Micro Focus staves off blue-chip relegation threat

Micro Focus appears to have staved off the threat of being dumped out of Britain's blue-chip index with a better-than-expected trading update this morning.

The tech giant, which has treated its shareholders to a roller-coaster ride in recent months, said revenue for the six months to April 2018 would be "better than the management guidance" – it was previously forecast to shrink between nine and 12 per cent.

Shares popped over eight per cent as markets opened. They are currently around seven per cent higher.

Around £4.5bn was wiped off Micro Focus' market value in March after what was then Britain's biggest tech company warned sales had fallen sharply. This prompted the early exit of Chris Hsu, the firm's chief executive.

The market sell-off plunged Micro Focus close to the relegation zone in the FTSE 100 rankings. The firm was sitting in 91st place at the end of April, this was after shares rose by around a third since a mid-March nadir.

The next FTSE reshuffle will be announced on 30 May, referencing the stock market valuations at the close of business on 29 May.

Today, Micro Focus said six-month revenues had been boosted by securing a $40m licence contract ahead of schedule. This meant full-year guidance for the 12 months to October was reiterated by the tech firm.

Read more: Micro Focus execs face "stiff questions" over £60m pay packets

£24m pay

Micro Focus is due to hold its annual general meeting later this year. While a specific date has yet to be announced, last year it was held in September. Last November executive chairman Kevin Looseman pocketed £24m – at the time making him one of the best-paid execs in the FTSE 100.

Micro Focus' 2017 accounts state pay awards are subject to clawback in the event of "material misstatement of the results, an error in calculation, fraud and gross misconduct, conduct leading to serious harm to the groups reputation or a significant financial loss or a material failure of risk management".

As the March revelation made no suggestion of impropriety, AJ Bell investment director Russ Mould said it would be hard for shareholders to recoup awards. Instead, it may come down the remuneration committee to decide whether the money should be returned.

He added:

It is now up to Loosemore and [new CEO Stephen] Murdoch to make the deal work and get Micro Focus back on track, or they will start to face some stiff questions over strategy and therefore pay.

Read more: Micro Focus, macro losses – City reacts as £4.5bn is wiped away

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