Micro Focus puts troubled past behind Micro Focus International expressed confidence that its troubles of the past few years were well behind it, with the FTSE 250 software company reporting a 30 per cent jump in annual pre-tax profit. The IT specialist said that growth in licence fees had offset a decline in revenues from consultancy and maintenance of IT systems, encouraging Micro Focus to boost its full year dividend 35 per cent. Micro Focus has endured a tumultuous past few years, losing two chief executives and a finance director, warning of stagnation in revenue growth and finding itself in the headlines from a drawn-out but ultimately doomed takeover bid from private equity suitors. In response, the Berkshire-based group, which updates ageing computer systems and provides automated software testing, has given shareholders almost $240m during the year in share buybacks, dividends and a programme to return cash. The news lifted Micro Focus shares up 6.5 per cent to 480.9p. However, the shareholder windfall pushed up Micro Focus's net debt almost ninefold from $12.7m a year ago to $113m at April 30, which the group covered with a $275m revolving credit facility. Kevin Loosemore, executive chairman, said the payouts were part of a strategy to bolster shareholder returns, adding that the group's ratio of net debt to adjusted earnings before interest, tax, depreciation and amortisation was relatively low at 0.6 times. "This is a modest level of gearing for a company with the cash generating qualities of Micro Focus and will provide options to give further returns to shareholders," said Mr Loosemore. We are confident that this level of debt will not reduce our ability to deliver growth, invest in products or make appropriate acquisitions. Micro Focus sells and maintains software based on the programming language Cobol, and recurring revenues comprise roughly half of turnover. "Micro Focus has been something of a work in progress over the past 12 to 18 months with profit warnings, senior management changes and the distractions of the takeover approaches," said David Johnson, analyst at Northland Capital Partners. Although not the most exciting software business, it generates substantial cash that is returned to shareholders. Revenue in the year to the end of April was virtually unchanged at $434.8m, from $436.1m a year earlier. Licence revenues rose 6.5 per cent year on year to $176.6m, but maintenance revenue slipped back 1.3 per cent to $230.9m. Consulting revenue fell more than one-quarter to $27.3m, which Micro Focus attributed to the axing of unprofitable contracts. Full year pre-tax profit rose from $96m to $120m, and diluted earnings per share rose from 46.15 cents to 64.11 cents. A final dividend of 23.4 cents a share was proposed - up from 16.2 cents a year ago - bringing the total payout for the year to 31.6 cents (23.4 cents).