aveva group plc · aveva group plc ordinary shares, isin: gb00bbg9vn75 the issuer is aveva group...

THIS DOCUMENT AND ANY ACCOMPANYING DOCUMENTS ARE IMPORTANT AND REQUIRE YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice immediately from an

independent financial adviser, who is authorised under the Financial Services and Markets Act 2000 (“FSMA”) if you are in the United

Kingdom, or from another appropriately authorised independent financial adviser if you are in a territory outside the United Kingdom.

This document, which comprises: (a) a circular prepared in accordance with the Listing Rules of the Financial Conduct Authority (“FCA”) for the

purposes of the General Meeting convened pursuant to the Notice of General Meeting set out at the end of this document; and (b) a simplified prospectus

for the purposes of Article 14 of the Prospectus Regulation, as amended, relating to AVEVA Group plc (the “Company” or “AVEVA”) prepared and

made available to the public in accordance with the Prospectus Regulation Rules of the FCA made under section 73A of FSMA, has been approved by

the FCA, as competent authority under the Prospectus Regulation, in accordance with section 87A of FSMA. The FCA only approves this document as

meeting the standards of completeness, comprehensibility and consistency imposed by the Prospectus Regulation and such approval should not be

considered as an endorsement of the issuer that is the subject of this document or of the quality of the New AVEVA Shares, the Nil Paid Rights and/or

the Fully Paid Rights that are the subject matter of this document. Investors should make their own assessment as to the suitability of investing in the

Rights Issue Shares, the Nil Paid Rights and/or the Fully Paid Rights. The document has been drawn up as part of a simplified prospectus in accordance

with Article 14 of the Prospectus Regulation.

Subject to the restrictions set out in this document, if you sell or transfer or have sold or otherwise transferred all of your Existing Ordinary Shares

(other than ex-rights) held in certificated form before 8.00 a.m. on 25 November 2020 (the “Ex-Rights Date”) please send this document together with

the accompanying Form of Proxy (but not any personalised Form of Proxy) and any Provisional Allotment Letter (duly renounced) at once to the

purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for delivery to the purchaser or the

transferee. However, such documents should not be distributed, forwarded to or transmitted in or into any jurisdiction where to do so might constitute

a violation of registration or of other local securities laws or regulations including, but not limited to, the United States, Australia, Canada, New Zealand,

Japan, Singapore, South Africa, and any other jurisdiction where the extension or availability of the Rights Issue (and any other transaction

contemplated thereby) would breach any applicable law or regulation. Any failure to comply with these restrictions may constitute a violation of the

securities laws of any such jurisdiction. If you sell or have sold or transferred all or some of your Existing Ordinary Shares (other than ex-rights) held

in uncertificated form before the Ex-Rights Date, a claim transaction will automatically be generated by Euroclear which, on settlement, will transfer

the appropriate number of Nil Paid Rights to the purchaser or transferee. If you sell or have sold or transferred only part of your holding of Existing

Ordinary Shares (other than ex-rights) held in certificated form before the Ex-Rights Date, you should refer to the instructions regarding split

applications in Part IV (Terms and Conditions of the Rights Issue) of this document and in the Provisional Allotment Letter.

This document does not constitute an offer to sell, or the solicitation of an offer to buy, securities in any jurisdiction where such offer or

solicitation would be unlawful. The distribution of this document, the accompanying Form of Proxy, any other offering or public material

relating to the Rights Issue and/or the Provisional Allotment Letter and/or the transfer of Nil Paid Rights, Fully Paid Rights and/or Rights Issue

Shares through CREST or otherwise into a jurisdiction other than the United Kingdom may be restricted by law or regulation and therefore

persons into whose possession this document (and/or any accompanying documents) comes should inform themselves about and observe any

such restrictions. In particular, subject to certain exceptions, this document and the accompanying documents should not be distributed,

forwarded to or transmitted in or into the United States or any of the Excluded Territories. Any failure to comply with any such restrictions

may constitute a violation of the securities laws of any such jurisdiction.

AVEVA GROUP PLC (incorporated and registered in England and Wales with registered number 02937296)

Proposed Acquisition of OSIsoft, LLCProposed 7 for 9 Rights Issue of 125,739,796 Rights Issue Shares at 2,255 pence per

Rights Issue Share to raise approximately £2.835 billion

Issue of 13.7 million Consideration Shares

and

Notice of General Meeting

Lazard Numis J.P. Morgan CazenoveFinancial Adviser Sponsor, Joint Broker, Joint Broker,

Joint Global Co-ordinator Joint Global Co-ordinator

and Joint Bookrunner and Joint Bookrunner

Barclays BNP PARIBAS SantanderJoint Bookrunner Joint Bookrunner Lead Manager

You should read the whole of this document, including any documents incorporated herein by reference and any accompanying documents. In

particular, your attention is drawn to the factors described in the “Risk Factors” section of this document and the letter from your Chairman

which is set out in Part I (Letter from the Chairman of AVEVA Group plc) of this document and which contains a recommendation from your

Board that you vote in favour of the Resolution to be proposed at the General Meeting. YOU SHOULD NOT RELY SOLELY ON

INFORMATION SUMMARISED IN THE SECTION OF THIS DOCUMENT ENTITLED “SUMMARY”.

The Existing Ordinary Shares have been admitted to the premium listing segment of the official list maintained by the FCA (the “Official List”) and

to trading on the London Stock Exchange’s main market for listed securities. Applications will be made to the FCA for the Rights Issue Shares (nil and

fully paid up) to be admitted to the premium listing segment of the Official List and to the London Stock Exchange for the Rights Issue Shares to be

admitted to trading on the London Stock Exchange’s main market for listed securities. It is expected that admission of the Rights Issue Shares on the

premium listing segment of the Official List and to trading on the main market for listed securities of the London Stock Exchange will become effective,

and that dealings in the Rights Issue Shares (nil paid) on the London Stock Exchange’s main market for listed securities will commence at 8.00 a.m. on

25 November 2020 and that dealings in the Rights Issue Shares (fully paid) on the London Stock Exchange’s main market for listed securities will

commence at 8.00 a.m. on 10 December 2020.

Notice of the General Meeting, to be held at 9.30 a.m. on 24 November 2020 at AVEVA Group plc, 30 Cannon Street, London, EC4M 6AH, is set out

at the end of this document. You will find enclosed with this document a Form of Proxy for use in advance of the General Meeting. In response to the

COVID-19 pandemic, the UK Government has introduced a number of measures in England aimed at controlling the spread of the COVID-19 virus.

LR 13.3.1(4)

LR 2.2.10(2)(a)

Annex 3, 1.5

Annex 12, 1.5

LR 13.3.1(6)

LR 2.2.1(1)

LR 13.4.1(2)

Annex 1, 4.1

Annex 3, 4.1

Annex 3, 4.2

Annex 12, 4.1

Annex 12, 5.3.1

LR 13.3.1(5)

LR 13.5.11

LR 2.2.3

LR 2.2.9(2)

LR 13.3.1(9)

LR 13.3.1(9)(a)

LR 13.3.1(9)(h)

Annex 12, 6.1

174183 Proof 7 Friday, November 6, 2020 11:46

Protecting the welfare of the Company’s Shareholders and employees is of paramount importance and therefore the Board has decided to prohibit

Shareholders attending in person at the General Meeting, with the exception of the minimum number of directors or managers as Shareholders/proxy

holders needed to form a quorum. Further, other Shareholders may participate in the General Meeting only by voting by proxy by appointing the

“Chairman of the meeting” as their proxy, in view of the restrictions on attendance at the General Meeting. Further updates may be provided on the

Company’s website at https://investors.aveva.com/, if necessary. Please check this page for updates. You can still ask questions or raise matters of

concern for you as a Shareholder, by emailing [email protected] with the subject line “General Meeting November 2020”. Shareholders

are encouraged to submit questions by 9.00 a.m. on 17 November 2020 and the Company will endeavour to respond to such questions on the Company’s

website in advance of the proxy voting deadline. The Company reserves the right to consolidate questions of a similar nature. In view of the foregoing,

you should vote by completing, signing and returning the enclosed Form of Proxy in accordance with the instructions printed on it so as to be received

by the Company’s Registrar, Link Group at PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF, as soon as possible and in any event no later than

9.30 a.m. on 20 November 2020 (or, in the case of an adjournment, not later than 48 hours before the time fixed for the holding of the adjourned

meeting). You may also submit your proxy electronically at www.signalshares.com, or if you are an institutional investor, at www.proxymity.io. If you

hold your Existing Ordinary Shares in uncertificated form (i.e. in CREST), you may appoint a proxy by completing and transmitting a CREST Proxy

Instruction in accordance with the procedures set out in the CREST Manual so that it is received by the Company’s Registrar (under CREST participant

RA10) by no later than 9.30 a.m. on 20 November 2020 (or, in the case of an adjournment, not later than 48 hours before the time fixed for the holding

of the adjourned meeting).

Subject to, inter alia, the passing of the Resolution, it is expected that Qualifying Non-CREST Shareholders (other than, subject to certain exceptions,

Excluded Shareholders and Shareholders with registered addresses in the United States) will be sent Provisional Allotment Letters on 24 November

2020, and that Qualifying CREST Shareholders (other than, subject to certain exceptions, Excluded Shareholders and Shareholders with registered

addresses in the United States) will receive a credit to their appropriate stock accounts in CREST in respect of the Nil Paid Rights to which they are

entitled on 25 November 2020. The Nil Paid Rights so credited in CREST are expected to be enabled for settlement by Euroclear as soon as practicable

after Rights Issue Admission.

The latest time and date for acceptance of, and payment in full for, the Rights Issue Shares by holders of Nil Paid Rights is expected to be

11.00 a.m. on 9 December 2020. The procedures for delivery, acceptance and payment of Nil Paid Rights are set out in Part IV (Terms and

Conditions of the Rights Issue) of this document and, for Qualifying Non-CREST Shareholders only, also in the Provisional Allotment Letter.

Qualifying CREST Shareholders should refer to Section 4 of Part IV (Terms and Conditions of the Rights Issue) of this document.

Qualifying Non-CREST Shareholders should retain this document for reference pending receipt of a Provisional Allotment Letter. Qualifying CREST

Shareholders should note that they will receive no further written communication from AVEVA in respect of the Rights Issue. Qualifying Non-CREST

Shareholders should accordingly retain this document for, among other things, details of the action they should take in respect of the Rights Issue.

Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in

connection with this document and the Rights Issue. Holdings of Existing Ordinary Shares in certificated and uncertificated form will be treated as

separate holdings for the purpose of calculating entitlements under the Rights Issue.

The Company and each of the Directors, whose names appear at Section 1.1 of Part XIII (Directors and Corporate Governance) of this document,

accept responsibility for the information contained in this document. To the best of the knowledge of the Company and the Directors, such information

is in accordance with the facts and this document does not omit anything likely to affect the import of such information.

Lazard, which is authorised and regulated in the United Kingdom by the FCA, is acting as financial adviser to AVEVA and no one else in connection

with the Rights Issue and the Acquisition and will not regard any other person (whether or not a recipient of this document) as a client in relation to the

Rights Issue or the Acquisition and will not be responsible for providing the protections afforded to the clients of Lazard nor for giving advice in relation

to the Rights Issue, the Acquisition, the contents of this document or any transaction or arrangement referred to, or information contained in, this

document.

Numis, which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for AVEVA and no one else in connection with the

Rights Issue and the Acquisition and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Rights

Issue or the Acquisition and will not be responsible for providing the protections afforded to the clients of Numis nor for giving advice in relation to

the Rights Issue or the Acquisition or any transaction or arrangement referred to, or information contained in, this document.

J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove), which is authorised in the United Kingdom

by the Prudential Regulation Authority (the “PRA”) and regulated in the United Kingdom by the FCA and the PRA, is acting exclusively for AVEVA

and no one else in connection with the Rights Issue and will not regard any other person (whether or not a recipient of this document) as a client in

relation to the to the Rights Issue and will not be responsible for providing the protections afforded to the clients of J.P. Morgan Cazenove nor for giving

advice in relation to the Rights Issue or any transaction or arrangement referred to, or information contained in, this document.

Barclays, which is authorised in the United Kingdom by the PRA and regulated in the United Kingdom by the FCA and the PRA, is acting exclusively

for AVEVA and no one else in connection with the Rights Issue and will not regard any other person (whether or not a recipient of this document) as a

client in relation to the Rights Issue and will not be responsible for providing the protections afforded to the clients of Barclays nor for giving advice

in relation to the Rights Issue or any transaction or arrangement referred to, or information contained in, this document.

BNP PARIBAS, which is lead supervised by the European Central Bank (“ECB”) and the Autorité de Contrôle Prudentiel et de Résolution (“ACPR”)

(and its London Branch is authorised by the ECB, the ACPR and the PRA and subject to limited regulation by the FCA and the PRA), is acting

exclusively for AVEVA and no one else in connection with the Rights Issue and will not regard any other person (whether or not a recipient of this

document) as a client in relation to the Rights Issue and will not be responsible for providing the protections afforded to the clients of BNP PARIBAS

nor for giving advice in relation to the Rights Issue or any transaction or arrangement referred to, or information contained in, this document.

Santander, which is authorised by the Bank of Spain and is enrolled in the Administrative Register of the Bank of Spain with number 0049, and is subject

to supervision by the ECB and by the Bank of Spain, and subject to limited regulation in the United Kingdom by the FCA and the PRA, is acting

exclusively for AVEVA and no one else in connection with the Rights Issue and will not regard any other person (whether or not a recipient of this

document) as a client in relation to the Rights Issue and will not be responsible for providing the protections afforded to the clients of Santander nor

for giving advice in relation to the Rights Issue or any transaction or arrangement referred to, or information contained in, this document.

LR 13.4.1(4)

Annex 3, 1.1

Annex 3, 1.2

Annex 12, 1.1

Annex 12, 1.2

Annex 12, 10.1

Annex 12, 10.1

2


Apart from the responsibilities and liabilities, if any, which may be imposed on Lazard, Numis, J.P. Morgan Cazenove, Barclays, BNP PARIBAS and

Santander by the FSMA or the regulatory regime established thereunder or under the regulatory regime of any jurisdiction where the exclusion of

liability under the relevant regulatory regime would be illegal, void or unenforceable, none of Lazard, Numis, J.P. Morgan Cazenove, Barclays, BNP

PARIBAS or Santander, nor any of their respective affiliates, directors, officers, employees or advisers, accepts any responsibility or liability whatsoever

nor makes any representation or warranty, express or implied concerning the contents of this document, including its accuracy, completeness or

verification, or regarding the legality of any investment in the Rights Issue Shares, the Nil Paid Rights or the Fully Paid Rights by any person under the

laws applicable to such person, or concerning any other statement made or purported to be made by AVEVA, or on AVEVA’s behalf, or by Lazard,

Numis, J.P. Morgan Cazenove, Barclays, BNP PARIBAS and/or Santander, or on behalf of Lazard, Numis, J.P. Morgan Cazenove, Barclays, BNP

PARIBAS and/or Santander in connection with AVEVA, the Rights Issue Shares, the Nil Paid Rights, the Fully Paid Rights, the Rights Issue or the

Acquisition and nothing in this document is or shall be relied upon as a promise or representation in this respect, whether as to the past, present or future.

To the fullest extent permitted by law, Lazard, Numis, J.P. Morgan Cazenove, Barclays, BNP PARIBAS and Santander and their respective affiliates,

directors, officers, employees and advisers accordingly disclaim all and any duty, liability or responsibility whatsoever (whether direct or indirect,

whether in contract, in tort, under statute or otherwise) which it might otherwise have in respect of this document or any such statement.

In connection with the Rights Issue, the Underwriters and any of their respective affiliates may, in accordance with applicable legal and regulatory

provisions, take up a portion of the Rights Issue Shares, the Nil Paid Rights and the Fully Paid Rights as a principal position and in that capacity may

retain, purchase, sell, offer to sell or otherwise deal for their own account in the securities of the Company and related or other securities and instruments

(including Rights Issue Shares, Nil Paid Rights and Fully Paid Rights) and may offer or sell such securities other than in connection with the Rights

Issue. Accordingly, references in this document to Rights Issue Shares, Nil Paid Rights and Fully Paid Rights being offered should be read as including

any offering of Rights Issue Shares, Nil Paid Rights and Fully Paid Rights to any of the Underwriters or any of their respective affiliates acting in such

capacity. In addition, certain Underwriters or their affiliates may enter into financing arrangements (including margin loans) with investors in connection

with which such Underwriters (or their affiliates) may from time to time acquire, hold or dispose of Rights Issue Shares, Nil Paid Rights and Fully Paid

Rights. Except as required by applicable law or regulation, none of the Underwriters nor their respective affiliates propose to make any public disclosure

in relation to such transactions.

In the event that the Underwriters acquire Rights Issue Shares which are not taken up by Qualifying Shareholders, the Underwriters may co-ordinate

disposals of such shares in accordance with applicable law and regulation. Except as required by applicable law or regulation, the Underwriters and

their respective affiliates do not propose to make any public disclosure in relation to such transactions.

Each of Numis, J.P. Morgan Cazenove, Barclays, BNP PARIBAS and Santander and their respective affiliates may have engaged in transactions with,

and provided various commercial banking, investment banking, financial advisory transactions and services in the ordinary course of their business with

the AVEVA Group and/or its affiliates for which they would have received customary fees and commissions. In addition, each of Barclays, BNP Paribas

Fortis SA/NV and J.P. Morgan Securities plc are FA Lenders (as defined herein) and each such entity may have performed its own credit analysis on

the Company. The Company does not intend to use proceeds from the Rights Issue to repay bank debt. The Rights Issue is fully committed and

underwritten and the Company does not expect to draw down under the Bridge Facilities and the commitments under the Bridge Facilities will be

automatically cancelled upon completion of the Rights Issue. Each of Numis, J.P. Morgan Cazenove, Barclays, BNP PARIBAS and Santander and their

respective affiliates may provide such services to the AVEVA Group and/or its affiliates in the future.

In the ordinary course of their various business activities, each of Numis, J.P. Morgan Cazenove, Barclays, BNP PARIBAS and Santander and their

respective affiliates may hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial

instruments (which may include bank loans and/or credit default swaps) in the AVEVA Group and/or its affiliates for their own account and for the

accounts of their customers and may at any time hold long and short positions in such securities and instruments. In addition, certain of Numis,

J.P. Morgan Cazenove, Barclays, BNP PARIBAS and Santander or their affiliates are, or may in the future be, lenders, and in some cases agents or

managers for the lenders, under certain of the AVEVA Group’s credit facilities and other credit arrangements, or its affiliates’. In their capacity as

lenders, such lenders may, in the future, seek a reduction of a loan commitment to the AVEVA Group or its affiliates, or impose incremental pricing or

collateral requirements with respect to such facilities or credit arrangements, in the ordinary course of business. In addition, certain of Numis,

J.P. Morgan Cazenove, Barclays, BNP PARIBAS and Santander or their affiliates that have a lending relationship with the AVEVA Group or its affiliates

may routinely hedge their credit exposure to the AVEVA Group or its affiliates consistent with their customary risk management policies; a typical

hedging strategy would include Numis, J.P. Morgan Cazenove, Barclays, BNP PARIBAS and/or Santander or their affiliates hedging such exposure by

entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in the Ordinary Shares and/or

the Rights Issue Shares.

Notice to Overseas Shareholders

The Nil Paid Rights, the Fully Paid Rights and the New AVEVA Shares have not been and will not be registered under the Securities Act, or under any

securities laws of any state or other jurisdiction of the United States, or any relevant laws of any of the Excluded Territories, and may not be offered,

sold, pledged, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States (except pursuant to an

exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities

laws of any state of other jurisdiction of the United States) or any of the Excluded Territories (except pursuant to applicable exemptions). There will be

no public offer of the Nil Paid Rights, the Fully Paid Rights, the Provisional Allotment Letters or the New AVEVA Shares in the United States or any

of the Excluded Territories.

The Nil Paid Rights, the Fully Paid Rights, the Provisional Allotment Letters and the New AVEVA Shares have not been approved, disapproved or

recommended by the SEC, any state securities commission in the United States or any other US regulatory authority, nor have any of the foregoing

authorities passed upon or endorsed the merits of the Rights Issue or confirmed the accuracy or completeness or determined the adequacy of this

document. Any representation to the contrary is a criminal offence in the United States.

Subject to certain limited exceptions, neither this document nor the Provisional Allotment Letter constitutes, or will constitute, or forms part of any offer

or invitation to sell, issue or apply for, or any solicitation of any offer to purchase, subscribe for, or take up entitlements to the Rights Issue Shares, Nil

Paid Rights or Fully Paid Rights to any person with a registered address, or who is resident or located in, the United States. Notwithstanding the

foregoing, the Nil Paid Rights may be offered and delivered to, and the Fully Paid Rights and the Rights Issue Shares may be offered to and acquired

by, a limited number of Qualifying Shareholders whom AVEVA reasonably believes to be “qualified institutional buyers”, in offerings exempt from the

registration requirements of the Securities Act. Any person in the United States who obtains a copy of this document or a Provisional Allotment Letter

and who is not a QIB is required to disregard them. QIBs that satisfy the Company as to their status may exercise the Nil Paid Rights and the Fully Paid

Rights by delivering a properly completed Provisional Allotment Letter to the Receiving Agent in accordance with the procedures set out in this

document. Permitted US Shareholders must also complete, execute and return to the Company, a QIB Representation Letter as described in Section 7.2

of Part IV (Terms and Conditions of the Rights Issue) of this document, and may be required to make certain certifications in the Provisional Allotment

Letter for the Nil Paid Rights and the Fully Paid Rights.

The Underwriters may arrange for the offer of Rights Issue Shares not taken up in the Rights Issue to be offered and sold only: (a) outside the United

States in accordance with Regulation S under the Securities Act; or (b) inside the United States to persons reasonably believed to be “qualified

institutional buyers” (“QIB”) within the meaning of Rule 144A under the Securities Act in reliance on an exemption from the registration requirements

of the Securities Act. Prospective investors are hereby notified that sellers of the Nil Paid Rights, the Fully Paid Rights, or the Rights Issue Shares may

be relying on the exemption from the registration requirements of Section 5 of the Securities Act provided by Rule 144A thereunder.

3


In addition, until 40 days after the commencement of the Rights Issue, an offer, sale or transfer of the Rights Issue Shares, the Nil Paid Rights, or the

Fully Paid Rights within the United States by a dealer (whether or not participating in the Rights Issue) may violate the registration requirements of the

Securities Act.

Subject to certain exceptions, neither this document nor any accompanying documents (including the Provisional Allotment Letter) will be posted to

any person with a registered address in the United States or in any of the Excluded Territories. All Overseas Shareholders and any person (including,

without limitation, a nominee, custodian or trustee) who has a contractual or legal obligation to forward this document or any Provisional Allotment

Letter, if and when received, or any other document to a jurisdiction outside the United Kingdom should read Section 7 of Part IV (Terms and Conditions

of the Rights Issue) of this document.

The Company is not subject to the periodic reporting requirements of the US Securities Exchange Act of 1934, as amended (the “Exchange Act”). For

so long as the Rights Issue Shares are “restricted securities” within the meaning of Rule 144A(a)(3) under the Securities Act, the Company agrees to

furnish upon the request of a Shareholder or a prospective purchaser from any Shareholder the information required to be delivered under Rule

144A(d)(4) of the Securities Act if at the time of such request it is not a reporting company under section 13 or section 15(d) of the Exchange Act and

is not exempt from reporting pursuant to Rule 12g3-2(b) thereunder.

Notice to Canadian investors

No prospectus has been filed with any securities commission or similar regulatory authority in Canada in connection with the offer and sale of the Nil

Paid Rights, the Fully Paid Rights and the New AVEVA Shares. No securities commission or similar regulatory authority in Canada has reviewed or in

any way passed upon this document or on the merits of the Nil Paid Rights, the Fully Paid Rights and the New AVEVA Shares and any representation

to the contrary is an offence. The offer and sale of the Nil Paid Rights, the Fully Paid Rights and the New AVEVA Shares in Canada is being made on

a private placement basis only and is exempt from the requirement that the issuer prepares and files a prospectus under applicable Canadian securities

laws. Any resale of Nil Paid Rights, the Fully Paid Rights and the New AVEVA Shares acquired by a Canadian investor in this offering must be made

in accordance with applicable Canadian securities laws, which resale restrictions may under certain circumstances apply to resales of the Nil Paid

Rights, the Fully Paid Rights and the New AVEVA Shares outside of Canada.

As applicable, each Canadian investor who purchases the Nil Paid Rights, the Fully Paid Rights and the New AVEVA Shares will be deemed to have

represented to the issuer, the underwriters and to each dealer from whom a purchase confirmation is received, as applicable, that the investor: (a) is

purchasing as principal, or is deemed to be purchasing as principal in accordance with applicable Canadian securities laws, for investment only and not

with a view to resale or redistribution; (b) is an “accredited investor” as such term is defined in section 1.1 of National Instrument 45-106 Prospectus

Exemptions or, in Ontario, as such term is defined in section 73.3(1) of the Securities Act (Ontario); and (c) is a “permitted client” as such term is

defined in section 1.1 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this document

(including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser

within the time limit prescribed by securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions

of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), this offering is conducted pursuant to any exemption

from the requirement that Canadian investors be provided with certain underwriter conflicts of interest disclosure that would otherwise be required

pursuant to subsection 2.1(1) of NI 33-105.

Notice to Swiss investors

The Nil Paid Rights, the Fully Paid Rights and the New AVEVA Shares may not be publicly offered directly or indirectly in or into Switzerland within

the meaning of the Swiss Financial Services Act (the “FinSA”), except under the following exemptions under the FinSA:

(a) to any investor that qualifies as a professional client within the meaning of the FinSA;

(b) to fewer than 500 investors (other than professional clients within the meaning of the FinSA); and

(c) in any other circumstances falling within article 36 of the FinSA,

provided, in each case, that no such offer of the Nil Paid Rights, the Fully Paid Rights and the New AVEVA Shares referred to in (a) through (c) above

shall require the publication of a prospectus for the Nil Paid Rights, the Fully Paid Rights and the New AVEVA Shares pursuant to the FinSA.

The Nil Paid Rights, the Fully Paid Rights and the New AVEVA Shares will not be listed or admitted to trading on any trading venue in Switzerland.

Neither this document nor any other offering or marketing material relating to the Nil Paid Rights, the Fully Paid Rights and the New AVEVA Shares

constitutes a prospectus pursuant to the FinSA, and neither this document nor any other offering or marketing material relating to the Nil Paid Rights,

the Fully Paid Rights and the New AVEVA Shares may be distributed or otherwise made available in Switzerland in a manner which would require the

publication of a prospectus pursuant to the FinSA in Switzerland.

Notice to all investors

Any reproduction or distribution of this document or the Provisional Allotment Letters, in whole or in part, and any disclosure of its contents or use of

any information for any purpose other than in considering an investment in the Nil Paid Rights, the Fully Paid Rights or the Rights Issue Shares is

prohibited. By accepting delivery of this document, each offeree of the Nil Paid Rights, the Fully Paid Rights and/or the Rights Issue Shares agrees to

the foregoing.

In making an investment decision, each investor must rely on their own examination, analysis and enquiry of the Company and the terms of the Rights

Issue, including the merits and risks involved.

The contents of this document or any subsequent communication from AVEVA, Lazard, Numis, J.P. Morgan Cazenove, Barclays, BNP PARIBAS or

Santander or any of their respective affiliates, officers, directors, employees or agents are not to be construed as legal, financial or tax advice. Each

prospective investor should consult his, her or its own legal adviser, financial adviser or tax adviser for legal, financial or tax advice.

The distribution of this document and/or the Provisional Allotment Letters and/or any other public materials relating to the Rights Issue and/or the

transfer of the Nil Paid Rights, the Fully Paid Rights and/or the Rights Issue Shares into jurisdictions other than the United Kingdom may be restricted

by law. Persons into whose possession these documents come should inform themselves about and observe any such restrictions. Any failure to comply

with these restrictions may constitute a violation of the securities laws of any jurisdiction. In particular, such documents should not be distributed,

forwarded to or transmitted in or into the United States or any Excluded Territory. No action has been taken by the Company or by the Underwriters

that would permit an offer of the Rights Issue Shares or rights thereto or possession or distribution of the Provisional Allotment Letters or this document

or any other offering or publicity material or the Nil Paid Rights, or the Fully Paid Rights in any jurisdiction where action for that purpose is required,

other than in the United Kingdom. The Nil Paid Rights, the Fully Paid Rights, the Provisional Allotment Letters and the Rights Issue Shares are not

transferable except in accordance with, and the distribution of this document is subject to, the restrictions set out in Section 7 of Part IV (Terms and

Conditions of the Rights Issue) of this document.

4


None of AVEVA, Lazard or the Underwriters, nor any of their respective affiliates, directors, officers, employees or advisers, is making any

representation to any offeree, subscriber or acquirer of the New AVEVA Shares, the Nil Paid Rights or the Fully Paid Rights regarding the legality of

an investment in the New AVEVA Shares, the Nil Paid Rights or the Fully Paid Rights by such offeree, subscriber or acquirer under the law applicable

to such offeree, subscriber or acquirer. Each investor should consult with his or its own advisers as to the legal, tax, business, financial and related

aspects of an investment in the New AVEVA Shares, the Nil Paid Rights or the Fully Paid Rights.

Investors also acknowledge that: (a) they have not relied on the Underwriters (or any of their affiliates) in connection with any investigation of the

accuracy of any information contained in this document or their investment decision; (b) they have relied only on the information contained in this

document in making their relevant decision; and (c) no person has been authorised to give any information or to make any representation concerning

the AVEVA Group or the Nil Paid Rights, the Fully Paid Rights, the Rights Issue Shares or the Rights Issue (other than as contained in this document)

and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Company or the

Underwriters (or any of their affiliates).

No person has been authorised to give any information or make any representations other than those contained in this document and, if given or made,

such information or representations must not be relied upon as having been authorised by the Company. Without prejudice to any obligation of the

Company to publish a supplement to the prospectus pursuant to Article 23 of the Prospectus Regulation, Article 18 of Commission Delegated Regulation

(EU) 2019/979 and PRR 3.4.1 of the Prospectus Regulation Rules, neither the delivery of this document nor any acquisition or sale made hereunder

shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this document or

that the information in this document is correct at any time after this date. AVEVA will comply with its obligation to publish supplements to the

prospectus containing further updated information required by law or by any regulatory authority but assumes no further obligation to publish additional

information.

The Company will publish a supplement to this prospectus if a significant new factor, material mistake or material inaccuracy relating to the information

in this document that may affect the assessment of the securities and which arises or is noted between the time when this prospectus was approved and

the close of the offer of Rights Issue Shares. This document and any supplement will be made public in accordance with the Prospectus Regulation by

publication on the Company’s website at https://investors.aveva.com/. In accordance with the Prospectus Regulation, if a supplement to the prospectus

is published, prospective investors may have a right to withdraw their acceptances, as referred to in section 6 of Part IV (Terms and Conditions of the

Rights Issue).

Without limitation, the contents of the AVEVA Group’s websites (other than the information as set out in Part XV (Documents Incorporated by

Reference) do not form part of this document.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as

amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing

measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or

otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto,

the Rights Issue Shares, the Nil Paid Rights and the Fully Paid Rights have been subject to a product approval process, which has determined that such

securities are: (x) compatible with an end target market of investors who meet the criteria of retail and professional clients and eligible counterparties,

each as defined in MiFID II; and (y) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market

Assessment”).

Notwithstanding the Target Market Assessment, distributors should note that: the price of the Rights Issue Shares, the Nil Paid Rights and the Fully

Paid Rights may decline and investors could lose all or part of their investment, the Rights Issue Shares, the Nil Paid Rights and the Fully Paid Rights

offer no guaranteed income and no capital protection; and an investment in the Rights Issue Shares, the Nil Paid Rights and the Fully Paid Rights is

compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate

financial or other adviser) are capable of evaluation the merits and risks of such an investment and who have sufficient resources to be able to bear any

losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling

restrictions in relation to the Rights Issue. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the Underwriters will only

procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of

MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to

the Rights Issue Shares, the Nil Paid Rights and the Fully Paid Rights.

Each distributor is responsible for undertaking its own Target Market Assessment in respect of the Rights Issue Shares, the Nil Paid Rights and the Fully

Paid Rights and determining appropriate distribution channels.

This document is dated 6 November 2020.

5


TABLE OF CONTENTS

Page

SUMMARY 7

RISK FACTORS 14

IMPORTANT INFORMATION 44

EXPECTED TIMETABLE OF PRINCIPAL EVENTS 49

SHARE CAPITAL AND RIGHTS ISSUE STATISTICS 51

DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS 52

PART I LETTER FROM THE CHAIRMAN OF AVEVA GROUP PLC 54

PART II PRINCIPAL TERMS OF THE ACQUISITION 72

PART III QUESTIONS AND ANSWERS ON THE RIGHTS ISSUE 78

PART IV TERMS AND CONDITIONS OF THE RIGHTS ISSUE 86

PART V INFORMATION ON THE AVEVA GROUP 120

PART VI INFORMATION ON THE OSISOFT GROUP 132

PART VII OPERATING AND FINANCIAL REVIEW OF THE AVEVA GROUP 139

PART VIII HISTORICAL FINANCIAL INFORMATION OF THE AVEVA GROUP 158

PART IX OPERATING AND FINANCIAL REVIEW OF THE OSISOFT GROUP 160

PART X HISTORICAL FINANCIAL INFORMATION OF THE OSISOFT GROUP 172

PART XI UNAUDITED PRO FORMA FINANCIAL INFORMATION ON

THE ENLARGED GROUP 220

PART XII TAXATION 230

PART XIII DIRECTORS AND CORPORATE GOVERNANCE 242

PART XIV ADDITIONAL INFORMATION 259

PART XV DOCUMENTS INCORPORATED BY REFERENCE 294

PART XVI DEFINITIONS 296

NOTICE OF GENERAL MEETING 306

6


SUMMARY

Section A – Introductions and warnings

AVEVA Group plc ordinary shares, ISIN: GB00BBG9VN75

The issuer is AVEVA Group plc, incorporated in England and Wales with registered number02937296.

The Company’s registered office is at High Cross, Madingley Road, Cambridge, CB3 0HB.The telephone number is +44 (0)1223 556 655 and the legal entity identifier number of theCompany is 213800XHATUM2LFMKG16.

This document has been approved by the FCA, as competent authority in the UnitedKingdom, under the Prospectus Regulation.

The head office of the FCA is at 12 Endeavour Square, London, E20 1JN. The telephonenumber of the FCA is +44 (0)20 7066 1000.

Date of approval of the prospectus 6 November 2020

Warnings This summary should be read as an introduction to the prospectus. Any decision to investin the securities should be based on a consideration of the prospectus as a whole by theinvestor, including the information incorporated by reference. The investor could lose all orpart of the invested capital. Where a claim relating to the information contained in aprospectus is brought before a court, the plaintiff investor might, under national law, haveto bear the costs of translating the prospectus before the legal proceedings are initiated.Civil liability attaches only to those persons who have tabled the summary including anytranslation thereof, but only where the summary is misleading, inaccurate or inconsistent,when read together with the other parts of the prospectus, or where it does not provide,when read together with the other parts of the prospectus, key information in order to aidinvestors when considering whether to invest in such securities.

Section B – Key information on the issuer

Who is the issuer of the securities?

AVEVA Group plc is a public limited company domiciled and incorporated in England andWales under the Companies Act with registered number 02937296. The principal legislationunder which the Company operates is the Companies Act and regulations thereunder.

The issuer’s principal activities AVEVA Group plc is a global leader in engineering and industrial software, founded morethan 50 years ago and headquartered in Cambridge, UK, with offices across 40 countries.AVEVA is recognised as one of the world’s leading engineering, planning and operations,asset performance, and monitoring and control software companies, providing mission-critical software solutions to many of the world’s largest companies in the process, batchand hybrid industries.

On 1 March 2018, AVEVA Group plc combined with the Schneider Electric SoftwareBusiness to create a global leader in industrial software.

On 25 August 2020, amongst others, AVEVA Group plc, OSIsoft and the Sellers enteredinto an agreement for the acquisition of OSIsoft by the AVEVA Group. The OSIsoft Group’smain product is the PI System, a proprietary, vendor-agnostic data management softwarewhich enables customers to capture, store, analyse and share real-time industrial sensor-based data with business systems across all operations. In the twelve months ended 31 July2020, OSIsoft had revenue of $491.3 million and Adjusted EBIT of $155.6 million.

As at 5 November 2020 (being the Latest Practicable Date), in so far as is known to theCompany by virtue of notifications made pursuant to the Companies Act and/or Chapter 5of the Disclosure Guidance and Transparency Rules, the following persons were interested,directly or indirectly, in three per cent. or more of the Company’s issued share capital orvoting rights:

Number Per cent.

of Existing of issued

Ordinary Shares(1) share capital ––––––––––––––– ––––––––––––

Schneider Electric 97,169,655 60.1Aberdeen Asset Management 6,645,729 4.1Artisan Partners 6,380,592 3.9BlackRock 4,893,254 3.0

Notes:

(1) Includes both direct and indirect shareholdings.

None of the major shareholders referred to above have different voting rights from othershareholders of the Company.

Schneider Electric is a “controlling shareholder” of the Company for the purposes of theListing Rules. Schneider Electric and the Company are party to the Relationship Agreementwhich records the understanding of the parties regarding the terms of their relationship.

As at 5 November 2020 (being the Latest Practicable Date), the Company was not aware ofany other person or persons who, directly or indirectly, jointly or severally, exercise or couldexercise control over the Company.

Name and international securitiesidentification number (ISIN) of the securities

Identity and contact details of thecompetent authority approving theprospectus

The issuer’s major shareholders, includingwhether it is directly or indirectly owned orcontrolled and by whom

Identity and contact details of the issuer,including its legal entity identifier (LEI)

The issuer’s domicile and legal form, itsLEI, the law under which it operates and itscountry of incorporation

7

Craig Hayman (Chief Executive Officer)James Kidd (Deputy Chief Executive Officer and Chief Financial Officer)

The identity of the issuer’s statutory auditors Ernst & Young LLP, 1 More London Place, London, SE1 2AF

Key financial information What is the key financial information regarding the issuer?

AVEVA Group

The tables below set out the AVEVA Group’s summary financial information for the periodsindicated. The financial information has been extracted without material adjustment from theaudited and unaudited financial statements of the AVEVA Group for the relevant periods.

Summary Consolidated Income Statement Data

FY H1 2021 H1 2020 FY FY 2018 (unaudited) (unaudited) 2020 2019 (restated) ––––––––– ––––––––– ––––––– ––––––– –––––––

(£, millions)

Revenue 332.6 391.9 833.8 766.6 486.3Cost of sales (83.9) (92.5) (190.7) (193.2) (150.8) ––––––––– ––––––––– ––––––– ––––––– –––––––Gross profit 248.7 299.4 643.1 573.4 335.5Operating expensesResearch and development costs (92.7) (92.0) (184.6) (178.0) (116.3)Selling and administrative

expenses (181.5) (180.3) (367.8) (341.9) (181.3)Net impairment loss on financial (0.8) (1.6) (7.6) (6.3) (1.2)

assetsOther income 3.1(1) – 11.9 – –Total operating expenses (271.9) (273.9) (548.1) (526.2) (298.8)(Loss)/Profit from operations (23.2) 25.5 95.0 47.2 36.7Other income – – – – 1.0Finance revenue 0.1 0.1 0.3 0.2 0.5Finance expense (1.1) (1.6) (3.3) (0.7) (3.7)(Loss)/Profit before tax from (24.2) 24.0 92.0 46.7 34.5

continuing operationsIncome tax credit/(expense) 3.9 (6.0) (22.2) (12.9) 6.0(Loss)/Profit for the year (20.3) 18.0 69.8 33.8 40.5

attributable to equity holders of the parent

Summary Consolidated Balance Sheet Data

As at 30 September(unaudited) As at 31 March

––––––––––––––––––––– ––––––––––––––––––––––––––– 2018 2021 2020 2020 2019 (restated) ––––––––– ––––––––– ––––––– ––––––– –––––––

(£, millions)

AssetsTotal non-current assets 1,911.2 1,983.3 1,956.0 1,923.0 1992.9Total current assets 452.0 428.3 519.4 477.8 416.3 ––––––––– ––––––––– ––––––– ––––––– –––––––Total assets 2,363.2 2,411.6 2,475.4 2,400.8 2,409.2 ––––––––– ––––––––– ––––––– ––––––– –––––––LiabilitiesTotal current liabilities 304.3 326.0 349.0 346.2 311.0Total non-current liabilities 186.2 177.2 184.7 130.1 143.5 ––––––––– ––––––––– ––––––– ––––––– –––––––Total liabilities 490.5 503.2 533.7 476.3 454.5 ––––––––– ––––––––– ––––––– ––––––– –––––––Equity 1,872.7 1,908.4 1,941.7 1,924.5 1954.7 ––––––––– ––––––––– ––––––– ––––––– –––––––Total equity and liabilities 2,363.2 2,411.6 2,475.4 2,400.8 2,409.2 ––––––––– ––––––––– ––––––– ––––––– –––––––Summary Consolidated Statement of Cash Flows Data FY H1 2021 H1 2020 FY FY 2018 (unaudited) (unaudited) 2020 2019 (restated) ––––––––– ––––––––– ––––––– ––––––– –––––––

(£, millions)

Net cash generated from 12.4 15.9 122.1 136.7 62.6operating activities

Net cash flows (used in)/from (7.3) (30.2) (39.9) (27.2) 133.0investing activities

Net cash flows used in (37.8) (37.8) (93.6) (86.0) (113.3)financing activities

Net (decrease)/increase in (32.7) (52.1) (11.4) 23.5 82.3cash and cash equivalents

Opening cash and cash equivalents 114.5 127.2 127.2 105.6 22.4Net foreign exchange difference (2.0) 3.5 (1.3) (1.9) 0.9Closing cash and cash equivalents 79.8 78.6 114.5 127.2 105.6

The identity of the issuer’s key managingdirectors

8


OSIsoft Group

The tables below set out the OSIsoft Group’s summary financial information for the periodsindicated. The financial information has been extracted without material adjustment fromthe historical financial information of the OSIsoft Group for the relevant periods.

Summary Statement of Comprehensive Income Data

OSIsoft OSIsoft 2020 2019 Interim Interim Period Period OSIsoft OSIsoft OSIsoft (unaudited) (unaudited) FY 2019 FY 2018 FY 2017 ––––––––– ––––––––– ––––––– ––––––– –––––––

($, millions)Revenue 245.0 223.7 470.0 439.1 422.7Cost of sales (50.0) (56.7) (93.9) (84.8) (81.9)Gross profit 195.0 167.0 376.1 354.3 340.8Operating expensesResearch and development

costs (14.5) (14.7) (43.8) (39.4) (42.2)Selling and administrative

expenses (122.0) (123.5) (207.7) (206.6) (190.3)Net impairment gain/(loss) on (0.5) (1.2) 0.6 1.5 (4.4)

financial assetsTotal operating expenses (137.0) (139.4) (250.9) (244.5) (236.9)Profit from operations 58.0 27.6 125.2 109.8 104.0Finance revenue 0.4 0.2 0.2 0.1 0.2Finance expense (2.3) (2.0) (3.5) (3.2) (3.3)Profit before tax from 56.1 25.8 121.9 106.7 100.8

continuing operationsIncome tax expense (4.1) (3.3) (7.2) (6.7) (4.9)Profit and total comprehensive 52.0 22.5 114.7 100.0 95.9

income for the period/year

Summary Consolidated Balance Sheet Data

As at 31 July As at 31 December As at ––––––––––––––––––– –––––––––––––––––––––––

2020 2019 1 January (unaudited) (unaudited) 2019 2018 2017 2017 –––––––– –––––––– ––––––– ––––––– ––––––– –––––––

($, millions)

AssetsTotal non-current assets 117.7 113.7 125.6 111.3 112.3 116.4Total current assets 165.6 125.4 268.1 233.0 217.2 174.9 –––––––– –––––––– ––––––– ––––––– ––––––– –––––––Total assets 283.3 239.1 393.7 344.3 329.5 291.3 –––––––– –––––––– ––––––– ––––––– ––––––– –––––––LiabilitiesTotal current liabilities 187.9 162.3 227.9 198.9 189.7 169.1Total non-current

liabilities 59.4 52.9 64.7 59.0 53.4 55.6 –––––––– –––––––– ––––––– ––––––– ––––––– –––––––Total liabilities 247.3 215.2 292.6 257.9 243.1 224.7 –––––––– –––––––– ––––––– ––––––– ––––––– –––––––Equity 36.0 23.9 101.1 86.4 86.4 66.6 –––––––– –––––––– ––––––– ––––––– ––––––– –––––––Total equity and

liabilities 283.3 239.1 393.7 344.3 329.5 291.3 –––––––– –––––––– ––––––– ––––––– ––––––– –––––––Summary Consolidated Statement of Cash Flows Data

OSIsoft OSIsoft 2020 2019 Interim Interim Period Period OSIsoft OSIsoft OSIsoft (unaudited) (unaudited) FY 2019 FY 2018 FY 2017 ––––––––– ––––––––– ––––––– ––––––– –––––––

($, millions)Net cash generated from 122.5 91.9 164.9 128.6 79.0

operating activitiesNet cash flows used in investing (20.4) (7.6) (14.1) (4.3) (2.9)

activitiesNet cash flows used in financing (124.0) (88.7) (107.8) (109.8) (86.7)

activitiesNet increase/(decrease) in cash (21.9) (4.5) 43.0 14.5 (10.6)and cash equivalentsOpening cash and cash 82.7 39.7 39.7 25.2 35.8

equivalentsClosing cash and cash 60.8 35.2 82.7 39.7 25.2

equivalents

9


Pro forma financial information Selected unaudited pro forma financial information which illustrates the impact of theAcquisition, the Rights Issue and the drawdown of the Term Facility on the incomestatement of AVEVA Group plc for FY 2020 as if they had taken place at the beginning ofthat financial year, and on the net assets of AVEVA Group plc as at 30 September 2020 asif they had taken place at that date.

The unaudited pro forma financial information has been prepared for illustrative purposesonly. The hypothetical financial position and results included in the pro forma financialinformation may differ from the Enlarged Group’s actual financial position or results.

Adjustments–––––––––––––––––––––––––––

OSIsoft Pro Forma

AVEVA for for OSIsoft Debt Acquisition Enlarged FY 2020(1) FY 2019(2) Financing adjustments Group ––––––––– ––––––––– –––––––– –––––––––– ––––––––

(£, millions)Revenue 833.8 368.2 – – 1,202.0Cost of sales (190.7) (73.6) – – (264.3)Gross profit 643.1 294.6 – – 937.7Operating expensesResearch and development (184.6) (34.3) – – (218.9)

costsSelling and administrative (367.8) (162.7) – (40.1) (570.6)

expensesNet impairment loss on (7.6) 0.5 – – (7.1)

financial assetsOther income 11.9 – – – 11.9Total operating expenses (548.1) (196.5) – (40.1) (784.7)Profit/loss from operations 95.0 98.1 – (40.1) 153.0Finance revenue 0.3 0.2 – – 0.5Finance expense (3.3) (2.7) (24.2) – (30.2)Profit before tax 92.0 95.5 (24.2) (40.1) 123.2Income tax expense (22.2) (5.6) 4.8 (14.5) (37.6)Profit for the year 69.8 89.8 (19.4) (54.2) 85.6

Notes:

(1) The income statement of AVEVA for FY 2020 has been extracted, without material adjustment, from

the audited consolidated financial statements of AVEVA for FY 2020.

(2) The income statement of OSIsoft for OSIsoft FY 2019 has been extracted, without material adjustment,

from the historical financial information of the OSIsoft Group, which has been prepared in accordance

with IFRS as adopted by the EU and AVEVA Group’s accounting policies for FY 2021. Amounts have

been converted from US dollars to pounds sterling at an average exchange rate for OSIsoft FY 2019 of

$1.2766: £1.

Adjustments––––––––––––––––––––––––––––––––––

AVEVA Net OSIsoft Net Assets as at Assets as Pro 30 September at 31 July Forma Acquisi-Pro Forma

2020(1) 2020(2) Equity Debt tion Enlarged (unaudited) (unaudited) Financing Financingadjustment Group ––––––––– ––––––––– –––––––– –––––––– –––––––– ––––––––

(£, millions)AssetsTotal non-current

assets 1,911.2 89.7 – – 3,844.8 5,845.7Total current assets 452.0 126.2 2,806.9 685.3 (3,445.8) 624.5 –––––––– –––––––– ––––––– ––––––– ––––––– –––––––Total assets 2,363.2 216.0 2,806.9 685.3 398.9 6,470.2 –––––––– –––––––– ––––––– ––––––– ––––––– –––––––LiabilitiesTotal current liabilities 304.3 143.2 – – (10.5) 437.0Total non-current 186.2 45.3 – 695.4 – 926.9

liabilities –––––––– –––––––– ––––––– ––––––– ––––––– –––––––Total liabilities 490.5 188.5 – 695.4 (10.5) 1,363.9 –––––––– –––––––– ––––––– ––––––– ––––––– –––––––Net assets 1,872.7 27.4 2,806.9 (10.1) 409.4 5,106.3 –––––––– –––––––– ––––––– ––––––– ––––––– –––––––Notes:

(1) The AVEVA Group’s financial information has been extracted, without material adjustment, from the

AVEVA Group H1 2021 Interim Results Statement.

(2) OSIsoft Group’s financial information has been extracted, without material adjustment, from the

OSIsoft Group unaudited condensed consolidated interim financial information, which has been

prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as

adopted by the EU and AVEVA Group’s accounting policies for FY 2021. Amounts have been converted

from US dollars to pounds sterling using the closing spot exchange rate on 31 July 2020 of

$1.3117: £1.00.

10


Not applicable. The audit reports on the historical financial information relating to AVEVAincorporated by reference into this document are not qualified. The accountant’s report onthe historical financial information relating to OSIsoft contained in this document is notqualified.

What are the key risks that are specific to the issuer?

Key information on the key risks relating to the Enlarged Group or its industry are:

• the ultimate impact of the COVID-19 pandemic on the AVEVA Group, the OSIsoftGroup and, following the Acquisition, the Enlarged Group, is unclear, and willdepend on factors which are outside their control, such as the duration and extent ofthe pandemic, its severity, actions taken by governments to contain the virus oraddress its impact, the impact on and responses of their customers and the extent andeffectiveness of economic stimulus packages in the key jurisdictions where theAVEVA Group, the OSIsoft Group and, following the Acquisition, the EnlargedGroup, may continue to operate and to what extent normal economic conditionsresume;

• governmental restrictions imposed due to the COVID-19 pandemic may negativelyimpact the productivity of employees of the AVEVA Group and, following theAcquisition, the Enlarged Group;

• despite the implementation of cybersecurity programmes, the IT environment of theAVEVA Group, the OSIsoft Group and, following the Acquisition, the EnlargedGroup may remain subject to hacking or other cybersecurity threats, which maydisrupt the business and operations of the AVEVA Group, the OSIsoft Group and,following the Acquisition, the Enlarged Group;

• the AVEVA Group’s and, following the Acquisition, the Enlarged Group’s businesswill depend to a significant degree on companies engaged in traditionally cyclicalindustries, such as oil and gas and mining;

• the Enlarged Group may experience difficulties in integrating the existing businessescarried on by the AVEVA Group and the OSIsoft Group and may face difficulties inrealising the revenue and cost synergies which are anticipated;

• the markets in which the AVEVA Group and the OSIsoft Group operate arecompetitive and success in those markets depends on a variety of factors. Shouldthey or following the Acquisition, the Enlarged Group not be able to competeeffectively against their competitors then they are likely to lose market share whichmay result in decreased sales and poor financial performance;

• the AVEVA Group and the OSIsoft Group operate and, following the Acquisition, theEnlarged Group will operate globally and, as a result, will be subject to associatedrisks and uncertainties;

• the AVEVA Group’s and, following the Acquisition, the Enlarged Group’s researchand development efforts may not produce successful new products or enhancementsto existing products that result in significant revenue, cost savings or other benefitsin the near future, due to significant costs associated with research and developmentin new and disruptive technologies;

• the software products of the AVEVA Group, the OSIsoft Group and, following theAcquisition, the Enlarged Group, may be compromised by cybersecurity incidents,industrial accidents, or suffer errors and/or performance failures, affecting theircustomers and leading to potential liabilities;

• Completion is subject to a number of conditions which may not be satisfied orwaived;

• the Acquisition may close even if there is an adverse change or development inrespect of the OSIsoft Group or the AVEVA Group; and

• the Rights Issue is not conditional upon Completion; if the Acquisition does notcomplete, the proceeds of the Rights Issue will be retained by the AVEVA Group.

Section C – Key information on the securities

Type, class and ISIN of the securities What are the main features of the securities?The Rights Issue Shares will be fully paid ordinary shares traded on the main market forlisted securities of the London Stock Exchange under the ticker symbol “AVV”.

The Consideration Shares will be fully paid ordinary shares traded on the main market forlisted securities of the London Stock Exchange under the ticker symbol “AVV”.

On Rights Issue Admission, the Rights Issue Shares will be registered with an ISIN ofGB00BBG9VN75 and a SEDOL of BBG9VN7. The ISIN for the Nil Paid Rights will beGB00BMC45194, the SEDOL will be BMC4519 and the TIDM will be AVVN. The ISINfor the Fully Paid Rights will be GB00BMC45202, the SEDOL will be BMC4520 and theTIDM will be AVVF.

On Consideration Shares Admission, the Consideration Shares will be registered with anISIN of GB00BBG9VN75 and a SEDOL of BBG9VN7.

Annex 12, 4.1

Brief description of any qualifications inthe audit report relating to the historicalfinancial information

11


Currency of the securities The New AVEVA Shares will be denominated in pounds sterling.

Pursuant to the Rights Issue, the Company will issue 125,739,796 Rights Issue Shares. TheRights Issue will be made on the basis of 7 Rights Issue Shares for every 9 ExistingOrdinary Shares in the Company. The Company will issue 13.7 million ConsiderationShares (after adjustment to take account of the Rights Issue) in accordance with the Stockand Unit Purchase Agreement.

As at the Latest Practicable Date, there were 161,665,453 Existing Ordinary Shares in issue.

Rights attaching to the securities The Rights Issue Shares and the Consideration Shares will, when issued and fully paid, rankpari passu in all respects with the Existing Ordinary Shares, including the right to alldividends or other distributions made, paid or declared by reference to a record date on orafter the respective issue dates of the Rights Issue Shares and the Consideration Shares (asapplicable), including, in respect of the Rights Issue Shares and, should the ConsiderationShares be issued prior to the relevant record date, the Consideration Shares, the right toreceive the proposed interim dividend announced on 5 November 2020 expected to be paidon 5 February 2021 to Shareholders on the Company’s register of members on 8 January2021.

On a show of hands at general meetings of the Company, every Shareholder who is presentin person and every person holding a valid proxy shall have one vote and on a poll everyShareholder present in person or by proxy shall have one vote per New AVEVA Share.

The New AVEVA Shares are freely transferable and there are no restrictions on transfer of the

New AVEVA Shares in the United Kingdom.

The New AVEVA Shares do not carry any rights to participate in a distribution of capital(including on a winding-up) other than those that exist as a matter of law. The New AVEVAShares and the Existing Ordinary Shares will rank pari passu in all respects

Dividend policy AVEVA announced on 9 June 2020 that the final dividend recommended by the Board forFY 2020 would remain unchanged from the final dividend for FY 2019 at 29 pence pershare. The final dividend recommended by the Board of 29 pence per share was approvedby Shareholders at AVEVA’s annual general meeting on 21 July 2020.

On 5 November 2020 AVEVA announced that it intends to pay an interim dividend of15.5 pence per share, which amount shall be adjusted to reflect the bonus element of theRights Issue. That adjusted amount will be announced through a Regulatory InformationService in due course, payable on 5 February 2021 to Shareholders on AVEVA’s register ofmembers on 8 January 2021.

Following Completion, AVEVA intends to maintain its existing progressive dividend policy,taking account of the earnings profile of the Enlarged Group. The ability of AVEVA to paydividends is dependent on a number of factors and there is no assurance that AVEVA willpay dividends nor what the amount of such dividends will be. As noted above in relation tothe interim dividend for the current financial period, the amount of future dividends on aper share basis will reduce to reflect the bonus element of the Rights Issue.

Where will the securities be traded?

Application will be made for the Rights Issue Shares (nil paid and fully paid) and theConsideration Shares to be admitted to the premium listing segment of the Official List ofthe FCA and to trading on the London Stock Exchange’s main market for listed securities.

No application has been made or is intended to be made for the New AVEVA Shares to beadmitted to listing or trading on any other exchange.

What are the key risks that are specific to the securities?

Prior to investing in the New AVEVA Shares, prospective investors should consider theassociated risks. The key risks specific to the New AVEVA Shares are:

• Schneider Electric will, for the purposes of the Listing Rules, continue to be acontrolling shareholder of the AVEVA Group and, following the Acquisition, theEnlarged Group and the AVEVA Group and, following the Acquisition, the EnlargedGroup will remain subject to restrictions under the Relationship Agreement.

• Shareholders who do not take up their rights in full will experience dilution in theirownership.

• An active trading market in Nil Paid Rights may not develop on the London StockExchange or the Nil Paid Rights may become worthless.

Section D – Key information on the offer of securities to the public and/or the admission to trading on a regulated market

Terms and conditions of the offer Under which conditions and timetable can I invest in this security?

It is expected that Rights Issue Admission will become effective, and that dealings in theRights Issue Shares (nil paid) on the London Stock Exchange’s main market for listedsecurities will commence at 8.00 a.m. on 25 November 2020 and that dealings in the RightsIssue Shares (fully paid) on the London Stock Exchange’s main market for listed securitieswill commence at 8.00 a.m. on 10 December 2020. Consideration Shares Admission isexpected to occur between December 2020 and February 2021.

Pursuant to the Rights Issue, 125,739,796 Rights Issue Shares will be offered by way of NilPaid Rights at the Rights Issue Price to Qualifying Shareholders on the terms and conditionsset out in this document and, in the case of Qualifying Non-CREST Shareholders only, the

Description of restrictions on freetransferability of the securities

Rank of securities in the Company’scapital structure in the event of insolvency

Annex 12, 6.3

LR 13.3.1(9)(a)

Annex 12, 4.4

Number of issued and fully paid securities

LR 13.3.1(9)(b)

LR 13.3.1(9)(c)

Annex 12, 4.2

12


Provisional Allotment Letter (in each case, subject to certain exceptions, other thanQualifying Shareholders with registered addresses, or located or resident within the UnitedStates or the Excluded Territories). The offer is to be made at 2,255 pence per Rights IssueShare, payable in full on acceptance by no later than 11.00 a.m., on 9 December 2020. TheRights Issue Price represents a discount of 45.8 per cent. to the closing price of 4,162 penceper Existing Ordinary Share on the Latest Practicable Date, and a discount of 32.2 per cent.to the theoretical ex-rights price of 3,328 pence per Existing Ordinary Share on the LatestPracticable Date.

The Rights Issue will be made on the basis of 7 Rights Issue Shares at 2,255 pence perRights Issue Share for every 9 Existing Ordinary Shares held on the Rights Issue RecordDate (and so in proportion for any other number of Existing Ordinary Shares then held) andotherwise on the terms and conditions set out in this document and, in the case of QualifyingNon-CREST Shareholders only, also in the Provisional Allotment Letters.

The offer of Nil Paid Rights, Fully Paid Rights and/or Rights Issue Shares to personsresident or domiciled in, or who are citizens of, or who have a registered address incountries other than the United Kingdom may be affected by the laws of the relevantjurisdiction. Those persons should consult their professional advisers as to whether theyrequire any governmental or other consents or need to observe any other formalities toenable them to take up their rights.

Rights Issue Shares will be provisionally allotted (nil paid) to all Qualifying Shareholders.However, Provisional Allotment Letters will not be sent to, and Nil Paid Rights will not becredited to CREST accounts of, Qualifying Shareholders with registered addresses in theUnited States or any of the Excluded Territories or their agents or intermediaries, exceptwhere the Company and the Underwriters are satisfied that such action would not result inthe contravention of any registration or other legal or regulatory requirement in suchjurisdiction (and, in the event they do not take up their entitlements, their entitlements toRights Issue Shares will be treated as entitlements not taken up in accordance with theprocedures set out in Section 5 of Part IV (Terms and Conditions of the Rights Issue) of thisdocument).

If a Qualifying Shareholder does not (or is not permitted to) participate in the Rights Issue,such Qualifying Shareholder will experience a 43.7 per cent. dilution in their shareholdingin the Company if the Rights Issue completes (assuming no additional Ordinary Shares areissued due to the vesting or exercise of any awards under the AVEVA Group Share Plansbetween the Latest Practicable Date and the completion of the Rights Issue), and a totaldilution of 46.3 per cent. if both the Rights Issue and the Acquisition complete (assumingthat no Ordinary Shares other than the New AVEVA Shares are issued prior to Completion).Those Qualifying Shareholders who are permitted to, and do, take up all of their rights tothe Rights Issue Shares provisionally allotted to them in full will suffer dilution of 4.5 percent. in their shareholding in the Company as a consequence of the issue of theConsideration Shares in connection with the Acquisition (assuming that no Ordinary Sharesother than the New AVEVA Shares are issued prior to Completion).

The total estimated costs and expenses of the Rights Issue payable by the Company areapproximately £28.6 million (excluding VAT). Investors will not be charged expenses bythe Company in respect of the Rights Issue.

The Rights Issue is fully committed and underwritten on the basis of the Equity FinancingDeed, the Support Agreement and the Underwriting Agreement.

The Rights Issue has been underwritten by the Underwriters pursuant to the terms andconditions of the Underwriting Agreement, with the exception of the 75,576,398 RightsIssue Shares which are subject to the Equity Financing Deed and the Support Agreement.Under the Equity Financing Deed and the Support Agreement, Schneider Electric hasirrevocably undertaken to take up (or cause to be taken up) its rights in full, amounting to75,576,398 Rights Issue Shares.

The Rights Issue is conditional on the Resolution, including the resolution to approve theAcquisition, having been passed by Shareholders at the General Meeting. However, theRights Issue is not conditional on Completion, which is expected to occur betweenDecember 2020 and February 2021.

Why is this prospectus being produced?

This document has been prepared in connection with the Rights Issue and the Acquisitionto be undertaken by the Company and in connection with Consideration Shares Admission.

Pursuant to the Rights Issue, the Company proposes to issue 125,739,796 Rights IssueShares. Through the issue of Rights Issue Shares, the Company expects to raise grossproceeds of £2.835 billion. The aggregate expenses of, or incidental to, the Rights Issue tobe borne by the Company are estimated to be approximately £28.6 million.

Net proceeds of approximately £2.807 billion will form a portion of the consideration forthe acquisition of the OSIsoft Group. A portion of the consideration will also be settled bythe issue of 13.7 million Consideration Shares (after adjustment to take account of theRights Issue).

There are no material conflicts of interest pertaining to Rights Issue Admission orConsideration Shares Admission.

Annex 12, 5.3.1

Annex 12, 9.1

Annex 12, 5.4.3

Annex 12, 3.1

13


RISK FACTORS

Any investment in the New AVEVA Shares, the Nil Paid Rights, the Fully Paid Rights or proceeding with the

Acquisition is subject to a number of risks and uncertainties. Accordingly, prior to any such investment in

the New AVEVA Shares, the Nil Paid Rights and/or the Fully Paid Rights or to proceeding with the

Acquisition, Existing Shareholders and prospective investors should carefully consider the risks and

uncertainties associated with any such investment, the AVEVA Group’s, the OSIsoft Group’s and, following

the Acquisition, the Enlarged Group’s business and the industry in which it operates, together with all other

information contained in this document, including, in particular, the risk factors described below.

Existing Shareholders and prospective investors should note that the risks and uncertainties summarised in

the section of this document headed “Summary” are the risks that the Directors believe to be the most

essential in respect of the Acquisition and the Rights Issue and to an assessment by an Existing Shareholder

and/or a prospective investor of whether to consider an investment in the New AVEVA Shares, the Nil Paid

Rights and/or the Fully Paid Rights or to proceed with the Acquisition. However, as the risks and

uncertainties which the AVEVA Group, the OSIsoft Group and/or, following the Acquisition, the Enlarged

Group faces relate to events and depend on circumstances that may or may not occur in the future, Existing

Shareholders and prospective investors should consider not only the information on the key risks and

uncertainties summarised in the section of this document headed “Summary” but also, among other things,

the risks and uncertainties described below.

The following is not an exhaustive list or explanation of all risks which Existing Shareholders or prospective

investors may face when making an investment in the New AVEVA Shares, the Nil Paid Rights and/or the

Fully Paid Rights or proceeding with the Acquisition and should be used as guidance only. Additional risks

and uncertainties relating to the AVEVA Group, the OSIsoft Group and, following the Acquisition, the

Enlarged Group that are not currently known to the AVEVA Group or the OSIsoft Group, or that the

Directors currently deem immaterial, may individually or cumulatively also have a material adverse effect

on the AVEVA Group’s, or following the Acquisition, the Enlarged Group’s business, financial condition,

results of operations and prospects and, if any such risk should materialise, the price of the New AVEVA

Shares, the Nil Paid Rights and/or the Fully Paid Rights may decline and investors could lose all or part of

their investment. Prospective investors should consider carefully whether an investment in the New AVEVA

Shares, the Nil Paid Rights and/or the Fully Paid Rights is suitable for them in the light of the information

in this document and their personal circumstances.

LR 13.3.1(1)

LR 13.4.1(2)

Annex 1, 3.1

Annex 3, 3.1

Annex 12, 2.1

14


1. RISKS RELATING TO THE BUSINESS AND INDUSTRY IN WHICH AVEVA AND

OSISOFT OPERATE AND, FOLLOWING THE ACQUISITION, THE ENLARGED GROUP

WILL OPERATE

1.1 The ultimate impact of the COVID-19 pandemic on the AVEVA Group, the OSIsoft Group and,

following the Acquisition, the Enlarged Group, is unclear, and will depend on factors which are

outside their control, such as the duration and extent of the pandemic, its severity, actions taken by

governments to contain the virus or address its impact, the impact on and responses of their

customers and the extent and effectiveness of economic stimulus packages in the key jurisdictions

where the AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group,

may continue to operate and to what extent normal economic conditions resume.

The AVEVA Group and the OSIsoft Group are operating and, following the Acquisition, the Enlarged

Group may continue to operate, in an environment where there is significant economic disruption and

severe declines in countries’ GDP due to the COVID-19 pandemic which remains persistent and, in

the United Kingdom, continues to escalate. Such factors may have a material adverse effect on the

business and operations of customers of the AVEVA Group, the OSIsoft Group and, following the

Acquisition, the Enlarged Group, which may be unable to continue to operate as expected while

governmental restrictions remain in place or may otherwise be adversely affected by the crisis. Such

customers may experience significant business interruption, delays or disruption or increased costs

associated with business continuity, which may in turn have an impact on their ongoing trading

prospects. Although there have been actions taken by governments to contain the COVID-19 virus

and its impact, including through the implementation of various economic stimulus measures, it is

currently uncertain what success these actions will have in alleviating the effects of the COVID-19

pandemic and the related economic downturn.

In addition, the COVID-19 pandemic may have a negative impact on the capacity of the AVEVA

Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s customers have

for incurring operating or capital expenditure or investing in new services. As a result, affected

customers may seek to minimise expenditure by seeking to terminate subscriptions or licence

arrangements and/or seek to renegotiate or delay previously agreed payment dates in relation to

payments due to the AVEVA Group, the OSIsoft Group or following the Acquisition, the Enlarged

Group. As has been experienced by the AVEVA Group in respect of certain customers engaged in

capital projects in the oil and gas industry (in particular EPC customers), see also risk factor 1.4

below. Customers may also be more cautious and take more time to make purchase decisions with

respect to the Enlarged Group’s products and services. In addition, if customers fail to perform under

their contracts with the Enlarged Group as a result of the ongoing COVID-19 uncertainty, the

Enlarged Group may be required to recognise impairments of the related assets as a result. If these

customers adopt such measures or fail to perform under their contracts with the Enlarged Group, this

would negatively impact the AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the

Enlarged Group’s ability to grow their business and may also impact the method and speed with which

the AVEVA Group and, following the Acquisition, the Enlarged Group can implement its business

strategy. For example, it may impact the ability of the AVEVA Group and, following the Acquisition,

the Enlarged Group to diversify its customer base and could affect the interest of customers in

converting to a recurring revenue model, a key strategy of the Enlarged Group, which could have a

material adverse effect on the business, financial condition and prospects of the AVEVA Group and,

following the Acquisition, the Enlarged Group.

1.2 Governmental restrictions imposed due to the COVID-19 pandemic may negatively impact the

productivity of employees of the AVEVA Group and, following the Acquisition, the Enlarged

Group.

The COVID-19 pandemic has resulted in governments around the world adopting a variety of

measures to ensure public health and safety, including restrictions on travel and gatherings of people

and implementing social distancing measures. This has led to a number of consequences for

businesses, including the temporary closure of many businesses or mandatory periods of working

from home for employees. The AVEVA Group and the OSIsoft Group continue to operate remotely,

15


and currently have a substantial number of employees working from home in response to the

pandemic and to comply with government restrictions. In addition, in response to the COVID-19

pandemic, the AVEVA Group is accelerating its shift to digital and Cloud services and the increased

necessity of remote working may increase the risks around providing consistent and quality services

to customers, as well as increase potential security risks, such as cyberattacks (see also risk factor 1.3

below).

Ongoing remote working and the ability to implement social distancing in the workplace may also

impact the productivity of employees over time. The remote working setup for employees might

compare unfavorably to their office setup and work facilities. Moreover, such employees may become

isolated or suffer potential wellbeing concerns and constraints remain on the ability to return to full

capacity within the workplace. Following the Acquisition, the physical separation of employees will

also mean that it will be harder for the Enlarged Group to integrate employees of the AVEVA Group

and the OSIsoft Group, which may impact the productivity of employees and hinder integration of the

workforce. In addition, as a consequence of employees working remotely and on a socially distanced

basis, it may become more challenging for the AVEVA Group, the OSIsoft Group and, following the

Acquisition, the Enlarged Group to protect, retain and acquire talented employees, which may lead to

lower productivity or a loss of talented employees to competitors if the AVEVA Group, the OSIsoft

Group and, following the Acquisition, the Enlarged Group are unable to facilitate and accommodate

effective remote working for its employees (see also risk factor 1.12 below).

The governmental restrictions also mean that the normal sales and implementation processes of the

AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group, which might

involve physical meetings with customers and visits to customers in the ordinary course of providing

services, may be unable to take place. The AVEVA Group and the OSIsoft Group have put in place

business continuity measures to enable such activities to take place remotely, however there is a risk

that such measures will not be as effective in generating business and winning new clients,

particularly with more complicated enterprise solutions of the AVEVA Group, the OSIsoft Group and,

following the Acquisition, the Enlarged Group. A loss of customers, an inability to win new customers

or a failure of the Enlarged Group’s customers to perform for these or other reasons may lead to a loss

of subscription or licence revenue, which would have a material adverse impact on the financial

position and reputation of the AVEVA Group or following the Acquisition, the Enlarged Group.

It is unclear when normal operating conditions can resume, given the uncertainty over how long

governmental restrictions may remain in place and in addition, the AVEVA Group and/or the OSIsoft

Group and/or following the Acquisition, the Enlarged Group may consider that, notwithstanding a

possible relaxation of restrictions, it is in the best interests of the health and safety of its employees

to continue to operate on a remote basis or partial remote basis. The length of time which the AVEVA

Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group is required to operate

remotely may lead to additional costs being incurred in order to support the continuity of operations,

such as additional software, hardware, or technology for employees who are unable to work from the

AVEVA Group’s and/or the OSIsoft Group’s and/or, following the Acquisition, the Enlarged Group’s

premises and it is unclear whether such measures would continue to be effective in supporting the

productivity of employees and enabling such employees to meet the requirements of customers

including the impact on sales productivity in generating new business.

1.3 Despite the implementation of cybersecurity programmes, the IT environment of the AVEVA

Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group may remain subject

to hacking or other cybersecurity threats, which may disrupt the business and operations of the

AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group.

Although the AVEVA Group and the OSIsoft Group seek to implement adequate cybersecurity

programmes, the continually increasing sophistication of hackers and prevalence of other

cybersecurity threats means there is an ongoing risk of breaches of the AVEVA Group’s, the OSIsoft

Group’s and, following the Acquisition, the Enlarged Group’s IT security systems resulting in

unauthorised access to data centres (which may lead to a loss of source code) or other parts of IT

16


environments containing confidential information. This risk is potentially increased due to the

increased demand for Cloud products from the AVEVA Group’s and the OSIsoft Group’s customers.

Cloud products place a greater burden on the AVEVA Group’s and the OSIsoft Group’s IT

infrastructure and could therefore expose the AVEVA Group and the OSIsoft Group and, following

the Acquisition, could expose the Enlarged Group, to greater cybersecurity risks.

For example, the OSIsoft Group was affected by a cyberattack in 2018, and despite the fact that the

OSIsoft Group considers that no customer data was compromised and no unauthorised implants were

made in its PI System software code, there may be other aspects of security breaches which remain

undetected and may lead to the compromise of confidential information or systems of the OSIsoft

Group and, following the Acquisition, the Enlarged Group. The OSIsoft Group took steps to

remediate impacted systems after the cyberattacks in 2018, and the AVEVA Group and the OSIsoft

Group currently have, and, following the Acquisition, the Enlarged Group will have, security

measures in place to attempt to detect and prevent such attacks, and, to the extent possible, mitigate

any successful attacks; however, given the increasing sophistication of computer hackers and

prevalence of other cybersecurity threats, there can be no assurance that such measures will be

effective in part or at all.

If the AVEVA Group or, following the Acquisition, the Enlarged Group were subject to, or perceived

to be subject to, a cyberattack or other cybersecurity threat, it could, among other things, disrupt

business operations, lead to unauthorised disclosure of data or damage or destroy IT systems or data,

each of which could expose the AVEVA Group or, following the Acquisition, the Enlarged Group, to

remedial costs and well as litigation or regulatory actions. Moreover, any such cyberattack or other

cybersecurity threat could harm the AVEVA Group’s or, following the Acquisition, the Enlarged

Group’s reputation with customers and investors. Any one or more of these events could have a

material adverse effect on the Enlarged Group’s business, financial position, profit, and cash flows.

Any cyberattacks could have a material adverse effect on the Enlarged Group’s business, financial

position, profit, and cash flows.

1.4 The AVEVA Group’s and, following the Acquisition, the Enlarged Group’s business will depend to

a significant degree on companies engaged in traditionally cyclical industries, such as oil and gas

and mining.

A significant proportion of the AVEVA Group’s and the OSIsoft Group’s revenue has been derived

from customers engaged in capital projects in the oil and gas, and the mining industries and AVEVA

expects that such industries will continue to account for a significant proportion of the Enlarged

Group’s total revenue for the foreseeable future. For FY 2020, approximately 40 per cent. of revenue

for the AVEVA Group was derived from oil and gas (with approximately 10 per cent. of revenue

exposed to greenfield capex in the sector) and marine, metals and mining each accounted for between

5 per cent. to 10 per cent. of AVEVA Group revenue. For OSIsoft, on the basis of billings, which are

recorded when invoices are issued to OSIsoft customers upon final processing of a bona fide purchase

order and may be different in time from when the billings are recognised as revenue, if at all, oil and

gas accounted for 23.9 per cent. of OSIsoft’s billings in FY 2019 and mines, metals, metallurgy and

materials accounted for 10.1 per cent. of OSIsoft’s billings, representing a combined 34.0 per cent. of

billings from traditionally cyclical industries. See “Important Information—Non-IFRS Measures”.

As a result, the demand for the provision of the AVEVA Group’s, the OSIsoft Group’s and, following

the Acquisition, the Enlarged Group’s services and/or products, as well as the impact on revenue and

profitability, will be dependent on global levels of activity in oil and gas exploration, development and

production, as well as in the mining and mineral processing industry. These activity levels are

principally affected by trends in, and expectations regarding, commodity prices, especially crude oil,

natural gas and metals, which in turn impact capital projects in these industries and global demand

impacts the activity of major shipyards. Adverse developments in these markets, including any

prolonged reduction in oil and gas prices and/or increased market volatility due to the COVID-19

pandemic including any practical difficulties that clients have in operating their business with social

distancing measures in place could disproportionally affect the AVEVA Group, the OSIsoft Group

17


and, following the Acquisition, the Enlarged Group given the large proportion of revenue generated

from such customers. Several oil companies have already announced reductions in capital

expenditure, particularly in relation to upstream projects, as a result of the sharp fall in oil

consumption caused by the COVID-19 pandemic towards the end of FY 2020 and the oversupply of

crude oil in the oil market during April and May 2020. This has led to certain customers of the AVEVA

Group engaged in such capital projects in the oil and gas industry seeking to implement longer

payment terms and/or greater flexibility in their licence agreements. This may in turn affect the

business and prospects of other customers of the AVEVA Group, the OSIsoft Group and, following

the Acquisition, the Enlarged Group (such as the Enlarged Group’s EPC customers) who may also

seek to reduce capital expenditure or may experience economic difficulties. It is also uncertain

whether a decline in capital expenditure within such cyclical industries affected by COVID-19 or

other macro-economic factors may be compensated by increased capital expenditure in IT

infrastructure from customers or potential customers in industries which have either benefited from

the pandemic (for example, the pharmaceutical and healthcare industry) or which have not been as

severely affected by the pandemic. A decline in customer demand for the products and/or services of

the AVEVA Group or the OSIsoft Group due to these or other factors over which the AVEVA Group,

the OSIsoft Group and, following the Acquisition, the Enlarged Group will have no control could have

a material adverse effect on the business, results of operations, financial condition and prospects of

the AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group.

1.5 The Enlarged Group may experience difficulties in integrating the existing businesses carried on

by the AVEVA Group and the OSIsoft Group and may face difficulties in realising the revenue and

cost synergies which are anticipated.

The Acquisition involves the integration of two businesses that have previously operated

independently of one another. The difficulties of successfully combining the AVEVA Group and

OSIsoft Group businesses to form the Enlarged Group will include:

• the necessity of co-ordinating and consolidating organisations, systems and facilities;

• developing, operating and integrating a number of different systems and technologies;

• consolidating infrastructure, procedures, systems, accounting functions, compensation

structures and other policies;

• the task of integrating the management and personnel of the AVEVA Group and the OSIsoft

Group, maintaining employee morale and culture and retaining and incentivising key

employees;

• co-ordinating communications with and/or the provision of services by the Enlarged Group to

customers of both the AVEVA Group and the OSIsoft Group;

• the inability to realise revenue and cost synergies from the Enlarged Group; and

• disruption to the business of each of the AVEVA Group and the OSIsoft Group.

The process of integrating operations may present financial, managerial and operational risks,

including an interruption of, or loss of momentum in, the activities of one or more of the AVEVA

Group’s businesses and the loss of key personnel. The diversion of management’s attention and any

delays or difficulties encountered in connection with the Acquisition and the integration of the

operations of the businesses could have an adverse effect on the business, results of operations,

financial condition or prospects of the Enlarged Group after Completion. Moreover, if management

is unable to integrate the operations of the companies successfully, the anticipated benefits of the

Acquisition may not be fully realised including the revenue and cost synergies which are targeted.

There may be additional challenges to the Acquisition which will not be known until after

Completion, and any delays or difficulties encountered in connection with the integration of the

AVEVA Group and the OSIsoft Group could result in increased costs, an interruption to the Enlarged

Group’s operations or reputational damage to the Enlarged Group. A failure to realise the anticipated

18


benefits from the Acquisition may result in the Enlarged Group suffering from inefficient business

processes, inconsistent corporate culture and/or a weakened brand, which could have a material

adverse effect on the business, results of operations, financial condition and prospects.

In addition, the management team of both the AVEVA Group and the OSIsoft Group will be required

to devote significant attention and resources to integrating their respective business practices and

operations. There is a risk that this may result in management distraction and that consequently, the

underlying businesses may not perform in line with expectations. As such, difficulties or delays

encountered in connection with the integration of the AVEVA Group and the OSIsoft Group could

have a material adverse effect on the Enlarged Group’s business, results of operations, financial

condition and prospects.

1.6 The markets in which the AVEVA Group and the OSIsoft Group operate are competitive and

success in those markets depends on a variety of factors. Should they or following the Acquisition,

the Enlarged Group not be able to compete effectively against their competitors then they are likely

to lose market share which may result in decreased sales and poor financial performance.

The markets in which the AVEVA Group and the OSIsoft Group operate and, following the

Acquisition, the Enlarged Group will operate are competitive and are characterised to varying degrees

by rapid technological change, evolving industry standards, evolving business models and

consolidation within the software industry. The AVEVA Group and the OSIsoft Group face

competition from a number of sources in the market for their software solutions. The AVEVA Group,

the OSIsoft Group and, following the Acquisition, the Enlarged Group could be adversely affected

through declining product sales if it fails to obtain comprehensive information about the markets in

which it operates and assess competitive risks such that it fails to understand the competitive

landscape adequately and thereby identify where competitive threats exist.

Failure to continue to innovate could also be detrimental to the AVEVA Group’s, the OSIsoft Group’s

and, following the Acquisition, the Enlarged Group’s strategic plans for digital transformation and

could impact their ability to introduce run-rate data management, supervisory control and operations

management software businesses as well as develop systems engaging with newer technologies such

as IIoT and machine learning, allowing traditional industrial software/hardware companies or other

competitors to gain traction in this space.

The AVEVA Group and/or the OSIsoft Group’s competitors may establish strategic or commercial

relationships among themselves or with existing or potential customers or other third parties, which

may have the effect of reducing the AVEVA Group’s, the OSIsoft Group’s and, following the

Acquisition, the Enlarged Group’s, ability to promote and sell its products successfully. Strategic

alliances among competitors and/or growth-related efficiency gains in emerging technology areas, for

example in Cloud services, could lead to significantly increased competition in the market

manifesting itself as: (a) increased pricing pressure; (b) cost increases; (c) the loss of market share as

a consequence of cooperating competitors; and (d) a consequent reduced ability to integrate solutions,

which may harm the AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the

Enlarged Group’s future business and growth prospects.

The inclusion of products bundled within other companies’ software products that perform the same

or similar functions as the AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the

Enlarged Group’s products, or services similar to those provided by the AVEVA Group, the OSIsoft

Group and, following the Acquisition, the Enlarged Group, could reduce the perceived need for its

products and services, or render its products obsolete and unmarketable. Furthermore, even if these

incorporated products are inferior to or more limited than the AVEVA Group’s, the OSIsoft Group’s

or following the Acquisition, the Enlarged Group’s products, customers may elect to accept the

incorporated products rather than purchase the AVEVA Group’s, the OSIsoft Group’s or, following the

Acquisition, the Enlarged Group’s products.

In addition, the software industry is currently undergoing consolidation as software companies seek

to offer more extensive suites and broader arrays of software products and services, as well as

19


integrated software solutions. The COVID-19 pandemic has created further uncertainty in the

technology market due to its global impact, which could lead to increased consolidation due to

potential opportunistic acquisitions by competitors or competitors reassessing or realigning their

strategies. In doing so, these competitors may be able to reduce prices on software that competes with

the AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s

solutions, in part by leveraging their larger economies of scale. Consolidation may also permit

competitors to offer a broader suite of products and more comprehensive bundled solutions, including

hardware, software and services. This industry consolidation may result in increased pricing pressure

and/or loss of business to these larger competitors, which may have a material adverse effect on the

business, results of operations, financial condition and prospects of the AVEVA Group, the OSIsoft

Group and, following the Acquisition, the Enlarged Group.

1.7 The AVEVA Group and the OSIsoft Group operate and, following the Acquisition, the Enlarged

Group will operate globally and, as a result, will be subject to associated risks and uncertainties.

The Enlarged Group will be subject to the laws and regulations of a number of countries, with the

AVEVA Group serving customers in more than 100 countries worldwide, and the OSIsoft Group

having 27 offices across 17 countries and receiving recurring revenue from 15 countries.

The AVEVA Group and the OSIsoft Group are and, following the Acquisition, the Enlarged Group

will also be subject to differing international legislation including trade compliance, antitrust and

competition, export controls, tariffs and other trade barriers, anti-bribery and corruption legislation

(including with respect to areas such as corporate gifts and hospitality, child and forced labour,

modern slavery and people trafficking, ‘know your customer’ and ‘know your supplier’ practices

(including indirect suppliers), related party transactions, whistleblowing procedures, market abuse

regulations (including with respect to insider information and insider dealing legislation), corporate

governance, environmental regulation and differing international responses and regulatory standards

as part of an increased focus on sustainability, different local accounting practices, intellectual

property and data protection and data privacy requirements. Furthermore, the Enlarged Group will be

subject to differing tax regimes across multiple jurisdictions. These may conflict and/or overlap while

the Enlarged Group may have to adapt to changes in external reporting standards and tax laws

including, but not limited to, the introduction of new tax concepts which harm digitised business

models.

As a consequence, extra management time and costs may need to be spent by the AVEVA Group, the

OSIsoft Group and, following the Acquisition, the Enlarged Group to ensure that local laws and

regulations are complied with and any enquiries from regulators are handled swiftly whilst managing

risk. Such risks may adversely affect the AVEVA Group’s, the OSIsoft Group’s and, following the

Acquisition, the Enlarged Group’s business, results of operations and overall financial condition.

The AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group will be

unable to predict future changes in laws or policies or future changes in the ultimate cost of

compliance with such laws and policies, and there is a risk that the AVEVA Group’s, the OSIsoft

Group’s and, following the Acquisition, the Enlarged Group’s strategies to ensure that employees

abide by such local laws and policies (such as training platforms for employees and external partners,

support from local professional advisers and support from internal compliance resources) may not be

effective in preventing a breach of these requirements leading to potential liability for the AVEVA

Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group, as well as possible

fines, penalties or other sanctions.

The AVEVA Group and the OSIsoft Group operate and, following the Acquisition, the Enlarged

Group will also operate in a number of territories with emerging economies including the Middle

East, Africa, South America and parts of Asia, including India and China, which are important and

growing markets for the Enlarged Group. In these territories, the AVEVA Group’s, the OSIsoft

Group’s and, following the Acquisition, the Enlarged Group’s exposure to risks may be higher due to:

• greater risk of political and economic instability, expropriation and nationalisation;

20


• fewer developed legal structures, including those governing private or foreign investment,

private property and intellectual property;

• significant regulatory and fiscal restrictions;

• the potential for higher rates of inflation or hyper-inflation for local currencies;

• challenging ethical environments; and

• lower levels of democratic accountability.

Moreover, the Enlarged Group’s ability to expand operations and sales in these growing markets may

be impacted by changes in domestic and international political climates including, but not limited to,

geo-political tensions between countries in which the Enlarged Group does business and over which

the Enlarged Group has no control, which could have a material adverse effect on the Enlarged

Group’s financial results and overall business.

In addition, the AVEVA Group’s and the OSIsoft Group’s customers are and, following the

Acquisition, the Enlarged Group’s customers are expected to be frequently large, multinational

corporations which are required to comply with varying international legal and regulatory standards,

leading to compliance issues or creating other barriers for the AVEVA Group and, following the

Acquisition, the Enlarged Group when seeking to successfully deploy software products to customers.

1.8 The AVEVA Group’s and, following the Acquisition, the Enlarged Group’s research and

development efforts may not produce successful new products or enhancements to existing

products that result in significant revenue, cost savings or other benefits in the near future, due to

significant costs associated with research and development in new and disruptive technologies.

The AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group cannot

predict with certainty the changes in its industry which may occur and the effect of those changes on

the competitiveness of it business. The Enlarged Group will need to anticipate and adapt to emerging

industry trends and technological developments by their competitors and peers, including disruptive

technologies, which, if they were to be developed or reach commercial viability, could supersede the

AVEVA Group or the OSIsoft Group’s products or offer a competing alternative to existing customers.

For the year ended 31 December 2019 the AVEVA Group, launched over 140 new software solutions.

During OSIsoft FY 2019, OSIsoft has continued to enhance the PI System’s existing capabilities and

to develop new capabilities. For example, OSIsoft released OSIsoft Cloud Services (“OCS”) and

Edge Data Store as well as Adapter and PI Vision updated. If the AVEVA Group’s, the OSIsoft

Group’s and, following the Acquisition, the Enlarged Group’s products and services fail to meet

customer requirements, or do not achieve market acceptance, customers will seek alternative

solutions, resulting in the loss of new revenue opportunities, the cancellation or non-renewal of

existing contracts and harm to reputation.

Any products developed by the AVEVA Group, the OSIsoft Group and, following the Acquisition, the

Enlarged Group may require significant continued investment in order to ensure that they remain

relevant to customer requirements and are not superseded by products offered by competitors. The

AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group will have a

large number of products, at differing stages of their life cycle and the extent of investment in each

product will need to be managed and prioritised considering the expected future prospects, especially

their potential for acceptance by customers in the key markets where the AVEVA Group, the OSIsoft

Group and, following the Acquisition, the Enlarged Group operate and the ability to integrate with

existing products. Insufficient or misplaced focus on research and development projects may damage

the long-term growth prospects of the AVEVA Group and, following the Acquisition, the Enlarged

Group.

21


New and enhanced product development involves a significant commitment of time and resources and

is subject to a number of risks and challenges including:

• managing the length of the development cycle for new products and product enhancements,

which may take longer than planned to achieve market acceptance;

• ensuring the compatibility of the AVEVA Group’s, the OSIsoft Group’s and, following the

Acquisition, the Enlarged Group’s software products with existing customer hardware,

including devices which provide crucial data inputs used by the AVEVA Group and the OSIsoft

Group’s software products;

• updating the skill sets of employees of the AVEVA Group, the OSIsoft Group and, following

the Acquisition, the Enlarged Group with respect to technological developments and the needs

of customers;

• undetected errors, failures, performance problems or defects due to the complexity of software

products;

• undertaking research and development in novel domains which may prove subsequently to

have little or no technological or commercial benefit;

• entering into new or unproven markets of which the AVEVA Group, the OSIsoft Group and,

following the Acquisition, the Enlarged Group may have limited experience;

• deploying capital to new strategic areas;

• managing new product and service strategies;

• incorporating acquired products and technologies; and

• a product defect or error in any new products or enhancements to existing products developed

may incur significant product development, support and warranty costs and be subject to

product liability claims.

There can be no assurance that the AVEVA Group, the OSIsoft Group and, following the Acquisition,

the Enlarged Group’s investment in new delivery, processes and platforms (including as part of the

AVEVA Group’s accelerated shift to Cloud-based products and services and the OSIsoft Group’s

extension of the Cloud-based capabilities of the PI System) will generate the expected returns.

Moreover, a failure by AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged

Group to keep up with technological advances may render their existing product and service

portfolios partially or wholly obsolete, which could have a material adverse effect on their businesses,

operational results and prospects.

1.9 The software products of the AVEVA Group, the OSIsoft Group and, following the Acquisition, the

Enlarged Group, may be compromised by cybersecurity incidents, industrial accidents, or suffer

errors and/or performance failures, affecting their customers and leading to potential liabilities.

Certain of the AVEVA Group’s products and The OSIsoft Group’s PI System offering and its scalable

architecture allow customers to store, retrieve, manipulate and manage their information, internal data

and external data. As a result, these offerings and products may be compromised by cybersecurity

incidents, industrial accidents, or suffer errors and/or performance failures, affecting their customers

and leading to potential liabilities.

In the event of a breach of a customer’s IT security system operating the AVEVA Group’s, the OSIsoft

Group’s or following the Acquisition, the Enlarged Group’s software products, either by a directed

attack or if they are indirectly compromised by a global cybersecurity incident, the AVEVA Group’s,

the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s reputation may be impacted

and this may lead to a loss of future revenues from affected customers, or prompt other customers to

review their current use of the AVEVA Group’s, the OSIsoft Group’s, or following the Acquisition,

22


the Enlarged Group’s products. The Enlarged Group may also be more likely to be targeted in a direct

attack due to its increased size and the global utilisation of its products in critical infrastructure.

Regardless of whether a breach (whether actual or perceived) is attributable to the AVEVA Group’s,

the OSIsoft Group’s, or following the Acquisition, the Enlarged Group’s products, such a breach may

cause contractual disputes and negatively affect the market perception of the effectiveness of the

AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s products

and reputation. Remediating any of these problems and/or a breach itself could materially adversely

affect the business, financial condition, operating results and cash flow of the AVEVA Group and,

following the Acquisition, the Enlarged Group by: (a) requiring significant expenditures of capital and

diversion of resources from development efforts; (b) requiring operational suspensions whist actual

or perceived breaches are investigated and/or resolved; (c) resulting in the loss of existing or potential

customers; and/or (d) resulting in legal or regulatory action by customers or government authorities.

Furthermore, customers of the AVEVA Group and, following the Acquisition, the Enlarged Group in

key global markets within the industrial software sector may require the operation of large, complex

machinery which may be controlled by, or which may require the use of, the AVEVA Group’s and,

following the Acquisition, the Enlarged Group’s software products to operate safely and effectively

(OSIsoft Group’s products do not have operational control functionality). A malfunction of any of the

Enlarged Group’s products due to a failure of the AVEVA Group and, following the Acquisition, the

Enlarged Group to detect performance problems in a new or enhanced product could have serious

implications in the performance of machinery, industrial plants or infrastructure operated by the

AVEVA Group’s, and, following the Acquisition, the Enlarged Group’s customers, leading to

significant potential hazards or accidents, and possible liability for the AVEVA Group and, following

the Acquisition, the Enlarged Group. Although the AVEVA Group and the OSIsoft Group have not

been notified of any such incidents, if such a product defect or error that results in such serious

implications were to materialise, this could cause significant reputational damage for the AVEVA

Group and, following the Acquisition, the Enlarged Group. It could also divert the attention of

software development and product management personnel and cause significant customer

relationship problems or loss of customers. The level of new licence sales may also decrease and

maintenance service contracts may not be renewed by customers, resulting in increased attrition rates.

A decrease in revenue as a result of any of these factors could have a material adverse effect on the

business, results of operations, financial condition and prospects of the AVEVA Group and, following

the Acquisition, the Enlarged Group.

1.10 The AVEVA Group and the OSIsoft Group depend on their senior management team, as well as

their sales management, product management and development personnel and other key

personnel. Should the AVEVA Group, the OSIsoft Group or, following the Acquisition, the

Enlarged Group, be unable to attract or retain sufficiently high quality and experienced

management and personnel, or experience productivity decline due to turnover of sales personnel

or other personnel, this may adversely affect the performance of the business and financial results

of the AVEVA Group, the OSIsoft Group, or following the Acquisition, the Enlarged Group.

The Directors believe that the future success of the AVEVA Group and, following the Acquisition, the

Enlarged Group will depend upon its ability to attract and retain senior management (including

directors) as well as sales management, product management and development personnel and other

key personnel who represent significant assets to the business and provide expertise and experience

critical to the AVEVA Group and, following the Acquisition, the Enlarged Group, including

implementation of its strategy. There is and will be competition for qualified personnel in the AVEVA

Group’s and the OSIsoft Group’s markets, which will, following the Acquisition, continue to impact

the Enlarged Group and employees who are highly trained are likely to remain a limited resource for

the foreseeable future. The technology and industrial software sectors are highly competitive as they

require a substantial degree of training and skill level in order to develop new products and understand

the specific requirements of the AVEVA Group and the OSIsoft Group’s customers, as well as

requiring specialist sales and implementation staff who have a detailed knowledge of the AVEVA

Group and the OSIsoft Group’s product and service offering. As a result, there can be no certainty that

23


the AVEVA Group and the OSIsoft Group will be able to attract and retain adequately skilled

personnel, or that the Enlarged Group will be able to do so following the Acquisition.

If the AVEVA Group, the OSIsoft Group or following the Acquisition, the Enlarged Group fails to

recruit and retain qualified management and other personnel with the requisite technical experience

gained through many years of market experience, it may be unable to deliver high quality products

which could lead to a failure to deliver services on a timely basis, the inability to pursue business in

a new area or a loss of goodwill. The COVID-19 pandemic has presented further challenges in

protecting, retaining and acquiring qualified management and other personnel during an extended

period of disruption and where continued remote working and social distancing is required.

Any failure by the AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged

Group to attract or retain sufficiently high quality and experienced management and other personnel

(including directors), or if they were to experience productivity decline due to turnover of sales

personnel or other personnel, may have a material adverse effect on the business, results of operations,

financial condition and prospects of the AVEVA Group, the OSIsoft Group or following the

Acquisition, the Enlarged Group.

1.11 The Enlarged Group’s ability to integrate the OSIsoft Group will be partially dependent upon its

ability to retain and motivate its senior management team.

Following the Acquisition, the integration of the businesses of the AVEVA Group and the OSIsoft

Group will be led by certain members of the Enlarged Group’s senior management. Such senior

management and other personnel have an intricate understanding of the systems, processes,

operations and employees of the AVEVA Group and the OSIsoft Group. The knowledge and

experience of these individuals, together with their ability to generate and deliver an integration plan,

are crucial to the integration process. The Enlarged Group’s ability to retain such personnel may be

diminished by the increased demands placed on them during the integration process which may affect

the morale of key individuals. The Directors believe that the success of the integration will depend,

in part, upon the Enlarged Group’s ability to retain and motivate such personnel. Failure to retain or

motivate such personnel may delay the integration timetable and hinder or prevent the successful

integration of the OSIsoft Group into the Enlarged Group. In such circumstances, the Enlarged Group

may be required to procure additional resources to complete integration. A loss of key integration

personnel or a decline in the motivation of such employees may adversely affect the business and

results of operations of the Enlarged Group.

1.12 An impairment of goodwill or other intangible assets would adversely affect the AVEVA Group’s

and, following the Acquisition, the Enlarged Group’s results of operations and net assets.

Under IFRS, goodwill and intangible assets with indefinite economic lives are not amortised but are

tested for impairment annually or more often if an event or circumstance indicates that an impairment

loss may have been incurred. Other intangible assets with a finite economic life are amortised on a

straight-line basis over their estimated useful economic lives and reviewed for impairment whenever

there is an indication of impairment. In particular, if the combination of the AVEVA Group and the

OSIsoft Group meets with unexpected difficulties, or if the business of the AVEVA Group and,

following the Acquisition, the Enlarged Group does not develop as expected, impairment charges may

be incurred in the future which could be significant and which could have a material adverse effect

on the business, results of operations, financial condition and prospects of the AVEVA Group and,


Following the Acquisition, the Enlarged Group will have significant intangible assets and goodwill

that are susceptible to impairment as a result of changes in various factors or conditions. On a pro

forma basis assuming the Acquisition had taken place on 30 September 2020, the Enlarged Group

would have had intangible assets and goodwill of £5.6 billion. Please refer to Part XI (Unaudited Pro

Forma Financial Information on the Enlarged Group) of this document which contains an unaudited

pro forma statement of net assets to illustrate the effect of the Acquisition on the net assets of the

AVEVA Group as if these events had taken place on 30 September 2020. The Enlarged Group will

24


assess impairment of amortisable intangible assets whenever events or changes in circumstances

indicate that the carrying value may not be recoverable. In addition, many asset classes are subject to

impairment consideration on a periodic basis under applicable accounting rules. Factors that could

trigger an impairment of such assets include the following:

• a significant underperformance relative to historical or projected future operating results;

• significant negative industry or general economic trends; and/or

• a sustained decline in its market capitalisation below net book value.

The AVEVA Group and, following the Acquisition, the Enlarged Group will assess the potential

impairment of goodwill and other intangible assets as of each financial year-end. It will also assess

the potential impairment of goodwill and other intangible assets whenever events or changes in

circumstances indicate that the carrying value may not be recoverable. Adverse changes in operations

or other unforeseeable factors could result in an impairment charge to the AVEVA Group’s and,

following the Acquisition, the Enlarged Group’s net assets in future periods; any such charge would

have no direct cash impact, but would impact the AVEVA Group’s and, following the Acquisition, the

Enlarged Group’s net assets.

1.13 The AVEVA Group, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group will

be dependent, upon the effectiveness of its sales strategy, partner ecosystem and distribution

channels to maintain and grow licence, maintenance and consultancy sales.

The AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s

product marketing programmes and strategies to exploit channel opportunities may not be effective

and may reduce the prospects for additional revenue streams.

Whilst a significant proportion of the AVEVA Group’s and the OSIsoft Group’s sales are and,

following the Acquisition, the Enlarged Group’s sales will be derived from direct sales channels, the

AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group depend on

systems integrators, resellers and OEMs to generate a portion of their turnover. For example, a

cohesive and effective partner ecosystem is a key part of the OSIsoft Group’s success and growth

strategy. Its partners span both the areas that the OSIsoft Group seeks to market its product in (e.g.

business systems and analytics, IIoT and technology) and also to those businesses that the OSIsoft

Group seeks to market its services to (e.g. system integrators, independent software vendors, and

OEM and resellers). Its partners therefore play an important role in driving market adoption its

solutions portfolio, by co-innovating on its platforms, embedding the OSIsoft Group’s technology,

and reselling and/or implementing its software.

The AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s

dependence on these third-party network poses certain risks:

• should any channel suffer from a decreased level of effectiveness, as may be caused in part due

to the COVID-19 pandemic (for more information regarding the impact of COVID-19 see also

risk factor 1.1 above), then the ability of the AVEVA Group, the OSIsoft Group and, following

the Acquisition, the Enlarged Group to reach customers and thereby sell products may be

impaired;

• a failure to grow the network of qualified partners to support the Enlarged Group’s scalability

needs may inhibit future market expansion and revenue expansion;

• the Enlarged Group’s third-party network may be, or become in future, less strategic and/or

attractive compared to its competitors;

• partners may not develop a sufficient number of new solutions and content on the Enlarged

Group’s platforms or might not provide high-quality products or services to meet customer

expectations; and

25


• partners may not embed the Enlarged Group’s solution effectively enough to profitably drive

product adoption.

The occurrence of one or more of these scenarios may harm the business of the AVEVA Group and,


The sales and distribution strategy for the AVEVA Group, the OSIsoft Group and, following the

Acquisition, the Enlarged Group will rely partly on the ability of systems integrators, resellers and

OEMs to develop their respective customer bases and incorporate the software technology of the

AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group into the

software and services each offers to its customers. In addition, the AVEVA Group, the OSIsoft Group

and, following the Acquisition, the Enlarged Group will rely on third parties to sell, distribute and

support its software products in territories where neither of the AVEVA Group, the OSIsoft Group or

following the Acquisition, the Enlarged Group has a physical presence. If the sales and marketing

strategy for the AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group

were to change in the future, the AVEVA Group, the OSIsoft Group and, following the Acquisition,

the Enlarged Group may need to make further investment in sales, service and support staff in certain

geographic areas. The business, results of operations, financial condition and growth prospects for the

AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group could be

materially adversely affected if systems integrators, packaged application providers or resellers:

• renegotiate existing contractual arrangements, which could result in reduced forecast revenue

and potentially higher costs of sale;

• use a competitor’s technology, which could undermine customer confidence in the AVEVA

Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s products

and services;

• are unable to attract additional customers, maintain existing customer relationships or

effectively market the solutions of the AVEVA Group, the OSIsoft Group and, following the

Acquisition, the Enlarged Group, resulting in fewer sales;

• engage in inappropriate practices without the knowledge of the AVEVA Group, the OSIsoft

Group and, following the Acquisition, the Enlarged Group which could result in penalties

and/or reputational damage;

• are unable to deliver the same quality or standard of services, which may require the AVEVA

Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group to engage with

its customers at a direct cost in order to protect its product and services standards and

reputation;

• are in conflict with the activities of the AVEVA Group’s, the OSIsoft Group’s and, following

the Acquisition, the Enlarged Group’s direct sales and marketing activities, which could result

in a duplication of efforts and oversaturation of certain markets;

• experience financial difficulties that may impact their ability to market the AVEVA Group’s,

the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s products and may

lead to delays, or even default, in the payment obligations of customers; and/or

• fail to provide accurate and timely reporting of the AVEVA Group’s, the OSIsoft Group’s and,

following the Acquisition, the Enlarged Group’s channel sales.

The AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group will be,

undergoing a shift from selling perpetual licences and maintenance to subscription contracts (for more

information with respect to this shift from selling perpetual licences and maintenance to subscription

contracts see also risk factor 1.17 below). There is a risk that the shift to subscription has an adverse

impact on the distributors and resellers businesses due to the lower initial contract values in the earlier

years of a contract thereby having a material impact on the cash flow of the distributors or resellers

compared to the traditional perpetual licences and maintenance model. This may result in the

26


distributors and resellers being unable to invest in their business to the same extent resulting in lower

revenue and profit for the AVEVA Group and, following the Acquisition, the Enlarged Group.

1.14 The increased international focus on sustainability (environment, societal and economic) and the

AVEVA Group’s and, following the Acquisition, the Enlarged Group’s response could negatively

impact its business, operational results and reputation.

The Directors have identified the following risks related to environmental, societal and economic

sustainability:

• failure to meet customer, partner, or other stakeholder expectations or generally accepted

standards on climate change, environmental stewardship, and our social investment strategy;

and

• failure to maintain our rating in sustainable investment indexes.

The failure to address any of, or more, of these risks could deter key personnel (existing and

potential), investors, customers and other key stakeholders from the AVEVA Group, the OSIsoft

Group and, following the Acquisition, the Enlarged Group and lead to:

• loss of existing customers and/or failure to acquire new customers;

• adverse reputational impact including loss of investment; and

• failure to attract and/or retain knowledge and talent in the business (niche dependency skills).

There is a risk that the AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the

Enlarged Group’s exposure to, and the use of the AVEVA Group’s, the OSIsoft Group’s and, following

the Acquisition, the Enlarged Group’s products in the power and utilities industry, the oil and gas, the

chemical and petro-chemical, and the metals and mining industries which contribute to, amongst other

things, the depletion of natural resources or the acceleration of global warming may deter existing and

potential employees, investors and customers from working with, or investing in the AVEVA Group,

the OSIsoft Group and, following the Acquisition, the Enlarged Group if they consider that the

AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s products

may have a negative environmental impact. The AVEVA Group’s, the OSIsoft Group’s and, following

the Acquisition, the Enlarged Group’s strategy to mitigate potential negative perceptions of its

environmental impact may not be sufficient to offset the impact, or perceived impact, of its products

and operations indirectly on the environment.

Furthermore, the AVEVA Group’s, the OSIsoft Group’s or following the Acquisition, the Enlarged

Group’s customers may be subject to additional regulatory intervention by local governments in the

areas where the AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged

Group operates designed to improve sustainability, which could impact the operations of the AVEVA

Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group by requiring reductions

in travel, waste output, and the use of resources, as well as the operations of the AVEVA Group’s, the

OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s customers. Greater pressure to

operate sustainably may lead to increased costs for the AVEVA Group, the OSIsoft Group and,

following the Acquisition, the Enlarged Group and their customers, which could in turn lead to an

alteration in strategy for customers meaning less investment in the AVEVA Group’s, the OSIsoft

Group’s and, following the Acquisition, the Enlarged Group’s software.

1.15 Changes to US tax laws could result in AVEVA being treated as a US corporation for US federal

income tax purposes or in AVEVA and its US affiliates being subject to certain adverse US federal

income tax rules and, in any case, the AVEVA Group’s and, following the Acquisition, the Enlarged

Group’s ability to engage in certain transactions could be limited to prevent the treatment of

AVEVA as a US corporation under Section 7874 of the US Internal Revenue Code (the “IRC”).

Under current law, AVEVA is expected, following Completion, to be treated as a non-US corporation

for US federal income tax purposes. However, changes to Section 7874 of the IRC, or the Treasury

27


Regulations promulgated thereunder, could affect AVEVA’s status as a non-US corporation for US

federal income tax purposes or could result in the application of certain adverse US federal income

tax rules to AVEVA and its US affiliates. In addition, future transactions by the AVEVA Group and,

following the Acquisition, the Enlarged Group could cause the 80 per cent. ownership threshold under

section 7874 of the IRC to be met, causing AVEVA to be treated as a US corporation for US federal

income tax purposes under Section 7874 of the IRC. Therefore, the ability of the AVEVA Group and,

following the Acquisition, the Enlarged Group to engage in certain strategic transactions (including

future acquisitions of US businesses in exchange for shares in AVEVA) may be limited in order to

avoid AVEVA being treated as a US corporation, which could have a material adverse effect on the

business, financial condition, results of operation and prospects of the AVEVA Group and, following


1.16 The AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group will

depend on intellectual property, the rights to which may be challenged or infringed by others or

otherwise prove insufficient to protect the business of the Enlarged Group.

The AVEVA Group’s and the OSIsoft Group’s successes have been built upon the development of

their respective substantial intellectual property rights and, following the Acquisition, the Enlarged

Group will rely on its intellectual property rights, in particular its exclusive right to use technologies

which are included in its software products. However, certain of the AVEVA Group’s intellectual

property rights, and most of OSIsoft Group’s intellectual property rights, are not protected by patents

or the subject of pending patent applications, and include trade secrets, copyright and other know-how

that is not considered patentable. The OSIsoft Group relies heavily on copyright protection and trade

secrets to protect its products, and each of the AVEVA Group and the OSIsoft Group has historically

sought to protect its proprietary information and trade secrets that may not be patented or patentable

and to secure its rights to copyright and patentable inventions by confidentiality agreements and,

where applicable, inventors’ rights agreements with its customers, partners and employees and,

following Completion, the Enlarged Group intends to continue to do so. However, there can be no

assurance that the AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged

Group will continue to be able to protect, maintain and enforce their existing intellectual property

rights, whether through confidentiality agreements, inventors’ rights agreements or registrations.

Moreover, the AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group

will continue to operate across multiple jurisdictions, the intellectual property laws of which are

complex and varied, and effective protection for the software products of the AVEVA Group, the

OSIsoft Group and, following the Acquisition, the Enlarged Group may be unavailable or limited or

not applied for in countries in which the AVEVA Group, the OSIsoft Group and, following the

Acquisition, the Enlarged Group will operate.

Regardless of any contractual or legal protections or remedies in place or available to the AVEVA

Group and, following the Acquisition, the Enlarged Group, it may be possible for an unauthorised

third party to reverse engineer or decompile the AVEVA Group’s and, following the Acquisition, the

Enlarged Group’s software products. The AVEVA Group and, following the Acquisition, the Enlarged

Group may be unable to detect such actions or take appropriate steps to enforce its rights against the

perpetrators, particularly in certain international jurisdictions. In common with other companies in the

software industry, the AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged

Group may choose from time to time to use open source software in some of its products. Despite

rigorous processes to select only open source software that should not compromise the AVEVA

Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s intellectual

property, there may be uncertainty about the legal effect of some open source software licences. By

using open source software, the AVEVA Group, the OSIsoft Group and, following the Acquisition, the

Enlarged Group may become obliged to disclose parts of its own source code, or may unknowingly

be infringing the intellectual property rights of a third party.

If the AVEVA Group, the OSIsoft Group or following the Acquisition, the Enlarged Group becomes

subject to litigation in respect of infringing actions alleged against it or by third parties, such as in the

event that it is alleged the AVEVA Group, the OSIsoft Group or following the Acquisition, the

28


Enlarged Group has used software designs, products, or proprietary technology owned by third parties

in the course of the AVEVA Group’s, the OSIsoft Group’s or following the Acquisition, the Enlarged

Group’s operations, it could result in the AVEVA Group, the OSIsoft Group or following the

Acquisition, the Enlarged Group incurring significant expense, and could adversely affect the

development of sales of the challenged product or intellectual property and divert the efforts of its

technical and management personnel, whether or not the litigation is resolved in favour of the AVEVA

Group, the OSIsoft Group or following the Acquisition, the Enlarged Group. This could occur

inadvertently, such as if the AVEVA Group, the OSIsoft Group or following the Acquisition, the

Enlarged Group develops a product substantially similar to those used by competitors of which it is

unaware, or if the AVEVA Group, the OSIsoft Group or following the Acquisition, the Enlarged Group

fails to adequately protect its own proprietary designs, enabling another party to gain intellectual

property rights by prior registration, or by an employee or group of employees of the AVEVA Group,

the OSIsoft Group or following the Acquisition, the Enlarged Group acting independently and in

breach of their service contracts and/or the internal policies of the AVEVA Group, the OSIsoft Group

or following the Acquisition, the Enlarged Group. If any claim against the AVEVA Group, the OSIsoft

Group or following the Acquisition, the Enlarged Group were to be successful, the AVEVA Group, the

OSIsoft Group or following the Acquisition, the Enlarged Group may need to re-design the relevant

product (which would demand further investment in that product, take a licence on the infringing

intellectual property within its product, which may not always be possible on acceptable commercial

terms) or even cease to sell that product, and accept the consequential impact on revenue. In addition,

the AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group may not

have insurance cover for these types of claims or such insurance cover may not be adequate. Were any

of these risks to materialise, it may have a material adverse effect on the business, results of

operations, financial condition and prospects of the AVEVA Group, the OSIsoft Group and, following


1.17 The Enlarged Group will be exposed to volatility in its financial condition and results of operations

due to variability in revenue generated from its licensing activities, including as a result of changes

in revenue model.

The AVEVA Group’s licensing revenue is currently composed of four different types: subscription

licences, maintenance agreements (including annual fees as well as separate support and maintenance

contracts), perpetual or initial licences and services (including consultancy, implementation services

and training). The majority of the OSIsoft Group’s billings, which are recorded when invoices are

issued to OSIsoft customers upon final processing of a bona fide purchase order and may be different

in time from when the billings are recognised as revenue, are from component software sold under a

perpetual software licence agreement, representing 23 per cent. of billings in OSIsoft FY 2019 and

for Software Reliance Program renewal, support and maintenance offered with the component

software product, representing 33 per cent. of billings in OSIsoft FY 2019. Enterprise Agreement

Software, allowing enterprise-wide deployment based on scope of utilisation, represents 14 per cent.

of OSIsoft FY 2019 billings with the associated support and maintenance representing 24 per cent. of

billings in OSIsoft FY 2019. Revenue (or billings) from project implementation agreements are

subject to greater volatility, due to the fact that customers have more opportunities to cancel their

contracts with the Enlarged Group. Further, perpetual or initial licence revenue or billings can be more

volatile due to the one-off purchase nature of this income stream.

Subscription licences offer greater stability in the revenue they generate because there is more

certainty that such customers will continue to engage with the Enlarged Group for the length of the

term of the licence and there is a greater prospect that customers will renew the term of the licence.

To the extent that the proportion of subscription licences purchased by customers decreases, this could

increase the volatility of the Enlarged Group’s financial results and results of operations.

The AVEVA Group has been driving a business model based on a strategy of increasing levels of

recurring revenue by growing software as part of its revenue mix and by increasing the mix of

subscription revenue as a proportion of new software revenue in a given financial year. Overall

recurring revenue accounted for 64.2 per cent., 62.2 per cent., 53.8 per cent. and 42.4 per cent. of the

29


AVEVA Group’s total revenue in H1 2021, FY 2020, FY 2019 and FY 2018, respectively. For the

OSIsoft Group, subscription revenues (from subscription products, Cloud and OCS products) form a

small but growing and strategically important portion of revenue and currently representing 4 per

cent. of OSIsoft FY 2019 revenue. Subscriptions offer customers greater flexibility and a lower initial

outlay, and are therefore increasingly offered by many software companies, including by many

competitors of the AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged

Group. The level and pace of adoption of a subscription model is likely to vary by customer, industry

and product area and any failure to effectively manage any such transition in response to customer

demand or competitor pressures may give rise to a loss of customers, market share and ultimately

revenue and profitability. Customers who have previously operated on the basis of an up-front

licensing fee and ongoing service costs may not be willing to amend their existing service terms with

the AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group and adopt

a subscription model which would result in ongoing costs to them. If customers do not adopt the

subscription-based revenue model as expected, the AVEVA Group, the OSIsoft Group and, following

the Acquisition, the Enlarged Group may not be able to realise the expected benefits of more stable

revenue over time and may continue to experience volatility.

Although the medium term effect of a greater proportion of subscription revenue should be to reduce

volatility in the financial condition and results of operations of the Enlarged Group, the period of any

such transition, even if successfully managed, may result in increased volatility in financial

performance, as well as a short-to-medium decline in (or a reduction in growth in) reported revenues

and profitability as a result of the lower annual values and the greater portion of revenue which are

typically deferred into future periods under a subscription model.

1.18 The AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s

business and products depend on the availability, integrity and security of their IT systems.

The AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s IT

systems and related software applications are integral to its business and rely on controls and systems

to ensure data integrity of critical business information and proper operation of their networks.

Although the Directors believe that the AVEVA Group’s and OSIsoft Group’s current data security

practices are in line with or exceed industry standards, a lack of data integrity could create

inaccuracies and hinder the AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the

Enlarged Group’s ability to perform meaningful business analysis and make informed business

decisions.

Despite network security, disaster recovery and systems management measures in place, the AVEVA

Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group may encounter

unexpected general systems outages or failures that may affect its ability to conduct research and

development, provide maintenance and support of its products, manage their contractual

arrangements, accurately, efficiently maintain books and records, record its transactions, provide

critical information to its management and prepare its financial statements. Additionally, these

unexpected systems outages or failures may require additional personnel and financial resources,

disrupt the AVEVA Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged

Group’s business or cause delays in the reporting of financial results.

The AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group also

outsource certain IT-related functions to third parties that are responsible for maintaining their own

network security, disaster recovery and systems management procedures. If such third-party IT

vendors fail to manage their IT systems and related software applications effectively, the AVEVA

Group’s, the OSIsoft Group’s and, following the Acquisition, the Enlarged Group’s business, results

of operations, financial condition and prospects could be materially adversely affected.

The AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group may also

be required to modify, enhance, upgrade or implement new systems, procedures and controls to reflect

changes in its business or technological advancements, which could cause it to incur additional costs

and require additional management attention, placing burdens on the AVEVA Group’s, the OSIsoft

30


Group and, following the Acquisition, the Enlarged Group’s internal resources. These programmes to

improve such systems, procedures and/or controls could become more complex or be delayed because

of continued global disruption caused by the COVID-19 pandemic.

The AVEVA Group is currently in the process of implementing a new Enterprise Resource

Management (“ERP”) system which will replace contract and financial management systems. There

is a risk that the implementation of the new ERP system will be disrupted by the COVID-19 pandemic

or that the new system will not be fit for purpose and fails to manage the contractual arrangements,

accurately and efficiently maintain books and records, record the transactions, provide critical

information to management and prepare the financial statements of the AVEVA Group and, following

the Acquisition, the Enlarged Group. In addition, AVEVA is in the process of exiting a transitional

service agreement from the previous combination of AVEVA and the Schneider Electric Software

Business; this process requires a focus of AVEVA resources and could lead to conflicting priorities

when coupled with the introduction of the new ERP system. During the transition period there is a

risk of unscheduled delays, in particular due to the COVID-19 pandemic. If the AVEVA Group is

unable to achieve a timely exit from the TSA, additional costs may be incurred which may materially

adversely affect the AVEVA Group’s results of operations, financial condition and prospects.

1.19 The Enlarged Group may be exposed to volatility in its financial condition and results of operations

due to fluctuations in currency exchange rates.

As the AVEVA Group and the OSIsoft Group currently operate and, following the Acquisition, the

Enlarged Group will operate in various countries, they will be exposed to foreign currency rate

fluctuations. The Enlarged Group will have significant businesses in the United Kingdom, Europe, the

US, India and Japan, which generate revenue and have associated operating costs in currencies other

than its reporting currency, the pound sterling. In particular, all of the OSIsoft Group’s revenue and

substantially all of its operating costs are denominated in US dollars. The AVEVA Group and the

OSIsoft Group are exposed, and, following the Acquisition, the Enlarged Group will be exposed to

currency transaction risks when their subsidiaries enter into transactions using a currency other than

their functional currency. This mismatch will result in gains or losses with respect to movements in

foreign exchange rates and may be material. The AVEVA Group is currently party to, and, following

the Acquisition, the Enlarged Group may enter into, financial transactions to hedge a portion of these

currency exposures. However, hedging transactions may not be available at a reasonable cost or may

prove ineffective in reducing these exposures. Any losses incurred in connection with any hedging

transactions could have a material adverse effect on the business, results of operations, financial

condition and prospects of the AVEVA Group and, following the Acquisition, the Enlarged Group.

There has recently been volatility in the value of the pound sterling as compared to the US dollar and

the Euro, particularly as a result of the United Kingdom’s exit from the European Union and the

impact of the COVID-19 pandemic. Fluctuations in the exchange rate between the Euro, the US

dollar, Indian Rupee and other currencies in which the AVEVA Group transacts and, following the

Acquisition, the Enlarged Group will transact, relative to the pound sterling may cause fluctuations in

reported financial results that may not necessarily relate to the financial results of their operations. In

particular, the OSIsoft Group’s business primarily transacts in US dollars, meaning that an exchange

rate fluctuation in the value of pound sterling as compared to US dollars may have a material adverse

effect on the financial condition of the Enlarged Group following the Acquisition.

1.20 The AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group may

face operational risks that may not be covered by insurance policies.

The AVEVA Group and the OSIsoft Group have, and, following the Acquisition, the Enlarged Group

will have, insurance coverage for a variety of areas. However, these insurance policies may not fully

cover the consequences of damage to persons or property, business interruptions, failure of

counterparties to conform to the terms of an agreement or other liabilities incurred in the Enlarged

Group’s operations. If a significant claim or number of claims is made on the AVEVA Group or,

following the Acquisition, the Enlarged Group ‘s policies, the AVEVA Group or, following the

Acquisition, the Enlarged Group may be subject to significant increases in premiums or even find it

31


difficult, prohibitively expensive or impossible to obtain sufficient levels of coverage. If the AVEVA

Group or, following the Acquisition, the Enlarged Group’s insurance coverage is not sufficient for any

reason, the AVEVA Group and, following the Acquisition, the Enlarged Group could incur significant

out of pocket expenses, which could have a material adverse effect on its business, results of

operations, financial condition and prospects.

1.21 The AVEVA Group, the OSIsoft Group or following the Acquisition, the Enlarged Group may be

involved in legal and other proceedings from time to time, and as a result may face damage to its

reputation or legal liability.

In the ordinary course of business, the AVEVA Group, the OSIsoft Group or following the

Acquisition, the Enlarged Group may from time to time be involved in legal actions in connection

with the products and services they provide. These actions may include employment-related claims,

contract claims or tax claims. In addition to being a defendant, the AVEVA Group, the OSIsoft Group

or following the Acquisition, the Enlarged Group may also act as a claimant or counterclaimant in

certain actions, for example in seeking the recovery of monies owed to it.

Any litigation could have adverse financial consequences for the AVEVA Group, the OSIsoft Group

or following the Acquisition, the Enlarged Group and the AVEVA Group, the OSIsoft Group or

following the Acquisition, the Enlarged Group may not have made adequate reserves for the potential

losses associated with litigation, including legal fees and awards of damages. Litigation could also

involve a diversion of management’s time from the day-to-day running of the business. Negative

outcomes of litigation in which the AVEVA Group, the OSIsoft Group or following the Acquisition,

the Enlarged Group may be involved may also adversely affect the AVEVA Group’s, the OSIsoft

Group’s or following the Acquisition, the Enlarged Group’s reputation, which could have a material

adverse effect on the business, results of operations, financial condition and prospects of the AVEVA

Group, the OSIsoft Group or following the Acquisition, the Enlarged Group.

The AVEVA Group, the OSIsoft Group and, following the Acquisition, the Enlarged Group are also

subject to both international and local laws and regulations in each of the jurisdictions where they

operate, and events giving rise to any litigation may also lead to investigations, proceedings and/or

fines or sanctions being imposed, in addition to reputational damage and the loss of potential business

opportunities, for the AVEVA Group, the OSIsoft Group or following the Acquisition, the Enlarged

Group across different international jurisdictions.

1.22 Legislative or other governmental action in the United States could adversely affect the AVEVA

Group and, following the Acquisition, the Enlarged Group’s business.

Legislative action may be taken by the US Congress that, if ultimately enacted, could limit the

availability of tax benefits or deductions that the AVEVA Group currently expects to claim, override

tax treaties upon which the AVEVA Group and, following the Acquisition, the Enlarged Group is

expected to rely or otherwise increase the taxes that the United States will impose on the AVEVA

Group and, following the Acquisition, the Enlarged Group’s worldwide operations. Such changes

could materially adversely affect the AVEVA Group’s and, following the Acquisition, the Enlarged

Group’s effective tax rate and/or require it to take further action, at potentially significant expense, to

seek to achieve its intended effective tax rate. In addition, if proposals were enacted that had the effect

of limiting AVEVA’s ability, as a company organised under the laws of England and Wales, to take

advantage of the income tax treaty between the United Kingdom and the United States, AVEVA could

incur additional tax expense that could have a material adverse effect on the business, financial

condition, results of operation and prospects of the AVEVA Group and, following the Acquisition, the

Enlarged Group.

32


1.23 The AVEVA Group has entered into various acquisitions over recent years and may be subject to

or have the benefit of certain residual representations, warranties, indemnities, covenants or other

liabilities, obligations or rights which affect the business, operations and financing of the Enlarged

Group.

The AVEVA Group has entered into various acquisitions over recent years and may be subject to or

have the benefit of certain residual representations, warranties, indemnities, covenants or other

liabilities, obligations or rights including change of control provisions which may be triggered by the

Acquisition. For instance, the AVEVA Group acquired the Schneider Electric Software Business in

2018. Following the Acquisition, the Enlarged Group may become subject to or may take legal

proceedings if for any reason any such representations, warranties, indemnities, covenants or other

liabilities, obligations or rights become enforceable against or by the Enlarged Group. Any such

litigation may be time consuming and expensive and there may be no certainty as to the outcome of

any such legal proceedings once initiated. Any such litigation may also divert the attention and time

of the management of the Enlarged Group and may adversely affect the financial condition and results

of operations for the Enlarged Group. Further, the Enlarged Group may not have insurance cover for

these types of claims, or such insurance may not be adequate, or such types of claims may be excluded

from or otherwise limited by, the terms of any insurance policy.

33


2. RISKS RELATING TO THE ACQUISITION

2.1 Completion is subject to a number of conditions which may not be satisfied or waived.

The implementation of the Acquisition is subject to the satisfaction (or waiver, where applicable) of

a number of conditions, some of which are outside of the parties’ control, including:

• approval by Shareholders of the Resolution;

• the expiry or termination of any waiting periods under applicable U.S. competition laws

relating to the Acquisition;

• the receipt of the approval or other consent required to be obtained with respect to the

Acquisition under the antitrust and competition laws of each of the following jurisdictions:

Austria, Cyprus, Germany, Brazil, Colombia, Russia, Saudi Arabia and Serbia, which approval

or consent shall remain in full force and effect; and

• receipt of CFIUS Approval.

Completion is not conditional on the Rights Issue. Although the Rights Issue is fully committed and

underwritten, subject only to customary conditions and termination provisions, in the highly unlikely

event the Rights Issue is not completed prior to Completion, the Directors’ current intention is that,

in addition to drawing down the Term Facility, the cash consideration for the Acquisition will be

funded by drawing down the Bridge Facilities available under the Facilities Agreement, further details

of which are set out in Section 7 of this Part I (Letter from the Chairman of AVEVA Group plc).

Whilst OSIsoft’s areas of operations are such that they may elicit some degree of regulatory scrutiny,

AVEVA and Schneider Electric already have existing operations in areas of equivalent or greater

sensitivity which have been the subject of equivalent regulatory clearances in the past, both in the US

and other jurisdictions. There is however no guarantee that these (or other) conditions will be satisfied

(or waived, if applicable) prior to the Outside Date, in which case the Acquisition will not be

completed. The conditions are set out in more detail in Part II (Principal terms of the Acquisition) of

this document.

In relation to the conditions requiring certain antitrust and regulatory approvals and confirmations to

be obtained (including CFIUS Approval), the consents may take a longer than expected period of time

to obtain, may not be granted and/or the relevant authorities may, as a condition to granting their

approval or confirmation, impose requirements limitations or costs or require divestitures or place

restrictions on the conduct of the Enlarged Group’s business. This could delay or jeopardise

Completion, reduce the anticipated benefits of the Acquisition or result in a material adverse effect on

the business, results of operations, financial condition and prospects of the Enlarged Group.

If Completion does not occur, the AVEVA Group will experience a delay in the achievement of its

strategic objectives and could suffer a significant impact on its reputation. AVEVA will also be

required to cause the Purchasers to pay a termination fee of $85 million to the Sellers if the Stock and

Unit Purchase Agreement is terminated due to either: (a) Completion not having occurred by

20 December 2020 as a result of Shareholder approval, antitrust approvals or CFIUS Approval not

having been obtained or governmental orders having prevented Completion (the “Break Fee

Conditions”), provided that such date will be extended to 31 March 2021, and subsequently to

30 June 2021, where any of the Break Fee Conditions (other than the Shareholder approval condition)

have not been satisfied (without regard being had to the satisfaction or otherwise of the Shareholder

approval condition); or (b) a government authority having prohibited the Acquisition by way of a final

non-appealable order under an antitrust law or issued by CFIUS, provided that, in either case, at the

time of such termination all other conditions to AVEVA’s obligations to effect the Acquisition have

been satisfied or would have been satisfied at Completion, and OSIsoft has not committed a material

breach of the Stock and Unit Purchase Agreement which was the principal cause of Completion not

having occurred and the Stock and Unit Purchase Agreement being terminated.

34


2.2 The Acquisition may close even if there is an adverse change or development in respect of the

OSIsoft Group or the AVEVA Group.

Under the Stock and Unit Purchase Agreement, AVEVA has limited rights to terminate the Acquisition

if, prior to Completion, a breach of warranty or conduct undertaking occurs which has or is reasonably

likely to have a particular material adverse effect on the OSIsoft Group. There is no right for AVEVA

or the Sellers to terminate the Acquisition if, prior to Completion, there are any circumstances which

might have a material adverse effect on AVEVA or the AVEVA Group.

The termination right does not arise in all circumstances where there is an adverse change, event or

development in respect of the OSIsoft Group. The termination right would only be triggered if

(subject to certain exceptions) the relevant event results in or could reasonably be expected to result

in, a material adverse effect on the business, properties, assets, rights, liabilities (contingent or

otherwise), results of operations or condition (financial or otherwise) of OSIsoft or the OSIsoft Group

(as the case may be). The exceptions to this termination right include (among others) general changes

in the industry in which OSIsoft operates, changes in economic conditions or financial markets and

any natural disasters, pandemic or epidemic (which includes COVID-19), in each case provided that

the OSIsoft Group is not disproportionately affected by such event (in which case, only the

incrementally disproportionate impact will be taken into account).

Accordingly, the Acquisition may proceed even if there is an adverse change in relation to the AVEVA

Group or the OSIsoft Group. If an adverse change occurs and the Acquisition closes, the price of the

Ordinary Shares may be adversely affected. Conversely, if AVEVA exercises a right to terminate the

Acquisition for a material adverse effect in relation to OSIsoft or the OSIsoft Group (as the case may

be), the price of the Ordinary Shares may be adversely affected.

2.3 Increased AVEVA indebtedness in connection with the Acquisition may affect the Enlarged

Group’s business flexibility in the longer term.

Following Completion, the Enlarged Group will have increased debt compared to the AVEVA Group’s

historical level of debt. As at 31 March 2020, the AVEVA Group had a net cash position of

£114.5 million. Assuming the Rights Issue completes, AVEVA expects to assume $900 million

(approximately £686 million) of additional borrowings in connection with the financing to complete

the Acquisition. In the longer term, this increased level of debt could have the effect, among other

things, of reducing the Enlarged Group’s flexibility to respond to changing business and economic

conditions. In addition, the amount of cash required to service the Enlarged Group’s increased debt

levels and increased aggregate dividends following Completion and thus the demands on the Enlarged

Group’s cash resources will be greater than the amount of cash flows required to service the AVEVA

Group’s debt and pay dividends prior to the Acquisition. The increased levels of debt and dividends

following Completion could, in the longer term, also reduce funds available for the Enlarged Group’s

investments in capital expenditures, share repurchases and other activities and may create competitive

disadvantages for the Enlarged Group relative to other companies with lower debt levels.

2.4 The Rights Issue is not conditional upon Completion; if the Acquisition does not complete, the

proceeds of the Rights Issue will be retained by the AVEVA Group.

It is possible that Completion may not occur, in particular, if any of the conditions precedent to

Completion are not satisfied in accordance with the Stock and Unit Purchase Agreement. In the event

that this occurs following Rights Issue Admission of the Rights Issue Shares (nil paid), and the Rights

Issue becoming wholly unconditional, the Rights Issue would still be completed and funds would be

raised by the AVEVA Group.

In the unlikely event that the Acquisition does not complete, the Directors’ current intention is that the

proceeds of the Rights Issue will be invested on a short term basis in government bonds, or other high-

quality, highly liquid assets, while the Directors evaluate alternative uses of the funds. If no such uses

can be found, the Directors will consider how best to return surplus capital to Shareholders. Such a

return could carry fiscal costs for certain Shareholders, will have costs for AVEVA and would be

subject to applicable securities laws.

35


2.5 The Enlarged Group may not be able to recover damages for any losses suffered as a result of a

breach of business warranty by OSIsoft under the Stock and Unit Purchase Agreement.

The Stock and Unit Purchase Agreement contains customary business warranties given by OSIsoft for

the benefit of AVEVA as at the date of the Stock and Unit Purchase Agreement and, in the case of

certain warranties, repeated as at the date of Completion. AVEVA has obtained a representations and

warranties insurance policy that will be effective as of Completion, pursuant to which the AVEVA

Group will be able to recover from third-party insurance carriers for losses incurred as a result of a

breach of any of the representations and warranties given by OSIsoft and the Sellers in the Stock and

Unit Purchase Agreement, as well as pre-closing taxes, subject to certain exceptions and the terms

thereof (the “R&W Policy”). The liability of the insurers under the R&W Policy is subject to further

customary limitations, as well as a coverage limit of $200 million.

Certain claims under the business warranties given by OSIsoft are subject to limitations, including

financial and timing limitations and requirements that AVEVA has been unable to recover the loss

which is the subject of the claim from the R&W Policy. Unless such requirements are satisfied, there

may be no recourse for any breaches of such business warranties, and so the Enlarged Group may not

have contractual recourse against, or otherwise be able to recover from, OSIsoft, the Sellers or any

other party, in respect of any losses which it may suffer in respect of a breach of such business

warranties (for example, as to the validity of the OSIsoft Group’s intellectual property rights, financial

data and other commercial matters) in the Stock and Unit Purchase Agreement.

As a result, any such losses resulting from the breach of any such business warranties may not be

recoverable (either in full or in part) under the terms of the Stock and Unit Purchase Agreement and

the R&W Policy and such losses could have a material adverse effect on the business, financial

condition, results of operation and prospects of the Enlarged Group.

2.6 The Acquisition may fail to realise anticipated benefits or may exceed the Enlarged Group’s cost

expectations.

There can be no guarantee that, following Completion, the Enlarged Group will realise any or all of

the anticipated benefits of the Acquisition, either in a timely manner or at all. In particular, the

Enlarged Group’s ability to realise anticipated benefits and the timing of this realisation may be

affected by a variety of factors, including but not limited to:

• its broad geographic areas of operations and the resulting potential complexity of integrating

the AVEVA Group’s and the OSIsoft Group’s corporate and regional offices;

• the challenges of combining the extensive product offerings of the Enlarged Group and

creating an effective go-to-market strategy encompassing both direct and indirect sales

channels;

• challenges involved in integrating the AVEVA Group’s and the OSIsoft Group’s IT

infrastructure, processes and systems;

• the difficulty of achieving cost savings; and

• unforeseeable events, including major changes in the industries in which AVEVA Group and

the OSIsoft Group operate.

If the anticipated benefits that AVEVA expects are not realised or are delayed, the Enlarged Group’s

business, results of operations, financial condition and prospects could be adversely affected.

The Enlarged Group may incur higher than expected integration, transaction and Acquisition-related

costs. In addition, the AVEVA Group will incur legal, accounting and transaction fees and other costs

related to the Acquisition. Some of these costs are payable regardless of whether the Acquisition is

completed and such costs may be higher than anticipated, which may reduce the net benefits of the

Acquisition and impact the Enlarged Group’s business, results of operations, financial condition

and/or prospects.

36


2.7 Third parties may seek to terminate or alter existing contracts with the AVEVA Group or the

OSIsoft Group as a result of the Acquisition.

As a result of the Acquisition, some of the AVEVA Group’s or the OSIsoft Group’s customers,

potential customers or strategic partners may terminate or reduce their business relationship with the

Enlarged Group. Some of the AVEVA Group’s or the OSIsoft Group’s customers may not wish to

source a larger percentage of their needs from a single company, or may feel that the Enlarged Group

is too closely allied with one of their competitors. Potential customers or strategic partners of the

AVEVA Group or the OSIsoft Group may delay entering into, or decide not to enter into, a business

relationship with the Enlarged Group because of the Acquisition. If the AVEVA Group’s or the

OSIsoft Group’s relationships with their respective customers are adversely affected by the

Acquisition, the Enlarged Group’s business, results of operations, financial condition and prospects

may suffer.

The AVEVA Group and the OSIsoft Group also each have contracts with suppliers, distributors,

clients, licensors, licensees, lessees, lessors, lenders, insurers and other business partners that contain

“change of control” or similar clauses that allow the counterparty to terminate or change the terms of

their contract upon Completion. AVEVA and the OSIsoft Group will seek to obtain consents from

certain of these counterparties prior to Completion. If these third-party consents cannot be reasonably

obtained, and such third parties exercise a right to terminate or seek to renegotiate their contracts, it

may have adverse financial consequences for the Enlarged Group. In particular, the Enlarged Group

may experience disruption to its business while a replacement counterparty is engaged and this may

have a further impact on the Enlarged Group’s products and services or result in further disruption to

customers of the Enlarged Group. The Enlarged Group’s business, results of operations, financial

condition and prospects may suffer as a result.

2.8 The Acquisition may have a destabilising effect on employees and customers of the Enlarged

Group.

Uncertainty about the effect of the Acquisition on employees, customers and partners of the AVEVA

Group and the OSIsoft Group may have an adverse effect on the respective groups and, consequently,

on the Enlarged Group after Completion. Although the AVEVA Group and the OSIsoft Group intend

to take steps to reduce any adverse effects, these uncertainties may impair their ability to attract, retain

and motivate key personnel for a period of time after Completion, and could cause their customers,

suppliers and others that deal with them to seek to change existing business relationships. If, despite

retention efforts, key employees depart because of issues relating to the uncertainty and difficulty of

integration or a desire not to remain, the respective businesses and therefore the Enlarged Group could

be seriously harmed.

2.9 The Enlarged Group may require additional capital to support its growth in the future, and this

capital might not be available.

The Directors intend to make investments to support the business growth of the Enlarged Group and

may in the longer term, beyond the period set forth in the working capital statement contained in

Section 12 of Part XIV (Additional Information) of this document, require additional funds to respond

to business challenges, including the need to develop new technologies, penetrate new markets or

acquire complementary businesses and technologies. In particular, the Enlarged Group will need to

continue to invest significant resources in research and development in order to enhance the Enlarged

Group’s existing products and services and introduce new high quality products and services.

Insufficient focus and investment on key research and development projects may damage the long-

term prospects of the Enlarged Group. The Enlarged Group cannot ensure that, should it require

additional funds in the future through an issue of equity, equity-linked securities, debt instruments or

facilities or other sources, it will be able to secure such additional funding, or additional funding may

not be available on terms which are acceptable to the Enlarged Group. The terms of any additional

finding (where such funding is secured through a debt facility or borrowing from banks or financial

institutions) may contain restrictions on incurring further debt, or other restrictive covenants, which

may impact the Enlarged Group’s commercial and financial flexibility.

37


3. RISKS RELATING TO THE RIGHTS ISSUE AND AN INVESTMENT IN NEW AVEVA

SHARES

3.1 Schneider Electric will, for the purposes of the Listing Rules, continue to be a controlling

shareholder of the AVEVA Group and, following the Acquisition, the Enlarged Group and the

AVEVA Group and, following the Acquisition, the Enlarged Group will remain subject to

restrictions under the Relationship Agreement.

Following the Rights Issue, Schneider Electric will hold 60.1 per cent. of the AVEVA Group. Upon

Completion and following the issue of the Consideration Shares, Schneider Electric will hold 57.4 per

cent. of the AVEVA Group (assuming no acquisition of Ordinary Shares by Schneider Electric prior

to the date of Completion other than the Schneider Electric Rights Issue Shares and that no Ordinary

Shares other than the New AVEVA Shares are issued prior to Completion). Schneider Electric will

therefore continue to be a “controlling shareholder” of the AVEVA Group and, following the

Acquisition, the Enlarged Group for the purposes of the Listing Rules.

The Relationship Agreement records the understanding of the parties thereto regarding the terms of

the relationship between Schneider Electric and the AVEVA Group or, following the Acquisition, the

Enlarged Group. It also addresses the governance of the AVEVA Group and, following the

Acquisition, the Enlarged Group as carrying on an independent business and restricts the AVEVA

Group and, following the Acquisition, the Enlarged Group from taking certain actions without

Schneider Electric consent. These restrictions, and other non-time limited restrictions, may limit the

AVEVA Group’s and, following the Acquisition, the Enlarged Group’s ability to pursue certain

strategic transactions or engage in other transactions, including share issues, certain asset disposals,

mergers and consolidations during the restricted period. As a result, the AVEVA Group and, following

the Acquisition, the Enlarged Group might determine to forgo certain transactions that otherwise

could be advantageous, which could have an adverse effect on the business, financial condition,

results of operation and prospects of the AVEVA Group and, following the Acquisition, the Enlarged

Group. The Relationship Agreement also grants certain rights to Schneider Electric (in addition to its

voting rights) for as long as it retains ownership (direct or indirect) of specified percentages of

AVEVA’s shares, including the right to nominate directors for appointment to the AVEVA Group’s

and, following the Acquisition, the Enlarged Group’s board and certain committees of the AVEVA

Group’s and, following the Acquisition, the Enlarged Group’s board.

The Relationship Agreement requires that if Schneider Electric proposes to dispose of its interests in

any Ordinary Shares, it must notify AVEVA. However, there is no other contractual restriction on the

ability of the Schneider Electric Group to dispose of its interest(s) in the Ordinary Shares. Any

disposal of a substantial number of Ordinary Shares, or the perception that such a disposal might

occur, could adversely affect the prevailing market price of the Ordinary Shares.

As a result of its shareholding, Schneider Electric will also continue to have the voting majority

necessary to adopt or block certain resolutions at general meetings of the AVEVA Group’s and,

following the Acquisition, the Enlarged Group’s shareholders, including resolutions concerning the

election of or removal of directors.

This concentration of ownership may also have the effect of delaying or deterring third parties from

purchasing Ordinary Shares or making a takeover offer for the AVEVA Group or, following the

Acquisition, the Enlarged Group. Such delay or deterrence could result in Shareholders receiving a

reduced or no premium for their Ordinary Shares as part of a sale of the AVEVA Group or, following

the Acquisition, the Enlarged Group, and that possibility may prospectively have a negative effect on

the market price of the Ordinary Shares.

In addition, if a third party were to make a takeover offer for the AVEVA Group or, following the

Acquisition, the Enlarged Group, by virtue of the size of Schneider Electric’s shareholding, Schneider

Electric would be able to determine whether or not such an offer were successful. If Schneider

Electric were to accept such an offer, a third party could acquire a majority shareholding interest in

the AVEVA Group or, following the Acquisition, the Enlarged Group. If Schneider Electric were to

reject such an offer, other shareholders in the AVEVA Group or, following the Acquisition, the

38


Enlarged Group would not be able to sell their Ordinary Shares pursuant to the offer. Such

possibilities may prospectively have a negative effect on the market price of the Ordinary Shares.

There may also be a difference between the interests of Schneider Electric and the interests of other

shareholders in AVEVA with respect to, for example, AVEVA’s dividend policy.

3.2 Shareholders who do not take up their rights in full will experience dilution in their ownership.

If Qualifying Shareholders do not (or are not permitted under the terms of the Rights Issue to) take

up the offer of Rights Issue Shares, their proportionate ownership and voting interests in the AVEVA

Group will be reduced. Even if a Qualifying Shareholder elects to sell any Nil Paid Rights, or such

Nil Paid Rights are sold on behalf of a Qualifying Shareholder, any compensation received may not

be sufficient to compensate it fully for the dilution of its percentage holding of the AVEVA Group’s

and, following the Acquisition, the Enlarged Group’s Ordinary Shares which may be caused as a result

of the Rights Issue. Qualifying Shareholders’ interests in the Company will also be diluted as a

consequence of the issue of the Consideration Shares in connection with the Acquisition.

3.3 An active trading market in Nil Paid Rights may not develop on the London Stock Exchange or the

Nil Paid Rights may become worthless.

An active trading market in the Nil Paid Rights may not develop on the London Stock Exchange

during the trading period. In addition, because the trading price of the Nil Paid Rights depends on the

trading price of the Ordinary Shares, the Nil Paid Rights price may be volatile and subject to the same

risks as noted in risk factor 3.4 below. The existing volatility of the Ordinary Shares may also magnify

the volatility of the Nil Paid Rights.

The public trading market price of the Ordinary Shares may decline below the subscription price for

the Rights Issue Shares. Should that occur after investors exercise their rights in the Rights Issue,

investors will suffer an immediate unrealised loss as a result. Following the exercise of rights, such

investors may be unable to sell Rights Issue Shares at a price equal to or greater than the subscription

price for these shares.

Existing Shareholders who decide not to exercise their rights may also sell or transfer their Nil Paid

Rights. If the public trading market price of the Ordinary Shares declines below the subscription price

for the Rights Issue Shares, investors who have acquired any such Nil Paid Rights in the secondary

market will suffer a loss as a result.

3.4 The share price of publicly traded companies can be highly volatile, including for reasons related

to differences between expected and actual operating performance, corporate and strategic actions

taken by such companies or their competitors, speculation and general market conditions and

regulatory changes.

Existing Shareholders and prospective investors should be aware that, following Rights Issue

Admission, the value of an investment in the Ordinary Shares may decrease abruptly which may

prevent Shareholders from being able to sell their Ordinary Shares at or above the price they paid for

them. The price of the Ordinary Shares may further fall in response to the Acquisition, market

appraisal of the AVEVA Group’s and, following the Acquisition, the Enlarged Group’s strategy,

operating results, financial position and/or prospects, or in response to regulatory changes affecting

its operations. In addition, stock markets have, from time to time, experienced significant price and

volume fluctuations which have affected the market price of securities. A number of factors, some of

which are outside of the AVEVA Group’s and, following the Acquisition, the Enlarged Group’s

control, may impact the price and performance of the Ordinary Shares, including:

• a delay to the integration of the OSIsoft Group or if such integration is unsuccessful;

• AVEVA not achieving the expected benefits of the Acquisition as rapidly, or to the extent

anticipated by, AVEVA’s financial analysts or investors, or at all;

39


• the effect of the Acquisition on the Enlarged Group’s financial results not being consistent with

the expectations of financial analysts or investors;

• actions or statements by Schneider Electric, as the AVEVA Group’s and, following the

Acquisition, the Enlarged Group’s controlling shareholder;

• differences between its expected and actual operating performance as well as between the

expected and actual performance of its competitors or of the software industry generally;

• the publication of research reports by analysts or failure to meet analysts’ forecasts;

• prevailing economic conditions and conditions or trends in the market generally (including the

perpetuating impact of the COVID-19 pandemic (see also risk factor 1.1 above));

• speculation, whether or not well founded, about possible changes in its management team;

• strategic actions by it or its competitors, such as mergers, acquisitions, divestitures,

partnerships and restructurings;

• negative developments in international trade and commerce;

• regulatory and tax changes;

• political upheaval or other political events affecting the international capital markets (including

the United Kingdom’s withdrawal from the European Union; and

• acts of God or force majeure.

3.5 The ability to take up Nil Paid Rights under the Rights Issue will not be readily available to any

Existing Shareholders in the United States or any Excluded Territories (subject to certain

exceptions).

The ability to take up Nil Paid Rights under the Rights Issue will not be readily available to any

Existing Shareholder with a registered address, or located or resident, in the United States or Excluded

Territory (subject to certain exceptions) in the absence of certain other actions. If a Qualifying

Shareholder is not able to take up Nil Paid Rights granted in respect of Existing Ordinary Shares under

the Rights Issue, then it will suffer dilution, as described above, and it may not receive the economic

benefit of such Nil Paid Rights because there is no assurance that the procedure in respect of Nil Paid

Rights not taken up, described in Part IV (Terms and Conditions of the Rights Issue) of this document,

will be successful either in selling the Nil Paid Rights or in respect of the prices obtained.

3.6 Investors may not receive compensation for expired and unexercised Nil Paid Rights.

The subscription period for the Rights Issue Shares being offered in the Rights Issue is expected to

commence at 8.00 a.m. on 25 November 2020 and is expected to expire at 11.00 a.m. on 9 December

2020. If an investor fails to exercise its Nil Paid Rights prior to the end of the subscription period,

then it may not receive the economic benefit of such Nil Paid Rights because there is no assurance

that the procedure in respect of Nil Paid Rights not taken up, described in Part IV (Terms and

Conditions of the Rights Issue) of this document will be successful in either selling the Nil Paid

Rights, or in respect of the prices obtained.

3.7 Any future issues of Ordinary Shares will further dilute the holdings of Shareholders and could

adversely affect the market price of the Ordinary Shares.

Other than pursuant to the Rights Issue and the Acquisition and its existing share schemes, AVEVA

has no current plans for further issues of Ordinary Shares. However, it is possible that AVEVA may

decide to offer additional shares in the future either to raise capital or for other purposes. If

Shareholders do not take up such an offer of Ordinary Shares or are not eligible to participate in such

offering, their proportionate ownership and voting interests in AVEVA will be reduced accordingly.

An additional offering, or significant sales of shares by Schneider Electric, or by other major

40


shareholders of the AVEVA Group or, following the Acquisition, the Enlarged Group, could have a

material adverse effect on the market price of the Ordinary Shares as a whole.

3.8 AVEVA cannot assure investors that it will make dividend payments in the future.

The dividend payments to Shareholders will depend upon a number of factors, including the results

of operations, cash flows and financial position, contractual restrictions and other factors considered

relevant by the Board. Moreover, under English law, AVEVA may pay dividends on the Ordinary

Shares only out of profits available for distribution determined in accordance with the Companies Act.

Although the Directors intend to continue paying dividends to Shareholders in accordance with the

terms of the Relationship Agreement, there is no assurance that AVEVA will declare and pay, or have

the ability to declare and pay, any dividends on the Ordinary Shares in the future.

As a holding company, AVEVA’s ability to pay dividends in the future is affected by a number of

factors, principally its ability to receive sufficient dividends from subsidiaries. The payment of

dividends to AVEVA by its subsidiaries is, in turn, subject to restrictions, including certain regulatory

and legal requirements. The ability of these subsidiaries to pay dividends is subject to applicable local

laws and other restrictions including, but not limited to, applicable tax laws. These laws and

restrictions could limit the payment of future dividends to AVEVA by its subsidiaries, which could

restrict AVEVA’s ability to pay a dividend to its shareholders.

3.9 The AVEVA Group’s or, following the Acquisition, the Enlarged Group’s operating results may

fluctuate and, if the AVEVA Group or, following the Acquisition, the Enlarged Group fails to meet

the expectations of securities analysts or investors, the market price of Ordinary Shares may

decline significantly.

Following Rights Issue Admission, the operating results of the AVEVA Group or, following the

Acquisition, the Enlarged Group may fluctuate due to a variety of factors, many of which are outside

the control of the AVEVA Group or, following the Acquisition, the Enlarged Group. These factors

include:

• the level of expenditure committed to application development and deployment by information

technology organisations;

• the degree of competition faced by the AVEVA Group or, following the Acquisition, the

Enlarged Group;

• foreign currency exchange rate movements;

• growth in the information technology services market, general economic and business

conditions, particularly in Europe and the United States;

• exposure to traditionally cyclical industries, such as oil and gas, and mining;

• changes in technology; and

• the ability of the AVEVA Group and, following the Acquisition, the Enlarged Group to attract

and retain personnel (including senior management and directors).

As a result, comparisons of the historic operating results of the AVEVA Group and the OSIsoft Group

may not provide a good indication of the future performance of the Enlarged Group. Moreover, if the

operating results of the AVEVA Group or, following the Acquisition, the Enlarged Group fall below

the expectations of securities analysts or investors, the market price of Ordinary Shares may decline

significantly.

3.10 A Shareholder or an investor whose principal currency is not pounds sterling is exposed to foreign

currency risk.

The Ordinary Shares are denominated in pounds sterling. An investment in Ordinary Shares by an

investor whose principal currency is not pounds sterling exposes the investor to foreign currency risk,

41


including in relation to any payment of a dividend by AVEVA. Any depreciation of pounds sterling in

relation to such foreign currency would reduce the value of the investment in the Ordinary Shares in

foreign currency terms, and any appreciation of pounds sterling against such other currency would

increase the value in foreign currency terms.

3.11 Admission of the Rights Issue Shares may not occur when expected.

Rights Issue Admission is subject to the approval (subject to satisfaction of any conditions which such

approval is expressed) of the FCA and Rights Issue Admission will become effective as soon as a

dealing notice has been issued by the FCA and the London Stock Exchange has acknowledged that

the Rights Issue Shares (nil and fully paid) will be admitted to trading. There can be no guarantee that

any conditions to which Rights Issue Admission is subject will be met or the FCA will issue a dealing

notice. See the Expected Timetable of Principal Events on page 49 of this document for further

information on the expected dates of these events.

3.12 Holders of Ordinary Shares outside the United Kingdom may not be able to participate in future

equity offerings.

English law provides for pre-emptive rights generally to be granted to the Shareholders, unless such

rights are disapplied by shareholder resolution. However, securities laws of certain jurisdictions may

restrict the AVEVA Group’s or, following the Acquisition, the Enlarged Group’s ability to allow

participation by certain Overseas Shareholders in any future issue of Ordinary Shares. In particular,

and subject to certain exceptions, Shareholders who are located in the United States may not be able

to exercise their rights in the Rights Issue or on a future issue of Ordinary Shares, unless a registration

statement under the Securities Act is effective with respect to the Ordinary Shares or an exemption

from the registration requirements is available thereunder. The AVEVA Group has no current intention

to file any such registration statement, and cannot assure prospective investors that any exemption

from the registration requirements would be available to enable US or other Overseas Shareholders

to exercise such pre-emption rights or, if available, that it will utilise any such exemption.

Qualifying Shareholders who have a registered address in or who are located or resident in countries

other than the United Kingdom should consult their professional advisers as to whether they require

any governmental or other consents, or need to observe any other formalities to enable them to acquire

Rights Issue Shares. Any Shareholder who is not entitled to participate in any future issue of Ordinary

Shares carried out by the Company will suffer dilution, as described above.

3.13 The ability of Overseas Shareholders to bring actions or enforce judgments against the AVEVA

Group or, following the Acquisition, the Enlarged Group or its directors or officers may be limited.

The ability of an Overseas Shareholder to bring an action against the AVEVA Group and, following

the Acquisition, the Enlarged Group, may be limited under law. AVEVA is a public limited company

incorporated in England and Wales. The rights of holders of Ordinary Shares are governed by English

law and the Articles. These rights differ from the rights of shareholders in typical US corporations and

some other non-UK corporations. In particular, English law significantly limits the circumstances

under which shareholders of English companies may bring derivative actions. Under English law, in

most cases, only AVEVA can be the proper claimant for purposes of maintaining proceedings in

respect of wrongful acts committed against it. Neither an individual shareholder nor any group of

shareholders has any right of action in such circumstances. In addition, English law does not afford

appraisal rights to dissenting shareholders in the form typically available to shareholders in a US

corporation.

An Overseas Shareholder may not be able to enforce a judgment against some or all of the Directors

and executive officers. The majority of the Directors and executive officers are residents of the United

Kingdom. Consequently, it may not be possible for an Overseas Shareholder to effect service of

process upon the Directors and executive officers within that Shareholder’s country of residence or to

enforce judgments of courts of that shareholder’s country of residence based on civil liberties under

that country’s securities laws. There can be no assurance that an Overseas Shareholder will be able to

42


enforce any judgments in civil and commercial matters or any judgments under the securities laws of

countries other than the United Kingdom against the Directors or executive officers who are residents

of the United Kingdom or countries other than those in which judgment is made. In addition, English

or other courts may not impose civil liability on the Directors or executive officers in any original

action based solely on the foreign securities laws brought against the Company or the Directors in a

court of competent jurisdiction in England or other countries.

3.14 AVEVA may be treated as a “passive foreign investment company” for US federal income tax

purposes if the Acquisition is not completed by the Outside Date of 30 June 2021.

The Directors believe that AVEVA was not a passive foreign investment company (“PFIC”) for US

federal income tax purposes in its previous taxable year and, assuming Completion occurs and the

proceeds of the Rights Issue are applied as part of the cash consideration payable by the Company in

connection with the Acquisition by the Outside Date of 30 June 2021, the Directors believe that the

Company will not become a PFIC in its current taxable year or in the foreseeable future. The

determination of PFIC status is fact specific and must be made annually after the close of each taxable

year and may be affected by the Company’s income, assets, activities (including the application of the

proceeds of the Rights Issue as part of the cash consideration payable by the Company in connection

with the Acquisition) and the market value of the Ordinary Shares. Any delay to the date of

Completion beyond 30 June 2021 will increase the likelihood of the Company being classified as a

PFIC. There can be no assurance that the Company will not be a PFIC for the current taxable year or

any future taxable year. If the Company were to be treated as a PFIC for any taxable year when a US

holder owns or owned Rights Issue Shares (or, under certain proposed regulations, rights to acquire

Rights Issue Shares), materially adverse consequences could result to such US holders for that year

and all future years during which such US holder holds or disposes of such Rights Issue Shares. US

holders should review the discussion in Section 3 of Part XII (Taxation) of this document.

43


IMPORTANT INFORMATION

Presentation of financial information

Unless otherwise indicated all references in this document to “pounds sterling”, “GBP”, “£”, “pence” or

“p” are to the lawful currency of the United Kingdom; references to “Euro” or “€” are to the official

currency of the Eurozone; references to “CAD$” are to the lawful currency of Canada; and references to

“US dollars” or “$” are to the lawful currency of the US.

In this document, unless otherwise stated, US dollar amounts have been converted into pounds sterling and

pounds sterling amounts into US dollars using the 5 November 2020 closing spot exchange rates on the

Latest Practicable Date, as follows: $1.00: £0.7627 and £1.00: $1.3111.

Where indicated in this document, US dollar amounts have been converted into pounds sterling and pounds

sterling amounts into US dollars using the average contracted forward rate under the deliverable forward

currency contracts entered into by AVEVA, as described in paragraph 9.1(n)(xi) of Part XIV (Additional

Information) of this document, as follows: $1.00: £0.7693 and £1.00: $1.2999 (the “Forward Rate”).

Rounding

Certain figures contained in this document or incorporated into this document by reference, including the

financial information presented in a number of tables in this document, have been rounded to the nearest

whole number or the nearest decimal place. Therefore, the sum of the numbers in a row or a column may

not conform exactly to the total figure given for that row or column. In addition, certain percentages

presented in this document reflect calculations based upon the underlying information prior to rounding and,

accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations

were based upon the rounded numbers. Differences between figures set out in the text of this document are

based on the differences between the relevant figures rounded to the nearest whole number or nearest

decimal place. Such differences may not conform exactly to the relevant figures if the relevant calculations

were based on the underlying information prior to rounding.

Sources of information

AVEVA

The audited consolidated financial statements of the AVEVA Group for FY 2020, FY 2019 and FY 2018,

together with the audit reports thereon, are incorporated by reference into this document from the AVEVA

Group’s 2020 Annual Report and Accounts, the AVEVA Group’s 2019 Annual Report and Accounts and the

AVEVA Group’s 2018 Annual Report and Accounts respectively.

The unaudited AVEVA Group H1 2021 Interim Results are incorporated by reference into this document

from the AVEVA Group H1 2021 Interim Results Statement.

The audited consolidated financial statements of the AVEVA Group for FY 2020, FY 2019 and FY 2018 have

been prepared in accordance with IFRS, and the audit reports on these financial statements were unqualified.

Further details can be found in Part VIII (Historical Financial Information of the AVEVA Group) of this

document. The unaudited AVEVA Group H1 2021 Interim Results have been prepared in accordance with

International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the European Union.

Where information has been extracted from the AVEVA Group’s audited consolidated financial statements,

the information is audited unless otherwise stated. Where the information has been extracted from the

AVEVA Group H1 2021 Interim Results, the information is unaudited.

LR 13.5.6

LR 13.5.6(1)

Annex 3, 11.2.1

Annex 3, 11.2.2

LR 13.5.8(1)

LR 13.5.8(2)

Annex 3, 11.2.3

44


OSIsoft

Financial information relating to OSIsoft has, unless otherwise stated, been extracted from the historical

financial information of OSIsoft for OSIsoft FY 2019, OSIsoft FY 2018 and OSIsoft FY 2017 and for the

seven months ended 31 July 2020 (the “OSIsoft 2020 Interim Period”), which are set out in Part X

(Historical Financial Information of the OSIsoft Group) of this document. Where information relating to

OSIsoft has been extracted from the historical financial information for OSIsoft FY 2019, OSIsoft FY 2018

and/or OSIsoft FY 2017, the information has been reported on by BDO LLP unless otherwise stated. Where

the information has been extracted from the OSIsoft Group’s financial statements for OSIsoft 2020 Interim

Period, the information is unaudited.

Certain terms used in this document, including all capitalised terms and certain technical and other terms,

are defined and explained in Part XVI (Definitions) of this document.

Non-IFRS Measures

Parts of this document, including this section “Important Information”, contain information regarding

alternative performance measures. An investor should not consider such items as alternatives to the

applicable IFRS measures. In particular, an investor should not consider any such non-IFRS measures as a

measurement of the AVEVA Group’s or the OSIsoft Group’s financial performance or liquidity under IFRS

as an alternative to the AVEVA Group’s or the OSIsoft Group’s operating results or any other performance

measures derived in accordance with IFRS or as an alternative to cash flow from operating activities as a

measure of the AVEVA Group’s or the OSIsoft Group’s activity. It may not therefore be comparable with

similarly titled profit measurements reported by other companies. It is not intended to be a substitute for

IFRS measures of profit. For a discussion regarding alternative performance measures, see Part VII

(Operating and Financial Review of the AVEVA Group) and Part IX (Operating and Financial Review of the

OSIsoft Group).

The non-IFRS measures that AVEVA’s Directors use to manage the AVEVA Group’s business and will use

to manage the Enlarged Group’s business include those referred to in Part VII (Operating and Financial

Review of the AVEVA Group) and in Part X (Operating and Financial Review of the OSIsoft Group) and

included there are reconciliations of the non-IFRS measures to the most directly comparable measures

calculated and presented in accordance with IFRS.

The AVEVA Group uses and will use such measures to measure operating performance and liquidity, in

presentations to the Directors and as a basis for strategic planning and forecasting, as well as monitoring

certain aspects of operating cash flow. The Directors believe that these and similar measures are used widely

by certain investors, securities analysts and other interested parties as supplemental measures of performance

and liquidity.

The non-IFRS measures may not be comparable to other similarly titled measures used by other companies

and have limitations as analytical tools and should not be considered in isolation or as a substitute for

analysis of the AVEVA Group’s or the Enlarged Group’s operating results as reported under IFRS. The

AVEVA Group does not regard these non-IFRS measures as a substitute for, or superior to, the equivalent

measures calculated and presented in accordance with IFRS or those calculated using financial measures that

are calculated in accordance with IFRS.

See also Part XVI (Definitions) for a definition of “billings”, which is an alternative performance measure

used to measure the performance of the OSIsoft Group.

Unaudited pro forma financial information

In this document, any reference to “pro forma” financial information is to information which has been

extracted without material adjustment from the unaudited pro forma financial information contained in

Part XI (Unaudited Pro Forma Financial Information on the Enlarged Group) of this document. The

unaudited pro forma income statement and unaudited pro forma statement of net assets contained in that

section is intended to show how the Acquisition, the Rights Issue and the drawdown of the Term Facility

might have affected the income statement of AVEVA Group plc for FY 2020 if they had taken place at the

LR 13.5.6

LR 13.5.7(1)

LR 13.5.8(2)

45


beginning of that financial year, and on the net assets of AVEVA Group plc as at 30 September 2020 if they

had taken place at that date.

The unaudited pro forma financial information has been prepared for illustrative purposes only. The

hypothetical financial position and results included in the pro forma financial information may differ from

the Enlarged Group’s actual financial position or results. Future results of operations may differ materially

from those presented in the pro forma information due to various factors.

Forward-looking statements

This document includes statements that are, or may be deemed to be, “forward-looking statements”. These

forward-looking statements can be identified by the use of forward-looking terminology, including the terms

“believes”, “estimates”, “plans”, “anticipates”, “targets”, “aims”, “continues”, “expects”, “intends”,

“hopes”, “may”, “will”, “would”, “could” or “should” or, in each case, their negative or other variations or

comparable terminology.

These forward-looking statements include matters that are not facts. They appear in a number of places

throughout this document and include statements regarding the Directors’ intentions, beliefs or current

expectations concerning, amongst other things, the AVEVA Group’s, OSIsoft’s and, following Completion,

the Enlarged Group’s results of operations, financial condition, liquidity, prospects, growth, strategies and

the industries in which the AVEVA Group, the OSIsoft Group and, following Completion, the Enlarged

Group operate. By their nature, forward-looking statements involve risk and uncertainty because they relate

to future events and circumstances.

A number of factors could cause actual results and developments to differ materially from those expressed

or implied by the forward-looking statements, including, without limitation: conditions in the markets; the

market position of each of the AVEVA Group, the OSIsoft Group and, following Completion, the Enlarged

Group; earnings, financial position, cash flows, return on capital and operating margins of the AVEVA

Group, the OSIsoft Group and, following Completion, the Enlarged Group; anticipated investments and

capital expenditures of the AVEVA Group, the OSIsoft Group and, following Completion, the Enlarged

Group; changing business or other market conditions; and general economic conditions. These and other

factors could adversely affect the outcome and financial effects of the plans and events described herein.

Forward-looking statements contained in this document based on past trends or activities should not be taken

as a representation that such trends or activities will continue in the future. Subject to any requirement under

the Listing Rules, Prospectus Regulation Rules, the Disclosure Guidance and Transparency Rules or other

applicable legislation or regulation, neither the Company, Lazard, Numis, J.P. Morgan Cazenove, Barclays,

BNP PARIBAS nor Santander undertakes any obligation to update or revise any forward-looking statements,

whether as a result of new information, future events or otherwise. Investors should not place undue reliance

on forward looking statements, which speak only as of the date of this document.

Prospective investors should carefully review the section of this document entitled “Risk Factors” for a

discussion of factors that could cause the Company’s actual results to differ materially from those expected

before making an investment decision. In light of these risks, uncertainties and assumptions, the events

described in the forward-looking statements in this document and/or the information incorporated by

reference into this document may not occur.

For the avoidance of doubt, nothing in this document constitutes a qualification of the working capital

statement contained in Section 12 of Part XIV (Additional Information) of this document.

Industry and market data

Unless the source is otherwise stated, the market, economic and industry data in this document constitute the

Directors’ estimates, using underlying data that has been sourced from independent third parties. Market data

and certain industry data and forecasts included in this document have been obtained from internal company

surveys, consultant surveys, market research, publicly available information, reports of government agencies

and industry publications and surveys. Where information in this document has been sourced from third

parties, the source of such information has been clearly stated adjacent to the reproduced information.

Annex 3, 1.4

Annex 12, 1.4

46


Where information contained in this document has been sourced from a third party, the Company confirms

that such information has been accurately reproduced and, so far as the Company is aware and able to

ascertain from information published by third parties, no facts have been omitted which would render the

reproduced information inaccurate or misleading. The Company has not independently verified any of the

data from third-party sources, nor ascertained the underlying economic assumptions relied upon therein and

the accuracy and completeness of such information is not guaranteed. Similarly, internal surveys, industry

forecasts and market research, which the Company believes to be reliable based on the Directors’ knowledge

of the industry, have not been independently verified. Statements as to the AVEVA Group’s, the OSIsoft

Group’s and, following the Acquisition, the Enlarged Group’s market positions are based on recently

available data.

Documents

Any Shareholder, person with information rights or other person to whom this document is sent may request

a copy of each of the documents incorporated by reference into this document as set out in Part XV

(Documents Incorporated by Reference) of this document. Hard copies will only be sent where valid requests

are received from such persons.

Requests for copies of any such document should be directed to the following address: AVEVA Group plc,

High Cross, Madingley Road, Cambridge, CB3 0HB or by telephoning on 01223 556655 (or +44 1223

556655 if telephoning from outside the United Kingdom). All valid requests will be dealt with as soon as

possible and hard copies mailed by no later than two Business Days following such request.

Website

The documents listed in Section 16 of Part XIV (Additional Information) of this document are available in

“read-only” format and can be printed from the Company’s website at the following address:

https://investors.aveva.com/ and are also available for inspection as provided in such section.

Unless otherwise specified in this document, neither the content of AVEVA’s website

(http://www.aveva.com), nor the content of any website accessible from hyperlinks on AVEVA’s website, is

incorporated into, or forms part of, this document, such content has not been scrutinised or approved by the

FCA and investors should not rely on them.

Validity

The validity of this document will expire on 5 November 2021 or, if earlier, the day after the later of: (i)

Consideration Shares Admission; and (ii) the day on which dealings in Rights Issue Shares, fully paid,

commence on the London Stock Exchange. The obligation to supplement a prospectus in the event of

significant new factors, material mistakes or material inaccuracies does not apply when a prospectus is no

longer valid.

No Forecasts or Estimates

Nothing in this document is intended as a profit forecast or estimate for any period and no statement in this

document should be interpreted to mean that earnings or earnings per share or dividend per share for the

Company for the current or future financial years would necessarily match or exceed the historical published

earnings or earnings per share or dividend per share for the Company.

Enforcement of Civil Liabilities

The ability of an Overseas Shareholder to bring an action against the Company may be limited under law.

The Company is a public limited company incorporated in England and Wales. The rights of holders of

Ordinary Shares are governed by English law and the Company’s memorandum and Articles. These rights

differ from the rights of shareholders in typical US corporations and some other non-UK corporations. In

particular, English law significantly limits the circumstances under which shareholders of English companies

may bring derivative actions. Under English law, in most cases, only the Company can be the proper

claimant for purposes of maintaining proceedings in respect of wrongful acts committed against it. Neither

Annex 3, 4.2

Annex 3, 7.1

Annex 3, 7.2

47


an individual shareholder nor any group of shareholders has any right of action in such circumstances. In

addition, English law does not afford appraisal rights to dissenting shareholders in the form typically

available to shareholders in a US corporation.

An Overseas Shareholder may not be able to enforce a judgment against some or all of the Directors and

executive officers. The majority of the Directors and executive officers are residents of the United Kingdom.

Consequently, it may not be possible for an Overseas Shareholder to effect service of process upon the

Directors and executive officers within that Shareholder’s country of residence or to enforce judgments of

courts of that shareholder’s country of residence based on civil liberties under that country’s securities laws.

There can be no assurance that an Overseas Shareholder will be able to enforce any judgments in civil and

commercial matters or any judgments under the securities laws of countries other than the United Kingdom

against the Directors or executive officers who are residents of the United Kingdom or countries other than

those in which judgment is made. In addition, English or other courts may not impose civil liability on the

Directors or executive officers in any original action based solely on the foreign securities laws brought

against the Company or the Directors in a court of competent jurisdiction in England or other countries.

48


EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Each of the times and dates in the table below is indicative only and may be subject to change. Please refer

to the notes for this timetable set out below.(1)(3)

Announcement of the Acquisition 25 August 2020

Announcement of the Rights Issue and publication and posting 6 November 2020

of this document, the Notice of General Meeting and

the Form of Proxy

Latest time and date for receipt of Forms of Proxy or 9.30 a.m. on 20 November 2020(2)

electronic appointments

Rights Issue Record Date close of business on 20 November 2020

General Meeting 9.30 a.m. on 24 November 2020

Announcement of the results of the General Meeting 24 November 2020

Despatch of Provisional Allotment Letters (to Qualifying 24 November 2020

Non-CREST Shareholders only)

Publication of notice in the London Gazette 25 November 2020

Existing Ordinary Shares marked “ex-rights” by the 8.00 a.m. on 25 November 2020

London Stock Exchange

Admission of, and commencement of dealings in, Nil Paid 8.00 a.m. on 25 November 2020

Rights on the London Stock Exchange

Nil Paid Rights credited to stock accounts in CREST as soon as practicable after

(Qualifying CREST Shareholders only) 8.00 a.m. on 25 November 2020

Nil Paid Rights and Fully Paid Rights enabled in CREST as soon as practicable after

8.00 a.m. on 25 November 2020

Recommended latest time and date for requesting withdrawal 4.30 p.m. on 3 December 2020

of Nil Paid Rights and Fully Paid Rights from CREST (i.e. if

your Nil Paid Rights and Fully Paid Rights are in CREST and

you wish to convert them to certificated form)

Recommended latest time for depositing renounced Provisional 3.00 p.m. on 4 December 2020

Allotment Letters, nil or fully paid, into CREST or for

dematerialising Nil Paid Rights or Fully Paid Rights into a

CREST stock account (i.e. if your Nil Paid Rights and Fully

Paid Rights are represented by a Provisional Allotment Letter

and you wish to convert them to uncertificated form)

Latest time and date for splitting Provisional Allotment Letters, 3.00 p.m. on 7 December 2020

nil or fully paid

Latest time and date for acceptance, payment in full and 11.00 a.m. on 9 December 2020

registration of renunciation of Provisional Allotment Letters

Results of Rights Issue to be announced through a Regulatory 8.00 a.m. on 10 December 2020

Information Service

Dealings in Rights Issue Shares, fully paid, commence on the 8.00 a.m. on 10 December 2020

London Stock Exchange

LR 13.3.1(9)(a)

LR 13.3.1(9)(e)

Annex 12, 5.1.2

Annex 12, 5.1.5

Annex 12, 5.1.6

Annex 12, 6.1

49


Rights Issue Shares credited to CREST accounts (uncertificated as soon as practicable after

holders only) 8.00 a.m. on 10 December 2020

Expected date for despatch of definitive share certificates for the by no later than 23 December 2020

Rights Issue Shares in certificated form and premium payments

(if applicable) in respect of Nil Paid Rights not taken up.

CREST accounts credited and cheques despatched in respect of by no later than 23 December 2020

premium payments (if applicable)

Expected date of Completion, issue of the Consideration Shares between December 2020

and admission of, and commencement of dealings in, and February 2021

Consideration Shares on the London Stock Exchange

Notes:

(1) The times and dates set out in the expected timetable of principal events above and mentioned in this document and in any other

document issued in connection with the Acquisition or Consideration Shares Admission are subject to change by the Company,

in which event details of the new times and dates will be notified to the FCA, the London Stock Exchange and, where appropriate,

to Shareholders.

(2) References to times in this document are to United Kingdom time.

(3) If you have any queries on the procedure for acceptance and payment or on the procedure for splitting Provisional Allotment

Letters you should contact Link Group on +44 (0) 371 664 0321. Calls are charged at the standard geographic rate and will vary

by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between

9.00 a.m. and 5.30 p.m. (London time), Monday to Friday excluding public holidays in England and Wales. Please note that Link

Group cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training

purposes.

50


SHARE CAPITAL AND RIGHTS ISSUE STATISTICS

Number of Ordinary Shares in issue at the Latest Practicable Date 161,665,453

Rights Issue

Basis of Rights Issue 7 Rights Issue Shares for every

9 Existing Ordinary Shares

Rights Issue Price per Rights Issue Share 2,255 pence

Discount of the Rights Issue Price to the closing price of 4,162 pence per 45.8 per cent.

Ordinary Share on the Latest Practicable Date

Number of Rights Issue Shares to be provisionally allotted pursuant to the 125,739,796

Rights Issue(1)

Number of Ordinary Shares in issue immediately following completion of 287,405,249

the Rights Issue(1)

Number of Rights Issue Shares as a percentage of the enlarged issued share 43.7 per cent.

capital of AVEVA in issue immediately following completion of

the Rights Issue(1)

Estimated gross proceeds of the Rights Issue £2.835 billion

Estimated expenses of the Rights Issue(3) £28.6 million

Estimated net proceeds of the Rights Issue receivable by AVEVA, after £2.807 billion

deduction of estimated expenses of the Rights Issue(3)

Acquisition

Number of Consideration Shares to be issued pursuant to the Acquisition 13,655,570

Number of Ordinary Shares in issue immediately following Consideration 301,060,819

Shares Admission(2)

Consideration Shares as a percentage of the share capital of the Enlarged 4.5 per cent.

Group in issue immediately following Consideration Shares Admission(2)

Estimated expenses of the Acquisition for the Company(3) £47.7 million

Total

Rights Issue Shares and Consideration Shares in aggregate as a percentage 46.3 per cent.

of the share capital of the Enlarged Group in issue immediately following

Consideration Shares Admission(1)(2)

Estimated expenses of the Rights Issue and the Acquisition for the Company(3) £76.2 million

Notes:

(1) On the assumption that no further Ordinary Shares are issued from the Latest Practicable Date until completion of the Rights

Issue other than the Rights Issue Shares.

(2) On the assumption that no further Ordinary Shares are issued from the Latest Practicable Date until Completion other than the

Rights Issue Shares and the Consideration Shares.

(3) All expenses are exclusive of any amounts in respect of VAT.

Annex 12, 5.1.8

Annex 12, 5.3.1

Annex 12, 6.3

Annex 12, 8.1

LR 13.3.1(9)(f)

51


DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND

ADVISERS

Directors of AVEVA Philip Aiken AM (Chairman)

Craig Hayman (Chief Executive Officer)

James Kidd (Deputy Chief Executive Officer and Chief Financial

Officer)

Christopher Humphrey (Senior Independent Non-Executive

Director)

Jennifer Allerton (Independent Non-Executive Director)

Ron Mobed (Independent Non-Executive Director)

Paula Dowdy (Independent Non-Executive Director)

Peter Herweck (Non-Executive Director and Vice Chairman)

Olivier Blum (Non-Executive Director)

Secretary David Ward

Registered office High Cross

Madingley Road

Cambridge

CB3 0HB

Financial Adviser to the Company Lazard & Co., Limited

50 Stratton Street

London

W1J 8LL

Numis Securities Limited

The London Stock Exchange Building

10 Paternoster Square

London

EC4M 7LT

J.P. Morgan Securities plc

(which conducts its UK investment banking business as

J.P. Morgan Cazenove)

25 Bank Street

London

E14 5JP

Joint Bookrunner Barclays Bank PLC

5 The North Colonnade

Canary Wharf

London

E14 4BB

Joint Bookrunner BNP PARIBAS

16, boulevard des Italiens

75009 Paris, France

Lead Manager Banco Santander S.A.

Paseo de Pereda, 9-12

39004 Santander, Spain

Annex 3, 1.1

Annex 12, 1.1

LR 13.4.1(2)

Annex 1, 4.4

Annex 12, 5.4.1

Annex 12, 5.4.3

Sponsor, Joint Broker, Global

Co-ordinator and Joint Bookrunner

Annex 12, 5.4.1

Annex 12, 5.4.3

Joint Broker, Joint Global

Co-ordinator and Joint Bookrunner

Annex 12, 5.4.3

Annex 12, 5.4.3

52


Ashurst LLP

London Fruit & Wool Exchange

1 Duval Square

London

E1 6PW

Latham & Watkins (London) LLP

99 Bishopsgate

London

EC2M 3XF

Registrars Link Group

The Registry

34 Beckenham Road

Beckenham

BR3 4TU

Receiving Agent Link Group

Corporate Actions

The Registry

34 Beckenham Road

Beckenham

BR3 4TU

Ernst & Young LLP

1 More London Place

London

SE1 2AF

PricewaterhouseCoopers LLP

1 Embankment Place

London

WC2N 6RH

BDO LLP

55 Baker Street

London

W1U 7EU

Legal Advisers to the Company as

to English law and US law

Legal Advisers to the Sole Sponsor,

Joint Brokers, Joint Global

Co-ordinators, the Joint

Bookrunners and the Lead Manager

Annex 3, 2.1Auditor and Reporting Accountant

to the Company

Reporting Accountant to the

Company

Reporting Accountant in respect of

OSIsoft

53


PART I

LETTER FROM THE CHAIRMAN OF AVEVA GROUP PLC (incorporated and registered in England and Wales with registered number 02937296)

Registered Office:

High Cross

Madingley Road

Cambridge

CB3 0HB

Directors

Philip Aiken AM (Chairman)

Craig Hayman (Chief Executive Officer)

James Kidd (Deputy Chief Executive Officer and Chief Financial Officer)

Christopher Humphrey (Senior Independent Non-Executive Director)

Jennifer Allerton (Independent Non-Executive Director)

Ron Mobed (Independent Non-Executive Director)

Paula Dowdy (Independent Non-Executive Director)

Peter Herweck (Non-Executive Director and Vice Chairman)

Olivier Blum (Non-Executive Director)

6 November 2020

To: AVEVA Group plc Shareholders, persons with information rights and, for information only, to

participants in the AVEVA Group Share Plans

Proposed Acquisition of OSIsoft, LLC

Proposed 7 for 9 Rights Issue of 125,739,796 Rights Issue Shares at 2,255 pence per

Rights Issue Share to raise approximately £2.835 billion

Issue of 13.7 million Consideration Shares and

Notice of General Meeting

1. Introduction

On 25 August 2020, AVEVA announced the proposed acquisition of the OSIsoft Group, at an enterprise value

of $5 billion, on a cash-free and debt-free basis, assuming a normalised level of working capital and subject

to customary completion adjustments. AVEVA also announced that it intends to partly fund the Acquisition

by a proposed capital raise by way of a Rights Issue to raise gross proceeds of approximately $3.5 billion,

excluding estimated amounts payable for transaction-related fees and expenses.

As announced today, under the terms of the Rights Issue, 125,739,796 Rights Issue Shares at a price of

2,255 pence per share will be issued. The Rights Issue is conditional upon, amongst other things,

Shareholders’ approval of the Resolution.

The consideration payable in connection with the Acquisition consists of approximately $4.4 billion of cash

consideration and 13.7 million Consideration Shares (after adjustment to take account of the Rights Issue)

to be issued to certain selling shareholders.

It is expected that the cash consideration payable in connection with the Acquisition will be financed as

follows:

• $3.5 billion will be funded by the Rights Issue; and

• $900 million will be funded by the new Term Facility entered into by AVEVA,

in each case, as described below.

LR 13.3.1(1)

LR 13.3.1(3)

Annex 3, 4.2

Annex 12, 5.3.1

54


The Rights Issue has been underwritten by the Underwriters pursuant to the terms and conditions of the

Underwriting Agreement, with the exception of the 75,576,398 Rights Issue Shares which Schneider Electric

has irrevocably committed to take up (or cause to be taken up) in full on a pro rata basis in accordance with

the terms of the Equity Financing Deed and the Support Agreement. Schneider Electric currently indirectly

holds 97,169,655 Existing Ordinary Shares, representing approximately 60 per cent. of the issued ordinary

share capital of AVEVA as at the Latest Practicable Date. Accordingly, the Rights Issue is fully committed

and underwritten, taking into account the Equity Financing Deed, the Support Agreement and the

Underwriting Agreement.

OSIsoft is a global leader in data historian and information management software providing real time data

management systems worldwide to improve the operational efficiency of client businesses. Founded in 1980

by Dr. J. Patrick Kennedy, the OSIsoft Group’s main product is the PI System, which enables customers to

capture, store, analyse and share real-time industrial sensor-based data with business systems across all

operations. In the period from 2017 to 2019, OSIsoft delivered a revenue CAGR of 5 per cent. and an

Adjusted EBIT CAGR of 10 per cent. This strong growth continued this year as the imperative for digital

transformation has continued through the COVID-19 crisis, with period over period revenue growth of

10 per cent. and Adjusted EBIT growth of 110 per cent. in the OSIsoft 2020 Interim Period compared to the

OSIsoft 2019 Interim Period. In the twelve months ended 31 July 2020, OSIsoft had revenue of

$491.3 million and Adjusted EBIT of $155.6 million.

The Directors believe the Acquisition has a compelling strategic rationale. The OSIsoft Group develops,

markets and supports the PI System, a suite of software designed to enable customers to capture data from

a variety of sensors and sources within a process or plant, for real-time visualisation as well as historical

analysis. The PI System enables end users to then analyse, compare, consolidate and visualise the data in

order to communicate it simply and effectively, increasing the efficiency, safety and cost of operations. The

PI System is a leading data historian platform and remains the most trusted system of record serving a variety

of business-critical applications. The Acquisition of the OSIsoft Group will enhance the Company’s leading

role in transforming the industrial world through digital technologies such as Cloud, Artificial Intelligence,

and the IIoT. The Enlarged Group will be better positioned to help customers accelerate their digital

transformation and help them reduce operating expenses. Furthermore, the Enlarged Group will have a more

diversified revenue base across customers, industries and geographies and the Directors believe that, taking

account of the shared purpose, values and strategy of the Company and the OSIsoft Group, the Acquisition

will create significant long term value for customers, employees and shareholders of the Enlarged Group.

The strategic rationale for the Acquisition is described in detail in Section 2 of this letter.

OSIsoft is currently owned by three unitholders:

• Estudillo Holdings Corp. (“Estudillo”), a company majority owned by Dr. J. Patrick Kennedy and his

family, which holds a 50.3 per cent. interest;

• SB/OSI, Inc. (“SoftBank Blocker”), a company owned by SoftBank Group, which holds a

44.7 per cent. interest; and

• MDT Holding, Inc. (“Mitsui”), a company owned by Mitsui & Co., Ltd, which holds a 5.0 per cent.

interest.

A portion of the total consideration payable pursuant to the Acquisition will be paid in newly issued shares

of AVEVA to Estudillo, of which Estudillo will distribute approximately 90 per cent. of the shares to

affiliates of Dr. J. Patrick Kennedy and 10 per cent. to other shareholders in Estudillo (estimated based on

the closing price of 4,162 pence per Existing Ordinary Share at the Latest Practicable Date).

The Acquisition, because of its size in relation to the Company, is a Class 1 transaction for AVEVA under

the Listing Rules and is therefore conditional, inter alia, upon the approval by Shareholders who together

represent a simple majority of the Ordinary Shares being voted (whether in person or by proxy) at the

General Meeting. Schneider Electric has irrevocably undertaken to vote (or procure a vote) in favour of the

Resolution at the General Meeting, as described in Section 13 of this letter.

Annex 12, 5.4.3

55


The principal terms of the Rights Issue are described in more detail in Section 11 of this letter and Part IV

(Terms and Conditions of the Rights Issue) of this document.

The purpose of this document is to explain the background to, and provide you with information on, the

Acquisition and the Rights Issue and to issue a notice of General Meeting to be held to consider, and if

thought appropriate pass, the Resolution needed to complete the Acquisition and the Rights Issue.

This document also explains why the Directors believe the Acquisition and the Rights Issue to be in the best

interests of the Shareholders taken as a whole. The Directors unanimously recommend that you vote in

favour of the Resolution. Shareholders should read the whole of this document and not just rely on the

summarised information set out in this letter.

2. Background to and strategic rationale for the Acquisition

AVEVA is a global leader in engineering and industrial software, founded more than 50 years ago and

headquartered in Cambridge, UK, with offices across 40 countries. AVEVA is recognised as one of the

world’s leading engineering, planning and operations, asset performance, and monitoring and control

software companies, providing mission-critical software solutions to many of the world’s largest companies

in the process, batch and hybrid industries. AVEVA’s consolidated revenue for FY 2020 was £833.8 million.

OSIsoft is a global leader in data historian and information management software based in San Leandro,

California, US with offices around the world. OSIsoft’s PI System enables its customers to connect disparate

sources of sensor-based time-series data in an efficient and cost-effective manner, allowing customers to

draw insights and make business decisions based on the data. OSIsoft has carried out installations in 146

countries and is widely used across the oil and gas, manufacturing, energy, utilities, pharmaceuticals and life

sciences sectors, as well as in data centres, facilities and the process industries. The Directors believe there

is a strong strategic rationale for an Acquisition of the OSIsoft Group. The Acquisition will enable AVEVA

to broaden and deepen its relationships with existing and new clients and bring a more comprehensive

product portfolio to market. The Enlarged Group will have a compelling financial profile that has a high

proportion of recurring revenue and a diverse revenue base.

OSIsoft’s founder, Dr. J. Patrick Kennedy, will remain involved in the business through his appointment to

the role of Chairman Emeritus of the Enlarged Group. Following Completion, Dr. J. Patrick Kennedy has

agreed to retain an ongoing share ownership in the Enlarged Group of at least four per cent. in order to

support the delivery of the full strategic, operational and financial benefits of the Acquisition.

Significantly Enhanced Product Offering

The Acquisition of OSIsoft will combine the complementary product offerings of AVEVA and OSIsoft –

bringing together AVEVA’s industrial software and OSIsoft’s data management – and further enhance

AVEVA’s portfolio of applications. The Enlarged Group will continue to lead the digitisation of the industrial

world through helping customers accelerate their digital transformation and reduce their operating and

capital expenses. AVEVA’s enhanced product offering will deepen and entrench its relationships with

existing and new customers, with efficiency, flexibility, sustainability and resilience becoming increasingly

urgent requirements for customers.

OSIsoft’s PI System is a very scalable and robust enterprise level data historian platform, which the Directors

consider will be a key enabler of a number of AVEVA solutions, in particular enhancing the Digital Twin,

HMI/SCADA, Manufacturing Execution System and Asset Performance, with more inputs and connectivity

to feed Artificial Intelligence and Cloud solutions. In particular, with Cloud being one of AVEVA’s top three

strategic priorities, the Acquisition represents an opportunity to accelerate the market adoption and

expansion of the OCS and other Cloud-based offerings of the OSIsoft Group and provide the OSIsoft

Group’s industry leading data management capability in a native Cloud environment.

AVEVA and OSIsoft’s solutions will combine to create a leading portfolio, which will continue to be a

hardware agnostic platform, meaning that it will be able to communicate with a wide variety of devices using

different operating systems and aggregate the data they collect, providing new insights into industrial

processes.

LR 13.5.11

Annex 12, 3.2

LR 13.4.1(1)

LR 10.4.1(2)(j)

LR 13.4.1

LR 10.4.1(2)(f)

LR 13.4.1(1)

LR 10.4.1(2)(b)

56


The combined solution set will optimise engineering, operations and performance, with unprecedented

efficiency and value as a result of the integration of both businesses.

Customer Diversification

The Acquisition will further diversify AVEVA’s industry exposure as well as customer base within each

industry segment. The Acquisition will strengthen AVEVA’s position in the power and utilities, chemicals,

pharmaceutical, food and beverage and life sciences segments. Following Completion, the Enlarged Group’s

oil and gas exposure is expected to decrease as oil and gas customers of AVEVA contributed 40 per cent. of

revenue in FY 2020 whilst oil and gas accounted for 24 per cent. of OSIsoft billings for OSIsoft FY 2019.

In addition to industry diversification, the broadening of AVEVA’s customer base and product portfolio

creates a further opportunity to build a less concentrated revenue base. This would represent a more secure

financial profile that will be well-positioned to weather any market uncertainty or disruption.

Geographic Market Penetration

AVEVA’s market reach includes an expansive network of direct sales, 4,300 SI partners, 1,200 OEM

partners, and 150 distributors. Combining this commercial reach with OSIsoft’s existing product suite has

the potential to expand OSIsoft’s reach and distribution and deepen AVEVA’s relationships with its existing

customers. The Acquisition of OSIsoft will increase AVEVA’s penetration across the Americas, EMEA and

Asia Pacific and increase the potential for cross-selling opportunities due to the high level of

complementarity between AVEVA and OSIsoft’s respective product portfolios. In addition, AVEVA is well

positioned to strengthen OSIsoft’s presence in underrepresented countries such as Japan and Germany.

Potential for Material Revenue and Cost Synergies

The Directors believe there is an opportunity to generate cost and significant revenue synergies over the

medium term following Completion.

The Directors believe that a combination between OSIsoft and AVEVA will strengthen AVEVA’s position in

engineering and industrial software and create significant value for Shareholders. With the addition of

OSIsoft’s PI System, the Directors are confident that the Enlarged Group can achieve cost and significant

revenue synergies in the following areas:

Complementary product sets offer extensive cross-selling opportunities – The Directors believe there is a

compelling opportunity to cross-sell AVEVA’s portfolio of over 70 applications into the customer base of

OSIsoft, which has an installed base of over 14,000 sites across 127 countries. Applications where the

Directors expect immediate opportunities include AVEVA’s Predictive Analytics/AI, Unified Operations

Center, Asset Performance and Reliability and Production Operations, all of which complement OSIsoft’s

core offering of industrial and infrastructure data management. Additional cross-selling opportunities exist

within AVEVA’s broad HMI/SCADA installed base, where the Company has a leading position, as well as

other areas within Manufacturing Execution Systems (“MES”) and Maintenance Management. OSIsoft’s PI

System provides HMI SCADA customers, OEMs and value-added resellers with additional capabilities to

extend the value of their existing systems; customers with AVEVA’s MES and Maintenance systems also

provide additional opportunities for upselling and cross-selling.

Expanding OSIsoft’s global reach – AVEVA is one of the largest, global, independent software companies

serving the industrial and infrastructure markets with a large installed base at over 100,000 sites across

vertical segments. AVEVA’s open and agnostic systems are connected to over 20 billion connected points

managing over 10 trillion transactions and 12 petabytes of data with over 90 per cent. of this data from non-

Schneider Electric systems. AVEVA’s market reach includes an expansive network of direct sales, 4,300 SI

partners, 1,200 OEM partners, and 130 distributors. With the strength of AVEVA’s global footprint and

breadth and depth of AVEVA’s installed base, AVEVA can support OSIsoft to accelerate its penetration of

underrepresented regions and customer segments as well as broadening its business model to offer greater

choices to its customers both commercially and technologically. Areas where OSIsoft is underrepresented

and where the Directors expect short to medium-term revenue opportunities include countries such as Japan

LR 13.4.1

LR 10.4.1(2)(f)

LR 13.4.1

LR 10.4.1(2)(f)

LR 13.4.1

LR 10.4.1(2)(f)

LR 13.5.9A

57


and Germany and adjacent markets such as Consumer Packaged Goods, OEM and Marine, which AVEVA

serves today.

Unique go-to-market proposition with Schneider Electric – AVEVA has a unique relationship with Schneider

Electric which provides it with access to Schneider Electric’s global market presence and customer

relationships while maintaining AVEVA’s position as an independent global leader in industrial software.

The Acquisition will provide OSIsoft with access to Schneider Electric’s customers, allowing it to accelerate

its penetration of many key accounts. The expected benefits to OSIsoft include additional market access, and

new avenues for growth in buildings, data centres, infrastructure and industry, leveraging Schneider

Electric’s leadership in industrial automation and energy management with the most comprehensive

combined product portfolio across these fields.

Enhanced Digital Twin potential, leveraging unrivalled combination of engineering and operational data –

The deployment of Digital Twin solutions has emerged as a key element of digital transformation initiatives

across all segments of the industrial sector. AVEVA is a market leader in the authoring and management of

asset-centric engineering information. OSIsoft is a market leader in the aggregation and management of

operational information. The combination of operational and engineering information, augmented by

AVEVA’s rich functional capability in visualisation and its performance applications for asset reliability,

supply chain efficiency and operational excellence, all combine to create a unique opportunity for a

comprehensive Digital Twin solution offering. AVEVA is already delivering such solutions supporting the

digital transformation initiatives of customers in the Power and Energy segments, and the Acquisition will

allow AVEVA to further commercialise the solution, enabling highly scalable deployment and faster time to

value across additional customer groups.

Enhanced technology, innovation and scale – With the support of over 1,700 people engaged in research and

development and one of AVEVA’s company-wide investment priorities being Cloud, where approximately

£25 million is being invested per annum, the Directors believe that the market adoption and future expansion

of OSIsoft’s Cloud products, in particular OCS, and other Cloud-based offerings can be accelerated. AVEVA

has successfully migrated many of its traditional on-premise offerings to the Cloud over the past five years

to also be available as SaaS and transitioned its business model to include a high percentage of subscription

revenue, and the Directors believe that AVEVA has the experience and key learnings to support and

accelerate OSIsoft’s Cloud journey and broaden its offering to customers. By combining OSIsoft’s OCS

offering with AVEVA’s complementary Cloud capabilities, there is a unique opportunity to develop this

newly created offering through AVEVA’s sales channels. This will unlock additional value for both new and

existing customers and drive growth for AVEVA.

Operational efficiency benefits – The Directors expect the Acquisition to allow AVEVA to drive operational

efficiencies through the optimisation of cost structures. The deployment of standard operating practices and

elimination of cost overlaps across the research and development, customer success and sales and marketing

functions, the consolidation of overlapping office locations, the elimination of duplicate IT systems and the

reduction of duplicate costs across support functions, are all areas expected to deliver cost savings as

compared to AVEVA and OSIsoft as standalone propositions.

The Directors expect to realise pre-tax cash cost synergies from the Acquisition of not less than £20 million

per annum on a run rate basis by the end of the second full financial year following Completion, which is

expected to be the year ending 31 March 2023.

The cost synergies have been assessed relative to the respective pre-Acquisition cost base for the last

completed financial year of AVEVA and OSIsoft.

The pre-tax cash cost synergies indicated above are recurring and contingent on Completion and could not

be achieved by AVEVA and OSIsoft operating independently. The Directors confirm that the narrative above

reflects both the beneficial elements and relevant costs.

Compelling Financial Benefits

The Directors believe that the Acquisition will enhance the growth profile of the Enlarged Group and lead

to cost and significant revenue synergies which will support AVEVA’s track record of delivering superior

LR 13.4.1

LR 10.4.1(2)(f)

58


shareholder returns. The Acquisition is expected to be accretive to earnings in AVEVA’s financial year

ending 31 March 2022, before synergies in part due to the material tax savings which the Directors believe

will be created over a 15 year period as a result of intangible assets created by the Acquisition that can be

amortised for tax purposes.

Combined Development Expertise

The combination of AVEVA and OSIsoft’s first-class development and engineering teams has the potential

to accelerate and improve the development of new software and technology. The Acquisition will bring

together two of the leading development teams in the industrial software space, laying the foundations for a

culture of continued, long-term innovation and product development.

Enhanced Combined Customer Base

The Acquisition will enable AVEVA to broaden and deepen its relationships with both existing and new

customers across the highly complementary, global customer bases. AVEVA and OSIsoft have a significant

shared customer base, which provides synergies in multiple industries, enabling product integration and

customer value.

OSIsoft has a large, growing customer base of leading blue chip companies and is used by its customers

across 14,000 sites in 127 countries. OSIsoft’s systems are widely used in industries such as energy, utilities,

pharmaceuticals and life sciences, as well as within data centre facilities and across the public sector

including federal government. OSIsoft works with over 1,000 of the world’s leading power and utilities

companies, 38 of the Global Fortune Top 40 oil and gas companies, all of the Global Fortune Top 10 metals

and mining companies, 37 of the 50 largest chemical and petro-chemical companies and nine of the Global

Fortune Top 10 pharmaceutical companies. As businesses deploy increasing levels of sensor-enabled

equipment, more assets are streaming more data, which the Directors believe will increase the need for and

value derived from the PI System.

Strengthened Business Resilience

The combined group will benefit from OSIsoft’s high retention rate of customers, with churn of 2.7 per cent.

or less in all years from 2007 to 2019, with an average churn rate of only 1.3 per cent. over the same period.

OSIsoft’s customer base has consistently grown in each year since 2006. OSIsoft also has a high proportion

of recurring revenue (which includes subscription and maintenance revenue), in line with AVEVA’s own.

This is a high quality revenue base that is well-positioned to cope with any market shocks and economic

cycles, and a strong base on which to continue OSIsoft’s growth.

3. Summary information on the AVEVA Group

The AVEVA Group is one of the world’s leading engineering and industrial software providers to the process,

batch and hybrid industries. For more than 50 years, AVEVA has delivered mission-critical software

solutions to asset owners, operators, engineering contractors and shipbuilders around the world.

The AVEVA Group’s world-leading technology was originally developed as the Computer-Aided Design

Centre, a UK Government research laboratory formed in 1967, privatised in 1983 and later listed on the

London Stock Exchange in 1996 as CADCentre. The Company was renamed ‘AVEVA’ in 2001. AVEVA has

a proven track record of acquiring best in class businesses and technology and integrating them successfully.

In 2018, AVEVA Group plc combined with the Schneider Electric Software Business to create a global leader

in engineering and industrial software for process, batch and hybrid industries. The combination brought

together two complementary offerings to create a complete end-to-end asset lifecycle software solution and

significantly diversified AVEVA’s industry verticals and geographic scale. It also established a strategically

important relationship with Schneider Electric, both as a business partner and as a majority shareholder in

AVEVA. The AVEVA Group has delivered a consistent track record of growing revenue and profits over the

long term through the provision of mission-critical software solutions to many of the world’s largest

companies in the process, batch and hybrid industries.

LR 13.4.1

LR 10.4.1(2)(f)

LR 13.4.1

LR 10.4.1(2)(f)

59


Demand from the AVEVA Group’s customers is driven by long-term trends. In particular, the industries that

AVEVA serves are making increasing use of technology to reduce both capital and operating costs in the

context of competitive pressures to increase efficiency, output, flexibility and improve overall sustainability.

This is being enabled by ongoing technological megatrends that are driving the digitalisation of the industrial

world, notably the IIoT, Cloud, Data Visualisation and Artificial Intelligence, in addition to other ongoing

global trends such as the growing global demand for energy of all kinds, the growing demand for raw

materials and their transportation, reduction in environmental impact and lifetime extension of operating

facilities.

AVEVA is well placed to help its customers digitalise, and key to the AVEVA Group’s strategy is the

digitalisation of the industrial world. The Company’s engineering, planning and operations, asset

performance, and monitoring and control solutions deliver proven results. Common to all of this is the ability

for customers to digitalise through AVEVA’s end-to-end product portfolio, which runs from simulation

through design and construction and into operations. AVEVA primarily serves the process, batch and hybrid

industries and these software solutions are installed in energy, infrastructure, mining, consumer packaged

goods, pharmaceutical and other manufacturing markets. These industries provide staple requirements for

basic consumption, such as energy, food, health and transport. As such, they have some level of resilience to

a macroeconomic downturn. Over 16,000 customers rely on the AVEVA Group’s software solutions to make

accurate and timely design, engineering and business decisions across entire project and asset lifecycles.

Major customers of AVEVA include: ExxonMobil; Shell; Chevron; Duke Energy; Southern Company;

Johnson and Johnson; P&G; General Mills; and BHP. AVEVA’s customers are supported by the largest

industrial software ecosystem, including 4,200 partners and 5,700 certified developers.

AVEVA has high levels of recurring revenue, with the transition to subscription driving an increase in

recurring revenue as a proportion of overall revenue. As the majority of revenue is derived from software

sales, AVEVA has enjoyed historically high profit margins that have enabled strong cash generation and

reinvestment in AVEVA’s technology to maintain and extend its competitive advantage.

4. Summary information on the OSIsoft Group

The OSIsoft Group develops, markets and supports the PI System, a suite of software designed to enable end

users to capture historical data and real-time data from a variety of sources within a business. The PI System

enables end users to then analyse, compare, consolidate and visualise the data in order to communicate it

simply and effectively. Customers can share data with people and systems across all operations within a

business as well as with their partners, vendors and customers. The OSIsoft Group’s customers have access

to immediate and comprehensive technical support, compelling user and developer events and a rich array

of online resources. Through this single infrastructure, companies are able to reduce downtime, manage

assets, mitigate risks, comply with regulations, improve processes and drive innovation in order to transform

their businesses.

The OSIsoft Group was established in 1980 with the aim of empowering customers’ business transformation

by delivering greater value into the enterprise, and the first PI System was launched in 1985. The OSIsoft

Group has retained 90 per cent. of its customers (including 95 of its first 100 customers). The OSIsoft Group

has, as of 31 December 2019, carried out over 28,000 installations in 146 countries, and is widely used

across the oil and gas, manufacturing, energy, utilities, pharmaceuticals and life sciences sectors, as well as

in data centres, facilities and the process industries. The OSIsoft Group has also provided installations for

the public sector and government-owned entities.

The OSIsoft Group is a leading provider of data historian and information management software. OSIsoft

works with over 1,000 of the world’s leading power and utilities companies, 38 of the Global Fortune Top

40 oil and gas companies, all of the Global Fortune Top 10 metals and mining companies, 37 of the 50 largest

chemical and petro-chemical companies and nine of the Global Fortune Top 10 pharmaceutical companies.

As businesses deploy increasing levels of sensor-enabled equipment, more assets are streaming more data,

which the Directors believe will increase the need for and value derived from the PI System.

LR 13.4.1(1)

LR 10.4.1(2)(b)

60


5. Summary financial information on the OSIsoft Group

In accordance with the Listing Rules this document includes full historical financial information on the

OSIsoft Group for the last three years, prepared in accordance with IFRS, in a form consistent with the

accounting policies adopted by the AVEVA Group in its own annual consolidated accounts.

As at 31 December 2019, the gross assets of OSIsoft were $393.7 million (£298.0 million, using the closing

spot exchange rate on 31 December 2019 of £1.00: $1.3210) and for OSIsoft FY 2019 the gross profits

attributable to OSIsoft were $376.1 million (£294.6 million, using the average spot exchange rate for OSIsoft

FY 2019 of £1.00: $1.2766).

6. Summary of the key terms of the Acquisition

Stock and Unit Purchase Agreement

On 25 August 2020, AVEVA, OSIsoft and the Sellers (or their representatives, as applicable) entered into an

agreement (the “Stock and Unit Purchase Agreement”) under which AVEVA has agreed, on the terms and

subject to the conditions of the Stock and Unit Purchase Agreement to acquire, directly or indirectly, all of

the issued and outstanding ownership units of OSIsoft in exchange for: (a) the issue and delivery of

13.7 million Consideration Shares (after adjustment to take account of the Rights Issue) to Estudillo; and (b)

approximately $4.4 billion of cash consideration. On Completion, OSIsoft will become an indirect wholly-

owned subsidiary of AVEVA.

Shareholder approvals

The size of the Acquisition means that it is classed as a Class 1 transaction under the Listing Rules. As such,

AVEVA is seeking the approval of Shareholders for the Acquisition at the General Meeting, which has been

convened for 9.30 a.m. on 24 November 2020 at AVEVA Group plc, 30 Cannon Street, London, EC4M 6AH.

Shareholders will be asked to vote in favour of the Resolution. Schneider Electric, which currently indirectly

holds 97,169,655 Existing Ordinary Shares, representing approximately 60 per cent. of the issued ordinary

share capital of AVEVA as at the Latest Practicable Date, has irrevocably undertaken to vote (or procure a

vote) in favour of the Resolution at the General Meeting, as described in Section 13 of this letter.

The Directors intend to vote in favour of the Resolution in relation to their beneficial holdings, which amount

to approximately 0.1 per cent. of AVEVA’s existing issued ordinary share capital as at the Latest Practicable

Date.

Conditions

Completion is subject to certain closing conditions including, but not limited to:

• the approval of the Resolution by Shareholders at the General Meeting;

• the expiry or termination of any waiting periods under applicable U.S. competition laws relating to

the Acquisition;

• the receipt of the approval or other consent required to be obtained with respect to the Acquisition

under the antitrust and competition laws of each of the following jurisdictions: Austria, Cyprus,

Germany, Brazil, Colombia, Russia, Saudi Arabia and Serbia, which approval or consent shall remain

in full force and effect; and

• receipt of CFIUS Approval.

Break Fee

AVEVA will also be required to cause the Purchasers to pay a termination fee of $85 million to the Sellers

if the Stock and Unit Purchase Agreement is terminated due to either: (a) Completion not having occurred

by 20 December 2020 as a result of a failure to satisfy the Break Fee Conditions, provided that such date

will be extended to 31 March 2021, and subsequently to 30 June 2021, where any of the Break Fee

Conditions (other than the Shareholder approval condition) have not been satisfied (without regard being had

to the satisfaction or otherwise of the Shareholder approval condition); or (b) a government authority having

LR 13.4.1(1)

LR 10.4.1(2)(a)

LR 10.4.1(2)(c)

LR 13.3.1(2)

LR 13.4.1(1)

LR 10.4.1(2)(d)

LR 10.4.1(2)(e)

61


prohibited the Acquisition by way of a final non-appealable order under an antitrust law or issued by CFIUS,

provided that, in either case, at the time of such termination all other conditions to AVEVA’s obligations to

effect the Acquisition have been satisfied or would have been satisfied at Completion, and OSIsoft has not

committed a material breach of the Stock and Unit Purchase Agreement which was the principal cause of

Completion not having occurred and the Stock and Unit Purchase Agreement being terminated.

Further details of the Stock and Unit Purchase Agreement are set out in Part II (Principal Terms of the

Acquisition) of this document.

7. Financing the Acquisition

The Company proposes to finance the cash element of the purchase price for the Acquisition, which amounts

to $4.379 billion, from: (a) the proceeds of the Rights Issue at the Rights Issue Price of 2,255 pence per

Rights Issue Share, which will raise approximately £2.835 billion ($3.686 billion, at the Forward Rate)

excluding estimated amounts payable for transaction-related fees and expenses; and (b) up to $900 million

(£686 million) through utilisation of the Term Facility.

Sources of financing for cash element of the consideration for the Acquisition

(a) Proceeds of the Rights Issue

AVEVA proposes to raise approximately £2.835 billion ($3.686 billion, at the Forward Rate) through

the Rights Issue at the Rights Issue Price of 2,255 per Rights Issue Share to partly fund the cash

consideration payable in relation to the Acquisition.

The Rights Issue is fully committed and underwritten, taking into account the Equity Financing Deed,

the Support Agreement and the Underwriting Agreement.

The Rights Issue has been underwritten by the Underwriters pursuant to the terms and conditions of

the Underwriting Agreement, with the exception of the 75,576,398 Rights Issue Shares which are

subject to the Equity Financing Deed and the Support Agreement. Under the Equity Financing Deed

and the Support Agreement, Schneider Electric has irrevocably undertaken to take up (or cause to be

taken up) its rights in full, amounting to 75,576,398 Rights Issue Shares.

The Rights Issue is conditional on the Resolution, including the resolution to approve the Acquisition,

having been passed by Shareholders at the General Meeting. However, the Rights Issue is not

conditional on Completion, which is expected to occur between December 2020 and February 2021.

Schneider Electric has irrevocably undertaken to vote (or procure a vote) in favour of the Resolution

at the General Meeting, as described in Section 13 of this letter.

The principal terms of the Rights Issue are described in more detail in Section 11 of this letter and

Part IV (Terms and Conditions of the Rights Issue) of this document.

(b) Term Facility

AVEVA entered into a term facility agreement on 9 October 2020 with, among others, Schneider

Electric as lender, pursuant to which Schneider Electric made available to AVEVA and certain of its

subsidiaries a $900 million term facility. It is proposed that the Term Facility will be utilised in full

in order to satisfy part of the cash consideration payable by AVEVA in connection with the

Acquisition. Subject to the satisfaction of certain customary conditions precedent, the Term Facility

is available for drawing until the earliest to occur of: (i) 30 June 2021; (ii) Completion; and (iii) the

date on which AVEVA delivers the notice that the Acquisition will not occur.

For more information on the Term Facility, see Section 9.1(f) of Part XIV (Additional Information).

The Directors believe that the Enlarged Group will be strongly cash generative and that the financing

structure for the Acquisition is appropriate.

Annex 12, 3.2

62


Bridge Facilities

Upon the Company’s entry into the Stock and Unit Purchase Agreement, the Company entered into the

Facilities Agreement, which included the Bridge Facilities and a $900 million term facility, in order to ensure

the Company would have sufficient funds available to finance the cash consideration payable in connection

with Acquisition. The term facility originally made available under the Facilities Agreement was irrevocably

cancelled by the Company on 9 October 2020 following the Company’s entry into the new Term Facility.

While the Bridge Facilities remain available to fund a portion of the cash consideration payable in

connection with the Acquisition, the Rights Issue is fully committed and underwritten, subject only to

customary conditions and termination provisions. Consequently, the Company does not expect to draw down

under the Bridge Facilities and the commitments under the Bridge Facilities will be automatically cancelled

upon completion of the Rights Issue. Completion is not however conditional on the Rights Issue and

therefore, in the highly unlikely event the Rights Issue is not completed prior to Completion, the Directors’

current intention is that the cash consideration for the Acquisition will be funded in part by drawing down

the Bridge Facilities.

For more information on the Facilities Agreement see Section 9.1(e) of Part XIV (Additional Information).

Consideration Shares

The Consideration Shares will be issued fully paid and will rank in full for all dividends or other distributions

declared, made or paid by reference to a record date on or after the date of issue of the Consideration Shares,

including, should the Consideration Shares be issued prior to the relevant record date, the right to receive the

proposed interim dividend announced on 5 November 2020 expected to be paid on 5 February 2021 to

Shareholders on the Company’s register of members on 8 January 2021, and otherwise pari passu in all

respects to the Ordinary Shares. Application will be made for the Consideration Shares to be admitted to the

premium listing segment of the Official List of the FCA and to trading on the London Stock Exchange’s main

market for listed securities. It is expected that the Consideration Shares will be issued, and that Consideration

Shares Admission will become effective, and that dealings in the Consideration Shares will commence,

between December 2020 and February 2021.

With effect from Consideration Shares Admission, all of the Consideration Shares will be capable of being

held in uncertificated form. No temporary documents of title will be issued in respect of the Consideration

Shares. Further details of the rights attaching to the Ordinary Shares and the Consideration Shares are set out

in Section 4 of Part XIV (Additional Information).

8. Financial effects of the Acquisition

On a pro forma basis and assuming that the Acquisition and the Rights Issue had taken place on

30 September 2020, the Enlarged Group would have had net assets of approximately £5.1 billion (based on

the net assets of the AVEVA Group as at 30 September 2020 and the OSIsoft Group as at 31 July 2020) as

more fully described in Part XI (Unaudited Pro Forma Financial Information on the Enlarged Group).

Part XI also contains an unaudited pro forma income statement, prepared to illustrate the impact of: (a) the

Rights Issue; (b) the Acquisition; and (c) the drawdown of the Term Facility, on the income statement of the

AVEVA Group for FY 2020 as if they had taken place at the beginning of that financial year.

The Directors believe that the Acquisition would have enhanced: (x) AVEVA’s net assets as at 30 September

2020, if the Acquisition had completed on that date; and (y) AVEVA’s earnings for FY 2020, if the

Acquisition had completed on 1 April 2019. This statement should not be interpreted to mean that, following

Completion, AVEVA’s earnings will necessarily match or exceed its historical published earnings or that

AVEVA’s net assets will reflect the position projected at the date of this document.

As set out in Section 2 of this letter, the Directors, in making their recommendation, expects that the

Acquisition will be accretive to earnings in AVEVA’s financial year ending 31 March 2022, before synergies.

LR 13.3.1(9)

LR 13.3.1(9)(a)

LR 13.3.1(9)(b)

LR 13.3.1(9)(c)

LR 13.3.1(9)(e)

LR 13.3.1(9)(h)

LR 13.3.1(9)(d)

LR 13.3.1(9)(g)

LR 13.4.1(1)

LR 10.4.1(2)(f)

LR 13.4.1(5)

63


9. Current trading and future prospects of the Enlarged Group

AVEVA

In H1 2021, AVEVA continued to make strong operational and strategic progress, even though the

disruptions of the COVID-19 pandemic affected AVEVA's financial results. Revenue decreased by 15.1 per

cent. in H1 2021 compared to H1 2020 primarily due to the challenging macroeconomic environment, as

well as the prior-year effect of revenue being recognised upfront on certain contracts and the early renewal

of a significant global account contract in H1 2020, which caused a £20 million pull forward of revenue into

September 2019. The impact of this revenue decline on profitability was mitigated in part by proactive cost

control as part of the plan for FY 2020, while continuing AVEVA’s strategic investments. In H1 2021,

AVEVA continued to make progress in its business model transition, with recurring revenue of 64.2 per cent.

of total revenue during the period, and Cloud delivered particularly good growth with a 50 per cent. increase

in orders.

The industries that AVEVA serves are making ever greater use of technology to reduce both capital and

operating costs in the context of competitive pressures to increase efficiency, output, flexibility and improve

overall sustainability. This is being enabled by ongoing technological mega trends that are driving the

digitalisation of the industrial world, notably the IIoT, Cloud, data visualisation and AI. This is driving long-

term growth in demand for industrial software. 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 and into

operations. Notwithstanding this, AVEVA experienced tough market conditions across all its geographical

reporting segments and business units during H1 2021 as disruption from the pandemic caused customer

caution and led to delays in some forecast sales.

AVEVA’s products are key to driving efficiency for customers in capital projects and operations. As such,

the AVEVA Group’s full-year performance is expected to be resilient despite the challenging global

economic environment. The order pipeline for the remainder of FY 2020 is strong, underpinned by a higher

volume of contract renewals, including major Global Account contracts, as well as the contracts that slipped

from the second quarter of FY 2021. As such, the Board expects to see solid revenue growth in H2 2021 and

remains confident in its outlook for FY 2021.

OSIsoft

OSIsoft’s business is proving resilient in the context of the challenging global macroeconomic environment.

OSIsoft’s customers historically turn to operational improvement projects, where OSIsoft software is central,

in times of capital spend constraints. OSIsoft’s products are key to driving higher efficiency, by allowing

customers to increase utilisation and reduce operational costs for existing capital assets. A significant portion

of OSIsoft’s annual billings come from recurring maintenance with low customer churn. The majority of

licence revenue come from pre-existing customers who expand OSIsoft software deployment footprint to

other parts of their business. In the context of this environment, OSIsoft’s cost base was actually reduced in

the OSIsoft 2020 Interim Period as result of travel restrictions, delays of high cost marketing events and

remote sales engagements.

OSIsoft is making a significant strategic investment into its next generation Cloud-based product, which is

now reaching markets with lighthouse customers. OSIsoft is expanding its sales footprint in key geographies

of DACH (Germany, Austria, and Switzerland) and Japan, and sees significant opportunity for expansion in

discrete manufacturing, food and beverage and pharmaceuticals. The expanded sales footprint combined

with new Cloud-based products is expected to generate significant profitable growth for the short and long-

term.

OSIsoft, being a private company, has not historically reported its financial results. Its financial results for

the OSIsoft 2020 Interim Period demonstrated period over period growth compared to a strong OSIsoft 2019

Interim Period, despite the effects of the COVID-19 pandemic. OSIsoft is on track to deliver sales growth

in line with its original plan for its financial year ended 31 December 2020. OSIsoft has continued its

positive trading trajectory throughout 2020, with billings for the nine month period ended 30 September

2020 growing by approximately 12 per cent. compared to the equivalent period in OSIsoft FY 2019. This

was achieved while strengthening its foundation through investment in the new product code-base,

LR 13.4.1(2)

Annex 1, 10

64


improving sales operations and adding new sales people in key regions. OSIsoft’s global workforce was

converted to remote operations early in the onset of the COVID-19 pandemic. It maintained solid operations

throughout the period and is starting to experiment with bringing groups back to the office through a safe

and carefully planned protocol.

10. Management and employees

Following Completion, AVEVA proposes to establish the PI System as a business unit within the Enlarged

Group. AVEVA has agreed to grant OSIsoft management and employee retention and incentive share-based

awards under the AVEVA Group Share Plans.

Dr. J. Patrick Kennedy has agreed to transition to the role of Chairman Emeritus of the Enlarged Group

following Completion for an initial one-year term pursuant to the PK Employment Agreement, further

details of which are set out in Section 9.1(l) of Part XIV (Additional Information).

In light of the proposed Acquisition and following further discussions with the Board, the Nomination

Committee and Schneider Electric, the Directors consider it is in the best interests of the Enlarged Group, its

Shareholders and other stakeholders that the succession plans to appoint a suitably qualified replacement for

Philip Aiken AM be delayed such that the Company can continue to benefit from the current Chairman's

industry experience and broad sector knowledge during the period of integration of the OSIsoft Group

following the Acquisition. Accordingly, Philip Aiken AM has entered into a new appointment letter with the

Company reflecting his continued appointment as Chairman of the Company until April 2022 with the option

to be extended until the conclusion of the 2022 AGM. For more information, please see Section 3 of Part

XIII (Directors and Corporate Governance).

11. Principal terms of the Rights Issue

AVEVA proposes to raise gross proceeds of approximately £2.835 billion (approximately £2.807 billion after

deduction of estimated transaction-related fees and expenses) by way of the Rights Issue.

The Rights Issue is being made to all Qualifying Shareholders on the register of members of AVEVA at the

close of business on 20 November 2020 pursuant to the terms and conditions set out in Part IV (Terms and

Conditions of the Rights Issue) of this document. Pursuant to the Rights Issue, AVEVA is proposing to offer

125,739,796 Rights Issue Shares by way of rights to Qualifying Shareholders at the Right Issue Price of

2,255 pence per Rights Issue Share payable in full on acceptance by no later than 11.00 a.m. on 9 December

2020. The Rights Issue Price represents a 45.8 per cent. discount to the closing price of 4,162 pence per

Existing Ordinary Share on the Latest Practicable Date, and a discount of 32.2 per cent. to the theoretical

ex-rights price of 3,328 pence per Existing Ordinary Share on the Latest Practicable Date. The Directors

believe that the Rights Issue price, and the discount which it represents, is appropriate to ensure the success

of the Rights Issue.

The Rights Issue will be made on the basis of:

7 Rights Issue Shares for every 9 Existing Ordinary Shares

registered in the name of each Qualifying Shareholder at the close of business on the Rights Issue Record

Date and so in proportion for any other number of Existing Ordinary Shares then registered in the name of

such Qualifying Shareholder. Qualifying Shareholders with fewer than 2 Existing Ordinary Shares will not

be entitled to any Rights Issue Shares. Entitlements to Rights Issue Shares under the Rights Issue will be

rounded down to the nearest whole number and fractions of Rights Issue Shares will not be provisionally

allotted to Qualifying Shareholders.

The Directors focused on raising capital in a way that enables Shareholders generally the ability to

participate in the Rights Issue and avoids their shareholdings being diluted involuntarily. In addition, only a

rights issue structure enables Shareholders who do not wish to participate in the Rights Issue to realise value

through the sale of their right to participate. This document sets out in greater detail the options available to

Shareholders with respect to the Rights Issue.

LR 13.3.1(9)(f)

Annex 12, 8.1

65


The Rights Issue is fully committed and underwritten, taking into account the Equity Financing Deed, the

Support Agreement and the Underwriting Agreement. Further details of the terms of Equity Financing Deed,

the Support Agreement and the Underwriting Agreement are set out in Section 9.1(c) of Part XIV (Additional

Information).

The Equity Financing Deed and the Support Agreement provide irrevocable commitments from Schneider

Electric to take up (or cause to be taken up) its entitlement to subscribe for Rights Issue Shares pursuant to

the Rights Issue, amounting to 75,576,398 Rights Issue Shares. Further details of the terms of the

Underwriting Agreement are set out in Section 9.1(c) of Part XIV (Additional Information).

The Rights Issue is conditional on:

• the Resolution having been passed by the Shareholders at the General Meeting without material

amendment;

• no condition of the Acquisition as set out in the Stock and Unit Purchase Agreement having become

incapable of satisfaction and the Stock and Unit Purchase Agreement continuing to have full force and

effect, not having lapsed, been rescinded, terminated (in whole or in part) or ceasing to be capable of

completion in accordance with its terms (in each case) prior to Rights Issue Admission;

• save in relation to cancellation of the term facility originally made available under the Facilities

Agreement as disclosed in paragraph 9.1(e) of Part XIV (Additional Information), the Facilities

Agreement and the Term Facility Agreement not having lapsed, been rescinded or terminated (in

whole or in part) prior to Rights Issue Admission;

• the irrevocable commitments undertaken by Schneider Electric under the Equity Financing Deed and

the Support Agreement continuing to have full force and effect and not having lapsed, been rescinded,

or, terminated (in whole or in part) or ceasing to be capable of completion in accordance with its terms

(in each case) prior to Rights Issue Admission;

• the Underwriting Agreement having become unconditional in all respects (save for the conditions

relating to Rights Issue Admission) and not having been rescinded or terminated in accordance with

its terms prior to Rights Issue Admission; and

• Rights Issue Admission becoming effective at 8.00 a.m. on 25 November 2020 (or such later time

and/or date as the Company and the Joint Global Co-ordinators may determine provided such date is

no later than 27 November 2020).

The Underwriting Agreement is subject to certain customary conditions and rights of termination as

described in Section 9.1(c) of Part XIV (Additional Information).

The Underwriting Agreement is not capable of termination following Rights Issue Admission.

The Rights Issue is not conditional on Completion. The Rights Issue may therefore complete while the

Acquisition does not. In the event that Rights Issue Admission is effected but Completion does not occur,

the Directors’ current intention is that the proceeds of the Rights Issue will be invested on a short term basis

in government bonds, or other high-quality, highly liquid assets, while the Directors evaluate alternative uses

of the funds. If no such uses can be found, the Directors will consider how best to return surplus capital to

Shareholders. Such a return could carry fiscal costs for certain Shareholders, will have costs for AVEVA and

would be subject to applicable securities laws.

The Rights Issue will result in 125,739,796 Ordinary Shares being issued and the number of Ordinary Shares

being increased from a total of 161,665,453 Ordinary Shares to a total of 287,405,249 Ordinary Shares (in

each case, excluding treasury shares) representing an increase of 77.8 per cent.

66


If a Qualifying Shareholder does not (or is not permitted to) participate in the Rights Issue, such Qualifying

Shareholder will experience a 43.7 per cent. dilution in their shareholding in the Company if the Rights Issue

completes (assuming no additional Ordinary Shares are issued due to the vesting or exercise of any awards

under the AVEVA Group Share Plans between the Latest Practicable Date and the completion of the Rights

Issue), and a total dilution of 46.3 per cent. if both the Rights Issue and the Acquisition complete (assuming

that no Ordinary Shares other than the New AVEVA Shares are issued prior to Completion). Those

Qualifying Shareholders who are permitted to, and do, take up all of their rights to the Rights Issue Shares

provisionally allotted to them in full will suffer dilution of 4.5 per cent. in their shareholding in the Company

as a consequence of the issue of the Consideration Shares in connection with the Acquisition (assuming that

no Ordinary Shares other than the New AVEVA Shares are issued prior to Completion).

Application will be made for the Rights Issue Shares (nil paid and fully paid) and the Consideration Shares

to be admitted to the premium listing segment of the Official List and to trading on the London Stock

Exchange’s main market for listed securities. It is expected that Rights Issue Admission will become

effective, and that dealings in the Rights Issue Shares (nil paid) will commence, at 8.00 a.m. on 25 November

2020 and that dealings in the Rights Issue Shares (fully paid) on the London Stock Exchange’s main market

for listed securities will commence at 8.00 a.m. on 10 December 2020.

12. Dividends

AVEVA announced on 9 June 2020 that the final dividend recommended by the Board for FY 2020 would

remain unchanged from FY 2019 at 29 pence per share. The final dividend recommended by the Board of

29 pence per share was approved by Shareholders at AVEVA’s annual general meeting on 21 July 2020.

On 5 November 2020 AVEVA announced that it intends to pay an interim dividend of 15.5 pence per share,

which amount shall be adjusted to reflect the bonus element of the Rights Issue. That adjusted amount will

be announced through a Regulatory Information Service in due course, payable on 5 February 2021 to

shareholders on AVEVA’s register of members on 8 January 2021.

Following Completion, AVEVA intends to maintain its existing progressive dividend policy, taking account

of the earnings profile of the Enlarged Group. The ability of AVEVA to pay dividends is dependent on a

number of factors and there is no assurance that AVEVA will pay dividends nor what the amount of such

dividends will be. As noted above in relation to the interim dividend for the current financial period, the

amount of future dividends on a per share basis will reduce to reflect the bonus element of the Rights Issue.

13. Intentions of Schneider Electric and of the Directors

Schneider Electric, which currently indirectly holds 97,169,655 Existing Ordinary Shares, representing

approximately 60 per cent. of the issued ordinary share capital of AVEVA as at the Latest Practicable Date,

has irrevocably committed to: (a) vote (or procure a vote) in favour of the Resolution at the General Meeting

pursuant to the Equity Financing Deed and the Support Agreement; and (b) take up (or cause to be taken up)

in full its Nil Paid Rights in the Rights Issue on a pro rata basis, amounting to 75,576,398 Rights Issue

Shares (the “Schneider Electric Rights Issue Shares”). At Completion, following the Rights Issue and the

issue of the Consideration Shares, Schneider Electric’s shareholding will fall from its current level of

60.1 per cent. to approximately 57.4 per cent. of the Enlarged Share Capital (assuming no acquisition of

Ordinary Shares by Schneider Electric prior to the date of Completion other than the Schneider Electric

Rights Issue Shares and that no Ordinary Shares other than the New AVEVA Shares are issued prior to

Completion). Schneider Electric has notified the Board that it currently intends to acquire Ordinary Shares

to ensure that its shareholding will remain at approximately 60 per cent. of the Enlarged Share Capital

following Completion. Such acquisitions may include purchases of: (i) Nil Paid Rights during the trading

period; (ii) Rights Issue Shares not taken up under the Rights Issue; and/or (iii) Ordinary Shares in the

market in the short term, whether prior to or following the date of Completion.

The Directors intend to vote in favour of the Resolution in relation to their beneficial holdings, which amount

to approximately 0.1 per cent. of AVEVA’s existing issued ordinary share capital as at the Latest Practicable

Date. Certain Directors have confirmed their intention to subscribe for Rights Issue Shares.

Annex 12, 5.2.2

LR 13.3.1(9)

LR 13.3.1(9)(a)

LR13.3.1(9)(h)

Annex 12, 6.1

Annex 3, 11.6

Annex 3, 11.6.1

Annex 12, 9.1

Annex 12, 9.2

67


14. Risk factors

Shareholders should consider fully the risk factors set out in the section entitled “Risk Factors” of this

document.

15. AVEVA Group Share Plans

The number of Ordinary Shares subject to awards or options outstanding under the AVEVA Group Share

Plans, the exercise price (if any) and any applicable performance conditions may be adjusted, in accordance

with the rules of the relevant AVEVA Group Share Plan, to take account of the issue of the Rights Issue

Shares pursuant to the Rights Issue. Participants in the applicable AVEVA Group Share Plans will be notified

of any adjustment separately.

16. Overseas Shareholders

The attention of Qualifying Shareholders who have registered addresses outside the United Kingdom, or

who are resident or domiciled in, or who are citizens of, countries other than the United Kingdom, or who

are holding Ordinary Shares for the benefit of such persons (including, without limitation, custodians,

nominees, trustees and agents) or who have a contractual or other legal obligation to forward this document,

a Provisional Allotment Letter and any other document in relation to the Rights Issue to such persons, is

drawn to the information which appears in Sections 2 and 7 of Part IV (Terms and Conditions of the Rights

Issue) of this document.

Rights Issue Shares will be provisionally allotted (nil paid) to all Qualifying Shareholders, including

Overseas Shareholders. However, subject to certain exceptions, Provisional Allotment Letters will not be

sent to Qualifying Non-CREST Shareholders with registered addresses in the United States or any of the

Excluded Territories, nor will the CREST stock account of Qualifying CREST Shareholders with registered

addresses in the United States or any of the Excluded Territories be credited with Nil Paid Rights, and, in the

event they do not take up their entitlements, their entitlements to Rights Issue Shares will be treated as

entitlements not taken up in accordance with the procedures set out in Section 5 of Part IV (Terms and

Conditions of the Rights Issue) of this document. The notice in the London Gazette referred to in Section 7.6

of Part IV (Terms and Conditions of the Rights Issue) will state where a Provisional Allotment Letter may

be inspected or obtained. Any person with a registered address, or who is resident or located, in the United

States or any Excluded Territory who obtains a copy of this document or a Provisional Allotment Letter is

required to disregard them, except with the consent of the Company. Notwithstanding any other provision

of this document or the Provisional Allotment Letter, the Company reserves the right to permit any

Qualifying Shareholder to take up its, his or her rights if the Company (in consultation with the

Underwriters) in its sole and absolute discretion is satisfied that the transaction in question will not violate

applicable laws. Persons in the United States or any of the Excluded Territories should consult their

professional advisers as to whether they require any governmental or other consents or need to observe any

other formalities to enable them to take up their rights.

Overseas Shareholders should refer to Section 7 of Part IV (Terms and Conditions of the Rights Issue) of this

document for further information on their ability to participate in the Rights Issue.

17. General Meeting

A notice convening a general meeting of the Company to be held at 9.30 a.m. on 24 November 2020 at

AVEVA Group plc, 30 Cannon Street, London, EC4M 6AH is set out at the end of this document. A Form

of Proxy to be used in connection with the General Meeting is enclosed. The purpose of the General Meeting

is to consider and, if thought fit, pass the Resolution as set out in full in the Notice of General Meeting.

Because of the size of OSIsoft when compared with AVEVA, the Acquisition is classified under the Listing

Rules as a Class 1 transaction and therefore requires the approval of Shareholders.

The Resolution proposes:

• that the Acquisition be approved and that the Directors be authorised to take all such steps as may be

necessary, expedient or desirable in relation to the Acquisition;

LR 13.3.1(2)

68


• that the Directors be authorised to allot Ordinary Shares up to an aggregate nominal amount of

£5 million, representing approximately 87.0 per cent. of the Company’s current issued share capital.

This will provide the Directors with the necessary authority and power under the Companies Act 2006

to proceed with the issue of the Rights Issue Shares and the Consideration Shares. The authority will

expire on 1 September 2021; and

• to clarify that the Company’s merger reserve and reverse acquisition reserve can be counted as

reserves for the purposes of the Company’s borrowing limits, in light of the proposed funding of the

Acquisition. The Directors’ borrowing powers under the Articles are currently limited to 2.5 times

share capital and capital and revenue reserves (subject to specified adjustments). Whilst the Directors

consider that these powers are sufficient, in particular in light of the Acquisition and its financing, on

the basis that the Company’s reverse acquisition reserve (as well as merger reserve and other reserves)

can be counted as either revenue or capital reserves, in order to avoid any doubt this part of the

Resolution clarifies that the reverse acquisition reserve (as well as the merger reserve) can be so

considered. This clarification is given by an ordinary resolution sanctioning borrowing on that basis.

The Resolution will be proposed as an ordinary resolution requiring a simple majority of votes in favour. The

Resolution must be approved by Shareholders who together represent a simple majority of the Ordinary Shares

being voted (whether in person or by proxy) at the General Meeting. Schneider Electric, which currently

indirectly holds 97,169,655 Existing Ordinary Shares, representing approximately 60 per cent. of the issued

ordinary share capital of AVEVA as at the Latest Practicable Date, has irrevocably undertaken to vote (or

procure a vote) in favour of the Resolution at the General Meeting, as described in Section 13 of this letter.

For further information in relation to the Resolution to be proposed at the General Meeting, see the Notice

of General Meeting at the end of this document.

Your attention is again drawn to the fact that the Rights Issue and the Acquisition are conditional and

dependent upon the Resolution being passed (there are also additional conditions which must be satisfied

before the Acquisition can be completed and the Rights Issue is subject to the additional conditions

summarised in Section 11 of this letter).

However, Shareholders should be aware that it is possible that, after the Rights Issue becomes unconditional,

the Acquisition could fail to complete. This possibility is discussed in Section 11 above.

18. Action to be taken

A Form of Proxy for use in relation to the General Meeting which covers the Resolution to be proposed at

the General Meeting accompanies this document. As an alternative to completing and returning the

accompanying Form of Proxy, you may register the appointment of a proxy for the General Meeting by:

(a) accessing the website www.signalshares.com;

(b) if you hold Ordinary Shares in CREST, you may appoint a proxy by completing and transmitting a

CREST Proxy Instruction in accordance with the procedures set out in the CREST Manual so that it

is received by the Company’s Registrar, Link Group, (under CREST participant RA10) by no later

than 9.30 a.m. on 20 November 2020 (or, in the case of an adjournment, not later than 48 hours before

the time fixed for the holding of the adjourned meeting); or

(c) if you are an institutional investor you may also be able to appoint a proxy electronically via the

Proxymity platform, a process which has been agreed by the Company and approved by the Registrar.

For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be

lodged by no later than 9.30 a.m. on 20 November 2020 in order to be considered valid. Before you

can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and

conditions. It is important that you read these carefully as you will be bound by them and they will

govern the electronic appointment of your proxy.

Guidance notes to assist you to complete the Form of Proxy or to register the appointment of a proxy

electronically or to complete and transmit a CREST Proxy Instruction are set out in the notice convening the

General Meeting at the end of this document.

Annex 12, 4.3

69


In response to the COVID-19 pandemic, the UK Government has introduced a number of measures in England

aimed at controlling the spread of the COVID-19 virus. Protecting the welfare of the Company’s Shareholders

and employees is of paramount importance and therefore the Board has decided to prohibit Shareholders

attending in person at the General Meeting, with the exception of the minimum number of directors or

managers as Shareholders/proxy holders needed to form a quorum. Further, other Shareholders may participate

in the General Meeting only by voting by proxy by appointing the “Chairman of the meeting” as their proxy,

in view of the restrictions on attendance at the General Meeting. Further updates may be provided on the

Company’s website at https://investors.aveva.com/, if necessary. Please check this page for updates. You can

still ask questions or raise matters of concern for you as a Shareholder, by emailing

[email protected] with the subject line “General Meeting November 2020”. Shareholders are

encouraged to submit questions by 9.00 a.m. on 17 November 2020 and the Company will endeavour to

respond to such questions on the Company’s website in advance of the proxy voting deadline. The Company

reserves the right to consolidate questions of a similar nature. In view of the foregoing, you should vote by

completing, signing and returning the enclosed Form of Proxy in accordance with the instructions printed on it

so as to be received by the Company’s Registrar, Link Group at PXS1, 34 Beckenham Road, Beckenham, Kent

BR3 4ZF, as soon as possible and in any event no later than 9.30 a.m. on 20 November 2020 (or, in the case of

an adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting), or by

registering the appointment of a proxy by one of the alternative means set out above.

If you have any questions relating to this document and/or the completion and return of the Form of Proxy,

please contact Link Group on +44 (0) 371 664 0321. Calls are charged at the standard geographic rate and

will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate.

The helpline is open between 9.00 a.m. and 5.30 p.m. (London time), Monday to Friday excluding public

holidays in England and Wales. Please note that Link Group cannot provide any financial, legal or tax advice

and calls may be recorded and monitored for security and training purposes.

19. Further information

Your attention is drawn to the Risk Factors set out on pages 14 to 43 of this document, and to the information

set out in the section entitled “Important Information” on pages 44 to 48.

You should not subscribe for any Rights Issue Shares except on the basis of information contained or

incorporated by reference into this document.

The results of the votes cast at the General Meeting will be announced as soon as possible once known

through a Regulatory Information Service and on the Company’s website

(https://investors.aveva.com/regulatory-news/). It is expected that this will be on 24 November 2020.

20. Financial advice

If you are in any doubt as to the action you should take, you are recommended to seek your own financial

advice immediately from an independent financial adviser, who is authorised under the FSMA if you are in

the United Kingdom, or from another appropriately authorised independent financial adviser if you are in a

territory outside the United Kingdom.

21. Recommendation

The Directors have received financial advice from Lazard in relation to the Acquisition and the Rights

Issue. In providing advice to the Directors, Lazard has relied on the Directors’ commercial

assessments. The Directors believe the Acquisition, the Rights Issue and the Resolution to be in the

best interests of the Company and its Shareholders taken as a whole.

Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the

Resolution, as all of the Directors intend to do (or procure to be done), in respect of the Ordinary

Shares in which they are interested, or in relation to which they are otherwise able to control the

exercise of the voting rights, held at the time of the General Meeting, amounting to 134,725 Ordinary

LR 13.3.1(4)

LR 13.3.1(5)

70


Shares in aggregate as at the Latest Practicable Date (representing approximately 0.1 per cent. of the

issued ordinary share capital of AVEVA).

Yours sincerely

Philip Aiken AM

Chairman

71


PART II

PRINCIPAL TERMS OF THE ACQUISITION

1. Stock and Unit Purchase Agreement

On 25 August 2020, the Company, AVEVA US 1 Corp., a Delaware corporation and indirect wholly owned

subsidiary of the Company, (“US Bidco”), AVEVA US 2 Corp., a Delaware corporation and indirect wholly

owned subsidiary of the Company, (“US Newco”, together with US Bidco, the “Purchasers”), OSIsoft,

MDT Holding, Inc., a Delaware corporation (“Mitsui”), SoftBank Vision Fund (AIV M1) L.P., a Delaware

limited partnership (“SoftBank”) and Estudillo Holdings Corporation, a Delaware corporation (“Estudillo”,

together with Mitsui and SoftBank, the “Sellers”) and Fortis Advisors LLC, a Delaware limited liability

company, solely in its capacity as the Sellers’ representative, entered into the Stock and Unit Purchase

Agreement, pursuant to which the Company and Purchasers have agreed, subject to the terms and the

conditions of the Stock and Unit Purchase Agreement, to acquire, directly or indirectly, all of the issued and

outstanding units of OSIsoft (the “Units”). On Completion, OSIsoft will become an indirect wholly owned

subsidiary of the Company.

2. Parties and structure

The Sellers collectively directly and indirectly own all of the Units of OSIsoft, which consist of 50,084 Units

(the “Estudillo Units”) owned by Estudillo; 4,976 Units (the “Mitsui Units”) owned by Mitsui; and

44,459 Units owned by SB/OSI, Inc., a Delaware corporation and wholly owned subsidiary of SoftBank (the

“SoftBank Blocker”). SoftBank owns all of the issued and outstanding capital stock of SoftBank Blocker

(“SoftBank Shares”).

The Acquisition will be effected by: (a) US Bidco acquiring the Estudillo Units from Estudillo and the Mitsui

Units from Mitsui; and (b) US Newco acquiring the SoftBank Shares.

3. Consideration

The total net consideration for the Acquisition will consist of approximately $4.4 billion in cash payable to

the Sellers, subject to certain customary adjustments described below to reflect that the Acquisition will be

made on a cash-free, debt-free basis and on the basis of a normalised level of working capital at Completion,

and approximately 10.8 million Consideration Shares, subject to increase in connection with the Rights

Issue, in accordance with the Stock and Unit Purchase Agreement, which is expected to result in

approximately 13.7 million Consideration Shares.

The cash portion of the consideration will be: (a) increased by the amount of cash and cash equivalents held

by the OSIsoft Group at Completion; (b) decreased by the amount of indebtedness of the OSIsoft Group and

certain liabilities of the SoftBank Blocker at Completion; (c) increased (or decreased) by the amount of any

working capital (as measured at Completion) excess (or shortfall) over (or less than) a target level of working

capital; and (d) decreased by the amount of certain transaction expenses incurred by OSIsoft on its own

behalf or on behalf of Sellers. These adjustments will be made pursuant to a customary pre-closing estimate

and post-closing true-up procedure.

4. Conditions

Completion is conditioned upon satisfaction of certain conditions:

(a) the approval of the Resolution by Shareholders at the General Meeting;

(b) the expiry or termination of any waiting periods under applicable U.S. competition laws relating to

the Acquisition;

(c) the receipt of the approval or other consent required to be obtained with respect to the Acquisition

under the antitrust and competition laws of each of the following jurisdictions: Austria, Cyprus,

LR 13.3.1(1)

LR 13.4.1(1)

LR 10.4.1(2)(a)

LR 13.4.1(1)

LR 10.4.1(2)(c)

Annex 12, 6.3

72


Germany, Brazil, Colombia, Russia, Saudi Arabia and Serbia, which approval or consent shall remain

in full force and effect;

(d) the absence of any order, injunction, or judgment issued by any governmental authority of a

competent jurisdiction enjoining or prohibiting the consummation of the Acquisition or making the

consummation of the Acquisition illegal;

(e) the approval of, or non-objection to, the Acquisition by CFIUS and its members (“CFIUS

Approval”);

(f) the accuracy of the representations and warranties given by the Sellers, OSIsoft, the Company and the

Purchasers (in respect of certain representations and warranties, subject to a materiality or material

adverse effect threshold);

(g) the compliance (in all material respects) with all covenants required to be performed or complied with

by the Sellers, OSIsoft, the Company and the Purchasers;

(h) the non-occurrence of a material adverse effect on the OSIsoft Group; and

(i) the delivery of certain customary closing documentation.

In connection with the Acquisition, Schneider Electric, OSIsoft and the Company have entered into a

Support Agreement, pursuant to which, among other things, Schneider Electric has agreed to vote its

Ordinary Shares, which constitute 60.1 per cent. of the issued and outstanding Ordinary Shares as of the date

hereof, in favour of the Resolution at the General Meeting.

5. Conduct of OSIsoft business prior to Completion

The Stock and Unit Purchase Agreement provides that between the date of the Stock and Unit Purchase

Agreement and Completion (or the termination of the Stock and Unit Purchase Agreement), subject to

certain limited exceptions or with the prior written consent of the Purchasers, which consent will not be

unreasonably withheld, conditioned, or delayed, OSIsoft will and will cause each other company in the

OSIsoft Group to, and, with respect to the third bullet below, the SoftBank Blocker and the Sellers will:

(a) use its reasonable best efforts to conduct its business in the ordinary course of business consistent with

past practice in all material respects;

(b) use its reasonable best efforts to maintain and preserve intact its business organisation and goodwill

of those having business relationships (including employees) with the OSIsoft Group; and

(c) not undertake certain actions as specified in the Stock and Unit Purchase Agreement.

6. Covenants

The Stock and Unit Purchase Agreement contains other covenants, including, among other things that:

(a) OSIsoft, the Sellers and the Company will use reasonable best efforts to, among other things: (i) take

all actions necessary or advisable under applicable antitrust laws to consummate the Acquisition and

to cause the closing conditions to be satisfied, including making antitrust filings in the United States

within 10 business days after the date of the Stock and Unit Purchase Agreement and as soon as

reasonably practicable in Austria, Cyprus, Germany, Brazil, Colombia, Russia, Saudi Arabia and

Serbia; (ii) take all actions necessary to obtain any governmental consents required under the antitrust

laws of the aforementioned jurisdictions; and (iii) contest and resist any action, decree, judgment,

injunction or order that restricts or prohibits the consummation of the Acquisition;

(b) to the extent there are any objections or challenges to the Acquisition under any applicable antirust

law, the Company will promptly pursue all actions necessary to resolve any such objection or

challenge, including, agreeing to a consent decree, holding assets separately, selling, divesting or

disposing of assets of the Company or its subsidiaries (including OSIsoft Group following

Completion), and otherwise taking any actions to avoid any judgment or order that restricts or

73


prohibits the consummation of the Acquisition; provided the Company will not be required to

undertake any actions that would reasonably be expected to have a material adverse effect on the

business, properties, assets, rights, liabilities (contingent or otherwise), results of operations or

condition (financial or otherwise) of the Company and its subsidiaries (including the OSIsoft Group

following Completion), taken as a whole;

(c) prior to the Completion, neither the Company or any of its subsidiaries will acquire any business or

any interest in a business (by stock purchase, merger, or otherwise) or any assets of a business that

would reasonably be likely to prevent, delay or otherwise interfere with any receipt of any

government consent in connection with the Acquisition under any antitrust laws;

(d) the Purchasers and OSIsoft will: (i) use reasonable best efforts to promptly prepare and file, or cause

to be promptly prepared and filed, not later than 20 business days after the date of the Stock and Unit

Purchase Agreement, a draft joint voluntary notice with CFIUS; (ii) submit a final joint voluntary

notice no more than five business days after receiving comments to the draft joint voluntary notice

from CFIUS; and (iii) use reasonable best efforts to take, or cause to be taken, all actions that are

customarily and reasonably undertaken to obtain CFIUS Approval, provided that such actions: (A) do

not require the Purchasers or any of their affiliates to act or refrain from acting in a manner that would

reasonably be expected to have a material and adverse effect on the Purchasers’ ownership,

management or control of OSIsoft or a material and adverse impact on the benefits that the Purchasers

would reasonably be expected to derive from the Acquisition; and (B) would not reasonably be

expected to have a material and adverse impact on the assets or businesses of the Purchasers or any

of their affiliates that are held apart from OSIsoft except insofar and to the extent that such assets or

businesses that are held apart from OSIsoft would have contracts or understandings to use or hold

assets (including information) or businesses of OSIsoft;

(e) the Company makes a number of covenants with respect to the General Meeting and obtaining the

Shareholders’ approval of the Acquisition, including covenants to, amongst other things: (i) call and

hold the General Meeting and to procure that the Shareholders approve the Resolution at the General

Meeting as soon as reasonably practicable; (ii) ensure that the Directors will recommend the

Acquisition to the Shareholders; (iii) not amend the Resolution; (iv) not adjourn or postpone or

adjourn the General Meeting unless required by applicable law or due to security reasons; and

(v) generally take all commercially reasonable actions within its power to obtain the approval of the

Shareholders of the Acquisition;

(f) following Completion, the Purchasers will cause OSIsoft to indemnify and advance expenses to the

current, former and future directors, officers, employees and agents of the OSIsoft Group under the

operating agreement of OSIsoft as in effect on the date of the Stock and Unit Purchase Agreement and

not amend, repeal or modify any provision in the operating agreement of OSIsoft providing for the

indemnification of OSIsoft Group’s directors, officers, employees and agents;

(g) prior to Completion, OSIsoft may purchase run-off coverage for the directors, officers, employees and

agents of the OSIsoft Group, which will provide coverage for six years following Completion in an

amount not less than any existing coverage and with terms not materially less favourable then the

current directors’ and officers’ liability insurance currently maintained by OSIsoft;

(h) between the date of the Stock and Unit Purchase Agreement and Completion (or the termination of

the Stock and Unit Purchase Agreement), OSIsoft and the Sellers will not, or permit any of their

respective directors, officers, employees or other representatives to, other than with respect to the

Acquisition, initiate, solicit, negotiate, discuss, or enter into any agreement that involves the direct or

indirect acquisition of the assets or Units of OSIsoft or merger or consolidation of OSIsoft;

(i) for a period of 12 months following Completion, the Company will provide or cause to be provided

to each employee of OSIsoft Group: (i) a base salary and target annual cash incentive opportunities

and commission communities no less favourable than those provided to such employee as of

immediately prior to the date of Stock and Unit Purchase Agreement; and (ii) health and welfare

benefits that are either substantially comparable to those received by such employee immediately

74


prior to the date of the Stock and Unit Purchase Agreement or the same as for similarly situated

employees of the Company;

(j) subject to certain terms and conditions, the Company will allow employees of the OSIsoft Group who

either continue as employees of Purchasers or continue as employees or join the OSIsoft Group to

participate in certain of the AVEVA Group Share Plans, as amended, and will make awards thereunder

whose aggregate amount is $60 million, in four equal $15 million tranches, with the first tranche

awarded on or promptly following the date of Completion. Further, an additional contribution of

$3.5 million for an additional one-off share award to be granted to OSIsoft employees is to be satisfied

also using the AVEVA Group RSP, funded by a direct or indirect party to the transaction other than

AVEVA;

(k) prior to or at Completion, the Purchasers will obtain or cause to be obtained a representations and

warranties insurance policy, and Purchasers and the Sellers shall each be responsible for one-half of

the costs, expenses, premiums, commissions and taxes related to such policy, up to a $2.75 million

cap with respect to the Sellers’ obligation;

(l) prior to Completion, OSIsoft is required to provide the Company and Purchasers with access to books,

records, properties and personnel of the OSIsoft Group and with all information related to the OSIsoft

Group companies as reasonably requested by the Company (subject to certain exceptions);

(m) at the written request of the Purchasers, OSIsoft will use commercially reasonable efforts to give any

notices and obtain all consents, waivers or approvals of any parties to any material contracts as

necessary or advisable in connection with the Acquisition; and

(n) the Company will use its reasonable best efforts to admit the Consideration Shares to the premium

listing segment of the Official List and to trading on the London Stock Exchange’s main market for

listed securities as soon as reasonably practicable after Completion.

7. Representations and warranties

The Stock and Unit Purchase Agreement contains warranties that are customary for a U.S. acquisition

transaction given by OSIsoft in relation to, among other things:

(a) formation, due organisation and power and authority to enter into the Stock and Unit Purchase

Agreement;

(b) capitalisation, due organisation and valid existence of the OSIsoft Group companies;

(c) financial statements, undisclosed liabilities and title to assets;

(d) consents and approvals, including necessary governmental approvals, in connection with entry into

the Stock and Unit Purchase Agreement and consummation of the Acquisition;

(e) material contracts, absence of any events which would have a material adverse effect on OSIsoft since

31 December 2019, absence of litigation and compliance with laws; and

(f) employment, labour matters and employee benefits, environmental matters, intellectual property,

information technology, data security and privacy, insurance, real estate, certain regulatory matters

(e.g., export control and anti-corruption matters), tax matters, material customer relationships and

related party transactions.

The Stock and Unit Purchase Agreement also contains warranties (that are customary for a U.S. acquisition

transaction) given by the Sellers (in their capacity as holders of Units and in the case of SoftBank, of the

SoftBank Shares) in relation to, among other things:

(a) incorporation, due organisation, and power and authority to enter into the Stock and Unit Purchase

Agreement;

75


(b) consents and approvals, including necessary governmental approvals, in connection with entry into

the Stock and Unit Purchase Agreement and consummation of the Acquisition;

(c) ownership of the Units and the SoftBank Shares;

(d) absence of litigation and certain tax matters; and

(e) certain securities laws, compliance and diligence matters with respect to the Consideration Shares

(from Estudillo only).

The Stock and Unit Purchase Agreement also contains warranties (that are customary for a U.S. acquisition

transaction) given by the Company and Purchasers in relation to, among other things:

(a) formation, due organisation, and power and authority to enter into the Stock and Unit Purchase

Agreement;

(b) consents and approvals, including necessary governmental approvals and the approval of the

Resolution by Shareholders at the General Meeting, in connection with entry into the Stock and Unit

Purchase Agreement and consummation of the Acquisition;

(c) the capitalisation of the Company;

(d) how the Purchasers and the Company will finance the Acquisition;

(e) that the Company is not discussing or negotiating any acquisition or merger transaction that would

reasonably be likely to prevent or delay the receipt of the requisite antitrust approvals for the

Acquisition; and

(f) that Purchasers have obtained a representations and warranties insurance policy that will allow the

Purchasers to recover for certain breaches of representations and warranties in the Stock and Unit

Purchase Agreement from third-party insurance providers.

US Bidco has obtained a representations and warranties insurance policy that will be effective as of

Completion, pursuant to which the Purchasers will be able to recover from third-party insurance carriers for

losses incurred as a result of a breach of any of the representations and warranties given by OSIsoft and the

Sellers in the Stock and Unit Purchase Agreement, as well as pre-closing taxes, subject to certain exceptions

and the terms thereof. The representations and warranties insurance policy includes customary terms and

conditions and will provide $200 million in coverage to the Company from Completion in accordance with

such terms.

Other than with respect to certain limited representations and warranties (e.g., capitalisation of OSIsoft,

ownership of the Units, certain tax matters with respect to the SoftBank Blocker), pre-closing taxes of the

SoftBank Blocker, wilful breaches of the pre-Completion covenants and fraud, the Purchasers and the

Company will not have any recourse through indemnification against the Sellers.

8. Termination

The Stock and Unit Purchase Agreement provides for an initial outside date of 20 December 2020, which is

subject to automatic extension to 31 March 2021, and subsequently to 30 June 2021, in the event that any of

the Break Fee Conditions (other than the Shareholder approval condition) have not been satisfied (without

regard being had to the satisfaction or otherwise of the Shareholder approval condition), as of such dates (the

“Outside Date”) and, subject to certain exceptions, may be terminated by the parties if Completion has not

occurred by the Outside Date.

In addition, the Stock and Unit Purchase Agreement may be terminated and the Acquisition aborted before

Completion (subject to certain exceptions):

(a) by mutual written consent of OSIsoft and the Purchasers;

76


(b) by either OSIsoft or the Purchasers if there is final non-appealable injunction or order by any

governmental authority of competent jurisdiction prohibiting the consummation of the Acquisition;

(c) by the Purchasers, if OSIsoft is in breach of any of its representations, warranties, covenants or

agreements which would give rise to a failure of a closing condition to be satisfied, which failure is

incapable of being cured or is not cured within the sooner of 30 calendar days or by the Outside Date;

and

(d) by OSIsoft, if Purchasers or the Company are in breach of any of their representations, warranties,

covenants or agreements which would give rise to a failure of a closing condition to be satisfied,

which failure is incapable of being cured or is not cured within the sooner of 30 calendar days or by

the Outside Date.

AVEVA will also be required to cause the Purchasers to pay a termination fee of $85 million to the Sellers

if the Stock and Unit Purchase Agreement is terminated due to either: (a) Completion not having occurred

by the Outside Date (as may be extended) as a result of a failure to satisfy the Break Fee Conditions; or (b)

a government authority having prohibited the Acquisition by way of a final non-appealable order under an

antitrust law or issued by CFIUS, provided that, in either case, at the time of such termination all other

conditions to AVEVA’s obligations to effect the Acquisition have been satisfied or would have been satisfied

at Completion, and OSIsoft has not committed a material breach of the Stock and Unit Purchase Agreement

which was the principal cause of Completion not having occurred and the Stock and Unit Purchase

Agreement being terminated.

9. Governing law

The Stock and Unit Purchase Agreement is governed by the laws of the State of Delaware. The Company,

Purchasers, the Sellers and OSIsoft have agreed to: (a) irrevocably and unconditionally submit to the

exclusive jurisdiction of the Court of Chancery of the State of Delaware, or any federal court of the United

States located within the State of Delaware, in any action arising out of or relating to the Stock and Unit

Purchase Agreement; and (b) waive to the fullest extent permitted by applicable law any right to a trial by

jury with respect to any litigation arising out of the Stock and Unit Purchase Agreement and the Acquisition.

77


PART III

QUESTIONS AND ANSWERS ON THE RIGHTS ISSUE

The questions and answers below have been prepared to help Shareholders understand what is involved in

the Rights Issue. These are in general terms only and, as such, you should not rely solely on them and should

also read Part IV (Terms and Conditions of the Rights Issue) of this document for full details of the action

you should take and the terms and conditions applicable to the Rights Issue. If you are in any doubt as to the

action you should take, you are recommended to seek your own financial advice immediately from your

stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under

FSMA if you are resident in the United Kingdom or, if not, from another appropriately authorised

independent financial adviser.

This Part III (Questions and Answers on the Rights Issue) deals with general questions relating to the Rights

Issue and more specific questions relating to Qualifying Shareholders who hold Existing Ordinary Shares in

certificated form, as well as some more specific questions relating to Qualifying Shareholders who hold

Existing Ordinary Shares in uncertificated form (that is, through CREST). Regardless of how your Existing

Ordinary Shares are held, you should read Part IV (Terms and Conditions of the Rights Issue) for full details

of what action you should take. If you are a CREST sponsored member, you should also consult your CREST

sponsor.

If you are an Overseas Shareholder, you should read question 4.6 of this Part III (Questions and Answers on

the Rights Issue) and you should take professional advice as to whether you are eligible and/or you need to

observe any formalities to enable you to take up your rights for the purposes of the Rights Issue.

Ordinary Shares can be held in certificated form (that is, represented by a share certificate) or in

uncertificated form) that is, through CREST). Accordingly, these questions and answers are split into four

sections:

• Section 1 (General);

• Section 2 (Ordinary Shares in certificated form) answers questions you may have in respect of

procedures for Qualifying Shareholders who hold their Existing Ordinary Shares in certificated form;

• Section 3 (Ordinary Shares in CREST) answers questions you may have in respect of the equivalent

procedures for Qualifying Shareholders who hold their Existing Ordinary Shares in CREST; and

• Section 4 (Further procedures for Ordinary Shares whether in certificated form or in CREST) answers

some detailed questions about your rights and the actions you may need to take and is applicable to

Ordinary Shares whether held in certificated form or in CREST.

If you do not know whether your Existing Ordinary Shares are held in certificated or uncertificated form,

please contact Link Group on +44 (0) 371 664 0321. Calls are charged at the standard geographic rate and

will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate.

The helpline is open between 9.00 a.m. and 5.30 p.m. (London time), Monday to Friday excluding public

holidays in England and Wales. Please note that Link Group cannot provide any financial, legal or tax advice

and calls may be recorded and monitored for security and training purposes.

1. General

1.1 What is a rights issue?

A rights issue is a way for companies to raise money. Companies do this by giving their existing

shareholders a right to subscribe for further shares in proportion to their existing shareholdings.

The offer under this Rights Issue is of 125,739,796 Rights Issue Shares at a price of 2,255 pence per

Rights Issue Share. If you are a Qualifying Shareholder other than a Shareholder with a registered

address, or resident or located in, subject to certain exceptions, the United States or the Excluded

LR 13.3.1(9)(d)

LR 13.3.1(9)(g)

78


Territories, you will be entitled to buy Rights Issue Shares under the Rights Issue. If you hold your

Existing Ordinary Shares in certificated form, your entitlement will be set out in your Provisional

Allotment Letter.

However, subject to certain exceptions, Provisional Allotment Letters will not be sent to Qualifying

Non-CREST Shareholders with registered addresses in the United States or any of the Excluded

Territories, nor will the CREST stock account of Qualifying CREST Shareholders with registered

addresses in the United States or any of the Excluded Territories be credited with Nil Paid Rights, and,

in the event they do not take up their entitlements, their entitlements to Rights Issue Shares will be

treated as entitlements not taken up in accordance with the procedures set out in Section 5 of Part IV

(Terms and Conditions of the Rights Issue) of this document. The notice in the London Gazette

referred to in Section 7.6 of Part IV (Terms and Conditions of the Rights Issue) will state where a

Provisional Allotment Letter may be inspected or obtained. Please see question 4.6 below if you live

outside the United Kingdom.

Rights Issue Shares are being offered to Qualifying Shareholders in the Rights Issue at a discount to

the share price on the last Business Day before the date of this document. The Rights Issue Price

represents a discount of 45.8 per cent. to the closing price of 4,162 pence per Existing Ordinary Share

on the Latest Practicable Date, and a discount of 32.2 per cent. to the theoretical ex-rights price of

3,328 pence per Existing Ordinary Share on the Latest Practicable Date. Because of this discount and

while the market value of the Existing Ordinary Shares exceeds the Rights Issue Price, the right to

subscribe for the Rights Issue Shares is potentially valuable.

The Rights Issue will be made on the basis of 7 Rights Issue Shares for every 9 Existing Ordinary

Shares held by Qualifying Shareholders on the Rights Issue Record Date. If you do not want to buy

the Rights Issue Shares to which you are entitled, you can instead sell or transfer your rights to those

Rights Issue Shares (called Nil Paid Rights) and receive the net proceeds, if any, of the sale or transfer

in cash. This is referred to as dealing “nil paid”.

1.2 Will Shareholders be entitled to vote on the Rights Issue?

Yes, shareholders are able to vote on the Resolution required to authorise the Directors to allot shares

pursuant to or in connection with the Rights Issue at the General Meeting. Shareholders are

encouraged to participate and Shareholders wishing to vote on the Resolution are requested to

complete and return the accompanying Form of Proxy, appoint a proxy electronically or complete and

transmit a CREST Proxy Instruction in the manner described in Section 18 of Part I (Letter from the

Chairman of AVEVA Group plc) of this document. However you should note that Schneider Electric,

which currently holds 97,169,655 Existing Ordinary Shares, representing approximately 60 per cent.

of the issued ordinary share capital of AVEVA as at the Latest Practicable Date, has irrevocably

undertaken to vote (or procure a vote) in favour of the Resolution at the General Meeting, as described

in Section 13 of Part I (Letter from the Chairman of AVEVA Group plc) of this document.

1.3 I understand that there is a period when there is trading in the Nil Paid Rights. What does this

mean?

If you do not want to buy the Rights Issue Shares being offered to you under the Rights Issue, you

can instead sell or transfer your rights (called Nil Paid Rights) to acquire those Rights Issue Shares

and receive the net proceeds, if any, of that sale or transfer in cash. This is referred to as dealing “nil

paid”. This means that, during the Rights Issue offer period (i.e. between 8.00 a.m. on 25 November

2020 and 11.00 a.m. on 9 December 2020), you can either trade Ordinary Shares (which will not carry

any entitlement to participate in the Rights Issue) or you can, subject to demand and market

conditions, trade in the Nil Paid Rights.

1.4 Can I sell some rights and use the proceeds to take up my remaining rights?

This is known as a “Cashless Take-up” or “tail-swallowing”. You should contact your stockbroker or

financial adviser who may be able to help if you wish to do this.

79


2. Ordinary Shares in Certificated Form

2.1 I hold my Existing Ordinary Shares in certificated form. How do I know if I am eligible to acquire

Rights Issue Shares under the Rights Issue?

If you receive a Provisional Allotment Letter then you should be eligible to acquire Rights Issue

Shares under the Rights Issue (as long as you have not sold all of your Existing Ordinary Shares

before 8.00 a.m. on 25 November 2020 (the time when the Existing Ordinary Shares are expected to

be marked “ex-rights” by the London Stock Exchange).

However, if you receive a Provisional Allotment Letter and you have a registered address in, or are a

person resident or domiciled in, or a citizen of, a country other than the United Kingdom, you must

satisfy yourself as to the full observance of the applicable laws of such territory including observing

any requisite governmental or other consents, observing any other requisite formalities and paying

any issue, transfer or other taxes due in such territories. Receipt of this document or a Provisional

Allotment Letter does not constitute an offer in those jurisdictions in which it would be illegal to make

an offer. Overseas Shareholders should refer to Section 7 of Part IV (Terms and Conditions of the

Rights Issue) of this document for further details.

If you do not receive a Provisional Allotment Letter, and you do not hold your shares in CREST, this

probably means you are not eligible to acquire any Rights Issue Shares. However, see question 2.5

below.

2.2 How many Rights Issue Shares will I be entitled to acquire?

Box 2 on the Provisional Allotment Letter shows the number of Rights Issue Shares you will be

entitled to buy pursuant to the Rights Issue if you are a Qualifying Non-CREST Shareholder. You will

be entitled to acquire at the Rights Issue Price 7 Rights Issue Shares for every 9 Existing Ordinary

Shares you held at close of business on 20 November 2020 (the Rights Issue Record Date). All

Qualifying Non-CREST Shareholders (other than Shareholders with a registered address in, subject

to certain exceptions, the United States or any of the Excluded Territories) will be sent a Provisional

Allotment Letter.

2.3 I hold my Existing Ordinary Shares in certificated form. What do I need to do in relation to the

Rights Issue?

If you hold your Existing Ordinary Shares in certificated form and do not have a registered address

in, subject to certain exceptions, the United States or any of the Excluded Territories, you will be sent

a Provisional Allotment Letter that shows: (a) in Box 1, how many Existing Ordinary Shares you held

at the close of business on 20 November 2020 (the Rights Issue Record Date); (b) in Box 2, how many

Rights Issue Shares you are entitled to buy pursuant to the Rights Issue; and (c) in Box 3, how much

you need to pay if you want to take up your right to subscribe for all the Rights Issue Shares

provisionally allotted to you in full. Question 2.4 below gives more details regarding the choices

available to you.

If you have a registered address in, subject to certain exceptions, the United States or any of the other

Excluded Territories, you will not receive a Provisional Allotment Letter.

2.4 I am a Qualifying Shareholder with a registered address in the United Kingdom and I hold my

Existing Ordinary Shares in certificated form. What are my options and what should I do with the

Provisional Allotment Letter?

(a) If you want to take up all of your rights

If you want to take up all of your rights to acquire all of the Rights Issue Shares to which you

are entitled, you need to return the whole of the Provisional Allotment Letter, together with

your cheque or banker’s draft in pounds sterling made payable to “Link Market Services

Limited RE: AVEVA Group plc Rights Issue Account” and crossed “A/C payee only” for the

amount shown in Box 3 of the Provisional Allotment Letter, detailing the Allotment Number

(which is on page 1 of the Provisional Allotment Letter) and your surname on the reverse of

the cheque or banker’s draft, by post or by hand (during normal business hours only) to Link

80


Group, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU to

be received by 11.00 a.m. on 9 December 2020. Within the United Kingdom only, you can use

the reply-paid envelope provided with the Provisional Allotment Letter. Please allow sufficient

time for delivery. Full instructions are set out in Part IV (Terms and Conditions of the Rights

Issue) and in the Provisional Allotment Letter.

Please note third-party cheques may not be accepted other than building society cheques or

banker’s drafts.

If payment is made by a building society cheque (not being drawn on account of the applicant)

or a banker’s draft, the building society or bank should insert details of the name of the account

holder and have either added the building society or bank branch stamp on the back of the

cheque/draft, or have provided a supporting letter confirming the source of funds. A definitive

share certificate will then be sent to you for the Rights Issue Shares that you take up. Your

definitive share certificate for Rights Issue Shares is expected to be despatched to you by no

later than 23 December 2020.

You will need your Provisional Allotment Letter to be returned to you if you want to deal in

your Fully Paid Rights. Your Provisional Allotment Letter will not be returned to you unless

you tick the appropriate box on the Provisional Allotment Letter.

(b) If you do not want to take up your rights at all

If you do not want to take up any of your rights, you do not need to do anything. If you do not

return your Provisional Allotment Letter subscribing for the Rights Issue Shares to which you

are entitled by 11.00 a.m. on 9 December 2020, the Company has made arrangements under

which the Underwriters will try to find investors to take up your rights and the rights of others

who have not taken them up. If the Underwriters do find investors who agree to pay a premium

above the Rights Issue Price and the related expenses of procuring those investors (including

any applicable brokerage and commissions and amounts in respect of value added tax), you

will be sent a cheque for your share of the amount of that premium provided that this is £5.00

or more. Cheques are expected to be dispatched by no later than 23 December 2020 and will

be sent to your existing address appearing on the register of members of the Company (or to

the first-named holder if you hold your Existing Ordinary Shares jointly). If the Underwriters

cannot find investors who agree to pay a premium over the Rights Issue Price and related

expenses so that your entitlement would be £5.00 or more, you will not receive any payment,

and any amounts of less than £5.00 will be aggregated and will accrue for the benefit of the

Company.

Alternatively, if you do not want to take up your rights, you can sell or transfer your Nil Paid

Rights (see question 2.4(d) below).

(c) If you want to take up some but not all of your rights

If you want to take up some, but not all, of your rights and to transfer some or all of those you

do not want to take up, or you wish to transfer all of the Nil Paid Rights or (if appropriate) the

Fully Paid Rights, but to different persons, you should first apply to have your Provisional

Allotment Letter split by completing Form X on page 4 of the Provisional Allotment Letter,

and returning it, with an accompanying letter stating the denominations of the split Provisional

Allotment Letters required, by post or by hand (during normal business hours only) to Link

Group, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU (so

as to be received by 3.00 p.m. on 7 December 2020), together with a covering letter stating the

number of split Provisional Allotment Letters required and the number of Nil Paid Rights to be

comprised in each split Provisional Allotment Letter. You should then deliver the split

Provisional Allotment Letter representing the Rights Issue Shares that you wish to accept

together with your cheque or banker’s draft to the Receiving Agent (see question 2.4(a) above)

to be received by 11.00 a.m. on 9 December 2020.

81


Alternatively, if you only want to take up some of your rights (but not sell some or all of the

rest), you should sign and date Form X on the Provisional Allotment Letter and return it with

a cheque or banker’s draft in pounds sterling, in accordance with the provisions set out in the

Provisional Allotment Letter. In this case the Provisional Allotment Letter and cheque or

banker’s draft must be received by 11.00 a.m. on 9 December 2020.

Further details are being set out in Part IV (Terms and Conditions of the Rights Issue) and will

be set out in the Provisional Allotment Letter.

(d) If you want to sell all of your rights

If you want to sell all of your rights you should complete and sign Form X on the Provisional

Allotment Letter (if it is not already marked “Original Duly Renounced”) and pass the entire

letter to your stockbroker, bank manager or other appropriate financial adviser or to the

transferee (provided they are not in the United States or any of the Excluded Territories). Please

note that your ability to achieve a sale of your rights is dependent on the demand for such rights

and that the price for the Nil Paid Rights may fluctuate. Please ensure, however, that you allow

enough time so as to enable the person acquiring your rights to take all necessary steps in

connection with taking up the entitlement prior to 11.00 a.m. on 9 December 2020.

2.5 I acquired my Existing Ordinary Shares prior to the Rights Issue Record Date and hold my

Existing Ordinary Shares in certificated form. What if I do not receive a Provisional Allotment

Letter?

If you do not receive a Provisional Allotment Letter but hold your Existing Ordinary Shares in

certificated form, this probably means that you are not able or entitled to acquire Rights Issue Shares

under the Rights Issue. Some Qualifying Non-CREST Shareholders, however, will not receive a

Provisional Allotment Letter but may still be eligible to acquire Rights Issue Shares under the Rights

Issue, namely:

(a) Qualifying CREST Shareholders who held their Existing Ordinary Shares in uncertificated

form on the Rights Issue Record Date and who have converted them to certificated form;

(b) Qualifying Non-CREST Shareholders who bought Existing Ordinary Shares before the

Ex-Rights Date and who hold such Existing Ordinary Shares in certificated form but were not

registered as the holders of those Existing Ordinary Shares at the close of business on the

Rights Issue Record Date; and

(c) certain Overseas Shareholders who can demonstrate to the satisfaction of the Company that the

offer under the Rights Issue can lawfully be made to them without contravention of any

relevant legal or regulatory requirements (please see question 4.6 below).

If you do not receive a Provisional Allotment Letter but think that you should have received one,

please contact Link Group on +44 (0) 371 664 0321. Calls are charged at the standard geographic rate

and will vary by provider. Calls outside the United Kingdom will be charged at the applicable

international rate. The helpline is open between 9.00 a.m. and 5.30 p.m. (London time), Monday to

Friday excluding public holidays in England and Wales. Please note that Link Group cannot provide

any financial, legal or tax advice and calls may be recorded and monitored for security and training

purposes.

2.6 I hold my Existing Ordinary Shares in certificated form. If I take up my rights, when will I receive

the certificate representing my Rights Issue Shares?

If you take up your rights under the Rights Issue, share certificates for the Rights Issue Shares are

expected to be posted by no later than 23 December 2020.

82


2.7 I hold my Existing Ordinary Shares in certificated form. What if I want to sell the Rights Issue

Shares for which I have paid?

Provided the Rights Issue Shares have been paid for and you have requested the return of the receipted

Provisional Allotment Letter, you can transfer the Fully Paid Rights by completing Form X (the form

of renunciation) on the receipted Provisional Allotment Letter in accordance with the instructions set

out in the Provisional Allotment Letter until 11.00 a.m. on 9 December 2020. After that time, you will

be able to sell your Rights Issue Shares in the normal way. The share certificate relating to your Rights

Issue Shares is expected to be dispatched to you by no later than 23 December 2020. Pending despatch

of the definitive share certificates, instruments of transfer of the Rights Issue Shares will be certified

by the Registrar against the register.

Further details are set out in Part IV (Terms and Conditions of the Rights Issue).

2.8 How do I transfer my rights into the CREST system?

If you are a Qualifying Non-CREST Shareholder, but are a CREST member and want your Rights

Issue Shares to be in uncertificated form, you should complete Form X and the CREST Deposit Form

(both on page 4 of the Provisional Allotment Letter). Further details on how to deposit Nil Paid Rights

or Fully Paid Rights into CREST are set out further in Section 3.9 of Part IV (Terms and Conditions

of the Rights Issue) and in the Provisional Allotment Letter.

If you have transferred your rights into the CREST system, you should refer to Section 4 of Part IV

(Terms and Conditions of the Rights Issue) for details on how to pay for the Rights Issue Shares.

3. Ordinary Shares in CREST

3.1 How do I know if I am eligible to participate in the Rights Issue?

If you are a Qualifying CREST Shareholder (save as mentioned below), and on the assumption that

the Rights Issue proceeds as planned, your CREST stock account will be credited with your

entitlement to Nil Paid Rights on 25 November 2020. The stock account to be credited will be the

account under the participant ID and member account ID that apply to your Existing Ordinary Shares

at close of business on the Rights Issue Record Date. The Nil Paid Rights and the Fully Paid Rights

are expected to be enabled after 8.00 a.m. on 25 November 2020. If you are a CREST sponsored

member, you should consult your CREST sponsor if you wish to check that your account has been

credited with your entitlement to Nil Paid Rights. The CREST stock accounts of Overseas

Shareholders with a registered address in the United States or any of the Excluded Territories will not

be credited with Nil Paid Rights. Overseas Shareholders should refer to Section 7 of Part IV (Terms

and Conditions of the Rights Issue).

3.2 How do I take up my rights using CREST?

If you are a Qualifying CREST Shareholder and wish to take up and pay your rights, you should refer

to the instructions set out in Part IV (Terms and Conditions of the Rights Issue).

If you are a CREST member, you should ensure that an MTM Instruction has been inputted and has

settled by 11.00 a.m. on 9 December 2020 in order to make a valid acceptance. If your Ordinary

Shares are held by a nominee or you are a CREST sponsored member, you should speak directly to

the agent who looks after your stock or your CREST sponsor (as appropriate) who will be able to help.

If you have further questions, particularly of a technical nature regarding acceptance through CREST,

you should call the CREST Service Desk on 0845 964 5648 (or +44 20 7849 0199 if you are calling

from outside the United Kingdom).

3.3 How many Rights Issue Shares will I be entitled to acquire?

If you are eligible to participate in the Rights Issue, your stock account will be credited with Nil Paid

Rights in respect of the number of Rights Issue Shares which you are entitled to acquire, and will be

entitled to 7 Rights Issue Shares for every 9 Existing Ordinary Shares you held at close of business

on the Rights Issue Record Date. You can also view the claim transactions in respect of

83


purchases/sales effected after this date, but before the Ex-Rights Date. If you are a CREST sponsored

member, you should contact your CREST sponsor.

3.4 If I take up my rights, when will Rights Issue Shares be credited to my CREST account(s)?

If you take up your rights under the Rights Issue, it is expected that Rights Issue Shares will be

credited to the CREST stock account in which you hold your Fully Paid Rights on 10 December 2020.

4. Further Procedures for Ordinary Shares whether in Certificated Form or in CREST

4.1 If I buy Ordinary Shares after the Rights Issue Record Date will I be eligible to participate in the

Rights Issue?

If you bought Ordinary Shares after close of business on the Rights Issue Record Date but prior to

8.00 a.m. on 25 November 2020 (the time when the Rights Issue Shares are expected to start trading

ex-rights on the London Stock Exchange), you may be eligible to participate in the Rights Issue. If

you are in any doubt, please consult your stockbroker, bank manager or other appropriate financial

adviser, or whoever arranged your share purchase, to ensure you claim your entitlement.

If you buy Ordinary Shares at or after 8.00 a.m. on 25 November 2020, you will not be eligible to

participate in the Rights Issue in respect of those shares.

4.2 What if the number of Rights Issue Shares to which I am entitled is not a whole number: am I

entitled to fractions of Rights Issue Shares?

Your entitlement to Rights Issue Shares will be calculated at close of business on the Rights Issue

Record Date (other than in the case of those who bought shares after close of business on the Rights

Issue Record Date but prior to 8.00 a.m. on 25 November 2020 who may be eligible to participate in

the Rights Issue). If the result is not a whole number, you will not receive a Rights Issue Share in

respect of the fraction of a Rights Issue Share and your entitlement will be rounded down to the

nearest whole number. Such fractions will be aggregated and, if possible and a price over the total of

the Rights Issue Price and the expenses of placing (including any related commissions and VAT which

is not, in the reasonable opinion of the Underwriters, recoverable) can be obtained, placed in the

market or otherwise acquired by the Underwriters as principals (or sub-underwriters or placees

procured by the Underwriters) pursuant to the Underwriting Agreement. The net proceeds of such

placing (after deduction of the Rights Issue Price and expenses) will be paid to the relevant Qualifying

Shareholders pro-rated to their fractions except that individual amounts per holding of less than £5.00

will not be distributed but will ultimately accrue for the benefit of AVEVA.

4.3 Will I be taxed if I take up or sell my rights or if my rights are sold on my behalf?

The following comments are by way of general guidance and assume, amongst other things, that you

hold your Ordinary Shares as an investment.

If you are resident in the United Kingdom for tax purposes, you should not have to pay United

Kingdom tax when you take up your rights, although the Rights Issue will affect the amount of United

Kingdom tax you may pay when you subsequently sell any or all of your Ordinary Shares. However,

you may in some circumstances (subject to any available exemption or relief) be subject to capital

gains tax on any proceeds that you receive from the sale of your rights.

Further information on taxation in the United Kingdom and the United States with regard to the

Rights Issue and the holding of Rights Issue Shares is contained in Part XII (Taxation). Qualifying

Shareholders who are in any doubt as to their tax position, or who are subject to tax in any other

jurisdiction, should consult an appropriate professional adviser as soon as possible. Please note that

Link Group will not be able to assist you with taxation issues.

LR 13.3.1(9)(f)

84


4.4 Will I be entitled to an interim dividend for the year ending 31 March 2021 in respect of my Rights

Issue Shares?

A holder of Rights Issue Shares issued pursuant to the Rights Issue will be entitled to receive, in

respect of those Rights Issue Shares, the interim dividend announced on 5 November 2020.

4.5 What if I hold options and awards under the AVEVA Group Share Plans?

Participants in the AVEVA Group Share Plans will be advised separately of adjustments (if any) to

their options and awards as a result of the Rights Issue.

4.6 What should I do if I live outside the United Kingdom?

Your ability to take up rights or sell rights to Rights Issue Shares may be affected by the laws of the

country in which you live and you should take professional advice as to whether you require any

governmental or other consents or need to observe any other formalities to enable you to take up your

rights. Shareholders with registered addresses, or who are resident or located outside the United

Kingdom, particularly those in the United States, Australia, Canada, New Zealand, Japan, Singapore

or South Africa should refer to Section 7 of Part IV (Terms and Conditions of the Rights Issue).

4.7 What should I do if I think my holding of Existing Ordinary Shares is incorrect?

If you are concerned about the figure in the Provisional Allotment Letter or otherwise

concerned that your holding of Existing Ordinary Shares is incorrect please contact Link Group on

+44 (0) 371 664 0321. Calls are charged at the standard geographic rate and will vary by provider.

Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is

open between 9.00 a.m. and 5.30 p.m. (London time), Monday to Friday excluding public holidays in

England and Wales. Please note that Link Group cannot provide any financial, legal or tax advice and

calls may be recorded and monitored for security and training purposes.

Your attention is drawn to the further terms and conditions of the Rights Issue in Part IV (Terms and

Conditions of the Rights Issue) and, in the case of Qualifying Non-CREST Shareholders, in the

Provisional Allotment Letter.

85


PART IV

TERMS AND CONDITIONS OF THE RIGHTS ISSUE

1. INTRODUCTION

Subject to the fulfilment of the terms and conditions set out below, the Company is proposing to raise gross

proceeds of approximately £2.835 billion by way of a rights issue of 125,739,796 Rights Issue Shares. The

Rights Issue Shares are being offered by way of nil paid rights at the Rights Issue Price to Qualifying

Shareholders on the basis of:

7 Rights Issue Shares for every 9 Existing Ordinary Shares

held and registered in their name at close of business on the Rights Issue Record Date (and so on in

proportion for any other number of Existing Ordinary Shares then held) and otherwise on the terms and

conditions set out in this document (and, in the case of Qualifying Non-CREST Shareholders, the

Provisional Allotment Letter).

The Rights Issue will result in 125,739,796 Rights Issue Shares being issued and the number or Ordinary

Shares being increased from a total of 161,665,453 Ordinary Shares to a total of 287,405,249 Ordinary

Shares, representing an increase of approximately 77.8 per cent., assuming no Ordinary Shares are issued

due to the vesting or exercise of any awards under the AVEVA Group Share Plans or otherwise between the

Latest Practicable Date and the completion of the Rights Issue.

The Rights Issue Price represents a discount of 45.8 per cent. to the closing price of 4,162 pence per Existing

Ordinary Share on the Latest Practicable Date, and a discount of 32.2 per cent. to the theoretical ex-rights

price of 3,328 pence per Existing Ordinary Share on the Latest Practicable Date.

Times and dates referred to in this Part IV (Terms and Conditions of the Rights Issue) have been included on

the basis of the expected timetable for the Rights Issue set out on page 49.

If a Qualifying Shareholder does not (or is not permitted to) participate in the Rights Issue, such Qualifying

Shareholder will experience a 43.7 per cent. dilution in their shareholding in the Company if the Rights Issue

completes (assuming no additional Ordinary Shares are issued due to the vesting or exercise of any awards

under the AVEVA Group Share Plans between the Latest Practicable Date and the completion of the Rights

Issue), and a total dilution of 46.3 per cent. if both the Rights Issue and the Acquisition complete (assuming

that no Ordinary Shares other than the New AVEVA Shares are issued prior to Completion). Those

Qualifying Shareholders who are permitted to, and do, take up all of their rights to the Rights Issue Shares

provisionally allotted to them in full will, subject to the rounding down of any fractions, retain the same

proportionate voting and distribution rights as they had at close of business on the Rights Issue Record Date

but will suffer dilution of 4.5 per cent. in their shareholding in the Company as a consequence of the issue

of the Consideration Shares in connection with the Acquisition (assuming that no Ordinary Shares other than

the New AVEVA Shares are issued prior to Completion).

The Nil Paid Rights (also described as Rights Issue Shares (nil paid)) are entitlements to acquire Rights Issue

Shares subject to payment of the Rights Issue Price. The Fully Paid Rights (also described as Rights Issue

Shares (fully paid)) are entitlements to receive the Rights Issue Shares, for which payment has already been

made.

Holdings of Existing Ordinary Shares in certificated and uncertificated form will be treated as separate

holdings to calculate entitlements under the Rights Issue. Entitlements to Rights Issue Shares under the

Rights Issue will be rounded down to the nearest whole number and fractions of Rights Issue Shares will not

be provisionally allotted to Qualifying Shareholders. Such fractions will be aggregated and, if possible and

a price over the total of the Rights Issue Price and the expenses of placing (including any related

commissions and VAT which is not, in the reasonable opinion of the Underwriters, recoverable) can be

obtained, placed in the market or otherwise acquired by the Underwriters as principals (or sub-underwriters

or placees procured by the Underwriters) pursuant to the Underwriting Agreement. The net proceeds of such

placing (after deduction of the Rights Issue Price and expenses) will be paid to the relevant Qualifying

Annex 12, 5.1.8

Annex 12, 8.1

LR 13.3.1(9)(f)

Annex 12, 9.1

Annex 12, 9.2

Annex 12, 5.3.1

LR 13.3.1(9)(f)

86


Shareholders pro-rated to their fractions except that individual amounts per holding of less than £5.00 will

not be distributed but will ultimately accrue for the benefit of AVEVA.

Qualifying Shareholders with fewer than 2 Existing Ordinary Shares at close of business on the Rights Issue

Record Date will not be offered any Rights Issue Shares in the Rights Issue.

The attention of Overseas Shareholders and any person (including, without limitation, custodians,

nominees and trustees) who has a contractual or other legal obligation to forward this document or

any Provisional Allotment Letter (duly renounced), if and when received, or other document relating

to the Rights Issue into a jurisdiction other than the United Kingdom is drawn to Section 7 of this

Part IV (Terms and Conditions of the Rights Issue). In particular, subject to certain exceptions,

Qualifying Shareholders with registered addresses in the United States or any Excluded Territories

have not been and will not be sent Provisional Allotment Letters and have not had and will not have

their CREST stock accounts credited with Nil Paid Rights, and, in the event they do not take up their

entitlements, their entitlements to Rights Issue Shares will be treated as entitlements not taken up in

accordance with the procedures set out in Section 5 of this Part IV (Terms and Conditions of the Rights

Issue).

Application will be made to the FCA for the Rights Issue Shares (nil and fully paid) to be admitted to listing

on the premium listing segment of the Official List and to the London Stock Exchange for the Rights Issue

Shares (nil and fully paid) to be admitted to trading on its main market for listed securities. It is expected

that Rights Issue Admission will become effective, and that dealings in the Rights Issue Shares, nil paid, on

the London Stock Exchange’s main market for listed securities will commence, at 8.00 a.m. on 25 November

2020 and that dealings in the Rights Issue Shares (fully paid) on the London Stock Exchange’s main market

for listed securities will commence at 8.00 a.m. on 10 December 2020.

The Existing Ordinary Shares are already admitted to CREST. No further application for admission to

CREST is required for the Rights Issue Shares and all of the Rights Issue Shares when issued and fully paid

may be held and transferred by means of CREST. Applications have been made for the Nil Paid Rights and

the Fully Paid Rights to be admitted to CREST. Euroclear requires AVEVA to confirm to it that certain

conditions are satisfied before Euroclear will admit any security to CREST. It is expected that these

conditions will be satisfied in respect of the Nil Paid Rights and the Fully Paid Rights on Rights Issue

Admission. As soon as practicable after satisfaction of the conditions, AVEVA will confirm this to Euroclear.

The Rights Issue is fully committed and underwritten, taking into account the Equity Financing Deed, the

Support Agreement and the Underwriting Agreement.

The Rights Issue has been underwritten by the Underwriters pursuant to the terms and conditions of the

Underwriting Agreement, with the exception of the 75,576,398 Rights Issue Shares which are subject to the

Equity Financing Deed and the Support Agreement. Under the Equity Financing Deed and the Support

Agreement, Schneider Electric has irrevocably undertaken to take up (or cause to be taken up) its rights in

full, amounting to 75,576,398 Rights Issue Shares.

The Rights Issue is conditional on:

(a) the Resolution having been passed by the Shareholders at the General Meeting without material

amendment;

(b) no condition of the Acquisition as set out in the Stock and Unit Purchase Agreement having become

incapable of satisfaction and the Stock and Unit Purchase Agreement continuing to have full force and

effect, not having lapsed, rescinded, terminated (in whole or in part) or ceasing to be capable of

completion in accordance with its terms prior to Rights Issue Admission;

(c) save in relation to cancellation of the term facility originally made available under the Facilities

Agreement as disclosed in paragraph 9.1(e) of Part XIV (Additional Information), the Facilities

Agreement and the Term Facility Agreement not having lapsed, been rescinded or terminated (in

whole or in part) prior to Rights Issue Admission;

LR 13.3.1(9)(a)

LR 13.3.1(9)

Annex 12, 6.1

Annex 12, 5.1.1

87


(d) the irrevocable commitments undertaken by Schneider Electric under the Equity Financing Deed and

the Support Agreement continuing to have full force and effect and not having lapsed, been rescinded,

terminated (in whole or in part) or ceasing to be capable of completion in accordance with its terms

(in each case) prior to Rights Issue Admission; and

(e) the Underwriting Agreement having become unconditional in all respects (save for the conditions

relating to Rights Issue Admission) and not having been rescinded or terminated in accordance with

its terms prior to Rights Issue Admission; and

(f) Rights Issue Admission becoming effective at 8.00 a.m. on 25 November 2020 (or such later time

and/or date as the Company and the Joint Global Co-ordinators may determine provided such date is

no later than 27 November 2020).

In certain circumstances either Joint Global Co-ordinator (acting on behalf of the Underwriters) may

terminate the Underwriting Agreement, including where a Material Adverse Change (as defined in

Section 9.1(c) of Part XIV (Additional Information)) occurs at any time prior to Rights Issue Admission

(whether or not foreseeable as at the date of the Underwriting Agreement) in the opinion of a Joint Global

Co-ordinator (acting in good faith). The Underwriting Agreement is not capable of termination following

Rights Issue Admission.

The Underwriters may arrange sub-underwriting for some, all or none of the Rights Issue Shares (excluding

all of the Rights Issue Shares which are subject to the Equity Financing Deed and the Support Agreement).

A summary of the principal terms of the Underwriting Agreement is set out in Section 9.1(c) of Part XIV

(Additional Information).

The Underwriters may, in accordance with applicable legal and regulatory provisions and subject to certain

restrictions in the Underwriting Agreement, engage in transactions in relation to the Nil Paid Rights and the

Ordinary Shares. The Underwriters may coordinate a sell-down in the event that any underwriting obligation

arises as a result of the Rights Issue. Except as required by applicable law or regulation, the Underwriters do

not propose to make any public disclosure in relation to such transactions.

The Rights Issue is not conditional on Completion. The Rights Issue may therefore complete while the

Acquisition does not. In the event that admission of the Rights Issue Shares, fully paid, is effected but

Completion does not occur, the Directors’ current intention is that the proceeds of the Rights Issue will be

invested on a short term basis in government bonds, or other high-quality, highly liquid assets, while the

Directors evaluate alternative uses of the funds. If no such uses can be found, the Directors will consider how

best to return surplus capital to Shareholders. Such a return could carry fiscal costs for certain Shareholders,

will have costs for AVEVA and would be subject to applicable securities laws.

Subject to the above conditions being satisfied and save as provided in Section 7 of this Part IV (Terms and

Conditions of the Rights Issue) in respect of Overseas Shareholders, it is intended that:

(a) the Provisional Allotment Letters will be despatched to Qualifying Non-CREST Shareholders (other

than, subject to certain exceptions, Qualifying Shareholders with a registered address in the United

States or any of the Excluded Territories) on 24 November 2020;

(b) the Registrar will instruct Euroclear to credit the appropriate stock accounts of Qualifying CREST

Shareholders (other than, subject to certain exceptions, Qualifying Shareholders with a registered

address in the United States or any of the Excluded Territories) with such Shareholders’ entitlements

to Nil Paid Rights, as soon as possible after 8.00 a.m. on 25 November 2020;

(c) the Nil Paid Rights and the Fully Paid Rights will be enabled for settlement in CREST by Euroclear

as soon as practicable after AVEVA has confirmed to Euroclear that all the conditions for admission

of such rights to CREST have been satisfied, which is expected to be as soon as possible after

8.00 a.m. on 25 November 2020;

(d) the Rights Issue Shares will be credited to the appropriate stock accounts of relevant Qualifying

CREST Shareholders (or their renouncees) who validly take up their rights as soon as possible after

8.00 a.m. on 10 December 2020; and

88


(e) the share certificates for the Rights Issue Shares to be held in certificated form will be despatched to

relevant Qualifying Non-CREST Shareholders (or their nominees) who validly take up their rights no

later than 23 December 2020.

Subject to the above conditions being satisfied and save as provided in Section 7 of this Part IV (Terms and

Conditions of the Rights Issue) in respect of Overseas Shareholders, the offer will be made to Qualifying

Non-CREST Shareholders by way of the Provisional Allotment Letter (as described in step (a) above) and

to Qualifying CREST Shareholders by way of the enablement of the Nil Paid Rights and the Fully Paid

Rights (as described in step (c) above and with such Shareholders’ stock accounts having been credited as

described in step (b) above).

All documents, including Provisional Allotment Letters (which constitute temporary documents of title) and

cheques and banker’s drafts posted to or by Qualifying Shareholders and/or their transferees or renouncees

(or their agents, as appropriate) will be posted at their own risk.

Pursuant to the Companies Act 2006, the offer of Rights Issue Shares to Qualifying Shareholders who have

no registered address in an EEA State or the UK and who have not given to the Company an address in an

EEA State or the UK for the serving of notices will be made to such Qualifying Shareholders through a

notice in the London Gazette, details of which are provided in Section 7 of this Part IV (Terms and

Conditions of the Rights Issue).

Qualifying Shareholders taking up their rights by completing a Provisional Allotment Letter or by sending

an MTM Instruction to Euroclear will be deemed to have given the representations and warranties set out in

Sections 3.2 and 4.2 of this Part IV (Terms and Conditions of the Rights Issue), unless such requirement is

waived by AVEVA and the Underwriters.

The Rights Issue Shares will, when issued and fully paid, rank pari passu in all respects with the Existing

Ordinary Shares, including the right to all dividends or other distributions made, paid or declared by

reference to a record date on or after the date of their issue, including the right to receive the proposed

interim dividend announced on 5 November 2020 expected to be paid on 5 February 2021 to Shareholders

on the Company’s register of members on 8 January 2021.

2. ACTION TO BE TAKEN

The action to be taken in respect of the Rights Issue Shares depends on whether, at the relevant time,

the Nil Paid Rights or the Fully Paid Rights in respect of which action is to be taken are in certificated

form (that is, are represented by Provisional Allotment Letters) or are in uncertificated form (that is,

are in CREST).

If you are a Qualifying Non-CREST Shareholder and you do not have a registered address, and are not

located in, the United States or any of the Excluded Territories, please refer to Sections 3, 5, 6, 7.6 and 8 to

13 of this Part IV (Terms and Conditions of the Rights Issue).

If you are a Qualifying CREST Shareholder and you do not have a registered address, and are not located

in, the United States or any of the Excluded Territories, please refer to Sections 4 to 6, 7.6 and 8 to 12 of this

Part IV (Terms and Conditions of the Rights Issue) and to the CREST Manual for further information on the

CREST procedures referred to below.

If you are a Shareholder with a registered address in the United States or any of the Excluded Territories or

holding Ordinary Shares on behalf of, or for the account or benefit of any person on a non-discretionary basis

who is in the United States, or any state or other jurisdiction of the United States, or any of the Excluded

Territories, please refer to Sections 7.2 and 7.3 of this Part IV (Terms and Conditions of the Rights Issue).

CREST sponsored members should refer to their CREST sponsors, as only their CREST sponsors will be

able to take the necessary actions specified below to take up the entitlements or otherwise to deal with the

Nil Paid Rights or the Fully Paid Rights of CREST sponsored members.

All enquiries in relation to the Provisional Allotment Letter should be addressed to Link Group on

+44 (0) 371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls

LR 13.3.1(9)(d)

LR 13.3.1(9)(b)

LR 13.3.1(9)(c)

89


outside the United Kingdom will be charged at the applicable international rate. The helpline is open

between 9.00 a.m. and 5.30 p.m. (London time), Monday to Friday excluding public holidays in England

and Wales. Please note that Link Group cannot provide any financial, legal or tax advice and calls may be

recorded and monitored for security and training purposes.

3. ACTION TO BE TAKEN BY QUALIFYING NON-CREST SHAREHOLDERS IN

RELATION TO NIL PAID RIGHTS REPRESENTED BY PROVISIONAL ALLOTMENT

LETTERS

3.1 General

Provisional Allotment Letters are expected to be despatched on 24 November 2020.

Each Provisional Allotment Letter will set out:

(a) the holding of Existing Ordinary Shares in certificated form at close of business on the Rights

Issue Record Date on which the entitlement to Rights Issue Shares in the Provisional Allotment

Letter has been based;

(b) the aggregate number and cost of the Rights Issue Shares in certificated form that are expected

to be provisionally allotted to such Qualifying Non-CREST Shareholder;

(c) the procedure to be followed if a Qualifying Non-CREST Shareholder wishes to sell all or part

of his, her or its Nil Paid Rights;

(d) the procedure to be followed if a Qualifying Non-CREST Shareholder wishes to take up all or

part of his, her or its entitlement;

(e) the procedures to be followed if a Qualifying Non-CREST Shareholder wishes to convert all

or part of his, her or its entitlement into uncertificated form; and

(f) instructions regarding acceptance and payment, consolidation, splitting and registration of

renunciation.

The maximum number of Rights Issue Shares that a Qualifying Non-CREST Shareholder may take

up is that which has been provisionally allotted to that Qualifying Non-CREST Shareholder as set out

in the Provisional Allotment Letter. The minimum number of Rights Issue Shares a Qualifying Non-

CREST Shareholder may take up is one.

If you sell or transfer, or have sold or otherwise transferred, all of your Existing Ordinary Shares

(other than ex-rights) held in certificated form before 8.00 a.m. on 25 November 2020 (being the Ex-

Rights Date), please send this document, together with any Provisional Allotment Letter (if applicable

and when received), as soon as possible to the purchaser or transferee, or to the bank, stockbroker or

other agent through whom the sale or transfer will be or was effected for onward delivery to the

transferee, except that such documents should not be distributed, forwarded to or transmitted in or into

any jurisdiction where to do so might constitute a violation of registration or of other local securities

laws or regulations including the United States or any of the Excluded Territories. If you sell or

transfer, or have sold or otherwise transferred, only part of your holding of Existing Ordinary Shares

(other than ex-rights) held in certificated form before the Ex-Rights Date, you should refer to the

instruction regarding split applications in Section 3.6 of this Part IV (Terms and Conditions of the

Rights Issue) and in the Provisional Allotment Letter.

If you do not receive a Provisional Allotment Letter or you think that the holding of Existing Ordinary

Shares in certificated form on which your entitlement to Rights Issue Shares in the Provisional

Allotment Letter has been based does not reflect your holding of Existing Ordinary Shares in

certificated form at close of business on the Rights Issue Record Date, please contact Link Group

using the details set out above.

Annex 12, 5.2.1

LR 13.3.1(6)

Annex 12, 5.1.2

90


On the basis that dealings in the Nil Paid Rights commence at 8.00 a.m. on 25 November 2020,

unless otherwise announced by the Company, the latest time and date for acceptance and

payment in full will be 11.00 a.m. on 9 December 2020.

If the Rights Issue is delayed so that Provisional Allotment Letters cannot be despatched on

24 November 2020, the expected timetable at the front of this document will be adjusted accordingly

and the revised dates will be set out in the Provisional Allotment Letters and announced through a

Regulatory Information Service. References to dates and times in this document should be read as

subject to any such adjustment.

3.2 Procedure for acceptance and payment

(a) Qualifying Non-CREST Shareholders who wish to accept in full

Holders of Provisional Allotment Letters who wish to take up all of their Nil Paid Rights must

return the Provisional Allotment Letter in accordance with the instructions thereon, together

with a cheque or banker’s draft, made payable to “Link Market Services Limited RE: AVEVA

Group plc Rights Issue Account” and crossed “A/C payee only” detailing the Allotment

Number (which is on page 1 of the Provisional Allotment Letter) and your surname written on

the reverse of the cheque or banker’s draft, for the full amount payable on acceptance, by post

or by hand (during normal business hours only) to Link Group, Corporate Actions, The

Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU so as to be received as soon as

possible and, in any event, by 11.00 a.m. on 9 December 2020. If you post your Provisional

Allotment Letter, it is recommended that you allow sufficient time for delivery. A reply-paid

envelope will be enclosed with the Provisional Allotment Letter for use within the United

Kingdom only. If requested, by indicating in Box E on page 4 of the Provisional Allotment

Letter, the Provisional Allotment Letter, duly receipted, will subsequently be returned to the

first named registered holder (or to the person validly detailed in Box F on page 4 of the

Provisional Allotment Letter). Once your Provisional Allotment Letter, duly completed, and

payment have been received by the Receiving Agent in accordance with the above, you will

have accepted the offer to subscribe for the number of Rights Issue Shares specified on your

Provisional Allotment Letter.

(b) Qualifying Non-CREST Shareholders who wish to accept in part

Holders of Provisional Allotment Letters who wish to take up some but not all of their Nil Paid

Rights should refer to Section 3.6 of this Part IV (Terms and Conditions of the Rights Issue).

Qualifying Non-CREST Shareholders who wish to take up some (but not all) of their

entitlement and wish to sell some or all of those rights which they do not want to take up

Holders of Provisional Allotment Letters who wish to take up some but not all of their Nil Paid

Rights or (if appropriate) Fully Paid Rights and wish to sell some or all of those rights which

they do not want to take up should return by post or by hand (during normal business hours

only) to Link Group, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent

BR3 4TU, so as to arrive as soon as possible and in any event so as to be received by 3.00 p.m.

on 7 December 2020, (the last date and time for splitting Nil Paid Rights), the following:

(i) the Provisional Allotment Letter duly completed in accordance with the instructions

printed thereon;

(ii) a cheque or banker’s draft in pounds sterling made payable to “Link Market Services

Limited RE: AVEVA Group plc Rights Issue Account” and crossed “A/C payee only”,

detailing the Allotment Number (which is on page 1 of the Provisional Allotment Letter)

and with their surname written on the reverse of the cheque or banker’s draft, for the

amount payable for the number of Nil Paid Rights such Qualifying Non-CREST

Shareholder wishes to take up; and

Annex 12, 5.1.5

91


(iii) a covering letter, signed by the Qualifying Non-CREST Shareholder(s), stating the

number of split Provisional Allotment Letters required for the Nil Paid Rights not being

taken up and the number of Nil Paid Rights or (if appropriate) Fully Paid Rights to be

comprised in each such split Provisional Allotment Letter. Refer to Section 3.6 below

for further information about splitting your Provisional Allotment Letter.

Qualifying Non-CREST Shareholders who wish to take action themselves to dispose of some or

all of their Nil Paid Rights

Any Qualifying Non-CREST Shareholder who is permitted to, and wishes to, sell all or part of

his, her or its Nil Paid Rights should contact their stockbroker or bank or other appropriate

authorised independent financial adviser to arrange the sale of those Nil Paid Rights in the

market. The stockbroker, bank or other authorised independent financial adviser will require

the Provisional Allotment Letter to arrange such sale and you will need to make arrangements

with the stockbroker, bank or other authorised independent financial adviser for the completion

of the Provisional Allotment Letter and its despatch to the stockbroker, bank or other authorised

independent financial adviser. Further information about such sales by Qualifying Non-CREST

Shareholders is set out in Section 3.6 below. Nil Paid Rights may only be transferred in

compliance with applicable securities laws and regulations of all relevant jurisdictions.

In this case, the split Provisional Allotment Letters (representing the Nil Paid Rights the

Qualifying Non-CREST Shareholder does not wish to take up) will be required in order to sell

those rights not being taken up.

(c) Qualifying Non-CREST Shareholders who do not wish to take up their rights at all and do not

wish to take action themselves to sell all or any of those rights

Qualifying Non-CREST Shareholders who do not wish to take up their rights at all and who do

not wish to take action themselves to sell all or any of those rights do not need to do anything

and should refer to Section 5 of this Part IV (Terms and Conditions of the Rights Issue).

If Qualifying Non-CREST Shareholders do not return their Provisional Allotment Letters by

11.00 a.m. on 9 December 2020, the Company has made arrangements under which the

Underwriters will try to find investors to take up the applicable Nil Paid Rights. If they do find

investors and are able to achieve a premium over the Rights Issue Price and the related

expenses of procuring those investors (including any applicable commission and amounts in

respect of irrecoverable VAT), then Qualifying Non-CREST Shareholders so entitled will be

paid for the amount of that aggregate premium above the Rights Issue Price less related

expenses (including any applicable commission and amounts in respect of irrecoverable VAT),

so long as the amount in question is at least £5.00 by cheque posted to their registered address.

No payment will be made of individual amounts of less than £5.00, which amounts will be

aggregated and will ultimately accrue to the benefit of the Company.

(d) AVEVA’s discretion as to validity of acceptances

If payment is not received in full by 11.00 a.m. on 9 December 2020, the provisional allotment

will, subject to the below, be deemed to have been declined and will lapse. However, AVEVA

and the Underwriters may (in their absolute discretion) treat as valid: (i) Provisional Allotment

Letters and accompanying remittances that are received through the post not later than

5.00 p.m. on 9 December 2020 (the cover bearing a legible postmark not later than 11.00 a.m.

on 9 December 2020); and (ii) acceptances in respect of which a remittance is received before

5.00 p.m. on 9 December 2020 from an authorised person (as defined in section 31(2) of

FSMA) specifying the number of Rights Issue Shares to be subscribed for and undertaking to

lodge the relevant Provisional Allotment Letter, duly completed, in due course.

AVEVA and the Underwriters may also (in their absolute discretion) treat a Provisional

Allotment Letter as valid and binding on the person(s) by whom or on whose behalf it is lodged

92


even if it is not completed in accordance with the relevant instructions or is not accompanied

by a valid power of attorney where required.

AVEVA, having first consulted with the Underwriters, reserves the right to treat as invalid any

acceptance or purported acceptance of the Rights Issue Shares that appears to AVEVA to have

been executed in, despatched from or that provides an address for delivery of share certificates

for Rights Issue Shares in the United States or any Excluded Territory.

A Qualifying Non-CREST Shareholder who makes a valid acceptance and payment in

accordance with this Section 3.2 is deemed to request that the Rights Issue Shares to which

they will become entitled be issued to them on the terms set out in this document and the

Provisional Allotment Letter and subject to the Articles.

Holders of Provisional Allotment Letters who wish to take up any of their entitlements must

also make the representations and warranties set out in Section 7.6 of this Part IV (Terms and

Conditions of the Rights Issue) and will be deemed to have done so by taking up their

entitlement by completing Provisional Allotment Letter. All Qualifying Non-CREST

Shareholders will also be deemed by any such completion to have agreed and acknowledged

that:

(i) the Underwriters: (A) are acting exclusively for AVEVA and no one else in connection

with the Rights Issue and the listing of the Rights Issue Shares on the premium listing

segment of the Official List; (B) will not regard any other person (whether or not a

recipient of this document) as their respective clients in relation to the Rights Issue; and

(C) will not be responsible to anyone other than AVEVA, nor for providing the

protections afforded to their customers nor for giving advice in connection with the

Rights Issue, the listing of the Rights Issue Shares on the premium listing segment of

the Official List or the contents of this document;

(ii) apart from the responsibilities and liabilities, if any, which may be imposed on the

Underwriters by FSMA or the regulatory regime established thereunder or under the

regulatory regime of any other jurisdiction where exclusion of liability under the

relevant regulatory regime would be illegal, void or unenforceable, neither of the

Underwriters, nor any of their respective affiliates, directors, officers, employees or

advisers, accept any responsibility whatsoever for the contents of this document, or

make any representation or warranty, express or implied, in relation to the contents of

this document, including its accuracy, completeness or verification or regarding the

legality of any investment in the Nil Paid Rights, the Fully Paid Rights or the Rights

Issue Shares by any person under the laws applicable to such person or for any other

statement made or purported to be made by it, or on its behalf, in connection with

AVEVA, the Nil Paid Rights, the Fully Paid Rights, the Rights Issue Shares or the Rights

Issue, and nothing in this document is, or shall be relied upon as, a promise or

representation in this respect, whether as to the past or the future. To the fullest extent

permissible, the Underwriters accordingly disclaim all and any responsibility or liability

whether arising in tort, contract or otherwise (save as referred to above) which they

might otherwise have in respect of this document or any such statement;

(iii) such Qualifying Shareholders have not relied on the Underwriters or any person

affiliated with any of the Underwriters in connection with any investigation as to the

accuracy of any information contained in this document or their investment decision;

and

(iv) such Qualifying Shareholders have relied only on the information contained in this

document, and that no person has been authorised to give any information or to make

any representation concerning the AVEVA Group or the Nil Paid Rights, the Fully Paid

Rights or the Rights Issue Shares (other than as contained in this document) and, if given

93


or made, any such other information or representation should not be relied upon as

having been authorised by AVEVA or the Underwriters.

(e) Payments

All payments made by Qualifying Non-CREST Shareholders must be made by cheque or

banker’s draft in pounds sterling payable to “Link Market Services Limited RE: AVEVA Group

plc Rights Issue Account” and crossed “A/C payee only”, detailing the Allotment Number

(which is on page 1 of the Provisional Allotment Letter) and with their surname written on the

reverse of the cheque or banker’s draft. Third-party cheques may not be accepted except

building society cheques or banker’s drafts where the building society or bank has confirmed

the name of the account holder by stamping or endorsing the back of the cheque or banker’s

draft to such effect. The account name should be the same as that shown on the application.

Post-dated cheques will not be accepted. Cheques or banker’s drafts must be drawn on an

account at a bank or building society or a branch of a bank or building society which is in the

United Kingdom, the Channel Islands or the Isle of Man and which is either a settlement

member of Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company

Limited or which has arranged for its cheques or banker’s drafts to be cleared through facilities

provided by either of these companies. Such cheques and banker’s drafts must bear the

appropriate sort code number in the top right-hand corner. Payments via CHAPS, BACS or

electronic transfer will not be accepted.

Cheques and banker’s drafts will be presented for payment on receipt. No interest will be

allowed on payments made before they are due and any interest on such payments ultimately

will accrue for the benefit of AVEVA. It is a term of the Rights Issue that cheques shall be

honoured on first presentation and AVEVA and the Underwriters may elect to treat as invalid

any acceptances in respect of which cheques are not so honoured. Return of a Provisional

Allotment Letter will constitute a warranty that the cheque will be honoured on first

presentation. All documents, cheques and banker’s drafts sent through the post will be sent at

the risk of the sender.

If Rights Issue Shares have already been allotted to a Qualifying Non-CREST Shareholder

before any payment not being so honoured or such acceptances being treated as invalid,

AVEVA and the Underwriters may (in their absolute discretion as to manner, timing and terms)

make arrangements for the sale of such shares on behalf of such Qualifying Non-CREST

Shareholder and hold the proceeds of sale (net of AVEVA’s reasonable estimate of any loss that

it has suffered as a result of the same and of the expenses of sale including, without limitation,

any stamp duty or SDRT payable on the transfer of such shares, and of all amounts payable by

such Qualifying Non-CREST Shareholder pursuant to the provisions of this Part IV (Terms and

Conditions of the Rights Issue) in respect of the acquisition of such shares) on behalf of such

Qualifying Non- CREST Shareholder. None of AVEVA, the Underwriters or any other person

shall be responsible for, or have any liability for, any loss, expenses or damage suffered by any

Qualifying Non- CREST Shareholder as a result.

If payment is made by a building society cheque (not being drawn on account of the applicant)

or a banker’s draft, the building society or bank should insert details on the back of the name

of the account holder and have either added the building society or bank branch stamp, or have

provided a supporting letter confirming the source of funds.

If a cheque or banker’s draft sent by a Qualifying Non-CREST Shareholder is drawn for an

amount different from that set out in Box 3 of that Qualifying Non-CREST Shareholder’s

Provisional Allotment Letter, that Shareholder’s application shall be treated as an acceptance

in respect of such whole number of Rights Issue Shares which could be acquired at the Rights

Issue Price with the amount for which the cheque or banker’s draft is drawn (and not the

amount set out in Box 3 of the Provisional Allotment Letter). Any balance from the amount of

the cheque will be retained for the benefit of the Company.

94


3.3 Money Laundering Regulations

To ensure compliance with the Money Laundering Regulations, the Receiving Agent may require, at

its absolute discretion, verification of the identity of the beneficial owner by whom or on whose behalf

the Provisional Allotment Letter is lodged with payment (which requirements are referred to below as

the “verification of identity requirements”). If an application is made by a United Kingdom

regulated broker or intermediary acting as agent and which is itself subject to the Money Laundering

Regulations, such agent should carry out the verification of identity requirements and the agent’s

stamp should be inserted on the Provisional Allotment Letter.

Submission of a Provisional Allotment Letter shall constitute a warranty that the Money Laundering

Regulations will not be breached by the acceptance of the remittance and an undertaking by the

person lodging the Provisional Allotment Letter (the “applicant”), including any person who appears

to the Receiving Agent to be acting on behalf of some other person, to provide promptly to the

Receiving Agent such information as may be specified by the Receiving Agent as being required for

the purpose of the Money Laundering Regulations and agree for the Receiving Agent to make a search

using a credit reference agency for the purposes of confirming such identity; where deemed necessary

a record of the search will be retained. The checks made at credit reference agencies leave an ‘enquiry

footprint’—an indelible record so that the applicant can see who has checked them out. The enquiry

footprint does not have any impact on the applicant’s credit score or on their ability to get credit. Anti-

money laundering checks appear as an enquiry/soft search on the applicant’s credit report. The report

may contain a note saying “Identity check to comply with Anti Money Laundering Regulations”.

If the Receiving Agent determines that the verification of identity requirements apply to any applicant

or application, the relevant Rights Issue Shares (notwithstanding any other term of the Rights Issue)

will not be issued to the relevant applicant unless and until the verification of identity requirements

have been satisfied in respect of that applicant or application. The Receiving Agent is entitled, in its

absolute discretion, to determine whether the verification of identity requirements apply to any

applicant or application and whether such requirements have been satisfied, and none of the Receiving

Agent, AVEVA or the Underwriters will be liable to any person for any loss, expense or damage

suffered or incurred (or alleged), directly or indirectly, as a result of the exercise of such discretion.

If the verification of identity requirements apply, failure to provide the necessary evidence of identity

within a reasonable time may result in delays and potential rejection of an application. If, within a

reasonable period of time following a request for verification of identity (and in any event by

11.00 a.m. on 9 December 2020), the Receiving Agent has not received evidence satisfactory to it as

aforesaid, AVEVA may, in its absolute discretion, treat the relevant application as invalid, in which

event the application monies will be returned (at the applicant’s risk) without interest to the account

of the bank or building society on which the relevant cheque or banker’s draft was drawn.

The verification of identity requirements will not usually apply:

• if the applicant is an organisation required to comply with the Money Laundering Directive

2005/60/EC of the European Parliament and of the EC Council of 26 October 2005 on the

prevention of the use of the financial system for the purpose of money laundering and terrorist

financing; or

• if the applicant is a regulated United Kingdom broker or intermediary acting as agent and is

itself subject to the Money Laundering Regulations; or

• if the applicant (not being an applicant who delivers his or her application in person) makes

payment by way of a cheque drawn on an account in the name of such acceptor; or

• if the aggregate subscription price for the relevant shares is less than €15,000 (approximately

£12,500).

95


Where the verification of identity requirements apply, please note the following as this will assist in

satisfying such requirements. Satisfaction of these requirements may be facilitated in the following

ways:

(a) if payment is made by cheque or banker’s draft in pounds sterling drawn on a branch of a bank

or building society in the United Kingdom and bears a United Kingdom bank sort code number

in the top right-hand corner, the following applies. Cheques, which must be drawn on the

personal account of the individual investor where they have sole or joint title to the funds,

should be made payable to “Link Market Services Limited RE: AVEVA Group plc Rights Issue

Account” and crossed “A/C payee only” detailing the Allotment Number (which is on page 1

of the Provisional Allotment Letter) and with their surname written on the reverse of the cheque

or banker’s draft. Third-party cheques may not be accepted except for building society cheques

or banker’s drafts where the building society or bank has confirmed the name of the account

holder by stamping or endorsing the back of the building society cheque/banker’s draft to such

effect. The account name should be the same as that shown on the application;

(b) if the Provisional Allotment Letter is lodged with payment by an agent which is an organisation

required to comply with the EU Money Laundering Directive ((EU) 2015/849) as amended, or

which is subject to anti-money laundering regulations in a country which is a member of the

Financial Action Task Force (the non-EU members of which are Argentina, Australia, Brazil,

Canada, China, the Cooperation Council for the Arab States of the Gulf (but not its individual

Member countries), Hong Kong, Iceland, India, Israel, Japan, Malaysia, Mexico, New Zealand,

Norway, the Republic of Korea, the Russian Federation, Saudi Arabia, Singapore, South

Africa, Switzerland, Turkey, United Kingdom and the United States), the agent should provide

written confirmation that it has that status with the Provisional Allotment Letter(s) and that it

has obtained and recorded evidence of the identity of the person for whom it acts and that it

will on demand make such evidence available to the Receiving Agent and/or any relevant

regulatory or investigatory authority; or

(c) if a Provisional Allotment Letter is lodged by hand by the applicant in person, he should ensure

that he has with him evidence of identity bearing his photograph (for example, his passport)

and evidence of his or her address (for example, a utility bill).

To confirm the acceptability of any written confirmation referred to in sub-section (b) above, or

in any other case, the applicant should contact Link Group on +44 (0) 371 664 0321. Calls are

charged at the standard geographic rate and will vary by provider. Calls outside the United

Kingdom will be charged at the applicable international rate. The helpline is open between 9.00

a.m. and 5.30 p.m. (London time), Monday to Friday excluding public holidays in England and

Wales. Please note that Link Group cannot provide any financial, legal or tax advice and calls

may be recorded and monitored for security and training purposes.

The contents of this document are not to be construed as legal, business or tax advice. Each

Shareholder should consult their own legal, financial or tax adviser for financial, tax, investment or

legal advice, respectively.

3.4 Dealings in Nil Paid Rights

Subject to the fulfilment of the conditions set out in Section 1 of this Part IV (Terms and Conditions

of the Rights Issue), dealings on the London Stock Exchange in the Nil Paid Rights are expected to

commence at or as soon as practicable after 8.00 a.m. on 25 November 2020. A transfer of Nil Paid

Rights can be made by renunciation of the Provisional Allotment Letter in accordance with the

instructions printed on it and delivery of the Provisional Allotment Letter to the transferee, up to the

latest time for acceptance and payment in full stated in the Provisional Allotment Letter, which is

11.00 a.m. on 9 December 2020.

Annex 12, 5.1.7

96


3.5 Dealings in the Fully Paid Rights

After acceptance by a Qualifying Non-CREST Shareholder of the provisional allotment and payment

in full in accordance with the provisions set out in this document and in the Provisional Allotment

Letter, the Fully Paid Rights may be transferred by renunciation of the relevant fully paid Provisional

Allotment Letter and delivering it, by post or by hand (during normal business hours only), to Link

Group, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, so as to

be received not later than 11.00 a.m. on 9 December 2020. To do this, Qualifying Non-CREST

Shareholders will need to have their fully paid Provisional Allotment Letter returned to them after

their acceptance has been effected by the Receiving Agent. However, fully paid Provisional Allotment

Letters will not be returned to Qualifying Non-CREST Shareholders unless their return is requested

by ticking the appropriate box on the Provisional Allotment Letter.

After 10 December 2020, the Rights Issue Shares will be registered and transferable in the usual

common form or, if they have been issued in or converted into uncertificated form, in electronic form

under the CREST system.

It should be noted that Qualifying Non-CREST Shareholders who wish to sell their Fully Paid Rights

will first have to take-up their rights by returning their Provisional Allotment Letter and cheque in the

post by following the instructions in Section 3.2 above.

3.6 Renunciation and splitting of Provisional Allotment Letters

The Provisional Allotment Letters are fully renounceable (save as required by the laws of certain

overseas jurisdictions) and may be split up to 3.00 p.m. on 7 December 2020 nil paid and fully paid.

Qualifying Non-CREST Shareholders who are permitted to, and wish to, transfer all (and not some

only) of their Nil Paid Rights or, after acceptance of the provisional allotment and payment in full, the

Fully Paid Rights comprised in a Provisional Allotment Letter may (save as required by the laws of

certain overseas jurisdictions) renounce such allotment by completing and signing Form X on page 4

of the Provisional Allotment Letter (if it is not already marked “Original Duly Renounced”) and

passing the entire Provisional Allotment Letter to their stockbroker or bank or other appropriate

financial adviser or to the transferee. Once a Provisional Allotment Letter has been renounced, it will

become a negotiable instrument in bearer form and the Nil Paid Rights or the Fully Paid Rights (as

appropriate) comprised in such letter may be transferred by delivery of such letter to the transferee.

The latest time and date for registration of renunciation of Provisional Allotment Letters, fully paid,

is 11.00 a.m. on 9 December 2020 unless otherwise announced by the Company, and after such date

the Rights Issue Shares will be in registered form, transferable by written instrument of transfer in the

usual common form or, if they have been issued in or converted into uncertificated form, in electronic

form under the CREST system. Qualifying Non-CREST Shareholders should note that fully paid

Provisional Allotment Letters will not be returned to Qualifying Non-CREST Shareholders unless

their return is requested.

If a holder of a Provisional Allotment Letter wishes to take up some, but not all, of the Nil Paid Rights

and to transfer some or all of the remainder, or wishes to transfer all the Nil Paid Rights, or (if

appropriate) the Fully Paid Rights but to different persons, the Provisional Allotment Letter may be

split, for which purpose the holder, or their agent, must sign and date Form X on page 4 of the

Provisional Allotment Letter and enclose a separate accompanying letter stating the denominations of

the split Provisional Allotment Letters required. The Provisional Allotment Letter must then be

delivered by post or by hand (during normal business hours only) to Link Group, Corporate Actions,

The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, by not later than 3.00 p.m. on

7 December 2020, to be cancelled and exchanged for the split Provisional Allotment Letters required.

The relevant holder will need to request a split Provisional Allotment Letter in respect of each

proposed transfer. The number of split Provisional Allotment Letters required and the number of Nil

Paid Rights or (as appropriate) Fully Paid Rights to be comprised in each split Provisional Allotment

Letter should be stated in an accompanying cover letter. The aggregate number of Nil Paid Rights or

(as appropriate) Fully Paid Rights comprised in the split Provisional Allotment Letters must equal the

number of Rights Issue Shares set out in Box 2 of page 1 of the Provisional Allotment Letter (less the

Annex 12, 5.1.7

97


number of Rights Issue Shares representing rights the holder wishes to take-up if applicable). Form

X on page 4 of split Provisional Allotment Letters will be marked “Original Duly Renounced” before

issue. The holder of the split Provisional Allotment Letters should then follow the instructions in the

preceding paragraph in relation to transferring the Nil Paid Rights or (as appropriate) the Fully Paid

Rights represented by each split Provisional Allotment Letter. Once the holder’s split Provisional

Allotment Letter, duly completed, and payment have been received by the Receiving Agent in

accordance with the above, the holder will have accepted the offer to subscribe for the number of

Rights Issue Shares specified on that split Provisional Allotment Letter.

Alternatively, Qualifying Non-CREST Shareholders who wish to take up some of their Nil Paid

Rights, without selling or transferring the remainder, should sign and date Form X on page 4 of the

original Provisional Allotment Letter and return it by post or by hand (during normal business hours

only) to Link Group, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3

4TU, together with cheque or banker’s draft in pounds sterling for the appropriate amount made

payable to “Link Market Services Limited RE: AVEVA Group plc Rights Issue Account” and crossed

“A/C payee only” detailing the Allotment Number (which is on page 1 of the Provisional Allotment

Letter) and with their surname written on the reverse of the cheque or banker’s draft. In this case, the

Provisional Allotment Letter and the cheque or banker’s draft must be received by not later than

11.00 a.m. on 9 December 2020. Once the holder’s Provisional Allotment Letter, duly completed, and

payment have been received by the Receiving Agent in accordance with the above, the holder will

have accepted the offer to subscribe for the relevant number of Rights Issue Shares being taken up.

AVEVA and the Underwriters reserve the right to refuse to register any renunciation in favour of any

person in respect of which AVEVA believes such renunciation may violate applicable legal or

regulatory requirements including (without limitation) any renunciation in the name of any person

with an address outside the United Kingdom.

3.7 Registration in names of Qualifying Non-CREST Shareholders

A Qualifying Non-CREST Shareholder who wishes to have all his entitlement to Rights Issue Shares

registered in his name must accept and make payment for such allotment before the latest time for

acceptance and payment in full which is 11.00 a.m. on 9 December 2020 in accordance with the

provisions set out in this document and the Provisional Allotment Letter, but need take no further

action.

3.8 Registration in names of persons other than Qualifying Non-CREST Shareholders originally

entitled

In order to register Fully Paid Rights in certificated form in the name of someone other than the

Qualifying Non-CREST Shareholder(s) originally entitled, the renouncee or his agent(s) must

complete Form Y on page 4 of the Provisional Allotment Letter (unless the renouncee is a CREST

member who wishes to hold such Rights Issue Shares in uncertificated form, in which case, Form X

and the CREST Deposit Form (both set out on page 4 of the Provisional Allotment Letter) must be

completed (see Section 3.9 of this Part IV (Terms and Conditions of the Rights Issue) and deliver the

entire Provisional Allotment Letter unless this is to be deposited into CREST, when fully paid, by post

or by hand (during normal business hours only) to Link Group, Corporate Actions, The Registry,

34 Beckenham Road, Beckenham, Kent BR3 4TU, not later than the latest time for registration of

renunciation which is 11.00 a.m. on 9 December 2020. Registration cannot be effected unless and

until the Rights Issue Shares comprised in a Provisional Allotment Letter are fully paid.

The Rights Issue Shares comprised in two or more Provisional Allotment Letters (duly renounced

where applicable) may be registered in the name of one holder (or joint holders). To consolidate rights

attached to two or more Provisional Allotment Letters in this way, Form Y should be completed on

page 4 of one of the Provisional Allotment Letters (the “Principal Letter”) and all other relevant

Provisional Allotment Letters delivered in one batch. Details of each relevant Provisional Allotment

Letter (including the Principal Letter) should be listed in an attached letter and the Allotment Number

Annex 12, 5.1.5

Annex 12, 5.1.5

98


(as shown on page 1 of each Provisional Allotment Letter) of the Principal Letter should be entered

into the box provided in Form Y on page 4 of each Provisional Allotment Letter.

3.9 Deposit of Nil Paid Rights or Fully Paid Rights into CREST

The Nil Paid Rights or the Fully Paid Rights represented by a Provisional Allotment Letter may be

converted into uncertificated form, that is, deposited into CREST (whether such conversion arises as

a result of a renunciation of those rights or otherwise). Similarly, Nil Paid Rights or Fully Paid Rights

held in CREST may be converted into certificated form (that is, withdrawn from CREST). Subject as

provided below or in the Provisional Allotment Letter, normal CREST procedures and timings apply

in relation to any such conversion. You are recommended to refer to the CREST Manual for details

of such procedures.

The procedure for depositing the Nil Paid Rights or the Fully Paid Rights represented by a Provisional

Allotment Letter into CREST, whether such rights are to be converted into uncertificated form in the

name(s) of the person(s) whose name(s) and address(es) appear on page 1 of the Provisional

Allotment Letter and/or in the name of a person or persons to whom the Provisional Allotment Letter

has been renounced, is as follows:

(a) Form X and the CREST Deposit Form (both set out on page 4 of the Provisional Allotment

Letter) will need to be completed and the Provisional Allotment Letter deposited with the

CCSS (as such term is defined in the CREST Manual); and

(b) in addition, the normal CREST stock deposit procedures will need to be carried out, except

that: (i) it will not be necessary to complete and lodge a separate CREST Transfer Form

(prescribed under the Stock Transfer Act 1963) with the CCSS; and (ii) only the whole of the

Nil Paid Rights or the Fully Paid Rights represented by the Provisional Allotment Letter may

be deposited into CREST.

The following should also be noted:

(a) if you wish to deposit only some of the Nil Paid Rights or the Fully Paid Rights represented by

the Provisional Allotment Letter into CREST, you must first apply for split Provisional

Allotment Letters;

(b) if the rights represented by more than one Provisional Allotment Letter are to be deposited, the

CREST Deposit Form on each Provisional Allotment Letter must be completed and deposited;

and

(c) a Consolidation Listing Form (as defined in the CREST Regulations) must not be used.

A holder of the Nil Paid Rights or the Fully Paid Rights represented by a Provisional Allotment Letter

who is proposing to convert those rights into uncertificated form (whether following a renunciation

of such rights or otherwise) is recommended to ensure that the conversion procedures are

implemented in sufficient time to enable the person holding or acquiring the Nil Paid Rights or, if

appropriate, the Fully Paid Rights in CREST following the conversion, to take all necessary steps in

connection with taking up the entitlement before 11.00 a.m. on 9 December 2020. In particular,

having regard to processing times in CREST and on the part of the Receiving Agent, the latest

recommended time for depositing a renounced Provisional Allotment Letter (with Form X and the

CREST Deposit Form on page 4 of the Provisional Allotment Letter duly completed) with the CCSS

(to enable the person acquiring the Nil Paid Rights or, if appropriate, the Fully Paid Rights in CREST

as a result of the conversion to take all necessary steps in connection with taking up the entitlement

before 11.00 a.m. on 9 December 2020) is 3.00 p.m. on 4 December 2020.

When Form X and the CREST Deposit Form (both set out on page 4 of the Provisional Allotment

Letter) have been completed, the title to the Nil Paid Rights or the Fully Paid Rights represented by

the relevant Provisional Allotment Letter will cease forthwith to be renounceable or transferable by

delivery and, for the avoidance of doubt, any entries in Form Y on page 4 of such Provisional

Allotment Letter will not be recognised or acted upon by the Receiving Agent. All renunciations or

LR 13.3.1(9)(d)

LR 13.3.1(9)(g)

Annex 12, 5.1.5

99


transfers of the Nil Paid Rights or the Fully Paid Rights must be effected through the means of the

CREST system once such rights have been deposited into CREST.

CREST sponsored members should contact their CREST sponsor as only their CREST sponsors will

be able to take the necessary actions to take up the entitlements or otherwise to deal with the Nil Paid

Rights or the Fully Paid Rights of CREST sponsored members.

3.10 Issue of Rights Issue Shares in definitive form

Definitive share certificates in respect of the Rights Issue Shares to be held in certificated form are

expected to be despatched by post by no later than 23 December 2020 at the risk of the person(s)

entitled to them, to accepting Qualifying Non-CREST Shareholders and renouncees or their agents or,

in the case of joint holdings, to the first-named Shareholder, in each case at their registered address

(unless lodging agent details have been completed in Box F on page 4 of the Provisional Allotment

Letter or the CREST Deposit Form on page 4 of the Provisional Allotment Letter has been

completed).

If the Provisional Allotment Letter is lodged, fully paid, with the lodging agent’s name and address

inserted in Box F on page 4 of the Provisional Allotment Letter, the definitive share certificate will be

despatched to the lodging agent. If the CREST Deposit Form on page 4 of the Provisional Allotment

Letter has been completed, a share certificate will not be issued but the relevant CREST account will

be credited. Where the Provisional Allotment Letter has been renounced following full payment a

definitive share certificate will be sent to the person named in Form Y on page 4 of the Provisional

Allotment Letter unless: (a) the CREST Deposit Form on page 4 of the Provisional Allotment Letter

has been completed, in which case a share certificate will not be issued but the relevant CREST

account will be credited; or (b) a lodging agent’s stamp appears on page 4, in which case the

certificate will be despatched to that agent. Where the CREST Deposit Form on page 4 of the

Provisional Allotment Letter has been completed and deposited with the CCSS, Rights Issue Shares

are expected to be credited to the relevant CREST account on 10 December 2020. All certificates will

be despatched through the post at the risk of the persons entitled thereto.

After despatch of definitive share certificates, Provisional Allotment Letters will cease to be valid for

any purpose whatsoever. Pending despatch of definitive share certificates, instruments of transfer of

the Rights Issue Shares will be certified by the Registrar against the register.

4. ACTION TO BE TAKEN BY QUALIFYING CREST SHAREHOLDERS IN RELATION TO

NIL PAID RIGHTS OR FULLY PAID RIGHTS IN CREST

4.1 General

Subject as provided in Section 7 of this Part IV (Terms and Conditions of the Rights Issue) in relation

to certain Overseas Shareholders, each Qualifying CREST Shareholder is expected to receive a credit

to his CREST stock account of his entitlement to Nil Paid Rights at or as soon as possible after

8.00 a.m. on 25 November 2020. For Qualifying CREST Shareholders, the CREST stock account to

be credited will be an account under the participant ID and member account ID that apply to the

Existing Ordinary Shares held at close of business on the Rights Issue Record Date by the Qualifying

CREST Shareholder in respect of which the Nil Paid Rights are provisionally allotted. If you sell or

transfer, or have sold or otherwise transferred, all or some of your Existing Ordinary Shares (other

than ex-rights) held in uncertificated form before the Ex-Rights Date, a claim transaction will

automatically be generated by Euroclear which, on settlement, will transfer the appropriate number of

Nil Paid Rights to the purchaser or transferee.

The maximum number of Rights Issue Shares that a Qualifying CREST Shareholder may take up is

that which has been provisionally allotted to that Qualifying CREST Shareholder and for which he or

she receives a credit of entitlement into his or her stock account in CREST. The minimum number of

Rights Issue Shares a Qualifying CREST Shareholder may take up is one.

Annex 12, 5.1.2

Annex 12, 5.1.4

Annex 12, 5.2.1

Annex 12, 5.1.5

100


Each Nil Paid Right and Fully Paid Right will constitute a separate security for the purposes of

CREST and can accordingly be transferred, in whole or in part, by means of CREST in the same

manner as any other security that is admitted to CREST.

If for any reason it is impracticable to credit the stock accounts of Qualifying CREST Shareholders

or to enable the Nil Paid Rights shortly after 8.00 a.m. on 25 November 2020, Provisional Allotment

Letters shall, unless AVEVA and the Underwriters determine otherwise, be sent out in substitution for

the Nil Paid Rights which have not been so credited or enabled and the expected timetable as set out

in this document may, with the consent of the Underwriters, be adjusted as appropriate. References to

dates and times in this document should be read as subject to any such adjustment. AVEVA will make

an appropriate announcement to a Regulatory Information Service giving details of the revised dates

but Qualifying CREST Shareholders may not receive any further written communication.

CREST members who wish to take up all or part of their entitlements in respect of, or otherwise to

transfer, all or part of their Nil Paid Rights or Fully Paid Rights held by them in CREST should refer

to the CREST Manual for further information on the CREST procedures referred to below. If you are

a CREST sponsored member, you should consult your CREST sponsor if you wish to take up your

entitlement, as only your CREST sponsor will be able to take the necessary action to take up your

entitlements or otherwise to deal with your Nil Paid Rights or Fully Paid Rights.

On the basis that dealings in the Nil Paid Rights commence at 8.00 a.m. on 25 November 2020,

unless otherwise announced by the Company, the latest time and date for acceptance and

payment in full will be 11.00 a.m. on 9 December 2020.

4.2 Procedure for acceptance and payment

(a) MTM Instructions

CREST members who wish to take up all or part of their entitlement in respect of Nil Paid

Rights in CREST must send (or, if they are CREST sponsored members, procure that their

CREST sponsor sends) an MTM Instruction to Euroclear which, on its settlement, will have

the following effect:

(i) the crediting of a stock account of the Receiving Agent under the participant ID and

member account ID specified below, with the number of Nil Paid Rights to be taken up;

(ii) the creation of a settlement bank payment obligation (as this term is defined in the

CREST Manual), in accordance with the CREST RTGS payment mechanism (as this

term is defined in the CREST Manual), in favour of the RTGS settlement bank of the

Receiving Agent in pounds sterling, in respect of the full amount payable on acceptance

in respect of the Nil Paid Rights referred to in sub-section (i) above; and

(iii) the crediting of a stock account of the accepting CREST member (being an account

under the same participant ID and member account ID as the account from which the

Nil Paid Rights are to be debited on settlement of the MTM Instruction) of the

corresponding number of Fully Paid Rights to which the CREST member is entitled on

taking up their Nil Paid Rights referred to in sub-section (i) above.

(b) Contents of MTM Instructions

The MTM Instruction must be properly authenticated in accordance with Euroclear’s

specifications and must contain, in addition to the other information that is required for

settlement in CREST, the following details:

(i) the number of Nil Paid Rights to which the acceptance relates;

(ii) the participant ID of the accepting CREST member;

(iii) the member account ID of the accepting CREST member from which the Nil Paid

Rights are to be debited;

Annex 12, 5.1.5

101


(iv) the participant ID of the Receiving Agent, in its capacity as a CREST receiving agent.

This is 9RA01;

(v) the member account ID of the Receiving Agent, in its capacity as a CREST receiving

agent. This is 20881AVE;

(vi) the number of Fully Paid Rights that the CREST member is expecting to receive on

settlement of the MTM Instruction. This must be the same as the number of Nil Paid

Rights to which the acceptance relates;

(vii) the amount payable by means of the CREST assured payment arrangements on

settlement of the MTM Instruction. This must be the full amount payable on acceptance

in respect of the number of Nil Paid Rights to which the acceptance relates;

(viii) the intended settlement date (which must be on or before 11.00 a.m. on 9 December

2020);

(ix) the ISIN for the Nil Paid Rights. This is GB00BMC45194;

(x) the ISIN for the Fully Paid Rights. This is GB00BMC45202;

(xi) the Corporate Action Number for the Rights Issue. This will be available by viewing the

relevant corporate action details in CREST;

(xii) a contact name and telephone number in the shared note field; and

(xiii) a priority of at least 80.

(c) Valid acceptance

An MTM Instruction complying with each of the requirements as to authentication and

contents set out in “Contents of MTM Instructions” of this Section 4.2 will constitute a valid

acceptance where either:

(i) the MTM Instruction settles by not later than 11.00 a.m. on 9 December 2020; or

(ii) at the discretion of AVEVA: (a) the MTM Instruction is received by Euroclear by not

later than 11.00 a.m. on 9 December 2020; (b) the number of Nil Paid Rights inserted in

the MTM Instruction is credited to the CREST stock member account of the accepting

CREST member specified in the MTM Instruction at 11.00 a.m. on 9 December 2020;

and (c) the relevant MTM Instruction settles by 11.00 a.m. on 9 December 2020 (or such

later time and/or date as AVEVA has determined).

An MTM Instruction will be treated as having been received by Euroclear for these purposes

at the time at which the instruction is processed by the Network Provider’s Communications

Host (as this term is defined in the CREST Manual) at Euroclear or the network provider used

by the CREST member (or by the CREST sponsored member’s CREST sponsor). This will be

conclusively determined by the input time stamp applied to the MTM Instruction by the

Network Provider’s Communications Host.

The provisions of this Section 4.2(c) and any other terms of the Rights Issue relating to

Qualifying CREST Shareholders may be waived, varied or modified as regards specific

Qualifying CREST Shareholder(s) or on a general basis by the Company.

(d) Representations, warranties and undertakings of CREST members

A CREST member or CREST sponsored member who makes, or procures the making of, a

valid acceptance in accordance with this Section 4.2 represents, warrants and undertakes to

AVEVA and the Underwriters that he has taken (or procured to be taken), and will take (or will

procure to be taken), whatever action is required to be taken by him or by his CREST sponsor

(as appropriate) to ensure that the MTM Instruction concerned is capable of settlement at

102


11.00 a.m. on 9 December 2020 and at all times thereafter until 2.00 p.m. on 9 December 2020

(or until such later time and date as AVEVA and the Underwriters may determine). In particular,

the CREST member or CREST sponsored member represents, warrants and undertakes that at

11.00 a.m. on 9 December 2020 and at all times thereafter until 2.00 p.m. on 9 December 2020

(or until such later time and date as AVEVA and the Underwriters may determine) there will be

sufficient Headroom within the Cap (as those terms are defined in the CREST Manual) in

respect of the cash memorandum account to be debited with the amount payable on acceptance

to permit the MTM Instruction to settle. CREST sponsored members should contact their

CREST sponsor if they are in any doubt.

If there is insufficient Headroom within the Cap (as those terms are defined in the

CREST Manual) in respect of the cash memorandum account of a CREST member or CREST

sponsored member for such amount to be debited or the CREST member’s or CREST

sponsored member’s acceptance is otherwise treated as invalid and Rights Issue Shares have

already been allotted to such CREST member or CREST sponsored member, AVEVA, and the

Underwriters may (in their absolute discretion as to manner, timing and terms) make

arrangements for the sale of such shares on behalf of that CREST member or CREST

sponsored member and hold the proceeds of sale (net of AVEVA’s reasonable estimate of any

loss that it has suffered as a result of the acceptance being treated as invalid and of the expenses

of sale including, without limitation, any stamp duty or SDRT payable on the transfer of such

shares, and of all amounts payable by the CREST member or CREST sponsored member

pursuant to the provisions of this Part IV (Terms and Conditions of the Rights Issue) in respect

of the acquisition of such shares) on behalf of such CREST member or CREST sponsored

member. None of AVEVA, the Underwriters nor any other person shall be responsible for, or

have any liability for, any loss, expenses or damage suffered by such CREST member or

CREST sponsored member as a result.

A Qualifying CREST Shareholder will, by sending an MTM Instruction to Euroclear, be

deemed to have made the representations and warranties set out in Section 7.7 of this Part IV

(Terms and Conditions of the Rights Issue) and the agreement and acknowledgement set out in

Section 3.2 of this Part IV (Terms and Conditions of the Rights Issue). All Qualifying

Shareholders will also, by sending an MTM Instruction to Euroclear, be deemed to have agreed

and acknowledged that:

(i) the Underwriters: (A) are acting exclusively for AVEVA and no one else in connection

with the Rights Issue and the listing of the Rights Issue Shares on the premium listing

segment of the Official List; (B) will not regard any other person (whether or not a

recipient of this document) as their respective clients in relation to the Rights Issue; and

(C) will not be responsible to anyone other than AVEVA, nor for giving the protections

afforded to their customers for providing advice in connection with the Rights Issue, the

listing of the Rights Issue Shares on the premium listing segment of the Official List or

the contents of this document;

(ii) apart from the responsibilities and liabilities, if any, which may be imposed on the

Underwriters by FSMA or the regulatory regime established thereunder or under

the regulatory regime of any other jurisdiction where exclusion of liability under the

relevant regulatory regime would be illegal, void or unenforceable, neither of the

Underwriters, nor any of their respective affiliates, directors, officers, employees or

advisers, accept any responsibility whatsoever for the contents of this document, or

make any representation or warranty, express or implied, in relation to the contents of

this document, including its accuracy, completeness or verification or regarding the

legality of any investment in the Nil Paid Rights, the Fully Paid Rights or the Rights

Issue Shares by any person under the laws applicable to such person or for any other

statement made or purported to be made by it, or on its behalf, in connection with

AVEVA, the Nil Paid Rights, the Fully Paid Rights, the Rights Issue Shares or the Rights

Issue, and nothing in this document is, or shall be relied upon as, a promise or

103


representation in this respect, whether as to the past or the future. To the fullest extent

permissible, the Underwriters accordingly disclaim all and any responsibility or liability

whether arising in tort, contract or otherwise (save as referred to above) which they

might otherwise have in respect of this document or any such statement;

(iii) such Qualifying Shareholders have not relied on the Underwriters or any person

affiliated with any of the Underwriters in connection with any investigation as to the

accuracy of any information contained in this document or their investment decision;

and

(iv) such Qualifying Shareholders have relied only on the information contained in this

document, and that no person has been authorised to give any information or to make

any representation concerning the AVEVA Group or the Nil Paid Rights, the Fully Paid

Rights or the Rights Issue Shares (other than as contained in this document) and, if given

or made, any such other information or representation should not be relied upon as

having been authorised by AVEVA or the Underwriters.

(e) CREST procedures and timings

CREST members and CREST sponsors (on behalf of CREST sponsored members) should note

that Euroclear does not make available special procedures in CREST for any particular

corporate action.

Normal system timings and limitations will therefore apply in relation to the input of an MTM

Instruction and its settlement in connection with the Rights Issue. It is the responsibility of the

CREST member concerned to take (or, if the CREST member is a CREST sponsored member,

to procure that his CREST sponsor takes) the action necessary to ensure that a valid acceptance

is received as stated above by 11.00 a.m. on 9 December 2020. In this connection, CREST

members and (where applicable) CREST sponsors are referred in particular to those sections

of the CREST Manual concerning practical limitations of the CREST system and timings.

(f) CREST member’s undertaking to pay

A CREST member or CREST sponsored member who makes a valid acceptance in accordance

with the procedures set out in this Section 4.2:

(i) undertakes to pay to the Receiving Agent, or procure the payment to the Receiving

Agent of, the amount payable in pounds sterling on acceptance in accordance with the

above procedures or in such other manner as the Receiving Agent may require (it being

acknowledged that, where payment is made by means of the CREST RTGS payment

mechanism (as defined in the CREST Manual) the creation of an RTGS settlement bank

payment obligation in pounds sterling in favour of the Receiving Agent’s RTGS

settlement bank (as defined in the CREST Manual), in accordance with the RTGS

payment mechanism shall, to the extent of the obligation so created, discharge in full the

obligation of the CREST member (or CREST sponsored member) to pay to the

Company the amount payable on acceptance); and

(ii) requests that the Fully Paid Rights and/or the Rights Issue Shares to which he will

become entitled be issued to him on the terms set out in this document and subject to the

Articles.

If the payment obligations of the relevant CREST member in relation to such Rights Issue

Shares are not discharged in full and such Rights Issue Shares have already been allotted to

such CREST member or CREST sponsored member, AVEVA and the Underwriters may (in

their absolute discretion as to manner, timing and terms) make arrangements for the sale of

such shares on behalf of that CREST member or CREST sponsored member and hold the

proceeds of sale (net of AVEVA’s reasonable estimate of any loss that it has suffered as a result

of the same and of the expenses of sale including, without limitation, any stamp duty or SDRT

104


payable on the transfer of such shares, and of all amounts payable by the CREST member or

CREST sponsored member pursuant to the provisions of this Part IV (Terms and Conditions of

the Rights Issue) in respect of the acquisition of such shares) or an amount equal to the original

payment of the CREST member or CREST sponsored member (whichever is the lower) on

behalf of such CREST member or CREST sponsored member. None of AVEVA, the

Underwriters nor any other person shall be responsible for, or have any liability for, any loss,

expenses or damage suffered by such CREST member or CREST sponsored member as a

result.

(g) Company’s discretion as to rejection and validity of acceptances

AVEVA and the Underwriters may in their absolute discretion:

(i) reject any acceptance constituted by an MTM Instruction, which is otherwise valid, in

the event of breach of any of the representations, warranties and undertakings set out or

referred to in Section 4.2(d) of this Part IV (Terms and Conditions of the Rights Issue).

Where an acceptance is made as described in this Section 4.2 which is otherwise valid,

and the MTM Instruction concerned fails to settle by 11.00 a.m. on 9 December 2020

(or by such later time and date as AVEVA and the Underwriters may determine), AVEVA

and the Underwriters shall be entitled to assume, for the purposes of their right to reject

an acceptance as described in this Section 4.2(g) of Part IV (Terms and Conditions of the

Rights Issue), that there has been a breach of the representations, warranties and

undertakings set out or referred to in Section 4.2(d) of this Part IV (Terms and

Conditions of the Rights Issue) unless AVEVA or the Underwriters are aware of any

reason outside the control of the CREST member or CREST sponsor (as appropriate)

concerned for the failure of the MTM Instruction to settle;

(ii) treat as valid and binding on the CREST member or CREST sponsored member

concerned an acceptance which does not comply in all respects with the requirements as

to validity set out or referred to in this Section 4.2;

(iii) accept an alternative properly authenticated dematerialised instruction from a CREST

member or (where applicable) a CREST sponsor as constituting a valid acceptance in

substitution for, or in addition to, an MTM Instruction and subject to such further terms

and conditions as AVEVA or the Underwriters may determine;

(iv) treat a properly authenticated dematerialised instruction (in this Section 4.2(g)(iv), the

“first instruction”) as not constituting a valid acceptance if, at the time at which the

Receiving Agent receives a properly authenticated dematerialised instruction giving

details of the first instruction, either AVEVA or the Receiving Agent has received actual

notice from Euroclear of any of the matters specified in CREST Regulation 35(5)(a) in

relation to the first instruction. These matters include notice that any information

contained in the first instruction was incorrect or notice of lack of authority to send the

first instruction; and

(v) accept an alternative instruction or notification from a CREST member or (where

applicable) a CREST sponsor, or extend the time for acceptance and/or settlement of an

MTM Instruction or any alternative instruction or notification if, for reasons or due to

circumstances outside the control of any CREST member or CREST sponsored member

or (where applicable) CREST sponsor, the CREST member or CREST sponsored

member is unable validly to take up all or part of his Nil Paid Rights by means of the

above procedures. In normal circumstances, this discretion is only likely to be exercised

in the event of any interruption, failure or breakdown of CREST (or of any part of

CREST) or on the part of facilities and/or systems operated by the Receiving Agent in

connection with CREST.

105


4.3 Money Laundering Regulations

If you hold your Nil Paid Rights in CREST and apply to take up all or part of your entitlement as

agent for one or more persons and you are not a United Kingdom or European Union regulated person

or institution (for example, a bank, a broker or another United Kingdom financial institution), then,

irrespective of the value of the application, the Receiving Agent is required to take reasonable

measures to establish the identity of the person or persons on whose behalf you are making the

application. You must therefore contact the Receiving Agent before sending any MTM Instruction or

other instruction so that appropriate measures may be taken.

Submission of an MTM Instruction which constitutes, or which may on its settlement constitute, a

valid acceptance as described above constitutes a warranty and undertaking by the applicant to

provide promptly to the Receiving Agent any information the Receiving Agent may specify as being

required for the purposes of the verification of identity requirements in the Money Laundering

Regulations or FSMA. Pending the provision of evidence satisfactory to the Receiving Agent as to

identity, the Receiving Agent, having consulted with AVEVA and the Underwriters may take, or omit

to take, such action as it may determine to prevent or delay settlement of the MTM Instruction. If such

information and other satisfactory evidence of identity has not been provided within a reasonable

time, the Receiving Agent will not permit the MTM Instruction concerned to proceed to settlement,

but without prejudice to the right of AVEVA and the Underwriters to take proceedings to recover any

loss suffered by any of them as a result of failure by the applicant to provide satisfactory evidence.

4.4 Dealings in Nil Paid Rights in CREST

Assuming the Rights Issue becomes unconditional, dealings in the Nil Paid Rights on the London

Stock Exchange are expected to commence at 8.00 a.m. on 25 November 2020. Dealings in Nil Paid

Rights can be made by means of CREST in the same manner as any other security that is admitted to

CREST. The Nil Paid Rights are expected to be enabled in CREST as soon as possible after 8.00 a.m.

on 25 November 2020. The Nil Paid Rights are expected to be disabled in CREST after the closure

of CREST business on 9 December 2020.

4.5 Dealings in Fully Paid Rights in CREST

After acceptance and payment in full in accordance with the provisions set out in this document, the

Fully Paid Rights may be transferred (in whole or in part) by means of CREST in the same manner

as any other security that is admitted to CREST. The last time for settlement of any transfer of Fully

Paid Rights in CREST is expected to be 11.00 a.m. on 9 December 2020. The Fully Paid Rights are

expected to be disabled in CREST after the close of CREST business on 9 December 2020.

After 10 December 2020, the Rights Issue Shares will be registered in the name(s) of the person(s)

entitled to them in AVEVA’s register of members and will be transferable by means of CREST in the

usual way.

4.6 Withdrawal of Nil Paid Rights or Fully Paid Rights from CREST

Nil Paid Rights or Fully Paid Rights held in CREST may be converted into certificated form (that is,

withdrawn from CREST). Normal CREST procedures (including timings) apply in relation to any

such conversion.

The recommended latest time for receipt by Euroclear of a properly authenticated dematerialised

instruction requesting withdrawal of their Nil Paid Rights or, if appropriate, Fully Paid Rights from

CREST is 4.30 p.m. on 3 December 2020, so as to enable the person acquiring or (as appropriate)

holding the Nil Paid Rights or, if appropriate, Fully Paid Rights following the conversion to take all

necessary steps in connection with taking up the entitlement before 11.00 a.m. on 9 December 2020.

You are recommended to refer to the CREST Manual or your CREST sponsor (as applicable) for

details of such procedures.

Annex 12, 5.1.7

Annex 12, 5.1.7

106


4.7 Issue of Rights Issue Shares in CREST

Fully Paid Rights in CREST are expected to be disabled in CREST after the close of CREST business

on 9 December 2020 (the latest date for settlement of transfers of Fully Paid Rights in CREST).

Rights Issue Shares will be issued in uncertificated form to those persons registered as holding Fully

Paid Rights in CREST at 5.30 p.m. on the date on which the Fully Paid Rights are disabled. The

Receiving Agent will instruct Euroclear to credit the appropriate stock accounts of those persons

(under the same participant ID and member account ID that applied to the Fully Paid Rights held by

those persons) with their entitlements to Rights Issue Shares with effect from the next Business Day

(expected to be 10 December 2020).

4.8 Right to allot/issue in certificated form

Despite any other provision of this document, AVEVA reserves the right to allot and to issue any Nil

Paid Rights, Fully Paid Rights or Rights Issue Shares in certificated form. In normal circumstances,

this right is only likely to be exercised in the event of any interruption, failure or breakdown of

CREST (or of any part of CREST) or of a part of the facilities and/or systems operated by the

Receiving Agent in connection with CREST.

5. PROCEDURE IN RESPECT OF RIGHTS NOT TAKEN UP (WHETHER CERTIFICATED

OR IN CREST)

If an entitlement to Rights Issue Shares, which are not subject to the Equity Financing Deed and the Support

Agreement, is not validly taken up in accordance with the procedure and timelines laid down for acceptance

and payment, then that provisional allotment will be deemed to have been declined and will lapse. Subject

to the terms and conditions of the Underwriting Agreement, the Underwriters acting severally and not jointly

(or jointly and severally) will use reasonable endeavours to procure, by not later than 5.00 p.m. on the second

Business Day (as defined in the Underwriting Agreement) following the last day for acceptances in the

Rights Issue, subscribers for all (or, at the discretion of the Underwriters, as many as possible) of those

Rights Issue Shares not taken up if a premium over the total of the Rights Issue Price and the expenses of

procuring such subscribers (including any related commissions and VAT which is not, in the reasonable

opinion of the Underwriters, recoverable) can be obtained.

Notwithstanding the above, the Underwriters may cease to endeavour to procure any such subscribers if, in

the opinion of the Underwriters, it is unlikely that any such subscribers can be so procured at such a price

by such time. If and to the extent that subscribers cannot be procured on the basis outlined above, the relevant

Rights Issue Shares will be subscribed for by the Underwriters acting severally and not jointly (or jointly and

severally) as principals pursuant to the Underwriting Agreement or by sub-underwriters procured by the

Underwriters, in each case at the Rights Issue Price on the terms and subject to the conditions of the

Underwriting Agreement.

Rights Issue Shares for which subscribers are procured on this basis will be re-allotted to such subscribers

and the aggregate of any premiums, being any premium over the aggregate of the Rights Issue Price and the

expenses of procuring subscribers (including any applicable brokerage and commissions and VAT which is

not recoverable), if any, will be paid (without interest), as set out below, to those persons entitled to lapsed

provisional allotments pro rata to the relevant provisional allotments not taken up:

(a) subject to (c) below, where the Nil Paid Rights were, at the last time and date they could have been

validly accepted in accordance with the procedure for acceptance and payment, represented by a

Provisional Allotment Letter, to the person whose name and address appeared on page 1 of the

Provisional Allotment Letter;

(b) subject to (c) below, where the Nil Paid Rights were, at the last time and date they could have been

validly accepted in accordance with the procedure for acceptance and payment, in uncertificated form,

to the person registered as the holder of those Nil Paid Rights at the time of their disablement in

CREST; and

(c) to the extent not provided for above, where an entitlement to Rights Issue Shares was not taken up by

an Overseas Shareholder with an address in the United States or any Excluded Territory, to that

Overseas Shareholder,

LR 13.3.1(9)(d)

Annex 12, 5.1.5

Annex 12, 5.1.7

LR 13.3.1(9)(e)

Annex 12, 5.1.5

107


save that no payment will be made of amounts of less than £5.00 per holding, which amounts will be

aggregated and will ultimately be paid to AVEVA. Cheques for the amounts due will be sent in pounds

sterling, by post, at the risk of the person(s) entitled, to their registered addresses (the registered address of

the first named in the case of joint holders), provided that where any entitlement concerned was held in

CREST the amount due will, unless AVEVA (in its absolute discretion) otherwise determines, be satisfied by

AVEVA procuring the creation of an assured payment obligation in favour of the relevant CREST member’s

(or CREST sponsored member’s) RTGS settlement bank in respect of the cash amount concerned in

accordance with the RTGS payment mechanism or in such other manner as the Company (in its absolute

discretion) determines.

Any transactions undertaken pursuant to this Section 5 shall be deemed to have been undertaken at the

request of the persons who did not take up their entitlement and none of AVEVA, the Underwriters nor any

other person procuring subscribers shall be responsible or have any liability for any loss, expense or damage

(whether actual or alleged) arising from the terms of or timing of any such acquisition, any decision not to

endeavour to procure subscribers or the failure to procure subscribers on the basis described above. The

Underwriters will be entitled to retain any fees, commissions or other benefits received in connection with

these arrangements.

It is a term of the Rights Issue that all Rights Issue Shares validly taken up by acquirers under the Rights

Issue may be allotted to such acquirers in the event that not all of the Rights Issue Shares offered for purchase

under the Rights Issue are taken up.

6. WITHDRAWAL RIGHTS

Persons who have the right to withdraw their acceptances under Article 23 of the Prospectus Regulation after

a supplement to the prospectus (if any supplement to the prospectus gives rise to such rights) in respect of

this document has been published by the Company and who wish to exercise such right of withdrawal must

send a written notice of withdrawal, which must include the full name and address of the person wishing to

exercise such right of withdrawal, the Allotment Number set out on the cover page of the Provisional

Allotment Letter, and, if such person is a CREST member, the participant ID and the member account ID of

such CREST member to Link Group, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham,

Kent BR3 4TU or by email to [email protected], so as to be received no later than two Business

Days after the date on which the supplement to the prospectus is published. Notice of withdrawal given by

any other means or which is received after expiry of such period will not constitute a valid withdrawal.

AVEVA will not permit the exercise of withdrawal rights after payment by the relevant person for the Rights

Issue Shares in full and the allotment of such Rights Issue Shares to such person becoming unconditional,

save as required by statute. In such circumstances, Shareholders are advised to consult their professional

advisers.

Provisional allotments of entitlements to Rights Issue Shares which are the subject of a valid withdrawal

notice will be deemed to be declined or to have lapsed. Such entitlements to Rights Issue Shares will be

subject to the provisions of Section 5 of this Part IV (Terms and Conditions of the Rights Issue) as if the

entitlement had not been validly taken up.

Following the valid exercise of statutory withdrawal rights, application monies will be returned by post to

relevant Qualifying Shareholders at their own risk and without interest to the address set out in the

Provisional Allotment Letter and/or the Receiving Agent will refund the amount paid by a Qualifying

CREST Shareholder by way of a CREST payment, without interest, as applicable within 14 days of such

exercise of statutory withdrawal rights. Interest earned on such monies will be retained for the benefit of the

Company. The provisions of this Section 6 of this Part IV (Terms and Conditions of the Rights Issue) are

without prejudice to the statutory rights of Qualifying Shareholders. In such event, Qualifying Shareholders

are advised to seek independent legal advice.

7. OVERSEAS SHAREHOLDERS

Provisional Allotment Letters will be posted to Qualifying Non-CREST Shareholders (other than, subject to

certain limited exceptions, Qualifying Shareholders with registered addresses in the United States or any of

Annex 12, 5.1.10

108


the Excluded Territories) and Nil Paid Rights will be credited to the CREST stock accounts of Qualifying

CREST Shareholders with registered addresses in any country other than the United States or an Excluded

Territory. No offer of or invitation to subscribe for Rights Issue Shares is being made by virtue of this

document or the Provisional Allotment Letters into the United States or any of the Excluded Territories. The

offer by way of Nil Paid Rights and Fully Paid Rights will be made to such Shareholders by means of the

notice in the London Gazette referred to in Section 7.6 of this Part IV (Terms and Conditions of the Rights

Issue).

Qualifying Shareholders in jurisdictions other than the United States or the Excluded Territories may, subject

to the laws of their relevant jurisdiction, accept their rights under the Rights Issue in accordance with the

instructions set out in this document and, in the case of Qualifying Non-CREST Shareholders only, the

Provisional Allotment Letters.

Qualifying Shareholders who are resident or domiciled in, or who are citizens of, or who have a registered

address in countries other than the United Kingdom should consult their appropriate professional advisers as

to whether they require any governmental or other consents or need to observe any other formalities to

enable them to take up their Nil Paid Rights or to acquire Fully Paid Rights or Rights Issue Shares. If you

are in any doubt as to your eligibility to accept the offer of Rights Issue Shares or to deal with Nil Paid Rights

or Fully Paid Rights, you should contact your appropriate professional adviser immediately.

7.1 General

The making or acceptance of the proposed offer of Nil Paid Rights, Fully Paid Rights and/or

Rights Issue Shares to persons who are resident or domiciled in, or who are citizens of, or who

have a registered address in countries other than the United Kingdom may be affected by the

laws of the relevant jurisdiction. Those persons should consult their professional advisers as to

whether they require any governmental or other consents or need to observe any other

formalities to enable them to take up their entitlement.

It is the responsibility of any person (including, without limitation, custodians, nominees and

trustees) outside the United Kingdom wishing to take up rights to Rights Issue Shares or

otherwise participate in the Rights Issue to satisfy themselves as to full observance of the laws

of any relevant territory in connection therewith, including the obtaining of any governmental

or other consents which may be required, the compliance with other necessary formalities and

the payment of any issue, transfer or other taxes due in such territories. The comments set out

in this Section 7 are intended as a general guide only and any Overseas Shareholder who is in

doubt as to his position should consult their own independent professional adviser without

delay.

Having considered the circumstances, the Directors have formed the view that it is necessary or

expedient to restrict the ability of persons with registered addresses, or who are resident or located, in

the United States and the Excluded Territories to take up rights to Rights Issue Shares or otherwise

participate in the Rights Issue due to the time and costs involved in the registration of this document

and/or compliance with the relevant local legal or regulatory requirements in those jurisdictions.

Receipt of this document and/or a Provisional Allotment Letter or the crediting of Nil Paid Rights to

a stock account in CREST will not constitute an offer to persons with registered addresses, or resident

or located in, the United States or any Excluded Territory or any other jurisdictions in which it would

be illegal to make an offer and, in those circumstances, subject to certain exceptions, this document

and/or a Provisional Allotment Letter must be treated as sent for information only and should not be

copied or redistributed.

Rights Issue Shares will be provisionally allotted (nil paid) to all Qualifying Shareholders. However,

Provisional Allotment Letters will not be sent to, and Nil Paid Rights will not be credited to CREST

accounts of, Qualifying Shareholders with registered addresses in the United States or any of the

Excluded Territories or their agents or intermediaries, except where the Company is satisfied that such

action would not result in the contravention of any registration or other legal requirement in any

jurisdiction.

109


No person receiving a copy of this document and/or a Provisional Allotment Letter and/or receiving

a credit of Nil Paid Rights to a stock account in CREST in any territory other than the United

Kingdom may treat the same as constituting an invitation or offer to him, nor should he in any event

use the Provisional Allotment Letter or deal with Nil Paid Rights or Fully Paid Rights in CREST

unless, in the relevant territory, such an invitation or offer could lawfully be made to him or the

Provisional Allotment Letter or Nil Paid Rights or Fully Paid Rights in CREST could lawfully be used

or dealt with without contravention of any registration or other legal or regulatory requirements. In

such circumstances, this document and/or the Provisional Allotment Letter are to be treated as sent

for information only and should not be copied or redistributed.

Accordingly, persons (including, without limitation, custodians, nominees and trustees) receiving a

copy of this document and/or a Provisional Allotment Letter and/or whose stock account in CREST

is credited with Nil Paid Rights or Fully Paid Rights should not, in connection with the Rights Issue,

distribute or send the same in or into, or transfer, Nil Paid Rights or Fully Paid Rights, subject to

certain exceptions, to any person in the United States or any Excluded Territory, or in or into

jurisdiction where to do so would or might contravene local security laws or regulations. If a

Provisional Allotment Letter or a credit of Nil Paid Rights or Fully Paid Rights in CREST is received

by any person in any such territory, or by his agent or nominee, he must not seek to take up the rights

referred to in the Provisional Allotment Letter or in this document or renounce the Provisional

Allotment Letter or transfer the Nil Paid Rights or Fully Paid Rights in CREST unless AVEVA and

the Underwriters determine that such actions would not violate applicable legal or regulatory

requirements. Any person (including, without limitation, custodians, nominees and trustees) who does

forward this document or a Provisional Allotment Letter or transfers Nil Paid Rights or Fully Paid

Rights into any such territories (whether under a contractual or legal obligation or otherwise) should

draw the recipient’s attention to the contents of this Section 7.

AVEVA and the Underwriters may (in their absolute discretion) treat as invalid, and AVEVA will not

be bound to allot or issue any Rights Issue Shares in respect of, any acceptance or instruction or

purported acceptance or instruction which:

(a) appears to AVEVA, the Underwriters or their respective agents or its agents to have been

executed, effected or despatched from the United States or an Excluded Territory;

(b) in the case of a Provisional Allotment Letter, provides an address for delivery of the share

certificates or other statements of entitlement or advice in the United States or an Excluded

Territory or any other jurisdiction outside the United Kingdom in which it would be unlawful

to deliver such certificates, statements or advice or if AVEVA or its agents believe that the same

may violate applicable legal or regulatory requirements; or

(c) in the case of a credit in CREST, to a CREST member or CREST sponsored member whose

registered address is in the United States or an Excluded Territory or any other jurisdiction

outside the United Kingdom in which it would be unlawful to make such a credit or if AVEVA

or its agents believe that making such credit may violate applicable legal or regulatory

requirements.

Save as provided in this Section 7, rights to the Rights Issue Shares to which Shareholders with

registered addresses, or who are resident or located, in the United States or any of the Excluded

Territories would otherwise be entitled will be aggregated with entitlements to Nil Paid Rights which

have not been taken up by other Shareholders and, if possible, sold as described in Section 5 of this

Part IV (Terms and Conditions of the Rights Issue). The net premium realised from such sales (after

deduction of the Rights Issue Price and expenses) will be paid to the relevant Shareholders pro-rated,

as described to Section 5, as soon as practicable after receipt, except that individual amounts of less

than £5.00 per holding will not be distributed but will ultimately accrue for the benefit of AVEVA.

Holdings of Existing Ordinary Shares in certificated and uncertificated holdings will be treated as

separate holdings for these purposes. None of AVEVA, the Underwriters or any other person shall be

responsible or have any liability whatsoever for any loss, damage, liability or cost (actual or alleged)

110


arising from the terms or the timing of the acquisition or the procuring of it or any failure to procure

subscribers.

Despite any other provision of this document or the Provisional Allotment Letter, AVEVA and the

Underwriters reserve the right to permit any Shareholder to participate in the Rights Issue on the terms

and conditions set out in this document as if they were a Qualifying Shareholder if AVEVA and the

Underwriters in their absolute discretion are satisfied that the transaction in question is exempt from

or not subject to the legislation or regulations giving rise to the restrictions in question. If AVEVA and

the Underwriters are so satisfied, AVEVA will arrange for the relevant Overseas Shareholder to be

sent a Provisional Allotment Letter if it is a Qualifying Non-CREST Shareholder or, if it is a

Qualifying CREST Shareholder, arrange for the Nil Paid Rights to be credited to the relevant CREST

stock account.

Those Shareholders who wish, and are permitted, to take up their entitlement should note that

payments must be made as described in Sections 3 (in the case of Qualifying Non-CREST

Shareholders) and 4 (in the case of Qualifying CREST Shareholders) of this Part IV (Terms and

Conditions of the Rights Issue).

The attention of Overseas Shareholders with registered addresses, or who are resident or located, in

the United States or any of the Excluded Territories is also drawn to Sections 7.2 to 7.4 of this Part IV

(Terms and Conditions of the Rights Issue) below.

Overseas Shareholders (other than Qualifying CREST Shareholders) should note that all subscription

monies must be paid in pound sterling by cheque or banker’s draft and should be drawn on a bank in

the United Kingdom, made payable to “Link Market Services Limited RE: AVEVA Group plc Rights

Issue Account” and crossed “A/C payee only”.

7.2 Offering restrictions relating to the United States

Subject to certain exceptions, this document and the Provisional Allotment Letters are intended for

use only in connection with offers and sales of Rights Issue Shares outside the United States and are

not to be sent or given to any person with a registered address, or who is resident or located, in the

United States.

The Rights Issue Shares, the Nil Paid Rights, the Fully Paid Rights and the Provisional Allotment

Letters have not been and will not be registered under the Securities Act or under any relevant

securities laws of any state or other jurisdiction of the United States and may not be offered, sold,

pledged, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, in or

into the United States except pursuant to an applicable exemption from, or in a transaction not subject

to, the registration requirements of the Securities Act and in compliance with any applicable securities

laws. The Nil Paid Rights, the Fully Paid Rights and the Rights Issue Shares being offered outside the

United States are being offered in reliance on Regulation S.

The offer by way of the Rights Issue will be made to Qualifying Shareholders by means of the notice

in the London Gazette referred to in Section 7.6 of this Part IV (Terms and Conditions of the Rights

Issue). The notice in the London Gazette will state where a Provisional Allotment Letter may be

inspected or obtained. Any person with a registered address, or who is resident or located, in the

United States who obtains a copy of this document or a Provisional Allotment Letter is required to

disregard them, except with the consent of AVEVA and the Underwriters.

Subject to certain exceptions, the offer of Rights Issue Shares is not being made in the United States

and neither this document nor the Provisional Allotment Letters constitutes or will constitute an offer,

or an invitation to apply for, or an offer or an invitation to subscribe for or acquire any Rights Issue

Shares, Nil Paid Rights or Fully Paid Rights in the United States. Subject to certain limited

exceptions, Provisional Allotment Letters have not been, and will not be, sent to, and Nil Paid Rights

have not been, and will not be, credited to the CREST account of, any Qualifying Shareholder with a

registered address in or that is known to be resident or located in the United States.

111


The Rights Issue Shares, the Nil Paid Rights, the Fully Paid Rights and the Provisional Allotment

Letters have not been approved or disapproved by the SEC, any state securities commission in the

United States or any other US regulatory authority, nor have any of the foregoing authorities passed

upon or endorsed the merits of the offering of the Rights Issue Shares, the Nil Paid Rights, the Fully

Paid Rights and the Provisional Allotment Letters or the accuracy or adequacy of this document. Any

representation to the contrary is a criminal offence in the United States.

Subject to certain limited exceptions, envelopes containing Provisional Allotment Letters should not

be postmarked in the United States or otherwise despatched from the United States, and all persons

subscribing for or acquiring Rights Issue Shares and wishing to hold such shares in certificated form

must provide an address for registration of the Rights Issue Shares issued upon exercise thereof

outside the United States.

Subject to certain limited exceptions, any person who subscribes for or acquires Rights Issue Shares,

Nil Paid Rights or Fully Paid Rights will be deemed to have declared, warranted and agreed, by

accessing this document or accepting delivery of the Provisional Allotment Letter and delivery of the

Rights Issue Shares, the Nil Paid Rights or the Fully Paid Rights, that it is not, and that at the time of

subscribing or acquiring the Rights Issue Shares, the Nil Paid Rights or the Fully Paid Rights it will

not be, in the United States or noting on behalf of, or for the account or benefit of a person on a non-

discretionary basis in the United States or any state or other jurisdiction of the United States.

The Company and the Underwriters reserve the right to treat as invalid any Provisional Allotment

Letter: (a) that appears to the Company, the Underwriters or their respective agents to have been

executed in or despatched from the United States; (b) that does not include the relevant warranty set

out in the Provisional Allotment Letter headed “Overseas Shareholders” to the effect that the person

accepting and/or renouncing the Provisional Allotment Letter does not have a registered address and

is not resident or located in the United States and is not subscribing for or acquiring Nil Paid Rights,

Fully Paid Rights or Rights Issue Shares with a view to the offer, sale, resale, transfer, delivery or

distribution, directly or indirectly, of any such Nil Paid Rights, Fully Paid Rights or Rights Issue

Shares in the United States; or (c) where the Company and the Underwriters believe acceptance of

such Provisional Allotment Letter may infringe applicable legal or regulatory requirements, and the

Company and the Underwriters shall not be bound to allot (on a non-provisional basis) or issue any

Rights Issue Shares, Nil Paid Rights or Fully Paid Rights in respect of any such Provisional Allotment

Letter. In addition, the Company and the Underwriters reserve the right to reject any MTM Instruction

in respect of Nil Paid Rights sent by or on behalf of any CREST member with a registered address in

or resident or located in the United States.

Notwithstanding the foregoing, the Company reserves the right to offer and deliver the Nil Paid

Rights and Provisional Allotment Letters to, and the Fully Paid Rights and the Rights Issue Shares

may be offered to and acquired by, a limited number of Shareholders in the United States reasonably

believed to be QIBs, in offerings exempt from the registration requirements of the Securities Act.

A QIB will be permitted to take up its entitlements to Rights Issue Shares under the Rights Issue only

if the QIB executes a QIB Representation Letter in the form provided by the Company and delivers

it to the Company, with a copy to the Underwriters. The QIB Representation Letter will require each

such QIB to represent and agree that, amongst other things: (a) it is a QIB; and (b) it will only offer,

sell, transfer, assign, pledge or otherwise dispose of the Rights Issue Shares in transactions exempt

from, or not subject to, the registration requirements of the Securities Act and in compliance with

applicable securities laws. The QIB Representation Letter contains additional written representations,

agreements and acknowledgements relating to the transfer restrictions applicable to the Rights Issue

Shares. Any such QIBs who hold Ordinary Shares through a bank, a broker or other financial

intermediary should procure that the relevant bank, broker or financial intermediary submits a QIB

Representation Letter on their behalf. The Company has the discretion to refuse to accept any

Provisional Allotment Letter that is incomplete, unexecuted or not accompanied by an executed QIB

Representation Letter or any other required additional documentation.

112


Any person with a registered address, or who is resident or located in the United States who obtains

a copy of this document and/or a Provisional Allotment Letter and who is not a QIB is required to

disregard them.

Until 40 days after the commencement of the Rights Issue or the procurement of subscribers for the

Rights Issue Shares not taken up in the Rights Issue, any offer, sale or transfer of the Rights Issue

Shares, Nil Paid Rights or Fully Paid Rights within the United States by a dealer (whether or not

participating in the Rights Issue) may violate the registration requirements of the Securities Act.

No representation has been, or will be, made by the Company or any of the Underwriters as to the

availability of Rule 144 under the Securities Act or any other exemption under the Securities Act or

any state securities laws for the reoffer, resale, pledge or transfer of the Rights Issue Shares.

7.3 US transfer restrictions in respect of shares not taken up in the Rights Issue

Any person within the United States that subscribes for any Rights Issue Shares that were not taken

up in the Rights Issue must meet certain requirements and will be deemed to have represented,

acknowledged and agreed that it has received a copy of this document and such other information as

it deems necessary to make an investment decision and to have further represented, acknowledged and

agreed as follows (terms defined in Rule 144A or Regulation S shall have the same meaning in this

section):

(a) it is a QIB and, if it is subscribing for or acquiring the Rights Issue Shares as a fiduciary or

agent for one or more investor accounts, each such account is a QIB;

(b) it is aware, and each beneficial owner of the Rights Issue Shares has been advised, that the

Rights Issue Shares have not been, and will not be, registered under the Securities Act, and that

the offer and sale to it (or such beneficial owner) is being made in a transaction not involving

a public offering exempt from registration under the Securities Act;

(c) it is acquiring the Rights Issue Shares for its own account or for the account of a QIB as to

which it has full investment discretion (and it has full power and authority to make, and does

make, the acknowledgments, representations and agreements herein on behalf of each owner

of such account), in each case for investment purposes and not with a view to, or for offer of

sale in connection with, any distribution (within the meaning of the United States securities

laws) thereof;

(d) it has made its own assessment concerning the relevant tax, legal, and other economic

considerations relevant to its investment in the Rights Issue Shares. It will base its investment

decision solely on this document, including the information incorporated by reference herein.

It acknowledges that none of the Company, any of its affiliates or any other person (including

any of the Underwriters or any of their respective affiliates) has made any representations,

express or implied, to it with respect to the Company, the Rights Issue, the Rights Issue Shares

or the accuracy, completeness or adequacy of any financial or other information concerning the

Company, the Rights Issue or the Rights Issue Shares, other than (in the case of the Company

and its affiliates only) the information contained or incorporated by reference in this document.

It acknowledges and agrees that it will not hold the Underwriters or any of their affiliates or

any person acting on their behalf responsible or liable for any misstatements in or omissions

from any publicly available information relating to the Company. It acknowledges that it has

not relied on any investigation that the Underwriters or any person acting on their behalf may

or may not have conducted, nor any information contained in any research reports prepared by

the Underwriters or any of their respective affiliates, and it has relied solely on its own

judgment, examination and due diligence of the Company, and the terms of the transaction,

including the merits and risks involved, and not upon any view expressed by or information

provided by, or on behalf of, the Underwriters or any of their affiliates. It acknowledges that it

has read and agreed to the matters set forth under Section 7 of this Part IV (Terms and

Conditions of the Rights Issue);

113


(e) it is aware that the Rights Issue Shares will be “restricted securities” within the meaning of

Rule 144(a)(3) under the Securities Act;

(f) it is aware that the Rights Issue Shares may not be deposited, and it agrees that it shall not

deposit any Rights Issue Shares, into any unrestricted depositary facility and that the Rights

Issue Shares may not settle or trade, and it agrees that it shall not settle or trade such Rights

Issue Shares, through the facilities of The Depositary Trust Company or any other U.S.

exchange or clearing system, unless at the time of deposit, settlement or trading such Rights

Issue Shares are no longer “restricted securities” within the meaning of Rule 144(a)(3) under

the Securities Act;

(g) it will not reoffer, resell, pledge or otherwise transfer the Rights Issue Shares except: (i) outside

the United States in accordance with Rule 903 or Rule 904 of Regulation S; or (ii) to another

QIB in compliance with Rule 144A; or (iii) pursuant to an exemption from registration under

the Securities Act provided by Rule 144 or any other exemption from the registration

requirements of the Securities Act, subject to its delivery to the Company of an opinion of

counsel (and of such other evidence that the Company may reasonably require) that such

transfer or sale is in compliance with the Securities Act, in each case in accordance with any

applicable securities laws of any state or other jurisdiction of the United States. It understands

that no representation has been made as to the availability of Rule 144 of the Securities Act or

any other exemption under the Securities Act or any state securities laws for the offer, resale,

pledge or transfer of the securities;

(h) it understands, and each beneficial owner understands, that the Company does not intend to file

a registration statement in respect of the Rights Issue Shares;

(i) it is an institution, and it, and each other QIB, if any, for whose account it is acquiring the

Rights Issue Shares, in the normal course of business invest in or purchase securities similar to

the Rights Issue Shares, (i) has such knowledge and experience in financial and business

matters that it is capable of evaluating the risks of an investment in the Rights Issue Shares;

and (ii) has the financial stability to bear the economic risk, and sustain a complete loss, of such

investment in the Rights Issue Shares for an indefinite period of time and adequate means for

providing for current needs and possible contingencies. It agrees that it will not look to any of

the Underwriters or any of their affiliates for all or part of any loss it may suffer;

(j) it is not subscribing for or acquiring the Rights Issue Shares as a result of any general

solicitation or general advertising (as those terms are defined in Regulation D under the

Securities Act), including advertisements, articles, notices or other communications published

in any newspaper, magazine or similar media or broadcast over the radio or television or any

seminar or meeting whose attendees have been invited by general solicitation or general

advertising or directed selling efforts (as that term is defined in Regulation S);

(k) it acknowledges that, to the extent the Rights Issue Shares are delivered in certificated form,

the certificate delivered in respect of the Rights Issue Shares will bear a legend substantially to

the following effect for so long as the securities are “restricted securities” within the meaning

of Rule 144(a)(3) under the Securities Act:

THE SHARES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE

REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS

AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY

AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES,

AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED

EXCEPT: (A) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903

OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; OR (B) TO A

“QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN AND IN COMPLIANCE

WITH RULE 144A; OR (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION

UNDER THE SECURITIES ACT PROVIDED BY RULE 144 OR ANOTHER EXEMPTION

114


FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT

TO DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL (AND OF SUCH

OTHER EVIDENCE THAT THE COMPANY MAY REASONABLY REQUIRE) THAT

SUCH TRANSFER OR SALE IS IN COMPLIANCE WITH THE SECURITIES ACT, IN

EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY

STATE OR OTHER JURISDICTION OF THE UNITED STATES. NO REPRESENTATION

CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY

RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THE SHARES

REPRESENTED HEREBY. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN

THE FOREGOING, THE SHARES MAY NOT BE DEPOSITED INTO ANY

UNRESTRICTED DEPOSITARY RECEIPT FACILITY MAINTAINED BY A

DEPOSITARY BANK. EACH HOLDER, BY ITS ACCEPTANCE OF THESE SHARES,

REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING

RESTRICTIONS.

(l) it will notify any person to whom it subsequently reoffers, resells, pledges or otherwise

transfers the Rights Issue Shares of the foregoing restrictions on transfer;

(m) it acknowledges and agrees that the Company shall not have any obligation to recognise any

offer, resale, pledge or other transfer made other than in compliance with the restrictions on

transfer set forth and described in this section and that the Company may make notations on its

records or give instructions to any transfer agent of the Rights Issue Shares in order to

implement such restrictions; and

(n) it acknowledges and agrees that the Company, its affiliates, the Underwriters, their respective

affiliates, the Registrar and others will rely upon the truth and accuracy of the foregoing

warranties, acknowledgements, representations and agreements. It agrees that if any of the

representations, warranties, agreements and acknowledgements deemed to be made cease to be

accurate, it shall promptly notify the Company and the Underwriters.

Prospective purchasers are hereby notified that sellers of the Rights Issue Shares may be relying on

the exemption from the registration requirements of the Securities Act provided by Rule 144A.

7.4 Excluded Territories

Due to restrictions under the securities laws of the Excluded Territories, and subject to certain

exceptions, no Provisional Allotment Letters will be sent to, and no Nil Paid Rights or Fully Paid

Rights will be credited to a stock account in CREST of, persons with registered addresses in the

Excluded Territories and the Nil Paid Rights to which they are entitled will be sold if possible in

accordance with the provisions of Section 5 above of this Part IV (Terms and Conditions of the Rights

Issue). Subject to certain exceptions, the Provisional Allotment Letters, the Nil Paid Rights and the

Fully Paid Rights and the Rights Issue Shares may not be transferred or sold to, or renounced or

delivered in, the Excluded Territories. No offer of Rights Issue Shares is being made by virtue of this

document or the Provisional Allotment Letter into the Excluded Territories. The offer by way of Nil

Paid Rights and Fully Paid Rights will be made to such Shareholders by means of the notice in the

London Gazette referred to in Section 7.6 of this Part IV (Terms and Conditions of the Rights Issue).

The notice in the London Gazette will state where a Provisional Allotment Letter may be inspected or

obtained. Any person with a registered address, or who is resident or located, in any of the Excluded

Territories who obtains a copy of this document or a Provisional Allotment Letter is required to

disregard them, except with the consent of the Company.

7.5 Overseas territories other than United States and the Excluded Territories

Other than for, subject to certain exceptions, Qualifying Shareholders with registered addresses, or

who are resident or located in, the United States or any of the Excluded Territories, Provisional

Allotment Letters will be posted to Qualifying Non-CREST Shareholders and Nil Paid Rights will be

credited to the CREST stock accounts of Qualifying CREST Shareholders. Such Qualifying

115


Shareholders may, subject to the laws of the relevant jurisdictions, participate in the Rights Issue in

accordance with the instructions set out in this document and, if relevant, the applicable Provisional

Allotment Letter. In cases where Overseas Shareholders do not take up Nil Paid Rights, their

entitlements will be sold if possible in accordance with the provisions of Section 5 of this Part IV

(Terms and Conditions of the Rights Issue).

Qualifying Shareholders who are resident or domiciled in, or who are citizens of, or who have a

registered address in countries other than the United Kingdom should consult their professional

advisers as to whether they require any governmental or other consents or need to observe any

formalities to enable them to take up their entitlement.

Member States of the EEA

In relation to each member state of the European Economic Area (each, a “Relevant Member

State”), none of the Rights Issue Shares, the Nil Paid Rights or the Fully Paid Rights may be offered

or sold to the public in that Relevant Member State except that an offer of such Nil Paid Rights, Fully

Paid Rights or Rights Issue Shares may be made to the public in that Relevant Member State: (a) to

any legal entity which is a qualified investor as defined in the Prospectus Regulation; (b) to fewer than

150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation)

per Relevant Member State, subject to obtaining the prior consent of the Underwriters for any such

offer; or (c) in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of the Rights Issue Shares, the Nil Paid Rights or the Fully Paid Rights

shall require AVEVA or the Underwriters to publish a prospectus pursuant to Article 3 of the

Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation

and each person who initially acquires any Rights Issue Shares, Nil Paid Rights or Fully Paid Rights

or to whom any offer is made under the Rights Issue will be deemed to have represented,

acknowledged, and agreed that it is a “qualified investor” within the meaning of Article 2(e) of the

Prospectus Regulation.

For the purposes of this selling restriction, the expression an “offer of the Rights Issue Shares, the Nil

Paid Rights or the Fully Paid Rights to the public” in relation to any Rights Issue Shares, the Nil Paid

Rights or the Fully Paid Rights in any Relevant Member State means the communication in any form

and by any means of sufficient information on the terms of the offer and the Rights Issue Shares, the

Nil Paid Rights or the Fully Paid Rights to be offered so as to enable an investor to decide to acquire

the Rights Issue Shares, the Nil Paid Rights or the Fully Paid Rights.

In the case of the Rights Issue Shares, the Nil Paid Rights or the Fully Paid Rights being offered to a

financial intermediary, as that term is used in the Prospectus Regulation, such financial intermediary

will also be deemed to have represented, acknowledged and agreed that the Rights Issue Shares, the

Nil Paid Rights or the Fully Paid Rights acquired by it have not been acquired on a non-discretionary

basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in

circumstances which may give rise to an offer of any Rights Issue Shares, Nil Paid Rights or Fully

Paid Rights to the public other than their offer or resale in a Relevant Member State to “qualified

investors” within the meaning of Article 2(e) of the Prospectus Regulation. AVEVA, the Underwriters

and their respective affiliates will rely upon the truth and accuracy of the foregoing representation,

acknowledgement and agreement.

7.6 Notice in the London Gazette

In accordance with section 562(3) of the Companies Act, the offer by way of rights to Qualifying

Shareholders who have no registered address in an EEA State or the UK and who have not given to

the Company an address in an EEA State or the UK for the service of notices, will be made by the

Company causing a notice to be published in the London Gazette on 25 November 2020 stating where

copies of this document and the Provisional Allotment Letters may be inspected or, in certain

circumstances, obtained on personal application by or on behalf of such Qualifying Shareholders. Any

person with a registered address, or who is resident or located, in the United States or any of the

116


Excluded Territories who obtains a copy of this document or a Provisional Allotment Letter is

required to disregard them, except with the consent of the Company.

However, in order to facilitate acceptance of the offer made to such Qualifying Shareholders by virtue

of such publication, Provisional Allotment Letters will also be posted to Qualifying Non-CREST

Shareholders who are Overseas Shareholders (other than, subject to certain exceptions, to those with

registered addresses in, or who are resident in, the United States or any of the Excluded Territories).

Such Shareholders, if it is lawful to do so, may accept the offer either by returning the Provisional

Allotment Letter posted to them in accordance with the instructions set out therein or, subject to

surrendering the original Provisional Allotment Letter posted to them, by obtaining a copy thereof

from the place stated in the notice and returning it in accordance with the instructions set out therein.

Similarly, Nil Paid Rights are expected to be credited to stock accounts in CREST of Qualifying

CREST Shareholders who are Overseas Shareholders (other than, subject to certain exceptions, those

with registered addresses, or who are resident in, the United States or any of the Excluded Territories).

7.7 Representations and warranties relating to overseas territories other than the United States and the

other Excluded Territories

(a) Qualifying Non-CREST Shareholders

Any person accepting and/or renouncing a Provisional Allotment Letter or requesting

registration of interests in Rights Issue Shares comprised therein represents and warrants to

AVEVA and each of the Underwriters that, except where proof has been provided to the

satisfaction of AVEVA and the Underwriters that such person’s use of the Provisional

Allotment Letter or the effecting of the instruction will not result in the contravention of any

applicable legal requirement in any jurisdiction: (i) such person is not accepting and/or

renouncing the Provisional Allotment Letter, requesting registration of the relevant Rights

Issue Shares or giving such instruction, from within the United States or any of the Excluded

Territories; (ii) such person is not in any territory in which it is unlawful to make or accept an

offer to subscribe for Rights Issue Shares or to use the Provisional Allotment Letter in any

manner in which such person has used or will use it or to give such instructions; (iii) such

person is not acting on a non-discretionary basis for, or on behalf of, or for the account or

benefit of, a person resident or located within the United States or any Excluded Territory or

any territory referred to in (ii) above at the time the instruction to accept, renounce or deal was

given; and (iv) such person is not acquiring Nil Paid Rights, Fully Paid Rights or Rights Issue

Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or

indirectly, of any such Nil Paid Rights, Fully Paid Rights or Rights Issue Shares into the United

States or any Excluded Territory or any territory referred to in (ii) above.

AVEVA and the Underwriters may treat as invalid any acceptance or purported acceptance of

the allotment of Rights Issue Shares comprised in, or renunciation or purported renunciation

of, a Provisional Allotment Letter if it: (i) appears to AVEVA and the Underwriters to have been

executed in or despatched from the United States or any Excluded Territory or otherwise in a

manner which may involve a breach of the laws of any jurisdiction or if they believe the same

may violate any applicable legal or regulatory requirement; (ii) provides an address in the

United States or any Excluded Territory (or any jurisdiction outside the United Kingdom in

which it would be unlawful to deliver such share certificates or sales advice); or (iii) purports

to exclude the warranty required by this section.

(b) Qualifying CREST Shareholders

A CREST member or CREST sponsored member who makes a valid acceptance in accordance

with the procedures set out in Section 4 of this Part IV (Terms and Conditions of the Rights

Issue) represents and warrants to AVEVA and the Underwriters that, except where proof has

been provided to the satisfaction of AVEVA and the Underwriters that such person’s acceptance

will not result in the contravention of any applicable legal requirement in any jurisdiction: (i)

such person is not within the United States or any of the Excluded Territories; (ii) such person

is not in any territory in which it is unlawful to make or accept an offer to subscribe for or

117


acquire Nil Paid Rights, Fully Paid Rights or Rights Issue Shares; (iii) such person is not

accepting on a non-discretionary basis for, or on behalf of, or for the account or benefit of, a

person located within the United States or any Excluded Territory or any territory referred to

in (ii) above at the time the instruction to accept was given; and (iv) such person is not

subscribing for or acquiring Nil Paid Rights, Fully Paid Rights or Rights Issue Shares with a

view to the offer, sale, pledge, resale, transfer, delivery or distribution, directly or indirectly, of

any such Nil Paid Rights, Fully Paid Rights or Rights Issue Shares into the United States or

any Excluded Territory.

7.8 Waiver

The provisions of this Section 7 and of any other terms of the Rights Issue relating to Overseas

Shareholders may be waived, varied or modified as regards specific Shareholder(s) or on a general

basis by AVEVA and the Underwriters in their absolute discretion. Subject to this, the provisions of

this Section 7 of this Part IV (Terms and Conditions of the Rights Issue) supersede any terms of the

Rights Issue inconsistent herewith. References in this Section 7 to Shareholders shall include

references to the person or persons executing a Provisional Allotment Letter and, in the event of more

than one person executing a Provisional Allotment Letter, the provisions of this Section 7 shall apply

jointly to each of them.

8. TAXATION

Certain information on taxation in the United Kingdom and the United States with regard to the Rights Issue

and the holding of Rights Issue Shares is set out in Part XII (Taxation) of this document. The information

contained in Part XII (Taxation) is intended only as a general guide to certain aspects of the current tax

position in the United Kingdom and the United States and Qualifying Shareholders in the United Kingdom

and the United States should consult their tax advisers regarding the tax treatment of the Rights Issue and

the holding of Rights Issue Shares in light of their own circumstances. Qualifying Shareholders who are

in any doubt as to their tax position or who are subject to tax in any other jurisdiction should consult

an appropriate professional adviser as soon as possible.

Qualifying Shareholders should note that the tax legislation of their jurisdiction of tax residence may, for

example, have an impact on the tax treatment of any dividends which they receive in respect of Rights Issue

Shares.

9. TIMES AND DATES

AVEVA shall in its discretion and after consultation with the Underwriters be entitled to amend the dates that

Provisional Allotment Letters are despatched or dealings in Nil Paid Rights commence and amend or extend

the latest date for acceptance under the Rights Issue and all related dates set out in this document and in such

circumstances shall announce such amendment via a Regulatory Information Service and notify the FCA

and, if appropriate, the Qualifying Shareholders. Qualifying Shareholders may not therefore receive any

direct further written communication of any such amendment.

If a supplement to the prospectus is issued by the Company two or fewer Business Days prior to the date

specified in this document as the latest date for acceptance and payment in full under the Rights Issue (or

such later date as may be agreed between the Company and the Underwriters), the latest date of acceptance

under the Rights Issue shall be extended to the date which is three Business Days after the date of issue of

the supplement to the prospectus (or such later date as may be agreed between the Company and the

Underwriters), and the dates and times of principal events due to take place following such date shall be

extended accordingly.

10. AVEVA GROUP SHARE PLANS

The number of Ordinary Shares subject to awards or options outstanding under the AVEVA Group Share

Plans, the exercise price (if any) and any applicable performance conditions may be adjusted, in accordance

with the rules of the relevant AVEVA Group Share Plan, to take account of the issue of the Rights Issue

Annex 12, 4.5

118


Shares pursuant to the Rights Issue. Participants in the applicable AVEVA Group Share Plans will be notified

of any adjustment separately.

11. EMPLOYEE SHAREHOLDERS

To the extent that employees are also Shareholders, their Ordinary Shares will be treated in the same way in

the Rights Issue as Ordinary Shares held by any other Shareholder. Such treatment is detailed in this

document but any further queries should be directed to Link Group on +44 (0) 371 664 0321. Calls are

charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be

charged at the applicable international rate. The helpline is open between 9.00 a.m. and 5.30 p.m. (London

time), Monday to Friday excluding public holidays in England and Wales. Please note that Link Group

cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and

training purposes.

If the employee Shareholder holds Ordinary Shares through a nominee arrangement, the employee may need

to instruct the nominee, for example, whether or not to accept the rights attaching to the employee’s Ordinary

Shares. Employee Shareholders will be contacted in due course in this regard.

12. GOVERNING LAW

The terms and conditions of the Rights Issue as set out in this document and the Provisional Allotment Letter

shall be governed by, and construed in accordance with, the laws of England and Wales (including, without

limitation, any non-contractual obligations arising out of or in connection with the Rights Issue and, where

appropriate, the Provisional Allotment Letter).

13. JURISDICTION

The courts of England and Wales are to have exclusive jurisdiction to settle any dispute which may arise out

of or in connection with the Rights Issue, this document or the Provisional Allotment Letter (including,

without limitation, disputes relating to any non-contractual obligations arising out of or in connection with

the Rights Issue, this document or the Provisional Allotment Letter). By accepting rights under the Rights

Issue in accordance with the instructions set out in this document and, in the case of Qualifying Non-CREST

Shareholders only, the Provisional Allotment Letter, Qualifying Shareholders irrevocably submit to the

jurisdiction of the courts of England and Wales (including, without limitation, in relation to any disputes

relating to any non-contractual obligations arising out of or in connection with the Rights Issue, this

document or the Provisional Allotment Letter) and waive any objection to proceedings in any such court on

the ground of venue or on the ground that proceedings have been brought in an inconvenient forum.

119


PART V

INFORMATION ON THE AVEVA GROUP

1. Introduction

AVEVA Group plc is one of the world’s leading engineering, planning and operations, asset performance,

and monitoring and control software providers to the process, batch and hybrid industries. The AVEVA

Group is headquartered in Cambridge, UK. It employs over 4,600 people and has offices across 40 countries,

serving over 16,000 customers globally.

2. Business Overview

The AVEVA Group’s world-leading technology was originally developed at the Computer-Aided Design

Centre, a UK Government research laboratory formed in 1967, privatised in 1983 and later listed on the

London Stock Exchange in 1996 as CADCentre. The Company was renamed ‘AVEVA’ in 2001. The AVEVA

Group became a global leader in industrial software on 1 March 2018 when it combined with the Schneider

Electric Software Business. The combination brought together two complementary offerings to create a

complete end-to-end asset lifecycle software solution and significantly diversified AVEVA’s industry

verticals and geographic scale. It also established a strategically important relationship with Schneider

Electric, both as a business partner and as a majority shareholder in AVEVA. AVEVA creates software that

enables people to engineer, operate and maintain complex industrial assets safely, efficiently and cost-

effectively. AVEVA’s software transforms opportunities into business value across diverse markets,

particularly for the process, batch and hybrid industries. AVEVA offers a broad portfolio of software

solutions spanning the entire operational life cycle of many of the world’s major industries such as energy,

power generation, marine, food and beverage, mining and infrastructure.

2.1 Business Units

The AVEVA Group has four business units: Engineering; Monitoring & Control; Asset Performance

Management; and Planning & Operations:

• Engineering: the largest of AVEVA’s business units, representing 43 per cent. of total revenue

in FY 2020, while achieving 25.0 per cent. growth in subscription licences. Engineering

primarily consists of engineering, design, simulation and project management software to

reduce capital project time and cost. AVEVA’s offering covers every stage of the project

process from initial planning and procurement, through to construction and handover, enabling

customers to increase insight, automate workflows and minimise risk. Key products include

AVEVA E3D Design, AVEVA PRO/II and AVEVA Process Simulation;

• Monitoring & Control: represented 31 per cent. of total revenue in FY 2020, while achieving

158.0 per cent. growth in subscription licences. The Monitoring & Control solutions,

comprising HMI/SCADA products, make the most of IIoT data by turning raw information into

valuable insights for customers. Key products include AVEVA Systems Platform and AVEVA

InTouch HMI;

• Asset Performance Management (“APM”): represented 14 per cent. of total revenue in

FY 2020, while achieving 262.5 per cent. growth in subscription licences. APM solutions

maximise returns on industrial assets by increasing reliability, safety and efficiency using AI

driven advanced analytics and asset visualisation. AVEVA’s APM offering is strongly

differentiated and 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 enables

companies to reduce unscheduled downtime, prevent equipment failures, reduce maintenance

costs, increase asset utilisation, extend equipment life and identify underperforming assets.

Annex 3, 5.1

120


Key products include AVEVA Predictive Analytics, Asset Information Management and

AVEVA Asset Strategy Optimization; and

• Planning & Operations: represented 12 per cent. of total revenue in FY 2020, while achieving

68.3 per cent. growth in subscription licences. Planning & Operations solutions are divided into

Planning & Scheduling and Operate & Optimize segments. Planning & Scheduling software

maximises profitability for customers across the supply chain and Operate & Optimize

solutions drive profitability and safety in manufacturing and support manual and automated

production lines. Key products include Spiral Unified Supply Chain Management and AVEVA

Manufacturing Execution System.

2.2 Revenue Models

AVEVA is driving a business model transition with the strategy to increase levels of recurring

revenue. The transition to greater levels of recurring revenue is expected to increase long-term free

cash flow generation. The AVEVA Group currently generates revenue in four main revenue streams:

• Subscription: Subscription revenue consists of a number of non-cancellable, fixed term

subscription models including on-premise rental contracts, token contracts, Cloud hosted

software and Software as a Service (“SaaS”). Subscription revenue grew by 45.2 per cent. to

£316.8 million in FY 2020, from £218.2 million in FY 2019. This was driven by growth in

subscription revenues across all regions, and reflects a change in customer buying behaviour

from perpetual licences (as described below) to subscription licences, helped by the

introduction of AVEVA Flex, an increased number of multi-year contracts and a move from

maintenance contracts to subscriptions. AVEVA Flex is a token-based way for customers to

purchase credits which can be applied to access AVEVA products and allows the subscription

to scale with customer growth and development. New sales force incentives have been

introduced to promote sales of subscription licences over perpetual licences.

Rentals consist of two separate components: a software licence and support and maintenance,

which are two distinct performance obligations.

SaaS subscriptions are agreements with customers to provide the right to access software. The

software, maintenance and support, and hosting elements are not distinct performance

obligations, and represent a combined service provided to the customer;

• Maintenance: Maintenance includes annual fees relating to previous initial licence contracts

and separate support and maintenance contracts relating to perpetual licences. Customers that

have purchased an initial licence pay obligatory annual fees each year. These annual fees

consist of the continuing right to use, and support and maintenance, which includes core

product upgrades, enhancements and remote support services. Users that originally purchased

initial licences must continue to pay annual fees in order to maintain the right to use the

software. Customers that have purchased a perpetual licence have the option to pay for support

and maintenance;

• Perpetual licences: Perpetual licences represent an up-front cost to the customer which is

non-recurring. Initial and perpetual licences provide the customer with the right to use the

software and are distinct from other services; and

• Services: Services consist of consultancy, implementation services and training.

Of these revenue streams, the AVEVA Group categorises subscription and maintenance revenue as

recurring revenue and across the AVEVA Group, 62.2 per cent. of revenue was recurring in FY 2020.

Overall, revenue increased by 8.8 per cent. in FY 2020, with subscription revenue increasing by

45.2 per cent. to £316.8 million, maintenance revenue increasing by 3.8 per cent. to £201.7 million,

perpetual licence revenue decreased by 15.3 per cent. to £179.3 million and services revenue

decreasing by 4.5 per cent. to £136.0 million. The growth in subscription revenue accompanied by the

corresponding decrease in perpetual revenue reflects more customer orders shifting to subscription in

121


line with AVEVA’s strategy. In addition, the lower level of growth in maintenance revenue in FY 2020

was due in part to certain customers transitioning from maintenance contracts to higher value

subscription contracts.

2.3 Recent Product Developments

Several key products were launched on AVEVA Connect, the Group’s Cloud platform in H1 2021.

These included: AVEVA Unified Engineering, providing key engineering products such as E3D,

Engineering and Simulation in a single cloud environment; AVEVA Unified Supply Chain; and

AVEVA Insight Guided and Advanced Analytics

3. Market Trends

The key market trends which affect the AVEVA Group are technological megatrends, which shape the

industrial software market and have a direct impact on the AVEVA Group and its competitors.

The COVID-19 pandemic however is likely to have an impact on the industrial software market in the short

to medium term due to the disruption to the businesses of customers, weakness in the oil and gas market and

substantial economic uncertainty. In the long term, it may also influence the behaviour of customers and

consumers and encourage the adoption of digital solutions, as the Directors believe that digital solutions

offered by AVEVA can help customers to build more resilient, flexible businesses.

The industries that AVEVA serves are making increasing use of technology to reduce both capital and

operating costs in the context of competitive pressures to increase efficiency, output, flexibility and improve

overall sustainability. This is being enabled by ongoing technological megatrends that are driving the

digitalisation of the industrial world, notably the IIoT, Cloud, Data Visualisation and Artificial Intelligence.

The Directors believe that AVEVA is well placed to help its customers digitalise and build momentum

towards a sustainable future, due to its end-to-end product portfolio, which runs from simulation through

design and construction and into operations:

• Industrial Internet of Things: The IIoT is transforming how companies operate and represents a

new way to combine previously inaccessible data streams in order to provide a more holistic view of

a business, or particular process. Increasingly, ‘smart’ devices are connected to the internet and are

able to share data via networks, which can be used by operators to make real-time decisions with a

more accurate picture of the situation. IIoT has also been identified by the World Economic Forum as

a gamechanger for sustainability and while predominant sustainability applications focus on energy

savings, the technology has the potential to enable broader science-based sustainability measures for

customers. Historically, cost represented a significant barrier to enabling many devices with the

ability to collect, process and transmit significant amounts of data, though the barriers to adopting

IIoT have fallen dramatically over the last decade. Unlike many competitors, the AVEVA Group’s

software is ‘platform and hardware agnostic’ meaning that it can communicate with diverse devices

using different operating systems and aggregate the data they collect, providing new insights into

industrial processes;

• Cloud: Cloud enables greater transparency, flexibility, agility, and scalability across value chains by

using the full breadth of the internet to deliver computing resources. Information can be consolidated

from multiple sources and presented, in context, on any connected device and teams can securely

share operational information with colleagues and suppliers worldwide. With data available

anywhere, anytime on any device, companies can better manage the cost of ownership of industrial

assets. AVEVA’s Cloud products are designed to be flexible, scalable and available everywhere and

are offered in each of AVEVA’s business units. AVEVA Connect is AVEVA’s Cloud-based software

platform, it enables customers to leverage AVEVA’s product base in the Cloud and add analytics that

span the software stack while also driving improved sustainability performance as a result of reduced

energy consumption and wastage. As data is integrated, users gain intelligence that allows business

optimisation. More comprehensive data, together with Cloud analytics, can transform the capabilities

of the human workforce for customers, enabling management of more complex tasks;

Annex 3, 5.1(b)

LR 13.4.1(2)

Annex 1, 10

Annex 3, 6.1

122


• Data Visualisation: Manufacturers collect broad, accurate, live data through digital manufacturing

systems and need the ability to quickly analyse that data for insight. Data Visualisation is the means

for operational teams to explore and understand performance to optimise their processes, and makes

it easier to spot patterns and understand opportunities as they happen. Connected teams are turning to

software that allows them to visualise data to reveal efficiencies and potential failures before they

occur, using powerful AI-infused analytics that enhance decision making. Combined with multi-

experience capabilities that ensure consistent user experience across on-premise, field, and remote

locations, Data Visualisation can transform operational decision making for the better, as well as

enhancing health, safety and environmental performance. AVEVA Extended Reality (“AVEVA XR”)

incorporates augmented reality, virtual reality and mixed reality into a single suite of industrial

software in order to increase the efficiency and longevity of assets, and help customers to make better

decisions in the course of their operations. AVEVA XR enables employees to be connected with

assets, documentation and real-time information from assets, informing decision-making and

enabling efficient execution of tasks. For example, AVEVA XR can assist a manufacturing customer

with a procurement project to purchase new machinery, by enabling them to visualise the new device

in a virtual reality environment to predict how it would perform before deciding whether to incur the

time and expense of physical testing. AVEVA XR can also be integrated into the training programs for

customers, allowing their employees to access training at any time, remotely via the Cloud,

simultaneously advancing sustainability by reducing their carbon footprint; and

• Artificial Intelligence: Computer systems can use data on assets’ past performance, combined with

live plant data and machine learning models, to extrapolate the future and associated risk. Applying

Artificial Intelligence-infused metrics to industrial settings is transforming operations and risk

management across industries. The AVEVA Group’s market leading Artificial Intelligence

technologies help customers to improve industrial processes, proactively detect and solve problems

and provide guidance for risk-based decisions, helping to drive significant cost savings and improved

competitiveness and sustainability for customers. This technology assists customers by highlighting

anomalies in the performance of processes, equipment and assets using advanced pattern recognition

combined with machine learning, helping to anticipate potential equipment failures, process

inefficiencies or engineering errors, which can in turn improve the safety of customer employees, help

limit operational risk and capital expenditure by helping prevent asset failure. Artificial Intelligence

can take millions of data points, continuously monitor systems, and make rapid changes to processes

to ensure a plant is operating at peak efficiency at all times and tracking to meet sustainability key

performance indicators, such as targets to reduce greenhouse gas emissions. AVEVA applies industry

and asset specific algorithms, combined with advanced modelling techniques to identify anomalies

within customer processes at an early stage, helping to accelerate the resolution of any issues.

4. Principal markets

The AVEVA Group is substantially diversified, providing services to customers across three major

geographies and a breadth of industries.

4.1 Geographic regions

The AVEVA Group’s business is divided into three geographic regions: Asia Pacific; Europe; Middle

East and Africa (EMEA); and Americas. In FY 2020, the AVEVA Group delivered growth across each

geographic region, with good performance and execution of sales via both direct and indirect sales

channels, including sales made through the AVEVA Group’s partner network and via Schneider

Electric.

LR 13.4.1(2)

Annex 1, 10

123


Regional Revenue per Revenue Type Regional Revenue per Financial Year–––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––

FY 2020 FY 2019 FY 2018 ––––––––– ––––––––– ––––––––– (£, millions)

EMEA

Subscription 140.0 107.2 39.1

Maintenance 67.9 71.7 34.9

Perpetual licences 69.6 86.6 51.6

Services 49.6 48.8 35.2 ––––––––– ––––––––– –––––––––Total EMEA 327.1 314.3 160.8

––––––––– ––––––––– –––––––––Americas




Services 54.5 65.8 56.8 ––––––––– ––––––––– –––––––––Total Americas 279.2 272.8 223.1

––––––––– ––––––––– –––––––––Asia Pacific




Services 31.9 27.8 25.0 ––––––––– ––––––––– –––––––––Total Asia Pacific 227.5 179.5 102.4

––––––––– ––––––––– –––––––––Overall revenue increased by 4.1 per cent. in EMEA in FY 2020, driven by growth in Russia and CIS

in the oil and gas, power and industrials markets, supported by collaboration with Schneider Electric.

Overall revenue increased by 2.3 per cent. in the Americas and grew in both North America and Latin

America, with Brazil performing well due to new customers and expansion deals in FY 2020.

In Asia Pacific, overall revenue increased by 26.7 per cent. Australia and India delivered strong

growth, while growth in China was solid despite the impact of the COVID-19 pandemic in the fourth

quarter of FY 2020.

4.2 Customers

AVEVA primarily serves process, batch and hybrid, marine, utilities and infrastructure customers.

These industries provide staple requirements for basic consumption, such as energy, food, and

transport. As such, these industries have some level of resilience, which has been further demonstrated

during the recent COVID-19 pandemic related macroeconomic downturn.

AVEVA’s largest customer group is oil and gas at around 40 per cent. of revenue, with around

10 per cent. of revenue exposed to upstream greenfield capex in the sector. Within oil and gas the

AVEVA Group’s business is diversified across the capital and operational expenditure phases of the

asset life cycle, with AVEVA supplying customers in the upstream, midstream and downstream

markets.

The AVEVA Group has become more diversified since the combination with the Schneider Electric

Software Business. Packaged goods (such as food and beverage and pharma), power, marine,

chemicals and petrochemicals, and metals and mining each accounted for 5 to 10 per cent. of the

AVEVA Group revenue. Other customer groups include water and wastewater, infrastructure and

discrete manufacturing. The AVEVA Group’s other customers are largely non-cyclical and are

primarily driven by structural growth as industries make increasing use of technology to drive

efficiency.

124


AVEVA has a strategy to grow in new segments, such as the infrastructure around cities, water and

wastewater utilities, power utilities, facility and energy management, transportation operators and

datacentres.

AVEVA has low customer concentration, with over 16,000 customers in FY 2020, with the AVEVA

Group’s top 20 customers in FY 2020 accounting for only 15.9 per cent. of total revenue.

5. Sales channels

In FY 2020, the majority of AVEVA’s revenue was derived from its direct sales force. Performance from the

direct sales channels was strong, benefiting from investment in systems and sales operations and revised

sales incentive structures to encourage recurring revenue growth with a focus on driving subscription

revenue versus perpetual licences.

AVEVA Group also sells indirectly through strategic partners and third-party distributors. AVEVA has

invested in and simplified its partner network, including enabling Schneider Electric to process sales leads

through this channel. Revenue from indirect sales channels accounted for approximately one third of revenue

in FY 2020 and revenue from indirect channels grew across all regions. For FY 2020, AVEVA introduced

the AVEVA Select programme, which provides its partners with the opportunity to become distributors of

the full AVEVA portfolio.

As part of the partner network simplification, AVEVA divested distributors in Italy, Germany and

Scandinavia. This had an immaterial impact on its FY 2020 financial results.

AVEVA has made substantial investments in sales and marketing to drive future growth, including further

strengthening of the marketing team and expansion of the sales force. These investments have also included

investments in customer events to showcase AVEVA’s enlarged product portfolio.

6. Key strengths of the AVEVA Group

The Directors believe that the key strengths of the AVEVA Group are:

6.1 The AVEVA Group offers products and services across the life-cycle of customer assets

Unlike many competitors, the AVEVA Group offers products and services which span the life-cycle

of customer assets, meaning that the AVEVA Group is well placed to generate revenue throughout the

initial design phases of a project, during design, engineering and construction and play a significant

role in the ongoing monitoring and maintenance of assets during their operation.

6.2 The AVEVA Group has a proven track record of commercialising high value products across its

four business units and continues to make substantial investments in research and development of

new products

The AVEVA Group has approximately 1,400 employees engaged in research and development

activities and invested £120.7 million (before amortisation of intangible assets and exceptional items)

in research and development in FY 2020, representing a 5.4 per cent. increase from FY 2019. The

AVEVA Group seeks to develop proprietary technology, as well as making strategic acquisitions, in

order to enhance the AVEVA Group’s portfolio and outpace competition. The AVEVA Group’s

research and development efforts include a focus on innovative technologies, such as Cloud

computing and Artificial Intelligence. AVEVA Group’s continued investment in research and

development seeks to ensure AVEVA remains competitive and ensures that it can continue to meet the

needs of customers in the future.

6.3 The AVEVA Group’s products serve a wide range of industries

The AVEVA Group is able to deploy its core technologies across a wide range of industries. For

example, AVEVA’s Monitoring & Control technology is used in industries as diverse as oil and gas,

smart cities, data centres, pharmaceuticals and food production. AVEVA has acquired knowledge of

the way that the industries it serves operate over decades, making its position difficult to replicate.

125


The AVEVA Group continues to partner with specific customers to help the digital transformation of

their businesses, often providing multiple AVEVA products at a single site or facility to scale up the

benefits of increased operational data to improve performance.

The AVEVA Group’s customers are designing, building, operating and maintaining highly complex

assets, some of which cost billions of dollars that require many skilled professionals across a broad

range of disciplines and specialities. Managing these environments is complex and changing market

conditions have further increased the challenge. The AVEVA Group’s software solutions help its

customers meet these challenges by giving them the engineering, design and operations management

software tools they need to create a more agile and high performance business. At the core of this lies

the AVEVA Group’s concept of the Digital Twin, which blends asset, process and production data

together to create a holistic view of the business. The AVEVA Group has built a leading position in

the process, batch and hybrid industries over many years. The AVEVA Group’s customers include

many of the world’s largest energy, utilities, food and beverage, infrastructure and chemical

companies. By partnering with the AVEVA Group, customers can create a trusted source of

information that is accessible throughout the entire life cycle of an asset; from front-end engineering

and design to production operations and performance and ultimately to decommissioning. This

strategy means that EPCs and shipbuilders can achieve greater project predictability and owner-

operators can improve productivity, performance, safety and reliability.

6.4 AVEVA software provides a data-driven approach to maximising capital project and asset

performance and increasing efficiency for customers

AVEVA’s design solutions utilise a proprietary database technology called Dabacon. This object

oriented, information-centric database creates a tight integration among AVEVA’s software

applications, enabling them to share data seamlessly without the need for any additional middleware.

The Dabacon database is therefore not reliant on any third-party software and is highly-customisable.

Using AVEVA’s programming tools, customers are able to build their own customisations around the

AVEVA design solutions, enabling them to automate routines, spread best-practice within their design

organisations and achieve greater efficiency as they embed their expertise and know-how for greater

competitive advantage.

Within AVEVA’s asset performance solutions, machine learning and advanced pattern recognition

enable customers to more accurately predict, and proactively mitigate or resolve, issues before they

can have a material impact on a customer’s business or assets. This is a key strength of the AVEVA

Group, as it enables customers to save costs which might otherwise have been incurred if an asset was

to experience unplanned downtime or suffer a malfunction. This enables customers to be more

efficient in planning for maintenance time as part of their usual operations. Increasingly, ‘edge’

devices are being deployed and connected to customer networks, meaning that more data is available

to extrapolate and model customer processes by using devices connected to customer infrastructure

such as sensors, valves, pumps or field devices. The growth in data available means that the AVEVA

Group’s Artificial Intelligence and machine learning products can be more accurate in making

predictions about a customer’s business and helping to manage resources, which means that such

solutions are increasingly valuable to customers.

6.5 The AVEVA Group’s software can be deployed alongside a customer’s existing technology

Unlike many competitors, AVEVA Group products are designed to be ‘platform agnostic’, meaning

they can run in conjunction with existing devices and customer software. This means that the AVEVA

Group’s products are easier to integrate with a customer’s existing investments, and removes barriers

to certain customers who might not otherwise purchase the AVEVA Group’s products if they were

incompatible with other customer solutions or require an expensive retrofit programme.

126


6.6 AVEVA software provides customers with new ways to minimise risk using innovative technologies

such as Artificial Intelligence, machine learning and mixed reality

The AVEVA Group’s customers benefit from the improved reliability, performance and safety that the

AVEVA Group’s software products can deliver by applying advanced Artificial Intelligence, machine

learning and mixed reality solutions. Machine learning and Artificial Intelligence leverage industrial

data in order to draw conclusions about the performance of customer assets, and can use pattern

recognition in order to provide early warning of anomalies in operations which could lead to a serious

equipment fault, which could be expensive and time consuming for customers to remedy. The AVEVA

Group’s broad ranging, innovative and advanced software offering can therefore be valuable in

mitigating costs for customers.

6.7 The AVEVA Group has a sophisticated partner network to gain access to new markets and

customers.

The AVEVA Group works with a network of over 5,000 partners, including system integrators and

distributors, as well as major strategic partners, most notably Schneider Electric. These partners

function as indirect distributors, with indirect sales representing approximately one third of total

revenue in FY 2020. The partner network is a key strength of the AVEVA Group, enabling them to

reach over 16,000 customers in over 100 countries.

6.8 The AVEVA Group has a management team with a track record of successfully executing the

AVEVA Group’s strategy and delivering and integrating high-quality acquisitions

The AVEVA Group has a proven track record of acquiring best-in-class businesses and technology and

integrating them successfully, details of which are further described at Section 8 of this Part V

(Information on the AVEVA Group) below.

In particular, following the combination of heritage AVEVA and the Schneider Electric Software

Business in March 2018, the AVEVA Group management team has driven substantial progress in

integrating its set of solutions to help customers on their digitalisation journeys and in advancing its

strategic priorities in creating a best-in-class industrial software group by investing in next-generation

software to sustain long-term growth. The benefits of the combination and integration yielded results

in FY 2020 and the AVEVA Group delivered a strong finish to a successful year, growing total revenue

by 8.8 per cent., which together with improved operating margins, drove an adjusted diluted EPS

increase of 24.9 per cent.

6.9 The AVEVA Group has consistently high margins, cash flow conversion and quality of earnings

with an increasing proportion of annually recurring revenue

The AVEVA Group reported an Adjusted EBIT margin of 16.9 per cent., 26.0 per cent., 22.9 per cent.

and 22.2 per cent. respectively for H1 2021, FY 2020, FY 2019 and FY 2018. The AVEVA Group also

had a cash conversion rate of 42.1 per cent., 74.4 per cent., 96.1 per cent. and 84.4 per cent.

respectively for H1 2021, FY 2020, FY 2019 and FY 2018. Its recurring revenue as a proportion of

total revenue was 64.2 per cent., 62.2 per cent., 53.8 per cent. and 42.4 per cent. respectively for H1

2021, FY 2020, FY 2019 and FY 2018, with the improvement driven by growth in subscription

revenue as AVEVA moves away from selling perpetual licences.

7. Strategy and objectives

Customer demand for greater technological innovation combined with constantly changing global market

conditions have shaped the AVEVA Group’s strategy over the last five decades. The AVEVA Group’s broad

product portfolio of integrated software solutions provides end-to-end customer support and enables the safe

and efficient operation of industrial assets. AVEVA is a profitable company and its strategy balances the need

to maintain its investment in growth and opportunity alongside its strong financial operating discipline.

Key elements of the AVEVA Group’s strategy include:

127


• Driving the digitalisation of the industrial world. The AVEVA Group’s customers are increasingly

using technology to reduce capital and operating costs to increase efficiency, output and flexibility,

and improve sustainability, which has led to growth in the demand for industrial software. The

AVEVA Group believes it is optimally placed to help its customers digitalise due to a product portfolio

which spans simulation, engineering, design and operations. The AVEVA Group intends to continue

to capitalise on the increasing digitalisation trend and react to technological megatrends;

• Increasing recurring revenue. The AVEVA Group is focused on increasing recurring revenue as a

proportion of total revenue and has been transitioning to a recurring revenue model, with more

customers accessing AVEVA products via subscription licence arrangements, rather than perpetual

licences. The transition to greater levels of recurring revenue is expected to increase long-term free

cash flow generation. Subscription offers customers benefits including greater flexibility, lower

upfront costs and simplicity in pricing. These benefits are reflected in the higher customer lifetime

value of a subscription model, as compared to a perpetual licence model. The AVEVA Group met its

medium target for recurring revenue in FY 2020, but increasing such revenue remains a key strategic

focus;

• SaaS and the Cloud. The AVEVA Group has been accelerating its Cloud roll-out, while increasing

investment in Cloud development. The AVEVA Group saw strong demand for Cloud-based solutions

during FY 2020 with both an increase in the volume of significant order wins and substantial

expansions from existing Cloud customers. However, the AVEVA Group’s strategy remains to grow

the Cloud-based portion of its business and increase investment in Cloud development. In April 2020,

AVEVA appointed a Chief Cloud Officer responsible for driving the Cloud portfolio and go-to-market

strategy. This appointment has been made principally to address the rapid shift in consumption

patterns in industrial software and position AVEVA both during the period of global disruption and in

a ‘new normal’ environment;

• Diversification of customers. The AVEVA Group has become more diversified as a result of the

combination with the Schneider Electric Software Business. The AVEVA Group is working to grow

in new segments, such as the infrastructure around smart cities, encompassing water and wastewater

utilities, power utilities, facility and energy management, transportation operations and datacentres;

and

• Direct and indirect sales channels. The combination with the Schneider Electric Software Business

has enabled the AVEVA Group to benefit from new indirect sales channels (with indirect sales

channels accounting for approximately one-third of revenue for the AVEVA Group in FY 2020). The

AVEVA Group has invested in its partner network and benefits from the close relationship with

Schneider Electric, which is able to process sales leads through the partner network. The AVEVA

Group has also divested three wholly-owned distributor businesses in Italy, Germany and

Scandinavia, resulting in £7.7 million of income in FY 2020, as part of the simplification of the

partner network and continues to focus on driving revenue from its indirect sales channels.

8. Acquisitions

The AVEVA Group has a proven track record of acquiring best in class businesses and technology and

integrating them successfully. The AVEVA Group’s acquisitions have supplemented its organic growth

strategy by broadening the AVEVA Group’s technology proposition and extending its addressable market

and customer base, whilst also expanding the geographic reach of the business.

Since its admission to listing on the Official List, the AVEVA Group has made the following acquisitions:

• 12 November 1998: the acquisition of the CADCentre business in Japan conducted by its distributor

Kyokuto Boeki Kaisha, which allowed the AVEVA Group to take full control of its sales and support

operations in Japan;

• 30 March 1999: the acquisition of the PASCE 3D design software and customer base of AEA

Technology from a subsidiary of AEA Technology plc. This acquisition increased the AVEVA Group’s

customer base and broadened its product portfolio;

128


• 13 September 1999: the acquisition of the SCOPE (renamed FOCUS) project management suite from

Kvaerner AS;

• 2 December 1999: the acquisition of VANTAGE plant data management system for large engineering

projects from Kvaerner AS, which contributed to the AVEVA Group’s ability to move into strategic

services related to the engineering activities with major process plant builders and operators, building

on long-term relationships with these departments;

• 7 September 2000: the acquisition of the software rights to the Open Plant Environment technology,

which is an important element of the AVEVA NET™ solution;

• 19 May 2004: the acquisition of Tribon Solutions AB, a global provider of design software and

services to the marine industry, from Access Equity Partners, which supplemented AVEVA’s domain

expertise, technology and customer base and enhanced the AVEVA Group’s global presence,

particularly in Asia Pacific;

• 31 March 2005: the acquisition of Reality Wave Inc., a software development company based in

Boston, Massachusetts, US, from Brook Venture Partners. This acquisition secured technology critical

to the AVEVA Group’s AVEVA NET™ solution;

• 29 September 2006: the acquisition of a source code licence for certain software from Spescom

Software Inc.;

• 30 March 2009: the acquisition of iDesignOffice Pty Ltd, a technology company based in Melbourne,

Australia. This acquisition brought best-in-class instrumentation engineering technology to the

AVEVA Group’s portfolio;

• 30 June 2010: the acquisition of Logimatic Software A/S from Logimatic Holdings AS and certain

shareholders, which extended AVEVA’s logistics and materials management offering in the plant and

marine industries;

• 30 June 2010: the acquisition of all assets relating to the oil and gas business of ADB Systemer AS.

This acquisition expanded the AVEVA NET™ enterprise solution and brought Operations Integrity

Management to owner-operators in the oil and gas industry;

• 7 October 2011: the acquisition of Z+F UK Limited, a UK company which produces, develops and

markets leading laser scanning software for the capture and management of laser scan data. This

acquisition enhanced AVEVA’s design automation solutions and helped the AVEVA Group to secure

an industry leading software technology that expanded its offering in the 3D data capture market,

while remaining fully independent from laser scanner hardware vendors. As a result of the acquisition,

AVEVA established a new global 3D data capture Centre of Excellence in Manchester, UK;

• 23 May 2012: the acquisition of the Bocad group of companies, including all intellectual property

rights, employees, contracts and assets, from the founders of the Bocad group. This acquisition

strengthened AVEVA’s 3D structural detailing capabilities for the plant, machine and fabrication

markets;

• 17 December 2012: the acquisition of all assets relating to the advanced visualisation and simulation

software of Global Majic Software, Inc., complementing AVEVA’s existing visualisation technology

by providing an immersive environment that enables virtual access to plant facilities for the purposes

of inspection, training and maintenance review, minimising the need to expose staff to on-site hazards;

• 5 January 2015: the acquisition of 8over8 Limited, which provided the software platform for AVEVA

to address the current global need for increased project control, capital discipline, minimising project

overruns, and delivering improved efficiency in operations;

• 22 June 2015: the acquisition of FabTrol Systems, Inc. from the Dowco Group of Companies. The

FabTrol software expanded the AVEVA Group’s fabrication portfolio and provided integration across

the steel fabrication value chain;

129


• 1 March 2018: the combination of the AVEVA Group with the Schneider Electric Software Business.

This transformational transaction for the AVEVA Group has led to a greater diversification for the

AVEVA Group as well as access to leading software tools from Schneider Electric’s operational

software suite. The combination also established a strategically important relationship with Schneider

Electric, both as a business partner and as a majority shareholder in AVEVA;

• 5 April 2019: the acquisition of AssetPlus software assets from MaxGrip, integrating predictive and

prescriptive analytics into the AVEVA Group’s asset performance management and boosting Artificial

Intelligence capabilities; and

• 26 March 2020: the acquisition of the trade and assets of MESEnter Co. Ltd, including the software

and intellectual property rights pertaining to ErrorSolver, a production accounting and hydrocarbon

loss management tool.

The AVEVA Group’s management team has successfully integrated new businesses into the AVEVA Group’s

then existing operations and executed a programme of targeted cost cutting and/or restructuring in order to

improve operational efficiencies and group profitability.

Following the combination with the Schneider Electric Software Business, the AVEVA Group has divested

of three wholly-owned distributor businesses in Italy, Germany and Scandinavia, resulting in £7.7 million of

income in FY 2020. Wonderware Italy was disposed of on 30 April 2019, Wonderware Scandinavia was

disposed of on 1 January 2020 and Schneider Electric Software Germany GmbH on 31 January 2020.

9. Research and development, patents and licences

The AVEVA Group has a significant research and development function aimed at developing existing

products as well as developing new ones. The AVEVA Group has millions of lines of proprietary code

utilised in its software products. The AVEVA Group seeks to protect these intangible assets principally

through copyright but also holds 137 patents to protect the AVEVA Group’s intellectual property, and was

awarded 16 new patents in FY 2020. In addition, the AVEVA Group registers trademarks for those of its

products and trade names which it views to be material to its business operations. The AVEVA Group has at

times utilised third-party code in its products when it is not practical to develop the code internally or where

it is more cost effective to licence in. There is a specific programme for the assessment of all third-party code

and the related licence agreements are reviewed by AVEVA’s legal team to ensure compliance. AVEVA has

a mature process for validating the integrity of the codebase in businesses that it acquires including checks

for third-party intellectual property.

10. Investments

Other than the Acquisition, the Company currently has no principal investments (in progress or planned for

the future on which the Directors have made firm commitments or otherwise) other than the subsidiaries and

subsidiary undertakings listed or referred to in the consolidated financial statements of the Company for

FY 2020 which are incorporated by reference into this documents as set out in Part XV (Documents

Incorporated by Reference).

11. Regulatory Environment

There have been no material changes in the Company’s regulatory environment since the period covered by

the latest published audited financial statements.

12. Competition

AVEVA operates in highly competitive global technology markets. Other technology companies could

acquire, merge or move into AVEVA’s market space to compete with AVEVA’s offering creating a material

threat, or existing competitors could respond quicker to market demands and trends resulting in reduced

market share and missed growth opportunities for AVEVA (see also risk factor 1.6).

Annex 3, 5.2

Annex 3, 5.1(b)(iii)

130


The AVEVA Group carefully monitors customer requirements, trends and other suppliers operating within

our chosen markets and invests in innovation to offer products to meet these market trends. The relationship

with Schneider Electric also provides the ability to offer complementary products to meet changing market

demands and competitive forces.

13. Real Property

AVEVA has minimal capital expenditure requirements and does not own any material properties. It leases

office facilities in several locations under operating leases.

Capital expenditure for property, plant and equipment was £6.3 million for H1 2021, £18.5 million for FY

2020, £7.4 million for FY 2019 and £4.9 million in FY 2018. These expenditures have primarily been for the

improvements to long leasehold buildings, purchase of computer equipment, fixtures and fittings and office

equipment and motor vehicles.

14. Insurance

AVEVA maintains insurance cover on all major risk areas of the AVEVA Group based on the scale of the risk

and availability of the cover in the external market. The AVEVA Group’s insurance cover includes directors

and officers’ liability, employer’s liability, workers’ compensation, property damage, business interruption,

primary public and product liability, personal accidents and travel, crime and professional indemnity.

The AVEVA Group has not made any material claims under any of its insurance policies in the last three

years.

15. Employees

15.1 The average number of persons employed by the AVEVA Group (including Executive Directors) for

FY 2020, FY 2019 and FY 2018 is set out below:

FY 2020 FY 2019 FY 2018 –––––––––– –––––––––– ––––––––––

Total number of employees (Headcount) 4,555 4,591 2,867

15.2 As at the Latest Practicable Date, the AVEVA Group employed 4,707 persons (including the

Executive Directors).

15.3 A breakdown of AVEVA employees by geographical location as at the Latest Practicable Date is as

follows:

Region Headcount–––––––– ––––––––––Americas 1,441

Asia-Pacific 1,774

EMEA 1,492 ––––––––Total 4,707

––––––––15.4 A breakdown of AVEVA employees by activity as at the Latest Practicable Date is as follows:

Function and Primary function Headcount–––––––––––––––––––––––––––– ––––––––––Administration 545

Research, development and product support 1,386

Sales and marketing 1,020

Project delivery and customer support 1,756 ––––––––Total 4,707

––––––––

131


PART VI

INFORMATION ON THE OSISOFT GROUP

1. Introduction

OSIsoft is a data historian and information management business providing real-time data management

systems worldwide to improve the operational efficiency of client businesses. OSIsoft is headquartered in

San Leandro, California, US. As of 31 December 2019, OSIsoft employed 1,421 employees and has offices

in 17 countries across North and South America, Europe, the Middle East, Asia, Africa and Australasia.

2. Business overview

2.1 General overview

OSIsoft is a data historian and information management software business providing real-time data

management systems worldwide to improve the operational efficiency of client businesses. It was

founded by Dr J. Patrick Kennedy in 1980 and introduced its first Plant Information System (the

“PI System”) to the market in 1985. By 2004, OSIsoft had developed into a business with a global

customer base, having installed its PI System in 100 countries worldwide. In 2019, OSIsoft moved

into Cloud computing with its launch of the OCS.

OSIsoft’s customer base is worldwide. As of 31 December 2019, OSIsoft has carried out installations

in 146 countries and, with 3,699 customers who have installed over 28,000 PI Servers which

generated $470.0 million in revenue in 2019. OSIsoft’s systems are widely used across the oil and gas,

manufacturing, energy, utilities, pharmaceuticals, and life sciences sectors as well as in data centres,

facilities, and the process industries. OSIsoft has also provided installations for the public sector and

government-owned entities.

2.2 Principal activities

OSIsoft’s principal systems offering is its PI System. This is proprietary, vendor-agnostic data

management software using a scalable architecture which, as of the date of this document, is able to

connect to more than 225 interfaces and collect high-frequency data in multiple formats, standards

and conventions. Data accessibility is central to the system’s capability. The PI System collects,

organises, analyses, visualises and shares large amounts of time-series and event-based data from

multiple sources for customers to access across business operations in order to deliver a range of

operational improvements. By consolidating and harmonising data into a uniform structure,

customers have access to an integrated information infrastructure, enabling them to make decisions

on the basis of accurate, complete and accessible data. As a consequence, by integrating the PI

System, OSIsoft customers are able to identify and troubleshoot issues, compare their past and present

operational performance, and increase asset health and process up-time. This has resulted in reduced

costs, new revenue streams, extended equipment life, increased production capacity, and improved

safety for employees.

In OSIsoft FY 2019, OSIsoft derived 98 per cent. of its total revenue from the PI System (including

maintenance, support and education fees) and 2 per cent. from professional services. OSIsoft is

comprised of a single business unit with an executive team overseeing all corporate functions. The

executive team consists of five members, the president, EVP Operations, SVP Sales, Marketing,

Business Development, SVP Customer Success, and SVP Engineering and Technology.

The PI System is comprised of three principal functions: (a) collecting data; (b) managing and

enhancing data; and (c) delivering data.

(a) Collecting data: the PI System uses four main ways to connect to the user’s PI Server and

enable data collection: PI Adapters, PI Connectors, PI Interfaces and PI Developer

Technologies.

LR 13.4.1(1)

LR 10.4.1(2)(b)

132


(i) PI Adapters: the latest set of data collection technologies that support IIoT data patterns

by sending data from remote assets and sensors to PI System storage options at the edge

(Edge Data Store), on-premises (PI Server), or cloud (OCS). PI Adapters are designed

to withstand harsh industrial environments with minimal intervention and are supported

on both Linux and Windows operating systems.

(ii) PI Connectors: a product portfolio which simplifies the process for connecting to new

data sources. PI Connectors scan a data source, which is then auto-configured on the PI

Server (as described below). Instead of having to create PI points manually during initial

set up or in the future, the PI Connector scans for a specific device protocol. This means

that data sources can begin sending data to the PI System with minimal configuration.

(iii) PI Interfaces: comprises different interfaces which enable data collection from external

data sources (e.g. customer assets and systems) regardless of device, standard, language,

delivery speed or format. OSIsoft offers more than 225 different interfaces for customers

to connect their assets to the PI Server.

(iv) PI Developer Technologies: a portfolio designed to support the development of custom

applications that ingest data from the PI System, as well as the integration of PI System

data with other applications and business systems such as Microsoft Office or SQL

Server, Enterprise Resource Planning systems, reporting and analytics platforms, web

portals, or geospatial and maintenance systems.

(b) Managing and enhancing data: the foundation of the PI System is the PI Server – a data

storage and distribution engine – which is surrounded by technologies that work together to

optimise data storage, transformation and delivery.

The PI Server is hosted by the client and receives data from sources across a client’s business

and consolidates this data into a single system, often (but not always) using its Asset

Framework. Asset Framework allows customers to organise and normalise vast amounts of

information into a standard view. Customers can use the Asset Analytics feature within Asset

Framework to easily configure streaming calculations. For example, using Asset Analytics,

instead of showing instantaneous energy usage, customers can configure daily, weekly, and

monthly average energy consumption and show over/under percentages relative to target.

Moreover, the Event Frame and Notifications feature within PI Server allows customers to

identify exception criteria for critical events and send email notifications to the right people and

systems to address the issue.

(c) Delivering data: The PI System provides multiple products which aim to get the right data to

the right tool, in the right context to empower customers to make timely and impactful

decisions. PI System client tools help users visualise and share data insights uncovered by PI

System data in a simple, accessible way for users. Selecting a few examples from the portfolio,

PI Vision is a web tool that brings PI Server data to tablets, phones or desktop for customers

to create and view process monitoring displays that can be shared across the organisation with

simply a hyperlink. PI DataLink brings PI Server data into Microsoft Excel so that users can

analyse operational data in a familiar, self-service reporting environment.

• Cloud services: OSIsoft delivers Cloud services using its OCS platform to allow

customers, solely within their own control, to aggregate data from on-premises PI

Servers. As an upcoming feature, OSC will be able to securely share operations data

with supply chain partners, downstream customers, and service and analytics providers.

OCS is a real-time data management system for unifying and augmenting critical

operations data from across an organisation to accelerate digital transformation.

Following its launch in 2019, OCS is currently used in several advanced partner

applications and there will be an increasing emphasis from OSIsoft on increasing sales

with respect to the OCS from 2021 onwards. OSIsoft expects to commercialise OCS in

2021.

133


• New OCS engineering programs are brought through the OSIsoft Lighthouse Program

as a final review of customer and use-case readiness. The OSIsoft Lighthouse Program

is a free, hands-on engagement process, providing customers with an opportunity to use

and provide feedback on some of OSIsoft’s pre-released products and functionalities,

which includes technical consultation with an OSIsoft software developer and product

manager. OSIsoft engages with these customers to align high-impact use cases with

program capabilities.

OSIsoft’s vision is to extend its on-premises PI System capabilities with OCS

capabilities (which are largely complementary) to enable further customer productivity

and efficiency gains within their operations and engaging a larger network of third-party

partners and the supply chain.

• Support services: OSIsoft offers a highly comprehensive, localised where possible,

24/7 product support (with limited staff on the weekend and public holidays) for its

customers from dedicated and highly trained employees. The company provides support

in 11 languages during local business hours and offers 24/7 cover in English across 17

countries. OSIsoft’s service function is well-staffed: approximately 23 per cent. of

OSIsoft staff provide support services and 25 per cent. of OSIsoft staff (Engineering) are

tasked with continuing to develop software solutions. As a result, as at the Latest

Practicable Date, OSIsoft’s support services were able to resolve 36 per cent. of all

technical support cases within 24 hours and 60 per cent. of cases within the same week.

Customers and partner are able to manage all of their interactions and engagement with

OSIsoft using its customer portal myOSIsoft.com and by phone.

• Partners: As at the Latest Practicable Date, OSIsoft has built an ‘ecosystem’ of more

than 500 global partners around its PI System product offering called the OSIsoft

Ecosphere. Of these partnerships, more than 300 have submitted detailed solutions and

are represented in OSIsoft’s Partner Marketplace. The Ecosphere provides a collection

of products, applications and services to customers in the OSIsoft Marketplace. OSIsoft

divides its partners into the following categories, which provide differing services to

customers depending on their aftermarket needs: (i) system integrator partners;

(ii) application provider partners which build applications and products extending the PI

System infrastructure; (iii) technology partners which provide complementary products

and services to OSIsoft’s offering; (iv) OEM partners which embed OSIsoft technology

into their own products and systems; (v) value-added resellers which sell their own

solutions within the PI System; and (vi) connected service partners which deliver

after-market services to customers.

Furthermore, OSIsoft has formed strategic alliances with other technology leaders so

that customers can easily connect the PI System and PI System data to other platforms

in their enterprises.

3. Principal activities

OSIsoft is the leading scaled pure-play real-time data acquisition and management platform in the IIoT

space. The company operates as an ‘operational historian’, meaning that its function is to enable customers

to: (a) store; (b) record; and (c) synchronise system and asset data across a range of processes and across a

variety of data inputs and data types to support data modelling, analytics, visualisation of data and reporting

capabilities. OSIsoft is a leading provider of operational historian software.

As a result of its market positioning, OSIsoft is well-placed to provide a data management platform within

the IIoT stack by collecting and harmonising data across industries. Its market offering fits neatly into the

IIoT tech stack by taking data inputs from customers’ hardware and sensor assets and harmonising that data

for use in customer-developed applications and solutions.

134


3.1 Geographic billings breakdown

OSIsoft’s customer base is worldwide. As of 31 December 2019, OSIsoft has carried out installations

in 146 countries and, with 3,699 customers who have installed over 28,000 PI servers.

OSIsoft’s billings by geographic area is principally generated in North America and Europe but it does

generate substantial billings from Latin America and Asia-Pacific.

Per cent. of total billings

Geographic area (OSIsoft FY 2019)––––––––––––––– ––––––––––––––––––––––––North American 48.8

European 29.5

Asia-Pacific 13.9

Latin American 7.8

3.2 Customers

As an operational historian and data platform, OSIsoft serves customers across a range of industries –

none of its competitors offers a comparable breadth of industrial customers.

OSIsoft’s primary customer groups are:

Per cent. of total billings

Industry sector (OSIsoft FY 2019)––––––––––––––– –––––––––––––––––––––––Power and utilities 31.4

Oil and gas – upstream, midstream and downstream 23.9

Others 7.3

Chemicals and Petrochemicals 12.1

Mines, Metals, Metallurgy and Materials 10.1

Pharmaceuticals, Food & Life Sciences 10.4

Pulp and Paper 4.8

Across these business sectors, OSIsoft provides services to over 1,000 of the world’s leading power

and utilities companies, 38 of the Global Fortune Top 40 oil and gas companies, all of the Global

Fortune Top 10 metals and mining companies, 37 of the 50 largest chemical and petro-chemical

companies and nine of the Global Fortune Top 10 pharmaceutical companies.

3.3 Sales Channels

OSIsoft uses an ‘ecosystem’ of strategic partners across different industrial sectors and levels in the

business service chain to service and grow its customer network.

OSIsoft has two primary sales channels: direct sales to customers through OSIsoft's account

managers, and channel sales through resellers that include OEMs, leveraging their existing market

penetration and knowledge. Direct sales accounted for a large portion of OSIsoft's billings, while

channel sales accounted for the remaining portion of billings in 2019.

(a) Direct customer sales

OSIsoft typically enters into software licence and services agreements (“SLSA”) or similar

arrangements with its direct sales customers. Under these arrangements, direct sales customers

agree to purchase non-exclusive software licences from OSIsoft through purchase orders that

set out pricing terms at a later date. OSIsoft determines the pricing for its products on a global

basis, providing pricing and discounting information to local affiliates. Most SLSAs span a

perpetual term and most allow the customer to terminate for convenience at any time. OSIsoft

also offers customers twelve-month software reliance programs for technical support and

future upgrade services.

135


The majority of OSIsoft’s SLSAs are supplemented by enterprise licences set out in enterprise

program agreements (“EPA”) pursuant to which OSIsoft’s customers agree to an initial licence

fee, with annual licence fees paid thereafter based on a percentage of the initial fee. The licence

fees under EPAs are based on business metrics (such as the number of employees at the

location of the software or barrels of oil produced) rather than data metrics. EPAs typically

have an initial five year term, with an option for either party to renew for one or two years.

(b) Channel sales through OEMs and resellers

Unlike OSIsoft’s direct customer agreements, which are typically perpetual licences with

recurring maintenance or service arrangements, distributor contracts contemplate ongoing

interaction between the parties during the term of the agreement and allow the distributor to

resell OSIsoft’s products to third parties. OSIsoft uses several types of standard, non-exclusive

distributor agreements including original equipment manufacturer agreements (“OEM

Agreements”) and value added reseller agreements (“VAR Agreements”). These agreements

allow the distributor to resell OSIsoft’s products to end customers as part of a bundle of

products offered by the distributor. OEM Agreements and VAR Agreements are typically for

limited terms with automatic renewal periods. Pricing is based on the number of data points

utilised by the end customer of the product package, with additional maintenance and upgrade

fees payable based on a percentage of the initial fee if the distributor is successful in selling

maintenance or service plans to the end customer.

OSIsoft has local sales support offices worldwide that provide feedback on any local market or

industry developments, through direct interactions with the customers to understand the

customers’ businesses and preferences. OSIsoft’s marketing efforts include participating in

trade shows, seminars and industry-specific conferences to increase OSIsoft’s exposure to

potential customers.

4. Recent business developments

• 11 June 2020: Mitsui Knowledge Industry Co., Ltd (“MKI”) announced it had signed a new VAR

Agreement with OSIsoft. Under the new agreement, MKI agrees to resell PI System licences.

• 21 May 2020: OSIsoft released a new version of PI Integrator for Business Analytics, which can

deliver operational data to a number of new data destinations including Google Cloud Storage and

SAP HANA. PI Integrator for Business Analytics extracts, harmonises and loads operations data from

the PI System to leading cloud and analytics platforms.

• 5 May 2020: OSIsoft announced general availability of Edge Data Store, which allows customers to

remotely monitor critical assets through the collection and management of data to improve uptime

while minimising the costs and safety risks involved with manual, in-person inspections.

• 31 January 2020: Mitsubishi Chemical Corporation (“MCC”) and OSIsoft announced an enterprise

agreement had been signed to accelerate MCC’s digital transformation. Under the enterprise

agreement, MCC will deploy OSIsoft’s PI System across its operations. The objective is for MCC to

use the PI System to improve operations at both its existing plants as well as at planned new facilities

abroad.

• Q1 2019, OSIsoft launched its customer portal, myOSIsoft. myOSIsoft functions as a hub for

customer and partners to manage their interactions with the company. Using the portal, customers and

create new cases, search old ones and streamline communications with its support teams, alongside

enabling customers and partners to search through OSIsoft’s knowledge base.

5. Strategy and objectives

OSIsoft’s objective is to deliver a vendor-agnostic enterprise data management platform connecting

sensor-based data, systems and people to create real-time, actionable insights which empower customers to

optimise and transform their businesses.

136


To achieve this objective, OSIsoft’s strategy is to focus on its customers’ longevity. By maximising

customers opportunities to transform their business, OSIsoft can provide value to companies throughout

their life cycles. The result of this approach is clear: OSIsoft has a high customer retention rate, as evidenced

by its average customer churn rate from 2007 to 2019 of only 1.3 per cent.

OSIsoft’s 5-year strategy for continued growth includes launching a subscription-based OCS Cloud product

in the first three months of 2021. This new Cloud product will evolve to significantly extend and enhance

the functions and features of the existing PI System opening the product to new users and applications and

benefitting customers, prospects and partners worldwide. The OCS technology developed for the Cloud will

form the basis of a new common technology platform for all OSIsoft products, offering additional

capabilities which will enable access to new markets and a range of new solutions from edge to Cloud.

6. Research and development (“R&D”), patents and licences

As a software provider, OSIsoft’s success relies on its design and product development activities and the

resulting technologies from such activities. OSIsoft’s R&D and product development team is engaged in

developing new products and improving existing products. Within OSIsoft’s R&D and product development

team, there are product management and product marketing teams that coordinate between the development

team and the sales and marketing teams in promoting OSIsoft’s products, gathering market intelligence, and

building up product roadmap on a global basis.

OSIsoft protects its software products by registering for United States copyright protection and keeping

certain information as trade secrets. Its approach to obtaining and maintaining protection for its intellectual

property is developed through a joint effort between its legal and marketing departments. OSIsoft maintains

a small portfolio of patents, most of which are registered in the United States. OSIsoft also has patents filed

in Australia, Brazil, Canada, China, Mexico, Japan, and with the World Intellectual Property Organization.

In addition, OSIsoft has registered trademarks worldwide in respect of the company’s name and logo as well

as product names.

OSIsoft has at times utilised third-party code and open source software in its business. Where it does use

open source software in its products, such software is licensed under permissive open source licences.

7. Competition

OSIsoft operates in a highly competitive global technology market. Data historian products are commonly

deployed as part of a wider software solution for customers. There are many larger global companies that

provide these broad software solutions to customers, which incorporate their own data historian offerings as

a functionality.

In addition, IT departments could elect to build similar products to that offered by OSIsoft internally.

In recent years, there have been a number of IIoT platforms and open source providers developing solutions

that allow customers to collect, organise and store multiple types of real-time and historical data coming

from various devices. These solutions serve the same purpose as data historian software.

8. Real Property

As of the Latest Practicable Date, OSIsoft did not own any real estate property and leased 27 office

properties, including seven properties located in the United States, with the remainder located in Australia,

Bahrain, Brazil, Canada, China, the Czech Republic, France, Germany, Japan, Mexico, Russia, Singapore,

Spain, South Korea, the UAE (Dubai) and the United Kingdom.

137


9. Employees

9.1 The number of persons employed by OSIsoft as at 31 December 2019, 31 December 2018 and

31 December 2017 is set out below:

As at As at As at

31 December 31 December 31 December

2019 2018 2017 –––––––––––– –––––––––––– ––––––––––––Total number of employees 1,421 1,388 1,316

9.2 A breakdown of OSIsoft employees by function as at 31 December 2019 is as follows:

Function––––––––––Operations 178

Sales & marketing 357

Engineering 346

Customer success 540 ––––––––Total 1,421

––––––––9.3 Key Employees

OSIsoft’s founder, Dr. J. Patrick Kennedy, will remain involved in the OSIsoft business through his

appointment to the newly established (non-Board) role of Chairman Emeritus and ongoing share

ownership in the Enlarged Group, in order to support the delivery of the full strategic, operational and

financial benefits of the Acquisition. Further details of the terms of the PK Employment Agreement

are set out in Section 9.1(l) of Part XIV(Additional Information).

LR 13.4.1(1)

LR 10.4.1(2)(j)

138


PART VII

OPERATING AND FINANCIAL REVIEW OF THE AVEVA GROUP

1. Overview

The AVEVA Group is one of the world’s leading engineering and industrial software providers serving the

process, batch and hybrid industries. These industries provide staple requirements for basic consumption,

such as energy, food, and transport. As such, they have some level of resilience to a macroeconomic

downturn. Over 16,000 customers rely on the AVEVA Group’s software solutions to make accurate and

timely design, engineering and business decisions across entire project and asset lifecycles.

Demand from the AVEVA Group’s customers is driven by long-term trends, such as the growing global

demand for energy of all kinds, the growing demand for raw materials and their transportation, the drive

towards a reduction in environmental impact and the lifetime extension of operating facilities. In addition,

the industries that AVEVA serves are making increasing use of technology to reduce both capital and

operating costs in the context of competitive pressures to increase efficiency output, flexibility and improve

overall sustainability. This is being enabled by the ongoing technological megatrends that are driving the

digitalisation of the industrial world, notably the IIoT, Cloud, Data Visualisation and Artificial Intelligence.

The Directors believe that AVEVA is well placed to help its customers digitalise, and key to the AVEVA

Group’s strategy is the digitalisation of the industrial world. AVEVA’s engineering, planning and operations,

asset performance, and monitoring and control solutions deliver proven results. Common to all of this is the

ability for customers to digitalise through AVEVA’s end-to-end product portfolio, which runs from

simulation through design and construction and into operations.

The AVEVA Group generates its revenue principally through the supply of subscriptions, maintenance,

perpetual licences, and services. Of these revenue streams, the AVEVA Group categorises subscription and

maintenance revenue as recurring revenue. Overall, revenue increased by 8.8 per cent. in FY 2020 compared

to FY 2019, with subscription revenue increasing by 45.2 per cent. to £316.8 million, maintenance revenue

increasing by 3.8 per cent. to £201.7 million, perpetual licence revenue decreasing by 15.3 per cent. to

£179.3 million and services revenue decreasing by 4.5 per cent. to £136.0 million. The AVEVA Group has

high levels of recurring revenue, with the transition to subscription driving an increase in recurring revenue

as a portion of overall revenue. Across the AVEVA Group, 62.2 per cent. of revenue was recurring in

FY 2020. In addition, as the majority of revenue is derived from software sales, AVEVA has enjoyed

historically high profit margins that have enabled strong cash generation and reinvestment in the AVEVA

Group’s technology to maintain and extend its competitive advantage. In H1 2021, AVEVA continued to

make strong operational and strategic progress, even though the disruptions of the COVID-19 pandemic

affected AVEVA's financial results. Revenue decreased by 15.1 per cent. in H1 2021 compared to H1 2020

primarily due to the challenging macroeconomic environment, as well as the effect of revenue from the prior

year being recognised upfront on certain contracts and the early renewal of a significant global account

contract in H1 2020, which caused approximately a £20 million pull forward of revenue into September

2019. In H1 2021, AVEVA continued to make progress in its business model transition, with recurring

revenue of 64.2 per cent. of total revenue during the period.

139


2. Key performance indicators

The table below sets forth the key performance indicators that AVEVA uses to track and measure the progress

of its business against its strategy.

Key Performance H1 2021 H1 2020 FY 2018

Indicator (unaudited) (unaudited) FY 2020 FY 2019 (restated)––––––––––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

(£, millions unless otherwise specified)

Revenue 332.6 391.9 833.8 766.6 486.3

Total revenue (15.1) per cent. 16.5 per cent. 8.8 per cent. 57.6 per cent.(1) n.a.(2)

growth(1)

Recurring revenue(3) 64.2 per cent. 61.9 per cent. 62.2 per cent. 53.8 per cent. 42.4 per cent.

(Loss)/Profit from (23.2) 25.5 95.0 47.2 36.7

operations

Adjusted EBIT(4) 56.3 90.6 216.8 175.9 108.0

Adjusted EBIT 16.9 per cent. 23.1 per cent. 26.0 per cent. 22.9 per cent. 22.2 per cent.

margin(5)

Cash conversion(6) 42.1 per cent. 48.0 per cent. 74.4 per cent. 96.1 per cent. 84.4 per cent.

Net cash(7) 59.8 58.6 114.6 127.8 95.8

Diluted EPS (pence) (12.60) 11.13 43.13 20.90 39.72

Adjusted diluted 28.26 43.31 108.15 86.60 71.42

EPS (pence)(8)

Growth in adjusted (34.7) per cent. 65.0 per cent. 24.9 per cent. 21.3 per cent. 5.7 per cent.

diluted EPS

(1) Total revenue growth is the percentage change in revenue compared to the corresponding prior period.

(2) Statutory results are stated under acquisition accounting principles and therefore the results for the 12 months to 31 March 2018

include 12 months of the Schneider Electric Software Business and one month of AVEVA Group revenue prior to the acquisition

of the Schneider Electric Software Business and do not represent a full year’s revenue from both businesses combined.

(3) Recurring revenue is defined as subscription plus maintenance revenue as a portion of total revenue.

(4) Adjusted EBIT is profit from operations before amortisation of intangible assets (excluding other software), share-based

payments, gain/loss on fair value of forward foreign exchange contracts, exceptional items and other income. The following table

sets forth a reconciliation of Adjusted EBIT to profit from operations:

H1 2021 H1 2020 FY 2018

(unaudited) (unaudited) FY 2020 FY 2019 (restated) –––––––– –––––––– –––––––– –––––––– ––––––––

(£, millions)

(Loss)/Profit from operations (23.2) 25.5 95.0 47.2 36.7

Amortisation of intangibles 45.8 45.3 90.6 88.1 45.2

(excluding other software) 4.6 6.4 12.0 11.2 1.4

Share-based payments

Loss on fair value of forward 0.1 0.1 0.4 0.5 0.1

exchange contracts

Exceptional items(*) 29.0 13.3 18.8 28.9 23.6

Other income – – – – 1.0

Adjusted EBIT 56.3 90.6 216.8 175.9 108.0

(*) Exceptional items include exceptional items relating to restructuring and the integration of heritage AVEVA and the

Schneider Electric Software Business, including acquisition and integration costs incurred relating principally to

consultancy fees paid to advisers and the costs of additional temporary resources required for the integration of heritage

AVEVA and the Schneider Electric Software Business, as well as severance payments in a number of global office locations.

In FY 2020, these items were partly offset by other income from a gain on sale of three wholly owned distributor businesses

in Italy, Germany and Scandinavia and certain reimbursements the Company received from Schneider Electric in connection

with the combination with the Schneider Electric Software Business.

(5) Adjusted EBIT margin is Adjusted EBIT as a percentage of total revenue.

(6) Cash conversion is a measure of how much of Adjusted EBIT is converted to Cash generated from operating activities before tax.

(7) Net cash is cash, cash equivalents and treasury deposits less borrowings.

(8) Adjusted diluted EPS has been calculated by dividing profit after tax for the year before amortisation of intangible assets

(excluding other software), share-based payments, gain/loss on fair value of forward foreign exchange contracts, exceptional

140


items and other income and the effect of acquisition accounting adjustments divided by the weighted average number of ordinary

shares adjusted for the effect of dilution. Where relevant this also includes the tax effect of these adjustments.

AVEVA presents the non-IFRS performance measure Adjusted EBIT on the face of its consolidated income

statement and adjusted diluted EPS in note 13 of the Company’s FY 2020 financial statements. The

adjustments made to profit from operations in the calculation of Adjusted EBIT and to profit after tax in

calculating adjusted diluted EPS have been made because the Directors believe that the adjusted earnings

measures presented provides a more reliable and consistent presentation of the underlying performance of

the AVEVA Group. Adjusted EBIT, Adjusted EBIT margin, adjusted diluted EPS, Cash conversion and Net

cash are not defined by IFRS and therefore may not be directly comparable with the same or similar

measures of other companies. Adjusted EBIT, Adjusted EBIT margin and adjusted diluted EPS, Cash

conversion and Net cash should not be considered in isolation or as substitutes for performance measures

calculated in accordance with IFRS.

3. Key trends and factors affecting AVEVA’s results of operations and financial condition

Combination with the Schneider Electric Software Business

On 1 March 2018, AVEVA acquired the Schneider Electric Software Business. For FY 2018, the AVEVA

Group’s consolidated financial statements comprise the results of the Schneider Electric Software Business

for the full year, and the results of AVEVA from 1 March 2018. For FY 2018, in accordance with IFRS 3,

the financial statements were prepared as a reverse acquisition of AVEVA by Schneider Electric. Therefore,

although the consolidated financial statements were issued in the name of AVEVA, the legal acquirer, the

AVEVA Group’s activity in FY 2018 is in substance the continuation of the financial information of the

Schneider Electric Software Business and includes the results of AVEVA for only one month prior to the

reverse acquisition. For FY 2019 and FY 2020, AVEVA’s consolidated financial statements comprise the

results of both the Schneider Electric Software Business and AVEVA for the full financial year.

After more than two years since the merger, the integration of the heritage AVEVA business and the

Schneider Electric Software Business is largely complete. AVEVA has implemented 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 research and development

effectiveness. The AVEVA Group targeted annualised cost synergies as part of the combination with the

Schneider Electric Software Business and by the end of the financial year achieved annualised savings of

approximately £33 million in FY 2020 compared to the target of £25 million. These savings have been re-

invested in capabilities to drive future revenue growth, such as research and development and investment in

sales and marketing.

Certain areas of the integration related to IT are still being completed. The IT transitional arrangements with

Schneider Electric which are still to be fully exited, are in two main areas: the transition of heritage

Schneider Electric offices onto the new AVEVA IT infrastructure, and the implementation of the new ERP

system which will replace the legacy systems in both businesses. These areas are progressing and are in

execution phase for end-user computing, applications, data, security, connectivity, systems and hosting.

However, the COVID-19 pandemic has disrupted activities with staff not being able to physically visit

offices and alternative plans were created and are now in place. As a result, negotiations with Schneider

Electric are ongoing in relation to an extension beyond the TSA end date of 31 August 2021 for ERP-related

services and 28 February 2021 for other ongoing services. Although certain residual and more specific risks

in relation to the integration remain, AVEVA considers these risks as captured and managed as functional or

programme risks and not principal risks to its business.

Demand for industrial software

The industries that AVEVA serves are making increasing use of technology to reduce both capital and

operating costs in the context of competitive pressures to increase efficiency, output and flexibility and

improve overall sustainability, leading to increased demand for industrial software in order to enable users

to operate and facilitate the adoption of new technologies. Ongoing technological megatrends (as identified

in Section 3 of Part V (Information on the AVEVA Group)) are driving the digitalisation of the industrial

world, in particular IIoT, Cloud, Data Visualisation and Artificial Intelligence, which in turn is driving

LR 13.4.1(2)

Annex 1, 10

Annex 3, 6.1

141


growth in demand for industrial software. The Directors believe that AVEVA is well placed to help its

customers digitalise and build momentum towards a sustainable future due to its end-to-end product

portfolio of industrial software solutions, which runs from simulation through design and construction and

into operations. IIoT represents a new way to combine previously inaccessible data streams in order to

provide a more holistic view of a business, or particular process. Increasingly, ‘smart’ devices are connected

to the internet and are able to share data via networks, which can be used by operators to make real-time

decisions with a more accurate picture of the situation. Historically, cost represented a significant barrier to

enabling many devices with the ability to collect, process and transmit significant amounts of data, though

the barriers to adopting IIoT have fallen dramatically over the last decade. The AVEVA Group’s software is

‘platform agnostic’ meaning that it can communicate with diverse devices, using different operating systems,

as well as various information systems and sources, providing new insights into industrial processes. Cloud

enables greater transparency, flexibility, agility, and scalability across value chains by using the full breadth

of the internet to deliver computing resources. AVEVA’s Cloud products are designed to be flexible, scalable

and available everywhere and are offered in each of AVEVA’s business units. Data Visualisation provides a

means for customers’ operational teams to explore and understand performance in order to optimise their

processes, and makes it easier to spot patterns and understand opportunities as they happen. For example,

by using AVEVA XR, which incorporates augmented reality, virtual reality and mixed reality into a single

suite of industrial software, customers may be able to increase the efficiency and longevity of their assets,

and AVEVA XR can help customers to make better decisions in the course of their operations. Applying AI-

infused metrics to industrial settings is also transforming operations and risk management across industries

and the AVEVA Group’s Artificial Intelligence technologies help customers to improve industrial processes,

proactively detect and solve problems and provide guidance for risk-based decisions, helping to drive

significant cost savings and improved competitiveness and sustainability for customers. AVEVA will need to

continue to make significant investment to meet the growing need for industrial software and remain relevant

to customer requirements, while ensuring its products are not superseded by products offered by competitors.

Transition to subscription-based model

A key driver of AVEVA’s business model is to increase its levels of recurring revenue through subscriptions

and the transformation of its services business. AVEVA expects that the transition to greater levels of

recurring revenue will also increase long-term free cash flow generation and help mitigate risks associated

with markets that are cyclical in nature, in particular since a subscription-based licensing model can offer

customers greater flexibility over their expenditure. Overall recurring revenue accounted for

64.2 per cent., 62.2 per cent., 53.8 per cent. and 42.4 per cent. of total revenue in H1 2021, FY 2020, FY 2019

and FY 2018, respectively.

AVEVA plans to continue to drive this change by growing software as part of its revenue mix and by

increasing the mix of subscription revenue as a proportion of new software revenue. Subscriptions revenue,

which includes rental contracts, token contracts and subscriptions, grew to £316.8 million in FY 2020

compared to £218.2 million in FY 2019 and £72.7 million in FY 2018. AVEVA continued to make strong

operational and strategic progress, even though subscriptions revenue decreased to £113.9 million in H1

2021 compared to £141.0 million in H1 2020 as a result of the challenging macroeconomic environment

and the prior-year effect of revenue being recognised upfront on certain contracts and the early renewal of a

significant global account contract in H1 2020, which caused approximately a £20 million pull forward of

revenue into September 2019.

In FY 2020, there was consistent growth in subscriptions across all regions, which also reflected a change

in customer buying behaviour from perpetual licences to subscription and was helped by the introduction of

AVEVA Flex, the increased number of multiyear contracts and a switch from maintenance contracts to

subscription. Furthermore, new sales force incentives to promote subscription over perpetual licences and

services contributed significantly to this growth. In addition, the AVEVA Group has seen very strong demand

for Cloud-based solutions with both an increase in the volume of significant order wins and substantial

expansions from existing Cloud customers. This strong demand helped the AVEVA Group achieve growth

of 50 per cent. in Cloud orders during H1 2021 compared to H1 2020. Growing recurring revenue and Cloud

remains a key focus and AVEVA expects to increase both during the current financial year. The Directors

believe subscription offers customers benefits including greater flexibility, lower upfront costs and

142


simplicity in pricing. These benefits are reflected in higher customer lifetime value of a subscription model

compared to a perpetual licence model.

Adjusted EBIT margin

In FY 2020, FY 2019 and FY 2018, AVEVA’s Adjusted EBIT margin was 26.0 per cent., 22.9 per cent. and

22.2 per cent., respectively. This growth has been driven by a positive sales mix, which benefited gross

margin, revenue growth driving operating leverage and underlying cost savings. AVEVA aims to continue to

increase Adjusted EBIT margins to 30 per cent. in the medium term. AVEVA currently expects margin

improvement 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. To

improve efficiency, AVEVA has focused on higher margin projects together with initiatives to increase

standard, repeatable solutions, which reduce the need for configuration and customisation. AVEVA has also

used more offshore service delivery teams in Mexico, Spain and India at lower cost to deliver projects. As

part of the services transformation programme, AVEVA has also embarked on a strategy to strengthen its

network of system integrators and provide them with the capability and skills to successfully implement

AVEVA’s products with a number of projects started in the year. Although progress has been made in these

areas, progress towards its medium term Adjusted EBIT margin target of 30 per cent. during the current

financial year has been impacted by the macroeconomic disruption and the COVID-19 pandemic. In

H1 2021, AVEVA’s Adjusted EBIT margin was 16.9 per cent, compared to 23.1 per cent. in H1 2020.

Cyclicality of customers’ industries/markets

AVEVA derives a substantial portion of its revenue from customers operating in markets which are cyclical

in nature, such as parts of the oil and gas market and marine. In FY 2020, oil and gas was AVEVA’s largest

customer group, accounting for approximately 40 per cent. of AVEVA’s total revenue. Within oil and gas the

AVEVA Group’s business is diversified across the capital and operational expenditure phases of the asset life

cycle, with AVEVA supplying customers in the upstream, midstream and downstream markets.

Approximately 10 per cent. of AVEVA’s revenue was exposed to greenfield capex in the oil and gas sector

in FY 2020. AVEVA’s revenue has become more diversified since its combination with the Schneider

Electric Software Business, with many of AVEVA’s other customers’ industries being largely non-cyclical

and primarily driven by structural growth as those industries make increasing use of technology to drive

efficiency. Packaged goods (such as food and beverage and pharma), power, marine, chemicals and

petrochemicals, and metals and mining each accounted for approximately 5 to 10 per cent. of AVEVA’s

revenue in FY 2020. The Directors believe AVEVA’s supply chain planning software is particularly well

placed to help customers adjust to the current market conditions in those markets.

As and when cyclical markets reach downturn stages, AVEVA’s customers often have less funding available

for capital projects, including the purchase of AVEVA’s software products. For example, there was a sharp

reduction in oil consumption associated with the COVID-19 crisis towards the end of FY 2020 in H1 2021.

This led to several oil companies announcing reductions in capital expenditure, particularly for upstream

projects, which has had or could have a knock-on impact on the business of some of AVEVA’s EPC

customers and led to subdued demand for engineering and design software in H1 2021. Most of AVEVA’s

EPC customers and certain marine customers have signed multi-year subscription contracts in the past two

years with a minimum level of spend which AVEVA expects will provide it with some insulation. Tough

market conditions also offer opportunities to drive further efficiencies through digitalisation, particularly in

operations, where AVEVA’s solutions include software to support supply chain planning and asset

performance. However, if the COVID-19 pandemic causes further significant or prolonged downturns in

customers’ industries, AVEVA’s revenue and profits could be materially impacted, and this risk has increased

since the prior financial year.

Research and development

AVEVA invests in research and development, which includes investments in product integration and new

product launches, and aims to acquire strategic technologies that enhance its portfolio. Through research and

development, AVEVA has developed innovative and advanced technologies, such as Artificial Intelligence

within its software, to bring increasing benefit and value to its customers. In FY 2020, AVEVA invested

£120.7 million (before amortisation of intangible assets and exceptional items), of which £25 million, or

20.7 per cent., was spent on Cloud and Artificial Intelligence. This represented an increase in total research

143


and development investments from £114.5 million in FY 2019 and £74.9 million in FY 2018. AVEVA

currently expects to continue to invest in research and development in order to continue to develop

technologies such as Artificial Intelligence and further develop its Cloud capabilities, in order to generate

future growth.

Competition

The markets in which AVEVA operates are competitive and are characterised to varying degrees by

technological change, evolving industry standards, evolving business models and consolidation within the

software industry.

AVEVA faces competition from a number of sources in the market for its software solutions. Competition

can impact product sales where competitive risks and landscape are not properly assessed and AVEVA

actively aims to identify where competitive threats and opportunities exist. In addition, competition may

increase when AVEVA’s competitors could establish strategic or commercial relationships among themselves

or with existing or potential customers or other third parties, which can impact AVEVA’s ability to promote

and sell its products successfully. In addition, the software industry is currently undergoing consolidation as

software companies seek to offer more extensive suites and broader arrays of software products and services,

as well as integrated software solutions.

The COVID-19 pandemic has also created further uncertainty in the market, which could lead to increased

consolidation in the market as competitors seek acquisitions or reassess or realign their strategies. In doing

so, these competitors may also be able to reduce prices on software that competes with AVEVA’s solutions,

in part by leveraging their larger economies of scale. Consolidation may also permit AVEVA’s competitors

to offer a broader suite of products and more comprehensive bundled solutions, including hardware, software

and services. This industry consolidation may result in increased pricing pressure and/or loss of business to

these larger competitors, which could adversely affect AVEVA’s business, results of operations, financial

condition and prospects.

COVID-19

The COVID-19 pandemic continues to impact AVEVA’s business and the businesses of AVEVA’s customers.

AVEVA has undertaken a number of initiatives within its business to protect the safety of its employees and

adapt its business to the crisis such as responding to restrictions on mobility through remote working.

At the same time, AVEVA is helping its customers to continue to drive efficiencies in their own businesses

and respond to the COVID-19 crisis. Digitalisation has been key in helping AVEVA’s customers to deal with

the challenges that they face and has helped them to drive efficiency in difficult operating environments,

including through unmanned operations. AVEVA has also been accelerating its Cloud roll-out, while

increasing investment in Cloud development, to provide flexibility for customers in how they consume

software. In this environment, AVEVA currently expects the ongoing and planned reduction in perpetual

licences to continue, with subscription revenue continuing to increase as a proportion of AVEVA’s revenue.

In addition, AVEVA has taken actions which are expected to result in a reduction in costs versus the AVEVA

Group’s pre-COVID-19 plans for FY 2021. AVEVA does not currently intend to make staff reductions in

response to the economic environment, furlough any staff, or make use of government support programmes,

but instead generate savings from reductions in discretionary spend, travel costs and lower costs from

switching key events from physical to virtual. Despite this, the overall level of macroeconomic disruption

has had some impact on customer confidence and in certain sectors it has caused supply chain disruption,

which has made the overall business environment more challenging and unpredictable. AVEVA’s net

impairment from financial assets, which represents the impairment of accounts receivable and contract

assets, increased by 20.6 per cent. to £7.6 million in FY 2020 from £6.3 million in FY 2019 primarily due

to an incremental provision amount for possible increased risk resulting from COVID-19 related

macroeconomic disruption. In H1 2021, AVEVA’s net impairment from financial assets was £0.8 million

compared to £1.6 million in H1 2020.

144


4. Reporting segments

The AVEVA Group’s business divided into three geographic reporting segments: Asia Pacific; Europe,

Middle East and Africa (EMEA); and Americas. These three regions are the basis of the AVEVA Group’s

primary operating segments reported in its financial statements. In addition, the AVEVA Group has a fourth

segment, Corporate, which includes the costs of centralised functions such as Executive Management, IT,

Finance and Legal.

5. Explanation of key profit and loss account line items

Revenue

The AVEVA Group generates its revenue principally through the supply of subscriptions, maintenance,

perpetual licences, and services.

Revenue is recognised upon transfer of control of the promised software and/or services to customers. The

AVEVA Group enters into contracts which can include combinations of software licences, support and

maintenance fees and other professional services, each of which is capable of being distinct and usually

accounted for as separate performance obligations. Where there are multiple performance obligations,

revenue is measured at the value of the expected consideration received in exchange for the services,

allocated by the relative stand-alone selling prices of each of the performance obligations.

• Subscription: The AVEVA Group offers a number of non-cancellable, fixed-term subscription

licensing models of between one month and five years and include on-premise software rentals, Cloud

hosted software and SaaS.

Rentals consist of two separate components: a software licence and support and maintenance, which

are two distinct performance obligations. The software licence is a right to use licence which is

recognised at a point in time when the contract is agreed and the software is made available to the

customer. The support and maintenance element is recognised on a straight-line basis over the rental

period.

SaaS subscriptions are agreements with customers to provide the right to access software. The

software, maintenance and support, and hosting elements are not distinct performance obligations,

and represent a combined service provided to the customer. Revenue is recognised as the service is

provided to the customer on a straight-line basis over the subscription period.

• Perpetual licences: Customers are charged an initial or perpetual licence fee for on-premise or hosted

software which is usually limited by a set number of users or seats. Initial and perpetual licences

provide the customer with the right to use the software and are distinct from other services. Revenue

is recognised at a point in time when the contract is agreed and the software is made available to the

customer.

• Maintenance: Revenue classified as maintenance includes annual fees as well as separate support and

maintenance contracts. For both, revenue is recognised over time on a straight-line basis over the

period of the contract, which is typically 12 months. Customers that have purchased an initial licence

pay obligatory annual fees each year. Annual fees consist of the continuing right to use, and support

and maintenance, which includes core product upgrades and enhancements, and remote support

services. Users must continue to pay annual fees in order to maintain the right to use the software.

Customers that have purchased a perpetual licence have the option to pay for support and

maintenance.

• Services: Services consist primarily of consultancy, implementation services and training. Revenue

from these services is recognised as the services are performed by reference to the costs incurred as

a proportion of the total estimated costs of the service project.

Cost of sales

Cost of sales include costs associated with delivery of services, costs of delivering support to customers as

part of support or subscription contracts, as well as channel partner and royalties and payments to third

parties, such as Cloud hosting fees.

145


Research and development costs

Research and development costs include costs associated with investments in product development, new

product launches, product integration and the development of new capabilities.

Selling and administrative expenses

Selling expenses include the costs of the sales and pre-sales teams, primarily marketing and other associated

sales costs. Administrative expenses include finance, legal and IT costs.

Net impairment loss on financial assets

Net impairment loss from financial assets represents the impairment of accounts receivable and contract

assets.

Other income

Other income includes a gain on sale of three distribution businesses. In addition, in H1 2021 and FY 2020,

other income includes reimbursements received from Schneider Electric for capital expenditure incurred as

part of the migration from activities covered by transitional service agreements following AVEVA’s

combination with the Schneider Electric Software Business.

Finance revenue

Finance revenue include primarily bank interest receivable and other interest earned.

Finance expense

Finance expense includes primarily net interest on pension scheme liabilities, bank interest payable and

similar charges and interest on lease liabilities.

Income tax

Income tax includes primarily current tax in relation to UK corporation tax, foreign tax, adjustments in

respect of prior periods, as well as deferred tax in relation to origination and reversal of temporary

differences and adjustments in respect of prior periods.

146


6. Results of operations

The following table summarises the consolidated income statement for the periods indicated:

H1 2021 H1 2020 FY 2018

(unaudited) (unaudited) FY 2020 FY 2019 (restated) –––––––– –––––––– –––––––– –––––––– ––––––––

(£, millions)

Revenue 332.6 391.9 833.8 766.6 486.3

Cost of sales (83.9) (92.5) (190.7) (193.2) (150.8)

Gross profit 248.7 299.4 643.1 573.4 335.5

Operating expenses

Research and development (92.7) (92.0) (184.6) (178.0) (116.3)

costs

Selling and administrative (181.5) (180.3) (367.8) (341.9) (181.3)

expenses

Net impairment loss on (0.8) (1.6) (7.6) (6.3) (1.2)

financial assets

Other income 3.1(1) – 11.9(2) – –

Total operating expenses (271.9) (273.9) (548.1) (526.2) (298.8)

(Loss)/Profit from (23.2) 25.5 95.0 47.2 36.7

operations

Other income – – – – 1.0(3)

Finance revenue 0.1 0.1 0.3 0.2 0.5

Finance expense (1.1) (1.6) (3.3) (0.7) (3.7)

(Loss)/Profit before tax from (24.2) 24.0 92.0 46.7 34.5

continuing operations

Income tax credit/(expense) 3.9 (6.0) (22.2) (12.9) 6.0

(Loss)/Profit for the year (20.3) 18.0 69.8 33.8 40.5

attributable to equity

holders of the parent

(1) Other income in H1 2021 contains £2.8 million received from Schneider Electric in reimbursement for capital expenditure

incurred as part of AVEVA’s migration from activities covered by transitional service agreements following the combination with

the Schneider Electric Software Business.

(2) Other income in FY 2020 includes a £7.7 million gain on the sale of three distribution businesses and £3.8 million received from

Schneider Electric in reimbursement for capital expenditure incurred as part of the migration from activities covered by

transitional service agreements following the combination with the Schneider Electric Software Business.

(3) Other income in FY 2018 relates to a divestment made by Schneider Electric in China which resulted in an exceptional write off,

offset by an exceptional gain made by selling the property relating to the same write off.

H1 2021 compared with H1 2020

Revenue

Revenue decreased 15.1 per cent. to £332.6 million in H1 2021 from £391.9 million in H1 2020. This

decrease was due to a 19.2 per cent. decrease in subscription revenue to £113.9 million in H1 2021 from

£141.0 million in H1 2020, a 27.8 per cent. decrease in perpetual licences revenue to £61.7 million in H1

2021 from £85.4 million in H1 2020 and a 10.3 per cent. decrease in services revenue to £57.4 million in H1

2021 from £64.0 million in H1 2020, while maintenance revenue decreased slightly by 1.9 per cent. to

£99.6 million in H1 2021 from £101.5 million in H1 2020.

The decrease in subscription revenue was primarily due to the challenging macroeconomic environment due

to the COVID-19 crisis in H1 2021, as well as the prior-year effect of a number of larger multi-year

contracts, on which a proportion of revenue is recognised upfront and the early renewal of a significant

global account contract, which caused approximately a £20 million pull forward of revenue into September

2019. The decrease in perpetual licenses revenue, with consistent decreases across EMEA, the Americas and

Asia-Pacific, was also primarily due to the challenging macroeconomic environment in H1 2021. The

decrease in services revenue resulted from AVEVA’s focus on increasing the proportion of higher gross

147


margin software as part of its overall revenue mix in the longer-term, while still undertaking services that

support long-term growth, particularly in newer areas of the business such as APM and digital twin projects.

AVEVA’s recurring revenue as a percentage of total revenue increased to 64.2 per cent. in H1 2021 compared

to 61.9 per cent. in H1 2020.

The following table sets forth a breakdown of AVEVA’s revenue by revenue type for the periods indicated:

Change

Revenue H1 2021 Per cent. of total H1 2020 Per cent. of total (per cent.)––––––– –––––––– ––––––––––––– –––––––– ––––––––––––– –––––––– (£, millions) (£, millions)

Subscription 113.9 34.2 141.0 36.0 (19.2)

Maintenance 99.6 30.0 101.5 25.9 (1.9)

Total recurring revenue 213.5 64.2 242.5 61.9 (12.0)

Perpetual licences 61.7 18.6 85.4 21.8 (27.8)

Services 57.4 17.2 64.0 16.3 (10.3) ––––––– ––––––––––––– ––––––– ––––––––––––– –––––––––––––Total 332.6 100.0 391.9 100.0 (15.1)

––––––– ––––––––––––– ––––––– ––––––––––––– –––––––––––––EMEA. Revenue in EMEA decreased by 5.6 per cent. to £127.2 million in H1 2021 from £134.7 million in

H1 2020 primarily due to the macroeconomic slowdown due to the COVID-19 crisis in H1 2021, which

impacted the growth rate of the industrial software market in the short term in EMEA. Notwithstanding this

impact, revenue in EMEA in H1 2021 would have remained largely consistent with revenue in EMEA in

H1 2021 were it not for a decrease in revenue due to the impact of currency translation and the divestment

of the Wonderware wholly owned distributor business.

Americas. Revenue in the Americas decreased by 11.0 per cent. to £118.3 million in H1 2021 from

£132.9 million in H1 2020 primarily due to due to challenging trading conditions that resulted from the

macroeconomic slowdown due to the COVID-19 crisis, which put pressure on AVEVA’s customers’ budgets

and resulted in decreased demand in certain sectors, in particular the oil and gas sector.

Asia Pacific. Revenue in Asia Pacific decreased by 29.9 per cent. to £87.1 million in H1 2021 from

£124.3 million in H1 2020 primarily due to impact of the early renewal of a significant global account

contract in H1 2020, which caused approximately a £20 million pull forward of revenue into September

2019, and decreased sales in the marine industry, mainly because there were a large number of contracts in

H1 2020 that were not repeated in H1 2021.

Cost of sales

Cost of sales decreased by 9.3 per cent. to £83.9 million in H1 2021 from £92.5 million in H1 2020. After

adjusting for exceptional items amounting to £0.2 million in H1 2021 and £0.2 million in H1 2020, AVEVA’s

adjusted cost of sales decreased by 9.3 per cent. to £83.7 million from £92.3 million primarily due to a

significant reduction in the cost of delivering services, partially offset by higher Cloud hosting costs.

However, the other key element of cost of sales, customer support, decreased by less than overall revenue

because it is largely fixed in nature.


Research and development costs increased by 0.8 per cent. to £92.7 million in H1 2021 from £92.0 million

in H1 2020. After adjusting for amortisation of intangibles (excluding other software) of £32.3 million in H1

2021 and £31.7 million in H1 2020 primarily related to amortisation of the fair valued heritage AVEVA

intangible assets under acquisition accounting and exceptional items of £0.1 million in H1 2021 and

£0.2 million in H1 2020, AVEVA’s adjusted research and development costs increased slightly by 0.3 per

cent. to £60.3 million from £60.1 million as a result of tight cost control being balanced by investment in

areas including Cloud, AI (specifically AI infused product expansion) and AVEVA XR.


Selling and administrative expenses increased slightly by 0.7 per cent. to £181.5 million in H1 2021 from

£180.3 million in H1 2020.

148


Selling and distribution expenses decreased 8.8 per cent. to £103.2 million in H1 2021 from £113.1 million

in H1 2020. After adjusting for amortisation of intangibles (excluding other software) of £13.5 million in H1

2021 and £13.6 million in H1 2020 and exceptional items of £1.6 million in H1 2021 and £1.2 million in H1

2020 related primarily to consultancy fees, temporary resources for integration and enterprise resource

planning in connection with AVEVA’s combination with the Schneider Electric Software Business, AVEVA’s

selling and distribution expenses decreased by 10.4 per cent. to £88.1 million from £98.3 million primarily

due to reduced sales costs and commissions as a result of the decrease in sales in H1 2021 compared to H1

2020, while overall marketing costs increased as AVEVA invested in digital marketing.

Administrative expenses increased 16.5 per cent. to £78.3 million in H1 2021 from £67.2 million in H1 2020.

After adjusting for exceptional items of £30.2 million in H1 2021 and £11.7 million in H1 2020 related to

consultancy fees paid to advisers and the costs of additional temporary resources and severance payments in

a number of global office locations in connection with AVEVA’s combination with the Schneider Electric

Software Business, share based payments of £4.6 million in H1 2021 and £6.4 million in H1 2020 to

employees and £0.1 million in H1 2021 and £0.1 million in H1 2020 in loss on FX contracts, AVEVA’s

administrative expenses decreased by 11.4 per cent. to £43.4 million from £49.0 million primarily due to a

decrease in corporate costs, such as the provision for bonuses, and foreign currency exchange gains as a

result of the translation of non-functional currency assets and liabilities in H1 2021.


Net impairment loss from financial assets, which represents the impairment of accounts receivable and

contract assets, decreased by 50 per cent. to £0.8 million in H1 2021 from £1.6 million.

Other income

Other income was £3.1 million in H1 2021 compared to nil in H1 2020. This increase was primarily due to

£2.8 million received from Schneider Electric in reimbursement for capital expenditure incurred as part of

the AVEVA’s migration from activities covered by transitional services agreements following the

combination with the Schneider Electric Software Business.

Finance revenue

Finance revenue remained the same at £0.1 million in H1 2021 compared with £0.1 million in H1 2020.

Finance expense

Finance expense decreased to £1.1 million in H1 2021 from £1.6 million in H1 2020 primarily due to the

return on assets in relation to UK pensions.

Income tax

Income tax credit/(expense) was a credit of £3.9 million in H1 2021 compared to an expense of £6.0 million

in H1 2020 primarily due to the loss before tax for the period of £24.2 million in H1 2021 compared to profit

before tax for the period of £24.0 million in H1 2020. The effective tax rate on the loss before tax was 16.1

per cent. in H1 2021 compared to 25.0 per cent. in H1 2020. The difference between the effective tax rate

and the US tax rate of 24.0 per cent. is primarily due to higher overseas tax rates and the benefit of UK and

US tax incentives.

FY 2020 compared to FY 2019

Revenue

Revenue increased 8.8 per cent. to £833.8 million in FY 2020 from £766.6 million in FY 2019. This increase

was due to an increase in recurring revenue primarily due to a 45.2 per cent. increase in subscription revenue

to £316.8 million in FY 2020 from £218.2 million in FY 2019 and a 3.8 per cent. increase in maintenance

revenue to £201.7 million in FY 2020 from £194.4 million in FY 2019.

This increase in recurring revenue was due to strong market demand, the increased value of multiyear

contracts and a switch from maintenance contracts to subscription, as well as new sales force incentives to

149


promote subscription over perpetual licences and services. The increase in recurring revenue was offset in

part by a 15.3 per cent. decrease in perpetual licences revenue to £179.3 million in FY 2020 from

£211.6 million primarily resulting from the shift to a subscription-based licensing model.


Per cent. Per cent. Change

Revenue FY 2020 of total FY 2019 of total (per cent.)–––––––– –––––––– –––––––– –––––––– ––––––– –––––––– (£, millions) (£, millions)

Subscription 316.8 38.0 218.2 28.4 45.2

Maintenance 201.7 24.2 194.4 25.4 3.8

Total recurring revenue 518.5 62.2 412.6 53.8 25.7

Perpetual licences 179.3 21.5 211.6 27.6 (15.3)

Services 136.0 16.3 142.4 18.6 (4.5) ––––––– ––––––– ––––––– ––––––– –––––––Total 833.8 100.0 766.6 100.0 8.8

––––––– ––––––– ––––––– ––––––– –––––––EMEA. Revenue in EMEA increased by 4.1 per cent. to £327.1 million in FY 2020 from £314.3 million in

FY 2019 primarily due to strong growth in Russia and CIS in the oil and gas, power and industrial markets,

supported by collaboration with Schneider Electric. The other regions in EMEA produced flat to mid-single

digit growth, reflecting the economic environment and subdued North Sea oil activity. There were a number

of key deals in the food and beverage, power, water and marine markets as well as expansion with existing

EPC customers.

Americas. Revenue in the Americas increased by 2.3 per cent. to £279.2 million in FY 2020 from

£272.8 million in FY 2019 primarily as a result of growth in both North America and Latin America, with

Brazil performing very well due to both expansion deals and new wins. Services revenue decreased more in

the Americas compared to other regions as AVEVA continued to reduce the Services element of its pipeline

Monitoring & Control business in the Americas.

Asia Pacific. Revenue in Asia Pacific increased by 26.7 per cent. to £227.5 million in FY 2020 from

£179.5 million in FY 2019 driven by good performance across the whole region. In particular, Australia and

India were strong. China was on track for an outstanding year before the impact of COVID-19 hit the fourth

quarter. Despite that, China still delivered double digit growth for the year.

Subscription revenue grew across all three of AVEVA’s geographic reporting segments, and all three regions

had customers on maintenance contracts who successfully transitioned to higher annual value subscription

contracts. In particular, the introduction of the AVEVA Flex subscription offering for products in the

Monitoring & Control business unit was successful with growth of over 150.0 per cent., with several large

enterprise accounts, particularly in North America and EMEA opting for the new subscription offering. This

increase was offset by a decrease in perpetual licences revenue in each region, as well as a decrease in

services revenue in the Americas.

Cost of sales

Cost of sales decreased by 1.3 per cent. to £190.7 million in FY 2020 from £193.2 million in FY 2019. After

adjusting for exceptional items related to AVEVA’s combination with the Schneider Electric Software

Business amounting to £0.6 million in FY 2020 and £1.9 million in FY 2019, AVEVA’s adjusted cost of sales

decreased by 0.6 per cent. to £190.1 million from £191.3 million primarily due to improved efficiency in

connection with higher margin projects, together with initiatives to increase standard, repeatable solutions,

which reduce the need for configuration and customisation, as well as the Company using more offshore

service delivery teams in Mexico, Spain and India to deliver projects. As part of the services transformation

programme, AVEVA has embarked on a strategy to strengthen its network of system integrators and provide

them with the capability and skills to successfully implement AVEVA’s products with a number of projects

started in the year.

150



Research and development costs increased 3.7 per cent. to £184.6 million in FY 2020 from £178.0 million

in FY 2019. After adjusting for amortisation excluding software of £63.5 million in FY 2020 and £61.8

million in FY 2019 million primarily related to amortisation of the fair valued heritage AVEVA intangible

assets under acquisition accounting and exceptional items of £0.4 million in FY 2020 and £1.7 million in FY

2019 related to AVEVA’s combination with the Schneider Electric Software Business, AVEVA’s adjusted

research and development costs increased by 5.4 per cent. to £120.7 million from £114.5 million, primarily

due to investments in areas including Cloud and Artificial Intelligence.


Selling and administrative expenses increased 7.6 per cent. to £367.8 million in FY 2020 from

£341.9 million in FY 2019.

Selling and distribution expenses increased 1.9 per cent. to £240.1 million in FY 2020 from £235.6 million.

After adjusting for amortisation of intangible assets (excluding other software) of £27.1 million in FY 2020

and £26.3 million in FY 2019 and exceptional items of £3.9 million in FY 2020 and £12.6 million in FY

2019 related primarily to consultancy fees, temporary resources for integration and enterprise resource

planning in connection with AVEVA’s combination with the Schneider Electric Software Business, AVEVA’s

selling and distribution expenses increased 6.3 per cent. to £209.1 million in FY 2020 from £196.7 million

in FY 2019. This increase represents investments AVEVA made during the year in sales and in strengthening

the marketing team and in customer events to showcase AVEVA’s enlarged product portfolio.

Administrative expenses increased 20.1 per cent. to £127.7 million in FY 2020 from £106.3 million in

FY 2019. After adjusting for exceptional items of £25.8 million in FY 2020 and £12.7 million in FY 2019

related to consultancy fees paid to advisers and the costs of additional temporary resources and severance

payments in a number of global office locations in connection with AVEVA’s combination with the

Schneider Electric Software Business, share based payments of £12.0 million in FY 2020 and £11.2 million

in FY 2019 to employees and £0.4 million in FY 2020 and £0.5 million in FY 2019 in loss on FX contracts,

AVEVA’s administrative expenses increased 9.3 per cent. to £89.5 million in FY 2020 from £81.9 million in

FY 2019. This increase was primarily due to investment in support functions, such as Human Resources, IT

and Finance as the transitional services from Schneider Electric were exited and replaced with in-house

capabilities.



contract assets, increased by 20.6 per cent. to £7.6 million in FY 2020 from £6.3 million in FY 2019

primarily due to an incremental provision amount for possible increased risk resulting from COVID-19

related macroeconomic disruption.

Other income

Other income was £11.9 million in FY 2020 compared to nil in FY 2019. This increase is primarily due to a

£7.7 million gain on the sale of three distribution businesses and £3.8 million received from Schneider

Electric in reimbursement for capital expenditure incurred as part of the migration from activities covered

by transitional service agreements following the combination with the Schneider Electric Software Business.

Finance revenue

Finance revenue increased by 50.0 per cent. to £0.3 million in FY 2020 from £0.2 million in FY 2019

primarily due to an increase in bank interest receivable and other interest earned.

Finance expense

Finance expense increased to £3.3 million in FY 2020 from £0.7 million in FY 2019 primarily due to an

increase in interest on lease liabilities of £2.5 million as a result of AVEVA’s transition to IFRS 16 on

1 April 2019 from nil in FY 2019 and a £0.1 million increase in bank interest payable and similar charges.

151


Income tax

Income tax expense was £22.2 million in FY 2020 compared to £12.9 million in FY 2019. AVEVA’s effective

rate of tax was 24.1 per cent., in line with the US effective corporation tax rate of 24 per cent.; however, this

rate was affected by the cost of increase in the rate of UK corporation tax from 17 per cent. to 19 per cent.

on the calculation of deferred tax liabilities for intangible fixed assets, which was offset by the benefit of tax

incentives for intellectual property in the current and prior periods. AVEVA’s adjusted tax rate decreased to

18.1 per cent. in FY 2020 from 20.2 per cent. in FY 2019 as a result of tax incentives for intellectual property

in the current and prior periods.

FY 2019 compared to FY 2018

Revenue

Revenue increased 57.6 per cent. to £766.6 million in FY 2019 from £486.3 million in FY 2018. This

increase was primarily due to AVEVA’s combination with the Schneider Electric Software Business and the

impact of FY 2018 only including one month of the heritage AVEVA’s results.

Subscription increased to £218.2 million in FY 2019 from £72.7 million in FY 2018 primarily due to

AVEVA’s combination with the Schneider Electric Software Business. AVEVA’s Subscription also increased

as a result of AVEVA’s continued focus on increasing recurring revenue and included the benefit of partly

up-front revenue recognition on certain multi-year contracts.

Maintenance increased to £194.4 million in FY 2019 from £133.5 million in FY 2018 primarily due to

AVEVA’s combination with the Schneider Electric Software Business. In addition, although AVEVA grew

initial and perpetual licences in the prior year which have associated support and maintenance revenue, this

growth was offset by certain customers switching from support and maintenance to new rental contracts as

the AVEVA Group sought to grow subscription revenue.

Perpetual licences increased to £211.6 million in FY 2019 from £163.1 million in FY 2018 primarily due to

AVEVA’s combination with the Schneider Electric Software Business. This increase was also 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.

Services increased to £142.4 million in FY 2019 from £117.0 million in FY 2018 primarily due to AVEVA’s

combination with the Schneider Electric Software Business. This increase was also driven by increasing

demand for initial implementation work associated with the sale of APM and Planning & Operations

products.


Per cent. FY 2018 Per cent. Change

Revenue FY 2019 of total (restated) of total (per cent.)––––––– –––––––– –––––––– –––––––– –––––––– –––––––– (£, millions) (£, millions)

Subscription 218.2 28.5 72.7 14.9 200.1

Maintenance 194.4 25.3 133.5 27.5 45.6

Total recurring revenue 412.6 53.8 206.2 42.4 100

Perpetual licences 211.6 27.6 163.1 33.5 29.7

Services 142.4 18.6 117.0 24.1 21.7 ––––––– –––––––– ––––––– –––––––– ––––––––Total 766.6 100.0 486.3 100.0 57.6

––––––– ––––––– ––––––– ––––––– –––––––EMEA. Revenue in EMEA increased to £314.3 million in FY 2019 from £160.8 million in FY 2018 primarily

due to AVEVA’s combination with the Schneider Electric Software Business. AVEVA also had orders in the

first half of FY 2019 from the marine industry in Norway and Germany where there was market demand for

complex speciality and cruise vessels. In the second half of FY 2019, AVEVA saw strong demand in

downstream oil and gas, with orders in Spain, Italy and Turkey. AVEVA also saw growth in food and

152


beverage, power and mining, where AVEVA delivered a digitalised mine for a leading operator in South

Africa. Other areas of demand included discrete manufacturing, with orders in automotive.

Americas. Revenue in the Americas increased to £272.8 million in FY 2019 from £223.1 million in FY 2018

primarily due to organic growth of the AVEVA Group. AVEVA also achieved strong growth in Latin America

where there has been an improvement in market conditions. In North America, AVEVA received large orders

in the EPC and oil and gas sectors and saw growth through its channel distribution partners as end users

modernise and upgrade Monitoring & Control software.

Asia Pacific. Revenue in Asia Pacific increased to £179.5 million in FY 2019 from £102.4 million in

FY 2018 primarily due to AVEVA’s combination with the Schneider Electric Software Business. AVEVA also

experienced growth in China, particularly in the oil and gas sector, and had major customers in the oil and

gas sector move forward with digital transformation across the Asia Pacific region. Conditions in the marine

sector were subdued and this impacted growth in the AVEVA Group’s core marine customer region of Japan

and Korea.

Cost of sales

Cost of sales increased to £193.2 million in FY 2019 from £150.8 million in FY 2018. The increase in cost

of sales was primarily due to AVEVA’s combination with the Schneider Electric Software Business. The cost

of sales increase also related in part to revenue growth with higher associated channel partner and third-party

royalty costs, together with some investments into the Customer Support function.


Research and development costs increased to £178.0 million in FY 2019 from £116.3 million in FY 2018.

The increase in cost of sales was primarily due to AVEVA’s combination with the Schneider Electric

Software Business. The remaining increase was primarily due to investment in product integration and new

product launches, being partly offset by cost synergies.


Selling and administrative expenses increased to £341.9 million in FY 2019 from £181.3 million in FY 2018.

This included an increase in selling and distribution expenses to £235.6 million in FY 2019 from

£128.0 million in FY 2018 and an increase in administrative expenses to £106.3 million in FY 2019 from

£53.3 million in FY 2018, which were primarily due to AVEVA’s combination with the Schneider Electric

Software Business.

The increase in selling and distribution expenses also related to the AVEVA Group experiencing higher sales

commissions following better than budgeted sales performance in FY 2019, and having made investments

during the year in sales both in terms of new recruits and training, to strengthen the marketing team and in

customer events to showcase AVEVA’s enlarged product portfolio.

The increase in administrative expenses also related to 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 transitional service agreements, for example legal team, treasury

and IT support.



contract assets, increased to £6.3 million in FY 2019 from £1.2 million in FY 2018.

Other income

Other income was nil in FY 2019 compared to £1.0 million in FY 2018.

153


Finance revenue

Finance revenue decreased to £0.2 million in FY 2019 from £0.5 million in FY 2018 primarily due to a

£0.3 million decrease in interest receivable from related parties.

Finance expense

Finance expense decreased to £0.7 million in FY 2019 from £3.7 million in FY 2018 primarily due to a

decrease of £3.5 million in interest payable to related parties, which was offset in part by a £0.4 million

increase in bank interest payable and similar charges and a £0.1 million increase in net interest on pension

scheme liabilities.

Income tax

Income tax expense was £12.9 million in FY 2019 compared to a credit of £6.0 million in FY 2018. The

effective rate of tax of 27.6 per cent. differs from the US corporation tax rate of 24 per cent. because of

higher rates of overseas tax and overseas losses in certain locations for which no deferred tax asset has been

recognised. AVEVA’s tax rate also benefited from research and development tax incentives in the UK and

the US.

7. Liquidity and Capital Resources

During the periods under review, AVEVA financed its operations principally by using cash flow from

operating activities. AVEVA has £79.8 million of cash and cash equivalents at 30 September 2020 and access

to a £100 million revolving credit facility (“RCF”), with £20 million outstanding under the RCF at that date.

From time to time the Company has drawn down amounts under the RCF but these amounts have not

amounted to over £30 million. AVEVA continues to have liquidity headroom on existing facilities and

against the RCF financial covenants during the period under assessment. AVEVA intends to continue to

finance its working capital and capital expenditure programmes with a combination of cash flows from

operating activities and its borrowings under its existing credit facilities, as required.

AVEVA’s £100 million RCF permits 15 loans to be outstanding at any one time. Interest on drawings is

calculated at LIBOR plus a margin, initially 0.5 per cent., rising only if net leverage position deteriorates

considerably. Additionally, a quarterly commitment fee is charged on the undrawn facility at 35 per cent. of

the margin. The three-year RCF was entered into in March 2018. During the second half of the year, the

option to extend on the same terms was exercised. The RCF expires on 1 March 2023. On Completion the

RCF will be cancelled and prepaid using monies drawn under the Facilities Agreement and will be replaced

by the Revolving Facility made available thereunder.

Following the Acquisition, AVEVA will have access to a £250 million Revolving Facility as part of the

Facilities Agreement entered into on 25 August 2020. Loans under the Revolving Facility may be used to:

(a) finance the cash consideration component of the consideration for, and costs and expenses incurred in

connection with, the Acquisition; and/or (b) the general corporate and working capital purposes of the

AVEVA Group. It is a condition of utilisation of the Facilities Agreement that the RCF is cancelled and

prepaid on or before the date of first utilisation of the Facilities. The interest rate payable for a Revolving

Facility loan is the aggregate of LIBOR (or, in the case of any loans in euro, EURIBOR) plus an applicable

margin of between 0.70 per cent. per annum and 2.05 per cent. per annum. The termination date of the

Revolving Facility is the date falling three years from the earlier of: (i) Completion; and (ii) the date falling

six months after the date of the Facilities Agreement. Subject to the satisfaction of the conditions precedent,

the Revolving Facility is available for drawing from and including Completion until the date falling one

month prior to the termination date applicable to the Revolving Facility.

For more information on the RCF and Facilities Agreement see Sections 9.1(d) and 9.1(e) of Part XIV

(Additional Information).

154


Consolidated statement of cash flows

The consolidated statement of cash flows relating to the Company set out below is extracted from: (i) the

unaudited interim financial statements of AVEVA prepared under IFRS for the interim periods ended

30 September 2020 and 30 September 2019 and (ii) the audited financial statements of AVEVA prepared

under IFRS for FY 2020, FY 2019 and FY 2018:

H1 2021 H1 2020 FY 2018

(unaudited) (unaudited) FY 2020 FY 2019 (restated) –––––––– –––––––– –––––––– –––––––– –––––––– (£, millions)

Net cash generated from 12.4 15.9 122.1 136.7 62.6

operating activities

Net cash flows (used in)/ (7.3) (30.2) (39.9) (27.2) 133.0

from investing

activities

Net cash flows used in (37.8) (37.8) (93.6) (86.0) (113.3)

financing activities

Net (decrease)/increase in (32.7) (52.1) (11.4) 23.5 82.3

cash and cash equivalents

Opening cash and cash 114.5 127.2 127.2 105.6 22.4

equivalents

Net foreign exchange (2.0) 3.5 (1.3) (1.9) 0.9

difference

Closing cash and cash 79.8 78.6 114.5 127.2 105.6

equivalents

Net cash generated from operating activities

Net cash generated from operating activities decreased 22.0 per cent. to £12.4 million in H1 2021 from

£15.9 million in H1 2020. This decrease was primarily due to a loss after tax of £20.3 million in H1 2021

compared to profit after tax of £18.0 million in H1 2020. This decrease was partially offset by movements

in net working capital of £16.3 million in H1 2021 from £43.7 million in H1 2020 primarily due to strong

collection of trade receivables.

Net cash generated from operating activities decreased 10.7 per cent. to £122.1 million in FY 2020 from

£136.7 million in FY 2019. This primarily resulted from a decrease in cash generated from trade and other

payables and contract liabilities due to movement in the completion accounts payable from the acquisition

of the Schneider Electric Software Business and an increase in cash outflow in contract assets. These were

offset in part by a decrease in cash used in trade and other receivables in the period. The decrease reflects

the impact of multi-year contracts and particularly those contracts where customers pay in annual

instalments, but revenue is recognised earlier under IFRS 15, as well as the impact of exceptional costs.

Net cash generated from operating activities increased 118.4 per cent. to £136.7 million in FY 2019 from

£62.6 million in FY 2018. This was primarily due to an increase in cash generated from trade and other

payables and a decrease in cash outflow in trade and other receivables in the period.

Net cash flows (used in)/from investing activities

Net cash used in investing activities decreased 75.8 per cent. to £7.3 million in H1 2021 from £30.2 million

in H1 2020. This decrease was primarily due to a decrease in acquisition of subsidiaries, net of cash acquired,

in relation to the acquisition of MaxGrip in H1 2020.

Net cash used in investing activities increased 46.7 per cent. to £39.9 million in FY 2020 from £27.2 million

in FY 2019. This was primarily due to an increase in cash used in the acquisition of subsidiaries in AssetPlus,

which represented the software assets of MaxGrip, net of cash acquired, and in the purchase of property,

plant and equipment in relation to new offices following the exit from the applicable transitional service

agreements, which was offset in part by a decrease in consideration paid on completion of the combination

155


with the Schneider Electric Software Business and cash generated from proceeds from sale of subsidiaries,

net of cash.

Net cash used in investing activities changed to cash used of £27.2 million in FY 2019 from cash generated

of £133.0 million in FY 2018. This was primarily due to a decrease in cash received on acquisition of

business from FY 2018 when there was £132.2 million generated as a result of reverse acquisition

accounting in connection with the business combination with the Schneider Electric Software Business and

an increase in cash used in consideration paid on completion of the business combination with the Schneider

Electric Software Business.

Net cash flows used in financing activities

Net cash used in financing activities remained the same at £37.8 million in both H1 2021 and H1 2020.

Net cash used in financing activities increased 8.8 per cent. to £93.6 million in FY 2020 from £86.0 million

in FY 2019. This was primarily due to an increase in cash used in payment of principal element of lease

liability and dividends paid to shareholders of the parent, which was offset in part by a decrease in repayment

of borrowings and purchase of own shares.

Net cash used in financing activities decreased 24.1 per cent. to £86.0 million in FY 2019 from

£113.3 million in FY 2018. This was primarily due to a decrease in cash used in return of value to

Shareholders and change in funding with related parties, which was offset in part by dividends paid to

shareholders of the parent and purchase of own shares.

Capitalisation and Indebtedness

The table below sets out the capitalisation and indebtedness of the AVEVA Group as at 30 September 2020, and

has been extracted without material adjustment from the AVEVA Group H1 2021 Interim Results Statement,

which is incorporated by reference into this document as set out in Part XV (Documents Incorporated by

Reference).

Capitalisation and Indebtedness As at

30 September 2020

(unaudited) ––––––––––––––––– (£, millions) Total borrowings(1) 20.0

––––––––Shareholders’ equity(2)

Issued share capital 5.7

Share premium 574.5

Other reserves(3) 1,180.7 ––––––––Total Shareholders’ equity 1,760.9

––––––––The table above does not reflect the impact of the Acquisition, the Rights Issue and the drawdown of the

Term Facility, which are described in Part XI (Unaudited Pro Forma Financial Information on the Enlarged

Group) of this document.

Notes:

(1) As at 30 September 2020, AVEVA had £20.0 million outstanding under its RCF.

(2) Shareholders’ equity does not include retained earnings.

(3) Other reserves includes share premium and other reserves.

LR 13.5.6

LR 13.5.7(1)

Annex 12, 3.4

156


The table below sets out the net indebtedness of the AVEVA Group as at 30 September 2020, and has been

extracted without material adjustment from the AVEVA Group H1 2021 Interim Results, which are

incorporated by reference into this document as set out in Part XV (Documents Incorporated by Reference).

As at 30 September 2020 the AVEVA Group had £20.0 million in indebtedness and the following cash and

cash equivalents:

Liquidity As at 30 September 2020

(unaudited) ––––––––––––––––––––– (£, millions)

Cash and cash equivalents(1) 79.8

Treasury deposits(2) 0.1 ––––––––Liquidity 79.9

––––––––The AVEVA Group has no indirect or contingent indebtedness as at 30 September 2020.

Notes:

(1) Cash equivalent includes short-term deposits, which are made for varying periods of between one day and three months,

depending on the immediate cash requirements of the AVEVA Group, and earn interest at the respective short-term deposit rates.

(2) Treasury deposits represent bank deposits with an original maturity of over three months and are held with a fixed rate of interest.

8. Capital Expenditures

AVEVA’s capital expenditure representing additions for property, plant and equipment were £6.3 million for

H1 2021, £18.5 million for FY 2020, £7.4 million for FY 2019 and £4.9 million in FY 2018. These

expenditures were primarily for the improvements to long leasehold buildings, purchase of computer

equipment, fixtures and fittings and office equipment and motor vehicles.

9. Related Party Transactions

Information regarding Related Party Transactions relating to the AVEVA Group is set out in Section 11 of

Part XIV (Additional Information).

10. Off balance sheet arrangements

As of 30 September 2020, the AVEVA Group did not have any off balance sheet arrangements.

11. Qualitative and Quantitation Disclosures about Market Risk

Information regarding market risks affecting the AVEVA Group is set out in Note 25 on page 145 to page 147

of the consolidated financial statements of the Company for FY 2020 under the headings “Market Risk,”

“Credit Risk” and “Liquidity Risk” which are incorporated by reference into this document as set out in

Part XV (Documents Incorporated by Reference).

12. Significant accounting policies and critical accounting estimates and assumptions

Information regarding significant accounting policies and critical accounting estimates and assumptions of

the AVEVA Group is set out in Note 2 on page 128 of the consolidated financial statements of the Company

for FY 2020 which is incorporated by reference into this document as set out in Part XV (Documents


LR 13.5.6

LR 13.5.7(1)

Annex 12, 3.4

157


PART VIII

HISTORICAL FINANCIAL INFORMATION OF THE AVEVA GROUP

1. Background

The audited consolidated financial statements for the AVEVA Group as at and for FY 2020, FY 2019 and

FY 2018, prepared in accordance with IFRS, together with the audit reports and notes in respect of each such

financial year, contained in the AVEVA Group 2020 Annual Report and Accounts, the AVEVA Group 2019

Annual Report and Accounts and the AVEVA Group 2018 Annual Report and Accounts, respectively, are

incorporated by reference into this Part VIII (Historical Financial Information of the AVEVA Group), as

described in Part XV (Documents Incorporated by Reference) of this document.

The unaudited AVEVA Group H1 2021 Interim Results are incorporated by reference into this document

from the AVEVA Group H1 2021 Interim Results Statement.

The consolidated financial statements contained in the AVEVA Group 2020 Annual Report and Accounts,

the AVEVA Group 2019 Annual Report and Accounts and the AVEVA Group 2018 Annual Report and

Accounts were audited by Ernst & Young LLP and the audit report for each such financial year was

unqualified. Ernst & Young LLP is registered to carry out audit work in the United Kingdom and Ireland by

the Institute of Chartered Accountants in England and Wales and has no material interest in the Company or

the AVEVA Group.

2. Cross reference list

The following list is intended to enable investors to identify easily specific items of information which have

been incorporated by reference into this document. A copy of each of these documents incorporated by

reference into this document can be accessed on the Company’s website at https://investors.aveva.com/.

2.1 IFRS interim financial statements for H1 2021

The page numbers below refer to the relevant pages of the AVEVA Group H1 2021 Interim Results

Statement:

Page number(s) Section–––––––––––––– –––––––13 Independent review report

14 Consolidated income statement

15 Consolidated statement of comprehensive income

16 Consolidated balance sheet

17 Consolidated statement of changes in shareholders’ equity

18 Consolidated cash flow statement

19 to 28 Notes to the interim report

2.2 IFRS financial statements for FY 2020 and the audit report thereon

The page numbers below refer to the relevant pages of the annual report and accounts of the AVEVA

Group for FY 2020:

Page number(s) Section–––––––––––––– –––––––116 to 122 Independent auditor’s report






128 to 158 Notes to the consolidated financial statements

LR 13.5.4(1)

LR 13.5.6

LR 13.5.7(1)

LR 13.5.7(3)(a)

LR 13.5.10

Annex 3, 11.1

Annex 3, 11.2.1

Annex 3, 11.2.2

Annex 12, 10.2

Annex 3, 11.2.3

LR 13.5.6

158


The annual report and accounts of the AVEVA Group for FY 2020 can be accessed at:

https://investors.aveva.com/media/plzdh14s/aveva_ar20_gf.pdf



Group for FY 2019:









https://www.aveva.com/-/media/RedesignV2/English/Pages-Template/Investors/AVEVA_AR19_

web.pdf



Group for FY 2018:









https://www.aveva.com/-/media/RedesignV2/English/Pages-Template/Investors/Financial-

Resources/20 18_AVEVA_Annual_Report_and_Accounts.pdf?la=en.

159


PART IX

OPERATING AND FINANCIAL REVIEW OF THE OSISOFT GROUP

1. Overview

OSIsoft is a data historian and information management software business providing real time data

management systems worldwide to improve the operational efficiency of client businesses. It was founded

by Dr J. Patrick Kennedy in 1980 and introduced its first PI System to the market in 1985. By 2004, OSIsoft

had developed into a business with a global customer base, having installed its PI System in 100 countries

worldwide. In 2019, OSIsoft moved into Cloud computing with its launch of the OCS. The company

operates as an ‘operational historian’, meaning that its function is to enable customers to store, record and

synchronise system and asset data across a range of processes and across a variety of data inputs and data

types to support data modelling, analytics, visualisation of data and reporting capabilities.

OSIsoft’s principal systems offering is its PI System. This is proprietary, vendor-agnostic data management

software using a scalable architecture which, as of the date of this document, is able to connect to more than

225 interfaces and collect high-frequency data in multiple formats, standards and conventions. Data

accessibility is central to the system’s capability. The PI System collects, analyses, visualises and shares

large amounts of time-series and event-based data from multiple sources for customers to access across

business operations in order to deliver a range of operational improvements. By consolidating and

harmonising data into a uniform structure, customers have access to an integrated information infrastructure,

enabling them to make decisions on the basis of accurate, complete and accessible data. As a consequence,

by integrating the PI System, OSIsoft customers are able to identify and troubleshoot issues, compare their

past and present operational performance, and increase asset health and process up-time. This has resulted

in reduced costs, new revenue streams, extended equipment life, increased production capacity, and

improved safety for employees. In OSIsoft FY 2019, OSIsoft derived almost all of its total billings from the

PI System (including maintenance, support and education fees), with a small portion of billings from

professional services. OSIsoft is comprised of a single business unit with an executive team overseeing all

corporate functions. The executive team consists of five members, the President, EVP Operations, SVP

Sales, Marketing, Business Development, SVP Customer Success, and SVP Engineering and Technology.

OSIsoft’s customer base is worldwide and primarily includes customers in power and utilities; mines, metals,

metallurgy and materials; oil and gas; pharmaceuticals; food and life sciences; chemicals and

petrochemicals; and pulp and paper, among others. As of 31 December 2019, OSIsoft has carried out

installations in 146 countries and, with 3,669 customers who have installed over 28,000 PI servers. OSIsoft’s

billings by geographic area is principally generated in North America and Europe, which accounted for

49 per cent. and 29 per cent., respectively, of OSIsoft’s total billings in OSIsoft FY 2019, but it does generate

substantial billings from Asia-Pacific and Latin America, which accounted for 14 per cent. and 8 per cent.,

respectively, of OSIsoft’s total billings during the same period. As of 31 December 2019, OSIsoft employed

1,421 employees and has offices in 17 countries across North and South America, Europe, the Middle East,

Asia, Africa and Australasia.

2. Key performance indicators

The table below sets forth OSIsoft’s Adjusted EBIT and Adjusted EBIT margin, which are non-IFRS

measures that AVEVA’s Directors use to manage the AVEVA Group’s business and will use to manage the

Enlarged Group’s business alongside IFRS measures, and which are presented for readers to understand how

the Directors will track and measure the progress of the Enlarged Group’s business against its strategy.

LR 13.5.6

LR 13.5.7(1)

LR 13.5.7(3)(a)

LR 13.5.11

160


OSIsoft OSIsoft

2020 2019

Key Performance Interim Period Interim Period OSIsoft OSIsoft OSIsoft

Indicator (unaudited) (unaudited) FY 2019 FY 2018 FY 2017–––––––––––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

($, millions, unless otherwise specified)

Revenue 245.0 223.7 470.0 439.1 422.7

Profit from operations 58.0 27.6 125.2 109.8 104.0

Adjusted EBIT(1) 58.0 27.6 125.2 109.8 104.0

Adjusted EBIT margin(2) 24 per cent. 12 per cent. 27 per cent. 25 per cent. 25 per cent.

Notes:

(1) Adjusted EBIT is profit from operations before amortisation of intangible assets (excluding other software), share-based

payments, gain/loss on fair value of forward foreign exchange contracts, exceptional items and other income, in each case to the

extent relevant. OSIsoft had nil amortisation of intangible assets (excluding other software), nil share-based payments, nil

gain/loss on fair value of forward foreign exchange contracts, nil exceptional items and nil other income for the periods under

review.

(2) Adjusted EBIT margin is Adjusted EBIT as a percentage of total revenue.

Adjusted EBIT and Adjusted EBIT margin are not defined by IFRS and therefore may not be directly

comparable with the same or similar measures of other companies. Adjusted EBIT and Adjusted EBIT

margin should not be considered in isolation or as substitutes for performance measures calculated in

accordance with IFRS. For additional information on non-IFRS measures such as Adjusted EBIT and

Adjusted EBIT margin, see “Important Information—Non-IFRS Measures”.

3. Key trends and factors affecting OSIsoft’s results of operations and financial condition

Demand for industrial software

Notwithstanding the temporary impact of COVID-19, the industrial software market is currently

experiencing a high growth rate owing to the need for improved productivity, speed, and efficiency required

in manufacturing process and the proliferation of new digital industrial technologies such as IIoT. Over the

last decade, process and manufacturing industries have experienced a transformation due to the emergence

of technologies such as AI and machine intelligence which has driven adoption of automation in

manufacturing processes, including production and assembly. With the increase in the use of industrial

automation and associated technologies, there has been a rise in the demand for automation software for

optimising the entire production process along with providing end-to-end visibility into operations.

As the digital transformation of the industrial world continues to accelerate, demand for industrial software

remains robust. This in turn drives demand for enduring data platforms that can collect, historise, organise,

model, and analyse operational data from industrial automation componentry. OSIsoft’s PI System is a

leading data historian platform that serves core IIoT infrastructure and OSIsoft is expected to remain a

beneficiary of automation and the growing demand for IIoT infrastructure. OSIsoft’s PI System supports

access to information infrastructure, enabling customers to take advantage of these emerging technologies

on the basis of accurate, complete and accessible data.

Transition to subscription-based model

The majority of OSIsoft’s billings, being the billings that are recorded when invoices are issued to OSIsoft's

customers upon final processing of a bona fide purchase order, is from component software sold under a

perpetual software licence agreement, representing 23 per cent. of billings in OSIsoft FY 2019 and from

Software Reliance Program renewal, support and maintenance offered with the component software product,

representing 33 per cent. of billings in OSIsoft FY 2019. Enterprise Agreement Software, allowing

enterprise-wide deployment based on scope of utilisation, represents 14 per cent. of OSIsoft FY 2019

billings with the associated support and maintenance of professional services accounts representing 24 per

cent. of billings in OSIsoft FY 2019. Professional Services accounted for approximately 2 per cent. of total

billings.

161


For the OSIsoft Group, subscriptions (from subscription products, Cloud and OCS products) form a small

but growing and strategically important portion of billings, and currently representing approximately 4 per

cent. of OSIsoft FY 2019 billings. Should OSIsoft institute a subscription model, the growth profile of

OSIsoft revenue may flatten or decrease as original licence fees are replaced with subscription contracts,

which can have a rateable revenue recognition profile, versus the up-front recognition of perpetual licences.

In the longer term, a transition to a subscription model is expected to accelerate revenue and growth which

are expected to become more predictable given continued expansion of scope and increased contribution

from recurring revenue. The level and pace of adoption of a subscription model is likely to vary by customer,

industry and product area and any failure to effectively manage any such transition in response to customer

demand or competitor pressures may give rise to a loss of customers, market share and ultimately revenue

and profitability.

Separate from the core PI System product line, a new product line named OCS is in-market with lighthouse

customers under a subscription model introduced during calendar 2020. This new product is complementary

to OSIsoft’s current solutions through the enablement of key usage scenarios. OCS will be used to expand

PI System’s footprint to community scenarios, machine learning, and supply chain data integration. OCS is

also expected to further accelerate the adoption of a subscription-based model within OSIsoft’s customer

base.

Cyclicality of customers’ industries/markets

OSIsoft serves some of the world’s largest companies in power and utilities; oil and gas; chemicals and

petrochemicals; pharmaceuticals, food and life sciences and other process manufacturing industries. OSIsoft

maintains a diversified customer base with no single customer accounting for more than 5 per cent. of

billings and counts many blue chip companies as customers – over 1,000 of the world’s leading power and

utilities companies, 38 of the Global Fortune Top 40 oil and gas companies, all of the Global Fortune Top

10 metals and mining companies, 37 of the 50 largest chemical and petrochemical companies and nine of

the Global Fortune Top 10 pharmaceutical companies. Select customers’ industries, including oil and gas,

are subject to cyclicality and as a result could adversely impact OSIsoft sales. Historically, OSIsoft has been

able to consistently maintain its business across economic cycles due in part to the high rates of customer

retention experienced for its maintenance and support services. In the years from 2007 to 2019, OSIsoft had

churn of 2.7 per cent. or less and an average churn rate of 1.3 per cent. over the same period.

Growth in OSIsoft’s business

OSIsoft seeks to maintain and extend its position as a leading global provider of software and related

services to drive the digital transformation for industrial companies. In recent years, OSIsoft introduced a

new strategy to evolve its scope of optimisation from process units in a particular customer plant to a larger

footprint extended to the equipment of a collection of customer assets or facilities. OSIsoft’s primary growth

strategy is to expand organically within its core verticals by leveraging its market leadership position and

driving increased usage and product adoption of the broad capabilities in its PI System, which it believes will

drive growth in its business. To accomplish these goals, OSIsoft expects to pursue the following activities:

• Further penetration into existing customer base. OSIsoft has an installed base of approximately

3,669 customers as of 31 December 2019. There is significant scope for expansion within such

existing customers’ operations and OSIsoft plans to work with its customers to identify ways in which

they can improve their business performance by using the PI System in an expanded scope, across all

of their plant locations, thereby driving growth in OSIsoft’s revenue;

• Adoption and usage in customer base. OSIsoft strives for its customers to adopt and sustain the use

of the PI System. OSIsoft does this by focusing its go-to-market resources through specific customer

success management activities that generate and sustain the value from the PI System, to ensure the

software is deployed in the most optimal manner in their IT networks, and that customers are familiar

with the latest value-enhancing functionality in OSIsoft’s products; and

• Expansion into new verticals. OSIsoft has identified a number of customers in new industry verticals

which it believes will adopt its solutions to optimise their operations. In particular, new and potential

162


customers in discrete manufacturing industries, including but not limited to food and beverage,

pharmaceuticals and cosmetics, are expected to provide new sources of revenue going forward.

Research and development

For over 40 years, OSIsoft has made significant investment in research and development, which has led to

a number of major process engineering advances which are now considered to be industry-standard

applications. OSIsoft’s product development activities are currently focused on strengthening the integration

of the PI System and adding new capabilities that address specific operational business processes in each

industry. In addition, OSIsoft has recently focused research and development resources on building a

Cloud-based version of the core PI System as well as Edge Data Collection, allowing customers to share data

between PI Systems both inside and outside the enterprise in a secure environment. OSIsoft expects to

continue to enhance and differentiate its core offering as well as support key market requirements, such as

machine learning support, improved visualisation, and meta-data frameworks.

Sales and Marketing

OSIsoft employs a value-based sales approach, offering customers a comprehensive suite of software and

services that enhance the efficiency and productivity of their engineering, manufacturing, supply chain, and

maintenance operations. OSIsoft has increasingly focused on positioning the PI System as a strategic

investment and therefore devotes a growing portion of its sales efforts to customers’ senior management,

including decision makers in manufacturing, operations, maintenance and technology organisations. OSIsoft

has implemented incentive compensation programs for its sales force to reward efforts that increase

customer usage of its products.

Historically, a vast majority of licence sales have been generated through OSIsoft’s direct field sales

organisation. In order to market the specific functionality and other technical features of OSIsoft’s software,

account managers work with specialised teams of technical sales personnel and product specialists organised

for each sales and marketing effort. OSIsoft’s technical sales personnel typically have degrees in engineering

or related disciplines and actively consult with a customer’s engineers. OSIsoft also has a group of industry

specialists, who bring with them a wealth of core industry knowledge critical for OSIsoft’s customers and

engineers alike.

OSIsoft has established channel partner relationships with select companies in order to pursue opportunities

in non-core target markets. OSIsoft supplements its sales efforts with a variety of marketing initiatives,

including user group conferences, industry analyst and public relations activities, campaigns to promote

product usage and adoption, and customer relationship programs. OSIsoft’s broad user base spans multiple

verticals and geographies and these users possess a variety of skills, experience and business needs. In order

to reach each of them in an effective, productive, and leveraged manner, OSIsoft has increasingly capitalised

on digital customer engagement solutions.

Competition

The market in which OSIsoft operates is competitive. OSIsoft’s key competitive differentiators include: the

breadth, depth and integration of its PI System; industry-leading innovation based on substantial process

expertise; the rapid return on investment, organisational efficiencies and operational improvements, and

increase in profitability that many of its customers experience; and its consistent global support and high

customer satisfaction.

OSIsoft faces competition from different sources in the market, and some of OSIsoft’s customers and

companies with which it has strategic relationships also are, or may become, competitors. In addition, many

of OSIsoft’s current and potential competitors have greater financial, technical, marketing, service and other

resources than OSIsoft has. As a result, these companies may be able to offer lower prices, additional

products or services, or other incentives that OSIsoft cannot match or offer. Increased competition can result

in pricing pressure, reduced profitability and loss of market share where competitive risks are not properly

assessed, and OSIsoft actively aims to identify where competitive threats and opportunities exist.

163


COVID-19

Since the beginning of March 2020, the sudden decrease in demand for oil due to the COVID-19 pandemic,

compounded by the excess supply arising from producers’ failure to agree on production cuts, resulted in a

drop in oil prices. While OSIsoft has not experienced a material impact in its financial results to date due to

COVID-19, it is continuing to assess the impact of these items on global markets and the various industries

of its customers. The extent of the impact on OSIsoft’s operational and financial performance going forward

will depend on developments such as the duration and spread of the pandemic and other factors affecting oil

prices, the impact of these items on OSIsoft’s customers and its sales cycles, as well as on its employees, all

of which are uncertain and cannot be predicted. OSIsoft is continuing to monitor the potential impacts related

to the current disruption of COVID-19 and uncertainty in the global markets on the various industries of its

customers. These factors could potentially impact the signing of new agreements, as well as the

recoverability of assets, including accounts receivable and contract costs.

4. Explanation of key profit and loss account line items

Revenue

OSIsoft generates its revenue principally through the supply of subscriptions, perpetual licences,

maintenance, and services.

• Subscription: Subscription consists of an on-premise term license with coterminous support and is

generally one year in length. Certain subscription arrangements include usage-based fees. For these

contracts, OSIsoft estimates the total expected consideration at the outset of the arrangement.

Revenue for the term software licence is recognised at the point in time that the licence is transferred

to the customer, while revenue attributable to support is recognised rateably over the support period.

Due to the variable consideration component, at times, revenue recognised can exceed fees billed to

date, which results in the recognition of a contract asset.

• Perpetual Licences: The majority of OSIsoft’s software is sold under software licence agreements

(“SLAs”). The SLAs generally include a perpetual software licence and post-contract support and

maintenance (“PCS”) that covers a 12-month period with optional annual renewals thereafter.

Revenue for the perpetual software licences is recognised at the point in time that the licence is

transferred to the customer while revenue for PCS is recognised rateably over the support period. In

addition to selling directly to end-customers, OSIsoft also sells its software to resellers and

distributors, typically under SLA arrangements. Provided that the criteria for revenue recognition

have been met, the company recognises revenue on a basis consistent with sales to end-customers.

• Maintenance: For maintenance contracts, revenue is recognised rateably over the period of the

contract, which is typically 12 months. The fair value estimate of the element of a customer’s fee

attributable to support and maintenance is reviewed periodically. On average, the element attributable

to customer support and maintenance as a proportion of the initial software delivery is 15 to

20 per cent.

• Services: Services consist primarily of consultancy, implementation services and training.

Cost of sales

Cost of sales includes expenses associated with staffed departments performing services directly to

customers. These services are primarily technical support, on-site and remote field services, training and

other sundry customer value offerings. Overhead expenses such as rent, telecoms, depreciation, as well as

benefits are allocated by headcount and thus a portion of these expenses are included herein.


Research and development costs include costs associated with investments in product development for new

products, and new features for existing products, and in new product launches. Technical development staff

engage in research and development projects as needed and, accordingly there is no independent research

and development function. Time spent by staff on research and development is allocated based on time

estimates.

164



Selling and administrative expenses include direct staff and overhead allocations for all functions executing

sales and marketing efforts, direct and indirect, and all business operating functions such as financing,

accounting, people management, legal, and business systems.


Net impairment loss from financial assets represents the impairment of trade receivables.

Finance revenue

Finance revenue includes primarily bank interest receivable and other interest earned.

Finance expense

Finance expense includes primarily bank interest payable and similar charges and interest on lease liabilities.

Income tax expense

Income tax includes primarily current tax and foreign tax and deferred tax provisions relating to tax withheld

by non-US customers, certain foreign direct taxes and US state income tax. As a pass-through entity, federal

tax obligations pass-through to invested partners. Deferred taxes consist of adjustments for employee

compensation, depreciation, and other common reserves and allowances.

5. Results of operations

The following table summarises the statement of comprehensive income for the periods indicated:

OSIsoft OSIsoft

2020 2019

Interim Interim

Period Period OSIsoft OSIsoft OSIsoft

(unaudited) (unaudited) FY 2019 FY 2018 FY 2017 –––––––––– –––––––––– –––––––– –––––––– ––––––––

($, millions)

Revenue 245.0 223.7 470.0 439.1 422.7

Cost of sales (50.0) (56.7) (93.9) (84.8) (81.9)

Gross profit 195.0 167.0 376.1 354.3 340.8

Operating expenses

Research and development costs (14.5) (14.7) (43.8) (39.4) (42.2)

Selling and administrative expenses (122.0) (123.5) (207.7) (206.6) (190.3)

Net impairment gain/(loss) on financial (0.5) (1.2) 0.6 1.5 (4.4)

assets

Total operating expenses (137.0) (139.4) (250.9) (244.5) (236.9)

Profit from operations 58.0 27.6 125.2 109.8 104.0

Finance revenue 0.4 0.2 0.2 0.1 0.2

Finance expense (2.3) (2.0) (3.5) (3.2) (3.3)

Profit before tax from continuing

operations 56.1 25.8 121.9 106.7 100.8

Income tax expense (4.1) (3.3) (7.2) (6.7) (4.9)

Profit and total comprehensive income 52.0 22.5 114.7 100.0 95.9

for the period/year

165


OSIsoft 2020 Interim Period compared to OSIsoft 2019 Interim Period

Revenue

Revenue increased by 10 per cent. to $245.0 million for the OSIsoft 2020 Interim Period from $223.7 million

for the OSIsoft 2019 Interim Period. This increase was primarily due to period over period increases in

licence revenue and subscription revenue, as well as an increase in maintenance revenue, which was partially

offset by a decrease in services revenue.

• Subscription. Subscription revenue increased by 86 per cent. to $13.6 million in the OSIsoft 2020

Interim Period from $7.3 million in the OSIsoft 2019 Interim Period. This increase is primarily

attributed to sales made to certain customers preferring a lease or term arrangement as opposed to a

perpetual license arrangement, the terms of which are generally between three and five years.

• Maintenance. Maintenance revenue increased by 10 per cent. to $150.5 million in the OSIsoft 2020

Interim Period from $136.5 million in the OSIsoft 2019 Interim Period. This increase was primarily

due to new maintenance revenue generated by new licence contract sales.

• Licence. Licence contract revenue increased by 4 per cent. to $78.1 million in the OSIsoft 2020

Interim Period from $75.4 million in the OSIsoft 2019 Interim Period. This increase was primarily

due to an increase in sales of new enterprise agreement licence contracts in the OSIsoft 2020 Interim

Period relative to the OSIsoft 2019 Interim Period.

• Services. Services revenue decreased by 38 per cent. to $2.8 million in the OSIsoft 2020 Interim

Period from $4.5 million in the OSIsoft 2019 Interim Period. This decrease was primarily due to fewer

on-site customer engagements particularly with training and the increase in virtual training and

support, which is generally less costly.

Cost of sales

Cost of sales decreased by 12 per cent. to $50.0 million for the OSIsoft 2020 Interim Period from

$56.7 million for the OSIsoft 2019 Interim Period. This decrease was primarily due to elimination of

non-essential travel and onsite service activity, and the provision of technical service and support as a

replacement, as a result of the COVID-19 pandemic in 2020.


Research and development costs decreased slightly by 1 per cent. to $14.5 million for the OSIsoft 2020

Interim Period from $14.7 million for the OSIsoft 2019 Interim Period. This decrease was primarily due to

timing of work by staff applied to research and development projects.


Selling and administrative expenses decreased slightly by 1 per cent. to $122.0 million for the OSIsoft 2020

Interim Period from $123.5 million for the OSIsoft 2019 Interim Period.


Net impairment loss on financial assets decreased by 58 per cent. to $0.5 million for the OSIsoft 2020

Interim Period from $1.2 million for the OSIsoft 2019 Interim Period. This decrease was primarily due to a

change in methodology for estimating bad debts in order to better reflect historical write-offs incurred.

Finance revenue

Finance revenue increased to $0.4 million for the OSIsoft 2020 Interim Period from $0.2 million for the

OSIsoft 2019 Interim Period. This increase was primarily due to interest earned on additional notes

receivable issued to existing external investments over the OSIsoft 2020 Interim Period.

166


Finance expense

Finance expense increased by 15 per cent. to $2.3 million for the OSIsoft 2020 Interim Period from

$2.0 million for the OSIsoft 2019 Interim Period. This increase was primarily due to interest on lease

liabilities accounted for under IFRS 16 resulting from the expansion of OSIsoft offices.

Income tax

Income tax expense increased by 24 per cent. to $4.1 million for the OSIsoft 2020 Interim Period from

$3.3 million for the OSIsoft 2019 Interim Period. This increase was primarily due to significant increase in

pre-tax profit over the period resulting from higher revenue.

OSIsoft FY 2019 compared to OSIsoft FY 2018

Revenue

Revenue increased by 7 per cent. to $470.0 million in OSIsoft FY 2019 from $439.1 million in OSIsoft

FY 2018. The increase was primarily due to an increase in maintenance revenue and licence contract

revenue, as well as an increase in subscription revenue, while services revenue remained consistent with

OSIsoft FY 2018.

• Subscription. Subscription revenue increased by 7 per cent. to $16.4 million in OSIsoft FY 2019 from

$15.3 million in OSIsoft FY 2018. This increase was primarily due to sales made on a lease rather

than perpetual licence basis to certain accounts during the year.

• Maintenance. Maintenance revenue increased by 8 per cent. to $248.0 million in OSIsoft FY 2019

from $229.6 million in OSIsoft FY 2018. This increase was primarily due to new maintenance

revenue generated by new licence contract sales.

• Licence. Licence contract revenue increased by 6 per cent. to $193.8 million in OSIsoft FY 2019 from

$182.8 million in OSIsoft FY 2018. This increase was primarily due to sales of new licence contracts

to new accounts and expansion of licence contracts with a number of existing customers.

• Services. Services revenue remained relatively stable at $11.8 million in OSIsoft FY 2019 compared

with $11.4 million in OSIsoft FY 2018.

Cost of sales

Cost of sales increased by 11 per cent. to $93.9 million in OSIsoft FY 2019 from $84.8 million in OSIsoft

FY 2018. This increase was primarily due to a year over year increase in staff supporting customer service

activities resulting from the increase in sales to new and existing customers.


Research and development costs increased by 11 per cent. to $43.8 million in OSIsoft FY 2019 from

$39.4 million in OSIsoft FY 2018. This increase was primarily due to slightly greater research and

development activity in OSIsoft FY 2019 compared to OSIsoft FY 2018.


Selling and administrative expenses increased slightly by 1 per cent. to $207.7 million in OSIsoft FY 2019

from $206.6 million in OSIsoft FY 2018.


Net impairment gain/(loss) on financial assets decreased by 60 per cent. to a gain of $0.6 million in OSIsoft

FY 2019 from a gain of $1.5 million for OSIsoft FY 2018. This decrease was primarily due to a change in

methodology for estimating bad debts in OSIsoft FY 2019 in order to better reflect historical write-offs

incurred.

167


Finance revenue

Finance revenue increased by 100 per cent. to $0.2 million in OSIsoft FY 2019 from $0.1 million in OSIsoft

FY 2018.

Finance expense

Finance expense increased by 9 per cent. to $3.5 million in OSIsoft FY 2019 from $3.2 million for OSIsoft

FY 2018. This increase was primarily due to an increase in interest on lease liabilities accounted for under

IFRS 16.

Income tax expense

Income tax expense increased by 7 per cent. to $7.2 million in OSIsoft FY 2019 from $6.7 million in OSIsoft

FY 2018. This increase was primarily due to an increase in foreign tax withholdings associated with the

increase in sales to non-US customers.

OSIsoft FY 2018 compared to OSIsoft FY 2017

Revenue

Revenue increased by 4 per cent. to $439.1 million for OSIsoft FY 2018 from $422.7 million for OSIsoft FY

2017. The increase is attributed to year over year increase in revenue generated through the sale of new

licence contracts to new accounts and expansion of licence contracts with a number of existing customers.

In addition, revenue generated by licence maintenance services also increased. Overall annual recurring

licence maintenance revenue remained consistent with OSIsoft FY 2017.

• Subscription. Subscription revenue increased by 18 per cent. to $15.3 million in OSIsoft FY 2018

from $13.0 million in OSIsoft FY 2017. This increase was primarily due to sales made on a lease

rather than perpetual licence basis to certain accounts during the year.

• Maintenance. Maintenance revenue increased by 8 per cent. to $229.6 million in OSIsoft FY 2018

from $213.3 million in OSIsoft FY 2017. This increase was primarily due to new maintenance

revenue generated by new licence contract sales.

• Licences. Licences revenue decreased by 3 per cent. to $182.8 million in OSIsoft FY 2018 from

$187.5 million in OSIsoft FY 2017. This increase was primarily due to the general industry segment

conditions and the timing of sales year-over-year.

• Services. Services revenue increased by 28 per cent. to $11.4 million in OSIsoft FY 2018 from

$8.9 million in OSIsoft FY 2017. This increase was primarily due to greater training and services

activity.

Cost of sales

Cost of sales increased by 4 per cent. to $84.8 million in OSIsoft FY 2018 from $81.9 million for OSIsoft

FY 2017. This increase was primarily due to an increase in the number of staff engaged in customer service

activities resulting from the expansion of sales to new and existing customers.


Research and development costs decreased by 7 per cent. to $39.4 million in OSIsoft FY 2018 from

$42.2 million in OSIsoft FY 2017. This decrease was primarily due to a year over year decrease in the

amount of technical and engineering staff time assigned to research and development activities and greater

emphasis on core products during this period.


Selling and administrative expenses increased by 9 per cent. to $206.6 million in OSIsoft FY 2018 from

$190.3 million in OSIsoft FY 2017. This increase was primarily due to an increase in the number of staff

engaged in sales and marketing activities as well as expenses associated with the implementation of new

business systems.

168



Net impairment gain/(loss) on financial assets was a gain of $1.5 million in OSIsoft FY 2018 compared to a

net impairment loss of $4.4 million in OSIsoft FY 2017 that resulted from a reversal of bad debt expense

due to OSIsoft’s allowance for doubtful accounts being too high.

Finance revenue

Finance revenue decreased by 50 per cent. to $0.1 million in OSIsoft FY 2018 from $0.2 million in OSIsoft

FY 2017.

Finance expense

Finance expense decreased by 3 per cent. to $3.2 million in OSIsoft FY 2018 from $3.3 million in OSIsoft

FY 2017. This decrease was primarily due to a decrease in interest on lease liabilities accounted for under

IFRS 16.

Income tax expense

Income tax expense increased by 37 per cent. to $6.7 million in OSIsoft FY 2018 from $4.9 million in

OSIsoft FY 2017. This increase was primarily due to an increase in foreign tax withholdings associated with

the increase in sales to non-US customers.

6. Liquidity and Capital Resources

During the periods under review, OSIsoft financed operations and capital expenditures through internally

generated cash. Going forward, OSIsoft expects to continue to generate sufficient cash to fund operations

and capital expenditures.

Consolidated statement of cash flows

The financial information in the consolidated statement of cash flows set out below is extracted without

material adjustment from OSIsoft’s historical financial information prepared under IFRS for OSIsoft

FY 2019, OSIsoft FY 2018 and OSIsoft FY 2017 and from OSIsoft’s unaudited financial information

prepared under IFRS for the OSIsoft 2020 Interim Period and the OSIsoft 2019 Interim Period:

OSIsoft OSIsoft

2020 2019

Interim Interim

Period Period OSIsoft OSIsoft OSIsoft

(unaudited) (unaudited) FY 2019 FY 2018 FY 2017 –––––––––– –––––––––– –––––––– –––––––– ––––––––

($, millions)

Net cash generated from operating 122.5 91.9 164.9 128.6 79.0

activities

Net cash flows used in investing (20.4) (7.6) (14.1) (4.3) (2.9)

activities

Net cash flows used in financing (124.0) (88.7) (107.8) (109.8) (86.7)

activities

Net increase/(decrease) in cash and (21.9) (4.5) 43.0 14.5 (10.6)

cash equivalents

Opening cash and cash equivalents 82.7 39.7 39.7 25.2 35.8

Closing cash and cash equivalents 60.8 35.2 82.7 39.7 25.2

Net cash generated from operating activities

Net cash generated from operating activities increased by 33 per cent. to $122.5 million for the OSIsoft 2020

Interim Period from $91.9 million for the OSIsoft 2019 Interim Period. This increase was primarily due to

an increase in cash generated from revenue and improved cash collection in OSIsoft 2020 Interim Period

compared to OSIsoft 2019 Interim Period.

169


Net cash generated from operating activities increased by 28 per cent. to $164.9 million in OSIsoft FY 2019

from $128.6 million in OSIsoft FY 2018. This increase was primarily due to an increase in cash generated

from revenue and improved cash collection in OSIsoft FY 2019 compared to OSIsoft FY 2018.

Net cash generated from operating activities increased by 63 per cent. to $128.6 million for OSIsoft FY 2018

from $79.0 million for OSIsoft FY 2017. This increase was primarily due to an increase in cash generated

from revenue and improved cash collection in OSIsoft FY 2019 compared to OSIsoft FY 2018.

Net cash used in investing activities

Net cash used in investing activities increased by 168 per cent. to $20.4 million for the OSIsoft 2020 Interim

Period from $7.6 million for the OSIsoft 2019 Interim Period. This was primarily due the classification of

certain exchange traded funds as investments rather than cash and cash equivalents due to a change in

accounting treatment, resulting in purchase of financial assets of $35.0 million in the OSIsoft 2020 Interim

Period, which was offset in part by proceeds from the sale of financial assets of $16.9 million and a decrease

in capital expenditure on office expansions and improvements compared to the prior year.

Net cash used in investing activities increased by 228 per cent. to $14.1 million in OSIsoft FY 2019 from

$4.3 million in OSIsoft FY 2018. This increase was primarily due to an increase in investments in leasehold

improvements and fixtures, fittings and office equipment in OSIsoft FY 2019 compared to OSIsoft FY 2018.

In particular, OSIsoft expanded its leasehold in Philadelphia in 2019. Tenant improvements associated with

the expansion involved a one-time $9.0 million expenditure. In addition, OSIsoft replaced server equipment

in its Oakland data centre. The spend was approximately $2.5 million.

Net cash used in investing activities increased by 48 per cent. to $4.3 million in OSIsoft FY 2018 compared

to $2.9 million in OSIsoft FY 2017. This increase was primarily due to an increase in investments in

leasehold improvements and fixtures, fittings and office equipment in OSIsoft FY 2019 compared to OSIsoft

FY 2018.

Net cash used in financing activities

Net cash used in financing activities increased by 40 per cent. to $124.0 million for the OSIsoft 2020 Interim

Period from $88.7 million the OSIsoft 2019 Interim Period. This was primarily due to an increase in cash

used for distributions to members, as well as cash used in principal portion of the lease liability in OSIsoft

2020 Interim Period compared to OSIsoft 2019 Interim Period.

Net cash used in financing activities decreased by 2 per cent. to $107.8 million in OSIsoft FY 2019 from

$109.8 million in OSIsoft FY 2018. This decrease was primarily due to a decrease in cash used in principal

portion of the lease liability in OSIsoft FY 2019 compared to OSIsoft FY 2018.

Net cash used in financing activities increased by 27 per cent. to $109.8 million in OSIsoft FY 2018 from

$86.7 million in OSIsoft FY 2017. This increase was primarily due to an increase in cash used for

distributions to members in OSIsoft FY 2018 compared to OSIsoft FY 2017.

170


Capitalisation and Indebtedness

The table below sets out the capitalisation and indebtedness of OSIsoft as at 31 July 2020, and has been

extracted without material adjustment from OSIsoft’s unaudited consolidated financial information prepared

under IFRS for the OSIsoft 2020 Interim Period.

As at

31 July 2020

Capitalisation and Indebtedness (unaudited)–––––––––––––––––––––––––––– –––––––––– ($, millions)

Total debt 0.0

Members’ equity

Common units 4.3

Retained earnings 31.7

––––––––Total members’ equity 36.0

––––––––As at 31 July 2020, OSIsoft had no indebtedness or indirect or contingent indebtedness, and had cash and

cash equivalents of $60.8 million.

7. Capital Expenditures

OSIsoft’s capital expenditures representing additions for property, plant and equipment were $2.6 million in

the OSIsoft 2020 Interim Period, $13.8 million for OSIsoft FY 2019, $4.4 million for OSIsoft FY 2018 and

$2.9 million for OSIsoft FY 2017. These expenditures were primarily for improvements to long leasehold

buildings, computer equipment, such as servers and telecom equipment, and fixtures and fittings and office

equipment.


Information regarding OSIsoft’s Related Party Transactions is set out in Note 21 to the consolidated financial

statements of the OSIsoft Group set out in Part X (Historical Financial Information of the OSIsoft Group)

and in Section 11 of Part XIV (Additional Information).

9. Off Balance Sheet Arrangements

As of 31 July 2020, OSIsoft did not have any off-balance sheet arrangements.

10. Qualitative and Quantitation Disclosures about Market Risk

Information regarding the main risks which may affect OSIsoft is set out in Note 19 to the consolidated

financial statements of the OSIsoft Group set out in Part X (Historical Financial Information of the OSIsoft

Group) under the headings “Market Risk,” “Credit Risk” and “Liquidity Risk”.

11. Significant Accounting Policies and Critical Accounting Estimates and Assumptions

Information regarding significant accounting policies and critical accounting estimates and assumptions of

OSIsoft is set out in Note 2 to the consolidated financial statements of the OSIsoft Group set out in

Part X (Historical Financial Information of the OSIsoft Group).

171


PART X

HISTORICAL FINANCIAL INFORMATION OF

THE OSISOFT GROUP

SECTION A: ACCOUNTANT’S REPORT ON THE HISTORICAL FINANCIAL INFORMATION

OF THE OSISOFT GROUP

BDO LLP

55 Baker Street

London

W1U 7EU

The Directors 6 November 2020

AVEVA Group plc

High Cross

Madingley Road

Cambridge

CB3 0HB

Numis Securities Limited

10 Paternoster Square

London

EC4M 7LT

Dear Sir or Madam

AVEVA Group plc (the “Company”) and its subsidiaries (together, the “Group”)

OSIsoft, LLC and its subsidiaries (the “OSIsoft Group”)

Introduction

We report on the financial information set out in Section B of Part X (Historical Financial Information of

the OSIsoft Group). This financial information has been prepared for inclusion in the combined class 1

circular and prospectus dated 6 November 2020 of the Company (the “Combined Document”) on the basis

of the accounting policies set out in note 2 to the financial information. This report is required by

item 13.5.21R of the Listing Rules and item 18.3.1 of Annex 1 of the Commission Delegated Regulation

(EU) 2019/980 (the “Prospectus Delegated Regulation”) and is given for the purpose of complying with

these items and for no other purpose.

Responsibilities

The directors of the Company are responsible for preparing the financial information in accordance with

International Financial Reporting Standards as adopted by the European Union.

It is our responsibility to form an opinion on the financial information and to report our opinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed,

which we may have to AVEVA Group plc’s ordinary shareholders as a result of the inclusion of this report

in the Combined Document, and arising under Prospectus Regulation Rule 5.3.2R(2)(f) to any person as and

to the extent there provided, to the fullest extent permitted by the law we do not assume any responsibility

and will not accept any liability to any other person for any loss suffered by any such other person as a result

of, arising out of, or in connection with this report or our statement, required by and given solely for the

LR 13.5.7(3)(a)

LR 13.5.10

LR 13.5.13(1)

LR 13.5.14(1)

Annex 12, 10.2

LR 13.5.18(2)

LR 13.5.21

LR 13.5.22

LR 13.5.23

172


purposes of complying with 13.4.1R(6) of the Listing Rules and item 1.3 of Annex 3 of the Prospectus

Delegated Regulation, consenting to its inclusion in the Combined Document.

Basis of opinion

We conducted our work in accordance with Standards for Investment Reporting issued by the Auditing

Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the

amounts and disclosures in the financial information. It also included an assessment of significant estimates

and judgements made by those responsible for the preparation of the financial information and whether the

accounting policies are appropriate to the entity’s circumstances, consistently applied and adequately

disclosed.

We planned and performed our work so as to obtain all the information and explanations which we

considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the

financial information is free from material misstatement whether caused by fraud or other irregularity or

error.

Our work has not been carried out in accordance with auditing or other standards and practices generally

accepted in the United States or other jurisdictions outside the United Kingdom and accordingly should not

be relied upon as if it had been carried out in accordance with those standards and practices.

Opinion

In our opinion, the financial information gives, for the purposes of the Combined Document, a true and fair

view of the state of affairs of the OSIsoft Group as at 31 December 2017, 31 December 2018 and

31 December 2019 and of its results, cash flows and changes in equity for the years then ended in accordance

with International Financial Reporting Standards as adopted by the European Union and has been prepared

in a form that is consistent with the accounting policies adopted in the Company’s latest annual accounts.

Declaration

For the purposes of Prospectus Regulation Rule 5.3.2R(2)(f) we are responsible for this report as part of the

Combined Document and declare that, to the best of our knowledge, the information contained in this report

is in accordance with the facts and makes no omission likely to affect its import. This declaration is included

in the Combined Document in compliance with item 1.2 of Annex 3 of the Prospectus Delegated Regulation.

Yours faithfully

BDO LLP

Chartered Accountants

BDO LLP is a limited liability partnership registered in England and Wales (with registered number

OC305127)

173


SECTION B: HISTORICAL FINANCIAL INFORMATION OF THE OSISOFT GROUP FOR

OSISOFT FY 2019, OSISOFT FY 2018 AND OSISOFT FY 2017

Statement of Comprehensive Income

OSIsoft OSIsoft OSIsoft

Notes FY 2019 FY 2018 FY 2017 ––––– –––––––– –––––––– ––––––––

($, millions)

Revenue 3 470.0 439.1 422.7

Cost of sales (93.9) (84.8) (81.9) –––––––– –––––––– ––––––––Gross profit 376.1 354.3 340.8

Operating expenses

Research and development costs (43.8) (39.4) (42.2)

Selling and administrative expenses 4 (207.7) (206.6) (190.3)

Net impairment gain/(loss) on financial assets 0.6 1.5 (4.4) –––––––– –––––––– ––––––––Total operating expenses (250.9) (244.5) (236.9) –––––––– –––––––– ––––––––

Profit from operations 5 125.2 109.8 104.0

Finance revenue 6 0.2 0.1 0.2

Finance expense 7 (3.5) (3.2) (3.3) –––––––– –––––––– ––––––––Profit before tax from continuing operations 121.9 106.7 100.8

Income tax expense 9 (7.2) (6.7) (4.9) –––––––– –––––––– ––––––––Profit for the year and total comprehensive

income 114.7 100.0 95.9 –––––––– –––––––– ––––––––All activities relate to continuing activities.

The accompanying notes are an integral part of these financial statements.

174


Consolidated Balance Sheet

As at 31 December–––––––––––––––––––––––––––––––––––

As at

1 January

Notes 2019 2018 2017 2017 ––––– –––––––– –––––––– –––––––– ––––––––

($, millions)

Non-current assets

Goodwill 11 21.0 21.0 21.0 21.0

Other intangible assets 12 0.5 0.6 0.6 0.6

Property, plant and equipment 13 34.4 28.5 30.0 32.7

Right-of-use assets 18 47.2 41.6 38.7 44.1

Deferred tax assets 20 2.5 2.0 2.2 2.0

Trade and other receivables 15 3.7 2.6 3.6 2.3

Contract-related costs 15.8 14.5 15.3 13.2

Investments 14 0.5 0.5 0.9 0.5 –––––––– –––––––– –––––––– –––––––– 125.6 111.3 112.3 116.4 –––––––– –––––––– –––––––– ––––––––

Current assets

Trade and other receivables 15 175.4 183.2 180.9 131.8

Contract-related costs 2 6.6 6.1 6.0 5.4

Financial assets 0.5 – – 0.2

Contract assets 2 2.9 4.0 5.1 1.7

Cash and cash equivalents 16 82.7 39.7 25.2 35.8 –––––––– –––––––– –––––––– –––––––– 268.1 233.0 217.2 174.9 –––––––– –––––––– –––––––– ––––––––Total assets 393.7 344.3 329.5 291.3

–––––––– –––––––– –––––––– ––––––––Equity

Common units 4.3 4.3 4.3 4.3

Retained earnings 96.8 82.1 82.1 62.3 –––––––– –––––––– –––––––– ––––––––Total equity 101.1 86.4 86.4 66.6 –––––––– –––––––– –––––––– ––––––––

Current liabilities

Trade and other payables 17 63.9 56.4 53.9 48.3

Contract liabilities 152.8 137.2 128.3 114.6

Lease liabilities 18 8.4 4.6 7.5 6.2

Current tax liabilities 2.8 0.7 – – –––––––– –––––––– –––––––– –––––––– 227.9 198.9 189.7 169.1 –––––––– –––––––– –––––––– ––––––––

Non-current liabilities

Lease liabilities 18 55.9 50.2 44.5 49.5

Contract liabilities 8.0 8.4 8.5 5.9

Other liabilities 0.8 0.4 0.4 0.2 –––––––– –––––––– –––––––– –––––––– 64.7 59.0 53.4 55.6 –––––––– –––––––– –––––––– ––––––––Total equity and liabilities 393.7 344.3 329.5 291.3

–––––––– –––––––– –––––––– ––––––––The accompanying notes are an integral part of these financial statements.

LR 13.5.18(1)

175


Consolidated Statement of Changes in Members’ Equity

Common Retained Total

Notes units earnings equity ––––– –––––––– –––––––– ––––––––

($, millions)

At 1 January 2017 4.3 62.3 66.6

Profit for the year – 95.9 95.9

Distributions to members 10 – (76.1) (76.1) –––––––– –––––––– ––––––––At 31 December 2017 4.3 82.1 86.4





–––––––– –––––––– ––––––––The accompanying notes are an integral part of these financial statements.

LR 13.5.18(4)

176


Consolidated Cash Flow Statement


Notes FY 2019 FY 2018 FY 2017 ––––– –––––––– –––––––– ––––––––

($, millions)

Cash flows from operating activities

Profit for the year 114.7 100.0 95.9

Income tax expense 9 7.2 6.7 4.9

Net finance expense 7 3.3 3.0 3.2

Amortisation of intangible assets 12 0.1 0.1 0.1

Depreciation of property, plant and equipment 13, 18 14.8 13.3 13.0

and right-of-use assets

Foreign exchange loss, net 1.5 1.2 0.2

Net impairment (gain)/loss on financial assets (0.6) (1.5) 4.4

Changes in working capital:

Trade and other receivables 4.2 (4.6) (56.1)

Contract-related costs (1.8) 0.7 (2.7)

Contract assets 1.1 1.1 (3.4)

Trade and other payables 7.5 2.4 5.6

Contract liabilities 15.1 8.8 16.3 –––––––– –––––––– ––––––––Cash generated from operating activities before tax 167.1 131.2 81.4

Income taxes paid (2.2) (2.6) (2.4) –––––––– –––––––– ––––––––Net cash generated from operating activities 164.9 128.6 79.0 –––––––– –––––––– ––––––––Cash flows from investing activities

Purchase of property, plant and equipment 13 (13.8) (4.4) (2.9)

Purchase of financial assets (0.5) – –

Purchase of intangible assets 12 – (0.1) (0.1)

Interest received 6 0.2 0.2 0.1 –––––––– –––––––– ––––––––Net cash flows used in investing activities (14.1) (4.3) (2.9) –––––––– –––––––– ––––––––Cash flows from financing activities

Principal portion of the lease liability 18 (4.3) (6.6) (7.3)

Distribution to members 10 (100.0) (100.0) (76.1)

Interest paid 18 (3.5) (3.2) (3.3) –––––––– –––––––– ––––––––Net cash flows used in financing activities (107.8) (109.8) (86.7) –––––––– –––––––– ––––––––Net increase in cash and cash equivalents 43.0 14.5 (10.6)

Opening cash and cash equivalents 16 39.7 25.2 35.8 –––––––– –––––––– ––––––––Closing cash and cash equivalents 82.7 39.7 25.2

–––––––– –––––––– ––––––––The accompanying notes are an integral part of these financial statements.

LR 13.5.18(3)

177


Notes to the consolidated financial statements

1. Corporate information

OSIsoft, LLC (“OSIsoft”) is incorporated in Delaware, United States as a Delaware limited liability

company (LLC). As of 31 December 2019, OSIsoft operated wholly owned subsidiaries located in Australia,

Argentina, Bahrain, Brazil, Canada, Chile, China, Czech Republic, France, Germany, India, Italy, Japan,

Mexico, Norway, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Turkey and the United

Kingdom with additional sales offices located internationally and in the United States. OSIsoft’s

headquarters are in San Leandro, California.

OSIsoft’s country of domicile is the United States, and its registered office and principal place of business

is located at 777 Davis St., Suite 250, San Leandro, CA 94577.

2. Key accounting policies

Explained below are OSIsoft’s key accounting policies.

(a) Basis of preparation

This historical financial information presents the financial track record of OSIsoft for the financial

year ended 31 December 2019 (“OSIsoft FY 2019”), the financial year ended 31 December 2018

(“OSIsoft FY 2018”) and the financial year ended 31 December 2017 (“OSIsoft FY 2017”) and has

been prepared for inclusion in the combined circular and prospectus to shareholders of AVEVA Group

plc (“AVEVA”) in connection with the Rights Issue and the Acquisition to be undertaken by AVEVA

and with Consideration Shares Admission.

These consolidated financial statements have been prepared in accordance with International

Financial Reporting Standards, International Accounting Standards and Interpretations issued by the

International Accounting Standards Board (“IASB”) and as adopted by the European Union

(collectively “IFRS”) and the requirements of the Prospectus Regulation and the Listing Rules. The

OSIsoft Group has adopted IFRS in 2019 with an IFRS transition date of 1 January 2017. The

transitional disclosures required under IFRS are included in note 22.

The principal accounting policies applied in the preparation of these consolidated financial statements

are set out below. These policies have been consistently applied to all periods presented. The

preparation of consolidated financial statements in compliance with IFRS requires the use of certain

critical accounting estimates. It also requires management to exercise judgment in applying the

OSIsoft Group’s accounting policies. The areas where significant judgments and estimates have been

made in preparing the consolidated financial statements and their effect are disclosed below.

The consolidated historical financial information has been prepared on a going concern basis and

under the historical cost convention, as modified by the revaluation of financial assets and financial

liabilities at fair value through profit or loss.

OSIsoft’s presentational currency is US dollars. The historical financial information is presented in

millions of US dollars, unless otherwise stated. Due to rounding, numbers presented throughout this

document may not add up precisely to the totals provided and percentages may not precisely reflect

the absolute figures.

The historical financial information has been adjusted, where applicable, to reflect the accounting

policies adopted by AVEVA in its audited financial statements for the year ended 31 March 2020, as

required by item 13.5.4R(1) of the Listing Rules.

The principal accounting policies adopted in the preparation of the historical financial information are

set out below.

Going concern and COVID-19

A novel strain of coronavirus (“COVID-19”) emerged globally in December 2019 and was declared

a pandemic in March 2020. The extent to which COVID-19 will impact OSIsoft’s customers,

LR 13.5.18(5)

LR 13.5.18(6)

LR 13.5.6

LR 13.5.7(1)

LR 13.5.8(1)

LR 13.5.30

LR 13.5.4(1)

178


business, results and financial condition will depend on current and future developments, which are

highly uncertain and cannot be predicted at this time. While OSIsoft’s day-to-day operations since

March 2020 have been impacted, OSIsoft has suffered less immediate impact as most staff can work

remotely and can continue to develop OSIsoft’s product offerings. OSIsoft continues to expect

positive cash from operations. As such, OSIsoft does not believe the COVID-19 outbreak has a

significant impact on its ability to continue as a going concern. Refer to note 23 for further discussion

on the impact of the COVID-19 pandemic.

(b) Revenue

OSIsoft generates its revenue principally through the supply of:

• subscriptions;

• perpetual licences;

• maintenance; and

• services.

Revenue is recognised upon transfer of control of the promised software and/or services to customers.

OSIsoft enters into contracts which can include combinations of software licences, support and

maintenance fees and other professional services, each of which is capable of being distinct and

usually accounted for as separate performance obligations. Where there are multiple performance

obligations, revenue is measured at the value of the expected consideration received in exchange for

the services, allocated by the relative stand-alone selling prices of each of the performance

obligations.

Subscriptions

Subscription consists of an on-premise term licence with coterminous support for identical software

and is generally one year in length. Revenue for the term software licence is recognised at the point

in time that the licence is transferred to the customer, while revenue attributable to support is

recognised rateably over the support period. A contract asset is recognised when revenue recognised

exceed fees billed to date.

Perpetual Licences

The majority of OSIsoft’s software is sold under software licence agreements (“SLAs”). The SLA

includes a perpetual software licence and post contract support and maintenance that covers a

12-month period with optional annual renewals thereafter. The software licence and support are

distinct performance obligations. The support period commences upon the later of the licence being

delivered and the support term beginning. Software licences are not sold separately and OSIsoft

estimates the stand-alone selling price of the software licences using the market assessment approach.

Support is commonly sold on a stand-alone basis through renewals, thus the stand-alone selling price

for support is based on the price when it is sold separately. An invoice is generated when the software

is delivered, and payment is usually due within 30 days. Revenue for the perpetual software licence

is recognised at the point in time that the licence is transferred to the customer while revenue for PCS

is recognised rateably over the support period.

OSIsoft, in addition to selling directly to end-customers, also sells its software to resellers and

distributors, typically under SLA arrangements. Provided that the criteria for revenue recognition

have been met, OSIsoft recognises revenue gross on a basis consistent with sales to end-customers.

An enterprise agreement (“EA”) includes a perpetual software licence for enterprise-wide deployment

without the need to purchase individual site licences and support that spans multiple periods (typically

five years). In addition, there are enhanced support and training services offered to EA customers in

order to optimise the benefit of the PI System. The support and services are estimated as a percentage

of the licence fee. An invoice for the licence and first year of support and services is generated when

179


the software is delivered, and the payment is usually due within 30 days. Support and services for

subsequent years are billed and paid annually generally at the beginning of each contract year.

Revenue for the perpetual software licence is recognised at the point in time that the licence is

transferred to the customer while revenue attributed to support is recognised rateably over the annual

support term.

Maintenance

Revenue is recognised rateably over the period of the contract, which is typically 12 months. The

stand-alone selling price of a customer’s fee attributable to support and maintenance is reviewed

periodically. On average, the element attributable to customer support and maintenance as a

proportion of the initial software delivery is 15 to 20 per cent.

Services

Services consist primarily of training, which is recognised upon completion.

Contract-related costs

OSIsoft defers incremental contract costs, which are comprised of sales commissions. Deferred

contract costs are amortised over a six-year amortisation period and expenses are recorded within

selling and administrative expenses. Amortisation of contract-related costs was $6.9 million,

$6.5 million, and $6.2 million for OSIsoft FY 2019, OSIsoft FY 2018 and OSIsoft FY 2017

respectively.

Commissions related to SLA and EA arrangements are paid based on the software licence and first

year of support. Normally, sales commissions paid for customer contract renewals are not

commensurate with the commissions paid for new contracts. It follows that the commissions paid for

new contracts also relate to expected future renewals of these contracts. Accordingly, the OSIsoft

Group amortises sales commissions paid for new customer contracts on a straight-line basis over the

expected customer life, based on expected renewal frequency. The current average customer life is

six years. If the expected amortisation period is one year or less the costs are expensed when incurred.

Management expects that all commissions paid as a result of obtaining contracts are recoverable.

Thus, no impairment loss in relation to the costs capitalised have been recognised during OSIsoft

FY 2019, OSIsoft FY 2018 or OSIsoft FY 2017.

(c) Significant accounting judgements

Segments

Operating segments are defined as components of OSIsoft about which separate financial information

is available that is evaluated regularly by the chief operating decision-maker, or decision-making

group, in deciding how to allocate resources and in assessing performance. All activities relate to the

sale of software licences, including the maintenance and services component of the sales

arrangements. Accordingly, OSIsoft allocates resources and assesses performance on a consolidated

basis and does not disaggregate its operations on either a product or geographical basis. OSIsoft has

concluded therefore that only one operating segment exists.

Revenue attributable to non-US operations is $4.1 million, $4.4 million, and $4.4 million for OSIsoft

FY 2019, OSIsoft FY 2018 and OSIsoft FY 2017 respectively.

The right-of-use assets held by non-US operations amounted to $16.2 million, $9.8 million, and

$11.8 million for OSIsoft FY 2019, OSIsoft FY 2018 and OSIsoft FY 2017 respectively. There were

no other significant non-current asset balances held by foreign countries.

Contract-related costs

Deferred commissions paid on the initial acquisition of a contract are amortised rateably over an

estimated period of benefit of six years, which is the estimated customer life. OSIsoft determined the

180


period of amortisation for deferred commissions by taking into consideration current customer

contract terms, historical customer retention, and other factors.

Leases

At commencement, OSIsoft records a lease liability at the present value of future lease payments, net

of any future lease incentives to be received. Lease agreements may include options to renew the lease

term, which is not included in the lease periods to calculate future lease payments unless it is

reasonably certain OSIsoft will renew the lease. OSIsoft estimates its incremental borrowing rate

(“IBR”) based on the information available at the lease commencement date in determining the

present value of lease payments. In determining the appropriate IBR, OSIsoft considers information

including, but not limited to, the lease term and the currency in which the arrangement is

denominated. The weighted-average IBR at 1 January 2017 is 6.27 per cent.

(d) Significant accounting estimates

Impairment of goodwill

Goodwill arising on acquisition is allocated to cash-generating units (“CGUs”) expected to benefit

from the business combination’s synergies and represents the lowest level at which goodwill is

monitored for internal management purposes at which cash flows are independent of other CGUs. The

recoverable amount of the CGU to which goodwill has been allocated is tested for impairment

annually and when events or changes in circumstance indicate that it might be impaired. Refer to

note 11 for further detail.

Impairment of Long-Lived Assets

The carrying values of property, plant and equipment, right-of-use assets and intangible assets other

than goodwill are reviewed for impairment when events or changes in circumstance indicate the

carrying value may be impaired. If any such indication exists and where the carrying values exceed

the estimated recoverable amount, the assets or CGUs are written down to their recoverable amount.

The recoverable amount is the greater of net selling price and value in use. In assessing value in use,

the estimated future cash flows are discounted to their present value using a pre-tax discount rate that

reflects current market assessments of the time value of money and the risks specific to the asset. For

an asset that does not generate largely independent cash inflows, the recoverable amount is

determined for the CGU to which the asset belongs. Impairment losses are recognised in the statement

of comprehensive income in the selling and administrative expenses line item. No impairment of

long-lived assets have been recorded in OSIsoft FY 2019, OSIsoft FY 2018 or OSIsoft FY 2017.

Trade receivables

OSIsoft applies the IFRS 9 simplified approach to measuring expected credit losses which uses a

lifetime expected credit loss allowance for all trade receivables.

OSIsoft’s trade receivables are derived from sales to customers. OSIsoft performs ongoing credit

evaluations of the customer’s financial condition and generally requires no collateral from customers.

OSIsoft maintains an allowance for doubtful accounts when deemed necessary. OSIsoft estimates its

allowance for doubtful accounts by providing for a general allowance amount based on historical bad

debt experiences. The estimate considers historical bad debts, customer credit-worthiness and current

economic trends. After all attempts to collect a receivable have failed, the receivable is written off

against the allowance.

The provision for impairment of trade receivables at 31 December 2019 was $3.6 million

(2018: $5.4 million, 2017: $6.5 million). Details of the provision for impairment of receivables are

contained in note 15.

No customer accounted for more than 10 per cent. of outstanding trades receivable as at

31 December 2019, 31 December 2018, or 31 December 2017. No customer accounted for more than

10 per cent. of revenue in OSIsoft FY 2019, OSIsoft FY 2018 or OSIsoft FY 2017.

181


Contract assets

OSIsoft records a contract asset when it has an unconditional right to consideration in exchange for

goods or services provided to a customer, in advance of the customer being invoiced. OSIsoft has

determined that the contract asset is recoverable and therefore did not record a provision for

impairment or any impairment losses for OSIsoft FY 2019, OSIsoft FY 2018 or OSIsoft FY 2017.

(e) Statement of OSIsoft Group accounting policies

Basis of consolidation

The consolidated financial statements comprise the financial statements of OSIsoft and its

subsidiaries for OSIsoft FY 2019, OSIsoft FY 2018 and OSIsoft FY 2017.

Consolidation of a subsidiary begins when OSIsoft obtains control over the subsidiary and ceases

when OSIsoft loses control of the subsidiary. Control is achieved when OSIsoft is exposed, or has

rights, to variable returns from its involvement with an investee and has the ability to affect those

returns through its power over the investee. Generally, there is a presumption that a majority of voting

rights results in control. Specifically, OSIsoft controls an investee if, and only if, the OSIsoft Group

has:

• power over the investee (i.e., existing and potential rights that give it the current ability to

direct the relevant activities of the investee);

• exposure, or rights, to variable returns from its involvement with the investee; and

• the ability to use its power over the investee to affect its return.

If OSIsoft loses control over a subsidiary, it derecognises the related assets (including goodwill),

liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is

recognised in profit or loss. Any investment retained is recognised at fair value, with any excess of

the cost of acquisition over this value being capitalised as goodwill.

Business combinations

Business combinations are accounted for using the acquisition method. The cost of an acquisition is

measured as the aggregate of the consideration transferred, which is measured at acquisition date fair

value. Any contingent consideration to be transferred by the acquirer will be recognised at fair value

at the acquisition date. Contingent consideration classified as equity is not remeasured and its

subsequent settlement is accounted for within equity. Contingent consideration which is not classified

as equity is measured at fair value with the changes in fair value recognised in the statement of profit

or loss.

Acquisition-related costs are expensed as incurred and included in administrative expenses.

Foreign currencies

The functional and presentational currency of OSIsoft is US dollars. Transactions in foreign

currencies are initially recorded at the functional currency rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional

currency rate of exchange ruling at the balance sheet date. All differences are taken to the statement

of comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated

using the exchange rate as at the date of the initial transaction.

All subsidiaries have a functional currency of US dollars. OSIsoft considers the functional currency

of its foreign entities to be the same as the functional currency of the parent company. This is on the

basis that the foreign entities have no significant degree of autonomy and perform sales and marketing

activities as an extension of the parent company.

182


Goodwill

Goodwill on acquisitions is initially measured at cost, being the excess of the cost of the business

combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and

contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated

impairment losses. For the purpose of impairment testing, goodwill acquired in a business

combination is allocated to each of OSIsoft’s CGUs that are expected to benefit from the combination,

irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the

goodwill associated with the operation disposed of is included in the carrying amount of the operation

when determining the gain or loss on disposal of the operation. Goodwill disposed of in this

circumstance is measured on the basis of the relative values of the operation disposed of and the

portion of the CGU retained.

Intangible assets

Intangible assets acquired separately are capitalised at cost and from a business acquisition are

capitalised at fair value as at the date of acquisition. Following initial recognition, the cost model is

applied to each class of intangible asset as set out below. Amortisation of intangible assets is included

within selling and administrative expenses.

Expenditure on internally developed intangible assets, excluding development costs, is taken to the

statement of comprehensive income in the year in which it is incurred. Internal software development

expenditure is recognised as an intangible asset only after its technical feasibility and commercial

viability can be demonstrated.

Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a

prospective basis. Amortisation is calculated on a straight-line basis over the estimated useful

economic lives of the asset, which are as follows:

Years ––––––––

Software 3 ––––––––

Research expenditure

Research expenditure is written off in the year of expenditure.

Property, plant and equipment

Property, plant and equipment is stated at cost less depreciation and any accumulated impairment

losses. Depreciation is calculated using the straight-line method over the estimated useful lives of the

assets ranging from three to seven years. Leasehold improvements are amortised on a straight-line

basis over the shorter of the lease term or estimated useful life of the asset, generally ten years. The

useful economic life for each asset class is as follows:

Years ––––––––

Leasehold improvements 10

Furniture and fixtures 7

Computer equipment 5

Office equipment 5 ––––––––

Leasehold improvements are amortised on a straight-line basis over the shorter of the lease term and

the estimated useful economic life of the asset, generally being ten years.

183


Impairment of non-current assets

The carrying values of property, plant and equipment, right-of-use assets and intangible assets other

than goodwill are reviewed for impairment when events or changes in circumstance indicate the

carrying value may be impaired. If any such indication exists and where the carrying values exceed

the estimated recoverable amount, the assets or CGUs are written down to their recoverable amounts.

The recoverable amount is the greater of net selling price and value in use. In assessing value in use,

the estimated future cash flows are discounted to their present value using a pre-tax discount rate that

reflects current market assessments of the time value of money and the risks specific to the asset. For

an asset that does not generate largely independent cash inflows, the recoverable amount is

determined for the CGU to which the asset belongs. No impairment of long-lived assets has been

recorded in OSIsoft FY 2019, OSIsoft FY 2018 or OSIsoft FY 2017.

Leases

In January 2016, the IASB issued IFRS 16, which supersedes the previous leases standard, IAS 17,

Leases (“IAS 17”), and related interpretations. The standard introduced a single lessee accounting

model and requires a lessee to recognise leases on its statement of financial position, represented by

right-of-use assets and lease obligations. IFRS 16 has been applied to all periods presented in

accordance with IFRS 1. Please refer to note 22 for further discussion.

OSIsoft recognises right-of-use assets at the commencement date of the lease (i.e. the date that the

underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated

depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost

of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred,

and lease payments made at or before the commencement date less any lease incentives received.

Unless OSIsoft is reasonably certain to obtain ownership of the leased asset at the end of the lease

term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its

estimated useful life and the lease term. Right-of-use assets are subject to impairment review.

At the commencement date of the lease, OSIsoft also recognises lease liabilities. Lease liabilities are

measured at the present value of lease payments to be made over the lease term. The lease payments

include fixed payments (including in substance fixed payments) less any lease incentives receivable,

variable lease payments that depend on an index or a rate, and amounts expected to be paid under

residual value guarantees. The lease payments also include the exercise price of a purchase option

reasonably certain to be exercised by OSIsoft and payments of penalties for terminating a lease, if the

lease term reflects OSIsoft exercising the option to terminate. The variable lease payments that do not

depend on an index or a rate are recognised as expense in the period on which the event or condition

that triggers the payment occurs.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of

interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities

is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed

lease payments or a change in the assessment to purchase the underlying asset. The carrying amount

of right-of-use assets are also remeasured to reflect this change in lease liabilities.

OSIsoft determines the lease term as the non-cancellable term of the lease, together with any periods

covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods

covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

Contract assets and liabilities

OSIsoft records a contract asset when the entity’s right to consideration is conditional on something

other than the passage of time, for example future performance of the entity. This situation arises

when the software licence performance obligation, from a multi-year contract, has been delivered to

a customer and the revenue recognised at a point in time and invoicing is conditional on further

performance. The carrying amount is reduced by allowances for expected credit losses under IFRS 9,

as necessary. When the invoices are raised the contract asset values are reclassified to trade

184


receivables. OSIsoft has determined that the estimated credit losses for contract assets is immaterial

for OSIsoft FY 2019, OSIsoft FY 2018 or OSIsoft FY 2017.

Contract liabilities comprise OSIsoft’s obligation to transfer goods or services to a customer for which

OSIsoft has received payment from the customer. This situation arises when the customer is invoiced

in advance of the transfer and recognition of maintenance and subscriptions.

Trade and other receivables

Trade receivables, which generally have 30 to 90-day terms, are typically held within a business

model with the objective to hold in order to collect contractual cash flows. As such, trade receivables

are recorded initially at fair value, and at amortised cost thereafter. This results in their recognition

and subsequent measurement at original invoice amount less an allowance for any uncollectible

amounts. An estimate for doubtful debts is made when collection of the full amount is no longer

probable.

Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that

there is no reasonable expectation of recovery include, amongst others:

• the debtor entering bankruptcy or administration; and

• the outcome of legal proceedings.

OSIsoft applies the IFRS 9 simplified approach to measuring expected credit losses which uses a

lifetime expected credit loss allowance for all trade receivables.

OSIsoft performs ongoing credit evaluations of the customer’s financial condition and generally

requires no collateral from customers. OSIsoft maintains an allowance for doubtful accounts when

deemed necessary. OSIsoft estimates its allowance for doubtful accounts by providing for a general

allowance amount based on historical bad debt experiences. The estimate considers historical bad

debts, customer credit-worthiness and current economic trends. After all attempts to collect a

receivable have failed, the receivable is written off against the allowance. The provision for

impairment of trade receivables at 31 December 2019 was $3.6 million (2018: $5.4 million, 2017:

$6.5 million). Details of the provision for impairment of receivables are contained in note 15.

Software development costs

Certain software development costs incurred subsequent to the establishment of technological

feasibility are required to be capitalised and amortised over the estimated lives of the related products.

Technological feasibility is established upon completion of a detailed programme design or working

model. As of 31 December 2019, 31 December 2018, and 31 December 2017, OSIsoft did not have

any software development costs capitalised as the amounts qualifying for capitalisation were not

considered significant. Software development costs have been charged to research and development

in the statement of comprehensive income.

Cash and cash equivalents

Cash and short-term deposits in the consolidated balance sheet comprise cash at bank and in hand and

short-term deposits with an original maturity of three months or less. The carrying amount of these

approximates their fair value. For the purpose of the consolidated cash flow statement, cash and cash

equivalents consist of cash and cash equivalents as defined above.

Restricted cash

Restricted cash consists of deposits held as collateral under OSIsoft’s leases. The restricted cash

balances at 31 December 2019 was $9.6 million (2018: $8.4 million, 2017: $8.9 million). These

amounts are included within trade and other receivables.

185


Taxation

OSIsoft files federal and state income tax returns in the United States, as well as in various foreign

jurisdictions. OSIsoft is not a taxable entity for federal income tax purposes. As such, OSIsoft does

not pay federal income tax. However, OSIsoft records federal tax expense related to foreign taxes

withheld on payments received from non-U.S. customers.

Taxable income or loss, which may vary substantially from the net income or net loss reported in the

statement of comprehensive income, is includable in the federal income tax returns of each member.

As a result, there is no current or deferred income tax provision related to OSIsoft’s federal income

taxes. However, certain states and all foreign jurisdictions tax OSIsoft as an entity separate from its

members, which results in current and deferred income tax provisions recorded in the accompanying

statement of comprehensive income. OSIsoft accounts for its state and foreign income taxes under

IAS 12 – Income Taxes.

Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet

date between the tax bases of assets and liabilities and their carrying amounts for financial reporting

purposes.

Deferred tax liabilities are recognised for all taxable temporary differences:

• except where the deferred tax liability arises from goodwill amortisation or the initial

recognition of an asset or liability in a transaction that is not a business combination and, at the

time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, except

where the timing of the reversal of the temporary differences can be controlled and it is

probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused

tax assets and unused tax losses to the extent that it is probable that taxable profit will be available

against which the deductible temporary differences, carry-forward of unused tax assets and unused

tax losses can be utilised:

• except where the deferred tax asset relating to the deductible temporary difference arises from

the initial recognition of an asset or liability in a transaction that is not a business combination

and, at the time of the transaction, affects neither the accounting profit nor taxable profit or

loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries,

deferred tax assets are only recognised to the extent that it is probable that the temporary

differences will reverse in the foreseeable future and taxable profit will be available against

which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the

extent that it is no longer probable that sufficient taxable profit will be available to allow all or part

of the deferred income tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year

when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been

enacted or substantively enacted at the balance sheet date.

Revenue, expenses and assets are recognised net of the amount of sales taxes except:

• where the sales tax incurred on a purchase of goods and services is not recoverable from the

taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of

the asset or as part of the expense item as applicable; and

• where receivables and payables are stated with the amount of sales taxes included.

186


The net amount of sales taxes recoverable from, or payable to, the taxation authority is included as

part of receivables or payables in the consolidated balance sheet.

Common units

OSIsoft’s membership agreement (as amended and restated) has authorised OSIsoft to issue 120,000

units of no par value membership units, all designated as “Common Units”.

Issued share capital consists of 99,519 Common Units issued and outstanding with no par value. No

new units were issued and no transactions in OSIsoft’s Common Units during OSIsoft FY 2019,

OSIsoft FY 2018 or OSIsoft FY 2017.

Share premium consists of additional consideration for shares above the nominal value of shares

issued.

Defined contribution plan

OSIsoft offers a defined contribution retirement savings plan under Section 401(k) of the Internal

Revenue Code. This plan covers all employees who meet minimum age and service requirements and

allows participants to defer a portion of their annual compensation on a pre-tax basis. During 2014,

at the approval of the board of directors, OSIsoft implemented an employer-match program for

qualified employees enrolled in retirement-savings programs. There is no vesting period for matching

contributions; all are fully vested when contributed. During OSIsoft FY 2019, OSIsoft FY 2018 and

OSIsoft FY 2017, OSIsoft contributed matching funds of $2.9 million, $2.8 million, and $2.6 million

respectively.

3. Revenue

An analysis of OSIsoft’s revenue is as follows:


FY 2019 FY 2018 FY 2017 ––––––– ––––––– –––––––

($, millions)

Subscription support 16.4 15.3 13.0

Maintenance 248.0 229.6 213.3

Software licences 193.8 182.8 187.5

Services 11.8 11.4 8.9 ––––––– ––––––– ––––––– 470.0 439.1 422.7

––––––– ––––––– –––––––Services transferred at a point in time 205.6 194.2 196.4

Services transferred over time 264.4 244.9 226.3 ––––––– ––––––– ––––––– 470.0 439.1 422.7

––––––– ––––––– –––––––Software licences includes revenue related to perpetual licences and term licences embedded in subscription

arrangements. The support elements of licencing arrangements is included within subscription support and

maintenance.

The transaction price allocated to the remaining performance obligations (unsatisfied or partially unsatisfied)

is as follows:


2019 2018 2017 ––––––– ––––––– –––––––

($, millions)

Within one year 155.7 138.8 129.5

More than one year 8.0 9.4 8.7 ––––––– ––––––– –––––––

187


Changes to the contract liabilities balance is as follows:

($, millions) –––––––

At 1 January 2017 120.5

Additions 430.3

Revenue recognised (414.0) –––––––At 31 December 2017 136.8

Additions 442.8


Additions 481.4


–––––––4. Selling and administrative expenses

An analysis of selling and administrative expenses is set out below:


FY 2019 FY 2018 FY 2017 ––––––– ––––––– –––––––

($, millions)

Selling and distribution expenses 100.5 102.8 102.6

Administrative expenses 107.1 103.8 87.7 ––––––– ––––––– ––––––– 207.7 206.6 190.3

––––––– ––––––– –––––––5. Profit from operations

Profit from operations is stated after charging:


FY 2019 FY 2018 FY 2017 ––––––– ––––––– –––––––

($, millions)

Depreciation of right-of-use assets 7.8 7.4 7.3

Depreciation of owned property, plant and equipment 7.0 5.9 5.7

Amortisation of intangible assets 0.1 0.1 0.1

Foreign exchange (gain)/loss, net 1.5 1.2 0.2 ––––––– ––––––– –––––––

6. Finance revenue

Finance revenue is shown below:


FY 2019 FY 2018 FY 2017 ––––––– ––––––– –––––––

($, millions)

Bank interest receivable and other interest earned 0.2 0.1 0.2 ––––––– ––––––– –––––––

7. Finance expense

An analysis of finance expense is set out below:


FY 2019 FY 2018 FY 2017 ––––––– ––––––– –––––––

($, millions)

Interest on lease liabilities 3.5 3.2 3.3 ––––––– ––––––– –––––––

188


8. Staff costs

Staff costs relating to employees (including Executive Directors) are shown below:


FY 2019 FY 2018 FY 2017 ––––––– ––––––– –––––––

($, millions)

Wages and salaries 192.8 180.9 176.3

Defined contribution plan costs 2.9 2.8 2.6

Benefits, insurance, and payroll taxes 45.5 41.5 36.7 ––––––– ––––––– ––––––– 241.2 225.2 215.6

––––––– ––––––– –––––––The average number of persons (including Executive Directors) employed by the OSIsoft Group was as

follows:


FY 2019 FY 2018 FY 2017 ––––––– ––––––– –––––––

Project delivery and customer support 586 557 509

Research, development and product support 273 256 273

Sales and marketing 327 358 345

Administration 277 273 244 ––––––– ––––––– ––––––– 1,463 1,444 1,371

––––––– ––––––– –––––––9. Income tax expense

(a) Tax on profit

The major components of income tax expense are as follows:


FY 2019 FY 2018 FY 2017 ––––––– ––––––– –––––––

($, millions)

Tax charged in statement of comprehensive income

Current tax 3.5 2.4 2.2

Foreign tax 4.3 4.2 2.9

Adjustments in respect of prior periods (0.1) (0.1) – ––––––– ––––––– –––––––

7.7 6.5 5.1 ––––––– ––––––– –––––––

Deferred tax

Origination and reversal of temporary differences (0.5) 0.2 (0.2)

(note 20) ––––––– ––––––– –––––––

Total income tax expense reported in statement of

comprehensive income 7.2 6.7 4.9

––––––– ––––––– –––––––

189


(b) Reconciliation of the total tax charge

The differences between the total tax charge shown above and the amount calculated by applying the

weighted average corporation tax rate for the non-US group to the profit before tax are as follows:


FY 2019 FY 2018 FY 2017 ––––––– ––––––– –––––––

($, millions)

Tax on profit before tax at weighted average of

25.3 per cent. (2018: 26.68 per cent., 2017:

26.45 per cent.) for the non-US group 31.9 29.2 26.9

Effects of:

– expenses not deductible for tax purposes 0.2 0.2 0.2

– non-taxable income (0.1) (0.1) (0.1)

– Non creditable foreign withholding tax 4.2 4.3 2.9

– LLC non-taxable status (29.0) (26.8) (25.0)

– differing tax rates – (0.1) – ––––––– ––––––– –––––––

Income tax expense reported in statement of


––––––– ––––––– –––––––OSIsoft’s effective tax rate for the year was: 5.63 per cent. (2018: 5.53 per cent., 2017: 7.78 per cent.).

OSIsoft’s future tax charge and effective tax rate could be affected by several factors, including:

changes in domestic and international tax laws and their interpretation; still to be determined tax

reform proposals in the EU; and the continuing OECD international tax reform work, as well as the

impact of acquisitions, disposals and any restructuring of its subsidiaries.

10. Dividends on equity shares

The following dividends were declared and paid in relation to the legal entity OSIsoft:


FY 2019 FY 2018 FY 2017 ––––––– ––––––– –––––––

($, millions)

Declared and paid during the year 100.0 100.0 76.1

11. Goodwill

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible

and identifiable intangible assets acquired in connection with a business combination. OSIsoft’s goodwill

balance relates to the June 2008 acquisition of the remaining 50 per cent. ownership of the German joint

venture, OSI Software GmbH. Goodwill as of 31 December 2019, 31 December 2018, and

31 December 2017 was $21.0 million.

OSIsoft tests its goodwill annually for impairment or more frequently if there are indications that goodwill

might be impaired. OSIsoft is comprised of a single CGU as there are no identifiable groups of assets that

generate independent cash inflows within the consolidated entity.

Based on annual impairment tests performed on goodwill in 2019, 2018 and 2017, OSIsoft concluded that

there is no impairment charge resulting. The recoverable amount used in the determination of impairment

calculations was based on the fair value less costs of disposal which reflects the expected net disposal

proceeds of OSIsoft. Fair value is represented by the implied value of OSIsoft derived from the sale of a

44.7 per cent. non-controlling interest in OSIsoft to an investor in May 2017, adjusted for current market

factors and management projections.

Given that the fair value of OSIsoft exceeded its carrying value, no impairment charge to goodwill has been

recorded in OSIsoft FY 2019, OSIsoft FY 2018 or OSIsoft FY 2017.

190


Based on the implied fair value derived in relation to the carrying value of OSIsoft, no reasonable change in

the value of OSIsoft would have led to an impairment of OSIsoft’s goodwill. Based on the results of this

analysis, no impairment charge to goodwill was recognised for OSIsoft FY 2019, OSIsoft FY 2018 or

OSIsoft FY 2017, as the fair value less costs to sell exceeded OSIsoft’s carrying value in each period.

12. Intangible assets

Intangible assets consist of the following:

Software –––––––––Cost ($, millions)

At 1 January 2017 8.0

Additions 0.1 –––––––At 31 December 2017 8.1

Additions 0.1 –––––––At 31 December 2018 8.2

Additions – –––––––At 31 December 2019 8.2

–––––––Amortisation and impairment

At 1 January 2017 (7.4)

Charge for the year (0.1) –––––––At 31 December 2017 (7.5)



–––––––Net book value 0.5

At January 1 2017 0.6 –––––––At 31 December 2017 0.6 –––––––At 31 December 2018 0.6 –––––––At 31 December 2019 0.5

–––––––

191


13. Property, plant and equipment

Property, plant, and equipment consists of the following:

Fixtures,

fittings

Leasehold Computer and office

improvements equipment equipment Total –––––––––––– –––––––––––– –––––––––––– ––––––––––––

($, millions)

Cost

At 1 January 2017 24.2 12.5 13.1 49.8

Additions 0.3 2.0 0.6 2.9

Disposals – (1.0) (0.1) (1.1) ––––––– ––––––– ––––––– –––––––At 31 December 2017 24.5 13.5 13.6 51.6

Additions 0.9 2.2 1.3 4.4

Disposals (0.5) (1.5) (0.2) (2.2) ––––––– ––––––– ––––––– –––––––At 31 December 2018 24.9 14.2 14.7 53.8

Additions 5.0 3.8 5.0 13.8

Disposals (1.3) – (0.3) (1.6) ––––––– ––––––– ––––––– –––––––

At 31 December 2019 28.6 18.0 19.4 66.0 ––––––– ––––––– ––––––– –––––––Depreciation

At 1 January 2017 (8.3) (5.1) (3.7) (17.1)

Charge for the year (2.4) (1.5) (1.8) (5.7)

Disposals 0.1 0.9 0.2 1.2 ––––––– ––––––– ––––––– –––––––At 31 December 2017 (10.6) (5.7) (5.3) (21.6)


Disposals 0.5 1.7 – 2.2 ––––––– ––––––– ––––––– –––––––At 31 December 2018 (12.4) (5.7) (7.2) (25.3)


Disposals 0.5 – 0.2 0.7 ––––––– ––––––– ––––––– –––––––At 31 December 2019 (14.6) (7.6) (9.4) (31.6) ––––––– ––––––– ––––––– –––––––Net book value 14.0 10.4 10.0 34.4 ––––––– ––––––– ––––––– –––––––At 1 January 2017 15.9 7.4 9.4 32.7 ––––––– ––––––– ––––––– –––––––At 31 December 2017 13.9 7.8 8.3 30.0 ––––––– ––––––– ––––––– –––––––At 31 December 2018 12.5 8.5 7.5 28.5 ––––––– ––––––– ––––––– –––––––At 31 December 2019 14.0 10.4 10.0 34.4 ––––––– ––––––– ––––––– –––––––

14. Investments

The OSIsoft Group consists of a parent company, OSIsoft, incorporated in the United States, and a number

of subsidiaries held directly or indirectly by OSIsoft, which operate and are incorporated around the world,

each contributing to OSIsoft’s profits, assets and cash flows.

OSIsoft’s percentage interest in the equity capital and voting rights in each subsidiary is 100 per cent.

The results of all subsidiaries have been consolidated in these financial statements.

192


At 31 December 2019, OSIsoft held the following principal investments.

Country of incorporation or registration Legal Entity Name––––––––––––––––––––––––––––––––––– ––––––––––––––––

Argentina OSIsoft Argentina SRL

Australia OSIsoft Australia Pty Ltd.

Bahrain OSIsoft Technologies Middle East S.P.C

Brazil OSIsoft do Brasil Sistemas Ltda.

Canada OSIsoft Canada ULC

Chile OSIsoft Chile SPA

China OSIsoft (Shanghai) Technology Co., Ltd.

China OSIsoft (Shanghai) Technology Co., Ltd. Beijing Branch

Czech Republic OSIsoft Czech Republic s.r.o.

France OSIsoft France Eurl

Germany OSIsoft Europe GmbH

India OSIsoft India Private Limited

Italy OSIsoft Italy S.R.L.

Japan OSIsoft Japan KK

Mexico OSIsoft Mexico S. de R.L. de C.V.

Norway OSIsoft Norway AS

Russia OSIsoft OOO (LLC)

Singapore OSIsoft Asia Pte. Ltd.

South Africa OSIsoft South Africa (Pty) Limited

South Korea OSIsoft Korea Co., Limited

Spain OSISOFT ESPANA, S.L Sociedad

Sweden OSIsoft Sweden AB

Turkey OSIsoft Technologies Bilisim Hizmetleri Limited Sirketi

United Kingdom OSIsoft (UK) Limited

OSIsoft held investments in ZipPower of $0.5 million as of 31 December 2018 and 31 December 2017.

Additionally, OSIsoft held investments in Finca Global of $0.5 million as of 31 December 2019 and

31 December 2018.

15. Trade and other receivables

An analysis of trade and other receivables is set out below:

As at As at As at As at

31 December 31 December 31 December 1 January

2019 2018 2017 2017 –––––––––– –––––––––– –––––––––– ––––––––––Current ($, millions)

Amounts falling due within one year

Trade receivables 163.1 170.4 165.5 127.1

Amounts owed from related parties (note 21) 0.2 0.3 – –

Prepayments and other receivables 12.1 12.5 15.4 4.7 ––––––– ––––––– ––––––– ––––––– 175.4 183.2 180.9 131.8

––––––– ––––––– ––––––– –––––––

193


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.



2019 2018 2017 2017 ––––––––––– ––––––––––– ––––––––––– –––––––––––Non-current ($, millions)

Prepayments and other receivables 3.7 2.6 3.1 2.3

Trade receivables – – 0.5 – ––––––– ––––––– ––––––– ––––––– 3.7 2.6 3.6 2.3 ––––––– ––––––– ––––––– –––––––As at 31 December 2019, the provision for impairment of receivables was $3.6 million (31 December 2018:

$5.4 million, 31 December 2017: $5.4 million) and an analysis of the movements during the year was as follows:

($, millions)

At 1 January 2017 6.5

Charge for the year 4.4

Utilised (5.5) –––––––At 31 December 2017 5.4

Charge for the year (1.5)

Adjustment to restore A/R for payments 2.5

Utilised (1.0) –––––––At 31 December 2018 5.4

Charge for the year (0.6)

Utilised (1.2) –––––––As at 31 December 2019 3.6

–––––––As at 31 December, the ageing analysis of trade receivables and amounts owed from related parties (net of

provision for impairment) was as follows:

Past due not impaired––––––––––––––––––––––––––––––––––––––––

Neither past Less Four Eight to More than

due nor than four to eight twelve twelve

Total impaired months months months months ––––––– ––––––– ––––––– ––––––– ––––––– –––––––

($, millions)

At 31 December 2019

Trade receivables 163.1 133.0 22.2 2.9 2.8 2.2

Amounts owed from related 0.2 – 0.2 – – –

parties ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– 163.3 133.0 22.4 2.9 2.8 2.2 ––––––– ––––––– ––––––– ––––––– ––––––– –––––––At 31 December 2018


Amounts owed from related 0.3 – 0.3 – – –

parties ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– 170.7 137.9 18.5 7.3 3.8 3.2 ––––––– ––––––– ––––––– ––––––– ––––––– –––––––At 31 December 2017


Amounts owed from related – – – – – –

parties ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– 165.5 130.4 23.0 4.4 3.7 4.0 ––––––– ––––––– ––––––– ––––––– ––––––– –––––––

194


Further disclosures relating to the credit quality of trade receivables are included in note 19.

16. Cash and cash equivalents

An analysis of OSIsoft’s cash and cash equivalents balances is set out below:



2019 2018 FY 2017 2017 –––––––––– –––––––––– –––––––––– ––––––––––

($, millions)

Cash and cash equivalents 82.7 39.7 25.2 35.8 ––––––– ––––––– ––––––– –––––––

OSIsoft considers all highly liquid investments purchased with original maturities of three months or less to

be cash equivalents. Cash equivalents as of 31 December 2019, 31 December 2018 and 31 December 2017

are primarily maintained in demand deposit accounts and money market funds.

17. Trade and other payables

An analysis of trade and other payables is set out below:



2019 2018 2017 2017 –––––––––– –––––––––– –––––––––– ––––––––––Current ($, millions)

Trade payables 7.0 7.0 4.7 4.7

Amounts owed to related parties (note 21) 0.2 – – –

Social security, employee taxes and sales taxes 9.9 8.9 9.1 7.3

Accruals 42.8 38.9 39.3 35.2

Other payables 4.0 1.6 0.8 1.1 ––––––– ––––––– ––––––– ––––––– 63.9 56.4 53.9 48.3

––––––– ––––––– ––––––– –––––––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 of OSIsoft consider that the carrying amount of trade and other

payables approximates their fair value.

Accruals balance primarily relates to various payroll-related items such as accrued payroll and bonuses,

accrued commissions, and accrued vacation.

18. Leases

(a) Background

As at 31 December 2019, OSIsoft was entered into lease contracts as a lessee for various properties,

vehicles, and items of office equipment for use in its operations. OSIsoft incurs expenses of

appropriately $3.0 million annually in variable lease payments not reflected in the measurement of the

lease liabilities primarily related to common area maintenance charges. There is no significant

exposure arising from extension options and termination options, residual value guarantees, or leases

not yet commencing for which OSIsoft is committed.

195


(b) Right-of-use assets

Set out below are the carrying amounts of OSIsoft’s right-of-use assets and the movements during the

period:

Motor Office

Buildings vehicles equipment Total ––––––––– ––––––––– ––––––––– –––––––––

($, millions)

As at 1 January 2017 43.9 – 0.2 44.1

Additions 1.8 – 0.1 1.9

Depreciation expense (7.2) – (0.1) (7.3) ––––––– ––––––– ––––––– –––––––

As at 31 December 2017 38.0 – 0.2 38.7

Additions 2.3 – 0.1 2.4

Modification 7.9 – – 7.9


As at 31 December 2018 41.4 – 0.2 41.6

Additions 13.1 0.1 0.1 13.3


As at 31 December 2019 46.9 0.1 0.2 47.2

––––––– ––––––– ––––––– –––––––(c) Lease liabilities

Set out below for OSIsoft’s lease liabilities are the carrying amounts and movements during the

period:

Motor Office

Buildings vehicles equipment Total ––––––––– ––––––––– ––––––––– –––––––––

($, millions)

As at 1 January 2017 55.5 – 0.2 55.7

Additions 1.8 – 0.1 1.9

Accretion of interest 3.3 – – 3.3

Payments (9.6) – (0.1) (9.7)

Exchange adjustment 0.8 – – 0.8 ––––––– ––––––– ––––––– –––––––

As at 31 December 2017 51.8 – 0.2 52.0

Additions 2.3 – 0.1 2.4


Payments (10.1) – – (10.1)

Modification 7.9 – – 7.9

Exchange adjustment (0.6) – – (0.6) ––––––– ––––––– ––––––– –––––––

As at 31 December 2018 54.5 – 0.3 54.8

Additions 13.1 0.1 0.1 13.4


Payments (7.5) – (0.1) (7.6)

Exchange adjustment 0.3 – – 0.3 ––––––– ––––––– ––––––– –––––––

As at 31 December 2019 63.9 0.1 0.3 64.3

––––––– ––––––– ––––––– –––––––Lease liabilities are remeasured when a change to future contractual cash flows is identified.

Remeasurements were made in the year based upon changes in indexation and rates on variable lease

payments, and changes in the lease term.

Additionally, OSIsoft had a lease modification in 2018, resulting in a $7.9 million increase to the lease

liability.

The potential impact of lease covenants is immaterial.

196


(d) Income statement impact

The following items have been recognised in the statement of comprehensive income:


FY 2019 FY 2018 FY 2017 ––––––– ––––––– –––––––

($, millions)

Depreciation expense on right-of-use assets 7.7 7.4 7.3

Interest on lease liabilities 3.5 3.2 3.3 ––––––– ––––––– –––––––Total amount recognised in statement of


––––––– ––––––– –––––––OSIsoft determined rent expense for short-term leases and leases of low-value assets were

insignificant for OSIsoft FY 2019, OSIsoft FY 2018 and OSIsoft FY 2017.

19. Financial risk management

OSIsoft’s principal financial instruments comprise cash and short-term deposits. OSIsoft has various other financial

assets and liabilities, primarily trade receivables and trade payables, which arise directly from its operations.

It is, and has been throughout the period under review, OSIsoft’s policy that no speculative trading in

financial instruments shall be undertaken.

The main risks arising from OSIsoft’s financial instruments are market risk, credit risk and liquidity risk. The

board of directors of OSIsoft reviews and agrees policies for managing such risks on a regular basis as

summarised below:

(a) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, will affect

OSIsoft’s income or the value of its holding of financial instruments. The objective of market risk

management is to manage and control market risk exposures within acceptable parameters.

Foreign currency risk

Foreign currency risk arises if OSIsoft undertakes a significant number of foreign currency

transactions during operations. Based on historical foreign currency impact recorded, the risk is

considered to be minimal in the context of OSIsoft. The international subsidiaries operate as a sales

and marketing arm on behalf of the parent company and get reimbursed on a cost plus margin basis.

OSIsoft does not believe foreign currency presents a material risk as substantially all customers are

billed in US dollars, which is OSIsoft’s functional and presentation currency.

(b) Credit risk

OSIsoft’s principal financial assets are cash and cash equivalents, trade and other receivables, and

contract assets.

OSIsoft places all of its cash and cash equivalents with high credit quality financial institutions. The

majority of OSIsoft’s balances are held in major U.S. banks. Interest bearing deposits held with

domestic banks may exceed the amount of Federal Deposit Insurance Corporation (FDIC) insurance

provided on such deposits. OSIsoft has never experienced any losses related to these balances.

OSIsoft trades only with recognised, creditworthy third parties and provides credit to customers in the

normal course of business. The amounts presented in the consolidated balance sheet are net of allowances

for doubtful receivables. Expected credit loss allowances are made against trade receivables based on

credit risk characteristics. OSIsoft has credit control functions to monitor receivable balances on an

ongoing basis. Credit checks are performed before credit is granted to new customers. Due to the credit

control procedures in place, OSIsoft believes all the receivables are of good quality. OSIsoft has no

significant concentration of credit risk, with exposure spread over a large number of customers. The

197


maximum exposure to credit risk is represented by the carrying amount of each financial asset. The

exposure to credit risk is mitigated where necessary by either letters of credit or payments in advance.

OSIsoft does not require collateral in respect of its financial assets.

(c) Liquidity risk

OSIsoft manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring

forecast and actual cash flows and matching the maturity of financial assets and liabilities.

The table below analyses OSIsoft’s financial liabilities, which will be settled on a net basis, into

relevant maturity groupings based on the remaining period at the balance sheet date to the contractual

maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows:

Between three Between six

Less than months and months and Greater than

three months six months one year one year –––––––––– –––––––––– –––––––––– ––––––––––

($, millions)

As at 31 December 2019

Trade payables 7.0 – – –

Amounts owed to related parties 0.2 – – –

Lease liabilities 2.9 3.1 6.4 69.7 –––––––––– –––––––––– –––––––––– –––––––––– 10.1 3.1 6.4 69.7

–––––––––– –––––––––– –––––––––– ––––––––––As at 31 December 2018

Trade payables 6.9 0.1

Amounts owed to related parties – – – –


–––––––––– –––––––––– –––––––––– ––––––––––As at 31 December 2017

Trade payables 4.7 – – –



–––––––––– –––––––––– –––––––––– ––––––––––As at 1 January 2017

Trade payables 2.7 2.0 – –



–––––––––– –––––––––– –––––––––– ––––––––––(d) Capital management

OSIsoft’s policy is to maintain a strong capital base so as to maintain investor, market, creditor,

customer and employee confidence and to sustain future development of the business. The capital

structure of OSIsoft consists of equity attributable to the equity holders of OSIsoft comprising issued

share capital and retained earnings.

To maintain or adjust the capital structure, OSIsoft may adjust the dividend payment to members,

return capital to members or issue new shares.

The board of directors of OSIsoft monitors the capital structure on a regular basis and determines the

level of annual dividend. OSIsoft is not exposed to any externally imposed capital requirements.

OSIsoft holds convertible promissory notes of $0.5 million as of 31 December 2019 (31 December

2018: $0, 31 December 2017: $0).

198


20. Deferred tax

The following are the major deferred tax liabilities and assets recognised by the OSIsoft Group and the

movements thereon, during the current and previous year:

Other

Employee Fixed Deferred temporary

Benefits Assets Provisions Revenue differences Total –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

($, millions)

At 1 January 2017 0.9 0.3 0.3 0.5 – 2.0

Credit to statement of 0.1 (0.1) 0.1 0.1 – 0.2

comprehensive income –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––At 31 December 2017 1.0 0.2 0.4 0.6 – 2.2

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Credit to statement of (0.1) – – (0.2) 0.1 (0.2)

comprehensive income –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––At 31 December 2018 0.9 0.2 0.4 0.4 0.1 2.0

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Credit to statement of 0.4 (0.2) 0.1 0.2 – 0.5

comprehensive income –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––At 31 December 2019 1.3 – 0.5 0.6 0.1 2.5

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––The net deferred tax asset as of 31 December 2019, 31 December 2018 and 31 December 2017 is analysed

below:


2019 2018 2017 ––––––––––– ––––––––––– –––––––––––

($, millions)

Deferred tax assets 2.5 2.0 2.2

––––––––––– ––––––––––– –––––––––––At the balance sheet date, OSIsoft Group has unrecognised deferred tax assets of $0 million (2018:

$0 million, 2017: $0 million).

Deferred tax assets have been recognised because it is probable that these assets will be recovered. Each of

these assets are reviewed to ensure there is sufficient evidence to support their recognition.

Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there

is an intention to settle the balances net.


Transactions between OSIsoft and its subsidiaries, which are related parties, have been eliminated on

consolidation and are not disclosed in this note.


FY 2019 FY 2018 FY 2017 ––––––––––– ––––––––––– –––––––––––

($, millions)

Sales of goods and services 1.8 1.6 0.9

Purchases of goods and services 3.7 4.0 4.4 ––––––––––– ––––––––––– –––––––––––

One of OSIsoft’s investors, Mitsui Holdings, LLC, who was admitted into the partnership in 2016 by

purchasing units from existing members, is also related to some customers with whom OSIsoft does

business. During OSIsoft FY 2019, OSIsoft FY 2018, and OSIsoft FY 2017 OSIsoft sold licences and

services to the Mitsui businesses under standard commercial transactions for total sales consideration of

$1.6 million, $1.6 million, and $0.7 million respectively. This amount is included in the table above within

199


“sales of goods and services”. As of 31 December 2019 and 31 December 2018, $0.2 million and

$0.3 million related to these sales were outstanding, respectively. OSIsoft had a payable outstanding to

Mitsui of $0.2 million related to sales commissions at 31 December 2019.

One of OSIsoft’s investors, SB/OSI, Inc., who was admitted into the partnership in 2017 by purchasing units

from existing members, is also related to some customers with whom OSIsoft does business. During OSIsoft

FY 2019, OSIsoft sold licences and services to Softbank Corp., under standard commercial transactions for

total sales consideration of $0.2 million which is included in the table above within “sales of goods and

services”.

OSIsoft leased one of its San Leandro, California facilities from a trust controlled by the principal members

of OSIsoft. Rent payments under this lease totalled $0.2 million in OSIsoft FY 2017. This amount is included

in the table above within “purchases of goods and services”. OSIsoft no longer leases this facility as of

31 December 2017.

OSIsoft’s founder and CEO owns 25 per cent. of SLTC. During OSIsoft FY 2019, OSIsoft FY 2018, and

OSIsoft FY 2017, OSIsoft paid SLTC $3.5 million, $3.6 million and $3.8 million in rental expenses,

respectively. This amount is included in the table above within “purchases of goods and services”.

OSIsoft incurred and paid $0.2 million, $0.1 million, and $0.1 million of telecommunication service fees for

OSIsoft FY 2019, OSIsoft FY 2018, and OSIsoft FY 2017, respectively, from LIT San Leandro, a telecom

infrastructure company. This amount is included in the table above within “purchases of goods and services”.

There was no outstanding balance owed or due to LIT Lan Leandro at 31 December 2019, 2018, or 2017.

During OSIsoft FY 2017, OSIsoft made an investment of less than 20 per cent. ownership in DB Software,

Inc., for approximately $1.5 million. DB Software, Inc. changed its name to Dianomic Systems, Inc. in 2018.

Dianomic Systems, Inc. issued convertible promissory notes to OSIsoft for $0.8 million and $0.5 million

during OSIsoft FY 2019 and OSIsoft FY 2018, respectively. Further, OSIsoft purchased software for

$0.3 million and $0.6 million from Dianomic Systems, Inc. in OSIsoft FY 2018 and OSIsoft FY 2017,

respectively, and the amount was fully paid as of 31 December 2018. The investments and promissory notes

were deemed unrecoverable. Investments were charged to selling and administrative expenses in the period

the investment was made and the promissory notes were charged to selling and administrative expenses in

the period the notes were issued.

In 2019, DERNetSoft, Inc. issued one-year convertible promissory notes of $0.5 million to OSIsoft.

Remuneration of key management personnel

Payroll costs of key management personnel is shown below:


FY 2019 FY 2018 FY 2017 ––––––––––– ––––––––––– –––––––––––

($, millions)

Payroll costs (salaries and bonuses) 4.0 4.8 7.0

Key management personnel is defined as “those persons having authority and responsibility for planning,

directing and controlling the activities of the entity, directly or indirectly, including any director (whether

executive or otherwise) of that entity”. The term ‘key management personnel’ includes both directors and

persons who are not appointed directors, but whose activities encompass duties normally carried out by

directors. Where management commentary refers to managers by name, management should consider

whether this indicates that they are key managers.

22. First-time adoption of IFRS

(a) Introduction

The consolidated financial statements for OSIsoft FY 2019 have been prepared using accounting

policies compliant with IFRS for the first time. The transition date for the adoption of IFRS is

1 January 2017. The comparative information in the consolidated financial statements has been

200


consistently applied in accordance with IFRS. This note explains the principal adjustments made by

OSIsoft in restating its US GAAP financial statements, including the statement of financial position

as at 1 January 2017 and the financial statements as of, and for, OSIsoft FY 2017 and OSIsoft

FY 2018.

In preparing its opening IFRS statement of financial position, the OSIsoft Group has adjusted the

amounts previously reported in its financial statements prepared in accordance with US GAAP. An

explanation of how the transition from US GAAP to IFRS has affected the OSIsoft Group’s financial

position and financial performance is set out in the following tables and notes.

IFRS 1, First-time Adoption of International Financial Reporting Standards (as amended in 2008),

allows companies adopting IFRS for the first time to take certain exemptions and exceptions from the

full requirements of IFRS on the date of transition (i.e., 1 January 2017). OSIsoft has elected the

exemptions detailed in note 22(c).

The consolidated cash flow statement reflects disclosures required in accordance with IFRS 16.

Operating and financing cash flows were impacted by the adoption of IFRS 16 due to the reversal of

rent expense and recording principal and interest lease payments. Payments of interest and principal

related to lease liabilities are reflected within the financing section of the statement of cash flows.

Non-cash activity for depreciation of the right of use asset is shown as an adjustment within the

operating section of the cash flow statement. Under IFRS 16, OSIsoft had total cash outflows related

to lease liabilities of $7.6 million for OSIsoft FY 2019 (OSIsoft FY 2018: $10.2 million, OSIsoft

FY 2017: $9.7 million).

(b) IFRS Adjustments

(i) Adjustment related to adoption of IFRS 15 and a change in OSIsoft’s amortisation period for

contract-related costs based on alignment with AVEVA’s policies.(refer to Statement of OSIsoft

Group accounting policies)

(ii) Adjustment relates to adoption of IFRS 16 (refer to Statement of OSIsoft Group accounting

policies).

(iii) Adjustment relates to alignment of AVEVA’s financial statement presentation and accounting

policies primarily due to fair value remeasurement of financial instruments.

(c) Exemptions applied

IFRS 1 allows first-time adopters certain exemptions from the retrospective application of certain

requirements under IFRS.

OSIsoft has applied the following exemptions:

• IFRS 3 Business Combinations has not been applied to either acquisitions of subsidiaries that

are considered businesses under IFRS, or acquisitions of interests in associates and joint

ventures that occurred before 1 January 2017. Use of this exemption means that the US GAAP

carrying amounts of assets and liabilities, that are required to be recognised under IFRS, are

their deemed cost at the date of the acquisition. After the date of the acquisition, measurement

is in accordance with IFRS. Assets and liabilities that do not qualify for recognition under IFRS

are excluded from the opening IFRS statement of financial position. OSIsoft did not recognise

any assets or liabilities that were not recognised under the US GAAP or exclude any previously

recognised amounts as a result of IFRS recognition requirements. IFRS 1 also requires that the

US GAAP carrying amount of goodwill must be used in the opening IFRS statement of

financial position (apart from adjustments for goodwill impairment and recognition or

derecognition of intangible assets). In accordance with IFRS 1, OSIsoft has tested goodwill for

impairment at the date of transition to IFRS. There was no impairment recognised on goodwill

at 1 January 2017.

201


• OSIsoft assessed all contracts existing at 1 January 2017 to determine whether a contract

contains a lease based upon the conditions in place as at 1 January 2017. Lease liabilities were

measured at the present value of the remaining lease payments, discounted using the lessee’s

incremental borrowing rate at 1 January 2017. Right-of-use assets were measured at the

amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease

payments relating to that lease recognised in the statement of financial position immediately

before 1 January 2017. The lease payments associated with leases for which the lease term ends

within 12 months of the date of transition to IFRS and leases for which the underlying asset is

of low value have been recognised as an expense on either a straight-line basis over the lease

term or another systematic basis.

IFRS 1 also requires first-time adopters to apply certain mandatory exceptions from the general

requirements contained in IFRS. OSIsoft has applied the following exceptions. All other mandatory

exceptions not referenced were not applicable to OSIsoft.

• Estimates under IFRS at 1 January 2017 and for OSIsoft FY 2017, OSIsoft FY 2018 and

OSIsoft FY 2019 were consistent with estimates made as at the same dates under US GAAP.

There is no evidence that those estimates were made in error.

• Financial assets and financial liabilities derecognised before 1 January 2017 were not

re-recognised under IFRS. The application of this exception did not have a significant impact

for OSIsoft FY 2017, OSIsoft FY 2018 and OSIsoft FY 2019.

202


Consolidated Balance Sheet reconciliation as at the comparative date of 1 January 2017

(date of transition to IFRS)

IFRS as at

1 January

US GAAP (i) (ii) (iii) 2017 –––––––– –––––––– –––––––– –––––––– ––––––––

($, millions)

Non-current assets

Goodwill 21.0 – – – 21.0

Other intangible assets – – – 0.6 0.6

Property, plant and 33.3 – – (0.6) 32.7

equipment

Right-of-use assets – – 44.1 – 44.1

Deferred tax assets 2.0 – – – 2.0

Trade and other receivables – – – 2.3 2.3

Contract-related costs – 13.2 – – 13.2

Investments 2.8 – – (2.3) 0.5 –––––––– –––––––– –––––––– –––––––– –––––––– 59.1 13.2 44.1 – 116.4

–––––––– –––––––– –––––––– –––––––– ––––––––Current assets

Trade and other receivables 122.3 9.5 – – 131.8


Financial assets 0.2 – – – 0.2

Contract assets – 1.7 – – 1.7

Cash and cash equivalents 35.8 – – – 35.8 –––––––– –––––––– –––––––– –––––––– –––––––– 158.3 16.6 – – 174.9

–––––––– –––––––– –––––––– –––––––– ––––––––Total assets 217.4 29.8 44.1 – 291.3

–––––––– –––––––– –––––––– –––––––– ––––––––Equity

Share premium 4.3 – – – 4.3

Retained earnings/(deficit) (179.6) 242.1 – (0.2) 62.3 –––––––– –––––––– –––––––– –––––––– ––––––––Total equity (175.3) 242.1 – (0.2) 66.6

–––––––– –––––––– –––––––– –––––––– ––––––––Current liabilities

Trade and other payables 49.3 – (1.0) – 48.3

Contract liabilities 238.7 (124.1) – – 114.6

Lease liabilities – – 6.2 – 6.2

Current tax liabilities – – – – – –––––––– –––––––– –––––––– –––––––– –––––––– 288.0 (124.1) 5.2 – 169.1

–––––––– –––––––– –––––––– –––––––– ––––––––Non-current liabilities



Deferred tax liabilities (0.2) – – 0.2 –

Other liabilities 10.8 – (10.6) – 0.2 –––––––– –––––––– –––––––– –––––––– –––––––– 104.7 (88.2) 38.9 0.2 55.6 –––––––– –––––––– –––––––– –––––––– ––––––––Total equity and liabilities 217.4 29.8 44.1 – 291.3

–––––––– –––––––– –––––––– –––––––– ––––––––(i) Adjustment related to adoption of IFRS 15 and a change in OSIsoft’s amortisation period for contract-related costs based on

alignment with AVEVA’s policies.

(ii) Adjustment relates to adoption of IFRS 16.

(iii) Adjustment relates to alignment of AVEVA’s financial statement presentation and accounting policies, primarily due to fair value

remeasurement of financial instruments.

203


Consolidated Balance Sheet reconciliation as at the comparative date of 31 December 2017

IFRS as at

31 December

US GAAP (i) (ii) (iii) 2017 –––––––– –––––––– –––––––– –––––––– ––––––––

($, millions)

Non-current assets

Goodwill 21.0 – – – 21.0


Property, plant and equipment 30.6 – – (0.6) 30.0


Deferred tax assets 2.2 – – – 2.2

Trade and other receivables 0.5 – – 3.1 3.6


Investments 5.5 – – (4.6) 0.9 –––––––– –––––––– –––––––– –––––––– –––––––– 59.8 15.3 38.7 (1.5) 112.3

–––––––– –––––––– –––––––– –––––––– ––––––––Current assets




Cash and cash equivalents 25.2 – – – 25.2 –––––––– –––––––– –––––––– –––––––– –––––––– 184.5 32.7 – – 217.2 –––––––– –––––––– –––––––– –––––––– ––––––––Total assets 244.3 48.0 38.7 (1.5) 329.5

–––––––– –––––––– –––––––– –––––––– ––––––––Equity


Retained earnings/(deficit) (198.0) 283.6 (2.0) (1.5) 82.1 –––––––– –––––––– –––––––– –––––––– ––––––––Total equity (193.7) 283.6 (2.0) (1.5) 86.4




Lease liabilities – – 7.5 – 7.5 –––––––– –––––––– –––––––– –––––––– –––––––– 327.4 (144.1) 6.4 – 189.7




Other liabilities 10.6 – (10.2) – 0.4 –––––––– –––––––– –––––––– –––––––– –––––––– 110.6 (91.5) 34.3 – 53.4

–––––––– –––––––– –––––––– –––––––– ––––––––Total equity and liabilities 244.3 48.0 38.7 (1.5) 329.5




(iii) Adjustment relates to alignment of AVEVA’s financial statement presentation and accounting policies primarily due to fair value


204


Consolidated Balance Sheet reconciliation as at the comparative date of 31 December 2018

IFRS as at

31 December

US GAAP (i) (ii) (iii) 2018 –––––––– –––––––– –––––––– –––––––– ––––––––

($, millions)

Non-current assets

Goodwill 21.0 – – – 21.0




Deferred tax assets 2.2 – – (0.2) 2.0



Investments 4.6 – – (4.1) 0.5 –––––––– –––––––– –––––––– –––––––– –––––––– 56.9 14.5 41.6 (1.7) 111.3

–––––––– –––––––– –––––––– –––––––– ––––––––Current assets –



Financial assets 0.5 – – (0.5) –


Cash and cash equivalents 39.7 – – – 39.7 –––––––– –––––––– –––––––– –––––––– –––––––– 207.4 26.1 – (0.5) 233.0 –––––––– –––––––– –––––––– –––––––– ––––––––Total assets 264.3 40.6 41.6 (2.2) 344.3

–––––––– –––––––– –––––––– –––––––– ––––––––Equity –


Retained earnings/(deficit) (197.8) 285.2 (3.3) (2.0) 82.1 –––––––– –––––––– –––––––– –––––––– ––––––––Total equity (193.5) 285.2 (3.3) (2.0) 86.4

–––––––– –––––––– –––––––– –––––––– ––––––––Current liabilities –




Current tax liabilities 0.7 – – – 0.7 –––––––– –––––––– –––––––– –––––––– –––––––– 336.9 (142.0) 4.0 – 198.9

–––––––– –––––––– –––––––– –––––––– ––––––––Non-current liabilities –



Deferred tax liabilities 0.2 – – (0.2) –

Other liabilities 9.7 – (9.3) – 0.4 –––––––– –––––––– –––––––– –––––––– –––––––– 120.9 (102.6) 40.9 (0.2) 59.0

–––––––– –––––––– –––––––– –––––––– ––––––––Total equity and liabilities 264.3 40.6 41.6 (2.2) 344.3






205


Consolidated Balance Sheet reconciliation as at the comparative date of 31 December 2019 (the end of

the latest period presented in the most recent annual financial statements in accordance with US GAAP)

IFRS at

31 December

US GAAP (i) (ii) (iii) 2019 –––––––– –––––––– –––––––– –––––––– ––––––––

($, millions)

Non-current assets

Goodwill 21.0 – – – 21.0




Deferred tax assets 1.9 – – 0.6 2.5


Contract-related costs 31.7 (15.9) – – 15.8

Investments 5.7 – – (5.2) 0.5 –––––––– –––––––– –––––––– –––––––– –––––––– 95.2 (15.9) 47.2 (0.9) 125.6

–––––––– –––––––– –––––––– –––––––– ––––––––Current assets

Trade and other receivables 178.3 – – (2.9) 175.4

Contract-related costs 6.1 0.5 – – 6.6

Financial assets 2.3 – – (1.8) 0.5

Contract assets – – – 2.9 2.9

Cash and cash equivalents 82.7 – – – 82.7 –––––––– –––––––– –––––––– –––––––– –––––––– 269.4 0.5 – (1.8) 268.1

–––––––– –––––––– –––––––– –––––––– ––––––––Total assets 364.6 (15.4) 47.2 (2.7) 393.7

–––––––– –––––––– –––––––– –––––––– ––––––––Equity


Retained earnings 122.0 (15.4) (6.1) (3.6) 96.8 –––––––– –––––––– –––––––– –––––––– ––––––––Total equity 126.3 (15.4) (6.1) (3.6) 101.1


Trade and other payables 63.9 – – – 63.9

Contract liabilities 152.8 – – – 152.8


Current tax liabilities 1.4 – – 1.4 2.8 –––––––– –––––––– –––––––– –––––––– –––––––– 218.1 – 8.4 1.4 227.9



Contract liabilities 8.0 – – – 8.0

Deferred tax liabilities 0.5 – – (0.5) –

Other liabilities 11.7 – (10.9) – 0.8 –––––––– –––––––– –––––––– –––––––– –––––––– 20.2 – 45.0 (0.5) 64.7

–––––––– –––––––– –––––––– –––––––– ––––––––Total equity and liabilities 364.6 (15.4) 47.2 (2.7) 393.7

–––––––– –––––––– –––––––– –––––––– ––––––––(i) The OSIsoft Group adopted ASC 606 Revenue from Contracts with Customers for OSIsoft FY 2019 and there are no differences

applicable to the OSIsoft Group under IFRS 15. Adjustment relates to a change in the OSIsoft Group’s amortisation period for

contract-related costs based on alignment with AVEVA’s policies.




206


Consolidated Statement of Comprehensive Income reconciliation as at 31 December 2017

IFRS at

31 December

US GAAP (i) (ii) (iii) 2017 –––––––– –––––––– –––––––– –––––––– ––––––––

($, millions)

Revenue 378.7 44.0 – – 422.7

Cost of sales (81.9) – – – (81.9) –––––––– –––––––– –––––––– –––––––– ––––––––Gross profit 296.8 44.0 – – 340.8

Operating expenses – – – –

Research and (11.4) – – (30.8) (42.2)

development costs

Selling and (222.9) (2.4) 1.3 33.7 (190.3)

administrative expenses

Net impairment loss on – – – (4.4) (4.4)

financial assets –––––––– –––––––– –––––––– –––––––– ––––––––Total operating expenses (234.3) (2.4) 1.3 (1.5) (236.9) –––––––– –––––––– –––––––– –––––––– ––––––––Profit from operations 62.5 41.6 1.3 (1.5) 104.0

Finance revenue 0.2 – – – 0.2

Finance expense – – (3.3) – (3.3) –––––––– –––––––– –––––––– –––––––– ––––––––Profit before tax from 62.7 41.6 (2.0) (1.5) 100.8


Income tax expense (4.9) – – 0.0 (4.9) –––––––– –––––––– –––––––– –––––––– ––––––––Profit for the year and 57.7 41.6 (2.0) (1.5) 95.9

total comprehensive

income –––––––– –––––––– –––––––– –––––––– ––––––––

(i) Adjustment related to adoption of IFRS 15 and a change in OSIsoft’s amortisation period for contract-related costs based on





207


Statement of Comprehensive Income reconciliation as at 31 December 2018

IFRS at

31 December

US GAAP (i) (ii) (iii) 2018 –––––––– –––––––– –––––––– –––––––– ––––––––

($, millions)

Revenue 438.6 0.5 – – 439.1

Cost of sales (84.8) – – – (84.8) –––––––– –––––––– –––––––– –––––––– ––––––––Gross profit 353.8 0.5 – – 354.3

Operating expenses – – – –

Research and (11.4) – – (28.8) (42.2)

development costs

Selling and (236.4) 1.1 1.9 26.8 (206.6)


Net impairment loss – – – 1.5 1.5

on financial assets –––––––– –––––––– –––––––– –––––––– ––––––––Total operating expenses (247.0) 1.1 1.9 (0.5) (236.9) –––––––– –––––––– –––––––– –––––––– ––––––––Profit from operations 106.7 1.6 1.9 (0.5) 109.8


Finance expense – – (3.2) – (3.2) –––––––– –––––––– –––––––– –––––––– ––––––––

Profit before tax from 106.9 1.6 (1.3) (0.5) 106.7


Income tax expense (6.7) – – (0.0) (6.7) –––––––– –––––––– –––––––– –––––––– ––––––––

Profit for the year and 100.2 1.6 (1.3) (0.5) 100.0

total comprehensive

income –––––––– –––––––– –––––––– –––––––– ––––––––

(i) Adjustment related to adoption of IFRS 15 and a change in OSIsoft’s amortisation period for contract-related costs based on





208


Statement of Comprehensive Income reconciliation as at 31 December 2019

IFRS at

31 December

US GAAP (i) (ii) (iii) 2019 –––––––– –––––––– –––––––– –––––––– ––––––––

($, millions)

Revenue 470.0 – – – 470.0

Cost of sales (93.9) – – – (93.9) –––––––– –––––––– –––––––– –––––––– ––––––––

Gross profit 376.1 – – – 376.1

Operating expenses – – – – –

Research and (11.2) – – (32.7) (43.8)

development costs

Selling and (237.7) (1.4) 0.6 30.8 (207.7)


Net impairment loss on – – – 0.6 0.6

financial assets –––––––– –––––––– –––––––– –––––––– ––––––––

Total operating expenses (248.9) (1.4) 0.6 (1.3) (250.9) –––––––– –––––––– –––––––– –––––––– ––––––––

Profit from operations 127.2 (1.4) 0.6 (1.3) 125.2


Finance expense (0.0) – (3.5) – (3.5) –––––––– –––––––– –––––––– –––––––– ––––––––

Profit before tax from 127.4 (1.4) (2.9) (1.3) 121.9


Income tax expense (6.9) – – (0.3) (7.2) –––––––– –––––––– –––––––– –––––––– ––––––––

Profit for the year and 120.5 (1.4) (2.8) (1.6) 114.7

total comprehensive

income –––––––– –––––––– –––––––– –––––––– ––––––––

(i) The OSIsoft Group adopted ASC 606 Revenue from Contracts with Customers for OSIsoft FY 2019 and there are no differences

applicable to the OSIsoft Group under IFRS 15. Adjustment relates to a change in the OSIsoft Group’s amortisation period for

contract-related costs based on alignment with AVEVA’s policies.




23. Subsequent events

On 30 January 2020 the World Health Organization (“WHO”) announced a global health emergency

because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the

risks to the international community as the virus spreads globally beyond its point of origin. In March 2020,

the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

The OSIsoft Group is dependent on its workforce and the sales and delivery of its products and services.

Developments, such as social distancing and shelter-in-place directives have impacted the OSIsoft Group’s

ability to deploy its workforce effectively. These same developments may affect the operations of the

OSIsoft Group’s suppliers and distributors/resellers, as their own workforces and operations are disrupted by

efforts to curtail the spread of this virus.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is

uncertain as to the full magnitude that the pandemic will have on the OSIsoft Group’s financial condition,

liquidity, and future results of operations. Management is actively monitoring the impact of the global

situation on its financial condition, liquidity, operations, suppliers, industry, and workforce.

209


In August 2020, OSIsoft, among others, entered into a definitive agreement pursuant to which it would be

acquired by AVEVA Group plc, a global leader in industrial software at an enterprise value of $5 billion. The

acquisition is expected to complete during the fourth quarter of 2020, although there can be no assurance

that the acquisition will close within this time frame or at all. This acquisition is not expected to materially

impact OSIsoft’s liquidity or results of operations. OSIsoft’s accounting and analysis of this transaction is

pending completion.

210


SECTION C: HISTORICAL FINANCIAL INFORMATION OF THE OSISOFT GROUP FOR THE

OSISOFT 2020 INTERIM PERIOD AND THE OSISOFT 2019 INTERIM PERIOD

Interim Consolidated Statement of Comprehensive Income

OSIsoft OSIsoft

2020 2019

Interim Interim

Period Period OSIsoft

Notes (unaudited) (unaudited) FY 2019 ––––– ––––––––– ––––––––– –––––––––

($, millions)

Revenue 3 245.0 223.7 470.0

Cost of sales (50.0) (56.7) (93.9)

Gross profit 195.0 167.0 376.1

Operating expenses

Research & development costs (14.5) (14.7) (43.8)

Selling and administrative expenses (122.0) (123.5) (207.7)

Net impairment gain/(loss) on financial assets (0.5) (1.2) 0.6 ––––––––– ––––––––– –––––––––Total operating expenses (137.0) (139.4) (250.9)

––––––––– ––––––––– –––––––––Profit from operations 58.0 27.6 125.2

Finance revenue 0.4 0.2 0.2

Finance expense (2.3) (2.0) (3.5) ––––––––– ––––––––– –––––––––Profit before tax 56.1 25.8 121.9

Income tax expense (4.1) (3.3) (7.2) ––––––––– ––––––––– –––––––––Profit and total comprehensive income for the period 52.0 22.5 114.7

––––––––– ––––––––– –––––––––All activities relate to continuing activities.

The accompanying notes are an integral part of these interim financial statements.

211


Interim Consolidated Balance Sheet

As at As at

31 July 31 July As at

2020 2019 31 December

Notes (unaudited) (unaudited) 2019 ––––– ––––––––– ––––––––– –––––––––

($, millions)

Non-current assets

Goodwill 21.0 21.0 21.0

Other intangible assets 0.1 0.1 0.5

Property, plant and equipment 32.8 33.3 34.4

Right-of-use assets 42.1 39.3 47.2

Deferred tax assets 2.2 2.2 2.5

Trade and other receivables 6 4.9 3.7 3.7

Contract-related costs 14.1 13.6 15.8

Investments 0.5 0.5 0.5 ––––––––– ––––––––– ––––––––– 117.7 113.7 125.6 ––––––––– ––––––––– –––––––––Current assets

Trade and other receivables 6 77.0 78.9 175.4

Contract-related costs 6.0 5.7 6.6

Financial assets 8 18.0 – 0.5

Contract assets 3.7 4.5 2.9

Cash and cash equivalents 60.8 35.2 82.7

Current tax assets 0.1 1.1 – ––––––––– ––––––––– ––––––––– 165.6 125.4 268.1 ––––––––– ––––––––– –––––––––Total assets 283.3 239.1 393.7

––––––––– ––––––––– –––––––––Equity

Common units 4.3 4.3 4.3

Retained earnings 31.7 19.6 96.8 ––––––––– ––––––––– –––––––––Total equity 36.0 23.9 101.1

––––––––– ––––––––– –––––––––Current liabilities

Trade and other payables 42.8 38.4 63.9

Contract liabilities 3 136.2 116.7 152.8

Lease liabilities 8.8 7.2 8.4

Current tax liabilities 0.1 – 2.8 ––––––––– ––––––––– ––––––––– 187.9 162.3 227.9 ––––––––– ––––––––– –––––––––


Lease liabilities 50.1 47.5 55.9

Contact liabilities 3 6.2 5.4 8.0

Other liabilities 3.1 – 0.8 ––––––––– ––––––––– ––––––––– 59.4 52.9 64.7 ––––––––– ––––––––– –––––––––Total equity and liabilities 283.3 239.1 393.7

––––––––– ––––––––– –––––––––The accompanying notes are an integral part of these interim financial statements.

212


Interim Consolidated Statement of Changes in Members’ Equity

Common Retained

Note units earnings Total equity ––––– ––––––––– ––––––––– –––––––––

($, millions)

At 1 January 2019 4.3 82.1 86.4

Profit for the period 22.5 22.5

Distributions to members 5 (85.0) (85.0) ––––––––– ––––––––– –––––––––At 31 July 2019 4.3 19.6 23.9 ––––––––– ––––––––– –––––––––

At 1 January 2020 4.3 96.8 101.1

Profit for the period 52.0 52.0

Distributions to members 5 (117.1) (117.1) ––––––––– ––––––––– –––––––––At 31 July 2020 4.3 31.7 36.0 ––––––––– ––––––––– –––––––––

The accompanying notes are an integral part of these interim financial statements.

213


Interim Condensed Consolidated Cash Flow Statement

OSIsoft OSIsoft

2020 2019

Interim Interim

Period Period OSIsoft

Notes (unaudited) (unaudited) FY 2019 ––––– ––––––––– ––––––––– –––––––––

($, millions)

Cash flows from operating activities

Profit for the period 52.0 22.5 114.7

Income tax expense 4.1 3.3 7.2

Net finance expense 1.9 1.9 3.3

Amortisation of intangible assets 0.1 0.1 0.1

Depreciation of property, plant and equipment,

and right of use assets 9.5 8.1 14.8

Foreign exchange (gain) loss, net (0.6) 0.9 1.5

Net impairment (gain) loss on financial assets 0.5 1.2 (0.6)

Changes in working capital:

Trade and other receivables 94.9 96.3 4.2

Contract-related costs 2.2 1.2 (1.8)

Contract assets (0.8) (0.5) 1.1

Trade and other payables (21.1) (18.0) 7.5

Contract liabilities (18.4) (23.5) 15.1 ––––––––– ––––––––– –––––––––Cash generated from operating activities before tax 124.3 93.4 167.1

Income taxes paid (1.8) (1.5) (2.2) ––––––––– ––––––––– –––––––––Net cash generated from operating activities 122.5 91.9 165.0

––––––––– ––––––––– –––––––––Cash flows from investing activities

Purchase of property, plant and equipment (2.6) (7.7) (13.8)

Purchase of financial assets 8 (35.0) – (0.5)

Proceeds from sale of financial assets 16.9 – –

Purchase of intangible assets (0.1) (0.1) –

Interest received 0.4 0.1 0.2 ––––––––– ––––––––– –––––––––Net cash flows used in investing activities (20.4) (7.6) (14.1)

––––––––– ––––––––– –––––––––Cash flows from financing activities

Principal portion of the lease liability (4.6) (1.6) (4.3)

Distribution to members 5 (117.1) (85.0) (100.0)

Interest paid (2.3) (2.1) (3.5) ––––––––– ––––––––– –––––––––Net cash flows used in financing activities (124.0) (88.7) (107.9)

––––––––– ––––––––– –––––––––Net increase/(decrease) in cash and cash equivalents (21.9) (4.5) 43.0

Opening cash and cash equivalents 82.7 39.7 39.7 ––––––––– ––––––––– –––––––––Closing cash and cash equivalents 60.8 35.2 82.7

––––––––– ––––––––– –––––––––The accompanying notes are an integral part of these interim financial statements.

214


Notes to the interim consolidated financial statements

1. Corporate information

OSIsoft, LLC (“OSIsoft”) is incorporated in Delaware, United States as a Delaware limited liability

company (LLC). As of 31 July 2020, OSIsoft operated wholly owned subsidiaries located in Australia,

Argentina, Bahrain, Brazil, Canada, Chile, China, Czech Republic, France, Germany, India, Italy, Japan,

Mexico, Norway, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Turkey and the United

Kingdom with additional sales offices located internationally and in the United States. OSIsoft’s

headquarters are in San Leandro, California.

OSIsoft’s country of domicile is the United States, and its registered office and principal place of business

is located at 777 Davis St., Suite 250, San Leandro, CA 94577.

2. The interim consolidated financial statements

The interim consolidated financial statements for the seven months ended 31 July 2020 (the “OSIsoft 2020

Interim Period”) and the seven months ended 31 July 2019 (the “OSIsoft 2019 Interim Period”) have been

prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as

adopted by the European Union, and have been prepared on a basis consistent with the accounting policies

adopted by AVEVA Group plc in its own audited consolidated financial statements for its financial year

ended 31 March 2020.

The interim consolidated financial statements do not include all the information and disclosures required in

the annual financial statements and should be read in conjunction with the historical financial information

of the OSIsoft Group for the three years ended 31 December 2019 included in Section B of this Part X

(Historical Financial Information of the OSIsoft Group). The financial information within these interim

consolidated financial statements is presented in millions of US dollars, unless otherwise stated.

The results of OSIsoft for the financial year ended 31 December 2019 (“OSIsoft FY 2019”) have been

extracted from the historical financial information of the OSIsoft Group for the three years ended

31 December 2019 which has been prepared in accordance with IFRS as adopted by the European Union.

Significant judgments

As at 31 July 2020, cash and cash equivalents includes $20.0 million related to amounts held in money

market accounts. Management has concluded that this meets the criteria to be included in cash and cash

equivalents as they are convertible into known amounts of cash, subject to an insignificant risk of change in

value, and intended by management to be used as part of the cash available for working capital purposes.

Income Taxes

Income tax expense is recognised based on management’s estimate of the weighted average effective annual

income tax rate expected for the full financial year.

Going concern and COVID-19

A novel strain of coronavirus (“COVID-19”) emerged globally in December 2019 and was declared a

pandemic in March 2020. The extent to which COVID-19 will impact OSIsoft’s customers, business, results

and financial condition will depend on current and future developments, which are highly uncertain and

cannot be predicted at this time. While OSIsoft’s day-to-day operations since March 2020 have been

impacted, OSIsoft has suffered less immediate impact as most staff can work remotely and can continue to

develop OSIsoft’s product offerings. OSIsoft continues to expect positive cash from operations. As such,

OSIsoft does not believe the COVID-19 outbreak impacts its ability to continue as a going concern.

215


3. Revenue

An analysis of OSIsoft’s revenue is as follows:

OSIsoft OSIsoft

2020 2019

Interim Interim OSIsoft

Period Period FY 2019

(unaudited) (unaudited) –––––––––– –––––––––– ––––––––

($, millions)

Subscription support 13.6 7.3 16.4

Software licences 78.1 75.4 193.8

Maintenance 150.5 136.5 248.0

Services 2.8 4.5 11.8 –––––––– –––––––– –––––––– 245.0 223.7 470.0

–––––––– –––––––– ––––––––Revenue attributable to non-US operations is $1.0 million and $1.6 million for the OSIsoft 2020 Interim

Period and the OSIsoft 2019 Interim Period, respectively. Revenue attributable to non-US operations is

$4.1 million for OSIsoft FY 2019.

Historically, revenues increase during the last quarter of the fiscal year due to customers aligning their

maintenance to their fiscal year-ends which mostly follow a calendar year. In addition, customers tend to

expand their licence base in conjunction with maintenance renewals which also results in higher revenues in

this quarter.

Adverse events that occur during this quarter could have a disproportionate effect on results of operations

for the entire fiscal year. As a result of quarterly fluctuations caused by these and other factors, comparisons

of OSIsoft’s operating results across different fiscal quarters may not be accurate indicators of future

performance.

The timing of the revenue recognition is as follows:

OSIsoft OSIsoft

2020 2019




($, millions)

Services transferred at a point in time 80.9 79.9 205.6

Services transferred over time 164.1 143.8 264.4 –––––––– –––––––– –––––––– 245.0 223.7 470.0

–––––––– –––––––– ––––––––Changes to the contract liabilities balance is as follows:

($, millions) –––––––––––At 1 January 2019 145.6

Additions 196.8

Revenue recognised (220.3) –––––––––––At 31 July 2019 122.1

Additions 284.5

Revenue recognised (245.8) –––––––––––At 31 December 2019 160.8

Additions 224.3

Revenue recognised (242.7) –––––––––––At 31 July 2020 142.4

–––––––––––

216


Contract liabilities for the OSIsoft 2020 Interim Period and the OSIsoft 2019 Interim Period were

$142.4 million and $122.1 million, respectively. The $20 million difference between the two interim periods

is directly related to the increase in maintenance and subscription sales during the seven months ended

31 July 2020 versus the seven months ended 31 July 2019.

4. Selling and administrative expenses

An analysis of selling and administrative expenses is set out below:

OSIsoft OSIsoft

2020 2019




($, millions)

Selling and distribution expenses 50.2 54.4 100.5

Administrative expenses 71.8 69.1 107.2 –––––––– –––––––– –––––––– 122.0 123.5 207.7

–––––––– –––––––– ––––––––5. Distribution to members

An analysis of distribution to members is set out below:

OSIsoft OSIsoft

2020 2019




($, millions)

Declared and paid during the period/year 117.1 85.0 100.0

–––––––– –––––––– ––––––––6. Trade and other receivables

An analysis of trade and other receivables is set out below:

Current

As at As at As at

31 July 31 July 31 December

2020 2019 2019


($, millions)

Trade receivables 69.1 64.7 163.1

Amounts owed from related parties – 0.5 0.2

Prepayments and other receivables 7.9 13.7 12.1 –––––––– –––––––– –––––––– 77.0 78.9 175.4

–––––––– –––––––– ––––––––

217


Non-current

As at As at As at

31 July 31 July 31 December

2020 2019 2019


($, millions)

Prepayments and other receivables 4.9 3.7 3.7

–––––––– –––––––– ––––––––The OSIsoft directors consider that the carrying amount of trade and other receivables approximates their

fair value.


Transactions between OSIsoft Group subsidiaries have been eliminated on consolidation. A list of

subsidiaries can be found in the notes to the OSIsoft FY 2019 consolidated financial statements.

During the relevant periods, OSIsoft Group companies entered into the following transactions with their

related parties:

OSIsoft OSIsoft

2020 2019




($, millions)

Sales of goods and services 0.8 0.5 1.8

Purchase of goods and services 3.9 3.4 3.7

One of OSIsoft’s investors, Mitsui Holdings, LLC, who was admitted into the partnership in 2016 by

purchasing units from existing members, is also related to some customers with whom OSIsoft does

business. During the OSIsoft 2020 Interim Period, the OSIsoft 2019 Interim Period and OSIsoft FY 2019,

OSIsoft sold licences and services to the Mitsui businesses under standard commercial transactions for total

sales consideration of $0.8 million, $0.5 million, and $1.6 million respectively. This amount is included in

the table above within “sales of goods and services”. As of 31 July 2020 and 31 July 2019, $0 million and

$0.5 million related to these sales were outstanding, respectively. OSIsoft paid Mitsui $0.2 million related to

sales commissions as of 31 July 2020. This amount is included in the table above within “purchases of goods

and services”.

One of OSIsoft’s investors, SB/OSI, Inc., who was admitted into the partnership in 2017 by purchasing units

from existing members, is also related to some customers with whom OSIsoft does business. During 2019,

OSIsoft sold licences and services to Softbank Corp., under standard commercial transactions for total sales

consideration of $0.2 million which is included in the table above within “sales of goods and services”.

OSIsoft’s founder and CEO owns 25 per cent. of SLTC. During the OSIsoft 2020 Interim Period, the OSIsoft

2019 Interim Period and OSIsoft FY 2019, OSIsoft paid SLTC $3.6 million, $3.3 million and $3.5 million

in rental expenses, respectively. This amount is included in the table above within “purchases of goods and

services”.

OSIsoft incurred and paid $0.1 million, $0.1 million, and $0.2 million of telecommunication service fees for

the OSIsoft 2020 Interim Period, the OSIsoft 2019 Interim Period and OSIsoft FY 2019, respectively, from

LIT San Leandro, a telecom infrastructure company. This amount is included in the table above within

“purchases of goods and services”. There was no outstanding balance owed or due to LIT Lan Leandro at

31 July 2020 or 31 July 2019.

Additionally, DERNetSoft, Inc. issued one-year convertible promissory notes to OSIsoft for $0.1 million

during the third quarter of 2019 and another $0.4 million during the fourth quarter of 2019.

218


8. Financial assets

As of 31 July 2020, OSIsoft had exchange traded funds of $17.5 million. These investments are classified

as Level 1 fair value measurement.

In addition, OSIsoft held investments in Finca Global, LLC of $0.5 million as of 31 July 2020 and 31 July

2019 (31 December 2019: $0.5 million). OSIsoft holds less than 20 per cent. ownership in Finca Global,

LLC.

9. Fair value

OSIsoft considers the carrying amount of trade receivables, cash and cash equivalents, trade and other

payables, and lease liabilities to be a reasonable approximation of their value.

10. Subsequent events

On 30 January 2020 the World Health Organization (“WHO”) announced a global health emergency

because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the

risks to the international community as the virus spreads globally beyond its point of origin. In March 2020,

the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

The OSIsoft Group is dependent on its workforce and the sales and delivery of its products and services.

Developments, such as social distancing and shelter-in-place directives have impacted the OSIsoft Group’s

ability to deploy its workforce effectively. These same developments may affect the operations of the

OSIsoft Group’s suppliers and distributors/resellers, as their own workforces and operations are disrupted by

efforts to curtail the spread of this virus.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is

uncertain as to the full magnitude that the pandemic will have on the OSIsoft Group’s financial condition,

liquidity, and future results of operations. Management is actively monitoring the impact of the global

situation on its financial condition, liquidity, operations, suppliers, industry, and workforce.

In August 2020, OSIsoft, among others, entered into a definitive agreement pursuant to which it would be

acquired by AVEVA Group plc, a global leader in industrial software at an enterprise value of $5 billion. The

acquisition is expected to complete during the fourth quarter of 2020, although there can be no assurance

that the acquisition will close within this time frame or at all. This acquisition is not expected to materially

impact OSIsoft’s liquidity or results of operations. OSIsoft’s accounting and analysis of this transaction is

pending completion.

219


PART XI

UNAUDITED PRO FORMA FINANCIAL INFORMATION

ON THE ENLARGED GROUP

SECTION A: UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ENLARGED

GROUP

Basis of Preparation

The unaudited pro forma income statement and unaudited pro forma statement of net assets set out below

have been prepared on the basis set out in the notes below to illustrate the impact of the Acquisition, the

Rights Issue and the drawdown of the Term Facility on the income statement of AVEVA Group plc

(“AVEVA”) for FY 2020 as if they had taken place at the beginning of that financial year, and on the net

assets of AVEVA Group plc as at 30 September 2020 as if they had taken place at that date (together the

“Unaudited Pro Forma Financial Information”).

The Unaudited Pro Forma Financial Information has been prepared for illustrative purposes only. The

hypothetical financial position and results included in the pro forma financial information may differ from

the Enlarged Group’s actual financial position or results.

The Acquisition will be accounted for in accordance with IFRS 3 using the acquisition method of accounting

under which the consideration is allocated to assets acquired and liabilities assumed based on their estimated

fair values as of the date of completion of the Acquisition. Goodwill of £3,844.8 million has been

provisionally recorded in the unaudited pro forma statement of net assets as a result of the Acquisition, based

on estimated purchase price consideration calculated using market information current as at the Latest

Practicable Date. The actual calculation and allocation of the consideration outlined above will be based on

the assets purchased and liabilities assumed at Completion and other information available at that date.

Accordingly, the actual amounts for each of these assets and liabilities will vary from the pro forma amounts

disclosed below and the variations may be material.

The Unaudited Pro Forma Financial Information does not constitute financial statements within the meaning

of section 434 of the Companies Act. Shareholders should read the whole of this document and not rely

solely on the summarised financial information contained in this Part XI (Unaudited Pro Forma Financial

Information on the Enlarged Group). Ernst & Young LLP’s report on the Unaudited Pro Forma Financial

Information is set out in Section B of this Part XI (Unaudited Pro Forma Financial Information on the

Enlarged Group).

The Unaudited Pro Forma Financial Information does not reflect the effect of anticipated synergies and

efficiencies associated with the Acquisition, nor the costs which may be incurred in relation to achieving

such synergies or efficiencies.

The Unaudited Pro Forma Financial Information has been prepared in accordance with Listing Rule 13.3.3R

and Sections 1 and 2 of Annex 20 of Commission Delegated Regulation (EU) 2019/980 of 14 March 2019

supplementing the Prospectus Regulation in a manner consistent with the accounting policies to be adopted

by AVEVA in preparing its audited consolidated financial statements for FY 2021.

Annex 20, 2.1

LR 13.4.1(5)

LR 13.5.7(3)(c)

LR 13.5.31

Annex 3, 11.5

Annex 20, 1.1(a)

LR 13.5.11

Annex 20, 1.1(b)

220


Unaudited Pro Forma Statement of Net Assets as at 30 September 2020

Adjustments––––––––––––––––––––––––––––––––––––––

AVEVA OSIsoft

Net Assets Net Assets

as at as at

30 September 31 July Pro Forma

2020 2020 Equity Debt Acquisition Enlarged

(unaudited) (unaudited) Financing Financing adjustments Group –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– Note 1 Note 2 Note 3 Note 4 Note 5

(£, millions)

Non-current assets:

Goodwill 1,294.6 16.0 – – 3,844.8 5,155.4

Other intangible assets 467.1 0.1 – – – 467.2

Property, plant and equipment 29.0 25.0 – – – 54.0

Right-of-use assets 73.3 32.1 – – – 105.4

Deferred tax assets 13.6 1.7 – – – 15.3

Trade and other receivables 22.7 3.7 – – – 26.4

Retirement benefit surplus 10.9 10.7 – – – 21.6

Investments – 0.4 – – – 0.4 –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– 1,911.2 89.7 – – 3,844.8 5,845.7 –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

Current assets:

Trade and other receivables 185.1 58.7 (2.5) 0.3 – 241.6

Contract-related costs – 4.6 – – – 4.6

Contract assets 159.5 2.8 – – – 162.3

Treasury deposits and other

financial assets 0.1 13.7 – – – 13.8

Cash and cash equivalents 79.8 46.4 2,809.4 685.0 (3,445.8) 174.7

Current tax assets 27.5 0.1 – – – 27.6 –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– 452.0 126.2 2,806.9 685.3 (3,445.8) 624.1 –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Total assets 2,363.2 216.0 2,806.9 685.3 398.9 6,470.2 –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

Current liabilities

Trade and other payables 134.3 32.6 – – (10.5) 156.4

Contract liabilities 132.9 103.8 – – – 236.7

Loans and borrowings 20.0 – – – – 20.0

Lease liabilities 15.5 6.7 – – – 22.2

Financial liabilities 0.5 – – – – 0.5

Current tax liabilities 1.1 0.1 – – – 1.2 –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– 304.3 143.2 – – (10.5) 437.0

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

221


Adjustments––––––––––––––––––––––––––––––––––––––

AVEVA OSIsoft

Net Assets Net Assets

as at as at

30 September 31 July Pro Forma

2020 2020 Equity Debt Acquisition Enlarged

(unaudited) (unaudited) Financing Financing adjustments Group –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– Note 1 Note 2 Note 3 Note 4 Note 5

(£, millions)


Lease liabilities 48.7 38.2 – – – 86.9

Contract liabilities – 4.7 – – – 4.7

Deferred tax liabilities 104.6 – – – – 104.6

Loans and borrowings – – – 695.4 – 695.4

Other liabilities 20.9 2.4 – – – 23.3

Retirement benefit obligations 12.0 – – – – 12.0 –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– 186.2 45.3 – 695.4 – 926.9 –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Total liabilities 490.5 188.5 – 695.4 (10.5) 1,363.9 –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

Net Assets 1,872.7 27.5 2,806.9 (10.1) 409.4 5,106.3

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Notes to the unaudited pro forma net assets statement

(1) The AVEVA Group’s financial information has been extracted, without material adjustment, from the AVEVA Group H1 2021

Interim Results Statement (on which a review report was published) incorporated by reference in Part VIII (Historical Financial

Information of the AVEVA Group) of this document.

(2) OSIsoft Group’s financial information has been extracted, without material adjustment, from the unaudited historical financial

information of the OSIsoft Group for the OSIsoft 2020 Interim Period and the OSIsoft 2019 Interim Period, which has been

prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the EU and

AVEVA Group’s accounting policies for FY 2021, and is set out in Section C of Part X (Historical Financial Information of the

OSIsoft Group) of this document. No review report has been published on this financial information. Unless stated otherwise,

amounts have been converted from US dollars to pounds sterling using the closing spot exchange rate on 31 July 2020 of

$1.3117: £1.00.

(3) The net proceeds of the Rights Issue of £2,809.4 million are calculated on the basis that AVEVA issues 125,739,796 Rights Issue

Shares at a price of 2,255 pence per share, net of estimated transaction-related fees and expenses (excluding VAT) in connection

with the Rights Issue of approximately £28.6 million, which have been accounted for as a deduction to equity. £2.5 million of

these fees and expenses had already been paid as at 30 September 2020 and were accounted for as a prepayment. The net

proceeds of the Rights Issue will be used to partly fund the Acquisition.

(4) This adjustment shows the debt that will be drawn down in order to fund the Acquisition. Total new loans and borrowings

available to the AVEVA Group in connection with the Acquisition comprise the $3,575 million Bridge Facility, the $900 million

Term Facility and the £250 million Revolving Facility. To fund the Acquisition, AVEVA proposes to fully draw down the Term

Facility, but no drawdown will be made on the Revolving Facility. For the purposes of this pro forma financial information, it is

assumed that the Bridge Facility will be automatically cancelled upon completion of the Rights Issue with no drawdown required

under the Bridge Facilities. The following assumptions have been made with regards to each element of the debt financing:

(i) the Term Facility of $900 million will be drawn fully in US dollars. For the purposes of the pro forma financial information,

the Term Facility drawdown has been translated into pounds sterling using the closing spot exchange rate on 30 September

2020 of $1.2865: £1. The Term Facility drawdown is shown net of arrangement fees of £4.2 million that will be capitalised

against loans and borrowings. £1.6 million of such arrangement fees had been incurred as at 30 September 2020 and were

accounted for as a prepayment;

(ii) the amount of cash received from the debt financing is shown net of the remaining outstanding fees of £14.6 million

(excluding VAT) incurred in relation to the Revolving Facility, the Term Facility and the Bridge Facility; and

(iii) an adjustment of £0.3 million has been made, comprising: (a) (£0.3) million adjustment which has been made to accelerate

amortisation of capitalised fees in relation to AVEVA's existing £100 million RCF, which will be cancelled and prepaid using

the new £250 million Revolving Facility; (b) (£1.6) million adjustment to capitalise term loan fees against loans and

borrowings that had already been paid and recognised in prepayments as at 30 September 2020; and (c) £2.2 million

adjustment made to capitalise the remaining fees on the £250 million Revolving Facility within trade and other receivables,

222


net of £0.9 million of fees that had already been paid and were recognised as a prepayment within trade and other

receivables as at 30 September 2020.

(5) The acquisition adjustments reflect the following:

(a) Net cash outflow on Completion

(i) AVEVA Solutions Limited, a member of the AVEVA Group, has entered into forward currency contracts to purchase

US dollars at an average rate of $1.2999: £1 to hedge the value of the Rights Issue proceeds, which will be received

by AVEVA in pounds sterling. For the purposes of the pro forma financial information, the pound sterling value of the

part of the cash consideration that will be paid by AVEVA using the proceeds of the Rights Issue has been calculated

using the Forward Rate. For the purposes of the pro forma, the pound sterling value of the remainder of the cash

consideration, which will be funded through drawings, made in US dollars, made from the Term Facility, has been

converted from US dollars at the closing spot exchange rate as at 30 September 2020 of $1.2865: £1.

(ii) In accordance with the terms of the Stock and Unit Purchase Agreement, new Ordinary Shares in AVEVA will also be

issued to Estudillo as part of the consideration for the Acquisition. The value of these Consideration Shares to be issued

to Estudillo at Completion has been estimated as £451.5 million, based on AVEVA’s closing share price of 4,162 pence

on the Latest Practicable Date. The issuance of the Consideration Shares is shown as a deduction from total

consideration below.

(iii) The pro forma financial information has been prepared on the basis that the Acquisition pricing was set on a cash free

debt free basis, so OSIsoft cash is also removed as part of this adjustment.

The total consideration and the net movement in cash and cash equivalents is analysed as follows:

(£, millions) ––––––––––Total consideration (3,825.9)

Less amount settled in Consideration Shares 451.5 –––––––––Total Cash consideration (3,374.4) –––––––––

Remove OSIsoft Cash (46.4)

Transaction costs (25.1) –––––––––Total pro forma adjustment to cash (3,445.8)

–––––––––(b) Transaction costs

Total transaction costs in relation to the debt financing, the Acquisition and the Rights Issue are expected to be £76.2 million.

Total transaction costs in relation to the Acquisition and Rights Issue are expected to be £59.1 million (inclusive of

irrecoverable VAT), of this, £28.6 million has been deducted from the Rights Issue proceeds and is expected to be capitalised

against share premium. As at 30 September 2020 £8.0 million had already been settled in cash (including £2.5 million of

the Rights Issue costs set out above), the outstanding expenses are assumed to be settled on Completion.

(c) Recognition of pro forma goodwill

The Unaudited Pro Forma Financial Information has been prepared on the basis that the Acquisition will be treated as a

business combination in accordance with IFRS 3 Business Combinations. AVEVA expects to undertake a fair value exercise

following Completion and no account has been taken of any fair value adjustments to the acquired assets and liabilities of

OSIsoft in the Unaudited Pro Forma Financial Information. For the purposes of the Unaudited Pro Forma Financial

Information the excess of total consideration over the carrying amount of net assets acquired has been attributed to goodwill.

The actual calculation and allocation of the consideration outlined above will be based on the assets purchased and liabilities

assumed at Completion and other information available at that date. Accordingly, the actual amounts for each of these assets

and liabilities will vary from the pro forma amounts disclosed below and the variations may be material.

The total consideration in respect of the acquisition has been determined based on acquiring OSIsoft on a cash free, debt free

basis. As such the following adjustment has been made to OSIsoft’s net assets for the purposes of the pro forma goodwill

calculation:

($, millions) ($, millions) (£, millions) (£, millions) –––––––––– –––––––––– –––––––––– ––––––––––Total cash consideration 4,378.8 3,374.4

Total non-cash consideration 580.8 451.5

Total Consideration 4,959.6 3,825.9

Less:

OSIsoft net assets 36.0 27.4

OSIsoft cash and cash equivalents (60.8) (46.4) –––––––– ––––––––Pro forma net liabilities acquired (excluding cash) (24.8) (18.9) –––––––– ––––––––Pro forma Goodwill Adjustment 4,984.4 3,844.8

223


The Acquisition has been agreed on a cash free debt free basis and with reference to a target level of net working capital. Certain

adjustments will be made to the part of the consideration to be settled in cash, in accordance with the provisions of the Stock and

Unit Purchase Agreement (“SUPA”) as set out in Part II (Principal Terms of the Acquisition) of this document. These adjustments

are to reflect the actual level of cash, indebtedness and the working capital balances, as defined in the SUPA, in OSIsoft, certain

transaction expenses incurred by OSIsoft and certain other assets and liabilities that will transfer to the Enlarged Group at

Completion. Other than to reflect OSIsoft’s actual net cash and indebtedness at 31 July 2020, no adjustments have been reflected

in the pro forma financial information for these items, which will be calculated at Completion. Further details on the adjustments

to the cash consideration as provided for in the SUPA are set out below:

(i) OSIsoft cash and indebtedness – any Cash (as defined in the SUPA) held by the OSIsoft Group will be added to the cash

consideration amount and any Company Debt (as defined in the SUPA) owed by the OSIsoft Group will be deducted from

the cash consideration amount.

(ii) Net working capital – an adjustment, upwards or downwards, to the cash consideration amount will be made depending on

the level of net working capital in the OSIsoft Group as at Completion compared to the agreed target level of net working

capital set out in the SUPA (being a net liability of $65 million).

(iii) Other transaction expenses – Certain transaction expenses incurred by OSIsoft but not settled at the date of Completion will

also be deducted from the cash consideration. This includes a portion of the Transaction Bonus (as defined in the SUPA) to

be paid to OSIsoft staff post-closing.

(iv) Certain other assets and liabilities – Except for SoftBank Blocker’s investment in OSIsoft, all assets and liabilities held in

SoftBank Blocker (comprising cash and certain residual tax liabilities, as defined in the SUPA) will be added to or deducted

from the consideration, respectively.

(6) In preparing the pro forma statement of net assets, no account has been taken of the trading or transactions, save as stated above

with regards to the forward currency contracts purchased and the debt financing agreements entered into, of the AVEVA Group

or the OSIsoft Group since 30 September 2020 and 31 July 2020 respectively.

224


Unaudited Pro Forma Income Statement for FY 2020

Adjustments–––––––––––––––––––––––––––––––––

OSIsoft for Pro Forma

AVEVA for OSIsoft Debt Acquisition Enlarged

FY 2020 FY 2019 Financing adjustments Group ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– Note 1 Note 2 Note 3 Note 4

(£, millions)

Revenue 833.8 368.2 – – 1,202.0

Cost of Sales (190.7) (73.6) – – (264.3) –––––––– –––––––– –––––––– –––––––– ––––––––Gross profit 643.1 294.6 – – 937.7 –––––––– –––––––– –––––––– –––––––– ––––––––

Operating expenses

Research and development cost (184.6) (34.3) – – (218.9)

Selling and administrative cost (367.8) (162.7) – (40.1) (570.6)

Net impairment loss on financial asset (7.6) 0.5 – – (7.1)

Other income 11.9 – – – 11.9 –––––––– –––––––– –––––––– –––––––– ––––––––Total Operating expenses (548.1) (196.5) – (40.1) (784.7) –––––––– –––––––– –––––––– –––––––– ––––––––Profit/(loss) from operations 95.0 98.1 – (40.1) 153.0 –––––––– –––––––– –––––––– –––––––– ––––––––

Financial revenue 0.3 0.2 – – 0.5

Financial expenses (3.3) (2.7) (24.2) – (30.2)

Analysed as:

Profit/(loss) from operations 95.0 98.1 – (40.1) 153.0

Amortisation of other intangibles 90.6 – – – 90.6

(excluding other software)

Share-based payments 12.0 – – 9.6 21.6

Loss on fair value of forward foreign 0.4 – – – 0.4

exchange contracts

Exceptional items 18.8 – – 30.5 49.3

Adjusted EBIT 216.8 98.1 – – 314.8

–––––––– –––––––– –––––––– –––––––– ––––––––Profit before tax 92.0 95.5 (24.2) (40.1) 123.2 –––––––– –––––––– –––––––– –––––––– ––––––––Income tax expenses (22.2) (5.6) 4.8 (14.5) (37.6) –––––––– –––––––– –––––––– –––––––– ––––––––Profit for the year 69.8 89.8 (19.4) (54.6) 85.6

–––––––– –––––––– –––––––– –––––––– ––––––––Notes to the unaudited pro forma income statement

(1) The income statement of AVEVA for FY 2020 has been extracted, without material adjustment, from the audited consolidated

financial statements of AVEVA for FY 2020 incorporated by reference in Part VIII (Historical Financial Information of the

AVEVA Group) of this document.

(2) The income statement of OSIsoft for OSIsoft FY 2019 has been extracted, without material adjustment, from the historical

financial information of the OSIsoft Group, which has been prepared in accordance with IFRS as adopted by the EU and AVEVA

Group’s accounting policies for FY 2020, and is set out in Section B of Part X (Historical Financial Information of the OSIsoft

Group) of this document. A report on this financial information is set out in Section A of Part X (Historical Financial Information

of the OSIsoft Group) of this document. Unless stated otherwise, amounts have been converted from US dollars to pounds sterling

at an average exchange rate or OSIsoft FY 2019 of $1.2766: £1.

(3) The adjustment to financial expenses reflects:

(a) the finance cost associated with the Term Facility had the Term Facility been in place from the beginning of FY 2020. The

adjustment comprises estimated interest charges of £11.6 million, amortisation of Term Facility debt issuance costs of £1.4

million and amortisation of Revolving Facility issuance costs of £1.1 million. This expense is expected to have a continuing

impact on the consolidated results of the AVEVA Group and, following the Acquisition, the Enlarged Group.

225


Interest on the drawn amount of the Term Facility of £11.6 million has been estimated on the basis of Margins using an

assumed Net Leverage of 2.0-1.5:1 (in each case, as defined in the Facilities Agreement). This expense is expected to have

a continuing impact on the consolidated results of the AVEVA Group and, following the Acquisition, the Enlarged Group;

(b) the arrangement fees related to the Bridge Facility. The adjustment comprises estimated fees for the Bridge Facility of £9.8

million (reflecting estimated fees incurred prior to its automatic cancellation upon completion of the Rights Issue, with no

draw down prior to cancellation). This expense is not expected to have a continuing impact on the consolidated results of

the AVEVA Group and, following the Acquisition, the Enlarged Group;

(c) an adjustment of £0.3 million has been made to accelerate amortisation of capitalised fees in relation to AVEVA’s existing

£100 million RCF, which will be cancelled and prepaid using AVEVA’s new £250 million Revolving Facility. This expense

is not expected to have a continuing impact on the consolidated results of the AVEVA Group and, following the Acquisition,

the Enlarged Group; and

(d) the income tax credit that is expected to arise on both the fees incurred and interest paid.

(4) The Acquisition adjustments reflect the following:

(a) total transaction costs in relation to the Acquisition, debt financing and the Rights issue are expected to be £76.2 million

(inclusive of irrecoverable VAT) comprising:

(i) £30.5 million of transaction costs related to the Acquisition have been reflected as an adjustment to selling and

administrative costs, of which £15.5 million had already been incurred in the six month period ended 30 September

2020;

(ii) £28.6 million of transaction costs related to the Rights Issue have been capitalised against share premium, of which

£2.5 million had already been incurred in the six month period ended 30 September 2020 and recognised as a

prepayment as at 30 September 2020; and

(iii) £17.2 million of transaction costs related to the debt financing, of which £2.5 million had already been incurred in the

six month period ended 30 September 2020 and recognised as a prepayment as at 30 September 2020. Of the remaining

£14.6 million, £9.8 million is reflected as an adjustment to financial expenses, with the remaining fees expected to be

capitalised against prepayments and loans and borrowings.

All costs that relate solely to the Acquisition have been expensed in accordance with IFRS 3 Business Combinations. These

expenses are not expected to have a continuing impact on the consolidated results of the AVEVA Group and, following the

Acquisition, the Enlarged Group;

(b) awards over Ordinary Shares in AVEVA to be made to OSIsoft employees which have been agreed under the SUPA. These

awards will be made in four tranches of $15 million. The first tranche will be awarded promptly following the date of

Completion and will be awarded under the AVEVA Group RSP. In addition to the $15 million grant of awards over Ordinary

Shares in AVEVA under tranche 1, an additional contribution of $3.5 million for an additional one-off share award to be

granted to OSIsoft employees is to be satisfied also using the AVEVA Group RSP, funded by a direct or indirect party to the

transaction other than AVEVA. A pro forma adjustment of $12.2 million has been made for the estimated 12 month share

based payment charge for the initial awards over Ordinary Shares in AVEVA granted in tranche 1 and the additional one-off

award over Ordinary Shares in AVEVA inclusive of employer social security contributions. These awards will vest over a

three year period consistent with the current AVEVA Group RSP. These awards are expected to have a continuing impact

on the consolidated results of the AVEVA Group and, following the Acquisition, the Enlarged Group; and

(c) the estimated impact on Enlarged Group income tax expense, which comprises:

(i) the expected US federal income and deferred tax charge of $23.2 million which would be borne by the Enlarged Group

had AVEVA acquired OSIsoft at the beginning of FY 2020. OSIsoft was a ‘tax transparent’ entity for tax purposes with

tax borne by its shareholders. Accordingly, its historical financial information does not reflect a federal tax charge. This

charge includes the tax benefit of the step up set out below. The ‘step up’ is the impact of the tax revaluation of the

goodwill and intangible assets that will occur as a result of the Acquisition. Where partnership interests are bought

directly, a revaluation of the goodwill and intangible assets will be undertaken for tax purposes. The amortisation on

the tax basis of the assets acquired provides a tax deduction that can be used against taxable profits that arise on the

profits of the Enlarged Group. This charge is expected to have a continuing impact on the consolidated results of the

AVEVA Group and, following the Acquisition, the Enlarged Group;

(ii) the expected US federal income and deferred tax charge of $23.2 million includes the annual income tax benefit in

respect of the ‘step up’ which, is estimated to be $32.7 million. It is assumed that the excess benefit over and above

OSIsoft taxable profits will be offset against AVEVA’s existing taxable profits arising in the US, following the

consolidation of the US tax group;

(iii) of the transaction expenses incurred, a portion of these are expected to be tax deductible, resulting in an income tax

credit of £1.7 million;

(iv) the expected US tax deduction of $2.6 million on the awards over Ordinary Shares in AVEVA referred to in paragraph

4(b) above; and

226


(v) the pro forma effective tax rate is 26 per cent. The pro forma effective tax rate before exceptional and normalised items

(presented as reconciling items between profit from operations and Adjusted EBIT in the pro forma Income Statement

above) of 13 per cent. includes the benefit from the amortisation of tax deductible goodwill and intangibles the ‘step

up’ as this benefit more accurately aligns the effective tax rate before exceptional and normalised items with the

expected rate of cash tax payments;

(5) In preparing the unaudited pro forma income statement, no account has been taken of the trading or transactions, save as stated

above, with regards to the forward currency contracts purchased and debt financing agreements entered into, of the AVEVA

Group or the OSIsoft Group since 31 March 2020 and 31 December 2019 respectively.

Annex 3, 11.5

227


SECTION B: ACCOUNTANT’S REPORT ON UNAUDITED PRO FORMA INFORMATION ON

THE ENLARGED GROUP

6 November 2020

The Directors

AVEVA Group plc

High Cross

Madingley Road

Cambridge

United Kingdom

CB3 0HB

Dear Sirs

We report on the unaudited pro forma financial information (the “Unaudited Pro Forma Financial

Information”) set out in Section A of Part XI (Unaudited Pro Forma Information on the Enlarged Group)

of the combined class 1 circular and prospectus dated 6 November 2020 (the “Document”).

This report is required by section 3 of Annex 20 of Commission Delegated Regulation (EU) 2019/980 of

14 March 2019 supplementing Regulation (EU) 2017/1129 of the European Parliament and of the Council

(the “Prospectus Delegated Regulation”) and Listing Rule 13.3.3R and is given for the purpose of

complying with those rules and for no other purpose.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed

and which we may have to AVEVA Group plc’s ordinary shareholders as a result of the inclusion of this

report in the Document and any responsibility arising under Prospectus Regulation Rule 5.3.2R(2)(f) to any

person as and to the extent there provided, to the fullest extent permitted by law we do not assume any

responsibility and will not accept any liability to any other person for any loss suffered by any such other

person as a result of, arising out of, or in connection with this report or our statement, required by and given

solely for the purposes of complying with item 1.3 of Annex 3 to the Prospectus Delegated Regulation and

Listing Rule 13.4.1R(6), consenting to its inclusion in the Document.

Opinion

In our opinion:

• the Unaudited Pro Forma Financial Information has been properly compiled on the basis stated; and

• such basis is consistent with the accounting policies of AVEVA Group plc.

Responsibilities

It is the responsibility of the directors of AVEVA Group plc to prepare the Unaudited Pro Forma Financial

Information in accordance with Sections 1 and 2 of Annex 20 of the Prospectus Delegation Regulation and

Listing Rule 13.3.3R.

It is our responsibility to form an opinion, as required by Section 3 of Annex 20 of the Prospectus Delegated

Regulation and Listing Rule 13.3.3R, as to the proper compilation of the Unaudited Pro Forma Financial

Information and to report that opinion to you.

No reports or opinions have been made by us on any financial information of OSIsoft, LLC used in the

compilation of the Unaudited Pro Forma Financial Information. In providing this opinion we are not

providing any assurance on any source financial information on which the Unaudited Pro Forma Financial

Information is based beyond the above opinion.

In providing this opinion we are not updating or refreshing any reports or opinions previously made by us

on any financial information used in the compilation of the Unaudited Pro Forma Financial Information, nor

do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or

opinions were addressed by us at the dates of their issue.

Annex 3, 11.5

PR Rule

5.3.2R(2)(f)

Annex 20, 3

228


Basis of Preparation

The Unaudited Pro Forma Financial Information has been prepared on the basis described in Section A of

Part XI (Unaudited Pro Forma Information on the Enlarged Group) of the Document, for illustrative

purposes only, to provide information about how the Acquisition, the Rights Issue and the drawdown of the

Term Facility might have affected the financial information presented on the basis of the accounting policies

to be adopted by AVEVA Group plc in preparing the financial statements for the period ending 31 March

2021.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Financial

Reporting Council in the United Kingdom. We are independent in accordance with the FRC’s Ethical

Standard as applied to Investment Circular Reporting Engagements, and we have fulfilled our other ethical

responsibilities in accordance with these requirements.

The work that we performed for the purpose of making this report, which involved no independent

examination of any of the underlying financial information, consisted primarily of comparing the unadjusted

financial information with the source documents, considering the evidence supporting the adjustments and

discussing the Unaudited Pro Forma Financial Information with the directors of AVEVA Group plc.

We planned and performed our work so as to obtain the information and explanations we considered

necessary in order to provide us with reasonable assurance that the Unaudited Pro Forma Financial

Information has been properly compiled on the basis stated and that such basis is consistent with the

accounting policies of AVEVA Group plc.

Our work has not been carried out in accordance with auditing or other standards and practices generally

accepted in other jurisdictions and accordingly should not be relied upon as if it had been carried out in

accordance with those standards and practices.

Declaration

For the purposes of Prospectus Regulation Rule 5.3.2R(2)(f) we are responsible for this report as part of the

prospectus and declare that, to the best of our knowledge, the information contained in this report is in

accordance with the facts and makes no omission likely to affect its import. This declaration is included in

the prospectus in compliance with item 1.2 of Annex 3 of the Prospectus Delegated Regulation.

Yours faithfully

Ernst & Young LLP

Annex 3, 1.1

Annex 3, 1.2

229


PART XII

TAXATION

1. General

The comments below are of a general and non-exhaustive nature based on the Directors’ understanding of

current tax law and published practice in the United Kingdom and the United States, which is subject to

change, possibly with retrospective effect. The acquisition of Ordinary Shares in the Company involves a

number of complex tax considerations. Changes in tax legislation in any of the countries in which the

Company has assets, in the United Kingdom (or in any other country in which a subsidiary of the Company

through which acquisitions are made is located), or in the United States or changes in tax treaties negotiated

by those countries, could adversely affect the returns from the Company to investors or increase the tax

liabilities of Shareholders.

Shareholders who are in any doubt as to their taxation position should consult their own independent

professional advisers on the potential tax consequences regarding the acquisition, holding or disposal of

Ordinary Shares under the laws of their country and/or state of citizenship, domicile or residence.

2. United Kingdom Taxation

The following statements do not constitute tax advice and are intended to apply only as a general guide to

the position under current United Kingdom tax law as applied in England and Wales and the published

practice of HMRC (which may not be binding on HMRC) as at the Latest Practicable Date, either of which

is subject to change at any time (possibly with retrospective effect). They relate only to certain limited

aspects of the United Kingdom taxation treatment of Shareholders and are intended to apply only to

Shareholders who are resident and (in the case of individuals) domiciled in (and only in) the United

Kingdom for United Kingdom tax purposes (unless the context otherwise requires) and to whom split-year

treatment does not apply, who hold their Ordinary Shares as investments (other than in an individual savings

account, self- invested personal pension or as carried interest), and who are the absolute beneficial owners

of their Ordinary Shares. They may not apply to certain classes of Shareholders such as, for example, dealers

in securities, trustees, insurance companies, collective investment schemes and Shareholders who have (or

who are deemed to have) acquired their Ordinary Shares by virtue of an office or employment.

Any person who is in any doubt as to its, his or her tax position or who may be subject to tax in any

jurisdiction other than the United Kingdom should consult an appropriate professional tax adviser as soon

as possible.

2.1 Taxation Of Chargeable Gains

(a) Issue of Rights Issue Shares

HMRC’s treatment of the acquisition of Rights Issue Shares cannot be guaranteed and specific

confirmation has not been requested. HMRC’s published practice to date has been to treat an

acquisition of shares by an existing shareholder up to its, his or her pro-rata entitlement

pursuant to the terms of a rights issue as a reorganisation, however HMRC may not apply this

practice in circumstances where a Rights Issue is not made to all Shareholders.

If the issue of the Rights Issue Shares is regarded as a reorganisation of the Company’s share

capital for the purposes of UK taxation on chargeable gains, to the extent that a Shareholder

takes up all or part of its, his or her entitlement to Rights Issue Shares it, he or she should not

be treated as acquiring a new asset nor will it, he or she be treated as making a disposal of any

part of their corresponding holding of Existing Ordinary Shares. No liability to UK taxation on

chargeable gains should arise on the issue of the Rights Issue Shares to the extent that the

Shareholder takes up its, his or her Rights Issue entitlement. The Rights Issue Shares will be

treated as acquired at the same time as the Existing Ordinary Shares in respect of which they

are acquired and the cost of acquisition of the Rights Issue Shares will be pooled with the

Annex 12, 4.5

230


expenditure allowable on the Existing Ordinary Shares in respect of which they are acquired

for the purposes of determining the amount of any chargeable gain arising on a subsequent

disposal.

If, or to the extent that, the issue of Rights Issue Shares pursuant to the Rights Issue is not

regarded by HMRC as a reorganisation, the Rights Issue Shares acquired by each Qualifying

Shareholder under the Rights Issue will, for the purposes of the UK taxation of chargeable

gains, be treated as acquired as part of a separate acquisition of Ordinary Shares. The amount

of subscription monies paid for the Rights Issue Shares will constitute the capital gains base

cost of the new shareholding, although subject to capital gains tax share matching rules.

(b) Disposal or lapse of rights to acquire Rights Issue Shares

If a Qualifying Shareholder:

(i) sells or otherwise disposes of all or some of its, his or her rights to subscribe for Rights

Issue Shares; or

(ii) allows or is deemed to allow all or any part of its, his or her rights to subscribe for Rights

Issue Shares to lapse and receives a cash payment in respect of them,

the proceeds should generally be treated as a capital distribution to that Qualifying Shareholder

by the Company, he, she or it shall be treated as if he, she or it had disposed of a part of its, his

or her Existing Ordinary Shares and he, she or it may, depending on its, his or her

circumstances, incur a liability to taxation on any chargeable gains. However, if the proceeds

resulting from a lapse or disposal of rights to subscribe for Rights Issue Shares are “small” as

compared with the market value (on the date of lapse or disposal) of that Qualifying

Shareholder’s Existing Ordinary Shares, such a Qualifying Shareholder should not generally

be treated as making a disposal for the purposes of the taxation of chargeable gains. The

proceeds will instead reduce the base cost of that Qualifying Shareholder’s Existing Ordinary

Shares used to compute any chargeable gain or allowable loss on a subsequent disposal.

This treatment will not apply where such proceeds are greater than the base cost of that

Qualifying Shareholder’s Existing Ordinary Shares.

The current practice of HMRC is to treat proceeds as “small” where either: (A) the proceeds

of the disposal or lapse of rights do not exceed 5 per cent. of the market value (at the date of

the disposal or lapse) of the shares in respect of which the rights arose; or (B) the amount of

the proceeds is £3,000 or less, regardless of whether the 5 per cent. test is satisfied. Whether

proceeds are small needs to be considered on a case-by-case basis having regard to the

circumstances of each case.

(c) Subsequent disposals of Rights Issue Shares by Individual Qualifying Shareholders

A disposal of Rights Issue Shares may, depending on the circumstances and subject to any

available exemption or relief, give rise to a chargeable gain (or an allowable loss) for the

purposes of UK capital gains tax.

An individual Qualifying Shareholder who is resident in the UK for UK tax purposes and

whose total taxable gains and income in a given tax year, including any gains made on the

disposal or deemed disposal of his or her Rights Issue Shares, are less than or equal to the upper

limit of the income tax basic rate band applicable to him or her in respect of that tax year (the

“Band Limit”) will generally be subject to capital gains tax at the flat rate of 10 per cent. in

respect of any gain arising on a disposal or deemed disposal of his or her Rights Issue Shares.

An individual Qualifying Shareholder who is resident in the UK for UK tax purposes and

whose total taxable gains and income in a given tax year, including any gains made on the

disposal or deemed disposal of his or her Rights Issue Shares, are more than the Band Limit

will generally be subject to capital gains tax at the flat rate of 10 per cent. in respect of any gain

231


arising on a disposal or deemed disposal of his or her Rights Issue Shares (to the extent that,

when added to the Qualifying Shareholder’s other taxable gains and income in that tax year,

the gain is less than or equal to the Band Limit) and at the flat rate of 20 per cent. in respect of

the remainder.

No indexation allowance will be available to an individual Qualifying Shareholder in respect

of any disposal of Rights Issue Shares. However, most individuals have an annual exemption,

such that capital gains tax is chargeable only on gains arising from all sources during the tax

year in excess of this figure. The annual exemption is £12,300 for the tax year 2020–2021.

Individuals who are temporarily non-resident may, in certain circumstances, be subject to tax

in respect of gains realised while they are not resident in the UK.

(d) Subsequent disposals of Rights Issue Shares by Corporate Qualifying Shareholders

Where a Qualifying Shareholder is within the charge to UK corporation tax, a disposal of

Rights Issue Shares may, depending on the circumstances and subject to any available

exemption or relief, give rise to a chargeable gain (or an allowable loss) for the purposes of

corporation tax.

Corporation tax is charged on chargeable gains at the rate of corporation tax applicable to that

company. It should be noted for the purposes of calculating any indexation allowance available

on a disposal of Rights Issue Shares that generally the expenditure incurred in acquiring those

Rights Issue Shares will be treated as incurred only when the Qualifying Shareholder made, or

became liable to make, payment, and not at the time those shares are otherwise deemed to have

been acquired. For disposals on or after 1 January 2018, indexation allowance will be

calculated only up to and including December 2017, irrespective of the date of disposal of

Rights Issue Shares.

2.2 Taxation of dividends

Under current UK tax law, the Company is not required to withhold tax at source from dividend

payments it makes.

A Shareholder’s liability to tax on dividends will depend on the individual circumstances of the

Shareholder.

(a) Individuals

An individual Shareholder who is resident for tax purposes in the UK will pay no tax on the

first £2,000 of dividend income received in a year (the “Nil Rate Amount”). The rates of

income tax on dividends received above the Nil Rate Amount are: (i) 7.5 per cent. for dividends

taxed in the basic rate band; (ii) 32.5 per cent. for dividends taxed in the higher rate band; and

(iii) 38.1 per cent. for dividends taxed in the additional rate band.

Dividend income that is within the dividend allowance counts towards an individual’s basic or

higher rate limits – and will therefore affect the level of savings allowance to which they are

entitled, and the rate of tax that is due on any dividend income in excess of this allowance. In

calculating into which tax band any dividend income over the £2,000 Nil Rate Amount falls,

savings and dividend income are treated as the highest part of an individual’s income. Where

an individual has both savings and dividend income, the dividend income is treated as the top

slice.

(b) Companies

Shareholders within the charge to corporation tax which are “small companies” (for the

purposes of UK taxation of dividends) will not generally expect to be subject to tax on

dividends from the Company.

232


Other Shareholders within the charge to corporation tax will not be subject to tax on dividends

from the Company so long as the dividends fall within an exempt class and certain conditions

are met. Dividends paid on non-redeemable shares that do not carry any present or future

preferential rights to dividends or to the relevant company’s assets on its winding up, and

dividends paid to a person holding less than 10 per cent. of the issued share capital of the payer

(or any class of that share capital), are examples of dividends that should fall within an exempt

class.

The exemptions above are subject to anti-avoidance rules.

2.3 Stamp duty and SDRT

(a) Issue of Rights Issue Shares and issue or crediting of rights to Rights Issue Shares

No stamp duty or SDRT will generally be payable on the issue of Provisional Allotment

Letters, split Provisional Allotment Letters or definitive share certificates, on the crediting of

Nil Paid Rights or Fully Paid Rights to accounts in CREST, or on the issue in uncertificated

form of Rights Issue Shares.

Where Rights Issue Shares represented by such documents or rights are registered in the name

of the Qualifying Shareholder entitled to such shares, or where Rights Issue Shares are credited

in uncertificated form to CREST, no liability to stamp duty or SDRT will generally arise.

(b) Purchase of rights to Rights Issue Shares

Persons who purchase (or are treated as purchasing) rights to Rights Issue Shares represented

by Provisional Allotment Letters (whether nil paid or fully paid), or Nil Paid Rights or Fully

Paid Rights held in CREST, on or before the latest time for registration of renunciation, will

not generally be liable to pay stamp duty. However, an unconditional agreement (or a

conditional agreement that becomes unconditional) to transfer rights to Rights Issue Shares

will be chargeable to SDRT. This is usually at the rate of 0.5 per cent. of the consideration given

in money or money’s worth but in certain cases may apply by reference to the market value of

the rights acquired. Where such a purchase is effected through a stockbroker or other financial

intermediary, that person will normally account to HMRC for the SDRT and should indicate

that this has been done in any contract note issued to the purchaser. In other cases, the

purchaser of the rights to Rights Issue Shares represented by the Provisional Allotment Letters

should be the accountable party and must therefore account for the SDRT to HMRC. Any

SDRT arising on the transfer of Nil Paid Rights or Fully Paid Rights held in CREST should be

collected and accounted for to HMRC by CREST. Notwithstanding the above, the purchaser of

the rights is still liable to any outstanding SDRT on a joint and several basis.

No stamp duty or SDRT will be payable on the registration of Provisional Allotment Letters or

split Provisional Allotment Letters, whether by the original holders or their renouncees.

(c) Subsequent dealings in Rights Issue Shares

Except in relation to depositary receipt systems and clearance services (to which the special

rules outlined below apply), any subsequent dealings in Rights Issue Shares will be subject to

stamp duty or SDRT in the normal way. Subject to an exemption for certain low value

transactions, the transfer on sale of Rights Issue Shares effected using written instruments

outside CREST will generally be liable to stamp duty at the rate of 0.5 per cent. of the amount

or value of the consideration payable (rounded up to the nearest multiple of £5.00) or, if an

unconditional agreement to transfer Rights Issue Shares is not completed by a duly stamped

transfer, or where the transfer is effected in CREST, SDRT at the rate of 0.5 per cent. of the

amount or value of the consideration payable in money or money’s worth. In cases where

Rights Issue Shares are transferred to a connected company (or its nominee), SDRT (or stamp

duty) will be chargeable on the higher of: (i) the amount or value of the consideration payable;

and (ii) the market value of those Rights Issue Shares.

233


Where Rights Issue Shares are transferred: (A) to, or to a nominee or an agent for, a person

whose business is or includes the provision of clearance services; or (B) to, or to a nominee or

an agent for, a person whose business is or includes issuing depositary receipts, stamp duty or

SDRT will generally be payable at the higher rate of 1.5 per cent. of the amount or value of the

consideration given or, in certain circumstances, the value of those Rights Issue Shares. There

is an exception from the 1.5 per cent. charge on the transfer to, or to a nominee or agent for, a

clearance service where the clearance service has made and maintained an election under

section 97A(1) of the Finance Act 1986, which has been approved by HMRC. In these

circumstances, SDRT at the rate of 0.5 per cent. of the amount or value of the consideration

payable for the transfer will arise on any transfer of shares in the Company into such an account

and on subsequent agreements to transfer such shares within such account. Any liability for

stamp duty or SDRT in respect of a transfer into a clearance service or depositary receipt

system, or in respect of a transfer within such a service, which does arise will strictly be

accountable by the clearance service or depositary receipt system operator or their nominee, as

the case may be, but will, in practice, be payable by the participants in the clearance service or

depositary receipt system. Specific professional advice should be sought before transferring

shares to a person within (A) or (B) of this paragraph.

3. United States Federal Income Tax Considerations

The following is a summary of the US federal income tax considerations that are generally applicable to the

receipt, exercise, expiration and disposition of Nil Paid Rights and the ownership and disposition of Fully

Paid Rights received through the exercise of Nil Paid Rights (for the purposes of this Part XII (Taxation)

only, together the “Rights”) pursuant to the Rights Issue, as well as the ownership and disposition of Rights

Issue Shares, in either case, by a US Holder (as defined below). This summary deals only with US Holders

that receive Nil Paid Rights pursuant to the Rights Issue, Fully Paid Rights through exercise of such Nil Paid

Rights or Rights Issue Shares through the ownership of such Fully Paid Rights and hold those Nil Paid

Rights, Fully Paid Rights and Rights Issue Shares, in each case, as “capital assets” (generally, property held

for investment) within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (for

the purposes of this Part XII (Taxation) only, the “Code”). The discussion does not cover all aspects of US

federal income taxation that may be relevant to, or the actual tax effect that any of the matters described

herein will have on, the receipt, exercise, expiration or disposition of Rights or the ownership or disposition

of Rights Issue Shares by particular investors in light of their individual investment circumstances. This

summary also does not address tax considerations applicable to investors that own (directly, indirectly or by

attribution) 10 per cent. or more of the stock of the Company (by vote or value), nor does this summary

discuss all of the tax considerations that may be relevant to certain types of investors subject to special

treatment under US federal income tax law (such as banks, financial institutions, insurance companies,

individual retirement accounts and other tax-deferred accounts, regulated investment companies or real

estate investment trusts, tax-exempt organisations, brokers or dealers in securities or currencies or traders in

securities that elect to use a mark-to-market method of accounting, investors that will hold Rights Issue

Shares as part of straddles, hedging transactions, conversion transactions or other integrated transactions for

US federal income tax purposes, United States expatriates, investors whose functional currency is not US

dollars, S corporations and persons holding Rights or Rights Issue Shares in connection with a permanent

establishment or fixed base outside the United States). This summary does not address any tax consequences

arising under any state, local or non-US tax laws, the Medicare tax on “net investment income” or the

alternative minimum tax or any other US federal tax laws.

This summary is based on the Code, its legislative history, existing and proposed regulations thereunder,

published rulings and court decisions, all as of the date of this document. These authorities are subject to

differing interpretations and may change, possibly retroactively, resulting in US federal income tax

consequences different from those discussed below. The Company has not requested, and will not request, a

ruling from the United States Internal Revenue Service (“IRS”) with respect to any of the US federal income

tax consequences described below, and as a result there can be no assurance that the IRS will not disagree

with or challenge any of the conclusions the Company has reached and describe herein, or that such contrary

position would not be sustained by a court.

234


For purposes of this discussion, a “US Holder” is a beneficial owner of Rights or Rights Issue Shares who

is, for US federal income tax purposes: (a) an individual who is a citizen or resident of the United States; (b)

a corporation or any other entity treated as a corporation that is organised in or under the laws of the United

States, any state thereof or the District of Columbia; (c) a trust if all of the trust’s substantial decisions are

subject to the control of one or more US persons and the primary supervision of the trust is subject to a US

court, or if a valid election is in effect with respect to the trust to be taxed as a US person; or (d) an estate

the income of which is subject to US federal income taxation regardless of its source.

The US federal income tax treatment of a partner in a partnership (or owner of other business entity or

arrangement treated as a partnership for US federal income tax purposes) that holds Rights or Rights Issue

Shares will depend on the status of the partner, the activities of the partnership and certain determinations

made at the partnership level. Partnerships (and entities or arrangements that are treated as partnerships for

US federal income tax purposes) and persons holding Rights or Rights Issue Shares through such

partnerships should consult their tax advisers concerning the US federal income tax consequences to them

and their partners of the receipt, ownership, exercise, expiration and disposition of Rights or Rights Issue

Shares by the partnership.

The Directors believe that AVEVA was not a PFIC for US federal income tax purposes in its previous taxable

year and, assuming Completion occurs and the proceeds of the Rights Issue are applied as part of the cash

consideration payable by the Company in connection with the Acquisition by the Outside Date of 30 June

2021, the Directors believe that the Company will not become a PFIC in its current taxable year or in the

foreseeable future. The determination of PFIC status is fact specific and must be made annually after the

close of each taxable year and may be affected by the Company’s income, assets, activities (including the

application of the proceeds of the Rights Issue as part of the cash consideration payable by the Company in

connection with the Acquisition) and the market value of the Ordinary Shares. Any delay to the date of

Completion beyond 30 June 2021 will increase the likelihood of the Company being classified as a PFIC and

there can be no assurance that the Company will not be a PFIC for the current taxable year or any future

taxable year. Except as specifically set forth in Section 3.3, the following discussion assumes that the

Company was not a PFIC for US federal income tax purposes in its previous taxable year and will not

become a PFIC in its current taxable year. If the Company were to be treated as a PFIC for any taxable year

when a US Holder owns or owned Rights Issue Shares (or, under certain proposed regulations, rights to

acquire Rights Issue Shares), materially adverse consequences could result to such US Holders for that year

and all future years during which such US Holder holds or disposes of Rights Issue Shares, regardless of

whether the Company continues to meet the PFIC test. For further discussion of the PFIC rules, see Section

3.3 below.

THE SUMMARY OF US FEDERAL INCOME TAX CONSIDERATIONS SET OUT BELOW IS

FOR GENERAL INFORMATION ONLY. ALL US HOLDERS SHOULD CONSULT THEIR TAX

ADVISERS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE RECEIPT,

OWNERSHIP, EXERCISE, EXPIRATION AND DISPOSITION OF RIGHTS OR RIGHTS ISSUE

SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, NON-US AND

OTHER TAX LAWS, TAX TREATIES AND POSSIBLE CHANGES IN TAX LAW.

3.1 Taxation In Respect Of Rights

(a) Receipt of Nil Paid Rights

Based on the particular facts relating to the Nil Paid Rights, the Directors believe that the

distribution of Nil Paid Rights should not be treated as a taxable stock dividend. However, the

application of Section 305 of the Code to the Rights Issue is not clear in several respects, and

it is possible that the IRS will take a contrary view. For example, the receipt of a Nil Paid Right

pursuant to the Rights Issue would be treated as a taxable distribution if it were considered a

distribution (or part of a series of distributions or deemed distributions) that has the effect of

increasing a Shareholder’s proportionate interest in the earnings and profits or assets of the

Company while any other Shareholder (or deemed Shareholder) receives (or is deemed to

receive) a distribution of cash or other property from the Company. In such case, the

distribution of Nil Paid Rights pursuant to the Rights Issue generally would be treated as a

235


taxable distribution to a US Holder in an amount equal to the value, if any, of such Nil Paid

Right. There is a risk that a Shareholder who, in connection with the Rights Issue, receives net

proceeds from the sale by one of the Underwriters of Rights Issue Shares at a premium over

the Rights Issue Price could be treated as receiving cash from the Company rather than treated

as having received the corresponding Nil Paid Rights and then selling either the Nil Paid Rights

or the corresponding Rights Issue Shares. If some Shareholders were treated as receiving cash

from the Company in connection with the Rights Issue, the receipt of Nil Paid Rights by others

(to the extent it results in a proportionate increase in the assets or earnings and profits of the

Company) generally would be treated as a taxable stock dividend. For further discussions of

taxation of dividends, see Section 3.2(a) below. US Holders are strongly urged to consult their

tax advisers regarding the risk of having a taxable distribution as a result of the receipt of a Nil

Paid Right. The remainder of this discussion assumes that the receipt of the Nil Paid Rights will

not be a taxable event for US federal income tax purposes.

(b) Basis and holding period of Nil Paid Rights

If, on the date of distribution, the fair market value of Nil Paid Rights is less than 15 per cent.

of the fair market value of the Existing Ordinary Shares with respect to which Nil Paid Rights

are received, the Nil Paid Rights will be allocated a zero tax basis unless the US Holder

affirmatively elects to allocate a portion of such US Holder’s adjusted tax basis in its Existing

Ordinary Shares to the Nil Paid Rights in proportion to the relative fair market values of the

US Holder’s Existing Ordinary Shares and the Nil Paid Rights received determined on the date

of distribution. This election must be made in the US Holder’s timely filed US federal income

tax return for the taxable year in which the Nil Paid Rights are received and is irrevocable. The

election will apply to all of the Nil Paid Rights received by the US Holder pursuant to the

Rights Issue. US Holders should consult their tax advisers regarding the advisability of making

such an election and the specific procedures for doing so.

If, on the date of distribution, the fair market value of the Nil Paid Rights is 15 per cent. or

more of the fair market value of the Existing Ordinary Shares with respect to which the Nil

Paid Rights are received, then, except as discussed below under Section 3.1(d), the US

Holder’s adjusted tax basis in its Existing Ordinary Shares must be allocated between the

Existing Ordinary Shares and Nil Paid Rights received in proportion to their fair market values

determined on the date of distribution.

A US Holder’s holding period for the Nil Paid Rights will include the US Holder’s holding

period in the underlying Existing Ordinary Shares with respect to which the Nil Paid Rights

were distributed (whether or not basis is allocated to the Nil Paid Rights).

(c) Sale or other taxable disposition of Nil Paid Rights

Upon a sale or other taxable disposition of Nil Paid Rights by a US Holder, a US Holder will

generally recognise gain or loss equal to the difference, if any, between the amount of cash or

other consideration received upon the disposition and the US Holder’s adjusted tax basis in the

Nil Paid Rights, each as determined in US dollars. Any gain or loss generally will be US source

capital gain or loss and will be a long-term capital gain or loss if the US Holder’s holding

period in the Nil Paid Rights exceeds one year. If the US Holder is not a corporation, long-term

capital gains are generally eligible for reduced rates of taxation. The deductibility of capital

losses may be subject to limitations.

The amount realised on a sale or other taxable disposition of the Nil Paid Rights for amounts

paid in a currency other than US dollars will be the US dollar value of the payment received

(as determined on the date of the disposition, in accordance with the US Holder’s method of

accounting). On the settlement date, a US Holder that uses the accrual method of accounting

generally will recognise foreign currency exchange gain or loss (taxable as ordinary income or

loss) equal to the difference, if any, between the US dollar value of the amount received based

on the exchange rates in effect on the date of disposition and the settlement date. However, in

236


the case of a cash basis US Holder and, if the Nil Paid Rights were treated as traded on an

established securities market in the case of an electing accrual basis US Holder, the amount

realised will be based on the US dollar value of the foreign currency as determined by

translating the amount paid at the spot rate of exchange on the settlement date of the sale. Such

an election by an accrual basis US Holder must be applied consistently from year to year and

cannot be revoked without the consent of the IRS. It is unclear if this election will be available

with respect to the sale of the Nil Paid Rights because it is uncertain whether an active trading

market on an established securities market will develop for the Nil Paid Rights. Any currency

gain or loss realised on the settlement date or on a subsequent conversion of a currency other

than US dollars into US dollars will generally be US source ordinary income or loss.

(d) Expiration of Nil Paid Rights

If a US Holder allows the Nil Paid Rights to expire without selling or exercising them, the US

Holder will not recognise any loss upon the expiration of the Nil Paid Rights. Upon expiration,

if the US Holder had previously allocated to the Nil Paid Rights a portion of the basis in the

underlying Existing Ordinary Shares held by the US Holder, that basis will be reallocated to

such Existing Ordinary Shares.

A US Holder that receives a payment from the Underwriters on account of the sale of Rights

Issue Shares at a premium over the Rights Issue Price will be treated either as having sold the

Nil Paid Rights (as described above) or as having exercised the Nil Paid Rights and having sold

Rights Issue Shares. A US Holder that is treated as having sold Rights Issue Shares will

recognise a short-term capital gain or loss as described below under Section 3.2(b)). A US

Holder that receives amounts in respect of Nil Paid Rights not taken up should consult its tax

advisers about the US federal income tax treatment of those amounts.

(e) Exercise of Nil Paid Rights

A US Holder will generally not recognise income upon the receipt of Fully Paid Rights

pursuant to the exercise of Nil Paid Rights.

A US Holder that exercises Nil Paid Rights received in this Rights Issue within 30 days of

disposing of the Existing Ordinary Shares with respect to which the Nil Paid Rights were

received at a loss is urged to consult a tax adviser regarding the potential application of the

“wash sale” rules under Section 1091 of the Code.

(f) Basis and holding period of Fully Paid Rights

A US Holder’s basis in the Fully Paid Rights will equal the sum of the US dollar value of the

Rights Issue Price determined at the spot rate on the date of exercise (or, in the case of cash

basis and, if the Fully Paid Rights are treated as traded on an established securities market,

electing accrual basis taxpayers, the settlement date) and the US Holder’s basis, if any, in the

Nil Paid Rights exercised to obtain the Fully Paid Rights (as determined pursuant to the rules

discussed above in Section 3.1(b)). For a discussion of differing treatment of cash basis and

electing accrual basis taxpayers, refer to the discussion above in Section 3.1(c).

A US Holder’s holding period for Fully Paid Rights will begin with and include the date of

exercise of the underlying Nil Paid Rights exercised to obtain the Fully Paid Rights.

(g) Sale or other taxable disposal of Fully Paid Rights

Upon a sale or other taxable disposition of Fully Paid Rights, a US Holder will generally

recognise capital gain or loss equal to the difference, if any, between the US dollar value of the

amount of cash or other consideration received upon disposition (as determined on the date of

the sale or other disposition, in accordance with the US Holder’s method of accounting) and

the US Holder’s adjusted tax basis in the Fully Paid Rights. Any gain or loss is expected to be

US source short-term capital gain or loss. Short-term capital gains of a US Holder are generally

taxed at the same rates as ordinary income. The deductibility of capital losses may be subject

237


to limitations. For the US federal income taxation of an amount realised in a currency other

than US dollars from a sale or other disposition of the Fully Paid Rights, refer to the discussion

above in Section 3.1(c).

(h) Receipt of Rights Issue Shares

A US Holder should not recognise gain or loss on the receipt of Rights Issue Shares in respect

of such holder’s Fully Paid Rights. A US Holder’s basis, if any, in Rights Issue Shares received

in respect of its Fully Paid Rights will equal the US Holder’s basis in the Fully Paid Rights with

respect to which Rights Issue Shares were issued (as determined pursuant to the rules discussed

above in Section 3.1(b) and Section 3.1(f).

A US Holder’s holding period for Rights Issue Shares received will not include the US

Holder’s corresponding holding period for its Nil Paid Right. The holding period of Rights

Issue Shares received will, however, include the US Holder’s holding period in the

corresponding Fully Paid Right.

3.2 Taxation in respect of Rights Issue Shares

(a) Dividends

Subject to the discussion of the PFIC rules below, distributions paid by the Company out of

current or accumulated earnings and profits (as determined for US federal income tax

purposes) will generally be taxable to a US Holder as foreign source dividend income, and will

not be eligible for the dividends received deduction allowed to corporations. Distributions in

excess of current and accumulated earnings and profits will be treated as a non-taxable return

of capital to the extent of the US Holder’s basis in Rights Issue Shares and thereafter as capital

gain. However, the Company does not maintain and does not intend to maintain calculations of

its earnings and profits in accordance with US federal income tax accounting principles. US

Holders should therefore assume that any distribution made by the Company to such US

Holder will be reported as a dividend. A dividend distribution will generally be treated as

foreign source “passive” income for US foreign tax credit purposes. US Holders should consult

their tax advisers with respect to the appropriate US federal income tax treatment of any

distribution received from the Company.

With respect to individuals and certain other non-corporate US Holders, dividends will be

taxed at the lower capital gains rate applicable to qualified dividend income, provided that: (i)

the Company is eligible for benefits of the income tax treaty between the United States and the

United Kingdom (which the Directors believe to be the case); (ii) the Company is not a PFIC

with respect to the US Holder for either the taxable year in which the dividend is paid or the

preceding taxable year; (iii) certain holding period requirements are met; and (iv) the US

Holder is not under an obligation to make a related payment with respect to positions in

substantially similar or related property.

Dividends paid in a currency other than US dollars will be included in income in a US dollar

amount calculated by reference to the exchange rate in effect on the day the dividends are

received by the US Holder (determined in accordance with the US Holder’s method of

accounting), regardless of whether the foreign currency dividends are converted into US

dollars at that time. If dividends received in a currency other than US dollars are converted into

US dollars on the day they are received, the US Holder generally will not be required to

recognise foreign currency gain or loss in respect of the dividend income. If instead the foreign

currency is converted at a later date, any currency gains or losses resulting from the conversion

of the foreign currency will be treated as US source ordinary income or loss.

(b) Sale or other taxable disposition

A US Holder’s initial tax basis in a Rights Issue Share will be determined as described above

in Section 3.1(h).

238


Subject to the discussion of the PFIC rules below, a US Holder generally will recognise capital

gain or loss on a sale or other taxable disposition of Rights Issue Shares equal to the difference,

if any, between the amount of cash plus the fair market value of other consideration received

on the sale or other taxable disposition and the US Holder’s adjusted tax basis in the Rights

Issue Shares, in each case as determined in US dollars. This capital gain or loss generally will

be long-term capital gain or loss if the US Holder’s holding period in the Rights Issue Shares

exceeds one year. However, regardless of a US Holder’s actual holding period, any loss will be

long-term capital loss to the extent the US Holder receives a dividend (or, in some cases,

multiple dividends that are aggregated under special rules) that qualifies for the reduced rate

described above under Section 3.2(a), and such dividend(s) exceeds 10 per cent. of the US

Holder’s basis in (or, in certain cases, the fair market value of) its Rights Issue Shares. If the

US Holder is not a corporation, long-term capital gains for taxable dispositions of Rights Issue

Shares are generally eligible for reduced rates of taxation. Any capital gain or loss will

generally be US source gain or loss for US foreign tax credit purposes. The deductibility of

capital losses is subject to limitations.

The amount realised on a sale or other taxable disposition of Rights Issue Shares for an amount

in a currency other than US dollars will be the US dollar value of the payment received (as

determined on the date of the disposition, in accordance with the US Holder’s method of

accounting). On the settlement date, a US Holder that uses the accrual method of accounting

generally will recognise foreign currency exchange gain or loss (taxable as ordinary income or

loss) equal to the difference, if any, between the US dollar value of the amount received based

on the exchange rates in effect on the date of disposition and the settlement date. However, in

the case of a cash basis US Holder or an electing accrual basis US Holder, if Rights Issue

Shares were treated as traded on an established securities market, the amount realised will be

based on the US dollar value of the foreign currency as determined by translating the amount

paid at the spot rate of exchange on the settlement date of the sale. Such an election by an

accrual basis US Holder must be applied consistently from year to year and cannot be revoked

without the consent of the IRS. Any currency gain or loss realised on the settlement date or on

a subsequent conversion of a currency other than US dollars into US dollars will generally be

US source ordinary income or loss.

3.3 Passive Foreign Investment Company consideration

The Directors believe that AVEVA was not a PFIC for US federal income tax purposes in its previous

taxable year and, assuming Completion occurs and the proceeds of the Rights Issue are applied as part

of the cash consideration payable by the Company in connection with the Acquisition by the Outside

Date of 30 June 2021, the Directors believe that the Company will not become a PFIC in its current

taxable year or in the foreseeable future. A non-US corporation is a PFIC in any taxable year in which,

after taking into account the income and assets of the corporation and certain subsidiaries pursuant to

applicable “look-through rules”, either: (a) at least 75 per cent. of its gross income is “passive

income”; or (b) at least 50 per cent. of the value of its assets (generally, determined on the basis of a

quarterly average) is attributable to assets that produce passive income or are held for the production

of passive income. The determination of PFIC status is fact specific and must be made annually after

the close of each taxable year and may be affected by the Company’s income, assets, activities

(including the application of the proceeds of the Rights Issue as part of the cash consideration payable

by the Company in connection with the Acquisition) and the market value of the Ordinary Shares.

There can be no assurance that the Company will not be a PFIC for the current taxable year or any

future taxable year. Any delay to the date of Completion beyond 30 June 2021 will increase the

likelihood of the Company being classified as a PFIC.

If the Company were to be treated as a PFIC for any taxable year when a US Holder owns or owned

Rights Issue Shares (or, under certain proposed regulations, rights to acquire Rights Issue Shares),

materially adverse consequences could result to such US Holders for that year and all future years

during which such US Holder holds or disposes of Rights Issue Shares, regardless of whether the

Company continues to meet the PFIC test. In particular, for any taxable year during which a US

239


Holder holds Rights Issue Shares, such holder will be subject to special tax rules with respect to any

“excess distribution” that such holder receives on the shares and any gain such holder realises from a

sale or other disposition (including a pledge) of shares, unless such holder makes a “mark-to-market”

election as discussed below. Distributions received by a US Holder in a taxable year that are greater

than 125 per cent. of the average annual distributions such holder received during the shorter of the

three preceding taxable years or such holder’s holding period for the shares will be treated as an

excess distribution. Under the “excess distribution” rules:

• the excess distribution or gain will be allocated rateably over the US Holder’s holding period

for the shares;

• amounts allocated to the current taxable year and any taxable years in the US Holder’s holding

period prior to the first taxable year in which the Company is classified as a PFIC (a “pre-

PFIC year”) will be subject to tax as ordinary income; and

• amounts allocated to each prior taxable year, other than the current taxable year or a pre-PFIC

year, will be subject to tax at the highest tax rate in effect applicable to the US Holder for that

year, and such amounts will be increased by an additional tax equal to interest on the resulting

tax deemed deferred with respect to such years.

If the Company is a PFIC for any taxable year during which a US Holder holds Rights Issue Shares

and any of the Company’s non-US subsidiaries or consolidated affiliated entities are also PFICs, such

holder will be treated as owning a proportionate amount (by value) of the shares of each such non-US

subsidiary classified as a PFIC for purposes of the application of these rules. In addition, under certain

proposed regulations, a disposition of Nil Paid Rights and/or Fully Paid Rights may also be subject to

the excess distribution rules described above.

A US Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election

for such stock of a PFIC to elect out of the tax treatment discussed in the second preceding paragraph.

If a valid mark-to-market election for the Rights Issue Shares is made, the US Holder will include in

income each year an amount equal to the excess, if any, of the fair market value of the Rights Issue

Shares as of the close of such holder’s taxable year over such holder’s adjusted basis in such Rights

Issue Shares. The US Holder is allowed a deduction for the excess, if any, of such holder’s adjusted

basis in the Rights Issue Shares over their fair market value as of the close of the taxable year to the

extent of any net mark-to-market gains on the Rights Issue Shares included in the US Holder’s income

for prior taxable years. Amounts included in the US Holder’s income under a mark-to-market

election, as well as gain on the actual sale or other disposition of the Rights Issue Shares, are treated

as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-

market loss on the Rights Issue Shares, as well as to any loss realised on the actual sale or disposition

of the Rights Issue Shares, to the extent that the amount of such loss does not exceed the net mark-

to-market gains previously included in income for such Rights Issue Shares. The US Holder’s basis

in the Rights Issue Shares will be adjusted to reflect any such income or loss amounts. If a US Holder

makes such a mark-to-market election, tax rules that apply to distributions by corporations which are

not PFICs would apply to distributions by the Company (except that the lower applicable capital gains

rate for qualified dividend income would not apply). If a US Holder makes a valid mark-to-market

election, and the Company subsequently cease to be classified as a PFIC, such US Holder will not be

required to take into account the mark-to-market income or loss described above during any period

that the Company is not classified as a PFIC.

The mark-to-market election is available only for “marketable stock” which is stock that is traded in

other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”)

on a qualified exchange or other market, as defined in applicable regulations. The Directors believe

the LSE is expected to be a qualified exchange for these purposes, and, consequently, assuming that

the Rights Issue Shares are regularly traded, if a US Holder holds the Rights Issue Shares, it is

expected that the mark-to-market election would be available to such holder were the Company to be

a PFIC.

240


However, because a mark-to-market election cannot be made for any lower-tier PFICs that the

Company may own, a US Holder may continue to be subject to the PFIC rules with respect to such

holder’s indirect interest in any investments held by the Company that are treated as an equity interest

in a PFIC for US federal income tax purposes.

The Company does not intend to provide information necessary for US Holders to make qualified

electing fund elections, which, if available, would result in tax treatment different from the general

tax treatment for PFICs described above.

In addition, a stepped up basis in the Rights Issues Shares will not be available upon the death of an

individual US Holder in the event the Company was classified as a PFIC.

If a US Holder owns Rights Issue Shares during any taxable year that the Company is a PFIC, such

holder must generally file an annual report on U.S. Internal Revenue Service Form 8621 with the IRS.

US Holders should consult their tax advisors concerning the US federal income tax considerations of

holding and disposing of Rights Issue Shares if the Company is or becomes a PFIC, including the

availability and possibility of making a mark-to-market election.

3.4 Information reporting and backup withholding

Distributions of dividends on Rights Issue Shares and proceeds with respect to the sale or other

taxable disposition of Rights or Rights Issue Shares paid by a US paying agent or other US

intermediary will be reported to the IRS and to the US Holder as may be required under applicable

regulations unless the holder establishes a basis for exemption. Backup withholding may apply to

these payments if the US Holder fails to provide an accurate taxpayer identification number or

certification of exempt status or fails to comply with applicable certification requirements. Certain US

Holders are not subject to backup withholding. Any amount withheld may be credited against the

holder’s US federal income tax liability subject to certain rules and limitations. US Holders should

consult their tax advisors about these rules and any other reporting obligations that may apply to the

ownership or disposition of Rights or Rights Issue Shares, including requirements related to the

holding of certain “specified foreign financial assets”.

4. FATCA

Sections 1471 through 1474 of the Code (collectively referred to as “FATCA”), impose a reporting regime

and potentially a 30 per cent. withholding tax with respect to certain payments to non-U.S. financial

institutions and certain other non-U.S. entities that fail to comply with applicable requirements under

FATCA. The United States and a number of jurisdictions have negotiated intergovernmental agreements

(each, an “IGA”) to facilitate the implementation of FATCA. The United Kingdom has entered into such an

IGA. There can be no assurances that the Company or an intermediary will not be required to deduct

withholding from payments on the Rights or Rights Issue Shares under FATCA or an IGA. Even if

withholding would be required on instruments such as the Rights or Rights Issue Shares, such withholding

would apply to payments no earlier than the date that is two years after the date on which final US Treasury

regulations defining “foreign passthru payments” are issued. In the event a FATCA withholding tax is

deducted from a payment on the Rights or Rights Issue Shares, no person will be obligated to make

additional payments in respect of such amounts withheld. Shareholders should consult their tax advisors

regarding how these rules may apply to the rights or Rights Issue Shares.

241


PART XIII

DIRECTORS AND CORPORATE GOVERNANCE

1. Directors and Senior Management of AVEVA

1.1 Current Directors

The current Directors of AVEVA and their functions are as follows:

Date appointed

Name Position to the Board––––––––– –––––––––––––––––––––––––––––––––– ––––––––––––––Philip Aiken AM Director, Chairman 1 May 2012Craig Hayman Director, Chief Executive Officer 19 February 2018James Kidd Director, Deputy Chief Executive Officer 1 January 2011

and Chief Financial OfficerChristopher Humphrey Senior Non-Executive Director (Independent) 8 July 2016Jennifer Allerton Non-Executive Director (Independent) 9 July 2013Ron Mobed Non-Executive Director (Independent) 1 March 2017Paula Dowdy Non-Executive Director (Independent) 1 February 2019Peter Herweck Non-Executive Director and Vice Chairman 1 March 2018Olivier Blum Non-Executive Director 30 April 2020

1.2 Profiles of the Directors of AVEVA

The names, business experience and principal business activities outside the AVEVA Group of theDirectors are set out below:

Philip Aiken AM

Chairman

Philip Aiken AM has 50 years of experience in industry and commerce. From 1997 to 2006 he wasPresident of BHP Petroleum and then Group President of Energy of BHP Billiton. He has beenManaging Director of BOC/CIG, Chief Executive of BTR Nylex, Senior Advisor of Macquarie Bank(Europe), Chairman of Robert Walters plc, Senior Independent Director of Kazakhmys plc and EssarEnergy plc and Director of Essar Oil Limited. Other previous roles include: Director of National Gridplc from 2008 to 2015, Director of Miclyn Express Offshore, Chairman of the 2004 World EnergyCongress and serving on the Boards of the Governor of Guangdong International Council, WorldEnergy Council and Monash Mt Eliza Business School. He is Chairman of Balfour Beatty plc and aDirector of Newcrest Mining Limited, Gammon China Limited and the Australian Day Foundation(UK). He was made a Member of the Order of Australia (AM) in 2013 for his services toUK/Australian business relations. Philip Aiken AM was appointed Chairman of AVEVA Group plc inMay 2012 and as noted in the AVEVA Group 2020 Annual Report and Accounts, followingdiscussions with the Board, the Company Secretary and Schneider Electric, it had been decided thatthe process for identifying a new Chairman would actively begin following the 2020 AGM. In lightof the proposed Acquisition and following further discussions with the Board, the NominationCommittee and Schneider Electric, the Directors consider it is in the best interests of the EnlargedGroup, its Shareholders and other stakeholders that the succession plans to appoint a suitably qualifiedreplacement for Philip Aiken AM be delayed such that the Company can continue to benefit from thecurrent Chairman's industry experience and broad sector knowledge during the period of integrationof the OSIsoft Group following the Acquisition. Accordingly, Philip Aiken AM has entered into a newappointment letter with the Company reflecting his continued appointment as Chairman of theCompany until April 2022 with the option to be extended until the conclusion of the 2022 AGM. Formore information, please see Section 3 of Part XIII (Directors and Corporate Governance).

LR 13.4.1(2)

Annex 3, 8.1

Annex 3, 8.1

242


Craig Hayman

Chief Executive Officer

Craig Hayman joined AVEVA as CEO in February 2018, bringing more than 30 years of technologyindustry leadership and executive management experience. Previously he was Chief Operating Officerat software company PTC Inc, where he had responsibility for sales, marketing and development. Healso served as President of the PTC Solutions Group. Prior to joining PTC, he was President of eBay’senterprise business and served more than 15 years in senior leadership positions at IBM. At IBM hecreated and grew IBM’s SaaS business and initiated and led 18 high performing acquisitions.

James Kidd

Deputy Chief Executive Officer and Chief Financial Officer

James Kidd is a Chartered Accountant and joined AVEVA in 2004. Prior to his appointment to theBoard, he held several senior finance roles within the AVEVA Group and was Head of Finance from2006 until 2011, when he was appointed Chief Financial Officer. He became Chief Executive Officerof AVEVA from January 2017 to February 2018, leading the merger with the Schneider ElectricSoftware Business before being appointed to the role of Deputy Chief Executive Officer and ChiefFinancial Officer of the Enlarged Group. Prior to joining AVEVA, he worked for both ArthurAndersen and Deloitte, serving technology clients in both transactional and audit engagements.

Christopher Humphrey

Senior Independent Non-Executive Director

Christopher Humphrey is a qualified accountant and has over 25 years’ experience managingengineering and technology companies. From 2008 until 2015 he was Group Chief Executive Officerof Anite plc, after having joined Anite in 2003 as Group Finance Director. Prior to this he was GroupFinance Director at Critchley Group plc and held senior positions in finance at Conoco and EurothermInternational plc. Christopher Humphrey has a BA (Hons) in Economics, is a Chartered ManagementAccountant, a Fellow of CIMA and has an MBA from Cranfield School of Management. He is SeniorIndependent Director of Vitec Group plc, Non-Executive Chairman of Eckoh plc, and Non-ExecutiveDirector of SDL plc.

Jennifer Allerton

Independent Non-Executive Director

Jennifer Allerton has more than 40 years’ experience in technology working in multinationalcompanies in the UK, the US, Brazil, Asia and Switzerland and speaks several languages. Notably,she was a member of the Pharma Executive Committee and Chief Information Officer of F.Hoffmann-La Roche, with responsibility for IT strategy and operations for the Pharma division andall Group IT operations. She has been a Non- Executive Director of Oxford Instruments plc andPaysafe plc. She has degrees in Mathematics, Geosciences and Physics and is an Associate of theChartered Institute of Management Accountants. She is Non-Executive Director of Iron Mountain Inc,Non-Executive Director of Sandvik AB, and Non-Executive Director of Barclays Bank Ireland PLC.

Ron Mobed


Ron Mobed has a broad range of global experience in electronic information businesses across anumber of sectors and regions. Most recently, he was Chief Executive Officer of the Elsevier businessof RELX Plc and has also held Executive positions with Cengage Learning, IHS and Schlumberger.He is a Fellow of the Institute of Directors and of the Energy Institute. He holds a Bachelor’s degree

243


in Engineering from Trinity College, University of Cambridge and a Master’s degree in PetroleumEngineering from Imperial College, University of London. He was previously a Non-ExecutiveDirector of Argus Media from 2009 until 2011. He is a Supervisory Board Member of Fugro N.V and,with effect from 1 December 2020, will join the board of Robert Walters PLC, taking on the role ofNon-Executive Chairman from 29 January 2021.

Paula Dowdy


Paula Dowdy is the Senior Vice President and General Manager EMEA for Illumina Inc., the globalleader in DNA sequencing and array-based technologies. Prior to her appointment to Illumina in 2016,Paula worked for Cisco in a variety of senior sales, services and strategy roles, notably as Senior VicePresident for Cloud, Software and Managed Services. She also led the integration of the analytics andautomation software acquisitions into the larger Cisco sales force and was a board observer for oneof Cisco’s investments. She holds an MBA from Pepperdine University and a Bachelor of Arts degreefrom the University of California, Berkeley.

Peter Herweck

Non-Executive Director and Vice Chairman

Peter Herweck has been a member of Schneider Electric’s Executive Committee since 2016 and leadstheir global Industrial Automation Business. He assumed the role of Vice Chairman in April 2020. Hebrings to the Board a wealth of experience in Automation, Digitisation and Industrial Software. Hestarted his career at Mitsubishi in Japan, later joining Siemens where he held several Executivepositions in Factory and Process Automation along with leading Corporate Strategy as Chief StrategyOfficer. He has a global and extensive Executive and senior management background in Germany,China, the US and Japan. He holds an MBA from Wake Forest University School of Business andEngineering degrees from Metz University and Saarland University. He is also a Harvard BusinessSchool Advanced Management Alumni. He is Non-Executive Director of the supervisory board ofRudolf GmbH and will join the board of Teradyne, Inc. (as of 9 November 2020) as a Non-ExecutiveDirector.

Olivier Blum

Non-Executive Director

Olivier Blum began his career at Schneider Electric in 1993 in Sales, and has subsequently heldvarious senior and Executive roles in SE, including positions in China, India and Hong Kong.Positions he has held in SE include Secretary of the Executive Committee, Regional Head of Strategyand Marketing Director (China), Regional Managing Director (India), Executive Vice President ofRetail (Hong Kong) and, since 2014, Chief Human Resources Officer and member of the executiveteam. He became SE’s Chief Strategy and Sustainability Officer on 1 April 2020 and is in charge ofdeveloping and deploying strategic, sustainability and quality initiatives, while steering all M&A andDivestment activities globally. He graduated from Grenoble École de Management (GEM), France.

Each of the Directors can be contacted at the Company’s head office address at High Cross,Madingley Road, Cambridge, CB3 0HB.

Annex 3, 8.1

244


1.3 Current Senior Management

The current Senior Management of AVEVA and their functions are as follows:

Name Position–––––––––––––––– –––––––––––––––––––––––––––––––––––––Andrew McCloskey Chief Technology OfficerRavi Gopinath Chief Product Officer and Chief Cloud OfficerSteen Lomholt-Thomsen Chief Revenue OfficerLisa Johnston Chief Marketing Officer and Chief Sustainability OfficerDavid Ward Finance Director and Company Secretary

Mark Cooper, AVEVA’s former Chief Human Resources Officer, resigned as of 31 October 2020. Anew Chief People Officer will join AVEVA in early 2021, with further details of this appointment tobe announced in due course.

1.4 Profiles of the Senior Management of the AVEVA Group

The names, business experience and principal business activities outside the AVEVA Group of theSenior Management of the AVEVA Group are set out below:

Andrew McCloskey

Chief Technology Officer

Andrew McCloskey leads the technology and execution of product development with a portfolio ofover 75 leading industrial automation and engineering products and a global research anddevelopment team of more than 1,400 engineers and computer scientists. Prior to joining AVEVA heheaded research for Toshiba Mobile Division, worked at two successful start-ups, and was a leadengineer working on guidance systems for NASA’s Space Programme, where he started his career. Heholds a bachelor’s degree in Aerospace Engineering from California Polytechnic University Pomona.He attended USC for graduate studies and has taught university-level courses in softwaredevelopment.

Ravi Gopinath

Chief Product Officer and Chief Cloud Officer

Ravi Gopinath was appointed Chief Product Officer and Chief Cloud Officer in April 2020, havingjoined AVEVA as Chief Operating Officer on 1 March 2018 following the combination with theSchneider Electric Software Business. Previously he was Executive Vice President of the SchneiderElectric Software Business and responsible for all aspects of its global P&L. He joined Invensys inOctober 2009 as President of Asia Pacific responsible for the complete suite of portfolio and businessfor the region. He successfully grew and expanded the business and was appointed President,Software Business, Invensys, in 2011. For the next few years, he achieved double-digit growth for thebusiness before it was acquired by Schneider Electric in 2014. Prior to joining Invensys, from 2006to 2009, he was the CEO and Managing Director of Geometric Limited, a specialist in PLM andEngineering Services listed on the Indian stock market. He started his career in 1994 at TataConsultancy Services, Asia’s largest IT services company, and worked over 12 years in a number ofroles starting in Corporate R&D and finally as the Vice President of the Engineering Services businessas a member of the senior executive team. He has a Ph.D in Chemical Engineering with aspecialisation in process control and optimisation and a Masters in Chemical Engineering with aspecialisation in process modelling and simulation.

Annex 3, 8.1

Annex 3, 8.1

245


Steen Lomholt-Thomsen

Chief Revenue Officer

Steen Lomholt-Thomsen joined AVEVA on 1 June 2017 as Chief Revenue Officer. In his role he hasresponsibility for the sales performance of AVEVA, leading all Sales functions and customer-facingactivities. He is a highly regarded Sales and Business Executive with more than 20 years’ experiencein the IT and Software industries. Before joining AVEVA, he held previous executive roles in IBM,HP and IHSMarkit, where he most recently had overall responsibility for Sales Operations in both theEMEA region and the Global Energy sector. He holds a Master in Economics and BusinessAdministration from Copenhagen Business School, is a member of the leading Danish ExecutiveBusiness Group and sits on the board of Trackunit A/S.

Lisa Johnston

Chief Marketing Officer and Chief Sustainability Officer

Lisa is the Chief Marketing Officer and Chief Sustainability Officer at AVEVA, the globalleader in engineering and industrial software, driving digital transformation across the life cycle ofcapital-intensive industries. Lisa leads the company in driving growth through global customer andprospect engagement, go-to-market initiatives and brand development. In 2020, Lisa assumed theleadership role for sustainability – developing AVEVA’s sustainability strategy and plan, one thatdelivers human, economic, and environmental value. This work includes each person at AVEVA tohelp deliver sustainable outcomes for our customers, and for the communities where we live andwork. Prior to joining AVEVA, Lisa was Managing Director, Marketing at Vista Consulting Group,leading marketing consulting for more than 50 companies within the Vista Equity Partners’ portfolio.Previously, she was Vice President of Power Systems Global Marketing at IBM, responsible formarketing and strategic business transformation.

David Ward

Finance Director and Company Secretary

David Ward joined AVEVA in January 2011 as the Head of Finance before being appointed to theBoard as Chief Financial Officer in July 2016. He was heavily involved in the execution of theSchneider Combination. Upon completion of the Schneider Combination in February 2018, hestepped down from the Board and now holds the position of Finance Director and Company Secretary.He is responsible for all aspects of the Finance function and leads the Legal and CommercialOperations teams. Prior to joining AVEVA, he worked at Ernst & Young for 14 years in several roleswithin the Audit and Assurance practice. He holds a bachelor’s degree in Economics and Accountingand is a Fellow of the Institute of Chartered Accountants in England and Wales.

Each of the Senior Management can be contacted at the Company’s head office address at High Cross,Madingley Road, Cambridge, CB3 0HB.

1.5 Interests of the Directors and Senior Management

(a) The interests in the share capital of the Company of the Directors and members of the SeniorManagement (all of which, unless otherwise stated, are beneficial or are interests (so far as isknown to them or could with reasonable diligence be ascertained by them) of a person closelyassociated (within the meaning of MAR) with a Director or a member of Senior Management)as at the Latest Practicable Date and immediately following Completion (assuming no furthershares are issued between the Latest Practicable Date and Completion (other than the New

LR 13.4.1(2)

Annex 1, 15.2

246


AVEVA Shares) and assuming no shares are taken up by them under the Rights Issue) are asfollows:

Immediately

Latest Practicable Date following Completion ––––––––––––––––––––––––– ––––––––––––––––––––––––– Number of Percentage of Number of Percentage

Ordinary existing issued Ordinary of Enlarged

Director Shares share capital Shares Share Capital––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––Philip Aiken AM 2,337 0.0 2,337 0.0Craig Hayman 69,832 0.0 69,832 0.0James Kidd 47,056 0.0 47,056 0.0Christopher Humphrey 4,000 0.0 4,000 0.0Jennifer Allerton 6,000 0.0 6,000 0.0Ron Mobed 3,000 0.0 3,000 0.0Paula Dowdy None Nil None NilPeter Herweck 2,500 0.0 2,500 0.0Olivier Blum None Nil None Nil

Immediately

Latest Practicable Date following Completion ––––––––––––––––––––––––– ––––––––––––––––––––––––– Number of Percentage of Number of Percentage

Ordinary existing issued Ordinary of Enlarged

Senior Management Shares share capital Shares Share Capital––––––––––––––––– ––––––––––– ––––––––––– ––––––––––– –––––––––––

Andrew McCloskey 597 0.0 597 0.0Ravi Gopinath 6,553 0.0 6,553 0.0Steen Lomholt-Thomsen 3,603 0.0 3,603 0.0Lisa Johnston 292 0.0 292 0.0David Ward 10,852 0.0 10,852 0.0

(b) The interests of the Directors and members of the Senior Management in Ordinary Shares underthe AVEVA Group LTIP, the AVEVA Group Buy-Out Award, the AVEVA Group Deferred ShareBonus Plans, and AVEVA Group RSP as at the Latest Practicable Date are as follows:

Total number

of Ordinary

Shares

over which

AVEVA Group awards are Exercise

Director Share Plan outstanding price (p) Vesting date–––––––– ––––––––––––––––– ––––––––––– –––––––– –––––––––––Craig Hayman AVEVA Group LTIP 35,939 3.556 11/09/2023

AVEVA Group LTIP 45,535 3.556 31/07/2022AVEVA Group LTIP 65,041 3.556 28/09/2021AVEVA Group LTIP 16,727 3.556 08/09/2020AVEVA Group

Buy-Out Award 105,708 Nil 15/11/2020AVEVA Group

Buy-Out Award 64,931 Nil 15/11/2020AVEVA Group Deferred

Share Bonus Plan 8,679 Nil 23/06/2020AVEVA Group Deferred

Share Bonus Plan 772 Nil 29/05/2019

247


Total number

of Ordinary

Shares

over which

AVEVA Group awards are Exercise

Director Share Plan outstanding price (p) Vesting date–––––––– ––––––––––––––––– ––––––––––– –––––––– –––––––––––James Kidd AVEVA Group LTIP 17,969 3.556 11/09/2023

AVEVA Group LTIP 22,767 3.556 31/07/2022AVEVA Group LTIP 32,519 3.556 28/09/2021AVEVA Group LTIP 43,827 3.556 28/09/2021AVEVA Group Deferred


Share Bonus Plan 6,096 Nil 29/05/2019

Total number

of Ordinary

Shares

over which

Senior AVEVA Group awards are Exercise

Management Share Plan outstanding price (p) Vesting date–––––––– ––––––––––––––––– ––––––––––– –––––––– –––––––––––Andrew AVEVA Group LTIP 4,026 3.556 11/09/2023

McCloskey AVEVA Group LTIP 7,152 3.556 13/07/2022AVEVA Group LTIP 9,424 3.556 13/12/2021AVEVA Group Deferred


Share Bonus Plan 2,171 Nil 23/06/2020AVEVA Group RSP 4,026 3.556 11/09/2021AVEVA Group RSP 4,563 3.556 26/07/2022AVEVA Group RSP 2,384 3.556 26/07/2022AVEVA Group RSP 5,562 3.556 26/07/2022

Ravi Gopinath AVEVA Group LTIP 5,521 3.556 11/09/2023AVEVA Group LTIP 10,262 3.556 31/07/2022AVEVA Group LTIP 15,070 3.556 28/09/2021AVEVA Group Deferred



248


Total number

of Ordinary

Shares

over which

Senior AVEVA Group awards are Exercise

Management Share Plan outstanding price (p) Vesting date–––––––– ––––––––––––––––– ––––––––––– –––––––– –––––––––––Steen Lomholt- AVEVA Group LTIP 4,204 3.556 11/09/2023Thomsen AVEVA Group LTIP 7,747 3.556 31/07/2022

AVEVA Group LTIP 48,397 3.556 28/09/2021AVEVA Group LTIP 20,782 3.556 31/07/2022AVEVA Group Deferred




Lisa Johnston AVEVA Group LTIP 3,416 3.556 13/12/2021AVEVA Group LTIP 6,067 3.556 31/07/2022AVEVA Group LTIP 9,796 3.556 13/12/2021AVEVA Group Deferred


Share Bonus Plan 1,068 Nil 23/06/2020AVEVA Group RSP 3,416 3.556 11/09/2021AVEVA Group RSP 3,900 3.556 29/09/2021AVEVA Group RSP 2,021 3.556 26/07/2022AVEVA Group RSP 4,718 3.556 11/09/2021AVEVA Group RSP 3,263 3.556 13/12/2021

David Ward AVEVA Group LTIP 3,897 3.556 11/09/2023AVEVA Group LTIP 7,403 3.556 31/07/2022AVEVA Group LTIP 10,535 3.556 28/09/2021AVEVA Group Deferred




(c) Save as set out in Sections (a) and (b) above, as at the Latest Practicable Date, no Director,member of Senior Management, member of their respective immediate families, nor anyperson closely associated with any Director (within the meaning of MAR) has any interests(beneficial or non-beneficial) in the share capital of the Company or any of its subsidiaries.

(d) No Director or member of Senior Management has or has had any interest in any transactionswhich are or were unusual in their nature or conditions or are or were significant to the businessof AVEVA or any of its subsidiary undertakings and which were effected by AVEVA or any of

249


its subsidiaries during the current or immediately preceding financial year or during an earlierfinancial year and which remain in any respect outstanding or unperformed.

(e) There are no outstanding loans or guarantees granted or provided by any member of theAVEVA Group to or for the benefit of any of the Directors save that qualifying third-partyindemnity provisions are in place for the benefit of Directors in relation to certain losses andliabilities which they may potentially incur to third parties in the course of their duties.

1.6 Executive Directors’ terms of employment, including notice periods

Each of the Executive Directors is employed pursuant to a service agreement with AVEVA SolutionsLimited and each has an indefinite service contract which can be terminated at any time by eitherparty giving the required period of notice as set out in the table below. AVEVA Solutions Limited canelect to terminate their employment by making a payment in lieu of notice equivalent to basic salaryfor the notice period. The payment in lieu of notice may be paid in instalments, and is payable onlyfor such portion of the notice period as the Executive Director does not perform work or services onhis own account or for any other party of a remunerative nature provided that AVEVA SolutionsLimited shall make up any shortfall between such earnings and the amount that would otherwise havebeen payable in lieu of notice. Each of the Executive Directors may be put on garden leave duringtheir notice period, up to a maximum of six months.

The employment of each Executive Director will be terminable with immediate effect by servingwritten notice on the Executive Director to that effect, without any further payment from AVEVASolutions Limited (except in respect of sums which have accrued due at that time), in certaincircumstances, including where the Executive Director commits any serious breach of his serviceagreement, is guilty of gross misconduct or any wilful neglect in the discharge of his duties, repeatsor continues (after warning) any breach of his service agreement, is guilty of any fraud, dishonesty orconduct tending to bring himself or any AVEVA Group company into disrepute, is declared bankruptor makes any arrangement with or for the benefit of his creditors or has a county court administrationorder made against him under the County Court Act 1984, is convicted of any criminal offence whichmight reasonably be thought to affect adversely the performance of his duties, fails or ceases to meetthe requirements of any regulatory body whose consent is required to enable him to undertake all ofhis duties or is guilty of a serious breach of the rules and regulations of such regulatory body or anycompliance manual of any company of the AVEVA Group, refuses (without reasonable cause) toaccept the novation by AVEVA Solutions Limited of his service agreement (or an offer of employmenton terms no less favourable) by any company which (as a result of a reorganisation, amalgamation orreconstruction of AVEVA Solutions Limited) acquire or agrees to acquire not less than 90 per cent. ofthe issued equity share capital of AVEVA Solutions Limited, or resigns (otherwise than at AVEVASolutions Limited’s request) as (or otherwise ceases to be, or becomes prohibited by law from being)a director of any company of the AVEVA Group.

Date of Effective date

continuous of service Notice period Notice period Current annual

Director service agreement (from AVEVA) (from director) base salary (£)–––––––––––– –––––––––––––– –––––––––––––– –––––––––––– –––––––––––– ––––––––––––Craig Hayman 19 February 2018 19 February 2018 9 months 9 months 718,200James Kidd 5 January 2004 19 February 2018 9 months 9 months 513,000

With effect from 1 April 2021, Craig Hayman’s annual base salary will increase to £825,000 andJames Kidd’s annual base salary will increase to £530,000. These increases are being made inaccordance with the AVEVA Group remuneration policy approved at the 2020 AGM.

As set out in further detail under Parts V (Information on the AVEVA Group) and VI (Information on

the OSIsoft Group), OSIsoft’s total revenue was $470.0 million for OSIsoft FY 2019, and$491.3 million for the twelve months ended 31 July 2020. The AVEVA Group’s total revenue was£833.8 million in FY 2020. The Acquisition will therefore greatly increase the financial andoperational size and complexity of the AVEVA Group post-Completion. Therefore, in light of CraigHayman’s and James Kidd’s increased scope of responsibilities brought about as a direct result of the

LR 13.4.1(2)

Annex 1, 14.2

250


Acquisition and additional obligations required to operate OSIsoft Group, the AVEVA RemunerationCommittee has decided that an increase in salaries to these levels is appropriate. Further, theRemuneration Committee has considered remuneration offered by companies which will be ofAVEVA Group’s increased size, complexity and market capitalisation post-Acquisition, once it hasmerged with OSIsoft Group, and concluded that the Directors’ salaries would, without these increases,fall behind appropriate market positioning for a company of AVEVA’s increased size and complexity.

The Executive Directors are eligible to receive the following additional benefits under their serviceagreements: eligibility to participate in an annual non-contractual bonus scheme, a company car ormobility allowance, a fuel allowance, dental and medical cover, life assurance cover, an annualallowance toward a range of benefits, reasonable expenses, credit card, pay and benefits up to amaximum of 26 weeks’ sick leave in any period of 12 months, 30 working days holiday (in additionto all bank and public holidays normally observed in England) per annum (with each ExecutiveDirector being required to take a minimum of 20 working days holiday, including bank and publicholidays, in each holiday year), membership of AVEVA Solutions Limited’s occupational pensionscheme or such other registered pension scheme as may be established by AVEVA Solutions Limitedto replace such scheme (with a requirement that the Executive Director pays any employeecontributions required by the pension scheme). The Executive Directors are eligible to participate inthe AVEVA Solutions Limited flexible benefits programme.

To protect the AVEVA Group’s business interests, the service agreements contain 12 month (includingany period of garden leave) post-termination covenants which restrict the Executive Directors’ abilityto compete with the business, to solicit business from customers and also to solicit key employees.

1.7 Non-Executive Directors’ Letters of Appointment

Each of the Non-Executive Directors are appointed by a letter of appointment for a fixed term of threeyears subject to earlier termination by either party giving to the other three months’ prior writtennotice. The appointment of each of the Non-Executive Directors’ is subject to the Articles and has tobe approved by the shareholders at an annual general meeting. Continuation of their appointment issubject to their continued satisfactory performance on the Board and re-election by the shareholdersat annual general meetings.

In certain circumstances, the Company may terminate their appointments with immediate effect,including where the Non-Executive Director has committed any serious or repeated breach ornon-observance of their obligations to the Company, been guilty of any fraud or dishonesty or actedin any manner which (in the opinion of the Board) brings or is likely to bring them or the AVEVAGroup into disrepute or is materially adverse to the interests of the AVEVA Group, been declaredbankrupt or made an arrangement with or for the benefit of their creditors, or if they have a countycourt administration order made against them under the County Court Act 1984, or been disqualifiedfrom acting as a director, or if they have not complied with the AVEVA Group’s anti-corruption andbribery policy and procedures or the Bribery Act 2010, or been convicted of any arrestable criminaloffence other than an offence under road traffic legislation for which a fine or non-custodial penaltyis imposed, or committed any serious or repeated breach or non-observance of any regulatoryrequirements, the disclosure of inside information or share dealing or any regulatory code or codeproduced by the AVEVA Group in respect of transactions by directors or insider dealing/insideinformation, as amended from time to time.

On termination of an appointment in the event of: (a) a serious breach or misconduct (as set out in therelevant letter of appointment) leading to immediate termination; or (b) failure to be re-elected as adirector at an annual general meeting, a Non-Executive Director is only entitled to such fees (if any)as accrued as at the date of termination, together with the reimbursement of any expenses properlyincurred prior to that date.

There are no other predetermined special provisions for the Non-Executive Directors with regard tocompensation in the event of loss of office, and the Non-Executive Directors are not entitled to anypayments in lieu of notice.

LR 13.4.1(2)

Annex 1, 14.2

251


1.8 Total Remuneration for Directors and Senior Management

For FY 2020 the aggregate remuneration paid (including contingent or deferred compensation) andbenefits in kind granted (under any description whatsoever) to the Directors and Senior Managementby the AVEVA Group was £13.9 million.

1.9 The current and past memberships of administrative, management and supervisory bodies and

partnerships of the Directors and the Senior Management

Set out below are the details of those companies and partnerships outside the AVEVA Group in whichthe Directors and members of Senior Management are, or have been, members of the administrative,management and supervisory bodies or partners (other than, where applicable, where held in theCompany and/or in any subsidiaries of the Company), in the five years prior to the date of this document:

Director Current Formerly held within five years–––––––––––––– –––––––––––––––––––––––––––– –––––––––––––––––––––––––––––

James Kidd None None

Paula Dowdy Illumina Inc Cisco Systems, Inc

Olivier Blum Schneider Electric SE None

Annex 3, 8.1

Newcrest Mining LimitedBalfour Beatty plcAustralian Day Foundation

LimitedGammon China Limited

National Grid plcSloane Residents Limited

Philip Aiken AM

None PTC InceBay Enterprise, Inc

Craig Hayman

SDL PLCThe Vitec Group plc.Eckoh plc

Anite Limited (formerly Anite plc)Christopher Humphrey

Iron Mountain Inc.Sandvik ABBarclays Bank Ireland PLC

Oxford Instruments plcPaysafe Group plc

Jennifer Allerton

Fugro N.VOrdnance Survey LtdCourt of University of DundeeNotwithstanding Ltd

Science Metrix Inc.Science Metrix CorporationReed Elsevier Group plcElsevier LimitedElsevier B.V.Elsevier Inc.

Ron Mobed

Rudolf GmbH ProXES GmbHActyx AG

Peter Herweck

252


Senior Manager Current Formerly held within five years–––––––––––––– –––––––––––––––––––––––––––– –––––––––––––––––––––––––––––Andrew

McCloskey None None

Ravi Gopinath None None

Lisa Johnston None Vista Consulting Group

David Ward None None

1.10 Within the period of five years preceding the date of this document, none of the Directors andmembers of Senior Management:

(a) has had any convictions in relation to fraudulent offences;

(b) has been a member of the administrative, management or supervisory bodies or director orsenior manager (who is relevant in establishing that a company has the appropriate expertiseand experience for management of that company) of any company at the time of anybankruptcy, receivership or liquidation of such company; or

(c) has received any official public incrimination and/or sanction by any statutory or regulatoryauthorities (including designated professional bodies) or has ever been disqualified by a courtfrom acting as a member of the administrative, management or supervisory bodies of acompany or from acting in the management or conduct of affairs of a company.

Trackunit A/S Exclusive Analysis Ltd (dissolved)Global Trade (Holdco) Limited

(dissolved)IHS GroupIHS Global AB (Sweden)

(dissolved)IHS Global APS (Denmark)

(dissolved)IHS Global FZ LLC (Dubai)

(dissolved)IHS Global Limited (dissolved)IHS Global SAS (France)

(dissolved)IHS Global SRL (Italy) (dissolved)IHS Group Holdings Limited

(dissolved)IHS International Holdings

Limited (dissolved)Invention Machine Limited

(dissolved)ODS-Petrodata (Holdings) Ltd

(dissolved)ODS-Petrodata Limited (dissolved)Polk Europe Holdings Limited

(dissolved)R. L. Polk UK Ltd (dissolved)Rushmore Associates Limited

(dissolved)Screen Digest Limited (dissolved)

Steen Lomholt-Thomsen

Annex 3, 8.1

253


1.11 Except for the current memberships of administrative, management or supervisory bodies andpartnerships set out in Section 1 of this Part XIII (Directors and Corporate Governance), in respectof any Director or Senior Management, there are no actual or potential conflicts of interests betweenany duties he or she has to the Company and the private interests and/or other duties he or she mayalso have.

Jennifer Allerton is a Non-Executive Director of Barclays Bank Ireland PLC, a wholly-ownedsubsidiary of Barclays. She has complied with the Company’s conflicts of interests proceduresrelating to the appointment of Barclays as Joint Bookrunner in connection with the Rights Issue andas mandated lead arranger, bookrunner, underwriter and agent in connection with the Facilities, andin particular did not vote on this matter.

1.12 There are no family relationships between any of the Directors or members of Senior Management.

2. Relationship Agreement

Schneider Electric is a “controlling shareholder” of the Company for the purposes of the Listing Rules.Schneider Electric and the Company are party to the Relationship Agreement which records theunderstanding of the parties regarding the terms of their relationship.

The Relationship Agreement came into effect on 1 March 2018 and will remain in force until: (a) the Companyceases to be listed (which could result from further share acquisitions by Schneider Electric, as the FCA has adiscretion to delist if, inter alia, there is insufficient liquidity); or (b) the Schneider Electric Group ceases to bea Shareholder; or (c) if earlier, by agreement between Schneider Electric and the Company (subject always tothe Listing Rules). The following is a summary of the principal terms of the Relationship Agreement.

(i) Board Composition

As at the Latest Practicable Date, the Directors of the Company are Philip Aiken AM, Craig Hayman,James Kidd, Christopher Humphrey, Jennifer Allerton, Ron Mobed, Paula Dowdy, Peter Herweck andOlivier Blum. If such directors leave or are removed or are not re-appointed, they will be replaced inaccordance with the recommendations of the Nomination Committee. Schneider Electric is notrestricted under the Relationship Agreement from voting to remove any Executive or Non-ExecutiveDirectors or from voting against their re-election.

The Schneider Electric Group may appoint one Non-Executive Director to the Board so long as it holdsat least 10 per cent. of the voting rights and economic interest in the Company and two Non-ExecutiveDirectors so long as it holds at least 25 per cent. of such rights and interests. In accordance with theRelationship Agreement, two Schneider Electric Directors were appointed by Schneider Electric to theBoard upon completion of the Schneider Combination. Of the current Board, the two SchneiderElectric Directors are Peter Herweck and Olivier Blum. As was agreed by the Company and SchneiderElectric, Paula Dowdy was appointed on 1 February 2019 as an additional independent Non-ExecutiveDirector in order to comply with the requirements of the UK Corporate Governance Code.

For so long as the Schneider Electric Group has the right to appoint at least one Non-ExecutiveDirector to the Board (that is, so long as the Schneider Electric Group holds at least 10 per cent. ofthe voting rights and economic interest in the Company), Schneider Electric will have the right (butnot the obligation) to appoint a Non-Executive Director who is a Schneider Electric Director as theChairman. The Chairman of a meeting of the Board has a casting vote in the case of equality of voteson questions arising at any meeting. The Deputy Chairman of the Board is appointed from one ofSchneider Electric’s two Non-Executive Directors. The current Deputy Chairman is Peter Herweck.If a Schneider Electric Director is appointed as Chairman of the Board, the Schneider ElectricDirector appointed as Deputy Chairman of the Board shall cease in that role and the role of DeputyChairman of the Board shall either cease to exist or be performed by an independent Non-ExecutiveDirector as determined by the Board. The Company has agreed under the Relationship Agreement toprocure, so far as it is legally able to do so, that each Schneider Electric Director shall (if that personremains a director at the relevant time and is willing to stand for re-election) be recommended for

Annex 3, 8.2

Annex 12, 3.1

Annex 3, 8.1

254


re-election at each general meeting of the Company at which that Schneider Electric Director isrequired to retire and seek re-election.

(ii) Quorum

In order for Board meetings to be quorate, three Directors, including (so long as Schneider Electric isentitled to appoint at least one Non-Executive Director) at least one Schneider Electric Director, mustbe present. If no quorum is present, a reduced quorum of any two Directors is required to be presentat any adjourned or reconvened meeting.

(iii) Fees

Each Schneider Electric Director is entitled to receive fees and expenses for the performance of hisor her duties as a Director in accordance with the Company’s normal remuneration policies for Non-Executive Directors. Schneider Electric may, at any time and at its option, procure that any SchneiderElectric Directors who are employees of the Schneider Electric Group waive any rights accruing tothem to receive any payments in connection with their position as Directors.

(iv) Committee Composition

So long as the Schneider Electric Group is entitled to appoint one or more Non-Executive Directors,each of the Remuneration Committee and Nomination Committee will comprise a total of fourmembers, one of whom will be the (or a) Schneider Electric Director and the other three members willbe independent Non-Executive Directors. The quorum for Remuneration Committee and NominationCommittee meetings requires the (or a) Schneider Electric Director to be present. However, if noquorum is present then there is no requirement for the (or a) Schneider Electric Director to be presentat any adjourned or reconvened meeting of the relevant committee. The Audit Committee is, and willcontinue to be, comprised only of independent Non-Executive Directors.

Schneider Electric has a right to be represented on any other Board committee to be established.

Schneider Electric acknowledged an intention, as of the date of the Relationship Agreement, that theNomination Committee will be responsible for proposing Board appointments (subject as statedabove in relation to the appointment of Schneider Electric Directors and the appointment of theChairman).

(v) Board Reserved Matters/Schneider Electric Reserved Matters

The following matters are subject to Board approval:

(A) any acquisition or disposal of any company or business with a price exceeding £50 million;

(B) otherwise than in the ordinary course of business, any sale or other disposal or transferintra-group of, or discontinuation of the business related to: (1) the assets comprised within theline of business utilising the Citect, sublicensing of the scope of rights concerningClearSCADA and Ampla software rights contributed to AVEVA under the SchneiderCombination; or (2) any other material part of the Schneider Electric Software Businesscontributed to AVEVA under the Schneider Combination;

(C) any other transaction that would constitute a Class 2 transaction under the Listing Rules;

(D) any issue of new shares or equity securities in AVEVA (other than on a pre-emptive basis), suchapproval to be obtained no later than seven days prior to the issue date or such longer periodas shall be reasonable to allow Schneider Electric to restore its stake to its initial percentageshareholding in AVEVA, other than any issue pursuant to employee share schemes approvedby the Board;

(E) any decision to pay or recommend payment of a dividend or other distribution;

(F) the adoption of the Company’s annual budget or business plan; and

255


(G) the appointment or removal of the chief executive, chief financial officer, chief operatingofficer and any other Executive Directors and those who directly report to the chief executive.

The Relationship Agreement also contains the following Schneider Electric reserved matters, whichshall apply until 1 March 2023 provided that the Schneider Electric Group holds more than50 per cent. of the voting rights in the Company, which require AVEVA to give Schneider Electricreasonable notice of any transaction involving:

(1) otherwise than: (a) in the ordinary course of business; or (b) where the approval of theShareholders is required under Chapter 10 and 11 of the Listing Rules, any sale or otherdisposal or transfer (irrespective of whether such sale, other disposal or transfer is to any thirdparty or within the Company) of, or discontinuation of, the business related to: (x) the assetscomprised within the line of business utilising Citect, sublicensing of the scope of rightsconcerning ClearSCADA and Ampla software rights contributed to AVEVA under theSchneider Combination; or (y) any other material part of the Schneider Electric SoftwareBusiness contributed to AVEVA under the Schneider Combination; or

(2) any issue of shares in AVEVA (including pursuant to any employee share scheme) representingfive per cent. or more of AVEVA’s total share capital in issue or any issue of shares that wouldleave Schneider Electric’s holding at/or below 50 per cent. of AVEVA’s total share capital inissue,

and any such transaction shall not be approved by the Board without the approval of SchneiderElectric provided, however, the approval of Schneider Electric shall not be required unless SchneiderElectric, acting reasonably, believes that the relevant transaction may compromise the tax treatmentof the Schneider Pre-Closing Reorganisation which relates to Schneider Electric or its affiliates.

(vi) Independence provisions

For so long as: (A) Schneider Electric remains a “controlling shareholder” of AVEVA within themeaning of Listing Rule 6.1.2AR; or (B) the Schneider Electric Group holds 25 per cent. or more ofthe voting rights or economic interest in the Company, Schneider Electric has agreed to undertake,and procure that its Associates (as defined in the Listing Rules) undertake, that:

(1) all transactions, agreements and arrangements between Schneider Electric or any of itsAssociates (as defined in the Listing Rules) (on the one hand) and any member of the AVEVAGroup (on the other hand) are conducted at arms’ length basis and on normal commercialterms;

(2) neither Schneider Electric nor any of its Associates (as defined in the Listing Rules) willpropose or procure the proposal of a shareholder resolution which is intended or appears to beintended to circumvent the proper application of the Listing Rules;

(3) neither Schneider Electric nor any of its Associates (as defined in the Listing Rules) will takeany action that would have the effect of preventing the Company from complying with itsobligations under the Listing Rules or from complying with the terms of the RelationshipAgreement; and

(4) it will abstain and will cause its Associates (as defined in the Listing Rules) to abstain fromvoting on any resolution to approve a “related party transaction” (as defined in the ListingRules) involving Schneider Electric or any of its Associates (as defined in the Listing Rules)as the related party.

(vii) Restrictions and changes in shareholding

There is no restriction on disposals of shares in the Company by Schneider Electric.

256


Since 1 March 2020, prior to which more extensive restrictions applied, and until 1 September 2021,without the approval of the majority of the Board’s independent Non-Executive Directors, SchneiderElectric is not permitted to:

(A) announce or make a general offer under the Takeover Code for the remaining shares in theCompany, unless such offer is:

(1) at an offer price not less than a 20 per cent. premium to the 30-day volume weightedaverage of the Company’s share price immediately prior to the commencement of theoffer period of the Company during which the Schneider Electric offer is made and berecommended by a majority of the independent Non-Executive Directors (or include anacceptance condition which requires the acceptance of the offer by a majority of theother shareholders in the Company); or

(2) otherwise recommended by a majority of the Board’s independent Non-ExecutiveDirectors;

(B) vote in favour of a delisting of the Company; or

(C) increase the aggregate shareholding of Schneider Electric and its Associates (as defined in theListing Rules), in the market or otherwise, to 75 per cent. or more of the Company’s entireissued share capital.

After 1 September 2021, Schneider Electric will be under no restrictions as to further acquisitions ofshares or making offers.

It should be noted that the minimum offer price described above: (a) is only for the period of18 months ending on 31 August 2021; (b) does not impose any obligation on Schneider Electric tomake any offer; (c) can be waived by the independent Non-Executive Directors; and (d) may bedepressed by sales of shares (as it is by reference to the then trading price) and Schneider Electric isnot under any restriction on sales of shares in the Company.

(viii) Other

The Company agreed to maintain its financial year-end to 31 March and to continue to apply IFRSaccounting policies as adopted by the European Union.

Schneider Electric and its Associates (as defined in the Listing Rules) are (for so long as SchneiderElectric and its Associates (as defined in the Listing Rules) hold more than 5 per cent. of the votingrights in the Company) permitted to obtain on reasonable request such information and access toinformation as is necessary or reasonably required by Schneider Electric for tax, accounting, legal orregulatory purposes and vice versa for the Company.

Schneider Electric and its Associates (as defined in the Listing Rules) are prohibited from taking anyaction which would reasonably be expected to result in the Company’s dividend policy not beingconsistent with the Company’s dividend policy as at the date of the Relationship Agreement, which isto pay a progressive dividend.

On the Ordinary Shares ceasing to be listed, the protections in the Relationship Agreement will cease.

3. Material impacts on Corporate Governance

Role of Chairman

It was noted in the AVEVA Group 2020 Annual Report and Accounts that Philip Aiken AM would havecompleted just over eight years in the role of Chairman of AVEVA Group plc if re-elected at the 2020 AGMand that the process for identifying a new Chairman would actively begin following the 2020 AGM. Theresolution to re-elect Philip Aiken was duly passed by Shareholders at the 2020 AGM. In light of theproposed Acquisition and following further discussions with the Board, the Nomination Committee andSchneider Electric, the Directors consider it is in the best interests of the Enlarged Group, its Shareholders

257


and other stakeholders that the succession plans to appoint a suitably qualified replacement for Philip Aikenbe delayed such that the Company can continue to benefit from the current Chairman’s industry experienceand broad sector knowledge during the period of integration of the OSIsoft Group following the Acquisition.The Board expects that Philip Aiken’s continued role as Chairman will support the delivery of the fullstrategic, operational and financial benefits of the Acquisition. Accordingly, Philip Aiken AM has enteredinto a new appointment letter with the Company reflecting his continued appointment as Chairman of theCompany until April 2022 with the option to be extended until the conclusion of the 2022 AGM. For moreinformation, please see Section 3 of Part XIII (Directors and Corporate Governance). The Chairman has notbeen involved in the deliberations of the Board on this matter.

258


PART XIV

ADDITIONAL INFORMATION

1. Corporate History

1.1 AVEVA Group plc was incorporated in England and Wales (where it is domiciled) on 9 June 1994

under the Companies Acts 1985 and 1989 as a private company limited by shares, with registration

number 02937296 and with the name M & R 603 Limited. The company name was changed from

M & R 603 Limited to CADCentre Holdings Limited on 1 September 1994. The Company was

re-registered as a public company limited by shares and its company name was changed from

CADCentre Holdings Limited to CADCentre Group plc on 29 October 1996. The legal entity

identifier (‘LEI’) number of the Company is 213800XHATUM2LFMKG16.

1.2 On 5 December 1996, the ordinary shares were admitted to listing on the Official List and to trading

on the London Stock Exchange’s main market for listed securities.

1.3 The company name was changed from CADCentre Group plc to AVEVA Group plc on 17 July 2001.

1.4 The liability of the members of the Company is limited.

1.5 The Company’s registered office and principal place of business is at High Cross, Madingley Road,

Cambridge, CB3 0HB (tel. no +44 (0)1223 556 655). The Company’s website address is

https://www.aveva.com, the information on the website does not form part of this document unless it

is incorporated by reference.

1.6 The ISIN of the Ordinary Shares is GB00BBG9VN75. On Rights Issue Admission, the Rights Issue

Shares will be registered with an ISIN of GB00BBG9VN75 and a SEDOL of BBG9VN7. The ISIN

for the Nil Paid Rights will be GB00BMC45194, the SEDOL will be BMC4519 and the TIDM will

be AVVN. The ISIN for the Fully Paid Rights will be GB00BMC45202, the SEDOL will be

BMC4520 and the TIDM will be AVVF. On Consideration Shares Admission, the Consideration

Shares will be registered with an ISIN of GB00BBG9VN75 and a SEDOL of BBG9VN7.

2. Share Capital

2.1 As at the Latest Practicable Date, the issued share capital of the Company was £5,748,105 divided

into 161,665,453 Ordinary Shares of 35⁄9 pence each (all of which were fully paid or credited as fully

paid). As at the Latest Practicable Date, the Company holds no treasury shares.

2.2 Immediately following the later of the date of completion of the Rights Issue and the date of

Completion, the Company’s issued share capital is expected to be approximately £10,704,835 divided

into 301,060,819 Ordinary Shares (all of which will be fully paid or credited as fully paid), assuming

that no further Ordinary Shares are issued between the Latest Practicable Date and Completion other

than the New AVEVA Shares and assuming that the maximum number of Rights Issue Shares is

issued.

2.3 The AVEVA Group has the following active share schemes which result in the holding of shares in

AVEVA: AVEVA Group LTIP; the AVEVA Group RSP; the AVEVA Group Deferred Share Bonus

Plans, the AVEVA Group Performance and Retention Awards and the AVEVA Group Buy-out Award.

259


Details of the total number of options and awards under the AVEVA Group Share Plans outstanding

as at the Latest Practicable Date are set out in the following table:

Number of Number of

Ordinary Shares Ordinary Shares

over which over which

awards are awards are

AVEVA Group Share Plan outstanding exercisable–––––––––––––––––––––––– –––––––––––––– ––––––––––––––AVEVA Group LTIP 1,164,808 220,245

AVEVA Group RSP 560,400 64,435

AVEVA Group Deferred Share Bonus Plans 103,669 20,033

AVEVA Group Buy-Out Award 170,639 115,431

TOTAL 1,999,516 420,144

3. Existing Shareholder authorities

3.1 At the 2020 AGM, the Shareholders approved, amongst other things, resolutions to:

(a) generally and unconditionally authorise the Company for the purpose of section 701 of the

Companies Act to make market purchases (within the meaning of section 693(4) of the

Companies Act) of any of its Ordinary Shares in the capital of the Company on such terms and

in such manner as the Directors may from time to time determine, provided that:

(i) the maximum number of Ordinary Shares authorised to be purchased is 16,151,222;

(ii) the minimum price that may be paid for each Ordinary Share (exclusive of expenses) is

35⁄9 pence;

(iii) the maximum price (exclusive of expenses) that may be paid for each Ordinary Share is

the higher of: (A) an amount equal to 105 per cent. of the average of the middle market

quotations for an Ordinary Share as derived from the London Stock Exchange Daily

Official List for the five Business Days immediately preceding the day on which such

share is contracted to be purchased; and (B) an amount equal to the higher of the price

of the last independent trade of an Ordinary Share and the highest current independent

bid for an Ordinary Share on the trading venues where the purchase is carried out;

(iv) the authority shall expire on 20 October 2021 or at the close of the next annual general

meeting of the Company, whichever shall be the earlier; and

(v) the Company may contract to purchase its Ordinary Shares under the authority prior to

the expiry of such authority that will or might be executed wholly or partly after the

expiration of such authority, and may purchase its Ordinary Shares in pursuance of any

such contract;

(b) generally and unconditionally authorise the Directors for the purposes of section 551 of the

Companies Act to exercise all the powers of the Company to allot shares and grant rights to

subscribe for, or convert any security into, shares:

(i) up to an aggregate nominal amount (within the meaning of section 551(3) and (6) of the

Companies Act) of £1,914,218 (such amount to be reduced by the nominal amount

allotted or granted under 3.1(b)(ii) below in excess of such sum); and

(ii) comprising equity securities (as defined in section 560 of the Companies Act) up to an

aggregate nominal amount (within the meaning of section 551(3) and (6) of the

Companies Act) of £3,828,437 (such amount to be reduced by any allotments or grants

made under 3.1(b)(i) above) in connection with or pursuant to an offer by way of a rights

issue in favour of holders of Ordinary Shares in proportion (as nearly as practicable) to

the respective number of Ordinary Shares held by them on the record date for such

Annex 12, 4.3

260


allotment (and holders of any other class of equity securities entitled to participate

therein or if the Directors consider it necessary, as permitted by the rights of those

securities), but subject to such exclusions or other arrangements as the Directors may

consider necessary or appropriate to deal with fractional entitlements, treasury shares,

record dates or legal, regulatory or practical difficulties which may arise under the laws

of, or the requirements of any regulatory body or stock exchange in any territory or any

other matter whatsoever,

these authorisations to expire at the conclusion of the next annual general meeting of the Company

(or if earlier on 20 October 2021), (save that the Company may before such expiry make any offer or

agreement which would or might require shares to be allotted or rights to be granted after such expiry

and the Directors may allot shares, or grant rights to subscribe for or to convert any security into

shares, in pursuance of any such offer or agreement as if the authorisations conferred hereby had not

expired);

(c) give the Directors power pursuant to sections 570(1) and 573 of the Companies Act to:

(i) allot equity securities (as defined in section 560 of the Companies Act) of the Company

for cash pursuant to the authorisation conferred by the resolution in 3.1(b); and

(ii) sell ordinary shares (as defined in section 560(1) of the Companies Act) held by the

Company as treasury shares for cash,

as if section 561 of the Companies Act did not apply to any such allotment or sale, provided

that this power shall be limited to the allotment of equity securities for cash and the sale of

treasury shares:

(A) in connection with or pursuant to an offer of or invitation to acquire equity securities

(but in the case of the authorisation granted under the resolution described in 3.1(b)(ii)

above, by way of a rights issue only) in favour of holders of ordinary shares in

proportion (as nearly as practicable) to the respective number of ordinary shares held by

them on the record date for such allotment or sale (and holders of any other class of

equity securities entitled to participate therein or if the Directors consider it necessary,

as permitted by the rights of those securities) but subject to such exclusions or other

arrangements as the Directors may consider necessary or appropriate to deal with

fractional entitlements, treasury shares, record dates or legal, regulatory or practical

difficulties which may arise under the laws of or the requirements of any regulatory

body or stock exchange in any territory or any other matter whatsoever; and

(B) in the case of the authorisation granted under resolution described in 3.1(b)(i) above (or

in the case of any sale of treasury shares), and otherwise than pursuant to paragraph (a)

of this resolution, up to an aggregate nominal amount of £287,132,

and shall expire at the conclusion of the next annual general meeting of the Company (or, if

earlier, on 20 October 2021), save that the Company may before such expiry make any offer

or agreement that would or might require equity securities to be allotted, or treasury shares to

be sold, after such expiry and the Directors may allot equity securities, or sell treasury shares

in pursuance of any such offer or agreement as if the power conferred hereby had not expired;

and

(d) authorise that a general meeting of the Company (other than an annual general meeting) may

be called on not less than 14 clear days’ notice.

3.2 Resolution proposed at the General Meeting

(a) The notice convening the General Meeting which is set out at the end of this document

proposes the Resolution which is summarised in Section 17 of Part I (Letter from the Chairman

of AVEVA Group plc) of this document.

261


(b) At the General Meeting, Shareholders will be asked to consider and vote on the Resolution,

which (inter alia) authorise the Directors, pursuant to section 551 of the Companies Act, to

allot up to 140,625,000 Ordinary Shares, representing approximately 87.0 per cent. of the

Company’s issued share capital (excluding treasury shares) as at 5 November 2020 (being the

Latest Practicable Date). This authority and power will expire at the close of business on

1 September 2021. The authority granted under the Resolution is in addition to the authority to

allot Ordinary Shares which was granted to the Directors at the 2020 AGM.

(c) The full text of the Resolution is set out in the Notice of General Meeting set out at the end of

this document.

3.3 The Company will be subject to the continuing obligations of the Listing Rules with regard to the

issue of shares for cash. The provisions of section 561(1) of the Companies Act and the Articles

(which confer on shareholders rights of pre-emption in respect of the allotment of equity securities

which are, or are to be, paid up in cash other than by way of allotment to employees under an

employees’ share scheme as defined in section 1166 of the Companies Act) apply to the issue of

Ordinary Shares in the capital of the Company except to the extent such provisions have been

disapplied as referred to in this Section 3.

3.4 The Ordinary Shares have been and will be created under the Companies Act and conform with the

laws of England and Wales. The Ordinary Shares have been and will be duly authorised according to

the requirements of the Company’s constitution and have and will have all necessary statutory and

other consents.

3.5 The Consideration Shares will be issued fully paid and will rank in full for all dividends or other

distributions declared, made or paid by reference to a record date on or after the date of issue of the

Consideration Shares, including, should the Consideration Shares be issued prior to the relevant

record date, the right to receive the proposed interim dividend announced on 5 November 2020

expected to be paid on 5 February 2021 to Shareholders on the Company’s register of members on

8 January 2021, and otherwise pari passu in all respects to the Ordinary Shares. With effect from

Consideration Shares Admission, all of the Consideration Shares will be capable of being held in

uncertificated form. No temporary documents of title will be issued in respect of the Consideration

Shares. Further details of the rights attaching to the Ordinary Shares and the Consideration Shares are

set out in Section 4 of this Part XIV (Additional Information).

4. Articles of Association

4.1 The Articles, which were adopted on 7 July 2010, and amended with effect from 1 March 2018 by

special resolution on 29 September 2017, are available for inspection as provided in Section 16 of this

Part XIV (Additional Information).

4.2 The Articles include provisions to the following effect:

(a) Objects

AVEVA’s objects are unrestricted.

(b) Limited liability

The liability of the Company’s members is limited to any unpaid amount on the shares in the

Company held by them.

(c) Voting rights

(i) Votes on a show of hands

Subject to any special terms as to voting upon which any shares may be issued or may

for the time being be held, on a show of hands every Shareholder present in person or

by proxy at a general meeting of the Company and every duly authorised corporate

representative shall have one vote. If a proxy has been duly appointed by more than one

LR 2.2.2(1)

LR 2.2.2(2)

LR 2.2.2(3)

LR 2.2.4(2)

LR 13.3.1(9)(b)

LR 13.3.1(9)(c)

LR 13.3.1(9)(d)

LR 13.3.1(9)(g)

Annex 12, 4.7

Annex 12, 4.3

262


Shareholder entitled to vote on the resolution and the proxy has been instructed by, or

exercises a discretion given by, one or more of those Shareholders to vote for the

resolution and by one or more other of those Shareholders to vote against it then the

proxy shall have one vote for and one vote against the resolution.

(ii) Votes on a poll

On a poll, votes may be given in person or by proxy and every Shareholder is entitled

to one vote for each share held by them. A Shareholder, who is entitled to more than one

vote, need not use all his votes or cast all the votes in the same way.

(d) Dividends and return of capital

Subject to the provisions of the Companies Act, the Company may by ordinary resolution from

time to time declare dividends in accordance with the respective rights of Shareholders, but no

dividend shall exceed the amount recommended by the Board.

If the Company shall be wound up (whether the liquidation is voluntary or by the court) the

liquidator may, with the authority of a special resolution passed at a general meeting of

the Company and any other sanction required by the Companies Act, divide among the

Shareholders in specie or kind the whole or any part of the assets of the Company (whether or

not the assets shall consist of property of one kind or not), and may for such purposes set such

value as he deems fair upon any property to be divided as aforesaid and may determine how

such division shall be carried out as between the Shareholders or different classes of

Shareholders. The liquidator may, with the like authority, vest the whole or any part of the

assets in trustees upon such trusts for the benefit of Shareholders as the liquidator with the like

authority shall think fit, but so that no Shareholder shall be compelled to accept any shares or

other property in respect of which there is a liability.

(e) Unclaimed dividends

Any dividend unclaimed after a period of 12 years from the date when it was declared or

became due for payment shall be forfeited and shall revert to the Company.

(f) Transfer of shares

Any Shareholder may transfer all or any of his uncertificated shares by means of a relevant

system in such manner provided for, and subject as provided, in the CREST Regulations and

the rules of any relevant system.

Any Shareholder may transfer all or any of his certificated shares by an instrument of transfer

in any usual form or in any other form which the Board may approve. The instrument of

transfer shall be executed by or on behalf of the transferor and (in the case of a partly paid

share) the transferee. The transferor shall be deemed to remain the holder of the share

concerned until the name of the transferee is entered in the register in respect of it. All

instruments of transfer, when registered, may be retained by the Company.

Subject to the provisions of the Companies Act, the Board may, in its absolute discretion,

decline to register any transfer of any share which is not a fully paid share provided that where

such a share is a member of a class of share admitted to the Official List, such discretion may

not be exercised in such a way as to prevent dealings in shares of that class from taking place

on an open and proper basis.

The Board may only decline to register a transfer of an uncertificated share in the

circumstances set out in the CREST Regulations, and the facilities and requirements of the

relevant system. The Board may decline to register a transfer, whether fully paid or not, if it is

in favour of more than four persons jointly.

LR 2.2.4(1)

LR 13.3.1(9)(g)

Annex 12, 4.4

Annex 3, 11.6

263


The Board may decline to register any transfer of a certificated share unless:

(i) the instrument of transfer is left at the registered office of the Company or such other

place as the Board may from time to time determine accompanied (save in the case of a

transfer by a person to whom the Company is not required by law to issue a certificate

and to whom a certificate has not been issued) by the certificate for the share to which

it relates and such other evidence as the Board may reasonably require to show the right

of the person executing the instrument of transfer to make the transfer; and

(ii) the instrument of transfer is in respect of only one class of share.

(g) Restrictions on shares

Where the holder of any shares in the Company, or any other person appearing to be interested

in those shares, fails to comply within the relevant period (as defined below) with any notice

under section 793 of the Companies Act in respect of those shares (in this sub-section, a

“statutory notice”), the Company may give the holder of those shares a further notice (in this

sub-section, a “restriction notice”) that the Shareholder shall not, nor shall any transferee

otherwise than as permitted by the Articles, be entitled to be present or vote or count as part of

the quorum at any general meeting of the Company or separate general meeting of the holders

of any class of shares of the Company.

If the Board is satisfied that the default in respect of which the restriction notice was issued no

longer continues, any restriction notice shall cease to have effect on or within seven days of

that decision. The Company may (at the absolute discretion of the Board) at any time give

notice to the Shareholder cancelling, or suspending for a stated period the operation of, a

restriction notice in whole or in part.

The relevant period referred to above is the period of 14 days following service of a statutory

notice. Where the restricted shares represent at least 0.25 per cent. (in nominal value) of the

issued shares of the same class, the restriction notice may also direct that:

(i) any dividend or other monies payable in respect of the restricted shares shall be

withheld, bear no interest and shall be payable only when the restriction notice ceases

to have effect; and/or

(ii) where an offer of the right to elect to receive shares of the Company instead of cash in

respect of any dividend has been made, any election made thereunder in respect of such

restricted shares shall not be effective; and/or

(iii) no transfer of any of the shares held by such Shareholder shall be recognised or

registered by the Board unless the transfer is a permitted transfer or:

(A) the Shareholder is not in default as regards supplying the information required;

and

(B) the transfer is of part only of the Shareholder’s holding and, when presented for

registration, is accompanied by a certificate by the Shareholder in a form

satisfactory to the Board to the effect that after due and careful enquiry the

Shareholder is satisfied that none of the shares the subject of the transfer are

restricted shares.

(h) Redemption of shares

Shares may be issued which are to be redeemed or are liable to be redeemed at the option of

the Company or the Shareholder. The terms and conditions and manner of redemption may be

determined by the Directors provided that this is done before the shares are allotted. The

Ordinary Shares are not redeemable.

264


(i) Notices to Shareholders

Any notice or document (including a share certificate) may be served on or delivered to any

Shareholder by the Company either personally or by sending it through the post addressed to

the Shareholder at his registered address or by leaving it at that address addressed to the

Shareholder or, where appropriate, by sending it in electronic form to an address for the time

being notified by the Shareholder concerned to the Company for that purpose, or by publication

on a website in accordance with the Companies Act or by any other means authorised in writing

by the Shareholder concerned. In the case of joint holders of a share, service or delivery of any

notice or document on or to the joint holder first named in the register is respect of the share

shall for all purposes be deemed a sufficient service on or delivery to all the joint holders.

(j) Borrowing powers

Subject to the provisions of the Companies Act and the Articles, the Board may exercise all the

powers of the Company to borrow money, and to mortgage or charge its undertaking, property

and uncalled capital, and to issue debentures and other securities, whether outright or as

collateral security for any debt, liability or obligation of the Company or of any third party.

The Board shall restrict the borrowings of the Company and exercise all voting and other rights

or powers of control exercisable by the Company in relation to its subsidiary undertakings (if

any) so as to secure (so far, as regards subsidiary undertakings, as by such exercise they can

secure) that the aggregate amount for the time being remaining outstanding of all monies

borrowed by the AVEVA Group (which in this sub-section means the Company and its

subsidiary undertakings for the time being) and for the time being owing to persons outside the

AVEVA Group, after deducting cash deposited, shall not at any time, without the previous

sanction of an ordinary resolution of the Company, exceed a sum equal to 2.5 times the

aggregate of: (i) the amount paid up on the issued share capital of the Company; and (ii) the

total of the capital and revenue reserves of the AVEVA Group (including any share premium

account, capital redemption reserve and credit balance on the profit and loss or retained

earnings account) in each case, whether or not such amounts are available for distribution, all

as shown in the latest published audited consolidated balance sheet of the AVEVA Group, but

after such adjustments and deductions as are specified in the relevant Article.

Note: The Resolution to be proposed at the General Meeting sanctions borrowings to the

extent set out in the Resolution and as explained in Section 17 of Part I (Letter from the

Chairman of AVEVA Group plc) of this document.

The above is a summary only of certain provisions of the Articles, the full provisions of

which are available for inspection as provided in Section 16 of this Part XIV (Additional

Information).

265


5. Significant shareholders and interests and dealings

5.1 So far as is known to the Company by virtue of notifications made pursuant to the Companies Act

and/or Chapter 5 of the Disclosure Guidance and Transparency Rules, as at the Latest Practicable

Date, the following persons were interested, directly or indirectly, in three per cent. or more of the

Company’s issued share capital or voting rights:

As at the Latest

Practicable Date––––––––––––––––––––––––––––

Percentage of

Number of existing issued

Ordinary Shares share capital –––––––––––––– ––––––––––––Schneider Electric 97,169,655 60.1

Aberdeen Asset Management 6,645,729 4.1

Artisan Partners 6,380,592 3.9

BlackRock 4,893,254 3.0

5.2 So far as is known to the Company, immediately following Completion, the following persons shall

be interested, directly or indirectly, in three per cent. or more of the Company’s issued share capital

or voting rights (assuming no further shares are issued between the Latest Practicable Date and

Completion (other than the New AVEVA Shares) and assuming that such persons take up their pro

rata entitlement under the Rights Issue):

Immediately following

Completion––––––––––––––––––––––––––––

Percentage of

Number of Enlarged

Ordinary Shares Share Capital –––––––––––––– ––––––––––––Schneider Electric 172,746,053 57.4

Estudillo Holdings Corp.(1) 13,655,570 4.5

Aberdeen Asset Management 11,814,629 3.9

Artisan Partners 11,343,274 3.8

BlackRock 8,699,118 2.9

Note:

(1) Estudillo is controlled by Dr J. Patrick Kennedy. It is intended that a proportion of the Ordinary Shares will be held by

Estudillo shareholders unconnected with Dr J. Patrick Kennedy.

5.3 Save as disclosed above, in so far as is known to the Directors, there is no other person who is or will

be immediately following Rights Issue Admission, directly or indirectly, interested in three per cent.

or more of the issued share capital of the Company, or of any other person who can, will or could,

directly or indirectly, jointly or severally, exercise control over the Company. The Directors have no

knowledge of any arrangements the operation of which may at a subsequent date result in a change

of control of the Company.

5.4 None of the Shareholders set out in Sections 5.1 and 5.2 have or will have different voting rights

attached to the shares they hold in the Company.

6. AVEVA Employee Share Plans

6.1 AVEVA operates the following employee and director share plans and share arrangements:

(a) AVEVA Group LTIP;

(b) AVEVA Group RSP;

(c) AVEVA Group Deferred Share Bonus Plans;

Annex 3, 9.1

Annex 3, 9.3

Annex 3, 9.4

Annex 3, 9.2

LR 13.4.1(2)

Annex 1, 16.1

Annex 3, 9.1

Annex 3, 9.3

Annex 12, 3.1

266


(d) AVEVA Group Buy-Out Award; and

(e) AVEVA Group Performance and Retention Awards.

AVEVA also adopted the AVEVA Group GESPP on 21 July 2020 but no awards have yet been made

under this plan (see below at Section 6.8 of this Part XIV (Additional Information)).

The above are together referred to as the “AVEVA Group Share Plans”.

In addition to the AVEVA Group Share Plans, AVEVA also operates the EBT, further details of which

are summarised below.

6.2 Common features

The following features are common to each of the AVEVA Group Share Plans, apart from where

otherwise indicated, as specified.

(a) Timing of awards

Except for the AVEVA Group Buy-Out Award and the AVEVA Group Performance and

Retention Awards, which were one-off awards (and the AVEVA Group Deferred Share Bonus

Plans and the AVEVA Group GESPP, which are summarised below), an award may be granted

within 42 days following:

(i) the day immediately following the day on which AVEVA makes an announcement of its

results for the last preceding financial year, half year or other period;

(ii) the announcement of any proposed tax legislation or the introduction or alteration of any

tax legislation relevant to the plan; or

(iii) any day on which the Remuneration Committee resolves that exceptional circumstances

exist which justify the grant of awards.

provided that, should any period of grant as described above fall within any closed period or

restricted period under any relevant legislation, then the Remuneration Committee may grant

awards within the 42 day period following the end of such proscribed period.

Under the AVEVA Group Deferred Share Bonus Plans, awards may be made within the

six week period beginning with:

(A) the dealing day after the date on which the Company announces its results for any

period;

(B) the bonus payment date;

(C) the bonus calculation date; or

(D) such other time as the Remuneration Committee considers the circumstances

sufficiently exceptional to justify a grant.

The AVEVA Group GESPP has no restrictions on the timing of awards.

(b) Dilution limits

The number of Ordinary Shares which may be issued or issuable (including for this purpose

treasury shares transferred or transferrable) under awards made in any ten year period under

the Company’s discretionary share plans (including the AVEVA Group LTIP and the AVEVA

Group RSP) cannot exceed five per cent. of the issued share capital of the Company. The

number of Ordinary Shares which may be issued or issuable (including for this purpose

treasury share transferred or transferrable, other than under the AVEVA Group GESPP) under

awards made in any ten year period under any AVEVA Group employee share plan cannot

exceed ten per cent. of the issued share capital of the Company.

267


In addition, the maximum number of Ordinary Shares which may be purchased under the

AVEVA Group US ESPP is 10 million. However, adjustment can be made to this maximum

limit where the Ordinary Shares outstanding are decreased, increased or exchanged for other

shares or there is a change to issued share capital of the Company to take into account share

distributions through merger, consolidation, spin-off, sale of all or substantially all the property

of the Company, reorganisation, recapitalisation, reclassification, stock dividend, stock split,

reverse stock split or other share distributions.

The AVEVA Group Performance and Retention Awards, the AVEVA Group Buy-Out Award

and the AVEVA Group Deferred Share Bonus Plans can only be satisfied using Ordinary Shares

purchased in the market (and not with newly issued Ordinary Shares) and therefore the dilution

limits do not apply to these share plans.

(c) Amendments

Other than for the AVEVA Group Deferred Share Bonus Plans and the AVEVA Group Buy-Out

Award, whose terms are not subject to Shareholder approval, Shareholder approval is required

to amend certain provisions to the advantage of the participants, including provisions relating

to eligibility, limitations on grant, the exercise price in the case of options, the adjustment of

awards, the restrictions on vesting or exercise, the rights attached upon the issue of Ordinary

Shares, the rights of the participants on the winding up of AVEVA, the transferability of awards

and the rules on alterations to the plan.

Shareholder approval is not required, however, for minor alterations which do not affect the

basic principles of the plan, including changes in light of a change in legislation, to obtain

favourable tax, exchange control or regulatory treatment, and to benefit the administration of

the plan.

(d) Variation of share capital

Upon any capitalisation issue, rights issue, subdivision, consolidation or other variation in the

share capital of AVEVA, or in the event of any demerger, dividend, income or capital

distribution or other similar event which affects the market price of Ordinary Shares to a

material extent, the number of Ordinary Shares over which an award has been granted, and any

exercise price attaching to an option, shall be adjusted in such manner as the Remuneration

Committee may determine.

In respect of any Ordinary Shares already held by participants of the AVEVA Group Share

Plans (including the AVEVA Group GESPP, AVEVA Group Buy-Out Award and AVEVA Group

Performance and Retention Awards), such Ordinary Shares will be treated in the same way as

other Ordinary Shares. In the event of a rights issue, participants will be able to direct the

trustees or nominees of the relevant AVEVA Group Share Plan trust or nominee account how

to act on their behalf.

6.3 Principal terms of the AVEVA Group LTIP

Information regarding the AVEVA Group LTIP is set out in the Remuneration Committee Report on

page 80 to page 108 of the AVEVA Group 2020 Annual Report and Accounts and in Note 28 on

page 153 of the consolidated financial statements of the Company for FY 2020 under the heading

“Long-Term Incentive Plan (LTIP)” which are incorporated by reference into this document as set out

in Part XV (Documents Incorporated by Reference).

6.4 Principal terms of the AVEVA Group RSP

Information regarding the AVEVA Group RSP is set out in the Remuneration Committee Report on

page 80 to page 108 of the AVEVA Group 2020 Annual Report and Accounts and in Note 28 on

page 153 of the consolidated financial statements of the Company for FY 2020 under the heading

“AVEVA Group plc Senior Employee Restricted Share Plan 2015” which are incorporated by

reference into this document as set out in Part XV (Documents Incorporated by Reference).

268


6.5 Principal terms of the AVEVA Group Deferred Share Bonus Plans

The AVEVA Group Deferred Share Bonus Plan adopted in 2018 and the AVEVA Group Management

Bonus Deferred Share Scheme adopted in 2008 are substantively the same and therefore information

regarding both (collectively known as the AVEVA Group Deferred Share Bonus Plans) is set out in

the Remuneration Committee Report on page 80 to page 108 of the AVEVA Group 2020 Annual

Report and Accounts and in Note 28 on page 153 of the consolidated financial statements of the

Company for FY 2020 under the heading “Deferred annual bonus share plan” which are incorporated

by reference into this document as set out in Part XV (Documents Incorporated by Reference).

6.6 Principal terms of the AVEVA Group Buy-Out Award

Information regarding the AVEVA Group Buy-Out Award is set out in the Remuneration Committee

Report on page 80 to page 108 of the AVEVA Group 2020 Annual Report and Accounts and in Note

28 on page 153 of the consolidated financial statements of the Company for FY 2020 under the

heading “AVEVA Group plc Senior Employee Restricted Share Plan 2015” which are incorporated by

reference into this document as set out in Part XV (Documents Incorporated by Reference).

6.7 Principal terms of the AVEVA Group Performance and Retention Awards

Information regarding the AVEVA Group Performance and Retention Awards is set out in the

Remuneration Committee Report on page 80 to page 108 of the AVEVA Group 2020 Annual Report

and Accounts and in Note 28 on page 153 of the consolidated financial statements of the Company

for FY 2020 under the heading “AVEVA Group plc Senior Employee Restricted Share Plan 2015”

which are incorporated by reference into this document as set out in Part XV (Documents


6.8 Principal terms of the AVEVA Group GESPP

Overview

There are currently no outstanding share awards or options granted under the AVEVA Group GESPP,

which was approved by Shareholders on 21 July 2020. The AVEVA Group GESPP comprises the

AVEVA Group GESPP and the three initial employees’ share sub-plans as follows: (a) the AVEVA

Group UK SIP; (b) the AVEVA Group US ESPP; and, (c) the AVEVA Group International ESPP.

Operation and Eligibility

The AVEVA Group GESPP allows eligible employees of selected companies within the Company’s

group the opportunity to purchase Ordinary Shares in AVEVA Group on beneficial terms.

It is intended that participants in the AVEVA Group UK SIP and the AVEVA Group US ESPP will be

able to take advantage of certain tax benefits in the UK and the US respectively. In particular, the

AVEVA Group UK SIP has been prepared to meet the requirements of Schedule 2 to the Income Tax

(Earnings and Pensions) Act 2003 (“Schedule 2”) and the AVEVA Group US ESPP has been prepared

to meet the requirements of Section 423 of the US Internal Revenue Code of 1986 (“Section 423”),

both as amended and re-enacted from time to time. Both the AVEVA Group UK SIP and the AVEVA

Group US ESPP must, if operated, be operated on a substantively all-employee basis. Offer of

participations under the AVEVA Group International ESPP is at the discretion of the Board; although,

the current intention is to also operate this plan, so far as is possible, on an ‘all-employee’ basis.

Individual limits

The maximum amount of money that may be deducted or contributed from a participant’s earnings

under the GESPP is determined for each offer:

AVEVA Group UK SIP – The maximum aggregate contribution is currently limited to £150 per month

or £1,800 per tax year (or 10 per cent. of the employee’s salary, if lower) from pre-tax earnings, or

such other limit as may be permitted under Schedule 2 from time to time.

269


AVEVA Group US ESPP – An eligible employee may not accrue rights to purchase Ordinary Shares

that exceed $25,000 (determined by reference to the price at which Ordinary Shares are purchased),

or such other limit as may be set under Section 423 from time to time.

AVEVA Group International ESPP – The maximum aggregate contribution shall be determined by the

Board in advance of any invitation to participate. It is currently intended to be limited to the same

limits as those under the AVEVA Group UK SIP (or the local currency equivalent), from post-tax

earnings.

Share Match

Under the AVEVA Group UK SIP and the AVEVA Group International ESPP, the Company may

‘match’ the number of Ordinary Shares purchased by a participant. To be eligible for a match a

participant must agree to hold his or her purchased Ordinary Shares for a certain period, set at the date

an offer is made, and normally remain in employment during that period.

In relation only to the AVEVA Group UK SIP, the Board may allocate up to a maximum of two

matching Ordinary Shares for every one Ordinary Share purchased (or such other matching ratio

permitted under Schedule 2).

In relation only to the AVEVA Group International ESPP, the Board may allocate up to a maximum

of two matching Ordinary Shares for every one Ordinary Share based on the actual number of

Ordinary Shares purchased or, if higher, the number of Ordinary Shares that could have been

purchased had they been acquired at a purchase price equal to the market value of a Ordinary Share

at the start of a purchasing period.

There is no ‘match’ under the AVEVA Group US ESPP. In recognition of this, participants will

normally be allowed to contribute more towards the purchase of Ordinary Shares, and Ordinary

Shares may be purchased at a discount to market value.

Free Shares

In relation to the AVEVA Group UK SIP, the Board may also arrange to allocate free Ordinary Shares

to an eligible employee, provided that the maximum aggregate market value of free Ordinary Shares

awarded does not exceed £3,600 per tax year, or such other limit permitted under Schedule 2. There

is currently no intention to allocate free Ordinary Shares under the UK SIP.

6.9 The EBT

The EBT was established on 10 July 2008 to encourage and facilitate the holding of Ordinary Shares

by or for the benefit of employees or former employees of AVEVA and its subsidiaries and certain of

their dependants. The current trustee of the EBT is Estera Trust (Jersey) Limited, an independent

professional trustee incorporated in Jersey. The EBT may hold Ordinary Shares for the purposes of

any share purchase scheme, share option scheme, deferred bonus arrangement or other arrangement.

AVEVA has the power to appoint additional trustees or to remove any trustee. With the agreement of

the trustee, the Company may amend the trust deed. Under the terms of the EBT, the trustees of the

EBT shall unless the Company otherwise directs, waive dividends on Ordinary Shares in respect of

which no beneficial interest has been vested in any beneficiary.

6.10 Effect of the Acquisition on the AVEVA Group Share Plans

The number of Ordinary Shares subject to awards or options outstanding under the AVEVA Group

Share Plans, the exercise price (if any) and any applicable performance conditions may be adjusted,

in accordance with the rules of the relevant AVEVA Group Share Plan, to take account of the issue of

the Rights Issue Shares pursuant to the Rights Issue. Participants in the applicable AVEVA Group

Share Plans will be notified of any adjustment separately.

270


7. Regulatory Disclosures

The Company regularly publishes announcements via the RNS system and its website. Below is a summary

of the information disclosed in accordance with the Company’s obligations under the Market Abuse

Regulation over the last 12 months which are relevant as at the Latest Practicable Date. In addition to the

RNS system, full announcements can be accessed on the webpage of the Company at

https://investors.aveva.com/regulatory-news/.

7.1 Inside Information

On 25 August 2020, AVEVA announced the proposed acquisition of the OSIsoft Group, at an

enterprise value of $5 billion, on a cash-free and debt-free basis, assuming a normalised level of

working capital and subject to customary completion adjustments. AVEVA also announced that it

intends to partly fund the Acquisition by a proposed capital raise by way of a Rights Issue to raise

gross proceeds of approximately $3.5 billion, excluding estimated amounts payable for transaction-

related fees and expenses.

7.2 Dealings by persons discharging managerial responsibilities and their persons closely associated

The Company has made a number of disclosures in accordance with Article 19 of the Market Abuse

Regulation in relation to transactions carried out by certain of the Company’s persons discharging

managerial responsibilities (“PDMRs”) and their persons closely associated. Such transactions

included the grant and exercise of awards over Ordinary Shares and the acquisition of Ordinary

Shares by certain PDMRs and persons closely associated.

On 3 December 2019, the Company announced that on 3 December 2019 it was notified that Steen

Lomholt-Thomsen, Chief Revenue Officer of the Company, exercised options over 4,219 Ordinary

Shares under the AVEVA Group RSP and sold all resultant Ordinary Shares.

On 30 March 2020, the Company announced that on 27 March 2020 Peter Herweck, a Non-Executive

Director of the Company, purchased 2,500 Ordinary Shares.

On 31 March 2020, the Company announced that on 31 March 2020 Jennifer Allerton, a

Non-Executive Director of the Company, purchased 5,000 Ordinary Shares.

On 26 June 2020, the Company announced that on 24 June 2020 it was notified that Andrew

McCloskey, a PDMR of the Company, sold a total of 484 Ordinary Shares.

On 26 June 2020, the Company announced that on 24 June 2020 it was notified that Lisa Johnston, a

PDMR of the Company, sold a total of 238 Ordinary Shares.

On 27 August 2020, the Company announced that on 25 August 2020 David Ward, Finance Director

and Company Secretary, exercised options over 216 Ordinary Shares following the 2017 award under

the AVEVA Group Deferred Share Bonus Plan and sold all resultant shares.

On 27 August 2020, the Company announced that on 26 August 2020 David Ward exercised options

over 3,335 Ordinary Shares following the 2018 and 2019 awards under the AVEVA Group Deferred

Share Bonus Plan and sold all resultant shares.

On 2 September 2020, the Company announced that on 28 August 2020 James Kidd, Deputy CEO

and CFO, exercised options over 410 Ordinary Shares following the 2017 award under the AVEVA

Group Deferred Share Bonus Plan and sold all resultant shares.

On 2 September 2020, the Company announced that on 28 August 2020 Ravi Gopinath, Chief

Operating Officer, purchased 4,250 Ordinary Shares.

On 10 September 2020, the Company announced that on 9 September 2020 David Ward exercised

options over 29,218 Ordinary Shares following the 2017 award under the AVEVA Group LTIP and

sold all resultant shares. The Company also announced that on 9 September 2020 David Ward

Annex 3, 13.1

271


purchased, pursuant to a condition of the AVEVA Group Performance and Retention Awards, 1,500

Ordinary Shares.

On 14 September 2020, the Company announced that on 11 September 2020 it granted various

options and awards to acquire Ordinary Shares in favour of certain PDMRs under the terms of the

AVEVA Group RSP.


options and performance share awards to acquire Ordinary Shares (subject to performance criteria) in

favour of certain PDMRs under the terms of the AVEVA Group LTIP.


options and conditional share awards to acquire Ordinary Shares in favour of certain PDMRs under

the terms of the AVEVA Group Deferred Share Bonus Plans.

On 25 September 2020, the Company announced that on 24 September 2020 David Ward purchased,

pursuant to a condition of the AVEVA Group Performance and Retention Awards, 1,596 Ordinary

Shares.

On 25 September 2020, the Company announced that on 24 September 2020 Steen Lomholt-Thomsen

exercised options over 10,000 Ordinary Shares following the 2017 award under the AVEVA Group

LTIP and sold all resultant shares.

On 28 September 2020, the Company announced that on 25 September 2020 Craig Hayman, Chief

Executive Officer, exercised options over 132,000 Ordinary Shares under the AVEVA Group Buy-Out

Award, with the intention to participate in the Rights Issue. He sold 62,168 of the resultant shares,

retaining the remaining 69,832 Ordinary Shares.


options and awards to acquire Ordinary Shares in favour of certain PDMRs under the terms of the

AVEVA Group RSP.

On 1 October 2020, the Company announced that on 30 September 2020 Ravi Gopinath, Chief Cloud

Officer and Chief Product Officer, exercised options over 2,303 Ordinary Shares following the 2019

award under the AVEVA Group Deferred Share Bonus Plan and retained all resulting Ordinary Shares.

8. Litigation

8.1 The AVEVA Group

There are no governmental, legal or arbitration proceedings (including any such proceedings which

are pending or threatened of which the Company is aware) during the 12 months preceding the date

of this document which may have, or have had in the recent past a significant effect on the Company’s

and/or the AVEVA Group’s financial position or profitability.

8.2 OSIsoft

There are no governmental, legal or arbitration proceedings (including any such proceedings which

are pending or threatened of which the Company is aware) during the 12 months preceding the date

of this document which may have, or have had in the recent past a significant effect on OSIsoft’s

and/or the OSIsoft Group’s financial position or profitability.

9. Material contracts

The following are all the contracts, other than contracts entered into in the ordinary course of business, that

have been entered into by the Company, any other member of the AVEVA Group or any member of the

OSIsoft Group: (a) within two years immediately preceding the date of this document and are, or may be,

material; or (b) containing a provision under which the Company, any other member of the AVEVA Group

or any member of the OSIsoft Group has any obligations or entitlements which are or may be material as at

the Latest Practicable Date.

LR 13.4.1(2)

Annex 1, 18.6.1

Annex 3, 11.3

LR 13.4.1(2)

Annex 1, 18.6.1

272


9.1 The AVEVA Group

(a) Stock and Unit Purchase Agreement

A description of the principal terms of the Stock and Unit Purchase Agreement is set out in

Part II (Principal Terms of the Acquisition) of this document

(b) R&W Policy

The R&W Policy provides coverage for any breach of the representations and warranties given

by OSIsoft and the Sellers in the Stock and Unit Purchase Agreement and with respect to

pre-closing taxes, up to an aggregate limit of $200 million, subject to customary exceptions and

the terms thereof. Coverage is provided for breaches of most representations and warranties for

three years from Completion and for breaches of certain fundamental representations and

warranties and pre-closing taxes for six years from Completion. The retention is $35 million,

subject to reduction to $25 million at the one-year anniversary of Completion, of covered

losses before the insured parties can begin to recover.

(c) Underwriting Agreement

On 6 November 2020, AVEVA and the Underwriters entered into the Underwriting Agreement.

Pursuant to the terms and conditions of the Underwriting Agreement:

(i) the Underwriters have severally and not jointly (or jointly and severally) agreed, subject

to certain conditions, to use reasonable endeavours to procure subscribers for the Rights

Issue Shares, save with respect to all of the Rights Issue Shares which are subject to the

Equity Financing Deed and the Support Agreement, or failing which, the Underwriters

will themselves severally subscribe for their proportionate share of such Rights Issue

Shares not taken up under the Rights Issue or will procure sub-underwriters to do so, in

each case, at the Rights Issue Price; and

(ii) the Company has appointed Numis in connection with the approval by the FCA of this

document and the Company’s application for Rights Issue Admission, and the

Underwriters in connection with the Rights Issue.

In consideration of the services of the Underwriters under the Underwriting Agreement, and

subject to their obligations under the Underwriting Agreement having become unconditional

and the Underwriting Agreement not being terminated, the Company has agreed to pay a

commission of:

(i) 0.3 per cent. of the Rights Issue Price multiplied by and the Rights Issue Shares

(excluding all of the Rights Issue Shares which are the subject to the Equity Financing

Deed and the Support Agreement) to the Joint Global Co-ordinators; and

(ii) 1.8 per cent. of the Rights Issue Price multiplied by and the Rights Issue Shares

(excluding all of the Rights Issue Shares which are the subject to the Equity Financing

Deed and the Support Agreement) in such proportions as between the Underwriters as

contained in the Underwriting Agreement.

The Company shall pay the costs and expenses of, or in connection with, the Rights Issue on

the basis contained in the Underwriting Agreement.

The Company has given certain customary representations and warranties to the Underwriters

as to the accuracy of the information contained in the Underwriting Agreement and other

relevant documents, and in relation to other matters relating to the AVEVA Group. In addition,

the Company has given customary indemnities to the Underwriters and certain indemnified

persons connected with each of them.

LR 13.4.1(2)

Annex 1, 20.1

Annex 3, 14.1

Annex 12, 5.4.3

Annex 12, 5.4.4

273


The obligations of the Underwriters under the Underwriting Agreement are subject to certain

customary conditions including, amongst others:

(i) the Resolution having been passed by the Shareholders at the General Meeting without

material amendment;

(ii) no condition of the Acquisition as set out in the Stock and Unit Purchase Agreement

having become incapable of satisfaction and the Stock and Unit Purchase Agreement

continuing to have full force and effect, not having lapsed, been rescinded, terminated

(in whole or in part) or ceasing to be capable of completion in accordance with its terms

prior to Rights Issue Admission;

(iii) the Facilities Agreement and the Term Facility Agreement not having lapsed, been

rescinded or terminated (in whole or in part) prior to Rights Issue Admission;

(iv) the irrevocable commitments undertaken by Schneider Electric under the Equity

Financing Deed and the Support Agreement continuing to have full force and effect and

not having lapsed, been rescinded, or, terminated (in whole or in part) or ceasing to be

capable of completion in accordance with its terms (in each case) prior to Rights Issue

Admission;

(v) the Cooperation Agreement (as described in paragraph 9.1(j) of this Part XIV

(Additional Information) below) continuing to have full force and effect and not having

lapsed, been rescinded, or terminated (in whole or on part) or ceasing to be capable of

completion in accordance with its terms prior to Rights Issue Admission;

(vi) the warranties in the Underwriting Agreement being true and accurate and not

misleading on and as of the date of the Underwriting Agreement, this document and the

date of any supplement to the prospectus published prior to Rights Issue Admission and

the date of Rights Issue Admission;

(vii) there having been no Material Adverse Change at any time prior to Rights Issue

Admission (whether or not foreseeable as at the date of the Underwriting Agreement) in

the opinion of the Joint Global Co-ordinators (acting in good faith). “Material Adverse

Change” means, for the purposes of the Underwriting Agreement, any material adverse

change in, or any development reasonably likely to result in a material adverse change

in or affecting, the condition (financial, operational, legal or otherwise), earnings,

results, management, business affairs, prospects, solvency or credit rating of (A)

AVEVA or the AVEVA Group taken as a whole, or (B) OSIsoft or the OSIsoft Group

taken as a whole, whether or not arising in the ordinary course of business; and

(viii) Rights Issue Admission becoming effective at 8.00 a.m. on 25 November 2020 (or such

later time and/or date as the Company and the Joint Global Co-ordinators may determine

provided such date is no later than 27 November 2020).

Where any of the conditions are not satisfied (or, where capable of being waived, are not

waived by the Joint Global Co-ordinators) or shall have become incapable of being satisfied by

the required date and time, as is customary, the Joint Global Co-ordinators may terminate the

Underwriting Agreement by notice to the Company given prior to Rights Issue Admission.

In certain circumstances, either of the Joint Global Co-ordinators may, in their absolute

discretion (on behalf of the Underwriters) and after consultation (where reasonably practicable)

with the Company, terminate the Underwriting Agreement by notice to the Company given

prior to Rights Issue Admission, including:

(i) in the opinion of a Joint Global Co-ordinator (in good faith), there has been a breach of

any of the warranties contained in the Underwriting Agreement or any of the warranties

is not or has ceased to be true, accurate and not misleading; or

274


(ii) where in the opinion of a Joint Global Co-ordinator (acting in good faith), there has

occurred, or it is reasonably likely that there has been the occurrence of an event such

as a material adverse change in the United Kingdom, the United States, in any other

member of the EEA, or international financial, political, economic or stock market

conditions and/or certain other matters and force majeure-style events the effect of

which are to make it impracticable or inadvisable to proceed with the Rights Issue, the

Acquisition, the underwriting of the Rights Issue Shares, save with respect to all of the

Rights Issue Shares which are subject to the Equity Financing Deed and the Support

Agreement, or the marketing or distribution of the Rights Issue Shares or which may

prejudice the success of the Acquisition or the Rights Issue; or

(iii) the Company has breached any of its other obligations and undertakings contained in the

Underwriting Agreement, which in the opinion of a Joint Global Co-ordinator (acting in

good faith) is material in the context of the Rights Issue, the Acquisition, Admission

and/or the underwriting of the Rights Issue Shares, save with respect to all of the Rights

Issue Shares which are subject to the Equity Financing Deed and the Support

Agreement.

The Underwriting Agreement is not capable of termination following Rights Issue Admission.

The Company has given certain undertakings, including an undertaking that it shall not,

without the prior written consent of the Joint Global Co-ordinators undertake certain actions in

relation to its share capital, including issuing further shares, for a period of 180 days from the

date of settlement of the Underwriters’ payment obligations to the Company pursuant to the

Underwriting Agreement, subject to certain exceptions, including the issue of the Rights Issue

Shares and the Consideration Shares.

(d) Revolving Credit Facility

On 5 September 2017, AVEVA and AVEVA Solutions Limited entered into the RCF

Agreement, pursuant to which the RCF was made available to the AVEVA Group for general

corporate and working capital purposes, including towards any acquisitions permitted under

the terms of the RCF Agreement.

The RCF is available for drawing by the borrowers until the date falling one month prior to the

termination date. The termination date is 1 March 2023, the initial three-year term having been

extended by two years in accordance with the RCF Agreement.

The RCF may be made available by the RCF Lenders by way of certain specified ancillary

facilities, including overdraft facilities, guarantees, bonding, documentary or stand-by letters

of credit or foreign exchange facilities, provided that such ancillary facilities shall not exceed

25 per cent. of the total commitments under the RCF.

AVEVA and AVEVA Solutions Limited are borrowers under the RCF. AVEVA and AVEVA

Solutions Limited are guarantors under the RCF Agreement. On 28 March 2018, AVEVA

Software LLC acceded to the RCF Agreement as a guarantor. On 30 April 2018, Schneider

Electric Software Australia Pty Ltd and Schneider Electric Software Canada Inc. acceded to the

RCF as guarantors. At all times from the date of first utilisation of the RCF, AVEVA must

ensure that the aggregate EBITDA and aggregate net assets of the guarantors under the RCF

represent 75 per cent. or more of the Consolidated EBITDA and net assets of the AVEVA

Group and, in the event that AVEVA is not in compliance with this requirement, AVEVA shall

accede such further subsidiaries as guarantors under the RCF Agreement as are required in

order to ensure compliance with this requirement within 30 days of such non-compliance if that

subsidiary is incorporated in England and Wales or Delaware and within 60 days of such non-

compliance if that subsidiary is incorporated in any other jurisdiction.

The RCF will be cancelled and all amounts drawn under it must be prepaid in full if: (a) there

is a sale of all or substantially all of the business and assets of the AVEVA Group; or (b) (if

275


required on an individual lender election basis) a person or group of person acting in concert

gains control of the ownership of AVEVA (other than Schneider Electric).

AVEVA is required to comply with the following financial covenants on a half yearly basis

which commenced on 30 September 2018: (i) interest cover in respect of any relevant period

shall not be less than 3.0:1; and (ii) net leverage in respect of any relevant period shall not

exceed 3.5:1.

The RCF Agreement permits voluntary prepayment and/or cancellation of the RCF, subject to

the payment of any applicable break costs.

The margin for each loan is the percentage per annum set out below in the column opposite net

leverage in respect of the most recently completed relevant period:

Margin (per cent.

Net Leverage per annum)–––––––––––– ––––––––––––––––Greater than 2.5:1 1.50

Less than or equal to 2.5:1 but greater than 2.0:1 1.25



Less than or equal to 1.0:1 0.50

AVEVA may, up to three times during the life of the RCF, request increases to the commitments

under the RCF by a total aggregate amount of not more than £50 million, subject to the

satisfaction of certain customary conditions. In the event that the RCF Lenders do not

participate in the increased amounts pro-rata to their existing commitments, AVEVA is entitled

to invite third parties to become lenders on terms that are not preferential to those offered to

the existing RCF Lenders.

The RCF Agreement includes restrictions, subject to certain exceptions, on some or all of the

AVEVA Group, from creating security over their assets, making disposals, making a class 1

acquisition or entering into a reverse takeover (other than the Schneider Combination), entering

into speculative derivative transactions, entering into any amalgamation, merger, demerger or

corporate reconstruction, and changing the general nature of their business.

The RCF Agreement includes customary positive and negative obligations, subject to specified

exceptions, on some or all of the AVEVA Group in relation to obtaining any necessary

authorisations, compliance with laws, maintaining insurance policies, maintaining intellectual

property, compliance with sanctions, anti-corruption and anti-bribery laws, compliance with

the US Employee Retirement Income Security Act of 1974 and pari passu ranking of

unsecured and unsubordinated debt.

The RCF Agreement also includes customary representations and warranties and events of

default. Upon the occurrence of an event of default which is continuing and, if instructed to do

so by the majority lenders (calculated by reference to their level of commitments), the Agent

(as defined in the RCF Agreement) may cancel any undrawn commitments, demand immediate

repayment of all amounts outstanding under the RCF Agreement and exercise any other rights

they have under the finance documents.

It is a condition of utilisation of the Facilities Agreement that the RCF is cancelled and prepaid

on or before the date of first utilisation of the Facilities.

(e) Facilities Agreement

AVEVA and certain of its subsidiaries entered into an English law governed multicurrency

bridge, term and revolving credit facilities agreement on 25 August 2020 between Barclays,

BNP Paribas Fortis SA/NV and J.P. Morgan Securities plc as mandated lead arrangers,

bookrunners and underwriters and Barclays as agent and certain financial institutions named

276


therein as lenders, pursuant to which the FA Lenders have made available to AVEVA and

certain of its subsidiaries the following facilities (the “Facilities”):

(i) a $2.151 billion bridge facility (“Facility A”);

(ii) a $1.424 billion bridge facility (“Facility B”, together with Facility A, the “Bridge

Facilities”); and

(iii) a £250 million revolving credit facility (the “Revolving Facility”).

Pursuant to the Facilities Agreement, the FA Lenders also originally made available a $900

million term facility to AVEVA. However this term facility was irrevocably cancelled by the

Company on 9 October 2020 following the Company’s entry into the Term Facility Agreement

(as described in more detail at (f) below).

Indebtedness under the Facilities Agreement is guaranteed by certain subsidiaries of AVEVA.

In addition, Facility A is guaranteed by Schneider Electric pursuant to a deed of guarantee

dated 25 August 2020 (the “Schneider Electric Guarantee”). Please see further details on the

Schneider Electric Guarantee at (g) below. The Facilities Agreement is unsecured.

Loans under the Bridge Facilities may be used to: (i) finance the cash consideration component

of the consideration for, and costs and expenses incurred in connection with, the Acquisition;

and/or (ii) refinance any existing indebtedness of the OSIsoft Group.

Loans under the Revolving Facility may be used to: (i) finance the cash consideration

component of the consideration for, and costs and expenses incurred in connection with, the

Acquisition; and/or (ii) the general corporate and working capital purposes of the AVEVA

Group.

The termination date of Facility A and Facility B is the date falling twelve months after

Completion. The termination date of Facility A and Facility B can each be extended at

AVEVA’s discretion by a further 6 months. AVEVA is required to pay an extension fee equal to

0.25 per cent. on the amount of the Facility A commitments and an extension fee equal to

0.50 per cent. on the amount of the Facility B commitments, in each case as at the date of the

relevant extension.

The termination date of the Revolving Facility is the date falling three years from the earlier

of: (i) Completion; and (ii) the date falling six months after the date of the Facilities

Agreement. The termination date of the Revolving Facility can be extended up to two times by

AVEVA at the discretion of the Revolving Facility lenders by a further 12 months up to a

maximum maturity of five years in total. AVEVA is required to pay an extension fee equal to

0.25 per cent. on the amount of Revolving Facility commitments as at the date of the relevant

extension.

The Revolving Facility may be made available by the Revolving Facility lenders by way of

certain specified ancillary facilities, including overdraft facilities, guarantees, bonding,

documentary or stand-by letters of credit or foreign exchange facilities, provided that such

ancillary facilities shall not exceed 25 per cent. of the total commitments under the Revolving

Facility.

Subject to the satisfaction of certain customary conditions precedent, Facility A and Facility B

are available for drawing until the earliest to occur of: (i) 30 June 2021; (ii) Completion; and

(iii) the date on which AVEVA delivers notice that the Acquisition will not occur, and the

Revolving Facility is available for drawing from and including Completion until the date

falling one month prior to the termination date applicable to the Revolving Facility.

AVEVA may, up to three times during the life of the Revolving Facility, request increases to

the commitments under the Revolving Facility by a total aggregate amount of not more than

£100 million, subject to the satisfaction of certain customary conditions. In the event that the

277


Revolving Facility lenders do not participate in the increased amounts pro-rata to their existing

commitments, AVEVA is entitled to invite third parties to become Revolving Facility lenders

on terms that are not preferential to those offered to the existing Revolving Facility lenders.

Loans drawn under Facility A and Facility B shall each be repaid in full on the last day of the

termination date applicable to the relevant facility. Each Revolving Facility loan shall be repaid

on the last day of the interest period applicable to that Revolving Facility loan. However, at the

end of an interest period (which can be of a duration of between one month, two months, three

months or six months), the relevant Revolving Facility borrower can roll over the loan for

another interest period, subject to certain customary conditions. Any amounts voluntarily

prepaid under the Revolving Facility can be reborrowed in subsequent interest periods.

The interest rate payable for a Facility A loan is the aggregate of LIBOR and an initial margin

of 0.50 per cent. per annum. The initial margin applies from the date of the Facilities

Agreement until the date falling six months after Completion. The margin will be increased by

an additional 0.50 per cent. per annum on this date and the date falling six months thereafter

by an additional 0.50 per cent. and will not be increased thereafter.

The interest rate payable for a Facility B loan is the aggregate of LIBOR and an initial margin

of 1.00 per cent. per annum. The initial margin applies from the date of the Facilities

Agreement until the date falling six months after Completion. The margin will be increased by

an additional 0.50 per cent. per annum on this date and the date falling six months thereafter

by an additional 0.50 per cent. and will not be increased thereafter.

The interest rate payable for a Revolving Facility loan is the aggregate of LIBOR (or, in the

case of any loans in euro, EURIBOR) plus an applicable margin of between 0.70 per cent. per

annum and 2.05 per cent. per annum which is determined in accordance with the ratio of Total

Net Debt to Consolidated EBITDA (each as defined in the Facilities Agreement) of the AVEVA

Group. At any time when an event of default is continuing, the margin for a Revolving Facility

loan will be 2.05 per cent. per annum.

Certain upfront, participation, agency and commitment fees are payable under the Facilities

Agreement.

Facility A, Facility B and the Revolving Facility under the Facilities Agreement may be subject

to mandatory cancellation and/or prepayment in certain circumstances, including on a change

of control of AVEVA, a sale of all or substantially all of the business and assets of the AVEVA

Group or if it becomes illegal for any lender to lend. In addition, and subject to certain

customary carve-outs, the Bridge Facilities may also be subject to mandatory cancellation

and/or prepayment on receipt of the net proceeds of share issuances by AVEVA and, in the

event that the Bridge Facilities have been drawn, the Bridge Facilities may also be subject to

mandatory cancellation and/or prepayment on receipt of net proceeds of disposals. AVEVA

may make voluntary prepayments of loans and cancel undrawn commitments of the Facilities,

subject to the payment of any applicable break costs, provided that a Revolving Facility

borrower may not prepay the Revolving Facility if any Bridge Facility loans are then

outstanding.

The Facilities Agreement contains customary financial covenants for a credit such as AVEVA,

which include the requirement to maintain the following financial ratios on a half-yearly basis:

(i) a ratio of Total Net Debt to Adjusted Consolidated EBITDA (in each case as defined in

the Facilities Agreement) of less than 3.5:1 or, in the event that AVEVA exercises an

option to increase this ratio following an acquisition for a period of not more than

12 months, 4.0:1; and

(ii) a ratio of Adjusted Consolidated EBITDA to Net Finance Charges (in each case as

defined in the Facilities Agreement) of not less than 3.0:1.

278


The Facilities Agreement includes customary positive and negative obligations, subject to

specified exceptions, on some or all of the AVEVA Group in relation to obtaining any necessary





The Facilities Agreement also contains customary covenants which restrict AVEVA and the

guarantors and, in certain cases, all of the AVEVA Group (subject to agreed exceptions and

materiality carve outs) from, amongst other things, creating security, disposing of assets,

entering into new Class 1 transactions and substantially changing the general nature of the

business of the AVEVA Group. In addition, during the period in which Facility A and/or

Facility B are drawn until the date on which they are fully cancelled and/or prepaid, additional

restrictions apply to AVEVA and the guarantors and, in certain cases, all of the AVEVA Group

(subject to agreed exceptions and materiality carve outs) from making acquisitions, incurring

capital expenditure and making dividends.

The Facilities Agreement also includes customary representations and warranties and events of

default. Upon the occurrence of an event of default which is continuing and, if instructed to do

so by the majority lenders (calculated by reference to their level of commitments), the agent

may cancel any undrawn commitments, demand immediate repayment of all amounts

outstanding under the Facilities Agreement and exercise any other rights they have under the

finance documents.

(f) Term Facility Agreement

AVEVA entered into an English law governed term facility agreement on 9 October 2020

between, among others, Schneider Electric as lender and AVEVA and certain of its subsidiaries

as borrowers, pursuant to which Schneider Electric has made available to AVEVA and certain

of its subsidiaries a $900 million term facility (the “Term Facility”). It is proposed that the

Term Facility will be utilised in full in order to satisfy part of the cash component of the

consideration payable by AVEVA in connection with the Acquisition.

Indebtedness under the Term Facility Agreement is guaranteed by certain subsidiaries of

AVEVA. The Term Facility Agreement is unsecured.

Loans under the Term Facility may be used to: (i) finance the cash consideration component of

the consideration for, and costs and expenses incurred in connection with, the Acquisition;

and/or (ii) refinance any existing indebtedness of the OSIsoft Group.

The termination date of the Term Facility is the date falling three years from the earlier of:

(i) Completion; and (ii) the date falling six months after the date of the Term Facility

Agreement.

Subject to the satisfaction of certain customary conditions precedent, the Term Facility is

available for drawing until the earliest to occur of: (i) 30 June 2021; (ii) Completion; and (iii)

the date on which AVEVA delivers notice that the Acquisition will not occur. Loans drawn

under the Term Facility shall each be repaid in full on the last day of the termination date

applicable to the Term Facility.

The interest rate payable for a Term Facility loan is the aggregate of LIBOR plus an applicable

margin of between 0.85 per cent. per annum and 2.20 per cent. per annum which is determined

in accordance with the ratio of Total Net Debt to Adjusted Consolidated EBITDA (each as

defined in the Term Facility Agreement) of the AVEVA Group. At any time when an event of

default is continuing, the margin for a Term Facility loan will be 2.20 per cent. per annum.

Certain commitment fees are payable under the Term Facility Agreement.

279


The Term Facility under the Term Facility Agreement may be subject to mandatory

cancellation and/or prepayment in certain circumstances, a sale of all or substantially all of the

business and assets of the AVEVA Group or if it becomes illegal for the lender to lend. AVEVA

may make voluntary prepayments of loans and cancel undrawn commitments of the Term

Facility, subject to payment of any applicable break costs.

The Term Facility Agreement contains customary financial covenants for a credit such as

AVEVA, which include the requirement to maintain the following financial ratios on a half-

yearly basis:

(i) a ratio of Total Net Debt to Adjusted Consolidated EBITDA (in each case as defined in

the Term Facility Agreement) of less than 3.5:1 or, in the event that AVEVA exercises

an option to increase this ratio following an acquisition for a period of not more than

12 months, 4.0:1; and

(ii) a ratio of Adjusted Consolidated EBITDA to Net Finance Charges (in each case as

defined in the Term Facility Agreement) of not less than 3.0:1.

The Term Facility Agreement includes customary positive and negative obligations, subject to

specified exceptions, on some or all of the AVEVA Group in relation to obtaining any necessary





The Term Facility Agreement also contains customary covenants which restrict AVEVA and the

guarantors and, in certain cases, all of the AVEVA Group (subject to agreed exceptions and

materiality carve outs) from, amongst other things, creating security, disposing of assets,

entering into new Class 1 transactions and substantially changing the general nature of the

business of the AVEVA Group. In addition, during the period in which Facility A and/or

Facility B under the Facilities Agreement are drawn until the date on which they are fully

cancelled and/or prepaid, additional restrictions under the Term Facility Agreement apply to

AVEVA and the guarantors and, in certain cases, all of the AVEVA Group (subject to agreed

exceptions and materiality carve outs) from making acquisitions.

The Term Facility Agreement also includes customary representations and warranties and

events of default. Upon the occurrence of an event of default which is continuing, the lender

may cancel any undrawn commitments, demand immediate repayment of all amounts

outstanding under the Term Facility Agreement and exercise any other rights it has thereunder.

(g) Schneider Electric Guarantee

AVEVA and certain of its subsidiaries, in their capacities as borrowers of Facility A under the

Facilities Agreement and guarantors of the Facilities Agreement (as the case may be) (the

“Obligors”), entered into an English law governed guarantee on 25 August 2020 between

Schneider Electric as parent guarantor and Barclays as agent, pursuant to which Schneider

Electric irrevocably and unconditionally agreed to guarantee to the Finance Parties (as defined

in the Facilities Agreement) the obligations of the borrowers of Facility A (the “Facility A

Borrowers”) under the Facilities Agreement in respect of payment of principal and interest

outstanding under Facility A only (the “Guaranteed Obligations”).

The obligations of Schneider Electric under the Schneider Electric Guarantee are limited to the

lower of: (i) the amount of unpaid principal and interest in respect of any loan made under

Facility A; and (ii) $2,700 million.

The Schneider Electric Guarantee shall terminate on the date on which the Guaranteed

Obligations have been discharged in full and the Finance Parties are under no further obligation

to provide financial accommodation under Facility A to any of the Facility A Borrowers.

280


The Obligors agreed on a joint and several basis to pay and reimburse Schneider Electric for

the full amount of any payments made by Schneider Electric under the Schneider Electric

Guarantee and pay, indemnify and reimburse Schneider Electric, its affiliates, and their

respective officers, directors, employees, shareholders, members, counsel and other advisors,

agents and controlling persons for liabilities, obligations, losses, damages, penalties, actions or

disbursements of any kind or nature relating to the enforcement against the Obligors of their

obligations under the Schneider Electric Guarantee except, in each case, to the extent such loss

or cost was finally judicially determined to have resulted from the gross negligence or wilful

misconduct of that indemnified party.

In the event that Schneider Electric makes any payment under the Schneider Electric

Guarantee, it shall retain its rights of subrogation against the Obligors and shall not be

subordinated to the rights of the Finance Parties under the Facilities Agreement. Until

Schneider Electric has been reimbursed in full for any payments made by it under the

Schneider Electric Guarantee, the Obligors shall subordinate their right to receive payment of

any obligations owed by another Obligor in respect of amounts reimbursed to Schneider

Electric under the Schneider Electric Guarantee.

A subsidiary of AVEVA which accedes to the Facilities Agreement as either a Guarantor (as

defined in the Facilities Agreement) or a Facility A Borrower shall also be required to accede

to the Schneider Electric Guarantee.

(h) Support Agreement

The voting and support agreement was entered on 25 August 2020 between AVEVA, OSIsoft

and Schneider Electric and sets out the terms on which Schneider Electric has irrevocably

agreed to vote (or procure a vote) in favour of the Resolution (the “Support Agreement”).

Pursuant to the terms of the Support Agreement, Schneider Electric has agreed that it will, to

the fullest extent that the shares in AVEVA of which Schneider Electric is the beneficial owner

(the “Schneider Shares”), being 97,169,655 Ordinary Shares, are entitled to vote thereon:

(i) appear, in person or in proxy, at the General Meeting or any other meeting at which the

Stock and Unit Purchase Agreement or the Acquisition is to be voted on or otherwise

cause all of the Schneider Shares to be counted as present for the purposes of ensuring

such meeting is quorate;

(ii) vote (or cause to be voted) all of the Schneider Shares, in person or in proxy, in favour

of: (A) the Stock and Unit Purchase Agreement and the Acquisition; and (B) any offer

by or invitation from AVEVA to AVEVA Shareholders to subscribe for or to acquire

Ordinary Shares in AVEVA to replace in whole or in part the debt financing to be

provided under Facility A (“Proposed Equity Financing”);

(iii) vote all of the Schneider Shares, in person or in proxy, against any action or agreements

which would reasonably be expected to cause a breach of a material covenant,

representation or warranty of AVEVA or any condition precedent under the Stock and

Unit Purchase Agreement to not be satisfied in a timely manner; and

(iv) vote all of the Schneider Shares, in person or in proxy, against any proposals,

resolutions, agreements, transactions or adjournments which would cause delay to or

affect Completion or any Proposed Equity Financing.

The Support Agreement states that Schneider Electric’s obligations set out at (i) to (iv) above

shall not apply, and Schneider Electric shall cause the Schneider Shares to not be represented

at the General Meeting or any other meeting at which the Stock and Unit Purchase Agreement

or the Acquisition is to be voted on, if a governmental authority enters an order, injunction,

judgment, decree, ruling, writ, assessment or award which prohibits the carrying out of the

above actions.

281


Schneider Electric has also agreed with both AVEVA and OSIsoft that it will not dispose of, or

enter into an agreement to dispose of, the Schneider Shares from the period commencing on

the date of the Support Agreement and continuing until the earlier of: (i) Completion;

(ii) termination of the Stock and Unit Purchase Agreement; or (iii) written agreement between

AVEVA, OSIsoft and Schneider Electric terminating the Support Agreement.

Schneider Electric has also agreed pursuant to the Support Agreement to subscribe for (or

procure the subscription of) its full pro rata portion of any Proposed Equity Financing with

respect to the Schneider Shares and to cooperate with and assist AVEVA as reasonably

requested with any documentation reasonably necessary for the Proposed Equity Financing and

with any filings with any governmental authority.

(i) Equity Financing Deed

The equity financing deed was entered into on 25 August 2020 between Schneider Electric,

AVEVA, J.P. Morgan Securities plc as the lead arranger of the Facilities Agreement (the

“Arranger”), Barclays, BNP Paribas Fortis SA/NV and Numis (the “Equity Financing

Deed”).

Pursuant to the Equity Financing Deed, Schneider Electric has irrevocably undertaken, agreed,

represented and warranted that it shall take up its full entitlement to subscribe for Rights Issue

Shares pursuant to the Rights Issue to replace in whole or in part the debt financing to be

provided under Facility A, by no later than 12.00 p.m. London time on the third business day

before the latest time for Schneider Electric’s acceptance and payment in relation to the Rights

Issue.

Schneider Electric has further irrevocably undertaken that, until dealings in the Rights Issue

Shares (fully paid) commence on the London Stock Exchange’s Main Market, it will not, and

will procure that the registered holder(s) of the shares will not, sell, transfer, charge or

otherwise dispose of any of the 97,169,655 Existing Ordinary Shares beneficially owned by

Schneider Electric, that it will procure that the registered holder(s) of the shares act in

accordance with the Equity Financing Deed and that it will vote (and it will procure that the

registered holders vote) in favour of the Rights Issue.

The Equity Financing Deed provides a right for each of the Arranger, Barclays and/or BNP

Paribas Fortis SA/NV to enforce the undertaking in the event that Schneider Electric has not

taken up its full entitlement to subscribe for the Rights Issue Shares.

The Equity Financing Deed shall automatically terminate on the earliest of: (A) the date that

dealings in the Rights Issue Shares (fully paid) commence on the London Stock Exchange’s

Main Market; (B) prior to Rights Issue Admission, the termination of the Acquisition

Documents (as defined in the Facilities Agreement); and (C) the termination of the

Underwriting Agreement. The Equity Financing Deed is not capable of termination following

Rights Issue Admission.

(j) Cooperation Agreement

The cooperation agreement was entered into on 25 August 2020 between AVEVA and

Schneider Electric and records the steps which AVEVA and Schneider Electric have agreed to

take in relation to Completion and records certain obligations to each other relating to the

Acquisition (the “Cooperation Agreement”).

The Cooperation Agreement provides, amongst other matter, that AVEVA shall:

(i) use its reasonable best efforts to cancel (if undrawn) or prepay (if drawn) the Facility A

in full prior to the latest applicable termination date under the Facilities Agreement;

282


(ii) in the event that Facility A has not been drawn and repaid in full by its original

termination date, exercise its rights to extend the termination date for Facility A under

the terms of the Facilities Agreement;

(iii) not, without Schneider Electric’s consent, agree to any amendment to the Facilities

Agreement if such amendment would or could increase the amount of any payment

under Facility A or accelerate or defer any payments which may reasonably be expected

to result in, or increase the prospects of a demand being made, under the Schneider

Electric Guarantee;

(iv) consult with Schneider Electric in relation to any proposed amendment to the Facilities

Agreement which could be expected to be material to the interests of Schneider Electric

under Schneider Electric Guarantee;

(v) notify Schneider Electric of any material issues or developments with respects to

Facility A, any default under the Facilities Agreement and any proposed changes to the

terms of the Facilities Agreement which could reasonably be expected to be material to

the interests of Schneider Electric under the Schneider Electric Guarantee, and to

consult with Schneider Electric in respect of any such changes; and

(vi) not amend or waive any provision of the Stock and Unit Purchase Agreement without

consulting with Schneider Electric, providing Schneider Electric an opportunity to

review and comment and considering all such comments in good faith, and, where such

amendment or waiver would reasonably be expected to materially affect Schneider

Electric’s rights and obligations under the Cooperation Agreement, the Schneider

Electric Guarantee, the Equity Financing Deed or the Support Agreement, without the

prior written consent of Schneider Electric.

The Cooperation Agreement further provides that Schneider Electric will assist AVEVA and its

advisers as reasonably requested in connection with any documentation reasonably necessary

for any offer or invitation to Shareholders to subscribe for or to acquire Ordinary Shares to

replace in whole or in part the debt financing to be provided under the Facilities Agreement and

any filings with applicable governmental authorities deemed necessary or advisable as a result

of the Acquisition and sets out the obligations between the parties in relation to any antitrust

filings required as part of the conditions to the Stock and Unit Purchase Agreement.

(k) Seller Non-Competition Agreement

The seller non-competition agreement was entered into on 25 August 2020 between AVEVA,

OSIsoft and Dr. J. Patrick Kennedy (the “Seller Non-Competition Agreement”). Pursuant to

the Seller Non-Competition Agreement, Dr. J. Patrick Kennedy has agreed that, for a three-year

period following Completion, he will not (and shall cause his controlled affiliates not to),

directly or indirectly:

(i) among other things, operate, control or engage in any business competing with any

member of the OSIsoft Group throughout the United States and any country in the world

if the OSIsoft Group was as, at Completion, conducting or undertaking material

planning to conduct business in such country;

(ii) solicit or negotiate with any person with whom any member of the OSIsoft Group had,

or was actively pursuing, a material business relationship in the six months prior to such

solicitation or negotiation;

(iii) subject to customary exceptions, solicit, recruit or induce any employee of the OSIsoft

Group to terminate their employment with the OSIsoft Group, or solicit for

employment, hire or engage any person who is or was employed by the OSIsoft Group

during the six months preceding the date of such solicitation or hiring; or

283


(iv) disparage any member of the OSIsoft Group or AVEVA or any of their respective

affiliates, officers, directors, employees or shareholder in any manner likely to be

harmful to such person, or its personal or business reputation.

(l) PK Employment Agreement

Dr. J. Patrick Kennedy’s employment agreement was entered into on 25 August 2020 between

AVEVA, OSIsoft and Dr. J. Patrick Kennedy (the “PK Employment Agreement”).

Pursuant to the PK Employment Agreement, Dr. J. Patrick Kennedy has agreed to transition to

the non-board role of Chairman Emeritus of the Enlarged Group following Completion.

Pursuant to the PK Employment Agreement, Dr. J. Patrick Kennedy’s role will continue for an

initial one-year term, with the initial term being extended for successive terms of one year each

on mutual agreement of the parties, provided that each successive term can be terminated

earlier on at least 30 days’ notice by either party. Dr. J. Patrick Kennedy’s role and

responsibilities as Chairman Emeritus will include assisting the Enlarged Group with strategic

planning and providing support for the strategic direction of the Enlarged Group, representing

the Enlarged Group at high profile speaking engagements and enterprise customer sessions,

participating in strategy sessions with the Enlarged Group’s core strategy leadership team, and

providing further mentorship and advisory support as mutually agreed with the Enlarged

Group.

Dr. J. Patrick Kennedy will devote between 50 and 70 days per year of his time to the role and

in consideration for such services provided pursuant to the PK Employment Agreement,

Dr. J. Patrick Kennedy will receive a base salary at an annual rate of $300,000. In the event

that Dr. J. Patrick Kennedy performs services exceeding 70 days per annum, compensation will

be as mutually agreed with the Enlarged Group, though if Dr. J. Patrick Kennedy performs

services exceeding 80 days per annum, these will be compensated at a per diem rate of $3,000

per day. Dr. J. Patrick Kennedy will be entitled to continue participating in the medical plan

and other benefit plans that OSIsoft provides to its most senior employees (including

reimbursement of business expenses in accordance with OSIsoft’s policies)

Dr. J. Patrick Kennedy has undertaken to comply with all legal and regulatory requirements

and codes of practice or compliance manuals issued by AVEVA relating to transactions in

securities (including the MAR) and, whilst Dr. J. Patrick Kennedy’s legal and/or beneficial

interest in Ordinary Shares (including through Dr. J. Patrick Kennedy’s interest in Estudillo)

equals or exceeds three per cent. of the outstanding share capital of AVEVA, to consult with

AVEVA and its brokers prior to offering or disposing (or agreeing to offer or dispose) of any

legal or beneficial interest in the Ordinary Shares.

(m) Transitional Services Agreement

Following completion of the Schneider Combination, the Schneider Electric Software Business

required services to be provided by entities within the Schneider Electric Group on a

transitional basis. Therefore, AVEVA and Schneider Electric Industries SAS, a Schneider

Electric Group entity, entered into a transitional services agreement on 5 September 2017 (the

“Original TSA”), as amended by an amendment dated 27 February 2018 (the “First TSA

Amendment”) and an amendment dated 31 January 2020 (the “Second TSA Amendment”),

setting out the terms on which Schneider Electric would provide to AVEVA such transitional

services from completion of the Schneider Combination (the “TSA”).

The services provided by the Schneider Electric Group to the Schneider Electric Software

Business include certain information technology infrastructure and application services, shared

real estate, as well as certain human resources services related to the management and

administration of hiring, payroll and employee benefits. The charges payable for the services

are set out in the schedule to the TSA.

284


The services provided pursuant to the Original TSA were for the relevant periods specified in

the applicable schedule to the Original TSA, as such period may have been modified by mutual

agreement of the parties, but in any case no longer than 24 months following completion of the

Schneider Combination. The First TSA Amendment was entered into to amend and restate the

services schedule in the Original TSA, and their respective service periods and service charges.

The Second TSA Amendment further extended the service periods for the following services,

among others:

(i) certain information technology infrastructure and application services until 31 August

2021;

(ii) certain human resources services until 28 February 2021; and

(iii) certain real estate services until the end of May, August and December 2020.

Under the TSA, if a service is provided pursuant to a third-party agreement between the

applicable provider and a third party and that third party increases its charges, the applicable

provider would be entitled to increase the charges payable for such service by an equivalent

amount on 30 days’ notice, provided that if the charges for such service increase by more than

10 per cent. the parties shall discuss, in good faith, alternatives as to how to minimise such

increase. AVEVA is also responsible for paying Schneider Electric’s actual out-of-pocket costs

and expenses incurred in the provision of, or setting up for, the provision of each service,

provided that if any such costs and expenses cause the charges payable for a services to

increase by more than 10 per cent. the parties shall discuss, in good faith, alternatives as to how

to minimise such increase.

Services are to be provided in a manner and at a level of services consistent in all material

respects as they were provided in the 12 months prior to completion of the Schneider

Combination. Where consent from a third party is required to provide a service then Schneider

Electric is obliged to use its best efforts to obtain that consent, but if it is not possible to obtain

that consent on commercially reasonable terms the parties will negotiate in good faith to agree

upon a commercially reasonable alternative, within excess costs being borne by Schneider

Electric. Any service may be terminated in the following circumstances: (i) by Schneider

Electric if it intends to cease providing the relevant service to its subsidiaries and cannot

procure a commercially reasonable alternative arrangement to provide the service to the

applicable recipient; (ii) if Schneider Electric intends to change its IT systems in such a way as

would result in the inability to provide the relevant service and Schneider Electric cannot

procure a commercially reasonable alternative arrangement to provide the service to AVEVA;

(iii) by AVEVA on 60 days’ notice (or such longer period provided for in the relevant schedule

for that service or by a relevant third-party agreement); (iv) by either party if continued

performance would be in violation of applicable law; (v) by either party for continued force

majeure events; (vi) by either party for non-remedied material breach by the other party

continuing for 30 days after receipt of notice; (vii) by AVEVA on 60 days’ notice if Schneider

Electric enters into a new agreement, or changes the applicable third-party provider, with

respect to information technology services provided to AVEVA; (viii) by either party if the

other party suffers an insolvency event; or (ix) by Schneider Electric if its failure to purchase,

lease or license, or to renew a lease or licence applicable to, any facility, equipment or software

or to pay any costs related to the transfer or conversion of AVEVA’s data to any alternative

provider of any services or AVEVA’s access to any facilities, equipment or software with

respect to any services shall materially adversely affect the quality or availability of such

services and cannot procure a commercially reasonable alternative arrangement to provide the

service to AVEVA.

Termination charges, including start-up and wind-down costs, breakage fees, early termination

fees or minimum volume make-up charges, will be payable other than where termination

occurs in the circumstances outlined in (i), (ii), (vi), (vii) or (ix) in the paragraph above,

provided that Schneider Electric shall use commercially reasonable efforts to minimise such

285


costs. AVEVA has agreed under the TSA to indemnify Schneider Electric for losses arising

from the employment or engagement of employees of the enlarged and any third party service

providers engaged by AVEVA to provide services under the TSA (save where such losses arise

as a result of an act or omission of the Schneider Electric Group that has not been approved in

writing by AVEVA). Schneider Electric has agreed to a reciprocal indemnity on equivalent

terms.

(n) Commercial Agreements

Between November and December 2015 and, separately, June and August 2017, an entity

within the AVEVA Group (which, for the purposes of this paragraph 9.1(n) will be referred to

as “Software”) entered into the Commercial Agreements (as described more fully below) with

an entity or business unit within the Schneider Electric Group (which, for the purposes of this

paragraph 9.1(n), will be referred to as “PA” in respect of both the 2015 and 2017 agreements

despite the identity of this entity being different), to cater and allow for the provision of various

services and licences between the Commercial Agreements Parties (and their affiliates).

In addition to the TSA (described more fully in paragraph 9.1(m) of this Part XIV (Additional

Information) above), the Commercial Agreements Parties have entered into eleven

Commercial Agreements (eight of which have since been amended).

Following Completion, the 2017 Subcontractor Agreement (as amended) and the 2017 Sales

Agent Agreement (as amended) (as described below) will apply to OSIsoft products and

services going forward, as following Completion the OSIsoft Group will be affiliates (as

defined in the relevant Commercial Agreement) of Software and are thereby able to receive the

benefit of such agreements.

(i) Subcontractor Agreements: Under the Subcontractor Agreements (one dated November

2015 as amended September 2017, the other dated September 2017 as amended

February 2018 and in May 2020), the Commercial Agreements Parties set out the terms

on which Software will assist PA in relation to any opportunity identified by PA for PA

to offer Software’s products and services integrated with its own products and services

as part of a bundled solution to a customer or potential customer of PA. The

Subcontractor Agreement obliges Software to provide a proposal following a request

from PA for Software’s products or services which shall set out, amongst other things, a

quote adhering to certain pricing principles set out in the agreement. In particular,

Software must provide PA a price which is equal to Software’s list price (for products)

or rate card (for services) less any specific discounts. The discounts for services are set

out in the rate card. In the 2015 Subcontractor Agreement, the SimSci software discount

is set out in a schedule. In relation to all AVEVA products, a discount of 20 per cent. is

provided as standard. There is no right for Software to refuse to provide a proposal and

it becomes binding when received by PA.

Software may not enter into discussions with third parties or proposed customers if PA

has notified Software of the applicable project and may not enter into discussions with

a competitor of PA in relation to the provision of Software’s products or services as part

of a bundled solution unless PA has notified Software that PA does not intend to pursue

the applicable opportunity. These restrictions do not apply where the relevant customer

has notified its potential suppliers that they must use Software as a subcontractor or has

specified the provision of products that only Software is able to provide. In such cases,

Software must offer its products to PA at 10 per cent. lower than the price offered to any

other bidders. Where Software’s products or services can address a customer’s

requirements for a bundled solution, PA must approach Software as preferred supplier

for products and sole provider to PA for services (unless PA is able to provide these

services itself).

286


The initial duration of each agreement is five years, after which it automatically renews

for successive five year terms unless either of the Commercial Agreements Parties

choose to terminate the agreement (which, in the case of PA may be done by giving

90 days’ notice or, in the case of either party, may be done by giving two years’ notice

prior to the expiry of any five year term). The parties may also terminate the agreement

for insolvency of the other party, for material breach that is unremedied within 90 days

of notice to do so or by mutual agreement.

(ii) Sales Agent Agreement (dated September 2017 as amended May 2020): Under the

Sales Agent Agreement, all Schneider Electric legal entities, including Schneider

Electric joint ventures (“AAs”), were appointed as Software’s independent

non-exclusive resellers of all AVEVA software products and related support and other

services. The AAs’ appointment covers certain strategic customer accounts in

geographies and markets as are agreed between the parties. Software is prevented from

using a competitor of the AAs as a reseller of the relevant software and services, or

selling the relevant software directly to those strategic customer accounts covered by the

agreement or any of PA’s competitors, except where such arrangements are already in

existence. The pricing for the software and services is determined by Software, subject

to certain restrictions, and each AA shall be entitled to a four per cent. commission on

the value of orders booked per quarter as a result of its efforts. The initial duration of the

agreement is five years, after which it automatically renews for successive five year

terms unless either of the Commercial Agreements Parties or the AAs choose to

terminate the arrangement (which may be done by giving two years’ notice prior to the

expiry of any five year term). The AAs may also terminate by giving 90 days’ notice

provided that it agrees to give Software reasonable post-termination assistance.

(iii) Sales Agent Agreement (dated November 2015 as amended September 2017 and

February 2018): Under the 2015 Sales Agent Agreement, PA was appointed as

Software’s independent non-exclusive reseller of certain software (SimSci, Avantis

EAM, Spiral Crude Suite, Planning and Scheduling, Ampla Products, IntelaTrac and

InBatch) and related support and other services. PA’s appointment covers certain

strategic customer accounts in geographies and markets as are agreed between the

parties (the “Resale Territory”). The software and services which are covered by the

Sales Agent Agreement may not be sold by PA outside of the Resale Territory unless

Software has given its prior consent and Software is prevented from itself selling within

the Resale Territory or from using a competitor of PA as a reseller of the relevant

software and services except where such arrangements are already in existence. The

pricing for the software and services is determined by Software, subject to certain

restrictions, and PA shall be entitled to a four per cent. commission on the value of

orders booked per quarter as a result of its efforts. The initial duration of the agreement

is five years, after which it automatically renews for successive five year terms unless

either of the Commercial Agreements Parties choose to terminate the arrangement

(which may be done by giving two years’ notice prior to the expiry of any five year

term). PA may also terminate by giving 90 days’ notice provided that it agrees to give

Software reasonable post-termination assistance.

(iv) Distributor Agreement (dated September 2017 as amended May 2020): Under the

Distributor Agreement, Software appoints PA as its non-exclusive distributor of

Software’s computer software products, all third-party products branded by Software

and the third party Citect software, in each case, to end-users in Australia, New Zealand

and China (such territory to be freely altered by Software). Software agrees to provide

training, technical support and promotional materials to facilitate such distribution. PA

shall conduct, at its expense, regional marketing activities utilising a minimum of three

per cent. of its annual gross revenue under the agreement. PA may establish its own

pricing structure for the products and Software will supply the products to PA at prices

on its then current price list less an agreed discount.

287


PA is prohibited from: (A) distributing or selling any competing products; (B) entering

into arrangement or negotiating agreements with persons that develop, distribute or

market competing products (including as part of a sale of PA’s business); or (C) allowing

any officer, shareholder or partner of PA to become a director, shareholder or partner of

a developer, distributor, or marketer of competing products. PA is to buy the relevant

products directly from Software for Software’s list price of that product, with such

discounts to be agreed mutually between the Commercial Agreements Parties from time

to time. PA must also meet agreed sales quotas for such products in each quarter. The

initial duration of the agreement was one year, after which it automatically renews for

successive three-month terms unless either of the Commercial Agreements Parties

choose to terminate the arrangement (which may be done by giving 30 days’ written

notice). Software may also terminate the agreement if PA: (X) undergoes insolvency

proceedings; (Y) tries to assign the agreement; or (Z) fails to remedy a breach of a

material provision of the agreement within 30 days of notice of such breach. PA may

terminate the agreement if Software fails to remedy a material breach of the agreement

within 60 days of notice to do so.

(v) 2015 OEM Agreement (dated November 2015 as amended September 2017 and

February 2018): Under the 2015 OEM Agreement, the Commercial Agreements Parties

set out the terms on which PA is entitled to use and sub-license WWSP, SimSci and

Citect software (and related maintenance services), as well as development obligations

for Software in respect of those products, including a requirement for Software to

allocate a minimum budget to such developments as PA may require being 50 per cent.

of the annual licence fee payable in the preceding contract year. The initial duration of

the agreement is five years, after which it automatically renews for successive five year

terms unless either of the Commercial Agreements Parties choose to terminate the

arrangement (which may be done by giving two years’ notice prior to the expiry of any

five year term). The licence fee is calculated as follows:

(A) if the number of sub-licences of the software products PA has granted in the

preceding contract year is no more or less than 20 per cent. of the number of

sub-licences granted in the 12 months preceding the date of the agreement or as

updated in accordance with sub-paragraph (C) below (for the purpose of this

paragraph 9.1(n)(v), the “Baseline Licence Volume”), then the licence fee shall

remain $5.5 million or as updated in accordance with sub-paragraph (C) (for the

purpose of this paragraph 9.1(n)(v), the “Baseline Licence Fee”);

(B) if the number of sub-licences of the software products PA has granted in the

preceding year is greater than 20 per cent. more or less than the Baseline Licence

Volume, then the licence fee shall be calculated as follows:

Licence Fee = [(N × LP × D) + Baseline Licence Fee]/2

(for the purpose of this paragraph 9.1(n)(v), the “Licence Fee”)

where:

N = the number of new sub-licences of software products granted by PA in the

preceding year, excluding renewals of sub-licences;

LP = the then-current list price for the software products in respect of which the

new sub-licences were granted (which is contained in schedule 4 to the

agreement); and

D = 50 per cent.; and

(C) where sub-paragraph (B) above applies, the Baseline Licence Volume and

Baseline Licence Fee shall be updated to reflect the actual number of sub-licences

288


granted in the preceding contract year and the Baseline Licence Fee shall be

updated to reflect the Licence Fee calculated in sub-paragraph (B) above and

such figures shall be used for the following contract year.

A separate maintenance fee of nine per cent. of the Licence Fee is also payable.

The OEM Agreement also contains restrictions on the parties to which Software may

license the software products, in particular that (except where such arrangements

already exist) Software may not grant a licence to any third-party offering, distributing

or manufacturing a distributed control system or programmable logic controllers.

(vi) 2017 OEM Agreement (dated September 2017 as amended February 2018): Under the

2017 OEM Agreement, the Commercial Agreements Parties set out the terms on which

PA is entitled to use and sub-license certain software (and related maintenance services),

as well as development obligations for Software in respect of those products. The initial

duration of the agreement is five years, after which it automatically renews for

successive five year terms unless either of the Commercial Agreements Parties choose

to terminate the arrangement (which may be done by giving two years’ notice prior to

the expiry of any five year term). The licence fee for each contract year is the list price

for the applicable software (as set out in the 2017 OEM Agreement) minus a 50 per cent.

discount. The exceptions to this are:

(A) Eco Buildings: EcoStruxureTM Power SCADA Operation, for which PA may

integrate certain specified products at no charge;

(B) Energy BU: Advanced Distribution Management System (ADMS), for which the

scope of licence can only be used in the segment of the electric power industry

that covers the generation, transmission and distribution of electricity for the

purpose of power control, energy management, distribution management, outage

management, or demand response management; and

(C) Energy BU: Advanced Gas Management System (AGMS), for which related

products will follow restrictions set out in that specific intellectual property

licence agreement.

A separate maintenance fee of 9 per cent. of the licence fee plus 60 per cent. of the total

maintenance fee for the prior contract year is also payable.

For software products integrated within Eco Buildings: EcoStruxureTM Power SCADA

Operation, the annual maintenance fee is $40,000.

Separately, the Commercial Agreements Parties to the 2017 OEM Agreement entered

into a second amendment agreement dated June 2020 to cover additional software

products (the “Second 2017 OEM Amendment Agreement”), incorporating and

modifying the terms of the 2017 OEM Agreement. The Second 2017 OEM Amendment

Agreement is separate and does not amend or modify the 2017 OEM Agreement and its

term is limited to the period until 31 December 2020.

(vii) Multi-Use Agreement (dated September 2017): Under the Multi-Use Agreement, the

Commercial Agreements Parties set out the terms on which each party agrees to license

to the other certain software owned by that party, solely for internal testing purposes

(including, in the case of PA, the ability to embed the software licensed by Software

within PA’s FLEX engineering tools solution) (PA licenses Foxboro CP and Triconex MP

control code and Analytics/Machine Learning Modules, and Software licenses DYNSIM,

TRISIM and FSIM software (or equivalent) and OEM WW Historian Svr 2017 enterprise

10,000 Tag (or equivalent)). The licences granted by each party are worldwide, non-

exclusive and royalty-free. Each party must provide updates to the licensed software at

no additional cost to the other party. The agreement has an initial term of five years from

289


the contract date. The agreement then automatically renews for further five year periods,

unless terminated by either party: (A) on two years’ notice in advance of the end of any

five year period; or (B) immediately for a material breach that has not been remedied

within 90 days; or (C) immediately for insolvency by the other party.

(viii) Volume Pricing Agreement (dated July 2017): Under the Volume Pricing Agreement,

the Commercial Agreements Parties set out the terms on which PA will be able to

purchase licences for existing Software products (including Avantis, SimSci and

Wonderware) solely for use internally at PA’s site. PA shall receive a minimum of a

40 per cent. discount off the then-current Software standard price list. PA may also

purchase support services for the Software products. The fee charged for the support

services is 18 per cent. of the then-current list price of the product minus a 20 per cent.

discount as a minimum. PA may also purchase consulting services for the Software

products. PA will receive a 20 per cent. discount of the then-current services rate card.

The Volume Pricing Agreement shall continue until terminated by either party.

(ix) Intellectual Property Licence Agreement (dated September 2017 as amended May

2020): Under the Intellectual Property Licence Agreement, Software licensed to PA and

the other entities specified in the agreement on an irrevocable, perpetual and

non-exclusive basis the relevant Software intellectual property (including the source

code of a number of next generation OASyS modules) in the field of the electrical and

power industry and gas transmission and distribution industry for the purpose of

integrating the Software intellectual property as part of the SCADA-based solution. A

one-time licence fee of CAD$2.6 million was payable by PA within 90 days of the date

of this contract (being September 2017).

(x) ClearSCADA OEM Agreement (dated September 2017): The ClearSCADA OEM

Agreement sets out the terms on which PA is entitled to use and sub-license the software

platform, currently named “ClearSCADA” and also sets out the related maintenance

services as well as development obligations for Software in respect of ClearSCADA,

including a requirement for Software to allocate a minimum budget to such

developments as PA may require of $650,000, which may increase or decrease

proportionally to the licence fee for the then-current contract year compared to the prior

contract year. The initial duration of the agreement is five years, after which it

automatically renews for successive five year terms unless either of the Commercial

Agreements Parties choose to terminate the arrangement (which may be done by giving

two years’ notice prior to the expiry of any five year term). The licence fee for each

contract year is calculated as follows:

(A) if the number of ClearSCADA sub-licences PA has granted in the preceding

contract year is no more or less than 20 per cent. of the number of sub-licences

granted in the 12 months preceding the date of the agreement or as updated in

accordance with sub-paragraph (C) below (for the purpose of this paragraph

9.1(n)(x), the “Baseline Licence Volume”), then the licence fee is $6.4 million

or as updated in accordance with sub-paragraph (C) (for the purpose of this

paragraph 9.1(n)(x), the “Baseline Licence Fee”);

(B) if the number of ClearSCADA sub-licences PA has granted in the preceding year

is greater than 20 per cent. more or less than the Baseline Licence Volume, then

the licence fee shall be calculated as follows:

Licence Fee = [(N × LP × D) + Baseline Licence Fee]/2 where:

(for the purpose of this paragraph 9.1(n)(x), the (“Licence Fee”)

N = the number of new ClearSCADA sub-licences granted by PA in the preceding

year, excluding renewal of sub-licences;

290


LP = the then-current list price for ClearSCADA in respect of which the new

sub-licences were granted (which is contained in the ClearSCADA OEM

Agreement); and

D = a percentage to be agreed upon by the Commercial Agreements Parties

within 30 days after the effective date (4 September 2017); and

(C) where sub-paragraph (B) above applies, the Baseline Licence Volume and

Baseline Licence Fee shall be updated to reflect the actual number of sub-licences

granted in the preceding contract year and the Baseline Licence Fee shall be

updated to reflect the Licence Fee calculated in sub-paragraph (B) above and

such figures shall be used for the following contract year.

A separate maintenance fee is also payable, which is 9 per cent. of the licence fee.

(xi) Forward Agreements (dated October 2020): Between 12 October 2020 and

2 November 2020, in connection with the Acquisition, AVEVA Solutions Limited

entered into a series of deliverable forward agreements with foreign exchange dealers

including: Barclays; HSBC Bank PLC; JPMorgan Chase Bank, National Association;

Banco Santander S.A., London Branch; and BNP PARIBAS in order to establish a cash

flow hedge in relation to the foreign exchange risk on the part of the cash consideration

payable by AVEVA in connection with the Acquisition which is expected to be funded

by the Rights Issue proceeds.

Under each such agreement, AVEVA Solutions Limited has contracted to receive a US

dollar amount in exchange for a GBP amount in order to mitigate the impact of any

potential movement in foreign exchange rates. The aggregate value of US dollars bought

by AVEVA Solutions Limited under such agreements is $3.5 billion.

In respect of each agreement entered into with a foreign exchange dealer under which it

has contracted to buy US dollars, AVEVA Solutions Limited has entered into a further

transaction with AVEVA Limited under which it has contracted to sell that same amount

of US dollars to AVEVA Limited in exchange for the same amount of GBP which it

agreed to sell to the relevant foreign exchange dealer.

9.2 OSIsoft

(a) Stock and Unit Purchase Agreement

A description of the principal terms of the Stock and Unit Purchase Agreement is set out in

Part II (Principal Terms of the Acquisition) of this document

(b) Support Agreement

See Section 9.1(h) above.

(c) Seller Non-Competition Agreement

See Section 9.1(k) above.

10. Frustrating Actions

The Company is subject to the City Code. Other than as provided by the City Code and Chapter 3 of Part 28

of the Companies Act, there are no rules or provisions relating to mandatory bids and/or squeeze-out and

sell-out rules relating to the Ordinary Shares.


11.1 Save as described in the AVEVA Group’s audited consolidated historical financial information for

FY 2020, FY 2019 and FY 2018 incorporated by reference in Part VIII (Historical Financial

Information of the AVEVA Group) of this document and in the unaudited AVEVA Group H1 2021

LR 13.4.1(2)

Annex 1, 20.1

Annex 12, 4.8

LR 13.4.1(2)

Annex 1, 17.1

Annex 3, 10.1

291


Interim Results of the AVEVA Group for H1 2021 incorporated by reference in Part VIII (Historical

Financial Information of the AVEVA Group) of this document, there are no Related Party Transactions

between the Company or members of the AVEVA Group that were entered into during H1 2021,

FY 2020, FY 2019 and FY 2018 or during the period from and including 1 October 2020 to and

including the Latest Practicable Date.

11.2 Save as described in the historical financial information of the OSIsoft Group for OSIsoft FY 2019,

OSIsoft FY 2018 and OSIsoft FY 2017 and in the unaudited consolidated historical financial

information of the OSIsoft Group for the OSIsoft 2020 Interim Period, which are set out in Part X

(Historical Financial Information of the OSIsoft Group) of this document, there are no Related Party

Transactions entered into by the OSIsoft Group during OSIsoft FY 2019, OSIsoft FY 2018 and

OSIsoft FY 2017 or during the period from and including 31 December 2019 to and including the

Latest Practicable Date.

12. Working capital

12.1 AVEVA is of the opinion that, taking into account the net proceeds of the Rights Issue and the facilities

available to AVEVA, the working capital available to the AVEVA Group is sufficient for its present

requirements, that is, for at least the next 12 months from the date of publication of this document.

12.2 AVEVA is of the opinion that, taking into account the net proceeds of the Rights Issue and the

facilities available to the Enlarged Group, the working capital available to the Enlarged Group is

sufficient for its present requirements, that is, for at least the next 12 months from the date of

publication of this document.

13. No significant change

13.1 Other than as described below, there has been no significant change in the financial position or

performance of the AVEVA Group since 30 September 2020 (the date to which the last published

interim financial information of the AVEVA Group was prepared).

On 9 October 2020, AVEVA entered into an English law governed term facility agreement between,

among others, Schneider Electric as lender and AVEVA and certain of its subsidiaries as borrowers,

pursuant to which Schneider Electric has made available to AVEVA and certain of its subsidiaries the

Term Facility. It is proposed that the Term Facility will be utilised in full in order to satisfy part of the

cash component of the consideration payable by AVEVA in connection with the Acquisition.

Subsequent to 30 September 2020, between 12 October 2020 and 2 November 2020, in connection

with the Acquisition, AVEVA Solutions Limited entered into a series of deliverable forward

agreements with foreign exchange dealers including: Barclays; HSBC Bank PLC; JPMorgan Chase

Bank, National Association; Banco Santander S.A., London Branch; and BNP PARIBAS in order to

hedge $3.5 billion of the cash consideration payable by AVEVA in connection with the Acquisition.

The instruments are due to mature in December 2020, ahead of Completion.

13.2 There has been no significant change in the financial position or performance of the OSIsoft Group

since 31 July 2020 (the date to which the last financial information of the OSIsoft Group was

prepared).

14. Consents

14.1 Lazard which is authorised and regulated in the UK by the Financial Conduct Authority, has given

and has not withdrawn its written consent to the issue of this document with the inclusion herein of

the references to its name in the form and context in which it is included.

14.2 Ernst & Young LLP has given and not withdrawn its written consent to the inclusion in this document

of its report, set out in Section B of Part XI (Unaudited Pro Forma Financial Information on the

Enlarged Group) of this document, and has authorised, for the purpose of Prospectus Regulation Rule

5.3.2R(2)(f) and item 1.3 of Annex 3 of Commission Delegated Regulation (EU) 2019/980, the

contents of this report as part of this document for the purpose of this prospectus.

Annex 12, 3.3

LR 13.4.1(2)

Annex 11, 3.1

LR 13.4.1(2)

Annex 1, 10.1(b)

Annex 1, 18.7.1

Annex 3, 6.1(b)

Annex 3, 11.4

LR 13.4.1(2)

Annex 1, 10.1(b)

Annex 1, 18.7.1

LR 13.3.1(10)

LR 13.4.1(6)

Annex 3, 1.3

Annex 12, 1.3

292


14.3 BDO LLP has given and not withdrawn its written consent to the inclusion in this document of its

report on the historical financial information of OSIsoft set out in Part X (Historical Financial

Information of the OSIsoft Group) of this document, and has authorised the contents of its report

which is included in this document for the purpose of Prospectus Regulation Rule 5.3-2R(2)(f) and

for the purpose of this prospectus.

A written consent under the Prospectus Regulation Rules is different from a consent filed with the

United States Securities and Exchange Commission under Section 7 of the US Securities Act. BDO

LLP has not filed and will not be required to file a consent under Section 7 of the US Securities Act.

15. Miscellaneous

15.1 The expenses of and costs to the Company incidental to Acquisition, Rights Issue Admission and

Consideration Shares Admission are estimated to amount to approximately £76.2 million (excluding

VAT).

15.2 The annual accounts of AVEVA for FY 2020, FY 2019 and FY 2018 have been audited by Ernst &

Young LLP, of 1 More London Place, London SE1 2AF, which is registered to carry out audit work

by the Institute of Chartered Accountants in England and Wales.

The financial information in this document which relates to the Company does not constitute full

statutory accounts as referred to in Section 434 of the Companies Act. Statutory accounts dealing with

FY 2020, FY 2019 and FY 2018 have been delivered to the Registrar of Companies and an auditor’s

report was made on those accounts; such report was unqualified and did not include a reference to any

matters to which the auditor drew attention by way of emphasis without qualifying the report; and did

not contain any statement under section 498(2)or (3) of the Companies Act.

15.3 The historical financial information of the OSIsoft Group for OSIsoft FY 2019, OSIsoft FY 2018 and

OSIsoft FY 2017 has been reported on by BDO LLP, of 55 Baker Street, London W1U 7EU, which

is registered to carry out audit work by the Institute of Chartered Accountants in England and Wales.

15.4 The Company’s registrar and paying agent for the payment of dividends is Link Group of The

Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.

16. Documents available for inspection

Copies of the following documents will be available for inspection, subject to compliance with appropriate

COVID-19 precautionary measures, during usual business hours on any weekday (Saturdays, Sundays and

public holidays excepted) from the date of this document until Rights Issue Admission at the offices of

Ashurst LLP at London Fruit & Wool Exchange 1 Duval Square, London E1 6PW:

16.1 the Articles;

16.2 the annual report and accounts of the AVEVA Group in respect of FY 2020, FY 2019 and FY 2018;

16.3 the AVEVA Group H1 2021 Interim Results Statement;

16.4 the report by BDO LLP on the historical financial information of OSIsoft set out in Part X (Historical

Financial Information of OSIsoft Business) of this document;

16.5 the report by Ernst & Young LLP on the unaudited pro forma financial information set out in Part XI

(Unaudited Pro Forma Financial Information on the Enlarged Group) of this document;

16.6 the consent letters referred to in Section 14 of this Part XIV (Additional Information);

16.7 the Stock and Unit Purchase Agreement; and

16.8 this document.

Copies of the above documents (other than the Stock and Unit Purchase Agreement) will also be published

on the Company’s website at http://www.aveva.com/.

Annex 12, 8.1

Annex 3, 1.3

Annex 3, 2.1

Annex 12, 1.3

Annex 12, 10.2

Annex 3, 1.3

Annex 12, 1.3

LR 13.4.1(2)

Annex 1, 21.1

LR 13.8.10(2)(a)

LR 13.8.10(2)(b)

Annex 3, 15.1

LR 13.4.1(6)

Annex 3, 1.3

Annex 12, 1.3

293


PART XV

DOCUMENTS INCORPORATED BY REFERENCE

The table below sets out the documents of which certain parts are incorporated by reference into, and form

part of, this document. Only the parts of the documents identified in the table below are incorporated into,

and form part of, this document. The parts of these documents which are not incorporated by reference are

either not relevant for investors or are covered elsewhere in this document.

To the extent that any information incorporated by reference itself incorporates any information by reference,

either expressly or by implication, such information will not form part of this document for the purposes of

the Prospectus Regulation Rules, except where such information is stated within this document as

specifically being incorporated by reference or where the document is specifically defined as including such

information.

Any statement contained in a document which is deemed to be incorporated by reference into this document

shall be deemed to be modified or superseded for the purpose of this document to the extent that a statement

contained in this document (or in a later document which is incorporated by reference into this document)

modifies or supersedes such earlier statement (whether expressly, by implication or otherwise).

Copies of the documents which are incorporated by reference in this document are available in “read-only”

format and can be printed from the Company’s website at the following address:

https://investors.aveva.com/. The documents are also available as provided in Section 16 of Part XIV

(Additional Information) of this document.

Information incorporated by reference

Reference document into this document Page numbers–––––––––––––––––– ––––––––––––––––––––––––––––––––––– –––––––––––––

Independent review report 13

Consolidated income statement 14

Consolidated statement of comprehensive income 15

Consolidated balance sheet 16

Consolidated statement of changes in shareholders’ equity 17

Consolidated cash flow statement 18

Notes to the interim report 19 to 28

The AVEVA Group H1 2021 Interim Results Statement is available at:

https://investors.aveva.com/media/kpgpfjvy/aveva-h1-fy21-results-05-11-2020.pdf

Audited information within the remuneration committee report 96 to 108

Independent auditor’s report 116 to 122






Notes to the consolidated financial statements 128 to 158

Company balance sheet 159

Notes to the Company financial statements 161 to 163

Full List of Addresses and Subsidiaries 169 to 171

The AVEVA Group 2020 Annual Report and Accounts is available at:

https://investors.aveva.com/media/plzdh14s/aveva_ar20_gf.pdf

AVEVA Group H1 2021

Interim Results Statement

AVEVA Group 2020 Annual

Report and Accounts

294


Information incorporated by reference

Reference document into this document Page numbers–––––––––––––––––– ––––––––––––––––––––––––––––––––––– –––––––––––––











The AVEVA Group 2019 Annual Report and Accounts is available at:https://www.aveva.com/-

/media/RedesignV2/English/Pages-Template/Investors/AVEVA_AR19_web.pdf











The AVEVA Group 2018 Annual Report and Accounts is accessible at: https://www.aveva.com/-

/media/RedesignV2/English/Pages-Template/Investors/Financial-Resources

/2018_AVEVA_Annual_Report_and_Accounts.pdf?la=en


Report and Accounts


Report and Accounts

295


PART XVI

DEFINITIONS

The following definitions apply in this document unless the context otherwise requires:

“2020 AGM” the annual general meeting of the Company held on 21 July 2020;

“Acquisition” the proposed acquisition by AVEVA and/or its subsidiaries of

OSIsoft pursuant to the Stock and Unit Purchase Agreement and

certain related agreements;

“Adjusted EBIT” 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

and other income;

the requirements contained in the publication “Admission and

Disclosure Standards” dated October 2018 containing, among other

things, the admission requirements to be observed by companies

seeking admission to trading on the London Stock Exchange’s main

market for listed securities;

“AI” Artificial Intelligence;

“APM” Asset Performance Management;

“Articles” the articles of association of the Company from time to time;

“Audit Committee” the audit committee of the Company established by the Board;

“AVEVA” or “Company” AVEVA Group plc, a company incorporated and registered in

England and Wales with registered number 02937296 with its

registered office at High Cross, Madingley Road, Cambridge,

CB3 0HB;

“AVEVA Group” AVEVA and its subsidiary undertakings from time to time;

the audited financial statements of the Company for the financial

year ended 31 March 2018;





“AVEVA Group Buy-Out Award” the Recruitment Award Agreement between Craig Hayman and

AVEVA Group dated on 6 March 2018;

the AVEVA Group Management Bonus Deferred Share Scheme and

the AVEVA Group Deferred Share Bonus Plan (as amended on

7 July 2020);

“AVEVA Group GESPP” AVEVA Group plc Global Employee Share Purchase Plan;

the unaudited condensed consolidated financial statements of the

Company for H1 2021;

“Admission and Disclosure

Standards”

“AVEVA Group 2018 Annual

Report and Accounts”



“AVEVA Group Deferred

Share Bonus Plans”



“AVEVA Group H1 2021

Interim Results”

296


the press release announcing the AVEVA Group’s results for the

six months ended 30 September 2020, made on 5 November 2020;

AVEVA Group plc Employee International Share Purchase Plan;

“AVEVA Group LTIP” the AVEVA Group Long Term Incentive Plan 2014 (as amended on

7 July 2017, 24 July 2017 and 21 July 2020);

the AVEVA Group Management Bonus Deferred Share Scheme

2008 (as amended on 3 June 2013 and 7 and 24 July 2017);

the Performance and Retention Awards entered into between

AVEVA Group and James Kidd and David Ward on 19 February

2018;

“AVEVA Group RSP” the AVEVA Group Senior Employee Restricted Share Plan 2015 (as

amended on 7 July 2017, 24 July 2017 and 21 July 2020);

“AVEVA Group Share Plans” the AVEVA Group LTIP, the AVEVA Group RSP, the AVEVA Group

Deferred Share Bonus Plans, the AVEVA Group GESPP, the

AVEVA Group Buy-Out Award and the AVEVA Group Performance

and Retention Awards;

“AVEVA Group UK SIP” AVEVA Group plc UK Share Incentive Plan;

“AVEVA Group US ESPP” AVEVA Group plc US Employee Stock Purchase Plan;

“Barclays” Barclays Bank PLC;

“billings” the billings that are recorded when invoices are issued to OSIsoft

customers upon final processing of a bona fide purchase order and

may be different in time from when the billings are recognised as

revenue, if at all. See “Important Information—Non-IFRS

Measures”;

“BNP PARIBAS” BNP PARIBAS;

“Board” the board of Directors of the Company from time to time;

“Break Fee Conditions” has the meaning given to it in risk factor 2.1 of this document;

“Bridge Facilities” the Bridge Facilities as defined in, and made available under, the

Facilities Agreement, comprising Facility A and Facility B;

“Business Day” a day on which the London Stock Exchange is open for business;

“CAGR” compound annual growth rate;

“Cashless Take-up” the sale of such number of Nil Paid Rights as will generate

sufficient sale proceeds to enable the direct or indirect holder

thereof to take up all of their remaining Nil Paid Rights (or

entitlements thereto);

“CCSS” the CREST Courier and Sorting Service established by Euroclear to

facilitate, amongst other things, the deposit and withdrawal of

securities;

in relation to a share or other recorded security, a share or other

security title to which is recorded on the relevant register as being

held in certificated form (that is, not in CREST);

“AVEVA Group H1 2021

Interim Results Statement”

“AVEVA Group International

ESPP”

“AVEVA Group Management

Bonus Deferred Share Scheme”

“AVEVA Group Performance

and Retention Awards”

“certificated” or “in certificated

form”

297


“CFIUS” the Committee on Foreign Investment in the United States;

“CFIUS Approval” the approval of, or non-objection to, the Acquisition by CFIUS and

its members;

“Chairman” the chairman of the Board;

“City Code” the UK City Code on Takeovers and Mergers;

“closing price” the closing middle market quotation of an Existing Ordinary Share

as derived from the Daily Official List published by the London

Stock Exchange;

“Commercial Agreements” the agreements described in paragraph 9.1(n) of Part XIV

(Additional Information) of this document;

“Commercial Agreements Parties” the applicable entity within the AVEVA Group and the applicable

entity within the Schneider Electric Group which have entered into

the Commercial Agreements;

“Companies Act” or the “Act” the UK Companies Act 2006, as amended;

“Completion” completion of the Acquisition in accordance with the terms of the

Stock and Unit Purchase Agreement;

“Consideration Shares” the Ordinary Shares, to be issued to Estudillo pursuant to the Stock

and Unit Purchase Agreement;

“Consideration Shares Admission” the admission of the Consideration Shares to the premium listing

segment of the Official List becoming effective in accordance with

the Listing Rules and to trading on the London Stock Exchange’s

main market for listed securities becoming effective in accordance

with the Admission and Disclosure Standards;

“CREST” the system for the paperless settlement of trades in securities and the

holding of uncertificated securities operated by Euroclear in

accordance with the CREST Regulations;

“CREST Deposit Form” the deposit form set out on page 4 of the Provisional Allotment

Letter;

“CREST Manual” the rules governing the operation of CREST, consisting of the

CREST Reference Manual, CREST International Manual, CREST

Central Counterparty Service Manual, CREST Rules; Registrars

Service Standards, Settlement Discipline Rules, CCSS Operations

Manual, Daily Timetable, CREST Application Procedure and

CREST Glossary of Terms (all as defined in the CREST Glossary

of Terms promulgated by Euroclear on 15 July 1996 and as

amended since);

“CREST member” a person who has been admitted by Euroclear UK as a system

member (as defined in the CREST Regulations);

“CREST Proxy Instruction” the CREST message in order to make a valid proxy appointment or

instruction;

“CREST Regulations” the UK Uncertificated Securities Regulations 2001 (as amended);

“CREST sponsor” a CREST participant admitted to CREST as a CREST sponsor;

“CREST sponsored member” a CREST member admitted to CREST as a sponsored member;

298


“Daily Official List” the daily record setting out the prices of all trades in shares and

other securities conducted on the London Stock Exchange;

“Directors” the directors of AVEVA and “Director” means any one of them;

the disclosure guidance and transparency rules of the FCA made

pursuant to Part VI of FSMA;

“document” this combined prospectus and circular (including any annexes), as

approved by the FCA as a prospectus;

“EBT” the employee trust established on 12 July 2008 between AVEVA

and Appleby Trust (Jersey) Limited (now renamed Estera (Jersey)

Limited);

“EEA” the European Economic Area;

“EEA State” a member state of the EEA;

“Enlarged Group” the AVEVA Group as enlarged by the Acquisition;

“Enlarged Share Capital” the issued ordinary share capital of the Company following the

Acquisition;

“EPC” Engineering, Procurement, and Construction;

“Equity Financing Deed” the equity financing deed entered into on 25 August 2020 between

the Company, Schneider Electric, J.P. Morgan Securities plc,

Barclays, BNP Paribas Fortis SA/NV and Numis;

“ERP” Enterprise Resource Planning;

“Estudillo” Estudillo Holdings Corp.;

“Euroclear” Euroclear UK & Ireland Limited;

“Ex-Rights Date” the date on which the Ordinary Shares are expected to commence

trading ex-rights, being 8.00 a.m. on 25 November 2020;

“Excluded Shareholders” subject to certain exceptions, Shareholders who have registered

addresses in, who are incorporated in, registered in, or otherwise

resident or located in, any Excluded Territory;

“Excluded Territories” Australia, Canada, New Zealand, Japan, Singapore, South Africa

and any other jurisdiction (other than the United States) where the

extension or availability of the Rights Issue (and any other

transaction contemplated thereby) would breach any applicable law

or regulation, and Excluded Territory shall be construed

accordingly;

“Executive Directors” the executive directors of the Company from time to time, which at

the date of this document are Craig Hayman and James Kidd;

“Existing Ordinary Shares” the Ordinary Shares of 35/9 pence each in the capital of the Company

in issue immediately prior to the Rights Issue;

“Existing Shareholders” the holders of Ordinary Shares;

“FA Lenders” Barclays, BNP Paribas Fortis SA/NV and J.P. Morgan Securities

plc;

“Facilities” the Bridge Facilities and the Revolving Facility;

“Disclosure Guidance and

Transparency Rules”

299


“Facilities Agreement” the English law governed multicurrency bridge, term and revolving

credit facilities agreement dated 25 August 2020 between, among

others, Barclays, BNP Paribas Fortis SA/NV and J.P. Morgan

Securities plc as mandated lead arrangers, bookrunners and

underwriters, Barclays as agent, certain financial institutions named

therein as lenders and AVEVA and certain of its subsidiaries as

borrowers, a summary of which is contained in Section 9.1(e) of

Part XIV (Additional Information) of this document;

“Facility A” Facility A as defined in, and made available under, the Facilities

Agreement;

“Facility B” Facility B as defined in, and made available under, the Facilities

Agreement;

the Financial Conduct Authority of the UK;

“Form of Proxy” the form of proxy which accompanies this document for use at the

General Meeting;

“Forward Rate” the average contracted forward rate under the deliverable forward

currency contracts entered into by AVEVA, as described in

paragraph 9.1(n)(xi) of Part XIV (Additional Information) of this

document, as follows: $1.00: £0.7693 and £1.00: $1.2999;

“FSMA” the Financial Services and Markets Act 2000, as amended;

“Fully Paid Rights” rights to acquire Rights Issue Shares (fully paid);

“FY 2018” the AVEVA financial year ended 31 March 2018;



“FY 2021” the AVEVA financial year ending 31 March 2021;

“General Meeting” the general meeting of the Company to be held at 9.30 a.m. on

24 November 2020 or any adjournment thereof, to consider and, if

thought fit, to approve the Resolution notice of which is set out at

the end of this document;

“H1 2020” the six month period ended 30 September 2019;

“H1 2021” the six month period ended 30 September 2020;

“HMI/SCADA” Human Machine Interface and Supervisory Control and Data

Acquisition;

“HMRC” Her Majesty’s Revenue and Customs;

“IFRS” International Financial Reporting Standards as adopted by the

European Union;

“IIoT” Industrial Internet of Things;

“ISIN” international securities identification number;

“J.P. Morgan Cazenove” J.P. Morgan Securities plc which conducts its UK investment

banking business as J.P. Morgan Cazenove;

“Joint Bookrunners” Numis, J.P. Morgan Cazenove, Barclays and BNP PARIBAS;

“Financial Conduct Authority”

or “FCA”

300


“Joint Global Co-ordinators” Numis and J.P. Morgan Cazenove;

“Latest Practicable Date” 5 November 2020, being the latest practicable date prior to the

publication of this document;

“Lazard” Lazard & Co., Limited;

“Link Group” a trading name of Link Market Services Limited;

“Listing Rules” the listing rules of the FCA made pursuant to Part VI of FSMA, as

amended;

“London Stock Exchange” or “LSE” the London Stock Exchange plc;

“MAR” Regulation (EU) No 596/2014 of the European Parliament and of

the Council of 16 April 2014 on market abuse, in the form retained

in the English law and as amended from time to time;

“Mitsui” MDT Holding, Inc.;

“Money Laundering Regulations” the Money Laundering, Terrorist Financing and Transfer of Funds

(Information on the Payer) Regulations 2017, as amended;

“MTM Instruction” a many-to-many instruction which allows two CREST members to

settle up to four movements of securities and create up to two

assured payment obligations at the same time;

“New AVEVA Shares” the Consideration Shares and the Rights Issue Shares;

“Nil Paid Rights” rights to acquire Rights Issue Shares (nil paid);

“Nomination Committee” the nomination committee of the Company established by the

Board;

“Non-Executive Directors” the non-executive directors of the Company from time to time,

which at the date of this document are Philip Aiken AM,

Christopher Humphrey, Jennifer Allerton, Ron Mobed, Paula

Dowdy, Peter Herweck and Olivier Blum;

“Notice of General Meeting” the notice of General Meeting contained in this document;

“Numis” Numis Securities Limited;

“OCS” the OSIsoft Cloud software;

“OEM” original equipment manufacturer;

“Official List” the official list maintained by the FCA;

“Ordinary Shares” ordinary shares of 35⁄9 pence each in the capital of the Company;

“OSIsoft” OSIsoft, LLC, a Delaware limited liability company;

“OSIsoft 2019 Interim Period” the seven month period ended 31 July 2019;

“OSIsoft 2020 Interim Period” the seven month period ended 31 July 2020;

“OSIsoft FY 2017” the OSIsoft financial year ended 31 December 2017;



“OSIsoft Group” OSIsoft and its subsidiary undertakings from time to time;

301


“Outside Date” has the meaning given to it in Section 8 of Part II (Principal Terms

of the Acquisition) of this document;

“Overseas Shareholders” Shareholders who are not resident in the United Kingdom or who

are citizens, residents or nationals of a country other than the United

Kingdom or who have a registered address which is not in the

United Kingdom. For the avoidance of doubt, Shareholders who are

not resident in the United Kingdom include Shareholders who are

resident in the Channel Islands or the Isle of Man;

“Permitted US Shareholders” Qualifying Shareholders resident in the United States permitted by

AVEVA to participate in the Rights Issue (which for these purposes,

where a Qualifying Shareholder holds as nominee, may be either

the Qualifying Shareholder or the person for whom it is acting,

directly or indirectly, as nominee);

“PFIC” passive foreign investment company;

“PI System” the OSIsoft Plant Information System;

“PK Employment Agreement” the employment agreement dated 25 August 2020 and made

between the Company, OSIsoft and Dr. J. Patrick Kennedy, a

summary of which is contained in Section 9.1(l) of Part XIV


“PRA” the Prudential Regulation Authority of the UK;

“Prospectus Regulation” Regulation (EU) 2017/1129 of the European Parliament and

Council on the prospectus to be published when securities are

offered to the public or admitted to trading on a regulated market,

and repealing Directive 2003/71/EC, as amended from time to time;

“Prospectus Regulation Rules” the prospectus rules made by the FCA pursuant to section 73A of

FSMA;

“Provisional Allotment Letter” the provisional allotment letter to be issued to Qualifying Non-

CREST Shareholders;

“Purchasers” US Bidco and US Newco;

“QIB” a “qualified institutional buyer” within the meaning of Rule 144A

under the Securities Act;

“QIB Representation Letter” the letter executed by a QIB and delivered to the Company,

certifying that, among other things: (a) it is a QIB and (b) it will

only offer, sell, transfer, assign, pledge or otherwise dispose of the

Rights Issue Shares in transactions exempt from, or not subject to,

the registration requirements of the Securities Act and in

compliance with applicable securities laws;

“Qualifying CREST Shareholders” Qualifying Shareholders holding Ordinary Shares on the register of

members of the Company on the Rights Issue Record Date which

are in uncertificated form;

Qualifying Shareholders holding Ordinary Shares on the register of

members of the Company on the Rights Issue Record Date which

are in certificated form;

“Qualifying Shareholders” holders of Ordinary Shares who are on the Company’s register of

members at the Rights Issue Record Date;

“Qualifying Non-CREST

Shareholders”

302


“R&W Policy” the representations and warranties insurance policy in relation to the

Stock and Unit Purchase Agreement dated 25 August 2020;

“RCF” the revolving multicurrency credit facility of up to £100 million

made available to the AVEVA Group under the RCF Agreement;

“RCF Agreement” the English law governed multicurrency revolving credit agreement

dated 5 September 2017 between, amongst others, the RCF Lenders

as original lenders and Barclays as agent;

“RCF Lenders” Barclays and Santander UK plc;

“Receiving Agent” Link Group;

“Registrar of Companies” the Registrar of Companies in England and Wales;

“Registrars” Link Group;

a regulatory information service as defined in the Listing Rules;

“Regulation S” Regulation S under the Securities Act;

“Related Party Transaction” has the meaning ascribed to it in paragraph 9 of IAS 24, being the

standard adopted according to Regulation (EC) No. 1606/2002;

“Relationship Agreement” the relationship agreement between AVEVA and Schneider Electric

dated 1 March 2018 (as amended on 15 March 2019);

“Remuneration Committee” the remuneration committee of the Company established by the

Board;

“Resolution” the resolution to be proposed at the General Meeting which are set

out in the Notice of General Meeting at the end of this document;

“Revolving Facility” the Revolving Facility as defined in, and made available under, the

Facilities Agreement;

“Rights Issue” the offer by way of rights to Qualifying Shareholders to acquire

Rights Issue Shares on the terms and conditions set out in this

document and, in the case of Qualifying Non-CREST Shareholders

only, the Provisional Allotment Letter;

“Rights Issue Admission” the admission of the Rights Issue Shares (nil paid) to the premium

listing segment of the Official List becoming effective in

accordance with the Listing Rules and to trading on the London

Stock Exchange’s main market for listed securities becoming

effective in accordance with the Admission and Disclosure

Standards;

“Rights Issue Price” 2,255 pence per Rights Issue Share;

“Rights Issue Record Date” close of business on 20 November 2020;

“Rights Issue Shares” the Ordinary Shares proposed to be issued by the Company

pursuant to the Rights Issue;

“Risk Factors” the risk factors set out on pages 14 to 43 of this document;

“Rule 144A” Rule 144A under the Securities Act;

“SaaS” Software as a Service;

“Regulatory Information

Service”

303


“Santander” Banco Santander S.A.;

“Schneider Combination” the acquisition by the AVEVA Group of the Schneider Electric

Software Business on 1 March 2018;

“Schneider Electric” Schneider Electric SE;

“Schneider Electric Director(s)” the Non-Executive Director(s) nominated for appointment to the

Board by Schneider Electric in accordance with the Relationship

Agreement;

“Schneider Electric Group” Schneider Electric and its subsidiary undertakings from time to

time;

the industrial software businesses acquired by AVEVA from

Schneider Electric in March 2018;

the reorganisation of the Schneider Electric Group in order to

transfer Schneider Electric Software Business (including all its

assets and liabilities) from the Schneider Electric Group companies

conducting that business to separate entities that were contributed to

the AVEVA Group as part of the Schneider Combination;

“SDRT” Stamp Duty Reserve Tax;

“SEC” the United States Securities and Exchange Commission;

“Securities Act” the United States Securities Act of 1933, as amended;

“SEDOL” Stock Exchange Daily Official List;

“Sellers” Estudillo Holdings Corp., SB/OSI, Inc. and MDT Holding, Inc.;

“Senior Management” Andrew McCloskey, Ravi Gopinath, Steen Lomholt-Thomsen,

David Ward and Lisa Johnston;

“Shareholder” a holder of Ordinary Shares;

“SoftBank” SoftBank Vision Fund (AIV M1) L.P.;

“SoftBank Blocker” SB/OSI, Inc.;

“Sponsor” Numis;

“sterling” or “pounds sterling” the lawful currency of the United Kingdom;

the conditional agreement dated 25 August 2020 and made between

AVEVA, the Sellers and OSIsoft, a summary of the principal terms

and conditions of which is set out in Part I (Letter From the

Chairman of AVEVA Group plc) of this document;

“subsidiary” has the meaning given in section 1159 of the Companies Act;

“subsidiary undertaking” has the meaning given in section 1162 of the Companies Act;

“Support Agreement” the voting and support agreement entered on 25 August 2020

between AVEVA, OSIsoft and Schneider Electric and sets out the

terms on which Schneider Electric has irrevocably agreed to vote in

favour of the Resolution;

“Term Facility” the Term Facility as defined in, and made available under, the Term

Facility Agreement;

“Stock and Unit Purchase

Agreement”

“Schneider Pre-Closing

Reorganisation”

“Schneider Electric Software

Business”

304


“Term Facility Agreement” the English law governed term facility agreement dated 9 October

2020 between, among others, Schneider Electric as lender and

AVEVA and certain of its subsidiaries as borrowers, a summary of

which is contained in Section 9.1(f) of Part XIV (Additional

Information) of this document;

“TIDM” Tradable Instrument Display Mnemonic;

“TSA” the transitional services agreement dated 5 September 2017 and

made between AVEVA and Schneider Electric Industries SAS, a

Schneider Electric Group entity, as amended by an amendment

dated 27 February and an amendment dated 31 January 2020, a

summary of which is contained in Section 9.1(m) of Part XIV


“UK” or “United Kingdom” the United Kingdom of Great Britain and Northern Ireland;

has the meaning given to it in Section A of Part XI (Unaudited Pro

Forma Financial Information of the Enlarged Group) of this

document;

in relation to a share or other recorded security, a share or other

security title to which is recorded on the relevant register as being

held in uncertificated form (that is, in CREST) and title to which

may be transferred by means of CREST;

“Underwriters” Numis, J.P. Morgan Cazenove, Barclays, BNP PARIBAS and

Santander;

“Underwriting Agreement” the underwriting agreement dated the same date as this document

and made between the Company, the Underwriters and the Sponsor,

a summary of which is contained in Section 9.1(d) of Part XIV


the United States of America, its territories and possessions, any

state of the United States of America and the district of Columbia;

“US Bidco” AVEVA US 1 Corp., a Delaware corporation and indirect wholly

owned subsidiary of the Company;

“US GAAP” the Generally Accepted Accounting Principles, the accounting

standard adopted by the SEC;

“US Newco” AVEVA US 2 Corp., a Delaware corporation and indirect wholly

owned subsidiary of the Company; and

“VAT” value added tax.

“uncertificated” or “in

uncertificated form”

“Unaudited Pro Forma

Financial Information”

“United States” or “US”

305


NOTICE OF GENERAL MEETING

AVEVA GROUP PLC

(incorporated and registered in England and Wales with registered number 02937296)

NOTICE IS HEREBY GIVEN that a General Meeting of AVEVA Group plc (the “Company”) will be held

at AVEVA Group plc, 30 Cannon Street, London, EC4M 6AH at 9.30 a.m. on 24 November 2020 for the

purposes of considering and, if thought fit, passing the following resolution as an ordinary resolution.

1. THAT

(a) the proposed acquisition of OSIsoft, LLC to be effected by the Company as described in the combined

circular and prospectus to shareholders of the Company dated 6 November 2020 of which the Notice

convening this General Meeting forms part, a copy of which has been produced to the meeting and

initialled by the Chairman of the meeting for the purposes of identification only (the “Combined

Circular and Prospectus”), on the terms and subject to the conditions of the Stock and Unit Purchase

Agreement (as defined in the Combined Circular and Prospectus) and the associated and ancillary

arrangements contemplated by the Stock and Unit Purchase Agreement, be approved, and the

directors of the Company (the “Directors”) be authorised to take all such steps as may be necessary,

expedient or desirable in relation thereto and to carry the same into effect with such modifications,

variations, revisions, waivers or amendments (providing such modifications, variations, revisions,

waivers or amendments do not materially change the terms of the proposed acquisition for the

purposes of FCA’s Listing Rule 10.5.2) to such agreements or any documents relating thereto as they

shall deem necessary, expedient or desirable;

(b) in addition to all existing authorities, the Directors be generally and unconditionally authorised,

pursuant to and in accordance with section 551 of the Companies Act 2006, as amended (the “Act”),

to exercise all the powers of the Company to allot shares and to grant rights to subscribe for or to

convert any security into shares in the Company up to an aggregate nominal amount (within the

meaning of section 551(3) and (6) of the Act) of £5,000,000 pursuant to or in connection with the

Acquisition and/or the Rights Issue (each as defined in the Combined Circular and Prospectus), such

authority to expire on 1 September 2021 (save that the Company may before such expiry make any

offer or agreement which would or might require shares to be allotted or rights to be granted after such

expiry and the Directors may allot shares or grant rights to subscribe for or convert any security into

shares pursuant to any such offer or agreement as if such authority had not expired); and

(c) sanction be given, pursuant to Article 94.2 of the Company’s articles of association, to the Directors

to permit the aggregate amount for the time being remaining outstanding of all monies borrowed

(within the meaning of Article 94.3) by the Group (as defined in Article 94.2) and for the time being

owing to persons outside the Group, after deducting Cash Deposited (as defined in Article 94.6) (“Net

External Borrowings”) to exceed the limit imposed by Article 94.2 provided that this sanction shall

not extend to permit the Net External Borrowings to exceed the limit stated in Article 94.2, were

Article 94.2 modified so that, for the reference in Article 94.2 to “the total of the capital and revenue

reserves of the Group (including”, there were substituted “the total reserves of the Group (including

any merger reserve, reverse acquisition reserve,”; and, for the reference in Article 94.2 to “issued

share capital or reserves (including”, there were substituted “issued share capital or reserves

(including merger reserve, reverse acquisition reserve,”.

By Order of the Board.

David Ward

Finance Director and

Company Secretary

6 November 2020

Registered office

High Cross

Madingley Road

Cambridge

CB3 0HB

306


Notes:

1. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001 and section 360B of the Companies Act 2006, the

Company specifies that in order to have the right to attend and vote at the General Meeting (and also for the purpose of

determining how many votes a person entitled to attend and vote may cast), a person must be entered on the register of members

of the Company at 6.00 p.m. on 20 November 2020 or, in the event of any adjournment, at 6.00 p.m. on the date which is two

days before the day of the adjourned meeting. Changes to entries on the register of members after this time shall be disregarded

in determining the rights of any person to attend or vote at the meeting.

2. A member is entitled to appoint another person as his/her proxy to exercise all or any of his/her rights to attend, to speak and to

vote at the General Meeting. A member may appoint more than one proxy in relation to the meeting, provided that each proxy is

appointed to exercise the rights attached to a different share or shares held by him/her. A proxy need not be a member of the

Company. A form of proxy for the meeting is enclosed.

To be valid any proxy form or other instrument appointing a proxy must be received by post or by hand (during normal business

hours only) by our registrar Link Group at PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF or electronically at

www.signalshares.com, in each case no later than 9.30 a.m. on 20 November 2020.

If you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity platform, a process

which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go

to www.proxymity.io. Your proxy must be lodged by no later than 9.30 a.m. on 20 November 2020 in order to be considered valid.

Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It

is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your

proxy.

If you are a CREST member, see note 3 below.

In response to the COVID-19 pandemic, the UK Government has introduced a number of measures in England aimed at

controlling the spread of the COVID-19 virus. Protecting the welfare of the Company’s Shareholders and employees is of

paramount importance and therefore the Board has decided to prohibit Shareholders attending in person at the General Meeting,

with the exception of the minimum number of directors or managers as Shareholders/proxy holders needed to form a quorum.

Further, other Shareholders may participate in the General Meeting only by voting by proxy by appointing the “Chairman of the

meeting” as their proxy, in view of the restrictions on attendance at the General Meeting. Further updates may be provided on

the Company’s website at https://investors.aveva.com/, if necessary. Please check this page for updates.

3. Alternatively, if you are a member of CREST, you may register the appointment of a proxy by using the CREST electronic proxy

appointment service. Further details are contained below.

CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so

for the General Meeting and any adjournment(s) thereof by using the procedures, and to the address, described in the CREST

Manual (available via www.euroclear.com/CREST) subject to the provisions of the Company’s articles of association. CREST

personal members or other CREST sponsored members, and those CREST members who have appointed a voting service

provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action

on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a

“CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK and Ireland Limited’s

(“Euroclear”) specifications and must contain the information required for such instructions, as described in the CREST Manual.

The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a

previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuer’s agent (RA10) by the

latest time(s) for receipt of proxy appointments specified above. For this purpose, the time of receipt will be taken to be the time

(as determined by the time stamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able

to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to

proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear does not

make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore

apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or,

if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to

procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message

is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable,

their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning

practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the

Uncertificated Securities Regulations 2001.

4. In the case of joint holders of a share, the vote of the senior holder who votes, whether in person or by proxy, shall be accepted

to the exclusion of the votes of the other joint holders, and for this purpose, seniority shall be determined by the order in which

the names stand in the register of members in respect of the share.

307


5. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy

information rights (a “Nominated Person”) may have a right, under an agreement between him/her and the member by whom

he/she was nominated, to be appointed (or to have someone else appointed) as a proxy for the General Meeting. If a Nominated

Person has no such proxy appointment right or does not wish to exercise it, he/she may have a right, under such an agreement,

to give instructions to the member as to the exercise of voting rights.

6. The statement of the above rights of the members in relation to the appointment of proxies does not apply to Nominated Persons.

Those rights can only be exercised by members of the Company.

7. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its

powers as a member provided that they do not do so in relation to the same shares.

8. Any member attending the General Meeting has the right to ask questions. The Company must cause to be answered any such

question relating to the business being dealt with at the meeting but no such answer need be given if: (a) to do so would interfere

unduly with the preparation for the meeting or involve the disclosure of confidential information; (b) the answer has already been

given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the company or the good

order of the meeting that the question be answered. Members who are not attending the General Meeting can ask questions or

raise matters of concern as a Shareholder in advance of the General Meeting by emailing [email protected] with

the subject line “General Meeting November 2020” so that it is received no later than 9.00 a.m. on 17 November 2020.

9. A copy of this notice, and other information required by section 311A of the Companies Act 2006, can be found at

https://investors.aveva.com.

10. As at 5 Nove mber 2020 (being the Latest Practicable Date) the Company’s issued share capital consists of 161,665,453 Ordinary

Shares, carrying one vote each. Therefore, the total voting rights in the Company as at that date are 161,665,453.

11. You may not use any electronic address (within the meaning of section 333(4) of the Companies Act 2006) provided in this

Notice of Meeting (or in any related documents including this document and the Form of Proxy) to communicate with the

Company for any purposes other than those expressly stated.

308


(This page has intentionally been left blank.)


309

(This page has intentionally been left blank.)

310



sterling 174183