June 24, 2010 11:26 pm

Micro Focus hit by CFO’s exit

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Micro Focus International’s full-year results were overshadowed on Thursday by the departure of Nick Bray, its chief financial officer.

Shares in the application modernisation group fell 67½p to 460p on news of the departure of the highly rated Mr Bray, while forecasts of “mid-single-digit” growth in the coming year also disappointed analysts.

Mr Bray said he resigned because he was in talks about becoming finance director at one of Micro Focus’s rivals. He told the Financial Times that it was not because he missed out on the chief executive role.

“My skillset has always been suited as an FD. I see where we are now [at Micro Focus] as the end of a chapter. I couldn’t commit to the medium-term and felt I needed to let them know.”

He joined Micro Focus in 2005 and became an integral part of the turnround at the group. He also steered the software company through the rest of its financial year following the resignation of Stephen Kelly as chief executive last September.

Micro Focus’s results to April 30 were in line with expectations and boosted by the combined $171m (£115m) purchases of Borland and assets of Compuware last summer.

Revenue was up 57 per cent to $432.6m, while pre-tax profits rose from $91.4m to $98.3m. Earnings per share were 36.71 cents (31.92 cents) and the final dividend rises 46 per cent to 16.2 cents, lifting the total 40 per cent to 21.8 cents.

FT Comment

The uncertainty created by departures of the team that turned the business around means Micro Focus is among the worst performing large software stocks on the FTSE this year. But it has also obscured slowing organic growth. It was running at a credible 5 per cent this year, but a comedown for investors used to double-digit expansion. The central issue for the new team will be to show investors that Micro Focus can be reinvigorated. Nigel Clifford, chief executive, aims to return the group to double-digit growth in the medium term but while testing is a fast-growing market, it is also one targeted by big companies such as Hewlett-Packard. Analysts expect the group to make profits of $176m from revenue of $469m for the year to April 2011. That puts Micro Focus shares on a prospective price/earnings ratio of 11.7, well below the sector average of 15 to 16.

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