Aveva Group PLC on Wednesday said it swung to an annual loss on one-off costs and cautioned on slower growth going forward as the industrial software provider is faced with pressure from wage inflation.

Aveva shares were 0.8% lower at 2,212.00 pence each in London on Wednesday morning.

For the financial year that ended March 31, revenue surged 45% to £1.19 billion from £820.4 million the year before, but Aveva swung to a pretax loss of £18.6 million from a £34.2 million profit.

Aveva posted total amortisation charges of £226.1 million, more than doubled from £95.7 million. It explained £147.6 million of financial 2022’s amortisation charges stemmed from ‘intangibles acquired through the OSIsoft acquisition’. Aveva sealed the £5.0 billion buy of the data management software provider back in March 2021.

It also posted a £7.3 million hit from impairments at ‘Russian-based counterparties’. However, it noted the ‘war in Ukraine did not have a material impact on revenue in the financial year’.

Annual adjusted earnings before interest and tax was £365.1 million, up from £354.7 million last year.

Aveva declared a final dividend of 24.5 pence per share, up 4.3% from 23.5p paid out in financial 2021. Its total payout for the year amounted to 37.5p per share, up 4.5% from 35.9p.

Chief Executive Officer Peter Herweck said: ‘Aveva delivered a solid set of results in FY22 as the business recovered following disruption caused by the Covid pandemic. During the year we made good progress with the integration of OSIsoft and have recently launched integrated products that will drive further revenue synergies. I am excited about the opportunities ahead of us as Aveva enables the connection and digitalisation of the industrial world. We are focused on accelerating growth in annualised recurring revenue and expect Aveva’s growth rate on this metric to significantly improve.’

Annualised recurring revenue grew 10% to £768.7 million in the financial year. The measure makes it easier to ‘track recurring revenue progression’ as it removes timing differences caused by revenue recognition standards, Aveva explained.

Looking ahead, Aveva said adjusted Ebit for financial 2023 will be hurt by some additional costs. These include wage inflation due to ‘very competitive’ software labour market conditions.

Aveva said revenue growth is expected to be lower in financial 2023 than in 2022 on an organic constant currency basis, and its adjusted Ebit margin is expected to narrow, before resuming growth in 2024.

The company added that some of its key end markets, such as energy, ‘have recovered from the Covid crisis’. Roughly a third of its revenue is derived from the energy sector, oil and gas firms in particular.

‘While the additional investment in cloud was planned, the board has decided to pull this investment forward to accelerate Aveva’s transition and the impact of this acceleration in cloud will result in around £20 million of additional costs in the current financial year,’ the Cambridge, England-based firm said.

Aveva is 59% owned by France’s Schneider Electric SE, whose shares were down 1.2% at €128.28 in Paris early Wednesday.

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