MicroFocus increases its 2017 interim dividend by 75.5% in $ terms

DividendMax Ltd.

MicroFocus increases its 2017 interim dividend by 75.5% in $ terms

Key highlights

Pro-forma CCY revenue growth of 1.2%, driven by:

o Strong performance by the SUSE Product Portfolio where revenues grew by 23.3% on a pro-forma CCY basis;

o On plan performance in Micro Focus portfolio with expected reduction in maintenance and Serena revenues.

On a CCY basis:

o Total revenues of $684.7m (2015: CCY $599.6m), an increase of 14.2%.

o Adjusted EBITDA of $332.5m (2015: CCY $271.7m), an increase of 22.4%.

o Underlying Adjusted EBITDA increased by 20.9% to $320.3m (2015: CCY $265.0m).

Completion of the Serena acquisition took place on 2 May 2016 for an Enterprise Value of $540.0m on a cash and debt free basis, partially funded by a share placing in FY16 of 10.9m shares at a price of 1455 pence raising £158.2m ($225.7m) before expenses.

On a pro-forma CCY basis to provide a better comparison of like-for-like performance:

o Total revenues of $684.7m (2015: pro-forma CCY $676.8m), an increase of 1.2%.

o Adjusted EBITDA of $332.5m (2015: pro-forma CCY $308.3m), an increase of 7.8%.

o Underlying Adjusted EBITDA of $320.3m (2015: pro-forma CCY $301.5m), an increase of 6.2%.

Continual focus on efficiencies led Underlying Adjusted EBITDA margins to improve further to 46.8% (2015: pro-forma CCY 44.5%)

Exceptional costs incurred in the period of $41.0m (2015: $10.7m) relate to integration costs, acquisition costs, pre-acquisition costs, property costs, severance and legal costs. Second half exceptional costs are currently estimated to be up to $80.0m

Improved cash generation in the period:

o Cash generated from operations was $201.9m (2015: $162.7m) representing 69.3% (2015: 62.6%) of Adjusted EBITDA less exceptional costs.

o Net debt+ at 31 October 2016 was $1,612.6m (30 April 2016: $1,078.0m) down from $1,625.0m following the completion of the Serena acquisition on 2 May 2016.

o Free cash flow in the period of $111.0m (2015: $40.3m)

o Net debt to Facility EBITDA for the 12 month period to 31 October 2016 is a multiple of 2.6 times, decreasing to 2.4 times on a pro-forma basis including the acquisition of Serena; medium term target remains 2.5 times.

Growth in adjusted diluted earnings per share of 20.5% to 89.20 cents (2015: 74.01 cents)

Proposed interim dividend increased by 75.5% to 29.73 cents per share (2015: 16.94 cents per share) in line with dividend policy of full year dividend being twice covered by adjusted earnings.

Companies mentioned