Micro Focus International plc (LON:MCRO), (NYSE:MFGP), the international software product group, has announced unaudited interim results for the six months ended 30 April 2020.
· Revenue performance consistent with the guidance given at the time of our full year results on 4 February 2020 and our COVID-19 update of 18 March 2020. COVID-19 led to delays in buying behaviours with customers in April 2020 and reduced revenue by at least 2% period on period.
· Impact of COVID-19 largely mitigated at Adjusted EBITDA1 level due to close management of the cost base. Adjusted EBITDA margin1 (after adopting IFRS 16) of 38.0% (30 April 2019: 39.9% CCY).
· The Group recorded a goodwill impairment charge of $922.2m in the period (30 April 2019: $nil) attributable to the increased economic uncertainty as a result of COVID-19, which has led to an increase in the pre-tax discount rate and expected disruption to new sales activity and timing pressure on renewals.
· As a result, the Group generated a statutory operating loss from continuing operations of $906.7m (30 April 2019: Operating profit of $32.6m).
· The Group continues to make progress against our strategic initiatives to improve operational efficiency and simplification, as well as to strengthen our product alignment with customer needs. Accordingly, we continue to make incremental investments in our operations as far as possible in light of COVID-19.
· Successful refinancing of $1.4bn Term Loan in May 2020. The Group has no term loan maturities until June 2024.
· The Group had cash and cash equivalents of $808.1m as at 30 April 2020 (31 October 2019: $355.7m), which reflects $633.1m of Operating cash1 and $175.0m of RCF drawn as a precautionary measure. The Group’s available liquidity totals $1.1bn.
· Strong cash performance, with Adjusted Cash Conversion1 of 131.5% (30 April 2019: 115.1%) and free cash flow1 of $304.9m in the six months ended 30 April 2020 (30 April 2019: $419.5m).
· Cash generated from operating activities of $560.4m for the six months ended 30 April 2020 (30 April 2019: $622.6m).
The table below shows the key results for the Group for the six months ended 30 April 2020:
|Results at a glance||Six monthsended30 April 2020 (unaudited)||Six monthsended30 April 2019(unaudited)2||Growth/(Decline)%|
|Alternative performance measures from continuing operations1|
|Revenue (versus CCY comparatives)||$1,454.2m||$1,638.6m||(11.3)%|
|Adjusted EBITDA (versus CCY comparatives)||$552.2m||$653.2m||(15.5)%|
|% Adjusted EBITDA margin (versus CCY comparatives)||38.0%||39.9%||(1.9) ppt|
|Adjusted Diluted Earnings per Share (“EPS”) – continuing operations||72.10c||85.53c||(15.7)%|
|Net Debt/Adjusted Net Debt||$4,312.0m||$3,807.5m||(13.3)%|
|Net Debt(Adjusted Net Debt)/ Adjusted EBITDA ratio||3.4 times||2.7 times|
|Revenue – continuing operations||$1,454.2m||$1,657.1m||(12.2)%|
|Operating (loss)/profit – continuing operations||$(906.7)m||$32.6m||(2,881.3)%|
|(Loss)/profit for the period||$(1,032.0)m||$1,397.1m||(173.9)%|
|Basic EPS – continuing operations||(308.40)c||(18.79)c||(1,541.3)%|
|Diluted EPS – continuing operations||(308.40)c||(18.79)c||(1,541.3)%|
1 The definition and reconciliations of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Diluted EPS, Operating cash, Net Debt, Adjusted Net Debt, Adjusted Cash Conversion, Free Cash Flow and Constant Currency (“CCY”) are in the “Alternative Performance Measures” section of this Interim Statement.
2 On 1 November 2019, the Group adopted IFRS 16. The results for the six months ended 30 April 2019 have not been restated for the adoption of this accounting standard.
Stephen Murdoch, Micro Focus International Chief Executive Officer, commented:
“I am proud of our employees’ resilience and professionalism throughout the unprecedented disruption caused by the COVID-19 pandemic. Micro Focus’ business continuity plans have been highly effective and we continue to adapt our working practices to continue supporting our customers and partners. Our performance during the period has been consistent with our guidance and the successful refinancing of our debt despite the challenging market conditions demonstrates confidence in the underlying strengths of our model. Going forward, we see significant opportunities to improve our business and we will continue to progress initiatives to strengthen and simplify our business operations, and stand ready to take further actions if required in these uncertain times.”