Industrial software giant Aveva Group has said it predicts foreign exchange headwinds and the slippage of contracts to cause first-half revenues to be significantly lower.
The Cambridge-based company believes revenues will end up at around £333million in the six months to the end of September against £391million in the same period last year.
Shares fell 5.3 per cent to £45.23 after it revealed results were affected by two medium-sized subscription deals that were expected in the second quarter now sliding into the third quarter and harmful foreign exchange headwinds.
Aveva Group: ‘Notwithstanding Covid-19 related disruption, there has been solid demand for AVEVA’s software due to its ability to drive efficiency, flexibility and sustainability’
But Aveva still said that it managed to perform ‘creditably’ and has not altered its outlook for the 2021 financial year.
It wrote: ‘Notwithstanding Covid-19 related disruption, there has been solid demand for AVEVA’s software due to its ability to drive efficiency, flexibility and sustainability for customers across a wide range of industries.’
Orders and revenue growth for the remainder of the year are expected to be strong though thanks to contract slippage, as well as a higher level of renewed contracts, including large-scale global accounts.
In a separate announcement, the FTSE 100 firm revealed it had completed the syndication of a £250million revolving credit facility concerning its planned purchase of OSIsoft with numerous banks such as HSBC and J.P. Morgan.
Aveva is anticipated to become the UK’s largest software company after agreeing two months ago to buy California-based OSIsoft for £3.8billion
Another $900million loan that was due to be provided by the banks will instead come straight from Schneider Electric, which controls around 60 per cent of Aveva Group.
Aveva is anticipated to become the UK’s largest software company after agreeing two months ago to buy California-based OSIsoft for £3.8billion, one of the largest ever deals struck by a British technology firm.
It hopes to take advantage of the increasing digitalisation of the software industry that has been accelerated by the Covid-19 pandemic and the rise of remote working.
OSIsoft provides data services to industries ranging from petrochemicals to mining, oil and gas, and pharmaceuticals. Aveva has stated that its acquisition would enable them to expand both its customer base and its technological capabilities.
SoftBank is expected to receive a considerable windfall of about £1.5billion from Aveva’s purchase of OSIsoft, in which it holds a 45 per cent stake
The transaction would give the Cambridge-based group an estimated value of £10billion when it is completed, making it worth about £2billion more than accountancy software business Sage.
Under the terms of the sale, Schneider Electric’s stake in Aveva is set to go down from 60 per cent to 57 per cent while OSIsoft founder Dr Patrick Kennedy will take a 4 per cent share.
SoftBank meanwhile will receive a considerable windfall of about £1.5billion owing to its 45 per cent stake in OSIsoft, which it bought three years ago from venture capitalists.
George O’Connor of investment firm Stifel described the deal as ‘box perfect for AVEVA. OSIsoft is a global leader in real-time industrial data software and services where its PI System is the system of record for customers for data capture, storage, analysis and sharing of real-time industrial sensor-based data across all operations.’