14th Nov 2006 07:02
AVEVA Group PLC14 November 2006 14th November 2006 AVEVA Group plc INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 AVEVA Group plc ("AVEVA"; stock code: AVV), one of the world's leading providersof engineering data and design IT systems, today announces its unaudited resultsfor the six months ended 30th September 2006. Highlights • Excellent progress reflecting the leadership position of our products in buoyant marine, oil and gas and power markets • Revenue increased by 58% to £45.9 million (2005: £29.0 million) • Recurring revenues up 28% to £24.4 million (2005: £19.1 million) • Adjusted profit from operations increased by 149% to £13.7 million (2005: £5.5 million) * • Profit before tax up 191% to £12.8 million (2005: £4.4 million) • Adjusted basic earnings per share up 164% to 15.19p (2005: 5.75p) • Basic earnings per share up 219% to 13.37p (2005: 4.19p) • Interim dividend increased by 70% to 1.24p (2005: 0.73p) reflecting the Board's continued confidence in the Company's prospects • Excellent cash flow with net cash at the period end of £30.4 million (2005: £17.8 million) • Positive outlook across all business streams Commenting on the outlook, Chairman Nick Prest said: "AVEVA is delivering outstanding growth as a result of our investment inleading engineering data and design IT software solutions serving buoyantmarkets. We have entered the second half with a healthy pipeline of newbusiness and the Board expects full year results to be ahead of marketexpectations, but with less weighting towards the second half than previousyears." * Adjusted profit from operations is before amortisation of intangiblesexcluding software and adjustment to the carrying value of goodwill. Enquiries: AVEVA Group plc On 14th November 2006 Tel: 020 7796 4133Richard Longdon, Chief Executive Thereafter Tel: 01223 556 611Paul Taylor, Finance Director Hudson Sandler Tel: 020 7796 4133Andrew HayesSandrine GallienJames White An analysts' briefing will be held at 29 Cloth Fair, London EC1A 7NN at 9:30amon 14th November 2006. For further information please contact Alix Haysom on020 7796 4133 or on [email protected]. CHAIRMAN'S STATEMENT OVERVIEW AVEVA has continued to build on its excellent trading momentum to deliver recordsales, profit and dividend growth in the first six months of this year. Thisreflects our leading position in the high growth markets of oil and gas, powerand marine in which we operate, and the established relationships that we enjoywith a large number of blue-chip clients. The performance of the business inthe first half was also boosted by several key contracts secured ahead ofschedule with higher than expected initial fees impacting in the first half. FINANCIALS, DIVIDEND AND SHARE SPLIT AVEVA has delivered a strong financial performance over the past six monthsreporting sales growth of 58% to £45.9 million compared to £29.0 million for thesame period in 2005. Within this sales growth, recurring revenues accounted for£24.4 million up 28% compared to the £19.1 million achieved in the first half of2005, with initial fees up 178% to £17.5 million (2005: £6.3 million). Profit from operations, before amortisation of intangible assets and adjustmentto carrying value of goodwill, increased 149% to £13.7 million (2005: £5.5million). This led to a material increase in adjusted earnings per share of164% to 15.19 p (2005: 5.75p). Operating margins increased to 27% (2005: 16%), which is above those shown inprevious periods. Whilst margins have improved over recent years, the current rate has partly beendriven by a larger than expected increase in initial fees which can distortmargins in the short term. AVEVA continues to be cash generative. Strong cash flow generated fromoperations in H1 resulted in a net cash position at 30th September 2006 of £30.4million (2005: £17.8 million). Dividend With strong first half trading and the continued strengths in AVEVA's keymarkets, the Board are declaring an interim dividend of 1.24p (2005: 0.73p), anincrease of 70%. Payment will be made on the 9th February 2007 to allshareholders on the register on the 5th January 2007. Share split Following shareholder approval at the AGM on 14th July 2006, AVEVA completed theproposed share split. Each ordinary share of 10p nominal value was divided intothree new ordinary shares with a nominal value of 3 1/3p each. Dealing in thenew ordinary shares commenced at 8.00am on 17th July 2006. OPERATING REVIEW The strong first half performance benefited from increased contributions in allgeographies and major industrial sectors that we support. Another outstanding performance was achieved in the Asia Pacific region, wheresales grew 92% from £10.9 million to £20.9 million. The region accounted for45% of total revenue in this period. In particular, we have benefited fromrapidly growing demand for power generation capacity in China and the fastgrowing marine market in Korea. Initial fees in the period increased from £4.3million to £12.1 million as a result of new contracts being closed earlier thananticipated. Looking forward, we believe that the Asia Pacific region willremain a key market for growth and we will be re-enforcing our focus onopportunities across this region. Central, Eastern and Southern Europe saw revenues increase by 39% from £7.5million to £10.4 million, with the oil and gas and power markets particularlybuoyant. We are continuing to win customers from competitors in these marketswhere there is increasing demand for the more extensive capabilities of theentire AVEVA VANTAGE suite solutions. Twelve months ago we opened an office inMoscow to complement our presence in St Petersburg in Russia, and we are pleasedwith the progress being made. Our presence is growing substantially and we arerecruiting extensively to keep up to speed with the opportunities in thisregion. The Americas business was up 26% from £5.0 million in 2005 to £6.3 million. Theoil and gas markets remain the current drivers to the business in this region,however given AVEVA's detailed knowledge and existing customer relationshipsgained in other regions, we are well placed to benefit from new opportunities inthe power sector. Western Europe, the Middle East and Africa also saw strong growth in revenues up51% to £8.3 million. Much of the growth across this region has been developedaround existing customers and the increased demand for major projects across allaspects of the business. Over the past eighteen months we have continued with the VNET development plan,our unique internet based technology that enables common applications to beintegrated to create an internet based information portal. Revenues for thefirst six months are in line with expectations with order books continuing tostrengthen. RESEARCH & DEVELOPMENT In a permanently evolving and growing market place, our continued position as amarket leader is the result, in part, of the commitment we continue to make toresearch and development. We have continued this commitment in the first halfof this year investing £7.2million (2005: £6.4 million) in software development.Our customer demands are constantly evolving and we expect to continue theseinvestments going forward to sustain and enhance our leadership position. MANAGEMENT AND BOARD On the 1st April 2006 Nick Prest took over as Chairman of the Board of AVEVAGroup following Richard King's retirement. We are also pleased to announce theappointment of Hilary Wright as Group Head of Human Resources and member of theexecutive operating team. OUTLOOK AVEVA is delivering outstanding growth as a result of our investment in leadingengineering data and design IT software solutions serving buoyant markets. Wehave entered the second half with a healthy pipeline of new business and theBoard expects full year results to be ahead of market expectations, but withless weighting towards the second half than in previous years. Nick Prest Chairman 14th November 2006 Independent review report to AVEVA Group plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 September 2006 which comprises the Consolidated IncomeStatement, Consolidated Statement of Recognised Income and Expenses,Consolidated Balance Sheet, Consolidated Cash Flow Statement and related notes 1to 7. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the company, for our work,for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4'Review of interim financial information' issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom Auditing Standards and therefore provides a lower level of assurancethan an audit. Accordingly, we do not express an audit opinion on the financialinformation. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 September 2006. Ernst & Young LLP Cambridge 14 November 2006 CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 Notes Year ended Six months ended 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Revenues 3,4 45,936 29,036 65,930 Cost of sales (12,236) (8,533) (21,514) Gross profit 33,700 20,503 44,416 Operating expenses Selling and distribution costs (12,848) (12,130) (21,742) Administrative expenses (8,314) (3,914) (11,439) Total operating expenses (21,162) (16,044) (33,181) Profit from operations 4 12,538 4,459 11,235 Analysis of profit from operations Profit from operations before amortisation and goodwill adjustment 13,747 5,496 13,902 Adjustment to carrying value of goodwill in respect of utilisation of tax losses (170) - (602) Amortisation of intangibles (excl software) (1,039) (1,037) (2,065) Profit from operations 12,538 4,459 11,235 Finance revenue 1,071 707 1,498 Finance expense (839) (760) (1,578) Profit before tax 12,770 4,406 11,155 Income tax expense 5 (3,841) (1,624) (3,079) Profit for the period attributable to equity 8,929 2,782 8,076shareholders of the parent Earnings per share (pence) 7 - basic 13.37p 4.19p 12.14p - diluted 13.25p 4.16p 12.04p Proposed dividend per share 1.24p 0.73p 2.46p All activities relate to continuing activities CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSES FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 Year ended Six months ended 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Deferred tax on items recognised directly in equity 828 253 (60)Exchange differences arising on translation of (1,051) 87 454foreign operationsActuarial (loss)/gain on defined benefit pension (1,015) (304) 1,328schemes Net (expense)/ income recognised directly in equity (1,238) 36 1,722Profit for the period 8,929 2,782 8,076 Total recognised income and expenses relating to 7,691 2,818 9,798the period attributable to equity holders CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2006 As at Six months ended 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Non-current assets Goodwill 16,291 17,207 16,612 Other intangible assets 12,208 14,582 13,584 Property, plant and equipment 4,899 4,920 4,905 Deferred tax assets 3,561 2,030 2,876 Other receivables 230 188 268 37,189 38,927 38,245 Current assets Trade and other receivables 31,954 21,674 26,896 Current tax assets 160 928 428 Cash and cash equivalents 30,990 18,947 24,173 63,104 41,549 51,497 TOTAL ASSETS 100,293 80,476 89,742 Equity Issued share capital 2,226 2,221 2,225 Share premium 25,373 25,173 25,353 Other reserves 3,566 3,921 4,617 Retained earnings 26,335 12,817 18,665 Total equity 57,500 44,132 50,860 Current liabilities Trade and other payables 24,838 21,198 24,192 Financial liabilities 737 1,204 832 Current tax liabilities 8,315 3,271 5,643 33,890 25,673 30,667 Non-current liabilities Deferred tax liabilities 3,414 4,098 3,795 Financial liabilities 182 - 265 Provisions 317 466 294 Retirement benefit obligations 4,990 6,107 3,861 8,903 10,671 8,215 TOTAL EQUITY AND LIABILITIES 100,293 80,476 89,742 CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006 Year ended Six months ended 30 September 31 March 2006 2005 2006 £'000 £'000 £'000 (unaudited) (unaudited) (audited) Cash flows from operating activitiesProfit from operations 12,538 4,459 11,235Depreciation and amortisation of tangible 1,620 1,606 3,202and intangible assets(Profit)/loss on disposal of non-current assets - (51) 6Share-based payments 85 26 84Difference between pension contributions paid and amounts recognised in income statement 203 69 (266)Adjustment to carrying value of goodwill 170 - 602Changes in working capital:Trade and other receivables (4,348) 3,974 (999)Trade and other payables 621 (1,883) 807Provisions 23 (358) (988) Cash generated from operating activities 10,912 7,842 13,683before taxIncome taxes paid (1,160) (1,122) (1,353) Net cash generated from operating activities 9,752 6,720 12,330 Cash flows from investing activitiesPurchase of property, plant and equipment (642) (527) (1,026)Interest received 203 50 170Proceeds from disposal of property, plant 35 62 49and equipmentPurchase of intangibles (9) - (38) Net cash used in investing activities (413) (415) (845) Cash flows from financing activitiesInterest paid (48) (103) (60)Proceeds from the issue of shares 21 867 1,051Payment of finance lease liabilities (90) (6) (14)Proceeds from sale and leaseback - - 364Dividends paid to equity holders of the parent (1,157) (948) (1,442) Net cash flows from financing activities (1,274) (190) (101) Net increase in cash and cash equivalents 8,065 6,115 11,384Net foreign exchange difference (1,173) 452 908Opening cash and cash equivalents 23,503 11,211 11,211 Closing cash and cash equivalents 30,395 17,778 23,503 NOTES 1. The interim report The Interim Report was approved by the Board on 13th November 2006. Thefinancial information set out in the Interim Report is unaudited but has beenreviewed by the Auditors, Ernst & Young LLP, and their report to the Company isset out on page 6. The Interim Report will be posted to shareholders in due course and copies willbe available from the registered office of AVEVA Group plc, High Cross,Madingley Road, Cambridge, CB3 0HB. 2. Financial information The financial information set out within this report does not constitute AVEVA'sconsolidated statutory financial statements as defined in section 240 of theCompanies Act 1985. The results for the year ended 31st March 2006 have beenextracted from the statutory consolidated financial statements for AVEVA Groupplc for the year ended 31st March 2006 which are prepared in accordance withIFRS, on which the Auditors gave an unqualified report (which made no statementunder sections 237 (2) or (3) of the Companies Act 1985) and have been filedwith the Registrar of Companies. The unaudited interim financial statements for the six months ended 30thSeptember 2006 have been prepared on the basis of the accounting policies setout in the most recently published financial statements of the Group for theyear ended 31st March 2006. 3. Revenues An analysis of the Group's revenue is as follows: Year ended Six months ended 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Annual fees 8,667 7,613 15,436Rental fees 14,648 10,354 22,224Recurring services 1,048 1,123 3,215 Total recurring revenues 24,363 19,090 40,875Initial licence fees 17,519 6,313 17,570Services 4,054 3,633 7,485 Total revenues 45,936 29,036 65,930Finance revenue 1,071 707 1,498 47,007 29,743 67,428 Services consist of consultancy and training fees. 4. Segment information Geographical segments Six months ended 30 September 2006 (unaudited) Asia Pacific WEMEA CES Americas Unallocated Total £'000 £'000 £'000 £'000 £'000 £'000 Income statementRevenueSegment revenue 20,879 8,349 10,440 6,268 - 45,936 ResultSegment result 13,287 5,377 5,917 3,677 - 28,258 Unallocated expensesCorporate overheads (8,499) (8,499)Research and development costs (7,221) (7,221) Profit from operations 12,538Finance revenue 1,071Finance expense (839) Profit before income tax 12,770Income tax expense (3,841) Net profit for the period 8,929 4. Segment information (continued) Geographical segments Six months ended 30 September 2005 (unaudited) Asia Pacific WEMEA CES Americas Unallocated Total £'000 £'000 £'000 £'000 £'000 £'000 Income statementRevenueSegment revenue 10,994 5,491 7,513 5,038 - 29,036 ResultSegment result 6,772 3,154 4,333 2,846 - 17,105 Unallocated expensesCorporate overheads (6,237) (6,237)Research and development costs (6,409) (6,409) Profit from operations 4,459Finance revenue 707Finance expense (760) Profit before income tax 4,406Income tax expense (1,624) Net profit for the period 2,782 4. Segment information (continued) Geographical segments Year ended 31 March 2006 (audited) Asia Pacific WEMEA CES Americas Unallocated Total £'000 £'000 £'000 £'000 £'000 £'000 Income statementRevenueSegment revenue 23,675 14,205 16,996 11,054 - 65,930 ResultSegment result 14,314 9,092 9,065 6,405 - 38,876 Unallocated expensesCorporate overheads (13,692) (13,692)Research and development (13,949) (13,949)costs Profit from operations 11,235Finance revenue 1,498Finance expense (1,578) Profit before income tax 11,155Income tax expense (3,079) Net profit for the year 8,076 5. Income tax expense The current year income tax expense (including deferred taxation) for the sixmonths ended 30th September 2006 is estimated at 30% (2005: 37%) of profitbefore tax. The total tax charge of £3.8m (2005: £1.6m) is made up of UK tax £1.9m (2005:£0.5m) and overseas tax of £1.9m (2005: £1.1m). 6. Interim ordinary dividend The proposed interim dividend of 1.24p per ordinary share will be payable on 9thFebruary 2007 to shareholders on the register on 5th January 2007. Inaccordance with IFRS, no provision for the interim dividend has been made inthese financial statements. An analysis of dividends paid is set out below: Year ended Six months ended 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Dividends - final 2004/5 paid at 1.43p per share - 952 952 - interim 2005/6 paid at 0.73p per share - - 490 - final 2005/6 paid at 1.73p per share 1,157 - - 1,157 952 1,442 7. Earnings per share The calculations of earnings per share from continuing operations are based onthe profit after tax for the six months to 30th September 2006 of £8,929,000 andthe following weighted average number of shares: Year ended Six months ended 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) No. of shares No. of shares No. of shares Weighted average number of ordinary shares for 66,761,222 66,361,263 66,532,626 basic earnings per share Effect of dilution: Employee share options 636,170 505,221 532,389 Weighted average number of ordinary shares 67,397,392 66,866,484 67,065,015 adjusted for the effect of dilution Details of the calculation of adjusted earnings per share is set out below: Year ended Six months ended 30 September 31 March 2006 2005 2006 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Profit for the period 8,929 2,782 8,076Intangible amortisation (excluding software) 1,039 1,037 2,065Adjustment to carrying value of goodwill 170 - 602 Adjusted profit after tax 10,138 3,819 10,743 Adjusted earnings per share:- basic 15.19p 5.75p 16.15p- diluted 15.04p 5.71p 16.02p The number of shares in the above table represent the weighted average number ofshares during the periods shown. The weighted average number of shares has beenrestated in prior periods to take into account the 3 for 1 share split which wasapproved at the Annual General Meeting on 14th July 2006. The adjustments madeto profit after tax in calculating adjusted basic and diluted earnings per sharehave not been adjusted for tax in any of the above periods. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
AVV.L