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Aveva returns to growth

RESULTS: Emerging markets plus Americas drive sales growth at software group Aveva
November 10, 2010

Engineering design software firm Aveva returned to growth with a standout 19 per cent hike in first half licence sales, to £19.2m, and reporting adjusted pre-tax profits up 12 per cent to £24.6m.

IC TIP: Sell at 1480p

Strong growth was seen in emerging markets, driven mainly by power and oil and gas sectors, with revenues in this segment up a third to £31.6m. It was the same story in the Americas with regional revenues 23 per cent higher at £14.7m. However, Europe continues to suffer the impact of economic turmoil and lack of any real growth in Germany and France. As a result, sales from Europe, Middle East and Africa (EMEA) slumped 7 per cent to £32.1m.

Operating costs have also been an issue though, rising 20 per cent in the six month period to £37.9m, which meant margins fell over 4 percentage points to 29 per cent, although that’s partly down to investment in AVEVA.NET, the company's online product suite. Still, a 11 per cent increase in recurring revenues provides decent sales visibility given this segment accounts for two thirds of group sales, while strong cashflows and a £140m cash pile make more acquisitions likely.

Evolution Securities expects full-year adjusted pre-tax profits of £56.4m and EPS of 57.9p (2010: £50.7m and 50.7p), rising to £63.8m and 65.6p, respectively, in 2011/12.

AVEVA (AVV)

ORD PRICE:1,480pMARKET VALUE:£1.01bn
TOUCH:1479-1481p12-MONTH HIGH:1,572p893p
DIVIDEND YIELD:1.2%PE RATIO:30
NET ASSET VALUE:262p*NET CASH:£140m

Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200969.923.323.03.00
201078.523.123.23.36
% change+12-1+1+12

Ex-div:05 Jan

Payment:04 Feb

*Includes intangible assets of £46.1m, or 68p per share

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