MCRO.L Share News (MCRO)

(Sharecast News) - Software and information technology business Micro Focus posted a drop in first-half underlying earnings on Wednesday as revenues slipped on the back of an unstable macro-economic environment.

Micro Focus said adjusted underlying earnings for the six months ended 30 April had fallen to $449.0m, down from $511.0m at the same time a year earlier, while interim revenues dipped 6.8% at constant currency to $1.3bn.

The FTSE 250-listed group did deliver an operating profit of $35.m, a marked improvement when compared to the prior year's interim loss of $155.0m, principally due to a "significant reduction" in exceptional spending and the one-off $63.0m profit on disposal of its Digital Safe unit.

Cash generated from operations also increased from $468.0m to $485.0m as the company's improved quality of earnings underpinned free cash flow growth of 36.2% year-on-year to $190.0m. The board proposed an interim dividend of $0.08.

Net debt was $3.65bn at the end of the half, down from $4.19bn at the start of the trading year and representing a net leverage ratio of 3.7 times.

Micro Focus made no change to its full-year expectations for revenue, costs, or cash and highlighted that it was working to mitigate the increased risks arising from the macro-economic environment.

Chief executive Stephen Murdoch said: "In H1 we improved free cash flow, reduced leverage, and made progress against the strategic objectives we outlined in November. I am encouraged by the strides taken to become increasingly customer-centric, building growth in key portfolios, and increasing our quality of earnings.

"We have delivered these results against an increasingly volatile market backdrop with customer demand to date remaining robust, demonstrating the mission-critical nature of our solutions."

As of 0845 BST, Micro Focus shares had slumped 13.31% to 309.93p.

Reporting by Iain Gilbert at Sharecast.com