Almost a year since falling sales prompted a catastrophic drop in Micro Focus's (MCRO) share price, revenues at the software giant are still descending. However, turnover was down by just 5.3 per cent in the year to October, comfortably below the 6 to 9 per cent range previously flagged by management.
The acquisition of Hewlett Packard's software arm prompted the decision to push the year-end date from April to October to better align the two businesses. This makes year-on-year comparisons difficult, but continuing operations look to be doing well. Cash profits are up 8.6 per cent to $1.41bn (£1.1bn), thanks in part to a 5.1 percentage point increase in margins.
Management is still keen on returning money to shareholders. The annual dividend is up 15 per cent, and the share buyback has been extended by $110m, bringing the total spent to $510m. It will now last until 28 March. The software specialist also announced the $2.54bn sale of SUSE, its open-source software business, in July last year. The disposal is expected to complete by the end of March, with proceeds paid out to shareholders.
Bloomberg consensus forecasts are for adjusted earnings per share of 210p for the year to October 2019 (206p in FY2018).
| MICRO FOCUS (MCRO) | ||||
| ORD PRICE: | 1,852p | MARKET VALUE: | £7.7bn | |
| TOUCH: | 1,852-1,853.5p | 12-MONTH HIGH: | 2,127p | LOW: 782p |
| DIVIDEND YIELD: | 6.4% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 1,880¢* | NET DEBT: | 55% | |
| Year to 30 Apr | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2014 | 0.43 | 148 | 84.8 | 44.00 |
| 2015 | 0.83 | 91 | 58.5 | 48.40 |
| 2016 | 1.25 | 195 | 74.5 | 66.68 |
| 2017 (Restated) | 1.08 | 132 | 68.9 | 88.06 |
| 18 months to | Turnover | Pre-tax | Earnings | Dividend |
| 31 Oct | ($bn) | profit ($m) | per share (¢) | per share (¢) |
| 2018 | 4.75 | 34.1 | 202 | 151.26 |
| % change | +341 | -74 | +193 | +72 |
| Ex-div: | 28 Feb | |||
| Payment: | 5 Apr | |||
| *Includes intangible assets of $13.4bn, or 3,241¢ a share £1=$1.28 | ||||
