micro focus international plc
annual report and accounts 2009
leading the 
evolution micro focus 
international plc
annual report and 
accounts 2009
ifc1
key highlights 2009 contents
ifc key highlights 2009
02 focused on growth
 02 revenue growth
 04 adjusted ebitda growth
 06 growth in cash generation
08 our customer offer
10 chairman’s statement 
business review
12 chief executive ofﬁ cer’s statement
 13 operational review
 17 group risk factors
 18 corporate and social responsibility
20 chief financial ofﬁ cer’s review 
25 leading with our people
 26 getting close to our customers
 28 building the brand
 31 modernization leadership
management and governance
32 board of directors
34 directors’ report
38 corporate governance
42 remuneration report
48 key performance indicators ‘kpis’
49  statement of directors’ responsibilities in respect 
of the annual report the directors’ remuneration 
report and the ﬁ nancial statements
consolidated ﬁ nancial statements and notes
50  independent auditors’ report to the members 
of micro focus international plc
51 consolidated income statement
52 consolidated balance sheet
53  consolidated statement of changes in 
shareholders’ equity
54 consolidated cash ﬂ ow statement
55 summary of signiﬁ cant accounting policies
61 notes to the ﬁ nancial statements
79  independent auditors’ report to the members 
of micro focus international plc
80 company balance sheet
81 notes to the company ﬁ nancial statements 
additional information
85 ofﬁ ces
86 historical summary
87 directors secretary registered ofﬁ ce and advisers
88 forwardlooking statements
ibc find out more
 
in assessing the performance of the business the directors use 
‘adjusted ebitda’ ‘adjusted operating proﬁ t’ ‘adjusted 
proﬁ t before tax’ and ‘adjusted earnings per share’ being 
the relevant statutory measures prior to exceptional items 
amortisation of purchased intangibles and share based 
compensation exceptional items share based compensation 
and amortisation of purchased intangibles are detailed in note 4

adjusted ebitda is also used and is reconciled to operating 
proﬁ t in note 4 
 
earnings per share and adjusted earnings per share are 
detailed in note 8 
revenue
2747m
204 2008 2282m
adjusted ebitda
1 186m 
340 2008 885m 
adjusted operating proﬁ t
1 156m
335 2008 866m 
adjusted proﬁ t before tax
1 159m
308 2008 886m 
adjusted earnings per share 
41 51c 
294 2008 3208c
cash generated from continuing operations 
1050m 
154 2008 910m  
micro focus 
international plc
micro focus is a growing 
international software 
company delivering 
shareholder v alue by 
responding to growing 
customer demand 
leading the global 
trend to application 
modernization micro 
focus solutions rapidl y 
reduce costs and 
improve productivity  
annual report and 
accounts 2009
01 micro focus 
international plc
focused on growth
revenue growth
from 2282m
to 2747m
annual report and 
accounts 2009
02
revenue comprises total revenues 
including the contribution of 
acquisitions and is compared 
with the prior year strong 
revenue growth is driven by 
solid demand for both licence 
and maintenance contracts 
supplemented by revenues from 
rapidly integrated acquisitions
2006
1437m
2007
1716m
2008
2282m 03 micro focus 
international plc
annual report and 
accounts 2009
2009
2 747 m micro focus 
international plc
focused on growth
annual report and 
accounts 2009
04
adjusted ebitda 
growth
from 885m
to  1 186m
adjusted ebitda comprises 
earnings before interest tax 
depreciation and amortisation 
of intangible ﬁ xed assets 
exceptional items and share 
based compensation charge 
improvements in adjusted 
ebitda are a result of organic 
growth supplemented by 
acquisitions
2006
388m
2007
653m 05 micro focus 
international plc
annual report and 
accounts 2009
2009
 1 1 86m
2008
885m micro focus 
international plc
annual report and 
accounts 2009
06
focused on growth
growth in 
cash generation
from 91 0m 
to  1 050m
this measure is calculated using 
the cash ﬂ ows generated from 
continuing operations – the 
group is generating cash from 
its ongoing business which is 
being used to reinvest in the 
development of the company 
including ﬁ nancing acquisitions 
fund liabilities and pay dividends 
to shareholders
2007
582m
2006
420m 07 micro focus 
international plc
annual report and 
accounts 2009
2009
 1 050m
2008
910m micro focus 
international plc
08 annual report and 
accounts 2009
our customer offer
offering customers 
choice flexibility and 
freedom from proprietary 
hardware and operating 
systems 09 micro focus 
international plc
annual report and 
accounts 2009
continuous evolution 
and improvement
application management 
and modernization
cfocio
deliver signiﬁ cant cost reduction 
and rapid return on investment 
understand changing business needs 
and provide application management 
choices improve timetomarket and 
increase business value
customer roadmap
micro focus responds to business 
needs throughout the customer 
organisation
technical leaders
provide solutions that increase 
productivity enable product 
innovation and reduce delivery cycles
technical teams
produce modern and stimulating 
development testing and 
deployment tools that promote 
fast delivery of quality products
employees
improve efﬁ ciency as a result of 
integrated effective deployments 
of business critical applications across 
the customer organisation
supporting customers’ application 
requirements
maintenance
reassurance for the future daytoday 
support for application management 
and functionality effective upgrades 
approximately 90 renewal rates
licence
new application management and 
development licences with the majority 
coming from existing customers
consulting
experienced support to cios 
providing effective assessment and
business implementation advice
the modernization trend
increasing adoption levels by large 
corporations rejecting expensive risky 
package or rewrite projects for business 
critical applications
micro focus large contract wins
more than 500000 fee levels
2009
17 transactions at an average sales price 
of 14 million for a total of c24 million
2008
12 transactions at an average sales price 
of 12 million for a total of c14 million
2007
7 transactions at an average sales price 
of 930000 for a total of c65 million
revenue split – year to 30 april 2009
number of contract wins worth 
over 500000
innovate
and improve
it assets assess
and plan
operate
and manage
test and 
deploy
 476 licence
 482 maintenance
 42 consulting
2009
17
2008
12
2007
7 micro focus 
international plc
10
chairman’s statement 
kevin loosemore
chairman
annual report and 
accounts 2009 micro focus 
international plc
annual report and 
accounts 2009
11
micro focus has delivered another year of strong ﬁ nancial results 
achieving signiﬁ cant organic revenue growth and improving proﬁ t 
margins in spite of tough economic conditions we successfully 
integrated netmanage liant and relativity companies acquired 
in june 2008 july 2008 and december 2008 respectively 
while we remain conscious of the current challenging economic 
conditions our longterm ambition remains to achieve signiﬁ cant 
growth in revenue and proﬁ ts through both organic and 
acquired means 
the performance achieved over the past year continues to reﬂ ect 
well on the entire micro focus team and highlights the strong 
fundamentals of the business we have ﬁ rst rate technology 
solutions a loyal customer base and a leading position in a 
substantial sustainable and growing marketplace market 
conditions for all companies are challenging but our revenue 
and ebitda margin growth underlines the relevance of our 
customer proposition and the resilience of our business model 
the board continues to adopt a progressive dividend policy reﬂ ecting 
the longterm earnings and cash ﬂ ow potential of micro focus and 
i am pleased to announce a proposed ﬁ nal dividend of 111 cents 
per share giving a full year dividend of 156 cents per share this 
represents a 20 increase when compared to a full year dividend 
of 130 cents last year and reﬂ ects the board’s conﬁ dence in both 
the relevance of our solutions and the prospects of micro focus 
we ﬁ nished the year with cash of 716 million and generated 
1050 million of cash from continuing operations during the year 
our business model has low ongoing capital requirements and 
delivers strong cash generation during the year 786 million 
of cash was used to fund the acquisitions and restructuring of 
netmanage liant and relativity this ﬁ gure comprises the purchase 
cost of 921 million restructuring costs incurred of 149 million 
less cash acquired of 284 million 
since the year end we have completed the acquisition of the testing 
and automated software quality ‘asq’ business of compuware 
for a gross consideration of 80 million in addition we have 
announced the acquisition of borland software corporation for 
a gross consideration of approximately 113 million to fund our 
acquisition and integration plans we have put in place a threeyear 
revolving credit facility of 215 million provided through a syndicated 
loan consortium comprising barclays hsbc lloyds and rbs 
as we build our company to address new growth opportunities we 
have added a signiﬁ cant number of employees to the business and 
i am pleased with their rapid integration and the strong contribution 
they are making the board would like to thank all of our employees 
for their continued hard work and commitment throughout the year 
we continue to build for the future 
we remain focused on proﬁ table revenue growth and i am conﬁ dent 
in the company’s ability to continue to deliver value to all of its 
stakeholders through both dividend and capital growth we aim 
to deliver superior total shareholder returns 
we look forward to the year ahead with conﬁ dence 
kevin loosemore 
chairman
 
what we do 
to deliver 
shareholder 
value
delivering 
shareholder 
value
resilient
business 
model
compelling
customer
proposition
effective 
cost 
management
growth
strategy micro focus 
international plc
business review
chief executive ofﬁ cer’s statement
stephen kelly
chief executive ofﬁ cer
‘given the synergies between application 
modernization and testing idc sees 
a key opportunity for micro focus to 
execute well in this targeted context’
idc micro focus augments 
modernization strategies 
with borland and compuware 
acquisitions may 2009
12 annual report and 
accounts 2009 micro focus 
international plc
annual report and 
accounts 2009
13
 
operational review
over the past year micro focus has generated strong growth in both 
revenues and proﬁ ts 
organisations of all sizes are increasingly considering and selecting 
an application modernization strategy to reduce business costs 
reduce risk and improve productivity and innovation they are 
achieving required business beneﬁ ts by modernising existing it 
applications as opposed to implementing the lengthy high risk and 
costly alternative of either rewriting these applications or replacing 
them with a packaged solution with little additional business beneﬁ t 
there is no other modernization player today that can offer the 
same level of experience and expertise to rapidly modernise and 
improve the functionality and cost effectiveness of businesscritical 
enterprise applications 
including the beneﬁ cial impacts of recent acquisitions we now 
estimate our addressable market to be approximately 4 billion 
per annum we have a signiﬁ cant opportunity ahead 
execution 
over the past year we delivered a strong set of ﬁ nancial results and 
made acquisitions to further our strategic aims while driving growth 
through acquisitions we have also remained fully focused on driving 
organic growth it was pleasing to see the core micro focus business 
continue to deliver double digit organic revenue growth in the year 
despite tough economic conditions 
on 18 june 2008 we acquired netmanage for 734 million in 
cash on 11 july 2008 we acquired liant software corporation 
for 49 million in cash and on 31 december 2008 we acquired 
relativity technologies for 103 million in cash all three acquisitions 
greatly strengthen our application modernization solutions since the 
year end we completed the acquisitions of compuware’s testingasq 
business and borland 
all three acquisitions completed in the ﬁ nancial year have been 
integrated rapidly drawing on our track record to acquire and bring 
acquisitions quickly into our own business model with minimal 
disruption to our operations margins at these operations are in line 
with levels at the rest of the micro focus group ‘group’ for the 
period since acquisition combining the businesses of micro focus 
netmanage liant and relativity has further strengthened micro 
focus’ position as a leading player in the fast growing application 
modernization market and provided the enlarged group with further 
opportunities for growth through a more comprehensive and broader 
product portfolio 
we continue to invest in expanding our solution set as well as 
extending our partnerships with other technology companies 
system integrators and outsourcers to take advantage of the 
considerable market opportunities in particular our deep 
relationships with hpeds ibm microsoft and oracle support 
further enhancement of our extensive product and solution 
portfolio an important current development focus is our enterprise 
application management offerings to beneﬁ t organisations 
embracing cloud computing to further improve cost efﬁ ciencies 
and productivity across their business operations 
corporate developments 
during 2009 the management team has been strengthened 
further to support our growth strategy we have appointed new 
regional presidents in north america asia paciﬁ c and international 
to further sharpen our focus on sales execution all individuals are 
highly experienced in the software industry and have all worked for 
international high growth successful companies 
the strengthened sales teams have driven continued improved 
performance in our north american operation as well as strong 
growth across our europe and rest of world operations we have 
seen very strong growth in those markets where we have invested 
in direct operations to meet customer demand for example in spain 
india and latin america where recent revenue growth has been 
particularly impressive 
micro focus has also continued to develop its marketing and 
communications strategies to increasingly establish senior level 
contacts within our target customer organisations with well 
publicised ‘failures’ in package and rewrite it projects there is 
signiﬁ cant momentum building around the ‘modernization message’ 
and we have beneﬁ ted from this rush to common sense as boards 
demand rapid returns on investment 
how we 
delivered 
growth 
delivering a 
high growth 
profitable 
software 
company
effective 
‘gotomarket’ 
business 
model
large and 
growing 
customer 
base
leading 
technology 
solutions
best 
people micro focus 
international plc
‘mainframe rehosting solutions offer
lower cost and moreimmediate
modernization results…’
gartner inc mainframe 
rehosting products offer 
lower risks by dale vecchio
3 april 2009
business review
chief executive ofﬁ cer’s statement continued
business model 
micro focus has demonstrated that it can grow and perform 
well in troubled economic times in this respect micro focus has 
become known as a ‘safe haven’ i believe micro focus can perform 
both sides of the economic cycle the relevance of our customer 
proposition and the resilience of our business model continue to 
encourage us that the outlook is positive in recessionary times 
micro focus provides companies with a low risk option that enables 
existing annual costs to be reduced in improved economic times 
micro focus allows companies to achieve a signiﬁ cant increase in 
capacity growth and innovation for a modest additional outlay 
micro focus beneﬁ ts from having a business model with a high 
proportion of predictable and recurring revenue of licence 
revenues which made up 476 of group revenues in the year 
the majority comes from high volume low value transactions which 
are supplemented by larger value transactions approximately 
a quarter of licence revenues come from royalties from other 
software companies which again consist of a high volume of 
lower value transactions 
our resilient maintenance revenue streams continue to represent 
nearly half our total revenue at 482 this line of business 
experiences high levels of retention and we continue to enjoy 
renewal rates of approximately 90 maintenance revenue growth 
is driven by the retention of existing customers as well as the 
addition of new maintenance revenue associated with the sale of 
new licences an encouraging performance in both of these areas 
in the year provides high levels of revenue visibility going forward 
the smallest proportion of our revenue is derived from our 
consultancy services and it is expected that this revenue will 
remain a similar proportion of total revenue in the coming year 
continued future revenue growth is largely dependent on driving 
licence sales our major growth opportunity remains around larger 
value licence fee transactions into the global 2000 companies it was 
encouraging that we again signed a number of these transactions 
in the year carrying on from our success last year these larger value 
transactions in turn drive future growth of our run rate high volume 
and low value business typically through deployment revenues 
as modernised applications are rolled out across organisations 
summary and outlook
our solutions reduce cost lower risk and provide clear and compelling 
returns on investment for our customers while we recognise the 
continuing uncertain macro economic conditions the defensive 
characteristics of our business model combined with the relevance 
and compelling nature of our solutions lead us to view the current 
year with conﬁ dence 
in the year ahead we will continue to pursue our successful growth 
strategy however as stated the impact of the recent compuware and 
borland acquisitions are expected to reduce the overall group margin 
micro focus’ resilience relevance and strong cash generation gives 
the board conﬁ dence in the group’s ability to continue to deliver 
superior total shareholder returns
stephen kelly
chief executive ofﬁ cer
14 annual report and 
accounts 2009
asia
23 revenue growth in fy2009 across 
singapore malaysia philippines hong 
kong china and korea
india
indian revenues grew by more than 
250 in fy2009
growing our business around the world
  disclaimer the gartner reports described herein the ‘gartner reports’ 
represents data research opinion or viewpoints published as part of a syndicated 
subscription service by gartner inc ‘gartner’ and are not representations of 
fact each gartner report speaks as of its original publication date and not as 
of the date of this company report and the opinions expressed in the gartner 
reports are subject to change without notice annual report and 
accounts 2009
15 micro focus 
international plc business review
chief executive ofﬁ cer’s statement continued
annual report and 
accounts 2009
16 micro focus 
international plc italy 
36 growth in total revenues nearly 
350 increase in last four years
spain 
200 growth in licence revenues 
vs fy2008
france 
32 growth in total revenues 
vs fy2008
group risk factors
the group in common with all businesses could be affected by risks 
not completely within its control which could have a material effect 
on its short and longerterm ﬁ nancial performance these risks 
could cause actual results to differ materially from forecasts or 
historic results
the following are the key risks that are relevant to the group as a 
provider of enterprise application management solutions please 
also refer to the section on internal controls within the corporate 
governance report on page 40
employees
the retention and recruitment of highly skilled and motivated 
employees is critical to the success and future growth of the group 
in all countries in which it currently operates and in which it is likely 
to expand into in the future
the group has policies in place to help achieve these objectives 
and ensure that it is able to attract and retain employees with the 
required skills
timing of concluding contracts
in common with other software companies the recognition of 
revenue is dependent upon obtaining signed contracts from 
customers and delivery of product with a high proportion of costs 
being ﬁ xed mainly people related failure to conclude sales contracts 
could result in a material decrease in margin failure to conclude at 
any time would have the same impact
however the group has a growing diverse mix of customers with a 
high proportion of predictable and recurring revenue which reduces 
this exposure
acquisitions
acquisitions could provide proﬁ table revenue growth concluding 
further acquisitions is dependent on a number of factors such as 
the global economic position the availability of ﬁ nance and suitable 
target companies there are also risks associated with successfully 
integrating future acquisitions for example the loss of key personnel 
system integration issues and other problems not identiﬁ ed prior 
to acquisition
the group has a successful track record todate in integrating 
acquisitions into the group’s business model and has strengthened 
its management team to assist in this process it has also secured 
a threeyear revolving 215 million loan facility agreement to fund 
announced acquisitions and associated integration costs 
bank loan facility
the 215 million loan facility agreement to the extent drawn down 
by the group may limit the operational and ﬁ nancial ﬂ exibility of the 
group and may increase the exposure of the group to interest rate 
ﬂ uctuations the loan facility agreement contains covenants which 
may negatively impact the ability of the group to operate and grow 
its business to the extent drawn down the loan facility agreement 
will create an amount of indebtedness for the group together with 
debt service obligations which may impair the operational and 
ﬁ nancial ﬂ exibility of the group 
the directors believe that the strength of the business means that 
any funds drawn down to fund acquisitions will be repaid together 
with any accrued interest within the threeyear term of the loan 
facility agreement minimising the effect of any restrictive covenants 
contained therein
research and development
the group has expanded its various rd facilities through organic 
growth and through acquisitions the success of the rd function 
in enhancing existing products and developing new products which 
are relevant to customer requirements is critical to the ongoing 
success of the group if new products or enhancements do not meet 
customer requirements or competitors introduce products which 
better meet the requirements of customers this may have a material 
impact on revenues and proﬁ ts 
the successful integration of the rd functions of acquired 
companies together with the effective management of existing 
facilities is key to mitigating these risks
micro focus 
international plc
annual report and 
accounts 2009
17 business review
chief executive ofﬁ cer’s statement continued
foreign exchange and treasury
the group is not exposed to signiﬁ cant foreign exchange 
transactional exposure as generally its subsidiaries trade in their own 
currency the group’s principal exposure to foreign currency is the 
translation of overseas proﬁ ts into us due to its limited exposure 
the group does not hold any ﬁ nancial instruments such 
as derivatives
the group is also exposed to foreign currency translation risk 
on the translation of its net investment overseas into us where 
the functional currency of those subsidiaries is not the us this 
is partially mitigated by the overseas subsidiaries incurring costs 
denominated in their local currency
economic risks 
the group’s business may be subject to inherent risks arising from 
the general and sector speciﬁ c economic conditions in the markets in 
which they operate the performance of the group may be affected 
by changes in economic or market conditions the growth and 
development of the markets in which the group operates depend 
on numerous factors many of which are beyond their control and 
the exact effect of which cannot accurately be predicted such 
factors include general economic and political activities including 
the extent of any governmental regulation legislation and taxation 
the group has demonstrated that it can grow and perform well 
on both sides of the economic cycle the relevance of the customer 
proposition and resilience of the group business model continues 
to encourage that the outlook is positive the group beneﬁ ts from 
having a business model with a high proportion of predictable and 
recurring revenue 
intellectual property
the group depends on its intellectual property and rights to such 
intellectual property may be challenged or infringed by others or 
otherwise prove insufﬁ cient to protect its business the group 
relies on trade secret trademark and copyright law to protect its 
intellectual property failure to protect maintain and enforce the 
group’s existing intellectual property or pursue registrations for 
new rights may result in the loss of the group’s exclusive right 
to use technologies which are included in their respective software 
products or are otherwise used in their respective businesses 
most of the group’s intellectual property is not covered by a patent 
or patent application and includes trade secrets and other knowhow 
that is not considered patentable in addition some of the group’s 
intellectual property includes technologies and processes that may 
be similar to the technologies and processes of third parties that are 
protected by patent copyright or trade secret law
the group takes appropriate steps to enforce its intellectual 
property rights particularly in international markets including 
litigation where appropriate 
note 3 to the summary of signiﬁ cant accounting policies gives 
additional information on additional ﬁ nancial risks that the group 
could be exposed to
corporate and social responsibility 
the board is committed to running the company in accordance 
with best practice in corporate governance this commitment 
includes recognition by the company of the importance of taking 
into account its corporate social responsibilities ‘csr’ in operating 
the business in this context micro focus seeks to integrate csr 
considerations relating particularly to social ethical and health 
safety and environment ‘hse’ issues in its daytoday operations 
the board acknowledges its duty to ensure the company conducts 
its activities responsibly and with proper regard for all its stakeholders 
including employees shareholders business partners suppliers and 
the local communities the company is a member company of the 
ftse4good index series this index identiﬁ es companies that meet 
globally recognised corporate responsibility standards 
in exercising its corporate social responsibility micro focus seeks 
to ensure that
�  the board takes account of the signiﬁ cance of social ethical 
and hse issues
�  business practices are managed ethically
�  the business is focused on delivering value to stakeholders
�  existing legislation regulations and guidelines are adhered 
to as a minimum
�  employees are recognised as key to the business with individual 
skills and experience being valued and developed and
�  health safety and environmental issues are treated as critical 
areas of concern for the business
japan
japan grew revenues for the eighth 
consecutive year in fy2009
north america
1900 ﬁ nancial services customers 
including 60 of the top 100 corporations
uk
20 revenue growth in licence fees 
versus fy2008
micro focus 
international plc
annual report and 
accounts 2009
18 micro focus 
international plc
plc board ethical
social
health  
 safety
environment
our csr focus
social
the health welfare and development of the company’s employees 
are a priority with the intent of attracting recruiting developing 
and retaining key employees micro focus maintains a number 
of policies and procedures for the beneﬁ t of its employees for 
example an equal opportunities policy approved by acas employee 
development is encouraged through appropriate training regular 
and open communication between management and employees 
is viewed as essential for motivating a highly educated workforce 
brieﬁ ngs are held regularly to provide updates on company 
business and to provide opportunity for questions and feedback 
review meetings are also held regularly within each department 
the company maintains both an internet website which is freely 
accessible and an intranet site accessible to all employees during 
the year two additional sharesave plans and us espp plans were 
introduced and the directors actively encourage employee equity 
participation subject to compliance with the group’s share dealing 
policy details of the current employee share option schemes and 
options granted during the year are given in note 23
the company plays an active part in its local communities 
participating in charitable initiatives and local community support 
projects two recent examples took place in bulgaria and italy 
in shiroka laka bulgaria the micro focus team supported an 
orphanage by building a fully functional computer room and 
conducted training sessions for the children in italy the company 
has donated ofﬁ ce furniture to schools and public ofﬁ ces in 
the earthquake areas of abruzzo aquila and the surrounding 
communities to effectively contribute to the rebuilding of this 
unfortunate area
ethical
the company manages its resources prudently to ensure appropriate 
investment is made in its research and development programmes 
and its commercialisation activities uptodate security systems 
are utilised to protect the company’s it systems the company’s 
intellectual property is protected through an appropriate trademark 
registration and patenting programme close attention is paid to 
maintaining relationships with key stakeholders including business 
partners suppliers and shareholders
the company has adopted a code of business conduct and ethics 
policy with which all company staff are required to comply
health and safety
the company has welldeveloped health and safety policies and 
procedures safeguarding staff contractors and visitors in compliance 
with applicable legislation and best practice
environment
micro focus complies with applicable environmental legislation 
the directors acknowledge that the company’s business as a 
provider of enterprise application management solutions has 
a minimal direct impact on the environment but there are areas 
in which the company does have an impact on the environment 
the company has introduced a number of automated processes 
to reduce the quantity of paper and packaging that is used in the 
business employees are encouraged to eliminate unnecessary 
travel and use video conferencing facilities and other methods of 
communication in its place computer and other ofﬁ ce equipment 
that has reached the end of its working life are resold recycled 
or donated to local organisations as appropriate having many 
ofﬁ ces worldwide the company is conscious of its total energy 
consumption and the amount of waste materials generated and is 
actively working to reduce both energy usage and the quantity of 
waste materials produced that cannot be recycled
annual report and 
accounts 2009
19 nick bray
chief financial ofﬁ cer
20 micro focus 
international plc
annual report and 
accounts 2009
business review
chief financial ofﬁ cer’s review  revenue for the year increased by 204 to 2747 million adjusted 
operating proﬁ t increased by 335 to 1156 million adjusted 
proﬁ t before tax increased by 308 to 1159 million and adjusted 
earnings per share increased by 294 to 4151 cents per share 
in the report below we have provided detail of total revenue at 
actual exchange rates by both geography and revenue category 
in addition to facilitate comparison on a likeforlike basis we have 
also shown the impact of exchange rate movements on revenue and 
the impact of acquisitions acquisitions before 30 april 2008 include 
hal knowledge solutions and acucorp and after 1 may 2008 
netmanage liant and relativity 
all areas showed solid improvement driven by both organic growth 
and the impact of acquisitions revenue by geographic region at 
actual reported  was as follows 
   2009 2008
  m  m 
north america 1240 451 965 423
europe and the middle east 1131 412 960 421
rest of the world 376 137 357 156
total revenue 2747 1000 2282 1000
excluding the impact of exchange rate movements on revenue and 
the impact of current and prior year acquisitions all geographic 
regions achieved solid organic growth as shown in the table below 
the core micro focus organic revenue growth at constant currency 
was 101 
revenues from acquisitions added 572 million of revenue in the 
year 255 million was generated from acquisitions completed in 
prior years and 317 million from current year acquisitions 
we have been encouraged by the growth in new direct territories 
including spain india and central and eastern europe which 
assisted in helping our europe and the middle east geography 
increase by 137 
   2009 2008 growth
   m m 
north america  922 855 78
europe and the middle east  898 790 137
rest of the world  355 330 76
core micro focus  2175 1975 101
acquisitions before 30 april 2008  255 254 –
   2430 2229 –
acquisitions after 1 may 2008  317 – –
t otal revenue growth precurrency impact 2747 2229  233
currency  – 53 –
total reported revenue  2747 2282 204 
the leadership and execution capability of the ‘go to market’ team 
has been continually strengthened the number of direct quota 
carrying sales executives has increased by 50 including the beneﬁ t 
of acquisitions
revenue for the year by category at actual reported  was as follows 
   2009 2008
  m  m 
licence fees 1308 476 1133 496
maintenance fees 1323 482 1042 457
consultancy fees 116 42 107 47
total revenue 2747 1000 2282 1000 
 
revenue
by geographic region 2009  million
 
by category  million how we have 
performed
 north america 1240
  europe and middle east 1131
 rest of world 376
 licence fees 1308
 maintenance fees 1323
 consulting fees 116
micro focus 
international plc
annual report and 
accounts 2009
21 micro focus 
international plc
annual report and 
accounts 2009
22
as detailed below licence and maintenance growth in the core 
micro focus business was 97 and 119 respectively consulting 
revenues reduced by c5 
   2009 2008 growth
   m m 
licence  1086 990 97
maintenance  1015 907 119
consulting  74 78 51
core micro focus  2175 1975 101
acquisitions before 30 april 2008  255 254 –
   2430 2229 –
acquisitions after 1 may 2008  317 – –
total revenue growth precurrency impact 2747 2229  233
currency  – 53 –
total reported revenue  2747 2282 204 
organic licence fee revenue growth from the core business at 
constant currency was driven by our low value high volume run 
rate business combined with improved sales of larger value 
transactions to enterprise customers we deﬁ ne larger value 
transactions as those in excess of 05 million it is encouraging 
to see both the number and average value of these larger value 
transactions increasing year on year 
organic maintenance revenue growth from the core business 
at constant currency was 119 reﬂ ecting the impact of solid 
licence fee sales combined with inﬂ ationary price increases and an 
improvement in the renewal rate as compared to the prior period
organic consulting revenue growth at constant currency showed 
a small decline against the prior year although the growth rate 
improved in the second half year as compared to the ﬁ rst half year 
the acquisitions made in the year comprising netmanage 
liant and relativity added 317 million of revenues in the year 
cost breakdown preexceptionals 2009  million
 cost of sales 224
 selling and distribution 781
 research and development 341
 administrative expenses 340
average monthly number of employees
 sales and distribution 312
 research and development 241
 general and administration 202
business review
chief financial ofﬁ cer’s review continued micro focus 
international plc
annual report and 
accounts 2009
23
costs 
all comments below relate to costs at actual reported  
cost of sales for the year fell by 1 to 224 million the costs in 
this category predominantly relate to our consulting and helpline 
support operations 
selling and distribution costs increased by 236 to 781 million 
we continue to make signiﬁ cant investments in the sales and 
marketing functions to support growth and will continue to do 
so this cost category represents approximately 27 of revenue 
and is expected to remain at a similar percentage of revenue for 
the year ahead 
research and development expenses increased by 157 to 
341 million we expect to maintain this cost category at a 
similar percentage of total revenue as we continue to enhance 
and expand our solution set to take advantage of the considerable 
market opportunity 
excluding restructuring charges of 149 million 2008 65 million 
administrative expenses increased by 75 to 340 million 
the increase in costs includes costs of the acquired businesses 
as well as expanding the group’s support functions to facilitate 
current and future growth we continue to leverage our back ofﬁ ce 
function to drive margin improvements as we expand the group 
currency impact 
an analysis of both revenue and costs as a percentage of the 
total by  and other currencies is shown below as the euro and 
sterling have weakened against the  our revenues have been 
negatively impacted by exchange rate movements as compared 
to the prior year however with a higher percentage of costs in 
non  denominated currencies than revenues our expenses have 
decreased proportionately faster than revenues as a result adjusted 
operating proﬁ t as reported in  was not materially different 
preor postcurrency adjustments 
   revenue cost
   analysis by analysis by
   major currency major currency
    
us  514 325
other  486 675
total  1000 1000 
operating proﬁ t 
operating proﬁ t for the year was 912 million 2008 748 million 
adjusted operating proﬁ t increased by 34 to 1156 million 
2008 866 million the improvement being driven by increased 
revenue and an improvement in margins 
adjusted ebitda
adjusted ebitda increased by 34 to 1186 million 2008 885 
million as a result of increased revenue and tightly controlled costs 
net ﬁ nance income 
net ﬁ nance income was signiﬁ cantly lower than for the previous 
year at 02 million 2008 20 million due to lower average cash 
balances and lower interest rates cash balances were reduced by 
786 million as a result of the purchases of netmanage liant and 
relativity and associated restructuring charges we also incurred 
facility fees of 07 million on the unused bank facility 
taxation 
tax for the year was 254 million 2008 214 million based 
on increased proﬁ ts the group’s effective tax rate is 278 
2008 279 our mediumterm effective tax rate is expected 
to be maintained at approximately 28 
proﬁ t after tax 
proﬁ t after tax increased by 19 to 660 million 2008 554 
million similar to the growth in revenues 
cash ﬂ ow 
at 30 april 2009 the company’s cash balance was 716 million 
2008 924 million the group generated a net cash inﬂ ow 
from continuing operating activities of 1050 million which was 
offset by outﬂ ows of 786 million in respect of the acquisition 
and restructuring of netmanage liant and relativity as well 
as corporation tax payments of 200 million and dividends 
of 261 million 
 
 1 1 9
organic revenue maintenance growth
 71 6m
cash balance at 30 april 2009 micro focus 
international plc
annual report and 
accounts 2009
24
dividend 
the board continues to adopt a progressive dividend policy reﬂ ecting 
the longterm earnings and cash ﬂ ow potential of micro focus with a 
level of dividend cover for the ﬁ nancial year ending 30 april 2009 of 
approximately 25 times on a preexceptional earnings basis in line 
with the above policy the directors recommend payment of a ﬁ nal 
dividend in respect of the full year to 30 april 2009 of 111 cents per 
share providing for total dividends in the year of 156 cents per share 
an increase of 20 over the total dividends of 130 cents per share 
for the full year to 30 april 2008 the dividend will be paid on 
28 september 2009 to shareholders on the register on 4 september 
2009 the directors of micro focus international plc have concluded 
that the company has sufﬁ cient reserves to enable the payment of 
the ﬁ nal dividend 
dividends will be paid in sterling based on an exchange rate of 
£1  165 equivalent to 673 pence per share being the rate 
applicable on 24 june 2009 the date of recommendation of the 
dividend by the board 
acquisitions made in the year 
during the year we made three acquisitions netmanage in june 
liant in july and relativity in december these three acquisitions 
added 317 million of revenues to the current year results at a 
margin broadly similar to that of the total group revenues for 
the year ahead are expected to increase in regard to acquisitions 
as we see the beneﬁ t of a full 12 months of results 
acquisitions made postperiod end 
on 29 may 2009 we closed the acquisition of compuware’s testing 
and asq business the gross purchase price was 80 million 
on 27 july 2009 we closed the acquisition of the borland software 
corporation for a gross purchase price of approximately 113 million 
to ﬁ nance these acquisitions we have arranged a threeyear 
revolving credit facility of 215 million through a syndicated loan 
consortium comprising barclays hsbc lloyds and rbs this facility 
together with the group’s existing cash balances will be used to 
fund the completed acquisitions and subsequent integration activities 
nick bray
chief financial ofﬁ cer 
business review
chief financial ofﬁ cer’s review continued leading 
with our
people
business review
26 getting close to our customers
28 building the brand
31 modernization leadership 
25 annual report and 
accounts 2009
micro focus 
international plc business review
leading with our people
marc andrews 
president
micro focus 
international plc
annual report and 
accounts 2009
26 ‘modernizing key legacy applications 
is the top software initiative for 
businesses this year’
forrester research press release 
top corporate software priority is 
modernizing legacy applications 
8 june 2009
27 micro focus 
international plc
annual report and 
accounts 2009 business review
leading with our people continued
annual report and 
accounts 2009
sally hanson 
global marketing communications director
micro focus 
international plc
28 micro focus 
international plc
annual report and 
accounts 2009
29 business review
leading with our people continued
neil fowler
director product development
micro focus 
international plc
annual report and 
accounts 2009
30 31
‘the capabilities micro focus 
provides will actually increase the 
reliability and scalability of apps 
running in the cloud’
forrester analyst mike gilpin in 
the eweek article taking cobol 
to the cloud november 2008
micro focus 
international plc
annual report and 
accounts 2009 micro focus 
international plc
annual report and 
accounts 2009
32
01 04
02 05
03 06 micro focus 
international plc
annual report and 
accounts 2009
33
04 david maloney 53
nonexecutive director †‡
david is chairman of hoseasons holdings ltd and a nonexecutive 
director of ludorum plc cineworld group plc carillion plc and 
enterprise inns plc he is also chairman of the board of trustees of 
makeawish foundation uk limited his most recent executive 
role was as chief financial ofﬁ cer of the global hotel group le 
meridien hotels and resorts prior to that he was chief financial 
ofﬁ cer of thomson travel group and preussag airlines and group 
finance director of avis europe plc david is a fellow of the chartered 
institute of management accountants and has a degree in economics 
from heriotwatt university edinburgh
05 paul pester 45
nonexecutive director †
paul is currently managing director at banco santander responsible 
for bradford  bingley and its integration into santander and for 
premium banking previously he was chief executive ofﬁ cer of 
moneyfacts group plc managing director of consumer banking at 
lloyds tsb group plc chairman of the british bankers’ association 
retail committee a director at visa international and chairman of 
the travellers cheque association paul holds a ﬁ rst class honours 
degree in physics from manchester university and a doctorate in 
mathematical physics from oxford university
06 tom skelton 48
nonexecutive director †
tom is a founding member of conﬂ uence medical systems a 
healthcare and technology consulting partnership in his most 
recent executive role he served as chief executive ofﬁ cer for misys 
healthcare systems from january 2002 until march 2007 and as a 
director of misys plc prior to that he was chief executive ofﬁ cer of 
medic computer systems a usbased software company focused 
on the healthcare information technology market he earned his 
bsba from robert morris university pittsburgh pa
01 kevin loosemore 50
nonexecutive chairman †‡
kevin is nonexecutive chairman of morse plc director of farnham 
castle and nonexecutive director of nationwide building society he 
was previously the chief operating ofﬁ cer of cable  wireless plc 
president of motorola europe middle east and africa and before 
that was chief executive of ibm uk limited he has a degree in 
politics and economics from oxford university
02 stephen kelly 47
executive director and chief executive ofﬁ cer‡
stephen served as chief executive ofﬁ cer of chordiant software inc 
nasdaq public company from january 2002 until february 2006 
he served as chordiant’s president and chief operating ofﬁ cer from 
october 2000 through january 2002 and as senior vice president of 
chordiant software international limited’s operations from october 
1998 to october 2000 prior to this he spent almost ten years in 
a number of senior management positions with the oracle group 
he is a nonexecutive director of cúram software limited stephen 
received his bsc with honours in business administration from the 
university of bath 
03 nick bray 44
executive director and chief financial ofﬁ cer
nick was previously group finance director of fibernet group plc 
having joined that company in february 2001 before that he held 
the positions of group chief financial ofﬁ cer of gentia software plc 
and chief accounting ofﬁ cer of comshare inc he started his career 
at price waterhouse where he qualiﬁ ed as a chartered accountant 
nick has a ﬁ rst class honours degree in civil engineering from 
aston university
management and governance
board of directors
 audit committee 
† remuneration committee
‡ nomination committee micro focus 
international plc
annual report and 
accounts 2009
34
the directors of micro focus international plc ‘the company’ 
present their report and the audited ﬁ nancial statements of the 
company for the year ended 30 april 2009
principal activities
the principal activity of the group during the year was the provision 
of enterprise application management solutions
the company is limited by shares and is domiciled and incorporated 
in the united kingdom the registered ofﬁ ce of the company is 
the lawn 22–30 old bath road newbury berkshire rg14 1qn
business review
the group is required to produce a business review complying with 
the requirements of the companies act 2006 the information that 
fulﬁ ls these requirements can be found in this directors’ report and in 
the following sections
the chief executive ofﬁ cer’s statement on pages 12 to 14 the 
ﬁ nance review on pages 20 to 24 which include details of the 
group’s activity and the future development of the group the 
risk factors set out on pages 17 to 18 and the key performance 
indicators ‘kpis’ on page 48 which are incorporated in this directors’ 
report by reference 
dividends
the board continues to adopt a progressive dividend policy reﬂ ecting 
the longterm earnings and cash ﬂ ow potential of micro focus with 
a level of dividend cover for the ﬁ nancial year ended 30 april 2009 
of approximately 25 times on a preexceptional earnings basis 
in line with the above policy the directors recommend payment 
of a ﬁ nal dividend in respect of 2009 of 111 cents per share 
which taken together with the interim dividend of 45 cents per 
share paid in january 2009 gives a total dividend in respect of 2009 
of 156 cents per share subject to shareholder approval the ﬁ nal 
dividend will be paid on 28 september 2009 to shareholders 
on the register on 4 september 2009 dividends will be paid in 
sterling based on an exchange rate of £1  165 equivalent to 
approximately 673 pence per share being the rate applicable on 
24 june 2009 the date of recommendation of the dividend by 
the board
research and development
the group expensed 341 million relating to research and 
development during the year to 30 april 2009 2008 295 million 
in addition the group capitalised 77 million of qualifying 
expenditure 2008 54 million this expenditure was incurred 
in improving the quality functionality and extending the range 
of the group’s innovative software solutions
donations
the company’s policy is to make no donations to political parties 
2008 nil during the year the group made charitable donations of 
27000 to a number of local and national charities and other local 
organisations 2008 31000 this included £8800 to castle special 
school newbury and £3600 to action for children the company 
has a gift programme that matches employee donations it also 
has a policy in place to encourage employees to volunteer a certain 
number of hours to assist local organisations
post balance sheet events
the company announced on 6 may 2009 that it had reached 
agreement on a recommended cash offer of 100 per share for 
the entire issued and outstanding share capital of borland software 
corporation ‘borland’ the nasdaqlisted software provider 
on 18 june 2009 the company announced that the offer had 
been increased to 115 per share and on 1 july 2009 the offer 
was increased to 150 per share the transaction was completed 
on 27 july 2009 after receiving approval from the shareholders 
of the company and borland the total gross consideration was 
approximately 113 million
the company announced on 6 may 2009 that it had reached 
agreement to acquire the suite of application testingautomated 
software quality asq solutions and all related sales support and 
development infrastructure together being the compuware testing 
and asq business from compuware corporation ‘compuware’ for 
a total gross cash consideration of 800 million the transaction was 
completed on 29 may 2009
on 6 may 2009 the company entered into a 175 million credit 
facility provided through a syndicated loan consortium comprising 
barclays bank plc hsbc bank plc lloyds tsb bank plc and the royal 
bank of scotland plc to assist with the funding of the acquisitions 
above and for general corporate purposes on 12 june 2009 this 
facility was subsequently increased to 215 million
directors and their interests
the directors of the company who served during the year are as 
follows
executive
stephen kelly
nick bray
nonexecutive
kevin loosemore  chairman
prescott ashe resigned 8 september 2008
david dominik resigned 18 february 2009
david maloney
paul pester
tom skelton
details of the interests of the directors and their families in the 
ordinary shares of the company as disclosed in the register of 
directors’ interests are given in the remuneration report on pages 
42 to 47
none of the directors had a material interest in any contract of 
signiﬁ cance to which the parent company or a subsidiary was a party 
during the ﬁ nancial year except as disclosed in note 28 related party 
transactions
the company maintains insurance cover for all directors and ofﬁ cers 
of group companies against liabilities which may be incurred by 
them while acting as directors and ofﬁ cers
as at the date of this report indemnities are in force under which 
the company has agreed to indemnify the directors to the extent 
permitted by law and by the articles of association against liabilities 
they may incur in the execution of their duties as directors of the 
company copies of these indemnities are available for review at the 
registered ofﬁ ce of the company
management and governance
directors’ report micro focus 
international plc
annual report and 
accounts 2009
35
employment policy
equal opportunities
the group operates an equal opportunities policy full consideration 
is given to all job applicants irrespective of gender age marital 
status disability sexuality race colour religion ethnic or national 
origin or any other conditions not relevant to the performance of 
the job who can demonstrate that they have the necessary skills 
and abilities
disabled employees
with regard to existing employees and those who may become 
disabled the group’s policy is to examine ways and means to provide 
continuing employment under its existing terms and conditions and 
to provide training and career development including promotion 
wherever appropriate all employees accept the commitment within 
this policy that the group will not allow discrimination or harassment 
by employees or others acting on the group’s behalf in respect of 
sex age marital status race nationality disability or religious or 
political beliefs
employee involvement
the group believes it is important that employees are aware of the 
group’s business strategy and objectives to assist them to focus 
on working towards these goals communications at the time of 
key announcements including presentations by directors to all 
employees together with brieﬁ ngs throughout the year are part of 
the communication and consultation programme in addition regular 
meetings are held with staff and managers both to raise issues and 
to assist with the twoway ﬂ ow of information
further education and training
continuing education training and development are important 
to ensure the future success of the group the group supports 
individuals who wish to obtain appropriate further education 
qualiﬁ cations and reimburses tuition fees up to a speciﬁ ed level 
training needs of all employees are also analysed during the annual 
appraisal process at which time a training plan is agreed as part of 
each individual’s ongoing development
share option schemes
the directors remain committed to the principle that selected 
employees should be able to participate in the group’s progress 
through share based compensation schemes details of the group’s 
share based compensation schemes are given in note 23
payment of creditors
micro focus international plc which holds the investments in 
the group’s companies does not trade itself and does not have 
suppliers as deﬁ ned by the companies act 1985 the directors 
believe however it would be helpful to give the disclosures on a 
consolidated basis
the group seeks the best possible terms from suppliers appropriate 
to their business and in placing orders gives consideration to quality 
delivery price and terms of payment the group does not follow 
a speciﬁ c payment code but has a policy to pay its suppliers in 
accordance with the speciﬁ c terms agreed with each supplier the 
average number of days’ purchases outstanding at 30 april 2009 for 
the group was 28 days 2008 28 days
financial instruments
the exposure of the group to ﬁ nancial risks including the use of 
ﬁ nancial instruments and policies for hedging and the exposure to 
price credit cash ﬂ ow and liquidity risk can be found in note 18 to 
the ﬁ nancial statements
substantial shareholding
in accordance with the disclosure and transparency rules of the 
financial services authority at 31 july 2009 the company had been 
advised of the following notiﬁ able interests in its voting rights
    ordinary shares  percentage of
name of holder    of 10 pence each  issued capital
standard life investments limited   22023644  1092
majedie asset management limited   16330461  817
blackrock inc   12863784 636
gam international management limited 11717270 584
jp morgan chase  co   9963590 496
legal and general group plc   7835219  388
fidelity international limited   6605572  330
additional information for shareholders
following the implementation of the eu takeover directive into uk 
law the following description provides the required information for 
shareholders where not already provided elsewhere in this report 
this summary is based on the company’s articles of association 
‘articles’ which came into effect on 1 october 2008
share capital
the company has a single class of share capital which is divided into 
ordinary shares of 10 pence each
rights and obligations attaching to shares
voting – in a general meeting of the company
•  on a show of hands every member present in person shall have 
one vote and
•  on a poll every member who is present in person or by proxy shall 
have one vote for every share of which he or she is the holder
no member shall be entitled to vote at any general meeting or class 
meeting in respect of shares held by him or her if any call or other 
sum then payable by him or her in respect of that share remains 
unpaid currently all issued shares are fully paid
deadlines for voting rights
full details of the deadlines for exercising voting rights in respect 
of the resolutions to be considered at the agm to be held on 
24 september 2009 are set out in the notice of meeting which 
accompanies this report
dividends and distributions
subject to the provisions of the companies act 1985 and the 
companies act 2006 ‘the companies acts’ the company may by 
ordinary resolution declare a dividend to be paid to members but no 
dividend shall exceed the amount recommended by the board the 
board may pay interim dividends and also any ﬁ xed rate dividend 
whenever the proﬁ ts of the company in the opinion of the board 
justiﬁ es its payment all dividends shall be apportioned and paid pro 
rata according to the amounts paid up on the shares micro focus 
international plc
annual report and 
accounts 2009
36
liquidation
under the articles if the company is in liquidation the liquidator 
may with the authority of an extraordinary resolution of the 
company
•  divide among the members in specie the whole or any part of the 
assets of the company or
•  vest the whole or any part of the assets in trustees upon such 
trusts for the beneﬁ t of members as the liquidator with the like 
authority shall think ﬁ t
transfer of shares
subject to the articles any member may transfer all or any of his 
or her certiﬁ ed shares in writing by an instrument of transfer in 
any usual form or in any other form which the board may approve 
the board may in its absolute discretion and without giving any 
reasons decline to register any instrument of transfer of a certiﬁ ed 
share which is not a fully paid share provided that where any such 
shares are admitted to the ofﬁ cial list maintained by the uk listing 
authority such discretion may not be exercised in such a way as 
to prevent dealings in the shares of that class from taking place on 
an open and proper basis the board may decline to recognise any 
instrument of transfer relating to shares in certiﬁ cated form unless it 
is in respect of only one class of share and is lodged duly stamped 
if required at the transfer ofﬁ ce accompanied by the relevant share 
certiﬁ cates and such other evidence as the board may reasonably 
require to show the right of the transfer or to make the transfer 
and if the instrument of transfer is executed by some other person 
on his behalf the authority of that person so to do in the case of a 
transfer of shares in certiﬁ cated form by a recognised clearing house 
or a nominee of a recognised clearing house or of a recognised 
investment exchange the lodgement of share certiﬁ cates will only 
be necessary if and to the extent that certiﬁ cates have been issued 
in respect of the shares in question the directors may also refuse to 
register an allotment or transfer of shares whether fullypaid or not 
in favour of more than four persons jointly subject to the articles 
and the rules as deﬁ ned in the crest regulations and apart from 
any class of wholly dematerialised security the board may permit any 
class of shares in the company to be held in uncertiﬁ cated form and 
subject to the articles title to uncertiﬁ cated shares to be transferred 
by means of a relevant system
repurchase of shares
the company obtained shareholder authority at the last agm held 
on 25 september 2008 to buy back up to 20056391 ordinary 
shares which remains outstanding until the conclusion of the next 
agm on 24 september 2009 the minimum price which must be 
paid for such shares is 10 pence and the maximum price payable is 
the higher of 5 above the average of the midmarket price of the 
ordinary shares of the company as derived from the london stock 
exchange daily ofﬁ cial list for the ﬁ ve business days immediately 
before the purchase is made and the amount stipulated by article 
51 of the buyback and stabilisation regulation 2003 in each case 
exclusive of expenses
amendment to the articles
any amendments to the articles may be made in accordance 
with the provisions of the companies act 2006 by way of 
special resolution
appointment and replacement of directors
directors shall be no less than three and no more than 11 in number 
directors may be appointed by the company by ordinary resolution 
or by the board a director appointed by the board holds ofﬁ ce 
only until the next agm and is then eligible for election by the 
shareholders and thereafter at least every three years the board may 
from time to time appoint one or more directors to hold employment 
or executive ofﬁ ce for such period subject to the companies acts 
and on such terms as they may determine and may revoke or 
terminate any such employment
the company may by ordinary resolution of which special notice 
has been given remove and the board by unanimous decision may 
remove any director before the expiration of his term of ofﬁ ce and 
the company may elect or the board may appoint another person 
in place of a director so removed from ofﬁ ce
the ofﬁ ce of director shall be vacated if i he or she in writing 
resigns or offers to resign and the directors accept such offer 
ii an order is made by any court claiming that he or she is or may 
be suffering from a mental disorder iii he or she is absent without 
permission of the board from meetings for six months and the 
board resolves that his or her ofﬁ ce is vacated iv he or she 
becomes bankrupt or compounds with his or her creditors 
generally v he or she is prohibited by law from being a director 
or vi he or she is removed from ofﬁ ce pursuant to the articles
powers of the directors
the business of the company will be managed by the board who 
may exercise all the powers of the company subject to the provisions 
of the company’s memorandum of association the articles the 
companies acts and any ordinary resolution of the company
shares held in the employee beneﬁ t trust
where the trustee of the micro focus employee beneﬁ t trust holds 
shares in the company and the beneﬁ cial interest in those shares has 
not been transferred to a beneﬁ ciary of the trust the trustee may 
not vote in relation to those shares at any meeting of shareholders 
of the company
signiﬁ cant agreements
the following signiﬁ cant agreement contains provisions entitling the 
counterparties to exercise termination or other rights in the event of 
a change of control of the company
on 13 may 2008 the company entered into a 40 million credit 
facility with hsbc bank plc and lloyds tsb bank plc for general 
corporate purposes on a change of control the bankers may give 
not less than ﬁ ve days notice to the company and cancel the facility 
and require repayment of any outstanding loans and interest the 
facility expired on 12 may 2009 
on 6 may 2009 the company entered into a 175 million credit 
facility provided through a syndicated loan consortium comprising 
barclays bank plc hsbc bank plc lloyds tsb bank plc and the 
royal bank of scotland plc to assist with the funding of acquisitions 
and for general corporate purposes on 12 june 2009 the company 
entered into a supplemental agreement for an additional 40 million 
to assist with the acquisition of borland software corporation at an 
increased offer price on a change of control all the facilities become 
immediately due and payable 
management and governance
directors’ report continued micro focus 
international plc
annual report and 
accounts 2009
37
the business review does not contain any information about persons 
with whom the company has contractual or other arrangements 
which are essential to the business of the company as in the view 
of the directors there are no such arrangements
branch
the group continues to operate overseas branches in hong kong 
and sweden during the year it opened branches in portugal 
denmark finland and mexico
annual general meeting ‘agm’
the notice convening the agm of the company together with 
the explanatory notes on the proposed resolutions accompanies 
this report the meeting will be held at the lawn 2230 old bath 
road newbury berkshire rg14 1qn on 24 september 2009 at 
3pm uk time
auditors and disclosure of information to auditors
so far as they are aware the directors at the date of this report 
conﬁ rm that there is no relevant audit information that is 
information needed by the company’s auditors in connection with 
preparing their report of which the company’s auditors are unaware 
and that the directors have taken all the steps that they ought to 
have taken as directors in order to make themselves aware of any 
relevant audit information and to establish that the company’s 
auditors are aware of that information
pricewaterhousecoopers llp have indicated their willingness to 
continue in ofﬁ ce and a resolution that they be reappointed will be 
proposed at the agm
going concern
the directors having made enquiries consider that the company 
and the group have adequate resources to continue in operational 
existence for the foreseeable future and therefore it is appropriate 
to maintain the going concern basis in preparing the ﬁ nancial 
statements
by order of the board
jane smithard 
company secretary
12 august 2009 micro focus 
international plc
annual report and 
accounts 2009
38
introduction
the principal corporate governance guidance that applies to 
companies listed with the uk listing authority during the year 
reported on is contained in the financial reporting council’s 
combined code 2006 ‘the combined code’ the combined code 
which operates on a ‘comply or explain’ basis incorporates among 
others recommendations by the higgs review regarding the role of 
nonexecutive directors and the smith review which refers to audit 
committees through their commitment to the highest standards of 
corporate governance the board endorses and supports the essential 
elements of the combined code and apart from a few limited 
exceptions as described below believes the group has fully complied 
with the combined code during the year reported on where it has 
not an explanation has been provided
compliance statement
the directors are committed to ensuring that the company will work 
towards compliance with the provisions set out in section 1 of the 
combined code 
throughout the year reported on the company has been in 
compliance with the provisions set out in section 1 of the 
combined code on corporate governance except for the following
a32 – board of directors – the combined code requires that at 
least half the board excluding the chairman should comprise non
executive directors determined by the board to be independent 
following the resignation of nonexecutive director prescott ashe 
who was not regarded as independent on 8 september 2008 the 
company is now in compliance david dominik who was also not 
regarded as independent resigned on 18 february 2009
a41 – nomination committee – the combined code requires 
that a majority of members of the nomination committee should be 
independent nonexecutive directors the nomination committee 
comprises the chairman david maloney nonexecutive senior 
independent director and stephen kelly executive director the 
company is aware that the chairman is not regarded as independent 
for purposes of the combined code the chairman operates in 
a nonexecutive capacity and is considered by the board to be 
independent of management and free from any business or other 
relationship which could materially interfere with the exercise of his 
independent judgment
the principles set out in the combined code cover four areas
the board directors’ remuneration accountability and audit and 
shareholder relations with the exception of directors’ remuneration 
which is dealt with separately in the remuneration report on pages 
42 to 49 the following section sets out how the board has applied 
these principles
the board
the group is controlled by the board which is responsible for the 
group’s system of corporate governance as at 30 april 2009 the 
board comprised six directors
kevin loosemore nonexecutive chairman
stephen kelly chief executive ofﬁ cer
nick bray chief financial ofﬁ cer
david maloney  nonexecutive senior independent director
paul pester  nonexecutive director
tom skelton  nonexecutive director
the role of the nonexecutive directors is to ensure that independent 
judgment is brought to board deliberations and decisions
the nonexecutive directors possess a wide range of skills and 
experience relevant to the development of the company which 
complement those of the executive directors
the chairman operates in a nonexecutive capacity and is considered 
by the board to be independent of management and free from any 
business or other relationship which could materially interfere with 
the exercise of his independent judgment
david maloney the nonexecutive senior independent director paul 
pester and tom skelton nonexecutive directors are considered by 
the board to be independent 
in accordance with the combined code all directors will be subject 
to election by the shareholders at the ﬁ rst annual general meeting 
‘agm’ of the company after their appointment and thereafter at 
least every three years kevin loosemore stephen kelly and nick bray 
will retire by rotation at the forthcoming agm and being eligible will 
stand for reelection the nonexecutive directors are appointed for 
speciﬁ c terms full terms of their appointment are to be found in the 
remuneration report
the board has agreed procedures for directors to follow if they 
believe they require independent professional advice in the 
furtherance of their duties and these procedures allow the directors 
to take such advice at the company’s expense in addition all 
the directors have direct access to the advice and services of the 
company secretary the company secretary is accountable to 
the board through the chairman on governance matters it is 
the responsibility of the company secretary to ensure that board 
procedures are followed and all rules and regulations are complied 
with under the direction of the chairman the company secretary’s 
responsibilities include facilitating induction and professional 
development and ensuring the smooth ﬂ ow of information within 
the board and its committees and between nonexecutive directors 
and senior management any new director receives a comprehensive 
formal and tailored induction into the company’s operations 
appropriate training is provided to new directors and is also available 
to other directors as required
the terms of reference of the chairman and chief executive ofﬁ cer 
have been agreed with the board and in accordance with best 
practice their roles remain separate
as part of its leadership and control of the company the 
board has agreed a list of items that are speciﬁ cally reserved 
for its consideration these include business strategy ﬁ nancing 
arrangements material acquisitions and divestments approval of the 
annual budget major capital expenditure projects risk management 
treasury policies and establishing and monitoring internal controls 
at each meeting the board reviews progress of the group towards 
its objectives and monitors ﬁ nancial progress against budget
in the year to 30 april 2010 the board will schedule meetings on 
a regular basis approximately every two months with additional 
meetings when circumstances and business dictate in months in 
which the board does not meet update calls are scheduled to review 
progress a schedule of meetings has been established all directors 
receive an agenda and board papers in advance of meetings to help 
them make an effective contribution at the meetings in addition 
the executive directors ensure regular informal contact is maintained 
management and governance
corporate governance micro focus 
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annual report and 
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39
with nonexecutive directors the board makes full use of appropriate 
technology as a means of updating and informing all its members
in the year under review the board met on 13 occasions 11 such 
meetings being scheduled formal board meetings with a further two 
additional meetings of the board called at short notice and held by 
telephone to consider board issues
while the board retains overall responsibility for and control of the 
company daytoday management of the business is conducted 
by the executive directors review of the group’s principal business 
activities is the responsibility of task teams comprising the executive 
directors together with executives responsible for the relevant tasks 
who meet regularly
the board receives papers on key subjects in advance of each board 
meeting these typically cover
•  strategy and budgets
•  business and ﬁ nancial performance
•  corporate activities
•  human resources and
•  investor relations
the board has undertaken a formal and rigorous process for 
the evaluation of its own performance and that of its committees 
and individual directors including the chairman as required 
by combined code provision a61 this evaluation has been 
conducted by jca group ltd and has taken the form of personal 
interviews with the directors and observations of board and 
committee meetings
the chairman holds meetings with nonexecutive directors without 
the presence of executive directors
conﬂ icts of interest
following the implementation of the relevant provisions of the 
companies act 2006 the company has put in place procedures 
to deal with conﬂ icts of interests which have operated effectively
the board is aware of the other commitments of its directors and 
changes to these commitments are reported to the board
board committees
in accordance with best practice the company has established audit 
nomination and remuneration committees with written terms of 
reference for each that deal with their respective authorities and 
duties the full terms of reference of all the committees are available 
from the company secretary or can be located on the company’s 
website the company is aware that the chairman is not regarded 
as independent for the purposes of the combined code
audit committee
the audit committee is comprised entirely of nonexecutive directors 
of the company it is chaired by david maloney who the board 
considers has recent and relevant ﬁ nancial experience the other 
members are tom skelton and paul pester
the audit committee has met six times during the ﬁ nancial year and 
will meet at least four times during the coming ﬁ nancial year and 
additionally as appropriate a schedule of meetings for the year has 
been established
the audit committee is responsible for reviewing the group’s annual 
accounts and interim reports prior to submission for approval to 
the full board this committee also monitors the group’s accounting 
policies internal ﬁ nancial control systems and ﬁ nancial reporting 
procedures the audit committee provides a forum through which 
the group’s external and internal auditors report to the board 
the auditors are invited to attend meetings of the committee on 
a regular basis and have the opportunity to meet privately with 
committee members in the absence of executive management 
the audit committee oversees the relationship with the auditor 
including the independence and objectivity of the auditor taking 
into account uk professional and regulatory requirements and the 
relationship with the audit ﬁ rm as a whole and the consideration 
of audit fees and fees for other nonaudit work in addition the 
audit committee has developed a policy designed to ensure that 
the auditor’s objectivity and independence is not compromised by 
its undertaking inappropriate nonaudit work all signiﬁ cant non
audit work commissioned from the external auditor requires audit 
committee approval an outsourced internal audit function continues 
to be provided by kpmg the group’s chief financial ofﬁ cer provides 
oversight and coordination of internal audit in order to ensure 
independence internal audit has a direct reporting line to the audit 
committee and its chairman
the role of internal audit is to advise executive management and the 
board on the extent to which the group’s systems of internal control 
are effective the internal audit plan for each year is determined 
through a structured process of risk assessment and is approved by 
the audit committee
the nature and scope of the internal audits completed during the 
year was reviewed and approved by the audit committee and the 
reports of results of completed audits received and responses of 
executive management considered the plan set out at the beginning 
of the year was achieved and the outcome of the work was in line 
with expectations
the audit committee’s terms of reference include a process for 
employees of the company to raise in conﬁ dence concerns about 
possible impropriety in matters of ﬁ nancial reporting or other matters
the written terms of reference of the audit committee include 
among other things the following responsibilities
•  to report to the board identifying any matters in respect of which 
it considers that action or improvement is needed and making 
recommendations as to the steps to be taken
•  to ensure that the interests of shareholders are properly protected 
in relation to ﬁ nancial reporting and internal control
•  to monitor the integrity of the ﬁ nancial statements of the 
company including its annual and interim reports preliminary 
results announcements and any other announcement relating 
to its ﬁ nancial performance
•  to review the consistency of and changes to accounting policies
•  to keep under review the effectiveness of the company’s internal 
controls and risk management systems
•  to review the company’s arrangements for its employees to raise 
concerns in conﬁ dence about possible wrongdoing in ﬁ nancial 
reporting or other matters
•  to monitor and review the need for and the effectiveness of the 
company’s internal audit function in the context of the company’s 
overall risk management system and micro focus 
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annual report and 
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40
•  to oversee the relationship with the company’s auditors ensuring 
the independence and objectivity of the auditor and considering 
audit fees and fees for nonaudit work to consider and make 
recommendations to the board in relation to the appointment 
reappointment and removal of the company’s external auditor
during the year the committee’s business included consideration of 
the following
•  the effectiveness of internal control procedures
•  the annual ﬁ nancial statements full year results announcement 
half year results and other stock exchange announcements
•  the annual review of the performance and effectiveness of both 
the internal and external auditors
•  responses to a questionnaire on the audit committee’s 
performance and effectiveness
•  a strategic risk assessment exercise to identify and assess the 
group’s key risks and the controls in place to manage and 
mitigate against these risks
•  review of the internal audit reports issued during the year and 
the risk based internal audit programme for 2010
•  review of the external audit plan
•  review of the work integrating the corporate structure of 
acquisitions made during the year
•  the updated policy on market abuse and insider dealing
•  succession planning strategy for the ﬁ nance function
•  consideration of the frc report on ‘challenges for audit 
committees arising from current economic conditions’
•  appointment of deloitte as the group’s tax advisors and
•  the management of corporate fraud risks 
nomination committee
the nomination committee is comprised of kevin loosemore who 
chairs the committee david maloney the nonexecutive senior 
independent director and stephen kelly chief executive ofﬁ cer 
of the company and has met two times during the ﬁ nancial year 
the nomination committee will meet at least twice during the 
coming ﬁ nancial year david dominik resigned as a director and 
from the committee on 18 february 2009 and stephen kelly was 
appointed to the committee on 23 february 2009
the nomination committee is responsible to the full board for 
proposing candidates to the board having regard to the balance and 
structure of the board the nomination committee uses consultants 
to identify suitable candidates where a position is identiﬁ ed
the terms of reference of the nomination committee include among 
other things the following responsibilities
•  to review the structure size and composition of the board and 
make recommendations to the board with regard to any changes
•  to identify and nominate for the approval of the board 
candidates to ﬁ ll board vacancies as and when they arise
•  to give full consideration to succession planning for directors 
and other senior executives 
•  to keep under review the leadership needs of the group both 
executive and nonexecutive with a view to ensuring the 
continued ability of the organisation to compete effectively in 
the marketplace and
•  to review annually the time required from nonexecutives and 
evaluating whether they are spending enough time to fulﬁ l 
their duties
remuneration committee
details of the remuneration committee are described in the 
remuneration report on pages 42 to 47
accountability and audit
the board is responsible for the preparation of ﬁ nancial statements 
that present a balanced assessment of the group’s ﬁ nancial position 
and prospects this responsibility is administered primarily by the audit 
committee the terms of reference of which are referred to above
internal controls
the board is ultimately responsible for establishing and monitoring 
internal control systems throughout the group and reviewing their 
effectiveness it recognises that rigorous systems of internal control 
are critical to the group’s achievement of its business objectives that 
those systems are designed to manage rather than eliminate risk and 
that they can only provide reasonable and not absolute assurance 
against material misstatement or loss
the key elements of the control system are
•  the group operates a structured objectivesdriven approach to 
fulﬁ l its core purpose and goals in respect of sustained proﬁ tability 
and growth
•  research and development and capital expenditure programmes 
are subject to formal review and monitoring procedures
•  all contracts are reviewed the level of review depends on the size 
and complexity of the contracts and associated risks there are 
formal limits above which the review level is escalated
•  reconciliations are performed on a timely basis for all major 
accounts and
•  systems and procedures are in place for all major transaction types 
with appropriate authorisation controls
there is an ongoing internal process for identifying evaluating and 
managing the signiﬁ cant risks faced by the company in association 
with the work performed by the outsourced internal audit function 
this process has been in place throughout the year and up to 
the date of approval of the report and accounts and it is regularly 
reviewed by the board and accords with the turnbull guidance
as part of the process that the company has in place to review the 
effectiveness of the internal control system there are procedures 
designed to capture and evaluate failings and weaknesses and in the 
case of those categorised by the board as ‘signiﬁ cant’ procedures 
exist to ensure that necessary action is taken to remedy the failings
management and governance
corporate governance continued micro focus 
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annual report and 
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41
this requirement is set out in the audit committee’s terms of 
reference to report on a regular basis to the board on the group’s 
internal ﬁ nancial control procedures and to make recommendations 
to the board in this area
the external auditors provide a supplementary independent and 
autonomous perspective on those areas of the internal control 
system which they assess in the course of their work their ﬁ ndings 
are regularly reported to both the audit committee and the board 
to ensure auditor objectivity and independence there is a stringent 
process in place to approve nonaudit work
human resources
the group endeavours to appoint employees with appropriate skills 
knowledge and experience for the roles they undertake
the group has a range of policies which are aimed at retaining and 
providing incentives for key staff objectives are set for departments 
and employees that are derived from the group’s business objectives 
and performance is formally measured against these objectives twice 
per year the group has a clear and wellunderstood organisational 
structure and each employee knows his or her line of accountability
announcements
all major announcements are approved by the chairman and the 
executive directors and circulated to the board prior to issue
the group also has internal and external checks to guard against 
unauthorised release of information
financial
a comprehensive budgeting system allows managers to submit 
detailed budgets which are reviewed and amended by executive 
directors prior to submission to the board for approval
insurance
the group keeps under review its portfolio of insurance policies with 
its insurance brokers to ensure that the policies are appropriate to the 
group’s activities and exposures
attendance at meetings
the number of board meetings and committee meetings attended 
by each director in the year to 30 april 2009 was as follows
   audit  remuneration  nomination
  board  committee  committee  committee
  held  attended  held  attended  held  attended  held  attended
kevin loosemore  13  13  – – 5 5 2 2
stephen kelly  13  13  –  –  –  –  –  –
nick bray  13  13  –  –  –  –  –  –
prescott ashe  4  4  –  –  –  –  –  –
david dominik  10  10  –  –  –  –  1 1
david maloney  13  12  6  6  5 5 2 2
paul pester  13  13 6  6  5 5 –  –
tom skelton  13  13 6  6 5 5  –  –
 during period of appointment
note
prescott ashe resigned on 8 september 2008
david dominik resigned on 18 february 2009
directors are normally provided with the agenda and supporting 
papers for board and committee meetings a week prior to the 
meeting if unable to attend a meeting a director will provide 
feedback to the chairman chairman of the committee or the 
company secretary and their comments are then communicated 
at the meeting
shareholder relations
the company values the views of shareholders and recognises their 
interests in the group’s strategy and performance
the company reports formally to shareholders four times a year 
around june preliminary announcement of annual results and 
december interim statement the company also publishes interim 
management statements in or around august and february each 
year the annual report is expected to be mailed to shareholders 
in august separate announcements of all material events are 
made as necessary regular communications are maintained with 
institutional shareholders and presentations are given to shareholders 
when the halfyear and fullyear ﬁ nancial results are announced and 
at other times in addition to the chief executive ofﬁ cer and chief 
financial ofﬁ cer who have regular contact with investors kevin 
loosemore chairman and david maloney senior independent 
director are available to meet with shareholders as and when 
required the whole board is kept up to date at its regular meetings 
with the views of shareholders and analysts external analysts’ reports 
are also circulated to directors
the company’s website wwwmicrofocuscom provides an overview 
of the business including its strategy products and objectives
all group announcements are available on the website and new 
announcements are published without delay the terms of reference 
of each of the board’s three committees and other important 
corporate governance documents are available on the website and 
from the company secretary additionally the chief financial ofﬁ cer 
provides a focal point for shareholders’ enquiries and dialogue 
throughout the year
annual general meeting ‘agm’
the company’s agm which will be held on 24 september 2009 
at 3pm uk time will provide an opportunity for the board to meet 
with all shareholders and participation of shareholders is encouraged 
at the meeting in addition to the statutory business the board will 
be available for questions from shareholders
in accordance with the combined code recommendations the 
company will count all proxy votes and will indicate the level of 
proxies lodged the number of proxy votes for and against such 
resolution and the number of votes withheld a resolution will 
be proposed for each substantive issue and the chairs of the 
audit remuneration and nomination committees will attend to 
answer questions micro focus 
international plc
annual report and 
accounts 2009
42
introduction
this is the company’s remuneration report in respect of the year to 
30 april 2009 and subject to ongoing review by the remuneration 
committee the ‘committee’ as to its appropriateness sets out the 
ongoing policy in respect of the following and subsequent years
the company seeks to comply with the relevant conditions of the 
2006 combined code on corporate governance relating to directors’ 
remuneration as published by the financial reporting council and 
the companies act 2006 the regulations require the auditors to 
report to the company’s members on the ‘auditable part’ of the 
directors’ remuneration report and to state whether in their opinion 
that part of the report has been properly prepared in accordance 
with the companies act 2006 the report has therefore been divided 
into separate sections for audited and unaudited information
in accordance with the companies act 2006 a resolution to approve 
the remuneration report will be proposed at the company’s agm on 
24 september 2009 details of the resolution may be found in the 
notice of meeting accompanying this annual report the vote will 
be advisory and will be considered carefully by the members of the 
committee in the formulation and approval of the company’s future 
remuneration policies
the remuneration committee
the committee has met ﬁ ve times during the ﬁ nancial year the 
committee is responsible for reviewing remuneration arrangements 
for members of the board and for providing general guidance 
on aspects of remuneration policy throughout the group the 
committee will meet at least twice during the coming ﬁ nancial year
the terms of reference of the committee include among other 
things the following responsibilities
•  to determine and agree with the board the framework or broad 
policy for the remuneration of the company’s chief executive 
ofﬁ cer chairman the executive directors the company secretary 
and other members of the executive management team as 
appointed from time to time
•  to determine the total individual remuneration package of each 
executive director and other senior executives including bonuses 
incentive payments and share options or other share awards
•  to determine the policy for and scope of pension arrangements 
for each executive director and other senior executives
•  to approve the framework of salaries for senior managers 
and determine targets for any performancerelated pay 
schemes operated by the company and approve the total 
annual payments
•  to review the design of all share incentive plans for approval 
by the board and shareholders
•  to oversee any major changes in employee beneﬁ t structures 
throughout the company or group and
•  to review the ongoing appropriateness and relevance of the 
remuneration policy
the committee comprises paul pester as chairman with david 
maloney tom skelton and kevin loosemore as its other members 
where appropriate the committee invites the views of the chief 
executive ofﬁ cer the chief financial ofﬁ cer and the group human 
resources director as well as that of external remuneration 
consultants the chairman absents himself from any discussion 
relating to his own remuneration
the committee has been materially assisted by hewitt associates 
limited trading as hewitt new bridge street ‘hnbs’ who are the 
principal advisors to the committee in providing remuneration 
advice by steen and co solicitors by linklaters solicitors and by 
watson wyatt their advice has been taken into account by the 
committee where appropriate during the year the chief executive 
ofﬁ cer and group human resources director attended some of 
the meetings by invitation of the committee on speciﬁ c items 
however they did not participate in discussions relating to their 
own remuneration
the terms of reference of the committee are available from 
the company secretary and are on the company’s website 
wwwmicrofocuscom under ‘investors’
remuneration policy
the company’s policy on the remuneration of executive directors 
and their direct reports is established by the committee and 
approved by the board the individual remuneration package 
of each executive director is determined by the committee
no executive director or employee participates in discussions 
relating to the setting of their own remuneration
the objective of the group’s remuneration policies is that all 
employees including executive directors should receive appropriate 
remuneration for their performance responsibility skills and 
experience remuneration packages are designed to enable the 
group to attract and retain key employees by ensuring they are 
remunerated appropriately and competitively and that they are 
motivated to achieve the highest level of group performance in 
line with the best interests of shareholders
it is intended that an appropriate and signiﬁ cant proportion of 
remuneration will continue to be performance related see details 
below performance conditions for performancerelated bonuses 
and longterm incentives will represent challenging growth targets 
which are designed to increase shareholder value the committee 
will review the performance conditions used to ensure that they 
remain demanding and appropriate
in line with the association of british insurers’ guidelines on 
responsible investment disclosure the committee will ensure 
that the incentive structure for executive directors and senior 
management will not raise environmental social or governance 
‘esg’ risks by inadvertently motivating irresponsible behaviour 
more generally with regard to the overall remuneration structure 
there is no restriction on the committee which prevents it from 
taking into account corporate governance on esg matters
it is the board’s intention to award share incentives to executive 
directors and selected employees as appropriate to reward and 
encourage performance these share incentives will be granted 
at the discretion of the committee
management and governance
remuneration report micro focus  
international plc
annual report and  
accounts 2009
43
policies on remuneration take account of the pay structure 
employment conditions and relativities within the group and also the 
industry sector to determine the elements and level of remuneration 
appropriate to each executive director the committee considers 
benchmark remuneration data for selected comparable technology 
companies and seeks to ensure that fixed costs are no higher than 
market median that an appropriately significant proportion of 
potential pay is performance related and that total pay is consistent 
with appropriately competitive levels of pay for superior performance
during the year the committee with the assistance of hnbs and 
watson wyatt conducted a review of all aspects of remuneration 
with a particular emphasis on longterm incentive provision following 
this review the committee has decided to increase the level of annual 
awards of longterm incentives for the executive directors and other 
senior executives this change is designed to ensure that the package 
of remuneration remains consistent with the policy outlined above
the committee has also reviewed the performance condition 
used for longterm incentive awards to ensure that these remain 
consistent with the group’s strategy it concluded that eps remains 
an appropriate performance measure for awards of longterm 
incentives the committee will keep this measure under review to 
ensure it remains sufficiently challenging
the micro focus international plc incentive plan 2005 the ‘plan’ 
currently has a limit of 5 in 10 years for specific awards within an 
overall plan limit of 10 in 10 years the company will be seeking 
shareholder approval at its agm in september to remove the  
5 in 10 years limit from the plan while maintaining the overall 
10 in 10 years dilution limit 
the 5 in 10 years limit is likely to become a constraint due to  
the following 
•  the majority of shares issued to date have been granted as 
market priced options the board believes that market priced 
options better align management and shareholders in a company 
with relatively high potential and growth these types of awards 
typically require the issue of a greater number of options than zero 
priced options approx 253 times greater volume the board 
believes that moving to zero priced options at this time would 
dilute the link between shareholders and management
•  micro focus has had and will continue to have the opportunity 
to create significant value through acquisition on acquisition 
we will gain and hire key individuals that are necessary to the 
successful integration stabilisation and growth of the acquired 
business longterm equity awards are an important part of 
retaining and recruiting these high calibre individuals and ensuring 
that the performance of the entire executive team is focused on 
creating longterm shareholder value to date it has been in the 
best interest of shareholders to buy companies with cash and not 
through the issuance of shares this has placed greater strain on 
the scheme 
•  in july 2006 shareholders approved a resolution allowing 
the company to satisfy option awards via the use of share 
appreciation rights ‘sars’ and since then the committee grants 
market priced options in the form of sars where possible this 
again aligns the company and shareholders by limiting dilution 
consistent with the abi guidelines all the shares potentially 
subject to an outstanding option will count towards the limits 
  until such time as a smaller number of shares are actually issued 
on exercise this means that the 5 limit is pushed even when a 
smaller number of shares may actually be issued
•  when micro focus hired stephen kelly as the ceo and nick bray 
as the cfo in 2006 the company’s share price was relatively low 
necessitating large grants in terms of numbers of shares for these 
critical hires
directors’ service contracts
executive directors
the group’s policy in entering into service contracts with executive 
directors is to enable the recruitment of highquality executives and 
to obtain protection from their sudden departure whether or not to 
competitor companies in addition service contracts are an important 
element in maintaining maximum protection for the group’ s intellectual 
property rights and other commercially sensitive information
the service contract dated 1 may 2006 with stephen kelly requires  
the company to give 12 months’ notice of termination stephen kelly  
is required to give six months’ notice of the termination of his 
employment should he wish to leave the service contract dated  
30 november 2005 with nick bray requires the company to give 12 
months’ notice of termination nick bray is required to give six months’ 
notice of the termination of his employment should he wish to leave
if an executive director is guilty of a material breach of his service 
contract or commits any crime or act of gross misconduct or 
dishonesty the company is entitled summarily to terminate the 
service contract without notice and without payment in lieu of notice 
or other compensation such a contract term cannot however as 
a rule of law affect the executive director’s statutory rights such as 
rights in respect of unfair dismissal
should an executive director be dismissed other than as described 
above the company may pay him in lieu of notice a sum equal to 
his basic pay over his notice period
at the discretion of the committee having regard to the company’s 
performance at the time of dismissal the committee may in addition 
pay all or a proportion of the bonus which would but for the 
dismissal have become payable up to the date of notice being served 
by the company the company’s policy on the duration of such 
contracts with executive directors is explained above
stephen kelly acts in the capacity of a nonexecutive director at 
cúram software limited for which he receives remuneration of 
£40000 per annum stephen kelly is permitted to retain these fees 
as the post entails personal responsibility
nick bray does not serve as a nonexecutive director for any 
company the executive directors may not accept nonexecutive 
appointments without the consent of the board
nonexecutive directors
nonexecutive directors are appointed by letter of appointment  
for a fixed term of three years subject to earlier termination by  
either the director or the company on 90 days notice nonexecutive 
directors receive fees for services as members of the board and its 
committees the level of fees is determined by the board after taking 
into account appropriate advice
nonexecutive directors do not participate in the group’s share 
incentives or otherwise receive performance related pay micro focus 
international plc
annual report and 
accounts 2009
44
kevin loosemore and david maloney signed reappointment letters 
with the company which became effective on 4 april 2008 tom 
skelton signed an appointment letter with effect from 23 october 
2006 paul pester signed an appointment letter which took effect 
on 27 june 2007 all appointments are subject to election by 
the shareholders at the ﬁ rst agm of the company after their 
appointment and thereafter at least every three years tom skelton 
and paul pester were elected at the agm held on 26 september 
2007 as the remaining nonexecutive directors were elected to the 
board at the agm of the company in september 2005 the directors 
have agreed to offer themselves for reelection on a rotation basis 
accordingly kevin loosemore retired voluntarily and was reelected 
at the company’s agm in september 2006 david maloney retired 
voluntarily and was reelected at the company’s agm in september 
2007 kevin loosemore together with executive directors stephen 
kelly and nick bray will be retiring voluntarily and submitting 
themselves for reelection by the shareholders at the agm of the 
company on 24 september 2009 the board considers it appropriate 
that mr loosemore is reelected at the agm each nonexecutive 
director still serving at the end of his term will have his appointment 
reviewed by the board and a further term of ofﬁ ce may be agreed 
where a nonexecutive director does not serve until the end of his 
term the policy is to pay the fees due pro rata to the date of cessation
remuneration package
executive directors’ remuneration currently comprises annual salary 
a performancerelated bonus a longterm incentive in the form of 
share incentives pension contributions and other beneﬁ ts
annual salary
the board approves the overall budget for employee salary increases 
and the committee agrees the speciﬁ c increases for executive 
directors and certain other senior members of the management 
team in doing so it seeks to ensure that the approach taken for 
executive directors is consistent with that used for other employees 
salaries for executive directors and other senior employees are 
reviewed annually with changes becoming effective from 1 july 
each year in determining appropriate salary levels for each executive 
director and senior employee the committee considers both 
the nature and the status of the company’s operations and the 
responsibilities skills experience and performance of the executive 
director or employee the committee compares the group’s 
remuneration packages for its directors and employees with 
those for directors and employees of similar seniority in companies 
whose activities are comparable with the group and with which 
it competes for staff the committee has used hnbs in making 
these comparisons
at 30 april 2009 the salaries of the executive directors are as follows
•  stephen kelly £330000
•  nick bray £220000
  with effect from 1 july 2009 the committee agreed to increase each of the 
executive directors’ salaries by 10 from £330000 to £363000 for stephen 
kelly and from £220000 to £242000 for nick bray reﬂ ecting both the increased 
scale of the roles in line with the growth of the company and following signiﬁ cant 
acquisitions this year
performancerelated bonus
the executive directors and all other employees except for sales 
staff participate in a performancerelated bonus scheme the level 
of commission for sales staff is based on a percentage of revenue 
generated with the percentages increasing as revenue exceeds 
target levels the level of bonus for nonsales staff is based on 
overall group performance in meeting its primary ﬁ nancial objectives 
in worldwide earnings before interest tax depreciation and 
amortisation ‘ebitda’ and revenue goals the levels of bonus for 
stephen kelly and nick bray includes personal objectives
the committee will continue to place a signiﬁ cant proportion of 
executive pay ‘at risk’ so that it is closely linked to the interests of 
shareholders the committee will ensure that there is a balance 
between setting targets for executive directors which are challenging 
and clearlyassessable which will include regard to consensus 
brokers’ forecasts where relevant ensuring that the performance 
targets do not encourage undue risktaking 
details of bonuses paid to executive directors in the year to 30 april 
2009 are detailed in the remuneration tables on page 46 bonuses 
are awarded wholly in cash the performance targets for stephen 
kelly resulted in a bonus of 93 of salary out of 150 of which 
32 was from personal objectives £66000 of this bonus is retained 
and will be paid in fy2010 provided mr kelly remains in employment 
with the company the performance targets for nick bray resulted 
in a bonus of 91 of salary out of 100 of which 30 was from 
personal objectives £44000 of this bonus is retained and will be paid in 
fy2010 provided mr bray remains in employment with the company
in respect of the year 20092010 the cap on bonuses payable to 
stephen kelly remains at 150 of salary and 100 of salary for 
nick bray
longterm incentives
the board believes that longterm incentive schemes are important 
in retaining and recruiting highcalibre individuals and ensuring 
that the performance of executives is focused on creating long
term shareholder value awards of options or free shares will be 
considered by the committee on an ongoing basis
the company adopted the plan prior to admission to the london 
stock exchange in 2005 this is intended to provide a ﬂ exible 
framework to allow the company to make awards of free shares in 
the form of nilcost options conditional awards or forfeitable shares 
or to grant market value options ‘awards’ currently the company’s 
ongoing policy is to make annual awards of market value options 
to the executive directors and market value options or nil cost 
options to other senior and key employees granting annual 
awards is intended to ensure that executives are not encouraged 
to undertake any undue risks in order to maximise the value of a 
particular award market value options are intended to focus the 
executive directors and employees on growing the revenue and 
proﬁ tability of the business
the targets for market value option awards made to the executive 
directors on 10 july 2009 and during the years ended 30 april 2009 
and 2008 were reviewed by the committee these require that 
cumulative eps growth over a threeyear vesting period is at least 
equal to rpi  11 pa at which point 25 of awards will vest 
60 of shares will vest for cumulative eps growth of rpi  13 
pa and for full vesting the cumulative eps growth will be required 
to be rpi  15 pa straightline vesting will apply between these 
points performance against these objectives is determined by the 
committee based on the company’s audited results
the maximum aggregate value of awards that can normally be 
granted to any individual in any ﬁ nancial year will not exceed two 
times his or her basic salary for these purposes the value of the 
awards is deemed to be equal to the market value of free shares 
at the time of the award or in the case of market value options 
management and governance
remuneration report continued micro focus 
international plc
annual report and 
accounts 2009
45
50 of the market value of the shares under option at the time of 
the award ie awards of market value share options with a face 
value up to four times salary can be made each year this limit may 
be exceeded only where the committee determines that there are 
exceptional circumstances 
the company has made awards of market value options with a face 
value that is signiﬁ cantly below the maximum award levels allowed 
under the plan the awards made in july 2008 had a face value of 
one times salary this took account of the larger grants made to 
the executive directors on recruitment as these recruitment awards 
have now vested the existing award levels would result in overall 
levels of total remuneration that are signiﬁ cantly below the market 
median level following the review of remuneration conducted by 
the committee during the year the committee has determined that 
for the 2009 and future awards award levels should be increased to 
3 times salary and 25 times salary for the chief executive ofﬁ cer and 
chief financial ofﬁ cer respectively
mediumterm incentives
for the year 2010 the company has introduced a mediumterm 
incentive speciﬁ cally targeted at achieving continued core business 
performance together with the integration of the compuware and 
borland acquisitions for a number of key executives the committee 
believes that successful integration will add signiﬁ cant incremental 
share holder value
the key measures for the mediumterm bonus are achievement 
of the core business budget in terms of revenues and ebitda and 
achievement of the planned revenues ebitda and key milestones 
from the acquired entities
the incentive for mr kelly and mr bray comprises the following 
elements
•  an incremental bonus of £160000 to stephen kelly and 
£110000 to nick bray that will be paid in micro focus shares 
on conﬁ rmation that the targets have been met these shares 
will vest two years after grant provided that the executive 
remains in employment
•  a deferred pay rise of £49500 to stephen kelly and £33000 
to nick bray that will be implemented on conﬁ rmation that the 
targets have been met and
•  that for 2010 the multiple of shares granted to mr kelly and 
mr bray will be increased by 05x salary to 35 times salary and 
30 times salary respectively
allemployee share incentives
executive directors are entitled to participate in the company 
sharesave scheme under the sharesave scheme uk employees are 
eligible to acquire shares in the company at a discount of up to 20 
of the market value at grant if they agree to enter into a savings 
contract for a period consistent with the relevant legislation no 
performance conditions apply
pension contributions
all employees including executive directors are invited to participate 
in a group personal pension plan all major schemes are money 
purchase in nature and have no deﬁ ned beneﬁ ts a deﬁ ned beneﬁ t 
scheme is operated in japan but given the number of members 
is insigniﬁ cant for group purposes the group has no obligation 
to the group personal pension scheme beyond the payment 
of contributions the company was not therefore impacted 
by the pension’s regime which came into force on 6 april 2006
the company contributions for the executive directors are 5 
of salary the committee recognises that this contribution is low 
by comparison to the current market however it does not propose 
to review the contribution rate in view of forthcoming legislation 
on pension contributions
pension beneﬁ ts include death in service
other beneﬁ ts
beneﬁ ts in kind for executive directors can include the provision 
of a company car allowance or service fuel life insurance and 
medical beneﬁ ts
total shareholder return
£0
£50
£100
£150
£200
£250
£300
30 apr 09 30 apr 08 30 apr 07 30 apr 06 12 may 05
— micro focus international plc
— ftse 250 index
— ftse software  computer services index
source datastream
the graph shows the value by 30 april 2009 of £100 invested in micro focus international plc on 12 may 2005 the start of conditional 
trading prior to admission on 17 may 2005 compared with the value of £100 invested in the ftse 250 and the ftse software  computer 
services indices the intervening points are at ﬁ nancial year ends the ftse 250 and the ftse software  computer services indices have been 
chosen as they are considered the most relevant indices for the company micro focus 
international plc
annual report and 
accounts 2009
46
audited information
detailed emoluments of the directors of the group
the aggregate remuneration paid or receivable by directors during the year ending 30 april 2009 was as follows
        
    base salary   beneﬁ ts    total total
    and fees  bonus  in kind  pensions  2009  2008
    £’000  £’000  £’000  £’000  £’000 £’000
executive directors
stephen kelly    325  304 23  16 668 651
nick bray    217  198  13  11  439 366
mike shinya resigned 7 january 2008   – – – – – 314
total   542  502  36  27  1107 1331
nonexecutive directors
kevin loosemore    150  –  –  –  150 146
david maloney    64  –  –  –  64  60
paul pester    47  –  –  –  47  38
tom skelton    45  –  –  –  45  38
total    306  –  –  –  306  282
nonexecutive director annual fees on 30 april 2009 were £150000 for the chairman kevin loosemore 30 april 2008 £150000 £65000 
effective 1 july 2008 for the senior independent director david maloney 30 april 2008 £60000 £45000 for paul pester following 
appointment as chairman of the remuneration committee 30 april 2008 £40000 and £40000 for tom skelton 30 april 2008 £40000 
nonexecutive fees are subject to periodic review with effect from 1 july 2009 nonexecutive director annual fees increased to £185000 for 
kevin loosemore £175000 annual fee plus £10000 as chair of the nomination committee £70000 for david maloney £50000 annual 
nonexecutive director fee plus £10000 for role as senior independent director and £10000 as chair of the audit committee £60000 for 
paul pester £50000 annual nonexecutive director fee plus £10000 as chair of the remuneration committee and £50000 for tom skelton 
annual nonexecutive director fee
neither of the nonindependent nonexecutive directors of the company who resigned during the year david dominik and prescott ashe 
received any emoluments during the year ended 30 april 2009 2008 nil 
directors’ interests in share capital
at 30 april 2009 the directors owned the following shares in the company including interests held by their connected persons
director        at 30 april 2009 at 30 april 2008
kevin loosemore        300000 500000
stephen kelly        125000 125000
nick bray        57770 57770
david maloney        50000 50000
tom skelton        –  –
paul pester       –  –
as at 12 august 2009 there had been no changes to these interests
management and governance
remuneration report continued micro focus 
international plc
annual report and 
accounts 2009
47
micro focus international plc incentive plan 2005 ‘plan’
the grants made to the executive directors under the terms of the plan are as follows
  number  number  number  number  number  
  at 1 may  granted  exercised  lapsed  at 30 april  exercise 
  2008  in year  in year  in year  2009  price  dates of exercise
stephen kelly
2 
 1153846  –  –  –  1153846  1040p  17 july 2009 to 16 july 2016
stephen kelly
3
  169332  – –  –  169332 26575p 12 july 2010 to 11 july 2017
stephen kelly
3
  – 134831 – – 134831 24475 3 july 2011 to 2 july 2018
nick bray
1 
 412955  –  412955 –  – 1235p  11 january 2009 to 10 january 2016
nick bray
2 
 100000  –  –  –  100000  1040p  17 july 2009 to 16 july 2016
nick bray
3 
 75258 – –  –  75258  26575p  12 july 2010 to 11 july 2017
nick bray
3
 – 89888 – – 89888 24475p 3 july 2011 to 2 july 2018
total  1911391  224719  412955    1723155  
1  the performance condition applying to awards made to nick bray on 11 january 2006 was based on growth in eps over a threeyear performance period with a minimum 
average annual eps growth of rpi  3 25 of awards vest and 100 vesting at an average annual eps growth of rpi  7 the market price on the date that nick bray 
exercised the share options above was 295p and the total gain on the exercise was £708000
2  the performance condition applying to awards granted in the 12 months to 30 april 2007 require that for any awards to vest compound annual eps growth must be at least 
equal to 15 pa once this hurdle has been reached awards may vest provided revenue growth targets are reached for 25 of awards to vest compound annual revenue 
growth must be at least equal to 6 with awards vesting in full for compound annual revenue growth of 15 
3  the performance conditions applying to awards granted in the 12 months to 30 april 2008 and 30 april 2009 require that for any shares to vest cumulative eps growth over 
a threeyear vesting period is at least equal to rpi  11 pa at which point 25 of awards will vest 60 of shares will vest for cumulative eps growth of rpi  13 pa and 
for full vesting the cumulative eps growth will be required to be rpi  15 pa straightline vesting will apply between these points 
on 10 july 2009 market value option awards were granted to stephen kelly over 359660 shares and nick bray over 205520 shares in each 
case at an exercise price of 35325 pence dates of exercise are from 10 july 2012 to 9 july 2019 the targets for these awards require that 
cumulative eps growth over a threeyear vesting period is at least equal to rpi  11 pa at which point 25 of awards will vest 60 
of shares will vest for cumulative eps growth of rpi  13 pa and for full vesting the cumulative eps growth will be required to be rpi  
15 pa straightline vesting will apply between these points
ltip – matching share scheme 
during the year to 30 april 2007 the following grants were made to the executive directors in accordance with the terms of the plan
   at 1 may  number lapsed  at 30 april exercise 
   2008   in year  2009  price  vesting date
stephen kelly  125000   –  125000  10p  11 january 2010
nick bray  57659   –  57659  10p  17 october 2009
total  182659     182659  
these conditional matching shares will vest after three years to the extent that the purchased shares are held continuously by the participant 
until the vesting date 
sharesave
in relation to the sharesave scheme the outstanding options which have been granted to each director of the company are as follows
   at 1 may  granted  number lapsed  at 30 april  exercise 
   2008  in year  in year  2009  price  dates of exercise
nick bray  11130  –  –  11130  840p  1 october 2009 to 31 march 2010
total  11130  –    11130  
these options are not subject to performance conditions since performance conditions do not apply to this allemployee share scheme 
share option schemes
details of the company’s share option schemes are given in note 23 of the ﬁ nancial statements
the midmarket price of the shares at 30 april 2009 was 319 pence and during the year the price varied between 188 pence and 331 pence
on behalf of the board
signature required
paul pester 
chairman of the remuneration committee
12 august 2009 micro focus 
international plc
annual report and 
accounts 2009
48
the company uses several key performance indicators internally to monitor the performance of the business against the achievement of 
objectives a summary of some of the more important kpis that are used with a brief description on how they are calculated and the results 
for the year are as follows
description  metrics  performance
revenue growth  2009  revenue comprises total revenues including the contribution of acquisitions and is
  204 compared with the prior year 
   
  2008 
  330
 
adjusted ebitda margin  2009  earnings before interest tax depreciation and amortisation of intangible ﬁ xed assets 
  432 exceptional items and share based compensation charge the adjusted ebitda margin
   represents adjusted ebitda divided by revenue for the year 
  2008 
  388  
cash generation from  2009  this measure is calculated using the cash ﬂ ows generated from continuing operations
operations 1129 divided by adjusted ebitda – the result indicates that the group is generating cash  
   from its ongoing business which can be used to reinvest in the development 
  2008  of the business including ﬁ nancing acquisitions fund liabilities and pay dividends 
  973 to shareholders
     amendment made to prior year cash ﬂ ow resulting in a change from last year’s disclosure 1087
adjusted eps  2009  adjusted eps is calculated by taking income for the ﬁ nancial year prior to exceptional 
  4151c items amortisation of purchased intangibles and share based compensation charge 
   divided by the weighted average number of ordinary shares in issue during the year
  2008 this measure indicates the ability of the company to continue to adopt a progressive  
  3208c dividend policy
renewal rates on  2009  customer retention is an important measure as it supports the maintenance revenue
maintenance contracts 895 streams going forward renewal rates are calculated as the number of maintenance 
   contracts which were renewed in the period divided by the number of contracts which
  2008 were potentially renewable in the period
  896
management and governance
key performance indicators ‘kpis’ micro focus 
international plc
annual report and 
accounts 2009
49
the directors are responsible for preparing the annual report the 
directors’ remuneration report and the ﬁ nancial statements in 
accordance with applicable law and regulations
company law requires the directors to prepare ﬁ nancial statements 
for each ﬁ nancial year under that law the directors have elected 
to prepare the group ﬁ nancial statements in accordance with 
international financial reporting standards ‘ifrss’ as adopted by 
the european union and the parent company ﬁ nancial statements 
in accordance with united kingdom generally accepted accounting 
practice united kingdom accounting standards and applicable law 
under company law the directors must not approve the ﬁ nancial 
statements unless they are satisﬁ ed that they give a true and fair 
view of the state of affairs of the group and the company and of 
the proﬁ t or loss of the group for that period in preparing these 
ﬁ nancial statements the directors are required to
•   select suitable accounting policies and then apply them 
consistently
•   make judgments and accounting estimates that are reasonable 
and prudent
•   state whether ifrss as adopted by the european union and 
applicable uk accounting standards have been followed subject 
to any material departures disclosed and explained in the group 
and parent company ﬁ nancial statements respectively and
•   prepare the ﬁ nancial statements on the going concern basis 
unless it is inappropriate to presume that the company will 
continue in business
the directors are responsible for keeping adequate accounting 
records that are sufﬁ cient to show and explain the company’s 
transactions and disclose with reasonable accuracy at any time the 
ﬁ nancial position of the company and the group and enable them to 
ensure that the ﬁ nancial statements and the directors’ remuneration 
report comply with the companies act 2006 and as regards the 
group ﬁ nancial statements article 4 of the ias regulation they are 
also responsible for safeguarding the assets of the company and the 
group and hence for taking reasonable steps for the prevention and 
detection of fraud and other irregularities
the directors are responsible for the maintenance and integrity of the 
company’s website legislation in the united kingdom governing 
the preparation and dissemination of ﬁ nancial statements may differ 
from legislation in other jurisdictions 
each of the directors whose names and functions are listed in the 
annual report conﬁ rm that to the best of their knowledge
•   the group ﬁ nancial statements which have been prepared in 
accordance with ifrss as adopted by the eu give a true and fair 
view of the assets liabilities ﬁ nancial position and proﬁ t of the 
group and
•   the directors’ report includes a fair review of the development 
and performance of the business and the position of the group 
together with a description of the principal risks and uncertainties 
that it faces
by order of the board
jane smithard 
company secretary
12 august 2009
management and governance
statement of directors’ responsibilities in respect of the annual report 
the directors’ remuneration report and the ﬁ nancial statements micro focus 
international plc
annual report and 
accounts 2009
50
we have audited the group ﬁ nancial statements of micro focus 
international plc for the year ended 30 april 2009 which comprise 
the consolidated income statement the consolidated balance sheet 
the consolidated statement of changes in shareholders’ equity the 
consolidated cash ﬂ ow statement and the related notes the ﬁ nancial 
reporting framework that has been applied in their preparation 
is applicable law and international financial reporting standards 
‘ifrss’ as adopted by the european union 
respective responsibilities of directors and auditors 
as explained more fully in the statement of directors’ responsibilities 
set out on page 49 the directors are responsible for the preparation 
of the group ﬁ nancial statements and for being satisﬁ ed that 
they give a true and fair view our responsibility is to audit the 
group ﬁ nancial statements in accordance with applicable law 
and international standards on auditing uk and ireland those 
standards require us to comply with the auditing practices board’s 
ethical standards for auditors 
this report including the opinions has been prepared for and only 
for the company’s members as a body in accordance with sections 
495 and 496 of the companies act 2006 and for no other purpose 
we do not in giving these opinions accept or assume responsibility 
for any other purpose or to any other person to whom this report is 
shown or into whose hands it may come save where expressly agreed 
by our prior consent in writing
scope of the audit of the ﬁ nancial statements 
an audit involves obtaining evidence about the amounts and 
disclosures in the ﬁ nancial statements sufﬁ cient to give reasonable 
assurance that the ﬁ nancial statements are free from material 
misstatement whether caused by fraud or error this includes an 
assessment of whether the accounting policies are appropriate to 
the group’s circumstances and have been consistently applied and 
adequately disclosed the reasonableness of signiﬁ cant accounting 
estimates made by the directors and the overall presentation of the 
ﬁ nancial statements
opinion on ﬁ nancial statements 
in our opinion the group ﬁ nancial statements 
•   give a true and fair view of the state of the group’s affairs as 
at 30 april 2009 and of its proﬁ t and cash ﬂ ows for the year 
then ended 
•   have been properly prepared in accordance with ifrss as adopted 
by the european union and 
•   have been prepared in accordance with the requirements of the 
companies act 2006 and article 4 of the las regulation 
opinion on other matter prescribed by the companies 
act 2006 
in our opinion the information given in the directors’ report for the 
ﬁ nancial year for which the group ﬁ nancial statements are prepared 
is consistent with the group ﬁ nancial statements 
matters on which we are required to report by 
exception 
we have nothing to report in respect of the following 
under the companies act 2006 we are required to report to you if 
in our opinion 
•   certain disclosures of directors’ remuneration speciﬁ ed by law are 
not made or 
•   we have not received all the information and explanations we 
require for our audit 
under the listing rules we are required to review 
•   the directors’ statement set out on page 37 in relation to going 
concern and 
•   the part of the corporate governance statement relating to the 
company’s compliance with the nine provisions of the 2006 
combined code speciﬁ ed for our review 
other matter 
we have reported separately on the parent company ﬁ nancial 
statements of micro focus international plc for the year ended 
30 april 2009 and on the information in the directors’ remuneration 
report that is described as having been audited 
pauline campbell senior statutory auditor
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors
reading
12 august 2009
consolidated ﬁ nancial statements and notes
independent auditors’ report to the members of 
micro focus international plc micro focus 
international plc
annual report and 
accounts 2009
51
consolidated ﬁ nancial statements and notes
consolidated income statement
for the year ended 30 april 2009
        2009 2008
       notes ’000 ’000
revenue      12 274731 228196
cost of sales       22377 22582
gross proﬁ t       252354 205614
selling and distribution costs       78128 63233
research and development expense       34127 29484
administrative expenses       48888 38105
operating proﬁ t       91211 74792
analysed as
operating proﬁ t before exceptional items      106118 81294
exceptional items      3 14907 6502
operating proﬁ t       91211 74792
finance costs      5 756 12
finance income      5 994 2043
proﬁ t before tax      13 91449 76823
taxation      6 25419 21404
proﬁ t after tax       66030 55419
earnings per share expressed in cents per share      cents cents
– basic      8 3287 2767
– diluted      8 3192 2697
earnings per share expressed in pence per share      pence pence
– basic      8 1993 1379
– diluted      8 1936 1344
all results are from continuing operations micro focus 
international plc
annual report and 
accounts 2009
52
        2009 2008
       notes ’000 ’000
assets
noncurrent assets
goodwill      9 119813 65784
other intangible assets      10 66349 35282
property plant and equipment      11 5112 4359
deferred tax assets      19 17625 15577
        208899 121002
current assets
inventories      12 128 192
trade and other receivables      13 67089 59205
cash and cash equivalents      14 71569 92405
        138786 151802
total assets       347685 272804
liabilities
current liabilities
trade and other payables      15 121120 103859
current tax liabilities      16 22187 19245
        143307 123104
noncurrent liabilities
noncurrent deferred income      17 7085 6518
deferred tax liabilities      19 28565 16660
        35650 23178
net assets       168728 126522
equity
share capital      20 37092 36837
share premium      21 106200 103904
proﬁ t and loss reserve       56870 12679
foreign currency translation deﬁ cit reserve      4349 187
other reserves deﬁ cit       27085 27085
total equity       168728 126522
the consolidated ﬁ nancial statements on pages 51 to 78 were approved by the board of directors on 12 august 2009 and were signed on its 
behalf by
 
stephen kelly nick bray
chief executive ofﬁ cer chief financial ofﬁ cer
consolidated ﬁ nancial statements and notes
consolidated balance sheet
as at 30 april 2009 micro focus 
international plc
annual report and 
accounts 2009
53
      foreign
      currency  proﬁ t 
      translation other and loss 
    share share reserve reserves reserve 
    capital premium deﬁ cit deﬁ cit
1
 deﬁ cit total
    ’000 ’000 ’000 ’000 ’000 ’000
balance as at 1 may 2007   36767 104054 1163 27085 23394 91505
currency translation differences   – – 976 – – 976
proﬁ t for the year   – – – – 55419 55419
dividends   – – – – 21229 21229
issue of share capital   70 – – – – 70
movement in relation to share options   – 150 – – 1487 1337
deferred tax on share options   – – – – 396 396
balance as at 30 april 2008   36837 103904 187 27085 12679 126522
currency translation differences   – – 4536 – – 4536
proﬁ t for the year   – – – – 66030 66030
dividends   – – – – 26077 26077
issue of share capital   255 2296 – – 1034 1517
movement in relation to share options   –  – – 2407 2407
current tax on share options   – – – – 1560 1560
deferred tax on share options   – – – – 1305 1305
balance as at 30 april 2009   37092 106200 4349 27085 56870 168728
1 the deﬁ cit in other reserves was established in may 2005 when the company was set up in its present format prior to admission to the london stock exchange
consolidated ﬁ nancial statements and notes 
consolidated statement of changes in shareholders’ equity
for the year ended 30 april 2009  micro focus 
international plc
annual report and 
accounts 2009
54
        2009 2008
       notes ’000 ’000
cash ﬂ ows from operating activities
cash generated from operations      22 105031 90975
interest received       994 2051
interest paid       756 12
tax paid       19991 18193
net cash from operating activities       85278 74821
cash ﬂ ows from investing activities
payments for intangible assets      10 8609 6272
purchase of property plant and equipment     11 2650 3183
acquisition of subsidiaries      27 92111 41576
disposal of property plant and equipment      18 –
net cash acquired with subsidiaries      27 28444 678
net cash used in investing activities       74908 50353
cash ﬂ ows from ﬁ nancing activities
proceeds from issue of ordinary share capital      1517 71
repayment of borrowings       – 113
dividends paid to shareholders      7 26076 21229
net cash used in ﬁ nancing activities       24559 21271
effects of exchange rate changes       6647 4237
net decrease increase in cash and cash equivalents     20836 7434
cash and cash equivalents at 1 may 2008      92405 84971
cash and cash equivalents at 30 april 2009     14 71569 92405
consolidated ﬁ nancial statements and notes
consolidated cash ﬂ ow statement
for the year ended 30 april 2009 micro focus 
international plc
annual report and 
accounts 2009
55
the principal accounting policies applied in the preparation of these consolidated ﬁ nancial statements are set out below these policies have 
been consistently applied to both years presented unless otherwise stated
1 group accounting policies
a basis of preparation
the consolidated ﬁ nancial statements of micro focus international plc have been prepared in accordance with eu endorsed international 
financial reporting standards ‘ifrs’ ifric interpretations and the companies act 2006 applicable to companies reporting under ifrs 
the consolidated ﬁ nancial statements have been prepared under the historical cost convention as modiﬁ ed by share options measured at fair 
value through the income statement
the preparation of ﬁ nancial statements in conformity with ifrs requires the use of certain critical accounting estimates it also requires 
management to exercise its judgment in the process of applying the group’s accounting policies the areas involving a higher degree of 
judgment or complexity or areas where assumptions and estimates are signiﬁ cant to the consolidated ﬁ nancial statements are disclosed 
below in 2 critical accounting estimates and assumptions
b consolidation
the ﬁ nancial statements of the group comprise the ﬁ nancial statements of the company and entities controlled by the company its 
subsidiaries prepared at the balance sheet date control exists where the company has the power to govern the ﬁ nancial and operating 
policies of the entity so as to obtain beneﬁ ts from its activities
the purchase method of accounting is used to account for the acquisition of subsidiaries by the group the cost of acquisition is measured 
as the fair value of the assets given equity instruments issued and liabilities incurred or assumed at the date of exchange plus costs directly 
attributable to the acquisition identiﬁ able assets acquired and liabilities and contingent liabilities assumed in a business combination are 
measured initially at their fair values at the acquisition date irrespective of the extent of any minority interest the excess of the cost of 
acquisition over the fair value of the group’s share of the identiﬁ able net assets acquired is recorded as goodwill
intercompany transactions balances and unrealised gains on transactions between group companies are eliminated
c revenue recognition
the group recognises revenues from sales of software licences to endusers or resellers upon persuasive evidence of an arrangement delivery 
of the software and determination that collection of a ﬁ xed or determinable fee is reasonably assured when the fees for software upgrades 
and enhancements maintenance consulting and training are bundled with the licence fee they are unbundled using the group’s objective 
evidence of the fair value of the elements represented by the group’s customary pricing for each element in separate transactions if evidence 
of fair value exists for all undelivered elements and there is no such evidence of fair value established for delivered elements revenue is ﬁ rst 
allocated to the elements where fair value has been established and the residual amount is allocated to the delivered elements if evidence of 
fair value for any undelivered element of the arrangement does not exist all revenue from the arrangement is deferred until such time that 
evidence of fair value exists or undelivered elements of the arrangement are delivered
if the arrangement includes acceptance criteria revenue is not recognised until the group can objectively demonstrate that the software or 
service can meet the acceptance criteria or the acceptance period lapses whichever is earlier the group recognises licence revenue derived 
from sales to resellers upon delivery to resellers provided that all other revenue recognition criteria are met otherwise revenue is deferred 
and recognised upon delivery of the product to the enduser maintenance revenue is derived from providing technical support and software 
updates to customers maintenance revenue is recognised on a straightline basis over the term of the contract which in most cases is one 
year revenue from consulting and training services is recognised as the services are performed amounts collected prior to satisfying the 
above revenue recognition criteria are included in deferred income
d segmental reporting
a geographical segment is engaged in providing products or services within a particular economic environment that is subject to risks and 
returns that are different from those of components operating in other economic environments
a business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are 
different from those of other business segments the group considers there to be only one business segment being the provision of enterprise 
application management and modernization solutions
e exceptional items
exceptional items are those signiﬁ cant items which are separately disclosed by virtue of their size nature or incidence to enable a full 
understanding of the group’s ﬁ nancial performance
examples of transactions which may be considered of an exceptional nature include major restructuring programmes or cost of integrating 
acquired businesses
consolidated ﬁ nancial statements and notes
summary of signiﬁ cant accounting policies
for the year ended 30 april 2009 micro focus 
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annual report and 
accounts 2009
56
consolidated ﬁ nancial statements and notes
summary of signiﬁ cant accounting policies
for the year ended 30 april 2009 continued
f employee beneﬁ t costs
a pension obligations
group companies operate various pension schemes all of the major schemes are deﬁ ned contribution plans for which the group pays 
contributions to publicly or privately administered pension insurance plans on a mandatory contractual or voluntary basis the group has 
no further payment obligations once the contributions have been paid the contributions are recognised as an employee beneﬁ t expense 
when they are due prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments 
is available
b share based compensation
the group operated various equitysettled share based compensation plans during the year
for shares or share options granted after 7 november 2002 and vested after 1 january 2005 the fair value of the employee services received 
in exchange for the grant of the shares or options is recognised as an expense the total amount to be expensed over the vesting period is 
determined by reference to the fair value of the shares or options granted nonmarket vesting conditions are included in assumptions about 
the number of options that are expected to become exercisable at each balance sheet date the group revises its estimates of the number of 
options that are expected to become exercisable it recognises the impact of the revision of original estimates if any in the income statement 
and a corresponding adjustment to equity over the remaining vesting period
the shares are recognised when the options are exercised and the proceeds received allocated between share capital and share premium
fair value is measured using the blackscholes pricing model the expected life used in the model has been adjusted based on management’s 
best estimate for the effects of non transferability exercise restrictions and behavioural considerations
g foreign currency translation
a functional and presentation currency
the presentation currency of the group is us dollars items included in the ﬁ nancial statements of each of the group’s entities are measured 
in the functional currency of each entity
b transactions and balances
foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions 
foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of 
monetary assets and liabilities denominated in foreign currencies are recognised in the income statement
c group companies
the results and ﬁ nancial position of all the group entities that have a functional currency different from the presentation currency are 
translated into the presentation currency as follows
i  assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
ii  income and expenses for each income statement are translated at average exchange rates unless this average is not a reasonable 
approximation of the cumulative effect of the rates prevailing on the transaction dates in which case income and expenses are translated 
at the dates of the transactions and
iii  all resulting exchange differences are recognised as a separate component of equity
on consolidation exchange differences arising from the translation of the net investment in foreign entities are taken to shareholders’ equity
goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity 
and translated at the closing rate with exception for goodwill arising before 1 may 2004 which is treated as an asset of the company and 
expressed in the company’s functional currency micro focus 
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annual report and 
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57
h intangible assets
a goodwill
goodwill represents the excess of the cost of an acquisition over the fair value of the net identiﬁ able assets of the acquired subsidiary at the 
date of acquisition goodwill on acquisitions of subsidiaries is included in intangible assets goodwill is tested annually for impairment and 
carried at cost less accumulated impairment losses gains and losses on the disposal of an entity include the carrying amount of goodwill 
relating to the entity sold goodwill is allocated to cashgenerating units for the purpose of impairment testing each of those cashgenerating 
units represents the group’s investment in each area of operation by each primary reporting segment
as permitted under ifrs 1 the group has elected to deem the uk gaap net book value at 1 may 2004 as the ifrs cost of goodwill 
at transition date
b computer software
computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the speciﬁ c software these costs 
are amortised using the straightline method over their estimated useful lives of three to ﬁ ve years
c research and development
research expenditure is recognised as an expense as incurred costs incurred on development projects relating to the developing of new 
computer software programmes and signiﬁ cant enhancement of existing computer software programmes are recognised as intangible 
assets when it is probable that the project will be a success considering its commercial and technological feasibility and costs can be 
measured reliably only direct costs are capitalised which are the software development employee costs development costs previously 
recognised as an expense are not recognised as an asset in a subsequent period development costs are amortised from the commencement 
of the commercial production of the product on a straightline basis over the period of its expected beneﬁ t typically being three years
d intangible assets – arising on business combinations
other intangible assets that are acquired by the group are stated at cost less accumulated amortisation amortisation is charged to the 
income statement on a straightline basis over the estimated useful lives of each intangible asset intangible assets are amortised from 
the date they are available for use the estimated useful lives will vary for each category of asset acquired and to date are as follows
trade names  three years
technology  seven to ten years
customer relationships two to ten years
noncompete agreements five years
i property plant and equipment
all property plant and equipment are stated at historical cost less accumulated depreciation and impairment historical cost includes 
expenditure that is directly attributable to the acquisition of the items subsequent costs are included in the asset’s carrying amount or 
recognised as a separate asset as appropriate only when it is probable that future economic beneﬁ ts associated with the item will ﬂ ow to 
the group and the cost of the item can be measured reliably all other repairs and maintenance expenditures are charged to the income 
statement during the ﬁ nancial period in which they are incurred depreciation is calculated using the straightline method to write off the 
cost of each asset to its residual value over its estimated useful life as follows
leasehold improvements over the lease term
furniture and ﬁ xtures  five to seven years
computer equipment  one to ﬁ ve years
the assets’ residual values and useful lives are reviewed and adjusted if appropriate at each balance sheet date an asset’s carrying amount 
is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount 
gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in the income 
statement
j impairment of tangible and intangible assets
assets that have an indeﬁ nite useful life are not subject to amortisation and are tested annually for impairment assets that are subject 
to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not 
be recoverable an impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount 
the recoverable amount is the higher of an asset’s fair value less costs to sell and value in use for the purposes of assessing impairment 
assets are grouped at the lowest levels for which there are separately identiﬁ able cash ﬂ ows – cashgenerating units micro focus 
international plc
annual report and 
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58
consolidated ﬁ nancial statements and notes
summary of signiﬁ cant accounting policies
for the year ended 30 april 2009 continued
k inventories
inventories are stated at the lower of cost and net realisable value the cost of ﬁ nished goods comprises software for resale and packaging 
materials net realisable value is the estimated selling price in the ordinary course of business less applicable variable selling expenses
l trade receivables
trade receivables are recognised at fair value less provision for impairment a provision for impairment of trade receivables is established 
when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of receivables 
the amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash ﬂ ows 
discounted at the effective interest rate the amount of the provision is recognised in the income statement
m cash and cash equivalents
cash and cash equivalents includes cash in hand deposits held at call with banks other shortterm highly liquid investments with original 
maturities of three months or less and bank overdrafts bank overdrafts are shown within borrowings in current liabilities on the balance 
sheet
n borrowings
borrowings are recognised initially at fair value net of transaction costs incurred transaction costs incurred in the arrangement of new 
borrowing facilities are capitalised and netted against the capital element of the outstanding borrowing these costs are then amortised over 
the life of the facility to which the costs relate on the effective interest basis
o leases
leases where the lessor retains a signiﬁ cant portion of the risks and rewards of ownership are classiﬁ ed as operating leases payments made 
under operating leases net of any incentives received from the lessor are charged to the income statement on a straightline basis over the 
period of the lease
p taxation
current and deferred tax are recognised in the income statement except when the tax relates to items charged or credited directly to equity 
in which case the tax is also dealt with directly in equity
deferred income tax is provided in full using the liability method on temporary differences arising between the tax bases of assets and 
liabilities and their carrying amounts in the consolidated ﬁ nancial statements however if the deferred income tax arises from initial 
recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither 
accounting nor taxable proﬁ t or loss it is not accounted for deferred income tax is determined using tax rates and laws that have been 
enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or 
the deferred income tax liability is settled deferred income tax assets are recognised to the extent that it is probable that future taxable proﬁ t 
will be available against which the temporary differences can be utilised
deferred income tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the 
temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future
current tax is recognised based on the amounts expected to be paid or recovered under the tax rates and laws that have been enacted or 
substantively enacted at the balance sheet date
q share capital share premium and dividend distribution
incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction net of tax from the proceeds
dividend distributions to the company’s shareholders are recognised as a liability in the group’s ﬁ nancial statements in the period in which the 
dividends are approved by the company’s shareholders
r financial instruments and hedge accounting
financial assets and liabilities are recognised in the group’s balance sheet when the group becomes a party to the contractual provision of the 
instrument trade receivables are noninterest bearing and are stated at their nominal value less the amount of any appropriate provision for 
irrecoverable amounts trade payables are noninterest bearing and are stated at their nominal value
in accordance with its treasury policy the group does not hold or issue derivative ﬁ nancial instruments for hedge accounting or trading 
purposes micro focus 
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annual report and 
accounts 2009
59
s adoption of new and revised international financial reporting standards
at the date of approval of these ﬁ nancial statements the following standards amendments and interpretations were issued but not yet 
mandatory effective for the group
international financial reporting standards ‘ifrss’
�  ifrs 8 ‘operating segments’ – 1 january 2009
�  ifrs 3 revised ‘business combinations’ – 1 july 2009
international financial reporting interpretations committee ‘ifric’
�  ifric 13 ‘customer loyalty programmes’ – 1 july 2008
�  ifric 14 ias19 – ‘the limit of a deﬁ ned beneﬁ t asset minimum funding requirements and their interaction’ – 1 january 2009
�  ifric 15 ‘agreements for construction of real estates’ – 1 january 2009
�  ifric 16 ‘hedges of a net investment in a foreign operation’ – 1 october 2008
�  ifric 17 ‘distribution of noncash assets to owners’ – 1 july 2009
�  ifric 18 ‘transfer of assets from customers’ – 1 july 2009
amendments to existing standards
�  amendment to ias 1 ‘presentation of financial statements a revised presentation’ – 1 january 2009
�  amendment to ias 16 ‘property plant and equipment’ – 1 january 2009
�  amendment to ias 19 ‘employee beneﬁ ts’ – 1 january 2009
�  amendment to ias 20 ‘accounting for government grants and disclosure of government assistance’ – 1 january 2009
�  amendment to ias 23 ‘borrowing costs’ – 1 january 2009
�   amendment to ias 27 ‘consolidated and separate financial statements’ – 1 january 2009
�  amendment to ias 28 ‘investments in associates’ – 1 january 2009
�   amendment to ias 32 ‘financial instruments presentation and ias 1 presentation of financial statements puttable financial instruments 
and obligations arising on liquidation’ – 1 january 2009
�   amendment to ias 36 ‘impairment of assets’ – 1 january 2009
�  amendment to ias 38 ‘intangible assets’ – 1 january 2009
�  amendment to ias 39 ‘financial instruments recognition and measurement’ – 1 july 2008
�  amendment to ias 39 ‘financial instruments recognition and measurement on eligible hedged items’ – 1 july 2009
�  amendment to ifrs 1 ‘first time adoption of ifrs’ – 1 july 2009
�  amendment to ifrs 2 ‘share based payment vesting conditions and cancellations’ – 1 january 2009
�  amendment to ifrs 5 ‘noncurrent assets held for sale and discontinued operations’ – 1 january 2009
�  amendment to ifrs 7 ‘financial instruments disclosures on the reclassiﬁ cation of financial assets’ – 1 july 2008
all the ifrs ifric interpretations and amendments to existing standards are yet to be adopted by the eu at the date of approval of these 
consolidated statements with the exception of ifric 13 ifric 16 ifrs 8 ifrs 3 revised and the amendments to ias 1 ias 16 ias 20 
ias 23 ias 27 ias 32 and ifrs 2 the implementation date for the above will be the annual period beginning on or after the date shown 
the directors anticipate that the future adoption of these standards interpretations and amendments listed above will not have a material 
impact on the consolidated ﬁ nancial statements
2 critical accounting estimates and assumptions
the group makes estimates and assumptions concerning the future the resulting accounting estimates will by deﬁ nition seldom equal 
the related actual results the estimates and assumptions that have a signiﬁ cant risk of causing a material adjustment to the carrying amounts 
of assets and liabilities within the next ﬁ nancial year are summarised below
a impairment of goodwill
the group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy 1j the recoverable 
amounts of cashgenerating units have been determined based on valueinuse calculations these calculations require the use of estimates
b income taxes
the group is subject to income taxes in numerous jurisdictions signiﬁ cant judgment is required in determining the worldwide provision for 
income taxes there are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course 
of business the group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due where 
the ﬁ nal tax outcome of these matters is different from the amounts that were initially recorded such differences will impact the income tax 
and deferred tax provisions in the period in which such determination is made micro focus 
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annual report and 
accounts 2009
60
consolidated ﬁ nancial statements and notes
summary of signiﬁ cant accounting policies
for the year ended 30 april 2009 continued
c acquisitions
when making acquisitions the group has to make judgments and best estimates about the fair value allocation of the purchase price 
appropriate advice is sought from professional advisors before making such allocations the valuation of goodwill and other intangibles is 
tested annually or whenever there are changes in circumstances indicating that the carrying amounts may not be recoverable these tests 
require the use of estimates
d development expenditure
the group invests in the development of future products in accordance with the accounting policy 1hc the assessment as to whether 
this expenditure will achieve a complete product for which the technical feasibility is assured is a matter of judgment as is the forecasting 
of how the product will generate future economic beneﬁ t finally the period of time over which the economic beneﬁ t associated with the 
expenditure occurred will arise is also a matter of judgment these judgments are made by evaluating the development plan prepared by the 
research and development department and approved by management regularly monitoring progress by using an established set of criteria for 
assessing technical feasibility and benchmarking to other products
3 financial risk factors
the group’s multinational operations expose it to a variety of ﬁ nancial risks that include the effects of changes in credit risks foreign currency 
exchange rates liquidity and interest rates
a credit risk
financial instruments which potentially expose the group to a concentration of credit risk consist primarily of cash equivalents and accounts 
receivable cash equivalents are deposited with highcredit quality ﬁ nancial institutions the group provides credit to customers in the normal 
course of business collateral is not required for those receivables but ongoing credit evaluations of customers’ ﬁ nancial conditions are 
performed the group maintains a provision for impairment based upon the expected collectability of accounts receivable the group sells 
products and services to a wide range of customers around the world and therefore believes there is no material concentration of credit risk
b foreign currency risk
the group operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect 
to the uk sterling the euro and the japanese yen foreign exchange risk arises from future commercial transactions recognised assets and 
liabilities and net investments in foreign operations foreign exchange risk arises when future commercial transactions recognised assets and 
liabilities are denominated in a currency that is not the entity’s functional currency
there were no hedging transactions in place at 30 april 2009
the group has certain investments in foreign operations whose net assets are exposed to foreign currency translation risk
c interest rate risk
the group’s income and operating cash ﬂ ows are substantially independent of changes in market interest rates 
the group’s cash ﬂ ow interest rate risk arises from cash deposits deposits placed at variable rates expose the group to cash ﬂ ow interest 
rate risk micro focus 
international plc
annual report and 
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61
1 segmental reporting
primary reporting format – geographical segments
the group is organised on a worldwide basis into three main geographical segments
�  north america
�  europe and the middle east
�  rest of the world
there are immaterial sales between the geographical segments the revenue analysis in the table below is based on the location of the 
customers where the order is received which is not materially different from the location of the assets the operating proﬁ t for each segment 
takes into account the transfer pricing agreements in place between the group companies
segment assets include goodwill property plant and equipment stocks debtors operating cash and other intangible assets and exclude 
deferred tax assets segment liabilities comprise operating liabilities and exclude current and deferred tax liabilities capital expenditure 
comprises additions to property plant and equipment
year ended 30 april 2009
       europe
       and the rest of
      north america middle east the world total
     notes ’000 ’000 ’000 ’000
revenue     124034 113122 37575 274731
segment result operating proﬁ t 
before exceptional items     17450 87538 1130 106118
exceptional items     8207 6700 – 14907
segment result operating proﬁ t     9243 80838 1130 91211
finance income – net    5    238
proﬁ t before tax        91449
taxation    6    25419
net proﬁ t        66030
segment assets     122551 195608 11901 330060
unallocated assets
deferred tax assets     19    17625
total assets        347685
segment liabilities     50679 65251 12275 128205
unallocated liabilities
current and deferred tax liabilities        50752
total liabilities        178957
other segment items
capital expenditure    11 599 1983 68 2650
depreciation     11 649 1188 73 1910
share based compensation     23 305 2014 88 2407
amortisation of intangible assets    10 4003 9726 – 13729
consolidated ﬁ nancial statements and notes
notes to the ﬁ nancial statements
for the year ended 30 april 2009 micro focus 
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annual report and 
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62
1 segmental reporting continued
year ended 30 april 2008
       europe
       and the rest of 
      north america middle east the world total
     notes ’000 ’000 ’000 ’000
revenue     96482 96018 35696 228196
segment result operating proﬁ t 
before exceptional items     12384 68154 756 81294
exceptional items     3094 3408 – 6502
segment result operating proﬁ t     9290 64746 756 74792
finance income – net    5    2031
proﬁ t before tax        76823
taxation    6    21404
net proﬁ t        55419
segment assets     88328 157925 10974 257227
unallocated assets
deferred tax assets    19    15577
total assets        272804
segment liabilities     71455 26004 12918 110377
unallocated liabilities
current and deferred tax liabilities        35905
total liabilities        146282
other segment items
capital expenditure    11 1275 1850 58 3183
depreciation    11 460 1085 58 1603
share based compensation    23 167 1143 27 1337
amortisation of intangible assets    10 2108 7482 – 9590
secondary reporting format – business segment
the group considers there is only one business segment being the provision of enterprise management and modernization solutions
2 supplementary information
set out below is an analysis of revenue recognised between the principal product categories which the directors use to assess the future 
revenue ﬂ ows from the current portfolio of customers
        2009 2008
        ’000 ’000
licence       130774 113314
maintenance       132334 104144
consulting       11623 10738
total       274731 228196
consolidated ﬁ nancial statements and notes
notes to the ﬁ nancial statements
for the year ended 30 april 2009 continued micro focus 
international plc
annual report and 
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63
3 proﬁ t before tax
proﬁ t before tax is stated after charging crediting the following operating costs gains classiﬁ ed by the nature of the costs gains
        2009 2008
       note ’000 ’000
staff costs      23 110153 89581
depreciation of property plant and equipment
– owned assets      11 1910 1593
– assets under ﬁ nance lease       – 10
amortisation of intangibles      10 13729 9590
changes in inventories of ﬁ nished goods      12 64 63
operating lease rentals payable
– plant and machinery       1672 1366
– other       6413 4908
foreign exchange gains       3416 784
exceptional items
        2009 2008
        ’000 ’000
reorganisation costs       14907 6502
current year reorganisation costs relate to restructuring programmes carried out in europe and the usa arising from the acquisition of 
netmanage liant and relativity technologies the prior year reorganisation costs relate to restructuring programmes carried out in europe 
and the usa arising from the acquisition of acucorp the restructuring comprised costs associated with the closure of ofﬁ ces and redundancy 
of staff across the group
severance costs included within reorganisation costs are not included within staff costs disclosed in note 23
all exceptional items relate to administrative expenses
services provided by the group’s auditors and network of ﬁ rms
during the year the group obtained the following services from the group’s auditor as detailed below
        2009 2008
        ’000 ’000
audit services
– fees payable to the company auditor for the audit of the parent company and consolidated accounts  67 98
nonaudit services
fees payable to the company’s auditor and their associates for other services
– the audit of the company’s subsidiaries pursuant to legislation     405 314
– services related to taxation       248 828
– other services pursuant to legislation       – 34
– other services       604 302
total       1324 1576
the group’s auditors pricewaterhousecoopers llp  provide nonaudit services for the group over and above the external audit principally tax 
compliance tax advice and due diligence work the board of directors reviews the level of nonaudit fees and believes that the group receives 
particular beneﬁ t from tax advice provided by its auditors given their wide and detailed knowledge of the group the board is conﬁ dent that 
the objectivity and independence of the auditors is not impaired in any way by reason of its nonaudit work
other services relate to due diligence micro focus 
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annual report and 
accounts 2009
64
4 reconciliation of operating proﬁ t to ebitda
        2009 2008
       notes ’000 ’000
operating proﬁ t       91211 74792
exceptional items – reorganisation costs      3 14907 6502
share based compensation charge      23 2407 1337
amortisation of purchased intangibles      10 7123 3946
adjusted operating proﬁ t       115648 86577
depreciation      11 1910 1603
amortisation of software      10 1037 337
adjusted ebitda       118595 88517
ebitda       101281 80678
exceptional items – reorganisation costs      3 14907 6502
share based compensation charge      23 2407 1337
adjusted ebitda       118595 88517
the directors use ebitda and ebitda before exceptional items and share based compensation charge ‘adjusted ebitda’ as key performance 
measures of the business
5 interest payablereceivable and similar charges
        2009 2008
        ’000 ’000
finance costs
interest expense on bank borrowings       50 11
bank facility costs       706 –
interest expense on ﬁ nance leases       – 1
total       756 12
finance income
finance income consists of interest receivable which relates to interest on bank deposits
consolidated ﬁ nancial statements and notes
notes to the ﬁ nancial statements
for the year ended 30 april 2009 continued micro focus 
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annual report and 
accounts 2009
65
6 taxation
        2009 2008
        ’000 ’000
current tax
current year       27604 21574
adjustments to tax in respect of previous years      3324 1569
        24280 20005
deferred tax
current year       2376 1329
adjustments to tax in respect of previous years      1237 70
        1139 1399
total       25419 21404
deferred tax of 13 million 2008 04 million has been recognised in relation to the share options charged against equity in the year
the tax for the year is lower than the standard rate of corporation tax in the uk 28 2008 30 the differences are explained below
        2009 2008
        ’000 ’000
proﬁ t before taxation       91449 76823
tax at uk corporation tax rate 28 2008 30 applicable to proﬁ ts in the respective countries   25606 23047
effects of
adjustments to tax in respect of previous years – current tax     3324 1569
adjustments to tax in respect of previous years – deferred tax     1237 70
adjustment for foreign tax rates       2191 1212
expenses not deductible for tax purposes      1564 1891
tax loss utilisation       619 844
other       – 2403
total taxation       25419 21404
the movement in deferred tax assets and liabilities during the period without taking into consideration the offsetting of balances within the 
same tax jurisdiction is provided in note 19
7 dividends
equity – ordinary
        2009 2008
        ’000 ’000
2008 ﬁ nal paid 94 cents 2007 70 cents per ordinary share     17592 14016
2009 interim paid 45 cents 2008 36 cents per ordinary share     8484 7213
        26076 21229
the directors are proposing a ﬁ nal dividend in respect of the year ended 30 april 2009 of 111 cents per share which will utilise 224 million 
of shareholders’ funds the directors have concluded that the company has sufﬁ cient reserves to pay the dividend it has not been included 
as a liability in these ﬁ nancial statements micro focus 
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annual report and 
accounts 2009
66
8 earnings per share
the calculation of the basic earnings per share has been based on the earnings attributable to ordinary shareholders and the weighted 
average number of shares for each year
  2009 2008
     weighted   weighted
     average   average
     number per share  number per share
    earnings of shares amount earnings of shares amount
    ’000 ‘000 cents ’000 ‘000 cents
basic eps
earnings attributable to ordinary shareholders  66030 200905 3287 55419 200268 2767
effect of dilutive securities
options    5940   5216
diluted eps
earnings attributable to ordinary shareholders  66030 206845 3192 55419 205484 2697
supplementary eps to exclude exceptional items
basic eps   66030 200905 3287 55419 200268 2767
adjusted items
1
   24437   11785
tax relating to above items
1
   7069   2954  
basic eps – adjusted   83398 200905 4151 64250 200268 3208
diluted eps   66030 206845 3192 55419 205484 2697
adjusted items
1
   24437   11785
tax relating to above items
1
   7069   2954  
diluted eps – adjusted   83398 206845 4032 64250 205484 3127
1 adjusted items comprise amortisation of acquired intangibles share based compensation and exceptional costs estimated tax relief on these items is as shown above
earnings per share expressed in pence has used the average exchange rate for the year of 165 to £1 2008 201 to £1
9 goodwill
        2009 2008
        ’000 ’000
cost and net book amount
at 1 may 2008       65784 42533
acquisition note 27       51686 23321
adjustment relating to prior years note 27      2343 70
at 30 april 2009       119813 65784
a segmentlevel summary of the goodwill allocation is presented below
north america       60514 47521
europe and the middle east       55860 14824
rest of the world       3439 3439
at 30 april 2009       119813 65784
details of the acquisitions in the year are shown in note 27
goodwill is allocated to the group’s cash generating units ‘cgus’ which represent the operations of a country or in more material 
operations divisions within a country it has been determined that the three geographical segments which form the primary reporting format 
each equate to a cgu for each cgu the group has determined its recoverable amount the recoverable amount is determined based on 
valueinuse calculations no impairment charge was required in the year 2008 nil and the cumulative impairment charge recognised to 
date is nil 2008 nil
the key assumptions in the valueinuse calculations are the discount rate applied the longterm operating margin and the longterm growth 
rate of net operating cash ﬂ ows these are based on the forecast operating cash ﬂ ows for the next ﬁ ve years based on approved budgets and 
plans these budgets and plans are based on past performance and expectations for the market development of the cgu
�  the discount rate applied to a cgu represents a pretax rate that reﬂ ects the market assessment of the time value of money at the balance 
sheet date and the risks speciﬁ c to the cgu the discount rate applied to each cgu’s operations was 11 2008 89
consolidated ﬁ nancial statements and notes
notes to the ﬁ nancial statements
for the year ended 30 april 2009 continued micro focus 
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annual report and 
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67
�  the longterm operating margin assumed for each cgu is primarily based upon past performance adjusted as appropriate where 
management believe that past operating margins are not indicative of future operating margins in these instances expected future 
improvements from sustainable cost savings are also included in management’s assessment of the longterm operating margin the long
term operating margin applied to cgus was 386 2008 356
�  longterm growth rates of net operating cash ﬂ ows are assumed to be no greater than the longterm growth rate in the in the gross 
domestic product of the countries in which the cgu operates and were 15 2008 3 
�   longterm growth and discount rates are applied consistently across all cgus as
 – the businesses within the cgus have similar trading characteristics
 – future forecasts are considered to be similar across all cgus
 – business risks are considered to be the same across all cgus and
 – the group has no debt and therefore no gearing across all cgus
sensitivity analysis as at 30 april 2009 has indicated that no reasonably foreseeable change in the key assumptions used in the impairment 
model would result in a signiﬁ cant impairment charge being recorded in the ﬁ nancial statements
10 other intangible assets
   purchased development   customer noncompete
   software costs technology trade names relationships agreements total
   ’000 ’000 ’000 ’000 ’000 ’000 ’000
cost
at 1 may 2008  5321 31814 18722 1175 10960 292 68284
acquisition note 27  488 – 14654 – 21113 – 36255
additions  884 7725 – – – – 8609
disposals  201 – – – – – 201
exchange adjustments  251 – – – – – 251
at 30 april 2009  6241 39539 33376 1175 32073 292 112696
aggregate amortisation and impairment
at 1 may 2008  4439 24085 2713 392 1314 59 33002
charge for the year  1037 5569 3594 391 3079 59 13729
disposals  195 – – – – – 195
exchange adjustments  189 – – – – – 189
at 30 april 2009  5092 29654 6307 783 4393 118 46347
net book amount at 30 april 2009  1149 9885 27069 392 27680 174 66349
   purchased development   customer noncompete
   software costs technology trade names relationships agreements total
   ’000 ’000 ’000 ’000 ’000 ’000 ’000
cost
at 1 may 2007  4333 26426 10904 – – – 41663
acquisition  – – 7818 1175 10960 292 20245
additions  884 5388 – – – – 6272
disposals  6 – – – – – 6
exchange adjustments  110 – – – – – 110
at 30 april 2008  5321 31814 18722 1175 10960 292 68284
aggregate amortisation and impairment
at 1 may 2007  4107 18779 532 – – – 23418
charge for the year  338 5306 2181 392 1314 59 9590
disposals  6 – – – – – 6
exchange adjustments  – – – – – – –
at 30 april 2008  4439 24085 2713 392 1314 59 33002
net book amount at 30 april 2008  882 7729 16009 783 9646 233 35282
intangible assets with the exception of purchased software and internally generated development costs relate to identiﬁ able assets 
purchased as part of the group’s business combinations intangible assets are amortised on a straightline basis over their expected useful 
economic life – see accounting policy 1hd micro focus 
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annual report and 
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68
11 property plant and equipment
      leasehold computer fixtures and
      improvements equipment ﬁ ttings total
      ’000 ’000 ’000 ’000
cost
at 1 may 2008     2873 6994 2131 11998
acquisition     395 312 318 1025
additions     647 1660 343 2650
disposals     678 971 700 2349
exchange adjustments     458 1266 498 2222
at 30 april 2009     2779 6729 1594 11102
depreciation
at 1 may 2008     1195 5119 1325 7639
charge for the year     532 975 403 1910
disposals     467 935 511 1913
exchange adjustments     201 1112 333 1646
at 30 april 2009     1059 4047 884 5990
net book amount at 30 april 2009     1720 2682 710 5112
      leasehold computer fixtures and
      improvements equipment ﬁ ttings total
      ’000 ’000 ’000 ’000
cost
at 1 may 2007     1705 5705 1680 9090
acquisition     20 296 129 445
additions     1087 1659 437 3183
disposals     22 727 191 940
exchange adjustments     83 61 76 220
at 30 april 2008     2873 6994 2131 11998
depreciation
at 1 may 2007     752 4717 1078 6547
charge for the year     440 920 243 1603
disposals     22 574 29 625
exchange adjustments     25 56 33 114
at 30 april 2008     1195 5119 1325 7639
net book amount at 30 april 2008     1678 1875 806 4359
12 inventories
        2009 2008
        ’000 ’000
finished goods       128 192
13 trade and other receivables
        2009 2008
        ’000 ’000
trade receivables       63272 52676
less provision for impairment of trade receivables      1593 1217
trade receivables net       61679 51459
prepayments       4514 3659
accrued income       896 4087
total       67089 59205
consolidated ﬁ nancial statements and notes
notes to the ﬁ nancial statements
for the year ended 30 april 2009 continued micro focus 
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annual report and 
accounts 2009
69
13 trade and other receivables continued
concentrations of credit risk with respect to trade receivables are limited due to the group’s customer base being large and unrelated 
in determining the recoverability of a trade receivable the group considers the ageing of each debtor and any change in the circumstances 
of the individual debtor due to this management believes there is no further credit risk provision required in excess of the normal provision 
for doubtful receivables at 30 april 2009 the carrying amount approximates the fair value of the instrument due to the shortterm nature 
of the instrument
at 30 april 2009 trade receivables of 131 million 2008 78 million were past due but not impaired these relate to a large number of 
independent companies for whom there is no recent history of default the amounts are regarded as recoverable the average age of these 
receivables was 35 days in excess of due date 2008 32 days
as at 30 april 2009 trade receivables of 16 million 2008 11 million were either partially or fully impaired the amount of the provision 
was 16 million 2008 12 million the ageing of these receivables is as follows
        2009 2008
        ’000 ’000
three to four months       321 434
over four months       1272 692
total       1593 1126
movements in the group provision for impairment of trade receivables were as follows
          2009 2008
          ’000  ’000
at 1 may 2008        1217 242
provision for receivables impairment        643 718
acquisition of subsidiaries        114 581
receivables written off as uncollectable        275 430
exchange adjustments        106 106
at 30 april 2009        1593 1217
14 cash and cash equivalents
        2009 2008
        ’000 ’000
cash at bank and in hand       18267 25626
shortterm bank deposits       53302 66779
total       71569 92405
the effective interest rate on shortterm deposits was 04 2008 28 and these deposits have an average maturity of one day 
2008 three days
at 30 april 2009 the carrying amount approximates to the fair value of the instrument due to the instrument bearing interest at market rates 
andor the shortterm nature of the instrument
15 trade and other payables – current
        2009 2008
        ’000 ’000
trade payables       4477 4964
other tax and social security payable       3876 4477
accruals       33403 26053
deferred income       79364 68365
total       121120 103859
at 30 april 2009 the carrying amount approximates to fair value of the instrument due to the shortterm nature of the instrument
16 current tax liabilities
        2009 2008
        ’000 ’000
corporation tax       22187 19245 micro focus 
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annual report and 
accounts 2009
70
17 other noncurrent liabilities
        2009 2008
        ’000 ’000
deferred income       7085 6518
18 financial instruments
foreign exchange risk
the group’s currency exposures comprise only those that give rise to net currency gains and losses to be recognised in the income statement 
such exposures reﬂ ect the monetary assets and liabilities of the group that are not denominated in the operating or functional currency of 
the operating unit involved note 3 shows the impact of foreign exchange gains in the year
capital risk management
the group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns 
for shareholders and beneﬁ ts for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital
in order to maintain or adjust the capital structure the group may adjust the amount of dividends paid to shareholders return capital to 
shareholders issue new shares or sell assets to reduce debt
consistent with others in the industry the group monitors capital on the basis of the gearing ratio this ratio is calculated as net debt divided 
by total capital net debt is calculated as total borrowings including ‘current and noncurrent borrowings’ as shown in the consolidated 
balance sheet less cash and cash equivalents t otal capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt
at 30 april 2009 the group did not have net debt and therefore no gearing 
on 13 may 2008 the company entered into a 40 million credit facility with hsbc bank plc and lloyds tsb bank plc for general corporate 
purposes the facility expired on 12 may 2009 
on 6 may 2009 the company entered into a 175 million credit facility provided through a syndicated loan consortium comprising barclays 
bank plc hsbc bank plc lloyds tsb bank plc and the royal bank of scotland plc to assist with the funding of acquisitions and for general 
corporate purposes on 12 june 2009 the company entered into a supplemental agreement for an additional 40 million to assist with the 
acquisition of borland software corporation at an increased offer price 
19 deferred tax
        2009 2008
        ’000 ’000
net deferred tax liability
at 1 may 2008       1083 60
charged to income statement       1139 1399
credited directly to equity       1305 396
foreign exchange adjustment       818 –
booked to goodwill       2343 –
acquisition of subsidiaries       6862 20
at 30 april 2009       10940 1083
        other
        temporary
       tax losses differences total
       ’000 ’000 ’000
deferred tax assets
at 1 may 2008      8354 7223 15577
charged to income statement      1330 1919 3249
credited directly to equity      – 1305 1305
foreign exchange adjustment      – 820 820
acquisition of subsidiaries      3749 1063 4812
at 30 april 2009      10773 6852 17625
deferred income tax assets are recognised for tax loss carryforwards to the extent that the realisation of the related tax beneﬁ t through the 
utilisation of future taxable proﬁ ts is probable
consolidated ﬁ nancial statements and notes
notes to the ﬁ nancial statements
for the year ended 30 april 2009 continued micro focus 
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annual report and 
accounts 2009
71
19 deferred tax continued
        other
        temporary
        differences total
        ’000 ’000
deferred tax liabilities
at 1 may 2008       16660 16660
charged to income statement       2112 2112
adjustment booked to goodwill       2343 2343
acquisition of subsidiaries       11674 11674
at 30 april 2009       28565 28565
no deferred tax liability was recognised in respect of unremitted earnings of overseas subsidiaries as the group is in a position to control 
the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future the 
deferred tax liability above relates mainly to timing differences on acquired intangibles 
20 called up share capital
        2009 2008
         
authorised
2500000000 ordinary shares of £010 each historic fx rate used £1  191    476770000 476770000
total authorised share capital       476770000 476770000
      
  2009 2008
      number  number 
issued and fully paid
ordinary shares of £010 each     202111131 37091806 200430656 36836791
total allotted called up and fully paid share capital   202111131 37091806 200430656 36836791
potential issues of ordinary shares
certain employees hold options to subscribe for shares in the company at prices ranging from 1 penny to 321 pence under the share option 
schemes approved by shareholders in 2001 the longterm incentive plan 2005 sharesave and espp  the number of shares subject to options 
at 30 april 2009 was 6773585 2008 6369627 further information on these options is disclosed in note 23
each holder of an ordinary share is entitled to one vote for each share held at all meetings of shareholders and will be entitled to any 
dividends declared by the board of directors
21 share premium account
        2009 2008
        ’000 ’000
at 1 may 2008       103904 104054
movement in relation to share options exercised      2296 150
at 30 april 2009       106200 103904 micro focus 
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annual report and 
accounts 2009
72
22 cash generated from operations
        2009 2008
       notes ’000 ’000
continuing operations
net proﬁ t       66030 55419
adjustments for
net interest       238 2031
taxation      6 25419 21404
depreciation      11 1910 1603
loss on disposal of property plant and equipment      418 9
loss on disposal of intangible asset       7 –
amortisation of intangibles      10 13729 9590
share based compensation       2407 1337
exchange movements       3444 5213
changes in working capital
inventories       64 118
trade and other receivables       1567 9469
payables and other noncurrent liabilities       9726 18208
cash generated from continuing operations      105031 90975
23 employees and directors
        2009 2008
        ’000 ’000
staff costs
wages and salaries       93924 75789
social security costs       10900 9859
other pension costs note 24       2922 2596
cost of employee share schemes       2407 1337
total       110153 89581
        2009 2008
        number number
average monthly number of people 
including executive directors employed by business group
sales and distribution       312 229
research and development       241 190
general and administration       202 172
total       755 591
        2009 2008
        ’000 ’000
key management compensation
salaries and shortterm employee beneﬁ ts      5055 5629
postemployment beneﬁ ts       147 121
share based payments       1266 667
total       6468 6417
the key management ﬁ gures above include the executive management team and directors
share based payments
the group has various equitysettled share based compensation plans details of which are provided below
share purchase and option plan 2001
the group had a share based compensation plan ‘the plan’ under which employees and directors could be granted options to purchase the 
company’s ordinary shares on the full listing of the company to the london stock exchange the options were treated as having vested and 
were exchanged for three options in the ordinary shares of the newly listed entity at this date the plan was closed for new issues no options 
were granted under the plan during the year
consolidated ﬁ nancial statements and notes
notes to the ﬁ nancial statements
for the year ended 30 april 2009 continued micro focus 
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annual report and 
accounts 2009
73
23 employees and directors continued
options over ordinary shares held by employees under the plan all of which were exercisable were as follows
  2009 2008
       weighted  weighted
       average  average
       exercise price  exercise price
      options pence options pence
at 1 may     904082 7p 1329905 8p
exercised     591780 5p 362251 6p
forfeited     – – 63572 6p
outstanding at 30 april     312302 7p 904082 7p
exercisable at 30 april     312302 7p 904082 7p
the weighted average remaining contractual life is 0 years 2008 0 years all outstanding options have exercise prices in the range 
‘1p to 30p’ 2008 ‘1p to 30p’
the weighted average share price for options exercised in the year was 293 pence 2008 273 pence
no amount was charged through the income statement 2008 nil
incentive plan 2005
on 27 april 2005 the remuneration committee approved the rules of the incentive plan 2005 ‘ltip’ which permits the granting of share 
options to executive directors and senior management the total number of options they receive is determined by the company’s aggregate 
earnings per share ‘eps’ growth exceeding inﬂ ation ‘rpi’ over a threeyear period commencing from the date of the grant
  2009 2008
       weighted  weighted
       average  average
       exercise price  exercise price
      options pence options pence
at 1 may     4562219 131p 4663580 89p
exercised     925619 60p – –
forfeited     181445 151p 1430515 101p
granted     2033417 231p 1329154 244p
outstanding at 30 april     5488572 176p 4562219 131p
exercisable at 30 april     68510 10p – –
the weighted average share price for options exercised in the year was 296 pence
the amount charged to the income statement in respect of the scheme was 21 million 2008 12 million
  2009 2008
    weighted  weighted weighted  weighted
    average number average average number average
    exercise of remaining exercise of remaining
    price shares contractual price shares contractual
range of exercise prices   pence ‘000 life years pence ‘000 life years
£010 or less   14p 483 12 62p 864 11
£011 – £100   – – – – – –
£101 – £200   1128p 2171 03 1156p 2623 12
£201 – £300   2551p 2777 19 2641p 1075 22
more than £300   3106p 57 26 – – –
    1758p 5488 12 1310p 4562 14
the weighted average fair value of options granted during the year determined using the blackscholes valuation model was £113 2008 £105 
the signiﬁ cant inputs into the model were weighted average share price of £251 2008 £258 at the grant date exercise price shown above 
volatility of 65 2008 54 dividend yield of 25 2008 18 an expected option life of three years and an annual riskfree interest 
rate of 423 2008 493 the volatility measured at the standard deviation of continuously compounded share returns is based on 
statistical daily share prices over the last three years  micro focus 
international plc
annual report and 
accounts 2009
74
23 employees and directors continued
sharesave and employee stock purchase plan 2006
in august 2006 the company introduced the micro focus employee stock purchase plan 2006 approved by members on 25 july 2006 there 
are two plans the sharesave plan ‘sharesave’ primarily for uk employees and the employee stock purchase plan ‘espp’ for employees in 
the usa and canada the sharesave and espp provide for an annual award of options at a discount to the market price and are open to all 
eligible group employees further sharesave and espp grants were made during the year to 30 april 2009
  2009 2008
       weighted  weighted
       average  average
       exercise price  exercise price
sharesave     options pence options pence
at 1 may     741275 104p 733240 84p
exercised     6939 84p – –
forfeited     47326 179p 85701 101p
granted     130363 219p 93736 239p
outstanding at 30 april     817373 118p 741275 104p
exercisable at 30 april     – – – –
     exercise price
     per share 
    date of grant pence exercise period 
    15 august 2006 84p 1 october 2009 – 31 march 2010
    17 august 2007 2393p 1 october 2010 – 31 march 2011
    4 august 2008 202p 1 october 2011 – 31 march 2012
    19 february 2009 244p 1 april 2012 – 30 september 2012
  2009 2008
       weighted  weighted
       average  average
       exercise price  exercise price
espp     options pence options pence
at 1 may     192362 120p 219682 97p
exercised     156137 97p – –
forfeited     15255 190p 57631 97p
granted     134368 253p 30311 243p
outstanding at 30 april     155338 251p 192362 120p
exercisable at 30 april     – – – –
     exercise price
     per share 
    date of grant pence exercise period
    1 october 2006 97p 1 october 2008 – 31 march 2009
    1 october 2007 2428p 1 october 2009 – 31 march 2010
    1 october 2008 2527p 1 october 2010 – 31 march 2011
    1 april 2009 2529p 1 april 2011 – 30 september 2011
the amount charged to the income statement in respect of the sharesave and espp schemes was 284000 2008 185000
the weighted average fair value of options granted in the sharesave and espp schemes during the year determined using the blackscholes 
valuation model was £120 2008 £114 the signiﬁ cant inputs into the model were weighted average share price of £281 2008 £277 
at the grant date exercise price shown above volatility of 65 2008 54 dividend yield of 25 2008 18 an expected option life 
of two or three years and an annual riskfree interest rate of 423 2008 493 the volatility measured at the standard deviation of 
continuously compounded share returns is based on statistical daily share prices over the last three years 
24 pension commitments
the group has established a number of pension schemes around the world covering many of its employees the principal funds are those 
in the us the uk and germany these are funded schemes of the deﬁ ned contribution type outside of these territories the schemes are 
also of the deﬁ ned contribution type except for japan which is a deﬁ ned beneﬁ t scheme but which has few members and therefore is not 
signiﬁ cant to the group
consolidated ﬁ nancial statements and notes
notes to the ﬁ nancial statements
for the year ended 30 april 2009 continued micro focus 
international plc
annual report and 
accounts 2009
75
24 pension commitments continued
pension costs for deﬁ ned contributions schemes are as follows
        2009 2008
        ’000 ’000
deﬁ ned contribution schemes       2922 2596
25 operating lease commitments – minimum lease payments
at 30 april 2009 the group has total lease agreements in respect of properties vehicles plant and equipment for which the payments 
extend over a number of years
        2009 2008
        ’000 ’000
commitments under noncancellable operating leases expiring
within one year       2797 2463
later than one year and less than ﬁ ve years      10009 9017
after ﬁ ve years       8343 14771
total       21149 26251
the group leases various ofﬁ ces under noncancellable operating lease agreements that are included in the table the leases have various 
terms escalation clauses and renewal rights
26 capital commitments and contingent liabilities
the group had no capital commitments or contingent liabilities at 30 april 2009 2008 nil
27 business combinations
a acquisition of netmanage inc
on 17 june 2008 the group acquired 100 of the share capital of netmanage inc for 762 million inclusive of 28 million related costs 
paid in full on completion
a fair value review was carried out on the assets and liabilities of the business resulting in the identiﬁ cation of intangible assets
details of the net assets acquired and goodwill are as follows
        carrying value at
        acquisition fair value
        ’000 ’000
intangible ﬁ xed assets       4182 27000
property plant and equipment        1086 1086
trade and other receivables        5636 5636
cash and cash equivalents        27878 27878
taxation        277 277
trade and other payables        6173 7042
deferred income        11431 11431
deferred tax liability       – 3294
net assets        20901 39556
goodwill        36684
consideration        76240
consideration satisﬁ ed by
cash        76240
outﬂ ow of cash to acquire business net of cash acquired
cash consideration        73406
acquisition costs        2834
cash acquired        27878
          48362 micro focus 
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annual report and 
accounts 2009
76
27 business combinations continued
the intangible assets acquired as part of the acquisition can be analysed as follows
        
         fair value
         ’000
software        10000
customer relationships        17000
total        27000
goodwill represents the value of the assembled workforce at the time of acquisition with speciﬁ c knowledge and technical skills it also 
represents the prospective future economic beneﬁ ts expected to accrue from enhancing the portfolio of products and services available to the 
company’s existing customer base with those customers of netmanage
b acquisition of liant software corporation 
on 11 july 2008 the group acquired 100 of the share capital of liant software corporation for 50 million inclusive of 01 million 
related costs paid in full on completion
a fair value review was carried out on the assets and liabilities of the business resulting in the identiﬁ cation of intangible assets
details of the net assets acquired and goodwill are as follows
        carrying value at
        acquisition fair value
        ’000 ’000
intangible ﬁ xed assets       – 3570
property plant and equipment       176 176
trade and other receivables        1269 1269
cash and cash equivalents        246 246
taxation        65 65
trade and other payables        1827 3917
deferred tax liability       – 1425
net liabilities        201 146
goodwill        5164
consideration        5018
consideration satisﬁ ed by
cash        5018
outﬂ ow of cash to acquire business net of cash acquired
cash consideration        4910
acquisition costs        108
cash acquired        246
          4772
the intangible assets acquired as part of the acquisition can be analysed as follows
software        1771
customer relationships        1799
total        3570
goodwill represents the value of anticipated synergies workforce in place and projected future economic beneﬁ ts from enhancing the 
group’s product portfolio
consolidated ﬁ nancial statements and notes
notes to the ﬁ nancial statements
for the year ended 30 april 2009 continued micro focus 
international plc
annual report and 
accounts 2009
77
c acquisition of relativity technologies inc 
on 31 december 2008 the group acquired 100 of the share capital of relativity technologies inc for 109 million inclusive of 
05 million related costs paid in full on completion
a fair value review was carried out on the assets and liabilities of the business resulting in the identiﬁ cation of intangible assets
details of the net assets acquired and goodwill are as follows
        carrying value at
        acquisition fair value
        ’000 ’000
intangible ﬁ xed assets       – 5197
property plant and equipment        256 256
trade and other receivables        2362 2546
cash and cash equivalents        320 320
trade and other payables        5164 5164
deferred tax liability       – 2140
net liabilitiesassets        2226 1015
goodwill        9838
consideration        10853
consideration satisﬁ ed by
cash        10853
outﬂ ow of cash to acquire business net of cash acquired
cash consideration        10316
acquisition costs        537
cash acquired        320
         10533
the intangible assets acquired as part of the acquisition can be analysed as follows
software        2883
customer relationships        2314
total        5197
goodwill represents the value of the assembled workforce at the time of acquisition with speciﬁ c knowledge and expertise in application 
modernization it also includes the economic beneﬁ ts expected to be derived from enhancing the group’s products and services available to 
the company’s existing customer base with those customers of relativity technologies 
d contribution of acquisitions 
the acquired businesses contributed the following revenues to the group for the period from date of acquisition to 30 april 2009 
         ’000
netmanage inc        24700
liant software corporation        4100
relativity technologies inc        2900
total        31700
if the companies had been acquired as at 1 may 2008 they would have contributed the following to the group’s revenue
         ’000
netmanage inc        27900
liant software corporation        5600
relativity technologies inc        9800
total        43300
the acquired companies operations have been restructured and largely integrated into existing micro focus businesses and therefore it is not 
practicable to ascertain the proﬁ ts of these businesses for the period from date of acquisition to 30 april 2009 micro focus 
international plc
annual report and 
accounts 2009
78
27 business combinations continued
e analysis of outﬂ ow of cash in respect of acquisitions
the outﬂ ow of cash and cash equivalents on the acquisitions is as follows
         ’000
netmanage inc        76240
liant software corporation        5018
relativity technologies inc        10853
net cash outﬂ ow        92111
during the year to 30 april 2009 adjustments were made in respect of goodwill on a prior year acquisition of 24 million due to changes in 
the tax rates at which the deferred tax liabilities in respect of the intangible assets recognised will unwind the prior year comparatives have 
not been amended as the adjustment is not considered material
the interim results for the half year to 31 october 2008 included provisional fair values for the acquisitions of netmanage inc and liant 
software corporation these fair values have been further reviewed as above
28 related party transactions
the group has taken advantage of the exemption available under ias 24 ‘related party disclosures’ not to disclose details of transactions 
with subsidiary undertakings
as described in the remuneration report the former nonexecutive directors david dominik and prescott ashe are directors in golden gate 
capital golden gate capital was a shareholder until 23 february 2009 when it disposed of its remaining shareholding in the company there 
were no related party transactions with this company during the year ended 30 april 2009 or with any other third party
29 borrowing facilities
on 13 may 2008 the company entered into a 40 million credit facility with hsbc bank plc and lloyds tsb bank plc for general corporate 
purposes the facility expired in may 2009 and incurred facility fees at market rates
30 events after the balance sheet date
a acquisition of borland software corporation
the company announced on 6 may 2009 that it had reached agreement on a recommended cash offer of 100 per share for the entire 
issued and outstanding share capital of borland software corporation ‘borland’ the nasdaqlisted software provider on 18 june 2009 
the company announced that the offer had been increased to 115 per share and on 1 july 2009 the offer was increased to 150
the offer values the existing issued share capital of borland at approximately 1130 million including the value of all outstanding options 
the transaction was completed on 27 july 2009
b acquisition of compuware testing and asq business 
the company announced on 6 may 2009 that it had reached agreement to acquire the suite of application testingautomated software 
quality asq solutions and all related sales support and development infrastructure together being the compuware testing and asq 
business from compuware corporation ‘compuware’ for a total gross cash consideration of 800 million the transaction was completed 
on 29 may 2009
in accordance with ifrs 3 the directors will assess the fair value of the net assets acquired for both acquisitions as further information 
becomes available it is impracticable to provide full disclosure of these acquisitions at present
c bank facilities 
on 6 may 2009 the company entered into a 175 million credit facility provided through a syndicated loan consortium comprising 
barclays bank plc hsbc bank plc lloyds tsb bank plc and the royal bank of scotland plc to assist with the funding of acquisitions and 
for general corporate purposes on 12 june 2009 the company entered into a supplemental agreement for an additional 40 million to 
assist with the acquisition of borland software corporation at an increased offer price 
consolidated ﬁ nancial statements and notes
notes to the ﬁ nancial statements
for the year ended 30 april 2009 continued micro focus 
international plc
annual report and 
accounts 2009
79
we have audited the parent company ﬁ nancial statements of micro 
focus international plc for the year ended 30 april 2009 which 
comprise the parent company balance sheet and the related notes 
the ﬁ nancial reporting framework that has been applied in their 
preparation is applicable law and united kingdom accounting 
standards united kingdom generally accepted accounting practice
respective responsibilities of directors and auditors 
as explained more fully in the directors’ responsibilities statement 
set out on page 49 the directors are responsible for the preparation 
of the parent company ﬁ nancial statements and for being satisﬁ ed 
that they give a true and fair view our responsibility is to audit the 
parent company ﬁ nancial statements in accordance with applicable 
law and international standards on auditing uk and ireland those 
standards require us to comply with the auditing practices board’s 
ethical standards for auditors 
this report including the opinions has been prepared for and only 
for the company’s members as a body in accordance with sections 
495 to 497 of the companies act 2006 and for no other purpose 
we do not in giving these opinions accept or assume responsibility 
for any other purpose or to any other person to whom this report is 
shown or into whose hands it may come save where expressly agreed 
by our prior consent in writing
scope of the audit of the ﬁ nancial statements
an audit involves obtaining evidence about the amounts and 
disclosures in the ﬁ nancial statements sufﬁ cient to give reasonable 
assurance that the ﬁ nancial statements are free from material 
misstatement whether caused by fraud or error this includes an 
assessment of whether the accounting policies are appropriate to 
the parent company’s circumstances and have been consistently 
applied and adequately disclosed the reasonableness of signiﬁ cant 
accounting estimates made by the directors and the overall 
presentation of the ﬁ nancial statements
opinion on ﬁ nancial statements 
in our opinion the parent company ﬁ nancial statements 
�  give a true and fair view of the state of the company’s affairs as at 
30 april 2009
�  have been properly prepared in accordance with united kingdom 
generally accepted accounting practice and 
�  have been prepared in accordance with the requirements of the 
companies act 2006 
opinion on other matters prescribed by the companies 
act 2006 
in our opinion 
�  the part of the directors’ remuneration report to be audited has 
been properly prepared in accordance with the companies act 
2006 and 
�  the information given in the directors’ report for the ﬁ nancial year 
for which the parent company ﬁ nancial statements are prepared is 
consistent with the parent company ﬁ nancial statements 
matters on which we are required to report by exception 
we have nothing to report in respect of the following matters where 
the companies act 2006 requires us to report to you if in our 
opinion 
�  adequate accounting records have not been kept by the parent 
company or returns adequate for our audit have not been 
received from branches not visited by us or 
�  the parent company ﬁ nancial statements and the part of the 
directors’ remuneration report to be audited are not in agreement 
with the accounting records and returns or 
�  certain disclosures of directors’ remuneration speciﬁ ed by law are 
not made or 
�  we have not received all the information and explanations we 
require for our audit 
other matter 
we have reported separately on the group ﬁ nancial statements of 
micro focus international plc for the year ended 30 april 2009 
pauline campbell senior statutory auditor
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors
reading
12 august 2009
consolidated ﬁ nancial statements and notes
independent auditors’ report to the members of 
micro focus international plc micro focus 
international plc
annual report and 
accounts 2009
80
         2008
        2009 restated
       note ’000 ’000
assets
fixed assets
investments in subsidiary undertakings      v 54111 27873
        54111 27873
current assets
deferred tax assets       373 322
debtors      vi 128126 130676
cash at bank       5619 3382
        134118 134380
creditors amounts falling due within one year     vii 4420 2806
net current assets       129698 131574
net assets       183809 159447
equity
share capital      viii 37092 36837
share premium      ix 102825 100528
proﬁ t and loss account      x 43892 22082
equity shareholders’ funds       183809 159447
the company ﬁ nancial statements on pages 80 to 84 were approved by the board of directors on 12 august 2009 and were signed on 
its behalf by
 
stephen kelly nick bray
chief executive ofﬁ cer chief financial ofﬁ cer
consolidated ﬁ nancial statements and notes
company balance sheet
as at 30 april 2009 micro focus 
international plc
annual report and 
accounts 2009
81
i summary of signiﬁ cant accounting policies
the basis of preparation and the principal accounting policies adopted in the preparation of the ﬁ nancial information are set out below
a basis of preparation
the company ﬁ nancial statements have been prepared under the historical cost convention as modiﬁ ed by the share options at fair value 
through the proﬁ t and loss account and in accordance with the companies act 2006 and all applicable uk accounting standards
b foreign currency translation
the functional currency of the company is united states dollars foreign currency transactions are translated into the functional currency 
using the exchange rates prevailing at the dates of the transactions foreign exchange gains and losses resulting from the settlement of such 
transactions and from the translation at yearend exchange rates of monetary assets and liabilities denominated in foreign currencies are 
recognised in the proﬁ t and loss account
c investments in subsidiaries
investments in subsidiaries are held at cost less any accumulated impairment losses
d share capital share premium and dividend distribution
ordinary shares are classiﬁ ed as equity incremental costs directly attributable to the issue of new shares or options are shown in equity as 
a deduction net of tax from the proceeds
dividend distribution to the company’s shareholders is recognised as a liability in the group’s ﬁ nancial statements in the period in which the 
dividends are approved by the company’s shareholders
e taxation
corporation tax is payable on taxable proﬁ ts at amounts expected to be paid or recovered under the tax rates and laws that have been 
enacted or substantively enacted at the balance sheet date
deferred tax is recognised to take account of timing differences between the treatment of transactions for ﬁ nancial reporting purposes 
and their treatment for tax purposes a deferred tax asset is only recognised when it is regarded as more likely than not that there will be a 
suitable taxable proﬁ ts from which the future reversal of the underlying timing differences can be deducted
deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to 
reverse based on the tax rates and laws that have been enacted or substantively enacted at the balance sheet date deferred tax is measured 
on a nondiscounted basis 
f employee beneﬁ t costs
a pension obligations
the company operates a deﬁ ned contribution plan for which it pays contributions to publicly or privately administered pension insurance 
plans on a mandatory contractual or voluntary basis the company has no further payment obligations once the contributions have been 
paid the contributions are recognised as employee beneﬁ t expense when they are due prepaid contributions are recognised as an asset to 
the extent that a cash refund or a reduction in the future payments is available
b share based compensation
the company operated various equitysettled share based compensation plans during the year
no expense is recognised in respect of share options granted before 7 november 2002 and vested before 1 january 2005 for shares or share 
options granted after 7 november 2002 and vested after 1 january 2005 the fair value of the employee services received in exchange for 
the grant of the shares or options is recognised as an expense the total amount to be expensed over the vesting period is determined by 
reference to the fair value of the shares or options granted nonmarket vesting conditions are included in assumptions about the number 
of options that are expected to become exercisable at each balance sheet date the entity revises its estimates of the number of options 
that are expected to become exercisable it recognises the impact of the revision of original estimates if any in the proﬁ t and loss account 
and a corresponding adjustment to equity over the remaining vesting period
the shares are recognised when the options are exercised and the proceeds received allocated between share capital and share premium
ii proﬁ t attributable to the company
as permitted by section 230 of the companies act 1985 no separate proﬁ t and loss account is presented in respect of the company
the proﬁ t for the ﬁ nancial year before dividends for the company was 463 million 2008 proﬁ t 207 million
consolidated ﬁ nancial statements and notes
notes to the company ﬁ nancial statements 
for the year ended 30 april 2009 micro focus 
international plc
annual report and 
accounts 2009
82
iii employees and directors
staff costs for the company during the year
        2009 2008
        ’000 ’000
wages and salaries       2927 3536
social security costs        440 360
other pension costs        45 67
cost of employee share schemes        682 550
total        4094 4513
the average monthly number of employees of the company including remunerated directors during the year was six 2008 eight for further 
information on the directors of the company please refer to the remuneration report on pages 42 to 47
iv dividends
a ﬁ nal dividend in respect of the year ended 30 april 2008 of 94 cents per share was proposed and paid during the year 176 million in 
total in addition an interim dividend in respect of the year ended 30 april 2009 of 45 cents per share 85 million in total was proposed 
and paid during the year
the directors are proposing a ﬁ nal dividend in respect of the year ended 30 april 2009 of 111 cents per share which would reduce 
shareholders’ funds by 224 million the proposed dividend is subject to approval at the agm on 24 september 2009
v investments in subsidiary undertakings
         2009
         ’000
at 1 may 2008        27873
additions         26238
at 30 april 2009         54111
at 30 april 2009 the company held directly or indirectly 100 of the ordinary share capital of the following principal subsidiary 
undertakings only micro focus holdings limited is directly owned by the company with all other subsidiaries being indirectly owned
company name country of incorporation principal activities
micro focus ag switzerland sale and support of software
micro focus apm solutions eood bulgaria development and support of software
micro focus apm solutions spa italy holding company sale and support of software
micro focus as norway sale and support of software
micro focus canada limited canada sale and support of software
micro focus gmbh germany sale and support of software
micro focus group holdings ireland holding company
micro focus holdings limited uk holding company
micro focus india private limited india sale and support of software
micro focus international limited cayman islands holding company
micro focus international holdings limited ireland sale and support of software
micro focus ip limited uk sale and support of software
micro focus israel limited israel development sale and support of software
micro focus kk japan sale and support of software
micro focus limited uk development sale and support of software
micro focus nv belgium sale and support of software
micro focus nv netherlands sale and support of software
micro focus pte limited singapore sale and support of software
micro focus pty limited australia sale and support of software
micro focus sas france sale and support of software
micro focus sl spain sale and support of software
micro focus software shanghai co limited prc sale and support of software
micro focus srl italy sale and support of software
micro focus us inc usa holding company development sale and support of software
liant software corporation usa sale and support of software
relativity technologies inc usa sale and support of software
these companies operate principally in the country in which they are incorporated
consolidated ﬁ nancial statements and notes
notes to the company ﬁ nancial statements 
for the year ended 30 april 2009 continued micro focus 
international plc
annual report and 
accounts 2009
83
vi debtors
        2009 2008
        ’000 ’000
amounts due from group undertakings       127726 130493
other debtors       213 139
prepayments       187 44
total       128126 130676
the amounts due from group undertakings are unsecured interest free and repayable on demand
vii creditors amounts falling due within one year
        2009 2008
        ’000 ’000
trade payables       366 562
taxation and social security        72 89
amounts payable to group undertakings       2256 230
accruals        1726 1925
total        4420 2806
the amounts payable to group undertakings are unsecured interest free and repayable on demand
viii called up share capital
        2009 2008
        ’000 ’000
authorised
2500000000 ordinary shares of £010 each historic fx rate used £1  191     476770000 476770000
total authorised share capital        476770000 476770000
       2009  2008
      number  number 
issued and fully paid
ordinary shares of £010 each     202111131 37091806 200430656 36836791
total allotted called up and fully paid share capital   202111131 37091806 200430656 36836791
further information on share capital is provided in note 20 and 23 of the group accounts
ix share premium account
        2009 2008
        ’000 ’000
at 1 may 2008       100528 100678
movement in relation to share options exercised      2297 150
at 30 april 2009       102825 100528 micro focus 
international plc
annual report and 
accounts 2009
84
x company statement of changes in shareholders’ equity
        restated 
        proﬁ t 
      share share and loss 
      capital premium account total
      ’000 ’000 ’000 ’000
balance as at 1 may 2007     36767 100678 20929 158374
proﬁ t for the year     – – 20732 20732
dividends     – – 21229 21229
issue of share capital      70 – – 70
movement in relation to share options      – 150 1487 1337
deferred tax on share options     – – 163 163
total changes in shareholders’ equity      70 150 1153 1073
balance as at 30 april 2008      36837 100528 22082 159447
proﬁ t for the year     – – 46342 46342
dividends     – – 26076 26076
issue of share capital      255 2297 1034 1518
movement in relation to share options      – – 2407 2407
deferred tax on share options     – – 171 171
total changes in shareholders’ equity      255 2297 21810 24362
balance as at 30 april 2009      37092 102825 43892 183809
in previous years an error was made in relation to accounting for the share option reserve which resulted in an understatement of proﬁ t and 
an overstatement of creditors the proﬁ t for the year to 30 april 2008 has been restated from 19434000 to 20732000 cumulative 
proﬁ ts for years to 30 april 2007 have been increased by 1009000
xi capital commitments and contingent liabilities
the company had no capital commitments or contingent liabilities at 30 april 2009 2008 nil
xii related party transactions
the company has taken advantage of the exemption under frs 8 ‘related party transactions’ from disclosing transactions with other 
members of the group headed by micro focus international plc there are no related party transactions or other external related parties
consolidated ﬁ nancial statements and notes
notes to the company ﬁ nancial statements 
for the year ended 30 april 2009 continued micro focus 
international plc
annual report and 
accounts 2009
85
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t 65 6622 5888 micro focus 
international plc
annual report and 
accounts 2009
86
     year to year to year to year to year to
     30 april 30 april 30 april 30 april 30 april
     2005 2006 2007 2008 2009
     ’000 ’000 ’000 ’000 ’000
results
revenue    150645 143688 171590 228196 274731
operating proﬁ t before exceptional items   44308 37167 62128 81294 106118
exceptional items    3394 14434 4861 6502 14907
operating proﬁ t    40914 22733 57267 74792 91211
proﬁ t before tax    32640 22558 60007 76823 91449
earnings per share
basic cents    1428 825 2196 2767 3287
diluted cents    1398 817 2137 2697 3192
additional information
historical summary micro focus 
international plc
annual report and 
accounts 2009
87
directors
kevin loosemore nonexecutive chairman
stephen kelly chief executive ofﬁ cer
nick bray chief financial ofﬁ cer
david maloney nonexecutive senior independent director
paul pester nonexecutive director 
tom skelton nonexecutive director
company secretary registered and head ofﬁ ce
jane smithard
the lawn
2230 old bath road
newbury
berkshire rg14 1qn
united kingdom
wwwmicrofocuscom
legal advisers
linklaters
one silk street
london ec2y 8hq
united kingdom
auditors
pricewaterhousecoopers llp
9 greyfriars road
reading
berkshire rg1 1jg
united kingdom
registrars
equiniti limited
aspect house
spencer road
lancing
bn99 6da
united kingdom
wwwshareviewcouk
brokers
ubs limited
2 finsbury square
london ec2 2pp
united kingdom
additional information
directors secretary registered ofﬁ ce and advisers micro focus 
international plc
annual report and 
accounts 2009
88
certain statements contained in this annual report including those 
under the captions entitled chairman’s statement chief executive 
ofﬁ cer’s statement ﬁ nance review directors’ report corporate 
governance and remuneration report constitute ‘forwardlooking 
statements’ all statements other than statements of historical facts 
included in this annual report including without limitation those 
regarding the company’s ﬁ nancial condition business strategy plans 
and objectives are forwardlooking statements these forward
looking statements can be identiﬁ ed by the use of forwardlooking 
terminology including the terms ‘believes’ ‘estimates’ ‘anticipates’ 
‘expects’ ‘intends’ ‘may’ ‘will’ or ‘should’ or in each case their 
negative or other variations or comparable terminology such 
forwardlooking statements involve known and unknown risks 
uncertainties and other factors which may cause the actual results 
performance or achievements of the company or industry results 
to be materially different from any future results performance 
or achievements expressed or implied by such forwardlooking 
statements such forwardlooking statements are based on numerous 
assumptions regarding the company’s present and future business 
strategies and the environment in which the company will operate in 
the future such risks uncertainties and other factors include among 
others the level of expenditure committed to development and 
deployment applications by organisations the level of deployment
related revenue expected by the company the degree to which 
organisations adopt webenabled services the rate at which large 
organisations migrate applications from the mainframe environment 
the continued use and necessity of the mainframe for business critical 
applications the degree of competition faced by micro focus growth 
in the information technology services market general economic 
and business conditions particularly in the united states changes 
in technology and competition and the company’s ability to attract 
and retain qualiﬁ ed personnel these forwardlooking statements 
speak only as at the date of this annual report except as required by 
the fsa or by law the company does not undertake any obligation 
to update or revise publicly any forwardlooking statement whether 
as a result of new information future events or otherwise
additional information
forwardlooking statements additional information
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Summary:
 micro focus 
international plc
10
chairman’s statement 
kevin loosemore
chairman
annual report and 
accounts 2009 micro focus 
international plc
annual report and 
accounts 2009
11
micro focus has delivered another year of strong ﬁ nancial results 
achieving signiﬁ cant organic revenue growth and improving proﬁ t 
margins in spite of tough economic conditions we successfully 
integrated netmanage liant and relativity companies acquired 
in june 2008 july 2008 and december 2008 respectively 
while we remain conscious of the current challenging economic 
conditions our longterm ambition remains to achieve signiﬁ cant 
growth in revenue and proﬁ ts through both organic and 
acquired means 
the performance achieved over the past year continues to reﬂ ect 
well on the entire micro focus team and highlights the strong 
fundamentals of the business we have ﬁ rst rate technology 
solutions a loyal customer base and a leading position in a 
substantial sustainable and growing marketplace market 
conditions for all companies are challenging but our revenue 
and ebitda margin growth underlines the relevance of our 
customer proposition and the resilience of our business model 
the board continues to adopt a progressive dividend policy reﬂ ecting 
the longterm earnings and cash ﬂ ow potential of micro focus and 
i am pleased to announce a proposed ﬁ nal dividend of 111 cents 
per share giving a full year dividend of 156 cents per share this 
represents a 20 increase when compared to a full year dividend 
of 130 cents last year and reﬂ ects the board’s conﬁ dence in both 
the relevance of our solutions and the prospects of micro focus 
we ﬁ nished the year with cash of 716 million and generated 
1050 million of cash from continuing operations during the year 
our business model has low ongoing capital requirements and 
delivers strong cash generation during the year 786 million 
of cash was used to fund the acquisitions and restructuring of 
netmanage liant and relativity this ﬁ gure comprises the purchase 
cost of 921 million restructuring costs incurred of 149 million 
less cash acquired of 284 million 
since the year end we have completed the acquisition of the testing 
and automated software quality ‘asq’ business of compuware 
for a gross consideration of 80 million in addition we have 
announced the acquisition of borland software corporation for 
a gross consideration of approximately 113 million to fund our 
acquisition and integration plans we have put in place a threeyear 
revolving credit facility of 215 million provided through a syndicated 
loan consortium comprising barclays hsbc lloyds and rbs 
as we build our company to address new growth opportunities we 
have added a signiﬁ cant number of employees to the business and 
i am pleased with their rapid integration and the strong contribution 
they are making the board would like to thank all of our employees 
for their continued hard work and commitment throughout the year 
we continue to build for the future 
we remain focused on proﬁ table revenue growth and i am conﬁ dent 
in the company’s ability to continue to deliver value to all of its 
stakeholders through both dividend and capital growth we aim 
to deliver superior total shareholder returns 
we look forward to the year ahead with conﬁ dence 
kevin loosemore 
chairman
 
what we do 
to deliver 
shareholder 
value
delivering 
shareholder 
value
resilient
business 
model
compelling
customer
proposition
effective 
cost 
management
growth
strategy