Aveva (AVV) flagged a tougher start to the 2021 financial year as its oil and gas clients grapple with a sharp reduction in demand following the outbreak of coronavirus pandemic. The software group expects a knock-on impact on some of its engineering procurement and construction (EPC) customers, as oil companies cut their capital expenditure budgets.
Most of its EPC clients have signed multi-year subscription contracts in the past two years, with a minimum level of spend, which should offer some shelter. Nevertheless, it has taken action to reduce costs this year by around £50m-£60m compared to its pre-Covid planned spend. This will further strengthen its balance sheet, which is already clear of debt and has net cash and treasury deposits of £115m, excluding lease liabilities.
Last year the group delivered 23 per cent growth in adjusted operating profits, which rose to £217m. It continued to progress with its transition to a software-as-a-service (SaaS) model, with recurring revenue rising by more than a quarter. Growth in its cloud business also accelerated with an increase of more than double in total contract value.
Numis forecasts operating profit of £201m and EPS of 97.6p for the year to March 2021, rising to £227m and 110p the following year.
AVEVA (AVV) | ||||
ORD PRICE: | 4,195p | MARKET VALUE: | £ 6.78bn | |
TOUCH: | 4,189-4,195p | 12-MONTH HIGH: | 5,350p | LOW: 2,636p |
DIVIDEND YIELD: | 1.1% | PE RATIO: | 98 | |
NET ASSET VALUE: | 1,202p* | NET CASH: | £45m** |
Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2016 | 201 | 29.4 | 32.0 | 36.0 |
2017 | 433 | 51.4 | 40.0 | 40.0 |
2018 | 486 | 34.5 | 39.9 | 27.0† |
2019 | 767 | 46.7 | 21.0 | 43.0 |
2020 | 834 | 92.0 | 43.0 | 44.5 |
% change | +9 | +97 | +105 | +3 |
Ex-div: | 09 Jul | |||
Payment: | 11 Aug | |||
*Includes intangible assets of £1.8bn, or 1,121p a share **Netted against lease liabilities of £70m †No interim dividend paid |