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Micro Focus International tops FTSE 100 gainers after strong first-half results

The group – which is reversing into US giant Hewlett Packard Enterprise Co.'s (NYSE:HPE.) software business - posted a 22.4% jump in underlying earnings (EBITDA) to US$332.5mln (£260mln) for the six months to October 31.
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Micro Focus shares – which joined the FTSE 100 index in September, replacing chip designer ARM Holdings after its US takeover – were up almost 4% in early morning trading

Micro Focus International (LON:MCRO) topped the FTSE 100 leader board today after the business software firm - which is reversing into US giant Hewlett Packard Enterprise Co.'s (NYSE:HPE) software business - reported strong first-half results.

The group – which said the transformational US$8.8bn HPE deal was on target to complete in the third quarter - posted a 22.4% jump in underlying earnings (EBITDA) to US$332.5mln (£260mln) for the six months to October 31.

The Newbury-based firm saw its total revenue grow by 13% to US$684.7mln for the half-year, driven by the inclusion of its Serena acquisition, which was completed in May, and by a strong performance from its SUSE software suite.

READ: Micro Focus transformational US deal

In reaction, Micro Focus shares – which joined the FTSE 100 index in September, replacing chip designer ARM Holdings after its US takeover – were up almost 4%, or 82p at 2,212p in early morning trading.

Micro Focus executive chairman Kevin Loosemore, said: "The board is delighted with our progress. Our focus on delivering to our customers by making detailed product-by-product decisions and investments has resulted in the business achieving modest like-for-like revenue growth."

However, the company said that while it had made a good start, it was maintaining full-year guidance for revenue growth of between minus 2% and zero.

Analysts at Numis Securities said: “MCRO has outperformed on nearly all levels in H1, giving a net 9% EPS beat and 3% FY upgrade.”

They added: “1.0% underlying revenue growth is well ahead of our -2% forecast, although management reiterate FY guidance of -2% to 0%, and we note that timing of deal closures can impact individual periods, thus 1% growth should not be automatically extrapolated into H2.

“However, it clearly provides strong support for the achievability of management's ‘modest growth’ goal.”

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