AVEVA Group PLC Capital Markets Day (1822B)

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RNS Number : 1822B

AVEVA Group PLC

19 September 2018

AVEVA GROUP PLC

Capital Markets Day

AVEVA Group plc ('AVEVA' or 'the Group'), a global leader in engineering and industrial software, will host a capital markets day this afternoon starting at 1pm BST. The event will be webcast live on www.aveva.com/investors.

In relation to this, the Group provides an update on current trading and sets out medium-term targets for revenue growth rates, Adjusted EBIT(1) margin and Recurring Revenue(2) .

Current trading

AVEVA has continued to deliver constant currency revenue growth in the financial year to date and the full year outlook remains in line with the Board's expectations.

Medium-term revenue growth

The Group aims to grow medium term revenue on a constant currency basis at least in line with the blended growth rate of the industrial software market, which we currently estimate to be growing at a mid-single digit rate.

This revenue growth target reflects AVEVA expecting to grow its underlying software business in excess of market growth rates, driven by a combination of the strength of the Group's market positions, sales execution, revenue synergies and additional value levers, including pricing.

This above-market growth will be partly offset in terms of reported revenue by the impact of a phased transition towards greater Rental & Subscription revenue, together with potentially lower growth rates in Services revenue.

Medium-term Adjusted EBIT margin

The Group aims to increase Adjusted EBIT margins to 30%. This margin improvement is expected to be driven by a combination of revenue growth, previously announced cost savings, cost control and a focus on high margin revenue growth through pricing and revenue mix optimisation.

Growing Recurring and Rental & Subscription revenue

The Group aims to increase its Recurring Revenue as a percentage of total revenue over the medium-term. This will be driven by growing software as part of the revenue mix and by increasing the mix of Rental & Subscription revenue as a proportion of new software revenue in a financial year.

AVEVA aims to grow the proportion of Recurring Revenue to total revenue from 52% (FY18 on a pro forma basis) to over 60% in the medium term.

The transition to greater levels of Recurring Revenue is expected to increase long-term free cash flow generation. Rental & Subscription offers customers benefits including greater flexibility, lower up-front costs and simplicity in pricing. These benefits are reflected in higher customer life-time value of a Rental & Subscription model versus a Perpetual licence model.

(1) Adjusted EBIT: Calculated as profit from operations before amortisation of intangible assets (excluding other software), share-based payments, gain/loss on fair value of forward foreign exchange contracts and exceptional items.

(2) Recurring Revenue as a proportion of total revenue = (Rental & Subscription software licence revenue + Support and Maintenance revenue) / total revenue.

Enquiries:

AVEVA Group plc

Matt Springett, Head of Investor Relations

Tel: [phone]

FTI Consulting LLP

Edward Bridges / Dwight Burden

Tel: [phone]

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September 19, 2018 02:01 ET (06:01 GMT)