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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the
Month of: May 2021
Commission
File Number: 001-38187
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MICRO FOCUS INTERNATIONAL PLC
(Exact name of registrant as specified in its charter)
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The Lawn, 22-30 Old Bath Road
Newbury, Berkshire
RG14 1QN
United Kingdom
+44 (0) 1635-565-459
(Address of principal executive office)
Indicate
by check mark whether this registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form
20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule
101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule
101(b)(7): ☐
CONTENTS
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Exhibit No.
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Exhibit Description
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99.1
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Headline,
dated 18 May 2021
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18 May 2021
Micro Focus International plc
Trading Statement
Overview
The
Board of Micro Focus International plc ("Micro Focus" or "the
Group", LSE: MCRO.L, NYSE: MFGP), the global enterprise software
group, today issues a trading update for the six months ended 30
April 2021.
● Micro Focus expects to report revenue of
approximately $1.4bn for the six months ended 30 April 2021. This
performance is ahead of market expectations and represents a
decline of approximately 5% on a constant currency ("CCY") basis
when compared to the first half of FY20.
● An expected Adjusted EBITDA margin of
approximately 36% for the first half is also ahead of market
expectations, reflecting the strong licence revenue performance and
cost savings from back office simplification, partially offset by
the planned product investment.
● Sales execution in the period was strong,
resulting in an improvement in sales conversion rates and a number
of deals closing earlier than expected. The H2 weighting of
prior year revenue due to COVID-19 was also a
factor.
● The Group continues to target a meaningful
improvement in the rate of constant currency revenue decline in
FY21 when compared to FY20, in line with current revenue consensus.
● As at 30 April 2021 the Group had cash of $0.7bn
and Net debt of $4.1bn, with operating cash generation remaining
strong.
Stephen Murdoch commented:
"We are pleased with a period of further solid progress in most
areas of our business. The product investments and
operational changes we are making are beginning to deliver
performance improvements, and our value propositions are resonating
with customers and partners, as demonstrated by the signing of the
significant, long term commercial agreement with AWS.
Our recovery programme and specifically our systems transformation
is progressing as planned despite the challenges of executing this
within the constraints of a global lockdown. I am proud of
the resilience, flexibility and professionalism of our teams across
the organisation. As a business, we continue to monitor the impact
of COVID-19 on our workforce, with particular focus currently on
supporting our colleagues in India.
Whilst there is a great deal to do, we are encouraged by our
progress and remain committed to delivering revenue stabilisation
and sustainable cash flow generation for our
shareholders."
Financial Performance
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Approximate Y-o-Y revenue trajectory (on a CCY basis)
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H1 FY21 versus H1 FY20
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Licence
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10%
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Maintenance
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(8)%
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SaaS
and other recurring
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(5)%
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Consulting
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(9)%
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Total revenue trajectory
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(5)%
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In
the first half of FY21, the Group expects to report a constant
currency revenue decline of approximately 5%.
Licence
revenue is expected to increase by approximately 10% when compared
to the first half of FY20, demonstrating the continuation of sales
execution improvements delivered in the second half of FY20. This
strong licence performance includes a small number of deals closing
earlier in FY21 than initially forecast and performance in the
comparable period being impacted by the onset of
COVID-19.
Maintenance
revenue is expected to decline by approximately 8%. Performance is
being impacted by a reduction in licence volume in the previous
financial period combined with elevated attrition rates for a small
subset of products. Corrective actions continue to be implemented,
however the improvement of maintenance trends remains a multi-year
initiative with improvements forecast to be weighted to the outer
years.
SaaS and other recurring revenue is expected to decline by
approximately 5% when compared to the first half of FY20, in line
with expectations.
Consulting
revenue is expected to decline by 9% but is now broadly in line
with the revenue generated in the second half of FY20.
Profitability and Cash
The
Group's Adjusted EBITDA margin of approximately 36% in the 6 months
ended 30 April 2021 is ahead of market expectations due to strong
licence performance and cost savings achieved through a combination
of continued progress in delivering in-year savings and the
annualised impact from initiatives actioned in FY20. These cost
savings have been used to fund continued investment in key product
areas, as outlined previously.
The
Group ended the period with cash balances of approximately $0.7bn
and net debt of approximately $4.1bn, in line with management
expectations.
Operational update
The
Group has signed multiple commercial agreements in the six months
ended 30 April 2021, including our strategic partnership with
Amazon Web Services ("AWS"). The commercial agreement
formalises a strategic collaboration to accelerate the
modernization of mainframe applications and workloads of large
public and private enterprises to the AWS Cloud. AWS and Micro
Focus will work together to deploy Micro Focus technology for
customers embarking on the transformational journey to modernise
their business-critical mainframe applications and workloads to an
agile, cloud-based production environment.
The
Group's transformation activities continue at pace and within this
the key IT system programme remains on track, however the Group
continues to monitor the global impact of COVID-19 on the
programme, particularly within India.
Board changes update
Recruitment of a new Chief Financial Officer is at an advanced
stage.
The Group will announce interim results for the six month period to
30 April 2021 on 1 July 2021.
This
announcement contains information that was previously Inside
Information, as that term is defined in the Market Abuse Regulation
(Regulation (EU) No 596/2014 of the European Parliament and of the
Council of 16 April 2014) as it forms part of domestic law by
virtue of The European Union (Withdrawal) Act 2018.
Enquiries:
Micro Focus
Tel: +44 (0)1635 32646
Stephen Murdoch, CEO
Investors@microfocus.com
Brian McArthur-Muscroft, CFO
Ben Donnelly, Head of Investor Relations
Brunswick
Tel: +44 (0) 20 7404
5959
Sarah West
MicroFocus@brunswickgroup.com
Jonathan
Glass
Notes to Editors:
About Micro Focus
Micro
Focus (LSE: MCRO.L, NYSE: MFGP) is a global enterprise software
company supporting the technology needs and challenges of the
Global 2000. Our solutions help organizations leverage
existing IT investments, enterprise applications and emerging
technologies to address complex, rapidly evolving business
requirements while protecting corporate information at all times.
Our product portfolios are Security, IT Operations Management,
Application Delivery Management, Information Management &
Governance and Application Modernization & Connectivity. For
more information, visit: www.microfocus.com
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereto duly authorized.
Date:
18 May 2021
Micro
Focus International plc
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By:
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/s/
Brian McArthur-Muscroft
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Name:
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Brian
McArthur-Muscroft
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Title:
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Chief
Financial Officer
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