AVEVA Annual Report 2004

FY2004 Annual Report · AVEVA
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Annual Report 2004

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1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FINANCIAL HIGHLIGHTS

31-Mar-04
£000's

31-Mar-03
£000's

Growth

Contents

i

ii

Chairman’s statement

Chief Executive’s review

vi

Financial review

1 Directors’ report

5 Board of directors

6

Corporate governance statement

8 Directors’ remuneration report

15

Statement of directors’ responsibilities

16 Auditors’ report

18

19

20

21

22

Consolidated proﬁt and loss account

Consolidated statement of total 
recognised gains and losses

Consolidated balance sheet

Company balance sheet

Consolidated cash ﬂow statement

23 Notes to the ﬁnancial statements

47

48

Five year record

Company information and advisors

Proﬁt and loss account highlights

Turnover

Recurring revenues
Initial licence fees
Other sales

23,000
10,060
5,053

20,946  
9,196 
5,866 

Total

38,113

36,008 

Europe, Middle East & Africa
Asia Paciﬁc
Americas

Total

Gross proﬁt

Gross margin

19,531
8,720
9,862

17,375 
8,531 
10,102 

38,113

36,008 

25,525

22,961 

67.0%

64.0%

Amortisation of intangible assets

software rights

267
352

267 
352 

10%
9%
-14%

6%

12%
2%
-2%

6%

11%

Operating proﬁt

Operating margin

Proﬁt before taxation

Earnings per share – pence

Total dividend per share, 
paid and proposed – pence

Balance sheet highlights

6,137

5,618 

9%

16.1%

15.6%

6,109

22.63

5,580 

21.46

5.8

5.6

Intangible assets and software rights (net)

3,290

3,909 

Cash and liquid resources

8,713

4,930 

Shareholders' funds: all equity

21,570

18,582 

CHAIRMAN’S STATEMENT

I am pleased to report
another year of good
performance with
increased revenue, proﬁt
and cash generation. Of
equal importance are
developments during the
year, and more recently,
which have positioned
AVEVA for sustained
growth in the future.

PERFORMANCE AND DIVIDEND
During the year, turnover increased 6%
with recurring revenues contributing 60%
of the total compared with 58% in 2003.
Operating margins were increased with the
result that proﬁt before tax and intangible
asset amortisation increased by 9% These
results were achieved despite the adverse
effect of the £/US$ exchange rate and, as
already announced, the slippage of a
material contract which was expected to be
signed during the fourth quarter.

An increased ﬁnal dividend of 4.0p is
proposed, making a total for the year of
5.8p (2003: 5.6p). The increased ﬁnal
dividend will be paid on the enlarged share
capital.

BUSINESS DEVELOPMENT
On 21 April 2004, AVEVA announced the
proposed acquisition of Tribon Solutions AB
(“Tribon”) for £19.0 million, ﬁnanced
mainly by a £17.2 million Placing and Open
Offer. Tribon is a leader in the market for
engineering software for designing ships
and complements AVEVA’s existing products
and services. I am pleased to note that the
necessary approvals have been given by
shareholders at the recent EGM and that
the funding has been well supported. This
acquisition completes today.

Detailed plans for integrating Tribon into
AVEVA will be implemented over the next
few months; a reduction in annualised
operating costs of some £2.4 million is
expected to be achieved at an estimated
one-off cost of about £2.1 million. Tribon
is expected to be earnings enhancing
during the year to 31 March 2006 
(before amortising goodwill and other
intangible assets).

The acquisition of Tribon, together with
the partnership alliance with Autodesk
signed during our second half year, places
AVEVA in an excellent position within its
marketplace. The Group now has a range of
products which is unrivalled at a time when
customers increasingly demand a ‘single
supplier solution’ to their engineering IT
needs. At the same time, we have been
able to strengthen our international
footprint and achieve greater scale in a
global market.

BOARD
In July 2003, Tony Christian left the
company and the Board, having previously
played an important role in broadening
AVEVA’s product offering.

OUTLOOK
As in recent years, we anticipate a seasonal
bias in our results and there will be short-
term distortions arising from the merging
of the two businesses. The large contract
delayed in March with an Asian consortium
of engineering companies is still
progressing and we expect this to be
closed in the near future.

We believe the enlarged group will have a
greater international presence and
improved prospects for growth, giving us
conﬁdence in our ability to achieve
satisfactory results in the current year.
Already AVEVA have made some joint visits
to customers and prospects regarding
opportunities for both expansion and new
licence sales in the Asia Paciﬁc region
where news of the acquisition has been
very positively received.

Richard A King CBE
Chairman

19 May 2004

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CHIEF EXECUTIVE’S REVIEW

TRIBON ACQUISITION
For many years AVEVA has had a small
amount of business in the marine market
with our systems being used to design the
internal layout for ships – essentially as a
spill-over from the process plant sector. In
order to capitalise on these opportunities,
a serious hull design solution was needed.
The acquisition of Tribon Solutions, the
leading global provider of design software
and services to the marine industry, will
allow us to combine the technology from
both companies and will allow AVEVA to
extend its business into the adjacent and
complementary sector of shipbuilding.

In addition to achieving operational
synergies, the enlarged group with be able
to offer an unrivalled range of engineering
IT products and services. Further, the
companies’ presence in the important Asia
Paciﬁc market will be signiﬁcantly
enhanced.

OVERVIEW
The past year has seen
sustained progress on all
fronts for AVEVA. Our rental
licence model, introduced in
2002, has become an
essential sales tool in times
that see capital expenditure
increasingly under pressure
within the engineering
industry. This has now

settled into a more predictable pattern,
which will be covered in more detail below.

Growth has been supported by continuing
investment in products, resulting in a good
ﬂow of new releases over the last twelve
months. We have achieved improved
consistency against delivery schedules and
reliability of product. Our investment in
product development has been increased
this year and we have some signiﬁcant new
products scheduled for launch in 2004/5.

The acquisition of Tribon Solutions AB was
a major project for much of the second half
of the year, with this deal being
announced and completed following the
year-end.

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OPERATIONS

Trends
In a marketplace affected by global unrest,
AVEVA has a solid bedrock of established
customers built over a long period across
multiple industries. 

One signiﬁcant trend is the exporting
engineering man-hours, often for design,
into the country in which a plant is to be
constructed. AVEVA has in place a global
licensing policy and with our enlarged
network of ofﬁces we are better placed
than most to capitalise on the relocation
of design work, often to the Asia Paciﬁc
region. 

Geographic

Americas
26% of group revenue: 
£9.9 m (2003: £10.1m)
The North American market has been
affected by project migration to lower cost
economies. In part this has been a
business driver for AVEVA as we sell global
licenses to North American based
customers and local licenses direct to the
lower cost economies via our network of
international ofﬁces. The adverse
movement in the £/US$ exchange rate
resulted in a reduction in revenues
although in constant currencies the
revenue increased during the year.

With many of the world’s largest full
service engineering, procurement and
contracting (EPCs) companies based in
North America we are delighted to have
concluded major license agreements with
Jacobs, AMEC, Fluor and Technip. In
addition we have implemented some of our
latest technology in these companies,
generating both rental licence income and
long term services revenue.

In the North American market the business
has become predominantly rental based.

South America has performed consistently
well and our long established third party
distribution channel is working closely
with staff from our Houston ofﬁce to
secure both new and extension business.

We expect the alliance with Autodesk to
open further opportunities in the American
market once we have a product to deliver
at the end of 2004. 

Asia Paciﬁc
23% of group revenue: 
£8.7 m (2003: £8.5m)
As with the Americas, revenues were
adversely affected by the US$ exchange
rate.

Asia Paciﬁc now has a fully developed sales
and support ofﬁce network following the
opening this year of an ofﬁce in Perth,
Australia. In this region, the bulk of
business is initial licence fee with only a
small number of customers choosing the
rental model.

Our most recent investment in the ofﬁce
network has been China where we have
been very successful selling into the power
industries, both nuclear and fossil fuelled.
We now have a dominant position in the
growing power segment, with 19 of the 26
fossil fuelled design institutes using our
design systems along with half of the 18
nuclear design institutes. 

Korea has been a very strong market for
AVEVA with signiﬁcant expansion in
business on the back of the booming
market for offshore semi submersible
structures being fabricated by the Korean
shipyards. Daewoo Shipbuilders and Marine
Engineering selected AVEVA systems for use
on the BP Angola Project for which they
will be one of the major designers and
constructors.

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CHIEF EXECUTIVE’S REVIEW

In Japan, after a slow start to the year,
activity picked up in the last two quarters
and we expect this to continue into the
current year.

The combination of Tribon and AVEVA will
give us a signiﬁcantly increased presence
across the Asia Paciﬁc region. We already
have a number of customers using both
systems and are already actively promoting
the combined company to customers and
prospects.

EMEA
51% of group revenue: 
£19.5 m (2003: £17.4m)
AVEVA operates the Europe Middle East and
Africa (EMEA) region in two streams, one
covering Western EMEA the other covering
Central and Southern Europe.

Business within the core markets and
including the large European based EPCs
has been good with some important new
business wins in a very competitive
market. The business in Europe is a mix of
rental and initial licence fee in broadly
equal proportion.

In Western EMEA we have further
developed our Middle East operations with
a head ofﬁce in Dubai, providing sales and
support to customers throughout Bahrain,
Egypt, Iran, Kuwait, Oman, Pakistan, Qatar,
Saudi Arabia and the UAE.

In Central and Southern Europe the
business has been made up of some very
large deals, most notably a contract with
Framatome to supply the full product range
for use on the new generation of European
Reactor. 

In the ﬁrst half-year we started direct
sales activity in Russia and have already
been successful with a large sale to Lukoil. 

The enlarging of the EU will help alleviate
some of the critical shortages of skilled
engineers and overcome some of the
problems of the past few years in trying to
tap into the overcapacity of the eastern EU
engineers. Presently AVEVA sells to the
eastern EU through an established agent
channel and we expect this remain the
case for the coming year. 

Products
The latest ‘Next Generation’ version of
PDMS was delivered during the year,
providing a major upgrade in usability
(PDMS sales still drive the majority of the
revenue and we continue to invest heavily
for the future). In line with our policy of
always maintaining the integrity of the
customer’s data we have provided tools to
migrate up to the new version without any
loss of productivity, a facility not open to
many users of competitor systems. 

The next version of PDMS is already close
to being ﬁnalised and will contain much of
the functionality designed as part of the
alliance with AutoDesk, combining the best
in 2D drafting and 3D database driven
technologies in one product with a
seamless interface between the two.

As a spin out of work started by the AVEVA
consulting group we have developed skills
in providing interfaces to ERP systems. SAP
is widely used within our customer base
and over the last year we have
implemented interfaces between a number
of AVEVA products and various parts of SAP.
With the AVEVA VNET product being
implanted at a corporate level we expect
to see demand for SAP interfaces continue
as we roll our further VNET installations.

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2003/4 PERFORMANCE

AVEVA Managed Services

AVEVA Engineering IT
Oil & gas and power (both contributing
some 35% of revenue) have been strong
performers during the past year. We have
seen a steady rise in the number of deep
water platforms and ﬂoating production
facilities being committed to construction.
These highly complex projects lend
themselves well to AVEVA solutions and, in
the longer term to the combined Tribon
hull system with AVEVA outﬁtting.

The much expected increase in project
activity in the chemical and
pharmaceutical business in North America
has been slow to materialise, although in
Germany and France we have been making
steady progress into these industries.

Petrochemical plant has seen an increase
over the last 12 months with owner
operators using AVEVA’s new technology
(VNET) to reduce plant maintenance costs
and make engineering data available to a
wider audience at low cost. Onshore
petrochemical plant is likely to be an area
of ﬁerce competition as customers evaluate
new technologies.

The shipbuilding, or marine, market has
been approximately 5% of AVEVA business
for a number of years with the majority of
the orders coming from Korea, China and
Taiwan. With the combination of the 800
Tribon customers and revenue, this sector
will rank equally in importance to oil & gas
and power. 

Our multi year contract to provide services
to DuPont is performing well and the team,
based in Wilmington, has given excellent
service on both AVEVA and third party
solutions within our scope of work. User
surveys conducted regularly have
consistently rated our service close to
100% satisfaction. During the year we
have taken on responsibility for the
Bentley Microstation products within
DuPont engineering groups as well as
several additional projects to upgrade
applications. 

In the second half we have concluded
managed service contracts with three large
engineering contractors, all providers of
services to DuPont under the Full Service
Design Contractor (FSDC) program. Over
the next year we plan to put more
emphasis on the AVEVA Managed Service
proposition building on the success of
DuPont and the new signings in the second
half year.

PEOPLE AND ORGANISATION
AVEVA enjoys a low staff turnover by
operating a devolved management
structure - one in which developers can
apply their skills, our ﬁnance and
administrative staff can monitor the
business and our sales, marketing and
support people can serve customers,
develop new markets and win new
business.

I’d like to thank all AVEVA staff for their
responsiveness and ﬂexibility during
periods of continuous change.

Richard Longdon
Chief Executive

19 May 2004

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FINANCIAL REVIEW

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FINANCIAL REVIEW
Overview of the year
The group results for the
year show continued
growth in revenues of 6%
from £36.0m to £38.1m
and growth in proﬁt before
tax of 9% from £5.6m to
£6.1m and a strong year
end cash position of
£8.7m. 

RESULTS OF OPERATIONS

Turnover
Reported group turnover for the year was
£38.1m (2003: £36.0m), an increase of
approximately 6% from 2003 with the
strongest region being Europe (including
the UK), Middle East and Africa which had
growth of 12%. Americas had a
disappointing year due to the US market
remaining depressed and highly
competitive and there was further evidence
of a continued shift of global projects from
the US to other areas. Both Americas and
Asia Paciﬁc were partly impacted by the
weakening of the US$ with Asia Paciﬁc
showing modest growth in revenues of 2%.
The Chairman’s statement and the Chief
Executive’s review provide more details of
the group’s performance in the year.

Licence fees were £10.0m in 2004
compared to £9.2m in 2003. Recurring
revenues for the year were £23.0m (2003:
£20.9m) and accounted for 60% of total
revenue (2003: 58%).

Service revenues, which include training,
implementation and consulting fees were
£5.1m compared with £5.9m last year.

Gross margins, operating 
expenses and operating proﬁts
Gross margins improved to 67% (2003:
64%) but operating expenses as a
percentage of turnover increased from 48%
in 2003 to 51% in 2004 reﬂecting the
additional infrastructure costs in the year.

Research and development expenditure for
the year was £6.9m, an increase of 16%
from 2003 and 18% of turnover (2003:
16%) reﬂecting a internal reorganisation of
resources and continued investment in
enhancing existing software and
developing new software such as that for
the Autodesk alliance. Consistent with
previous years, all R&D expenditure is
expensed in the proﬁt and loss account. 

As a software business the largest single
element of expenditure is on employees
and the associated costs. Group staff costs
in the year were £16.2m compared to
£15.5m in 2003, an increase of 4.8%. The
average number of employees decreased
from 330 to 326 in 2004.

Operating proﬁt increased from £5.6m in
2003 to £6.1m in 2004, an increase of 9%. 

Taxation
The group tax charge for the year was
£2.2m (2003: £1.9m) representing an
effective tax rate before amortisation of
goodwill and intangible assets of 33%
(2003: 31%). The main factor resulting in
the effective tax rate being higher than
the standard UK tax rate of 30% was that a
signiﬁcant proportion of the proﬁts were
earned by overseas subsidiaries which are
subject to higher rates of tax. This was
partially offset by the beneﬁts of the tax
credit on qualifying research and
development expenditure in the UK. 

Earnings per share
Basic earnings per share was 22.63p
(2003: 21.46p) which is an increase of 5%
on 2003. Adjusted earnings per share
before the amortisation of goodwill and
intangible assets arising from acquisitions
was 26.20p (2003: 25.09p) which the
directors believe provides a more
meaningful measurement of performance of
the underlying business.

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FINANCIAL REVIEW

foreign currency contracts to manage the
currency risk where material. The overseas
subsidiaries trade in their own currencies
and that also acts as a natural hedge
against currency movements.

The group is also exposed to foreign
currency translation risk on the translation
of its net investment overseas into
sterling. This is managed to some extent
by the overseas subsidiaries incurring costs
denominated in their local currency.
Further details of the group’s ﬁnancial
instruments are provided in note 17 to the
ﬁnancial statements.

Acquisition of Tribon
Tribon Solutions AB is a Swedish group
which develops, markets and supports
software solutions for use in the design
and production processes in marine
industry. Tribon has 164 employees, with
headquarters in Sweden and ofﬁces in
China, Germany, India, Japan, Republic of
Korea, Russia, Singapore, the UK and the
USA. The total consideration for the
acquisition was £19.0m, £15.0m of which
was satisﬁed in cash and £4.0m was
satisﬁed through the issue of shares. The
acquisition was approved by the
shareholders at the Extraordinary General
Meeting held on 14 May 2004.

In order to ﬁnance the cash consideration
for the acquisition and expenses related
thereto, the company raised approximately
£17.2m, (approximately £14.7m net of
expenses) pursuant to a Placing and Open
Offer of 3,645,112 ordinary shares of 10p
each. 

Dividends
The Board recommends a ﬁnal dividend of
4.0p per ordinary share, resulting in a total
dividend per share for the year of 5.8p
(2003: 5.6p). The ﬁnal dividend will be
paid on 2 August 2004 to shareholders on
the register at the close of business on 2
July 2004. The cost of dividends paid and
proposed in respect of the ﬁnancial year
was £1.0m (2003: £1.0m).

Balance sheet
The group balance sheet continues to
remain strong with net assets increasing
from £18.6m to £21.6m at 31 March 2004.
Trade debtors were £14.4m compared to
£13.5m and deferred revenue was £6.0m
compared to £5.7m last year.

Cash ﬂows
Overall net cash balances increased by
£3.8m from £4.9m to £8.7m. Cash ﬂow for
the year from operating activities was
£7.9m (2003: £3.2m) reﬂecting continued
focus on working capital management.
Capital expenditure was £1.6m (2003:
£1.7m) which was principally on the
completion of the extension to the
building at the Cambridge site and
computer equipment, tax paid was £2.0m
(2003: £2.1m) and equity dividends paid
were £1.0m (2003: £0.9m)

Capital structure and treasury policy
The group ﬁnances its operations through
a combination of retained proﬁts, new
equity and bank overdraft facilities. 

During the year the group had an overdraft
facility of £1.5m in the UK which was
utilised to manage short term ﬂuctuations
in cash before cash was remitted from the
overseas entities. The group has agreed
bank facilities of £6m subsequent to the
year end to manage short term working
capital requirements following the
acquisition of Tribon.

Approximately £34.7m (91%) of the
group’s turnover is generated outside the
UK and is invoiced in currencies other than 
sterling. The group enters into forward 

Paul Taylor
Finance Director

19 May 2004

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A

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Directors’ report
For the year ended 31 March 2004

The directors present their annual report on the affairs of the group together with the ﬁnancial statements and auditors’
report for the year ended 31 March 2004.

PRINCIPAL ACTIVITIES

The company is a holding company. The principal activities of the group are the marketing and development of computer
software and services for engineering and related solutions.

BUSINESS REVIEW

A review of the group’s operations during the year and its plans for the future is given in the Chairman’s and Chief
Executive’s Statements and Financial Review. 

The group made a proﬁt for the year after taxation of £3,910,000 (2003 – £3,658,000). Sales were £38,113,000 
(2003 – £36,008,000) with overseas sales representing 91% (2003 – 82%) of the business.

CREDITORS’ PAYMENT PRACTICE

It is the group’s policy that payments to suppliers are made in accordance with those terms and conditions agreed between
the company and its suppliers, provided that all trading terms and conditions have been complied with.

The company has no trade creditors (2003 – £nil).

RESULTS AND DIVIDENDS

The group results and dividends are as follows:

Group proﬁt for the year after taxation 
Dividends paid and proposed
– interim dividend paid of 1.8p per ordinary share 
– ﬁnal dividend proposed of 4.0p per ordinary share 

Retained proﬁt for the year 

RESEARCH AND DEVELOPMENT

£000
3,910

(320)
(699)
__________

2,891
__________

The group continues an active programme of research and development and all costs are expensed as incurred. The research
and development programme covers updating of and extension to the group's range of products.

INTELLECTUAL PROPERTY

The group owns intellectual property both in its software tools and the products derived from them. The directors consider
such properties to be of signiﬁcant value to the business. Intellectual property acquired is capitalised at cost but internally
developed intellectual property costs are written off as incurred.

❚ 1

Directors’ report
(continued)

DIRECTORS AND THEIR INTERESTS

The directors who served during the year under review are shown below:

(Chairman)
Resigned 31 July 2003

*

R A King
A D Christian

*   C A Garrett
R Longdon
* D W Mann
P R Taylor

* Non-executive directors

The beneﬁcial interests in the shares of the company of directors who held ofﬁce at 31 March 2004 are as follows:

R A King  
C A Garrett         
R Longdon         
D W Mann         
P R Taylor         

2003
_________________________________

2004

10p ordinary
shares
131,250
-
380,476
17,800
8,000
___________

10p ordinary
shares
131,250 
-
380,476
17,800
4,000
___________ 

No changes took place in the interests of directors in the shares of the company between 31 March 2004 and 19 May 2004.

Directors’ share options are disclosed in the Directors’ remuneration report on page 12.

Resolutions will be submitted to the Annual General Meeting for the re-election of two directors. Brief biographical details of those
directors who are proposed for re-election appear on page 5.

❚ 2

Directors’ report
(continued)

OTHER SUBSTANTIAL SHAREHOLDINGS

On 14 May 2004, the company had been notiﬁed in accordance with sections 198 to 208 of the Companies Act 1985, of the
following interests in the ordinary share capital of the company:

Name of holder

Framlington Group Ltd
Merrill Lynch Investment Managers
Standard Life
Invesco English and International Trust
M&G Investment Management
Hermes Administration Services Ltd
F&C Management
Schroder Investment Management
UBS Global Asset Management Holding (No.2)
Legal & General Investment Management
3i Smaller Quoted Companies Trust PLC

CHARITABLE DONATIONS

Number
1,501,240
1,459,098
1,420,544
1,261,217
1,074,247
904,747
730,320
633,817
631,997
674,992
525,000
___________

Percentage
held
8.59
8.35
8.13
7.22
6.15
5.18
4.18
3.63
3.62
3.86
3.00
__________ 

During the year the group made charitable donations of £5,403 (2003 – £5,413) to a combination of local and international
charities. 

POST BALANCE SHEET EVENTS

On 21 April 2004 the company signed a conditional agreement to acquire the entire issued share capital of Tribon Solutions AB, a
Swedish company which develops, markets and supports software solutions for use in the design and production processes in
marine industry all over the world. The total consideration for the acquisition was approximately £19.0 million, approximately
£15.0 million of which was satisﬁed in cash and approximately £4.0 million was satisﬁed through the issue of 789,655 ordinary
shares of 10p each to the vendors.

In order to ﬁnance the cash consideration for the acquisition and expenses related thereto, the company has raised
approximately £17.2 million, (approximately £14.7 million net of expenses) pursuant to a Placing and Open Offer of 3,645,112
ordinary shares of 10p each. In addition, the company has also entered into bank facility agreements for the provision of bank
facilities amounting up to £6.0 million to support the enlarged group’s working capital requirements.

At an Extraordinary General Meeting (EGM) held on 14th May 2004, a special resolution was passed to approve the acquisition
and to increase the authorised share capital of the Company from £2,200,000 to £3,000,000 by the creation of 8,000,000
ordinary shares of 10p each. In addition, the directors were authorised to allot the relevant number of ordinary shares pursuant
to the Placing and Open Offer and the acquisition.

Also at the EGM ordinary resolutions were passed to adopt a new Long Term Incentive Plan and to amend the dilution limits of
the Cadcentre Group plc Executive Share Option Scheme.

AUTHORITIES TO ALLOT SHARES AND DISAPPLY PRE-EMPTION RIGHTS

Resolution 9 set out in the notice convening the Annual General Meeting contains authority for the directors to allot relevant
securities until the earlier of 15 October 2005 and the date of the next Annual General Meeting up to a maximum nominal
amount of £730,168 (representing 33.33 per cent of the total issued ordinary share capital as at 28 May 2004. At that date, no
treasury shares were held by the Company.

Resolution 10 gives the directors the power to allot equity securities for cash pursuant to this authority, disapplying the pre-
emption provisions contained in Section 89(1) of the Companies Act 1985. This power is valid for the same period and is limited
to the allotment of equity securities up to a nominal amount of £109,525 (approximately 5 per cent of the issued ordinary share
capital at 28 May 2004) or in connection with a rights issue or other pre-emptive offer.

❚ 3

Directors’ report
(continued)

AUTHORITIES TO ALLOT SHARES AND DISAPPLY PRE-EMPTION RIGHTS (continued)

The directors have no present intention of issuing further shares other than to satisfy the exercise of option holders' rights under
the Company's share option schemes or in relation to any appropriate acquisition opportunities which may become available to
the Company.

Following the introduction of The Companies (Acquisition of Own Shares)(Treasury Shares) Regulations 2003 (the "Treasury
Regulations") which came into force on 1 December 2003, this authority will now also cover the sale of treasury shares for cash.

AUTHORITY TO REPURCHASE ORDINARY SHARES

Resolution 8 set out in the notice convening the Annual General Meeting gives authority to the Company to purchase its own
ordinary shares up to a maximum of 2,190,506 ordinary shares until the earlier of 15 October 2005 and the date of the next
Annual General Meeting. This represents 10 per cent of the ordinary shares in issue at 28 May 2004 and the Company's exercise
of this authority is subject to the stated upper and lower limits on the price payable which reﬂects the requirements of the UK
Listing Authority. Shares will only be repurchased if earnings per share are expected to be enhanced as a result and the directors
believe it is in the best interests of shareholders generally. To the extent that any shares so purchased are held in treasury,
earnings per share will be enhanced until such time, if any, as such shares are resold or transferred out of treasury.

Pursuant to the Treasury Regulations, the Company now has the choice of cancelling shares which have been repurchased or
holding them as treasury shares (or a combination of both). Treasury shares are essentially shares which have been repurchased
by the Company and which it is allowed to hold pending either reselling them for cash, cancelling them or, if authorised, using
them for the purposes of its employee share plans.

The directors believe that it is desirable for the Company to have this choice. Holding the repurchased shares as treasury shares
would give the Company the ability to reissue them quickly and cost effectively and would provide the Company with additional
ﬂexibility in the management of its capital base. No dividends will be paid on, and no voting rights will be exercised in respect
of treasury shares.

As at 28 May (being the latest practicable date prior to the publication of the notice of the Annual General Meeting), there were
624,700 outstanding options granted under all share option plans operated by the Company which, if exercised, would represent
2.85 per cent of the issued ordinary share capital of the Company. If this authority were exercised in full and the shares
repurchased were to be cancelled, such options if exercised would represent 3.17 per cent of the issued ordinary share capital of
the Company."

AUDITORS

A resolution to reappoint Ernst & Young LLP as auditors for the ensuing year will be put to the members at the Annual General
Meeting.

By order of the Board,

P R Taylor
Secretary

High Cross
Madingley Road 
Cambridge
CB3 0HB

19 May 2004

❚ 4

Board of directors

Richard King CBE, aged 74, Non-Executive Chairman

Richard King joined AVEVA at the time of the management buyout negotiations and was appointed Chairman at their conclusion
in August 1994. Prior to that he held various senior management positions in both Pye of Cambridge and Philips NV in the UK
and overseas. In 1980 he created, out of Philips, Cambridge Electronic Industries, a group of some 25 specialist companies. The
group was listed on the London Stock Exchange (LSE) in 1982 and he was CEO throughout the 1980's. Richard then turned his
attention and interests to the development of early stage technical companies, mostly in Cambridge. Three of these, apart from
AVEVA, where at various times he was Chairman, obtained LSE listings. He also committed considerable time to public service
appointments as a director or Governor of Addenbrooke's Hospital; Anglia Polytechnic University and Eastern Arts and is currently
Deputy Chairman of Xaar plc; Chairman of Sentec; governor of Norwich School of Art and Design and a trustee of the East Anglian
Air Ambulance Trust. He is an Emeritus Fellow of Darwin College in the University of Cambridge.

Richard Longdon, aged 48, Chief Executive

Richard Longdon received an engineering training in the defence industry then gained experience in the project management of
high value engineering projects. He moved into sales and held a series of international sales and marketing positions. He joined
AVEVA in 1984 and shortly afterwards was made marketing manager for the process products. In January 1992 he relocated to
Frankfurt where he was responsible for setting up and running the group’s German ofﬁce. He returned to the UK as part of the
management buyout team in 1994 subsequently taking responsibility for the group’s worldwide sales and marketing activities
before being appointed Managing Director in May 1999. He took over as Group Chief Executive in December 1999.

Paul Taylor FCCA, aged 39, Finance Director and Company Secretary

Paul Taylor joined AVEVA in 1989, he was heavily involved in the ﬂotation process and has been responsible for both UK
accounting and the development of its overseas subsidiaries including adherence to group standards. Between 1998 and 2001
Paul was also UK Director of Human Resources and was appointed to the position of Finance Director and Company Secretary of
AVEVA Group plc on 1 March 2001. Prior to joining AVEVA, Paul originally trained within the accountancy profession before
moving to Philips Telecommunications (UK) where he was responsible for the management accounts of its public sectors division.

David Mann, aged 59, Non-Executive Director and Senior Independent Director

David Mann was educated at Jesus College, Cambridge. He is Non-Executive Chairman of Charteris plc, a business and IT
management consultancy, which he established with some colleagues in 1996 and was ﬂoated on AIM in 2000. He is also Non-
Executive Chairman of Flomerics Group plc (quoted on AIM) and Non-Executive Director of Ansbacher Holdings Ltd and Room
Solutions Limited. Prior to setting up Charteris, he spent almost all his career with Logica plc where he became head of
worldwide operations, then Group Chief Executive and ﬁnally Deputy Chairman. He is a Past President of the British Computer
Society and a Past Master of the Worshipful Company of Information Technologists in the City of London.

Colin Garrett ACA, aged 47, Non-Executive Director

Colin Garrett has spent the majority of his career in corporate ﬁnance. For the last four years he has been involved, in a non
executive capacity, with a number of companies and management teams. Colin is a Non-Executive Director of Intec Business
Colleges plc and Sentec Limited. He is also Non-Executive Chairman of 3G Comms Limited, ZBD Displays Limited and Pelikon
Limited.

❚ 5

Corporate governance statement

STATEMENT OF COMPLIANCE WITH THE CODE OF BEST PRACTICE

The company has complied throughout the year with the Provisions of the Code of Best Practice set out in section 1 of the
Combined Code.

In addition, the company is currently reviewing the requirements of the New Combined Code, published in July 2003, and intends
to adopt relevant changes where possible, to its governance framework during the course of the current ﬁnancial year.

STATEMENT ABOUT APPLYING THE PRINCIPLES OF GOOD GOVERNANCE

The company has applied the Principles of Good Governance set out in section 1 of the Combined Code by complying with the
Code of Best Practice as described above. Further explanation of how the Principles have been applied is set out below and, in
connection with directors' remuneration, in the Directors’ remuneration report.

BOARD OF DIRECTORS

The executive directors of the group are fully involved in its management at all levels, and its direction and control remains
ﬁrmly in their hands. The board is fully involved in the nomination, selection and appointment of non-executive and executive
directors, although there is no formal written procedure in place.

The board currently comprises the non-executive chairman, two non-executive directors, including the senior independent
director, and two executive directors. The board meets at least eight times during the year. It is responsible for the business and
commercial strategy of the group, monitoring progress, the approval of major transactions and the approval of the ﬁnancial
statements and operating and capital expenditure budgets. To enable the board to discharge its duties, all directors receive
appropriate and timely information. Brieﬁng papers are distributed by the company secretary to all directors in advance of board
meetings. The chairman ensures that the directors take independent professional advice as required. A nomination committee for
board appointments has not been established, because the full board is actively involved in all appointments. All directors are
subject to re-election at least every three years.

It is the view of the board that all non-executive directors are independent. The senior independent director is D W Mann.

AUDIT COMMITTEE

The audit committee comprises the three non-executive directors and is chaired by C A Garrett with R A King and D W Mann as
members. The committee meets as required to review the scope of the audit and the audit procedures, the format and content of
the audited ﬁnancial statements and interim reports, including their notes and the accounting principles applied. The committee
will also review any proposed change in accounting policies and any recommendations from the group’s auditors regarding
improvements to internal controls and the adequacy of resources within the group’s ﬁnance function. The audit committee
advises the board on the appointment of external auditors and on their remuneration both for audit and non-audit work, and
discusses the nature, scope and results of the audit with external auditors. The audit committee keeps under review the cost
effectiveness and the independence and objectivity of the external auditors.

DIALOGUE WITH INSTITUTIONAL SHAREHOLDERS

The chief executive and the ﬁnance director have meetings with representatives of institutional shareholders at least twice
annually. These meetings seek to build a mutual understanding of objectives by discussing long-term issues and obtaining
feedback. All shareholders are encouraged to participate in the company's Annual General Meeting.

❚ 6

Corporate governance statement
(continued)

INTERNAL CONTROL

The board has applied Principle D.2 of the Combined Code by establishing a continuous process for identifying, evaluating and
managing the signiﬁcant risks the group faces. The board regularly reviews the process, which has been in place from the start of
the year to the date of approval of this report and which is in accordance with Internal Control: “Guidance for Directors on the
Combined Code” published in September 1999. The board is responsible for the group’s system of internal control and for
reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business
objectives, and can only provide reasonable and not absolute assurance with respect to the preparation of ﬁnancial information
and the safeguarding of assets and against material misstatement or loss.

In compliance with Provision D.2.1 of the Combined Code, the board continuously reviews the effectiveness of the group’s system
of internal control. The board’s monitoring covers all controls, including ﬁnancial, operational and compliance controls and risk
management. It is based principally on reviewing reports from management to consider whether signiﬁcant risks are identiﬁed,
evaluated, managed and controlled and whether any signiﬁcant weaknesses are promptly remedied and indicate a need for more
extensive monitoring. The board has also performed a speciﬁc assessment for the purpose of this annual report. This assessment
considered all signiﬁcant aspects of internal control arising during the period covered by the report. The audit committee assists
the board in discharging its review responsibilities. 

The board has considered the requirement to have an internal audit function and given the group’s relative size, does not
consider one necessary at this point but will continue to monitor this going forward.

❚ 7

Directors’ remuneration report

This report has been prepared in accordance with Schedule 7A of the Companies Act 1985. The report also meets the relevant
requirements of the Listing Rules of the Financial Services Authority and describes how the board has applied the Principles of
Good Governance relating to directors’ remuneration. As required by the Regulations, a resolution to approve the report will be
proposed at the Annual General Meeting of the company at which the ﬁnancial statements of the company will be approved.

The Regulations require the auditors to report to the company members on the ‘auditable part’ of the Directors’ remuneration
report and to state whether in their opinion that part of the report has been properly prepared in accordance with the Companies
Act 1985 (as amended). The report has therefore been divided into separate sections for audited and unaudited information.

UNAUDITED INFORMATION

REMUNERATION COMMITTEE

The remuneration committee’s principal responsibility is to determine the remuneration of both the company’s executive directors
and its senior management within broad policies agreed with the board. In addition it reviews the remuneration policy for the
company as a whole. The remuneration of the non-executive directors is determined by the executive directors, not the
committee.

The committee comprises a Chairman (D W Mann) and two non-executive directors (R A King and C A Garrett). The Chief
Executive (R Longdon) is invited to submit recommendations to the committee and both he and the members of the committee
take into consideration relevant external market data as well as the reviews of remuneration for employees of the group generally.

REMUNERATION POLICY

The committee aims to ensure that members of the executive management are provided with appropriate incentives to encourage
enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the
company. It also aims for a combination of ﬁxed and variable payments, beneﬁt and share option plans that will achieve a
balance in incentives to achieve short and long-term goals.

BASIC SALARIES

In determining the basic salary of each executive director the committee takes account of the performance of the company as a
whole and the performance of the individual in achieving ﬁnancial and non-ﬁnancial goals within his areas of responsibility.

BONUS PAYMENTS

The executive directors participate in annual performance-related bonus schemes determined by the committee. The schemes are
based substantially or entirely on the performance of the company as a whole; part may be based on the achievement of personal
objectives. In the year ended 31 March 2004 bonuses of £10,000 and £6,000 were paid to R Longdon and P R Taylor in respect of
achievement of the group’s performance for the six months to 30 September 2003. The performance targets for the year ended 31
March 2004 were not achieved and therefore no further bonuses were payable. For the year ending 31 March 2005 there will be a
cap on the bonus that an executive director can earn under the scheme and the maximum cap will be 60% of basic salary.

SHARE OPTIONS

The committee considers that periodic grants of share-related incentives should constitute an important element of the
remuneration of the company’s senior executives, in line with common practice in competitive companies. However there was
very little scope for providing such incentives via the company’s existing share option scheme and no options were granted to
executive directors during the year ended 31 March 2004. Following discussions with and approval from shareholders, a Long
Term Incentive Plan (LTIP) was established by the company subsequent to the year end and the dilution limits under the existing
share option scheme were extended. The key rules under the LTIP are as follows:

The options will be granted at a price equal to the nominal value of an ordinary share which is 10p and will be subject to
condition of exercise. The extent to which options will be capable of exercise will depend on the extent to which the condition of
exercise has been satisﬁed. The condition of exercise will be based on the ranking of the company in terms of its total
shareholder return measured against other companies in a relevant London Stock Exchange index such as the techMARK 100
index. The option will ‘vest’ in accordance with the following scale:

❚ 8

Directors’ remuneration report
(continued)

Total shareholder return ranking

Percentage vesting of shares subject to option

75 per cent and above
Median to 75 per cent
Median
Below median

100 per cent
Pro rata on a straight line basis
33 per cent
Nil

The condition of exercise will be measured over a period of at least three years. There will be no retesting of the condition of
exercise. It is the intention of the remuneration committee to grant options under the LTIP during the year ending 
31 March 2005.

Although it is the intention of the remuneration committee that options granted under the LTIP will be subject to the condition
of exercise as described above for the year ending 31 March 2005, the remuneration committee will take note of practical
experience, professional advice, market trends and investor feedback in determining the condition of exercise to be applied for
option grants in subsequent years.

SERVICE CONTRACTS

The service contracts and letters of appointment of the directors include the following terms:

Date of Contract 

Date of Appointment 

Notice Period (months)

R A King
A D Christian
C A Garrett
R Longdon
D W Mann
P R Taylor

28 November 1996
7 April 1998
14 July 2000
28 November 1996
17 May 2000
17 October 1989

28 November 1996
1 May 1999
1 August 2000
28 November 1996
8 June 1999
1 March 2001

3
9
3
12
3
9 

The committee considers that the notice periods of the executive directors are in line with those in other companies of a similar
size and nature and are in the best interests of the group to ensure stability in senior management. The non-executive and
executive directors retire at any Annual General Meeting where they are so required by the Articles of Association, accordingly
their contracts have no set termination date. 

There are no predetermined special provisions for executive or non-executive directors with regard to compensation in the event
of loss of ofﬁce. The remuneration committee would be responsible for considering the circumstances of the early termination
and in exceptional circumstances will determine compensation payments in excess of the company’s contractual obligations.

❚ 9

Directors’ remuneration report
(continued)

PERFORMANCE GRAPH

The following graph shows the Company’s performance, measured by total shareholder return, compared with the performance of
the techMARK All Share Index. 

350.00

300.00

250.00

200.00

150.00

100.00

50.00

0.00

1999

2000

2001

2002

2003

2004

The directors consider the techMARK All Share Index to be an appropriate choice as the index includes the group.

AVEVA Group plc

techMARK All Share Index

❚ 10

Directors’ remuneration report
(continued)

AUDITED INFORMATION

DIRECTORS’ REMUNERATION

The total amounts for directors’ emoluments and other beneﬁts were as follows:

Name of director 

Non-executive

R A King
J R F Fairbrother*
C A Garrett 
D W Mann

Executive

A D Christian*
R Longdon
P R Taylor 

Aggregate emoluments

Basic salary 
£000 

Fees 
£000 

Bonus 
£000 

Beneﬁts 
in kind 
£000 

Compensation
for loss of ofﬁce
£000 

-
-
-
-

32
-
20
20

-
-
-
-

-
-
-
-

-
-
-
-

2004 
Total 
£000 

32
-
20
20

2003 
Total 
£000 

32
6
20
20

48
210
133

-
-
-
_________  _________ 

5
19
17
_________  _________ 

-
10
6

391

72
_________  _________ 

41
_________  _________ 

16

160
193
132
__________  __________  __________ 

188
239
156

135
-
-

135

563 
_________  __________  __________ 

655

*Remuneration shown up to date of resignation from the board on 31 July 2003.

The remuneration of each executive director includes the provision of a company car, or allowance, and a fuel allowance.

Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the
company granted to or held by the directors.

❚ 11

Directors’ remuneration report
(continued)

SHARE OPTIONS

The interests of directors in options to acquire ordinary shares were as follows:

Name 

As at 1 April
2003

Granted 

Exercised 

Lapsed

As at 31
March 2004 

Gain on 
exercise

Exercise
price
exercise

Earliest 
date of
exercise

Date
of
expiry

Number 

Number 

Number 

Number 

Number

£  

A D Christian

150,000
50,000

200,000

R Longdon

100,000

P R Taylor

3,000
3,000
23,000
71,000

100,000

-
-

-

-

-
-
-
-

-

150,000
-

-
50,000

150,000

50,000

-
-

-

225,000
-

272.5p
524.7p

01.06.01
19.01.04

31.05.05
18.01.08

-

3,000
3,000
23,000
-

29,000

-

-
-
-
-

-

100,000

225,000

524.7p

19.01.04

18.01.08

-
-
-
71,000

12,588
8,100
66,884
-

71,000

87,572

50.4p
200.0p
179.2p
524.7p

27.11.99
24.05.00
16.03.02
19.01.04

28.11.03
23.05.04
15.03.06
18.01.08

The market price as at 31 March 2004 was 507.5p with a high-low spread for the year of 532.5p to 314.5p. 

The aggregate gain on exercise of options by directors for the year ended March 31 2004 was £312,572 (2003: £nil).

The options are normally exercisable in full or in part between the third and seventh anniversaries of the date of grant. All options except for
those at 50.4p are subject to performance conditions, which require earnings per share to outperform RPI (utilisation) by a total of 10% over
a three-year rolling period. The share option rules were established at the time of the company’s initial public offering in 1996 and the
performance conditions set were commonly used at that time. The board monitors whether the performance conditions have been achieved on
an annual basis using a formula which is set out within the rules. The options which have an exercise price of 50.4p were granted when the
group was privately owned and therefore were not subject to the earnings per share performance condition.

❚ 12

Directors’ remuneration report
(continued)

PENSIONS

During the year, three directors, (R Longdon, A D Christian and P R Taylor) were members of the AVEVA Solutions Limited’s deﬁned
beneﬁt pension scheme. It is a contributory, funded, ﬁnal salary occupational pension scheme approved by the Inland Revenue.
Under this scheme they are entitled to a pension on normal retirement, or on retirement due to ill health, equivalent to two-thirds of
their pensionable salary provided they have completed (or would have completed in the case of ill-health) 25 years’ service. Inland
Revenue earnings limits apply to A D Christian and P R Taylor when calculating ﬁnal salary. During the year, R Longdon’s salary for
pension purposes was capped at £175,000. Future calculations of pension entitlement will be based upon the capped salary plus
increases in line with those applicable to Inland Revenue limits. A lower pension is payable on earlier retirement after the age of 50
by agreement with the company. Pensions are payable to dependants on the director’s death in retirement and a lump sum is payable
if death occurs in service.

The following directors had accrued entitlements under the pension scheme as follows:

Accumulated 
accrued pension 
at 31 March 
2004 

Accumulated
accrued pension
at 31 March
2003

Increase in 
accrued 
pension 
during year 

Increase in 
accrued pension 
during the year, 
after removing the 
effects of inﬂation 

A D Christian
R Longdon
P R Taylor

£ 
13,390
92,560
28,990

£
12,530
87,890
25,870

£ 
860
4,670
3,120

£ 
510
2,210
2,400

Transfer value 
of increase, 
after removing the 
effects of inﬂation,  
less directors’  
contributions 
£ 
3,160
11,040
9,390

The transfer value as at date of retirement of each directors’ accrued beneﬁts at the end of the ﬁnancial year is as follows:

A D Christian*
R Longdon
P R Taylor

31 March 
2004
£ 
127,400
705,430
158,880

31 March 
2003 
£ 
113,160
768,480
151,840

Movement, less 
directors’ 
contributions    

£ 
12,520
(72,240)
1,840

* A D Christian left the scheme and became a deferred member as at 31 July 2003.

The pension entitlement shown is that which would be paid annually on retirement based on the service to the end of the year.

❚ 13

Directors’ remuneration report
(continued)

The transfer values have been calculated on the basis of actuarial advice in accordance with Actuarial Guidance Note GN11 (and are
net of directors’ own contributions). Members of the scheme have the option to pay Additional Voluntary Contributions. Neither the
contributions nor the resulting beneﬁts are included in the above table.

High Cross
Madingley Road 
Cambridge
CB3 0HB

19 May 2004

By order of the Board,

P R Taylor
Secretary

❚ 14

Statement of directors’ responsibilities

FINANCIAL STATEMENTS, INCLUDING ADOPTION OF GOING CONCERN BASIS

Company law requires the directors to prepare ﬁnancial statements for each ﬁnancial year which give a true and fair view of the state
of affairs of the company and group and of the proﬁt or loss of the group for that period. 

After making enquiries, the directors have a reasonable expectation that the company and the group have adequate resources to
continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in
preparing the ﬁnancial statements.

In preparing the ﬁnancial statements, the directors are required to: select suitable accounting policies and then apply them
consistently; make judgements and estimates that are reasonable and prudent; and state whether applicable accounting standards
have been followed, subject to any material departures disclosed and explained in the ﬁnancial statements.

OTHER MATTERS

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the ﬁnancial
position of the company and group and enable them to ensure that the ﬁnancial statements comply with the Companies Act 1985.
They are also responsible for safeguarding the assets of the company and group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.

❚ 15

Auditors’ report

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF AVEVA GROUP PLC

We have audited the ﬁnancial statements of AVEVA Group plc for the year ended 31 March 2004 which comprise the Consolidated
proﬁt and loss account, Consolidated statement of total recognised gains and losses, Consolidated balance sheet, Company
balance sheet, Consolidated cash ﬂow statement and the related notes numbered 1 to 27. These ﬁnancial statements have been
prepared under the accounting policies set out therein. We have also audited the information in the Directors’ remuneration
report that is described as having been audited.

This report is made solely to the company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our
audit work has been undertaken so that we might state to the company’s members those matters we are required to state to
them in an Auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

The directors’ responsibilities for preparing the Annual Report, including the ﬁnancial statements which are required to be
prepared in accordance with applicable United Kingdom law and accounting standards are set out in the Statement of directors’
responsibilities in relation to the ﬁnancial statements.

Our responsibility is to audit the ﬁnancial statements and the part of the Directors’ remuneration report to be audited in
accordance with relevant legal and regulatory requirements, United Kingdom Auditing Standards and the Listing Rules of the
Financial Services Authority. 

We report to you our opinion as to whether the ﬁnancial statements give a true and fair view and whether the ﬁnancial
statements and the part of the Director’s remuneration report to be audited have been properly prepared in accordance with the
Companies Act 1985. We also report to you if, in our opinion, the Directors’ report is not consistent with the ﬁnancial
statements, if the company has not kept proper accounting records, if we have not received all the information and explanations
we require for our audit, or if information speciﬁed by law or the Listing Rules regarding directors’ remuneration and transactions
with the group is not disclosed. 

We review whether the Corporate governance statement reﬂects the company’s compliance with the seven provisions of the
Combined Code speciﬁed for our review by the Listing Rules, and we report if it does not. We are not required to consider whether
the board’s statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the group’s
corporate governance procedures or its risk and control procedures.

We read other information contained in the Annual Report and consider whether it is consistent with the audited ﬁnancial
statements. This other information comprises the Chairman’s statement, Chief Executive’s review, Financial review, Directors’
report, Board of directors, unaudited part of the Directors’ remuneration report and Corporate governance statement. We consider
the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the ﬁnancial
statements. Our responsibilities do not extend to any other information.

BASIS OF AUDIT OPINION

We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the ﬁnancial statements and the
part of the Directors’ remuneration report to be audited. It also includes an assessment of the signiﬁcant estimates and
judgments made by the directors in the preparation of the ﬁnancial statements, and of whether the accounting policies are
appropriate to the group’s circumstances, consistently applied and adequately disclosed. 

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order
to provide us with sufﬁcient evidence to give reasonable assurance that the ﬁnancial statements and the part of the Directors’
remuneration report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In
forming our opinion we also evaluated the overall adequacy of the presentation of information in the ﬁnancial statements and
the part of the Directors’ remuneration report to be audited.

❚ 16

Auditors’ report
(continued)

OPINION

In our opinion:

the ﬁnancial statements give a true and fair view of the state of affairs of the company and of the group as at 31 March 2004 
and of the proﬁt of the group for the year then ended; and 

the ﬁnancial statements and the part of the Directors’ remuneration report to be audited have been properly prepared in 
accordance with the Companies Act 1985. 

Ernst & Young LLP 
Registered Auditor
Cambridge

19 May 2004

❚ 17

❚
❚
Consolidated proﬁt and loss account
For the year ended 31 March 2004

Turnover
Cost of sales 

Gross proﬁt
Other operating expenses

Operating proﬁt 
Interest receivable 
Interest payable and similar charges

Proﬁt on ordinary activities before taxation 
Tax on proﬁt on ordinary activities 

Proﬁt on ordinary activities after taxation, being proﬁt for the ﬁnancial year
Dividends paid and proposed on equity shares

Retained proﬁt for the year

Basic earnings per share 

Diluted earnings per share 

The accompanying notes are an integral part of this consolidated proﬁt and loss account. 

All results are derived from continuing activities.

Notes 

2 

3 

4 

5 
7 

21
8 

9 

9 

2004 
£000 
38,113 
(12,588) 
__________ 
25,525 
(19,388)
__________
6,137
61 
(89) 
__________ 
6,109 
(2,199) 
__________ 
3,910 
(1,019) 
__________ 
2,891 
__________

2003     
£000 
36,008
(13,047)
__________ 
22,961 
(17,343)
__________ 
5,618 
53
(91)
__________ 
5,580 
(1,922)
__________ 
3,658 
(955) 
__________ 
2,703 
__________ 

22.63p 

21.46p 

__________ 

__________ 

22.42p 

21.24p 

__________ 

__________ 

❚ 18

Consolidated statement of total recognised gains and losses
For the year ended 31 March 2004

Proﬁt for the ﬁnancial year   
Translation loss arising on consolidation 

Total recognised gains and losses recognised since last annual report

2004 
£000

3,910  
(837) 
__________ 
3,073 
__________

2003  
£000 

3,658 
(437)  

__________ 
3,221 
__________ 

The accompanying notes are an integral part of this consolidated statement of total recognised gains and losses.

❚ 19

Consolidated balance sheet
31 March 2004

Fixed assets
Goodwill 
Other intangible assets 
Tangible assets 

Current assets
Stocks 
Debtors 
Cash at bank and in hand 

Creditors: Amounts falling due within one year 

Net current assets 

Total assets less current liabilities
Creditors: Amounts falling due after more than one year
Provisions for liabilities and charges 

Net assets 

Capital and reserves
Called-up share capital 
Share premium account 
Proﬁt and loss account 

Shareholders’ funds – all equity 

The accompanying notes are an integral part of this consolidated balance sheet.

Notes 

2004 
£000 

2003   
£000 

10 
10 
11 

13 
14 

15 

16 
18 

19 
20 
20 

21 

1,313 
1,977 
5,046 
__________ 
8,336 
__________

1,580 
2,329
4,674  
__________  
8,583  
__________ 

217 
18,830 
8,713 
__________ 
27,760 
(14,150) 
__________ 
13,610 
__________ 
21,946 
(41) 
(335) 
__________ 
21,570 
__________ 

758 
15,772 
5,129

__________  
21,659 
(11,076)
__________ 
10,583
__________ 
19,166 
(112) 
(472)
__________ 
18,582 
__________ 

1,747 
8,210 
11,613 
__________ 
21,570 
__________ 

1,705 
7,318 
9,559
__________ 
18,582 
__________ 

❚ 20

Company balance sheet
31 March 2004

Fixed assets
Investments 

Current assets
Debtors 
Cash at bank and in hand 

Creditors: Amounts falling due within one year 

Net current assets

Total assets less current liabilities, being net assets

Capital and reserves
Called-up share capital 
Share premium account 
Proﬁt and loss account 

Shareholders’ funds – all equity 

Notes 

2004 
£000 

2003  
£000 

12 

7,205 
__________ 

7,205  

__________

14 

15 

4,369 
52
__________ 
4,421 

3,439 
15

__________  
3,454 

(699) 
__________ 
3,722
__________ 

(647)
__________ 
2,807
__________ 

10,927 
__________ 

10,012 
__________ 

19 
20 
20 

1,747 
8,210 
970 
__________ 

1,705 
7,318 
989
__________ 

10,927 
__________ 

10,012 
__________ 

The accompanying notes are an integral part of this balance sheet.

The ﬁnancial statements were approved by the Board of Directors on 19 May 2004 and signed on its behalf by:

R A King

R Longdon

19 May 2004

Directors

❚ 21

Consolidated cash ﬂow statement
For the year ended 31 March 2004

Net cash inﬂow from operating activities

Returns on investments and servicing of ﬁnance 
Taxation 
Capital expenditure and ﬁnancial investment 
Equity dividends paid 

Cash inﬂow / (outﬂow) before ﬁnancing 
Financing 

Increase / (decrease) in cash in the year 

The accompanying notes are an integral part of this consolidated cash ﬂow statement.

Notes 

2004 
£000

2003 
£000 

22 

23 
23 
23 

23 

24 

7,880 

3,232

(28) 
(2,006) 
(1,594) 
(967) 
__________ 

(38) 
(2,123) 
(1,735) 
(922)
__________ 

3,285 
832
__________ 
4,117
__________ 

(1,586) 
(11) 
__________ 
(1,597) 
__________ 

❚ 22

Notes to the ﬁnancial statements

1 ACCOUNTING POLICIES

A summary of the principal accounting policies, all of which have been applied consistently throughout the year and the
preceding year, is set out below.

a) Basis of accounting

The ﬁnancial statements are prepared under the historical cost convention and in accordance with applicable accounting
standards.

b) Basis of consolidation

The group ﬁnancial statements consolidate the ﬁnancial statements of AVEVA Group plc and its subsidiary undertakings made up
to 31 March each year. The acquisition method of accounting has been adopted. Under this method, the results of subsidiary
undertakings acquired or disposed of in the year are included in the consolidated proﬁt and loss account from the date of
acquisition or up to the date of disposal. 

Where the company does not hold a majority shareholding in an investee company, but the directors consider that dominant
inﬂuence is exercised over its operating and ﬁnancial policies, the investee company will be treated as a subsidiary for the
purposes of consolidation.

No proﬁt and loss account is presented for AVEVA Group plc as provided by Section 230 of the Companies Act 1985. 
The company's proﬁt after taxation for the ﬁnancial year, determined in accordance with the Act, was £1,000,000 (2003 –
£1,000,000).

c) Intangible assets 

Goodwill arising on the acquisition of subsidiary undertakings and businesses, representing any excess of the fair value of the
consideration given over the fair value of the identiﬁable assets and liabilities acquired, is capitalised and written off on a
straight-line basis over its useful economic life.

Goodwill arising on acquisitions in the year ended 31 March 1998, and earlier periods, was written off to reserves in accordance
with the accounting standard then in force. As permitted by the current accounting standard the goodwill previously written off
to reserves has not been reinstated in the balance sheet. On disposal or closure of a previously acquired business, the
attributable amount of goodwill previously written off to reserves is included in determining the proﬁt or loss on disposal.

Purchased software rights are capitalised at cost and amortised on a straight line basis over their estimated useful lives.

The carrying value of goodwill and intangible assets is reviewed for impairment at the end of the ﬁrst full year following
acquisition and in other periods if events or changes in circumstances indicate the carrying value may not be recoverable.

d) Research and development

Research and development expenditure is written off in the year of expenditure.

❚ 23

Notes to the ﬁnancial statements
(continued)

1  ACCOUNTING POLICIES (continued)

e) Tangible ﬁxed assets

Tangible ﬁxed assets are stated at cost, net of depreciation and any provision for impairment.

The group has taken advantage of the transitional provisions of FRS15 Tangible Fixed Assets and retained the book amounts of
certain freehold properties which were revalued prior to implementation of that standard. The properties were last revalued in
1994 and the valuations have not subsequently been updated.

Depreciation is provided at rates calculated to write off the cost, less estimated residual value, based on prices prevailing at the
date of acquisition, of each asset on a straight-line basis over its expected useful life, as follows:

Computer equipment 
Fixtures and ﬁttings and ofﬁce equipment 
Motor vehicles 

- 
- 
- 

25% 
12–15% 
25% 

per annum 
per annum 
per annum 

Leasehold buildings are amortised on a straight-line basis over the period of the lease or useful economic life if shorter. The
carrying values of tangible ﬁxed assets are reviewed for impairment when events or changes in circumstances indicate the
carrying value may not be recoverable. 

f) Investments

Fixed asset investments are shown at cost less any provision for impairment.

g) Taxation

Current tax including UK corporation tax and foreign tax is provided at amounts expected to be paid (or recovered) using the tax
rates and laws that have been enacted or substantially enacted by the balance sheet date. 

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date
where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future
have occurred at the balance sheet date. Timing differences are differences between the group’s taxable proﬁts and its results as
stated in the ﬁnancial statements that arise from the inclusion of gains and losses in tax assessments in periods different from
those in which they are recognised in the ﬁnancial statements.

A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can
be regarded as more likely than not that there will be suitable taxable proﬁts from which the future reversal of the underlying
timing differences can be deducted.

Deferred tax is not recognised when ﬁxed assets are re-valued unless by the balance sheet date there is a binding agreement to
sell the re-valued assets and the gain or loss expected to arise on sale has been recognised in the ﬁnancial statements. Neither is
deferred tax recognised when ﬁxed assets are sold and it is more likely than not that the taxable gain will be rolled over, being
charged to tax only if and when the replacement assets are sold.

Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries and associates only to the extent that, at
the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in the
future has been entered into by the subsidiary or associate.

Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are
expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is measured on a non-discounted basis.

❚ 24

Notes to the ﬁnancial statements
(continued)

1  ACCOUNTING POLICIES (continued)

h) Pension costs

The deﬁned beneﬁt pension scheme, previously available to all UK employees was closed to new applicants during the year. UK
employees are now offered membership of a deﬁned contribution scheme after a qualifying period. Pension costs are accounted for
on the basis of charging the expected cost of providing pensions over the period during which the group beneﬁts from the
employees' services. The effect of variations from regular cost is spread over the expected average remaining service lives of
current members of the schemes. The pension cost is assessed in accordance with the advice of qualiﬁed actuaries.
The group also operates a deﬁned contribution pension scheme for a number of non-UK employees. Differences between
contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet.

i)

Foreign currency

Transactions denominated in foreign currencies are recorded at actual exchange rates as of the date of the transaction, or, if
hedged, at the forward contract rate. Monetary assets and liabilities denominated in foreign currencies at the year end are reported
at the rates of exchange prevailing at the year end or where appropriate at the forward contract rate. Any gain or loss arising from
a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss in the proﬁt and loss
account.

The results of overseas subsidiary undertakings are translated at the average exchange rate during the year, and their balance
sheets at the rates ruling at the balance sheet date. Exchange differences arising on translation of the opening net assets and
results of overseas subsidiary undertakings are dealt with through reserves.

j)

Turnover

Turnover comprises fees in respect of initial and extension licences, annual licences, and rentals together with income from
consultancy and other related services (excluding VAT and similar taxes).

For each revenue stream, no revenue is recognised unless and until:

a clear contractual arrangement can be evidenced;
delivery has been made in accordance with that contract;
if required, contractual acceptance criteria have been met; and
the fee has been agreed and collectability is probable.

Users can pay an initial licence fee upon installation for a set number of users followed by an obligatory annual fee on each
anniversary of installation. Additional users can be licensed at any time on payment of an extension fee similar to the initial and
annual fees. The fees cover right to use and post contract support which includes core product enhancements and remote support
services.

The fees related to the right to use are recognised once the above conditions have been met. Post contract support fees are
recognised ratably over the period of the contract.

As an alternative to the initial/extension licence plus annual fee model, the group also supplies its software under two different
types of rental contract.

Rentals which are invoiced monthly and which are cancellable by the customer are recognised on a monthly basis. 

Other rental contracts are invoiced at the start of the contracted period, are non-cancellable and consist of two separate
components, the right to use and post contract support. Revenue in respect of the right to use is recognised once the above
conditions have been met and revenue for post contract support is recognised ratably over the period of the contract. 

❚ 25

❚
❚
❚
❚
Notes to the ﬁnancial statements
(continued)

1  ACCOUNTING POLICIES (continued)

j)

Turnover (continued)

Income from consultancy and other related services is recognised as the services are provided.
The group has revised its revenue recognition policy, as described above, in view of the Amendment to FRS5 ‘Reporting the
substance of transactions: Revenue Recognition’, which was issued in November 2003. This revision has had no material impact
on the reported results of the group. 

k) Leases

Rentals payable under operating leases are charged on a straight-line basis over the lease term, even if the payments are not
made on such a basis.

Where ﬁxed assets are ﬁnanced by leasing arrangements which transfer to the group substantially all the beneﬁts and risks of
ownership, the assets are treated as if they had been purchased outright and are included in tangible ﬁxed assets. The capital
element of the leasing commitments is shown as obligations under ﬁnance leases. The lease rentals are treated as consisting of
capital and interest elements. The capital element is applied to reduce the outstanding obligations and the interest element is
charged against proﬁt in proportion to the reducing capital element outstanding. Assets held under ﬁnance leases are
depreciated over the shorter of the lease terms and the useful lives of equivalent owned assets.

l) Derivative ﬁnancial instruments

The group uses derivative ﬁnancial instruments to reduce exposure to foreign exchange risk. The group does not hold or issue
derivative ﬁnancial instruments for speculative purposes.

For a forward foreign exchange contract to be treated as a hedge the instrument must be related to actual foreign currency assets
or liabilities or to a probable commitment. It must involve the same currency or similar currencies as the hedged item and must
also reduce the risk of foreign currency exchange movements on the group's operations. Gains and losses arising on these
contracts are deferred and recognised in the proﬁt and loss account, or as adjustments to the carrying amount of ﬁxed assets,
only when the hedged transaction has itself been reﬂected in the group's ﬁnancial statements.

m) Long-term contracts

Cumulative costs incurred net of amounts transferred to costs of sales, less provision for contingencies and anticipated future
losses on contracts, are included as long-term contract balances in stock.

Proﬁt is recognised on long-term contracts, if the ﬁnal outcome can be assessed with reasonable certainty, by including in the
proﬁt and loss account turnover and related costs as contract activity progresses.

2  TURNOVER 

A geographical analysis of turnover by destination is set out below: 

2004 
£000 

2003  
£000 

United Kingdom 
Rest of Europe, Middle East and Africa 
Americas 
Asia Paciﬁc 

3,458
16,073
9,862
8,720

6,346 
11,029 
10,102 
8,531  
__________  __________  
36,008 
__________  __________ 

38,113

No further geographical segmental analysis is given as, in the opinion of the directors, disclosure of this information would be
seriously prejudicial to the interests of the group.

❚ 26

Notes to the ﬁnancial statements
(continued)

3 OTHER OPERATING EXPENSES

Selling costs 
Administrative expenses 

4 INTEREST PAYABLE AND SIMILAR CHARGES

Bank interest payable and similar charges 

2004 
£000 

2003  
£000 

14,367
5,021

12,658  
4,685  
__________  __________  
17,343 
__________  __________ 

19,388

2004 
£000 

89

2003 
£000 

91   

__________  __________ 

❚ 27

Notes to the ﬁnancial statements
(continued)

5 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

Proﬁt on ordinary activities before taxation is stated after charging / (crediting):

Depreciation of owned tangible ﬁxed assets
Depreciation of tangible ﬁxed assets held under ﬁnance leases
Amortisation of purchased software rights
Amortisation of goodwill
Auditors' remuneration
audit  (current auditors)
-
audit  (previous auditors)
-
non-audit (current auditors)
-
-
non-audit (previous auditors)
Research and development costs 
Operating lease rentals
land and buildings
-
-
plant and machinery
Loss/(proﬁt) on disposal of tangible ﬁxed assets

6 STAFF COSTS

Particulars of employees (including executive directors) are shown below:

Wages and salaries
Social security costs
Other pension costs 

The average monthly number of persons (including executive directors) 
employed by the group was as follows:

Research, development and product support 
Sales, marketing and customer support 
Administration 

Directors’ remuneration

2004 
£000 
1,025
102
352
267

216
-
201
19
6,858

924
266
7
__________ 

2003  
£000 
1,012
30
352
267

209
18
89
35
5,933

936
284

(4) 
__________ 

2004 
£000 
12,895
1,717
1,601
__________ 
16,213 
__________ 

2003  
£000 
12,479
1,532
1,465

__________  
15,476 
__________ 

2004 
Number 
102
156
68
__________ 
326
__________ 

2003  
Number 
100 
166  
64   
__________  
330 
__________ 

The disclosure of individual directors’ remuneration and interests required by the Companies Act 1985 and those speciﬁed for
audit by the Listing Rules of the Financial Services Authority are shown in the Directors’ remuneration report on pages 11 to 14
and form part of these ﬁnancial statements.

❚ 28

Notes to the ﬁnancial statements
(continued)

7 TAX ON PROFIT ON ORDINARY ACTIVITIES

The tax charge comprises:

UK corporation tax
Adjustments in respect of prior periods

Foreign Tax
Adjustments in respect of prior periods

Total current tax

Deferred tax 

Origination and reversal of timing differences (note 18) 

Total tax on proﬁt on ordinary activities 

The differences between the total current tax shown above and the amount calculated 
by applying the standard rate of UK corporation tax to the proﬁt before tax is as follows:

Tax on group proﬁt on ordinary activities at standard UK corporation tax rate 
of 30% (2003 – 30%) 
Effects of: 
Expenses not deductible for tax purposes
UK research & development tax credit
Capital allowances in excess of depreciation
Other timing differences
Higher tax rates on overseas earnings
Unrelieved tax losses
Adjustments in respect of prior years

Group current tax charge for period 

2004 
£000 

2003  
£000 

945
115
__________ 
1,060 
1,243
33
__________ 
2,336

604
(255)  
__________  
349 
1,643
(9)

__________   
1,983  

(137) 
__________ 

(61)  

__________ 

2,199 
__________ 

1,922 
__________ 

2004 
£000 

2003  
£000 

1,833 

1,674 

86
(125)
111
16
254
13
148
__________ 

103
-
-
(56)
371
155
(264)
__________ 

2,336
__________ 

1,983  
__________ 

The group’s tax rate is higher than the UK tax rate because a signiﬁcant proportion of its proﬁts are earned overseas and are
subject to higher rates of tax. This is expected to continue for the foreseeable future.

❚ 29

Notes to the ﬁnancial statements
(continued)

8 DIVIDENDS PAID AND PROPOSED ON EQUITY SHARES

Interim dividend paid of 1.8p (2003 – 1.8p) per ordinary share
Final dividend proposed of 4.0p (2003 – 3.8p) per ordinary share

9 EARNINGS PER SHARE

The calculations of earnings per share are based on the proﬁt after tax for the year of £3,910,000 
(2003 – £3,658,000) and the following weighted average numbers of shares:

For basic earnings per share
Employee share options

For diluted earnings per share

10 INTANGIBLE FIXED ASSETS

Group

Cost
At 1 April 2003 and 31 March 2004

Amortisation
At 1 April 2003
Charge for the year

At 31 March 2004

Net book value
At 1 April 2003 

At 31 March 2004 

2004 
£000 
320
699
__________ 
1,019
__________ 

2003  
£000 
308
647  
__________  
955 
__________ 

2004 
Number 
17,281,707
156,687
__________ 
17,438,394
__________ 

2003  
Number 
17,042,245

180,540  
__________ 
17,222,785
__________

Purchased  
software rights 
£000 

Goodwill 
£000 

3,523
__________ 

2,669  
__________  

1,194
352
__________ 

1,089
267 
__________ 

1,546
__________ 

1,356 
__________ 

2,329
__________ 

1,580  
__________ 

1,977
__________ 

1,313 
__________ 

Purchased software rights arose on the acquisition of the products 'Vantage Project Resource Management' for £1,700,000 on 
13 September 1999 and 'Vantage Plant Engineering' for £1,500,000 on 2 December 1999. On 7 September 2000, the group
acquired OPE software for £323,000. 

Purchased goodwill arose on the acquisition of rights to integrate, develop and market 3D design software from AEA Technology
on 30 March 1999. The initial cost of goodwill was £2,169,000.

In addition, on 12 November 1998 AVEVA agreed to acquire from the distributor Kyokuto Boeki Kaisha all AVEVA’s business in
Japan. The goodwill arising on acquisition was £500,000.

All intangible assets are being amortised over their useful economic life of ten years.

The company had no intangible ﬁxed assets in either year.

❚ 30

Notes to the ﬁnancial statements
(continued)

11  TANGIBLE FIXED ASSETS

Group

Cost or valuation
At 1 April 2003
Additions
Disposals
Exchange adjustment

At 31 March 2004

Depreciation
At 1 April 2003
Charge for the year
Disposals
Exchange adjustment

At 31 March 2004

Net book value
At 1 April 2003

At 31 March 2004

Long 
leasehold 
land and 
buildings 
£000 

Computer 
equipment 
£000 

Fixtures,   
ﬁttings   

and ofﬁce 
equipment 
£000 

Motor  
vehicles 
£000 

Total 
£000 

2,375
706
-
-
__________ 

6,694
506
(210)
(120)
_________ 

2,177
382
(64)
(82)

341
169
(56)
(52)
_________  __________

11,587
1,763
(330)
(254)
__________ 

3,081
__________ 

6,870
_________ 

2,413

402
_________  __________ 

12,766 
__________ 

201
63
-
-
__________ 

5,466
607
(61)
(88)
_________ 

1,093
366
(64)
(52)

153
91
(29)
(26)
_________  __________ 

6,913
1,127
(154)
(166) 
__________ 

264
__________ 

5,924
_________ 

1,343

189
_________  __________ 

7,720 
__________ 

2,174
__________ 
2,817
__________ 

1,228
_________ 
946
_________ 

1,084

188
_________  __________ 
213
_________  __________ 

1,070

4,674  
__________ 
5,046 
__________ 

The net book value of computer equipment includes an amount of £112,000 (2003 - £214,000) in respect of assets held under
ﬁnance leases.

The company had no tangible ﬁxed assets.

The long leasehold land and buildings were re-valued, on the basis of the open market value for existing use, by Bidwells,
Chartered Surveyors, as at 29 July 1994. There was no original historical cost to the group.

❚ 31

Notes to the ﬁnancial statements
(continued)

12  FIXED ASSET INVESTMENTS

Subsidiary undertakings 

All subsidiary undertakings have been included in the consolidation.
At 31 March 2004 the parent company and the group had the following investments:

Name of undertaking 

Country of   
incorporation 
or registration 

Principal 
activity

2004 
_________ 

2003  
_________ 

Company 
£000 
7,205 
_________

Company  
£000 
7,205 
_________ 

Description and proportion of 
shares and voting rights held 

100% ordinary shares of £1 each 

100% common stock of US$1 each 
100% ordinary shares of Euros 25,565 each 
100% ordinary shares of Euros 30 each 
100% ordinary shares of HK$1 each 
100% ordinary shares of £1 each 
100% ordinary shares of £1 each

Software development 
and marketing
Software marketing 
Software marketing 
Software marketing 
Software marketing 
Holding property 
Trustee company 

AVEVA Solutions Limited*

Great Britain

USA 
Germany 
France 
Hong Kong 
Great Britain 
Great Britain 

AVEVA Inc. 
AVEVA GmbH 
AVEVA SA 
AVEVA East Asia Limited 
Cadcentre Property Limited 
Cadcentre Pension
Trustee Limited 
AVEVA Engineering IT Limited 
AVEVA AS 
AVEVA KK 
AVEVA Sendirian Berhad** 
AVEVA Asia Paciﬁc
Sendirian Berhad
AVEVA Korea Limited 
AVEVA Managed Services Limited Great Britain 
Great Britain 
Cadcentre Limited*
Great Britain 
AVEVA Consulting Limited* 
AVEVA Information Technology
India 
India Private Limited 
Cadcentre Engineering IT Limited  Great Britain 
AVEVA Pty Limited

Great Britain 
Norway 
Japan 
Malaysia 
Malaysia 

Australia

Korea 

Software marketing 
Training and consultancy 
Software marketing 
Software marketing 
Software marketing 

100% ordinary shares of £1 each 
100% ordinary shares of NOK 500 each 
100% ordinary shares of 50,000 Yen each 
49% ordinary shares of MYR1 each 
100% ordinary shares of MYR1 each 

100% ordinary shares of KRW500,000 each 

Software marketing 
Consulting & support services  100% ordinary shares of £1 each 
Consulting & support services  100% ordinary shares of £1 each 
Consulting & support services  100% ordinary shares of £1 each 
Software marketing 

100% ordinary shares of 10 Rupee each

Software marketing
Software marketing

100% ordinary shares of £1 each
100% ordinary shares of AUD$1 each

*All subsidiaries except AVEVA Solutions Limited, AVEVA Consulting Limited and Cadcentre Limited are indirectly owned.

** AVEVA Sendirian Berhad has been consolidated on the basis that the Group exercises dominant inﬂuence over its ﬁnancial and operating
policies under the terms of the shareholders’ agreement.

❚ 32

Notes to the ﬁnancial statements
(continued)

13  STOCKS

Net cost

14 DEBTORS

2004 

2003

_______________________  _______________________

Group 
£000 
217 
__________ 

Company 
£000 
- 

Company  
£000 
- 
__________  __________  __________ 

Group 
£000 
758 

2004 

2003

_______________________  _______________________

Group 
£000 

Company 
£000 

Group 
£000 

Company  
£000 

Amounts falling due within one year: 
Trade debtors
UK corporation tax receivable
Amounts owed by group undertakings
Prepayments
Accrued income

14,391
-
-
4,127
312
__________ 

18,830
__________ 

-
-
4,369
-
-

-
-
3,439
-
-
__________  __________  __________ 

13,465
823
-
1,293
191

4,369

3,439 
__________  __________  __________ 

15,772

Included within prepayments are professional fees of £2,582,000 which relate to the acquisition of Tribon Solutions AB, which
was acquired subsequent to the year-end (see note 27). Of these fees, £90,000 had been paid before the year-end.

In the 2003 comparatives an amount of £472,000 relating to withholding tax has been reclassiﬁed from prepayments to UK
corporation tax receivable.

15 CREDITORS

Amounts falling due within one year

Bank overdraft
Obligations under ﬁnance leases
Trade creditors
UK corporation tax payable
Foreign tax
Social security, PAYE and VAT
Other creditors
Accruals
Deferred income
Proposed dividend

2004 

2003  

_______________________  _______________________

Group 
£000 
-
71
796
292
469
1,194
98
4,529
6,002
699
_________

14,150
_________

Company 
£000 
-
-
-
-
-
-
-
-
-
699

Company  
£000 
-
-
-
-
-
-
-
-
-
647
__________  __________  __________ 

Group 
£000 
199
102
1,042
-
1,254
791
55
1,278
5,708
647

647 
__________  __________  __________ 

11,076

699

Included within accruals is an amount of £2,492,000 for professional fees which relate to the acquisition of Tribon Solutions AB,
which was acquired subsequent to the year-end (see note 27).

❚ 33

Notes to the ﬁnancial statements
(continued)

16 CREDITORS

Amounts falling due after more than one year

Obligations under ﬁnance leases, due within one to two years (note 17)

Group 
£000 
41 
__________ 

Company 
£000 
- 
__________ 

Group 
£000 
112 
__________ 

Company  

£000
- 
__________ 

2004 

2003  

_______________________  _______________________

17 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS

The disclosures in this note deal with ﬁnancial assets and ﬁnancial liabilities as deﬁned in FRS13 ‘Derivatives and other ﬁnancial
instruments: Disclosures’. Certain ﬁnancial assets such as investments in subsidiaries are excluded from the scope of these
disclosures. 

The group’s ﬁnancial instruments comprise cash and liquid resources, and various items, such as trade debtors and trade
creditors, that arise directly from its operations. As permitted by FRS13, short-term debtors and creditors have also been
excluded from the disclosures (except as indicated below).

It is, and has been, throughout the period under review, the group’s policy that no trading in ﬁnancial instruments shall be
undertaken.

The main risks arising from the group’s ﬁnancial instruments are interest rate risk, liquidity risk and foreign currency risk. The
board reviews and agrees policies for managing such risks on a regular basis as summarised below.

Interest rate and liquidity risks

The group holds net funds, and hence its interest rate risk and liquidity risk are associated with short-term cash deposits. The
group's overall objective with respect to holding these deposits is to maintain a balance between accessibility of funds and
competitive rates of return. In practice this has meant that no deposits have been made with a maturity date greater than three
months in the course of the year.

Foreign currency risk

Foreign currency risk arises from the group undertaking a signiﬁcant number of foreign currency transactions in the course of
operations. Where such transactions are material, the board has a policy of entering into foreign currency contracts or currency
matching to help manage currency risk. The group’s objectives in managing the currency exposure arising from its net
investments overseas are to maintain a low cost of borrowing, and to retain some potential for currency related appreciation,
while partially hedging against currency depreciation. Gains and losses arising from these structural currency exposures are
recognised in the consolidated statement of total recognised gains and losses.

❚ 34

Notes to the ﬁnancial statements
(continued)

17 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS (continued)

Interest rate proﬁle

The group has ﬁnancial assets denominated in both sterling and foreign currency deposits. 
These comprise cash balances, overdrafts and deposits at short-term rates.

Floating 
rate 
ﬁnancial assets

£000
721
1,060
3,818
1,466
151
904
246
180
71
-
-
-
__________ 
8,617
__________ 

Sterling
US Dollar
Euro
Japanese Yen
Norwegian Kroner
Korean Won
Malaysian Ringgit
Indian Rupee
Australian Dollar
Swedish Kroner
Hong Kong Dollar
Other currencies

Total

Interest rate proﬁle of ﬁnancial liabilities 

Sterling

Floating 
rate 
£000
-
__________ 

2004 
Financial 
assets on 
which no
interest is
earned
£000
-
-
-
-
-
-
-
-
-
25
35
36
__________
96
__________

2004 
Fixed 
rate 
£000
112
__________

Total 

Floating 
rate 
ﬁnancial assets

£000
721
1,060
3,818
1,466
151
904
246
180
71
25
35
36
__________
8,713
__________

£000 
(149)
1,104
2,214
786
139
801
128
43
-
-
-
-
__________
5,066
__________

2003
Financial 
assets on
which no
interest is
earned
£000
-
-
-
-
-
-
-
-
-
17
28
18
__________
63
__________

Total

£000 
(149)
1,104
2,214
786
139
801
128
43
-
17
28
18
__________ 
5,129 
__________ 

Total 

£000
112
__________

Floating 
rate 
£000 
199
__________

2003
Fixed 
rate
£000
214
__________

Total

£000 
413
__________

The ﬂoating rate ﬁnancial liability for 2003 comprised a bank overdraft facility bearing interest at 5.54%.The ﬁxed rate ﬁnancial
liability comprises two ﬁnance leases with weighted average interest rate of 12% (2003: 12%). 

The maturity proﬁle of the group’s ﬁnancial liabilities is as follows:

In one year or less, or on demand
Between one and two years
Between two and three years

2004
£000
71
41
-
__________ 

112
__________ 

2003
£000
301
112
-
__________

413
__________

❚ 35

Notes to the ﬁnancial statements
(continued)

17  DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS (continued)

Currency exposures

The table below shows the group's transactional currency exposures that give rise to the net currency gains and losses recognised
in the proﬁt and loss account. Such exposures comprise the monetary assets and liabilities of the group that are not denominated
in the functional currency of the operating unit. As at 31 March 2004 and 31 March 2003 these exposures (including those
arising on short term debtors and creditors) were as follows:

Functional currency of group operation

US $

Euro

SNG$

AUS$

Total   

2004 
Sterling (£000)
Malaysian Ringgit (MYR 000’s)

2003 
Sterling (£000)
Malaysian Ringgit (MYR 000’s)

Borrowing facilities

1,188
118
__________

418
-
__________

-
7
__________

-
48
__________

1,606

173   

__________

2,329
50
__________

358
-
__________

-
-
__________

-
-
__________

2,687
50
__________

The group had undrawn committed borrowing overdraft facilities at 31 March 2004 of £1,500,000 (2003 - £1,500,000) in respect
of which all conditions precedent had been met. The group has agreed bank facilities of £6,000,000 subsequent to the year-end
to manage short-term working capital requirements following the acquisition of Tribon (note 27).

Fair values

The book values of the group’s ﬁnancial assets and liabilities consist of cash of £8,713,000 (2003 - £5,129,000), overdraft of £nil
(2003 – £199,000) and ﬁnance leases of £112,000 (2003 - £214,000). 

There is no material difference between the book value and fair value of the group’s ﬁnancial instruments in the current or the
preceding year.

Gains and losses on hedges

The group enters into forward foreign currency contracts to minimise the currency exposures that arise on sales denominated in
foreign currencies. Changes in the fair value of instruments used as hedges are not recognised in the ﬁnancial statements until
the hedge position matures. No material unrecognised gains or losses on hedged ﬁnancial instruments existed at 31 March 2004
or 31 March 2003.

As at 31 March 2004 there were forward contracts in the UK to sell US $1,500,000 and   1,000,000 on 30 June 2004, and to sell
US $1,000,000 and   1,000,000 on 30 September 2004. These contracts hedged US dollar cash and short term deposits of US
$363,000 and US dollar debtors of US $1,821,099 held in the UK at that date, and also Euro cash and short term deposits of        

3,000 and Euro debtors of    623,000. The balance of the forward contracts was held to hedge US Dollar and Euro income

expected to arise from recurring revenues over the period to 30 September 2004. The directors consider these to qualify for hedge
accounting since the following criteria are met:

the instruments are related to foreign exchange existing assets or probable future income whose characteristics 
have been identiﬁed;
they involve the same currency as the hedged item; and
they reduce the risk of foreign currency exchange movements to the group operations.

❚ 36

❚
❚
❚
Notes to the ﬁnancial statements
(continued)

18  PROVISIONS FOR LIABILITIES AND CHARGES

Deferred tax 

At 1 April 2003 
Released during year 

At 31 March 2004 

Accelerated capital allowances
Short term timing differences
Tax losses

Group 
£000 
472 
(137) 
_________   

335 

_________   

Provided                            Unprovided

2004 
£000 
365
(30)
-
__________

2003 
£000 
480
(8)
-
__________

2004 
£000 
-
-
(13)
__________

2003 
£000
-
-
(155)
__________

335

472

(13)

(155)

In addition, if the long leasehold property were to be sold at its current net book value, a tax liability of up to £269,000 (2003 –
£270,000) may arise. No provision has been made for this liability as there is no intention to dispose of the property. If the
property were to be sold in the future, the tax liability would probably be mitigated or deferred by available reliefs.

The company has no deferred tax liability.

19 CALLED-UP SHARE CAPITAL

Authorised
22,000,000 ordinary shares of 10p each

Allotted, called-up and fully paid
17,470,300 (2003 – 17,047,150) ordinary shares of 10p each

Group and company
2003
2004 
£000 
£000

2,200
__________

2,200 
__________ 

1,747
__________ 

1,705 
__________ 

During the year 423,150 ordinary shares with a nominal value of £42,315 were issued following the exercise of employee share
options of 1,200 at an exercise price of 395.0p per share, 14,200 at an exercise price of 342.5p per share, 70,000 at an exercise
price of 309.5p per share, 150,000 at an exercise price of 272.5p per share, 85,700 at an exercise price of 200.0p per share,
25,400 at an exercise price of 179.2p per share and 76,650 at an exercise price of 50.4p per share. This resulted in proceeds of
£934,323 including a premium of £892,008.

❚ 37

Notes to the ﬁnancial statements
(continued)

19 CALLED-UP SHARE CAPITAL (continued)

Share options

Share options have been granted to certain employees of the group and remain outstanding as follows:

Date of Grant

13 June 1997
16 March 1998
16 March 1999
10 January 2000
30 March 2000
31 August 2000
19 January 2001
12 July 2001
6 August 2001

Number 
of options 

Exercise 
price (p) 

25,000
17,750
5,400
30,000
45,550
10,000
357,300
108,700
25,000
__________ 

230.0
395.0
179.2
309.5
342.5
491.8
524.7
479.5
463.3 
__________ 

These options are normally exercisable in full or in part between the third and seventh anniversaries of the date of grant.

20 RESERVES

Group
At 1 April 2003 
Proﬁt for the year
Dividends
Translation arising on consolidation
Share issues

At 31 March 2004 

Share 
premium 
account 
£000 
7,318
-
-
-
892
__________ 

Proﬁt  
and loss  
account 
£000 
9,559
3,910
(1,019)
(837)
-
__________ 

8,210
__________ 

11,613 
__________ 

Included within proﬁt and loss account reserves is goodwill of £3,934,000 which was directly eliminated against reserves in 1995
(2003: £3,934,000).

❚ 38

Notes to the ﬁnancial statements
(continued)

20 RESERVES (continued)

Company
At 1 April 2003
Share issues
Proﬁt for the year
Dividends

At 31 March 2004

21 RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS’ FUNDS

Proﬁt for the ﬁnancial year
Other recognised gains and losses relating to the year

Dividends paid and proposed on equity shares
New shares issued

Net addition to shareholders' funds
Opening shareholders' funds

Closing shareholders' funds

22 RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES

Operating proﬁt
Depreciation and amortisation charges
Loss/(proﬁt) on disposal of ﬁxed assets
Decrease in stocks
Increase in debtors
Increase/(decrease) in creditors

Net cash inﬂow from operating activities

Share 
premium 
account 
£000 
7,318
892
-
-
__________ 
8,210
__________ 

Proﬁt  
and loss  
account 
£000 
989
-
1,000
(1,019)
__________ 

970   

__________ 

2004 
£000 
3,910
(837)
__________
3,073
(1,019)
934
__________
2,988
18,582
__________
21,570
__________ 

2003  
£000 
3,658
(437)
__________
3,221
(955)
19
__________
2,285
16,297
__________
18,582

__________  

2004 
£000 
6,137
1,746
7
541
(4,677)
4,126
__________
7,880
__________ 

2003
£000 
5,618
1,661
(4)
200
(2,798)
(1,445)
__________
3,232 
__________ 

❚ 39

Notes to the ﬁnancial statements
(continued)

23 ANALYSIS OF CASH FLOWS

Returns on investments and servicing of ﬁnance 
Interest received
Interest paid

Net cash outﬂow 

Taxation 
UK corporation tax received/(paid)
Foreign tax paid

Net cash outﬂow 

Capital expenditure and ﬁnancial investment 
Purchase of tangible ﬁxed assets
Proceeds from sale of tangible ﬁxed assets

Net cash outﬂow 

Financing
Issue of ordinary share capital
Capital element of ﬁnance lease rental payments

Net cash inﬂow / (outﬂow)

24 ANALYSIS AND RECONCILIATION OF NET FUNDS

Cash at bank and in hand
Bank overdraft

Cash
Finance leases

Net funds

❚ 40

2004 
£000 

2003
£000 

61
(89)
__________

(28) 
__________ 

53
(91)
__________ 
(38) 
__________ 

55
(2,061)
__________ 
(2,006) 
__________ 

(1,597)
(526)
__________ 
(2,123) 
__________ 

(1,763)
169
__________ 
(1,594) 

__________

(1,793)
58  
__________ 
(1,735) 
__________ 

934
(102)
__________ 

19
(30)
__________

832 
__________

(11) 
__________ 

1 April
2003 
£000 
5,129
(199)
__________
4,930
(214)
__________
4,716
__________

Cash ﬂow 
£000 
3,918
199
__________
4,117
102
__________
4,219
__________

Exchange 
differences 
£000 
(334)
-
__________
(334)
-
__________
(334)
__________

31 March
2004
£000
8,713
-
__________
8,713
(112)
__________
8,601
__________

Notes to the ﬁnancial statements
(continued)

24 ANALYSIS AND RECONCILIATION OF NET FUNDS (continued)

Increase /(decrease) in cash in the year
Cash outﬂow from decrease in lease ﬁnancing

Change in net funds resulting from cash ﬂows
New ﬁnance leases
Currency translation differences

Movement in net funds in year
Net funds at start of the year

Net funds at end of the year

25 GUARANTEES AND OTHER FINANCIAL COMMITMENTS

a) Pension arrangements
SSAP24 Disclosures

2004 
£000 
4,117
102
__________
4,219
-
(334)
__________
3,885
4,716
__________
8,601
__________ 

2003
£000 
(1,597)
30
__________
(1,567)
(244)
171
__________
(1,640)
6,356
__________
4,716
__________ 

The group operates a deﬁned beneﬁt pension plan providing beneﬁts based on ﬁnal pensionable pay. This scheme was closed to
new employees on 30 September 2003. Administration on behalf of the members is governed by a Trust Deed, and the funds are
held and managed by professional investment managers who are independent of the group.

Contributions to the scheme are made in accordance with advice from an independent professionally qualiﬁed actuary at rates
which are calculated to be sufﬁcient to meet the future liabilities of the scheme. The employees' contributions are ﬁxed as a
percentage of salary, the balance being made up by the employer.

The most recent actuarial valuation was carried out as at 1 April 2001 using the projected unit method.

The assets of the scheme were taken into account at a smoothed market value. Consistent with this, the liabilities were valued
using ﬁnancial assumptions derived from yields on index-linked and ﬁxed interest government securities.

The main actuarial assumptions were that:

a)

the return on scheme investments would be:
past service
6.00% 
future service 6.25%

b) salaries would increase by 4.40% per annum
c) pensions in payment would increase by 2.40% per annum.

❚ 41

Notes to the ﬁnancial statements
(continued)

25 GUARANTEES AND OTHER FINANCIAL COMMITMENTS (continued)

a) Pension arrangements (continued)

Since the date of the actuarial valuation the group has closed the pension scheme to new entrants (with the option of re-opening
if required). The group’s actuarial advisers have conﬁrmed that this event is unlikely to have had a signiﬁcant effect on the
position of the fund. Under the projected unit method the current service cost will increase as members approach retirement age.

The deﬁcit identiﬁed at the 2001 valuation, amounting to £314,000, is expected to be eliminated over the period to 2018
through increased employer contributions.

The market value of the assets of the scheme was £14,521,000 and the smoothed market value of the assets represented 98% of
the beneﬁts that had accrued to members after allowing for expected future increases in earnings.

The pension charge for the deﬁned beneﬁt schemes in the UK amounted to £1,137,000 (2003 – £1,167,000).

The group also operates a deﬁned contribution scheme for UK, US, German, French and Norwegian employees for which the
pension charge for the year amounted to £438,000 (2003 – £298,000).

FRS17 Disclosures

Additional disclosures regarding the group’s deﬁned beneﬁt pension scheme are required under the transitional provisions of
FRS17 ‘Retirement beneﬁts’ and these are set out below. The valuation used for FRS17 disclosures has been based on the most
recent actuarial valuation at 1 April 2001, as updated to 31 March 2004 by a qualiﬁed independent actuary, to take account of the
requirements of FRS17 in order to assess the liabilities of the scheme at 31 March 2004 and 2003. Scheme assets are stated at
their market values at the respective balance sheet dates.

Main assumptions: 

Rate of salary increases
Rate of increase of pensions in payment
Rate of increase of pensions in deferment
Discount rate
Inﬂation assumption

2004 
%

2003 
%

4.75
2.75
2.75
5.5
2.75

4.5
2.5
2.5
5.5
2.5

❚ 42

Notes to the ﬁnancial statements
(continued)

25 GUARANTEES AND OTHER FINANCIAL COMMITMENTS (continued)

a) Pension arrangements (continued)
FRS17 disclosures (continued)

The assets and liabilities of the scheme and the expected rates of return at 31 March 2004 are:

2004 
Long-term rate 
of return

2003 
Long-term rate
of return 

Expected
%

Value
£000

Expected
%

Value
£000

Equities
Bonds
Properties

6.70
3.70
3.00

Total market value of assets
Present value of scheme liabilities

Pension liability before deferred tax
Related deferred tax asset

Net pension liability

14,300
1,500
700
__________
16,500
(25,000)
__________
(8,500)
2,600
__________
(5,900)
__________

6.60
3.60
2.75

10,300
1,700
600 
__________
12,600
(25,000) 

__________
(12,400)
3,700 
__________

(8,700) 

__________

An analysis of the deﬁned beneﬁt cost for the year ended 31 March 2004 is as follows:

Current service cost

Total operating charge

Expected return on pension scheme assets
Interest on pension scheme liabilities

Total other ﬁnance cost

Actual return less expected return on pension scheme assets

Gain/(loss) arising from changes in assumptions underlying the 
present value of scheme liabilities

Actuarial gain/(loss) recognised in the Statement of total 
recognised gains and losses

2004 
£000 

2003
£000 

1,400
__________
1,400
__________
800
(1,400)
__________
(600)
__________
2,000

1,200
__________
1,200
__________
1,100
(1,200)
__________
(100)
__________
(5,000)

2,800
__________

(3,400)
__________

4,800
__________

(8,400)
__________

❚ 43

Notes to the ﬁnancial statements
(continued)

25 GUARANTEES AND OTHER FINANCIAL COMMITMENTS (continued)

a) Pension arrangements (continued)
FRS17 disclosures (continued)

Analysis of movements in the deﬁcit during the year:

At 1 April 2003

Total operating charge

Total other ﬁnance cost

Actuarial gain/(loss)

Exchange difference

Contributions

At 31 March 2004

2004
£000 

2003  
£000 

(12,400)

(3,900)

(1,400)

(1,200)

(600)

(100)

4,800

(8,400)

–

–

1,100

1,200
____________ ____________

(8,500)

(12,400)
____________ ____________

The updated actuarial valuation at 31 March 2004 showed a decrease in the deﬁcit from £12.4 million to £8.5 million. No
improvements in beneﬁts were made in the year ended 31 March 2004 and contributions remained at 18.5% of pensionable pay,
with members’ contributions remaining at 5.25% of pensionable salary. It has been agreed with the trustees that contributions
for the next two years will remain at that level.

History of experience gains and loses:

2004

2003

Difference between expected return and actual return on pension scheme assets:

– amount (£000)

– % of scheme assets

2,000

(5,000)

12%

(40%)

Experience (losses)/gains arising on scheme liabilities:

– amount (£000)

– % of the present value of scheme liabilities

-

-

-

-

Total actuarial gain/(loss) recognised in the Statement of total recognised gains and losses:

– amount (£000)

4,800

(8,400)

– % of the present value of scheme liabilities

19%

(34%)

❚ 44

Notes to the ﬁnancial statements
(continued)

25 GUARANTEES AND OTHER FINANCIAL COMMITMENTS (continued)

a) Pension arrangements (continued)
FRS17 disclosures (continued)

Reconciliation of net assets and reserves under FRS17
Net assets - Group

Net assets as stated in the balance sheet
FRS17 deﬁned beneﬁt liabilities

Net assets including deﬁned beneﬁt liabilities

Reserves – Group

Proﬁt and loss reserve as stated in the balance sheet
FRS17 deﬁned beneﬁt liabilities

Proﬁt and loss reserve including amounts relating to deﬁned beneﬁt liabilities

2004
£000
21,570
(5,900)
__________
15,670
__________

2004
£000
11,613
(5,900)
__________

5,713

2003
£000
18,582
(8,700)
__________

9,822

__________

2003
£000
9,559
(8,700)
__________

859

__________

__________

b) Lease commitments

At 31 March 2004 the group had annual commitments under non-cancellable operating leases as follows:

Net assets - Group                                                                                         2004 

2003 

Expiring within one year
Expiring between two and ﬁve years 
Expiring in more than ﬁve years

Land and 
buildings 
£000 
416
104
327
__________
847
__________

Plant and 
machinery 
£000 
203
44
-
__________
247
__________ 

Land and 
buildings 
£000 
371
676
5
__________
1,052
__________ 

Plant and
machinery 
£000 
138
116
-
__________
254
__________ 

c) Capital commitments

At the end of the year the group and company had capital commitments contracted for but not provided for of £123,000 
(2003 - £757,000). 

26 RELATED PARTY TRANSACTIONS

There were no transactions with related parties in either year that require disclosure within these ﬁnancial statements.

❚ 45

Notes to the ﬁnancial statements
(continued)

27 POST BALANCE SHEET EVENTS

On 21 April 2004 the company signed a conditional agreement to acquire the entire issued share capital of Tribon Solutions AB, a Swedish
company which develops, markets and supports software solutions for use in the design and production processes in marine industry all over
the world. The total consideration for the acquisition was approximately £19.0 million, approximately £15.0 million of which was satisﬁed in
cash and approximately £4.0 million was satisﬁed through the issue of 789,655 ordinary shares of 10p each to the vendors.

In order to ﬁnance the cash consideration for the acquisition and expenses related thereto, the company has raised approximately £17.2
million, (approximately £14.7 million net of expenses) pursuant to a Placing and Open Offer of 3,645,112 ordinary shares of 10p each. 
In addition, the company has also entered into bank facility agreements for the provision of bank facilities amounting up to £6.0 million to
support the enlarged group’s working capital requirements.

At an Extraordinary General Meeting (EGM) held on 14 May 2004, a special resolution was passed to approve the acquisition and to increase the
authorised share capital of the Company from £2,200,000 to £3,000,000 by the creation of 8,000,000 ordinary shares of 10p each. 
In addition, the directors were authorised to allot the relevant number of ordinary shares pursuant to the Placing and Open Offer and the
acquisition.

Also at the EGM ordinary resolutions were passed to adopt a new Long Term Incentive Plan and to amend the dilution limits of the Cadcentre
Group plc Executive Share Option Scheme.

❚ 46

Five year record

Summarised consolidated results:

Turnover

Gross proﬁt

Operating proﬁt before intangible asset amortisation
Intangible asset amortisation
Operating proﬁt

Taxation

Proﬁt for the ﬁnancial year

Earnings per share

Total dividend per share

Summarised consolidated balance sheet:

Fixed assets

Cash and liquid resources

Net current assets

Shareholders funds: all equity

2004

£000

38,113

25,525

6,756
619
6,137

2,199

3,910

22.63p

5.8p

8,336

8,713

13,610

21,570

2003

£000

36,008

22,961

6,237
619
5,618

1,922

3,658

21.46

5.6p

8,583

4,930

10,583

18,582

2002

£000

31,818

20,230

5,561
637
4,924

1,573

3,365

19.82

5.4p

8,307

6,356

8,523

2001

£000

28,100

19,061

5,759
602
5,157

1,722

3,503

20.80

5.4p

8,652

5,620

5,668

2000

£000

23,889

16,007

4,643
404
4,239

1,388

2,950

17.72

5.4p

8,853

4,214

2,224

16,297

13,730

10,866

❚ 47

Company information and advisors

Directors

Richard King CBE
Chairman

Richard Longdon
Chief Executive

Paul Taylor
Finance Director

Colin Garrett
Non-executive Director

David Mann 
Non-executive Director

Secretary

Paul Taylor

Registered Ofﬁce

High Cross
Madingley Road
Cambridge CB3 0HB

Registered Number

2937296

Auditors

Bankers

Solicitors

Stockbroker and
Financial Advisors

Registrars

Ernst & Young LLP
Compass House
80 Newmarket Road
Cambridge CB5 8DZ

Barclays Bank plc
15 Bene't Street
Cambridge CB2 3PZ

Mills & Reeve
Francis House
112 Hills Road
Cambridge CB2 1PH

Hoare Govett Ltd
250 Bishopsgate
London EC2M 4AA

Capita Registrars
Bourne House
34 Beckenham Road
Beckenham, Kent BR3 4TU

❚ 48

FINANCIAL HIGHLIGHTS

31-Mar-04
£000's

31-Mar-03
£000's

Growth

Contents

i

ii

Chairman’s statement

Chief Executive’s review

vi

Financial review

1 Directors’ report

5 Board of directors

6

Corporate governance statement

8 Directors’ remuneration report

15

Statement of directors’ responsibilities

16 Auditors’ report

18

19

20

21

22

Consolidated proﬁt and loss account

Consolidated statement of total 
recognised gains and losses

Consolidated balance sheet

Company balance sheet

Consolidated cash ﬂow statement

23 Notes to the ﬁnancial statements

47

48

Five year record

Company information and advisors

Proﬁt and loss account highlights

Turnover

Recurring revenues
Initial licence fees
Other sales

23,000
10,060
5,053

20,946  
9,196 
5,866 

Total

38,113

36,008 

Europe, Middle East & Africa
Asia Paciﬁc
Americas

Total

Gross proﬁt

Gross margin

19,531
8,720
9,862

17,375 
8,531 
10,102 

38,113

36,008 

25,525

22,961 

67.0%

64.0%

Amortisation of intangible assets

software rights

267
352

267 
352 

10%
9%
-14%

6%

12%
2%
-2%

6%

11%

Operating proﬁt

Operating margin

Proﬁt before taxation

Earnings per share – pence

Total dividend per share, 
paid and proposed – pence

Balance sheet highlights

6,137

5,618 

9%

16.1%

15.6%

6,109

22.63

5,580 

21.46

5.8

5.6

Intangible assets and software rights (net)

3,290

3,909 

Cash and liquid resources

8,713

4,930 

Shareholders' funds: all equity

21,570

18,582 

TM

Group Headquarters

AVEVA Group plc
High Cross
Madingley Road
Cambridge CB3 0HB
UK
Tel:  +44 (0)1223 556611
Fax: +44 (0)1223 556622

www.aveva.com
avevagroup@aveva.com

Locations

❚  Bangalore, India

❚  Calgary, Canada

❚  Cambridge, UK

❚  Dubai

❚  Frankfurt, Germany

❚  Genova, Italy

❚  Guangzhou, China

❚  Hong Kong

❚  Houston, USA

❚  Kil, Sweden

❚  Kuala Lumpur, Malaysia  

❚  Lyon, France 

❚  Lysaker, Norway 

❚  Manchester, UK 

❚  Osaka, Japan

❚  Paris, France 

❚  Perth, Australia

❚  Portsmouth, UK

❚  Saudi Arabia

❚  Seoul, Korea

❚  Shanghai, China

❚  Shefﬁeld, UK

❚  Singapore

❚  Stavanger, Norway  

❚  Wilmington, USA

❚  Yokohama, Japan  

S
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TM

AVEVA Group plc
High Cross, Madingley Road
Cambridge CB3 0HB  UK

Tel: +44 (0)1223 556611
Fax: +44 (0)1223 556622

www.aveva.com
avevagroup@aveva.com

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