News Column

Micro Focus In New Shareholder Return As It Retains Guidance

August 14, 2014

Steve McGrath

LONDON (Alliance News) - Software company Micro Focus International PLC said its underlying profit rose in its fiscal first quarter even though revenue was flat, but it maintained its guidance for low-single-digit revenue growth in the medium term and said it plans to return a further 60 pence a share in cash, or GBP84 million, to shareholders.

In its last financial year, Micro Focus had returned 60 pence a share to its shareholders on top of a 10.0% rise in its total dividend for that year.

The scheme it uses is accompanied by a proportional share consolidation to maintain broad comparability of the share price and return per share before and after the return of value. However, it is having to extend its revolving credit facility to make the latest payout.

"In order to facilitate the return of value, Micro Focus intends to utilise the accordion within its existing USD420 million revolving credit facility that enables the group to increase the RCF to USD520 million. Initial conversations with the six banks in the RCF have been very positive and it is anticipated that the USD100 million accordion will be oversubscribed," it said in a statement.

It hopes to make the payout in November, once it has been approved by shareholders and the talks on the revolving credit facility extension are completed.

In a statement, the company said revenue in the three months to July 31 was flat as growth in maintenance revenue balanced a decline in licence revenue. However, it said its underlying adjusted earnings before interest, tax, depreciation and amortisation was up on the year. It didn't provide any figures.

"After a strong close to (fiscal 2014), Licence revenues in International remained strong, whilst there was a small decline in Asia Pacific & Japan against a strong comparative period and the sales force restructuring in North America caused a drag in the quarter," the company said.

It kept its outlook unchanged, saying it remains confident it can achieve low-single-digit revenue growth in the medium term, allowing it to continue to make big returns to shareholders.

Micro Focus also said cash generation remained strong in the first quarter of its financial year, meaning debt fell to USD232.9 million on July 31, from USD261.0 million at the end of April.

Its shares were up 0.8% at 870.78 pence early Thursday.

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Source: Alliance News

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