Micro Focus International plc (LSE:MCRO), the legacy software giant, said it is on course to arrest the decline in revenues next year.
The FTSE 250 company, which has suffered severe indigestion problems since paying US$8.8bn for the software segment of the Hewlett Packard Enterprise Company (HPE), said it expects to reduce its cost base to around US$1.5-1.6bn (allowing for cost inflation) from around US$1.9bn in the year to the end of October 2023.
The group said it expects to achieve a run rate of roughly US$500mln in adjusted free cash flow after the cost-cutting initiatives fall through, up from US$292.4m in the financial year just ended.
In the year to 31 October 2021, the group saw revenue slide to US$2.9bn from US$3.0bn the year before, down 5% on a constant currency (CC) basis – an improvement on the previous year’s 10% CC decline.
Adjusted underlying earnings (EBITDA) eased to US$1.04bn from US$1.10bn the previous year, with the margin sliding to 36% from 39%.
The loss before tax, which excludes depreciation and amortisation of US$1.06bn (US$793mln) and various exceptional items (such as US$136.4mln of HPE integration costs), narrowed to US$517.8mln from the previous year’s loss of US$2.94bn.
Net debt crept up to US$4.20bn from US$4.15bn at the end of the previous financial year. Despite this, the company increased its final dividend to 20.3 cents from 15.5 cents the previous year, taking the full-year payout up to 29.1 cents.
"We made good progress in FY21 as we continued to reposition the product portfolio to focus on growth opportunities, restructured the go-to-market organisation and implemented a single platform across the group. These customer-centric investments started to deliver meaningful improvements in sales and operating performance, and the sale of the Digital Safe business demonstrated the underlying value of our assets. In addition, we announced the refinancing of US$1.6bn of our debt on attractive terms as we continue to reposition and invest in the portfolio,” said Stephen Murdoch, the chief executive officer of Micro Focus.
“These results provide a good foundation from which to deliver the strategic priorities that we announced at the end of last year,” he added.