AVV.L Share News (AVV)

LONDON (Alliance News) - Aveva Group PLC Monday reiterated its full-year expectations, despite seeing a "disappointing" first half performance, as it saw pretax profit fall in the half year to end September on lower revenues.

The engineering data and design IT system provider company upped its interim dividend to 5.5 pence per share from 5.0 pence a year before.

AVEVA posted a pretax profit of GBP14.2 million, down from GBP27.3 million a year before, as revenue fell 21% to GBP85.9 million from GBP108.5 million. The company said its rental licence fee revenue had been reduced by around GBP13 million due to the phasing of key rental contracts, rental contracts not being renewed in Brazil, and lower levels of activity in the Asia Pacific region.

Additionally, initial licence fees dropped 27% due to weakness in Asia Pacific and the Americas offsetting growth in China, India and parts of Europe, and Services revenue fell 9%.

In Brazil, the company has been hampered by engineering contracts not currently being awarded new projects by the state-owned oil company Petrobras.

The company also was hit by the strength of sterling against the dollar, euro, Brazilian real, Norwegian kroner and yen. On a constant currency basis revenue fell just 15%.

The company said it was continuing to monitor the situation in Russia carefully in regards to sanctions and how that might impact its business.

Aveva said that despite the disappointing performance, the "underlying fundamentals of the business have not changed, and there has been no change to the business model." It is maintaining a "tight" control on operating costs.

Total costs fell to GBP64.5 million from GBP68.9 million, as the company moved projects in house, reduced bonuses for its research and development staff, and rationalised staff, although this was partly offset by investment in headcount and marketing, as well as in the company's information systems.

Aveva had originally planned to increase its headcount in the second half of the year, but said that in light of its performance in the first half and lower activity, this has been limited to sales and marketing. It expects operating expenses to be around GBP10 million lower than originally planned in the second half due to lower sales commissions, bonuses, and the reduction of other non-payroll costs.

"Despite the macro-economic environment, there are a number of steps we are pro-actively taking to ensure that we remain focused on long-term growth in revenue and profitability," said Chief Executive Richard Longdon in a statement.

By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews

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