Growing subscription revenues has been a priority for Aveva’s (AVV) management since 2015, when it introduced its target to derive 60 per cent of sales from repeating sources. Fast forward three years, and recurring revenues jumped 42 per cent in the first six months of the year, to account for 62 per cent of the £392m total. Chief executive Craig Hayman describes the target as “a stop along the way” to increasing that proportion, but said the industrial software group would not set new targets until it had completed the full year – Aveva’s business tends to be second-half weighted. The star performer behind the growth was the monitoring and control division, thanks to its new, token-based rentals and subscription-selling model.
Top-line growth ahead of costs helped to improve the adjusted operating margin, which could be further boosted by the group’s programme to strip out £25m in annualised costs by the end of 2021 – it is expected to climb steadily to reach 30 per cent by 2022.
Aveva completed its acquisition of Maxgrip in the period, bolstering its asset-performance capabilities. Maxgrip helps users to identify and prevent the root causes behind a wide variety of equipment failures. However, the acquisition pushed net cash down to £58.6m for the period.
Broker Numis is forecasting operating profits of £217m, giving EPS of 106p in 2020, up from £184.5m and 90.9p in 2019.
| AVEVA (AVV) | ||||
| ORD PRICE: | 4,360p | MARKET VALUE: | £7.04bn | |
| TOUCH: | 4,356-4,358p | 12-MONTH HIGH: | 4,434p | LOW: 2,264p |
| DIVIDEND YIELD: | 1% | PE RATIO: | 122 | |
| NET ASSET VALUE: | 1,182p* | NET CASH: | £58.6m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 337 | -5.5 | -3.61 | 14.00 |
| 2019 | 392 | 24.0 | 11.19 | 15.50 |
| % change | +16 | - | -410 | +11 |
| Ex-div: | 9 Jan | |||
| Payment: | 7 Feb | |||
| *Includes intangible assets of £1.86bn, or 1,150p a share | ||||
