Micro Focus International up despite lower sales

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Micro Focus International up despite lower sales
Master Investor Magazine

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FTSE 100 software group Micro Focus International (LON:MCRO) saw its shares climb by 12.03% to 1,700p (as of 10:50 GMT) despite revenues for the 18 months to 31st October dropping by 5.3%. This was a smaller decrease than guidance had suggested and adjusted EBITDA margins were 377 basis points higher than in the prior period.

Chief executive officer Steven Murdoch commented: “We report a solid financial performance for our year ended 31 October 2018 with pro-forma Adjusted EBITDA increasing by 9.2% to $1.5bn and a slowing of pro forma constant currency revenue decline to 5.3% compared to guidance of a decline of between 6% and 9%.

“The Micro Focus operating model delivers substantial cash returns to shareholders. In the last 18 months, total dividends per share were 151.26 cents in addition to $400m of share buy-backs. We also intend to return to shareholders the net proceeds from the sale of SUSE after tax, transaction costs and any required debt repayment.

“Looking forward, we expect further moderation of revenue decline and consequently we are guiding constant currency revenue for the continuing MFPP business for the 12 months to 31 October 2019 to be between minus 4% to minus 6% compared to a decline of 7.1% for the 12 months ending 31 October 2018. We continue to target a Net Debt to Adjusted EBITDA multiple of 2.7 times and maintain a dividend policy that is twice covered by adjusted earnings.

“I am pleased with the financial and operational progress we have made over recent months as we continue to build a more dynamic environment where execution is faster, operations simpler and people more accountable, all of which is focused on delivering value to customers and shareholders for the long-term“.

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