TIDMAVV
RNS Number : 0666Z
AVEVA Group PLC
24 May 2016
24 May 2016
AVEVA GROUP PLC
PRELIMINARY RESULTS FOR THE YEARED 31 MARCH 2016
AVEVA Group plc ('AVEVA'; stock code : AVV), one of the world's
leading providers of engineering data and design IT systems, today
announces its preliminary results for the year ended 31 March
2016.
Financial Highlights
2016 2015 % change
--------------------------- ---------- ---------- ---------
Revenue GBP201.5m GBP208.7m (3%)
--------------------------- ---------- ---------- ---------
Organic constant currency
revenue** GBP204.4m GBP207.6m (2%)
--------------------------- ---------- ---------- ---------
Adjusted* profit before
tax GBP51.2m GBP62.1m (18%)
--------------------------- ---------- ---------- ---------
Profit before tax GBP29.4m GBP54.9m (46%)
--------------------------- ---------- ---------- ---------
Adjusted* profit before
tax margin 25.4% 29.8% (15%)
--------------------------- ---------- ---------- ---------
Basic earnings per share 32.03p 65.07p (51%)
--------------------------- ---------- ---------- ---------
Adjusted* basic earnings
per share 62.04p 74.51p (17%)
--------------------------- ---------- ---------- ---------
Net cash GBP107.9m GBP103.8m 4%
--------------------------- ---------- ---------- ---------
Final dividend per share 30.0p 25.0p 20%
--------------------------- ---------- ---------- ---------
* Adjusted profit before tax, adjusted profit margin and
adjusted basic earnings per share are calculated before
amortisation of intangible assets (excluding other software),
share-based payments, gain/loss on fair value of forward foreign
exchange contracts and exceptional items. In addition, adjusted
basic earnings per share also include the tax effects of these
adjustments.
** Organic constant currency revenue is defined as the period's
reported revenue restated to reflect the previous year's average
exchange rates and excludes the contribution from 8over8 and
FabTrol.
Highlights
-- Results in line with 19 April 2016 trading update: revenue of GBP201.5 million (2015 - GBP208.7
million) and adjusted PBT of GBP51.2 million (2015 - GBP62.1 million)
-- AVEVA benefited from its strong customer relationships, with organic constant currency recurring
revenue at GBP156.3 million (2015 - GBP157.4 million) or 76% of total Group revenue (2015
- 76%)
-- Global account rental renewals in line with expectations in second half of the year, with
price escalation achieved in multi-year contracts
-- Proposed increase in final dividend of 20% to 30.0 pence per share (2015 - 25.0 pence), signalling
the Board's confidence in the outlook whilst leaving significant headroom for strategic acquisitions
-- Highly encouraging performance from AVEVA Everything 3D(TM) (AVEVA E3D(TM)) with an acceleration
in revenue growth in the second half and contributing c.10% of revenue in 2016 (2015 - less
than 5%)
-- Good progress in our initiative to sell our non-3D products (More than 3D), for example double-digit
growth in schematics and continued strong growth in laser modelling
-- Operating cash conversion was 123% (2015 - 83%) with net cash of GBP107.9 million (2015 -
GBP103.8 million) rising to GBP123.5 million at 30 April 2016 following strong cash collection
post year end
Commenting, Chief Executive Richard Longdon said:
"The result for the year has highlighted the strength of the
AVEVA business model, the value that our technology delivers to our
customers and our ability to adapt to changing market conditions
through a disciplined approach to innovation and organisational
efficiency. Whilst we recognise the challenges in our markets, the
Board is confident that we can achieve our targets in the current
financial year and over the medium term."
Enquiries:
AVEVA Group plc
Richard Longdon, Chief Executive
James Kidd, Chief Financial Officer
Derek Brown, Head of Investor Relations
On 24 May 2016 Tel: 020 3727
1000
Thereafter Tel: 01223 556655
FTI Consulting LLP
Edward Bridges / Dwight Burden / Emma Appleton
Tel: 020 3727 1000
Conference call and webcast
AVEVA management will host a conference call and audio-webcast,
for registered participants, at 09:30 (BST) today. The
audio-webcast will be also accessible via the AVEVA website
following the presentation.
To register for the webcast and access the presentation
materials please visit:
http://www.aveva.com/en/Investors.aspx.
Conference calls dial in details:
Telephone: +44 (0) 20 3427 1912
Conference call
code: 3611104
Participants are advised to visit the website at least 15
minutes prior to the commencement of the call in order to register
and, for those accessing the webcast, in order to download and
install any audio software that may be required.
NB: Conference call participants will be able to ask questions
during the Q&A session, but those on the webcast will be in a
listen only mode.
A full replay facility will be made available later in the
day.
Additional information can be accessed at
www.aveva.com/investors or by contacting the AVEVA Investor
Relations team or FTI Consulting LLP directly.
Chairman's statement
Overview
I am pleased to report that AVEVA continued to deliver a solid
performance throughout the course of 2015/16.
The full year results reflect the resilience of the business
model, our longstanding customer relationships and the quality of
the business-critical solutions we provide.
Group revenue was GBP201.5 million (2015 - GBP208.7 million)
which was broadly in line with our expectations against a
challenging market backdrop.
Revenue was impacted by foreign currency headwinds during the
year with sterling strengthening against most major currencies.
After adjusting for currency effects, organic constant currency
revenue declined by 2% compared to 2014/15, a respectable
performance given the market conditions.
Adjusted* profit before tax was GBP51.2 million (2015 - GBP62.1
million) representing a margin of 25.4% (2015 - 29.8%). Reported
profit before tax was GBP29.4 million (2015 - GBP54.9 million)
which reflects lower revenue and one-off exceptional costs of
GBP15.2 million, principally arising from restructuring initiatives
and from professional services fees relating to the aborted
Schneider Electric transaction.
Acquisitions
In July 2015, we announced that headline terms had been agreed
to acquire Schneider Electric's software business. A very intense
period of due diligence continued from that point to December 2015
when discussions were terminated. I am pleased to report that,
despite the obvious potential distractions of this transaction, the
employees and management remained focused on ensuring that AVEVA
delivered a solid operating result in the year.
During the year, the Group completed the acquisition of FabTrol
Systems Inc., a North American business providing fabrication
management software, for GBP3.6 million.
Strategy update
The Board has recently reaffirmed the Group's strategy, which
has at its foundation a commitment to generating strong cash flows
that can be reinvested in the business in order to drive long-term
profitable growth and deliver consistent returns for our
shareholders. The Board has approved a three year strategic plan,
comprising a number of key priorities which are covered in more
detail in the CEO's strategic review. We are very excited by the
opportunities that lie ahead. Innovation remains at the heart of
our success as a Company and the investment that we have made in
recent years is now bringing measurable benefits, clearly seen in
the strong momentum behind AVEVA E3D and our newest solution, AVEVA
Engage(TM).
The Board
The composition of the Board has remained very stable for
several years but there will be some change during the year ahead
with two of our non-executives due to retire from the Board, each
having reached the nine year limit under the Corporate Governance
code.
Jonathan Brooks' nine year tenure as a Non-Executive Director
ends in July 2016 and I would like to thank him on behalf of the
Board for his contribution to AVEVA. Jonathan joined us in 2007 and
has overseen a period of strong growth and success for AVEVA. The
process to find his replacement as Audit Committee chair is
underway and we expect to appoint a successor shortly. Jonathan has
agreed to stay on until November 2016 to ensure an orderly
handover.
Philip Dayer will also reach his ninth anniversary with AVEVA in
January 2017 and a replacement will be sought in due course.
Capital allocation
AVEVA has remained cash generative during the year and at 30
April 2016 our cash balance was GBP123.5 million, with no debt. The
Board believes it is important to maintain a strong balance sheet
in order to provide additional confidence in the strength of our
business to our customers and also to have at hand sufficient
resources to invest in the future growth of the business. Our
strong cash flows also continue to support our ability to grow via
acquisition and our progressive dividend policy. At the same time
the Board recognises the need to strike the correct balance between
investing in the business and providing returns to shareholders
over the long term.
Following an in-depth review of our capital allocation and
discussions with our shareholders and our advisers, the Board has
concluded to maintain its sustainable progressive dividend policy,
balanced against an active focus on M&A, with excess capital
being returned to shareholders from time to time. Hence, with this
in mind, we are pleased to announce the increase of the ordinary
dividend alongside these results, which illustrates our confidence
in the long term prospects for the business and its underlying
strength. The final dividend will be increased to 30.0 pence per
share (2015 - 25.0 pence) which represents an increase of 20% over
the prior year and takes the full year dividend to 36.0 pence (2015
- 30.5 pence), an increase of 18% over last year.
Summary
Despite 2015/16 having been a challenging year for the Group on
a number of fronts, the business has shown great resilience and
delivered a highly respectable performance, demonstrating the
strength of our business model as well as the benefits that our
technology delivers to customers. This performance would not have
been possible without the hard work and dedication of all of our
employees and the Board would like to express its sincere thanks
for their considerable efforts.
I believe that AVEVA is well-positioned to capitalise on a
number of exciting opportunities over the long-term, and as a Board
we are confident that our strategy is both focused and
achievable.
Philip Aiken
Chairman
24 May 2016
Chief Executive's strategic review
Summary
For the financial year 2015/16 AVEVA achieved reported revenue
of GBP201.5 million (2015 - GBP208.7 million) and adjusted profit
before tax of GBP51.2 million (2015 - GBP62.1 million). Excluding
the contribution from acquisitions and negative currency effects,
revenue was GBP204.4 million (2015 - GBP207.6 million), in line
with the Board's expectations.
Regionally, we saw an improved performance in the Asia Pacific
region, with growth in China offset somewhat by the pressures on
our South Korean shipyard customers that resulted in a flat
performance in North East Asia. The Americas region as a whole was
affected by ongoing weakness in Latin America, principally Brazil,
and flat underlying revenues in North America. We saw a steady
performance in the EMEA region, despite the mixed market conditions
facing our customers.
The business environment
Our software is used by customers as they design, build and
operate large capital-intensive assets, mainly in the process,
power and marine industries. We sell our solutions principally to
Engineering, Procurement and Construction (EPC) companies,
shipyards and Owner Operator (OO) customers worldwide. Our vision
of a constantly evolving Digital Asset is enabling our customers to
manage this process of continual change as they design, build and
operate some of the world's most complicated assets. Increasingly,
our customers are looking to deploy a combination of our products
and this, reinforced by our strategically focused 'One AVEVA' sales
effort, is driving wider adoption of the entire AVEVA product
portfolio.
Among the principal long-term drivers of historical revenue
growth for AVEVA has been the growing complexity of the engineering
challenges that our customers are required to undertake within
ever-shrinking time schedules, which necessitates an increasing
investment in upfront engineering design and hence drives demand
for our software applications. This has been a feature in all of
our markets, but in particular in Oil & Gas, representing
around 40% of revenue, where AVEVA has a competitive edge in the
most complex of all design environments: upstream, offshore and
deep water.
In recent times, global shifts in the supply and demand balance
for Oil & Gas have led to a well-documented reduction in
capital expenditure on new projects. This has particularly affected
our ability to grow the revenue we derive from customers who have a
high exposure to offshore and deep-water Oil & Gas projects.
Among those most noticeably affected have been our shipyard
customers in North East Asia, who had previously been major
beneficiaries of the significant investment in offshore Oil &
Gas, and our EPC customers who are heavily involved in the design
phase of such projects. Consequently, we have seen some customers
reducing their usage of our software over the past year and this
has been evident in the reduction in total Group revenue and the
related negative impact on profits that we have reported for this
financial year.
We have responded to these changes in our markets by rapidly
shifting our focus to expanding our presence in areas where we have
historically been under-represented as well as pushing into
adjacent markets. This has included a push into the downstream and
onshore areas of Oil & Gas and an increased focus on building
on our presence in Petrochemicals & Chemicals, Food &
Beverage and Mining & Metals. In addition, we have increased
our sales focus on higher growth regions such as India and China,
where the market for power-related infrastructure is expected to
show strong growth over the long term.
We have continued to invest in innovation over the past several
years, and as a consequence of this we are seeing strong growth in
sales of additional products into our installed base. For example,
schematics applications, which currently represent less than 10%
but could represent up to a third of total revenue in time, with
AVEVA Engineering(TM) acting as a key driver of this adoption. Our
flagship new design platform, AVEVA E3D, almost doubled its revenue
in the first half of the financial year, and we saw this growth
rate accelerate in the second half as various market trends
increasingly play to the strengths of key areas of functionality
such as laser modelling for brownfield engineering, which meets the
demands of our EPC customers as they seek out more revamp, retrofit
and life extension projects. AVEVA E3D contributed just under 10%
of total revenue in the year to March 2016 (2015 - less than
5%).
The proven quality of AVEVA's technology continues to provide
customers with business-critical capabilities, enabling them to
enhance their competitive advantage. This continues to underpin the
strong customer relationships we enjoy as well as our recurring
revenue base, both of which have been pivotal in helping to offset
challenging markets.
When we look to understand the general direction of our markets
our global accounts business is an important bellwether,
representing many of our largest customers and contributing
approximately 20% to annual Group revenue. We have been encouraged
by the trends we saw during the year amongst these customers, where
we witnessed increased usage of our new software solutions in
onshore and downstream, as well as in the adjacent market of
Building Information Modelling (BIM) and fabrication markets. This
helped partially offset reduced usage of our 3D products in
specific accounts. In particular, we were encouraged to see
increased adoption of AVEVA's engineering data management
solutions, helping us to displace competitor products with AVEVA
Engineering, AVEVA NET(TM) and AVEVA Information Standards
Manager(TM).
The AVEVA engineering data management solution spans all
industry sectors and is currently being deployed on all major
continents within our EPC global account customer base. Indeed,
engineering data management is a clear driving force in our More
than 3D (MT3D) campaign, which is key to driving customer adoption
of a broader set of AVEVA solutions over time. In areas such as UK
infrastructure projects, where our unique approach to information
management has been proven over many years in the process
industries, AVEVA has established a foothold in the BIM space.
Market fundamentals and our positioning
Our business remains strongly positioned in its markets, with
fundamental drivers that are expected to support sustained growth
over the long term. Despite the near-term effects of a weaker oil
price, the projected increase in energy usage from a growing global
population, in addition to the requirement to upgrade, replace and
extend the lifetime of ageing existing assets, indicates that
significant infrastructure investment will be necessary in order to
meet demand. The International Energy Authority (IEA) estimates
that by 2040 world energy demand will increase by one-third, with
the net growth driven entirely by developing countries. Over the
same period, China's net oil imports are forecast to be nearly five
times that of the United States, and India's will easily exceed
that of the European Union with an estimated 600 million new
electricity consumers (Source: World Energy Outlook, IEA November
2015).
Power therefore offers very attractive growth opportunities over
the long term as the world's emerging economies invest in their
power generation requirements and the ageing infrastructure of the
developed world is maintained and replaced. Our global presence
leaves us well positioned to capitalise on these opportunities.
Within our Marine segment, the shipbuilding market remains
depressed given subdued demand and overcapacity in the world fleet.
The market is affected by trends in global GDP and a general
slowdown in global trade combined with an economic slowdown in
emerging markets, particularly the leading global importer, China.
There are some areas where we see growth, for example in naval
shipbuilding in China and India, but the overall macro picture is
expected to remain challenging. Whilst a number of our major
shipyard customers have been successful in diversifying their
businesses into offshore projects over the past five years, their
pipelines for this activity have seen a sharp slowdown since 2014,
affected in particular by the boom in North America's shale Oil
& Gas market.
In times of uncertainty, we are keenly focused on supporting our
customers as they seek to become more efficient and adapt to the
fast changing environment. This was clearly evident at our annual
customer event, the AVEVA World Summit, held in Dubai in October
2015. With over 330 delegates from 45 countries, we heard from
customers from across the world's Process, Plant, Power and Marine
industries as they shared their project and operational
experiences, explaining how AVEVA technology is helping them to
address technical and strategic business challenges.
Among the key themes of the Summit this year was engineering
decision-support and we unveiled our new asset visualisation
product, AVEVA Engage, and showcased the powerful Design in
Context(TM) capabilities of the latest release of AVEVA E3D. As
part of the continuing evolution of the AVEVA Digital Asset
offering, customers were also able to familiarise themselves with
our latest laser-modelling technologies, introducing the unique
capabilities of the AVEVA Trusted Living Pointcloud(TM).
Progress towards our key strategic goals
AVEVA has a clear strategy to grow its business over the long
term, supported by achievable medium-term goals. As part of that
objective, we have made good progress on a number of important
fronts during the year, in particular in the following key
strategic areas:
(1) increasing our revenue from OOs
(2) increasing solution sales through our MT3D initiative
(3) broadening our market exposure
(4) further developing our Software as a Service (SaaS)
solutions
Increasing our revenue from OOs
The OO market represents a significant opportunity for AVEVA to
grow. With many plants today operating far beyond their intended
lifetime, the pressure is on owners to keep these ageing assets
running which presents OOs with important challenges as they seek
to comply with ever more stringent environmental and safety
legislation, whilst maximising profits through minimising downtime
and unplanned outages. For this reason, OOs often exert influence
over an EPC's choice of engineering software tools, as they
recognise the value of this design data in operations. As a result,
OOs are particularly interested in areas such as our laser
modelling capabilities contained in AVEVA E3D, as well as our
Integrated Engineering & Design solutions.
Operators do not always have the skills or resources to maintain
their Digital Assets and AVEVA is increasingly working with
partners, providing a managed service offering to keep data current
and accurate for the asset in question. We saw a good illustration
of how AVEVA can solve this problem for customers during the year
with a new customer, DowAksa, a leading global OO in the provision
of industrial carbon fibre for the transportation, energy and
infrastructure markets, who has chosen to standardise on AVEVA
Integrated Engineering & Design(TM) in order to increase its
overall control and management of all of its assets.
Many of our OO customers are witnessing a growing risk to asset
reliability and compliance that can result from the difficulties
inherent in maintaining the accuracy of the information they hold
about the assets they own and operate. Simply attempting to stay
abreast of the constant change in this information can lead to
significant inefficiencies and increase the risk of costly errors
in the field. During the period we were able to demonstrate the
value that AVEVA technology can offer in solving this problem for a
leading North American OO based in North Dakota, in this case
through the roll out of AVEVA Diagrams(TM) to support its
mechanical integrity operations.
Increasing solution sales through our MT3D initiative
We see a major market opportunity in leveraging our 3D installed
base by selling additional engineering software tools, outside of
AVEVA's core 3D design platforms, AVEVA E3D and AVEVA PDMS(TM). One
of the strongest areas of revenue growth within our business over
the past year has been in MT3D, which include schematics, laser
modelling and AVEVA Bocad(TM) amongst other applications. In
particular, we believe the cross-selling opportunity for schematics
and laser modelling is substantial. Our MT3D focus, backed by
strong sales incentives, is already delivering results as we expand
our product footprint within our key accounts.
Broadening our market exposure
Our technology delivers efficiency gains resulting from tight
data integration and is a principal driver leading to an increasing
number of EPC and OO customers choosing to standardise on AVEVA
technology. AVEVA's solutions are designed to help customers
eliminate errors in construction and thus reduce expensive rework
later in the project phase. Another key determinant of the
customer's decision to invest in AVEVA technology is their need to
cope with increasing scale and complexity.
Furthermore, our solutions enable the maintenance of accurate
and reliable information, which is increasingly a key regulatory
requirement in all the industries our customers serve. Thus,
through the deployment of AVEVA technology our customers are able
to maintain a competitive edge in the markets in which they are
operating.
These factors, and the extensive capabilities of our solutions
themselves, are clearly relevant to a broader set of end-markets
than Oil & Gas, Power and Marine, where we are well
represented. Hence, one of our key strategic initiatives is to
expand into areas of the process industries in which we have little
or no penetration, as well as adjacent markets where appropriate.
Some of the following customer examples serve to illustrate the
progress we made during the year on this front.
In the Paper & Pulp industry, we saw a strategically
important customer in Latin America begin its migration from PDMS
to AVEVA E3D, as a means of eliminating the problem of data
inconsistency in the revision of complex drawings, which had
previously been done using third-party tools unconnected to the 3D
model and, hence, prone to error.
In the Power market, a leading global EPC chose to deploy
AVEVA's Integrated Engineering & Design solutions, including
AVEVA E3D, replacing a legacy system in order to benefit from
increased efficiency within its engineering disciplines and in
order to streamline purchasing and production workloads and
replacing an inefficient legacy system. Key to this decision was
the ability for AVEVA's solutions to reduce rework in construction
and improve the efficiency of the approvals process.
Eliminating errors in construction, and thus reducing costly
rework in both greenfield and brownfield projects, led one of the
leading EPCs operating in the Russian Petrochemical market to
become a customer for the first time, replacing a legacy competitor
solution. Again, in Russia, we saw one of the country's largest
petrochemical and gas processing EPCs extend its deployment of
AVEVA technology to include a number of new products including
AVEVA E3D, in order to cope efficiently with projects of greater
scale and complexity.
Brodosplit Shipyard in Croatia implemented an AVEVA Integrated
Shipbuilding solution, optimising the design of both vessels and
offshore assets as well as materials management and production
across the entire shipyard. One of the largest power EPCs in the
Middle East selected AVEVA Integrated Engineering & Design
package, replacing a competitor's solution. We closed an important
standardisation deal with a large Russian EPC and a major water
services customer commenced full migration to AVEVA E3D, having
been a PDMS customer for a number of years.
We saw an encouraging number of new customers adopt AVEVA NET to
meet their information management requirements, where regulatory
compliance is a key consideration and driver behind the investment
decision. These included a global chemical company, a major nuclear
fusion research facility in France and two major South Korean EPCs.
AVEVA NET has also gone into production at a Norwegian integrated
oil major, which includes the first deployment of the AVEVA
Activity Visualisation Platform(TM) (AVEVA AVP(TM)). This is an
example of a customer choosing to use the 3D model as the portal
for navigation as they access data held in AVEVA NET, a trend which
we expect to drive further convergence of these technologies.
Encouragingly, progress in our AVEVA NET business has now reached a
level of maturity where we can look to build additional scale
through a partner approach rather than through further investment
in our internal service organisation.
Our Fabricators business also delivered strong growth during the
period. This business incorporates AVEVA Bocad and the recently
acquired FabTrol(TM), offering an end-to-end solution for steel
detailing and steel fabrication management, production control and
shipping. The FabTrol acquisition, completed in June 2015, has
already begun to raise awareness of AVEVA Bocad in the North
American market, recently underpinned by significantly upgraded
functionality that we expect to support future development in the
region.
Finally, providing further evidence of our determination to move
into new industry segments, we were pleased to deliver an
integrated design and workflow management solution, as the first
stage of an eventual standardisation strategy, to one of the
largest global suppliers of technology into the food processing
industry, where AVEVA software tools are now being deployed to
develop and design production plants for the dairy, beverage,
brewery, food, pharmaceutical and chemical processing markets.
Further developing our Software as a Service (SaaS)
solutions
We expect that over time the SaaS delivery model will become
more valuable to our customers, particularly as it enables them to
leverage the many efficiencies and benefits offered by cloud
computing. AVEVA has a strong technical proposition and is well
positioned, through partnerships with the industry-leading cloud
infrastructure platform providers, for the eventual SaaS delivery
of our solutions. Indeed, AVEVA has led the industry with AVEVA
Global(TM) which has allowed customers to move projects around the
globe to enable 24 hour collaborative working on projects.
We were very encouraged during the year by the uptake for our
on-demand AVEVA E3D environment AVEVA Experience(TM), with over
1,000 customers already trialling the cloud version of AVEVA E3D,
where existing and prospective users of our design software can
gain hands-on experience with the fully-functional AVEVA E3D
platform, via the cloud, and we have some well-established hosted
deployments of AVEVA NET. We believe that over the long term these
solutions will gain strong traction, but there are a number of
challenges for the industry to overcome before wider adoption
becomes the norm.
Some years ago we saw the majority of the market move from
initial licences to rental licences and to a SaaS hybrid of token
licensing. The next transition will be towards greater use of SaaS
and off premise services and software; as we make this technology
shift there will be additional opportunities for AVEVA enabling us
to offer a broader set of solutions.
Outlook
The result for the year has highlighted the strength of the
AVEVA business model, the value that our technology delivers to our
customers and our ability to adapt to changing market conditions
through a disciplined approach to innovation and organisational
efficiency.
AVEVA's Digital Asset approach is proving to be transformational
for our EPC and OO customers as we help them to focus on
profitability, lean engineering disciplines, operational
efficiencies and regulatory compliance in information management.
We have continued to invest in our technology vision and are
particularly encouraged to see the concept resonating strongly with
our customers, many of whom have placed the Digital Asset at the
heart of their technology vision. The Digital Asset offers our
customers a means of building a substantial business opportunity
around the entire lifecycle of the asset, which we expect to
increase in importance for both EPCs and OOs over the long
term.
As we manage our business through the cycle we are focused on
ensuring the most efficient allocation of resources, optimising our
investment in future opportunities. As a consequence, in the second
half of the year we undertook some additional cost saving
initiatives, achieved at a one-off exceptional cost of
approximately GBP4.5 million, part of which has been recognised in
the year. We believe that our organisation is now well positioned
to deliver further progress against our key strategic initiatives,
despite the difficult end-market backdrop we are currently
experiencing.
It is a testament to the dedication of all of our employees
around the world that we have been able to deliver a solid result
in difficult markets alongside the implementation of significant
cost savings during 2015/16. As a result, AVEVA is in a stronger
position today, both from a technology and an organisational
perspective, than ever before. Our business remains well
capitalised and we intend to continue to bolster our organic growth
with selective acquisitions over time, adding new product
capabilities and accelerating access to new markets as a
result.
Whilst we recognise the challenges in our markets, we are
focused on the opportunities that lie ahead of us both
strategically and operationally and, with these in mind, the Board
is confident that we can achieve our targets in the current
financial year and over the medium term.
Richard Longdon
Chief Executive Officer
24 May 2016
Finance review
Summary
The business has delivered a solid performance despite difficult
market conditions. We have seen a broadly flat performance in
organic, constant currency terms with our recurring revenue
continuing to hold up at 76% of total revenue. With the business
being heavily weighted towards the second half, it was pleasing
that the business performed broadly as we expected with over 80% of
our profit being earned in H2. The business remains highly cash
generative and we closed the year with GBP107.9 million in net cash
and no debt.
Total revenue for the year was GBP201.5 million which was down
3% compared to the previous year (2015 - GBP208.7 million).
Included in the results is GBP6.9 million of revenue from the
acquisitions of 8over8 Limited, (acquired January 2015) and
FabTrol, the fabrication management software (acquired June 2015).
Organic revenue on a constant currency basis declined 2% compared
to the prior year.
Following first half revenue of GBP82.0 million (2015 - GBP85.9
million), the second half of the year delivered revenue of GBP119.5
million, compared to GBP122.8 million in 2014/15 and represents 59%
of the year's revenue (2015 - 59%). Adjusted profit before tax was
GBP51.2 million (2015 - GBP62.1 million), which included a loss of
GBP0.3m from acquisitions and was impacted by a foreign exchange
loss of GBP1.7 million in March 2016 resulting from the translation
of (in particular) US Dollar-denominated assets following the
weakening of the Dollar.
The results for the year are summarised as follows:
2016 2016 2016 2016 2015 Organic
Organic Organic constant
constant currency
GBPm Total Acquisitions Organic currency** Total change
Revenue
Annual fees 63.4 3.3 60.1 63.4 60.2 5%
Rental licence
fees 90.6 1.9 88.7 92.9 97.2 (4%)
-------- -------------- --------- ------------ --------- ----------
Recurring revenue 154.0 5.2 148.8 156.3 157.4 (1%)
Initial licence
fees 29.4 0.5 28.9 30.1 31.1 (3%)
Training and Services 18.1 1.2 16.9 18.0 19.1 (6%)
-------- -------------- --------- ------------ --------- ----------
Total revenue 201.5 6.9 194.6 204.4 207.6 (2%)
-------- -------------- --------- ------------ --------- ----------
Cost of sales (14.7) (1.2) (13.5) (14.3) (15.2) (6%)
Gross profit 186.8 5.7 181.1 190.1 192.4 (1%)
Operating expenses* (135.6) (6.0) (129.6) (133.5) (130.0) 3%
Net finance revenue - - - - 0.3 (100%)
Adjusted profit/(loss)
before tax 51.2 (0.3) 51.5 56.6 62.7 (10%)
------------ --------- ----------
Normalised
adjustments (21.8) - (21.8)
-------- -------------- ---------
Reported profit/(loss)
before tax 29.4 (0.3) 29.7
-------- -------------- ---------
* Operating expenses adjusted to exclude amortisation of
intangible assets (excluding other software), share-based payments,
gain/loss on forward foreign exchange contracts and exceptional
items.
** Organic constant currency is defined as the period's reported
results restated to reflect the previous year's average exchange
rates and excludes the contribution from 8over8 and FabTrol.
Revenue
Organic, constant currency revenue by category
The Group's recurring revenue, which consists of annual fees and
rental licence fees, was broadly flat at GBP156.3 million (2015 -
GBP157.4 million) and represented 76% of revenue (2015 - 76%).
Annual fees grew by 5% to GBP63.4 million following on from
initial licence sales in the previous year and some price
increases.
Rental licence fee revenue fell by 4% to GBP92.9 million with
the largest fall coming from Latin America. Again we saw a
significant seasonal effect with rental revenue of GBP60.0 million
(2015 - GBP65.1 million) in the second half of the year. As
previously highlighted, this was driven by our Global Account
customers where renewals typically fall into the second half of the
year. Generally we saw our Global Account renewals hold up
reasonably well in the period and the price escalation achieved in
multi-year contracts, in particular through the introduction of
AVEVA E3D, was in line with expectations. Unsurprisingly we saw
some customers reduce their usage of our software tools,
principally due to the more challenging market conditions in Oil
& Gas.
Initial licence revenue was GBP30.1 million, a reduction of 3%
compared to the previous year (2015 - GBP31.1 million).
Training and services revenue was down 6% at GBP18.0 million
(2015 - GBP19.1 million).
Segment performance
An analysis of revenue by geography is set out below:
GBPm Asia Pacific EMEA Americas Total
As reported 71.6 101.6 28.3 201.5
Acquisitions (1.4) (1.5) (4.0) (6.9)
------------------ ------------- ------ --------- ------
Organic 70.2 100.1 24.3 194.6
Currency effect 1.6 7.8 0.4 9.8
------------------ ------------- ------ --------- ------
Organic constant
currency 71.8 107.9 24.7 204.4
------------------ ------------- ------ --------- ------
2015 organic 67.3 103.5 36.8 207.6
Organic constant
currency 7% 4% (33%) (2%)
Revenue was impacted by GBP9.8 million (a reduction of 5%)
related to foreign exchange on the translation of our overseas
subsidiaries, which was a continuation of the effects we saw in the
first half of the year. EMEA was impacted most significantly as a
result of the weakness, relative to sterling, of the Euro and
Russian rouble.
Asia Pacific
In Asia we achieved growth of 7% on a constant currency basis
with growth in all of the territories in which we operate, which
was very pleasing. Our focus on South East Asia is paying dividends
and has helped deliver strong growth. The investment we have made
in India in recent years is delivering good growth and we benefited
principally from naval projects, Power and refining. In South Korea
and Japan, there was modest growth overall despite this region
having the biggest exposure to shipbuilding. Finally, in China we
saw growth over last year, driven mainly by Power, Chemical and Oil
& Gas customers.
EMEA
In EMEA we achieved overall growth of 4% on a constant currency
basis. There was strong growth in the Middle East from OOs and in
Northern and Central Europe from rental fees from non-Oil & Gas
accounts. Global Accounts in EMEA were flat compared to the
previous year.
Americas
In the Americas, the performance was impacted by Brazil where we
experienced a decline in revenue compared to the previous year. In
North America, whilst Global Accounts usage was reasonably stable,
we did see one Global Account where we recognised less revenue in
2015/16 due to the timing of the renewal. Excluding this one
customer, we saw a flat performance in our North American
business.
Acquisitions
In January 2015, we completed the acquisition of 8over8 Limited,
a vendor of contract risk management software for increased project
control and capital discipline. Whilst the recurring revenue for
8over8 has remained intact during the year, the lack of new capital
projects within Oil & Gas has affected demand for new licences
of the ProCon software. We remain focused on selling ProCon into
other capital intensive industries where it is equally relevant and
we were pleased to close our first contract with a mining company
during the year.
In June 2015, we completed the acquisition of FabTrol Systems
Inc for GBP3.6 million. The business is based in North America and
provides fabrication management software to the steel fabrication
industry. It has a well-established market position with 1,400
customers globally with a particularly strong installed base in
North America, a major cross-selling opportunity for our Bocad
software.
In total, the acquisitions contributed GBP6.9 million of revenue
during the year and incurred costs of GBP7.2 million resulting in
an adjusted loss before tax of GBP0.3 million in the year.
Cost analysis
An analysis of organic operating expenses on a normalised basis
is set out below:
Research
& Selling and Administrative
GBPm Development distribution expenses Total
As reported 32.1 85.9 39.4 157.4
Normalised adjustments (6.4) (2.7) (12.7) (21.8)
--------------------------- ------------- -------------- --------------- -------
25.7 83.2 26.7 135.6
Acquisitions (2.4) (3.4) (0.2) (6.0)
--------------------------- ------------- -------------- --------------- -------
Organic 23.3 79.8 26.5 129.6
Currency effect 0.7 3.7 (0.5) 3.9
--------------------------- ------------- -------------- --------------- -------
Organic constant currency 24.0 83.5 26.0 133.5
--------------------------- ------------- -------------- --------------- -------
2015 organic 28.1 77.7 24.2 130.0
Organic constant currency
change (15%) 7% 7% 3%
As disclosed in the interim statement, the allocation of costs
between selling and distribution costs and administrative expenses
has been amended during the year and the income statements of prior
periods have been restated accordingly. There has been no impact on
profit from operations. Further details are contained in note
1.
Normalised items include amortisation of intangibles (excluding
other software) GBP5.6 million (2015 - GBP4.7 million), share-based
payments GBP0.5 million (2015 - gain of GBP0.4 million), loss on
fair value of forward foreign exchange contracts GBP0.4 million
(2015 - GBP1.0 million) and exceptional items of GBP15.2 million
(2015 - GBP2.0 million).
We continue to invest in Research & Development in both
continued advancement of our existing products with examples
including the new version of AVEVA E3D with enhanced laser
capability for brownfield projects and new products such as AVEVA
Engage. Research & Development costs fell by 14% on an organic,
constant currency basis partly due to the benefit of the
restructuring that was undertaken in the first half, savings from
utilising our in-house facility in Hyderabad for more projects and
an increased benefit from a higher R&D tax claim in the UK.
Selling and distribution expenses increased by 7% on an organic,
constant currency basis. This was principally due to increased
sales commissions, higher anti-piracy costs and higher technical
sales and marketing costs.
Administrative expenses increased by 7% on a constant currency
basis although 2014/15 benefited from a foreign exchange gain of
approximately GBP2.5 million. In 2015/16 we also incurred higher
costs of national insurance on share options.
We continue to have a focused and disciplined approach to
managing the cost base. In March 2016, we implemented a number of
cost efficiency initiatives including a reduction in headcount in
specific areas of the business, some office rationalisation and
other efficiency measures. As a result, we have incurred an
exceptional charge of GBP2.4 million in the second half for
redundancy and related costs, and property lease costs with GBP2.1
million having been incurred in the first half. These will be
completed by the end of the first quarter of 2016/17 and we expect
to incur a charge of approximately GBP2.5 million. The resulting
savings are intended to mitigate the impact of expected cost
inflation and planned investments elsewhere in the business.
Exceptional items
During the year the Group incurred exceptional costs of GBP15.2
million (2015 - GBP2.0 million).
Included in exceptional items were professional fees paid of
GBP10.5 million (2015 - GBP0.4 million) principally for legal and
financial due diligence services related to the aborted Schneider
Electric transaction as well as the acquisition of FabTrol Systems
Inc. In the previous year, the costs were in relation to
professional fees related to the acquisition of 8over8 Limited.
As noted above, during 2015/16 exceptional restructuring costs
of GBP4.5 million (2015 - GBP0.9 million) were incurred for
redundancy and related costs in connection with the rationalisation
of offices and reduction in headcount in specific areas of the
business. The total cash cost in 2015/16 amounted to GBP2.5
million.
The Group has provided for a potential underpaid sales tax
liability, in respect of prior periods, related to the local sales
of one of the Group's subsidiary companies. The provision includes
an estimate of the underpaid tax as well as related interest for
late payment.
Profit before tax
Adjusted profit before tax for the year ended 31 March 2016 was
GBP51.2 million (2015 - GBP62.1 million), a decrease of 18%,
principally caused by the reduction in revenue. This resulted in an
adjusted profit margin of 25.4% compared to 29.8% for 2014/15.
Reported profit before tax was GBP29.4 million (2015 - GBP54.9
million) and was principally impacted by the lower revenue and
one-off exceptional items of GBP15.2 million as described
above.
Taxation
The headline effective tax rate for the year was 30.4% (2015 -
24.2%) as the charge was impacted by the non-deductible
acquisition-related exceptional costs of GBP10.5 million (2015 -
GBP0.4 million). After adjusting for these costs, the underlying
effective rate was 22.5% which is slightly above the underlying UK
corporate tax rate of 20%, caused by profits being taxed at higher
rates in overseas jurisdictions and other non-deductible
expenses.
Dividends
With consistent and strong cash flows and no net debt, the Group
retains considerable financial flexibility going forward. The Board
remains focused on delivering growth both organically and through
acquisitions. Our strong cash flows underpin the Board's
sustainable, progressive dividend policy, balanced against an
active focus on M&A, with excess capital being returned to
shareholders from time to time. The Board is proposing a final
dividend of 30.0 pence per share (2015 - 25.0 pence per share), an
increase of 20%. The dividend will be payable on 5 August 2016, to
shareholders on the register on 1 July 2016.
Earnings per share
Basic earnings per share were 32.03 pence (2015 - 65.07 pence)
and diluted earnings per share were 31.96 pence (2015 - 64.92
pence). Adjusted basic earnings per share were 62.04 pence (2015 -
74.51 pence).
Balance sheet and cash flows
AVEVA continues to maintain a strong balance sheet and has no
debt. Net assets at 31 March 2016 were GBP201.0 million compared to
GBP189.9 million at 31 March 2015.
Non-current assets
Non-current assets decreased from GBP90.9 million to GBP87.5
million mainly due to lower capital expenditure as we carefully
managed our cash flow and as a consequence of a reduction to the
consideration paid for 8over8 Limited of GBP4.1 million that arose
through an acquisition indemnity claim.
Working capital
Gross trade receivables at 31 March 2016 were GBP94.5 million
which was in line with last year (2015 - GBP94.2 million). Again we
saw a strong finish to the year with a large number of our Global
Account renewals occurring in the final quarter resulting in
billings being more weighted towards the end of the period. The bad
debt provision at 31 March 2016 was GBP5.9 million compared to
GBP5.6 million at 31 March 2015. We have continued to apply the
Group's bad debt provision policy consistently throughout the year
and as highlighted above, we suffered a bad debt charge of GBP3.4
million (2015 - GBP3.3 million) as a result of delays in getting
paid by customers, principally in Brazil, Russia, India and
China.
Deferred income at 31 March 2016 was GBP46.9 million compared to
GBP48.2 million at 31 March 2015.
Trade payables and other liabilities were higher than last year
due to the timing of invoices.
Cash generation
Net cash (including treasury deposits) at 31 March 2016 was
GBP107.9 million compared to GBP103.8 million at 31 March 2015.
Since 31 March 2016, we have seen strong cash collections from
customers resulting in cash at 30 April 2016 being GBP123.5 million
(2015 - GBP117.6 million).
Cash generated from operating activities after tax was GBP24.3
million (2015 - GBP30.9 million). The Group showed strong cash
generation in the first half of the year but we saw an impact in
the second half due to the delay of a large receivable,
subsequently collected in April 2016. There has been no change in
the credit terms offered to customers, however, as highlighted
above, we have experienced some delays in payment in certain
countries impacting cash conversion. In addition, during the year
the Group paid professional fees principally related to the
Schneider Electric transaction of GBP10.5 million. The cash
conversion for the year was 123% (2015 - 83%) reflecting higher
year-end trade creditors and provisions, including in respect of
restructuring costs.
Pensions
On an accounting basis, the Group's pension liabilities
decreased from GBP14.2 million last year to
GBP5.2 million. This was principally caused by the UK defined
benefit scheme deficit decreasing from GBP11.3 million to GBP2.3
million driven by an increase in government gilt and corporate bond
yields, leading to a corresponding increase in the discount rate
used to discount our long-term liabilities, together with a strong
equity and bonds performance.
On 31 March 2015, the Group closed the UK defined benefit
pension scheme to future accrual. This decision was taken to manage
the current and future risk on the Group's balance sheet, with a
view to ultimately effecting an insurance buy-out. Previously
accrued pension benefits will continue to be revalued in line with
RPI.
Capital structure
At 31 March 2016, the Group had 63,961,113 shares of 3 5/9p each
in issue (2015 - 63,948,241 shares). During the year the AVEVA
Group Employee Benefit Trust 2008 ('the Trust') purchased 4,418
ordinary shares in the Company in the open market at an average
price of GBP21.23 per share for total consideration of GBP93,784 in
order to satisfy awards made under the AVEVA Group Management Bonus
Deferred Share Scheme 2008. At 31 March 2016, the Trust owned
22,077 ordinary shares in the Company.
Treasury policy
The Group treasury policy aims to ensure that the capital held
is not put at risk and the treasury function is managed under
policies and procedures approved by the Board. These policies are
designed to reduce the financial risk arising from the Group's
normal trading activities, which primarily relate to credit,
interest, liquidity and currency risk. The Group is, and expects to
be, cash positive and at 31 March 2016 held net cash of GBP107.9
million. The treasury policy includes strict counterparty
limits.
James Kidd
Chief Financial Officer
24 May 2016
Review of principal risks and uncertainties
AVEVA faces a number of potential risks and uncertainties which
could have a material impact on the Group's long-term performance.
The Board is responsible for determining the nature of these risks
and ensuring appropriate mitigating actions are in place to manage
them effectively.
Strategic and market risks
Risk Mitigation
---------------------------------------------- -----------------------------------------
Dependency on key markets AVEVA is expanding into new
AVEVA generates a substantial amount market segments such as mining,
of its income from customers whose petrochemicals and AEC, albeit
main business is derived from capital from a relatively small base.
projects in the Oil & Gas, Power and It is central to our strategy
Marine markets. World economic conditions to diversify our customer offerings
or funding constraints for new capital into
projects may adversely affect our Owner Operators and Plant
financial performance. Currently, operations. This will help
some of AVEVA's vertical end markets secure a longer-term income
are under pressure with lower oil stream that extends beyond
prices and inevitably this is having the design/build phase of these
an impact on the Group's revenues. capital projects. In addition,
our extensive global presence
provides some mitigation from
over-reliance on key geographic
markets.
---------------------------------------------- -----------------------------------------
Competition We carefully monitor customers
AVEVA operates in highly competitive and other suppliers operating
markets that serve the Oil & Gas, within our chosen markets.
Power and Marine markets. Our 3D design We stay close to our customers
tools are well established in our and ensure we have a strong
markets and we believe that there understanding of their needs
are a relatively small number of significant and their expectations from
competitors. However, some of these the AVEVA product development
competitors could, in the future, roadmap.
pose a greater competitive threat
to AVEVA's revenues, particularly We expect that the customers
if they consolidate or form strategic we serve will, over the next
or commercial relationships among 3 to 5 years, show an increased
themselves or with larger, well capitalised appetite or insistence on their
companies. software needs being delivered
with more flexibility. AVEVA
Further threats are posed by the entrance, is already well progressed
into AVEVA's markets, of a much larger with its Cloud strategy and
technology competitor or transformational expects to be able to meet
technology, such as Cloud-based solutions. these customer demands as they
develop.
The Group's strategy to extend the
digital asset footprint is key to
ensuring that our customer penetration
is broad and that AVEVA's sources
of revenue are diversified.
---------------------------------------------- -----------------------------------------
Professional Services We employ experienced industry
Where AVEVA assists customers with professionals within our professional
the deployment of an enterprise solution services team and continue
this involves some degree of consulting to build commercial partnerships
and/or implementation work. This requires with third party systems integrators.
specialist knowledge to be available
and well managed in many geographic We have rigorous processes
locations. There is a risk that the and controls for the appraisal
services provided do not meet the of potential commercial opportunities
customer's expectations or that technical prior to any bid being submitted.
difficulties are encountered. Bids are appraised on grounds
of technical complexity as
In some instances we may opt to partner well as financial and commercial
with a third party for this work and risk.
this relationship also requires careful
management and maintenance to ensure
that AVEVA's strong reputation with
our customers is not damaged.
---------------------------------------------- -----------------------------------------
Acquisitions
An acquisition by AVEVA or of AVEVA While each acquisition and
could pose a significant distraction integration is unique, AVEVA
to management and to the delivery now has an experienced team
of our business plan. to appraise and complete acquisitions.
The Group's experience of previous
The Group expects to continue to review 'bolt-on' acquisitions as well
acquisition targets as part of its as the aborted transaction
strategy. The integration of acquisitions with Schneider Electric provides
involves a number of unique risks, a good understanding of potential
including diversion of management's transaction and integration
attention, failure to retain key personnel risks.
of the acquired business, failure
to realise the benefits anticipated
to result from the acquisition, and
successful integration of the acquired
intellectual property.
---------------------------------------------- -----------------------------------------
Operational risks
Risk Mitigation
-------------------------------------------------- -------------------------------------
Recruitment and retention of employees The Group endeavours to
AVEVA's success has been built on the quality ensure that employees are
and reputation of its products and services, motivated in their work
which rely almost entirely on the quality and there are regular appraisals,
of the people developing and delivering with staff encouraged to
them. Managing this pool of highly skilled develop their skills. Annually
and motivated individuals across all disciplines there is a Group-wide salary
and geographies remains key to our ongoing review that rewards strong
success. performance and ensures
salaries remain competitive.
Commission and bonus schemes
help to ensure the success
of the Group and individual
achievement is appropriately
rewarded.
-------------------------------------------------- -------------------------------------
Protection of intellectual property The Group uses third party
The Group's success has been built upon technology to encrypt, protect
the development of its substantial intellectual and restrict access to its
property rights and the future growth of products. Access limitations
the business requires the continual protection and rights are also defined
of these tools. within the terms of the
software licence agreement.
The protection of the Group's proprietary
software products is achieved by licensing The Group seeks to ensure
rights to use the application, rather than that its intellectual property
selling or licensing the computer source rights are appropriately
code. protected by law and seeks
to vigorously assert its
proprietary rights wherever
possible.
-------------------------------------------------- -------------------------------------
Research & Development AVEVA continually reviews
The Group makes substantial investments the alignment of the activities
in Research & Development in enhancing existing of our Research & Development
products and introducing new products and teams to ensure that they
must effectively appraise its investment remain focused on areas
decisions and ensure that we continue to that will meet the demands
provide class-leading solutions that meet of our customers and deliver
the needs of our markets. appropriate financial returns.
This process is managed
Our software products are complex and new by developing a product
products or enhancements may contain undetected roadmap that identifies
errors, failures, performance problems or the schedule for new products
defects which may impact our strong reputation and the enhancements that
with our customers. will be made to successive
versions of existing products.
Products are extensively
tested prior to commercial
launch.
-------------------------------------------------- -------------------------------------
International operations
The Group operates in over 30 countries The Group manages its overseas
globally and must determine how best to operations by employing
utilise its resources across these diverse locally qualified personnel
markets. Where necessary, the business must who are able to provide
adapt its market approach to best capitalise expertise in the appropriate
on local market opportunities, particularly language and an understanding
in the strategically key growth economies. of local culture, custom
and practice. Local management
In addition, the Group is required to comply is supported by local professional
with the local laws, regulations and tax advisers and further oversight
legislation in each of these jurisdictions. is maintained from the Group's
Significant changes in these laws and regulations corporate legal and finance
or failure to comply with them could lead functions.
to additional liabilities and penalties.
-------------------------------------------------- -------------------------------------
Financial risks
Risk Mitigation
------------------------------------------------- -----------------------------------
Foreign exchange risk The overseas subsidiaries
Exposure to foreign currency gains and predominantly trade in their
losses can be material to the Group, with own local currencies, which
more than 80% of the Group's revenue denominated acts as a partial natural
in a currency other than sterling, of hedge against currency movements.
which our two largest are US Dollar and In addition, the Group enters
Euro. into forward foreign currency
contracts to manage the
The UK referendum on European Union membership risk where material and
on 23 June 2016 is currently increasing practical. The Group limits
foreign exchange risk for the Group and its hedging of revenue to
if the decision is to exit this increased US Dollar, Euro, Japanese
uncertainty and volatility may prevail Yen and its hedging of costs
for the medium term. to Swedish Krona and Indian
Rupee.
------------------------------------------------- -----------------------------------
Consolidated income statement
for the year ended 31 March 2016
2016 2015*
Notes GBP000 GBP000
---------------------------------------------------- ------ ---------- ----------
Revenue 3, 4 201,491 208,686
Cost of sales (14,689) (15,538)
---------------------------------------------------- ------ ---------- ----------
Gross profit 186,802 193,148
Operating expenses
Research & Development costs (32,128) (32,696)
Selling and administrative expenses 5 (125,252) (105,899)
---------------------------------------------------- ------ ---------- ----------
Total operating expenses (157,380) (138,595)
---------------------------------------------------- ------ ---------- ----------
Profit from operations 29,422 54,553
Finance revenue 633 765
Finance expense (626) (456)
---------------------------------------------------- ------ ---------- ----------
Analysed as:
Adjusted profit before tax 51,201 62,098
Amortisation of intangibles (excluding other
software) (5,617) (4,707)
Share-based payments (494) 441
Loss on fair value of forward foreign exchange
contracts (432) (980)
Exceptional items 6 (15,229) (1,990)
---------------------------------------------------- ------ ---------- ----------
Profit before tax 29,429 54,862
Income tax expense 7 (8,955) (13,303)
---------------------------------------------------- ------ ---------- ----------
Profit for the year attributable to equity holders
of the parent 20,474 41,559
---------------------------------------------------- ------ ---------- ----------
Earnings per share (pence)
* basic 9 32.03 65.07
* diluted 9 31.96 64.92
---------------------------------------------------- ------ ---------- ----------
Adjusted earnings per share (pence)
* basic 9 62.04 74.51
* diluted 9 61.91 74.34
---------------------------------------------------- ------ ---------- ----------
* Restated for a reclassification of expenses, as explained in
note 1
All activities relate to continuing activities.
The accompanying notes are an integral part of this Consolidated
income statement.
Consolidated statement of comprehensive income
for the year ended 31 March 2016
2016 2015
Notes GBP000 GBP000
----------------------------------------------- ------ -------- ---------
Profit for the year 20,474 41,559
Items that may be reclassified to profit or
loss in subsequent periods:
Exchange gain/(loss) arising on translation
of foreign operations 3,812 (9,393)
Items that will not be reclassified to profit
or loss in subsequent periods:
Remeasurement gain/(loss) on defined benefit
plans 13 7,837 (11,496)
Income tax effect 7(a) (1,654) 2,657
----------------------------------------------- ------ -------- ---------
Total of items that will not be reclassified
to profit or loss in subsequent periods 6,183 (8,839)
----------------------------------------------- ------ -------- ---------
Total comprehensive income for the year, net
of tax 30,469 23,327
----------------------------------------------- ------ -------- ---------
The accompanying notes are an integral part of this Consolidated
statement of comprehensive income.
Consolidated balance sheet
31 March 2016
2016 2015
Notes GBP000 GBP000
-------------------------------- ------ -------- --------
Non-current assets
Goodwill 51,697 50,589
Other intangible assets 24,841 27,506
Property, plant and equipment 7,101 7,595
Deferred tax assets 2,617 3,800
Other receivables 10 1,257 1,440
-------------------------------- ------ -------- --------
87,513 90,930
-------------------------------- ------ -------- --------
Current assets
Trade and other receivables 10 97,138 96,468
Treasury deposits 11 43,316 45,248
Cash and cash equivalents 11 64,611 58,519
Current tax assets 3,492 2,195
-------------------------------- ------ -------- --------
208,557 202,430
-------------------------------- ------ -------- --------
Total assets 296,070 293,360
-------------------------------- ------ -------- --------
Equity
Issued share capital 2,274 2,274
Share premium 27,288 27,288
Other reserves 5,965 1,655
Retained earnings 165,471 158,713
-------------------------------- ------ -------- --------
Total equity 200,998 189,930
-------------------------------- ------ -------- --------
Current liabilities
Trade and other payables 12 84,070 81,613
Financial liabilities 864 432
Current tax liabilities 1,789 5,718
-------------------------------- ------ -------- --------
86,723 87,763
-------------------------------- ------ -------- --------
Non-current liabilities
Deferred tax liabilities 3,187 1,480
Retirement benefit obligations 13 5,162 14,187
-------------------------------- ------ -------- --------
8,349 15,667
-------------------------------- ------ -------- --------
Total equity and liabilities 296,070 293,360
-------------------------------- ------ -------- --------
The accompanying notes are an integral part of this Consolidated
balance sheet.
The financial statements were approved by the Board of Directors
and authorised for issue on 24 May 2016. They were signed on its
behalf by:
Philip Aiken Richard Longdon Company number
Chairman Chief Executive 2937296
Consolidated statement of changes in shareholders' equity
31 March 2016
Other reserves
--------------
Cumulative Total
Share Share Merger translation Treasury other Retained Total
capital premium reserve adjustments shares reserves earnings equity
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ---- -------- -------- -------- -------------- -------- --------- --------- --------
At 1 April 2014 2,271 27,288 3,921 8,109 (1,441) 10,589 144,829 184,977
Profit for the year - - - - - - 41,559 41,559
Other comprehensive
(loss) - - - (9,393) - (9,393) (8,839) (18,232)
----------------------- ---- -------- -------- -------- -------------- -------- --------- --------- --------
Total comprehensive
(loss)/income - - - (9,393) - (9,393) 32,720 23,327
Issue of share capital 3 - - - - - - 3
Share-based payments - - - - - - (441) (441)
Tax arising on share
options - - - - - - (73) (73)
Investment in own
shares - - - - (305) (305) - (305)
Cost of employee
benefit trust shares
issued to employees - - - - 764 764 (764) -
Equity dividends 8 - - - - - - (17,558) (17,558)
----------------------- ---- -------- -------- -------- -------------- -------- --------- --------- --------
At 31 March 2015 2,274 27,288 3,921 (1,284) (982) 1,655 158,713 189,930
Profit for the period - - - - - - 20,474 20,474
Other comprehensive
income - - - 3,812 - 3,812 6,183 9,995
----------------------- ---- -------- -------- -------- -------------- -------- --------- --------- --------
Total comprehensive
income - - - 3,812 - 3,812 26,657 30,469
Issue of share capital - - - - - - - -
Share-based payments - - - - - - 494 494
Tax arising on share
options - - - - - 13 13
Investment in own
shares - - - - (94) (94) - (94)
Cost of employee
benefit trust shares
issued to employees - - - - 592 592 (592) -
Equity dividends 8 - - - - - - (19,814) (19,814)
----------------------- ---- -------- -------- -------- -------------- -------- --------- --------- --------
At 31 March 2016 2,274 27,288 3,921 2,528 (484) 5,965 165,471 200,998
----------------------- ---- -------- -------- -------- -------------- -------- --------- --------- --------
The accompanying notes are an integral part of this Consolidated
statement of changes in shareholders' equity.
Consolidated cash flow statement
for the year ended 31 March 2016
2016 2015
Notes GBP000 GBP000
-------------------------------------------------------- ------ --------- ---------
Cash flows from operating activities
Profit for the year 20,474 41,559
Income tax 7(a) 8,955 13,303
Net finance revenue (7) (309)
Amortisation of intangible assets 5,954 5,335
Depreciation of property, plant and equipment 2,167 2,914
Loss on disposal of property, plant and equipment 2 191
Share-based payments 494 (441)
Difference between pension contributions paid
and amounts charged to operating profit (1,849) (6,565)
Research & development expenditure tax credit (2,076) (930)
Changes in working capital:
Trade and other receivables 514 (11,752)
Trade and other payables 1,076 852
Changes to fair value of forward foreign exchange
contracts 432 980
-------------------------------------------------------- ------ --------- ---------
Cash generated from operating activities before
tax 36,136 45,137
Income taxes paid (11,798) (14,231)
-------------------------------------------------------- ------ --------- ---------
Net cash generated from operating activities 24,338 30,906
-------------------------------------------------------- ------ --------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment (2,056) (2,571)
Purchase of intangible assets (393) (522)
Acquisition of subsidiaries and business undertakings,
net of cash acquired (2,540) (25,651)
Refund of consideration for prior year business
combination 4,349 -
Proceeds from disposal of property, plant and
equipment 429 345
Interest received 633 765
Maturity/(purchase) of treasury deposits (net) 11 1,932 (5,010)
-------------------------------------------------------- ------ --------- ---------
Net cash flows from/(used in) investing activities 2,354 (32,644)
-------------------------------------------------------- ------ --------- ---------
Cash flows from financing activities
Interest paid (48) (73)
Purchase of own shares (94) (305)
Proceeds from the issue of shares - 3
Dividends paid to equity holders of the parent 8 (19,814) (17,558)
-------------------------------------------------------- ------ --------- ---------
Net cash flows used in financing activities (19,956) (17,933)
-------------------------------------------------------- ------ --------- ---------
Net increase/(decrease) in cash and cash equivalents 6,736 (19,671)
Net foreign exchange difference (644) 881
Opening cash and cash equivalents 11 58,519 77,309
-------------------------------------------------------- ------ --------- ---------
Closing cash and cash equivalents 11 64,611 58,519
-------------------------------------------------------- ------ --------- ---------
The accompanying notes are an integral part of this Consolidated
cash flow statement.
1. Basis of preparation
The Group is required to prepare its Consolidated financial
statements in accordance with IFRS as adopted by the European
Union. For the purposes of this document the term IFRS includes
International Accounting Standards.
The preliminary announcement covers the period 1 April 2015 to
31 March 2016 and was approved by the Board on 24 May 2016.
The financial information contained in this preliminary
announcement of audited results does not constitute the Group's
statutory accounts for the years ended 31 March 2016 or 31 March
2015. The accounts for the year ended 31 March 2015 have been
delivered to the Registrar of Companies. The statutory accounts for
the years ended 31 March 2016 and 2015 have been reported on by the
Company's auditors; the reports on these accounts were unqualified,
did not draw attention to any matters by way of emphasis and did
not contain any statement under section 498(2) or (3) of the
Companies Act 2006 or equivalent preceding legislation.
The statutory accounts for the year ended 31 March 2016 are
expected to be posted to shareholders in due course and will be
delivered to the Registrar of Companies after they have been laid
before the shareholders in a general meeting on 8 July 2016. Copies
will be available from the registered office of the Company, High
Cross, Madingley Road, Cambridge CB3 0HB and can be accessed on the
AVEVA website, www.aveva.com. The registered number of AVEVA Group
plc is 2937296.
From 1 April 2015, the EDS and ES lines of business were merged
and the Executive team now monitor and appraise the business based
on the performance of three geographic regions: Asia Pacific;
Americas; and Europe, Middle East and Africa (EMEA). These three
regions are now the basis of the Group's primary operating segments
reported in the financial statements. Performance is evaluated
based on regional contribution using the same accounting policies
as adopted for the Group's financial statements. There is no
inter-segment revenue. Balance sheet information is not included in
the information provided to the Executive team. Support functions
such as head office departments are controlled and monitored
centrally. Disclosure for the year ended 31 March 2015 has been
restated to reflect the new organisational structure.
Also from 1 April 2015, the allocation of costs between selling
and distribution expenses and administrative expenses has been
amended and the income statement for the year ended 31 March 2015
has been restated accordingly. Previously, all costs related to the
sales offices were included in selling and distribution expenses
including the local finance, HR and IT costs to reflect the total
cost of the regional sales operation. In line with industry
practice, the presentation has been updated to allocate the costs
by function to selling and distribution costs and administrative
expenses respectively. Comparatives have been restated accordingly
resulting in an increase of GBP7.5 million to administrative
expenses and a corresponding decrease to selling and distribution
costs in the year ended 31 March 2015. There has been no impact on
profit from operations. Similarly, and also in line with industry
practice, selling and distribution expenses and administrative
expenses have been combined on the face of the Consolidated income
statement with the split of these expenses now provided in a note -
see note 5. The Directors believe that the revised Income statement
presentation more appropriately and consistently reflects the
nature of the Group's operations.
The Group presents a non-GAAP performance measure on the face of
the Consolidated income statement. The Directors believe that this
alternative measure of profit provides a reliable and consistent
measure of the Group's underlying performance. The face of the
Consolidated income statement presents adjusted profit before tax
and reconciles this to profit before tax as required to be
presented under the applicable accounting standards. Adjusted
earnings per share is calculated having adjusted profit after tax
for the same items and their tax effect. The term adjusted profit
is not defined under IFRS and may not be comparable with similarly
titled profit measures reported by other companies. It is not
intended to be a substitute for, or superior to, GAAP measures of
profit.
2. Accounting policies
The preliminary statement has been prepared on a consistent
basis with the accounting policies set out in the last published
financial statements for the year ended 31 March 2015. New
standards and interpretations which came into force during the year
did not have a significant impact on the Group's financial
statements.
3. Revenue
An analysis of the Group's revenue is as follows:
2016 2015
GBP000 GBP000
------------------------- -------- --------
Annual fees 63,368 60,724
Rental licence fees 90,617 97,489
------------------------- -------- --------
Total recurring revenue 153,985 158,213
Initial licence fees 29,373 31,122
Training and services 18,133 19,351
------------------------- -------- --------
Total revenue 201,491 208,686
Finance revenue 633 765
------------------------- -------- --------
202,124 209,451
------------------------- -------- --------
Services consist of consultancy, implementation services and
training fees.
Included within revenue for the year ended 31 March 2016, are
annual fees of GBP1,318,000, initial licence fees of GBP492,000 and
services of GBP136,000 related to the acquisition of FabTrol, and
annual fees of GBP2,023,000, rental licence fees of GBP1,861,000
and services of GBP1,031,000 related to the acquisition of 8over8
Limited (for the prior year the revenues from the date of
acquisition, January 2015, were annual fees of GBP534,000, rental
licence fees GBP296,000 and services of GBP321,000).
4. Segment information
From 1 April 2015, the Group was reorganised so as to place
greater emphasis on regional performance. The Group is now
organised into three geographical segments: Asia Pacific; Americas;
and Europe, Middle East and Africa (EMEA). Each segment is
determined by the location of the Group's operations and is
organised and managed separately due to the differing local
requirements in each market.
The Executive management team monitors the operating results of
the regions for the purposes of making decisions about performance
assessment and resource allocation. Performance is evaluated based
on regional contribution using the same accounting policies as
adopted for the Group's financial statements. There is no
inter-segment revenue. Balance sheet information is not included in
the information provided to the Executive management team. Support
functions such as head office departments are controlled and
monitored centrally. Disclosure for the year ended 31 March 2015
has been restated to reflect the new organisational structure.
Year ended 31 March 2016
-----------------------------------------------------------
Asia Pacific EMEA Americas Corporate Total
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- ------------- --------- --------- ---------- ----------
Revenue
Annual fees 27,608 28,528 7,232 - 63,368
Initial fees 18,403 8,787 2,183 - 29,373
Rental fees 21,486 53,270 15,861 - 90,617
Training and services 4,049 11,015 3,069 - 18,133
--------------------------------- ------------- --------- --------- ---------- ----------
Regional revenue total 71,546 101,600 28,345 - 201,491
Cost of sales (3,117) (9,514) (2,058) - (14,689)
Selling and administrative
expenses (24,491) (33,270) (17,965) (34,171) (109,897)
--------------------------------- ------------- --------- --------- ---------- ----------
Regional contribution 43,938 58,816 8,322 (34,171) 76,905
--------------------------------- ------------- --------- --------- ---------- ----------
Research & Development
costs (25,711)
Adjusted profit from operations 51,194
Net finance revenue 7
--------------------------------- ------------- --------- --------- ---------- ----------
Adjusted profit before
tax 51,201
Exceptional items and other
normalised adjustments(#) (21,772)
--------------------------------- ------------- --------- --------- ---------- ----------
Profit before tax 29,429
--------------------------------- ------------- --------- --------- ---------- ----------
# Normalised adjustments include amortisation of intangible
assets (excluding other software), share-based payments and
movements on fair value of forward foreign exchange contracts.
Included within revenue for the year ended 31 March 2016 are the
following, related to the acquisitions of FabTrol and 8over8
Limited: Asia Pacific GBP1,340,000, EMEA GBP1,497,000 and Americas
GBP4,024,000.
Year ended 31 March 2015
-----------------------------------------------------------
Asia Pacific EMEA Americas Corporate Total
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- ------------- --------- --------- ---------- ----------
Revenue
Annual fees 25,137 29,838 5,749 - 60,724
Initial fees 16,855 10,537 3,730 - 31,122
Rental fees 21,625 51,365 24,499 - 97,489
Training and Services 3,992 12,034 3,325 - 19,351
--------------------------------- ------------- --------- --------- ---------- ----------
Regional revenue total 67,609 103,774 37,303 - 208,686
Cost of sales (3,053) (9,216) (2,262) (1,007) (15,538)
Selling and administrative
expenses (23,909) (32,800) (15,729) (30,008) (102,446)
--------------------------------- ------------- --------- --------- ---------- ----------
Regional contribution 40,647 61,758 19,312 (31,015) 90,702
--------------------------------- ------------- --------- --------- ---------- ----------
Research & Development
costs (28,913)
Adjusted profit from operations 61,789
Net finance revenue 309
--------------------------------- ------------- --------- --------- ---------- ----------
Adjusted profit before
tax 62,098
Exceptional items and other
normalised adjustments(#) (7,236)
--------------------------------- ------------- --------- --------- ---------- ----------
Profit before tax 54,862
--------------------------------- ------------- --------- --------- ---------- ----------
Other segmental disclosures
The Company's country of domicile is the UK. Revenue attributed
to the UK and all foreign countries amounted to GBP18,450,000 and
GBP183,041,000 (2015 - GBP16,038,000 and GBP192,648,000)
respectively. No individual country accounted for more than 10% of
the Group's total revenue. Revenue is allocated to countries on the
basis of the location of the customer. No single external customer
accounted for 10% or more of the Group's total revenue (2015 -
none).
Non-current assets (excluding deferred tax assets) held in the
UK and all foreign countries amounted to GBP39,314,000 and
GBP45,582,000 (2015 - GBP46,594,000 and GBP40,536,000)
respectively. There are no material non-current assets located in
an individual country outside of the UK.
5. Selling and administration expenses
An analysis of selling and administration expenses is set out
below:
2016 2015*
GBP000 GBP000
Selling and distribution expenses 85,915 80,323
Administrative expenses 39,337 25,576
125,252 105,899
----------------------------------- -------- --------
* Restated for a reclassification of expenses, as explained in
note 1.
6. Exceptional items
2016 2015
GBP000 GBP000
Acquisition and integration activities 10,459 371
Restructuring costs 4,544 851
Provision for interest on underpaid sales taxes in
an overseas location 226 768
15,229 1,990
---------------------------------------------------- ------- -------
The acquisition and integration expenses of the period relate to
fees paid to professional advisers primarily for legal and
financial due diligence services related to the aborted acquisition
of certain software assets from Schneider Electric and the
acquisition of FabTrol Systems Inc. The costs incurred during the
year to 31 March 2015 of GBP371,000 related to the acquisition of
8over8 Limited.
Exceptional restructuring costs of GBP4,544,000 (2015 -
GBP851,000) were incurred during the period and relate to
redundancy and other related costs in connection with the
rationalisation of offices and reduction in headcount in specific
areas of the business in light of challenging market
conditions.
The Group has provided for a potential underpaid sales tax
liability in respect of prior periods, related to the local sales
of one of the Group's subsidiary companies. The provision includes
an estimate of the underpaid tax as well as related interest for
late payment.
Exceptional items were included in the Consolidated income
statement as follows:
2016 2015
GBP000 GBP000
Research & Development costs 2,230 -
Selling and distribution expenses 1,290 1,218
Administrative expenses 11,709 772
15,229 1,990
----------------------------------- ------- -------
7. Income tax expense
a) Tax on profit
The major components of income tax expense for the years ended
31 March 2016 and 2015 are as follows:
2016 2015
GBP000 GBP000
---------------------------------------------------------- -------- --------
Tax charged in Consolidated income statement
Current tax
UK corporation tax 3,863 5,362
Adjustments in respect of prior periods (47) 3
---------------------------------------------------------- -------- --------
3,816 5,365
---------------------------------------------------------- -------- --------
Foreign tax 5,869 6,667
Adjustments in respect of prior periods (704) 553
---------------------------------------------------------- -------- --------
5,165 7,220
---------------------------------------------------------- -------- --------
Total current tax 8,981 12,585
---------------------------------------------------------- -------- --------
Deferred tax
Origination and reversal of temporary differences (441) 785
Adjustment in respect of prior periods 415 (67)
---------------------------------------------------------- -------- --------
Total deferred tax (26) 718
---------------------------------------------------------- -------- --------
Total income tax expense reported in Consolidated income
statement 8,955 13,303
---------------------------------------------------------- -------- --------
2016 2015
GBP000 GBP000
-------------------------------------------------------- -------- --------
Tax relating to items (charged)/credited directly to
Consolidated statement of comprehensive income
Deferred tax on intangible assets credited to other
comprehensive income - 380
Deferred tax on actuarial remeasurements on retirement
benefit obligation (1,868) 1,085
Current tax on pension contributions 214 1,192
-------------------------------------------------------- -------- --------
Tax (charge)/credit reported in Consolidated statement
of comprehensive income (1,654) 2,657
-------------------------------------------------------- -------- --------
b) Reconciliation of the total tax charge
The differences between the total tax charge shown above and the
amount calculated by applying the standard rate of UK corporation
tax to the profit before tax are as follows:
2016 2015
GBP000 GBP000
----------------------------------------------------------- -------- --------
Tax on Group profit before tax at standard UK corporation
tax rate of 20% (2015 - 21%) 5,886 11,521
Effects of:
* expenses not deductible for tax purposes 2,923 646
* irrecoverable withholding tax 93 132
* movement on unprovided deferred tax balances 408 387
* differing tax rates (19) 128
* adjustments in respect of prior years (336) 489
----------------------------------------------------------- -------- --------
Income tax expense reported in Consolidated income
statement 8,955 13,303
----------------------------------------------------------- -------- --------
The Group's effective tax rate for the year before exceptional
items and adjustments in respect of prior periods is 22.9% (2015 -
22.8%).
At the balance sheet date, the UK government had substantively
enacted a 1% reduction in the main rate of UK corporation tax to
19% from 1 April 2017 and by another 1% to 18% from 1 April 2020.
These rate changes have resulted in a GBP85,000 movement to opening
deferred tax consisting of a credit of GBP141,000 to the income
statement and a GBP226,000 charge to comprehensive income.
On 16 March 2016, the UK government announced that it would
reduce the main rate of corporation tax by a further 1% from 1
April 2020 to 17%. This change had not been substantively enacted
at the balance sheet date and is consequently not included in these
financial statements. The effect of this proposed reduction would
be immaterial to the UK net deferred tax liability.
8. Dividends paid and proposed on equity shares
2016 2015
GBP000 GBP000
-------------------------------------------------------- -------- --------
Declared and paid during the year
Interim 2015/16 dividend paid of 6.0 pence (2014/15
- 5.5 pence) per ordinary share 3,836 3,515
Final 2014/15 dividend paid of 25.0 pence (2013/14
- 22.0 pence) per ordinary share 15,978 14,043
-------------------------------------------------------- -------- --------
19,814 17,558
-------------------------------------------------------- -------- --------
Proposed for approval by shareholders at the Annual
General Meeting
-------------------------------------------------------- -------- --------
Final proposed dividend 2015/16 of 30.0 pence (2014/15
- 25.0 pence) per ordinary share 19,182 15,976
-------------------------------------------------------- -------- --------
The proposed final dividend is subject to approval by
shareholders at the Annual General Meeting on 8 July 2016 and has
not been included as a liability in these financial statements. If
approved at the Annual General Meeting, the final dividend will be
paid on 5 August 2016 to shareholders on the register at the close
of business on 1 July 2016.
9. Earnings per share
2016 2015
Pence Pence
------------------------------------------- ------- -------
Earnings per share for the year:
* basic 32.03 65.07
* diluted 31.96 64.92
Adjusted earnings per share for the year:
* basic 62.04 74.51
* diluted 61.91 74.34
------------------------------------------- ------- -------
2016 2015
Numbers Numbers
------------------------------------------------------ ----------- -----------
Weighted average number of ordinary shares for basic
earnings per share 63,925,508 63,872,070
Effect of dilution: employee share options 137,389 146,272
------------------------------------------------------ ----------- -----------
Weighted average number of ordinary shares adjusted
for the effect of dilution 64,062,897 64,018,342
------------------------------------------------------ ----------- -----------
The calculations of basic and diluted earnings per share are
based on the net profit attributable to equity holders of the
parent for the year of GBP20,474,000 (2015 - GBP41,559,000). Basic
earnings per share amounts are calculated by dividing the net
profit attributable to equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the
net profit attributable to equity holders of the parent by the
weighted average number of ordinary shares outstanding during the
year plus the weighted average number of ordinary shares that would
be issued on the conversion of all the potentially dilutive share
options into ordinary shares.
Details of the calculation of adjusted earnings per share are
set out below:
2016 2015
GBP000 GBP000
---------------------------------------------------------- -------- --------
Profit after tax for the year 20,474 41,559
Intangible amortisation (excluding software) 5,617 4,707
Share-based payments 494 (441)
Loss on fair value of forward foreign exchange contracts 432 980
Exceptional items 15,229 1,990
Tax effect on exceptional items (936) (134)
Tax effect on other normalised items (1,648) (1,067)
---------------------------------------------------------- -------- --------
Adjusted profit after tax 39,662 47,594
---------------------------------------------------------- -------- --------
The denominators used are the same as those detailed above for
both basic and diluted earnings per share.
The adjustment made to profit after tax in calculating adjusted
basic and diluted earnings per share has been adjusted for the tax
effects of the items adjusted.
The Directors believe that adjusted earnings per share is a more
representative presentation of the underlying performance of the
business.
10. Trade and other receivables
2016 2015
GBP000 GBP000
-------------------------------------- -------- --------
Current
Amounts falling due within one year:
Trade receivables 88,618 88,618
Prepayments and other receivables 7,384 6,590
Accrued income 1,136 1,260
-------------------------------------- -------- --------
97,138 96,468
-------------------------------------- -------- --------
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.
2016 2015
GBP000 GBP000
----------------------------------- -------- --------
Non-current
Prepayments and other receivables 1,257 1,440
----------------------------------- -------- --------
Non-current prepayments and other receivables include rental
deposits for operating leases.
As at 31 March 2016 the provision for impairment of receivables
was GBP5,879,000 (2015 - GBP5,636,000) and an analysis of the
movements during the year was as follows:
GBP000
---------------------------------------------- --------
At 1 April 2014 5,161
Arising from business combination 1,011
Charge for the year, net of amounts reversed 3,327
Utilised (3,612)
Exchange adjustment (251)
---------------------------------------------- --------
At 31 March 2015 5,636
Arising from business combination --
Charge for the year, net of amounts reversed 3,431
Utilised (3,141)
Exchange adjustment (47)
---------------------------------------------- --------
As at 31 March 2016 5,879
---------------------------------------------- --------
As at 31 March, the ageing analysis of trade receivables (net of
provision for impairment) was as follows:
Past due not impaired
----- ------- --------- --------------------------------------
Neither Eight
past due Less than Four to to More than
nor four eight twelve twelve
Total impaired months months months months
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----- ------- --------- --------- ------- ------- ---------
2016 88,618 54,778 30,831 2,142 867 -
2015 88,618 65,058 20,712 1,650 1,176 22
----- ------- --------- --------- ------- ------- ---------
11. Cash and cash equivalents and treasury deposits
2016 2015
GBP000 GBP000
--------------------------------------------- -------- --------
Cash at bank and in hand 38,176 50,635
Short-term deposits 26,435 7,884
--------------------------------------------- -------- --------
Net cash and cash equivalents per cash flow 64,611 58,519
Treasury deposits 43,316 45,248
--------------------------------------------- -------- --------
107,927 103,767
--------------------------------------------- -------- --------
Treasury deposits represent bank deposits with an original
maturity of over three months. Treasury deposits held with a fixed
rate of interest were GBP23,296,000 (2015 - GBP32,788,000), with
the remainder held at a floating rate.
Short-term deposits are made for varying periods of between one
day and three months, depending on the immediate cash requirements
of the Group, and earn interest at the respective short-term
deposit rates. GBP31,776,000 (2015 - GBP3,768,000) were at a fixed
rate of interest and the remainder were held at a floating rate of
interest.
The fair value of cash and cash equivalents and treasury
deposits is GBP107,927,000 (2015 - GBP103,767,000).
12. Trade and other payables
2016 2015
GBP000 GBP000
------------------------------------------------- -------- --------
Current
Trade payables 5,986 3,251
Social security, employee taxes and sales taxes 13,502 14,500
Accruals and other payables 16,478 15,232
Deferred revenue 46,874 48,213
Deferred consideration 1,230 417
------------------------------------------------- -------- --------
84,070 81,613
------------------------------------------------- -------- --------
Trade payables are non-interest bearing and are normally settled
on terms of between 30 and 60 days. Social security, employee taxes
and sales taxes are non-interest bearing and are normally settled
on terms of between 19 and 30 days. The Directors consider that the
carrying amount of trade and other payables approximates their fair
value.
13. Retirement benefit obligations
The movement on the provision for retirement benefit obligations
was as follows:
UK German South
defined defined Korean
benefit benefit severance
scheme schemes pay Total
GBP000 GBP000 GBP000 GBP000
-------------------------------------------- --------- --------- ----------- --------
At 31 March 2014 5,853 1,074 1,921 8,848
Current service cost 1,487 - 246 1,733
Net interest on pension scheme liabilities 276 42 65 383
Actuarial remeasurements 11,389 122 (15) 11,496
Employer contributions (7,724) (47) (526) (8,297)
Exchange adjustment - (132) 156 24
-------------------------------------------- --------- --------- ----------- --------
At 31 March 2015 11,281 1,059 1,847 14,187
Current service cost - - 213 213
Net interest on pension scheme liabilities 506 30 42 578
Actuarial remeasurements (7,936) 211 (112) (7,837)
Employer contributions (1,580) (11) (471) (2,062)
Exchange adjustment - 104 (21) 83
-------------------------------------------- --------- --------- ----------- --------
At 31 March 2016 2,271 1,393 1,498 5,162
-------------------------------------------- --------- --------- ----------- --------
a) UK defined benefit scheme
The Group operates a UK defined benefit pension plan providing
benefits based on final pensionable pay which is funded. This
scheme was closed to new employees on 30 September 2002 (with the
option of re-opening if required) and was converted to a Career
Average Revalued Earnings basis on 30 September 2004. The Scheme
closed to future benefit accrual with effect from 1 April 2015.
Pensions are also payable to dependants on death. Administration on
behalf of the members is governed by a trust deed, and the funds
are held and managed by professional investment managers who are
independent of the Group.
Contributions to the scheme are made in accordance with advice
from an external, professionally qualified actuary, Broadstone
Corporate Benefits Limited, at rates which are calculated to be
sufficient to meet the future liabilities of the scheme. Scheme
assets are stated at their market values at the respective Balance
sheet dates.
The principal assumptions used in determining the pension
valuation were as follows:
2016 2015
% %
------------------------------------------- ----- -----
Main assumptions:
Discount rate 3.40 3.10
Inflation assumption - RPI 3.30 3.30
Rate of salary increases 5.30 5.30
Rate of increase of pensions in payment 3.10 3.10
Rate of increase of pensions in deferment 2.30 2.30
------------------------------------------- ----- -----
The duration of the Scheme liabilities is estimated to be 19
years.
14. Directors
Philip Aiken
Chairman
Philip Dayer
Non-Executive Director and Senior Independent Director
Jonathan Brooks
Non-Executive Director
Jennifer Allerton
Non-Executive Director
Richard Longdon
Chief Executive
James Kidd
Chief Financial Officer
15. Responsibility statement pursuant to FSA's Disclosure and
Transparency Rule 4 (DTR 4)
Each Director of the Company (whose names and functions appear
in note 14) confirms that (solely for the purpose of DTR 4) to the
best of his/her knowledge:
-- the financial information in this document, prepared in
accordance with the applicable UK law and applicable accounting
standards, give a true and fair view of the assets, liabilities,
financial position and result of the Company and of the Group taken
as a whole; and
-- the Chairman's statement, Chief Executive's review and
Finance review include a fair review of the development and
performance of the business and the position of the Company and
Group taken as a whole, together with a description of the
principal risks and uncertainties that they face.
On behalf of the Board
James Kidd Richard Longdon
Chief Financial Officer Chief Executive
24 May 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUMAAUPQGBW
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May 24, 2016 02:01 ET (06:01 GMT)
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