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Oy vey, Aveva

Aveva launched new products and slashed costs in a bid to counter weak oil and gas markets

Reports that Schneider Electric, GE and Emerson could soon pounce on Aveva (AVV) sent its shares up 9 per cent on the day before these results came out. But they retreated after the engineering software group announced that 2015 adjusted pre-tax profit had tumbled more than a fifth to about £62m.

IC TIP: Hold at 1919p

Aveva, whose software is used by energy and engineering groups to test out project designs, continued to suffer from tepid spending among oil and gas clients, patchy demand in South America and parts of Asia, and the strong pound. Lower initial and rental licence fees, together with reduced training and service revenues, drove underlying group sales down 7 per cent.

The group delivered £10m in second-half cost savings as it slashed research and discretionary spending. The upshot was a 2 per cent dip in full-year adjusted operating costs to £139m.

But management claims market uncertainty has been a positive, too, prompting some of Aveva's largest customers to invest in its technology to improve their competitiveness. Together with strong demand for flagship offering Everything 3D and several new products, that helped the group win contracts with WS Atkins, KBR and others.

Broker Panmure Gordon expects current year pre-tax profit of £66.6m, giving EPS of 77.5p (from £62m and 73.3p in 2015).

AVEVA (AVV)
ORD PRICE:2,027pMARKET VALUE:£1.3bn
TOUCH:2,027-2,031p12-MONTH HIGH:2,460pLOW: 1,186p
DIVIDEND YIELD:1.5%PE RATIO:31
NET ASSET VALUE:297p*NET CASH:£104m

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)†
201117449.850.918.3
201219657.758.921.0
2013 (restated)22063.566.824.0
201423769.078.127.0
201520954.965.130.5
% change-12-20-17+13

Ex-div: 2 Jul

Payment: 3 Aug

*Includes intangible assets of £78.1m, or 122p a share

†Excludes special dividend of 147p paid in August 2013