Micro Focus shares ticked up around 5 per cent as investors reacted positively to news that the legacy computer systems specialist had raised its dividend distribution ratio from 40 per cent to 50 per cent of underlying post-tax earnings. The enhanced payout policy was made possible by a continued emphasis on strong cash generation, and marks "an impressive turnaround in the business", according to analysts at Canaccord Genuity.
Full-year results were broadly in line with expectations, although net debt shot up from $13m to $113m (£72m), partly as a result of $62.5m spent on share buybacks. Improved operational savings allowed Micro Focus to increase underlying pre-tax profits by more than a quarter to $149m despite static revenues. On a constant currency basis, licence revenues increased by 5.3 per cent to $177m, although this was largely offset by a $7.3m fall in maintenance receipts.
For the financial year to April 2013, guidance is for constant currency revenue growth in the range of 1 per cent to -3 per cent, although management is confident of delivering returns above the company's cost of capital.
Canaccord Genuity expects a 12.5 per cent rise in EPS to 82¢.
| MICRO FOCUS INTERNATIONAL (MCRO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 475p | MARKET VALUE: | £777m | |
| TOUCH: | 474-475p | 12-MONTH HIGH: | 482p | LOW: 230p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 72¢* | NET DEBT: | 96% | |
| Year to 30 Apr | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2008 | 228 | 77 | 27.7 | 13.0 |
| 2009 | 275 | 91 | 32.9 | 15.6 |
| 2010 | 433 | 98 | 37.5 | 21.8 |
| 2011 | 436 | 115 | 47.0 | 23.4 |
| 2012 | 435 | 149 | 65.8 | 31.6 |
| % change | - | +30 | +40 | +35 |
Ex-div: 29 Aug Payment: 2 Oct £1 = $1.57 *Includes intangible assets of $372m, or 227¢ a share | ||||
