Chairman's statement
Chairman
- Revenue for the year amounted to £148.3 million (2009 – £164.0 million).
- The Group's balance sheet continued to strengthen.
- The Board is recommending a final dividend of 13.9 pence.
- Our staff remained highly focused and professional and have contributed to our solid performance during the year.
I am pleased to report on another set of solid results for AVEVA for the year ended 31 March 2010. Good levels of revenue and profits have been achieved in difficult world economic conditions.
Key financials
Revenue for the year amounted to £148.3 million (2009 – £164.0 million). The performance across all our regions was impacted by recent economic uncertainty and, as anticipated, this resulted in a reduction in new licence sales which was particularly pronounced in the Marine market in Asia. However, recurring revenue increased by 9% to £102.7 million (2009 – £94.2 million) and this, coupled with a fall in initial fees to £35.1 million (2009 – £57.7 million), has meant that recurring revenue as a proportion of total revenue increased to 69% (2009 – 57%).
Following the restructuring programme undertaken in the early part of the year, the Group has remained well positioned to respond to market conditions whilst maintaining the appropriate level of investment for the longer term. As part of the restructuring, the Group achieved annualised cost savings of approximately £5.0 million which helped to maintain solid operating margins that the Group has historically achieved. Operating margins were 33% for the year (2009 – 35%).
Adjusted profit before tax, amortisation, share-based payments, restructuring costs and fair value of forward foreign exchange contracts amounted to £50.7 million (2009 – £66.4 million). Adjusted basic earnings per share amounted to 50.92 pence (2009 – 69.99 pence), a decrease of 27%. Profit before tax amounted to £49.6 million (2009 – £59.2 million) and basic earnings per share were 49.36 pence (2009 – 62.27 pence).
The Group's balance sheet continued to strengthen during the period as the Group's cash, including treasury deposits which comprise bank deposits with a maturity date of up to six months, increased by 19% to £149.7 million (2009 – £126.2 million), once again reflecting the strong conversion of profits into cash flow.
Dividend
Following a number of years of high levels of profitability and cash generation the Board has reviewed the existing level of dividend payout and has decided to increase it from what it now considers to be a relatively low base. The Board is therefore recommending a final dividend of 13.9 pence (2009 – 6.5 pence). Combined with the interim dividend of 3.0 pence (2009 – 2.86 pence) this gives a full year dividend of 16.9 pence (2009 – 9.36 pence), an increase of 81%. The rebased dividend better reflects the established nature of our business and the strength and stability of our cash flows without impinging materially on our ability to continue to invest and grow the business.
Subject to approval at the Annual General Meeting, the final dividend will be paid on 30 July 2010 to shareholders on the register on 25 June 2010.
People
Our people remain the principal foundation of our success and this continues to be one of our market differentiators. Our staff are highly skilled and dedicated to keeping the AVEVA brand synonymous with quality and delivery. The past twelve months have presented a number of challenges for the Group and its employees. The global economic slowdown and the subsequent restructuring programme created both business and personal challenges for many of our staff. Throughout this period our staff remained highly focused and professional and have contributed to our solid performance during the year, whilst building a strong base from which we can continue to both grow the business and maintain our first class reputation. On behalf of the Board I wish to thank all of our people for their hard work, commitment and contribution over this year to the success of the Group.
As announced earlier in May 2010, after eleven years of contribution to the Group, David Mann will retire from his role as Non-Executive Director of the Company at the Annual General Meeting in July of this year. I would like to take this opportunity to thank David for both his personal contribution and his help in developing the Group and the Board over his tenure.
I would also like to welcome Hervé Couturier who joined the Board in April 2010. Hervé's experience, in particular at SAP AG, will no doubt prove invaluable as AVEVA continues to develop its products and solutions for the markets in which it operates.
Outlook
Despite the challenges of 2009, we have continued with the development of the business through product innovation and securing growth in new markets such as the CIS and Brazil. We see growth opportunities in each of our vertical end markets.
The key drivers for growth remain in the Power and Oil and Gas markets where projects in new regions and more complex designs are likely to see new customer wins and the expansion of existing relationships. Although the traditional Marine market looks set to be slow for some time, emerging countries that are investing to develop local capacity afford some opportunities, as does offering new product functionality to existing customers. AVEVA NET remains a strong focus for the business as a growing customer base accepts the technology solution for managing the large volumes of data in both new build and brownfield assets.
Ongoing investments in products and delivery capabilities across AVEVA's entire portfolio will continue but added emphasis on AVEVA NET delivery capacity will help to accelerate our position within the market and capitalise on the growing opportunity.
The Group's market leading technologies and a global sales infrastructure capable of benefiting from both improving global and local trends, mean that AVEVA remains well placed to continue to build on its success over recent years.
Nick Prest
Chairman
26 May 2010
“Good levels of revenue and profits have been achieved in difficult world economic conditions.”