depends on its many IT systems Chief Information Officer and
for day-to-day operations and additional people resources to
to meet its customers' expectations. lead and drive the various IT
If they fail to operate effectively initiatives, including a new ERP
and efficiently then this could implementation project designed
result in reputational damage, to provide and support industry
negative employee engagement or best practice processes. This
poor customer experiences. includes respective governance
frameworks and support from expert
This is a new principal risk for external advisors and integration
AVEVA reflecting the range of specialists.
IT systems now in the AVEVA IT
estate given the 2018 merger and
the ongoing projects to consolidate
and improve them whilst maintaining
business as usual processes.
-------------------------------------- ------------------------------------
Disruptive Risks
Risk Mitigation
------------------------------------- ----------------------------------------
Disruptive Technologies AVEVA largely mitigates this threat
New and unforeseen technology, through its own leading innovation
software or business models which initiatives and by remaining at
threaten AVEVA's value offering the forefront of technological
could be developed and become advances. This a core strategic
significantly commercially viable strength of AVEVA. In addition,
resulting in material impacts AVEVA continually scans the disruptive
to AVEVA's profits and prospects. technology environment to ensure
it is well informed and placed
This is a new principal risk for to respond to any material threats.
AVEVA reflecting the increased
potential threats from disruptive
forces which seek to capitalise
on digitisation of industry trends.
------------------------------------- ----------------------------------------
Consolidated income statement
for the year ended 31 March 2019
2018
2019 GBPm
Notes GBPm (restated)
---------------------------------------------------- ------ -------- ------------
Revenue 3,4 766.6 486.3
Cost of sales (193.2) (150.8)
---------------------------------------------------- ------ -------- ------------
Gross Profit 573.4 335.5
Operating Expenses
Research & Development costs (178.0) (116.3)
Selling and administrative expenses 5 (341.9) (181.3)
Net impairment loss on financial assets (6.3) (1.2)
Total operating expenses (526.2) (298.8)
---------------------------------------------------- ------ -------- ------------
Profit from operations 6 47.2 36.7
Other income - 1.0
Finance revenue 0.2 0.5
Finance expense (0.7) (3.7)
---------------------------------------------------- ------ -------- ------------
Profit before tax from continuing operations 46.7 34.5
Income tax (expense)/credit 7 (12.9) 6.0
---------------------------------------------------- ------ -------- ------------
Profit for the year attributable to equity holders
of the parent 33.8 40.5
---------------------------------------------------- ------ -------- ------------
Profit from operations 47.2 36.7
Amortisation of intangibles (excluding other software) 88.1 45.2
Share-based payments 11.2 1.4
Loss on fair value of forward foreign exchange
contracts 0.5 0.1
Exceptional items 6 28.9 23.6
Other income - 1.0
-------------------------------------------------------- ------ ------
Adjusted EBIT 175.9 108.0
-------------------------------------------------------- ------ ------
Earnings per share (pence)
- basic 9 20.97 39.92
- diluted 9 20.90 39.72
---------------------------- ------ ------
All activities relate to continuing activities.
The accompanying notes are an integral part of this Consolidated
income statement.
Consolidated statement of comprehensive income
for the year ended 31 March 2019
2018
2019 GBPm
Notes GBPm (restated)
--------------------------------------------------- ------ ------ ------------
Profit for the year 33.8 40.5
Items that may be reclassified to profit or loss
in subsequent periods:
Exchange gain/(loss) arising on translation of
foreign operations 8.4 (15.5)
--------------------------------------------------- ------ ------ ------------
Total of items that may be reclassified to profit
or loss in subsequent periods 8.4 (15.5)
--------------------------------------------------- ------ ------ ------------
Items that will not be reclassified to profit
or loss in subsequent periods:
Remeasurement loss on defined benefit plans (0.5) (2.4)
Deferred tax effect 7(a) (0.4) 1.5
--------------------------------------------------- ------ ------ ------------
Total of items that will not be reclassified to
profit or loss in subsequent periods (0.9) (0.9)
--------------------------------------------------- ------ ------ ------------
Total comprehensive income for the year, net of
tax 41.3 24.1
--------------------------------------------------- ------ ------ ------------
The accompanying notes are an integral part of this Consolidated
statement of comprehensive income.
Consolidated balance sheet
31 March 2019
2018 2017
2019 GBPm GBPm
Notes GBPm (restated) (restated)
-------------------------------- ------ -------- ------------ ------------
Non-current assets
Goodwill 1,285.3 1,283.5 42.4
Other intangible assets 599.5 678.8 199.0
Property, plant and equipment 17.1 14.8 8.7
Deferred tax assets 11.8 9.0 2.1
Other receivables 2.2 1.2 -
Retirement benefit surplus 7.1 5.6 -
Financial assets - - 1.6
1,923.0 1,992.9 253.8
-------------------------------- ------ -------- ------------ ------------
Current assets
Inventories 0.8 0.9 1.0
Trade and other receivables 10 237.9 230.4 171.4
Contract assets 3 100.5 67.6 72.7
Treasury deposits 11 0.6 0.2 -
Cash and cash equivalents 11 127.2 105.6 22.4
Financial assets - 0.5 -
Current tax assets 10.8 11.1 5.2
-------------------------------- ------ -------- ------------ ------------
477.8 416.3 272.7
-------------------------------- ------ -------- ------------ ------------
Total assets 2,400.8 2,409.2 526.5
-------------------------------- ------ -------- ------------ ------------
Equity
Issued share capital 5.7 5.7 2.3
Share premium 574.5 574.5 27.3
Other reserves 1,178.8 1,179.4 (4.2)
Retained earnings 165.5 195.1 181.1
-------------------------------- ------ -------- ------------ ------------
Total equity 1,924.5 1,954.7 206.5
-------------------------------- ------ -------- ------------ ------------
Current liabilities
Trade and other payables 12 156.8 147.2 129.2
Contract liabilities 3 174.6 141.7 96.0
Loans and borrowings - 10.0 -
Financial liabilities 0.1 - 1.9
Provisions 1.9 - -
Current tax liabilities 12.8 12.1 8.6
-------------------------------- ------ -------- ------------ ------------
346.2 311.0 235.7
-------------------------------- ------ -------- ------------ ------------
Non-current liabilities
Deferred tax liabilities 111.3 130.5 75.7
Other liabilities 3.1 2.2 3.4
Provisions 2.6 - -
Retirement benefit obligations 13.1 10.8 5.2
-------------------------------- ------ -------- ------------ ------------
130.1 143.5 84.3
-------------------------------- ------ -------- ------------ ------------
Total equity and liabilities 2,400.8 2,409.2 526.5
-------------------------------- ------ -------- ------------ ------------
The accompanying notes are an integral part of this Consolidated
balance sheet.
Consolidated statement of changes in shareholders' equity
31 March 2019
Other reserves
---------------------------------------------------------------------
Cumulative Capital Capital Reverse Total
Share Share Merger translation contribution redemption acquisition Treasury other Retained Total
capital premium reserve adjustments reserve reserve reserve shares reserves earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------- ------- ------- ----------- ------------ ---------- ----------- -------- -------- -------- -------
At 1 April
2017 2.3 27.3 - 25.4 - - (29.4) (0.2) (4.2) 146.6 172.0
Impact of
change
in accounting
polices - - - - - - - - - 34.5 34.5
-------------- ------- ------- ------- ----------- ------------ ---------- ----------- -------- -------- -------- -------
Restated
balance
as at 1 April
2017 2.3 27.3 - 25.4 - - (29.4) (0.2) (4.2) 181.1 206.5
Profit for the
year - - - - - - - - - 40.5 40.5
Other
comprehensive
income - - - (15.5) - - - - (15.5) (0.9) (16.4)
-------------- ------- ------- ------- ----------- ------------ ---------- ----------- -------- -------- -------- -------
Total
comprehensive
income - - - (15.5) - - - - (15.5) 39.6 24.1
Shares issued
to acquire
the
Schneider
Electric
software
business 3.4 548.9 1,265.6 - - - - - 1,265.6 - 1,817.9
Issue and
redemption
of B shares - - (650.0) - - 101.7 - - (548.3) - (548.3)
Recognition of
reverse
acquisition
reserve on
combination - - - - - - 481.9 - 481.9 - 481.9
Transaction
costs - (1.7) - - - - - - - - (1.7)
Share-based
payments - - - - - - - - - 1.2 1.2
Investment in
own shares - - - - - - - (0.3) (0.3) - (0.3)
Transactions
with
Schneider
Electric - - - - - - - - - (26.8) (26.8)
Cost of
employee
benefit trust
shares issued
to employees - - - - - - - 0.2 0.2 - 0.2
At 31 March
2018 5.7 574.5 615.6 9.9 - 101.7 452.5 (0.3) 1,179.4 195.1 1,954.7
Profit for the
year - - - - - - - - - 33.8 33.8
Other
comprehensive
income - - - 8.4 - - - - 8.4 (0.9) 7.5
-------------- ------- ------- ------- ----------- ------------ ---------- ----------- -------- -------- -------- -------
Total
comprehensive
income - - - 8.4 - - - - 8.4 32.9 41.3
Share-based
payments - - - - - - - - - 11.2 11.2
Tax arising on
share options - - - - - - - - - 1.3 1.3
Investment in
own shares - - - - - - - (9.3) (9.3) - (9.3)
Capital
contribution - - - - 0.1 - - - 0.1 - 0.1
Transactions
with
Schneider
Electric - - - - - - - - - (8.8) (8.8)
Cost of
employee
benefit trust
shares issued
to employees - - - - - - - 0.2 0.2 (0.2) -
Equity
dividends - - - - - - - - - (66.0) (66.0)
-------------- ------- ------- ------- ----------- ------------ ---------- ----------- -------- -------- -------- -------
At 31 March
2019 5.7 574.5 615.6 18.3 0.1 101.7 452.5 (9.4) 1,178.8 165.5 1,924.5
-------------- ------- ------- ------- ----------- ------------ ---------- ----------- -------- -------- -------- -------
The accompanying notes are an integral part of this Consolidated
statement of changes in shareholders' equity.
Consolidated cash flow statement
for the year ended 31 March 2019
2018
2019 GBPm
Notes GBPm (restated)
---------------------------------------------------------- ------ ------- ------------
Cash flows from operating activities
Profit for the year 33.8 40.5
Income tax expense / (credit) 7(a) 12.9 (6.0)
Net finance expense 0.5 3.2
Other income - 0.5
Amortisation of intangible assets 88.8 46.4
Depreciation of property, plant and equipment 5.4 3.2
Impairment and loss on disposal of intangible
assets - 14.9
Loss/(Profit) on disposal of property, plant and
equipment 0.1 (1.8)
Share-based payments 11.2 1.2
Difference between pension contributions paid
and amounts charged to operating profit 0.1 (1.3)
Research & Development expenditure tax credit (2.0) (0.3)
Capitalisation of Research & Development costs - (9.9)
Changes in working capital:
Trade and other receivables (51.4) (28.4)
Trade and other payables 69.2 28.9
Changes to fair value of forward foreign exchange
contracts 0.5 0.1
---------------------------------------------------------- ------ ------- ------------
Cash generated from operating activities before
tax 169.1 91.2
Income taxes paid (32.4) (28.6)
---------------------------------------------------------- ------ ------- ------------
Net cash generated from operating activities 136.7 62.6
---------------------------------------------------------- ------ ------- ------------
Cash flows from investing activities
Purchase of property, plant and equipment (7.4) (4.9)
Purchase of intangible assets (0.2) (1.2)
Cash received on acquisition of business - 132.2
Consideration paid on completion of business combination (19.4) -
Proceeds from disposal of property, plant and
equipment - 3.3
Proceeds from disposal of intangible assets - 3.1
Purchase of treasury deposits (0.4) -
Interest received 0.2 0.5
---------------------------------------------------------- ------ ------- ------------
Net cash flows (used in)/from investing activities (27.2) 133.0
---------------------------------------------------------- ------ ------- ------------
Cash flows from financing activities
Interest paid (0.7) (3.5)
Purchase of own shares (9.3) -
Repayment of/(proceeds from) borrowings (10.0) 10.0
Change in funding with related parties - (18.1)
Return of value to shareholders - (100.0)
Transaction costs on issue of shares - (1.7)
Dividends paid to shareholders of the parent (66.0) -
---------------------------------------------------------- ------ ------- ------------
Net cash flows used in financing activities (86.0) (113.3)
---------------------------------------------------------- ------ ------- ------------
Net increase in cash and cash equivalents 23.5 82.3
Net foreign exchange difference (1.9) 0.9
Opening cash and cash equivalents 11 105.6 22.4
---------------------------------------------------------- ------ ------- ------------
Closing cash and cash equivalents 21 127.2 105.6
---------------------------------------------------------- ------ ------- ------------
The accompanying notes are an integral part of this Consolidated
cash flow statement.
1 Basis of preparation
The Consolidated financial statements of AVEVA Group plc and all
its subsidiaries (the Group) have been prepared in accordance with
IFRS, as adopted by the European Union, as they apply to the
financial statements of the Group for the year ended 31 March
2019.
The preliminary announcement covers the period from 1 April 2018
to 31 March 2019 and was approved by the Board on 29 May 2019. It
is presented in Pounds Sterling (GBP) and all values are rounded to
the nearest GBP0.1m except when otherwise indicated.
The financial information contained in this preliminary
announcement of audited results does not constitute the Group's
statutory accounts for the years ended 31 March 2019 or 31 March
2018. The accounts for the year ended 31 March 2018 have been
delivered to the Registrar of Companies. The statutory accounts for
the year ended 31 March 2019 have been reported on by the Company's
auditors; the report on these accounts was unqualified, did not
draw attention to any matters by way of emphasis and did not
contain any statement under section 498(2) or (3) of the Companies
Act 2006 or equivalent preceding legislation.
The statutory accounts for the year ended 31 March 2019 are
expected to be posted to shareholders in due course and will be
delivered to the Registrar of Companies after they have been laid
before the shareholders in a general meeting on 8 July 2019. Copies
will be available from the registered office of the Company, High
Cross, Madingley Road, Cambridge CB3 0HB and can be accessed on the
AVEVA website, www.aveva.com. The registered number of AVEVA Group
plc is 2937296.
For the year ended 31 March 2019, the consolidated financial
statements comprise the results of both SES and the AVEVA Group for
the full financial year. For the year ended 31 March 2018, the
consolidated financial statements comprise the results of the SES
for the full year, and the results of the AVEVA Group from 1 March
2018, the date of the reverse acquisition (hereafter referred to as
the 'Combination'). For the year ended 31 March 2018, in accordance
with IFRS 3, the financial statements were prepared as a reverse
acquisition of AVEVA Group by SES. Therefore, although the
consolidated financial statements were issued in the name of AVEVA
Group plc, the legal acquirer, the Group's activity is in substance
the continuation of the financial information of SES.
The Group presents a non-GAAP performance measure on the face of
the Consolidated income statement. The Directors believe that
'adjusted EBIT' provides a reliable and consistent presentation of
the underlying performance of the Group. Adjusted EBIT is not
defined by IFRS and therefore may not be directly comparable with
the 'adjusted EBIT' measures of other companies.
The business is managed and measured on a day to day basis using
adjusted results. To arrive at adjusted results, certain
adjustments are made for normalised and exceptional items that are
individually important and which could, if included, distort the
understanding of the performance for the year and the comparability
between periods.
Normalised items: These are recurring items which management
considers to have a distorting effect on the underlying results of
the Group, and are non-cash items. These items relate to
amortisation of intangibles (excluding other software), share-based
payment charges and fair value adjustments on financial
derivatives, although other types of recurring items may arise.
Recurring items are adjusted each year irrespective of materiality
to ensure consistent treatment.
Exceptional items: These are items which are non-recurring and
are identified by virtue of either their size or their nature.
These items can include, but are not restricted to, the costs of
significant restructuring exercises, fees associated with business
combinations and costs incurred in integrating acquired
companies.
2 Accounting policies
The preliminary statement has been prepared on a consistent
basis with the accounting policies set out in the last published
financial statements for the year ended 31 March 2018 except where
noted below. Other new standards and interpretations which came
into force during the year did not have a significant impact on the
Group's financial statements.
The Group has adopted IFRS 15 Revenue from Contracts with
Customers from 1 April 2018, using the full retrospective method.
This has resulted in changes in accounting policies and adjustments
to the amounts recognised in the financial statements.
i) Rendering of services - transfer of control
Under IAS 18, revenue from sales of initial licences, perpetual
licences and the initial software delivery element of rental/term
licences was recognised upon delivery. Delivery occurred when the
customer had access to the intellectual property described in the
contract. In some limited circumstances, AVEVA recognised revenue
from a rental/term licence agreement rateably over the contract
period. This assessment was based on whether AVEVA could reliably
estimate the maintenance and support element of the contract.
Under IFRS 15, revenue is recognised when a customer obtains
control of the services. All distinct performance obligations
relating to licences for software are considered to be 'right to
use' and are transferred to the customer at a 'point in time'.
Therefore, under IFRS 15, all revenue from software licences which
are distinct performance obligations are recognised at a 'point in
time' and not 'over time'. This results in an acceleration of the
recognition in revenue for certain contracts and revenue
streams.
The effect on the income statement for the year ended 31 March
2018 has been to reduce revenue by GBP10.4m, and profit after tax
by GBP5.2m.
ii) Providing extended payment terms to customers
Under IAS 18, where AVEVA provided a customer with extended
payment terms, the revenue was deferred until the consideration was
due in accordance with the contract. Under IFRS 15, all the
contractual payments are included in the transaction price and
allocated to the performance obligations at the start of the
contract, to the extent that collectability is considered probable.
Where the performance obligation has already been satisfied, this
has resulted in revenue being recognised at an earlier point under
IFRS 15.
The effect on the income statement for the year ended 31 March
2018 has been to reduce revenue and profit after tax by
GBP0.1m.
iii) Stand-alone selling prices
Revenue from contracts with separately-identifiable components
(multiple-element arrangements) was previously recognised based on
the relative fair value of the components. Under IFRS 15, the total
consideration of a customer arrangement is allocated based on their
relative stand-alone selling prices. Stand-alone selling prices are
determined based on list prices (with standard discounts where
appropriate), the adjusted market assessment approach and the
residual approach.
The effect on the income statement for the year ended 31 March
2018 has been to reduce revenue by GBP2.3m, and profit after tax by
GBP1.8m.
3 Revenue
An analysis of the Group's revenue is as follows:
2019 2018
GBPm GBPm
------------------------------------------------ ------ ------
Support and maintenance, including annual fees 194.4 133.5
Rental and subscriptions 218.2 72.7
Initial fees and perpetual licences 211.6 163.1
Training and services 142.4 117.0
------------------------------------------------ ------ ------
766.6 486.3
Timing of revenue recognition
Services transferred at a point in time 357.3 220.0
Services transferred over time 409.3 266.3
------------------------------------------------ ------ ------
766.6 486.3
------------------------------------------------ ------ ------
Finance revenue 0.2 0.5
------------------------------------------------ ------ ------
766.8 486.8
------------------------------------------------ ------ ------
Training and services consists of consultancy, implementation
services and training fees.
Contract balances are as below:
31 March 31 March 1 April
2019 2018 2017
GBPm GBPm GBPm
---------------------- --------- --------- --------
Trade receivables 174.9 146.9 64.5
Contract assets 100.5 67.6 72.7
Contract liabilities 174.6 141.7 96.0
---------------------- --------- --------- --------
A contract asset is recognised when the software licence
performance obligation is satisfied, and therefore revenue
recognised, but the full licence amount has not been billed. This
situation arises when customers purchase a multi-year rental or
subscription which is billed on an annual basis. When invoices are
raised the contract assets are reclassified to trade
receivables.
Contract liabilities are recognised when the customer is billed
prior to the satisfaction of the performance obligation. This
situation arises when a contract includes post contractual support
as part of a rental or subscription contract or a support and
maintenance contract. Post contractual support is a service
transferred to the customer over time, with billing upfront or
annually.
Set out below is the amount of revenue recognised from:
2019
GBPm
----------------------------------------------------------- ------
Amounts included in contract liabilities at the beginning
of the year 127.6
Performance obligations satisfied in previous years -
----------------------------------------------------------- ------
4 Segment information
The Executive Leadership Team monitors and appraises the
business based on the performance of three geographic regions: Asia
Pacific; Europe, Middle East and Africa (EMEA); and Americas. These
three regions are the basis of the Group's primary operating
segments reported in the financial statements. Performance is
evaluated based on regional contribution using the same accounting
policies as adopted for the Group's financial statements. There is
no inter-segment revenue. Corporate costs include centralised
functions such as Executive Management, Information Management,
Finance and Legal. Balance sheet information is not included in the
information provided to the Executive Leadership Team.
Year ended 31 March 2019
----------------------------------------
Asia Pacific EMEA Americas Corporate Total
GBPm GBPm GBPm GBPm GBPm
---------------------------- ------------- ------- --------- ---------- --------
Revenue
Support and maintenance,
including annual fees 45.0 71.7 77.7 - 194.4
Rental and subscriptions 49.4 107.2 61.6 - 218.2
Initial fees and perpetual
licences 57.3 86.6 67.7 - 211.6
Training and services 27.8 48.8 65.8 - 142.4
---------------------------- ------------- ------- --------- ---------- --------
Regional revenue total 179.5 314.3 272.8 - 766.6
Cost of sales (28.8) (42.6) (66.2) (53.7) (191.3)
Selling and administrative
expenses (36.6) (65.9) (60.9) (115.2) (278.6)
Net impairment loss on
financial assets (4.0) (1.6) (0.7) - (6.3)
---------------------------- ------------- ------- --------- ---------- --------
Regional contribution 110.1 204.2 145.0 (168.9) 290.4
Research & Development
costs (114.5)
---------------------------- ------------- ------- --------- ---------- --------
Adjusted EBIT 175.9
---------------------------- ------------- ------- --------- ---------- --------
Exceptional items, other
normalised adjustments*
and net interest (129.2)
---------------------------- ------------- ------- --------- ---------- --------
Profit before tax 46.7
---------------------------- ------------- ------- --------- ---------- --------
* Normalised adjustments include amortisation of intangible
assets (excluding other software), share-based payments and
movements on fair value of forward exchange contracts.
As the Combination of the two businesses completed so close to
the end of the financial year, it was not possible to report cost
data between the three regions for the year ended 31 March 2018.
Neither was it possible to consistently report the combined
business on any other segmental basis. Therefore, the segmental
information provided has had to be limited to regional revenue only
for the comparative period.
Year ended 31 March 2018
----------------------------------------
Asia Pacific EMEA Americas Total
GBPm GBPm GBPm GBPm
---------------------------- ------------- ------ --------- ------
Revenue
Support and maintenance,
including annual fees 15.3 34.9 83.3 133.5
Rental and subscriptions 18.0 39.1 15.6 72.7
Initial fees and perpetual
licences 44.1 51.6 67.4 163.1
Training and services 25.0 35.2 56.8 117.0
---------------------------- ------------- ------ --------- ------
102.4 160.8 223.1 486.3
---------------------------- ------------- ------ --------- ------
5 Selling and administration expenses
An analysis of selling and administration expenses is set out
below:
2019 2018
GBPm GBPm
----------------------------------- ------ ------
Selling and distribution expenses 235.6 128.0
Administrative expenses 106.3 53.3
----------------------------------- ------ ------
341.9 181.3
----------------------------------- ------ ------
6 Exceptional items
2019 2018
GBPm GBPm
------------------------------------------------ ------ ------
Acquisition and integration activities 23.0 5.7
Restructuring costs 5.9 2.9
Impairment and loss on sale of capitalised R&D - 15.0
28.9 23.6
------------------------------------------------ ------ ------
Acquisition and integration activities relate to fees paid to
professional advisers primarily for legal and financial due
diligence services related to the combination of AVEVA Group plc
and SES, plus other consultancy costs paid to advisors in relation
to the integration, and provisions taken in relation to onerous
leases.
The restructuring costs relate to severance payments in a number
of global office locations. In the financial year ended 31 March
2018 this also included a divestment made by SES in China, which
resulted in an exceptional write off of GBP0.9m. This was offset by
an exceptional gain of GBP1.9m made by selling the property
relating to the same write off.
The impairment of capitalised R&D recognised in the year
ended 31 March 2018 related to a development project that was
ceased, prior to completion, following a divestment of a Schneider
Electric Software joint venture operation with Schneider Electric.
Also included are the previously capitalised development costs
related to a project over which a commercial review of financial
prospects was performed, and it was concluded that the carrying
value of the development costs should be fully impaired.
The total cash outflow during the year as a result of
exceptional items was GBP18.9m (2018: GBP25.0m).
Exceptional items were included in the Consolidated income
statement as follows:
2019 2018
GBPm GBPm
----------------------------------- ------ ------
Cost of sales 1.9 0.4
Research & Development costs 1.7 15.5
Selling and distribution expenses 12.6 2.8
Administrative expenses 12.7 5.9
Other income - (1.0)
28.9 23.6
----------------------------------- ------ ------
7 Income tax expense
a) Tax on profit
The major components of income tax expense are as follows:
2019 2018
GBPm GBPm
---------------------------------------------------------- ------- -------
Tax charged in Consolidated income statement
Current tax
UK corporation tax 5.8 3.6
Foreign tax 29.8 35.1
Adjustments in respect of prior periods (0.5) (1.1)
---------------------------------------------------------- ------- -------
35.1 37.6
---------------------------------------------------------- ------- -------
Deferred tax
Origination and reversal of temporary differences (22.0) (43.6)
Adjustments in respect of prior periods (0.2) -
---------------------------------------------------------- ------- -------
(22.2) (43.6)
---------------------------------------------------------- ------- -------
Total income tax expense reported in Consolidated income
statement 12.9 (6.0)
---------------------------------------------------------- ------- -------
2019 2018
GBPm GBPm
---------------------------------------------------------------- ------ ------
Tax relating to items charged directly to Consolidated
statement of comprehensive income
Deferred tax on actuarial remeasurements on retirement
benefit obligation 0.4 (1.5)
---------------------------------------------------------------- ------ ------
Tax charge reported in Consolidated statement of comprehensive
income 0.4 (1.5)
---------------------------------------------------------------- ------ ------
b) Reconciliation of the total tax charge
The differences between the total tax charge shown above and the
amount calculated by applying the standard rate of US (2018: UK)
corporation tax to the profit before tax are as follows:
2019 2018
GBPm GBPm
------------------------------------------------------ ------ -------
Tax on Group profit before tax at standard US (2018:
UK) corporation tax rate of 24% (2018: 19%) 11.2 6.6
Effects of:
- expenses not deductible for tax purposes 1.9 1.8
- US deferred tax rate benefit - (23.7)
- R&D incentives (4.1) (0.9)
- irrecoverable withholding tax 0.7 1.3
- movement on unprovided deferred tax balances 1.4 4.9
- differing tax rates 2.5 5.1
- adjustments in respect of prior years (0.7) (1.1)
------------------------------------------------------ ------ -------
Income tax expense reported in Consolidated income
statement 12.9 (6.0)
------------------------------------------------------ ------ -------
The Group's effective tax rate for the year was: 27.6% (2018:
-17.4%). The Group's effective tax rate for the year before
exceptional items was 22.9% (2018: -7.9%). The Group's effective
tax rate before exceptional and other normalised adjustments (see
note 6) was 20.2% (2018: 30.5%).
8 Dividends paid and proposed on equity shares
The following dividends were declared, paid and proposed in
relation to the legal entity AVEVA Group plc:
2019 2018
GBPm GBPm
--------------------------------------------------------- ------ ------
Declared and paid during the year
Interim 2018/19 dividend paid of 14.0 pence (2017/18:
nil) per ordinary share 22.5 -
Final 2017/18 dividend paid of 27.0 pence (2016/17:
27.0 pence) per ordinary share 43.5 17.3
--------------------------------------------------------- ------ ------
66.0 17.3
--------------------------------------------------------- ------ ------
Proposed for approval by shareholders at the Annual
General Meeting
--------------------------------------------------------- ------ ------
Final proposed dividend 2018/19 of 29.0 pence (2017/18:
27.0 pence) per ordinary share 46.8 43.5
--------------------------------------------------------- ------ ------
The proposed final dividend is subject to approval by
shareholders at the Annual General Meeting on 8 July 2019 and has
not been included as a liability in these financial statements. If
approved at the Annual General Meeting, the final dividend will be
paid on 2 August 2019 to shareholders on the register at the close
of business on 5 July 2019.
9 Earnings per share
2019 2018
Pence Pence
-------------------------------------------- ------- -------
Earnings per share for the year:
- basic 20.97 39.92
- diluted 20.90 39.72
Adjusted earnings per share for the year*:
- basic 91.24 71.78
- diluted 90.90 71.42
-------------------------------------------- ------- -------
*Adjusted earnings per share has been calculated inclusive of
the acquisition accounting adjustment to revenue.
2019 2018
Number Number
------------------------------------------------------ ------------ ------------
Weighted average number of ordinary shares for basic
earnings per share 161,081,559 101,464,203
Effect of dilution: employee share options 589,978 514,438
------------------------------------------------------ ------------ ------------
Weighted average number of ordinary shares adjusted
for the effect of dilution 161,671,537 101,978,641
------------------------------------------------------ ------------ ------------
The calculations of basic and diluted earnings per share are
based on the net profit attributable to equity holders of the
parent for the year of GBP33.8m (2018: GBP40.5m). Basic earnings
per share amounts are calculated by dividing the net profit
attributable to equity holders of the parent by the weighted
average number of AVEVA Group plc ordinary shares outstanding
during the year. For the purpose of the calculation, the number of
shares prior to the Combination is considered to be 96,034,353.
This is the number of AVEVA Group plc ordinary shares as at 1 March
2018, adjusted by the exchange ratio of the Combination.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to equity holders of the parent by the
weighted average number of ordinary shares outstanding during the
year as described above, plus the weighted average number of
ordinary shares that would be issued on the conversion of all the
potentially dilutive share options into ordinary shares for the
year ended 31 March 2019, and the period from 1 March 2018 to 31
March 2018.
Details of the calculation of adjusted earnings per share are
set out below:
2019 2018
GBPm GBPm
---------------------------------------------------------- ------- -------
Profit after tax for the year 33.8 40.5
Intangible amortisation (excluding software) 88.1 45.2
Share-based payments 11.2 1.4
Loss on fair value of forward foreign exchange contracts 0.5 0.1
Exceptional items 28.9 23.6
Effect of acquisition accounting adjustments 8.6 -
Tax effect on exceptional items (4.4) (1.4)
Tax effect on other normalised adjustments (excluding
net finance expense) (18.1) (36.6)
Tax effect on acquisition accounting adjustments (1.6) -
---------------------------------------------------------- ------- -------
Adjusted profit after tax 147.0 72.8
---------------------------------------------------------- ------- -------
The denominators used are the same as those detailed above for
both basic and diluted earnings per share.
The adjustment made to profit after tax in calculating adjusted
basic and diluted earnings per share has been adjusted for the tax
effects of the items adjusted. The Directors believe that adjusted
earnings per share is more representative of the underlying
performance of the business.
10 Trade and other receivables
2019 2018
GBPm GBPm
--------------------------------------------- ------ ------
Current
Amounts falling due within one year:
Trade receivables 174.9 146.9
Amounts owed from related parties (note 13) 35.5 52.5
Prepayments and other receivables 27.5 31.0
--------------------------------------------- ------ ------
237.9 230.4
--------------------------------------------- ------ ------
Trade receivables are non-interest bearing and generally on
terms of between 30 and 90 days. The Directors consider that the
carrying amount of trade and other receivables approximates their
fair value.
11 Cash and cash equivalents
2019 2018
GBPm GBPm
--------------------------------------------- ------ ------
Cash at bank and in hand 126.5 104.5
Short-term deposits 0.7 1.1
--------------------------------------------- ------ ------
Net cash and cash equivalents per cash flow 127.2 105.6
Treasury deposits 0.6 0.2
--------------------------------------------- ------ ------
127.8 105.8
--------------------------------------------- ------ ------
Treasury deposits represent bank deposits with an original
maturity of over three months. Treasury deposits held with a fixed
rate of interest were GBP0.6m (2018: GBP0.2m), with the remainder
held at a floating rate.
Short-term deposits are made for varying periods of between one
day and three months, depending on the immediate cash requirements
of the Group, and earn interest at the respective short-term
deposit rates. GBP0.6m (2018: GBP1.0m) were at a fixed rate of
interest and the remainder were held at a floating rate of
interest.
The fair value of cash and cash equivalents and treasury
deposits is GBP127.8m (2018: GBP105.8m).
12 Trade and other payables
2019 2018
GBPm GBPm
------------------------------------------------- ------ ------
Current
Trade payables 20.3 22.9
Amounts owed to related parties (note 13) 10.5 8.9
Social security, employee taxes and sales taxes 22.6 17.4
Accruals 100.5 74.8
Other payables 2.9 23.2
------------------------------------------------- ------ ------
156.8 147.2
------------------------------------------------- ------ ------
Trade payables are non-interest bearing and are normally settled
on terms of between 30 and 60 days. Social security, employee taxes
and sales taxes are non-interest bearing and are normally settled
on terms of between 19 and 30 days. The Directors consider that the
carrying amount of trade and other payables approximates their fair
value.
13 Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
During the year, Group companies entered into the following
transactions with Schneider Electric group companies:
2019 2018
GBPm GBPm
--------------------------------- ------- -------
Sales of goods and services 80.1 72.9
Purchases of goods and services (19.7) (13.1)
Interest income - 0.3
Interest expense - (3.4)
Completion accounts adjustment (19.4) -
Other non-trading transactions 4.3 (7.9)
Pre-closing management fees - (11.0)
--------------------------------- ------- -------
During the year, the Group paid GBP17.4m to Schneider Electric
SE, the parent company of the Schneider Electric Group. All other
transactions were with subsidiary companies within the Schneider
Electric Group.
As at 31 March, Group companies held the following balances with
Schneider Electric group companies:
2019 2018
GBPm GBPm
----------------------------- ------- ------
Trade and other receivables 34.1 43.1
Trade and other payables (10.5) (8.9)
Non-trading receivables 1.4 9.4
----------------------------- ------- ------
All balances held were with subsidiary companies within the
Schneider Electric group.
Terms and conditions of transactions with related parties
Outstanding balances at 31 March 2019 are unsecured, and
settlement occurs in cash. There have been no guarantees provided
or received for any related party receivables or payables. For the
year ended 31 March 2019, the Group has not recorded any impairment
of receivables relating to amounts owed by related parties (2018:
nil). This assessment is undertaken each financial year through
examining the financial position of the related party and the
market in which the related party operates.
Directors
Philip Aiken
Chairman
Jennifer Allerton
Independent Non-Executive Director
Christopher Humphrey
Independent Non-Executive Director
Ron Mobed
Independent Non-Executive Director
Emmanuel Babeau
Non-Executive Director
Paula Dowdy
Non-Executive Director
Peter Herweck
Non-Executive Director
Craig Hayman
CEO
James Kidd
Deputy CEO & CFO
14. Responsibility statement pursuant to FSA's Disclosure and
Transparency Rule 4
(DTR 4)
Each Director of the Company (whose names and functions appear
above) confirms that (solely for the purpose of DTR 4) to the best
of his/her knowledge:
-- the financial information in this document, prepared in
accordance with the applicable UK law and applicable accounting
standards, give a true and fair view of the assets, liabilities,
financial position and result of the Company and of the Group taken
as a whole; and
-- the Chairman's statement, Chief Executive's strategic review
and Finance review include a fair review of the development and
performance of the business and the position of the Company and
Group taken as a whole, together with a description of the
principal risks and uncertainties that they face.
On behalf of the Board
Craig Hayman James Kidd
CEO Deputy CEO & CFO
29 May 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR PGUGCAUPBPGR
(END) Dow Jones Newswires
May 29, 2019 02:00 ET (06:00 GMT)
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