18th Mar 2020 09:49
(Alliance News) - Micro Focus International PLC on Wednesday said it is no longer recommending a final dividend for its most recent financial year due to uncertainty caused by the Covid-19 pandemic.
Shares in Micro Focus were down 14% at 347.30 pence in London in morning trading.
The business software firm had intended to propose a final dividend 58.33 cents per share for its financial year that ended October 2019 to its upcoming annual general meeting on Wednesday next week.
However, Micro Focus has now withdrawn the dividend resolution, resolution number 2, citing "the current increased macro uncertainty, which has been uniquely impacted by the global spread of Covid-19".
So far, the company said, Covid-19 has not had "any material impact" on its business, but "the ultimate impact on the global economy is unknown".
"As a minimum we believe it appropriate to be prepared for a level of disruption to our new sales activity even though the majority of our revenues are contractual and recurring in nature. As a result, we think it is right to approach the next twelve months with a reduced risk appetite and heightened sense of caution," Micro Focus said.
Micro Focus said it will consider paying a second interim dividend for its financial 2019 year, in lieu of the final dividend, once some visibility on the virus's effect on its business.
The firm stressed that its decision to scrap its final dividend does not alter its view that Micro Focus "remains appropriately capitalised, with robust profits underpinned by recurring strong cash flows". It had cash in hand of more than USD600 million at the end of February.
Mirco Focus has encouraged shareholder to appoint the company's chair as their proxy with their voting instructions rather than attend next week's AGM in person.
"The Covid-19 pandemic is complex, fast moving and, at times, unpredictable. Micro Focus is continuously monitoring the situation and will continue to update shareholders on material corporate and business developments in the usual way," the company said.
By Anna Farley; [email protected]
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