PracticeAccounting FirmsQ&A: Mirco Focus FD on the company’s interim results

Q&A: Mirco Focus FD on the company's interim results

Nick Bray, FD of Micro Focus drills down into the business software provider's interim results

Nick Bray, Micro Focus FD

Nick Bray, Micro Focus FD

You achieved your target of double-digit revenue growth and margins
above 40%, so talk me through the key numbers for the first half.

It was another satisfactory six months of trading. We achieved total revenue
growth in the order of 24%, of which half of that growth was from the organic
business and half of that was through acquisition.

What drove that margin growth?

We’ve kept investing in sales, we’ve kept investing in research and
development in the core areas of the business. And actually, what we’ve managed
to do is we’ve managed to leverage our back office costs. So while in dollar
terms those costs are increasing, as a percent of revenues they’re falling. And
all of those things combined have led to an increase in the margin.

And given the strengthening dollar, is there still limited currency
impact on your results?

This is something that we’ve spoken about before and with investors it was
something they were keen to find out more about almost 18 months ago. What
people are now hopefully starting to understand and starting to see is that, of
our revenues, approximately 50% are in dollar billings. But of our costs, only
30% are billed in dollars. So almost by design and a little bit of good luck ­
the company’s been in existence now for more than 32 years ­ we have a situation
where, almost mathematically, the way exchange rates move, if revenues go up by
$5m (£3.44m) due to exchange rates, costs will go up by the same amount. If
revenues fall by $5m ­ or whatever that figure is ­ costs will fall by the same
amount. On the net profit level we’ve got this very well hedged.

But just how wise is it to increase the dividend by 25%, given that
economic conditions could worsen?

Well, we’ve considered this very carefully and it really reflects two things.
One is the absolute strength of the balance sheet of the company which, as I’ve
said, we’ve got more than $40m in cash on the balance sheet; no debt; very, very
secure; very, very stable. But perhaps more importantly, it’s the outlook and
the confidence of the outlook for the business as a whole. So, having considered
both those aspects, we feel entirely comfortable in increasing the dividend by
25%.

For more FD, CFO and CEO online programming go to
www.cantos.com

Related Articles

WorkStyle: Helping accountants to support new contractors

Accounting Firms WorkStyle: Helping accountants to support new contractors

5d ClearSky Accounting | Sponsored
Grant Thornton grows profits while radically reshaping portfolio

Accounting Firms Grant Thornton grows profits while radically reshaping portfolio

6d Alia Shoaib, Reporter
How to protect LLP firms from a damaging team move

Accounting Firms How to protect LLP firms from a damaging team move

1w Clive Greenwood, Lewis Silkin
Grant Thornton reports gender pay gap at 26.6%

Accounting Firms Grant Thornton reports gender pay gap at 26.6%

3w Alia Shoaib, Reporter
5 ways to adapt your accounting services for millennial clients

Accounting Firms 5 ways to adapt your accounting services for millennial clients

4w Receipt Bank | Sponsored
Smith & Williamson reports double digit growth

Accounting Firms Smith & Williamson reports double digit growth

4w Alia Shoaib, Reporter
RSM UK reports 9% revenue rise

Accounting Firms RSM UK reports 9% revenue rise

4w Alia Shoaib, Reporter
Productive accountancy firms lead the way

Accounting Firms Productive accountancy firms lead the way

1m Simon Adcock, HSBC