Annual Financial Report

23 August 2010

Annual Financial Report

Publication of the Micro Focus International plc Annual Report and Accounts and other Shareholder Documentation

Micro Focus International plc (the "Company") announces that it has published the following documents on its website at www.microfocus.com:

·; The annual report and accounts for the year ended 30 April 2010 (the "2010 Annual Report")

·; The Chairman's letter and notice of annual general meeting for 2010 (the "2010 Notice of Annual General Meeting"); and

·; A draft of the Company's proposed revised articles of association (the "Proposed Articles of Association").

A copy of these documents is also available for inspection at the Company's offices in Newbury.

The Company has also submitted to the UK Listing Authority two copies of each of the documents listed above, together with the form of proxy for the Annual General Meeting 2010, in compliance with Listing Rule 9.6.1.

Copies of the above documents will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at:

Financial Services Authority

25 The North Colonnade

Canary Wharf

London E14 5HS

Telephone: 020 7066 1000

The Annual General Meeting will be held on 23 September 2010 at the Company's offices in Newbury at 3pm (UK time).

Jane Smithard

Company Secretary

23 August 2010

Information to be disclosed in accordance with Rule 6.1.2 of the Disclosure Rules and Transparency Rules ("DTR")

The 2010 Notice of Annual General Meeting includes a resolution to adopt the Proposed Articles of Association, copies of which have been submitted to the UK Listing Authority and will also be available for inspection at the Document Viewing Facility and at the Company's offices in Newbury. The purpose of the Proposed Articles of Association is to ensure that the Company's constitution reflects changes to UK company law and current practice. In particular, the proposed changes to the Company's articles of association reflect the implementation of the Shareholders' Rights Directive in the UK in August 2009 and the remaining provisions of the Companies Act 2006 which came into force in October 2009. An explanation of the principal changes to the Company's articles of association is set out in the appendix to the 2010 Notice of Annual General Meeting.

Information to be disclosed in accordance with DTR 6.3.5

In accordance with Rule 6.3.5 of the DTR, extracted below from the 2010 Annual Report is the unedited text from a management report which contains a statement of directors' responsibility, Group risk factors and details of related party transactions. Page numbers refer to those in the 2010 Annual Report. The Company announced its final results on 24 June 2010, which included a condensed set of financial statements.

A - Statement of directors' responsibility

The following information has been reproduced from page 45 of the 2010 Annual Report:

Each of the directors, whose names and functions are listed below confirm that, to the best of their knowledge:

·; the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

·; the directors' report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

Directors:

Kevin Loosemore, Non-executive Chairman

Nigel Clifford, Chief Executive officer

David Maloney, Non-executive senior independent director

Paul Pester, Non-executive director

Tom Skelton, Non-executive director

Karen Slater, Non-executive director

B - Principal risks and uncertainties

The following information has been reproduced from pages 20 and 21 of the 2010 Annual Report:

The Group in common with all businesses could be affected by risks not completely within its control which could have a material effect on its short- and longer- term financial performance. These risks could cause actual results to differ materially from forecasts or historic results. Where possible, the Group seeks to mitigate these risks through its system of internal controls but this can only provide reasonable assurance and not absolute assurance against material losses.

The following are the key risks that are relevant to the Group as a provider of enterprise application management solutions. Please also refer to the section on internal controls within the corporate governance report on page 33.

Employees

Risk - The retention and recruitment of highly skilled and motivated employees is critical to the success and future growth of the Group in all countries in which it currently operates and in which it is likely to expand into in the future.

Potential impact - Failure to retain and develop skill sets, particularly in R&D and sales management may hinder the Group's expansion plans.

Mitigation - 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. These policies include training, career development and long-term financial incentives. Leadership training schemes are in place to support succession plans.

Timing of concluding contracts

Risk - In common with other software companies, the recognition of revenue is dependent upon obtaining signed contracts from customers and delivery of product.

Potential impact - With a high proportion of costs being fixed, 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.

Mitigation - The Group has a growing diverse mix of customers with a high proportion of predictable and recurring revenue which reduces this exposure. Regular reviews are made on sales prospects to progress the conclusion of contracts at key periods in the financial year.

Acquisitions

Risk - Acquisitions could provide profitable revenue growth. Concluding further acquisitions is dependent on a number of factors such as the global economic position, the availability of finance and suitable target companies.

Potential impact - There are also risks associated with successfully integrating future acquisitions; for example the loss of key personnel, system integration issues and other problems not identified prior to acquisition.

Mitigation - The Group has strengthened its management team and internal procedures to enable acquisitions to be integrated successfully into its business model. It has in place a three-year revolving $215m loan facility agreement, expiring on 6 May 2012, to fund acquisitions and associated integration costs concluded in the year to 30 April 2010and any future acquisitions.

Bank loan facility

Risk - The $215m loan facility agreement, to the extent drawn down by the Group may limit the operational and financial flexibility of the Group and may increase the exposure of the Group to interest rate fluctuations.

Potential impact - The loan facility agreement contains covenants which may negatively impact the ability of the Group to operate and grow its business. To the extent drawn down, the loan facility agreement will create an amount of indebtedness for the Group which may impair the operational and financial flexibility of the Group.

Mitigation - The directors believe that the strength of the business means that any funds drawn down to fund acquisitions will be repaid together with any accrued interest within the three year term of the loan facility agreement minimising the effect of any restrictive covenants contained therein.

Research and development

Risk - The Group has expanded its various R&D facilities through organic growth 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.

Potential impact - If new products or enhancements do not meet customer requirements, or competitors introduce products which better meet the requirements of customers, this may have a material impact on revenues and profits.

Mitigation - 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. In addition, extensive research has been made in each of the Group's addressable markets to allocate investment and resources with a strong focus on future customer needs.

Foreign exchange and treasury

Risk - The Group is not exposed to significant foreign exchange transactional exposure as generally its subsidiaries trade in their own currency. The Group's principal exposure to foreign currency is the translation of overseas profits into US$. The Group is also exposed to foreign currency translation risk on the translation of its net investment overseas into US$ where the functional currency of those subsidiaries is not the US$.

Potential impact - The accounting profits of the Group and the book value of assets and liabilities are subject to changes in foreign currency rates. The conversion of foreign currency denominated surplus cash into US$ will also be affected by fluctuations in foreign currency rates.

Mitigation - The overseas subsidiaries generally trade in their own currencies, which acts as a natural hedge against currency movements. Due to its limited exposure, the Group does not hold any financial instruments such as derivates.

Economic risks

Risk - The Group's business may be subject to inherent risks arising from the general and sector specific economic conditions in the markets in which they operate.

Potential impact - The performance of the Group may be affected by changes in economic or market conditions. The growth and development of the markets in which the Group operates depend on numerous factors many of which are beyond their control and the exact effect of which cannot accurately be predicted. Such factors include general economic and political activities including the extent of any governmental regulation, legislation and taxation.

Mitigation - The Group has demonstrated that it can grow and perform well on both sides of the economic cycle. The relevance of the customer proposition and resilience of the Group business model continues to encourage that the outlook is positive. The Group benefits from having a business model with a high proportion of predictable and recurring revenue.

Intellectual property

Risk - The Group depends on patent, trade secret, trade mark and copyright law to protect its intellectual property. The Group possesses a number of patents and patent applications and regularly reviews its patent application and enforcement programme. The Group registers copyrights where appropriate. The Group's intellectual property also includes trade secrets and other know-how that is not considered patentable.

Potential impact - The Group seeks to protect its proprietary information and trade secrets that may not be patentable and to secure its rights to copyright and patentable inventions by confidentiality agreements with its customers, partners and employees and, if applicable, through inventors' rights agreements.

Mitigation - Some of the Group's intellectual property includes technologies and processes that may be similar to the technologies and processes of third parties that are protected by patent, copyright or trade secret law and the Group could become subject to litigation in which it is alleged that it has infringed the intellectual property rights of others.

The Group takes steps to enforce its intellectual property rights particularly in international markets including litigation where appropriate.

Note 3 to the summary of significant accounting policies, on page 56 of the 2010 Annual Report, gives additional information on financial risks that the Group could be exposed to.

C - Related party transactions

The following information has been reproduced from note 30 on page 76 of the 2010 Annual Report:

The Group has taken advantage of the exemption available under IAS 24, "Related Party Disclosures", not to disclose details of transactions with subsidiary undertakings. There are no external related parties.

END

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About Micro Focus

Micro Focus, a member of the FTSE 250, provides innovative software that allows companies to dramatically improve the business value of their enterprise applications. Micro Focus Enterprise Application Modernization and Management software enables customers' business applications to respond rapidly to market changes and embrace modern architectures with reduced cost and risk. For additional information please visit www.microfocus.com.