Aveva finds new business hard to come by

(By Philip Carnelley, 12 Nov 09, 08:15) Aveva, the CAD/CAM software company, has reported that its half year revenues fell 7% to £69.9m, while PBT fell from 20% £29.2m to £23.3m. Still, a PBT margin of 33% is pretty good in the present climate. The drop in sales is not unexpected: as we reported back in May (Aveva shines – but storm clouds loom) a general funding squeeze in its core areas of oil, gas, power and marine is inhibiting its clients’ major capex projects. The biggest difficulties were in marine in Asia Pacific, and in North America. The company is increasingly reliant on recurring revenues – now 69% of the total. This is in part because of a drop in license fee sales, but also due to an increased number of customers adopting a rental purchase model - with lower payments in the first couple of years, likely paid from opex not capex, but higher over the longer term. Aveva restructured operations during the half and so profitability should rise going forward. Meanwhile the still-healthy margins helped a rise in net cash from £101m to £134m.