19th May 2020 10:10
(Alliance News) - Micro Focus International PLC on Tuesday predicted a double-digit revenue fall for the first half of its current financial year amid the coronavirus pandemic.
The enterprise software company said it expects to report revenue of USD1.45 billion for the six months to the end of April, a decline of 11% on a constant currency basis when compared to the prior year.
Micro Focus said the revenue fall is consistent with guidance, given back in February, taking into account the expected disruption to new sales activity amid coronavirus.
The company also said it saw a slowdown in customer buying behaviour in April, leading to the deferral of some projects involving new licence and services revenue, as well as delays to some maintenance renewals. The negative impact of this is estimated to be at least 2% on revenue in the period, Micro Focus noted.
Despite that, the company said its cash flow performance was "strong" and is underpinned by effective working capital management. Micro focus ended the period with operating cash balances of USD630 million and a net debt of USD4.31 billion.
Looking ahead, the company said it is currently evaluating the potential impact on the carrying value of its intangible assets and goodwill at this point in time.
Micro Focus also said it is prepared to implement further actions in reducing costs, in the event the pandemic has a prolonged impact on its trading performance.
"Despite the current uncertainty, the group's diversified and recurring revenue base and our highly cash generative business model represent solid foundations from which to execute any additional actions required. Additionally, our business continuity plans have been thoroughly tested and are proving robust," Micro focus said in its statement Tuesday.
The FTSE 250-listed company was trading 9.7% higher in London on Tuesday at 463.30 pence a share.
By Evelina Grecenko; [email protected]
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