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AVEVA Group PLC

08 June 2022

AVEVA GROUP PLC

RESULTS FOR THE 12 MONTHSED 31 MARCH 2022

AVEVA delivers solid results with ARR up 10% and revenue up 7% on an organic pro forma constant currency basis

AVEVA Group plc ('AVEVA' or 'the Group') announces its results for the year ended 31 March 2022.

Highlights

Pro forma results (1)

   --      Annualised Recurring Revenue (ARR)(2) increased 10.2% to GBP768.7m (FY21: GBP697.8m). 

-- On an organic constant currency basis(3) pro forma revenue for the combined Group grew 7.1% and adjusted EBIT(4) grew 7.7%.

Statutory results (5)

-- Revenue was GBP1,185.3 million (FY21: GBP820.4 million) after the impact of the deferred revenue haircut of GBP50.3 million (FY21: GBP3.3 million), representing an increase of 44.5%. This change was primarily due to the acquisition of OSIsoft.

-- Loss from operations before tax was GBP6.5m (FY21: profit of GBP36.6m) with the loss being primarily due to the amortisation of intangible assets of GBP226.1m (FY21: GBP95.7m).

   --      Diluted loss per share was 20.8 pence (FY21: EPS 11.3 pence). 
   --      Final dividend of 24.5 pence proposed representing an increase of 4.3% (FY21: 23.5 pence). 

Integration

-- Integration of the AVEVA and OSIsoft businesses has progressed well. During the year both revenue and cost synergies were in line with the plan while strong progress was made on product integration, which will drive substantial longer-term synergies.

Summary results

 
 Combined AVEVA Group on a pro forma basis (unaudited) 
                                                                      Organic constant 
 Year ended 31 March                2022          2021       Change       currency 
 
 Revenue                         GBP1,235.6m   GBP1,196.1m    3.3%          7.1% 
 Annualised recurring revenue     GBP768.7m     GBP697.8m      -           10.2% 
 Adjusted EBIT                    GBP365.1m     GBP354.7m     2.9%          7.7% 
 Adjusted diluted earnings 
  per share                         99.6p        105.3p      (5.4)%          - 
------------------------------  ------------  ------------  -------  ----------------- 
 
 
 AVEVA Group plc statutory results 
 Year ended 31 March                 2022         2021      Change 
 
 Revenue                          GBP1,185.3m   GBP820.4m   44.5% 
 (Loss)/profit from operations     GBP(6.5)m    GBP36.6m      - 
 Basic (loss)/earnings per 
  share                             (20.8)p       11.4p       - 
 Diluted (loss)/earnings 
  per share                         (20.8)p       11.3p       - 
 

Chief Executive Officer, Peter Herweck said:

"AVEVA delivered a solid set of results in FY22 as the business recovered following disruption caused by the Covid pandemic. During the year we made good progress with the integration of OSIsoft and have recently launched integrated products that will drive further revenue synergies. I am excited about the opportunities ahead of us as AVEVA enables the connection and digitalisation of the industrial world. We are focused on accelerating growth in Annualised Recurring Revenue and expect AVEVA's growth rate on this metric to significantly improve."

Notes

(1) On 19 March 2021, the Group announced the completion of the acquisition of OSIsoft, LLC (OSIsoft) enhancing AVEVA's ability to accelerate the digital transformation of the industrial world . To provide a better understanding of the combined comparative trading performance and to improve transparency, non-statutory results are also shown for the combined Group on a pro forma basis. The Directors believe that the pro forma results give helpful insight into the performance of the Group and form a basis from which to consider the outlook.

Pro forma results include results for both AVEVA and OSIsoft for the 12 months to 31 March 2022 and the 12 months to 31 March 2021. In addition to this, the results have been adjusted to exclude the effect of the deferred revenue haircut under IFRS 3 (Business Combinations), which reduces statutory revenue.

(2) ARR makes it easier to track recurring revenue progression by annualising revenue associated with subscription, cloud and Maintenance contracts. It removes timing differences caused by revenue recognition standards by annualising the revenue associated with contracts at a point in time. It is calculated on a constant currency basis.

(3) Organic constant currency revenue and adjusted EBIT excludes a currency translation reduction of GBP 42.5 million to revenue; and adjusts for the disposals of the Acquis Software, Termis Software and Water Loss Management Software businesses in June 2021 by removing the results of the disposals from each reporting period.

(4) Adjusted metrics are calculated before amortisation of intangible assets, share-based payments and exceptional items. Adjusted Earnings Per Share also includes the tax effects of these adjustments. See note 1 Basis of Preparation.

(5) Statutory results include the results for the combined AVEVA Group for the 12 months to 31 March 2022 compared to the results for AVEVA Group and 12 days of OSIsoft ownership for FY21.

Enquiries:

AVEVA Group plc

Matt Springett, Head of Investor Relations Tel: 07789 818 684

FTI Consulting LLP

Edward Bridges / Dwight Burden Tel: 0203 727 1017

Conference call details

AVEVA will host a call for analysts and investors at 9.30am BST today.

Conference call dial-in details:

UK: 020 3936 2999 / 0800 640 6441

USA : 1 855 9796 654 / 1 646 664 1960

All other locations: +44 20 3936 2999

Conference call access code: 427649

Slides and a webcast are available via investors.aveva.com and a replay of the call will be made available later in the day.

Chief Executive's review

Summary

AVEVA delivered a solid financial performance and made good progress in integrating OSIsoft, which was acquired just before the start of the financial year.

Pro forma organic constant currency ARR increased 10.2%, revenue grew by 7.1% and adjusted EBIT increased 7.7% on the same basis. The revenue growth was led by growth in sales of PI System products, which increased at a double-digit rate and growth from the heritage AVEVA business at a low single-digit rate.

Integration

The integration of OSIsoft progressed well, in accordance with AVEVA's plans. During the first half of the financial year, the organisational model was established and leadership roles determined.

R&D work on the product portfolio roadmap to achieve interoperability between products has been progressed to add greater value to customers. Key integrated products that have been launched included AVEVA Unified Operations Center with AVEVA PI System and AVEVA Predictive Analytics with PI System.

AVEVA is on track to achieve both cost and revenue synergies in line with its acquisition model. Pre-tax cash cost synergies are expected of not less than $30 million per annum on a run rate basis by the year ending 31 March 2023. Revenue synergies of at least $100 million per annum are expected by the year ending 31 March 2026.

During FY22 AVEVA achieved initial revenue synergies of GBP7. 4 million ($10.1 million) and GBP 10.8 million ($14.7 million) of cost synergies were realised in the year .

ARR and business model transition

ARR at 31 March 2022 for the combined AVEVA Group on a pro forma constant currency basis was GBP768.7 million (FY21: GBP697.8 million), representing a 12 month increase of 10.2%. This growth was driven by the heritage AVEVA business, which increased ARR by a double-digit rate, while OSIsoft increased ARR by a low single digit rate, ahead of its transition to a subscription-based revenue model.

During the year AVEVA also made progress with its subscription transition, with 11.5% growth in on-premises pro forma constant currency subscription revenue and very strong growth in SaaS contract wins, leading to 23.9% growth in SaaS revenue on a pro forma constant currency basis.

The PI System product is expected to increase ARR growth as it moves to the AVEVA Flex subscription model. AVEVA also expects to drive an acceleration in sales of SaaS revenue as more products become available on the cloud and salesforce incentives have been evolved to further encourage sales of these products.

Pro forma regional performance

EMEA revenue was GBP473.9 million representing an increase of 5.9% (FY21: GBP447.6 million) and was up 9.7% on an organic constant currency basis. AVEVA achieved good growth in Eastern Europe and the Middle East in particular. The war in Ukraine did not have a material impact on revenue in the financial year. Notable order wins were achieved with companies including International Maritime Industries, Saudi Aramco and Saudi Electricity Company.

Americas revenue was GBP496.5 million representing an increase of 4.8% to (FY21: GBP473.7 million) and was up 8.4% on an organic constant currency basis. Growth was broad based with all regions delivering a good performance across the USA, Canada and Latin America. Notable order wins were achieved with companies including TC Energy, Pembina, Southern California Gas and General Mills.

Asia Pacific revenue was GBP265.2 million, representing a decrease of 3.5% (FY21: GBP274.8 million) and was up 0.7% on an organic constant currency basis. AVEVA saw good growth in China and India, which was largely offset by declines in Korea and Japan due to tough comparative periods. Notable order wins were achieved with companies including Sinopec Engineering and Indian Oil Corporation.

Business highlights

Engineering consists of Engineering and Simulation software. In turn, Engineering software includes Engineering & Design, Project Execution and Engineering Information Management. Simulation includes Simulation & Learning and Value Chain Optimisation.

Engineering contributed 30.9% of pro forma revenue in the period (FY21: 35.1%). On an organic constant currency basis, revenue decreased by 5.7%. This decrease was due to a tough comparator in the prior year that included a significant amount of point-in-time revenue recognition due to several significant multi-year contracts. Underlying business performance was good, contributing to the Group's double-digit ARR growth, with a broad range of new order wins being achieved, particularly in the energy market, which is undergoing a recovery following the Covid crisis. Significant orders were won from companies including Aibel, Saipem SBM Offshore and Worley.

Operations consists of Asset Performance, Monitoring & Control and Information Management (PI System). In turn, Asset Performance consists of Asset Performance Management and Manufacturing Executions Systems software. Monitoring & Control includes HMI SCADA, Enterprise Visualisation and Pipeline Management software. Information Management consists of the recently acquired OSIsoft business.

Operations contributed 69.1% of pro forma revenue in the period (FY21: 64.9%). On an organic constant currency basis, revenue increased by 14.2%. This revenue growth was due to good performances across the business unit from Asset Performance, Monitoring & Control and in particular, Information Management. The PI System business delivered solid double-digit growth in the year, with performance significantly strengthening in Q4 as the benefits of integration began to take effect. The growth in Monitoring & Control revenue was supported by a significant contract extension and renewal with Schneider Electric, with a substantial element of point-in-time revenue recognition. Other significant orders came from companies including General Mills, PepsiCo, Nestle and Rio Tinto.

Cloud

AVEVA made progress during FY22 growing SaaS revenue to GBP27.8 million representing 23.9% growth on a pro forma organic constant currency basis (FY21: GBP23.4 million) and orders in annual contract value terms by 89%. Key products were launched on the Group's SaaS platform, AVEVA Connect, during the year including Unified Engineering, Unified Operations Control and Unified Supply Chain. AVEVA is accelerating investment in cloud R&D during FY23 moving products to an industrial hybrid cloud architecture to maximise the opportunities for leveraging data and collaborative working.

Outlook

The ongoing digitalisation of the industrial world continues to drive demand for industrial software and AVEVA is very well positioned with its broad integrated software portfolio to drive sustainable growth. AVEVA's end markets have recovered from the Covid crisis and several key markets are showing positive trends, such as energy, power, shipbuilding and infrastructure.

As communicated in the trading update on 27 April 2022, AVEVA intends to drive an acceleration in ARR growth in FY23 to a level of 15% to 20% per annum. This growth will be underpinned by the business model transition to subscription, improving end market conditions, synergies relating to the PI System integration, and price increases. For example, contracts are beginning to be renewed early as energy markets recover; PI System will accelerate its move to subscription; the Group's cloud transition is being accelerated; and AVEVA implemented a substantial list price increase on 1 April 2022.

As the transition to subscription and SaaS accelerates in FY23, reported revenue will be reduced by the timing of revenue recognition but ARR will increase. The Group expects contract assets to remain broadly stable, impacting point-in-time revenue recognition as AVEVA increasingly moves towards higher ARR value contracts that have rateable revenue recognition.

In addition to this, revenue will be impacted by the war in Ukraine and consequential sanctions on Russia as AVEVA has ceased new business in Russia. The Group continues to support existing non-sanctioned companies where there is no legal basis to terminate contracts. Russia is a relatively small market in the context of the Group, representing around 2% of revenue in FY22. Due to the fixed nature of AVEVA's costs, the loss of revenue will largely drop through to adjusted EBIT.

Adjusted EBIT for FY23 will also be impacted by some additional costs. These include wage inflation due to very competitive software labour market conditions; increased travel and event costs post-Covid; together with investment in cloud R&D, cloud sales and cloud operations. Wage inflation will be more than offset by pricing over time; however, most salary increases feed through at the beginning of the financial year, while list price increases only take effect when contracts are renewed, or new business is signed. While the additional investment in cloud was planned, the Board has decided to pull this investment forward to accelerate AVEVA's transition and the impact of this acceleration in cloud will result in around GBP20m of additional costs in the current financial year.

As previously communicated in a trading update on 27 April 2022, taking all of these factors into account, revenue growth is expected to be lower in FY23 than in FY22 on an organic constant currency basis and adjusted EBIT margin is expected to reduce, before resuming growth in FY24. If current rates of FX persist, AVEVA will benefit from a significant currency translation gain on a statutory basis, due to the strength of the US dollar versus Sterling. Cash conversion is expected to significantly improve in FY23 and beyond.

Peter Herweck

Chief Executive Officer

7 June 2022

Finance review

Overview

On 25 August 2020, AVEVA announced that it had reached agreement to acquire OSIsoft at an enterprise value of $5.0 billion . The transaction subsequently completed on 19 March 2021 and therefore the statutory results compare the performance of the combined AVEVA and OSIsoft business in FY22 with the standalone AVEVA business plus 12 days of OSIsoft ownership in FY21.

The finance review begins with a commentary of those statutory results and then covers pro forma results to show the underlying performance of the combined business.

Statutory results

On a statutory basis, revenue for the year was GBP1,185.3 million whic h was 44.5% higher compared with the previous year (FY21: GBP820.4 million). This change was due to the inclusion of OSIsoft in the current year and growth in the business, partly offset by negative FX translation due to the relative strengthening of Sterling, particularly in relation to the US Dollar on average during the year, given that the majority of AVEVA's sales are made in US Dollars.

Subscription revenue, which includes rental contracts and SaaS contracts, grew 17.9% to GBP424.2 million (FY21: GBP359.7 million), primarily due to the growth in the heritage AVEVA business Operations business unit.

Maintenance revenue grew by 74.6% to GBP345.2 million (FY21: GBP197.7 million), primarily due to the inclusion of OSIsoft in FY22.

Perpetual licences grew 107.0% to GBP293.1 million (FY21: GBP141.6 million), primarily due to the inclusion of OSIsoft in FY22 and growth in the OSIsoft business.

Services revenue grew 1.2% to GBP122.8 million (FY21: GBP121.4 million) relating to a focus on growing higher margin software revenue.

Total statutory costs increased to GBP1,203.9 million (FY21: GBP786.2 million). This increase was mainly due to the acquisition of OSIsoft and the cost of sale, operating cost and amortisation of intangible assets associated with this.

As a result of the acquisition the amortisation charge increased to GBP226.1 million (FY21: GBP95.7 million). While the cost of sale increased 28.2% to GBP232.5 million (FY21: GBP181.3 million), operating costs including amortisation increased 59.2% to GBP959.3 million (FY21: GBP602.5 million) and net interest increased from GBP2.4 million to GBP12.1 million.

Cost of sales was GBP232.5 million (FY21: GBP181.3 million) representing an increase of 28.2%. This was below the statutory increase in revenue of 44.5%, due to a lower cost of sale for the OSIsoft business, which has a lower services revenue mix.

Research & Development costs were GBP343.3 million (FY21: GBP184.5 million) representing an increase of 86.1%. This was due the amortisation of acquired intangible assets, an increase in the scale of the business, growth due to investment in cloud and higher employment costs.

Selling and distribution expenses were GBP345.4 million (FY21: GBP226.8 million) representing an increase of 52.3%. This was mainly due to the greater scale of the business and additional amortisation.

Administrative expenses were GBP246.3 million (FY21: GBP193.0 million) representing an increase of 27.6%. This reflected a decrease in exceptional items, which was more than offset by the increased scale of the business and underlying higher costs in IT and legal functions.

The Group made a loss before tax of GBP18.6 million (FY21: profit of GBP34.2 million). This was largely due to the amortisation of intangible assets relating to AVEVA's combinations with the Schneider Electric industrial software business and OSIsoft, the deferred revenue haircut and exceptional costs.

Basic loss per share was 20.8 pence (FY21: EPS 11.4 pence) and diluted loss per share was 20.8 pence (FY21: EPS 11.3 pence).

The statutory tax charge was GBP44.0m (FY21: GBP9.4 million). This was due to factors including additional taxable profits following the OSIsoft acquisition, US alternative minimum tax and an increase in the UK tax rate from 19% to 25%.

Operating cash flow

Cash generated from operating activities before tax was GBP197.2 million, compared to GBP91.2 million generated in the previous year.

This included cash paid in the period in relation to the acquisition of OSIsoft of GBP67.4 million and other exceptional items of GBP40.6 million (FY21: GBP63.2 million).

Cash conversion, defined as free cash flow before tax excluding acquisition costs as a proportion of adjusted profit before tax was 62.5% (FY21: 36.8%).

Dividends

The Directors propose to pay a final dividend of 24.5 pence per share (FY21: 23.5 pence). The final dividend will be payable on 5 August 2022 to shareholders on the register on 8 July 2022.

Balance sheet

On 31 March 2022, AVEVA had net debt of GBP405.2 million (31 March 2021: GBP367.4 million). Net debt is defined as loans and borrowings minus cash and cash equivalents. This reflects the $900 million term loan taken out to partly finance the acquisition of OSIsoft, together with cash of GBP279.3 million (31 March 2021: GBP286.6 million).

Non-current assets were GBP 5.7 billion (31 March 2021: GBP5.8 billion), reflecting goodwill and intangible assets that arose from the combination with the Schneider Electric industrial software business and the OSIsoft acquisition. Goodwill and intangible assets were GBP 5.5 billion (31 March 2021: GBP5.6 billion).

Trade and other receivables were GBP381.2 million (31 March 2021: GBP318.0 million). Contract assets increased to GBP302.1 million from GBP215.6 million at 31 March 2021. This increase included the impact of new subscription contract wins with point in time revenue recognition.

Contract liabilities were GBP328.2 million (31 March 2021: GBP239.7 million). This increase reflected an increase in Maintenance contract wins and the unwinding of the deferred revenue haircut, which arose from the acquisition of OSIsoft.

Pro forma results

The pro forma results are summarised below:

 
                                                  FY21             Organic constant 
 GBPm                      FY22 Unaudited    Unaudited    Change           currency 
 
 Revenue                          1,235.6      1,196.1      3.3%               7.1% 
 Cost of sales                    (232.3)      (229.1)      1.4%               4.9% 
------------------------  ---------------  -----------  --------  ----------------- 
 Gross profit                     1,003.3        967.0      3.8%               7.7% 
 Operating expenses               (638.2)      (612.3)      4.2%               7.6% 
------------------------  ---------------  -----------  --------  ----------------- 
 Adjusted EBIT                      365.1        354.7      2.9%               7.7% 
 Net interest                      (12.1)       (16.0)   (24.4)% 
------------------------  ---------------  -----------  --------  ----------------- 
 Adjusted profit before 
  tax                               353.0        338.7      4.2% 
 Tax charge                        (50.6)       (20.1)    151.7% 
------------------------  ---------------  -----------  --------  ----------------- 
 Adjusted profit after 
  tax                               302.4        318.6    (5.1)% 
 
 Adjusted diluted EPS 
  (pence)                            99.6        105.3    (5.4)%                  - 
 Gross margin                       81.2%        80.8%    +40bps             +40bps 
 Adjusted EBIT margin               29.5%        29.7%   (20)bps             +30bps 
 Tax charge                         14.3%         5.9%   +840bps                  - 
 

Pro forma results include results for both AVEVA and OSIsoft for the 12 months to 31 March 2022 and the 12 months to 31 March 2021. In addition to this, the results have been adjusted to exclude the effect of the deferred revenue haircut under IFRS 3 (Business Combinations).

Adjusted metrics are calculated before amortisation of intangible assets, share-based payments and exceptional items. Adjusted Earnings Per Share also includes the tax effects of these adjustments.

Pro forma revenue

Revenue was GBP1,235.6 million, representing an increase of 3.3% (FY21: GBP1,196.1 million). Organic constant currency revenue grew 7.1%, adjusted for a currency translation headwind of GBP42.5 million and minor disposals in the current year.

The revenue mix for the combined Group is shown below:

 
                                                             Organic 
                                                            constant 
                                                Reported    currency   % of FY22 
 GBPm                          FY22      FY21     change      change       total 
 On-premises rental           396.4     364.0       8.9%       11.5%       32.1% 
 SaaS                          27.8      23.4      18.8%       23.9%        2.2% 
                           --------  --------  ---------  ----------  ---------- 
 Total subscription 
  revenue                     424.2     387.4       9.5%       12.3%       34.3% 
 Maintenance                  395.5     412.8     (4.2)%        0.4%       32.0% 
                           --------  --------  ---------  ----------  ---------- 
 Total recurring revenue      819.7     800.2       2.4%        6.2%       66.3% 
 Perpetual licences           293.1     271.2       8.1%       12.2%       23.7% 
 Services                     122.8     124.7     (1.5)%        2.5%       10.0% 
                           --------  --------  ---------  ----------  ---------- 
 Total                      1,235.6   1,196.1       3.3%        7.1%      100.0% 
                           --------  --------  ---------  ----------  ---------- 
 

Subscription revenue growth was driven by sales of on-premises rental contracts within the heritage AVEVA business as the transition to a recuring revenue model continued and also subscription growth from OSIsoft, as it began its business model transition. Within subscription, SaaS revenue grew 18.8% to GBP27.8 million (FY21: GBP23.4 million) which was due to sales of cloud solutions such as Value Chain Optimisation, Asset Information Management and Unified Engineering. On an organic constant currency basis the increase was 23.9%.

Maintenance revenue was driven by growth associated with the OSIsoft business, which more than offset a decline at the heritage AVEVA business due to the planned subscription transition.

Perpetual licence increase was driven by strong growth from the heritage OSIsoft business, ahead of its move to a subscription business model.

Services revenue was driven by growth in the overall business, partly offset by a focus on higher margin software revenue.

The revenue mix for the combined Group showing point in time versus overtime revenue recognition is shown below:

 
                                     FY22                               FY21 
                         Revenue                            Revenue 
                        point in      Revenue              point in      Revenue 
 GBPm                       time    over time     Total        time    over time     Total 
 
 On-premises rental        280.7        115.7     396.4       259.6        104.4     364.0 
 SaaS                          -         27.8      27.8           -         23.4      23.4 
 Total subscription        280.7        143.5     424.2       259.6        127.8     387.4 
 Maintenance                   -        395.5     395.5           -        412.8     412.8 
                      ----------  -----------  --------  ----------  -----------  -------- 
 Total recurring 
  revenue                  280.7        539.0     819.7       259.6        540.6     800.2 
 Perpetual licences        293.1            -     293.1       271.2            -     271.2 
 Services                      -        122.8     122.8           -        124.7     124.7 
                      ----------  -----------  --------  ----------  -----------  -------- 
 Total                     573.8        661.8   1,235.6       530.8        665.3   1,196.1 
                      ----------  -----------  --------  ----------  -----------  -------- 
 

Of the total revenue recognised in FY22, GBP661.8 million (FY21: GBP665.3 million) was recognised over time representing 53.6% of the total (FY21: 55.6%), demonstrating that AVEVA already has a significant amount of revenue which is recognised rateably.

Revenue recognised at a point in time was GBP573.8 million (FY21: GBP530.8 million) representing 46.4% of total revenue (FY21: 44.4%). Of this GBP280.7 million (FY21: GBP259.6 million) related to on-premises rental subscription contracts and represented 22.7% of total revenue in the year (FY21: 21.7%), showing that this element is relatively stable year on year.

At 31 Marc h 2022, the Group had a revenue backlog of GBP781.4 million (FY21: GBP657.9 million) representing remaining performance obligations which have not been met or are partially met. Of this GBP487.8 million (FY21: GBP425.8 million) will be recognisable within one year.

Pro forma costs

An analysis of total expenses is summarised below.

 
                                                                     Net impairment 
                                                                        gain / loss 
                     Cost of                     Selling             from financial 
 GBPm                  sales     R&D    and distribution   Admin.            assets   Total 
 Adjusted costs        232.3   178.2               280.7    179.9             (0.6)   870.5 
 
 FY21                  229.1   168.5               278.1    162.1               3.6   841.4 
 Change                 1.4%    5.8%                0.9%    11.0%          (116.7)%    3.5% 
 Organic constant 
  currency              4.9%    9.2%                4.2%    14.7%          (113.9)%    6.9% 
 

Cost of sales increased largely due to the growth in the business and included higher cloud hosting and infrastructure costs.

Research & Development costs increased due to investment in the development of cloud products and also reflects higher employment costs, reflecting a very competitive labour market.

Selling and distribution expenses increased mainly due to increased sales commissions and sales employment costs.

Administrative expenses increased largely due to higher costs in IT and legal functions with increases in capacity being needed as the business scales.

Net impairment loss from financial assets represents the impairment of accounts receivable and contract assets. The reversal of provisions made during the Covid crisis in FY21, offset by the impairment of assets in Russia, led to a net positive impact in FY22.

Pro forma adjusted EBIT

Adjusted EBIT increased by 2.9% to GBP365.1 million (FY21: GBP354.7 million). This resulted in an adjusted EBIT margin of 29.5% (FY21: 29.7%), which was up +30bps on an organic constant currency basis.

Pro forma net interest charge

The combined pro forma interest charge assumes that the GBP685.1 million term loan was drawn down on 1 April 2020 and therefore a full year's interest is charged in each period. Total net interest was GBP12.1 million (FY21: GBP16.0 million). The year-on-year reduction was largely due to lower LIBOR rates.

Pro forma taxation

The pro forma tax charge on adjusted profit before tax was GBP 50.6 million (FY21: GBP20.1 million), which equates to an effective tax rate of 14.3 % (FY21: 5.9%). This tax charge factors in the benefit of UK tax incentives on intellectual property and US tax deductions for the amortisation of goodwill relating to the acquisition of OSIsoft . The year-on-year increase was due to increased US Alternative Minimum Tax and irrecoverable withholding tax. The tax rate on adjusted profit before tax is expected to remain at or below the level seen in FY22 going forward.

Pro forma earnings per share

Pro forma diluted adjusted EPS decreased by 5.4 % to 99.6 pence (FY21: 105.3 pence) as a result of the higher adjusted EBIT and lower interest, being more than offset by a higher tax charge.

Normalised and exceptional items

The normalised and exceptional items below have been excluded in presenting the adjusted results.

 
 GBPm                                             FY22    FY21 
 Acquisition costs relating to OSIsoft             0.8    44.4 
 Integration of OSIsoft                           28.0     6.1 
 Integration of Schneider Electric industrial 
  software business                               13.5    27.6 
 Disposals                                         2.8       - 
 Retirement of steel fabrication business         15.4       - 
 Impairment of balances with Russian-based 
  counterparties                                   7.3       - 
 Gain on disposal of pension scheme                  -   (0.3) 
 Total exceptional items                          67.8    77.8 
----------------------------------------------  ------  ------ 
 
 Amortisation                                    226.1    95.7 
 Share-based payments                             27.4    16.3 
 Total normalised items                          253.5   112.0 
----------------------------------------------  ------  ------ 
 

Exceptional costs incurred in the integration of OSIsoft, primarily consisting of consultancy and adviser fees and additional temporary resources paid relating to the merging of IT systems and real estate, and rebranding. Costs are anticipated to continue until mid-calendar 2023.

In the year-ended 31 March 2022, Schneider Electric industrial software business integration costs primarily related to the continued build and implementation of a global ERP system and legal entity rationalisation. These costs are expected to continue until mid-calendar 2024.

A GBP14.9 million impairment of intangible assets associated with the Group's steel fabrication business (GBP10.9 million and GBP4.0 million of developed technology and customer relationships respectively) was recognised following the announcement in July 2021 of these products' retirement. Restructuring costs of GBP0.5 million have also been incurred.

As a result of the invasion of Ukraine by Russia, and the subsequent sanctions enforced by the UK and US governments, the Group fully provided against an additional GBP4.9 million of trade receivables, GBP1.0 million of amounts owed by related parties, and GBP1.4 million of contract assets held with entities within Russia at 31 March 2022.

Amortisation relates to the amortisation of the fair valued heritage AVEVA intangible assets under acquisition accounting, following the combination with the Schneider Electric industrial software business and the amortisation of intangibles relating to the OSIsoft acquisition. Of the GBP226.1 million amortisation charge, GBP147.6 million relates to the intangibles acquired through the OSIsoft acquisition.

The increase in share-based payments reflects the increase in the size of AVEVA's business post the acquisition of OSIsoft.

Brian DiBenedetto

Chief Financial Officer

7 June 2022

Review of principal risks and uncertainties

Approach to risk management

We further strengthened our risk management approach and the supporting Group risk function throughout the fiscal year. The Board of Directors retains overall responsibility for the Group's risk management approach, supported by the Executive Risk Committee, which includes all Executive Directors and relevant stakeholders across the business. The Executive Risk Committee meets quarterly to oversee our principal and emerging risks, challenge the acceptability of risk exposure and monitor the adequacy of risk management and mitigation. Through this process, we avoid exceeding our risk tolerance as defined by our Group-wide risk appetite.

Key changes in the year

Industrial digitalisation strategy - Movement towards industrial digitalisation has accelerated within the last 24 months, and our customers understand and accept the need to evolve. With less need to convince customers to digitalise, it is less likely our strategy to capitalise on the opportunities of industrial digital transformation could fail or not provide the expected levels of return. This risk has been removed from our principal risks as the market has evolved and we do not deem this to be a material threat over the next 18 months.

SaaS subscription - We previously reported on separate principal risks for Cloud and Subscription. These are now combined into one risk, ultimately linked to growth of SaaS subscriptions.

 
 Strategic risks 
 Risk                                                          Mitigation 
------------------------------------------------------------  ---------------------------------------------------------- 
 
   Talent                                                       In the past 12 months, we improved 
   As a technology company, we are                              the tracking and visibility of attrition 
   heavily reliant on the people we                             rates. We are also introducing new 
   employ and we compete for the best                           approaches to succession planning. 
   talent globally. If we are unable 
   to attract or retain the niche skills                        Additional mitigations we undertook 
   and experience we need to drive                              in the last fiscal year include: 
   the business forward, creating innovation                     *    Building talent pipelines in niche/hard-to-hire 
   and growth, this could materially                                  areas; 
   impact our success. 
 
   The AVEVA brand must remain attractive                        *    Using AVEVA's connections to Schneider Electric to 
   for us to successfully attract and                                 source talent, including talent rotation programme 
   retain developers, technical sales                           s; 
   staff, consultants and leadership. 
 
   Talent recruitment and retention                              *    Review of compensation packages in various 
   challenges have increased globally                                 territories; 
   in the last 12 months, caused by 
   the pandemic and subsequent impacts 
   including changing work-life balance                          *    Improving talent review processes; 
   requirements and employer responses 
   (compensation packages, remote working 
   opportunities and wellbeing). The                             *    Increasing in-house talent acquisition expertise; 
   need to retain talent during the 
   key integration of our recent acquisition 
   has also contributed to a continued                           *    Partnering with universities; 
   high risk in the last 12 months. 
 
                                                                 *    Leveraging employee referral programmes; and 
 
 
                                                                 *    Strengthening employee engagement activities. 
 
 
 
                                                                We seek to ensure that employees 
                                                                are motivated in their work and 
                                                                receive regular appraisals and encouragement 
                                                                to develop their skills. Annually, 
                                                                there is a Group-wide salary review 
                                                                that rewards strong performance 
                                                                and ensures salaries remain competitive. 
                                                                Commission and bonus schemes help 
                                                                to ensure that both AVEVA's success 
                                                                and individual achievement are appropriately 
                                                                rewarded. 
  Risk                                                          Mitigation 
  -----                                                         ----------- 
 
  SaaS subscription 
  This risk encompasses all the risk                            The shift to cloud is a core theme 
  elements related to our shift towards                         of our five-year business planning 
  a SaaS subscription model, including                          process, with functional strategies 
  product and portfolio readiness,                              and investments aligned with our 
  cloud strategy and capabilities,                              strategic plans. 
  the current structure of the organisation 
  and ability to scale, and competition                         We also have a multi-year business 
  from other large platform providers                           transformation programme to drive 
  and system integrators. Failure                               operational readiness for the shift 
  to move towards a SaaS subscription                           to SaaS and grow AVEVA's user base 
  model could negatively impact recurring                       through access to new markets and 
  revenue and cash flow generation.                             additional cloud products. Targeted 
                                                                investments have also been made 
                                                                in sales and marketing. 
  Risk                                                          Mitigation 
  -----                                                         ----------- 
 
  Sustainability 
  Increased focus on sustainability                             During FY22, we established a dedicated 
  and greater stakeholder expectations                          sustainability function and ESG 
  for management of ESG issues creates                          governance structure. To inform 
  reputational, regulatory and product                          the company's prioritisation of 
  related risk for AVEVA. If not well-managed,                  ESG management, target-setting, 
  this risk could lead to:                                      and disclosures, we conducted a 
   *    loss of existing customers or failure to acquire new    robust materiality assessment. 
        customers; 
                                                                A key pillar of our ESG framework 
                                                                is to reduce reliance on fossil 
   *    failure to maintain our ratings in sustainable          fuel industries by seizing opportunities 
        investment indices and broader reputational impact,     to help customers use digitalisation 
        leading to loss of investment;                          to thrive in a low-carbon future. 
                                                                To increase what we call our technology 
                                                                handprint, or impact, we are developing 
   *    failure to attract or retain the talent and niche       sustainability-related offerings 
        skills our business requires; and                       and product features and further 
                                                                leveraging AVEVA's partner ecosystems. 
                                                                Sustainability-focused marketing 
   *    failure to meet new ESG-related reporting               and sales enablement strategies 
        regulations.                                            are also in place to support diversification. 
 
                                                                We disclose climate-related risks 
                                                                and opportunities in accordance 
                                                                with the recommendations of the 
                                                                Taskforce on Climate-related Financial 
                                                                Disclosures (TCFD). In addition, 
                                                                our climate goals include a near 
                                                                term science-based target and a 
                                                                net-zero commitment. 
  Risk                                                          Mitigation 
  -----                                                         ----------- 
 
  Integration 
  In 2021, we acquired OSIsoft, now                             We set up and are running a comprehensive 
  operated as the PI Business within                            integration programme, led by our 
  AVEVA. We spent much of the last                              SVP of Integration. This process 
  12 months ensuring the successful                             is overseen by an Integration Management 
  integration of this acquisition.                              Office Steering Committee, headed 
                                                                by the CEO. As part of this programme, 
  The primary risks we have been addressing                     we established cross-organisational 
  as we integrate the PI Business                               workstreams for all major and enabling 
  are:                                                          functions impacted by the integration. 
   *    employee turnover; 
                                                                The organisation design workstream, 
                                                                for example, is nearly complete, 
   *    achievement of cost and revenue synergies;              with ongoing checks on employee 
                                                                engagement. To drive our revenue 
                                                                synergies while addressing employee 
   *    integrating business processes and systems; and         attrition risks, we accelerated 
                                                                recruitment for key revenue-driving 
                                                                skills in the midst of a challenging 
   *    the risk of disruptive change to core operations.       recruitment market. We also created 
                                                                the right sales operating model 
                                                                with incentives aligned to market 
                                                                dynamics. 
 
                                                                Some projects to integrate business 
                                                                processes and address systems risk 
                                                                are ongoing, including development 
                                                                of campaign-to-cash processes, office 
                                                                consolidation, and extensive product, 
                                                                portfolio and R&D planning. 
 
                                                                New corporate values and behaviours 
                                                                were communicated throughout the 
                                                                business, and there have been numerous 
                                                                employee engagement and change initiatives 
                                                                delivered throughout the year to 
                                                                counter the impact of disruptive 
                                                                change. 
------------------------------------------------------------  ---------------------------------------------------------- 
 External risks 
 Risk                                                          Mitigation 
------------------------------------------------------------  ---------------------------------------------------------- 
 
   Competitors                                                   We carefully monitor customer requirements, 
   We operate in highly competitive                              trends and other suppliers operating 
   markets. Other technology companies                           within our chosen markets. We invest 
   could acquire, merge or move into                             in innovation and strive to offer 
   AVEVA's market space to compete                               superior products to meet market 
   with our offerings, creating a material                       needs. 
   threat. Existing competitors could 
   also respond more quickly to market                           The integration of our PI Business 
   demands and trends, resulting in                              further mitigates this risk, providing 
   reduced market share and missed                               us with a distinct competitive advantage 
   growth opportunities. Our industry                            and market position. 
   is characterised by rapid technological 
   change, evolving industry standards,                          Other mitigations include leveraging 
   evolving business models and consolidations.                  our relationship with Schneider 
                                                                 Electric, attractive proposals for 
   In an environment of continuing                               additional complementary products 
   uncertainty, it is likely that competitor                     for existing customers, and flexibility 
   strategies may change or consolidations                       to meet changing market demands 
   in our industry could negatively                              and competitive forces. 
   impact our business. Potential negative 
   impacts include increased pricing 
   pressure, cost increases, the loss 
   of market share due to competitor 
   cooperation and, consequently, a 
   reduced ability to integrate solutions. 
   Risk                                                          Mitigation 
   -----                                                         ----------- 
 
 
   Dependency on energy sector 
   Approximately a third of our revenue                          Our products deliver Capex certainty 
   is derived from customers in the                              and Opex reduction, providing meaningful 
   energy sector, particularly oil                               efficiency. 
   and gas companies. 
                                                                 Our extensive global presence provides 
   In the event of a downturn in energy                          diversification and allows us to 
   markets, customers may have less                              avoid over-reliance on specific 
   funding for capital projects or                               geographic markets. 
   additional operational commitments, 
   including the purchase of AVEVA's                             In FY22, about 33% of our revenue 
   software products. Significant end-market                     was attributable to customers operating 
   downturns could materially impact                             in the energy sector. This represents 
   our revenues and profits.                                     a decrease from FY21, when 50% was 
                                                                 attributable. This change is primarily 
                                                                 a result of the OSIsoft acquisition. 
 
                                                                 AVEVA's move towards a subscription-based 
                                                                 licensing model further mitigates 
                                                                 this risk, as it offers customers 
                                                                 greater flexibility over their expenditure. 
                                                                 We also continue to leverage our 
                                                                 relationship with Schneider Electric 
                                                                 to expand into other sectors. 
 
                                                                 In the event of a downturn in the 
                                                                 energy market, AVEVA's products 
                                                                 act as a natural hedge for one another, 
                                                                 with decrease in revenue from Capex 
                                                                 likely to be offset by an increase 
                                                                 in revenue from Opex as customers 
                                                                 look to further optimise their operations. 
  Risk                                                          Mitigation 
  -----                                                         ----------- 
 
  Product security 
  AVEVA's products are complex and                              Our products are extensively tested 
  new products or enhancements may                              prior to commercial launch. In addition, 
  contain undetected errors, failures,                          AVEVA has a robust security development 
  performance problems or defects                               life cycle as a key component of 
  which may impact our strong reputation                        our overall software development 
  with our customers or create negative                         process, and we have created formal 
  financial implications.                                       and collaborative relationships 
                                                                with third-party security researchers, 
  This risk reflects AVEVA's portfolio                          security organisations and regulatory 
  of products, their functionality                              entities to proactively ensure our 
  and increasing threats in the external                        software is as safe and secure as 
  cyber environment.                                            is reasonable. 
 
  The risk level increased during                               As part of the integration of our 
  FY22, in part due to the acquisition                          PI Business, we have combined security 
  of the PI business and related growth                         best practices from both entities, 
  in our product portfolio. The risk                            further strengthening our approach. 
  of cyber conflict also increased 
  as the Ukraine crisis developed.                              Our threat intelligence capabilities 
                                                                were enhanced throughout the year 
                                                                in response to the cyber security 
                                                                risk to the corporate environment, 
                                                                and product security teams have 
                                                                been able to leverage this information 
                                                                to improve their defences. 
 
                                                                AVEVA also implemented a sabotage 
                                                                resistance programme across the 
                                                                company during FY22, increasing 
                                                                resistance to insider threat. 
  Risk                                                          Mitigation 
  -----                                                         ----------- 
 
  Cyber security 
  Cyber and physical threats continue 
  to grow. We depend on our IT systems                          To reduce our risk, we conduct continual 
  not only to run our business but                              security assessments of our digital 
  also to deliver services and capabilities                     assets. This is combined with regular 
  to customers, compounding our exposure                        external penetration testing to 
  to this risk.                                                 ensure a suitable security posture 
                                                                is maintained. 
  The risk remains elevated due to 
  higher cyber threats associated                               Our global security team focuses 
  with remote working, recent developments                      on: reducing the likelihood of regulatory 
  in Ukraine, and other global or                               sanctions and fines being levied; 
  market events impacting supply chain                          protecting our brand and our digital 
  and cloud providers.                                          and physical assets; protecting 
                                                                customer and employee data; and 
                                                                building stakeholders' confidence 
                                                                in our overall security posture. 
 
                                                                We measure ourself against the NIST 
                                                                Cyber Security Framework and the 
                                                                maturity of our cyber and security 
                                                                controls is audited by independent 
                                                                third-party accessors. These steps 
                                                                constitute a continual verification 
                                                                and improvement programme. 
 
                                                                We are ISO27001 certified for our 
                                                                R&D function and continue to maintain 
                                                                SOC2 compliance. 
 
                                                                We constantly assess and adapt our 
                                                                security capabilities in response 
                                                                to the emerging threat landscape 
                                                                and remain fully committed to protecting 
                                                                the confidentiality, integrity and 
                                                                availability of our infrastructure. 
  Risk                                                          Mitigation 
  -----                                                         ----------- 
 
  Regulatory compliance 
  AVEVA operates through direct and                             Compliance policies and guidance 
  indirect sales channels and must                              materials for our employees and 
  comply with both international and                            external partners are combined with 
  local laws in each country of operation.                      regular, targeted communications 
  If one or more employees acting                               and training platforms. 
  on our behalf commit, or are alleged 
  to have committed, a violation of                             Local management teams are supported 
  law, we could face substantial costs                          by local professional advisors. 
  and severe financial penalties and                            Corporate legal and finance functions 
  reputational damage. Applicable                               provide further oversight and regularly 
  regulatory risks include geopolitical                         receive support from external advisors. 
  risk, trade compliance, data protection 
  and privacy, anti-trust, anti-bribery                         Dedicated compliance resources, 
  and corruption.                                               including software and people, enhance 
                                                                management and monitoring of this 
  Schneider Electric is a major re-seller                       principal risk. 
  for AVEVA and major shareholder. 
  We are subject to related-party                               As part of our integration of our 
  transaction obligations with respect                          recent acquisition of OSIsoft, work 
  to our relationship with Schneider                            is ongoing to harmonise compliance 
  Electric.                                                     programmes. 
  Risk                                                          Mitigation 
  -----                                                         ----------- 
 
  Pandemic-related economic disruption 
  Because of the global Covid-19 pandemic,                      Our business remains in a strong 
  AVEVA, like many global companies,                            cash and financial position. Our 
  operates in an environment with                               leadership continues to review our 
  continued economic disruption and                             financial position and is prepared 
  declining GDPs. This could have                               to take mitigating steps as necessary. 
  many impacts including significantly 
  decreased demand for our products                             As mentioned above, our products 
  and services, unexpected disruptions                          deliver Capex certainty and Opex 
  in the industries that we serve                               reduction for meaningful efficiency 
  or the potential for restricted                               in periods of economic and trading 
  access to funding.                                            disruption. We are also committed 
                                                                to supporting our valued customers 
  Our customers may seek to minimise                            and meeting their needs. 
  expenditures by terminating subscriptions 
  or licence arrangements, or attempting 
  to renegotiate or delay previously-agreed 
  payment dates. Customers may also 
  be more cautious and take more time 
  to make purchase decisions. 
------------------------------------------------------------  ---------------------------------------------------------- 
 Operational risks 
 Description                                                   Mitigation 
------------------------------------------------------------  ---------------------------------------------------------- 
 Internal IT systems (suitability 
  and continuity)                                                During the fiscal year, we made 
  We seek to deliver uninterrupted                               significant improvements to address 
  customer and employee services and                             the legacy risk in our application 
  experiences, supported by our functional                       and infrastructure services. 
  IT strategy. 
                                                                 A key strategic programme to support 
  We outsource certain IT-related                                mitigations is in place. It features 
  functions to third parties that                                committed investment, executive 
  are responsible for maintaining                                support and a global multi-phase 
  their own network security, disaster                           plan. 
  recovery and systems management 
  procedures. If such third-party                                For our third-party providers, we 
  IT vendors fail to manage their                                are now undertaking a more formal 
  IT systems and related software                                approach with questionnaires and 
  applications effectively, this could                           assessments of capabilities before 
  severely impact AVEVA.                                         commercial commitment is finalised. 
 
                                                                 To ensure successful business outcomes, 
                                                                 we engage external third-party advisors 
                                                                 and use best practice metrics and 
                                                                 governance. 
------------------------------------------------------------  ---------------------------------------------------------- 
 Disruptive risks 
 Description                                                   Mitigation 
------------------------------------------------------------  ---------------------------------------------------------- 
 Disruptive technologies 
  New and unforeseen technology, software                        This risk is primarily mitigated 
  or business models threatening our                             through our own innovation initiatives, 
  value offering could be developed                              and remaining at the forefront of 
  and become commercially viable.                                technological advances. This is 
  This would impact our profits and                              a core strategic strength of our 
  prospects.                                                     company. In addition, we continually 
                                                                 scan the disruptive technology environment 
  The potential threats seeking to                               to ensure we stay informed and well 
  capitalise on digitalisation trends                            positioned to respond to any material 
  continue but have not increased.                               threats. 
------------------------------------------------------------  ---------------------------------------------------------- 
 

Consolidated Income Statement

for the year ended 31 March 2022

 
                                                        2022      2021 
                                             Notes      GBPm      GBPm 
------------------------------------------  ------  --------  -------- 
 Revenue                                       3,4   1,185.3     820.4 
 Cost of sales                                       (232.5)   (181.3) 
------------------------------------------  ------  --------  -------- 
 Gross profit                                          952.8     639.1 
 Operating expenses 
 Research & Development costs                        (343.3)   (184.5) 
 Selling and distribution expenses                   (345.4)   (226.8) 
 Administrative expenses                             (246.3)   (193.0) 
 Net impairment loss on financial assets               (6.7)     (3.7) 
 Other (expense)/income                          5    (17.6)       5.5 
------------------------------------------  ------  --------  -------- 
 Total operating expenses                            (959.3)   (602.5) 
------------------------------------------  ------  --------  -------- 
 (Loss)/profit from operations                         (6.5)      36.6 
 Finance revenue                                         1.9       0.6 
 Finance expense                                      (14.0)     (3.0) 
------------------------------------------  ------  --------  -------- 
 (Loss)/profit before tax from continuing 
  operations                                          (18.6)      34.2 
 Income tax expense                              6    (44.0)     (9.4) 
------------------------------------------  ------  --------  -------- 
 (Loss)/profit for the year attributable 
  to equity holders of the parent                     (62.6)      24.8 
------------------------------------------  ------  --------  -------- 
 
 (Loss)/profit from operations                         (6.5)      36.6 
 Amortisation of intangible assets                     226.1      95.7 
 Share-based payments                                   27.4      16.3 
 Exceptional items                               5      67.8      77.8 
------------------------------------------  ------  --------  -------- 
 Adjusted EBIT                                   1     314.8     226.4 
------------------------------------------  ------  --------  -------- 
 
 
 (Loss)/earnings per share (pence) 
 -- basic                             8   (20.78)   11.35 
 -- diluted                           8   (20.78)   11.27 
-----------------------------------      --------  ------ 
 

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 2022

 
                                                           2022    2021 
                                                 Notes     GBPm    GBPm 
----------------------------------------------  ------  -------  ------ 
 (Loss)/profit for the year                              (62.6)    24.8 
 Items that may be reclassified to profit 
  or loss in subsequent periods: 
 Exchange gain arising on translation of 
  foreign operations                                      159.1    20.7 
----------------------------------------------  ------  -------  ------ 
 Total of items that may be reclassified 
  to profit or loss in subsequent periods                 159.1    20.7 
----------------------------------------------  ------  -------  ------ 
 Items that will not be reclassified to 
  profit or loss in subsequent periods: 
 Actuarial remeasurements on retirement 
  benefits                                                  3.4   (2.5) 
 Deferred tax on actuarial remeasurements 
  on retirement benefits                             6    (2.2)     0.5 
 Deferred tax on losses and other timing 
  differences                                        6      2.9       - 
----------------------------------------------  ------  -------  ------ 
 Total of items that will not be reclassified 
  to profit or loss in subsequent periods                   4.1   (2.0) 
----------------------------------------------  ------  -------  ------ 
 Total comprehensive income for the year, 
  net of tax                                              100.6    43.5 
----------------------------------------------  ------  -------  ------ 
 

The accompanying notes are an integral part of this Consolidated Statement of Comprehensive Income.

Consolidated Balance Sheet

31 March 2022

 
                                              2022      2021 
                                   Notes      GBPm      GBPm 
--------------------------------  ------  --------  -------- 
 Non-current assets 
 Goodwill                                  4,004.6   3,904.1 
 Other intangible assets                   1,472.5   1,662.3 
 Property, plant and equipment                44.7      48.5 
 Right-of-use assets                          95.1     111.9 
 Deferred tax assets                          47.2      21.4 
 Trade and other receivables          10       8.4      19.4 
 Customer acquisition costs                    6.3       0.3 
 Investments                                   0.4       0.4 
 Retirement benefit surplus                   16.6      13.1 
--------------------------------  ------  --------  -------- 
                                           5,695.8   5,781.4 
--------------------------------  ------  --------  -------- 
 Current assets 
 Trade and other receivables          10     381.2     318.0 
 Contract assets                             302.1     215.6 
 Cash and cash equivalents            11     279.3     286.6 
 Restricted cash                      11         -       7.3 
 Current tax assets                           12.1      18.9 
--------------------------------  ------  --------  -------- 
                                             974.7     846.4 
--------------------------------  ------  --------  -------- 
 Total assets                              6,670.5   6,627.8 
--------------------------------  ------  --------  -------- 
 Equity 
 Issued share capital                         10.7      10.7 
 Share premium                             2,842.1   3,842.1 
 Other reserves                            1,370.4   1,209.6 
 Retained earnings                           986.0     130.3 
--------------------------------  ------  --------  -------- 
 Total equity                              5,209.2   5,192.7 
--------------------------------  ------  --------  -------- 
 Current liabilities 
 Trade and other payables             12     224.0     271.3 
 Contract liabilities                  3     328.2     239.7 
 Lease liabilities                            22.1      22.9 
 Current tax liabilities                      33.8      45.6 
--------------------------------  ------  --------  -------- 
                                             608.1     579.5 
--------------------------------  ------  --------  -------- 
 Non-current liabilities 
 Loans and borrowings                        684.5     654.0 
 Lease liabilities                            73.3      88.9 
 Deferred tax liabilities                     71.2      82.0 
 Other liabilities                    12      10.7      18.2 
 Retirement benefit obligations               13.5      12.5 
--------------------------------  ------  --------  -------- 
                                             853.2     855.6 
--------------------------------  ------  --------  -------- 
 Total equity and liabilities              6,670.5   6,627.8 
--------------------------------  ------  --------  -------- 
 

The accompanying notes are an integral part of this Consolidated Balance Sheet.

Consolidated Statement of Changes in Shareholders' Equity

31 March 2022

 
                                                              Other reserves 
---------------  --------  ----------  --------  ---------------------------------------  ---------  ---------  ---------  -------- 
                                                   Cumulative      Capital       Reverse                 Total 
                    Share       Share    Merger   translation   redemption   acquisition   Treasury      other   Retained     Total 
                  capital     premium   reserve   adjustments      reserve       reserve     shares   reserves   earnings    equity 
                     GBPm        GBPm      GBPm          GBPm         GBPm          GBPm       GBPm       GBPm       GBPm      GBPm 
---------------  --------  ----------  --------  ------------  -----------  ------------  ---------  ---------  ---------  -------- 
 At 1 April 
  2020                5.7       574.5     615.6          22.6        101.7         452.5     (12.1)    1,180.3      181.2   1,941.7 
 Profit for 
  the year              -           -         -             -            -             -          -          -       24.8      24.8 
 Other 
  comprehensive 
  income/(loss)         -           -         -          20.7            -             -          -       20.7      (2.0)      18.7 
 Total 
  comprehensive 
  income                -           -         -          20.7            -             -          -       20.7       22.8      43.5 
 Issue of new 
  shares              0.5       465.2         -             -            -             -          -          -          -     465.7 
 Rights issue         4.5     2,831.0         -             -            -             -          -          -          -   2,835.5 
 Transaction 
  costs 
  relating 
  to issue of 
  share capital         -      (28.6)         -             -            -             -          -          -          -    (28.6) 
 Share-based 
  payments              -           -         -             -            -             -          -          -       16.3      16.3 
 Tax arising 
  on 
  share-based 
  payments              -           -         -             -            -             -          -          -        2.1       2.1 
 Investment 
  in own shares         -           -         -             -            -             -      (1.1)      (1.1)          -     (1.1) 
 Cost of 
  employee 
  benefit trust 
  shares issued 
  to employees          -           -         -             -            -             -        9.7        9.7      (9.7)         - 
 Equity 
  dividends             -           -         -             -            -             -          -          -     (82.4)    (82.4) 
---------------  --------  ----------  --------  ------------  -----------  ------------  ---------  ---------  ---------  -------- 
 At 31 March 
  2021               10.7     3,842.1     615.6          43.3        101.7         452.5      (3.5)    1,209.6      130.3   5,192.7 
 Loss for the 
  year                  -           -         -             -            -             -          -          -     (62.6)    (62.6) 
 Other 
  comprehensive 
  income                -           -         -         159.1            -             -          -      159.1        4.1     163.2 
---------------  --------  ----------  --------  ------------  -----------  ------------  ---------  ---------  ---------  -------- 
 Total 
  comprehensive 
  income/(loss)         -           -         -         159.1            -             -          -      159.1     (58.5)     100.6 
 Share-based 
  payments              -           -         -             -            -             -          -          -       27.4      27.4 
 Tax arising 
  on 
  share-based 
  payments              -           -         -             -            -             -          -          -      (0.2)     (0.2) 
 Investment 
  in own shares         -           -         -             -            -             -      (1.3)      (1.3)          -     (1.3) 
 Cost of 
  employee 
  benefit trust 
  shares issued 
  to employees          -           -         -             -            -             -        3.0        3.0      (3.0)         - 
 Equity 
  dividends             -           -         -             -            -             -          -          -    (110.0)   (110.0) 
 Capital 
  reduction             -   (1,000.0)         -             -            -             -          -          -    1,000.0         - 
---------------  --------  ----------  --------  ------------  -----------  ------------  ---------  ---------  ---------  -------- 
 At 31 March 
  2022               10.7     2,842.1     615.6         202.4        101.7         452.5      (1.8)    1,370.4      986.0   5,209.2 
---------------  --------  ----------  --------  ------------  -----------  ------------  ---------  ---------  ---------  -------- 
 

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 2022

 
                                                                    2022        2021 
                                                         Notes      GBPm        GBPm 
------------------------------------------------------  ------  --------  ---------- 
 Cash flows from operating activities 
 (Loss)/profit for the year                                       (62.6)        24.8 
 Income tax expense                                          6      44.0         9.4 
 Net finance expense                                                12.1         2.4 
 Amortisation of intangible assets                                 226.1        96.3 
 Depreciation of property, plant and equipment 
  and right-of-use assets                                           36.6        28.2 
 Loss on disposal of property, plant and equipment                   0.4         1.0 
 Impairment of intangible assets                             5      14.9           - 
 Gain on disposal of pension scheme                                    -       (0.3) 
 Loss on disposal of subsidiaries                          5,9       2.8           - 
 Share-based payments                                               27.4        16.3 
 Difference between pension contributions paid 
  and amounts charged to operating profit                          (0.5)         0.3 
 Research & Development expenditure tax credit                     (2.2)       (3.1) 
 Changes in working capital: 
 Trade and other receivables                                      (53.6)       (5.5) 
 Contract assets                                                  (78.3)      (70.8) 
 Customer acquisition costs                                        (5.4)       (0.3) 
 Trade and other payables                                         (45.5)         5.5 
 Contract liabilities                                               81.0      (13.0) 
------------------------------------------------------  ------  --------  ---------- 
 Cash generated from operating activities before 
  tax                                                              197.2        91.2 
 Income taxes paid                                                (59.8)      (32.8) 
------------------------------------------------------  ------  --------  ---------- 
 Net cash generated from operating activities                      137.4        58.4 
------------------------------------------------------  ------  --------  ---------- 
 Cash flows from investing activities 
 Purchase of property, plant and equipment                         (8.6)      (10.9) 
 Purchase of intangible assets                                         -       (0.5) 
 Payment on disposal of pension scheme                                 -       (0.3) 
 Acquisition of subsidiaries, net of cash acquired           9         -   (3,029.5) 
 Adjustment to consideration on completion of 
  business combination                                               6.2           - 
 Restricted cash from acquisition of business 
  - held in escrow                                                     -       (7.3) 
 Net payment for forward contracts under hedge 
  accounting                                                           -      (74.2) 
 Proceeds from sale of business, net of cash                 9       1.6           - 
 Interest received                                                   1.9         0.3 
------------------------------------------------------  ------  --------  ---------- 
 Net cash generated/(used) in investing activities                   1.1   (3,122.4) 
------------------------------------------------------  ------  --------  ---------- 
 Cash flows from financing activities 
 Interest paid                                                    (12.7)       (2.8) 
 Purchase of own shares                                            (1.3)       (1.1) 
 Proceeds from borrowings, net of fees incurred                        -       645.6 
 Payment of principal element of lease liability                  (23.3)      (18.5) 
 Proceeds from rights issue                                            -     2,835.5 
 Transaction costs on issue of shares                                  -      (28.6) 
 Payment of facility arrangement fees                                  -       (2.0) 
 Dividends paid to shareholders of the parent                7   (110.0)      (82.4) 
------------------------------------------------------  ------  --------  ---------- 
 Net cash generated/(used) in financing activities               (147.3)     3,345.7 
------------------------------------------------------  ------  --------  ---------- 
 Net (decrease)/increase in cash and cash equivalents              (8.8)       281.7 
 Net foreign exchange difference                                     1.5     (109.6) 
 Opening cash and cash equivalents                          11     286.6       114.5 
------------------------------------------------------  ------  --------  ---------- 
 Closing cash and cash equivalents                          11     279.3       286.6 
------------------------------------------------------  ------  --------  ---------- 
 

The accompanying notes are an integral part of this Consolidated Cash Flow Statement.

   1.   Basis of preparation 

The Consolidated Financial Statements of the Group have been prepared in accordance with International Accounting Standards (IASs) in conformity with the requirements of the Companies Act 2006 and in accordance with UK-adopted IASs. The financial information has been prepared on the basis of all applicable IFRSs, including all IASs, Standing Interpretations Committee (SIC) interpretations and International Financial Reporting Interpretations Committee (IFRIC) interpretations issued by the International Accounting Standards Board (IASB) that are applicable to the financial period.

Except for the application of UK-adopted IASs, for which there are no material differences from IFRSs as issued by the IASB and adopted by the EU when applied to the Group, accounting policies have been applied consistently to all years presented unless otherwise stated.

The preliminary announcement covers the period from 1 April 2021 to 31 March 2022 and was approved by the Board on 7 June 2022. It is presented in Pounds Sterling (GBP) and all values are rounded to the nearest GBP0.1m except when otherwise indicated.

The financial information contained in this preliminary announcement of audited results does not constitute the Group's statutory accounts for the years ended 31 March 2022 or 31 March 2021. The accounts for the year ended 31 March 2021 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 March 2022 have been reported on by the Company's auditors; the report on these accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain any statement under section 498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation.

The statutory accounts for the year ended 31 March 2022 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 15 July 2022. 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.

The Group presents multiple non-GAAP measures. They are not defined by IFRSs and therefore may not be directly comparable with similarly titled measures of other companies. They are not intended to be a substitute for, or superior to, GAAP measures. Additional information for all non-GAAP measures, including definitions, rationale for their presentation, and reconciliations from the closest IFRS measure is provided in the Non-GAAP Measures section below.

The main non-GAAP presentations are adjusted and pro forma results.

Adjusted results

The business is managed and measured on a day-to-day basis using adjusted results. To arrive at adjusted results, certain adjustments are made for normalised and exceptional items that are individually significant and which could affect the understanding of the performance for the year and the comparability between periods.

Adjusted earnings before interest and tax (EBIT) is presented on the face of the Consolidated Income Statement and is reconciled to profit from operations as required to be presented under the applicable accounting standards. The Directors believe that this alternative measure of profit provides a reliable and consistent measure of the Group's underlying performance.

Adjusted earnings per share is calculated having adjusted profit after tax for the normalised and exceptional items, their tax effect, the deferred revenue haircut arising due to the fair valuing of OSIsoft's contract liabilities on acquisition, and the tax effect of the deferred revenue haircut.

Normalised items

These are recurring items which management considers could affect the underlying results of the Group.

These items relate to:

   --      amortisation of intangible assets; 
   --      share-based payment charges; and 
   --      tax step up due to intangible assets recognised on acquisition of OSIsoft, LLC. 

Other types of recurring items may arise; however, no others were identified in either the current or prior year. Recurring items are adjusted each year irrespective of materiality to ensure consistent treatment.

Management considers these items to not reflect the underlying performance of the Group.

In the year ended 31 March 2022, the following changes have been made to the definition of normalised items:

   --      inclusion of the impact of the tax step up arising on the acquisition of OSIsoft; 
   --      removal of the impact of fair value adjustments on financial derivatives; and 
   --      inclusion of the impact of amortisation of other software. 

Further commentary and explanation of these changes is provided in the Non-GAAP Measures section below.

Exceptional items

These are items which are non-recurring and are identified by virtue of either their size or their nature. These items can include, but are not restricted to, the costs of significant restructuring exercises, fees associated with business combinations and costs incurred in integrating acquired companies. Exceptional items are discussed further in note 6.

Management considers these significant, non-recurring-items to be inherently not reflective of the future or underlying performance of the Group.

Pro forma results

For the year ended 31 March 2022, pro forma results are the Group's adjusted results with an additional adjustment to add back the deferred revenue haircut arising due to the fair valuing of OSIsoft's contract liabilities on acquisition. Pro forma results do not form part of the financial statements and are unaudited.

For the year ended 31 March 2021, pro forma results are the Group's adjusted results adjusted for the deferred revenue haircut, with the addition of pre-acquisition OSIsoft results for the period. It is assumed no synergies or trading between the groups occurred, and that the term loan used to finance the acquisition was entered into on 1 April 2020.

These are presented to increase year-on-year comparability, given the significant impact of the OSIsoft acquisition upon the Group's results.

Going concern

In adopting the going concern basis for preparing the financial statements, the Directors have considered the business activities and the Group's principal risks and uncertainties in the context of the current operating environment. This includes possible ongoing impacts upon the Group of the global Covid-19 pandemic and economic sanctions following the Russian invasion of Ukraine, and reviews of liquidity and covenant forecasts.

At 31 March 2022, the Group held external debt in the form of a GBP685.1 million (US$ 900.0 million) term loan, due for repayment in March 2024. The Group has access to a GBP250.0 million Revolving Credit Facility (RCF), of which nil was drawn down at 31 March 2022. This facility is due for renewal in February 2025, with a one-year extension option subject to lender approval.

To support the going concern conclusion, the Group has developed several working capital financial models covering the period from the signing of the financial statements to 30 September 2023. The specific scenarios modelled are:

 
 Scenario                                         Outcome 
-----------------------------------------------  --------------------------------------------- 
 Base case 
  Based upon the Group's most recent                The Group is not in breach of any 
  Board approved forecasts to 31 March              financial covenants and is not required 
  2027. These are the same forecasts                to draw down on the RCF. The Group 
  used in the viability statement and               is able to meet all forecasted obligations 
  VIU model used for impairment testing.            as they fall due. 
 Sensitised 
  A severe downside scenario, including             The Group is not in breach of any 
  reducing revenue                                  financial covenants and is not required 
  (10% from the base case), and introducing         to draw down on the RCF. The Group 
  delays in cash collection (10% increase           is able to meet all forecasted obligations 
  from the base case).                              as they fall due. 
 Reverse stress case 
  A scenario created to model the circumstances     This resulted in a covenant breach 
  required to breach the Group's credit             at the end of the going concern period. 
  facilities within the going concern               Management believes the possibility 
  period. This includes reducing revenue            of this combination of severe downsides 
  (18% decrease from the base case)                 arising to be remote, and that there 
  and delays in cash collection (10                 are numerous mitigating actions which 
  day increase in debtor days from                  could be taken to avoid a covenant 
  the base case).                                   breach. The impact of these mitigating 
                                                    actions were not considered in the 
                                                    scenario modelling. 
-----------------------------------------------  --------------------------------------------- 
 

Should extreme downside scenarios occur, there are several mitigating actions the Group could take to avoid covenant breaches to maintain liquidity headroom under existing debt facilities. These include cancellation or deferral of dividend payments and reductions in other discretionary spending costs.

The financial statements for the year ended 31 March 2022 have therefore been prepared under the going concern basis of accounting.

   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 2021. 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:

 
                               Services transferred at a point in time   Services transferred over time     Total 
 Year ended 31 March 2022                                         GBPm                             GBPm      GBPm 
----------------------------  ----------------------------------------  -------------------------------  -------- 
 On-premises rental                                              280.7                            115.7     396.4 
 SaaS                                                                -                             27.8      27.8 
----------------------------  ----------------------------------------  -------------------------------  -------- 
 Total subscription revenue                                      280.7                            143.5     424.2 
 Maintenance                                                         -                            345.2     345.2 
 Perpetual licences                                              293.1                                -     293.1 
 Services                                                            -                            122.8     122.8 
----------------------------  ----------------------------------------  -------------------------------  -------- 
                                                                 573.8                            611.5   1,185.3 
----------------------------  ----------------------------------------  -------------------------------  -------- 
 
 
                                                                         Services transferred 
                               Services transferred at a point in time              over time   Total 
 Year ended 31 March 2021                                         GBPm                   GBPm    GBPm 
----------------------------  ----------------------------------------  ---------------------  ------ 
 On-premises rental                                              236.1                  100.2   336.3 
 SaaS                                                                -                   23.4    23.4 
----------------------------  ----------------------------------------  ---------------------  ------ 
 Total subscription revenue                                      236.1                  123.6   359.7 
 Maintenance                                                         -                  197.7   197.7 
 Perpetual licences                                              141.6                      -   141.6 
 Services                                                            -                  121.4   121.4 
----------------------------  ----------------------------------------  ---------------------  ------ 
                                                                 377.7                  442.7   820.4 
----------------------------  ----------------------------------------  ---------------------  ------ 
 

Contract balances are as follows:

 
                                     2022    2021    2020 
                                     GBPm    GBPm    GBPm 
---------------------------------  ------  ------  ------ 
 Trade receivables (non-current)      0.2     0.7     2.0 
 Trade receivables (current)        287.3   245.3   181.2 
 Contract assets                    302.1   215.6   142.4 
 Contract liabilities               328.2   239.7   177.0 
---------------------------------  ------  ------  ------ 
 

Contract assets have increased year-on-year predominantly due to an increase in the number and value of multi-year subscription licenses (rentals). The structure of these contracts results in the cumulative revenue recognised in the initial years being higher than the invoiced total. Contract assets are stated net of a provision of GBP2.0 million (2021: GBP7.7 million). The provision has decreased year-on-year due to the reversal of an historical forward-looking provision made due to the uncertainty caused by the onset of the Covid-19 pandemic. As there is limited evidence that Covid-19 has harmed cash collection, management believes this is no longer required. This has been offset by a provision of GBP1.4 million relating to contract assets with counterparties based in Russia. See note 6 for further information.

Trade receivables increased year-on-year as a result of revenue growth in the last quarter of the year. Contract liabilities have increased primarily due to the impact of the reduction in prior year contract liabilities caused by the revenue haircut taken on acquisition of OSIsoft, LLC.

Revenue for the year ended 31 March 2022 includes GBP215.8 million (2021: GBP159.3 million) which was included in contract liabilities at the beginning of the year. Revenue of GBP3.1 million (2021: GBP3.1 million) recognised in the year ended 31 March 2022 related to performance obligations satisfied in previous years.

The transaction price allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at 31 March is as follows:

 
                        2022    2021 
                        GBPm    GBPm 
--------------------  ------  ------ 
 Within one year       487.8   425.8 
 More than one year    293.6   232.1 
--------------------  ------  ------ 
 
   4.   Segment information 

The Executive Leadership Team (ELT) monitors and appraises the business based on the performance of three geographic regions: Americas; Asia Pacific; and Europe, Middle East and Africa (EMEA). These three regions are the basis of the Group's primary operating segments reported in the financial statements. Performance is evaluated based on regional contribution using the same accounting policies as adopted for the Group's financial statements. There is no inter-segment revenue. Corporate costs include centralised functions such as Executive Management, Information Technology, Finance and Legal. Balance sheet information is not included in the information provided to the ELT.

 
                                                         Year ended 31 March 2022 
                                          ----------------------------------------------------- 
                                                          Asia 
                                           Americas    Pacific     EMEA   Corporate     Total 
                                               GBPm       GBPm     GBPm        GBPm      GBPm 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Revenue 
 On-premises rental                           134.2       81.5    180.7           -     396.4 
 SaaS                                           9.3        4.9     13.6           -      27.8 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Total subscription revenue                   143.5       86.4    194.3           -     424.2 
 Maintenance                                  170.7       58.8    115.7           -     345.2 
 Perpetual licences                           105.6       84.6    102.9           -     293.1 
 Services                                      47.2       30.3     45.3           -     122.8 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Regional revenue total                       467.0      260.1    458.2           -   1,185.3 
 Adjusted cost of sales(1)                   (53.6)     (22.1)   (39.9)     (116.7)   (232.3) 
 Adjusted selling and distribution 
  expenses(1)                                (98.2)     (51.0)   (97.3)      (34.2)   (280.7) 
 Adjusted administrative expenses(1)              -          -        -     (179.9)   (179.9) 
 Net impairment loss on financial 
  assets                                          -        2.0    (1.4)           -       0.6 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Regional contribution                        315.2      189.0    319.6     (330.8)     493.0 
 Adjusted Research & Development 
  costs(1)                                                                            (178.2) 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Adjusted EBIT                                                                          314.8 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Exceptional items, normalised items(1) 
  and net interest                                                                    (333.4) 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Loss before tax                                                                       (18.6) 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 

1. Adjusted cost of sales, adjusted selling and distribution expenses, adjusted administrative expenses and adjusted Research & Development costs exclude the impact of exceptional and normalised items. Normalised items include amortisation of intangible assets and share-based payments.

 
                                                        Year ended 31 March 2021 
                                          --------------------------------------------------- 
                                                          Asia 
                                           Americas    Pacific     EMEA   Corporate     Total 
                                               GBPm       GBPm     GBPm        GBPm      GBPm 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Revenue 
 On-premises rental                            84.5       90.1    161.7           -     336.3 
 SaaS                                          10.1        5.4      7.9           -      23.4 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Total subscription revenue                    94.6       95.5    169.6           -     359.7 
 Maintenance                                   84.3       46.7     66.7           -     197.7 
 Perpetual licences                            42.1       47.4     52.1           -     141.6 
 Services                                      44.4       31.7     45.3           -     121.4 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Regional revenue total                       265.4      221.3    333.7           -     820.4 
 Adjusted cost of sales(1)                   (50.0)     (19.8)   (39.9)      (70.8)   (180.5) 
 Adjusted selling and distribution 
  expenses(1)                                (64.4)     (40.7)   (68.0)      (21.2)   (194.3) 
 Adjusted administrative expenses(1)              -          -        -      (97.8)    (97.8) 
 Net impairment loss on financial 
  assets                                      (1.0)      (1.8)    (0.9)           -     (3.7) 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Regional contribution                        150.0      159.0    224.9     (189.8)     344.1 
 Adjusted Research & Development 
  costs(1)                                                                            (116.4) 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Adjusted EBIT                                                                          227.7 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Exceptional items, normalised items(1) 
  and net interest                                                                    (193.5) 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 Profit before tax                                                                       34.2 
----------------------------------------  ---------  ---------  -------  ----------  -------- 
 

1. Adjusted cost of sales, adjusted selling and distribution expenses, adjusted administrative expenses and adjusted Research & Development costs exclude the impact of exceptional and normalised items. Normalised items include amortisation of intangible assets and share-based payments.

   5.   Exceptional items 
 
                                                            2022    2021 
                                                            GBPm    GBPm 
---------------------------------------------------------  -----  ------ 
 Acquisition of OSIsoft                                      0.8    44.4 
 Integration of OSIsoft and associated activities           28.0     6.1 
 Integration of SES and associated activities               13.5    27.6 
 Disposal of Acquis Software, Termis Software and Water 
  Loss Management Software business (note 9)                 2.8       - 
 Retirement of steel fabrication business                   15.4       - 
 Impairment of balances with Russia-based counterparties     7.3       - 
 Gain on disposal of pension scheme                            -   (0.3) 
---------------------------------------------------------  -----  ------ 
                                                            67.8    77.8 
---------------------------------------------------------  -----  ------ 
 

The total net cash outflow during the year as a result of exceptional items was GBP59.8 million (2021: GBP63.2 million).

   a)   Acquisition of OSIsoft 

Adviser fees incurred due to the acquisition of OSIsoft, which completed on 19 March 2021. No further cost relating to this acquisition are anticipated. This has resulted in a cash outflow of GBP19.2 million (2021: GBP26.0 million).

   b)   Integration of OSIsoft and associated activities 

Costs incurred in the integration of OSIsoft, primarily consisting of consultancy fees advisers and additional temporary resources paid relating to the merging of IT systems and real estate, and rebranding. Costs are anticipated to continue until at least the end of the year ended 31 March 2023. This has resulted in a cash outflow of GBP29.5 million (2021: GBP3.5 million).

   c)   Integration of SES and associated activities 

In the year ended 31 March 2022, costs primarily related to the continued build and implementation of a global ERP system and legal entity rationalisation. These costs are expected to continue until 2024. Costs in the years ended 31 March 2022 and 31 March 2021 included work undertaken to exit the Transitional Service Agreements (TSAs) provided by Schneider Electric which ended in August 2021. In the year ended 31 March 2021, GBP5.2 million was reimbursement by Schneider Electric for capital expenditure incurred as part of the Group's migration activities covered by TSAs. The associated cash outflow was GBP12.6 million (2021: GBP33.7 million).

   d)   Retirement of steel fabrication business 

A GBP14.9 million impairment of intangible assets associated with the Group's steel fabrication business (GBP10.9 million and GBP4.0 million of developed technology and customer relationships respectively) was recognised following the announcement in July 2021 of these products' retirement. A discounted cash flow model was used to determine the value in use over the assets' remaining life. Restructuring costs of GBP0.5 million have also been incurred. This has resulted in a cash outflow of GBP0.1 million (2021: GBPnil).

   e)   Impairment of balances with Russia-based counterparties 

As a result of the invasion of Ukraine by Russia, and the enforcement of subsequent international sanctions, the Group fully provided against GBP4.9 million of trade receivables, GBP1.0 million of amounts owed by related parties, and GBP1.4 million of contract assets held with entities within Russia at 31 March 2022. This has resulted in a cash outflow of GBPnil (2021: GBPnil).

   f)    Income statement impact 

Exceptional items were included in the Consolidated Income Statement as follows:

 
                                      2022    2021 
                                      GBPm    GBPm 
-----------------------------------  -----  ------ 
 Cost of sales                         0.2     0.8 
 Research & Development costs          0.5     0.3 
 Selling and distribution expenses     3.4     3.9 
 Administrative expenses              38.8    78.3 
 Net impairment loss on financial 
  assets                               7.3       - 
 Other expense/(income)               17.6   (5.5) 
-----------------------------------  -----  ------ 
                                      67.8    77.8 
-----------------------------------  -----  ------ 
 
   6.   Income tax expense 
   a)   Tax on loss 

The major components of income tax expense are as follows:

 
                                                           2022     2021 
                                                           GBPm     GBPm 
------------------------------------------------------  -------  ------- 
 Tax charged in Consolidated Income Statement 
 Current tax 
 -- UK corporation tax                                        -        - 
 -- Foreign tax                                            65.1     41.9 
 -- Adjustments in respect of prior periods               (0.4)    (1.9) 
------------------------------------------------------  -------  ------- 
                                                           64.7     40.0 
------------------------------------------------------  -------  ------- 
 Deferred tax 
 -- Origination and reversal of temporary differences    (18.3)   (29.3) 
 -- Adjustments in respect of prior periods               (2.4)    (1.3) 
------------------------------------------------------  -------  ------- 
                                                         (20.7)   (30.6) 
------------------------------------------------------  -------  ------- 
 Total income tax expense reported in Consolidated 
  Income Statement                                         44.0      9.4 
------------------------------------------------------  -------  ------- 
 
 
                                                                    2022    2021 
                                                                    GBPm    GBPm 
----------------------------------------------------------------  ------  ------ 
 Tax relating to items charged/(credited) directly 
  to Consolidated Statement of Comprehensive Income 
 Deferred tax on actuarial remeasurements on retirement 
  benefits                                                           2.2   (0.5) 
 Deferred tax on losses and other timing differences               (2.9)       - 
----------------------------------------------------------------  ------  ------ 
 Tax credit reported in Consolidated Statement of Comprehensive 
  Income                                                           (0.7)   (0.5) 
----------------------------------------------------------------  ------  ------ 
 
   b)   Reconciliation of the total tax charge 

The differences between the total tax expense shown above and the amount calculated by applying the standard rate of US (2021: US) corporation tax to the profit before tax are as follows:

 
                                                           2022    2021 
                                                           GBPm    GBPm 
------------------------------------------------------  -------  ------ 
 Tax on Group profit before tax at standard US (2021: 
  US) corporation tax rate of 24% (2021: 24%)(1)          (4.5)     8.2 
 Effects of: 
 -- expenses not deductible for tax purposes               9 .2     1.8 
 -- US alternative minimum tax                             19.8     7.0 
 -- non-deductible acquisition costs                          -     3.0 
 -- Research & Development incentives                    (10.2)   (5.3) 
 -- UK rate change impact on deferred tax                  13.5       - 
 -- irrecoverable withholding tax                          13.9       - 
 -- movement on unprovided deferred tax balances            1.0   (1.9) 
 -- differing tax rates                                     4.1   (0.2) 
 -- adjustments in respect of prior years                 (2.8)   (3.2) 
------------------------------------------------------  -------  ------ 
 Income tax expense reported in Consolidated Income 
  Statement                                                44.0     9.4 
------------------------------------------------------  -------  ------ 
 

1. Reconciliation is performed starting from the standard US corporation tax rate as US taxable profits are greater than any other individual country.

The Group's effective tax rate for the year was (236.6)% (2021: 27.5%). The Group's effective tax rate before exceptional and other normalised adjustments was 12.4% (2021: 21.2%).

   7.   Dividends paid and proposed on equity shares 

The following dividends were declared, paid and proposed in relation to the legal entity AVEVA Group plc:

 
                                                             2022   2021 
                                                             GBPm   GBPm 
---------------------------------------------------------  ------  ----- 
 Declared and paid during the year 
 Interim 2021/22 dividend paid of 13.0 pence (2020/21: 
  12.4 pence) per ordinary share                             39.2   35.6 
 Final 2020/21 dividend paid of 23.5 pence (2019/20: 
  23.3 pence) per ordinary share                             70.8   46.8 
---------------------------------------------------------  ------  ----- 
                                                            110.0   82.4 
---------------------------------------------------------  ------  ----- 
 Proposed for approval by shareholders at the Annual 
  General Meeting 
---------------------------------------------------------  ------  ----- 
 Final proposed dividend 2021/22 of 24.5 pence (2020/21: 
  23.5 pence) per ordinary share                             73.9   70.8 
---------------------------------------------------------  ------  ----- 
 

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 15 July 2022 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 2022 to shareholders on the register at the close of business on 8 July 2022.

   8.   (Loss)/earnings per share 
 
                                                 2022    2021 
                                                Pence   Pence 
-------------------------------------------  --------  ------ 
 (Loss)/earnings per share for the year: 
 -- Basic                                     (20.78)   11.35 
 -- Diluted                                   (20.78)   11.27 
 Adjusted earnings per share for the year: 
 -- Basic                                      100.37   81.86 
 -- Diluted                                     99.58   81.31 
-------------------------------------------  --------  ------ 
 
 
                                                             2022       2021 
                                                         Millions   Millions 
------------------------------------------------------  ---------  --------- 
 (Loss)/earnings per share 
 Weighted average number of ordinary shares for basic 
  earnings per share                                       301.30     218.50 
 Effect of dilution: employee share options(1)                  -       1.50 
------------------------------------------------------  ---------  --------- 
 Weighted average number of ordinary shares adjusted 
  for the effect of dilution                               301.30     220.00 
------------------------------------------------------  ---------  --------- 
 
 Adjusted earnings per share 
 Weighted average number of ordinary shares for basic 
  earnings per share                                        301.3      218.5 
 Effect of dilution: employee share options                   2.4        1.5 
------------------------------------------------------  ---------  --------- 
 Weighted average number of ordinary shares adjusted 
  for the effect of dilution                                303.7      220.0 
------------------------------------------------------  ---------  --------- 
 

1. The effect of share options are anti-dilutive in the year ended 31 March 2022 due to the Group recognising a net loss for the period. They are therefore excluded from the diluted earnings per share calculation.

The calculations of basic and diluted earnings per share (EPS) are based on the net loss attributable to equity holders of the parent for the year of GBP62.6 million (2021: profit GBP24.8 million). Basic EPS amounts are calculated by dividing the net profit attributable to equity holders of the parent by the weighted average number of AVEVA Group plc ordinary shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the net profit attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the year as described above, plus the weighted average number of ordinary shares that would be issued on the conversion of all the potentially dilutive share options into ordinary shares.

Details of the calculation of adjusted EPS are set out below:

 
                                                          2022     2021 
                                                          GBPm     GBPm 
-----------------------------------------------------  -------  ------- 
 (Loss)/profit after tax for the year                   (62.6)     24.8 
 Amortisation of intangible assets                       226.1     95.7 
 Share-based payments                                     27.4     16.3 
 Exceptional items                                        67.8     77.8 
 Effect of acquisition accounting adjustments(1)          50.3      3.3 
 Tax effect on exceptional items                         (9.5)   (15.1) 
 Tax effect on normalised adjustments (excluding net 
  finance expense)                                        16.0   (23.0) 
 Tax effect on acquisition accounting adjustments(1)    (13.1)    (0.9) 
-----------------------------------------------------  -------  ------- 
 Adjusted profit after tax                               302.4    178.9 
-----------------------------------------------------  -------  ------- 
 

1. Acquisition accounting adjustments relate to the revenue haircut made upon the combination with OSIsoft, LLC.

The denominators used are the same as those detailed above for both basic and diluted EPS.

The adjustment made to profit after tax in calculating adjusted basic and diluted EPS has been adjusted for the tax effects of the items adjusted. The Directors believe that adjusted EPS is more representative of the underlying performance of the business.

   9.   Business combinations 
   a)   Acquisition of OSIsoft, LLC 

On 19 March 2021 the Group acquired 100% of the voting shares of OSIsoft, LLC, a global leader in real-time industrial operational data software and services. The OSIsoft Group's main product is the PI System, a proprietary, vendor-agnostic data management software which enables customers to capture, store, analyse and share real-time industrial sensor-based data with business systems across all operations. This acquisition will significantly enhance the Group's product offering, provide customer diversification and greater geographical market penetration, create opportunities for material revenue and cost synergies, and accelerate and improve the Group's development of new software and technology. A consideration of GBP3,825.2 million (US$5,095.1 million) was paid.

The deal was funded by GBP3,365.7 million (US$4,438.1 million) of cash; GBP2,806.9 million (US$3,734.3 million) raised via a rights issue (net of expenses), and GBP558.8 million (US$703.8 million) from existing cash and new debt facilities. The remainder was funded by a GBP465.7 million (US$648.4 million) issue of 13,655,570 ordinary shares on 22 March 2021 to Estudillo Holdings Corp, a company majority owned by Dr J. Patrick Kennedy and his family, which held a 50.3% interest in OSIsoft, LLC. At 31 March 2021, GBP7.3 million (US$10.0 million) remained in restricted cash in relation to consideration to be paid. This was released in the year ended 31 March 2022 upon finalisation of the completion accounts.

At the end of the previous reporting period, the acquisition accounting had been provisionally determined. This has been finalised in the current year, as part of the measurement period permitted under IFRS 3. Changes to the provisionally reported fair values as set out in note 14 of the 2021 Annual Report are due to finalisation and review of the acquired balance sheet. The overall movement is not deemed material.

The fair values of identifiable assets acquired and liabilities assumed at the acquisition date are:

 
                                            Carrying value at acquisition   Fair value adjustment   Fair value 
                                                                     GBPm                    GBPm         GBPm 
-----------------------------------------  ------------------------------  ----------------------  ----------- 
 Non-current assets 
 Intangible assets                                                    0.4                 1,231.6      1,232.0 
 Property, plant and equipment                                       21.0                       -         21.0 
 Right-of-use assets                                                 36.2                       -         36.2 
 Deferred tax assets                                                 22.0                   (3.0)         19.0 
 Trade and other receivables                                          2.9                       -          2.9 
 Customer acquisition costs                                          10.3                  (10.3)            - 
 Investments                                                          0.4                       -          0.4 
-----------------------------------------  ------------------------------  ----------------------  ----------- 
 Total non-current assets                                            93.2                 1,218.3      1,311.5 
-----------------------------------------  ------------------------------  ----------------------  ----------- 
 Current assets 
 Trade and other receivables                                         75.6                   (5.5)         70.1 
 Contract assets                                                      2.4                       -          2.4 
 Customer acquisition costs                                           4.0                   (4.0)            - 
 Cash and cash equivalents                                          150.6                       -        150.6 
 Financial assets                                                     0.4                       -          0.4 
-----------------------------------------  ------------------------------  ----------------------  ----------- 
 Total current assets                                               233.0                   (9.5)        223.5 
-----------------------------------------  ------------------------------  ----------------------  ----------- 
 Current liabilities 
 Trade and other payables                                         (115.1)                   (5.0)      (120.1) 
 Contract liabilities                                             (136.2)                    60.5       (75.7) 
 Lease liabilities                                                  (6.8)                       -        (6.8) 
 Current tax liabilities                                           (29.9)                   (0.5)       (30.4) 
-----------------------------------------  ------------------------------  ----------------------  ----------- 
 Total current liabilities                                        (288.0)                    55.0      (233.0) 
-----------------------------------------  ------------------------------  ----------------------  ----------- 
 Non-current liabilities 
 Lease liabilities                                                 (37.9)                       -       (37.9) 
 Retirement benefit obligations                                     (0.9)                   (0.4)        (1.3) 
-----------------------------------------  ------------------------------  ----------------------  ----------- 
 Total non-current liabilities                                     (38.8)                   (0.4)       (39.2) 
-----------------------------------------  ------------------------------  ----------------------  ----------- 
 Net identifiable assets and liabilities                            (0.6)                 1,263.4      1,262.8 
 Goodwill                                                                                              2,562.4 
-----------------------------------------  ------------------------------  ----------------------  ----------- 
 Total consideration                                                                                   3,825.2 
-----------------------------------------  ------------------------------  ----------------------  ----------- 
 

Goodwill of GBP1,358.0 million is expected to be deductible for tax purposes.

The main factors leading to the recognition of goodwill are the value of the assembled OSIsoft, LLC workforce and the future synergy benefits expected to arise from integrating the two combined businesses.

Costs incurred in the year ended 31 March 2021 that were directly attributable to raising debt (GBP2.9 million) and equity (GBP28.6 million) were offset against the corresponding financial liability and share premium respectively. All remaining transaction costs were expensed and included within administrative expenses. Additional details are included within note 5.

From acquisition date to 31 March 2021, OSIsoft, LLC contributed revenue and profit after tax of GBP20.7 million and GBP10.8 million respectively in the Consolidated Income Statement, before a revenue haircut of GBP3.3 million. If the acquisition had occurred on 1 April 2020, the Consolidated Income Statement would have presented revenue of GBP1,196.1 million and profit after tax of GBP48.1 million (at an effective tax rate of 5.5%) in the 12 months to 31 March 2021, before a revenue haircut of approximately GBP53.0 million.

   b)   Disposal of Acquis Software, Termis Software and Water Loss Management Software business 

On 11 May 2021 the Group entered into an agreement to sell the business and assets of Acquis Software, Termis Software and Water Loss Management Software to Schneider Electric for an aggregate consideration of GBP1.6 million. This transaction was made at arm's length, with the consideration set based upon independent advice and resulted in a net cash inflow of GBP1.6 million.

This completed on 30 June 2021. A loss on disposal of GBP2.8 million was recognised, calculated as follows:

 
                        Total 
                         GBPm 
---------------------  ------ 
 Cash consideration       1.6 
---------------------  ------ 
 Gross consideration      1.6 
 Net assets disposed    (4.4) 
---------------------  ------ 
 Loss on disposal       (2.8) 
---------------------  ------ 
 

Net assets disposed comprised:

 
                              Total 
                               GBPm 
---------------------------  ------ 
 Non-current assets 
 Goodwill                       5.2 
 Other intangible assets        0.1 
---------------------------  ------ 
 Total non-current assets       5.3 
---------------------------  ------ 
 Current liabilities 
 Contract liabilities         (0.9) 
---------------------------  ------ 
 Total current liabilities    (0.9) 
---------------------------  ------ 
 Net assets                     4.4 
---------------------------  ------ 
 

The net loss on disposal is included within other (expense)/income. Disposed goodwill of GBP5.2 million has been allocated to the following CGUs, based on the value of cash flows for the disposed business relative to the cash flows for the CGU overall:

   --      Americas: GBPnil 
   --      Asia Pacific: GBP1.9 million 
   --      EMEA: GBP3.3 million 

10. Trade and other receivables

 
                                                 2022    2021 
                                                 GBPm    GBPm 
---------------------------------------------  ------  ------ 
 Current 
 Trade receivables                              287.3   245.3 
 Amounts owed from related parties (note 13)     37.6    21.6 
 Prepayments and other receivables               56.3    51.1 
---------------------------------------------  ------  ------ 
                                                381.2   318.0 
---------------------------------------------  ------  ------ 
 Non-current 
 Trade and other receivables                      8.4    19.4 
---------------------------------------------  ------  ------ 
                                                  8.4    19.4 
---------------------------------------------  ------  ------ 
 

11. Cash and cash equivalents

 
                                                 2022    2021 
                                                 GBPm    GBPm 
---------------------------------------------  ------  ------ 
 Cash at bank and in hand                       105.7   279.7 
 Short-term deposits                            173.6     6.9 
---------------------------------------------  ------  ------ 
 Net cash and cash equivalents per cash flow    279.3   286.6 
 Restricted cash                                    -     7.3 
---------------------------------------------  ------  ------ 
                                                279.3   293.9 
---------------------------------------------  ------  ------ 
 

GBP11.6 million of cash at bank and in hand was held in Russia at 31 March 2022. Due to the introduction of international sanctions upon Russian entities, cash is likely to remain deployed within Russian operations whilst sanctions remain in force.

Restricted cash represented funds held in escrow in relation to the acquisition of OSIsoft, LLC. This was released during the year ended 31 March 2022 as a result of the finalisation of the completion accounts process.

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 fixed short-term deposit rates.

12. Trade and other payables

 
                                           2022    2021 
                                           GBPm    GBPm 
---------------------------------------  ------  ------ 
 Current 
 Trade payables                            30.0    39.6 
 Amounts owed to related parties (note 
  13)                                       6.2     1.5 
 Social security, employee taxes and 
  sales taxes                              21.1    28.5 
 Accruals                                 148.7   176.8 
 Other liabilities                         18.0    24.9 
---------------------------------------  ------  ------ 
                                          224.0   271.3 
---------------------------------------  ------  ------ 
 Non-current 
 Other liabilities                         10.7    18.2 
---------------------------------------  ------  ------ 
                                           10.7    18.2 
---------------------------------------  ------  ------ 
 

Trade payables are non-interest bearing and are normally settled on terms of between 30 and 60 days. Social security, employee taxes and sales taxes are non-interest bearing and are normally settled on terms of between 19 and 30 days. The Directors consider that the carrying amount of trade and other payables approximates their fair value.

Accruals have reduced year-on-year following the payment of transaction related costs associated with the acquisition of OSIsoft, LLC.

13. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

   a)   Schneider Electric Group companies 

Schneider Electric SE is the Group's majority shareholder.

During the year, Group companies entered into the following transactions with Schneider Electric Group companies:

 
                                     2022    2021 
                                     GBPm    GBPm 
---------------------------------  ------  ------ 
 Sales of goods and services        104.6    62.2 
 Purchases of goods and services    (6.8)   (3.4) 
 Interest expense on term loan      (8.6)   (0.2) 
 Other non-trading transactions       1.6    13.7 
---------------------------------  ------  ------ 
 

On 19 March 2021, the AVEVA Group received a US $900.0 million term loan from Schneider Electric Holdings Inc to assist in the funding of the acquisition of OSIsoft, LLC. The term loan bears interest of LIBOR plus a margin and is repayable three years from the inception date on 19 March 2024.

Other non-trading transactions of GBP1.6 million (2021: GBPnil) comprised the sale of Acquis Software, Termis Software and Water Management Software. See note 9(b) for further details.

In the year ended 31 March 2021, other non-trading transactions of GBP13.7 million related to amounts received in reimbursement for expenditure incurred as part of the Group's migration from activities covered by Transitional Service Agreements following the combination with the Schneider Electric industrial software business. Of these transactions, GBP8.5 million related to operating expenses incurred, and GBP5.2 million to capital expenditure.

The Transitional Service Agreement with Schneider Electric ended on 31 August 2021. A new Service Agreement was entered into on 1 September 2021 under which Schneider Electric (through SE Digital) will continue to provide ERP-related support services until 31 December 2023 whilst the AVEVA Group completes its global roll out of the new ERP system.

As disclosed on page 91 of the Group's 2021 Annual Report, Peter Herweck has retained his Schneider Electric LTIP share options and continued to participate in his Schneider Electric pension arrangement, with the cost being met by Schneider Electric.

.

The Group did not make any payments to Schneider Electric SE, the parent company of the Schneider Electric Group (2021: GBPnil). All transactions were with subsidiary companies within the Schneider Electric Group.

As at 31 March, Group companies held the following balances with Schneider Electric Group companies:

 
                               2022      2021 
                               GBPm      GBPm 
-------------------------  --------  -------- 
 Trade receivables             37.6      18.9 
 Trade payables               (5.8)     (1.3) 
 Non-trading receivables          -       2.7 
 Non-trading payables         (0.4)     (0.2) 
 Term loan(1)               (685.1)   (654.8) 
-------------------------  --------  -------- 
 

1. This balance represents the contractual obligation owed to Schneider Electric Group companies. The carrying value per the Consolidated Balance Sheet is stated after offsetting directly attributable costs for obtaining this financing.

All balances held were with subsidiary companies within the Schneider Electric Group.

Terms and conditions of transactions with related parties

Outstanding balances at 31 March 2022 are unsecured, and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March 2022, the Group has recorded impairment against GBP1.0 million of receivables relating to amounts owed by related parties situated in Russia (2021: GBPnil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. The amounts set out in the table above are stated before impairment.

   b)   Transactions with other related parties 

Dr J Patrick Kennedy controls 4.4% (2021: 4.5%) of the issued ordinary share capital of AVEVA Group plc through his controlling ownership of Estudillo Holdings Corp and is Chairman Emeritus of the Group, a board advisory position.

During the period, Group companies entered into the following transactions with Dr J Patrick Kennedy, and with companies in which Dr J Patrick Kennedy has a shareholding:

 
                                   2022   2021 
                                   GBPm   GBPm 
--------------------------------  -----  ----- 
 Purchase of goods and services     4.1    0.1 
 Chairman Emeritus salary           0.2      - 
--------------------------------  -----  ----- 
 

Non-GAAP measures

The Group presents various non-GAAP measures, which management believes provide useful information for understanding the Group's financial performance. These non-GAAP measures should be considered in addition to IFRS measures and are not intended to be either a substitute for them or superior to them.

As non-GAAP measures are not defined by IFRS, they may not be directly comparable with other companies who use similar measures.

The Group's non-GAAP measures are consistent with those presented in the 2021 Annual Report, except for:

-- Standalone AVEVA and standalone OSIsoft results are not reported. Management believes presentation of separate results is not required due to the ongoing integration of OSIsoft into the Group.

   --      Normalised items have been redefined to: 

o include the impact of the tax step up arising on the acquisition of OSIsoft;

o remove the impact of fair value adjustments on financial derivatives; and

o include the impact of amortisation of other software.

   --      Net cash has been redefined to: 

o include the US $900 million term loan drawn down on 19 March 2021; and

o exclude treasury deposits.

It has consequently been renamed net debt.

-- Cash conversion has been redefined also resulting in the inclusion of free cash flow before tax as a non-GAAP measure.

Further information, definitions, the intent in presenting, and a reconciliation from the nearest IFRS measure are provided below.

 
Non-GAAP         Closest          Definition and purpose 
 measure          equivalent 
                  IFRS measure 
Pro forma        Group GAAP       Pro forma results are presented to provide a year-on-year 
 results          results          performance comparison for the Group, given the 
                                   significant impact of the OSIsoft acquisition on 
                                   the Group's results for the year ended 31 March 
                                   2022. Management have considered pro forma results 
                                   in the day-to-day running of the business for the 
                                   year ended 31 March 2022, and they have been incorporated 
                                   into performance elements of employee bonus and 
                                   share schemes. 
 
                                   Pro forma results do not represent the enlarged 
                                   Group's actual results and do not purport to represent 
                                   what the combined results would have been in comparative 
                                   periods. They share the same limitations as adjusted 
                                   results and present a more favourable view than 
                                   GAAP measures. In addition, due to the acquisition 
                                   of OSIsoft completing close to the year-end, comparatives 
                                   for the year ended 31 March 2021 do not represent 
                                   the legal form of the Group for the full 12 months 
                                   and include results that are not attributable to 
                                   the Group's shareholders. 
 
                                   Pro forma results for the year ended 31 March 2022 
                                   Pro forma results for the year ended 31 March 2022 
                                   are prepared on an adjusted basis and additionally 
                                   exclude the impact of the deferred revenue haircut 
                                   (see definition below). 
 
                                   Pro forma results for the year ended 31 March 2021 
                                    *    Pro forma results for the year ended 31 March 2021 
                                         have been prepared on the basis that: 
 
 
                                    *    The financial information is the combination of the 
                                         consolidated financial statements of AVEVA Group plc 
                                         and OSIsoft, LLC for the year to 31 March 2021. 
 
 
                                    *    No pro forma adjustments have been made to reflect 
                                         synergies or cost savings that may be expected to 
                                         occur as a result of the acquisition, nor have any 
                                         adjustments been made to reflect the stand-alone 
                                         costs expected. 
 
 
                                    *    There has been no trading between the two groups for 
                                         either of the years presented. 
 
 
                                    *    The term loan was entered into on 1 April 2020, and 
                                         interest accrued from that date. 
 
 
 
                                   Pro forma adjusted diluted EPS 
                                   The pro forma adjusted diluted EPS calculation 
                                   assumes: 
                                    *    Rights issue shares were issued on 1 April 2020. 
 
 
                                    *    Rights issue adjustments for unexercised share 
                                         options at the date of the rights issue were made at 
                                         the later of 1 April 2020 and the share option award 
                                         date. 
 
 
                                    *    No timing adjustments made for actual or potential 
                                         share option awards to OSIsoft employees. 
 
 
 
                                   For reconciliations, see: 
                                    *    Section a below for pro forma results, pro forma 
                                         constant currency results, and pro forma organic 
                                         constant currency results. 
                 ---------------  ------------------------------------------------------------ 
Normalised       No direct        The following changes have been made to the definition 
 items            equivalent       of normalised items in the year ended 31 March 
                                   2022: 
                                    *    The tax step up has been included within normalised 
                                         items for the first time. This benefit accrues evenly 
                                         across the financial year and, given the proximity of 
                                         the completion of the OSIsoft acquisition to the 
                                         year-end (such that the benefit only accrued for 13 
                                         days in the year ended 31 March 2021), it did not 
                                         have a material impact in previous years. Note that 
                                         this is a tax effect, and hence does not impact 
                                         pre-tax measures such as adjusted EBIT or pro forma 
                                         adjusted EBIT. 
 
 
                                    *    Fair value adjustments on financial derivatives have 
                                         been removed from normalised items for the year ended 
                                         31 March 2022. This is due to their relative 
                                         immateriality compared to the Group's results (2022: 
                                         GBP0.3 million, 2021: GBP(0.7) million) and is 
                                         intended to simplify the Group's normalised items. 
 
 
                                    *    Amortisation of intangible assets has been expanded 
                                         to include amortisation of other software for the 
                                         year ended 31 March 2022. Historically, this category 
                                         has been presented as amortisation of intangible 
                                         assets (excluding other software). This is due to the 
                                         relative immateriality of amortisation of other 
                                         software compared to the Group's results (2022: 
                                         GBP0.2 million, 2021: GBP0.6 million), and is 
                                         intended to simplify the Group's normalised items. 
 
 
                                    *    The tax impact of normalised items is included in the 
                                         reconciliation to adjusted profit after tax in note 8 
                                         above. 
 
 
 
                                   For additional information and reconciliations, 
                                   see: 
                                    *    Normalised items are included on the face of the 
                                         Consolidated Income Statement in the reconciliation 
                                         to adjusted EBIT. 
 
 
                                    *    Normalised items are included in the reconciliation 
                                         to adjusted and pro forma results in section a below. 
                 ---------------  ------------------------------------------------------------ 
Net debt         No direct        Total cash, cash equivalents, overdrafts, and the 
                  equivalent       carrying value of the Group's term loan. This metric 
                                   was called net cash in previous years. 
 
                                   The definition of net debt has changed to: 
                                    *    include the carrying value of the Group's term loan. 
                                         This term loan was drawn down on 19 March 2021 and 
                                         has been included as it is a significant future 
                                         obligation affecting the Group's liquidity; and 
 
 
                                    *    exclude treasury deposits, due to their relative 
                                         immateriality. 
 
 
 
                                   Net debt is a measure of the strength of the Group's 
                                   balance sheet. 
 
                                   See section b below for a reconciliation. 
                 ---------------  ------------------------------------------------------------ 
Cash conversion  No direct        Free cash flow before tax (see definition below) 
                  equivalent       as a percentage of the Group's adjusted profit 
                                   before tax (the Group's profit before tax excluding 
                                   exceptional and normalised items). This is a financial 
                                   target for the Group, which targets an average 
                                   100% cash conversion for the five-year period from 
                                   the financial year ending 31 March 2022 to the 
                                   financial year ending 31 March 2026. Additionally, 
                                   this is included as a strategic target within the 
                                   Executive Directors' bonus scheme for the year 
                                   ended 31 March 2023. 
 
                                   This measures how efficiently the Group's profit 
                                   are converted into cash for organic investment, 
                                   M&A and returns to shareholders. 
 
                                   The definition of cash conversion has changed from 
                                   that presented in the 2021 Annual Report. Previously, 
                                   cash conversion was defined as cash generated from 
                                   operating activities before tax as a percentage 
                                   of adjusted EBIT. Management believes that use 
                                   of free cash flow before tax, and inclusion of 
                                   cash outflows necessary as part of the Group's 
                                   day-to-day operations, provides a better indication 
                                   of the Group's trading performance. 
 
                                   See section c below for a reconciliation. 
                 ---------------  ------------------------------------------------------------ 
Free cash        Cash generated   Free cash flow before tax is used in determining 
 flow before      from operating   cash conversion (see definition above). It is calculated 
 tax              activities       as : 
                  before            *    cash generated from operating activities before tax; 
                  tax                    plus 
 
 
                                    *    capital expenditure, lease repayments, interest paid 
                                         and received, purchase of own shares; excluding 
 
 
                                    *    cash outflow on M&A related exceptional items. 
 
 
 
                                   See section c below for a reconciliation. 
                 ---------------  ------------------------------------------------------------ 
 
   a)   Reconciliation to adjusted and pro forma results 

31 March 2022

 
                                                                                                                               Pro 
                                                                                           Impact        Pro                 forma 
                                                                                               of      forma   Disposal    organic 
                               Normalised   Exceptional              Revenue       Pro    foreign   constant         of   constant 
                   Statutory        items         items   Adjusted   haircut     forma   exchange   currency   business   currency 
                        GBPm         GBPm          GBPm       GBPm      GBPm      GBPm       GBPm       GBPm       GBPm       GBPm 
----------------  ----------  -----------  ------------  ---------  --------  --------  ---------  ---------  ---------  --------- 
 Revenue             1,185.3            -             -    1,185.3      50.3   1,235.6       42.5    1,278.1      (0.7)    1,277.4 
 Cost of sales       (232.5)            -           0.2    (232.3)         -   (232.3)      (8.0)    (240.3)        0.9    (239.4) 
----------------  ----------  -----------  ------------  ---------  --------  --------  ---------  ---------  ---------  --------- 
 Gross profit          952.8            -           0.2      953.0      50.3   1,003.3       34.5    1,037.8        0.2    1,038.0 
 Operating 
 expenses 
 Research & 
  Development 
  costs              (343.3)        164.6           0.5    (178.2)         -   (178.2)      (5.7)    (183.9)        0.5    (183.4) 
 Selling and 
  distribution 
  expenses           (345.4)         61.3           3.4    (280.7)         -   (280.7)      (9.1)    (289.8)          -    (289.8) 
 Administrative 
  expenses           (246.3)         27.6          38.8    (179.9)         -   (179.9)      (6.0)    (185.9)          -    (185.9) 
 Net impairment 
  (loss)/gain 
  on financial 
  assets               (6.7)            -           7.3        0.6         -       0.6      (0.1)        0.5          -        0.5 
 Other expense        (17.6)            -          17.6          -         -         -          -          -          -          - 
----------------  ----------  -----------  ------------  ---------  --------  --------  ---------  ---------  ---------  --------- 
 Total operating 
  expenses           (959.3)        253.5          67.6    (638.2)         -   (638.2)     (20.9)    (659.1)        0.5    (658.6) 
----------------  ----------  -----------  ------------  ---------  --------  --------  ---------  ---------  ---------  --------- 
 (Loss)/profit 
  from 
  operations           (6.5)        253.5          67.8      314.8      50.3     365.1       13.6      378.7        0.7      379.4 
 Finance revenue         1.9            -             -        1.9         -       1.9        0.1        2.0          -        2.0 
 Finance expense      (14.0)            -             -     (14.0)         -    (14.0)      (0.5)     (14.5)          -     (14.5) 
----------------  ----------  -----------  ------------  ---------  --------  --------  ---------  ---------  ---------  --------- 
 (Loss)/profit 
  before tax          (18.6)        253.5          67.8      302.7      50.3     353.0       13.2      366.2        0.7      366.9 
----------------  ----------  -----------  ------------  ---------  --------  --------  ---------  ---------  ---------  --------- 
 

31 March 2021

 
                                                                                                     Term             Disposal       Pro 
                               Normalised   Exceptional              Revenue   Pre-acquisition       loan       Pro         of     forma 
                   Statutory        items         items   Adjusted   haircut           OSIsoft   interest     forma   business   organic 
                        GBPm         GBPm          GBPm       GBPm      GBPm              GBPm       GBPm      GBPm       GBPm      GBPm 
----------------  ----------  -----------  ------------  ---------  --------  ----------------  ---------  --------  ---------  -------- 
 Revenue               820.4            -             -      820.4       3.3             372.4          -   1,196.1      (3.9)   1,192.2 
 Cost of sales       (181.3)            -           0.8    (180.5)         -            (48.6)          -   (229.1)        0.9   (228.2) 
----------------  ----------  -----------  ------------  ---------  --------  ----------------  ---------  --------  ---------  -------- 
 Gross profit          639.1            -           0.8      639.9       3.3             323.8          -     967.0      (3.0)     964.0 
 Operating 
 expenses 
 Research & 
  Development 
  costs              (184.5)         67.8           0.3    (116.4)         -            (52.1)          -   (168.5)        0.5   (168.0) 
 Selling and 
  distribution 
  expenses           (226.8)         27.9           3.9    (195.0)         -            (83.1)          -   (278.1)          -   (278.1) 
 Administrative 
  expenses           (193.0)         16.3          78.3     (98.4)         -            (63.7)          -   (162.1)          -   (162.1) 
 Net impairment 
  loss on 
  financial 
  assets               (3.7)            -             -      (3.7)         -               0.1          -     (3.6)          -     (3.6) 
 Other income            5.5            -         (5.5)          -         -                 -          -         -          -         - 
----------------  ----------  -----------  ------------  ---------  --------  ----------------  ---------  --------  ---------  -------- 
 Total operating 
  expenses           (602.5)        112.0          77.0    (413.5)         -           (198.8)          -   (612.3)        0.5   (611.8) 
----------------  ----------  -----------  ------------  ---------  --------  ----------------  ---------  --------  ---------  -------- 
 Profit from 
  operations            36.6        112.0          77.8      226.4       3.3             125.0          -     354.7      (2.5)     352.2 
 Finance revenue         0.6            -             -        0.6         -               0.1          -       0.7          -       0.7 
 Finance expense       (3.0)            -             -      (3.0)         -             (0.9)     (12.8)    (16.7)          -    (16.7) 
----------------  ----------  -----------  ------------  ---------  --------  ----------------  ---------  --------  ---------  -------- 
 Profit before 
  tax                   34.2        112.0          77.8      224.0       3.3             124.2     (12.8)     338.7      (2.5)     336.2 
----------------  ----------  -----------  ------------  ---------  --------  ----------------  ---------  --------  ---------  -------- 
 
   b)   Net debt 
 
                                 2022      2021 
                                 GBPm      GBPm 
---------------------------  --------  -------- 
 Cash and cash equivalents      279.3     286.6 
 Loans and borrowings         (684.5)   (654.0) 
---------------------------  --------  -------- 
 Net debt                     (405.2)   (367.4) 
---------------------------  --------  -------- 
 
   c)   Cash conversion 
 
                                                              2022     2021 
                                                              GBPm     GBPm 
---------------------------------------------------------  -------  ------- 
 Net cash generated from operating activities before 
  tax                                                        197.2     91.2 
 Operating activities cash flow impact from exceptional 
  items (M&A related) 
 
   *    Acquisition of OSIsoft                                19.2     26.0 
 
   *    Disposal of Acquis Software, Termis Software and 
        Water Loss Management Software business                  -        - 
 
   *    OSIsoft transaction bonus(1)                          48.2        - 
---------------------------------------------------------  -------  ------- 
                                                             264.6    117.2 
 Purchase of property, plant and equipment                   (8.6)   (10.9) 
 Purchase of intangible assets                                   -    (0.5) 
 Interest received                                             1.9      0.3 
 Interest paid                                              (12.7)    (2.8) 
 Purchase of own shares                                      (1.3)    (1.1) 
 Payment of principal element of lease liability            (23.3)   (18.5) 
---------------------------------------------------------  -------  ------- 
 Free cash flow before tax                                   220.6     83.7 
---------------------------------------------------------  -------  ------- 
 
 Adjusted EBIT                                               314.8    226.4 
 Deferred revenue haircut                                     50.3      3.3 
 Finance revenue                                               1.9      0.6 
 Finance expense                                            (14.0)    (3.0) 
---------------------------------------------------------  -------  ------- 
 Adjusted profit before tax                                  353.0    227.3 
---------------------------------------------------------  -------  ------- 
 
 Cash conversion                                             62.5%    36.8% 
---------------------------------------------------------  -------  ------- 
 

1. A one-off transaction bonus paid to OSIsoft employees. This was recognised in the acquired OSIsoft balance sheet.

Directors

Philip Aiken

Chairman

Peter Herweck

CEO

James Kidd

Chief Strategy and Transformation Officer

Christopher Humphrey

Senior Independent Non-Executive Director

Jennifer Allerton

Independent Non-Executive Director

Olivier Blum

Non-Executive Director

Paula Dowdy

Independent Non-Executive Director

Dr. Ayesha Khanna

Independent Non-Executive Director

Hilary Maxson

Non-Executive Director

Ron Mobed

Independent Non-Executive Director

Anne Stevens

Independent Non-Executive Director

Responsibility statement pursuant to FSA's Disclosure and Transparency Rule 4 (DTR 4)

Each Director of the Company (whose names and functions appear above) confirms that (solely for the purpose of DTR 4) to the best of his/her knowledge:

-- the financial information in this document, prepared in accordance with the applicable UK law and applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and result of the Company and of the Group taken as a whole; and

-- the Chairman's statement, Chief Executive's strategic review and Finance review include a fair review of the development and performance of the business and the position of the Company and Group taken as a whole, together with a description of the principal risks and uncertainties that they face.

On behalf of the Board

 
 Philip Aiken   Peter Herweck 
 Chairman       CEO 
 

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END

FR UPUGAQUPPUGR

(END) Dow Jones Newswires

June 08, 2022 02:01 ET (06:01 GMT)

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