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Micro Focus FY Pro-forma Revenues Down

Software product group Micro Focus International plc (MCFUF.PK,MCRO.L) reported that its pro-forma revenues were $4.058 billion for the 12 months ended 31 October 2018 represented a decline of 5.3% on a pro forma constant currency basis.

Adjusted EBITDA for the Group was $2.06 billion for the 18 months ended 31 October 2018, compared to $640.9 million in 12 months ended 30 April 2017. On a pro-forma basis at actual exchange rates the Group delivered a 9.2% growth in Adjusted EBITDA to $1.53 billion for the 12 months ended 31 October 2018., reflecting good progress in the cost management actions related to the integration programme.

In the 18 months ended 31 October 2018, the Group generated revenue of $4.75 billion, which represented an increase of 341.3% on the 12 months ended 30 April 2017. The increase in trading was driven by the acquisition of the HPE Software business, which has materially increased the scale of the operations combined with the longer period of account.

In the 18 months ended October 2018, the Group generated operating profit of $376.8 million, which represents an increase of 65.7% on the 12 months ended April 2017. On a statutory basis, the operating profit increased due to the 18-month accounting period combined with the impact of the HPE Software business transaction in the current period. The acquisition has been transformational for the business and has substantially increased the scale of the Group's operations. In addition, exceptional costs (included within operating profit) have increased from $97.3 million in the 12 months ended 30 April 2017 to $538.2m in the 18 months ended 31 October 2018.

The Group generated a profit before tax of $34.1 million in the 18 months ended 31 October 2018, and a loss of $78.5 million within the last 12 months.

On an annualised basis, the total dividend is 100.84 cents per share which is growth of 14.5% on the full year dividend for the year ended 30 April 2017 of 88.06 cents per share.

In order to align financial periods following the acquisition of the HPE Software business effective 1 September 2017, the Group changed its year end to 31 October 2018 resulting in an 18 month period of account. Accordingly the results on a statutory basis are for the 18 month period ended 31 October 2018 with the comparable period being the 12 months to 30 April 2017. SUSE is treated as a discontinued operation in both periods for statutory reporting purposes. To aid understanding, results for the Group are also shown on a pro-forma basis. The pro-forma results include the discontinued SUSE business and 12 months of results for the acquired HPE Software business in both the 12 months ended 31 October 2018 and 2017, the company said.

Today, the company issued constant currency revenue guidance for the MFPP continuing business for the 12 months to 31 October 2019 of minus 4% to minus 6% compared to the 12 months ending 31 October 2018. It continues to target a Net Debt to Adjusted EBITDA target of 2.7 times together with a regular dividend twice covered by adjusted earnings.

On 29 August 2018, the company announced the start of a share buy-back programme for an initial tranche of up to $200 million which was extended on 5 November 2018 to the total value of $400 million (including the initial tranche). Up to and including 13 February 2019 the company had spent $400 million and purchased 22,455,121 shares at an average price of 13.82 pounds per share. It is now extending this buy-back programme into a third tranche of up to $110 million to be executed in the period from today, the 14 February 2019, up until the day before the AGM which takes place on 29 March 2019 when the current buy-back authority approved by shareholders at the 2017 AGM to make market purchases of up to 65,211,171 ordinary shares will expire.

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