24th May 2016 11:40
LONDON (Alliance News) - Engineering software company AVEVA Group PLC said it had delivered a "highly respectable" performance in its last financial year on Tuesday, despite tough end markets and an ultimately terminated reverse takeover of the company by France's Schneider Electric SA.
Pretax profit, however, fell thanks to lower revenue and costs booked both on the aborted Schneider Electric deal and on headcount reductions as the group sought to cope amid difficult trading conditions.
Shares in AVEVA were down 6.2% to 1,500.86 pence, the worst performer in the FTSE 250.
In December, AVEVA saw its shares tumble after it said a deal which would have seen it acquire the software business of French electricity distribution and energy management components giant Schneider Electric had been terminated. The deal had first been unveiled in July and would have seen AVEVA take over the Schneider Software arm, with Schneider then taking a 53.5% stake in the enlarged business.
In addition to valuing AVEVA at a significant premium, it would have added a series of new verticals to diversify AVEVA's end-market exposure, following a tough year for the group when it has been hit hard by its presence in the oil and gas market, where orders have been declining as operators slash costs to remain afloat amid the low oil price environment.
Those issues were illustrated on Tuesday as AVEVA said pretax profit for the year to the end of March nearly halved, falling to GBP29.4 million from GBP54.9 million a year earlier.
The drop mostly was caused by costs related to the failed Schneider deal and by restructuring costs, particularly for headcount reductions as AVEVA looked to cut costs amid ongoing softness in its oil and gas end markets.
Revenue for the year fell to GBP201.5 million from GBP208.7 million, again due to weaker markets over the course of the year, but contract renewals were in line with expectations in the second half, with price increases achieved on multi-year contracts, AVEVA said.
AVEVA said the problems afflicting the oil and gas industry were the main driver of the fall in profit, as some key customers reduced usage of the company's software.
AVEVA said the worst afflicted region was its Americas business, hit hard by the ongoing recession in Brazil. North American's software usage was broadly stable, though one key account saw revenue decline due to the timing of the contract renewal.
Revenue from Europe, the Middle East and Africa grew in constant currencies, AVEVA said, boosted by a good performance in the Middle East and rental fees in central Europe from non-oil and gas accounts. Asia Pacific revenue was also up in constant currencies, with growth in all regions.
AVEVA will pay a final dividend of 30.0p per share, up 20% from 25.0p a year earlier, which it said reflected its confidence on its outlook. Total payout for the year will rise 18% to 36.0p from 30.5p.
"The result for the year has highlighted the strength of the AVEVA business model, the value that our technology delivers to our customers and our ability to adapt to changing market conditions through a disciplined approach to innovation and organisational efficiency. Whilst we recognise the challenges in our markets, the board is confident that we can achieve our targets in the current financial year and over the medium term," said Chief Executive Richard Longdon.
By Sam Unsted; [email protected]; @SamUAtAlliance
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