(Alliance News) - Micro Focus International PLC shares were sharply higher on Wednesday morning on news its margin had been at the upper end of management expectations in its 2020 financial year.
Shares in the FTSE 250-listed software and consultancy company jumped 30% to 352.40 pence in London on Wednesday morning.
Micro Focus said its adjusted earnings before interest, tax, depreciation, and amortisation margin for its financial year ended October 31 was approximately 39%, near the upper end of management expectations. This compares to an adjusted Ebitda margin of 40.7% in financial 2019.
Micro Focus's adjusted Ebitda excludes exceptional items such share-based compensation and foreign exchange, with the adjusted Ebitda margin representing adjusted Ebitda divided by revenue on a constant currency basis.
The company also expects to report revenue of around USD3.0 billion for financial 2020, down from USD3.35 billion in financial 2019, in line with management expectations and approximately a 10% decline on a constant currency basis from financial 2019.
As at October 31, cash is forecast to be USD700 million with net debt at USD4.2 billion. Available liquidity on that date was USD1.1 billion and, after a refinancing, its next facility maturity date is June 2024.
In the second half of Micro Focus's financial year, its revenue fell around 9% versus the second half of financial 2019, a 2 percentage points improvement in revenue trajectory compared to the first half of financial 2020.
A decision with respect to Micro Focus's final dividend is still under review, as does the carrying value of its goodwill and intangible assets.
"Set against the context of continued challenging market conditions, this performance is encouraging and combined with improvement in the underlying operational metrics gives management confidence that the actions being taken are beginning to improve the overall revenue trends," said Micro Focus.
Chief Executive Stephen Murdoch said: "We are now nine months into our three year turnaround plan for the group and whilst there remains a great deal to do I am pleased with progress in both overall operational effectiveness and in the delivery of our key strategic objectives. Cash generation and working capital management remain strong, the investments we've made are showing encouraging early results and we continue to see a clear, ongoing customer need for our solutions and approach to digital transformation.
"I am confident we are making the changes and building the foundations necessary to continue to make progress in the delivery of our plan."
By Anna Farley; annafarley@alliancenews.com
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