MS INTERNATIONAL PLC — AGM Information 2014

Oct 8, 2014

THIS DOCUMENT AND ANY ACCOMPANYING DOCUMENTS ARE IMPORTANT AND REQUIRE YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice immediately from an independent financial adviser, who is authorised under the Financial Services and Markets Act 2000 ("FSMA") if you are in the United Kingdom, or from another appropriately authorised independent financial adviser if you are in a territory outside the United Kingdom.

If you sell or have sold or otherwise transferred all of your Existing Ordinary Shares please send this document (but not any personalised Form of Proxy or Form of Election) at once to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for delivery to the purchaser or the transferee. However, the distribution of this document and the accompanying documents into jurisdictions other than the United Kingdom may be restricted by law. Therefore, persons outside the United Kingdom into whose possession this document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of the relevant jurisdiction.

This document, which comprises (i) a circular prepared for the purposes of the General Meeting convened pursuant to the notice of General Meeting set out at the end of this document; and (ii) a prospectus relating to the Ordinary Shares prepared in accordance with the Prospectus Rules of the Financial Conduct Authority (the "FCA") made under section 73A of FSMA, has been approved by the FCA in accordance with section 87A of FSMA and made available to the public in accordance with Rule 3.2 of the Prospectus Rules.

You should read the whole of this document and any documents incorporated herein by reference. In particular, your attention is drawn to the factors described in the "Risk Factors" section of this document and the letter from your Chairman which is set out in Part I (Letter from the Chairman of Micro Focus International plc) of this document and which contains a recommendation from your Board that you vote in favour of the Resolutions to be proposed at the General Meeting.

MICRO FOCUS INTERNATIONAL PLC

(incorporated and registered in England and Wales with registered number 5134647)

Proposed Merger with The Attachmate Group, Inc.

Issue of 86,595,711 Consideration Shares

Waiver of Rule 9 of the Takeover Code

Proposed New Employee Incentive Arrangements

Proposed Return of Value to Shareholders of 60 pence per Existing Ordinary Share

and

Notice of General Meeting

Numis Securities Limited

Sponsor and Broker

The Existing Ordinary Shares are admitted to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. As the Merger is classified as a reverse takeover under the Listing Rules, upon completion of the Merger the listing on the premium listing segment of the Official List of all of the Existing Ordinary Shares will be cancelled, and application will be made for the immediate readmission of those Existing Ordinary Shares (which, if the proposed Return of Value has occurred, will have been consolidated into New Ordinary Shares) and the admission of the Consideration Shares to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective and dealings in the Existing Ordinary Shares (or, if the Return of Value has occurred, New Ordinary Shares) and the Consideration Shares will commence at 8.00 a.m. on 3 November 2014.

Notice of the General Meeting of the Company to be held at 3.00 p.m. on 27 October 2014 at The Lawn, 22-30 Old Bath Road, Newbury, Berkshire RG14 1QN is set out at the end of this document. You will find enclosed with this document a Form of Proxy for use at the meeting. Whether or not you intend to attend the General Meeting in person, you are asked to complete, sign and return the enclosed Form of Proxy in accordance with the instructions printed on it so as to be received by the Company's Registrar, Equiniti Limited at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, as soon as possible and in any event no later than 3.00 p.m. on 23 October 2014 (or, in the case of an adjournment, not later than two Business Days before the time fixed for the holding of the adjourned meeting). You may also submit your proxy electronically at www.sharevote.co.uk using the Voting ID, Task ID and Shareholder Reference Number on the Form of Proxy. If you hold your Ordinary Shares in uncertificated form (i.e. in CREST), you may appoint a proxy by completing and transmitting a CREST Proxy Instruction in accordance with the procedures set out in the CREST Manual so that it is received by the Company's Registrar (under CREST participant RA19) by no later than 3.00 p.m. on 23 October 2014 (or, in the case of an adjournment, not later than two Business Days before the time fixed for the holding of the adjourned meeting). Completion and return of a Form of Proxy, or the electronic appointment of a proxy or CREST Proxy Instruction, will not preclude you from attending and voting at the General Meeting or any adjournment thereof, if you wish to do so.

No person has been authorised to give any information or make any representations other than those contained in this document and any such information or representations must not be relied upon as having been so authorised by the Company, the Directors, Numis Securities Limited ("Numis") or any other person. Micro Focus will comply with its obligation to publish supplementary prospectuses containing further updated information required by law or by any regulatory authority but assumes no further obligation to publish additional information.

The distribution of this document into jurisdictions other than the United Kingdom may be restricted by law. Persons into whose possession this document comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of securities laws of any such jurisdiction. In addition, the Form of Election must not be distributed or sent into the United States, Canada, Australia, Japan, the Republic of South Africa or New Zealand.

Numis, which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Micro Focus and no-one else in connection with the contents of this document and the Merger, Admission and the Return of Value and will not regard any other person (whether or not a recipient of this document) as a client in relation to the Merger, Admission or the Return of Value and will not be responsible for providing the protections afforded to respective clients of Numis nor for giving advice in relation to the contents of this document and the Merger, Admission and the Return of Value, or any arrangement referred to, or information contained in, this document.

Apart from the responsibilities and liabilities, if any, which may be imposed on Numis under FSMA or the regulatory regime established thereunder, Numis does not accept any responsibility whatsoever nor makes any representation or warranty, express or implied, concerning the contents of this document including its accuracy, completeness or verification or concerning any other statement made or purported to be made by Micro Focus, or on Micro Focus's behalf, or by Numis, or on Numis' behalf in connection with the Company, the Merger, the Consideration Shares, Admission or the Return of Value and nothing in this document is or shall be relied upon as a promise or representation in this respect, whether as to the past or future. Subject to applicable law, Numis disclaims all and any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) which it might otherwise have in respect of this document.

Subject to FSMA, the Listing Rules, the Disclosure and Transparency Rules and the Prospectus Rules, neither the delivery of this document nor any subscription or sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this document or that the information in this document is correct as at any time after this date. Without limitation, the contents of the Micro Focus Group's or Attachmate Group's websites do not form part of this document.

The contents of this document or any subsequent communication from Micro Focus or Numis or any of their respective affiliates, officers, directors, employees or agents are not to be construed as legal, financial or tax advice. Each prospective investor should consult his, her or its own legal adviser, financial adviser or tax adviser for legal, financial or tax advice.

8 October 2014 R.24.3(d)(ii)

CONTENTS

		Page
SUMMARY		4
RISK FACTORS		20
	IMPORTANT INFORMATION	38
	EXPECTED TIMETABLE OF PRINCIPAL EVENTS	41
	MERGER STATISTICS	42
	DIRECTORS, PROPOSED DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS	43
PART I	LETTER FROM THE CHAIRMAN OF MICRO FOCUS INTERNATIONAL PLC	44
PART II	DETAILS OF THE MERGER	59
PART III	INFORMATION ON THE MICRO FOCUS GROUP	63
PART IV	INFORMATION ON THE ATTACHMATE GROUP	72
PART V	OPERATING AND FINANCIAL REVIEW OF THE MICRO FOCUS GROUP	88
PART VI	FINANCIAL INFORMATION OF THE MICRO FOCUS GROUP	90
PART VII	OPERATING AND FINANCIAL REVIEW OF THE ATTACHMATE GROUP	92
PART VIII	FINANCIAL INFORMATION OF THE ATTACHMATE GROUP	110
PART IX	UNAUDITED PRO FORMA FINANCIAL INFORMATION	179
PART X	CAPITALISATION AND INDEBTEDNESS	184
PART XI	THE RETURN OF VALUE	186
PART XII	DIRECTORS, PROPOSED DIRECTORS, CORPORATE GOVERNANCE AND EMPLOYEES	235
PART XIII	ADDITIONAL INFORMATION	246
PART XIV	GLOSSARY AND DEFINITIONS	292
PART XV	DOCUMENTS INCORPORATED BY REFERENCE	306
	NOTICE OF GENERAL MEETING	307

SUMMARY

Summaries are made up of disclosure requirements known as 'Elements'. These elements are numbered in Sections A–E (A.1–E.7).

This summary contains all the Elements required to be included in a summary for this type of security and issuer. Because some Elements are not required to be addressed there may be gaps in the numbering sequence of the Elements.

Even though an Element may be required to be inserted into the summary because of the type of security and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of 'not applicable'.

		Section A – Introduction and warnings
A.1	Introduction and Warning	This summary should be read as an introduction to this document.
		Any decision to invest in the securities should be based on consideration of this document as a whole by the investor.
		Where a claim relating to the information contained in this prospectus is brought before a court, the plaintiff investor might, under the national legislation of a member state of the European Union, have to bear the costs of translating this document before the legal proceedings are initiated.
		Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this document or it does not provide, when read together with the other parts of this document, key information in order to aid investors when considering whether to invest in such securities.
A.2	Subsequent resale of securities or final placement of securities through financial intermediaries	Not applicable. No consent has been given by the Company or any person responsible for drawing up this document to use this document for any subsequent resale or final placement of securities by financial intermediaries.

	Section B – Issuer and any guarantor
B.1	Legal and commercial name	Micro Focus International plc.
B.2	Domicile, legal form, legislation, country of incorporation	The Company is a public limited company, incorporated on 21 May 2004 in England and Wales under the Companies Act 1985 with its registered office situated in England and Wales. The Company is subject to the Takeover Code.
B.3	Current operations and principal activities and markets	The Micro Focus Group The Micro Focus Group is a software group that provides customers with application management solutions to improve the effectiveness and efficiency of their core IT systems whilst exploiting advances in technology. The Micro Focus Group provides enterprise application solutions, specifically software solutions for assessing, developing, testing, managing and modernising existing applications. The Micro Focus Group

		operates as a portfolio of related businesses delivering solutions across the software development life cycle, as well as middleware components and modernisation toolsets. The Micro Focus Group evaluates on an ongoing basis acquisition opportunities to broaden its addressable market and customer base and to drive sustainable Total Shareholder Returns from its portfolio of businesses.
		The Attachmate Group
		The Attachmate Group is one of the leading global providers of enterprise infrastructure software solutions to businesses, governments and other large organisations in order to extend, manage and secure complex IT environments. The Attachmate Group's principal solutions are organised into four product portfolios: Attachmate (products), NetIQ, Novell and SUSE Linux. The Attachmate Group, headquartered in Houston, Texas in the United States, has been in business for over 30 years and has more than 80 offices worldwide, serving over 20,000 customers.			software
B.4	Significant recent trends affecting the Enlarged Group and its industry	The software industry is characterised by many new, innovative companies which invest heavily in revenue growth and new models, often at the expense of profitability and cash flow while they seek to establish market leading positions. In addition there are increasing numbers of more established software companies with lower growth profiles that are often more profitable and cash generative.
B.5	Description of the Enlarged Group	The Company is the parent company of the Micro Focus Group and will be the parent company of the Enlarged Group. Following the implementation of the Merger, Attachmate will become an indirect wholly owned subsidiary of Micro Focus.
		The table below contains a list of the principal subsidiaries, joint ventures and associates of the Company following Completion (each of which is considered by the Directors to be likely to have a significant effect on the assessment of the assets, liabilities, financial position and/or profits and losses of the Enlarged Group):
				Proportion of	Proportion of
			Country of	ownership	voting power
		Name	Incorporation	interest	held
		The Micro Focus Group Micro Focus Group Limited	UK	100%	100%
		MA FinanceCo LLC	USA	100%	100%
		Minerva Finance SARL	Luxembourg	100%	100%
		Micro Focus AS Micro Focus (Canada) Limited	Norway Canada	100% 100%	100% 100%
		Micro Focus GmbH	Germany	100%	100%
		Micro Focus Holdings Limited	UK	100%	100%
		Micro Focus India Private Limited	India	100%	100%
		Micro Focus (IP) Limited Micro Focus Israel Limited	UK Israel	100% 100%	100% 100%
		Micro Focus IP Development Limited UK		100%	100%
		Micro Focus KK	Japan	100%	100%
		Micro Focus Limited	UK	100%	100%
		Micro Focus SA	Belgium	100%	100%
		Micro Focus NV Micro Focus Pte Limited	Netherlands Singapore	100% 100%	100% 100%
		Micro Focus Pty Limited	Australia	100%	100%
		Micro Focus APM Solutions EOOD	Bulgaria	100%	100%
		Micro Focus SAS	France	100%	100%

		Proportion of	Proportion of
	Country of	ownership	voting power
Name	Incorporation	interest	held
Micro Focus SL	Spain	100%	100%
Micro Focus Srl	Italy	100%	100%
Micro Focus (US) Inc	USA	100%	100%
Micro Focus (US) Group Inc	USA	100%	100%
Micro Focus (US) Holdings Limited	UK	100%	100%
Borland BV	Netherlands	100%	100%
Borland Co. Limited	Japan	100%	100%
Borland Entwicklung GmbH	Austria	100%	100%
Borland France Sarl	France	100%	100%
Borland GmbH	Germany	100%	100%
Borland Latin America Ltda	Brazil	100%	100%
Borland Software Corporation	USA	100%	100%
Borland Srl	Italy	100%	100%
Borland (UK) Limited	UK	100%	100%
The Attachmate Group
The Attachmate Group, Inc.	USA	100%	100%
Attachmate Corporation	USA	100%	100%
NetIQ Corporation	USA	100%	100%
Novell, Inc	USA	100%	100%
SUSE LLC	USA	100%	100%
Novell Holdings, Inc. (NHI)	USA	100%	100%
Novell Canada, Ltd.	Canada	100%	100%
Attachmate Ireland Limited	Ireland	100%	100%
Novell Ireland Software
Limited (NISL)	Ireland	100%	100%
NetIQ Ireland Limited	Ireland	100%	100%
NetIQ Europe Limited	Ireland	100%	100%
Novell Software
International Limited (NSIL)	Ireland	100%	100%
Novell Ireland Real Estate
Limited (NIRE)	Ireland	100%	100%
Novell Cayman Software (NCS)	Ireland	100%	100%
Novell Cayman Software
International (NCSI)	Ireland	100%	100%
SUSE Linux Holdings
Limited (SLH)	Ireland	100%	100%
Attachmate Group Austria GmbH	Austria	100%	100%
Attachmate Group Belgium BV	Belgium	100%	100%
NOVL Czech s.r.o.	Czech	100%	100%
SuSE Linux s.r.o. (Czech)	Czech	100%	100%
Attachmate Group Denmark A/S	Denmark	100%	100%
Attachmate Group France SARL	France	100%	100%
Novell Holding Deutschland
GmbH (NHD)	Germany	100%	100%
Attachmate Group Germany GmbH	Germany	100%	100%
SuSE Linux GmbH (SUDE)	Germany	100%	100%
SuSE Linux Products
GmbH (SULX)	Germany	100%	100%
Attachmate Group Italy Srl	Italy	100%	100%
Attachmate Group Netherlands BV	Netherlands	100%	100%
Novell Portugal Informatica Lda.	Portugal	100%	100%
Attachmate Group South Africa
(Proprietary) Limited	South Africa	100%	100%
Attachmate Group Spain S.L.	Spain	100%	100%
Attachmate Group Sweden AB	Sweden	100%	100%
Attachmate Group Schweiz AG	Switzerland	100%	100%
Attachmate Teknoloji Satis ve
Pazarlama Ltd. Sti. (Turkey)	Turkey	100%	100%
Novell United Kingdom Ltd	UK	100%	100%
Attachmate Sales UK Ltd	UK	100%	100%
Attachmate Group Australia Pty. Ltd	Australia	100%	100%
Novell Software (Beijing) Ltd.	China	100%	100%

		Name Novell Hong Kong Limited Novell Software Development (India) Private Limited NetIQ KK (Japan) Novell Korea Co., Ltd. Novell Corporation (Malaysia) Sdn Bhd Novell New Zealand Limited Attachmate Group Singapore Pte Ltd Novell (Taiwan) Co., Ltd.	Country of Incorporation Hong Kong India Japan Korea Malaysia New Zealand Singapore Taiwan	Proportion of ownership interest 100% 100% 100% 100% 100% 100% 100% 100%	Proportion of voting power held 100% 100% 100% 100% 100% 100% 100% 100%
		Attachmate Sales Argentina SRL Novell do Brasil Software Ltd. Attachmate Mexico S.A. de C.V.	Argentina Brazil Mexico	100% 100% 100%	100% 100% 100%
B.6	Notifiable interests, different voting rights and controlling interests	As at 7 October 2014 (being the latest practicable date prior to the publication of this document), the interests (all of which are or will be beneficial unless otherwise stated) of the Directors and Proposed Directors and their connected persons in the share capital of the Company completing, will be as follows: Number of Ordinary Shares in which the Director has a direct or indirect interest at 7 October 2014 Kevin Loosemore(1)(3) 739,919 Mike Phillips(2)(3) 130,000 Stephen Murdoch(3) None Karen Slatford None Tom Skelton None Tom Virden 4,531 Richard Atkins(4) 5,886 Prescott Ashe None David Golob None Notes: (1) 49,067 shares are held by Kevin Loosemore's wife, Joy Loosemore. (2) 114,448 shares are held by Mike Phillips' wife, Josie Phillips. (3) Kevin Loosemore, Mike Phillips and Stephen Murdoch have received ASGs, which are conditional upon Completion and Shareholder approval of the New Incentive Arrangements, over 947,140, 676,529 and 405,917 Ordinary Shares respectively. (4) 2,214 shares are held by Richard Atkins' wife, Julie Atkins. As at 7 October 2014 (being the latest practicable date prior to the publication of this document), in addition to those persons described above, the Company had been notified, or was otherwise	existing issued share capital 0.53 0.09 – – – 0.00 0.00 – –	was and, following the Merger Percentage ordinary share capital if Merger Merger completes Percentage of completes with or and assuming the Return of Value 0.32 0.06 – – – 0.00 0.00 – –	Percentage of issued of issued ordinary share capital if following the Return of Value is not implemented 0.33 0.06 – – – 0.00 0.00 – –
		aware of, the following persons who are directly or indirectly interested in 3 per cent. or more of the existing issued ordinary share capital of the Company:
		Standard Life Investments M&G Investment Management Artemis Investment Management Schroder Investment Management F&C Asset Management JP Morgan Asset Management Invesco Perpetual BlackRock Aberforth Partners	Number of Existing	Ordinary Shares 11,282,989 10,152,435 7,690,037 6,721,689 6,397,290 5,569,244 5,362,454 4,385,417 4,370,407	Percentage interest of issued ordinary share capital 8.07 7.26 5.50 4.80 4.57 3.98 3.83 3.13 3.12

The Shareholders set out above do not have different voting rights.

So far as is known to the Company, the following persons shall be directly or indirectly interested in 3 per cent. or more of the Company's issued share capital immediately following the Merger completing:

		If Merger completes with or following the Return of Value		If Merger completes but the Return of Value is not implemented
		Percentage		Percentage
		interest of		interest of
		issued		issued
	Number of	ordinary	Number of	ordinary
	Ordinary	share	Ordinary	share
	Shares	capital	Shares	capital
Wizard	86,595,711	40.0	86,595,711	38.2
Standard Life Investments	10,476,255	4.8	11,282,989	5.0
M&G Investment Management	9,426,535	4.4	10,152,435	4.5
Artemis Investment Management	7,140,199	3.3	7,690,037	3.4

As at 7 October 2014 (being the latest practicable date prior to the publication of this document), the Company was not aware of any person or persons who, directly or indirectly, jointly or severally, exercise or could exercise control over the Company.

On Completion the Company will enter into the Relationship Agreement which will take effect on and from Admission and continue until Wizard, the Wizard Shareholders and their respective associates cease to hold an interest, either direct or indirect, which carries 10 per cent. or more of the aggregate voting rights in the Company from time to time. The Relationship Agreement will regulate the continuing relationship between Wizard, the Wizard Shareholders and their respective associates and the Company to ensure that, in accordance with the Listing Rules, the Enlarged Group will be able to carry on its business independently of Wizard, the Wizard Shareholders and their respective associates.

The Relationship Agreement will also provide that Wizard shall have the right to nominate up to two persons to be Non-Executive Directors for so long as Wizard, the Wizard Shareholders and their respective associates together hold an interest, either direct or indirect, in 30 per cent. or more of the aggregate voting rights in the Company from time to time and one person to be a Non-Executive Director for so long as Wizard, the Wizard Shareholders and their respective associates together hold an interest, either direct or indirect, in 15 per cent. or more (but less than 30 per cent.) of the aggregate voting rights in the Company from time to time.

Wizard is the holding company of the Attachmate Group and is the entity through which the following entities have invested in the Attachmate Group: the Golden Gate Funds (31.52 per cent.), the Francisco Partners Funds (29.91 per cent.), the Thoma Bravo Funds (14.14 per cent.), the Elliot Management Funds (13.20 per cent.) and Attachmate management and others (11.23 per cent.).

B.7	Selected historical key financial information	Shareholders should read the whole of this document and not LR13.5.11 rely solely on the summarised financial information set out below.
		Micro Focus Group
		The selected historical consolidated financial information relating to the Company set out below has been extracted without material adjustment from the audited reports and consolidated accounts of the Company prepared under IFRS for the financial years ended 30 April 2012, 30 April 2013 and 30 April 2014:
		Consolidated statement of comprehensive income
			For the financial year ended 30 April 2012 US\$'000	For the financial year ended 30 April 2013 US\$'000	For the financial year ended (Restated*) 30 April 2014 US\$'000
		Continuing operations
		Revenue Cost of sales	434,838 (49,267) ––––––––	412,167 (34,069) ––––––––	433,058 (29,912) ––––––––
		Gross profit Selling and distribution costs Research and development expense Administrative expenses	385,571 (127,253) (54,768) (47,759)	378,098 (117,558) (52,599) (48,503)	403,146 (120,669) (57,833) (68,924)
		Operating profit	–––––––– 155,791 ––––––––	–––––––– 159,438 ––––––––	–––––––– 155,720 ––––––––
			For the financial year ended 30 April 2012 US\$'000	For the financial year ended 30 April 2013 US\$'000	For the financial year ended (Restated*) 30 April 2014 US\$'000
		Analysed as:
		Underlying Adjusted EBITDA Amortisation of acquired	173,025	184,121	196,402
		intangible assets Depreciation of property, plant	(16,623)	(16,766)	(19,563)
		and equipment	(3,810)	(3,483)	(3,846)
		Share-based compensation charge Foreign exchange (debit)/credit	(6,056) 3,572	(6,639) 543	(12,837) (4,400)
		Net capitalisation of development costs	3,241	1,662	(36)
		Operating profit (pre-exceptional items) Exceptional items	153,349 2,442	159,438 –	155,720 –
		Operating profit	–––––––– 155,791	–––––––– 159,438	–––––––– 155,720
		Finance costs	–––––––– (6,836)	–––––––– (8,307)	–––––––– (8,197)
		Finance income	295 ––––––––	413 ––––––––	318 ––––––––
		Profit before tax	149,250 ––––––––	151,544 ––––––––	147,841 ––––––––
		Profit for the year Total comprehensive income	120,620 ––––––––	121,777 ––––––––	122,082 ––––––––
		for the year	121,665 ––––––––	119,319 ––––––––	124,258 ––––––––
		Continuing and discontinued operations
		Basic earnings in cents per share	65.77	77.83	84.75
		Diluted earnings in cents per share Basic earnings in pence per share	64.11 41.29	75.23 49.43	82.35 52.92
		Diluted earnings in pence per share	40.25	47.78	51.43
		* The comparatives for the financial year ended 30 April 2013 have been restated to reflect the impact of a misstatement of revenue caused by invalid orders within the Micro Focus Group's sales channel network in India.

Consolidated statement of financial position

		For the
	For the	financial	For the
	financial	year ended	financial
	year ended	30 April 2013	year ended
	30 April 2012		(Restated*) 30 April 2014
	US\$'000	US\$'000	US\$'000
Total assets	556,961	568,179	605,017
Total liabilities	439,415	510,363	621,268
Net (liabilities)/assets	–––––––– 117,546 ––––––––	–––––––– 57,816 ––––––––	–––––––– (16,251) ––––––––
Total (deficit)/equity attributable
to owners of parent	117,546	57,816	(16,251)
	––––––––	––––––––	––––––––

Consolidated statement of cash flows

		For the
	For the	financial	For the
	financial	year ended	financial
	year ended	30 April 2013	year ended
	30 April 2012		(Restated*) 30 April 2014
	US\$'000	US\$'000	US\$'000
Cash generated from operations	196,659	192,440	206,775
Net cash generated from
operating activities	182,178	165,292	174,974
Cash flows from investing activities	(38,924)	(38,226)	(53,580)
Cash flows from financing activities	(136,883) ––––––––	(116,906) ––––––––	(126,583) ––––––––
Net (decrease)/increase in cash
and cash equivalents	4,330 ––––––––	7,533 ––––––––	(5,143) ––––––––
Cash and cash equivalents at 30 April	30,410	37,943	32,800

–––––––– –––––––– –––––––– * The comparatives for the financial year ended 30 April 2013 have been restated to reflect the impact of a misstatement of revenue caused by invalid orders within the Micro Focus Group's sales channel network in India.

During the period under review, the Micro Focus Group's revenue declined from US\$434.8 million in 2012 to US\$412.2 million in 2013 and then rose to US\$433.1 million in 2014. The decrease in revenue between the financial years ended 30 April 2012 and 30 April 2013 was primarily driven by a decrease in licence fee revenue and a reduction in consultancy revenues, as anticipated. The increase in revenue between the financial years ended 30 April 2013 and 30 April 2014 was driven by a combination of factors including licence revenue growth, strong international sales and a positive contribution from the acquisitions made during the year. The Micro Focus Group's Underlying Adjusted EBITDA increased from US\$173.0 million in 2012 to US\$184.1 million in 2013 and US\$196.4 million in 2014, due in large part (i) in 2013 to the cost efficiency programme primarily in the sales organisation and (ii) in 2014 to the profitability generated from the acquisition of the Iona CORBA assets from Progress Software.

Save as described above, there has been no significant change in the financial condition or results of operations of the Micro Focus Group during the financial years ended 30 April 2012, 2013 and 2014 or the period subsequent to 30 April 2014, the date to which the last audited financial information of the Micro Focus Group was prepared.

Attachmate Group

The selected historical consolidated financial information relating to the Attachmate Group for the financial years ended 31 March 2012, 31 March 2013 and 31 March 2014 and the one month periods ended 30 April 2013 and 30 April 2014 as set out in the following tables has been extracted without material adjustment from the consolidated financial information in Part VIII (Financial Information of the Attachmate Group) of this document:

Consolidated statement of comprehensive income

	One month ended Years ended 31 March 30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(Unaudited)
Revenue	1,013,350	995,783	956,829	68,782	65,325
Cost of sales	(167,847)	(156,161)	(151,188)	(10,382)	(10,089)
Gross profit	–––––––– 845,503	–––––––– 839,622	–––––––– 805,641	–––––––– –––––––– 58,400	55,236
Selling and distribution costs	(354,341)	(347,146)	(341,833)	(26,324)	(22,369)
Research and
development expense	(247,234)	(210,555)	(212,875)	(18,798)	(16,925)
Administrative expense	(127,866)	(85,139)	(78,086)	(7,371)	(5,804)
Operating profit	–––––––– 116,062	–––––––– 196,782	–––––––– 172,847	–––––––– –––––––– 5,907	10,138
Analysed as:
Underlying Adjusted
EBITDA	343,961	328,181	312,846	17,212	18,466
Amortisation of
intangible assets	(105,083)	(108,891)	(90,200)	(8,809)	(7,294)
Depreciation of property, plant and equipment	(19,931)	(13,175)	(12,182)	(1,056)	(974)
Share based
compensation charge	(9,966)	(3,698)	(1,836)	(211)	(109)
Foreign exchange
debit/(credit)	4,944	(1,854)	(4,540)	(1,116)	87
Operating profit
(pre-exceptional items) 213,925		200,563	204,088	6,020	10,176
Exceptional items	(97,863)	(3,781)	(31,241)	(113)	(38)
Operating profit	–––––––– 116,062	–––––––– 196,782	–––––––– 172,847	–––––––– –––––––– 5,907	10,138
Finance costs	(86,218)	(118,893)	(116,437)	(9,852)	(9,068)
Exceptional finance costs (56,595)		(68,962)	–	–	–
Finance income	673	644	320	45	40
Share of profit (loss)
of associates	(899)	4,228	(1,586)	(130)	(155)
Other expense, net	(413) ––––––––	(378) ––––––––	(529) ––––––––	(168) –––––––– ––––––––	(657)
Profit (loss) before tax	(27,390) ––––––––	13,421 ––––––––	54,615 ––––––––	(4,198) –––––––– ––––––––	298
Taxation	(1,648)	57,405	(27,224)	4,944	(631)
Profit for the period	–––––––– (29,038)	–––––––– 70,826	–––––––– 27,391	–––––––– –––––––– 746	(333)
Consolidated statement of financial position	––––––––	––––––––	––––––––	–––––––– ––––––––
	31 March	31 March		31 March	30 April
	2012		2013	2014	2014
	US\$'000	US\$'000		US\$'000	US\$'000
Total assets
	2,377,965	1,958,972		1,818,556	1,756,923
Total liabilities	2,257,296 ––––––––	2,451,093 ––––––––		2,278,670 ––––––––	2,217,325 ––––––––
Net (liabilities)/assets	120,669 ––––––––	––––––––	(492,121)	(460,114) ––––––––	(460,402) ––––––––

Total (deficit)/equity 120,669 (492,121) (460,114) (460,402) –––––––– –––––––– –––––––– ––––––––

Consolidated statement of cash flows
					One month ended
		Years ended 31 March		30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(Unaudited)
Cash generated from operations	316,645	254,794	284,458	17,947	18,990
Net cash generated from/
(used in) operating activities	147,758	117,240	149,008	(11,367)	(7,328)
Net cash used in investing activities	(614,010)	108,153	(14,423)	(1,162)	(1,614)
Net cash generated by/ (used in) financing
activities	697,842 ––––––––	(441,033) ––––––––	(143,399) ––––––––	(20,624) –––––––– ––––––––	–
Net (decrease)/
increase in cash and cash equivalents	231,590 ––––––––	(215,640) ––––––––	(8,814) ––––––––	(33,153) –––––––– ––––––––	(8,942)
Cash and cash
equivalents at period end	375,869	160,229	151,415	127,076	142,473
	––––––––	––––––––	––––––––	–––––––– ––––––––

During the period under review, the Attachmate Group's revenue declined from US\$1,013 million in 2012 to US\$996 million in 2013 and to US\$957 million in 2014. The revenue decrease from the financial year ended 31 March 2013 to the financial year ended 31 March 2014 was mainly due to declining performance across all three revenue types (licences, maintenance & subscription and services) in the Attachmate Group's North American operations, offset in part by improved licensing revenue in the Attachmate Group's International operations. On a product basis, the decline in revenue was mainly in Novell and Attachmate. The decrease in revenue between the financial year ended 31 March 2012 and the financial year ended 31 March 2013 was mainly due to declines in maintenance and subscription revenue as well as licensing revenue, primarily in North America. On a product basis, the decline in revenue was mainly in Novell.

Save as described above, there has been no significant change in the financial condition or results of operations of the Attachmate Group during the financial years ended 31 March 2012, 2013 and 2014, the month ended 30 April 2014, or the period subsequent to 30 April 2014, the date to which the last audited financial information of the Attachmate Group was prepared.

B.8	Selected key pro forma
	financial information	Unaudited pro forma income statement
			The Micro Focus Group (Note 1) For the year ended 30 April	The Attachmate (Note 2) For the year ended 31 March 2014	Merger Group adjustments (Note 3)	Financing (Note 4)	Return of Value	Pro forma total
			US\$'000	US\$'000 –	US\$'000 –	US\$'000 –	US\$'000 –	US\$'000 –
		Revenue Cost of sales	433,058 (29,912)	956,829 (151,188) ————	– – ————	– – ————	– – ————	1,389,887 (181,100) ————
		Gross Profit Selling and distribution costs Research and development	403,146 (120,669)	805,641 (341,833)	– –	– –	– –	1,208,787 (462,502)
		Administrative expenses	(68,924)	(212,875) (78,086) ————	– (48,100) ————	– – ————	– – ————	(270,708) (195,110) ————
		Operating Profit Analysed as:	155,720	172,847	(48,100)	–	–	280,467
		before exceptional items Exceptional items	155,720 –	204,088 (31,241)	– (48,100)	– –	– –	359,808 (79,341)
		Operating profit Finance costs	155,720 (8,197)	———— 172,847 (116,437)	———— (48,100) (8,000)	———— – 20,688	———— – –	———— 280,467 (111,946)
		Finance income	Summarised Pro Forma Financial Information 2014 Gross revenue ———— expense (57,833) ———— Operating profit ———— 318 ———— Net finance costs (7,879) and other expenses 147,841 Profit for the year 122,082 Explanatory Notes: (1) The Micro Focus financial information has been extracted, without material adjustment, from the consolidated financial statements of the Micro Focus Group for the year ended 30 April 2014. The Attachmate financial information has been extracted, without material adjustment, from the historical financial information of the Attachmate Group for the year ended 31 March 2014 set out in Part VIII (Financial Information of the Attachmate Group) of this document. Merger adjustments relate to estimated transaction costs of US\$56.1m, including US\$8.0m payable in respect of the early repayment of the existing Attachmate debt, excluding US\$67.6m of change of control payments by Attachmate to Wizard and employees, which are capitalised as goodwill, and US\$59.3m prepaid financing fees on the New Facilities which are capitalised within borrowings on the balance sheet. This adjustment is a one off charge and does not represent a continuing impact on the Enlarged Group following the Merger. The financing adjustment is calculated as: a) The interest cost on the US\$1.775bn new Term Loan Facilities at the new rate of 5.25 per cent. for the US\$1.275bn Facility B, 4.5 per cent. for the US\$500m Facility C and 3.7326 per cent. on the US\$75m Revolving Facility assumed to be drawn at completion, plus a non utilisation fee of 0.5 per cent. on the undrawn committed Revolving Facility (assumed to be US\$75m at completion), less the actual finance costs incurred by Micro Focus and Attachmate during the period of US\$124.6m, plus an amortisation charge of US\$11.3m, representing the annual amortisation of capitalised financing fees. b) A consequent increase in the taxation charge, calculated using an effective tax rate of 25 per cent. These financing adjustments will have a continuing impact on the Enlarged Group following the Merger. No adjustment has been made to reflect the trading results of Micro Focus since 30 April 2014 or of Attachmate since 31 March 2014.	320 ———— (116,117)	– ———— (8,000)	– ———— 20,688	– ———— –	638 ———— (111,308)
		Share of associates	————	————	————	————	————	————
		Profit before tax	– ————	(2,115) ———— 54,615	– ———— (56,100)	– ———— 20,688	– ———— –	(2,115) ———— 167,044
		Taxation	(25,759) ————	(27,224) ————	– ————	(5,172) ————	– ————	(58,155) ————
			————	27,391 ————	(56,100) ————	15,516 ————	– ————	108,889 ————
		(2) (3) (4) (5)

	Unaudited pro forma net asset statement
		The	The				Pro
		Micro Focus	Attachmate	Merger		Return	forma
		Group		Group adjustments	Financing	of Value	total
		As at 30 April	As at 30 April
		2014	2014
		Note 1	Note 2	Note 3	Note 4	Note 5
		US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Assets
Non-current assets Goodwill		308,182	906,052	1,945,992	–	–	3,160,156
	Other intangible assets	92,533	261,908	–	–	–	354,441
	Property, plant and equipment	21,599	24,801	–	–	–	47,288
Assets held for sale		–	888	–	–	–	888
	Investment in associates	–	16,530	–	–		16,530
	Long term pension assets Long term income tax receivable	– –	16,514 10,047	– –	– –	– –	16,514 10,047
	Other non-current assets	–	6,243	–	–	–	6,243
Deferred tax assets		42,631	197,716	–	–	–	240,347
		———— 464,945	———— 1,440,699	———— 1,945,992	———— –	———— –	———— 3,851,566
Current assets
Inventories		133	–	–	–	–	133
	Trade and other receivables Cash and cash equivalents	107,139 32,800	172,946 143,278	– –	– 78,444	– (135,010)	280,085 119,512
		————	————	————	————	————	————
		140,072 ————	316,224 ————	– ————	78,444 ————	(135,010) ————	399,730 ————
Total assets		605,017 ————	1,756,923 ————	1,945,992 ————	78,444 ————	(135,010) ————	4,251,296 ————
Liabilities
Current liabilities
	Trade and other payables	77,876	109,002	–	–	–	186,878
Borrowings		293,830	32,383	–	(219,838)	–	106,375
Provisions	Current income tax liabilities	4,382 42,177	6,639 25,801	– –	– –	– –	11,021 67,978
Deferred income		150,168	481,834	–	–	–	632,002
		————	————	————	————	————	————
		568,433 ————	655,659 ————	– ————	(219,838) ————	– ————	1,004,254 ————
	Non-current liabilities
Deferred income		12,629	210,730	–	–	–	223,359
Borrowings	Long term provisions	– 4,920	1,262,343 4,319	123,700 –	298,282 –	– –	1,684,325 9,239
Pension liability		–	23,647	–	–	–	23,647
	Other non-current liabilities	–	8,254	–	–	–	8,254
	Deferred tax liabilities	35,286	52,373	–	–	–	87,659
		———— 52,835	———— 1,561,666	———— 123,700	———— 298,282	———— –	———— 2,036,483
Total liabilities		———— 621,268	———— 2,217,325	———— 123,700	———— 78,444	———— –	———— 3,040,737
	Net (liabilities)/assets	———— (16,251)	———— (460,402)	———— 1,822,222	———— –	———— (135,010)	———— 1,210,559
		————	————	————	————	————	————
(1) (2) (3) a) b)	The Micro Focus financial information has been extracted without material adjustment from the unaudited consolidated financial statements of the Micro Focus Group as at 30 April 2014. The Attachmate financial information has been extracted without material adjustment from the historical financial information of the Attachmate Group as at 30 April 2014 as set out in Part VIII (Financial Information of the Attachmate Group) of this document. The adjustments arising as a result of the Merger are set out below: Adjustment for cash transaction costs of US\$183.0m. US\$56.1m has been expensed through the income statement, US\$67.6m is capitalised in goodwill for change of control payments by Attachmate to Wizard and employees and US\$59.3m is capitalised as prepaid facility costs (as a reduction of borrowings). The adjustment to goodwill has been calculated as follows: Consideration Net liabilities acquired Attachmate change of control payment Pro forma goodwill adjustment			Consideration is calculated as 86,595,711 Ordinary Shares issued at a share price of 1,018.0p (being the share price as at 7 October 2014, translated at an exchange rate of £1:US\$1.60845, being the exchange rate as at 7 October 2014, the latest practicable date prior to publication of this document). The Merger will be accounted for			US\$m 1,417,920 460,402 67,600 ––––––––— 1,945,922 ––––––––—
(4)	The financing adjustment represents the drawdown of US\$1.85bn of New Facilities, (being US\$1.275bn Facility B, US\$500m Facility C and US\$75m of the committed US\$150m Revolving Facility), net of US\$59.3m capitalised financing fees, which are to be used for the repayment of the		that may arise on the Merger.	using the acquisition method of accounting. The sum of the consideration, the Attachmate change of control payment and the book value of the net liabilities acquired has been reflected as goodwill. A fair value exercise will be completed post Merger and therefore no account has been taken of any fair value adjustments

		existing facilities of Micro Focus and Attachmate totalling US\$1.59bn at 30 April 2014 and the payment of total estimated transaction costs of US\$123.7m, with the remainder held as cash to be used for the Return of Value (see note 5).
		(5) The adjustment represents the US\$135.0m proposed Return of Value to holders of Existing Ordinary Shares, calculated as 60p per Existing Ordinary Share at an exchange rate of £1:US\$1.60845, based on total Existing Ordinary Shares of 139,896,511.
		(6) The Directors consider net debt to be an important measure and will use this measure to monitor the financial position of the Enlarged Group. The pro forma net indebtedness of the Enlarged Group at 30 April 2014 of approximately US\$1.7bn is calculated as follows:
			US\$'000
		Cash and cash equivalents	119,512
		Short term borrowings (106,375)
		Long term borrowings	(1,684,325) —————
		Net indebtedness	(1,671,188)
		(7) No adjustment has been made to reflect the trading results of the Micro Focus Group or the Attachmate Group since 30 April 2014.	—————
B.9	Profit forecast or estimate	Not applicable; neither the Company nor Attachmate has made a profit forecast or estimate.
B.10	Audit report on the historical financial information – qualifications	Not applicable; the audit reports on the historical financial information contained in, or incorporated by reference into, this document are not qualified.
B.11	Insufficient working capital	Not applicable; Micro Focus is of the opinion that the working capital available to the Enlarged Group is sufficient for its present requirements, that is for at least the next 12 months from the date of publication of this document.

		Section C – Securities
C.1	Type and class of securities being admitted to trading	If the Return of Value is implemented, Ordinary Shares of 10 pence each. If the Return of Value is not implemented, Ordinary Shares of 13 13/24 pence each. The ISIN of the Existing Ordinary Shares is GB00BCZM1F64. The SEDOL is BCZM1F6. If the Return of Value is implemented, the ISIN of the New Ordinary Shares following the Share Capital Consolidation will be GB00BQY7BX88. The SEDOL will be BQY7BX8.
C.2	Currency of the securities issue	The Ordinary Shares are and will be priced in pounds sterling and the Consideration Shares will be priced in pounds sterling.
C.3	Number of issued and fully paid securities and par value	As at 7 October 2014 (being the latest practicable date prior to publication of this document), the Company had in issue 152,767,938 fully paid Ordinary Shares of 13 13/24 pence each in the capital of the Company, of which 12,871,427 were held in treasury. If the Return of Value is implemented prior to Completion, at ROV Admission the fully paid Existing Ordinary Shares will be consolidated into New Ordinary Shares of 10 pence each as part of the Share Capital Consolidation. All New Ordinary Shares on ROV Admission will be fully paid. If Completion occurs, there will be a further 86,595,711 Consideration Shares in issue at Admission, all of which will be fully paid.
C.4	Rights attached to the securities	The Consideration Shares, which are Ordinary Shares, will be issued credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares (which, if the Return of Value is

		approved by Shareholders, will become New Ordinary Shares following the Share Capital Consolidation), including the right to receive all dividends or other distributions declared, made or paid after the date of the allotment and issue of the Consideration Shares, save that the Consideration Shares shall not rank for the Return of Value or the final dividend for the year ended 30 April 2014 as described in paragraph 2 of Part II (Details of the Merger) of this document.
		Subject to any special rights, restrictions or prohibitions as regards voting for the time being attached to any Ordinary Shares (for example, in the case of joint holders of a share, the only vote which will count is the vote of the person whose name is listed before the other voters on the register for the share), Shareholders shall have the right to receive notice of and to attend and vote at general meetings of the Company. Subject to the provisions of the Companies Act, Micro Focus may from time to time declare dividends and make other distributions on the Ordinary Shares. Shareholders are entitled to participate in the assets of the Company attributable to their shares in a winding-up of the Company or other return of capital, but they have no rights of redemption.
		Subject to the provisions of the Companies Act, any equity securities issued by the Company for cash must first be offered to Shareholders in proportion to their holdings of Ordinary Shares. The Companies Act and the Listing Rules allow for the disapplication of pre-emption rights which may be granted by a special resolution of the Shareholders, either generally or specifically, for a maximum period not exceeding five years.
C.5	Restrictions on transfer	The Ordinary Shares are freely transferable and there are no restrictions on transfer in the UK.
C.6	Application for admission to trading on regulated market	As the Merger is classified as a reverse takeover under the Listing Rules, upon Completion the listing on the premium listing segment of the Official List of all of the Ordinary Shares will be cancelled, an application will be made for the immediate readmission of those Ordinary Shares (which if the Return of Value is implemented, will be New Ordinary Shares following the Share Capital Consolidation) and the admission of the Consideration Shares to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective, and that dealings in the Existing Ordinary Shares or New Ordinary Shares and the Consideration Shares will commence at 8.00 a.m. on 3 November 2014.
C.7	Dividend Policy	The Board has in recent periods had a dividend policy to award a level of dividend covered approximately two times on a pre exceptional earnings basis. Following Completion, unless the performance of the Enlarged Group were to fall significantly below the Board's expectations, the Board intends to implement a progressive dividend policy, but to suspend consideration of further returns of value or share buy-backs until such time as the Enlarged Group's target debt level of 2.5x Facility EBITDA is achieved.

Section D – Risks
D.1	Key information on key risks relating to the Company or its industry	For the purposes of this section, references to the "Enlarged Group" shall mean, prior to Completion, the Micro Focus Group and, following Completion, the Micro Focus Group as enlarged by the Merger.
		Key information on the key risks relating to the Enlarged Group or its industry are:
		• The Enlarged Group's success will partly be dependent upon its ability to integrate the Attachmate Group's businesses; there will be numerous challenges associated with the integration and the anticipated benefits arising from growth opportunities, operational efficiencies and synergies between the Micro Focus Group and the Attachmate Group may fail to materialise.
		• Following the acquisition of the Novell business in 2011, the Attachmate Group has experienced a decline in its overall revenue due to a variety of factors. The success of the Enlarged Group will be largely dependent upon the Board successfully managing and reducing that decline and restructuring the Enlarged Group's business in line with the anticipated revenues. Should the Board not be able to do this, or should the restructuring take more time than expected, it is likely to have an adverse impact on the financial position of the Enlarged Group.
		• The Enlarged Group's operating and financial flexibility may be restricted by its level of indebtedness and covenants and it may incur costs if it breaches its covenants.
		• The Enlarged Group depends on its intellectual property. The Enlarged Group's rights to such intellectual property may be challenged or infringed by others or otherwise prove insufficient to protect its business.
		• The business and operating results of any member of the Enlarged Group will be affected by the Enlarged Group's ability to develop new and enhanced products and services that achieve widespread market acceptance and its ability to adapt its business model to keep pace with industry trends.
		• The markets in which the Enlarged Group will operate are competitive and success in those markets depends on a variety of factors. Should the Enlarged Group not be able to compete effectively against its competitors then it is likely to lose market share, which may result in decreased sales and poorer financial performance.
		• Certain software that the Enlarged Group will use in its products is licensed from third parties and, for that reason, may not be available in the future, which has the potential to delay product development and production or result in additional expenses being incurred.
		• The Enlarged Group's success will, in part, be dependent on the strength of its products and the ability to maintain,

			modify and update such products. If such products do not meet the requirements of customers or are not competitive when compared to those of its competitors, the level of new licence sales is likely to decrease and attrition rates of existing maintenance contracts with customers may increase, which may result in a material adverse effect upon the reputation, business and financial operations of the Enlarged Group.
		•	The Enlarged Group will depend on its senior management team, as well as its sales management, product management and development personnel and other key personnel. Should it not attract or retain sufficiently high quality and experienced management and employees, this may adversely affect the performance of the business and financial results of the Enlarged Group.
		•	The Enlarged Group's ability to integrate the Attachmate Group's business will be partially dependent upon its ability to retain and motivate its senior management team.
		•	The Enlarged Group will be dependent upon the effectiveness of its sales force and distribution channels to maintain and grow licence, maintenance and consultancy sales.
		•	The Enlarged Group's strategy may involve the making of further acquisitions to protect or enhance the competitive position of the Enlarged Group. The success of the Enlarged Group may therefore be, in part, dependent upon its management successfully identifying, executing and integrating such acquired businesses.
		•	The Enlarged Group will be exposed to volatility in its financial condition and results of operations due to fluctuations in currency exchange rates.
D.3	Key information on key		Key information on the key risks relating to the Ordinary Shares are:
	risks relating to the securities	•	Any future issues of Ordinary Shares will further dilute the holdings of Shareholders and could adversely affect the market price of the Ordinary Shares.
		•	The share price of publicly traded companies can be highly volatile, including for reasons related to differences between expected and actual operating performance, corporate and strategic actions taken by such companies or their competitors, speculation and general market conditions and regulatory changes.
		•	Micro Focus cannot assure investors that it will make dividend payments in the future.
		•	The Enlarged Group's operating results may fluctuate and, if the Enlarged Group fails to meet the expectations of securities analysts or investors, the market price of Ordinary Shares may decline significantly.

• Substantial sales of Ordinary Shares, or the perception that such sales might occur, whether by Wizard or any of the members of the Enlarged Group's senior management team or otherwise, could depress the market price of the Ordinary Shares. In particular, the Enlarged Group will be unable to predict whether, following the termination of the lock up restrictions put in place in connection with the Merger, substantial amounts of Ordinary Shares will be sold in the open market by those subject to such restrictions.

• Wizard and/or the Wizard shareholders may be able to exercise influence over the Enlarged Group's business following Admission.

	Section E – Offer
E.1	Total net proceeds and estimated total expenses	There are no proceeds relating to the Merger. The estimated total expenses in relation to the Merger and the Return of Value are US\$183.0 million.
E.2a	Reasons for the offer, use of, estimated net amount of the proceeds	Not applicable.
E.3	Terms and conditions of the offer	Not applicable.
E.4	Material interests	Not applicable.
E.5	Selling shareholders and Lock-up agreements	No Shareholders are selling any Ordinary Shares pursuant to an offer to the public.
		Pursuant to the Relationship Agreement, Wizard will not, for a period of 365 days from Admission, offer, allot, issue, lend, mortgage, assign, charge, pledge, sell or contract to sell or issue, issue or sell options in respect of, or otherwise dispose of, directly or indirectly, or announce an offering or issue of, any interest in any Ordinary Shares held by it whether directly or indirectly, or any other securities it holds that are exchangeable for (or convertible to) Ordinary Shares, without the prior written consent of the Board (excluding any Directors appointed by Wizard pursuant to the Relationship Agreement) subject to certain limited exceptions set out in the Relationship Agreement, including the right to transfer Ordinary Shares to a Wizard Shareholder or any associate of such Wizard Shareholder and the right, inter alia, to accept a general offer made in accordance with the Takeover Code by way of a contractual offer or a scheme of arrangement made under the Companies Act.
E.6	Dilution	Upon completion of the Merger the Consideration Shares will represent approximately 40.0 per cent. of the enlarged issued ordinary share capital of the Company if the Return of Value is implemented and approximately 38.2 per cent. of the enlarged issued share capital of the Company if the Return of Value is not implemented.
E.7	Estimated expenses charged to investor	Not applicable; no expenses will be directly charged to the investors by the Company.

RISK FACTORS

An investment in the Ordinary Shares or proceeding with the Merger involves certain risks. Existing Shareholders and prospective investors should carefully consider the risks set forth below and all of the information set forth in this document prior to making any decision on the proposed Resolutions (in the case of Existing Shareholders only) or any investment decision with respect to the Ordinary Shares. The risks described below could have a material adverse effect on the Micro Focus Group's and, following Completion, the Enlarged Group's business, financial condition, results of operations, future prospects and the price of the Ordinary Shares and it is possible that Existing Shareholders could lose all or part of their investment in the Ordinary Shares. In addition, the risks below are not the only risks to which the Enlarged Group may be subject. The Company may be unaware of certain risks or believe certain risks to be immaterial which later prove to be material.

Existing Shareholders and prospective investors should note that the risks relating to the Enlarged Group, its industry and the Ordinary Shares summarised in the section of this document headed "Summary" are those risks that the Directors believe to be the most essential in respect of the Merger and to an assessment by a prospective investor of whether to consider an investment in the Ordinary Shares. However, as the risks which the Enlarged Group faces relate to events and depend on circumstances that may or may not occur in the future, Existing Shareholders and prospective investors should consider not only the information on the key risks summarised in the section of this document headed "Summary" (Section D) but also, among other things, the risks and uncertainties described below.

For the purposes of this section, references to the "Enlarged Group" shall (unless the context shall otherwise require) mean prior to Completion, the Micro Focus Group and, following Completion, the Micro Focus Group as enlarged by the Merger.

PART A: RISKS RELATING TO THE ENLARGED GROUP

The Enlarged Group's success will partly be dependent upon its ability to integrate the Attachmate Group's businesses; there will be numerous challenges associated with the integration and the anticipated benefits arising from growth opportunities, operational efficiencies and synergies between the Micro Focus Group and the Attachmate Group may fail to materialise.

The Enlarged Group may encounter numerous integration challenges and unexpected costs in connection with the Merger. The success of the Merger will depend, in part, on the ability of the Enlarged Group to stabilise the revenue decline in the Attachmate Group, operational efficiencies and synergies from integrating the businesses of the Micro Focus Group and the Attachmate Group. The integration is expected to be a complex, costly and time-consuming process and may adversely affect the business or financial condition of the Enlarged Group if not completed in accordance with the planned timetable. In particular, operational efficiencies and the alignment of best practices throughout the Enlarged Group could take longer than anticipated to achieve or may not occur at all due to a variety of factors, including differences in organisational structure, management and local cultures. In addition, the Enlarged Group's management and resources may be diverted away from its core business activities due to personnel being required to assist in the integration process. There is also a risk that anticipated benefits arising from growth opportunities, operational efficiencies and synergies between the Micro Focus Group and the Attachmate Group may fail to materialise, or they may be materially lower than have been estimated which may have a material adverse effect on the financial condition of the Enlarged Group.

Following the acquisition of the Novell business in 2011, the Attachmate Group has experienced a decline in its overall revenue due to a variety of factors. The success of the Enlarged Group will be largely dependent upon the Board successfully managing and reducing that decline and restructuring the Enlarged Group's business in line with the anticipated revenues. Should the Board not be able to do this, or should the restructuring take more time than expected, it is likely to have an adverse impact on the financial position of the Enlarged Group.

Following the acquisition of the Novell business in 2011, the Attachmate Group has experienced a decline in its overall revenues and has restructured its cost base on several occasions. Whilst the Board believes it can manage and reduce the decline in the Novell business' revenues and restructure the Enlarged Group's cost base in line with the anticipated revenues, there is a risk that the business of Novell, and therefore Attachmate, continues to decline at a greater rate than the Board anticipates which may have an adverse impact on the financial position of the Enlarged Group.

The Enlarged Group's operating and financial flexibility may be restricted by its level of indebtedness and covenants and it may incur costs if it breaches its covenants.

Although, in the Directors' opinion, the Enlarged Group's available liquidity and working capital is sufficient for not less than the next 12 months following the date of this document, like any company with significant borrowings, the Enlarged Group is subject to the risk that, in the longer term, when the Enlarged Group's business prospects and capital requirements are harder to predict, it may be unable to generate sufficient cash flow to service or refinance the indebtedness under the terms of its New Facilities.

The New Facilities will be subject to a net leverage covenant, should 35 per cent. or more of the Revolving Facility be drawn, and other non-financial restrictive covenants including limitations on disposals, dividends and incurring indebtedness that could limit the Enlarged Group's operating and financial flexibility. The Company does not consider that there is a material risk of being in breach of these covenants at least for the period of 12 months from the date of this document. However, to the extent that the Company and its Restricted Subsidiaries are in breach of any of these covenants after 12 months from the date of this document, this could result in the New Facilities becoming immediately repayable. In order to remain in compliance with these covenants and depending on the future performance of its business, the Enlarged Group may be required to take actions that it would not otherwise have chosen or may be unable to pursue opportunities it otherwise would have, such as possible acquisition opportunities. In addition, any future debt financing that the Enlarged Group will obtain may impose additional restrictions on financing and operating activities.

The Enlarged Group's level of indebtedness and the covenants which apply to it may have important consequences on the Enlarged Group's future prospects and financial condition including:

• limiting the Enlarged Group's flexibility in planning for, or reacting to, changes in technology, customer demand, and competitive pressures;
• placing the Enlarged Group at a competitive disadvantage compared to its competitors, who may be less leveraged and restricted by financial covenants than the Enlarged Group;
• causing the Enlarged Group to dedicate a substantial portion of its cash flow from operations to service the indebtedness and causing it as a result to reprioritise the uses to which its capital is put to the potential detriment of the Enlarged Group's business needs, which, depending on the level of the Enlarged Group's borrowings, prevailing interest rates and exchange rates fluctuations, could result in reduced funds being available for expansion, dividend payments and other general corporate purposes;
• increasing the Enlarged Group's vulnerability to both general and industry-specific adverse economic conditions and its flexibility to respond to such conditions;
• increasing the cost of servicing the Enlarged Group's borrowings in the event such covenants are renegotiated; and
• adversely affecting investor perception of the Enlarged Group, leading to a decline in the price of the Company's securities.

The Enlarged Group's access to debt, equity and other financing as a source of funding for its operations and for refinancing maturing debt will be subject to many factors, many of which will be beyond its control. The type, timing and terms of any future financing will depend on the Enlarged Group's cash needs and the then prevailing conditions in the financial markets, including in the corporate bond, term loan and equity markets. There is a risk that these conditions will not be favourable at the time any refinancing is required to be undertaken or that the Enlarged Group will not be able to complete any such refinancing in a timely manner or on favourable terms, if at all.

Although the Directors believe that the Enlarged Group's current financial condition, cash generation and capital reserves are sufficient to enable the Company and its Restricted Subsidiaries to comply with the net leverage covenant under the New Facilities for not less than the next 12 months from the date of this document, deterioration in the Enlarged Group's primary markets created by, for example, continued economic uncertainty or a return to a recessionary economic environment may have a material adverse effect on its earnings, which, in the longer term, could affect the Company's and its Restricted Subsidiaries' ability to comply with the net leverage covenant under its New Facilities. This covenant requires the Company and its Restricted Subsidiaries to maintain a particular leverage ratio. There can be no assurance that the Company and its Restricted Subsidiaries can continue to comply with this covenant in the longer term.

The Enlarged Group will depend on its intellectual property. The Enlarged Group's rights to such intellectual property may be challenged or infringed by others or otherwise prove insufficient to protect its business.

The Enlarged Group will rely on trade secret, trade mark and copyright law to protect its intellectual property. Failure to protect, maintain and enforce the Enlarged Group's existing intellectual property rights or pursue registrations for new intellectual property rights may result in the loss of the Enlarged Group's exclusive right to use technologies which are included in its software products or are otherwise used in its businesses. Most of the Enlarged Group's intellectual property is not covered by a patent or patent application and includes trade secrets and other know-how that is not considered patentable. In addition, some of the Enlarged 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.

It may also be possible for an unauthorised third party to reverse engineer or decompile the Enlarged Group's software products. The Enlarged Group may be unable to detect the unauthorised use of, or take appropriate steps to enforce, its intellectual property rights particularly in certain international markets. Litigation may be required to enforce such intellectual property rights and such litigation can be time consuming and expensive and there may be no certainty as to the outcome of any such legal proceedings once initiated. If the Enlarged Group does not adequately protect its right to use its technologies, it may have to pay others for rights to use their intellectual property, pay damages for infringement or misappropriation or be enjoined from using such intellectual property.

In common with other companies in the software industry, the Enlarged Group will use Open Source software in some of its products. There is uncertainty about the legal effect of some Open Source software licences. By using Open Source software, the Enlarged Group may become obliged to disclose parts of its source code, or may unknowingly be infringing the intellectual property rights of a third party. There is no certainty that the Enlarged Group would be able to obtain licences to use third party intellectual property rights on acceptable terms, or at all.

The position of the Enlarged Group is subject to complex factual and legal issues that may give rise to uncertainty as to the validity, scope and enforceability of a particular intellectual property right. Effective protection for the software of the Enlarged Group may be unavailable or limited or not applied for in countries in which the Enlarged Group will operate. The Enlarged Group will seek to protect its proprietary information and trade secrets that may not be patented or patentable and to secure its rights to copyright and patentable inventions by confidentiality agreements and, if applicable, inventors' rights agreements with its customers, partners and employees. These agreements may be breached and the Enlarged Group may not have adequate remedies for any breach.

There is a risk that the Enlarged Group will inadvertently infringe the intellectual property rights of a third party. If any such claim against any of the Enlarged Group were to be successful, the Enlarged Group may need to re-design the relevant product which would demand further investment in that product, take a licence on the infringing intellectual property within its product which may not always be possible on acceptable commercial terms, or even cease to sell that product, and accept the consequential impact on revenues.

The Enlarged Group could also become subject to litigation in which it is alleged that it has infringed the intellectual property rights of others. The Enlarged Group could commence litigation against others whom it believes are infringing upon its rights. The involvement of the Enlarged Group in intellectual property litigation could result in significant expense to it and could adversely affect the development of sales of the challenged product or intellectual property and divert the efforts of its technical and management personnel, whether or not the litigation is resolved in the favour of the Enlarged Group. In addition the Enlarged Group may not have insurance cover for these types of claim or such insurance cover may not be adequate.

The business and operating results of any member of the Enlarged Group will be affected by its ability to develop new and enhanced products and services that achieve widespread market acceptance and its ability to adapt its business model to keep pace with industry trends.

The success of the Enlarged Group will depend on its ability to respond to the changing needs of its customers by developing or introducing new products, product upgrades and services on a timely basis. If products do not meet their requirements, customers will seek alternative solutions, resulting in the loss of new revenue opportunities and the cancellation of existing contracts. The Enlarged Group will have a large number of products, at differing stages of their life cycle and the extent of investment in each product will need to be managed and prioritised considering the expected future prospects. In particular, there is a risk that insufficient focus on key research and development projects may damage the long-term growth prospects of the Enlarged Group.

New and enhanced product development involves a significant commitment of time and resources and is subject to a number of risks and challenges including:

• managing the length of the development cycle for new products and product enhancements, which may be longer than anticipated;
• adapting to (and anticipating) emerging and evolving industry standards and technological developments by the Enlarged Group's competitors and customers;
• updating the skill sets of employees of the Enlarged Group with respect to technological developments and the demands of customers;
• entering into new or unproven markets of which the Enlarged Group may have limited experience;
• deploying capital to new strategic areas;
• managing new product and service strategies;
• incorporating acquired products and technologies; and
• developing or expanding efficient sales channels.

If the Enlarged Group is not successful in managing these risks and challenges, or if its new products, product upgrades, and services are not technologically competitive or do not achieve market acceptance, the business and operating results of the Enlarged Group may be adversely affected.

The markets in which the Enlarged Group operates are competitive and success in those markets depends on a variety of factors. Should the Enlarged Group not be able to compete effectively against its competitors then it is likely to lose market share which may result in decreased sales and poorer financial performance.

The markets in which the Enlarged Group operate are competitive and are characterised to varying degrees by rapid technological change, evolving industry standards and coalescence around specific technologies, OEMs and vendors. The Enlarged Group faces competition from a number of sources in the market for its software solutions. The Enlarged Group could be adversely affected through declining product sales if it fails to obtain comprehensive information about the markets in which it operates and assess competitive risks so that it fails to understand the competitive landscape adequately and thereby identify where competitive threats exist.

Many of the Enlarged Group's current and potential competitors have or may have greater brand recognition, larger customer bases or greater financial, sales and marketing, distribution, technical and other resources than the Enlarged Group. As a result, the Enlarged Group's competitors may be able to respond more quickly to market demands or to devote greater resources to the development, promotion, sale and deployment of their products than the Enlarged Group. Furthermore, the Enlarged Group's competitors may develop and introduce new products that will be priced lower, are more technologically advanced, provide superior performance or achieve greater market penetration and acceptance than the Enlarged Group's products. In addition, the Enlarged Group's competitors may establish financial and strategic relationships among themselves or with existing or potential customers or other third parties, which may have the effect of reducing the ability of the Enlarged Group to promote and sell its products successfully. Accordingly, it is possible that new competitors or alliances among competitors could emerge and potentially rapidly acquire market share, which may harm the Enlarged Group's future business and growth prospects.

The widespread inclusion of products that perform the same or similar functions as the Enlarged Group's products bundled within other companies' software products, or services similar to those provided by the Enlarged Group, could reduce the perceived need for the Enlarged Group's products and services, or render its products obsolete and unmarketable. Furthermore, even if these incorporated products are inferior or more limited than the Enlarged Group's products, customers may elect to accept the incorporated products rather than purchase the Enlarged Group's products.

In addition, the software industry is currently undergoing consolidation as software companies seek to offer more extensive suites and broader arrays of software products and services, as well as integrated software solutions. This trend could create opportunities for larger companies, such as Google, IBM, HP, Microsoft, Oracle and other large enterprise software companies, to increase their market share through the acquisition of companies that dominate certain lucrative market niches or that have loyal installed customer bases. In doing so, these competitors may be able to reduce prices on software that competes with the Enlarged Group's solutions, in part by leveraging their larger economies of scale. Consolidation also may permit competitors of the Enlarged Group to offer a broader suite of products and more comprehensive bundled solutions, including hardware, software and services. This industry consolidation may result in stronger competitors that are better able to compete as sole-source vendors for customers and could lead to more variability in the Enlarged Group's operating results due to lengthening of the customer evaluation process, increased pricing pressure and/or loss of business to these larger competitors, which may materially and adversely affect the Enlarged Group's business, financial condition, operating results and cash flows.

Certain software that the Enlarged Group will use in its products is licensed from third parties and, for that reason, may not be available in the future, which has the potential to delay product development and production or result in additional expenses being incurred.

In common with all software businesses, the Enlarged Group's products must integrate with a variety of operating systems, software applications, hardware and technologies of third parties. If the Enlarged Group's products are not compatible with such technologies in the future or it becomes prohibitively expensive to ensure compatibility, this could result in the Enlarged Group becoming less competitive. The Enlarged Group may incur significant expenditure and substantial costs associated with redesigning, testing and distributing new products or technology which could negatively impact the financial condition and results of operations for the Enlarged Group.

Some of the Enlarged Group's solutions contain software licensed from third parties which may not be available in the future on terms that are acceptable or allow the Enlarged Group's products to remain competitive. The loss of these licences or the inability to maintain any of them on commercially acceptable terms could delay development of future products or the enhancement of existing products of the Enlarged Group. The Enlarged Group may also choose to pay a premium price for any such licence in certain circumstances where continuity of the licensed product would outweigh the premium cost of the licence. The unavailability of these licences or the necessity of agreeing to commercially unreasonable terms for such licences could materially adversely affect the Enlarged Group's business, financial condition, operating results and cash flow.

The Enlarged Group's customers license and deploy its products across a variety of computer platforms and integrate them with a number of third-party software applications. These combinations increase the Enlarged Group's risk further because, in the event of a system-wide failure, it may be difficult to determine which product is at fault. As a result, the Enlarged Group may be harmed by the failure of another supplier's products.

The Enlarged Group's success will be dependent, in part, on the strength of its products and the ability to maintain, modify and update such products. If such products do not meet the requirements of customers or are not competitive when compared to those of the Enlarged Group's competitors, the level of new licence sales is likely to decrease and attrition rates of existing maintenance contracts with customers may increase which may result in a material adverse effect upon the reputation, business and financial operations of the Enlarged Group.

The success and sales of the Enlarged Group will be dependent on the strength of its products. The Enlarged Group could be adversely affected should its products fail to remain competitive, either through the Enlarged Group's inability to effectively maintain, modify and update its product set or else as a result of its competitors offering a superior product. Further, if the Enlarged Group is unable to respond to changing customer demand, the reputation and image of the business and financial operations of the Enlarged Group may be impaired and customer demand for a particular category of product offering may decrease in the future.

Software produced by the Enlarged Group may contain undetected errors when first introduced or as upgrades or newer versions are released. The Enlarged Group may lose revenue as a result of product defects or errors and suffer damage to its reputation. As a result of any product defect or error the Enlarged Group may incur significant product development, support and warranty costs and be subject to product liability claims. In addition, a product defect or error could also divert the attention of software development and product management personnel and cause significant customer relationship problems or loss of customers, all of which would harm the business in terms of revenue and brand reputation. The contracts for the provision of maintenance services to its customers by the Enlarged Group, may not be renewed resulting in increased attrition rates. This would have an adverse effect on the revenue and profitability for the Enlarged Group.

The Enlarged Group may experience delays in the introduction of new products due to various factors, which may result in lost revenue.

The Enlarged Group may experience delays in the introduction of new products due to various factors including the complexity of software products, the need for extensive testing of software to ensure compatibility of new releases with a wide variety of application software and hardware devices and the need to ensure quality of products prior to extensive distribution. The Enlarged Group's Open Source offerings will depend to a large extent on the efforts of developers whom it does not employ for the creation and modification of Open Source technologies. Delays in developing, completing, or shipping new or enhanced products may result in delayed or reduced revenue for those products and may adversely impact customer acceptance of those offerings.

The Enlarged Group's research and development efforts may not produce successful products or enhancements that result in significant revenue, cost savings or other benefits in the near future, if at all.

Developing products and enhancements is expensive and time consuming, and there is no assurance that such activities will result in significant new marketable products or enhancements to the Enlarged Group's platform, design improvements, cost savings, revenue or other expected benefits. If the Enlarged Group spends significant resources on research and development and is unable to generate an adequate return on its investment, the business and results of operations may be materially and adversely affected.

The Enlarged Group's business may be impacted by the quality of the reputation of the brands and trademarks which it uses to sell its products. Should any of the Enlarged Group's products be discontinued or under-invested going forward, such brands and trademarks may be impaired, which may negatively impact the brand of the Enlarged Group.

In order to maintain and enhance its brands, the Enlarged Group may be required to make further investments that may not be successful. If the Enlarged Group fails to promote and maintain its brands, or if its incurs excessive costs in doing so, its business, financial condition, operating results and cash flows may be adversely affected.

The Enlarged Group may, for the purposes of product portfolio rationalisation and optimisation, discontinue or end the life of particular products. The business of the Enlarged Group could be adversely affected if the Enlarged Group fails to clearly communicate the possible impacts on partners, customers and other interested parties. Customers of products that have been de-emphasised could elect to migrate to other products sooner than would otherwise have been expected. Furthermore, the lack of new development spend with respect to these de-emphasised products may cause them to become obsolete more rapidly, limiting the potential for new licence sales associated with these products. Should the Enlarged Group not rapidly and efficiently evolve its product offering to remain relevant to the application development and modernisation challenges faced by its customer base, the business of the Enlarged Group could suffer.

The Enlarged Group's maintenance revenue could decline.

Maintenance revenues are expected to be an important source of recurring revenue for the Enlarged Group and the Enlarged Group will need to invest significant resources to provide maintenance and support services to its customers. Maintenance revenues generally increase as purchases of licences increase. To date, the Attachmate Group and the Micro Focus Group have generally received higher maintenance revenues when customers enter into new licence and maintenance agreements or license their products for additional processing capacity. Price competition on enterprise transactions can lead to increased discounting for higher levels of supplemental processing capacity; the maintenance fees on a per unit of capacity basis are typically reduced in enterprise licence agreements. In addition, customers are generally entitled to reduced annual maintenance fees for entering into long-term maintenance contracts. Declines in the Enlarged Group's licence bookings, increases in the proportion of long-term maintenance contracts and/or increased discounting could lead to declines in the Enlarged Group's maintenance revenue growth rates. Should customers migrate from systems and applications which the Enlarged Group's products support, use alternatives to the Enlarged Group's products, including maintenance-free solutions such as on demand, or become dissatisfied with the Enlarged Group's maintenance services, increased cancellations could lead to declines in the maintenance revenues of the Enlarged Group. As maintenance revenue will make up a substantial portion of the Enlarged Group's total revenue, any decline in its maintenance revenue could have a material adverse effect on the Enlarged Group's business, financial condition, operating results and cash flows.

The Enlarged Group will depend on its senior management team, as well as its sales management, product management and development personnel and other key personnel. Should the Enlarged Group not attract or retain sufficiently high quality and experienced management and employees, this may adversely affect the performance of the business and financial results of the Enlarged Group.

The Directors believe that the future success of the Enlarged Group will depend upon its ability to attract and retain senior management as well as sales management, product management and development personnel and other key personnel who represent significant assets to the business and provide expertise and experience critical to the implementation of the Enlarged Group's strategy. There is and will be competition for qualified personnel in the Enlarged Group's markets. The number of people with appropriate skills and experience is limited. Certain employees of the Enlarged Group are employed "at will" or on terms that allow termination at short notice. In particular, there can be no certainty that the Enlarged Group will be able to attract and retain adequately skilled personnel in the future.

Failure to develop the skill sets of employees, particularly in sales and product development, may lead to poor performance amongst employees and may hinder the Enlarged Group's sales and development plans. Weak organisational alignment and inadequate incentivisation may lead to poor performance amongst employees of the Enlarged Group. While the Micro Focus Group has launched new initiatives to reskill its sales force, there is no guarantee that such initiatives will result in long-term financial returns or enable the Enlarged Group to retain such skilled personnel.

From time to time, the Enlarged Group may make changes in the organisational structure and compensation plans of the Enlarged Group's sales organisations, which may increase the risk of sales personnel turnover. To the extent that the Enlarged Group experiences turnover within its direct sales force or sales management, there is a risk that the productivity of the sales force would be negatively impacted which could lead to revenue declines. Turnover within the sales force of the Enlarged Group may cause disruption in sales cycles leading to delay or loss of business. In addition, it can take time to implement new sales management plans and to effectively recruit and train new sales representatives.

It is common in the software industry for employees to enter into non-compete and confidentiality agreements with their employers. The Enlarged Group or the employees it hires may be subject to claims related to such prior agreements, to the extent that any of the Enlarged Group hires employees who are subject to such restrictions. Whilst much of the Enlarged Group's proprietary know-how will be documented, there can be no guarantee that members of the technical team who contribute valuable skills and know-how to the business and who may be subject to contractual confidentiality agreements in favour of the Micro Focus Group, will not join the Enlarged Group's competitors or otherwise establish themselves in competition with the Enlarged Group in the future. Failure to retain the services of any of these people may adversely affect the Enlarged Group's business and growth prospects.

The Enlarged Group's ability to integrate the Attachmate Group's business will be partially dependent upon its ability to retain and motivate its senior management team.

Following the Merger, the integration of the businesses of the Micro Focus Group and the Attachmate Group will be led by certain members of the Enlarged Group's senior management. Such Executive Directors and employees have an intricate understanding of the systems, processes, operations and employees of the Micro Focus Group and the Attachmate Group. The knowledge and experience of these individuals, together with their ability to generate and deliver an integration plan, are crucial to the integration process. The Enlarged Group's ability to retain such personnel may be diminished by the increased demands placed on such personnel during the integration process which may affect the morale of key individuals. The Directors believe that the success of the integration will depend, in part, upon the Enlarged Group's ability to retain and motivate such members of staff. Failure to retain or motivate such personnel may delay the integration timetable and hinder or prevent the successful integration of Attachmate's business into the Enlarged Group. In such circumstances the Enlarged Group may be required to procure additional resources to complete integration. A loss of key integration personnel or a decline in the motivation of such employees may adversely affect the business and results of operations of the Enlarged Group.

The Enlarged Group will be dependent upon the effectiveness of its sales force and distribution channels to maintain and grow licence, maintenance and consultancy sales.

The Enlarged Group's product marketing programmes and strategies to exploit channel opportunities may not be effective and may reduce the prospects for additional revenue streams going forward for the Enlarged Group. Whilst a significant proportion of the Enlarged Group's sales will be derived from direct sales channels, the Enlarged Group will depend on packaged application providers, OEMs, systems integrators and resellers to generate a portion of its turnover. Should any channel suffer from a decreased level of effectiveness, then the ability of the Enlarged Group to reach customers and thereby sell products may be impaired and this may harm the business of the Enlarged Group.

The sales and distribution strategy for the Enlarged Group will rely, partly on the ability of systems integrators, OEMs and packaged application providers to develop their respective customer bases and incorporate the software technology of the Enlarged Group into the software and services each offers to its customers. In addition, the Enlarged Group will rely on third parties to sell, distribute and support its software products in territories where the Enlarged Group does not have a physical presence. If the sales and marketing strategy for the Enlarged Group were to change in the future, the Enlarged Group may need to make further investment in sales staff in certain geographic areas. The business, results of operations, financial condition and growth prospects for the Enlarged Group could be materially adversely affected if systems integrators, packaged application providers or resellers:

• renegotiate existing contractual arrangements;
• use a competitor's technology;
• are unable to attract additional customers, maintain existing customer relationships or effectively market the solutions of the Enlarged Group;

• engage in inappropriate practices without the knowledge of the Enlarged Group which could result in penalties and/or reputational damage to the Enlarged Group;

• are unable to deliver the same quality or standard of services, which may require the Enlarged Group to engage with their customers at a direct cost to the Enlarged Group to protect the Enlarged Group's product and services standards and reputation;

• are in conflict with the activities of the Enlarged Group's direct sales and marketing activities;
• experience financial difficulties that may impact their ability to market the Enlarged Group's products and may lead to delays, or even default, in their payment obligations to the Enlarged Group; and/or
• fail to provide accurate and timely reporting of the Enlarged Group's channel sales.

The Enlarged Group's strategy may involve the making of further acquisitions to protect or enhance the competitive position of the Enlarged Group. The success of the Enlarged Group may therefore be, in part, dependent upon the Enlarged Group's management team successfully identifying, executing and integrating such acquired businesses into the Enlarged Group.

While the Directors currently have no plans for further acquisitions during the period of integration and stabilisation following Completion, it is possible that acquisition opportunities may arise which the Board decides to pursue, and in the longer term it is likely that further acquisitions may form part of the Enlarged Group's strategy. The effect of this may be to place additional strain on the Enlarged Group's senior management team and its financial and other resources. Should further acquisitions be made, the Enlarged Group may have difficulty incorporating the acquired technologies or products into its existing product lines and integrating the operations, facilities, personnel and commission plans of the acquired business and may therefore find that acquired companies or assets do not improve the Enlarged Group's financial and strategic position as planned.

The ability of the Enlarged Group to acquire and manage the combination of organic and inorganic growth effectively will require the Enlarged Group to be able to identify and execute appropriate acquisition targets as well as to continue to improve operations, including software development and sales, to continue to improve operational, financial and management systems and to hire, train, motivate and manage new and existing employees. Difficulties in effectively managing this growth could have a material adverse effect on the business prospects, financial condition and results of operations for the Enlarged Group.

The Micro Focus Group and the Attachmate Group have entered into various acquisitions and disposals over recent years and may be subject to or have the benefit of certain residual representations, warranties, indemnities, covenants or other liabilities, obligations or rights. The business, operations and financing of the Enlarged Group may be affected by such transactions.

Each of the Micro Focus Group and the Attachmate Group has entered into various acquisitions and disposals over recent years and may be subject to or have the benefit of certain residual representations, warranties, indemnities, covenants or other liabilities, obligations or rights including change of control provisions which may be triggered by the Merger. The Enlarged Group may become subject to or may take legal proceedings if for any reason any such representations, warranties, indemnities, covenants or other liabilities, obligations or rights become enforceable against or by the Enlarged Group. Any such litigation may be time consuming and expensive and there may be no certainty as to the outcome of any such legal proceedings once initiated. Any such litigation may also divert the attention and time of the management of the Enlarged Group and may adversely affect the financial condition and results of operations for the Enlarged Group. The Enlarged Group may not have insurance cover for these types of claims or such insurance may not be adequate.

The Enlarged Group's ability to maintain customer satisfaction depends in part on the quality of its professional service organisation and technical and other support services, including the quality of the support provided on its behalf by certain partners. Failure to maintain high-quality customer support could have a material adverse effect on the Enlarged Group's business, financial condition and results of operations.

Once products are deployed within the IT environments of the Enlarged Group's customers, these customers depend on the Enlarged Group's technical and other support services, as well as the support of the Enlarged Group's channel partners, to resolve any issues relating to the implementation and maintenance of the Enlarged Group's products. If the Enlarged Group or its channel partners do not effectively assist its customers in deploying its products, succeed in helping its customers quickly resolve post-deployment issues, or provide effective ongoing support, the Enlarged Group's ability to sell additional products to existing customers would be adversely affected and the Enlarged Group's reputation with potential customers could be damaged.

The Attachmate Group uses Open Source technologies in its products. In the (unlikely) event that those technologies are not maintained by third party developers, the Attachmate Group will still be able to use such technologies in its current products but may have to rely on its own Open Source development team to continue to build upon or maintain those technologies and/or replace them with either different Open Source technologies or proprietary versions of the same in future versions of its products.

The Attachmate Group uses Open Source technologies which often rely on a number of largely informal communities of independent Open Source software programmers to develop and enhance the Attachmate Group's enterprise technologies. If these groups of programmers fail to adequately further develop and enhance Open Source technologies, the Attachmate Group would have to rely on other parties to develop and enhance its offerings or the Attachmate Group would need to develop and enhance its offerings with its own resources. The Attachmate Group cannot predict whether further developments and enhancements to these technologies would be available from reliable alternative sources. In either event, the Enlarged Group's development expenses could be increased and its technology release and upgrade schedules could be delayed. Moreover, if third-party software programmers fail to adequately further develop and enhance Open Source technologies, the development and adoption of these technologies could be stifled and the Enlarged Group's offerings could become less competitive. Delays in developing, completing or delivering new or enhanced offerings could result in delayed or reduced revenue for those offerings and could also adversely affect customer acceptance of those offerings.

Moreover, different groups of Open Source software programmers compete with one another to develop new technology. Typically, the technology developed by one group will become more widely used than that developed by others. If the Enlarged Group acquires, or adopts, new technology and incorporates it into its offerings but competing technology becomes more widely used or accepted, the market appeal of the Enlarged Group's offerings may be reduced and that could harm the Enlarged Group's reputation, diminish its brands and adversely affect the Enlarged Group's business, financial condition, operating results and cash flows.

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

The performance of the Enlarged Group may be affected by changes in economic or market conditions. The business of the Enlarged Group may be affected by general risks faced by all companies operating in the same markets as the Enlarged Group. The growth and development of the markets in which the Enlarged Group will operate depend on numerous factors many of which are beyond its control and the exact effect of which cannot accurately be predicted. Such factors include general economic and political activities including the extent of any governmental regulation, legislation and taxation. The Enlarged Group could be adversely affected by changes in economic, political, administrative, taxation or other regulatory factors in any jurisdictions in which the Enlarged Group may operate. Adverse economic conditions worldwide may result in decreased demand and increased price competition for the products of the Enlarged Group which could harm the business prospects, financial condition and result of operations for the Enlarged Group.

The Enlarged Group will sell and distribute its software products around the globe and, as a result, is subject to associated risks and uncertainties.

The Enlarged Group will sell its software products, directly or indirectly, around the world. As a result, the business of the Enlarged Group will be subject to various risks inherent in international operations, including (but not limited to) intellectual property laws, uncertainty regarding liability, tariffs and other trade barriers, foreign currency exchange risk, difficulties in staffing and managing foreign offices (including those experienced by its resellers), different payment cycles, different local accounting practices, problems in collecting accounts receivable, political instability and potentially differing tax laws and practices. Any of the foregoing could adversely affect the financial condition, results of operations or business strategy of the Enlarged Group.

The Enlarged Group will be exposed to volatility in its financial condition and results of operations due to fluctuations in currency exchange rates.

As the Enlarged Group will operate in various countries, it will be exposed to foreign currency rate fluctuations. The Enlarged Group will have significant businesses in the United Kingdom, Europe and Japan, which generate turnover and have associated operating costs in currencies other than its reporting currency, the US dollar. The Enlarged Group will be exposed to currency transaction risks when its subsidiaries enter into transactions using a currency other than their functional currency. This mismatch will result in gains or losses with respect to movements in foreign exchange rates and may be material. The Enlarged Group may enter into financial transactions to hedge a portion of these currency exposures. However, hedging transactions may not be available at a reasonable cost or may prove ineffective in reducing these exposures. Any losses incurred in connection with any hedging transactions could adversely affect the operating results of the Enlarged Group. In addition, fluctuations in the exchange rate between the Pound Sterling, Euro, Yen, Australian Dollar, Indian Rupee and other currencies in which the Enlarged Group will transact, relative to the US dollar may cause fluctuations in reported financial results that may not necessarily relate to the financial results of operations for the Enlarged Group.

The Enlarged Group's business may be subject to credit risks arising from its use of financial instruments and/or the providing of credit to customers.

Financial instruments may potentially expose the Enlarged Group to a concentration of credit risk consisting primarily of cash equivalents and accounts receivable. Cash equivalents are deposited with high credit quality financial institutions on short term deposits. Deposits placed at variable rates expose the Enlarged Group to cash flow interest rate risks. Each of the Micro Focus Group and the Attachmate Group provide credit to customers in the normal course of business and there is a risk that the Enlarged Group may not always recover the full amount payable by customers.

The Enlarged Group's sales to government clients subject it to risks, including litigation, early termination, renegotiation, audits, investigations, sanctions and penalties.

Some of the Enlarged Group's total revenue is associated with multi-year contracts signed with the US federal government and other US state and local government agencies. These contracts are generally subject to annual fiscal funding approval, may be renegotiated or terminated at the discretion of the government, or all of these. Termination, renegotiation or failure to obtain funding approval for a contract could adversely affect the sales, revenue and reputation of the Enlarged Group. Additionally, the Enlarged Group's government contracts are generally subject to audits and investigations, which could result in various civil and criminal actions and penalties, and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from doing business with the government, which could materially adversely affect the Enlarged Group's business, financial condition, operating results and cash flow.

The IT environments of the Enlarged Group's and the Enlarged Group's customers may be subject to hacking or other cybersecurity threats, which may harm customer relationships and the market perception of the effectiveness of the Enlarged Group's products.

There is a risk of actual or perceived breaches of the Enlarged Group's and the Enlarged Group's customers' IT security systems resulting in unauthorised access to data centres or other parts of IT environments containing confidential information. Regardless of whether a breach (whether actual or perceived) is attributable to the Enlarged Group's products, such a breach may cause contractual disputes and negatively affect the market perception of the effectiveness of the Enlarged Group's products and reputation. Alleviating any of these problems could adversely affect the business, financial condition, operating results and cash flow of the Enlarged Group by: (i) requiring significant expenditures of capital and diversion of resources from development efforts; (ii) resulting in the Enlarged Group losing existing or potential customers; and/or (iii) resulting in the Enlarged Group being subject to legal action by customers or government authorities.

The Enlarged Group's business and products are dependent on the availability, integrity and security of its IT systems.

The Enlarged Group's IT systems and related software applications are integral to its business and the Enlarged Group relies on controls and systems to ensure data integrity of critical business information and proper operation of the Enlarged Group's systems and networks. Lack of data integrity could create inaccuracies and hinder the Enlarged Group's ability to perform meaningful business analysis and make informed business decisions. Despite network security, disaster recovery and systems management measures in place, the Enlarged Group may encounter unexpected general systems outages or failures that may affect its ability to conduct research and development, provide maintenance and support of its products, manage the Enlarged Group's contractual arrangements, accurately and efficiently maintain the Enlarged Group's books and records, record its transactions, provide critical information to its management and prepare its financial statements. Additionally, these unexpected systems outages or failures may require additional personnel and financial resources, disrupt its business or cause delays in the reporting of its financial results. The Enlarged Group may also be required to modify, enhance, upgrade or implement new systems, procedures and controls to reflect changes in its business or technological advancements, which could cause it to incur additional costs and require additional management attention, placing burdens on the Enlarged Group's internal resources. The Attachmate Group also outsources certain IT-related functions to third parties that are responsible for maintaining their own network security, disaster recovery and systems management procedures. If the Attachmate Group's third party IT vendors fail to manage their IT systems and related software applications effectively, it could adversely affect the Enlarged Group's business operations, operating results and cash flows.

Failure to adequately protect personal information could have a material adverse effect on the Enlarged Group's business.

A wide variety of provincial, state, national, and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data. These data protection and privacy-related laws and regulations are evolving and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions. Customers rely on a number of the Enlarged Group's products such as email, communications and identify management solutions, among others, to store and access personal information. The Enlarged Group's failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement action against the Enlarged Group, including fines, imprisonment of company officials and public censure, claims for damages by customers and other affected individuals, damage to the Enlarged Group's reputation and loss of goodwill (both in relation to existing customers and prospective customers), any of which could have a material adverse effect on the Enlarged Group's operations, financial performance and business. Even the perception of privacy concerns, whether or not valid, may harm the Enlarged Group's reputation and inhibit adoption of its products by current and future customers.

The Enlarged Group may face operational risks that may not be covered by insurance policies.

The Enlarged Group will have insurance coverage for a variety of areas. However, these insurance policies may not fully cover the consequences of damage to persons or property, business interruptions, failure of counterparties to conform to the terms of an agreement or other liabilities incurred in the Enlarged Group's operations. If a significant claim or number of claims is made on the Enlarged Group's policies, the Enlarged Group may be subject to significant increases in premiums or even find it difficult, prohibitively expensive or even impossible to obtain sufficient levels of coverage. If the Enlarged Group's insurance coverage is not sufficient for any reason, the Enlarged Group could incur significant out of pocket expenses, which could have a material adverse effect on its business, results of operations and financial condition.

The Enlarged Group may become obligated to remunerate employees and former employees on the basis of recent interpretations of the Working Time Regulations relating to holiday pay.

A recent case before the European Court of Justice (referred by the Leicester Employment Tribunal), dealing with the issue of calculating employee holiday pay, has determined that an employee's holiday pay should be calculated not only on the basis of her or his salary, but should also include any element of remuneration "intrinsically linked" to the tasks required under the employee's contract, including commission payments. Neither Micro Focus nor Attachmate currently includes commission payments in its holiday pay calculations in the UK and so the Attachmate and Micro Focus UK entities (and potentially other Attachmate and Micro Focus entities based in other European jurisdictions) are at risk of deductions from wages claims from current and, potentially, former employees. In addition, this could have implications for the salary costs for the Enlarged Group going forward should commission payments be taken into consideration in the calculation of holiday pay.

The Enlarged Group may be involved in legal and other proceedings from time to time, and as a result may face damage to its reputation or legal liability.

In the ordinary course of business the Enlarged Group may be involved in lawsuits, arbitrations and other formal and informal dispute resolution procedures in a variety of jurisdictions, the outcomes of which will determine its rights and obligations under insurance and other contractual agreements or under tort laws or other legal obligations. From time to time, the Enlarged Group may institute, or be named as a defendant in, legal proceedings, and it may be a claimant or respondent in arbitration proceedings. The Enlarged Group may also, from time to time, be involved in investigations and regulatory proceedings, certain of which could result in adverse judgments, settlements, fines and other outcomes. The Enlarged Group could also be subject to litigation risks arising from potential employee misconduct, including non-compliance with internal policies and procedures. The Enlarged Group may settle litigation or regulatory proceedings prior to a final judgment or determination of liability. The Enlarged Group may do so to avoid the cost, management efforts or negative business, regulatory or reputational consequences of continuing to contest liability, even when it believes it has valid defences to liability. The Enlarged Group may also do so when the potential consequences of failing to prevail would be disproportionate to the costs of settlement. Furthermore, the Enlarged Group may, for similar reasons, reimburse counterparties for their losses even in situations in which it does not believe that it is legally compelled to do so. The financial impact of legal risks might be considerable but may be hard or impossible to estimate and to quantify, so that amounts eventually paid may exceed the amount of reserves set aside to cover such risks.

In addition, while the Enlarged Group will seek to ensure where possible that the governing law clause of each contract is explicitly and validly set out in the terms of the contract, and identifies a jurisdiction that is acceptable to and appropriate in respect of the Enlarged Group, it is possible that this legal framework may be deemed invalid or inappropriate by courts in the relevant jurisdiction.

Substantial legal liability could materially adversely affect the Enlarged Group's business, financial condition and results of operations, and could cause significant reputational harm.

Changes in tax law, changes in the Attachmate Group's effective tax rate or exposure to additional income tax liabilities could affect the Enlarged Group's profitability and financial condition.

The Attachmate Group carries out its business operations through entities in the United States and multiple foreign jurisdictions. As such, the Attachmate Group is required to file corporate income tax returns that are subject to United States Federal State(s) and foreign tax laws. The United States Federal State(s) and foreign tax liabilities are determined, in part, by the amount of operating profit generated in these different taxing jurisdictions. The Attachmate Group's effective tax rate, earnings and operating cash flows could be adversely affected by changes in the mix of operating profits generated in countries with higher statutory tax rates as well as by the positioning of the Enlarged Group's cash balances globally. The Attachmate Group's effective tax rate is also impacted by the portion of the Enlarged Group's foreign earnings in jurisdictions having different corporate tax rates than the United States when the Attachmate Group deems such earnings to be indefinitely reinvested in such jurisdictions. If the Attachmate Group were to determine that these foreign earnings were not indefinitely reinvested, the Attachmate Group's effective tax rate, earnings and operating cash flows could be adversely impacted. Similarly, if statutory tax rates or tax bases were to increase or if changes in tax laws, regulations or interpretations were made that impact the Enlarged Group directly, its effective tax rate, earnings and operating cash flows could be adversely impacted. The Attachmate Group is also required to evaluate the realisability of its deferred tax assets. This evaluation requires that the Attachmate Group's management assesses the positive and negative evidence regarding sources of future taxable income. If management's assessment regarding the realisability of the Enlarged Group's deferred tax assets changes, the Attachmate Group will be required to increase its valuation allowance, which will negatively impact its effective tax rate and earnings. The Attachmate Group is also subject to routine corporate income tax audits in multiple jurisdictions. The Attachmate Group's provision for income taxes includes amounts intended to satisfy income tax assessments that may result from the examination of the Enlarged Group's corporate tax returns that have been filed in these jurisdictions. The amounts ultimately paid upon resolution of these examinations could be materially different from the amounts included in the provision for income taxes and result in additional tax expense and operating cash outflows.

The tax treatment of the Attachmate Group is, among other things, dependent on the past legal structure of the Attachmate Group being respected by the tax authorities in the various jurisdictions in which the Attachmate Group conducts its business.

The Attachmate Group has sought to structure its affairs in a tax efficient manner and to align its corporate structure and tax strategy to that which would be expected of a major US group, managed from the United States, with significant operations in the major trading nations. Tax liabilities may arise if the Attachmate Group's organisational or operational structure is viewed in an unfavourable light by any taxation authority in any jurisdiction in which the Attachmate Group conducts its business. The Enlarged Group's financial condition and results of operations could be adversely affected should actual tax liabilities exceed any provisions made in its accounts for the same.

PART B: RISKS RELATING TO THE MERGER

Completion of the Merger is subject to a number of conditions which may not be satisfied or waived.

The implementation of the Merger is subject to the satisfaction (or waiver, where applicable) of a number of conditions, including:

• approval of the Merger by Existing Shareholders at the General Meeting;
• the expiry of any applicable waiting period under the Hart-Scott-Rodino Act and the receipt (or deemed receipt) of merger control clearances in Germany and Austria;
• consummation of the debt financing contemplated by the Commitment Letter; and
• Admission becoming effective.

There is no guarantee that these (or other) conditions will be satisfied (or waived, if applicable), in which case the Merger will not be completed. The conditions are set out in more detail in Part II (Details of the Merger) of this document.

If Completion does not occur, the Micro Focus Group will experience a delay in the achievement of its strategic objectives and would, subject to certain conditions set out more fully in paragraph 7 of Part II (Details of the Merger) of this document, nonetheless be obliged to pay approximately £11.8 million of costs (primarily due diligence, debt arrangement fees and advisory fees) incurred in connection with the Merger.

Application for Admission will be made close to Completion. If Completion is delayed, the application for Admission will be delayed. Admission is subject to the approval (subject to satisfaction of any conditions which such approval is expressed) of the UK Listing Authority and Admission will become effective as soon as a dealing notice has been issued by the UK Listing Authority and the London Stock Exchange has acknowledged that the Ordinary Shares will be re-admitted or admitted (in the case of the Consideration Shares) to trading. There can be no guarantee that any conditions to which Admission is subject will be met or the UK Listing Authority will issue a dealing notice. See the Expected Timetable of Principal Events on page 41 of this document for further information on the expected dates of these events.

The Company will not have recourse against, or otherwise be able to recover from Wizard in respect of any breach of warranties under the Merger Agreement following Completion.

The Company will not have recourse against, or otherwise be able to recover from Wizard, in respect of any losses which it may suffer in respect of a breach of warranties following Completion. If claims arose but losses could not be recovered, this could adversely affect the Enlarged Group's business, results of operations, financial condition and prospects.

The Enlarged Group may require additional capital to support its growth, and this capital might not be available.

The Board intends to make investments to support the business growth of the Enlarged Group and may in the longer term require additional funds to respond to business challenges, including the need to develop new technologies, penetrate new markets or acquire complementary businesses and technologies. In particular, the Enlarged Group will need to continue to invest significant resources in research and development in order to enhance the Enlarged Group's existing products and services and introduce new high quality products and services. Insufficient focus and investment on key research and development projects may damage the long-term prospects of the Enlarged Group.

The Merger may have a destabilising effect on employees and customers of the Enlarged Group.

Uncertainty about the effect of the Merger on employees, customers and partners of the Micro Focus Group and the Attachmate Group may have an adverse effect on the respective groups and, consequently, on the Enlarged Group after Completion. Although the Micro Focus Group and the Attachmate Group intend to take steps to reduce any adverse effects, these uncertainties may impair their ability to attract, retain and motivate key personnel for a period of time after Completion, and could cause their customers, suppliers and others that deal with them to seek to change existing business relationships. If, despite retention efforts, key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain, the respective businesses and therefore the Enlarged Group could be seriously harmed.

The Enlarged Group will be subject to the laws and regulations of a number of countries covering a wide variety of areas affecting international transactions.

The Enlarged Group will be subject to the laws and regulations of a number of countries covering a wide variety of areas affecting international transactions, including export controls, anti-corruption legislation and data protection requirements. Extra time and costs may need to be spent by the Enlarged Group to ensure that local laws and regulations are complied with.

The Enlarged Group will be unable to predict future changes in laws or policies nor future changes in the ultimate cost of compliance with such laws and policies. The Enlarged Group may be adversely affected as a result of new or revised legislation or regulations or by changes in the interpretation or enforcement of existing laws and regulations.

Existing Shareholders will own a smaller percentage of the Enlarged Group than they currently own of Micro Focus.

Following Completion of the Merger, Existing Shareholders will own a smaller percentage of the Enlarged Group than they currently own of Micro Focus. Based on the number of Ordinary Shares in issue as at the close of business on 7 October 2014 (being the last practicable date prior to the publication of this document) and assuming there are no other issues of Ordinary Shares, Existing Shareholders will own approximately 60.0 per cent. of the Ordinary Shares if the Return of Value is implemented and approximately 61.8 per cent. of the Ordinary Shares if the Return of Value is not implemented. As a consequence, voting power which can be exercised and the influence which may be exerted by the Existing Shareholders in respect of the Enlarged Group will be reduced.

PART C: RISKS RELATING TO INVESTMENT IN SHARES

Any future issues of Ordinary Shares will further dilute the holdings of Shareholders and could adversely affect the market price of the Ordinary Shares.

Other than pursuant to the Merger, Micro Focus has no current plans for further issues of Ordinary Shares apart from possible issues in relation to employee share plans. However, it is possible that Micro Focus may decide to offer additional shares in the future either to raise capital or for other purposes. If Shareholders did not take up such an offer of Ordinary Shares or are not eligible to participate in such offering, their proportionate ownership and voting interests in Micro Focus will be reduced and the percentage that their Ordinary Shares will represent of the total share capital of Micro Focus will be reduced accordingly. An additional offering, or significant sales of shares by major shareholders of the Enlarged Group, could have a material adverse effect on the market price of the Ordinary Shares as a whole.

The share price of publicly traded companies can be highly volatile, including for reasons related to differences between expected and actual operating performance, corporate and strategic actions taken by such companies or their competitors, speculation and general market conditions and regulatory changes.

Shareholders should be aware that, following Admission, the value of an investment in the Ordinary Shares may decrease abruptly which may prevent Shareholders from being able to sell their Ordinary Shares at or above the price they paid for them. The price of the Ordinary Shares may fall in response to market appraisal of the Enlarged Group's strategy, operating results, financial position and/or prospects, or in response to regulatory changes affecting its operations. In addition, stock markets have, from time to time, experienced significant price and volume fluctuations which have affected the market price of securities. A number of factors, some of which are outside of the Enlarged Group's control, may impact the price and performance of the Ordinary Shares, including:

• differences between its expected and actual operating performance as well as between the expected and actual performance of its competitors or of the software industry generally;
• the publication of research reports by analysts or failure to meet analysts' forecasts;
• prevailing economic conditions and conditions or trends in the market generally;
• speculation, whether or not well founded, about possible changes in its management team;
• strategic actions by it or its competitors, such as mergers, acquisitions, divestitures, partnerships and restructurings;
• negative developments in international trade and commerce;
• regulatory and tax changes;
• political upheaval or other political events affecting the international capital markets; and
• acts of God or force majeure.

Micro Focus cannot assure investors that it will make dividend payments in the future.

The dividend payments to Shareholders will depend upon a number of factors, including the results of operations, cashflows and financial position, contractual restrictions and other factors considered relevant by the Board. In addition, under English law, any payment of dividends would be subject to the Companies Act, which requires that all dividends be recommended by the Board and approved by Shareholders. Moreover, under English law, Micro Focus may pay dividends on the Ordinary Shares only out of profits available for distribution determined in accordance with the Companies Act. Although the Board intends to continue paying dividends to Shareholders, there is no assurance that Micro Focus will declare and pay, or have the ability to declare and pay, any dividends on the Ordinary Shares in the future.

The Enlarged Group's operating results may fluctuate and, if the Enlarged Group fails to meet the expectations of securities analysts or investors, the market price of Ordinary Shares may decline significantly.

The operating results of the Enlarged Group may fluctuate due to a variety of factors, many of which are outside the control of the Enlarged Group. These factors include:

• the level of expenditure committed to application development and deployment by information technology organisations;
• the degree to which organisations adopt web-enabled services;
• the rate at which organisations modernise mainframe applications;
• the degree of competition faced by the Enlarged Group;
• foreign currency exchange rate movements;
• growth in the information technology services market, general economic and business conditions, particularly in Europe and the United States;
• changes in technology and competition; and
• the ability of the Enlarged Group to attract and retain personnel.

As a result, comparisons of the historic operating results of the Micro Focus Group and the Attachmate Group may not provide a good indication of the future performance of the Enlarged Group. Moreover, if the operating results of the Enlarged Group fall below the expectations of securities analysts or investors, the market price of Ordinary Shares may decline significantly.

Substantial sales of Ordinary Shares, or the perception that such sales might occur, whether by Wizard (directly or indirectly, through the sale of equity interests in Wizard) or any of the members of the Enlarged Group's senior management team or otherwise, could depress the market price of the Ordinary Shares. In particular, the Enlarged Group will be unable to predict whether, following the termination of the lock up restrictions put in place in connection with the Merger, substantial amounts of Ordinary Shares will be sold in the open market by those subject to such restrictions.

Sales of Ordinary Shares by either Wizard or any of the members of the Enlarged Group's senior management team may affect the confidence of the market in the Ordinary Shares and cause the market price of the Ordinary Shares to fall. Subject to certain limited exceptions set out in the Relationship Agreement, including the right to transfer Ordinary Shares to a Wizard Shareholder or any associate of such Wizard Shareholder and the right, inter alia, to accept a general offer made in accordance with the Takeover Code by way of a contractual offer or a scheme of arrangement made under the Companies Act, Wizard has agreed to refrain from selling any of its Ordinary Shares for a period of 365 days following Admission. On the expiry of this period, Wizard will be free (subject to applicable law) to sell the Ordinary Shares held by it.

The Board is unable to predict whether, following the termination of the lock up restrictions put in place in connection with the Merger, a substantial number of Ordinary Shares will be sold in the open market by those subject to such restrictions. Any sales of a substantial number of Ordinary Shares in the public market by Wizard, or the perception that such sales might occur, could result in a material adverse effect on the market price of the Ordinary Shares. This may make it more difficult for Existing Shareholders to sell Ordinary Shares at a time and price that they deem appropriate, and could also impede the Company's ability to issue equity securities in the future.

Wizard may be able to exercise influence over the Enlarged Group's business following Admission.

At Admission, Wizard will hold approximately 40.0 per cent. of the enlarged issued share capital of the Company if the Return of Value is implemented and approximately 38.2 per cent. of the enlarged issued share capital of the Company if the Return of Value is not implemented. Whilst the Company will on Completion enter into the Relationship Agreement with Wizard to ensure that the Enlarged Group is capable of carrying on its business independently of Wizard, by virtue of the level of its shareholding, Wizard may be able to influence certain matters requiring approval of Shareholders, such as the election of directors and approval of certain business decisions. Wizard will have certain rights in respect of the Company under the Relationship Agreement, including, amongst others, the right to appoint two Non-Executive Directors for so long as Wizard, the Wizard Shareholders and their respective associates hold, in aggregate, 30 per cent. of the voting rights in Micro Focus and one Non-Executive Director for so long as Wizard, the Wizard Shareholders and their respective associates hold, in aggregate 15 per cent. of the voting rights in Micro Focus. The willingness of a third party to make a takeover offer for the Company is also likely to be influenced by the willingness of Wizard and the Wizard Shareholders to accept such an offer. The interests of Wizard and the Wizard Shareholders may differ or conflict with the interests of other investors. This could delay, deter or prevent acts that other investors may favour or which are or may be beneficial to the Company and have a material adverse effect on the market price of the Ordinary Shares. Furthermore, for so long as Wizard is interested in shares carrying 30 per cent. or more of the Company's voting share capital, if a third party were to acquire more than 50 per cent. of the voting rights of Wizard, the Takeover Panel may, in certain circumstances, require such third party to make a mandatory offer for the Company under Rule 9 of the Takeover Code.

IMPORTANT INFORMATION

Presentation of financial information

The Company publishes its financial statements in US dollars ("US\$" or "dollars"). The abbreviations "US\$ million" and "US\$m" represent millions of dollars. The abbreviations "£ million" and "£m" represent millions of pounds sterling ("£" or "sterling") and references to "penny", "pence" and "p" represent pence in the UK.

The financial information presented in a number of tables in this document has been rounded to the nearest whole number or the nearest decimal place. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this document reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers. Differences between figures set out in the text of this document are based on the differences between the relevant figures rounded to the nearest whole number or nearest decimal place. Such deltas may not conform exactly to the relevant figures if the relevant calculations were based on the underlying information prior to rounding.

In this document, unless otherwise stated, US dollar amounts have been converted into pounds sterling and pounds sterling amounts into US dollars using the WM/Reuters closing spot exchange rates on 7 October 2014, being the latest practicable date prior to the publication of this document, as follows: US\$1.00: £0.6217 and £1.00: US\$1.6085.

Sources of information

Financial information relating to the Micro Focus Group, unless otherwise stated, has been extracted from the audited consolidated historical financial information of the Micro Focus Group for the financial years ended 30 April 2012, 2013 and 2014, which are incorporated by reference in Part XV (Documents Incorporated by Reference) of this document. Where information has been extracted from the audited consolidated financial statements for the financial years ended 30 April 2012, 2013 and 2014, the information is audited unless otherwise stated.

Financial information relating to the Attachmate Group, unless otherwise stated, has been extracted from the audited consolidated historical financial information of the Attachmate Group for the one month period ended 30 April 2014 and the financial years ended 31 March 2012, 2013 and 2014 and the unaudited consolidated historical financial information of the Attachmate Group for the one month period ended 30 April 2013, which are set out in Part VIII (Financial Information of the Attachmate Group) of this document. Where information has been extracted from the audited consolidated historical financial information for the one month period ended 30 April 2014 or the financial years ended 31 March 2012, 2013 and 2014, the information is audited unless otherwise stated.

Certain terms used in this document, including all capitalised terms and certain technical and other terms, are defined and explained in Part XIV (Glossary and Definitions) of this document.

International Financial Reporting Standards

Unless otherwise stated, financial information of the Micro Focus Group and the Attachmate Group in this document has been prepared in accordance with IFRS and related interpretations, as adopted for use within the European Union.

Credit ratings

Paragraph 21 of Part XIII (Additional Information) of this document refers to credit ratings from Standard & Poor's and Moody's, each of which is a credit rating agency established and operating in the European Community. On 31 October 2011, both Standard & Poor's and Moody's were registered in accordance with Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies.

Forward-looking statements

This document includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not facts. They appear in a number of places throughout this document and include statements regarding the Directors' intentions, beliefs or current expectations concerning, amongst other things, the Micro Focus Group's, the Attachmate Group's and following Completion, the Enlarged Group's results of operations, financial condition, liquidity, prospects, growth, strategies and the industries in which the Micro Focus Group, the Attachmate Group and following Completion, the Enlarged Group operate. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation: conditions in the markets; the market position of each of the Micro Focus Group, the Attachmate Group and following Completion, the Enlarged Group; earnings, financial position, cash flows, return on capital and operating margins of the Micro Focus Group, the Attachmate Group and following Completion, the Enlarged Group; anticipated investments and capital expenditures of the Micro Focus Group, the Attachmate Group and following Completion, the Enlarged Group; changing business or other market conditions; and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this document based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Subject to any requirement under the Listing Rules, Prospectus Rules, the Disclosure and Transparency Rules or other applicable legislation or regulation, neither the Company nor Numis undertakes any obligation to update or revise any forwardlooking statements, whether as a result of new information, future events or otherwise. Investors should not place undue reliance on forward looking statements, which speak only as of the date of this document.

Notice to all investors

Investors should rely only on the information in this document and information incorporated herein by reference. No person has been authorised to give any information or to make any representations other than those contained in this document in connection with the Merger, Admission or the Return of Value and, if given or made, such information or representations must not be relied upon as having been authorised by or on behalf of the Company, the Directors, or Numis. No representation or warranty, express or implied, is made by Numis or any selling agent as to the accuracy or completeness of such information, and nothing contained in this document is, or shall be relied upon as, a promise or representation by Numis or any selling agent as to the past, present or future. Without prejudice to any obligation of the Company to publish a supplementary prospectus pursuant to section 87G of FSMA and PR 3.4.1 of the Prospectus Rules, neither the delivery of this document nor any subscription or sale made under this document shall, under any circumstances, create any implication that there has been no change in the business or affairs of the Micro Focus Group, the Attachmate Group and/or the Enlarged Group since the date hereof or that the information contained herein is correct as of any time subsequent to its date.

The contents of this document are not to be construed as legal, business or tax advice. Each prospective investor should consult his or her own lawyer, financial adviser or tax adviser for legal, financial or tax advice in relation to any subscription, purchase or proposed subscription or purchase of Ordinary Shares.

Apart from the responsibilities and liabilities, if any, which may be imposed on Numis by FSMA or the regulatory regime established thereunder or any other applicable regulatory regime, Numis accepts no responsibility whatsoever for the contents of this document or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Micro Focus Group, the Attachmate Group, the Enlarged Group, the Merger, Admission or the Return of Value. Numis disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of such document or any such statement.

All times referred to in this document, unless otherwise stated, are references to London time.

Documents

Any Shareholder, person with information rights or other person to whom this document is sent may request a copy of each of the documents incorporated by reference into this document as set out in Part XV (Documents Incorporated by Reference) of this document. Hard copies will only be sent where valid requests are received from such persons.

Requests for copies of any such document should be directed to the following address or by telephoning on 01635 32646 (or +44 1635 32646 if telephoning from outside the United Kingdom):

Micro Focus International plc The Lawn 22-30 Old Bath Road Newbury Berkshire RG14 1QN

All valid requests will be dealt with as soon as possible and hard copies mailed by no later than two Business Days following such request.

Website

The irrevocable undertakings, details of which are set out in paragraph 6.13 of Part XIII (Additional Information), are available in "read-only" format and can be printed from the Company's website at the following address: http://investorsmicrofocus.com. These documents, the Commitment Letter and the latest draft of the New Facilities Agreement, are also available as provided in paragraph 22 of Part XIII (Additional Information) of this document.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Each of the times and dates in the table below is indicative only and may be subject to change. Please refer to the notes for this timetable set out below.(1)

	2014
Announcement of the Merger and the Return of Value	15 September
Prospectus published, Forms of Proxy and Forms of Election despatched	8 October
Latest time and date for receipt of Forms of Proxy or electronic appointments	3.00 p.m. on 23 October
Micro Focus General Meeting	3.00 p.m. on 27 October
Election Deadline, latest time and date for receipt of Forms of Election or TTE Instructions from CREST holders in relation to the Options	4.30 p.m. on 31 October(2)
Latest time and date for dealings in Existing Ordinary Shares. Ordinary Share register closed and Existing Ordinary Shares disabled in CREST	4.30 p.m. on 31 October(2)
Record Time for the ROV Entitlement and the Share Capital Consolidation	6.00 p.m. on 31 October(2)
Completion of the Merger	3 November
Cancellation of trading of Existing Ordinary Shares. Consideration Shares issued and New Ordinary Shares admitted to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. Dealings commence in New Ordinary Shares	8.00 a.m. on 3 November
C Shares and B Shares (if applicable) issued	8.00 a.m. on 3 November
CREST accounts credited with New Ordinary Shares	Approx. 8.00 a.m. on 3 November
If applicable, redemption of B Shares, if any, issued pursuant to the Capital Option	By 12 November
C Share Dividend becomes payable on C Shares and C Shares automatically reclassified as Deferred Shares	By 12 November
Despatch of share certificates and fraction cheques (if applicable) in respect of New Ordinary Shares	By 12 November
Despatch of cheques, or payment by BACS to mandated Sterling bank accounts, in respect of proceeds under the Income Option	By 12 November
Despatch of cheques or, if held in CREST, CREST accounts credited in respect of proceeds under the Capital Option	By 12 November

Notes:

• (1) The times and dates set out in the expected timetable of principal events above and mentioned in this document and in any other document issued in connection with the Merger or the Return of Value are subject to change by the Company, in which event details of the new times and dates will be notified to the UK Listing Authority, the London Stock Exchange and, where appropriate, to Shareholders.
• (2) If the Directors determine (in their absolute discretion) that the Merger Agreement is unlikely to complete on 3 November 2014, the Directors will, if practicable, postpone the Record Date and the Election Deadline (which shall, for the avoidance of doubt, fall on the same day), giving, if practicable, not less than three Business Days' notice of the postponement by RIS. The Record Date and the Election Deadline will subsequently be re-scheduled and the Company shall provide not less than three Business Days' notice by RIS of the revised Record Date and Election Deadline, which is expected to take place on the Business Day prior to the date on which the Merger Agreement completes.

MERGER STATISTICS

Number of Existing Ordinary Shares in issue as at 7 October 2014(1)	139,896,511
Aggregate number of Consideration Shares to be issued pursuant to the Merger	86,595,711
Aggregate number of Ordinary Shares to be admitted or readmitted (as applicable) to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities assuming that the Return of Value has been implemented and Share Capital Consolidation occurs(1)	216,489,622
Percentage of the Enlarged Share Capital held by Wizard assuming that the Return of Value has been implemented(2)	40.0
Aggregate number of Ordinary Shares including Consideration Shares to be admitted or readmitted (as applicable) to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities assuming that the Return of Value is not implemented(2)(3)	226,492,222
Percentage of the Enlarged Share Capital held by Wizard assuming that the Return of Value is not implemented(2)	38.2
Estimated expenses of the Merger and the Return of Value	US\$183.0 million
Notes:
(1) Excluding Ordinary Shares held in treasury. 12,871,427 Existing Ordinary Shares were held in treasury at 7 October 2014 (being

the latest practicable date prior to the publication of this document). (2) Based on Micro Focus's issued share capital as at 7 October 2014 (being the latest practicable date prior to the publication of this

document) (excluding Ordinary Shares held in treasury), 86,595,711 Consideration Shares being issued pursuant to the Merger and assuming that no further Ordinary Shares are issued whether pursuant to the Micro Focus Share Plans or otherwise.

(3) Excluding Ordinary Shares held in treasury.

DIRECTORS, PROPOSED DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS

Directors of Micro Focus	Kevin Loosemore (Executive Chairman) Mike Phillips (Chief Financial Officer) Stephen Murdoch (Chief Operating Officer) Karen Slatford (Non-Executive Senior Independent Director) Tom Skelton (Non-Executive Director) Tom Virden (Non-Executive Director) Richard Atkins (Non-Executive Director)
Proposed Directors	Prescott Ashe (Non-Executive Director) David Golob (Non-Executive Director)
Secretary	Jane Smithard
Registered office	The Lawn 22-30 Old Bath Road Newbury Berkshire RG14 1QN
Sponsor and Broker	Numis Securities Limited The London Stock Exchange Building Paternoster Square London EC4M 7LT
Legal Advisers to the Company as to English law	Travers Smith LLP 10 Snow Hill London EC1A 2AL
Legal Advisers to the Company as to US law	Kirkland & Ellis LLP 555 California Street, 27th Floor San Francisco, CA 94104 United States of America
Legal Advisers to the Sponsor and Broker as to English and US law	Norton Rose Fulbright LLP 3 More London Riverside London SE1 2AQ
Legal Advisers to Attachmate as to English and US law	Linklaters LLP One Silk Street London EC2Y 8HQ
Registrars	Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA
Auditor and Reporting Accountants	PricewaterhouseCoopers LLP 9 Greyfriars Road Reading Berkshire RG1 1JG

PART I

LETTER FROM THE CHAIRMAN OF MICRO FOCUS INTERNATIONAL PLC

(incorporated and registered in England and Wales with registered number 5134647)

Kevin Loosemore (Executive Chairman) The Lawn Mike Phillips (Chief Financial Officer) 22-30 Old Bath Road Stephen Murdoch (Chief Operating Officer) Newbury Karen Slatford (Non-Executive Senior Independent Director) Berkshire Tom Skelton (Non-Executive Director) RG14 1QN Tom Virden (Non-Executive Director) Richard Atkins (Non-Executive Director)

Directors: Registered Office:

8 October 2014

To: Micro Focus International plc Shareholders, persons with information rights and, for information only, to participants in the Micro Focus Share Plans

Dear Shareholder,

Proposed Merger with The Attachmate Group, Inc. Issue of 86,595,711 Consideration Shares Waiver of Rule 9 of the Takeover Code Proposed New Employee Incentive Arrangements Proposed Return of Value to Shareholders of 60 pence per Existing Ordinary Share and Notice of General Meeting

1. Introduction

On 15 September 2014, the Company announced that it had agreed to a merger with Attachmate pursuant to which the Company will acquire the entire issued share capital of Attachmate, the holding company of the Attachmate Group, which is an enterprise software infrastructure business, in exchange for the issue of 86,595,711 Ordinary Shares. This is equal to approximately 40.0 per cent. of the Enlarged Share Capital following the Merger if the Return of Value (as described below) is implemented and approximately 38.2 per cent. of the Enlarged Share Capital following the Merger if the Return of Value is not implemented. Completion is subject to the satisfaction of a number of conditions, including, amongst other things, applicable regulatory and anti-trust approvals having been obtained, Shareholder approval of the Merger, Admission and the financing of the Enlarged Group having been secured as set out in paragraph 6 of this Part I.

The Company also announced on 15 September 2014 that it proposed, subject to Shareholder approval, to return approximately £83.9 million (US\$135.0 million) to Shareholders. The Board has decided to effect the Return of Value, which is not conditional on the Merger, through a structure which may enable Existing Shareholders, subject to applicable overseas restrictions and tax laws, to elect to receive their cash proceeds as income or capital or any combination of the two. The Record Date for the Return of Value will occur prior to Completion and so the Consideration Shares to be issued in connection with the Merger will not be entitled to receive the Return of Value. They will also not participate in the final dividend of 17.7 pence per share payable in respect of the year ended 30 April 2014.

2. Background to and reasons for the Merger

Strategic rationale and operational benefits

The Board has set out a clear strategy of delivering consistent Total Shareholder Returns ("TSRs") in excess of Micro Focus's risk adjusted cost of capital, with an objective of achieving TSRs of 15 to 20 per cent. per annum over the long term. This objective has been comfortably exceeded over the three financial years ended 30 April 2014, through a combination of growing earnings per share, improving the consistency of the Company's financial performance, returning cash to Shareholders, and selectively reinvesting cashflow from operations into accretive acquisitions and into improving the quality of the Micro Focus Group's product portfolio and "Go to Market" propositions.

The Board believes that the proposed Merger presents a rare opportunity to achieve a significant increase in the scale and breadth of Micro Focus, with the potential to deliver TSRs that are superior to those likely to be achieved on an organic basis.

Attachmate is a privately held enterprise software infrastructure company headquartered in Houston, Texas, United States with approximately 3,300 employees. Attachmate's consolidated revenues for the financial year ended 31 March 2014 were US\$956.8 million and Underlying Adjusted EBITDA was US\$312.8 million for the same period.

The Directors consider that the businesses of the Micro Focus Group and the Attachmate Group share a number of important attributes:

• both the Micro Focus Group and the Attachmate Group are well established enterprise software vendors operating at a global scale with a presence in all significant international markets;
• both the Micro Focus Group and the Attachmate Group are characterised by high Underlying Adjusted EBITDA margins (Micro Focus 45.4 per cent., Attachmate 32.7 per cent.) and high recurring revenues (Micro Focus 66.3 per cent., Attachmate 71.3 per cent.);
• both the Micro Focus Group and the Attachmate Group hold a portfolio of software solutions organised into different product groups which address specific aspects of the infrastructure software requirements of a substantial installed base of large enterprise customers; and
• both the Micro Focus Group's and the Attachmate Group's respective product portfolios are (with exceptions) predominantly mature solution sets which are embedded within the IT infrastructures of large corporate customers.

The Board and Wizard (the direct parent company of Attachmate) have for some time recognised the potential for a combination of the two businesses and have held exploratory discussions in the past which have helped the parties to gain a greater understanding of the performance and trajectory of their respective businesses. Micro Focus's executive team has, over the three years ended 30 April 2014, proven adept at managing Micro Focus's product portfolio to arrest declining revenues through invigorated product management and improved sales effectiveness and a strong alignment of employee and management incentives to shareholder returns and cash generation, coupled with tight financial discipline and strongly improving operating margins.

With the Company performing strongly the Board believes that the Merger represents a substantial opportunity to:

• create significantly greater scale and breadth of product portfolio covering adjacent areas of the infrastructure market, with limited direct overlaps creating a leading global infrastructure software company with a top three global market position in a number of key segments, including offmainframe COBOL, mainframe modernisation, host connectivity and Linux;

• add a substantial recurring revenue base to Micro Focus's existing "Core" products, together with accessing important new growth drivers and new revenue models within Attachmate's product set, including, for example, maintenance and subscription revenues from the Attachmate Group's SUSE Linux product portfolio which were US\$181.8 million for the financial year ended 31 March 2014;

• accelerate operational effectiveness over the medium term, through the alignment of best practices between the Micro Focus Group and the Attachmate Group in areas such as product development, support, product management, account management, and sales force productivity, as well as achieving operational efficiencies where appropriate; and

• exploit and further develop cross-selling opportunities between the Enlarged Group's enterprise customers.

Integration benefits

The Board believes that the principal benefits of the Merger will arise mainly from the delivery, over the medium term, of operational efficiencies across the Enlarged Group. Given the scale of the Enlarged Group, the Board believes that the operational efficiencies will be achieved in the medium term, primarily through reducing duplicated central costs and combining corporate support functions where appropriate. The Board will also seek to reduce or reverse areas of revenue decline, accelerate revenue growth where achievable, and enhance operating margins. However, the immediate imperative will be to ensure that the Merger is effected without undue disruption to the product development, sales, support and administrative functions of the Enlarged Group. As at the date of this document, an outline integration and alignment plan has been developed. A more detailed alignment plan will set out the scope of the wider and longer term alignment process, quantifiable objectives and the proposed organisation structure of the Enlarged Group.

The Enlarged Group is also expected to benefit from lower finance costs. Details of the New Facilities are set out in paragraph 6 below, Part IX (Unaudited Pro Forma Financial Information) of this document and also paragraph 14.1.5 of Part XIII (Additional Information) of this document.

Management, employees and locations of business

On Completion, Prescott Ashe (a Managing Director of Golden Gate Capital) and David Golob (a Partner in Francisco Partners) will join the Board as Non-Executive Directors. To ensure an appropriate balance between independent and non-independent Directors, Stephen Murdoch will step down from the Board at Completion whilst remaining as an employee of the Enlarged Group and a key member of the operating board (see below). The remaining Directors will continue to perform their existing roles on the Board as part of the Enlarged Group. The Board intends to appoint another (as yet unidentified) independent Non-Executive Director to the Board following Completion, which will increase the number of independent Non-Executive Directors from four to five.

On 15 April 2014, the Board announced a transition back to the separate roles of a Chairman and a Chief Executive over the following 12 to 24 months. This decision will be continually reviewed during the integration process.

An operating board will be formed comprising senior management of Micro Focus and Attachmate in order to ensure that the Enlarged Group benefits from the skills and experience of both Micro Focus and Attachmate to deliver best practice and operational excellence across the Enlarged Group.

The Enlarged Group's headquarters will be located at Micro Focus's registered office at The Lawn, 22-30 Old Bath Road, Newbury, Berkshire, RG14 1QN, England. The Board also currently intends to retain Attachmate's principal offices at 515 Post Oak Boulevard, Suite 1200, Houston, TX 77027, USA.

3. Information on the Attachmate Group

The Attachmate Group is one of the leading global providers of enterprise infrastructure software solutions to businesses, governments and other large organisations in order to extend, manage and secure complex IT environments. The Attachmate Group maintains its registered office in Houston, Texas and operates its business from four distributed offices in Provo, Utah; Houston, Texas; Seattle, Washington; and Nuremburg, Germany. It has been in business for over 30 years and has approximately 3,300 employees across 80 offices worldwide, from which it serves more than 20,000 customers. It comprises four principal software product portfolios:

• Attachmate, which delivers advanced software for terminal emulation, legacy modernisation, managed file transfer and enterprise fraud management;
• NetIQ, which helps organisations tackle information protection challenges cost-effectively and manage the complexity of dynamic, highly-distributed application environments;
• Novell, which helps businesses work more efficiently and collaborate more effectively; and
• SUSE Linux, which offers a family of software products centred around SUSE Linux Enterprise, an interoperable platform for core computing needs supported by a shared global support and services organisation.

The Attachmate Group has a stable base of core relationship customers whose existence supports a strong recurring revenue base, with recurring revenues representing 71.3, 71.0 and 68.9 per cent. respectively of total revenue for the financial years ended 31 March 2014, 2013 and 2012.

4. Information on Wizard

Wizard is the holding company of the Attachmate Group and is the entity through which the following entities have invested in the Attachmate Group:

		Beneficial economic interest
	Name of Wizard Shareholders	in Wizard1
(a)	Golden Gate Funds	31.52%
(b)	Francisco Partners Funds	29.91%
(c)	Thoma Bravo Funds	14.14%
(d)	Elliot Management Fund	13.20%
(e)	Attachmate Group management and others	11.23%

Francisco Partners Management, L.P. and Golden Gate Capital are managers to the Francisco Partners Funds and the Golden Gate Funds respectively which hold equity interests in Wizard.

Wizard is a holding company for Attachmate and has no revenues other than those generated by Attachmate. Its only other asset is its 100 per cent. holding in Novell Intellectual Property Holdings, Inc., which is the holding company for various intellectual property licences and patents which will continue to be licensed to Attachmate on a perpetual, royalty-free basis following Completion.

Management and Governance

The board of representatives of Wizard will, from Completion, consist of six representatives of Wizard's equityholders, of which two will be appointed by Francisco Partners, two by the Golden Gate Funds and one by each of Thoma Bravo and Elliott Management. In order for the board of representatives of Wizard to take any action, a majority of the voting power of the entire board must vote in favour of the action or provide written consent, although certain matters will require the consent of 75 per cent. of the votes in Wizard which are controlled by the Golden Gate Funds, Francisco Partners and Thoma Bravo.

Financial Information

The financial information of the Attachmate Group is set out in Part VIII (Financial Information of the Attachmate Group) of this document.

5. Summary financial information on Micro Focus and Attachmate

The table below sets out selected historical consolidated financial information relating to the Micro Focus Group and the Attachmate Group, which has been extracted without material adjustment from (i) the audited consolidated accounts and financial statements of Attachmate prepared under IFRS in respect of the financial year ended 31 March 2014; (ii) the audited consolidated financial statements of the Micro Focus Group

¹ As at 7 October 2014 (being the latest practicable date prior to the publication of this document).

prepared under IFRS in respect of the financial year ended 30 April 2014; and (iii) with regard to the net debt figures below, the unaudited management accounts of Micro Focus and Attachmate as at 31 July 2014.

	Micro Focus	Attachmate
	Group	Group
	for the financial	for the financial
	year ended	year ended
	30 April 2014	31 March 2014
	US\$'000	US\$'000
Revenue	433,058	956,829
Underlying Adjusted EBITDA	196,402	312,846
Cash generated from operations	206,775	284,458
Underlying Adjusted EBITDA margin	45.4%	32.7%
Cash conversion*	107.7%	92.3%
Net debt as at 31 July 2014**	232,881	1,165,836

*Consistent with Micro Focus's past reporting, the cash conversion ratio is calculated as Cash Generated from Operations divided by Adjusted EBITDA less exceptional items. Adjusted EBITDA is arrived at by adding/(deducting) net capitalisation/(amortisation) of development costs and foreign exchange gains/(losses) to/from Underlying Adjusted EBITDA.

**The net debt figures as at 31 July 2014 do not take into account payment of the Return of Value, arrangement fees relating to the New Facilities, transaction fees payable to certain Wizard Shareholders in connection with the Merger, employment related change of control payments to the Attachmate Group employees and the transaction costs of the Micro Focus Group and the Attachmate Group, estimated through to Completion, which in aggregate amount to an estimated US\$318 million.

6. Financing of the Enlarged Group

The existing indebtedness of both the Attachmate Group and the Micro Focus Group will be refinanced as part of the Merger. As set out in paragraph 5 of this Part I above and in Part X (Capitalisation and Indebtedness) of this document, as at 31 July 2014 Micro Focus had total indebtedness of US\$266.2 million and cash balances of US\$33.3 million, and as at 31 July 2014 Attachmate had total indebtedness of US\$1,294.7 million and cash balances of US\$128.9 million. Taking into account payment of the Return of Value and total estimated transaction costs of the Micro Focus Group and the Attachmate Group (including arrangement fees related to the New Facilities and transaction fees payable to certain Wizard Shareholders), the aggregate net indebtedness of the Enlarged Group following Completion is estimated to be approximately US\$1.7 billion.

Underwriting commitments have been secured from Bank of America Merrill Lynch, HSBC, RBC Capital Markets, Goldman Sachs, Credit Suisse and Guggenheim in respect of the New Facilities in an aggregate amount of US\$1,925 million which will be available to the Borrower as at completion of the Merger. The New Facilities comprise:

• (a) Facility B, a syndicated senior secured tranche B term loan facility of US\$1,275 million, with an interest rate of 4.25 per cent. above LIBOR (subject to a LIBOR floor of 1.00 per cent.), amortising at 1.00 per cent. per annum, with an original issue discount of 1.00 per cent. and a 7 year term;
• (b) Facility C, a syndicated senior secured tranche C term loan facility of US\$500 million, with an interest rate of 3.75 per cent. above LIBOR (subject to a LIBOR floor of 0.75 per cent.), amortising at 10.00 per cent. per annum, with an original issue discount of 1.5 per cent. and a 5 year term; and
• (c) the Revolving Facility, a senior secured revolving credit facility of between US\$150 million and US\$225 million, with an interest rate of 3.50 per cent. above LIBOR on amounts drawn (and 0.50 per cent. on amounts undrawn) thereunder and an original issue discount of 0.5 per cent. The Initial Lenders have given underwriting commitments in an aggregate amount of US\$150 million in respect of the Revolving Facility and three additional banks have indicated their willingness to increase this facility to up to US\$225 million (subject to certain conditions).

The only financial covenant attaching to the New Facilities relates to the Revolving Facility, which will be subject to an aggregate net leverage covenant only in circumstances where more than 35 per cent. of the Revolving Facility is outstanding at a fiscal quarter end. The New Facilities will be used to finance the Return of Value and the Refinancing, and to pay fees and costs arising from the Return of Value, the Merger and the Refinancing.

Debt funds associated with the Golden Gate Funds have committed to subscribe for US\$102 million of Facility B and US\$40 million of Facility C.

Further details of the New Facilities are summarised in paragraph 14.1.5 of Part XIII (Additional Information) of this document.

7. Financial effects of the Merger

Impact on earnings

The Board believes that, taking into account the business and prospects of the Enlarged Group, the Merger will significantly enhance adjusted earnings per share in the current financial year ending 30 April 2015 and thereafter. This statement is not intended to be a profit forecast, and should not be interpreted to mean that the earnings per share of the Micro Focus Group following completion of the Merger will necessarily be above or below the historical published earnings per share.

Impact on leverage and interest cover ratios

Including the proposed Return of Value and estimated transaction costs, the aggregate net indebtedness of the Enlarged Group following Completion is expected to be approximately US\$1.7 billion, as set out in note 6 to the unaudited pro forma net asset statement contained in Part IX (Unaudited Pro Forma Financial Information) of this document. The Board recognises that the leverage ratio of the Enlarged Group immediately following Completion will be above the Board's previously stated target net debt ratio of 2.5x Facility EBITDA, and accordingly intends that the strong operating cashflows of the Enlarged Group should reduce net debt to approximately this target level before considering the buyback of any Ordinary Shares or any further returns of value, other than normal dividends.

The Board is targeting to achieve a net debt ratio of 2.5x Facility EBITDA within two years of Completion.

Assuming full drawdown of Facility B and Facility C, and a \$75 million drawdown under the Revolving Facility, the interest cost of the New Facilities for the 12 months following completion of the Merger is estimated at US\$103.9 million. This is covered approximately 5x by the Enlarged Group's pro forma Facility EBITDA, which the Board considers to be a comfortable level of interest cover.

Impact on dividend and cash returns policy of the Enlarged Group

The Board has in recent periods had a dividend policy to award a level of dividend covered approximately two times on a pre-exceptional earnings basis. Following Completion, unless the performance of the Enlarged Group were to fall significantly below the Board's expectations, the Board intends to implement a progressive dividend policy, but to suspend consideration of further returns of value or share buy-backs until such time as the Enlarged Group's target debt level of 2.5x Facility EBITDA is achieved.

8. Further details on the terms and conditions of the Merger

Completion is conditional upon, amongst other things, approval by Existing Shareholders of the Merger Resolutions and Admission as well as on those other matters set out in Part II (Details of the Merger) of this document. The Company expects Completion to occur by 3 November 2014.

On Completion, the Company will allot and issue to Wizard 86,595,711 Ordinary Shares, equal to approximately 40 per cent. of the Enlarged Share Capital if the Return of Value is implemented and approximately 38.2 per cent. of the Enlarged Share Capital if the Return of Value is not implemented.

As the Merger is classified as a reverse takeover under the Listing Rules, upon Completion the listing on the premium listing segment of the Official List of all of the Ordinary Shares will be cancelled, and application will be made for the immediate readmission of those Ordinary Shares (which if the proposed Return of Value is implemented on or before the Merger will have been consolidated into New Ordinary Shares) and the admission of the Consideration Shares to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective, and that dealings in Ordinary Shares (including the Consideration Shares) will commence, at 8.00 a.m. on 3 November 2014. The maximum number of Ordinary Shares which will be the subject of Admission is expected to be 216,489,622 New Ordinary Shares (excluding 11,951,119 shares expected to be held in treasury) if the Merger completes with or following the Return of Value or 226,492,222 Ordinary Shares (excluding 12,871,427 shares expected to be held in treasury) if the Return of Value is not implemented but the Merger completes. Because no value is to be accorded to Wizard in respect of the Return of Value, the number of Consideration Shares (being 86,595,711) will be the same whether or not the Return of Value is completed. Further details about the Merger are set out in Part II (Details of the Merger) of this document.

The Directors have given irrevocable undertakings to vote in favour of the Merger Resolutions (other than the Executive Directors in relation to the resolution approving the New Incentive Arrangements described in paragraph 13 below, in relation to which they are ineligible to vote) in respect of their directly controlled beneficial holdings, amounting to in aggregate approximately 0.51 per cent. of the Existing Ordinary Shares. Please refer to paragraph 6.13 of Part XIII (Additional Information) for more information.

9. Current trading and future prospects of the Enlarged Group

Micro Focus Group

For the financial year ended 30 April 2014, Micro Focus's revenue grew by 6.4 per cent. on a constant currency basis, including acquisitions made during the current and prior year. This was marginally ahead of the top end of Micro Focus's previous guidance range of 3 per cent. to 6 per cent.. The Underlying Adjusted EBITDA margin was 45.4 per cent., which was ahead of market expectations. During the financial year ended 30 April 2014, the Company also returned 60 pence per share in cash to Shareholders.

On 14 August 2014, Micro Focus issued an interim management statement covering the period from 30 April 2014 to 14 August 2014. Total revenues in the period ended 31 July 2014 on a constant currency basis were in line with the same period last year whilst Underlying Adjusted EBITDA was ahead of the comparable period. Growth in maintenance revenues was balanced by a decline in licence revenues. After a strong close to the financial year ended 30 April 2014, licence revenues in International remained strong, whilst there was a small decline in Asia Pacific & Japan against a strong comparative period. The sales force restructuring in North America caused a drag in the quarter.

If the exchange rates experienced in the year to date were to continue for the remainder of the financial year, the comparative revenues for the year ended 30 April 2014 would increase from the reported US\$433.1m to US\$435.2m on a constant currency basis.

The Micro Focus Group's net debt position at 31 August 2014 was US\$235.3m (30 April 2014: US\$261.0m) demonstrating further good operational cash generation during the period. In the preliminary results, the Board announced an increase in the Board's target net debt ratio to 2.5x Facility EBITDA.

Management's outlook remains unchanged from that given in the preliminary results for the year ended 30 April 2014 issued on 19 June 2014. Since the publication of the interim management statement of 14 August 2014, Micro Focus has continued to trade in line with its guidance. The Board believes that by continuing to execute the current business strategy and financial model, Micro Focus is well positioned to deliver shareholder returns at their target level, which requires low single digit revenue growth in the medium-term. However, it is to be expected that the announcement of the Merger may cause some customers who would otherwise have intended to sign new contracts by the end of October 2014 to defer their purchase decisions beyond the end of Micro Focus's half yearly reporting period, until the outcome of the Merger becomes clear. As at 7 October 2014, Micro Focus had incurred approximately \$15 million of costs related to the transaction process and due diligence which will be treated as exceptional in the current financial year.

Attachmate Group

Part VIII (Financial Information of the Attachmate Group) includes the audited results of the Attachmate Group for the one month period ended 30 April 2014 and the unaudited comparable one month period ended 30 April 2013. In the one month period ended 30 April 2014, revenues were US\$65.3 million, a decrease of US\$3.5 million, or 5.0 per cent., from US\$68.8 million in the one month period ended 30 April 2013, and operating profit increased from US\$5.9 million to US\$10.1 million, an increase of US\$4.2 million. As April historically is one of the least active months for the Attachmate Group in any given year, these results should not be seen as indicative of trends in the Attachmate Group's performance for the current financial year.

Based on the Attachmate Group's unaudited management information prepared under IFRS, total consolidated revenues in the first quarter of its current financial year were marginally (2 per cent.) below the prior year comparative, driven by lower licence revenues. The SUSE product portfolio achieved revenues ahead of prior year (up 15 per cent.); NetIQ revenues were marginally (1 per cent.) behind the prior year; and the combined revenues of the Novell and Attachmate product portfolios were down against the prior year period.

Operating expenses were below prior year, resulting in Underlying Adjusted EBITDA for the first quarter being ahead of the prior year.

Trading in the Attachmate Group's second quarter ended 30 September 2014 was modestly below the original budget for the quarter. A significant portion of revenues are weighted toward the end of the quarter and Attachmate management believes that, as expected, the announcement of the Merger near the end of the quarter has caused some customers to defer their purchase decisions until later in the year. As at 7 October 2014, the Attachmate Group had incurred approximately \$9 million of costs related to the transaction process and due diligence which will be treated as exceptional in the current financial year. Ongoing costs will be incurred up to Completion with further success fees payable at Completion.

10. Wizard's intentions for the purposes of the Takeover Code regarding the Enlarged Group and its ongoing relationship with the Company

As a result of Completion, Wizard will hold in excess of 30 per cent. of the voting rights in the Company, so that the Company is required to seek a waiver in this regard under Rule 9 of the Takeover Code. As a result, the Takeover Code imposes certain disclosure requirements on Wizard. As required by the Takeover Code, Wizard has confirmed to the Company that, save for the future intentions and strategy of the Enlarged Group as described in this Part I, it does not intend to make any changes regarding the future strategy of the Enlarged Group's business, the locations of the Enlarged Group's places of business, and the continued employment of the Enlarged Group's employees and management, including any material change in conditions of employment, including pension rights, and the deployment of the fixed assets of the Enlarged Group. Following Admission, Wizard intends to maintain the listing of the Ordinary Shares on the premium listing segment of the Official List and the trading of the Ordinary Shares on the London Stock Exchange's main market for listed securities.

On Completion, the Company will enter into the Relationship Agreement with Wizard and the Wizard Shareholders which will take effect on and from Admission and will continue until Wizard, the Wizard Shareholders and their respective associates cease to hold an interest, either direct or indirect, in 10 per cent. or more of the aggregate voting rights in the Company from time to time. The Relationship Agreement will regulate the continuing relationship between Wizard, the Wizard Shareholders and the Company to ensure that, in accordance with the Listing Rules, the Enlarged Group will be able to carry on its business independently of Wizard, the Wizard Shareholders and their respective associates.

Under the Relationship Agreement, Wizard shall have the right to nominate up to two persons to be Non-Executive Directors for so long as Wizard, the Wizard Shareholders and their respective associates together hold an interest, either direct or indirect, in 30 per cent. or more of the aggregate voting rights in the Company from time to time and one person to be a Non-Executive Director for so long as Wizard, the Wizard Shareholders and their respective associates together hold an interest, either direct or indirect, in 15 per cent. or more (but less than 30 per cent.) of the aggregate voting rights in the Company from time to time. Further, Wizard has agreed to a 365 day lock-up arrangement from Admission in relation to the Consideration Shares. See paragraph 14.1.3 of Part XIII (Additional Information) of this document for a more detailed description of the Relationship Agreement.

11. Proposed Return of Value

The proposed Return of Value of 60 pence per Existing Ordinary Share will cost approximately £83.9 million (US\$135.0 million) and will follow a similar process and structure to the previous returns of value made in October 2013 through a D share scheme and in January and November 2012 through B/C share schemes. These previous returns of value provided Shareholders, subject to applicable overseas restrictions and tax laws, with the option of receiving their cash proceeds as income or capital, or any combination of the two. The Board has decided to preserve this capital and income election option for the Return of Value.

Under this proposal, for every one Ordinary Share held at the Record Time, 60 pence per Ordinary Share (equivalent to approximately 96.5 cents) would be returned to Shareholders. If the Return of Value is implemented at the same time as the Merger completes, this will be effected through the issue of either one B Share, which will be redeemed by the Company for 60 pence, or one C Share, on which a dividend of 60 pence will be payable. If the Merger is terminated for any reason, the Return of Value will be effected through the issue of C Shares on which either a dividend of 60 pence will be payable, or which will be purchased by Numis, acting as principal (and not as agent, nominee or trustee), at 60 pence per C Share under the Purchase Offer. The Consideration Shares will not rank for the Return of Value.

Whilst the Return of Value is not conditional on the Merger, it is intended that it will be funded out of the New Facilities and, accordingly, be paid shortly after Completion. If, however, the Merger is terminated for any reason, it is intended instead that the Return of Value will be funded out of the Existing Facility, as augmented (if required) by the Accordion Facility. In the event of any termination of the Merger Agreement, the Company will seek to defer the Return of Value and announce a revised Record Date and Election Deadline by RIS, giving not less than three Business Days' notice thereof.

Shareholders (other than Overseas Shareholders resident, or with a registered address, in a Restricted Territory) will be able to elect for either the Income Option or the Capital Option as described in more detail in Section E of Part XI (The Return of Value) of this document. Shareholders who do not make a valid election for either the Income Option or the Capital Option will be deemed to have elected for the Income Option in respect of all of their ROV Entitlement.

In order that the market price for Ordinary Shares is not materially affected by the implementation of the Return of Value, a proportional share capital consolidation of the Existing Ordinary Shares is also proposed. Under this consolidation, Shareholders will receive 0.9285 of a New Ordinary Share in substitution for each Existing Ordinary Share held by them at the Record Time. At the same time, in order that the Company should have shares in issue of a simple and manageable nominal value, the nominal value of the Ordinary Shares will be reduced to 10 pence each. The consolidation will also give rise to Deferred D Shares of negligible value, all of which will be repurchased by the Company for the aggregate price of one penny. After the Return of Value, and disregarding the dilutive effect of the Merger should it complete, Existing Shareholders will own the same proportion of the Company as they did immediately beforehand, subject only to fractional entitlements. Details of the Share Capital Consolidation are summarised in Section E of Part XI (The Return of Value) of this document.

This structure has been chosen to complete the Return of Value because:

• it gives all Shareholders (with the exception of Overseas Shareholders resident, or with a registered address, in a Restricted Territory) a choice as to how they receive their cash, which is intended to afford UK tax-resident Shareholders flexibility in the tax treatment of their proceeds; and
• it treats all Shareholders equally relative to the size of their existing shareholdings in the Company.

Part XI (The Return of Value) of this document sets out details of the Return of Value and the Share Capital Consolidation and explains why the Directors consider the Return of Value to be in the best interests of the Company and Shareholders taken as a whole. The Consideration Shares shall not rank for the Return of Value. The implementation of the Return of Value is not dependent upon the Merger completing, but the way in which it is implemented will depend on whether or not the Merger completes.

12. Risk Factors

For a discussion of the risks and uncertainties which you should take into account when considering whether to vote in favour of the Merger Resolutions, please refer to the Risk Factors on pages 20 to 37 of this document.

13. New Incentive Arrangements

In order to ensure the success of the integration of the Micro Focus Group and the Attachmate Group, and the Merger as a whole, the Directors believe that it is essential to retain, incentivise and recruit the best talent from both organisations, as well as from outside the Enlarged Group, and to recognise the significant incremental workload and responsibility that will fall on Executive Directors and senior managers during the integration period.

On Completion, the salaries of Executive Directors and senior managers will be considerably below market rate for comparable businesses. However, depending upon the success of the integration project, it will not be clear what the appropriate new salary levels should be. Accordingly, it is proposed that, conditional upon Shareholder approval and Completion, an Additional Responsibility Allowance is paid monthly to certain Executive Directors and senior managers of the Enlarged Group as additional salary until such time as clear determinations of the relevant base salaries can be made. The ARA will be a monthly fixed payment per individual (subject to the deduction of PAYE income tax and National Insurance contributions) for a period of at least six months but not exceeding three years, such payment being made subject to a recipient being in employment with the Enlarged Group on the date of each payment. During this period, the Remuneration Committee will be able to revise individual ARAs down, should it become clear that the relevant ARA is greater than the potential final salary uplift that will be attained based on Company performance. The alternative would have been to raise base salaries at Completion when insufficient knowledge is available to determine the appropriate level. The ARA will not be paid to Attachmate executives whose work during the integration period has already been recognised prior to Completion by the award of bonuses, accelerated cash awards, retention payments, change of control payments and in some cases the vesting of significant share awards. At the conclusion of the integration period, the ARA will fall away and appropriate base salaries proposed.

The aggregate payments made under the ARA will not exceed £1.0 million per annum. The total number of ARA recipients will not exceed 12. The initial monthly amounts payable under the ARA to Kevin Loosemore, Mike Phillips and Stephen Murdoch will not exceed £21,667, £10,000 and £6,667 respectively. Kevin Loosemore's and Mike Phillips's ARA will be capped at these amounts.

In addition, it is proposed that Additional Share Grants be made to certain Executive Directors and senior managers of the Enlarged Group, conditional upon Completion and Shareholder approval, by way of the grant of nil cost options in order to incentivise key management to deliver exceptional returns. The ASGs will comprise nil cost options over, in aggregate, up to 5,412,240 Ordinary Shares (representing a maximum of 2.5 per cent. of the Enlarged Share Capital (assuming that the Return of Value is implemented)) and, when combined with awards under all other employee share plans, will not exceed 10 per cent. of the issued ordinary share capital of the Company over any 10 year period. None of the ASGs will vest unless the TSR measured from Completion to the third anniversary of Completion (or 1 November 2017 if earlier) exceeds 50 per cent., and the ASGs will vest in full only if the TSR exceeds 100 per cent., with straight line vesting between 50 per cent. and 100 per cent.. These TSR thresholds will be calculated with reference to a reference share price of 819.4 pence per Ordinary Share (being the 20 day average closing share price prior to signature of heads of terms relating to the Merger on 3 June 2014). These thresholds have been set to incentivise the senior executive management of the Enlarged Group to achieve TSRs in excess of Micro Focus's stated minimum standalone TSRs objective of 15 per cent. to 20 per cent. per annum over the long term. By way of illustration, if the Enlarged Group was to achieve a TSR of 15 per cent. per annum over the reference price over a three year period from Completion this would result in a cumulative TSR of approximately 52 per cent., in which event only approximately 4 per cent. of the ASGs would vest. An annual TSR of 20 per cent. would result in a cumulative three year TSR of approximately 73 per cent. and vesting of approximately 46 per cent. of the ASGs. Full vesting of the ASGs would require an annual TSR of approximately 26 per cent.. In these last two scenarios the maximum pre-tax value of all awards under the ASGs would represent 2.71 per cent. and a maximum of 5.00 per cent. respectively of the total increase in value to Shareholders, relative to the reference price over the reference period.

Holders of ASGs will be required (subject to continued employment with, or being a director of any member of the Enlarged Group on the vesting date) to hold the nil cost options or, in the event of exercise of such options, the Ordinary Shares arising on exercise (after allowing for the sale of a sufficient number to allow for the payment of income tax and National Insurance contributions payable on sale) for a minimum of 12 months after the date of vesting.

Subject to the approval of Shareholders and Completion, Kevin Loosemore, Mike Phillips and Stephen Murdoch have been granted ASGs over 947,140, 676,529 and 405,917 Ordinary Shares respectively. Other senior managers of the Micro Focus Group have received similar conditional awards of ASGs over, in aggregate, 541,223 Ordinary Shares. The balance of the available ASGs (being over 2,841,431 Ordinary Shares) may be allocated (subject to an individual maximum of 1,082,448) to a select number of the existing senior management of the Attachmate Group and the Micro Focus Group, and to select key new hires, who are deemed critical to ensuring the success of the Merger. The total number of ASG recipients will not exceed 15. In connection with Rule 16.2 of the Takeover Code, the Takeover Panel has consented to the New Incentive Arrangements, subject to the approval of Shareholders at the General Meeting (other than the Executive Directors and any other person proposed to receive the ARA or ASGs, who will be ineligible to vote in connection with the New Incentive Arrangements).

If approved by Shareholders, neither the ARA nor the ASGs would be consistent with the Company's existing Remuneration Policy. In order to implement each of the ARA and the ASGs it is therefore necessary to amend the Remuneration Policy by the addition of provisions relating to each of the ARA and the ASGs. The full text of the proposed amendments to the Remuneration Policy is set out in paragraph 7.3 of Part XIII (Additional Information) of this document.

The Directors believe that the significant challenges represented by the integration of the Micro Focus Group and the Attachmate Group will require the best and most motivated managerial talent available both from within and outside the Enlarged Group and an appropriate incentivisation package to ensure complete alignment between senior management and Shareholders. The Directors therefore believe that the ARA, the ASGs and the consequential revisions to the Remuneration Policy are essential to the success of the Merger. Accordingly, the Directors do not believe that the Merger should be implemented without such alignment in place. Thus the Merger is conditional upon the approval of the ARA, the ASGs and the related revisions to the Remuneration Policy by Shareholders at the General Meeting. Please refer to paragraph 18 of this Part I for the recommendation of the Non-Executive Directors in relation to the ARA, the ASGs and the revisions to the Remuneration Policy. Further details of the ARA, the ASGs and the related revisions to the Remuneration Policy are set out in paragraph 7 of Part XIII (Additional Information) of this document.

14. General Meeting

At the end of this document, you will find a notice convening a General Meeting, which is to be held at 3.00 p.m. on 27 October 2014 at The Lawn, 22-30 Old Bath Road, Newbury, Berkshire RG14 1QN. A summary of the action you should take is set out in paragraph 15 of this Part I and in the Form of Proxy that accompanies this document.

The purpose of the General Meeting is to consider and, if thought fit, pass the Resolutions, in each case as set out in full in the notice of General Meeting.

The Merger is conditional upon the Merger Resolutions being passed (although there are also additional conditions which must be satisfied before the Merger can be completed which are set out in detail in Part II (Details of the Merger) of this document).

The Return of Value is conditional upon Resolution 5 (as set out in the notice of General Meeting at the end of this document) being passed.

In addition to the Resolutions to be considered at the General Meeting in relation to the Merger and the Return of Value, resolutions are to be considered to amend the shareholder authorities passed at the Annual General Meeting held on 25 September 2014 to take into account, as appropriate, the Merger and the Return of Value. A Resolution is also to be considered at the General Meeting relating to the Directors' power to capitalise reserves in order to pay up in full shares issued pursuant to employee share schemes where, owing to previous share capital consolidations, the option exercise price is less than the nominal value of the relevant shares.

Resolution 1 – Approval of the Merger (Ordinary Resolution)

Resolution 1 proposes (subject to and conditional upon the passing of Resolutions 2, 3 and 4) that the Merger be approved, the Directors be authorised to take all steps and enter into all agreements and arrangements necessary or desirable to implement the Merger and that the borrowing limit contained in the Articles be increased from US\$600 million to US\$2,500 million to enable the Company and members of the Enlarged Group to enter into the New Facilities.

Resolution 2 – Waiver under Rule 9 of the Takeover Code (Ordinary Resolution)

Under Rule 9 of the Takeover Code any person who, whether by a series of transactions over a period of time or not, acquires an interest in shares which, when taken together with the shares in which he is already interested (together with shares in which persons acting in concert with him are interested), carry 30 per cent. or more of the voting rights in a company which is subject to the Takeover Code, is normally required to make a general offer to all of the remaining shareholders to acquire their shares. Similarly, when any person together with any persons acting in concert with him already is interested in shares which, in aggregate, carry 30 per cent. or more but does not hold shares carrying more than 50 per cent. of the voting rights in such a company, a general offer will normally be required to be made if any further interests in such shares are acquired.

An offer under Rule 9 must be in cash and at the highest price paid within the 12 months prior to the announcement of the offer for any shares acquired in the company by the person required to make the offer or any person acting in concert with him.

If the Merger completes and the Company allots the Consideration Shares to Wizard in accordance with the Merger Agreement, Wizard will hold in excess of 30 per cent. of the voting rights of the Company and as a result an obligation under Rule 9 of the Takeover Code would arise for Wizard to make a cash offer for the issued shares of the Company which it does not already own. The Takeover Panel has agreed, however, to waive the obligation to make a general offer that would otherwise arise as a result of the Consideration Shares being issued pursuant to Completion, subject to the approval of the Independent Shareholders. Accordingly, Resolution 2 is being proposed at the General Meeting and will be taken on a poll on which only the Independent Shareholders are entitled to vote.

Wizard does not currently hold any Ordinary Shares and does not (and will not pursuant to the Merger) hold any options over Ordinary Shares. On Completion, Wizard will hold in aggregate 86,595,711 Ordinary Shares, representing approximately 40.0 per cent. of the issued voting share capital of the Company if the Return of Value is implemented, which is the maximum potential controlling position of Wizard pursuant to the matters described in this document, and approximately 38.2 per cent. if the Return of Value is not implemented.

Following Completion, Wizard will be interested in shares carrying 30 per cent. or more of the Company's voting share capital but will not hold shares carrying more than 50 per cent. of such voting rights. Any further increase in that aggregate interest in shares will be subject to the provisions of Rule 9 of the Takeover Code and therefore the obligation to make a cash offer for those Ordinary Shares not already owned by it or any of its concert parties.

Resolution 3 – Authority to allot (Ordinary Resolution)

Resolution 3 proposes that, subject to and conditional upon the passing of Resolutions 1, 2 and 4, the Directors be authorised to allot and issue the Consideration Shares in connection with the Merger. The Consideration Shares represent 61.9 per cent. of the total ordinary share capital in issue (excluding treasury shares) as at 7 October 2014 (being the latest practicable date prior to the publication of this document). The Directors intend to exercise this authority on Completion. The authority will be in addition to the existing authority which was passed at the Annual General Meeting.

Resolution 4 – Additional Responsibility Allowance, the Additional Share Grants and revision of the Remuneration Policy (Ordinary Resolution)

Resolution 4 proposes that the Additional Share Grants be approved and that the Remuneration Policy be revised to allow the Additional Responsibility Allowance and the Additional Share Grants to be adopted, in each case conditional upon and with effect from Completion. A summary of the Additional Responsibility Allowance and the Additional Share Grants and the revision to the Remuneration Policy is set out in paragraph 7 of Part XIII (Additional Information) of this document. The Takeover Panel has given its consent to the New Incentive Arrangements in connection with Rule 16.2 of the Takeover Code, subject to the approval of Shareholders at the General Meeting (other than the Executive Directors and any other person proposed to receive the ARA or ASGs, who will be ineligible to vote). Accordingly, Resolution 4 will be taken on a poll on which no Executive Director or other person proposed to receive the ARA or the ASGs will be entitled to vote.

Resolution 5 – Approval of the Return of Value and amendments to the Articles (Special Resolution)

Resolution 5 is required for the implementation of the Return of Value and proposes amendments to the Articles and the approval and authorisation of certain steps, including the Share Capital Consolidation, to be taken by the Company and the Directors for the purposes of implementing the Return of Value.

Resolutions 6 and 7 – Revised authority to allot (Ordinary Resolution) and disapplication of pre-emption rights (Special Resolution)

The Directors believe that it will be necessary following either or both the Share Capital Consolidation and the Merger to re-grant to the Directors customary authorities, similar to the existing shareholder authorities in place since the Annual General Meeting, which reflect the Company's new proposed share capital structure following the Return of Value and/or the Merger. Resolution 6 proposes to give the Directors general authority to allot shares in the Company. Resolution 7 proposes to empower the Directors to allot equity securities under the authority conferred under Resolution 6 on a non-pre-emptive basis. Each of Resolutions 6 and 7 reflects the conditionality of the Merger and the Return of Value, and authorises the Company to allot or disapply pre-emption (as the case may be) in relation to customary proportions of the Company's issued share capital, dependent upon whether or not the Merger completes and whether or not the Return of Value is approved.

A full summary explanation of Resolutions 5 to 7 to be proposed at the General Meeting can be found in paragraph 13 of Section E of Part XI (The Return of Value) of this document.

Resolution 8 – Approval of an amendment to the Articles to permit Directors to capitalise reserves and funds in connection with employee share plans.

The Company also proposes to amend the Articles by the insertion of a provision into the Articles which permits the Directors to capitalise reserves and funds in connection with the issue of shares pursuant to employee share plans, in circumstances where the option exercise price is less than the nominal value of the relevant shares. Consolidations of Ordinary Shares in 2012 and 2013 in previous returns of value resulted in their nominal value being increased on each occasion, resulting in outstanding options under the Incentive Plan 2005 having an exercise price lower than the nominal value of the Ordinary Shares to which the options relate, whilst nil cost options granted under the Incentive Plan 2005 have an exercise price lower than the nominal value of the Ordinary Shares to which the options relate. In order to facilitate satisfaction of these options by means of the issue of new Ordinary Shares, it is proposed that the Directors be permitted to capitalise profits and reserves to the extent necessary to pay up in full shares issued pursuant to employee share schemes, in circumstances where the option exercise price is less than the nominal value of the relevant shares.

15. Action to be taken in relation to the General Meeting

A Form of Proxy for use in relation to the General Meeting which covers the Resolutions to be proposed at the General Meeting accompanies this document. As an alternative to completing and returning the accompanying Form of Proxy, you may register the appointment of a proxy for the General Meeting by accessing the website www.sharevote.co.uk. If you hold Ordinary Shares in CREST, you may instead appoint a proxy by completing and transmitting a CREST Proxy Instruction to the Company's registrars, Equiniti. Guidance notes to assist you to complete the Form of Proxy or to register the appointment of a proxy electronically or to complete and transmit a CREST Proxy Instruction are set out in the notice convening the General Meeting of the Company at the end of this document.

Whether or not you intend to be present at the General Meeting, you are requested to complete and return the accompanying Form of Proxy in accordance with the instructions printed thereon or to register the appointment of a proxy electronically or, if you hold Ordinary Shares in CREST, to complete and transmit a CREST Proxy Instruction. Completed Forms of Proxy should be returned to the Company's registrars, Equiniti Limited, Corporate Actions, Aspect House, Spencer Road, Lancing West Sussex BN99 6DA as soon as possible and, in any event, so as to be received not later than 3.00 p.m. on 23 October 2014. The completion and return of a Form of Proxy or the transmittal of an electronic proxy registration or CREST Proxy Instruction will not prevent you from attending the General Meeting and voting in person if you so wish and are so entitled.

If you have any questions relating to this document and/or the completion and return of the Form of Proxy, please contact Equiniti on 0871 384 2873 and +44 121 415 0164 for overseas. The helpline is available between the hours of 8.30 a.m. and 5.30 p.m. Monday to Friday (except UK public holidays) and will remain open until 26 November 2014 (or such later date as the Directors determine). Calls to 0871 384 2873 are charged at 8 pence per minute (excluding VAT) plus network extras. Service providers' costs may vary. Calls to +44 121 415 0164 from outside the UK are chargeable at applicable international rates. Please note that calls to these numbers may be monitored or recorded and no advice on the merits of the Merger can be given.

16. Action to be taken in relation to the Return of Value

The procedure for making elections under the Return of Value depends on whether your Existing Ordinary Shares are held in certificated or uncertificated form and is summarised below.

Shareholders (other than Overseas Shareholders resident, or with a registered address, in a Restricted Territory) may elect for any combination of the Options, provided that the total number of Existing Ordinary Shares in respect of which an election is made does not exceed a Shareholder's total holding as at the Record Time. Shareholders need to make their own decision regarding any election(s) they make under the Return of Value and are recommended to consult their own independent professional adviser.

(a) Existing Ordinary Shares held in certificated form

Shareholders (other than Overseas Shareholders resident, or with a registered address, in a Restricted Territory) who hold Existing Ordinary Shares in certificated form should make any election for the Option(s) suitable for them by completing the Form of Election, in accordance with the instructions printed thereon, and returning it as soon as possible and, in any event, so as to be received by post or using the accompanying reply paid envelope if posting from inside the United Kingdom or (during normal business hours only) by hand to Equiniti Limited, at Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, by no later than 4.30 p.m. on 31 October 2014 (or such later date as the Directors determine). Shareholders who do not complete and return a valid Form of Election by 4.30 p.m. on 31 October 2014 (or such later date as the Directors determine) will be deemed to have elected for the Income Option in respect of their entire ROV Entitlement.

Overseas Shareholders with a registered address in a Restricted Territory will not be sent a Form of Election and will be deemed to have elected for the Income Option in respect of all of their ROV Entitlement.

(b) Existing Ordinary Shares held in uncertificated form

Shareholders (other than Overseas Shareholders resident, or with a registered address, in a Restricted Territory) who hold their Existing Ordinary Shares in uncertificated form should refer to the applicable procedures and related timings set out in paragraph 4 of Section I of Part XI (The Return of Value) of this document. Any Shareholder whose TTE Instruction does not settle by 4.30 p.m. on 31 October 2014 (or such later date as the Directors determine) will be deemed to have elected for the Income Option in respect of his entire ROV Entitlement.

The CREST Manual may also assist you in making a TTE Instruction.

Shareholders who do not make a valid election, and all Overseas Shareholders resident, or with a registered address, in a Restricted Territory, will be deemed to have elected for the Income Option in respect of ALL of their ROV Entitlement.

17. Further information

Your attention is drawn to the section entitled "Risk Factors" on pages 20 to 37 of this document and to Part XIII (Additional Information) of this document. You should read all of the information contained in this document before deciding the action to take in respect of the General Meeting.

The results of the votes cast at the General Meeting will be announced as soon as possible once known through a Regulatory Information Service and on the Company's website (www.microfocus.com). It is expected that this will be on 27 October 2014.

18. Recommendation

The Board, which has been so advised by Numis, considers the terms of the Merger, the Rule 9 Waiver, the Return of Value and the New Incentive Arrangements, to be fair and reasonable and in the best interests of the Shareholders taken as a whole. In making this determination, the Executive Directors have been excluded from the Board's consideration of the New Incentive Arrangements and its view that they are fair and reasonable and in the best interests of the Shareholders taken as a whole. In providing advice to the Board, Numis has taken account of the Directors' commercial assessment. Accordingly, the Board recommends unanimously that Shareholders vote in favour of the Merger, the Rule 9 Waiver, the Return of Value and the New Incentive Arrangements. The Executive Directors have been excluded from the Board's recommendation in respect of the New Incentive Arrangements. The Directors who hold interests (directly or indirectly) in Ordinary Shares have irrevocably undertaken to vote in favour of the Merger, the Rule 9 Waiver, the Return of Value and the New Incentive Arrangements (other than the Executive Directors in respect of the New Incentive Arrangements, in relation to which they are ineligible to vote under Rule 16 of the Takeover Code) in respect of their own directly controlled beneficial holdings which amount in aggregate to 714,607 Ordinary Shares and represent approximately 0.51 per cent. of the Company's issued share capital as at 7 October 2014 (the latest practicable date prior to publication of this document).

The Directors make no recommendation to Shareholders in relation to which elections should be used in connection with the Return of Value. Shareholders need to take their own decision in this regard and are recommended to consult their own independent professional adviser.

Yours sincerely

Kevin Loosemore Executive Chairman

PART II

DETAILS OF THE MERGER

1. Merger Structure

The Merger Agreement was entered into on 15 September 2014 between Micro Focus, Merger Sub (a wholly-owned subsidiary of Micro Focus), Wizard and Attachmate. The Merger shall become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware, whereupon Merger Sub shall be merged with and into Attachmate, and the separate corporate existence of Merger Sub shall cease. Attachmate shall continue as the surviving corporation and succeed to and assume all the rights and obligations of Merger Sub in accordance with the General Corporation Law of the State of Delaware.

2. Merger Consideration

The consideration payable by Micro Focus pursuant to the Merger Agreement is the allotment and issue to Wizard of the Consideration Shares. The number of Consideration Shares to be issued shall be equitably adjusted to reflect appropriately the effect of any stock split, reverse stock split, dividend or other distribution, reorganisation, recapitalisation, reclassification or other similar change with respect to the capital of Micro Focus occurring on or after the date of the Merger Agreement and prior to Completion, other than the Return of Value and the final dividend payable of 17.7 pence per Ordinary Share in respect of the financial year ended 30 April 2014.

3. Conditions to Completion

• 3.1 The obligations of Wizard, Attachmate, Micro Focus and Merger Sub to consummate the Merger are subject to the satisfaction of the following conditions:
• 3.1.1 the approval of the Merger by the Existing Shareholders at the General Meeting;
• 3.1.2 no governmental authority having enacted or issued any law, rule, regulation, executive order or decree, judgment, injunction, ruling or other order, that has the effect of preventing or prohibiting the consummation of the Merger or that otherwise imposes material limitations on the ability of Merger Sub and Micro Focus to effectively acquire or hold the business of the Attachmate Group;
• 3.1.3 all material consents, approvals and permits and all authorisations from, notifications to and filings with any governmental authorities required to be made or obtained prior to Completion shall have been made or obtained;
• 3.1.4 the waiting period under the Hart-Scott-Rodino Act has expired or been terminated, the applicable waiting period has expired in accordance with Austrian merger control legislation and merger control clearance has been issued or deemed issued by the German competition authorities;
• 3.1.5 consummation of the debt financing contemplated by the Commitment Letter; and
• 3.1.6 Admission occurring.
• 3.2 The obligations of Micro Focus and Merger Sub to consummate the Merger are subject, inter alia, to the satisfaction or waiver of the following additional conditions:

• 3.2.1 the representations and warranties of Attachmate being true and correct as of the date of the Merger Agreement and as of the date of Completion provided that, in the event of a breach of such a representation or warranty, the condition shall be deemed satisfied unless the effect of all such breaches taken together had, or would reasonably be expected to have, a Material Adverse Effect in respect of the Attachmate Group;

• 3.2.2 the covenants of Wizard and Attachmate having been performed and complied with in all material respects; and

• 3.2.3 no circumstance, effect or change having occurred which individually or in the aggregate has had, or would reasonably be expected to have, a Material Adverse Effect in respect of the Attachmate Group.
• 3.3 The obligations of Attachmate to complete the Merger are subject, inter alia, to the satisfaction or waiver of the following additional conditions:
• 3.3.1 the representations and warranties of Micro Focus and Merger Sub being true and correct as of the date of the Merger Agreement and as of the date of Completion provided that, in the event of a breach of such a representation or warranty, the condition shall be deemed satisfied unless the effect of all such breaches taken together had, or would reasonably be expected to have, a Material Adverse Effect in respect of Micro Focus;
• 3.3.2 the covenants of Micro Focus and Merger Sub having been performed and complied with in all material respects; and
• 3.3.3 no circumstance, effect or change having occurred which individually or in the aggregate has had, or would reasonably be expected to have, a Material Adverse Effect in respect of Micro Focus.

A "Material Adverse Effect" means, for the purposes of the Merger Agreement, in relation to Attachmate or Micro Focus (as the context requires) any circumstance, effect, event, or change that, individually or in the aggregate, (i) has, or is reasonably likely to have, a materially adverse effect on the business, assets, condition (financial or otherwise) or results of operations, of the Attachmate Group or Micro Focus (as the context requires), taken as a whole, other than resulting from an Excluded Matter or (ii) prevents or materially delays, or is reasonably likely to prevent or materially delay, the ability of its and its subsidiaries to perform their obligations under the Merger Agreement or to consummate the transactions contemplated by the Merger Agreement in accordance with its terms.

"Excluded Matter" means, for the purposes of the Merger Agreement, in relation to the Attachmate Group or Micro Focus (as the context requires), any one or more of the following: (a) changes in general economic conditions which do not have a materially disproportionate effect on its and its subsidiaries taken as a whole relative to other industry participants, (b) changes affecting the specific industry in which its and its subsidiaries operate which do not have a materially disproportionate effect on its and its subsidiaries taken as a whole relative to other industry participants, (c) changes caused by the taking of any action expressly required by the Merger Agreement, (d) the taking of any action by it that has been previously approved in writing by the Attachmate Group or Micro Focus (as the context requires), (e) changes resulting from a modification after the date of the Merger Agreement in accounting rules applicable to its and its subsidiaries, (f) changes resulting from a breach of the Merger Agreement by the Attachmate Group or Micro Focus or Merger Sub (as the context requires), (g) changes resulting from any modification in any law or regulation after the date of the Merger Agreement applicable to its and its subsidiaries, (h) any failure of it to meet internal projections or forecasts, or analysts' expectations for any financial period, whether as a result of the Announcement or otherwise (provided that the underlying causes of such failure shall not be excluded pursuant to this clause (h)), (i) any change in the financial performance of Attachmate or Micro Focus (as the context requires) as a result of the Announcement or (j) any act of terrorism or war (whether threatened, pending or declared) or act of civil disturbance, any armed conflict (or any escalation or worsening of any of the same) or any natural disaster.

4. Representations and Warranties

The Merger Agreement contains customary representations and warranties made by Attachmate, on the one hand, and by Micro Focus and Merger Sub on the other, relating to their respective businesses as at the date of the signing of the Merger Agreement, with each such representation and warranty being repeated immediately prior to Completion. As the representations and warranties in relation to Attachmate are given by Attachmate only (and not by Wizard), the Company will not have recourse against, or otherwise be able to recover from, Wizard or any other party, in respect of any losses which it may suffer in respect of a breach of warranty and its only remedy will be to terminate the Merger Agreement prior to Completion if such a breach (or breaches) has (or have) a Material Adverse Effect in respect of the Attachmate Group.

5. Covenants

The Merger Agreement includes customary restrictions regarding the conduct of the business of Attachmate pending Completion, including a restriction on the declaration of dividends, capital expenditure and incurring any indebtedness.

The Merger Agreement also includes customary restrictions regarding the conduct of the business of Micro Focus pending Completion, including a restriction on the declaration of dividends, capital expenditure and incurring any indebtedness.

In addition, the Merger Agreement includes an obligation that the Board (or in the case of the New Incentive Arrangements, the Non-Executive Directors) shall recommend to Shareholders to vote in favour of the Merger Resolutions and include such a recommendation in this document, and an obligation upon the Board not to withdraw, modify, qualify or fail to make such recommendation unless in either case:

• (a) an announcement is made under Rule 2.4 or Rule 2.7 of the Takeover Code and as a consequence the Board resolves to withdraw, modify, qualify or not to make its recommendation of the transactions contemplated by the Merger Agreement; or
• (b) a new event or circumstance occurs or becomes known to the Board after the date of the Merger Agreement (other than any proposal made in respect of the acquisition of Ordinary Shares) that was not known to or reasonably foreseeable to the Board on or prior to the date of the Merger Agreement, and the Board concludes, having been advised by its financial and legal advisers, that it would be inconsistent with the duties that they owe to Micro Focus in their capacity as Directors to maintain or make (or maintain or make without qualification or modification) the recommendation. Micro Focus agrees and acknowledges that the following events or circumstances will not constitute an event or circumstance that would require the recommendation to be withdrawn, qualified, modified or not to be made: (a) any new event or circumstance relating to Attachmate other than an event or circumstance that permits Micro Focus to terminate the Merger Agreement; (b) any change in the trading or financial performance of Micro Focus after the date of the Merger Agreement; and (c) any Excluded Matter in relation to Micro Focus.

The only remedy of Wizard and Attachmate for any breach of this obligation to recommend the Merger Resolutions is for Micro Focus to pay the break fee referred to in paragraph 7 below, provided that if the provisions are breached during an offer period for Micro Focus (as defined for the Takeover Code), Micro Focus shall have no liability if any offer for Micro Focus that is made during such offer period is declared unconditional.

6. Termination

The Merger Agreement may be terminated at any time prior to Completion by Attachmate or Micro Focus by mutual consent and by either Attachmate or Micro Focus if:

• (a) any governmental authority permanently restrains, enjoins or otherwise prohibits the consummation of the Merger (provided that the terminating party shall have used its commercially reasonable efforts to take all actions necessary to consummate the Merger);
• (b) the Merger shall not have been consummated on or before 12 February 2015 (provided that the terminating party shall have used its commercially reasonable efforts to take all actions necessary to consummate the Merger);
• (c) consummation of the Merger becomes unlawful or otherwise prohibited;
• (d) Shareholders do not approve the Merger at the General Meeting; or
• (e) an offer for Micro Focus becomes or is declared wholly unconditional.

Each of Attachmate and Micro Focus may terminate the Merger Agreement if Micro Focus or Merger Sub (in the case of Attachmate) or Attachmate or Wizard (in the case of Micro Focus) shall have breached any of their respective representations, warranties, covenants or other agreements set forth in the Merger Agreement, or if any representation or warranty shall have become untrue, in each case where such breach would lead to a Material Adverse Effect and such breach is not cured within ten Business Days of notice received from the other party.

Attachmate may also terminate the Merger Agreement if:

• (f) (i) Micro Focus fails to send out notice of a general meeting of Shareholders to consider the Merger Resolutions on or prior to the date that is 15 days after completion of the syndication of the Refinancing or, if earlier, ten days after this document has been approved by the UKLA or (ii) Micro Focus sends out the notice of the General Meeting without a recommendation in it from the Board or (iii) if the Directors modify, qualify or withdraw their recommendation; and
• (g) the General Meeting has not been held within two weeks after the original date set for that meeting in this document.

If the Merger Agreement is terminated in accordance with its terms, it shall be of no further effect, other than in relation to the break fee (see below) and customary provisions related to, inter alia, confidentiality, information and governing law.

7. Break fee

If the Merger Agreement is terminated by Attachmate under paragraph (f) above, Micro Focus has agreed to pay Attachmate a break fee of £11,786,249 in cash (inclusive of any associated tax) other than where the Board has failed to send notice of a general meeting of Shareholders to consider the Merger Resolutions during an offer period relating to Micro Focus and/or withdrawn its recommendation during such an offer period. If Attachmate terminates the Merger Agreement where Micro Focus has failed to send notice of a general meeting to consider the Merger Resolutions during an offer period relating to Micro Focus and/or has withdrawn, modified, qualified or not made its recommendation during such an offer period, if the related third party offer that commenced the offer period and all competing offers subsequently lapse or are withdrawn, then such break fee shall be payable by Micro Focus within five Business Days of the lapsing or withdrawal of all such third party offers.

8. Expenses

Attachmate shall bear the fees and expenses of itself and Wizard relating to the Merger and the Refinancing. Attachmate shall, in addition, pay to the Wizard Shareholders a transaction fee of approximately US\$43.2 million and employment related change of control payments to Attachmate Group employees of approximately US\$23.4 million excluding employer on-costs estimated at approximately US\$1 million.

If the Merger Agreement is terminated by any party for any reason, Attachmate and Micro Focus will bear equally the costs and expenses associated with entering into the New Facilities and any filings made in connection with the Hart-Scott-Rodino Act and all other relevant merger control or anti-trust legislation.

9. Law and jurisdiction

The Merger Agreement is governed by the laws of England and Wales. The parties have irrevocably and unconditionally submitted to the exclusive jurisdiction of the courts of England and Wales in relation to any action or proceeding (including in relation to any non-contractual obligations) arising out of the Merger Agreement.

PART III

INFORMATION ON THE MICRO FOCUS GROUP

1. The Micro Focus Group's business

The Micro Focus Group, headquartered in Newbury, UK, is a software business that specialises in managing a portfolio of infrastructure software assets and provides customers with application management solutions to improve the effectiveness and efficiency of their core IT systems whilst exploiting advances in technology. It provides enterprise application solutions, specifically software solutions for assessing, developing, testing, managing and modernising existing applications. Micro Focus has more than 30 years of heritage in research and development across the popular and pervasive computing languages of COBOL and more recently PL/I. The Directors believe that over time, most corporate organisations have developed complex IT systems and technology applications that lie at the heart of their operational effectiveness. In most cases, these applications have been developed in-house over a period of many years and reside on proprietary technology platforms and systems, becoming increasingly complex, inflexible and expensive to maintain. The Micro Focus Group's solutions offer cost effective ways for such organisations to avoid replacing their mission critical applications with expensive, risky and lengthy package software implementations or rewriting custom upgrades. The Directors believe that the key value proposition to clients is that they are enabled to achieve significant incremental benefits from their prior investments in IT by addressing the technical challenges that link the "old" and the "new" such as Cloud, Big Data or virtualisation.

The proliferation of mobile devices and the emergence of the "Internet of Things" is driving significant growth in transaction volumes which most often occur on the "old" large COBOL and PL/I transaction systems where the Micro Focus Group has deep, often decades-long experience. These increasing volumes of data drive complexity (in development and testing) and cost (in terms of load and volume), and often result in these "old" mature systems becoming ever bigger and more embedded, thereby increasing opportunities for the Micro Focus Group.

To be able to meet its customers' needs, the Micro Focus Group has a number of partnerships and relationships worldwide with system integrators and Independent Software Vendors ("ISVs") as well as other leading technology firms to assist it further in reaching its target markets.

Since May 2005, the Ordinary Shares have been admitted to listing on the Official List and to trading on the main market of the London Stock Exchange. As at 7 October 2014, the last practicable date prior to the publication of this document, Micro Focus had a market capitalisation of £1.42 billion (US\$2.29 billion). As reported in and extracted without material adjustment from the audited consolidated results of the Micro Focus Group for the financial year ended 30 April 2014, the Micro Focus Group reported revenues of US\$433 million, an operating profit of US\$156 million and an Underlying Adjusted EBITDA of US\$196.4 million.

2. The Micro Focus Group's strategy

The Micro Focus Group operates in three geographic areas: North America, International and Asia Pacific & Japan, selling a portfolio of software assets delivering solutions across the software development life cycle, as well as application, modernisation and deployment toolsets. The software products offered by the Micro Focus Group enable organisations to achieve improved functionality and performance from their enterprise applications and middleware, whilst lowering their ongoing cost of IT operations. The Micro Focus Group allocates capital and human resources around its product portfolio with the objective of delivering Total Shareholder Returns in excess of the Company's cost of capital with a core objective to deliver TSRs of 15 to 20 per cent. per annum over the long term. It executes this strategy with a strong discipline around the uses of cash and optimises TSRs with a combination of organic execution, financial leverage and acquisitions. Micro Focus has a base case model which estimates the returns to shareholders from organic execution and the return of excess cash. Any acquisitions made by Micro Focus are only made if the Directors believe that they will generate risk adjusted returns greater than the base case. In the absence of material acquisitions, the Company's practice has been to return excess cash to Shareholders through an appropriate capital structure.

3. Acquisitions

The Micro Focus Group has a successful track record of executing and integrating selected strategic acquisitions. The Micro Focus Group's acquisitions, in addition to delivering shareholder value through cash generation, have supplemented the Micro Focus Group's organic growth strategy by broadening the Micro Focus Group's technology proposition and extending the addressable market and customer base whilst also expanding the geographic reach of the business.

Since its admission to listing on the Official List, the Micro Focus Group has made the following acquisitions:

• 10 November 2006: the acquisition of HAL Knowledge Solutions SpA, a provider of application portfolio management software products and services that provide business intelligence to drive information technology governance.
• 3 May 2007: the acquisition of Acucorp, Inc., an application modernisation vendor with particular strengths in the small and medium sized markets. This acquisition brought a solid customer base and revenue stream and enhanced the Micro Focus Group's core COBOL tools offering.
• 17 June 2008: the acquisition of NetManage, Inc., a software vendor providing technologies to transform core applications into internet-based business solutions. NetManage, Inc. provided the Micro Focus Group with terminal emulation technology to broaden the Micro Focus Group's core legacy modernisation capabilities.
• 11 July 2008: the acquisition of Liant Software Corporation, a provider of software tools for developing business information systems and solutions to help transform existing business applications and processes into modern distributed application software systems tools. Liant Software Corporation's PL/I tools complemented the Micro Focus Group's own COBOL tools and, by allowing the Micro Focus Group to address another core programming language, extended the Micro Focus Group's addressable market.
• 30 December 2008: the acquisition of Relativity Technologies, Inc., which offered application modernisation and application portfolio management software. This was the Micro Focus Group's second acquisition in the assessment space and, coupled with HAL Knowledge Solutions SpA, strengthened the Micro Focus Group's position in this market.
• 29 May 2009: the acquisition from Compuware Corporation of the suite of ASQ and all related sales, support and development infrastructure. This was the Micro Focus Group's first extension into this market.
• 27 July 2009: the acquisition of Borland which, when combined with the ASQ business acquired from Compuware Corporation, helped the Micro Focus Group consolidate its position in the ASQ market and was consistent with Micro Focus's strategy of extending into logically adjacent market segments in order to expand its addressable market and further develop its customer proposition.
• 15 February 2013: the purchase of the Iona CORBA assets (Orbacus, Orbix and Artix) from Progress Software strengthening the Micro Focus Group's offering to customers around this technology.
• 9 October 2013: the acquisition of SoforTe GmbH, which enabled the Micro Focus Group to complete its vision of supporting the full application life cycle from maintenance through to full modernisation for mainframe COBOL applications.
• 29 November 2013: the purchase of OpenFusion CORBA assets from PrismTech. By adding OpenFusion to an extensive portfolio that already included Orbacus, Orbix, VisiBroker and Artix, the Micro Focus Group was further able to consolidate its position as one of the leading global providers of CORBA software in the middleware market.
• 31 December 2013: the acquisition of AccuRev Inc. which extended the Borland portfolio of tools further and improved the Micro Focus Group's execution capability enabling coverage of more of the market opportunity and offering a compelling value-add for existing customers of both companies.

In each case, the Micro Focus Group's management team has successfully integrated the new business into the Micro Focus Group's then existing operations and executed a programme of targeted cost cutting and/or restructuring in order to improve operational efficiencies and group profitability.

4. Organisational structure and business overview

The Micro Focus Group operates from 36 locations across 31 countries. Customers span multiple industry vertical sectors and range from small to large. Approximately 20 per cent. of customer licence revenues are derived from relationships with ISVs who embed the Micro Focus Group's application technology in their own customer offerings, thereby enabling Micro Focus to extract royalty revenues for every ISV customer sale. In addition, the Micro Focus Group benefits from a number of strategic relationships with other technology companies. The Micro Focus Group is party to 10 material intellectual property agreements which licence-in third party software for use by the Micro Focus Group and in one case the agreement also includes the provision of certain licensing services.

During the financial years ended 30 April 2012 and 2013, the Micro Focus Group evolved its product strategy and underlying product roadmap and started to adjust its "Go to Market" structures in order to optimise channel strategy, marketing and lead generation plans. There has also been a shift from direct to inside sales in an effort to improve sales productivity. In the financial year ended 30 April 2014, the Micro Focus Group began to reskill its salesforce through improved training and sales effectiveness tools, started to pilot activity based compensation in its field organisation and launched a sales graduate recruitment programme. The Board is committed to increasing sales productivity and predictability further by generating closer interaction between sales, product management and marketing and product development. A partner relationship management portal has been created in order to drive greater interaction with partners.

Micro Focus Group business model – strong and established technology franchises

The Micro Focus Group specialises in managing infrastructure software assets which have been installed and are delivering value to significant numbers of customers over long periods of time. The Micro Focus Group's product portfolio assets have some or all of the following attributes:

• broad based covering all industrial sectors;
• significant numbers of customers;
• significant maintenance streams;
• relatively high switching costs; and
• significant market positions.

In any IT system the customers' business logic and data remain their competitive advantage. A key challenge is unlocking this competitive advantage through exploitation of the latest technology innovation such as Cloud, Big Data or virtualisation. Typically customers have been forced into costly, disruptive and risky application re-writes to make this possible but with the Micro Focus Group, customers can take a different approach which Micro Focus characterises as bridging the "old" and the "new".

By enabling its customers to link their investments in established technology with the latest innovation, Micro Focus helps customers gain incremental returns on investments they have already made and to preserve and protect their data and business logic. The most notable example of this is that an application written in Micro Focus COBOL 37 years ago (before anyone had thought of Linux, Windows, virtualisation, cloud or wireless communications) will work today in all of those environments. Micro Focus has made this a reality. By contrast, if a COBOL application had been rewritten in another language, to execute in Java or .NET, the customer would have to do additional incremental re-writes and incur significant costs every time there was a major technology change.

In essence, Micro Focus helps its customers bridge the "old" and the "new" enabling them to leverage additional value from their investments in critical business applications.

Current portfolio – underpinning the business model with clear execution and investment discipline

The typical stages of a product life cycle are from a new product introduction through to high growth to broad adoption and maturity, to decline and ultimately obsolescence, and are depicted in the following diagram:

Note: The vertical axis represents the product adoption, while the horizontal axis represents elapsed time.

When considering any investment opportunities, the Board evaluates the options against a set of characteristics mapped to each stage of this life cycle. This enables the product portfolio to be categorised into one of the four quadrants represented in the chart below:

Portfolio composition
New Models	Growth Drivers
(subscription, Cloud)	(build the future)
Niche	Core
(optimise returns)	(protect)

The majority of the Micro Focus Group's revenues and investment focus are represented by the "Growth Drivers" and "Core" quadrants represented above. The Board seeks to identify critical technologies where the costs and risk of replacement are high and the returns from such investment questionable. These technologies can then be enabled for new operating environments such as JAVA or .NET or new use cases such as the Cloud or mobile. The Micro Focus Group's investment in COBOL enabling deployment to the Cloud and CORBA and enabling connection into the broader service-orientated architecture are examples of ensuring existing applications can leverage new technologies to avoid costly application re-writes and continue to deliver business value.

The focus for "New Models" is to identify new innovation that is applicable to the "Core" and "Growth Driver" propositions, particularly where new innovation is needed to leverage existing applications in order to deliver returns or open new opportunities. Silk Performer Cloudburst is an example of a Cloud based implementation of the Silk Performer product which enables customers to execute a hybrid solution with almost unlimited capacity to support operational peak loads. The "Niche" quadrant addresses technologies that are nearing end of life and subsequent replacement but which may continue to deliver significant value to certain customers. The Micro Focus Group can help customers with support models to extend life and ensure protection of the customer's investment for as long as possible.

Product portfolio

The Micro Focus Group's overall portfolio is managed and run in the following individual product portfolios:

• COBOL Development;
• Mainframe Solutions;
• Borland;
• CORBA; and
• Niche.

• COBOL Development ("CD")

Micro Focus continues to invest in and strengthen its core product portfolio of CD which primarily targets the off mainframe distributed development market. The CD portfolio delivers products that enable programmers to develop and deploy applications written in COBOL across multiple platforms including Windows, UNIX, Linux and the Cloud. Further developments have been introduced to Visual COBOL in relation to which Micro Focus has received a positive response from customers and partners. Visual COBOL V2.2 provides the fastest way for customers to move to Java Virtual Machine, .NET or Cloud environments whilst protecting their existing COBOL investments and intellectual property. COBOL applications continue to be at the heart of the world's business transactions and to power the majority of large organisations' key business operations.

• Mainframe Solutions ("MS")

The MS product set addresses customers' needs to get the most value out of their mainframe environment. Following the launch of the MS strategy in 2013 there has been positive growth in 2014. Feedback from customers and prospects has been positive and suggests that the positioning is relevant to the current marketplace. The product offering was further enhanced by the purchase of the technology of SoforTe GmbH which helped to speed up delivery of the product roadmap. The launch last year of Enterprise Developer for zEnterprise took the Micro Focus Group's core Visual COBOL technology and, by delivering it in an Eclipse environment, made COBOL capabilities available to the mainframe COBOL user, thereby extending reach and market opportunity. The combination of this capability and the SoforTe GmbH technology enables the support of the full application lifecycle from maintenance through to full modernisation for mainframe COBOL applications. In April 2014 the Micro Focus Group announced its first significant contract to provide its MS tool set on a subscription basis to a major systems integrator.

• Borland

The Borland product portfolio enables companies to optimise the end to end supply chain process of delivering software, from definition (requirements capture) through to quality (testing and change management). The portfolio enables clients to better align their teams and for that alignment to extend outside the client to suppliers and partners. This helps to provide the foundation for accelerated delivery of software projects and can be leveraged by companies seeking competitive advantage, improved customer satisfaction and optimised operational efficiency. Micro Focus has invested significantly in the Borland product line to ensure relevance to key market growth areas, specifically: agile development, Cloud-based service delivery models, and the rapid adoption of mobile devices as a business technology platform. This investment has made customer engagement more effective and helped to deliver organic growth in 2014. The acquisition of AccuRev Inc. in December 2013 extended the portfolio further and improved execution capability enabling coverage of more of the market opportunity and offering attractive value-add for existing customers of both Borland and the Micro Focus Group. The Borland products (Silk, Caliber, StarTeam and AccuRev) have a large addressable market and have clear product roadmaps and differentiated customer propositions.

• CORBA

Following the purchase of the Iona CORBA assets (Orbacus, Orbix and Artix) from Progress Software in February 2013, the Micro Focus Group's position was further strengthened by acquiring the OpenFusion CORBA assets from PrismTech Group in November 2013. The Micro Focus Group now owns the three leading CORBA products: Visibroker, Orbix and OpenFusion as well as the Orbacus mainframe product. These products provide strong functionality and performance to companies with installed networks with a requirement for high speed and secure transfer of data between systems.

• Niche

The Niche product portfolio comprises mature products that are expected to see on-going revenue decline but has provided good margins and strong cash flow.

5. Product research and development

The Micro Focus Group invests heavily in product development and has seen significant enhancements to existing products and has accelerated the development of new products. New versions of products such as Visual COBOL, Enterprise Developer and Silk Performer have been released in the past year. Through its market knowledge and close contact with customers, the Board has sought to refine products to respond to the changing needs of the Micro Focus Group's customers.

During the financial years ended 30 April 2012, 2013 and 2014, an aggregate of US\$165.2 million (US\$57.8 million for the financial year ended 30 April 2014) was charged to the consolidated statement of comprehensive income of the Micro Focus Group in respect of research and development expenditure. The Directors intend to continue to focus investment in growth and core products and do not intend to dispose of declining products unless such products can achieve greater than the discounted cash flow they would generate in the ownership of the Micro Focus Group.

6. Selected Financial Information for the Micro Focus Group

The selected historical financial information and other historical financial information in relation to the Micro Focus Group in this Part III has been extracted without material adjustment from the audited consolidated financial statements of the Micro Focus Group in the annual report and accounts of Micro Focus for the financial years ended 30 April 2012, 30 April 2013 and 30 April 2014 as referred to in Part VI (Financial Information of the Micro Focus Group) of this document. The auditors of Micro Focus, PricewaterhouseCoopers LLP, issued unqualified audit opinions on the Micro Focus Group's consolidated financial statements for each of the three financial years ended 30 April 2012, 2013 and 2014. Investors should read the whole of this document and the documents incorporated herein by reference and should not just rely on the financial information set out in this Part III.

Consolidated statement of comprehensive income

		Financial year ended 30 April
		Restated2
	2012	2013	2014
	US\$'000	US\$'000	US\$'000
Revenue	434,838 —————	412,167 —————	433,058 —————
Cost of sales	(49,267)	(34,069)	(29,912)
Gross profit	————— 385,571 —————	————— 378,098 —————	————— 403,146 —————
Selling and distribution costs	(127,253)	(117,558)	(120,669)
Research and development expense	(54,768)	(52,599)	(57,833)
Administrative expense	(47,759)	(48,503)	(68,924)
Operating profit Analysed as:	————— 155,791	————— 159,438	————— 155,720
Operating profit before exceptional items	153,349	159,438	155,720
Exceptional items	2,442	–	–
Operating profit	————— 155,791	————— 159,438	————— 155,720
Finance costs	————— (6,836)	————— (8,307)	————— (8,197)
Finance income	295	413	318
Profit before tax	————— 149,250	————— 151,544	————— 147,841
Taxation	————— (28,630)	————— (29,767)	————— (25,759)
Profit for the year	————— 120,620 —————	————— 121,777 —————	————— 122,082 —————
Other comprehensive income: Items that may be subsequently reclassified to profit or loss	—————	—————	—————
Currency translation differences	1,045	(2,458)	2,176
Other comprehensive income for the year	1,045	(2,458)	2,176
Total comprehensive income for the year	121,665 —————	119,319 —————	124,258 —————
Profit attributable to:
Owners of the parent:	121,665 —————	119,319 —————	124,258 —————
Earnings per share expressed in cents per share	cents	cents	cents
– basic	65.77	77.83	84.75
– diluted	64.11	75.23	82.35
Earnings per share expressed in pence per share	pence	pence	pence
– basic	41.29	49.43	52.92
– diluted	40.25	47.78	51.43
	—————	—————	—————

² The comparatives for the financial year ended 30 April 2013 have been restated to reflect the impact of a misstatement of revenue caused by invalid orders within the Micro Focus Group's sales channel network in India. Further details are set out in Note 34 to the consolidated historical financial information of the Micro Focus Group for the financial year ended 30 April 2014.

Consolidated statement of financial position

	As at 30 April	As at 30 April	As at 30 April
	2012	2013	2014
			Restated3
	US\$'000	US\$'000	US\$'000
Non-current assets:
Goodwill	274,340	284,661	308,182
Other intangible assets	97,811	93,644	92,533
Property, plant and equipment	22,302	21,157	21,599
Deferred tax assets	39,782	38,134	42,631
	————— 434,235	————— 437,596	————— 464,945
Current assets:
Inventories	460	144	133
Trade and other receivables	91,856	92,496	107,139
Cash and cash equivalents	30,410 —————	37,943 —————	32,800 —————
	122,726 —————	130,583 —————	140,072 —————
Total assets	556,961	568,179	605,017
Current liabilities:	—————	—————	—————
Trade and other payables	61,164	56,939	77,876
Borrowings	143,613	215,634	293,830
Provisions	3,721	8,992	4,382
Current tax liabilities	35,438	41,795	42,177
Deferred income	136,135 —————	138,306 —————	150,168 —————
	380,071	461,666	568,433
Non-current liabilities:
Deferred income	12,611	9,646	12,629
Long-term provisions	6,794	2,009	4,920
Deferred tax liabilities	39,939 —————	37,042 —————	35,286 —————
	59,344 —————	48,697 —————	52,835 —————
Total liabilities	439,415 —————	510,363 —————	621,268 —————
Net assets	117,546	57,816	(16,251)
Equity attributable to the owners of the parent	—————	—————	—————
Share capital	37,787	37,797	37,802
Share premium account	61,311	13,523	14,546
Retained earnings	(6,480)	(63,053)	(140,324)
Foreign currency translation	(4,891)	(7,349)	(5,173)
Other reserves	29,819 —————	76,898 —————	76,898 —————
Total (deficit)/equity attributable to the
owners of the parent	117,546	57,816	(16,251)

————— ————— —————

³ The comparatives for the financial year ended 30 April 2013 have been restated to reflect the impact of a misstatement of revenue caused by invalid orders within the Micro Focus Group's sales channel network in India. Further details are set out in Note 34 to the consolidated historical financial information of the Micro Focus Group for the financial year ended 30 April 2014.

Consolidated statement of cash flows

		Financial year ended 30 April
		Restated4
	2012	2013	2014
	US\$'000	US\$'000	US\$'000
Cash flows from operating activities
Cash generated from operations	196,659	192,440	206,775
Interest paid	(2,545)	(5,076)	(5,752)
Tax paid	(11,936)	(22,072)	(26,049)
Net cash generated from operating activities	————— 182,178	————— 165,292	————— 174,974
Cash flows from investing activities
Payments for intangible assets	(20,946)	(20,327)	(19,055)
Purchase of property, plant and equipment	(18,273)	(3,312)	(2,908)
Interest received	295	413	317
Payments for the acquisition of business	————— –	————— (15,000)	————— (35,195)
Net cash acquired with acquisitions	– —————	– —————	3,261 —————
Net cash used in investing activities	(38,924)	(38,226)	(53,580)
Cash flows from financing activities
Payments for repurchase of shares	(62,498)	–	–
Proceeds from issue of ordinary share capital	1,253	730	1,028
Foreign exchange gain on hedging contracts
related to the Return of Value	635	2,393	4,470
Return of value paid to shareholders	(129,604)	(131,171)	(144,664)
Costs associated with the return of value	(1,116)	(491)	(536)
Proceeds from sale of fractional shares	2	3	–
Repayment of bank borrowings	(203,000)	(142,307)	(134,000)
Proceeds from bank borrowings	308,000	212,307	215,000
Bank loan costs	(4,293)	(1,210)	(5,248)
Dividends paid to owners	(46,262)	(57,160)	(62,633)
Net cash used in financing activities	————— (136,883)	————— (116,906)	————— (126,583)
Effects of exchange rate changes	(2,041) —————	(2,627) —————	46 —————
Net (decrease)/increase in cash and cash equivalents	4,330	7,533	(5,143)
Cash and cash equivalents at 1 May	26,080 —————	30,410 —————	37,943 —————
Cash and cash equivalents at 30 April	30,410	37,943	32,800
	—————	—————	—————

⁴ The comparatives for the financial year ended 30 April 2013 have been restated to reflect the impact of a misstatement of revenue caused by invalid orders within the Micro Focus Group's sales channel network in India. Further details are set out in Note 34 to the consolidated historical financial information of the Micro Focus Group for the financial year ended 30 April 2014.

PART IV

INFORMATION ON THE ATTACHMATE GROUP

1. The Attachmate Group's Business

The Attachmate Group is one of the leading global providers of enterprise infrastructure software solutions to businesses, governments and other large organisations in order to extend, manage and secure complex IT environments.

The Attachmate Group's principal solutions are organised into four software product portfolios:

• Attachmate, which delivers advanced software for terminal emulation, legacy modernisation, managed file transfer and enterprise fraud management;
• NetIQ, which helps organisations tackle information protection challenges cost-effectively and manage the complexity of dynamic, highly-distributed application environments;
• Novell, which helps businesses work more efficiently and collaborate more effectively; and
• SUSE Linux, which offers a family of software products centred around SUSE Linux Enterprise, an interoperable platform for core computing needs supported by a shared global support and services organisation.

The Attachmate Group has a stable base of core relationship customers whose existence supports a strong recurring revenue base, with recurring revenues representing 71.3, 71.0 and 68.9 per cent. of total revenue for the financial years ended 31 March 2014, 2013 and 2012. The Attachmate Group has been in business for over 30 years. It has more than 3,300 employees across 80 offices worldwide from which it serves more than 20,000 customers.

2. The Attachmate Group's Strategy

The Attachmate Group delivers enterprise software solutions that make enterprises more efficient, innovative and secure. Its objective is to be the world's leading independent software provider for host connectivity, network and endpoint management, security, Linux operating systems, messaging and collaboration solutions. The Attachmate Group's solutions help enterprises and governments access, manage, communicate and collaborate across modern and complex IT architectures including mainframe, distributed, mobile and Cloud environments. It has a broad and deep portfolio of software solutions with which to execute its business strategy and these solutions allow customers to extend the value of their existing technology investments and lengthen the useful lifecycles of those investments. As a leveraged entity, the Attachmate Group balances investing in growth with strong discipline in operating efficiently, particularly in more mature product areas.

To accomplish this, key elements of the Attachmate Group's strategy include:

• Continuous innovation. The Attachmate Group focuses on improving its products and solutions portfolio to enhance its features and capabilities.
• Expansion of product offerings. The Attachmate Group has a broad product portfolio, and its goal is to continue to further broaden its set of software solutions which it delivers to its large base of existing customers.
• Addressing the shift in technology and customer needs. The Attachmate Group aims to deliver new differentiated solutions that enable its customers to capture the opportunities of disruptive technologies such as mobile technologies, social credentials authentication, Cloud and Open Source computing while leveraging and extending their existing systems investments.

• Strong focus on cash flow and de-levering. Given the nature of the Attachmate Group's capital structure, it looks to balance efforts to grow its business with efficiently running its operations to drive organic de-leveraging of its balance sheet and to return value to its shareholders.

3. Acquisitions and Disposals

The Attachmate Group was formed primarily from the combination of four previously independent businesses acquired by a consortium of private equity investors between December 2004 and April 2011.

• In December 2004, WRQ was acquired. WRQ was founded in 1981 as a pioneer in the development and commercialisation of host connectivity software that enabled personal computers to emulate the screens of mainframe computers. Prior to its acquisition, WRQ offered two main software products which offer a wide range of functionality to management of information systems.
• In May 2005, Wizard acquired Attachmate Corporation. Prior to its acquisition, Attachmate, which was founded in 1982, had been one of the software industry's largest privately held software companies and the only all-mainframe connectivity expert. Its products at the time provided for connectivity between desktops and host systems via emulation and visibility into host system data for a variety of devices. WRQ was merged with Attachmate Corporation to form the Attachmate Group.
• In June 2006, Wizard acquired NetIQ Corporation for approximately US\$503.3 million and integrated it into the Attachmate Group. NetIQ is a provider of integrated systems and security management solutions that empower IT management with the knowledge and automation to assure consistent service from the IT infrastructure. NetIQ's systems and security management software solutions enable organisations to increase the performance of IT services, protect critical information and applications and the IT systems they run on, sustain compliance of IT systems within company and regulatory policies, and streamline the administration of user tasks via the delegation of privileges and self-service functionality.
• On 27 April 2011, the Attachmate Group acquired Novell for an equity value of approximately US\$2.2 billion. The combined operations of the Attachmate Group and Novell represented a highly strategic transaction, creating a scale player with mature businesses, significant installed bases, substantive recurring revenue streams and products with high switching costs. Novell develops, sells and installs enterprise-quality software that is positioned in the operating systems and infrastructure software layers of the information technology industry, including Linux operating system software for a range of computers from desktops to servers. In addition, Novell provides a portfolio of integrated IT management software for systems, identity and security management for both Linux and mixed platform environments.
• On 26 April 2012: Novell entered into an agreement to sell buildings G and H from its Provo, Utah campus to Select Income REIT ("SIRE") for US\$85,500,000. At the same time Novell also entered into a lease agreement with Select Income Reit to lease back buildings G and H for a 12.5 year term. The sale agreement closed on 1 June 2012 when 2012 Novell received US\$83,774,842 from SIRE, net of broker and title fees as well as the first months' rent of US\$554,976.

4. Organisational Structure and Business Overview

Organisational Structure

The Attachmate Group maintains its registered office in Houston, Texas and operates its business from four distribution offices in Provo, Utah; Houston, Texas; Seattle, Washington and Nuremburg, Germany. It is divided into four product portfolios focused on the sales and development of certain software families. Those four product portfolios are:

• Attachmate, which delivers advanced software for terminal emulation, legacy modernisation, managed file transfer. and enterprise fraud management software;

• NetIQ, which is focused on systems management, identity, security and compliance management and resource management software;
• Novell, which is focused on collaboration, file and networking services and endpoint management software; and
• Linux SUSE, which is focused on enterprise Linux servers, software appliances and Linux desktops.

Customers

The Attachmate Group has historically had a loyal customer base, resulting in low customer turnover. The distributed characteristics of its solutions and the mission critical nature of its software make displacement difficult. In addition, end users frequently implement custom workflows on top of certain of Attachmate Group's software to further customise the solutions for their particular purposes, thereby significantly elevating the switching costs. The primary industries in which the Attachmate Group has customers are professional services, government, financial services, manufacturing, health care, retail, technology and academia. These customers are located around the world, though approximately half of them, by revenue, are located in North America.

4.1 Attachmate (products)

Background

The Attachmate product portfolio assists businesses in extending, managing and securing their IT investments. Software from this product portfolio has, in one form or another, assisted in these tasks for over 30 years. In particular, Attachmate's product portfolio enables IT organisations using mainframe applications to provide business-critical information to the end user of the system while modernising the functionality and access to the information when that information is held across a broad array of new and legacy systems.

Product Offerings

The following outlines the Attachmate Group's products by product family and by type of software:

(a) Terminal Emulation

Reflection, Reflection Security Gateway, Extra! and InfoConnect solutions provide reliable connections to applications on IBM, HP, Unix, Unisys, OpenVMS, Tandem, IBM TPF and ALCS systems from any web browser or desktop environment. Advanced features are designed to strengthen host security, improve user productivity and support existing and emerging technologies.

(b) PC X Server

The Reflection family of X servers connects Windows, Unix, Linux and Mac users to graphical Unix applications and desktop environments (such as GNOME, KDE and CDE). These highpowered solutions deliver rich, precise graphics with unrivalled speed and accuracy enabling organisations to run Unix-based graphics-intensive applications in today's hybrid multiplatform IT environments.

(c) Legacy Integration

The Databridge and Verastream software program suites comprise the core of Attachmate's legacy integration portfolio:

• Databridge enables business information to be readily accessible for analysis and processing. It provides an Extract, Transform, Load solution that mirrors data in a secondary working database, while keeping it updated in real time. Databridge allows companies to combine data from disparate sources, integrate it into modern businessintelligence systems, perform trend analysis and evaluate key performance indicators. Databridge modernises processes and eliminates coding needs for data access from legacy applications and databases; and

• Verastream is a powerful integration platform that puts mainframe assets to work in new ways as mobile apps, web applications, and web services for internal and Cloud initiatives. Verastream enables enterprises to update the existing applications to meet the demands of today's mobile workforce. An advanced mobile enterprise application platform, Verastream allows packaging of existing IT assets into any format for a wide range of devices. Verastream enables enterprises to deliver mobile applications while maintaining a dynamic architecture that can adapt as mobile technologies evolve.
• (d) Managed File Transfer

Attachmate's managed file transfer solutions, FileXpress and Reflection for Secure IT, provide a range of tactical and strategic solutions for securely transferring files of any size across all major platforms to any location enabling businesses to work seamlessly with partners and customers by supporting multiple platforms, web browsers, user interfaces, security protocols and devices.

Market & Competitive Landscape

IBM is the largest provider of host access. Attachmate is the next largest player, specialising in environments with heterogeneous systems or platforms where its solution is able to address the needs of enterprises which have a mixture of systems and platform solutions. There are many competitors in the market for host integration often addressing very specific vertical needs.

4.2 NetIQ

Background

The NetIQ product portfolio offers broad, proven solutions for identity and access management, security and data centre management. The NetIQ product portfolio enables customers to manage, secure and measure the critical elements of a business' IT infrastructure while helping to address the challenges of mobility, BYOD and complex environments, both in the Cloud or on the premises.

Product Offerings

The following product categories comprise NetIQ's offering:

(a) Identity and Access Management ("IAM")

IAM enables simple, secure access for the right people at the right time by using integrated identity information to create, modify, and retire identities and control their access to enterprise, Cloud and mobile resources. The solution features identity management, access management, single sign-on, access governance, identity tracking and active directory administration. The following are the various IAM products that the NetIQ business unit offers.

• Access Governance Suite helps organisations understand, monitor, manage and mitigate risks associated with granting users access to information resources;
• Access Manager provides single sign-on for enterprise web applications as well as federation for private and public Cloud applications;
• Access Review enables the review of access rights to applications in order to ensure appropriate certification of these rights;
• Advanced Authentication Framework enables organisations to move beyond username and password to a more secure way to protect sensitive information;

• CloudAccess enables IT to extend the user's single sign-on experience to SaaS or Cloud applications while keeping access secure;

• Directory and Resource Administrator limits administrative privileges and restricts directory views to specified roles or individuals;

• eDirectory is the foundation for the world's largest identity management deployments, and an integral part of Identity Manager. It provides centralised identity management, infrastructure, security and scalability to all types of applications running behind and beyond the firewall;
• Exchange Administrator enables delegated Exchange administration that restricts privileges to specified roles or individuals;
• Group Policy Administrator enables IT organisations to edit, test, and review Group Policy Objects changes before implementing them;
• MobileAccess enables IT administrators to extend the user's single sign-on experience to applications on mobile devices while keeping access secure;
• Identity Manager delivers an intelligent identity management framework to service clients' enterprises – inside the firewall and into the Cloud;
• Identity Tracking for Identity Manager monitors user activity in key systems and takes corrective actions in case of non-compliant or suspicious behaviours;
• The Lightweight Directory Access Protocol ("LDAP") Proxy is a lightweight proxy server that acts as a middleware layer between LDAP clients and LDAP directory servers for load balancing, fail-over, centralised auditing, and other use cases;
• Privileged User Manager allows IT administrators to work on systems without exposing superuser passwords or root-account credentials;
• SecureLogin streamlines user authentication for enterprise applications by providing a single login experience to users;
• Self Service Password Reset enables users to reset their passwords themselves across the IT environment and systems;
• SocialAccess allows business and government entities to leverage social identity providers to share select identity information for federated authentication; and
• Validator simplifies and automates development and testing for Identity Manager environments and shortens overall time-to-market.

(b) Security Management

Security Management provides powerful security intelligence for protecting information assets. The Attachmate Group's Security Management solutions provide visibility and control of user activities, security events, and critical systems across the organisation to help reduce the risk of a data breach and keep systems compliant. The following are the various security management software solutions that the Attachmate Group sells through its NetIQ business unit:

• Change Guardian proactively identifies and responds to unmanaged changes that could lead to security breaches or failed audits;
• Directory and Resource Administrator limits administrative privileges and restricts directory views to specified roles or individuals;

• iSeries Security provides simplified compliance auditing, security monitoring and real-time protection for IBM iSeries systems;

• Secure Configuration Manager continuously and proactively finds and repairs configuration errors that could lead to security breaches, failed audits, or downtime; and

• Sentinel is a Security Information and Event Management ("SIEM") solution that simplifies the deployment, management and day-to-day use of SIEM.

(c) IT Operations Management

IT Operations Management enables always-available services, applications and systems. NetIQ IT operations management ("ITOM") solutions, a part of NetIQ Data Center Management, integrate service management, application management and systems management, to give organisations a holistic view of their IT environment and business services. NetIQ provides application performance management, IT process automation, business service management and systems management solutions to improve performance and availability of the IT applications. The following are the software applications for ITOM solutions that NetIQ offers:

• Aegis is a process automation toolkit for building IT processes and integrating applications. Aegis allows IT administrators to streamline repetitive manual processes through automated workflows;
• AppManager is a monitoring suite for technologies like virtualisation, Unix applications, Microsoft applications and databases;
• Cloud Manager delivers a complete Infrastructure as a Service ("IaaS") experience for both IT consumers and IT provider; and
• Operations Center is a business service management solution that delivers a holistic view of mixed IT environments.

(d) Disaster Recovery

Disaster Recovery enables affordable, high-performance protection for physical and virtual workloads. The following are the software programs for disaster recovery that NetIQ offers:

• PlateSpin Forge is an all-in-one disaster recovery hardware appliance that protects both physical and virtual workloads; and
• PlateSpin Protect is a disaster recovery software that uses virtual infrastructure capacity to protect both physical and virtual workloads.
• Workload Migration enables organisations to plan and execute anywhere-to-anywhere server workload migrations. NetIQ's physical/virtual conversion tools deliver fast and efficient anywhere-to-anywhere migration.
• PlateSpin Migrate is a physical/virtual conversion tool that delivers fast and efficient Physical-to-Virtual and Virtual-to-Virtual and anywhere-to-anywhere migrations; and
• PlateSpin Recon is a virtualisation planning tool that provides actionable data on which physical servers to virtualise.

(e) Unified Communications & VoIP

Unified Communications & VoIP software applications enable organisations to assess, diagnose, and manage for better quality of service for VoIP applications. The following are the software applications for VoIP offered by NetIQ:

• Vivinet Assessor – allows organisations to model VoIP network performance before investing in a VoIP deployment to predict the overall call quality on the network, and to efficiently identify where upgrades will be needed to avoid call quality problems; and

• Vivinet Diagnostics – a VoIP troubleshooting tool that automatically pinpoints call quality problems in Voice over IP networks and identifies network issues.

Market & Competitive Landscape

There are a number of macro and industry drivers attributable to this space, including:

• the drive for access governance including access request management, role management and access recertification to ensure sensitive data is properly governed, reduce IT administration costs and prevent dangerous leaks of sensitive information due to unchecked data access privileges;
• increasing industry and government requirements for compliance and event audits;
• demand for more robust security and data protection of personal and enterprise assets and data, especially as a result of increasing malicious corporate attacks and costly security breach headlines;
• the rise of Cloud computing driving the need for federated identity management platforms for inter/intra-company communications; and
• the consumerisation of IT driving rapid uptake in mobile device utilisation which requires solutions for user authentication and access management.

The key trends driving this growth are virtualisation and Cloud development as companies rely on more virtual platforms for more complex and mission-critical processes, as well as demand for more complex software to both manage the virtual server environment and protect information and systems. The competitive landscape is heavily fragmented and includes companies such as HP, BMC, IBM, CA and Microsoft as well as a number of small private companies with offerings in the space.

4.3 Novell

Background

The Novell product portfolio includes software that enables organisations to be more productive and promote work environments that are more secure and easier to manage, regardless of how or where people work. The Novell products support thousands of organisations around the world to help enable work forces in the office and on the go. These solutions include endpoint management, collaboration, and file and networking solutions.

Product Offerings

(a) Collaboration

Novell's collaboration products help employees boost their productivity, in a way that is cost and time efficient for IT departments. Novell's collaboration portfolio includes email, calendaring, contact management and task management; team workspaces with doc management, workflows, and social streams; and mobile access. The following product categories comprise Novell's collaboration offering:

• GroupWise provides secure e-mail, calendaring, contact management and task management with mobile synchronisation; and
• Vibe provides secure team collaboration with document management and workflow features, that can replace existing intranet systems.
• (b) Endpoint Management

Novell's endpoint management products enable IT staff to give the proper working environment to each employee and keep it updated remotely using a unified management console. Organisations that utilise Novell's solution can ensure all devices are patched, compliant, secure and properly equipped. The following product categories comprise Novell's endpoint management offering:

• Service Desk streamlines and automates the way clients provide IT services to business;
• ZENworks Application Virtualisation allows clients to package and deploy virtualised applications with predictive application streaming that delivers apps based on user behaviour;
• ZENworks Asset Management provides hardware and software reports that integrate licensing, installation and usage data;
• ZENworks Configuration Management provides automated endpoint management, software distribution, user support and accelerated operating system migration;
• ZENworks Endpoint Security Management delivers identity-based protection for mobile devices like laptops, smart phones and thumb drives, as well as offers firewall protection;
• ZENworks Full Disk Encryption protects the data on laptops and desktops with pushbutton ease;
• ZENworks Mobile Management secures and manages the mobile devices clients' users want to work on, both corporate-issued and personal ("BYOD"); and
• ZENworks Patch Management automates monitoring and remediation and patch assessment and monitors patch compliance to detect security vulnerabilities.

(c) File and Networking Services

Novell provides core file, print, and networking services that can keep users productive while protecting the client's business, even when operating in a mixed Windows/Linux/Mac environment. File and networking services enable organisations to control and automate file storage, simplify network management, enable users to install printers easily and automate disaster recovery of key business systems. The following product categories comprise Novell's file and networking services offering:

• Business Continuity Clustering automates the configuration and management of highavailability, clustered servers;
• Cluster Services for Open Enterprise Server simplifies resource management on a Storage Area Network and enables high-availability;
• Dynamic File Services enables clients to create policies for dynamic and automated data storage process;
• File Management Suite allows to discover, analyse, provision, relocate and optimise file storage based on business policies;
• File Reporter examines and reports on terabytes of unstructured file data and forecasts storage growth;
• Filr allows clients' users to access their home directories and network folders on any mobile device;
• iFolder stores files for secure accessibility online and offline, across systems and on the web;

• iPrint delivers scalable, self-service enterprise print management features, as well as mobile printing;

• Open Enterprise Server offers NetWare services such as centralised server management and secure file storage on SUSE Linux Enterprise Server; and

• Storage Manager provides automated management of file storage for users and workgroups.

Market & Competitive Landscape

Companies in this space provide enterprise infrastructure software (Netware, OES) and collaborative solutions (Groupwise) that allow organisations to facilitate communication and collaboration between their constituents. Competitors of the Attachmate Group include Microsoft (via its Windows Server, Outlook, Communicator, Live Meeting, Live and System Center Configuration Manager products), IBM (via its Lotus Notes, Lotus Sametime, Lotus Connections, Lotus Quickr and Storage Manager software), Citrix (via its ShareFile and XenApp programs), Google (via its Gmail, Gchat, GCalendar, Documents, Drive offerings), LANDesk (which offers its LANDesk Management Suite) and Symantec (the Symantec Client Management Skill program). In general, enterprise communication products have high renewal rates and high switching costs. The high costs associated with switching from heavily embedded systems limit the number of customers willing to transition to other software.

4.4 SUSE

Background

Established in 1992, SUSE is the original provider of the enterprise Linux distribution and the most interoperable platform for mission-critical computing. With a portfolio centred around SUSE Linux Enterprise, SUSE products power thousands of organisations around the world across physical, virtual and Cloud environments.

Product Offerings

(a) Server

SUSE server products enable clients to reliably and securely run mission-critical applications anywhere: physical, virtual and Cloud. The following editions of SUSE are available, tailored to specific customer use and environment:

• SUSE Linux Enterprise Server is a highly reliable, scalable and secure server operating system, built to power both physical and virtual mission-critical workloads. With this foundation, enterprises can deliver business services, enable secure networks and manage heterogeneous IT resources;
• SUSE Linux Enterprise Server for System z is the optimised version of SUSE Linux Enterprise Server designed to run on IBM System z mainframes. The Attachmate Group estimates that approximately 80 per cent. of all mainframe Linux in existence at the date of the document is SLES for system z;
• SUSE Linux Enterprise Server for SAP Applications is the only operating system optimised for all mission-critical SAP software solutions, including appliances and is recommended by SAP as a preferred Linux platform; and
• SUSE Linux Enterprise Server for high performance computing is a version of SUSE Linux Enterprise Server which uses high performance computing to solve the most demanding computational and data-intensive problems.

(b) Extensions

SUSE's extensions products satisfy real-time, high availability and geo-clustering client needs and include the following products:

• SUSE Linux Enterprise High Availability Extension reduces unplanned downtime with affordable Linux clustering;
• Geo Clustering for SUSE Linux Enterprise High Availability Extension keeps regional disasters from interrupting clients' mission critical workloads;
• SUSE Linux Enterprise Real Time Extension runs time-sensitive applications reliably and predictably;
• SUSE Linux Enterprise Virtual Machine Driver Pack boosts virtual workload performance; and
• SUSE Manager Management Pack for Microsoft System Center enables Windows systems administrators to view server health information and perform both Windows and Linux patching via the same console.

(c) Management and Cloud

SUSE's management and Cloud products are compatible with a broad ecosystem of over 20 public Cloud providers, enabling clients to deploy, maintain and manage their servers and OpenStack powered Cloud infrastructure. These products include the following software programs:

• SUSE Cloud deploys and manages enterprise-ready OpenStack powered Cloud infrastructure and services;
• SUSE Manager offers improved usability, provisioning, power management and new IT compliance and security features;
• SUSE Studio allows clients to easily build and manage portable and Cloud-enabled applications;
• SUSE Linux Enterprise Server for Amazon EC2 makes it easy to build customised server images for Amazon EC2 in SUSE and directly deploy them into an Amazon Web Services environment; and
• SUSE Linux Enterprise Server for Windows Azure provides superior reliability and security for Cloud computing.
• (d) Desktop

Desktop provides an Open Source alternative to the traditional enterprise desktop operating system environment through the following programs:

• SUSE Linux Enterprise Desktop delivers essential office functionality, designed for mixed IT environments, with the security, manageability and efficiency of Linux; and
• LibreOffice provides a comprehensive, professional-quality productivity suite.

Market & Competitive Landscape

Linux is an Open Source operating system and has been a fast growing sub-segment of the enterprise operating system market. The Attachmate Group competes with certain providers of Linux such as RedHat, Oracle and Canonical. There are a number of macro and industry drivers attributable to the space:

• continuous Unix to Linux migration relative to Unix, Linux possesses superior performance relative to its cost, broader support availability, and greater platform openness;
• increased OEM penetration Linux has continuously penetrated the server OEM space, with most independent hardware vendors carrying Linux on top of their hardware. As Linux's share has improved, other hardware vendors and some business application vendors have begun developing their products for optimal performance and reliability on Linux (for example: Oracle and SAP);
• growing acceptance of Linux in large-scale systems Linux is increasingly being used in mission-critical systems, Cloud and data centre infrastructure;
• major independent hardware vendors, such as IBM and component manufacturers, such as Intel, have made a firm, long-term commitment to growing Linux as an enterprise platform. Also, IBM z/OS is the dominant mainframe operating system in use today representing a migration opportunity for Linux vendors; and
• Linux adoption in enterprise is also being driven by high performance computing and Big Data analytics.

5. Sales and Marketing

The Attachmate Group sells its products through a direct salesforce as well as utilising distributors, resellers and fulfilment partners. The Attachmate Group's salesforce is aligned geographically with concentrations in countries which provide the highest sales opportunity. Salespersons are allowed to sell specific products in specific territories. As an Open Source business, SUSE does not sell software licences. Instead, SUSE sells subscriptions of varying annual duration (e.g. one, three or five years), which include maintenance and support benefits. The subscription pricing and packaging can be based on physical machines, number of CPUs or virtual instances depending on customer requirements.

On-going product maintenance is typically sold to purchasers of the Attachmate Group's software. Maintenance gives the user the right to upgrades, technical-support, bug fixes and any patches that are published. These high maintenance renewal rates and the Attachmate Group's extensive customer base provide a steady and predictable recurring revenue stream.

6. Research & Development

The Attachmate Group had approximately 1,323 research and development employees (as at 31 March 2014) plus an additional 87 contractors in various jurisdictions. They include product architects who research new technologies as well as possible acquisitions or partnerships and product managers who assess market, industry and customer requirements to establish product plans. They also include the engineering department which designs, builds and delivers products; this team includes software engineers, test engineers, technical writers, very high level technical support engineers, localisation specialists, and a configuration management team. The Attachmate Group has strong cross-departmental lines of communication, particularly within sales, consulting services and technical support, to ensure that Attachmate is producing the right products of high quality at the right time and is responsive to customer needs on an ongoing basis.

7. Intellectual property

The Attachmate Group has millions of lines of proprietary code utilised in its software products. The Attachmate Group utilises patents as part of its intellectual property assets. The Attachmate Group has approximately 457 issued patents and 11 patent applications pending in the United States and other major international jurisdictions.

The Attachmate Group processes copyright registrations for all material version releases and registers trademarks for those of its products which it views to be material to its business operations. Attachmate has at times utilised third party code and/or binaries in its products when it is not practical to develop the code internally. All such inclusions are reviewed by the legal team and information is stored in a tracking system along with the specific licence agreements.

8. Selected Financial Information for the Attachmate Group

The selected historical financial information and other historical financial information in relation to the Attachmate Group in this Part IV has been extracted without material adjustment from the audited consolidated historical financial information of the Attachmate Group for the financial years ended 31 March 2012, 2013 and 2014 and the one month period ended 30 April 2014 and the consolidated unaudited historical financial information of the Attachmate Group for the one month period ended 30 April 2013 in Part VIII (Financial Information of the Attachmate Group) of this document. Investors should read the whole of this document and should not just rely on the financial information set out in this Part IV.

Selected financial and operating information relating to the Attachmate Group set out below has been extracted, without material adjustment, from the Attachmate Group's audited consolidated financial statements of the Attachmate Group for the financial years ended 31 March 2012, 2013 and 2014 and the one month period ended 30 April 2014 and the consolidated unaudited financial statements of the Attachmate Group for the one month period ended 30 April 2013.

	One month Years ended 31 March ended 30 April
	2012 US\$'000	2013 US\$'000	2014 US\$'000	2013 US\$'000 (unaudited)	2014 US\$'000
Revenue Cost of sales	1,013,350 (167,847) ––––––––	995,783 (156,161) ––––––––	956,829 (151,188) ––––––––	68,782 (10,382) ––––––––	65,325 (10,089) ––––––––
Gross profit Selling and distribution costs Research and development expense Administrative expense	845,503 (354,341) (247,234) (127,866) ––––––––	839,622 (347,146) (210,555) (85,139) ––––––––	805,641 (341,833) (212,875) (78,086) ––––––––	58,400 (26,324) (18,798) (7,371) ––––––––	55,236 (22,369) (16,925) (5,804) ––––––––
Operating profit Analysed as:	116,062	196,782	172,847	5,907	10,138
Operating profit before exceptional items 213,925 Exceptional items	(97,863) ––––––––	200,563 (3,781) ––––––––	204,088 (31,241) ––––––––	6,020 (113) ––––––––	10,176 (38) ––––––––
Operating profit	116,062 ––––––––	196,782 ––––––––	172,847 ––––––––	5,907 ––––––––	10,138 ––––––––
Finance costs – pre-exceptional Finance costs – exceptional	(86,218) (56,595) ––––––––	(118,893) (68,962) ––––––––	(116,437) – ––––––––	(9,852) – ––––––––	(9,068) – ––––––––
Finance costs Finance income	(142,813) 673 ––––––––	(187,855) 644 ––––––––	(116,437) 320 ––––––––	(9,852) 45 ––––––––	(9,068) 40 ––––––––
Finance costs – net Share of profit (loss) of associates	(142,140)	(187,211)	(116,117)	(9,807)	(9,028)
accounted for using the equity method Other expense, net	(899) (413) ––––––––	4,228 (378) ––––––––	(1,586) (529) ––––––––	(130) (168) ––––––––	(155) (657) ––––––––
Profit (loss) before tax	(27,390) ––––––––	13,421 ––––––––	54,615 ––––––––	(4,198) ––––––––	298 ––––––––
Taxation Profit (loss) for the period Other comprehensive income (loss): Items that will not be reclassified to	(1,648) (29,038)	57,405 70,826	(27,224) 27,391	4,944 746	(631) (333)
profit or loss Actuarial gains (losses) on defined benefit pension plans Items that may be subsequently reclassified to profit or loss Currency translation differences	52 (12,679)	(3,394) 3,651	(633) 3,414	– 929	– (64)
Other comprehensive income	––––––––	––––––––	––––––––	––––––––	––––––––
(loss) for the period	(12,627) ––––––––	257 ––––––––	2,781 ––––––––	929 ––––––––	(64) ––––––––
Total comprehensive income	(41,665) ––––––––	71,083 ––––––––	30,172 ––––––––	1,675 ––––––––	(397) ––––––––
Attributable to: – Owners of the parent – Non-controlling interests	(41,881) 216	70,900 183	29,816 356	1,451 224	(603) 206
Total comprehensive income	–––––––– (41,665) ––––––––	–––––––– 71,083 ––––––––	–––––––– 30,172 ––––––––	–––––––– 1,675 ––––––––	–––––––– (397) ––––––––

(1) From the date of acquisition to 31 March 2012 the Novell acquisition contributed US\$713.1 million of revenue and US\$123.5 million of operating income. Had the acquisition of Novell occurred at the beginning of the accounting period on 1 April 2011, the Attachmate Group would have recognised approximately US\$53.5 million of additional revenue in the consolidated statement of comprehensive income for the financial year ending 31 March 2012.

Consolidated statement of financial position

	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Non-current assets
Goodwill	277,867	906,052	906,052	906,052	906,052
Other intangible assets	140,726	473,803	364,504	268,122	261,908
Property, plant and equipment	4,074	37,723	32,753	25,293	24,801
Assets held for sale	–	105,722	–	888	888
Deferred tax assets	18,223	211,503	235,423	196,862	197,716
Investment in associates	–	14,044	18,272	16,685	16,530
Long-term pension assets	–	13,889	14,203	15,991	16,514
Long-term income tax receivable	–	10,047	10,047	10,047	10,047
Other non-current assets	5,543 ––––––––	4,293 ––––––––	3,546 ––––––––	6,347 ––––––––	6,243 ––––––––
	446,433	1,777,076	1,584,800	1,446,287	1,440,699
Current assets
Trade and other receivables	87,867	224,045	213,806	220,051	172,946
Restricted cash	141	975	137	803	805
Cash and cash equivalents	144,279	375,869	160,229	151,415	142,473
	–––––––– 232,287	–––––––– 600,889	–––––––– 374,172	–––––––– 372,269	–––––––– 316,224
Total assets	–––––––– 678,720 ––––––––	–––––––– 2,377,965 ––––––––	–––––––– 1,958,972 ––––––––	–––––––– 1,818,556 ––––––––	–––––––– 1,756,923 ––––––––
Current liabilities
Trade and other payables	53,404	134,784	126,848	140,583	109,002
Borrowings	56,764	104,945	115,799	32,383	32,383
Provisions	324	21,003	3,699	7,571	6,639
Current tax liabilities	13,160	36,576	29,947	25,753	25,801
Deferred income – current	115,961	513,020	488,238	502,392	481,834
	–––––––– 239,613	–––––––– 810,328	–––––––– 764,531	–––––––– 708,682	–––––––– 655,659
Non-current liabilities
Deferred income – non-current	19,207	263,073	253,711	220,429	210,730
Long-term provisions	339	7,175	4,018	4,472	4,319
Long-term derivative liabilities	7,492	4,761	–	–	–
Pension liability	–	13,497	19,303	22,848	23,647
Preferred share liabilities	41,775	–	–	–	–
Borrowings	547,420	1,023,180	1,322,326	1,262,343	1,262,343
Deferred tax liabilities	39,015	133,755	82,311	52,637	52,373
Other non-current liabilities	1,645 ––––––––	1,527 ––––––––	4,893 ––––––––	7,259 ––––––––	8,254 ––––––––
	656,893 ––––––––	1,446,968 ––––––––	1,686,562 ––––––––	1,569,988 ––––––––	1,561,666 ––––––––
Total liabilities	896,506 ––––––––	2,257,296 ––––––––	2,451,093 ––––––––	2,278,670 ––––––––	2,217,325 ––––––––
Net assets	(217,786) ––––––––	120,669 ––––––––	(492,121) ––––––––	(460,114) ––––––––	(460,402) ––––––––
(Deficit) equity
Share capital	–	–	–	–	–
Share option reserve	1,196	6,263	7,161	6,197	5,606
Retained earnings (deficit)	(218,982)	126,869	(490,653)	(461,452)	(461,291)
Foreign currency translation deficit	– ––––––––	(12,679) ––––––––	(9,028) ––––––––	(5,614) ––––––––	(5,678) ––––––––
Owners of the parent	(217,786) ––––––––	120,453 ––––––––	(492,520) ––––––––	(460,869) ––––––––	(461,363) ––––––––
Non-controlling interests	– ––––––––	216 ––––––––	399 ––––––––	755 ––––––––	961 ––––––––
Total (deficit) equity	(217,786) ––––––––	120,669 ––––––––	(492,121) ––––––––	(460,114) ––––––––	(460,402) ––––––––

Consolidated statement of cash flows

				Month ended
Year ended 31 March		30 April
2012	2013	2014	2013 (unaudited)	2014
US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
316,645	254,794	284,458	17,947	18,990
(75,864)	(115,603)	(118,568)	(29,034)	(26,521)
(93,023)	(21,951)	(16,882)	(280)	203
147,758	117,240	149,008	(11,367)	–––––––– (7,328) ––––––––
(614,010)	108,153	(14,423)	(1,162)	(1,614)
697,842	(441,033)	(143,399)	(20,624)	–
231,590	(215,640)	(8,814)	(33,153)	–––––––– (8,942) ––––––––
	–––––––– –––––––– –––––––– ––––––––	–––––––– –––––––– –––––––– ––––––––	–––––––– –––––––– –––––––– ––––––––	–––––––– –––––––– –––––––– ––––––––

Other financial data

The table below shows the Attachmate Group's revenue for the financial years ended 31 March 2012, 2013 and 2014 by geographical region:

		Year ended 31 March
	2012	2013	2014
	US\$'000	US\$'000	US\$'000
North America(1)	542,082	529,515	489,383
International(2)	369,812	363,336	373,629
Asia-Pacific(3)	101,456	102,932	93,817
Total	–––––––– 1,013,350	–––––––– 995,783	–––––––– 956,829
	––––––––	––––––––	––––––––

Notes:

• (1) North America includes the Attachmate Group's operations in Antarctica, Canada, Guam, United States and United States Minor Outlying Islands.
• (2) International includes the Attachmate Group's operations in Algeria, Andorra, Angola, Argentina, Austria, Azerbaijan, Bahamas, Bahrain, Barbados, Belarus, Belgium, Belize, Bermuda, Bolivia, Bosnia and Herzegovina, Botswana, Bouvet Island, Brazil, Bulgaria, Burundi, Cameroon, Chile, Colombia, Congo, Congo (Democratic Republic of (Was Zaire)), Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Dominica, Dominican Republic, Ecuador, Egypt, El Salvador, Estonia, Ethiopia, Faroe Islands, Finland, France, Georgia, Germany, Ghana, Gibraltar, Greece, Greenland, Grenada, Guadeloupe, Guatemala, Guernsey, Honduras, Hungary, Iceland, Iraq, Ireland, Isle of Man, Israel, Italy, Jamaica, Jordan, Kazakhstan, Kenya, Kuwait, Latvia, Lebanon, Lesotho, Liberia, Liechtenstein, Lithuania, Macedonia (the Former Yugoslav Republic of), Madagascar, Malawi, Malta, Mauritius, Mexico, Moldova (Republic of), Morocco, Mozambique, Namibia, Netherlands, Netherlands Antilles, Nicaragua, Nigeria, Norway, Oman, Palestinian Territory (Occupied), Panama, Paraguay, Peru, Poland, Portugal, Puerto Rico, Qatar, Republic of Montenegro, Republic of Serbia, Réunion, Romania, Russian Federation, Saint Lucia, San Marino, Saudi Arabia, Senegal, Seychelles, Slovakia, Slovenia, South Africa, South Georgia and the South Sandwich Islands, Spain, Suriname, Swaziland, Sweden, Switzerland, Tanzania (United Republic of), Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, Uruguay, Uzbekistan, Venezuela, Virgin Islands (US), Yemen, Zambia and Zimbabwe.
• (3) Asia-Pacific includes the Attachmate Group's operations in Afghanistan, American Samoa, Australia, Bangladesh, Bhutan, Brunei Darussalam, Cambodia, China, Christmas Island, Cocos (Keeling) Islands, Fiji, French Polynesia, Heard Island and McDonald Islands, Hong Kong, India, Indonesia, Japan, Korea (Republic of), Lao People's Democratic Republic, Macao, Malaysia, Mongolia, Myanmar, New Caledonia, New Zealand, Pakistan, Papua New Guinea, Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Timor-Leste and Vietnam.

The table below shows the Attachmate Group's revenue for the financial years ended 31 March 2012, 2013 and 2014 by type of revenue:

		Year ended 31 March
	2012	2013	2014
	US\$'000	US\$'000	US\$'000
Licence(1)	219,976	192,084	192,440
Maintenance and Subscriptions(2)	697,831	706,877	681,861
Services(3)	95,543 ––––––––	96,822 ––––––––	82,528 ––––––––
Total	1,013,350	995,783	956,829
	––––––––	––––––––	––––––––

Notes:

• (1) Licence revenue consists of revenue received from the licensing of the Attachmate Group's software products to end customers or to resellers who bundle the Attachmate Group's software with other products for resale to end users.
• (2) Maintenance and subscription revenue consists of revenue received for the provision of technical support and product upgrades to existing customers and subscription revenue received for subscriptions to support services from customers of our SUSE product family.
• (3) Service revenue consists of premium support for the Attachmate Group's software products including consulting and advanced training.

PART V

OPERATING AND FINANCIAL REVIEW OF THE MICRO FOCUS GROUP

The operating and financial review for the financial year ended 30 April 2012, as set out in the annual report and accounts of the Micro Focus Group for the financial year ended 2012, the operating and financial review for the financial year ended 30 April 2013, as set out in the annual report and accounts of the Micro Focus Group for the financial year ended 2013 and the operating and financial review for the financial year ended 30 April 2014, as set out in the annual report and accounts of the Micro Focus Group for the year ended 2014, are incorporated by reference into this document. The audit reports for each of the financial years ended 30 April 2012, 30 April 2013 and 30 April 2014 were unqualified. Reference should also be made to the financial information incorporated by reference into this document (see Part VI (Financial Information of the Micro Focus Group)), the Risk Factors on pages 20 to 37, the strategy section in paragraph 2 of Part III (Information on the Micro Focus Group) and Part XIII (Additional Information) of this document.

Investors should read the whole of this document and the documents incorporated herein by reference and should not just rely on the financial information set out in this Part V.

1. Cross reference list

The following list is intended to enable investors to identify easily specific items of information which have been incorporated by reference into this document.

1.1 Operating and Financial Review for the financial year ended 30 April 2012 as compared to the financial year ended 30 April 2011

The page numbers below refer to the relevant pages of the annual report and accounts of the Micro Focus Group for the financial year ended 30 April 2012:

Page
Number(s)	Section
2 to 5	Executive Chairman's Statement
6 to 9	Operational and financial review
10 to 13	Corporate social responsibility
14 to 15	Principal risks and uncertainties
35	Key performance indicators

1.2 Operating and Financial Review for the financial year ended 30 April 2013 as compared to the financial year ended 30 April 2012

The page numbers below refer to the relevant pages of the annual report and accounts of the Micro Focus Group for the financial year ended 30 April 2013:

Page
Number(s)	Section
3 to 6	Executive Chairman's Statement
7 to 11	Operational and financial review
12 to 13	Corporate social responsibility
14 to 15	Principal risks and uncertainties
35	Key performance indicators

1.3 Operating and Financial Review for the financial year ended 30 April 2014 as compared to the financial year ended 30 April 2013

The page numbers below refer to the relevant pages of the annual report and accounts of the Micro Focus Group for the financial year ended 30 April 2014:

Page
Number(s)	Section
2 to 9	Executive Chairman's Statement
10 to 15	Operational and financial review
20 to 24	Corporate social responsibility
18 to 19	Principal risks and uncertainties
16 to 17	Key Performance indicators

2. Summary of cash flows

The summary of cash flows relating to the Micro Focus Group set out below is extracted without material adjustment from audited reports and consolidated accounts of the Micro Focus Group prepared under IFRS for the financial years ended 30 April 2012, 30 April 2013 and 30 April 2014:

Consolidated statement of cash flows

	For the	For the	For the
	financial	financial	financial
	year ended	year ended	year ended
	30 April 2012	30 April 2013	30 April 2014
	US\$'000	US\$'000	US\$'000
Net cash generated from operating activities	182,178	165,292	174,974
Cash flows from investing activities	(38,924)	(38,226)	(53,580)
Cash flows from financing activities	(136,883)	(116,906)	(126,583)
Net (decrease)/increase in cash and cash equivalents	———— 4,330	———— 7,533	———— (5,143)
Cash and cash equivalents at 30 April	———— 30,410	———— 37,943	———— 32,800

The Micro Focus Group's operating cash flow from continuing operations for the financial year ended 30 April 2012 was US\$196.7 million. This represented a cash conversion ratio when compared to Adjusted EBITDA before exceptional items of 107.7 per cent. At 31 August 2014 (being the latest practicable date prior to the publication of this document), the Micro Focus Group's net debt was US\$235.3 million.

3. Capital resources

During the financial years ended 30 April 2012, 30 April 2013 and 30 April 2014, the most significant cash outflows were in respect of the return of values (further details of which are set out in paragraph 3.3 of Part XIII (Additional Information) of this document) and on acquisitions (further details of which are set out in paragraph 3 of Part III (Information on the Micro Focus Group) of this document).

The Micro Focus Group's sources of liquidity include its cash flows from operations, its cash balances and its Existing Facility. Whilst the financial position for the financial year ended 30 April 2014 of the Micro Focus Group is presented as being in net deficit, as a function of the Return of Value, liquidity risk and working capital is managed effectively as a result of operating cash flows and the Existing Facility, further details of which are set out in paragraph 14.1.4 of Part XIII (Additional Information).

Upon utilisation of the New Facilities which will be provided to the Borrower at Completion, any amounts outstanding under the Existing Facility will be repaid and commitments thereunder will be cancelled. Further details of the New Facilities are set out at paragraph 14.1.5 of Part XIII (Additional Information).

PART VI

FINANCIAL INFORMATION OF THE MICRO FOCUS GROUP

1. Background

The consolidated financial statements of the Micro Focus Group for the year ended 30 April 2012, as set out in the annual report and accounts of the Micro Focus Group for 2012, the consolidated financial statements of the Micro Focus Group for the financial year ended 30 April 2013, as set out in the annual report and accounts of the Micro Focus Group for 2013, and the consolidated financial statements of the Micro Focus Group for the financial year ended 30 April 2014, as set out in the annual report and accounts of the Micro Focus Group for 2014, are incorporated by reference into this document. The audit reports for each of the financial years ended 30 April 2012, 30 April 2013 and 30 April 2014 were unqualified.

The consolidated financial statements for the financial years ended 30 April 2012, 30 April 2013, 30 April 2014 were prepared in accordance with IFRS.

2. Cross reference list

The following list is intended to enable investors to identify easily specific items of information which have been incorporated by reference into this document. A copy of each of these documents incorporated by reference into this document can be accessed on the Company's website on www.microfocus.com.

2.1 IFRS financial statements for the financial year ended 30 April 2012 and the audit report thereon The page numbers below refer to the relevant pages of the annual report and accounts of the Micro Focus Group for the financial year ended 30 April 2012:

Page
Number	Section
37	Independent auditors' report to the members of Micro Focus
38	Consolidated statement of comprehensive income
39	Consolidated statement of financial position
40	Consolidated statement of changes in equity
41	Consolidated statement of cash flows
42 to 47	Summary of significant accounting policies
48 to 69	Notes to the consolidated financial statements
71	Company balance sheet
72 to 79	Notes to the Company financial statements

2.2 IFRS financial statements for the financial year ended 30 April 2013 and the audit report thereon The page numbers below refer to the relevant pages of the annual report and accounts of the Micro Focus Group for the financial year ended 30 April 2013:

Page
Number	Section
37	Independent auditors' report to the members of Micro Focus
38	Consolidated statement of comprehensive income
39	Consolidated statement of financial position
40	Consolidated statement of changes in equity
41	Consolidated statement of cash flows
42 to 47	Summary of significant accounting policies
48 to 69	Notes to the consolidated financial statements
71	Company balance sheet
72 to 77	Notes to the Company financial statements

2.3 IFRS financial statements for the financial year ended 30 April 2014 and the audit report thereon The page numbers below refer to the relevant pages of the annual report and accounts of the Micro Focus Group for the financial year ended 30 April 2014:

Page
Number	Section
63 to 66	Independent auditors' report to the members of Micro Focus
67	Consolidated statement of comprehensive income
68	Consolidated statement of financial position
69	Consolidated statement of changes in equity
70	Consolidated statement of cash flows
71 to 77	Summary of significant accounting policies
78 to 110	Notes to the consolidated financial statements
113	Company balance sheet
114 to 119	Notes to the Company financial statements

PART VII

OPERATING AND FINANCIAL REVIEW OF THE ATTACHMATE GROUP

The operating and financial review for the three financial years ended 31 March 2012, 2013 and 2014 is based on the audited consolidated historical financial information for the financial years ended 31 March 2012, 31 March 2013, 31 March 2014, and the one month period ended 30 April 2014 and the consolidated unaudited one month period ended 30 April 2013 set out in Part VIII (Financial Information of the Attachmate Group). The audit reports for each of the financial years ended 31 March 2012, 31 March 2013, 31 March 2014 and the one month period ended 30 April 2014 were unqualified. Reference should also be made to the financial information of the Attachmate Group in Part VIII (Financial Information of the Attachmate Group), the Risk Factors on pages 20 to 37, the strategy section in paragraph 2 of Part IV (Information on the Attachmate Group) and Part XIII (Additional Information) of this document.

Investors should read the whole of this document and should not just rely on the financial information set out in this Part VII.

1. Overview

The Attachmate Group is one of the leading global providers of enterprise infrastructure software solutions to businesses, governments and other large organisations in order to extend, manage and secure complex IT environments. The Attachmate Group's principal solutions are organised into four software product portfolios:

• (a) Attachmate, which delivers advanced software for terminal emulation, legacy modernisation, managed file transfer and enterprise fraud management;
• (b) NetIQ, which helps organisations tackle information protection challenges cost-effectively and manage the complexity of dynamic, highly-distributed application environments;
• (c) Novell, which helps businesses work more efficiently and collaborate more effectively; and
• (d) SUSE Linux, which offers a family of software products centred around SUSE Linux Enterprise, an interoperable platform for core computing needs supported by a shared global support and services organisation.

The Attachmate Group has a stable base of core relationship customers whose existence supports a strong recurring revenue base, with recurring revenues representing 71.3, 71.0 and 68.9 per cent. of total revenue for the financial years ended 31 March 2014, 2013 and 2012, respectively. The Attachmate Group maintains its registered office in Houston, Texas and operates its business from four distributed offices in Provo, Utah; Houston, Texas; Seattle, Washington; and Nuremburg, Germany and has been in business for over 30 years. It has more than 3,300 employees across 80 offices worldwide from which it serves more than 20,000 customers.

2. Current Trading

Part VIII (Financial Information of the Attachmate Group) includes the audited results of the Attachmate Group for the one month period ended 30 April 2014 and the unaudited comparable period ended 30 April 2013. In the one month period ended 30 April 2014, revenues were US\$65.3 million, a decrease of US\$3.5 million, or 5.0 per cent., from US\$68.8 million in the one month period ended 30 April 2013, and operating profit increased from US\$5.9 million to US\$10.1 million, an increase of US\$4.2 million. As April historically is one of the least active months for the Attachmate Group in any given year, these results should not be seen as indicative of trends in the Attachmate Group's performance for the current financial year.

Based on the Attachmate Group's unaudited management information prepared under IFRS, total consolidated revenues in the first quarter of its current financial year were marginally (2 per cent.) below the prior year comparative, driven by lower licence revenues. The SUSE product portfolio achieved revenues ahead of prior year (up 15 per cent.); NetIQ revenues were marginally (1 per cent.) behind the prior year; and the combined revenues of the Novell and Attachmate product portfolios were down against the prior year period.

Operating expenses were below prior year, resulting in Underlying Adjusted EBITDA for the first quarter being ahead of the prior year.

Trading in the Attachmate Group's second quarter ended 30 September 2014 was modestly below the original budget for the quarter. A significant portion of revenues are weighted toward the end of the quarter and Attachmate management believes that, as expected, the announcement of the Merger near the end of the quarter has caused some customers to defer their purchase decisions until later in the year. As at 7 October 2014, the Attachmate Group had incurred approximately \$9 million of costs related to the transaction process and due diligence which will be treated as exceptional in the current financial year. Ongoing costs will be incurred up to Completion with further success fees payable at Completion.

3. Acquisition of Novell

On 27 April 2011 the Attachmate Group acquired 100 per cent. of the stock of Novell at a total cost of US\$2,216.9 million, which was comprised of US\$2,118.9 million in cash and US\$97.9 million in equity consideration. As a result, the financial year ended 31 March 2013 is not fully comparable to the financial year ended 31 March 2012 as the financial year ended 31 March 2013 incorporates the results of Novell for the entire financial year whereas the financial year ended 31 March 2012 contains 26 days of trading (1 April 2011 to 26 April 2011) which do not include the results of Novell. Over that 26 day period, Novell recognised US\$53.5 million of revenue for the year ended 31 March 2012.

4. Key Factors Affecting the Attachmate Group's Results of Operations

Set forth below is a description of certain key factors that have historically affected the Attachmate Group's business and which may impact its business in the future.

4.1 Global and regional economic conditions

The Attachmate Group's financial results depend to a large extent on continued levels of customer spending on software products, which, in turn, is influenced by general levels of corporate profitability and expectations for future profitability. As a result, macroeconomic factors such as inflation, interest rates, business confidence, investment levels and corporate profitability all can have an impact on the Attachmate Group's revenue and financial results. This impact can be at a global level, such as occurred during the global economic crisis that started in 2008, or at a regional or national level as the Attachmate Group operates in three distinct economic regions: North America, International and the Asia- Pacific regions.

For example, in the financial year ended 31 March 2013, International revenues decreased by US\$6.5 million, or 1.8 per cent. primarily as a result of the Eurozone economic crisis during which there was a reduction in the willingness of businesses and governments in the region to invest in their IT infrastructure. Similarly, in the financial year ended 31 March 2014 revenues from the region returned to their prior level as countries in Western Europe, particularly the countries where the Attachmate Group is particularly active such as Germany and the United Kingdom, recovered economically.

As over 50 per cent of the Attachmate Group's revenues come from the North American region, it is most impacted by changes in general economic conditions in that region. However, economic conditions in the International and Asia-Pacific regions have had a significant effect on the Attachmate Group's revenues as well. The table below sets out the Attachmate Group's revenues by region for the financial years ended 31 March 2014, 2013 and 2012.

		Year ended 31 March
	2012	2013	2014
	US\$'000	US\$'000	US\$'000
North America	542,082	529,515	489,383
International	369,812	363,336	373,629
Asia-Pacific	101,456 ––––––––	102,932 ––––––––	93,817 ––––––––
Total	1,013,350	995,783	956,829
	––––––––	––––––––	––––––––

4.2 Lifecycle of the Attachmate Group's product offerings

The Attachmate Group's business model is based upon the development and licensing of various "portfolios" of software products to its customers. Once a software product has been licensed, the Attachmate Group then seeks to sell maintenance and subscription, which includes both technical support and product upgrades, and services, such as product customisation, consulting and advanced training, to the users of its software products. As a result, recently developed software products will primarily generate licensing revenue whereas more mature products primarily generate maintenance and subscription and services revenue. For any given financial period, revenue from the provision of maintenance and subscription services constitutes the substantial majority of the Attachmate Group's revenue. One exception to this model involves the Attachmate Group's SUSE Linux product portfolio. As these products are based on Open Source software, the Attachmate Group does not charge licensing fees for software in this product family and only charges for support and maintenance which it categorises as maintenance and subscription revenue.

The table below sets out the Attachmate Group's revenue by type of revenue for the three financial years ended 31 March 2014, 2013 and 2012.

	Year ended 31 March
	2012 2013
	US\$'000	US\$'000	2014 US\$'000
Licence	219,976	192,084	192,440
Maintenance and Subscription	697,831	706,877	681,861
Services	95,543	96,822	82,528
Total	–––––––– 1,013,350	–––––––– 995,783	–––––––– 956,829
	––––––––	––––––––	––––––––

As software products become more mature, it is increasingly likely that customers will migrate from those products to newer or alternate products as competitive pressures, particularly on price, increase as mature products become commoditised and more competitors produce products with similar features. When customers migrate to newer products, they do not renew their maintenance and service contracts for those products. To the extent that the Attachmate Group is unable to provide new products that are competitively priced and have equivalent or better functionality than those of its competitors or if the Attachmate Group's marketing and sales force is not effective in informing customers about such new products, the Attachmate Group's revenues will decline. When such a decline occurs, it will first impact licensing revenues and then lead to a reduction of maintenance and subscription revenues.

To manage the cycle described above, the Attachmate Group needs to generate sufficient licensing revenue from its younger software products in any given financial period such that those products will generate maintenance and subscription revenues in subsequent periods to replace revenues lost as a result of customer migration away from its mature products. In the periods under review, licensing revenue fell by US\$27.9 million in the financial year ended 31 March 2013 as compared to the financial year ended 31 March 2012. In subsequent periods, maintenance and subscription revenues fell by approximately US\$25.0 million and services revenues fell by US\$14.3 million in the financial year ended 31 March 2014 as compared to the financial year ended 31 March 2013 even though licensing revenues stabilised in the same period.

This decline in revenue over the period under review is an example of the general trend discussed above. A reduction or lack of growth in licensing revenue in one period will usually lead to a reduction in maintenance and subscription and service revenues in subsequent periods.

4.3 Recurring revenues

As the substantial majority of the Attachmate Group's revenues relate to its maintenance and subscription contracts with existing customers, the extent to which those customers renew their contracts has a substantial impact on the Attachmate Group's overall revenues. If customers do not renew their contracts, whether as the result of a product or a product upgrade not being competitive on price or function or as a result of an increased customer willingness to make adjustments to core software platforms, there would be a significant impact on the Attachmate Group's revenue. In each of the years ended 31 March 2014, 2013 and 2012, the Attachmate Group has generated recurring revenue (which is calculated as a percentage on a revenue basis, of contracts for maintenance and subscription services) of 71.3, 71.0 and 68.9 per cent., respectively. However, changes to the Attachmate Group's ability to generate recurring revenues in the future could have a direct impact on the Attachmate Group's financial results.

4.4 Accounting treatment due to the acquisition of Novell

Upon the acquisition of Novell, the Attachmate Group fair valued acquired deferred income that had been booked by Novell prior to acquisition. This income primarily related to multi-period maintenance and subscription revenues. This resulted in a reduction in the value of acquired deferred income by approximately 7.5 per cent. This fair value adjustment had an impact of US\$28.6 million on the Attachmate Group's recognised revenues in the financial year ended 31 March 2012. The negative impact moderated in the subsequent financial years ended 31 March 2013 and 2014 to US\$7.9 million and US\$2.8 million, respectively.

4.5 Customer mix

While the Attachmate Group is exposed to a variety of economic sectors, including financial services and telecoms, none of them account for more than a quarter of the Attachmate Group's overall revenues. The Attachmate Group made in each of the last three financial years slightly less than a fifth of its sales to various departments of the US federal government, state, municipal and foreign governments as well as to supranational organisations. Sales to governments, in addition to being impacted by general economic conditions are impacted by political uncertainty, budget pressures and other government procurement requirements. In particular, the sequestration of the United States government in the beginning of the 2013 calendar year caused many federal agencies to cancel or defer spending, including spending on software products. As a result, the Attachmate Group's revenue in the financial year ended 31 March 2013 was materially impacted by the sequestration.

4.6 Restructuring of the Attachmate Group's operations

The Attachmate Group has engaged in activities designed to realign its cost structure with its current and expected business opportunities. These activities have included employee redundancies and facility closures. In the financial year ended 31 March 2012, the year in which the Attachmate Group acquired Novell and made the most significant operational changes as a result of the acquisition, the Attachmate Group incurred restructuring charges (which were primarily severance payments to terminated employees and the cost of closing certain facilities) of US\$59.3 million. Similar costs were minimal in the financial year ended 31 March 2013 and largely related to restructuring actions planned in the financial year ended 31 March 2012, but not enacted until the following year.

In the financial year ended 31 March 2014, the Attachmate Group identified further redundancies resulting from its acquisition of Novell and undertook to further streamline its operations via additional employee redundancies and, to a lesser extent, facility consolidation. As a result of such activity, the Attachmate Group incurred US\$18.3 million of restructuring costs in that year.

4.7 Refinancing of the Attachmate Group's principal debt obligations

In the periods under review, the Attachmate Group refinanced its principal debt obligations twice. The first refinancing was in connection with the acquisition of Novell when the Attachmate Group entered into two term loan agreements on 27 April 2011 (the "2011 Term Loans"). The second was done on 22 May 2012 (the "2012 Term Loans") in order to refinance the 2011 Term Loans and to fund an equity distribution to the Attachmate Group's shareholders.

As of 1 April 2011, the Attachmate Group had capitalised US\$5.8 million of costs related to prior debt and US\$0.7 million of prepaid loan costs related to the 2011 Term Loans. As a result of the first refinancing, US\$5.6 million was expensed as early extinguishment of debt and is included in the line item 'finance costs - exceptional' in the consolidated statements of comprehensive income. During the year ended 31 March 2012, the Attachmate Group also expensed US\$51.0 million in costs related to the 2011 Term Loans and these costs are included in the line item 'finance costs - exceptional' in the consolidated statements of comprehensive income.

During the year ended 31 March 2013, the Attachmate Group expensed US\$63.5 million of fees and costs related to the 2012 Term Loans and paid US\$5.5 million in breakage fees on its pre-existing debt, for a total cost of US\$69.0 million. This second refinancing was accounted for as an extinguishment of debt and the US\$69.0 million cost is shown in the line item, 'finance costs – exceptional' within the accompanying consolidated statement of comprehensive income.

In addition to generating exceptional expenses, the refinancings substantially increased the total amount of the Attachmate Group's outstanding debt. The April 2011 refinancing increased outstanding debt by approximately US\$539.9 million and the May 2012 refinancing increased outstanding debt by approximately US\$371.9 million. The May 2012 refinancing also resulted in a revised quarterly schedule for the repayment of the principal amount of the outstanding debt and switched the calculation of interest payments from a fixed interest rate to a quarterly floating interest rate. By switching to a floating interest rate, though the Attachmate Group has experienced a lower interest rate since the refinancing than its previous fixed interest rate, but it has increased its exposure to interest rate movements. If interest rates were to rise in the future, this would have a material impact on the Attachmate Group's interest expense.

Even though the interest rates due on the loans reduced slightly at the time of each refinancing and have not increased since then, as a result of the increased amount of debt outstanding represented by the new loan, the Attachmate Group's pre-exceptional finance costs increased from US\$86.2 million in the financial year ended 31 March 2012 to US\$116.4 million in the financial year ended 31 March 2014 as a result of the refinancings.

4.8 Sale and lease-back of substantially all of the Attachmate Group's land and owned buildings

During the financial year ended 31 March 2013, the Attachmate Group sold all of the property and land associated with its Provo, Utah campus as well as a building in Bracknell, United Kingdom which it had acquired as a result of is acquisition of Novell, in order to implement its policy of leasing rather than owning its office facilities. These sales accounted for the substantial majority of the property and buildings owned by the Attachmate Group, though it still owns a building in South Africa that it classifies as property held for sale with a carrying value of approximately US\$0.9 million. The Attachmate Group received net proceeds of US\$117.0 million for the properties sold in the financial year ended 31 March 2013. The Provo campus was sold for a net gain of US\$9.3 million while the remaining properties were sold at a loss of US\$6.2 million. Simultaneously with the sale of the Provo campus, the Attachmate Group leased the Provo campus directly back from the purchaser. Under IFRS, the gain on the sale-leaseback transaction was recognised immediately as the lease was an operating lease and the sale was executed at the fair value of the asset. In addition, the average annual rent expense increased as a result of the lease. This expense impacted the Attachmate Group's operating costs for the financial year ended 31 March 2014 and is expected to continue to do so for the life of the lease.

5. Description of Key Line Items

The following describes those line items presented in the Attachmate Group's historical financial statements that it considers key in understanding its results of operations.

5.1 Revenue

Revenue consists of income derived primarily from the sale of software licences, software maintenance, subscriptions of SUSE Linux products, technical support, training and professional services. The Attachmate Group has three separate categories of revenue: licence, maintenance and subscription and services revenue. The Attachmate Group recognises licence revenue or defers it depending on a variety of factors including: whether or not delivery was made to the end-user or to a reseller, whether or not the collection of future fees related to the licence sale is reasonably assured and if future substantive upgrades or similar future performance obligations are committed to the specified period. Maintenance and subscription revenue is derived from providing technical support and software updates to customers. Maintenance and subscription revenue is recognised on a straight-line basis over the term of the contract, which in most cases is one year. Services revenue from consulting and training activity is recognised as the services are performed.

5.2 Cost of sales

Cost of sales primarily includes distribution and royalty costs for programs licensed, costs incurred to support and maintain products and services and costs associated with the delivery of consulting and technical support services.

5.3 Selling and distribution costs

Selling and distribution costs consist of advertising costs such as online advertising, public relations, promotions within business publications and trade show publications as well as the costs of the Attachmate Group's internal and external marketing and sales teams.

5.4 Research and development expense

Research and development expense includes costs attributable to the development of new software and improvements to the Attachmate Group's existing software.

5.5 Administrative expenses

Administrative expenses consists of costs associated with the central corporate activities of the Attachmate Group including costs associated with restructuring activities, amortisation and facility sales.

5.6 Exceptional items

Exceptional items consist of those significant items which are separately disclosed by virtue of their size, nature or incidence to enable a full understanding of the Attachmate Group's financial performance and include major restructuring programmes, impairments, and disposal of assets held for sale.

5.7 Finance costs

Finance costs consist of the costs associated with the Attachmate Group's debt borrowings.

5.8 Exceptional finance costs

Exceptional finance costs are those significant items which are separately disclosed by virtue of their size, nature or incidence to enable a full understanding of the Attachmate Group's financial performance. Examples of transactions which may be considered of an exceptional nature include early retirement of borrowing obligations.

5.9 Share of profit (loss) of associates

Share of profit (loss) of associates is the percentage of income or loss of those companies in which the Attachmate Group has a minority investment and significant influence equal to the Attachmate Group's share of equity in those companies and where it accounts for the investment under the equity method of accounting.

5.10 Currency translation differences

Currency translation differences consist of gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved in the transaction.

5.11 Actuarial gains (losses) on defined benefit pension plans

Actuarial gains (losses) on defined benefit pension plans consist of the net result of annual actuarial valuations for the Attachmate Group's defined pension plans.

6. Key Performance Indicators

The key performance indicators set out below include certain measures that are not accounting measures within the scope of IFRS (the "Non-IFRS Financial Measures"), which the Attachmate Group uses to assess the financial performance of its businesses, including Adjusted EBITDA and Underlying Adjusted EBITDA. Adjusted EBITDA refers to earnings before interest, taxation, depreciation and amortisation, adjusted to also remove the impact of exceptional non-recurring items and the share based compensation charge. Underlying Adjusted EBITDA refers to Adjusted EBITDA adjusted to remove the impact if foreign currency transactions gains and losses. The Non-IFRS Financial Measures are not measures based on IFRS, generally accepted accounting standards in the United States or any other internationally accepted accounting principles and prospective investors should not consider such items to the exclusion or as an alternative to the historical financial position or other indicators of the Attachmate Group's financial position based on IFRS measures. The Non-IFRS Financial Measures are derived from the Attachmate Group's internal operating and financial systems and, as a result, may not be comparable to similarly-titled measures as presented by other companies due to differences in the way the Attachmate Group's Non-IFRS Financial Measures are calculated. Even though the Non-IFRS Financial Measures are used by the Attachmate Group's management to assess its financial position and these types of measures are commonly used by investors, they have important limitations as analytical tools, and they should not be considered in isolation or as substitutes for analysis of the Attachmate Group's financial condition or results as reported under IFRS.

The table below set outs the Attachmate Group's Adjusted EBITDA and Underlying Adjusted EBITDA for the three financial years ended 31 March 2012, 2013 and 2014 as well as the one month periods ended 30 April 2013 and 2014.

Adjusted EBITDA

		Years ended			One month
		31 March			ended 30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000 (unaudited)	US\$'000
Operating profit	116,062	196,782	172,847	5,907	10,138
Amortisation of intangible assets Depreciation of property,	105,083	108,891	90,200	8,809	7,294
plant and equipment	19,931	13,175	12,182	1,056	974
EBITDA	———— 241,076	———— 318,848	———— 275,229	———— 15,772	———— 18,406
Exceptional items	97,863	3,781	31,241	113	38
Share based compensation charge	9,966	3,698	1,836	211	109
Adjusted EBITDA Foreign exchange	———— 348,905	———— 326,327	———— 308,306	———— 16,096	———— 18,553
(gains) and losses	(4,944)	1,854	4,540	1,116	(87)
Underlying Adjusted EBITDA	———— 343,961 ————	———— 328,181 ————	———— 312,846 ————	———— 17,212 ————	———— 18,466 ————

7. Results of Operations

7.1 Results of operations for the year ended 31 March 2014 compared to the year ended 31 March 2013 The table below presents the Attachmate Group's results of operations for the financial years ended 31 March 2014 and 2013.

		Year ended 31 March
	2014 US\$'000	2013 US\$'000
Revenue Cost of sales	956,829 (151,188) ––––––––	995,783 (156,161) ––––––––
Gross profit	805,641	839,622
Selling and distribution costs Research and development expense Administrative expense	–––––––– (341,833) (212,875) (78,086) ––––––––	–––––––– (347,146) (210,555) (85,139) ––––––––
Analysed as operating profit before exceptional items	204,088	200,563
Exceptional items	–––––––– (31,241)	–––––––– (3,781)
Operating profit	–––––––– 172,847	–––––––– 196,782
Finance costs Exceptional finance costs Finance income Share of profit (loss) of associates Other expense, net	–––––––– (116,437) – 320 (1,586) (529)	–––––––– (118,893) (68,962) 644 4,228 (378)
Profit (loss) before tax	–––––––– 54,615	–––––––– 13,421
Taxation	–––––––– (27,224)	–––––––– 57,405
Profit (loss) for the period	–––––––– 27,391	–––––––– 70,826
Currency translation differences Actuarial gains (losses) on defined benefit pension plans	–––––––– 3,414 (633) ––––––––	–––––––– 3,651 (3,394) ––––––––
Total comprehensive income (loss)	30,172 ––––––––	71,083 ––––––––

7.1.1 Revenue

For the financial year ended 31 March 2014, revenue decreased by US\$39.0 million, or 3.9 per cent., to US\$956.8 million from US\$995.8 million for the financial year ended 31 March 2013. This decrease was primarily due to declining performance across all three revenue types in the Attachmate Group's North American operations. This was partially offset by improved licensing revenue performance in the International region, which was enough to offset the decline in licensing revenue in North America. However maintenance and subscription and services revenues in the International and Asia-Pacific regions were also down, though not to the same extent as in North America.

(a) Revenue by geography

The Attachmate Group reports revenue across three geographical regions: North America, International and Asia-Pacific.

For the financial year ended 31 March 2014, revenue in North America decreased by US\$40.1 million, or 7.6 per cent., to US\$489.4 million from US\$529.5 million for the financial year ended 31 March 2013. This decrease was primarily due to a reduction in maintenance and subscription revenue, as well as moderate declines in licensing and services revenue.

For the financial year ended 31 March 2014, revenue in the International region increased by US\$10.3 million, or 2.8 per cent., to US\$373.6 million from US\$363.3 million for the financial year ended 31 March 2013. This increase was primarily due to an increase in licensing revenue as a result of the general economic recovery (particularly in key national markets such as the United Kingdom and Germany), partially offset by mild declines in revenue from maintenance and subscription and services.

For the financial year ended 31 March 2014, revenue in the Asia-Pacific region decreased by US\$9.1 million, or 8.9 per cent., to US\$93.8 million from US\$102.9 million for the financial year ended 31 March 2013. This decrease was primarily due to reductions in licensing and services revenue.

(b) Revenue by type

The Attachmate Group also reports three types of revenue: licences, which includes revenue received from the licensing of the Attachmate Group's software products to end customers or to resellers who bundle the Attachmate Group's software with other products for resale to end users, maintenance and subscription, which includes revenue received for the provision of technical support and product upgrades to existing customers, and services, which includes premium support for the Attachmate Group's software products including consulting and advanced training.

For the financial year ended 31 March 2014, revenue from licences increased slightly by US\$0.3 million to US\$192.4 million from US\$192.1 million for the financial year ended 31 March 2013. This lack of growth was primarily due to the decrease in North America being offset by an increase in the International region while Asia Pacific remained static. The decline in licensing revenue was within the Attachmate family of software products offset by increasing sales and licensing revenue from the Attachmate Group's NetIQ licensing product family.

For the financial year ended 31 March 2014, revenue from maintenance and subscription decreased by US\$25.0 million, or 3.5 per cent., to US\$681.9 million from US\$706.9 million for the financial year ended 31 March 2013. This decrease was primarily due to decreases in North America complemented by minor reductions in maintenance and subscription revenue globally. Of the Attachmate Group's software portfolios, the decline in maintenance and subscription revenue is focussed on the Novell product family.

For the financial year ended 31 March 2014, revenue from services decreased by US\$14.3 million, or 14.8 per cent., to US\$82.5 million from US\$96.8 million for the financial year ended 31 March 2013. This decrease was primarily due to a declining North America, supplemented by minor declines in other geographies. On a product family basis, services sold to customers using Attachmate and Novell software decline sharply, but NetIQ services revenue was sharply up over the same period, though not enough to fully offset the other declines.

7.1.2 Cost of sales

For the financial year ended 31 March 2014, cost of sales decreased by US\$5.0 million, or 3.2 per cent., to US\$151.2 million from US\$156.2 million in the financial year ended 31 March 2013, primarily due to lower costs in providing maintenance and services. This was primarily due to lower costs associated with the provision of maintenance and services.

7.1.3 Gross profit

For the financial year ended 31 March 2014, gross profit decreased by US\$34.0 million, or 4.0 per cent., to US\$805.6 million from US\$839.6 million in the financial year ended 31 March 2013, primarily due to the reasons discussed above.

7.1.4 Selling and distribution costs

For the financial year ended 31 March 2014, selling and distribution costs decreased by US\$5.3 million, or 1.5 per cent., to US\$341.8 million from US\$347.1 million in the financial year ended 31 March 2013, primarily due to a rebalancing of resources within the sales force. Sales resources were reduced in certain geographies and product portfolios where management observed underperformance in revenue. This was partially offset by increased costs in the Attachmate Group's internal sales team due to increased headcount.

7.1.5 Research and development expense

For the financial year ended 31 March 2014, research and development expense increased by US\$2.3 million, or 1.1 per cent., to US\$212.9 million from US\$210.6 million in the financial year ended 31 March 2013, primarily due to the fact that the Attachmate Group restructured its software development to improve the efficiency of its development teams and focused its efforts on certain of its software portfolios. As part of this activity, resources were reallocated within some of its product portfolios and some resources in North America were replaced with lower cost resources in other geographies. These reductions were partially offset by additions to the development teams supporting other product portfolios.

7.1.6 Administrative expenses

For the financial year ended 31 March 2014, administrative expenses decreased by US\$7.1 million, or 8.3 per cent., to US\$78.1 million from US\$85.1 million in the financial year ended 31 March 2013, reflecting the impact of the realisation of cost savings associated with the Attachmate Group's restructuring activity in the financial year ended 31 March 2014.

7.1.7 Operating profit before exceptional items

For the financial year ended 31 March 2014, operating profit before exceptional items increased by US\$3.5 million, or 1.8 per cent., to US\$204.1 million from US\$200.6 million in the financial years ended 31 March 2013 due to changes in the line items discussed above.

7.1.8 Exceptional items

For the financial year ended 31 March 2014, exceptional items increased by US\$27.4 million to a loss of US\$31.2 million from a loss of US\$3.8 million in the financial year ended 31 March 2013, primarily due to the impact of costs associated with the Attachmate Group's restructuring activities in the financial year ended 31 March 2014 and a charge for trademark impairment related to a revaluation of expected future revenues from certain Novell software products.

7.1.9 Finance costs before exceptional items

For the financial year ended 31 March 2014, finance costs before exceptional items decreased by US\$2.5 million, or 2.1 per cent., to US\$116.4 million from US\$118.9 million in the financial years ended 31 March 2013, primarily due to lower interest payments associated with principal payments of corporate debt.

7.1.10 Exceptional Finance costs

For the financial year ended 31 March 2014, exceptional finance costs decreased by US\$69.0 million to US\$nil million in the financial year ended 31 March 2013, primarily due to the absence of any exceptional finance costs, such as those related to refinancing of debt, in the financial year ended 31 March 2014.

7.1.11 Profit (loss) before tax

For the financial year ended 31 March 2014, profit (loss) before tax increased by US\$41.2 million to US\$54.6 million from US\$13.4 million in the financial years ended 31 March 2013, as a result of the changes in the line items discussed above.

7.1.12 Taxation

For the financial year ended 31 March 2014, taxation decreased by US\$84.6 million, to a loss of US\$27.2 million from a gain of US\$57.4 million in the financial years ended 31 March 2013, primarily due to an increase in tax due as a result of the repatriation of foreign earnings, partially offset by the release of previously unrecognised tax assets.

7.1.13 Currency translation differences

For the financial year ended 31 March 2014, currency translation differences decreased by US\$0.3 million, or 6.5 per cent., to US\$3.4 million from US\$3.7 million for the financial year ended 31 March 2013.

7.1.14 Actuarial gains (losses) on defined benefit pension plans

For the financial year ended 31 March 2014, the Actuarial losses on defined benefit pension plans decreased by US\$2.8 million, or 81.3 per cent., to US\$0.6 million from US\$3.4 million in the financial year ended 31 March 2013, primarily due to a change in the financial assumptions of the plans whereby the discount rate and the return on net plan assets decreased, partially offset by actuarial gains due to recognition of historical experience.

7.1.15 Total comprehensive income

For the financial year ended 31 March 2014, total comprehensive income decreased by US\$40.9 million or 57.6 per cent., to US\$30.2 million from US\$71.1 million for the financial year ended 31 March 2013 as a result of the factors discussed above.

7.2 Results of operations for the year ended 31 March 2013 compared to the year ended 31 March 2012 The table below presents the Attachmate Group's results of operations for the financial years ended 31 March 2013 and 2012.

	Year ended 31 March
2013	2012
US\$'000	US\$'000
995,783	1,013,350
(156,161)	(167,847)
839,622	–––––––– 845,503 ––––––––
(347,146)	(354,341)
(210,555)	(247,234)
(85,139)	(127,866)
200,563	–––––––– 213,925 ––––––––
(3,781)	(97,863)
196,782	–––––––– 116,062
	–––––––– (86,218)
	(56,595)
	673
	(899)
(378)	(413)
13,421	–––––––– (27,390)
57,405	–––––––– (1,648)
70,826	–––––––– (29,038) ––––––––
3,651	(12,679)
(3,394)	52
71,083	–––––––– (41,665) ––––––––
	–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– (118,893) (68,962) 644 4,228 –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

7.2.1 Revenue

For the financial year ended 31 March 2013, revenue decreased by US\$17.6 million, or 1.7 per cent., to US\$995.8 million from US\$1,013.4 million for the financial year ended 31 March 2012. This decrease was primarily due to declines in maintenance and subscription revenue as well as licensing revenue. The decline was most significant in the North American region, but the International region was also impacted by this decline.

(a) Revenue by geography

For the financial year ended 31 March 2013, revenue in the North America region decreased by US\$12.6 million, or 2.3 per cent., to US\$529.5 million from US\$542.1 million for the financial year ended 31 March 2012. This decrease was primarily due to a decrease in maintenance and subscription revenue and, to a lesser extent, a decrease in services revenue.

For the financial year ended 31 March 2013, revenue in the International region decreased by US\$6.5 million, or 1.8 per cent., to US\$363.3 million from US\$369.8 million for the financial year ended 31 March 2012. This decrease was primarily due to a decline in licensing revenues as a result of the Eurozone crisis in Europe.

For the financial year ended 31 March 2013, revenue in the Asia-Pacific region increased by US\$1.4 million, or 1.4 per cent., to US\$102.9 million from US\$101.5 million for the financial year ended 31 March 2012. This increase was primarily due to increases in maintenance and subscription revenue and services revenue, partially offset by a decline in licensing revenue.

(b) Revenue by product category

For the financial year ended 31 March 2013, revenue from licences decreased by US\$27.9 million, or 12.7 per cent., to US\$192.1 million from US\$220.0 million for the financial year ended 31 March 2012. This decrease impacted the Attachmate Group's operations globally, though it was most pronounced in the International region. Both Novell software products as well as NetIQ software products drove the decline.

For the financial year ended 31 March 2013, revenue from maintenance and subscriptions increased by US\$9.1 million, or 1.3 per cent., to US\$706.9 million from US\$697.8 million for the financial year ended 31 March 2012. This increase was primarily due to an increase in the International region and, to a lesser extent, in the Asia Pacific region, though largely offset by a decline in the North American region. This increase was driven by growth of the NetIQ and SUSE product portfolios while the offsetting decline was focused on Novell software products.

For the financial year ended 31 March 2013, revenue from services increased by US\$1.3 million, or 1.3 per cent., to US\$96.8 million from US\$95.5 million for the financial year ended 31 March 2012. This increase was primarily due to small increases in International and Asia Pacific revenues being offset by a moderate decline in North America. From a product perspective, moderate increases occurred in the SUSE and NetIQ product portfolios whereas moderate declines occurred in the Novell and the Attachmate product portfolios.

7.2.2 Cost of sales

For the financial year ended 31 March 2013, cost of sales decreased by US\$11.6 million, or 7.0 per cent., to US\$156.2 million from US\$167.8 million in the financial year ended 31 March 2012, primarily due to synergies realised from the Novell integration.

7.2.3 Gross profit

For the financial year ended 31 March 2013, gross profit decreased by US\$5.9 million, or 0.7 per cent., to US\$839.6 million from US\$845.5 million in the financial year ended 31 March 2012, due to the reasons discussed above.

7.2.4 Selling and distribution costs

For the financial year ended 31 March 2013, selling and distribution costs decreased by US\$7.2 million, or 2.0 per cent., to US\$347.1 million from US\$354.3 million in the financial year ended 31 March 2012, primarily due to investments in product specialist sales resources and an increase in marketing expenditures related to the Attachmate Group's SUSE product family being more than offset by synergies recognised from the Novell integration.

7.2.5 Research and development expense

For the financial year ended 31 March 2013, research and development expense decreased by US\$36.7 million, or 14.8 per cent., to US\$210.6 million from US\$247.2 million in the financial year ended 31 March 2012, primarily due to lower bonus payments for the Attachmate Group's salaried employees in the financial year ended 31 March 2013 when compared to the payments in the financial year ended 31 March 2012.

7.2.6 Administrative expenses

For the financial year ended 31 March 2013, administrative expenses decreased by US\$42.7 million, or 33.4 per cent., to US\$85.1 million from US\$127.9 million in the financial year ended 31 March 2012, reflecting costs savings realised from the Attachmate Group's restructuring activity undertaken in the financial year ended 31 March 2013 as a result of the acquisition of Novell and lower bonus payments for the Attachmate Group's salaried employees in the financial year ended 31 March 2013 when compared to the payments in the financial year ended 31 March 2012.

7.2.7 Operating profit before exceptional items

For the financial year ended 31 March 2013, operating profit before exceptional items decreased by US\$13.4 million, or 6.3 per cent. to US\$200.6 million from US\$213.9 million in the financial year ended 31 March 2012, due to changes in the line items discussed above.

7.2.8 Exceptional items

For the financial year ended 31 March 2013, exceptional costs decreased by US\$94.1 million to a loss of US\$3.8 million from a loss of US\$97.9 million in the financial year ended 31 March 2012, primarily due to the absence of the restructuring costs associated with the Novell acquisition as well as a gain from the sale of real estate which was partially offset by further small restructuring and impairment costs.

7.2.9 Finance costs before exceptional items

For the financial year ended 31 March 2013, finance costs before exceptional items increased by US\$32.7 million, or 37.8 per cent., to US\$118.9 million from US\$86.2 million in the financial year ended 31 March 2012, primarily due to higher interest payments associated with higher debt outstanding.

7.2.10 Exceptional finance costs

For the financial year ended 31 March 2013, exceptional finance costs increased by US\$12.4 million, or 21.9 per cent., to US\$69.0 million from US\$56.6 million in the financial year ended 31 March 2012, primarily due to the recapitalisation of transaction fees associated with the 2012 refinancing.

7.2.11 Profit (loss) before tax

For the financial year ended 31 March 2013, profit (loss) before tax increased by US\$40.8 million to a gain of US\$13.4 million from a loss of US\$27.4 million in the financial year ended 31 March 2012, as a result of the changes in the line items discussed above.

7.2.12 Taxation

For the financial year ended 31 March 2013, taxation decreased by US\$59.1 million to a gain of US\$57.4 million from a loss of US\$1.6 million in the financial year ended 31 March 2012, as a result of increased profits and the utilisation of previously unrecognised capital losses, partially offset by capital gains taxes on foreign distributions.

7.2.13 Currency translation differences

For the financial year ended 31 March 2013, currency translation differences increased by US\$16.4 million to a gain of US\$3.7 million from a loss of US\$12.7 million for the financial year ended 31 March 2012.

7.2.14 Actuarial gains (losses) on defined benefit pension plans

For the financial year ended 31 March 2013, the net pension adjustment decreased by US\$3.5 million to a loss of US\$3.4 million from a gain of US\$0.1 million in the financial year ended 31 March 2012, primarily due to a change in financial assumptions during the financial year ended 31 March 2013 whereas the increase in the discount rate and return on net plan assets was substantially less in the financial year ended 31 March 2012.

7.2.15 Total comprehensive income

For the financial year ended 31 March 2013, total comprehensive income increased to a gain of US\$71.1 million as compared to a loss of US\$41.7 million for the financial year ended 31 March 2012 as a result of the factors discussed above.

8. Liquidity and Capital Resources

8.1 Cash flows

The table below sets out the principal components of the Attachmate Group's cash flows for the financial years ended 31 March 2014, 2013 and 2012.

		Year ended 31 March
	2014	2013	2012
	US\$'000	US\$'000	US\$'000
Cash flows from operating activities	149,008	117,240	147,758
Cash flows provided by/(used in) investing activities	(14,423)	108,153	(614,010)
Cash flows provided by/(used in) financing activities	(143,399)	(441,033)	697,842
Net (decrease) increase in cash and cash equivalents	–––––––– (8,814)	–––––––– (215,640)	–––––––– 231,590
Cash and cash equivalents at period beginning	160,229	375,869	144,279
Cash and cash equivalents at period end	151,415	160,229	375,869
	––––––––	––––––––	––––––––

8.1.1 Cash flows from operating activities

The Attachmate Group's cash flows from operating activities consist primarily of cash received for sales of software licences or under contracts to provide maintenance and other services in relation to the Attachmate Group's software platforms.

For the financial year ended 31 March 2014, cash flows from operating activities increased by US\$31.8 million, or 27.1 per cent., to US\$149.0 million from US\$117.2 million in the financial year ended 31 March 2013, primarily due to increased operating efficiency as a result of restructuring activities.

For the financial year ended 31 March 2013, cash flows from operating activities decreased by US\$30.5 million, or 20.7 per cent., to US\$117.2 million from US\$147.8 million in the financial year ended 31 March 2012, primarily due to reductions in operating revenues from customers.

8.1.2 Cash flows provided by/(used in) investing activities

The Attachmate Group's cash flows from investing activities consist primarily of the purchase and sale of property, plant and equipment as well as the cash portion of the Novell acquisition.

For the financial year ended 31 March 2014, cash flows from investing activities decreased by US\$122.6 million to an outflow of US\$14.4 million from an inflow of US\$108.2 million in the year ended 31 March 2013, primarily due to the absence in the financial year ended 31 March 2014 of the net proceeds received from the sale of certain of the Attachmate Group's buildings in the financial year ended 31 March 2013 and the fact that the ordinary course cash flows related to investing activity were stable between the two years.

For the financial year ended 31 March 2013, cash flows from investing activities increased by US\$722.2 million to an inflow of US\$108.2 million from an outflow of US\$614.0 million in the financial year ended 31 March 2012, primarily due to the cash outflow related to the Novell acquisition in the financial year ended 31 March 2012 not being repeated in the financial year ended 31 March 2013. This trend was enhanced by the sale of certain of the Attachmate Group's buildings in the financial year ended 31 March 2013.

8.1.3 Cash flows provided by/(used in) financing activities

The Attachmate Group's cash flows from financing activities consist primarily of the repayment of, including accelerated repayment, of obligations under the Attachmate Group's outstanding debt as well as its entrance into new debt obligations and payments to and contributions from the existing shareholders.

For the financial year ended 31 March 2014, cash flows used in financing activities decreased by US\$297.6 million, or 67.5 per cent., to an outflow of US\$143.4 million from an outflow of US\$441.0 million in the financial year ended 31 March 2013, primarily due to the existence of a shareholder distribution and the refinancing of the 2011 Term Loans with the issuance of the 2012 Term Loans in the financial year ended 31 March 2013 and the absence of any similar activity in the financial year ended 31 March 2014.

For the financial year ended 31 March 2013, cash flows from finance activities decreased by US\$1,138.9 million to an outflow of US\$441.0 million from an inflow of US\$697.8 million in the year ended 31 March 2012, primarily due to the existence of a shareholder distribution of US\$687.6 million in the financial year ended 31 March 2013, as compared to a shareholder contribution of US\$230.1 million in the financial year ended 2012 and the net cash inflow of the first refinancing being larger than the net cash inflow from the second refinancing which occurred in the financial year ended 31 March 2013.

8.2 Capital expenditure

Historically, the Attachmate Group, like many other comparable software companies, has had minimal capital expenditure requirements. For the three years under review, they have been US\$7.6 million in the financial year ended 31 March 2014, US\$11.6 million for the financial year ended 31 March 2013 and US\$7.2 million for the financial year ended 31 March 2012. These expenditures have primarily been for the purchase of plant property and equipment and to a lesser extent to purchase software or other intellectual property which support the development of the Attachmate Group's own software products.

8.3 Working capital

The Attachmate Group funds its working capital needs from its cash from operations. While it has an available line of credit of US\$40 million, it has never been utilised.

8.4 Contractual obligations

The table below presents a summary of the Attachmate Group's historical contractual obligations as at 31 March 2014. The existing indebtedness of the Attachmate Group will be restricted as part of the

	Less than one year	One to three years	More than three years ('000 US\$)	Total
Borrowings	32.4	185.6	1,076.7	1,294.7
Leases	24.6	42.8	103.1	170.5
Outside services and royalties	15.8	22.9	0.1	38.8
Merger liabilities	–	–	–	5.5
Total	–––––––– 72.8 ––––––––	–––––––– 251.4 ––––––––	–––––––– 1,179.9 ––––––––	–––––––– 1,509.5 ––––––––

Merger. For further details please refer to paragraph 5 of Part I (Letter from the Chairman of Micro Focus International Plc) and paragraph 14.1.5 of Part XIII (Additional Information) of this document.

8.4.1 Line of Credit

At 31 March 2014, the Attachmate Group had a revolving line of credit with a limit up to US\$40 million. This line of credit has a maturity date of 22 May 2017 and, when drawn, bears interest at a base rate equal to the higher of the prime rate or 0.5 per cent. above the overnight US federal funds rate or 1.0 per cent. above the one-month Eurodollar rate, plus an applicable margin that is no greater than 4.75 per cent., with an optional Eurodollar rate also available. The interest rate on this line of credit was 7.25 per cent. at 31 March 2014. The Attachmate Group had no outstanding borrowings under its US\$40 million line of credit during the financial years ended 31 March 2014 and 2013. When undrawn, the Attachmate Group is charged 0.5 per cent. of the available balance for lack of utilisation.

8.4.2 Borrowings

On 22 May 2012, the Attachmate Group entered into two term loan credit agreements (the "First Lien Credit Agreement" and the "Second Lien Credit Agreement" and, together, constituting the 2012 Term Loans) in order to repay its previous loans and to help fund an equity distribution to Attachmate's shareholders. The 2012 Term Loans contain certain restrictions related to the sale of assets and dividend payments.

(a) First Lien Credit Agreement

The Attachmate Group had borrowings under the First Lien Credit Agreement of US\$905.5 million as at 31 March 2014. The First Lien Credit Agreement matures on 22 November 2017, at which time the remaining principal balance is due to be repaid. The Attachmate Group is required to make quarterly payments that vary over time. Borrowings under the First Lien Credit Agreement bear interest quarterly at a base rate equal to the higher of the prime rate or 0.5 per cent. above the overnight US federal funds rate or 1.0 per cent. above the one-month Eurodollar rate, plus an applicable margin that is no greater than 4.75 per cent., with an optional Eurodollar rate also available.

The First Lien Credit Agreement is subject to affirmative and negative financial covenants. Attachmate is in compliance with all financial covenants as at 31 March 2014.

(b) Second Lien Credit Agreement

Borrowings under the Second Lien Credit Agreement in the original amount of US\$400 million do not require any principal payments until the loan matures on 22 November 2018. However, during the financial year ended 31 March 2014, certain creditors under the First Lien Credit Agreement waived pre-payments required due to the Attachmate Group's excess cash flow position at year-end. The Second Lien Credit Agreement is subordinated to the First Lien Credit Agreement and thus when this waiver occurred, Attachmate made a payment of US\$10.8 million to the creditors of the Second Lien Credit Agreement, resulting in a remaining principal balance of US\$389.2 million as at 31 March 2014. Borrowings under the Second Lien Credit Agreement bear interest at a base rate equal to the higher of the prime rate or 0.5 per cent. above the overnight US federal funds rate or 1.0 per cent. above the one-month Eurodollar rate, plus an applicable margin of 8.5 per cent., with an optional Eurodollar rate also available.

The Second Lien Credit Agreement is also subject to affirmative and negative financial covenants. The Attachmate Group is in compliance with all financial covenants as at 31 March 2014.

8.4.3 Leases

The Attachmate Group leases its office facilities, certain equipment and vehicles under operating leases expiring at various dates through 2025, though many of its lease agreements have renewal options.

8.4.4 Contractual commitments and Royalties

The agreements the Attachmate Group maintains for certain contractual commitments and royalties expire at various dates through the financial year ending 31 March 2022. However, most of these contracts renew automatically upon expiration unless specifically cancelled within the contract terms. Additionally, under the terms of some contracts, prepayment is required, which is reflected in the Attachmate Group's consolidated financial statements as prepaid assets.

In certain circumstances, the Attachmate Group has an obligation to make royalty payments that fluctuate based on the monthly sales of various products. Royalty terms range from a percentage of total sales to a set fee per licence or maintenance sold and are not reflected in the contingent obligations table set out above.

8.4.5 Merger Liabilities

At the time the Attachmate Group acquired Novell, it acquired US\$5.5 million of liabilities connected to a leased facility associated with an acquisition that Novell completed in 2001. This liability relates to the amount expected to be paid over the remaining lease term which extends to 2025.

9. Quantitative and Qualitative Disclosure about Financial Risk

The following discussion should be read in conjunction with the consolidated financial statements for the financial years ended 31 March 2014, 2013 and 2012 contained elsewhere in this document.

The Attachmate Group's exposure to market risk is a function of its borrowing and business activities. The Attachmate Group is exposed to market risk from changes in both foreign currency exchange rates and interest rates. The Attachmate Group faces foreign exchange risk to the extent that its business's sales, costs, assets or liabilities are denominated in currencies other than US dollars. The Attachmate Group's interest rate risk results from changes in interest rates which may affect the cost of its financings.

9.1 Credit risk

Credit risk is the risk that a counter-party will not meet its obligations under a financial instrument or contract, leading to a financial loss. Financial instruments which potentially expose the Attachmate Group to a concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash equivalents are deposited with high-credit quality financial institutions. The Attachmate Group provides credit to customers in the normal course of business. Collateral is not required for those receivables, but ongoing credit evaluations of customers' financial conditions are performed. The Attachmate Group maintains a provision for impairment based upon the expected collectability of accounts receivable. The Attachmate Group sells products and services to a wide range of customers around the world and therefore believes there is no material concentration of credit risk.

9.2 Interest rate risk

The Attachmate Group's income and operating cash flows are substantially independent of changes in market interest rates.

The Attachmate Group's interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Attachmate Group to cash flow interest rate risk which is partially offset by cash held at variable rates. The Attachmate Group did not have any interest rate swaps or interest rate caps as of 31 March 2014 or 30 April 2014.

9.3 Liquidity risk

Liquidity risk is the risk that the Attachmate Group does not have available sufficient financial resources to enable it to meet its obligations as they fall due or can secure its obligations only at excessive cost. Central treasury carries out cash flow forecasting for the Attachmate Group to ensure that it has sufficient cash to meet operational requirements and to allow the repayment of the bank facility.

Surplus cash in the operating units over and above what is required for working capital needs is transferred to the Attachmate Group treasury. These funds are used to repay bank borrowings or invested in interest bearing current accounts, time deposits or money market deposits of the appropriate maturity period determined by consolidated cash forecasts. Trade payables arise in the normal course of business and are all current.

Total secured borrowings of US\$1,294.7 million are related to the Attachmate Group's credit agreements as at 30 April 2014. Current portion of borrowings of US\$32.4 million at 30 April 2014 are due within the next 12 months. At 31 July 2014 (being the latest practicable date prior to the publication of this document), the Attachmate Group's total debt was US\$1,294.7 million. Please see paragraph 14.1.5 of Part XIII (Additional Information) for details on the New Facilities.

9.4 Self-insurance risk

The Attachmate Group retains a significant portion of the risk related to its employee health programs. The exposure for unpaid claims and associated expenses, including incurred but not reported losses, generally is estimated by factoring in pending claims and historical trends and data and the assessment of external actuaries. The Attachmate Group limits its exposure by having specific stop-loss coverage per individual per year. The total liability is calculated at the end of the plan year based on the enrolment each month throughout the plan year. The gross estimated liability associated with settling unpaid claims is included in the line item, "accrued compensation and employee benefits" in the Attachmate Group's consolidated balance sheets.

9.5 Exchange rate risk

The Attachmate Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the pounds sterling, Euro, Australian dollar and Indian rupee. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity's functional currency.

The Attachmate Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.

9.6 Significant accounting policies

Please refer to pages 116 to 128 of Part VIII (Financial Information of the Attachmate Group) for a summary of significant accounting policies of the Attachmate Group.

PART VIII

FINANCIAL INFORMATION OF THE ATTACHMATE GROUP

(A) Report on the Financial Information of the Attachmate Group

The Directors Micro Focus International plc The Lawn 22-30 Old Bath Road Berkshire RG14 1QN

Numis Securities Limited The London Stock Exchange Building 10 Paternoster Square London EC4M 7LT

8 October 2014

Dear Sirs

The Attachmate Group, Inc.

We report on the financial information set out in section B of this Part VIII (the "Financial Information Table"). The Financial Information Table has been prepared for inclusion in the prospectus dated 8 October 2014 (the "Prospectus") of Micro Focus International plc (the "Company") on the basis of the accounting policies set out in note 1 to the Financial Information Table. This report is required by item 20.1 of Annex I to the PD Regulation and is given for the purpose of complying with that item and for no other purpose.

Responsibilities

The directors of the Company are responsible for preparing the Financial Information Table in accordance with International Financial Reporting Standards as adopted by the European Union.

It is our responsibility to form an opinion as to whether the Financial Information Table gives a true and fair view, for the purposes of the Prospectus and to report our opinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed and for any responsibility arising under item 5.5.3R(2)(f) of the Prospectus Rules to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report, consenting to its inclusion in the Prospectus.

PricewaterhouseCoopers LLP, One Reading Central, 23 Forbury Road, Reading, Berkshire, RG1 3JH T: +44 (0) 1189 597111, F: +44 (0) 1189 383020, www.pwc.co.uk

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for designated investment business.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. It also included an assessment of significant estimates and judgments made by those responsible for the preparation of the financial information and whether the accounting policies are appropriate to the Company's circumstances, consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from material misstatement whether caused by fraud or other irregularity or error.

Opinion

In our opinion, the Financial Information Table gives, for the purposes of the Prospectus dated 8 October 2014, a true and fair view of the state of affairs of The Attachmate Group, Inc. and its subsidiaries and subsidiary undertakings as at the dates stated and of its profits and losses, cash flows and changes in equity for the periods then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Declaration

For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the Prospectus and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with item 1.2 of Annex I to the PD Regulation.

Yours faithfully

PricewaterhouseCoopers LLP Chartered Accountants

(B) Historical Financial Information relating to the Attachmate Group for the financial years ended 31 March 2012, 31 March 2013 and 31 March 2014 and the one month periods ended 30 April 2013 and 30 April 2014.

Consolidated statements of comprehensive income for the years ended 31 March 2012, 2013 and 2014 and one month periods ended 30 April 2013 and 2014

			Years ended 31 March			One month ended 30 April
	Notes	2012 US\$'000	2013 US\$'000	2014 US\$'000	2013 US\$'000	2014 US\$'000
Revenue Cost of sales	1	1,013,350 (167,847) ––––––––	995,783 (156,161) ––––––––	956,829 (151,188) ––––––––	(unaudited) 68,782 (10,382) ––––––––	65,325 (10,089) ––––––––
Gross profit Selling and distribution costs Research and development expense Administrative expense		845,503 (354,341) (247,234) (127,866) ––––––––	839,622 (347,146) (210,555) (85,139) ––––––––	805,641 (341,833) (212,875) (78,086) ––––––––	58,400 (26,324) (18,798) (7,371) ––––––––	55,236 (22,369) (16,925) (5,804) ––––––––
Operating profit Analysed as: Operating profit before exceptional items Exceptional items	2	116,062 213,925 (97,863)	196,782 200,563 (3,781)	172,847 204,088 (31,241)	5,907 6,020 (113)	10,138 10,176 (38)
Operating profit		–––––––– 116,062	–––––––– 196,782	–––––––– 172,847	–––––––– 5,907	–––––––– 10,138
Finance costs – pre-exceptional Finance costs – exceptional	4 2	–––––––– (86,218) (56,595)	–––––––– (118,893) (68,962)	–––––––– (116,437) –	–––––––– (9,852) –	–––––––– (9,068) –
Finance costs Finance income	4	–––––––– (142,813) 673 ––––––––	–––––––– (187,855) 644 ––––––––	–––––––– (116,437) 320 ––––––––	–––––––– (9,852) 45 ––––––––	–––––––– (9,068) 40 ––––––––
Finance costs – net Share of (loss) profit of associates accounted for using the		(142,140)	(187,211)	(116,117)	(9,807)	(9,028)
equity method Other expense, net		(899) (413)	4,228 (378)	(1,586) (529)	(130) (168)	(155) (657)
(Loss) profit before tax Taxation	2 5	–––––––– (27,390) (1,648)	–––––––– 13,421 57,405	–––––––– 54,615 (27,224)	–––––––– (4,198) 4,944	–––––––– 298 (631)
(Loss) profit for the period Other comprehensive income (loss): Items that will not be reclassified to profit or loss Actuarial gains (losses) on defined		–––––––– (29,038)	–––––––– 70,826	–––––––– 27,391	–––––––– 746	–––––––– (333)
benefit pension plans Items that may be subsequently be reclassified to profit or loss Currency translation differences		52 (12,679)	(3,394) 3,651	(633) 3,414	– 929	– (64)
Other comprehensive (loss) income for the period		–––––––– (12,627)	–––––––– 257	–––––––– 2,781	–––––––– 929	–––––––– (64)
Total comprehensive (loss) income		–––––––– (41,665)	–––––––– 71,083	–––––––– 30,172	–––––––– 1,675	–––––––– (397)
Attributable to: – Owners of the parent – Non-controlling interests		–––––––– (41,881) 216	–––––––– 70,900 183	–––––––– 29,816 356	–––––––– 1,451 224	–––––––– (603) 206
Total comprehensive (loss) income		–––––––– (41,665)	–––––––– 71,083	–––––––– 30,172	–––––––– 1,675	–––––––– (397)
		––––––––	––––––––	––––––––	––––––––	––––––––

		1 April	31 March	31 March	31 March	30 April
		2011	2012	2013	2014	2014
	Notes	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Non-current assets
Goodwill	7	277,867	906,052	906,052	906,052	906,052
Other intangible assets	8	140,726	473,803	364,504	268,122	261,908
Property, plant and equipment	9	4,074	37,723	32,753	25,293	24,801
Assets held for sale	9	–	105,722	–	888	888
Deferred tax assets	18	18,223	211,503	235,423	196,862	197,716
Investment in associates		–	14,044	18,272	16,685	16,530
Long-term pension assets	23	–	13,889	14,203	15,991	16,514
Long-term income tax receivable		–	10,047	10,047	10,047	10,047
Other non-current assets		5,543 ––––––––	4,293 ––––––––	3,546 ––––––––	6,347 ––––––––	6,243 ––––––––
		446,433	1,777,076	1,584,800	1,446,287	1,440,699
Current assets
Trade and other receivables	10	87,867	224,045	213,806	220,051	172,946
Restricted cash	11	141	975	137	803	805
Cash and cash equivalents	11	144,279 ––––––––	375,869 ––––––––	160,229 ––––––––	151,415 ––––––––	142,473 ––––––––
		232,287 ––––––––	600,889 ––––––––	374,172 ––––––––	372,269 ––––––––	316,224 ––––––––
Total assets		678,720	2,377,965	1,958,972	1,818,556	1,756,923
Current liabilities		––––––––	––––––––	––––––––	––––––––	––––––––
Trade and other payables	12	53,404	134,784	126,848	140,583	109,002
Borrowings	13	56,764	104,945	115,799	32,383	32,383
Provisions	16	324	21,003	3,699	7,571	6,639
Current tax liabilities		13,160	36,576	29,947	25,753	25,801
Deferred income – current	14	115,961	513,020	488,238	502,392	481,834
		–––––––– 239,613	–––––––– 810,328	–––––––– 764,531	–––––––– 708,682	–––––––– 655,659
Non-current liabilities
Deferred income – non-current	15	19,207	263,073	253,711	220,429	210,730
Long-term provisions	16	339	7,175	4,018	4,472	4,319
Long-term derivative liabilities		7,492	4,761	–	–	–
Pension liability	23	–	13,497	19,303	22,848	23,647
Preferred share liabilities	29	41,775	–	–	–	–
Borrowings	13	547,420	1,023,180	1,322,326	1,262,343	1,262,343
Deferred tax liabilities	18	39,015	133,755	82,311	52,637	52,373
Other non-current liabilities		1,645 ––––––––	1,527 ––––––––	4,893 ––––––––	7,259 ––––––––	8,254 ––––––––
		656,893 ––––––––	1,446,968 ––––––––	1,686,562 ––––––––	1,569,988 ––––––––	1,561,666 ––––––––
Total liabilities		896,506 ––––––––	2,257,296 ––––––––	2,451,093 ––––––––	2,278,670 ––––––––	2,217,325 ––––––––
Net (liabilities) assets		(217,786)	120,669	(492,121)	(460,114)	(460,402)
(Deficit) equity attributable to the owners of the parent		––––––––	––––––––	––––––––	––––––––	––––––––
Share capital	19	–	–	–	–
Share option reserve	20	1,196	6,263	7,161	6,197	5,606
Retained (deficit) earnings		(218,982)	126,869	(490,653)	(461,452)	(461,291)
Foreign currency translation deficit		–	(12,679)	(9,028)	(5,614)	(5,678)
Owners of the parent		–––––––– (217,786)	–––––––– 120,453	–––––––– (492,520)	–––––––– (460,869)	–––––––– (461,363)
Non-controlling interests		–––––––– –	–––––––– 216	–––––––– 399	–––––––– 755	–––––––– 961
Total (deficit) equity		–––––––– (217,786)	–––––––– 120,669	–––––––– (492,121)	–––––––– (460,114)	–––––––– (460,402)

Consolidated statements of financial position as at 1 April 2011, 31 March 2012, 2013 and 2014 and 30 April 2014

–––––––– –––––––– –––––––– –––––––– ––––––––

Consolidated statements of changes in equity for the years ended 31 March 2012, 2013 and 2014 and one month period ended 30 April 2014

					Attributable to the owners of Attachmate Foreign
	Notes	Share capital US\$'000	Share option reserve US\$'000	Retained deficit US\$'000	currency translation reserve deficit US\$'000	Total US\$'000	Non- controlling interests US\$'000	Total equity US\$'000
Balance as at 1 April 2011 Loss for the period Actuarial gains on defined		– –	1,196 –	(218,982) (29,254)	– –	(217,786) (29,254)	– 216	(217,786) (29,038)
benefit pension plans Currency translation differences	23	– –	– –	52 –	– (12,679)	52 (12,679)	– –	52 (12,679)
Total comprehensive loss Transactions with owners:		–––––––– –	–––––––– –	–––––––– (29,202)	–––––––– (12,679)	–––––––– (41,881)	–––––––– 216	–––––––– (41,665)
Shareholder contribution Equity consideration on acquisition Retirement of preferred share liabilities	27	– – –	– – –	230,055 97,941 42,158	– – –	230,055 97,941 42,158	– – –	230,055 97,941 42,158
Movement in relation to share options	22	– ––––––––	5,067 ––––––––	4,899 ––––––––	– ––––––––	9,966 ––––––––	– ––––––––	9,966 ––––––––
Balance as at 31 March 2012		–	6,263	126,869	(12,679)	120,453	216	120,669
Profit for the period Actuarial losses on defined benefit		–––––––– –	–––––––– –	–––––––– 70,643	–––––––– –	–––––––– 70,643	–––––––– 183	–––––––– 70,826
pension plans Currency translation differences	23	– –	– –	(3,394) –	– 3,651	(3,394) 3,651	– –	(3,394) 3,651
Total comprehensive income Transactions with owners:		–––––––– –	–––––––– –	–––––––– 67,249	–––––––– 3,651	–––––––– 70,900 –	–––––––– 183	–––––––– 71,083 –
Dividends Movement in relation to Share Options	6 22	– –	– 898	(687,571) 2,800	– –	(687,571) 3,698	– –	(687,571) 3,698
Balance as at 31 March 2013		–––––––– –	–––––––– 7,161	–––––––– (490,653)	–––––––– (9,028)	–––––––– (492,520)	–––––––– 399	–––––––– (492,121)
Profit for the period Actuarial losses on defined benefit		–––––––– –	–––––––– –	–––––––– 27,035	–––––––– –	–––––––– 27,035	–––––––– 356	–––––––– 27,391
pension plans Currency translation differences	23	– – ––––––––	– – ––––––––	(634) – ––––––––	– 3,414 ––––––––	(634) 3,414 ––––––––	– – ––––––––	(634) 3,414 ––––––––
Total comprehensive income Transactions with owners:		–	–	26,401	3,414	29,815 –	356	30,171
Movement in relation to Share Options	22	– ––––––––	(964) ––––––––	2,800 ––––––––	– ––––––––	1,836 ––––––––	– ––––––––	1,836 ––––––––
Balance as at 31 March 2014		– ––––––––	6,197 ––––––––	(461,452) ––––––––	(5,614) ––––––––	(460,869) ––––––––	755 ––––––––	(460,114) ––––––––
Loss for the period Currency translation differences		– –	– –	(539) –	– (64)	(539) (64)	206 –	(333) (64)
Total comprehensive loss Transactions with owners:		–––––––– –	–––––––– –	–––––––– (539)	–––––––– (64)	–––––––– (603) –	–––––––– 206	–––––––– (397) –
Movement in relation to Share Options	22	– ––––––––	(591) ––––––––	700 ––––––––	– ––––––––	109 ––––––––	– ––––––––	109 ––––––––
Balance as at 30 April 2014		–	5,606	(461,291)	(5,678)	(461,363)	961	(460,402)

–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

Consolidated statements of cash flows for the years ended 31 March 2012, 2013 and 2014 and one month periods ended 30 April 2013 and 2014

						One month ended
		Years ended 31 March		30 April
		2012	2013	2014	2013	2014
	Notes	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
					(unaudited)
Cash flows from operating activities
Cash generated from operations	21	316,645	254,794	284,458	17,947	18,990
Interest paid		(75,864)	(115,603)	(118,568)	(29,034)	(26,521)
Tax paid		(93,023)	(21,951)	(16,882)	(280)	203
Net cash generated from (used in) operating activities Cash flows from investing		–––––––– 147,758	–––––––– 117,240	–––––––– 149,008	–––––––– (11,367)	–––––––– (7,328)
activities
Payments for intangible assets	8	(466)	(2,163)	(6,745)	(123)	(1,082)
Purchase of property, plant and
equipment	9	(7,249)	(7,563)	(7,567)	(1,107)	(532)
Proceeds from sales of property	9	–	116,936	–	–	–
Other investing activities		8,858	116	562	–	–
Changes in restricted cash Payments for the acquisition of business, net of cash	11	288	827	(673)	68	–
acquired	27	(615,441)	–	–	–	–
Net cash (used in) generated by investing activities Cash flows from financing		–––––––– (614,010)	–––––––– 108,153	–––––––– (14,423)	–––––––– (1,162)	–––––––– (1,614)
activities
Repayment of bank borrowings	13		(631,930) (1,190,000)	(143,399)	(20,624)	–
Proceeds from bank borrowings	13	1,150,000	1,500,000	–	–	–
Bank loan costs	13	(50,283)	(63,462)	–	–	–
Contributions from owners		230,055	–	–	–	–
Dividends paid to owners	6	–	(687,571)	–	–	–
Net cash generated by (used in)		––––––––	––––––––	––––––––	––––––––	––––––––
financing activities		697,842 ––––––––	(441,033) ––––––––	(143,399) ––––––––	(20,624) ––––––––	– ––––––––
Net increase (decrease) in cash and cash equivalents		231,590	(215,640)	(8,814)	(33,153)	(8,942)
Cash and cash equivalents at period beginning		144,279 ––––––––	375,869 ––––––––	160,229 ––––––––	160,229 ––––––––	151,415 ––––––––
Cash and cash equivalents at period end		375,869	160,229	151,415	127,076	142,473
		––––––––	––––––––	––––––––	––––––––	––––––––

Summary of significant accounting policies

General information

Attachmate is a holding company, with ownership of both direct and indirect subsidiaries, incorporated under the laws of Delaware and is domiciled in the United States of America. Attachmate is privately held and owned by Wizard. Wizard is controlled by the following private equity sponsors: Francisco Partners, Golden Gate Capital, Elliot Management and Thoma Bravo. The address of Attachmate's registered office is 515 Post Oak Boulevard, Suite 1200, Houston, TX 77027, USA.

The Attachmate Group's principal brands include Attachmate, NetIQ, Novell and SUSE which develop, sell and install enterprise-quality software that is positioned in the operating systems and infrastructure software layers of the information technology industry. The Attachmate Group's enterprise solutions include systems and security management and host connectivity to corporations and government agencies worldwide. The Attachmate Group has a presence in 36 countries worldwide, with its most significant international operations based in Ireland, United Kingdom, Germany, India, and Australia, and employs approximately 3,300 people.

The principal accounting policies adopted by the Attachmate Group in the preparation of the consolidated financial statements are set out below. These policies have been applied consistently to all periods presented unless stated otherwise.

I. Attachmate Group accounting policies

A. Basis of preparation

The consolidated financial information has been prepared in accordance with the requirements of the Prospectus Directive Regulations, the Listing Rules, and in accordance with this basis of preparation. This basis of preparation describes how the consolidated financial information has been prepared in accordance with IFRS, interpretations issued by the IFRS Interpretations Committee and the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared on a going concern basis under the historical cost convention. The accounting policies used and disclosed below are consistent with those used by Micro Focus International plc.

These are Attachmate's first consolidated financial statements prepared under IFRS. Note 29 provides further details of the application of IFRS 1, First-time Adoption of International Financial Reporting Standards ("IFRS 1"). The Attachmate Group's consolidated financial statements for all periods presented were previously prepared in accordance with US GAAP.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Attachmate Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed below in II, "Critical accounting estimates and assumptions".

B. Consolidation

The consolidated financial statements of the Attachmate Group comprise the financial statements of Attachmate and entities controlled by Attachmate, its subsidiaries, prepared at the balance sheet date. Control exists where Attachmate has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. The results of subsidiaries are consolidated from the date on which control passes to the Attachmate Group. The results of disposed subsidiaries are consolidated up to the date on which control passes from the Attachmate Group.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Attachmate Group. The cost of acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, with costs directly attributable to the acquisition being expensed. Identifiable assets acquired, and liabilities and contingent liabilities assumed, in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Attachmate Group's share of the identifiable net assets acquired is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between Attachmate Group entities are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Attachmate Group.

C. Revenue recognition

The Attachmate Group recognises revenues from sales of software licences, software maintenance, subscriptions, technical support, training and professional services upon persuasive evidence of an arrangement, delivery of the software and determination that collection of a fixed or determinable fee is reasonably assured. Revenue is derived primarily from sales to distributors, who sell the Attachmate Group's products to resellers, and value added resellers ("VARs") who provide solutions across multiple vertical market segments which usually include services; OEMs, who integrate the Attachmate Group's products with their products or solutions; and end users, who may purchase the Attachmate Group's products and services directly from the Attachmate Group or from other partners or resellers.

When the fees for software upgrades and enhancements, maintenance, consulting and training are bundled with the licence fee, they are unbundled using the Attachmate Group's objective evidence of the fair value of the elements represented by the Attachmate Group's customary pricing for each element in separate transactions. If evidence of fair value exists for all undelivered elements and there is no such evidence of fair value established for delivered elements, revenue is first allocated to the elements where fair value has been established and the residual amount is allocated to the delivered elements.

The Attachmate Group recognises licence revenue derived from sales to resellers upon delivery to resellers, provided that all other revenue recognition criteria are met, otherwise revenue is deferred and recognised upon delivery of the product to the end-user. Where the Attachmate Group sells access to a licence for a specified period of time and collection of a fixed or determinable fee is reasonably assured, licence revenue is recognised upon delivery, unless future substantive upgrades or similar future performance obligations are committed to, in which case revenue is deferred and recognised rateably over the specified period. This is typically the case for subscriptions where access and performance obligations are performed over a defined term. Maintenance revenue is derived from providing technical support and software updates to customers. Maintenance revenue is recognised on a straight-line basis over the term of the contract, which in most cases is one year. Revenue from consulting and training services is recognised as the services are performed. Amounts collected prior to satisfying the above revenue recognition criteria are included in deferred income.

D. Determination and presentation of operating segments

The Attachmate Group determines and presents operating segments based on the information that internally is provided to the chief executive officer, who is the Attachmate Group's CODM. An operating segment is a component of the Attachmate Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Attachmate Group's other components. An operating segment's operating results are reviewed regularly by the CODM to make decisions about resources for the segment and assess its performance, and for which discrete financial information is available. The Attachmate Group has determined that it only has one operating and reportable segment. This position will be monitored as the Attachmate Group develops.

E. Exceptional items

(a) Exceptional items are those significant items which are separately disclosed by virtue of their size, nature or incidence to enable a full understanding of the Attachmate Group's financial performance. Examples of transactions which may be considered of an exceptional nature include major restructuring programmes, impairments, and disposal of assets held for sale.

(b) Exceptional finance costs are those significant items which are separately disclosed by virtue of their size, nature or incidence to enable a full understanding of the Attachmate Group's financial performance. Examples of transactions which may be considered of an exceptional nature include the costs associated with debt extinguishment.

F. Employee benefit costs

(a) Pension obligations

Attachmate Group entities operate various pension schemes. All of the major schemes are defined contribution plans for which the Attachmate Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Attachmate Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense when they are due.

As part of the Novell purchase, the Attachmate Group acquired defined benefit pension plans sponsored by a German subsidiary that covers 53 current employees and 241 former employees or retirees as of 30 April 2014. The plans were closed to new members in 1995 and November 2004. The Attachmate Group also has a separate immaterial defined benefit plan for another German subsidiary that was closed to members as of November 2010.

For defined benefit plans, pension costs are assessed using the projected unit credit method: Pension cost is recognised in the consolidated income statement so as to spread the current service cost over the service lives of employees. Pension obligation is measured as the present value of the estimated future cash outflows using interest rates on high quality corporate bonds with appropriate maturities. Remeasurement gains and losses are charged or credited to equity in other comprehensive income in the period in which they arise. Past service costs and settlement gains and losses are recognised immediately in income as part of service cost, when the plan amendment or settlement occurs. Curtailment gains and losses are accounted for as past service costs.

The retirement benefit obligation recognised in the consolidated statements of financial position is the present value of the pension obligation at the balance sheet date less the fair value of plan assets. Certain long term pension assets do not meet the definition of plan assets as they have not been pledged to the plan and are subject to the creditors of the Group. Such assets are recorded separately in the statement of financial position as long term pension assets.

Actuarial valuations for the Attachmate Group's defined benefit pension plans are performed annually. In addition, actuarial valuations are performed when a curtailment or settlement of a defined benefit plan occurs.

(b) Stock based compensation

As of 27 April 2011, all stock issuances from the Attachmate Group to employees were exchanged for Legacy Common Units issued by Wizard as described in Note 22. Wizard also issued equity settled stock awards to certain employees of the Attachmate Group. As these awards are in substance for work performed for the benefit of the Attachmate Group, stockbased compensation expense and the related capital contribution is recorded for these awards. Refer to note 22 for more information about the stock awards from Wizard.

For stock units granted, the fair value is determined at grant date. The total amount to be expensed over the vesting period is determined by reference to the fair value of the stock units granted. Non-market vesting conditions are included in assumptions about the number of stock units that are expected to vest. Market vesting conditions are taken into account when determining the fair value of the stock units at grant date. At each balance sheet date, the Attachmate Group revises its estimates of the number of stock units that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the consolidated statement of comprehensive income, and a corresponding adjustment to equity through the share option reserve over the remaining vesting period.

The social security contributions payable in connection with the grant of the stock units is considered an integral part of the grant itself, and the charge is treated as a cash-settled transaction.

G. Foreign currency translation

(a) Functional and presentation currency

The presentation currency of the Attachmate Group is US dollars. Items included in the financial statements of each of the Attachmate Group's entities are measured in the functional currency of each entity. The Attachmate Group uses the local currency as the functional currency, except for an Ireland entity and a German holding company, where the functional currency is the US dollar.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of comprehensive income.

(c) Attachmate Group entities

The results and financial position of all the Attachmate Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
• (ii) income and expenses for each consolidated statement of comprehensive income item are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
• (iii) all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities are taken to other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

(d) Exchange rates

The most important foreign currencies for the Attachmate Group are Canadian dollar, the Euro, Japanese Yen, and Australian dollar. The exchange rates used are as follows:

	1 April							30 April
	2011		31 March 2012		31 March 2013		31 March 2014	2013	30 April 2014
	Closing	Average	Closing	Average	Closing	Average	Closing	Average	Average	Closing
CAD 1 = \$	1.0313	1.0081	1.0012	1.0006	0.9854	0.9525	0.9042	0.9819	0.9054	0.9121
EUR 1 = \$	1.4174	1.3858	1.3332	1.2929	1.2838	1.3379	1.3761	1.2965	1.3790	1.3808
AUD 1 = \$	1.0344	1.0423	1.0367	1.0337	1.0424	0.9364	0.9243	1.0429	0.9268	0.9265
JPY 1 = \$	0.0120	0.0127	0.0121	0.0121	0.0106	0.0100	0.0097	0.0104	0.0098	0.0097

H. Intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Attachmate has one CGU to which Goodwill has been attributed for the purpose of impairment testing.

(b) Computer software

Computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. These costs are amortised using the straight-line method over their estimated useful lives of three to five years.

(c) Research and development

Research expenditures are recognised as an expense as incurred. Costs incurred on development projects relating to developing new computer software programmes and significant enhancement of existing computer software programmes are recognised as intangible assets when it is probable that the project will be a success, considering its commercial and technological feasibility, and costs can be measured reliably. The Attachmate Group has determined that commercial and technological feasibility is established at the time a working model of products is complete. To date, the Attachmate Group has not incurred significant costs between the establishment of technological feasibility and the release of a product for sale.

(d) Intangible assets – arising on business combinations

Intangible assets that are acquired by the Attachmate Group are stated at cost less accumulated amortisation. Amortisation is charged to the consolidated statement of comprehensive income on a straight-line basis over the estimated useful life of each intangible asset. Intangible assets are amortised from the date they are available for use. The estimated useful lives will vary for each category of asset acquired as follows:

Customer relationships	Five to twelve years
Developed technology	Two to seven years
In process research and development	Two to five years
Non-competition agreements	Two years
Trade names, trademarks and other	Three to eight years

The Attachmate Group has indefinite lived trade names and trademarks that are not subject to amortisation. These indefinite-lived intangible assets are classified as indefinite-lived since they are expected to generate perpetual cash flows. They are tested for impairment annually, or when there may be an indication they may be impaired. These indefinite-lived intangible assets are carried at cost less accumulated impairment losses.

I. Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditures that are directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Attachmate Group and the cost of the item can be measured reliably. All other repairs and maintenance expenditures are charged to the consolidated statement of comprehensive income during the financial year in which they are incurred. Depreciation is calculated using the straight-line method to write off the cost of each asset over its estimated useful life as follows:

Buildings Thirty years Fixtures and fittings Two to seven years Computer equipment Three years

Leasehold improvements Lesser of useful life or life of lease

The assets' useful lives are reviewed, and adjusted, if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in the consolidated statement of comprehensive income.

Property held for sale is measured at the lower of its carrying amount or estimated fair value less costs to sell. Refer to Note 9 for more information regarding property held for sale.

J. Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation and depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and VIU. For the purposes of assessing impairment, assets grouped at the lowest levels for which there are separately identifiable cash flows. It has been determined that there is a single CGU. Any non-financial assets other than goodwill which have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

K. Trade receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost less provisions for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Attachmate Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is based on historical collection trends and the collection risk of specific customer accounts due to a change in their financial condition identified subsequent to the revenue transaction. The amount of the provision is recognised in the consolidated statement of comprehensive income.

L. Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less.

M. Restricted Cash

Restricted cash held in deposit accounts are reserved primarily to meet the Attachmate Group's performance obligations in relation to certain leasing arrangements.

N. Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Subsequent to initial recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value recognised in the consolidated statement of comprehensive income over the period of borrowing on an effective interest basis. All outstanding borrowings have been issued at face value.

O. Leases

Leases where the lessor retains a significant portion of the risks and rewards of ownership are classified as operating leases. All other leases are classified as finance leases. The Attachmate Group currently does not have any finance leases. Payments made under operating leases, net of any incentives received from the lessor, are charged to the consolidated statement of comprehensive income on a straight-line basis over the period of the lease.

P. Taxation

Current and deferred tax are recognised in the consolidated statement of comprehensive income, except when the tax relates to items charged or credited directly to equity, in which case the tax is also recorded directly in equity.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Attachmate Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Current tax is recognised based on the amounts expected to be paid or recovered under the tax rates and laws that have been enacted or substantively enacted at the balance sheet date.

Q. Ordinary shares, share premium and dividend distribution

Incremental costs directly attributable to the issue of new stock are shown in equity as a deduction, net of tax, from the proceeds.

Dividend distributions to Attachmate's shareholders are recognised as a liability in the Attachmate Group's financial statements in the period in which the dividends are approved by Attachmate's shareholders. Dividends are recognised when they are declared.

R. Financial instruments and hedge accounting

Financial assets and liabilities are recognised in the Attachmate Group's balance sheet when the Attachmate Group becomes a party to the contractual provision of the instrument. The Attachmate Group's principal financial assets are cash and cash equivalents and trade receivables. Trade receivables are non-interest bearing and are stated at their fair value less the amount of any appropriate provision for irrecoverable amounts. The Attachmate Group's principal financial liabilities are noninterest bearing trade payables and variable-rate bank borrowings. Trade payables and bank borrowings are stated at their fair value.

From time-to-time, the Attachmate Group has entered into interest rate swap and interest rate cap contracts to manage interest rate risk in order to reduce the proportion of total debt that is subject to variable interest rates since all of the Attachmate Group's outstanding debt is at variable rates. The Attachmate Group does not use interest rate derivatives for trading or speculative purposes. Historically, the derivatives have not been designated as hedges for accounting purposes and thus are not linked to the Attachmate Group's debt obligations. Accordingly, the adjustment to the derivatives' fair value is recognised in the period of change in the accompanying consolidated statements of comprehensive income within the line item finance costs and actual settlements are recognised in the period incurred and are reflected in the accompanying consolidated statements of comprehensive income within the line item finance costs. The estimated fair values of our derivatives fluctuate over time and should be viewed in relation to the underlying hedged transaction and the overall management of the Attachmate Group's exposure to fluctuations in the underlying risk.

The Attachmate Group's interest rate swap agreements that were outstanding are set forth in the table below:

	Notional Amount
As of	US\$'000	Receive	Pay	Maturity Date
1 April 2011	200,000	Floating	2.790% – 2.890%	Through 31 December 2012
31 March 2012	400,000	Floating	0.500% – 2.500%	Through 27 April 2013
31 March 2013	400,000	Floating	0.500% – 2.500%	Through 27 April 2013

The Attachmate Group did not have any outstanding interest rate swaps as of 31 March 2014 and 30 April 2014.

In August 2011, the Attachmate Group entered into two interest rate cap contracts. A total of US\$0.1m was paid for both contracts at the inception of the agreements for the right to receive payment if interest rates go above the contractual rate of 1.5 per cent. Both contracts terminated on 27 April 2013 and had a combined notional amount of US\$175m. The Attachmate Group did not have any outstanding interest rate caps as of 31 March 2014 and 30 April 2014.

S. Provisions

Provisions for restructuring costs and legal claims are recognised when the Attachmate Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease and other contractual termination penalties and employee termination payments. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as an interest expense.

T. Investments in associates

Associates are investees over which the Attachmate Group has significant influence on the financial or operating decisions. Significant influence is presumed to exist when ownership interest is between 20% and 50% of the outstanding stock of the investee, but can also arise where the Attachmate Group holds less than 20% if it has the power to be actively involved and influential in policy decisions affecting the investee. Investments in associates are accounted for using the equity method. The Attachmate Group initially records the investment at cost and adjusts the carrying amount each period to recognise its share of the earnings or losses of the investee based on its percentage of ownership.

Adjustments are made to align the accounting policies of the associate with those of the Attachmate Group before applying the equity method. When the Attachmate Group's share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Attachmate Group has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Attachmate Group resumes recognising its share of those profits only after its share of the profits equals the share of losses not recognised.

At 31 March 2014 and 30 April 2014, the Attachmate Group had a 14.3% interest, or US\$16.7m and US\$16.5 investment, respectively, in OIN which it accounts for as an associate given the Attachmate Group's significant influence over OIN's operations. At 31 March 2012 and 2013 the Attachmate Group had a 16.7%, or US\$14.0m and US\$18.3m investment, respectively, in OIN. OIN is a privatelyheld limited liability company that acquires patents to promote Linux and Open Source by offering its patents on a royalty-free basis to any company, institution or individual that agrees not to assert its patents against the Linux operating system or certain Linux-related applications. During the years ended 31 March 2012, 2013 and 2014, and one month periods ended 30 April 2013 and 2014 the Attachmate Group recorded income (loss) of US\$(0.9)m, US\$4.2m, US\$(1.6)m, US\$(0.1)m and US\$(0.2)m, respectively, related to OIN, which is shown in the line item "Share of profit (loss) of associates accounted for using the equity method" in the accompanying consolidated statements of comprehensive income. The Attachmate Group reviews its equity investments periodically for indicators of impairment.

U. Self-insurance reserves

The Attachmate Group retains a significant portion of the risk related to its employee health programs. The exposure for unpaid claims and associated expenses, including incurred but not reported losses, generally is estimated by factoring in (1) pending claims and historical trends and data and (2) the assessment of external actuaries. The Attachmate Group limits its exposure by having specific stoploss coverage per individual per year. The total liability is calculated at the end of the plan year based on the enrolment each month throughout the plan year. The gross estimated liability associated with settling unpaid claims is included in the line item, trade and other payables in the Attachmate Group's consolidated statement of financial position.

V. Guarantees and Warranties

Indemnification and warranty provisions are sometimes contained within the Attachmate Group's customer licence and service agreements. These are standard terms generally consistent with those prevalent in the Attachmate Group's industry. The duration of product warranties generally does not exceed 90 days following delivery of products. The Attachmate Group has not incurred significant costs under customer indemnification or warranty provisions historically and management does not expect to incur significant obligations in the future. Accordingly, the Attachmate Group does not record a liability for potential costs to rectify customer indemnification or warranty-related obligations unless and until the Attachmate Group concludes the likelihood of a material obligation is probable and estimable. The Attachmate Group reviews its receivables that may not be collected due to warranty related issues and provides an allowance as necessary.

The debt obligations on the consolidated balance sheets are obligations of the Attachmate Group's subsidiaries: Attachmate, NetIQ and Novell. The Attachmate Group has fully and unconditionally guaranteed all the bank debt obligations of Attachmate, NetIQ and Novell. Performance under this guarantee agreement would be required if there was a default on the obligation. No additional liabilities have been recorded for these guarantees because the underlying obligations are reflected in our consolidated balance sheets. Refer to note 13 for more information on our debt obligations.

W. Fair Value

Due to the short-term nature of the Attachmate Group's financial instruments, which include cash, accounts receivable, accounts payable and other accrued liabilities, the Attachmate Group believes that the carrying amount approximates fair value. The carrying value of the Attachmate Group's borrowing obligations approximates fair value as the interest rates vary with market rates. The carrying value of the Attachmate Group's investment in OIN approximates fair value as most of OIN's assets are comprised of cash, and short and long-term investments.

Fair value is estimated market value that one could obtain when settling an asset or transferring a liability. Authoritative guidance associated with fair value measurements provides a framework for measuring fair value and establishes a fair value hierarchy that prioritises the inputs used to measure fair value, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

The Attachmate Group's interest rate swaps and caps at 31 March 2013 and 2012 were Level 2, meaning that the fair value of these financial instruments were not determined by quoted market prices in active markets but by observable inputs, either directly or indirectly, such as quoted prices for similar assets. Specifically, the Attachmate Group's interest rate swaps and interest rate cap contracts were recorded at their estimated fair values based on quotes received from the financial institutions that trade these accounts.

The fair value of the Attachmate Group's interest rate swaps were liabilities of US\$7.5m and US\$4.8m as at 1 April 2011 and 31 March 2012, respectively. The fair value of the Attachmate Group's interest rate swaps were liabilities of US\$0.4m and an asset of US\$0.1m as at 31 March 2013. The liability amounts are shown in the line item, 'trade and other payables', and the asset amount is shown in the line item, 'trade and other receivables' in the Attachmate Group's consolidated statements of financial position. The fair value of the Attachmate Group's interest rate cap contracts was approximately nil as at 31 March 2012 and 2013 due to the short remaining life of the contracts.

The fair value of the Attachmate Group's assets that have been designated to fund one of the Attachmate Group's defined benefit plans (note 22) are Level 2 financial instruments, as the fair value is determined based on quotes received from the financial institution that holds these assets.

As of 31 March 2014 and 2013, the Attachmate Group had no Level 3 financial instruments.

X. Adoption of new and revised International Financial Reporting Standards

The accounting policies adopted in these consolidated financial statements reflect the most recent IFRS required adoptions as of the year ended 31 March 2014 and for the one month period 30 April 2014 with the exception of the following of published standards adopted during the year and as of 30 April 2014:

• (a) The following standards, interpretations and amendments to existing standards are now effective and have been adopted by the Attachmate Group as of 31 March 2014:
• Amendments to IFRS 7, 'Financial instruments: Disclosures' on offsetting financial assets and financial liabilities for periods beginning on or after 1 January 2013. This amendment includes new disclosures to aid comparison between those entities that prepare IFRS financial statements to those that prepare their financial statements according to US GAAP.
• Amendment to IAS 12, 'Income Taxes' applies for periods beginning on or after 1 January 2013.
• Amendment to IAS 19, 'Employee Benefits', for periods beginning on or after 1 January 2013. These amendments eliminate the corridor approach and calculate finance costs on a net funding basis.
• Amendment to IAS 1, 'Financial Statement Presentation' applies for periods beginning on or after 1 January 2013.
• IFRS 13, 'Fair Value Measurement' applies for periods beginning on or after 1 January 2013 and aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements.
• Amendment to IAS 32, 'Financial Instruments: Presentation' applies to periods beginning on or after 1 January 2014 and clarifies some of the requirements for offsetting financial assets and financial liabilities on the balance sheet.
• Amendment to IAS 36, 'Impairment of Assets' applies to periods beginning on or after 1 January 2014 and relates to the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal.

• Amendment to IAS 39, 'Financial Instruments: Recognition and Measurement' applies to periods beginning on or after 1 January 2014 and provides relief from discontinuing hedge accounting when novation of a hedging instrument to a central counter party meets certain criteria.

• IFRS 11, 'Joint Arrangements' applies to periods beginning on or after 1 January 2014 and provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form.

• IFRS 12, 'Disclosure of Interests in Other Entities' applies for periods beginning on or after 1 January 2014 and includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purchase vehicles and other vehicles recorded off statement of the consolidated statement of financial position.
• (b) The following standards, interpretations and amendments to existing standards are not yet effective, have not yet been endorsed by the EU and have not been adopted early by the Attachmate Group:
• IFRS 9, 'Financial Instruments' for periods beginning on or after 1 January 2018 and is the first standard issued as part of a process to replace IAS 39. It simplifies the mixed measurement model and establishes two primary measurement categories for financial assets, amortised cost and fair value.
• IFRS 15, 'Revenue From Contracts With Customers Issued' applies for periods beginning on or after 1 January 2017 and specifies how and when revenue is recognised as well as requiring such entities to provide users of the financial statements with more informative, relevant disclosures.
• IFRS 10, 'Consolidated Financial Statements' applies for periods beginning on or after 1 January 2013 and establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. It defines the principle of control and establishes controls as the basis for consolidation.

The directors anticipated that the future introduction of those standards, amendments and interpretations listed above will not have a material impact on the consolidated financial statements.

II. Critical accounting estimates and assumptions

In preparing the consolidated financial statements, the Attachmate Group has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Attachmate Group regularly reviews these estimates and updates them as required. Actual results could differ from these estimates. Unless otherwise indicated, the Attachmate Group does not believe that it is likely that materially different amounts would be reported related to the accounting estimates and assumptions described below. The Attachmate Group considers the following to be a description of the most significant estimates, which require the Attachmate Group to make subjective and complex judgments, and matters that are inherently uncertain.

(a) Impairment of goodwill and indefinite-lived intangible assets

The Attachmate Group tests annually whether goodwill or indefinite-lived intangible assets have suffered any impairment in accordance with the accounting policy IJ. The recoverable amount of the Attachmate Group's CGU has been determined based on the higher of an asset's fair value less costs to sell and value in use ('VIU') calculations. These calculations require the use of estimates. Details of the Attachmate Group's impairment review and sensitivities to changes in assumptions are disclosed in notes 7 and 8.

(b) Income taxes

The Attachmate Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Attachmate Group recognises liabilities for anticipated settlement of tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The Attachmate Group carries appropriate provision, based on best estimates, until tax computations are agreed with the taxation authorities.

(c) Acquisitions

When making acquisitions, the Attachmate Group has to make judgments and best estimates about the fair value allocation of the purchase price. Appropriate advice is sought from professional advisors before making such allocations.

(d) Revenue recognition

The key area of judgement in respect of recognising revenue is the timing of recognition, specifically in relation to recognition and deferral of revenue on support contracts where management assumptions and estimates are necessary.

III. Financial risk factors

The Attachmate Group's multi-national operations expose it to a variety of financial risks that include the effects of changes in credit risk, foreign currency risk, interest rate risk and liquidity risk. Risk management is carried out by a central treasury department under directives approved by the board of directors. Attachmate Group Treasury identifies and evaluates financial risks. The board provides guidance for risk management together with specific directives covering areas such as foreign currency risk, interest rate risk, credit risk and liquidity risk, use of derivative financial instruments and non-derivative financial instruments as appropriate, and investment of excess funds.

In accordance with the treasury policy, as of 30 April 2014 the Attachmate Group does not hold or issue derivative financial instruments. The Attachmate Group held such instruments in prior periods.

(a) Credit risk

Financial instruments which potentially expose the Attachmate Group to a concentration of credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash equivalents are deposited with high-credit quality financial institutions. The Attachmate Group provides credit to customers in the normal course of business. Collateral is not required for those receivables, but ongoing credit evaluations of customers' financial conditions are performed. The Attachmate Group maintains a provision for impairment based upon the expected collectability of accounts receivable. The Attachmate Group sells products and services to a wide range of customers around the world and therefore believes there is no material concentration of credit risk.

(b) Foreign currency risk

The Attachmate Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Canadian dollar, Euro, Australian dollar and Japanese Yen. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity's functional currency.

The Attachmate Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.

(c) Interest rate risk

The Attachmate Group's income and operating cash flows are substantially independent of changes in market interest rates.

The Attachmate Group's interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Attachmate Group to cash flow interest rate risk which is partially offset by cash held at variable rates. The Attachmate Group did not have any interest rate swaps or interest rate caps as of 31 March 2014 or 30 April 2014.

(d) Liquidity risk

Central Treasury carries out cash flow forecasting for the Attachmate Group to ensure that it has sufficient cash to meet operational requirements and to allow the repayment of the bank facility.

Surplus cash in the operating units over and above what is required for working capital needs is transferred to Attachmate Group treasury. These funds are used to repay bank borrowings or invested in interest bearing current accounts, time deposits or money market deposits of the appropriate maturity period determined by consolidated cash forecasts.

Trade payables arise in the normal course of business and are all current.

Total secured borrowings of US\$1,294.7m are related to the Attachmate Group's credit agreements (note 13) as at 30 April 2014. Current portion of borrowings of US\$32.4m at 30 April 2014 are due within the next 12 months.

Notes to the consolidated financial statements

1. Segmental reporting

IFRS 8, "Operating Segments", requires the Attachmate Group to determine its operating segments based on information which is provided internally to the CODM. Based on the internal reporting information and management structures within the Attachmate Group, it has been determined that there is one reporting segment being the Attachmate Group as the information reported to the CODM includes operating results at a consolidated group level only.

There is also considered to be only one reporting segment which is the Attachmate Group, the results of which are shown in these consolidated statement of comprehensive income.

Analysis by geography

The Attachmate Group is domiciled in the USA. The results of its revenue from external customers in the USA in the year ended 31 March 2014 is \$438.6m, 31 March 2013 is \$480.0m, 31 March 2012 is \$494.7m and for the one month ended 30 April 2013 and 30 April 2014 \$33.3m and \$30.1m respectively. The total of revenue from external customers from other countries was \$518.2m in the year ended 31 March 2014, 31 March 2013 is \$515.8m, 31 March 2012 is \$518.7m and for the one month ended 30 April 2013 and 30 April 2014 \$35.4m and \$35.2m respectively.

The total of non-current assets other than deferred tax assets and post employment benefit assets located in the USA as at 31 March 2014 is \$1,217.8m, as at 31 March 2013 is \$1,320.3m, as at 31 March 2012 is \$1,521.2m and for the one month ended 30 April 2014 is \$1,211.1m. The total of such non current assets located in other countries as at 31 March 2014 is \$15.6m, as at 31 March 2013 is \$14.9m, as at 31 March 2012 is \$30.5m and for the one month ended 30 April 2014 is \$15.4m.

Within the Attachmate Group's one reporting segment the Attachmate Board monitors revenues both by geographic region and by product portfolio and further disclosures in this regard are given below.

The Attachmate Group operates globally, with primary operations in North America; International, which consists of Europe, Middle East, Africa and Latin America; and the Asia Pacific ("APAC") regions. Revenue by geographical region is presented below:

					One month
		Years ended 31 March	ended 30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(unaudited)
Geographic revenue:
North America	542,082	529,515	489,383	36,860	32,719
International	369,812	363,336	373,629	25,154	25,978
APAC	101,456	102,932	93,817	6,768	6,628
Total revenue	–––––––– 1,013,350	–––––––– 995,783	–––––––– 956,829	–––––––– 68,782	–––––––– 65,325
	––––––––	––––––––	––––––––	––––––––	––––––––

Revenue by product category is presented below:

					One month ended
	Years ended 31 March				30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(unaudited)
Product category:
Licence	219,976	192,084	192,440	8,334	4,919
Maintenance and subscription	697,831	706,877	681,861	55,175	55,144
Service	95,543 ––––––––	96,822 ––––––––	82,528 ––––––––	5,273 ––––––––	5,262 ––––––––
Total revenue	1,013,350	995,783	956,829	68,782	65,325
	––––––––	––––––––	––––––––	––––––––	––––––––

Supplementary information

Set out below is an analysis of revenue recognised by product portfolio for the year ended 31 March 2012:

	Attachmate US\$'000	Novell US\$'000	NetIQ US\$'000	SUSE US\$'000	Total US\$'000
Licence	101,749	47,070	71,015	142	219,976
Maintenance and subscription	100,687	280,008	168,867	148,269	697,831
Services	6,004	23,077	50,497	15,965	95,543
Total	–––––––– 208,440	–––––––– 350,155	–––––––– 290,379	–––––––– 164,376	–––––––– 1,013,350
	––––––––	––––––––	––––––––	––––––––	––––––––

Set out below is an analysis of revenue recognised by product portfolio for the year ended 31 March 2013:

	Attachmate US\$'000	Novell US\$'000	NetIQ US\$'000	SUSE US\$'000	Total US\$'000
Licence	95,231	33,512	62,840	501	192,084
Maintenance and subscription	101,143	264,416	177,657	163,661	706,877
Services	5,600	27,654	47,276	16,292	96,822
Total	–––––––– 201,974	–––––––– 325,582	–––––––– 287,773	–––––––– 180,454	–––––––– 995,783
	––––––––	––––––––	––––––––	––––––––	––––––––

Set out below is an analysis of revenue recognised by product portfolio for the year ended 31 March 2014:

	Attachmate US\$'000	Novell US\$'000	NetIQ US\$'000	SUSE US\$'000	Total US\$'000
Licence	79,936	37,752	74,752	–	192,440
Maintenance and subscription	100,367	228,692	170,974	181,828	681,861
Services	5,471	18,566	43,621	14,870	82,528
Total	–––––––– 185,774	–––––––– 285,010	–––––––– 289,347	–––––––– 196,698	–––––––– 956,829
	––––––––	––––––––	––––––––	––––––––	––––––––

Set out below is an analysis of revenue recognised by product portfolio for one month ended 30 April 2013:

	Attachmate	Novell	NetIQ	SUSE	Total
(unaudited)	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Licence	1,291	2,290	4,753	–	8,334
Maintenance and subscription	8,512	19,830	13,771	13,062	55,175
Services	561	1,352	2,375	985	5,273
Total	–––––––– 10,364	–––––––– 23,472	–––––––– 20,899	–––––––– 14,047	–––––––– 68,782
	––––––––	––––––––	––––––––	––––––––	––––––––

Set out below is an analysis of revenue recognised by product portfolio for one month ended 30 April 2014:

	Attachmate US\$'000	Novell US\$'000	NetIQ US\$'000	SUSE US\$'000	Total US\$'000
Licence	2,183	1,602	1,134	–	4,919
Maintenance and subscription	8,170	17,251	13,673	16,050	55,144
Services	286	1,177	2,881	918	5,262
Total	–––––––– 10,639	–––––––– 20,030	–––––––– 17,688	–––––––– 16,968	–––––––– 65,325
	––––––––	––––––––	––––––––	––––––––	––––––––

2. Profit before tax

Profit before tax is stated after charging/(crediting) the following operating costs/(gains) classified by the nature of the costs/(gains):

						One month ended
			Years ended 31 March			30 April
		2012	2013	2014	2013	2014
	Notes	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
					(unaudited)
Staff costs	22	447,674	443,824	442,799	35,492	31,920
Depreciation of property, plant
and equipment
– Owned assets	9	19,931	13,175	12,182	1,056	974
Amortisation of intangibles	8	105,083	108,891	90,200	8,809	7,294
Operating lease rentals payable,
net
– Other – buildings		16,250	21,650	22,652	1,910	1,946
– Plant and machinery		3,846	3,327	3,104	265	238
Provision for receivables
impairment	10	1,310	(311)	149	11	(16)
Foreign exchange (gains) and
losses		(4,944)	1,854	4,540	1,116	(87)
		––––––––	––––––––	––––––––	––––––––	––––––––

Exceptional items (excluded from above)

						One month ended
			Years ended 31 March			30 April
		2012	2013	2014	2013	2014
	Notes	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
					(unaudited)
Restructuring costs and property
rationalisation	16	59,332	–	18,314	113	38
Acquisition transaction costs	27	8,120	–	–	–	–
Advisor fees	26	24,234	10,488	–	–	–
Impairment of trademarks	8	–	2,571	12,927	–	–
Impairment of property held for sale	9	6,177	–	–	–	–
Gain on sale of property	9	–	(9,278)	–	–	–
Total		–––––––– 97,863	–––––––– 3,781	–––––––– 31,241	–––––––– 113	–––––––– 38
		––––––––	––––––––	––––––––	––––––––	––––––––

Finance costs – exceptional

						One month ended
			Years ended 31 March	30 April
		2012	2013	2014	2013	2014
	Notes	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
					(unaudited)
Extinguishment of debt	13	56,595	68,962	–	–	–

Services provided by the Attachmate Group's auditors and network of firms

The Attachmate Group obtained the following services from the Attachmate Group's auditors as detailed below:

					One month ended
		Years ended 31 March			30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(unaudited)
Audit of company	1,827	1,977	1,819	418	236
Audit of subsidiaries	555	1,341	1,297	–	–
Total audit	–––––––– 2,382	–––––––– 3,318	–––––––– 3,116	–––––––– 418	–––––––– 236
Tax advisory services	–––––––– 121	–––––––– 101	–––––––– 50	–––––––– –	–––––––– –
Total	2,503	3,419	3,166	418	236
	––––––––	––––––––	––––––––	––––––––	––––––––

3. Reconciliation of operating profit to EBITDA

						One month ended
			Years ended 31 March			30 April
		2012	2013	2014	2013	2014
	Notes	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
					(unaudited)
Operating profit		116,062	196,782	172,847	5,907	10,138
Amortisation of intangible assets	8	105,083	108,891	90,200	8,809	7,294
Depreciation of property, plant
and equipment	9	19,931 ––––––––	13,175 ––––––––	12,182 ––––––––	1,056 ––––––––	974 ––––––––
EBITDA		241,076	318,848	275,229	15,772	18,406
Exceptional items	2	97,863	3,781	31,241	113	38
Share based compensation charge	22	9,966	3,698	1,836	211	109
Adjusted EBITDA		–––––––– 348,905	–––––––– 326,327	–––––––– 308,306	–––––––– 16,096	–––––––– 18,553
Foreign exchange (gains) and losses		(4,944)	1,854	4,540	1,116	(87)
Underlying Adjusted EBITDA		–––––––– 343,961	–––––––– 328,181	–––––––– 312,846	–––––––– 17,212	–––––––– 18,466
		––––––––	––––––––	––––––––	––––––––	––––––––

The directors use earnings before interest, taxes, depreciation and amortisation ('EBITDA') and EBITDA before exceptional items, share based compensation charge ('Adjusted EBITDA') and Adjusted EBITDA before foreign exchange gains and losses ('Underlying Adjusted EBITDA') as key performance measures of the business.

4. Finance income and finance costs

	One month ended
		Years ended 31 March			30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(unaudited)
Finance costs – pre-exceptional
Finance costs on bank borrowings	82,044	117,191	115,167	9,735	8,958
Net interest expense on
retirement benefit obligation	849	890	932	92	92
Lack of utilisation fees	282	216	204	17	17
Other bank interest costs	165	146	138	12	11
Net (gain) loss on derivative financial
instruments	2,268	450	(4)	(4)	–
Preferred share liability accretion	383	–	–	–	–
Debt issue costs expensed	227 ––––––––	– ––––––––	– ––––––––	– ––––––––	– ––––––––
Total	86,218	118,893	116,437	9,852	9,068
Finance Income	––––––––	––––––––	––––––––	––––––––	––––––––
Income from cash bank deposits	838	644	320	45	40
Dividend income	63	–	–	–	–
Loss on sale of securities	(228)	–	–	–	–
Total	–––––––– 673	–––––––– 644	–––––––– 320	–––––––– 45	–––––––– 40
	––––––––	––––––––	––––––––	––––––––	––––––––

5. Taxation

					One month ended
		Years ended 31 March			30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(unaudited)
Current tax
Current year	22,605	13,267	21,401	1,819	1,961
Adjustments to tax in respect of
previous years	791	(7,150)	191	(68)	–
	–––––––– 23,396	–––––––– 6,117	–––––––– 21,592	–––––––– 1,751	–––––––– 1,961
Deferred tax	––––––––	––––––––	––––––––	––––––––	––––––––
Current year	(21,292)	(59,106)	4,947	(7,383)	(1,330)
Adjustments to tax in respect of
previous years	(456) ––––––––	(4,416) ––––––––	685 ––––––––	688 ––––––––	– ––––––––
	(21,748)	(63,522)	5,632	(6,695)	(1,330)
Total	–––––––– 1,648	–––––––– (57,405)	–––––––– 27,224	–––––––– (4,944)	–––––––– 631
	––––––––	––––––––	––––––––	––––––––	––––––––

The tax charge for the years ended 31 March 2012, 31 March 2014 and for the one month period ended 30 April 2014 is higher (31 March 2013 and 30 April 2013 lower) than the standard rate of corporation tax in the US of 35%. The table below explains the difference between Attachmate Group's US statutory rate to its effective rate in the statements of comprehensive income.

				One month ended
				30 April
2012	2013	2014	2013	2014
US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
			(unaudited)
(27,390)	13,421	54,615	(4,198)	298
				––––––––
(9,587)	4,697	19,115	(1,469)	104
(1,825)	(2,012)	(1,969)	(164)	(80)
–	–	(3,171)	–	–
12,456	(13,466)	(11,946)	174	89
5,083	(1,921)	398	(4,811)	–
1,087	13,002	43,103	903	462
(154)	(24,524)	(20,601)	–	–
335	(11,565)	877	620	–
(442)	(6,337)	(4,414)	102	48
4,495	(428)	602	(299)	8
–	5,639	16,658	–	–
–	(10,559)	(11,678)	–	–
(9,800)	(9,931)	250	–	– ––––––––
1,648	(57,405)	27,224	(4,944)	631
	–––––––– ––––––––	–––––––– ––––––––	Years ended 31 March –––––––– ––––––––	–––––––– ––––––––

The movement in deferred tax assets and liabilities during the period is provided in note 18.

6. Dividends

The directors approved and the Attachmate Group paid stockholders dividends on its ordinary stock totalling US\$687.6m or US\$0.7m per share in the year ended 31 March 2013. No dividends were paid in the years ended 31 March 2012 and 2014 or in the one month periods ended 30 April 2013 and 2014.

7. Goodwill

	As at
	31 March	31 March	31 March	30 April
	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000
Cost and net book amount
At period beginning	277,867	906,052	906,052	906,052
Acquisition1	628,185	–	–	–
Total at period end	–––––––– 906,052	–––––––– 906,052	–––––––– 906,052	–––––––– 906,052
	––––––––	––––––––	––––––––	––––––––

1 Acquisition of Novell, Inc. on 27 April 2011 (note 27).

The Attachmate Group conducts annual impairment tests on the carrying value of goodwill, based on the net present value on the recoverable amount of the CGU to which goodwill has been allocated. It has been determined that the Attachmate Group has one CGU.

An impairment test is a comparison of the carrying value of the assets of the CGU with their recoverable amount, where the recoverable amount is less than the carrying value, an impairment results. The Attachmate Group has carried out its annual impairment testing at 31 March each year.

The recoverable amounts of the CGU is determined based on the VIU calculations. The determination of whether or not goodwill has been impaired requires an estimate to be made of the VIU of the CGU to which goodwill has been allocated. The VIU calculation includes estimates about the future financial performance of the CGU. The cash flow projections in the three financial years following the budget year reflect management's expectation of the medium and long-term operating performance of the CGU and growth prospects in the CGU's market.

Key assumptions

The key assumptions in the VIU calculations are the discount rate applied, the long-term operating margin and the long-term growth rate of net operating cash flows. In determining the key assumptions, management has taken into consideration the current economic climate, the resulting impact on expected growth and discount rates, and the pressure this places on impairment calculations.

Discount rate applied

The discount rate applied to the CGU represents a post-tax rate that reflects market assessment of the time value of money at the balance sheet date and risks specific to the CGU. The discount rate applied to the CGU's operations was 16.7% at 31 March 2012 (2013: 16.7% and 2014: 16.7%).

Long-term operating margin

The long-term operating margin for the CGU is primarily based upon past performance adjusted as appropriate where management believes that past operating margins are not indicative of future operating margins. The long-term operating margins applied to the CGU is 29.7% at 31 March 2012 (2013: 33.1% and 2014: 33.0%).

Long-term growth rates of net operating cash flows

The long-term growth rates of net operating cash flows are assumed to be no greater than the long-term growth rate in the gross domestic product of the countries in which the CGU operates and were 2.4% as at 31 March 2012, 2013 and 2014.

Summary of results

During the years ended 31 March 2012, 2013 and 2014, all goodwill was tested for impairment, with no impairment charge resulting.

As the VIU calculation is most sensitive to a change in the long-term operating margin, the directors are of the opinion that it would take a systematic change to the market for long-term operating margins to fall to the level where an impairment would be required.

The directors consider that a reduction of 4.0% as at 31 March 2014 (2013: 4.0%) in the absolute value of long-term operating margins of the CGU would be the limit of what could be considered to be reasonably possible on the basis that the Attachmate Group's cost base is flexible and could quickly respond to market changes. The Attachmate Group is spread across a range of geographies and sectors and also offers customer cost saving solutions, which help to insulate it from more significant changes. If the long-term margins used in the VIU calculations for the CGU was 4.0% as at 31 March 2014 (2013: 4.0%) lower in absolute terms than management's estimates, the Attachmate Group would not have any impairment charge. If the operating margins remain in perpetuity at the current year levels then there would also not be any impairment charge. The Attachmate Group bases its estimate for the long-term post-tax discount rate on its weighted average cost of capital (WACC) using long-term market data and industry data to derive the appropriate inputs to the calculation. The directors have assessed that a 2.0% change as at 31 March 2014 (2013: 2.0%) in the absolute pre-tax discount rate is the maximum change that could be considered as reasonably possible. If the estimated pre-tax discount rates applied to the discounted cash flows of the CGU were 2.0% (2013: 2.0%) higher in absolute terms than the management's estimates, the Attachmate Group would not have any impairment charge.

The Attachmate Group considers that the long-term growth rates could change and that a 1.0% (2013: 1.0%) change is reasonably possible. If the absolute value of the long-term growth used in the VIU calculations was 1.0% lower than management's estimates, the Attachmate Group would not have recognised any goodwill impairment charge.

The directors have considered combinations of a reduction in the long-term operating margins of the CGU combined with a reasonably possible increase in the absolute discount rate and a reasonably possible decrease in the long-term growth rates and no impairment would occur in these scenarios.

8. Other intangible assets

Other intangible assets were comprised of the following as at 31 March 2012:

						Purchased
					Definite-lived Indefinite-lived
			In process		trade names,	trade names,
	Customer	Developed	research and	Non-compete	trademarks	trademarks
	relationships	technology	development	agreements	and other	and other	Total
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Cost
At 1 April 2011	184,979	102,508	–	–	6,381	34,381	328,249
Acquisitions (note 27)	205,196	94,867	44,703	11,700	4,463	76,765	437,694
Additions	–	34	–	–	432	–	466
Disposals	(1,400) ––––––––	– ––––––––	– ––––––––	– ––––––––	(1,400) ––––––––	– ––––––––	(2,800) ––––––––
At 31 March 2012	388,775	197,409	44,703	11,700	9,876	111,146	763,609
Accumulated amortisation	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	–––––––– –
At 1 April 2011	100,938	81,379	–	–	5,206	–	187,523
Charge for the period	50,709	35,389	12,027	5,363	1,595	–	105,083
Disposals	(1,400)	–	–	–	(1,400)	–	(2,800)
At 31 March 2012	–––––––– 150,247 ––––––––	–––––––– 116,768 ––––––––	–––––––– 12,027 ––––––––	–––––––– 5,363 ––––––––	–––––––– 5,401 ––––––––	–––––––– – ––––––––	–––––––– 289,806 ––––––––
Net book amount at
31 March 2012	238,528 ––––––––	80,641 ––––––––	32,676 ––––––––	6,337 ––––––––	4,475 ––––––––	111,146 ––––––––	473,803 ––––––––
Net book amount at
31 March 2011	84,041	21,129	–	–	1,175	34,381	140,726
	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––

Other intangible assets were comprised of the following as at 31 March 2013:

				Purchased
						Definite-lived Indefinite-lived
	Internally			In process		trade names, trade names,
	developed	Customer		Developed research and Non-compete		trademarks	trademarks
	software	relationships	technology	development	agreements	and other	and other	Total
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Cost
At 1 April 2012	–	388,775	197,409	44,703	11,700	9,876	111,146	763,609
Additions	1,457	–	613	–	–	93	–	2,163
Disposals	–	–	–	–	–	(852)	–	(852)
At 31 March 2013	–––––––– 1,457	–––––––– 388,775	–––––––– 198,022	–––––––– 44,703	–––––––– 11,700	–––––––– 9,117	–––––––– 111,146	–––––––– 764,920
Accumulated amortisation	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	–––––––– –
At 1 April 2012	–	150,247	116,768	12,027	5,363	5,401	–	289,806
Charge for the period	–	52,731	35,943	13,119	5,849	1,249	–	108,891
Disposals	–	–	–	–	–	(852)	–	(852)
Impairment	–	–	–	–	–	–	2,571	2,571
At 31 March 2013	–––––––– – ––––––––	–––––––– 202,978 ––––––––	–––––––– 152,711 ––––––––	–––––––– 25,146 ––––––––	–––––––– 11,212 ––––––––	–––––––– 5,798 ––––––––	–––––––– 2,571 ––––––––	–––––––– 400,416 ––––––––
Net book amount at
31 March 2013	1,457 ––––––––	185,797 ––––––––	45,311 ––––––––	19,557 ––––––––	488 ––––––––	3,319 ––––––––	108,575 ––––––––	364,504 ––––––––
Net book amount at
31 March 2012	–	238,528	80,641	32,676	6,337	4,475	111,146	473,803
	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––

Other intangible assets comprised of the following as at 31 March 2014:

				Purchased
						Definite–lived Indefinite-lived
	Internally			In process			trade names, trade names,
	developed	Customer			Developed research and Non-compete	trademarks	trademarks
	software	relationships	technology	development	agreements	and other	and other	Total
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Cost
At 1 April 2013	1,457	388,775	198,022	44,703	11,700	9,117	111,146	764,920
Additions	6,550 –––––––	– ––––––––	12 ––––––––	– ––––––––	– ––––––––	183 ––––––––	– ––––––––	6,745 ––––––––
At 31 March 2014	8,007	388,775	198,034	44,703	11,700	9,300	111,146	771,665
Accumulated amortisation	–––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––
At 1 April 2013	–	202,978	152,711	25,146	11,212	5,798	2,571	400,416
Charge for the period	37	49,930	27,576	11,013	488	1,156	–	90,200
Disposals	–	–	–	–	–	–	–	–
Impairment	– –––––––	– ––––––––	– ––––––––	– ––––––––	– ––––––––	– ––––––––	12,927 ––––––––	12,927 ––––––––
At 31 March 2014	37	252,908	180,287	36,159	11,700	6,954	15,498	503,543
Net book amount at	–––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––
31 March 2014	7,970 ––––––––	135,867 ––––––––	17,747 ––––––––	8,544 ––––––––	– ––––––––	2,346 ––––––––	95,648 ––––––––	268,122 ––––––––
Net book amount at
31 March 2013	1,457	185,797	45,311	19,557	488	3,319	108,575	364,504
	–––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––

Other intangible assets were comprised of the following as at 30 April 2014:

				Purchased
						Definite-lived Indefinite-lived
	Internally			In process			trade names, trade names,
	developed	Customer			Developed research and Non-compete	trademarks	trademarks
	software	relationships	technology	development	agreements	and other	and other	Total
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Cost
At 1 April 2014	8,007	388,775	198,034	44,703	11,700	9,300	111,146	771,665
Additions	1,071	–	–	–	–	9	–	1,080
At 30 April 2014	––––––– 9,078	–––––––– 388,775	–––––––– 198,034	–––––––– 44,703	–––––––– 11,700	–––––––– 9,309	–––––––– 111,146	–––––––– 772,745
Accumulated amortisation	–––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––
At 1 April 2014	37	252,908	180,287	36,159	11,700	6,954	15,498	503,543
Charge for the period	10 ––––––––	4,160 ––––––––	2,131 ––––––––	902 ––––––––	– ––––––––	91 ––––––––	– ––––––––	7,294 ––––––––
At 30 April 2014	47 ––––––––	257,068 ––––––––	182,418 ––––––––	37,061 ––––––––	11,700 ––––––––	7,045 ––––––––	15,498 ––––––––	510,837 ––––––––
Net book amount at
30 April 2014	9,031	131,707	15,616	7,642	–	2,264	95,648	261,908
	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––

Intangible assets primarily relate to identifiable assets purchased as part of the Attachmate Group's business combinations. Indefinite-lived intangible assets are tested for impairment annually, or when there may be an indication they may be impaired. Definite-lived intangible assets are amortised on a straight-line basis over their expected useful economic life – see accounting policy IH(d).

The additions to intangible assets in the year ended 31 March 2012 primarily relate to the acquisition of Novell, Inc. (note 27).

At 30 April 2014, the weighted average unamortised lives of technology assets were as follows:

	Weighted
	average
	lives (years)
Customer relationships	3.0
Developed technologies	2.0
In-process research and development	2.0
Definite-lived trade names, trademarks and other	1.9

Amortisation expense ('Charge for the period') in the above tables is included in the following costs in the statement of comprehensive income:

				One month ended
	Years ended 31 March			30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(unaudited)
Selling and distribution costs	57,667	59,829	51,574	4,754	4,261
Research and development expense	47,416	49,062	38,589	4,055	3,033
Administrative expense	–	–	37
Total	–––––––– 105,083	–––––––– 108,891	–––––––– 90,200	–––––––– 8,809	–––––––– 7,294
	––––––––	––––––––	––––––––	––––––––	––––––––

The Attachmate Group conducts annual impairment tests on the carrying value of indefinite-lived intangible assets, based on the net present value of the recoverable amount of the CGU to which the indefinite-lived intangible assets has been allocated.

An impairment test is a comparison of the carrying value of the assets of the CGU with their recoverable amount, where the recoverable amount is less than the carrying value, an impairment results. The Attachmate Group has carried out its annual impairment testing at 31 March each year.

The recoverable amounts of the CGU are determined based on the VIU calculations. The determination of whether or not indefinite-lived intangible assets have been impaired requires an estimate to be made of the VIU of the CGU to which the indefinite-lived intangible assets have been allocated. The VIU calculation includes estimates about the future financial performance of the CGU. In all cases the approved budget for the following financial year forms the basis for the cash flow projections for a CGU. The cash flow projections in the three financial years following the budget year reflect management's expectation of the medium and long-term operating performance of the CGU and growth prospects in the CGU's market.

Key assumptions

The key assumptions in the VIU calculations are the pre-tax discount rate applied, the market royalty rates and the long-term growth rate of net operating cash flows. In determining the key assumptions, management has taken into consideration the current economic climate, the resulting impact on expected growth, market royalty rates and discount rates, and the pressure this places on impairment calculations.

Discount rate applied

The discount rate applied to the CGU represents a pre-tax rate that reflects market assessment of the time value of money at the balance sheet date and risks specific to the CGU.

Royalty rate applied

The royalty rate applied to the CGU was based upon royalty rates charged for the use of similar assets in comparable industries.

Long-term growth rates of net operating cash flows

The long-term growth rates of net operating cash flows are assumed to be no greater than the long-term growth rate in the gross domestic product of the countries in which the CGU operates.

A summary of the rates described above are presented below:

	Years ended 31 March
	2012	2013	2014
Attachmate
Discount rate	16.70%	16.70%	16.70%
Royalty rate	2.75%	2.75%	2.75%
Long-term growth rate	1.60% ––––––––	1.60% ––––––––	3.00% ––––––––
NetIQ
Discount rate	16.70%	16.70%	16.70%
Royalty rate	2.75%	2.75%	2.75%
Long-term growth rate	4.00% ––––––––	4.00% ––––––––	3.00% ––––––––
Novell
Discount rate	16.70%	16.70%	16.70%
Royalty rate	2.75%	2.75%	2.75%
Long-term growth rate	0.00% ––––––––	0.00% ––––––––	0.00% ––––––––
SUSE
Discount rate	16.70%	16.70%	16.70%
Royalty rate	2.75%	2.75%	2.75%
Long-term growth rate	4.50% ––––––––	4.50% ––––––––	3.00% ––––––––

Summary of results

In the years ended 31 March 2013 and 2014, the Attachmate Group recorded impairment charges of US\$2.6m and US\$12.9m, respectively, related to the Novell indefinite-lived trade name and is included in the statement of comprehensive income in 'Exceptional items'. The impairment charge resulted from management's lowered expectations for forward revenue streams from Novell branded products. The lowered revenue expectations are due to competitive intensity.

The Attachmate Group bases its estimate for the long-term pre-tax discount rate on its WACC using longterm market data and industry data to derive the appropriate inputs to the calculation. As noted, the Novell indefinite-lived trademark has experienced an impairment during the years ended 31 March 2013 and 2014. In arriving at these impairments, the directors have considered combinations of a reduction in the market royalty rates of the CGU combined with a reasonably possible increase in the absolute pre-tax discount rate and a reasonably possible decrease in the long-term growth rates. An additional impairment of the Novell indefinitely lived trademark would occur in the scenario that any of these assumptions were to worsen.

9. Property, plant and equipment

Property, plant and equipment were comprised of the following as at 31 March 2012:

	Land and buildings US\$'000	Leasehold improvements US\$'000	Computer equipment US\$'000	Fixtures and fixtures US\$'000	Total US\$'000
Cost
At 1 April 2011	–	3,046	18,104	2,780	23,930
Acquisitions (note 27)	121,084	12,541	22,366	5,783	161,774
Additions	565	1,793	3,207	1,684	7,249
Disposals	–	(1,375)	(802)	(455)	(2,632)
Impairment	(6,177)	–	–	–	(6,177)
Property held for sale	(111,601)	–	–	–	(111,601)
Reclassifications	–	1,304	2	(1,296)	10
Exchange adjustments	(924)	(2,359)	674	(91)	(2,700)
At 31 March 2012	–––––––– 2,947	–––––––– 14,950	–––––––– 43,551	–––––––– 8,405	–––––––– 69,853
Accumulated amortisation	––––––––	––––––––	––––––––	––––––––	––––––––
At 1 April 2011	–	2,369	15,802	1,685	19,856
Charge for the period	5,976	3,121	8,803	2,031	19,931
Disposals	–	(692)	(777)	(281)	(1,750)
Property held for sale	(5,879)	–	–	–	(5,879)
Reclassifications	(1)	99	2	(89)	11
Exchange adjustments	(1)	14	(4)	(48)	(39)
At 31 March 2012	–––––––– 95 ––––––––	–––––––– 4,911 ––––––––	–––––––– 23,826 ––––––––	–––––––– 3,298 ––––––––	–––––––– 32,130 ––––––––
Net book amount at 31 March 2012	2,852 ––––––––	10,039 ––––––––	19,725 ––––––––	5,107 ––––––––	37,723 ––––––––
Net book amount at 31 March 2011	– ––––––––	677 ––––––––	2,302 ––––––––	1,095 ––––––––	4,074 ––––––––

Property, plant and equipment were comprised of the following as at 31 March 2013:

	Land and buildings US\$'000	Leasehold improvements US\$'000	Computer equipment US\$'000	Fixtures and fixtures US\$'000	Total US\$'000
Cost
At 1 April 2012	2,947	14,950	43,551	8,405	69,853
Additions	–	5,811	5,273	484	11,568
Disposals	–	(3,569)	(644)	(802)	(5,015)
Exchange adjustments	(228)	(557)	(795)	(359)	(1,939)
At 31 March 2013	–––––––– 2,719 ––––––––	–––––––– 16,635 ––––––––	–––––––– 47,385 ––––––––	–––––––– 7,728 ––––––––	–––––––– 74,467 ––––––––

32,130
13,175
(2,736)
(855) ––––––––
41,714
––––––––
32,753 ––––––––
37,723 ––––––––

Property, plant and equipment were comprised of the following as at 31 March 2014:

	Land and buildings US\$'000	Leasehold improvements US\$'000	Computer equipment US\$'000	Fixtures and fixtures US\$'000	Total US\$'000
Cost
At 1 April 2013	2,719	16,635	47,385	7,728	74,467
Additions	–	2,254	4,305	1,008	7,567
Disposals	–	(875)	(1,668)	(370)	(2,913)
Property held for sale	(995)	–	–	–	(995)
Reclassifications	–	(794)	(907)	(915)	(2,616)
Exchange adjustments	(154) ––––––––	(209) ––––––––	62 ––––––––	(39) ––––––––	(340) ––––––––
At 31 March 2014	1,570	17,011	49,177	7,412	75,170
Accumulated amortisation	––––––––	––––––––	––––––––	––––––––	––––––––
At 1 April 2013	184	5,622	31,546	4,362	41,714
Charge for the period	89	2,656	8,392	1,045	12,182
Disposals	–	(562)	(1,639)	(355)	(2,556)
Property held for sale	(107)	–	–	–	(107)
Reclassifications	–	(372)	(910)	(487)	(1,769)
Exchange adjustments	(12) ––––––––	(50) ––––––––	532 ––––––––	(57) ––––––––	413 ––––––––
At 31 March 2014	154	7,294	37,921	4,508	49,877
Net book amount at	––––––––	––––––––	––––––––	––––––––	––––––––
31 March 2014	1,416 ––––––––	9,717 ––––––––	11,256 ––––––––	2,904 ––––––––	25,293 ––––––––
Net book amount at
31 March 2013	2,535 ––––––––	11,013 ––––––––	15,839 ––––––––	3,366 ––––––––	32,753 ––––––––

	Land and	Leasehold	Computer	Fixtures and
	buildings	improvements	equipment	fixtures	Total
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Cost
At 1 April 2014	1,570	17,011	49,177	7,412	75,170
Additions	–	139	385	8	532
Disposals	–	–	–	(41)	(41)
Reclassifications	–	–	4	(1)	3
Exchange adjustments	3	1	(6)	(15)	(17)
At 30 April 2014	–––––––– 1,573	–––––––– 17,151	–––––––– 49,560	–––––––– 7,363	–––––––– 75,647
Accumulated amortisation	––––––––	––––––––	––––––––	––––––––	––––––––
At 1 April 2014	154	7,294	37,921	4,508	49,877
Charge for the period	4	185	715	70	974
Disposals	–	–	–	–	–
Reclassifications	–	–	1	1	2
Exchange adjustments	–	1	(6)	(2)	(7)
At 30 April 2014	–––––––– 158	–––––––– 7,480	–––––––– 38,631	–––––––– 4,577	–––––––– 50,846
Net book amount at	––––––––	––––––––	––––––––	––––––––	––––––––
30 April 2014	1,415	9,671	10,929	2,786	24,801

Property, plant and equipment were comprised of the following as at 30 April 2014:

–––––––– –––––––– –––––––– –––––––– –––––––– Prior to the issuance of the Attachmate Group's 31 March 2012 consolidated financial statements, with proper management approval and authorisation, the Attachmate Group entered into discussions to sell land and buildings on the Provo, Utah campus and the Bracknell, United Kingdom building. Consequently, these properties were classified as property held for sale in the consolidated statements of financial position as at 31 March 2012. As a result, the net book value of these properties of US\$111.9m were reclassified from property, plant and equipment to assets held for sale. Upon reclassification both properties were tested for impairment and the Attachmate Group recorded a US\$6.2m impairment charge on the Bracknell, UK property which reduced the carrying value of the assets to US\$105.7m at 31 March 2012. The sale of the land and buildings on the Provo, Utah campus resulted in a net gain of US\$9.3m in the year ended 31 March 2013. The gain on the sale and impairment of the properties held for sale is included within 'exceptional items' in the consolidated statement of comprehensive income.

Simultaneously with the sale of certain buildings on the Provo, Utah campus during fiscal year 2013, the Attachmate Group entered into an agreement to lease these buildings back from the buyer. Under the terms of the agreement, all risks and rewards of ownership were transferred and the Attachmate Group is the only tenant with the buyer. The lease term is for twelve and a half years. The average annual rent cost over the lease term is US\$7.9m. The future minimum rental payments are included with the other operating leases in the table in Note 24.

As of 31 March 2014 and 30 April 2014, the Attachmate Group had US\$0.9m in property held-for-sale consisting of a building in South Africa. The Attachmate Group received proper management approval and anticipates selling this building during fiscal year ended 31 March 2015.

Depreciation expense ('Charge for the period') in the above tables is included in the following costs in the statement of comprehensive income:

				One month
		Years ended 31 March		ended 30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(unaudited)
Cost of sales	4,316	2,747	2,585	235	189
Selling and distribution costs	4,999	3,131	2,804	271	215
Research and development
expense	8,611	6,166	5,752	446	486
Administrative expense	2,005 ————	1,131 ————	1,041 ————	104 ————	84 ————
Total	19,931	13,175	12,182	1,056	974
	————	————	————	————	————

10. Trade and other receivables

			As at
	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Trade receivables	80,879	182,922	166,297	187,332	141,622
Less:
Provision for impairment of trade receivables	(477)	(1,680)	(884)	(950)	(890)
Provision for sales returns	– –––––––	(524) –––––––	(246) –––––––	(176) –––––––	(176) –––––––
Trade receivables, net	80,402	180,718	165,167	186,206	140,556
Prepayments	4,660	14,571	18,355	16,781	17,070
Other receivables	2,805	28,742	30,281	17,056	15,306
Accrued income	–	14	3	8	8
Total	––––––– 87,867	––––––– 224,045	––––––– 213,806	––––––– 220,051	––––––– 172,946
	–––––––	–––––––	–––––––	–––––––	–––––––

Concentrations of credit risk with respect to trade receivables are limited due to the Attachmate Group's customer base being large and unrelated. In determining the recoverability of a trade receivable, the Attachmate Group considers historical collection trends and the collection risk of specific customer accounts due to a change in their financial condition identified subsequent to the revenue transaction. Due to this, management believes there is no further credit risk provision required in excess of the normal provision for doubtful receivables. At 1 April 2011, 31 March 2012, 2013 and 2014 and at 30 April 2014, the carrying amount approximates the fair value of the instrument due to the short-term nature of the instrument.

Trade receivables of US\$6.8m, US\$12.9m, US\$16.0m, US\$19.0m and US\$36.6m at 1 April 2011; 31 March 2012, 2013 and 2014; and 30 April 2014, respectively, were past due but not impaired. These relate to a large number of independent companies for whom there is no recent history of default. The amounts are regarded as recoverable. The average age of all past due receivables were 16, 31, 34, 74 and 52 days in excess of the due date as at 31 March 2011, 2012, 2013, 2014 and 30 April 2014, respectively.

Provisions were established in an amount equal to the trade receivables that were partially or fully impaired. The ageing of these receivables is as follows:

	As at
	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
One to four months past due	–	124	28	–	–
Over four months past due	477	1,556	856	950	890
Total	––––––– 477	––––––– 1,680	––––––– 884	––––––– 950	––––––– 890
	–––––––	–––––––	–––––––	–––––––	–––––––

Movements in the Attachmate Group provision for impairment of trade receivables were as follows:

			As at
	31 March	31 March	31 March	30 April	30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(unaudited)
At period beginning	477	1,680	884	884	950
Provision/(write back) for receivables
impairment	1,310	(311)	134	11	(16)
Receivables written off as uncollectable	(107)	(485)	(68)	(11)	(44)
At period end	––––––– 1,680	––––––– 884	––––––– 950	––––––– 884	––––––– 890
	–––––––	–––––––	–––––––	–––––––	–––––––

The creation and release of the provision for impaired receivables have been included in administrative expenses in the consolidated statement of comprehensive income. Amounts charged in the allowance account are generally written off when there is no expectation of recovering additional cash. The Attachmate Group does not hold any collateral as security.

The Attachmate Group also has a reserve for sales returns to reflect estimated returns during a 90 day warranty period following the sale. The Attachmate Group had sales returns reserves of nil, US\$0.5m, US\$0.2m, US\$0.2m, and US\$0.2m at 1 April 2011; 31 March 2012, 2013, and 2014; and 30 April 2014, respectively.

11. Cash and cash equivalents and restricted cash

			As at
	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Cash at bank and in hand	144,279	276,484	132,112	128,860	132,062
Short-term bank deposits	–	99,385	28,117	22,555	10,411
Total cash and cash equivalents	––––––– 144,279	––––––– 375,869	––––––– 160,229	––––––– 151,415	––––––– 142,473
	–––––––	–––––––	–––––––	–––––––	–––––––

The carrying amount approximates the fair value at each period end. The Attachmate Group's credit risk on cash and cash equivalents is limited as the counterparties are well established banks with high credit ratings. The credit quality of cash and cash equivalents is as follows:

			As at
	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
S&P/Moody's/Fitch rating:
AA	124,999	207,351	68,484	56,474	47,785
A+	352	5,097	1,506	5,168	5,508
A	18,678	22,353	34,413	34,491	39,144
A-	7	138,233	51,350	54,805	49,623
BBB+	–	101	153	111	106
BBB	243	2,560	4,008	244	134
BB+	–	174	315	122	173
Total	––––––– 144,279	––––––– 375,869	––––––– 160,229	––––––– 151,415	––––––– 142,473
	–––––––	–––––––	––––––– As at	–––––––	–––––––
	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Total restricted cash	141 –––––––	975 –––––––	137 –––––––	803 –––––––	805 –––––––

The carrying amount approximates the fair value at each period end. The Attachmate Group maintains cash in deposit accounts that are reserved primarily to meet its performance obligations in relation to certain leasing arrangements.

12. Trade and other payables

			As at
	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Trade payables	10,330	29,375	24,499	19,978	17,357
Tax, social security tax and payroll tax	4,505	17,309	15,743	12,469	9,995
Accruals	38,569	88,100	86,606	108,136	81,650
Total	–––––––– 53,404	–––––––– 134,784	–––––––– 126,848	–––––––– 140,583	–––––––– 109,002
	––––––––	––––––––	––––––––	––––––––	––––––––

The carrying amount approximates the fair value at each period end.

13. Borrowings

			As at
	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
First lien – due 13 April 2013	355,054	–	–	–	–
Second lien – due 13 October 2013	255,000	–	–	–	–
First lien – due 27 April 2017	–	853,125	–	–	–
Second lien – due 27 October 2017	–	275,000	–	–	–
First lien – due 22 November 2017	–	–	1,038,125	905,508	905,508
Second lien – due 22 November 2018	–	–	400,000	389,218	389,218
Total borrowings	–––––––– 610,054	–––––––– 1,128,125	–––––––– 1,438,125	–––––––– 1,294,726	–––––––– 1,294,726
Unamortised prepaid credit arrangement
fees	(5,870)	–	–	–	–
Total borrowings, net	–––––––– 604,184	–––––––– 1,128,125	–––––––– 1,438,125	–––––––– 1,294,726	–––––––– 1,294,726
Less: current borrowings	56,764	104,945	115,799	32,383	32,383
Total borrowings, net of current portion	–––––––– 547,420	–––––––– 1,023,180	–––––––– 1,322,326	–––––––– 1,262,343	–––––––– 1,262,343
	––––––––	––––––––	––––––––	––––––––	––––––––

Line of credit agreement

At 30 April 2014, the Attachmate Group had a revolving line of credit with a limit up to US\$40m. This line of credit has a maturity date of 22 May 2017 and bears interest at a base rate equal to the higher of the prime rate or 0.5% above the overnight federal funds rate or 1.0% above the one month Eurodollar rate, plus an applicable margin that is no greater than 4.75%, with an optional Eurodollar rate also available. The interest rate on this line of credit was 7.25% at 30 April 2014. Outstanding borrowings under the Attachmate Group's US\$40m line of credit were nil during the year ended 31 March 2014 (2013: US\$nil) and US\$nil for the one month ended 30 April 2014. Therefore, no interest expense was incurred during those periods. The Attachmate Group was charged commitment and administration fees which is included in the line item, 'finance costs – pre-exceptional' in the consolidated statements of comprehensive income (note 4).

Term loan credit agreements

At 30 April 2014, the Attachmate Group had total secured borrowings of US\$1,294.7m in place, denominated in US dollars, comprised of a first lien secured borrowing on 22 May 2012 and second lien secured borrowing on 22 May 2012, which is subordinate to the first lien borrowing. The Attachmate Group entered into these agreements to repay previous loans and to help fund an equity distribution to shareholders. The previous loans were entered into 27 April 2011 in order to fund the Attachmate Group's acquisition of Novell.

The first lien secured borrowing of US\$905.5m outstanding at 31 March 2014 and 30 April 2014 expires on 22 November 2017 and bears interest at a base rate equal to the higher of the prime rate or 0.5% above the overnight US federal funds rate or 1.0% above the one month Eurodollar rate, plus an applicable margin that is not greater than 4.75%, with an optional Eurodollar rate also available. The interest rate at 31 March 2014 and 30 April 2014 was 7.25%.

The second lien secured borrowing of US\$389.2m outstanding as of 31 March 2014 and 30 April 2014 expires 22 November 2018. Borrowings under the second lien bear interest at a base rate equal to the higher of the prime rate or 0.5% above the overnight federal funds rate or 1.0% above the one month Eurodollar rate, plus an applicable margin of 8.5%, with an optional Eurodollar rate also available. The interest rate at 31 March 2014 and 30 April 2014 was 11.0%.

The first lien and second lien loans are subject to affirmative and negative financial covenants. The Attachmate Group is in compliance with all financial covenants as of 31 March 2014 and 30 April 2014.

The repayment schedule of the principal portion of the outstanding borrowings as of 30 April 2014 is as follows:

	US\$'000
2015	32,383
2016	82,500
2017	103,125
2018	687,500
2019	389,218 ––––––––
Total	1,294,726 ––––––––
Less current portion	(32,383) ––––––––
Long-term debt – less current portion	1,262,343
	––––––––

Debt issuance costs

As of 1 April 2011, the Attachmate Group had capitalised US\$5.8m of costs related to prior debt and US\$0.7m prepaid loan costs related to new debt that the Attachmate Group entered into effective 27 April 2011. In connection with the acquisition of Novell on 27 April 2011, the Attachmate Group refinanced the debt; as a result of the refinancing, US\$5.6m was expensed as early extinguishment of debt and is included in the line item 'finance costs – exceptional' in the consolidated statements of comprehensive income. During the year ended 31 March 2012, the Attachmate Group also expensed US\$51.0m in costs related to the debt agreements issued on 27 April 2011 and is included in the line item 'finance costs – exceptional' in the consolidated statements of comprehensive income.

During the year ended 31 March 2013, the Attachmate Group expensed US\$63.5m of fees and costs related to the refinancing of the borrowings and paid US\$5.5m in breakage fees on its pre-existing debt, totalling US\$69.0m. This refinancing was accounted for as an extinguishment of debt and the US\$69.0m is shown in the line item, 'finance costs – exceptional' within the accompanying consolidated statement of comprehensive income. During the year ended 31 March 2013 US\$0.4m in administrative and nonutilisation loan fees was expensed and included in 'finance costs – pre-exceptional' in the consolidated statement of comprehensive income.

14. Deferred income – current

			As at
	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Deferred income	–––––––– 115,961	–––––––– 513,020	–––––––– 488,238	–––––––– 502,392	–––––––– 481,834
	––––––––	––––––––	––––––––	––––––––	––––––––

Revenue not recognised in the consolidated statement of comprehensive income under the Attachmate Group's accounting policy for revenue recognition is classified as deferred income in the balance sheet to be recognised in future periods. Where revenue is due to be recognised within twelve months, this is classified as current deferred income.

15. Deferred income – non-current

			As at
	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Deferred income	–––––––– 19,207	–––––––– 263,073	–––––––– 253,711	–––––––– 220,429	–––––––– 210,730
	––––––––	––––––––	––––––––	––––––––	––––––––

Revenue not recognised in the consolidated statement of comprehensive income under the Attachmate Group's accounting policy for revenue recognition is classified as deferred income in the balance sheet to be recognised in future periods. Where revenue is due to be recognised in greater than twelve months, this is classified as non-current deferred income.

16. Provisions

1 April 2011 US\$'000	31 March 2012 US\$'000	As at 31 March 2013	31 March 2014	30 April 2014
		US\$'000	US\$'000	US\$'000
	19,511	2,880	3,551	3,626
				3,738
–	5,169	4,101	4,172	3,594 ––––––––
663	28,178	7,717	12,043	10,958
324	21,003	3,699	7,571	–––––––– 6,639
339	7,175	4,018	4,472	4,319 ––––––––
663	28,178	7,717	12,043	10,958
				–––––––– Total
			US\$'000	US\$'000
		663	–	663
			–	72,182
			5,475	54,412
				(99,075)
				(4) ––––––––
			5,169	28,178
			–	3,227
			(1,068)	(18,947)
		–	–	(4,568)
		–	–	(173) ––––––––
		736	4,101	7,717
			71	20,139
			–	(15,843)
		–	–	29
			4,172	–––––––– 12,043
		38	–	113
		(620)	(578)	(1,198)
			3,594	–––––––– 10,958 ––––––––
	– 663 –––––––– –––––––– –––––––– ––––––––	3,498 –––––––– –––––––– –––––––– –––––––– Legal US\$'000 – 12,850 15,216 (8,551) (4) –––––––– 19,511 723 (12,613) (4,568) (173) –––––––– 2,880 1,754 (1,113) 29 –––––––– 3,551 75 – –––––––– 3,626 ––––––––	736 –––––––– –––––––– –––––––– –––––––– US\$'000 59,332 33,721 (90,218) – –––––––– 3,498 2,504 (5,266) –––––––– 18,314 (14,730) –––––––– 4,320 –––––––– 3,738	4,320 –––––––– –––––––– –––––––– –––––––– Restructuring Merger liability (306) – –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

Restructuring costs represent actions to realign the Group's cost structure based on current and expected near-term growth rates for the business and to eliminate redundant functions resulting from business acquisitions. Restructuring costs, which include termination benefits and property closure costs, are recorded at estimated fair value. Termination benefits are comprised of severance payments for terminated employees and property closure costs represent costs to terminate leases in conjunction with the consolidation of property.

The Attachmate Group had significant restructuring events in the year ended 31 March 2012 due to identifying redundancies following the Novell acquisition earlier in that year. The restructuring plans included involuntary employee terminations that resulted in severance and benefit costs of \$56.2m in addition to property closure costs of \$3.1m. The Attachmate Group also acquired ongoing restructuring commitments totalling \$33.7m as part of the Novell acquisition. Payments of \$90.2m were made in the year ending 31 March 2012 to settle a number of these obligations. There were smaller programmes across the group in the year ended 31 March 2013 totalling \$2.5m.

The Attachmate Group entered into a further significant restructuring programme in the year ended 31 March 2014 in order to further streamline operations. The restructuring plans included involuntary employee terminations that resulted in severance and benefit costs of \$15.7m. There were also property charges and termination costs of other contractual obligations of \$2.2m and \$0.4m, respectively included in the restructuring provision recorded that year.

Legal provisions include management's best estimate of the likely outflow of economic benefits associated with ongoing legal matters. In the year ended 31 March 2012, the Attachmate Group acquired potential liabilities as part of the Novell acquisition totalling \$15.2m. During that same year the Attachmate Group separately recorded additional legal provisions totalling \$12.9m. Over the course of 2012 and 2013, payments of \$8.6m and \$12.6m respectively were made in order to conclude these matters with \$4.6m being released. There remain a smaller number of claims with associated legal provisions that remain at 30 April 2014 that are expected to be settled in the near future.

The merger liability of \$5.5m acquired as part of the Novell acquisition on 27 April 2011 is related to a leased facility associated with an acquisition that Novell completed in 2001. This liability relates to the amount expected to be paid over the remaining lease term which extends to 2025. At 30 April 2014, the liability associated with this facility is \$3.6m of which \$0.2m is shown in the line item 'provisions' and \$3.4m is shown in the line item 'long-term provisions' in Attachmate Group's consolidated statement of financial position.

17. Financial instruments

Credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at 30 April 2014 was:

	As at
	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Trade receivables, net	80,402	180,718	165,167	186,206	140,556
Cash and cash equivalents	144,279	375,869	160,229	151,415	142,473
Total	–––––––– 224,681	–––––––– 556,587	–––––––– 325,396	–––––––– 337,621	–––––––– 283,029

–––––––– –––––––– –––––––– –––––––– ––––––––

Risk management

The Attachmate Group's treasury function aims to reduce exposures to interest rate, foreign exchange and other financial risks, to ensure liquidity is available as and when required, and to invest cash assets safely and profitably. The Attachmate Group does not typically engage in speculative trading in financial instruments. The treasury function's policies and procedures are reviewed and monitored by the audit committee and are subject to internal audit review.

Foreign exchange risk

The Attachmate Group's currency exposures comprise those that give rise to net currency gains and losses to be recognised in the consolidated statement of comprehensive income as well as gains and losses on consolidation which go to reserves. Such exposures reflect the monetary assets and liabilities of the Attachmate Group that are not denominated in the operating or functional currency of the operating unit involved and the Attachmate Group's investment in net assets in currencies other than US dollar. Note 2 shows the impact on the consolidated statement of comprehensive income of foreign exchange gains in the year.

Liquidity risk

The Attachmate Group monitors liquidity risk by monitoring its debt rating and the maturity dates of existing debt. The tables below summarises the maturity profile of the Attachmate Group's financial liabilities at the following dates based on contractual undiscounted payments:

				31 March 2012
		Less than	1 to 2	2 to 5
	On demand	1 year	years	years	>5 years	Total
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Total borrowings	–	104,945	54,688	968,492	–	1,128,125
Trade payables	–	29,375	–	–	–	29,375
Other current liabilities	–	105,409	–	–	–	105,409
Total	––––––– –	––––––– 239,729	––––––– 54,688	––––––– 968,492	––––––– –	––––––– 1,262,909
	–––––––	–––––––	–––––––	––––––– 31 March 2013	–––––––	–––––––
		Less than	1 to 2	2 to 5
	On demand	1 year	years	years	>5 years	Total
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Total borrowings	–	115,799	82,500	839,826	400,000	1,438,125
Trade payables	–	24,499	–	–	–	24,499
Other current liabilities	– –––––––	102,349 –––––––	– –––––––	– –––––––	– –––––––	102,349 –––––––
Total	–	242,647	82,500	839,826	400,000	1,564,973
	–––––––	––––––– ––––––– ––––––– ––––––– ––––––– 31 March 2014
		Less than	1 to 2	2 to 5
	On demand	1 year	years	years	>5 years	Total
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Total borrowings	–	32,383	82,500	1,179,843	–	1,294,726
Trade payables	–	19,978	–	–	–	19,978
Other current liabilities	– –––––––	120,605 –––––––	– –––––––	– –––––––	– –––––––	120,605 –––––––
Total	–	172,966	82,500	1,179,843	–	1,435,309
	–––––––	–––––––	–––––––	––––––– 30 April 2014	–––––––	–––––––
		Less than	1 to 2	2 to 5
	On demand	1 year	years	years	>5 years	Total
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Total borrowings	–	32,383	82,500	1,179,843	–	1,294,726
Trade payables	–	17,357	–	–	–	17,357
Other current liabilities	– –––––––	91,645 –––––––	– –––––––	– –––––––	– –––––––	91,645 –––––––
Total	– –––––––	141,385 –––––––	82,500 –––––––	1,179,843 –––––––	– –––––––	1,403,728 –––––––

Sensitivity analysis

The Attachmate Group's principal exposures in relation to market risks are the changes in the exchange rates between the US dollar and the Euro and to changes in US LIBOR interest rates. The table below illustrates the sensitivities of the Attachmate Group's results to changes in these key variables as at the balance sheet date. The analysis covers only financial assets and liabilities held at the balance sheet date.

		Years ended 31 March	One month ended 30 April
	2012	2013	2014	2013	2014
	Consolidated	Consolidated	Consolidated	Consolidated	Consolidated
	statement of	statement of	statement of	statement of	statement of
	comprehensive	comprehensive	comprehensive	comprehensive	comprehensive
	income	income	income	income	income
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Euro/USD
exchange rate +/- 5%	1,221	1,128	1,991	1,385	1,673
US LIBOR +/- 1%	11,273	14,484	13,950	1,182	1,079

Capital risk management

The Attachmate Group's objective when managing its capital structures is to minimise the cost of capital while maintaining adequate capital to protect against volatility in earnings and net asset values. The strategy is designed to maximise shareholder return over the long-term. The relative proportion of debt to equity will be adjusted over the medium-term depending on the cost of debt compared to equity and the level of uncertainty facing the industry and the Attachmate Group. The Attachmate Group's committed credit facilities contain affirmative and negative covenants. The Attachmate Group has complied with these covenant requirements during the month ended 30 April 2014.

The capital structure of the Attachmate Group at the balance sheet date is as follows:

			As at
	1 April	31 March	31 March	31 March	30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Total borrowings (note 13)	610,054	1,128,125	1,438,125	1,294,726	1,294,726
Less cash and cash
equivalents (note 11)	144,279	375,869	160,229	151,415	142,473
Total net debt	–––––––– 465,775	–––––––– 752,256	–––––––– 1,277,896	–––––––– 1,143,311	–––––––– 1,152,253
Total equity	(217,786)	120,669	(492,121)	(460,114)	(460,402)
Debt/Equity %	–––––––– -213.9%	–––––––– 623.4%	–––––––– -259.7%	–––––––– -248.5%	–––––––– -250.3%
	––––––––	––––––––	––––––––	––––––––	––––––––

Market risk

The table below sets out the contractual values of financial assets and liabilities.

		As at 1 April 2011 Non			2012 Non			As at 31 March 2013 Non			2014 Non			As at 30 April 2014 Non
		Financial financial		Total Financial financial			Total Financial financial			Total Financial financial US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000			Total Financial financial		Total
Financial assets – loans and receivables:
Current
Cash and cash
equivalents (note 11)	144,279			– 144,279 375,869		– 375,869 160,229				– 160,229 151,415		– 151,415 142,473			_ 142,473
Restricted cash (note 11)	141	–	141	975	–	975	137	–	137	803	_	803	805	–	805
Trade and other receivables
(note 10)	80,402	7,465		87,867 180,718		43,327 224,045 165,167				48,639 213,806 186,206 ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––		33,845 220,051 140,556			32,390 172,946
Total	224,822			7,465 232,287 557,562		43,327 600,889 325,533				48,639 374,172 338,424		33,845 372,269 283,834			32,390 316,224
		As at 1 April						As at 31 March		––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––				As at 30 April
		2011			2012			2013			2014			2014
		Non			Non			Non			Non			Non
		Financial financial		Total Financial financial			Total Financial financial			Total Financial financial US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000 US\$'000			Total Financial financial		Total
Financial liabilities – at amortised cost:
Non-current
Borrowings (note 13)	547,420			– 547,420 1,023,180		– 1,023,180 1,322,326				– 1,322,326 1,262,343		– 1,262,343 1,262,343			– 1,262,343
Provisions (note 16)	–	339	339	5,130	2.045	7,175	3,843	175	175	3,548	924	4,472	3,429	890	4,319
Current
Borrowings (note 13)	56,764	–		56,764 104,945		– 104,945 115.799			– 115,799	32,383	–	32,383	32,383	–	32,383
Trade and other
payables (note 12)	10,330	43,074	53,404		29,375 105,409 134,784			24,499 102,349 126,848			19,978 120,605 140,583		17,357		91,645 109,002
Provisions (note 16)	–	324	324	39	20,964	21,003	258	3,441	3,699	624 ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––	6,947	7,571	165	6,474	6,639
Total	614,514	––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––								43,737 658,251 1,162,699 128.418 1,291,087 1,466,725 105,965 1,568,847 1,318,876 128,476 1,447,352 1,315,677					99,009 1,414,686

18. Deferred tax

The analysis of deferred tax assets and deferred tax liabilities is as follows:

			As at
	1 April		31 March		30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Group
Deferred tax assets	18,223	211,503	235,423	196,862	197,716
Deferred tax liabilities	(39,015) –––––––	(133,755) –––––––	(82,311) –––––––	(52,637) –––––––	(52,373) –––––––
Deferred tax asset (liability),
net	(20,792)	77,748	153,112	144,225	145,343
	–––––––	–––––––	–––––––	–––––––	–––––––
			As at
	1 April		31 March		30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Deferred tax asset (liability), net
At 1 April		(20,792)	77,748	153,112	144,225
Credited (charged) to consolidated statement of
comprehensive income		21,773	68,125	(6,878)	1,225
Credited (charged) directly
to equity		–	7,239	(2,009)	(107)
Acquisition of Novell (note 27)	–––––––	76,767 –––––––	– –––––––	– –––––––	– –––––––
At period end	(20,792)	77,748	153,112	144,225	145,343
	–––––––	–––––––	–––––––	–––––––	–––––––

		Other
Tax losses	Tax Credits	differences	Total
\$'000	\$'000	\$'000	\$'000
691	9,112	8,420	18,223
38,441	(7,380)	(177,561)	(146,530)
45,880	35,099	258,832	339,811 ————
			211,504
(34,475)	31,761	19,395	16,681
	–	7,239	7,239
			———— 235,423
(12,389)	(23,182)	(981)	(36,553)
	–	(2,009)	(2,009)
			———— 196,862
(35)	199	796	961
	–	(107)	(107)
38,083	45,609	114,024	———— 197,716
	———— 84,982 ———— 50,507 ———— 38,118 ———— ————	———— 36,831 ———— 68,592 ———— 45,410 ———— ————	temporary ———— 89,691 ———— 116,324 ———— 113,335 ———— ————

Deferred tax assets are recognised for tax loss carry-forwards to the extent that the utilisation of the asset against future taxable profits is probable. The Attachmate Group did not recognise deferred income tax assets as at 31 March 2012 of US\$71.6m (2013: US\$39.3m and 2014: US\$30.2m) and as at 30 April 2014 of US\$30.1m in respect of US federal losses amounting to US\$204.6m during the year ended 31 March 2012 (2013: US\$112.3m and 2014: US\$86.3m) and as at 30 April 2014 of US\$86.1m that can be carried forward against future taxable income. The losses not recognised expire in the years from 2020 to 2028.

The Attachmate Group did not recognise deferred income tax assets as at 31 March 2012 of US\$3.3m (2013: US\$3.3m and 2014: US\$2.6m) and as at 30 April 2014 of US\$2.6m in respect of US federal research and development credits amounting to US\$32.6m during the year ended 31 March 2012 (2013: US\$35.4m and 2014: US\$33.1m) and as at 30 April 2014 of US\$33.1m that can be carried forward against future income tax.

		Other
		temporary
	Intangibles	differences	Total
	\$'000	\$'000	\$'000
Deferred tax liabilities
At 1 April 2011	(35,781)	(3,234)	(39,015)
Charged to consolidated statement
of comprehensive income	38,946	129,358	168,304
Novell acquisition	(115,222)	(147,822)	(263,044)
At 31 March 2012	–––––––– (112,057)	–––––––– (21,698)	–––––––– (133,755)
Charged to consolidated statement
of comprehensive income	33,293	18,151	51,444
At 31 March 2013	–––––––– (78,764)	–––––––– (3,547)	–––––––– (82,311)
Charged to consolidated statement
of comprehensive income	29,220	454	29,674
At 31 March 2014	–––––––– (49,544)	–––––––– (3,093)	–––––––– (52,637)
Charged to consolidated statement
of comprehensive income	1,940 ––––––––	(1,676) ––––––––	264 ––––––––
At 30 April 2014	(47,604)	(4,769)	(52,373)
	––––––––	––––––––	––––––––

19. Share capital

Ordinary shares at US\$0.001 each.

				As at 31 March				As at 30 April
		2012		2013		2014		2014
	Shares	US\$'000	Shares	US\$'000	Shares	US\$'000	Shares	US\$'000
At period beginning	7,691	–	1,000	–	1,000	–	1,000	–
Ordinary share conversion	(7,691)	–	–	–	–	–	–	–
Ordinary share issuance	1,000	–	–	–	–	–	–	–
At period end	––––––– 1,000 –––––––	––––––– – –––––––	––––––– 1,000 –––––––	––––––– – –––––––	––––––– 1,000 –––––––	––––––– – –––––––	––––––– 1,000 –––––––	––––––– – –––––––

Share issued during the year

During the year ended 31 March 2012, no ordinary shares of US\$0.001 each were issued. On 27 April 2011, the then outstanding ordinary shares were exchanged for new ordinary shares in connection with the acquisition of Novell, Inc. (note 27).

20. Share option reserve

		As at 31 March		As at 30 April
	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000
At period beginning	1,196	6,263	7,161	6,197
Movement in relation to stock
units (note 22)	5,067 –––––––	898 –––––––	(964) –––––––	(591) –––––––
At period end	6,663	7,161	6,197	5,606
	–––––––	–––––––	–––––––	–––––––

21. Cash generated from operations

						One month ended
			Years ended 31 March			30 April
		2012	2013	2014	2013	2014
	Notes	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
					(unaudited)
Profit after tax		(29,038)	70,826	27,391	746	(333)
Adjustments for:
Net interest		85,545	118,249	116,117	9,807	9,028
Taxation	18	1,648	(57,405)	27,224	(4,944)	631
Foreign exchanges (gains) losses	2	(4,944)	1,854	4,540	1,116	(87)
Depreciation	9	19,931	13,175	12,182	1,056	974
Impairment of facilities held for sale	9	6,177	–	–	–	–
Gain on sale of facilities	9	–	(9,278)	–	–	–
Impairment of tradenames	8	–	2,571	12,927	–	–
Amortisation of intangibles	8	105,083	108,891	90,200	8,809	7,294
Debt issuance cost amortisation/writeoff	13	56,823	63,462	–	–	–
Provision for doubtful note receivable	10	3,039	274	(15)	–	–
Share based compensation charges	22	9,966	3,698	1,836	211	109
Exchange movements		(1,573)	(8,264)	(4,306)	(8,004)	291
Provisions and other non-cash items		(36,254)	(15,247)	8,091	6,950	(662)
Changes in working capital:
Trade and other receivables	10	19,703	4,397	(15,582)	43,639	45,572
Payables and other non-current
liabilities	12	(70,578)	(12,939)	20,902	(11,700)	(13,237)
Deferred income	14,15	151,117	(29,470)	(17,049)	(29,739)	(30,590)
Cash generated from operating					–––––––– –––––––– –––––––– –––––––– ––––––––
activities		316,645	254,794	284,458	17,947	18,990
					–––––––– –––––––– –––––––– –––––––– ––––––––

22. Employees and directors

					One month ended
		Years ended 31 March
	2012	2013 2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(unaudited)
Staff costs
Wages and salaries	370,171	372,208	372,890	29,950	26,519
Social security costs	54,374	56,437	55,844	4,343	4,373
Other pension costs (note 23)	13,163	11,481	12,229	988	919
Share based payments	9,966 ––––––––	3,698 ––––––––	1,836 ––––––––	211 ––––––––	109 ––––––––
Total	447,674	443,824	442,799	35,492	31,920
	––––––––	––––––––	––––––––	––––––––	––––––––

These costs include exceptional staff costs. Detail of these has been included in Note 2.

					One month ended
		Years ended 31 March			30 April
	2012	2013	2014	2013	2014
	Number	Number	Number	Number	Number
				(unaudited)
Average monthly number of people
(including executive directors)
employed by the Group:
Cost of sales	859	801	800	836	763
Selling and distribution	1,039	1,029	937	972	863
Research and development	1,297	1,311	1,319	1,324	1,307
Administration	417	404	372	388	360
Total	–––––––– 3,612	–––––––– 3,545	–––––––– 3,428	–––––––– 3,520	–––––––– 3,293
	––––––––	––––––––	––––––––	––––––––	–––––––– One month ended
		Years ended 31 March			30 April
	2012	2013	2014	2013	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
				(unaudited)
Key management compensation
Short-term employee benefits	9,649	11,520	9,000	164	365
Share based payments	9,966	3,698	1,836	211	109
Other compensation schemes	34	95	47	1	1
Total	–––––––– 19,649	–––––––– 15,313	–––––––– 10,883	–––––––– 375	–––––––– 474

The key management figures above include the executive management team and directors. There are no post employment benefits. There are no post-employment benefits. The Attachmate Group does not provide remuneration to its non-employee directors other than on a rare exception basis as share based payments which are included above.

–––––––– –––––––– –––––––– –––––––– ––––––––

					One month ended
		Years ended 31 March		30 April
	2012	2013	2014
	\$'000	\$'000	\$'000	\$'000	\$'000
				(unaudited)
Directors Emoluments
Aggregate emoluments	3,838	4,309	3,173	31	128
Aggregate gains made on the exercise
of share options	–	–	–	–	–
Aggregate emoluments receivable
under long term incentives	6,162	2,132	1,085	128	61
Company contributions to the
pension scheme	6 ––––––––	5 ––––––––	5 ––––––––	– ––––––––	– ––––––––
Total	10,006	6,446	4,263	159	189
	––––––––	––––––––	––––––––	––––––––	––––––––

There is one legal director of the Attachmate Group and as such the total emoluments disclosed above are also those of the highest paid director.

Share based payments

Certain employees of the Attachmate Group participate in various equity-settled share based compensation plans, the details of which are provided below.

Legacy common units

Through 27 April 2011, the Attachmate Group had a Stock Incentive Plan authorising the grant of incentive and nonqualified stock options, restricted stock, restricted stock units and other awards that were denominated or payable in shares of common stock to employees, directors, and consultants of the Attachmate Group. Effective 27 April 2011, all outstanding stock awards under this plan were retired and exchanged for 2,019,107 equivalent legacy common units ("LCU") in Wizard.

Even though these LCUs are in Wizard, the units are in substance for work performed for the benefit of the Attachmate Group. Therefore, the Attachmate Group records the stock-based compensation expense and related capital contribution for these awards. The fair value of the LCUs was calculated using the fair value of the business based on a market approach. The LCUs vest over four to seven years. Total stock-based compensation expense for these legacy units was US\$1.0m, US\$0.4m and US\$0.2m during the fiscal years ended 31 March 2012, 2013 and 2014, respectively; and US\$21 thousand and US\$11 thousand for the one month periods ended 30 April 2013 and 2014, respectively, and are included within administrative expense in the Attachmate Group's consolidated statements of comprehensive income. At 30 April 2014, there was US\$0.2m of total unrecognised compensation expense expected to be recognised over a weighted average period of 2 years.

			As at 31 March					As at 30 April 2014
	2012		2013		2014
		Weighted		Weighted		Weighted		Weighted
		average		average		average		average
		grant date		grant date		grant date		grant date
		fair value		fair value		fair value		fair value
		per unit		per unit		per unit		per unit
	LCUs	US\$	LCUs	US\$	LCUs	US\$	LCUs	US\$
Nonvested at beginning of period	–	–	1,403,157	0.83	1,062,097	0.82	738,265	0.82
Retired/exchanged	2,019,107	0.84	–	–	–	–	–	–
Vested	(615,950)	0.87	(341,060)	0.84	(323,932)	0.83	(26,986)	0.83
Granted	–	–	–	–	–	– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––	–	–
Nonvested end of period	1,403,157	0.83	1,062,097	0.82	738,265	0.82	711,279	0.82
						––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Management incentive units

During fiscal year 2012, Wizard granted 2,499,650 Management Incentive Units ("MIU") in Wizard to certain employees of the Attachmate Group. Even though these MIUs are in Wizard, these units are in substance for work performed for the benefit of the Attachmate Group. Therefore, the Attachmate Group records stock-based compensation expense and a related capital contribution for these awards. The fair value for the MIUs was calculated using the fair value of the business based on a market approach using an analysis of comparable companies. Total stock-based compensation expense was US\$9.0m, US\$3.3m and US\$1.6m during the fiscal years ended 31 March 2012, 2013 and 2014, respectively; and US\$0.2m and US\$0.1m for the one month periods ended 30 April 2013 and 2014, respectively. Stock-based compensation expense is included within administrative expense in the Attachmate Group's consolidated statements of comprehensive. The MIU grants vest over 4 years. At 30 April 2014, there was US\$0.5m of total unrecognised compensation expense expected to be recognised over the next year.

		As at 31 March
		2012	2013		2014		2014
		Weighted		Weighted		Weighted		Weighted
		average		average		average		average
		grant date		grant date		grant date		grant date
		fair value		fair value		fair value		fair value
		per unit		per unit		per unit		per unit
	MIUs	US\$	MIUs	US\$	MIUs	US\$	MIUs	US\$
Non-vested at beginning of period	–		1,646,111	5.60	1,139,322	5.73	609,670	5.60
Granted	2,499,650	5.60	67,064	9.00	–	–	–	–
Vested	(853,539)	5.60	(531,938)	5.76	(487,737)	5.60	(40,645)	5.60
Forfeited	–	–	(41,915)	5.60	(41,915) ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––	9.00	–	–
Non-vested end of period	1,646,111	5.60	1,139,322	5.73	609,670	5.60	569,025	5.60
					––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Further information relating to the LCU and MIU awards as at 30 April 2014 are below.

			Fair value
		Non-vested	per share
Award Type	Original date of grant	units	US\$	Remaining vesting period
LCU	1 June 2010	711,279	\$0.82	1 May 2014 – 31 May 2017
MIU	12 September 2011	569,026 –––––––––	\$5.60	1 May 2014 – 11 September 2015
		1,280,305 –––––––––

23. Pension commitments

The Attachmate Group operates three defined benefit plans in Germany under broadly similar regulatory frameworks. There exists three Plans that plans are final salary pension plans, which provide benefits to members in the form of a guaranteed level of pension payable for life in the case of retirement, disability, and death. The level of benefit provided depends on the members' length of service and their salary in the final years leading up to retirement. The plans are generally updated in line with the retail price index on retirement and face similar risks as outlined below. In addition there is one arrangement which relates to a single individual and is an unfunded arrangement presented below as 'Other post retirement obligations'. The majority of benefit payments are from assets designated to fund the pension obligations, which do not qualify as plan assets as they have not been pledged to the plan and are subject to creditors of the Attachmate Group. Plan assets are governed by local regulation. Responsibility for governance of the plans, including investment decisions and contribution schedules, lies with the Attachmate Group,

The amounts recognised in the balance sheet are determined as follows:

			As at
		31 March		30 April
	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000
Present value of funded obligations	18,351	24,262	28,729	29,590
Fair value of plan assets	(5,177)	(5,309)	(6,279)	(6,342)
Deficit of funded plans	–––––––– 13,174	–––––––– 18,953	–––––––– 22,450	–––––––– 23,248
Present value of unfunded obligation	–	–	–	–
Total deficit of defined benefit pension plans	–––––––– 13,174	–––––––– 18,953	–––––––– 22,450	–––––––– 23,248
Fair value of other post retirement obligations	323	350	398	399
Pension liability	–––––––– 13,497	–––––––– 19,303	–––––––– 22,848	–––––––– 23,697

–––––––– –––––––– –––––––– –––––––– The subsequent tables provide a more detailed analysis of the movements in the present value of the pension obligations and the fair value of assets.

			As at
		31 March		30 April
	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000
Change in net defined benefit liability:
Net defined liability at beginning of period	(158)	13,174	18,953	22,450
Acquisition	14,065	–	–	–
Amounts recognised in income	1,133	1,157	1,563	123
Amount recognised in other comprehensive income	(445)	5,356	949	620
Employer contributions	(69)	(149)	(356)	(16)
Benefits paid	(41)	(39)	(86)	(5)
Currency exchange rate (gain) loss	(1,311) ––––––––	(546) ––––––––	1,427 ––––––––	76 ––––––––
Net defined benefit liability at end of period	13,174	18,953	22,450	23,248
	––––––––	––––––––	––––––––	––––––––

			As at
		31 March		30 April
	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000
Change in present value of defined benefit obligation:
Present value of defined benefit obligation at beginning
of period	1,451	18,351	24,262	28,729
Acquisition	17,928	–	–	–
Current service cost	536	522	686	60
Net interest expense on retirement benefit obligations	849	890	932	82
Remeasurement of retirement obligations
Due to changes in demographic assumptions	–	–	–	–
Due to changes in financial assumptions	70	6,081	2,092	1,081
Due to experience	(673)	(792)	(1,116)	(453)
Past service cost	–	–	156	–
Benefits paid	(52)	(50)	(107)	(7)
Currency exchange rate (gain) loss	(1,758)	(740)	1,824	98
Present value of defined benefit obligation at end	––––––––	––––––––	––––––––	––––––––
of period	18,351	24,262	28,729	29,590
	––––––––	––––––––	––––––––	––––––––
			As at
		31 March		30 April
	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000
Change in plan assets:
Fair value of plan assets at beginning of period	1,609	5,177	5,309	6,279
Acquisition	3,863	–	–	–
Settlements	–	–	–	–
Interest income on plan assets	94	188	238	27
Contributions by Attachmate Group	69	149	355	16
Benefits paid	(11)	(11)	(21)	(2)
Currency exchange rate gain (loss)	(447)	(194)	398	22
Fair value of plan assets at end of period	–––––––– 5,177	–––––––– 5,309	–––––––– 6,279	–––––––– 6,342
	––––––––	––––––––	––––––––	––––––––

Main assumptions (rates per annum)

The main assumptions for the valuations of the plans under IAS 19R are set out below.

			As at
	1 April		31 March		30 April
	2011	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Weighted-average assumptions:
Discount rate	5.0%	5.0%	3.7%	3.4%	3.3%
Net return on plan assets	5.0%	5.0%	3.7%	3.4%	3.3%
Rate of salary increase	3.0%	3.0%	2.0%	2.0%	2.0%
Post-retirement pension increases	2.0%	2.0%	2.0%	2.0%	2.0%

Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in the territory. These assumptions translate into an average life expectancy in years for a pension retiring at age 65.

		31 March	30 April
	2013	2014	2014
Retiring at age 65 at the end of the reporting period
Male	18.8	18.9	18.9
Female	22.8	23.0	23.0
Retiring 15 years after the end of the reporting period
Male	18.7	18.8	18.8
Female	23.7	23.8	23.8

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is as follows:

		Impact on defined benefit obligation
	Change in assumption	Increase in obligation	Decrease in obligation
Discount rate	0.50%	Decrease by 10.6%	Increase by 12.4%
Salary growth rate	0.50%	Increase by 2.2%	Decrease by 1.9%
Pension growth rate	0.25%	Increase by 3.4%	Decrease by 3.2%
		Increase by 1 year	Decrease by 1 year
		in assumption	in assumption
Life expectancy		Increase by 2.1%	Decrease by 2.1%

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position.

Through its defined benefit pension plans, the group is exposed to a number of risks, the most significant of which are detailed below:

Asset Volatility: The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets underperform, this will create a deficit. Both plans hold a significant proportion of government and corporate bonds that the Attachmate Group believes offers the best return over the long term, while minimising short term risk and volatility. The government bonds represent investment in German government securities only. The corporate bonds are global securities with an emphasis on Germany.

Changes in bond yields: A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the pledged and unpledged bond holding.

Inflation: Some of the group pension obligations are linked to inflation, and higher inflation will lead to higher liabilities. There is a cap on the level of inflationary increase on one of the plans which protects the plan against extreme inflation. The majority of the plan assets are either unaffected by or loosely correlated with inflation, meaning an increase in inflation will also increase the deficit.

Life Expectancy: The majority of the plans obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans liabilities.

In the case of the defined benefit plans, the Attachmate Group ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long term investments that are in line with the obligations under the pension schemes. In addition to the plan assets outlined above, at 1 April 2011; 31 March 2012, 2013, and 2014; and 30 April 2014 the Attachmate Group had assets valued at US\$nil, US\$13.9m, US\$14.2m, US\$16.0m and US\$16.5m respectively. These assets are designated to fund the pension obligation and do not qualify as plan assets as they have not been pledged to the plan and are subject to the creditors of the Attachmate Group. Within this framework, the Attachmate Group's objective is to match assets to the pension obligations by investing in insurances that match the benefit payments as they fall due and in the appropriate currency. The Attachmate Group actively monitors the performance of the assets to ensure they are matching the expected cash flows arising from the pension obligations. The Attachmate Group has not changed the processes used to manage its risk from previous periods. The assets are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A significant portion of the assets consists of bonds, with additional investments in property and equity. The Attachmate Group believes that bonds offer the best returns over the long term with an acceptable level of risk.

The Attachmate Group sponsors a qualified retirement plan (the "401(k) Plan"). The 401(k) Plan is for all eligible US employees under the provisions of the Internal Revenue Code. Participants may defer a portion of their annual compensation on a pretax basis subject to tax limitations. The 401(k) Plan allows Attachmate Group the flexibility to adjust the match percentage. Any matching contributions the Attachmate Group elects to make under the 401(k) Plan vest ratably over a period of three years.

The Attachmate Group has other retirement plans in certain foreign countries in which it employs personnel. Each plan is consistent with local laws and business practices. During the years ended 31 March 2012, 2013 and 2014 and for the one month periods ended 30 April 2013 and 2014, the Attachmate Group made matching contributions on its 401(k) Plan and other retirement plans and expensed US\$12.0m, US\$10.2m, US\$10.6m, US\$0.8m and US\$0.9m, respectively.

24. Operating lease commitments

The Attachmate Group has a number of lease agreements in respect of properties, vehicles, plant and equipment, for which the payments extend over a number of years:

	31 March	31 March	31 March	30 April
	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000
Commitments under non-cancellable
operating leases:
Within one year	18,404	21,737	24,606	23,257
Between one and five years	33,683	62,803	75,572	69,423
Beyond five years	2,748	67,691	70,339	61,450
Total	–––––––– 54,835	–––––––– 152,231	–––––––– 170,517	–––––––– 154,130
	––––––––	––––––––	––––––––	––––––––

The Attachmate Group leases various offices under non-cancellable operating lease agreements that are included in the table. The leases have various terms, escalation clauses and renewal rights. Some of the offices leases have been sublet to unrelated third parties and the Attachmate Group has not been released from their primary obligations under these leases. The above operating lease payments are presented at their gross amounts, before sublease rental income.

25. Contingent liabilities

Unconditional obligations for contractual commitments and royalties

The agreements the Attachmate Group maintains for certain contractual commitments and royalties expire at various dates until fiscal year 2022. However, generally most of these contracts renew automatically upon expiration unless specifically cancelled within the contract terms. Additionally, under the terms of some contracts, prepayment was required and these are currently reflected as prepaid assets.

The Attachmate Group's future required minimum obligation for contractual commitments and royalties, which represents future contracted payments entered into as a part of the normal course of business that are not recorded as liabilities as of 30 April 2014 are as follows:

		31 March		30 April
	2012	2013	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000
Within one year	17,601	17,874	15,785	15,814
Between one and two years	14,374	4,951	13,421	15,619
Between two and three years	13,919	1,458	9,502	10,359
Thereafter	– ––––––––	– ––––––––	56 ––––––––	56 ––––––––
Total	45,894	24,283	38,764	41,848
	––––––––	––––––––	––––––––	––––––––

In addition to the minimum payments listed above, in certain instances the Attachmate Group also has an obligation to make royalty payments that fluctuates based on the monthly sales of various products. Royalty terms range from a percentage of total sales to a set fee per licence or maintenance sold. The amount incurred under these royalty obligations was US\$24.0m, US\$22.1m, US\$22.7m, US\$0.8m and US\$1.0m for the years ended 31 March 2012, 2013 and 2014 and for the one month periods ended 30 April 2013 and 2014, respectively, and is included within cost of sales.

Legal proceedings

From time to time, the Attachmate Group is a defendant in claims or lawsuits involving matters which are routine to the nature of our business such as claims involving former employees, or claims for infringement of patents. Management is of the opinion that the ultimate resolution of all such matters will not have a material adverse effect on its results of operations, cash flows, or financial position.

Following the announcement of the proposed acquisition of Novell, certain of Novell's shareholders filed class action lawsuits challenging the proposed transaction alleging the Novell directors breached their fiduciary duties to the Novell shareholders. During fiscal year 2012, the Attachmate Group accrued US\$5.0m for this claim but during fiscal year 2013 certain of these lawsuits were dismissed and others were settled. As a result, during fiscal year 2013, the Attachmate Group reduced the US\$5.0m accrual to US\$0.4m, which is the settlement amount paid in fiscal year 2014. There are no further claims against the Attachmate Group regarding this matter.

The Attachmate Group inherited the outstanding litigation that Novell had at the time of the acquisition.

In 2004, Novell filed an antitrust complaint against Microsoft related to unfair trade practices committed by Microsoft which significantly damaged the value of WordPerfect during the time period that Novell owned and marketed the WordPerfect products. Microsoft's initial Motion to Dismiss was granted in part and denied in part. Both Microsoft and Novell appealed to the US 4th Circuit Court of Appeals. On 15 October 2007, the US 4th Circuit Court of Appeals affirmed the District Court's ruling allowing Novell to proceed with its claims against Microsoft. Microsoft's petition to the US Supreme Court was rejected in March 2008. After extensive discovery in the case, Novell and Microsoft filed certain Motions for Summary Judgment. On 30 March 2010, the District Court issued an order granting Microsoft's Motion for Summary Judgment as to the issue of whether Novell had previously transferred its claims now being asserted against Microsoft. The Court determined that a previous agreement by Novell and related to the DR DOS business sold to Caldera in 1995, included any claims related to the "Operating System Market" including the claims Novell asserted against Microsoft. Novell filed a notice of appeal to the US Fourth Circuit Court of Appeals and the case was fully briefed. On 3 May 2011, the Fourth Circuit Court of Appeals, reversed and remanded the District Court's decision and held that Novell's claim as to Count 1 had not been transferred to Caldera and that substantial issues of fact remained relative to such claim. Accordingly, the case was remanded to the District Court for trial. Jury trial began in Salt Lake City on 17 October 2011 and concluded 16 December 2011 with a hung verdict. Microsoft renewed its Rule 50 motion for a Judgment as a Matter of Law ('JMAL'). Briefing on the Motion for JMAL was filed 9 March 2012 and a hearing was held on 7 June 2012. Both parties participated in mediation before a magistrate judge on 24 April 2012. The Court granted Microsoft's motion to dismiss the lawsuit. Novell appealed that dismissal. On appeal the dismissal was upheld by the appellate court and the US Supreme Court denied a higher court review effectively upholding the dismissal of all of Novell's claims against Microsoft. This matter is resolved.

Tax Contingencies

The Attachmate Group's tax filings for various periods are subjected to audit by tax authorities in jurisdictions in which the Attachmate Group does business. These audits may result in assessments of additional taxes that are subsequently resolved with the authorities or potentially through the courts. The Attachmate Group believes that they have adequately provided for any assessments that could result from those proceedings where it is more likely than not that the Attachmate Group will pay some amount.

26. Related party transactions

Transactions between Attachmate and its subsidiaries have been eliminated on consolidation. The remuneration of key management personnel of the Attachmate Group (which is defined as members of the Executive Committee) including executive directors is set out in note 22.

Advisors

The Attachmate Group has an advisory agreement with certain private equity firms (the 'Advisors') that became effective with the Novell acquisition on 27 April 2011. The Attachmate Group's current required payment to the Advisors is approximately US\$2.0m per year. The Attachmate Group is also responsible for reimbursement to the Advisors for any reasonable out-of-pocket expenses. Advisory fees of approximately US\$1.9m, US\$2.0m, US\$2.0m, US\$0.2m and US\$0.2m is included in the line item, 'administrative expense' in the accompanying consolidated statements of comprehensive income for the years ended 31 March 2012, 2013, 2014 and for the one month periods ended 30 April 2013 and 2014.

This new agreement required payment of US\$24.2m in fees and expenses to the Advisors for financial services provided as part of the Novell acquisition closing that was finalised in the year ended 31 March 2012 (note 27). During the year ended 31 March 2013, the Attachmate Group paid the Advisors US\$10.5m for financial services directly related to the new financing (note 13). These financial services fees are included in the line item, 'administrative expense' and 'exceptional items' in the accompanying consolidated statements of comprehensive income.

The Attachmate Group had US\$0.2m payable to Advisors for advisory services as at 1 April 2011, 31 March 2012, 2013 and 2014 and US\$0.1m as at 30 April 2014.

Novell Intellectual Property Holdings, Inc.

Novell Intellectual Property Holdings, Inc. ("NIPH") is a separate company also owned by Wizard, TAG's parent, but NIPH is not part of the TAG consolidated entity. NIPH is a separate holding company without any operations. TAG is serving as NIPH's billing agent and as of 30 April 2014, US\$36 thousand has been advanced to pay certain legal and patent maintenance fees on behalf of NIPH. As this service is insignificant, the service is being performed without charge to NIPH and likewise NIPH is not charging TAG interest on the cash advance. The cash advance is included in the line item, trade and other payables in the current liability section of the consolidated statement of financial position.

27. Business combinations

On 27 April 2011 the Attachmate Group acquired 100 per cent. of the stock of Novell, a leader in intelligent workload management that gave Attachmate rights to the Novell and SUSE brands as well as added to the NetIQ product family. Under the terms of the acquisition, all the stock of Novell was acquired for a total of US\$2,216.9m comprised of US\$2,118.9m in cash (of the cash acquired, US\$1,385.9m was utilised for the purchase) and US\$97.9m in equity consideration. The fair value of equity that was contributed was based on the contribution of 16,055,930 Novell Inc. shares at the acquisition price of US\$6.10 per share. During the year ending 31 March 2012, the Attachmate Group incurred US\$8.1m in acquisition costs that were expensed and that are shown as a component of the line item, 'administrative expenses' and 'exceptional items' in the consolidated statements of comprehensive income.

The transaction was financed with cash on hand, new cash borrowings, cash contributions by the Attachmate Group shareholders, and from equity contributions from an existing Novell shareholder. The results of Novell's operations have been included in the consolidated financial statements beginning 27 April 2011.

All identifiable assets and liabilities were assigned a portion of the cost of acquisition based on their respective estimated fair values. The determination of fair value is a critical and complex calculation that involves significant assumptions and estimates. These assumptions and estimates were based on management's best judgments. No residual value has been assumed for any of the acquired intangible assets.

The following table summarises the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition.

	Carrying value
	at acquisition	Fair value
	US\$'000	US\$'000
Intangible assets	25,864	437,694
Property, plant and equipment	148,516	161,774
Deferred tax assets	316,805	339,811
Receivables and other assets	197,543	195,229
Cash and cash equivalents	1,503,489	1,503,489
Trade and other payables	(209,934)	(191,726)
Current tax liabilities	(179,786)	(98,875)
Deferred tax liabilities	(19,310)	(263,044)
Deferred income	(535,856) –––––––––	(495,667) –––––––––
Net assets	1,247,331	1,588,685
Goodwill (note 7)	–––––––––	628,185 –––––––––
Consideration		2,216,870 –––––––––
Consideration satisfied by:
Cash		2,118,929
Fair value of equity exchange		97,941
Total consideration		––––––––– 2,216,870
		–––––––––

As part of the acquisition which included shares as consideration, there was a share capital reorganisation involving \$230m of shareholder contribution and a retirement of brought forward preference shares that were classified as a liability.

The intangible assets acquired as part of the acquisition can be analysed as follows:

	Fair value
	US\$'000
Customer relationships	205,196
Developed technology	94,867
In process research and development	44,703
Non-competition agreements	11,700
Trade name and trademarks – indefinite lived	76,765
Trade name and trademarks – finite lived	4,463 –––––––––
	437,694

The value of the goodwill represents the value of the assembled workforce at the time of the acquisition with specific knowledge and technical skill. It also represents the prospective future economic benefits that are expected to accrue from enhancing the portfolio of products available to Attachmate's existing customer base with those of the acquired business. Goodwill is not tax deductible. It is management's belief that through this acquisition that the open source, identity management, security management and collaboration products developed by Novell are a valuable addition to the Attachmate Group's product lines and will help the Attachmate Group remain competitive and increase its revenue.

–––––––––

The Attachmate Group has used acquisition accounting for the purchase, and the resulting goodwill of US\$628.2m has been capitalised. There are no contingent consideration payments.

From the date of acquisition to 31 March 2012 the acquisition contributed US\$713.1m of revenue and US\$123.5m of operating income. Had the acquisition of occurred at the beginning of the accounting period on 1 April 2011, the Attachmate Group would have recognised approximately US\$53.5m of additional revenue for the year ending 31 March 2012.

28. Principal subsidiaries

Details of principal subsidiaries are provided below:

Legal Name	Country	Principal Activities
Attachmate Corporation	US	Development, sale and support of software
NetIQ Corporation	US	Development, sale and support of software
Novell, Inc	US	Development, sale and support of software
SUSE LLC	US	Development, sale and support of software
Novell Holdings, Inc.	US	Holding company
Novell Canada, Ltd.	Canada	Sale and support of software
Attachmate Ireland Limited	Ireland	Sale and support of software
Novell Ireland Software Limited	Ireland	Development, sale and support of software
NetIQ Ireland Limited	Ireland	Holding company
NetIQ Europe Limited	Ireland	Sale and support of software
Novell Software International Limited	Ireland	Holding company
Novell Ireland Real Estate Limited	Ireland	Holding company
Novell Cayman Software (NCS)	Ireland	Holding company
Novell Cayman Software International	Ireland	Holding company
SUSE Linux Holdings Limited	Ireland	Holding company
Attachmate Group Austria GmbH	Austria	Sale and support of software
Attachmate Group Belgium BV	Belgium	Sale and support of software
NOVL Czech s.r.o.	Czech	Sale and support of software
SuSE Linux s.r.o. (Czech)	Czech	Development, sale and support of software
Attachmate Group Denmark A/S	Denmark	Sale and support of software
Attachmate Group France SARL	France	Sale and support of software
Novell Holding Deutschland GmbH	Germany	Holding company
Attachmate Group Germany GmbH	Germany	Sale and support of software
SuSE Linux GmbH	Germany	Development, sale and support of software
SuSE Linux Products GmbH	Germany	Development, sale and support of software
Attachmate Group Italy Srl	Italy	Sale and support of software
Attachmate Group Netherlands BV	Netherlands	Sale and support of software
Novell Portugal Informatica Lda.	Portugal	Sale and support of software
Attachmate Group South Africa
(Proprietary) Limited	South Africa	Sale and support of software
Attachmate Group Spain S.L.	Spain	Sale and support of software
Attachmate Group Sweden AB	Sweden	Sale and support of software
Attachmate Group Schweiz AG	Switzerland	Sale and support of software
Attachmate Teknoloji Satis ve
Pazarlama Ltd. Sti. (Turkey)	Turkey	Sale and support of software
Novell United Kingdom Ltd	UK	Sale and support of software
Attachmate Sales UK Ltd	UK	Sale and support of software
Attachmate Group Australia Pty. Ltd	Australia	Sale and support of software
Novell Software (Beijing) Ltd.	China	Development, sale and support of software
Novell Hong Kong Limited	Hong Kong	Sale and support of software
Novell Software Development
(India) Private Limited	India	Development, sale and support of software
Novell Japan Ltd.	Japan	Sale and support of software
NetIQ KK (Japan)	Japan	Sale and support of software
Novell Korea Co., Ltd.	Korea	Sale and support of software
Novell Corporation (Malaysia) Sdn Bhd	Malaysia	Sale and support of software
Novell New Zealand Limited	New Zealand	Sale and support of software
Attachmate Group Singapore Pte Ltd	Singapore	Sale and support of software
Novell (Taiwan) Co., Ltd.	Taiwan	Sale and support of software
Attachmate Sales Argentina SRL	Argentina	Sale and support of software
Novell do Brasil Software Ltd.	Brazil	Sale and support of software
Attachmate Mexico S.A. de C.V.	Mexico	Sale and support of software

29. Transition to IFRS

For the purposes of this IFRS Financial Information Table, the Attachmate Group's date of transition to IFRS is 1 April 2011 and all comparative information in this financial information has been restated to reflect the Attachmate Group's adoption of IFRS, except where otherwise required or permitted by IFRS 1.

IFRS 1 requires an entity to comply with each IFRS effective at the reporting date for its first IFRS financial statements. As a general principle, IFRS 1 requires the standards effective at the reporting date to be applied retrospectively; however, retrospective application is prohibited in some areas. In addition, there are a number of optional exemptions from full retrospective application of IFRS within IFRS.

The adoption of IFRS did not have a material effect on the Attachmate Group's cash flow statement, so no reconciliation of cash flow has been included.

The tables below show the impact of IFRS on net assets at 1 April 2011 as well as the following:

• a) Statements of financial position reconciliations as at 31 March 2012 and 2013
• b) Statements of comprehensive income reconciliations for years ended 31 March 2012 and 2013
• c) A discussion of individual adjustments on line items on the statements of financial position and comprehensive income

(i) Debt issuance costs

Under US GAAP, debt issuance costs are capitalised and recognised on a straight-line basis over the term of the facility. In an extinguishment, creditor fees are expensed and debt issuance costs are capitalised. IFRS does not distinguish between creditor fees and debt issuance costs in an extinguishment, as both are expensed. Therefore, under IFRS, the Attachmate Group has expensed certain debt issuance costs that had been capitalised under US GAAP and adjusted the subsequent year's amortisation of capitalised debt issuance costs.

(ii) Sale lease-back

In fiscal year 2013, the Attachmate Group sold property and land associated with its Provo, Utah campus. Simultaneously, the Attachmate Group leased the property back from the buyer. Under US GAAP, the gain on the sale-leaseback transaction was deferred and amortised over the leaseback term period. Under IFRS, the gain on the sale-leaseback transaction was recognised immediately as the lease was an operating lease and the sale was executed at the fair value of the asset.

(iii) Share-based payments

Wizard issued stock awards to certain employees of the Attachmate Group. As these awards are in substance for work performed for the benefit of the Attachmate Group, stock-based compensation expense and the related capital contribution is recorded for these awards. Under US GAAP, this expense is recognised over the vesting period using the straight line method. Under IFRS, such payments are required to be recognised using a graded-vesting schedule. Accordingly, the Attachmate Group has adjusted the stock-based compensation expense to reflect graded vesting.

(iv) Fair value of deferred revenue

Upon acquisition of Novell in April 2012, the Attachmate Group recognised deferred revenue as a component of the business combination. Under US GAAP, in accordance with the Attachmate Group's historical estimation methodology and accounting policy, the Attachmate Group determined the fair value of deferred revenue using an income valuation approach resulting in a reduction to the book value of approximately 55 per cent. Under IFRS and in order to conform to the potential acquiror's historical estimation methodology and accounting policy, the Attachmate Group determined the fair value of deferred revenue using a market valuation approach resulting in a reduction to the book value of approximately 5 per cent. Consequently, the amount of revenue, deferred revenue and goodwill is greater under IFRS when compared to US GAAP.

(v) Held for sale – property, plant and equipment

In March 2012, the Attachmate Group classified its Bracknell, UK properties as held for sale. Under IFRS, the Attachmate Group assessed the assets held for sale for impairment based upon the lower of carrying value and fair value less cost to sell. This assessment resulted in an impairment to the carrying value of the Bracknell, UK properties under IFRS. As such, the Attachmate Group recorded an impairment charge for the year ended 31 March 2012 and adjusted the loss on disposal recorded under US GAAP for the year ended 31 March 2013.

(vi) Impairment of indefinite long-lived assets – trademarks

Under IFRS, indefinite long lived assets require a full impairment test on annually based discounted cash flows. US GAAP does not prescribe the same degree of detail to annual impairment tests. In adopting IFRS and conducting full impairment tests on this described basis, it has identified the need for impairments or further impairments.

(vii) Income taxes

Under US GAAP, any income tax effects resulting from intragroup profits are deferred at the seller's tax rate and recognised upon sale to a third party or other recovery. IFRS requires the recording of deferred taxes based on the buyer's tax rate at the time of the initial transaction, resulting in a revision to deferred taxes for an intragroup transfer during fiscal year 2013. All deferred tax amounts are presented as non-current under IFRS.

Other changes to deferred taxes are a result of the adjustments necessary to transition to IFRS.

(viii) Pensions

Under US GAAP, the Attachmate Group had delayed recognition of actuarial gains and losses through the use of the corridor approach. Under IFRS, actuarial gains and losses are recognised immediately in other comprehensive income and are not subsequently recycled through the consolidated statement of comprehensive income. Additionally, the component of pension expense related to the expected return on plan assets has been adjusted to reflect the discount rate under IFRS, rather than the expected return on plan assets under US GAAP.

(ix) Debt versus equity

As of 1 April 2011, the Attachmate Group had outstanding convertible preferred stock that was classified under US GAAP as equity. Under IFRS, the Attachmate Group classified the preferred stock as a liability due to certain redemption features outside of the Attachmate Group's control. As such, accretion of preferred stock dividends during the year ended 31 March 2012 were recorded as an expense in the consolidated statement of comprehensive income as opposed to being recognised as a component of equity under US GAAP.

(x) Goodwill

Upon acquisition the Attachmate Group made an estimate of the fair value of the deferred tax liabilities. Under IFRS the fair value of such liabilities gives rise to the need for additional deferred tax liabilities in respect of certain intangibles. In addition, upon acquisition of Novell in April 2011, the group made an estimate of a liability associated with a litigation case. Under IFRS, developments in the negotiation of such liabilities are treated as new information relating to events and circumstances that existed at the point of acquisition. As such where these developments arise within the 'measurement period', the valuation of the liability is revised to reflect this new information with a corresponding adjustment to goodwill.

(xi) IFRS 1 exemptions

As permitted by IFRS 1, the cumulative translation adjustments and pension adjustments in accumulated other comprehensive loss under US GAAP have been reset to zero under IFRS at 1 April 2011.

(xii) Presentation and disclosure

Certain reclassifications, such as debt issuance costs and deferred income taxes, have been made to US GAAP financial statement presentation to conform to IFRS financial statement presentation.

) \$'000 (US	–––––––––– US GAAP	Share based payments ) (iii	Income taxes ) (vii	y ) Debt vs. (ix equit	Goodwill ) (x	ptions ) IFRS 1 (xi Exem	and Presentation disclosure ) (xii	IFRS ––––––––––
pment qui gible assets y, plant and e Non-current assets Deferred tax assets Other intan Goodwill pert Pro	– ,867 ,726 ,074 277 140 4						,223 18	,726 ,074 ,867 ,223 140 4 277 18
Other non-current assets	–––––––––– ,362 ,695 8 431	–––––––––– –	–––––––––– –	–––––––––– –	––––––––––	–––––––––– –	) –––––––––– ,152 ,071 (3 15	–––––––––– ,543 ,433 446 5
Trade and other receivables Other current assets Current assets	,402 ,514 80 16		,805 2				) ,660 ,514 4 (16	– ,867 87
quivalents Cash and cash e Restricted cash	,279 141 144							,279 141 144
Total assets	–––––––––– –––––––––– –––––––––– ,336 ,698 672 241	–––––––––– – –––––––––– –	–––––––––– –––––––––– ,805 ,805 2 2	–––––––––– – –––––––––– –	–––––––––– ––––––––––	–––––––––– – –––––––––– –	) –––––––––– –––––––––– ,854 ,217 3 (11	–––––––––– –––––––––– ,720 ,287 232 678
payables Current liabilities Trade and other	,404 53	––––––––––	––––––––––	––––––––––	––––––––––	––––––––––	––––––––––	–––––––––– ,404 53
gs Provisions Borrowin	,916 324 59						) ,152 (3	,764 324 56
Deferred income – current Current tax liabilities	–––––––––– ,355 ,961 10 115	––––––––––	–––––––––– ,805 2	––––––––––	––––––––––	––––––––––	––––––––––	,160 –––––––––– ,961 13 115
Non-current liabilities	,960 239	–	,805 2	–		–	) ,152 (3	,613 239
Deferred income – non-current provisions g-term Lon	,207 339 19							,207 339 19
y g-term derivative liabilit y Preferred stock liabilit y Pension liabilit Lon	– – ,492 7			,775 41				,492 – ,775 7 41
Other non-current liabilities Deferred tax liabilities gs Borrowin	,138 ,928 ,645 550 29 1		– –	–		–	) ,718 ,087 (2 9	,420 ,015 ,645 39 547 1
Total liabilities	–––––––––– –––––––––– ,749 ,709 608 848	–––––––––– – ––––––––––	–––––––––– – –––––––––– ,805 2	–––––––––– –––––––––– ,775 ,775 41 41	–––––––––– ––––––––––	–––––––––– – ––––––––––	–––––––––– –––––––––– ,369 ,217 6 3	–––––––––– –––––––––– ,506 ,893 656 896
Net assets	) –––––––––– –––––––––– ,011 (176	– –––––––––– –	–––––––––– –	) –––––––––– ,775 (41	––––––––––	– –––––––––– –	–––––––––– –	) –––––––––– ,786 (217
premium pital and Preferred share ca pital Share ca y quit E	,775 41	––––––––––	––––––––––	) –––––––––– ,775 (41	––––––––––	––––––––––	––––––––––	–––––––––– –
gn currency translation deficit ption reserve Retained deficit Share o Forei	) – – ,104 ,892 (220 1	) ,196 ,196 1 (1				) ,318 ,892 2 (1		) – ,196 ,982 – (218 1
plans ponent of defined benefit Unrealised com y quit Total e	) –––––––––– –––––––––– 426 ,011 (176	–––––––––– – ––––––––––	–––––––––– – ––––––––––	) –––––––––– –––––––––– ,775 (41	–––––––––– ––––––––––	) –––––––––– – –––––––––– (426	–––––––––– – ––––––––––	) – –––––––––– ,786 –––––––––– (217

168

Consolidated statement of financial position as of 1 April 2011

of ment e at st ed at d i onsol C	al nanci i f	on as of i t posi	arch M 1 3	2 1 0 2
) \$'000 (US	–––––––––– US GAAP	Debt issuance costs ) (i	Share based payments ) (iii	Revenue recognition ) (iv	f g-lived assets ) pairment o (v lon Im	taxes Income ) (vii	Pension ) (viii	y ) Debt vs. (ix equit	Goodwill ) (x	ptions ) IFRS 1 (xi Exem	) and Presentation disclosure (xii	IFRS ––––––––––
pment Investment in associates qui gible assets y, plant and e Non-current assets Assets held for sale Deferred tax assets Other intan Goodwill pert Pro	,769 ,899 ,044 ,803 ,723 ,051 700 37 47 14 473 111	,518 16		,300 ,804 156 27	) ,177 (6				,983 48		,130 120	,052 ,722 ,044 ,803 ,723 ,503 906 14 473 37 105 211
g-term income tax receivable pension assets Other non-current assets g-term Lon Lon	–––––––––– ,540 ,047 ,534 ,410 17 10 47 ,460 1	) ) –––––––––– ,241 ,723 (26 (43	–––––––––– –	–––––––––– ,104 184	) –––––––––– ,177 (6	–––––––––– –	) ) –––––––––– ,651 ,651 (3 (3	–––––––––– –	–––––––––– ,983 48	–––––––––– –	–––––––––– ,130 120	,889 –––––––––– ,076 ,047 ,293 10 4 ,177 13 1
Trade and other receivables quivalents Other current assets Cash and cash e Current assets Restricted cash	,718 ,787 ,869 975 180 60 375					,029 10					) ,298 ,787 (60 33	– ,869 ,045 975 224 375
Total assets	–––––––––– –––––––––– –––––––––– ,349 ,759 618 ,078 2	) –––––––––– – –––––––––– ,723 (26	–––––––––– – –––––––––– –	–––––––––– – –––––––––– ,104 184	) –––––––––– – –––––––––– ,177 (6	–––––––––– –––––––––– ,029 ,029 10 10	) –––––––––– – –––––––––– ,651 (3	–––––––––– – –––––––––– –	–––––––––– – –––––––––– ,983 48	–––––––––– – –––––––––– –	) –––––––––– ,489 –––––––––– ,641 (27 92	–––––––––– ,889 –––––––––– ,965 600 ,377 2
Trade and other receivables Deferred income – current Current tax liabilities Current liabilities gs Provisions Borrowin	–––––––––– ,784 ,469 ,342 ,945 ,003 134 104 2 21 463	––––––––––	––––––––––	–––––––––– ,678 49	––––––––––	–––––––––– ,107 34	––––––––––	––––––––––	––––––––––	––––––––––	––––––––––	–––––––––– ,784 ,576 ,020 ,945 ,003 134 104 36 21 513
Non-current liabilities	,543 726	–––––––––– –	–––––––––– –	–––––––––– ,678 49	–––––––––– –	–––––––––– ,107 34	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– ,328 810
Deferred income – non-current y g-term derivative liabilit Other non-current liabilities Deferred tax liabilities provisions y Pension liabilit gs g-term Borrowin Lon Lon	– –––––––––– ,148 ,180 ,965 ,175 ,761 ,605 239 7 4 17 25 ,023 1			,108 23		) ,078 (24	) ,651 (3		,114 41		– ,641 92	,180 ,073 ,175 ,497 ,755 ,527 ,761 4 263 7 13 ,023 133 1 1
Total liabilities	–––––––––– ,834 ,377 ,317 ,044 2 1	–––––––––– – –––––––––– –	–––––––––– – –––––––––– –	–––––––––– –––––––––– ,786 ,108 72 23	–––––––––– – –––––––––– –	) –––––––––– –––––––––– ,078 ,029 (24 10	) ) –––––––––– –––––––––– ,651 ,651 (3 (3	–––––––––– – –––––––––– –	–––––––––– –––––––––– ,114 ,114 41 41	–––––––––– – –––––––––– –	–––––––––– –––––––––– ,641 ,641 92 92	–––––––––– –––––––––– ,296 ,968 ,446 ,257 2 1
Net assets	–––––––––– –––––––––– ,382 34	) –––––––––– ,723 (26	–––––––––– –	–––––––––– ,318 111	) –––––––––– ,177 (6	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– ,869 7	–––––––––– –	–––––––––– –	–––––––––– ,669 120
gn currency translation deficit ponent of defined ption reserve gs Unrealised com Retained earnin pital Share ca Share o y quit Forei E	) – ,542 ,787 ,933 6 37 (10	) –––––––––– ,723 (26	) –––––––––– (318 318	–––––––––– ,318 111	) –––––––––– ,177 (6	–––––––––– –	–––––––––– 52	) –––––––––– 39 (39	–––––––––– ,869 7	) –––––––––– ,318 ,892 2 (1	––––––––––	) –––––––––– – ,869 ,679 ,263 6 126 (12
plans benefit	–––––––––– 478	––––––––––	––––––––––	––––––––––	––––––––––	––––––––––	) –––––––––– (52	––––––––––	––––––––––	) (426 ––––––––––	––––––––––	– ––––––––––
parent Owners of the	–––––––––– ,166 34	) –––––––––– ,723 (26	– ––––––––––	–––––––––– ,318 111	) –––––––––– ,177 (6	– ––––––––––	– ––––––––––	– ––––––––––	–––––––––– ,869 7	– ––––––––––	– ––––––––––	–––––––––– ,453 120
g interests Non-controllin y quit Total e	–––––––––– –––––––––– 216 ,382 34	) –––––––––– ,723 (26	–––––––––– –	–––––––––– ,318 111	) –––––––––– ,177 (6	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– ,869 7	–––––––––– –	–––––––––– –	216 –––––––––– ,669 120
		––––––––––	––––––––––	––––––––––	––––––––––	––––––––––	––––––––––	––––––––––	––––––––––	––––––––––	––––––––––	––––––––––

ment e at st ed at d i onsol C	preh m co of	nco ve i ensi	year end me	arch M 1 g 3 n i	2 1 0 2
) \$'000 (US	US GAAP	Debt issuance costs ) (i	Share based payments ) (iii	recognition Revenue ) (iv	f g-lived assets ) pairment o (v lon Im	Income taxes ) (vii	Pension ) (viii	y ) Debt vs. (ix equit	Goodwill ) (x	ptions ) IFRS 1 (xi Exem	and Presentation disclosure ) (xii	IFRS
Cost of sales Revenue	) –––––––––– ,224 ,847 (179 833			,126 180	) ,337 (1						,337 13	) –––––––––– ,350 ,847 ,013 (167 1
g and distribution costs Research and develo profit Gross Sellin	) –––––––––– ,129 ,377 653 (345	–––––––––– –	–––––––––– –	–––––––––– ,126 180	) ) –––––––––– ,337 ,549 (1 (1	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	) –––––––––– ,337 ,663 13 (7	) –––––––––– ,503 ,341 (354 845
pment pense Administrative ex expense	) ) ,566 ,360 (244 (113		) ,385 (3		) ) ,668 (623 (2				) ,824 (4		) ,674 (5	) ) ,234 ,866 (247 (127
g profit ysed as: peratin Anal O	) –––––––––– ,678 (49	–––––––––– –	) –––––––––– ,385 (3	–––––––––– ,126 180	) –––––––––– ,177 (6	––––––––––	–––––––––– –	–––––––––– –	) –––––––––– ,824 (4	––––––––––	–––––––––– –	–––––––––– ,062 116
g profit before exceptional items ptional items peratin Exce O	) ,686 ,008 42 (91	–	) ,385 (3	,126 180	) – ,177 (6	–	–	–	) ,824 (4	–	–	) ,925 ,863 213 (97
g profit peratin O	) –––––––––– ,678 (49	–––––––––– –	) –––––––––– ,385 (3	–––––––––– ,126 180	) –––––––––– ,177 (6	–––––––––– –	–––––––––– –	–––––––––– –	) –––––––––– ,824 (4	–––––––––– –	–––––––––– –	–––––––––– ,062 116
pre-exceptional ptional Finance costs – exce Finance costs –	) ) –––––––––– ,546 ,643 (93 (5	) –––––––––– ,952 ,711 (50 7	––––––––––	––––––––––	––––––––––	––––––––––	––––––––––	) –––––––––– (383	––––––––––	––––––––––	––––––––––	) ) –––––––––– ,218 ,595 (86 (56
Finance income Finance costs	) –––––––––– ,189 673 (99	) –––––––––– ,241 (43	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	) –––––––––– (383	–––––––––– –	–––––––––– –	–––––––––– –	) –––––––––– ,813 673 (142
Share of loss of associates accounted for usin , net Finance costs	) –––––––––– ,516 (98	) –––––––––– ,241 (43	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	) –––––––––– (383	–––––––––– –	–––––––––– –	–––––––––– –	) –––––––––– ,140 (142
y quit g the e pense, net method Other ex	) ) (899 (413											) ) (899 (413
Loss before tax Taxation	) –––––––––– ,506 ,949 (149 37	) –––––––––– ,518 ,241 16 (43	) –––––––––– ,385 (3	) –––––––––– ,126 ,808 180 (68	) –––––––––– ,177 (6	–––––––––– –	–––––––––– –	) –––––––––– (383	) –––––––––– ,824 ,693 (4 12	–––––––––– –	–––––––––– –	) ) –––––––––– ,390 ,648 (27 (1
year Loss for the Other com	) –––––––––– ,557 (111	) –––––––––– ,723 (26	) –––––––––– ,385 (3	–––––––––– ,318 111	) –––––––––– ,177 (6	–––––––––– –	–––––––––– –	) –––––––––– (383	–––––––––– ,869 7	–––––––––– –	–––––––––– –	) –––––––––– ,038 (29
) on defined profit or loss prehensive loss: Items that will not be (losses reclassified to gains Actuarial benefit	52											52
y quentl y translation differences profit or loss y be subse plans pension reclassified to Items that ma Currenc	) ,679 (12											) ,679 (12
prehensive loss year Other com for the	) –––––––––– ,627 (12	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	–––––––––– –	) –––––––––– ,627 (12
prehensive loss Total com	) –––––––––– ,184 –––––––––– (124	) –––––––––– ,723 (26	) –––––––––– ,385 (3	–––––––––– ,318 111	) –––––––––– ,177 (6	–––––––––– –	–––––––––– –	) –––––––––– (383	–––––––––– ,869 7	–––––––––– –	–––––––––– –	) –––––––––– ,665 (41
g interests parent – Owners of the – Non-controllin Attributable to:	) ,400 216 (124	) –––––––––– ,723 (26	) –––––––––– ,385 (3	–––––––––– ,318 111	) –––––––––– ,177 (6	–––––––––– –	–––––––––– –	) –––––––––– (383	–––––––––– ,869 7	–––––––––– –	–––––––––– –	) –––––––––– 216 ,881 (41
prehensive loss Total com	) –––––––––– ,184 –––––––––– (124	) –––––––––– –––––––––– ,723 (26	) –––––––––– –––––––––– ,385 (3	–––––––––– –––––––––– ,318 111	) –––––––––– –––––––––– ,177 (6	–––––––––– – ––––––––––	–––––––––– – ––––––––––	) –––––––––– –––––––––– (383	–––––––––– ,869 –––––––––– 7	–––––––––– – ––––––––––	–––––––––– – ––––––––––	) –––––––––– –––––––––– ,665 (41

of ment e at st ed at d i onsol C	al nanci i f	on as of i t posi	M 1 3	3 1 0 2 arch
		Debt issuance costs	leaseback Sale-	Share based payments	Im Revenue recognition	f g-lived assets pairment o lon	of pairment trademarks Im	Income taxes	Pension	y Debt vs. equit	Goodwill	ptions IFRS 1 Exem	and Presentation disclosure
Non-current assets ) (US\$'000	US GAAP ––––––––––	(i)	(ii)	(iii)	(iv)	(v)	(vi)	(vii)	(viii)	(ix)	(x)	(xi)	(xii)	IFRS ––––––––––
pment qui gible assets perty, plant and e Other intan Goodwill Pro	700,769 367,075 32,753				156,300		) (2,571				48,983			906,052 364,504 32,753
Assets held for sale Deferred tax assets	– 121,618	1,257	) (4,199		8,827		982						106,938	– 235,423
g-term income tax receivable g-term pension assets Other non-current assets Investment in associates Lon Lon	18,272 17,866 10,047 6,837	) (3,291							) (3,663					18,272 10,047 3,546 14,203
	1,275,237	) (2,034	) (4,199	–	165,127	–	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (1,589	–	) (3,663	–	48,983	–	106,938	1,584,800
Trade and other receivables quivalents Other current assets Cash and cash e Current assets Restricted cash	91,930 137 160,229 168,311							9,254					) (91,930 36,241	213,806 – 137 160,229
	420,607	–	–	–	–	–	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –	9,254	–	–	–	–	) (55,689	374,172
Total assets	1,695,844	) (2,034	) (4,199	–	165,127	–	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (1,589	9,254	) (3,663	–	48,983	–	51,249	1,958,972
Deferred income – current payables Current tax liabilities Current liabilities Trade and other gs Provisions Borrowin	– 126,848 115,799 3,699 470,598				17,640		–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––	29,947						126,848 115,799 3,699 29,947 488,238
	716,944	–	–	–	17,640	–	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –	29,947	–	–	–	–	–	764,531
Deferred income – non-current Non-current liabilities Deferred tax liabilities g-term provisions y Pension liabilit gs Borrowin Lon	248,242 – 4,018 22,966 1,322,326				5,469				) (3,663		31,062		– 51,249	4,018 1,322,326 253,711 19,303 82,311
Other non-current liabilities	33,460		) (10,993				–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––	) (17,574						4,893
Total liabilities	1,631,012 2,347,956	– –	) ) (10,993 (10,993	– –	5,469 23,109	– –	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– – –	) (17,574 12,373	) ) (3,663 (3,663	– –	31,062 31,062	– –	51,249 51,249	1,686,562 2,451,093
Net assets	) (652,112	) (2,034	6,794	–	142,018	–	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (1,589	) (3,119	–	–	17,921	–	–	) (492,121
gn currency translation deficit ponent of defined ption reserve Retained deficit Unrealised com pital Share ca Share o y quit Forei E	) ) – 8,566 (651,025 (7,136	) (2,034	6,794	) (1,444 1,444	142,018	–	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (1,589	) (3,119	) (3,342	) 39 (39	– 17,921	) (1,892 2,318		) ) – (9,028 7,161 (490,653
plans benefit	) (2,916						–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––		3,342			) (426		–
g interests parent Owners of the Non-controllin	) 399 (652,511	) (2,034	6,794	–	142,018	–	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (1,589	) (3,119	–	–	17,921	–	–	) (492,520 399
y quit Total e	) (652,112	) (2,034	6,794	–	142,018	–	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (1,589	) (3,119	–	–	17,921	–	–	) (492,121

of ment e at st ed at d i onsol C	preh m co	nco ve i ensi	year end me	1 g 3 n i	1 0 2 arch M	3
		Debt			Im	f pairment o	pairment Im						Presentation
) (US\$'000	US GAAP	issuance costs (i)	leaseback Sale- (ii)	Share based payments (iii)	Revenue recognition (iv)	g-lived assets (v) lon	of trademarks (vi)	Income taxes (vii)	Pension (viii)	y (ix) Debt vs. equit	Goodwill (x)	ptions (xi) IFRS 1 Exem	and disclosure (xii)	IFRS
Cost of sales Revenue	) –––––––––– 946,106 (169,466		2,292		49,677	1,337							9,676	) –––––––––– 995,783 (156,161
profit Gross	776,640	–	2,292	–	49,677	1,337	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –	–	–	–	–	–	9,676	839,622
g and distribution costs Sellin	) (342,995		2,612			1,549	) (2,571						) (5,741	) (347,146
pment expense pense Research and develo Administrative ex	) ) (218,368 (81,097		5,145 944	) (1,674		2,668 623			–				) (3,935	) ) (210,555 (85,139
g profit peratin O	134,180	–	10,993	) (1,674	49,677	6,177	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (2,571	–	–	–	–	–	–	196,782
g profit before exceptional items ysed as: peratin Anal O	152,560			) (1,674	49,677		–	–	–	–	–	–		200,563
ptional items Exce	) (18,380	–	– 10,993			– 6,177	) (2,571						–	) (3,781
g profit peratin O	134,180	–	10,993	) (1,674	49,677	6,177	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (2,571	–	–	–	–	–	–	196,782
pre-exceptional ptional Finance costs – exce Finance costs –	) ) (120,920 (106,885	2,027 37,923					–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––							) ) (68,962 (118,893
Finance costs	) (227,805	39,950	–	–	–	–	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –	–	–	–	–	–	–	) (187,855
Finance costs, net Finance income	) 644 (227,161	39,950	–	–	–	–	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –	–	–	–	–	–	–	) 644 (187,211
y method quit profit of associates g the e accounted for usin pense, net Share of Other ex	) 4,228 (378													) 4,228 (378
Profit before tax Taxation	) 87,927 (89,131	) 39,950 (15,261	) 10,993 (4,199	) (1,674	) 49,677 (18,977	6,177	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) 982 (2,571	) – (3,119	–	–	– 10,052	–	–	57,405 13,421
year Profit for the	) (1,204	24,689	6,794	) (1,674	30,700	6,177	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (1,589	) (3,119	–	–	10,052	–	–	70,826
Items that will not be reclassified to ) on defined prehensive income: (losses profit or loss gains Other com Actuarial
y quentl profit or loss y be subse plans pension reclassified to Items that ma benefit	) (3,394													) (3,394
y translation differences Currenc	3,651						–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––							3,651
prehensive income year Other com for the	257	–	–	–	–	–	–	–	–	–	–	–	–	257
prehensive income Total com	) (947	24,689	6,794	) (1,674	30,700	6,177	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (1,589	) (3,119	–	–	10,052	–	–	71,083
g interests parent – Non-controllin Attributable to: – Owners of the	) (1,130 183	24,689	6,794	) (1,674	30,700	6,177	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (1,589	) (3,119	–	–	10,052	–	–	70,900 183
prehensive income Total com	) (947	24,689	6,794	) (1,674	30,700	6,177	–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ) (1,589	) (3,119	–	–	10,052	–	–	71,083
							–––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– –––––––––– ––––––––––

of ment e at st ed at d i onsol C	al nanci i f	i t posi	M 1 3 on as of	4 1 0 2 arch
		Debt issuance costs	leaseback Sale-	payments reco Share based	Revenue gnition	pairment Im g-lived of lon Im	of pairment assets trademarks	Income taxes	Pension	Debt vs. y equit	Exem Goodwill	IFRS 1 ptions	and Presentation disclosure
) \$'000 (US	US GAAP –––––––––	) (i	) (ii	) (iii	) (iv	) (v	) (vi	) (vii	) (viii	) (ix	) (x	) (xi	) (xii	IFRS –––––––––
pment qui gible assets y, plant and e Non-current assets Other intan Goodwill pert Pro	,769 ,704 ,293 700 279 25				,300 156		) ,582 (11				,983 48		– – –	,052 ,122 ,293 906 268 25
Investment in associates Assets held for sale Deferred tax assets	,910 888 102 16	970	) ,839 (3		,089 2		,424 4						– ,308 90	888 ,862 196 16
g-term income tax receivable pension assets Other non-current assets g-term Lon Lon	,685 ,047 ,888 ,274 20 10 8	) ,541 (2							) ,283 (4				–	,047 ,347 ,685 ,991 15 10 6
	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,458 ,165 1	) ,571 (1	) ,839 (3	–	,389 158	–	) ,158 (7	–	) ,283 (4	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,983 48	–	1 ,308 90	,287 ,446
Trade and other receivables quivalents Other current assets Cash and cash e Restricted cash Current assets	803 ,415 ,206 ,992 186 86 151							,601 7					) ,244 – – ,992 26 (86	– ,051 803 ,415 220 151
	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,416 425	–	–	–	–	–	–	,601 7	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	) ,748 (60	,269 372
Total assets	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,874 ,590 1	) ,571 (1	) ,839 (3	–	,389 158	–	) ,158 (7	,601 7	) ,283 (4	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,983 48	–	1 ,560 29	,556 ,818
Deferred income – current payables Current tax liabilities Current liabilities Trade and other gs Provisions Borrowin	,644 ,583 ,383 ,571 ,642 ––––––––– 140 32 7 3 498	–––––––––	–––––––––	–––––––––	,750 ––––––––– 3	–––––––––	–––––––––	,109 ––––––––– 22	–––––––––	–––––––––	––––––––– –––––––––		– – – – – –––––––––	––––––––– ,392 ,583 ,383 ,571 ,753 140 32 7 25 502
	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,823 682	–	–	–	,750 3	–	–	,109 22	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	,682 708
Deferred income – non-current Other non-current liabilities Non-current liabilities Deferred tax liabilities provisions y Pension liabilit gs g-term Borrowin Lon	– ,947 ,710 ,472 ,343 ,131 ,262 218 4 27 29 1		) ,051 (10		,719 1			) ,637 (12	) ,283 (4		,077 23		1 – – – – ,560 – 29	,429 ,472 ,848 ,637 ,259 ,343 220 4 22 ,262 52 7
	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,603 ,542 1	–	) ,051 (10	–	,719 1	–	–	) ,637 (12	) ,283 (4	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,077 23	–	1 ,560 29	,988 ,569
Total liabilities	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,426 ,225 2	–	) ,051 (10	–	,469 5	–	–	,472 9	) ,283 (4	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,077 23	–	2 ,560 29	,670 ,278
Net assets	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ,552 (634	) ,571 (1	,212 6	–	,920 152	–	) ,158 (7	) ,871 (1	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,906 25	–	–	) ,114 (460
gn currency translation deficit ponent of defined ption reserve gs Retained earnin Unrealised com pital Share ca Share o y quit Forei E	) ) – ,750 ––––––––– ,786 ,722 (639 (3 11	) ––––––––– ,571 (1	,212 ––––––––– 6	) ,592 ––––––––– ,592 (5 5	,920 ––––––––– 152	– –––––––––	) ––––––––– ,158 (7	) ––––––––– ,871 (1	) ––––––––– ,975 (3	) 39 ––––––––– (39	––––––––– 2 (1 ,906 – ––––––––– 25	) ,318 ,892	– – – – –––––––––	) ) ––––––––– – ,197 ,452 ,614 6 (5 (461
plans benefit	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ,549 (3								,975 3		––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––	) (426	–	–
parent Owners of the	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ,307 (635	) ,571 (1	,212 6	–	,920 152	–	) ,158 (7	) ,871 (1	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,906 25	–	–	) ,869 (460
g interests Non-controllin	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– 755										––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––		–	755
y quit Total e	) ––––––––– ,552 (634	) ––––––––– ,571 (1	,212 ––––––––– 6	– –––––––––	,920 ––––––––– 152	– –––––––––	) ––––––––– ,158 (7	) ––––––––– ,871 (1	– –––––––––	– –––––––––	––––––––– ,906 ––––––––– 25	–	– –––––––––	) ,114 ––––––––– (460

) \$'000 (US	GAAP	Debt issuance costs ) (i	leaseback ) Sale- (ii	payments reco Share based ) (iii	Revenue gnition ) (iv	pairment Im g-lived ) (v of lon Im	of pairment assets trademarks ) (vi	) Income taxes (vii	Pension ) (viii	y Debt vs. ) (ix equit	Goodwill ) (x	IFRS 1 ptions ) (xi Exem	) and Presentation disclosure (xii	IFRS
Cost of sales Revenue	) ––––––––– ,189 ,885 939 (165		) (200		,640 17								– ,897 14	) ––––––––– ,829 ,188 956 (151
pense ) g and distribution costs pment ex (losses pense g gains/ Research and develo Administrative ex peratin profit Other o Gross Sellin	) ) ) ,304 ,430 ,181 ,881 (212 773 (323 (73	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ) ) ) (200 (217 (445 (80	– ,348 1	,640 17	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) – ,011 (9	–	– –	–	–	–	) ) ,897 – ,424 ,473 14 (9 (5	) ) ) – ,833 ,875 ,086 ,641 (212 805 (78 (341
g profit ysed as: peratin Anal O	,812 163	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (942	,348 1	,640 17	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ,011 (9	–	–	–	–	–	– –	,847 172
ptional g profit before exce ptional items peratin items Exce O	) ,100 ,288 185 (21	–	) – (942	,348 1	,640 17	–	) – ,011 (9	–	–	–	–	–	– –	) ,088 ,241 204 (31
g profit peratin O	,812 163	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (942	,348 1	,640 17	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ,011 (9	–	–	–	–	–	–	,847 172
pre-exceptional ptional Finance costs – exce Finance costs –	) – ,188 (117	751	––––––––– ––––––––– ––––––––– ––––––––– –––––––––				––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––							) – ,437 (116
Finance income Finance costs	) 320 ,188 (117	751	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	– –	) ,437 320 (116
y quit g the e Share of loss of associates accounted for usin pense, net , net Finance costs method Other ex	) ) ) ,586 (529 ,868 (116 (1	751	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	–	) ) ) ,117 ,586 (529 (116 (1
Profit before tax Taxation	) ,829 ,234 44 (33	) 751 (287	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) 360 (942	,348 1	) ,640 ,738 (6 17	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ,442 ,011 (9 3	– ,248 1	–	–	– ,985 7	–	– –	) ,615 ,224 54 (27
Items that will not be reclassified ) on defined prehensive income: (losses year profit or loss gains Profit for the Other com Actuarial to	,595 11	464	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (582	,348 1	,902 10	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ,569 (5	,248 1	–	–	,985 7	–	–	,391 27
y y translation differences quentl profit or loss y be subse plans pension reclassified to Items that ma benefit Currenc	) ,414 (633 3												– –	) (633 ,414 3
prehensive income for year Other com the	,781 2	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	–	,781 2
prehensive income Total com	,376 14	464	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (582	,348 1	,902 10	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ,569 (5	,248 1	–	–	,985 7	–	–	,172 30
g interests parent – Non-controllin Attributable to: – Owners of the	,020 356 14	464	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (582	,348 1	,902 10	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ,569 (5	,248 1	–	–	,985 7	–	– –	,816 356 29
prehensive income Total com	,376 14	464	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (582	,348 1	,902 10	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ,569 (5	,248 1	–	–	,985 7	–	–	,172 30

Consolidated Statement of comprehensive income year ending 31 March 2014

		Debt issuance	Sale-	based Share	Revenue	pairment Im g-lived of lon Im	of pairment	Income		Debt vs.		IFRS 1	and Presentation
) \$'000 (US	GAAP US	costs ) (i	leaseback ) (ii	payments reco ) (iii	gnition ) (iv	) (v	assets trademarks ) (vi	) taxes (vii	Pension ) (viii	y ) (ix equit	) Goodwill (x	ptions ) (xi Exem	) disclosure (xii	IFRS
Cost of sales Revenue	) ––––––––– ,475 ,442 66 (11		) (17		,307 2								– ,077 1	) ––––––––– ,782 ,382 68 (10
profit Gross	,033 55	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (17	–	,307 2	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	,077 1	,400 58
g and distribution costs Research and develo Sellin	) ) ,564 ,761 (25 (18		) ) (18 (37										) (742	) ) ,324 ,798 (26 (18
pense pment ex penses Administrative ex	) ,084 (7		) (6	54									) – (335	) ,371 (7
g profit peratin O	,624 3	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (78	54	,307 2	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	–	,907 5
ptional g profit before exce ysed as: peratin Anal O
ptional items items Exce	) ,659 (35 3	–	) – (78	54	,307 2	–	–	–	–	–	–	–	– –	) ,020 (113 6
g profit peratin O	,624 3	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (78	54	,307 2	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	–	,907 5
pre-exceptional ptional Finance costs – exce Finance costs –	) – ,915 (9	63												) ,852 – (9
Finance income Finance cost	) 45 ,915 (9	63	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–			– –	) ,852 45 (9
Finance costs – net	) ,870 (9	63	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–		–	–	) ,807 (9
y quit g the e Share of loss of associates accounted for usin method	) (130													) (130
, net pense) (ex Other income/	) (168													) (168
Profit before tax Taxation	) ,989 ,544 (6 4	) 63 (24	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) 30 (78	54	) ,307 (881 2	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	– 104	–	–	726	–	– –	) ,944 ,198 (4 4
Profit for the month	) ,555 (1	39	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (48	54	,426 1	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	104	–	–	726	–	–	746
Items that will not be reclassified ) on defined prehensive income: plans (losses profit or loss pension gains Other com benefit Actuarial to	–													–
y y translation differences quentl profit or loss y be subse reclassified to Items that ma Currenc	929												–	929
prehensive income for Other com			––––––––– ––––––––– ––––––––– ––––––––– –––––––––				––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––
the month	929	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	–	929
prehensive income Total com	) (626	39	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (48	54	,426 1	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	104	–	–	726	–	–	,675 1
g interests parent Attributable to: – Owners of the – Non-controllin	) 224 (850	39	) (48	54	,426 1	–	–	104	–	–	726	–	–	224 ,451 1
prehensive income Total com	) (626	39	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (48	54	,426 1	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	104	–	–	726	–	–	,675 1
			––––––––– ––––––––– ––––––––– ––––––––– –––––––––				––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

Consolidated Statement of comprehensive income month ending 30 April 2013

of ment e at st ed at d i onsol C	al nanci i f	i t posi	A 0 3 on as of	4 1 0 2 l pri
		Debt issuance costs	leaseback Sale-	payments reco Share based	Revenue gnition	pairment Im g-lived of lon Im	of pairment assets trademarks	Income taxes	Pension	debt y vs. quit E	Exem Goodwill	IFRS 1 ptions	and Presentation disclosure
) \$'000 (US	US GAAP –––––––––	) (i	) (ii	) (iii	) (iv	) (v	) (vi	) (vii	) (viii	) (ix	) (x	) (xi	) (xii	IFRS –––––––––
pment qui gible assets y, plant and e Non-current assets Other intan Goodwill pert Pro	,801 ,769 ,490 700 24 273				,300 156		) ,582 (11				,983 48		– – –	,052 ,908 ,801 906 24 261
Investment in associates Assets held for sale Deferred tax assets	888 ,648 ,530 102 16	946	) ,809 (3		,859 1		,424 4						– ,648 91	888 ,716 ,530 197 16
g-term income tax receivable pension assets Other non-current assets g-term Lon Lon	,047 ,721 ,343 20 10 8	) ,478 (2							) ,829 (3				– – – –	,514 ,047 ,243 16 10 6
	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,237 ,158 1	) ,532 (1	) ,809 (3	–	,159 158	–	) ,158 (7	–	) ,829 (3	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,983 48	–	,648 91	,699 ,440 1
Trade and other receivables Other current assets Current assets	,556 ,143 140 88							,980 5					) ,410 ,143 26 (88	– ,946 172
quivalents Cash and cash e Restricted cash	805 ,473 142												– –	805 ,473 142
	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,977 371	–	–	–	–	–	–	,980 5	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	) ,733 (61	,224 316
Total assets	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,214 ,530 1	) ,532 (1	) ,809 (3	–	,159 158	–	) ,158 ( 7	,980 5	) ,829 (3	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,983 48	–	,915 29	,923 ,756 1
payables Current tax liabilities Current liabilities Trade and other gs Provisions Borrowin	,393 ,002 ,383 ,639 ––––––––– 32 6 109 5	–––––––––	–––––––––	–––––––––	–––––––––	–––––––––	–––––––––	,408 ––––––––– 20	–––––––––	–––––––––	–––––––––	–––––––––	– – – – –––––––––	––––––––– ,002 ,639 ,383 ,801 109 32 6 25
Deferred income – current	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,886 ,469 478 631	–	–	–	,365 ,365 3 3	–	–	,408 20	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	– –	,834 ,659 655 481
Deferred income – non current Non-current liabilities provisions y Pension liabilit g-term Lon	,319 ,228 ,476 4 209 27				,502 1				) ,829 (3				– – –	,730 ,319 ,647 210 4 23
Other non-current liabilities Deferred tax liabilities gs Borrowin	– ,887 ,343 ,262 30 1		) ,972 (9					) ,661 (12			,458 22		– ,915 29	,254 ,343 ,373 ,262 52 8 1
	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,253 ,534 1	–	) ,972 (9	–	,502 1	–	–	) ,661 (12	) ,829 (3	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,458 22	–	,915 29	,666 ,561 1
Total liabilities	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,139 ,166 2	–	) ,972 (9	–	,867 4	–	–	,747 7	) ,829 (3	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,458 22	–	,915 29	,325 ,217 2
Net assets	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ––––––––– ,925 (635	) ––––––––– ,532 (1	,163 ––––––––– 6	– –––––––––	,292 ––––––––– 153	– –––––––––	) ,158 ––––––––– ( 7	) ––––––––– ,767 (1	– –––––––––	– –––––––––	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,525 ––––––––– 26	– –––––––––	– –––––––––	) ––––––––– ,402 (460
gn currency translation deficit ponent of defined ption reserve gs Retained earnin Unrealised com pital Share ca Share o y quit Forei E	) ) – ,015 ,566 ,786 12 (3 (641	) ,532 (1	,163 6	) ,448 ,448 (6 6	,292 153		) ,158 ( 7	) ,767 (1	) ,975 (3	) 39 (39	,525 26	) ,318 ,892 2 (1	– – – –	) ) – ,606 ,678 ,291 5 (5 (461
plans benefit	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ,549 (3								,975 3		––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––	) (426	–	–
g interest parent Non-controllin Owners of the	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) 961 ,886 (636	) ,532 (1	,163 6	–	,292 153	–	) ,158 (7	) ,767 (1	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ,525 26	–	–	) ,363 961 (461
y quit Total e	) ,925 (635	) ,532 (1	,163 6	–	,292 153	–	) ,158 (7	) ,767 (1	–	–	,525 26	–		) ,402 (460

––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––

of ment e at t S ed at d i onsol C	preh m co	ve i ensi	mont me nco	n i end h	2 l pri A 0 g 3	4 1 0
		Debt issuance costs	leaseback Sale-	based Share	Revenue gnition	pairment Im g-lived of lon Im	of pairment assets trademarks	Income taxes	Pension	y vs. debt quit E	Goodwill	IFRS 1 ptions Exem	and Presentation disclosure
) \$'000 (US	US GAAP	) (i	) (ii	payments reco ) (iii	) (iv	) (v	) (vi	) (vii	) (viii	) (ix	) (x	) (xi	) (xii	IFRS
Cost of sales Revenue	) ––––––––– ,723 ,251 64 (11		) (17		602								– ,179 1	) ––––––––– ,089 ,325 (10 65
profit Gross	,472 53	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (17	–	602	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	,179 1	,236 55
pense g and distribution costs pment ex Research and develo Sellin	) ) ,644 ,888 (16 (21		) ) (18 (37										) – (707	) ) ,369 ,925 (22 (16
penses Administrative ex	) ,481 (5		––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (7	156			––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –––––––––						) (472	) ,804 (5
g profit before exceptional items g profit ysed as: peratin peratin Anal O O	41 ,459 ,418 9 9	– –	) – (79	156 156	602 602	– –	– –	– –	– –	– –	– –	– –	– –	,176 ,138 10 10
ptional items g profit peratin Exce O	,459 9	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) ) (79 (79	156	602	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	– –	) (38 ,138 10
pre-exceptional ptional Finance costs – exce Finance costs –	) – ,131 (9	63											–	) – ,068 (9
Finance income Finance cost	) 40 ,131 (9	63	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	– –	) 40 ,068 (9
Finance cost – net	) ,091 (9	63	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	–	) ,028 (9
y quit , net g the e Share of loss of associates pense) accounted for usin (ex Other income/ method	) ) (155 (657													) ) (155 (657
Profit before tax Taxation	) ) (444 ,130 (1	) 63 (24	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) 30 (79	156	) 602 (230	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	– 104	–	–	619	–	– –	) 298 (631
Items that will not be reclassified prehensive income: Profit for the month Other com	) ,574 (1	39	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (49	156	372	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	104	–	–	619	–	–	) (333
) on defined plans (losses profit or loss pension gains Actuarial benefit into	–												–	–
y profit or loss y translation differences quentl y be subse reclassified into Items that ma Currenc	) (64												–	) (64
prehensive income for the month Other com	) (64	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	–	–	–	–	–	–	) (64
prehensive income Total com	) ,638 (1	39	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (49	156	372	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	104	–	–	619	–	–	) (397
g interest parent –— Owners of the –— Non-controllin Attributable to:	) 206 ,844 (1	39	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (49	156	372	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	104	–	–	619	–	– –	) 206 (603
prehensive income Total com	) ,638 (1	39	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ) (49	156	372	–	––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– ––––––––– –	104	–	–	619	–	–	) (397

177

31. Subsequent events

Events and transactions subsequent to the balance sheet date have been evaluated through 8 October 2014, the date the balance sheet was issued, for potential recognition or disclosure.

PART IX

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma income statement and pro forma statement of net assets of the Enlarged Group set out below have been prepared on the basis set out in the notes below to illustrate the impact of the Merger and the Return of Value on the income statement of the Micro Focus Group for the year ended 30 April 2014 as if it had taken place at the beginning of that financial year, and on the net assets of the Micro Focus Group for the year ended 30 April 2014 as if it had taken place at that date.

The unaudited pro forma information has been prepared for illustrative purposes only and, by its nature, addresses a hypothetical situation and does not, therefore, represent the Enlarged Group's actual financial position or results.

The unaudited pro forma information does not constitute financial statements within the meaning of section 434 of the Companies Act. Shareholders should read the whole of this document and not rely solely on the summarised financial information contained in this Part IX.

(A) Unaudited pro forma income statement

	The	The				Pro
	Micro Focus	Attachmate	Merger		Return	forma
	Group	Group	adjustments	Financing	of Value	total
	(Note 1)	(Note 2)	(Note 3)	(Note 4)
	For the	For the
	year ended	year ended
	30 April	31 March
	2014	2014
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Gross revenue		–	–	–	–	–
Revenue	433,058	956,829	–	–	–	1,389,887
Cost of sales	(29,912) ————	(151,188) ————	– ————	– ————	– ————	(181,100) ————
Gross Profit	403,146	805,641	–	–	–	1,208,787
Selling and distribution costs	(120,669)	(341,833)	–	–	–	(462,502)
Research and development
expense	(57,833)	(212,875)	–	–	–	(270,708)
Administrative expenses	(68,924)	(78,086)	(48,100)	–	–	(195,110)
Operating Profit	———— 155,720	———— 172,847	———— (48,100)	———— –	———— –	———— 280,467
Analysed as:
Operating profit
before exceptional items	155,720	204,088	–	–	–	359,808
Exceptional items	–	(31,241)	(48,100)	–	–	(79,341)
Operating profit	———— 155,720	———— 172,847	———— (48,100)	———— –	———— –	———— 280,467
Finance costs	(8,197)	(116,437)	(8,000)	20,688	–	(111,946)
Finance income	318	320	–	–	–	638
Net finance costs	———— (7,879) ————	———— (116,117) ————	———— (8,000) ————	———— 20,688 ————	———— – ————	———— (111,308) ————
Share of associates
and other expenses	– ————	(2,115) ————	– ————	– ————	– ————	(2,115) ————
Profit before tax	147,841	54,615	(56,100)	20,688	–	167,044
Taxation	(25,759) ————	(27,224) ————	– ————	(5,172) ————	– ————	(58,155) ————
Profit for the year	122,082 ————	27,391 ————	(56,100) ————	15,516 ————	– ————	108,889 ————

Explanatory Notes:

(1) The Micro Focus financial information has been extracted, without material adjustment, from the consolidated financial statements of the Micro Focus Group for the year ended 30 April 2014.

(2) The Attachmate financial information has been extracted, without material adjustment, from the historical financial information of the Attachmate Group for the year ended 31 March 2014 set out in Part VIII (Financial Information of the Attachmate Group) of this document.

• (3) Merger adjustments relate to estimated transaction costs of US\$56.1m, including US\$8.0m payable in respect of the early repayment of the existing Attachmate debt, excluding US\$67.6m of change of control payments by Attachmate to Wizard and employees, which are capitalised as goodwill, and US\$59.3m prepaid financing fees on the New Facilities which are capitalised within borrowings on the balance sheet. This adjustment is a one off charge and does not represent a continuing impact on the Enlarged Group following the Merger.
• (4) The financing adjustment is calculated as:
• a) The interest cost on the US\$1.775bn new Term Loan Facilities at the new interest rate of 5.25 per cent. for the US\$1.275bn Facility B, 4.5 per cent. for the US\$500m Facility C and 3.7326 per cent. on the US\$75m Revolving Facility assumed to be drawn at completion, pus a non-utilisation fee of 0.5 per cent. on the undrawn committed Revolving Facility (assumed to be US\$75m at completion), less the actual finance costs incurred by Micro Focus and Attachmate during the period of US\$124.6m, plus an amortisation charge of US\$11.3m, representing the annual amortisation of capitalised financing fees.
• b) A consequent increase in the taxation charge, calculated using an effective tax rate of 25 per cent.

These financing adjustments will have a continuing impact on the Enlarged Group following the Merger.

(5) No adjustment has been made to reflect the trading results of Micro Focus since 30 April 2014 or of Attachmate since 31 March 2014.

⁽B) Unaudited pro forma net asset statement

	The	The				Pro
	Micro Focus	Attachmate	Merger		Return	forma
	Group	Group	adjustments	Financing	of Value	total
	As at	As at
	30 April	30 April
	2014	2014
	Note 1	Note 2	Note 3	Note 4	Note 5
	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000	US\$'000
Assets
Non-current assets
Goodwill	308,182	906,052	1,945,922	–	–	3,160,156
Other intangible assets	92,533	261,908	–	–	–	354,441
Property, plant and equipment	21,599	24,801	–	–	–	47,288
Assets held for sale	–	888	–	–	–	888
Investment in associates	–	16,530	–	–		16,530
Long term pension assets	–	16,514	–	–	–	16,514
Long term income tax receivable	–	10,047	–	–	–	10,047
Other non-current assets	–	6,243	–	–	–	6,243
Deferred tax assets	42,631 ————	197,716 ————	– ————	– ————	– ————	240,347 ————
	464,945	1,440,699	1,945,922	–	–	3,851,566
Current assets
Inventories	133	–	–	–	–	133
Trade and other receivables	107,139	172,946	–	–	–	280,085
Cash and cash equivalents	32,800	143,278	–	78,444	(135,010)	119,512
	———— 140,072 ————	———— 316,224 ————	———— – ————	———— 78,444 ————	———— (135,010) ————	———— 399,730 ————
Total assets	605,017 ————	1,756,923 ————	1,945,922 ————	78,444 ————	(135,010) ————	4,251,296 ————
Liabilities
Current liabilities
Trade and other payables	77,876	109,002	–	–	–	186,878
Borrowings	293,830	32,383	–	(219,838)	–	106,375
Provisions	4,382	6,639	–	–	–	11,021
Current income tax liabilities	42,177	25,801	–	–	–	67,978
Deferred income	150,168	481,834	–	–	–	632,002
	———— 568,433	———— 655,659	———— –	———— (219,838)	———— –	———— 1,004,254
	————	————	————	————	————	————
Non-current liabilities
Deferred income	12,629	210,730	–	–	–	223,359
Borrowings	–	1,262,343	123,700	298,282	–	1,684,325
Long term provisions	4,920	4,319	–	–	–	9,239
Pension liability	–	23,647	–	–	–	23,647
Other non-current liabilities	–	8,254	–	–	–	8,254
Deferred tax liabilities	35,286 ————	52,373 ————	– ————	– ————	– ————	87,659 ————
	52,835 ————	1,561,666 ————	123,700 ————	298,282 ————	– ————	2,036,483 ————
Total liabilities	621,268 ————	2,217,325 ————	123,700 ————	78,444 ————	– ————	3,040,737 ————
Net (liabilities)/assets	(16,251) ————	(460,402) ————	1,822,222 ————	– ————	(135,010) ————	1,210,559 ————

Explanatory Notes:

• (1) The Micro Focus financial information has been extracted without material adjustment from the unaudited consolidated financial statements of the Micro Focus Group as at 30 April 2014.
• (2) The Attachmate financial information has been extracted without material adjustment from the historical financial information of the Attachmate Group as at 30 April 2014 as set out in Part VIII (Financial Information of the Attachmate Group) of this document.
• (3) The adjustments arising as a result of the Merger are set out below:
• a) Adjustment for cash transaction costs of US\$183.0m. US\$56.1m has been expensed through the income statement, US\$67.6m is capitalised in goodwill for change of control payments by Attachmate to Wizard and employees and US\$59.3m is capitalised as prepaid facility costs (as a reduction of borrowings).
• b) The adjustment to goodwill has been calculated as follows:

	US\$m
Consideration*	1,417,920
Net liabilities acquired	460,402
Attachmate payment to Wizard	67,600
Pro forma goodwill adjustment	———— 1,945,922
	————

• * Consideration is calculated as 86,595,711 Ordinary Shares issued at a share price of 1,018.0p (being the share price as at 7 October 2014 translated at an exchange rate of £1:US\$1.60845, being the exchange rate as at 7 October 2014, the latest practicable date prior to publication of this document). The Merger will be accounted for using the acquisition method of accounting. The sum of the consideration, the Attachmate change of control payment and the book value of the net liabilities acquired has been reflected as goodwill. A fair value exercise will be completed post Merger and therefore no account has been taken of any fair value adjustments that may arise on the Merger.
• (4) The financing adjustment represents the drawdown of US\$1.85bn of New Facilities (being US\$1.275bn Facility B, US\$500m Facility C and US\$75m of the committed US\$150m Revolving Facility), net of US\$59.3m capitalised financing fees, which are to be used for the repayment of the existing facilities of Micro Focus and Attachmate totalling US\$1.59bn at 30 April 2014 and the payment of total estimated transaction costs of US\$123.7m, with the remainder held as cash to be used for the Return of Value (see note 5).
• (5) The adjustment represents the US\$135.0m proposed Return of Value to holders of Existing Ordinary Shares, calculated as 60p per Existing Ordinary Share at an exchange rate of £1:US\$1.60845, based on total Existing Ordinary Shares of 139,896,511.
• (6) The Directors consider net debt to be an important measure and will use this measure to monitor the financial position of the Enlarged Group. The pro forma net indebtedness of the Enlarged Group at 30 April 2014 of approximately US\$1.7bn is calculated as follows:

	US\$'000
Cash and cash equivalents	119,512
Short term borrowings	(106,375)
Long term borrowings	(1,684,325)
Net indebtedness	———— (1,671,188)
	————

(7) No adjustment has been made to reflect the trading results of the Micro Focus Group or the Attachmate Group since 30 April 2014.

(C) Accountant's report on the unaudited pro forma financial information

The Directors Micro Focus International plc The Lawn 22-30 Old Bath Road Newbury Berkshire RG14 1QN

Numis Securities Limited The London Stock Exchange Building 10 Paternoster Square London EC4M 7LT

8 October 2014

Dear Sirs

Micro Focus International plc (the "Company")

We report on the pro forma financial information (the "Pro Forma Financial Information") set out in sections A and B of this Part IX of the Company's prospectus dated 8 October 2014 (the "Prospectus ") which has been prepared on the basis described in the notes to the Pro Forma Financial Information, for illustrative purposes only, to provide information about how the proposed Merger might have affected the financial information presented on the basis of the accounting policies adopted by the Company in preparing the financial statements for the period ended 30 April 2014. This report is required by item 20.2 of Annex I to the PD Regulation and is given for the purpose of complying with that PD Regulation and for no other purpose.

Responsibilities

It is the responsibility of the directors of the Company to prepare the Pro Forma Financial Information in accordance with item 20.2 of Annex I to the PD Regulation.

It is our responsibility to form an opinion, as required by item 7 of Annex II to the PD Regulation as to the proper compilation of the Pro Forma Financial Information and to report our opinion to you.

PricewaterhouseCoopers LLP, One Reading Central, 23 Forbury Road, Reading, Berkshire, RG1 3JH T: +44 (0) 1189 597111, F: +44 (0) 1189 383020

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for designated investment business.

In providing this opinion we are not updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the Pro Forma Financial Information, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issue.

Save for any responsibility which we may have to those persons to whom this report is expressly addressed and for any responsibility arising under item 5.5.3R(2)(f) of the Prospectus Rules to any person as and to the extent there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with item 23.1 of Annex I to the PD Regulation, consenting to its inclusion in the Prospectus.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Pro Forma Financial Information with the directors of the Company.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Pro Forma Financial Information has been properly compiled on the basis stated and that such basis is consistent with the accounting policies of the Company.

Opinion

In our opinion:

• a) the Pro Forma Financial Information has been properly compiled on the basis stated; and
• b) such basis is consistent with the accounting policies of the Company.

Declaration

For the purposes of Prospectus Rule 5.5.3 R(2)(f), we are responsible for this report as part of the Prospectus and we declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the Prospectus in compliance with item 1.2 of Annex I to the PD Regulation.

Yours faithfully

PricewaterhouseCoopers LLP Chartered Accountants

PART X

CAPITALISATION AND INDEBTEDNESS

(A) The Micro Focus Group

The tables below set out the Micro Focus Group's capitalisation and indebtedness. The capitalisation and indebtedness information set out below has been extracted without material adjustment from the Micro Focus Group's unaudited accounting records as at 31 July 2014.

Total Current debt – Guaranteed – Secured – Unguaranteed/unsecured Total Non-Current debt (excluding current portion of long–term debt) – Guaranteed – Secured – Unguaranteed/unsecured	———————————— 266,156 ————————————
	266,156 – –
	———————————— – ————————————
	– – –
Total Non-Current debt (excluding current portion of long–term debt)	———————————— –
Total Indebtedness	———————————— 266,156 ————————————

Note: The Micro Focus Group has no indirect or contingent indebtedness as at 31 July 2014 other than as disclosed in Part V (Operating and Financial Review of the Micro Focus Group) of this document.

Capitalisation/Shareholder's equity:	As at 30 April 2014 (US\$'000) ————————————
Share capital	37,802
Share premium account	14,546
Foreign currency translation deficit	(5,173)
Other reserves	76,898
Total Capitalisation	———————————— 124,075 ————————————

Note: There has been no material change in the capitalisation of the Micro Focus Group since 30 April 2014.

The net financial indebtedness of the Micro Focus Group as at 31 July 2014 is set out below, extracted without material adjustment from the Micro Focus Group's unaudited accounting records as at 31 July 2014.

As at 31 July 2014 (US\$'000)
-------------------------------	--	--

	As at 31 July 2014 (US\$'000) ————————————
Cash and cash equivalents	33,275
Liquidity	———————————— 33,275 ————————————
Current financial receivables	33,275 ————————————
Current borrowings Current portion of non-current borrowings Obligations under finance leases	266,156 – –
Current financial debt	———————————— 266,156
Net current financial liquidity	———————————— 232,881 ————————————
Non-current bank loans Bonds/Convertible Notes issued Other non-current loans	– – –
Non-current financial indebtedness	———————————— –
Net financial indebtedness	———————————— 232,881 ————————————

(B) The Attachmate Group

The tables below set out the Attachmate Group's capitalisation and indebtedness. The capitalisation and indebtedness information set out below has been extracted without material adjustment from the Attachmate Group's unaudited accounting records as at 31 July 2014.

As at 31 July 2014 (US\$'000)
———————————— 59,883
———————————— – 59,883 –
———————————— 1,234,843 ————————————
– 1,234,843 –
———————————— 1,234,843
———————————— 1,294,726 ————————————

Note: The Attachmate Group has no indirect or contingent indebtedness as at 31 July 2014 other than as disclosed in Part VII (Operating and Financial Review of the Attachmate Group) of this document.

Capitalisation/ Shareholder's equity:	As at 30 April 2014 (US\$'000) ————————————
Share capital	–
Share option reserve	5,606
Foreign currency translation reserve	(5,678)
Non-controlling interests	961
Total capitalisation	———————————— 889 ————————————

Note: There has been no material change in the capitalisation of the Attachmate Group since 30 April 2014.

The net financial indebtedness of the Attachmate Group as at 31 July 2014 is set out below, extracted without material adjustment from the Attachmate Group's unaudited accounting records as at 31 July 2014.

	As at 31 July 2014 (US\$'000) ————————————
Cash and cash equivalents	128,890
Liquidity	———————————— 128,890 ————————————
Current financial receivables	128,890 ————————————
Current borrowings Current portion of non-current borrowings Obligations under finance leases	59,883 – –
Current financial debt	———————————— 59,883
Net current financial liquidity	———————————— 69,007 ————————————
Non-current bank loans Bonds/Convertible Notes issued Other non-current loans	1,234,843 – –
Non-current financial indebtedness	———————————— 1,234,843
Net financial indebtedness	———————————— 1,165,836 ————————————

PART XI

THE RETURN OF VALUE

SECTION A: INTRODUCTION

1. Proposed Return of Value

As announced on 15 September 2014, the Board proposes to implement a further Return of Value to Existing Shareholders of 60 pence per Existing Ordinary Share, amounting to approximately £83.9 million (US\$135.0 million) in cash, by way of a B/C Share Scheme, which gives Existing Shareholders (with the exception of Overseas Shareholders resident, or with a registered address, in a Restricted Territory) a choice between receiving the cash in the form of income or capital. The Record Date for the Return of Value will occur prior to Completion and Wizard will not be entitled to participate in the Return of Value in respect of the Consideration Shares. Although the implementation of the Return of Value is not dependent upon the Merger completing, the way in which it is implemented will depend on whether or not the Merger completes.

2. The Options

Shareholders (with the exception of Overseas Shareholders resident, or with a registered address, in a Restricted Territory) will be able to choose between the two Options described below as to how they receive their cash proceeds under the B/C Share Scheme. This is intended to give UK resident Shareholders the flexibility to receive their cash proceeds as income or capital, or any combination of the two. It is also possible that equivalent treatment may be available in certain other jurisdictions (but Shareholders should take their own professional advice in this regard). Each Option is expected to return 60 pence of cash per Existing Ordinary Share.

Shareholders should read Section H of this Part XI which contains certain information as to the tax treatment of the Options in the UK and the US. Shareholders who are in any doubt as to their tax position, or who are subject to taxation in a jurisdiction other than the UK or the US, should consult an appropriate professional adviser.

Shareholders who do not make a valid election, and all Overseas Shareholders resident, or with a registered address, in a Restricted Territory, will be deemed to have elected for the Income Option in respect of ALL of their ROV Entitlement.

Option 1 (Income Option)

For Existing Ordinary Shares validly elected (or deemed elected) to the Income Option, a Shareholder will receive one C Share for each corresponding Existing Ordinary Share held at the Record Time. It is currently expected that the C Share Dividend of 60 pence will become payable in respect of each such C Share by 12 November 2014 and that the cash proceeds of the C Share Dividend will be sent to relevant Shareholders by the Payment Date. The cash received under this Option should be taxed as income for UK individual shareholders. Section H of this Part XI provides further details on the UK taxation in relation to the Return of Value.

Once the C Share Dividend has been paid, each relevant C Share will be automatically reclassified as a Deferred Share having negligible value and carrying extremely limited rights. The Company will then take steps to purchase the Deferred Shares for an aggregate consideration of one penny and then cancel the Deferred Shares. In view of the negligible amount of the aggregate consideration, Shareholders will not be entitled to have any part of the aggregate consideration paid to them.

Shareholders electing for the Income Option will receive C Shares as described above irrespective of whether the Merger occurs.

Option 2 (Capital Option)

For Existing Ordinary Shares validly elected to the Capital Option, a Shareholder will (save as set out below) receive either one B Share (each B Share being redeemed for 60 pence) or one C Share (which will be purchased by Numis, acting as principal (and not as agent, nominee or trustee), for 60 pence per C Share pursuant to the Purchase Offer).

Whether or not Shareholders who elect for the Capital Option will receive B Shares or C Shares will depend upon whether the Merger Agreement completes in accordance with its terms (the "Merger Return Condition"). If the Merger Return Condition is satisfied, B Shares will be issued to satisfy valid elections for the Capital Option and it is currently expected that each such B Share will be redeemed by the Company for 60 pence by 12 November 2014 and subsequently cancelled. The redemption proceeds will be sent to relevant Shareholders by the Payment Date. If the Merger Return Condition is not satisfied, Shareholders will instead receive C Shares to satisfy valid elections for the Capital Option, which will be purchased by Numis, acting as principal (and not as agent, nominee or trustee), including the right to receive the C Share Dividend, for 60 pence per C Share, free and clear of all dealing expenses and commissions, with the proceeds of such sale to be sent to relevant Shareholders by the Payment Date. The cash received under this Option by way of either the redemption of B Shares or the purchase under the Purchase Offer of C Shares should be taxed as capital for UK individual shareholders. Section H of this Part XI provides further details on the UK taxation in relation to the Return of Value.

All Shareholders electing for the Capital Option will receive the same cash proceeds at the same time, whether this is effected by the issue and subsequent redemption of B Shares or the issue and subsequent purchase of C Shares under the Purchase Offer.

The making of the Purchase Offer by Numis is subject to certain conditions, further details of which can be found in paragraph 6 of Section E of this Part XI. Once Numis has made the Purchase Offer it will be automatically deemed to be accepted by Shareholders who have elected for the Capital Option, with the consideration becoming payable to Shareholders once and subject to the C Share Dividend being declared and paid to Numis in respect of the C Shares acquired under the Purchase Offer.

Overseas Shareholders resident, or with a registered address, in a Restricted Territory will not be eligible for the Capital Option and so will be deemed to have elected for the Income Option in respect of ALL of their ROV Entitlement.

Information relating to the B Shares, C Shares, Deferred Shares and Deferred D Shares

None of the B Shares or the C Shares to be issued pursuant to the B/C Share Scheme, the Deferred Shares into which the C Shares will be automatically reclassified or the Deferred D Shares (described below) which will arise on the Share Capital Consolidation will be admitted to the Official List or to trading on the London Stock Exchange's main market for listed securities, nor will any of them be listed or admitted to trading on any other recognised investment exchange. The B Shares, C Shares, Deferred Shares and Deferred D Shares will have limited rights. The rights and restrictions attached to the B Shares, C Shares, the Deferred Shares and Deferred D Shares are set out more fully in Section G of this Part XI.

Further information

The Options summarised above are explained in further detail in Section E of this Part XI. In addition, Section B of this Part XI sets out some frequently asked questions to help Shareholders understand what is involved in the B/C Share Scheme, including worked examples in Section B of this Part XI of how each of the Options summarised above would affect Shareholders. Shareholders should read Part XI of this document in full.

3. Share Capital Consolidation

As part of the B/C Share Scheme, the Company proposes to undertake the Share Capital Consolidation. The purpose of the Share Capital Consolidation is to seek to ensure that the market price of each New Ordinary Share is not materially affected by the implementation of the B/C Share Scheme.

The value proposed to be returned pursuant to the B/C Share Scheme represents approximately 7.1 per cent. of the Company's market capitalisation (based on the average closing middle market price for the three Business Days prior to the date of entry into the Merger Agreement). As a result of the Share Capital Consolidation, the number of Ordinary Shares in issue, disregarding the Consideration Shares to be issued (if any), will be reduced by a broadly equivalent percentage, with Shareholders receiving 0.9285 New Ordinary Shares for every one Existing Ordinary Share held at the Record Time. In addition, the Company proposes to reduce the nominal value of each Ordinary Share in issue in order to have a simple 10 pence nominal value going forward. In order to do this, and to avoid carrying out a reduction of the Company's capital that would otherwise be necessary, the Company proposes to consolidate all the Existing Ordinary Shares in issue at the Record Time into one share and, following this consolidation, sub-divide and redesignate this share into New Ordinary Shares of 10 pence and Deferred D Shares of 1 ⁄ 24 penny.

Immediately following the Share Capital Consolidation, it is expected that:

• if the Merger Return Condition has been met, there will be 216,489,622 New Ordinary Shares (excluding treasury shares but including Consideration Shares) in issue on the Admission Date; and
• if the Merger Return Condition has not been met, there will be 129,893,911 New Ordinary Shares (excluding treasury shares) in issue on the ROV Admission Date.

The New Ordinary Shares will, subject to Admission, or if the Merger Return Condition is not satisfied, ROV Admission, be traded on the London Stock Exchange's main market for listed securities and will be equivalent in all material respects to the Existing Ordinary Shares. After the B/C Share Scheme, and disregarding the dilutive effect of the Merger should it complete, Shareholders will own the same proportion of the Company as they did immediately beforehand, subject to fractional entitlements.

A fractional entitlement of a New Ordinary Share will arise as a result of the Share Capital Consolidation unless a holding of Existing Ordinary Shares when multiplied by 0.9285 results in an exact whole number of New Ordinary Shares. For example, a Shareholder holding 100 Existing Ordinary Shares would be entitled to 92 New Ordinary Shares and a fractional entitlement of 0.85 of a New Ordinary Share after the Share Capital Consolidation. These fractional entitlements will be aggregated and sold in the market and the proceeds of the sale will be distributed pro rata to relevant Shareholders save that, where the proceeds from the sale of any such fractional entitlement (net of any expenses) are less than £5.00, Shareholders will have no entitlement or right to the proceeds of sale but instead any such proceeds will be donated by the Company to a suitable charity. Cheques for any amount exceeding £5.00 in respect of the net proceeds of sale of a fractional entitlement will be despatched, or CREST accounts will be credited with such net proceeds, as appropriate, within two weeks of the Share Capital Consolidation taking effect. In addition, as part of the Share Capital Consolidation, Deferred D Shares of negligible value and carrying extremely limited rights will be allocated to the holders of Existing Ordinary Shares at the Record Time, pro rata to their holdings of Existing Ordinary Shares. Following New Ordinary Share Admission, all of the Deferred D Shares arising on the Share Capital Consolidation will be bought back for the aggregate price of one penny by the Company.

It is anticipated that fractional entitlements to a Deferred D Share will arise upon the allocation of Deferred D Shares. Such fractional entitlements will be aggregated together and transferred to a nominee identified by the Directors who shall hold such Deferred D Shares until they are bought back by the Company.

4. Tax

A general guide to certain limited aspects of the UK tax treatment of the B/C Share Scheme under current UK law and HM Revenue & Customs' published practice (including the Purchase Offer to be made by Numis) is set out in Section H (1) of this Part XI and a summary of certain US tax consequences of the Income Option for Shareholders under current US tax law is set out in Section H (2) and Section H (3) of this Part XI.

Any Shareholder who validly elects for the Capital Option or whose proceeds from the Income Option are (a) paid to an account maintained in the US, (b) despatched to such Shareholder at an address in the US, (c) paid to such Shareholder who made an election from within the US, or (d) paid to such Shareholder who has been or will be sent a confirmation of redemption or sale at an address in the US, may be subject to US information reporting and backup withholding and is referred to the summary of certain aspects of the US information reporting and backup withholding rules set out in Section H (2) and Section H (3) of this Part XI.

Shareholders who are subject to tax in a jurisdiction other than the UK or the US, or who are in any doubt as to the potential tax consequences of the B/C Share Scheme, should consult an appropriate professional adviser.

5. Overseas Shareholders

Overseas Shareholders' attention is drawn to paragraph 8 of Section E of this Part XI. In particular, Overseas Shareholders (other than those in Restricted Territories) should note that, by making a valid election for the Capital Option, such Shareholders will be deemed to represent, warrant, undertake and/or agree (as applicable) in the terms set out in paragraph 8 of Section E of this Part XI. Furthermore, Overseas Shareholders resident, or with a registered address, in a Restricted Territory will be deemed to have elected for the Income Option in respect of all of their ROV Entitlement. The tax consequences of the B/C Share Scheme may vary for Overseas Shareholders and, accordingly, Overseas Shareholders should consult their own independent professional adviser without delay.

6. General Meeting

Implementation of the B/C Share Scheme and certain related matters require the approval of Shareholders at a general meeting of the Company. Accordingly, Shareholder approval for the Return of Value and certain matters related to it is being sought at the General Meeting. A detailed summary of the relevant Resolutions is set out in paragraph 13 of Section E of this Part XI.

The actions to be taken by Shareholders in relation to the Return of Value are set out in paragraph 16 of Part I (Letter from the Chairman of Micro Focus International Plc) of this document.

SECTION B: FREQUENTLY ASKED QUESTIONS AND ANSWERS

To help you understand what is involved in the B/C Share Scheme, the following sets out some frequently asked questions and brief responses. Shareholders should read both the questions and answers below and this Part XI as a whole carefully.

What happens if the Merger does not go ahead?

The B/C Scheme is not conditional upon the Merger going ahead. However, whether or not the Company will be able to issue B Shares as part of the B/C Share Scheme will depend on whether or not the Merger completes. This is referred to throughout this document as the Merger Return Condition. Regardless of whether the Merger Return Condition is satisfied or not, Shareholders who elect, or are deemed to have elected, for the Income Option will receive C Shares in relation to which they will receive the C Share Dividend. However, whether or not the Merger Return Condition is satisfied will affect the class of share received by Shareholders in respect of the Capital Option. If the Merger Return Condition is satisfied, B Shares (with a nominal value of 60 pence per share) will be issued to Shareholders electing for the Capital Option which will subsequently be redeemed. If it is not satisfied, Shareholders electing for the Capital Option will receive C Shares (with a nominal value of 0.0000001 pence per share), which will be subject to the Purchase Offer by Numis. In either case, Shareholders will receive 60 pence per B Share or C Share, and either the redemption of a B Share or the sale of a C Share pursuant to the Purchase Offer should be treated as a disposal of those shares for United Kingdom tax purposes.

The reason for these different structures is that if the Merger does not proceed, no merger reserve will be created out of which B Shares could be issued in accordance with the authority sought from Shareholders. If the Merger does proceed, a merger reserve will be created, so permitting the issue of B Shares. As stamp duty will be payable on the purchase of the C Shares pursuant to the Purchase Offer (this cost falling ultimately on the Company), but not on the redemption of the B Shares, there is a preference for the B Share route to be followed to the extent possible.

For further details of the tax treatment of the Return of Value, please refer to Section H of this Part XI.

Is there a meeting to approve the B/C Share Scheme? How do I vote?

The B/C Scheme requires the approval of Shareholders, which is being sought pursuant to Resolution 5 to be proposed at the General Meeting convened for 3.00 p.m. on 27 October 2014. A detailed explanation of Resolution 5 is set out at paragraph 13 of Section E of this Part XI and will require a majority of 75 per cent. or more of the votes cast to be in favour in order to be passed.

Whether or not you intend to be present at the General Meeting, you are requested to complete and return the accompanying Form of Proxy in accordance with the instructions printed thereon or to register the appointment of a proxy electronically or, if you hold Ordinary Shares in CREST, to complete and transmit a CREST Proxy Instruction. Completed Forms of Proxy should be returned to the Company's registrars, Equiniti Limited, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA as soon as possible and, in any event, so as to be received not later than 3.00 p.m. on 23 October 2014. The completion and return of a Form of Proxy or the transmittal of an electronic proxy registration or CREST Proxy Instruction will not prevent you from attending the General Meeting and voting in person if you so wish and are so entitled.

If you have any questions relating to this document and/or the completion and return of the Form of Proxy, please contact Equiniti on 0871 384 2873 and +44 121 415 0164 for overseas. The helpline is available between the hours of 8.30 a.m. and 5.30 p.m. Monday to Friday (except UK public holidays) and will remain open until 26 November 2014 (or such later date as the Directors determine). Calls to 0871 384 2873 are charged at 8 pence per minute (excluding VAT) plus network extras. Service providers' costs may vary. Calls to +44 121 415 0164 from outside the UK are chargeable at applicable international rates. Please note that calls to these numbers may be monitored or recorded and no advice on the merits of the Merger can be given.

What do I need to do next?

First, whether or not you intend to be present at the General Meeting, we would encourage you to vote on the Resolutions being proposed in relation to the Return of Value, as well as the other matters to be considered at the General Meeting, by appointing a proxy as described above.

Secondly, you should consider whether or not you are resident in or have a registered address in the Restricted Territories, namely United States, Canada, Australia, Japan, the Republic of South Africa or New Zealand. Shareholders resident, or with a registered address, in a Restricted Territory will be deemed to have elected for the Income Option in respect of all of their ROV Entitlement and so will not be sent Forms of Election. If you are such a Shareholder, you do not need to take any further action in respect of your election to any of the Options.

If your registered address is not in a Restricted Territory and you are not resident in a Restricted Territory, you will be able to choose between the two Options as to how to receive your proceeds from the B/C Share Scheme. Further details of these choices are set out in Section E of this Part XI. You do not have to elect the same Option for all of your Existing Ordinary Shares: you may choose a combination of the two.

Before making any election or elections between the Options available under the B/C Share Scheme, you are recommended to consult your own independent professional adviser. In particular, Overseas Shareholders should read paragraph 8 of Section E of this Part XI.

How do I elect for my chosen Option(s)?

Assuming you do not have a registered address in a Restricted Territory and you are not resident in a Restricted Territory and you hold your existing shares in certificated form, you can indicate your choice by completing and signing the enclosed Form of Election and returning it so as to be received by Equiniti by no later than 4.30 p.m. on 31 October 2014. Instructions on how to complete the Form of Election are printed on the form itself.

Shareholders who hold their existing shares in CREST will not be sent a Form of Election. They will, however, be able to make their election by way of a TTE Instruction through the CREST system to be received by Equiniti by not later than 4.30 p.m. on 31 October 2014. Further information for Shareholders who hold their existing shares in CREST is contained in paragraph 4 of Section I of this Part XI of this document.

Shareholders who are resident or have a registered address in a Restricted Territory will not be sent a Form of Election and will be deemed to have elected for the Income Option in respect of ALL of their ROV Entitlement.

What is the impact of the B/C Share Scheme on the value of my Micro Focus shares?

The purpose of the Share Capital Consolidation, which forms part of the B/C Share Scheme, is to try to ensure that (subject to market fluctuations) the market price of each New Ordinary Share immediately following the implementation of the B/C Share Scheme (before taking into account any effects of the Merger) is approximately the same as the market price of each Existing Ordinary Share immediately beforehand.

In addition, disregarding the dilutive effect of the Merger should it complete, you will continue to own the same proportion of the Company (subject to fractional entitlements) as you did before.

Under the Share Capital Consolidation, every one Existing Ordinary Share you hold will be consolidated into 0.9285 of a New Ordinary Share, thus reducing the aggregate number of Ordinary Shares in issue. Expressed as a percentage, the reduction in the number of Ordinary Shares as a result of the Share Capital Consolidation is broadly equivalent to the percentage of the Company's market capitalisation immediately prior to the Announcement (as calculated by reference to the average closing middle market price for the three Business Days prior to the signing of the Merger Agreement) which is proposed to be returned to Shareholders under the B/C Share Scheme. Therefore, the value of your holding of New Ordinary Shares plus the amount to be returned per Existing Ordinary Share held at the Record Time should, subject to market fluctuations and the effects of the proposed Merger, approximately equal the value of your holding of Existing Ordinary Shares before the Return of Value.

If you currently hold Existing Ordinary Shares in certificated form, you will be issued with a new share certificate in respect of your New Ordinary Shares following the issue of New Ordinary Shares. Your existing share certificate should then be destroyed.

If you currently hold Existing Ordinary Shares in uncertificated form, it is currently expected that the Existing Ordinary Shares under ISIN GB00BCZM1F64 will be disabled by 4.30 p.m. on 31 October 2014 and on or soon after 8.00 a.m. on 3 November 2014 your CREST account will be credited with New Ordinary Shares under ISIN GB00BQY7BX88.

How will the B/C Share Scheme affect my shareholding?

To give you an idea of how the B/C Share Scheme would affect your shareholding we have set out some examples below:1

Option 1 (Income Option)

			Dividend
		Number of	expected to be
	Number of	New Ordinary	despatched
Number of Existing Ordinary Shares	C Shares you	Shares you	by the
held at the Record Time	will receive	will receive	Payment Date
			(£)
100	100	92	60
500	500	464	300
1,000	1,000	928	600

Option 2 (Capital Option)

			Proceeds
			payable
			on redemption
			of B Shares3
		Number of	expected to be
	Number of	New Ordinary	despatched
Number of Existing Ordinary Shares	B Shares you	Shares you	by the
held at the Record Time	will receive2	will receive	Payment Date
			(£)
100	100	92	60
500	500	464	300
1,000	1,000	928	600

Note: Deferred D Shares arising on the Share Capital Consolidation will have negligible value and have therefore been ignored.

2 Or any C Shares that you may receive that are the subject of the Purchase Offer.

3 Or any proceeds that you may receive under the Purchase Offer.

Do I have to elect for one of the two Options? What happens if I do nothing?

Shareholders who do not make a valid election will be deemed to have elected for the Income Option in respect of ALL of their ROV Entitlement.

¹ If, immediately before the Share Capital Consolidation, your holding of Existing Ordinary Shares when multiplied by 0.9285 does not result in an exact number of New Ordinary Shares, you will be left with a fractional entitlement to a New Ordinary Share. Fractional entitlements will be aggregated into New Ordinary Shares and sold in the market and the proceeds of the sale will be distributed pro rata to relevant Shareholders, save that where the proceeds from the sale of any fractional entitlement is less than £5.00, Shareholders will have no entitlement or rights to the proceeds of sale and any such proceeds will be retained by the Company and donated to a suitable charity. See paragraph 4 of Section E of this Part XI for further details. This will mean that, following the Share Capital Consolidation, no Shareholder will be left with a fraction of a New Ordinary Share.

What if I sell or have sold or transferred all or some of my Existing Ordinary Shares?

If you sell or have sold or otherwise transferred all of your Existing Ordinary Shares at any time prior to the Record Time, please forward this document (but not any personalised Form of Proxy or Form of Election), at once to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee. If you sell or have sold only part of your holding of Existing Ordinary Shares, please consult the bank, stockbroker or other agent through whom the sale or transfer was effected. However, such documents should not be forwarded to or sent in or into any jurisdiction in which to do so would constitute a breach of the relevant laws of such jurisdiction.

Can I trade my New Ordinary Shares?

Subject to Admission or ROV Admission (as the case may be), New Ordinary Shares will be traded on the London Stock Exchange's main market for listed securities and will be equivalent in all material respects (including as to the right to transfer) to Existing Ordinary Shares. It is expected that dealings in Existing Ordinary Shares will continue until 4.30 p.m. on the dealing day prior to Admission or ROV Admission (as the case may be) (expected to be 31 October 2014, or such later date as the Directors determine) and that Admission or ROV Admission (as the case may be) will become effective and dealings in them will commence on the London Stock Exchange at 8.00 a.m. on 3 November 2014 (or such later date as the Directors determine), meaning there should not be any period when you cannot trade either your Existing Ordinary Shares or your New Ordinary Shares on the London Stock Exchange's main market for listed securities.

Can I trade my B Shares, C Shares, Deferred Shares or Deferred D Shares?

Although the B Shares and C Shares are transferable (subject to the applicable restrictions set out in the Articles as proposed to be amended at the General Meeting (please refer to Section G of this Part XI for further details)), neither they nor the Deferred Shares (into which the C Shares will be reclassified immediately upon payment of the C Share Dividend) will be admitted to the Official List or to trading on the London Stock Exchange's main market for listed securities or listed or admitted to trading on any other recognised investment exchange. There will be no formal market for the B Shares or C Shares and your ability to trade or sell the B Shares or C Shares is therefore likely to be limited.

Should you wish to transfer some or all of your B Shares or some or all of your C Shares (subject to the applicable restrictions set out in the Articles as proposed to be amended at the General Meeting (please refer to Section G of this Part XI for further details)) you should send the relevant duly completed instrument(s) of transfer, to Corporate Actions, Equiniti Limited, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA so as to be received by Equiniti by 5.00 p.m. on the second Business Day prior to the Dividend Effective Date. If you transfer such shares prior to the Dividend Effective Date and deliver the relevant instrument(s) of transfer as set out above, you will not be entitled to any proceeds which may become payable on such shares pursuant to the B/C Share Scheme.

Neither the Deferred Shares nor the Deferred D Shares are transferable (other than in the circumstances set out in Section G of this Part XI) meaning you will not be able to trade or sell such shares.

What if I am a citizen, resident or national of a country other than the UK?

Shareholders who are not resident in the UK, or who are citizens, residents or nationals of a country other than the UK, should read the additional information set out in paragraph 8 of Section E of this Part XI. In particular, Overseas Shareholders should note that, by making a valid election for the Capital Option, such Shareholders will be deemed to represent, warrant, undertake and/or agree (as applicable) to the terms set out in paragraph 8 of Section E of this Part XI. Furthermore, Overseas Shareholders who are resident or have a registered address in a Restricted Territory will be deemed to have elected for the Income Option in respect of all their ROV Entitlement. Shareholders who are subject to tax in a jurisdiction other than the UK or the US, or who are in any doubt as to their tax position, should consult their own independent professional adviser since the tax consequences of the B/C Share Scheme may vary for such Shareholders.

What is my tax position?

A general guide to certain limited aspects of the UK tax treatment of the B/C Share Scheme (including under the Purchase Offer) under current UK law and HM Revenue & Customs' published practice is set out in Section H (1) of this Part XI and a summary of certain US tax consequences of the Income Option for Shareholders under current US tax law is set out in Sections H (2) and H (3) of this Part XI.

Shareholders who are subject to tax in a jurisdiction other than the UK or the US, or who are in any doubt as to the potential tax consequences of the B/C Share Scheme, are strongly recommended to consult their own independent professional adviser.

What happens if I do not get my Form of Election back in time?

If you hold your Existing Ordinary Shares in certificated form and do not complete and return a valid Form of Election so that it is received by Equiniti by 4.30 p.m. on 31 October 2014 (or such later date as the Directors determine) or, if you are a CREST Shareholder and you do not send a valid TTE Instruction for settlement by 4.30 p.m. on 31 October 2014 (or such later date as the Directors determine), you will be deemed to have elected for the Income Option in respect of ALL of your ROV Entitlement and you will therefore receive C Shares.

When will I receive my proceeds from the B/C Share Scheme and how will these be paid?

In respect of valid elections (or deemed elections) to the Income Option, it is expected that relevant Shareholders will be sent cheques or, if mandate instructions are held payments are expected to be made by BACS to mandated accounts, in respect of the C Share Dividend by the Payment Date. All payments in respect of the C Share Dividend will be made in pounds sterling.

In respect of valid elections to the Capital Option (including under the Purchase Offer), it is expected that relevant Shareholders will be sent two separate cheques for payments in respect of their B Shares and/ or C Shares by the Payment Date. If Shareholders hold their existing shares in CREST, their CREST accounts are also expected to be credited by the Payment Date. All payments will be made in pounds sterling.

What is the impact on Micro Focus Share Plans?

The Remuneration Committee will consider whether any adjustments should be made as a result of the Merger to the number of Ordinary Shares subject to existing options and awards. No adjustment will be required in relation to the ASGs. Participants in the Micro Focus Share Plans will be advised separately after conclusion of the Merger of any adjustment to existing schemes or awards made or to be made. Please see paragraph 12 of Section E of this Part XI for further details.

What if I have any more questions?

If you have read this document and have any further questions, please telephone the Shareholder helpline, which is available between the hours of 8.30 a.m. and 5.30 p.m. Monday to Friday (except UK public holidays) and which will remain open until 26 November 2014 (or such later date as the Directors determine). The Shareholder helpline numbers are: 0871 384 2873 (from inside the UK) and +44 121 415 0164 (from outside the UK). Please note that calls to the Shareholder helpline numbers may be monitored or recorded. Calls to 0871 384 2873 are charged at 8 pence per minute (excluding VAT) plus network extras. Other service providers' costs may vary. Calls to +44 121 415 0164 from outside the UK are chargeable at applicable international rates. Please note that for legal reasons the Shareholder helpline will only be able to provide information contained in this document and will be unable to give advice on the merits of the B/C Share Scheme, the Options or to provide financial, investment or taxation advice.

Shareholders are recommended to consult their own independent professional adviser before making any election(s) under the B/C Share Scheme.

SECTION C: COMPLETING THE FORM OF ELECTION

To make an election, Shareholders who hold their Existing Ordinary Shares in certificated form must complete the Form of Election sent to them with this document. Shareholders who hold their Existing Ordinary Shares in CREST will not be sent a Form of Election and instead should make their election by means of a TTE Instruction and should refer to paragraph 4 of Section I of this Part XI for further information.

Overseas Shareholders resident or with a registered address in the United States, Canada, Australia, Japan, the Republic of South Africa or New Zealand will be deemed to have elected for the Income Option in respect of all of their ROV Entitlement and will automatically receive the C Share Dividend. The Capital Option is not being offered to Shareholders resident, or with a registered address, in any of these jurisdictions. Accordingly, this Form of Election is not being and must not be mailed or otherwise forwarded, distributed or sent into the United States, Canada, Australia, Japan, the Republic of South Africa or New Zealand. The attention of Overseas Shareholders is drawn to paragraph 8 of Section E of this Part XI.

Shareholders wishing to receive the C Share Dividend (i.e. the Income Option) in respect of ALL of their ROV Entitlement and Overseas Shareholders resident, or with a registered address, in a Restricted Territory should NOT complete or return the Form of Election or make an election through CREST. C Shares will be issued and the C Share Dividend paid automatically in respect of all of the ROV Entitlement in relation to which a Shareholder has not elected for any Option.

The following instructions describe what Shareholders should do when completing a Form of Election. Shareholders need to take their own decision regarding any election(s) they make under the B/C Share Scheme and are recommended to consult their own independent professional adviser.

References to "Boxes" are to the boxes on the Form of Election.

Number of Existing Ordinary Shares held

Box 1B shows the number of Existing Ordinary Shares registered in the name(s) of the Shareholder(s) at 6.00 p.m. on 30 September 2014 and is for information purposes only. If Shareholders do not sell or transfer any Existing Ordinary Shares registered in their name(s) or purchase additional Existing Ordinary Shares between that date and the Record Time (expected to be 6.00 p.m. on 31 October 2014), then this number will also be the same as their ROV Entitlement in respect of which they may make an election. If Shareholders sell or transfer any Existing Ordinary Shares registered in their name(s) and/or purchase additional Existing Ordinary Shares, they should ensure that their election corresponds to the number of Existing Ordinary Shares that will be registered in their name(s) at the Record Time.

How Shareholders may elect for one Option in respect of all of their ROV Entitlement

To elect for the Income Option in respect of ALL of their ROV Entitlement, Shareholders should take no further action. Shareholders who do not complete or return the Form of Election will automatically receive only C Shares in respect of all of their ROV Entitlement, on which the C Share Dividend is expected to be paid.

To elect for the Capital Option in respect of ALL of their ROV Entitlement, Shareholders should mark an "X" or an "ALL" where indicated in Box 2B. By electing for the Capital Option, Shareholders will be deemed to have elected to participate in the Purchase Offer in the event that C Shares are issued by the Company in satisfaction of the Capital Option.

How Shareholders may split their ROV Entitlement between more than one Option

To split his ROV Entitlement between more than one Option, a Shareholder should enter (in numbers) the number of his ROV Entitlement he wishes to elect for the Capital Option in Box 2B. The balance will automatically be defaulted to the Income Option.

The default position where a Shareholder makes an election which is less than his total ROV Entitlement

If a Shareholder enters a number in Box 2B of the Form of Election, which is less than his total ROV Entitlement, he will be deemed to have elected for the Income Option in respect of the balance of his holding.

Dematerialisation of Existing Ordinary Shares following election

If the Existing Ordinary Shares to which any election made on the enclosed Form of Election relates are currently held in certificated form and are "dematerialised" into uncertificated form (i.e. held in CREST) after the relevant Form of Election has been submitted but before the Election Deadline, such election will become invalid. Shareholders who subsequently hold such Existing Ordinary Shares in uncertificated form in CREST will need to give a valid TTE Instruction in place of the submitted Form of Election by the Election Deadline.

Overseas Shareholders

Each Shareholder by whom, or on whose behalf, a Form of Election is executed or TTE Instruction is given, irrevocably represents, warrants, undertakes and agrees to and with the Company that such Shareholder has observed the laws of all relevant territories, obtained any requisite governmental or other consents, complied with all requisite formalities and paid any issue, transfer or other taxes due from such Shareholder in any territory in connection with any election for any of the Options (or any transaction resulting therefrom) and such Shareholder has not taken or omitted to take any action which may result in the Company or any other person acting in breach of the legal or regulatory requirements of any territory in connection with the B/C Share Scheme or such Shareholder's election for any of the Options (or any transaction resulting therefrom).

General

The Directors shall have absolute discretion to determine all questions as to the form and validity (including time and place of receipt) of any Form of Election or TTE Instruction (save that, in the case of a deemed election to participate in the Purchase Offer, such determination shall be made jointly by the Directors and Numis), which determination shall be final and binding. The Directors, jointly with Numis in the case of a deemed election to participate in the Purchase Offer, also reserve the absolute right to waive any defect or irregularity in relation to, or in relation to the receipt of, any Form of Election completed by or on behalf of any Shareholder, and such determination shall be binding on such Shareholder(s). Neither the Directors nor Numis shall be liable to Shareholders for any loss arising from the determination of questions as to the form and validity (including time and place of receipt) of any Form of Election or TTE Instruction, unless attributable to their own wilful default, fraud or negligence and neither the Directors nor Numis shall be under any duty to give notification of any defect or irregularity in any Form of Election or incur any liability for failure to give any such notice.

Once the Election Period has ended, any election made is irrevocable. If the Election Period is extended, the period for exercising withdrawal rights will also be extended (these rights are described more fully in paragraph 7 of Section E of Part XI). No authority conferred by or agreed by the signing of a Form of Election will be affected by, and all such authority will survive, the death or incapacity of the Shareholder executing such form or giving such instruction. All obligations of such Shareholders will be binding upon the heirs, personal representatives, successors and assigns of such Shareholders.

B Shares and/or C Shares which are transferred or otherwise disposed of shall remain subject to the relevant Shareholder's election (or deemed election) for any Option(s) made in respect of such B Shares and/or C Shares.

Signing the Form of Election

The Form of Election shows the name of the holder, or names of joint holders, of Existing Ordinary Shares by reference to which an election can be made in respect of the corresponding ROV Entitlement. The Shareholder, or all joint Shareholders, must sign the Form of Election (in Box 3). The signatures of Shareholders who are individuals signing need to be witnessed. The witness must be over 18 years of age and cannot be the Shareholder, or one of the joint Shareholders, or otherwise have any financial interest in the relevant shares or in the proceeds resulting from the execution of the Form of Election. However, one person may separately witness the signature of all joint Shareholders. If the Form of Election is signed under a power of attorney, the original power of attorney should be sent to Equiniti with the Form of Election.

Final instructions on completing a Form of Election

Shareholders returning a Form of Election must sign where applicable in Box 3.

All Shareholders named on a Form of Election must sign the Form of Election. Once completed, signed and witnessed, this Form of Election should be returned in the reply paid envelope provided. No stamps will be needed if posted in the United Kingdom. To be valid, Forms of Election must be returned so as to be received by Equiniti by the Election Deadline (expected to be 4.30 p.m. on 31 October 2014) (or such later date as the Directors determine). If Shareholders do not use the envelope provided, postage will be payable and the Form of Election should be sent to Corporate Actions, Equiniti Limited, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA.

Shareholders who do not validly complete and return their Form of Election will be deemed to have elected for the Income Option in respect of all of their ROV Entitlement.

Shareholders who need assistance in completing the Form of Election or have any queries relating to it should telephone the Shareholder helpline on 0871 384 2873 and +44 121 415 0164 for overseas between 8.30 a.m. and 5.30 p.m. Monday to Friday (except UK public holidays). Calls to 0871 384 2873 are charged at 8 pence per minute (excluding VAT) plus network extras. Other service providers' costs may vary. Calls to +44 121 415 0164 are chargeable at applicable international rates.

Please note that the Shareholder helpline will not give advice on the merits of the B/C Share Scheme or the choice of Options or provide financial, investment or taxation advice.

SECTION D: ISSUES TO BE CONSIDERED IN RELATION TO THE PROPOSED B/C SHARE SCHEME

Shareholders should consider carefully all of the information set out in this document including, in particular, the risks described below, as well as their personal circumstances, prior to making any decision regarding the B/C Share Scheme. The risks below are not intended to be presented in any assumed order of priority and should be read in conjunction with all other information contained in this document.

The B/C Share Scheme is conditional

There is no guarantee that the B/C Share Scheme will take place. The B/C Share Scheme is conditional on the approval of Resolution 5 set out in the notice of General Meeting set out at the end of this document and will not proceed if it is not approved by Shareholders. The approval of Resolutions 5 and 7 requires not less than 75 per cent. and Resolution 6 requires not less than 50 per cent. of Shareholders voting at the General Meeting in person or by proxy to vote in favour of such resolutions.

It is possible that Shareholders may not approve the proposed B/C Share Scheme. If the B/C Share Scheme does not occur, the Board may need to consider alternative ways to deliver value to Shareholders.

Increased debt

If the Return of Value is implemented, the Enlarged Group (assuming the Merger proceeds) or the Micro Focus Group (if the Merger does not proceed) will have more indebtedness than if the Return of Value is not implemented, which will have several important effects on its future operations, including the following:

• (a) the Company's financial performance will need to be sufficient to service its debt and to satisfy its covenants;
• (b) the Company may be restricted in the future from obtaining additional financing; and
• (c) the Company will be required to comply with certain financial covenants contained in loan and related documentation, further restricting its financial and operating flexibility.

These effects increase with higher levels of debt. However, the Board is confident in the ability of the business to support borrowings under the Existing Facility, as augmented (if required) by the Accordion Facility (should the Merger not go ahead) or under the New Facilities (should the Merger complete), taking into account the strongly cash generative nature of the Micro Focus business and the Attachmate business and the available headroom under the Existing Facility and New Facilities, as the case may be, which is envisaged.

If both the Merger is completed and the Return of Value is implemented, the equity attributable to the Shareholders of the Enlarged Group is expected to return to a positive position compared to the deficit position of Micro Focus as at 30 April 2014. If only the Return of Value is approved, then the total equity attributable to the Shareholders of the Company on a consolidated basis will remain in a deficit position. Despite this position, the Board considers the Return of Value to be in the best interests of the Shareholders taken as a whole (as explained in paragraph 18 of Part I) and notes that it will not impact the Company's ability to make distributions to Shareholders but could impact the external perception of the financial position of the Company.

Exchange Rate Risk

The Micro Focus Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. As the Micro Focus Group's reporting currency is in US dollars but the Return of Value is being made in UK sterling, the Micro Focus Group is exposed to foreign exchange rate fluctuations between the date of this document and the date that the Return of Value is paid to Shareholders. As a result, the Micro Focus Group is considering ways in which to hedge such exposure where possible and practicable.

Current tax legislation and practice may change

A general guide to certain limited aspects of the UK tax treatment of the B/C Share Scheme for Shareholders set out in Section H (1) of this Part XI is based on current UK law and HM Revenue & Customs' published practice as at the date of this document. The summaries of certain US tax consequences of the B/C Share Scheme for Shareholders set out in Sections H (2) and H (3) of this Part XI are based on current US law and practice as at the date of this document. Current legislation and practice may change (including in the period from the date of this document and the date(s) on which any proceeds of the B/C Share Scheme are received by Shareholders) and any such change may affect the taxation liabilities of Shareholders in relation to the B/C Share Scheme.

The B Shares and C Shares are unlisted and may be difficult to transfer

No application has been, or will be, made for the B Shares or the C Shares to be admitted to the Official List or to trading on the London Stock Exchange's main market for listed securities, nor will the B Shares or the C Shares be listed or admitted to trading on any other recognised investment exchange. It is therefore highly unlikely that, if the B/C Share Scheme is implemented, an active trading market for the B Shares or the C Shares will develop or, if developed, will be sustained. As a result, Shareholders may find it difficult to transfer their B Shares and/or C Shares.

SECTION E: DETAILS OF THE B/C SHARE SCHEME

1. B/C Share Scheme

The B/C Share Scheme and the Share Capital Consolidation together comprise the Capital Reorganisation (described in paragraph 4 below) and the Options available under the B/C Scheme are described in paragraph 5 below.

The aggregate amount to be returned under the B/C Share Scheme will depend on the number of Existing Ordinary Shares in issue at the Record Time. However, based on the number of Existing Ordinary Shares in issue on 7 October 2014, the aggregate amount to be returned under the B/C Share Scheme would amount to approximately £83.9 million (US\$135.0 million).

2. Conditions to the implementation of the B/C Share Scheme

The B/C Share Scheme is conditional on:

• (A) the approval by Shareholders of Resolution 5 to be proposed at the General Meeting; and
• (B) New Ordinary Share Admission.

If these conditions are not satisfied, no B Shares or C Shares will be allotted or issued, the Share Capital Consolidation will not take place, no New Ordinary Shares will be created and the B/C Share Scheme will not take effect. The implementation of the B/C Scheme is not conditional upon the Merger.

3. Condition to the structure of the B/C Share Scheme

The issue of B Shares in satisfaction of the Capital Option is conditional upon the satisfaction of the Merger Return Condition. If the Merger Return Condition is not satisfied, the ROV Entitlement shall be satisfied entirely by the issue of C Shares on which a dividend will be payable of 60 pence per C Share (in satisfaction of the Income Option) or which will be purchased by Numis, acting as principal (and not as agent, nominee or trustee), under the Purchase Offer at 60 pence per C Share (in satisfaction of the Capital Option).

4. Capital Reorganisation

Allotment and issue of B Shares and C Shares

If the Merger Return Condition is satisfied as a consequence of the Merger, the Company will recognise a merger reserve, out of which B Shares (with a nominal value of 60 pence per Share) will be issued in satisfaction of the Capital Option. It is proposed that the Company capitalises a sum not exceeding US\$160,000,000 million standing to the credit of the Company's merger reserve and then to apply the resulting amount at a US\$/£ exchange rate to be fixed by the Directors for the purpose of paying up in full B Shares with a nominal value of 60 pence each and a sum not exceeding US\$1 standing to the credit of the Company's share premium account and then to apply such amount at the same exchange rate for the purpose of paying up in full C Shares with a nominal value of 0.0000001 pence each, on the basis that the aggregate nominal value of the B Shares and C Shares so issued shall not exceed £90 million, as described below. If the Merger Return Condition is satisfied, the B Shares and C Shares will be issued to Shareholders on the basis of one B Share or one C Share for each Existing Ordinary Share held at the Record Time, which is expected to be 6.00 p.m. on 31 October 2014.

If the Merger Return Condition is not satisfied, the Company will have no merger reserve out of which to issue B Shares, in which case it is proposed that the Company capitalise a sum not exceeding US\$1 standing to the credit of the Company's share premium account and then to apply the resulting amount at a US\$/£ exchange rate to be fixed by the Directors for the purpose of paying up in full C Shares with a nominal value of 0.0000001 pence each. If the Merger Return Condition is not satisfied, the C Shares will be issued to Shareholders on the basis of one C Share for each Existing Ordinary Share held at the Record Time, which date and time shall be determined by the Directors. The Company shall provide not less than three Business Days' notice by RIS of the revised Record Date in these circumstances.

The exact number of B Shares and C Shares to be issued will depend upon whether or not the Merger Return Condition is satisfied and upon the elections made by each Shareholder between the Options, but in aggregate will be equal to the number of Existing Ordinary Shares in issue at the Record Time. As at 7 October 2014 (the latest practicable date prior to the publication of this document) there were 139,896,511 Existing Ordinary Shares in issue (excluding treasury shares).

It is the intention of the Directors that, if each of the Merger and the Return of Value is approved by Shareholders at the General Meeting and the Merger Return Condition is satisfied, Merger Admission and Re-admission will occur simultaneously. Therefore the Record Date and the Election Deadline are both expected to occur on 31 October 2014, which is the last Business Day prior to the expected date of Completion. However, if the Directors determine that the Merger will be delayed beyond such date, the Record Date and the Election Deadline will be postponed, with the Company, if practicable, giving not less than three Business Days' notice of such postponement through an RIS. Subsequently, on not less than three Business Days' notice, the Company will announce a new Record Date and Election Deadline through an RIS.

The rights and restrictions to be attached to the B Shares and the C Shares are more fully set out in Section G of this Part XI.

No application has been, or will be, made for the B Shares, C Shares, Deferred Shares or Deferred D Shares to be admitted to listing on the Official List or admitted to trading on the London Stock Exchange's main market for listed securities, nor will the B Shares, C Shares, Deferred Shares or Deferred D Shares be listed or admitted to trading on any other recognised investment exchange.

No share certificates will be issued in respect of the B Shares, C Shares, Deferred Shares or Deferred D Shares, and no CREST accounts will be credited with such shares.

The Company will announce the exact number of B Shares and C Shares issued under the proposed Capital Reorganisation on the date of Admission (or, if earlier, the date of ROV Admission).

Share Capital Consolidation

Under the proposed Share Capital Consolidation, the Existing Ordinary Shares will be subdivided and consolidated so that Shareholders will receive 0.9285 of a New Ordinary Share for every one Existing Ordinary Share held at the Record Time. The nominal value of each New Ordinary Share will be 10 pence.

The purpose of the Share Capital Consolidation is so that the market price of New Ordinary Shares is not materially affected by the implementation of the B/C Scheme. The ratio used for the Share Capital Consolidation has been set by reference to the average closing middle market price for the three Business Days prior to the signing of the Merger Agreement. The effect of this will be to reduce the number of Ordinary Shares in issue to reflect the return of 60 pence per Existing Ordinary Share to Shareholders under the B/C Share Scheme. However, Shareholders will own the same proportion of the Company as they did beforehand, subject to fractional entitlements and disregarding the dilutive effect of the Merger should it complete.

Subject to New Ordinary Share Admission, New Ordinary Shares will be traded on the London Stock Exchange's main market for listed securities in the same way as Existing Ordinary Shares and will be equivalent in all material respects to the Existing Ordinary Shares (including as to dividend, voting and other rights), with the exception of the difference in nominal value and the New Ordinary Shares being subject to the rights of the B Shares and the C Shares.

Application will be made for the New Ordinary Shares to be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities with a premium listing, with New Ordinary Share Admission expected to take place and dealings expected to commence at 8.00 a.m. on the date of New Ordinary Share Admission. The Company will apply for the New Ordinary Shares to be admitted to CREST with effect from New Ordinary Admission so that general market transactions in the New Ordinary Shares may be settled within the CREST system.

Share certificates representing the New Ordinary Shares will be issued following the Capital Reorganisation and it is expected that they will be sent to Shareholders by 12 November 2014. Share certificates representing the Existing Ordinary Shares shall cease to be valid from the date of New Ordinary Share Admission. Shareholders who hold their Existing Ordinary Shares in CREST will automatically have their New Ordinary Shares credited to their CREST account at approximately 8.00 a.m. on the date of New Ordinary Share Admission. Such Shareholders shall have their old creditation in respect of the Existing Ordinary Shares cancelled.

In respect of any dividends payable, your present dividend mandate, where in respect of a Sterling bank account, will (unless revoked or amended) be deemed to be valid for dividends and any potential dividends going forward in respect of the New Ordinary Shares.

Fractional entitlements to New Ordinary Shares

Unless a holding of Existing Ordinary Shares when multiplied by 0.9285 results in an exact number of New Ordinary Shares, a Shareholder will have a fractional entitlement to a New Ordinary Share following the Share Capital Consolidation. So, for example, a Shareholder holding 100 Existing Ordinary Shares would, after the Share Capital Consolidation, be entitled to 92 New Ordinary Shares and a fractional entitlement of 0.85 of a New Ordinary Share. By contrast, a Shareholder holding 2,000 Existing Ordinary Shares would, after the Share Capital Consolidation, be entitled to 1,857 New Ordinary Shares and no fractional entitlement.

These fractional entitlements will all be aggregated into New Ordinary Shares and sold in the market and the net proceeds of sale will be distributed pro rata to relevant Shareholders. Cheques in respect of the net proceeds of sale will be despatched to relevant Shareholders together with share certificates for New Ordinary Shares or CREST accounts are expected to be credited with the net proceeds as appropriate by 12 November 2014. Where the cash consideration for any such fractional entitlement (net of any expenses) is less than £5.00, Shareholders will have no entitlement or right to the proceeds of sale and so will not receive a cheque or have their CREST account credited in respect of that entitlement due to the administrative costs incurred in doing so; rather, the net proceeds will be donated by the Company to a suitable charity.

Deferred D Shares

As part of the Share Capital Consolidation, Deferred D Shares will be allocated to the holders of Existing Ordinary Shares at the Record Time, pro rata to their holdings of Existing Ordinary Shares. Following New Ordinary Share Admission, all of the issued Deferred D Shares arising on the Share Capital Consolidation will be bought back for the aggregate price of one penny by the Company. It is anticipated that fractional entitlements to a Deferred D Share will arise upon the allocation of Deferred D Shares. Such fractional entitlements will be aggregated together and transferred to a nominee identified by the Directors who shall hold such Deferred D Shares until they are bought back by the Company. No share certificates shall be issued for the Deferred D Shares.

5. Options

Shareholders (with the exception of Overseas Shareholders resident, or with a registered address, in a Restricted Territory) may choose between the Options (the Income Option and the Capital Option), or a combination of the Options, in respect of their ROV Entitlement. Details of how to make an election are set out in Section C of this Part XI and on the Form of Election enclosed with this document in respect of Existing Ordinary Shares held in certificated form and, in respect of Existing Ordinary Shares held in CREST, in paragraph 4 of Section I of this Part XI. If you elect for more than one Option, you will need to specify a whole number of your ROV Entitlement for each Option you choose.

Overseas Shareholders with a registered address in a Restricted Territory will not be sent Forms of Election and will be deemed to have elected for the Income Option in respect of their entire ROV Entitlement.

Shareholders who do not complete and return a valid Form of Election or TTE Instruction by 4.30 p.m. on 31 October 2014 (or such later date as the Directors determine) will be deemed to have elected for the Income Option in respect of ALL of their ROV Entitlement. Shareholders who complete a valid Form of Election or TTE Instruction in respect of less than their entire ROV Entitlement will be deemed to have elected for the Income Option for those Existing Ordinary Shares in respect of which no election has been made.

Shareholders should read the general guidance on certain limited aspects of the UK and US tax treatment of the proposed B/C Share Scheme set out in Section H of this Part XI. Shareholders who are in any doubt as to their tax position, or who are subject to tax in a jurisdiction other than the United Kingdom or the United States, should consult an appropriate professional adviser.

Option 1 (Income Option)

Shareholders who elect, or are deemed to have elected, for the Income Option in respect of some or all of their ROV Entitlement will receive one C Share in respect of each Existing Ordinary Share held at the Record Time and validly elected to such Option (irrespective of whether the Merger occurs). Shareholders who are resident or have a registered address in a Restricted Territory, or who do not make a valid election, will automatically be deemed to have elected for the Income Option in respect of all their Existing Ordinary Shares.

The C Share Dividend of 60 pence will become automatically payable on each such C Share on the ROV Effective Date. It is expected that Shareholders entitled to receive the C Share Dividend will be sent cheques or, if mandate instructions are held, that payments will be made by BACS to mandated accounts, in respect of the C Share Dividend on the Payment Date. All payments in respect of the C Share Dividend will be made in pounds sterling.

The C Shares upon which the C Share Dividend becomes payable will be automatically reclassified as Deferred Shares, with the Shareholder receiving one Deferred Share for each such C Share. The Deferred Shares will carry extremely limited rights as more fully described in Section G of this Part XI and will have negligible value.

The Company will purchase all Deferred Shares then in issue at any time for an aggregate consideration of one penny and no further action will be required from Shareholders. In view of the negligible amount of the aggregate consideration, Shareholders will not be entitled to have any part of the aggregate consideration paid to them.

No share certificates will be issued in respect of the C Shares or the Deferred Shares and no CREST accounts will be credited with C Shares or Deferred Shares. Neither the C Shares nor the Deferred Shares will be listed on the Official List or traded on the London Stock Exchange's main market for listed securities or listed or admitted to trading on any other recognised investment exchange.

The rights and restrictions attached to the C Shares and the Deferred Shares are more fully set out in Section G of this Part XI.

Overseas Shareholders resident or with a registered address in a Restricted Territory will automatically be deemed to have elected for the Income Option in respect of all their ROV Entitlement. The attention of Overseas Shareholders (and, in particular, Overseas Shareholders resident, or with a registered address, in a Restricted Territory) is generally drawn to paragraph 8 of this Section E.

Option 2 (Capital Option)

Shareholders (other than Overseas Shareholders resident or with a registered address in a Restricted Territory) who elect for the Capital Option will receive one B Share or, if the Merger Return Condition is not satisfied, one C Share in respect of each Existing Ordinary Share held at the Record Time and validly elected to such Option. The circumstances in which Shareholders may receive C Shares rather than B Shares under this Capital Option are described further below.

If the Merger Return Condition is satisfied, as a consequence of the Merger the Company will recognise a merger reserve, out of which B Shares will be issued in satisfaction of the Capital Option. Where B Shares are issued to satisfy valid elections for the Capital Option, each such B Share will be redeemed by the Company for 60 pence on the ROV Effective Date. Each B Share will be cancelled on redemption.

If the Merger Return Condition is not satisfied, the Company will have no merger reserve out of which to issue the B Shares and will instead issue C Shares to satisfy valid elections for the Capital Option to a Shareholder. Such Shareholders will not be paid the C Share Dividend (as they would be under the Income Option). Instead, subject to the conditions of the Purchase Offer being satisfied, Numis, acting as principal (and not as agent, nominee or trustee), will purchase such C Shares from those Shareholders under the Purchase Offer by 4.30 p.m. on the dealing day following New Ordinary Share Admission for 60 pence per C Share, free of all dealing expenses and commissions. Once Numis has made the Purchase Offer, it will be automatically deemed to be accepted by Shareholders, with the consideration becoming payable on and subject to the C Share Dividend being cleared. In such cases, the C Share Dividend will instead be paid to Numis. Each C Share purchased by Numis, acting as principal (and not as agent, nominee or trustee), under the Purchase Offer will, once the C Share Dividend has been paid on it, automatically be reclassified as a Deferred Share, with Numis holding one Deferred Share for every such C Share. The Deferred Shares held by Numis will have the same rights as those received by Shareholders who elect, or are deemed to have elected for the Income Option and therefore will carry extremely limited rights as more fully described in Section G of this Part XI and will have negligible value. The Company will purchase all Deferred Shares (including those held by Numis) for an aggregate consideration of one penny. Shareholders are advised to read the terms which would apply to the Purchase Offer, set out below in paragraph 6 of this Section E, before electing for the Capital Option.

The B Shares, the C Shares, Deferred Shares and the Deferred D Shares will not be listed on the Official List or traded on the London Stock Exchange's main market for listed securities, nor will such shares be listed or admitted to trading on any other recognised investment exchange. No share certificates will be issued in respect of the B Shares, the C Shares, Deferred Shares or the Deferred D Shares and no CREST accounts will be credited with such shares.

The rights and restrictions attached to the B Shares, the C Shares, the Deferred Shares and the Deferred D Shares are more fully set out in Section G of this Part XI.

The attention of Overseas Shareholders (and, in particular, Overseas Shareholders resident, or with a registered address, in a Restricted Territory) is generally drawn to paragraph 8 of this Section E below.

It is expected that Shareholders, who are entitled to do so, will be sent cheques in respect of the proceeds from the redemption of B Shares issued pursuant to the Capital Option and/or, if applicable, separate cheques in respect of the proceeds received under the Purchase Offer, by the Payment Date. If Shareholders hold their Existing Ordinary Shares in CREST, they will have their CREST accounts credited by the Payment Date.

6. Terms of the Purchase Offer

The following terms will apply to the Purchase Offer:

• (i) no contract between a Shareholder and Numis will arise in relation to the sale and purchase of any C Shares, or under which Numis may (subject to conditions or otherwise) become entitled or obliged to purchase any C Shares under the Purchase Offer, unless and until Numis (acting as principal, and not as agent, nominee or trustee) makes the Purchase Offer (which it has committed to do subject to the satisfaction of the conditions set out in this paragraph), which is expected to be by way of an announcement through a Regulatory Information Service by 4.30 p.m. on the dealing day following New Ordinary Share Admission, at which point such offer shall be automatically deemed to be accepted by Shareholders in respect of C Shares issued to satisfy valid elections for the Capital Option. The obligation of Numis to make the Purchase Offer is conditional upon the satisfaction or waiver by Numis, of the following conditions: (i) Resolution 5 being passed at the General Meeting without amendment; (ii) the allotment and issue of C Shares in satisfaction of the Capital Option in accordance with this document; and (iii) the Company having sufficient distributable reserves to pay the C Share Dividend in accordance with this document. The consideration owed by Numis to Shareholders pursuant to the Purchase Offer shall only become payable once the C Share Dividend is declared and paid;
• (ii) execution by or on behalf of a Shareholder of a Form of Election, or the giving of a TTE Instruction, in either case to participate in the Capital Option, constitutes a deemed election, to the extent the

Shareholder receives C Shares in respect of its election for the Capital Option, to participate in the Purchase Offer and the Shareholder thereby irrevocably appoints the Company, or any officer or employee of the Company for the time being, or Numis, or any director of Numis for the time being, as attorney for and/or agent of the Shareholder with authority on that Shareholder's behalf and in his or their name, to exercise all rights, powers and privileges attached to the C Shares or otherwise capable of being exercised by that Shareholder in respect of the C Shares in order to give effect to his or their election and to do all acts and things and to execute all such deeds, transfers and other documents as such attorney and/or agent shall consider necessary to give effect to that Shareholder's election;

• (iii) the Form of Election, or the giving of a TTE Instruction, in either case to participate in the Capital Option, which constitutes a deemed election to participate in the Purchase Offer and all contracts and matters (whether contractual or non-contractual) resulting therefrom will be governed by and construed in accordance with English law. Execution by or on behalf of a Shareholder of such a Form of Election or, as the case may be, the giving of a TTE Instruction constitutes that Shareholder's submission, in relation to all matters arising out of or in connection with such form or instruction and the exercise of the powers of attorney or agent appointed thereunder, to the exclusive jurisdiction of the English courts;
• (iv) upon execution of a Form of Election, or the giving of a TTE Instruction, in either case to participate in the Capital Option, which constitutes a deemed election to participate in the Purchase Offer, the Shareholder represents and warrants that such Shareholder has full power and authority to tender, sell, assign and transfer the C Shares in relation to which that Shareholder has accepted the Purchase Offer under that Form of Election or TTE Instruction and that when such C Shares are accepted for purchase by Numis, Numis will acquire such C Shares with full title guarantee and free and clear from all liens, charges, restrictions, claims, equitable interests and encumbrances and with full power and authority to tender, sell, assign and transfer such C Shares. In addition, by execution of the Form of Election or the giving of a TTE Instruction which constitutes a deemed election to participate in the Purchase Offer under the Capital Option, the Shareholder: (i) agrees that he or she will do all other things and execute any additional documents which may be necessary or, in the opinion of Numis, desirable to effect the purchase of such C Shares by Numis and/or to perfect any of the authorities expressed to be given under the Form of Election or by virtue of giving the TTE Instruction; and (ii) acknowledges that Numis shall have no liability whatsoever to such Shareholder in respect of acts done or omitted to be done by it on behalf of such Shareholder in connection with the instructions given to it by such Shareholder pursuant to the Form of Election, the TTE Instruction or otherwise in relation to the Purchase Offer;
• (v) each Shareholder by whom, or on whose behalf, a Form of Election is executed or TTE Instruction is given irrevocably represents, warrants, undertakes and agrees to and with the Company and Numis that such Shareholder has observed the laws of all relevant territories, obtained any requisite governmental or other consents, complied with all requisite formalities and paid any issue, transfer or other taxes due from such Shareholder in any territory in connection with any election for any of the Options (or any transaction resulting therefrom) and such Shareholder has not taken or omitted to take any action which may result in the Company, Numis or any other person acting in breach of the legal or regulatory requirements of any territory in connection with the B/C Share Scheme or such Shareholder's election for any of the Options (or any transaction resulting therefrom);
• (vi) upon execution of a Form of Election, or the giving of a TTE Instruction, in either case to participate in the Capital Option which constitutes a deemed election to participate in the Purchase Offer, the Shareholder represents and warrants that such Shareholder does not have his/her registered address in a Restricted Territory and is not resident in a Restricted Territory;
• (vii) no authority conferred or agreed to by execution of the Form of Election, or the giving of a TTE Instruction, in either case to participate in the Capital Option, which constitutes a deemed election to participate in the Purchase Offer shall be affected by, and all such authority shall survive, the death or incapacity of the Shareholder executing such form or giving such instruction. All obligations of such

Shareholder shall be binding upon the heirs, personal representatives, successors and assigns of such Shareholder; and

(viii) the Directors jointly with Numis may, if they so determine in their absolute discretion, accept a Form of Election or TTE Instruction in either case to participate in the Capital Option, which includes a deemed election to participate in the Purchase Offer which is received after the relevant time or which is not correctly completed.

7. Withdrawal rights

Any election for an Option, whether made by the signing of a Form of Election or the giving of a TTE Instruction, may be withdrawn by a Shareholder at any time up to 1.00 p.m. prior to the Election Deadline. Thereafter, such election will be irrevocable. If an election is validly withdrawn, the Shareholder may make a new election during the Election Period, but if a new valid election is not made by the Election Deadline, the Shareholder will be deemed to have elected for the Income Option to the extent the Shareholder has not otherwise made a valid election. If the Election Period is extended elections shall remain valid unless withdrawal rights are exercised, and withdrawal rights will be correspondingly extended.

Shareholders wishing to withdraw their election must call the Shareholder helpline on 0871 384 2873 and +44 121 415 0164 for overseas between the hours of 8.30 a.m. and 5.30 p.m. Monday to Friday (except UK public holidays) and then send written notice of such withdrawal to Equiniti Limited, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA. Calls to 0871 384 2873 are charged at 8 pence per minute (excluding VAT) plus network extras. Other service providers' costs may vary. Calls to +44 121 415 0164 from outside the UK are chargeable at applicable international rates. If such Shareholders wish to re-elect in respect of either Option, they can request a replacement Form of Election or receive instructions on how to re-elect through CREST from the Shareholder helpline. Shareholders will need to take into account the postal time necessary for a replacement Form of Election to reach Equiniti by the Election Deadline (expected to be 4.30 p.m. on the dealing day prior to New Ordinary Admission (currently expected to be 31 October 2014)).

For a withdrawal of any election to be effective, a written notice of withdrawal signed by the person(s) who signed the relevant Form of Election or who gave the relevant TTE Instruction must:

• (i) specify the name(s) and address(es) of the person(s) who tendered the election to be withdrawn, the account number (which, for Shareholders who hold their Existing Ordinary Shares in certificated form, appears on the front page of the relevant Form of Election) and the exact number of their ROV Entitlement to be withdrawn; and
• (ii) in the case of an election originally made by a TTE Instruction, be accompanied by a valid ESA Message given by the person(s) who gave the relevant TTE Instruction,

and be received by Equiniti no later than 1.00 p.m. before the Election Deadline.

Telex, facsimile, electronic mail or other electronic means of transmission or any form of copy of written notice will not constitute a written instruction of withdrawal.

Withdrawals may not be rescinded, but re-elections may be made at any time prior to the end of the Election Period. Withdrawals must be received by Equiniti no later than 1.00 p.m. before the Election Deadline. Any re-elections that are received by Equiniti after the end of the Election Period will be deemed invalid for the purposes of the Options. Any Shareholder who withdraws his or her election in accordance with this paragraph before the end of the Election Period and does not validly re-elect in respect of their ROV Entitlement will be deemed to have elected for the Income Option to the extent the Shareholder has not otherwise made a valid election.

The Directors shall determine all questions as to the form and validity (including time and place of receipt) of any notice of withdrawal, in their absolute discretion, which determination shall be final and binding (save that, in the case of a withdrawal from the Purchase Offer, such determination shall be made jointly by the Directors and Numis). The Directors (jointly with Numis in the case of a withdrawal from the Purchase Offer) also reserve the absolute right to waive any defect or irregularity in relation to, or in relation to the receipt of, any withdrawal by any Shareholder, and such determination will be binding on such Shareholder. None of the Company, any other member of the Micro Focus Group, Numis, Equiniti or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or incur any liability for failure to give any such notification or for any reason with regard to withdrawals and reelections.

8. Overseas Shareholders

Shareholders who are not resident in the United Kingdom or who are citizens, residents or nationals of other countries should consult their professional advisers to ascertain whether the return of value pursuant to the B/C Share Scheme (including, as may be relevant in each case, the issue, holding, redemption or disposal of the B Shares, the C Shares, Deferred D Shares and/or the Deferred Shares) will be subject to any restrictions or require compliance with any formalities imposed by the laws or regulations of, or any body or authority located in, the jurisdiction in which they are resident or to which they are subject. In particular, it is the responsibility of any Overseas Shareholder to satisfy himself as to full observance of the laws of each relevant jurisdiction in connection with the B/C Share Scheme, including the obtaining of any government, exchange control or other consents which may be required, or the compliance with other necessary formalities needing to be observed and the payment of any issue, transfer or other taxes or duties in such jurisdiction.

The distribution of this document in certain jurisdictions may be restricted by law. Persons into whose possession this document comes should inform themselves about and observe any such restrictions. Neither this document nor any other document issued or to be issued by or on behalf of the Company in connection with the B/C Share Scheme constitutes an invitation, offer or other action on the part of the Company in any jurisdiction in which such invitation, offer or other action is unlawful.

The Capital Option is not being made available to Shareholders who are resident, or have a registered address in any of the Restricted Territories. Any purported election by a Shareholder, resident, or with a registered address in a Restricted Territory for the Capital Option will be deemed by the Company to be an election for the Income Option in respect of the entirety of that Shareholder's ROV Entitlement and accordingly that Shareholder will receive the C Share Dividend.

Each Shareholder by whom, or on whose behalf, a Form of Election is executed or TTE Instruction is given, irrevocably represents, warrants, undertakes and agrees to and with the Company and Numis that such Shareholder has observed the laws of all relevant territories, obtained any requisite governmental or other consents, complied with all requisite formalities and paid any issue, transfer or other taxes due from such Shareholder in any territory in connection with any election for any of the Options (or any transaction resulting therefrom) and such Shareholder has not taken or omitted to take any action which may result in the Company, Numis or any other person acting in breach of the legal or regulatory requirements of any territory in connection with the B/C Share Scheme or such Shareholder's election for any of the Options (or any transaction resulting therefrom).

In the event that the Company is advised that it would or might be in breach of legal or regulatory requirements in any jurisdiction, or the Company would or might be required to make filings or take any other action in any jurisdiction as a result of an election made pursuant to a Form of Election or TTE Instruction by an Overseas Shareholder, such Overseas Shareholder shall be deemed to have elected for the Income Option (unless the Directors otherwise determine in their absolute discretion).

The above provisions of this paragraph relating to Overseas Shareholders may be waived, varied or modified as regards specific Overseas Shareholders or on a general basis by the Company in its absolute discretion.

9. Securities Law considerations in the United States

None of the B Shares, C Shares, Deferred Shares, Deferred D Shares nor the New Ordinary Shares have been or will be registered under the Securities Act or the state securities laws of the United States and none of them may be offered or sold in the United States or to any US persons unless pursuant to a transaction that has been registered under the Securities Act and the relevant state securities laws or a transaction that is not subject to the registration requirements of the Securities Act and the state securities laws, either due to an exemption therefrom or otherwise.

10. Dealings and despatch of documents

The Return of Value will be made by reference to holdings of Existing Ordinary Shares on the Company's register of members as at the Record Time. If the Directors determine that the Record Time be postponed, the Company will, if practicable, give not less than three Business Days' notice of such delay through an RIS.

B Shares and/or C Shares which are transferred or otherwise disposed of shall remain subject to the relevant Shareholder's election (or deemed election) for any elections made in respect of such B Shares and/or C Shares.

It is expected that dealings and settlement within the CREST system of the Existing Ordinary Shares will continue until the Election Deadline when, the registration of uncertificated holdings in respect of Existing Ordinary Shares will be disabled. In the case of Existing Ordinary Shares held in certificated form, the register of members will be closed for transfers and no further transfers of Existing Ordinary Shares will be able to be made after the Election Deadline.

With effect from New Ordinary Share Admission, share certificates in respect of Existing Ordinary Shares will cease to be valid. Share certificates in respect of New Ordinary Shares will only be issued following the Share Capital Consolidation. It is therefore important that, if you hold certificate(s) in respect of your Existing Ordinary Shares, you retain them for the time being until New Ordinary Share certificates are despatched, which is currently expected to be by 12 November 2014. On receipt of share certificates in respect of New Ordinary Shares, certificates in respect of Existing Ordinary Shares should be destroyed.

Temporary documents of title will not be issued in respect of New Ordinary Shares and, pending despatch of definitive share certificates, transfers of New Ordinary Shares held in certificated form will be certified against the register of members held by Equiniti.

No share certificates will be issued by the Company in respect of B Shares, C Shares, Deferred Shares or Deferred D Shares.

It is expected that Shareholders entitled to receive the C Share Dividend will be sent cheques or, if mandate instructions are held in respect of a Sterling bank account, payments will be made by BACS to mandated accounts in respect of the C Share Dividend by the Payment Date. All payments in respect of the C Share Dividend will be made in pounds sterling.

It is expected that Shareholders, who are entitled to do so, will be sent cheques in respect of the proceeds from the redemption of B Shares issued pursuant to the Capital Option and/or, if applicable, separate cheques in respect of the proceeds from the sale of the C Shares to Numis under the Purchase Offer, by the Payment Date. If Shareholders hold their Existing Ordinary Shares in CREST, they will have their CREST accounts credited on the Payment Date.

All share certificates and cheques will be sent by post, at the risk of the Shareholder(s) entitled thereto, to the registered address of the relevant Shareholder (or, in the case of joint Shareholders, to the address of the joint Shareholder whose name stands first in the register of members in respect of such joint shareholding).

Your present dividend payment mandate, unless revoked or amended, will be deemed to be valid for dividends from the Company in respect of the New Ordinary Shares. In respect of any dividends payable pursuant to the Income Option your present dividend mandate, where in respect of a Sterling bank account, will (unless revoked or amended) be deemed to be valid for dividends payable by the Company. All payments in respect of any dividend payable pursuant to the Income Option will be made in Sterling.

No application has been, or will be, made for the B Shares, C Shares, Deferred Shares or Deferred D Shares to be admitted to listing on the Official List or admitted to trading on the London Stock Exchange's main market for listed securities, nor will they be listed or admitted to trading on any other recognised investment exchange.

11. Amendments to the Articles of Association

A number of amendments to the Articles are required in order to implement the B/C Share Scheme and require approval at the General Meeting:

• the insertion into the Articles of the rights and restrictions attaching to the B Shares, C Shares, Deferred Shares and Deferred D Shares, as set out in Section G of this Part XI; and
• changes required to article 122 of the Articles, which will confer a power on the Company to capitalise its reserves and funds, in order that the Company can allot and issue B Shares and C Shares in the manner described in this document (these amendments are set out in Section F of this Part XI).

12. Micro Focus Share Plans

Under the Micro Focus Share Plans, the Company has granted options and awards over Ordinary Shares at varying exercise prices and expiry dates. In addition, the Company has made conditional Additional Share Grants as described in paragraph 7.2 of Part XIII (Additional Information) of this document. Participants under the Micro Focus Share Plans and recipients of Additional Share Grants are not the beneficial owners of Existing Ordinary Shares under those schemes and so will not participate in the B/C Share Scheme, other than in their capacity as Shareholders (if applicable).

Other than in relation to the options granted to US participants of the ESPP (further details of which are set out in paragraph 12 of Part XIII (Additional Information of this document), it is expected that the Share Capital Consolidation will achieve a largely neutral position for participants under the Micro Focus Share Plans and recipients of Additional Share Grants as options or awards over Existing Ordinary Shares will take effect as options or awards over the same number of New Ordinary Shares, which are expected to have approximately the same market value following the Capital Reorganisation as Existing Ordinary Shares, subject to market fluctuations. On this basis, it is anticipated that no adjustment will be made to the number of Ordinary Shares over which participants have options or awards or to the relevant strike price of such options or awards. Where subsisting options or awards are subject to performance conditions, the Remuneration Committee will consider whether amendments to the original conditions are required (in line with the terms of the relevant plans) in light of the proposed Return of Value and the Share Capital Consolidation to ensure that the performance targets are not materially less challenging in its opinion. Any such amendment will be made at the discretion of the Remuneration Committee and will be notified to relevant option/award holders. No such adjustment will be made in respect of the ASGs.

Holders of options granted to US participants under the ESPP will receive a cash compensation payment to take account of the reduction in value of such options resulting from the proposed Return of Value. This is because, unlike other Micro Focus Share Plans, the value of these options will not be preserved following the Share Capital Consolidation. The terms of such compensation payment will be determined in the discretion of the Remuneration Committee on a fair and reasonable basis, and communicated to the relevant participants. However, any such compensation will, in any event, only be paid to the extent the relevant options are exercised.

As at 7 October 2014 (being the latest practicable date prior to publication of this document) the total number of options under the Micro Focus Share Plans outstanding to subscribe for or acquire Existing Ordinary Shares was 4,948,398 (excluding Additional Share Grants conditionally made over 2,570,809 Ordinary Shares). In aggregate, these outstanding options represented approximately 3.54 per cent. of the issued ordinary share capital of the Company (excluding treasury shares). Following the B/C Share Scheme, excluding the Consideration Shares and assuming no further shares and options are issued between 7 October 2014 and the Share Capital Consolidation becoming effective, the outstanding options (excluding Additional Share Grants conditionally made over 2,570,809 Ordinary Shares) will represent approximately 3.81 per cent. of the issued ordinary share capital of the Micro Focus Group (excluding treasury shares).

13. Summary explanation of the Resolutions relating to the Return of Value

In order to comply with applicable companies' legislation, the implementation of the B/C Share Scheme requires the approval of Shareholders at a general meeting of the Company. Accordingly, Shareholder approval for the Return of Value and certain matters related to it is being sought at the General Meeting. The notice convening the General Meeting is set out at the end of this document.

Three Resolutions will be proposed at the General Meeting in relation to the Return of Value. Resolutions 5 and 7 will each be proposed as special resolutions (the passing of which requires at least 75 per cent. of the votes cast (whether in person or by proxy) to be in favour) and Resolution 6 will be proposed as an ordinary resolution (the passing of which requires more than 50 per cent. of the votes cast (whether in person or by proxy) to be in favour). Resolution 5 is required for the implementation of the B/C Share Scheme and the Share Capital Consolidation. Resolutions 6 and 7 replace similar existing shareholder authorities in place since the Annual General Meeting and reflect the Company's proposed new share capital structure that will be in place following either or both of the Share Capital Consolidation becoming effective and the Consideration Shares being issued pursuant to the Merger Agreement. Resolution 5 is not conditional on the passing of Resolutions 6 or 7 and consequently the Return of Value is not conditional upon either Resolution 6 or Resolution 7 being passed. The authority contained within Resolution 6 is conditional on either or both the Return of Value being implemented and the Consideration Shares being issued and is structured to ensure that, should either or both occur, the Company has in place the customary shareholder authorities appropriate to its capital structure. In addition, Resolution 7 is conditional on Resolution 6.

Resolution 5: To approve the B/C Share Scheme and to amend the Articles

This special resolution is conditional on New Ordinary Share Admission occurring by 8.00 a.m. on 12 February 2015 (or such later date or time as the Directors may determine). A summary of the paragraphs comprising the Resolution follows below:

5(A) This paragraph proposes that the Articles be altered by:

• (i) deleting the current article 122 and substituting therefor new article 122 which is set out in full in section F of this Part XI and relates to the ability to allow the Company to capitalise funds and reserves; and
• (ii) deleting the current articles 139 and 140 and substituting therefor new articles 139, 140, 141A and 141B which are set out in full in section G of this Part XI and relate to the rights and restrictions to be attached to the B Shares (provided that the Merger Return Condition is satisfied), the C Shares, the Deferred Shares and the Deferred D Shares.
• 5(B) This paragraph is conditional upon satisfaction of the Merger Return Condition and proposes to authorise the Directors to:
• (i) capitalise a sum not exceeding US\$160,000,000 standing to the credit of the Company's merger reserve (assuming completion of the Merger), to pay up in full the B Shares;
• (ii) capitalise a sum not exceeding US\$1, standing to the credit of the Company's share premium account, to pay up in full the C Shares; and
• (iii) allot and issue B Shares up to an aggregate nominal amount of £90,000,000 and C Shares up to an aggregate nominal amount of 50 pence, on the basis of one B Share or one C Share for each Existing Ordinary Share held at the Record Time. The authority granted to the Directors will expire at the conclusion of the annual general meeting of the Company in 2015 or the close of business on 27 October 2015 (whichever is earlier).
• 5(C) This paragraph is conditional upon the Merger Return Condition not being satisfied or becoming incapable of being satisfied and proposes to authorise the Directors to:
• (i) capitalise a sum not exceeding US\$1, standing to the credit of the Company's share premium account, to pay up in full the C Shares; and
• (ii) allot and issue C Shares up to an aggregate nominal amount of 50 pence, on the basis of one C Share for each Existing Ordinary Share held at the Record Time. The authority granted to the Directors will expire at the conclusion of the next annual general meeting of the Company in 2015 or the close of business on 27 October 2015 (whichever is earlier).
• 5(D) This paragraph sets out the procedure for the consolidation of the Existing Ordinary Shares and subsequent subdivision and redesignation into New Ordinary Shares and Deferred D Shares. All

fractional entitlements of New Ordinary Shares which arise will be aggregated and sold with the net proceeds of the sale, where equal to or in excess of £5.00, paid in due proportion to the relevant Shareholders. The net proceeds of sale from fractional entitlements of less than £5.00 will be donated by the Company to a suitable charity. All fractional entitlements of Deferred D Shares which arise on the Share Capital Consolidation will be aggregated and transferred to a nominee identified by the Directors.

5(E) This paragraph proposes to authorise the Directors to transfer, in accordance with the revised Articles, any Deferred D Shares arising as a result of the Share Capital Consolidation and any Deferred Shares arising on the reclassification of the C Shares following payment of the C Share Dividend.

Resolution 6: To approve a revised authority to allot shares

As described in this document, both the Return of Value and the Merger are conditional, inter alia, on the approval of Shareholders at the General Meeting. In addition, the Merger Agreement is subject to the conditions described more particularly in paragraph 3 of Part II (Details of the Merger) of this document. In relation to the future share capital structure of the Company, there are therefore four possible scenarios, where:

• the Return of Value is implemented prior to the Merger completing (in which case, assuming that there are 139,896,511 Ordinary Shares in issue (excluding treasury shares) immediately prior to the Return of Value, 129,893,911 New Ordinary Shares will be held by Existing Shareholders following the Share Capital Consolidation (excluding 11,951,119 held in treasury)) ("Scenario 1");
• both the Return of Value and the Merger occur simultaneously or the Merger occurs following the Return of Value (in which case, assuming that there are 139,896,511 Ordinary Shares in issue (excluding treasury shares) immediately prior to the Return of Value, 129,893,911 New Ordinary Shares will be held by Existing Shareholders (excluding 11,951,119 held in treasury) and 86,595,711 Consideration Shares will be held by Wizard) ("Scenario 2");
• the Return of Value is not implemented but the Merger completes (in which case 86,595,711 Consideration Shares will be held by Wizard and there will be no Share Capital Consolidation, so (assuming that there are 139,896,511 Ordinary Shares in issue immediately prior to the Merger) there will remain 139,896,511 Ordinary Shares held by Existing Shareholders following the Merger (excluding 12,871,427 held in treasury)) ("Scenario 3"); and
• neither the Return of Value nor the Merger are completed, in which case, the Company's share capital will remain unchanged and so the Company's existing authorities will be sufficient.

In each of Scenarios 1, 2 and 3, the Company's share capital structure will differ from the position as at the date of this document and require different standing shareholder authorities. Therefore, each of Resolutions 6 and 7 seeks to obtain from Shareholders customary shareholder authorities in relation to each of these three scenarios.

Resolution 6 proposes to give the Directors general authority to allot shares in the capital of the Company to replace similar existing authorities in place since the Annual General Meeting. In order to reflect each of Scenarios 1, 2 and 3 described above, Resolution 6 is split into three paragraphs, each relating to one of Scenarios 1, 2 or 3. Paragraph 6.1 of Resolution 6 relates to Scenario 1 and is conditional on the passing of Resolution 5 and New Ordinary Share Admission occurring by 8.00 a.m. on 12 February 2015 (or such later time as the Directors may in their absolute discretion determine). Paragraph 6.2 of Resolution 6 relates to Scenario 2 and is conditional on the passing of Resolution 5 and New Ordinary Share Admission and Merger Admission occurring by 8.00 a.m. on 12 February 2015 (or such later time as the Directors may in their absolute discretion determine). Paragraph 6.3 relates to Scenario 3 and is conditional upon Merger Admission and Resolution 5 not being passed. The authorities set out in each paragraph are mutually exclusive, such that only one authority (under either paragraph 6.1, 6.2 or 6.3) can apply at any time. A summary of the paragraphs comprising this Resolution is below.

Paragraph 6.1 will apply if the Return of Value is implemented prior to the Merger:

• 6.1(A) This paragraph proposes to give the Directors authority to allot shares up to an aggregate nominal amount of £4,329,797 (representing 43,297,970 New Ordinary Shares of 10 pence each) being approximately one third of the expected issued ordinary share capital of the Company (excluding treasury shares) immediately following the Return of Value being implemented.
• 6.1(B) In line with guidance issued by the IMA, this paragraph proposes to give the Directors authority to allot shares in connection with a rights issue in favour of ordinary shareholders of the Company up to an aggregate nominal amount equal to £8,659,594 (representing 86,595,940 New Ordinary Shares of 10 pence each), as reduced by the nominal amount of any Relevant Securities issued under paragraph 6.1(A). This amount (before any reduction) represents approximately two thirds of the expected issued ordinary share capital (excluding treasury shares) of the Company immediately following the Return of Value being implemented.

If approved, the authorities granted under sub-paragraphs 6.1(A) and 6.1(B) of Resolution 6 will expire on the earliest to occur of Merger Admission (in which case, the authorities set out in paragraph 6.2 will apply) and the Company's annual general meeting in 2015 (or 27 October 2015, whichever is the earliest).

Paragraph 6.2 will apply if the Return of Value and the Merger are implemented together or if the Merger completes after the Return of Value is implemented:

• 6.2(A) This paragraph proposes to give the Directors authority to allot shares up to an aggregate nominal amount of £7,216,320 (representing 72,163,200 New Ordinary Shares of 10 pence each) being approximately one third of the expected issued ordinary share capital of the Company (excluding treasury shares) immediately following Admission.
• 6.2(B) In line with guidance issued by the IMA, this paragraph proposes to give the Directors authority to allot shares in connection with a rights issue in favour of ordinary shareholders of the Company up to an aggregate nominal amount equal to £14,432,640 (representing 144,326,400 New Ordinary Shares of 10 pence each), as reduced by the nominal amount of any Relevant Securities issued under paragraph 6.2(A). This amount (before any reduction) represents approximately two thirds of the expected issued ordinary share capital (excluding treasury shares) of the Company immediately following Admission.

If approved, the authorities granted under sub-paragraphs 6.2(A) and 6.2(B) of Resolution 6 will be reduced by the amount of any authority used pursuant to paragraph 6.1 and will expire on the date of the Company's annual general meeting in 2015 (or 27 October 2015, whichever is the earlier).

Paragraph 6.3 will apply if the Return of Value is not implemented but the Merger completes:

• 6.3(A) This paragraph proposes to give the Directors authority to allot shares up to an aggregate nominal amount of £10,223,607 (representing 75,497,405 Ordinary Shares of 13 13/24 pence each) being approximately one third of the expected issued ordinary share capital of the Company (excluding treasury shares) immediately following Merger Admission.
• 6.3(B) In line with guidance issued by the IMA, this paragraph proposes to give the Directors authority to allot shares in connection with a rights issue in favour of ordinary shareholders of the Company up to an aggregate nominal amount equal to £20,447,214 (representing 150,994,811 Ordinary Shares of 13 13/24 pence each), as reduced by the nominal amount of any Relevant Securities issued under paragraph 6.3(A). This amount (before any reduction) represents approximately two thirds of the expected issued ordinary share capital (excluding treasury shares) of the Company immediately following Merger Admission.

If approved, the authorities granted under sub-paragraphs 6.3(A) and 6.3(B) of Resolution 6 will expire on the date of the Company's annual general meeting in 2015 (or 27 October 2015, whichever is the earlier).

The Directors have no immediate plans to make use of the authorities set out in Resolution 6. Should the aggregate usage by the Company of the authority granted by Resolution 6 exceed one third of the nominal value of the Company's issued ordinary share capital (excluding treasury shares) and also, in the case of issuance being in whole or part by way of a fully pre-emptive rights issue, monetary proceeds exceed one third (or such lesser relevant proportion) of the pre-issue market capitalisation of the Company, in accordance with the Articles, all Directors wishing to remain in office will stand for re-election at the Company's next annual general meeting following the decision to make the issue in question.

Resolution 7: To approve a revised disapplication authority

This Resolution is conditional on the passing of Resolution 6 and proposes to authorise the Directors to allot shares under the various authorities conferred under Resolution 6 on a non pre-emptive basis. If shares are to be allotted, the Companies Act requires that those shares be offered first to existing shareholders in proportion to the number of shares that they hold. However, it may sometimes be in the interests of the Company for the Directors to allot shares or sell treasury shares for cash other than to shareholders in proportion to their existing holdings. This Resolution allows the Directors to do that in certain circumstances and replaces similar existing authorities in place since the Annual General Meeting and reflects the Company's proposed share capital structure under each of Scenarios 1, 2 and 3 described above. Paragraph 7.1 relates to Scenarios 1 and 2, whilst paragraph 7.2 relates to Scenario 3. Each disapplication is limited to allotments or sales in connection with rights issues or other pre-emptive offers, or otherwise to allotments up to aggregate nominal amounts representing, in each case, approximately 5 per cent. of the expected issued ordinary share capital of the Company (including treasury shares) in each of Scenarios 1, 2 and 3.

If approved, the authorities granted under Resolution 7 will expire either on the date of the Company's annual general meeting in 2015 or 27 October 2015, whichever is the earlier. The Directors have no immediate plans to make use of this authority, other than to fulfil the Company's obligations under its employee share plans.

SECTION F: POWER OF THE COMPANY TO CAPITALISE RESERVES AND FUNDS BY ORDINARY RESOLUTION

The following sets out the power of the Company to capitalise reserves and funds as the same is proposed to be inserted into the Articles pursuant to Resolution 5 to be proposed at the General Meeting. The following paragraph will be inserted as a new Article 122 in the Articles in substitution for and to the exclusion of Article 122 in the existing Articles.

122. Capitalisation of profits and reserves

• 122.1 The Company may, upon the recommendation of the Directors, at any time and from time to time pass an Ordinary Resolution to the effect that it is desirable to capitalise all or any part of any amount standing to the credit of any reserve or fund (including retained earnings) at the relevant time, whether or not the same is available for distribution, and accordingly that the amount to be capitalised be set free for distribution among the members or any class of members who would be entitled to it if it were distributed by way of dividend which may exclude the Company in respect of any treasury shares and in the same proportions (or, in connection with the arrangements and proposed transactions described in a prospectus and circular to holders of shares in the capital of the Company dated 8 October 2014 (the "Prospectus"), in such proportions as the Directors determine to give effect to the arrangements and proposed transactions set out in that Prospectus and to any valid elections made or deemed to be made by holders of shares in the Company in respect of any of the arrangements or proposed transactions set out in that Prospectus) on the footing that it is applied either:
• (a) in or towards paying up the amounts unpaid at the relevant time on any shares in the Company held by those members respectively; or
• (b) in paying up in full shares, debentures or other obligations of the Company to be allotted and distributed credited as fully paid up among those members (including, in connection with the arrangements and proposed transactions set out in the Prospectus, shares of different or multiple classes which would be paid up and allotted and distributed credited as fully paid up among those members in accordance with the arrangements and proposed transactions set out in the Prospectus and any valid elections made, or deemed to be made, by holders of shares in the Company pursuant to those arrangements and proposed transactions),

or partly in one way and partly in the other, but so that, for the purposes of this Article a share premium account and a capital redemption reserve and a merger reserve, and any other reserve or fund representing unrealised profits, may be applied only in paying up in full shares of the Company that are to be allotted and distributed as fully paid up.

• 122.2 The Directors shall have power after the passing of any such resolution:
• (c) to make such provision (by the issue of fractional certificates or by payment in cash or otherwise) as they think fit in the case of shares, debentures or obligations becoming distributable in fractions, such power to include the right for the Company to retain small amounts, the cost of distribution of which would be disproportionate to the amounts involved;
• (d) to authorise any person to enter, on behalf of all the members entitled thereto, into an agreement with the Company providing (as the case may require) either:
  • (i) for the payment up by the Company on behalf of such members (by the application thereto of their respective proportions of the profits resolved to be capitalised) of the amounts, or any part of the amounts, remaining unpaid on their existing shares; or
  • (ii) for the allotment to such members respectively, credited as fully paid, of any further shares, debentures or obligations to which they may be entitled upon such capitalisation; and
  • (iii) any agreement made under such authority shall be effective and binding on all such members.

SECTION G: RIGHTS AND RESTRICTIONS ATTACHED TO THE B SHARES, THE C SHARES, THE DEFERRED SHARES AND THE DEFERRED D SHARES

The following sets out the rights of the B Shares, the C Shares, the Deferred Shares and the Deferred D Shares and the restrictions to which they will be subject, as the same are proposed to be inserted into the Articles pursuant to Resolution 5 to be proposed at the General Meeting. The following paragraphs will be inserted as new Articles 139, 140, 141A and 141B in the Articles in substitution for and to the exclusion of Articles 139 and 140 in the existing Articles.

139 Rights and restrictions attached to B Shares

139.1 General

Notwithstanding Article 7 the redeemable shares of 60 pence each in the capital of the Company (the "B Shares") shall have the rights, and be subject to the restrictions, attaching to shares set out in these Articles save that in the event of a conflict between any provision in this Article 139 and any other provision in these Articles, the provisions in this Article 139 shall prevail.

139.2 Form of election

Together with the Prospectus (as defined in Article 122 above), holders of ordinary shares in the capital of the Company who held such shares in certificated form were sent a form of election ("Form of Election") relating to the B Shares and the non-cumulative, irredeemable shares of 0.0000001 pence each in the capital of the Company (the "C Shares") proposed to be issued by the Company, as more fully described in the Prospectus. By way of the Form of Election or, where ordinary shareholders held such shares in uncertificated form, by following the instructions and taking the actions set out in the Prospectus, ordinary shareholders could (subject always to the Directors' determination as described in the Prospectus as to the number of B Shares and C Shares to be allotted and issued) make an election, on and subject to the terms set out in the Prospectus, (an "Election''), inter alia, which would result in the issue to them of B Shares to be redeemed by the Company at the Redemption Time (as defined in Article 139.7(a) below) (the "Capital Option'').

139.3 Income

The B Shares shall confer no right to participate in the profits of the Company save for the right to redemption under Article 139.7 below.

139.4 Capital

• (a) Except as provided in Article 139.6 below, on a return of capital on winding-up (excluding any intra-group reorganisation on a solvent basis), the holders of the B Shares shall be entitled, in priority to any payment to the holders of every other class of share in the capital of the Company (except the C Shares) but pari passu with any payment to the holders of C Shares, to 60 pence per B Share held by them.
• (b) On a winding up, the holders of the B Shares shall not be entitled to any further right of participation in the profits or assets of the Company in excess of that specified in Article 139.4(a) above. In the event that there is a winding-up to which Article 139.4(a) applies and the amounts available for payment are insufficient to pay the amounts due on all the B Shares in full, the holders of the B Shares shall be entitled to their pro rata proportion of the amounts to which they would otherwise be entitled.
• (c) The aggregate entitlement of each holder of B Shares on a winding-up in respect of all the B Shares held by him shall be rounded up to the nearest whole penny.
• (d) The holders of the B Shares shall not be entitled to any further right of participation in the profits or assets of the Company in their capacity as holders of B Shares.

139.5 Attendance and voting at general meetings

• (a) The holders of the B Shares shall not be entitled, in their capacity as holders of such B Shares, to receive notice of any general meeting of the Company nor to attend, speak or vote at any such general meeting unless the business of the meeting includes the consideration of a resolution for the winding-up of the Company (excluding any intra group reorganisation on a solvent basis), in which case the holders of the B Shares shall have the right to attend the general meeting and shall be entitled to speak and vote only on any such resolution only.
• (b) If the holders of the B Shares are entitled to vote at a general meeting of the Company in their capacity as holders of such B Shares, then, subject to any other provisions of these Articles, each holder thereof shall be entitled to vote at such general meeting whether on a show of hands or on a poll as provided in the Companies Acts. For this purpose, where a proxy is given discretion as to how to vote on a show of hands, this shall be treated as an instruction by the relevant holder of B Shares to vote in the way in which the proxy elects to exercise that discretion.

139.6 Class rights

• (a) The Company may from time to time create, allot and issue further shares, whether ranking pari passu with or in priority or subsequent to the B Shares. The creation, allotment or issue of any such further shares (whether or not ranking in any respect in priority to the B Shares) shall be treated as being in accordance with the rights attaching to the B Shares and shall not involve a variation of such rights for any purpose or require the consent of the holders of the B Shares.
• (b) A reduction by the Company of the capital paid up or credited as paid up on the B Shares and the cancellation of such shares shall be treated as being in accordance with the rights attaching to the B Shares and shall not involve a variation of such rights for any purpose or require the consent of the holders of the B Shares.
• (c) Without prejudice to the generality of the foregoing, the Company is authorised to reduce (or purchase shares in) its capital of any class or classes and such redemption (or purchase) shall not involve a variation of any rights attaching to the B Shares for any purpose or require the consent of the holders of the B Shares.
• (d) If at any time a currency other than sterling is accepted as legal tender in the United Kingdom in place of or in addition to sterling, the Directors shall be entitled, without the consent of holders of ordinary shares, B Shares, C Shares, Deferred Shares (as is defined in Article 140.3 below) or Deferred D Shares (as defined in Article 141B.1 below), to make such arrangements and adjustments in respect of the method of calculation and payment of any of the entitlements of holders of B Shares under these Articles as the Directors consider necessary, fair and reasonable in the circumstances to give effect to the rights attaching to the B Shares. Any such arrangements and adjustments shall not involve a variation of any rights attaching to the B Shares for any purpose.

139.7 Redemption of B Shares

Subject to the provisions of the Companies Acts and these Articles, the Company shall redeem, out of the profits available for distribution, the B Shares as follows:

• (a) The B Shares in respect of which a valid election has been made, or is deemed to have been made, for the Capital Option in accordance with the terms described in the Prospectus and (where applicable) the Form of Election shall be redeemed at such time as the Directors may in their absolute discretion determine which is expected to be 12 November 2014, or such later time as the Directors decide in their absolute discretion (the "Redemption Time'').
• (b) On redemption of a B Share at the Redemption Time, the Company shall be liable to pay to a holder of B Shares 60 pence (the "Redemption Amount'') for each B Share in respect of which

a valid Election has been made, or is deemed to be made, by such holder for the Capital Option in accordance with the terms described in the Prospectus and (where applicable) the Form of Election. The Company's liability to pay to such holder the Redemption Amount for each such B Share shall be discharged by the Company by a payment to such holder within 25 days of the Redemption Time of the Redemption Amount for each such B Share.

• (c) In the absence of bad faith or wilful default, neither the Company nor any of its Directors, officers or employees shall have any liability to any person for any loss or damage arising as a result of the determination of the Redemption Time in accordance with Article 139.7(a) above.
• (d) All B Shares redeemed shall be cancelled and the Company shall not be entitled to re-issue them.

139.8 Transfer

Subject to such of the provisions of these Articles as may be applicable, no transfer of B Shares will be registered after 5.00 p.m. on the second Business Day prior to the Redemption Time unless determined to the contrary by the board.

139.9 Deletion of Article 139 when no B Shares in existence

• (a) If the Merger Return Condition (as defined in the Prospectus) is not satisfied, Article 139 shall be, and shall be deemed to be, of no effect (save to the extent that the provisions of Article 139 are referred to in other Articles) and shall be deleted and replaced with the wording "Article 139 has been deleted''.
• (b) Following the first issue of B Shares, Article 139 shall remain in force until there are no longer any B Shares in existence, notwithstanding any provision in these Articles to the contrary. Thereafter Article 139 shall be, and shall be deemed to be, of no effect (save to the extent that the provisions of Article 139 are referred to in other Articles) and shall be deleted and replaced with the wording "Article 139 has been deleted'', and the separate register for the holders of B Shares shall no longer be required to be maintained by the Company; but the validity of anything done under Article 139 before that date shall not otherwise be affected and any actions taken under Article 139 before that date shall be conclusive and not be open to challenge on any grounds whatsoever.

140 Rights and restrictions attached to C Shares

140.1 General

Notwithstanding Article 7, the C Shares (as defined in Article 139.2 above) shall have the rights, and be subject to the restrictions, attaching to shares set out in these Articles save that in the event of a conflict between any provision in this Article 140 and any other provision in these Articles, the provisions in this Article 140 shall prevail.

140.2 Form of election

Together with the Prospectus, holders of ordinary shares in the capital of the Company who held such shares in certificated form were sent a Form of Election relating to the B Shares and C Shares proposed to be issued by the Company, as more fully described in the Prospectus. By way of the Form of Election or, where ordinary shareholders held such shares in uncertificated form, by following the instructions and taking the actions set out in the Prospectus, ordinary shareholders could make an Election, on and subject to the terms set out in the Prospectus, inter alia, which would result in the issue to them of: (1) C Shares in respect of which the C Share Dividend (as defined in Article 140.3(a) below) would be paid; and/or (2) if the Merger Return Condition is not satisfied, C Shares in respect of which it was expected that Numis Securities Limited would make an offer to purchase acting as principal (and not as agent, nominee or trustee) (the "Purchase Offer").

140.3 Income

• (a) Subject to the provisions of the Companies Acts and these Articles, out of the profits of the Company available for distribution, a single dividend of 60 pence per C Share (the "C Share Dividend") shall become payable (without the need for such dividend to be declared by the Company, the board or any other person and notwithstanding any provision to the contrary in these Articles (including Articles 110 and 111)) to holders of C Shares at such time as the Directors may in their absolute discretion determine which is expected to be on or before 12 November 2014 (the "Dividend Time"):
• (i) in respect of which a valid Election to receive the C Shares has been made, or is deemed to have been made, in accordance with the terms described in the Prospectus and (where applicable) the Form of Election; and
• (ii) who are registered on the Company's relevant register as holding such C Shares (that is, C Shares within (i) above) at the Dividend Time.
• (b) The Company's liability to pay the C Share Dividend to such holder of C Shares shall be discharged by the Company by a payment to such holder within 25 days of the Dividend Time of an amount equal to the C Share Dividend.
• (c) Each C Share in respect of which the C Share Dividend becomes payable shall immediately thereupon (but without prejudice to the accrued right to receive such dividend) be reclassified as a deferred share of 0.0000001 pence in the capital of the Company having the rights and being subject to the restrictions described in Article 141 (a "Deferred Share").
• (d) For the avoidance of doubt, the provisions of Article 120 (Unclaimed dividend) shall apply in respect of any and all C Share Dividends payable on or in respect of any C Shares which remain unclaimed.
• (e) In the absence of fraud or wilful default, neither the Company nor any of its Directors, officers or employees shall have any liability to any person for any loss or damage arising as a result of the determination of the Dividend Time in accordance with Article 139.7(a) above.

140.4 Capital

• (a) Except as provided in Article 140.6 below, on a return of capital on winding-up (excluding any intra-group reorganisation on a solvent basis), the holders of each C Share shall be entitled, in priority to any payment to the holders of every other class of share in the capital of the Company (except the B Shares) but pari passu with any payment to the holders of B Shares, to the aggregate of the amount of the nominal capital paid up or credited as paid up on such C Share and an amount of 60 pence per C Share held by them.
• (b) On a winding-up, the holders of the C Shares shall not be entitled to any further right of participation in the profits or assets of the Company in excess of that specified in Article 140.4(a) above. In the event that there is a winding-up to which Article 140.4(a) applies and the amounts available for payment are insufficient to pay the amounts due on all the C Shares in full, the holders of the C Shares shall be entitled to their pro rata proportion of the amounts to which they would otherwise be entitled.
• (c) The aggregate entitlement of each holder of C Shares on a winding-up in respect of all the C Shares held by him shall be rounded up to the nearest whole penny.
• (d) The holders of the C Shares shall not be entitled to any further right of participation in the profits or assets of the Company in their capacity as holders of C Shares.

140.5 Attendance and voting at general meetings

• (a) The holders of the C Shares shall not be entitled, in their capacity as holders of such C Shares, to receive notice of any general meeting of the Company nor to attend, speak or vote at any such general meeting unless the business of the meeting includes the consideration of a resolution for the winding-up of the Company (excluding any intra-group reorganisation on a solvent basis), in which case the holders of the C Shares shall have the right to attend the general meeting and shall be entitled to speak and vote only on any such resolution only.
• (b) If the holders of the C Shares are entitled to vote at a general meeting of the Company in their capacity as holders of such C Shares, then, subject to any other provisions of these Articles, each holder thereof shall be entitled to vote at such general meeting whether on a show of hands or on a poll as provided in the Companies Acts. For this purpose, where a proxy is given discretion as to how to vote on a show of hands, this shall be treated as an instruction by the relevant holder of C Shares to vote in the way in which the proxy elects to exercise that discretion.

140.6 Class rights

• (a) The Company may from time to time create, allot and issue further shares, whether ranking pari passu with or in priority or subsequent to the C Shares. The creation, allotment or issue of any such further shares (whether or not ranking in any respect in priority to the C Shares) shall be treated as being in accordance with the rights attaching to the C Shares and shall not involve a variation of such rights for any purpose or require the consent of the holders of the C Shares.
• (b) A reduction by the Company of the capital paid up or credited as paid up on the C Shares and the cancellation of such shares shall be treated as being in accordance with the rights attaching to the C Shares and shall not involve a variation of such rights for any purpose or require the consent of the holders of the C Shares.
• (c) Without prejudice to the generality of the foregoing, the Company is authorised to reduce (or purchase shares in) its capital of any class or classes and such redemption (or purchase) shall not involve a variation of any rights attaching to the C Shares for any purpose or require the consent of the holders of the C Shares.
• (d) If at any time a currency other than sterling is accepted as legal tender in the United Kingdom in place of or in addition to sterling, the Directors shall be entitled, without the consent of holders of ordinary shares, B Shares, C Shares or Deferred Shares, to make such arrangements and adjustments in respect of the method of calculation and payment of any of the entitlements of holders of C Shares under these Articles as the Directors consider necessary, fair and reasonable in the circumstances to give effect to the rights attaching to the C Shares. Any such arrangements and adjustments shall not involve a variation of any rights attaching to the C Shares for any purpose.

140.7 Transfer

Subject to such of the provisions of these Articles as may be applicable, no transfer of C Shares will be registered after 5.00 p.m. on the second Business Day prior to the Dividend Time unless (a) such transfer is to or from Numis in accordance with the terms and conditions of the Purchase Offer or (b) determined to the contrary by the board.

140.8 Deletion of Article 140 when no C Shares in existence

Following the first issue of C Shares, Article 140 shall remain in force until there are no longer any C Shares in existence, notwithstanding any provision in these Articles to the contrary. Thereafter Article 140 shall be, and shall be deemed to be, of no effect (save to the extent that the provisions of Article 140 are referred to in other Articles) and shall be deleted and replaced with the wording "Article 140 has been deleted", and the separate register for the holders of C Shares shall no longer be required to be maintained by the Company; but the validity of anything done under Article 140 before that date, and accrued rights in respect of the payment of dividends arising before that date, shall not otherwise be affected and any actions taken under Article 140 before that date shall be conclusive and not be open to challenge on any grounds whatsoever.

141 Rights and restrictions attached to Deferred Shares and Deferred D Shares

141A Deferred Shares

141A.1 General

Notwithstanding Article 7, the Deferred Shares (as defined in Article 140.3 above) shall have the rights, and be subject to the restrictions, attaching to shares set out in these Articles save that in the event of a conflict between any provision in this Article 141 and any other provision in these Articles, the provisions in this Article 141 shall prevail.

141A.2 Income

The Deferred Shares shall confer no right to participate in the profits of the Company.

141A.3 Capital

On a return of capital on a winding-up (excluding any intra-group reorganisation on a solvent basis), there shall be paid to the holders of the Deferred Shares and the holders of the Deferred D Shares pari passu as if the same were consolidated as one class, the nominal capital paid up, or credited as paid up, on such Deferred Shares or Deferred D Shares after:

• (a) firstly, paying to the holders of the B Shares and the holders of the C Shares pari passu as if the same were consolidated as one class, the amounts they are entitled to receive on a winding up in accordance with their terms; and
• (b) secondly, paying to the holders of the ordinary shares the nominal capital paid up or credited as paid up on the ordinary shares held by them respectively, together with the sum of £100,000,000,000 on each ordinary share.

The holders of the Deferred Shares shall not be entitled to any further right of participation in the assets of the Company.

141A.4 Attendance and voting at general meetings

The holders of the Deferred Shares shall not be entitled, in their capacity as holders of such shares, to receive notice of any general meeting of the Company or to attend, speak or vote at any such meeting.

141A.5 Class rights

• (a) The Company may from time to time create, allot and issue further shares, whether ranking pari passu with or in priority to the Deferred Shares, and on such creation, allotment or issue any such further shares (whether or not ranking in any respect in priority to the Deferred Shares) shall be treated as being in accordance with the rights attaching to the Deferred Shares and shall not involve a variation of such rights for any purpose or require the consent of the holders of the Deferred Shares.
• (b) The reduction by the Company of the capital paid up on the Deferred Shares shall be in accordance with the rights attaching to the Deferred Shares and shall not involve a variation of such rights for any purpose and the Company shall be authorised at any time to reduce its capital (in accordance with the Companies Acts) without obtaining the consent of the holders of the Deferred Shares.
• (c) Without prejudice to the foregoing, the Company is authorised to reduce (or purchase shares in) its capital of any class or classes and such reduction (or purchase) shall not

involve a variation of any rights attaching to the Deferred Shares for any purpose or require the consent of the holders of the Deferred Shares.

141A.6 Form

The Deferred Shares shall not be listed or traded on any stock exchange nor shall any share certificates be issued in respect of such shares. The Deferred Shares shall not be transferable except in accordance with Article 141.7 below or with the written consent of the Directors.

141A.7 Transfer and purchase

The Company shall at any time (and from time to time) (subject to the provisions of the Companies Acts) without obtaining the sanction of the holder or holders of the Deferred Shares:

• (a) appoint any person to execute on behalf of any holder of Deferred Shares a transfer of all of the Deferred Shares or any part thereof (and/or an agreement to transfer the same) to the Company or to such person as the Directors may determine (whether or not an officer of the Company), in any case for not more than the aggregate amount of one penny for all the Deferred Shares then being transferred which shall be donated to a suitable charity; and
• (b) cancel all or any of the Deferred Shares purchased or acquired by the Company in accordance with the Companies Acts.

141A.8 Deletion of Article 141A when no Deferred Shares in existence

Article 141A shall remain in force until there are no longer any Deferred Shares in existence, notwithstanding any provision in these Articles to the contrary. Thereafter Article 141A shall be, and shall be deemed to be, of no effect (save to the extent that the provisions of Article 141A are referred to in other Articles) and shall be deleted and replaced with the wording ''Article 141A has been deleted'', and the separate register for the holders of Deferred Shares shall no longer be required to be maintained by the Company; but the validity of anything done under Article 141A before that date shall not otherwise be affected and any actions taken under Article 141A before that date shall be conclusive and not be open to challenge on any grounds whatsoever.

141B Deferred D Shares

141B.1 General

Notwithstanding Article 7, the deferred shares of 1/24 pence each which will arise on the Share Capital Consolidation (as defined in the Prospectus) (the "Deferred D Shares") shall have the rights, and be subject to the restrictions, attaching to shares set out in these Articles save that in the event of a conflict between any provision in this Article 141B and any other provision in these Articles, the provisions in this Article 141B shall prevail.

141B.2 Income

The Deferred D Shares shall confer no right to participate in the profits of the Company.

141B.3 Capital

On a return of capital on a winding-up (excluding any intra-group reorganisation on a solvent basis), there shall be paid to the holders of the Deferred Shares and the holders of the Deferred D Shares pari passu as if the same were consolidated as one class, the nominal capital paid up, or credited as paid up, on such Deferred D Shares or Deferred Shares after:

• (a) firstly, paying to the holders of the B Shares and the holders of the C Shares pari passu as if the same were consolidated as one class, the amounts they are entitled to receive on a winding up in accordance with their terms; and
• (b) secondly, paying to the holders of the ordinary shares the nominal capital paid up or credited as paid up on the ordinary shares held by them respectively, together with the sum of £100,000,000,000 on each ordinary share.

The holders of the Deferred D Shares shall not be entitled to any further right of participation in the assets of the Company.

141B.4 Attendance and voting at general meetings

The holders of the Deferred D Shares shall not be entitled, in their capacity as holders of such shares, to receive notice of any general meeting of the Company or to attend, speak or vote at any such meeting.

141B.5 Class rights

• (a) The Company may from time to time create, allot and issue further shares, whether ranking pari passu with or in priority to the Deferred D Shares, and on such creation, allotment or issue any such further shares (whether or not ranking in any respect in priority to the Deferred D Shares) shall be treated as being in accordance with the rights attaching to the Deferred D Shares and shall not involve a variation of such rights for any purpose or require the consent of the holders of the Deferred D Shares.
• (b) The reduction by the Company of the capital paid up on the Deferred D Shares shall be in accordance with the rights attaching to the Deferred D Shares and shall not involve a variation of such rights for any purpose and the Company shall be authorised at any time to reduce its capital (in accordance with the Companies Acts) without obtaining the consent of the holders of the Deferred D Shares.
• (c) Without prejudice to the foregoing, the Company is authorised to reduce (or purchase shares in) its capital of any class or classes and such reduction (or purchase) shall not involve a variation of any rights attaching to the Deferred D Shares for any purpose or require the consent of the holders of the Deferred D Shares.

141B.6 Form

The Deferred D Shares shall not be listed or traded on any stock exchange nor shall any share certificates be issued in respect of such shares. The Deferred D Shares shall not be transferable except in accordance with Article 141B.7 below or with the written consent of the Directors.

141B.7 Transfer and purchase

The Company shall at any time (and from time to time) (subject to the provisions of the Companies Acts) without obtaining the sanction of the holder or holders of the Deferred D Shares:

• (a) appoint any person to execute on behalf of any holder of Deferred D Shares a transfer of all of the Deferred D Shares or any part thereof (and/or an agreement to transfer the same) to the Company or to such person as the Directors may determine (whether or not an officer of the Company), in any case for not more than the aggregate amount of one penny for all the Deferred Shares then being transferred which shall be donated to a suitable charity; and
• (b) cancel all or any of the Deferred D Shares purchased or acquired by the Company in accordance with the Companies Acts.

141B.8 Deletion of Article 141B when no Deferred D Shares in existence

Article 141B shall remain in force until there are no longer any Deferred D Shares in existence, notwithstanding any provision in these Articles to the contrary. Thereafter Article 141B shall be, and shall be deemed to be, of no effect (save to the extent that the provisions of Article 141B are referred to in other Articles) and shall be deleted and replaced with the wording ''Article 141B has been deleted'', and the separate register for the holders of Deferred D Shares shall no longer be required to be maintained by the Company; but the validity of anything done under Article 141B before that date shall not otherwise be affected and any actions taken under Article 141B before that date shall be conclusive and not be open to challenge on any grounds whatsoever.

SECTION H: TAXATION

(1) United Kingdom taxation

The following comments do not constitute tax advice and are intended only as a general guide to current United Kingdom tax law and HM Revenue & Customs' current published practice (which are both subject to change at any time, possibly with retrospective effect). They relate only to certain limited aspects of the United Kingdom taxation treatment of Shareholders and are intended to apply only to Shareholders who are resident in the United Kingdom for United Kingdom tax purposes (unless the position of non-UK resident Shareholders is expressly referred to) and who are and will be the absolute direct beneficial owners of their Existing Ordinary Shares, New Ordinary Shares, B Shares, C Shares and Deferred Shares. The comments only apply to Shareholders who hold, and will hold, their shares as investments and not as securities to be realised in the course of a trade (and the shares are not held through a New Individual Savings Account or a Self-Invested Personal Pension). They may not apply to certain Shareholders, such as dealers in securities, insurance companies and collective investment schemes, Shareholders who are exempt from taxation, Shareholders who acquire or acquired their Existing Ordinary Shares under the Micro Focus Share Plans and Shareholders who have (or are deemed to have) acquired their Existing Ordinary Shares by virtue of an office or employment. Such persons may be subject to special rules. The tax treatment of Shareholders may be different for future transactions and may alter between the date of this document and the implementation of the B/C Share Scheme.

Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the United Kingdom should consult an appropriate professional adviser.

1. Capital Reorganisation

For the purposes of the United Kingdom taxation of capital gains and corporation tax on chargeable gains ("CGT"):

• (A) the issue of the B Shares and the C Shares to Shareholders and the Share Capital Consolidation should each be treated as a reorganisation of the Company's share capital. Shareholders in receipt of B Shares, C Shares and New Ordinary Shares arising from the Capital Reorganisation should not be treated as making a disposal of their holding of Existing Ordinary Shares and no liability to CGT should arise. Instead, the new shares acquired and the Existing Ordinary Shares in respect of which they are issued will, for CGT purposes, be treated as the same asset and as having been acquired at the same time, and for the same consideration, as the Existing Ordinary Shares;
• (B) upon a subsequent disposal (or deemed disposal) of all or part of the Shareholder's B Shares, C Shares or New Ordinary Shares, a Shareholder's aggregate CGT base cost in such Shareholder's holding of Existing Ordinary Shares will be apportioned between the B Shares, C Shares and the New Ordinary Shares by reference to their respective values on the first day on which the New Ordinary Shares are issued; and
• (C) the sale, on behalf of relevant Shareholders, of fractional entitlements to New Ordinary Shares resulting from the Share Capital Consolidation (where applicable) should not generally constitute a part disposal for CGT purposes provided the proceeds are 'small' as compared to the value of the Existing Ordinary Shares (broadly, the proceeds do not exceed the higher of £3,000 or 5 per cent. of the value of the Existing Ordinary Shares). Instead, the amount of any payment received by the Shareholder will be deducted from the base cost of the B shares and/or C shares and New Ordinary Shares for the purposes of computing a chargeable gain or allowable loss on a subsequent disposal. This treatment will not apply if the proceeds are greater than the base cost of the holding of Existing Ordinary Shares. In this event, the Shareholder may elect for the amount of the capital distribution to be reduced by the amount of the allowable expenditure.

The issue of the B Shares and the C Shares, the Share Capital Consolidation and the reclassification of the C Shares into Deferred Shares (where applicable) should not give rise to any liability to United Kingdom income tax (or corporation tax on income) in a Shareholder's hands.

2. Option 1 (Income Option)

The tax treatment of the C Share Dividend received by the Shareholder should be the same as that of any other dividend paid by the Company. Accordingly, that tax treatment will follow the current tax treatment of dividends, which is as summarised below.

General

There is no United Kingdom withholding tax on dividends paid by the Company.

Individual Shareholders within the charge to United Kingdom income tax

When the Company pays a dividend to a Shareholder who is an individual resident (for tax purposes) in the United Kingdom, the Shareholder will be entitled to a tax credit equal to one-ninth of the dividend received. The dividend received plus the related tax credit (the "gross dividend") will be part of the Shareholder's total income for United Kingdom income tax purposes and will be regarded as the top slice of that income. However, in calculating the Shareholder's liability to income tax in respect of the gross dividend, the tax credit (which equates to 10 per cent. of the gross dividend) is set off against the tax chargeable on the gross dividend.

Basic Rate Taxpayers

In the case of a Shareholder who is liable to income tax at the basic rate only, the Shareholder will be subject to tax on the gross dividend at the rate of 10 per cent. The tax credit will, in consequence, satisfy in full the Shareholder's liability to income tax on the gross dividend.

Higher Rate Taxpayers

To the extent that, after taking into account the Shareholder's other taxable income, the gross dividend falls above the threshold for the higher rate of income tax but below the threshold for the additional rate of income tax, the Shareholder will be subject to tax on the gross dividend at the rate of 32.5 per cent. This means that the tax credit will satisfy only part of the Shareholder's liability to income tax on the gross dividend, so that to that extent the Shareholder will have to account for income tax equal to 22.5 per cent. of the gross dividend (which equates to 25 per cent. of the dividend received). For example, assuming the entire gross dividend falls above the higher rate threshold and below the additional rate threshold, a dividend of £90 from the Company would represent a gross dividend of £100 (after the addition of the tax credit of £10) and the Shareholder would be required to account for income tax of £22.50 on the dividend, being £32.50 (i.e. 32.5 per cent. of £100) less £10 (the amount of the tax credit).

Additional Rate Taxpayers

To the extent that, after taking into account the Shareholder's other taxable income, the gross dividend falls above the threshold for the additional rate of income tax, the Shareholder will be subject to tax on the gross dividend at the rate of 37.5 per cent. This means that the tax credit will satisfy only part of the Shareholder's liability to income tax on the gross dividend, so that to that extent the Shareholder will have to account for income tax equal to 27.5 per cent. of the gross dividend (which equates to approximately 30.6 per cent. of the dividend received). For example, assuming the entire gross dividend falls above the additional rate threshold, a dividend of £90 from the Company would represent a gross dividend of £100 (after the addition of the tax credit of £10) and the Shareholder would be required to account for income tax of £27.50 on the dividend, being £37.50 (i.e. 37.5 per cent. of £100) less £10 (the amount of the tax credit).

Corporate Shareholders within the charge to United Kingdom corporation tax

Shareholders within the charge to United Kingdom corporation tax which are ''small companies'' (for the purposes of United Kingdom taxation of dividends legislation) should not generally expect to be subject to tax on dividends from the Company.

Other Shareholders within the charge to United Kingdom corporation tax should not be subject to tax on dividends from the Company so long as the dividends fall within an exempt class and certain conditions are met. In general, dividends paid to a United Kingdom corporate Shareholder holding less than 10 per cent. of the issued share capital of the payer (or any class of that share capital in respect of which the dividend is paid) is an example of a dividend that falls within an exempt class. Shareholders will need to ensure that they satisfy the requirements of any exempt class before treating any dividend as exempt, and seek appropriate professional advice where necessary.

No payment of tax credit

A Shareholder (whether an individual or a company) who is not liable to tax on dividends from the Company will not be entitled to claim payment of the tax credit in respect of those dividends.

Non-residents

The right of a Shareholder who is not resident (for tax purposes) in the United Kingdom to a tax credit in respect of the C Share Dividend and to claim payment from HM Revenue & Customs of any part of that tax credit will depend on the existence and terms of any double tax treaty between the United Kingdom and the country in which the Shareholder is resident for tax purposes. A Shareholder resident outside the United Kingdom (for tax purposes) may also be subject to foreign taxation on dividend income under local law. Shareholders who are not resident in the United Kingdom (for tax purposes) should consult their own tax adviser concerning their tax liabilities on dividends received from the Company. Shareholders who are subject to United States tax are referred to Section H (3) below.

Taxation of chargeable gains

For CGT purposes, the C Share Dividend (and the consequent reclassification of the C Shares into Deferred Shares) should not be treated as giving rise to a disposal or part disposal of the C Shares.

Shareholders who receive the C Share Dividend should note that, consequent to the Capital Reorganisation, a proportion of the base cost, for CGT purposes, of their Existing Ordinary Shares will be attributed to the C Shares; and this amount will continue to be attributed to those C Shares following their reclassification into Deferred Shares (notwithstanding that the Deferred Shares have limited rights or value). Correspondingly, only a proportion of the base cost for CGT purposes of the original holding of Existing Ordinary Shares will be available on a future disposal of New Ordinary Shares.

A disposal of the Deferred Shares will be treated in the same way as outlined in paragraph 3 of this Section H (1) below and may result in a Shareholder realising a capital loss.

3. Option 2 (Capital Option)

Both: (i) the redemption of the B Shares; and (ii) the sale of the C Shares by a Shareholder to Numis pursuant to the Purchase Offer, should be treated as a disposal of those Shares for United Kingdom tax purposes. This may, subject to the Shareholder's individual circumstances and any available exemption or relief, give rise to a chargeable gain (or allowable loss) for the purposes of CGT.

Any gain or loss will be calculated by reference to the difference between the purchase or redemption price and the element of the Shareholder's original base cost in their Existing Ordinary Shares that is attributed to the relevant B Shares and C Shares. The amount of the base cost which will be attributed to the B Shares and the C Shares will be determined as outlined in paragraph 1 of this Section H (1) above.

The amount of CGT, if any, payable by an individual Shareholder as a consequence of the redemption of the B Shares and/or the sale of the C Shares pursuant to the Purchase Offer will depend on his or her own personal tax position. No tax should be payable on any gain realised on a redemption of the B Shares and/or the sale of the C Shares if the amount of the net chargeable gains realised by such a Shareholder, when aggregated with their other net gains in the year of assessment (and after taking account of allowable losses), does not exceed the annual exempt amount (£11,000 for 2014/2015). Broadly, any gains in excess of this amount will be taxed at a rate of 18 per cent. for a taxpayer paying tax at the basic rate and 28 per cent. for a taxpayer paying tax at a rate above the basic rate of income tax. Where the gains of a basic rate taxpayer subject to CGT exceed the unused part of his basic rate band, that excess is subject to tax at the 28 per cent. rate.

A corporate Shareholder is normally taxable on all of its chargeable gains without an annual exempt amount, subject to any other available reliefs and exemptions. Corporate Shareholders should be entitled to indexation allowance up to the date the chargeable gain is realised.

In the event that the C Shares are not purchased under the Purchase Offer and the C Share Dividend of 60 pence becomes payable, the tax treatment of the C Share Dividend will be the same as outlined in paragraph 2 of this Section H (1) above.

4. Dividends payable on the New Ordinary Shares

Dividends payable on the New Ordinary Shares should be subject to United Kingdom income tax or United Kingdom corporation tax on income on receipt by Shareholders under the rules applicable to dividends. The current tax treatment of dividends is as outlined in paragraph 2 of this Section H (1) above.

5. Stamp duty and stamp duty reserve tax ("SDRT")

No stamp duty or SDRT should be payable on the issue of the B Shares or C Shares (unless the Shareholder receiving B Shares or C Shares is a depositary or clearance service, where special rules may apply).

No stamp duty or SDRT will be payable on, or as a result of, the redemption of the B Shares. No stamp duty or SDRT will be payable by Shareholders on the Share Capital Consolidation.

No stamp duty or SDRT will be payable by Shareholders on, or as a result of, the reclassification of the C Shares into Deferred Shares.

An agreement to sell B Shares, C Shares or New Ordinary Shares will normally give rise to a liability on the purchaser to SDRT, at the rate of 0.5 per cent. of the actual consideration paid. If an instrument of transfer of the B Shares, C Shares or the New Ordinary Shares is subsequently produced it will generally be subject to stamp duty at the rate of 0.5 per cent. of the actual consideration paid (rounded up to the nearest £5). When such stamp duty is paid, the SDRT charge will be cancelled and any SDRT already paid will be refunded. Stamp duty and SDRT are generally the liability of the purchaser.

As the C Shares are not listed, liability for stamp duty or SDRT will arise on the purchase by Numis of the C Shares pursuant to the Purchase Offer.

For the avoidance of doubt, neither a sale of C Shares under the Purchase Offer nor any acquisition of the Deferred Shares by the Company will give rise to any liability to stamp duty or SDRT for the selling Shareholder. Any such liability in connection with the sale of C Shares will fall on Numis or the Company, not the selling Shareholder. Any such liability in connection with any acquisition of the Deferred Shares by the Company would fall on the Company, not the selling Shareholder.

6. Transactions in Securities

Under section 684 Income Tax Act 2007 (for individuals), HM Revenue & Customs can, in certain circumstances, counteract income tax advantages arising in relation to transactions in securities. Were section 684 to be successfully invoked against any Shareholder, that individual Shareholder would be likely to be taxed as though the consideration for the sale of their B Shares was dividend income rather than a capital receipt.

Section 684 Income Tax Act 2007 only applies in relation to the receipt of relevant consideration in connection with certain transactions involving "close companies" (as defined in Chapter 2 of Part 10 of the Corporation Tax Act 2010). Given the Company's shareholder base, the Company should not be treated as a "close company" for these purposes.

A similar adjusting provision applies for companies under the provisions of Part 15 of the Corporation Tax Act 2010. Were section 737 Corporation Tax Act 2010 to apply, those corporate Shareholders who elected to receive a capital return might be liable to taxation as if they had received an income amount. The Company has been advised that the necessary circumstances for an adjustment under section 737 Corporation Tax Act 2010 (receipt of consideration in connection with relevant company distribution) are not present.

(2) United States information reporting and backup withholding tax

Information Reporting and Backup Withholding

Information reporting to the US Internal Revenue Service (the "IRS") and backup withholding generally will apply to payments in respect of sales of fractions of New Ordinary Shares arising on the Share Capital Consolidation and payments made in respect of the B/C Share Scheme (such as the C Share Dividend) that are paid to Shareholders within the United States (and in certain cases, outside the United States). Backup withholding generally will not apply in the case of a US Holder (as defined below) that furnishes a correct taxpayer identification number and makes any other required certification, generally on IRS Form W-9, or otherwise establishes an exemption from backup withholding.

Provided that a non-US Holder has complied with certain reporting procedures (usually satisfied by providing an IRS Form W-8BEN) or otherwise establishes an exemption, a non-US Holder generally will not be subject to backup withholding with respect to dividend payments on, and the proceeds from the disposition of, the Ordinary Shares pursuant to the Share Capital Consolidation and the B/C Share Scheme, unless the Company or its paying agent know or have reason to know that the holder is a US person. Additional rules relating to information reporting requirements and backup withholding with respect to the payment of proceeds from the disposition of its Ordinary Shares (such as payments made in respect of the sale of fractions of New Ordinary Shares arising on the Share Capital Consolidation) are as follows:

• If the proceeds are paid to or through the US office of a broker, a non-US Holder generally will be subject to backup withholding and information reporting unless the non-US Holder certifies under penalties of perjury that it is not a US person (usually on an IRS Form W-8BEN) or otherwise establishes an exemption.
• If the proceeds are paid to or through a non-US office of a broker that is a US person or that has certain specified US connections, a non-US Holder generally will be subject to information reporting (but generally not backup withholding) unless the non US Holder certifies under penalties of perjury that it is not a US person (usually on an IRS Form W-8BEN) or otherwise establishes an exemption.
• If the proceeds are paid to or through a non-US office of a broker that is not a US person and does not have certain specified US connections, a non-US Holder generally will not be subject to backup withholding or information reporting.

To prevent the imposition of the backup withholding tax, Shareholders whose proceeds from the sale of fractions of New Ordinary Shares arising on the Share Capital Consolidation would not be considered to be paid in a sale effected at an office outside the United States should return the appropriate IRS Form W-9 or Form W-8 with their Form of Election. If they are a US person, they should submit a duly executed IRS Form W-9. If they are a non-US person, they should submit a duly executed IRS Form W-8BEN-E or other US Internal Revenue Service Form W-8, as appropriate. IRS forms may be obtained from the IRS at its website: www.irs.gov.

Notwithstanding the foregoing, certain Shareholders may be exempt from US information reporting and backup withholding even though the appropriate tax form has not been returned.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a Shareholder will be allowed as a credit against the Shareholder's US federal income tax liability and may entitle the holder to a refund, provided that the required information is timely furnished to the IRS.

Shareholders should consult their tax advisors regarding the application of the information reporting and backup withholding rules.

(3) General United States taxation

Certain US federal income tax considerations

The following discussion describes certain United States federal income tax consequences to a US Holder (as defined below), under current law, of the B/C Share Scheme for US Holders who are deemed to elect the Income Option and does not describe US federal income tax consequences to any Shareholder electing the Capital Option in whole or in part. Shareholders electing the Capital Option should consult their tax advisers as to the particular tax consequences to them of the B/C Share Scheme.

This discussion is based on the federal income tax laws of the United States as of the date of this Prospectus, including the US Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed Treasury regulations promulgated thereunder, judicial authority, published administrative positions of the IRS, and other applicable authorities, all as of the date hereof. All of the foregoing authorities are subject to change, which change could apply retroactively and could significantly affect the tax consequences described below. The Company has not sought any ruling from the IRS with respect to the statements made and the conclusions reached in the following discussion and there can be no assurance that the IRS or a court will agree with its statements and conclusions. This summary does not discuss the so-called Medicare tax on net investment income, any federal non-income tax laws, including the federal estate or gift tax laws, or the laws of any state, local or non-US taxing jurisdiction. In addition, this discussion does not address any withholding taxes or reporting obligations applicable to accounts maintained with non-United States financial institutions (through which a US Holder may hold Ordinary Shares).

This discussion applies only to US Holders (as defined below) who hold their Existing Ordinary Shares as capital assets for US federal income tax purposes (generally, property held for investment). The discussion neither addresses the tax consequences to any particular investor nor describes all of the tax consequences that may be applicable to persons in special tax situations, such as:

• banks and certain other financial institutions;
• insurance companies;
• regulated investment companies;
• real estate investment trusts;
• brokers or dealers in stocks and securities, or currencies;
• persons who use or are required to use a mark-to-market method of accounting;
• certain former citizens or residents of the US subject to Section 877 of the Code;
• entities subject to the US anti-inversion rules of Section 7874;
• tax-exempt organisations and entities;
• persons subject to the alternative minimum tax provisions of the Code;
• persons whose functional currency is other than the US dollar;
• persons holding Ordinary Shares as part of a straddle, hedging, conversion or integrated transaction;
• persons holding Ordinary Shares through a bank, financial institution or other entity, or a branch thereof, located, organised or resident outside the United States;
• persons that actually or constructively own 10 per cent. or more of the total combined voting power of all classes of the Company's voting stock;

• persons who acquired Ordinary Shares pursuant to the exercise of an employee stock option or otherwise as compensation;

• partnerships or other pass-through entities, or persons holding Ordinary Shares through such entities;

• persons that held, directly, indirectly or by attribution, Ordinary Shares or other ownership interests in us prior to these offerings; or
• Shareholders resident or ordinarily resident in the United Kingdom.

If a partnership (including an entity or arrangement treated as a partnership for United States federal income tax purposes) holds Ordinary Shares, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. A partnership or partner in a partnership holding Ordinary Shares should consult its own tax advisors regarding the tax consequences of investing in and holding Ordinary Shares.

As used herein the term "US Holder" means a beneficial owner of Existing Ordinary Shares that is, for US federal income tax purposes: (i) an individual citizen or resident of the United States; (ii) a corporation (or other entity treated as a corporation for US federal income tax purposes) created or organised under the laws of the United States, any State thereof or the District of Columbia; (iii) an estate the income of which is subject to US federal income tax without regard to its source; or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more US persons have the authority to control all substantial decisions of the trust, or, in the case of a trust that was treated as a domestic trust under the law in effect before 1997, the trust has elected to be treated as a domestic trust for US federal income tax purposes.

The summary assumes that the Company is not a passive foreign investment company ("PFIC") for US federal income tax purposes, although no assurance is being given in that regard. The Company's possible status as a PFIC is based on an annual determination that cannot be made until the close of a taxable year, involves extensive factual investigation, including ascertaining the fair market value of all of the Company's assets on a quarterly basis and the character of each item of income that the Company earns, and is subject to uncertainty in several respects. Therefore, the Company cannot assure you that it will not be treated as a PFIC for its current taxable year ending 30 April 2015 or for any future taxable year or that the IRS will not take a contrary position. If the Company were to be a PFIC, special, possibly materially adverse, consequences would result for US Holders and certain reporting requirements might apply to US Holders.

If the Company were to be treated as a PFIC, US Holders of Ordinary Shares would be required (i) to pay a special US addition to tax on certain distributions and gains on sale and (ii) to pay tax on any gain from the sale of Ordinary Shares at ordinary income (rather than capital gains) rates in addition to paying the special addition to tax on this gain. Shareholders should consult their tax advisers regarding the potential application of the PFIC regime.

Summary of certain material US federal income tax consequences

The summary of certain material US federal income tax consequences set out below is for general information only and is subject to the considerations set out above. It is not a substitute for careful tax planning and advice. Holders should consult their tax advisers as to the particular tax consequences to them of the B/C Share Scheme, the applicability and effect of state, local, non-US and other tax laws (including the US federal and gift tax laws), the applicability of the income tax treaty between the United States and the United Kingdom (the "Treaty") or any other applicable tax treaty, and possible changes in tax law.

(i) In general

The summary assumes that the transactions contemplated by the Share Capital Consolidation and the Income Option are treated as a recapitalisation and a distribution of cash by the Company for US federal income tax purposes. If a contrary position is successfully asserted by the IRS, the US federal income tax consequences of the B/C Share Scheme for US Holders could differ from those described below.

(ii) C Share Dividend

The gross amount of the C Share Dividend (including any taxes withheld, if any) will be taxable as a dividend, to the extent paid out of the Company's current or accumulated earnings and profits, as determined under US federal income tax principles. Such income (including any withheld taxes) will be includable in your gross income on the day actually or constructively received by you.

Because the Company does not intend to determine its earnings and profits on the basis of US federal income tax principles, any distribution paid generally will be reported as a "dividend" for US federal income tax purposes. Such dividends will not be eligible for the dividends-received deduction allowed to qualifying corporations under the Code.

Dividends received by a non-corporate US Holder may qualify for the lower rates of tax applicable to "qualified dividend income" if the dividends are paid by a "qualified foreign corporation" and other conditions discussed below are met. A non-US corporation is treated as a qualified foreign corporation (i) with respect to dividends paid by that corporation on shares that are readily tradable on an established securities market in the United States (which is not the case for the Existing Ordinary Shares) or (ii) if such non-US corporation is eligible for the benefits of a qualifying income tax treaty with the United States that includes an exchange of information program. The Secretary of Treasury has determined the Treaty is satisfactory for these purposes. If the Company is eligible for the benefits of the Treaty, then dividends that it pays on its Existing Ordinary Shares would, subject to applicable limitations, be eligible for the reduced rates of taxation. However, the Company will not be treated as a qualified foreign corporation if the Company is a PFIC in the taxable year in which the dividend is paid or the preceding taxable year.

Even if dividends would be treated as paid by a qualified foreign corporation, a non-corporate US Holder will not be eligible for reduced rates of taxation if it does not hold the Existing Ordinary Shares and New Ordinary Shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date or if the US Holder elects to treat the dividend income as "investment income" pursuant to Section 163(d)(4) of the Code. In addition, the rate reduction will not apply to dividends of a qualified foreign corporation if the non-corporate US Holder receiving the dividend is obligated to make related payments with respect to positions in substantially similar or related property.

You should consult your own tax advisors regarding the availability of the lower tax rates applicable to qualified dividend income for the C Share Dividend.

The C Share Dividend generally will generally be treated as foreign source income or loss and generally will be allocated to the "passive income" category for foreign tax credit limitation purposes. You should consult your tax advisors regarding the availability of foreign tax credits in your particular circumstances.

(iii) Receipt of C Shares, sub-division and consolidation of Existing Ordinary Shares into New Ordinary Shares and Deferred D Shares, reclassification of C Shares into Deferred Shares and potential buy-back and cancellation of Deferred Shares and Deferred D Shares

If, as the Company assumes, the transactions contemplated by the Share Capital Consolidation and the Income Option are treated as a recapitalisation and a distribution of cash by the Company for US federal income tax purposes, US Holders should not be separately taxed upon the receipt of the C Shares, the sub-division and consolidation of Existing Ordinary Shares into New Ordinary Shares and Deferred D Shares (except to the extent of any fractional entitlement for which cash is received), the reclassification of C Shares into Deferred Shares or the cancellation of the Deferred Shares and Deferred D Shares. US Holders should generally have the same holding period and basis in the New Ordinary Shares received as they had in their Existing Ordinary Shares (except such basis may be reduced to the extent attributable to any fractional entitlement for which cash is received as described below in "Fractional entitlement on Share Capital Consolidation").

(iv) Fractional entitlement on Share Capital Consolidation

If, as the Company assumes, the transactions contemplated by the Share Capital Consolidation and the Income Option are treated as a recapitalisation and a distribution of cash by the Company for US federal income tax purposes, a US Holder who receives cash proceeds with respect to a fractional entitlement as a result of the Share Capital Consolidation should be treated as if a fractional share of a New Ordinary Share had been received by the US Holder as part of the Share Capital Consolidation and then sold by such US Holder. Accordingly, such US Holder should recognise capital gain or loss equal to the difference between the cash so received and the portion of the tax basis in its New Ordinary Shares that is allocable to such fractional share.

(v) Gain or loss treatment

Any gain or loss described in this summary generally will be capital gain or loss. Capital gains of a non-corporate US Holder, including an individual, whose holding period for the New Ordinary Shares is greater than one year as of the date of the Share Capital Consolidation, in the case of capital gain or loss resulting from a fractional entitlement currently are eligible for the reduced tax rates applicable to long-term capital gains. The deductibility of capital losses is subject to limitations.

Any gain or loss described in the preceding paragraph will generally be treated as US source income or loss and generally will be allocated to the "passive income" category for foreign tax credit limitation purposes. You should consult your tax advisors regarding the proper treatment of gain or loss, as well as the availability of foreign tax credits, in your particular circumstances.

A loss may nonetheless be a long-term capital loss regardless of a US Holder's actual holding period to the extent of any qualified dividend income from one or more dividends that are extraordinary dividends (generally a dividend in excess of 10 per cent. of a US Holder's adjusted basis in the New Ordinary Shares) received by a US Holder prior to a sale or other disposition of its New Ordinary Shares.

(vi) Consequences of payment in pounds sterling

Amounts of the C Share Dividend that are paid in sterling should be included in a US Holder's income in a US dollar amount calculated by reference to the exchange rate in effect on the date the amounts are received by such US Holder, regardless of whether the payment is in fact converted into US dollars. A US Holder may have foreign currency gain or loss, which will be ordinary gain or loss, if the amount of any dividend is converted from sterling into United States dollars after the date of receipt.

A US Holder that receives sterling in respect of a fractional share entitlement will realise an amount equal to the US dollar amount calculated by reference to the exchange rate in effect on the applicable payment date or, in the case of cash basis and electing accrual basis taxpayers, the settlement date, regardless of whether the payment is in fact converted into US dollars on such date. If a US Holder that is an accrual basis taxpayer does not elect to treat the settlement date as the realisation date, such US Holder will recognise currency gain or loss if the US dollar value of the sterling received on the settlement date differs from the amount realised. A US Holder will have a tax basis in the sterling received equal to the US dollar amount at the spot rate on the settlement date. Generally, any gain or loss realised by a US Holder on a subsequent conversion or disposition of such sterling will be US source ordinary income or loss.

The discussion set forth above is included for general information only. US Holders are urged to consult their tax advisers to determine the particular tax consequences to them of the B/C Share Scheme, including the applicability and effect of US state, local and non-US tax laws.

SECTION I: ADDITIONAL INFORMATION

1. Summary of the rights and restrictions attaching to the New Ordinary Shares

The rights and restrictions attaching to the New Ordinary Shares will be the same as the rights and restrictions set out in the Articles in respect of the Existing Ordinary Shares subject to the amendments proposed by the Resolutions to be considered at the General Meeting. These may be summarised as regards income, return of capital and voting, as follows:

Income

Subject to the payment of the C Share Dividend, the holders of the New Ordinary Shares shall be entitled to be paid any further profits of the Company available for distribution and determined to be distributed. Any dividend payable on the New Ordinary Shares which has remained unclaimed for 12 years from the date when it was declared or became due for payment shall be forfeited and shall revert to the Company unless the Board decides otherwise.

Capital

On a return of capital on a winding-up (excluding any intra-group reorganisation on a solvent basis), after paying such sums as may be due in priority to the holders of any other class of shares in the capital of the Company (including the B Shares and the C Shares), any further such amount shall be paid to the holders of the New Ordinary Shares rateably according to the amounts paid up or credited as paid up in respect of each New Ordinary Share and £100,000,000,000 per New Ordinary Share. Any further such amount remaining after payments to the holders of New Ordinary Shares shall be paid to the holders of the Deferred Shares and the Deferred D Shares up to the nominal value paid up or credited as paid up on such shares in accordance with the Articles as amended pursuant to the Resolutions.

Voting

The holders of the New Ordinary Shares shall be entitled, in respect of their holding of such shares and subject to relevant provisions of the revised Articles, to receive notice of any general meeting of the Company and to attend and vote at any such general meeting. At any such meeting, on a show of hands, every holder of New Ordinary Shares present in person shall have one vote and every such holder present in person or by proxy shall upon a poll have one vote for every New Ordinary Share of which he is the holder.

Please refer to paragraph 4 of Part XIII (Additional Information) of this document for a fuller summary of the Articles and the rights attaching to the New Ordinary Shares.

2. Form

The New Ordinary Shares, B Shares, C Shares, Deferred Shares and Deferred D Shares are not renounceable and (with the exception of the Deferred Shares and Deferred D Shares, which are not generally transferable and, in respect of the B Shares and the C Shares, subject to the applicable restrictions set out in the Articles as amended pursuant to the Resolutions) will be transferable by an instrument of transfer in usual or common form. The New Ordinary Shares and the B Shares, C Shares, Deferred Shares and Deferred D Shares will be in registered form. The Company will apply for the New Ordinary Shares to be admitted to CREST with effect from New Ordinary Share Admission. Accordingly, settlement of transactions in the New Ordinary Shares may take place within the CREST system in respect of general market transactions.

3. CREST

Shareholders who hold their Existing Ordinary Shares in CREST will, following the Share Capital Consolidation, have their CREST accounts credited with New Ordinary Shares under ISIN GB00BQY7BX88 on the expected date of New Ordinary Share Admission.

4. Electing in CREST

Shareholders holding their Existing Ordinary Shares in CREST will not be sent a Form of Election with this document. Their election will be by means of a TTE Instruction.

Such Shareholders should take (or procure to be taken) the action set out below to transfer by means of a TTE Instruction the number of Existing Ordinary Shares held at the Record Time (expected to be 6.00 p.m. on 31 October 2014) in respect of which they are making an election to an escrow balance, specifying Equiniti in its capacity as a CREST Receiving Agent (under participant ID 5RA15) as the escrow agent, as soon as possible and in any event so that the transfer to escrow settles not later than 4.30 p.m. on 31 October 2014. If Shareholders sell or transfer any Existing Ordinary Shares registered in their name(s) before the Record Time or purchase additional Existing Ordinary Shares, they should take care to ensure that their election is in respect of the number of Existing Ordinary Shares that will be registered in their name(s) at the Record Time.

If Shareholders are CREST personal members, they should refer to their CREST sponsor before taking any action. CREST sponsors will be able to confirm details of Shareholders' participant ID and the member account ID under which their Existing Ordinary Shares are held. In addition, only CREST sponsors will be able to give the TTE Instruction to Euroclear by which Shareholders are making their election.

To make an election, Shareholders should give (or, if they are a CREST personal member, procure that their CREST sponsor gives) a TTE Instruction, which must be properly authenticated in accordance with Euroclear's specifications and which must contain, in addition to the other information that is required for the TTE Instruction to settle in CREST, the following details:

• the number(s) of Existing Ordinary Shares to be transferred to the escrow account;
• the member account ID;
• the participant ID;
• the corporate action ISIN, which is GB00BCZM1F64;
• the corporate action number of the B/C Share Scheme. This is allocated by Euroclear and can be found by viewing the relevant corporate action details in CREST;
• the intended settlement date for the transfer to escrow, which should be as soon as possible and in any event not later than 4.30 p.m. on 31 October 2014;
• the standard delivery instruction priority of 80; and
• the name and contact number inserted in the shared note field.

In order for an uncertificated election to be valid, the TTE Instruction must comply with the requirements as to authentication and contents set out above and must settle by 4.30 p.m. on 31 October 2014.

Electing for the Income Option

Shareholders who hold their Existing Ordinary Shares in CREST and who wish to elect for the Income Option in respect of ALL their ROV Entitlement need take no action. Shareholders who do not give a TTE Instruction for the Capital Option will automatically receive the C Share Dividend in respect of all their ROV Entitlement.

Electing for the Capital Option

Shareholders who hold their Existing Ordinary Shares in CREST and who wish to elect for the Capital Option in respect of some or all of their ROV Entitlement, should give (or, if they are a CREST personal member, procure that their CREST sponsor gives) a TTE Instruction with the following information, in addition to the information listed above:

• the participant ID of Equiniti, which is 5RA15; and
• the member account ID of Equiniti, which for these purposes is MICROCAP.

Overseas Shareholders and Shareholders resident or with a registered address in a Restricted Territory

Overseas Shareholders should note that, by making a valid election for the Capital Option, such Shareholders will be deemed to represent, warrant, undertake and/or agree (as applicable) in the terms set out in paragraph 8 of Section E of this Part XI. Furthermore, Shareholders resident, or with a registered address, in a Restricted Territory will only be eligible to receive the C Share Dividend under the Income Option, and as a result do not need to take any action.

Validity of Elections

Shareholders who do not make a valid election will be deemed to have elected for the Income Option in respect of ALL of their ROV Entitlement.

The default position where a Shareholder makes an election which in total is less than their holding of Existing Ordinary Shares at the Record Time

If Shareholders send a TTE Instruction which details, or TTE Instructions which together detail, a number of Existing Ordinary Shares to be transferred to the escrow account which in total is less than their holding of Existing Ordinary Shares at the Record Time, they will be deemed to have elected for the Income Option in respect of the balance of their holding.

Dematerialisation of Existing Ordinary Shares following election

If the Existing Ordinary Shares to which any election made on the enclosed Form of Election relates are currently held in certificated form and are dematerialised into uncertificated form after the relevant Form of Election has been submitted but before the Election Deadline, such election will become invalid. Shareholders who subsequently hold such Existing Ordinary Shares in uncertificated form in CREST will need to give a valid TTE Instruction in place of the submitted Form of Election by the Election Deadline.

5. Methods of Election – General

The Directors shall determine all questions as to the form and validity (including time and place of receipt) of any TTE Instruction or Form of Election in their absolute discretion (save that in the case of a deemed election to participate in the Purchase Offer, such determination shall be made jointly by the Directors and Numis), which determination shall be final and binding. The Directors (jointly with Numis in the case of a deemed election to participate in the Purchase Offer) also reserve the absolute right to waive any defect or irregularity in relation to, or in relation to the receipt of, any TTE Instruction or Form of Election completed by or on behalf of any Shareholder, and such determination will be binding on such Shareholder. Neither the Directors nor Numis shall be liable to Shareholders for any loss arising from the determination of questions as to the form and validity (including time and place of receipt) of any TTE Instruction or Form of Election, unless attributable to their own wilful default, fraud or negligence and neither the Directors nor Numis shall be under any duty to give notification of any defect or irregularity in any TTE Instruction or Form of Election or incur any liability for failure to give any such notice.

After the end of the Election Period, any election made is irrevocable. If the Election Period is extended, withdrawal rights will also be extended (withdrawal rights are described more fully in paragraph 7 of Section E of this Part XI). No authority conferred by or agreed to by giving of a TTE Instruction will be affected by, and all such authority will survive, the death or incapacity of the relevant Shareholder giving such instruction. All obligations of such Shareholder will be binding upon the heirs, personal representatives, successors and assigns of such Shareholder.

B Shares and/or C Shares which are transferred or otherwise disposed of shall remain subject to the relevant Shareholder's election (or deemed election) for any options made in respect of such B Shares and/or C Shares.

6. Amendments

The Directors reserve the right to change the Dividend Effective Date, the Election Deadline and the Payment Date. They also reserve the right not to proceed with the Return of Value at any time prior to issue of the B Shares (if applicable) and the C Shares.

PART XII

DIRECTORS, PROPOSED DIRECTORS, CORPORATE GOVERNANCE AND EMPLOYEES

1. Directors of Micro Focus and Senior Management of the Enlarged Group

The following table sets out information relating to each of the Directors of Micro Focus:

Name	Current position in respect of Micro Focus
Kevin Loosemore	Executive Chairman
Mike Phillips	Chief Financial Officer
Stephen Murdoch	Chief Operating Officer(1)
Karen Slatford	Non-Executive Senior Independent Director
Tom Skelton	Non-Executive Director
Tom Virden	Non-Executive Director
Richard Atkins	Non-Executive Director

(1) Stephen Murdoch intends to step down from the Board on Completion.

The business address of each of the Directors is The Lawn, 22-30 Old Bath Road, Newbury, Berkshire RG14 1QN.

1.1 Profiles of the Directors of Micro Focus

The names, business experience and principal business activities outside the Micro Focus Group of the current Directors are set out below:

Kevin Loosemore

Executive Chairman, Age 55

Kevin was appointed to the Micro Focus Board on 4 April 2005 shortly prior to Micro Focus's IPO in May 2005. Kevin was previously non-executive Chairman of Morse plc, a non-executive director of Nationwide Building Society and a non-executive director of the Big Food Group plc. His most recent executive roles were as Chief Operating Officer of Cable & Wireless plc, President of Motorola Europe, Middle East and Africa and before that, he was Chief Executive of IBM UK Limited. Kevin was appointed non-executive Chairman of the Company in 2005 and Executive Chairman in April 2011. He has a degree in politics and economics from Oxford University.

Mike Phillips

Chief Financial Officer, Age 51

Mike was appointed to the Board on 7 September 2010. He has more than 14 years' experience in financial leadership roles at publicly listed international technology corporations. Mike was Chief Executive Officer at Morse plc, following his initial role as Group Finance Director. Mike left Morse plc in July 2010 following the turn around and successful corporate sale to 2e2 in June 2010.

From August 1998 to February 2007, Mike was Group Finance Director at Microgen plc and played a lead role in the transformation of the company to an international software and services business with sustainable and profitable growth.

Earlier roles include seven years' corporate finance work at Smith & Williamson, as well as two years at PricewaterhouseCoopers where he led the UK technology team, reporting to the global Head of Corporate Finance for the Technology Sector. Mike began his career at Peat Marwick Mitchell & Co (now KPMG).

Karen Slatford

Non-Executive Director, Age 58

Karen was appointed to the Board on 5 July 2010. Karen is Chair of Volex plc and The Foundry, a leading special effects software company, e-conomic international, a SaaS based accounting software provider, and also a non-executive director at Intelliflo Ltd. Prior to her current board responsibilities, she has held various roles at board level since 2001 at a range of technology companies, including Portwise AB, Via Networks, Inc., Compel Group plc, HAL Knowledge Systems and Stepstone ASA. Karen began her career at ICL before spending 20 years at Hewlett Packard, where in 2000 she became Vice President and General Manager Worldwide Sales & Marketing for the Business Customer Organisation, responsible for sales of all Hewlett Packard's products, services and software to business customers globally. Karen holds a BA Honours degree in European Studies from Bath University and a Diploma in Marketing.

Tom Skelton

Non-Executive Director, Age 53

Tom was appointed to the Board on 24 October 2006. He currently serves as Chief Executive Officer at Surescripts, LLC a nationwide health information network in the United States. Prior to joining Surescripts, Tom served as Chief Executive Officer of Foundation Radiology Group, a leading diagnostic imaging services firm. He also founded Confluence Medical Systems, a healthcare and technology consulting partnership. Prior to that, Tom served as Chief Executive at Misys Healthcare Systems from 2000 to 2007 and as a director of Misys plc. Tom is based at Surescripts' Arlington, VA corporate headquarters. He is a native of Pittsburgh, PA, where he studied Management Information Systems and Services at Robert Morris University.

Tom Virden

Non-Executive Director, Age 56

Tom was appointed to the Board on 5 January 2012. Tom is a non-executive director of Atari SA. (publicly traded on the French stock exchange) and technology start-up Sweetbeam. He began his career at Apple Inc. and held a range of leadership roles in market development and product marketing, including the leadership of the company's introduction to small business and the music industry. More recently, Tom was International Business Development Director at lastminute.com with responsibility for international Strategy for the company and launching subsidiaries and fully localised sites in France, Germany, Sweden, Italy, Spain, Netherlands, Australia and Ireland. Prior to that, he was Vice President, Marketing at Digidesign, a California company that brought digital multitrack recording and editing to personal computers. Tom has also started and led a number of technology companies including Katz Media SARL, Virtual European Office (VEO), and most recently, Boatbookings.com, the world's largest online yacht charter site, with 8,000 yachts worldwide. Tom holds a Bachelor of Arts, Double Major in Psychology and Economics from Stanford University in the US.

Richard Atkins

Non-Executive Director, Age 62

Richard was appointed as a Non-Executive Director on 16 April 2014 and is currently a non-executive director of Aon UK Limited and Chairman of Acora Limited, Entanet International Limited, Sub 10 Systems Limited and Miles 33 (Holdings) Limited. He was previously a non-executive director at Compel plc, Morse plc, Global Crossing (UK) Telecommunications Ltd, Global Crossing (UK) Finance plc and Message Labs Ltd. He was previously non-executive Chairman of TripleArc plc, Easynet and 7City. He has spent the majority of his career within the IT industry, most recently at IBM Global Services, where he held a number of senior general management positions. In 1991 as Finance Director he led the MBO of Data Services Ltd from Thorn EMI plc before managing its acquisition by IBM in 1996. Richard qualified as a Chartered Accountant with Ernst & Young.

Stephen Murdoch

Chief Operating Officer, Age 47

As Chief Operating Officer, Stephen is responsible for the day to day execution of Micro Focus operations. Stephen has a 25 year track record of success in the IT industry spanning hardware, software and services. He has held senior executive positions in general management, sales and strategy with IBM and Dell. Most recently, Stephen was the General Manager of Europe, Middle East & Africa for Dell's Public Sector and Large Commercial Enterprise business unit. Stephen will step down from the Board at Completion whilst remaining as an employee of the Enlarged Group and a key member of the operating board.

1.2 Profiles of the Senior Management of the Enlarged Group

Charles Sansbury

Chief Operating Officer of the Attachmate Group, Age 47

Charles oversees worldwide finance and operations for the Attachmate Group and brings more than 16 years of experience in strategic, financial, and operational leadership to the Attachmate Group. Prior to joining the Attachmate Group, Charles served as CFO for Vignette Corporation, a publiclytraded provider of enterprise content management software and was a Principal in the Investment Banking Group at Morgan Stanley. He holds a Bachelor's degree from Georgetown University and an M.B.A from The Wharton School of the University of Pennsylvania.

Jay Gardner

President and General Manager, NetIQ, Age 58

Jay leads the NetIQ Business Unit and is responsible for engineering, product management, marketing, technical support, sales and operational functions as well as the unit's market vision and business strategy. He brings over 30 years of experience in sales, marketing, business development and technology strategy to the organisation. Prior to joining Attachmate, Jay served as a venture advisor for DFJ Mercury, having previously been at BMC Software and IBM. He holds a Bachelor's degree in Business Administration from Texas Christian University and an M.B.A from Texas Christian University.

Nils Brauckmann

President and General Manager, SUSE Linux, Age 50

Nils is responsible for leading the continued development and distribution of the industry's first Linux operating system. He manages development, sales, marketing, technical support, pre-sales consulting and consulting services for the SUSE Linux solutions worldwide. Nils has over 20 years of experience in the IT industry, serving in cross-functional and international management positions in companies such as WRQ (acquired by Attachmate in 2004), Novell and Siemens Nixdorf, where he started his technology career. Nils holds a diploma in Safety Engineering from the University of Wuppertal in Germany.

Kathleen Owens

President and General Manager, Attachmate and Novell, Age 40

Kathleen leads the Novell and Attachmate brands' combined business unit and is responsible for sales, engineering, product management marketing, Attachmate technical support, and customer success. Kathleen draws on more than 16 years of organisational experience and leadership in sales, team management and end to end processes. Prior to assuming her duties as president and general manager, Kathleen was vice president of sales for Attachmate North America, in charge of the direct sales force, field technical resources and sales-channel partner relationships. She began her Attachmate career in regional and international sales and also served as territory manager and sales director.

2. Proposed Directors of Micro Focus

On Admission, the following Directors will be appointed to the Board:

Name	Proposed position
Prescott Ashe	Non-Executive Director
David Golob	Non-Executive Director

Prescott Ashe

Proposed Non-Executive Director, Age 47

Prescott is a Managing Director of Golden Gate Capital. He has 15 years of private equity investing experience and has participated in both growth-equity and management buyout transactions with more than US\$10 billion in value. Prescott focuses on (i) technology-related industries (specifically software, IT services, electronic hardware and manufacturing services), (ii) the consumer products and retail sectors, and (iii) business services. Prior to joining Golden Gate Capital, Prescott was a Principal at Bain Capital, which he initially joined in 1991, and a strategy consultant at Bain & Company. Prescott was one of two Non-Executive Directors nominated by Golden Gate pursuant to a relationship agreement with the Company dating from its IPO in 2005, which entitled Golden Gate, inter alia, to appoint up to two Directors. On 8 September 2008, following a reduction in Golden Gate Capital's shareholding in the Company, Prescott resigned his directorship. He holds a J.D. from Stanford Law School and a B.S. in Business Administration from the University of California at Berkeley (graduating first in his class).

David Golob

Proposed Non-Executive Director, Age 46

David joined Francisco Partners as a Partner in 2001. He focuses primarily on the software and technologyenabled services industries. Prior to Francisco Partners, David was a Managing Director with Tiger Management, where he was co-head of the global technology group. Earlier in his career, David worked as a private equity investor at General Atlantic Partners, which he initially joined in 1991, and as a management consultant at McKinsey & Company. He holds an MBA from the Stanford Graduate School of Business, where he was an Arjay Miller Scholar, and an AB in Chemistry from Harvard College, summa cum laude.

3. Corporate Governance

The Company supports the principles of corporate governance contained in the UK Corporate Governance Code and, through its commitment to the highest standards of corporate governance, the Board endorses and supports the essential elements of the UK Corporate Governance Code. Apart from a limited exception as explained in paragraph 3.6 of this Part XII below, the Company complies with the UK Corporate Governance Code and, subject to such exception, the Directors intend to comply with UK Corporate Governance Code following Completion.

3.1 The Board of Micro Focus

The Micro Focus Group is (and the Enlarged Group will be) controlled by the Board, which is responsible for the Company's system of corporate governance. The Board currently comprises seven Directors, four of whom are Non-Executive Directors. The Non-Executive Directors possess a wide range of skills and experience relevant to the development of the Micro Focus Group and the Enlarged Group, which complement those of the Executive Directors. Karen Slatford, the Non-Executive Senior Independent Director, Tom Skelton, Tom Virden and Richard Atkins, each a Non-Executive Director, are considered by the Board to be independent. The two Proposed Directors are not and will not be considered to be independent. Stephen Murdoch will step down from the Board at Completion to ensure an appropriate balance between independent and non-independent Directors.

In accordance with the UK Corporate Governance Code, all Directors are subject to election by the Shareholders at the first annual general meeting of the Company after their appointment, and, thereafter, are subject to election on an annual basis. The Board has agreed procedures for Directors to follow if they believe they require independent professional advice in the furtherance of their duties and these procedures allow the Directors to take such advice at the Company's expense. In addition, all the Directors have direct access to the advice and services of the Company Secretary. The Company Secretary is accountable to the Board through the Chairman on governance matters. It is the responsibility of the Company Secretary to ensure that the Board procedures are followed and all rules and regulations are complied with. Any new Director receives a comprehensive, formal and tailored induction into the Company's operations. The Directors can request that appropriate training is available as required. New Directors' inductions include briefings on the Company's business, strategy, constitution and decision making process, the roles and responsibilities of a director and the legislative framework. New Directors also meet with the senior product and other managers.

As part of its leadership and control of the Company, the Board has agreed a list of items that are specifically reserved for its consideration. These include business strategy, financing arrangements, material acquisitions and divestments, approval of the annual budget, major capital expenditure projects, risk management, treasury policies and establishing and monitoring internal controls. At each meeting, the Board reviews progress of the Micro Focus Group (and following Completion, will review progress of the Enlarged Group) towards its objectives and monitors financial progress against budget.

The Board schedules meetings on a regular basis approximately every two months, with additional meetings when circumstances and business dictate. In the financial year to 30 April 2014, there were seven formally scheduled Board meetings.

All Directors receive an agenda and board papers in advance of meetings to help them make an effective contribution at the meetings. The Board makes full use of appropriate technology as a means of updating and informing all its members. Board papers are circulated electronically to a tablet device, allowing Directors to access documentation more easily and securely. The Executive Directors ensure regular informal contact is maintained with Non-Executive Directors.

The Board undertakes a formal and rigorous process for the evaluation of its own performance and that of its committees and individual Directors (including the Executive Chairman), as required by the UK Corporate Governance Code.

3.2 Board Committees

In accordance with best practice, the Company has established audit, nomination and remuneration committees, with written terms of reference for each that deal with their respective authorities and duties. The full terms of reference of all the committees are available from the Company Secretary or can be viewed on the Company's website at http://investors.microfocus.com/corporate-governance. The Company is aware that the Executive Chairman is not regarded as independent for the purposes of the UK Corporate Governance Code.

3.3 Audit Committee

• 3.3.1 The audit committee is comprised entirely of independent Non-Executive Directors. It is chaired by Richard Atkins, who the Board considers has recent and relevant financial experience. The other members are Tom Skelton, Karen Slatford and Tom Virden.
• 3.3.2 The audit committee is expected to meet not less than four times in each financial year and met four times during the financial year to 30 April 2014.
• 3.3.3 The audit committee is responsible for, amongst other things:
• reviewing the annual accounts and interim reports prior to submission to the full Board for approval;

• overseeing the relationship with the Company's auditor, ensuring the independence and objectivity of the auditor (taking into account UK professional and regulatory requirements and the relationship with the audit firm as a whole) and considering audit fees and fees for other non-audit work;

• reporting to the Board on its proceedings, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken;

• monitoring the integrity of the financial statements of the Company and ensuring that the interests of shareholders are properly protected in relation to financial reporting and internal control;
• reviewing the effectiveness of the Company's internal controls and risk management systems;
• reviewing the Company's procedures for preventing and detecting fraud, the Company's systems and controls for the prevention of bribery, the adequacy and effectiveness of the Company's anti money laundering systems and the Company's arrangements for its employees to raise concerns about possible wrongdoing in financial reporting or other matters; and
• monitoring and reviewing the need for, and the effectiveness of, the Company's internal audit function in the context of the Company's overall risk management system.

3.4 Nomination Committee

• 3.4.1 The nomination committee is comprised of three Directors. It is chaired by Karen Slatford and the other members are Kevin Loosemore and Tom Skelton. The nomination committee is expected to meet not less than twice a year and during the financial year ended 30 April 2014 met five times.
• 3.4.2 The nomination committee is responsible for, amongst other things:
• reviewing the structure, size and composition (including the skills, knowledge and experience) required of the Board and making recommendations to the Board with regard to any changes;
• identifying and nominating, for the approval of the Board, candidates to fill Board vacancies as and when they arise;
• giving full consideration to succession planning for Directors and other senior executives;
• keeping under review the leadership needs of the Company, both executive and nonexecutive, with a view to ensuring the continued ability of the organisation to compete effectively in the market place; and
• reviewing annually the time required from Non-Executive Directors and evaluating whether they are spending enough time to fulfil their duties.

3.5 Remuneration Committee

• 3.5.1 The Remuneration Committee is comprised entirely of independent Non-Executive Directors. It is chaired by Karen Slatford and the other members are Richard Atkins, Tom Skelton and Tom Virden. The Remuneration Committee is expected to meet not less than four times a year and during the financial year ended 30 April 2014 met five times.
• 3.5.2 The Remuneration Committee is responsible for, amongst other things:

• determining and agreeing with the Board the framework or broad policy for the remuneration of the Company's chief executive officer, Chairman, the Executive Directors, the Company Secretary and other members of the executive management team;

• determining the total individual remuneration package of each Executive Director and other senior executives including bonuses, incentive payments and share options or other share awards;

• determining the policy for, and scope of, pension arrangements for each Executive Director and other senior executives;
• approving the design of, and determining targets for any performance-related pay schemes operated by the Company, and approving the total annual payments made under such schemes;
• reviewing the design of all share incentive plans for approval by the Board and Shareholders;
• overseeing any major changes in employee benefit structures throughout the Micro Focus Group (and, following Completion, the Enlarged Group); and
• reviewing the ongoing appropriateness and relevance of the remuneration policy.
• 3.5.3 The Company's policy on the remuneration of Executive Directors and their direct reports is established by the Remuneration Committee and approved by the Board. The individual remuneration packages of each Executive Director is determined by the Remuneration Committee in accordance with the remuneration policy of the Company in force from time to time pursuant to section 439A of the Companies Act.
• 3.5.4 The remuneration of Non-Executive Directors is a matter for the Chairman and the Executive Directors.
• 3.5.5 No Director or employee participates in discussions relating to the setting of their own remuneration.
• 3.5.6 The objective of the Company's remuneration policies is that all employees, including Executive Directors, should receive appropriate remuneration for their performance, responsibility, skills and experience. Remuneration packages are designed to enable the Micro Focus Group (and, following Completion, the Enlarged Group) to attract and retain key employees by ensuring they are remunerated appropriately and competitively and that they are motivated to achieve the highest level of performance for the Company in line with the best interests of Shareholders.
• 3.5.7 It is intended that an appropriate and significant proportion of remuneration of the Executive Directors will continue to be performance-related. It is the Board's intention to award share incentives, including the ASGs, to Executive Directors and selected employees as appropriate to reward and encourage performance. These share incentives will be granted at the discretion of the Remuneration Committee in accordance with the remuneration policy of the Company in force from time to time pursuant to section 439A of the Companies Act.

3.6 Compliance with the UK Corporate Governance Code

3.6.1 The Company complies with the provisions of the UK Corporate Governance Code, except that the roles of the Chairman and the Chief Executive are exercised by Kevin Loosemore.

Kevin Loosemore (formerly Non-Executive Chairman) was appointed to the role of Executive Chairman on 14 April 2011. The nomination committee and the Board considered that the combined role is in the interests of Shareholders in order to utilise the proven leadership qualities and significant experience of Kevin Loosemore through a challenging period for the Company and to ensure the ongoing commercial success of the Company. Furthermore, Kevin Loosemore has been with the Company since its flotation in 2005 and can therefore provide stability and continuity through his detailed understanding of the Micro Focus Group's operations and the markets in which it operates.

• 3.6.2 Following Kevin Loosemore's appointment as Executive Chairman, the terms of reference were agreed by the Board. These can be viewed on http://investors.microfocus.com/corporategovernance. Kevin Loosemore leads the Board and the Company in its relationships with all stakeholders and customers. He is responsible for all aspects of executive management including business strategy and its successful achievement. He is also responsible for chairing Board and general meetings, facilitating the effective contribution of Non-Executive Directors, ensuring effective communication with Shareholders and upholding the highest standards of integrity and probity. Karen Slatford chairs the nomination committee and is therefore responsible for succession planning, leading on governance issues, including the annual review of board effectiveness, and acts as an intermediary, if necessary, between Non-Executive Directors and the Executive Chairman and between the Company and Shareholders. The Board has a clear majority of independent Directors, with four out of seven Directors being fully independent as at the date of this document. Following Completion, the Board will be split evenly between four fully independent Directors and four non-independent Directors. The Board intends to appoint a fifth (as yet unidentified) independent Non-Executive Director following Completion to ensure that the Board has a majority of independent Non-Executive Directors. On 15 April 2014, the Board announced a plan to conduct an orderly succession to separate the roles of Chairman and Chief Executive Officer over the following 12 to 24 months. This decision will be continually reviewed as the integration of the Attachmate Group with the Micro Focus Group progresses.
• 3.6.3 On Completion, the Company will enter into the Relationship Agreement with Wizard to ensure that it will be able, at all times, to carry on its business independently of it and that all transactions and relationships between the Company and Wizard are at arm's length and on a normal commercial basis. Pursuant to the Relationship Agreement, the Proposed Directors will be nominated by Wizard and appointed to the Board on Completion. Please see paragraph 14.1.3 of Part XIII (Additional Information) of this document for a more detailed description of the Relationship Agreement.

4. Employees

4.1 Employees of the Micro Focus Group

4.1.1 The number of persons employed by the Micro Focus Group (on an FTE basis) at the end of each of the three financial years ended 30 April 2012, 30 April 2013 and 30 April 2014 is set out below:

	Number of employees (FTE)
	Year ended	Year ended	Year ended
	30 April	30 April	30 April
	2012	2013	2014
Total number of employees	––––––––	––––––––	––––––––
(including Executive Directors)	1,196	1,212	1,237
	––––––––	––––––––	––––––––

4.1.2 As at 30 September 2014 (the latest practicable date prior to the publication of this document), the Micro Focus Group employed 1,228 persons (on an FTE basis) (including the Executive Directors).

4.1.3 A breakdown of Micro Focus employees (on an FTE basis) by geographical location as at 30 September 2014 (the latest practicable date prior to the publication of this document) is as follows:

	Number of employees (FTE) of
Country	the Micro Focus Group
Austria	45
Australia	20
Belgium	3
Bulgaria	48
Brazil	29
Canada	15
Switzerland	2
Chile	3
China	5
Germany	31
Denmark	4
Spain	19
France	25
Hong Kong	4
Ireland	11
Israel	35
India	20
Italy	45
Japan	35
South Korea	2
Mexico	3
Netherlands	5
Norway	4
Portugal	2
Sweden	5
Singapore	35
United Kingdom	410
United States of America	362
South Africa	1 ––––––––
Total	1,228

4.1.4 A breakdown of Micro Focus employees by activity (on an FTE basis), as at 30 September 2014 (the latest practicable date prior to the publication of this document), is as follows:

––––––––

	Number of employees (FTE) of
Activity	the Micro Focus Group
Corporate Marketing	15
Customer Care	134
Executive Management	8
Executive Sales Management	520
Finance & Administration	130
Human Resources/Operations & Distribution	41
Legal Services	13
Product Development	346
Product Management/Marketing	19
Technology Office	1 ––––––––
Total	1,228
	––––––––

4.2 Employees of the Attachmate Group

4.2.1 The total number of persons employed by the Attachmate Group as at the end of the three financial years ended years ended 31 March 2012, 31 March 2013 and 31 March 2014 is set out below:

	31 March	31 March	31 March
	2012	2013	2014
Total number of employees (including Attachmate Directors)	–––––––– 3,555 ––––––––	–––––––– 3,585 ––––––––	–––––––– 3,291 ––––––––

• 4.2.2 As at 2 September 2014 (the latest practicable date prior to the publication of this document), the Attachmate Group employed approximately 3,325 persons (including the directors of the board of Attachmate).
• 4.2.3 A breakdown of Attachmate employees by geographical location, as at 2 September 2014 (the latest practicable date prior to the publication of this document), is as follows:

	Number of employees of
Country	the Attachmate Group
Argentina	2
Asia Pacific Region	2
Australia	62
Austria	1
Belgium	3
Brazil	41
Canada	33
China	86
Czech Republic	86
Denmark	4
France	53
Germany	323
Hong Kong	8
India	667
Ireland	135
Italy	22
Japan	34
Malaysia	2
Mexico	8
Netherlands	76
New Zealand	3
Norway	1
Portugal	3
Singapore	5
South Africa	24
South Korea	1
Spain	21
Sweden	22
Switzerland	11
Taiwan	14
Turkey	4
UK	95
USA	1,472 ––––––––
Total:	3,325
	––––––––

4.2.4 A breakdown of Attachmate employees by activity, as at 2 September 2014 (the latest practicable date prior to the publication of this document), is as follows:

Activity	Number of employees of the Attachmate Group
General and Administration	365
Marketing	103
Product Cost	89
Product Development	1,323
Sales	773
Services Cost	672 ––––––––
Total	3,325
	––––––––

PART XIII

ADDITIONAL INFORMATION

1. Responsibility

• 1.1 The Company, the Directors and the Proposed Directors, whose names appear at paragraph 1 of Part XII (Directors, Proposed Directors, Corporate Governance and Employees) of this document, accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Company, the Directors and the Proposed Directors (having taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information.
• 1.2 The Wizard Representatives, being Jeff Hawn, Prescott Ashe, David Golob, Jim Schaper, Dave Mitchell, Scott Crabill and Jesse Cohn, accept responsibility for the information contained in this document relating to each of them, the Wizard Shareholders, Wizard and the Attachmate Group including, in particular, the statement of intention in paragraph 10 of Part I (Letter from the Chairman of Micro Focus International plc) of this document and Part IV (Information on the Attachmate Group) of this document. To the best of the knowledge and belief of the Wizard Representatives (having taken all reasonable care to ensure that such is the case) such information is in accordance with the facts and does not omit anything likely to affect the import of such information.

2. Corporate History

• 2.1 Micro Focus International plc was incorporated in England and Wales (where it is domiciled) on 21 May 2004 under the Companies Act 1985 as a private company limited by shares with registration number 5134647 and with the name Hackremco (No. 2158) Limited.
• 2.2 The Company was re-registered as a public company limited by shares and its company name was changed from Hackremco (No. 2158) Limited to Micro Focus International plc on 5 April 2005. Micro Focus became the holding company for the Micro Focus Group on 17 May 2005.
• 2.3 The liability of the members of the Company is limited.
• 2.4 The Company's registered office and principal place of business is at The Lawn, 22-30 Old Bath Road, Newbury, Berkshire RG14 1QN (tel. no. +44 (0)163 532 646).
• 2.5 The principal activity of the Company and its direct and indirect subsidiaries during the year was the making and selling of software products.
• 2.6 On 17 May 2005, the ordinary shares were admitted to listing on the Official List and to trading on the London Stock Exchange's main market for listed securities, immediately prior to which certain Golden Gate Funds held ordinary shares equal to approximately 82 per cent. of the issued share capital of the Company. Immediately following the listing, they held ordinary shares equal to approximately 60 per cent. of the issued share capital of the Company and on 18 February 2009 finally divested their entire investment in the Company.
• 2.7 The ISIN of the Existing Ordinary Shares is GB00BCZM1F64. The ISIN of the New Ordinary Shares will be GB00BQY7BX88.

3. Share Capital

3.1 As at 7 October 2014 (the last practicable date prior to the date of this document), the issued share capital of the Company was £20,687,324.94 divided into 152,767,938 ordinary shares of 13 13/24 pence each (all of which were fully paid or credited as fully paid). As at 7 October 2014 (the last practicable date prior to the date of this document), a total of 12,871,427 Ordinary Shares were held in treasury, representing 9.20 per cent. of the total ordinary share capital in issue (excluding treasury shares).

• 3.2 Immediately following the Merger, if the Return of Value has been implemented, the Company's issued share capital is expected to be £22,844,074.10 divided into 228,440,741 New Ordinary Shares of 10 pence each (all of which will be fully paid or credited as fully paid) of which 11,951,119 Ordinary Shares are expected to be held in treasury. If the Return of Value has not been implemented when the Merger completes, the Company's issued share capital immediately following Completion is expected to be £32,413,827.47 divided into 239,363,649 Ordinary Shares of 13 13/24 pence each (all of which will be fully paid or credited as fully paid) of which 12,871,427 Ordinary Shares are expected to be held in treasury.
• 3.3 The following returns of value have been made to Shareholders from 30 April 2012 to 30 April 2014, being the date of the most recent balance sheet of the Company:
• 3.3.1 During the financial year ended 30 April 2012, Micro Focus announced a return of value to Shareholders amounting to US\$129.0 million in cash (45 pence per ordinary share, equivalent to approximately 69.8 cents per ordinary share), by way of a B and C share scheme, which gave Shareholders (other than certain overseas Shareholders) a choice between receiving cash in the form of income or capital. The return of value was accompanied by a 22 for 25 share consolidation.
• 3.3.2 During the financial year ended 30 April 2013, Micro Focus announced a return of value to Shareholders of 50 pence per ordinary share amounting to US\$128.8 million in cash after including a foreign exchange contract gain of US\$2.4 million, by way of a B and C share scheme, which gave Shareholders (other than certain overseas Shareholders) a choice between receiving cash in the form of income or capital. The return of value was accompanied by a 10 for 11 share consolidation.
• 3.3.3 During the financial year ended 30 April 2014, Micro Focus announced a return of value to Shareholders amounting to US\$140.2 million in cash (60 pence per ordinary share equivalent to approximately 93 cents per ordinary share) by way of a D share scheme. The return of value was accompanied by a 12 for 13 share consolidation.
• 3.4 The following is a summary of the changes in the issued ordinary share capital of the Company from 1 May 2011 to 30 April 2014, being the date of the most recent audited balance sheet of the Company:

	Number of
Date of Issue	Ordinary Shares issued	Price (£)	Nature of issue
9 June 2011	2826	2.4400	To settle exercised share options
23 June 2011	500	2.8135	To settle exercised share options
29 June 2011	500	2.8135	To settle exercised share options
4 July 2011	500	2.8135	To settle exercised share options
6 July 2011	500	2.8135	To settle exercised share options
6 July 2011	20000	0.1000	To settle exercised share options
8 July 2011	12257	2.4475	To settle exercised share options
11 July 2011	1698	3.1008	To settle exercised share options
18 July 2011	20000	1.5000	To settle exercised share options
26 September 2011	5000	2.4475	To settle exercised share options
27 September 2011	20000	2.6575	To settle exercised share options
27 September 2011	500	2.8135	To settle exercised share options
7 October 2011	13274	2.2600	To settle exercised share options
7 October 2011	4500	1.0400	To settle exercised share options
10 October 2011	17213	2.0200	To settle exercised share options
11 October 2011	1489	2.0200	To settle exercised share options
17 October 2011	500	2.8135	To settle exercised share options
21 October 2011	1000	2.8135	To settle exercised share options
21 October 2011	18333	0.1000	To settle exercised share options
25 October 2011	5871	3.3820	To settle exercised share options
25 October 2011	9306	2.0200	To settle exercised share options
28 October 2011	10000	1.0400	To settle exercised share options
17 November 2011	4735	2.260	To settle exercised share options
21 November 2011	3590	2.5145	To settle exercised share options
12 December 2011	465	2.0200	To settle exercised share options
13 December 2011	278	0.1000	To settle exercised share options
13 December 2011	9722	0.1000	To settle exercised share options

	Number of
Date of Issue	Ordinary Shares issued	Price (£)	Nature of issue
15 December 2011	500	2.8135	To settle exercised share options
15 December 2011	6553	1.0400	To settle exercised share options
16 December 2011	1000	2.2488	To settle exercised share options
20 December 2011	1444	3.7195	To settle exercised share options
21 December 2011	1150	2.4475	To settle exercised share options
21 December 2011	11772	2.5483	To settle exercised share options
23 December 2011	1000	2.8135	To settle exercised share options
29 December 2011	3000	1.8978	To settle exercised share options
3 January2012	4653	2.0200	To settle exercised share options
4 January2012	500	2.8135	To settle exercised share options
4 January2012	14000	1.0400	To settle exercised share options
4 January2012	15500	1.0400	To settle exercised share options
6 January 2012	500	2.8135	To settle exercised share options
6 January 2012	500	2.8135	To settle exercised share options
9 January 2012	1861	2.02	To settle exercised share options

11 January 2012: cancellation of 5 Ordinary Shares held in treasury

12 January 2012 share consolidation: 206,209,950 Ordinary Shares of 10 pence cancelled and

181,464,004 Ordinary Shares of 11 4/11 pence created

	Number of
Date of Issue	Ordinary Shares issued	Price (£)	Nature of issue
12 January 2012	500	2.8135	To settle exercised share options
12 January 2012	6600	2.8135	To settle exercised share options
12 January 2012	500	4.1420	To settle exercised share options
12 January 2012	6600	3.0199	To settle exercised share options
13 January2012	500	2.8135	To settle exercised share options
16 January 2012	20,500	2.9613	To settle exercised share options
20 January 2012	3400	2.4475	To settle exercised share options
24 January 2012	653	1.0400	To settle exercised share options
27 February 2012	11059	2.7125	To settle exercised share options
28 February 2012	20000	2.9650	To settle exercised share options
28 February 2012	500	2.8135	To settle exercised share options
14 March 2012	500	2.8135	To settle exercised share options
16 March 2012	2949	2.7150	To settle exercised share options
3 April 2012	5805	2.44	To settle exercised share options
12 April 2012	3049	2.6575	To settle exercised share options
12 April 2012	500	2.8135	To settle exercised share options
16 April 2012	1600	2.4475	To settle exercised share options
17 April 2013	36	2.44	To settle exercised share options
18 April 2012	500	2.8135	To settle exercised share options
19 April 2012	500	2.8135	To settle exercised share options
19 April 2012	153	2.44	To settle exercised share options
23 April 2012	1000	2.8135	To settle exercised share options
26 June 2012	5912	3.0500	To settle exercised share options
26 June 2012	3883	3.0500	To settle exercised share options
26 June 2012	500	2.8135	To settle exercised share options
28 June 2012	10000	2.4475	To settle exercised share options
28 June 2012	1000	1.4400	To settle exercised share options
29 June 2012	500	2.8135	To settle exercised share options
29 June 2012	10102	1.5282	To settle exercised share options
2 July 2012	4000	2.4475	To settle exercised share options
4 July 2012	4353	3.2075	To settle exercised share options
4 July 2012	8379	3.5800	To settle exercised share options
6 July 2013	343	2.1840	To settle exercised share options
6 July 2013	500	2.8135	To settle exercised share options
10 July 2013	1000	2.8135	To settle exercised share options
11 July 2013	41	3.05	To settle exercised share options
24 July 2012	2899	2.583	To settle exercised share options
17 August 2012	412	2.184	To settle exercised share options

25 October 2012: cancellation of 3 Ordinary Shares held in treasury

26 October 2012 share consolidation: 181,605,226 Ordinary Shares of 11 4/11 pence cancelled and 165,095,660 Ordinary Shares of 12 1/2 pence created

	Number of
Date of Issue	Ordinary Shares issued	Price (£)	Nature of issue
31 May 2013	9690	2.4775	To settle exercised share options
8 August 2013	500	2.8135	To settle exercised share options

26 October 2013 share consolidation: 165,105,850 Ordinary Shares of 12 1/2 pence cancelled and 152,405,400 Ordinary Shares of 13 13/24 pence created

Ordinary Shares issued	Price (£)	Nature of issue
		To settle exercised share options
12102	2.6575	To settle exercised share options
	Number of 2383	4.0160

3.5 Existing Shareholder authorities

• 3.5.1 At the Annual General Meeting held on 25 September 2014, the Shareholders approved resolutions to:
• (a) allot shares in the Company or grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate nominal amount of £6,300,069;
• (b) allot equity securities up to a nominal amount of £12,600,138 in connection with a rights issue;
• (c) allot equity securities for cash, free of pre-emption rights up to a nominal amount of £945,010;
• (d) generally and unconditionally authorise the Company to make market purchases (within the meaning of section 693(4) of the Companies Act) of Ordinary Shares each subject to the following conditions:
  • (A) the maximum aggregate number of Ordinary Shares authorised to be purchased is 20,921,657;
  • (B) the minimum price (excluding expenses) which may be paid for each Ordinary Share is 13 13/24 pence (being the nominal value of an Ordinary Share);
  • (C) the maximum price (excluding expenses) which may be paid for each Ordinary Share is the higher of: (i) 105 per cent. of the average of the middle market quotations for the Ordinary Shares as derived from the London Stock Exchange Daily Official List for the five Business Days immediately preceding the day on which the Ordinary Share is contracted to be purchased; and (ii) an amount equal to the higher of the price of the last independent trade of an Ordinary Share and the highest current independent bid for an Ordinary Share as derived from the London Stock Exchange Trading System; and
  • (D) the authority shall expire on 1 November 2015 or, if earlier, at the end of the Company's annual general meeting to be held in 2015 so that the Company may, before the expiry of the authority, enter into a contract to purchase Ordinary Shares which will or may be executed wholly or partly after the expiry of such authority; and
• (e) authorise the Company in accordance with the Articles, until the Company's next annual general meeting, to call general meetings on 14 clear days' notice.

3.6 Resolutions proposed at the General Meeting

• 3.6.1 The notice convening the General Meeting which is set out at the end of this document proposes the following Resolutions:
• (a) Resolution 1 proposes that (subject to and conditional upon the passing of Resolutions 2 to 4) the Merger be approved and the Directors be authorised to take all steps and enter

into all agreements and arrangements necessary or desirable to implement the Merger, and that, conditional upon Completion, the borrowing limit set out in the Articles be increased from US\$600 million to US\$2,500 million to enable the Company and members of the Enlarged Group to enter into the New Facilities;

• (b) if the Merger completes and the Company allots the Consideration Shares to Wizard in accordance with the Merger Agreement, Wizard will hold in excess of 30 per cent. of the voting rights of the Company and as a result an obligation under Rule 9 of the Takeover Code would arise for Wizard to make a cash offer for the issued shares of the Company which it does not already own. The Takeover Panel has agreed, however, to waive the obligation to make a general offer that would otherwise arise as a result of the Consideration Shares being issued, subject to the approval of the Independent Shareholders. Accordingly, Resolution 2 is being proposed at the General Meeting and will be taken on a poll on which only the Independent Shareholders are entitled to vote;
• (c) Resolution 3 proposes that (subject to and conditional upon the passing of Resolutions 1, 2 and 4) the Directors be authorised to allot and issue up to an aggregate nominal amount of (i) £11,726,503 if the Share Capital Consolidation does take effect on or before Completion and (ii) £8,659,572 if the Share Capital Consolidation does not take effect on or before Completion;
• (d) Resolution 4 proposes that the Additional Share Grants be approved and that the Remuneration Policy be revised to allow the Additional Responsibility Allowance and the Additional Share Grants to be adopted, in each case conditional upon and with effect from Completion. The Takeover Panel has given its consent to the New Incentive Arrangements in connection with Rule 16.2 of the Takeover Code, subject to the approval of Shareholders at the General Meeting (other than the Executive Directors and any other person proposed to receive the ARA or ASGs, who will be ineligible to vote). Accordingly, Resolution 4 will be taken on a poll on which no Executive Director or other such person will be entitled to vote. A summary of the Additional Responsibility Allowance and the Additional Share Grants and the revision to the Remuneration Policy is set out in paragraph 7 of this Part XIII;
• (e) Resolution 5 proposes the approval and authorisation of the Return of Value, the amendments to the Articles necessary to implement the Return of Value and the approval and authorisation of certain steps to be taken by the Company and the Directors for the purposes of implementing the Return of Value and the Share Capital Consolidation;
• (f) Resolutions 6 and 7 propose that following either or both of the Return of Value and the Merger, the Directors are re-granted customary authorities (other than the existing buyback authority, which will fall away on the Share Capital Consolidation and which the Directors are not seeking to renew), similar to the existing shareholder authorities in place since the Annual General Meeting held on 25 September 2014, but which reflect the Company's proposed new share capital structure. Resolution 6 proposes to give the Directors general authority to allot shares in the Company. Resolution 7 proposes to empower the Directors to allot equity securities under the authority conferred under Resolution 6 on a non-pre-emptive basis; and
• (g) Resolution 8 proposes an amendment to the Articles to allow the Company to capitalise funds and reserves in connection with the issue of shares pursuant to employee share plans in circumstances where the option exercise price is less than the nominal value of the relevant shares.

The full text of the Resolutions is set out in the notice of General Meeting set out at the end of this document.

• 3.7 The number of Ordinary Shares subject to options as at 30 April 2014 was 4,550,091. Save as disclosed in paragraphs 5, 7 and 12 of this Part XIII, no share or loan capital of the Company is under option or agreed conditionally or unconditionally to be put under option.
• 3.8 The Company will be subject to the continuing obligations of the Listing Rules with regard to the issue of shares for cash. The provisions of section 561(1) of the Companies Act and the Articles (which confer on shareholders rights of pre-emption in respect of the allotment of equity securities which are, or are to be, paid up in cash other than by way of allotment to employees under an employees' share scheme as defined in section 1166 of the Companies Act) apply to the issue of Ordinary Shares in the capital of the Company except to the extent such provisions have been disapplied as referred to in this paragraph 3.
• 3.9 The Ordinary Shares have been and will be created under the Companies Act and conform with the laws of England and Wales. The Ordinary Shares have been and will be duly authorised according to the requirements of the Company's constitution and have and will have all necessary statutory and other consents.
• 3.10 The following table sets out the middle market quotations for an Ordinary Share, as derived from the Daily Official List of London Stock Exchange for the first Business Day of each of the six months immediately preceding the date of this document and on 7 October 2014, being the latest practicable date prior to the publication of this document:

Date	Price per Ordinary Share (pence)
1 May 2014	790.5
2 June 2014	838.5
1 July 2014	877.0
1 August 2014	830.0
1 September 2014	873.5
1 October 2014	1,066.0
7 October 2014	1,018.0

3.11 The Consideration Shares will be issued fully paid and will rank in full for all dividends or other distributions declared, made or paid after the date of issue of the Consideration Shares and otherwise pari passu in all respects to the Existing Ordinary Shares (which, if the Return of Value is approved by Shareholders, will be redesignated as New Ordinary Shares following the Share Capital Consolidation), save that the Consideration Shares shall not rank for the Return of Value or for the final dividend in respect of the financial year ended 30 April 2014. With effect from Admission, all of the Consideration Shares will be capable of being held in uncertificated form. No temporary documents of title will be issued in respect of the Consideration Shares. Further details of the rights attaching to the Ordinary Shares and the Consideration Shares are set out in paragraph 4 of this Part XIII.

4. Articles of Association

4.1 The Articles include provisions to the following effect (not including any of the proposed amendments to the Articles set out in the notice of General Meeting set out at the end of this document):

4.1.1 Voting rights

Subject to any special terms as to voting upon which any Ordinary Shares may be issued, or may for the time being be held and any restriction on voting referred to below, every holder of Ordinary Shares who (being an individual) is present in person or (being a corporation) is present by a duly authorised representative and every proxy (regardless of the number of members for whom he is proxy) shall have one vote on a show of hands. On a poll, every holder of Ordinary Shares present in person or by proxy shall have one vote for every Ordinary Share of which he is the holder.

The duly authorised representative of a corporate Shareholder may exercise the same powers on behalf of that corporation as it could exercise if it were an individual Shareholder.

A Shareholder is not entitled to vote unless all calls due from him have been paid.

A Shareholder is also not entitled to attend or vote at meetings of the Company in respect of any Ordinary Shares held by him in relation to which he or any other person appearing to be interested in such shares has been duly served with a notice under section 793 of the Companies Act and, having failed to comply with such notice within 14 days. Such disentitlement will apply only for so long as the notice from the Company has not been complied with.

4.1.2 General meetings

The Company must hold an annual general meeting in each period of six months beginning with the day following the Company's accounting reference date in addition to any other general meetings held in the year. The Directors can call a general meeting at any time.

At least 21 clear days' written notice must be given for every annual general meeting. For all other general meetings, not less than 14 days' written notice must be given. The notice for any general meeting must state: (i) whether the meeting is an annual general meeting; (ii) the date, time and place of the meeting; (iii) the general nature of the business of the meeting; (iv) any intention to propose a resolution as a special resolution and (v) with reasonable prominence, that a member is entitled to attend and vote and is entitled to appoint one or more proxies to attend, speak and vote instead of him and that a proxy need not also be a member. All members who are entitled to receive notice under the Articles must be given notice.

Before a general meeting starts, there must be a quorum, being two members present in person or by proxy.

Each Director can attend and speak at any general meeting.

4.1.3 Dividends and other distributions

Subject to the Companies Act, the Company may, by ordinary resolution, declare dividends to be paid to members of the Company according to their rights and interests in the profits of the Company available for distribution, but no dividend shall be declared in excess of the amount recommended by the Board.

Subject to the Companies Act, the Board may from time to time pay to the Shareholders such interim dividends as appear to the Board to be justified by the profits available for distribution and the position of the Company, on such dates and in respect of such periods as it thinks fit.

Except insofar as the rights attaching to, or the terms of issue of, any share otherwise provide (no such shares presently being in issue), all dividends shall be apportioned and paid pro rata according to the amounts paid or credited as paid up (other than in advance of calls) on the shares during any portion or portions of the period in respect of which the dividend is paid. Any dividend unclaimed after a period of 6 years from the date of declaration shall be forfeited and shall revert to the Company.

The Board may, if authorised by an ordinary resolution, offer the holders of shares the right to elect to receive additional shares, credited as fully paid, instead of cash in respect of any dividend or any part of any dividend.

The Board may withhold dividends payable on shares representing not less than 0.25 per cent. by number of the issued shares of any class after there has been a failure to comply with any notice under section 793 of the Companies Act requiring the disclosure of information relating to interests in the shares concerned as referred to in paragraph 4.8 of this Part XIII below.

4.1.4 Return of capital

On a voluntary winding-up of the Company the liquidator may, with the sanction of a special resolution of the Company and subject to the Act and the Insolvency Act 1986 (as amended), divide amongst the shareholders of the Company in specie the whole or any part of the assets of the Company.

4.1.5 Transfer of shares

The Ordinary Shares are in registered form.

The Articles provide for Ordinary Shares to be held in CREST accounts, or through another system for holding shares in uncertificated form, such shares being referred to as "Participating Securities". Subject to such of the restrictions in the Articles as shall be applicable, any member may transfer all or any of his Ordinary Shares. In the case of Ordinary Shares represented by a certificate ("Certificated Shares") the transfer shall be made by an instrument of transfer in the usual form or in any other form which the Board may approve. A transfer of a Participating Security need not be in writing, but shall comply with such rules as the Board may make in relation to the transfer of such Ordinary Shares, a CREST transfer being acceptable under the current rules.

The instrument of transfer of a Certificated Share shall be executed by or on behalf of the transferor and (in the case of a partly paid share) by or on behalf of the transferee and the transferor is deemed to remain the holder of the share until the name of the transferee is entered in the register of members.

The Board may also refuse to register a transfer unless:

• 4.1.5.1 in the case of a Certificated Share, the instrument of transfer (duly stamped if required) is lodged at the registered office of the Company or at some other place as the Board may appoint accompanied by the relevant share certificate and such other evidence of the right to transfer as the Board may reasonably require;
• 4.1.5.2 in the case of a Certificated Share, the instrument of transfer is in respect of only one class of share; and
• 4.1.5.3 in the case of a transfer to joint holders of a Certificated Share, the transfer is in favour of not more than four such transferees.

In the case of Participating Securities, the Board may refuse to register a transfer if the Uncertificated Securities Regulations 2001 (as amended) allow it to do so, and must do so where such regulations so require.

The Board may also decline to register a transfer of shares if they represent not less than 0.25 per cent. by number of their class and there has been a failure to comply with a notice requiring disclosure of interests in the shares (as referred to in paragraph 4.8 of this Part XIII below) unless the Shareholder has not, and proves that no other person has, failed to supply the required information. Such refusal may continue until the failure has been remedied, but the Board shall not decline to register:

• 4.1.5.4 a transfer in connection with a bona fide sale of the beneficial interest in any shares to any person who is unconnected with the shareholder and with any other person appearing to be interested in the share;
• 4.1.5.5 a transfer pursuant to the acceptance of an offer made to all the Company's Shareholders or all the Shareholders of a particular class to acquire all or a proportion of the Ordinary Shares or the Ordinary Shares of a particular class; or
• 4.1.5.6 a transfer in consequence of a sale made through a recognised investment exchange or any stock exchange outside the United Kingdom on which the Company's shares are normally traded.

4.1.6 Variation of rights

Subject to the Companies Act, all or any of the rights attached to any class of share may (unless otherwise provided by the terms of issue of shares of that class) be varied (whether or not the Company is being wound up) either with the written consent of the holders of not less than three-quarters in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of such holders. The quorum at any such general meeting is two persons holding or representing by proxy at least one-third in nominal value of the issued shares of that class and at an adjourned meeting the quorum is one holder present in person or by proxy, whatever the amount of his shareholding. Any holder of shares of the class in question present in person or by proxy may demand a poll. Every holder of shares of the class shall be entitled, on a poll, to one vote for every share of the class held by him. Except as mentioned above, such rights shall not be varied.

The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the Articles or the conditions of issue of such shares, be deemed to be varied by the creation or issue of new shares ranking pari passu therewith or subsequent thereto.

4.1.7 Share capital and changes in capital

Subject to and in accordance with the provisions of the Companies Act, the Company may issue redeemable shares. Without prejudice to any special rights previously conferred on the holders of any existing shares, any share may be issued on terms that they are, at the option of the Company or a member liable, to be redeemed on such terms and in such manner as may be determined by the Board (such terms to be determined before the shares are allotted).

Subject to the provisions of the Articles and the Companies Act, the power of the Company to offer, allot and issue any new shares in the Company and any shares lawfully held by the Company or on its behalf (such as shares held in treasury) shall be exercised by the Board at such time and for such consideration and upon such terms and conditions as the Board shall determine.

The Company may by ordinary resolution alter its share capital in accordance with the Companies Act. The resolution may determine that, as between the holders of shares resulting from the sub-division, any of the shares may have any preference or advantage or be subject to any restriction as compared with the others.

4.1.8 Disclosure of interests in shares

Section 793 of the Companies Act provides a public company with the statutory means to ascertain the persons who are, or have within the last three years been, interested in its relevant share capital and the nature of such interests. When a Shareholder receives a statutory notice of this nature, he or she has 14 days to comply with it, failing which the Shareholder will not have any right to attend or vote at a Shareholders' meeting or to exercise any other right in relation to Shareholders' meetings. Where the shares represent at least 0.25 per cent. of their class the Company may decide to restrict the rights relating to the relevant shares and send out a further notice to the holder (known as a "direction notice") relating to the withholding of dividends and transfer restrictions.

Once the direction notice has been given, if the Directors are satisfied that all the information required by any statutory notice has been supplied, the Company shall, within not more than seven days, withdraw the direction notice.

The Articles do not restrict in any way the provisions of section 793 of the Companies Act.

4.1.9 Untraced shareholders

Subject to various notice requirements, the Company may sell any of a Shareholder's shares in the Company if, during a period of 6 years, at least three dividends on such shares have become payable and no dividend has been claimed during that period in respect of such shares and the Company has received no communication from such Shareholder.

4.1.10 Borrowing powers

The Board may exercise all the powers of the Company to borrow money and to mortgage or charge all or any of its undertaking, property and assets (present and future) and uncalled capital and subject to any relevant statutes, to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligations of the Company or any third party provided that the Board shall restrict the borrowings of the Company, and exercise all powers of control exercisable by the Company in relation to its subsidiaries, so as to secure (in relation to its subsidiaries so far as the Board is able) that the aggregate amount for the time being of all borrowings by the Micro Focus Group (excluding any money owed between members of the Micro Focus Group) shall not at any time without the previous sanction of an ordinary resolution of the Company exceed an amount equal to US\$600 million.

4.1.11 Directors

Subject to the Companies Act, and provided he has made the necessary disclosures, a Director may be a party to, or otherwise directly or indirectly interested in, any transaction or arrangement with the Company or in which the Company is otherwise interested or a proposed transaction or arrangement with the Company.

The Board has the power to authorise any matter which would or might otherwise constitute or give rise to a breach of the duty of a Director under section 175 of the Companies Act to avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict with, the interests of the Company. Any such authorisation will only be effective if the matter is proposed in writing for consideration in accordance with the Board's normal procedures, any requirement about the quorum of the meeting is met without including the Director in question and any other interested director and the matter was agreed to without such Directors voting (or would have been agreed to if the votes of such Directors had not been counted). The Board may impose terms or conditions in respect of its authorisation.

Save for certain circumstances, a Director shall not vote in respect of any matter in which he has, directly or indirectly, any material interest (otherwise than by virtue of his interests in shares or debentures or other securities of, or otherwise in or through, the Company) or a duty which conflicts or may conflict with the interests of the Company. A Director shall not be counted in the quorum at a meeting in relation to any resolution on which he is debarred from voting.

A Director shall (in the absence of material interests other than those indicated below) be entitled to vote (and be counted in the quorum) in respect of any resolution concerning any inter alia of the following matters:

• 4.1.11.1the giving of any guarantee, security or indemnity to him or any other person in respect of money lent to, or an obligation incurred by him or any other person at the request of or for the benefit of, the Company or any of its subsidiaries;
• 4.1.11.2the giving of any guarantee, security or indemnity to a third party in respect of an obligation of the Company or any of its subsidiaries for which he himself has assumed any responsibility in whole or in part alone or jointly under a guarantee or indemnity or by the giving of security;

• 4.1.11.3any proposal concerning his being a participant in the underwriting or subunderwriting of an offer of shares, debentures or other securities by the Company or any of its subsidiaries;

• 4.1.11.4any proposal concerning any other company in which he is interested, directly or indirectly, and whether as an officer or shareholder or otherwise, provided that he is not the holder of or beneficially interested in 1 per cent. or more of any class of the equity share capital of such company (or of any corporate third party through which his interest is derived) or of the voting rights available to members of the relevant company (any such interest being deemed to be a material interest in all circumstances);

• 4.1.11.5any arrangement for the benefit of employees of the Company or any of its subsidiaries which does not accord to any Director any privilege or advantage not generally accorded to the employees to which such arrangement relates; and
• 4.1.11.6any proposal concerning any insurance which the Company is empowered to purchase and/or maintain for the benefit of any of the Directors or for persons who include Directors.

The Directors shall be paid such remuneration by way of fees for their services as may be determined by the Board, save that, unless otherwise approved by ordinary resolution of the Company in general meeting, the aggregate amount of such fees of all Directors shall not exceed £1,000,000 per annum. The Directors shall also be entitled to be repaid by the Company all expenses of travelling to and from and attending Board meetings, committee meetings, general meetings or otherwise incurred while engaged in the business of the Company. Any Director who by request of the Board performs special services for the Company may be paid such extra remuneration by way of salary, percentage of profits or otherwise as the Board may determine.

The Company may provide benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, to or for the benefit of past directors who held executive office or employment with the Company or any of its subsidiaries or a predecessor in business of any of them or to or for the benefit of persons who are or were related to or dependants of any such Directors.

The Directors and officers of the Company are entitled to be indemnified against all losses and liabilities which they may sustain in the execution of the duties of their office, except to the extent that such an indemnity is not permitted by sections 232 or 234 of the Companies Act. Subject to sections 205(2) to (4) of the Companies Act, the Company may provide a Director with funds to meet his expenditure in defending any civil or criminal proceedings brought or threatened against him in relation to the Company. The Company may also provide a Director with funds to meet expenditure incurred in connection with proceedings brought by a regulatory authority and indemnify a Director in connection with the Company's activities as a trustee of a pension scheme.

The Directors are subject to re-election annually. Any Director appointed by the Board holds office only until the next annual general meeting, when he is eligible for re-election.

There is no age limit for Directors.

Unless and until otherwise determined by ordinary resolution of the Company, the Directors (other than alternate Directors) shall not be less than three not more than eleven in number.

4.1.12 Redemption

The Ordinary Shares are not redeemable.

4.1.13 Electronic Communications

The Company may communicate electronically with its members in accordance with the provisions of the Electronic Communications Act 2000.

The above is a summary only of certain provisions of the Articles, the full provisions of which are available for inspection as described in paragraph 22 of this Part XIII.

4.1.14 Changes to the Articles

• 4.1.14.1Sections F and G of Part XI (The Return of Value) of this document set out the additional changes that are proposed to be made to the Articles in connection with the Return of Value pursuant to Resolution 5 to be proposed at the General Meeting.
• 4.1.14.2An additional change is proposed to be made to the Articles pursuant to Resolution 8 to be proposed at the General Meeting to give the Company the power to capitalise reserves and funds in connection with the issue of shares pursuant to employee share plans in circumstances where the option exercise price is less than the nominal value of the relevant shares. The proposed additional article 122A is set out in full in Resolution 8 contained in the notice of General Meeting set out at the end of this document.

5. Interests of the Directors, Proposed Directors and Senior Management

• 5.1 The Directors, the Proposed Directors and members of the Senior Management, their functions within the Enlarged Group and brief biographies are set out in Part XII (Directors, Proposed Directors, Corporate Governance and Employees) of this document.
• 5.2 Each of the Directors and the Proposed Directors can be contacted at the Company's head office address at The Lawn, 22-30 Old Bath Road, Newbury, Berkshire RG14 1QN.
• 5.3 The interests in the share capital of the Company of the Directors, the Proposed Directors and Senior Management (all of whom, unless otherwise stated, are beneficial or are interests of a person connected with a Director, a Proposed Director or a member of Senior Management) as at 7 October 2014 (the latest practicable date prior to the publication of this document) and immediately following Merger Admission are as follows:

			Number of	Percentage of	Number of	Percentage of
			Ordinary	issued share	Ordinary	issued share
	Number of		Shares if	capital if	Shares if	capital if
	Ordinary Shares		Merger	Merger	Merger	Merger
	in which the		completes	completes	completes and	completes and
	Director/Senior	Percentage of	with or	with or	assuming the	assuming the
Director/	Manager	existing	following	following	Return of	Return of
Proposed Director/	has a direct or	issued share	the Return	the Return	Value is not	Value is not
Senior Manager	indirect interest	capital	of Value	of Value	implemented	implemented
Kevin Loosemore1	739,919	0.53	687,014	0.32	739,919	0.33
Mike Phillips2	130,000	0.09	120,705	0.06	130,000	0.06
Tom Virden	4,531	0.00	4,207	0.00	4,531	0.00
Richard Atkins3	5,886	0.00	5,465	0.00	5,886	0.00

• 1 49,067 shares are held by Kevin Loosemore's wife, Joy Loosemore.
• 2 114,448 shares are held by Mike Phillips' wife, Josie Phillips.
• 3 2,214 shares are held by Richard Atkins' wife, Julie Atkins.
• 5.4 The interests of the Directors, the Proposed Directors and members of the Senior Management in Ordinary Shares under the Incentive Plan 2005 (in respect of market value options) as at 7 October 2014 (being the latest practicable date prior to publication of this document) are as follows:

Director Ordinary Shares Exercise price Exercise period
Kevin Loosemore1 192,157 0.0p 27 June 2015 to 26 June 2022
Kevin Loosemore1 142,132 0.0p 26 June 2016 to 25 June 2023
Kevin Loosemore1 115,192 0.0p 27 June 2017 to 26 June 2024
Mike Phillips2 219,756 0.0p 1 July 2014 to 17 April 2021
Mike Phillips1 86,471 0.0p 27 June 2015 to 26 June 2022
Mike Phillips1 63,959 0.0p 26 June 2016 to 25 June 2023
Mike Phillips1 61,710 0.0p 27 June 2017 to 26 June 2024
Stephen Murdoch1 96,237 0.0p 27 December 2015 to 26 December 2022
Stephen Murdoch1 39,884 0.0p 26 June 2016 to 25 June 2023
Stephen Murdoch1 56,421 0.0p 27 June 2017 to 26 June 2024

• 1 Performance condition requires that cumulative EPS growth over a three year vesting period is at least equal to RPI plus 3 per cent. per annum (at which point 25 per cent. of awards will vest) and for full vesting the cumulative EPS growth will be required to be RPI plus 9 per cent. per annum. Straight-line vesting will apply between these points. Performance against these objectives is determined by the committee based on the Company's audited results.
• 2 Performance condition comprises a combination of EPS and share price targets which require that cumulative EPS growth over a three year vesting period is at least equal to RPI plus 3 per cent. per annum (at which point 25 per cent. of awards will vest) and for full vesting the cumulative EPS growth will be required to be RPI plus 9 per cent. per annum. Straight-line vesting will apply between these points. The resulting level of vesting will be reduced by 25 per cent. if the Absolute Shareholder Return ('ASR') at vesting (equal to the share price at vesting less the reference price of 291.8 pence plus dividend and cash distributions over the vesting period) is below 150 pence or increased by 50 per cent. if the ASR is 300 pence or above. The closing share price on the vesting date was 877 pence and the dividends over the vesting period were 64.02 pence per share and so the ASR over the vesting period was 649.22 pence and so the initial grant of 149,504 has been increased by 50 per cent. to 219,756.
• 5.5 Subject to the approval of Shareholders and Completion, Kevin Loosemore, Mike Phillips and Stephen Murdoch have received ASGs over 947,140, 676,529 and 405,917 Ordinary Shares respectively. Subject also to the approval of Shareholders and Completion, it is proposed that further Additional Share Grants be made to certain other senior managers of the Enlarged Group following Completion. The ASGs will comprise nil cost options over Ordinary Shares representing, in aggregate, up to 2.5 per cent. of the Enlarged Share Capital. See paragraph 7.2 of this Part XIII for further details.
• 5.6 In relation to the Sharesave Scheme, save for Mike Phillips who, as at 7 October 2014, held options pursuant to the Sharesave Scheme over 1,504 Ordinary Shares, none of the Directors, the Proposed Directors and/or members of the Senior Management have any outstanding options.
• 5.7 Save as set out in paragraphs 5.1 to 5.6, no Director, Proposed Director, member of Senior Management, member of their respective immediate families, nor any person connected with any Director within the meaning of section 252 of the Companies Act, has any interests (beneficial or nonbeneficial) in the share capital of the Company or any of its subsidiaries.
• 5.8 No Director, Proposed Director or member of Senior Management has or has had any interest in any transactions which are or were unusual in their nature or conditions or are or were significant to the business of the Micro Focus Group or any of its subsidiary undertakings and which were effected by the Micro Focus Group or any of its subsidiaries during the current or immediately preceding financial year or during an earlier financial year and which remain in any respect outstanding or unperformed.
• 5.9 There are no outstanding loans or guarantees granted or provided by any member of the Micro Focus Group to or for the benefit of any of the Directors or Proposed Directors, save that qualifying third party indemnity provisions are in place for the benefit of Directors in relation to certain losses and liabilities which they may potentially incur to third parties in the course of their duties.

6. Directors and Senior Management

6.1 Remuneration Strategy

The objective of the Remuneration Policy is that all employees, including Executive Directors, should receive appropriate remuneration for their performance, responsibility, skills and experience. Remuneration packages are designed to enable the Company to attract and retain key employees by ensuring they are remunerated appropriately and competitively and that they are motivated to achieve the highest level of Company performance in line with the best interests of Shareholders.

The Remuneration Policy takes account of the pay structure, employment conditions and relativities within the Group and also the industry sector. To determine the elements and level of remuneration appropriate to each Executive Director, the Remuneration Committee considers benchmark remuneration data for selected comparable technology companies as well as a broader group of companies of a similar size to the Company.

The Additional Responsibility Allowance and the Additional Share Grants are the key elements of the Company's future remuneration strategy in order to ensure the successful integration of the Attachmate Group and the Micro Focus Group. See paragraph 7 of this Part XIII for further details.

There is no arrangement under which any Director has waived or agreed to waive future emoluments nor has there been any waiver of emoluments during the financial year immediately preceding the date of this document.

6.2 Executive Directors' terms of employment, including notice periods

• 6.2.1 Kevin Loosemore was appointed as the Company's Executive Chairman on 14 April 2011. His service contract, dated 14 April 2011, requires each party to give twelve months' notice of termination. Mike Phillips was appointed as the Chief Financial Officer on 7 September 2010. His service contract, dated 7 September 2010, requires each party to give six months' notice of termination after the first year. Stephen Murdoch was appointed as the Chief Operating Officer on 16 April 2014. His service contract, dated 16 April 2014, requires each party to give three months' notice of termination.
• 6.2.2 If an Executive Director is guilty of a material breach of his service contract or commits any crime or act of gross misconduct or dishonesty, the Company is entitled summarily to terminate the service contract without notice and without payment in lieu of notice or other compensation. Such a contract term cannot, however, as a rule of law, affect such Executive Director's statutory rights such as rights in respect of unfair dismissal.
• 6.2.3 Should an Executive Director be dismissed other than as described above, the Company may pay him, in lieu of notice, a sum equal to his basic pay over his notice period. In respect of Kevin Loosemore, such sum is equal to 150 per cent. of his basic pay to reflect the value of salary and benefits.
• 6.2.4 Each of the Executive Directors is subject to a confidentiality undertaking without limitation in time and to non-competition, non-solicitation, non-dealing and non-hiring restrictive covenants for a period of between six and 12 months after the termination of their respective employment arrangements.
• 6.2.5 Each of the Executive Directors has the benefit of a qualifying third-party indemnity from the Company (the terms of which are in accordance with the Companies Act) and appropriate directors' and officers' liability insurance.

6.3 Executive Directors' Compensation

• 6.3.1 Executive Directors' remuneration currently comprises annual salary, a performance-related bonus, long-term incentive in the form of share incentives, pension contributions and other benefits.
• 6.3.2 Kevin Loosemore is employed as the Company's Executive Chairman and received a salary of £490,000 for the financial year ended 30 April 2014. Mike Phillips is employed as the Company's Chief Financial Officer and received a salary of £299,000 for the financial year ended 30 April 2014. His annual salary was increased to £350,000 with effect from 1 April 2014. Stephen Murdoch was appointed to the Board on 16 April 2014 and his base salary was increased by 16 per cent. to £320,000 with effect from 1 May 2014 to reflect the new responsibilities of his role as Chief Operating Officer. Executive Directors' salaries are and will be reviewed, but not necessarily increased, on an annual basis.
• 6.3.3 The Executive Directors receive the following benefits under the terms of their service contracts:
• the Executive Directors participate in a bonus plan, under which bonuses were capped at the following percentages for the year ended 30 April 2014: 150 per cent. of salary for Kevin Loosemore and 100 per cent. of salary for each of Mike Phillips and Stephen Murdoch. There is no bonus payout if Underlying Adjusted EBITDA excluding the

impact of in year acquisitions is the same as the reported level for the previous year on a constant currency basis and maximum bonuses are earned if the increase in this measure is 10 per cent. or more. Where an Executive Director leaves by reason of death, disability, ill-heath or any other reason, at the Remuneration Committee's discretion, he may receive a pro-rata bonus for the financial year of cessation, paid on the normal payment date (with Remuneration Committee discretion to accelerate), based on performance against pre-determined targets and time served during the year. Except as described above, none of Executive Directors have the benefit of any commission or profit-sharing arrangements;

• the Company's ongoing policy is to make annual awards of market value options or nil cost options to the Executive Directors and other senior and key employees as part of the Incentive Plan 2005 (please see paragraph 12.1 of this Part XIII for further details);
• Executive Directors are entitled to participate in the Sharesave Scheme (please see paragraph 12.2 of this Part XIII for further details);
• the Executive Directors are invited to participate in a Micro Focus Group Personal Pension Plan which is money purchase in nature and has no defined benefits. The Micro Focus Group has no obligation to the Micro Focus Group Personal Pension Scheme beyond the payment of contributions. A 20 per cent. of salary allowance is paid to Kevin Loosemore in lieu of pension contributions. The Company's pension contribution for Mike Phillips and Stephen Murdoch is 12.5 per cent. of salary or a cash payment in lieu of a pension contribution of 10.98 per cent. of salary;
• benefits in kind for Executive Directors include death in service benefit, the provision of a company car allowance or service, fuel, life insurance and medical benefits;
• please see paragraph 7.1 of this Part XIII for details of the ARA; and
• please see paragraph 7.2 of this Part XIII for details of the ASGs.

6.4 Micro Focus's Executive Directors' Remuneration

Under the terms of their service contracts and applicable incentive plans, in the year ended 30 April 2014, the Executive Directors were remunerated as set out below:

			Other
			Benefits
			(including
			annual
			bonus but
			excluding
		Annual	pension	Pension
Name	Position	Salary	contribution)	contribution
Kevin Loosemore	Executive Chairman	£490,000	£11,880,000	£98,000
Mike Phillips	Chief Financial Officer	£299,000	£3,236,000	£37,000
Stephen Murdoch	Chief Operating Officer	£275,0001	£12,000	£1,000

1 This includes Stephen Murdoch's remuneration as General Manager of Products and Marketing Strategy. Stephen Murdoch was appointed to the Board on 16 April 2014 and his salary from the time of his appointment to the Board to 30 April 2014 was £11,000.

6.5 Senior Management's Remuneration

For the year ended 31 March 2014, the aggregate total remuneration paid (including contingent or deferred compensation) and benefits in kind granted (under any description whatsoever) to the Senior Management by the Attachmate Group was US\$4,742,345.48.

6.6 Non-Executive Directors' Compensation

• 6.6.1 Each of the Non-Executive Directors is appointed by a letter of appointment for a fixed term of three years or less subject to earlier termination by either the Director or the Company on 90 days' notice. Each Non-Executive Director still serving at the end of his or her term will have his or her appointment reviewed by the Board and the reappointment of that Director may be agreed.
• 6.6.2 Tom Skelton was appointed as a Non-Executive Director on 24 October 2006 and Tom's annual fee was £50,000 for the financial year ended 30 April 2014. Karen Slatford was appointed as a Non-Executive Director on 5 July 2010 and Karen's annual fee was £60,000 for the financial year ended 30 April 2014. On 24 September 2014, Karen was appointed as chairman of the nominations committee and will receive an additional £10,000 per annum for performing this role. Tom Virden was appointed as a Non-Executive Director on 5 January 2012 and Tom's annual fee was £50,000 for the financial year ended 30 April 2014. Richard Atkins was appointed as a Non-Executive Director on 16 April 2014 and Richard's annual fee was £50,000 for the financial year ended 30 April 2014 on a pro-rata basis. On 19 June 2014 Richard was appointed chairman of the audit committee and will receive an additional £10,000 per annum for performing this role.
• 6.6.3 Each Non-Executive Director is also entitled to reimbursement of reasonable expenses.
• 6.6.4 Non-Executive Directors do not participate in the Micro Focus Group's share incentives or otherwise receive performance related pay, and do not receive any pension contributions or benefits in kind.
• 6.6.5 The Non-Executive Directors are subject to confidentiality undertakings without limitation in time.
• 6.6.6 Each of the Non-Executive Directors has the benefit of a qualifying third-party indemnity from the Company (the terms of which are in accordance with the Companies Act) and appropriate directors' and officers' liability insurance.
• 6.7 Save as set out in paragraphs 6.1 to 6.6 of this Part XIII, there have been no new service contracts or letters of appointment or amendments to existing service contracts or letters of appointment with any Directors within the period of six months preceding the date of this document.

6.8 Proposed Directors

• 6.8.1 Following Completion, each of the Proposed Directors shall be appointed as a Non-Executive Director in accordance with the Relationship Agreement and be subject to re-election when appropriate by Shareholders and in accordance with the Articles.
• 6.8.2 Neither Proposed Director shall be entitled to receive a fee from the Company in connection with his role as a Non-Executive Director but each will be entitled to reimbursement of reasonable expenses on a basis consistent with any other Non-Executive Director.
• 6.8.3 Neither Proposed Director will participate in the Micro Focus Group's share incentives schemes or otherwise receive performance related pay, nor receive any pension contributions or benefits in kind.
• 6.8.4 Each of the Proposed Directors will be subject to confidentiality undertakings without limitation in time.
• 6.8.5 Each of the Proposed Directors will have the benefit of a qualifying third-party indemnity from the Company (the terms of which are in accordance with the Companies Act) and appropriate directors' and officers' liability insurance.

6.9 The current and past directorships and partnerships of the Directors, the Proposed Directors and the Senior Management

Set out below are the directorships (unless otherwise stated) and partnerships held by the Directors, Proposed Directors and members of Senior Management (other than, where applicable, directorships held in the Company and/or in any subsidiaries of the Company), in the five years prior to the date of this document:

Director	Current Directorships	Former Directorships within five years
Kevin Loosemore	None	Farnham Castle Morse Limited Nationwide Building Society(1)
Mike Phillips	None	Parity Group plc ASMMC Limited ASMMCTWO Limited D&C Financial Consultants Limited Delphis (Holdings) Limited Delphis EBIT 1999 Limited Diagonal Consulting Limited Diagonal Limited Diagonal Quest Limited Diagonal Solutions Limited MFT Computer Holdings Limited Morse Computer Group Limited Morse Consulting Inc Morse Consulting SDN.BHD Morse Engineering Limited Morse Group Limited Morse Limited Morse Management Consulting Limited Morse Overseas Holdings Limited Morse Service Holdings Limited Morse Solutions Limited Morse Spain SL Strand IT Recruitment Limited Wisdom Solutions Limited XAYCE Limited
Tom Skelton	Surescripts, LLC Robert Morris University School of Nursing Patagonia Health, Inc	Foundation Radiology, Inc Confluence Medical Systems MED3000, Inc
Karen Slatford	Volex plc. The Foundry Holdings Ltd. The Foundry Visionmongers Ltd. The Foundry Bidco Ltd. The Foundry Midco No 2 Ltd. The Foundry Topco Ltd. The Foundry Midco No 1 Ltd. Cambridge Broadband Networks Ltd. Intelliflo Ltd Intelliflo Holdings 2013 Ltd. Pentech Advisory Group ii Limited Partnership. e-conomic International MidCo Sarl Farlax Bidco ApS e-conomic International A/S e-conomic Danmark A/S	Neverfail Holdings Ltd Acunu Ltd. Featurespace Ltd. Ingenious Film Partners LLP
Tom Virden	Enitiative.biz Limited Atari SA Sweetbeam Villas Direct Ltd	Yachtcharterbids.com Limited
Richard Atkins	Acora Holdings Limited Sub10 Systems Limited Acora Limited Entanet International Limited Miles 33 (Holdings) Limited Quillot Associates Ltd. AON UK Limited Ackling Management Limited	Fitch 7City Learning Holdings Limited Fitch 7City Learning (IB) Limited Lantra Awards Limited Level 3 Communications UK Limited Morse Limited EGHL Limited Global Crossing (UK) Finance Limited

Director Stephen Murdoch	Current Directorships West Bar BPRA LLP(2)	Former Directorships within five years Dell Solutions (UK) Limited
	Cobalt Data Centre 2 LLP(2) Cumberland House BPRA Property Fund LLP(2) Park Regis Birmingham LLP(2)	The Networked Storage Company Limited
Charles Sansbury	Pilgrim Quality Solutions, Inc. Open Invention Network LLC	None
Jay Gardner	None	Phurnace Software, Inc.
Nils Brauckmann	None	None
Kathleen Owens	None	None
Prescott Ashe	The Attachmate Group, Inc. Novell, Inc. Novell Holdings, Inc. Novell International Holdings, Inc. SUSE LLC Attachmate Corporation NetIQ Corporation Wizard Parent LLC AI Capital (I) Corporation AI Capital (II) Corporation AI Capital Company LLC AI Capital Investments, Ltd. AIC Company Limited AMZ GP, Inc. AMZ Intermediate Holding Corp. AMZ Parent Corp. Angel Island Capital Collateral Manager SPV Ltd. Angel Island Capital Holdings Corp. Angel Island Capital Management, LLC Angel Island Capital Services, LLC Angel Island Capital SPV Ltd. Angel Island Capital, LLC Angel Island Management Blocker Corp. Angel Island Operations Holdings, LLC Angel Island Originations, LLC Aspect Software Group Holdings Ltd. Aspect Software, Inc. Barracuda Investments Limited GGC Credit Opportunities (California), LLC GGC Credit Opportunities S.à r.l. GGC Credit Opportunities, LLC GGC Financial (US), LLC GGC Financial Holdings, Inc. GGC Unlevered Credit Opportunities, LLC	Aeroflex Holding Corp. Multi-Channel Holdings, Inc GXS Worldwide, Inc. Inovis International, Inc. GGC Neways Holdco Ltd. GGC Neways Debt Holdco Ltd. Neways Holdings Ltd. Neways Parent SARL Symon Holdings Corporation U.S. Silica Holdings, Inc. GGC RCS Holdings, Inc. Coated Sand Solutions, LLC Preferred Rocks USS, Inc. Hourglass Holdings, LLC USS Holdings, Inc. BMAC Services Co., Inc. U.S. Silica Company The Fulton Land and Timber Company Pennsylvania Glass Sand Corporation Ottawa Silica Company Ottawa Silica Company Ltd.
David Golob	VGG Holdings, LLC The Attachmate Group, Inc. Novell, Inc. Novell Holdings, Inc. Novell International Holdings, Inc. SUSE LLC Attachmate Corporation NetIQ Corporation	GXS Group, Inc. FP-GVBB S.a.r.l. Allston Holdings LLC Plex Systems Holding, Inc. Foundation 9 Entertainment, Inc. City Index Group Limited
	Wizard Parent LLC Barracuda Networks, Inc. Prosper Marketplace, Inc. PayLease Holdings, LLC BCA Holdings Limited Avalon Health Manager, LLC

Director	Current Directorships	Former Directorships within five years
David Golob	Francisco Partners, L.P.
(continued)	Francisco Partners II, L.P.
	Francisco Partners II (Cayman), L.P.
	Francisco Partners III, L.P.
	Francisco Partners III (Cayman), L.P.
	Francisco Partners III (Domestic AIV), L.P.

Notes:

(2) LLP member

Within the period of five years preceding the date of this document, none of the Directors, Proposed Directors or members of Senior Management:

• (a) has had any convictions in relation to fraudulent offences;
• (b) has been a member of the administrative, management or supervisory bodies or director or senior manager (who is relevant in establishing that a company has the appropriate expertise and experience for management of that company) of any company at the time of any bankruptcy, receivership or liquidation of such company; or
• (c) has received any official public incrimination and/or sanction by any statutory or regulatory authorities (including designated professional bodies) or has ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of affairs of a company.
• 6.10 Except for the current directorships and partnerships set out in paragraph 6.9 of this Part XIII, in respect of any Director, Proposed Director or member of Senior Management, there are no actual or potential conflicts of interests between any duties he or she has to the Company, either in respect of the Merger or otherwise, and the private interests and/or other duties he or she may also have.
• 6.11 Save in respect of the Merger Agreement and the Relationship Agreement, none of the Directors, Proposed Directors or members of Senior Management were selected to be a Director, Proposed Director or member of Senior Management pursuant to any arrangement or understanding with any major shareholder, customer, supplier or other person having a business connection with the Enlarged Group.
• 6.12 There are no family relationships between any of the Directors, Proposed Directors or members of Senior Management.

6.13 Irrevocable undertakings

Wizard has received irrevocable undertakings to vote in favour of all of the Resolutions in respect of a total of 714,607 Ordinary Shares, representing, in aggregate, approximately 0.51 per cent. of the Company's existing issued share capital, from each Director who holds interests (directly or indirectly) in Ordinary Shares in respect of their entire directly controlled beneficial holdings (subject to the inability of each Executive Director to vote on the resolution approving the New Incentive Arrangements).

		Percentage of
	Number of	ordinary issued
Director	Ordinary Shares	share capital
Kevin Loosemore	690,852	0.49
Mike Phillips	15,552	0.01
Tom Virden	4,531	0.03
Richard Atkins	3,672	0.02

The obligations under the irrevocable undertakings will cease to be binding in the event that the Merger Agreement either fails to become unconditional in all respects or is terminated in accordance with its terms.

⁽¹⁾ A mutual holding society (not a company incorporated under the Companies Act or a partnership)

7. The Additional Responsibility Allowance and the Additional Share Grants

In connection with Rule 16.2 of the Takeover Code, the Takeover Panel has consented to the New Incentive Arrangements set out in this paragraph 7, subject to the approval of Shareholders at the General Meeting (other than the Executive Directors and any other proposed recipient of the ARA or ASGs, who will be ineligible to vote in connection with the New Incentive Arrangements). Accordingly, the New Incentive Arrangements are conditional, inter alia, upon the passing of Resolution 4 set out in the notice of General Meeting set out at the end of this document.

7.1 The Additional Responsibility Allowance (ARA)

(a) Eligibility

Subject to the approval of Shareholders and Completion, the ARA will be paid to Kevin Loosemore, Mike Phillips, Stephen Murdoch and other senior managers. The total number of recipients will not exceed 12.

(b) Amount

The initial amount payable each month in respect of the ARA, subject to the approval of Shareholders and Completion, to (i) Kevin Loosemore will be £21,667, (ii) Mike Phillips will be £10,000 and (iii) Stephen Murdoch will be £6,667. The ARA for Kevin Loosemore and Mike Phillips will be capped at these amounts.

(c) Terms of payment

The ARA will be a fixed amount per individual (after the deduction of PAYE income tax and National Insurance contributions), paid on a monthly basis subject to the recipient being in employment with the Enlarged Group on the date of payment. Payments will be made during a period of at least six months but not exceeding three years from the date of Completion. The maximum amount payable under the ARA to all recipients will be £1 million per annum in aggregate.

(d) Review and amendment of the ARA

The Remuneration Committee may review and subsequently increase or decrease the ARA (in accordance with the Remuneration Policy as amended by the Resolutions) every six months for the first eighteen months following Completion and then at any time thereafter. Any exercise of the Remuneration Committee's discretion to amend the ARA will take effect on three months' written notice from the date of the relevant review, except if the Remuneration Committee has determined a revised salary for the recipient of the ARA in which case any entitlement to the ARA will cease immediately.

(e) General

Any benefits, payments and liabilities to recipients of the ARA which are (but for the ARA) calculated by reference to base salary shall be calculated by reference to the sum of the ARA and base salary. For the avoidance of doubt this will include but not be limited to pension allowance, permanent health insurance, annual bonus, long term incentive plan grant, any notice or damages payment or payment in lieu of notice and life insurance.

7.2 The Additional Share Grants (ASGs)

The Additional Share Grants can be summarised as follows:

(a) Eligibility

All employees (including any officer or director) of any company within the Enlarged Group are eligible to receive an ASG conditional on Completion. However, the Remuneration Committee will only award ASGs during the 18 month period following Completion, and it is intended that the recipients will be limited to the Executive Directors and certain senior managers or employees of the Enlarged Group and new joiners who (in each case) are deemed critical to the delivery of the Merger and integration of the Attachmate Group and the Micro Focus Group. The total number of recipients of ASGs will not exceed 15.

(b) Awards

ASGs are nil cost options over Ordinary Shares. The number of Ordinary Shares subject to the ASGs will be a maximum of 5,412,240 Ordinary Shares. This equates to a maximum of 2.5 per cent. of the Enlarged Share Capital (assuming that the Return of Value is implemented) in the event that the performance condition (see below) is achieved in full (i.e. a return to Shareholders of 100 per cent. is achieved). The Board may decide not to allocate the maximum amount. With partial achievement of the performance condition, less than 2.5 per cent. of the Enlarged Share Capital (assuming the Return of Value is implemented) will vest, with zero vesting if the return to Shareholders is 50 per cent..

(c) Performance condition and vesting

The ASGs will become exercisable, subject to the satisfaction of the performance condition, on the third anniversary of the date of Completion or 1 November 2017, whichever is earlier (the "vesting date") and will remain exercisable until the tenth anniversary of Completion. If the ASGs are not exercised within the 30 days ending on the tenth anniversary of Merger Admission because of any regulatory restrictions, the ASGs may be exercised within 14 days of such restrictions ceasing to apply.

The performance condition is that the percentage of Ordinary Shares subject to the ASG which may be acquired on exercise on or after the vesting date is as follows:

• (i) 0 per cent. if the Shareholder Return Percentage (as defined below) is 50 per cent. or less;
• (ii) 100 per cent. if the Shareholder Return Percentage is 100 per cent. or more; and
• (iii) a percentage determined on a straight line basis between (i) and (ii) above.

The "Shareholder Return Percentage" will be calculated by deducting 819.4 pence per share (the "Reference Price"), being the average of the 20 days before 3 June 2014 (being the date of the heads of agreement relating to the proposed combination of Micro Focus and Attachmate between Micro Focus, Wizard, Golden Gate Capital and Francisco Partners Management LP), from the sum of the "Vesting Price" (calculated as the average closing share price over the period of 20 days ending on the day prior to the vesting date) plus the total of all dividends per share between Completion and the vesting date. This will be divided by the Reference Price, multiplying the resulting figure by 100, and subtracting 100 from that number to obtain the Shareholder Return Percentage.

Holders of ASGs are required, subject to holding employment or a directorship with any member of the Enlarged Group on the vesting date, to hold the ASGs or the Ordinary Shares acquired on exercise for a minimum of 12 months following the vesting date.

The Company reserves the right to settle all or part of the ASGs in cash (calculated on the basis of the average closing Ordinary Share price on the 20 day period ending on the date of exercise). If the Company's shares are not listed the cash amount shall be the greater of such value as the Remuneration Committee in its sole discretion shall determine acting fairly and reasonably or the average closing Ordinary Share price over the last 20 days on which Ordinary Shares were traded multiplied by the number of Ordinary Shares subject to the ASGs, whichever is the greater.

(d) Individual limits

Subject to the approval of Shareholders and Completion, Kevin Loosemore, Mike Phillips and Stephen Murdoch have been granted ASGs over 947,140, 676,529 and 405,917 Ordinary Shares respectively. Other senior managers of the Micro Focus Group have received similar conditional awards of ASGs over, in aggregate, 541,223 Ordinary Shares. The balance of the available ASGs (being over 2,841,431 Ordinary Shares) to be granted to any other participant shall not exceed ASGs over more than 1,082,448 Ordinary Shares. The total number of ASG recipients will not exceed 15.

(e) Dilution limits

In any 10-year period, not more than 10 per cent. of the issued ordinary share capital of the Company may be issued or be issuable under any employee share plans operated by Micro Focus (including for the avoidance of doubt the ASGs). These limits do not include rights to Ordinary Shares which have lapsed or been surrendered or those granted before Micro Focus was listed on the Official List and admitted to trading on the London Stock Exchange.

(f) Leaving employment

The 'leaver provisions' attaching to ASGs will be no more favourable (although may be less favourable at the discretion of the Remuneration Committee) than the terms set out in this section. If the employment of a holder of an ASG ceases before the vesting date:

• (i) as a result of the individual's voluntary resignation, the ASG will lapse. However, the Remuneration Committee may determine in its discretion that the ASG will become exercisable in part or in whole on the normal vesting date;
• (ii) as a result of the individual's serious breach of contract, gross misconduct or gross incompetence, the ASG will lapse. However, the Remuneration Committee may determine in its discretion that the ASG will become exercisable in part or in whole on the normal vesting date;
• (iii) as a result of the individual being fairly dismissed within the meaning of Part XI of the Employment Rights Act 1996 for a reason other than one within (ii) above and other than that which would amount to a dismissal under clause 95(1)(c) of the Employment Rights Act 1996, the ASG will become exercisable on the normal vesting date for a period of six months. The percentage of Ordinary Shares subject to the ASG which may be acquired on exercise (subject also the application of the performance condition) in these circumstances depends on the date on which the employment or directorship ceases (the "termination date"). The relevant percentage is 0 per cent. if the termination date is within six months of Completion, and 50 per cent., 70 per cent. or 90 per cent. if the termination date is on or before the first, second or third anniversary of Completion respectively; and
• (iv) in all other circumstances, the ASG will vest, subject to the performance condition referred to above, and become exercisable on the normal vesting date for a period of six months.
• (g) Takeovers and restructurings

On a takeover, scheme of arrangement, or disposal of a business or assets contributing to 75 per cent. or more of the Company's turnover (in each case other than as a result of an internal reorganisation) prior to the vesting date, ASGs will vest and become exercisable in full immediately prior to and for one month following such an event.

(h) Adjustment of awards on a variation of share capital

In the event of a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital/or demerger of all or part of the business the ASGs will be adjusted to ensure that it delivers the value originally contemplated.

(i) Amendments to the Additional Share Grants

Provisions relating to:

• (i) the persons to whom, or for whom, securities, cash or other benefits are provided under the ASGs;
• (ii) limitations on the number or amount of the securities, cash or other benefits subject to the scheme;
• (iii) the maximum entitlement for any one participant; and
• (iv) the basis for determining a participant's entitlement to, and the terms of, securities, cash or other benefit to be provided and for the adjustment thereof (if any) if there is a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital,

cannot be altered to the advantage of participants without the prior approval of Shareholders in general meeting (except for minor amendments to benefit the administration of the scheme, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants in the scheme or for the company operating the scheme or for members of its group).

(j) Tax

Exercise is conditional on the holder of the ASG providing the Company with sufficient funds, or appropriate deductions being made by the Company (including through the sale of Ordinary Shares) to meet any withholding liability of the Company.

(k) General

ASGs are not transferable and are governed by the laws of England and Wales. Benefits provided under the ASG are not pensionable.

7.3 Amendment to the Remuneration Policy

Subject to the passing of Resolution 4 set out in the Notice of General Meeting at the end of this document, the Remuneration Policy will be amended and restated subject to the addition of the following rows at the end of the Executive Directors' Remuneration Policy table.

Element of pay and alignment with strategy	Operation	Maximum opportunity	Performance measures
	Additional Responsibility Allowance
• Ensure the success of the acquisition of the Attachmate Group by Micro Focus (the "Merger") and the successful integration of the Attachmate Group and the Micro Focus Group	• ARAs will be a fixed amount per individual, paid on a monthly basis subject to the recipient being in employment with the Micro Focus Group on the date of payment	• Kevin Loosemore: £260,000 per annum • Mike Phillips: £120,000 per annum • Stephen Murdoch: £100,000 per annum	None
• Recognises the significant incremental workload and responsibility and allows for a revised salary to be determined	• Payments will be made during a period of at least six months but not exceeding 3 years from the date of completion of the Merger • The ARA does not contain malus or claw-back provisions	• Other senior managers: in aggregate £520,000 per annum • Subject to review every 6 months for the first 18 months and then at any time thereafter. Any amendment will take effect on three months' notice, except if a revised salary has been determined, in which case any entitlement to the ARA will cease immediately

Element of pay and alignment with strategy	Operation	Maximum opportunity	Performance measures
		Additional Share Grants
• Ensure the success of the Merger • Aligns executive interest with those of long-term shareholders	• ASGs will take the form of nil cost options which may be awarded during the first 18 months from the date of completion of the Merger, with vesting dependent upon the achievement of a performance condition over three years • The ASGs do not contain malus or claw-back provisions	• Kevin Loosemore, Mike Phillips and Stephen Murdoch will receive ASGs over no more than 947,140 Ordinary Shares, 676,529 Ordinary Shares and 405,917 Ordinary Shares respectively, (subject to appropriate adjustment in the event of any capitalisation issue, rights issue or open offer, sub division or consolidation of shares or reduction of capital or any other variation of capital or demerger of all or part of the business) • The number of Ordinary Shares subject to ASGs granted to any other one participant shall not exceed 1,082,448, (subject to appropriate adjustment in the event of any capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital or demerger of all or part of the business)	• The percentage of the ASG which will vest is: (i) 0 per cent. if the Share Holder Return Percentage is 50 per cent. or less; (ii) 100 per cent. if the Share Holder Return Percentage is 100 per cent. or more; and (iii) a percentage determined on a straight line basis between (i) and (ii) above • The "Shareholder Return Percentage" will reflect all dividends paid and any increase in share price from the reference price of 819.4 pence to the vesting price, being the average of the closing share price on the 20 Business Days prior to the vesting date. The vesting date is the earlier of the third anniversary of Completion and 1 November 2017

8. Pensions

All employees of the Micro Focus Group, including Executive Directors, are invited to participate in a Micro Focus Group personal pension plan. Executive directors will continue to receive a pension contribution or payment in lieu of pension. The Executive Chairman receives a payment in lieu of pension of 20 per cent. of base salary whilst the other executive directors receive a contribution of up to 12.5 per cent. or a payment in lieu of pension of 10.98 per cent. All major schemes are money purchase in nature and have no defined benefits. Defined benefit schemes are operated in Japan and France, but, given the number of members, are insignificant for the purposes of the Micro Focus Group. The Micro Focus Group has no obligation to the Micro Focus Group personal pension scheme beyond the payment of contributions.

9. Mandatory takeover bids, "squeeze-out" and "sell-out" rules

9.1 Mandatory bid

The Takeover Code applies to the Company. Under Rule 9 of the Takeover Code, if:

• (a) a person acquires an interest in shares in the Company which, when taken together with shares already held by him or persons acting in concert with him, carry 30 per cent. or more of the voting rights in the Company; or
• (b) a person who, together with persons acting in concert with him, is interested in shares in the Company carrying not less than 30 per cent. but does not hold shares carrying more than 50 per cent. of the voting rights in the Company acquires additional interests in shares which increase the percentage of shares carrying voting rights in which that person is interested,

the acquirer and, depending on the circumstances, its concert parties, would be required (except with the consent of the Takeover Panel) to make a cash offer for the outstanding shares in the Company at a price not less than the highest price paid for any interests in the Ordinary Shares by the acquirer or its concert parties during the previous 12 months.

9.2 Compulsory acquisition

• 9.2.1 Under sections 974 to 991 of the Companies Act, if an offeror acquires or contracts to acquire (pursuant to a takeover offer) not less than 90 per cent. of the shares (in value and by voting rights) to which such offer relates it may then compulsorily acquire the outstanding shares not assented to the offer. It would do so by sending a notice to outstanding holders of shares telling them that it will compulsorily acquire their shares and then, six weeks later, it would execute a transfer of the outstanding shares in its favour and pay the consideration to the Company, which would hold the consideration on trust for the outstanding holders of shares. The consideration offered to the holders whose shares are compulsorily acquired under the Companies Act must, in general, be the same as the consideration that was available under the takeover offer.
• 9.2.2 In addition, pursuant to section 983 of the Companies Act, if an offeror acquires or agrees to acquire not less than 90 per cent. of the shares (in value and by voting rights) to which the offer relates, any holder of shares to which the offer relates who has not accepted the offer may require the offeror to acquire his shares on the same terms as the takeover offer. The offeror would be required to give any holder of shares notice of his right to be bought out within one month of that right arising. Sell-out rights cannot be exercised after the end of the period of three months from the last date on which the offer can be accepted or, if later, three months from the date on which the notice is served on the holder of shares notifying them of their sellout rights. If a holder of shares exercises his/ her rights, the offeror is bound to acquire those shares on the terms of the offer or on such other terms as may be agreed.

10. Significant shareholders and interests and dealings

10.1 So far as is known to the Company as at 7 October 2014 (being the latest practicable date prior to the publication of this document), the following persons were interested, directly or indirectly, in 3 per cent. or more of the Company's issued share capital or voting rights:

	As at 7 October 2014
	Percentage
		interest of
	Number of Existing	issued ordinary
	Ordinary Shares	share capital
Standard Life Investments	11,282,989	8.07
M&G Investment Management	10,152,435	7.26
Artemis Investment Management	7,690,037	5.50
Schroder Investment Management	6,721,689	4.80
F&C Asset Management	6,397,290	4.57
JP Morgan Asset Management	5,569,244	3.98
Invesco Perpetual	5,362,454	3.83
BlackRock	4,385,417	3.13
Aberforth Partners	4,370,407	3.12

10.2 So far as is known to the Company, the following persons shall be interested, directly or indirectly, in 3 per cent. or more of the Company's issued share capital or voting rights immediately following the Merger:

		If the Merger occurs with or		If the Return of Value is
	following the Return of Value		not implemented but the
				Merger completes
		Percentage		Percentage
		interest		interest
	Number of	of issued	Number of	of issued
	Ordinary	ordinary	Ordinary	ordinary
	Shares	share capital	Shares	share capital
Wizard	86,595,711	40.0	86,595,711	38.2
Standard Life Investments	10,476,255	4.8	11,282,989	5.0
M&G Investment Management	9,426,535	4.4	10,152,435	4.5
Artemis Investment Management	7,140,199	3.3	7,690,037	3.4

• 10.3 Save as disclosed above, in so far as is known to the Directors, there is no other person who is or will be immediately following Admission, directly or indirectly, interested in 3 per cent. or more of the issued share capital of the Company, or of any other person who can, will or could, directly or indirectly, jointly or severally, exercise control over the Company. The Directors have no knowledge of any arrangements the operation of which may at a subsequent date result in a change of control of the Company.
• 10.4 None of the Company's major Shareholders have or will have different voting rights attached to the shares they hold in the Company.
• 10.5 During the disclosure period, the following dealings were entered into by BAML in Relevant Securities of the Company:1

Dates	Nature of Dealings	Number of Shares	Low price (£)	High Price (£)
7 September 2014 -	Purchases	203,772	8.96	9.75
7 October 2014	Sales	241,410	8.54	10.61
7 August 2014 -	Purchases	970	8.91	8.91
6 September 2014	Sales	0	0	0
7 July 2014 -	Purchases	133,870	8.12	8.56
6 August 2014	Sales	72	8.56	8.56
7 April 2014 -	Purchases	86,689	8.04	8.54
6 July 2014	Sales	20,312	8.07	8.56
7 January 2014 -	Purchases	215,732	7.20	8.38
6 April 2014	Sales	294,404	7.29	8.01
7 October 2013 -	Purchases	319	7.84	8.12
6 January 2014	Sales	31,191	7.46	8.35

As at the Latest Practicable Date, BAML did not have:

• (i) any interest in, or right to subscribe for, Relevant Securities of the Company; or
• (ii) any Short Position in Relevant Securities of the Company; and had not
• (iii) borrowed or lent any Relevant Securities of the Company.

10.6 Interests and Dealings – General

Save as disclosed above in this document:

• 10.6.1 as at the Latest Practicable Date, neither Wizard nor, so far as Wizard is aware, any person acting in concert with it (as detailed in paragraph 10.7 of this Part XIII below) had:
• (i) any interest in, or right to subscribe for, Relevant Securities of the Company; or
• (ii) any Short Position in Relevant Securities of the Company; or
• (iii) borrowed or lent any Relevant Securities of the Company;
• 10.6.2 neither Wizard nor, so far as Wizard is aware, any person acting in concert with it (as detailed in paragraph 10.7 of this Part XIII below) has, during the disclosure period, dealt in any Relevant Securities of the Company;
• 10.6.3 as at the Latest Practicable Date, none of the Company, the Directors, their immediate families, persons connected with them or any person acting in concert with them had:
• (i) any interest in, or right to subscribe for, Relevant Securities of Wizard; or
• (ii) any Short Position in Relevant Securities of Wizard; or
• (iii) borrowed or lent any Relevant Securities of Wizard;
• 10.6.4 as at the Latest Practicable Date, none of the Directors, their immediate families, persons connected with them or any person acting in concert with the Company or any of them had:
• (i) any interest in, or right to subscribe for, Relevant Securities of the Company; or
• (ii) any Short Position in Relevant Securities of the Company; or
• (iii) borrowed or lent any Relevant Securities of the Company;

• 1 A full list of dealings will be published in accordance with paragraph 22 of this Part XIII.

• 10.6.5 save for the irrevocable undertakings described in paragraph 6.13 of this Part XIII, there were no Arrangements which existed between Wizard, or any person acting in concert with Wizard, and any other person; and

• 10.6.6 in this paragraph references to:

"Acting in concert" has the meaning attributed to it in the Takeover Code;

"Arrangement" has the meaning set out in Note 11 to the definition of Acting in concert;

"Connected adviser" has the meaning attributed to it in the Takeover Code;

"control" means an interest, or interests, in shares carrying in aggregate 30 per cent. or more of the voting rights (as defined below) of a company, irrespective of whether such interest or interests give de facto control;

"Dealing" or "dealt" includes the following:

• (i) the acquisition or disposal of Relevant Securities, of the right (whether conditional or absolute) to exercise or direct the exercise of voting rights attached to Relevant Securities, or of general control of Relevant Securities;
• (ii) the taking, granting, acquisition, disposal, entering into, closing out, termination, exercise (by either party) or variation of an option (including a traded option contract) in respect of any Relevant Securities;
• (iii) subscribing or agreeing to subscribe for Relevant Securities;
• (iv) the exercise of conversion, whether in respect of new or existing Relevant Securities, of any Relevant Securities carrying conversion or subscription rights;
• (v) the acquisition of, disposal of, entering into, closing out, exercise (by either party) of any rights under, or variation of, a derivative referenced, directly or indirectly, to Relevant Securities;
• (vi) entering into, terminating or varying the terms of any agreement to purchase or sell Relevant Securities; and
• (vii) any other action resulting, or which may result, in an increase or decrease in the number of Relevant Securities in which a person is interested or in respect of which he has a short position;

"Derivative" includes any financial product whose value in whole or in part is determined directly or indirectly by reference to the price of an underlying security but which does not include the possibility of delivery of such underlying security;

"disclosure period" means the period commencing on 7 October 2013 (being the date which is 12 months prior to the date of this document) and ended on the Latest Practicable Date;

"Exempt principal trader" or "exempt fund manager" has the meaning attributed to it in the Takeover Code;

being "interested" in Relevant Securities includes where a person:

• (i) owns Relevant Securities;
• (ii) has the right (whether conditional or absolute) to exercise or direct the exercise of the voting rights attaching to Relevant Securities or has general control of them;
• (iii) by virtue of any agreement to purchase, option or derivative, has the right or option to acquire Relevant Securities or call for their delivery or is under an obligation to take

delivery of them, whether the right, option or obligation is conditional or absolute and whether it is in the money or otherwise; or

(iv) is party to any derivative whose value is determined by reference to its price and which results, or may result, in his having a long position in it;

"Latest Practicable Date" means 7 October 2014;

"Relevant Securities" means relevant securities of the Company or Wizard, as defined in the Takeover Code;

"Short Position" means any short position (whether conditional or absolute and whether in the money or otherwise) including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery; and

"Voting rights" except for the purpose of Rule 11, voting rights means all the voting rights attributable to the capital of a company which are currently exercisable at a general meeting.

• 10.7 Wizard is a limited liability company incorporated in Delaware whose registered address is at 705 5th Avenue South, Suite 1100, Seattle WA 98104, United States of America. The following persons are acting in concert (as defined in the Takeover Code) with Wizard:
• 10.7.1 the Proposed Directors, the Wizard Representatives, their immediate families, persons connected with them (within the meaning of Part 22 of the Act and related regulations) or any person acting in concert with any of them;
• 10.7.2 pension funds or employee benefit trusts of Wizard;
• 10.7.3 the Golden Gate Funds, the Francisco Partners Funds, the Thoma Bravo Funds and the Elliott Management Fund (each a "Wizard Fund" and together the "Wizard Funds") and the respective general partners and management entities of each of the Wizard Funds;
• 10.7.4 each portfolio company of each Wizard Fund, where such Wizard Fund holds a direct or indirect equity interest of 20 per cent. or more in any such portfolio company;
• 10.7.5 Morgan Stanley & Co LLC, in its capacity as connected adviser, and whose registered office is at 1585 Broadway, New York, New York 10036, United States of America;
• 10.7.6 Novell Intellectual Property Holdings, Inc., which is a Delaware corporation, company number 4965725 (registered address: 1209 Orange Street, Wilmington, DE 19801, United States of America) in which Wizard also has a direct controlling interest;
• 10.7.7 Lazard Frères & Co. LLC, in its capacity as connected adviser, and whose registered office is 30 Rockefeller Plaza, New York, New York 10020, United States of America;
• 10.7.8 Merrill Lynch, Pierce, Fenner & Smith Incorporated, in its capacity as a connected adviser, and whose registered office is at Bank of America Tower, One Bryant Park, New York, New York 10036, United States of America ("BAML"); and
• 10.7.9 RBC Capital Markets LLC in its capacity as a connected adviser, and whose registered address is at Royal Bank Plaza, 200 Bay Street, Toronto, Ontario M5J 2H5, Canada.
• 10.8 The following persons will hold (through Wizard) an indirect economic interest in approximately 5 per cent. or more of the shares of the Enlarged Group at Completion:
• 10.8.1 Francisco Partners

Francisco Partners is a global private equity firm that specialises in investments in technology companies. Francisco Partners was formed in 1999 to provide transformational capital to technology companies facing strategic or operational inflection points. Francisco Partners has invested in more than 100 technology companies through a wide variety of transaction structures including: divisional carve-outs, acquisitions from founders, growth equity, publicto-privates, and sponsored M&A. Francisco Partners has raised approximately \$7 billion across three funds (including the Francisco Partners Funds). Francisco Partners invests in transaction values ranging from \$50 million to over \$2 billion, where the firm's deep sub-sector knowledge and operational expertise help companies realise their full potential. The Francisco Partners Funds are managed as follows:

• Francisco Partners Management, L.P., whose registered office is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, United States of America, is the investment manager the Francisco Partners Funds;
• Francisco Partners GP LLC., whose registered office is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, United States of America, is the general partner of Francisco Partners L.P. and Francisco Partners Fund A L.P.;
• Francisco Partners GP II, L.P., whose registered office is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, United States of America, is a general partner of Francisco Partners II L.P. and Francisco Partners Parallel Fund II L.P.; and
• Francisco Partners II L.P., whose registered office is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, United States of America, is the managing member of Francisco Partners Fund E LLC.

The Francisco Partners Funds collectively hold approximately 29.91 per cent. of the economic interests in Wizard (based on recent estimated aggregate equity valuation). Other than Attachmate, the software investee companies of Francisco Partners include Barracuda Networks Inc, eFront, Frontrange Solutions Inc, Kewill and Webtrends.

The investors in the Francisco Partners Funds are primarily comprised of institutional investors such as government and corporate pension funds, financial institutions, private companies and a limited number of high net worth individuals. In addition, certain individuals associated with Francisco Partners are investors in the Francisco Partners Funds.

10.8.2 Golden Gate Capital

Golden Gate Capital is a privately held enterprise with over \$12 billion in committed capital, including from the Golden Gate Funds. Unlike conventional private equity firms, it operates as a private holding company and recapitalises, restructures, and ultimately builds meaningful businesses in partnership with management over an indefinite time horizon. The principals of Golden Gate have a long and successful history of investing across a wide range of industries and transaction types, including leveraged buyouts, recapitalisations, corporate divestitures, spin-offs and build-ups. Golden Gate is one of the most active software investors in the world, having invested in or acquired more than 65 software companies since its inception in 2000. Golden Gate's current portfolio of software companies had combined revenue in 2013 of approximately \$7.5 billion.

Golden Gate Capital, whose registered office is located at 1 Embarcadero Center Ste 3900, San Francisco, CA 94111, United States, is the investment manager of the Golden Gate Funds.

The Golden Gate Funds collectively hold approximately 31.52 per cent. of the economic interests in Wizard (based on recent estimated aggregate equity valuation). Other than Attachmate, the software investee companies of Golden Gate include Aspect Software, BMC Software, Ex Libris, Infor, JDA Software, and LiveVox. Golden Gate was also the majority shareholder of Micro Focus from 2001 until Micro Focus's IPO in 2005, and fully divested its holding in 2009.

The investors in the Golden Gate Funds include university endowments, not-for-profit foundations, select financial institutions and insurance companies, and high net worth individuals, as well as the funds' own partners and employees.

10.8.3 Thoma Bravo

Thoma Bravo is a leading private equity investment firm that has been providing equity and strategic support to experienced management teams building growing companies for over 30 years. The firm pioneered the concept of "industry consolidation" or "buy-and-build" investing, which seeks to create value through the strategic use of acquisitions to accelerate business growth. Through a series of private equity funds, including the Thoma Bravo Funds, Thoma Bravo currently manages over \$7 billion of equity capital. In the technology industry, Thoma Bravo is arguably the most active private equity firm in the middle market, having completed over 100 total acquisitions representing approximately \$10 billion in aggregate enterprise value over the past ten years. The Thoma Bravo Funds are managed as follows:

• TC Partners VII, L.P., whose registered office is located at c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, DE 19940, United States, is the general partner of Thoma Cressey Fund VII, L.P. and Thoma Cressey Friends Fund VII, L.P;
• Thoma Cressey Bravo, Inc., whose registered office is located at c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, DE 19940, United States, is the general partner of TC Partners VII, L.P;
• Thoma Bravo Partners IX, L.P., whose registered office is located at c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, DE 19940, United States, is the general partner of Thoma Bravo Fund IX, L. P; and
• Thoma Bravo, LLC, whose registered office is located at c/o National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, DE 19940, United States, is the general partner of Thoma Bravo Partners IX, L.P.

The Thoma Bravo Funds collectively hold approximately 14.14 per cent. of the economic interests in Wizard (based on recent estimated aggregate equity valuation). Other than Attachmate, the software investee companies of Thoma Bravo include Blue Coat Systems Inc, Embarcadero Technologies Inc, Hyland Software Inc, Keynote Systems Inc, LANDESK Software Inc, Sirius Computer Solutions Inc, Sparta Systems Inc, Tripwire Inc, Vision Solutions Inc, and (transaction pending) Compuware Corporation.

The investors in the Thoma Bravo Funds comprise institutional investors, such as U.S., European and Asian governmental and corporate pension funds, funds-of-funds, insurance companies, financial institutions and sovereign wealth funds, as well as high net worth individuals, family offices, business executives and employees of the Thoma Bravo Funds' general partners.

10.8.4 Elliott Associates

Elliott Management Corporation and certain of its affiliates provide discretionary investment advice and other services to two multi-strategy hedge funds, Elliott Associates, L.P., having its registered office at c/o Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 ("EALP") and Elliott International, L.P., having its registered office at c/o Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands ("EILP"), which together have more than \$24 billion of assets under management. EALP, the flagship fund of Elliott Management Corporation, was founded in 1977, making it one of the oldest hedge funds under continuous management. EALP is the general partner of Waverly Securities L.P., whose registered office is c/o The Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801, and who holds approximately 13.20 per cent. of the economic interests in Wizard (based on recent estimated aggregate equity valuation).

Other than Attachmate, the software investee companies of EALP, EILP and their respective subsidiaries include BMC Software Inc and Compuware Corporation. The investors in EALP and Elliott International Limited, EILP's sole limited partner, include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, high net worth individuals and families, and employees of Elliott Management Corporation and its affiliates.

11. Subsidiaries

The Company is the parent company of the Micro Focus Group. The table below contains a list of the principal subsidiaries, joint ventures and associates of the Company following Completion (each of which is considered by the Directors to be likely to have a significant effect on the assessment of the assets, liabilities, the financial position and/or the profits and losses of the Enlarged Group):

		Country of	Proportion of
Company Name	Nature of business	incorporation	share capital held
Micro Focus Group Limited	Holding company	UK	100%
MA FinanceCo LLC	Holding company	USA	100%
Minerva Finance SARL	Holding company	Luxembourg	100%
Micro Focus AS	Sale and support of software	Norway	100%
Micro Focus (Canada) Limited	Development, sale and support of software	Canada	100%
Micro Focus GmbH	Sale and support of software	Germany	100%
Micro Focus Holdings Limited	Holding company	UK	100%
Micro Focus India Private Limited	Marketing and sale of software	India	100%
Micro Focus (IP) Limited	Holding company	UK	100%
Micro Focus Israel Limited	Development and support of software	Israel	100%
Micro Focus IP Development Limited Development of software		UK	100%
Micro Focus KK	Sale and support of software	Japan	100%
Micro Focus Limited	Development, sale and support of software	UK	100%
Micro Focus NV	Sale and support of software	Belgium	100%
Micro Focus NV	Sale and support of software	Netherlands	100%
Micro Focus Pte Limited	Development, sale and support of software	Singapore	100%
Micro Focus Pty Limited	Sale and support of software	Australia	100%
Micro Focus APM Solutions EOOD	Development of software	Bulgaria	100%
Micro Focus SAS	Development, sale and support of software	France	100%
Micro Focus SL	Sale and support of software	Spain	100%
Micro Focus Srl	Development, sale and support of software	Italy	100%
Micro Focus (US) Inc	Development, sale and support of software	USA	100%
Micro Focus (US) Group Inc	Holding company	USA	100%
Micro Focus (US) Holdings	Holding company	UK	100%
Borland BV	Sale and support of software	Netherlands	100%
Borland Co. Limited	Sale and support of software	Japan	100%
Borland Entwicklung GmbH	Development of software	Austria	100%
Borland France Sarl	Sale and support of software	France	100%
Borland GmbH	Sale and support of software	Germany	100%
Borland Latin America Ltda	Sale and support of software	Brazil	100%
The Attachmate Group, Inc.	Holding company	USA	100%
Borland Software Corporation	Development, sale and support of software	USA	100%
Borland Srl	Sale and support of software	Italy	100%
Borland (UK) Limited	Sale and support of software	UK	100%
Attachmate Corporation	Development, sale and support of software	USA	100%
NetIQ Corporation	Development, sale and support of software	USA	100%
Novell, Inc	Development, sale and support of software	USA	100%
SUSE LLC	Development, sale and support of software	USA	100%
Novell Holdings, Inc. (NHI)	Holding company	USA	100%
Novell Canada, Ltd.	Sale and support of software	Canada	100%
Attachmate Ireland Limited	Sale and support of software	Ireland	100%
Novell Ireland Software Limited	Development, sale and support of software	Ireland	100%
NetIQ Ireland Limited	Holding company	Ireland	100%
NetIQ Europe Limited	Sale and support of software	Ireland	100%
Novell Software International
Limited	Holding company	Ireland	100%
Novell Ireland Real Estate Limited	Holding company	Ireland	100%
Novell Cayman Software (NCS)	Holding company	Ireland	100%

		Country of	Proportion of
Company Name	Nature of business	incorporation	share capital held
Novell Cayman Software
International	Holding company	Ireland	100%
Novell International Holdings Inc.
SUSE Linux Holdings Limited (SLH) Holding company		Ireland	100%
Attachmate Group Austria GmbH	Sale and support of software	Austria	100%
Attachmate Group Belgium BV	Sale and support of software	Belgium	100%
NOVL Czech s.r.o.	Sale and support of software	Czech	100%
SuSE Linux s.r.o. (Czech)	Development, sale and support of software	Czech	100%
Attachmate Group Denmark A/S	Sale and support of software	Denmark	100%
Attachmate Group France SARL	Sale and support of software	France	100%
Novell Holding Deutschland
GmbH (NHD)	Holding company	Germany	100%
Attachmate Group Germany GmbH	Sale and support of software	Germany	100%
SuSE Linux GmbH (SUDE)	Development, sale and support of software	Germany	100%
SuSE Linux Products GmbH
(SULX)	Development, sale and support of software	Germany	100%
Attachmate Group Italy Srl	Sale and support of software	Italy	100%
Attachmate Group Netherlands BV	Sale and support of software	Netherlands	100%
Novell Portugal Informatica Lda.	Sale and support of software	Portugal	100%
Attachmate Group South Africa
(Proprietary) Limited	Sale and support of software	South Africa	100%
Attachmate Group Spain S.L.	Sale and support of software	Spain	100%
Attachmate Group Sweden AB	Sale and support of software	Sweden	100%
Attachmate Group Schweiz AG	Sale and support of software	Switzerland	100%
Attachmate Teknoloji Satis ve
Pazarlama Ltd. Sti. (Turkey)	Sale and support of software	Turkey	100%
Novell United Kingdom Ltd	Sale and support of software	UK	100%
Attachmate Sales UK Ltd	Sale and support of software	UK	100%
Attachmate Group Australia Pty. Ltd	Sale and support of software	Australia	100%
Novell Software (Beijing) Ltd.	Development, sale and support of software	China	100%
Attachmate Hong Kong Limited	Sale and support of software	Hong Kong	100%
Novell Software Development
(India) Private Limited	Development, sale and support of software	India	100%
NetIQ KK (Japan)	Sale and support of software	Japan	100%
Novell Korea Co., Ltd.	Sale and support of software	Korea	100%
Novell Corporation (Malaysia)
Sdn Bhd	Sale and support of software	Malaysia	100%
Novell New Zealand Limited	Sale and support of software	New Zealand	100%
Attachmate Group Singapore Pte Ltd	Sale and support of software	Singapore	100%
Novell (Taiwan) Co., Ltd.	Sale and support of software	Taiwan	100%
Attachmate Sales Argentina SRL	Sale and support of software	Argentina	100%
Novell do Brasil Software Ltd.	Sale and support of software	Brazil	100%
Attachmate Mexico S.A. de C.V.	Sale and support of software	Mexico	100%
CJDNLD LLC	Holding company	USA	100%
SUSE Linux Ireland Ltd.	Holding company	USA	100%

The Company currently has no principal investments (in progress or planned for the future on which the Directors have made firm commitments or otherwise) other than the subsidiaries and subsidiary undertakings listed above.

12. Share Plans

Micro Focus Group Share Plans

The Micro Focus Group currently operates the following employee share plans:

• the Micro Focus Incentive Plan 2005 (the "Incentive Plan 2005");
• the Micro Focus Sharesave Plan 2006 (the "Sharesave Scheme"); and
• the Micro Focus Employee Stock Purchase Plan 2006 (the "ESPP").

In addition, the following plans have been adopted:

• the Micro Focus International PLC Leadership Stock Incentive Plan 2007 (the "Leadership Plan");
• the Micro Focus International Sharesave Plan 2010 (the "International Sharesave Scheme"), adopted as a sub-plan of the Sharesave Scheme; and
• the Micro Focus Sharesave Plan Ireland 2013 (the "Ireland Sharesave Scheme"), also adopted as a sub-plan of the Sharesave Scheme.

It is also proposed to award Additional Share Grants to certain senior managers of the Enlarged Group in order to retain, recruit and incentivise the best talent from both the Micro Focus Group and the Attachmate Group, as well as from outside the Enlarged Group, to ensure the success of the Merger (see paragraph 7 of this Part XIII for further details).

12.1 The Incentive Plan 2005

In April 2005, prior to Micro Focus's admission to the London Stock Exchange, the Company adopted the Incentive Plan 2005. This provides a flexible framework to allow Micro Focus to make awards of free Ordinary Shares, in the form of nil-cost options, conditional awards or forfeitable shares, or to grant market value options over Ordinary Shares ("Awards"). Market value options may be designated as tax favoured options and granted pursuant to Schedule 4 to the Income Tax (Earning and Pensions) Act 2003 (options with particular income tax relief on exercise).

Awards may be granted to employees of the Micro Focus Group and certain associated companies and Directors. Currently, Micro Focus's on-going policy is to make awards of market value options to the Executive Directors, and market value options or nil cost options to other senior and key employees.

The Incentive Plan 2005 can be summarised as follows:

(a) Eligibility

All employees (including Executive Directors) of the Micro Focus Group are eligible to participate in the Incentive Plan 2005. Unless the Remuneration Committee decides otherwise, Awards may not be granted to an employee who, on the Award date, has given or received notice of termination of employment.

(b) Awards

The Remuneration Committee must approve all Awards to be made under the Incentive Plan 2005.

The number of Ordinary Shares subject to an Award will be determined by reference to the number of Ordinary Shares already held or purchased by a participant, or the gross equivalent of an amount invested by or on behalf of a participant in Ordinary Shares.

Awards may generally only be made within 42 days following the announcement of Micro Focus's results for any period or the date of Micro Focus's annual general meeting. The Remuneration Committee may, however, grant Awards at other times in exceptional circumstances.

Awards cannot be granted after 27 April 2015.

(c) Performance conditions and vesting

Awards will normally be subject to performance conditions, determined by the Remuneration Committee for each Award. Performance conditions must be objective and must be specified at the date of the Award and may provide that an Award will lapse to the extent they are not satisfied.

However, Awards made on an all-employee basis may not be subject to performance conditions.

The Remuneration Committee determines, at the end of the relevant performance period, whether and to what extent any performance condition has been satisfied and how many Ordinary Shares vest for each Award.

If no performance conditions are set, the Awards will vest on the third anniversary of the Award date.

(d) Dilution Limits

The maximum aggregate value of Awards in any financial year under the Incentive Plan 2005 to an employee will not exceed two times basic salary. For these purposes, the value of the Awards is deemed to be equal to the market value of free Ordinary Shares at the time of award or in the case of market value options, 50 per cent. of the market value of Ordinary Shares under option at the time of Award. This limit may be exceeded only where the Remuneration Committee determines that there are exceptional circumstances.

(e) Incentive Plan 2005 limits

In any 10-year period, not more than 10 per cent. of the issued ordinary share capital of the Company may be issued or be issuable under any employee share plans operated by Micro Focus (including, for the avoidance of doubt, the ASGs). These limits do not include rights to Ordinary Shares which have lapsed or been surrendered or those granted before Micro Focus was listed on the Official List and admitted to trading on the London Stock Exchange.

(f) Treasury shares and share appreciation rights

Rights under the Incentive Plan 2005 may be satisfied using treasury shares. If such treasury shares are used Micro Focus will, so long as required under the IMA Share Capital Management Guidelines, count them towards the dilution limits set out above. In addition, Shareholders have approved a resolution allowing Micro Focus to satisfy option Awards via the use of share appreciation rights. This is intended to allow Micro Focus additional flexibility to manage dilution. Consistent with the IMA Share Capital Management Guidelines, all the Ordinary Shares potentially subject to an outstanding option subject to an outstanding option will count towards the dilution limits until such time as a smaller number of Ordinary Shares are actually issued on exercise.

(g) Leaving employment

Generally an Award will lapse on the date a person holding an Award ceases to be an employee of Micro Focus or member of the Micro Focus Group. Ordinary Shares may be acquired early if an employee leaves employment due to redundancy, ill health, injury or disability, death, retirement at normal retirement age or early retirement with the agreement of Micro Focus, a sale of the employee's employing business or company or any other reason if the Remuneration Committee so decides. The number of Ordinary Shares will also be reduced pro rata to take account of the period between the start of the performance period and the date of leaving as a proportion of the whole performance period. The number of Ordinary Shares will also depend on the extent to which the performance conditions have been satisfied.

(h) Takeovers and restructurings

On a takeover, scheme of arrangement, merger or certain other corporate reorganisations, Awards will vest to the extent that any performance conditions are then satisfied and the number of Ordinary Shares acquired will be reduced pro rata to reflect the early vesting of the Awards.

(i) Adjustment of Awards on a variation of share capital

Awards may be adjusted following a rights issue or certain variations in share capital including capitalisations, subdivisions, consolidations or reductions of capital.

(j) Tax

Micro Focus or any employing company of the Micro Focus Group may withhold such amount and make such arrangements as it considers necessary to meet any liability to taxation or social security contributions in respect of an Award, including the sale of Ordinary Shares on behalf of a participant.

A participant must, if required by Micro Focus, enter into an election to transfer to it the liability to employer's national insurance contributions in respect of an Award.

(k) Amendments to the rules of the Incentive Plan 2005

Provisions relating to eligibility, individual and dilution limits, option price, rights attaching to Awards and Ordinary Shares, adjustment of Awards and other rights in the event of a variation in share capital and the amendment powers cannot be altered to the advantage of participants without the prior approval of Shareholders in general meeting.

However, Shareholder approval is not required for minor changes intended to benefit the administration of the Incentive Plan 2005, or to comply with or take account of existing or proposed legislation or any changes in legislation, or to secure favourable tax treatment for the Company, members of the Micro Focus Group or participants.

(l) General

Awards granted under the Incentive Plan are not transferable (except with the consent of the remuneration committee) and benefits under the Incentive Plan 2005 are not pensionable.

Any Ordinary Shares issued in the Incentive Plan 2005 will rank equally with Ordinary Shares of the same class in issue on that date of allotment, except in respect of rights arising by reference to a prior record date.

The laws of England and Wales govern the Incentive Plan 2005 and all Awards.

12.2 The Leadership Plan

The Leadership Plan was adopted by the Board on 5 December 2007 and by the Remuneration Committee on 21 June 2011.

The terms of the Leadership Plan are identical to the terms of the Incentive Plan 2005, except for minor changes to benefit the administration of the plan and the changes summarised below:

(a) Eligibility

Directors are not eligible to participate in the Leadership Plan.

(b) Awards

Awards may be granted at any time, subject to any restrictions under applicable law and regulations. Awards may not be settled using newly issued or treasury shares.

Market value options over Ordinary Shares cannot be granted under the Leadership Plan. The Leadership Plan does not provide for the grant of tax advantaged options to UK taxpayers.

The Remuneration Committee may determine that no performance condition should attach to an award under the Leadership Plan.

(c) Limits

The Remuneration Committee may determine, from time to time, limits applicable to the Leadership Plan.

(d) Leaving Employment

Ordinary Shares may be acquired early due to retirement with the agreement of the Company.

(e) Amendments to the rules of the Leadership Plan

The Remuneration Committee may amend the Leadership Plan by resolution, provided that any amendment to the material disadvantage of participants (other than a minor change to a performance condition) must be approved by a majority of participants.

12.3 Sharesave Scheme

In July 2006, Micro Focus adopted the Sharesave Scheme. The Sharesave Scheme is an all-employee tax favoured plan intended to meet the requirements of Schedule 3 to the Income Tax (Earnings and Pensions) Act 2003.

Under the Sharesave Scheme, UK employees of the Micro Focus Group are eligible to receive options to acquire Ordinary Shares at a discount of up to 20 per cent. of the market value of Ordinary Shares at the date of grant. Participants enter into a savings contract with a savings provider for a specified period determined at the outset by Micro Focus. At the end of the savings period, the savings can be used to exercise the option and acquire Ordinary Shares or the cash can be refunded to the participant. If options are exercised, then provided the Sharesave Scheme remains approved by HM Revenue & Customs at that time, no income tax is chargeable on any gain made on exercise.

No performance conditions apply to the grant or exercise of options under the Sharesave Scheme.

The Sharesave Scheme can be summarised as follows:

(a) Eligibility

All employees of the Micro Focus Group who are subject to UK income tax are eligible to participate in the Sharesave Scheme provided they have met a qualifying period of service and do not have material interest in Micro Focus. Directors who work at least 25 hours per week are also eligible to participate in the Sharesave Scheme.

(b) Limits

No option may be granted in any calendar year which would, at the time it is granted, cause the number of Ordinary Shares allocated on or after 17 May 2005 and in the prior ten years under the Sharesave Scheme or any other employee share plan adopted by Micro Focus to exceed such number as represents ten per cent. of the issued ordinary share capital of Micro Focus at that time.

(c) Exercise of options

Options are normally exercisable for a period of six months following the expiry of the relevant savings period. If options have not been exercised during that six month period, they lapse.

The exceptions to this rule are if an employee dies or ceases employment due to injury, disability, redundancy, retirement or transfer out of the Micro Focus Group or if there is a takeover or other corporate restructuring. In these circumstances, options become exercisable for a defined period following such event happening notwithstanding the savings period may not have expired.

(d) Amendments to the rules of the Sharesave Scheme

Certain amendments to the Sharesave Scheme to the advantage of an option holder require prior approval by ordinary resolution of Micro Focus Shareholders in general meeting. Other minor amendments require Board approval.

(e) General

Benefits provided under the Sharesave Scheme are not pensionable. English law governs the Sharesave Scheme and all options granted under it.

12.4 International Sharesave Scheme

The International Sharesave Scheme was adopted by the Board on 5 August 2010 as a sub-plan to the Sharesave Scheme. The terms of the International Sharesave Scheme are identical to the terms of the Sharesave Scheme, except for minor changes to benefit the administration of the plan and changes relating to the lack of a requirement for approval from HM Revenue & Customs.

12.5 Ireland Sharesave Scheme

The Ireland Sharesave Scheme was adopted by the Board on 5 August 2010 as a sub-plan to the Sharesave Scheme. The terms of the Ireland Sharesave Scheme are identical to the terms of the Sharesave Scheme, except for minor changes to obtain favourable tax treatment for participants (including to provide for approval of the Ireland Sharesave Scheme by the Revenue Commissioners of Ireland).

12.6 ESPP

In July 2006, Micro Focus adopted the ESPP for employees of the Micro Focus Group based in the USA and Canada. The ESPP operates in a broadly similar way to the Sharesave Scheme in that options are granted by Micro Focus to acquire Ordinary Shares at a discount to the fair market value using savings accumulated over a defined period) but with some differences.

The ESPP is intended to constitute an "employee stock purchase plan" within the meaning of section 423(b) of the US Internal Revenue Code of 1986. This means that awards made under the ESPP qualify for favourable tax treatment in the United States.

(a) Eligibility

All employees (including any officer or director) of any Micro Focus Group company are eligible to participate in the ESPP, provided they have met a qualifying period of employment as determined by the ESPP committee.

(b) Dilution limits

No option may be granted in any calendar year which would, at the time it is granted, cause the number of Ordinary Shares allocated on or after 17 May 2005 and in the prior ten years under the ESPP or any other employee share plan adopted by Micro Focus to exceed such number as represents ten per cent. of the issued ordinary share capital of Micro Focus at that time.

In addition, unless increased with the approval of Micro Focus Shareholders, the maximum number of Ordinary Shares that may be issued pursuant to the ESPP is 29,922,924 Ordinary Shares.

(c) Offer periods and exercise of options

Participants are granted an option to acquire a specified number of Ordinary Shares at a specified option price using proceeds saved through payroll deductions over a period of 24 months, or such other period determined by the ESPP committee. The period of the offer may not exceed 27 months unless the option price is determined by reference to the fair market value of an Ordinary Share at the date of exercise of the option, in which case the offer period may not exceed 60 months.

At the end of the payroll period, the amount authorised is deducted from the pay of each participant and held to the credit of the participant by Micro Focus as part of its general funds and may, at the discretion of Micro Focus, accrue interest.

At the end of the offer period, participants decide to either use the proceeds saved to exercise the option and acquire Ordinary Shares, or to elect to have the savings (and any applicable interest) refunded.

On a takeover or other corporate restructuring, options may be exercised within one month of notification of the event happening, following which the option shall lapse.

(d) Individual limits

Shareholders holding or deemed to hold 5 per cent. or more of Ordinary Shares (including Ordinary Shares held under options) are ineligible to participate in the ESPP.

No employee shall be granted an option under the ESPP if such grant would allow the employee to acquire in any calendar year, under the ESPP and any other employee share purchase plan, Ordinary Shares with an aggregate fair market value in excess of US\$25,000.

(e) Option price

The option price is determined by the ESPP committee but shall be not less than the lower of 85 per cent. of the fair market value of an Ordinary Share on the date of grant of the option and 85 per cent. of the fair market value of an Ordinary Share on the date of exercise of the option.

(f) Amendments to the rules of ESPP

Certain amendments to the ESPP to the advantage of an option holder require prior approval by ordinary resolution of Micro Focus Shareholders in general meeting. Other minor amendments require Board approval.

(g) Governing law

English law governs the ESPP to the extent not pre-empted by US federal law (including the US Internal Revenue Code of 1986).

12.7 Effect of the Merger on the Micro Focus Share Plans

The Remuneration Committee will consider whether any adjustments should be made as a result of the Merger to the number of Ordinary Shares subject to existing options and awards. Participants in the Micro Focus Share Plans will be advised separately after conclusion of the Merger of any adjustment to existing schemes or awards made or to be made.

13. Litigation

13.1 The Micro Focus Group

There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) during the 12 months preceding the date of this document which may have, or have had in the recent past a significant effect on the Company's and/or the Micro Focus Group's financial position or profitability.

13.2 The Attachmate Group

There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Micro Focus Group is aware) during the 12 months preceding the date of this document which may have, or have had in the recent past a significant effect on the Attachmate Group's financial position or profitability.

14. Material contracts

The following are all the contracts, other than contracts entered into in the ordinary course of business, that have been entered into by the Company, any other member of the Micro Focus Group or any member of the Attachmate Group (i) within two years immediately preceding the date of this document and are, or may be, material; or (ii) containing a provision under which the Company, any other member of the Micro Focus Group or any member of the Attachmate Group has any obligations or entitlements which are or may be material as at the date of this document:

14.1 The Micro Focus Group

14.1.1 Merger Agreement

Please see Part II (Details of the Merger).

14.1.2 Sponsor's Agreement

On the date of the Announcement, Numis and Micro Focus entered into a sponsor's agreement pursuant to which Numis has agreed to act as the Company's sponsor in relation to Admission and the Return of Value. Micro Focus is providing Numis with certain undertakings which will require Micro Focus to either consult with or obtain the prior consent of Numis before it can take a particular action and with certain representations and warranties in relation to the Micro Focus Group and the Attachmate Group which are unlimited in time and are not subject to any financial limit. The representations and warranties in relation to the Attachmate Group are given subject to the Company's best knowledge and belief. In addition, Micro Focus is providing Numis with the benefit of certain indemnities standard for a document of this nature. Pursuant to this agreement, Numis may terminate the agreement in certain limited circumstances.

14.1.3 The Relationship Agreement

Following Completion, Wizard will hold in excess of 30 per cent. of the Enlarged Share Capital. In accordance with the Listing Rules and in order to allow the Company to operate as an independent listed company, Wizard and the Wizard Shareholders will enter into the Relationship Agreement with the Company on Completion.

The Relationship Agreement will take effect on and from Admission (provided that Admission is not later than 12 February 2015 or such later date as Wizard and the Company may agree) and will continue until Wizard, the Wizard Shareholders and their respective associates cease to hold a "Minimum Interest", where a "Minimum Interest" is an interest, either direct or indirect, in 10 per cent. or more of the issued ordinary share capital of the Company or which carries 10 per cent. or more of the aggregate voting rights in the Company from time to time.

The Relationship Agreement will regulate the continuing relationship between Wizard, the Wizard Shareholders and their respective associates and the Company on and after Admission. In particular:

• (a) Wizard agrees that, for so long as it and its associates (as such term is defined in the Listing Rules) and any person acting in concert with it hold, in aggregate, 30 per cent. or more of the voting rights in the Company:
• all transactions and relationships between (a) Wizard or, to the extent required in order for the Company to comply with the Listing Rules from time to time, any of its associates and (b) any member of the Enlarged Group (including trading arrangements) will be conducted on arm's length and on normal commercial terms;
• neither Wizard nor, to the extent required in order for the Company to comply with the Listing Rules from time to time, any of its associates shall take any action that would prevent the Company from complying with any of its obligations under the Listing Rules;
• neither Wizard nor, to the extent required in order for the Company to comply with the Listing Rules from time to time, any of its associates shall propose or procure the proposal of any resolution of the Company which is intended or appears to be intended to circumvent the proper application of the Listing Rules; and

• Wizard shall abstain and, so far as it is able, cause its associates to abstain, from voting on any resolution to which Listing Rule 11.1.7R(4) applies relating to a transaction with Wizard or any of its associates as the relevant related party.

• (b) Each Wizard Shareholder agrees that, immediately following the acquisition by it (or any of its associates) of any voting rights in the Company for so long as it (together with its associates and any person acting in concert with such and Wizard Shareholder) and Wizard and its associates (together with any person acting in concert with Wizard) together hold, in aggregate, 30 per cent. or more of the voting rights in the Company:

• all transactions and relationships between (a) such Wizard Shareholder, to the extent required in order for the Company to comply with the Listing Rules from time to time, its associates and (b) any member of the Enlarged Group (including trading arrangements) will be conducted on arm's length and on normal commercial terms;
• neither it nor, to the extent required in order for the Company to comply with the Listing Rules from time to time, any of its associates or any of their respective associates shall take any action that would prevent the Company from complying with any of its obligations under the Listing Rules;
• neither it nor any of its associates or any of their respective associates shall propose or procure the proposal of any resolution of the Company which is intended or appears to be intended to circumvent the proper application of the Listing Rules; and
• it shall abstain and, so far as it is able, cause its associates to abstain, from voting on any resolution to which Listing Rule 11.1.7R(4) applies relating to a transaction with Wizard or any of its associates as the relevant related party.
• (c) Wizard shall have the right to nominate up to two persons to be Non-Executive Directors for so long as Wizard, the Wizard Shareholders and their respective associates together hold an interest, either direct or indirect, in 30 per cent. or more of the aggregate voting rights in the Company from time to time and one person to be a Non-Executive Director for so long as the Wizard, the Wizard Shareholders and their respective associates together hold an interest, either direct or indirect, in 15 per cent. or more of the aggregate voting rights in the Company from time to time (any such Non-Executive Director being a "Representative Director"); and
• (d) Wizard will not, for a period of 365 days from Admission, offer, allot, issue, lend, mortgage, assign, charge, pledge, sell or contract to sell or issue, issue or sell options in respect of, or otherwise dispose of, directly or indirectly, or announce an offering or issue of, any interest in any Ordinary Shares held by it whether directly or indirectly, or any other securities it holds that are exchangeable for (or convertible to) Ordinary Shares, without the prior written consent of the Board (excluding, for these purposes, any Representative Director) (the "Lock-up"). The foregoing undertakings are subject to the right to transfer Ordinary Shares to a Wizard Shareholder or any associate of such Wizard Shareholder or to any person beneficially entitled to such shares (provided that such transferee enter into an agreement to be bound by the terms of the Lock-up) and the right to, inter alia, accept a general offer made in accordance with the Takeover Code or by way of a scheme of arrangement made under the Companies Act.
• (e) Wizard and each Wizard Shareholder undertake to use reasonable endeavours to procure that, in the event of a transfer, allotment or issue of any equity units in Wizard, any such allottee or transferee shall first enter into a deed of adherence to be bound by the terms of the Relationship Agreement as if it had been named as a Wizard Shareholder. Where such allottee or transferee would be treated as a controlling shareholder for the purposes of the Listing Rules, the obligation on Wizard and the each Wizard Shareholder to procure such a deed shall be absolute. Where, in any event, such a deed is not procured, a proportion of the voting rights held by Wizard, the Wizard Shareholders or any of their respective associates will be ignored for the purposes of determining the right to nominate a Non-Executive Director as set out in paragraph 14.1.3(c) above. Such

proportion of voting rights held will be equal to the proportion which the equity units so transferred or allotted bears to the total amount of equity units in Wizard in issue.

14.1.4 Existing Facility

Pursuant to the Existing Facility, a US\$420 million revolving credit facility (the "Existing RCF") is made available to Micro Focus Group Limited to finance (i) the repayment and cancellation of a previous facility agreement, (ii) the Micro Focus Group's general corporate purposes, (iii) permitted acquisitions, (iv) fees, costs and expenses, stamp, registration and any other taxes payable under the Existing Facility and other finance documents, and (v) intra-Micro Focus Group loans.

The Existing RCF may be drawn in dollars, sterling, euro or any other readily available currency. Interest on the Existing Facility is payable at 2.90 per cent. per annum over LIBOR, or in relation to any loan in euro, EURIBOR, subject to a margin ratchet where leverage is below 2.5:1. The Existing RCF does not amortise, and is repayable in full on 17 July 2017. The Existing RCF can be voluntarily prepaid and cancelled ahead of that date on five Business Days' notice, in a minimum amount of US\$2 million.

The Existing Facility contains customary representations, undertakings and events of default. It also contains leverage and interest cover financial covenants. The Existing Facility is unsecured, but is guaranteed by the guarantors listed therein.

Under the Existing Facility Micro Focus can request (i) an increase to the Existing RCF of between US\$10 million and US\$100 million (the "Accordion Facility"), and (ii) an increase to the Existing RCF to replace such portion of that facility as has been cancelled or repaid in certain circumstances.

Micro Focus may request the Accordion Facility at any time up to and including 17 June 2017, and may increase the Existing Facility commitments by the Accordion Facility up to three times during the life of the Existing Facility. The Accordion Facility commitments (the "New Commitments") are first offered to the Existing RCF lenders pro rata to their Existing RCF commitments, then to the accepting Existing RCF lenders pro rata or otherwise, and, finally, to banks and financial institutions which are not Existing RCF lenders ("New Lenders").

There is no obligation on the Existing Facility lenders to fund the New Commitments. Once allocations are agreed, Micro Focus must submit a notice of the allocations, specifying the date on which they will become effective (the "Accordion Effective Date"). The assumption of the New Commitments on the Accordion Effective Date is conditional upon (i) the repeating representations being true in all material respects on the Accordion Effective Date, (ii) confirmation that no default has occurred and is continuing or would occur on the Accordion Effective Date as a result of the assumption of the New Commitments, (iii) each New Commitments lender confirming they have received any additional CPs as have been agreed with each New Commitments lender, and (iv) each New Lender acceding to the Existing Facility and the agent completing "know your customer" checks on such New Lender. On the Accordion Effective Date, the terms of the Existing Facility (except those relating to arrangement fees which can be separately agreed for the Accordion Facility) will apply to the New Commitments.

14.1.5 Financing Arrangements

Pursuant to the Commitment Letter, the Borrower and Micro Focus Group Limited have secured commitments from the Initial Lenders for the US\$1,925 million New Facilities to be made available to the Borrower, conditional, inter alia, on Completion. In addition, three additional banks have indicated their willingness to increase the New Facilities to US\$2,000 million (subject to certain conditions). Under the New Facilities, the Lenders will provide to the Borrower the US\$1,275 million Facility B, the US\$500 million Facility C and the Revolving Facility of between US\$150 million and US\$225 million.

The Term Loan Facilities will be made available in US dollars, to be drawn in one drawing on Completion and satisfaction of the other conditions precedent. The Revolving Facility will be made available in US dollars, euros, sterling or any other agreed currency. The New Facilities can be used to finance the Return of Value paid within 30 days of the Closing Date or refinance the Return of Value paid before then and the Refinancing, and to pay fees and costs arising from the payment of the Return of Value, the Merger and the Refinancing. The Revolving Facility will be used to fund these transactions and costs payable on the Closing Date, and thereafter for Micro Focus's working capital, capital expenditures and general corporate purposes.

Amounts drawn under the New Facilities will be required to be repaid in full on the date falling seven years after the Closing Date in respect of Facility B, or the date falling five years after the Closing Date in respect of Facility C and the Revolving Facility. The Term Loan Facilities will amortise in equal quarterly instalments in an aggregate annual amount equal to 1 per cent. or 10 per cent., in relation to Facility B and Facility C respectively, of the respective Term Loan Facility's original principal amount beginning on 31 July 2015, with the balance of each Term Loan Facility payable in full on the relevant termination date for that Term Loan Facility. The Revolving Facility will not amortise.

Interest in respect of the New Facilities will be calculated at margins over LIBOR of 4.25 per cent. in respect of Facility B (subject to a 1.00 per cent. floor), 3.75 per cent. in respect of Facility C (subject to a 0.75 per cent. floor) and 3.50 per cent. in respect of amounts drawn under the Revolving Facility. In addition, a commitment fee of 0.5 per cent. is payable on undrawn amounts of the Revolving Facility.

The Borrower will be able to request incremental commitments and/or one or more new tranches to the New Facilities from the Lenders or other prospective lenders in an aggregate amount not to exceed (i) US\$125 million less indebtedness incurred under the general basket available under the New Facilities, (ii) all voluntary prepayment and commitment reductions of the New Facilities, and (iii) an unlimited additional amount provided that specified leverage ratios can be met following the incurrence of such additional facilities.

The New Facilities and, at the Borrower's option, hedging and cash management obligations of the Borrower, Micro Focus, or any of its subsidiaries (the "Secured Obligations") will be guaranteed by Micro Focus and each of its wholly owned restricted subsidiaries, subject to certain exceptions, (the "Guarantors", and together with the Borrower, the "Obligors"). The Secured Obligations will also be secured by perfected first-priority security interests in the stock issued to and other assets of the Obligors, subject to certain exclusions.

The New Facilities Agreement will be entered into at or prior to Completion pursuant to the Commitment Letter to document the New Facilities and will include representations and warranties, affirmative and negative covenants binding Micro Focus and its restricted subsidiaries and events of default.

The New Facilities Agreement will also include a net leverage covenant, which will only be tested if more than 35 per cent. of the Revolving Facility commitments are outstanding on the last day of the Company's fiscal quarter. The New Facilities Agreement will not contain any other financial covenants.

If an event of default occurs and is continuing under the New Facilities Agreement the Lenders will, subject to certain limitations and exceptions, be entitled to accelerate repayment of the New Facilities, cancel any unutilised commitment and enforce their rights under the guarantees and security granted by the Obligors.

The New Facilities Agreement will include provisions requiring mandatory prepayment subject to a minimum threshold in certain circumstances, in relation to (i) amounts received from the incurrence of debt by Micro Focus or its restricted subsidiaries, (ii) net cash proceeds from certain permitted categories of asset sales and other dispositions of property by Micro Focus or its restricted subsidiaries in excess of US\$10 million in respect of any single transaction or US\$25 million in respect of all such transactions in any fiscal year of Micro Focus, (iii) insurance proceeds in respect of a property or asset of Micro Focus or its restricted subsidiaries with a value prior to the insured event of US\$10 million or more, and (iv) 75 per cent. of Micro Focus's annual excess cashflow (subject to a reduction to 50 per cent., 25 per cent. or 0 per cent. of such amount provided certain leverage ratios are met).

A prepayment fee will be payable in respect of voluntary or mandatory prepayments where (i) a voluntary prepayment of the Term Loan Facilities is made using the proceeds of secured first lien syndicated bank facility indebtedness incurred at substantially the same time as the prepayment, or (ii) a mandatory prepayment is made with the proceeds of secured first lien syndicated bank facility indebtedness, in each case prior to the date falling twelve months after the Closing Date and resulting in a lower yield. In such instances, a prepayment fee of 1.00 per cent. of the aggregate principal amount of such prepayment shall be payable.

14.1.6 Financial Sponsors' Agreement

On 15 September 2014, Micro Focus, Attachmate, Wizard, Merger Sub and each of the Wizard Shareholders entered into the Financial Sponsors' Agreement. Attachmate agreed to pay approximately US\$43.2 million in aggregate to the Wizard Shareholders, on Completion, to satisfy obligations arising in connection with the Merger under certain pre-existing management and shareholder arrangements entered into between Attachmate, Wizard and the Wizard Shareholders. In addition Attachmate agreed to pay approximately US\$23.4 million of employment related change of control payments to employees of the Attachmate Group excluding employer on-costs estimated at approximately US\$1 million. In accordance with the terms of this agreement, all management, shareholder and other non-arm's length arrangements between members of the Attachmate Group and Wizard, the Financial Sponsors and their respective affiliates, and any liabilities thereunder, shall terminate on Completion. Following Completion, Attachmate will continue to benefit from various intellectual property licences and patents on a perpetual, royalty-free basis from Novell Intellectual Property Holdings, Inc., a wholly-owned subsidiary of Wizard. Other than the Financial Sponsors' Agreement and the Merger Agreement (and, following Completion, the Relationship Agreement and the terms of appointment of David Golob and Prescott Ashe as Non-Executive Directors pursuant to the Relationship Agreement), there are no other material agreements or arrangements between members of the Enlarged Group and the Wizard Shareholders or any of their affiliates.

14.2 The Attachmate Group

14.2.1 Merger Agreement

Please see Part II (Details of the Merger).

14.2.2 Financial Sponsors' Agreement Please see paragraph 14.1.6 above.

15. Details of any property/fixed assets

There is no existing or planned tangible fixed asset which is material to the Micro Focus Group or the Attachmate Group. Each of the Micro Focus Group and the Attachmate Group is not aware of any environmental issues that may affect the Micro Focus Group's or the Attachmate Group's (respectively) utilisation of tangible fixed assets.

16. Related party transactions

16.1 Save as described in the Micro Focus Group's audited consolidated historical financial information for the three financial years ended 30 April 2012, 2013 and 2014, incorporated by reference in Part VI (Financial Information of the Micro Focus Group), there are no related party transactions between the Company or members of the Micro Focus Group that were entered into during the financial years ended 30 April 2012, 2013 and 2014 or during the period from and including 30 April 2014 to and including 7 October 2014 (the latest practicable date prior to printing of this document) other than the Relationship Agreement described in paragraph 14.1.3 above and the Additional Responsibility Allowance described in paragraph 7 above.

16.2 Save as described in the Attachmate Group's audited consolidated financial information for the three financial years ended 31 March 2012, 2013 and 2014, set out in Part VIII (Financial Information of the Attachmate Group), there are no related party transactions between Attachmate or members of the Attachmate Group that were entered into during the financial years ended 31 March 2012, 2013 and 2014 or during the period from and including 31 March 2014 to and including 7 October 2014 (the latest practicable date prior to printing of this document) other than the Relationship Agreement described in paragraph 14.1.3 above and the Financial Sponsors' Agreement described in paragraph 14.1.6 above.

17. Working capital

17.1 Micro Focus is of the opinion that, taking into account the New Facilities available, the working capital available to the Enlarged Group is sufficient for its present requirements, that is for at least the next 12 months from the date of publication of this document.

18. No significant change

• 18.1 There has been no significant change in the trading or financial position of the Micro Focus Group since 30 April 2014 (the date to which the last audited financial information of the Micro Focus Group was prepared).
• 18.2 There has been no significant change in the trading or financial position of the Attachmate Group since 30 April 2014 (the date to which the historical financial information of the Attachmate Group (set out in Part VIII) was prepared).

19. Consents

• 19.1 Numis, which is authorised in the UK under FSMA and regulated by the Financial Conduct Authority, has given and has not withdrawn its written consent to the issue of this document with the inclusion herein of the references to its name and its advice to the Board in the form and context in which they appear.
• 19.2 PricewaterhouseCoopers LLP has given and not withdrawn its written consent to the inclusion in this document of its report on the historical financial information of the Attachmate Group set out in section A of Part VIII (Financial Information of the Attachmate Group) of this document and of its report on the pro forma financial information set out in sections A and B of Part IX (Unaudited Pro Forma Financial Information) of this document, in the form and context in which they are included and has authorised the contents of those reports for the purposes of item 5.5.3R(2)(f) of the Prospectus Rules.

20. Dilution of Ordinary Share capital

• 20.1 Upon completion of the Merger, Existing Shareholders will own approximately 60.0 per cent. of the Ordinary Shares if the Return of Value is implemented and approximately 61.8 per cent. of the Ordinary Shares if the Return of Value is not implemented. As a result of the Merger, Shareholders will experience a dilution of approximately 40 per cent. if the Return of Value is implemented and 38.2 per cent. if the Return of Value is not implemented.
• 20.2 There are no arrangements under which future dividends are waived or agreed to be waived.

• 20.3 The expenses of and costs incidental to Merger Admission and the Merger are estimated to amount to approximately US\$183.0 million (excluding VAT).

• 20.4 The annual accounts of Micro Focus for the three financial years ended 30 April 2012, 30 April 2013 and 30 April 2014 have been audited by PricewaterhouseCoopers LLP, a member of the Institute of Chartered Accountants in England and Wales, of 9 Greyfriars Road, Reading, Berkshire RG1 1JG.

• 20.5 The historical financial information of Attachmate for the three financial years ended 31 March 2012, 31 March 2013 and 31 March 2014 and the one month period ended 30 April 2014 has been reported on by PricewaterhouseCoopers LLP, a member of the Institute of Chartered Accountants in England and Wales, of 9 Greyfriars Road, Reading, Berkshire RG1 1JG.
• 20.6 The Ordinary Shares are only listed on the Official List of the UK Listing Authority. As the Merger is classified as a reverse takeover under the Listing Rules, upon Completion the listing on the premium listing segment of the Official List of all of the Existing Ordinary Shares will be cancelled, and application will be made for the immediate readmission of those Existing Ordinary Shares (or New Ordinary Shares) and the admission of the Consideration Shares to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective, and that dealings in the Existing Ordinary Shares (or the New Ordinary Shares) and the Consideration Shares will commence at 8.00 a.m. on 3 November 2014. If the Return of Value is implemented prior to, or concurrently with, Completion, the number of Ordinary Shares which will be the subject of Admission will be 228,440,741 Ordinary Shares (including 11,951,119 shares expected to be held in treasury). If the Return of Value is not approved by Shareholders at the General Meeting, the number of Ordinary Shares which will be the subject of Admission will be 239,363,649 Ordinary Shares (including 12,871,427 shares expected to be held in treasury).
• 20.7 The Company's registrar and paying agent for the payment of dividends is Equiniti Limited of Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA.
• 20.8 There is no relationship (personal, financial or commercial), arrangement or understanding between Wizard, or any person acting in concert with Wizard, and Numis, or any person who is, or is presumed to be, acting in concert with Numis.
• 20.9 Save for the Merger Agreement and Relationship Agreement, no agreement, arrangement or understanding (including any compensation arrangement) exists between Wizard or any person acting in concert with Wizard and any of the Directors, recent directors, Shareholders or recent shareholders in the Company having any connection with or dependence upon the proposals set out in this document.
• 20.10 There is no agreement, arrangement or understanding whereby the beneficial ownership of any of the Ordinary Shares to be received by Wizard will be transferred to any other person.
• 20.11 Save for the irrevocable undertakings to vote in favour of the Resolutions given by the Directors who hold interests (directly or indirectly) in Ordinary Shares in respect of their own beneficial holdings and those of their connected persons, which amount in aggregate to 714,607 Ordinary Shares and represent approximately 0.51 per cent. of the Company's issued share capital as at 7 October 2014 (the latest practicable date prior to the publication of this document), no irrevocable undertakings or letters of intent in relation to relevant securities of the Company have been procured by Wizard or any person acting in concert with Wizard.

21. Credit Ratings

Attachmate Corporation (a wholly-owned subsidiary of Attachmate) received a corporate credit rating of B with a stable outlook from Standard & Poor's on 28 August 2014. Attachmate received a corporate family rating of B2 with a negative outlook and a senior secured bank credit facility rating of B1/LGD3 from Moody's on 30 April 2014. On 17 September 2014, following the publication of the Announcement, Micro Focus received a BB– corporate family rating with a recovery rating of 3 from Standard & Poor's and a corporate family rating and probability of default rating of B1, from Moody's, each with a stable outlook.

Each of Standard & Poor's and Moody's is a credit rating agency established and operating in the European Community. On 31 October 2011, both Standard & Poor's and Moody's were registered in accordance with Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies.

22. Documents available for inspection

Copies of the following documents will be published on the Company's website at www.microfocus.com and will be available for inspection during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted) from the date of this document until Admission at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL and at the place of the General Meeting for 15 minutes prior to the meeting and during the meeting:

• 22.1 the existing Articles and the Articles as proposed to be amended at the General Meeting;
• 22.2 the bylaws of Wizard (as redacted by agreement with the Takeover Panel);
• 22.3 the annual report and accounts of the Micro Focus Group in respect of the years ended 30 April 2012, 2013 and 2014;
• 22.4 the interim management statement of the Micro Focus Group dated 14 August 2014;
• 22.5 the report by PricewaterhouseCoopers LLP on the historical financial information of the Attachmate Group set out in Part VIII (Financial Information of the Attachmate Group) of this document;
• 22.6 the report on the unaudited pro forma financial information by PricewaterhouseCoopers LLP set out in Part IX (Unaudited Pro Forma Financial Information) of this document;
• 22.7 the consent letter from Numis referred to in paragraph 19.1 and the consent letter from PricewaterhouseCoopers LLP referred to in paragraph 19.2 of this Part XIII;
• 22.8 the Merger Agreement;
• 22.9 the Relationship Agreement;
• 22.10 the Financial Sponsors' Agreement;
• 22.11 the Sponsor's Agreement;
• 22.12 the pro forma deed relating to the Additional Share Grants and the Additional Responsibility Allowance;
• 22.13 the irrevocable undertakings, details of which are set out in paragraph 6.13 of this Part XIII and the full list of dealings in Relevant Securities of the Company referred to in paragraph 10.5 of this Part XIII;
• 22.14 the Commitment Letter and the latest draft of the New Facilities Agreement; and
• 22.15 this document.

8 October 2014

PART XIV

GLOSSARY AND DEFINITIONS

Glossary
"ALM"	Application Lifecycle Management, a set of software tools that aid software developers to run development projects;
"APM"	Application Portfolio Management, a set of software tools that enable software developers and corporate IT departments to manage and maintain a portfolio of software products;
"ASQ"	Application Testing/Automated Software Quality Solutions; ASQ software is used to test applications and for quality assurance;
"Attachmate" (products)	Attachmate products which deliver advanced software for terminal emulation, legacy modernisation, managed file transfer and enterprise fraud management;
"Big Data"	very large amounts of data, frequently held in databases on corporate servers or mainframes. This data is often found to be very useful for understanding customer buying patterns, corporate trends or similar;
"BYOD"	Bring Your Own Device, which refers to mobile computing devices (such as smartphones or tablets) which are increasingly used as alternatives to or in conjunction with desktop personal computers;
"CD"	COBOL Development, a product portfolio of Micro Focus that produces COBOL development related products for commercial sale;
"Cloud"	the deployment of IT infrastructure on a model that separates applications and/or data from the devices that access these applications or data. The intermediary between the access device and the application and/or data is either a network (public or private), or the internet;
"COBOL"	Common Business Oriented Language, a software development programming language;
"CORBA"	Common Object Request Broker Architecture, a software middleware integration product that bridges the gap between different operating systems and languages;
"Eclipse"	an Open Source integrated development environment which can be used to develop a local COBOL application;
"FTE"	full time equivalent;
"IaaS"	Infrastructure as a Service, the provision of a complete computing service including hardware and software. The only on-premise IT required is a browser. This is full utility computing and typically billed on a monthly or quarterly basis;
"IAM"	Identity & Access Management, a product category/market that includes software for uses such as identity verification, access control, registration, user management and authentication;

"ISV"	an independent software vendor, who produces, sells and maintains software for companies;
"IT"	information technology;
"LDAP"	Lightweight Directory Access Protocol, an open, vendor-neutral, industry standard application protocol for accessing and maintaining distributed directory information services over an internet protocol network;
"Linux"	a version of Unix that is made available under the free and Open Source development and distribution model. Linux has also been distributed by two commercial companies (Red Hat and Attachmate's SUSE Linux product portfolio) on a paid for basis. These commercial companies provides a more robust commercial version of the software, with associated maintenance support services;
"MS"	Mainframe Solutions, a set of software tools designed and sold by Micro Focus to assist in the development of mainframe software;
"MS Toolset"	Mainframe Solutions toolset;
"NetIQ"	NetIQ, a product portfolio of Attachmate, whose products help organisations tackle information protection challenges cost effectively and manage the complexity of dynamic, highly distributed application environments;
"ITOM"	IT operations management, a NetIQ data centre product that supports the understanding of software systems through their visual representation;
"Novell"	Novell, a product portfolio of Attachmate, which develops, sells and installs enterprise-quality software that is positioned in the operating systems and infrastructure software layers of the IT industry, including Linux operating system software for a range of computers from desktops to servers. In addition, Novell also provides a portfolio of integrated IT management software for systems, identity and security management for both Linux and mixed platform environments;
"OEM"	Original Equipment Manufacturer, a term that designates hardware systems manufacturers (including companies like IBM and HP), which incorporate software technologies from the Attachmate Group;
"OpenFusion"	one of the brands in the CORBA marketplace acquired by the Micro Focus Group in November 2013;
"Open Source"	the practice of making software source code freely available in the public domain to software engineers for modification or distribution;
"OpenStack"	a Linux-based cloud computing platform commonly deployed as an IaaS solution in a data centre;
"OIN"	Open Invention Network, LLC;

"Physical-to-Virtual"	the migration of software from a physical server to a virtual server which would normally sit in the Cloud. A virtual server is one which cannot be separately identified because it is simultaneously running multiple workloads which can be shifted from server to server so as to maximise capacity utilisation;
"PL/I"	a software development language used in older technology environments;
"SaaS"	Software as a Service, the provision of a software application on a pay-as-you-go basis, rather like a utility. The software itself may reside in the Cloud or on the provider's server in its own data centre;
"SIEM"	Security Information and Event Management, a product category/market that includes software used to analyse security event data for internal and external threat management and to analyse and report on data for incident response and regulatory compliance;
"SLES"	SUSE Linux Enterprise Servers;
"SUSE" or "SUSE Linux"	a family of software products centred around SUSE Linux Enterprise Servers, an interoperable platform for core computing needs supported by a shared global support and services organisation;
"Unix"	a computer operating system, which acts as an intermediary between application programs and computer hardware. Unix was created by AT&T's Bell labs and was one of the first operating systems to be made available on many different brands of computer hardware;
"Virtual-to-Virtual"	the process of migrating a computing environment from one virtual machine/server to another;
"Visual COBOL"	Micro Focus's solution for COBOL application, development and deployment on Windows, Unix and Linux operating systems; and
"VoIP"	Voice over Internet Protocol, which allow users to speak over the internet infrastructure rather than using traditional voice telephony.
Definitions

The following definitions apply in this prospectus unless the context otherwise requires:

"2011 Term Loan"	a term loan agreement entered into by the Attachmate Group as detailed in paragraph 4.7 of Part VII (Operating and Financial Review of the Attachmate Group) of this document;
"2012 Term Loan"	a term loan agreement entered into by the Attachmate Group as detailed in paragraph 4.7 of Part VII (Operating and Financial Review of the Attachmate Group) of this document;
"Accordion Facility"	the increase of up to US\$100,000,000 to the Existing Facility RCF which may be requested by Micro Focus under the terms of the Existing Facility;
"Additional Responsibility Allowance" or "ARA"	has the meaning given to it in paragraph 7.1 of Part XIII (Additional Information) of this document;

"Additional Share Grants" or "ASGs"	has the meaning given to it in paragraph 7.2 of Part XIII (Additional Information) of this document;
"Adjusted EBITDA"	the operating profit prior to depreciation, amortisation of purchased software and purchased intangibles, share based compensation and exceptional items;
"Admission"	(i) Merger Admission; and
	(ii) Re-admission,
	which will occur simultaneously if the Merger Return Condition is satisfied;
"Admission and Disclosure Standards"	the requirements contained in the publication "Admission and Disclosure Standards" dated April 2013 containing, among other things, the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange's main market for listed securities;
"Admission Date"	the date on which Admission occurs;
	"AGM" or "Annual General Meeting" the annual general meeting of the Company held on 24 September 2014;
"Announcement"	the announcement made on 15 September 2014 detailing the matters set out in this document;
"Articles"	the articles of association of the Company from time to time;
"Attachmate"	The Attachmate Group, Inc., a company incorporated in Delaware whose address is at 515 Post Oak Boulevard, Suite 1200, Houston, TX 77027, USA;
"Attachmate Group"	Attachmate and its subsidiaries and subsidiary undertakings from time to time;
"B Shares"	the redeemable shares of 60 pence each in the capital of the Company carrying the rights and restrictions set out in Section G of Part XI (The Return of Value) of this document;
"B/C Share Scheme" or "Return of Value"	the proposed transactions comprising the Capital Reorganisation and the return of 60 pence per Existing Ordinary Share by way of the Options (including the proposed transactions comprising the issuance of the B Shares and the C Shares) to be effected in accordance with Part XI (The Return of Value) of this document;
"Board"	the board of Directors of the Company from time to time;
"Borland"	Borland Software Corporation;
"Borrower"	MA FinanceCo LLC, a direct wholly owned subsidiary of Micro Focus Group Limited;
"Business Day"	a day on which the London Stock Exchange is open for business;
"C Share Dividend"	the proposed dividend of 60 pence per C Share;
"C Shares"	the non-cumulative irredeemable shares of 0.0000001 pence each in the capital of the Company carrying the rights and restrictions set out in Section G of Part XI (The Return of Value) of this document;

"Capital Option"	the allotment of B Shares to be redeemed by the Company on the ROV Effective Date, or (in the event that Merger Return Condition is not satisfied) the allotment of C Shares which shall be subject to the Purchase Offer;
"Capital Reorganisation"	the proposed reorganisation of the Company's share capital comprising the issue of the B Shares and/or the C Shares and the Share Capital Consolidation;
"CGU"	cash generating unit;
"Closing Date"	the date of Completion;
"CODM"	Attachmate Group's Chief Operating Decision Maker, usually the chief executive officer of Attachmate;
"Commitment Letter"	the amended and restated commitment letter dated 16 September 2014 and side letter dated 7 October 2014, in each case between the Borrower and the Commitment Parties pursuant to which the Initial Lenders have agreed, subject to certain conditions, to make the New Facilities available to the Borrower;
"Commitment Parties"	(i) the Initial Lenders and (ii) Merrill Lynch, Pierce, Fenner & Smith Incorporated, HSBC Securities (USA) Inc., RBC Capital Markets, Goldman Sachs Bank USA, NZC Guggenheim Fund LLC and Credit Suisse Securities (USA) LLC, in each such person's capacity as a lead arranger;
"Company" or "Micro Focus"	Micro Focus International plc, a company incorporated and registered in England and Wales with registered number 5134647 with its registered office at The Lawn, 22-30 Old Bath Road, Newbury, Berkshire RG14 1QN;
"Company Secretary"	the company secretary of the Company;
"Companies Act" or the "Act"	the Companies Act 2006, as amended;
"Completion"	completion of the Merger in accordance with the terms of the Merger Agreement;
"Consideration Shares"	86,595,711 Ordinary Shares to be issued as consideration pursuant to the Merger Agreement;
"CREST"	the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear in accordance with the CREST Regulations;
"CREST Manual"	the rules governing the operation of CREST, consisting of the CREST Reference Manual, CREST International Manual, CREST Central Counterparty Service Manual, Registrars Service Standards, Settlement Discipline Rules, CCSS Operations Manual, Daily Timetable, CREST Application Procedure and CREST Glossary of Terms (all as defined in the CREST Glossary of Terms promulgated by Euroclear on 15 July 1996 and as amended since);
"CREST Regulations"	the Uncertificated Securities Regulations 2001 (as amended);
"Daily Official List"	the daily record setting out the prices of all trades in shares and other securities conducted on the London Stock Exchange;

"Deferred D Shares"	the deferred D shares of 1/24th penny each in the capital of the Company carrying the rights and restrictions summarised in Section G of Part XI (The Return of Value) of this document;
"Deferred Shares"	the deferred shares of 0.0000001 pence each in the capital of the Company carrying the rights and restrictions summarised in Section G of Part XI (The Return of Value) of this document;
"Directors"	the directors of Micro Focus as at the date of this document and "Director" means any one of them;
	"Disclosure and Transparency Rules" the disclosure rules and transparency rules of the UK Listing Authority made pursuant to Part VI of FSMA;
"Dividend Effective Date"	such date as the Directors in their absolute discretion may determine between 3 November 2014 and 12 November 2014 inclusive (or such other date as the Directors in their absolute discretion may determine), being the date on which the C Share Dividend will become payable and the B Shares issued under the Capital Option will be redeemed;
"Election Deadline"	4.30 p.m. on 31 October 2014 (or such later time and/or date as the Directors may in their absolute discretion determine);
"Election Period"	the period from the date of this document until the Election Deadline, during which time Shareholders (other than Overseas Shareholders resident, or with a registered address, in a Restricted Territory) may make elections for one or both of the Options;
"Elliott Management"	collectively, (i) the Elliott Management Fund, and (ii) Elliott International, L.P., being the general partner of the Elliott Management Fund;
"Elliott Management Fund"	Waverly Securities L.P., whose registered office is c/o The Corporation Trust Center, 1209 Orange Street, Wilmington, County of New Castle, Delaware 19801, USA, and which holds approximately 13.20 per cent. of the economic interests in Wizard (based on recent estimated aggregate equity valuation);
"Enlarged Group"	the Micro Focus Group as enlarged by the Merger;
"Enlarged Share Capital"	the issued ordinary share capital of the Company following the Merger (excluding treasury shares);
"ESA Message"	a message through CREST to Equiniti in its capacity as escrow agent requesting a withdrawal of Existing Ordinary Shares from the escrow balance;
"ESPP"	the Micro Focus Employee Stock Purchase Plan 2006;
"EU"	the European Union;
"Euro"	the currency introduced at the start of the third stage of European Economic and Monetary Union pursuant to the Treaty establishing the European Union, as amended from time to time;
"Euroclear"	Euroclear UK & Ireland Limited;
"Eurodollar rate"	the greater of (a) 1.50 per cent. per annum and (b) the rate per annum obtained by dividing (i) the offered rate appearing among

	the average British Bankers' Association Interest Settlement Rate for deposits in Dollars; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition the "Eurodollar Rate" shall be the average of the rates per annum at which deposits in Dollars are offered to major banks in the London interbank market in London, England by (ii) a percentage equal to 100 per cent. minus the stated maximum rate of all reserve requirements (including any marginal, emergency, supplemental, special or other reserves) applicable to any member bank of the Federal Reserve System in respect of "Eurocurrency liabilities" as defined in Regulation D of the Securities Act (or any successor category of liabilities under Regulation D of the Securities Act);
"Executive Chairman"	Kevin Loosemore;
"Executive Directors"	the executive directors of the Company from time to time, which at the date of this document are Kevin Loosemore, Stephen Murdoch and Mike Phillips;
"Existing Facility"	the facility agreement dated 17 July 2013 relating to a US\$420,000,000 revolving credit facility with Barclays Bank plc, Clydesdale Bank plc, HSBC Bank plc, Lloyds Bank plc, Santander UK plc and The Royal Bank of Scotland plc;
"Existing Facility RCF"	the US\$420,000,000 revolving credit facility available pursuant to the Existing Facility;
"Existing Ordinary Shares"	the 152,767,938 ordinary shares of 13 13/24 pence each in the capital of the Company in issue at the date of this document;
"Existing Shareholders"	the holders of Existing Ordinary Shares;
"Facility B"	the US\$1,275,000,000 tranche B term loan facility agreed to be provided to the Borrower by the Lenders pursuant to the Commitment Letter;
"Facility C"	the US\$500,000,000 tranche C term loan facility agreed to be provided to the Borrower by the Lenders pursuant to the Commitment Letter;
"Facility EBITDA"	the Company's Adjusted EBITDA before amortisation of capitalised development costs, referred to in the annual report and accounts for the year ended 30 April 2014 as RCF EBITDA;
"Financial Conduct Authority" or "FCA"	the Financial Conduct Authority of the UK;
"Financial Sponsors' Agreement"	the conditional agreement dated 15 September 2014 between Wizard, Attachmate, Micro Focus, Merger Sub and the Wizard Shareholders;
"Form of Election"	the form enclosed with this document by which Shareholders (other than Overseas Shareholders resident, or with a registered address, in a Restricted Territory) holding Ordinary Shares in certificated form may elect for one or both of the Options;
"Form of Proxy"	the form of proxy which accompanies this document for use at the General Meeting;

"Francisco Partners"	collectively, (i) the Francisco Partner Funds, (ii) Francisco Partners Management, L.P. (being the investment manager of the Francisco Partners Funds and the manager of FP Annual Fund Investors LLC), (iii) Francisco Partners GP LLC (being the general partner of Francisco Partners L.P. and Francisco Partners Fund A L.P.), (iv) Francisco Partners GP II, L.P. (being the general partner of Francisco Partners II L.P. and Francisco Partners Parallel Fund II L.P.), and (v) Francisco Partners II L.P. (being the managing member of Francisco Partners Fund E LLC);
"Francisco Partners Funds"	Francisco Partners L.P., Francisco Partners Fund A L.P., Francisco Partners GP LLC, FP Annual Fund Investors LLC, Francisco Partners II L.P., Francisco Partners Parallel Fund II L.P., and Francisco Partners Fund E LLC., collectively holding approximately 29.91 per cent. of the economic interests in Wizard (based on recent estimated aggregate equity valuation);
"FSMA"	the Financial Services and Markets Act 2000, as amended;
"General Meeting"	the general meeting of the Company to be held at 3.00 p.m. on 27 October 2014, or any adjournment thereof, to consider and, if thought fit, to approve the Resolutions, notice of which is set out at the end of this document;
"Golden Gate Capital"	Golden Gate Private Equity, Inc., being the investment manager of the Golden Gate Funds;
"Golden Gate Funds"	(i) CCG AV LLC – Series A, CCG AV LLC – Series C, Golden Gate Capital Investment Fund II L.P., Golden Gate Capital Investment Fund II (AI) L.P., Golden Gate Capital Associates II-QP LLC, Golden Gate Capital Associates II-AI LLC, whose registered offices are located at 4001 Kennett Pike, Suite 302, Wilmington, DE 19807, and (ii) Golden Gate Capital Opportunity Fund L.P., Golden Gate Capital Opportunity Fund-A L.P., GGCOF Co-Invest L.P., and GGCOF Third Party Co-Invest L.P., whose registered offices are located at Ugland House, PO Box 309, Grand Cayman KY1-1104 Cayman Islands, which entities identified in the preceding clauses (i) and (ii) collectively holding approximately 31.52 per cent. of the economic interests in Wizard (based on recent estimated aggregate equity valuation);
"IAS"	International Accounting Standard;
"IFRS"	International Financial Reporting Standards as adopted by the European Union;
"IMA"	the Investment Management Association (which has assumed responsibility for guidance previously issued by the Association of British Insurers);
"Incentive Plan 2005"	the Micro Focus Incentive Plan;
"Income Option"	the allotment of C Shares in respect of which the C Share Dividend will become payable on the ROV Effective Date;
"Independent Shareholders"	for the purposes of the Rule 9 Waiver, Shareholders other than Wizard;

"Initial Lenders"	Bank of America, N.A., HSBC Bank PLC, Royal Bank of Canada, Goldman Sachs Bank USA, NZC Guggenheim Fund LLC and Credit Suisse AG, Cayman Islands Branch;
"International"	(i) in relation to Micro Focus, the geographical area, excluding North America and Asia Pacific and Japan, in which the Micro Focus Group operates and (ii) in relation to Attachmate, the geographic locations set out in note (2) to the consolidated statement of cash flows set out in Part IV (Information on the Attachmate Group) of this document;
"ISIN"	International Securities Identification Number;
"LCU"	legacy common units;
"Lenders"	the Initial Lenders and/or, following syndication of the New Facilities, any lenders pursuant to the New Facilities Agreement;
"Listing Rules"	the Listing Rules of the UK Listing Authority made pursuant to Part VI of FSMA;
"London Stock Exchange" or "LSE"	the London Stock Exchange plc;
"Merger"	the proposed acquisition by Micro Focus of all the outstanding common stock of Attachmate on the terms and subject to the conditions set out in the Merger Agreement;
"Merger Admission"	the admission of the Consideration Shares to the premium listing segment of the Official List becoming effective in accordance with the Listing Rules and to trading on the London Stock Exchange's main market for listed securities becoming effective in accordance with the Admission and Disclosure Standards;
"Merger Agreement"	the conditional agreement and plan of merger dated 15 September 2014, a summary of the principal terms and conditions of which is set out in Part II (Details of the Merger) of this document;
"Merger Resolutions"	Resolutions 1 to 4 to be proposed at the General Meeting which are set out in the notice of General Meeting set out at the end of this document, which must be passed by Shareholders in order for the Merger to proceed;
"Merger Return Condition"	completion of the Merger Agreement in accordance with its terms on or before 12 February 2015;
"Merger Sub"	Minerva Merger Sub, Inc. a Delaware corporation and wholly owned subsidiary of Micro Focus;
"Micro Focus Group"	Micro Focus and its subsidiaries and subsidiary undertakings from time to time;
"Micro Focus Holdings"	Micro Focus Holdings Limited, the direct parent of the Borrower and a subsidiary of Micro Focus;
"Micro Focus Share Plans"	the Incentive Plan 2005, the Sharesave Scheme and the ESPP;
"MIU"	Management Incentive Units;
"Model Code"	the rules governing dealings by directors in the securities of a company as set out in the Annex to Chapter 9 of the Listing Rules;

"Money Laundering Regulations"	the Money Laundering Regulations (2007) S.I. 2012/2157, as amended;
"New Facilities"	the new senior secured facilities of up to US\$2 billion to be made available to the Borrower as described in paragraph 14.1.5 of Part XIII (Additional Information) of this document;
"New Facilities Agreement"	the New York law governed credit agreement to be entered into at or prior to Completion between, amongst others, the Lenders and the Borrower to document the New Facilities;
"New Incentive Arrangements"	the ARA, the ASGs and the consequent amendment to the Remuneration Policy;
"New Ordinary Share Admission"	the admission of the New Ordinary Shares (either as part of Admission or as part of ROV Admission) to the premium listing segment of the Official List becoming effective in accordance with the Listing Rules and to trading on the London Stock Exchange's main market for listed securities becoming effective in accordance with the Admission and Disclosure Standards;
"New Ordinary Shares"	the ordinary shares of 10 pence each in the Company, arising as a result of the Share Capital Consolidation;
"NIPH"	Novell Intellectual Property Holdings, Inc.;
"Non-Executive Directors"	the non-executive directors of the Company from time to time, which at the date of this document are Tom Skelton, Karen Slatford, Tom Virden and Richard Atkins;
"Numis"	Numis Securities Limited;
"Official List"	the list maintained by the UK Listing Authority;
"Options"	the Income Option and the Capital Option, or any of them as the context may require;
"Ordinary Shares"	as the context permits, Existing Ordinary Shares or New Ordinary Shares;
"Overseas Shareholders"	Shareholders who are not resident in the United Kingdom or who are citizens, residents or nationals of a country other than the United Kingdom or who have a registered address which is not in the United Kingdom. For the avoidance of doubt, Shareholders who are not resident in the United Kingdom include Shareholders who are resident in the Channel Islands or the Isle of Man;
"Payment Date"	such date as the Directors in their absolute discretion may determine which is expected to be on or before 12 November 2014 (or such other date as the Directors in their absolute discretion may determine but being, in any event, a date within 25 days of the ROV Effective Date), being the date on which cash is expected to be sent to Shareholders under the Income Option and the Capital Option;
"Proposed Directors"	Prescott Ashe and David Golob;
"Prospectus"	the final prospectus as approved by the FCA as a prospectus prepared in accordance with the Prospectus Rules made under section 73A of FSMA in connection with the Merger;
"Prospectus Directive"	Directive 2003/71/EC of the European Parliament and Council on the prospectus to be offered when transferable securities are offered

	to the public or admitted to trading and the trading on the London Stock Exchange, as amended;
"Prospectus Directive Regulation"	the Prospectus Directive Regulation (No. 2004/809/EC), as amended;
"Prospectus Rules"	the prospectus rules made by the UK Listing Authority pursuant to section 73A of FSMA;
"Purchase Offer"	the offer to be made by Numis, acting as principal (and not as agent, trustee or nominee), to purchase C Shares, if any, issued under the Capital Option, the terms of which are set out in paragraph 6 of Section E of Part XI (The Return of Value) of this document;
"Re-admission"	the re-admission of the Ordinary Shares to the premium listing segment of the Official List becoming effective in accordance with the Listing Rules and to trading on the London Stock Exchange's main market for listed securities becoming effective in accordance with the Admission and Disclosure Standards;
"Record Date"	31 October 2014 (or such other date as the Directors, in their absolute discretion, shall determine);
"Record Time"	6.00 p.m. on 31 October 2014 (or such other time and/or date as the Directors in their absolute discretion may determine);
"Redemption Time"	such date as the Directors in their absolute discretion may determine, which is expected to be on or before 12 November 2014, being the date on which the B Shares issued under the Capital Option will be redeemed;
"Refinancing"	the refinancing of the existing borrowings of the Attachmate Group and the Micro Focus Group to be carried out at Completion pursuant to the Commitment Letter;
"Registrar of Companies"	the Registrar of Companies in England and Wales;
"Registrars" or "Equiniti"	Equiniti Limited of Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA;
"Relationship Agreement"	the relationship agreement to be entered into between the Company, Wizard and the Wizard Shareholders on Completion;
"Remuneration Committee"	the remuneration committee of the Company established by the Board;
"Remuneration Policy"	the remuneration policy of the Company adopted in accordance with section 439A of the Companies Act from time to time;
"Resolutions"	the resolutions to be proposed at the General Meeting which are set out in the notice of General Meeting at the end of this document;
"Restricted Subsidiaries"	Restricted Subsidiaries as defined for the purposes of the New Facilities Agreement, being the Borrower and the Company's subsidiaries other than those designated as being unrestricted;
"Restricted Territories"	United States, Canada, Australia, Japan, the Republic of South Africa or New Zealand;
"Return of Value"	has the same meaning as "B/C Share Scheme";

"Revolving Facility"	the new revolving credit facility of up to US\$225 million to be provided to the Borrower as described in paragraph 14.1.5 of Part XIII (Additional Information) of this document;
"RIS" or "Regulatory Information Service"	a regulatory information service as defined in the Listing Rules;
"Risk Factors"	the risk factors set out on pages 20 to 37 of this document;
"ROV Admission"	where the Merger Return Condition has not been satisfied, the admission of the New Ordinary Shares to the premium listing segment of the Official List becoming effective in accordance with the Listing Rules and to trading on the London Stock Exchange's main market for listed securities becoming effective in accordance with the Admission and Disclosure Standards;
"ROV Admission Date"	the date on which ROV Admission occurs;
"ROV Effective Date"	such date as the Directors in their absolute discretion may determine, which is expected to be on or before 12 November 2014, being the date on which the C Share Dividend will become payable and the B Shares, if any, issued under the Capital Option will be redeemed;
"ROV Entitlement"	the entitlement of Shareholders to receive one B Share or one C Share for each Existing Ordinary Share held at the Record Time and, where the context requires, the aggregate entitlement of a Shareholder to receive B Shares and/or C Shares;
"Rule 9 Waiver"	the proposed waiver by the Takeover Panel of the obligation of Wizard to make a general offer under Rule 9 of the Takeover Code, which would otherwise arise as a consequence of the Merger, granted by the Takeover Panel conditional upon the approval by the Independent Shareholders by the passing of Resolution 2 in the notice of General Meeting at the end of this document;
"Scenario 1"	has the meaning given to it in paragraph 13 of Section E of Part XI (Return of Value);
"Scenario 2"	has the meaning given to it in paragraph 13 of Section E of Part XI (Return of Value);
"Scenario 3"	has the meaning given to it in paragraph 13 of Section E of Part XI (Return of Value);
"SDLT"	Stamp Duty Land Tax;
"SDRT"	Stamp Duty Reserve Tax;
"SEC"	the US Securities and Exchange Commission;
"Securities Act"	the US Securities Act of 1933, as amended;
"SEDOL"	Stock Exchange Daily Official List;
"Senior Management"	each of Stephen Murdoch, Charles Sansbury, Jay Gardner, Nils Brauckmann and Kathleen Owens;
"Share Capital Consolidation"	the proposed consolidation, subdivision and redesignation of share capital, as more fully described in paragraph 4 of Section E of Part XI (The Return of Value) of this document;

"Shareholder"	a holder of Ordinary Shares and, where the context so requires, holders of B Shares and/or C Shares and/or Deferred Shares and/or Deferred D Shares;
"Sharesave Scheme"	the Micro Focus Sharesave Plan 2006;
"SIRE"	Select Income REIT, a party to the agreement with Novell to sell buildings G and H from its Provo, Utah campus and as is described more fully in paragraph 3 of Part IV (Information on the Attachmate Group) of this document;
"Sponsor's Agreement"	the sponsor's agreement between the Company and Numis dated 15 September 2014, a summary of the principal terms and conditions is set out in paragraph 14.1.2 of Part XIII (Additional Information) of this document;
"sterling" or "pounds sterling"	the lawful currency of the United Kingdom;
"subsidiary"	has the meaning given in section 1159 of the Companies Act;
"subsidiary undertaking"	has the meaning given in section 1162 of the Companies Act;
"Takeover Code"	the UK City Code on Takeovers and Mergers;
"Takeover Panel"	the Panel on Takeovers and Mergers;
"Term Loan Facility"	either Facility B or Facility C (and together, the "Term Loan Facilities");
"Thoma Bravo"	collectively, (i) the Thoma Bravo Funds, (ii) TC Partners VII, L.P. (being the general partner of Thoma Cressey Fund VII, L.P. and Thoma Cressey Friends Fund VII, L.P.), (iii) Thoma Bravo Partners IX, L.P. (being the general partner of Thoma Bravo Fund IX, L.P.), and (iv) Thoma Bravo, LLC (being the general partner of Thoma Bravo Partners IX, L.P.);
"Thoma Bravo Funds"	Thoma Cressey Fund VII, L.P., Thoma Cressey Friends Fund VII, L.P. and Thoma Bravo Fund IX, L. P., collectively holding approximately 14.14 per cent. of the economic interests in Wizard (based on recent estimated aggregate equity valuation);
"Total Shareholder Returns" or "TSRs"	the return to a Shareholder over a period of time from the increase in the price of Ordinary Shares over that period as well as any cash received in the period from normal dividend payments;
"TTE Instruction(s)"	a transfer to escrow instruction (as defined by the CREST Manual);
"UK Corporate Governance Code"	the UK Corporate Governance Code as published by the Financial Reporting Council;
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland;
"UK Listing Authority" or "UKLA"	the Financial Conduct Authority in its capacity as the competent authority for listing in the United Kingdom;
"uncertificated" or "in uncertificated form"	in relation to a share or other recorded security, a share or other security title which is recorded on the relevant register as being held in uncertificated form (that is in CREST) and title to which may be transferred by means of CREST;

"Underlying Adjusted EBITDA"	Adjusted EBITDA before capitalisation and amortisation of research and development, and before foreign exchange movements;
"United States", "USA" or "US"	the United States of America, its territories and possessions, any state of the United States of America and the district of Columbia;
"US GAAP"	United States generally accepted accounting principles;
"VARs"	value added resellers;
"VAT"	Value Added Tax;
"VIU"	value in use;
"Wizard"	Wizard Parent LLC, the direct parent company of Attachmate, a company incorporated in Delaware whose address is at 705 5th Avenue South, Suite 1100, Seattle WA 98104, United States of America;
"Wizard Representatives"	the representatives of Wizard, being Jeff Hawn, Prescott Ashe, David Golob, Jim Schaper, Dave Mitchell, Scott Crabill and Jesse Cohn;
"Wizard Shareholders"	the Francisco Partners Funds, the Golden Gate Funds, the Thoma Bravo Funds and the Elliott Management Fund;
"Working Time Regulations"	Working Time Regulations 1998, as amended; and
"WRQ"	WRQ Corporation.

PART XV

DOCUMENTS INCORPORATED BY REFERENCE

The following documentation, which was sent to Shareholders at the relevant time and/or is available for inspection in accordance with paragraph 22 of Part XIII (Additional Information) of this document, contains information which is relevant to the Merger:

Section	Page numbers in such documents
Consolidated statement of comprehensive income	38
	39
	40
	41
	48 to 69
	72 to 79
Independent auditors report	37
Consolidated statement of comprehensive income	38
Consolidated statement of financial position	39
Consolidated statement of changes in equity	40
Consolidated statement of cash flows	41
Notes to the consolidated financial statements	48 to 69
Notes to the Company financial statements	72 to 77
Independent auditors report	37
Consolidated statement of comprehensive income	67
Consolidated statement of financial position	68
Consolidated statement of changes in equity	69
Consolidated statement of cash flows	70
Notes to the consolidated financial statements	78 to 110
Notes to the Company financial statements	114 to 119
Independent auditors report	63 to 66
	Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements Notes to the Company financial statements

Copies of the documents which are incorporated by reference in this document are available in "read-only" format and can be printed from the Company's website at the following address: http://investors.microfocus.com/key-financial-data/reports-and-accounts. The documents are also available as provided in paragraph 22 of Part XIII (Additional Information) of this document.

Information that is itself incorporated by reference in the above documents is not incorporated by reference into this document. It should be noted that, except as set forth above, no other portion of the above documents are incorporated by reference into this document.

Any statement contained in a document which is deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this document to the extent that a statement contained herein (or in a later document which is incorporated by reference herein) modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded for the purpose of this document shall not be deemed, except as so modified or superseded, to constitute a part of this document.

NOTICE OF GENERAL MEETING

MICRO FOCUS INTERNATIONAL PLC

(Registered in England and Wales under No. 5134647)

NOTICE IS HEREBY GIVEN that a General Meeting of Micro Focus International plc (the "Company") will be held at The Lawn, 22-30 Old Bath Road, Newbury, Berkshire RG14 1QN at 3.00 p.m. on 27 October 2014 for the purposes of considering and, if thought fit, passing the following resolutions, of which Resolutions 1 to 4 (inclusive) and 6 shall be proposed as ordinary resolutions and Resolutions 5, 7 and 8 (inclusive) shall be proposed as special resolutions. Resolution 2 will be taken on a poll on which only shareholders who are considered independent for the purposes of Rule 9 of the City Code on Takeovers and Mergers are entitled to vote. Resolution 4 will be taken on a poll on which no executive director or any other person proposed to receive the employee benefits referred to therein will be entitled to vote.

ORDINARY RESOLUTIONS

• 1. THAT, subject to and conditional upon the passing of Resolutions 2 to 4 (inclusive):
• (A) the proposed acquisition of all of the issued and outstanding shares of common stock of The Attachmate Group, Inc. as described in the combined circular and prospectus to shareholders of the Company dated 8 October 2014 of which this Notice of General Meeting forms part, a copy of which has been produced to the meeting and initialled by the Chairman of the meeting for the purposes of identification only (the "Combined Circular and Prospectus"), on the terms and subject to the conditions of the Merger Agreement (as defined in the Combined Circular and Prospectus), be and is hereby approved, and the directors of the Company (the "Directors") (or a duly authorised committee thereof) be and are hereby authorised to take all such steps as may be necessary, expedient or appropriate in relation thereto and to carry the same into effect with such modifications, variations, revisions, waivers or amendments (providing such modifications, variations, revisions, waivers or amendments are not in the opinion of the Directors, or any such committee, of a material nature) to such agreements or any documents relating thereto as they shall deem necessary, expedient or appropriate; and
• (B) subject to and conditional upon Completion (as defined in the Combined Circular and Prospectus) the borrowing limit of US\$600 million set out in Article 102.2 of the Company's articles of association be increased to US\$2,500 million.
• 1. THAT, subject to and conditional upon the passing of Resolutions 1, 3 and 4, the waiver by the Panel on Takeovers and Mergers of any requirement under Rule 9 of the City Code on Takeovers and Mergers for Wizard Parent LLC ("Wizard") to make a general offer to shareholders of the Company as a result of obtaining the ordinary shares in the capital of the Company issued as consideration pursuant to the Merger Agreement as described in the Combined Circular and Prospectus (subject to Wizard holding up to an aggregate maximum of 40 per cent. of the issued ordinary shares in the capital of the Company (the "Ordinary Shares") (excluding for this purpose any Ordinary Shares held as treasury shares)) be and is hereby approved.
• 1. THAT, subject to and conditional upon the passing of Resolutions 1, 2 and 4 and in addition and without prejudice to all existing authorities for the purposes of section 551 of the Companies Act 2006 (the "Act"), the Directors be and are hereby generally and unconditionally authorised to allot, as is contemplated in sub-sections 551(1)(a) and 551(1)(b) of the Act respectively, Ordinary Shares:
• (A) up to a nominal amount of £11,726,503 if the Share Capital Consolidation (as defined in the Combined Circular and Prospectus) does not take effect on or prior to Completion; and
• (B) up to a nominal amount of £8,659,572 if the Share Capital Consolidation does take effect on or prior to Completion,

in each case as the Consideration Shares to be issued pursuant to the Merger Agreement (as each such term is defined in the Combined Circular and Prospectus), such authority to expire on 12 February 2015.

• 1. THAT, subject to and conditional upon Completion, for the purposes of the Act, the Listing Rules of the UK Listing Authority and Rule 16.2 of the City Code on Takeovers and Mergers:
• (a) the Additional Share Grants set out in paragraph 7.2 of Part XIII (Additional Information) of the Combined Circular and Prospectus be and are hereby adopted, and further that the Company be and hereby is authorised to grant options and make conditional share awards over up to 5,412,240 Ordinary Shares under, and otherwise operate, the Additional Share Grants in accordance with their terms; and
• (b) the Remuneration Policy of the Company (as defined in the Combined Circular and Prospectus) be amended by the inclusion of the additional terms set out in paragraph 7.3 of Part XIII (Additional Information) of the Combined Circular and Prospectus with effect from Completion.

SPECIAL RESOLUTION

• 1. THAT, conditional upon the New Ordinary Shares (as defined below) being admitted to the Official List of the UK Listing Authority (the "Official List") and to trading on London Stock Exchange plc's main market for listed securities by 8.00 a.m. on 12 February 2015 (or such later time and/or date as the Directors may in their absolute discretion determine) ("Admission"):
• (A) pursuant to section 21(1) of the Act, the articles of association of the Company be altered by:
  • (i) deleting the current article 122 and substituting therefor a new article 122, as set out in full in section F of Part XI (The Return of Value) of the Combined Circular and Prospectus; and
  • (ii) deleting the current articles 139 and 140 and substituting therefor new articles 139, 140, 141A and 141B, as set out in full in section G of Part XI (The Return of Value) of the Combined Circular and Prospectus;
• (B) the Directors of the Company be and are hereby generally and unconditionally authorised, upon satisfaction of the Merger Return Condition (as such term is defined in the Combined Circular and Prospectus):
  • (i) to capitalise a sum not exceeding US\$160,000,000, standing to the credit of the Company's merger reserve arising on Completion, and to apply such sum in paying up in full up to the maximum number of redeemable shares of 60 pence each in the capital of the Company carrying the rights and restrictions set out in article 139 of the articles of association of the Company as amended by this Resolution (the "B Shares") that may be allotted pursuant to the authority given by sub-paragraph (B)(iii)(a) below;
  • (ii) to capitalise a sum not exceeding US\$1, standing to the credit of the Company's share premium account, and to apply such sum in paying up in full up to the maximum number of non-cumulative, irredeemable shares of 0.0000001 pence each in the capital of the Company carrying the rights and restrictions set out in article 140 of the articles of association of the Company as amended by this Resolution (the "C Shares") that may be allotted pursuant to the authority given by sub-paragraph (B)(iii)(b) below; and
  • (iii) pursuant to section 551 of the Act to exercise all powers of the Company to allot and issue credited as fully paid up (provided that the authority hereby conferred shall expire at the conclusion of the annual general meeting of the Company in 2015 or the close of business on 27 October 2015, whichever is earlier):
  • (a) B Shares up to an aggregate nominal amount of £90,000,000; and
  • (b) C Shares up to an aggregate nominal amount of 50 pence,

to the holders of the ordinary shares of 13 13/24 pence in the capital of the Company (the "Existing Ordinary Shares") (other than in respect of Existing Ordinary Shares held in treasury) on the basis of one B Share or one C Share for each Existing Ordinary Share held and recorded on the register of members of the Company at 6.00 p.m. on 31 October 2014 (or such other time and/or date as the Directors may in their absolute discretion determine) (the "Record Date"), in accordance with (I) the terms of the Combined Circular and Prospectus, (II) the Directors' determination (as described in the Combined Circular and Prospectus) as to the number of B Shares and C Shares to be allotted and issued, and (III) subject to the terms set out in the Combined Circular and Prospectus and the aforementioned Directors' determination, valid elections made (or deemed to be made) by the holders of the Existing Ordinary Shares pursuant to the terms of the Combined Circular and Prospectus as to whether to receive B Shares and/or C Shares;

• (C) the Directors of the Company be and are hereby generally and unconditionally authorised, if the Merger Return Condition (as such term is defined in the Combined Circular and Prospectus) is not satisfied or becomes incapable of being satisfied:
• (i) to capitalise a sum not exceeding US\$1, standing to the credit of the Company's share premium account, and to apply such sum in paying up in full up to the maximum number of C Shares that may be allotted pursuant to the authority given by sub-paragraph (C)(ii) below; and
• (ii) pursuant to section 551 of the Act to exercise all powers of the Company to allot and issue credited as fully paid up (provided that the authority hereby conferred shall expire at the conclusion of the annual general meeting of the Company in 2015 or the close of business on 27 October 2015, whichever is earlier) C Shares up to an aggregate nominal amount of 50 pence, to the holders of the Existing Ordinary Shares on the basis of one C Share for each Existing Ordinary Share held and recorded on the register of members of the Company at 6.00 p.m. on the Record Date, in accordance with (I) the terms of the Combined Circular and Prospectus, (II) the Directors' determination (as described in the Combined Circular and Prospectus) as to the number of C Shares to be allotted and issued, and (III) subject to the terms set out in the Combined Circular and Prospectus and the aforementioned Directors' determination, valid elections made (or deemed to be made) by the holders of the Existing Ordinary Shares pursuant to the terms of the Combined Circular and Prospectus;
• (D) all of the Existing Ordinary Shares, as shown in the register of members of the Company at 6.00 p.m. on the Record Date, be consolidated into one share of a nominal value equal to the aggregate nominal value of all of the Existing Ordinary Shares in issue as shown in the register of members of the Company as at 6.00 p.m. on the Record Date (the "Interim Share"), which shall be allocated to the holders of the Existing Ordinary Shares in proportion to their holdings of Existing Ordinary Shares prior to the consolidation set out in this sub-paragraph (D) and, immediately thereafter, the Interim Share be subdivided and redesignated into:
• (i) such number of new ordinary shares of 10 pence each in the capital of the Company (each, a "New Ordinary Share") as is equal to the total number of Existing Ordinary Shares as shown in the register of members of the Company at 6.00 p.m. on the Record Date multiplied by 0.9285, rounded down to the nearest whole New Ordinary Share, which shall be allocated to the holders of the Existing Ordinary Shares in proportion to their holdings of Existing Ordinary Shares prior to the consolidation set out in this subparagraph (D), provided that, where such allocation would result in any member being entitled to a fraction of a New Ordinary Share, such fraction shall be aggregated with the fractions of a New Ordinary Share (if any) to which other members of the Company would be similarly so entitled and the Directors of the Company be and are hereby authorised to sell (or appoint any other person to sell) all the New Ordinary Shares representing such fractions at the best price reasonably obtainable to any person(s), and to distribute the proceeds of sale (net of expenses) in due proportion among the relevant members who would otherwise be entitled to the fractions so sold, save that (I) any fraction of a penny which would otherwise be payable shall be rounded up or down in accordance with the usual practice of the registrar of the Company, and (II) any due

proportion of such proceeds of less than £5.00 (net of expenses) shall be donated by the Company to a suitable charity and the relevant member shall not be entitled thereto (and, for the purposes of implementing the provisions of this paragraph, any Director (or any person appointed by the Directors) shall be and is hereby authorised to execute one or more instrument(s) of transfer in respect of such New Ordinary Shares on behalf of the relevant member(s) and to do all acts and things the Directors consider necessary or desirable to effect the transfer of such New Ordinary Shares to, or in accordance with the directions of, any buyer of such New Ordinary Shares); and

• (ii) such number of deferred shares of 1/24 penny each in the capital of the Company (each a "Deferred D Share") having the rights set out in the articles of association of the Company as proposed to be amended by this Resolution as, in aggregate, shall have a nominal value equal to the aggregate nominal value of all of the Existing Ordinary Shares as shown in the register of members of the Company as at 6.00 p.m. on the Record Date less the aggregate nominal value of all of the New Ordinary Shares arising pursuant to sub-paragraph D(i) above, which shall be allocated to the holders of the Existing Ordinary Shares in proportion to their holdings of Existing Ordinary Shares prior to the consolidation set out in this sub-paragraph (D) above provided that, where such consolidation would result in any member of the Company being entitled to a fraction of a Deferred D Share, such fraction shall, so far as possible, be aggregated with the fractions of a Deferred D Share (if any) to which other members of the Company would be similarly so entitled and the Directors be and are hereby authorised to transfer all the Deferred D Shares representing such fractions to a nominee, identified by the Directors, who shall hold such Deferred D Shares on behalf of the members of the Company entitled to such fractions of a Deferred D Share; and
• (E) the Directors be and are hereby authorised to do all such things as they consider necessary or expedient to:
• (i) transfer the deferred shares of 0.0000001 pence in the capital of the Company (if any) arising on reclassification of the C Shares in accordance with the articles of association of the Company as amended by this Resolution; and
• (ii) transfer the Deferred D Shares arising as a result of the subdivision and redesignation provided for in sub-paragraph (D) above in accordance with the articles of association of the Company as amended by this Resolution.

ORDINARY RESOLUTION

6. THAT:

• 6.1 subject to the passing of Resolution 5 and conditional upon Admission occurring by 8.00 a.m. on 12 February 2015 (or such later time and/or date as the Directors may in their absolute discretion determine), the Directors be and are hereby generally and unconditionally authorised in accordance with section 551 of the Act to allot Relevant Securities (as defined in the explanatory notes below):
• (A) up to an aggregate nominal amount of £4,329,797 (such amount to be reduced by the nominal amount allotted or granted under sub-paragraph 6.1(B) below in excess of such sum);
• (B) comprising equity securities (within the meaning of section 560 of the Act) up to an aggregate nominal amount of £8,659,594 (after deducting from such limit the aggregate nominal amount of any Relevant Securities allotted under sub-paragraph 6.1(A) above) in connection with an offer by way of rights issue to holders of New Ordinary Shares in proportion (as nearly as may be practicable) to their existing holdings and to holders of other equity securities as required by the rights of those securities or as the Directors otherwise consider necessary, but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; and

(C) such authority shall expire on the date of the earliest to occur of (a) the annual general meeting of the Company to be held in 2015 or (b) admission of the Consideration Shares (as such term is defined in the Combined Circular and Prospectus) to (i) the Official List and (ii) trading on London Stock Exchange plc's main market for listed securities becoming effective ("Merger Admission") and (c) 27 October 2015, but so that the Company may, in each case, before such expiry make an offer or agreement which would or might require Relevant Securities to be allotted after such expiry and the Directors may allot Relevant Securities in pursuance of any such offer or agreement as if the power conferred hereby had not expired.

With effect from the authorities granted under this paragraph 6.1 becoming effective this authority shall be in substitution for any previous authorities granted in this regard by the Company (other than the authority granted under Resolution 3 above), but without prejudice to any allotment of Relevant Securities or grant of rights already made, offered or agreed to be made pursuant to such authorities;

• 6.2 subject to the passing of Resolution 5 and conditional upon Admission and Merger Admission occurring by 8.00 a.m. on 12 February 2015 (or such later time and/or date as the Directors may in their absolute discretion determine), the Directors be and are hereby generally and unconditionally authorised in accordance with section 551 of the Act to allot Relevant Securities (as defined in the explanatory notes below):
• (A) up to an aggregate nominal amount of £7,216,320 (such amount to be reduced by the nominal amount allotted or granted under (i) sub-paragraph 6.1(A) above, (ii) sub-paragraph 6.1(B) above in excess of £4,329,797, and (iii) sub-paragraph 6.2(B) below in excess of £7,216,320);
• (B) comprising equity securities (within the meaning of section 560 of the Act) up to an aggregate nominal amount of £14,432,640 (after deducting from such limit the aggregate nominal amount of any Relevant Securities allotted under sub-paragraph 6.1 above and sub-paragraph 6.2(A) above) in connection with an offer by way of rights issue to holders of New Ordinary Shares in proportion (as nearly as may be practicable) to their existing holdings and to holders of other equity securities as required by the rights of those securities or as the Directors otherwise consider necessary, but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; and
• (C) such authority shall expire on the date of the annual general meeting of the Company to be held in 2015 or, if earlier, 27 October 2015, but so that the Company may, in each case, before such expiry make an offer or agreement which would or might require Relevant Securities to be allotted after such expiry and the Directors may allot Relevant Securities in pursuance of any such offer or agreement as if the power conferred hereby had not expired.

With effect from the authorities granted under this paragraph 6.2 becoming effective this authority shall be in substitution for any previous authorities granted in this regard by the Company (including the authorities granted under paragraph 6.1 above and paragraph 6.3 below), but without prejudice to any allotment of Relevant Securities or grant of rights already made, offered or agreed to be made pursuant to such authorities; and

• 6.3 subject to Resolution 5 above not being passed and conditional upon Merger Admission occurring by 8.00 a.m. on 12 February 2015 (or such later time and/or date as the Directors may in their absolute discretion determine), the Directors be and are hereby generally and unconditionally authorised in accordance with section 551 of the Act to allot Relevant Securities (as defined in the explanatory notes below):
• (A) up to an aggregate nominal amount of £10,223,607 (such amount to be reduced by the nominal amount allotted or granted under sub-paragraph 6.3(B) below in excess of such sum);
• (B) comprising equity securities (within the meaning of section 560 of the Act) up to an aggregate nominal amount of £20,447,214 (after deducting from such limit the aggregate nominal amount of any Relevant Securities allotted under sub-paragraph 6.3(A) above in connection with an offer by way of rights issue to holders of Ordinary Shares in proportion (as nearly as

may be practicable) to their existing holdings and to holders of other equity securities as required by the rights of those securities or as the Directors otherwise consider necessary, but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; and

(C) such authority shall expire on the date of the annual general meeting of the Company to be held in 2015 or, if earlier, 27 October 2015, but so that the Company may, in each case, before such expiry make an offer or agreement which would or might require Relevant Securities to be allotted after such expiry and the Directors may allot Relevant Securities in pursuance of any such offer or agreement as if the power conferred hereby had not expired.

With effect from the authorities granted under this paragraph 6.3 becoming effective this authority shall be in substitution for any previous authorities granted in this regard by the Company, but without prejudice to any allotment of Relevant Securities or grant of rights already made, offered or agreed to be made pursuant to such authorities.

SPECIAL RESOLUTIONS

7. THAT:

• 7.1 subject to the passing of Resolution 6 and conditional upon Admission occurring by 8.00 a.m. on 12 February 2015 (or such later time and/or date as the Directors may in their absolute discretion determine), and in substitution for all existing authorities, the Directors be and are hereby empowered pursuant to section 570 of the Act to allot equity securities (within the meaning of section 560 of the Act) of the Company for cash pursuant to the general authority conferred by Resolution 6 above as if section 561(1) of the Act did not apply to any such allotment and to sell equity securities (within the meaning of section 560 of that Act) if, immediately before the sale, such shares are held by the Company as treasury shares for cash as if section 561(1) of that Act did not apply to such sale, provided that this power shall be limited to the allotment of equity securities and the sale of treasury shares:
• (A) in connection with an offer of such securities (but in the case of the authority granted under sub-paragraphs 6.1(B) and 6.2(B) of Resolution 6, by way of a rights issue only) to holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings of such shares and to holders of other equity securities, as required by the rights of those securities or as the Directors otherwise consider necessary, but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates or any legal or practical problems in or under the laws of any territory, or the requirements of any regulatory body or stock exchange; and
• (B) (other than pursuant to sub-paragraph 7.1(A) above) up to an aggregate nominal amount of:
  • a. £709,225; and
  • b. conditional also upon Merger Admission, £1,142,203, less an amount equal to the amount of equity securities allotted pursuant to the authority granted under paragraph 7.1(B)a above; and
• 7.2 subject to the passing of Resolution 6 and to Resolution 5 not being passed and conditional upon Merger Admission occurring by 8.00 a.m. on 12 February 2015 (or such later time and/or date as the Directors may in their absolute discretion determine), and in substitution for all existing authorities, the Directors be and are hereby empowered pursuant to section 570 of the Act to allot equity securities (within the meaning of section 560 of the Act) of the Company for cash pursuant to the general authority conferred by Resolution 6 above as if section 561(1) of the Act did not apply to any such allotment and to sell equity securities (within the meaning of section 560 of that Act) if, immediately before the sale, such shares are held by the Company as treasury shares for cash as if section 561(1)

of that Act did not apply to such sale, provided that this power shall be limited to the allotment of equity securities and the sale of treasury shares:

• (A) in connection with an offer of such securities (but in the case of the authority granted under sub-paragraph 6.3(B) of Resolution 6, by way of a rights issue only) to holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings of such shares and to holders of other equity securities, as required by the rights of those securities or as the Directors otherwise consider necessary, but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates or any legal or practical problems in or under the laws of any territory, or the requirements of any regulatory body or stock exchange; and
• (B) (other than pursuant to sub-paragraph 7.2(A) above) up to an aggregate nominal amount of £1,620,691.

All power conferred by this Resolution 7 shall expire on the date of the annual general meeting of the Company to be held in 2015 or, if earlier, 27 October 2015 but so that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted or treasury shares to be sold (as the case may be) after such expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not expired. This Resolution revokes and replaces all unexercised powers previously granted to the Directors to allot equity securities as if section 561(1) of the Act did not apply but without prejudice to any allotment of equity securities already made or agreed to be made pursuant to such authorities.

1. THAT, pursuant to section 21(1) of the Act, the articles of association of the Company be altered by inserting the following new article 122A at the end of current article 122:

"122A.Capitalisation of profits and reserves in connection with employee share plans

• 122A.1 This Article applies where:
• (a) a person is granted pursuant to an employee share plan a right to subscribe for shares in the capital of the Company in cash (or for nil consideration) at a subscription price which is less than the nominal value of the relevant shares;
• (b) as a result of a share consolidation or other variation of capital, the nominal value of shares in the capital of the Company is increased such that the subscription price (if any) at which any person is entitled to subscribe for shares in the capital of the Company pursuant to an employee share plan is less than the nominal value of the relevant shares; or
• (c) pursuant to an employee share plan, the terms on which any person is entitled to subscribe for shares in the capital of the Company are adjusted as a result of a capitalisation issue, rights issue or other variation of capital so that the subscription price is less than the nominal value of the relevant shares.
• 122A.2 In any such case the Board:
• (a) may transfer to a reserve account a sum equal to the deficiency between the subscription price if any and the nominal value of the shares (the "Cash Deficiency") from the profits or reserves of the Company specified in Article 122A.5; and
• (b) subject to Article 122A.4, shall not apply that reserve account for any purpose other than paying up the Cash Deficiency on the allotment of those shares.
• 122A.3 Whenever the Company is required to allot shares pursuant to such a right to subscribe, the Board may, subject to the provisions of the Act:
• (a) appropriate to capital out of the reserve account an amount equal to the Cash Deficiency applicable to those shares;

• (b) apply that amount in paying up the deficiency on the nominal value of those shares; and

• (c) allot those shares credited as fully paid to the person entitled to them.

• 122A.4 If any person previously entitled to subscribe for shares as described in Article 122A.1 ceases to be so entitled, the restrictions on the reserve account shall cease to apply in relation to such part of the account as is equal to the amount of the Cash Deficiency applicable to those shares.
• 122A.5 The profits or reserves of the Company to which Articles 122A.1 to 122A.4 (inclusive) apply shall be:
• (a) any profits of the Company, including, without limitation any profits arising from appreciation in capital assets (whether realised by sale of ascertained by valuation); and
• (b) any amounts for the time being standing to any reserve or reserves, to the capital redemption reserve, to the share premium account, to the share based payment reserve, or to any other special account.

Explanatory Notes

For the purposes of Resolution 6 "Relevant Securities" means;

• 1. shares in the Company other than shares allotted pursuant to:
• (A) an employees' share scheme (as defined by section 1166 of the Act);
• (B) a right to subscribe for shares in the Company where the grant of the right itself constituted a Relevant Security; or
• (C) a right to convert securities into shares in the Company where the grant of the right itself constituted a Relevant Security; and
• 1. any right to subscribe for or to convert any security into shares in the Company other than rights to subscribe for or convert any security into shares allotted pursuant to an employees' share scheme (as defined by section 1166 of the Act). References to the allotment of Relevant Securities in the resolution include the grant of such rights.

By Order of the Board. Jane Smithard Company Secretary

8 October 2014

Registered office Micro Focus International plc The Lawn 22-30 Old Bath Road Newbury Berkshire RG14 1QN United Kingdom

Registered in England Number: 05134647

Notes:

• 1. A Shareholder is entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at the General Meeting. A Shareholder may appoint more than one proxy in relation to the General Meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. A proxy need not be a Shareholder of the Company. A Form of Proxy which may be used to make such appointment and give proxy instructions accompanies this Notice of General Meeting. In order to be valid an appointment of proxy must be returned by post, by courier or by hand to the Company's Registrars, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom, and must be received by 3.00 p.m. (UK time) on 23 October 2014, or if the General Meeting is adjourned, 48 hours (excluding non-business days) prior to the adjourned meeting. A proxy may also be appointed electronically and further details are set out at Note 2 and Note 7 below. Appointment of a proxy does not preclude a Shareholder from attending the General Meeting and voting in person. If you do not have a Form of Proxy and believe that you should have one, or if you require additional forms, please contact the Company's Registrars, Equiniti on 0871 384 2873 (calls to this number cost 8 pence per minute, other providers' costs may vary) or +44 121 415 0164 from outside the UK. Lines are open from 8.30 a.m. to 5.30 p.m. (Monday to Friday).
• 1. To appoint a proxy electronically log on to the Company's Registrars' website at www.sharevote.co.uk. Shareholders will need their Voting ID, Task ID and Shareholder Reference Number, printed on the face of the accompanying Form of Proxy. Full details of the procedures are given on the website. Alternatively, if you have already registered with the Registrars' online portfolio service, Shareview, you can submit your proxy by logging on to your portfolio at www.shareview.co.uk and clicking on 'Company Meetings'. Instructions are given on the website. If you are a member of CREST, you may use the CREST electronic appointment service, details of which are set out at Note 7. Any person to whom this Notice is sent who is a person nominated under section 146 of the Act to enjoy information rights (a "Nominated Person") may, under an agreement between him/her and the Shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the Shareholder as to the exercise of voting rights.
• 1. The statement of the rights of Shareholders in relation to the appointment of proxies in Note 1 above does not apply to Nominated Persons. Such rights can only be exercised by Shareholders of the Company.
• 1. A Shareholder has a right to put to the Directors any questions relating to the business to be dealt with at the General Meeting and subject to the exemptions under section 319A of the Act the Company must answer any such questions.
• 1. The Company, pursuant to the Uncertificated Securities Regulations 2001, specifies that only those Shareholders on the register of members as at 6.00 p.m. (UK time) on 23 October 2014 shall be entitled to attend or vote at the General Meeting in respect of the number of shares registered in their names at that time (or, in the event of any adjournment, at 6.00 p.m. (UK time) on the day which is two business days before the day of the adjourned meeting). Changes to entries on the ordinary register after 6.00 p.m. (UK time) on 23 October 2014 shall be disregarded in determining the right of any person to attend or vote at the General Meeting (unless the General Meeting is adjourned in which case the previous provisions of this Note 5 apply).
• 1. As at 7 October 2014 (being the last practicable business day prior to the publication of the Combined Circular and Prospectus) the Company's issued share capital consisted of 152,767,938 Ordinary Shares, carrying one vote each, of which 12,871,427 were held in treasury, representing 9.20 per cent. of the total ordinary share capital in issue (excluding treasury shares). The total number of voting rights in the Company as at 7 October 2014 were 139,896,511.
• 1. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications, and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the Company's agent (ID RA19) by 3.00 p.m. on 23 October 2014. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Application Host) from which the Company's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
• 1. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
• 1. If all shares have been sold or transferred by the addressee, this Notice and any other relevant documents (but not any personalised Form of Proxy or Form of Election) should be passed to the person through whom the sale or transfer was effected for transmission to the purchaser or transferee.
• 1. A copy of the Combined Circular and Prospectus including the Notice of General Meeting can be found on the Company's website, www.microfocus.com, free of charge.
• 1. Copies of the Combined Circular and Prospectus, the Articles as amended by the Resolutions and the pro forma deed relating to the Additional Share Grant will be available for inspection at the registered office of the Company (being the location of the General Meeting) during usual business hours (Saturdays, Sundays and English public holidays excepted) from the date of this Notice until the conclusion of the General Meeting and at the General Meeting itself for at least 15 minutes prior to the General Meeting.
• 1. A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as a member provided that no more than one corporate representative exercises powers over the same share.
• 1. In the case of joint holders, the vote of the senior holder who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the other joint holders and, for this purpose, seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the relevant joint holding.
• 1. In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to the Company's Registrars, Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice. The revocation notice must be received by Equiniti by 3.00 p.m. (UK time) on 23 October 2014, or if the General Meeting is adjourned, 48 hours prior (excluding non-business days) to the adjourned meeting.
• 1. You may not use any electronic address provided in either this Notice of General Meeting or any related document (including the Form of Proxy) to communicate with the Company for any purpose other than those expressly stated.
• 1. In accordance with section 311A of the Act, the contents of this Notice, details of the total number of shares in respect of which members are entitled to exercise voting rights at the General Meeting and, if applicable, any members' statements, members' resolutions or members' matters of business received by the Company after the date of this Notice will be available on the Company's website www.microfocus.com.
• 1. Unless the context otherwise requires, the definitions used in the Combined Circular and Prospectus shall apply in this Notice.