AVEVA rides the resource boom to record revenue, profit; plans share split
Engineering data and design IT systems specialist AVEVA Group plc (AVV.L) reported record growth in turnover, profit and cash for the financial rear ended 31 March 2006.
Revenue grew 15% to £65.9m while operating profit reached £13.9m, 36% more than in 2005. Cash generation remained strong with net the cash balance at the end of year up 110% to £23.5 million.
Chief Executive Richard Longdon (pictured) said there had been excellent progress across the business. "We entered the last financial year in a strong position, with good trading momentum across all our regions and major industry sectors".
And the future is looking just as good.
AVEVA supports many of the world's leading engineering companies in the marine, oil and gas and power sectors, all enjoying strong underlying growth supporting massive investment in new facilities and equipment. In oil and gas alone over £130 billion of projects are envisaged over the next 10 years for new refineries and petrochemical plants. LNG projects feature heavily throughout the AVEVA process and marine customer base, with LNG being the world's fastest growing fuel. Annual capex on LNG terminals and carriers is set to top £9 billion by 2009.
The stock market has recognised the value in the company, bidding it share price up 65% over the past year. Today, however, it was down 2.3% to 1125p perhaps as a result of profit taking or maybe it got caught in the general gloom of the past week. The group is valued at £246m.
The growth in the share price has led to the Board announcing today that it will propose a three for one share split to shareholders to boost market liquidity.
R&D spending up
The Group investment in research and development is at a high, with new releases across all its Vantage suite of products, including Vantage Marine which saw its first major release and subsequent sales in the year. Investment in research and development has increased by 34% to £13.9m.
Staff costs remain the single biggest expenditure. Total staff headcount increased from 459 in March 2005 to 491 at 31 March 2006. Total costs were £8.7m higher at £29.0m.
AVEVA's customer facing business is managed as four distinct regional business units:
• Asia Pacific - (revenue: £23.7m up from £20.2m). AVEVA now has 11 offices in the region that accounts for 36% of turnover. Korea has been one of the best performing regions over the past few years with revenues now accounting for almost 30% of business in the region. It is making sales inroads into China, especially with Chinese shipbuilders, who are investing heavily in new plant and technology.
• Central, Eastern and Southern Europe - (revenue: £17.0m up from £14.7m). A significant number of competitor customers have been converted to AVEVA products.
• Western Europe, Middle East and Africa - (revenue: £14.2m up from £12.9m). The main driver for business is the oil and gas industry, where the strength of the sector led to a slightly stronger order intake in the last six months of the year than expected.
Mr Anderson said the Group was also seeing acceleration in orders from emerging markets such as Russia and South America.
"Trading so far this year is good and order books are in line with expectations," he said. "AVEVA today is a global leader well positioned in growth markets to continue its successful development. We look to the future with confidence."
18th May 2006
