AVEVA Annual Report 2021

FY2021 Annual Report · AVEVA

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AVEVA Group plc

Annual Report and Accounts 2021

Redefining
Digital Transformation

—

Enabling industries to drive sustainable growth

In FY21, AVEVA shifted to operate from home, extended
our Cloud capabilities and accelerated subscription sales.
Our transformative integration with OSIsoft deepened
our industrial information management capabilities.
In 12 months of unprecedented disruption, we delivered a
solid performance.

Integrating our industrial software with OSIsoft’s PI System
enables us to connect our customers’ information with
artificial intelligence and human insight, empowering their
teams to make precise decisions and drive sustainable
growth. We call this Performance Intelligence and we
believe it’s set to redefine how industries can engineer,
operate and innovate.

In this report, learn how we are helping industries use
Cloud, big data, artificial intelligence and the IIoT to drive
engineering efficiency, operational excellence, resiliency,
and agility, shaping a sustainable future.

FY21 financial highlights

Revenue

£820.4m

Down 1.6% (FY20: £833.8m)

Adjusted1 EBIT

£226.4m

Up 4.4% (FY20: £216.8m)

Profit before tax

£34.2m

Down 62.8% (FY20: £92.0m)

Recurring revenue2

67.9%

Up 570 bps (FY20: 62.2%)

Net cash

Adjusted1 EBIT margin

£286.9m

Up 150.3% (FY20: £114.6m)

Diluted EPS

11.27p

27.6%

Up 160 bps (FY20: 26.0%)

Adjusted1 diluted EPS

81.31p

Down 67.4% (FY203: 34.60p)

Down 6.3% (FY203: 86.75p)

Redefining digital transformation
Case studies
At a glance
Chairman’s statement
Chief Executive’s review

Strategic report
1
2
8
10
12
18 Market review
20
22
24
26
28
36
47
48
54
58

Our business model
Our stakeholders
Our strategy
Key performance indicators
Sustainability
Principal risks and uncertainties
Viability statement and going concern
Finance review
Our people
Non-financial information statement

Governance report
Chairman’s letter
59
Board of Directors
62
Governance at a glance
66
Division of responsibilities
67
Keeping the Board informed
68
Considering stakeholders in
70
principal decisions
Board activities
Nomination Committee report
Audit Committee report
Remuneration Committee report

74
78
83
90
100 Directors’ Remuneration Policy
109 The Implementation Report
123 Other statutory information

Financial statements
128 Auditor’s report
137 Consolidated financial statements
179 Company financial statements
185 Statement of Group accounting policies
191 Full list of addresses and subsidiaries
195 Non-GAAP measures
202 Company information and advisers
203 Glossary

1. Adjusted figures are calculated before amortisation of intangible assets (excluding other software),

share-based payments, gain/loss on fair value of forward foreign exchange contracts and exceptional
items. Where relevant this also includes the tax effect of these adjustments.

2. Recurring revenue is defined as subscription plus maintenance revenue.

3. FY20 EPS has been restated to reflect a bonus factor of 0.8 arising on the November 2020 rights issue.

Front cover image: Worker interacts with a digital infrastructure display.

View our interactive Online Annual Report at:
https://investors.aveva.com/annualreport/annualreport.html

Redefining digital
transformation through
Performance Intelligence

At AVEVA, we relentlessly pursue innovation. Combining broader,
deeper industrial data and AI-infused analytics with Cloud and Digital
Twin, we empower teams with insight, freeing our customers to
elevate what they can achieve. We call this Performance Intelligence.

From water and energy to food and infrastructure, we enable
industries to leverage the capabilities of our hardware-agnostic
software to drive engineering efficiency and operational agility.
Using digital insight, teams can transform opportunity into
sustainable business value.

We’ll take you there™

Our strategy is
centred around
five key areas

SCG Chemicals drives operational
agility using AVEVA APM software
and OSIsoft’s PI System

We evolved our strategy
to focus on engineering efficiency
and operational agility

Our Action for Good programme
puts our people at the heart of
sustainable innovation

Read more on page 56

aveva.com | Annual Report 2021

Redefining engineering
efficiencies with AVEVA’s
Unified Engineering solution

Optimising EDF’s power
generation value chain

Enabling engineering efficiency with
AVEVA Unified Engineering

EDF, the world’s largest power
company, is committed to tackling
climate change. The company’s
vision is to produce low-carbon
electricity and achieve carbon
neutrality across its portfolio by
2050. Digital transformation is
critical to delivering EDF’s vision,
and to preserving the company’s
competitiveness. In addition, the
French nuclear industry identified
software solutions as a key step
towards realising a new, safe and
competitive nuclear sector.

SWITCH to the next level
In 2018, EDF launched the SWITCH
transformation programme.
SWITCH was designed to overhaul
its nuclear engineering operations
to embed efficient processes and
innovative operating models.
Engineering and building a plant
to EDF’s Extended Producer
Responsibility blueprint is a
long-term project. EDF wished to
select a trusted partner who is
fully aligned with its innovative
priorities. Having signed a
strategic agreement with AVEVA,
SWITCH will be able to accelerate
its digital transformation agenda,

elevating nuclear engineering to
the cutting edge of innovation and
performance using AVEVA’s
Unified Engineering solution.

Leveraging AVEVA E3D Design,
EDF will elevate its engineering
design tools to a new level of
conceptional methodology using
AVEVA’s unique industrial
software capabilities to support
the SWITCH vision. By empowering
EDF’s teams with a trusted,
data-centric solution, AVEVA
provides complete digital continuity
and boosts engineering efficiency,
all founded on the Digital Twin.

Analytics-led operational
efficiency
In parallel, EDF also uses AVEVA
Predictive Analytics and AVEVA’s
operational data management,
PI System, to operate its power
plants. Together, these solutions
provide EDF’s team with real-time
operations information, enabling
them to make precise decisions to
optimise assets across the
company’s portfolio.

Image: A nuclear facility in the French countryside.

Annual Report 2021 | aveva.com

aveva.com | Annual Report 2021

Redefining operational agility through
intelligent information management

Enabling BASF to optimise
chemicals manufacturing

Image: BASF employees at the Ludwigshafen plant, Germany.

Annual Report 2021 | aveva.com

AVEVA Asset Information Management deployment
supports BASF’s global digital strategy

BASF operates one of the world’s
largest AVEVA Asset Information
Management installations at
the Verbundsite Ludwigshafen,
with over 120 plants connected.
The first investment, made over
eight years ago, was designed
to enable BASF’s teams to unify
disparate data stacks into a
unified dashboard that spanned
their engineering and operations
information, providing a holistic
perspective on business operations.

Called the myPlant Asset
Information Portal (AIP), the
system provides object- and
asset-related information at the
click of a button. BASF teams can
access the technical sheet,
inspection documents, drawings,

3D models, and more. The web-based
browser of the AIP displays the data
directly and logically, consolidating
data and facilitating information
transfer between teams. Now, BASF’s
teams can take an enhanced
approach to asset documentation,
using a process-oriented system with
intuitive navigation which provides
the team with consistent information
and drives operational agility.

In the past year, the AIP has become
ever more important to BASF’s
operations, providing accurate,
real-time information on chemical
manufacturing processes and
enabling teams to share best
practices intuitively.

Image: Accessing BASF’s MyPlant AIP using an internet browser.

“AVEVA’s flexible approach has been the foundation of our
business collaboration for many years. With the introduction
of the AIP for myPlant Lifecycle Management, we further
boosted efficiency for operational and technical processes
because we can find and display information and asset
documents faster than conventional searches, and object-
and topic-related, associative, networked, dynamic information
provides a more intuitive and useful interface for collaboration
and knowledge sharing. This year, during lockdown, we
have used the system to identify further opportunities to
optimise our operations and streamline our production.”

Frank Tillwick, BASF Senior Manager Process-Ownership

“Having worked with BASF for many years, I have been
delighted in the past year to see how our deployment of
AVEVA Asset Information Management has enabled the
team to optimise key business operations and improve
operational agility, keeping core essential processes up
and running during times of disruption.”

Utrecht Wolf, AVEVA project lead

aveva.com | Annual Report 2021

Fleet-wide performance monitoring
using AVEVA Predictive Analytics
enables optimal performance

Elevating operations
and collaboration at
SCG Chemicals

Image: SCG Chemicals team at work in Bangkok, Thailand.

Annual Report 2021 | aveva.com

Innovative model integrates data,
analytics and artificial intelligence

When the leadership of SCG
Chemicals (SCG), one of
Thailand’s largest integrated
petrochemical complexes, wished
to improve efficiency across its
value chain, the team selected
AVEVATM Asset Performance
Management (APM) software
to help deliver the resilience,
agility and maintenance savings
they needed to accelerate the
transformation of their operations.

SCG aimed to unify all operational
data in a holistic Digital Reliability
Center with AVEVA’s APM
software at its heart. This enabled
them to build a virtual 3D plant
to visualise all operating and
engineering information, using
rich analytics so that they could
predict faults and prescribe
pre-emptive actions.

AVEVA’s expert team worked
closely with SCG, building a highly
innovative model that draws
on Digital Twin and connected
worker approaches to unify IIoT
data, analytics and artificial
intelligence together into a single,
easy-to-access interface in
the Cloud.

The results have been highly
impressive. Plant reliability
has risen from 98% to 100%,
achieving ROI of 9x. Better
efficiency and improved scheduling
cut maintenance costs by 40%.

Such results mean that today the
Digital Reliability Center is seen as
a best-practice solution for the
wider petrochemicals industry.

Image: SCG Chemicals’ team use shared, accurate data to optimise the entire value chain.

“The Digital Reliability Platform is an unprecedented
step forward for ensuring reliability. AVEVA was the
only company able to provide an end-to-end solution
spanning engineering, operations and maintenance.
We’ve successfully brought together big data, AI, machine
learning and predictive analytics into a practical solution that
will empower our workers and improve our performance.
This is a great achievement for SCG Chemicals.”

Mr. Mongkol Hengrojanasophon, Vice President – Olefins Business
and Operations, SCG Chemicals

“We were delighted to have been part of this highly
innovative project, which brings together multi-dimensional
elements of our APM software into a holistic interface.
AVEVA’s solution has the potential for broad application
throughout the chemicals industry, and the opportunity to
explore further deployments is incredibly exciting.”

Sittichai Lumpikarnon, AVEVA project lead

aveva.com | Annual Report 2021

AT A GLANCE

Accelerating industries
with intelligence

AVEVA industrial software connects
the power of information, artificial
intelligence and Cloud with human insight
to drive Performance Intelligence.
We enable the teams managing essential
industries to unify, visualise and analyse
their data, driving operational agility and
realising sustainable growth.

Our customers span the process, batch
and hybrid industries. They use our
software to simplify design processes,
optimise production, reduce wastage and
maximise performance with software that
predicts outcomes and provides guidance,
enabling teams to accelerate innovation.

Empowering diverse industries

Customers in 100 countries worldwide

Revenue split
by industry

Energy

Power

Food & Beverage, Consumer
Packaged Goods, Life Sciences

Chemicals

Metals, Mining and Minerals

Infrastructure

Marine

Other

6,250

employees

global offices

countries in which we
operate

With over 50 years of innovation, two million licences installed, and annual revenue of over £820 million, our
proven and trusted solutions are founded on deep industry understanding. We are committed to driving
digital transformation by empowering teams and enabling open, integrated data-centric operations.
We are committed to developing and growing our capabilities. We invest over £110 million each year
in Research & Development, ensuring that our customers can drive optimisations that save up to 20%
in operating expenditure, increase efficiency and drive sustainability.

Learn more about our people
on pages 54 to 57.

Annual Report 2021 | aveva.com

Key statistics

Acquisition of OSIsoft
makes AVEVA the

largest

software company listed on the
London Stock Exchange

Schneider Electric is a

58.6%

23.5p

final dividend

>£9bn

market capitalisation

shareholder and strategic partner

revenue

£820m

4.4%

increase in adjusted EBIT

Combining information and AI
with human insight

Digital
Transformation

Shaping a sustainable future

Operational
Improvements

Innovation

Our strategy is
centred around
five key areas

Expansion &
Diversification

Commercial
Transition

We empower customers by connecting their teams, providing
digital agility and operational resilience to enable them to
keep step with rapid market transformation.

Learn more about our Group strategy
on pages 24 to 25.

We manage sustainability through the lens of our technology
handprint, operational footprint, and inclusive culture. We place it
at the heart of our business strategy. Our actions and investments
are guided by our values.

Learn more about our environmental sustainability commitments and our
diversity and inclusion policies on pages 28 to 35.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSCHAIRMAN’S STATEMENT

Strength,
progress and
strategic growth

Annual Report 2021 | aveva.com

The last year was one of strong progress for AVEVA, despite the challenges posed by
the Covid-19 pandemic. The Group adapted swiftly to the new operating environment,
with the business demonstrating resilience.

Overview
Although the first half of the financial year was
significantly impacted by disruption, business
improved in the second half as our customers and
employees got used to new ways of working.

We continued to invest in AVEVA’s future growth
increasing our investment in core areas of Research
& Development, such as Cloud and Artificial
Intelligence, while completing the acquisition of
OSIsoft, a global leader in real-time industrial data
software and services.

We are proposing a final dividend of 23.5 pence per
share, which represents a small increase after
adjusting for the bonus factor in relation to the
rights issue.

Strategic developments
Three years after the combination of heritage
AVEVA and the Schneider Electric industrial
software business created a global leader in
industrial software, AVEVA acquired OSIsoft,
further enhancing the Group’s ability to accelerate
the digital transformation of the industrial world,
as a leading independent, hardware-agnostic
software company. I would like to extend a warm
welcome from the Board to all our new colleagues
who have joined the Group from OSIsoft.

Section 172 statement
Our Directors are aware of their duty under section 172 of
the Companies Act 2006 to act in the way that they consider,
in good faith, would be most likely to promote the Company’s
success for the benefit of all our stakeholders.

To operate effectively, it is important for us to understand the
impact we have upon those stakeholders we interact with most.
We have identified our key stakeholders on pages 22 to 23 of the
Strategic Report and highlighted how we engage with them.

The Board may sometimes engage directly with certain
stakeholders. However, most engagement takes place at an
operational level. Where there is no direct engagement at Board
level, senior managers regularly report to the Board on key areas,
for it to use in its decision-making.

Find out about:

• our stakeholders: why they are important to us, their interests and

how we engage with them: page 22

• how the Board engages with our employees: page 76
• the stakeholders affected by the Board’s activities: page 74
• how the Board keeps informed about our stakeholders: page 68
• how we considered stakeholders in the principal decisions made

during the year: page 70

• how we considered stakeholders during the OSIsoft acquisition

process: page 73

• how we establish the independence of our Directors and manage

potential conflicts of interest: page 77

Combining the complementary product offerings of
AVEVA and OSIsoft, which brings together industrial
software applications with the market-leading
industrial data platform, will enable AVEVA to
broaden and deepen its relationships with
customers, while further diversifying the Group’s end
markets and developing its ability to assist customers
on their energy transition journeys. This is expected
to result in substantial revenue synergies, in addition
to £20 million of cost synergies.

We continue to align all aspects of our business
to ESG best practice, creating products that meet
the current and future needs of our customers
whilst ensuring that we are encouraging an
organisational ethos that embraces diversity and
inclusion, such that AVEVA remains a great place to
work and an employer of choice in a highly
competitive marketplace.

Board developments
As I covered in my Statement last year, Emmanuel
Babeau resigned as a Non-Executive Director, Vice
Chairman of the Board and member of the
Remuneration Committee effective 30 April 2020.
Emmanuel was replaced by Olivier Blum as a
Non-Executive Director and member of the
Remuneration Committee. Peter Herweck assumed
the role of Vice Chairman on the same date.

Peter Herweck stepped up to become AVEVA’s CEO
on 1 May 2021. He is very familiar with AVEVA’s
business having served on AVEVA’s Board since
2018 and was instrumental in the creation of the
AVEVA Group as it is now structured. Peter played a
key role in both bringing together AVEVA and the
Schneider Electric industrial software business and
more recently AVEVA and OSIsoft.

Craig Hayman stepped down as CEO on 1 May and
will retire from the Board following our AGM in July.
During his three-year tenure, Craig has overseen the
successful integration of the Schneider Electric
industrial software business, the progress of the
Group to a FTSE100 position, and the completion of
the acquisition of OSIsoft. The Board would like to
thank Craig for his service as CEO and wish him all
the best for the future.

Summary
The Board would also like to thank all our employees
for their hard work and flexibility over the last year,
particularly given the additional challenges arising
from the Covid-19 crisis. We also thank our
customers, shareholders and other stakeholders for
their continued support, and we look forward to a
successful future together.

Philip Aiken AM
Chairman

25 May 2021

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSCHIEF EXECUTIVE’S REVIEW

Elevating industries through
Performance Intelligence

AVEVA made strong operational
and strategic progress during the
financial year, making good
headway on our subscription
transition journey and completing
the acquisition of OSIsoft.

Annual Report 2021 | aveva.com

Summary
During the first half of the year, revenue for the
standalone AVEVA Group was impacted by the
disruptions of the Covid-19 pandemic, although
performance improved significantly during the
second half, resulting in broadly flat year-on-year
revenue on an organic constant currency basis.

The OSIsoft business experienced a similar pattern to
the financial year, with a strong second half leading
to 6.6% growth in organic constant currency revenue.
This resulted in combined Group pro forma revenue
growing by 2.2% on the same basis. Although this is
well below longer-term trends, it was an acceptable
outcome given the global challenges faced during the
period. Cost control measures, together with saving
on expenditure such as travel due to the Covid-19
restrictions, led to an improvement in overall Group
adjusted EBIT of 8.1% to £354.7 million (FY20:
£328.1 million) and adjusted EBIT margin to 29.7%
(FY20: 27.0%) on a pro forma basis.

The standalone AVEVA business increased recurring
revenue as a percentage of total revenue to 67.9%
(FY20: 62.2%). This was ahead of the Group’s
medium-term target of 60%. AVEVA remains
committed to its subscription transition journey. With
the standalone AVEVA target exceeded and the
addition of OSIsoft to the Group, AVEVA is
formulating new Subscription transition targets and
will disclose increased targets at the forthcoming
Capital Markets Day on 1 July.

Operating during the Covid-19
pandemic
AVEVA adapted quickly to a new way of
working, with a focus on the safety and wellbeing
of employees.

From a demand generation perspective, we made
substantial investments in digital marketing, for
example by hosting virtual AVEVA World Digital
conferences. In the context of the experiences since
the beginning of the Covid-19 pandemic, the Group
has undertaken a ‘Dynamic Work’ project and will
retain many of the efficiency and productivity gains
achieved into the longer-term, for example with less
travel and more flexible working practices.

Redefining sustainable
innovation
Sidebar with Lisa Johnston,
Chief Marketing
and Sustainability Officer

In 2020, climate change-related gas emissions
dropped by 17% owing to the pandemic.
Across the world, communities benefitted from
cleaner air and quieter, less polluted
environments. As economies reopen, we have
an opportunity to realise a sustainable future
through digital transformation.

The next ten years will be critical to our success
in tackling climate change and achieving the
UN Sustainable Development Goals (SDGs) –
it’s been named the Decade of Action. It has
never been more important for industries to
harness the full potential of technology to make
a difference.

Digital solutions are already helping to cut
carbon emissions by up to 15%, in energy,
manufacturing, agriculture, buildings, services
and transportation. This corresponds to more
than the combined carbon footprints of the EU
and the US put together. Analysis by the World
Economic Forum and PwC has shown that
current applications of advanced technologies
could have a high impact on at least ten of the
SDGs and enable 70% of the 169 targets
underpinning them. This represents a huge
opportunity for our industry.

At AVEVA, we have the expertise, the network
and the software capabilities to help realise the
sustainable industries of the future. We
recognise that technology has a core part
to play, including driving energy efficiency,
circularity, traceability and resilience across
global industries.

We take our responsibility seriously. We are
increasing investment in R&D, extending our
capabilities and building new solutions that
enable our customers to drive sustainability
throughout engineering and operations. We
are proud to be supporting the front-line,
advancing sustainable industries worldwide.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSCHIEF EXECUTIVE’S REVIEW CONTINUED

Acquisition of OSIsoft
On 25 August 2020, AVEVA announced that it had
reached agreement to acquire OSIsoft at an
enterprise value of $5.0 billion. OSIsoft is a global
leader in real-time industrial data software. Through
OSIsoft’s PI System, customers draw insights, make
better decisions, optimise operations, and drive
digital transformation.

The acquisition completed on 19 March 2021.
This followed a successful rights issue and the
securing of a $900 million term loan in order to
part finance the purchase, and the receipt of
regulatory approvals.

Our people
Sidebar with Caoimhe Keogan,
Chief People Officer

Our employees are the driving force
behind Performance Intelligence.
It’s their relentless pursuit of
innovation that puts industrial data
and artificial intelligence at our
customers’ fingertips.

We are constantly striving to create
an environment and culture where
people feel empowered, supported
and able to do their best work.

Learning is a mindset that we cultivate at AVEVA. We’re proud to facilitate
it through challenging work that supports personal growth as well as more
formal development programmes.

Over the last 12 months of global remote working, we’ve increased our
focus on employee wellbeing, and this will continue. We’re using many
ways to reach our employees on a personal level and ensure they can bring
their whole, healthy and authentic selves to work. These include mental-
health campaigns, Employee Assistance Programmes, toolkits for
managers, diversity and inclusion initiatives, worldwide exercise challenges
and more.

We’ve also learned that where we work does not impact how we work. We
are excited about introducing a new, more dynamic approach to our
workplaces, where our people have more flexibility to work remotely,
without losing the option of meaningful face-to-face interaction.

As we push forward into a new chapter for AVEVA, welcoming 1,500 new
colleagues from OSIsoft, we will take the best of both companies, learning
from each other’s skills and experiences as we bring the right people into
the teams where they can have the biggest positive impact.

This is an incredibly exciting time to be part of AVEVA, and that is down to
the hard work, dedication and enthusiasm of our 6,250 brilliant employees.

Annual Report 2021 | aveva.com

AVEVA is now the clear global leader in operational
industrial software, with Engineering software
representing around one-third of Group revenue and
Operational software representing two-thirds.

OSIsoft performed well during the year ended 31
March 2021, achieving 6.6% growth on a constant
currency basis. As with standalone AVEVA, OSIsoft
experienced more difficult trading conditions in the
first half of the year, followed by a recovery in the
second half. Revenue growth in the second half was
10.6%, up from 2.0% in the first half on an organic
constant currency basis. On an end market basis,
growth was driven by a strong performance in
OSIsoft’s largest market, Power. Chemicals and
Pharma & Life Sciences also saw strong growth,
while Energy saw a moderate decline.

AVEVA expects substantial revenue synergies from
areas including cross selling, expanding OSIsoft’s
global reach and developing and launching new
combined products. In addition to this, pre-tax cost
synergies are expected of not less than £20.0 million
per annum on a run rate basis by the end of FY23.

AVEVA has appointed a Senior Vice President to
lead the integration function, reporting to the Deputy
CEO and CFO. The integration of OSIsoft has begun,
with a management structure for the combined
Group having been implemented. The next stage of
integration is to begin the implementation of value
capture opportunities. These include both revenue
and cost synergies.

Of these, the revenue synergy opportunity is the
largest. OSIsoft’s global market-leading data
platform provides an unrivalled base from which to
run and integrate industrial software applications
and discussions with key customers have been very
positive, showing demand for integrated products.
An example of this is AVEVA’s plan to integrate
Predictive Analytics with OSIsoft’s capabilities and
bring a combined offer to Power customers. In terms
of cost synergies, work to remove duplicate overhead
costs, systems and processes has begun. For
example, AVEVA has a programme to consolidate
offices in 17 locations where there is overlap.

Trading and market trends
AVEVA and OSIsoft were run separately during the
financial year, with the acquisition completing shortly
before the year end. Notwithstanding this, both
businesses experienced similar market trends during
the year and so the commentary below relates to the
wider Group. We have reported this on a pro forma
basis, which is unaudited.

The industries that AVEVA serves are making
ever-greater use of technology to reduce both capital
and operating costs in the context of competitive
pressures to increase efficiency, output, flexibility and
improve overall sustainability. This is being enabled
by ongoing technological mega trends that are
driving the digitalisation of the industrial world,
notably the industrial internet of things, Cloud, data
visualisation and AI.

Bringing together Engineering
& Operational Data, Digital Twin,
Artificial Intelligence and Cloud
to realise Performance Intelligence
Digital, data-led strategies enable companies to benefit from broader,
more precise and accurate insights that empower them to drive
sustainable growth. This is why Performance Intelligence is key to
unlocking success in today’s operating environment.

GlaxoSmithKline, for example, uses OSIsoft’s PI System together with
AVEVATM System Platform to optimise vaccine production.

“Using AVEVA System Platform together with
PI System operational data management empowers our
team to execute our automation strategy to drive
efficiencies in manufacturing. We benefit from the
integration of our automation platform with our plant
information, using AVEVA’s digital and data analytics
capabilities.”

Antonio Buendia, Director of Global Automations, GlaxoSmithKline

Performance Intelligence from AVEVA’s industrial information
management combined with insight from AI-infused analytics, Digital
Twins and visualisation enables industries to simplify design
processes, optimise operations, minimise energy use and maximise
performance in real time. Leveraging the Cloud, AVEVA integrates
solutions and connects teams with their data, freeing them to predict
outcomes, collaborate faster and target sustainable growth.

We are committed to being open and hardware agnostic. We use the
power of our ecosystem to drive engineering efficiency, operational
agility and growth for our customers.

This is driving long-term growth in demand for
industrial software. AVEVA is optimally placed to
help its customers digitalise, due to its end-to-end
product portfolio, which runs from simulation through
design and construction and into operations and
now also includes OSIsoft’s rich industrial data layer.

AVEVA primarily serves process, batch and hybrid
industries. These industries provide staple
requirements for basic consumption, such as energy,
food, and transport. As such, they have some level of
resilience to Covid-19 disruption. Notwithstanding
this, the Group experienced tough trading conditions
in the first half of the financial year across most
markets. This was primarily due to general disruption
and uncertainty impacting the speed of customers’
decision making.

AVEVA’s largest end market is Energy at around
35% of pro forma revenue, which includes upstream,
mid-stream and downstream Oil & Gas and the
emerging renewable energy sector. Power is
AVEVA’s second largest market at around 15% of
revenue, while Packaged Goods (such as Food &
Beverage and Pharma) and Chemicals both account
for around 10% of revenue. Other end markets
include Metals & Mining, Marine and Infrastructure.

Energy was particularly challenged due to the
extreme volatility in oil prices. Other large markets
have been more resilient, including Power, Food &
Beverage, Packaged Goods and Pharma. The
shipbuilding market has continued to experience
depressed trading conditions.

Standalone AVEVA Cloud
Demand for Cloud products was good with overall
SaaS and customer-hosted Cloud sales increasing
strongly. In line with AVEVA’s ‘Cloud First’ focus,
several key products were launched on AVEVA
Connect, the Group’s Cloud platform. These included
AVEVA Unified Engineering, providing key
engineering products such as E3D, Engineering and
Simulation in a single Cloud environment; AVEVA
Unified Supply Chain; AVEVA Insight Guided and
Advanced Analytics; and AVEVA Asset Information
Management. The number of customers using
AVEVA Connect increased substantially.

Standalone AVEVA business unit
performance
During the year, AVEVA was organised into
four business units: Engineering, Monitoring &
Control, Asset Performance Management and
Planning & Operations.

Following the year end, this structure has been
simplified, with AVEVA’s business being organised
into two areas, Engineering and Operations.
Engineering contains products that are focused
on the capital expenditure lifecycle of industrial
assets and Operations contains products that are
focused on the operating lifecycle of these assets.
The new Operations business unit consists of the
software that was previously in Monitoring & Control,
Asset Performance Management, Planning &
Operations and OSIsoft.

In terms of the performance of the former business
units, Engineering consists of simulation, design and
project execution software. It contributed 42% of
revenue for the standalone AVEVA during the year.
On an organic constant currency basis, revenue
declined by 4.3%, while recurring revenue declined
by 2.4%, which in the context of the difficult global
capital expenditure environment was robust, helped
by our ability to help customers mitigate risk in
capital project execution and use engineering
information management in operations.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSCHIEF EXECUTIVE’S REVIEW CONTINUED

Creating scale, extending reach,
sustainably: The OSIsoft acquisition
Sidebar with Dr J. Patrick Kennedy,
Founder OSIsoft

In 1980, I started a consultancy
to advise Oil & Gas companies
on advanced control. We built
some in-house software to
capture data from newly-
introduced digital control
systems, and found that it was
of interest to our customers
as well. That software
became the PI System, now
used every day by industrial
professionals in 146 countries.
Over 20,000 sites depend on

the PI System to improve operational performance, protect health and
safety, and maintain quality and reliability to drive financial and
environmental sustainability. This is a big and humbling responsibility.

I believe we have only scratched the surface of what is possible
from digitisation. Enabling better control of a particular asset, plant or
enterprise-wide operations is a great start. Combining what we have
learned with advances in software will be transformative, such as
Cloud-based services to help our customers better collaborate with
their customers, suppliers, regulators and other partners.

Industrial processes rely on three fundamental flows: materials,
energy and information. Through the power of shared data, we have
a huge opportunity to accelerate the third flow – information – to
create stronger industrial value chains for our customers. We have
witnessed this potential recently as the pharmaceutical industry
developed, manufactured and delivered Covid-19 vaccines in months
rather than years.

This vision is a big part of what drove us to join forces with AVEVA,
and I am excited to be a part of it.

AVEVA’s strength across both engineering and
operational software, and the associated benefits to
customers of using AVEVA as a supplier for both, led
to an increase in orders from owner operators
managing engineering information as the core of
their digitalisation strategies to build the Digital Twin
within their existing plant facilities. We saw
significant wins from Shell and BHP Group.

From our EPC customers, we saw significant
contract wins from Wood, Worley and Petrofac.
Although the Covid-19 crisis had an impact on
planned capital projects being postponed, we saw
demand shift from 3D design software to project
execution software, as AVEVA continues to drive
digital transformation with these customers.

Annual Report 2021 | aveva.com

In terms of end markets, there was a reduction in
orders from Oil & Gas and Marine, but assisted by the
energy transition, we saw an increase in orders from
the Power end market with significant contract wins,
for example from EDF.

Monitoring & Control represented 32% of total
revenue for the standalone AVEVA. On an organic
constant currency basis, revenue grew by 6.4%,
while recurring revenue increased by 28.5%.
Customers continued to focus on operations
efficiency, remote operations and collaboration.
Enterprise visibility and performance management
are being realised by AVEVA’s Unified Operations
Center solutions. Transition to AVEVA’s Flex
Subscription offer continued successfully. In terms of
end markets, AVEVA saw strength in mid-stream
Oil & Gas with a number of key wins including from
SoCalGas, and in other sectors AVEVA achieved
significant order wins from customers including
BHP Group.

Asset Performance Management represented 14%
of total revenue for the standalone AVEVA. On an
organic constant currency basis, revenue declined by
2.1% while recurring revenue increased by 15.0%.
This was due to lower sales of perpetual licences and
services as part of AVEVA’s Subscription transition,
with strong growth in Subscription. AVEVA won its
first mining customer in APM and continued a
substantial global roll-out with an Energy major.

Planning & Operations represented 12% of total
revenue for the standalone AVEVA. On an organic
constant currency basis, revenue grew by 2.9% while
recurring revenue increased by 20.3%. Growth was
supported by sales of Supply Chain planning
solutions to help customers in the Energy sector
operate efficiently in the context of the disrupted
market. AVEVA also saw growth in the Food &
Beverage and Metals & Mining sectors for
Manufacturing Execution software.

Standalone AVEVA regional
performance
EMEA revenue was £328.4 million, representing a
small increase on the previous year (FY20: £327.1
million). On an organic constant currency basis, sales
grew 5.4%. In the first half of the year we saw our
customers respond to the challenges of remote
working with the successful conclusion of new
business based on AVEVA Connect Cloud supporting
access to AVEVA’s solutions. As the second half saw
customers adopt to new ways of working, AVEVA
saw material new contract extensions in the Food &
Beverage, Marine, and Energy sectors, with notable
new customer wins addressing renewable energy
and carbon capture.

Sales growth was helped by the renewal of large
Global Account contracts in the second half;
reflecting AVEVA’s long standing strategic
engagements with the world’s largest EPC
contractors and new wins with global Super Majors.
In addition, EMEA won a new commitment with our
largest and longest standing customer in nuclear
power generation, which lays the foundation of the
next 20 years of strategic engagement.

Americas revenue was £255.8 million, representing a
decline of 8.4% on the previous year (FY20: £279.2
million). On an organic constant currency basis, sales
declined 3.7%, with significant reductions in
perpetual licences and services partly offset by good
growth in Subscription and Cloud sales. Trading
conditions were challenging due to the depressed
economy and difficult conditions in the Oil & Gas
sector in particular.

Asia Pacific revenue was £218.8 million,
representing a 3.8% decline on the previous year
(FY20: £227.5 million). On an organic constant
currency basis, sales declined 2.4% against a very
tough comparative in the previous year, which
included a large Global Accounts contract. AVEVA
delivered strong double-digit growth during the
second half of the year, following a difficult first half
due to the Covid-19 pandemic.

The Group delivered successfully on an end market
diversification strategy, with Chemicals and Metal &
Mining delivering very strong performance while Oil
& Gas has been under pressure and the Marine
market was challenging. AVEVA grew its business in
South Korea and Japan, while performance in China
was broadly flat due to the strong pandemic
influence at the beginning of the year and with
strong recovery in the second half. Due to a reduction
in capital expenditure, Engineering revenue declined
as anticipated, however Operations solutions
showed strong growth, particularly in the area of
Asset Performance and Planning & Operations.

Environmental, Social and Governance
Many of AVEVA’s customers are focused on
sustainability, as they transition to business models
that are aligned with objectives such as carbon
reduction and circularity.

The Group’s software supports the development
of industries such as clean power generation.
In more mature industries it increases energy
efficiency, helps reduce waste and boosts circularity
throughout engineering and operations to maximise
sustainable performance.

During the year, the remote deployment of AVEVA
Unified Operations Centre enabled Saudi Aramco to
monitor emissions and optimise energy usage; while
Neste, the world’s leading producer of renewable
diesel and sustainable aviation fuel, used AVEVA’s
Unified Supply Chain to drive collaboration between
its remote teams, boosting efficiency. Several of
AVEVA’s EPC customers used AVEVATM Unified
Engineering to help pioneer hydrogen production
designs while other engineering companies use our
software for onshore windfarms.

The acquisition of OSIsoft has significantly
strengthened AVEVA’s position in the power
generation, transmission and distribution end
markets, where software is essential to help power
networks cope with intermittent supply from wind
and solar.

AVEVA has accelerated investment in the area of
sustainability and hosts a sustainability Customer
Advisory Board, with members including global
market leaders across the process, batch and
hybrid industries.

In addition to the strong contribution that AVEVA is
making to sustainability through its products, the
Group also invested in other areas of ESG during the
year. For example, AVEVA recruited a Head of
Diversity & Inclusion (D&I) and has run global D&I
training and is implementing a five-year D&I strategy.

Outlook
The ongoing digitalisation of the industrial world
continues to drive demand for AVEVA’s software.
Notwithstanding the continued uncertainties
in relation to Covid-19, trading conditions have
largely normalised in our major markets following
the global disruption at the start of the crisis.
Organic currency neutral growth rates for
the AVEVA and OSIsoft business are expected to be
similar to their long-term trends in the current
financial year. As such, the outlook for AVEVA
remains in line with the Board’s expectations. AVEVA
will update its long-term targets to include the
acquisition of OSIsoft at its upcoming Capital
Markets Day on 1 July.

Peter Herweck
Chief Executive Officer

25 May 2021

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSMARKET REVIEW

Capturing the opportunity

We pay close attention to the trends shaping the sectors in which our customers
operate. With the effects of the Covid-19 pandemic transforming our world, below
are some of the most powerful market developments we have identified as
affecting the industries we serve – and how our customers are responding.

Market trends

Everything as a Service (XaaS)

Workforce and people

The trend towards XaaS continues to grow. The speed of
change is shown by the fact that SaaS vendors already
account for 75% of all software revenue1.

What this means for our customers
Adoption is accelerated by Covid-19 as customers grow their
investments in SaaS solutions. This is bringing them greater
flexibility and a potentially reduced time to benefit, better
scalability and easier deployment. SaaS is therefore a very
attractive offering for most customers.

(See the Stakeholders and Strategy sections for more.)

Sustainability and energy transition

The shift towards green energy, with solar power as a key
driver, emphasises the overwhelming importance of
sustainability. With power generation becoming increasingly
de-centralised, transmission networks and grids are
becoming an area of focus. Sustainability criteria apply to all
industries and their supply chains. Several industries such as
Food & Beverage and Pharmaceuticals are additionally facing
challenges resulting from changing, health-driven demand.

What this means for our customers
Countries and enterprises across all industries are setting up
programmes to become carbon neutral and conserve resources.
This is creating demand for solutions that enable the
monitoring and control of energy use and carbon emissions.
Production processes need to become more efficient,
enabling companies to produce more with less energy and
fewer resources while allowing maximum flexibility.

The ‘connected worker’ – a person whose working life is
changing thanks to digitisation – will continue to be a
strategic focus for the years ahead across various industries.
Connected working frees companies to grow productivity by
empowering their workers with better collaboration tools and
unified information.

Today, 94% of executives cite the connected worker as an
essential element in delivering their strategies2.
Compromising safe operations, worker safety, and wellbeing
in the workplace are not acceptable.

What this means for our customers
With people costs rising, companies must equip their
employees with the best available technology to reduce the
time spent collecting and verifying information. Losses
resulting from disconnected systems damage productivity.
Companies therefore need to invest in digitalisation and
AI-powered automation. In addition, teams need access to
information on premise and via the Cloud to enable remote
and mobile working, often as part of a collaborative global
team. This trend is driving towards increased adoption of
autonomous operations strategies with fewer workers on site
and reduced safety risks as a result.

Continued pressure on operating margins

Operating margins continue to be a key focus for investors.
Industries with a higher level of digitalisation tend to deliver
higher margins3.

What this means for our customers
Driving digitalisation to increase margins is essential, and
companies are seeking ways of improving their business and
production processes. Unscheduled and scheduled downtime
needs to be avoided to maximise production. Supply chain
management and planning will be a key focus area in future.

1. McKinsey, ‘The next software disruption: How vendors must adapt to a new era’, P2, 2020

2. Accenture Research

3. SAP and Oxford Economics, ‘4 Ways Leaders Set Themselves Apart’

Annual Report 2021 | aveva.com

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Technology trends

Industrial IoT and Edge

IoT markets continue to grow. It is estimated that they will
generate an annual value of US $11+ trillion by 2025.
Industrial IoT (IIoT) will represent more than 40% of
that value4.

What this means for our customers
Performance Intelligence – acquiring data and using AI to
analyse and make predictions – is the leading use case for
IIoT5. It is anticipated that it will ultimately drive reduced
operational costs. When that occurs, IIoT will become a
cornerstone for Digital Twins. Companies need to select
vendors that allow them to remove silos and apply the latest
AI-based solutions.

(Distributed) Cloud

The Distributed Cloud allows data to be created and
processed at the point where it is needed. The types include
public and private Cloud as well as IoT Edge Cloud.

What this means for our customers
A growing number of business-critical solutions are available
in a Cloud environment. The combination of Cloud, Edge
Cloud and Hybrid Cloud is enabling customers to be flexible
in their journey from on-premises systems to the Cloud.
When using Cloud solutions, customers will need to focus
on cyber security and service availability.

Visualisation including extended
reality (XR)

Today 70% of Fortune 500 companies are actively using
or prototyping solutions that include mixed and extended
reality6. This trend will soon be picked up by small and
medium-sized enterprises as the technology becomes
widely available.

What this means for our customers
Data visualisation, information and 3D models are essential
elements of the connected worker’s environment. The
technology is becoming available on mobile devices, and
companies will increasingly need to make the content
available to their employees.

Artificial Intelligence, Machine Learning
and Analytics

AI, ML and Analytics will play a larger role in the future.
According to studies, by 2022 40% of all software projects
will have AI co-developers7. The technology is becoming
increasingly available and can be adapted for multiple
specific tasks.

What this means for our customers
Companies will increasingly need to be able to make more use
of the growing quantities of project-based operational data
being collected by IoT sensors. AI, ML and Analytics, tailored
for specific environments and tasks, are increasingly providing
the basis for better and faster decision-making. Using AI can
raise the level of automation and help reduce the quantities of
distracting, irrelevant data on an employee’s desk. In addition,
AI and Analytics provide the basis for predictive and
prescriptive maintenance, which leads to cost reductions.

Data, information and Digital Twin

The Digital Twin is one of the top ten technology trends. Data
acquisition and contextualising provide the basis for a Digital
Twin. It is not limited to representing the physical object; it
also includes its behaviour, condition, how it operates and its
organisational structures.

What this means for our customers
Companies will continue to invest in Digital Twins, as they
support safer and more efficient operations. As one of the
building blocks for serving connected workers, the Digital
Twin is on a trajectory to become mainstream. Digital Twins
exist at multiple levels, including equipment, asset and
enterprise. To generate maximum value, they need to be
connected and integrated.

4. McKinsey

5. Statista, ‘Industrial IoT: Leading Use Cases Worldwide 2019’

6. McKinsey

7. Mark Driver, Gartner, 2019

aveva.com | Annual Report 2021

OUR BUSINESS MODEL

Enabling sustainable growth

We sell industrial software and supporting services to customers
and partners across various markets and geographies. We provide
software both as a horizontal industrial information platform and
as domain-specific applications. We primarily license and sell it by
subscription, with the balance as perpetual licensing.

Empowering diverse industries

1. Our capabilities

Our solutions and expertise
accelerate transformation
while optimising engineering,
operations and performance
for our customers.

Our Operations software orchestrates control,
maintenance and production planning to safely
and efficiently produce finished goods or provide
infrastructure for services such as power or water.
Customers use our Engineering software to define
and design elements of process simulation, plant
design and construction management, ensuring
cost-effective and efficient construction
management for their critical assets.

2. Our partnerships

3. Software as a Service

We work with our customers
and harness the power of our
ecosystem to deliver operational
agility and human expertise.

Because we continuously strive to deliver the
very best solutions for our customers, it is
essential for us to build and maintain close
relationships with a number of strategic partners.
They bring additional value to our customers in
areas where highly specialist domain knowledge
and capabilities are key success factors.

Our customers have access
to more than 20 solutions
through our AVEVA Connect
Cloud platform and the AVEVA
Flex subscription programme.

The data of our customers is sensitive. We have
therefore put measures and services in place
to protect and manage this data, ensuring it
is always trusted, reliable and accessible. Our
ambitious development programmes will allow
us to offer more capabilities and solutions as a
service over the coming years.

Annual Report 2021 | aveva.com

Over 100 markets worldwide

Shaping a sustainable future

We create economic value
primarily through customer
subscriptions to our software
solutions. Most are delivered
through our direct sales channel,
with around one-third generated
through our global network of
partners and distributors.

We also provide support for industrial companies that
are building their digitalisation strategies. Our experts
deliver application support and professional services
around software implementations, empowering our
customers to achieve maximum value from our
technology. We also provide customer training
courses on request.

During the year, we added 11 patents to our portfolio
to protect our intellectual property. These patents, now
totalling 148, help us secure our future revenue streams.

Revenue
mix (%)

We listen to and work with
our stakeholders to evolve
our business, supporting the
continuing digital evolution
of the industries we serve.

Investors

23.5p

final dividend

Employees

6,250

Communities

£550k

donated

Customers

>16,000

Subscription

Maintenance

Perpetual licences

Services

Learn more about how we engage with
stakeholders on pages 22 to 23.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSOUR STAKEHOLDERS

Engaging with stakeholders
in a year like no other

Key considerations

Investors

Why we engage

How we engage

We have designed our investor-engagement activities to
adhere to all relevant regulatory requirements; while achieving
an appropriate balance between the benefits of extensive
engagement with the resources available, such as
Directors’ time.

We engage with investors to gain and maintain support for our
strategy, which in FY21 included a capital raise to fund the
acquisition of OSIsoft, to help facilitate an orderly market in the
Group’s shares and to listen to feedback. Over the last year
feedback on Environmental, Social and Governance (ESG)
issues and in particular sustainability has been valuable.

We have an ongoing dialogue with existing and potential new

communications, as do other members of the AVEVA

investors and equity analysts. Over the last year, we had over

management team such as the Head of Strategy. Non-

500 virtual meetings and calls with investors based across the

Executive Directors, including the Chairman, are also available

globe. Our aim is to discuss AVEVA’s strategy with investors

to engage with investors when requested and when there are

with a high degree of availability and openness. The Head of

issues to discuss proactively, such as governance and

Investor Relations is always available to speak at short notice,

remuneration.

and the CEO and CFO place high importance on investor

Employees

Covid-19 transformed operating practices for companies
including AVEVA, and we were delighted with how rapidly our
employees were able to pivot to work from home.

We need to be very understanding and supportive of
flexible working arrangements in terms of hours and locations,
ensuring people can work in an open, welcoming environment
where they can be themselves. There is also a need to maintain
fair pay and working conditions, as well as to deliver opportunities
for professional advancement and development.

Following lockdown we recognise that we may wish to retain
some of the flexibility benefits of working from home.

Communities

Our employees are core to the success of AVEVA. Our ambition
is to have an inclusive culture and we have a strong cadence of
communications activity that allows employees to contribute
and have their voices heard.

Regular engagement improves collaboration and visibility of
our successes, achievements and progress. Communication
this year has transformed into more targeted and regular
updates with an emphasis on the employee experience and
Executive visibility.

We have supported the creation and growth of employee
networks and have started to hold bold conversations around
diversity and inclusion and mental health. We want every
employee to feel they have a voice and to be able to bring their
true authentic selves to the workplace.

We launched a number of campaigns and mechanisms to

information. In addition, we continued to deliver a range

support the mental health and wellbeing of our colleagues in

of established activities during the year, including but not

lockdown. Flexible working arrangements were encouraged,

limited to:

and we also offered all employees a home office allowance to

help with the physical transition.

• regular global email notification of successes, programmes

and training updates;

We elevated our social intranet and launched weekly

• twice-yearly engagement surveys; and

#WEAREAVEVA campaigns designed to provide employees

• future of work surveys.

with a chance to connect with one another over a particular

theme. Some of the most popular campaigns have included

During the year, we launched the first phase of our global

pets, working from home selfies and a welcome board set up

employee share purchase plan. This went live in most

to greet our new OSIsoft colleagues in March.

countries, giving our employees the opportunity to

become shareholders.

We also increased the frequency of management and

all-employee All Hands Calls with the ELT. These calls all

We also hosted our first Sustainability Jam which invited all

include dedicated time for live Q&A, with all questions and

employees to participate in the discussion on how we can

answers published on the intranet. Our CEO also delivered a

make AVEVA a more sustainable organisation and come

regular podcast to increase visibility and highlight important

forward with actionable ideas we can implement.

As a FTSE100 company with a global reach and influence, we
have responsibilities for the economic, social and environmental
wellbeing of the communities where we, our customers and our
partners operate. During the Covid-19 pandemic, these
responsibilities have been more significant than ever. Please
see page 56 for a fuller analysis and description of our
community support activities during the year.

We engage with communities at a local, regional and
global level because making a positive difference fits with
our corporate culture. Our employees feel passionately about
their obligation to support people and communities in need. Our
community focus is therefore an important source of motivation
and team spirit. Quite simply, it is the right thing to do,
delivering a valuable sense of achievement that inspires people
to do even more.

We are committed to helping our employees support

Many events were organised by our employees in their own

their communities. Despite the impact of the pandemic,

communities. On a more collective front, we also set up

the paid time off and other financial support we provided

committees to support regional efforts. In addition, we

during the year enabled the donation of 3,750 hours to

support several STEM-related education programmes

community activities.

around the world, including engagement with universities

to promote STEM subjects by supporting competitions and

providing awards. In another major initiative, we launched

AVEVA Forest in December 2020.

Customers

Customer demands evolved rapidly during the pandemic, as
they responded to diverse challenges by region and industrial
sector. With widespread disruption, many companies increased
their investment in Cloud, artificial intelligence and digital
operating models to enable operational agility, helping to
secure supply chains and ensure resiliency.

As economies begin to adjust to the new market environment,
our core industries are focusing more than ever on sustainability
and environmental, social and governance requirements, and
the role that digital solutions can play in helping to shape a
sustainable future.

We believe that by building strong relationships with
customers in times of crisis, we lay the foundation for
future growth together.

Supporting our customers’ vision for digital transformation is
also key to enabling Industry 4.0 and supporting sustainability
throughout the sectors we serve.

The transformational acquisition of OSIsoft also redefines our
offer to customers. Combining the PI System’s intelligent
operational data management with the AI-infused capabilities
of our industrial software, and bringing both to the Cloud,
transforms what industries can achieve.

Annual Report 2021 | aveva.com

When face-to-face engagement was challenging,

we launched a range of new digital events, AVEVA

World Digital, which were attended by more than

5,000 customers and prospects.

We also offered existing solutions to customers in the

Cloud free of charge for three months, supporting their

digital resiliency in the early months of the pandemic.

In addition, we launched a new website, Digital 2.0, with

improved digital metrics and tracking.

Our new brand campaign also helped to differentiate us from

our competition, achieving significant increases in our key

brand attributes: empowering, sustainable, adaptable.

Why we engage

How we engage

We have designed our investor-engagement activities to

We engage with investors to gain and maintain support for our

adhere to all relevant regulatory requirements; while achieving

strategy, which in FY21 included a capital raise to fund the

an appropriate balance between the benefits of extensive

acquisition of OSIsoft, to help facilitate an orderly market in the

engagement with the resources available, such as

Directors’ time.

Group’s shares and to listen to feedback. Over the last year

feedback on Environmental, Social and Governance (ESG)

issues and in particular sustainability has been valuable.

We have an ongoing dialogue with existing and potential new
investors and equity analysts. Over the last year, we had over
500 virtual meetings and calls with investors based across the
globe. Our aim is to discuss AVEVA’s strategy with investors
with a high degree of availability and openness. The Head of
Investor Relations is always available to speak at short notice,
and the CEO and CFO place high importance on investor

communications, as do other members of the AVEVA
management team such as the Head of Strategy. Non-
Executive Directors, including the Chairman, are also available
to engage with investors when requested and when there are
issues to discuss proactively, such as governance and
remuneration.

Key considerations

Investors

Employees

Covid-19 transformed operating practices for companies

Our employees are core to the success of AVEVA. Our ambition

including AVEVA, and we were delighted with how rapidly our

is to have an inclusive culture and we have a strong cadence of

employees were able to pivot to work from home.

communications activity that allows employees to contribute

We need to be very understanding and supportive of

flexible working arrangements in terms of hours and locations,

Regular engagement improves collaboration and visibility of

ensuring people can work in an open, welcoming environment

our successes, achievements and progress. Communication

where they can be themselves. There is also a need to maintain

this year has transformed into more targeted and regular

fair pay and working conditions, as well as to deliver opportunities

updates with an emphasis on the employee experience and

for professional advancement and development.

Executive visibility.

and have their voices heard.

Following lockdown we recognise that we may wish to retain

We have supported the creation and growth of employee

some of the flexibility benefits of working from home.

networks and have started to hold bold conversations around

diversity and inclusion and mental health. We want every

employee to feel they have a voice and to be able to bring their

true authentic selves to the workplace.

Communities

Customers

As a FTSE100 company with a global reach and influence, we

We engage with communities at a local, regional and

have responsibilities for the economic, social and environmental

global level because making a positive difference fits with

wellbeing of the communities where we, our customers and our

our corporate culture. Our employees feel passionately about

partners operate. During the Covid-19 pandemic, these

their obligation to support people and communities in need. Our

responsibilities have been more significant than ever. Please

community focus is therefore an important source of motivation

see page 56 for a fuller analysis and description of our

and team spirit. Quite simply, it is the right thing to do,

community support activities during the year.

delivering a valuable sense of achievement that inspires people

to do even more.

Customer demands evolved rapidly during the pandemic, as

We believe that by building strong relationships with

they responded to diverse challenges by region and industrial

customers in times of crisis, we lay the foundation for

sector. With widespread disruption, many companies increased

future growth together.

their investment in Cloud, artificial intelligence and digital

operating models to enable operational agility, helping to

Supporting our customers’ vision for digital transformation is

secure supply chains and ensure resiliency.

also key to enabling Industry 4.0 and supporting sustainability

throughout the sectors we serve.

As economies begin to adjust to the new market environment,

our core industries are focusing more than ever on sustainability

The transformational acquisition of OSIsoft also redefines our

and environmental, social and governance requirements, and

offer to customers. Combining the PI System’s intelligent

the role that digital solutions can play in helping to shape a

operational data management with the AI-infused capabilities

sustainable future.

of our industrial software, and bringing both to the Cloud,

transforms what industries can achieve.

We launched a number of campaigns and mechanisms to
support the mental health and wellbeing of our colleagues in
lockdown. Flexible working arrangements were encouraged,
and we also offered all employees a home office allowance to
help with the physical transition.

We elevated our social intranet and launched weekly
#WEAREAVEVA campaigns designed to provide employees
with a chance to connect with one another over a particular
theme. Some of the most popular campaigns have included
pets, working from home selfies and a welcome board set up
to greet our new OSIsoft colleagues in March.

We also increased the frequency of management and
all-employee All Hands Calls with the ELT. These calls all
include dedicated time for live Q&A, with all questions and
answers published on the intranet. Our CEO also delivered a
regular podcast to increase visibility and highlight important

information. In addition, we continued to deliver a range
of established activities during the year, including but not
limited to:

• regular global email notification of successes, programmes

and training updates;

• twice-yearly engagement surveys; and
• future of work surveys.

During the year, we launched the first phase of our global
employee share purchase plan. This went live in most
countries, giving our employees the opportunity to
become shareholders.

We also hosted our first Sustainability Jam which invited all
employees to participate in the discussion on how we can
make AVEVA a more sustainable organisation and come
forward with actionable ideas we can implement.

We are committed to helping our employees support
their communities. Despite the impact of the pandemic,
the paid time off and other financial support we provided
during the year enabled the donation of 3,750 hours to
community activities.

When face-to-face engagement was challenging,
we launched a range of new digital events, AVEVA
World Digital, which were attended by more than
5,000 customers and prospects.

We also offered existing solutions to customers in the
Cloud free of charge for three months, supporting their
digital resiliency in the early months of the pandemic.

Many events were organised by our employees in their own
communities. On a more collective front, we also set up
committees to support regional efforts. In addition, we
support several STEM-related education programmes
around the world, including engagement with universities
to promote STEM subjects by supporting competitions and
providing awards. In another major initiative, we launched
AVEVA Forest in December 2020.

In addition, we launched a new website, Digital 2.0, with
improved digital metrics and tracking.

Our new brand campaign also helped to differentiate us from
our competition, achieving significant increases in our key
brand attributes: empowering, sustainable, adaptable.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSOUR STRATEGY

A strategy for growth and
continuous improvement

Strategic pillars
We build our strategy
on five strategic pillars,
enabling us at all times
to focus on priorities and
react fast and decisively
to changes in our
operating environment.

Digital
Transformation
Driving the digital
transformation of
the industrial world

Innovation
Providing a leading
software portfolio that
delivers operations,
engineering and
Performance Intelligence

A confluence of global market dynamics,
digital technologies and changing business
models is disrupting industrial markets,
and Covid-19 has further exacerbated
the situation. The adoption and maturity
of digital technology by industrial
businesses lag behind those of sectors
such as banking and retail.

However, industrial customers are
increasingly using digital technology and
industrial data to optimise the integrated
value chain, exploring new business
models and avenues for growth and
profitability. This has accelerated growth
in demand for industrial software, creating
unique opportunities for us. We are
constantly increasing the number of
solutions available in the Cloud to make
digital transformation easier for industrial
customers while at the same time we
broaden our portfolio to cover more
business processes for our customers.

Our relationships with customers and
universities have created a culture of open
innovation, resulting in many solutions
unrivalled in our industry. Our customers
acknowledge this, choosing to partner with us
into the future. Above all, they choose us for
our unique ability to digitise and integrate
operations and engineering, helping them
achieve new levels of Performance Intelligence
that reduces costs and drives efficiency gains.

Our Operations software orchestrates
control, maintenance and production planning
to safely and efficiently produce finished goods
or provide infrastructure for services such as
power or water. Our Engineering software is
used to define and design elements of process
simulation, plant design and construction
management, ensuring cost-effective and
efficient construction management for
critical assets.

Digitising these combined disciplines creates a
tremendous amount of process, production and
design data that enables additional levels of
value creation. Collecting and organising this
data into an industrial Digital Twin, where it is
refined and infused with AI and analytics,
generates new levels of Performance Intelligence.
All this is then delivered through our integrated
hybrid-Cloud portfolio.

Performance metrics and how
we will achieve them

Number of products available in
the Cloud

Number of new patents
awarded in the year

FY20: 10

FY20: 16

• We will continue to invest heavily in our

• Extending our portfolio with new

Cloud transition

AI-infused solutions

• Focus on integration scenarios
• Continue to patent new products

and ideas

Annual Report 2021 | aveva.com

Commercial
Transition
Accelerating the shift to
subscription and Cloud,
driving increased
Annualised Recurring
Revenue

Expansion &
Diversification
Driving growth through
a focus on end-market,
geography and
portfolio area

Operational
Improvements
Systems, processes,
and commercial rigour

Our commercial business model
continues to transition to subscription
and a Cloud-based Software as a
Service (SaaS) model, as measured by
Annualised Recurring Revenue (ARR).
The subscription model brings commercial
and technical flexibility for customers,
giving them easy access to our entire
portfolio via a single subscription
mechanism that scales with use.

As a result, our customers and partners
can realise additional value by gaining
easy access to more of our portfolio. We
can then further monetise more of our
portfolio investments, accelerating growth
and profitability over the long term.

We continue to improve diversification and
business expansion through a focus on
three key areas: end-market, geography
and portfolio area.

We continue to make operational
improvements across several functional
areas of the business including:

•

• service and support transformation
(to drive increased margin and
customer satisfaction);
improving our gender and ethnic
diversity within our teams, in
recognition that breadth of experience
brings rigour and challenge to existing
processes and operations;
leveraging and applying our experience
and technical skills in the area of
Cloud development to accelerate
OSIsoft’s Cloud programme
(reducing operating costs);
• portfolio rationalisation and

•

divestments (to shape investment
decisions and reduce costs); and
• general process, automation and
system-level improvements (to
realise general efficiency gains).

End-market diversification enables
expansion in hybrid end-markets (such
as Life Sciences, Food and Beverage,
and Consumer Packaged Goods) and
infrastructure end-markets including
data centres, cities, power and renewable
energy. This will provide new avenues for
growth and enable additional resilience in
cyclical and market downturns.

We will continue to increase our
geographic coverage in EMEA, APAC
and the Americas through additional direct
sales, supporting investments and forming
additional partnerships.

We are diversifying our portfolio by
expanding select areas of engineering and
design, planning and operations, Monitoring
& Control and Maintenance. Each portfolio
area services a diverse mix of end-user
customers, owner operators, OEMs, and
engineering, procurement and construction
(EPC) firms across engineering and
operations-focused businesses.

Strong growth in Annualised
Recurring Revenue1

Revenue from cyclical markets
post-acquisition

£704.8m

FY20: £648.9m

• Growing the number of
SaaS-based solutions

1. On a pro forma constant currency basis.

Recurring revenue as a
proportion of total revenue

67.9%

FY20: 62.2%

• Driving our Sales teams to deliver more
rental and subscription sales contracts

50%

Pre-acquisition: 60%

• The integration of OSIsoft will lead to
new solutions, allowing us to address
a larger market

• Growing faster in non-cyclical markets

with focus on sustainability

• Acquisition of OSIsoft will lead to

increased presence in industries to
which we had limited access in the past

Females in the workforce

26.5%

FY20: 25.8%

• Several programmes for D&I have been
started (for details see pages 34 to 35)
• We will be launching our first ethnicity

pay gap report in FY22

Adjusted EBIT margin

27.6%

FY20: 26.0%

• Limit cost control to inflation and
targeted, strategic investments

• Focus on high margin revenue growth

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSGrowth in adjusted

Growth in adjusted

diluted EPS2

(6.3)%

(FY20: 24.9%)

FY21

FY20

FY19

FY18

Recurring revenue as a

proportion of total revenue

67.9%

(FY20: 62.2%)

Cash conversion

40.3%

(FY20: 74.4%)

(6.3)%

FY21

24.9%

FY20

21.3%

FY19

5.9%

FY18

67.9%

FY21

62.2%

FY20

53.8%

FY19

42.4%

FY18

40.3%

74.4%

96.1%

84.4%

Adjusted diluted EPS is a measure of

Recurring revenue is revenue earned from

Cash conversion tracks whether profitability

shareholder earnings growth, and is important

customers for the provision of goods over a

is effectively being converted into cash for use in

as the Group aims to maintain a progressive

contractual term, where future contract renewal

future operations or as a return to shareholders.

dividend policy.

is required for ongoing use of the product.

Adjusted diluted EPS declined principally as a

Recurring revenue increased due to strong

Cash conversion declined significantly, due to

result of an increase in issued ordinary shares

growth in subscriptions revenue.

operating cash outflows on exceptional items of

following the November 2020 rights issue,

offsetting an increase in adjusted EBIT

year-on-year.

Pro forma4 recurring revenue was 66.9% of

total pro forma revenue (FY20: 61.2%),

increasing because of good subscription

£63.2 million (FY20: £23.3 million) and the

timing of revenue recognition on multi-year

subscription contracts.

Pro forma4 adjusted diluted EPS was

performance in AVEVA, and subscription and

Underlying cash conversion, which excludes the

105.3p (FY20: 94.1p), an increase of 11.9%.

maintenance performace in OSIsoft.

impact of exceptional cash flows, was 68.2%

This was caused by a year-on-year increase in

adjusted profit.

(FY20: 85.2%).

Adjusted diluted EPS is a performance element

Recurring revenue is included as a metric

Cash conversion is a personal objective for

within the Group’s LTIP schemes.

within the Group bonus scheme.

the CFO, and H1 cash conversion formed part

of the Group bonus scheme.

KEY PERFORMANCE INDICATORS

How we measure our progress

Our KPIs measure performance against our strategy and highlight progress towards
longer-term goals.

Financial measures

Total revenue growth1
Total revenue growth1

Adjusted EBIT margin
Adjusted EBIT margin

Our financial KPIs are centred around growing
our revenues and improving our revenue mix,
improving earnings growth for our shareholders,
and generating sustainable cash flows. For further
commentary see the Finance Review on pages
48 to 53.

(1.6)%
(1.6)%

(FY20: 8.8%)
(FY20: 8.8%)

27.6%
27.6%

(FY20: 26.0%)
(FY20: 26.0%)

Performance

FY21

FY20

FY19

FY18

(1.6)%

FY21

8.8%

FY20

57.6%

FY19

n/a

FY18

27.6%

26.0%

22.9%

22.2%

Why it is important to us

Revenue is a measure of our business growth.

Adjusted EBIT margin is a measure of our
profitability and the efficiency of our operations.

What has happened during the year

How it aligns to strategic pillars

Link to remuneration

Non-financial measures

Our non-financial KPIs track our transition to a
Cloud business, our commitment to D&I, and us
giving back to wider communities.

Performance

Why it is important to us

What has happened during the year

How it aligns to strategic pillars

Link to remuneration

Annual Report 2021 | aveva.com

Revenue declined as a result of disruption
caused by the Covid-19 pandemic.
Strengthening GBP negatively impacted
revenue, offset by £17.4 million contributed
by OSIsoft since acquisition. Revenue growth on
an organic constant currency basis was 0.1%.

Pro forma4 organic constant currency revenue
growth was 2.2%, driven by improved OSIsoft
performance year-on-year.

Adjusted EBIT margin increased as a result of
tighter cost control and reduced travel due to
Covid-19.

Pro forma4 adjusted EBIT margin was 29.7%
(FY20: 27.0%), driven by a combination of cost
savings arising due to Covid-19 and OSIsoft
revenue growth.

Recurring revenue is included as a metric within
the Group bonus scheme.

Total revenue growth is also a performance
element within the Group’s LTIP schemes.

Adjusted EBIT margin is not a direct target
within any remuneration package. However,
adjusted EBIT is a performance element within
the Group bonus scheme.

AVEVA Action for Good days
AVEVA Action for Good days

Women as percent of
Women as a percentage of
all new hires3
all new hires3

XX
469

(FY20: 1,536)
(FY20: 1,536)

FY21

FY20

FY19

FY18

34.3%
34.3%

(FY20: 30.8%)
(FY20: 30.8%)

469

FY21

1,536

FY20

FY19

FY18

34.3%

30.8%

33.0%

n/a

We are committed to donating 1% of net
profits each year to charitable causes through
AVEVA Action for Good, either through paid
time off for our employees to spend on
charitable activities, or direct donation.

As a result of Covid-19 and lockdowns being
in place globally, the opportunities for our
employees to take paid days off for charitable
activities have been reduced. This will be offset
by an increase in charitable donations.

We are committed to encouraging and
supporting women in all areas of our business.
We aim to increase the proportion of women
in our workforce every year.

26.5% of our employees are women as at
31 March 2021. This is up from 25.8% in FY20.

New Cloud customers4

New Cloud customers

220

(FY20: 98)

FY21

FY20

FY19

FY18

220

We are transitioning to a Cloud-based,

business model. New Cloud customers is

a measure of how rapidly this transition

is occurring.

Demand was good, with an increasing number

of customers signed up to SaaS and customer

hosted Cloud products.

An increase in the number of AVEVA Action
for Good days was a personal objective for
the CEO in FY21.

D&I was a personal objective for the CEO
in FY21.

New customer wins in Cloud and growth

in Cloud orders was a personal objective for

the CEO in FY21.

Financial measures

Our financial KPIs are centred around growing

our revenues and improving our revenue mix,

improving earnings growth for our shareholders,

and generating sustainable cash flows. For further

commentary see the Finance Review on pages

48 to 53.

Performance

Total revenue growth1

Adjusted EBIT margin

(1.6)%

(FY20: 8.8%)

FY21

FY20

FY19

FY18

27.6%

(FY20: 26.0%)

(1.6)%

FY21

8.8%

FY20

57.6%

FY19

n/a

FY18

Why it is important to us

Revenue is a measure of our business growth.

Adjusted EBIT margin is a measure of our

profitability and the efficiency of our operations.

What has happened during the year

Revenue declined as a result of disruption

Adjusted EBIT margin increased as a result of

caused by the Covid-19 pandemic.

tighter cost control and reduced travel due to

Strengthening GBP negatively impacted

Covid-19.

revenue, offset by £17.4 million contributed

by OSIsoft since acquisition. Revenue growth on

an organic constant currency basis was 0.1%.

Pro forma4 adjusted EBIT margin was 29.7%

(FY20: 27.0%), driven by a combination of cost

savings arising due to Covid-19 and OSIsoft

Pro forma4 organic constant currency revenue

revenue growth.

growth was 2.2%, driven by improved OSIsoft

performance year-on-year.

How it aligns to strategic pillars

Link to remuneration

Recurring revenue is included as a metric within

Adjusted EBIT margin is not a direct target

the Group bonus scheme.

Total revenue growth is also a performance

element within the Group’s LTIP schemes.

within any remuneration package. However,

adjusted EBIT is a performance element within

the Group bonus scheme.

Non-financial measures

Our non-financial KPIs track our transition to a

Cloud business, our commitment to D&I, and us

giving back to wider communities.

Performance

469

(FY20: 1,536)

FY21

FY20

FY19

FY18

all new hires3

34.3%

(FY20: 30.8%)

469

FY21

1,536

FY20

FY19

FY18

Why it is important to us

We are committed to donating 1% of net

We are committed to encouraging and

profits each year to charitable causes through

supporting women in all areas of our business.

AVEVA Action for Good, either through paid

We aim to increase the proportion of women

time off for our employees to spend on

charitable activities, or direct donation.

in our workforce every year.

What has happened during the year

As a result of Covid-19 and lockdowns being

26.5% of our employees are women as at

in place globally, the opportunities for our

31 March 2021. This is up from 25.8% in FY20.

How it aligns to strategic pillars

employees to take paid days off for charitable

activities have been reduced. This will be offset

by an increase in charitable donations.

27.6%

26.0%

22.9%

22.2%

34.3%

30.8%

33.0%

n/a

Growth in adjusted
Growth in adjusted
diluted EPS2
diluted EPS2

(6.3)%
(6.3)%

(FY20: 24.9%)
(FY20: 24.9%)

FY21

FY20

FY19

FY18

Recurring revenue as a
Recurring revenue as a
proportion of total revenue
proportion of total revenue

67.9%
67.9%

(FY20: 62.2%)
(FY20: 62.2%)

Cash conversion
Cash conversion

40.3%
40.3%

(FY20: 74.4%)
(FY20: 74.4%)

(6.3)%

FY21

24.9%

FY20

21.3%

FY19

5.9%

FY18

67.9%

FY21

62.2%

FY20

53.8%

FY19

42.4%

FY18

40.3%

74.4%

96.1%

84.4%

Adjusted diluted EPS is a measure of
shareholder earnings growth, and is important
as the Group aims to maintain a progressive
dividend policy.

Recurring revenue is revenue earned from
customers for the provision of goods over a
contractual term, where future contract renewal
is required for ongoing use of the product.

Cash conversion tracks whether profitability
is effectively being converted into cash for use in
future operations or as a return to shareholders.

Adjusted diluted EPS declined principally as a
result of an increase in issued ordinary shares
following the November 2020 rights issue,
offsetting an increase in adjusted EBIT
year-on-year.

Pro forma4 adjusted diluted EPS was
105.3p (FY20: 94.1p), an increase of 11.9%.
This was caused by a year-on-year increase in
adjusted profit.

Recurring revenue increased due to strong
growth in subscriptions revenue.

Pro forma4 recurring revenue was 66.9% of
total pro forma revenue (FY20: 61.2%),
increasing because of good subscription
performance in AVEVA, and subscription and
maintenance performace in OSIsoft.

Cash conversion declined significantly, due to
operating cash outflows on exceptional items of
£63.2 million (FY20: £23.3 million) and the
timing of revenue recognition on multi-year
subscription contracts.

Underlying cash conversion, which excludes the
impact of exceptional cash flows, was 68.2%
(FY20: 85.2%).

Adjusted diluted EPS is a performance element
within the Group’s LTIP schemes.

Recurring revenue is included as a metric
within the Group bonus scheme.

Cash conversion is a personal objective for
the CFO, and H1 cash conversion formed part
of the Group bonus scheme.

AVEVA Action for Good days

Women as percent of

Women as a percentage of

New Cloud customers4
New Cloud customers

Link to strategic pillars

220
220

(FY20: 98)
(FY20: 98)

FY21

FY20

FY19

FY18

220

We are transitioning to a Cloud-based,
business model. New Cloud customers is
a measure of how rapidly this transition
is occurring.

Demand was good, with an increasing number
of customers signed up to SaaS and customer
hosted Cloud products.

Link to remuneration

An increase in the number of AVEVA Action

D&I was a personal objective for the CEO

for Good days was a personal objective for

in FY21.

the CEO in FY21.

New customer wins in Cloud and growth
in Cloud orders was a personal objective for
the CEO in FY21.

Digital Transformation

Innovation

Commercial Transition

Expansion & Diversification

Operational Improvements

1. During FY18, heritage AVEVA merged with SES. Therefore, FY18 did not represent a full year of

revenue from the enlarged Group and this data is not presented.

2. As a result of the November 2020 rights issue, all comparative EPS figures have been restated to

reflect a bonus factor of 0.80.

3. 2018 data is unavailable. Excludes OSIsoft employees joining AVEVA as part of the OSIsoft acquisition.

4. Pro forma results represent the combined results for AVEVA and OSIsoft as if the acquisition and

associated financing has occured on 1 April 2019.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUSTAINABILITY

The AVEVA approach

Exemplifying environmental
stewardship and ethical
business across our value
chain

Following the disruption in 2020
to markets, society and economies,
there is now a growing momentum and
renewed will to build back better and
drive innovation for a more sustainable
future. Global industries have already
been forced to pivot to new ways of
working to ensure continual and safe
operations during the pandemic. They
have had to adjust and localise supply
chains, re-evaluate assets, upskill
employees and accelerate the
digitisation of key business processes
simply to continue operating during
periods of lockdown.

Annual Report 2021 | aveva.com

Transforming the energy
efﬁciency, circularity,
traceability and resilience
of worldwide industries via
secure software

Enabling a culture of
inclusion, wellbeing and
opportunity for our people
and communities

At AVEVA, we are well positioned
to support sustainable digital
transformation. We are proud to
be working closely with some of the
world’s most sustainable companies to
optimise business agility and accelerate
sustainability ambitions while creating
lasting value for all stakeholders.
We recognise the importance of the
environmental, social and governance
aspects of business performance,
including their impact on creating
long-term sustainable value. We are
pleased to have joined the UN Global
Compact as a Participant member in
FY21, and look forward to collaborating
with other members who share
our values.

Our Environmental, Social and Governance
(ESG) framework

To inform our areas of focus and advance our work
on setting enterprise-wide sustainability goals, we
conducted a detailed assessment to determine the
ESG issues that are most material to our business.
These issues align to the three pillars of our sustainability
framework, which we call our technology handprint,
our operational footprint and our inclusive culture.

Our technology handprint is the positive environmental, operational and social impact that our
products can offer our customers. As a technology leader, this handprint is where we believe we have
the biggest opportunity to make a positive global impact, including by helping our customers reduce their
greenhouse gas emissions. We are committed to demonstrating we are a trusted and secure software
partner who can enable new levels of energy efficiency, circularity, traceability and resilience for industries
worldwide (see pages 30 to 31).

TECHNOLOGY
HANDPRINT

We define our operational footprint as our efforts to demonstrate ethical business practices and
manage the environmental impacts of our operations in line with the highest standards. We aspire
to lead by example on how we measure and reduce our own GHG emissions and are committed to
minimising our use of all natural resources. We are also focused on strengthening our resilience and
mitigating risks as part of our work to indicate climate leadership (see page 32 to 33).

OPERATIONAL
FOOTPRINT

As a company, we are passionate about embracing and supporting a diverse, equitable and inclusive
culture for our people and communities around the world. In addition to our employee-led support
networks, we have a comprehensive diversity and inclusion action plan in place (see pages 34 to 35).
We are committed to ensuring all our colleagues feel a sense of belonging and wellbeing (see page 56).
Through our various giveback initiatives and the Action for Good programme, we strive to share those
core values with our communities (see page 56).

INCLUSIVE
CULTURE

We look forward to sharing more details on
our materiality assessment, strategic framework,
goal-setting process and contributions to the
United Nations Sustainable Development Goals
(SDGs) in our upcoming Sustainability Report,
to be published later in 2021.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUSTAINABILITY CONTINUED

Our technology handprint

We aspire to being part of a world where economic growth supports
environmental sustainability, with better living standards for all.
Our software has been driving sustainable outcomes for our
customers for decades. However, in recent years we have seen an
increasing desire among our customers to apply our technology to
transform the environmental and social impacts of their business.

Understanding our customers’ sustainability drivers

Our stakeholders and customers cite three main recurring themes which are driving their sustainability agendas:

Tackling climate change and advancing the transition to
low-carbon energy sources

Boosting circularity and moving away from ‘take-make-
waste’ business models

Enhancing resilience and traceability in their operations
and supply chains

Our software enables
these transitions, and we
are working with forward-
thinking businesses to
deliver against measurable
sustainability goals and
meet planetary needs.

Supporting our customers’ energy-transition journeys

Optimising biofuels production
Neste, the world’s leading producer of
renewable diesel and sustainable aviation fuel,
uses AVEVA Unified Supply Chain in the Cloud
to drive efficiency and share best practices
across its global team.

Supporting renewable
energy generation
Our design software is used in the construction
of top-sides for offshore windfarms, including
Ørsted’s North America South Fork Wind project
and Schlattner’s North Sea projects.

Advancing the hydrogen economy
Numerous engineering, procurement and
construction companies, including Technip
Energies and Wood Group, use our design
tools to support energy-transition technologies
including the production of green hydrogen.

Enabling power grids to cope
with intermittent supply
Spanish power leader Sener’s Noor Complex
in Morocco uses AVEVA Predictive Analytics to
optimise the performance of the world’s largest
thermosolar complex.

Annual Report 2021 | aveva.com

OPER ATIONAL
FOOTPRINT

TECHNOLOGY
HANDPRINT

SUSTAINABILIT Y

INCLUSIVE
CULTURE

Our technology and the Global Goals

Beyond enabling the global transition to a lower-carbon energy system, our software solutions are being used to help to make progress on
meeting the world’s most pressing sustainability challenges, as articulated by the United Nations Sustainable Development Goals.

Veolia Water Technologies, global leaders
in optimised resource management, use our
software to support agile collaboration in the Cloud.
AVEVA Connect helps boost collaboration by 20%,
empowering teams to leverage centralised real-time
data to enhance operational efficiency, share best
practices and accelerate sustainable performance.
Veolia maximises each drop of water produced by
harnessing their collective expertise with unified data.

Ballard Power Systems, a leading global provider
of innovative clean-energy solutions, was looking to
build a standardised, scalable model to enable remote
monitoring, diagnostics and optimisation of fuel cells in
the field. To do so, it leveraged AVEVA’s Cloud-based
Insight solution, empowering its team to visualise
and analyse fuel-cell performance across its entire
operational fleet around the world.

Global leaders in consumer goods and chemicals,
Henkel uses AVEVA Manufacturing Execution System
to realise the sustainability goals of its Laundry and
Home Care division. Working closely with us, Henkel
built a digital backbone that connects its global
operations in a proprietary Cloud system, unifying
1.5 billion data points to help optimise energy and
resource efficiency. This contributes directly to Henkel’s
climate-positive ambitions, reducing energy usage by
16% in just six years. This is equivalent to EUR 8 million
in savings each year.

The City of Seattle uses AVEVA software to gather
data from across diverse municipal systems. During the
pandemic, the city’s authorities needed teams and
processes to be seamlessly connected to drive resiliency
and agile decision-making. Using AVEVA software, the
team was able to centralise technology operations data,
enabling the authorities to transition to almost 100%
remote operations early in the outbreak. As a result,
thousands of critical employees were able to keep the
city services functioning safely and seamlessly,
supporting citizens on the frontline of the crisis.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUSTAINABILITY CONTINUED

Our operational footprint

We are committed to measuring and mitigating our environmental
footprint by continuing to adapt to a more sustainable operating model.
This includes minimising our carbon emissions, improving the sustainable
use of our real estate and working with our people to find ways of reducing
our use of valuable natural resources. One way we measure our footprint
is via our greenhouse gas (GHG) emissions across Scopes 1, 2 and 3.

Tonnes of CO2e

Scope 1 – Combustion of fuel from direct operation of facilities

Scope 2 – Electricity, heat, steam, and cooling purchased for own use

Scope 3 – Mainly business travel

Intensity measurement

Tonnes CO2e/£m revenue
Energy consumption / mWh

Energy used to calculate CO2e

FY21

UK & offshore

167

322

505

FY21
Other

645

4,081

630

5,356

FY20
UK & offshore

FY20
Other

202

521

4,790

5,513

1,013

7,686

13,975

22,674

12.7

6.9

145.8

28.5

2,169

13,402

2,892

19,469

Note 1: FY20 numbers have been restated. This is due to changes in the emission factors used, as well as updates to the energy consumption figures.

Note 2: Data relating to OSIsoft was unavailable due to the transaction completing near the end of the reporting period. We will report on this in FY22.

FY21 emissions data
For the purposes of reporting emissions data, we
use an operational control approach to define our
organisational boundary. We also currently take a
location-based approach to reporting our Scope 2
emissions results. Our GHG emissions fell by just over
79% compared to FY20, primarily driven by a 97%
reduction in Scope 3 emissions. By comparison, our
Scope 1 emissions declined by 33% and Scope 2
emissions by 46%.

The primary driver of these reductions was the
significant change in working practices that resulted
from the Covid-19 pandemic. As our employees’
safety and wellbeing is our greatest priority, we
pivoted swiftly to a remote working model for all
employees in March 2020. The majority of our
workforce continued to work remotely for the
remainder of the calendar year. Emissions associated
with business travel, air travel in particular, fell due
to the shift to a digital format of customer marketing
events and customer support work, including
software training and implementation projects.

Despite the scale of the global pandemic’s impact
on our emissions, we have also made further efforts
to manage and mitigate our emissions footprint.
These include, wherever possible, starting the active
transition of our offices to renewable energy sources.

As an example, we partnered with our UK energy
broker to join an Optimal Green portfolio that
powers our Head Office in Cambridge and offices in
Chesterfield and Manchester. This provides electricity
from renewable energy sources with zero carbon
emissions and is certified as 100% renewable by
the Carbon Trust.

We also aim to find buildings with best-in-class
energy ratings when sourcing new office locations.
For example, our office in Brisbane, Australia
is the first building in Queensland to achieve
a WELL Platinum rating. It has achieved 74%
savings in embodied carbon, energy reductions of
46% and a 29% reduction in water consumption.

We also focus on ensuring new offices are as close
as possible to public transport networks. In parallel,
we are retrofitting legacy office space to bring it
into line with appropriate sustainability standards
wherever possible. We remain committed to doing
more over time to achieve model environmental
stewardship, from recycling to reducing waste and
sourcing environmentally conscious products for our
offices. We have also launched a ‘Dynamic Work’
project, to review how we can optimise remote and
office-based working in the future, including better
support for our environmental objectives.

GHG emissions
down

79%

Scope 1 emissions
reduced by

33%

Scope 2 emissions
reduced by

46%

Scope 3 emissions
reduced by

97%

Annual Report 2021 | aveva.com

Continuously improving our
GHG reporting
AVEVA is committed to continuously improving
our GHG emissions reporting and transparency
and the management of our environmental footprint.
In support of this commitment, working with an
expert third party, we launched a detailed review
of the processes we use to collect and manage
GHG data. The review is also designed to help us
validate our GHG baseline as a step towards setting
the enterprise-wide mitigation targets we aim to
disclose in next year’s Annual Report.

OPER ATIONAL
FOOTPRINT

TECHNOLOGY
HANDPRINT

SUSTAINABILIT Y

INCLUSIVE
CULTURE

As part of this effort, we plan to start dual
reporting for Scope 2 emissions from purchased
electricity. This will involve using both a location-
based (our current approach) and a market-based
approach. Taking a market-based accounting
approach will allow us to track the emissions
associated with the actual electricity products
we buy from the market, including renewable
electricity. We are preparing to expand our
Scope 3 reporting to go beyond the current GHG
Protocol categories of Business Travel to include
other material categories throughout our value
chain, including Employee Commuting, Purchased
Goods and Services, and Use of Sold Products.
We are also engaging directly with our data centre
and Cloud providers to better understand and track
over time the emissions associated with our use
of their services.

In addition, we will report to the Carbon Disclosure
Project (CDP) in FY22. We are also conducting a
Task Force on Climate-related Financial Disclosures
(TCFD) readiness assessment. This will inform
the steps we need to take to better align our
ESG reporting, corporate governance and business
practices with the TCFD recommendations starting
in FY22. It will provide our stakeholders with a
deeper level of insight into our ongoing plans to
address climate-related risks and opportunities.

Modelling ethical business practices
Beyond our environmental stewardship practices,
we are committed to aligning our strategy and
operations with universally-held principles on
human rights, labour, environment and anti-
corruption. We believe that a principled approach
to business and profits go hand in hand, as
outlined in our Business Conduct Guidelines.

Our strong ESG practices were recognised
again this year when we were included in the
FTSE4GOOD Index Series for the fourth consecutive
year. As good governance is key to making progress
on all other sustainability-related objectives, we are
especially proud to have again scored full marks for
corporate governance.

You can find more information on our related practices in
the Governance section.

AVEVA’s Brisbane office is in Queensland’s most sustainable building. The location was selected for its
environmental credentials.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSSUSTAINABILITY CONTINUED

Our inclusive culture

Diversity and inclusion

Our vision is of an ‘inclusive organisational culture’, with a focus on
making the changes that will achieve the biggest positive difference,
such as developing the capabilities of our leaders who have a critical role
in driving the business and enhancing our working culture and creating
a safe space for all employees to have open conversation through
our Employee Support Network groups. We aim to treat people fairly,
equitably and without bias, creating conditions that encourage and value
diversity, and promoting respect, dignity and belonging. We follow and
promote diversity and inclusion legislation, complying with its letter and
spirit, recognising we can continue to improve the employee experience.

In March 2021, we shared our first Global Diversity
and Inclusion policy with all employees, asking them
to take part in comprehensive mandatory training
to support their understanding of the policy. We
continue to make progress on pay equity, reducing
our global gender pay gap by more 430bps in
FY21 and have made significant investments
in understanding our ethnicity pay gap so that we
can begin reporting on it before the end of the year.

Our employee networks play a vital role in raising
awareness, facilitating dialogue, providing feedback
and fostering connections so that all employees have
a clear sense of belonging and purpose. This year,
these networks have enabled us to have open and
candid conversations about diversity, equality and
inclusion, both at a corporate level and among
colleagues. These employee networks will continue
to have a voice as we strive to make a workplace
that is truly equitable.

Ethnicity
AVEVA’s approach to diversity, equity and
inclusion goes beyond a focus on gender.
We are committed to having a better baseline
understanding of our ethnicity pay gap, as we
know that having data is foundational to making
progress. We launched that process this year with
a data collection effort and will be producing our
first-ever ethnicity pay gap report later this year.
This is an important step to understanding the
dynamics of ethnicity and race in AVEVA. We plan
to use its findings to develop an action plan that will
help us to close any gaps and build an inclusive,
equitable culture for everyone.

You can find more information about our people
and communities on pages 54 to 57.

Annual Report 2021 | aveva.com

OPER ATIONAL
FOOTPRINT

TECHNOLOGY
HANDPRINT

SUSTAINABILIT Y

INCLUSIVE
CULTURE

Gender
The overall proportion of female employees in the
workforce is 26.5%, an increase from 25.8% in FY20.

Data we use to measure gender diversity includes
turnover rates, and representation by job level, role
type, starters and leavers.

We have reported the UK gender pay gap since
FY18. In FY21 we introduced reporting in the top 20
AVEVA countries by size.

The overall gender pay gap for AVEVA reduced
globally from 24.7% to 20.4% in FY21, a reduction of
more than four percentage points. This was achieved
by taking a number of steps, including job levelling
that provides transparency in career ladders and
helps management in making equitable hiring and
promotion decisions. We recognise that we still have
more work to do in this area but are committed to
building on the significant progress we have made
this year.

430bps

reduction in our
overall gender pay
gap globally to

20.4%

Summary of gender facts
Male:

73.5%

Female:

26.5%

Manager gender split:
Male:

77.4%

Female:

22.6%

Strategic Leadership Team statistics:
Female:
Male:

68.2%

31.8%

“I am proud that, at AVEVA, we strive to embrace our
differences, leverage the diversity of our people and
be free from bias and favouritism – and do so with the
same great energy that we bring to work every day. I
will do everything I can so that we all feel part of our
journey in creating an inclusive culture and that our
customers, partners and colleagues recognise us for
our aim to excel in diversity, equity and inclusion.”

Peter Herweck, CEO

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSPRINCIPAL RISKS AND UNCERTAINTIES

Management of principal risks and uncertainties

FY21 has seen an overall increase to our risk profile following the completion
of the OSIsoft acquisition, the impact of Covid-19 on our operations and people,
and our ongoing transition to a Cloud business model.

Approach to risk management
The Board of Directors has overall responsibility for risk management
at AVEVA. The CEO also chairs the Executive Risk Committee,
which comprises the Executive team, the Chief Information Officer
(CIO), SVP Integration, the Head of Integration & Transformation
and the Head of Internal Audit & Risk. The Committee meets
formally each quarter with a clear risk-management agenda.
In addition, senior leaders across the business actively monitor
and manage risk as a core part of operational management.

A dedicated risk-management session was held with the Board
during the year, which included reviews of principal risks, emerging
risks and risk appetites. The Audit Committee also reviewed
risk-management processes and governance throughout the year.

Meeting quarterly, the Executive Risk Committee has continued to
make good progress since it was first established in January 2020.
Its main responsibilities are to monitor how principal and key Group
risks are managed and mitigated, and to ensure the effectiveness
of risk management within our functions and business units.

Functional and business-unit leadership teams are responsible for
ensuring their key risks are captured and effectively mitigated as
part of their day-to-day operations.

Executive Risk Committee – core areas covered in the year to March 2021
Principal risks: deep dives
• Regulatory compliance
• Cyber security
• Talent (including pandemic

Other risk areas: deep dives
• Pandemic disruption and remote
working, including impact on
existing principal and key risks

disruption)

• AVEVA licence compliance

• OSIsoft acquisition and integration

and piracy

• Brexit

The diagram represents our 2021 risk governance structure:

Facilitator
Group Risk
Function

Board
Ultimate accountability and oversight for business risk,
risk appetite and controls

Executive Risk Committee
• Accountability for the implementation of risk management
• Develops Group risk register and mitigation plans
• Challenges functional and business unit risk management

Functions

Strategy & business
units

Each functional and business unit leadership team is
responsible for ensuring that its key risks are captured and
are being mitigated within business-as-usual processes

Annual Report 2021 | aveva.com

General reviews
• Principal and key risk

measurements, appetites and
mitigation status
Integration and transformation risks

•
• Sustainability
• Emerging risks

Audit Committee
Responsible for reviewing
the effectiveness of the
Group’s risk management
systems and processes

Strategic Leadership
Team (SLT)
The SLT, chaired by the
CEO, provides oversight
of corporate strategic
risks and business unit
risks and report on status
of these risks to the ERC

Risk appetite
The Board formally sets a risk appetite for each
principal risk. To achieve a balance between
protecting and enhancing value and to support the
Group’s strategic objectives, these appetites range
from ‘Risk Tolerant’ to ‘Risk Averse’. The appetites
also set the necessary tone from the Board for
all enterprise category-related risks across the
Company. For example, the appetites relating to
cyber security and sustainability dictate how these
areas are managed operationally. We use key
risk indicators to show how each principal risk is
measured and reported against its appetite. We
have defined risk appetites for other corporate risks
besides the principal risks, and this is increasing as
we extend the risk-management programme across
the business.

Principal risks
Our Executive team continually assess and monitor
the risks we face as a company. All the risks they
identify are measured on both an inherent and
residual risk basis using predetermined risk scales.
The Board consider 14 risks to be the principal risks
we will face over the next 12 to 18 months.

We use the following four risk category headings
when identifying these risks:

Strategic – risks identified as threats to
our strategic goals and that influence
internal decision-making

External – risks that could materialise
externally and impact on us

Operational – risks that could materially
disrupt our day-to-day operations

Disruptive – risks that threaten our
value offering

Emerging risks
The Board and the Executive Risk Committee
recognise the value of identifying emerging risks
and longer-term threats to our business model.
The Board and the Executive Risk Committee
therefore kept areas of emerging risk under review
during the year. Emerging risks will also be a focus
area for the Executive Risk Committee in the year
ahead. This area will continue to be discussed and
closely monitored alongside principal risks as regular
agenda items.

Brexit
We include a risk for Brexit on the corporate risk
register, and the Executive Risk Committee is keeping
this under review. Brexit is not a principal risk for our
business. Because we are a technology business,
many Brexit-related threats to businesses, such as
labour mobility, supply chain friction and customs
tariffs, do not apply. However, macroeconomic, legal,
tax and regulatory risks do apply, and we therefore
continue to monitor and manage these internally. As
from 31 December 2020, a deal between the UK and
the EU was reached, meaning the risk of a ‘no-deal
Brexit’ did not materialise. Although this deal is
intended to provide certainty for the government of
relationships between the UK and the EU, many of
the risks previously under review in relation to Brexit
still exist. Any changes affecting us therefore require
review and implementation. Some reviews involving
external legal advice are therefore ongoing. Some
actions, such as a review of higher-risk contracts,
will also continue over the coming year.

Key changes in the year
OSIsoft integration – We have added a new principal risk
regarding the acquisition and integration of the OSIsoft
business. The acquisition is transformational and represents
significant financial and operational commitments by the
Board to our stakeholders, as part of a major strategic initiative
executed with a risk-tolerant appetite. As such, we are keeping
the principal risk and key project risks continually under review.
These will be part of standing business for the Executive Risk
Committee and the Board for the year ahead.

Covid-19 pandemic, remote working and operational
resilience – The Covid-19 pandemic remains a significant
global issue. By continuing to create high levels of uncertainty
across the world, it makes it difficult to reach clear risk
management judgements. In light of our proven ability to
operate remotely over the last year, the Board has decided to
remove the dedicated Extended period of remote working
principal risk that we reported in March 2020. The principal
Global economic disruption & declining GDPs risk remains,
however. The Board also considers that the pandemic
continues to impact the existing principal risks relating to
Talent, Cloud, Competitors, Cyclical markets and Customer
cyber attack.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSPRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Our principal risks

We have graded the principal risks below for likelihood and impact on a gross
basis (i.e. without accounting for existing mitigation). They are not presented in
order of priority.

t
c
a
p
m

Probability

Strategic risks

Talent

Subscription

Cloud

Industrial digitalisation strategy

Sustainability

OSIsoft integration

External risks

Competitors

Dependency on cyclical markets

AVEVA software products implicated
in industrial accidents or customer
cyber attack

Cyber attack

Regulatory compliance

Global economic disruption
and declining GDPs

Operational risks

Internal IT systems
(suitability & continuity)

Disruptive risks

Disruptive technologies

Annual Report 2021 | aveva.com

Strategic risks

Talent

Gross probability
High

Gross impact
High

Change in risk level
Increased

Ownership
Chief People Officer

Categorisation

Industry general

Description

Mitigation

At AVEVA, we are heavily reliant on the people
we employ. If we are unable to attract or retain
the niche skills and experience we need to drive
the business forward, creating innovation and
growth, this could materially impact the success
of our business.

The technology sector is increasingly competitive
when seeking talent. The AVEVA brand must
therefore remain attractive, particularly for in-
demand skills such as developers, technical sales,
services, consultants and leadership.

Impacts from the continuing Covid-19 pandemic
have increased this risk. There are now further
challenges involved in protecting, retaining and
acquiring talent during an extended period of
disruption, particularly when continued remote-
working requirements and government restrictions
are in place. Employee wellbeing becomes an
increasing priority.

This risk will grow further with the OSIsoft
acquisition and the additional complexity this brings
to factors including talent bench, retention of key
individuals, competitive compensation and clear
career-development paths. The success of the
integration will depend significantly upon the
enlarged organisation’s ability to engage and retain
critical talent from both heritage organisations
through the integration.

We recruited a new Chief People Officer in January
2021 whose responsibilities include the continued
development of Talent risk mitigation initiatives.

Mitigating activities include building our in-house talent
acquisition expertise, partnerships with universities,
our employee referral programme, evolving our
learning culture, embedding Diversity & Inclusion
practices, investing in our talent management
systems, succession planning, technical and
non-technical training schemes, and compensation
benchmarking. We will also use these actions to
manage Talent risk for the incoming OSIsoft business.

We have responded to increased Talent risk caused
by the Covid-19 pandemic with multiple additional
mitigations; these include virtual interview rooms
and on-boarding to support new hires and investing
significantly in wellbeing initiatives to support our
employees. Throughout the period of disruption,
our leadership has continually supported and
communicated with employees, enabling them and
providing the tools to work remotely as effectively
as possible while staying connected with colleagues
and customers. Our HR and Executive Leadership
teams are continually reviewing the best approaches.

To support these mitigations, we also operate a
comprehensive employee-engagement programme.
Detailed reporting on it is frequently reviewed and
discussed by the CEO and senior leadership.

We continually endeavour to ensure that employees
are appropriately recognised for their contributions
to AVEVA’s success. There is an annual Group-wide
salary review that rewards strong performance
and ensures salaries remain competitive. Both short
and long-term incentives along with commission
schemes are deployed to reward individual
achievement appropriately.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSPRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Strategic risks

Subscription

Gross probability
Medium

Gross impact
Medium

Change in risk level
No change

Ownership
Chief Strategy &
Chief Cloud Officer

Categorisation

Industry general
and company
specific

Cloud

Gross probability
High

Gross impact
High

Change in risk level
Increased

Ownership
Chief Strategy &
Chief Cloud Officer

Categorisation

Industry general
and company
specific

Description

Mitigation

Our continued strategic move towards a
subscription-based licence model is designed
to offer customers improved flexibility when
addressing their software needs; it also creates
improved recurring revenue and cash flow
generation for our business.

Customers may be reluctant to move to a
subscription model or they may transition at a
slower pace than anticipated. This is more likely
during and following the Covid-19 pandemic.
The level and pace of adoption of a subscription
model are also likely to vary by customer, industry
and product area. In addition, we might experience
internal challenges in presenting customers with
an effective subscription value offering.

Should any of these areas of risk be realised, we
might fail to achieve expected key milestones for
the subscription model.

We are committed to providing market-leading,
value-adding, reliable and secure Cloud services
to our customers. We therefore invest continually
in this fundamental strategic initiative.

The global disruption and remote working caused
by the Covid-19 pandemic has accelerated industry
shifts to the Cloud. This has in turn accelerated
internal development, changing the dynamic of
this risk. In addition, security is also a critical concern
when providing Cloud services to customers, posing
significant risk which we must manage effectively.

If these risks are not managed well, they both
threaten our ability to realise anticipated returns
from Cloud initiatives and pose the threat of harmful
reputational damage.

We are keen to gain the benefits of the wider
adoption of subscription-based licensing and to
bring our customers the benefits of this model.
The Engineering business unit has had a subscription
offering for many years and we will use our
experience to develop subscription offerings for the
other business units. We have successfully trialled
the subscription model with our Monitoring &
Control business unit and have also introduced
subscription offerings into Asset Performance
Management and Planning & Operations.

We have launched additional operational and
transformational – yet highly complementary –
initiatives to further strengthen the success of
the subscription programme. Examples include
investments into master data management,
pricing and enterprise information management.

Management continually reviews progress
and refines the model where necessary, and
continues to offer traditional licensing models
as further mitigation.

Within the last year, we announced the
appointment of both a Chief Cloud Officer and a
Cloud Senior Vice President. They are collectively
responsible for driving our Cloud portfolio and
go-to-market strategy.

To support the growing Cloud demand and make
sure AVEVA Cloud has the capability to scale and
act fast on steadily changing market dynamics, we
launched a multi-year transformation programme
touching all angles of our business.

Consequently, we are investing significantly into
Cloud products and operations across all business
units and functions. Incentive models across the
Company have changed to support the focus on
Cloud sales and the recognition of our new Cloud
subscription business.

Together with OSIsoft, we have a strong position in
Cloud, AI and data, which are the main drivers
of the digital transformation our customers
are undergoing.

To protect our customers and offer best in class
availability and security, we have established
rigorous test and continuity routines before any
product can be launched.

Annual Report 2021 | aveva.com

Strategic risks

Industrial
digitalisation
strategy

Gross probability
Medium

Gross impact
High

Change in risk level
No change

Ownership
Executive VP,
Engineering &
Process Business &
Executive VP
Operations
Business

Categorisation

Industry general

Sustainability

Gross probability
Medium

Gross impact
Medium

Change in risk level
No change

Ownership
Chief Sustainability
& Chief Marketing
Officer

Categorisation

Industry general
and company
specific

Description

Mitigation

We mitigate this risk through the careful
management of the right digital transformation
strategy. We also have a dedicated Sales and
Consulting team in place, as well as targeted
marketing campaigns, continued portfolio
rationalisation and case prioritisation.

If our strategy to capitalise on the opportunities of
digital transformation were ultimately to fail or not
provide the expected levels of return, it could lead
to increased costs, reputational damage or lost
market positions.

The move towards digitalisation has accelerated
within the last 12 months where customers have
understood and accepted the need to transform.
However, continued Capex and Opex constraints
dampen this acceleration. Subsequently, there is no
net change expected in this risk level for our
business over the next 12 months.

The increasing international focus on sustainability,
and growing stakeholder expectations relating to
how companies manage Environmental, Social and
Governance (ESG) issues, are exposing AVEVA to
increased risk in a number of areas.

The penalties of failure to meet generally
accepted standards on material ESG issues or the
expectations of customers, partners, employees,
investors or any other stakeholders can be serious.
They can adversely impact a company’s reputation,
putting sales growth at risk, undermining efforts
to hire and retain top talent, and complicating
the ability to build partnerships and attract
outside investment.

Many of our customers are transitioning to business
models aligned with long-term sustainability
objectives, including managing climate risk through
decarbonisation and circularity strategies. Some
customers that have not taken such action have
experienced reduced financial investment and
economic loss, impacting their ability to buy AVEVA
solutions. To protect our business against any
resulting reductions in revenue or loss of market
share, it is part of our climate risk and resilience
strategy to invest in product-focused sustainability
and industry diversification.

We have established a dedicated sustainability
team, led by a Director of Sustainability, which
is responsible for working cross-functionally
to develop a strategic ESG framework with
measurable goals. As a first step, we have now
completed a robust ESG materiality assessment,
and are working to prioritise issues and set targets.

In August 2020, we held a ‘Sustainability Jam’ for
employees, enabling them to come together virtually
to propose and discuss sustainability ideas relating
to our products and operations. We also launched
a Sustainability Customer Advisory Board in
November. This brings together sustainability
leaders from across the energy, power, utilities,
chemicals, food & beverage and consumer
packaged goods (CPG) sectors for cross-industry
dialogue on sustainability priorities.

To better understand and address our climate-
related risk, we are currently conducting a detailed
review of our greenhouse gas reporting processes
and baseline data. We will also complete a Task
Force on Climate-related Financial Disclosures
(TCFD) gap assessment in FY22.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSPRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Strategic risks

OSIsoft
integration

Gross probability
High

Gross impact
High

Change in risk level
New

Ownership
SVP Integration

Categorisation

Company specific

External risks

Competitors

Gross probability
High

Gross impact
High

Change in risk level
Increased

Ownership
Chief Strategy &
Chief Cloud Officer

Categorisation

Industry general

Description

Mitigation

The acquisition of OSIsoft involves the integration
of two businesses that have previously operated
independently. There are specific areas of risk which
could lead to financial and/or reputational impacts,
or threaten the anticipated revenue and cost-synergy
benefits of the acquisition. These include the
challenges of consolidating organisations, systems
and facilities and the potential disruption to our
current businesses. Integrations of this scale raise
the risks of unplanned talent attrition, reduced morale
and engagement, increased by the complexity of
integrating two successful cultures to ensure continued
focus on delivering and improving our customer
and partner value. These challenges also risk our
transformation to Cloud and a subscription-based
licence model and our ability to realise revenue and
cost synergies from the enlarged Group.

We are proactively addressing these risks by
building on our capability from the previous
combination between heritage AVEVA and SES.
We have supplemented this by recruiting an
experienced SVP of Integration and establishing a
programme and governance to drive the right
decisions focused on value; value to customers and
partners in the form of accelerating combined
technology capabilities, value for our talent in the
form of a larger, more exciting organisation and
value for our shareholders through detailed planning
to deliver on revenue and cost synergies.

As part of this decision focused programme, we have
established cross organisation workstreams between
all major and enabling functions impacted by the
integration. We have designed and deployed talent
retention programmes, including a culture integration
programme that will drive a combined culture to bring
our people together in a way that targets growth. Our
Product and Portfolio teams are working together to
accelerate our ambitions for Cloud to support a
subscription-based revenue model.

We have supported all of these programmes with a
comprehensive communications plan, allowing us to
be transparent and flexible in adjusting our
programme quickly based on feedback from
customers, partners and our people.

We operate in highly competitive markets. Other
technology companies could acquire, merge or move
into our market space to compete with our offering,
creating a material threat. Existing competitors
could respond more quickly to market demands
and trends, resulting in reduced market share and
missed growth opportunities for us. The industry
in which we operate is characterised to varying
degrees by rapid technological change, evolving
industry standards, evolving business models
and consolidations.

Risks are increased by the continued uncertainty in
the marketplace caused by the Covid-19 pandemic.
It is likely that changing competitor strategies or
industry consolidations could have a negative
impact on us. This is due to increased pricing
pressure, cost increases, the loss of market share
due to competitor collaboration and a consequent
reduction in our ability to integrate solutions.

We carefully monitor customer requirements, trends
and other suppliers operating within our chosen
markets. We invest in innovation and strive to offer
superior products to meet market trends.

The acquisition of OSIsoft will further mitigate this
risk. Integrating and aligning the product portfolios
of both organisations will provide us with a distinct
competitive advantage and market position.

We also now have a dedicated Cloud business,
supporting our portfolio with integrated Cloud-
based solutions, which has made significant
progress in the last year.

Other areas of specific mitigation include the ability
to leverage our relationship with Schneider Electric,
attractive proposals for additional complementary
products for existing customers and the flexibility
to meet changing market demands and
competitive forces.

Annual Report 2021 | aveva.com

Description

Mitigation

We materially derive our revenue from customers
operating in markets which are mainly cyclical in
nature, such as Oil & Gas and Marine. As and when
those markets reach downturn stages, customers
may have less funding available for capital projects
or additional operational commitments, including the
purchase of our software products. Significant end
market downturns could therefore materially impact
our revenues and profits.

The global disruption caused by the Covid-19
pandemic has led to volatility in oil markets and
consequently to companies in our customer base.
A longer period of volatility further increases the
risk of revenue impacts. Several oil companies
have already announced reductions in capital
expenditure, particularly in relation to upstream
projects. These are due to the sharp fall in oil
consumption in late 2020 and the oversupply
of crude oil during April and May 2020.

We believe there is a slight decrease in this risk for
our business over the next 12 months given the
dilution effect of cyclical markets dependency created
by the OSIsoft acquisition and continued pre-existing
initiatives to expand into non-cyclical markets.

Our software products are complex. New products
or enhancements may contain undetected errors,
failures, performance problems or other defects.
Such occurrences may impact our strong
reputation with our customers and/or create
financial implications.

This risk reflects our portfolio of products, their
functionality and increasing threats in the external
cyber environment. While there is no change
currently in the threat level since last year, the
risk may grow during the year ahead following
the successful acquisition of the OSIsoft business.
This would reflect our larger product portfolio, the
associated complexity and our increased size.

Because our products bring customers Capex
certainty and Opex reduction, they deliver
meaningful efficiency gains during periods
of downturn.

Our extensive global presence also provides
mitigation against over-reliance on key
geographic markets.

We derive over half of our revenue from customers
operating in non-cyclical markets such as Food &
Beverages, Utilities and Infrastructure markets
(such as airports and smart cities). The integration of
OSIsoft will further reduce this risk due to the further
dilution provided by the OSIsoft customer base.

Our strategic move towards a subscription-based
licensing model further mitigates this risk, because
it can offer customers greater flexibility over their
expenditure. There is also the opportunity for further
leveraging Schneider Electric relationships into
non-cyclical markets.

Our products are extensively tested prior to
commercial launch. A robust Security Development
Lifecycle is also a key component of our overall
software-development process. In addition, we
have created formal and collaborative relationships
with third-party security researchers and security
organisations to proactively ensure our software is
as safe and secure as is reasonable. Dependent
upon successful acquisition, we will extend these
existing mitigations to the OSIsoft business as part
of our integration activities.

External risks

Dependency
on cyclical
markets

Gross probability
High

Gross impact
High

Change in risk level
Decreased

Ownership
Chief Strategy &
Chief Cloud Officer

Categorisation

Company specific

AVEVA
products
implicated in
industrial
accidents or
customer cyber
attack

Gross probability
Medium

Gross impact
Medium

Change in risk level
No change

Ownership
Chief Technology
Officer

Categorisation

Industry general

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSPRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

External risks

Cyber attack

Gross probability
High

Gross impact
High

Change in risk level
No change

Ownership
Chief Information
Officer

Categorisation

Industry general

Regulatory
compliance

Gross probability
High

Gross impact
High

Change in risk level
Increased

Ownership
Group General
Counsel and
Company Secretary

Categorisation

Industry general

Description

Mitigation

Threats within the global cyber environment
continue to grow. We are reliant on our IT systems,
and should we be specifically targeted by a cyber
attack or impacted by a global cyber incident,
impacts could include:

• suspension of some operations;
• regulatory breaches and fines;
• reputational damage;
•
•

loss of customer and employee information; and
loss of customer or other stakeholder confidence.

The risk remains increased partly due to higher
cyber threats associated with remote working
because of the Covid-19 pandemic. There is also
a closer focus on our organisation, due to the
acquisition of the OSIsoft business.

We have a low tolerance to this risk. We have
in place multiple layers of cyber-security threat
defences, including access control, encryption,
firewalls and more. We use these security measures
to detect and prevent cyber attacks. To the greatest
possible extent, we also use them to mitigate the
impact of any successful attacks.

External penetration testing is also conducted
across our critical corporate and online services.

Further steps have also been taken to increase
security measures while our workforce is operating
remotely. These will now permanently remain
in place.

We are required to comply with international
and local laws in each of the jurisdictions in which
we operate. If one or more of our employees or
anyone acting on our behalf commit or are alleged
to have committed a violation of law, we could
face substantial investigative, defence and/or
remediation costs. We could also be exposed to
severe financial penalties and reputational damage.

This applies to several specific regulatory risk
areas, including:

• trade compliance (including sanctions and export

control);

• data protection and privacy (including GDPR);
• anti-trust;
• anti-bribery and corruption, covering corporate

gifts and hospitality;

• failure to prevent facilitation of tax evasion;
• anti-money laundering;
• related party transactions; and
•

insider dealing and market abuse regulations.

This risk may grow during the year due to
the acquisition of the OSIsoft business, as a result of
the inherent risk associated with the acquisition of a
business with 27 offices across 18 countries.

We use compliance policies and guidance materials
plus clear communications and training platforms
for all employees and external partners.

Local management is supported by local
professional advisers. Further oversight is
maintained by the corporate legal and finance
functions, which regularly receive support from
external advisers, in particular with regard to risk
assessment, which is periodically carried out on key
areas of exposure to compliance risk.

We have dedicated compliance resources, including
software and people, within our organisation to
enhance the management and monitoring of this
principal risk.

We carry out due diligence on all contractual
counterparties, whether suppliers, customers,
advisers, consultants, intermediaries or
counterparties to corporate transactions.

We conduct periodic, risk-based monitoring in
relation to matters relating to compliance risk.

Annual Report 2021 | aveva.com

External risks

Global
economic
disruption and
declining GDPs

Gross probability
High

Gross impact
High

Change in risk level
No change

Ownership
Chief Strategy
Officer & Chief
Cloud Officer

Categorisation

Industry general

Description

Mitigation

We remain in a strong cash and financial position.
Our leadership continues to review this and is
prepared to take mitigating steps as and when
considered necessary. Recent examples include
employee pay and recruitment freezes and cuts to
discretionary spending.

Further, our products deliver Capex certainty
and Opex reduction. They therefore deliver
meaningful efficiency in periods of economic
and trading disruption.

Because of the Covid-19 pandemic, like many global
companies we now operate in an international
environment where there is continued economic
disruption and declining GDPs. This could have
many impacts, including significantly decreased
demand for our products and services, unexpected
disruptions in the industries we serve or limited
access to funding.

Affected customers may seek to minimise their
expenditure by seeking to terminate subscriptions
or licence arrangements. They may also seek to
renegotiate or delay previously agreed payment
dates. Customers may also be more cautious and
take more time to make purchase decisions.

Although we expect stability in certain geographical
markets, we also anticipate continued disruption in
other geographies over the next 12 months and in
Asia Pacific specifically. Overall, we see no change
in risk level.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSPRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Description

Mitigation

We rely on our many IT systems to sustain our
day-to-day operations and to meet our customers’
expectations. If these systems fail to operate
effectively and efficiently, this could result in
reputational damage, negative employee
engagement and/or poor customer experiences.

This remains a high risk for us, reflecting the range
of legacy systems in our IT estate. It also reflects the
ongoing significant initiatives that are in place to
consolidate, improve, create competitive advantage
and maintain business as usual processes. These
include the continued implementation of a new
Group-wide ERP system. This is further complicated
by the IT estate that we have inherited with the
OSIsoft acquisition. These initiatives are subject to
delays and other operational challenges caused by
the continuing Covid-19 pandemic.

We also outsource certain IT-related functions to
third parties who are responsible for maintaining
their own network-security, disaster-recovery and
systems-management procedures. If these third
parties fail to manage their IT systems and related
software applications effectively, this could have a
severe impact on us.

Competitors could develop new and unforeseen
technology, software or business models which
threaten our value offering. If these became
significantly commercially viable, they could have
material impacts on our profits and prospects.

There is no change in the threat level for this
principal risk from the previous year, reflecting the
continued potential threats from disruptive forces
that seek to capitalise on the fast-evolving
digitisation of industry trends.

We have appointed an experienced Chief Information
Officer (CIO) and a Chief Information Security Officer
(CISO) to lead and drive our various IT initiatives.
These include our new ERP implementation project,
which is designed to provide and support industry
best-practice processes. This includes respective
governance frameworks and support from expert
external advisers and integration specialists.

We also have in place network-security, disaster-
recovery and systems-management measures.

We largely mitigate this threat through our own
leading innovation initiatives and continued position
at the forefront of technological advances. This is
one of our core strategic strengths.

In addition, we continually scan the disruptive
technology environment to ensure we are well
informed and well placed to respond to any
emerging material threats.

Operational risks

Internal IT
systems
(suitability and
continuity)

Gross probability
High

Gross impact
High

Change in risk level
No change

Ownership
Chief Information
Officer

Categorisation

Company specific

Disruptive risks

Disruptive
technologies

Gross probability
High

Gross impact
Medium

Change in risk level
No change

Ownership
Chief Technology
Officer

Categorisation

Industry general

Annual Report 2021 | aveva.com

VIABILITY STATEMENT AND GOING CONCERN

Viability statement and going concern

The Group assesses its prospects primarily through its five-year
strategic planning cycle and budgeting process. This process is
led by the Executive Directors, and responsibility for business
functions and the regions is delegated to the appropriate senior
management. The Board reviews the business plans and annual
budget each year to determine whether the plans continue to be
appropriate in the light of market conditions and industry changes.

In line with the Group’s strategic planning cycle, the Directors have
assessed the Group’s prospects and viability over a five-year
period, significantly longer than the outlook of the going concern
statement of 16 months to 30 September 2022. The Directors
determine five years to be an appropriate time horizon, aligned to
the period covered by the Group’s business-planning cycle.

The Directors have considered plausible principal risks and
the impact that these could have, over a five-year period.
The principal risks that were combined and modelled comprised
the following scenarios:

Scenario 1: A ‘severe but plausible’ scenario which models
materialisation of all the following principal risks being applied to
the base case financial forecasts, which reduced base case
revenues by circa 13% across the five-year forecast period: (3)
Cloud, (6) OSIsoft integration, and (12) Global economic disruption
and declining GDPs.

Scenario 2: A ‘severe but plausible’ scenario which models
materialisation of all the following principal risks being applied to
the base case financial forecasts, which also reduces base case
revenues by circa 15% across the five-year forecast period: (7)
Competitors, (6) OSIsoft integration, and (12) Global economic
disruption and declining GDPs.

The stress-testing of these various scenarios showed that, despite
significant drops in gross revenue, the Group is projected to remain
viable over the five-year period.

The Group has £286.6 million of cash reserves as well as access to
a large revolving credit facility (RCF). Consequently, the Directors
did not consider this combination of scenarios to present a threat
either to the liquidity of the Group or to its compliance with any
financial covenants.

In making this statement, the Directors have also made the
following assumptions:

• The Group will increase the diversification and strength of its

product offering into non-cyclical markets;

• There will be strong leverage for increased opportunities via the

relationship with Schneider Electric;

• AVEVA has a strong reputation, and an established and growing

customer base and product portfolio; and

• AVEVA will retain necessary skills, leadership and experience

throughout the assessment period.

Going concern statement
The Consolidated Financial Statements of the Group have been
prepared in accordance with International Accounting Standards
(IASs) in conformity with the requirements of the Companies Act
2006 and in accordance with International Financial Reporting
Standards (IFRSs) adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union.

In adopting the going concern basis for preparing the financial
statements, the Directors have considered the Group’s business
activities and its principal risks and uncertainties in the context of the
current operating environment. Matters considered included possible
ongoing impacts of the global Covid-19 pandemic on the Group, and
reviews of liquidity and covenant forecasts.

The Group’s business-planning cycle has also taken account of
potential ongoing impacts of Covid-19. This has enabled the creation
of a base-case going concern model, reflecting the current business
disruption and economic conditions. This also takes into account the
resulting impact on customers and their ability to continue operating
effectively during the ongoing period of remote working.

The Directors have considered sensitivities regarding potential
downside scenarios over the base-case going concern model and
the available mitigating actions. In doing so, they have concluded
that the Group is able to continue in operation for a period of at least
16 months from the date of approving the financial statements to
30 September 2022.

The specific scenarios modelled are:

The Directors have identified several factors which support
their assessment:

Scenario 1: A ‘stress-test’ scenario, reducing base model revenue by
circa 10% across the five-year forecast period.

• AVEVA operates in diverse industries, increasingly so with the

acquisition of OSIsoft;

• The Group has expertise in many specific areas, including

integration and Cloud;

• AVEVA’s products deliver Capex certainty and Opex reduction,
meaning they deliver meaningful efficiency advantages in a
downturn;

• The Group’s extensive global presence mitigates against

over-reliance on key geographic markets;

• AVEVA has strong cost-control mechanisms; and
• The Group has considerable headroom in its cash balances and

a substantial, undrawn RCF.

Based on this assessment, the Directors have considered the
Group’s current position and principal risks. They have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the five-year
period to 31 March 2026.

Scenario 2: A further scenario was created to model circumstances
required to breach AVEVA’s credit facilities. This scenario assumes
severe cash collection delays and does not include any mitigating
actions that the Group would take. It is, overall, considered very unlikely.

Under the base-case scenario, there is no expected requirement to
draw down on the RCF across the going concern period. Under the
four downside scenarios, the Group would utilise the RCF, but within
the currently available liquidity levels.

Throughout both the downside scenarios, the Group continues during
the period under assessment to have liquidity headroom, both on its
existing facilities and against the RCF financial covenants. Should a
more extreme downside scenario occur, additional mitigating actions
could be taken, such as cancelling or deferring dividend payments and
reducing other discretionary operating costs. The financial statements
for the year ended 31 March 2021 have therefore been prepared
under the going concern basis of accounting.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFINANCE REVIEW

Finance review

On a statutory basis, revenue for the period was £820.4 million
which was 1.6% lower compared with the previous year (FY20:
£833.8 million). This change was due to tougher trading conditions
due to the Covid-19 crisis and FX translation, partly offset by the
inclusion of OSIsoft for 13 days of the year.

Subscription revenue, which includes rental contracts, token
contracts and Cloud contracts, grew 13.5% to £359.7 million
(FY20: £316.8 million), primarily due to the growth set out in the
standalone AVEVA commentary below, which grew by 11.4%.

Maintenance revenue reduced by 2.0% to £197.7 million
(FY20: £201.7 million), due to foreign exchange translation and
some conversion of Maintenance contracts to Subscription.

Perpetual licences reduced 21.0% year-on-year to £141.6 million
(FY20: £179.3 million), due to the tough business environment and
some impact from the transition of customer purchases into
subscription licence models.

Services revenue reduced by 10.7% to £121.4 million (FY20:
£136.0 million). As part of our planned strategy as set out in the
standalone AVEVA commentary below.

The Group made a profit before tax of £34.2 million (FY20: £92.0
million) and on an adjusted basis, driven by the acquisition and
integration costs incurred in the year. The Group made an adjusted
profit before tax of £224.0 million (FY20: £213.8 million).

Basic earnings per share was 11.35p (FY20: 34.78p) and diluted
earnings per share was 11.27p (FY20: 34.60p).

Cash generated from operating activities before tax was £91.2
million, compared to £161.4 million in the previous year. This
reflects the cash paid out in respect of exceptional items of £63.2
million (FY20: £28.8 million and the effect of multi-year contracts
and resulting working capital movements on contract assets.

Overview
On 25 August 2020, AVEVA announced that it had reached
agreement to acquire OSIsoft at an enterprise value of $5.0 billion.
The transaction subsequently completed on 19 March 2021 and
therefore the FY21 statutory results include 13 days of OSIsoft’s
performance up to 31 March 2021. The finance review begins with
a commentary of those statutory results.

The finance review then covers the unaudited standalone results
of AVEVA and OSIsoft for FY21 and FY20, and also what the
combined Group would look like on an unaudited pro forma basis
for the same period as if AVEVA had owned OSIsoft from 1 April
2019. This is to show the underlying performance of both AVEVA
and OSIsoft, and to provide a view of how the combined business
now looks.

Statutory results for the year ended 31 March 2021
The statutory results for the year ended 31 March 2021 include
12 months of AVEVA trading and OSIsoft trading since the date of
its acquisition (19 March 2021) compared with the FY20 results for
standalone AVEVA only. OSIsoft contributed £17.4 million of
revenue and £8.4 million of adjusted EBIT for the 13 days to
31 March 2021.

The statutory results are summarised below:

£m

Revenue

Cost of sales1

Gross profit

Operating expenses1

Adjusted EBIT

FY20

Change

FY21

820.4

833.8

(180.5)

(190.1)

639.9

643.7

(413.5)

(426.9)

226.4

216.8

(1.6)%

(5.0)%

(0.6)%

(3.1)%

4.4%

The statutory tax charge for the year ended 31 March 2021 was
£9.4 million (FY20: £22.2 million). The effective rate of 27.5%
(FY20: 24.1%) is in line with the US corporation tax rate of 23.7%.
The tax rate was most affected by US alternative minimum tax and
reduced benefits from intellectual property tax incentives, both of
which are calculated on statutory profits.

Net interest and other income

(2.4)

(3.0)

(20.0)%

Adjusted profit before tax

224.0

213.8

4.8%

Normalised adjustments

(189.8)

(121.8)

55.8%

Reported profit before tax

34.2

92.0

(62.8)%

1. Cost of sales and operating expenses adjusted to exclude amortisation of intangible
assets (excluding other software), share-based payments, gain/loss on forward
foreign exchange contracts and exceptional items.

Dividends
The Directors propose to pay a final dividend of 23.5 pence per
share. After adjustment to reflect the bonus element of the rights
issue, this represents an increase of 1% versus the FY20 final
dividend. The final dividend will be payable on 4 August 2021 to
shareholders on the register on 9 July 2021.

Annual Report 2021 | aveva.com

Terms and financing of the acquisition of OSIsoft,
debt and capital structure
The acquisition of OSIsoft was at an enterprise value of $5.0 billion,
on a cash-free and debt-free basis, assuming a normal level of
working capital and subject to customary completion adjustments.
Completion accounts are in the process of being drawn up and any
final adjustments to the purchase price will be made in the first half
of FY22.

AVEVA funded the $5,086.5 million (£3,831.4 million)
consideration via a rights issue raising approximately $3,734.3
million (£2,806.9 million), the issue of 13.7 million consideration
shares to the majority selling shareholder worth $648.4 million
(£465.7 million) and $703.8 million (£558.8 million) from existing
cash and new debt facilities including a $900 million term loan from
Schneider Electric.

Pro forma results for the year ended 31 March
2021 (unaudited)
We now present the pro forma result for the year. OSIsoft was a
transformational acquisition which helped AVEVA on its journey to
become the global leader in industrial software, further enhancing
the Group’s ability to lead the digital transformation of the
industrial world. The OSIsoft business has a strong financial profile
with a track record of delivering strong growth, profitability and
cash conversion, which will enhance AVEVA’s profile.

The acquisition has created a larger business with pro forma FY21
revenue of £1,196.1 million, versus AVEVA’s standalone FY21 revenue
of £803.0 million. The largest proportion of this revenue now relates
to software used for the operation of industrial assets at around
two thirds, with engineering making up the remaining one third.

FY21
(unaudited)

FY20
(unaudited)

Change
(unaudited)

1,196.1

1,213.2

(229.1)

(249.9)

967.0

963.3

(612.3)

(635.2)

(1.4)%

(8.3)%

0.4%

(3.6)%

8.1%

354.7

(16.0)

338.7

(20.1)

318.6

105.3

80.8%

29.7%

5.9%

328.1

(29.1)

(45.0)%

299.0

13.3%

(15.3)

(31.4)%

283.7

12.3%

94.1

79.4%

27.0%

5.1%

11.9%

140bps

270bps

80bps

The rights issue and the issue of consideration shares resulted in
an additional 139.4m AVEVA shares being issued. This resulted
in total shares in issue at 31 March 2021 of 301.2 million
(FY20: 161.5 million) ordinary shares of 3.56 pence each.

£m

Revenue

Cost of sales

Gross profit

Operating expenses

Adjusted EBIT

Net interest

Adjusted profit before tax

Tax charge

Adjusted profit after tax

Adjusted diluted EPS (pence)

Gross margin

Adjusted EBIT margin

Tax charge

The $900.0 million debt facility was entered into on 9 October 2020
with Schneider Electric SE and was subsequently assigned to
another Schneider entity. The debt is repayable over a three-year
term, and bears interest at LIBOR plus a margin. The initial margin
was 1.30% but varies dependent upon the net leverage ratio.
The term loan was drawn down on 19 March 2021 when the
acquisition completed and expires on 19 March 2024. The balance
as at 31 March 2021 was £654.0 million (2020: nil).

Balance sheet
Cash and treasury deposits were £286.9 million (FY20: £114.6
million) at 31 March 2021. A proportion of this cash was committed
to pay transaction related costs and after payment of these costs net
cash and treasury deposits were £217.1 million on 16 May 2021.
There will be additional payments to the vendors of OSIsoft as part
of the completion accounts mechanism during the first half of FY22.

Non-current assets were £5.8 billion (31 March 2020: £2.0 billion),
reflecting goodwill and intangible assets that arose from the
combination with the Schneider Electric industrial software business
and the OSIsoft acquisition. Goodwill and intangible assets increased
to £5.6 billion (FY20: £1.8 billion) as a result of the acquisition.

Trade and other receivables were £317.0 million (31 March 2020:
£242.2 million). Contract assets increased to £215.6 million from
£142.4 million at 31 March 2020, due to the upfront revenue
recognition on multi-year contracts signed in the year.

Contract liabilities were £239.7 million (31 March 2020:
£177.0 million), reflecting the increased size of the Group.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFINANCE REVIEW CONTINUED

Combined Group pro forma revenue (unaudited)
Revenue for the combined Group was £1,196.1 million,
representing a reduction of 1.4% (FY20: £1,213.2 million). Organic
constant currency revenue grew 2.2%, adjusted for a currency
translation headwind of £31.2 million and the disposals of
Wonderware Italy, Germany and Scandinavia in the prior year.

As previously announced, the Board believes that there is an
opportunity to generate significant revenue synergies over the
medium term through the combination of AVEVA and OSIsoft.
These include cross-selling AVEVA’s portfolio into the OSIsoft
customer base, expansion of OSIsoft’s global reach in Asia Pacific
and EMEA through AVEVA’s global footprint and enhancing
AVEVA’s Digital Twin offering through the combination of
engineering and operations data.

Recurring revenue for the combined Group grew 7.7% to £800.2
million (FY20: £743.0 million) representing 66.9% (FY20: 61.2%) of
overall revenue. This was driven by strong growth in subscription
of 17.4% with maintenance flat compared with FY20. Perpetual
licence revenue fell by 16.8% principally as a result of the tougher
business environment and the business model transition in
standalone AVEVA. AVEVA intends to continue with its strategy of
increasing the combined Group’s overall levels of recurring through
subscription revenue.

The revenue mix for the combined Group is shown below:

FY21

387.4

412.8

800.2

271.2

124.7

FY20

330.1

412.9

743.0

326.0

144.2

1,196.1

1,213.2

Reported
change

Organic constant
currency change % of FY21 total

17.4%

0.0%

7.7%

(16.8)%

(13.5)%

(1.4%)

19.8%

4.0%

11.0%

(12.2)%

(11.3)%

2.2%

32.4%

34.5%

66.9%

22.7%

10.4%

100%

Combined Group pro forma earnings per share
(unaudited)
Pro forma diluted adjusted EPS increased by 11.9% to 105.3 pence
(FY20: 94.1 pence), primarily as a result of the higher adjusted EBIT.

Standalone AVEVA revenue (unaudited)
Revenue for the year on an organic constant currency basis grew
by 0.2%. On a reported basis, revenue declined by 3.7% to £803.0
million (FY20: £833.8 million). Following a challenging first half,
AVEVA saw second half revenue of £470.4 million (FY20: £441.9
million) which was a growth of 6.5% in reported terms or 10.6% in
organic constant currency terms driven by strong contract
renewals in Q3.

Revenue by type is set out below:

£m

Subscription

Maintenance

Total recurring revenue

Perpetual licences

Services

Total

Combined Group pro forma adjusted EBIT
(unaudited)
Adjusted EBIT increased by 8.1% to £354.7 million (FY20: £328.1
million), reflecting cost control and cost savings relating to global
Covid-19 related restrictions. This resulted in an adjusted EBIT
margin of 29.7% (FY20: 27.0%).

The year-on-year margin improvement resulted from some
Covid-19 related cost reductions and an element of these is
expected to return as the restrictions in certain countries are eased,
for example in the areas of travel and customer events.

As announced as part of the acquisition, pre-tax cash cost
synergies are expected of not less than £20 million per annum on a
run rate basis by the end of the second full financial year following
completion, which is year ending 31 March 2023.

Combined Group pro forma net interest charge
(unaudited)
The combined pro forma assumes that the $900 million term loan
was drawn down on 1 April 2019 and therefore a full year’s
interest is charged in each year. Total pro forma net interest would
have been £16.0 million (FY20: £29.1 million). The year-on-year
reduction was due to lower LIBOR rates in FY21.

£m

Subscription

Maintenance

Total recurring revenue

Perpetual licences

Services

Total

Annual Report 2021 | aveva.com

FY21

353.0

192.3

545.3

136.5

121.2

803.0

% of total

44.0%

23.9%

67.9%

17.0%

15.1%

100.0%

FY20

316.8

201.7

518.5

179.3

136.0

833.8

% of total

38.0%

24.2%

62.2%

21.5%

16.3%

100.0%

Change

11.4%

(4.7)%

5.2%

(23.9)%

(10.9)%

(3.7)%

Organic constant
currency

13.5%

0.5%

8.5%

(17.9)%

(8.7)%

0.2%

Recurring revenue
Growing recurring revenue, both as a proportion of overall revenue
and in absolute terms, remains a key focus for AVEVA. Total
recurring revenue increased by 5.2% to £545.3 million (FY20:
£518.5 million). On an organic constant currency basis, the increase
was 8.5%.

Subscriptions revenue, which includes rental contracts, token
contracts and Cloud contracts, grew 11.4% to £353.0 million (FY20:
£316.8 million) or 13.5% on an organic constant currency basis.
The second half saw strong growth in Subscriptions following the
large contract renewals in the third quarter. Going forward, AVEVA
expects considerable growth in Cloud orders, which are recognised
rateably over the term of the contract. This will impact the amount
of revenue recognised within a year on new Subscription contracts,
but does create backlog for future years.

Maintenance revenue was resilient, reducing by 4.7% to £192.3
million (FY20: £201.7 million), largely due to foreign exchange
translation (organic constant currency was an increase of 0.5%)
and some conversion of Maintenance contracts to Subscription.

Perpetual licences
Perpetual licences reduced 23.9% year-on-year to £136.5 million
(FY20: £179.3 million), or 17.9% on an organic constant currency
basis, due to the tough business environment and some impact
from the transition of customer purchases into Subscription
licence models.

Services
As planned, services revenue reduced by 10.9% to £121.2 million
(FY20: £136.0 million), or 8.7% on an organic constant currency
basis. Services are sold alongside software licences to ensure
efficient deployment and to generate value faster for customers.
This planned reduction was driven by AVEVA’s focus on increasing
the proportion of higher gross margin software as part of its
overall revenue mix in the longer term, while still undertaking
services that support long-term growth, particularly in newer areas
of the business such as Asset Performance Management and
Digital Twin projects.

Standalone AVEVA adjusted EBIT and cost
management (unaudited)
Adjusted EBIT increased 0.6% to £218.0 million (FY20: £216.8
million). The adjusted EBIT margin increased to 27.1% (FY20:
26.0%) due to tight cost control and savings archived due to the
Covid-19 pandemic. Some of these costs are expected to come
back in FY22 as restrictions on travel are gradually lifted.

AVEVA continued to invest in strategic areas such as Cloud,
Artificial Intelligence and digital marketing, whilst significantly
reducing costs elsewhere.

Total adjusted costs were £585.0 million (FY20: £617.0 million), a
decrease of 5.2% over the previous year and a decrease of 3.4% on
a constant currency basis.

An analysis of total expenses is summarised below:

£m

Statutory

Amortisation excl. other software

Share-based payments

Gain on FX contracts

Exceptional items

Adjusted costs

FY20

Change

Constant currency

Cost of sales

179.8

–

(0.8)

179.0

190.1

(5.8)%

(4.1)%

R&D

179.3

(63.9)

–

(0.3)

115.1

120.7

(4.6)%

(3.1)%

Selling and
distribution

222.9

(26.6)

–

(4.6)

191.7

209.1

(8.3)%

(6.2)%

Admin.

189.7

–

(16.3)

0.7

(78.3)

95.8

89.5

7.0%

8.6%

Net impairment
loss from
financial assets

Other income

3.4

(5.5)

–

3.4

7.6

(55.3)%

–

5.5

–

Total

769.6

(90.5)

(16.3)

0.7

(78.5)

585.0

617.0

(5.2)%

(3.4)%

Cost of sales decreased by 5.8% to £179.0 million (FY20: £190.1
million). This was driven by a significant reduction in the cost of
delivering services and customer support, including reduced travel
costs, partially offset by significantly higher Cloud hosting costs.

Research & Development costs were £115.1 million (FY20: £120.7
million), representing a decrease of 4.6% with tight cost control
being partly offset by investment in areas including Cloud and AI.

Selling and distribution expenses were £191.7 million (FY20:
£209.1 million), an 8.3% decrease versus the prior year. This was
primarily due to lower Sales costs, relating largely to reduced travel
costs, partly offset by an increase in investment in Marketing and in
particular, digital marketing.

Administrative expenses were £95.8 million (FY20: £89.5 million)
representing an increase of 7.0%. This was primarily due to
investment in the IT function to support the larger Group as the
transitional services with Schneider Electric were exited, together
with some expansion of the Finance function.

Net impairment loss from financial assets represents the
impairment of accounts receivable and contract assets during the
year of £3.4 million (FY20: £7.6 million).

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFINANCE REVIEW CONTINUED

Standalone AVEVA normalised and exceptional
items (unaudited)
The normalised and exceptional items below have been excluded
in presenting the standalone AVEVA’s adjusted results. Although
OSIsoft did incur transaction costs relating to the acquisition, these
are not included in these results because the pro forma for OSIsoft
presents results on an adjusted basis.

£m

Acquisition costs

Integration activities

Restructuring costs

Other income

Total exceptional items

Amortisation excl. other software

Share-based payments

(Gain)/loss on FX contracts

Total normalised items

FY21

44.4

37.3

2.3

FY20

0.8

28.2

1.7

(5.5)

(11.9)

78.5

90.5

16.3

(0.7)

18.8

90.6

12.0

0.4

106.1

103.0

Acquisition and integration activities principally related to
acquisition costs associated with OSIsoft and the tail-end of
integration activities related to the Schneider Electric industrial
software business, such as IT costs related to the exit of the
Transitional Service Agreement, including the new ERP system
implementation. Other income relates to reimbursement of capital
expenditure on integration activities from Schneider Electric.

Amortisation relates to the amortisation of the fair valued heritage
AVEVA intangible assets under acquisition accounting, following the
combination with the Schneider Electric industrial software business.

Standalone AVEVA operating cash flow
(unaudited)
Cash generated from operating activities before tax and
exceptional items was £173.3 million, compared to £190.2 million
in the previous year, resulting in conversion of adjusted EBIT to
operating cash flow of 79% (FY20: 88%). This reflects the effect of
multi-year contracts and particularly those contracts where
customers pay in annual instalments, but revenue is recognised
earlier under IFRS 15.

Net cash paid out in respect of exceptional items was £63.2 million
(FY20: £23.3 million).

Standalone OSIsoft performance (unaudited)
Revenue
Revenue increased 6.6% on an organic constant currency basis.
On a reported basis, revenue increased by 3.6% to £393.1 million
(FY20: £379.4 million). Similarly to AVEVA, OSIsoft had a weaker
first half of the year due to the disruption caused by Covid-19 with
revenue growth of 2.0% and a stronger second half with organic
constant currency growth of 10.6%.

Revenue by type is set out below:

£m

Subscription

Maintenance

Total recurring revenue

Perpetual licences

Services

Total

FY21

34.4

220.5

254.9

134.8

3.4

393.1

% of total

8.7%

56.1%

64.8%

34.3%

0.9%

100.0%

FY20

13.3

211.2

224.5

146.7

8.2

379.4

% of total

3.5%

55.7%

59.2%

38.7%

2.1%

100.0%

Change

158.6%

4.4%

13.5%

(8.1)%

(58.5)%

3.6%

Organic constant
currency

169.2%

7.3%

16.9%

(5.6)%

(57.3)%

6.6%

Recurring revenue
Recurring revenue increased from £224.5 million to £254.9 million
representing 64.8% (FY20: 59.2%) of total revenue.

Maintenance revenue increased by 4.4% to £220.5 million
(FY20: £211.2 million), largely due to new revenue resulting from
new perpetual licence sales and a high retention rate among
existing accounts.

Subscriptions revenue grew 158.6% to £34.4 million (FY20: £13.3
million). This was due to broad based growth and assisted by a
larger multi-year contract signed at the end of the financial year.

Perpetual licences
Perpetual licences decreased 8.1% year-on-year to £134.8 million
(FY20: £146.7 million), due to disruption caused by the pandemic
and in particular weakness in the Oil & Gas sector.

Services
Services revenue reduced by 58.5% to £3.4 million (FY20: £8.2 million),
due to a sharp decline in on-site training and field service orders
driven by customer responses to the conditions of the pandemic.

Annual Report 2021 | aveva.com

Standalone OSIsoft adjusted EBIT and cost management (unaudited)
Adjusted EBIT increased 22.8% to £136.7 million (FY20: £111.3 million). The adjusted EBIT margin increased to 34.8% (FY20: 29.3%) due to
a combination of the revenue growth and savings archived due to the Covid-19 pandemic.

Total adjusted costs were £256.4 million (FY20: £268.1 million), a decrease of 4.4% over the previous year and a decrease of 1.6% on a
constant currency basis.

An analysis of total expenses is summarised below:

£m

Adjusted costs

FY20

Change

Constant currency

Cost of sales

50.1

59.8

(16.2)%

(13.9)%

R&D

53.4

51.2

4.3%

7.2%

Selling and
distribution

86.4

93.4

(7.5)%

(4.8)%

Net impairment
loss from
financial assets

0.2

(0.7)

–

Admin.

66.3

64.4

3.0%

5.9%

Total

256.4

268.1

(4.4)%

(1.6)%

Combined Group pro forma Annualised Recurring
Revenue (ARR) (unaudited)
In order to make it easier to track the performance of AVEVA’s
recurring revenue progression, the Group is introducing a
new metric, Annualised Recurring Revenue (ARR). ARR is a
non-GAAP measure.

ARR removes distortions caused by applying the revenue
recognition accounting standard by annualising the revenue
associated with contracts at a point in time. For example, an
on-premise Subscription contract would have a large element of
the contract recognised upfront, whereas a Cloud Subscription
contract is recognised rateably over the lifetime of the contract.
ARR removes the differences in this revenue recognition treatment
to make it easier to track underlying value progression.

On 31 March 2021, ARR for the combined AVEVA Group was
£704.8 million. This represented a 12 month increase of 8.6% on a
constant currency basis (31 March 2020: £648.9 million). This Group
total consisted of £453.8 million of ARR for the standalone AVEVA
Group (FY20: £420.9 million) and £251.0 million of ARR for OSIsoft
(FY20: £228.0 million).

James Kidd
Deputy CEO & CFO

25 May 2021

Cost of sales decreased by 16.2% to £50.1 million (FY20: £59.8
million). This was driven by a reduction in travel by customer
success functions in reaction to conditions of the pandemic.

Research & Development costs were £53.4 million (FY20: £51.2
million), representing an increase of 4.3% due to an increased
investment in Cloud development.

Selling and distribution expenses were £86.4 million (FY20: £93.4
million), a 7.5% decrease versus the prior year. This was due to
cancellation of on-site marketing and sales events such as user
conferences, executive summits and trade events, as well as a
steep reduction in travel related expenses. Both decreased as a
result of conditions caused by the pandemic. This decrease was
partly offset by additional investment in sales capabilities.

Administrative expenses were £66.3 million (FY20: £64.4 million)
representing an increase of 3.0%. This was due to increased
professional fees relating to the sale process and additional
investment in business IT and software, such as Azure and Salesforce.

Net impairment loss from financial assets represents the impairment
of accounts receivable and contract assets during the year of
£0.2 million (FY20: income of £0.7 million).

Taxation (unaudited)
The pro forma tax charge on adjusted profit before tax was
£20.3 million (FY20: £15.3 million), which equates to an effective
tax rate of 5.9% (FY20: 5.1%). This tax charge factors in the benefit
of UK and US tax incentives on intellectual property and the tax
step-up relating the acquisition of OSIsoft.

The announced increase in UK corporation tax is expected to have
a minimal impact on the adjusted tax rate because of the continued
benefit of intellectual property tax incentives and the increased
proportion of Group profits earned in the US following the
OSIsoft acquisition.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSOUR PEOPLE

Our people are amazing

FY21 has been a year of home and virtual working. This has not been
easy for many of our people, but we have learned that where we work
does not impact how we work. In response to the challenges of
Covid-19 we have enhanced our engagement activities, the visibility of
the Executive team and our focus on employee wellbeing.

We use regular engagement surveys to understand
how our employees feel about life at AVEVA. During
FY21, we ran two all-employee surveys in which
people reported feeling supported by and connected
to AVEVA throughout the Covid-19 pandemic and
while working from home.

We have also used employee and manager All
Hands Video Calls as a vital channel, connecting
everyone at AVEVA with the Executive Leadership
Team (ELT). With monthly managers’ calls and
quarterly all-employee calls, we ensure a regular
drumbeat of information and business updates
cascades through to employees.

These calls form part of our consistent cadence of
engagement aligned to the AVEVA LIFE values, and
we receive regular feedback that we are helping our
teams feel engaged and positive.

AVEVA successfully acquired OSIsoft in March 2021.
To ease the transition, we developed a full engagement
plan to welcome our 1,500 new colleagues.

“I have been part of a few mergers and
acquisitions. Joining AVEVA has been
the best experience I have had …
This is a high-class organisation.”

With a clear focus on our employee experience,
colleagues from both OSIsoft and AVEVA were
well-informed, empowered to ask questions and
given a platform to virtually greet one another.
Our ultimate goal was to help all employees feel
like important and valued parts of the expanded
organisation. This included providing access from
day one to all our systems and employee materials,
as well as creating a welcome campaign on our
employee intranet.

Over 4,000 employees participated in an employee
All Hands Call with the ELT to understand our
strategy from Day 1 of our combination with
OSIsoft. Every OSIsoft colleague who responded
to a follow-up survey rated this call as excellent.

Annual Report 2021 | aveva.com

Covid-19 response
With the onset of the Covid-19 crisis, AVEVA was
quick to adapt to homeworking.

To help with the transition, we offered employees
financial assistance to set up a home office. We
also established a dedicated Covid-19 hub on our
OneSpace intranet, providing details on our response
to the pandemic and outlining the support available
to employees. Working with representatives from
across the business, we used this as our one-stop
area for factors including:

• region-specific guidance;
• useful contacts;
• toolkits for managers;
• relevant external links, and
• our policies on travel and customer interaction

and our expectations of employees.

On 18 March 2020, the first day of homeworking,
we launched the first of our #WEAREAVEVA
campaigns, which are designed to get employees
talking and connecting on topics outside of work.
The first theme was a selfie challenge, which resulted
in 111 posts and more than 2,500 interactions.
Since then we have uploaded a new theme every
other week, and engagement rates remain high.

The most popular campaign to date was the
interactive welcome board we launched to greet our
new OSIsoft colleagues. Over 320 employees from
across both organisations posted messages and
images to give a virtual welcome.

Learning and development
We support and encourage all employees’ growth
and development. We recently conducted a thorough
talent review and moved our Leadership Essentials
training programme online so that colleagues could
continue to benefit remotely. To accelerate our R&D
product strategy, we developed ‘Project Uplift’, an
AI and Cloud upskilling programme for FY21 and
FY22. This is designed to enhance our existing
skills, domain knowledge and customer focus,
and accelerate our ability to innovate in these areas.

“I wanted to thank you for a great eight
weeks of Leadership training. I learned
so many new skills that I can’t wait to
implement with my team.”

Joshua Wright – Team Lead, Services

Organised by our Sales Enablement team, IGNITE
is an annual event designed to ensure the team
has the tools and connections they need to succeed.
Our sales graduate programme is now in its second
year, and in October we welcomed 30 new
graduates from across the globe.

“As a fresh graduate, my aim was to get
into a company that values young talent,
helping them to developing their skills
and their cultural knowledge. Thankfully I
joined AVEVA and found it to be the right
place to learn, connect with different
people and grow!”

Rana Abukhater, AVEVA graduate

We also run mandatory training to ensure all
employees fully understand and comply with our
corporate policies, including those on D&I, cyber
security and corporate ethics.

Limitless Possibilities
We understand the limitless potential of true innovation, we are
creative and curious, constantly challenging ourselves to help
our customers create a better world.

Integrity Always
We do the right thing, leading by example. Our respect for
everyone we connect with is why we’re trusted to help our
customers work smarter, and why we work and act as one.

Flexibility Together
By working flexibly and collaboratively across our diverse
internal and external teams, we foster close connections and
ensure we achieve our goals together.

Excellence Every Day
Our people are amazing. Smart, pragmatic, humble, and always
welcome a challenge. We’re incredibly proud of what we deliver
and help our customers achieve.

Culture
Values, recognition and reward
Our values drive us every day to succeed. Beyond
the need to demonstrate how we all live the values
through performance reviews, we have embedded
and demonstrated our commitment to living them in
many ways.

Before the acquisition, AVEVA’s values were closely
aligned to those of OSIsoft: an innovative organisation
with a strong focus on learning. This alignment has
led to a strong early connection between employees
of both organisations, with 91% of respondents to
our Day 1+ experience survey stating that the strategic
rationale of our transaction makes sense. In addition,
86% agree they are excited about the future.

Recognition and empowerment also help us
to reinforce our values. We launched a new
recognition platform, MyRecognition, on which
employees can formally recognise and publicly
appreciate their colleagues. MyRecognition
ensures there is a consistent and sustainable
way to recognise everybody’s efforts and
promote them to the wider business.

In the first five months since the platform’s launch:

• 2,095 separate recognitions were posted on
the platform, with 5,211 interactions, and

• 1,958 employees received at least

one recognition.

In January 2021, we rolled out a global employee
share purchase plan that was adopted by AVEVA’s
shareholders at the July 2020 AGM. This is our
first all-employee share plan, driving alignment
between our employees and our shareholders. It
has received extremely positive support, with nearly
50% of eligible employees taking the opportunity
to buy shares.

“I was pleased when AVEVA
announced the launch of My AVEVA
Shares. As a participant, I feel more
connected and responsible for the
company’s growth and performance.
It’s rewarding to see that I have a role
to play in AVEVA’s success.”

Shelley Barker, Human Resources.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSOUR PEOPLE CONTINUED

Wellbeing Network
formed across

employees

countries

Wellbeing
Due to the exceptional circumstances Covid-19 has
created, we placed an increased focus on wellbeing
taking into account the additional mental and
physical pressures some of our employees may
have been experiencing. We have encouraged
flexible working schedules and established a
Wellbeing Hub, full of resources for all employees
to use when they need. In May 2020, we formed
a Wellbeing Network of over 50 employees in 12
different countries.

‘I am so thankful that AVEVA has
taken this initiative to recognise
mental health during this most
unusual time of our lives.’

Angie Wright, Human Resources.

See page 76 for more information on how the Board has
been involved in employee wellbeing and engagement
during the year.

World Mental Health Week
Inspired by World Mental Health Day, we held our First World Mental
Health Week at AVEVA. There were a number of different initiatives
including employee blogs and ‘coffee chat’ sessions, where everyone
was encouraged to reach out to a colleague and connect with them.

We also ran a series of Wellbeing webinars with the help of Dr John
Briffa, an external expert. The webinars covered a host of mental and
physical issues and offered practical, common-sense solutions.

‘May I just say how excellent I thought that talk by
Dr John Briffa was — I truly wish I had had some of
that in mind during past times in my life.’

Communities
Action for Good, our Group-wide programme,
encourages employees to take part in social
wellbeing activities, supporting local communities
and wider society alike. We have pledged to provide
the equivalent of 1% of our net profits to support
social wellbeing and charitable causes, both at a
global level and in the local communities where
we operate.

Our employees have not let Covid-19 restrictions
prevent them from getting involved and supporting
worthy causes through our four regional committees.
The regions have been very busy supporting local
charities and, wherever possible, taking part in virtual
activities. Many employees have also been helping
on the ground, volunteering at vaccine centres
and foodbanks.

AVEVA and OSIsoft are well aligned when it comes
to charitable activities and employee participation.
All employees from both organisations receive paid
time off to volunteer and both organisations also
make donations to match charitable funds raised
by employees. Despite the difficulties posed by
Covid-19, 531 AVEVA employees and 104
OSIsoft employees used paid time off to support
good causes.

AVEVA has donated over £550,000 to more than
39 charities, including Water Aid, Homestart, CALM,
Save the Children and UNICEF. Our employees chose
these charities, which all align to our Sustainability
programme while helping us step up support for
vulnerable populations disproportionately at risk from
the pandemic’s impact. OSIsoft also have a culture of
raising money for good causes; over $300,000 was
donated or raised by employees in the 12 months to
March 2021, with OSIsoft making matching
donations totalling nearly $280,000.

We look forward to learning from each other’s
experiences in the coming year.

In late 2020, we launched the
AVEVA ‘Around the World in 80 Days’
Steps Challenge, inviting teams
from across the globe to compete
for Action for Good donations for
a charity of their choice.

With nearly 600 colleagues taking
part across 104 teams, this walking
challenge had a great impact on
wellbeing, encouraging many
participants to exercise much more
than usual. With £14,000 in charity

donations to be split across the
five winning teams, there was a
real sense of healthy competition
and a drive to succeed.

As well as promoting physical fitness,
the challenge also had a positive impact
on mental wellbeing. There were
hundreds of posts on the employee
intranet challenge hub from people
sharing experiences from their travels,
recaps of their walking stats and
challenges issued to competing teams.

“I am delighted by the
success of the Steps
Challenge, to see not only
so many colleagues take part
and record so many steps,
but also the worthy local
charities they wished
to support.”

James Kidd, Deputy CEO and CFO

Annual Report 2021 | aveva.com

International Women’s Day
Inspired by International Women’s Day and the
campaign theme of #ChooseToChallenge, we
launched a dedicated #WEAREAVEVA campaign.
This campaign invited colleagues to show their
commitment to challenging inequality, calling out
bias, questioning stereotypes and helping to forge
an inclusive world.

Rakhi Kirti, Solution Support Engineer

The ELT also got involved, hosting open and
frank discussions in collaboration with the
Women@AVEVA network. Members shared
their views on the importance of diversity and
inclusion for us all, and our need to learn from
and celebrate our differences.

Caoimhe Keogan, Chief People Officer, also hosted
a panel discussion featuring members of the ELT,
discussing some of the key themes of gender bias
and inequality. As well as enabling members to
reflect on their own personal learnings, the panel
considered how we can all help to create a more
inclusive workplace.

To read more on our D&I activities, please see
pages 34 to 35.

Academics
Programme sponsorship
AVEVA is proud to be the industrial sponsor of
the Future Infrastructure of the Built Environment 2
Centre for Doctoral Training which is joint funded
by the Engineering and Physical Sciences Research
Council (EPSRC). AVEVA will sponsor up to six
PhD students to research topics under the general
heading of ‘Resilient Infrastructure’. This is closely
aligned with AVEVA’s ambition to find sustainability
solutions for our customers.

The AVEVA Academic Programme
Competition
The AVEVA Academic Programme Competition
provides chemical engineering students from
across North America and Europe with a unique
opportunity to develop their process-simulation skills.
Students are invited to solve real-world engineering
problems using AVEVA Process Simulation: this is
our innovative integrated platform developed to
enable the next generation of engineers, covering
the complete engineering lifecycle of design,
simulation and training. The software’s ease of
use means we can encourage students with no
prior experience to enter.

“Building on the success of the
past two years, the 2021 academic
competition is designed to attract
aspiring engineers, allowing them to
transfer the skills they have learned
in the classroom to solving real-life
engineering problems. By offering
practical experience through our
industry-leading software, AVEVA
is empowering the next generation
of engineers and ensuring they are
well prepared for working in the
industrial sector.”

Mihaela Hahne, Global Program Manager,
Academic at AVEVA.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSNON-FINANCIAL INFORMATION STATEMENT

Non-financial information statement

Focus area

Policies and disclosures

Further reading

Environmental

Greenhouse gas emissions data

Page 32

Our handprint and footprint

Pages 30 to 33

Employees

Diversity & inclusion

Employee wellbeing

Values and culture

Social matters

AVEVA Action for Good

Group gender diversity

Page 34

Page 56

Page 55

Page 56

Page 35

Board gender and ethnic diversity

Page 66 and page 80

Human rights

Anti-slavery and human trafficking policy

Data protection policy

Our full anti-slavery and human trafficking statement
is available on our website at aveva.com

Our data Trust Centre is available on our website at
aveva.com/en/legal/trust/

Anti-bribery & corruption

Anti-bribery and corruption policy

Page 84

Our ‘AVEVA Speak Up’ portal is available for any
AVEVA employees and third parties to report suspected
wrongdoing relating to AVEVA. This is available on our
website at aveva.com

Non-financial key
performance indicators

The key metrics in measuring our
non-financial performance.

Pages 26 to 27

Management of principal
risks and uncertainties

Our key risks and how they are mitigated.

Page 36 to 46

Business model

How we create value for our stakeholders.

Page 20 to 21

Annual Report 2021 | aveva.com

CORPORATE GOVERNANCE REPORT

Chairman’s introduction to Governance

Board and leadership changes
The Company announced on 27 April 2021 that Chief Executive
Officer, Craig Hayman, will leave the Group after the Company’s
AGM in July. Craig’s contribution during his three-year tenure will
resonate in future years as we see the ongoing benefits of the
combination with the Schneider Electric industrial software
business and the recently acquired OSIsoft, consolidating AVEVA’s
prime position in the world of industrial software. The Board and I
would like to thank Craig for his dedicated service as CEO and we
wish him all the best for the future.

Peter Herweck has been transferred from Schneider Electric at the
request of the Board to the role of AVEVA’s CEO, effective from
1 May 2021. Peter has over 30 years of experience in automation,
digitalisation and industrial software and has served on AVEVA’s
Board since 2018, most recently as Vice Chairman, making him the
ideal appointment at this stage of AVEVA’s development.
Following his appointment as CEO, Peter has resigned as member
of the Nomination Committee and as Vice Chairman effective from
1 May 2021.

My colleagues on the Board and the ELT and I would also like to
express our gratitude to David Ward, whose decision to step down
from his current role as our Finance Director and Company Secretary
with effect from 7 May 2021 was announced in January 2021. David
has been with AVEVA since January 2011, and the support and
counsel he has provided to the Board have made an enormous
contribution to our success.

Claire Denton, Group General Counsel, took over the role of
Company Secretary with effect from 7 May 2021.

As included in last year’s Annual Report, Emmanuel Babeau
resigned as Non-Executive Director, Vice Chairman and as member
of the Remuneration Committee on 30 April 2020, following his
resignation from Schneider Electric. In accordance with the terms
of the Relationship Agreement between the Company and
Schneider Electric (the Relationship Agreement), Schneider Electric
appointed Olivier Blum to the Board and the Remuneration
Committee. Please see page 125 for further detail on the terms
of the Relationship Agreement.

Board response to Covid-19
During the year, the Board oversaw and supported the response of
the ELT to the challenges and pressures created by the pandemic.
As part of this, it worked closely with the ELT and Company
Secretary to implement a range of governance and process changes
to strengthen our strategic, tactical and operational response.

The Board also re-evaluated meeting agendas and frequency to
ensure we could focus on key priorities. This included increasing
the frequency of Board and ELT meetings to stay ahead of
developments, share insights, make timely decisions and steer the
organisation through the crisis. We also adapted the Board and
ELT engagement schedule to ensure that we continue to deliver on
our responsibilities to our key shareholders.

We recognise how important it is to have an open and ongoing
dialogue with shareholders, employees and other stakeholders,
particularly during times of change. Throughout the year, therefore,
members of the Board and senior management took part in
many stakeholder meetings, including with the Company’s
largest investors.

aveva.com | Annual Report 2021

In FY21, a global pandemic and the largest
acquisition in our corporate history made
good governance more important than
ever for AVEVA. Here, our Chairman
outlines how the Board continues to
meet its responsibilities to support good
decision-making and enable effective
responses to the challenges we
collectively face.

Our people and culture
AVEVA’s rapid and responsible action in the face of the Covid-19
crisis protected the interests of all stakeholders, most especially
our employees’ health and safety and our customers’ needs.
This clearly indicates the resilience of our business, our culture
and our colleagues.

I am confident that our collective ability to adapt and innovate in
the face of such rapid and significant change was pivotal to our
success in FY21. I would like to thank everybody whose collective
energy and commitment made a contribution during FY21.

OSIsoft acquisition targeting long-term
resilient growth
The year’s single most significant event was the acquisition of
OSIsoft. This, the largest strategic acquisition in our history, will
permanently underpin our future success. We undertook the
acquisition from a position of strength and as part of our deliberate
corporate strategy that is enabling us to build the resilience that
our stakeholders demand.

In order to deliver the acquisition’s full strategic, operational and
financial benefits, OSIsoft’s founder Dr J. Patrick Kennedy will
remain involved in the business. As explained in the combined
circular and prospectus published by the Company on 6 November
2020 (the Prospectus), he has taken on the newly-established role
of Chairman Emeritus, which is not a Board position, but will
smooth the cultural integration of the OSIsoft business. Please see
pages 72 to 73 for a description of the acquisition process and
page 60 for an overview of the Chairman Emeritus appointment.

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSCORPORATE GOVERNANCE REPORT CONTINUED

Chairman Emeritus

Dr J. Patrick Kennedy’s
employment agreement
was entered into on
25 August 2020 between
AVEVA, OSIsoft and
Dr J. Patrick Kennedy
(the PK Employment
Agreement).

Pursuant to the PK
Employment Agreement,
Dr J. Patrick Kennedy agreed
to transition to the non-Board
role of Chairman Emeritus
following completion of the
acquisition of OSIsoft.

Pursuant to the PK Employment Agreement, Dr J. Patrick Kennedy’s
role will continue for an initial one-year term, with the initial term
being extended for successive terms of one year each on mutual
agreement of the parties, provided that each successive term can be
terminated earlier on at least 30 days’ notice by either party. Dr J.
Patrick Kennedy’s role and responsibilities as Chairman Emeritus will
include assisting the enlarged Group with the integration of the
OSIsoft business, representing the enlarged Group at high-profile
speaking engagements and enterprise-customer sessions,
participating in strategy sessions with the enlarged Group’s core
strategy leadership team, and providing further mentorship and
advisory support as mutually agreed with the enlarged Group.

Dr J. Patrick Kennedy will devote between 50 and 70 days per year of
his time to the role and in consideration for such services provided
pursuant to the PK Employment Agreement, Dr J. Patrick Kennedy will
receive a base salary at an annual rate of $300,000. In the event that
Dr J. Patrick Kennedy performs services exceeding 70 days per
annum, compensation will be as mutually agreed with the enlarged
Group, though if Dr J. Patrick Kennedy performs services exceeding
80 days per annum, these will be compensated at a per diem rate of
$3,000. Dr J. Patrick Kennedy will be entitled to continue participating
in the medical plan and other benefit plans that OSIsoft provides to its
most senior employees (including reimbursement of business expenses
in accordance with OSIsoft’s policies). Remuneration for the Chairman
Emeritus role falls within the remit of the Remuneration Committee.

Dr J. Patrick Kennedy has undertaken to comply with all legal and
regulatory requirements and codes of practice or compliance manuals
issued by AVEVA relating to transactions in securities (including the
Market Abuse Regulation) and, whilst Dr J. Patrick Kennedy’s legal
and/or beneficial interest in the Company’s ordinary shares (including
through Dr J. Patrick Kennedy’s interest in Estudillo Holdings LLC
(Estudillo)) equals or exceeds 3% of the outstanding share capital of
AVEVA, to consult with AVEVA and its brokers prior to offering or
disposing (or agreeing to offer or dispose) of any legal or beneficial
interest in the ordinary shares.

In connection with the acquisition of OSIsoft, new ordinary shares in
AVEVA were issued to Estudillo as part of the consideration for the
acquisition of Estudillo’s interest in OSIsoft. Estudillo is controlled by
Dr J. Patrick Kennedy and it is understood that Estudillo intends to
distribute most of these to affiliates of Dr J. Patrick Kennedy with the
remainder being distributed to other shareholders in Estudillo.

Annual Report 2021 | aveva.com

Governance and the Board
The Board undertakes an annual review of its own
and its Committees’ performance and effectiveness.
This year, we conducted an internal evaluation of our
performance and further details on the process,
outcomes and actions of the evaluation can be found
on page 79.

A time of crisis makes good governance more
important than ever, supporting agile and effective
decision-making, bringing assurance to all
stakeholders and facilitating recovery. To achieve
this, we, as a Board, need to ensure we have the
right people in place to support our strategy
and plans.

To help provide continuity following the OSIsoft
acquisition and the transition to the enlarged Group,
I have agreed to extend my term of appointment as
Chairman beyond the ninth anniversary of my tenure.
Please see the Nomination Committee report for
clarification on this decision.

As Peter Herweck has taken up an executive position
on the Board, Schneider Electric, the Company’s
majority shareholder, is entitled to appoint a
replacement Non-Executive Director to the Board
and to the Nomination Committee pursuant to the
terms of the Relationship Agreement. The Company
is in discussions with Schneider Electric regarding
such appointments. The role of Vice Chairman is a
requirement of the Relationship Agreement and
discussions with Schneider Electric will include
consideration of this.

In addition to the Company’s discussions with
Schneider Electric, the Nomination Committee is
currently in the process of identifying an additional
independent Non-Executive Director to join the
Board. Enhancing the diversity of the Board will be a
key consideration during our search and also in our
discussions with Schneider Electric regarding any
candidates they nominate for appointment pursuant
to the Relationship Agreement. The Nomination
Committee report on pages 78 to 82 contains
commentary on the search.

I would like to thank my fellow Board members,
the ELT and all our colleagues at every level
of AVEVA for their support, commitment and
contribution during what has been an exceptional
period of change, full of unconventional and
unexpected challenges.

Looking ahead, as a Board, we fully expect the
challenging external environment and its associated
impacts to continue. We will continue to work closely
with the ELT in order to respond effectively to any
challenges, successfully integrate the OSIsoft
business and to deliver on our strategic goals.

Philip Aiken AM
Chairman

Statement of Compliance

The Board is accountable to the Group’s shareholders for its
standards of governance. It is also committed to the principles of
corporate governance (the principles) as set out in the Financial
Reporting Council (FRC) 2018 UK Corporate Governance Code
(the 2018 Code). The 2018 Code can be found on the FRC’s website
at www.frc.org.uk.

We have prepared this Annual Report with references to the
2018 Code. The Board considers that the Company has complied
with the provisions of the 2018 Code save with certain exceptions.
The specific provisions of the 2018 Code where we and our
Directors are not compliant are:

• Provision 17, which requires that the majority of the Nomination
Committee’s membership should be independent Non-Executive
Directors. If the independence of the Chairman is excluded (in
relation to which see page 81 for a discussion of the Chairman’s
tenure), the Committee’s membership has not comprised such a
majority during the year as only two out of its four members
were independent. In accordance with the Relationship
Agreement with Schneider Electric, Peter Herweck was, prior to
his appointment as Chief Executive Officer, the Committee’s
Schneider Electric-appointed member and consequently a
non-independent Director on the Nomination Committee. Peter
is an experienced executive, and the Board considered this, as
well as the diversity of thought and insight he brought to the
Committee’s activities, to have had a positive impact. Following
his appointment as CEO, Peter Herweck has resigned from the
Nomination Committee and the Company is engaged in
discussions with Schneider Electric regarding the appointment
of a replacement Non-Executive Director. Following the search
and appointment of an additional independent Non-Executive
Director, the Board will consider the membership of the
Nomination Committee and aim to achieve compliance with the
Code. Please see page 77 for further detail on the independence
of Directors and how we manage conflicts.

• Provision 32, which requires that the Remuneration Committee
should only comprise independent Non-Executive Directors. The
presence on the Committee of Olivier Blum, appointed by
Schneider Electric in accordance with the Relationship
Agreement, means the Committee is not constituted in this way.
However, Olivier’s senior executive strategic and operational
roles in HR and remuneration bolster the effectiveness of the
Committee, which values his insight and technical expertise.
Please see page 77 for further detail on the independence of
Directors, mitigating actions and management of conflicts.

• Provision 19, which states that the Chairman should

not remain in post beyond nine years. As explained in the
Prospectus related to the OSIsoft acquisition, the Board
identified stability and continuity as key drivers for the future
success of the enlarged Group. Because of this, and following
discussions without the Chairman present, it was decided to
extend the tenure of the Chairman for one further year.
The Board believes that it is in the best interest of the
Company and our shareholders that the current Chairman
should oversee the completion of the OSIsoft acquisition to
ensure the long-term success of the Company. The strength
of the Senior Independent Director ensures there is a balance
of responsibility at the top of the Company. The Chairman
will therefore stand for re-election at this year’s AGM. Please
see the Nomination Committee Report for further details on
the Chairman tenure including the timescales of the extension
and succession planning.

• Provision 41, the Annual Report does not include a description
of what engagement with the workforce has taken place to
explain how executive remuneration aligns with wider pay
policy. The Board’s normal schedule of employee engagement
was disrupted by the Covid-19 pandemic and the move to fully
remote working. The Board is committed to addressing
employee engagement, including on executive remuneration,
during the coming year and is working towards implementing
an effective and consistent engagement plan that works in a
virtual as well as in-person context. For details of broader
workforce engagement during the year, please see page 76.

An explanation of how the Company has
applied the Principles set out in the Code is given
on the following pages:

Board leadership, purpose and culture – page 65

Division of responsibilities – page 67

Composition, succession and evaluation – pages 78 to 82
(Nomination Committee report)

Audit, risk and internal control – pages 83 to 89
(Audit Committee report)

Remuneration of Directors – pages 90 to 122
(Remuneration Committee report)

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSCORPORATE GOVERNANCE REPORT CONTINUED

Board of Directors

Philip Aiken AM
Chairman
Tenure: 9 years 1 month

Appointed: 1 May 2012

Nationality: Australian

Peter Herweck
CEO
Tenure: 3 years 3 months

Appointed: 1 Mar 20181

Nationality: German

James Kidd
Deputy CEO and CFO
Tenure: 10 years 5 months

Appointed: 1 Jan 2011

Nationality: British

(Chair of Nomination Committee)

(Member of Nomination Committee
until 1 May 2021)

Skills and experience
James is a Chartered Accountant and
joined AVEVA in 2004. Prior to his
appointment to the Board, James held
several senior finance roles within the
AVEVA Group and was Head of Finance
from 2006 until 2011, when he was
appointed CFO. James was interim Chief
Executive Officer from January 2017 to
February 2018, leading the merger with
the Schneider Electric Software Business
before being appointed Deputy CEO and
Chief Financial Officer of the enlarged
AVEVA Group. Prior to joining us, James
worked for Arthur Andersen and Deloitte,
serving technology clients in both
transactional and audit engagements.

Current external appointments
None

Skills and experience
Philip has 50 years of experience in industry
and commerce. From 1997 to 2006 he was
President of BHP Petroleum and then
Group President of Energy of BHP Billiton.
He has been Managing Director of BOC/
CIG, Chief Executive of BTR Nylex,
Chairman of Robert Walters plc, and Senior
Independent Director of Kazakhmys plc and
Essar Energy plc. Other previous roles
include: Director of National Grid plc from
2008 to 2015, Senior Advisor of Macquarie
Bank (Europe), Director of Miclyn Express
Offshore and Essar Oil (India), and
Chairman of the 2004 World Energy
Congress. He has served on the Boards of
the Governor of Guangdong International
Council, World Energy Council and Monash
Mt Eliza Business School. He was made a
Member of the Order of Australia (AM) in
2013 for his services to Anglo Australian
business relations.

Current external appointments
Chairman of Balfour Beatty plc (standing
down as Chairman in July 2021)

Non-Executive Director of Newcrest
Mining Limited

Director of Gammon China Limited

Skills and experience
Peter joined AVEVA as Chief Executive
Officer in May 2021 from Schneider Electric,
where he led their global Industrial
Automation Business and was Vice
Chairman of the AVEVA Board of Directors.

Peter started his career as Software
Development Engineer with Mitsubishi in
Japan, later joining Siemens, where he held
several executive positions in Factory and
Process Automation, along with leading
Corporate Strategy as Chief Strategy
Officer. In 2016 he was appointed to the
Executive Committee of Schneider Electric,
leading the Industrial Automation and the
Industrial Software business, which he
merged into AVEVA in 2018. He has a
global and extensive executive and senior
management background in Germany,
China, the US, France, Switzerland,
and Japan.

Peter holds an MBA from Wake Forest
University School of Business, and
Engineering degrees from Metz University,
France and Saarland University, Germany.
He is also a Harvard Business School
Advanced Management Alumni.

Current external appointments
Non-Executive Director of the supervisory
Board of Rudolf GmbH

Non-Executive Director of Teradyne, Inc

1. Appointed 1 Mar 2018 as Non-Executive Director

and 1 May 2021 as CEO.

Annual Report 2021 | aveva.com

Christopher Humphrey
Senior Independent Non-Executive
Director
Tenure: 4 years 11 months

Jennifer Allerton
Independent Non-Executive
Director
Tenure: 7 years 11 months

Ron Mobed
Independent Non-Executive
Director
Tenure: 4 years 3 months

Appointed: 8 Jul 2016

Nationality: British

Appointed: 9 Jul 2013

Appointed: 1 Mar 2017

Nationality: British and Swiss

Nationality: British

(Chair of Audit Committee, Member of
Nomination Committee)

(Chair of Remuneration Committee and
Member of Audit Committee)

(Member of Nomination, Remuneration
and Audit Committees)

Skills and experience
Chris is a qualified accountant with over
25 years’ experience managing
engineering and technology companies.
From 2008 until 2015 he was Group Chief
Executive Officer of Anite plc, after having
joined Anite in 2003 as Group Finance
Director. Prior to this, he was Group
Finance Director at Critchley Group plc and
held senior positions in finance at Conoco
and Eurotherm International plc.

Chris has a BA (Hons) in Economics, is a
Chartered Management Accountant, a
Fellow of CIMA and has an MBA from
Cranfield School of Management.

Current external appointments
Senior Independent Director and Chairman
of the Audit Committee of Vitec Group plc

Non-Executive Chairman of Eckoh plc

Skills and experience
Jennifer has more than 40 years’ experience
in technology, working in multinational
companies in the UK, the US, Brazil, Asia
and Switzerland. She speaks several
languages. Notably, she was a member of
the Pharma Executive Committee and Chief
Information Officer of F. Hoffmann-La
Roche, with responsibility for IT strategy
and operations for the Pharma division and
all Group IT operations. She has been a
Non-Executive Director of Oxford
Instruments plc and Paysafe plc.

She has degrees in Mathematics,
Geosciences and Physics and is an
Associate of the Chartered Institute of
Management Accountants.

Current external appointments
Non-Executive Director of Iron
Mountain Inc.

Non-Executive Director of Sandvik AB.

Non-Executive Director of Barclays Bank
Ireland plc

Skills and experience
Ron has a broad range of global executive
experience in digital information
businesses across a number of sectors and
regions. From 2012 until 2019, he was
Chief Executive Officer of the Elsevier
business of RELX Plc, prior to which he
held executive positions with Cengage
Learning, IHS and Schlumberger.

He is a Fellow of the Institute of Directors
and of the Energy Institute. Ron holds a
Bachelor’s degree in Engineering from
Trinity College, University of Cambridge,
and a Master’s degree in Petroleum
Engineering from Imperial College,
University of London.

Current external appointments
Supervisory Board Member of Fugro N.V.

Non-Executive Chairman of Robert
Walters plc

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSCORPORATE GOVERNANCE REPORT CONTINUED

Board of Directors continued

Paula Dowdy
Independent Non-Executive
Director
Tenure: 2 years 4 months

Olivier Blum
Non-Executive Director

Craig Hayman
Director

Tenure: 1 year 1 month

Tenure: 3 years 3 months

Appointed: 1 Feb 2019

Appointed: 30 April 2020

Appointed: 19 Feb 2018

Nationality: American and British

Nationality: French

Nationality: British and American

(Member of Remuneration Committee)

Skills and experience
Paula is the Senior Vice President & General
Manager EMEA for Illumina Inc., the global
leader in DNA sequencing and array-based
technologies. Prior to her appointment to
Illumina in 2016, Paula worked for Cisco in
a variety of senior sales, services and
strategy roles, notably as Senior Vice
President for Cloud, Software and
Managed Services. Paula also led the
integration of the analytics and automation
software acquisitions into the larger Cisco
sales force and was a Board observer for
one of Cisco’s investments.

She holds an MBA from Pepperdine
University and a Bachelor of Arts degree
from the University of California, Berkeley.

Current external appointments
None

Skills and experience
As Chief Strategy & Sustainability Officer
of Schneider Electric, Olivier leads the
development of Corporate Strategy,
Merger & Acquisition, Sustainability and
Quality. He has been a member of the
Executive Committee since 2014.

Olivier began his career at Schneider
Electric (SE) in 1993 in his home country of
France then has been living and working in
Asia (China, India, and Hong Kong) for
nearly two decades. Across these
countries, he’s held several leadership
positions in both businesses and customer
facing functions. Most recently Olivier led
the People Function as Chief Human
Resources Officer from 2014 until March
2020, winning Chief Human Resources
Officer of the Year award 2019 in France.

Olivier has always been passionate about
creating new businesses and engaging
with people with diverse backgrounds.

Olivier graduated from Grenoble École de
Management (GEM), France.

Current external appointments
None

Skills and experience
Craig Hayman was AVEVA’s Chief
Executive Officer from February 2018 until
May 2021. Under his leadership, AVEVA
achieved transformational growth
delivered through strong operating
performance and the successful
integration of the heritage AVEVA Group
with the Schneider Electric industrial
software business, and the 2021
acquisition of OSIsoft, unifying a world-
leading data platform with the leader in
industrial software.

Prior to joining AVEVA, Craig was Chief
Operating Officer at PTC, where he
returned the digital engineering business
to growth and introduced a new
generation of Industry 4.0-connected
manufacturing applications. Prior to joining
PTC, Craig was President of eBay’s
enterprise business and served more than
15 years in senior leadership positions at
IBM. At IBM he created and grew IBM’s
SaaS business and initiated and led 18
high performing acquisitions. He holds a
BSc in Computer Science and Electronics
from the University of London.

Current external appointments
None

Annual Report 2021 | aveva.com

Board leadership, purpose and culture

Purpose – why we do what we do

Values – how we live our mission

The Board establishes the Company’s purpose, values and strategy,
and satisfies itself that these and the Company’s culture are aligned.
Ensuring continued clarity of the purpose, values, strategy and
culture of the enlarged AVEVA is a key focus of the Board.

AVEVA’s purpose as established by the Board is:

‘We create industrial software that
inspires people to shape the future.
From water and energy to food and
infrastructure, our solutions turn
opportunities into business value.
We work with our customers and harness
the power of our ecosystem to deliver
solutions across the asset and operations
lifecycles. We use collaborative
innovation to empower people and
industries, enabling the planet to thrive.’

Having a clear purpose gives employees a sense of belief and
determination and a common goal. This supports a strong culture
which drives performance across the business both in terms of
financial and non-financial value.

The AVEVA LIFE values underpin who we are and what we do.
The LIFE Values of Limitless Possibilities, Integrity Always,
Flexibility Together and Excellence Every Day are weaved into
everything we do. Living our values is fundamental to our success,
the delivery of our strategy and it supports our purpose. We
present our values on page 55.

Culture – how we work together

We recognise that the cultural tone of our business comes from the
Board. At AVEVA, we see the benefits of a strong culture in the
success of delivering our strategy, in becoming a chosen partner
and in our employees’ engagement, retention and productivity.
The Board monitors and assesses the Group’s culture in alignment
with the purpose and values, receiving regular updates on culture,
strategy and progress from various members of senior leadership.
The Board also assesses cultural indicators such as management’s
attitude to risk, behaviours and compliance within the Group’s
policies and procedures and reviews the results on the annual
Company-wide culture survey.

Please refer to page 55 for more details on our culture initiatives.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSCORPORATE GOVERNANCE REPORT CONTINUED

Governance at a glance

The Board’s responsibility for leading the Company towards
achievement of its purpose continues to be supported by a robust
governance structure.

Our governance structure

Board independence (%)

Board
Provides strategic
leadership to
the Group

Executive
Leadership Team
Management Committee
chaired by the CEO,
setting Group strategy
and steering the
operational performance
of the Group

Nomination
Committee
Reviews Board
composition and
succession planning

Audit
Committee
Monitors and oversees
risk management and
control

Remuneration
Committee
Reviews Board and
senior management
remuneration

Membership and attendance
Excludes 18 additional unscheduled Board meetings held in response to the Covid-19 pandemic, the OSIsoft acquisition and deep
dive sessions on specific topics.

Director

Philip Aiken AM

Craig Hayman

Christopher Humphrey

Jennifer Allerton

Peter Herweck

Paula Dowdy

James Kidd

Ron Mobed

Olivier Blum

Board
meetings

Nomination
Committee

Audit
Committee

Remuneration
Committee

7(7)

6(7)

3(3)

–

3(3)

–

3(3)

–

3(3)

–

5(5)

–

5(5)

–

9(9)

–

8(9)

–

9(9)

Peter Herweck resigned as a member of the Nomination Committee on 1 May 2021.

Olivier Blum was appointed as Non-Executive Director and also a member of the Remuneration Committee on 30 April 2020.
Olivier attended all meetings except for one Remuneration Committee meeting which was convened at short notice, when he had
an unavoidable prior commitment.

Emmanuel Babeau resigned as Non-Executive Director and as member of the Remuneration Committee on 30 April 2020.

Annual Report 2021 | aveva.com

Chairman

Independent Non-Executive

Non-Executive Director

Executive Director

Board tenure (%)

1 – 3 years

3 – 6 years

6 – 9 years

+9 years

Board gender diversity (%)

Male

Female

Division of responsibilities

While our Board shares collective responsibility for the long-term sustainable success
of the Company, individual members undertake additional clearly defined activities on
the Board’s behalf.

The roles and responsibilities of the Board, its Committees, Chairman and the CEO are documented and regularly reviewed. The Board is
assisted by the Nomination, Remuneration and Audit Committees. Certain powers have been delegated to these Committees, and each
Committee has its own Terms of Reference which can be found at investors.aveva.com. The Board also maintains a list of Matters
Reserved for the Board which can be consulted at investors.aveva.com. When necessary, the Board may delegate very specific matters to
ad hoc subcommittees with a clearly defined remit and for a limited period.

Roles and responsibilities

Role

Responsibilities

Chairman

Philip Aiken AM

Philip’s primary responsibility is to lead and direct the Board and to facilitate effective communication
between Board members and senior management. He creates focused agendas to guide
deliberations and to ensure that sufficient time is spent on considering stakeholder interests in all
decision-making. He creates a culture of openness to promote efficient discussion, challenge and
debate in the boardroom.

Chief Executive Officer

Craig Hayman (to 1 May 2021)

Peter Herweck (from 1 May 2021)

Peter, and Craig before him, is responsible for proposing and implementing Company strategy,
managing day-to-day operations and leading the ELT. He takes the lead in engaging with all our
various stakeholders and providing regular feedback to the Board, not only on stakeholder views but
on all matters affecting the business.

Senior Independent NED

Christopher Humphrey

Christopher acts as a sounding board for the Chairman and acts as an intermediary for the other
Directors and shareholders. He is available to address shareholders’ concerns that have not been
resolved through the usual channels of communication. He also meets with all Non-Executive
Directors (without the Chair present) on an annual basis to lead the review of the Chairman’s
performance.

Deputy Chief Executive Officer &
Chief Financial Officer

James Kidd

James works closely with the CEO to help drive forward implementation of strategy. He assesses and
evaluates the financial performance of the organisation with regards to its long-term operational
goals, forecasts and budgets. He ensures the integrity of financial information that is presented and
reported to the Board and the market. He is also responsible for all treasury matters and the
implementation and maintenance of robust accounting systems and internal controls.

Independent NEDs

Jennifer Allerton

Paula Dowdy

Ron Mobed

Christopher Humphrey

Non-Independent NEDs

Olivier Blum

Peter Herweck (to 1 May 2021)

Company Secretary

David Ward (to 7 May 2021)

Claire Denton (from 7 May 2021)

With their diverse range of backgrounds, skills, knowledge and expertise, our independent NEDs
provide constructive challenge during deliberations, offer strategic guidance to the Board and are
proactive in providing their different perspectives. They take responsibility for monitoring the
performance of Executive Directors and achievement of agreed objectives.

As appointees of Schneider Electric, our majority shareholder and as per the Relationship Agreement,
Peter and Olivier add unique and valuable insight and constructive challenge to Board proceedings.
With appropriate management of conflicts, they can constructively scrutinise the performance of
management in meeting agreed goals and objectives which adds an extra layer of challenge to that
of the independent Non-Executive Directors.

Claire, as David before her, assists the Chairman with meeting preparation, the induction of new
Board members and provides corporate-governance guidance and advice to the Board. She further
ensures robust governance practices throughout the Company.

aveva.com | Annual Report 2021

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Applied Governance

Keeping the Board informed

The Board’s ability to make sound
decisions for the organisation is reliant
on the clear and timely information
provided by our senior leaders on a wide
variety of topics.

Cyber security
The Audit Committee Chair keeps the Board informed
through the Committee’s responsibility for monitoring
cyber security as a principal risk. There are also regular
updates in the CEO’s report to the Board on cyber
security initiatives, including the creation of a
strengthened Information Security team with dedicated,
knowledgeable new hires, such as a Chief Information
Security Officer, and Company-wide cyber security
policies and training.

Culture
The Board received regular people strategy updates
from Craig Hayman as CEO. These included details of
the employee engagement survey results, cultural
awareness initiatives, key new hires and developments
relating to D&I. Other culture-related initiatives from the
year included:

• an annual update by the Company Secretary on the
results of the summer’s Corporate Ethics training
programme and Corporate Ethics policy amendments;

• a review of UK gender pay gap reports led by the

Chief People Officer;

• extensive consideration of the OSIsoft cultural fit,

based on discussions between our ELT and OSIsoft
senior leadership, as well as market analysis
provided by third parties; and

• a Sustainability Jam initiative to emphasise and
promote our internal culture of learning and
provide a forum for ideas to be shared and
developed collectively.

All activities and reviews were underpinned by the
AVEVA Life Values and Business Conduct Guidelines.

For further information on our culture please see page 55.

Annual Report 2021 | aveva.com

Sustainability
Lisa Johnston, our Chief Marketing Officer and Chief
Sustainability Officer, keeps the Board informed on
sustainability matters. Discussion points in the year
included the increasing importance of sustainability, our
sustainability opportunity and mobilising talent to
realise it, mapping our position and path, and putting
systems in motion. The Company’s broad sustainability
initiatives support delivering on the Company’s purpose,
as set out on page 65. The Board also reviewed
proposals for a ten-year sustainability plan.

We launched an inclusive employee-wide programme
to generate short- and long-term ideas that will
complement our broader sustainability activities.
We generated ideas that can be fed into the R&D
product funnel and taken to market. Activities included
a Sustainability Hackathon and the Sustainability Jam
we refer to above. The Sustainability Jam’s outcomes
included nine ideas that we will take to market,
exceeding expectations. Around two-thirds of ideas
making the final list were submitted by women, and
concepts were presented by people of a total of
40 nationalities.

AVEVA Action for Good, which together with our
AVEVA Life Values will be implemented across the
combined Group, includes environmental projects.

During the year, we also established a Sustainability
Workstream Group comprising members of the Senior
Leadership Team and focused on building talent and
growing expertise by making new hires.

Next steps, which will engage the Board even more
closely with sustainability matters, include semi-annual
formal Board reviews of sustainability initiatives, the
provision of support to help establish an environmental
reporting baseline, and the evaluation of choices around
making pledges and setting goals.

The AVEVA Sustainability Pledge comprises a number of
key mitigating steps which we are executing, including:

• commitments to minimising carbon emissions by
increasing the use of recycling opportunities,
removing single-use plastics and reducing the use of
valuable natural resources;

• continually improving our tracking of emissions data;
• operating AVEVA Action for Good;
• donating 1% of our profit after tax to sustainability

initiatives; and

• serving industries that are of environmental

importance (e.g. Water) and improving our ability to
increase efficiency for a range of industries.

For further information on our work around sustainability
including TCFD please see pages 28 to 35.

Wider stakeholders
In order for the Company to meet its responsibilities to
shareholders and stakeholders, the Board ensures
effective engagement with, and encourage participation
from, these parties. The Board strongly believes that
companies do not exist in isolation and that they have
an important role to play in society, as well as a
responsibility to maintain mutually beneficial
relationships with stakeholders. Our culture is based on
open engagement and discussion, and on working in a
way that earns trust and builds successful partnerships.

The Board strives to safeguard and engage with all
shareholders and values the views of shareholders to
balance against that of the majority shareholder. Our
highly respected Investor Relations team delivers a
comprehensive investor relations programme to provide
day-to-day contact with our investors. The Executive
Directors are central to this programme through regular
meetings with institutional investors. During the year
the then appointed Executive Directors had over 500
contacts with investors on individual or group calls.
This particularly high level of activity reflected the
acquisition of OSIsoft and the rights issue associated
with it. The Board is kept informed about the views of
key shareholders, including any concerns. In addition,
the Chairman attends meetings or calls with key
shareholders who want to discuss corporate
governance or high-level corporate strategy.

The Chair of the Remuneration Committee also
engaged with major shareholders on matters to do with
the Company’s executive remuneration and consulted
AVEVA’s top 20 shareholders ahead of the AGM.

The Deputy CEO and CFO provides updates at each
Board meeting on investor relations activities and
changes to the shareholding register. The Board is kept
informed on topics such as AVEVA’s performance
versus its global peer group, feedback on results,
feedback on strategic initiatives such as M&A and
investors’ expectations around AVEVA’s opportunities
for long-term value creation.

A new brand marketing campaign is under
development to provide a wider audience with
awareness of the Company. At the Board’s request the
Chief Marketing Officer has presented material from the
campaign and revealed the work that is underway on
developing the new Company website.

The Board receives updates on sector trends which
include opportunities, developments and challenges
from CEO/CFO reports.

Please see pages 22 to 23 for detailed discussion of our
stakeholder engagement activities.

Governance
The Company Secretary is responsible for keeping the
Board and Committees informed about the corporate
governance landscape. There is a series of initiatives
aiming to support high-quality governance, including:

• an external corporate legal adviser supports the

Audit Committee’s review of forthcoming corporate
governance changes that will affect the Committee;

• a specialist remuneration adviser keeps the

Remuneration Committee fully informed about the
remuneration landscape, market expectations and
the requirements of the Code;

• the Board undertakes annual training, led by a

corporate legal adviser, on the responsibilities of
directors; and

• the Company Secretary leads an annual review of
constitutional documents, matters reserved for the
Board and Committee Terms of Reference.

Diversity and Inclusion
The Board is passionate about D&I, which has become
an even more significant topic for all businesses.
AVEVA is working to find its own voice and position,
particularly in view of the Group’s enlargement
following completion of the OSIsoft acquisition.
Initiatives in this area included:

• a dedicated Board session led by the CEO on the

Diversity & Inclusion status across the business and
initiatives that are underway and being developed;
• the inclusion of a discussion on Diversity & Inclusion

during the CEO’s June 2020 Podcast;

• as a result of the CEO’s calls with management for
ideas on how we can improve Diversity & Inclusion
staff mandatory Diversity & Inclusion training for all
staff was rolled out and, in the USA, employees were
granted an additional day’s leave in recognition of
Martin Luther King Jr Day;

• the launch of AVEVA’s first Global Diversity &

Inclusion Policy; and

• the hiring of AVEVA’s first full-time Global Director

for Diversity & Inclusion.

aveva.com | Annual Report 2021

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Applied Governance

Considering stakeholders in principal decisions

We enjoyed great success in FY19
and FY20, following improved execution
within the business, plus the benefits
of our customers’ momentum towards
digitalisation and the rewards of our
transformation projects.

However, due to current and expected Covid-19 disruption, it was
necessary to revise the plan for FY21. In particular, we carried out
some corrective actions in the first half to safeguard the best
interests of all Company stakeholders. We were especially
concerned with how we could maintain our services to customers
during the crisis and how we could keep our workforce safe. We
also considered how these decisions would impact on our ability to
deliver our strategic plans and returns for shareholders. The Audit
Committee was tasked with overseeing Covid-19 as a principal
risk, with the Board continuing to take the lead on the pandemic’s
impact on the wider business. The Executive Risk Committee,
chaired by the CEO, held additional meetings to provide a
comprehensive review of this key risk status.

The global Covid-19 pandemic has changed the risk profile within
which the business must now operate. The Audit Committee
closely monitors the Company’s risk-management activities to
ensure that we can integrate and track the new and changed risks
arising from the pandemic. Key areas of impact monitored by the
ERC and Board include talent, economic disruption and cyclical-
market dependency risks.

External advisers took the Board through scenario planning to
understand the risks and possible responses.

The specific effects on stakeholders of the actions taken to mitigate
the impact of Covid-19 include:

Customers: the ability to have our employees on-site to
install/maintain our solutions was reduced. This was offset by
our growing ability to deliver remote installation.

Investors: we have seen revenues decline, although this is
partially offset by a fall in the costs of doing business.

Communities: the actions we have taken to reduce the
spread of Covid-19 have also lessened our environmental
impact. We may continue operating with reduced travel,
flights in particular.

Employees: actions taken to reduce the risk of contracting
Covid-19 have made it more difficult for people to carry out
their work.

Please also see our Section 172 statement on page 11 and stakeholder
engagement on pages 22 to 23 for classification of our stakeholders.

Annual Report 2021 | aveva.com

Considering Employees
in relation to a Covid-19
decision

It is important to the Board that we stay true to our corporate
values and protect our people. Remote working was initiated
early for the majority of employees, the ELT hosted regular
All Hands calls inviting all employees to attend, wellbeing and
Covid-19 intranet hubs were launched, and the Employee
Assistance Programme was reviewed and extended. The
Board also aimed to understand the impacts of Covid-19 on
other principal risks such as Talent.

Following consideration of the financial position of the
Company, employee wellbeing and the needs of our
customers, we decided not to take advantage of any support
offered by the UK government in respect of Covid-19 relief
measures (such as staff furloughing, loans or the deferral of
tax payments).

The entire Board and ELT responded personally to the
Covid-19 crisis by giving 10% of their annual salary/fees to
the AVEVA charities fund this year.

The ELT, with the Board’s support, agreed to give employees
an additional day of annual leave and an allowance to enable
them to buy any equipment required to work effectively from
remote locations.

The Board was proud to approve the roll out of the
Company’s first all-employee share purchase plan, which
went live in January 2021. The Board is kept up to date on
take-up of the scheme via updates from the Remuneration
Committee. It has been encouraging to see the positive
response from employees sharing in AVEVA’s success.

Travel restrictions were introduced across the business. The
Board also considered the infrastructure required to support
those able to work from home and their working efficiency. In
considering the health, safety and wellbeing of all employees,
the Board addressed the online safety of employees working
remotely. This included how to mitigate the increased risk of
cyber attacks and data breaches, including support for
enhanced cyber security training. The Board also deliberated
the safety measures needed to protect the wellbeing of those
still required to be on-site to support customer delivery.

A range of scenarios were considered, including subdued
customer demand and the inability to deliver for a period of
time. Consideration was given to how we could manage the
workforce to address such challenges while protecting our
employees’ interests and engagement and retaining their
expertise within the business for the long term.

Actions were also taken to reduce costs and minimise the
impact on employees, with discretionary costs being reduced.

Considering Customers
in relation to a Covid-19
decision

Considering Shareholders
in relation to a Covid-19
decision

The Board places great importance on communicating
with investors. Engagement with our investors helps them
to understand our strategy, performance and governance
arrangements, and to make informed and effective
investment decisions concerning the Company, especially
during a time of uncertainty such as brought about by the
Covid-19 pandemic. This engagement makes clear our
prioritisation of the long term in our decision-making and
focus on delivery of consistent financial performance.
This is of particular importance given that there is a majority
shareholder in the Company. The Board ensures that
all shareholder views are taken into consideration when
making decisions.

In relation to Covid-19, the Board considered our current
liquidity and financial position and studied various scenarios
that could cause cash flow to deteriorate. While the Group
was in a strong financial position, given considerable
uncertainty it was prudent to reduce discretionary cash
outflows where possible. This will help ensure that we
emerge in a good position to deliver long-term sustainable
growth for shareholders. After considering factors, including
trading conditions, balance sheet strength, short- and
medium-term liquidity, cash flow requirements and feedback
from investors on dividend expectations, the Board declared
an interim and final dividend.

The Board considered continuity plans and our ability to
continue delivering for our customers if a significant
proportion of our workforce should be unable to work due to
sickness. It also considered near-term demand and how
customers’ priorities might change over a longer period.
The Board was satisfied with the continuity plans in place to
ensure the continued delivery of mission-critical work if a
large proportion of the workforce were to be absent. It gave
particular attention to how we will respond to changing
customer priorities over a longer time horizon.

We moved all customer and marketing events to a virtual
environment, including the AVEVA World Summit. This reflected
our ambition to become digital in everything we do. We also
accelerated our Cloud capabilities with the new AVEVA
Cloud business unit.

We are committed to orientating completely around our
customers’ consumption of our software and delivering
meaningful efficiency to their business. The Board also
sought to understand customer needs brought on by the
crisis. It also considered the impact on our five-year business
plan and how to reshape our strategy and plan to respond to
customer needs.

The Covid-19 pandemic, however, is likely to have an impact
on the industrial software market in the short to medium
term. This is due to the disruption to the customers’
businesses, weakness in the Oil & Gas market and substantial
economic uncertainty. In the long term, it may also influence
the behaviour of customers and consumers and encourage
the adoption of digital solutions. The digital solutions we offer
can help customers build more resilient, flexible businesses.

The Directors believe we are well placed to help our
customers digitalise and build momentum towards a
sustainable future. This is thanks to our end-to-end product
portfolio, which runs from simulation through design and
construction and into operations.

aveva.com | Annual Report 2021

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Applied Governance

Board oversight of the OSIsoft acquisition process

Timeline and milestones

2 April 2020
OSIsoft informed us it
was going to sell and
provided a business
overview presentation

10 April 2020
CEO-to-CEO discussions
were held to discuss
strategic fit and
preliminary structure

28 May 2020
A shortlist of potential
acquirers moved to
phase II due diligence

6 November 2020
The Combined Circular
and Prospectus was
published

12 October 2020
Update was provided on
the debt financing
relating to the proposed
acquisition

25 August 2020
AVEVA announced an
agreement had been
reached on the terms of
the acquisition

6 November 2020
A rights issue was
announced

24 November 2020
A General Meeting
was held at which
shareholders approved
the proposed
acquisition

28 January 2021
Progress update was
provided on regulatory
clearances

19 March 2021
Completion of the
acquisition occurred

18 March 2021
Final antitrust and
regulatory clearances
received

Annual Report 2021 | aveva.com

Suppliers
The ability of AVEVA’s existing supply chain to support the
enlarged Group was also considered. The Board was satisfied that,
with adequate planning, the existing supply chain would be able to
support the enlarged Group.

Key issues considered by the Board
Schneider Electric (SE) as majority shareholder
The Board is aware of the need for independent decision-making
free from conflict. As the Group’s majority shareholder, SE supported
AVEVA throughout the acquisition. Managing the relationship with
the majority shareholder and balancing it against the needs of
minority shareholders will be an ongoing priority for the Board.

Due diligence and risk assessment
Our corporate legal advisers, accountants and financial advisers
regularly reported to the Board on the due diligence process.
Specifically, the Board satisfied itself that management conducted
a robust due diligence process that was designed to:

•
identify potential risks and valuation considerations;
• assess their magnitude and the probability of the risks’

occurrence; and

• consider whether mitigation was possible and to

respond accordingly.

The Board questioned and challenged all outcomes of the process.
As part of the due diligence framework, given the size and risk of
the transaction the Board also considered the appointment of
appropriate advisers.

Counsel taken by the Board
The Board took advice during the process from corporate legal
advisers, sponsors, banks and financial advisers.

Regulators
Throughout the acquisition process, the Board has received
updates from its corporate advisers and Group General Counsel on
the status of the regulatory approvals required. Early in the process,
the Board wanted to understand the governance structure to help
it manage decision-making around the acquisition, as well as the
risk-management framework and possible governance structure
following completion. The ELT led an extensive due-diligence
process, and the Board reviewed and approved risk assessments
and mitigation factors.

Key stakeholders considered by the Board
Consideration was given to the impact of the proposed transaction
on employees, customers, shareholders and suppliers.

Employees
The ELT reported to the Board following interviews held with the
management team of OSIsoft to understand the internal dynamics
and culture. The Board spent a significant amount of time
analysing the cultural fit of OSIsoft with our current business and
how to manage cultural integration. The Board acknowledged that
there are clear differences between the cultures of the two
businesses, especially considering the listed company status and
regulatory environment in which AVEVA operates. It was decided
that these differences would be managed carefully through the
integration processes with dedicated culture workstreams. The
Board considers that appointing Dr J. Patrick Kennedy as Chair
Emeritus will smooth cultural integration.

The Board further considered the retention of key OSIsoft
employees and approved an integration plan covering all business
functions. It also considered the type of work the combined entities
could deliver and whether employees will have the skills required to
deliver such projects. The Board concluded that the addition of
OSIsoft will enhance our high results and customer-focused culture
and that talent management will have dedicated focus during
the integration.

Customers
The initial consideration of whether to proceed with the acquisition
centred around the strategic fit of the two organisations. The Board
was excited about the possibility of extending the range of
products and services available to our customers.

Combining the two organisations will enhance opportunities to
create sustainable value and improve scale and scope to lead the
digital transformation of the industrial world, driving greater
efficiency and sustainability. It will also spur on further
diversification, with increased exposure to sectors such as
renewable energy. It will also strengthen our product offering to
support key areas, such as sustainable communities, clean and
safe water supply, and worker/asset safety.

Shareholders
The Board continues to oversee timely and transparent
announcements to the market. Work has been focused on
supporting the rights issue, reaching more than 500 investors via
calls and presentations since the announcement of the OSIsoft
acquisition. The Board also considered finance structuring, the use
of capital and debt, and the impact on returns for shareholders.

The Board had extensive meetings to ensure the Prospectus
included as much information as possible for shareholders to make
an informed decision on whether or not to support the acquisition.

We carefully considered the strategic fit, financial merits and
valuation of OSIsoft as well as our ability to successfully integrate it
into our business over a long period. We concluded there was a
strong strategic fit and the deal should deliver attractive returns
over the long term.

aveva.com | Annual Report 2021

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Applied Governance

Board activities

The Board has regular deep-dive sessions on specific topics,
which are in addition to scheduled Board meetings. During the past
year highlights included sessions on AVEVA’s Finance Transformation
programme (Advance), the ERP implementation project, alternative
performance measures and on Annualised Recurring Revenue (ARR).
These exclude the additional meetings that were required in view of
Covid-19 decisions and the OSIsoft acquisition.

• Attended dedicated meetings to review, discuss and consider
the proposed acquisition of OSIsoft including the rights issue
and communications to the market.

• Approved the refreshed AVEVA Brand Strategy.

Covid-19
Stakeholders considered

• Ensured that the Board’s governance documents such as the
Articles and Committee Terms of Reference provide sufficient
flexibility for operating remotely and via videoconference.

• Received updates on arrangements for key annual events of the
Company which had to be cancelled, postponed or moved to a
virtual environment due to Covid-19.

• Actively monitored Covid-19 developments in order to make
timely decisions concerning employee safety and mental
wellbeing, customer requirements and welfare of other
stakeholders such as suppliers.

• Approved funding to ensure that employees could continue to

work effectively from remote locations.

• Approved decision to not furlough any employees or take up

any government funding in respect of Covid-19.

• Received updates on employee engagements such as the

quarterly CEO videocasts which are circulated to all employees,
which include comprehensive updates on Covid-19 and activity
via the Covid-19 intranet Hub.

• Approved a proposal by the ELT to grant one additional annual

leave day for all employees.

Finance and risk management
Stakeholders considered

• At each Board meeting, discussed reports by the CEO and CFO
including updates on financial results and position, analysis of
performance versus budgets and forecasts, investor relations
activities and shareholder/analyst financial expectations.

• Early in FY21, the Board discussed and considered the

Company’s response to the Covid-19 pandemic, including any
necessary revisions to financial plans for the year ahead, capital
allocation and internal control framework.

• Approved FY20 final dividend and FY21 interim dividend.
• Reviewed the FY22 budget and financial plan.
• Considered the Board’s appetite for risk in order to achieve its

strategic objectives.

• A dedicated risk management session which included reviews

of principal risks, emerging risks and risk appetites.

• Considered updates from the Executive Risk Committee (ERC)

presented by the Audit Committee Chair.

• A dedicated session to consider the Company’s

taxation strategy.

Strategy
Stakeholders considered

• Discussed, challenged and approved the five-year business

plan which includes M&A strategy, sales strategy,
transformation strategy, people strategy, as revised in view of
Covid-19.

• Considered in detail the business and commercial consequences
of the Company’s transition to subscription and Cloud revenue
streams, with a focus on increasing Annualised Recurring
Revenue (ARR).

Key to Stakeholder groups
Investors

Customers

Employees

Communities

Annual Report 2021 | aveva.com

Investor relations
Stakeholders considered

Cyber threats
Stakeholders considered

• At each Board meeting reviewed updates from the Investor

Relations team on share price, performance matters,
shareholder register activity, proxy analyst views and
competitor landscape.

• Approved results announcements and quarterly trading updates.
• Reviewed feedback from investors on the success of the virtual
roadshow covering the proposed transformational acquisition;
over 100 institutions connected with during 30 hours of calls.
• Approved market announcements on the OSIsoft acquisition

and rights issue and reviewed investor feedback.

Culture
Stakeholders considered

• Discussed regular updates by the Deputy CEO & CFO on
Security Transformation including recruitment of a Chief
Information Security Officer.

• Received updates from Audit Committee on cyber risks as a
principal risk including overview of management actions and
mitigations put in place to manage the risks.

• Reviewed steps taken to increase security measures whilst

AVEVA’s workforce operates remotely.

• Approved roll out of a mandatory ‘Think Security’ training
course in February 2021, to help employees protect the
Company from security threats.

• Dedicated review of cyber risks, IT breaches and

regulatory compliance.

Finance systems
Stakeholders considered

• Received updates on culture initiatives across the organisation.
• Considered the fit of OSIsoft culture when discussing the merits

of the proposed acquisition.

• Reviewed results of employee engagement surveys conducted

• Regularly discussed updates on Integration & Transformation

through the year to including surveys on remote working, Future
of Work, views on the OSIsoft acquisition and diversity
initiatives.

• Reviewed and approved roll out of Corporate Ethics policies and
training including new Diversity & Inclusion policy and training
and the Modern Slavery statement.

• Reviewed Real Estate plans to support Company strategy,

OSIsoft integration, avoid isolated teams and enhance culture.

• Reviewed reports from the Audit Committee on the

comprehensive Speak Up programme which allows employees
and third parties to submit Speak Up reports.

Governance and reporting
Stakeholders considered

• Continued NED-only meetings at the end of each Board meeting
as agreed following the Board evaluation of the previous year.

• Reflected on results and progress against actions of the

externally facilitated Board evaluation conducted by Better
Boards for FY20. Reviewed and agreed actions further to the
results of the FY21 internal Board evaluation.

• Considered and approved actual and potential director conflicts

of interests especially in view of the OSIsoft transaction.

• Approved the Group’s Modern Slavery Statement for publication

on the Group’s website.

• Refined process of reporting from Committees to the Board by
the Committee Chairs, deciding on the best format for such
reporting and the frequency.

• Continued review of governance framework in view of the

enlarged Group such as Matters Reserved for the Board, Terms
of Reference and delegated authorities.

(Advance Programme) status.

• Considered Transformation re-planning due to Covid-19 and
the assessment of risks and issues related to the Covid-19
situation. Adjusted risk governance framework.

• Reviewed transfer pricing policy to align with business model,
reduce risk and ensure consistent approach across the Group.

M&A
Stakeholders considered

• Reviewed updates by the Executive Directors on M&A

opportunities and the M&A market in general.

For FY22 the Board will focus on the following priorities:

• Post Covid-19 recovery
•
• Continued transitions to subscription and Cloud

Integration of the OSIsoft group

revenue streams

• Sustainability
• Diversity and Inclusion
• Succession planning
• Workforce engagement

aveva.com | Annual Report 2021

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Applied Governance

Engaging with our workforce

Workforce engagement
The Board and the ELT work closely together on workforce
engagement, regularly considering the best approach to take in the
light of Code provisions.

The Code outlines three suggested workforce engagement
approaches. Following an analysis of AVEVA’s application of the
Code, the Board reviewed, considered and discussed its existing
workforce engagement practices. Although the Board recognised
merit in each of the Code’s workforce engagement mechanism
proposals, it noted that it must consider the size and structure of
our business, including its international workforce scope, and select
an approach within that context that most practically delivers the
underlying spirit and ambition of the Code even if it is not one of the
three prescribed approaches. The Code is also supportive of
alternate methods where an explanation is provided.

While the Board does not follow one of the three proposed
methods, it believes its preferred arrangement for addressing
workforce-related matters and understanding employee concerns
is effective and appropriate.

The pandemic has had an impact on the way in which the Board
planned to have engagement with its AVEVA colleagues. Board
meetings and office visits have not been possible during this year,
as health and safety for our people was prioritised. This has meant
that workforce engagement has had to be managed using other
means and video conferencing meetings have been the preferred
method. In addition to the routes to engagement described below,
Executive Directors and Non-Executive Directors have sought
opportunities to engage with employees on strategic and key
operational topics such as technology roadmaps, product
development, D&I, digital marketing and the ERP project.

Gauging opinions
During the year, we carried out various employee surveys to gauge
views on the OSIsoft acquisition, working from home, cyber
security awareness, D&I initiatives, Company culture and general
workforce opinions on what is working and what is not. Some of
the results highlights are:

• 91% of colleagues have said that the strategic rationale of our

transaction makes sense and 86% agree they are excited about
the future, according to initial results.

• a Global Recognition Platform was launched to provide a way
of showing appreciation for colleagues who are role modelling
our AVEVA LIFE values.

• a Global Wellbeing intranet hub was launched and is updated
regularly with relevant content including talks with practical
advice held by wellbeing experts that are accessible to
all employees.

We also launched a Future of Work project, which is still ongoing,
to help us assess future employee and office-accommodation
needs. Input is solicited from all employees and teams globally.

Quarterly all-employee calls are held during the year, led by the
ELT and these are consistently attended by more than 4,000
employees globally. Any questions raised during the calls are
followed up with answers being made available on the Company
intranet. Topics covered include overall business performance
including financial and economic factors influencing performance,
updates on the OSIsoft transaction (including a session with
Dr J. Patrick Kennedy, the Chairman Emeritus), working from home
arrangements, matters relating to sustainability initiatives and our
Action for Good programme. All materials used during calls are
made available to all employees following the call.

Employee wellbeing
Wellbeing is a key focus for us, as it is vital to our shared success
that we can support and nourish the health, personal growth and
wellbeing of every employee. The year featured several associated
initiatives, including the appointment of an ELT member as the
Wellbeing Lead Sponsor across the Group.

We also launched our new wellbeing hub on our intranet, providing
access to the support employees may need in these difficult times.
The hub is interactive, and employees can also post content,
comments and ideas. We marked World Mental Health week with
a wide range of activities designed to support mental wellbeing
across our organisation. These included a very well-received and
accessible series of science-based webinar presentations from
Dr John Briffa, a practising doctor, writer and international speaker.
Each one of these focused on practical tips covering various areas
of wellbeing, such as sleep, breathing, fitness and nutrition.

Keeping informed
During the year, the Deputy CEO and CFO provided regular
all-employee newsletters and intranet updates on progress with
OSIsoft, updates on the Transformation programme, Diversity &
Inclusion, Wellbeing, our Sustainability initiatives and other topics
relevant to all employees. Progress in this area was also covered in
the CEO’s quarterly podcasts, which also included Covid-related
news, guidance on achieving work/life balance while working from
home, major contract wins, D&I, cyber security and more.

Concerns and grievances
The Audit Committee has responsibility for whistleblowing,
including our Group-wide ‘Speak Up’ programme, and provides
regular reports to the Board. AVEVA’s Speak Up reporting
channels, which are managed by an independent external third
party provider, and procedures are available to all stakeholders
and are not restricted to employees only. Details of how any
stakeholder can raise concerns, with anonymity, are included on
the Company’s website.

Annual Report 2021 | aveva.com

Independence and conflicts of interest
Issues relating to tenure and independence that have been considered
during the past year relate to the tenure of the Chairman and the
independence of the Schneider Electric-nominee Directors.

Chairman tenure
The Board believes that it is in the best interest of the Company
and our shareholders that the current Chairman should oversee the
completion of the OSIsoft acquisition to ensure the long-term success
of the Company. The strength of the Senior Independent Director
ensures there is a balance of responsibility at the top of the Company.
The Nomination Committee, led by the Senior Independent Director,
therefore considers that Philip Aiken’s continuing Chairmanship will
benefit the Group during a period of expansion; this will ensure
stability and consistency in leadership at a time when we are
embarking on an integration plan to create a combined, stronger
business. See page 81 of the Nomination Committee’s report for
further information on the Chairman’s tenure.

Independent Non-Executive Directors
The Board has delegated authority to the Nomination Committee in
relation to assessing the independence of Non-Executive Directors
and determining the balance of independence required for the
Board and its Committees.

In accordance with Provision 10 of the 2018 Code, we consider
Jennifer Allerton, Christopher Humphrey, Ron Mobed and Paula
Dowdy to be independent in character and judgement, and free
from conflicting business or other interests that could interfere with
the exercise of their independent judgement. In accordance with
Provision 11 of the 2018 Code, the four independent Non-Executive
Directors comprise half of the Board if the Chairman is excluded.

The Committee reached this conclusion having considered all
relevant circumstances that are likely to impair, or could appear to
impair, independence, including the criteria set out in Provision 10
of the 2018 Code. When assessing the independence of Non-
Executive Directors, the Committee considers whether or not a
Director has an interest, position, association or relationship which,
when judged from the perspective of a reasonable and informed
third party, is likely to influence unduly or cause bias in decision-
making in the best interests of the Company and its stakeholders.
None of the four independent Non-Executive Directors or their
immediate families has ever had a material relationship with the
Group. None of them receives additional remuneration apart from
Directors’ fees, nor do they participate in the Group’s share plans or
pension schemes. None of them serve as directors of any
companies or affiliates in which any other Director is a director.

Non-Executive Directors appointed by
Schneider Electric (SE)
During the past year, Peter Herweck and Olivier Blum represented
the Company’s majority shareholder, Schneider Electric. As such,
they have not been considered independent within the meaning of
the 2018 Code. Each of Peter Herweck and Olivier Blum are still
considered to not be independent, Peter Herweck now by virtue of
his Executive position, and Olivier Blum as an SE-nominee Director.
However, each of these Directors made, and continue to make, a
significant contribution to Board discussions and bring a wide
range of experience to proceedings. The Board considers both
Directors to be independent in character and judgement, and the
Directors are aware of their requirements to consider all
stakeholders in their dealings, not only the interests of SE.

As mentioned below, the Board has established a formal protocol
to ensure the independence of Directors by governing any potential
conflicts of interest for all Directors. Complying with the protocol,
Peter Herweck and Olivier Blum stood and continue to stand aside
when matters in which they have an interest are discussed, as all
Directors do. We expect Directors to develop their own informed
view on the Company’s activities. In this regard, Olivier and Peter
neither simply implemented demands nor represented SE as major
shareholders. In addition, they did not, and do not, seek to avoid
their responsibility to make independent decisions by relying solely
on the knowledge or judgement of their employer.

The Board, under the leadership of the Chairman, and the
Nomination and Remuneration Committees, and under the
direction of the Chairs of those Committees, also uses a range of
conflict management tools to manage potential or actual conflicts
relevant to the SE-nominee Directors and will continue to do so in
respect of any replacement Non-Executive Director appointed by
Schneider Electric following Peter Herweck’s appointment as CEO.
These include temporary separation or recusal from the relevant
process or decision, restriction of access to certain information and
sharing authority through collective decision-making.

All Directors
In accordance with the Company’s Articles of Association and the
Companies Act, the Board can authorise any matter that would
otherwise result in a Director breaching his or her duty to avoid a
conflict of interest. The Board is responsible for determining if a
Director is independent in character and judgement, and whether
any relationships or circumstances are likely to affect a Director’s
judgement or appear to do so. The Company Secretary maintains a
conflict register, a record of actual and potential conflicts, together
with any Board authorisation of the conflict. The authorisations are
for an indefinite period. The Board reserves the right to vary or
terminate these authorisations at any time.

The Board has adopted procedures to assist with managing
conflicts. As part of this process, the Board:

• considers each conflict situation separately according to the

particular situation;

• considers the conflict situation in conjunction with the Articles;
• keeps records on authorisations granted by Directors and the

scope of any approvals given; and

• regularly reviews conflict authorisations.

When they are appointed, all Directors are required to disclose any
other appointments or significant commitments. They must also
notify the Chairman and Company Secretary of any changes or
new appointments. The Board considers all external directorships
prior to appointment, reviewing any potential conflict of interests
and time commitment for both Executive Directors and Non-
Executive Directors.

Our Board members share a deep sense of responsibility and in
practice Board members’ time commitment exceeds the minimum
requirements set out in their letters of appointment, particularly in
the case of the Chairman of the Board and the Chairs of
Committees. In particular, the Non-Executive Directors regularly
have meetings with executive management to stay informed of all
Company matters. Please see page 66 for a summary of meeting
attendance by Directors.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSNOMINATION COMMITTEE REPORT

Nomination Committee report

We are pleased to present our report
on the Nomination Committee’s activities
for the past financial year, focusing on
the key highlights of the Committee’s
work. Please refer to our Terms of
Reference at investors.aveva.com
for a full overview of the Committee’s
responsibilities.

During the last year, the Committee focused on the following
key areas:

• the completion of an internal Board evaluation led by the

Chairman;

• a review of the Board and Committee structure in anticipation

of the Group’s forthcoming enlargement; and

• consideration of succession planning, also in anticipation of

the enlargement.

Board evaluation
An external evaluation of the Board was carried out during FY20, a
year earlier than required under the 2018 Code. During FY21 an
internal evaluation, led by the Chairman with the support of the
Company Secretary, took place.

The FY21 Board evaluation process

Scope and
methodology

• The Committee was keen to have a

comparison against last year’s evaluation
results to measure progress.

• We therefore decided to use the same

Evaluation
process

Conclusions

questionnaire as in the previous year to enable
us to make such a comparison. This ensured a
comprehensive review and would provide
assurance on the progress made since FY20
and identify any areas where further action
was required.

• During a Board meeting, the Chairman and
Company Secretary briefed the Directors on
the internal evaluation process.

• Directors completed a confidential online

questionnaire to assess the effectiveness of the
Board, its Committees, the Committee Chairs
and the Chairman.

• Better Boards, and independent board

evaluation company, prepared a final results
report comparing the overall results of the
evaluation with those of the previous year.

• The draft evaluation report was discussed with
the Chairman and Company Secretary during
separate meetings, prior to the Chairman
presenting the final report to the Board. The
Committees also reviewed the results in the
context of their own performance. An action
plan was agreed by the Board and updates
will regularly be provided to the Board.

3/3

Philip Aiken AM
Nomination Committee Chair

Membership and attendance

Chair

Philip Aiken AM

Committee members

Ron Mobed

Christopher Humphrey

Peter Herweck (resigned on 1 May 2021)

Attending by invitation

Company Secretary

Other members of the Board

Advisers

Independence split

Chair: 1

Non-independent: 1 (nil, following Peter
Herweck’s resignation)

Independent: 2

Annual Report 2021 | aveva.com

Results of the FY21 Board evaluation
The FY20 review identified several areas for improvement in the way that the Board operated and consequently the Board took several
actions during FY21 to address the areas identified.

The Committee was pleased to note that the final results report showed that the Board has made steady progress on all board effectiveness
measures that were reviewed during FY20 and FY21. In some instances changes might have seemed marginal, but it was considered an
achievement to be highlighted in view of the challenges posed by the Covid-19 pandemic and the uncertain geopolitical environment, the
demands of the OSIsoft acquisition and the fact that all Board and Committee meetings had to take place virtually.

Progress against outcomes from the previous year

FY20 outcome

Actions identified in FY20

FY21 progress

Time dedicated to strategy
discussions

Increased time for NED-only meetings

Enhanced Board working practices

Continued focus on Board and ELT
succession planning

The Board planned to hold a focused day
spent on our long-term strategy later in the
year. This was to be preceded by interviews
between the Chairman and each Director,
to understand what Directors would want
to achieve from the day and to maximise
the effectiveness of discussions.

The agenda for all scheduled Board
meetings would in future include a NEDs-
only session, without the Executive Directors
and management present.

Some opportunities for improving the flow
of information to Directors were identified.
These will be actioned by the Company
Secretary, who continuously reviews all
processes to improve the quality of Board
papers and to implement best-practice
processes for reporting to the Board.
Specifically, some Directors felt the reporting
from Committees back to the Board could be
enhanced. It was also noted that the process
for arranging NED visits to Company offices
could be improved.

Focus on succession planning across the
Company increased substantially during
the year. The Board and the Committee
were to continue supporting ELT efforts in this
regard. The search for a new Chairman was
to start, with internal and external candidates
being considered. This would create fresh
opportunities for the Committee to formulate
Board and ELT succession planning.

Increased emphasis on Environmental,
Societal and Governance (ESG) issues

The Directors considered the most effective
ways to increase the Board’s focus on
ESG issues.

Strategy is now a regular Board agenda item.
The Board’s dedicated strategy day has been
postponed due to Covid-19 restrictions and the
view that this session would be most productive
if held as an in-person meeting. It will be
scheduled as soon as possible.

The Board now holds NEDs-only sessions at
each Board meeting, agreeing that it has been
healthy to have these informal discussions.

Every Board meeting agenda now
features updates from the Committee Chairs.
Committee papers are also made available
to all Board members when appropriate.
All visits to Company offices have been on
hold during the past year due to Covid-19
restrictions. The Board is currently reviewing
alternative arrangements to further improve
workforce engagement.

The Committee, with the Board’s support, had
agreed to postpone the annual Board and ELT
succession-planning review until after the close
of the OSIsoft acquisition. In view of the closing,
the Committee can now comfortably include in
its review the OSIsoft senior executive structure
and continue its annual succession planning
review. Succession planning continues across
the Company at levels below the ELT. During
the year the Board had a dedicated session on
D&I across the Company and plans to make this
an annual feature on its corporate calendar.

The Chief Sustainability Officer presents to the
Board twice a year on progress made with
sustainability initiatives. We have strengthened
the team that leads on sustainability initiatives
through dedicated recruitment.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSNOMINATION COMMITTEE REPORT CONTINUED

FY21 actions
Based on the comparative data in the report, the areas emphasised
that would make the greatest difference to the effectiveness and
performance of the Board are:

The Committee’s work on D&I is closely aligned with our
succession-planning activities. We deliver these through the design
and development of innovative and effective talent-management
processes to improve the depth, quality and diversity of the
Company’s talent.

The Committee and Board acknowledge that gender diversity on
the Board falls short of the targeted 33% female representation, as
recommended by the Hampton-Alexander Review: FTSE Women
Leaders, Improving gender balance in FTSE Leadership. Please
refer to pages 35 for the breakdown of gender diversity statistics
across our business. However, we note that we meet the minimum
recommendation set out by the Parker Review: A Report into the
Ethnic Diversity of UK Boards 2017, with one member, Ron Mobed,
who identifies as British Asian.

The Committee has taken into consideration the gender and ethnic
balance of the Board as a key factor during the current recruitment
process for an additional Board member. We continue to work
towards meeting and subsequently exceeding the targets set
by both the Hampton-Alexander and the Parker Reviews.

D&I is about treating people fairly, equitably and without bias,
and creating conditions that encourage and value diversity and
promote respect, dignity and belonging. This involves making
efforts to redress inequalities, including systemic inequalities.
In addition to professional diversity, the Board endorses the five
focus areas defined in the Global D&I Policy i.e. gender, race/ethnicity,
religion/faith/belief, sexual orientation and disability. Diversity is an
essential part of our nomination and succession-planning processes.

For further information on the Company’s D&I work, please see pages 34
to 35.

Succession planning
Following the OSIsoft acquisition, we are moving to a new phase of
growth. It is therefore an appropriate time for us to review the
composition of the Board and to support this transition.

The Committee leads the Board’s annual dedicated succession-
planning session. This important annual review was postponed in
2020 to complete the acquisition and consider the implication
of the larger Group. In anticipation of the succession-planning
review, the Committee has started reviewing the structure of the
current Board to ensure that it remains effective in view of the
enlargement. This work would then be further enhanced following
the acquisition by the succession-planning/talent review with the
full Board.

We continue to carry out Company-wide talent-mapping exercises
annually. The Committee and the Board also regularly review
progress on diversity and succession-planning initiatives.
We have also rolled out succession-planning mapping across
all functions and all levels of employees during the past year.

1. Continued review of FY20 actions
The Board will keep under review progress against the actions
identified in FY20 to ensure that all items are addressed effectively.

2. Succession planning
The focus of succession planning should be to optimise the
composition of the Board and its Committees to keep pace with
the evolution of the Group. This would ensure that the Board
has the appropriate mix of skills and diversity to drive forward
its strategy. Please see below for details of the Board’s succession
planning process.

3. Continuing to build on the current strengths of the
Board
The results of the Board evaluation indicate that the Board is on a
good path of continuous development. The Board has distinctive
strengths and it believes that boards which understand their
individual and collective strengths excel. The Board will therefore
consciously take time to discuss how it can continue to make
the best use of individual and collective strengths of its members.
These discussions will be included in its strategy, succession
planning and training sessions.

During the forthcoming year the Board will discuss and implement
further actions it may deem necessary to improve its effectiveness.

Diversity & Inclusion
We have a diverse Board where ‘every member has a voice’ and
which is dedicated, committed and ambitious.

The Board’s membership is also diverse geographically, with
nationals from Australia, France, Germany, the UK and the USA.
This diversity aids the Board’s discussions and decision-making
processes, given the international nature of our business.

A key feature of our D&I initiatives is our focus on embracing all
diversity. We have taken great strides in this regard. Following
recruitment, we now have a well-established D&I team working
across the Company, and several senior employees act as
ambassadors. Initiatives are led by the ELT with regular reporting
to the Board. During the year, the Committee and Board also
started a regular review of recruitment processes to ensure
consistent, fair and transparent recruitment practices. The Board
also supported the roll-out of:

• our first Global D&I Policy;
• mandatory D&I training for all staff; and
• the first ethnicity pay gap report (to be published in June 2021)

to capture more diversity and ethnicity demographic
information, to understand our current workforce and put into
place appropriate employee policies.

Annual Report 2021 | aveva.com

Succession planning in relation to the Chairman

The 2018 Code
introduced a change
in recommended
practice regarding
a Chairman’s tenure,
stating that a
Chairman should step
down after nine years
of service. At the time
of the AGM, Philip
Aiken’s tenure will
exceed the new
recommended

maximum duration, as he was first appointed as Chairman
in 2012. The Senior Independent Director has led the Board
discussion on this matter as we try to find a balance between
adhering with the 2018 Code and doing what is best for the
business and stakeholders. While the Board aims to comply
with the 2018 Code’s recommendations, its overriding duty
is to ensure that any action taken to comply is in the
Company’s overall best interests. As a Board, we need to
take several factors into account when reviewing this issue.
These include successes that we have seen under Philip’s
tenure, especially the:

• combination with the Schneider Electric industrial

software business;
improvements in our corporate governance processes and
controls over the last few years as we moved from the
FTSE250 to the FTSE100; and
integration of OSIsoft on which we are embarking.

•

Committee and Schneider Electric, the Directors consider it is
in the best interests of the enlarged Group, its shareholders
and other stakeholders that the succession plans to appoint
a suitably qualified replacement for Philip be delayed such
that the Company can continue to benefit from the current
Chairman’s industry experience and broad sector knowledge
during the period of integration of the OSIsoft Group following
the acquisition. Accordingly, Philip has entered into a new
appointment letter with the Company reflecting his continued
appointment as Chairman of the Company until April 2022
with the option for such appointment to be extended until the
conclusion of the 2022 AGM. In light of the overwhelming
support by the shareholders of the acquisition of OSIsoft, LLC
at the EGM on 24 November 2020, and the overwhelming
participation in the rights issue to fund the acquisition, we are
confident that shareholders will be supportive of Philip’s
continued tenure as Chairman to see the Company through
this period of integration.

To that end, we believe that non-compliance with this aspect
of the 2018 Code at this time is appropriate given the unique
circumstances the business faces, and the value-add that
Philip continues to bring in the role as Chairman. Starting
from its first meeting following the 2021 AGM, the Committee
will keep Philip’s appointment under review as we move
through the integration process and will put in place
appropriate succession plans. I will take over as de facto
Chair of the Nomination Committee when Philip’s succession
planning is discussed. All discussions regarding
the extension of Philip’s tenure were also led by me as Senior
Independent Director.

As stated in the Prospectus, in light of the acquisition and
following further discussions with the Board, the Nomination

Christopher Humphrey
Senior Independent Director

In accordance with its responsibilities, the Committee undertakes
medium and long-term contingency planning for unexpected Board
changes and unforeseen departures. As part of this, the Committee
assesses the skills, expertise, independence and diversity required
on the Board, considers the current and future challenges facing
the Company and the Board composition required to support the
long-term growth and strategy of the Company.

With these responsibilities in mind, the Committee has initiated a
search for a suitable candidate to join the Board as an independent
Non-Executive Director to strengthen the expertise on the Board
and further enhance our Board diversity.

The Board has an established approach for seeking and evaluating
candidates for Board positions, which is being applied for the
current Non-Executive Director search. Prior to the Committee
making a recommendation to the Board for an appointment,
it undertakes the following process:

•

Identifying the skills, experience and knowledge required for,
and complementary to, the role, also taking into account results
from the annual Board evaluation process.

• Agreeing the role specification and capabilities required.
• Selecting a global executive search firm.
• Reviewing candidate profiles and preparing a shortlist of

diverse candidates for interview.

• Making an in-depth assessment of each candidate’s suitability

for the role, based on interviews and references.

• Recommending the preferred candidate to the Board.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSFollowing review, we were satisfied that each Director continues
to contribute the time, as well as the focus, care and quality of
attention, to fulfilling their duties to the Company and its
shareholders. Based upon the evaluation of the Board, its
Committees and the continued effective performance of individual
Directors, the Committee recommended to the Board that all
Directors stand for re-election at the Company’s AGM. It is also
recommended that Olivier Blum stands for election in accordance
with our Articles of Association.

Annual review
In its annual review, the Committee:

• assessed its own performance and effectiveness;
• concluded that, while it operates effectively and that no

immediate changes are required, this should be reviewed when
new Board members are recruited, or Schneider Electric appoints
a new Non-Executive Director to the Board and Committee in
accordance with the Relationship Agreement; and

• reviewed and approved its Terms of Reference, taking into

consideration the OSIsoft acquisition, the enlarged Group and
the regulatory landscape.

The Committee also continually reviews its annual calendar to
ensure the effective and efficient discharge of its responsibilities
under the Code.

Philip Aiken AM
Nomination Committee Chair

NOMINATION COMMITTEE REPORT CONTINUED

We are at the initial stage of our search and are hopeful that we
will be able to secure an appointment prior to the end of 2021.
The Committee will engage an independent agency, not connected
to the Company, to undertake the independent Non-Executive
Director search with the brief to secure a candidate who meets
our diversity objectives and who will contribute to the achievement
of our strategic objectives.

As Peter Herweck has taken up an Executive position on the Board,
Schneider Electric, the Company’s majority shareholder, is entitled to
appoint a replacement Non-Executive Director to the Board and to
the Nomination Committee pursuant to the terms of the Relationship
Agreement. The Company is in discussions with Schneider Electric
regarding such appointments. Please see pages 125 to 126
for further detail on the terms of the Relationship Agreement.

Board and Committee composition
The Committee is committed to ensuring that the Board and its
Committees have the right balance of skills, experience and
knowledge to help achieve its strategic objectives and to guarantee
the continued delivery of shareholder value. We therefore
continuously review the composition of the Board and its
Committees and the required skills and behaviours. This is more
relevant than ever in view of the OSIsoft acquisition. The framework
within which we continue to assess the composition of the Board,
its Committees and future Board appointments is based on the
terms of the Relationship Agreement, AVEVA’s inclusion in the
FTSE100 Index, regulatory requirements and the specific functions
which Non-Executive Directors would be required to fulfil on
Committees. Following consideration, the Committee believes
that the Board composition and that of its Committees has
provided an appropriate balance of skills, knowledge and
experience throughout the year.

As part of our annual review responsibilities, we considered the
time Non-Executive Directors are required to give to their roles.
All Non-Executive Directors receive a formal letter of appointment
setting out clearly what is expected of them in terms of time
commitment, Committee service and their responsibilities outside
Board meetings. These terms are reviewed and renewed when
necessary. It is understood and anticipated that the time required
of Directors will fluctuate depending on the demands of the
business and other events. This has certainly been the case
in FY21, given the Board’s responsibility to steer the Company
through challenges arising from the outbreak of the Covid-19
pandemic and the OSIsoft acquisition.

Annual Report 2021 | aveva.com

AUDIT COMMITTEE REPORT

Audit Committee report

Christopher Humphrey
Audit Committee Chair

Membership and attendance

Christopher Humphrey (Chair)

Jennifer Allerton

Ron Mobed

5/5

The Committee usually meets four times a year. We
held an additional meeting in June 2020 to cover
year-end reporting.

Attending by invitation
• Chairman
• CEO
• Deputy CEO and CFO
• External audit partner
• Group General
Counsel and
Company Secretary

• Head of Internal
Audit & Risk
• Other senior

members of the
Group Finance team

Our focus is the integrity of the
Group’s financial reporting,
audit processes, key risk management
and internal controls

The Audit Committee (the Committee) is appointed by the Board.
The members are Christopher Humphrey (Chair), Jennifer Allerton
and Ron Mobed. The Board regards all Committee members as
independent Non-Executive Directors. Other Board members and
relevant senior management regularly attend Committee meetings
at the invitation of the Chair. They provide company insight, advice
and reports to help the Committee consider AVEVA’s approach to
its primary responsibilities. The external audit partner is also invited
to attend all meetings.

Role of the Committee
The Committee is appointed by the Board to monitor the Group’s
financial integrity. It confirms to the Board that the financial
statements within the Annual Report are fair, balanced
and understandable and that they comply with all applicable
legislation and regulation. It also reviews the Group’s risk-
management processes and internal controls, which include
maintaining oversight of the internal audit function. Further,
the Committee manages the relationship with the external auditor,
reviews the scope and terms of its engagement, and runs regular
effectiveness reviews to monitor its performance.

Committee membership and skills
I was appointed Chair of the Committee in November 2016.
The Board believes I have the necessary recent and relevant
financial experience as required by the UK Corporate Governance
Code (‘the Code’). I am a Chartered Management Accountant and
a Fellow of CIMA, and was previously CEO of Anite plc, a UK-listed
company, formerly holding the position of Chief Finance Officer.
Prior to that, I held senior positions in finance at Conoco, Eurotherm
International plc and Critchley Group plc. I am also Chair of the
Audit Committee of Vitec Group plc. I maintain an up-to-date
understanding of financial and corporate governance best practice
by attending training sessions and updates presented by the major
accounting firms.

The Board also considers that the other members of the Committee
have a broad range of appropriate skills and strong experience
covering financial, commercial and operational matters. You can
find brief biographical details for all Committee members on
pages 62 to 64.

In my capacity as Committee Chair, I am pleased to report on our
operations during the past year. My emphasis is on the specific
matters we have considered, including compliance with the Code
and associated Guidance on Audit Committees. I confirm that we
have fully complied with the requirements of the Code as issued in
July 2018.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSThe Committee continues to assess the internal control framework
while employees are working remotely due to the Covid-19
pandemic. We consider that this remains suitable.

The Company’s formal whistleblowing policy, AVEVA Speak Up,
has been communicated to employees. The policy formalises the
processes by which we report, consider and action issues of
concern within our organisation. This includes the disclosure of
information made in the public interest which relates to suspected
wrongdoing or dangers at work. All staff and external parties are
able to raise genuine concerns without fear of reprisals, even if the
concerns turn out to be mistaken.

The Speak Up policy reporting process is not a replacement for
individual complaints or grievances that would ordinarily be dealt
with under HR’s grievance procedures.

The Committee is satisfied that the process is effective and reviews
all key issues that are reported.

Key estimates and judgements
The Committee discusses with management and the auditor the
approaches taken when assessing all key estimates. These include:

impairment of assets;

• revenue recognition;
•
• provisions for impairment of financial assets;
• valuation and useful life of intangible assets;
• the valuation of retirement benefit obligations; and
• determination of the lease term for contracts with a renewal or

termination option.

Annually, the Committee also considers the going concern principle
(upon which the financial statements are prepared) and the
Group’s viability statement disclosures.

AUDIT COMMITTEE REPORT

Audit Committee Terms of Reference
The role of the Committee is set out in its Terms of Reference,
which are available at investors.aveva.com. The Committee monitors
the integrity of the Group’s financial statements. The Committee
members (as part of the full Board) also review all proposed
regulatory announcements to be made by the Group. They give due
consideration to any significant financial reporting judgements
that are included or required.

The Committee considers:

• the effectiveness of financial reporting and internal controls;
• compliance with legal requirements;
• accounting standards; and
• the Listing, Disclosure and Transparency Rules of the Financial

Conduct Authority.

We also review any proposed change in accounting policies and
any recommendations the Group’s auditor may make regarding
improvements to internal controls and the adequacy of the finance
function’s resources. The Committee also assesses and reports to
the Board on the process established to ensure that the Annual
Report is fair, balanced and understandable.

Risk and internal controls
The principal risks the Group faces are set out on pages 36 to 46.
On at least an annual basis, the Committee considers the Group
risk register and related management controls. Throughout
the process, the Board or the Committee:

• considers whether areas should be looked at more closely

through specific control reviews;
•
identifies areas where internal controls need improvement; and
• agrees action plans to deliver any necessary or recommended

enhancements.

The Committee has also developed a framework to gain assurance
over the system of internal financial and operational controls. This
comprises the following:

• the annual Internal Audit Plan: the Committee receives regular
updates from the internal audit function on the outcomes of
agreed independent reviews; and

• the use of qualified third parties to undertake specialist reviews
in more technical areas; and an annual assessment by the
Committee of the whole system of internal financial and
operational controls.

Annual Report 2021 | aveva.com

Significant accounting issues
The Group finance function and the external audit process identify significant accounting issues and judgements, which are reviewed by the
Committee. The table below features the significant issues the Committee considered in the year.

Significant issue

How it was addressed

Revenue recognition

The Committee reviews proposed high-value contracts with customers before they are finalised. Associated
revenue recognition is often also considered at this stage.

The external auditor presented its findings regarding key revenue recognition testing and associated risks.
The Committee reviewed and concluded that revenue recognised in the year is materially correct.

Adjusted and exceptional
items

Management continues to use Alternative Performance Measures such as Adjusted EBIT and recurring
revenue. For FY21 we have also started reporting Annualised Recurring Revenue (ARR) in addition to
GAAP-based KPIs. The Committee reviews the basis of these measures and the processes and controls
related to their reporting.

Pensions

During each reporting period, management is required to reassess the actuarial assumptions and overall
valuation relating to our defined benefit pension schemes. The UK scheme remains the most significant and is
the main area of focus. Management, with the assistance of their actuaries, have updated assumptions. We
are satisfied that the valuation of the pension liabilities is within an acceptable range and that the
assumptions have been updated to reflect market conditions at the year end. We are also satisfied that
recognising the UK pension surplus, in accordance with IFRIC 14, is still appropriate.

Share-based payments

The two key areas of judgement for management are the fair value of new options granted in the period and
the vesting assumptions made on all open option grants. We are satisfied that the fair value of the LTIPs
granted in the year are appropriate, based upon the model used. We have also confirmed that the vesting
assumptions management made are consistent with the latest available Board-approved forecasts.

Bonuses

Bonuses for FY21 were payable based upon the following key metrics:

• operating cash flow for H1;
• Remuneration Committee discretion based on overall H2 and annual performance;
• recurring revenue;
• adjusted EBIT; and
individual KPIs.
•

The Committee examines closely the accounting controls and judgements involved in determining the
accounting for management bonuses.

Asset impairment

The Group has significant goodwill and other non-current assets. Management completed an assessment for
impairment triggers during the year, using the same Covid-19 forecast as for the going concern assessment.
It presented the findings in detail to the Audit Committee, and we are satisfied there have been no
impairment triggers and that the likelihood of impairment is low.

OSIsoft

Covid-19

The Committee worked closely with management on key aspects of the OSIsoft acquisition over recent
months. These included significant accounting areas, such as identification and estimation of fair value of
intangible assets, tax accounting and the tax step up. The Committee also had oversight of the review of key
controls in place in the OSIsoft business, the plan for future integration of the Finance function, the financing
strategy for the acquisition, and an assessment of external auditor independence for candidates to take on
the audit of OSIsoft.

The Committee continues to consider the various potential impacts of Covid-19 on accounting judgements.
This work includes reviews of forecasts, asset impairments, share-based payment vesting and impairment.
The Committee has also overseen the preparation of going concern and long-term viability statements,
paying attention to modelling, scenarios, liquidity positions and covenants.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAUDIT COMMITTEE REPORT CONTINUED

Internal audit
The in-house internal audit function executes annual internal audit
plans. These give the Committee an independent view on the
strength of internal controls and mitigation of some of the biggest
areas of risk we face. Where an audit review requires specialist
resource or capacity, then independent third parties may be used.
As a Committee, we believe this resourcing model provides the
most effective approach and we continue to develop and invest
in the internal audit function.

External audit
The Audit Committee advises the Board on the appointment of the
external auditor. Ernst & Young (EY) has been our auditor since the
end of FY03, and cannot therefore remain our auditor beyond
2023. We carried out a tender process during the year, and
PricewaterhouseCoopers (PwC) has been appointed from the year
ending 31 March 2023. Management and the Chair of the Audit
Committee met with four firms to assess their approach and ability
to meet AVEVA’s needs. Two firms were invited to the tender
process, which involved several meetings with management and
culminated in a presentation to the Committee in October 2020.
The Committee felt that the breadth and depth of the proposed
team’s experience, geographic coverage, and auditing approach
put PwC in the strongest position to suit our needs.

The Board subsequently approved PwC for recommendation to
shareholders at the 2022 AGM. The Company will seek shareholder
approval of the reappointment of EY for their final year at the AGM
on 7 July 2021. The Committee will oversee handover and induction
arrangements to ensure a smooth transition during this last year of
EY’s tenure. Schneider Electric has appointed PwC as auditors from
its December 2021 year end (i.e., from 1 January 2022), and the
Committee has also considered the implications of this for the
AVEVA audit.

The Company confirms that we have complied with the provisions
of the Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender Processes and
Audit Committee Responsibilities) Order 2014 issued by the
Competition and Markets Authority.

Audit partners are rotated every five years, and the auditor issues a
formal statement of independence each year. Marcus Butler
completed his fifth year with the Group in the year ended 31 March
2020. Chris Voogd and Ruth Logan replaced him for the year
ended 31 March 2021. The Board and the Audit Committee are
satisfied that the auditor’s independence has been maintained.

The Company has a non-audit services policy to ensure that the
external auditor’s provision of non-audit services does not impair its
independence or objectivity. The Audit Committee must pre-approve
all non-audit services. A list of pre-approved services is reviewed on
an annual basis, from which the Group CFO may give written
authorisation for services up to £20,000. The Audit Committee
receives a report each year analysing fees paid for any non-audit
work by the external auditors. EY performed the following non-audit
services for AVEVA in the year ended 31 March 2021:

• reporting accountant work associated with the rights issue;
• review procedures for the Group’s interim results; and
• payroll procedures in Mexico.

The final two items are recurring.

Annual Report 2021 | aveva.com

The Committee advises the Board on the auditor’s remuneration.
The audit fees paid to EY for the statutory audit were £1.9 million
(FY20: £1.0 million). This is higher than in the previous year
recognising the impact of the acquisition of OSIsoft on the audit.
The Committee continues to keep under review the cost
effectiveness and quality of the audit service.

The Committee also discusses with the external auditor the nature,
scope and results of the audit. The effectiveness of the external
audit process depends on the identification of appropriate audit
risks and a robust assessment of key estimates and judgements at
the start of the audit cycle. Each audit cycle, we challenge the
auditor on their test of management’s assumptions. We also
request feedback from management on their assessment of
auditor effectiveness. Overall, management and the Committee
are satisfied with the quality and effectiveness of the external
audit process.

The Committee meets quarterly with the auditor without any
members of the Executive team being present. I also meet
individually with the Head of Internal Audit & Risk, the CFO and
other senior finance-team members.

Audit planning and main audit issues
At the Committee’s September 2020 meeting, the auditor
presented its audit plan for FY21. This included a summary of the
proposed audit scopes for the year for each of the Group’s
subsidiaries. It also featured a summary of what the auditor
considered to be the most significant financial reporting risks facing
the Group, together with the auditor’s proposed approach to
addressing them.

At the March 2021 Committee meeting the auditor presented an
update to the audit plan and approach including changes to the
risk assessment, materiality and scope as a result of the completion
of the OSIsoft acquisition.

FRC reviews
The FRC’s Conduct Committee reviewed the Group’s Annual
Report and financial statements for the year ended 31 March 2020
as part of its routine monitoring activity. The Conduct Committee
did not report any material errors in compliance with relevant
reporting requirements, or require any corrections. It did make
some recommendations to support continuous improvements in
our reporting. These have now been addressed by additional
disclosures where material and relevant.

The FRC has also requested that we advise shareholders that this
review provides no assurance that the Annual Report and financial
statements are correct in all material respects. Its purpose is
not to verify the information provided but to consider compliance
with reporting requirements. The FRC and its officers, employees
and agents therefore accept no liability for any reliance on its
review by third parties, including but not limited to shareholders
and investors.

EY’s external audit of AVEVA for the year ended 31 March 2020
was not subject to an FRC Audit Quality Review. Should there be
any further reviews, we will advise shareholders in the subsequent
Annual Report.

Assessing the content of the Annual Report
The Board takes responsibility for determining that the whole
Annual Report is fair, balanced and understandable and that it
provides the necessary information for shareholders. The Committee
concentrates its review only on the financial statements and
the process underpinning the long-term viability statement.
The Committee recommended to the Board the adoption of the
financial statements as at 31 March 2021.

Annual evaluation of the Committee performance
The Committee’s effectiveness was assessed as part of the internal
Board evaluation as further explained in the Nomination
Committee report on page 78. The evaluation concluded that the
Committee operates effectively and that no immediate changes to
its composition are required. The Board, however, will continue to

review actions flowing from the results of the evaluation and the
Committee will assess and implement any actions that might be
required. Further, we set and measure our performance against
specific objectives every year. These objectives are set annually
and the details of our objectives for FY22 and the progress made
are summarised on pages 88 to 89.

Committee activities in FY21
I chaired five scheduled meetings of the Committee in FY21,
working closely with management to ensure that we received the
comprehensive information and support we required.

Agendas include annual reporting requirements, risk assurance
processes and other ad-hoc matters which may arise and require
robust review and challenge.

We dealt with the following specific matters at meetings during FY21:

Meeting

Matters discussed

Meeting

Matters discussed

May
2020

• approval of prior minutes and actions;
• review of Committee objectives;
• year-end reporting including:

October
2020

• status update
• review of draft accounts
• accounting judgements
• tax update
• Going Concern & Viability
• external auditor’s reports
internal audit update; and

•
• update on audit tender.

June
2020

• approval of prior minutes and actions;
• year-end reporting including:

March
2021

September
2020

• status update
• external auditor’s reports

• formal recommendations to the Board.

• approval of prior minutes and actions;
• review of Committee objectives;
•
internal audit update;
• external auditor planning;
• risk management governance update;
• cyber security update;
• OSIsoft acquisition update; and
• Enterprise Resource Planning (ERP)

programme update.

• approval of prior minutes and actions;
• review of Committee objectives;
interim reporting including:
•
• accounting update report from

management

• tax update
• treasury update
•
• review of draft interim financial

interim report from external auditor

statements

• risk management update

• OSIsoft acquisition update;
• ERP programme update;
•
internal audit update; and
• external audit tender update.

• approval of prior minutes and actions;
• review of Committee objectives;
• OSIsoft acquisition update;
• FY21 year-end planning including:

• external auditor planning
• revenue recognition, ARR, revenue

disclosures

internal audit update, including FY22 plan;

• ERP programme update;
•
• risk governance update;
• treasury update;
• tax update;
• review of Committee Terms of Reference;
• non-audit services policy;
• whistleblowing summary; and
• appointment of external auditor.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAUDIT COMMITTEE REPORT CONTINUED

Audit Committee objectives in FY21:
The Committee agreed several objectives at the start of the financial year, as shown in the following table.

Objective

Activity in the year

Progress

Integration and
transformation

Cyber

Auditor rotation

Update presentations to the Audit Committee were
made in September 2020 and October 2020.

A cyber update was provided at the September
2020 Audit Committee.

An independent external expert review of
cyber security is planned for May 2021, to align
with the fruition of internal cyber initiatives and
maximise value.

The Board received an update on cyber risks within
our own products as part of an AVEVA Group
Technology review presented by the
Chief Technology Officer in March 2021.

The new EY partner has been installed.

The tender process to succeed EY has also been
completed, with the appointment of PwC.

As the finance transformation programme
continues, there are some critical projects that the
Audit Committee should monitor. These include the
new ERP project, transfer pricing, our legal entity
rationalisation programme and shared services.

The Audit Committee should monitor the progress
of these projects and understand the associated
project and implementation risks. We will seek
regular updates from management.

The Committee will continue to focus on
monitoring the cyber risks AVEVA faces, and
on the management actions and mitigations
put in place to manage them. The Committee
will seek regular updates on any cyber incidents.

Significant projects are currently underway,
where progress should be regularly reported
to the Committee.

EY introduced a new audit partner to
AVEVA for the year ended 31 March 2021.
The Committee has overseen and monitored
the handover process and dedicated the
necessary time to ensure the relationship with
the new audit partner has been successful.

The Audit Committee also oversaw the tender
process to appoint the audit firm to succeed EY for
the audit of the year ending 31 March 2023 and
onward. The process was arranged and run by
management but with strong oversight by the
Audit Committee, which made a recommendation
to the Board on this appointment.

The Audit Committee will closely monitor any
dependencies or issues for auditor independence
during the planned transition period.

Annual Report 2021 | aveva.com

Objective

Activity in the year

Progress

Continued development of
the internal audit function
towards risk-based reviews

The continued development of enterprise risk
management in 2019 and early 2020 enables us to
take a risk-based approach to internal audit in
FY21. As a result, the Audit Committee will be
focused on the outcomes and assurance levels it
receives on higher-risk areas of the business. These
will include areas of principal risk and subsidiaries
and processes where controls need strengthening.

The FY21 Internal Audit Plan, as presented at the
March 2020 Committee meeting, detailed plans
and justifications for risk-based reviews. So that the
Committee may receive assurance on the highest-
risk areas of the business, the plan leverages:

• the enterprise risk-management process;
• an AVEVA audit universe, our audit history; and
• external perspectives on higher-risk areas.

Internal Audit has also continued to focus on
expanding and embedding the AVEVA internal
control framework.

Taxation

Covid-19

AVEVA will implement a new global transfer-
pricing methodology during FY21. The Committee
will seek to understand any risks related to this
implementation and how any risks will be
incorporated into accounting processes
(tax provisioning).

In addition to an Audit Committee presentation
in June 2020, a presentation on Tax strategy
was also provided to the main Board in July 2020.
Regular bi-annual tax updates have been provided
at the Committee meetings in October 2020 and
March 2021.

The Committee will also focus on oversight of the
global tax compliance processes, designed and run
by management to ensure accurate and timely
compliance with local legislation.

The global Covid-19 pandemic has changed the
risk profile in which AVEVA must now operate,
with new and altered risks. The Committee will
closely monitor the Company’s risk-management
activities to ensure these new and changed risks
are recognised, integrated and tracked.

Impacts from the Covid-19 pandemic continue to
be accounted for within the Company’s principal
and key risks. Key areas of impact include talent,
economic disruption and cyclical market
dependency. The Executive Risk Committee and
the Board monitor these risks.

Audit Committee objectives for FY22
In March 2021, the Committee considered the objectives for the year ahead. It agreed to prioritise the following focus areas:

integration and transformation, as a continuation from the FY21 objective;

•
• revenue metrics;
• audit firm rotation;
• risk-based internal audit reviews and management assurance plans;
• taxation – integration of the OSIsoft business, transfer pricing and external tax advisers; and
• corporate governance developments.

Christopher Humphrey
Audit Committee Chair

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSREMUNERATION COMMITTEE

Remuneration Committee report

Annual Statement

Dear Fellow Shareholder
I am pleased to present the Directors’ Remuneration Report for the
year ended 31 March 2021.

Covid-19 at AVEVA
The financial year ended 31 March 2021 featured unprecedented
changes in how we conduct our business and significant impact on
our customers, partners, shareholders and employees.

Covid-19 has reinforced the importance of the health and
wellbeing of our global employees. Reassuringly, AVEVA moved
quickly to protect and ensure the safety of our employees,
customers, partners, suppliers and investors.

Although it was a year of more difficult market conditions, AVEVA
reacted in an agile and virtual manner to maintain productivity
across all business functions globally.

The focus of our remuneration decisions during the year was on
ensuring we take a balanced approach reflecting the huge range of
challenges facing individuals, businesses and governments in light
of the Covid-19 pandemic. We also recognise the significant
contributions of all employees across the Group who have
continued to deliver for our customers, partners and shareholders.
The Committee made the following key deliberations against the
backdrop of AVEVA’s great resilience in the markets in which we
operate, the wider general economy and developing corporate
governance and shareholder views:

• As a response to Covid-19, our Executive Directors,

Non-Executive Directors and Executive Leadership Team
members donated 10% of their base salary/fees for a six month
period to further AVEVA’s Action for Good work – an initiative
that supported medical care, medical workers, food and
education in the response to the pandemic.

• No salary reductions or pay deferrals were implemented for

any employees.

• AVEVA took no government assistance or furloughed

any employees during the year in any of the countries where
we operate.

• Globally bonuses for 2020 were paid on time as reported.
• There were no reductions to our overall bonus and incentive
schemes globally or benefits programmes in any country,
although thresholds, targets and maximum targets were all
set at levels that were more challenging relative to the Board
approved budget. This ensured that incentives were only paid
in the current climate for strong performance.

• Overall global headcount grew during the year as the business
continued to invest in Cloud, AI and customer-support roles.

• We made no redundancies related to Covid-19.
• 2021 salary increases for employees globally will go ahead

from 1 April with continued focus on improving the competitive
pay of the wider workforce.

• AVEVA maintained its dividends during the year as it prudently

managed its cash flow during Covid-19 and continued
unhindered with its normal investor activities.

As the world starts to recover from Covid-19, business carries on.
It is against this backdrop that I am proud to announce a solid set
of financial results for this year.

Jennifer Allerton
Remuneration Committee Chair

Membership and attendance

Chair

Jennifer Allerton

Committee members

Ron Mobed

Paula Dowdy

Olivier Blum1

Attending by invitation

CEO

CFO

CPO

8/8

1. Appointed 30 April 2020.

This report is in four sections:
• this Annual Statement;
• Remuneration at a glance;
• a summary of the key elements of the Directors’

Remuneration Policy, approved at the 2020 AGM
(part A); and

• the Implementation Report (part B).

Annual Report 2021 | aveva.com

Board changes
During the year, Emmanuel Babeau retired from the Board.
We were pleased to welcome Olivier Blum to the Remuneration
Committee, who was appointed as Non-Executive Director on
30 April 2020. There were no other changes to the Remuneration
Committee’s membership during the year.

On 27 April, AVEVA announced that Craig Hayman had decided to
return to the USA for personal reasons and will leave the Group
after the AGM in July 2021. His employment will cease at the end of
his notice period (31 January 2022). A summary of the
remuneration arrangements in respect of Craig Hayman’s
cessation of employment, which are in line with the Directors’
Remuneration Policy, are set out on page 98.

Peter Herweck has been transferred from Schneider Electric on
request of the AVEVA Board to the role of AVEVA’s CEO, effective
1 May 2021. An overview of the remuneration arrangements for
Peter Herweck, which are in line with our recruitment policy, are
outlined below. In broad terms, the overall package for Peter
maintains his overall compensation opportunity compared to his
Schneider Electric package and reflects the nature of his
appointment as CEO of AVEVA.

• Base salary: £760,000 with effect from 1 May 2021
• Maximum annual bonus: 200% of salary (50% of any bonus

earned is deferred into shares under the Deferred Share Scheme).

• Housing allowance £130,000.
• Car allowance: £14,400.
• Tax equalised – income tax and social security burden will

remain the same as if he had worked and lived exclusively in his
home country (i.e. Germany).

• Personal liability insurance and personal insurance protection.
• Private medical insurance scheme for his benefit, his spouse or

civil partner.

• Peter Herweck will not participate in the AVEVA LTIP and will
not receive a pension or cash in lieu of pension contributions
from AVEVA. He will retain his Schneider Electric LTIPs and
will continue to participate in his Schneider Electric pension
arrangement (the cost of which is being met by Schneider Electric).

Acquisition of OSIsoft
Despite the impact of Covid-19, AVEVA made a strategic decision
to acquire OSIsoft in August 2020. OSIsoft is a San Francisco-based
software business specialising in application software for real-time
data management. The transaction provides an exciting opportunity
to combine both companies and reinforces AVEVA as a true global
leader in industrial software.

AVEVA worked hard during the year to close this transaction
before the year end. This included a significant mid-year rights
issue which was positively received by shareholders with a
take-up rate of 99.1%.

Incentive outcomes for FY21
AVEVA has delivered a solid set of results during a challenging
year. While revenue growth was flat year on year, we achieved a
higher level of margin than in FY20. Our key focus for the first half
of the year was on maintaining and protecting cash flow while
maintaining normal business activities.

As AVEVA moves more towards a subscription model and
using software as a service (SaaS), the proportion of recurring
revenue maintained its momentum, increasing over the year
from 62% to 68%.

The FY21 annual bonus award was based on the delivery of
key financial and strategic measures. Accordingly, the financial
performance and the achievement of the strategic measures
resulted in the Executive Directors receiving a bonus of 57% and
56% of maximum bonus for the CEO and CFO respectively.
Consistent with the current policy and due to shareholding
requirements having been met, the 50% bonus deferral is reduced
to 25%. It will be deferred into shares vesting over three years.

The 2018 Long-Term Incentive Plan (LTIP) award has performed
very well during the three-year measurement period. Our strong
TSR, EPS and total revenue performance have resulted in both
Executive Directors achieving 88% of maximum.

The Remuneration Committee gave careful consideration to the
incentive outcomes for FY21, taking into account various internal
and external factors. These included the Company’s overall
performance, with our share price increasing significantly over the
course of the year, our response to Covid-19 and the stretching
nature of the targets set. Despite the full year revenue growth
being flat, but taking into account the efforts to protect cash flow in
H1 and the strong H2 performance, the Committee decided to
award 19% of the 30% maximum opportunity for the short-term
bonus metrics. The Committee is satisfied that the annual bonus
and long-term incentive resulting outcomes are appropriate and
consistent with the experience of shareholders and will be
consistently applied to the wider workforce.

Similar to previous year’s statements, we have included a
double-page ‘at a glance’ summary that clearly describes the
remuneration arrangements and performance outturns in FY21
and FY22. You can see this analysis on pages 96 to 97.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REMUNERATION COMMITTEE CONTINUED

Annual Statement continued

Remuneration Policy
The Remuneration Committee undertook a full review of the
Remuneration Policy last year. Looking to the future, no changes
to the Policy are being proposed at this time. It is the Committee’s
opinion that the Policy operated as intended over the last financial
year. We also believe the changes implemented last year allow us
to remain competitive in the global market and are aligned with
investor expectations.

Taking into account the views of our shareholders,
the impact of the OSIsoft acquisition and the current
Covid-19 circumstances, we outline below the key decisions
regarding the implementation of the Policy for FY22.

LTIP: for FY22, the maximum LTIP opportunity will
remain unchanged, at 175% of salary for James.
Craig Hayman and Peter Herweck will not be
granted an LTIP award for FY22.

Salary: for FY22, James Kidd received a salary
increase of 3.3% with effect from 1 April 2021.
This increase reflects the increased size and
complexity of the business and the increased
scope of the CFO role following the acquisition of
OSIsoft as disclosed in the acquisition prospectus.
Following the announcement on 27 April 2021
that Craig Hayman will leave the Group after the
AGM in July 2021, it was agreed that the base
salary increase to £825,000 disclosed in the
acquisition prospectus for Craig with effect from
1 April 2021 would not be implemented.

Bonus: in line with FY21, the maximum annual
bonus opportunity for FY22 will be 150% of
salary for James. As detailed on page 116,
Craig will be eligible to earn a reduced and time
pro-rated bonus for the period 1 April 2021
to 7 July 2021 (the date on which he steps down
from the Board in relation to the financial
year FY22).

Pensions: Craig and James will remain aligned to
the wider workforce and receive a pension
contribution of 10% of salary.

Annual Report 2021 | aveva.com

LTIP performance measures: the Committee
considered replacing the Total Revenue Growth
measure with Annualised Recurring Revenue
(ARR) for the FY22 LTIP award. Although ARR is
an important measure to AVEVA, as it provides
an indication of the health of recurring revenue
and is aligned to the future strategy of the
business, the Committee is mindful that the use
of ARR is not yet an established KPI. The
Committee therefore agreed that for the LTIP
award to be granted in 2021 performance will be
based on EPS growth (50%); and relative Total
Shareholder Return (50%). The use of ARR as a
LTIP performance measure will be kept under
review for future LTIP awards.

•

In-employment shareholding requirements
for Craig and James will remain unchanged
and continue to be at market-leading levels,
equivalent to 415% and 325% of salary
respectively.

• Post-employment shareholding requirements
for Craig and James remain unchanged and
aligned to the formal post-employment
shareholding guidelines approved at the AGM
in 2020.

As discussed on page 76 , workforce engagement activities during
FY21 concentrated on engaging with our employees during
monthly virtual town hall meetings conducted by the Executive
Leadership Team. These have proved vital in keeping the global
workforce in touch with each other during a difficult year, as well
as providing an upward channel for views, comments and debate.
They have also provided opportunities to share remuneration
updates with the global workforce. Subjects have included the
Global AVEVA bonus plan, how it has tracked during the year and
the Company’s quarterly financial performance.

We have been restricted in our efforts to engage more fully with
employees during the year. The Board has acknowledged that
more needs to be done in FY22 to ensure the wider workforce is
represented. Efforts are therefore underway to create greater
transparency on the activities of each of the Committees and the
outcomes regarding remuneration. These also aim to ensure
employees’ views and feedback are listened to and form part of our
decision-making process going forward.

In conclusion
I hope you find this report useful and that it provides clarity and
transparency on the remuneration landscape at AVEVA as we
continue our growth journey. As always, if shareholders have any
questions or comments, the Remuneration Committee will be
delighted to receive them and will respond.

Jennifer Allerton
Remuneration Committee Chair

Committee activities during the year
Remuneration activities continue to change at pace as AVEVA
completed transformational work following the merger with
Schneider Electric.

Key deliverables this year included:

• successfully launching the global employee share scheme

across 20 countries with an impressive take-up rate of 60%,
and 50% participation;
implementing job architecture globally to ensure consistency
and fairness in the mapping of employees to job levels;

•

• completing an external compensation benchmarking exercise

for the Executive Leadership Team;

• constructing global salary scales which will help ensure we

remain a competitive payer and provide a key focus on reducing
our gender pay gap;

• facilitating the implementation of the rights issue impacting all

•

external and internal shareholders; and
launching a new global recognition scheme for all employees to
ensure we never forget to say thank you to each other.

Given the impact of the OSIsoft acquisition, the Committee believes
strongly that performance measures for outstanding LTIP awards
should be measured on a ‘like-for-like’ basis. To maintain stretch in
the performance targets for the LTIP awards granted in 2018 and
2019, the EPS and revenue growth targets will be measured based
on the average of three annual growth figures across each year in
the performance period. (This replaces a CAGR from a base year
based on AVEVA’s performance on a standalone basis.) The LTIP
awards granted in 2020 were based on three measures: EPS growth
(50%); total revenue growth (25%); and relative Total Shareholder
Return (25%). The combined Group pro-forma financials will be
used as the base year for CAGR, EPS and revenue growth over the
three-year performance period ending 31 March 2023.

During the year, we increased our focus on and investment in
Diversity and Inclusion (D&I), with a commitment to reporting our
ethnicity pay gap in FY22 alongside our global gender pay
gap results.

Working virtually proved challenging for all employees during the
year, and the Remuneration Committee completed eight virtual
separate remuneration meetings during the year.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSREMUNERATION COMMITTEE CONTINUED

At a Glance

Current policy
The table below summarises the key remuneration elements and the Remuneration Policy approved by shareholders at the 2020 AGM.

Remuneration Policy
approved at the 2020 AGM

Implementation for FY22

Base salary

Salaries are reviewed annually, although there is no
automatic entitlement to an increase.

Base salary normally increases in line with the wider
UK workforce.

On occasions, there may be a need to recognise an
increase in the scope, size or responsibility of the role
and/or developments in the wider market.

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Benefits

Pensions

In line with benefits provided for other senior
employees in the Group, Executive Directors currently
receive a mobility allowance or company car, a fuel
allowance and an annual allowance toward a range
of benefits.

Craig Hayman and James Kidd are members of the
AVEVA Group Personal Pension Plan (a defined
contribution scheme). Executive Directors receive
a cash-in-lieu allowance equivalent to 10%
of salary, reduced for the effect of employers’
National Insurance contributions.

To reflect the increased size and complexity of the
business and the increased scope of the role
following the acquisition of OSIsoft, as disclosed
in the acquisition prospectus, with effect from
1 April 2021 the CFO’s base salary increased to
£530,000 (FY21: £513,000).

As detailed previously, following the announcement
on 27 April 2021 that Craig Hayman will leave the
Group after the AGM, his base salary remained
unchanged at £718,200.

Peter Herweck’s base salary has been set at
£760,000 with effect from 1 May 2021.

As part of the Remuneration Policy renewal last
year, the Remuneration Committee undertook an
extensive review of the Executive Directors’
remuneration against the market. It was noted that
our market positioning was modest compared to
the size of the company we have become.

Our market positioning on salaries ensures we
remain competitive as an established FTSE100
company with a market cap of over £9 billion,
competing in the global industrial software market.
We recognise that increasing this level of
competitiveness in salaries will require the
continued delivery of performance, coupled with
stretching targets for variable and long-term
compensation. This will ensure alignment to
shareholders’ objectives as we continue to grow.
During the year, other significant salary increases
were awarded to below-Board employees whose
roles will change in size and nature as a result of
the OSIsoft acquisition.

Base salary increases of 3.6% for FY22 for the
wider workforce were made with effect from
1 April 2021.

No changes from FY21 for Craig Hayman and
James Kidd.

Peter Herweck will receive: housing allowance,
car allowance, medical insurance, tax equalisation,
personal liability insurance and personal
insurance protection.

Craig Hayman and James Kidd will remain aligned
to the wider workforce and receive a pension
contribution of 10% of salary.

Peter Herweck will not participate in the AVEVA
pension plan and will not receive cash in lieu of
pension contributions from AVEVA. He will retain
his Schneider Electric pension arrangement.

The focus of our Remuneration Policy is to provide competitive variable and performance-related elements of the packages which are
aligned to shareholders’ objectives. The proposed increases in incentive value as a result of proposed FY22 salary increases will require
additional stretch in the performance delivered, so that more pay is delivered only for more performance. This is fully aligned with AVEVA’s
philosophy and with the changes we have made to variable remuneration for the wider workforce.

Annual Report 2021 | aveva.com

Remuneration Policy
approved at the 2020 AGM

Implementation for FY22

Annual
bonus –
opportunity

The maximum bonus opportunity is 200% of base
salary for the CEO and 175% of base salary for
the CFO.

Annual
bonus –
deferral

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50% of any bonus earned is deferred into shares under
the Deferred Share Scheme.

If shareholding guidelines are met, the bonus deferral
will be reduced to half the usual amount (i.e. 25% of
any bonus to be deferred). The existing three-year
bonus deferral holding period remains.

Long-term
incentive –
opportunity

Under the Policy the maximum LTIP opportunity is
300% of base salary for the CEO and 250% of base
salary for the CFO.

Long-term
incentive –
threshold
vesting

Where a sliding scale of targets is used, attaining the
threshold level of performance for any measure will
not typically produce a vesting of more than 20% of
the maximum.

The FY22 maximum bonus opportunity for the CFO
will remain at 150% of base salary.

As detailed on page 116, Craig Hayman will be
eligible to earn a reduced and time pro-rated bonus
for the period 1 April 2021 to 7 July 2021 (the date
on which he steps down from the Board in relation
to the financial year FY22).

The maximum annual bonus opportunity for Peter
Herweck is 200% of salary.

The Committee acknowledges that increased FY22
salary levels for James Kidd and Peter Herweck
result in increased bonus opportunity and therefore
require additional stretch so that more pay is
delivered only for the achievement of more
stretching performance targets.

No changes are proposed for FY22.

Deferred element of FY22 bonus for Craig Hayman
will not be granted (see page 116).

No change to the LTIP opportunity for the CFO at
175% of base salary is being proposed.

Performance measures for FY22 will be based on
EPS growth (50%) and relative Total Shareholder
Return (50%). A revised Total Shareholder Return
(TSR) comparator group is also being proposed to
reflect a larger group of similarly-sized companies.
Further details are set out on page 117.

Neither Craig Hayman nor Peter Herweck will be
granted an LTIP award for FY22.

No changes proposed for FY22.

Shareholding
requirements –
in-employment

Shareholding requirements were increased last year to
market-leading levels. Both annual bonus and annual
LTIP opportunity maximums would apply:

For Peter, shareholding requirements would be
200% for annual bonus only, as he will not be
issued any AVEVA LTIPs.

• For Craig, this will be 165% for annual bonus and

No other changes proposed for FY22.

250% for LTIPs, giving a shareholding requirement of
415% of annual salary.

• For James, an annual bonus opportunity of 150%

and 175% LTIP opportunity equates to a
shareholding of 325% of annual salary.

Shareholding
requirements –
post-employment

A two-year post-employment shareholding guideline
was introduced last year with 100% of the
shareholding guideline for the first year and 50% for
the second year post employment.

No changes proposed for FY22.

Malus and clawback
– provisions

The provisions apply to the annual bonus, the deferred
bonus scheme and LTIPs.

No changes proposed for FY22.

For further details, see page 104.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
REMUNERATION COMMITTEE CONTINUED

At a Glance continued

How we performed in FY21

Revenue growth
(1.6)% to £820.4m

Adjusted diluted EPS
(6.3)% to 81.31p

TSR
7th out of 22 companies

Adjusted EBIT
+ 4.4% to £226.4m

Remuneration of our Executive Directors for FY21 and FY22
The table below summarises how Executive Directors were remunerated for FY21, together with the implementation of the policy for FY22.

Key elements

Applies to

Base salary

Craig Hayman

James Kidd

Peter Herweck

How we paid our
Executive Directors in FY21

Implementation of the
current policy for FY22

£718k
(0% salary increase)

£513k
(0% salary increase)

Not applicable – appointed CEO
1 May 2021

£718k
(0% salary increase)

£530k
(3.3% salary increase)

£760k

Pensions

Benefits

Executive Directors other than
Peter Herweck

Craig Hayman & James Kidd

10% of salary for Craig Hayman & James Kidd
Not applicable for Peter Herweck

Mobility allowance, US and UK medical, car allowance, fuel allowance
and £600 of flexible benefits

Peter Herweck

FY22 only: Housing allowance, car allowance, medical insurance, tax equalisation,
personal liability insurance and personal insurance protection.

Performance period

Opportunity applied

Craig Hayman

Criteria

Payable

James Kidd

Peter Herweck

Craig Hayman

James Kidd

FY21

165% of salary

150% of salary

Not applicable – appointed CEO
1 May 2021

Short-term financial 30%
Adjusted EBIT 25%
Recurring revenue 25%
Strategic objectives 20%

£673k (57% of maximum)

£429k (56% of maximum)

FY22

16% of salary
(see page 116)

150% of salary

200% of salary

OSIsoft New Revenue 10%
Adjusted EBIT 50%
Annualised recurring revenue 20%
Strategic objectives 20%

n/a

Performance period

Both EDs

1 April 2018 – 31 March 2021

1 April 2021 – 31 March 2024

Vesting in respect of FY21

Awarded in respect of FY22

Opportunity applied

Craig Hayman

Time horizon

Criteria

Payable

James Kidd

Both EDs

Craig Hayman

James Kidd

CEO pay compared to
UK employee pay1

75th percentile

50th percentile

25th percentile

250% of salary

175% of salary

n/a

175% of salary

Three-year performance period, followed by a two-year holding period.

EPS growth 50%

Relative TSR performance 25%

Relative TSR performance 50%

Strategic objectives 25%

£2,445k (88% of maximum)

£1,222k (88% of maximum)

FY20

n/a

FY21

Using the
single figure
table

Excluding the
effect of buy-out
awards

Using the
single-figure
table

Excluding the
effect of buy-out
awards

62:1

85:1

119:1

23:1

32:1

44:1

59:1

78:1

106:1

47:1

63:1

85:1

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1. The CEO pay ratios have been calculated by comparing the single figure of remuneration of the CEO to the 25th, 50th and 75th percentile UK employees. Remuneration includes

salary, benefits, pension, bonuses and share awards. All amounts are on a full-time equivalent basis.

Annual Report 2021 | aveva.com

Annual Incentive Scheme

Craig Hayman
% of salary
0

Maximum

100

125

150

175

James Kidd
% of salary
0

Maximum

100

125

150

175

Outcome

0
£(000)

200

400

600

Outcome

800

1,000

1,200

0
£(000)

100

200

300

400

500

600

700

800

900

Rec Rev

Adjusted EBIT

Personal objectives

Long-Term Incentive Plan

Craig Hayman
% of salary
50
0

100

FV at date of grant

150

200

250

300

350

400

James Kidd
% of salary
0

FV at date of grant

100

150

200

250

300

122

Opportunity inclusive of share price appreciation

194

136

Outcome

£(000)

194

136

500

1,000

1,500

2,000

2,500

3,000

200

400

600

800

1,000

1,200

1,400

1,600

£(000)

Outcome

EPS

TSR

Revenue

Maximum total remuneration opportunity compared to actual remuneration received for the year ending
March 2021

Craig Hayman

Opportunity

Minimum

On-target

Maximum

Actual

James Kidd

Opportunity

Minimum

On-target

Maximum

Actual

£(000)

1,000

2,000

3,000

4,000

5,000

Fixed

Bonus

LTIP

One-off awards1

1. These relate to the final tranche of Craig’s buy-out awards.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSREMUNERATION COMMITTEE CONTINUED

At a Glance continued

Leaving remuneration arrangements for Craig Hayman

Salary, pension
and benefits

Following the announcement on 27 April 2021 that Craig will leave the Group after the AGM in July 2021,
it was agreed that the base salary increase to £825,000 disclosed in the Prospectus with effect from
1 April 2021 would not be implemented.

Craig’s base salary therefore remained unchanged at £718,200. As an employee, he will receive his base
salary, pension allowance and benefits until the end of his contractual notice period on 31 January 2022.

Annual bonus

As Craig served as an employee for the whole of the Company’s FY21 financial year, he will remain eligible to
earn a bonus for the year ended 31 March 2021, full details of which are set out on page 111. The deferred
share award element of that bonus will continue and be released from deferral at its ordinary times.

Craig will be eligible to earn a reduced and time pro-rated bonus for the period 1 April 2021 to 7 July 2021
(the date on which he steps down from the Board in relation to the financial year FY22).

The maximum performance-related opportunity of 165% of salary will be reduced by: (i) time pro-rationed for
the period 1 April 2021 to 7 July 2021; (ii) limiting the amount to an on-target payment (i.e. multiplying by
50%); and (iii) further limiting the amount to the cash element only (i.e. multiplying by 75%). Any amount will
be paid in cash only at the usual time in 2022, with no deferred share element, based on performance
assessment related to a successful hand-over of the Chief Executive role. Full details will be included in the
Directors’ Remuneration Report for the year ending 31 March 2022.

Deferred annual
bonus plan

Craig will retain his other deferred annual bonus awards, which were awarded in relation to the bonuses
earned in respect of the FY19 and FY20 financial years. Each award will continue to be subject to the existing
three-year bonus deferral holding periods and be released from deferral at their ordinary times.

Long-Term Incentive
Plan (LTIP)

Craig holds LTIP awards, which will be treated as follows:

• The 2017 LTIP award vested by reference to performance to 31 March 2020 and is subject to a holding
period. The award will continue and is due to be released at the end of the originally envisaged holding
period on 8 September 2022.

• The 2018 LTIP award vested by reference to performance to 31 March 2021, and details of the vesting
amount are included on page 114. Craig will retain the award to the extent it vested by reference to the
performance conditions. No time pro-rating will be applied given that the performance period was
completed prior to his resignation. The award will remain subject to its original holding period, and is due
to be released in September 2023.

• The 2019 LTIP award will be reduced to reflect the portion of the performance period that has elapsed

up to 31 March 2021. The retained award will then vest subject to the satisfaction of the original
performance conditions assessed over the usual period. To the extent it vests, the award will remain
subject to the original holding period and is due to be released in July 2024.

• The 2020 LTIP award will lapse in full.

Craig will not receive a LTIP award for the FY22 financial year.

Craig received a contribution of up to £10,000 plus VAT in respect of reasonable legal fees incurred in obtaining advice in relation to the
cessation of his employment. He will not receive any other remuneration payment or payment for loss of office.

Our approach to setting pay
AVEVA operates in the ‘UK plc’ executive remuneration environment, but needs to attract and retain talent from a technology sector with a
high US influence. Half of our leadership team is based outside the UK, and the majority of senior technology positions (R&D, Business Unit,
Portfolio heads) are based in the US. As outlined above, we need to recruit increasing numbers of employees and leadership positions in
niche technical skill areas, which are highly competitive.

Annual Report 2021 | aveva.com

To ensure we maintain competitive, we monitor the compensation of a select UK and US peer group of technology and software companies
to give further benchmark comparisons for total remuneration.

UK comparison peer group

US comparison peer group

Avast

Microfocus

Ocado

Sage

Smiths Group

Sophos

Ansys

Aspen

Cadence Design

Rockwell Automation

Honeywell

Autodesk

PTC

While market data provides a valuable insight into pay levels and structures, the Committee recognises that benchmarking should not be the
sole determinant when considering Executive Directors’ remuneration. In line with AVEVA’s general approach to setting pay, the Committee
therefore considered many factors, alongside benchmarking, when reviewing the proposed revisions to the Remuneration Policy.

How does the Remuneration Policy align with the UK Corporate Governance Code?

Clarity

The Committee welcomes open dialogue with shareholders on any aspect of remuneration. We consulted
shareholders as part of last year’s review of our Remuneration Policy. This provided valuable insights into
their views on the proposed changes, which received widespread support.

A key principle for the Committee is to ensure consistency across the Company, from the Executive Directors
down through the entire organisation. Following the bonus harmonisation in FY20, we continue to adopt a
global, ‘one-design’ approach to variable pay for non-sales employees. This global scheme ensures all
employees are measured and remunerated in the same way, on the same plan using the same metrics in a
clear and transparent manner.

Simplicity

Each component of our Remuneration Policy is clearly laid out and explained in a clear and simple manner.

Across the Company, we ensure our remuneration arrangements are simple by design, communicated clearly
and understood by all participants.

Although the quantum will vary, the policies and practices of remuneration are consistently applied across
all levels.

Risk

When determining award outcomes, the Committee assesses the performance of the Company and the
individual in order to ensure that sound judgement and appropriate risk management are applied. This
ensures that excessive rewards do not take place, reputational risk is protected and behavioural risks are
identified and mitigated.

The Remuneration Policy balances the level of risk management by applying the annual bonus deferral,
adopting the shareholding period and shareholding quantum and enforcing post-employment
shareholding guidelines.

As a final safeguard, our robust malus and clawback provisions apply to both the annual bonus and the
Long-Term Incentive Plan.

Predictability

The Remuneration Policy clearly states the threshold, on-target and stretch levels of performance opportunity
required. Achievement is measured against predetermined targets defined in advance of the programme launch.

Targets and measures are not altered or amended mid programme, ensuring that performance achievement
is aligned to original goals and objectives at all times.

Proportionality The annual bonus programme rewards achievement against AVEVA’s annual operating growth targets
together with personal objectives for the individual. The Long-Term Incentive Plan, meanwhile, rewards
long-term achievement of goals and the creation of shareholder value, both of which are aligned to the
overall strategy.

The Committee may apply discretion if and when needed to reduce outcomes of both the annual bonus and
Long-Term Incentive Plan, for both Company and individual performance.

Alignment
to culture

The Committee assesses performance under the annual bonus programme against a range of objectives,
including those related to AVEVA customers, AVEVA employees and our culture, strategy and risk.
This ensures the values and purpose are aligned to incentive outcomes.

aveva.com | Annual Report 2021

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSREMUNERATION COMMITTEE CONTINUED

Part A: the Directors’ Remuneration Policy

Introduction
Our Directors Remuneration Policy was approved by shareholders
at the previous Annual General Meeting held on 21 July 2020 and is
set out in full on pages 87 to 95 of the 2020 Annual Report and
Accounts, which are available on the Company’s website at
investors.aveva.com. We have set out below a summary of those
parts of the Policy that we think shareholders will find most useful.
This includes the table of service contracts updated to reflect Peter
Herweck’s appointment as CEO with effect from 1 May 2021.

The Directors’ Remuneration Policy became binding from 1 April
2020. It continues to be our intention that this current Policy will
remain valid until the 2023 Annual General Meeting.

The Remuneration Committee aims to ensure that: the Executive
Directors are provided with appropriate incentives to align them
with the achievement of the Company’s long-term strategy and the
future creation of shareholder value; enhanced performance is

encouraged; and the Executive Directors are, in a fair and
responsible manner, rewarded for their individual contributions to
the success of the Group. Excessive risk-taking is neither
encouraged nor rewarded.

It also aims for a combination of fixed and variable payments,
benefits and share-based awards that will achieve a balance in
incentives to deliver short and long-term goals. The Company’s
policy is that a substantial proportion of remuneration of Executive
Directors should be performance-related and should be delivered in
shares to create alignment with shareholders’ interests.
Remuneration for Executive Directors is set in the context of the
economic environment in which the Group operates, the outcome
of the wider pay review for all Group employees as well as the
financial performance of the Group. When determining
remuneration arrangements, the Committee takes into
consideration relevant external considerations as well as the
remuneration for employees of the Group generally.

The Directors’ Remuneration Policy

Purpose and
link to strategy

Operation

Maximum opportunity

Performance measures

Base salary

• Helps recruit and
retain employees

• Reflects

experience
and role

None

• Base salary is normally reviewed
annually with changes effective
from 1 April, although salaries
may be reviewed more frequently
or at different times of the year if
the Committee determines this
is appropriate.

• The Committee determines base
salary taking into account factors
including, but not limited to:
• The individual’s role, experience

and performance.

• Salaries at other companies of a
similar size and complexity as
well as global technology peers.

• Remuneration of different

groups of employees within
the Company.

•

In determining salary increases
the Committee generally
considers the factors outlined in
the ‘Operation’ column.

• Salary increases will normally be
in line with the range of increases
in the broader workforce salary (in
percentage terms), although
higher increases can be made in
appropriate circumstances,
for example:
• an increase in the individual’s

•

scope of responsibilities;
in the case of Executive
Directors who are positioned
on a lower initial salary while
they gain experience in the
role; or

• Total organisational salary

• where the Committee

budgets.

• The Committee takes a phased
approach to new salaries where
appropriate.
• Paid in cash.

considers that salary is behind
appropriate market positioning
for a company of AVEVA’s size
and complexity.

• However, no salary increase will
be paid to an incumbent to the
extent that this increases the
salary beyond £900,000.

100

Annual Report 2021 | aveva.com

Purpose and
link to strategy

Operation

Maximum opportunity

Performance measures

Pensions

• Provides a
competitive
means of saving
for retirement in
a way that is
cost effective to
the Company

• The CEO and CFO are members of
a defined contribution scheme.

• The intention is that new

appointments to the Board would
also participate in a defined
contribution pension scheme or
receive an equivalent cash
payment.

• However, if appropriate the

Committee may determine that
alternative arrangements for the
provision of retirement benefit
may apply. When determining
pension arrangements for new
appointments the Board will give
regard to the cost of the
arrangements, market practice
and the pension arrangements
received by the wider workforce.

•

• The maximum employer

None

contribution (which may be
provided as a pension contribution
or cash alternative or a
combination thereof) is 10% of
base salary which is aligned with
the employer contribution
available to the wider workforce;
this limit may be increased to
reflect any increase in the level of
employer contribution for the
wider workforce.
If an alternative pension
arrangement were introduced as
referred to in the ‘Operation’
column, the maximum opportunity
would not exceed the maximum
opportunity for members of the
wider workforce who participate
in such an arrangement.

Benefits

• Help recruit and
retain employees

• Provide a

competitive
range of valued
benefits

• Assist toward
early return to
work in the event
of illness or injury

•

• The benefit policy is to provide an
appropriate level of benefit taking
into account market practice at
other companies of similar size
and complexity and the level of
benefits provided for other
employees in the Group.
In line with benefits provided for
other senior employees in the
Group, Executive Directors
currently receive a mobility
allowance or company car, a fuel
allowance and an annual
allowance toward a range of
benefits.
If an Executive Director was
required to re-locate to undertake
their role, the Committee may
provide additional benefits to
reflect the relevant circumstances
(on a one-off or ongoing basis).

•

None

• The cost of benefit provision
will depend on the cost to
the Company of providing
individual items and the
individual’s circumstances.
• However, the addition of further

benefits to those already provided
(excluding relocation/recruitment-
related benefits and participation
in any other share plan) will not
result in the aggregate benefit
provision for any Executive Director
increasing to over £50,000.

• Benefits are reviewed by the
Committee in the context of
market practice from time to time
and the Committee may introduce
or remove particular benefits if it is
considered appropriate to do so.
If the Company were to operate a
share plan in the future in which
participation was open to the
wider workforce, Executive
Directors would be entitled to
participate in the plan on the same
terms as other employees.

•

aveva.com | Annual Report 2021

101

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSREMUNERATION COMMITTEE CONTINUED

Part A: the Directors’ Remuneration Policy continued

Purpose and
link to strategy

Operation

Annual Incentive Scheme

Maximum opportunity

Performance measures

•

Incentivises
and rewards
the achievement
of targets and
objectives
aligned with
AVEVA’s
strategy

• Deferred element

encourages
long-term
shareholding,
helps retention
and discourages
excessive
risk-taking

• The Committee determines an
individual’s maximum incentive
opportunity taking into account
the responsibilities of the role and
market practice at comparable
companies.

• The maximum bonus opportunity
is 200% of base salary in the case
of the CEO and 175% of base
salary in the case of any other
Executive Director.

• For FY21, the maximum bonus

• The performance measures
applied may be financial or
non-financial and corporate,
divisional or individual and in such
proportions as the Committee
considers appropriate.

• Where a sliding scale of targets is
used, attaining the threshold level
of performance for any measure
will not typically produce a
pay-out of more than 20% of the
maximum portion of overall
annual bonus attributable to that
measure, with a sliding scale to full
payout for maximum performance.
However, the annual bonus plan
remains a discretionary
arrangement and the Committee
retains a standard power to apply
its judgement to adjust the
outcome of the annual bonus plan
for any performance measure
should it consider that to be
appropriate (e.g. if the provisional
bonus outturn does not in the
Committee’s view reflect overall
shareholder expectations).

• Performance targets are set by the
Committee on an annual basis
and ordinarily disclosed
retrospectively.

opportunity applied was 165% of
base salary in the case of the CEO
and 150% of base salary in the
case of the CFO.

• The Committee determines the
level of bonus paid taking into
account performance against
targets, the underlying
performance of the business and
Executive Directors’ performance
during the year.

• A portion of any bonus earned is
deferred into shares for three
years, with the portion being:
• 25% of the bonus earned if the
Executive Director meets or
exceeds the applicable
Shareholding Requirement set
out below; or

• 50% of the bonus earned if the
Executive Director does not
meet the applicable
Shareholding Requirement set
out below

• Deferred awards will normally

vest in three equal tranches, one in
each of the three years following
the year in which an award is
granted. The Committee has
discretion to determine an
alternative vesting profile.

• Deferred share awards can take
the form either of the Executive
Director being required to invest
the after tax amount of the
relevant portion of the bonus in
shares, or the grant to the
Executive Director of a share
award in respect of such number
of shares as have a value equal to
the relevant portion of the bonus.

• Deferred awards are subject to

malus and clawback provisions as
noted at the end of this table.

• Dividends and any other income or
capital distribution can accrue on
deferred shares up until the point
at which the Executive Director is
entitled to acquire the shares.

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Purpose and
link to strategy

Operation

Maximum opportunity

Performance measures

The AVEVA Group Long-Term Incentive Plan (the LTIP)

• Establishes a

• Awards vest based on

• Awards over shares worth no

more than 300% of salary in the
case of the CEO or 250% of salary
in the case of any other Executive
Director may be made in respect
of any year.

• For FY21, the maximum award

applied was 250% of base salary
in the case of the CEO and 175%
of base salary in the case of
the CFO.

motivational and
performance-
orientated
structure to
incentivise
Directors to focus
on the creation of
shareholder
value aligned
with the
longer-term
strategy for
the Group

performance over a period of three
years and are subject to a
subsequent two-year holding
period.

• The holding period can take the
form either of the Executive
Director being required to retain
the relevant portion of the shares
for the holding period (other than
shares they may dispose of to
cover tax liabilities), or the
Executive Director not being able
to acquire the relevant portion of
the shares until the end of the
holding period.

• Awards under the LTIP may be

granted in the form of conditional
awards or nominal cost options.
• Dividends and any other income or
capital distribution can accrue on
shares up until the point at which
the Executive Director is entitled to
acquire the shares.

• The Committee determines targets
each year to ensure that targets
are stretching and represent value
creation for shareholders while
remaining motivational for
management.

• The Committee shall determine
the extent to which the awards
will vest based on performance
against targets and taking into
consideration the wider
performance of the Group.

• LTIP awards are subject to malus
and clawback provisions as noted
at the end of this table.

The Committee may set such
performance conditions on awards
as it considers appropriate, whether
financial or non-financial and
whether corporate, divisional
or individual.

Performance periods will be at least
three years long.

Where a sliding scale of targets is
used, attaining the threshold level of
performance for any measure will
not typically produce a vesting of
more than 25% of the maximum
portion of overall award attributable
to that measure (or not more than
20% in respect of any award
granted in excess of the awards for
FY21), with a sliding scale to full
payout for maximum performance.

The Committee may in its judgement
adjust the vesting outturn should
it consider that to be appropriate
(e.g. if the provisional vesting outturn
does not in the Committee’s view
reflect the underlying financial
performance of the Group over the
performance period).

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Part A: the Directors’ Remuneration Policy continued

Stating maximum amounts for the
Remuneration Policy
The Regulations and related investor guidance encourages
companies to disclose a cap within which each element of the
Directors’ Remuneration Policy will operate. Where maximum
amounts for elements of remuneration have been set within the
Directors’ Remuneration Policy, these will operate simply as caps
and are not indicative of any aspiration.

Remuneration arrangements throughout
the Group
Throughout the Group, remuneration is determined based on
substantially the same principles: that remuneration arrangements
should be appropriate for the role without paying more than is
necessary and that pay should be structured to incentivise
individuals to deliver the objectives of their role. AVEVA employs
over 4,700 employees in over 80 locations with roles ranging from
administrators to technical specialists and sales staff. The structure
and level of reward therefore differs from role to role depending on
skills, experience, level of seniority and market practice for the role.
AVEVA’s sales employees participate in commission plans that are
designed to encourage the growth objectives of the Group. More
senior employees have annual bonus plans, with the Executive
Leadership Team receiving a portion of bonus in shares which is
deferred for up to three years. Senior employees within the
Company participate in the LTIP and a Restricted Share Plan.

Selection of performance measures
The Committee’s guiding principle is that remuneration
arrangements that operate throughout the Group should support
the delivery of our long-term business strategy and therefore the
creation of shareholder value. Our key long-term strategic priority is
to deliver strong but sustainable revenue and profit growth to
support the delivery of this strategic priority. The metrics used in
our annual bonus arrangements and LTIP are chosen with this in
mind, with the payment of bonuses and the vesting of long-term
incentives subject to stretching targets established by the
Committee at the beginning of each performance period.
These targets are set taking account of internal forecasts of
performance over the performance period, the markets in which
the Group operates, our long-term growth ambitions and the
expectations of the investment community on the Group’s future
potential performance.

Malus and clawback provisions
The annual bonus (including any deferred bonus award) and the
LTIP are subject to malus and clawback provisions. These may be
applied in the event of:

• Material misstatement of audited Group results.
• Payments made based on erroneous or misleading data.
• Calculation error.
• Fraud and/or gross misconduct.
• Group reputational damage and/or financial loss.
• Risk management failure resulting in serious harm to reputation

or financial loss to the Group.

• Corporate failure.

The provisions can be applied until the date that falls three years
from payment in the case of the cash bonus, until the date that falls
three years after grant in the case of the deferred bonus, and until
the date that falls two years after the end of the performance
period in the case of LTIP awards.

Shareholding requirement
In-service shareholding requirement
The Company has adopted an in-service shareholding requirement
pursuant to which a serving Executive Director must build up and
maintain a holding of AVEVA shares with a value (as determined
by the Committee) at least equal to the aggregate of their variable
remuneration opportunity (being 415% of salary in the case of the
CEO and 325% of salary in the case of the CFO in FY22). Shares
subject to deferred bonus arrangements, shares subject to LTIP
awards which are in a holding period, and shares subject to other
share awards which are no longer subject to any performance
condition (including any exercisable but unexercised deferred
bonus awards and LTIP awards) count towards the requirement,
on a net of assumed tax basis where relevant.

There is no specified time period within which an Executive Director
must achieve the Shareholding Requirement, but Executive
Directors will be required to retain half of the after tax shares
acquired pursuant to the LTIP and deferred bonus arrangements
until the Shareholding Requirement is achieved. The Committee
retains discretion to vary the In-Service Shareholding Requirement
to take account of compassionate circumstances.

Post-employment shareholding requirement
The Company has adopted a post-employment shareholding
requirement pursuant to which an Executive Director must retain
for 12 months following cessation of employment such of their
‘relevant shares’ as have a value (as determined by the Committee)
equal to the In-Service Shareholding Requirement most recently
applicable to them, and for a further 12 months such of their
‘relevant shares’ as have a value (as determined by the Committee)
equal to 50% of the In-Service Shareholding Requirement most
recently applicable to them.

Shares which the Executive Director has purchased or which they
acquire pursuant to share plan awards granted before this Policy
came into effect are not “relevant shares” for these purposes. The
Committee retains discretion to vary the In-Service Shareholding
Requirement to take account of compassionate circumstances.

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Remuneration Policy for new hires
When determining the remuneration package for a newly
appointed Executive Director, the Committee would seek to apply
the following principles:

• The package should be market competitive to facilitate the
recruitment of an individual of sufficient calibre to lead the
business. At the same time, the Committee would intend to pay
no more than it believes is necessary to secure the required talent.

• The structure of the ongoing remuneration package would

normally include the components set out in the policy table for
Executive Directors. Circumstances in which other elements of
remuneration may be awarded include:
• an interim appointment being made to fill an Executive

•

Director role on a short-term basis;
if exceptional circumstances require that the Chairman or a
Non-Executive Director takes on an executive function on a
short-term basis;
if an Executive Director is recruited at a time in the year
when it would be inappropriate to provide a bonus or LTIP
award for that year as there would not be sufficient time to
assess performance; subject to the limit on variable
remuneration set out below, the quantum in respect of the
months employed during the year may be transferred to the
subsequent year so that reward is provided on a fair and
appropriate basis.

• Where an individual forfeits outstanding variable pay
opportunities or contractual rights as a result of their
appointment, the Committee may offer compensatory
payments or awards, in such form as the Committee considers
appropriate taking into account relevant factors, which may
include the form of awards, expected value and vesting
timeframe of forfeited opportunities. When determining such
‘buy-outs’ the guiding principle would be that awards would
generally be on a ‘like for like’ basis to those forfeited unless not
considered appropriate.

• To facilitate awards outlined above, in the event of recruitment,
the Committee may grant awards to a new Executive Director
in accordance with Listing Rule 9.4.2. This provision permits the
granting of awards to facilitate, in unusual circumstances, the
recruitment of an Executive Director, without seeking prior
shareholder approval.

• The maximum level of variable remuneration which may be
awarded (excluding any ‘buy-out’ awards) is 500% of base
salary in the case of a CEO and 425% of base salary in the case
of any other Executive Director.

• Where an Executive Director is required to relocate to take-up
their role the Committee may provide reasonable assistance
with relocation (either via one-off or ongoing payments or
benefits) taking into account the individual’s circumstances and
prevailing market practice.
If an internal candidate is promoted to the Board, legacy terms
and conditions would normally be honoured, including pension
entitlements and any outstanding incentive awards.

•

Executive Director service contracts and policy on payment for loss of office
When determining leaving arrangements for an Executive Director the Committee takes into account any contractual agreements including
the provisions of any incentive arrangements, typical market practice and the performance and conduct of the individual.

The service contracts for current and non-current Executive Directors include the following terms:

Name

Date of appointment

Date of contract

Continuous service date Notice period

Current Executive Directors

Craig Hayman

19 February 2018

1 April 2018

19 February 2018

James Kidd

1 January 2011

19 February 2018

5 January 2004

Peter Herweck

1 May 2021

26 April 2021

1 May 2021

9 months

3 months

The service agreements are available to shareholders to view on request from the Company Secretary.

Notice period

Craig Hayman’s service contract can be terminated by the Company or the Executive Director on nine months’ notice.
The CFO’s service contract can be terminated by the Company or the Executive Director on nine months’ notice. The
service agreements provide for a period of garden leave. The Committee will determine the appropriate notice period
for any new Director taking into account the circumstances of the individual and market practice. Any notice period
will normally be no longer than 12 months.

Payment in lieu
of notice

In the event of termination of contract without notice, the Executive shall be entitled to a payment in respect of salary
for the period of notice. Such payment will normally be made in instalments and subject to mitigation but the
Committee shall have discretion to make a single payment if this is considered appropriate

Annual bonus

The Executive Director may, at the discretion of the Committee, remain eligible to receive an annual bonus for the
financial year in which they ceased employment. Such annual bonus award will be determined by the Committee
taking into account the circumstances for leaving, time in employment and performance. Any such bonus will
ordinarily be paid at the same time and in the same way as for a continuing Executive Director. The Committee
retains discretion to pay the bonus early and not to apply deferral where it would otherwise apply, but would do so
only in compassionate circumstances.

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Part A: the Directors’ Remuneration Policy continued

Deferred bonus
arrangements

Death: In the event of a participant’s death unvested awards shall vest. Where awards are in the form of options they
may be exercised for a period of up to 12 months from death.

Good leavers (at the discretion of the Committee, leaving by reason of injury, disability, redundancy, the Company for
which the participant works leaving the Group or any other reasons determined by the Committee): Awards shall
continue in full and vest on the originally anticipated vesting dates. Alternatively, the Committee may determine that
awards should vest when the participant ceases employment. Awards in the form of options may be exercised in
accordance with the rules of the applicable scheme.

Leavers in other circumstances: Awards will normally lapse.

Long-Term
Incentive Plan

Good leavers (at the discretion of the Committee, leaving as a result of death, injury, disability, redundancy, retirement,
the Company for which the participant works leaving the Group or any other reason):

• Unvested awards shall ordinarily continue in existence for the remainder of the performance period, following which

they will vest subject to the satisfaction of the performance conditions and, unless the Committee determines
otherwise, reduced reduction to reflect the period that elapsed from the start of the performance period to the date
of cessation as a proportion of the performance period. Any holding period will ordinarily continue to apply. The
Committee retains discretion to vest the award before the date of, and to assess performance accordingly, and to
waive the continuation of the holding period or to shorten its application, but would do so only in compassionate
circumstances.

• Vested awards which are subject to a holding period will ordinarily continue to be subject to the holding period,

although the Committee retains discretion to waive the continuation of the holding period or to shorten its
application but would do so only in compassionate circumstances.

Leavers in other circumstances: Awards will normally lapse. Vested but unexercised options held by participants who
leave employment other than due to gross misconduct may be exercised for a period following cessation of employment.

Other payments An Executive Director who joined the Company before January 2008 and who is made redundant, may receive, in
addition to a payment in lieu of notice, any statutory redundancy payment and any other payment to which he is
entitled, a payment under the Company’s enhanced redundancy policy. This policy applies to all employees who
joined the Company before January 2008. Under the policy, an eligible person will receive a payment calculated by
reference to their length of service and weekly pay (by reference to gross annual salary) as follows:

• 7 weeks’ pay for service of up to 6 years; plus
• 1.5 weeks’ pay for each completed year of service over 7 years up to 20 years; plus
• 2 weeks’ pay for each completed year of service over 20 years.

Under the Company’s enhanced redundancy policy, eligible participants, including Executive Directors, may also
receive a payment in lieu of a 90 day redundancy consultation period. In the event of termination of an Executive
Director’s employment, a payment may be made in lieu of any accrued but untaken holiday. The Remuneration
Committee would be responsible for considering the circumstances of the early termination of an Executive Director’s
contract and determining whether in exceptional circumstances there should be compensation payments in excess of
the Company’s contractual obligations.

The Company has the power to enter into settlement agreements
with Directors and to pay compensation to settle potential legal
claims. In addition, and consistent with market practice, in the
event of the termination of an Executive Director, the Company
may make a contribution towards that individual’s legal fees and
fees for outplacement services as part of a negotiated settlement.
Any such fees will be disclosed as part of the detail of termination
arrangements. For the avoidance of doubt, the policy does not
include an explicit cap on the cost of termination payments.

Employee context
When setting Executive Directors’ pay, the Committee considers
the remuneration arrangements of other senior managers and
employees in the Group more generally to ensure that Executive
remuneration arrangements are appropriate in this context.
AVEVA undertakes an annual salary review in April each year and
uses this opportunity to reward strong performance and ensure
salaries are in line with market rates. It manages this in a competitive
environment particularly in the fast-growing economic areas.

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When determining salary increases for Executive Directors the
Committee considers the outcome of the wider pay review for the
Group. The Committee does not specifically consult directly with
employees regarding Executive Directors’ remuneration. However,
at regular intervals the Company conducts a survey of the views of
employees in respect of their experience of working at AVEVA
including their own reward and during FY21 conducted quarterly
town hall meetings with all employees globally where details of the
bonus tracking outcome and financial performance of the Group
was shared and discussed openly.

Due to the unprecedented business conditions at the beginning of
FY21 AVEVA took the prudent decision to not provide an annual
salary review for all employees globally. There were however
additional limited opportunities during the year for key high
performing / high potential employees to be recognised, promoted
and compensated where it was deemed appropriate.

Remuneration outcomes in different performance scenarios
The remuneration package at AVEVA is structured so that the package rewards performance over both the short and long term to ensure
that reward is aligned with shareholder value creation.

The table and charts below and opposite show hypothetical values of the remuneration package for the current Executive Directors
(Peter Herweck and James Kidd) under four assumed performance scenarios.

In each scenario, fixed remuneration is the most recently known salary (£760,000 in the case of the CEO and £530,000 in the case of
the CFO), and the value of proposed benefits and employer pension contributions for the coming year. Peter Herweck is retaining his
Schneider Electric pension and LTIP arrangements and so these elements of remuneration have been excluded from these hypothetical
performance scenarios.

Other than in the ‘Maximum performance plus share price’ scenario, no share price growth has been assumed. Potential benefits under all
employee share schemes and dividend or distribution equivalents have not been included for any scenario.

Maximum performance
plus share price

Annual bonus scheme (full pay-out)

LTIP (maximum vesting plus assumed 50% share price growth)

Total

Maximum performance

Annual bonus scheme (full pay-out)

LTIP (maximum vesting)

Total

On-target performance

Annual bonus scheme (50% pay-out)

Minimum performance

Annual bonus scheme (nil pay-out)

LTIP (25% vesting)

Total

LTIP (nil vesting)

Total

Peter Herwick

James Kidd

Awards as a % of salary

CEO

CFO

200%

100%

150%

262.5%

412.5%

150%

175%

325%

75%

43.75%

118.75%

38%

55%

100%

62%

Max +50 growth

Maximum

21%

26%

29%

34%

33%

17%

40%

45%

On-target

49%

32% 19%

XX%

Minimum

100%

XX%

£0k

£500k

£1,000k

£1,500k

£2,000k

£2,500k

£3,000k

£0k

£500k

£1,000k

£1,500k

£2,000k

£2,500k

£3,000k

Max +50 growth

Maximum

On-target

Minimum

Fixed pay

Annual bonus

LTIP

LTIP +50% share price growth

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Part A: the Directors’ Remuneration Policy continued

Remuneration Policy for Non-Executive Directors

Approach to setting fees

Basis of fees

Other items

• Fees for the Chairman and the

• Basic fees are subject to the aggregate

• Non-Executive Directors do not receive

Non-Executive Directors are determined
taking account of the individual’s
responsibilities, the expected time
commitment for the role and prevalent
market rates.

• The Board is responsible for setting
fees for the Non-Executive Directors
with the Remuneration Committee
being responsible for setting fees for
the Chairman.

• Fees are reviewed at appropriate

intervals, usually on an annual basis.

limit set in accordance with the
Company’s Articles of Association.
Any changes in this limit would be subject
to shareholder approval.

• Non-Executive Directors are paid a basic
fee for membership of the Board with
additional fees being paid to Non-
Executive Directors who hold the position
of Committee Chairman to take into
account the additional responsibilities and
workload. Additional fees may also be
paid for other Board responsibilities or
roles if this is considered appropriate.

• Fees are normally paid in cash.

incentive pay or share awards.

• Non-Executive Directors do not currently

receive any benefits nor pension
arrangements. Benefits may be provided in
the future if, in the view of the Board (or, in
the case of the Chairman, the Committee),
this was considered appropriate.

• Travel and other reasonable expenses
(including fees incurred in obtaining
professional advice in the furtherance of
their duties) incurred in the course of
performing their duties are reimbursed to
Non-Executive Directors (including any
associated tax liability).

The Non-Executive Directors have appointment letters, the terms of which recognise that their appointments are subject to the Company’s
Articles of Association and their services are at the direction of the shareholders.

The letters of appointment for Non-Executive Directors include the following terms:

Name

Date of appointment Date of contract

Expiry/review date
of current contract

Notice period
in months

Philip Aiken

1 May 2012

5 November 2020

31 March 2022

Jennifer Allerton

9 July 2013

1 July 2019

30 June 2022

Christopher Humphrey

8 July 2016

27 June 2019

26 June 2022

Ron Mobed

1 March 2017

1 March 2020

28 February 2023

Paula Dowdy

1 February 2019

31 January 2022

Oliver Blum

30 April 2020

29 April 2023

All Non-Executive Directors submit themselves for election at the Annual General Meeting following their appointment and subsequent
intervals of no more than three years.

There are no predetermined special provisions for Non-Executive Directors with regard to compensation in the event of loss of office.
Non-Executive Directors are not entitled to any payments in lieu of notice.

The letters of appointment are available for shareholders to view from the Company Secretary upon request.

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B: The Implementation Report

The Remuneration Committee membership,
role and remit
The Remuneration Committee is appointed by the Board.
The current members are Jennifer Allerton (Chair), Ron Mobed,
Paula Dowdy and Olivier Blum who we welcomed as a new
member on 30 April 2020. Emmanuel Babeau served during the
year and resigned on 30 April 2020. All the Committee members
except for Olivier are regarded by the Board as independent
Non-Executive Directors. Jennifer has been a member of the
Remuneration Committee since 2013 and became Chair in July 2017.
Committee meetings are also regularly attended by the CEO,
CFO and Chief People Officer (CPO) at the invitation of the Chair,
to provide company insight and advice to help the Committee consider
appropriate remuneration. No Committee member or invited
attendee is present during the discussion of their own remuneration.

The role of the Committee is set out in its Terms of Reference which
are available on the Company’s website at www.aveva.com. The
Committee’s primary responsibility is to develop and determine the
remuneration framework, policy and pay levels for the Executive
Directors, the Chair and the Executive Leadership Team in overall
alignment with the general workforce. The Committee also has
visibility of our employee engagement activities and overall Human
Resource strategy which affects all AVEVA employees.

The remuneration framework includes establishing stretching
performance-related targets for rewards to support AVEVA’s
long-term growth strategy in alignment with the Company’s
purpose, values and culture. This has been achieved by:

• Determining the remuneration and benefits of the Executive
Directors, including fixed pay, annual bonus, long-term
incentives and pensions.

• Determining the remuneration for Executive Leadership below

Board level.

• Reviewing the wider workforce remuneration and related

policies and taking these into account when setting the policy
for Executive Director remuneration.

• Providing remuneration recommendations to the Board based

upon AVEVA’s remuneration framework.

• Approving share awards.

The principles of our Remuneration Policy
A significant part of the total reward is related to share price
performance and is paid in shares that must be retained until the
minimum shareholding requirements have been met. This ensures
that our Executive Directors’ interests are aligned with those of
other shareholders.

A considerable part of the total reward is determined by the
Company’s success over both the short and the long term.
Failure to achieve threshold levels of performance results in no
payout for these elements. A key focus of the Committee is to
ensure a suitable level of stretched performance is determined in
order to align with maximum levels of potential rewards.

Advice and auditors
Following a competitive tender process, the Committee appointed
Deloitte as remuneration adviser with effect from 1 October 2019.
Deloitte’s role is to provide the Committee with independent advice
on comparator information, general remuneration trends and most
recently to advise on the remuneration implications of the recent
acquisition of OSIsoft and the resulting rights issue. Deloitte also
provided advice on the remuneration arrangements for Craig
Hayman and Peter Herweck. Fees are charged on a time spent
basis and the fees paid during the year to Deloitte in relation to the
advice provided to the Committee were £85,140 of which £12,050
related to the OSIsoft acquisition and £8,000 related to
remuneration arrangements for Craig Hayman and Peter Herweck
(FY20 fees: £60,710). In addition, Deloitte also provide tax advisory,
employment law, due diligence and other consultancy services to
the Company. The Committee is content that their advice is
objective and independent. Deloitte is a founding member of the
Remuneration Consultants Group and adheres to its Code of
Conduct in relation to executive remuneration consulting in the UK.

The auditors have reported on certain sections of Part B and stated
whether, in their opinion, those parts have been properly prepared
in accordance with the Companies Act 2006. Those sections of
Part B which have been subject to audit are clearly indicated.

Shareholder voting and engagement
The table below shows the results of the most recent votes on the Policy (July 2020) and Implementation Report (July 2020).

Directors’ Remuneration Policy – AGM 2020

Directors’ Remuneration Report – AGM 2020

133,179,299

139,482,063

88.45%

93.23%

17,397,282

10,128,590

11.55%

6.77%

561,717

1,527,644

Votes for

Percentage

Votes against

Percentage

Votes withheld

The Committee was very pleased with the vote in favour of the Directors’ Remuneration Report (DRR) in 2020 and the revised Remuneration
Policy. Ahead of the 2020 AGM, we actively engaged with our shareholder base and sought to fully understand their views and the rationale
behind the voting outcome at the 2019 AGM. We expanded the disclosure around our incentive objectives, particularly the strategic
elements of both the annual bonus and LTIP award. We also expanded disclosure in the 2020 report related to legacy retention
arrangements. For FY21, we did not implement the maximum opportunities for either annual bonus or LTIP under the Remuneration Policy.
We also introduced a formal two-year post-employment shareholding guideline with effect from the 2020 AGM.

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Part B: The Implementation Report continued

Implementation of policy for the year ended 31 March 2021

Single total figure of remuneration for Executive Directors (audited)
The following table sets out the single figure of total remuneration for Executive Directors for the year ended 31 March 2021 and the
previous financial year.

Craig Hayman FY21

Craig Hayman FY20

James Kidd FY21

James Kidd FY20

Salary
£’000

Benefits1
£’000

Pension2
£’000

Total Fixed
Pay
£’000

Annual
bonus
£’000

718

513

806

803

577

672

635

429

454

LTIPs3
£’000

2,445

804

1,222

2,106

One-off
awards4
£’000

Total
Variable Pay
£’000

939

3,408

–

1,038

4,056

4,847

1,651

3,598

Total
£’000

4,862

5,650

2,228

4,175

1. Benefits for Craig Hayman include a mobility allowance of £10,000 per annum, medical insurance for himself and his US based family totalling £15,500 per annum, and a £600 annual

flexible benefits allowance. Benefits for James Kidd include a UK car allowance and fuel allowance totalling £19,200 plus a £600 annual flexible benefits allowance.

2. See below for further information on pensions.

3. For FY21, the 2018 LTIP has been valued based upon the number of options (Craig: 81,299; James: 40,646) multiplied by the closing share price on 31 March 2021 of 3,422p, and a
vesting outcome of 87.9% as referred to on page 114. Of the vested amount, 64.5% (£1,577k Craig, £788k James) relates to performance achievement, and 35.5% (£868k Craig;
£434k James) relates to share price appreciation over the performance period. The 2017 LTIP value for FY20 has been restated from the year end share price at 31 March 2020 of
3,494p to reflect the share price at the date of vesting of 3,880p and a vesting outcome of 100.0%. This increased the single figure of total remuneration by £223k for Craig and by
£585k for James. The Committee did not exercise any discretion in relation to share price changes to the 2017 LTIP or the 2018 LTIP. The 2017 LTIP is due to be released at the end of
the two-year holding period on 8 September 2022.

4. For Craig Hayman, 22,015 buy-out options vested on 15 November 2020 (this equates to 27,443 shares post the rights issue adjustment) and have been valued using the 31 March

2021 year end share price of 3,422p. This is the final tranche of his buy-out awards. In FY20, 97,537 buy-out options vested (shown before the rights issue adjustment) and have been
valued using the 31 March 2020 year end share price of 3,494p. For James Kidd, these are the value of his performance and retention awards vesting for FY20 calculated as £500k for
the retention element and £538k for the performance element (see page 101 of the FY20 Directors’ Remuneration Report for further details).

Additional information on the amounts which
make up the single total figure of remuneration
Base salary
In FY21, Craig Hayman as CEO received a salary of £718,200
which was unchanged from the previous year. James Kidd as CFO
received a salary of £513,000 which also remained unchanged.
Both Executive Directors and the wider Executive Leadership Team
voluntarily decided to contribute 10% of their annual salary to the
AVEVA Action For Good programme at the beginning of FY21 in
response to the global Covid-19 pandemic. The values in the single
figure are shown before this contribution.

Benefits
In FY21, both Executive Directors were provided with a £600
annual allowance towards a range of flexible benefits. In addition,
Craig Hayman received a mobility allowance of £10,000 per
annum and a US medical benefit for himself and his family totalling
£15,500 per annum. For FY21, Craig Hayman continued to be split
from a payroll perspective between the UK and the US. James Kidd
also received a car allowance of £14,400 per annum and a fuel
allowance of £4,800 per annum.

Pension
The Company’s defined benefit scheme is not open to new
members, and neither of the Executive Directors in the year are or
have ever been a member. Craig Hayman and James Kidd are
members of the AVEVA Group Personal Pension Plan (a defined
contribution scheme). Both Directors receive a cash in lieu
allowance equivalent to 10% of salary, reduced for the effect of
employer’s National Insurance contributions. The UK scheme and
contribution levels are consistent for the wider workforce. During
FY21, James Kidd received cash in lieu of contributions of £44,221
(FY20: £44,221), and Craig Hayman received cash in lieu of
contributions of £61,909 (FY20: £61,909).

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How is pay linked to performance for the year ended 31 March 2021
Annual incentive scheme
For FY21, the maximum opportunity for Executive Directors under
the annual incentive was 165% of base salary for the CEO and
150% for the CFO, requiring a stretch level of performance for
full payout.

The performance targets were based on:

1. Short-term financial measures with a maximum weighting
of 30% of bonus opportunity. As detailed in the Directors’
Remuneration Report last year, for this element of the annual
incentive scheme H1 and H2 half year financial targets were
set focused on priorities for those periods. The H1 target was
based on operating cash flow before tax. The H2 short-term
financial metric was based on an assessment of overall
H2 financial performance.

2. Adjusted EBIT profit with a maximum weighting of 25% of

bonus opportunity.

3. Recurring revenue, with a maximum weighting of 25% of

bonus opportunity.

4. Key performance objectives, with a maximum of 20% of bonus
opportunity. The key individual performance objectives were
agreed with the Remuneration Committee at the start of each
financial year, although this element would have been capped
at a maximum achievement of 13.33% of bonus opportunity
had the Group adjusted EBIT target not been met.

In line with best practice, 50% of the maximum bonus is payable
for delivering an on-target level of performance.

For FY21, 50% of any award made under the annual incentive
scheme, irrespective of the amount, is payable in deferred shares,
and is subject to a three-year vesting period, but with no further
performance conditions. However, if shareholding requirements are
met this level of bonus deferral is reduced by half to 25% of any
award. Deferred awards deliver the shares to participants in three
equal tranches, one in each of the three years following the year in
which an award is granted.

Performance against the targets set and the total annual incentive
earned based on performance for the year ended 31 March 2021 is
set out below. This includes both the cash element of the bonus and
the portion deferred into shares under the deferred share scheme.

The Committee gave careful consideration to this outcome in
respect of various internal and external factors including the fact
that no employee was furloughed or made redundant as a result of
Covid-19 during FY21, and that our share price has increased
significantly over the course of the year. Despite the full year
revenue growth being flat, but taking into account the efforts to
protect cash flow in H1 and the strong H2 performance, the
Remuneration Committee decided to award half of the maximum
opportunity of 30% in assessing overall H2 financial performance.
The Committee is satisfied that the annual bonus resulting
outcomes are appropriate and consistent with the experience of
shareholders and will be consistently applied to the wider workforce.

Metric

Thresholds (Min),
Budget (Mid) and
Targets (Max)

Short-term financial
measures H1 (operating
cash flow before tax)

Min: £10.0m

Mid: £22.5m

Max: £43.5m

Actual

% of Max
achieved

Craig Hayman
(% of salary)

James Kidd
(% of salary)

Max

Actual

Max

Actual

£34.3m

78.1%

24.8%

19.3%

22.5%

17.6%

Short-term financial
measures H2

No specific targets set –
see note below

Min: £204.5m

50.0%

24.8%

12.4%

22.5%

11.3%

Group adjusted EBIT

Mid: £216.0m

45.8%

41.3%

18.9%

37.5%

17.2%

Recurring revenue

Max: £240.0m

£218.3m

Min: £500m

Mid: £570m

Max: £623m

£549.7m

28.4%

41.3%

11.7%

37.5%

10.6%

Strategic objectives

see overleaf

90-95%

Totals as a percentage of salary

Bonus receivable

Granted in cash (75%)

Granted in shares (25%)

33.0%

165.0%

31.4%

93.6%

£672,534

£504,400

£168,134

30.0%

150.0%

27.0%

83.6%

£429,015

£321,761

£107,254

Note: As set out above, the H2 short-term financial metric was based on an assessment of overall H2 financial performance for standalone
AVEVA. Whilst no specific H2 targets were set, the Remuneration Committee noted that, despite the full year revenue growth being flat:

• Revenue increased 6.4% to £470.4 million (FY20 H2: £441.9 million);
• EBIT increase 27.2% to £160.5 million (FY20 H2: £126.2 million); and
• Recurring revenue increased 21.8% to £336.2 million (FY20 H2: £276.0 million).

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REMUNERATION COMMITTEE CONTINUED

Part B: The Implementation Report continued

Notwithstanding this strong H2 performance, the Remuneration Committee applied discretion to reduce the H2 short-term financial
measure to 50% of the maximum opportunity for this element (i.e. 7.5% of the 15%). As shown in the table on the previous page, the H1
operating cash flow measure vested at 78.1% of the maximum opportunity for this element (i.e. 11.7% of the 15%).

Further details on the key individual and strategic objectives and performance outcomes are detailed below.

Weighting (as %
of maximum bonus
opportunity)

Actual vesting (as %
of maximum bonus
opportunity)

Executive Director
Craig Hayman, CEO

Objective

ESG focus: Environmental & social assessed by:

Environmental. Increase focus on environmental sustainability as measured by portfolio,
end-market and customer activity

Established first company Chief Sustainability Officer and established AVEVA as a values-based
organisation focused on becoming a leader in sustainability.

Conducted a review of AVEVA’s global GHG emissions profile, identified key data and process
gaps. Cross-functional working group and governance structure has objective to achieving
net-zero emissions across operations (Scope 1 & 2) by 2030.

22 sustainability customer references published for sales and on aveva.com. Sustainability
case studies include Schneider Electric Smart Factory, Neste, Anglian Water, Fujirebio and
Nava Raipur all included in global brand campaign with a 30% increase in video completions.
Benchmarking research demonstrates a 9 basis-point improvement in sustainability brand
attribution as a result of FY21 activities. 13% outperformance compared to the ideal brand
as a values-based organisation.

AVEVA Sustainability Customer Advisory Board established with senior level cross
industry membership.

7.5%

100%

Social. Broaden diversity focus beyond women to include LGBT and racial diversity.
Raise awareness and learning across Company on unconscious bias. Integrate into
AVEVA LIFE values. Increase AVEVA Action for Good employee participation.

Q1 – CEO dialog with managers and employees. CEO statement on policy.

Q2 – New worldwide gender pay gap published, new regional D&I social networks established.

Q3 – New Global D&I director recruited, new Peakon survey on D&I and wellbeing.

Q4 – Martin Luther King Day recognised for first time in USA. New global D&I policy published
together with training program. Two thirds of employees completed D&I training by end of FY21.

Action for Good featured extensively on social media highlighting work with Water Aid, Save the
Children, World Central Kitchen, NHS Charities, Front line Covid-19 support in India and China,
and a £100k donation to UNICEF’s Covid-19 relief programme to deliver vaccines into under-
served communities.

Cloud focus: Deliver competitively compelling Cloud portfolio with customer verification and market traction covering:

Growth in Cloud portfolio

Overachieved bookings objective at £82 million and 95% growth (vs £75 million objective) including
£39 million in AVEVA SaaS and £43 million in customer cloud.

One-third of all sellers closed one or more cloud opportunity including 47 all-new logos.

Cloud metrics growing rapidly including functional offers (grew to over 30), Cloud adoption
(grew from 1,000 to 4,000) and user activity (weekly logins growing from 50,000 to 100,000).
New cloud dev-ops team achieved 99.95% uptime.

Project Apollo established to remove selling and back office friction to continue scale out.

Demonstration of AVEVA Connect cloud platform interoperating with OSIsoft OCS cloud solution
at transaction close to investors, customers, press and Board.

7.5%

90%

Total

20%

19%

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James Kidd, CFO

Objective

Cash conversion:

Evaluation

Weighting (as %
of maximum bonus
opportunity)

Actual vesting (as %
of maximum bonus
opportunity)

Improve AVEVA’s cash conversion (operating cash flow / adjusted EBIT) from 74% (FY20)
to 80% for FY21

The cash conversion result was 40% for the year, but this was heavily impacted by exceptional
costs related to the OSIsoft acquitision, as well as a number of multi-year contracts signed in FY21
(Nestle, Wood, Worley, Aker). This impacts cash conversion as revenue is booked earlier than we
collect the cash.

M&A Projects:

– Complete assessment of strategic divestments of non-core businesses

– Complete carve out where applicable

– Set up process for potential disposal

Successful acquisition in FY21 of OSIsoft and related rights issue.

Establishment of a staffed M&A team with new additions including Head of M&A and Head
of Integration.

Effected one strategic disposal of a non-core asset to Schneider Electric.

Completed the assessment of strategic opportunities during the course of the year.

6.66%

70%

6.66%

100%

Cyber security: Implement new plan for cyber security and new measures required to ensure AVEVA is secure.

– New technology implemented e.g. Multi Factor Authentication

– Management of cyber exposures

– Complete training and education of staff

– Metrics driven assessment of cyber exposure

Policies and procedures updated, MFA and new VPN implemented.

Cyber security posture substantially improved year-on-year whilst operating remotely.

Launched mandatory cyber security training for all employees.

Hired new Chief Information Security Officer and established a new security organisation.

6.66%

100%

Total

20%

18%

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Part B: The Implementation Report continued

Long-term incentives vesting in respect of the year ended 31 March 2021
The LTIP awards granted under the Long-Term Incentive Plan in 2018 that were capable of vesting based on performance over the
three-year period ended 31 March 2021 were subject to the following performance targets:

• Delivery of diluted adjusted EPS growth performance targets (50% of maximum);
• Relative Total Shareholder Return (TSR) against the comparator group, details below (25% of maximum); and
• Strategic objectives – Total Revenue Growth (25% of maximum).

LTIP targets and actual performance are summarised below:

Performance condition

Diluted EPS (CAGR)1, 4

TSR vs peer group2

Total Revenue Growth3, 4

Overall % vesting

Weighting
(% of award)

50%

25%

Threshold

5% p.a.

Maximum Actual performance

Vesting
(% of maximum)

15% p.a.

16.25%

100%

Median Upper quartile

7th out of 22
companies

3.0%

7.0%

5.88%

79%

72%

87.9%

1. For the EPS measure, non-linear vesting applies: threshold (25% vesting); mid (80% vesting for 10% p.a. growth) and maximum (100% vesting).

2. Straight-line vesting applies between threshold (25% vesting) and maximum (100% vesting). The TSR comparator group for these awards was a combination of the FTSE350

Technology Sector and the S&P Mid Cap 400 Software companies resulting in a group of 24 companies (PTC, Fortinet, Sage, CDK Global, Ultimate Software Group, Micro Focus
International, Fair Isaac, Blackbaud, Sophos, Commvault Systems, Manhattan Associates, ACI Worldwide, Fidessa, Computacenter, Softcat, FDM Group, Alfa, Financial Software,
Laird, NCC, Kainos Group, SDL, Nanoco Group and Spirent Communications).

3. Straight-line vesting applies between threshold (25% vesting) and maximum (100% vesting).

4. As a result of the OSIsoft acquisition, to ensure that performance is measured on a like-for-like basis and to maintain stretch in the performance targets, the EPS and Total Revenue
Growth targets were measured based on the average of three annual growth figures across each year in the performance period. This replaces a CAGR from a base year based on
AVEVA’s performance on a standalone basis.

The Committee reviewed the outcome against internal and external factors including the impact of Covid-19. Given the Group’s execution
of strategy over the performance period and the significant growth in share price, the Committee concluded that the vesting levels
were warranted.

Vesting of final tranche of buy-out award for Craig Hayman
As disclosed in previous annual reports, when Craig joined AVEVA as CEO in February 2018, he was granted buy-out awards to
compensate him for the loss of significant outstanding equity awards on leaving PTC. The final tranche of the buy-out award which was
subject to Craig’s employment vested on 15 November 2020. Under the Directors’ Remuneration Report regulations these awards are
included in the single figure for the year in which they are granted rather than the year in which they vest. However, for transparency,
the table below summarises the awards vesting for FY21.

Basis of award

Retention award:

Fair value equivalence with awards forgone in previous employment.

Subject to continued employment to 15 November 2020.

n/a

Final tranche of buy-out award vesting during FY21

None of the vested awards were exercised in the year.

Other information in relation to FY21

Performance outturn

Number of shares vesting

Value of award vesting based on
year end share price of 3,422p

22,015 x 1.2466
rights issue
adjustment factor =
27,443

27,443

£939,099

Scheme interests awarded in the year (audited)
The following tables set out details of the LTIP and deferred share awards made to the Executive Directors during FY21:

Long-term incentives granted during the year ended 31 March 2021

Executive Director

Craig Hayman

James Kidd

Date of grant

Basis of award

Face value
of awards1

Performance
period

11 September 2020

250% of base salary

£1,795,500

175% of base salary

£897,750

1 April 2020 –
31 March 2023

1. To determine the number of shares over which these awards were made, a share price was used of 4,008p prior to the rights issue adjustment for Craig and James’ Sept 2020 grant,

being the average share price for the five days to 1 September 2020 (i.e. the five days following the lifting of the restricted dealing period).

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In line with the UK Corporate Governance Code, LTIP awards are subject to a two-year holding period following the end of the three-year
performance period.

The structure of the LTIPs granted during the year are summarised below:

LTIP performance element

Weighting

Minimum performance

Mid performance

Maximum performance

EPS growth1

50% 25% vesting for growth of 5% p.a.

80% pays out for growth of
10% p.a.

100% vesting for growth of
15% p.a.

Relative TSR performance

25%

25% vesting at median
performance (50th percentile)

Linear vesting between min
and max performance

100% vesting if in the upper
quartile (75th percentile)

Total Revenue Growth1

25%

25% vesting at threshold

Linear vesting between min
and max performance

100% vesting at maximum

1. As a result of the OSIsoft acquisition, to ensure that performance is measured on a like-for-like basis and to maintain stretch in performance targets the combined Group pro-forma

financials (AVEVA + OSIsoft) will be used as the base year for the CAGR EPS and revenue growth over the three-year performance period to ended 31 March 2023.

For the FY21 LTIP award, the Committee reviewed the TSR comparator group in light of the increased size and complexity of the Company.
It was decided that the comparator group should reflect a more comparable list of similar sized and larger organisations, resulting in a list of
27 UK and US Software and Technology companies. The TSR element vesting schedule remains in line with the structure outlined above
(25% of this element will vest at median, with 100% vesting at the upper quartile).

TSR comparator group for the FY21 award

Name

ABB Group

Altair Engineering

Amadeus

Ansys

Aspen Technology

Autodesk

Avast

Bentley Systems

Market Cap1

Sector

Name

Market Cap1

Sector

£45,399m Electrical Components

15 IBM

£81,605m

Computer Services

£3,150m

£23,367m

£22,595m

£6,895m

£47,354m

£5,217m

£8,241m

Software

16 Micro Focus International

Computer Services

17 Nemetschek

Software

18 Oracle

Software

19 PTC

£1,399m

£6,195m

£134,293m

£10,430m

Software

20 Rockwell Automation

£21,549m Electronic Equipment

Software

21 SAP

Software

22 Siemens

£114,687m

Software

£91,481m Diversified Industrials

Dassault Systems

£38,569m

Software

23 Software N

10 Emerson Electric

£35,822m

Electronic Equipment

24 Teamviewer

11 ESI Group

£235m

Software

25 Temenos N

12 General Electric

£70,641m Diversified Industrials

26 The Sage Group

£2,283m

£7,538m

£7,153m

£6,479m

Software

13 Hexagon

14 Honeywell

£23,758m

Software

27 Trimble

£12,288m Electronic Equipment

£107,172m Diversified Industrials

1. Market capitalisation used is a three-month average to 15 February 2021.

Due to commercial sensitivity, the Committee does not believe it to be in shareholders’ interests to prospectively disclose details of the
revenue growth targets. However, they will be objectively measurable over a three-year period, significant outperformance will be required
to deliver full vesting, the targets will be disclosed retrospectively following vesting, and vesting will only occur if the Committee is satisfied
that the Company’s underlying financial performance warrants such payment.

Deferred Share Awards

Executive Director

Craig Hayman

James Kidd

Date of
grant

Basis of
award

11 September 2020

Deferred element of
FY20 annual bonus

Face value
of awards1

£218,563

£156,112

Performance
period

No performance period.
Awards vest in equal tranches on the date
of announcement in May 2021,
May 2022 and May 2023

1. Deferred bonus for FY20 is calculated as 40% of the actual bonus outcome for that year.

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Part B: The Implementation Report continued

Base salary FY22
As previously disclosed in the acquisition prospectus from November 2020, James Kidd’s base salary was increased to £530,000 from
1 April 2021. Following the announcement on 27 April 2021 that Craig Hayman will leave the Group after the AGM in July 2021, it was
agreed that the base salary increase disclosed in the Prospectus for Craig Hayman with effect from 1 April 2021 would not be implemented.
Craig Hayman’s base salary therefore remains unchanged at £718,200.

Craig Hayman

James Kidd

Base salary with effect from
1 April 2020

Base salary with effect from
1 April 2021

£718,200

£513,000

£718,200

£530,000

Increase

3.3%

As detailed in the Annual Statement from the Remuneration
Committee Chair, Peter Herweck’s base salary was set at
£760,000 with effect from 1 May 2021.

Annual incentive scheme FY22
The FY22 maximum bonus opportunity for the CFO will remain at
150% of base salary.

During the year, other significant salary increases were awarded to
below Board employees whose roles will change in size and nature
as a result of the OSIsoft acquisition. Base salary increases of 3.6%
for FY22 for the wider workforce were made with effect from
1 April 2021.

As part of the Policy renewal last year, the Committee undertook
an extensive review of the Executive Directors’ remuneration
against market. It was noted that our market positioning was
modest compared to the size of the company we have become.
The Committee is also mindful of the need to ensure that our
market positioning on salaries ensures we remain competitive
as a mid-FTSE100 company, competing in the global industrial
software market. In addition, the OSIsoft acquisition is expected
to further increase the size and complexity of the business.
We recognise that increasing the level of competitiveness in
salaries will require the continued delivery of performance coupled
with stretching targets for variable and long-term compensation.
This will ensure alignment to shareholders’ objectives as we
continue to grow.

Benefits and pension FY22
Both Craig Hayman and James Kidd have unchanged terms and
conditions for FY22 which are aligned to the wider UK workforce
and there are no planned changes to either the benefits structure
or quantum.

In line with best practice, we have aligned the terms and conditions
of AVEVA and SES employees in the UK resulting in the pension
benefits for both Executive Directors being aligned to all other UK
employees who remained on existing terms and conditions.

As detailed in the Annual Statement from the Remuneration
Committee Chair, Peter Herweck will not participate in the
AVEVA pension plan and will not receive cash in lieu of pension
contributions from AVEVA. He will retain his Schneider Electric
pension arrangement. Peter Herweck will receive the following
benefits: housing allowance, car allowance, medical insurance,
tax equalisation, personal liability insurance and personal
insurance protection.

Craig Hayman will be eligible to earn a reduced and time pro-rated
bonus for the period 1 April 2021 to 7 July 2021 (the date on which
he steps down from the Board in relation to the financial year
FY22). His annual bonus eligibility of 165% will be halved, and
further reduced by 25%, representing the forfeiture of the deferred
shares element of his standard annual incentive. Further, the time
pro-ration of the bonus reduces his annual incentive eligibility to
16% for the year.

The maximum annual bonus opportunity for Peter Herweck is
200% of salary. The level of deferred bonus is remaining
unchanged from FY21 at 50%, with this amount being reduced by
25% in the event of the shareholding requirement having been met.

The Committee acknowledges that increased salary levels for
James Kidd and Peter Herweck result in an increase in annual
incentive opportunity and can confirm that they continue to require
additional stretch to targets so that more pay is delivered only for
the achievement of more stretching performance targets taking
into account revised growth budgets, forecasts and external
market conditions. This annual incentive scheme operates for all
non-sales employees globally from the Executive Directors down
through all levels of the Company, with the same metrics, targets
and financial outcomes applying to all eligible employees. For FY22,
the proposed targets reflect the enlarged Group, absolute growth
above FY21 and improved operating efficiency. Consistent with
prior years, the maximum bonus will only be earned for material
improved year on year performance.

The Committee has reviewed the performance measures for FY22
to ensure they are appropriately aligned with the Group’s strategic
plan for the coming year. It is proposed that performance will be
measured against the following performance measures:

Measure

Combined Group Adjusted EBIT

Annualised Recurring Revenue for
standalone AVEVA

Personal KPIs

OSIsoft New Revenue

Weight
(% of maximum bonus
opportunity)

50%

20%

10%

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For FY22, the annual incentive scheme will see both AVEVA and
OSIsoft employees use a similar structure designed to encourage
cross company collaboration, partnership and efficiencies to drive
integration. Annualised Recurring Revenue provides the Company
with a key strategic objective and aligning it to the short-term
incentive ensures all employees are aligned globally on this critical
deliverable. The key individual performance objectives are agreed
with the Remuneration Committee at the start of each financial
year, although this element will be capped at a maximum
achievement of 10% of the maximum opportunity should the Group
adjusted EBIT target not be met. At year-end, when we determined
the performance outcomes for the year, we will be thoughtful in our
assessment of results, balanced with the shareholder and
workforce experience.

The Board believes that, given the annual incentive scheme
rewards the achievement of the Company’s annual business plan,
the targets are market sensitive and therefore should not be
disclosed in advance, but ordinarily disclosed retrospectively.

Long-Term Incentive Plan FY22
There are no proposed increases in LTIP opportunity for FY22 for
the CFO. The maximum LTIP award will remain unchanged at
175% of salary for the CFO. Craig Hayman and Peter Herweck will
not be granted an LTIP award for FY22.

For the FY22 LTIP award to be granted in 2021, the Committee
considered replacing the Total Revenue Growth measure with
Annualised Recurring Revenue (ARR). Although ARR is an
important measure to AVEVA, as it provides an indication of the
health of recurring revenue and is aligned to the future strategy of
the business, the Committee is mindful that the use of ARR is not
yet an established KPI. The Committee therefore agreed that for
the LTIP award to be granted in 2021 performance will be based
on EPS growth (50%) and relative Total Shareholder Return (50%).
The use of ARR as a LTIP performance measure will be kept under
review for future LTIP awards.

The TSR peer group was further refined, with 25 companies
selected to form a bespoke peer group. These companies were
chosen on the basis that they accurately reflected AVEVA’s
projected size, industry specialism and global reach. The companies
are listed below:

Name

ABB Group

Amadeus

Ansys

Aspen Technology

Autodesk

Avast

Bentley Systems

Cadence

Dassault Systems

Market Cap1

Sector

£45,399m Electrical Components

£23,367m

£22,595m

£6,895m

£47,354m

£5,217m

£8,241m

£26,538m

£38,569m

Computer Services

Software

10 Emerson Electric

£35,822m Electronic Equipment

11 General Electric

£70,641m Diversified Industrials

12 Hexagon

13 Honeywell

14 IBM

£23,758m

Software

£107,172m Diversified Industrials

£81,605m

Computer Services

15 Manhattan Associates

£5,160m

16 Nemetschek

17 PTC

£6,195m

£10,430m

Software

18 Rockwell Automation

£21,549m Electronic Equipment

19 ServiceNow

£78,049m

Software

20 Siemens

21 Synopsys

22 Teamviewer

23 Temenos N

24 The Sage Group

25 Trimble

AVEVA

£91,481m Diversified Industrials

£28,361m

£7,538m

£7,153m

£6,479m

Software

£12,288m Electronic Equipment

£8,936m

Software

1. Market capitalisation used is a three-month average to 15 February 2021.

The performance targets for the FY22 LTIP award are to be as follows:

LTIP performance element

Weighting

Minimum performance

Mid performance

Maximum performance

EPS growth

Relative TSR performance

50%

25% vesting for
growth of 5% p.a.

80% pays out for
growth of 10% p.a.

100% vesting for
growth of 15% p.a.

25% vesting at
median performance
(50th percentile)

Linear vesting
between min and max
performance

100% vesting if in the
upper quartile
(75th percentile)

Shareholding guidelines
Last year, the shareholding guidelines were increased to market
leading levels, including both annual bonus and LTIPs and
increased from 200% of annual salary to 415% for Craig Hayman
and from 200% to 325% for the CFO. The increased shareholding
requirements applied to all newly issued LTIPs and deferred bonus
shares granted in respect of FY21 and later years. If these increased
shareholding guidelines are met the bonus deferral will be relaxed
to half the usual amount i.e. 25% of any bonus to be deferred.
The deferral will continue to be subject to the existing three-year
bonus holding period.

A two-year post-employment shareholding guideline was also
introduced in FY20 which applied to shares acquired through
awards granted under the new Remuneration Policy, with 100%
of the increased shareholding guidelines (or actual shareholding,
if lower) retained for the first-year post employment and 50% for
the second-year post employment.

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Part B: The Implementation Report continued

Shareholding guidelines and interests in shares (audited)
Shareholding guidelines (audited)
Executive Director share ownership guidelines are set out in the Remuneration Policy on page 95. The interests of the Executive Directors in
office at 31 March 2021 in the share capital of the Company as a percentage of base salary were as follow. Shares are valued for these
purposes at the financial year-end price, which was 3,422p at 31 March 2021.

Number of shares held as
at 31 March 20211

Value as at 31 March 2021

Value of shares as
% of base salary

Share ownership guideline
as a % of base salary

Craig Hayman

James Kidd

335,991

115,594

11,497,612

3,955,627

1,601%

771%

415%

325%

Guideline met

Yes

1. Shares subject to deferred bonus arrangements, shares subject to LTIP awards which are in a holding period, and shares subject to other share awards which are no longer subject to
any performance condition (including any exercisable but unexercised deferred bonus awards and LTIP awards) count towards the requirement, on a net of assumed tax basis of 45%
income tax and 2% national insurance.

Interests in shares (audited)
The interests (both beneficial and their connected person) of the Executive Directors in office at the date of this report in the share capital of
the Company as at 31 March 2021 were as follows:

Shares owned
outright at
31 March
2021

326,347

105,033

Shares owned
outright at
31 March
2020

–

47,056

LTIP unvested
and subject to
performance
conditions

183,140

91,565

LTIP unvested and
subject to holding
period

Deferred bonuses
unvested and
subject to continued
employment

–

13,956

13,530

Vested and not
exercised

4,241

6,397

Total interests

526,684

216,525

Craig Hayman

James Kidd

Outstanding scheme interests (audited)

As at
1 April
2020
Number

Normal grants
during the
year

Dividend
equivalent

Rights
issue

Exercised
during the
year

Lapsed/
forfeited
during the
year

As at
31 March
2021

Exercise price
p

Gain on
exercise of
share options
£

Craig Hayman

LTIP

Deferred shares

Buy-out awards1

Total

James Kidd

LTIP

Deferred shares

Total

126,497

35,939

9,414

5,110

302,290

438,201

–

806

349

40,805

(20,907)

3,636

–

42,656 (345,295)

41,049

1,192

87,097 (366,202)

98,486

12,660

17,969

3,650

111,146

21,619

627

672

29,265

(54,782)

3,982

(410)

33,247

(55,192)

–

183,140

18,197

3.556

742,4082

n/a

–

n/a 14,586,5133

201,337

15,328,921

91,565

19,927

111,492

3.556

2,012,1434

n/a

20,9765

2,033,119

1. During the year, 27,443 shares vested.

2. Market value at exercise date was 3,551p.

3. Market value at exercise date was 3,551p for 234,202 shares, and 4,750p for 132,000 shares.

4. Market value at exercise date was 3,673p.

5. Market value at exercise date was 5,116p.

Summary of LTIP targets for all LTIPs in issue
Existing AVEVA LTIPs
The following table sets out a summary of the EPS performance targets attached to outstanding long-term incentive awards.

Adjusted EPS growth targets p.a.

Threshold

Midpoint

Maximum

Proportion of vesting

25%

80%

100%

25% vests for diluted adjusted EPS growth of threshold, and 100% vests for diluted adjusted EPS growth of the maximum. Non-linear
vesting applies between these points, as outlined in the table above.

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Date of award

8 September 2017
(James Kidd)

6 March 2018
(Craig Hayman)

28 September 2018

31 July 2019

Options
granted to
Executive
Directors

45,994

16,204

95,454

Period of
performance
measurement Threshold vesting Maximum vesting

FY18 – FY20

25%

100%

FY19 – FY21

25%

100%

Achievement

100% of
award vested

87.9% of
award vested

67,669

FY20 – FY22

25%

100%

Performance period not
yet completed

11 September 2020

53,908

FY21 – FY23

1. The definition of and figures used for adjusted diluted EPS are provided in note 13 in the notes to the consolidated financial statements.

Dilution
The number of shares which may be allocated on exercise of any options granted under any of the Company’s share option schemes
(including employee schemes) shall not, when aggregated with the number of shares which have been allocated in the previous ten years
under these schemes, exceed 5% of the ordinary share capital of the Company in issue immediately prior to that date.

Payments made to past Directors (audited)
No payments were made to past Directors during FY21. David Ward continues to be employed with the Group and was rewarded in line
with the terms and conditions of his employment.

Payments for loss of office (audited)
No payments were made for loss of office during FY21.

Total shareholder return v. techMARK All-Share Index FY11–FY21
The graph below shows performance, measured by total shareholder return, compared with the performance of the techMARK All-Share
Index. Total shareholder return is the share price plus dividends reinvested compared against the techMARK All-Share Index, rebased to the
start of the period. The Directors consider this index to be an appropriate choice as it includes AVEVA Group plc.

Total shareholder return (GBP)

500

400

300

200

100

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

FY21

AVEVA Group plc, rebased

techMARK, rebased

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Part B: The Implementation Report continued

CEO single figure ten-year history
The table below shows the ten-year history of the CEO single figure of total remuneration:

Richard Longdon (to 31 December 2016)

James Kidd (1 January 2017 to 18 February 2018)

Craig Hayman (19 February 2018 onwards)

FY12

1,003

FY13

963

FY14

1,163

–

CEO single figure of total remuneration (£‘000)

1,003

963

1,163

Annual incentive pay-out (% of maximum)

68% 94% 50%

LTIP pay-out (% of maximum)

100% 33% 94%

FY15

517

–

517

FY16

561

–

FY17

395

127

–

FY18

FY19

FY20

FY21

–

949

137

–

7,346

5,650

4,862

561

522

1,086

7,346

5,650

4,862

8% 18% 91% 98% 71% 57%

n/a1

100% 88%

1. The relevant pay-out for LTIPs vesting in FY19 was 90%, but Craig had no LTIPs that vested in the year.

Change in remuneration of Directors and all employees (audited)
The table below illustrates the percentage change in salary, benefits and annual incentive of each Executive Director and Non-Executive
Director against two selected sub-sets of employees (including only those employees who were employed at the start of the FY20 financial
year through to the end of the FY21 financial year) calculated on an FTE basis. AVEVA Group plc only employs the Directors and a very small
proportion of the workforce. Therefore, the comparator data for the average employee has been calculated by reference to UK and US
employees. This is considered to provide a more representative comparison than the employees of the Parent Company only and reflects
that the Group offices of heritage AVEVA and SES are headquartered in these countries respectively, and together employ just over
one-quarter of its workforce. Typical salary inflation in some other AVEVA locations is materially higher than the UK and US, which would
distort the comparison.

Executive Directors

Non-Executive Directors

% change (FY20 to FY21)

Base salary

Benefits

Annual bonus

CEO

CFO

5.9%

(5.5)%

Phillip Aiken

Jennifer
Allerton

Christopher
Humphrey

Ron Mobed

Paula
Dowdy

Peter

Herweck Olivier Blum

n/a

Average
UK & US
employee

1.6%

7.3%

Relative importance of spend on pay
The chart below illustrates the year-on-year change in total remuneration for all employees in the Group compared to recurring revenue,
adjusted EBIT and distributions to shareholders. The Committee determined recurring revenue and adjusted EBIT were appropriate
measures for this chart as they are the primary measures for the annual incentive scheme.

Relative importance of spend on pay (GBP millions)

Employee
staff costs

Recurring
revenue

Adjusted
EBIT

Dividends
paid

FY20

FY21

410.8

426.6 | +4%

518.5

557.4 | +8%

216.8

226.4 | +4%

46.8

70.7 | +51%

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CEO pay ratio
The table below discloses the ratio of the Chief Executive Officer’s pay for FY21. The CEO total remuneration is his FY21 total single figure as
disclosed on page 110. The calculation uses total remuneration on a consistent basis for the 25th (lower), 50th (median) and 75th (upper)
percentiles against the UK employee total remuneration (calculated on a full time equivalent basis).The 25th, 50th and 75th UK employees
were selected from the UK employee population as at 31 March 2021. The employees identified were subsequently reviewed and deemed to
be a true reflection of the UK workforce.

Year

FY21

FY20

Method

Option A

25th percentile (P25) pay ratio

Median (P50) pay ratio 75th percentile (P75) pay ratio

106:1

126:1

78:1

88:1

59:1

65:1

The total pay, benefits and salary of each employee who is the best equivalent of the 25th, 50th, and 75th ranked employee is as follows:

25th percentile pay ratio

50th percentile pay ratio

75th percentile pay ratio

£46,080

£43,000

£62,419

£57,559

£82,642

£73,017

Outside appointments
The Board believes that accepting Non-Executive appointments
with other companies enhances the experience of Executive
Directors and therefore they are entitled to accept appointments
outside of the Company provided that Board approval is sought
prior to accepting the appointment. Whether or not the Director
concerned is permitted to retain their fees is considered on a
case-by-case basis. Neither Craig nor James held any outside
appointments during the year.

Total pay and benefits

Salary only

We chose Option A as it is felt this is the most accurate, consistent
and robust method to identify the 25th, 50th and 75th UK
employee. In line with this option, the ratios are calculated using
single figure valuation methodology.

The total remuneration in respect of FY21 for the employees
identified at 25th, 50th and 75th is £46k, £63k, and £84k,
respectively. The base salary in respect of FY21 for the
employees identified at 25th, 50th and 75th is £43k, £58k,
and £73k, respectively.

The total remuneration for the 25th, 50th and 75th ranked
employees broadly unchanged, yet the CEO pay ratios fell
year-on-year. This was because Craig’s single figure of total
remuneration fell by 14%, with FY20 representing the year when
a large proportion of his buy-out awards vested. Offsetting this,
FY21 was the first year where Craig had a full complement of
performance-related LTIPs vesting. The quantum for these LTIPs
was less than for the FY20 buy-out awards.

The Committee has reviewed the FY21 pay ratios and is satisfied
that the overall picture is consistent with the remuneration policies
of the Group’s UK employees:

• Salaries are set annually using a range of factors including role
scope, experience, market benchmarks, impact of role (including
the Executive Directors).

• Benefit entitlement and level of benefit depending upon role and

level of seniority is consistently applied.

• Participation in the annual bonus scheme and level of

opportunity varies by level of seniority with all participants
measured against the same strategically aligned financial
metrics together with personal KPI achievement.

• None of the comparator employees participated in the 2020
long-term incentive scheme. Executive Directors and senior
executives receive a greater proportion of performance related
variable pay plus share-based awards reflecting their greater
influence over performance outcomes.

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Part B: The Implementation Report continued

Non-Executive Directors
Single total figure of remuneration for Non-Executive Directors (audited)
As noted in the Policy Report, the fees for the Chairman and the Non-Executive Directors are determined taking account of the individuals’
responsibilities, time devoted to the role and prevalent market rates.

The table below shows a single figure of remuneration for each of our Non-Executive Directors.

Philip Aiken (Chairman)

Jennifer Allerton

Christopher Humphrey

Ron Mobed

Paula Dowdy

Peter Herweck1

Olivier Blum1

FY21 fees

277,000

73,750

85,550

61,500

–

FY20 fees
£

277,000

73,750

85,550

61,500

–

1. Peter Herweck and Olivier Blum have waived their fees for their current three-year term.

The Non-Executive Directors voluntarily decided to contribute 10% of their fee for a six month period to further AVEVA’s Action For Good
programme at the beginning of FY21 in response to the global Covid-19 pandemic. The values in the single figure table are shown before
this contribution.

Implementation of Remuneration Policy for NEDs in FY22
NEDs do not participate in any of the Company’s incentive arrangements nor do they receive any benefits. Their fees are reviewed at
appropriately regular intervals, usually annually, against those for companies of a similar scale and complexity to AVEVA. The Chairman’s
fees are set by the Committee and the Chief Executive; those for the NEDs are set by the Board as a whole. For FY22, it has been decided
that the fees for Chairman and Committee Chairman be increased to reflect the revised size and complexity of the Company and the
additional workload resulting from the acquisition of OSIsoft. The table shows the annual fees payable for each of the NED roles held in
the year.

Role

Chairman

Basic Non-Executive Director fee

Vice Chairman

Committee Chair fee (Audit and Remuneration)

Senior Independent Director

FY22 fees

320,000

65,000

40,000

16,000

11,800

FY21 fees
£

277,000

61,500

40,000

12,250

11,800

NEDs’ interests in shares (audited)
The table shows the interests in AVEVA ordinary shares of Non-Executive Directors and their connected persons.

Philip Aiken (Chairman)

Jennifer Allerton

Christopher Humphrey

Ron Mobed

Paula Dowdy

Olivier Blum

Shares owned
outright at
31 March

2021

4,154

17,777

7,110

5,333

–

Shares owned
outright at
31 March
2020

2,337

6,000

4,000

3,000

–

There have been no changes to Directors’ holdings between the year-end date and the publication of this report.

This Remuneration Committee report has been approved by the Board of Directors and is signed on its behalf by:

Jennifer Allerton
Remuneration Committee Chair

25 May 2021

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OTHER STATUTORY INFORMATION

Other statutory information

Directors’ Report
The Directors’ Report for the year ended 31 March 2021 occupies
pages 1 to 127 of this report, together with the other sections of
the Annual Report indicated by the page numbers referred to
below. As permitted by legislation, we have included some of the
matters required to be included in the Directors’ Report in the
Strategic Report instead, as the Board considers them to be of
strategic importance. These are:

• operations during the year and future business developments

(throughout the Strategic Report);

• stakeholder engagement (see pages 22-23);
• the Section 172 statement (see page 11);
• risk management and internal control (on pages 36 to 46); and
• post balance sheet events (on page 178).

Results and dividends
We made a profit for the year after taxation of £24.8 million (FY20:
£69.8 million). Revenue was £820.4 million (FY20: £833.8 million),
generated by software licences, software maintenance and services.

The Directors recommend the payment of a final dividend of
23.5 pence per ordinary share (FY20: 29.0 pence). If approved at
the forthcoming Annual General Meeting, the final dividend will be
paid on 4 August 2021 to shareholders on the register at close of
business on 9 July 2021.

Business review and future developments
The Chairman’s Statement, the Chief Executive’s Review and the
Finance Review include a review of our operations during the year
and our plans for the future. Please see pages 72 and 155 for
details of the Company’s acquisition of the OSIsoft group, the most
important event affecting the Company in the past year.

The financial KPIs we use to measure our performance at Group
level include total revenue, recurring revenue, adjusted EBIT
margin, adjusted diluted earnings per share (EPS) and cash
conversion. Additionally, we also track non-financial KPIs around
Cloud customers, gender diversity of new hires, and the number of
paid employee days used for our community programme, Action
for Good. We set out the figures for the year ended 31 March 2021
on pages 26 to 27. You can find a discussion of the principal risks
and uncertainties facing the Group on pages 36 to 46.

Research & Development
The Group continues an active programme of Research &
Development, updating and extending our range of products.

Intellectual property
The Group owns intellectual property, both in our software tools
and the products we derive from them. The Directors consider such
properties to be of significant value to the business and have a
comprehensive programme to protect it.

Financial instruments
We discuss the Group’s financial risk-management objectives and
policies in note 24 to the consolidated financial statements.

Directors and their interests
We disclose Directors’ share and share option holdings in the
Remuneration Committee Report on pages 109 to 122.

No Director had a material interest in any contract of significance,
other than a service contract or contract for services, with the
Company or any of its subsidiaries at any time during the year.

Conflicts of interest
The Company had effective procedures in place throughout the
year to deal with conflict situations, and these have been operated
effectively. No conflicts arose during the year which required the
Board to exercise its authority or discretion. Further details on how
we manage conflicts can be found on page 77.

Share capital
You can find details of the issued share capital in note 28 to the
consolidated financial statements. The rights attaching to the
Company’s shares are set out in our Articles of Association.

Members may attend any general meeting of the Company, subject
to any restrictions referred to in the next section.

There are no restrictions on the transfer of ordinary shares in the
Company other than: certain restrictions which may from time to
time be imposed by laws and regulations; and pursuant to the
Market Abuse Regulation and the Company’s own rules whereby
Directors and certain employees of the Company require the
approval of the Company to deal in the ordinary shares and
pursuant to the Articles of Association where there is default in
supplying the Company with information concerning interests in
the Company’s shares. There are no special control rights in
relation to the Company’s shares.

Voting rights
Subject to any restrictions below, on a show of hands every
member who is present in person or by proxy at a general meeting
has one vote on each resolution. In addition, on a poll, every
member who is present in person or by proxy has one vote on each
resolution for every share of which he or she is the registered
member. A proxy will have one vote for and one vote against a
resolution on a show of hands in certain circumstances specified in
the Articles of Association. The Notice of Annual General Meeting
specifies deadlines for exercising voting rights.

A resolution put to the vote of a general meeting is decided on a
show of hands. This is unless beforehand, or on the declaration of
the result of the show of hands, the Chairman of the meeting
demands a poll. The Articles of the Company also allow members,
in certain circumstances, to demand that a resolution is decided by
a poll.

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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSThe Company refinanced its existing £100 million RCF with a £250
million Revolving Credit Facility with Barclays Bank plc as agent
dated 25 August 2020. The facility states that if:

i. Schneider Electric ceased to hold directly or indirectly 50.1% or
more of the issued and registered voting share capital of the
Company; or

ii. any person or group of persons acting in concert (other than
Schneider Electric) gains control, then the Company and
Lenders will enter into negotiations to agree terms and
conditions acceptable to all parties. During this period Lenders
are not obliged to increase borrowings under the facility.
Following a negotiation period if no agreement is reached, any
lender may cancel its commitment and declare all its
outstanding loans immediately due and payable.

The Relationship Agreement referred to below will terminate
(among other events) upon the listing of the Company’s shares
being cancelled.

There are no other significant agreements to which the Company is
a party that take effect, alter or terminate upon a change of control
of the Company following a takeover bid.

There are no agreements between the Company and its Directors
or employees providing for compensation for loss of office or
employment that occurs because of a takeover bid.

Articles of Association
Any amendments to the Company’s Articles of Association may be
made in accordance with the provisions of the Companies Act 2006
by way of special resolution.

Powers of the Directors
The business of the Company is managed by the Directors, who
may exercise all powers of the Company, subject to the Company’s
Articles of Association, relevant statutory law and to any direction
that may be given by the Company in general meeting by special
resolution. Subject to the Companies Act 2006, shares may be
issued by Board resolution. At the Company’s last Annual General
Meeting, powers were granted to the Directors (subject to limits set
out in the resolutions) to issue and to buy back its own shares.
Similar powers are proposed to be granted at the forthcoming
Annual General Meeting. The buy-back authority was limited to
10% of the Company’s issued share capital. No shares have been
bought back under this authority.

OTHER STATUTORY INFORMATION CONTINUED

Other statutory information continued

A member may vote personally or by proxy at a general meeting.
Any form of proxy must be delivered to the Company not less than
48 hours before the time appointed for holding the meeting or
adjourned meeting at which the person named in the appointment
proposes to vote. (For this purpose, the Directors may specify that
no account shall be taken of any part of a day that is not a working
day.) A corporation which is a member of the Company may
authorise such persons as it thinks fit to act as its representatives
at any general meeting of the Company.

No member shall be entitled to attend or vote, either personally or
by proxy, at a general meeting in respect of any share if any call or
other sum presently payable to the Company in respect of such
share remains unpaid, or in certain other circumstances specified
in the Articles of Association where there is default in supplying
the Company with information concerning interests in the
Company’s shares.

Dividends, distributions and liquidation
Members can declare final dividends by passing an ordinary
resolution, but the amount of the dividends cannot exceed the
amount the Board recommends. The Board can pay interim
dividends provided the distributable profits of the Company justify
such payment. The Board may, if authorised by an ordinary
resolution of the members, offer any member the right to elect to
receive new shares, which will be credited as fully paid, instead of
their cash dividend. Any dividend which has not been claimed for
12 years after it became due for payment will be forfeited and
revert to the Company. Members may share in surplus assets on
a liquidation.

If the Company is wound up, the liquidator can, with the sanction
of the members by special resolution and any other sanction
required by law, divide among the members all or any part of the
assets of the Company. He or she can also value any assets and
determine how the divisions shall be carried out as between the
members or different classes of members. The liquidator can also
transfer the whole or any part of the assets to trustees upon any
trusts for the benefit of the members. No members can be
compelled to accept any asset which would give them any liability.

There are no agreements between holders of securities that are
known to the Company which may result in restrictions on the
transfer of securities or on voting rights. The only exception is
described below in relation to the Employee Benefit Trust.

Change of control
All of the Company’s share-based plans and long-term incentive
schemes contain provisions relating to change of control.
Outstanding awards and options normally vest and become
exercisable or payable on or following a change of control arising
as a result of an offer or the court sanctioning a compromise or
arrangement under the Companies Act 2006, subject to the
satisfaction of any relevant performance conditions at that time.

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Substantial shareholdings
Interests in the ordinary share capital of the Company are set out in
the table below.

The Company had been notified, in accordance with Disclosure
Guidance and Transparency Rule 5 (DTR 5), of the following
interests in the Company’s ordinary share capital:

As at 31 March 2021

As at 30 April 2021

Percentage
held
%

Number

Percentage
held
%

Number

176,471,625

58.6 176,471,625

58.6

13,655,570

4.5

13,655,570

4.5

Name of holder

Schneider
Electric SE

Estudillo
Holdings LLC

Aberdeen
Standard
Investments

Artisan Partners

9,706,925

10,662,905

3.5

3.2

10,424,512

8,942,259

3.5

3.0

In the period from 1 May 2021 to the date of this report, we have
received no further notifications of any changes to holdings in
accordance with the DTR 5.

Appointment of Directors
The Articles of Association limit the number of Directors to not less
than two and not more than ten, save where members decide
otherwise. Members may appoint Directors by ordinary resolution
and may remove any Director (subject to the giving of special
notice). If desired, it may replace such removed Director by ordinary
resolution. New Directors may be appointed by the Board but are
subject to election by members at the first Annual General Meeting
after their appointment. A Director may be removed from office if
requested by all other Directors.

The Company’s Articles of Association require that at each AGM any
Director who shall have been a Director at each of the preceding
two Annual General Meetings and who was not appointed or
reappointed then or subsequently shall retire from office (and be
subject to re-election by members). However, in accordance with
the UK Corporate Governance Code, the Company requires all
Directors who held office at 31 March 2021 to stand for re-election.

Listing Rules disclosures
For the purpose of the FCA’s Listing Rule 9.8.4C R (LR9.8.4C R), the
only applicable information required to be disclosed in accordance
with LR9.8.4 R can be found in:

• the section below titled ‘Employee Benefit Trust’ (in respect of

shareholder waiver of dividends and future dividends);

• the section below titled ‘Majority shareholder and the Relationship
Agreement’ (in respect of a statement by the Board in respect of
the Relationship Agreement with the controlling shareholder); and

• the Remuneration Committee Report in relation to Craig

Hayman (in respect of details of long-term incentive schemes as
required by the Listing Rules).

Annual General Meeting
The Annual General Meeting will be held on 7 July 2021 at AVEVA,
30 Cannon Street, London EC4M 6AH. The Notice of the Annual
General Meeting is being sent to shareholders along with this
Annual Report, which contains details of the resolutions proposed.

Employee Benefit Trust
The AVEVA Group Employee Benefit Trust 2008 was established
in 2008 to facilitate satisfying the transfer of shares to employees
within the Group on the exercise of vested options under the
Company’s various share option and deferred bonus share plans.
The Trust holds a total of 135,235 ordinary shares in AVEVA Group
plc, representing 0.04% (FY20: 421,054 shares representing
0.26%) of the issued share capital at the date of this report.
Under the terms of the Trust deed governing the Trust, the trustees
are required (unless the Company directs otherwise) to waive all
dividends and abstain from voting in respect of ordinary shares
in AVEVA Group plc held by the Trust, except where beneficial
ownership of any such ordinary shares was passed to a beneficiary
of the Trust. In the same way as other employees, the Executive
Directors of the Company are potential beneficiaries under
the Trust.

Majority shareholder and the Relationship
Agreement
The Company entered into a relationship agreement (the
‘Relationship Agreement’) with Schneider Electric SE, its majority
shareholder, on 1 March 2018, as amended on 15 March 2019.

The Relationship Agreement will remain in force until (i) AVEVA
ceases to be listed; or (ii) the Schneider Electric Group ceases to be
a shareholder; or (iii) if earlier, by agreement between Schneider
Electric and AVEVA (subject always to the Listing Rules).

The Relationship Agreement contains provisions relating to the
ongoing relationship between AVEVA and Schneider Electric,
including:

• Schneider Electric may appoint up to two Non-Executive
Directors (depending on the level of its shareholding);

• after a period of two years from completion of the combination,
for so long as Schneider Electric has the right to appoint at
least one Non-Executive Director, it will have the right (but not
the obligation) to appoint such Non-Executive Director as
the Chairman;

• so long as Schneider Electric is entitled to appoint at least one
Non-Executive Director, each of the Remuneration Committee
and Nomination Committee will comprise a total of four
members, one of whom will be the (or a) Non-Executive Director
appointed by Schneider Electric and the other three members
will be independent Non-Executive Directors; and

• for the period of five years from completion of the combination
and provided Schneider Electric holds more than 50% of the
voting rights in AVEVA, AVEVA shall give Schneider Electric
reasonable notice of certain specified transactions.

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Other statutory information continued

The Relationship Agreement also provides that, (i) for so long as
Schneider Electric remains a ‘controlling shareholder’ of AVEVA
within the meaning of LR6.1.2AR; or (ii) the Schneider Electric
Group holds 25% or more of the voting rights or economic interest
in AVEVA, it agrees to undertake, and procure that its Associates
(as defined in the Listing Rules) undertake, that:

Disabled employees
We give full consideration to applications for employment from
disabled persons where the candidate’s particular aptitudes and
abilities adequately meet the requirements of the job. We have
made opportunities available to disabled employees for training,
career development and promotion.

a. all transactions, agreements and arrangements between the
Schneider Electric Group and any member of the enlarged
AVEVA Group are conducted on an arm’s length basis and on
normal commercial terms;

b. neither Schneider Electric nor any of its Associates will propose
or procure the proposal of a shareholder resolution which is
intended or appears to be intended to circumvent the proper
application of the Listing Rules;

c. neither Schneider Electric nor any of its Associates will take any
action that would have the effect of preventing AVEVA from
complying with its obligations under the Listing Rules or the
terms of the Relationship Agreement; and

d. it will abstain and will cause its Associates to abstain from

voting on any resolution to approve a ‘related party transaction’
(as defined in the Listing Rules) involving Schneider Electric or
any of its Associates as the related party.

There is no restriction on disposals of shares in AVEVA by
Schneider Electric. Since 1 March 2020, prior to which more
extensive restrictions applied, and until 1 September 2021, without
the approval of the majority of the independent Non-Executive
Directors, Schneider Electric is not permitted to:

a. announce or make a general offer under the Takeover Code for

the remaining shares in the Company (subject to certain
requirements as to the offer price and to recommendation by a
majority of the independent Non-Executive Directors);

b. vote in favour of a delisting of the Company; or
c. increase the aggregate shareholding of Schneider Electric and

its Associates, in the market or otherwise, to 75% or more of the
Company’s issued share.

After 1 September 2021, Schneider Electric will be under no
restrictions as to further acquisitions of shares or making offers.
Further details of the Relationship Agreement are set out in the
Prospectus, Part XIII, paragraph 2.

AVEVA has complied and, in so far as it is aware, Schneider Electric
and its Associates have complied with the independence provisions
in the Relationship Agreement during the period under review.

When existing employees become disabled, it is our policy to provide
continuing employment wherever practicable in the same or an
alternative position. We also seek to provide appropriate training to
achieve this aim as well as reasonable adjustments to the workplace
and other support mechanisms. All employees, including those with
a disability, are treated in a fair and inclusive way throughout their
careers, whether that means accessing training, development
opportunities or when seeking job progression.

Employee involvement
We place considerable value on the involvement of our employees.
We keep them informed of matters affecting them as employees
and on the various factors that affect the performance of the
Group. We achieve this through formal and informal meetings,
employee newsletters, the Company’s intranet and presentations
from senior management. In respect of the discretionary share
plans, eligible employees are entitled to receive an annual
discretionary award related to the overall profitability of the Group,
subject to the performance of the individual and the Group.
The Company also operates an all-employee share plan in each of
the countries in which the Board, in its discretion, decides to offer it,
giving eligible employees the opportunity to purchase ordinary
shares in the Company on beneficial terms. We also carry out
employee-wide surveys from time to time to gauge the success or
otherwise of our policies. We use this information to improve
matters as appropriate. Please see pages 22 to 23 for further
details on workforce engagement.

Directors’ indemnity
The Company has granted an indemnity to its Directors against
liability in respect of proceedings brought by third parties, subject
to the conditions set out in the Companies Act 2006. Such
qualifying third-party indemnity provision remains in force as at the
date of approving the Directors’ Report.

Greenhouse gas emissions reporting
We are required to state the annual quantity of emissions, in
tonnes of carbon dioxide equivalent, from activities for which the
Group is responsible. These include the combustion of fuel, the
operation of any facility, and emissions resulting from the purchase
of electricity, heat, steam or cooling. We set out details of our
emissions on pages 32 to 33 of the Strategic Report and include
them as part of the Directors’ Report disclosures.

Auditor
A resolution to re-appoint Ernst & Young LLP as auditor will be put
to the members at the Annual General Meeting.

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Disclosure of information to auditor
The Directors who were members of the Board at the time of
approving the Directors’ Report are listed on pages 62 to 64.
Each of these Directors confirms that:

• so far as he or she is aware, there is no relevant audit

information (as defined by Section 418 of the Companies Act
2006) of which the Company’s auditor is unaware; and

• he or she has taken all the steps he or she ought to have taken
as a Director to make himself or herself aware of any such
relevant audit information and to establish that the Company’s
auditor is aware of that information.

Fair and balanced reporting
Having taken advice from the Audit Committee, the Board
considers the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and that it provides the
information shareholders need to assess the Company’s position
and performance, business model and strategy.

Responsibility statement pursuant to the
FCA’s Disclosure Guidance and Transparency
Rule 4 (DTR 4)
Each Director of the Company (whose names and functions appear
on pages 62 to 64) confirms that (solely for the purpose of DTR 4)
to the best of his or her knowledge:

• the financial statements in this document, prepared in

accordance with English law and applicable accounting
standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company and the
undertakings included in the consolidation taken as
a whole; and

• the Strategic Report and the Directors’ Report include a fair
review of the development and performance of the business
and the position of the Company and the undertakings
included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties
that they face.

This Directors’ Report has been approved by the Board of Directors
and is signed on its behalf by:

Claire Denton
Group General Counsel and Company Secretary

Statement of Directors’ responsibilities in
relation to the financial statements

The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.

Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors are
required to prepare the Group financial statements in accordance
with International Accounting Standards in conformity with the
requirements of the Companies Act 2006 (IFRSs) and have also
chosen to prepare the Parent Company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable
law), including Financial Reporting Standard 101 Reduced
Disclosure Framework (FRS 101). Under company law the
Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of
affairs of the Group and the Company and of the profit or loss of
the Group for that period.

In preparing those consolidated financial statements, the Directors
are required to:

• select and apply accounting policies in accordance with

accounting standard IAS 8;

• present information, including accounting policies, in a manner

that provides relevant, reliable, comparable and understandable
information; and

• provide additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to understand
the impact of particular transactions, other events and conditions
on the entity’s financial position and financial performance.

In preparing the Parent Company financial statements,
the Directors are required to:

• select suitable accounting policies and then apply

them consistently;

• make judgements and accounting estimates that are

reasonable and prudent;

• state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and

• prepare the financial statements on the going concern basis,
unless it is inappropriate to presume that the Company will
continue in business.

The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s and
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Group and the Company
and enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and the Company and hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.

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Independent Auditor’s Report to
the members of AVEVA Group plc

Opinion
In our opinion:

• AVEVA Group plc’s Group financial statements and Parent Company financial statements (the ‘financial statements’) give a true and fair

view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2021 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with International Accounting Standards in conformity with
the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC)
No. 1606/2002 as it applies in the European Union;

• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of AVEVA Group plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended
31 March 2021 which comprise:

Group

Parent Company

Consolidated Income Statement for the year ended 31 March 2021

Company Balance Sheet as at 31 March 2021

Consolidated Statement of Comprehensive Income for the year then ended

Consolidated Balance Sheet as at 31 March 2021

Company Statement of Changes in Shareholder’s
Equity for the year then ended

Related notes 1 to 11 to the financial statements
including a summary of significant accounting policies

Consolidated Statement of Changes in Shareholder’s Equity for the year then ended

Consolidated Cash Flow Statement for the year then ended

Related notes 1 to 31 to the financial statements, including a summary of significant
accounting policies

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and
International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting
Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union. The financial reporting framework that
has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting
Standards, including FRS 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in
the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors use of the going concern basis of accounting in the preparation of
the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and Parent Company’s ability to continue to
adopt the going concern basis of accounting included:

• We understood the process undertaken by management to perform the going concern assessment, including the evaluation of the

ongoing impact of Covid-19 on the Group and the Group’s access to available sources of liquidity and associated covenants;

• We obtained management’s going concern assessment, including the cash flow forecasts for the going concern period to 30 September 2022;
• The Group has modelled a base case which is consistent with the assumptions used in the Group’s impairment assessments; a sensitivity
scenario which reduces base revenues by 5%; 2 stress scenarios which are linked to the Group’s principal risks; and a reverse stress test
based on liquidity/covenants in order to determine how much additional downside in trading could be absorbed before a breach of
covenants occurs (which based on the stress testing would occur ahead of any liquidity shortfall);

• We assessed the reasonableness of all key assumptions, namely revenue performance per revenue stream, adjusted EBIT margin and

working capital collection. This has been performed by:

• checking the arithmetical accuracy of management’s model;
• assessing the historical forecasting accuracy of the Group by comparing actual revenue and adjusted EBIT to forecast for the previous

five years;

• comparing the revenue forecasts to the revenue backlog and revenue pipeline against the forecast and previous conversion rates;
• reconciling the working capital assumptions with the risk assumed within the expected credit loss calculation; and
• checking for consistency of the forecasts with other areas of the audit including impairment assessment.

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• We compared the reduction in revenues assumed in the most severe scenario presented by management, to the revenue declines

demonstrated during recent economic crises. We have also compared the forecast result to reports from analysts and expected revenue
trends to industry forecasts for industrial software including the impact of Covid-19;

• We confirmed the availability of the revolving credit facility (‘RCF’) by comparing to the underlying agreement and reperformed

management’s forecast covenant ratio compliance calculations to check for breaches of each covenant ratio throughout the going
concern period under each scenario presented by management;

• We compared current trading performance to management’s Covid-19 forecast by obtaining the latest available management accounts

and latest available weekly Group cash report to identify any issues with current trading and cashflows;

• We recalculated the results of the sensitivity testing performed by management to determine the impact of reasonably possible

fluctuations in key assumptions on the Group’s available liquidity and covenant compliance;

• We performed reverse stress testing to establish the level of change in revenue and adjusted EBIT margin necessary to cause a liquidity

or financial covenant breach and considered the likelihood of such a change;

• We considered the further mitigating actions available to the Group, such as not paying the interim dividend, and further cost mitigations,
and the feasibility of management being able to execute such mitigating actions, when considering the likelihood of the reverse stress
testing scenario; and

• We reviewed the appropriateness of management’s going concern disclosure in describing the risks associated with its ability to continue
to operate as a going concern for a period of 16 months from the date of approval of the financial statements to 30 September 2022.

We observed that the adjusted EBIT for the Group continues to grow (2021: £226.4 million, 2020: £216.8 million) and the Group generates
positive operating cashflows (2021: £58.4 million, 2020: £122.1 million). The Group acquired OSIsoft on 19 March 2021, which is forecast to
further contribute to the positive consolidated cashflows, consistent with the prospectus approved by shareholders. As part of the funding of
the acquisition consideration, the Group obtained a £654.0 million term loan from Schneider Electric, its ultimate parent undertaking,
however this is not repayable during the going concern period. The Group has access to a committed revolving credit facility of £250 million,
which doesn’t expire until 2024. The covenant compliance necessary under both covenant test ratios within the RCF have been modelled as
part of the going concern forecast.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and Parent Company’s ability to continue as a going concern for a period of 16 months
from when the financial statements are authorised for issue to 30 September 2022.

In relation to the Group and Parent Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered
it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s ability to continue
as a going concern.

Overview of our audit approach
Audit scope

– We performed an audit of the complete financial information of nine (2020: four) components and audit

procedures on specific balances for a further ten (2020: twelve) components.

– The components where we performed full or specific audit procedures accounted for 77% of adjusted Profit

before tax, 79% of Revenue and 84% of Total assets.

Key audit matters

– Acquisition accounting

– Risk of inappropriate revenue recognition

Materiality

– Overall Group materiality of £5.6 million which represents 5% of adjusted Profit before tax.

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Independent Auditor’s Report to the members of AVEVA Group plc
continued

An overview of the scope of the Parent Company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each
company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into
account size, risk profile, the organisation of the Group and effectiveness of Group-wide controls, changes in the business environment and
other factors such as recent Internal audit results when assessing the level of work to be performed at each entity.

In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage of
significant accounts in the financial statements, of the 107 reporting components of the Group, we selected 19 components covering entities
within the Group in the following countries: UK, US, Canada, Germany, France, Korea, China, India, Japan, Netherlands and Russia, which
represent the principal business units within the Group.

Of the 19 components selected, we performed an audit of the complete financial information of nine components (‘full scope components’)
which were selected based on their size or risk characteristics. For the remaining ten components (‘specific scope components’), we performed
audit procedures on specific accounts within that component that we considered had the potential for the greatest impact on the significant
accounts in the financial statements either because of the size of these accounts or their risk profile.

The reporting components where we performed audit procedures accounted for 77% (2020: 91%) of the Group’s adjusted Profit before tax,
79% (2020: 75%) of the Group’s Revenue and 84% (2020: 84%) of the Group’s Total assets. For the current year, the full scope components
contributed 70% (2020: 67%) of the Group’s adjusted Profit before tax, 52% (2020: 48%) of the Group’s Revenue and 81% (2020: 78%) of
the Group’s Total assets. The specific scope components contributed 7% (2020: 24%) of the Group’s adjusted Profit before tax, 27% (2020:
27%) of the Group’s Revenue and 3% (2020: 5%) of the Group’s Total assets. The audit scope of these components may not have included
testing of all significant accounts of the component but will have contributed to the coverage of significant tested for the Group.

Of the remaining 88 components that together represent 23% of the Group’s adjusted Profit before tax, none are individually greater than
3% of the Group’s adjusted Profit before tax. For these components, we performed other procedures, including analytical review, testing of
consolidation journals and intercompany elimination and foreign currency translation recalculations to respond to any potential risks of
material misstatement to the Group financial statements.

Changes from the prior year
For the current year, we have designated the component in Russia as specific scope compared to review scope in the comparative period, as
part of our rotational audit scoping strategy, replacing Malaysia that was included as specific scope last year. Following the acquisition of
OSIsoft, we have designated this component as full scope in relation to both the opening Balance Sheet (given it represents the acquisition
carrying values – see note 14) and the year-end Balance Sheet (given the relative size).

Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the
components by us, as the primary audit engagement team, or by component auditors from other EY global network firms operating under
our instruction. Of the nine full scope components, audit procedures were performed on two of these directly by the primary audit team.
For the ten specific scope components, where the work was performed by component auditors, we determined the appropriate level of
involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for our opinion on the Group as a whole.

Chris Voogd has become Senior Statutory Auditor in the current year, following Marcus Butler completing his 5-year rotation. As part of the
transition, Chris performed attended a series of virtual video/teleconferences with key audit locations. Separate audit planning sessions were
held with key members of the Group finance team and Audit Committee Chair, in which Chris communicated the audit plan and the
approach to key judgements and estimates. We have continued our established approach to involvement in component teams through the
review of planning and conclusion deliverables. Chris also participated in key component teams’ closing meeting calls in which key
conclusions were discussed.

Close meetings for all component teams were held via video conference in April and May 2021 with attendance from the Primary team,
including the senior statutory auditor for all full scope components. For all components, the year-end review of relevant audit work papers
was facilitated by the EY electronic audit file platform, screen sharing or the provision of copies of work papers direct to the Group audit
team. Based upon the above approach we are satisfied that we have been able to perform sufficient and appropriate oversight of our
component teams.

The primary team interacted regularly with the component teams where appropriate during various stages of the audit, reviewed key
working papers and were responsible for the scope and direction of the audit process. This, together with the additional procedures
performed at Group level, gave us appropriate evidence for our opinion on the Group financial statements.

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Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a
whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

Key observations
communicated to
the Audit Committee

We concluded that the
transaction was properly
accounted for in accordance
with IFRS 3, and the fair
value adjustments and
provisional Purchase
Price Allocation were
appropriate. The relevant
tax considerations have
been recorded and
disclosed appropriately in
the financial statements.

Risk

Our response to the risk

Acquisition accounting

Refer to the Audit Committee Report
(pages 83 to 89); Accounting policies
(pages 185 to 190); and note 14 of the
Consolidated Financial Statements
(pages 155 to 156)

On 19 March 2021, AVEVA Group plc
acquired the OSIsoft LLC software business
for £3,831.4 million, in exchange for 100%
of the voting shares. The deal was funded
by £3,365.7 million (US $4,438.1 million) of
cash; £2,806.9 million (US $3,734.3 million)
raised via a rights issue (net of expenses),
and £558.8 million (US $703.8 million)
from existing cash and new debt facilities.
The remainder was funded by a £465.7
million (US $648.4 million) issue of
13,655,570 ordinary shares on 22 March
2021 to Estudillo Holdings Corp, a company
majority owned by Dr J. Patrick Kennedy
and his family, which held a 50.3% interest
in OSIsoft, LLC.

As the acquisition accounting is complex
and the associated balances are highly
material, we have designated this as a
significant audit risk in the current year.
The Group has calculated the Purchase
Price Allocation, including separately
identifiable intangible assets and relevant
fair value adjustments. The identification
and valuation of intangibles is a
judgemental area and involves a number
of management assumptions.

Taxation

We reviewed management’s accounting paper setting out how the control
criteria in accordance with IFRS 3 has been achieved and corroborated this
to the Stock and Unit Purchase Agreement. We also obtained the provisional
Purchase Price Allocation (PPA) prepared by management’s experts. We read
the sales and purchase agreement to check whether the terms and conditions
of the transaction have accurately been reflected in the accounting entries and
management’s Purchase Price Allocation.

We assessed the valuation methodologies including ‘cross checks’ as well as
the key inputs used in determining the purchase price allocation including the
discount rate, cash flow forecasts and other prospective financial information and
the useful lives assigned, with the assistance of our valuation specialists.

We also performed procedures to compare the application of accounting
principles and presentation with AVEVA Group plc. Together with our component
team and valuation specialists we corroborated material opening net assets, fair
value adjustments, and separately identifiable tangible and intangible assets,
including adjustments necessary to align the accounting policies.

We assessed the tax methodology and rates applied by management
when calculating the associated deferred tax adjustments arising from the
acquisition accounting.

As a primary team, we read the disclosures within the Annual Report and
accounts in relation to the business combination to establish whether they have
been prepared in accordance with applicable accounting standards

Taxation

We read relevant advice received from management’s tax advisors in
relation to the interpretation and application of tax principles relevant to the
acquisition accounting.

We engaged our tax specialists to evaluate the judgments and calculations
made by management in estimating the provisions held in respect of uncertain
tax positions. In doing so we assessed the provisions recognised in the financial
statements by reference to the outcome of prior tax audits conducted on the
Group, correspondence between the Group and relevant tax authorities, the view
of the Group’s tax advisors and our specialists experience in these areas.

The acquisition brings an increased level of
complexity and judgement in the following
areas, which resulted in this also forming
part of our audit focus:

We used our specialists to review the Stock and Unit Purchase Agreement
and associated structure as part of the OSIsoft acquisition to determine
whether there are incremental tax risks over and above those already identified
by management.

We reviewed the transaction costs incurred and associated tax treatment, which
is consistent with underlying tax legislation.

• Assessment of uncertain tax positions
within the acquired OSIsoft Group

• Deferred tax implications of the

acquisition accounting

• Consideration of specific US tax law

implications linked to the structuring of
the acquisition

• The tax treatment of transaction costs

associated with the acquisition

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Independent Auditor’s Report to the members of AVEVA Group plc
continued

Key observations
communicated to
the Audit Committee

Based on our procedures
performed both at Group
and by component audit
teams, we concluded that
revenue recognised in the
year, and revenue deferred
as at 31 March 2021,
was appropriate.

Risk

Our response to the risk

Risk of inappropriate revenue recognition
– £820.4 million (2020: £833.8 million)

Refer to the Audit Committee Report
(pages 83 to 89); Accounting policies
(pages 185 to 190); and note 2(b) of
the Consolidated Financial Statements
(page 143 to 144)

In particular, the risks are:

•

Inappropriate application of the Group
revenue recognition policy and IFRS
15 ‘Revenue’ for licence revenue
recognition, could result in, for example,
revenue being recorded when
performance obligations have not been
satisfied, incorrect deferral of revenue
for support and maintenance and other
obligations; and
Inappropriate licence revenue
recognition in relation to cut off,
as revenue may not have been
recognised in the correct accounting
period, including the risk of possible
manipulation of project margins by
management through estimates
to complete on ‘Percentage of
Completion’ (PoC) projects, particularly
where progress as of year-end is
greater than 10% and less than 90%
complete (as contracts that have
just commenced or nearly finalised
are less judgemental).

We performed walkthroughs of significant classes of revenue transactions to
understand significant processes, including the central Group revenue approval
process, and to identify and assess the design effectiveness of key management
controls over data input and IT.

A summary of our key procedures performed are:

We have performed licence revenue transaction testing at a local and Group
level to ensure that revenue has been recorded in accordance with the Group’s
revenue recognition policy and IFRS 15 and has been appropriately recorded
in the current year income statement or deferred on the balance sheet as
appropriate. This was achieved by testing a sample of contracts and:

• agreeing licence revenues to signed contracts or software licence agreements;
• agreeing the revenue to subsequent payment as evidence of collectability;
• checking evidence such as licence keys to support that software has been

•

delivered to customers prior to revenue recognition;
reviewing contract terms to establish whether all performance obligations
have been identified and for any conditions that would impact the timing of
revenue recognition and in turn the completeness of contract liabilities;

• ensuring appropriate allocation of the fair value and recognition of revenue for

other deliverables included within the contract; and

• We selected a sample of revenue journals and assessed the appropriateness

of the journal by checking to supporting evidence such as revenue contracts
and ensuring compliance with the Group’s revenue recognition policy and
IFRS 15. The sample selected was based on risk-based criteria including but
not limited to manual journal entries, those close to period end and postings
that appeared inconsistent with roles and responsibilities.

We have performed an independent assessment using our industry knowledge
to establish whether the fair value rate of the support and maintenance is still
applicable and that any non-standard contracts have an appropriate fair value
rate applied.

To validate our understanding of contractual terms with customers and to
identify any contractual issues or any ongoing contractual obligations, we made
enquiries of management outside the finance function, including the sales team
and legal counsel to ensure that appropriate obligations and commitments had
been recorded in the financial statements.

We have performed a test of detail including reviewing the terms and conditions
of the contract and recalculating the amount of revenue to be recognised in
comparison to amounts billed, for a sample of contract liability and contract asset
revenue items to ensure it is in accordance with the revenue recognition principles.

We have performed analytical review by revenue stream and geography in
comparison to the prior year to assess unexpected trends and patterns that could
be indicative of incorrect revenue recognition.

We have performed cut-off testing for a sample of revenue items booked either
side of year end on a day-by-day basis by agreeing to supporting documentation
to ensure that licence revenue was only recognised for software in the period
where the contract was signed by both AVEVA and the customer prior to year-
end and the software has been made available prior to the year end.

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Risk

Our response to the risk

Key observations
communicated to
the Audit Committee

Risk of inappropriate revenue recognition
– £820.4 million (2020: £833.8 million)
(continued)

For projects accounted for under ‘Percentage of Completion’ (PoC), we evaluated
judgements made by management regarding the expected costs to complete
and the timing and recognition of variation orders. We also tested the cut-off of
project costs. This testing focussed on:

• Low margin/loss making projects, including ensuring losses are

appropriately recognised;

• Risk reserves included in the project accounting, including enquiring of
the operational status of the project to establish whether an additional
reserve is required/existing risk reserves should be released;
• Change requests issued by the customer and the impact on the

project accounting;

• The estimated costs to complete, including changes during the life of the

project and historical forecast accuracy; and

• The status of billings, achievement of milestones and the recoverability of

contract assets/ shipped not billed balances.

Where detailed procedures were performed by component teams, the primary
team exercised oversight of the testing and performed additional testing of
contracts over £1.0 million or containing non-standard terms.

For related party transactions between AVEVA and the Schneider Electric
business, we obtained evidence that the performance obligations had been
fulfilled, were arm’s length in nature, and that they form part of the related
party disclosures.

We performed full and specific scope audit procedures over this risk area in
14 locations, which covered 79% of the risk amount.

In the prior year, our auditor’s report included a key audit matter in relation to the Impact of Covid-19. In the current year, Covid-19 has been
considered throughout the audit and the continued considerations relating to going concern are included in the Conclusions relating to going
concern section of this report.

Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit
and in forming our audit opinion.

Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Group to be £5.6 million (2020: £5.5 million), which is 5% (2020: 5%) of adjusted Profit before tax.
We believe that adjusted Profit before tax provides us with the most relevant measure of the underlying performance of the Group, as it
removes the impact of one-off transactions. For both years, we have used Profit before tax adjusted for exceptional items as reported in note
7, however have not made adjustment for recurring items, such as amortisation of intangibles, share-based payments and gain/loss on
forward exchange contracts.

We initially determined materiality for the Parent Company to be £95.3 million (2020: £29.0 million), which is 2% (2020: 2%) of total assets.
We believe that total assets is the most relevant measure, given the primary activity of the Parent Company is to hold investments in
subsidiaries. However, as this is higher than the materiality for the Group, we restrict the materiality to £5.6 million so that the Parent
Company materiality is not higher than that for the Group.

Starting basis
• Profit before tax
– £34.2 million

Adjustments
• Exceptional items

(note 7) – £78.5 million

Materiality
• Totals £112.7 million

(adjusted Profit before tax)

• Materiality of £5.6 million
(5% of materiality basis)

During the course of our audit, we reassessed initial materiality and updated for the final profit shown above.

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Independent Auditor’s Report to the members of AVEVA Group plc
continued

Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was
that performance materiality was 75% (2020: 75%) of our planning materiality, namely £4.2 million (2020: £4.1 million). We have set
performance materiality at this percentage due to ensure that the total uncorrected and undetected audit differences in all accounts did not
exceed our materiality.

Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken
based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale
and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year,
the range of performance materiality allocated to components was £0.8 million to £2.1 million (2020: £0.8 million to £2.2 million).

Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.3 million
(2020: £0.2 million), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other
relevant qualitative considerations in forming our opinion.

Other information
The other information comprises the information included in the Annual Report set out on pages 1 to 127, including the Strategic Report and
the Corporate Governance Report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the
other information contained within the Annual Report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in
the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the
other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements and those reports have been prepared in accordance with applicable legal
requirements;

• the information about internal control and risk management systems in relation to financial reporting processes and about share capital

structures, given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Rules and Transparency Rules sourcebook made by the
Financial Conduct Authority (the FCA Rules), is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements; and
information about the company’s corporate governance statement and practices and about its administrative, management and
supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.

•

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Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in:

• the Strategic Report or the Directors’ Report; or
• the information about internal control and risk management systems in relation to financial reporting processes and about share capital

structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in
our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from

branches not visited by us; or

• the Parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the

accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit; or
• a Corporate Governance Statement has not been prepared by the company.

Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group and company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our knowledge obtained during the audit:

• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material

uncertainties identified set out on page 47;

• Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period is

appropriate set out on page 47;

• Directors’ statement on fair, balanced and understandable set out on page 127;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 36 to 46;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set out on

page 74 to 75; and;

• The section describing the work of the Audit Committee set out on pages 83 to 89.

Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 127, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group and Parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.

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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSAUDITOR’S REPORT CONTINUED

Independent Auditor’s Report to the members of AVEVA Group plc
continued

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,
or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company
and management.

• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most

significant are those which are directly relevant to the specific assertions in the financial statements (IFRS, FRS 101, the Companies Act
2006 and UK Corporate Governance Code) and the relevant tax compliance regulations in the jurisdictions in which the Group operates.
In addition, we concluded that there are certain significant laws and regulations which may have an effect on the determination of the
amounts and disclosures in the financial statements being the Listing Rules of the UK Listing Authority, and those laws and regulations
relating to occupational health and safety and data protection.

• We understood how AVEVA Group plc is complying with those frameworks by making enquiries of management and legal counsel,

oversight of those charged with governance (i.e. considering the potential for override of controls or other inappropriate influence over the
financial reporting process, such as efforts by management to manage earnings in order to influence the perceptions of analysts as to the
company’s performance and profitability), the culture of honesty and ethical behaviour and whether a strong emphasis is placed on fraud
prevention, which may reduce opportunities for fraud to take place, and fraud deterrence, which could persuade individuals not to commit
fraud because of the likelihood of detection and punishment.

• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by meeting with
management from various parts of the business to understand where it considered there was susceptibility to fraud. We also considered
performance targets and their influence on efforts made by management to manage earnings or influence the perceptions of analysts. We
considered the programs and controls that the Group has established to address risks identified, or that otherwise prevent, deter and detect
fraud; and how senior management monitors those programs and controls. Where the risk was considered to be higher, we performed audit
procedures to address each identified fraud risk. These procedures included testing manual journals and review of accounting estimates and
judgements and were designed to provide reasonable assurance that the financial statements were free from fraud or error.

• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures
involved management enquiries at the Group level, review of legal correspondences, journal entry testing, and full and specific scope
management enquiries. Our audit procedures were communicated to and performed by our component teams.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Other matters we are required to address
• Following the recommendation from the Audit Committee we were appointed by the company on 21 July 2020 to audit the financial

statements for the year ending 31 March 2021 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is 19 years, covering the years ending
31 March 2003 to 31 March 2021.

• The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent Company and we remain

independent of the Group and the Parent Company in conducting the audit.
• The audit opinion is consistent with the additional report to the Audit Committee

Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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
auditor’s 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.

Christopher Voogd (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor

Birmingham

25 May 2021

Notes:
1. The maintenance and integrity of the AVEVA Group plc website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these

matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

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Consolidated Income Statement

for the year ended 31 March 2021

Revenue

Cost of sales

Gross profit

Operating expenses

Research & Development costs

Selling and administrative expenses

Net impairment loss on financial assets

Other income

Total operating expenses

Profit from operations

Finance revenue

Finance expense

Profit before tax from continuing operations

Income tax expense

Profit for the year attributable to equity holders of the parent

Profit from operations

Amortisation of intangibles (excluding other software)

Share-based payments

(Gain)/loss on fair value of forward foreign exchange contracts

Exceptional items

Adjusted EBIT

Earnings per share (pence)
– basic
– diluted

All activities relate to continuing activities.

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

Notes

3,4

11(a)

2021
£m

820.4

(181.3)

639.1

(184.5)

(419.8)

(3.7)

5.5

2020
£m

833.8

(190.7)

643.1

(184.6)

(367.8)

(7.6)

11.9

(602.5)

(548.1)

36.6

0.6

(3.0)

34.2

(9.4)

24.8

36.6

95.7

16.3

(0.7)

78.5

95.0

0.3

(3.3)

92.0

(22.2)

69.8

95.0

90.6

12.0

0.4

18.8

226.4

216.8

11.35

11.27

34.78

34.60

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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS

FINANCIAL STATEMENTS CONTINUED

Consolidated Statement of
Comprehensive Income

for the year ended 31 March 2021

Profit for the year

Items that may be reclassified to profit or loss in subsequent periods:

Exchange gain arising on translation of foreign operations

Total of items that may be reclassified to profit or loss in subsequent periods

Items that will not be reclassified to profit or loss in subsequent periods:

Remeasurement (loss)/gain on defined benefit plans

Deferred tax effect

Total of items that will not be reclassified to profit or loss in subsequent periods

Total comprehensive income for the year, net of tax

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

Notes

11(a)

2021
£m

24.8

20.7

(2.5)

0.5

(2.0)

43.5

2020
£m

69.8

4.2

6.2

(1.2)

5.0

79.0

138
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FINANCIAL STATEMENTS CONTINUED

Consolidated Balance Sheet

31 March 2021

Non-current assets

Goodwill

Other intangible assets

Property, plant and equipment

Right-of-use assets

Deferred tax assets

Trade and other receivables

Customer acquisition costs

Investments

Retirement benefit surplus

Current assets

Trade and other receivables

Contract assets

Treasury deposits

Cash and cash equivalents

Restricted cash

Financial assets

Current tax assets

Total assets

Equity

Issued share capital

Share premium

Other reserves

Retained earnings

Total equity

Current liabilities

Trade and other payables

Contract liabilities

Lease liabilities

Financial liabilities

Current tax liabilities

Non-current liabilities

Loans and borrowings

Lease liabilities

Deferred tax liabilities

Other liabilities

Retirement benefit obligations

Total equity and liabilities

Notes

23(b)

28(a)

28(b)

28(c)

23(c)

2021
£m

2020
£m

3,904.1

1,662.3

48.5

111.9

21.4

19.4

0.3

0.4

13.1

1,295.7

514.8

27.6

79.5

19.1

4.4

–

14.9

5,781.4

1,956.0

317.0

215.6

0.3

286.6

7.3

0.7

18.9

846.4

242.2

142.4

0.1

114.5

–

20.2

519.4

6,627.8

2,475.4

10.7

3,842.1

1,209.6

130.3

5,192.7

271.3

239.7

22.9

–

45.6

579.5

654.0

88.9

82.0

18.2

12.5

5.7

574.5

1,180.3

181.2

1,941.7

149.5

177.0

16.6

0.4

5.5

349.0

–

53.3

119.9

0.7

10.8

855.6

6,627.8

184.7

2,475.4

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

The financial statements were approved by the Board of Directors and authorised for issue on 25 May 2021. They were signed on its
behalf by:

Peter Herweck
Chief Executive Officer

James Kidd
Deputy CEO & CFO

Company number
2937296

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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS

FINANCIAL STATEMENTS CONTINUED

Consolidated Statement of Changes in
Shareholders’ Equity

31 March 2021

Share
capital
£m

Share
premium
£m

Merger
reserve
£m

Notes

Other reserves

Cumulative
translation
adjustments
£m

Capital
redemption
reserve
£m

Reverse
acquisition
reserve
£m

Treasury
shares
£m

Total other
reserves
£m

Retained
earnings
£m

Total
equity
£m

5.7 574.5 615.6

18.4

101.7

452.5

(9.4) 1,178.8

165.5 1,924.5

–

4.2

–

4.2

–

(3.1)

69.8

5.0

74.8

12.0

1.0

–

69.8

9.2

79.0

12.0

1.0

(3.1)

0.4

–

0.4

–

(0.4)

–

(71.7)

5.7 574.5 615.6

22.6

101.7

452.5

(12.1) 1,180.3

181.2 1,941.7

–

0.5 465.2

4.5 2,831.0

–

(28.6)

–

20.7

–

20.7

–

(1.1)

24.8

(2.0)

22.8

24.8

18.7

43.5

–

465.7

– 2,835.5

–

(28.6)

16.3

2.1

–

16.3

2.1

(1.1)

9.7

–

9.7

(9.7)

–

(82.4)

10.7 3,842.1 615.6

43.3

101.7

452.5

(3.5) 1,209.6

130.3 5,192.7

At 31 March 2019

Profit for the year

Other comprehensive income

Total comprehensive income

Share-based payments

Tax arising on share options

Investment in own shares

Cost of employee benefit trust
shares issued to employees

Equity dividends

At 31 March 2020

Profit for the year

Other comprehensive income

Total comprehensive income

Issue of new shares

Rights issue

Transaction costs relating to

issue of share capital

Share-based payments

Tax arising on share options

Investment in own shares

Cost of employee benefit trust
shares issued to employees

Equity dividends

At 31 March 2021

The accompanying notes are an integral part of this Consolidated Statement of Changes in Shareholders’ Equity. Details of other reserves are
contained in note 28.

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FINANCIAL STATEMENTS CONTINUED

Consolidated Cash Flow Statement

For the year ended 31 March 2021

Cash flows from operating activities

Profit for the year

Income tax expense

Net finance expense

Amortisation of intangible assets

Depreciation of property, plant and equipment and right-of-use assets

Loss on disposal of property, plant and equipment

Gain on disposal of pension scheme

Gain on disposal of subsidiaries

Share-based payments

Difference between pension contributions paid and amounts charged to operating profit

Research & Development expenditure tax credit

Changes in working capital:

Trade and other receivables

Contract assets

Customer acquisition costs

Trade and other payables

Contract liabilities

Changes to fair value of forward foreign exchange contracts

Cash generated from operating activities before tax
Income taxes paid

Net cash generated from operating activities

Cash flows from investing activities

Purchase of property, plant and equipment

Purchase of intangible assets

Payment on disposal of pension scheme

Acquisition of subsidiaries, net of cash acquired

Restricted cash from acquisition of business - held in escrow

Net payment for forward contracts under hedge accounting

Proceeds from sale of subsidiaries, net of cash

(Purchase)/sale of treasury deposits

Interest received

Net cash flows used in investing activities

Cash flows from financing activities

Interest paid

Purchase of own shares

Proceeds from borrowings, net of fees incurred

Payment of principal element of lease liability

Proceeds from rights issue

Transaction costs on issue of shares

Payment of facility arrangement fees

Dividends paid to shareholders of the parent

Net cash flows used in financing activities

Net increase/(decrease) in cash and cash equivalents

Net foreign exchange difference

Opening cash and cash equivalents

Closing cash and cash equivalents

Notes

11(a)

8,9

17,23

2021
£m

24.8

9.4

2.4

96.3

28.2

1.0

(0.3)

–

16.3

0.3

(3.1)

(4.8)

(70.8)

(0.3)

5.5

(13.0)

(0.7)

91.2
(32.8)

58.4

(10.9)

(0.5)

(0.3)

(3,029.5)

(7.3)

(74.2)

–

(0.2)

0.5

2020
£m

69.8

22.2

3.0

91.7

24.4

0.7

(0.4)

(7.7)

12.0

(1.2)

(2.3)

(12.2)

(43.8)

–

(5.8)

10.7

0.3

161.4
(39.3)

122.1

(18.5)

(0.6)

(2.0)

(25.1)

–

5.5

0.5

0.3

28(c)

(3,122.4)

(39.9)

(2.8)

(1.1)

645.6

(18.5)

2,835.5

(28.6)

(2.0)

(82.4)

3,345.7

281.7

(109.6)

114.5

286.6

(3.3)

(3.1)

–

(15.5)

–

(71.7)

(93.6)

(11.4)

(1.3)

127.2

114.5

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

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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS

FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements

1 Corporate information

AVEVA Group plc is a public limited company incorporated and domiciled in the United Kingdom. The address of the registered office is given
on page 202. AVEVA Group plc’s shares are publicly traded on the Official List of the London Stock Exchange. The Parent Company financial
statements of AVEVA Group plc are included on pages 179 to 184.

2 Key accounting policies

Explained below are the key accounting policies of the AVEVA Group plc and all its subsidiaries (the Group). The full Statement of Group
Accounting Policies is included on pages 185 to 190.

a) Basis of preparation
The Consolidated Financial Statements of the Group have been prepared in accordance with International Accounting Standards (IASs) in
conformity with the requirements of the Companies Act 2006 and in accordance with International Financial Reporting Standards (IFRSs)
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. The financial information has been prepared on the
basis of all applicable IFRSs, including all IASs, Standing Interpretations Committee (SIC) interpretations and International Financial Reporting
Interpretations Committee (IFRIC) interpretations issued by the International Accounting Standards Board (IASB) that are applicable to the
financial period.

The accounting policies which follow set out those policies applied in preparing the financial statements, which have been consistently applied
to all the years presented unless otherwise stated. The Group applies several new amendments to accounting standards, none of which have
impacted the Consolidated Financial Statements.

The Consolidated Financial Statements are presented in pounds sterling (£) and all values are rounded to the nearest £0.1 million except
when otherwise indicated.

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

The Group’s business planning cycle has taken account of potential ongoing impacts of Covid-19 to create a base case going concern model,
reflecting the current business disruption, economic conditions and the resulting impact on customers and their ability to continue operating
effectively during the ongoing period of remote working.

The Directors have considered sensitivities in respect of potential downside scenarios over the base case going concern model and the
mitigating actions available in concluding that the Group is able to continue in operation for a period of at least sixteen months from the date
of approving the financial statements to 30th September 2022.

The specific scenarios modelled are:

Scenario 1: A ‘stress test’ scenario reducing base model revenue by circa 10% across the five-year forecast period.

Scenario 2: A further scenario was created to model circumstances required to breach AVEVA’s credit facilities. This scenario assumes severe
cash collection delays and does not include any mitigating actions that the Group would take. It is overall considered very unlikely.

Under the base case scenario, there is no expected requirement to draw down on the RCF across the going concern period. Under the two
downside scenarios, the Group would utilise the RCF, but within the current liquidity levels available.

Throughout both downside scenarios, the Group continues to have liquidity headroom on existing facilities and against the RCF financial
covenants during the period under assessment. Should a more extreme downside scenario occur, additional mitigating actions could be taken
such as the cancellation or deferral of dividend payments and reductions in other discretionary operating costs. The financial statements for
the year ended 31 March 2021 have therefore been prepared under the going concern basis of accounting.

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FINANCIAL STATEMENTS CONTINUED

b) Revenue
The Group generates its revenue principally through the supply of:

• subscription;
• maintenance;
• perpetual licences; and
• services.

Revenue is recognised upon transfer of control of the promised software and/or services to customers. The Group enters into contracts which
can include combinations of software licences, support and maintenance fees and other professional services, each of which is capable of
being distinct and usually accounted for as separate performance obligations. Where there are multiple performance obligations, revenue is
measured at the value of the expected consideration received in exchange for the services, allocated by the relative stand-alone selling prices
of each of the performance obligations.

Where a contract is subject to a modification and the purpose of the modification is to increase the licence term by an agreed number of
annual periods and in some cases to expand the list of included software, an adjustment is made to revenue at the date of the contract
modification. The adjustment to revenue will incorporate the effects of both scenarios noted above.

Subscription
The Group offers a number of non-cancellable, fixed-term subscription licensing models of between one month and seven years and include
on-premise software rentals, Cloud-hosted software and Software as a Service (SaaS).

Rentals consist of two separate components: a software licence; and support and maintenance, which are two distinct performance
obligations. The software licence is a right to use licence which is recognised at a point in time when the contract is agreed, and the software
is made available to the customer. The support and maintenance element is recognised on a straight-line basis over the rental period.

SaaS subscriptions are agreements with customers to provide the right to access software. The software, maintenance and support, and
hosting elements are not distinct performance obligations, and represent a combined service provided to the customer. Revenue is recognised
as the service is provided to the customer on a straight-line basis over the subscription period.

Where software is licensed for use exclusively within the AVEVA Cloud, the software has been developed or has undergone redevelopment
for optimisation within the AVEVA Cloud infrastructure. This optimisation and the performance of the software within the AVEVA Cloud forms
a key element of the overall customer software solution. This means that the software and AVEVA Cloud hosting services are highly
interrelated and as a result are not distinct performance obligations. The software and hosting services are therefore accounted for as one
single performance obligation. The support and maintenance services within SaaS agreements are provided as part of the overall software as
a service solution and have the same pattern of transfer to AVEVA’s customers. On this basis, the support and maintenance services form
part of the combined output to AVEVA’s customers and as a result are included within the combined single performance obligation.

Perpetual licences
Customers are charged an initial or perpetual licence fee for on-premise or hosted software which is usually limited by a set number of users
or seats. Initial and perpetual licences provide the customer with the right to use the software and are distinct from other services. Revenue is
recognised at a point in time when the contract is agreed, and the software is made available to the customer.

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

2 Key accounting policies continued

Maintenance
Revenue classified as maintenance includes annual fees as well as separate support and maintenance contracts. For both, revenue is
recognised over time on a straight-line basis over the period of the contract, which is typically 12 months. Customers that have purchased an
initial licence pay obligatory annual fees each year. Annual fees consist of the continuing right to use, and support and maintenance, which
includes core product upgrades and enhancements, and remote support services. Users must continue to pay annual fees in order to maintain
the right to use the software. Customers that have purchased a perpetual licence have the option to pay for support and maintenance.

Services
Services consist primarily of consultancy, implementation services and training. Revenue from these services is recognised as the services are
performed by reference to the costs incurred as a proportion of the total estimated costs of the service project.

If an arrangement includes both licence and service elements, an assessment is made as to whether the licence element is distinct in the
context of the contract, based on whether the services provided significantly modifies or customises the base product. Where it is concluded
that a licence is distinct, the licence element is recognised as a separate performance obligation. In all other cases, revenue from both licence
and service elements is recognised over time.

c) Non-GAAP measures
The Group presents the non-GAAP performance measure ‘adjusted earnings before interest and tax (EBIT)’ on the face of the Consolidated
Income Statement. Adjusted EBIT is not defined by IFRSs and therefore may not be directly comparable with the adjusted EBIT measures of
other companies.

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

Normalised items
These are recurring items which management considers to have a distorting effect on the underlying results of the Group.

These items relate to:

• amortisation of intangible assets (excluding other software);
• share-based payment charges; and
• fair value adjustments on financial derivatives.

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

Management consider these items to be distorting as they do not reflect the underlying performance of the Group.

Exceptional items
These are items which are non-recurring and are identified by virtue of either their size or their nature. These items can include, but are not
restricted to, the costs of significant restructuring exercises, fees associated with business combinations and costs incurred in integrating
acquired companies. Exceptional items are discussed further in note 7.

Management consider these items to be distorting by nature, as they are significant non-recurring-items that are inherently not reflective of
the future or underlying performance of the Group.

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FINANCIAL STATEMENTS CONTINUED
d) Significant accounting judgements

Determination of lease term for contracts with renewal or termination option
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the
lease where it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, where it is reasonably certain
not to be exercised.

The Group has entered into several lease contracts that include extension and/or termination options. Judgement is applied in evaluating
whether it is reasonably certain that the Group will exercise the option to renew or terminate the lease. Relevant factors that may create an
economic incentive to exercise either the renewal or termination option are considered. After the commencement date, the lease term is
reassessed when there is a significant event or change in circumstances that is within the Group’s control and affects its ability to exercise or
not to exercise the option to renew or to terminate.

e) Significant accounting estimates

Revenue recognition
The assessments and estimates used by the Group for revenue recognition could have a significant impact on the amount and timing of
revenue recognised.

Revenue from sales of software licences when these are combined with the delivery of significant implementation or customisation services is
recognised in line with the delivery of the services to the customer. This policy involves the assessment of which customer projects include
significant customisation or implementation and also an assessment of the stage of completion of such projects.

The fair value estimate of the element of a customer rental fee attributable to the continuing right to use, and to customer support and
maintenance, is reviewed periodically. Management used judgement in calculating this estimate by using a combination of historical data,
cost to the business of providing services, and annual fees as a proportion of initials. On average, the element attributable to customer support
and maintenance as a proportion of the initial software delivery is 17%.

Impairment of assets
Goodwill arising on acquisition is allocated to CGUs expected to benefit from the combination’s synergies and represents the lowest
level at which goodwill is monitored for internal management purposes and generates cash flows which are independent of other CGUs.
The recoverable amount of the CGU to which goodwill has been allocated is tested for impairment annually or when events or changes in
circumstance indicate that it might be impaired. The carrying values of property, plant and equipment, right-of-use assets and intangible
assets other than goodwill are reviewed for impairment when events or changes in circumstance indicate the carrying value may be impaired.
If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or CGUs are written down to
their recoverable amount. The recoverable amount is the greater of net selling price and VIU. In assessing VIU, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for
the CGU to which the asset belongs. Impairment losses are recognised in the income statement in the selling and administrative expenses line
item. Further details about the assumptions used and sensitivity analysis performed in the impairment review are set out in note 15.

Provision for impairment of financial assets
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected credit loss allowance for
all trade receivables and contract assets.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past
due. Loss allowances are calculated using historical account payment profiles and the corresponding historical credit losses experienced and
adjusted for forward-looking factors specific to the debtor and the economic environment. In assessing the impact of the forward-looking
information available, management have considered the risk factors most likely to impact customers in light of the Covid-19 pandemic.
Trade receivables were grouped based on industry and type of customer, and a further overlay applied to the risk matrix for specific higher
risk industries.

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

2 Key accounting policies continued

Provisions for the impairment of receivables have also been made on a customer-specific basis. The determination of the appropriate level of
provision involves an estimate of the potential risk of default or non-payment by the Group’s customers. In making this assessment,
management considers a number of factors, including:

• the financial strength of the customers;
• the level of default that the Group has suffered in the past;
• the age of the receivable outstanding; and
• the Group’s trading experience with that customer.

Contract assets have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has
therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.

Therefore, the significant estimates made relating to the provision for impairment of trade receivables are also applicable to impairment of
contract assets.

The provision for impairment of trade receivables at 31 March 2021 was £7.9 million (2020: £7.6 million) and contract assets was £7.7 million
(2020: £5.4 million). Details of the provision for impairment of receivables are contained in note 19.

To measure the expected credit losses, trade receivables and contract assets are grouped together based on shared risk characteristics.
An increase of 100bps in all ECL rates would increase the provision for impairment of trade receivables by £2.5 million and contract assets
by £1.7 million. A decrease of 100bps across all ECL rates would reduce the provision for impairment of trade receivables by £1.5 million and
contract assets by £1.6 million.

Intangible assets
The combination with OSIsoft, LLC requires the Group to recognise at fair value the identifiable intangible assets of OSIsoft, LLC. Valuation
methods vary by type of intangible asset, and include income approaches (royalty savings method, excess earnings method, and with and
without method) and cost approaches (replacement cost method). Income approaches require estimates of future cash flows, discount rates,
royalty rates, and customer attrition rates. Cost approaches require estimates of average salary costs, the proportion of development that can
be performed on- and offshore, and the total man-hours required to develop a replacement product.

Future results are impacted by the amortisation periods adopted and changes to the estimated useful lives would result in different effects
on the income statement. If the estimated useful lives of the intangible assets recognised on acquisition of OSIsoft, LLC were reduced by
one year, the annual amortisation would increase by $27.1 million. If they were increased by one year, the annual amortisation would reduce
by $21.3 million.

Retirement benefits
The determination of the Group’s surplus, obligations and expense for defined benefit pensions is dependent on the selection, by the Board
of Directors, of assumptions used by the pension scheme actuary in calculating these amounts. The assumptions applied, together with
sensitivity analysis, are described in note 26 and include, amongst others, the discount rate, the inflation rate, rates of increase in salaries
and mortality rates. While the Directors consider that the assumptions are appropriate, significant differences in the actual experience or
significant changes in assumptions may materially affect the reported amount of the Group’s future pension surplus and obligations, actuarial
gains and losses included in the Consolidated Statement of Comprehensive Income in future years and the future staff costs. In mitigation of
significant changes in assumptions affecting the Group's future pension obligations, the pension scheme operates a liability-driven investment
strategy, which means as inflation and interest rates change, the value of the asset portfolio will rise and fall, offsetting the impact on the net
position. The carrying amount of retirement benefit surplus at 31 March 2021, net of obligations, was £0.6 million (2020: £4.1 million).

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FINANCIAL STATEMENTS CONTINUED

3 Revenue

An analysis of the Group’s revenue is as follows:

Year ended 31 March 2021

Subscription

Maintenance

Perpetual licences

Services

Year ended 31 March 2020

Subscription

Maintenance

Perpetual licences

Services

Contract balances are as below:

Trade receivables (non-current)

Trade receivables (current)

Contract assets

Contract liabilities

Services
transferred at a
point in time
£m

Services
transferred
over time
£m

236.1

–

141.6

–

377.7

123.6

197.7

–

121.4

442.7

Services
transferred at a
point in time
£m

Services
transferred
over time
£m

228.7

–

179.3

–

408.0

2021
£m

0.7

245.3

215.6

239.7

88.1

201.7

–

136.0

425.8

2020
£m

2.0

181.2

142.4

177.0

Total
£m

359.7

197.7

141.6

121.4

820.4

Total
£m

316.8

201.7

179.3

136.0

833.8

2019
£m

–

174.9

100.5

174.6

Contract assets have increased year-on-year predominantly due to the recognition of a number of multi-year subscription licences, resulting
in the cumulative revenue recognised for these contracts being greater than the cumulative amounts invoiced. Contract assets are stated
net of a provision of £7.7 million (2020: £5.4 million). The provision has increased year-on-year due to forward-looking considerations in light
of Covid-19.

Trade receivables and contract liabilities have also increased year-on-year, primarily as a result of the acquisition of OSIsoft, LLC.

Revenue for the year ended 31 March 2021 includes £159.3 million (2020: £157.1 million) which was included in contract liabilities at the
beginning of the year. Revenue of £3.1 million recognised in the year ended 31 March 2021 related to performance obligations satisfied in
previous years (2020: £3.1 million).

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

Within one year

More than one year

2021
£m

425.8

232.1

2020
£m

323.8

178.0

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

4 Segment information

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

Year ended 31 March 2021

Americas
£m

Asia Pacific
£m

EMEA
£m

Corporate
£m

Total
£m

Revenue

Subscription

Maintenance

Perpetual licences

Services

Regional revenue total

Cost of sales

Selling and administrative expenses

Net impairment loss on financial assets

Regional contribution

Research & Development costs

Adjusted EBIT
Exceptional items, other normalised adjustments1 and net interest
Profit before tax

94.6

84.3

42.1

44.4

265.4

(50.0)

(64.4)

(1.0)

150.0

95.5

46.7

47.4

31.7

221.3

(19.8)

(40.7)

(1.8)

159.0

169.6

66.7

52.1

45.3

333.7

(39.9)

(68.0)

(0.9)

224.9

–

(70.8)

(120.3)

–

(191.1)

359.7

197.7

141.6

121.4

820.4

(180.5)

(293.4)

(3.7)

342.8

(116.4)

226.4

(192.2)

34.2

1. Normalised adjustments include amortisation of intangible assets (excluding other software), share-based payments, and movements on fair value of forward exchange contracts.

Revenue

Subscription

Maintenance

Perpetual licences

Services

Regional revenue total

Cost of sales

Selling and administrative expenses

Net impairment loss on financial assets

Regional contribution

Research & Development costs

Adjusted EBIT
Exceptional items, other normalised adjustments1 and net interest
Profit before tax

Year ended 31 March 2020

Americas
£m

Asia Pacific
£m

EMEA
£m

Corporate
£m

Total
£m

81.2

85.9

57.6

54.5

279.2

(49.9)

(69.4)

(4.1)

155.8

95.6

47.9

52.1

31.9

227.5

(27.3)

(44.7)

(0.8)

154.7

140.0

67.9

69.6

49.6

327.1

(34.6)

(72.5)

(2.7)

217.3

–

(78.3)

(112.0)

–

(190.3)

316.8

201.7

179.3

136.0

833.8

(190.1)

(298.6)

(7.6)

337.5

(120.7)

216.8

(124.8)

92.0

1. Normalised adjustments include amortisation of intangible assets (excluding other software), share-based payments, and movements on fair value of forward exchange contracts.

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FINANCIAL STATEMENTS CONTINUED

Other segmental disclosures
The Company’s country of domicile is the UK. Revenue attributed to the UK and all foreign countries amounted to £39.9 million and £780.5
million (2020: £37.8 million and £796.0 million) respectively. The USA accounted for 25% of the Group’s revenue (2020: 25.0%). No other
country is considered to be material to the Group (2020: none). Revenue is allocated to countries on the basis of the location of the customer.
No single external customer accounted for a material amount of the Group’s total revenue (2020: none).

Non-current assets (excluding deferred tax assets and retirement benefits) held in the UK and all foreign countries amounted to £1,673.7
million and £228.8 million (2020: £1,702.2 million and £219.8 million) respectively. Provisional goodwill and intangibles of £3,854.3 million
arising from the acquisition of OSIsoft, LLC remained unallocated at 31 March 2021, as explained in note 14. There are material non-current
assets (excluding deferred tax assets and retirement benefits) located in the USA amounting to £129.3 million (2020: £128.9 million). There
are no material non-current assets located in any other individual country outside of the UK (2020: none).

5 Selling and administrative expenses

An analysis of selling and administrative expenses is set out below:

Selling and distribution expenses

Administrative expenses

6 Profit from operations

Profit from operations is stated after charging:

Depreciation of right-of-use assets

Depreciation of owned property, plant and equipment

included in Research & Development costs

Amortisation of intangible assets:
–
–
–
Loss on disposal of property, plant and equipment

included in selling and distribution expenses

included in administrative expenses

Net foreign exchange losses

During the year the Group (including its subsidiaries) obtained the following services from the Group’s auditor at costs as detailed below:

Fees payable to the Group auditor for:
– the audit of the Parent Company and Consolidated Financial Statements
– the audit of the Group’s subsidiaries pursuant to legislation
Fees payable to the Group auditor and its associates for other services:
– audit-related assurance services (including procedures over the rights issue prospectus)

2021
£m

1.9

0.9

0.4

3.2

2021
£m

226.8

193.0

419.8

2020
£m

240.1

127.7

367.8

2021
£m

19.5

8.7

67.8

27.9

0.6

1.0

1.6

2020
£m

17.1

7.3

63.5

27.1

1.1

0.7

1.3

2020
£m

1.0

0.7

–

1.7

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

7 Exceptional items

Acquisition costs

Integration activities

Restructuring costs

Other income

2021
£m

44.4

37.3

2.3

(5.5)

78.5

2020
£m

0.8

28.2

1.7

(11.9)

18.8

The total cash net outflow during the year as a result of exceptional items was £63.2 million (2020: £23.3 million).

a) Acquisition costs
Acquisition costs in the year ended 31 March 2021 relate to adviser fees incurred in the acquisition of OSIsoft, LLC. In addition, fees incurred as
a direct result of raising debt (£2.9 million) and equity (£28.6 million) have been offset against the carrying value of the associated financial
liability and share premium respectively.

Acquisition costs in the year ended 31 March 2020 related to the acquisition of AssetPlus, and the trade and assets of MESEnter Co. Ltd.

b) Integration activities
Integration costs of £31.2 million (2020: £28.2 million) were incurred relating to the integration of heritage AVEVA and the Schneider Electric
industrial software business (SES). This principally related to consultancy fees paid to advisers, and the costs of additional temporary
resources required for the integration. Key activities included work undertaken to exit the Transitional Service Agreements (TSA) provided by
Schneider Electric, and costs incurred in the continued build and UK rollout of a new harmonised global ERP system.

Services covered by the TSA relating to integration activities ceased in the year, and no further costs of this nature are expected. Future costs
of integrating heritage AVEVA and SES will primarily relate to the global roll out of the new ERP system, which is expected to last until 2024.

To 31 March 2021 the Group expensed £6.1 million (2020: nil) relating to the integration of OSIsoft, LLC. It is expected that these costs will
substantially increase and continue in future years.

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FINANCIAL STATEMENTS CONTINUED

c) Restructuring costs
Restructuring costs related to severance payments in a number of locations across the Group. The costs incurred for the year ended 31 March
2021 have been a continuation of the restructuring programme started following the merger of heritage AVEVA and SES, which is now
complete. Further costs are expected to continue into the year ended 31 March 2022, arising from the integration of OSIsoft, LLC.

d) Other income
Other income contains £5.2 million (2020: £3.8 million) received from Schneider Electric in reimbursement for capital expenditure incurred as
part of the Group’s migration activities covered by TSAs following the Combination.

Prior year also included a £7.7 million gain on sale of three wholly owned distributor businesses.

Income statement impact

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

Cost of sales

Research & Development costs

Selling and distribution expenses

Administrative expenses

Other income

8 Finance revenue

Net return on pension assets

Bank interest receivable and other interest earned

9 Finance expense

Net interest on pension scheme liabilities

Bank interest payable and similar charges

Interest on term loan

Interest on lease liabilities

2021
£m

0.8

0.3

4.6

78.3

(5.5)

78.5

2021
£m

0.1

0.5

0.6

2021
£m

–

0.3

0.2

2.5

3.0

2020
£m

0.6

0.4

3.9

25.8

(11.9)

18.8

2020
£m

–

0.3

2020
£m

0.2

0.6

–

2.5

3.3

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

10 Staff costs

Staff costs relating to employees (including Executive Directors) are shown below:

Wages and salaries

Social security costs

Pension costs

Share-based payments

The average number of persons (including Executive Directors) employed by the Group was as follows:

Project delivery and customer support

Research, development and product support

Sales and marketing

Administration

Directors’ remuneration
The Directors of AVEVA Group plc received remuneration as follows:

Directors’ remuneration

Aggregate gains on the exercise of share options

Number of Directors accruing benefits under defined contributions

2021
£m

358.4

29.8

22.1

16.3

426.6

2021
Number

1,695

1,429

1,107

649

4,880

2021
£m

7.1

17.4

24.5

2020
£m

350.9

28.7

19.2

12.0

410.8

2020
Number

1,678

1,336

1,018

523

4,555

2020
£m

9.0

0.2

9.2

2021
Number

2020
Number

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FINANCIAL STATEMENTS CONTINUED

11 Income tax expense

a) Tax on profit
The major components of income tax expense are as follows:

Tax charged in Consolidated Income Statement

Current tax
– UK corporation tax
– Foreign tax
– Adjustments in respect of prior periods

Deferred tax
– Origination and reversal of temporary differences (note 25)
– Adjustments in respect of prior periods

Total income tax expense reported in Consolidated Income Statement

Tax relating to items charged directly to Consolidated Statement of Comprehensive Income

Deferred tax on actuarial remeasurements on retirement benefits

Tax (credit)/charge reported in Consolidated Statement of Comprehensive Income

b) Reconciliation of the total tax charge
The differences between the total tax charge shown above and the amount calculated by applying the standard rate of US (2020: US)
corporation tax to the profit before tax are as follows:

Tax on Group profit before tax at standard US (2020: US) corporation tax rate of 24% (2020: 24%)1
Effects of:
– expenses not deductible for tax purposes
– non-deductible acquisition costs
– Research & Development incentives
– UK rate change impact on deferred tax
–
– movement on unprovided deferred tax balances
– differing tax rates
– adjustments in respect of prior years
Income tax expense reported in Consolidated Income Statement

irrecoverable withholding tax

2021
£m

8.2

8.8

3.0

(5.3)

–

(1.9)

(0.2)

(3.2)

9.4

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

The Group’s effective tax rate for the year was 27.5% (2020: 24.1%). The Group’s effective tax rate for the year before exceptional items was
21.7% (2020: 24.2%). The Group’s effective tax rate before exceptional and other normalised adjustments was 21.2% (2020: 18.1%).

At the balance sheet date, the UK government had announced that it would increase the main rate of corporation tax to 25% from
1 April 2023. This change had not been substantively enacted at the balance sheet date and is consequently not included in these
financial statements. The effect of this proposed tax rate increase would be to increase the deferred tax liability by £17.8 million
consisting of a debit to the income statement of £17.0 million and a debit to other comprehensive income of £0.8 million.

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153

2021
£m

2020
£m

–

41.9

(1.9)

40.0

(29.3)

(1.3)

(30.6)

9.4

2021
£m

(0.5)

11.1

26.3

(9.6)

27.8

(9.9)

4.3

(5.6)

22.2

2020
£m

1.2

2020
£m

22.1

2.0

–

(5.8)

8.9

1.2

(1.1)

0.2

(5.3)

22.2

STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS

FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

12 Dividends paid and proposed on equity shares

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

Declared and paid during the year1
Interim 2020/21 dividend paid of 12.4 pence (2019/20: 12.4 pence) per ordinary share

Final 2019/20 dividend paid of 23.3 pence (2018/19: 23.3 pence) per ordinary share

Proposed for approval by shareholders at the Annual General Meeting

Final proposed dividend 2020/21 of 23.5 pence (2019/20: 23.3 pence) per ordinary share

2021
£m

35.6

46.8

82.4

70.7

2020
£m

25.0

46.7

71.7

46.8

1. Dividends per share for comparative periods have been restated and adjusted for a bonus factor of 0.80, to reflect the bonus element of the November 2020 rights issue. Previously stated

interim dividend per share totals for both 2020/21 and 2019/20 were 15.5 pence per share, and final dividend per share for both 2019/20 and 2018/19 were 29.0 pence per share.

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting on 7 July 2021 and has not been included
as a liability in these financial statements. If approved at the Annual General Meeting, the final dividend will be paid on 4 August 2021 to
shareholders on the register at the close of business on 9 July 2021.

13 Earnings per share

Earnings per share for the year:
– basic
– diluted
Adjusted earnings per share for the year:
– basic
– diluted

Weighted average number of ordinary shares for basic earnings per share
Effect of dilution: employee share options
Weighted average number of ordinary shares adjusted for the effect of dilution

2021
Pence

11.35

11.27

81.86

81.31

2020
(restated)1
Pence

34.78

34.60

87.20

86.75

2021
Number

2020
(restated)1
Number

218,531,149 200,758,092

1,489,318

1,030,456

220,020,467 201,788,548

1. Basic and diluted EPS figures for comparative periods have been restated and adjusted for a bonus factor of 0.80 to reflect the bonus element of the November 2020 rights issue.

Amounts originally stated as at 31 March 2020 were 43.35 pence basic EPS and 43.13 pence diluted EPS. Originally stated adjusted EPS were 108.70 pence basic adjusted EPS and
108.15 pence diluted adjusted EPS.

The calculations of basic and diluted earnings per share (EPS) are based on the net profit attributable to equity holders of the parent for the
year of £24.8 million (2020: £69.8 million). Basic EPS amounts are calculated by dividing the net profit attributable to equity holders of the
parent by the weighted average number of AVEVA Group plc ordinary shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the net profit attributable to equity holders of the parent by the weighted average number of
ordinary shares outstanding during the year as described above, plus the weighted average number of ordinary shares that would be issued
on the conversion of all the potentially dilutive share options into ordinary shares. Details of the terms and conditions of share options are
provided in note 27.

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FINANCIAL STATEMENTS CONTINUED

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

Profit after tax for the year

Intangible amortisation (excluding software)

Share-based payments

Gain/(loss) on fair value of forward foreign exchange contracts

Exceptional items
Effect of acquisition accounting adjustments1
Tax effect on exceptional items

Tax effect on other normalised adjustments (excluding net finance expense)
Tax effect on acquisition accounting adjustments1
Adjusted profit after tax

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

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

2021
£m

24.8

95.7

16.3

(0.7)

78.5

3.3

(15.1)

(23.0)

(0.9)

178.9

2020
£m

69.8

90.6

12.0

0.4

18.8

–

(4.6)

(12.0)

–

175.0

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

14 Business combinations

Acquisition of OSIsoft, LLC
On 19 March 2021 the Group acquired 100% of the voting shares of OSIsoft, LLC, a global leader in real-time industrial operational data
software and services. The OSIsoft Group’s main product is the PI System, a proprietary, vendor-agnostic data management software which
enables customers to capture, store, analyse and share real-time industrial sensor-based data with business systems across all operations.
This acquisition will significantly enhance the Group’s product offering, provide customer diversification and greater geographical market
penetration, create opportunities for material revenue and cost synergies, and accelerate and improve the Group’s development of new
software and technology. A consideration of £3,831.4 million (US$5,086.5 million) was paid.

The deal was funded by £3,365.7million (US$4,438.1 million) of cash; £2,806.9 million (US$3,734.3 million) raised via a rights issue
(net of expenses), and £558.8 million (US$703.8 million) from existing cash and new debt facilities. The remainder was funded by a
£465.7 million (US$648.4 million) issue of 13,655,570 ordinary shares on 22 March 2021 to Estudillo Holdings Corp, a company majority
owned by Dr J. Patrick Kennedy and his family, which held a 50.3% interest in OSIsoft, LLC. At 31 March 2021, £7.3 million (US$10.0 million)
remained in restricted cash in relation to consideration to be paid.

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

14 Business combinations continued

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

Non-current assets

Intangible assets

Property, plant and equipment

Right-of-use assets

Deferred tax assets

Trade and other receivables

Customer acquisition costs

Investments

Total non-current assets

Current assets

Trade and other receivables

Contract assets

Customer acquisition costs

Cash and cash equivalents

Financial assets

Total current assets

Current liabilities

Trade and other payables

Contract liabilities

Lease liabilities

Current tax liabilities

Total current liabilities

Non-current liabilities

Lease liabilities

Retirement benefit obligations

Total non-current liabilities

Net identifiable assets and liabilities

Goodwill

Total consideration

Carrying value
at acquisition
£m

Provisional fair
value
adjustment
£m

Provisional fair
value
£m

0.4

21.0

36.2

22.0

2.9

10.3

0.4

93.2

75.6

2.4

4.0

150.6

0.4

233.0

(115.1)

(136.2)

(6.8)

(29.9)

(288.0)

(37.9)

(0.9)

(38.8)

(0.6)

1,231.6

1,232.0

–

(15.8)

–

(10.3)

–

21.0

36.2

6.2

2.9

–

0.4

1,205.5

1,298.7

–

(4.0)

–

(4.0)

–

60.5

–

(8.0)

52.5

–

1,254.0

75.6

2.4

–

150.6

0.4

229.0

(115.1)

(75.7)

(6.8)

(37.9)

(235.5)

(37.9)

(0.9)

(38.8)

1,253.4

2,578.0

3,831.4

Goodwill of £1,303.5 million is expected to be deductible for tax purposes.

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

Costs incurred that are directly attributable to raising debt (£2.9 million) and equity (£28.6 million) have been offset against the corresponding
financial liability and share premium respectively. All remaining transaction costs were expensed and are included within selling and
administrative expenses. Additional details are included within note 7.

The revenue and profit after tax included in the Consolidated Income Statement contributed by OSIsoft, LLC were £20.7 million and
£10.8 million respectively, before a revenue haircut of £3.3 million. If the acquisition had occurred on 1 April 2020, the Consolidated Income
Statement would have presented revenue of £1,196.1 million and profit after tax of £48.1 million (at an effective tax rate of 5.5%) before a
revenue haircut of approximately £53.0 million.

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FINANCIAL STATEMENTS CONTINUED

15 Goodwill

At 1 April
Acquisition of business1
Disposals1
Exchange adjustment

At 31 March

2021
£m

1,295.7

2,578.0

–

30.4

2020
£m

1,285.3

11.3

(3.1)

2.2

3,904.1

1,295.7

1. Goodwill arising on business combinations in the year-ended 31 March 2021 is unallocated as at 31 March 2021. Acquisitions and disposals in the year-ended 31 March 2020 were

allocated to the EMEA CGU.

The following table shows the allocation of the carrying value of goodwill and indefinite life intangible assets (the AVEVA brand) at the end of
the year by CGU.

Americas

Asia Pacific

EMEA

Unallocated (provisional)

Goodwill

Purchased brands
(indefinite life)

2021
£m

386.9

282.6

622.4

2,612.2

3,904.1

2020
£m

388.1
283.4
624.2

–

1,295.7

2021
£m

25.3

16.0

34.7

–

76.0

2020
£m

25.3

16.0

34.7

–

76.0

The Group tests goodwill and purchased brands for impairment annually, or more frequently if there are indications that goodwill might be
impaired. Goodwill acquired in a business combination is allocated to the CGUs that are expected to benefit from that business combination.
In 2021 the goodwill impairment testing was carried out on a VIU basis using the most recently approved management budgets for the year
ending 31 March 2022 together with the most recent five-year business plan.

Projected cash flows beyond five years have been assumed at the long-term growth rate for that region and these have been used to
formulate a terminal value for the discounted cash flow calculation in perpetuity.

Key assumptions
The key assumptions in the most recent annual budget on which the cash flow projections are based relate to:

• discount rates;
•
• operating margins.

long-term growth rates; and

Discount rates: The cash flow projections have been discounted using the Group’s pre-tax weighted average cost of capital adjusted for the
country and market risk.

Long-term growth rates: Long-term growth rates used are assumed to be equal to the long-term growth rate in the gross domestic product of
the region in which the CGU operates.

Operating margin: Operating margins are based upon past results. These are increased over the forecast period for planned improvements in
gross margin, driven by a changing sales mix towards more profitable product streams. In addition, cost management strategies are assumed
to be implemented that limit operating expense increases to on or around inflation.

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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS

FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

15 Goodwill continued

The key assumptions used in the VIU model were as follows:

Americas

Asia Pacific

EMEA

Discount rate

Long-term growth rate

Average operating margin

2021

12.0%

9.9%

2020 Break-even1

11.7%

15.4%

12.6%

21.3%

23.2%

15.7%

2021

1.8%

2.0%

1.8%

2020

Break-even1

2021

2020 Break-even1

1.9%

(17.3)%

(22.9)%

(7.8)%

29.7%

29.1%

27.5%

25.6%

31.0%

30.3%

16.0%

14.3%

16.6%

1. The break-even rate is the rate at which headroom within the CGU is reduced to nil, if all other assumptions remain unchanged. This is included for illustrative purposes and does not reflect

a reasonably foreseeable change in assumptions.

Summary of results
During the year all goodwill and purchased brands were tested for impairment, with no impairment charge resulting.

Sensitivity to changes in key assumptions
The Group has considered the impact of changes in future cash flows and key assumptions on the base case VIU model, to create a sensitised
VIU model. This has included applying the cumulative impact of:

increasing pre-tax discount rates by 100bps, to reflect potential future increases in government bond yields and associated risk-free rates;

•
• decreasing long-term growth rates by 50bps, to reflect a worse than predicted long-term global economic outlook;
• restricting year-on-year revenue growth by 50% from the base case, to reflect the risk that future operational growth is not achieved; and
• restricting year-on-year operating margin improvements by 50%, to reflect the risk that future sales mix and efficiency improvements are

not achieved.

It was concluded that the sensitised VIU model does not result in an impairment.

The headroom (i.e. the excess of the value of discounted future cash flows over the carrying amount of the CGU) under both the base case and
worst-case scenario is below:

Americas

Asia Pacific

EMEA

2021

2020

Base case1

Sensitised2

Base case1

Sensitised2

95%

116%

74%

37%

38%

25%

28%

44%

31%

17%

1. The excess of the recoverable amount over the carrying amount of the CGU before applying sensitivities.
2. Headroom after adjusting future cash flows and key assumptions to create a sensitised ‘worst case’ VIU model.

Unallocated goodwill
Unallocated goodwill relates to goodwill arising on the acquisition of OSIsoft, LLC as detailed in note 14. As the acquisition completed close to
the end of the financial year it was not possible to allocate the goodwill to CGUs. As the initial allocation cannot be completed before the end
of the first annual period in which the business combination was affected, the initial allocation shall be completed before the end of the first
annual reporting period beginning after the acquisition date. The initial allocation will be reported in the Annual Report for the year ended
31 March 2022.

Unallocated goodwill has been reviewed for impairment indicators, by comparison of forecasts used to determine the purchase price of
OSIsoft, LLC to actual results and revised forecasts as at 31 March 2021. No impairment indicators were identified.

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FINANCIAL STATEMENTS CONTINUED

16 Intangible assets

Cost

At 1 April 2019

Additions

Acquisition of business

Disposals
Transfer1
Exchange
adjustment

At 31 March 2020

Additions

Acquisition of business

Disposals

Exchange adjustment

At 31 March 2021

Amortisation and impairment

At 1 April 2019

Charge for the year

Disposals
Transfer1
Exchange adjustment

At 31 March 2020

Charge for the year

Disposals

Exchange adjustment

At 31 March 2021

Net book value

At 1 April 2019

At 31 March 2020

At 31 March 2021

Developed
technology
£m

Customer
relationships
£m

Purchased
brands
£m

Trademarks
£m

Other
software
£m

Purchased
software
rights
£m

Capitalised
Research &
Development
£m

Total
£m

151.1

240.1

76.0

28.3

–

16.2

–

308.9

8.2

484.4

–

0.6

–

4.7

245.4

–

855.6

247.1

–

(4.6)

–

(5.2)

–

76.0

–

128.9

–

1.7

1,335.4

487.3

206.6

98.2

59.7

–

41.9

5.7

205.5

63.0

–

(13.3)

255.2

52.9

278.9

1,080.2

73.4

23.5

–

3.5

100.4

23.9

–

(7.2)

117.1

166.7

145.0

370.2

–

0.5

–

0.5

76.0

206.1

–

1.5

29.8

–

(3.0)

26.8

18.4

3.6

–

1.1

23.1

3.5

–

(2.4)

24.2

9.9

6.7

2.6

7.0

0.6

–

(0.5)

–

0.3

7.4

–

0.4

(0.7)

(0.8)

6.3

5.2

1.1

(0.5)

–

0.2

6.0

0.6

(0.7)

(0.4)

5.5

1.8

1.4

0.8

324.4

37.9

864.8

–

(0.2)

(308.9)

0.8

16.1

0.5

–

(0.7)

15.9

51.8

1.6

(0.2)

(41.9)

1.0

12.3

2.7

–

(0.5)

14.5

272.6

3.8

1.4

–

(0.1)

37.8

–

0.5

38.3

32.6

2.2

–

34.8

2.1

–

0.4

37.3

5.3

3.0

1.0

0.6

16.8

(0.7)

–

15.4

896.9

0.5

1,232.0

(0.7)

(12.1)

2,116.6

279.6

91.7

(0.7)

–

11.5

382.1

96.3

(0.7)

(23.4)

454.3

585.2

514.8

1,662.3

1. During the prior year, assets with a cost of £308.9 million, accumulated amortisation of £41.9 million and net book value of £267.0 million were transferred from purchased software rights to

developed technology, which is considered to better represent the nature of the assets.

For the purposes of the adjusted EPS calculation (note 13), intangible asset amortisation excludes the charge relating to other software of
£0.6 million (2020: £1.1 million).

The following intangible assets are individually material:

Developed technology recognised on the reverse acquisition of AVEVA Group plc

Developed technology recognised on the acquisition of OSIsoft, LLC

Customer relationships recognised on the reverse acquisition of AVEVA Group plc

Customer relationships recognised on the acquisition of OSIsoft, LLC

AVEVA brand

OSIsoft brand

Carrying value
£m

189.8

863.0

112.5

249.5

76.0

130.1

Remaining
amortisation
period

5 years

8 years

9 years

10 years

Indefinite

10 years

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

17 Property, plant and equipment

Cost

At 1 April 2019

Additions

Disposals

Exchange adjustment

At 31 March 2020

Additions

Acquisition of business

Disposals

Exchange adjustment

At 31 March 2021

Depreciation

At 1 April 2019

Charge for the year

Disposals

Exchange adjustment

At 31 March 2020

Charge for the year

Disposals

Exchange adjustment

At 31 March 2021

Net book value

At 1 April 2019

At 31 March 2020

At 31 March 2021

Long leasehold
buildings and
improvements
£m

Computer
equipment
£m

Fixtures, fittings
and office
equipment
£m

Motor vehicles
£m

9.8

6.5

(1.0)

–

15.3

3.3

10.6

(2.3)

(1.1)

25.8

4.6

1.6

(1.0)

0.1

5.3

2.3

(1.5)

(0.4)

5.7

5.2

10.0

20.1

21.7

6.8

(2.6)

0.3

26.2

4.8

4.1

(5.0)

(1.6)

28.5

13.6

4.4

(2.3)

0.2

15.9

5.0

(5.0)

(1.1)

14.8

8.1

10.3

13.7

8.4

5.2

(1.6)

0.3

12.3

2.8

6.5

(2.1)

(0.7)

18.8

5.3

1.0

(1.5)

0.2

5.0

1.4

(1.9)

(0.4)

4.1

3.1

7.3

14.7

1.1

–

(0.7)

(0.1)

0.3

–

(0.3)

–

0.4

0.3

(0.4)

–

0.3

–

(0.3)

–

0.7

–

Total
£m

41.0

18.5

(5.9)

0.5

54.1

10.9

21.2

(9.7)

(3.4)

73.1

23.9

7.3

(5.2)

0.5

26.5

8.7

(8.7)

(1.9)

24.6

17.1

27.6

48.5

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FINANCIAL STATEMENTS CONTINUED

18 Investments

The Group consists of a Parent Company, AVEVA Group plc, incorporated in the UK, and a number of subsidiaries held directly or indirectly by
AVEVA Group plc, which operate and are incorporated around the world, each contributing to the Group’s profits, assets and cash flows.

The Group’s percentage of equity capital and voting rights is 100%.

The results of all subsidiaries have been consolidated in these financial statements.

At 31 March 2021, the Group held the following principal investments. The addresses of all subsidiaries, principal or dormant, are
provided on pages 191 to 194.

AVEVA Financing Limited

AVEVA Solutions Limited

OSIsoft (UK) Limited

Schneider Electric Software GB Limited

OSIsoft Argentina SRL

Schneider Electric Software Argentina S.A.

AVEVA Pty Limited

Country of
incorporation
or registration

Argentina

Australia

Country of incorporation
or registration

AVEVA Software Italia S.p.A

AVEVA KK

AVEVA Software KK

OSIsoft Japan KK

AVEVA Asia Pacific Sendirian Berhad

AVEVA Sendirian Berhad

Italy

Japan

Malaysia

Schneider Electric Software México SA de CV

Mexico

AVEVA Software Australia Holdings Pty Ltd

Australia

Asset+ Solutions B.V

AVEVA Software Australia Pty Ltd

Australia

Schneider Electric Software Holdings

Netherlands

OSIsoft Czech Republic s.r.o.

Czech Republic

AVEVA Software España S.L.U.

OSIsoft Australia Pty Ltd.

OSIsoft Technologies Middle East W.L.L.

AVEVA do Brasil Informática Ltda

AVEVA Software Brasil Ltda

OSIsoft do Brasil Sistemas Ltda

AVEVA Software Canada Inc.

OSIsoft Canada ULC

AVEVA Software Chile SpA

AVEVA (Shanghai) Consultancy Co. Ltd

(in liquidation)

AVEVA Solutions (Shanghai) Co. Ltd

OSIsoft (Shanghai) Technology Co.Ltd.

Telvent Control System (China) Co. Ltd

Australia

Bahrain

Brazil

Canada

Chile

China

AVEVA Software Colombia S.A.S.

AVEVA Denmark A/S

AVEVA SA

OSIsoft France Sarl

Schneider Electric Software France SAS

AVEVA GmbH

OSIsoft Europe GmbH

AVEVA East Asia Limited

Colombia

Denmark

France

Germany

Netherlands BV

Schneider Electric Software Netherlands BV

Netherlands

AVEVA AS

OSIsoft Norway AS

AVEVA Korea Limited

AVEVA Software Korea Limited

OSIsoft Korea Co., Limited

AVEVA Limited Liability Company

OSIsoft OOO (LLC)

Schneider Electric Software RU

AVEVA Software Singapore Pte Ltd.

OSIsoft Asia Pte. Ltd.

OSIsoft South Africa (Pty) Limited

OSIsoft Espana, S.L Sociedad Unipersonal

AVEVA AB

OSIsoft Sweden AB

AVEVA Software (Thailand) Co. Ltd

Norway

Republic of Korea

Russia

Singapore

South Africa

Spain

Sweden

Thailand

OSIsoft Technologies Bilişim Hizmetleri Limited

Turkey

Sirketi

AVEVA Software Middle East FZ-LLC

United Arab Emirates

AVEVA Inc.

Hong Kong

AVEVA Software, LLC

AVEVA Information Technology India Private

India

AVEVA US 1 Corp

Limited

AVEVA Software Private Limited

AVEVA Solutions India LLP

OSIsoft India Private Limited

OSIsoft Italy S.R.L.

India

Italy

AVEVA US 2 Corp

AVEVA US Blocker Corp

OSIsoft, LLC

USA

As at 31 March 2021, AVEVA Group plc held an 6.02% investment in Finca Global of £0.4 million (2020: nil) and a 20% investment in
Dianomic Systems, Inc of £nil (2020: nil).

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

19 Trade and other receivables

Current

Amounts falling due within one year:

Trade receivables

Amounts owed from related parties (note 29)

Prepayments and other receivables

Non-current

Trade and other receivables

2021
£m

2020
£m

245.3

21.6

50.1

317.0

19.4

181.2

28.4

32.6

242.2

4.4

Trade receivables are non-interest bearing and generally on terms of between 30 and 90 days. The Directors consider that the carrying
amount of trade and other receivables approximates their fair value.

As at 31 March 2021, the provision for impairment of receivables was £7.9 million (2020: £7.6 million) and an analysis of the movements
during the year was as follows:

At 1 April 2019

Charge for the year

Utilised

Exchange adjustment

At 31 March 2020

Charge for the year

Utilised

Exchange adjustment

At 31 March 2021

£m

7.2

2.9

(2.2)

(0.3)

7.6

1.4

(0.4)

(0.7)

7.9

At 31 March, the ageing analysis of trade receivables and amounts owed from related parties (net of provision for impairment) was as follows:

At 31 March 2021

Trade receivables

Amounts owed from related parties

At 31 March 2020

Trade receivables

Amounts owed from related parties

Neither past due
nor impaired
£m

Less than four
months
£m

Total
£m

Four to eight
months
£m

Eight to twelve
months
£m

More than
twelve months
£m

Past due not impaired

245.3

21.6

266.9

181.2

28.4

209.6

167.2

14.3

181.5

121.1

18.1

139.2

66.9

3.8

70.7

52.5

5.8

58.3

6.1

1.0

7.1

3.0

1.5

4.5

3.7

1.0

4.7

4.6

0.4

5.0

1.4

1.5

2.9

–

2.6

Further disclosures relating to the credit quality of trade receivables are included in note 24.

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FINANCIAL STATEMENTS CONTINUED

20 Cash and cash equivalents

Cash at bank and in hand

Short-term deposits

Net cash and cash equivalents per cash flow

Treasury deposits

Restricted cash

2021
£m

279.7

6.9

286.6

0.3

7.3

2020
£m

112.8

1.7

114.5

0.1

–

294.2

114.6

Treasury deposits represent bank deposits with an original maturity of over three months and are held with a fixed rate of interest.

Restricted cash represents funds held in escrow in relation to the acquisition of OSIsoft, LLC.

Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of
the Group, and earn interest at the respective fixed short-term deposit rates.

Further disclosures relating to credit quality of cash and cash equivalents and treasury deposits are included in note 24.

21 Trade and other payables

Current

Trade payables

Amounts owed to related parties (note 29)

Social security, employee taxes and sales taxes

Accruals

Other payables

Non-current

Other liabilities

2021
£m

39.6

1.5

28.5

176.8

24.9

271.3

18.2

2020
£m

20.1

7.6

18.5

99.1

4.2

149.5

0.7

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

Accruals have increased as a result of the acquisition of OSIsoft, LLC and associated transaction related costs.

22 Loans and borrowings

During the year, the group replaced its £100.0 million Revolving Credit Facility with a new £250.0 million facility. The facility is unsecured but
carries the support of various operating entities within the Group. Interest on drawings is calculated at LIBOR plus a variable margin, initially
1.15% but adjusts in relation to the Group’s net leverage ratio. A commitment fee, linked to the margin, is also payable on undrawn amounts.
The initial maturity is 25 February 2024. The facility also includes the mechanism to request two one-year extensions which are subject to
lender’s acceptance at each occurrence.

As at 31 March 2021 the RCF remained undrawn (2020: nil).

On 9 October 2020 the Group entered into a US$900.0 million debt facility with Schneider Electric Holdings Inc. This non-amortising loan was
drawn down in full on 19 March 2021 with a termination date of 19 March 2024. Interest on drawings is calculated at LIBOR plus a variable
margin, initially 1.30% but adjusts in relation to the Group’s net leverage ratio. The facility is unsecured but carries the support of various
operating entities within the Group.

The balance as at 31 March 2021 was £654.0 million (2020: nil), inclusive of £0.8 million of fees.

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

23 Leases

a) Background
As at 31 March 2021, the Group was entered into lease contracts as a lessee for various properties, vehicles, and items of office equipment for
use in its operations. The Group does not operate as a lessor.

b) Right-of-use assets
Set out below are the carrying amounts of the Group’s right-of-use assets and the movements during the period:

At 1 April 2019

Additions
Remeasurement1
Depreciation expense

Exchange adjustment

Disposals

At 31 March 2020

Additions

Acquisition of business
Remeasurement1
Depreciation expense

Exchange adjustment

At 31 March 2021

Long leasehold
buildings
£m

Office
equipment
£m

Motor vehicles
£m

73.2

18.6

(0.3)

(15.4)

0.4

(0.1)

76.4

14.8

35.5

3.1

(17.9)

(3.1)

108.8

0.2

–

(0.1)

–

0.3

–

0.8

–

(0.1)

–

1.0

2.7

2.4

(0.2)

(1.6)

–

(0.5)

2.8

0.7

–

0.1

(1.5)

–

2.1

Total
£m

76.1

21.2

(0.5)

(17.1)

0.4

(0.6)

79.5

15.5

36.3

3.2

(19.5)

(3.1)

111.9

1. Lease liabilities are remeasured when a change to future contractual cash flows is identified. Remeasurements were made in the year based upon changes in indexation and rates on

variable lease payments, and changes in the lease term. The carrying value of the corresponding right-of-use asset is also remeasured to reflect this change in lease liabilities.

c) Lease liabilities
Set out below for the Group’s lease liabilities are the carrying amounts and movements during the period:

At 1 April 2019

Additions
Remeasurement1
Accretion of interest

Payments

Exchange adjustment

Disposals

At 31 March 2020

Additions

Acquisition of business
Remeasurement1
Accretion of interest

Payments

Exchange adjustment

At 31 March 2021

Current

Non-current

Long leasehold
buildings
£m

Office
equipment
£m

Motor vehicles
£m

62.0

18.6

(0.3)

2.4

(16.2)

0.4

(0.1)

66.8

14.8

44.1

3.2

2.4

(19.6)

(3.0)

108.7

21.3

87.4

0.2

–

(0.1)

–

0.3

–

0.8

–

(0.1)

–

1.0

0.2

0.8

2.7

2.4

(0.2)

0.1

(1.7)

–

(0.5)

2.8

0.7

–

0.1

(1.6)

–

2.1

1.4

0.7

Total
£m

64.9

21.2

(0.5)

2.5

(18.0)

0.4

(0.6)

69.9

15.5

44.9

3.3

2.5

(21.3)

(3.0)

111.8

22.9

88.9

1. Lease liabilities are remeasured when a change to future contractual cash flows is identified. Remeasurements were made in the year based upon changes in indexation and rates on

variable lease payments, and changes in the lease term.

The potential impact of lease covenants is considered to be immaterial.

A maturity analysis of lease liabilities is included within note 24(c).

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FINANCIAL STATEMENTS CONTINUED

d) Income statement impact
The following items have been recognised in the Consolidated Income Statement:

Depreciation expense on right-of-use assets

Interest on lease liabilities

Expense relating to short-term leases

Expense relating to leases of low-value assets

Total amount recognised in Consolidated Income Statement

The Group had total cash outflows for leases of £24.1 million (2020: £23.4 million).

24 Financial risk management

2021
£m

19.5

2.5

2.7

0.1

24.8

2020
£m

17.1

2.5

5.4

–

25.0

The Group’s principal financial instruments comprise cash and short-term deposits, and forward foreign exchange contracts. The Group has
various other financial assets and liabilities such as trade receivables, trade payables and borrowings, which arise directly from its operations.

The Group enters into forward foreign exchange contracts to manage currency risks arising from the Group’s operations.

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

The main risks arising from the Group’s financial instruments are market risk, credit risk and liquidity risk. The Board reviews and agrees
policies for managing such risks on a regular basis, as summarised below:

a) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or the
value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposures within
acceptable parameters.

Interest rate risk
The Group’s interest rate risk consists of:

• Floating interest rate risk, arising on the Group’s term loan and any drawings under the RCF. Changes in floating interest rates affect

finance expense and cash flows. Interest rates are set with reference to LIBOR.

•

Interest rate risk associated with the Group’s cash deposits. The Group’s overall objective with respect to holding these deposits is to
maintain a balance between security of funds, accessibility and competitive rates of return.

For the presentation of market risks, IFRS 7 requires sensitivity analysis that show the effects of hypothetical changes of relevant risk variables
on profit or loss and shareholders’ equity. The Group is exposed to fluctuations in interest rates on its cash, cash equivalents and borrowings.

A 1% decrease in the sterling and US dollar interest rates would not have had any impact on interest income (2020: no impact) or profit after
tax (2020: no impact).

Foreign currency risk
Foreign currency risk arises from the Group undertaking a significant number of foreign currency transactions in the course of operations.
These exposures arise from sales in currencies other than the Group’s presentational currency of sterling.

The Group manages exchange risks, where possible, by using forward foreign exchange contracts and foreign currency denominated
borrowings. The fair value of the forward contracts is recognised in financial assets and financial liabilities in the balance sheet. The Group
enters into forward foreign exchange contracts to match forecast cash flows arising from its recurring revenue base. In addition, it enters into
specific forward foreign exchange contracts for individually significant revenue contracts, when the timing of forecast cash flows is reasonably
certain. Other currency exposures are harder to hedge cost effectively. At 31 March 2021, the Group had outstanding currency exchange
contracts to sell of US$2.1 million (2020: US$21.9 million) and €6.8 million (2020: €5.6 million).

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

24 Financial risk management continued

The Group applied hedge accounting for forward foreign exchange contracts relating to funds raised for the purpose of acquiring OSIsoft, LLC.
A loss of £178.4 million was recognised in the hedging reserve through the Consolidated Statement of Comprehensive Income and adjusted
the purchase price on completion on the combination. Gains and losses on all other forward foreign exchange contracts have been included in
the Consolidated Income Statement.

The Group has investments in foreign operations whose net assets are exposed to currency translation risk. Gains and losses arising from
these structural currency exposures are recognised in the Consolidated Statement of Comprehensive Income.

Foreign currency sensitivity analysis
For the presentation of market risks, IFRS 7 requires sensitivity analysis that shows the effect of hypothetical changes in the foreign exchange
rates in profit or loss or shareholders’ equity. The impact is determined by applying the sensitised foreign exchange rate to the monetary
assets and liabilities at the balance sheet date.

Currency risks as defined by IFRS 7 arise on account of financial instruments being denominated in a currency that is not the functional
currency and being of a monetary nature; differences resulting from the translation of financial statements into the Group’s presentation
currency are not taken into consideration.

A 10% change in the US dollar and euro against sterling would have impacted equity and profit after tax by the amounts shown below as
at the reporting date shown. In management’s opinion, this is a reasonably possible change given current market conditions. Our analysis
indicates that a 10% change in other currencies would not have a significant impact. This analysis assumes that all other variables,
in particular interest rates and other foreign currencies, remain constant. The analysis is performed on the same basis for 2020.

31 March 2021

US dollar

Euro

31 March 2020

US dollar

Euro

Increase/
(decrease) in
average rate

Profit/(loss)
£m

10%

(10%)

10%

(10%)

(14.1)

14.1

(2.5)

2.3

Increase/
(decrease) in
average rate

Profit/(loss)
£m

10%

(10%)

10%

(10%)

(5.8)

5.4

(0.7)

0.6

Equity
£m

(14.1)

14.1

(2.5)

2.3

Equity
£m

(5.8)

5.4

(0.7)

0.6

b) Credit risk
The Group’s principal financial assets are cash and cash equivalents, and trade and other receivables.

Counterparties for cash and cash equivalents are governed by the treasury policy, which has been approved by the Board, and are limited to
financial institutions which have a high credit rating assigned by international credit rating agencies. As set out in the Group’s treasury policy,
the amount of exposure to each counterparty is subject to a specific limit, up to a maximum of 50% of the Group’s total counterparty risk.
Within this overall limit, some counterparties are subject to more restrictive caps on counterparty exposure.

The Group trades only with recognised, creditworthy third parties and provides credit to customers in the normal course of business. The amounts
presented in the Consolidated Balance Sheet are net of allowances for doubtful receivables. Expected credit loss allowances are made against
trade receivables based on credit risk characteristics. The Group has credit control functions to monitor receivable balances on an ongoing
basis. Credit checks are performed before credit is granted to new customers. Due to the credit control procedures in place, we believe all
the receivables are of good quality. The Group has no significant concentration of credit risk, with exposure spread over a large number of
customers. The maximum exposure to credit risk is represented by the carrying amount of each financial asset. The exposure to credit risk is
mitigated where necessary by either letters of credit or payments in advance.

The Group does not require collateral in respect of its financial assets.

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FINANCIAL STATEMENTS CONTINUED

The Group’s credit risk exposure on trade receivables and related party receivables is set out below:

At 31 March 2021

Trade receivables

Expected loss rate %

Gross carrying amount

Loss allowance

At 31 March 2020

Trade receivables

Expected loss rate %

Gross carrying amount

Loss allowance

Total
£m

Current
£m

Less than four
months
£m

Four to eight
months
£m

Eight to twelve
months
£m

More than
twelve months
£m

Past due

253.2

(7.9)

167.8

(0.6)

67.7

(0.8)

6.6

(0.5)

20%

4.6

(0.9)

79%

6.5

(5.1)

Total
£m

Current
£m

Less than four
months
£m

Four to eight
months
£m

Eight to twelve
months
£m

More than
twelve months
£m

Past due

188.8

(7.6)

122.8

(1.7)

53.9

(1.4)

12%

3.4

(0.4)

12%

5.2

(0.6)

100%

3.5

(3.5)

c) Liquidity risk
The Group manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring forecast and actual cash flows
and matching the maturity of financial assets and liabilities. As at 31 March 2021 the Group has access to undrawn borrowing facilities of
£250.0 million (2020: £100.0 million).

The table below analyses the Group’s financial liabilities, which will be settled on a net basis, into relevant maturity groupings based on the
remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual
undiscounted cash flows:

At 31 March 2021

Current financial liabilities

Less than three months

Between three months and six months

Between six months and one year

Non-current financial liabilities

One to two years

Two to five years

Greater than five years

Total financial liabilities

Effect of discounting

Carrying amount

Lease liabilities
£m

Trade and other
payables
£m

Amounts owed
to related
parties
£m

Term loan
£m

6.6

6.4

12.4

25.4

22.2

48.7

24.9

95.8

121.2

(9.4)

111.8

62.1

1.0

1.4

64.5

11.2

7.0

–

18.2

82.7

–

82.7

1.3

–

0.2

1.5

–

1.5

–

1.5

–

654.0

–

654.0

–

654.0

Total
£m

70.0

7.4

14.0

91.4

33.4

709.7

24.9

768.0

859.4

(9.4)

850.0

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

24 Financial risk management continued

At 31 March 2020

Current financial liabilities

Less than three months

Between three months and six months

Between six months and one year

Non-current financial liabilities

One to two years

Two to five years

Greater than five years

Total financial liabilities

Effect of discounting

Carrying amount

Lease liabilities
£m

Trade and other
payables
£m

Amounts owed
to related parties
£m

5.1

4.9

8.8

18.8

15.1

28.6

15.6

59.3

78.1

(8.2)

69.9

20.3

1.1

2.9

24.3

0.7

–

0.7

25.0

–

25.0

5.7

0.9

1.0

7.6

–

7.6

–

7.6

Total
£m

31.1

6.9

12.7

50.7

15.8

28.6

15.6

60.0

110.7

(8.2)

102.5

The table below analyses the Group’s forward foreign exchange contracts, which will be settled on a gross basis, into relevant maturity
groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are
the contractual undiscounted cash flows:

At 31 March 2021

Forward foreign exchange contracts (GBP/EUR)

Outflow

Inflow

Forward foreign exchange contracts (GBP/USD)

Outflow

Inflow

At 31 March 2020

Forward foreign exchange contracts (GBP/EUR)

Outflow

Inflow

Forward foreign exchange contracts (GBP/USD)

Outflow

Inflow

Less than
three months
‘m

Between three
months and
six months
‘m

Between six
months and
one year
‘m

Greater than
one year
‘m

€4.3

£3.8

$2.1

£1.6

€2.5

£2.2

–

Less than
three months
‘m

Between three
months and
six months
‘m

Between six
months and
one year
‘m

Greater than
one year
‘m

€2.5

£2.2

$10.9

£8.4

€2.1

£1.9

$3.0

£2.3

€1.0

£0.9

$8.0

£6.6

–

d) Fair values
The carrying amounts of financial assets and liabilities in the Group’s financial statements approximates their fair values.

The Group’s financial liabilities include forward foreign exchange contracts. Financial instruments that are recognised at fair value subsequent
to initial recognition are grouped into Levels 1 to 3 based on the degree to which the fair value is observable. The three levels are defined as
follows:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the

asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based

on observable market data (unobservable inputs).

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FINANCIAL STATEMENTS CONTINUED

At 31 March 2021, the Group had forward foreign exchange contracts which were measured at Level 2 fair value subsequent to initial
recognition. The fair value of the asset in respect of foreign exchange contracts was £0.3 million at 31 March 2021 (2020: liability of £0.4 million).

The resulting gain of £0.7 million (2020: loss of £0.4 million) on the movement of the fair value of forward foreign exchange contracts is
recognised in the Consolidated Income Statement within selling and administrative expenses.

e) Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, market, creditor, customer and employee confidence and to
sustain future development of the business. The Group’s equity structure consists of equity attributable to the equity holders of AVEVA Group
plc comprising issued share capital, other reserves and retained earnings. The Group’s debt facilities are detailed in note 22 and consist of a
term loan and RCF.

To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue
new shares.

The Board monitors the capital structure on a regular basis and determines the level of annual dividend. The Group is not exposed to any
externally imposed capital requirements.

25 Deferred tax

The following are the major deferred tax liabilities and assets recognised by the Group and the movements thereon, during the current and
previous year:

At 1 April 2019

Acquisition of business

Credit to income statement

Charge to other comprehensive income

Credited to equity

Exchange adjustment

At 31 March 2020

Acquisition of business

Credit to income statement

Credit to other comprehensive income

Charged to equity

Exchange adjustment

At 31 March 2021

Retirement
benefits
£m

(0.2)

–

(0.4)

(1.2)

–

(1.8)

0.1

0.3

0.5

–

(0.1)

(1.0)

Intangible
assets
£m

(106.9)

(3.4)

9.8

–

(1.4)

(101.9)

–

18.9

–

1.2

(81.8)

Share options
£m

Losses
£m

Other temporary
differences1
£m

3.2

–

1.2

–

0.2

–

4.6

–

0.3

–

(0.1)

–

4.8

–

1.5

–

(0.2)

1.3

8.2

2.5

–

0.1

12.1

4.4

–

(6.5)

–

(0.9)

(3.0)

(2.1)

8.6

–

1.8

5.3

Total
£m

(99.5)

(3.4)

5.6

(1.2)

0.2

(2.5)

(100.8)

6.2

30.6

0.5

(0.1)

3.0

(60.6)

1. Other temporary differences consist principally of deferred tax on fixed assets, expenses deductible in future and timing differences in respect of revenue recognition.

Certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances (after offset) for financial
reporting purposes:

Deferred tax liabilities

Deferred tax assets

2021
£m

(82.0)

21.4

(60.6)

2020
£m

(119.9)

19.1

(100.8)

At the balance sheet date, the Group has unused tax losses of £54.9 million (2020: £45.4 million) available for offset against future profits.
Losses of £2.4 million (2020: £1.9 million) expire after 10 years and no losses (2020: £9.4 million) expire after 20 years. All other losses may be
carried forward indefinitely. No deferred tax asset has been recognised for tax losses of £20.1 million (2020: £36.9 million).

It is likely that the majority of the overseas earnings would qualify for the UK dividend exemption. However, £54.5 million (2020: £48.3 million)
of the undistributed earnings of overseas subsidiaries may still result in a tax liability principally as a result of withholding taxes levied by the
overseas jurisdictions in which they operate. A deferred tax liability of £0.3 million (2020: £0.5 million) has been provided for withholding tax
that is expected to be incurred on the payment of intra-Group dividends. No liability has been recognised for the remaining overseas earnings
because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will
not reverse in the foreseeable future.

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

26 Retirement benefits

The Group operates defined benefit pension schemes in the UK, Germany, Italy and Sweden. The Group also provides certain post-retirement
benefits to employees in Australia, India, Saudi Arabia and UAE.

The movement on the retirement benefit surplus and obligations was as follows:

At 31 March 2019

Additions

Current service cost

Net interest on pension scheme liabilities

Return on pension scheme assets

Actuarial remeasurements

Employer contributions

Disposals

Exchange adjustment

At 31 March 2020

Additions

Acquisition of business

Current service cost

Past service cost

Net interest on pension scheme liabilities

Return on pension scheme assets

Actuarial remeasurements

Employer contributions

Disposals

Exchange adjustment

At 31 March 2021

UK
£m

(7.1)

–

1.9

(1.8)

(6.3)

(1.6)

–

(14.9)

–

0.1

1.6

(1.9)

2.2

(0.2)

–

(13.1)

Germany
£m

South Korea
£m

2.9

–

0.3
–
–
(0.1)

(0.1)

–

0.1

3.1

–

0.1

–

0.3

(0.2)

–

(0.1)

3.2

2.4

–

0.2
–
–
–
(0.1)

(2.4)

(0.1)
–
–

–

Other
£m

7.8

0.3

1.2

0.2

(0.1)

0.2

(1.1)

(0.8)

–

7.7

2.0

0.9

1.2

(0.3)

0.2

–

(1.0)

(1.1)

(0.3)

9.3

Total
£m

6.0

0.3

1.7

2.1

(1.9)

(6.2)

(2.9)

(3.2)

–

(4.1)

2.0

0.9

1.3

(0.2)

1.8

(1.9)

2.5

(1.4)

(1.1)

(0.4)

(0.6)

During the year to 31 March 2021, the defined benefit scheme operated in Japan was converted to a defined contribution scheme. A gain on
disposal of £0.3 million is recognised in other income.

The following is the analysis of the retirement benefit balances:

Retirement benefit surplus

Retirement benefit obligations

Net retirement benefit surplus

2021
£m

(13.1)

12.5

(0.6)

2020
£m

(14.9)

10.8

(4.1)

The UK defined benefit scheme surplus has been recognised as a non-current asset as the Group has a right to any remaining surplus after all
liabilities are paid. The Trustees may not distribute any surplus without the agreement of the Group. If such agreement is withheld, the
Trustees are required to repay any remaining funds to the Group.

a) UK defined benefit scheme
The Group operates a UK defined benefit pension plan providing benefits based on final pensionable pay which is funded. This scheme was
closed to new employees on 30 September 2002 (with the option of reopening if required) and was converted to a Career Average Revalued
Earnings basis on 30 September 2004. The scheme closed to future benefit accrual with effect from 1 April 2015. Pensions are also payable to
dependants on death. Administration on behalf of the members is governed by a trust deed, and the funds are held and managed by
professional investment managers who are independent of the Group.

The most recent triennial actuarial assessment of the scheme was dated 31 March 2019 and performed by Broadstone Corporate Benefits
Limited, an external, professionally qualified actuary. The outcome of the valuation was that, on a statutory funding objective basis, the
scheme held £79.8 million of liabilities with an overall surplus of £4.9 million. It was determined no additional employer contributions were
required. The Group is sufficiently profitable and cash-generative to meet future obligations should the next valuation require contributions
to restart.

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FINANCIAL STATEMENTS CONTINUED

The scheme operates a liability-driven investment strategy; around two-thirds of asset values comprise low-risk investments such as bonds
and defensive hedge funds, with equities a small total of scheme assets. The liability-driven investment strategy seeks to match the profile of
the liabilities where appropriate. This includes the use of derivative instruments to hedge inflation and interest risks. Scheme assets are stated
at their market values.

The pension liability is measured with reference to discount rates derived from yields on high-quality corporate bonds, UK retail price inflation,
future salary increases, and post-retirement mortality. The scheme is therefore exposed to risks associated with UK inflation, interest rates,
investments, and changes in pensioner life expectancy. These risks are mitigated by investing in liability-driven investments to hedge inflation
and interest rates, outsourcing of investments to the consultancy firm Aon Solutions, who continually review asset allocations and
performance against the set benchmark, and the scheme actuary regularly reviewing and providing updates on mortality rate assumptions.

The principal assumptions used in determining the pension valuation were as follows:

Main assumptions:

Discount rate

Inflation assumption – RPI

Rate of salary increases

Rate of increase of pensions in payment

Rate of increase of pensions in deferment

Cash commutation

2021
%

2.0

3.3

5.3

3.1

2.6

2020
%

2.2

2.9

4.9

2.8

2.2

20% of
pension

The duration of scheme liabilities is estimated to be 16 years.

For the years ended 31 March 2021 and 2020, the mortality assumptions adopted imply the following weighted average life expectancies:

Male currently aged 65

Female currently aged 65

Male currently aged 45

Female currently aged 45

2021
Years

22.6

23.8

23.6

25.0

2020
Years

22.6

23.7

23.6

24.9

Company contributions were £0.2 million (2020: £1.6 million), comprising deficit contributions totalling £nil (2020: £1.4 million) per annum plus
an administration charge of £0.2 million (2020: £0.2 million). The total contributions in the year-ended 31 March 2022 is expected to be
approximately £0.2 million.

The assumed discount rate, inflation rate and mortality all have a significant effect on the IAS 19 accounting valuation. The following table
shows the sensitivity of the valuation to changes in these assumptions:

0.25 percentage point increase to:
– discount rate
–
Additional one-year increase to life expectancy

inflation (including pension increases linked to inflation)

The assets and liabilities of the scheme at 31 March 2021 and 2020 were as follows:

Equities

Bonds

Other

Total fair value of assets

Present value of scheme liabilities

Net pension asset

Impact on liabilities
increase/(decrease)

2021
£m

(3.1)

1.9

3.4

2021
£m

17.7

13.2

60.5

91.4

(78.3)

13.1

2020
£m

(2.9)

2.0

3.0

2020
£m

18.5

28.2

43.3

90.0

(75.1)

14.9

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

26 Retirement benefits continued

The amounts recognised in the Consolidated Income Statement and Consolidated Statement of Comprehensive Income for the year are
analysed as follows:

2021
£m

0.1

2020
£m

–

(1.9)

1.6

3.4

(1.9)

1.5

(3.7)

(2.2)

1.9

5.4

(1.9)

3.5

2.7

6.2

2020
£m

77.7

1.9

(1.8)

(1.7)

(1.2)

0.2

–

75.1

2020
£m

84.8

1.9

1.6

(1.8)

3.5

90.0

Selling and administrative expenses

Past service cost

Finance revenue

Interest income on pension scheme assets

Finance costs

Interest on pension scheme liabilities

Taken to Consolidated Statement of Comprehensive Income

Actual return on pension scheme assets

Less: interest income on pension scheme assets

Changes in assumptions and experience adjustments on liabilities

Remeasurement gain on defined benefit plan

Analysis of movements in the present value of the defined benefit pension obligations during the year are analysed as follows:

At 1 April

Interest on pension scheme liabilities

Benefits paid

Actuarial loss due to experience

Actuarial loss due to changes in the economic assumptions

Actuarial gain due to changes in the demographic assumptions

Past service cost

At 31 March

The above defined benefit obligation arises from a plan that is wholly funded.

Changes in the fair value of plan assets are as follows:

At 1 April

Interest income

Contributions by employer

Benefits paid

Actual return less interest in income

At 31 March

2021
£m

75.1

1.6

(2.2)

(1.8)

5.5

–

0.1

78.3

2021
£m

90.0

1.9

0.2

(2.2)

1.5

91.4

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FINANCIAL STATEMENTS CONTINUED

b) Germany defined benefit schemes
The Group operates five schemes in Germany that are accounted for under IAS 19. All are unfunded, with benefits paid as they become due.

Scheme type

Defined benefit

Anniversary payments

Schemes

Payable on

Status

Throughout retirement

Achievement of service milestones

Closed to new applicants

Details of the actuarial assumptions used to value these schemes in accordance with IAS 19 are set out below:

Rate of increase of pension in payment

Discount rate

Mortality

Retirement age

2021

2020

1.5 to 2.5%

0.1 to 0.8%

1.8 to 2.5%

0.2 to 1.8%

13 to 20 years

60 to 63

The Group is also responsible for the pension obligations of six former Bocad employees. This liability is covered by an external insurance
provider, with the Group being liable only if the external insurance provider defaults.

c) Other retirement and employee benefit schemes
The Group operates additional retirement and employee benefit schemes in several of its overseas businesses, none of which are considered
to be individually material:

Location

Australia

Bahrain

France

India

Italy

Saudi Arabia

Sweden

United Arab Emirates

Scheme type

Funding status

Payable on

Long service leave payments

Lump sum payment

Lump sum payment
Leave encashment plan1
Lump sum payment

Lump sum payment

Lump sum payment
ITP scheme2
Lump sum payment

Unfunded

Funded

Unfunded

Funded

Unfunded

Qualifying dates during employment

Retirement or termination

Retirement

Severance of employment

Retirement

Retirement or termination

Throughout retirement

Retirement or termination

1. Unused annual leave can be used to purchase an additional retirement benefit.
2. Multi-employer, industry defined benefit scheme providing benefits above the state pension. Accounted for as a defined contribution scheme.

d) Defined contribution schemes
The Group also operates defined contribution retirement schemes. The assets of the schemes are held separately from those of the Group.
The total cost charged to the income statement of £20.6 million (2020: £18.2 million) represents contributions payable to these schemes by the
Group at the rates specified in the rules of the plans.

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

27 Share-based payment plans

The Group has four active equity-settled share schemes: the AVEVA Group plc Long-Term Incentive Plan (LTIP); the AVEVA Group
Management Bonus Deferred Share Scheme (Deferred Share Scheme); the AVEVA Group plc Senior Employee Restricted Share Plan 2015
(Restricted Share Plan); and the AVEVA Group plc Global Employee Share Purchase Plan (GESPP).

The following table illustrates the number, and movements in, share options for the schemes during the year:

Outstanding at 1 April 2019

Exercisable at 1 April 2019

Granted during year

Forfeited during the year

Exercised during the year

Outstanding at 31 March 2020

Exercisable at 31 March 2020

Granted during year
Rights issue adjustment during year1
Forfeited during the year

Exercised during the year

Outstanding at 31 March 2021

Exercisable at 31 March 2021

LTIP

Restricted
Share Plan

Deferred
Share Scheme

1,007,852

313,061

2,924

301,748

(29,100)

6,212

166,059

(6,225)

56,529
–
85,358

–

Total

1,377,442

9,136

553,165

(35,325)

(157,414)

(67,108)

(21,162)

(245,684)

1,123,086

405,787

120,725

1,649,598

250,355

280,236

286,878

(14,963)

(532,958)

3,870

636,313

137,436

(12,450)

(84,152)

1,142,279

1,082,934

25,442

69,955

257
23,609
27,119
–
(35,641)
135,812
25,655

254,482

940,158

451,433

(27,413)

(652,751)

2,361,025

121,052

1. Additional options were awarded to scheme participants as a result of the December 2020 rights issue. Options were awarded such that the overall value of options available were

unchanged by the rights issue.

The fair value of option awards subject to EPS performance targets was measured at grant date using the Black-Scholes option pricing model, and the
fair value of option awards subject to TSR performance targets was determined by use of Monte Carlo simulations, both taking into account the
terms and conditions upon which the instruments were granted. The following table lists the inputs to the model used for each of the awards:

Year ended 31 March 2021

Weighted average exercise price

Expected volatility

Risk-free interest rate

Expected life of option

Weighted average share price

Valuation type

Year ended 31 March 2020

Weighted average exercise price

Expected volatility

Risk-free interest rate

Expected life of option

Weighted average share price

Valuation type

Black-Scholes and Monte Carlo

Black-Scholes

LTIP

3.56p

36% to 46%

nil-0.1%

3 to 5 years

47.53

LTIP

3.56p

27%

0.4%

3 to 5 years

37.94

Restricted Share Plan

Deferred Share Scheme

3.56p

36% to 46%

nil-0.1%

1 to 3 years

39.34

3.56p

27%

0.4%

3 years

39.94

nil

46%

nil

2 to 4 years

48.87

Black-Scholes

nil

32%

0.6%

2 to 4 years

32.20

Black-Scholes

Restricted Share Plan

Deferred Share Scheme

Black-Scholes and Monte Carlo

Black-Scholes

The weighted average remaining contractual life for the options outstanding at 31 March 2021 is 5.9 years (2020: 6.7 years).

The weighted average share price at date of exercise for options exercised during the year was £41.83 (2020: £39.72).

The average fair value of options granted during the year was £39.46 (2020: £37.61). In calculating the fair value, the expected life of the
options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the
assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.

In the year ended 31 March 2021 the Group recognised an expense of £16.3 million related to equity-settled share-based payment
transactions (2020: £12.0 million).

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FINANCIAL STATEMENTS CONTINUED

Details of the share option plans are as follows:

a) Long-Term Incentive Plan
The performance conditions attached to the options awarded in the financial years ended 31 March 2021, 2020, and 2019 are based on
EPS growth (50%), Total Shareholder Return (TSR) (25%) against a comparator group combining the FTSE 350 Technology Sector and
the S&P Mid Cap 400 Software companies, and strategic objectives (25%), with the precise measures to be set and measured by the
Remuneration Committee.

Further information about the performance conditions are provided in the Remuneration Committee report on pages 114 to 115.

b) Deferred Share Scheme
The Deferred Share Scheme is participated in by Directors and senior management. Subject to the achievement of performance conditions
relating to a single financial year, these incentive arrangements are intended to reward the recipient partly in cash and partly in ordinary
shares in the Company to be delivered on a deferred basis.

The award of deferred shares takes the form of nil-cost options exercisable by participants in three equal tranches, one in each of the three
years following the year in which the award is made. The option may be exercised in the 42-day period beginning on the announcement of
the financial results of the Group in each of the three calendar years after that in which the option was granted. The last date of the exercise
is the end of the 42-day period following the announcement of the financial results of the Group in the third calendar year following that
in which the option was granted or (if applicable) such later date as the Remuneration Committee may specify. These awards are made
solely in respect of performance in the financial year immediately prior to their grant. Delivery of the deferred shares is not subject to further
performance conditions but each participant is required to remain an employee or Director of the Group during the three-year vesting period in
order to receive their deferred shares in full (except in the case of death or the occurrence of a takeover, reconstruction or amalgamation, or
voluntary winding up of the Company).

c) Restricted Share Plan
The Restricted Share Plan allows awards of options to be made to senior management, and other employees at the discretion of the
Remuneration Committee. The right to exercise an option is subject to completion of a required period of continued employment within
the Group:

• options granted pre-31 March 2020: three years; or
• options granted post-31 March 2020: one to three years, in three equal tranches on the anniversary date of the grant.

Options that are not exercised prior to the fifth anniversary (or, in the case of an award with an overall award period of more than four years,
the sixth anniversary) of the date of grant shall lapse.

d) Global Employee Share Purchase Plan
The Group launched the GESPP in January 2021, with the aim to encourage employees to acquire and hold shares in AVEVA Group plc.
This is comprised of three plans. At 31 March 2021 no shares had been purchased under this scheme as all plans were in an initial six-month
employee contribution phase. The first share purchase is expected in August 2021.

UK Share Incentive Plan
All UK employees are entitled to contribute up to £150 per month from their gross pay. The GESPP trustees buy shares (partnership shares) at
market value every six months with the employees’ contributions. For every two partnership shares purchased, the Group purchases three
additional shares (matching shares) which are awarded to the employee.

If the employee sells their partnership shares or leaves employment with the Group within three years of the initial acquisition the matching
shares are forfeited.

US Employee Stock Purchase Plan
All US employees are entitled to contribute up to £850 per month from their net pay. The GESPP trustees buy partnership shares in the
open market with the employee’s contributions. Share are purchased at market value, less a 15% discount which is settled by the Group.
These shares are not subject to a holding period or forfeiture.

International Employee Share Purchase Plan
All international employees based outside of the UK and US and who are employed by a participating Group company are entitled to
contribute up to £150 per month from their net pay. The GESPP trustees buy partnership shares at market value every six months with the
employees’ contributions. For each partnership share purchased, the Group purchases one additional matching share which is awarded to
the employee.

If the employee sells the partnership share or leaves employment with the Group within two years of the initial acquisition the matching share
is forfeited.

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

28 Share capital and reserves

a) Share capital

Allotted, called-up and fully paid

301,155,427 (2020: 161,512,219) ordinary shares of 3.56 pence each

Details of the shares issued during the year and the prior year are as follows:

At 1 April

Issue of new shares for the acquisition of OSIsoft, LLC

Rights issue for the acquisition of OSIsoft, LLC

Exercise of share options

At 31 March

2021
£m

10.7

2021
Number

161,512,219

13,655,570

125,739,796

247,842

2021
£m

2020
Number

5.7 161,287,697

0.5

4.5

–

224,522

301,155,427

10.7 161,512,219

2020
£m

5.7

2020
£m

5.7

–

5.7

During the year the Company undertook a rights issue in order to facilitate the acquisition of OSIsoft, LLC. Additionally, part of the
consideration was paid through issuance of additional new shares to Estudillo Holdings Corp. A total of 139,395,366 ordinary shares of
3.56 pence were issued.

The Company issued a further 247,842 (2020: 224,522) ordinary shares of 3.56 pence each with a nominal value of £8,806 (2020: £7,968)
pursuant to the exercise of share options. The total proceeds were £8,806 (2020: £7,968), which included a premium of £nil (2020: £nil).

b) Share premium
Share premium represents the excess of proceeds arising on the issue of equity shares, net of transactions costs, over the nominal value of the
associated share capital.

At 1 April

Issue of new shares for the acquisition of OSIsoft, LLC

Rights issue for the acquisition of OSIsoft, LLC

Transactions costs for issued share capital

At 31 March

c) Other reserves

2021
£m

574.5

465.2

2,831.0

(28.6)

3,842.1

2020
£m

574.5

–

574.5

Merger reserve
The merger reserve is the difference between the equity consideration and the nominal value of shares issued in connection with the
acquisition of SES in 2018, less amounts used to pay up the B shares. The return of value to shareholders was effected through the issue and
redemption of B shares which were paid up out of the merger reserve.

Cumulative translation adjustment reserve
The cumulative translation adjustment reserve is used to record exchange differences arising from the translation of the financial statements
of foreign subsidiaries.

Capital redemption reserve
The capital redemption reserve represents the return of value to shareholders from AVEVA Group plc insofar as made out of distributable reserves.

Reverse acquisition reserve
On 1 March 2018, AVEVA Group plc acquired SES as part of a reverse acquisition. AVEVA Group plc was the legal acquirer, as it exercised
control over the enlarged Group. For accounting purposes SES was treated as the acquirer, as the former shareholders of SES (Schneider
Electric) obtained the majority of shares in the enlarged AVEVA Group. The reverse acquisition reserve represents the difference between the
consideration and the AVEVA capital equity interests on this acquisition.

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FINANCIAL STATEMENTS CONTINUED

Treasury shares
The treasury share reserve represents the cost of the shares in AVEVA Group plc purchased in the open market and held by the AVEVA Group
Employee Benefit Trust 2008 (EBT) to satisfy deferred shares under the Group's deferred annual bonus share plan. During the year, 23,197
shares (2020: 85,127) were purchased by the EBT at a price of £47.83 (2020: £36.13). An additional 71,300 shares (2020: nil) were obtained
as a result of the November 2020 rights issue. These are held at nil value. 380,316 shares (2020: 21,162) with an attributable cost of
£9.7 million (2020: £0.4 million) were issued to employees in satisfying share options that were exercised.

At 1 April 2019

Own shares purchased

Shares issued to employees

At 31 March 2020

Own shares purchased

Shares issued to employees

At 31 March 2021

29 Related party transactions

£m

9.4

3.1

(0.4)

12.1

1.1

(9.7)

3.5

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

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

Sales of goods and services

Purchases of goods and services

Interest expense on term loan

Other non-trading transactions

2021
£m

62.2

(3.4)

(0.2)

13.7

2020
£m

69.1

(11.2)
–
13.4

Other non-trading transactions related to amounts received from Schneider Electric in reimbursement for expenditure incurred as part of the
Company’s migration from activities covered by TSAs following the Combination. Of these transactions, £8.5 million (2020: £9.6 million)
related to operating expenses incurred, and £5.2 million (2020: £3.8 million) to capital expenditure.

On 19 March 2021, the AVEVA Group received a £646.4 million (US $900.0 million) term loan from Schneider Electric Holdings Inc to assist in
the funding of the acquisition of OSIsoft, LLC. The term loan bears interest of LIBOR plus a margin and is repayable three years from the
inception date on 19 March 2024.

During the year ended 31 March 2021, the Group paid £nil (2020: £nil) to Schneider Electric SE, the parent company of the Schneider Electric
Group. All other transactions were with subsidiary companies within the Schneider Electric Group.

The existing TSA with Schneider Electric has an end date of 31 August 2021 for ERP-related services. Discussions are ongoing in relation to a
new Services Agreement under which Schneider Electric (through SE Digital) will continue to provide ERP-related services beyond 31 August
2021 whilst the Group completes its global roll out of the new ERP system.

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

Trade and other receivables

Trade and other payables

Non-trading receivables

Term loan

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

2021
£m

18.9

(1.5)

2.7

(654.8)

2020
£m

23.6

(7.6)

4.8

–

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FINANCIAL STATEMENTS CONTINUED

Notes to the Consolidated Financial Statements continued

29 Related party transactions continued

Terms and conditions of transactions with related parties
Outstanding balances at 31 March 2021 are unsecured, and settlement occurs in cash. There have been no guarantees provided or received
for any related party receivables or payables. For the year ended 31 March 2021, the Group has not recorded any impairment of receivables
relating to amounts owed by related parties (2020: nil). This assessment is undertaken each financial year through examining the financial
position of the related party and the market in which the related party operates.

b) Remuneration of key management personnel
The remuneration of the key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24
‘Related Party Disclosures’. Key management personnel are considered to be the Board and the ELT of AVEVA Group plc. In addition to their
salaries, the Group provides non-cash benefits and contributes to defined contribution pension schemes on their behalf. Key management
personnel also participate in the Group’s share option schemes and deferred annual bonus share plan.

Further information about the remuneration of individual Directors is provided in the audited part of the Remuneration Committee report on
pages 90 to 122.

Short-term employee benefits

Share-based payments

2021
£m

5.4

6.4

11.8

2020
£m

7.9

6.0

13.9

c) Transactions with other related parties
Dr J Patrick Kennedy holds 4.53% of the issued ordinary share capital of AVEVA through his 75.64% ownership of Estudillo Holdings Corp.
Dr J Patrick Kennedy is also Chairman Emeritus of the Group, a board advisory position.

In the year ended 31 March 2021, the Group has recognised £141,000 (2020: nil) of expense payable to SLTC LLC for the use of the OSIsoft
San Leandro offices. The lease is effective until 31 January 2027, with rent of US$4.0 million payable per annum. SLTC LLC is 25% owned by
Dr J Patrick Kennedy.

In the year ended 31 March 2021, the Group has recognised £8,000 (2020: nil) of expense payable to Lit San Leandro LLC for the use of fibre
optic cable. The lease is effective until 6 January 2022, with extension options to 6 January 2029. Rent of US$132,000 is payable per annum.
Lit San Leandro LLC is 49% owned by Dr J Patrick Kennedy.

30 Commitments and contingencies

Bank guarantees

Parent Company guarantees

2021
£m

12.8

44.7

57.5

2020
£m

8.0

14.4

22.4

The Group provides a number of guarantees for obligations to complete and deliver projects. These include bid, performance and warranty
bonds, and guarantees against advance payments, all of which arise in the ordinary course of business and are issued by either banking
partners or AVEVA parent companies. The amounts disclosed above represent the Group’s contractual exposure at the balance sheet date.

31 Subsequent events

On 11 May 2021 the Group entered into an agreement whereby it agreed to sell the Acquis Software, Termis Software and Water Loss
Management Software businesses together to Schneider Electric for an aggregate consideration of £2.6 million. Completion is expected to
occur in or around July 2021.

Subsequent to the year end, the Group proposes to perform a capital reduction, reducing share premium and creating additional distributable
reserves within retained earnings of approximately £1.0 billion. The proposal is subject to approval by shareholders at the Annual General
Meeting on 7 July 2021.

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FINANCIAL STATEMENTS CONTINUED

Company Balance Sheet

31 March 2021

Non-current assets

Investments

Deferred tax assets

Current assets

Trade and other receivables

Cash and cash equivalents

Total assets

Equity

Issued share capital

Share premium

Capital redemption reserve

Merger reserve

Retained earnings

Total equity

Current liabilities

Trade and other payables

Current tax liabilities

Total equity and liabilities

Profit for the year

Notes

2021
£m

2020
£m

4,630.9

1,334.1

3.6

1.7

4,634.5

1,335.8

8(a)

8(b)

129.6

–

129.6

4,764.1

10.7

3,842.1

101.7

619.6

182.9

130.1

–

130.1

1,465.9

5.7

574.5

101.7

619.6

157.4

4,757.0

1,458.9

5.6

1.5

7.1

5.3

1.7

7.0

4,764.1

1,465.9

92.1

89.0

No income statement is presented by the Company as permitted by section 408 of the Companies Act 2006. The accompanying notes are an
integral part of this Company Balance Sheet.

The financial statements on pages 179 to 184 were approved by the Board of Directors on 25 May 2021 and signed on its behalf by:

Peter Herweck
Chief Executive Officer

James Kidd
Deputy CEO & CFO

Company number
2937296

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FINANCIAL STATEMENTS CONTINUED

Company Statement of Changes in
Shareholders’ Equity

31 March 2021

At 1 April 2019

Profit for the year

Share-based payments

Share options granted to employees of subsidiary

companies

Tax arising on share options

Dividends paid

At 31 March 2020
Profit for the year
Issue of new shares

Rights issue

Transaction costs relating to issue of share capital
Share-based payments
Share options granted to employees of subsidiary

companies

Tax arising on share options
Dividends paid
At 31 March 2021

Share capital
£m

Share premium
£m

Merger reserve
£m

Capital
redemption
reserve
£m

5.7

574.5

619.6

101.7

–

5.7

–

0.5

4.5

–

574.5

–

465.2

2,831.0

(28.6)

–

619.6

101.7

–

10.7

3,842.1

619.6

101.7

Retained
earnings
£m

127.9

89.0

6.7

5.3

0.2

(71.7)

157.4

92.1

–

9.4

6.7

(0.3)

(82.4)

182.9

Total
shareholders’
funds
£m

1,429.4

89.0

6.7

5.3

0.2

(71.7)

1,458.9

92.1

465.7

2,835.5

(28.6)

9.4

6.7

(0.3)

(82.4)

4,757.0

The accompanying notes are an integral part of this Company Statement of Changes in Shareholders’ Equity.

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FINANCIAL STATEMENTS CONTINUED

Notes to the Company Financial Statements

1 Authorisation of financial statements and corporate information

The financial statements of AVEVA Group plc (the Company) for the year ended 31 March 2021 were authorised for issue by the Board of
Directors on 25 May 2021 and the balance sheet was signed on the Board's behalf by Peter Herweck, the Chief Executive Officer, and James
Kidd, the Deputy CEO & CFO. AVEVA Group plc is a limited company incorporated and domiciled in England and Wales whose shares are
publicly traded on the London Stock Exchange. The principal activity of the Company is that of a holding company.

These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101)
and in accordance with applicable accounting standards. The financial statements are prepared on the historical cost basis. The accounting
policies which follow set out those policies which apply in preparing the financial statements for the year ended 31 March 2021. The financial
statements are presented in pounds sterling (£), rounded to the nearest £0.1 million except when otherwise indicated.

No income statement is presented by the Company as permitted by section 408 of the Companies Act 2006. The results of AVEVA Group plc
are included in the Consolidated Financial Statements of AVEVA Group plc.

The Directors believe that the Company is well placed to manage its business risks successfully despite macroeconomic and geopolitical
uncertainties. It has considerable financial resources and no external borrowings. As a consequence of these factors and having reviewed the
forecasts for the coming year, the Directors have a reasonable expectation that there are adequate resources to continue in operational existence
for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

2 Summary of significant accounting policies

Explained below are the significant accounting policies of the Company. The full statement of Group accounting policies is included on
pages 185 to 190.

a) Basis of accounting
The Company has taken advantage of the following disclosure exemptions under FRS 101:

• the requirements of IAS 7 'Statement of cash flows';
• the requirements of IAS 8 'IFRSs issued but not effective';
• the requirements of IFRS 2 'Share-based payments';
• the requirements of IFRS 7 'Financial instruments: disclosures';
• the requirements of IFRS 13 'Fair value measurements'; and
• the requirements of IAS 24 'Related party disclosures'.

The basis for all of the above exemptions is because equivalent disclosures are included in the Consolidated Financial Statements of the Group
in which the entity is consolidated.

b) Significant accounting estimates

Impairment of investments in subsidiaries
The carrying values of investments in subsidiaries are reviewed for impairment when events or changes in circumstance indicate the carrying
value may be impaired. If any such indication exists, and where the carrying values exceed the estimated recoverable amount, the investments in
subsidiaries are written down to their recoverable amount. The recoverable amount is the greater of fair value less cost of disposal and VIU.
In assessing VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. Impairment losses are recognised in the income statement.
It is not considered that any impairment indicators existed at the balance sheet date.

c) Taxation
Corporation tax payable is provided on taxable profits using the tax rates and laws that have been enacted or substantively 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, or a right to pay less, tax in the future have occurred at the balance sheet date.
Deferred tax is measured on a non-discounted basis at the average tax rates that are expected to apply in periods in which timing differences
reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

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FINANCIAL STATEMENTS CONTINUED

Notes to the Company Financial Statements continued

2 Summary of significant accounting policies continued

d) Share-based payments
The accounting policy in relation to share-based payment transactions is disclosed in full in the Consolidated Financial Statements. The Company
recognises the expense relating to the Executive Directors. The Company also records a corresponding increase in its investments in subsidiaries
with a credit to equity which is equivalent to the IFRS 2 cost in subsidiary undertakings.

Investments in subsidiaries

e)
Fixed asset investments in subsidiaries are shown at cost less provision for impairment.

3 Result for the year

AVEVA Group plc reported a profit for the financial year ended 31 March 2021 of £92.1 million (2020: £89.0 million).

Audit fees of £8,000 (2020: £7,000) are borne by another Group company.

The Company had an average of two employees during the year (2020: two).

Directors’ remuneration is disclosed in the Directors’ Remuneration Report on pages 90 to 122. The Company bears the remuneration expense
for Executive and Non-Executive Directors.

4 Dividends

Declared and paid during the year1
Interim 2020/21 dividend paid of 12.4 pence1 (2019/20: 12.4 pence) per ordinary share
Final 2019/20 dividend paid of 23.3 pence (2018/19: 23.3 pence) per ordinary share

Proposed for approval by shareholders at the Annual General Meeting

Final 2020/21 proposed dividend of 23.5 pence (2019/20: 23.3 pence) per ordinary share

2021
£m

35.6

46.8

82.4

70.7

2020
£m

25.0

46.7

71.7

46.8

1. Dividends per share for comparative periods have been restated and adjusted for a bonus factor of 0.80, to reflect the bonus element of the November 2020 rights issue. Previously stated

final dividend per share totals for both 2020/21 and 2019/20 were 15.5 pence per share, and final dividend per share for both 2019/20 and 2018/19 were 29.0 pence per share.

Investments

At 1 April 2019

Additions

At 31 March 2020

Additions

At 31 March 2021

£m

1,325.0

9.1

1,334.1

3,296.8

4,630.9

During the year ended 31 March 2021, the Company increased its investment in AVEVA Solutions Limited (£2,643.7 million), AVEVA
Software Singapore Pte Ltd (£617.6 million) and AVEVA Financing (£28.7 million) as part of the structuring for the acquisition of OSIsoft, LLC.
A further investment in AVEVA Solutions Limited of £6.8 million was made by virtue of share options being granted to employees of that
subsidiary undertaking.

Details of the Company’s subsidiary undertakings are set out in note 18 in the Consolidated Financial Statements of the Group.

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FINANCIAL STATEMENTS CONTINUED

6 Trade and other receivables

Amounts owed by Group undertakings

Amounts owed by Group undertakings are non-interest bearing and are repayable on demand.

7 Trade and other payables

Social security, employee taxes and sales taxes

Accruals

Amounts owed to Group undertakings

2021
£m

129.6

2020
£m

130.1

2021
£m

3.3

0.4

1.9

5.6

2020
£m

0.4

3.0

1.9

5.3

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

8 Share capital and reserves

a) Share capital

Allotted, called-up and fully paid

301,155,427 (2020: 161,512,219) ordinary shares of 3.56 pence each

Details of the shares issued during the year and the prior year are as follows:

At 1 April

Issue of new shares for the acquisition of OSIsoft, LLC

Rights issue for the acquisition of OSIsoft, LLC

Exercise of share options

At 31 March

2021
£m

10.7

2021
Number

161,512,219

13,655,570

125,739,796

247,842

2021
£m

2020
Number

5.7 161,287,697

0.5

4.5

–

224,522

301,155,427

10.7 161,512,219

2020
£m

5.7

2020
£m

5.7

–

5.7

Details of share options awarded to Executive Directors during the year are contained in the Directors’ Remuneration Report. Note 27 of the
Consolidated Financial Statements for the Group includes details of share option awards made during the year.

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FINANCIAL STATEMENTS CONTINUED

Notes to the Company Financial Statements continued

8 Share capital and reserves continued

b) Share premium
Share premium represents the excess of proceeds arising on the issue of equity shares, net of transactions costs, over the nominal value of the
associated share capital.

At 1 April

Issue of new shares for the acquisition of OSIsoft, LLC

Rights issue for the acquisition of OSIsoft, LLC

Transactions costs for issued share capital

At 31 March

c) Other reserves

2021
£m

574.5

465.2

2,831.0

(28.6)

3,842.1

2020
£m

574.5
–
–
–
574.5

Capital redemption reserve
The capital redemption reserve represents the return of value to shareholders from AVEVA Group plc insofar as made out of distributable reserves.

9 Related party transactions

There are no related party balances held at 31 March 2021 (2020: £nil).

10 Commitments and contingencies

Parent Company guarantees

Loan guarantee

2021
£m

43.2

654.8

698.0

2020
£m

14.4

–

14.4

The Company provides a number of Parent Company guarantees to subsidiaries for obligations to complete and deliver projects. These include bid,
performance and warranty bonds, and guarantees against advance payments, all of which arise in the ordinary course of business.

The Company is a guarantor for the £654.8 million (US$900.0 million) loan from Schneider Electric Holdings Inc, undertaken by Company
subsidiaries to fund the acquisition of OSIsoft, LLC.

The amounts disclosed above represent the Company’s contractual exposure at the balance sheet date.

11 Subsequent events

Subsequent to the year end, the Company proposes to perform a capital reduction, reducing share premium and creating additional
distributable reserves within retained earnings of approximately £1.0 billion. The proposal is subject to approval by shareholders at the
Annual General Meeting on 7 July 2021.

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FINANCIAL STATEMENTS CONTINUED

Statement of Group Accounting Policies

Statement of compliance
The Consolidated Financial Statements of AVEVA Group plc and all its subsidiaries (the Group) have been prepared in accordance with
International Accounting Standards (IASs) in conformity with the requirements of the Companies Act 2006 and in accordance with
International Financial Reporting Standards (IFRSs) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union
and for the year ended 31 March 2021. The financial information has been prepared on the basis of all applicable IFRSs, including all IASs,
Standing Interpretations Committee (SIC) interpretations and International Financial Reporting Interpretations Committee (IFRIC)
interpretations issued by the International Accounting Standards Board (IASB) that are applicable to the financial period.

The Parent Company financial statements of AVEVA Group plc have been prepared under the FRS 101 reduced disclosure framework and
are included on pages 179 to 184.

Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of AVEVA Group plc and its subsidiaries as at 31 March each year.
The financial statements of subsidiaries are prepared using existing GAAP for each country of operation. Adjustments are made to translate
any differences that may exist between the respective local GAAP and IFRSs.

Inter-company balances and transactions, including unrealised profits arising from intra-Group transactions, have been eliminated in full.
Subsidiaries are consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which
control is transferred out of the Group. On acquisition, assets and liabilities of subsidiaries are measured at their fair values at the date of
acquisition, with any excess of the cost of acquisition over this value being capitalised as goodwill.

Adoption of new and revised standards
The Group has applied for the first time in the reporting period commencing 1 April 2020:

• amendments to IFRS 3 ‘Definition of a business’;
• amendments to IFRS 16 ‘Covid-19 related rent concessions’;
• amendments to IFRS 7, IFRS 9 and IAS 39 ‘Interest rate benchmark reform’; and
• amendments to IAS 1 and IAS 8 ‘Definition of material’.

These amendments did not impact the Group’s financial statements.

New standards and interpretations not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for the current reporting period and have
not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future
reporting periods and on foreseeable future transactions.

Foreign currencies
The functional and presentational currency of AVEVA Group plc is pounds sterling (£). Transactions in foreign currencies are initially recorded
at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the Consolidated
Income Statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date
of the initial transaction.

The subsidiaries have a number of different functional currencies. As at the reporting date, the assets and liabilities of these overseas
subsidiaries are translated into pounds sterling (£) at the rate of exchange ruling at the balance sheet date, and their income statements are
translated on a monthly basis, using an average periodic rate for each month. Exchange differences arising on the retranslation are taken
directly to the Consolidated Statement of Comprehensive Income.

Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the
consideration transferred, which is measured at acquisition date fair value.

The Group determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive
process that together significantly contribute to the ability to create outputs. The acquired process is considered substantive if it is critical to
the ability to continue producing outputs, and the inputs acquired include an organised workforce with the necessary skills, knowledge, or
experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce
or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.

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FINANCIAL STATEMENTS CONTINUED

Statement of Group Accounting Policies continued

Acquisition costs wholly related to raising debt or equity are offset against the corresponding financial liability and share premium respectively
on the day of incurring the liability or of the equity issue. All other acquisition-related costs are expensed as incurred and included in selling
and administrative expenses.

Goodwill
Goodwill on acquisitions is initially measured at cost, being the excess of the cost of the business combination over the acquirer’s interest in
the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each
of the Group’s CGUs that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are
assigned to those units.

Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the operation
disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill
disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the
CGU retained.

If the potential benefit of tax losses or other deferred tax assets does not satisfy the criteria in IFRS 3 for separate recognition when a business
combination is initially accounted for but is subsequently realised, the Group recognises the deferred tax income in the Consolidated Income
Statement.

Intangible assets
Intangible assets acquired separately are capitalised at cost and from a business acquisition are capitalised at fair value as at the date of
acquisition. Following initial recognition, the cost model is applied to each class of intangible asset as set out below.

Expenditure on internally developed intangible assets, excluding development costs, is taken to the Consolidated Income Statement in the
year in which it is incurred. Internal software development expenditure is recognised as an intangible asset only after its technical feasibility
and commercial viability can be demonstrated.

Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis. Amortisation is
calculated on a straight-line basis over the estimated useful economic lives of the asset, which are as follows:

Developed technology

Customer relationships

Purchased brands

Trademarks

Other software

Purchased software rights

Capitalised Research & Development

Years

3 to 12

5 to 20

10 to infinite

5 to 15

3 to 7

3 to 10

3 to 5

Government grants
Government grants are recognised as receivable when there is reasonable assurance that they will be received and all required conditions to
obtain them have been complied with. They are credited to the income statement in the same period as the related expense for which the
grant is compensating. The grant income is presented as a deduction from the related expense.

Property, plant and equipment
Property, plant and equipment is stated at cost less depreciation and any accumulated impairment losses.

Depreciation is calculated on a straight-line basis to write down the assets to their estimated residual value over the useful economic life of the
asset as follows:

Computer equipment

Fixtures, fittings and office equipment

Motor vehicles

Years

3 to 5

5 to 8

Leasehold buildings and improvements are amortised on a straight-line basis over the shorter of the period of the lease and useful economic life.

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FINANCIAL STATEMENTS CONTINUED

Impairment of assets
Goodwill arising on acquisition is allocated to CGUs expected to benefit from the combination’s synergies and represents the lowest
level at which goodwill is monitored for internal management purposes and generates cash flows which are independent of other CGUs.
The recoverable amount of the CGU to which goodwill has been allocated is tested for impairment annually or when events or changes in
circumstance indicate that it might be impaired. The carrying values of property, plant and equipment and intangible assets other than
goodwill are reviewed for impairment when events or changes in circumstance indicate the carrying value may be impaired. If any such
indication exists and where the carrying values exceed the estimated recoverable amount, the assets or CGUs are written down to their
recoverable amount. The recoverable amount is the greater of net selling price and VIU. In assessing VIU, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the
CGU to which the asset belongs. If the initial allocation of goodwill acquired in a business combination cannot be completed before the end of
the first annual period in which the business combination is effected, that initial allocation shall be completed before the end of the first annual
period beginning after the acquisition date. Impairment losses are recognised in the Consolidated Income Statement within selling and
administrative expenses.

Contract assets and liabilities
A contract asset is recognised when revenue recognised in respect of a customer contract exceeds amounts received or receivable from the
customer. This situation arises when the software licence performance obligation, from a multi-year rental contract, has been delivered to a
customer and the revenue recognised at a point in time and invoicing is conditional on further performance. Also, from the recognition of
revenue from service projects on a percentage of completion basis that is greater than amounts invoiced to the customer and invoicing is
conditional on further performance. The carrying amount is reduced by allowances for expected credit losses under IFRS 9. When the invoices
are raised the contract asset values are reclassified to trade receivables.

Contract liabilities comprise the Group’s obligation to transfer goods or services to a customer for which the Group has received payment from
the customer in advance of revenue recognition. This situation arises when the customer is invoiced in advance of the transfer and recognition
of maintenance and subscriptions. Also, when the revenue recognised from services projects on a percentage of completion basis is lower
than the amounts invoiced to the customer.

Customer acquisition costs
Where sales commission is linked directly to an individual sale and is therefore an incremental cost of acquiring that contract, the
commission is recognised as an asset on the balance sheet. Deferred customer acquisition costs are amortised over the period that the
related goods or services transfer to the customer. As commissions paid for new contracts also relate to expected future renewals of
these contracts, the amortisation period is based on average customer life, which is considered to be six years. This has been
determined by considering the current customer contract terms and historical customer retention of those contracts which typically
have incremental customer acquisition costs. Deferred customer acquisition costs are periodically reviewed for impairment.

Sales commission as a result of schemes that are not directly linked to individual contracts is expensed as incurred.

Trade and other receivables
Trade receivables, which generally have 30 to 90-day terms, are typically held within a business model with the objective to hold in order to
collect contractual cash flows. As such, trade receivables are recorded initially at fair value, and at amortised cost thereafter. This results in
their recognition and subsequent measurement at original invoice amount less an allowance for any uncollectible amounts. An estimate for
doubtful debts is made when collection of the full amount is no longer probable.

Trade receivables and contract assets are written off where there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others:

• the debtor entering bankruptcy or administration; and
• the outcome of legal proceedings.

Cash and cash equivalents
Cash and short-term deposits in the Consolidated Balance Sheet comprise cash at bank and in hand and short-term deposits with an original
maturity of three months or less. The carrying amount of these approximates their fair value. For the purpose of the Consolidated Cash Flow
Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

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FINANCIAL STATEMENTS CONTINUED

Statement of Group Accounting Policies continued

Derivative financial instruments
The Group holds forward foreign exchange contracts (the hedging instrument) to reduce exposure to foreign exchange risk. The Group does
not hold or issue derivative financial instruments for speculative purposes. All forward foreign exchange contracts have been marked-to-
market and are held at fair value on the Consolidated Balance Sheet. For regular transactions the Group does not apply hedge accounting.
Where hedge accounting is not applied, movements in fair value are recorded in the Consolidated Income Statement. Fair value is estimated
using the settlement rates prevailing at the period end.

For significant one-off transactions the Group may apply hedge accounting in order to mitigate the impact of changes in foreign exchange on
the Group’s income statement by matching the impact of the hedging instrument against the hedged risk.

At the inception of a hedging relationship, the hedged item and hedging instrument are documented, alongside the risk management strategy
and objectives for the hedge. Prospective effectiveness testing is performed. Over the life of the hedging relationship, effectiveness testing is
undertaken to ensure the instrument remains an effective hedge of the transaction.

Changes in the fair value of the hedging instrument are recognised in the hedging reserve, through the Consolidated Statement of
Comprehensive Income. Any ineffective portion is recognised immediately within the Consolidated Income Statement.

Where future cash flow results in the recognition of a non-financial asset or liability, then at the point of recognition the previously recognised
related gains or losses are included in the initial measurement of that asset or liability.

Hedge accounting is discontinued when the hedging instrument expires, or it is sold, terminated, exercised, or no longer qualifies for hedging.
At that time, any cumulative gain or loss on the hedging instrument recognised in the hedging reserve is retained in the hedging reserve until
the forecast transaction occurs. Gains or losses on hedging instruments relating to an underlying exposure that no longer exists are taken to
the Consolidated Income Statement.

Leases
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date that the underlying asset is available for use).
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain
ownership of the leased asset at the end of the lease term, the recognised right-of-use asset is depreciated on a straight-line basis over the
shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment review.

At the commencement date of the lease, the Group also recognises lease liabilities. They are measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of
penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do
not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.
The Group has adopted the practical expedient to view certain arrangements containing both lease and non-lease components as a single
lease component.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the
interest rate implicit in the lease is not readily determinable.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a
change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset. The carrying amounts of
right-of-use assets are also remeasured to reflect this change in lease liabilities.

The Group applies the short-term lease recognition exemption to its short-term leases (i.e. those leases that have a lease term of 12 months or
less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption
to leases of assets that are considered of low value (i.e. below £5,000). Lease payments on short-term leases and leases of low-value assets
are recognised as expense on a straight-line basis over the lease term.

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the
lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to
be exercised.

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FINANCIAL STATEMENTS CONTINUED

Taxation
The Group is subject to income tax in numerous jurisdictions. The Group recognises provisions for tax based on estimates of taxes that are
likely to become due. Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the
current income tax and deferred tax provisions in the period in which such determinations are made.

Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.

The UK Research & Development Credit (RDEC) is recognised in the income statement and netted off against Research & Development
expenses as the RDEC is of the nature of a government grant.

Deferred income tax liabilities are recognised for all taxable temporary differences:

• except where the deferred income tax liability arises from goodwill amortisation or the initial recognition of an asset or liability in a

transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss; and

•

in respect of taxable temporary differences associated with investments in subsidiaries, except where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses
to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of
unused tax assets and unused tax losses can be utilised:

• except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and

•

in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are only recognised to the
extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against
which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

The income tax effects of items recorded in either other comprehensive income or equity are recognised in the Consolidated Statement of
Comprehensive Income or the Consolidated Statement of Changes in Shareholders’ Equity respectively. Otherwise, income tax is recognised in
the Consolidated Income Statement.

Revenue, expenses and assets are recognised net of the amount of sales taxes except:

• where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales tax

is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables are stated with the amount of sales taxes included.

The net amount of sales taxes recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
Consolidated Balance Sheet.

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FINANCIAL STATEMENTS CONTINUED

Statement of Group Accounting Policies continued

Retirement benefits
For defined benefit schemes, the defined benefit obligation is calculated semi-annually for each plan by qualified external actuaries using the
projected unit credit method which attributes entitlement to benefits to the current period (to determine current service cost) and to the current
and prior periods (to determine the present value of defined benefit obligation). The retirement benefit liability in the Consolidated Balance
Sheet represents the present value of the defined benefit obligation (using a discount rate derived from a published index of AA-rated
corporate bonds) as reduced by the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on
market price information and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is restricted
to the present value of any amount the Group expects to recover by way of refunds from the plan or reductions in the future contributions.
The current service cost is recognised in the Consolidated Income Statement as an employee benefit expense. The net interest element of the
defined benefit cost is calculated by applying the discount rate to the net defined benefit liability or asset.

Actuarial gains and losses arising from experience adjustments or changes in actuarial assumptions are credited or charged in the
Consolidated Statement of Comprehensive Income in the period in which they arise.

The Group also operates defined contribution pension schemes for a number of UK and non-UK employees. Contributions to defined
contribution plans are charged to the Consolidated Income Statement as they become payable.

Share-based payments
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted,
further details of which are given in note 27 of the Notes to the Consolidated Financial Statements.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date).
The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the
vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition,
which are treated as vesting irrespective of whether the market condition is satisfied, provided that all other performance conditions
are satisfied.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified.
In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date
of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation and any expense not yet recognised for
the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement
award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as
described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of EPS, subject to an estimate of whether
performance conditions will be met.

Employee benefit trust
The Group has established an employee benefit trust (AVEVA Group Employee Benefit Trust 2008), which is a separately administered trust
and is funded by loans from Group companies. The assets of the trust comprise shares in AVEVA Group plc and cash balances. The Group
recognises assets and liabilities of the trust in the Consolidated Financial Statements and shares held by the trust are recorded at cost as a
deduction from shareholders’ equity.

Consideration received for the sale of shares held by the trust is recognised in equity, with any difference between the proceeds from the sale
and the original cost being taken to retained earnings.

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FINANCIAL STATEMENTS CONTINUED
Full List of Addresses and Subsidiaries

A full list of addresses of all subsidiaries and significant holdings as at 31 March 2021 is provided below, alphabetically by country within
each region.

Head office

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

EMEA

OSIsoft Technologies Middle East W.L.L.
Office 2302-04, 23rd Floor, Almoayyed Tower
Building No. 2504, Road 2832
Block 428, Seef Suburb
Bahrain

OSIsoft Czech Republic s.r.o.
Politických obětí 117
Frýdek-Místek - Místek
738 01
Czech Republic

AVEVA Denmark A/S
Sofiendalsvej 5A
9200 Aalborg SV
Denmark

AVEVA SA
Schneider Electric Software France SAS
5 Square Felix Nadar
Bat C, 94300 Vincennes
France

OSIsoft France Sarl
81 Boulevard Pierre
1er, 33110 Le Bouscat
France

AVEVA GmbH
Otto-Volger-Street 7c
65843 Sulzbach (Taunus)
Germany

OSIsoft Europe GmbH
Mainzer Landstrasse 178190
60327 Frankfurt am Main
Germany

AVEVA Software Italia S.p.A
Viale Milano no. 177
Gallarate
Milan
Italy

OSIsoft Italy S.R.L.
Milano (MI) Viale
20134
Forlanini Enrico 23
Milan
Italy

Asset+ Holding B.V
Asset+ RDS B.V
Asset+ Solutions B.V
Asset+ Solutions IP B.V
Papendorpseweg 100
3528BJ
Utrecht
Netherlands

AVEVA (The Netherlands) B.V.
Schneider Electric Software Holdings Netherlands B.V.
Schneider Electric Software Netherlands B.V.
Baarnsche dijk 10 B
3741LS
Baarn
Netherlands

AVEVA AS
Golf Tower
Kanalsletta 2
N-4033
Stavanger
Norway

OSIsoft Norway AS
Intertrust (Norway) AS Munkedamsveien 59B
0270
Oslo
Norway

AVEVA Limited Liability Company
3rd Floor, Office 9, Lit 4
Pavlovskaya Street 7
115093
Moscow
Russia

OSIsoft OOO (LLC)
Letnikovskaya st.2., bld. 1., 4th floor, offices 401-405
115114
Moscow
Russia

Schneider Electric Software RU
Moika Embankment 58
lit. A, of. 504 190 000
St. Petersburg
Russia

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FINANCIAL STATEMENTS CONTINUED

Full List of Addresses and Subsidiaries continued

OSIsoft South Africa (Pty) Limited
Clearwater Office Park Building 3
Ground Floor Millenium Road And Christiaan De Wet Road
Johannesburg
Gauteng 1735
South Africa

8over8 Limited (in liquidation)
Northern Ireland Science Park
Fort George, Bay Road
Derry
BT48 7TG
UK

AVEVA Software España S.L.U.
Avda Manoteras, Num 44
Puerta 1
28050
Madrid
Spain

OSIsoft Espana, S.L Sociedad Unipersonal
Cuzco IV
Paseo de la Castellana
141 Planta 5a
28046
Madrid
Spain

AVEVA AB
PO Box 50555, Drottninggatan 18
SE-202 15
Malmo
Sweden

OSIsoft Sweden AB
Regus Malmo Central
Adelgatan 21
211 22
Malmo
Sweden

AVEVA Yazilim VE Hizmetleri A.S.
Kurtköy Aeropark, Yenişehir Mahallesi, Osmanl Bulvar
No:11 Kat 5 A/28,
Pendik
İstanbul
34912
Turkey

OSIsoft Technologies Bilişim Hizmetleri Limited Sirketi
Kavaklidere Mahallesi
Ataturk Blv. No: 185
Cankaya
Ankara
Turkey

AVEVA Software Middle East FZ-LLC
Plot. No. S10809
P.O. Box 61495
Jebel Ali
Dubai
UAE

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AVEVA Consulting Limited
AVEVA Engineering IT Limited
AVEVA Finance Limited
AVEVA Financing Limited
AVEVA Limited
AVEVA Managed Services Limited
AVEVA Solutions Limited
AVEVA to the Power of PI Limited
AVEVA UK 1 Limited
AVEVAPI Limited
CADCentre Engineering IT Limited
CADCentre Limited
CADCentre Pension Trustee Limited
CADCentre Property Limited
LFM Software Limited
Tribon Solutions (UK) Limited
High Cross
Madingley Road
Cambridge
CB3 0HB
UK

Fabtrol Systems, UK Limited (in liquidation)
Ship Canal House
98 King Street
Manchester
M2 4WU
UK

OSIsoft (UK) Limited
Capital House
15th Floor
Chapel Street
London
NW1 5DH
UK

Schneider Electric Software GB Limited
101 Science Park
Milton Road
Cambridge
CB4 0FY
UK

Americas

OSIsoft Argentina SRL
Alem Leandro N. Av. 592 Piso:6
1001-Ciudad Autonama
Buenos Aires
Argentina

FINANCIAL STATEMENTS CONTINUED

Schneider Electric Software Argentina S.A.
Av. Eduardo Madero 900
16th Floor
Buenos Aires
C1106AVC
Argentina

AVEVA do Brasil Informática Ltda
Edificio Internacional Rio
Praia do Flamengo 154
Rio de Janeiro
Brazil

OSIsoft Mexico S. de R.L. de C.V.
Miguel de Cervantes Saavedra
233-901, Granada Miguel Hidalgo
Ciudad de Mexico
11520
Mexico

Schneider Electric Software Mexico SA de C.V.
111 Presidente Masarik
Polanco
Miguel Hidalgo
11560 Ciudad de Mexico
Mexico

AVEVA Software Brasil Ltda
Avenida das Nacoes Unidas
22.223, Setor Portao B
CEP 04795-907
Cidade de São Paulo
Estado de São Paulo
Brazil

OSIsoft do Brasil Sistemas Ltda
Alameda Santos,
1940 15 andar
Cerqueira Cesar
CEP 01418-102
São Paulo - SP
Brazil

AVEVA Software Canada Inc.
49 Quarry Park Blvd. SE
Calgary Alberta AB T2C 5H9
Canada

OSIsoft Canada ULC
600-1741 Lower Water Street
Halifax, Nova Scotia, B3J OJ2
Canada

AVEVA Software Chile S.p.A.
Avda. Andres Bello
No 2711 Of. 1701
Las Condes
Santiago
Chile

OSIsoft Chile S.p.A.
Padre Mariano no:391 DP:1101
Providencia
Santiago
Chile

AVEVA Software Colombia S.A.S.
Cento Empresarial Colpatria
Torre 3, Piso 6
Calle 127A 53A-45
Bogota
Colombia

AVEVA Inc.
920 Memorial City Way
Houston, TX 77024
USA

AVEVA Software, LLC
AVEVA US 1 Corp
AVEVA US 2 Corp
AVEVA US Blocker Corp
Wonderware de Mexico, Inc.
Wonderware of Venezuela, Inc.
251 Little Falls Drive
Wilmington, DE 19808
USA

OSIsoft LLC
1600 Alvarado Street
San Leandro, CA 94577
USA

Asia Pacific

AVEVA Pty Ltd
AVEVA Software Australia Holdings Pty Ltd
AVEVA Software Australia Pty Ltd
Level 9, 25 King Street
Bowen Hills
Queensland 4006
Australia

OSIsoft Australia Pty Ltd
Level 7, 99 St Georges Terrace
Perth, WA 6000
Australia

AVEVA (Shanghai) Consultancy Co. Limited (in
liquidation)
37F, 88 Yincheng Rd
Pudong District
Shanghai
China

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FINANCIAL STATEMENTS CONTINUED

Full List of Addresses and Subsidiaries continued

AVEVA Solutions (Shanghai) Co. Limited
Unit 3703-07, No. 88 Yin Cheng Road
China Life Finance Center
Pudong District
Shanghai
China

OSIsoft (Shanghai) Technology Co., Ltd
Suite 4105, No.268 Xi Zang Middle Road
Shanghai
Huangpu District
China

Telvent Control Systems (China) Co. Limited
Middle Zone, 2/F, No.1 Building
No. 2, 2nd Liangshuihe River Street
Beijing Economic & Technological Development Area
Beijing
China

AVEVA East Asia Limited
Room 1501
Grand Millennium Plaza (lower block)
181 Queens Road
Central Hong Kong
Hong Kong

AVEVA Information Technology India Private Limited
Unit No 202, Wing A, 2nd Floor
Supreme Business Park
Supreme City
Powai, Mumbai - 400076
India

AVEVA Software India Private Limited
Plot Nos. 488 and 489 1st Floor Sai Ganesh Towers Y.S.R.
Hills, Sri Swamy Ayyappa Society
Madhapur
Hyderabad, Telangana - 500081
India

AVEVA Software Private Limited
Salarpuria Touchstone, Survey No.15A
Portion of Survey No 14
P7, Kadubeesanahalli, Varthur Hobli
Bangalore, Karnataka - 560037
India

AVEVA Solutions India LLP
Tower 2.1, 2nd/4th Floor, WaveRock
Sy.no 115 APIIC IT/ITE SEZ
Nanakramguda
Gachibowli, Hyderabad - 50008
India

OSIsoft India Private Limited
Platina, 9th Floor, C-59, G-Block, Bandra Kurla Complex
Bandra (East)
Mumbai
Mumbai City, Maharashtra - 400051
India

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AVEVA KK
Oase Shibaura MJ Building
2-15-6 Shibaura, Minato-ku
Tokyo 108-0023
Japan

AVEVA Software KK
OASE Shibaura MJ Building
2-15-6 Shibaura
Minato-ku, Tokyo
Japan

OSIsoft Japan KK
1-6, Shinjuku 4-chome
Shinjuku-ku, Tokyo
Japan

AVEVA Asia Pacific Sendirian Berhad
AVEVA Sendirian Berhad
Level 7, Menara Milenium
Jalan Damanlela, Pusat Bandar
Damansara Heights
50490, Kuala Lumpur
Malaysia

AVEVA Korea Limited
AVEVA Software Korea Limited
25 F, West Tower
Mirae Asset Center 1 Building, 26 Eulji-ro 5-gil, Jung-gu, Seoul
Republic of Korea

AVEVA Software Korea Limited
13F, 189, Seongam-ro, Mapo-gu, Seoul
Republic of Korea

OSIsoft Korea Co., Limited
27th Floor, One IFC
10 Gukjegeumyung-Ro
Yeongdeungpo-Gu, Seoul
Republic of Korea

AVEVA Software Singapore Pte. Ltd
15 Changi Business Park
Central 1
#03-01/05, Singapore 486057
Singapore

OSIsoft Asia Pte. Ltd.
250 North Bridge Road
#36-04 Raffles City Tower, 179101
Singapore

AVEVA Software (Thailand) Co., Ltd
89 AIA Capital Center, 20th Floor, Room 2028-2030
Ratchadapisek Road
Kwaeng Dindaeng
Khet Dindaeng
Bangkok 10400
Thailand

FINANCIAL STATEMENTS CONTINUEDNon-GAAP measures

Various non-GAAP measures are presented, which management believe provide useful information for understanding the Group’s financial
performance.

These non-GAAP measures should be considered in addition to IFRS measures and are not intended to be a substitute for them. As they are
not defined by IFRS, they may not be directly comparable with other companies who use similar measures.

Non-GAAP measure

Closest equivalent
IFRS measure

Definition and purpose

Income statement – revenue measures

Annualised recurring
revenue (ARR)

No direct
equivalent

Revenue at constant
currency

Revenue

Organic revenue at
constant currency

Revenue

Recurring revenue

No direct
equivalent

Income statement – cost measures

Adjusted costs

No direct
equivalent

Adjusted costs at
constant currency

No direct
equivalent

Exceptional items

No direct
equivalent

Normalised items

No direct
equivalent

The non-cancellable contract consideration of subscription and
maintenance contracts as at the reporting date divided by the
number of days in the non-cancellable contract period and
multiplied by 365.
ARR represents the annualised value of the recurring revenue
base that is expected to be carried into future periods.

Constant currency is derived by translating the relevant current
year figure at prior year average exchange rates.
Constant currency enables measurement of performance on a
comparable year-on-year basis without the potentially distorting
effect of foreign exchange movements.

Constant currency figures, adjusted for significant one-off events
affecting year-on-year comparability, including acquisitions
and disposals of subsidiaries.
Organic constant currency enables measurement of performance
on a comparable year-on-year basis without the potentially
distorting effects of foreign exchange movements and
M&A activity.

Recurring revenue is defined as subscription revenue plus
maintenance revenue.
Recurring revenue is revenue earned from customers for the
provision of goods or services over a contractual term, where future
contract renewal is required for ongoing use of the product.

Expense excluding exceptional and normalised items.
Adjusted costs allow for the comparison of results year-on-year
without the potentially distorting effects of significant one-off items
or items which do not relate to the underlying performance of
the Group.

Items which are non-recurring and are identified by virtue of either
their size or their nature. These items can include, but are not
restricted to:
– costs of significant restructuring exercises;
– fees associated with business combinations; and
– costs incurred in integrating acquired companies.
Exceptional items are excluded from statutory measures to
determined adjusted results.

These are recurring items which management consider to
have a distorting effect on the underlying results of the Group.
These include:
– amortisation of intangible assets (excluding other software);
– share-based payment charges; and
– fair value adjustments on financial derivatives.
Normalised items are excluded from statutory measures to
determine adjusted results.

Reconciliation / calculation

Consistent with definition
given.

See section b below.

See section e below.

See section f below.

Exceptional items are included
on the face of the Consolidated
Income Statement. Further
information on the nature of
exceptionals is included within
note 7 of the notes to the
consolidated financial
statements.

Normalised items are included
on the face of the Consolidated
Income Statement.
Further information on the
rationale for these items being
normalised is included in note 2(c)
of the notes to the consolidated
financial statements.

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FINANCIAL STATEMENTS CONTINUED

Non-GAAP measures continued

Non-GAAP measure

Closest equivalent
IFRS measure

Definition

Income statement – profit measures

Adjusted EBIT

Profit from
operations

Adjusted EBIT growth No direct

equivalent

Adjusted EBIT margin No direct

equivalent

Adjusted EPS

EPS

Earnings before finance revenue, finance expense, tax, exceptional
items, and normalised items.
Adjusted results allow for the comparison of results year-on-year
without the potentially distorting effects of significant one-off
items or items which do not relate to the underlying performance
of the Group. Adjusted EBIT is a measure of the underlying
profitability of the Group.

Year-on-year percentage increase in adjusted EBIT.
Adjusted results allow for the comparison of results year-on-year
without the potentially distorting effects of significant one-off items
or items which do not relate to the underlying performance of the
Group. Adjusted EBIT growth is a measure of the movement in
the underlying profitability of the Group.

Adjusted EBIT as a percentage of revenue.
Adjusted results allow for the comparison of results year-on-year
without the potentially distorting effects of significant one-off items
or items which do not relate to the underlying performance of the
Group. Adjusted EBIT margin is a measure of the underlying
profitability of the Group.

Adjusted profit after tax divided by the weighted average number
of ordinary shares. Weighted average number of ordinary shares
are the same as those used in the Group’s EPS calculation.
Adjusted results allow for the comparison of results year-on-year
without the potentially distorting effects of significant one-off items
or items which do not relate to the underlying performance of the
Group. Adjusted EPS is a measure of the underlying earnings per
share for the Group.
Adjusted diluted EPS growth is a performance condition for
LTIP vesting.

Reconciliation / calculation

A reconciliation is given on the
face of the Consolidated
Income Statement.

Consistent with definition
given.

See note 13 of the notes to the
consolidated financial
statements.

Adjusted profit after
tax

Profit after tax Profit after tax, adjusting for exceptional and normalised items and

the tax effect of those items.
Adjusted results allow for the comparison of results year-on-year
without the potentially distorting effects of significant one-off items
or items which do not relate to the underlying performance of the
Group. Adjusted EBIT is a measure of the underlying profitability of
the Group.

See note 13 of the notes to the
consolidated financial
statements.

Income statement – tax measures

Effective tax rate

Effective tax
rate before
exceptional items

No direct
equivalent

Tax charge for the year per the income statement expressed as a
percentage of profit before tax.

See section c below.

Tax charge for the year per the income statement adjusted
for the tax effect of exceptional items, expressed as a percentage
of profit before tax and exceptional items.
This provides an indication of the ongoing tax rate across
the Group.

See section c below. The tax
effect of exceptional items is
provided in note 13 of the
notes to the consolidated
financial statements.

Effective tax rate
before exceptional
and other normalised
adjustments

No direct
equivalent

Tax charge for the year per the income statement adjusted for the
tax effect of exceptional and normalised items, expressed as a
percentage of profit before tax, exceptional and normalised items.
This provides an indication of the ongoing tax rate across
the Group.

See section c below. The tax
effects of exceptional and
normalised items are provided
in note 13 of the notes to the
consolidated financial
statements.

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FINANCIAL STATEMENTS CONTINUED

Non-GAAP measure

Cash measures

Cash conversion

Closest equivalent
IFRS measure

Definition

No direct
equivalent

Cash generated from operating cash flow before tax items as a
percentage of adjusted EBIT.
This measures how efficiently Group’s operating profit is converted
into cash.
Underlying cash conversion is defined as cash generated from
operating cash flow before tax and exceptional items as a
percentage of adjusted EBIT.

Reconciliation / calculation

See section a below.

Net cash

No direct
equivalent

Total cash, cash equivalents, overdrafts, and treasury deposits.
It is a measure of the strength of the Group’s balance sheet.

See section d below.

Income statement presentations

Standalone AVEVA
results

Group GAAP
results

Standalone OSIsoft
results

No direct
equivalent

Standalone AVEVA results have been prepared on the basis that
the OSIsoft, LLC acquisition had not completed before 31 March
2021. No adjustments have been made to eliminate incremental
revenue or costs relating to the acquisition of OSIsoft, LLC before or
after the acquisition date.
The acquisition of OSIsoft, LLC has had a significant distorting effect
upon the results of the Group. Standalone AVEVA results enable a
more meaningful year-on-year comparison.

Standalone OSIsoft represent the stand alone results for OSIsoft,
LLC for the years ended 31 March 2021 and 31 March 2020.
OSIsoft, LLC will form a significant portion of the Group’s results in
future years. Standalone OSIsoft only results allow an
understanding of the historical performance of these entities.

See section g below. 2020
standalone AVEVA results are
equivalent to the Group’s 2020
adjusted results.

Consistent with definition
given.

Pro forma results

Group GAAP
results

Pro forma results for the years ended 31 March 2021 and 31 March
2020 have been prepared on the basis that:
– the financial information is the combination of the consolidated

See section h below.

financial statements of AVEVA Group plc and OSIsoft, LLC for the
years to 31 March 2020 and 31 March 2021;

– no pro forma adjustments have been made to reflect synergies or
cost savings that may be expected to occur as a result of the
acquisition, nor have any adjustments been made to reflect the
stand-alone costs expected;

– there has been no trading between the two groups for either of

the years presented; and

– the term loan was entered into on 1 April 2019, and interest

accrued from that date.

The pro forma adjusted diluted EPS calculation assumes:
– rights issue shares were issued on 1 April 2019;
– rights issue adjustments for unexercised share options at the
date of the rights issue were made at the later of 1 April 2019
and the share option award date; and

– no timing adjustments made for actual or potential share options

awards to OSIsoft employees.

Pro forma financial information does not represent the enlarged
Group’s actual results and does not purport to represent what the
combined results would have been.
Non-market performance conditions for LTIPs granted in the year-
ended 31 March 2021 have been set using the pro forma results for
the year-ended 31 March 2020 as a baseline for measuring growth.
Non-market performance conditions for unvested LTIPs granted in
previous years have been revised to incorporate pro forma results.

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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS

FINANCIAL STATEMENTS CONTINUED

Non-GAAP measures continued

a) Cash conversion

Cash generated from operating activities before tax

Cash outflow from exceptional items in relation to operating activities

Cash generated from operating activities before tax and exceptional items

Adjusted EBIT

Cash conversion

Underlying cash conversion

b) Constant currency

2021

Revenue at actual rates

Impact of foreign exchange

Revenue at constant currency rates

Acquisition of OSIsoft, LLC

Organic revenue at constant currency rates

2020

Revenue at actual rates

Disposal of Wonderware entities

Organic revenue at actual rates

Change at constant currency

Change at organic constant currency

2021

Revenue at actual rates

Impact of foreign exchange

Revenue at constant currency rates

Acquisition of OSIsoft, LLC

Organic revenue at constant currency rates

2020

Revenue at actual rates

Disposal of Wonderware entities

Organic revenue at actual rates

Change at constant currency

Change at organic constant currency

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2021
£m

91.2

63.2

154.4

226.4

40.3%

68.2%

2020
£m

161.4

23.3

184.7

216.8

74.4%

85.2%

Services
£m

Total
£m

121.4

3.0

124.4

(0.2)

124.2

136.0

–

136.0

(8.5)%

(8.7)%

820.4

22.0

842.4

(19.5)

822.9

833.8

(12.0)

821.8

1.0%

0.1%

Subscription
£m

Maintenance
£m

359.7

7.4

367.1

(7.5)

359.6

316.8

–

316.8

15.9%

13.5%

197.7

6.6

204.3

(6.1)

198.2

201.7

(4.4)

197.3

1.3%

0.5%

Perpetual
licences
£m

141.6

5.0

146.6

(5.7)

140.9

179.3

(7.6)

171.7

(18.2)%

(17.9)%

Americas
£m

APAC
£m

EMEA
£m

Total
£m

265.4

14.3

279.7

(10.9)

268.8

279.2

–

279.2

0.2%

(3.7)%

221.3

3.5

224.8

(2.6)

222.2

227.5

–

227.5

(1.2)%

(2.3)%

333.7

4.2

337.9

(6.0)

331.9

327.1

(12.0)

315.1

3.3%

5.3%

820.4

22.0

842.4

(19.5)

822.9

833.8

(12.0)

821.8

1.0%

0.1%

FINANCIAL STATEMENTS CONTINUED

c) Effective tax rate

Profit

Profit before tax

Exceptional items

Profit before tax and exceptional items

Normalised items
– Amortisation of intangibles (excluding other software)
– Share-based payments
–
Profit before tax, exceptional items, and normalised items

(Gain)/loss on fair value of forward foreign exchange contracts

Income tax

Income tax expense

Tax effect on exceptional items

Income tax expense before exceptional items

Tax effect on normalised items

Income tax expense before exceptional items and normalised items

Effective tax rate

Income tax expense

Profit before tax

Effective tax rate

Effective tax rate before exceptional items

Income tax expense before exceptional items

Profit before tax and exceptional items

Effective tax rate before exceptional items

Effective tax rate before exceptional and other normalised adjustments

Income tax expense before exceptional items and normalised items

Profit before tax, exceptional items, and normalised items

Effective tax rate before exceptional and other normalised adjustments

2021
£m

34.2

78.5

112.7

95.7

16.3

(0.7)

224.0

9.4

15.1

24.5

23.0

47.5

9.4

34.2

2020
£m

92.0

18.8

110.8

90.6

12.0

0.4

213.8

22.2

4.6

26.8

12.0

38.8

22.2

92.0

27.5%

24.1%

24.5

112.7

21.7%

47.5

224.0

21.2%

26.8

110.8

24.2%

38.8

213.8

18.1%

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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS

FINANCIAL STATEMENTS CONTINUED

Non-GAAP measures continued

2021
£m

286.6

0.3

286.9

2021
£m

359.7

197.7

557.4

7.5%

820.4

67.9%

Operating expenses

Cost of sales
£m

Research &
Development
£m

Selling and
distribution
£m

Administrative
expenses
£m

Net impairment
loss from
financial assets
£m

181.3

–

(0.8)

180.5

3.6

184.1

190.7

–

(0.6)

190.1

(5.0)%

(3.2)%

184.5

(67.8)

–

(0.3)

116.4

2.1

118.5

184.6

(63.5)

–

(0.4)

120.7

(3.5)%

(1.8)%

226.8

(27.9)

–

(4.6)

194.3

4.7

199.0

240.1

(27.1)

–

(3.9)

209.1

(7.1)%

(4.8)%

193.0

–

(16.3)

0.7

(78.3)

99.1

1.8

100.9

127.7

–

(12.0)

(0.4)

(25.8)

89.5

3.7

–

3.7

–

3.7

7.6

–

7.6

(10.7)%

12.7%

(51.3)%

2020
£m

114.5

0.1

114.6

2020
£m

316.8

201.7

518.5

25.7%

833.8

62.2%

Total
£m

789.3

(95.7)

(16.3)

0.7

(84.0)

594.0

12.2

606.2

750.7

(90.6)

(12.0)

(0.4)

(30.7)

617.0

(3.7)%

(1.8)%

d) Net cash

Cash and cash equivalents

Treasury deposits

Net cash

e) Recurring revenue

Subscription

Maintenance

Recurring revenue

Growth in recurring revenue

Total revenue

Recurring revenue as a percentage of total revenue

f) Adjusted cost

2021

Statutory cost at actual rates

Amortisation excl. other software

Share-based payments

Gain on FX contracts

Exceptional items

Adjusted costs at actual rates

Impact of foreign exchange

Adjusted costs at constant currency rates

2020

Statutory cost at actual rates

Amortisation excl. other software

Share-based payments

Loss on FX contracts

Exceptional items

Adjusted costs at actual rates

Change at actual rates

Change at constant currency

200
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Annual Report 2021 | aveva.com

FINANCIAL STATEMENTS CONTINUED

g) Standalone AVEVA results

Statutory
2021
£m

Normalised
items
£m

Exceptional
items
£m

Adjusted
2021
£m

OSIsoft post-
acquisition
£m

Standalone
AVEVA
2021
£m

Standalone
AVEVA
2020
£m

Revenue1
Cost of sales

Gross profit

Operating expenses

Research & Development costs

Selling and administrative expenses

Net impairment loss on financial

assets

Other income

Total operating expenses

Profit from operations

Finance revenue

Finance expense

Profit before tax

Income tax

Profit after tax

820.4

(181.3)

639.1

(184.5)

(419.8)

(3.7)

5.5

(602.5)

36.6

0.6

(3.0)

34.2

(9.4)

24.8

–

67.8

43.5

–

111.3

–

111.3

(23.0)

88.3

–

0.8

0.3

82.9

–

(5.5)

77.7

78.5

–

78.5

(15.1)

63.4

820.4

(180.5)

639.9

(116.4)

(293.4)

(3.7)

–

(413.5)

226.4

0.6

(3.0)

224.0

(47.5)

176.5

1. OSIsoft post-acquisition revenue adjustment is stated after the impact of the £3.3 million revenue haircut.

(17.4)

803.0

833.8

1.5

(179.0)

(190.1)

(15.9)

624.0

643.7

(115.1)

(287.5)

(120.7)

(298.6)

1.3

5.9

0.3

–

7.5

(8.4)

(0.1)

0.2

(8.3)

0.5

(7.8)

(3.4)

–

(7.6)

(55.3)%

–

(406.0)

(426.9)

218.0

216.8

0.5

(2.8)

215.7

(47.0)

168.7

0.3

(3.3)

213.8

(38.8)

175.0

Research & Development costs

(184.5)

67.8

0.3

(116.4)

(52.2)

h) Pro forma results

Revenue

Cost of sales

Gross profit

Operating expenses

Selling and administrative

expenses

Net impairment loss on

financial assets

Other income

Total operating expenses

Profit from operations

Finance revenue

Finance expense

Profit before tax

Statutory
2021
£m

Normalised
items
£m

Exceptional
items
£m

Adjusted
2021
£m

OSIsoft pre-
acquisition
£m

Revenue
haircut
£m

Term loan
interest
£m

Pro forma
2021
£m

Pro forma
2020
£m

820.4

(181.3)

639.1

–

0.8

820.4

(180.5)

639.9

372.4

(48.7)

323.7

3.3

–

3.3

–

1,196.1 1,213.2

(229.2)

(249.9)

966.9

963.3

0.4%

(168.6)

(171.9)

(1.9)%

(440.0)

(456.4)

(3.6)%

(3.6)

(6.9)

(47.8)%

–

(612.2)

(635.2)

(3.6)%

354.7

328.1

8.1%

0.7

–

(12.8)

(16.7)

(29.8)

(44.0)%

338.7

299.0

13.3%

(419.8)

43.5

82.9

(293.4)

(146.6)

(3.7)

5.5

–

(602.5)

111.3

36.6

111.3

0.6

(3.0)

–

(5.5)

77.7

78.5

–

(3.7)

–

0.1

–

(413.5)

(198.7)

226.4

125.0

3.3

0.6

(3.0)

0.1

(0.9)

–

34.2

111.3

78.5

224.0

124.2

3.3

Change

(3.7)%

(5.8)%

(3.1)%

(4.6)%

(3.7)%

–

(4.9)%

0.6%

66.7%

(15.2)%

0.9%

21.1%

(3.6)%

Change

(1.4)%

(8.3)%

aveva.com | Annual Report 2021
aveva.com | Annual Report 2021

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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS

FINANCIAL STATEMENTS CONTINUED

Company Information and Advisers

Chairman

Chief Executive Officer (appointed 1 May 2021)
Non-Executive Director & Vice Chairman (resigned 1 May 2021)

Chief Executive Officer (resigned 1 May 2021)
Director

Deputy CEO & CFO

Senior Independent Non-Executive Director

Independent Non-Executive Director

Non-Executive Director (appointed 30 April 2020)

Non-Executive Director (resigned 30 April 2020)

Mills & Reeve LLP
Botanic House
100 Hills Road
Cambridge, CB2 1PH

J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London, E14 5JP

Directors
Philip Aiken

Peter Herweck

Craig Hayman

James Kidd

Christopher Humphrey

Jennifer Allerton

Ron Mobed

Paula Dowdy

Olivier Blum

Emmanuel Babeau

Company secretary
Claire Denton (appointed 7 May 2021)
David Ward (resigned 7 May 2021)

Registered office
High Cross, Madingley Road
Cambridge, CB3 0HB

Registered number
2937296

Auditor
Ernst & Young LLP
One Cambridge Business Park
Cambridge, CB4 0WZ

Bankers
Barclays Bank plc
9–11 St Andrews Street
Cambridge, CB2 3AA

Solicitors
Ashurst LLP
London Fruit & Wool Exchange
1 Duval Square
London, E1 6PW

Stockbrokers
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London, EC4M 7LT

Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham, BR3 4TU

Financial PR
FTI Consulting
200 Aldersgate Street
London, EC1A 4HD

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FINANCIAL STATEMENTS CONTINUED
Glossary

AGM – Annual General Meeting. The next annual meeting of
AVEVA’s shareholders will be held on 7 July 2021.

ELT – Executive Leadership Team. AVEVA’s executive
management, responsible for the Group’s day-to-day running.

AI – Artificial Intelligence.

APAC – Asia & Pacific.

EMEA – Europe, Middle East & Africa.

EPC – Engineering, Procurement and Construction. Firms
specialising in the delivery of infrastructure projects.

APM – Asset Performance Management. One of AVEVA’s business
units, focused on improving and managing the performance of
physical assets.

EPS – Earnings Per Share. The portion of profits attributable to each
ordinary share in issue.

AQR – Audit Quality Review. Monitoring the quality of the audit
work of statutory auditors and audit firms within the UK by the FRC.

EPSRC – Engineering and Physical Sciences Research Council. A
funding body for engineering and physical sciences in the UK.

AR – Augmented Reality. An interactive experience whereby a real-
world environment is enhanced by overlaid computer-generated
information.

ERC – Executive Risk Committee. A committee, chaired by the CEO,
containing all ELT members and various senior management
members responsible for implementing risk management and
developing the Group risk register.

ARR – Annualised Recurring Revenue. The value of the contracted
recurring revenue from subscriptions and maintenance in a one-
year period.

ERP – Enterprise Resource Planning. Technology tools for the
integrated management of business processes.

AVEVA LIFE – AVEVA’s company values. Limitless possibilities,
Integrity always, Flexibility together, Excellence every day.

ESG – Environmental, Social and Governance.

Bonus factor – reflecting the number of shares deemed to have
been issued without consideration during the November 2020 rights
issue.

CEO – Chief Executive Officer, Peter Herweck.

CFO – Chief Financial Officer, James Kidd.

CGU – Cash Generating Unit. The smallest identifiable group of
assets that generates cash inflows which are largely independent
from those of other assets or groups of assets.

EY – Ernst & Young, the Group’s independent external auditors.

FCA – Financial Conduct Authority. An independent UK body
responsible for regulating the conduct of UK financial markets and
financial services firms.

FRC – Financial Reporting Council. An independent UK body
responsible for regulating auditors, accountants and actuaries, and
for setting the UK’s Corporate Governance Code.

GAAP – Generally Accepted Accounting Practice. Commonly
accepted methods for recording and reporting accounting
transactions.

CO2e – Carbon dioxide equivalent. The quantity of CO2 which would
provide an equivalent warming effect.

GDP – Gross Domestic Product.

CPO – Chief People Officer, Caoimhe Keogan.

D&I – Diversity and Inclusion.

Digital Twin – a near-real-time digital image of a physical object or
process that helps optimise business performance.

DRR – Directors’ Remuneration Report. A report laying out the
remuneration of AVEVA’s Directors, in compliance with the
Companies Act 2006.

DTR – Disclosure Guidance & Transparency Rules. Regulations
applicable to certain companies listed on the London Stock
Exchange, published by the FCA.

EBIT – Earnings Before Interest and Tax.

GDPR – General Data Protection Regulation. An EU law on data
protection and privacy.

GESPP – Global Employee Share Purchase Plan. An employee
share plan aiming to increase employee share ownership, launched
in January 2021. Allows participating employees to purchase
AVEVA shares at a discount or be awarded additional
matching shares.

GHG – Greenhouse gas, a gas that contributes to the greenhouse
effect.

IASB – International Accounting Standards Board. An independent
accounting standard-setting body.

IFRIC – interpretations of accounting standards which are
developed, issued and approved by the IASB.

EBT – Employee Benefit Trust. A trust set up to facilitate the transfer
of shares to AVEVA’s employees on exercise of vested options
under various share option schemes.

IFRSs – International Financial Reporting Standards. Accounting
standards issued by the IFRS Foundation and IASB.

ED – Executive Director. A member of AVEVA’s Board who is part of
AVEVA’s ELT.

IIoT – Industrial Internet of Things. The networking of computers,
sensors, instruments and other devices for industrial applications.

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aveva.com | Annual Report 2021

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FINANCIAL STATEMENTS CONTINUED

Glossary continued

Industry 4.0 – the ongoing automation of traditional manufacturing
and industrial practices, using modern smart technology.

Standalone OSIsoft Results – results for the standalone OSIsoft
Group, as if it had not been acquired by the AVEVA Group.

ISAs (UK) – International Standards on Auditing (UK). Professional
standards for the auditing of financial information in the UK, based
upon standards issued by the International Auditing and Assurance
Standards Board.

KPI – Key Performance Indicator. Measure that tracks AVEVA’s
performance against strategy and longer-term goals.

STEM – Science, Technology, Engineering and Mathematics.

TCFD – Task Force for Climate-related Financial Disclosures. A task
force responsible for making recommendations on improving and
increasing the reporting of climate-related financial information.
Recommendations cover four key areas: governance, strategy, risk
management, and metrics and targets.

LTIP – Long-Term Incentive Plan. A share option scheme offered to
AVEVA’s senior employees.

TCV – Total Contract Value. The total revenue to be recognised over
the life of a contract.

ML – Machine Learning. A process by which a system can learn and
improve from experience, without additional programming.

NED – Non-Executive Director. A member of AVEVA’s Board who is
not part of AVEVA’s executive management team.

OEM – Original Equipment Manufacturer.

Partners – the ecosystem of AVEVA partners, including distributors
and strategic partners.

Pro Forma – Results prepared on the basis that the acquisition of
AVEVA Group plc and OSIsoft, LLC occurred on 1 April 2019.

TSA – Transitional Services Agreement. An arrangement where
Schneider Electric continues to provide infrastructure support and
back office resource for legal entities transferred in the sale to
AVEVA, for a monthly fee and for an agreed time period.

TSR – Total Shareholder Return. A measure of the performance of
AVEVA shares, combining capital growth and dividends paid to
show total return to shareholders as an annualised percentage.

UOC – Unified Operations Centre. A central control room where
data is collated and visualised enabling real-time operational
performance management.

VIU – Value in Use. The net present value of future cash flows.

PwC – PricewaterhouseCoopers, the Group’s independent external
auditor from the year ended 31 March 2023.

VR – Virtual Reality. An immersive, simulated virtual experience.

WISE – Women in Science and Engineering. A campaign aiming to
facilitate understanding among women and girls of science and
engineering, and the career opportunities they present.

XaaS – a collective term that refers to the delivery of anything as
a service.

R&D – Research & Development.

RCF – Revolving Credit Facility. A line of credit providing AVEVA
flexible financing with the ability to draw down, repay and draw
down again.

RDEC – Research & Development Expenditure Credit. A UK
tax-incentive scheme designed to encourage R&D investment
within the UK.

Revenue Haircut – A fair value adjustment to revenue of
£3.3 million for the 12 months to 31 March 2021, reflecting an
acquisition accounting adjustment to contract liabilities on the
opening balance sheet.

SaaS – Software as a Service. A distribution model whereby
AVEVA products are available to customers via the internet.

SDG – Sustainable Development Goal. A collection of 17 global
goals set in 2015 by the United Nations General Assembly, intended
to be achieved by 2030.

SES – Schneider Electric industrial software business. Combined
with AVEVA in February 2018.

SLT – Strategic Leadership Team. A team comprising senior
management, chaired by the CEO and overseeing AVEVA’s
corporate strategic and business unit risks. Reports to the ERC.

Standalone AVEVA Results – results for the standalone AVEVA
Group, as if the acquisition of OSIsoft, LLC had not occurred.

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Annual Report 2021 | aveva.com

FINANCIAL STATEMENTS CONTINUEDThis report is printed on paper certified in accordance with
the FSC® (Forest Stewardship Council®) and is recyclable
and acid-free.

Pureprint Ltd is FSC certified and ISO 14001 certified
showing that it is committed to all round excellence and
improving environmental performance is an important part
of this strategy.

Pureprint Ltd aims to reduce at source the effect its
operations have on the environment and is committed to
continual improvement, prevention of pollution and
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Pureprint Ltd is a Carbon / Neutral® Printing Company.

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