Q&A: Nick Bray, CFO of Micro Focus on the company’s prelims

The numbers you’re announcing are above and beyond your previous
guidance. Were you caught off-guard by this strong performance?

Well, firstly, we are pleased with the numbers that we’ve just reported: 19%
revenue growth; 70% improvement in our operating profit.

Our second half year improved in terms of revenue growth and profits against
the first. And on the back of that, we’ve generated significant cash in the

We finished with $85m (£42.5m) in the bank, and that’s allowed us to, again,
propose a good final dividend.

We also, certainly in the fourth quarter, signed a number of larger-value
transactions which was encouraging.

So I think it would be fair to say that it is a good set of results, and
certainly towards the upper end of our expectations.

What’s had the biggest impacts on profit, then? Has it been revenue
growth? Or cost control?

Well, both have had a positive impact. Again, with revenues growing, in
effect just a touch over 19%, and we’ve managed to contain costs to a 2%

That 2% increase, of course, includes six months of costs from the Hal

So if you strip those out, the underlying costs of the core Micro Focus
business have actually reduced year-on-year by about 4% or 5%.

It’s that combined effect of really keeping control of the costs while
increasing the revenues.

At the half-year, you said that the Group restructure charge would
have a very short payback period given the cost savings. Have you achieved

Absolutely. Against any profit measure you care to look at, we’ve achieved a
significant increase. In terms of the costs that we were talking about earlier,
the restructure absolutely obtained the cost benefits that we expected.

Performance in Europe has been very strong again. And UK has also
picked up in the second half. What’s driving revenue in this region?

The company has all the right ingredients: a firm market exists, a firm
growing market exists. We have a leadership position. We’ve got great solutions,
great products. We’ve got a great team with new people like myself, but also
with a number of people who’ve got five, ten, 15, 20, 25 years of experience.

But performance in the US remains poor, despite extra investment
here. How much have you spent on the attempted recovery so far, and is this just
good money after bad?

Well, firstly the US recovery plan is really still in its infancy.
Effectively, the focus was on Continental Europe first. And now, Q4, we’ve put
the investment in, the focus into North America. So it’s early days, but we now
have a firm plan in place. It’s all now about focus and execution.

For the full interview and more on FD. CFO and CEO online programming go

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