Falling first-half licensing revenues at Micro Focus International (MCRO) precipitated a 3 per cent fall in its share price on the day the figures appeared. But the focus for investors in the company - which modernises and maintains computer systems for companies such as Barclays - is likely to be the successful integration of Attachmate, acquired in November.
Licensing sales fell 8 per cent to about $77m (£49m), a sharp contrast to 8.5 per cent growth in the year to end-April. That reflected weak demand in Asia Pacific and Japan for the group's COBOL products, which allow programmers to create and deploy business applications across platforms such as Windows in the cloud. However, higher maintenance and consultancy sales meant total constant-currency adjusted cash profit grew 17 per cent to $103m.
These results exclude the $2.5bn purchase of US peer Attachmate, which reported $957m of revenues in the year to end-March and adjusted cash profit of $313m. The deal strengthens Micro Focus's global presence and management thinks it could significantly boost annual returns to shareholders. The group has already returned £533m through share buy-backs, ordinary dividends and other returns of value since March 2011. However, one-off returns to shareholders may be suspended until net debt hits 2.5 times adjusted cash profits.
Broker Panmure Gordon expects full-year pre-tax profit of $271m, giving EPS of 113¢, rising to $411m and 117¢, with Attachmate's contribution, in 2016 ($180m and 98¢ in 2013).
MICRO FOCUS INTERNATIONAL (MCRO) | ||||
---|---|---|---|---|
ORD PRICE: | 1,114p | MARKET VALUE: | £2.41bn | |
TOUCH: | 1,105-1,114p | 12-MONTH HIGH: | 1,169p | LOW: 728p |
DIVIDEND YIELD: | 2.6% | PE RATIO: | 21 | |
NET ASSET VALUE: | * | NET DEBT: | $259m |
Half-year to 31 Oct | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
---|---|---|---|---|
2013 | 208 | 70.5 | 38.9 | 14.0 |
2014 | 208 | 57.1 | 36.2 | 15.4 |
% change | - | -19 | -7 | +10 |
Ex-div: 4 Jan Payment: 23 Jan *Negative equity shareholders' funds £1=$1.57 |