Micro Focus blames economic uncertainty on fall in sales

Software giant Micro Focus has warned sales will be lower than previously expected as bosses said the economic uncertainty is slowing business.

The company, which sells software to banks and retailers which use legacy IT systems, said full-year revenues will now be down between 6% and 8%, compared with previous estimates of a 4% to 6% fall.

Shares plunged on the news, down 31% in early trading on Thursday to 1,060.9p.

A year ago, revenues were 4.1 billion US dollars (£3.36 billion), meaning an 8% fall would take sales to 3.7 billion dollars (£3 billion).

Bosses at the FTSE 100 firm will now speed up a review of operations to look for “strategic, operational and financial alternatives” in a year that saw shareholders vote down the company’s pay report in protest against huge bonuses.

Chief executive Stephen Murdoch said: “Following the recent disappointing trading performance, we have determined that it is appropriate to accelerate the undertaking of a strategic review of the group’s operations with a view to determining where performance can be improved and how the business can be better positioned to optimise shareholder value.

“Whilst the review is taking place, management will continue to drive previously targeted improvements in business performance and execute the operational initiatives already in place.”

In July, the company revealed revenues dropped 7.5% to 1.66 billion US dollars (£1.36 billion) and said more work was needed on integrating Hewlett Packard’s software division, which includes the remnants of British software company Autonomy, following the £6.5 billion purchase in 2017.

Just two days after the results, it emerged executive chairman Kevin Loosemore pocketed £11.6 million after selling off more than half his stake in Micro Focus.

Shareholders narrowly voted down the remuneration report earlier this year, after heavy criticism over a massive £110 million bonus plan for executives.

Investors were angry at the board’s decision to give bosses an extra year to hit a share price target that would trigger the payouts.