AVEVA Group plc. Results for the six months ended 30 th September

Transcription

1 AVEVA Group plc Results for the six months ended 30 th September

2 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. 2

3 Strategic highlights H1 15 result in line with mid-september guidance Significant deals signed during the period, acceleration in AVEVA Everything 3D (AVEVA E3D) The benefits of One AVEVA starting to show in new deals Solid revenue outlook from Global Accounts over next five years Thorough review of planned investment to yield efficiencies Anticipate result in line with Board s expectations for full year AVEVA continues to lead through innovation Record attendance at recent AVEVA World Summit in Berlin Demonstration of AVEVA E3D in the Cloud and new laser modelling capabilities 3

4 4 CFO review James Kidd

5 Financial highlights Sept 2014 Sept 2013 Change Total revenue 85.9m 108.5m 21% Constant currency revenue 92.3m 108.5m 15% Adjusted* profit before tax 17.1m 32.3m 47% Adjusted* basic EPS 20.50p 35.23p 42% Adjusted* profit before tax margin 19.9% 29.8% Interim dividend per share 5.5p 5.0p Net cash 116.4m 95.8m 22% Operating cash flow before tax 22.5m 30.2m 25% * 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. 5

6 Summary income statement (statutory) Sept 2014 m Sept 2013 m Change Total revenue % Cost of sales (7.5) (8.4) Research and Development costs (15.6) (18.7) 17% Selling and distribution expenses (40.5) (44.2) 8% Administrative expenses (8.4) (10.2) 18% Net interest receivable Normalised items Adjusted* profit before tax % Reported profit before tax % Income tax (3.5) (7.5) Profit after tax % Adjusted* profit margin 19.9% 29.8% Adjusted* basic EPS (pence) 20.50p 35.23p 42% 6

7 Summary balance sheet Sept 2014 m Sept 2013 m Non-current assets Accounts receivable (net of provision 6.0m ( m)) Other receivables Net cash and deposits Total assets Other liabilities Deferred revenue Pension liabilities Shareholders equity Total shareholders equity and liabilities

8 Revenue by category million H1 2014/15 Reported H1 2014/15 Constant Currency H1 2013/14 Reported Constant currency change Annual fees % Rental licence fees (27%) Recurring revenue (12%) Initial licence fees (27%) Services (9%) Total (15%) Annual fees grew by 12% in H1 Recurring revenue 72% ( %) ILF growth in China, weaker in other parts of Asia Pacific 8

9 Rental licence fees Rental licence fees were approx. 13 million down v H1 2013/14 on a constant currency basis Impacted by specific factors Phasing of key rental contracts which are due to renew in H2 worth 7.0 million Brazil contracts worth 2.5 million not renewed due to lack of new projects Asia Pacific top-up rentals worth 3.5 million not renewed due to lower demand Rentals will be more H2 weighted in FY15 Demand for rental remains resilient and is supported by EPC backlogs 9

10 Global performance Rental fees Americas 12.4m 13.7m* ( m) EMEA 43.7m 46.6m* ( m) Initial fees Annual fees Training & services Asia Pacific 29.8m 32.0m* ( m) Brazilian customers impacted by lack of new projects North America saw lower levels of offshore O&G projects * Revenue on a constant currency basis Mixed performance across region Good levels of AVEVA E3D sales Strong growth in China and India Lower demand in South Korea and South East Asia 10

11 Opex million H1 2014/15 Reported H1 2014/15 Constant Currency H1 2013/14 Reported Constant currency change Research & Development (13%) Selling & distribution (2%) Administrative expenses (9%) Total costs (6%) R&D benefit from further expansion in India Continue to invest in sales function in growth areas Admin costs lower due to forex gains and other costs 11

12 Cost base Direct action taken to manage cost base c. 10 million saving in H2 vs plan 4 million deferred recruitment, 3 million discretionary spend, 3 million bonus and commission FX also expected to have 4% impact on the cost base No slow down in investment in key areas e.g. Cloud R&D, sales and pre-sales technical 12

13 Engineering & Design Systems Sept 2014 m Sept 2013 m Change Revenue % Constant currency revenue % Annual fees Rental licence fees Recurring revenue % Initial licence fees Services Total revenue % Operating costs (22.4) (23.8) 6% Contribution % Rental licences impacted by specific factors Cost efficiencies from Indian R&D 13

14 Enterprise Solutions Sept 2014 m Sept 2013 m Change Revenue % Constant currency revenue % Annual fees Rental licence fees Recurring revenue % Initial licence fees Services Total revenue % Operating costs (13.3) (14.4) Contribution (1.6) (1.6) - Backlog 11.6 million v 10.7 million 31 March 2014 Maintaining tight control over cost base 14

15 Movement in net cash position (7.9) (1.7) (14.0) Mar-14 Cash from operations Tax Cap Ex Dividend 30-Sep-14 Operating cash flow 22.5 million ( million) Net cash balance million at 30 Sept 2014 (31 March million) Cash conversion 156% ( %) 15

16 16 CEO review Richard Longdon

17 Strategic overview Current industry trends Global accounts AVEVA E3D and AVEVA NET Customer examples AVEVA World Summit 2014 feedback AVEVA E3D in the Cloud Outlook 17

18 Oil & Gas Long term outlook remains strong, but short term slower global growth and oversupply is affecting E&P spend IOCs delaying high-breakeven projects, reducing headcount and focusing on capital discipline Under the right conditions, the many recent deepwater discoveries will require more complex units for processing and extraction Plenty of activity within the LNG sector with a strong pipeline of investment Downstream refining and petrochem also attractive markets, particularly in the US A mixed environment for the EPCs, our customers 18

19 Power Consistent growth as world energy demand increases and existing infrastructure ages Global energy consumption continues to accelerate despite stagnant global GDP* Strong growth in renewables, now 22% of the global mix Last year global nuclear power output grew for the first time since 2010* China and India are expected to have built c.40% of the world s new capacity by 2035ƚ Ageing western infrastructure driving the need for decommissioning and replacement * BP Statistical Review of World Energy, June 2014 ƚ International Energy Agency, World Energy Outlook

20 Marine The new normal expect the market to remain flat considering the world economy The outlook for global GDP is key, as it remains a fundamental driver of the Marine industry Order books for conventional shipbuilding have started to recover for the first time since 2008 Offshore order book down c.30% this year, with pain particularly evident in South Korea $1.4 trillion investment required to finance the shipping industry * Prospect of a major pick up in demand for LNG carriers, fleet expected to increase 60% by 2020 * Clarksons Research, Dynamic Growth in the Energy Competition (3 October 2014) estimates that LNG trade could reach 1 billion tonnes in the 2030s, from 244 million in

21 Global Accounts Multi-year agreements provide visibility and revenue upside Expansion of product footprint to include AVEVA Integrated Engineering & Design solutions (AVEVA IE&D) and AVEVA NET As a result of these new agreements, we have identified an incremental revenue opportunity of more than 30 million over the next 5 years* * Based on a phased uptake of AVEVA E3D over 5 years and average usage profile executed against the new contract pricing structure 21

22 AVEVA E3D Good momentum maintained in AVEVA E3D during H1 Strong sales in September Cumulative revenue since launch now exceeds 5 million Increasing deal sizes Largest deployment at a single customer is now over 120 seats Noteworthy deals in H1 included those with Shell, KBR, Atkins and Hitachi GE 22

23 Selected customer examples Atkins AVEVA E3D and AVEVA Laser Modeller to support lean construction processes KBR AVEVA E3D for major capital projects Keypro Ingeneria S.A. Migrated to AVEVA E3D from AVEVA PDMS NGLTech AVEVA E3D to reduce risk and minimise project costs 23

24 AVEVA NET Steady progress, increasing usage among EPCs and OOs Since period end significant deal with a major North American OO, combining both EDS tools and AVEVA NET Also, our first contract with a pure play Canadian oil sands producer RAO-Engineering, Russia s 2 nd largest OO, for AVEVA NET and AVEVA IE&D Follow-on deal with Lundin for AVEVA NET and Digital Information Hub for the Digital Asset 16 th October: Global alliance agreement signed with Capgemini, covering all asset-intensive industries 24

25 AVEVA World Summit 2014 This year s Summit in Berlin saw a record attendance Over 300 delegates from 36 countries Over 75% of delegates from C- Level and department / project management Around 20% from Owner Operators Key presentations from AMEC, Jacobs, Foster Wheeler and Shell Strong positive response to the digital asset theme, and new asset visualisation technology In total there were 16 customer case study presentations from leading EPCs, OOs and shipbuilders, sharing the advantage of the digital asset approach to their operations 25

26 Berlin reaction to E3D in the Cloud A secure solution which accommodates the complexity of engineering project IT An open and customisable solution Cost-effective flexibility for customers Since the Berlin demo, we have expanded the beta release programme to more key customers Using Amazon AppStream, the setup took just minutes and the performance was not noticeably different from that of a desktop AVEVA E3D session there was so much interest that the team held an impromptu provisioning session during lunch on day 2 of the Summit. Schnitger Corp., 22 October

27 Outlook Customer feedback suggests overall market growth in H2, although it is a mixed picture Uncertain global economic backdrop with regional difficulties in Brazil, South Korea and Russia over the medium term We remain focused on long term growth Innovation is a key driver of the business in uncertain markets The core of the business remains resilient Maximising opportunities with One AVEVA pull-through strategy Leveraging increased revenue from Global Accounts via AVEVA E3D We are focused on the digital asset across all industry sectors We have confidence in the outlook and the long term growth opportunity 27

28 28 Appendices

29 Currency effect on revenue H1 FY15 Currency % of FY 14 revenue A: Average rate H1 FY 15 B: Average rate H1 FY 14 Delta (A / B) H1 FY 15 rev impact EMEA 51% -6% EUR % NOK % RUB % Asia Pacific 35% -7% CNY % INR % JPY % KRW 1, , AUD % Americas 14% -9% USD % BRL % MXP % Total 100% -7% 29

30 Summary cash flow Sept 2014 m Sept 2013 m Net cash from operating activities Tax paid (7.9) (6.7) Capital expenditure (net) (1.7) (2.5) Interest received (net) Purchase of own shares (0.3) (0.7) Dividends paid (14.0) (113.3) Net decrease in cash (1.0) (92.4) Foreign exchange movement (0.1) (2.2) Opening cash and deposits Closing cash and deposits

31 Definitions Item Initial Licence Fee Annual Fee Rental licence model Token-based licensing Revenue recognition Revenue by geography Recurring revenue Adjusted PBT Constant currency Adjusted EPS Cash conversion Enterprise Solutions backlog Definition Initial Licence Fee (ILF) - users are charged an initial licence fee per seat together with an obligatory 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. 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. 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. 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. 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. Annual fees plus rental fees. 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. The subsidiary companies reported result retranslated to reflect the previous year s average exchange rates and before any gains or losses on intra-group payables or receivables. Adjusted PBT is used to calculate the adjusted earnings per share, after an adjustment for the tax effect of the items adjusted. Cash flow from operations divided by the operating profit for the period, measured as a percentage. 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. 31