Micro Focus shareholders to get cash return

Shareholders of software group Micro Focus are in for a windfall of 50p per share after the company proposed a cash return and share consolidation on Thursday.

The cash return, which will cost Micro Focus $130m in total, is subject to shareholder approval and will be implemented by way of a B and C share scheme.

"The return of value will be accompanied by a proportional share consolidation to maintain broad comparability of the share price and return per share of the ordinary shares before and after the return of value," the firm said.

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

It will be funded from existing debt facilities. Net debt has fallen from $113.2m to $90.4m since the end of April "demonstrating further good operational cash generation during the period".

The group also said that its financial results in the fiscal year to date (since April 30th) have been in line with expectations. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in the three months to July 31st should be flat on last year on a constant currency basis.

Meanwhile, constant currency revenues have followed the pattern expected with underlying growth in licence fees and declines in maintenance and consulting.

As announced in June with its full-year results, Micro Focus expects revenue growth for the year to April 2013 to be anywhere between -3% and +1% on a constant currency basis.

Weakness in the euro:dollar exchange rate has dented revenues so far this year, the group said. If exchange rates were to remain at the level experienced for the rest of the year then last year's revenues on a constant currency basis would fall from $434.8m to $422.2m.