Interim Results For the Six Months Ended 31 October 2016 Kevin - PowerPoint PPT Presentation

Interim Results For the Six Months Ended 31 October 2016 Kevin Loosemore, Mike Phillips, Stephen Murdoch, Nils Brauckmann 14th December 2016

Safe Harbour Statement The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be com municated (“relevant • persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Inform ation in the following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. • This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Micro Focus International plc (the “Company”) or any company which is a subsidiary of the Company. • The release, publication or distribution or this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions. • Certain statements contained in this presentation constitute forward-looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company’s financial condition, business strategy, plans and objectives, are forward- looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other variat ions or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward- looking statements are based on numerous assumptions regarding the Company’s prese nt and future business strategies and the environment in which the Company will operate in the future. Such risks, uncertainties and other factors include, among others: the level of expenditure committed to development and deployment applications by organisations; the level of deployment-related turnover expected by the Company; the degree to which organisations adopt web-enabled services; the rate at which large organisations migrate applications from the mainframe environment; the continued use and necessity of the mainframe for business critical applications; the degree of competition faced by the Company; growth in the information technology services market; general economic and business conditions, particularly in the United States; changes in technology and competition; and the Company’s ability to attract and retain qualified personnel. These forward -looking statements speak only as at the date of this presentation. Except as required by the Financial Conduct Authority, or by law, the Company does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. 2

Agenda Group Overview Micro Focus Operations SUSE Operations Financial Review Group Summary Questions and Answers 3

Group Overview Revenue increased by 1.2% compared to Pro-Forma CCY • Guidance remains for minus 2% to zero for the full year Underlying Adjusted EBITDA growth of 6.2% Disciplined M&A strategy with 2 completed acquisitions and 2 further transactions announced with HPE Total Shareholder Return strategy continues • Interim Dividend increased by 75.5% to 29.73 cents (2015: 16.94 cents) 4

HY17 Micro Focus Portfolio Update Stephen Murdoch CEO

HY17: Continued Progress on the Strategy and Model • Delivered financial commitments • Execution of portfolio strategy on track Refocus of product level investments towards “customer driven innovation” beginning to bear fruit • • Serena integration and business plan on track • GWAVA acquisition complete and integration underway • Continued progress in simplifying the underlying business operations to drive efficiency • Re-engineering of go to market organisation underway • HPE engagement and resourcing on track 6

Micro Focus – P&L vs pro-forma CCY Six months ended Six months ended 31 October 2016 31 October 2015 (Decline)/Growth Micro Focus Product Portfolio As reported Pro-forma CCY % $m $m Segment revenue 537.3 557.3 (3.6%) Directly managed costs (277.3) (311.0) Allocation of centrally managed costs 12.7 13.0 Adjusted operating costs (264.6) (298.0) (11.2%) Adjusted operating profit 272.7 259.3 5.2% Depreciation of property, plant & equipment 4.7 5.1 Amortization of software intangibles 0.5 0.9 Adjusted EBITDA 277.9 265.3 4.7% Foreign exchange credit (8.0) 0.1 Net capitalization of development costs (2.9) (6.4) Underlying Adjusted EBITDA 267.0 259.0 3.1% Underlying Adjusted EBITDA margin 49.7% 46.5% 6.9% 7

Micro Focus Product Portfolio Six months ended 31 Six months ended 31 October 2016 October 2015 (Decline)/Growth Pro-forma Revenue at CCY As reported Pro-forma CCY $m $m % CDMS Licence 52.4 40.2 30.3% Maintenance 75.3 72.4 4.0% Consultancy 5.5 4.1 34.1% 133.2 116.7 14.1% Host Connectivity Licence 38.9 48.1 (19.1%) Maintenance 52.6 54.1 (2.8%) Consultancy 0.9 1.2 (25.0%) 92.4 103.4 (10.6%) Identity, Access & Security Licence 19.8 20.1 (1.5%) Maintenance 70.3 69.6 1.0% Consultancy 10.2 11.7 (12.8%) 100.3 101.4 (1.1%) Development & IT Operations Management Tools Licence 24.6 25.9 (5.0%) Maintenance 109.4 120.1 (8.9%) Consultancy 7.3 8.2 (11.0%) 141.3 154.2 (8.4%) Collaboration & Networking Licence 11.2 12.3 (8.9%) Maintenance 56.6 66.4 (14.8%) Consultancy 2.3 2.9 (20.7%) 70.1 81.6 (14.1%) Micro Focus Product Portfolio Licence 146.9 146.6 0.2% Maintenance 364.2 382.6 (4.8%) Consultancy 26.2 28.1 (6.8%) 537.3 557.3 (3.6%) 1 Unaudited

Micro Focus – Regional Revenue Performance Six months ended 31 Six months ended 31 October 2016 October 2015 (Decline)/Growth Micro Focus Product Portfolio As reported Pro-forma CCY % $m $m North America 299.8 309.7 (3.2%) Licence 80.0 80.2 (0.2%) Maintenance 205.8 216.7 (5.0%) Consultancy 14.0 12.8 9.4% International 187.7 197.7 (5.1%) Licence 47.3 49.4 (4.3%) Maintenance 129.5 135.8 (4.6%) Consultancy 10.9 12.5 (12.8%) Asia Pacific & Japan 49.8 49.9 (0.2%) Licence 19.6 17.0 15.3% Maintenance 28.9 30.1 (4.0%) Consultancy 1.3 2.8 (53.6%) Total 537.3 557.3 (3.6%) Licence 146.9 146.6 0.2% Maintenance 364.2 382.6 (4.8%) Consultancy 26.2 28.1 (6.8%) 9

FY17 Imperatives: Deliver in 17 and Build for 18+ LFR: EXECUTION : granular approach via 4 BOX model Deliver FY17 MFR: STABILIZATION : improve trends through incremental improvements across the board Financial Plan CFR: CONSISTENCY: underpin delivery of customer value Deliver Great Products Execute portfolio model to deliver “customer driven innovation” strategy Remove Simplify processes, improve underlying data quality, analytics and reporting Complexity Go-to-Market Simplified Platform for Growth Acquisitions Re-shape Systems & Application Efficiency & Enablement Organizational Model Identify & Close Integrate & Leverage Model Enablers: Clarity of direction & purpose underpinned by great people 10

Improving Profitability through Operational Efficiencies Average Employees for FY14 31 October 2016 6,000 6,000 • Net reduction in MF of 642 (15%) 5,000 5,000 • Net increase in SUSE of 306 (65%) 4,000 4,000 3,000 3,000 4012 4,177 4,177 2,000 2,000 3535 1,000 1,000 776 776 470 470 400 0 0 77 Total SUSE Micro Focus Total SUSE Serena GWAVA Micro Focus 147 locations in November 2014 97 locations in November 2016 ~ 120 Product Lines ~ 120 Product Lines • • 12-24 month release cadence (TAG) 6-12 month release cadence • • OEM dependencies in key products Customer driven innovation • OEM dependencies removed 11

FY17 Priorities • Delivery of our financial plan • Consistent execution of strategy and four phase plan within context of combined business post completion of HPE • Simplifying business operations and accelerating progress on improving the effectiveness of Go-to-Market • Highly focused development and product management to deliver “customer driven innovation” and optimize the performance of each sub-portfolio 12

HY17 SUSE Portfolio Update Nils Brauckmann CEO

HY17 – A Successful Period For SUSE The SUSE growth charter: “Sustainable, Profitable Revenue Growth Above Market Rate” All relevant KPIs showed growth • Revenue of $147.4m with y/y growth of 23.3% • Deferred revenue balance of $335.2m with y/y growth of 21.8% • TCV of $154.0m with y/y growth of 20.3% • ACV of $88.8m with y/y growth of 16.4% Open source business with market leading profitability • Underlying Adjusted EBITDA of $53.3m • y/y increase of $10.8m (growth of 25.4%) • Profit margin of 36.3% with y/y improvement of 1.0% 14