Micro Focus Annual Results

On 8 July 2015 Micro Focus announced their first annual results since the deal to acquire The Attachmate Group.  As of 30 April Micro Focus reported an increase in revenue to $835M from $433M the year before.   However net income (profit after tax) fell to $101M from $122M.

These figures include only a part year of Attachmate business but even though the results exceeded earlier indications the share price fell but was still higher at the end of July than it was at the start. As of August 2015 the consensus amongst investment analysts is that Micro Focus will out-perform the general stock market and their recommendation on shares is to buy.

Micro Focus is one of the few technology companies to pay a dividend and this was increased this year to 48.4 cents per share (a 10% increase).

Underlying sales at Attachmate were slightly down as strong demand for subscriptions failed to make up for declines of a tenth in both maintenance and licensing revenue.

The bright spot was the SUSE business, which offers open-source Linux software, servers and cloud storage. Sales there rose 11 per cent to $222m.

In the annual financial statement is the disappointing news that for the year to end of April 2015 revenue from the Novell business declined 17.3% to $233.1M. Licence sales were just $26.4M with maintenance at $199.7M and consultancy at $7M.

The NetIQ business contracted by 5.8% in comparison. The report comments that Action is being taken to improve both the product and sales execution in this area so that this level of decline should not continue into the future.

Commenting on the overall results, Kevin Loosemore, the executive Chairman said “Progress to date has already shown that this transaction (the TAG acquisition) will enable Micro Focus to deliver significantly higher returns to our shareholders over the medium-term than our base case of 15 per cent to 20 per cent per annum”.

The full report is available at:  http://www.microfocus.com/assets/micro-focus-preliminary-result_tcm6-215449.pdf

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