Micro Focus gives $134m back to shareholders

Micro Focus International, the business software company, has seen revenues on a constant currency basis drop 2.6% in the six months to the end of October.

The firm has had a tough year during which maintenance fees and consulting revenues have fallen. However, the company claims revenues at $219.1m are still ahead of market expectations, as is its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) figure of $89.2m (8.5% ahead of the equivalent period of 2010).

The company claims incentivising the Presidents of its three business regions (North America, International and Asia Pacific) on the basis of adjusted EBITDA is beginning to show results.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The big news for shareholders is that Micro Focus intends to return around $134.4m in cash by way of a B and C share scheme. Shareholders will have a choice of receiving the money in the form of direct income or in capital. The offer amounts to 45p per share.

Micro Focus is also increasing its interim dividend by 13.9% to 8.2 cents per share.

Net debt has grown at Micro Focus from $14.9m on 30 April to $47.6m by the end of October folowing a share buy back programme of $62.5m and final dividend of $30.9m. The firm has, however, agreed new banking facilites to 2014 worth $275m.

Micro Focus tried to sell itself between April and August this year but received no firm offers. The company makes clear however that all options to achieve shareholder value will be considered.

Commenting on the results Kevin Loosemore, Micro Focus' executive chairman acknowledges "poor execution" in the previous financial year but says now:

"We have established a clear vision for the company, re-organised Product Management and Development and are working to improved Sales Execution...This is an important start and we are pleased with progress, whilst at the same time recognising that these changes will take time to flow through into further improvement in results."

BS