- Revenue decline moderated
- Improved cash conversion has prompted management to reinstate dividend
Micro Focus (MCRO) has made some good progress in the first year of its three-year turnaround plan, following the botched integration of the HPE software business that it bought back in 2017. The company’s revenue decline moderated from 11 per cent in the first half of last year to 9 per cent in the second, dropping overall by around a tenth and slightly beating consensus expectations.
Meanwhile, adjusted cash profits of $1.2bn (£876m) came in towards the upper end of expectations, helped by tighter cost controls. However, a goodwill impairment charge of $2.8bn, brought about by changes in trading and the overall environment, compared with initial projections at the time of the HPE Software acquisition, pushed it firmly into the red.
But an improved cash conversion rate of 113 per cent and no-term loan maturities until June 2024, following the refinancing of a $1.4bn term loan, meant that management felt confident enough to reinstate the dividend.
| MICRO FOCUS (MCRO) | ||||
| ORD PRICE: | 514p | MARKET VALUE: | £ 1.72bn | |
| TOUCH: | 513.6-514p | 12-MONTH HIGH: | 821p | LOW: 212p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | NA | |
| NET ASSET VALUE: | 960¢* | NET DEBT: | 129% | |
| Year to 30 Apr | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
| 2016 | 1.25 | 0.20 | 74.5 | 66.68 |
| 2017 | 1.08 | 0.13 | 68.9 | 88.06 |
| Year to 31 Oct | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 | 36.8 | -0.79 | 143 | 100.8 |
| 2019 | 3.35 | -0.34 | -4.87 | nil |
| 2020 | 3.00 | -2.94 | -886 | 15.5 |
| % change | -10 | - | - | - |
| Ex-div: | 11 Mar | |||
| Payment: | 15 Apr | |||
| *Includes intangible assets of $9.2bn or 2,752¢ a share £1=$1.37 | ||||
