Earnings drop knocks stocks at Micro Focus

Joseph Millis
IT ENTERPRISE firm Micro Focus yesterday reported a dip in half-year pre-tax profit, adding that it was yet to show the full impact of its $1.2bn (£765m) purchase of US rival Attachmate. Shares fell seven per cent after publication of the results.

The British company said revenues, on a constant currency basis, were $208.3m in the six months ended 31 October, up 0.6 per cent compared to the same period a year ago.

But pre-tax profit fell more than 15 per cent year-on-year to $57.1m, far below analysts’ expectations. Micro Focus said it had incurred $25.1m in “exceptional costs associated with the transaction” as well as a charge of $2.4m related to the refinancing of debt linked with the merger.

Micro Focus and Attachmate help large enterprises test, maintain and upgrade their old IT systems – a particular problem for financial services, where regulatory requirements can leave companies juggling multiple legacy systems.

Micro Focus’ Kevin Loosemore said: “Licence revenues in international remained strong, while there was a decline in Asia Pacific and Japan against a strong compar­ative period and the sales force restructuring at the end of the year. North America caused a drag in the half-year as the new teams were brought on”.