Aveva (AVV) helpfully provided pro-forma comparisons for its March year-end, following its recent tie-up with the software arm of France's Schneider Electric SA. The combined group would have delivered aggregate revenues of £705m, an 8.6 per cent rise year on year, with adjusted operating profits up by a similar margin. Reported returns were held in check by costs associated with the reverse acquisition, but a 1.8 percentage point increase in the adjusted margin points to solid underlying trading. Presumably, unit profitability will receive additional support from the £25m in synergy cost savings targeted by 2020.
The combination involved a transfer of Schneider Electric software assets and a payment of £550m – £10.15 a share – to the UK group’s shareholders in exchange for a 60 per cent holding. Aside from the cash return, the strategic rationale for the deal is easy to appreciate. The addition of the Schneider portfolio augments Aveva’s ‘Digital Twins’ offering – digital replicas of physical assets and systems – a type of technology with myriad industrial applications. And it has also resulted in a much stronger position in the lucrative North American market, while reducing proportional exposure to the upstream oil & gas market.
Numis has ratcheted up its aggregate estimates, giving adjusted profits of £171m for March 2019, with EPS of 78.4p, against £166m and 75.6p in FY2018.
AVEVA (AVV) | ||||
ORD PRICE: | 2,840p | MARKET VALUE: | £ 4.58bn | |
TOUCH: | 2,838-2,842p | 12-MONTH HIGH: | 2,960p | LOW: 1,195p |
DIVIDEND YIELD: | 1.0% | PE RATIO: | 60 | |
NET ASSET VALUE: | 1,193p* | NET CASH: | £96.1m |
Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2014 | 237 | 69.0 | 78.1 | 27.0 |
2015 | 209 | 54.9 | 65.0 | 30.5 |
2016 | 201 | 29.4 | 32.0 | 36.0 |
2017 | 433 | 51.4 | 40.0 | 40.0 |
2018 | 499 | 46.9 | 47.0 | 27† |
% change | +15 | -9 | +17 | -33 |
Ex-div: | 05 Jul | |||
Payment: | 03 Aug | |||
*Includes intangible assets of £1.95bn, or 1,211p a share. †No interim dividend was paid FY2018 due to the cash return of £10.15 per share in Mar 2018. |