28th Jun 2007 07:04
Micro Focus International plc28 June 2007 28 June 2007 Micro Focus International plc Preliminary results for the full year to 30 April 2007 Positive operational progress and significant increase in profitability Micro Focus International plc ("Micro Focus", "the Company" or "the Group", LSE:MCRO.L) announces preliminary results for the year to 30 April 2007. All figuresare in US$ and cents. Key financial highlights • Revenue up 19% to $171.6m (2006: $143.7m) • Operating profit before exceptional items* up 70% to $63.0m (2006: $36.9m) • EBITDA** before exceptional items* up 68% to $65.3m (2006: $38.8m) • Profit before tax up 166% to $60.0m (2006: $22.6m) • Basic earnings per share 21.96 cents (2006: 8.25 cents)*** • Cash balance as at 30 April 2007 of $85.0m (2006: $56.1m) - $40.7m cash utilised post year end to fund the acquisition of Acucorp, Inc. • Final proposed dividend of 7 cents per share; total dividend for the year up 67% to 10 cents per share (2006: 6 cents per share) • Operating profit $57.3m (2006: $22.7m) • EBITDA** $59.6m (2006: $24.5m) * Exceptional items are detailed in note 7** EBITDA is reconciled to operating profit in note 6*** Earnings per share are detailed in note 8 Business Highlights • Solid organic growth achieved for the year • Direct sales into Global 2000 targets progressing well with larger value licence fee transactions ahead of expectations in the second half • New customer wins in the year included Tesco, TNT, Australia National Tax Office and Nomura Securities • Integration of HAL Knowledge Systems SpA ("HAL KS") now completed. • Integration of Acucorp, Inc. ("Acucorp"), acquired post period end, progressing well Stephen Kelly, Chief Executive Officer of Micro Focus, commented: "We are encouraged by Micro Focus' performance over the past year, reflectingthe strong fundamentals of the business. Year-on-year organic revenue growthcombined with a firm control of expenses has resulted in a significant increasein profits as compared with the prior year. The acquisition of HAL KS during theyear together with the acquisition of Acucorp in May 2007 have furtherstrengthened our capability to drive future growth. The full benefit of bothacquisitions will be seen in the financial year to 30 April 2008. Looking ahead, the impact of both the acquisitions we have made, combined withfurther expected organic growth, is expected to provide annual revenue growthsimilar to the rate achieved in the year to 30 April 2007. Margins are expectedto remain at a similar level. Management's emphasis will continue to be on licence fee sales to driveprofitable growth. We are confident that a robust and sustainable market existsto support our growth strategy. Our key focus remains on organic growth." Enquiries Micro Focus Tel: +44 (0)1635 32646Stephen Kelly, Chief Executive OfficerNick Bray, Chief Financial Officer Financial Dynamics Tel: +44 (0)20 7831 3113Harriet KeenHaya Chelhot About Micro Focus Micro Focus, a member of the FTSE 250, provides innovative software that allowscompanies to dramatically improve the business value of their enterpriseapplications. Micro Focus Enterprise Application Modernization and Managementsoftware enables customers' business applications to respond rapidly to marketchanges and embrace modern architectures with reduced cost and risk. Foradditional information please visit www.microfocus.com. Chairman's statement I am encouraged by our performance over the past year. We have achieved goodrevenue growth and have increased our margin performance and profitability.Micro Focus is now well positioned for the future. The new executive Board members of Stephen Kelly (CEO), Nick Bray (CFO) and MikeShinya (COO) have the skills, experience, commitment and drive necessary to leadour business strongly forward. Whilst we have refreshed and reinvigorated ourCompany with a number of new hires, the contribution of the existing executivetalent within our Company has been considerable. Stephen, Nick and Mike aside,the remaining five members of the senior executive team have more than eightyyears' combined experience with Micro Focus. Our Company has a thirty yearheritage and over 60% of our employees have been with us for more than fiveyears. The combination of both new and existing talent within our Companyprovides us with a formidable leadership team and skills base. I am alsodelighted to announce today the appointment of Dr Paul Pester as a Non-ExecutiveDirector with immediate effect. Dr Pester has extensive experience in theFinancial Services sector and is an important addition to our Board. The speed of the recovery achieved over the past twelve months reflects well onthe team and highlights the strong fundamentals of the business. We have firstrate technology solutions, a loyal and satisfied customer base and a marketleading position in a substantial, sustainable and growing market place. We nowhave the team to take full advantage of the market opportunity. Revenue growth combined with a firm control of expenses has resulted in asignificant increase in profitability. We continue to make appropriate targetedinvestments in the areas of sales and marketing to support future growth whilstnot sacrificing margins. In line with our strategy, we have completed one acquisition during the year anda second in May 2007 designed to both consolidate our market position andprovide further opportunities for profitable growth. We have firm financialfoundations from which to grow and I am pleased to announce a 75% increase inthe final dividend to 7 cents per share, giving a full year dividend of 10 centsa share. We finished the financial year with cash of $85.0m, and generated$58.2m of cash from operations in the period. Our business has a low capitalrequirement and our ability to generate cash is encouraging. We have since put asignificant proportion of this cash to good use with $40.7m being used to fundthe acquisition of Acucorp, Inc post year-end. The Board would like to thank all our employees for their continued hard workand commitment throughout the past year. We have experienced significant change,have emerged much stronger as a result, and have an exciting opportunity ahead. Our foundations are well established. We remain focused on profitable revenuegrowth and I am confident in the Company's ability to continue to deliver valueto all of its stakeholders. Kevin Loosemore, Chairman Chief Executive Officer's statement Strategy Review On joining the Company it was imperative to ensure that we had the correctstrategy to drive profitable revenue growth. A detailed review undertaken over aperiod of six months confirmed and clarified the Board's view of the business.The key findings were: • We are a market leader • A firm market exists for all of our solution areas; COBOL Development Tools, Modernization and Application Portfolio Management ("APM") • All solution areas combined can support solid growth over the long-term • Our key focus is organic growth; although acquisition opportunities exist • Our primary opportunity is through sales to larger organisations Execution Over the past twelve months, we have strengthened the management team, delivereda strong set of financial results and made our first acquisition to further ourstrategic aims. Whilst we still have many areas on which to improve, we havesuccessfully executed ahead of our initial expectations. The sales team has been strengthened and we will continue to invest to drive thebusiness forward. Our marketing and delivery have been refined, including astrong focus on developing senior level contacts within our target customers.All marketing spend is considered to be investment and is measured and monitoredas such. We have a clear focus on only making appropriate investments and, withexcellence in sales execution as our priority, every other function is alignedto support this. Our strategy review identified the major growth opportunity around larger valuelicence fee transactions into the Global 2000 ('G2000') companies. I amencouraged that we signed a number of such deals in the second half yearcontributing to total revenue growth of 19%, ahead of our expectations. Newcustomer wins included Tesco, TNT, Australia National Tax Office and NomuraSecurities. In addition to revenues from new customers, we derived further newrevenues from our existing customer base including wins with Oracle, Barclaysand JP Morgan. Our channels to market are through Independent Software Vendors ("ISV"), SystemIntegrators ("SI") distributors and through our own direct sales force. Whilstkeeping a firm focus on all channels, we are placing an increasing emphasis onsales to G2000 customers through a combination of both direct and SI sales. Itis pleasing to note that in the second half year we signed a number of largervalue transactions in G2000 accounts in conjunction with IBM, Microsoft, EDS,Oracle and Accenture. The strategy review also highlighted the higher growth rate potential of the APMand Modernization solution areas. Whilst we achieved growth across allsolutions, it was encouraging to see the increase in our Modernization solutionsales. We have invested significantly in the development of this solution overthe past three years and we firmly believe that we have a market leadingproposition, the full benefits of which are now gaining recognition and tractionwith our existing and prospective customers. The vast majority of our growth in both revenues and profits during the year to30 April 2007 was derived from the core business with limited benefit from theacquisition of HAL Knowledge Solutions SpA ("HAL KS"). The full benefit of theacquisition will be seen in the year ahead. The Company benefits from having a business model with a high proportion ofpredictable and recurring revenues. Micro Focus has an enviable customer basewith 48% of turnover derived from low risk maintenance revenues. Maintenancegrowth is driven by the retention of existing customers as well as the additionof new maintenance revenue associated with the sale of new licences. Anencouraging performance in both of these areas over the past twelve monthspositions us well for further maintenance growth in the year ahead. The revenue growth achieved, when combined with a firm control of expenses, hasresulted in a significant improvement in operating profit before exceptionalitems. Geographically, the picture was strong overall, although some areas call forcloser attention in the year ahead. We were pleased with the performance inJapan, the UK rebounded under new leadership and Continental Europe producedpositive improvements. Licence fee sales fell short of expectations in NorthAmerica. Management changes were made recently and early signs are encouraging. While organic revenue growth is our key focus, the strategy review highlightedthe potential for further profitable revenue growth through acquisitions. Withthe strategy review completed in September 2006, I am pleased with the speed ofexecution resulting in the acquisition of HAL KS with effect from 1 November2006 for $3.5m before related costs. HAL KS provides us with a strong offeringin a growing solution area identified from the strategy review, ApplicationPortfolio Management. The acquisition of HAL KS provides market leading technology for APM. Since theacquisition we have integrated the company successfully into Micro Focus andimproved its existing product offering with the launch of Micro Focus EnterpriseView on 1 May 2007. Our objective for the year ahead is to leverage ourextensive distribution footprint to drive further product sales. The acquisition of Acucorp, Inc ("Acucorp"), effective from 4 May 2007, for$40.7m, provides technology that is highly complementary to Micro Focus' corebusiness in the COBOL Development Tool space as well as providing theopportunity for Micro Focus to expand its reach into the small and medium-sizedenterprise ("SME") markets. The integration is progressing positively and weexpect a meaningful contribution to both revenues and profits in the year aheadas a result of this acquisition. We have firm financial foundations to support a platform for growth. The cashbalance at 30 April 2007 was $85.0m, up from $56.1m at 30 April 2006 as a resultof improvements in the underlying trading performance. Outlook Future revenue growth will be largely dependent on driving licence sales.Whilst encouraged by the performance in the year to 30 April 2007, it would bepremature to conclude that we can repeat the number and value of largertransactions achieved in the second half year. A number of such prospective newlicence opportunities remain in our pipeline although by their very nature andsize they are less predictable. We do expect to continue organic growth in theyear ahead. Following a successful year of licence fee sales we would expect to achievegrowth in our maintenance revenues for the year ahead. The smallest proportionof our revenues is derived from our consultancy services and it is intended thatthese revenues will remain a similar proportion of total revenues for the yearahead. During the year to 30 April 2007 we had the benefit of six months of tradingfrom the HAL KS acquisition. On 8 December 2006 we had provided guidance thatrevenues would be in the range of $4.0m to $5.0m and can report that revenueswere within this range, although at the lower end. We were disappointed to fallmarginally short of our six month goal for the APM business of EBITDAbreak-even. Whilst early days, the acquisition of Acucorp is progressing well. Thisacquisition is anticipated to provide revenues of approximately $17.0m in theyear to 30 April 2008 with margins being consistent with the existing MicroFocus business. The restructuring is progressing as planned. The relatedrestructuring charge is expected to be approximately $8.0m. We have been encouraged by the margins achieved in the year to 30 April 2007.Our stated aim is to achieve profitable revenue growth and as such we will lookto maintain margins at a consistent level for the year ahead. In February 2007, we restructured the product group and established developmentCentres of Excellence for our solutions around Modernization (United States -Washington), Development Tools (United Kingdom - Newbury), and ApplicationPortfolio Management (Italy - Milan). In addition, the purchase of HAL KSprovided a team of twenty seven developers in Sofia, Bulgaria. This team hassince been expanded to provide a high value development facility in support ofthe three Centres of Excellence. This development facility is expected to play apivotal role in improving both our efficiency and productivity. As a business, we have made encouraging progress over the past twelve months. Itwas pleasing to return to respectable organic revenue growth although we arefully conscious of the poor performance in the prior year. Looking ahead, theimpact of both the acquisitions we have made, combined with further expectedorganic growth, is expected to provide annual revenue growth similar to the rateachieved in the year to 30 April 2007. Margins are expected to remain at asimilar level. We have developed a clearly scoped out strategy and have a firmfocus on execution and tight cost control. Sustainable and profitable revenue growth is the key factor that will determinethe long-term success of the Company. Management's emphasis will continue to beon licence fee sales to drive profitable growth. Stephen Kelly, Chief Executive Chief Financial Officer's review Revenue for the year ended 30 April 2007 increased to $171.6m (2006: $143.7m). Revenue by geographic region was as follows: 2007 2006 $m % $m % North America 70.6 41.1 68.9 47.9Europe and the Middle East 71.8 41.8 54.0 37.6Rest of the World 29.2 17.1 20.8 14.5Total revenue 171.6 100.0 143.7 100.0 Whilst revenue growth was achieved across all areas, the primary driver ofgrowth was from our European operations. These operations, including France,Italy, Benelux and our European distributor network, are managed by anexperienced Micro Focus "Go to market" leadership team. With clear focus anddirection, they have stepped up to the challenge and exceeded our expectations.We strengthened our UK operation towards the end of 2006. It has beenencouraging to see the turnaround in this operation since this time with the UKsignificantly increasing licence fees in the six month period to 30 April 2007as compared to the six month period to 31 October 2006. Our Rest of the World operations had a positive year with our Japanese businessproducing growth of over 17%. Our Japanese operation has an experienced team inplace, who have delivered consistent year-on-year revenue growth over aconsiderable period of time. Our North America operations produced results below expected performance levels.A new senior leadership team was established during quarter four and a number ofnew sales hires have since taken place. With appropriate leadership, resourceand focus, we anticipate that this key territory will return to an acceptablelevel of performance in the year ahead. Revenue for the year by category was as follows: 2007 2006 $m % $m % Licence fees 82.6 48.2 68.0 47.3Maintenance fees 82.1 47.8 71.9 50.0Consultancy fees 6.9 4.0 3.8 2.7Total revenue 171.6 100.0 143.7 100.0 It can be seen that turnover improved across all revenue streams for the year to30 April 2007. Licence fees increased by $14.6m or 21.5% to $82.6m (2006:$68.0m). The growth in licence fee revenues was achieved by a combination of anincreased volume of lower value orders as well as a number of larger valuetransactions. A number of large contracts remain in our pipeline although, bytheir very nature, they are unpredictable. The contribution from HAL KS wasminimal, growth in the main being driven by core Micro Focus solution sales.Whilst growth was achieved across all solution areas, it was encouraging to seean increase in licence fee sales from our Modernization solution area. Maintenance revenues increased by $10.2m or 14.2% to $82.1m (2006: $71.9m).Maintenance revenues are recognised evenly over the life of each contract, whichis typically twelve months. As such, the profit and loss recognition ofmaintenance revenue lags the initial licence fee sale. Thus, it was encouragingto see the increase in maintenance revenues following the disappointing licencefee performance in the prior year to 30 April 2006. The major factors drivingmaintenance growth in the year to 30 April 2007 are as follows: • A solid year of licence fee growth • An improvement in the renewal rate of existing customers • Modest annual price increases to existing customers; and • A focus on closing "contracts in negotiation" and the introduction of an automatic renewal process for our customers Consulting revenues showed a positive improvement as against the prior yeardriven by growth in both core Micro Focus revenues and the additional consultingrevenues as a result of the acquisition of HAL KS, this company and solutionhaving a higher mix of consulting revenues as compared to the Micro Focus COBOLDevelopment Tools and Modernization solutions. The impact of exchange rate movements in the year was to improve revenues byapproximately 2%. Improvements in Sterling and the Euro as compared to the USdollar were in part offset by a weakness in the Japanese Yen. Costs Whilst total costs, excluding exceptional items, were effectively flatyear-on-year, it should be noted that this includes six months' costs for HAL KSin the year ended 30 April 2007. The restructuring of the core Micro Focusbusiness, announced on 6 April 2006, delivered the expected level of savings. Afirm control of expenses has been established and will be maintained. Cost of sales for the year ended 30 April 2007 increased marginally by 3.4% to$18.1m (2006: $17.6m). The costs in this category predominantly relate to ourconsulting and helpline support operations. Costs within the consultingorganisation increased in line with increased revenues although it should benoted that we intend, where possible, to increase the use of external consultingresources. Selling and distribution costs reduced to $45.6m for the year ended 30 April2007 (2006: $48.5m). We continue to make targeted investments in the areas ofsales and marketing to drive future profitable revenue growth. Research and development expenses for the year increased to $23.1m (2006:$21.7m). In February 2007, we restructured the product group and establisheddevelopment Centres of Excellence for our solutions. Administrative expenses, excluding exceptional items of $5.7m (2006: $14.2m),increased to $21.8m (2006: $19.0m). This cost category contains $1.2m inrelation to exchange losses in the year to 30 April 2007. In the prior yearcosts were reduced by exchange gains of $0.3m. As such, excluding the impact ofthis exchange movement, administrative expenses have increased by $1.3m or 6.7%driven primarily by higher bonus payments to staff as a result of significantlyimproved performance as compared to the prior year. Operating profit Operating profit for the year was $57.3m (2006: $22.7m). Operating profit beforeexceptional items was $63.0m (2006: $36.9m), the improvement being driven by thecombination of improved revenues and reduced costs. EBITDA EBITDA before exceptional items increased by 68.4% to $65.3m (2006: $38.8m) as aresult of the factors described above. Net finance income Finance income of $2.8m was achieved in the year to 30 April 2007 (2006: $1.0m).Finance expense in the prior year of $1.1m related to loans which were repaidfollowing the IPO. Taxation Tax for the year ended 30 April 2007 was $16.1m (2006: $6.3m) based on increasedprofits. The Group's effective tax rate is 26.9% (2006: 28.1%). As a result ofthe significant increase in the share price in the year to 30 April 2007, a taxdeduction has arisen on the stock options in issue. Excluding the effects ofthis beneficial tax deduction, the effective tax rate was 28.9%. Profit after tax Profit after tax for the year ended 30 April 2007 increased by 170.3% to $43.9m(2006: $16.2m) driven by a significant improvement in operating performancecombined with lower exceptional charges. Cash flow For the year ended 30 April 2007, the Company generated a net cash inflow fromoperating activities of $53.6m (2006: $35.0m). At 30 April 2007, the Company'scash balance was $85.0m (2006: $56.1m). Since that time, the Company hasacquired Acucorp for a cash consideration of $40.7m. Dividends of $14.0m werepaid in the year. Dividend The Board continues to adopt a progressive dividend policy reflecting thelong-term earnings and cash flow potential of Micro Focus whilst targeting alevel of dividend cover for the financial year ending 30 April 2007 ofapproximately 2.5 times on a pre-exceptional earnings basis. In line with theabove policy, the directors recommend payment of a final dividend in respect ofthe year to 30 April 2007 of 7 cents per share, which taken together with theinterim dividend of 3 cents per share paid in January 2007, gives a totaldividend in respect of 2007 of 10 cents per share, an increase of 67% ascompared to the prior year. Subject to shareholder approval, the final dividendwill be paid on 1 October 2007 to shareholders on register on 7 September 2007. Whilst the Group as a whole has a deficit in its profit and loss reserve, thedirectors of Micro Focus International plc have concluded that the Company hassufficient reserves to enable the payment of the final dividend. Dividends will be paid in sterling based on an exchange rate of £ = $2.00,equivalent to 3.5 pence per share, being the rate applicable on 27 June 2007,the date of recommendation of the dividend by the Board. Acquisition of HAL KS On 2 November 2006, Micro Focus announced that it had agreed to acquire HAL KS,a leading provider of Application Portfolio Management software in order toenhance the Company's enterprise application modernization capabilities. Thetransaction successfully closed on 10 November 2006. HAL KS has been acquired byMicro Focus for a total consideration of $3.5m in cash, subject to a net assetadjustment. In the year to 31 December 2005, HAL KS reported a net loss before tax of $4.5mand its gross assets as at 31 December 2005 were $9.5m. Following theacquisition, we have restructured the business to reduce costs, with arestructuring charge of $2.8m, falling in the current financial year. HAL KS wasacquired with net balance sheet liabilities of approximately $4.5m. For the six month period to 30 April 2007, revenues were in the expected rangeof $4.0m to $5.0m. The business made an EBITDA loss in the six month period to30 April 2007. Acquisition of Acucorp On 4 May 2007, Micro Focus announced that it had acquired Acucorp for a totalcash consideration of $40.7m, paid in full on completion, plus a working capitaladjustment capped at a maximum value of $0.25m. In the year to December 2006, Acucorp generated an operating profit of $3.0m andits gross assets as at 31 December 2006 were $13.1m. Revenues for the year to 30 April 2008 are anticipated to be approximately$17.0m. We are in the process of restructuring the business with the aim ofincreasing margins over time to a level consistent or better than our existingbusiness. The consequent restructuring charge is expected to be approximately$8.0m in the year to 30 April 2008. Nick Bray, Chief Financial Officer CONSOLIDATED INCOME STATEMENT (unaudited)For the year ended 30 April 2007 Notes 2007 2006 $'000 $'000 Revenue 4,5 171,590 143,688Cost of sales (18,148) (17,552)*Gross profit 153,442 126,136Selling and distribution costs (45,592) (48,500)Research and development expense (23,051) (21,714)*Administrative expenses (27,532) (33,189)*Operating profit 57,267 22,733 Analysed as:Operating profit before exceptional items 62,977 36,946Exceptional items 7 (5,710) (14,213)Operating profit 6 57,267 22,733 Finance costs (70) (1,137)Finance income 2,810 962Profit before tax 60,007 22,558Taxation (16,143) (6,332)Profit after tax 43,864 16,226 Earnings per share expressed in cents per share 8- basic 21.96 8.25- diluted 21.37 8.17 Earnings per share expressed in pence per share 8- basic 11.49 4.68- diluted 11.18 4.63 * Certain costs have been reclassified between cost of sales, research anddevelopment and administration expenses as disclosed in note 1R CONSOLIDATED BALANCE SHEET (unaudited)As at 30 April 2007 Notes 2007 2006 $'000 $'000ASSETSNon-current assetsGoodwill 42,533 42,404Other intangible assets 18,245 7,637Property, plant and equipment 2,543 2,386Deferred tax assets 10,813 7,718 74,134 60,145Current assetsInventories 255 331Trade and other receivables 10 44,031 37,629Cash and cash equivalents 84,971 56,066 129,257 94,026Total assets 203,391 154,171 LIABILITIESCurrent liabilitiesTrade and other payables 11 76,612 70,516Current tax liabilities 17,023 10,777Financial liabilities - borrowings 72 117 93,707 81,410Non-current liabilitiesNon-current deferred income 7,265 6,720Deferred tax liabilities 10,873 8,446Financial liabilities - borrowings 41 94 18,179 15,260Net assets 91,505 57,501 SHAREHOLDERS' EQUITYCapital and reserves attributable to the Company'sequity holdersShare capital 36,767 36,644Share premium 104,054 103,641Profit and loss deficit (23,394) (55,267)Foreign currency translation reserve (deficit) 1,163 (432)Other reserves (27,085) (27,085)Total shareholders' equity 91,505 57,501 CONSOLIDATED CASH FLOW STATEMENT (unaudited)For the year ended 30 April 2007 2007 2006 $'000 $'000Cash flow from operating activitiesNet profit 43,864 16,226Adjustments for Net interest (2,740) 175 Taxation 16,143 6,332 Depreciation 1,169 1,006 Loss on disposal of property, plant and equipment 26 17 Amortisation of intangibles 5,973 5,433 Share-based compensation 849 (224)Changes in working capital: Inventories 76 19 Trade and other receivables (5,532) 12,615 Payables and other non-current liabilities (1,658) 371Cash generated from continuing operations 58,170 41,970Interest received 2,780 666Interest paid (70) (1,551)Tax paid (7,316) (6,103)Net cash from operating activities 53,564 34,982 Cash flows from investing activitiesPayments for intangible assets (5,456) (4,986)Purchase of tangible fixed assets (830) (1,123)Acquisition of subsidiary (4,832) -Net cash acquired with subsidiary (1,218) -Net cash used in investing activities (12,336) (6,109) Cash flows from financing activitiesProceeds from issue of ordinary share capital 125 109,823Repayment of borrowings (46) (111,250)Dividends paid to shareholders (13,981) (3,987)Net cash used in financing activities (13,902) (5,414)Effects of exchange rate changes 1,579 (263)Net increase in cash and cash equivalents 28,905 23,196Cash and cash equivalents at 1 May 2006 56,066 32,870Cash and cash equivalents at 30 April 2007 84,971 56,066 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)For the year ended 30 April 2007 Foreign currency translation Profit and loss Share Share reserve Other reserve capital premium (deficit) reserves (deficit) Total $'000 $'000 $'000 $'000 $'000 $'000 Balance as at 1 May 2005 1 3,376 (169) - (67,869) (64,661)Currency translation differences - - (263) - - (263)Profit for the year - - - - 16,226 16,226Dividends - - - - (3,987) (3,987)Share for share exchange 27,085 - - (27,085) - -Issue of share capital 9,558 100,265 - - - 109,823Movement in relation toshare options - - - - 363 363Balance as at 30 April 2006 36,644 103,641 (432) (27,085) (55,267) 57,501 Currency translation differences - - 1,595 - - 1,595Profit for the year - - - - 43,864 43,864Dividends - - - - (13,981) (13,981)Issue of share capital 123 3 - - - 126Movement in relation toshare options - 410 - - 355 765Deferred tax on share options - - - - 1,635 1,635Balance as at 30 April 2007 36,767 104,054 1,163 (27,085) (23,394) 91,505 NOTES TO THE FINANCIAL STATEMENTS (unaudited)For the year ended 30 April 2007 1 Group Accounting Policies A Basis of preparation The consolidated financial statements of Micro Focus International plc have beenprepared in accordance with EU Endorsed International Financial ReportingStandards (IFRS), IFRIC interpretations and the Companies Act 1985 applicable tocompanies reporting under IFRS. The consolidated financial statements have beenprepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the useof certain critical accounting estimates. It also requires management toexercise its judgement in the process of applying the Group's accountingpolicies. The areas involving a higher degree of judgement or complexity, orareas where assumptions and estimates are significant to the consolidatedfinancial statements are disclosed in Note 2. Whilst the financial information included in this preliminary announcement hasbeen computed in accordance with International Financial Reporting Standards,this announcement does not itself contain sufficient information to comply withIFRSs. The Group expect to be issuing full financial statements that complywith IFRSs in July 2007. The financial information set out in this preliminary announcement does notconstitute the Company's statutory accounts for the years ended 30 April 2007 or2006, but is derived from those accounts. Statutory accounts for the year ended 30 April 2006 have been delivered to theRegistrar of Companies; the auditors have reported on those accounts, theirreport was unqualified and did not contain a statement under Section 237 (2) or(3) of the Companies Act 1985. Copies of the annual results for the year ended 30 April 2007 will be sent toall shareholders and will also be available on the company's website atwww.microfocus.com. Copies of the annual results for the year ended 30 April2006 can be obtained by writing to The Company Secretary, Micro FocusInternational plc, Old Bath Road, Newbury, Berkshire, RG14 1QN. This announcement was approved by the board of Micro Focus International plc on27 June 2007. A summary of the more important Group accounting policies is set out below. B Consolidation The financial statements of the Group comprise the financial statements of theCompany and entities controlled by the Company, its subsidiaries, prepared atthe balance sheet date. Control exists where the Group has the power to governthe financial and operating policies of the entity so as to obtain benefits fromits activities. The purchase method of accounting is used to account for the acquisition ofsubsidiaries by the Group. The cost of acquisition is measured as the fairvalue of the assets given, equity instruments issued and liabilities incurred orassumed at the date of exchange, plus costs directly attributable to theacquisition. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at theirfair values at the acquisition date, irrespective of the extent of any minorityinterest. The excess of the cost of acquisition over the fair value of theGroup's share of the identifiable net assets acquired is recorded as goodwill. Inter-company transactions, balances and unrealised gains on transactionsbetween Group companies are eliminated. C Revenue recognition The Group recognises revenue from sales of software licences to end-users orresellers upon persuasive evidence of an arrangement, delivery of the softwareand determination that collection of a fixed or determinable fee is reasonablyassured. When the fees for software upgrades and enhancements, maintenance,consulting and training are bundled with the licence fee, they are unbundledusing the Group's objective evidence of the fair value of the elementsrepresented by the Group's customary pricing for each element in separatetransactions. If evidence of fair value exists for all undelivered elements andthere is no such evidence of fair value established for delivered elements,revenue is first allocated to the elements where fair value has been establishedand the residual amount is allocated to the delivered elements. If evidence offair value for any undelivered element of the arrangement does not exist allrevenue from the arrangement is deferred until such time that evidence of fairvalue exists or undelivered elements of the arrangement are delivered. If thearrangement includes acceptance criteria, revenue is not recognised until theGroup can objectively demonstrate that the software or service can meet theacceptance criteria, or the acceptance period lapses, whichever is earlier. The Group recognises licence revenue derived from sales to resellers, upondelivery to resellers, provided that all other revenue recognition criteria aremet, otherwise revenue is deferred and recognised upon delivery of the productto the end-user. Maintenance revenue is derived from providing technical support and softwareupdates to customers. Maintenance revenue is recognised on a straight-line basisover the term of the contract, which in most cases is one year. Revenue fromconsulting and training services is recognised as the services are performed. Amounts collected prior to satisfying the above revenue recognition criteria areincluded in deferred income. D Segmental reporting A geographical segment is engaged in providing products or services within aparticular economic environment that are subject to risks and returns that aredifferent from those of components operating in other economic environments. A business segment is a group of assets and operations engaged in providingproducts or services that are subject to risks and returns that are differentfrom those of other business segments. The Group considers there to be only onebusiness segment being the provision of enterprise application management andmodernization solutions. E Leases Leases of property, plant and equipment where the Group has substantially allthe risks and rewards of ownership are classified as finance leases. Financeleases are capitalised at the lease's commencement at the lower of the fairvalue of the leased property and the present value of the minimum leasepayments. Each lease payment is allocated between the liability and financecharges so as to achieve a constant rate of interest on the liabilityoutstanding. The corresponding rental obligations, net of finance charges, areincluded in financial liabilities - borrowings. The property, plant and equipment acquired under finance leases is depreciatedover the shorter of the asset's useful life and the lease term. Leases where the lessor retains a significant portion of the risks and rewardsof ownership are classified as operating leases. Payments made under operatingleases (net of any incentives received from the lessor) are charged to theincome statement on a straight-line basis over the period of the lease. F Foreign currency translation a) Functional and presentation currency Items included in the financial statements of each of the Group's entities aremeasured using the currency of the primary economic environment in which theentity operates ("the functional currency"). The consolidated financialstatements are presented in US Dollars, which is the Group's functionalcurrency. b) Transactions and balances Foreign currency transactions are translated into the functional currency usingthe exchange rates prevailing at the dates of the transactions. Foreign exchangegains and losses resulting from the settlement of such transactions and from thetranslation at year-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the income statement. c) Group companies The results and financial position of all the Group entities that have afunctional currency different from the presentation currency are translated intothe presentation currency as follows: i) assets and liabilities for each balance sheet presented are translated at theclosing rate at the date of that balance sheet; ii) income and expenses for each income statement are translated at averageexchange rates (unless this average is not a reasonable approximation of thecumulative effect of the rates prevailing on the transaction dates, in whichcase income and expenses are translated at the dates of the transactions); and iii) all resulting exchange differences are recognised as a separate componentof equity. On consolidation, exchange differences arising from the translation of the netinvestment in foreign entities are taken to shareholders' equity. When a foreignoperation is sold, such exchange differences are recognised in the incomestatement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreignentity are treated as assets and liabilities of the foreign entity andtranslated at the closing rate, with exception for goodwill arising before 1 May2004 which is treated as an asset of the Company and expressed in the Company'sfunctional currency. G Borrowings Borrowings are recognised initially at fair value, net of transaction costsincurred. Transaction costs incurred in the arrangement of new borrowingfacilities are capitalised and netted against the capital element of theoutstanding borrowing. These costs are then amortised over the life of thefacility to which the costs relate on the effective interest basis. H Property plant and equipment All property, plant and equipment are stated at historical cost less accumulateddepreciation and impairment. Historical cost includes expenditure that isdirectly attributable to the acquisition of the items. Subsequent costs areincluded in the asset's carrying amount or recognised as a separate asset, asappropriate, only when it is probable that future economic benefits associatedwith the item will flow to the Group and the cost of the item can be measuredreliably. All other repairs and maintenance expenditures are charged to theincome statement during the financial period in which they are incurred.Depreciation is calculated using the straight-line method to write-off the costof each asset to its residual value over its estimated useful life as follows: Leasehold improvements - over the lease termFurniture and fixtures - five to seven yearsComputer equipment - one to five years The assets' residual values and useful lives are reviewed, and adjusted ifappropriate, at each balance sheet date. An asset's carrying amount is writtendown immediately to its recoverable amount if the asset's carrying amount isgreater than its estimated recoverable amount. Gains and losses on disposals aredetermined by comparing the disposal proceeds with the carrying amount and areincluded in the income statement. I Intangible assets i) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair valueof the net identifiable assets of the acquired subsidiary at the date ofacquisition. Goodwill is tested annually for impairment and carried at cost lessaccumulated impairment losses. Gains and losses on the disposal of an entityinclude the carrying amount of goodwill relating to the entity sold. Goodwill isallocated to cash-generating units for the purpose of impairment testing. Eachof those cash-generating units represents the Group's investment in each area ofoperation by each primary reporting segment. As permitted under IFRS 1, the Group has elected to deem the UK GAAP net bookvalue at 1 May 2004 as the IFRS cost of goodwill at transition date. ii) Computer software Acquired computer software licences are capitalised on the basis of the costsincurred to acquire and bring to use the specific software. These costs areamortised using the straight-line method over their estimated useful lives ofthree to five years. iii) Research and development Research expenditure is recognised as an expense as incurred. Costs incurred ondevelopment projects relating to the developing of new computer softwareprogrammes and significant enhancement of existing computer software programmesare recognised as intangible assets when it is probable that the project will bea success, considering its commercial and technological feasibility, and costscan be measured reliably. Only direct costs are capitalised which include thesoftware development employee costs and an appropriate portion of relevantoverheads. Development costs previously recognised as an expense are notrecognised as an asset in a subsequent period. Development costs are amortisedfrom the commencement of the commercial production of the product on astraight-line basis over the period of its expected benefit, typically beingthree years. iv) Intangible assets - arising on business combinations Other intangible assets that are acquired by the Group are stated at cost lessaccumulated amortisation. Amortisation is charged to the income statement on astraight-line basis over the estimated useful lives of each intangible asset.Intangible assets are amortised from the date they are available for use. Theestimated useful lives will vary for each category of asset acquired and to dateare as follows: Technology - ten years J Impairment of tangible and intangible assets Assets that have an indefinite useful life are not subject to amortisation andare tested annually for impairment. Assets that are subject to amortisation arereviewed for impairment whenever events or changes in circumstances indicatethat the carrying amount may not be recoverable. An impairment loss isrecognised for the amount by which the asset's carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher of an asset's fairvalue less costs to sell and value in use. For the purposes of assessingimpairment, assets are grouped at the lowest levels for which there areseparately identifiable cash flows (cash generating units). K Inventories Inventories are stated at the lower of cost and net realisable value. Cost isdetermined using the weighted average method. The cost of finished goodscomprises software for resale and packaging materials. Net realisable value isthe estimated selling price in the ordinary course of business, less applicablevariable selling expenses. L Trade receivables Trade receivables are recognised at fair value less provision for impairment. Aprovision for impairment of trade receivables is established when there isobjective evidence that the Group will not be able to collect all amounts dueaccording to the original terms of receivables. The amount of the provision isthe difference between the asset's carrying amount and the present value ofestimated future cash flows, discounted at the effective interest rate. Theamount of the provision is recognised in the income statement. M Employee benefit costs a) Pension obligations Group companies operate various pension schemes. All of the major schemes aredefined contribution plans for which the Group pays contributions to publicly orprivately administered pension insurance plans on a mandatory, contractual orvoluntary basis. The Group has no further payment obligations once thecontributions have been paid. The contributions are recognised as an employeebenefit expense when they are due. Prepaid contributions are recognised as anasset to the extent that a cash refund or a reduction in the future payments isavailable. b) Share-based compensation The Group operated four equity-settled, share-based compensation plans duringthe year. For shares or share options granted after 7 November 2002 and vested after 1January 2005 the fair value of the employee services received in exchange forthe grant of the shares or options is recognised as an expense. The total amountto be expensed over the vesting period is determined by reference to the fairvalue of the shares or options granted. Non-market vesting conditions areincluded in assumptions about the number of options that are expected to becomeexercisable. At each balance sheet date, the Group revises its estimates of thenumber of options that are expected to become exercisable. It recognises theimpact of the revision of original estimates, if any, in the income statement,and a corresponding adjustment to equity over the remaining vesting period. The shares are recognised when the options are exercised and the proceedsreceived allocated between share capital and share premium. N Share capital, share premium and dividend distribution Incremental costs directly attributable to the issue of new shares or optionsare shown in equity as a deduction, net of tax, from the proceeds. Dividend distributions to the Company's shareholders are recognised as aliability in the Group's financial statements in the period in which thedividends are approved by the Company's shareholders. O Deferred income tax Deferred income tax is provided in full, using the liability method, ontemporary differences arising between the tax bases of assets and liabilitiesand their carrying amounts in the consolidated financial statements. However, ifthe deferred income tax arises from initial recognition of an asset or liabilityin a transaction other than a business combination that at the time of thetransaction affects neither accounting nor taxable profit or loss, it is notaccounted for. Deferred income tax is determined using tax rates (and laws) thathave been enacted or substantially enacted by the balance sheet date and areexpected to apply when the related deferred income tax asset is realised or thedeferred income tax liability is settled. Deferred income tax assets arerecognised to the extent that it is probable that future taxable profit will beavailable against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investmentsin subsidiaries, except where the timing of the reversal of the temporarydifference is controlled by the Group and it is probable that the temporarydifference will not reverse in the foreseeable future. P Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call withbanks, other short-term highly liquid investments with original maturities ofthree months or less, and bank overdrafts. Bank overdrafts are shown withinborrowings in current liabilities on the balance sheet. Q Exceptional items Exceptional items are those significant items which are separately disclosed byvirtue of their size or incidence to enable a full understanding of the Group'sfinancial performance. R Reclassification of expenditure The directors have reviewed the classification of certain expenditure within theIncome Statement and believe, to be consistent with software industry accountingpractices, in order to aid comparison, it is more appropriate to classify thefollowing costs differently than was reported in prior periods. i) Cost of customer support - these costs were previously included withinAdministrative Expenses and have been reclassified as Cost of Sales. The impactof the change is to increase Cost of Sales by $9.2m (2006: $10.0m) and decreaseAdministrative Expenses by a corresponding amount. ii) Amortisation of development costs - these costs relating to capitalisedsalaries were previously amortised though Cost of Sales. The amortisation hasbeen reclassified as Research and Development Expenditure. The impact of thechange is to decrease Cost of Sales by $4.8m (2006: $4.6m) and increase Researchand Development Expenditure by a corresponding amount. 2 Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resultingaccounting estimates will, by definition, seldom equal the related actualresults. The estimates and assumptions that have a significant risk of causing amaterial adjustment to the carrying amounts of assets and liabilities within thenext financial year are summarised below. a) Impairment of goodwill The Group tests annually whether goodwill has suffered any impairment, inaccordance with the accounting policy stated in note J. The recoverable amountsof cash-generating units have been determined based on value-in-usecalculations. These calculations require the use of estimates. b) Income taxes The Group is subject to income taxes in numerous jurisdictions. Significantjudgement is required in determining the worldwide provision for income taxes.There are many transactions and calculations for which the ultimate taxdetermination is uncertain during the ordinary course of business. The Grouprecognises liabilities for anticipated tax audit issues based on estimates ofwhether additional taxes will be due. Where the final tax outcome of thesematters is different from the amounts that were initially recorded, suchdifferences will impact the income tax and deferred tax provisions in the periodin which such determination is made. c) Acquisitions When making acquisitions, the Group has to make judgements and best estimatesabout the fair value allocation of the purchase price. Appropriate advice issought from professional advisors before making such allocations. The valuationof goodwill is tested annually or whenever there are changes in circumstancesindicating that the carrying amounts may not be recoverable. These testsrequire the use of estimates. The Group makes judgements on specific items when applying its accountingpolicies. The judgement that has a significant risk of causing a materialadjustment to the carrying amounts of assets and liabilities within the nextfinancial year is discussed below. c) Acquisitions (continued) The Group invests in the development of future products in accordance with theaccounting policy stated in note I iii). The assessment as to whether thisexpenditure will achieve a complete product for which the technical feasibilityis assured is a matter of judgement, as is the forecasting of how the productwill generate future economic benefit. Finally, the period of time over whichthe economic benefit associated with the expenditure occurred will arise is alsoa matter of judgement. These judgements are made by evaluating the developmentplan prepared by the research and development department and approved bymanagement, regularly monitoring progress by using an established set ofcriteria for assessing technical feasibility and benchmarking to other products. 3 Risk factors The Group's multi-national operations expose it to a variety of financial risksthat include the effects of changes in credit risks, foreign currency exchangerates, liquidity and interest rates. a) Credit risk Financial instruments which potentially expose the Group to a concentration ofcredit risk consist primarily of cash equivalents and accounts receivable. Cashequivalents are deposited with high-credit quality financial institutions. TheGroup provides credit to customers in the normal course of business. Collateralis not required for those receivables, but ongoing credit evaluations ofcustomers' financial conditions are performed. The Group maintains a provisionfor impairment based upon the expected collectibility of accounts receivable.The Group sells products and services to a wide range of customers around theworld and, therefore, believes there is no material concentration of creditrisk. b) Foreign currency risk The Group operates internationally and is exposed to foreign exchange riskarising from various currency exposures, primarily with respect to the UKSterling, the Euro and the Japanese Yen. Foreign exchange risk arises fromfuture commercial transactions, recognised assets and liabilities and netinvestments in foreign operations. Foreign exchange risk arises when futurecommercial transactions, recognised assets and liabilities are denominated in acurrency that is not the entity's functional currency. There were no hedgingtransactions in place at 30 April 2007. The Group has certain investments in foreign operations, whose net assets areexposed to foreign currency translation risk. c) Interest rate risk The Group's income and operating cash flows are substantially independent ofchanges in market interest rates. The interest rates of finance leases to whichthe Group is lessee are fixed at inception of the lease. These leases expose theGroup to fair value interest rate risk. The Group's cash flow interest rate risk arises from cash deposits. Depositsplaced at variable rates expose the Group to cash flow interest rate risk. 4 Segmental information Geographical analysis of revenue 2007 2006 $'000 $'000 North America 70,634 68,847Europe and the Middle East 71,808 54,038Rest of the World 29,148 20,803 171,590 143,688 There is no material difference between revenue by origin above and revenue bydestination. 5 Supplemental information Set out below is an analysis of revenue recognised between the principal productcategories, which the directors use to assess the future revenue flows from thecurrent portfolio of customers. Revenue 2007 2006 $'000 $'000 Licence fees 82,652 67,985 Maintenance fees 82,056 71,860 Consultancy fees 6,882 3,843 171,590 143,688 6 Reconciliation of operating profit to EBITDA 2007 2006 $'000 $'000 Operating profit 57,267 22,733Depreciation 1,169 1,006Amortisation of software 608 806Amortisation of purchased intangibles 532 -EBITDA 59,576 24,545Exceptional items IPO related costs - 6,909 Reorganisation costs 4,861 7,403 Share based compensation charge/(credit) 849 (224) Management charges - 125 EBITDA before exceptional items 65,286 38,758 In calculating EBITDA the amortisation of Development expenditure is not addedback to operating profit, as the directors believe by doing so EBITDA provides abetter measure of the cash generation of the business. Amortisation ofDevelopment expenditure in the year to 30 April 2007 was $4.8m (2006: $4.6m). 7 Exceptional items 2007 2006 $'000 $'000 IPO related costs - 6,909Reorganisation costs 4,861 7,403Share based compensation charge/(credit) 849 (224)Management charges - 125 5,710 14,213 The prior year IPO-related costs include termination fees of $4.7m in respect ofmanagement charges previously paid by the Group to its shareholders prior to theIPO. They also include fees incurred during the process that did not directlyrelate to the raising of share capital. Current year reorganisation costs relate to restructuring programmes carried outin Europe and the USA and at HAL Knowledge Systems SpA. The prior yearreorganisation costs related to a cost reduction programme including thoseassociated with the redundancy of employees and the onerous lease cost of abuilding vacated as part of the programme. All exceptional items relate to administrative expenses. 8 Earnings per share The calculation of basic earnings per share has been based on the earningsattributable to ordinary shareholders of the Company and the weighted averagenumber of shares for each year. The diluted earnings per share has been calculated after taking account of shareoptions. 2007 2006 Weighted Weighted average average number of Per share number of Per share Earnings shares amount Earnings shares amount $'000 '000 cents $'000 '000 centsBasic EPS Earnings attributable to ordinaryshareholders 43,864 199,744 21.96 16,226 196,709 8.25 Effect of dilutive securities Share options 5,562 2,002 Diluted EPS Earnings attributable to ordinaryshareholders 43,864 205,306 21.37 16,226 198,711 8.17 Supplementary EPS to excludeexceptional items Basic EPS 43,864 199,744 21.96 16,226 196,709 8.25 Exceptional items 5,710 14,213 Tax relating to exceptional items (1,223) (2,154) Basic EPS excluding exceptionalitems 48,351 199,744 24.21 28,285 196,709 14.38 Diluted EPS 43,864 205,306 21.37 16,226 198,711 8.17 Exceptional items 5,710 14,213 Tax relating to exceptional items (1,223) (2,154) Diluted EPS excluding exceptionalitems 48,351 205,306 23.55 28,285 198,711 14.23 9 Dividends 2007 2006 $'000 $'000Equity - ordinary2006 final paid $0.04 per ordinary share 7,983 -2007 interim paid $0.03 (2006: $0.02) per ordinary share 5,998 3,987 13,981 3,987 Whilst the Group as a whole has a deficit in its profit and loss reserve, thedirectors of Micro Focus International plc have concluded that the Company hadsufficient reserves to enable the payment of the final dividend relating to theyear ended 30 April 2006 and the interim dividend relating to the year ended 30April 2007. The directors are proposing a final dividend in respect of the yearended 30 April 2007 of 7 cents per share which will utilise $14.0m ofshareholders' funds and again the directors have concluded that the Company hassufficient reserves to pay this dividend. It has not been included as aliability in these financial statements. 10 Trade and other receivables 2007 2006 $'000 $'000Trade debtors 35,634 29,377Prepayments 4,581 3,959Accrued income 3,816 4,293 44,031 37,629 11 Trade and other payables 2007 2006 $'000 $'000Trade payables 4,374 1,944Other tax and social security payable 185 2,468Accruals 21,750 20,511Deferred income 50,303 45,593 76,612 70,516 12 Acquisition of subsidiary On 2 November 2006, the Group acquired 100% of the share capital of HALKnowledge Solutions SpA, for a consideration of $4.8m (inclusive of $1.3mrelated costs). The fair values of net assets are based on provisionalassessments pending final determination of some assets and liabilities. The acquired business contributed revenues of $4.0m to the Group from the dateof acquisition to 30 April 2007. The business made an EBITDA loss in the 6months to 30 April 2007. All intangible assets were recognised at their respective fair values with theresulting excess over the net assets acquired recognised as goodwill. Carrying value at Provisional acquisition fair value $'000 $'000Intangible assets 1,547 10,929Property, plant and equipment 356 356Trade and other receivables 4,355 4,355Cash and cash equivalents 377 377Trade and other payables (9,567) (9,718)Borrowings (1,596) (1,596)Net (liabilities)/assets (4,528) 4,703Goodwill 129Consideration 4,832Consideration satisfied by:Cash 4,832 The fair value adjustments contain some provisional amounts which will befinalised in the 2008 accounts. Goodwill includes non-identified intangible assets which do not meet theseparable and reliably measurable criteria including business processes,know-how and work force related industry specific knowledge and technicalskills. The outflow of cash and cash equivalents on the acquisition is calculated asfollows: $'000Cash consideration 3,472Acquisition costs 1,360Cash acquired (377) 4,455 The intangible assets acquired as part of the acquisition can be analysed asfollows: $'000Software 25Technology 10,904 10,929 13 Post balance sheet event On 4 May 2007, Micro Focus announced that it had agreed to acquire Acucorp, Inc.(Acucorp) for a total cash consideration of $40.7m paid in full on completion,plus a working capital adjustment capped at a maximum value of $0.25m. In the year to 31December 2006, Acucorp generated an operating profit of $3.0mand its gross assets at 31 December 2006 were $13.1m. Following the acquisition,Micro Focus plans to restructure the business and aims to increase margins overtime to a level consistent with Micro Focus' existing business. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MCRO.L