Micro Focus shares dive 20pc after £820m loss
SOFTWARE giant Micro Focus shed a fifth of its value after a huge loss sent investors scrambling for the exit.
The struggling company swung to a loss of £820m between November and April, as it said ‘economic uncertainty’ triggered by the pandemic meant it had to write down the value of its assets by £730m.
By contrast, it made a healthy profit of £1.1bn in the same period of last year.
Micro Focus specialises in wringing profit out of old computer systems it acquires by selling software and maintenance services to banks and retailers which use them.
But revenue dropped by more than 12pc over the first half of its financial year, as the pandemic led to a slowdown in customer sales in April.
Micro Focus had already had a turbulent start to 2020, when long-running boss Kevin Loosemore, who was credited with the company’s rise, departed following a pay row and a slump in turnover last year. And although it acted quickly to conserve cash in March – including by cancelling its dividend – the pandemic has interrupted a much-needed turnaround.
Yesterday almost £300m was wiped off the FTSE 250-listed company’s value, as shares sank 19.6pc, or 85.9p, to 352.8p.
But others have managed to thrive amid the turmoil. Online trading platform Plus500 has come into its own since markets began going haywire in February.
It expects revenues in the first half of the year to be nearly four times what they were in 2019 after armchair traders raced to place bets and make a quick penny.
Plus500 estimates it will make £450m, compared with £120m in the first six months of 2019.
It specialises in selling ‘contracts for difference’. These allow customers to bet on whether prices will move higher or lower on things like stocks, crypto-currencies and commodities, rather than traditional investing.
It attracted 198,176 new customers to sign up to its platform in the first half and has decided to make interim boss David Zruia its permanent chief executive.
Similar bumper trends have been echoed by rivals, though analysts are wondering how long this will be sustainable. For the time being, investors are content with Plus500’s gains, with shares rising 3.3pc, or 44p, to 1379p.
Things were less rosy across the market as a whole, as rising coronavirus cases in the US and Latin America alarmed traders and fuelled fears that a second wave could hit Europe and Asia.
David Madden, analyst at CMC Markets, said: ‘Investors are getting back to the reality of rising coronavirus cases, which is causing some caution and fear to be back following Monday’s rally.’
The FTSE 100 fell by 1.5pc, or 96.04 points, to 6189.9, while the
FTSE 250 fell 1.1pc, or 199.99 points, to 17,350.04.
Ailing cruise operator Carnival lost another 2pc of its value, falling 19.8p to 962.8p, after it rescheduled and cancelled several cruises because one of its ships, the Mardi Gras, won’t be ready in time to start sailing this year.
Shareholders in student accommodation provider Unite were unmoved by Peel Hunt analysts’ positive review.
Brokers raised its rating to ‘add’ from ‘hold’ and bumped up its target price from 900p to 1000p, as it increasingly seems likely that students will be going back in September for the next academic year. It fell 1.1pc, or 10.5p to 924p.
Elsewhere, pipe maker Polypipe sank 6.7pc, or 30p, to 419p, after the Doncaster-based group warned the grim outlook for UK construction meant that it would have to axe 250 jobs.