AVEVA PLC: Analyzing Innovation's Impact on Sales and Performance

This report provides a detailed analysis of the impacts of innovation on AVEVA PLC's financial performance, focusing on the years 2016 to 2018. The introduction highlights the significance of technology in economic growth and its role in driving competitiveness. The report examines AVEVA PLC's operations, market segments, and product offerings, including software solutions for various industries. It discusses the relationship between innovation and economic development, emphasizing the role of innovation in reducing costs, improving financial systems, and increasing trade openness. The report analyzes the financial impact of innovation on AVEVA PLC's sales, profits, and cash flow, including the impacts of restructuring, mergers, and new product launches. The analysis covers the years 2016, 2017, and 2018, highlighting the impact of innovations such as AVEVA Net and AVEVA Engage, as well as the merger with Schneider Electric Industrial Software. The conclusion summarizes the company's growth, the impact of its innovation, and future strategies. The report references various academic sources to support its findings, and the report is contributed by a student to be published on the website Desklib, a platform which provides all the necessary AI based study tools for students.

Impacts of innovation for AVEVA PLC1
IMPACTS OF INNOVATION FOR AVEVA PLC
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Introduction
In globalisation, the aim for the differences in economic development and inter-nations
income inequality is described on the bases of technologies differences (BODDY 2017). The
technology can be reflected as a vital source in economic growth, and the numerous
technology variations contribute considerably in the progress of underdeveloped nations.
(Von Schomberg 2013). The objectives of science and technology are to facilitate the
individuals and enterprises to apply techniques more effectively, as this leads to minimised
costs and excellent productivity benefits. The application of novel technologies paves the
direction for the manufacture of new cheap merchandise and capital growth (Morrison 2016).
It causes progressed international competitiveness and enhanced quality for scientific
research organisation (Maradana et al. 2017). This essay will discuss in great detail the
impact of innovation to the AVEVA PLC sales for the three consecutive years since 2016.
Headquartered in Cambridge, UK, AVEVA has over 4,400 personnel at 80 places in over 80
nations (AVEVA n.d). AVEVA is an international leader in industrial and engineering
software, inspiring the digital transformation across the entire functional and asset life cycle
of capital-intensive sectors. The company planning, engineering, operations, asset
performance, control, and monitoring solutions provide proven outcomes to over 16,000
users across the universe. Its users are backed by the hugest automated software surrounding,
encompassing 4,200 associates and 5,700 authorised developers (AVEVA annual report
2018).
The company operates in the following market segments: Europe, Asia Pacific, Africa, and
the Middle East. Its engineer merchandises comprise AVEVA electrical, diagrams,
instrumentation and engineering. Its design produces includes; AVEVA Bocad Onshore,
steel, offshore and Tower. Its manage goods such as AVEVA catalogue manager, class

Impacts of innovation for AVEVA PLC 3
manager, engage, material, planning and global. Its build products such as AVEVA
automated plate nesting, assembly planning, and Bocad NC. Its operate merchandises such as
AVEVA change manager, activity visualisation platform, control of work and workmate. Its
solutions suites encompass combined applications and solutions for enterprise-level
necessity, such as enterprise resource management, integrated engineering, and design
(AVEVA annual report 2018).
Innovation and economic development
Innovation and economic development are more inter-related in that their advancements are
essential in the survival of economy. Innovation in technology leads to improved financial
systems, infrastructure development, more employment opportunities, global
competitiveness, and trade openness which lead to the increase in the net national product, an
indicator of economic growth (David & Murphy 2011). Innovation and economic growth is
seen as the feasibility of bi-directional connection where an increase in economic growth is
attributed to increase in the innovation and an increase in innovation is also attributed to the
high economic growth (Petrariu, Bumbac and Ciobanu 2013).
Financial and ICT issues
Innovation is the key driver of the economy. It refers to the process or the implementation of
a new or majorly improved product, a new organisational method in business practices or a
new marketing method, which may be either new to the firm, the market or the world (Needle
2010). Institutions and firms are relying on technological innovation to reduce both capital
and operating costs. The AVEVA innovation have aided in curbing financial and IT related
issues such as cybersecurity, cloud computing, and controlling costs (Morrison 2016).

Impacts of innovation for AVEVA PLC 4
Corporate governance and ethics
The board governance committee oversees the company's sustainable business strategy and
policies. The corporation is subject to the 2016 UK Corporate Governance Code, with which
the company aims to comply. The company is committed to the highest standards of
behaviours as outlined by the Business Ethics Code which underscores the commitment to
function transparently and responsibly. The Financial Crime Business Standard directs the
company's risk-based financial crime programmes which seek to avert, identify and report a
financial crime such as corruption and bribery while complying with relevant regulation and
legislation (Carroll 2016). The firm uses risk-based drilling to make sure workers, and others
acting on the company's behalf comprehend what is expected of them. The Aveva PLC gives
back to the community through its charitable programmes. In 2018, the company carried out
academic initiatives where it donated software to local vocational centres and universities
(AVEVA n.d).
How innovation has impacted operations, sales and profits
The year 2015/2016 was marred by lower revenue due to the restructuring initiatives carried
out by the company in addition to the failed merger of Schneider Electric Industrial Software
firm which Aveva PLC had the obligation of paying the professional service fees incurred.
The Adjusted profit before tax was £51.2 million which was a drop from 2015. Despite the
drop of 25.4%, Aveva remained cash generative with a cash balance of £123.5% million with
no debt as at 30th April 2016, courtesy of the innovation made that year (AVEVA annual
report 2016).
The Aveva PLC innovations of 2017 like the Aveva Net and Aveva Engage information
management tools aided to strengthen the Aveva offer to Owners Operators (OO’s) where
they recorded a 16% growth in their operations and won some of impressive new customer’s

Impacts of innovation for AVEVA PLC 5
logos in the Aveva’s competition. A 2.1% increase in sales on a constant currency basis was
recorded. The revenues increased from £201.5 million to £215.8 million which is a 7.1% rise
(AVEVA Annual-Report 2017).
The profits before tax were £46.9 million before adjusting as compared to that of 2016 which
was £29.4 million. On an adjusted basis, the profits grew from £51.2 million to £55.0 million
which is an increase of 7.4%. The Avevas PLC also increased cash from its operating
activities from £36.1 million to £57.2 million which is a 58.2% increase.
The dividends through the progressive dividend policy proposed an 11.1% increase, that is,
from 36.0 pence of the year 2016 to 40.0 pence. In overall, the Aveva PLC net cash position
grew by £23 million from 2016 to £107.9, and the company expanded on its research and
development (AVEVA report and accounts 2017).
The year 2018 was capped by the merging of Schneider Electric Industrial Softwares (SES).
SES acquired 60% of shares in Avevas PLC after paying £550 million to Avevas
shareholders and contributing certain software assets to them.
On a statutory basis, the revenues went up by 15.3% increase from £432.8 million to £499.1
million. A 20.3% increase in adjusted tax was recorded which was from £97.4 million in the
year 2017 to £117.2 million. On a proforma basis, revenues growth went up from
£648.7million in 2017 to £704.6 million in 2018 which is an 8.6% increase (AVEVA annual
report 2018).
On average, revenues increased from £215.8 million in the year 2017 to £2487.2 million in
2018 which is a 15.0% increase. The revenues increased by 13.5% on a constant currency
basis. The success of 2018 was led by the merge of the two corporations which improved

Impacts of innovation for AVEVA PLC 6
performance and execution and greater decision making in their operations (AVEVA annual
report 2018).
Conclusion
In conclusion, last three annual reports shows that Aveva PLC has expanded its operations
through the merging with the likes of Schneider Electric Industrial Softwares. The above has
caused an increase in sales of different product portfolios which has resulted to augmented
profit margins owing to their innovation. AVEVA's approach is to upsurge returns by
developing the addressable market as the model of the digital possession is more broadly
embraced, to sell a vast variety of merchandises and to grow in the sector and geographic
verticals where the organisation's market share is underweight against the power of its good
offering.

Impacts of innovation for AVEVA PLC 7
References
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AVEVA annual report. (2016). AVEVA ANNUAL REPORT AND ACCOUNTS 2016.
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[Accessed on 24 April 2019].
AVEVA annual report. (2018). AVEVA Group plc Annual Report and Accounts 2018.
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AVEVA ANNUAL REPORT AND ACCOUNTS 201 AVEVA ANNUAL R

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