CIMdata PLM Industry Summary Online Archive
11 November 2008
Financial News
AVEVA Group plc: Interim Results for the Six Months Ended 30 September 2008
AVEVA Group plc announced its unaudited results for the six months ended 30 September 2008.
Highlights
• Strong growth in revenue, profit and cash reflecting the leadership position of our products in marine, oil and gas and power markets
• Revenue increased by 32% to £74.8 million (2007 – £56.8 million)
• Recurring revenue up 43% to £40.9 million (2007 – £28.6 million)
• Investment in Research and Development up 26% to £12.9 million (2007 - £10.2 million)
• Adjusted profit before tax increased by 67% to £31 million (2007 – £18.6 million)*
• Profit before tax up 73% to £29.2 million (2007 – £16.9 million)
• Adjusted basic earnings per share up 66% to 33.11 pence (2007 – 19.97 pence)
• Basic earnings per share up 74% to 30.50 pence (2007 – 17.50 pence)
• Interim dividend increased by 73% to 2.86 pence (2007 – 1.65 pence)
• Excellent cash flow with net cash at the period end of £101 million (2007 – £54.5 million)
Commenting on the outlook, Chairman Nick Prest said:
“AVEVA is one of the leading providers of engineering IT solutions to many of the world’s largest companies in the Plant, Power and Marine businesses. These solutions help our customers from early stage concept and design through to operation and maintenance. Whilst our products and the markets in the last few years have been focused on the early stages within the project lifecycle, more recent developments and opportunities relate to the management and maintenance of these high value assets throughout the production cycle. Our existing relationships and product offering position us well to benefit from this next stage. We acknowledge that recent and rapid developments within the world economy have created less certainty about future demand and whilst there has been little impact on our current trading we continue to monitor the situation closely.”
* Adjusted profit before tax is before amortisation of intangibles excluding software, share-based payments and adjustment to the carrying value of goodwill.
CHAIRMAN’S STATEMENT
Overview
The excellent results achieved for the six months ended 30 September 2008 again demonstrate AVEVA’s core strengths in the markets we serve, where our technology, industry knowledge, geographical presence and understanding of customers’ developing requirements position us as a market leader. The performance in the first half was driven by the continuing demand for large, complex projects across all our major markets. Our investment in new products and our ability to service these through our regional network of offices will continue to keep us close to the developing requirements of our customers.
Financials
AVEVA’s strong trading in the first six months has seen turnover increase 32% to £74.8 million (2007 - £56.8 million). The pull through of recurring licence fees generated in prior periods has seen recurring fees increase 43% over last year. Recurring revenue amounted to 55% of total revenue, broadly in line with previous periods. Initial fees amounted to £28.8 million (2007 - £24.4 million), and service revenue totalled £5.1 million (2007 - £3.8 million).
Adjusted profit before tax increased by 67% to £31 million (2007 - £18.6 million), which is before amortisation of intangibles, share-based payments and adjustment to goodwill of £1.8 million (2007 - £1.7 million). Adjusted earnings per share amounted to 33.11 pence, an increase of 66% on prior year (2007 - 19.97 pence). Profit before tax was £29.2 million (2007 - £16.9 million) resulting in an increase in basic earnings per share of 74% to 30.50 pence (2007 - 17.50 pence).
Operating margins increased by 9% to 37% over the same period last year. The improvement in margins as in previous periods reflects the operational leverage achieved from strong sales growth and in particular from increases in initial licence fees. At the same time Research and Development expenditure has increased by 26% to £12.9 million, spent on both enhancing existing products and developing new products that will help generate future revenue growth.
Cash
AVEVA continues to be very cash generative with strong cash flow in the period resulting in net cash of £101 million (2007 - £54.5 million).
Dividend
Given the strong first half performance the Board is declaring an increased interim dividend of 2.86 pence per share (2007 - 1.65 pence). Payment will be made on the 9 February 2009 to all shareholders on the register on 9 January 2009.
Operating Review
The Group continued to see strong trading across all its markets and geographies in the first half of the year.
Asia Pacific
Sales in Asia Pacific continued to grow strongly with good performances across all regions but in particular in China, India and Australia. Initial fees remained the predominant form of licensing in Asia. Recurring revenue increased by 58% which helped deliver overall growth in sales of 31% to £31.1 million. Sales success was achieved in all our major market sectors and from both existing and new customers. Opportunities in the region remain good as requirements for Power remain high and developments in the Marine markets have continued, with growing emphasis being placed on lifecycle management tools such as Central Eastern and Southern Europe (CES) Another period of sustained growth in our CES region, driven by new customer wins and increased orders from our existing user base, delivered revenue of £22 million, up 46% on prior year (2007 - £15.1 million). We have continued to see high levels of activity from within the Power market and Russia has been one of our largest growth contributors. New opportunities within Southern Europe have also been a factor in our success in the half year. Our success in the nuclear market within this region over the last few years has continued with customers now looking to use our products in new territories with local partners, thereby providing an opportunity for AVEVA to grow its customer base.
Western Europe, Middle East and Africa (WEMEA)
WEMEA is our most mature market and sales to existing customers remain the primary driver for growth within this region. Our customers remain very busy but a shortage of skilled resources continues to be a constraining factor in the industry, and this has restricted short term opportunities. In the first six months of the year our investment has been focused on developing our capabilities to deliver new products and services to meet our customer requirements. Revenue for the period amounted to £11.4 million (2007 - £10.8 million) with recurring revenue amounting to £9.4 million, 82% of total revenue (2007 - £8.7 million and 80% respectively).
Americas
We saw good growth from the Americas in the first half of the year driven by new product sales to new customers and growing momentum in Canada and South America. The Americas market has remained robust and linked to global demands, but it is also a very competitive market, being the home market for many of AVEVA’s competitors. We continue to expand our presence in both Canada and South America and have recently opened a direct sales office in Brazil. South America presents opportunities to serve owner operators as they look to manage their high value plants. Total revenue in the Americas grew by 44% to £10.4 million (2007 - £7.2 million) Overall, sales opportunities remain positive across all our regions and markets but we expect to see customers increasingly purchase the tools that help manage the whole lifecycle of the assets they own (PLM) and not just the design phase. Our expanding suite of products positions us well to benefit from these evolving customer requirements.
Research and Development
The focus for our development efforts has continued to be on both enhancements to existing products and new products which will help our customers with the key issues involved in managing large complex projects where skilled resources are limited and management of these assets through the lifecycle becomes ever more important. In particular during the last six months we have seen new releases of AVEVA NET offering integrated operations capability and AVEVA Global allowing customers to maximise productivity with multi-site design.
Outlook
AVEVA is one of the leading providers of engineering IT solutions to many of the world’s largest companies in the Plant, Power and Marine businesses. These solutions help our customers from early stage concept and design through to operation and maintenance. Whilst our products and the markets in the last few years have been focused on the early stages within the project lifecycle, more recent developments and opportunities relate to the management and maintenance of these high value assets throughout the production cycle. Our existing relationships and product offering position us well to benefit from this next stage. We acknowledge that recent and rapid developments within the world economy have created less certainty about future demand and whilst there has been little impact on our current trading we continue to monitor the situation closely.
Nick Prest
Chairman
11 November 2008
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