Micro Focus International plc (MCRO) 2009年年度報告「LSE」.pdf

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1、Micro Focus International plcAnnual Report and Accounts 2009LEADING THE EVOLUTIONMicro Focus International plcAnnual Report and Accounts 2009ifc1Key highlights 2009ContentsIFC Key highlights 200902 Focused on growth 02 Revenue growth 04 Adjusted EBITDA growth 06 Growth in cash generation08 Our custo

2、mer offer10 Chairmans statement Business review12 Chief Executive Offi cers statement 13 Operational review 17 Group risk factors 18 Corporate and social responsibility20 Chief Financial Offi cers review 25 Leading with our people 26 Getting close to our customers 28 Building the brand 31 Modernizat

3、ion leadershipManagement and governance32 Board of directors34 Directors report38 Corporate governance42 Remuneration report48 Key performance indicators(KPIs)49 Statement of directors responsibilities in respect of the annual report,the directors remuneration report and the fi nancial statementsCon

4、solidated fi nancial statements and notes50 Independent auditors report to the members of Micro Focus International plc51 Consolidated income statement52 Consolidated balance sheet53 Consolidated statement of changes in shareholders equity54 Consolidated cash fl ow statement55 Summary of signifi can

5、t accounting policies61 Notes to the fi nancial statements79 Independent auditors report to the members of Micro Focus International plc80 Company balance sheet81 Notes to the Company fi nancial statements Additional information85 Offi ces86 Historical summary87 Directors,Secretary,registered offi c

6、e and advisers88 Forward-looking statementsIBC 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,amortisa

7、tion 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 ar

8、e detailed in note 8.Revenue$274.7m+20.4%(2008:$228.2m)Adjusted EBITDA*$118.6m+34.0%(2008:$88.5m)*Adjusted operating profi t*$115.6m+33.5%(2008:$86.6m)Adjusted profi t before tax*$115.9m+30.8%(2008:$88.6m)Adjusted earnings per share*41.51c+29.4%(2008:32.08c)*Cash generated from continuing operations

9、$105.0m+15.4%(2008:$91.0m)Micro Focus International plcMICRO FOCUS IS A GROWING,INTERNATIONAL SOFTWARE COMPANY DELIVERING SHAREHOLDER VALUE BY RESPONDING TO GROWING CUSTOMER DEMAND.LEADING THE GLOBAL TREND TO APPLICATION MODERNIZATION,MICRO FOCUS SOLUTIONS RAPIDLY REDUCE COSTS AND IMPROVE PRODUCTIVI

10、TY.Annual Report and Accounts 200901Micro Focus International plcFocused on growthREVENUE GROWTH.FROM$228.2mTO$274.7mAnnual Report and Accounts 200902Revenue comprises total revenues including the contribution of acquisitions and is compared with the prior year.Strong revenue growth is driven by sol

11、id demand for both licence and maintenance contracts,supplemented by revenues from rapidly integrated acquisitions.2006$143.7m2007$171.6m2008$228.2m03Micro Focus International plcAnnual Report and Accounts 20092009$274.7mMicro Focus International plcFocused on growthAnnual Report and Accounts 200904

12、ADJUSTED EBITDA GROWTH.FROM$88.5mTO$118.6mAdjusted 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

13、.2006$38.8m2007$65.3m05Micro Focus International plcAnnual Report and Accounts 20092009$118.6m2008$88.5mMicro Focus International plcAnnual Report and Accounts 200906Focused on growthGROWTH IN CASH GENERATION.FROM$91.0m TO$105.0mThis measure is calculated using the cash fl ows generated from continu

14、ing 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$58.2m2006$42.0m07Micro Focus International plcAnnual Report and Accounts 2

15、0092009$105.0m2008$91.0mMicro Focus International plc08Annual Report and Accounts 2009Our customer offerOFFERING CUSTOMERS CHOICE,FLEXIBILITY AND FREEDOM FROM PROPRIETARY HARDWARE AND OPERATING SYSTEMS.09Micro Focus International plcAnnual Report and Accounts 2009Continuous evolution and improvement

16、Application Management and Modernization.CFO/CIODeliver signifi cant cost reduction and rapid return on investment,understand changing business needs and provide application management choices,improve time-to-market and increase business value.Customer roadmapMicro Focus responds to business needs t

17、hroughout the customer organisation:Technical leadersProvide solutions that increase productivity,enable product innovation and reduce delivery cycles.Technical teamsProduce modern and stimulating development,testing and deployment tools that promote fast delivery of quality products.EmployeesImprov

18、e effi ciency as a result of integrated,effective deployments of business critical applications across the customer organisation.Supporting customers application requirementsMaintenanceReassurance for the future,day-to-day support for application management and functionality,effective upgrades(appro

19、ximately 90%renewal rates).LicenceNew application management and development licences,with the majority coming from existing customers.ConsultingExperienced support to CIOs,providing effective assessment andbusiness implementation advice.The modernization trendIncreasing adoption levels by large cor

20、porations rejecting expensive,risky package or rewrite projects for business critical applications.Micro Focus large contract wins(more than$500,000 fee levels):200917 transactions at an average sales price of$1.4 million for a total of c$24 million.200812 transactions at an average sales price of$1

21、.2 million for a total of c$14 million.20077 transactions at an average sales price of$930,000 for a total of c$6.5 million.Revenue split year to 30 April 2009Number of contract wins worth over$500,000Innovateand improveIT AssetsAssessand planOperateand manageTest and deploy 47.6%Licence 48.2%Mainte

22、nance 4.2%Consulting20091720081220077Micro Focus International plc10Chairmans statement Kevin LoosemoreChairmanAnnual Report and Accounts 2009Micro Focus International plcAnnual Report and Accounts 200911Micro Focus has delivered another year of strong fi nancial results,achieving signifi cant organ

23、ic 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 long-t

24、erm 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 technol

25、ogy 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.T

26、he board continues to adopt a progressive dividend policy refl ecting the long-term earnings and cash fl ow potential of Micro Focus and I am pleased to announce a proposed fi nal dividend of 11.1 cents per share,giving a full year dividend of 15.6 cents per share.This represents a 20%increase when

27、compared to a full year dividend of 13.0 cents last year and refl ects the boards confi dence in both the relevance of our solutions and the prospects of Micro Focus.We fi nished the year with cash of$71.6 million,and generated$105.0 million of cash from continuing operations during the year.Our bus

28、iness model has low ongoing capital requirements and delivers strong cash generation.During the year,$78.6 million of cash was used to fund the acquisitions and restructuring of NetManage,Liant and Relativity.This fi gure comprises the purchase cost of$92.1 million,restructuring costs incurred of$14

29、.9 million less cash acquired of$28.4 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

30、 consideration of approximately$113 million.To fund our acquisition and integration plans we have put in place a three-year 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 opp

31、ortunities,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 bui

32、ld for the future.We remain focused on profi table revenue growth and I am confi dent in the Companys 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 c

33、onfi dence.Kevin Loosemore Chairman WHAT WE DO TO DELIVER SHAREHOLDER VALUEDelivering Shareholder ValueResilientBusiness ModelCompellingCustomerPropositionEffective Cost ManagementGrowthStrategyMicro Focus International plcBusiness reviewChief Executive Offi cers statementStephen KellyChief Executiv

34、e Offi cerGiven 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 200912Annual Report and Accounts 2009Micro Foc

35、us International plcAnnual Report and Accounts 200913 Operational reviewOver 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

36、 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 a

37、dditional 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 business-critical enterprise applications.Including the benefi cial impacts of recent acquis

38、itions,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

39、 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$73.4 million in cash.On 11 July 2008,we acq

40、uired Liant Software Corporation for$4.9 million in cash and on 31 December 2008,we acquired Relativity Technologies,for$10.3 million in cash.All three acquisitions greatly strengthen our application modernization solutions.Since the year end we completed the acquisitions of Compuwares Testing/ASQ b

41、usiness 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

42、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

43、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 opport

44、unities.In particular,our deep relationships with HP/EDS,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,

45、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 fu

46、rther 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

47、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 co

48、ntinued 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 hav

49、e 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 companyEffective go-to-market business modelLarge and growing customer baseLeading technology solutionsBest peopleMicro Focus International pl

50、cMainframe rehosting solutions offerlower cost and more-immediatemodernization resultsGartner,Inc.Mainframe Rehosting Products Offer Lower Risks by Dale Vecchio,3 April 2009*Business reviewChief Executive Offi cers statement(continued)Business model Micro Focus has demonstrated that it can grow and

51、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 posi

52、tive.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 be

53、nefi ts from having a business model with a high proportion of predictable and recurring revenue.Of licence revenues,which made up 47.6%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

54、 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 48.2%.This line of business experiences high levels of retention,an

55、d 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 hig

56、h 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 licen

57、ce 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 gro

58、wth of our run rate high volume and low value business,typically through deployment revenues as modernised applications are rolled out across organisations.Summary and outlookOur solutions reduce cost,lower risk,and provide clear and compelling returns on investment for our customers.While we recogn

59、ise 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.

60、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 Groups ability to continue to deliver superior total shareholder returns.Stephe

61、n KellyChief Executive Offi cer14Annual Report and Accounts 2009Asia23%revenue growth in FY2009 across Singapore,Malaysia,Philippines,Hong Kong,China and KoreaIndiaIndian revenues grew by more than 250%in FY2009Growing our business around the world:*Disclaimer:The Gartner Report(s)described herein,(

62、the Gartner Report(s)represent(s)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 th

63、e opinions expressed in the Gartner Report(s)are subject to change without notice.Annual Report and Accounts 200915Micro Focus International plcBusiness reviewChief Executive Offi cers statement(continued)Annual Report and Accounts 200916Micro Focus International plcItaly 36%growth in total revenues

64、,nearly 350%increase in last four yearsSpain 200%growth in licence revenues vs FY2008France 32%growth in total revenues vs FY2008Group risk factorsThe 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

65、longer-term 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 c

66、ontrols within the corporate governance report on page 40.EmployeesThe 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.

67、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 contractsIn common with other software companies,the recognition of revenue is dependent upon obtaining signed contracts from cust

68、omers 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

69、a high proportion of predictable and recurring revenue which reduces this exposure.AcquisitionsAcquisitions 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 targ

70、et 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 to-date in integrating acquisitions into the

71、Groups business model and has strengthened its management team to assist in this process.It has also secured a three-year revolving$215 million loan facility agreement to fund announced acquisitions and associated integration costs.Bank loan facilityThe$215 million loan facility agreement,to the ext

72、ent 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 busines

73、s.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 dra

74、wn down to fund acquisitions will be repaid together with any accrued interest within the three-year term of the loan facility agreement minimising the effect of any restrictive covenants contained therein.Research and developmentThe Group has expanded its various R&D facilities through organic grow

75、th and through acquisitions.The success of the R&D 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 introduc

76、e products which better meet the requirements of customers,this may have a material impact on revenues and profi ts.The successful integration of the R&D functions of acquired companies together with the effective management of existing facilities is key to mitigating these risks.Micro Focus Interna

77、tional plcAnnual Report and Accounts 200917Business reviewChief Executive Offi cers statement(continued)Foreign exchange and treasuryThe Group is not exposed to signifi cant foreign exchange transactional exposure as generally its subsidiaries trade in their own currency.The Groups principal exposur

78、e 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

79、 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 Groups business may be subject to inherent risks arising from the general and sector specifi c economic conditions

80、 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

81、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 propositi

82、on 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 propertyThe Group depends on its intellectual property,and rights to such intell

83、ectual 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 Groups existing intellectual property or pur

84、sue registrations for new rights may result in the loss of the Groups exclusive right to use technologies which are included in their respective software products or are otherwise used in their respective businesses.Most of the Groups intellectual property is not covered by a patent or patent applic

85、ation and includes trade secrets and other know-how that is not considered patentable.In addition,some of the Groups 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

86、 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 b

87、e 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

88、the business.In this context,Micro Focus seeks to integrate CSR considerations relating particularly to social,ethical and health,safety and environment(HS&E)issues in its day-to-day operations.The board acknowledges its duty to ensure the Company conducts its activities responsibly and with proper

89、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 cor

90、porate social responsibility,Micro Focus seeks to ensure that:The board takes account of the signifi cance of social,ethical and HS&E issues;Business practices are managed ethically;The business is focused on delivering value to stakeholders;Existing legislation,regulations and guidelines are adhere

91、d 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.JapanJapan grew revenues for the eighth consecutive year in FY2009No

92、rth America1,900 fi nancial services customers,including 60 of the top 100 corporationsUK20%revenue growth in licence fees versus FY2008Micro Focus International plcAnnual Report and Accounts 200918Micro Focus International plcPLC BoardEthicalSocialHealth&SafetyEnvironmentOur CSR focusSocialThe heal

93、th,welfare and development of the Companys 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.E

94、mployee 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 questio

95、ns 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

96、 actively encourage employee equity participation,subject to compliance with the Groups 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 charit

97、able 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 donat

98、ed 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.EthicalThe Company manages its resources prudently to ensure appropriate investment is made in its resear

99、ch and development programmes and its commercialisation activities.Up-to-date security systems are utilised to protect the Companys IT systems.The Companys intellectual property is protected through an appropriate trademark registration and patenting programme.Close attention is paid to maintaining

100、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 safetyThe Company has well-developed health and safety policies and procedure

101、s,safeguarding staff,contractors and visitors in compliance with applicable legislation and best practice.EnvironmentMicro Focus complies with applicable environmental legislation.The directors acknowledge that the Companys business as a provider of enterprise application management solutions has a

102、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 unneces

103、sary 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 consc

104、ious 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 200919Nick BrayChief Financial Offi cer20Micro Focus International plcA

105、nnual Report and Accounts 2009Business reviewChief Financial Offi cers review Revenue for the year increased by 20.4%to$274.7 million,adjusted operating profi t increased by 33.5%to$115.6 million,adjusted profi t before tax increased by 30.8%to$115.9 million and adjusted earnings per share increased

106、 by 29.4%to 41.51 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 like-for-like basis we have also shown the impact of exchange rate movements on revenue and the imp

107、act 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

108、 follows:2009 2008$m%$m%North America 124.0 45.1 96.5 42.3Europe and the Middle East 113.1 41.2 96.0 42.1Rest of the World 37.6 13.7 35.7 15.6Total revenue 274.7 100.0 228.2 100.0Excluding the impact of exchange rate movements on revenue and the impact of current and prior year acquisitions,all geog

109、raphic regions achieved solid organic growth as shown in the table below.The core Micro Focus organic revenue growth at constant currency was 10.1%.Revenues from acquisitions added$57.2 million of revenue in the year.$25.5 million was generated from acquisitions completed in prior years and$31.7 mil

110、lion 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 13.7%.2009 2008 Growth$m$m%North America 92.2 85.5 7.8Europe and the

111、 Middle East 89.8 79.0 13.7Rest of the World 35.5 33.0 7.6Core Micro Focus 217.5 197.5 10.1Acquisitions before 30 April 2008 25.5 25.4 243.0 222.9 Acquisitions after 1 May 2008 31.7 Total revenue growth pre-currency impact 274.7 222.9 23.3Currency 5.3 Total reported revenue 274.7 228.2 20.4 The lead

112、ership 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 1

113、30.8 47.6 113.3 49.6Maintenance fees 132.3 48.2 104.2 45.7Consultancy fees 11.6 4.2 10.7 4.7Total revenue 274.7 100.0 228.2 100.0 RevenueBy geographic region 2009$million By category$millionHOW WE HAVE PERFORMED North America 124.0 Europe and Middle East 113.1 Rest of World 37.6 Licence Fees 130.8 M

114、aintenance Fees 132.3 Consulting Fees 11.6Micro Focus International plcAnnual Report and Accounts 200921Micro Focus International plcAnnual Report and Accounts 200922As detailed below,licence and maintenance growth in the core Micro Focus business was 9.7%and 11.9%respectively.Consulting revenues re

115、duced by c.5%.2009 2008 Growth$m$m%Licence 108.6 99.0 9.7Maintenance 101.5 90.7 11.9Consulting 7.4 7.8(5.1)Core Micro Focus 217.5 197.5 10.1Acquisitions before 30 April 2008 25.5 25.4 243.0 222.9 Acquisitions after 1 May 2008 31.7 Total revenue growth pre-currency impact 274.7 222.9 23.3Currency 5.3

116、 Total reported revenue 274.7 228.2 20.4 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

117、those in excess of$0.5 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 11.9%refl ecting the impact of solid licence fee sales combined with

118、 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

119、 acquisitions made in the year comprising,NetManage,Liant and Relativity added$31.7 million of revenues in the year.Cost breakdown(pre-exceptionals)2009$million Cost of sales 22.4 Selling and distribution 78.1 Research and development 34.1 Administrative expenses 34.0Average monthly number of employ

120、ees Sales and distribution 312 Research and development 241 General and administration 202Business reviewChief Financial Offi cers review(continued)Micro Focus International plcAnnual Report and Accounts 200923Costs All comments below relate to costs at actual reported$.Cost of sales for the year fe

121、ll by 1%to$22.4 million.The costs in this category predominantly relate to our consulting and helpline support operations.Selling and distribution costs increased by 23.6%to$78.1 million.We continue to make signifi cant investments in the sales and marketing functions to support growth and will cont

122、inue 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 15.7%to$34.1 million.We expect to maintain this cost category at a similar percentage of total revenu

123、e as we continue to enhance and expand our solution set to take advantage of the considerable market opportunity.Excluding restructuring charges of$14.9 million(2008:$6.5 million),administrative expenses increased by 7.5%to$34.0 million.The increase in costs includes costs of the acquired businesses

124、 as well as expanding the Groups 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

125、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 fast

126、er than revenues.As a result,adjusted operating profi t as reported in$was not materially different pre-or post-currency adjustments.Revenue Cost analysis by analysis by major currency major currency%US$51.4 32.5Other 48.6 67.5Total 100.0 100.0 Operating profi t Operating profi t for the year was$91

127、.2 million(2008:$74.8 million).Adjusted operating profi t increased by 34%to$115.6 million(2008:$86.6 million),the improvement being driven by increased revenue and an improvement in margins.Adjusted EBITDAAdjusted EBITDA increased by 34%to$118.6 million(2008:$88.5 million)as a result of increased r

128、evenue and tightly controlled costs.Net fi nance income Net fi nance income was signifi cantly lower than for the previous year at$0.2 million(2008:$2.0 million)due to lower average cash balances and lower interest rates.Cash balances were reduced by$78.6 million as a result of the purchases of NetM

129、anage,Liant and Relativity and associated restructuring charges.We also incurred facility fees of$0.7 million on the unused bank facility.Taxation Tax for the year was$25.4 million(2008:$21.4 million)based on increased profi ts.The Groups effective tax rate is 27.8%(2008:27.9%).Our medium-term effec

130、tive tax rate is expected to be maintained at approximately 28%.Profi t after tax Profi t after tax increased by 19%to$66.0 million(2008:$55.4 million),similar to the growth in revenues.Cash fl ow At 30 April 2009,the Companys cash balance was$71.6 million(2008:$92.4 million).The Group generated a n

131、et cash infl ow from continuing operating activities of$105.0 million which was offset by outfl ows of$78.6 million in respect of the acquisition and restructuring of NetManage,Liant and Relativity as well as corporation tax payments of$20.0 million and dividends of$26.1 million.+11.9%Organic revenu

132、e maintenance growth$71.6mCash balance at 30 April 2009Micro Focus International plcAnnual Report and Accounts 200924Dividend The board continues to adopt a progressive dividend policy refl ecting the long-term earnings and cash fl ow potential of Micro Focus with a level of dividend cover for the f

133、i nancial year ending 30 April 2009 of approximately 2.5 times on a pre-exceptional 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 11.1 cents per share providing for total dividends in the year of 15.6

134、 cents per share,an increase of 20%over the total dividends of 13.0 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

135、 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=$1.65,equivalent to 6.73 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 yea

136、r During the year,we made three acquisitions,NetManage in June,Liant in July and Relativity in December.These three acquisitions added$31.7 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 r

137、egard to acquisitions as we see the benefi t of a full 12 months of results.Acquisitions made post-period end On 29 May 2009,we closed the acquisition of Compuwares Testing and ASQ business.The gross purchase price was$80 million.On 27 July 2009,we closed the acquisition of the Borland Software Corp

138、oration for a gross purchase price of approximately$113 million.To fi nance these acquisitions,we have arranged a three-year revolving credit facility of$215 million through a syndicated loan consortium comprising Barclays,HSBC,Lloyds and RBS.This facility together with the Groups existing cash bala

139、nces will be used to fund the completed acquisitions and subsequent integration activities.Nick BrayChief Financial Offi cer Business reviewChief Financial Offi cers review(continued)LEADING WITH OURPEOPLE.Business review26 Getting close to our customers28 Building the brand31 Modernization leadersh

140、ip 25Annual Report and Accounts 2009Micro Focus International plcBusiness reviewLeading with our peopleMarc Andrews PresidentMicro Focus International plcAnnual Report and Accounts 200926Modernizing key legacy applications is the top software initiative for businesses this year.Forrester Research Pr

141、ess Release:Top Corporate Software Priority Is Modernizing Legacy Applications,8 June 200927Micro Focus International plcAnnual Report and Accounts 2009Business reviewLeading with our people(continued)Annual Report and Accounts 2009Sally Hanson Global Marketing Communications DirectorMicro Focus Int

142、ernational plc28Micro Focus International plcAnnual Report and Accounts 200929Business reviewLeading with our people(continued)Neil FowlerDirector,Product DevelopmentMicro Focus International plcAnnual Report and Accounts 20093031The capabilities Micro Focus provides will actually increase the relia

143、bility and scalability of apps running in the Cloud.Forrester analyst Mike Gilpin in the eWeek article,Taking COBOL to the Cloud,November 2008Micro Focus International plcAnnual Report and Accounts 2009Micro Focus International plcAnnual Report and Accounts 20093201.04.02.05.03.06.Micro Focus Intern

144、ational plcAnnual Report and Accounts 20093304.David Maloney,53(Non-executive director)*David is Chairman of Hoseasons Holdings Ltd and a non-executive director of Ludorum plc,Cineworld Group plc,Carillion plc and Enterprise Inns plc.He is also Chairman of the Board of Trustees of Make-a-Wish Founda

145、tion(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 C

146、hartered Institute of Management Accountants and has a degree in economics from Heriot-Watt University,Edinburgh.05.Paul Pester,45(Non-executive director)*Paul is currently Managing Director at Banco Santander responsible for Bradford&Bingley,and its integration into Santander,and for Premium Bankin

147、g.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

148、 honours degree in physics from Manchester University and a doctorate in mathematical physics from Oxford University.06.Tom Skelton,48(Non-executive director)*Tom is a founding member of Confl uence Medical Systems,a healthcare and technology consulting partnership.In his most recent executive role,

149、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 US-based software company focused on the healthcare information technology market.He earned h

150、is BSBA from Robert Morris University,Pittsburgh,Pa.01.Kevin Loosemore,50(Non-executive Chairman)Kevin is non-executive Chairman of Morse Plc,director of Farnham Castle and non-executive director of Nationwide Building Society.He was previously the Chief Operating Offi cer of Cable&Wireless plc,Pres

151、ident 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

152、Inc.(NASDAQ public company)from January 2002 until February 2006.He served as Chordiants President and Chief Operating Offi cer from October 2000 through January 2002,and as Senior Vice President of Chordiant Software International Limiteds operations from October 1998 to October 2000.Prior to this,

153、he spent almost ten years in a number of senior management positions with the Oracle Group.He is a non-executive director of Cram 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

154、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

155、 qualifi ed as a chartered accountant.Nick has a fi rst class honours degree in civil engineering from Aston University.Management and governanceBoard of directors*Audit committee Remuneration committee Nomination committeeMicro Focus International plcAnnual Report and Accounts 200934The directors o

156、f 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 activitiesThe principal activity of the Group during the year was the provision of enterprise application management solutions.The Company

157、is limited by shares and is domiciled and incorporated in the United Kingdom.The registered offi ce of the Company is:The Lawn,2230 Old Bath Road,Newbury,Berkshire RG14 1QN.Business reviewThe Group is required to produce a business review complying with the requirements of the Companies Act 2006.The

158、 information that fulfi ls these requirements can be found in this directors report and in the following sections:The Chief Executive Offi cers statement on pages 12 to 14,the fi nance review on pages 20 to 24 which include details of the Groups activity and the future development of the Group,the r

159、isk 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.DividendsThe board continues to adopt a progressive dividend policy refl ecting the long-term earnings and cash fl ow potential of Micro Focus with a

160、level of dividend cover for the fi nancial year ended 30 April 2009 of approximately 2.5 times on a pre-exceptional earnings basis.In line with the above policy,the directors recommend payment of a fi nal dividend in respect of 2009 of 11.1 cents per share,which,taken together with the interim divid

161、end of 4.5 cents per share paid in January 2009,gives a total dividend in respect of 2009 of 15.6 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 e

162、xchange rate of 1=$1.65,equivalent to approximately 6.73 pence per share,being the rate applicable on 24 June 2009,the date of recommendation of the dividend by the board.Research and developmentThe Group expensed$34.1 million relating to research and development during the year to 30 April 2009(200

163、8:$29.5 million).In addition,the Group capitalised$7.7 million of qualifying expenditure(2008:$5.4 million).This expenditure was incurred in improving the quality,functionality and extending the range of the Groups innovative software solutions.DonationsThe Companys policy is to make no donations to

164、 political parties(2008:nil).During the year,the Group made charitable donations of$27,000 to a number of local and national charities and other local organisations(2008:$31,000).This included 8,800 to Castle Special School,Newbury and 3,600 to Action for Children.The Company has a gift programme th

165、at 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 eventsThe Company announced on 6 May 2009,that it had reached agreement on a recommended cash offer of$1.00 per share for the ent

166、ire issued and outstanding share capital of Borland Software Corporation,(Borland),the NASDAQ-listed software provider.On 18 June 2009,the Company announced that the offer had been increased to$1.15 per share and on 1 July 2009,the offer was increased to$1.50 per share.The transaction was completed

167、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 Testing/Automated Software Quality(ASQ)solutions

168、 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$80.0 million.The transaction was completed on 29 May 2009.On 6 May 2009,the Company entered into a$175 mill

169、ion 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 i

170、ncreased to$215 million.Directors and their interestsThe directors of the Company who served during the year are as follows:ExecutiveStephen KellyNick BrayNon-executiveKevin Loosemore (Chairman)Prescott Ashe(resigned 8 September 2008)David Dominik(resigned 18 February 2009)David MaloneyPaul PesterTo

171、m SkeltonDetails 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 whi

172、ch 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

173、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

174、of these indemnities are available for review at the registered offi ce of the Company.Management and governanceDirectors reportMicro Focus International plcAnnual Report and Accounts 200935Employment policyEqual opportunitiesThe Group operates an equal opportunities policy.Full consideration is giv

175、en 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 employeesWith regar

176、d to existing employees and those who may become disabled,the Groups 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 commitmen

177、t within this policy that the Group will not allow discrimination or harassment by employees or others acting on the Groups behalf,in respect of sex,age,marital status,race,nationality,disability or religious or political beliefs.Employee involvementThe Group believes it is important that employees

178、are aware of the Groups 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 consult

179、ation programme.In addition,regular meetings are held with staff and managers,both to raise issues and to assist with the two-way fl ow of information.Further education and trainingContinuing education,training and development are important to ensure the future success of the Group.The Group support

180、s 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 individuals ongoing develo

181、pment.Share option schemesThe directors remain committed to the principle that selected employees should be able to participate in the Groups progress through share based compensation schemes.Details of the Groups share based compensation schemes are given in note 23.Payment of creditorsMicro Focus

182、International plc,which holds the investments in the Groups 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

183、 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 numb

184、er of days purchases outstanding at 30 April 2009 for the Group was 28 days(2008:28 days).Financial instrumentsThe 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 foun

185、d in note 18 to the fi nancial statements.Substantial shareholdingIn 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 ofName of

186、 holder of 10 pence each Issued capitalStandard Life Investments Limited 22,023,644 10.92%Majedie Asset Management Limited 16,330,461 8.17%BlackRock,Inc 12,863,784 6.36%GAM International Management Limited 11,717,270 5.84%JP Morgan Chase&Co 9,963,590 4.96%Legal and General Group Plc 7,835,219 3.88%F

187、idelity International Limited 6,605,572 3.30%Additional information for shareholdersFollowing 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 b

188、ased on the Companys Articles of Association(Articles)which came into effect on 1 October 2008.Share capitalThe Company has a single class of share capital which is divided into ordinary shares of 10 pence each.Rights and obligations attaching to sharesVoting in a general meeting of the Company:On a

189、 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

190、 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 rightsFull details of the deadlines for exercising voting rights in respect of the resolutions to be considered at the AGM to be

191、held on 24 September 2009 are set out in the Notice of Meeting which accompanies this report.Dividends and distributionsSubject 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,b

192、ut 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

193、paid up on the shares.Micro Focus International plcAnnual Report and Accounts 200936LiquidationUnder 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 asset

194、s 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 sharesSubject to the Articles,any member may transfer all or any of his or her certifi ed shares in writing by

195、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 share

196、s 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 sh

197、ares 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 cate(s)and such other evidence as the board may reasonably require to show the right of the transfer or to make the t

198、ransfer(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

199、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 fully-paid or not)in favour of more than four persons jointly

200、.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 transfe

201、rred by means of a relevant system.Repurchase of sharesThe Company obtained shareholder authority at the last AGM(held on 25 September 2008)to buy back up to 20,056,391 ordinary shares,which remains outstanding until the conclusion of the next AGM on 24 September 2009.The minimum price which must be

202、 paid for such shares is 10 pence and the maximum price payable is the higher of 5%above the average of the mid-market 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 th

203、e amount stipulated by Article 5(1)of the Buy-back and Stabilisation Regulation 2003(in each case exclusive of expenses).Amendment to the ArticlesAny amendments to the Articles may be made in accordance with the provisions of the Companies Act 2006 by way of special resolution.Appointment and replac

204、ement of directorsDirectors 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 the

205、reafter 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 r

206、esolution 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 sh

207、all 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 t

208、he 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 directorsThe business of the Com

209、pany will be managed by the board who may exercise all the powers of the Company,subject to the provisions of the Companys memorandum of association,the Articles,the Companies Acts and any ordinary resolution of the Company.Shares held in the Employee Benefi t TrustWhere the trustee of the Micro Foc

210、us 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 agreementsThe following signifi

211、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

212、 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 syn

213、dicated 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 as

214、sist 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 governanceDirectors report(continued)Micro Focus International plcAnnual Report and Accounts 200937The business review doe

215、s 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.BranchThe Group continues to operate overseas branches in Hong Kong and Sweden.Dur

216、ing 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,22-30 Old Bath Road,Newbury,Berks

217、hire RG14 1QN on 24 September 2009 at 3pm(UK time).Auditors and disclosure of information to auditorsSo 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 Companys auditors in connection with preparing

218、 their report)of which the Companys 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 Companys auditors are aware of that information.Pricewater

219、houseCoopers LLP have indicated their willingness to continue in offi ce and a resolution that they be reappointed will be proposed at the AGM.Going concernThe directors,having made enquiries,consider that the Company and the Group have adequate resources to continue in operational existence for the

220、 foreseeable future,and therefore it is appropriate to maintain the going concern basis in preparing the fi nancial statements.By order of the boardJane Smithard Company Secretary12 August 2009Micro Focus International plcAnnual Report and Accounts 200938IntroductionThe principal corporate governanc

221、e guidance that applies to companies listed with the UK Listing Authority during the year reported on is contained in the Financial Reporting Councils Combined Code 2006(the Combined Code).The Combined Code,which operates on a comply or explain basis,incorporates,among others,recommendations by the

222、Higgs Review regarding the role of non-executive 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 exceptio

223、ns 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 statementThe directors are committed to ensuring that the Company will work towards compliance with the provisions set out in Se

224、ction 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:A.3.2 board of directors The Combined Code requires that at least half the board,excluding th

225、e Chairman,should comprise non-executive directors determined by the board to be independent.Following the resignation of non-executive 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 independe

226、nt,resigned on 18 February 2009.A.4.1 nomination committee The Combined Code requires that a majority of members of the nomination committee should be independent non-executive directors.The nomination committee comprises the Chairman,David Maloney(non-executive senior independent director)and Steph

227、en 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 non-executive capacity and is considered by the board to be independent of management and free from any business or other relationship which

228、 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 th

229、e remuneration report on pages 42 to 49)the following section sets out how the board has applied these principles.The boardThe Group is controlled by the board,which is responsible for the Groups system of corporate governance.As at 30 April 2009,the board comprised six directors:Kevin Loosemore Non

230、-executive ChairmanStephen Kelly Chief Executive Offi cerNick Bray Chief Financial Offi cerDavid Maloney Non-executive senior independent directorPaul Pester Non-executive directorTom Skelton Non-executive directorThe role of the non-executive directors is to ensure that independent judgment is brou

231、ght to board deliberations and decisions.The non-executive 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 non-executive capacity and is considered by the board to be indep

232、endent of management and free from any business or other relationship which could materially interfere with the exercise of his independent judgment.David Maloney,the non-executive senior independent director,Paul Pester and Tom Skelton,non-executive directors,are considered by the board to be indep

233、endent.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 t

234、he forthcoming AGM and,being eligible will stand for re-election.The non-executive 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 p

235、rofessional advice in the furtherance of their duties and these procedures allow the directors to take such advice at the Companys 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 th

236、e 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 Secretarys responsibilities include facilitating induction and professional

237、development and ensuring the smooth fl ow of information within the board and its committees,and between non-executive directors and senior management.Any new director receives a comprehensive,formal and tailored induction into the Companys operations.Appropriate training is provided to new director

238、s 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

239、 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 co

240、ntrols.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 busine

241、ss 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 executiv

242、e directors ensure regular informal contact is maintained Management and governanceCorporate governanceMicro Focus International plcAnnual Report and Accounts 200939with non-executive directors.The board makes full use of appropriate technology as a means of updating and informing all its members.In

243、 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

244、Company,day-to-day management of the business is conducted by the executive directors.Review of the Groups 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 rec

245、eives 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 an

246、d that of its committees and individual directors(including the Chairman),as required by Combined Code provision A6.1.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 hol

247、ds meetings with non-executive directors without the presence of executive directors.Confl icts of interestFollowing 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.Th

248、e board is aware of the other commitments of its directors and changes to these commitments are reported to the board.Board committeesIn accordance with best practice,the Company has established audit,nomination and remuneration committees,with written terms of reference for each that deal with thei

249、r 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 Companys website.The Company is aware that the Chairman is not regarded as independent for the purposes of the Combined Code.Audit committeeThe audi

250、t committee is comprised entirely of non-executive 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

251、 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 Groups annual accounts and interim reports prior to submission for approval to the full board.Thi

252、s committee also monitors the Groups accounting policies,internal fi nancial control systems and fi nancial reporting procedures.The audit committee provides a forum through which the Groups external and internal auditors report to the board.The auditors are invited to attend meetings of the committ

253、ee 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 r

254、equirements and the relationship with the audit fi rm as a whole)and the consideration of audit fees and fees for other non-audit work.In addition,the audit committee has developed a policy designed to ensure that the auditors objectivity and independence is not compromised by its undertaking inappr

255、opriate non-audit 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 Groups Chief Financial Offi cer provides oversight and co-ordination of internal audit.In order t

256、o 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 Groups systems of internal control are effective.The internal audit plan for each year is det

257、ermined 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 man

258、agement 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 committees terms of reference include a process for employees of the Company to raise in confi dence concerns about possible impropriety in matters of fi

259、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

260、 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 othe

261、r 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 Companys internal controls and risk management systems;To review the Companys arrangements for its employees to raise concerns,in confi

262、dence,about possible wrongdoing in fi nancial reporting or other matters;To monitor and review the need for,and the effectiveness of,the Companys internal audit function in the context of the Companys overall risk management system;andMicro Focus International plcAnnual Report and Accounts 200940 To

263、 oversee the relationship with the Companys auditors,ensuring the independence and objectivity of the auditor and considering audit fees and fees for non-audit work;to consider and make recommendations to the board in relation to the appointment,re-appointment and removal of the Companys external au

264、ditor.During the year,the committees 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 eff

265、ectiveness of both the internal and external auditors;Responses to a questionnaire on the audit committees performance and effectiveness;A strategic risk assessment exercise to identify and assess the Groups key risks and the controls in place to manage and mitigate against these risks;Review of the

266、 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

267、 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 Groups tax advisors;and The management of corporate fraud risks.Nomination committeeThe nomination committee is comprised of

268、Kevin Loosemore(who chairs the committee),David Maloney,(the non-executive 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

269、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 n

270、omination 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

271、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 e

272、xecutive and non-executive,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 non-executives and evaluating whether they are spending enough time to fulfi l their duties.Remuneration committeeDetai

273、ls of the remuneration committee are described in the remuneration report on pages 42 to 47.Accountability and auditThe board is responsible for the preparation of fi nancial statements that present a balanced assessment of the Groups fi nancial position and prospects.This responsibility is administ

274、ered primarily by the audit committee,the terms of reference of which are referred to above.Internal controlsThe board is ultimately responsible for establishing and monitoring internal control systems throughout the Group and reviewing their effectiveness.It recognises that rigorous systems of inte

275、rnal control are critical to the Groups 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:Th

276、e Group operates a structured,objectives-driven 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

277、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 approp

278、riate 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

279、 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

280、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 governanceCorporate governance(continued)Micro Focus International plcAnnual Report and Accounts 200941This requirement is set

281、out in the audit committees terms of reference to report on a regular basis to the board on the Groups 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 t

282、he 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 non-audit work.Human resourcesThe Group endeavours

283、 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 Groups business objecti

284、ves and performance is formally measured against these objectives twice per year.The Group has a clear and well-understood organisational structure and each employee knows his or her line of accountability.AnnouncementsAll major announcements are approved by the Chairman and the executive directors

285、and circulated to the board prior to issue.The Group also has internal and external checks to guard against unauthorised release of information.FinancialA comprehensive budgeting system allows managers to submit detailed budgets which are reviewed and amended by executive directors prior to submissi

286、on to the board for approval.InsuranceThe Group keeps under review its portfolio of insurance policies with its insurance brokers to ensure that the policies are appropriate to the Groups activities and exposures.Attendance at meetingsThe number of board meetings and committee meetings attended by e

287、ach 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*AttendedKevin Loosemore 13 13 5 5 2 2Stephen Kelly 13 13 Nick Bray 13 13 Prescott Ashe 4 4 David Dominik 10 10 1 1David Maloney 13

288、 12 6 6 5 5 2 2Paul 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 2008David Dominik resigned on 18 February 2009Directors are normally provided with the agenda and supporting papers for board and committee meetings a week prio

289、r 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 relationsThe Company values the views of shareholders and recognises their interests

290、in the Groups 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

291、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 half-year and full-year fi nancial results are anno

292、unced 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

293、date at its regular meetings with the views of shareholders and analysts.External analysts reports are also circulated to directors.The Companys website()provides an overview of the business including its strategy,products and objectives.All Group announcements are available on the website and new a

294、nnouncements are published without delay.The terms of reference of each of the boards 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 enqu

295、iries and dialogue throughout the year.Annual General Meeting(AGM)The Companys 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 statutor

296、y 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.

297、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 plcAnnual Report and Accounts 200942IntroductionThis is the Companys remuneration report in respect of the year to 30

298、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 relat

299、ing to directors remuneration as published by the Financial Reporting Council and the Companies Act 2006.The regulations require the auditors to report to the Companys members on the auditable part of the directors remuneration report and to state whether in their opinion that part of the report has

300、 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 Companys AGM on 24 Se

301、ptember 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 Companys future remuneration policies.The remuneration commit

302、teeThe 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 co

303、ming 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 Companys Chief Executive Offi cer,Chairman,the executive directors,the Company Secret

304、ary 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 fo

305、r,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 performance-related pay schemes operated by the Company,and approve the total annual payments;To review the design of all

306、 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

307、 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 a

308、ny 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 b

309、y 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 r

310、elating to their own remuneration.The terms of reference of the committee are available from the Company Secretary and are on the Companys website under Investors.Remuneration policyThe Companys policy on the remuneration of executive directors and their direct reports is established by the committe

311、e 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 Groups remuneration policies is that all empl

312、oyees,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

313、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 performance-relate

314、d bonuses and long-term 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

315、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 remuneratio

316、n structure,there is no restriction on the committee which prevents it from taking into account corporate governance on ESG matters.It is the boards intention to award share incentives to executive directors and selected employees as appropriate to reward and encourage performance.These share incent

317、ives will be granted at the discretion of the committee.Management and governanceRemuneration reportMicro Focus International plcAnnual Report and Accounts 200943Policies on remuneration take account of the pay structure,employment conditions and relativities within the Group and also the industry s

318、ector.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 pr

319、oportion 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 empha

320、sis on long-term incentive provision.Following this review the committee has decided to increase the level of annual awards of long-term incentives for the executive directors and other senior executives.This change is designed to ensure that the package of remuneration remains consistent with the p

321、olicy outlined above.The committee has also reviewed the performance condition used for long-term incentive awards to ensure that these remain consistent with the Groups strategy.It concluded that EPS remains an appropriate performance measure for awards of long-term incentives.The committee will ke

322、ep 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

323、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 believ

324、es 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 2.5-3 times greater volume).The board believes that moving to

325、 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 integrat

326、ion,stabilisation and growth of the acquired business.Long-term 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 long-term shareholder value.To date it has been in the

327、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

328、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 numb

329、er 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 Companys share price was relatively low necessitating large grants in te

330、rms of numbers of shares for these critical hires.Directors service contractsExecutive directorsThe Groups policy in entering into service contracts with executive directors is to enable the recruitment of high-quality executives and to obtain protection from their sudden departure whether or not to

331、 competitor companies.In addition,service contracts are an important element in maintaining maximum protection for the Groups 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 noti

332、ce 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 o

333、f 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,af