Schneider Software: Proposed Transaction Update

AVEVA Group plc

Schneider Software: Proposed Transaction Update and Current Trading information

10 November 2015 - Cambridge, U.K. - AVEVA Group plc ('AVEVA'; stock code: AVV), one of the world's leading providers of engineering data and design IT systems, provides an update on the progress of the proposed acquisition of selected Schneider Electric industrial software assets.

Update on the Proposed Transaction

Following the announcement on 20 July 2015 of the non-binding terms relating to the proposed transaction, both parties have been engaged in detailed due diligence, with a timing consistent with the complex nature of the transaction.

Based on the current timetable, both parties are working towards finalising due diligence and reaching definitive terms in December 2015, with completion expected to occur by mid-2016.

This will be a transformational deal for AVEVA and the enlarged group is expected to be one of the world's leading industrial software companies, with an unmatched breadth of product offering covering all aspects of the digital asset including process simulation and optimization, detailed engineering design, operations and asset lifecycle management and supervisory control. Both parties remain convinced of its merits and the key strategic and financial benefits that it will bring, including a more widely diversified product set, significant scale in North America, a generally more diverse regional and end market exposure, a significant presence amongst owner operator customers and enhanced shareholder returns.

There can be no certainty that the discussions between AVEVA and Schneider Electric will lead to a transaction, nor what the final terms or timing of any such transaction may be.

Update on Schneider Software Current Trading - unaudited

Over the first six months to 30 September 2015, Schneider Software reported revenue of $239 million, corresponding to a 7% contraction vs. H1 FY15, driven by a 7% negative FX translation effect, a 3% organic decline and the positive effect from the acquisition of InStep (+3%). Within this overall revenue performance, at organic constant currency, maintenance revenue showed high single-digit year on year growth, offset by a mid-single-digit decline in licence revenue and a low double-digit decline in engineering services.

EBITA was in line with last year on a constant currency basis, and 4% below on a headline basis. On a like for like basis, EBITA decreased by 6% mainly as a function of the impact of lower licence revenue offset by cost reduction actions that have been implemented by Schneider management.

Since 31 March 2015, Schneider Software has traded consistent with the macro-economic environment and the impact on the capital intensive industries that it serves, associated with the decline in oil prices and continued fiscal challenges facing specific market segments in Europe, China and Latin America. The trading environment has manifested in some delays in order intake especially for larger projects, and start-up of awarded contracts associated with increased cycle time on capital investments, from customers most sensitive to the oil price. While Schneider management expect this trading environment to generally prevail through the current fiscal year, Schneider management believes that many of customers have now re-baselined and re-scheduled their investment plans for major capital projects that involve Schneider technology. The outlook for the remainder of the fiscal year thus projects recovery in sales volume in the second half based on projects backlog and continued positive development of project pipeline, a strong base for software maintenance revenue and visible recovery of momentum in the channel driven licence business. Historically, revenue tends to peak in Q3 and Q4 with first half trading performance representing c.45% of total FY revenue. A significant portion of revenue is typically weighted toward the end of the quarter primarily in the license revenue stream.

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