richard longdon chief executive chief financial officer .../media/aveva/english/... · pdms...
TRANSCRIPT
Results for the year ended 31 March 2013
Richard Longdon – Chief Executive James Kidd – Chief Financial Officer Derek Brown – Head of Investor Relations
Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Safe Harbor Statement
During (and in this) presentation we make forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from any future results or developments expressed or implied from the forward-looking statements. Each forward-looking statement speaks only as of today and save to the extent required by the applicable law or regulation, we do not undertake any obligation to update or renew any forward-looking statement.
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Richard Longdon Chief Executive
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Strategic highlights
Record results, another year of double-digit organic growth
Major milestone achieved with Enterprise Solutions moving into profitability for the first time
Successful launch of AVEVA Everything3D™ (AVEVA E3D™)
Further expanded Engineering & Design Systems footprint with new products
Stepped up investment in India with new R&D facility
Announced the intention to return £100 million to shareholders via a special dividend, representing half of cash
Retain significant cash balance and the flexibility and headroom
to continue to pursue acquisition opportunities
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Oil & Gas
Power
Marine
Other
Fundamental drivers
Oil & Gas Power Marine
Other markets
Size and complexity of projects continues to increase
Regulatory, compliance, health & safety
Industry CAPEX now > $1 trillion*
EPC backlogs remain strong
Global energy demand to rise by 36% 2011-2030**
Investment in nuclear in China and India
Continued CAPEX on conventional power
Korean yards now seeing >50% of backlog from offshore
Commercial shipbuilding weak, particularly affecting China
Naval shipbuilding and drive to fuel efficiency are areas of some activity
New industry specific applications for Metals & Mining
Chemical & Petrochemical
Pulp & Paper
Pharmaceutical *Global Data, Oil & Gas
Capital Expenditure
Outlook H1 2012
**BP Global Energy Outlook 2030, Jan 2013
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
AVEVA – global operational performance
Americas Brazil weakness affected Latin America Good progress in Canada The US an area of renewed focus in 2013/14
EMEA Key customers are very busy Benefit from the strong performance in ES Strong rental renewals
Asia Pacific Particular strength in SEA, and strong growth in India Key strategic win with CNPC Japan and Korea steady performance
• 48 offices in 30 countries
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
EDS - Engineering & Design Systems
Continued strong growth
Brazil impact offset by other fast growing markets
Successful launch of AVEVA E3D
Focus on driving sales of AVEVA E3D to new customers to gain market share
Upfront investment in technical sales
Image Courtesy of RuzGazEngineering. © Copyright RGE Group
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
EDS – Customer examples
Lesedi Nuclear Services (PDMS, Instrumentation, Diagrams)
JPNOR Engenharia (Integrated Engineering & Design)
Synergy Engineering (Laser Modeller) – Brownfield modification
EDF (Diagrams and Schematics)
PAENAL Yard (AVEVA Marine) - Offshore steelwork and outfitting
Image Courtesy of EDF. © Copyright EDF
Oil & Gas
Power
Marine
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
ES - Enterprise Solutions
Major milestone with move into profitability
Tight cost control, improved delivery model
Improved service utilisation
Further penetration into the OOs, additional momentum via upsell to EPCs
Software/service mix improved to 55/45 (2012: 51/49)
Image Courtesy of AMEC. © Copyright AMEC
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
ES – Customer examples
Meta Petroleum (AVEVA NET) – Owner Operator
AMEC (EAM) – EPC
Jinling Shipyard (AVEVA NET) – Multi-site collaborative shipbuilding
Sredne Nevsky (AVEVA ERM) – Planning and optimisation
ADMA OPCO (AVEVA NET) – Owner Operator
Image Courtesy of AMEC. © Copyright AMEC
Oil & Gas
Marine
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
- The opportunity
Higher list price
Offset of PDMS licences
Greater efficiency
Expanded user footprint
Positive effect as AVEVA E3D starts at 15% above current PDMS list price
Most AVEVA customers have not paid list price, with different discounts depending on volumes and longevity of contract
The true revenue uplift is the delta in price between AVEVA E3D
and PDMS licences
AVEVA E3D is on average 25-30% more efficient than competing products, so customers could use fewer licences
AVEVA E3D has more functionality which extends into new user areas, resulting in the potential for additional seats e.g. 2 drafting, cloud applications, etc.
Volume discounts will still apply to AVEVA E3D
Typically technology improvements have driven increased use of design tools
Multiple variables will affect migration from PDMS to AVEVA E3D
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
- Migration to AVEVA E3D over the long term
5-8 year time frame
Evaluation/early adoption on new projects
Large EPCs begin to standardise Efficiency gains create competitive advantage Key reference accounts
AVEVA E3D feeds through into EPC ecosystem and market share gains accrue Mandates from OOs AVEVA E3D platform begins to enable new business models, for example the cloud, generating additional seats
Some long term projects remain on PDMS, these subside over time
PDMS remains integral amongst some of the most cautious customers
Emerging markets adoption
x
y
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
Rate and phases of adoption…
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
- Conservative target market
Existing customer…
• Attracted to evaluate by efficiency benefits
• Strategic decision to adopt for new projects
• Long sales cycle
• Takes evaluation licences
• Mixed environment with ongoing migration
• Difficult to predict timing to full adoption
New customer…
“AVEVA E3D ‘go to market’ strategy: drive sales to new
accounts – market share gains”
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
- The financial model
Higher list
price
Push for more
rentals
New
commercial
agreement –
adds time to
sales process
Fewer
discounts
Aggressive
anti-piracy
Investment
in technical
sales and
winning
market share
AVEVA E3D
more intuitive
– potentially
less training
required
AVEVA E3D
is an ongoing
R&D project
– Cloud, etc.
Implications for the financial model
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
- tracking success
Adoption
within PDMS
installed
base
% penetration
100%
0%
Number
of new
seats won
# of new seats won
n
0
PDMS installed base Engineering Design
Tools market
We are focused on driving market share gains over the long term
The pay-as-
you-go ‘token’
licences are a
grey area as
they are not
‘seat’ based
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
James Kidd CFO
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Financial highlights
March 2013
March 2012
Total revenue £220.2m £195.9m 12%
Underlying revenue (ex acquisitions, constant currency) £218.9m £194.6m 12%
Adjusted* profit before tax £70.7m £62.3m 13%
Adjusted* basic EPS (pence) 74.87p 63.81p 17%
Adjusted profit before tax margin 32.1% 31.8%
Final dividend per share (pence) 19.5p 17.0p 15%
Special dividend £100m -
Net cash £190.4m £179.0m 6%
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Summary income statement (statutory)
March 2013 £m
March 2012 £m
Total revenue 220.2 195.9 12%
Cost of sales (16.1) (16.1)
Research and Development costs (35.5) (32.1) 11%
Selling and distribution expenses (87.6) (75.0) 17%
Administrative expenses (18.6) (16.2) 15%
Net interest receivable 1.2 1.2
Normalised items 7.1 4.6
Adjusted profit before tax 70.7 62.3 13%
Reported profit before tax 63.6 57.7
Income tax (18.1) (17.7)
Profit after tax 45.5 40.0
Adjusted profit margin 32.1% 31.8%
Adjusted basic EPS 74.87p 63.81p 17%
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Summary balance sheet
March 2013 £m
March 2012 £m
Non-current assets 82.1 62.3
Accounts receivable (net of provision £4.8m (2012 - £3.4m) 74.1 63.7
Other receivables 8.0 5.1
Net cash and deposits 190.4 179.0
Total assets 354.6 310.1
Other liabilities 49.4 45.2
Deferred revenue 36.6 33.5
Pension liabilities 17.0 9.9
Shareholders’ equity 251.6 221.5
Total shareholders’ equity and liabilities 354.6 310.1
Debtors increased due to strong Q4
Deferred revenue up 9%
Pension deficit increased due to discount rate
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Underlying revenue growth Headline revenue +12%
Organic, constant currency revenue +12%
– 1.7% negative impact from currency (principally the Euro)
– 2.3% from acquisition (Bocad = 10 months contribution)
£m
195.9
218.9
5.1 - 3.8
180
185
190
195
200
205
210
215
220
225
230
Reported Revenue 2011/12
Organic c/c Revenue 2012/13
Bocad FX Reported Revenue 2012/13
220.2
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
54.4
98.8
42.4
24.6 220.2
0
50
100
150
200
250
Annual fees Rental fees Initial licence fees Services Total revenue
£m
47.8
90.1
37.3
20.7
+14%
+10%
+14%
+19% +12%
195.9
20
12
20
13
Revenue by category Recurring revenue +11%,
70% of total sales
Rental licence income +10%, steady at 51% of software revenue
Annual fees +14%
Initial fees +14%
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Profit analysis New products require
investment in sales technical, product strategy & marketing
Just over half the Op Ex increase relates to inflation
Annualised impact will be seen in 2013/14
Some further areas of investment planned
62.3
19.1 - 8.8
- 1.5
- 0.4 70.7
55
60
65
70
75
80
85
90
31-Mar-12 Additional revenue
Additional Op EX
Additional Bad debt charge
Bocad loss
31-Mar-13
£m
Sales technical, product strategy
Expansion in regions, Owner Operators
Office investment & other cost increases
Key to Op Ex
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Engineering & Design Systems
March 2013 £m
March 2012 £m
Revenue 189.5 172.5 10%
Annual fees 49.0 43.1 14%
Rental licence fees 93.3 86.9 7%
Recurring revenue 142.3 130.0
Initial licence fees 36.3 33.2 9%
Services 10.9 9.3 17%
Total revenue 189.5 172.5 10%
Operating costs (45.4) (39.0) 16%
Contribution 144.1 133.5 8%
EDS organic constant currency growth 9%
Rental growth driven by global EPCs, weakness in Brazil
Investment in product strategy/marketing and sales technical resources
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Enterprise Solutions
Backlog £14.7m (2012 - £12.7m)
Software/service mix improved to 55%/45% (2012 – 51%/49%)
Focus on R&D, service delivery and sales capture delivering cost benefits
March 2013 £m
March 2012 £m
Revenue 30.7 23.5 31%
Annual fees 5.3 4.7 13%
Rental licence fees 5.5 3.3 67%
Recurring revenue 10.8 8.0
Initial licence fees 6.2 4.1 51%
Services 13.7 11.4 20%
Total revenue 30.7 23.5 31%
Operating costs (28.7) (27.9) 3%
Contribution 2.0 (4.4)
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
EMEA –benefit from ES growth, global EPCs and strong performance in Russia & Middle East
Americas – progress with large EPCs, decline in Brazil
Asia driven by strong performance in China and India
AVEVA – global performance
Americas
£39.3m (2012 - £38.2m)
Growth 3%
EMEA
£107.6m (2012 - £93.3m)
Growth 15%
Asia Pacific
£73.3m (2012 - £64.4m)
Growth 14%
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Movements in net cash position
Operating cash conversion
at 97%
£12.5 million net cost of
acquisitions
Dividend +14% over prior
year
179.0
60.3 - 19.6
- 4.5
- 12.5
-14.6
2.3 190.4
160
170
180
190
200
210
220
230
240
250
Net cash 31-Mar-12
Cash from
operations Tax Cap Ex Acquisitions
(net) Dividend FX/Other Net cash
31-Mar-13
£m
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Return of capital
Focused on delivering shareholder value
Intention to return £100 million via special dividend
This represents £1.46 per share
AGM approval – 9 July
Flexibility to pursue acquisitions
• Post dividend net cash c.£100m • Post-tax cash generation £40m +
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Outlook
Extending technology and thought leadership
– AVEVA E3D and new product pipeline
Focused and disciplined approach to acquisitions
Drive profitable expansion in Enterprise Solutions
Broad exposure across multiple growth markets
High recurring revenues
Sustainable growth
Continued investment in business
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Appendices
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Summary cash flow
March 2013 £m
March 2012 £m
Net cash from operating activities 60.3 64.7
Tax paid (19.6) (16.9)
Capital expenditure (net) (4.5) (3.1)
Acquisitions (12.5) (5.7)
Interest received (net) 1.6 1.4
Purchase of own shares (0.6) (0.6)
Dividends paid (14.6) (12.8)
Net increase in cash 10.1 27.0
Foreign exchange movement 1.3 (1.2)
Opening cash and deposits 179.0 153.2
Closing cash and deposits 190.4 179.0
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Investor communications calendar
Trading updates AVEVA will no longer automatically issue trading updates in October/April prior to the interims/prelims. AVEVA plans to provide updates to the market as follows: Financial year 2013/14 July 2013 Interim Management Statement
November 2013 Interim results
January 2014 Interim Management Statement
May 2014 Preliminary results
Other events September 2013 Investor/analyst briefing in Houston, TX November 2013 Annual Capital Markets Day, London
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
AVEVA products and competitive landscape
ASPEN
HEXAGON
BENTLEY
DASSAULT
SIEMENS
ASPEN
SIEMENS
Conceptual Design FEED
Detailed Design
Construction & Commissioning Operations Decommissioning
BENTLEY
HEXAGON
Engineering Design Systems
DASSAULT
SAP
IN-HOUSE SOLUTIONS
IN HOUSE SOLUTIONS POINT SOLUTIONS
Project phase 2-6 years (c.$1.6 billion) Operations phase up to 50 years (>$2 billion)
AUTODESK
Enterprise Solutions
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Copyright © 2013 AVEVA Solutions Limited and its subsidiaries. All rights reserved.
Definition of terms
Item Definition
Initial Licence Fee Initial Licence Fee (ILF) - users are charged an initial licence fee per seat together with an obligatory annual fee.
Annual Fee Charged in association with an ILF providing customer support and maintenance, which includes core updates. Users must pay the annual fee in order to maintain the right to use the software.
Rental licence model An alternative to the ILF plus annual fee model, there are three different types of rental licence: Monthly invoicing, contractual period (typically one year, invoiced up front) or token licensing.
Token-based licensing The user pays for a 'basket of tokens' representing licences to use different software products over a defined period of time. The customer can draw down on these licences as required.
Revenue recognition
ILFs – recognised upfront after usual delivery and acceptance conditions are met. Annual fees – recognised ratably over the period (typically 12 months). Rental licences - an estimated licence element is recognised up front, and the remaining maintenance element is recognised ratably over the contracted period. Services are recognised on a percentage complete basis.
Revenue by geography The sales force is organised into three geographic regions. Revenue is allocated based on where the contracting entity of the customer is based. AVEVA's global accounts often choose to purchase software in one geography for use in another.
Recurring revenue Annual fees plus rental fees.
Adjusted PBT Profit Before Tax adjusted to exclude the effects of amortisation of intangibles (excluding software), share-based payments, gain/loss on fair value of forward foreign exchange contracts and exceptional items.
Adjusted EPS Adjusted PBT is used to calculate the adjusted earnings per share, after an adjustment for the tax effect of the items adjusted.
Cash conversion Cash flow from operations divided by the operating profit for the period, measured as a percentage.
Enterprise Solutions backlog Contracted Enterprise Solutions revenue that has not yet been recognised but which is expected to be recognised in the next 12 months. Revenue backlog also includes 12 months of annual fees.
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