Acquisitions prompt Micro Focus upgrade

11th Nov 2009 07:04

Micro Focus's two recent acquisitions, Borland and Compuware, have performed much better than expected and the legacy software specialist has upped its forecasts for both interim sales and underlying profits.After a "strong close to the first half" the group now expects to report total revenues of approximately $195m, up from $135.6m, while underlying profits will also be above expectations. Excluding exceptional items and stock based compensation, earnings are now forecast to come in at about approximately $75m, against $57.9m, representing a margin of approximately 38%.Excluding recent acquisitions Borland and Compuware and on a constant currency basis, organic revenues are up by approximately 9%, while directly comparable revenue growth will be in the region of 5%. Micro focus added that both Borland and Compuware are ahead of expectations in terms of revenue and underlying earnings, with combined annualised revenues of $160m, approximately $10m ahead of previous guidance. Margins from the pair area also double initial estimates at 30%, against previous guidance of 15%, attributed to better revenues and cost reductions."Micro Focus has delivered continued growth in its business over the first half year with a strong progression in the second quarter performance, as compared to the first quarter of the year. In addition, the Borland and Compuware integrations are ahead of schedule," chief executive Kevin Loosemore added.Cash generation remains strong and reduction of the net debt position is ahead of schedule with a US$16m repayment in October. Net debt at the end of the first half was approximately US$104m.