Results round-up
Software group Micro Focus said interim pre-tax profits rose 28.7% to $145.7m after the acquisition of Hewlett Packard Enterprise's software unit helped to increase revenue.
Yet the company also warned that revenues for the year to October 31 2018 would fall by 2%-4% from 2017's $4.2bn.
Operating profits rose 34.7% to $220m, while basic earnings per share fell 9.5% to 35.83 cents. The dividend was hoisted by 16.4% to 34.60 cents a share. Revenues grew by 80% to $1.2bn.
If the HPE merger was taken out of the numbers, revenue fell 2.9% to $664.7m. Within Micro Focus's existing business, the SUSE product portfolio grew revenue by 13% to $164.4m and the product portfolio fell 7.05% to $0.5bn from $0.537bn.
The company also said its chief financial officer Mike Phillips would move to a new position as director of mergers and acquisitions with his old role filled by Chris Kennedy, a former CFO of ARM and easyJet.
It added that as a result of a change in year-end there would be a shift in licence revenue towards the new year-end of October 31 which will lead to second half revenues being higher than those in the six months to 30 April.
"We will seek to re-balance this revenue weighting in future years," the company said.
Retailer Mothercare has warned that profits are likely to be less than half the level expected as management held off from discounting as long as possible despite challenging UK and international trading.
UK like-for-like sales fell 7.2% in the 12 weeks to 30 December, meaning means LFL sales for the year to date are down 0.9% after growing an encouraging 2.5% in the first half.. Even online sales were down 6.9% during the period.
The parent-and-child retailer, which is closing stores as part of an effort to improve its estate, saw total group sales fall 2.4% in the Christmas period and also the year to date.
With no improvement anticipated for UK market conditions in the short-term, adjusted group profit for the year are seen as likely to be in the range of £1-5m, versus around £10m expected and after the group reported a £0.7m loss in November’s half-year results.
"In our UK business, we took a conscious decision to remain at full price to protect our brand positioning prior to Christmas but to then discount more heavily in the end of season sale," said chief executive Mark Newton-Jones.
"We have subsequently seen good progress with strong sell through rates on Autumn Winter clearance lines albeit these carry lower margins and will lead to a further reduction in full year margin as a result."
Cash generation and inventory positions both remained strong, though Newton-Jones said the central cost base would be reduced, which will benefit next year's financial year. Net debt is expected to be £50m at year-end.
While international trade was challenging in the quarter overall, down 6.8% in actual currencies, there was a return to moderate growth in the Middle East over the last seven weeks of the quarter.
"Whilst this is positive news, it is too early to say whether or not this is the beginning of a more sustained up-turn in sales across the region," Newton-Jones said. "In Russia, our largest international country by turnover, we also saw a return to growth as the weather became colder, leading to improved trading."
Shares in Mothercare tumbled 26% to 45.86p in early trade on Monday.
The decline in UK sales was particularly disappointing given the recent progress on that front, said analyst Neil Wilson at ETX Capital, after the improvement in LFL sales and gross margin in the first half.
"We should look to management’s decision not to discount in the peak trading season as a significant contributing factor.
"Admirable perhaps but with competitors slashing prices ahead of Christmas amid (justified) fears of a slowdown in consumer spending, it looks as if the ‘conscious decision’ to remain at full price prior to Christmas but to then discount more heavily in the end of season sale was a mistake.
"Clearly Mothercare et al are up against it and the update does not bode especially well for the retail sector ahead of an important week of releases."