Micro Focus lost its chairman today as it posted a huge drop in profit in a “challenging” latest financial year, triggering traders to offload the struggling firm’s stock.
Operating profit sank 41.2 per cent year on year to $221.7m (£170.9m) for the 12 months to the end of October.
Revenue also tumbled 29.6 per cent to $3.35bn after the technology company blamed Brexit chaos for customers delaying IT purchases. Sales fell 7.3 per cent on a constant currency basis, and core earnings dropped 2.6 per cent to $1.35bn.
Net debt climbed by around $80m to $4.34bn, 3.2 times Micro Focus’ earnings before interest, tax, depreciation and amortisation (Ebitda).
Basic earnings per share plummeted 103 per cent from $181.91 in 2018 to a loss of $4.87 per share.
Micro Focus paid a higher total dividend per share of $1.166, up from last year’s $1.08.
Why it’s interesting
Chairman Kevin Loosemore’s time at Micro Focus ended with today’s latest set of negative numbers. Traders sent Micro Focus’ share price down 14 per cent to 847.9p in early trading.
Loosemore said he and the board “decided that now is the right time for me to leave”, with Greg Lock stepping in as non-executive chairman on 14 February.
Loosemore came in to lead the company’s initial public offering (IPO) in 2005. But he leaves having overseen a huge drop in the British tech firm’s share price after its problematic takeover of HP’s software house.
From a high of 2,739p per share in late 2017, the firm’s stock has shed 64 per cent of its value before yesterday’s close.
Loosemore also hit the share price when he dumped £11.6m worth of shares last year to “diversify” his investment portfolio.
His replacement, Lock, is a former Computacenter chairman. Lock said: “I am pleased to join Micro Focus as non-executive chairman, well aware of the previous successes and the present challenges. I am looking forward to rolling my sleeves up to help management execute the plan.”
The firm insisted its drop in revenue on a constant currency basis was within grim guidance issued in August as part of a revenue warning.
But chief executive Stephen Murdoch admitted the results “fell short of expectations”.
That warning over summer that sales could fall by as much as double a previous forecast sent shares tumbling. Micro Focus blamed Brexit uncertainty and economic concerns for customers delaying new IT purchases.
What Micro Focus said
CEO Stephen Murdoch said:
This has been a challenging year for Micro Focus and our overall financial performance fell short of expectations. As a result, we conducted a strategic and operational review, which has identified the additional actions and changes required to deliver on the significant potential within the business.
Successful execution of these actions will position Micro Focus to deliver against our goal of consistent and sustained value creation for customers, shareholders and employees.