London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Sanity from Lee1235.
So for me I read the report again and a good takeaway is that the digital safe business had a big impact on revenue reduction. It says that SAAS overall would be as small increase if this was excluded. By the may update that's gone. Also debt will likely fall under 3.5 billion this year. The report mentions weaker sales in past impact maintenance. Sales looks to be on the up for new licences so I expect we start seeing some improvement.
I don't see the panic and today is a knee jerk reaction without people understanding the data amd prospects.
People think the amortisation of intangibles is a problem but it's just spreadsheet **** with no impact on cash. That's why the statutory loss means bugger all
Lol, they've pumped employee trust money into it right before results perfectly knowing what financial year will end up with loss and expected market drop.. Surely whoever manages it are receiving a lot of warm cheers from MCRO pension benefit scheme participants.
I earnt 6.5% divi on my original investment. That is tax free real income. As long as 500m FCF and stable revenue by 2023 we are good to grow the SP north of £10. Long way to go but im not selling.
And so it will. To sell now means throwing in the towel. Let's face it: The year ending Oct 2021 was still a challenging year for any company.... So the ship needs another year to turn for good....so what. Collect a nice divi in the mean time and in ca 1 years time see 550-600p. So why why why bail out now?
During a day trade lots of buys and also a large buy at 419 for £1.36m (not UT) !
People taking advantage of a slip in sp....
Best of luck all, I ll be holding for a decent profit patience will be rewarded imo
Sign of confidence re future cash generation?
Micro Focus improves cash generation, but debt issues predominate
Renegotiation of debt and strong cash generation has enabled management to improve the dividend
February 8, 2022
By Arthur Sants
Cash conversion ratio falls because of working capital
Revenue forecast to avert decline next year
Software and consultancy business Micro Focus (MCRO) is still fighting to get to grips with its disastrous purchase of Hewlett Packard's enterprise software business by stripping out costs. This leaves it in an interesting spot to handle interest rate rises even as it maintains healthy dividends and strong cash generation, and even with a massive debt pile – an unholy balancing act.
MCRO:LSE
Micro Focus International PLC
1mth
Today change
-12.49%Price (GBP)
400.00
Adjusted cash profits (Ebitda) were down 12 per cent to £1bn. However, the statutory operating loss narrowed appreciably due to a big reduction in depreciation, amortisation and exceptional item costs. Excluding these exceptional charges, adjusted free cash flow was $292mn (£216mn). This was less than half of last year due to one-off tax payments and working capital outflows, some of which were driven by timing differences in payment of receivables.
Cash conversion was down from 113 per cent to 87.1 per cent. However, management is expecting an adjusted free cash flow run rate of approximately $500m on an annual basis through 2023, with a flat revenue trajectory.
The biggest concern is the $4.2bn net debt burden (excluding lease liabilities). Micro Focus has managed to extend the average maturity of the debt pile to 3.6 years from 2.7 years, and has used this breathing space to increase the final dividend to 20.3¢ from 15.5¢ last year.
House broker Numis has forecast net debt to fall to $3.59bn by 2023 and the expects free-cash-flow yield to rise to an impressive 15.3 per cent by then. This is progress of sorts, but the company may find it harder to meet its debt commitments given the probable trajectory of interest rates. However, with the shares trading at a 36 per cent discount to net assets and improved cash generation, we move (gingerly) to hold.
CEO, not CFO.
What is it that you want a new CFO to do Dessy? Murdoch has told us what he's going to do and he seems to be doing pretty much exactly what's promised. Do you want something different ? (What?) Or do you want some theatre, spin or smoke & mirrors? Or do you want a company returned to a position where it delivers $0.5bn+ pa free cash flow and a market cap which reflects a reasonable multiple of that?
Margin should improve in 2022 because of exceptionals. 38-39% maybe. This should boost the dividend also to 3x cents per share. I was under the impression that amortization was fixed due to accounting standards over 10 years in the UK? Sadly the SP is not in our control for a while whilst results are less than stellar. Cant see the call on the 10th being much use at the moment either, just parroting what they said 2 years ago.
Turnaround plays like Micro need patiences ... lots and lots of patience.
Eons ago I invested in ARM and it went sideways for about 6yrs before I gave up on this "hot tech stock with unlimited prospects" ... then it went up about 20x in 2-3yrs whilst I watched from the sidelines.
Right now Micro is capable of generating recurring $3bn revenue at 35% gross margin and really should be able to generate 10-20% Net Profit, but because of all the acquisitions the results are almost entirely dependent on the amortisation of Intangibles and the cost of servicing debt. The refinancings just announced have extended the debt maturities which is great, but they also show just what sort of junk the markets think Micro is ... financing for 5yrs at 5.5-6% including the hedges is pretty awful but it does mean we know what the costs are with some certainty. The amortisations is the real guessing game and as the Notes state they can vary this annual charge by +/-$160mm simply by assuming the future life of these "assets" increases/decreases by 1yr. However in terms of cash generation this is easily capable of paying out 5% dividend yield and it seems to be the chances of it going bust over the next 2-3yrs are very low , whilst the chances of returning to above 750p are quite good.
Limited downside with 5% yield and potential for 50% p.a capital growth over medium term seems worth continuing to hold
Thanks yoda
Need change at CEO level full stop! the buck stops there. Shareholder revolt? or an activist shareholder is needed to through some weight about and improve shareholder value.
A man goes into a bookies and places a bet. The race is lost along with his money.
With MCRO every day is a new race and one day you may yet win. A paper loss is just that and never needs released unless you are on leverage then ouch.
If you have £280k to invest in the company in the first place, then a temporary trim to £240k is not worth a worry to you when people cannot paid for heating and food.
Count your blessings and relax. It is is too hot, take the hit and regroup.
It was at a low of 327 now 393 so be grateful for small mercies.
M.
GLA
The big news here is that there is no News. Next update will show the reduction in debt. Less declines in some areas and better financial performance due to exceptional costs. Thats the best we got right now. AWS is looking like a damp squib until end of 2022 when they said its likely to get motoring. 1 more year of sideways movement but This stock adds 11k Gross to my annual income pre tax so its not all bad.
Everyone is yapping now how bad it is but let’s see what you have to say when we’ll start ripping aws partnerships deal.
The results were expected from November so we new what’s coming.
I have not sold any of my shares and I believe FY 22 will show “better than expected” results. Waiting time and patience will be rewarded imo.
No guidance whatsoever and it’s guidance that charts the path of a share, unless it was 2 year further losses and flat line with 1-2% thereafter.
This statement was in play prior to the aws partnership. There is no mention again about revenue stream from this, maybe there is none?
Dividend nice but would rather have not and pay down some debt. Capital erosion dwarfs dividend.
Perhaps Lee should be out new CEO. Everyone is dumb, stupid or worse when questioning anything but how good micro is. At least he speaks the company up which is way more than “Steven”. He is totally hopeless. Down £40k today. My biggest single day hit ever.
Who cares if I'm down? I don't and I'm confident in my investments. Plus I'm not stupid like jw crying over day to day sp noise. I haven't sold any shares in 2 years and I'm averaging 30 per cent increase yearly. Stop been a ***** thinking I care that it's down
The divi should grow from here also . Its still very cheap but this isnt the result to provide a catalyst for SP increase. Downside is that there is nothing reported now till July! Unless a trading update comes in May? not seen it on the calendar though
And that lovely man Lee is big time down today!
Twice in 6 months!!
Stay diversified and you can afford to wait for the recovery. This has never been and never will be a high growth business. It has a history of acquiring mostly mid to late life cycle software products and squeezing profit out of them. The city doesn't expect it to be knocking the bedroom lights out.
We all knew what was going to happen today, it happens every results day, there's probably some element of a self fulfilling expectation.
In a years time Rodney.....
Stop losses kick in and won't be long down to 3.50.
So happy I sold most of these at 450, it would seem there is a lot of risk at anything over 400.
Hopeless CEO, monotone B------t.