Parallax Portfolio Company to List on London Stock Exchange

LONDON – Apr. 13, 2005: 

Key Highlights

• Micro Focus International plc (“Micro Focus”) (the intended holding company for the Micro Focus Group), a UK software company, announces that it is planning to seek a listing on the London Stock Exchange in the first half of 2005, subject to market and other conditions.

• Micro Focus software enables its customers to reuse their existing, or legacy, IT assets in modern contexts, rather than having to replace them.

• Micro Focus software helps reduce costs, increase agility and reduce risk for customers by unlocking the business value within their legacy systems.

• Micro Focus operates in the legacy development and deployment market, a subset of the large and growing application development and deployment software market. Based on a recent industry report, the application development and deployment software market generated revenues of $33.9 billion in 2003 and is expected to increase at an annual compound growth rate of 6% from 2003 to 2008, reaching revenues of $45.4 billion by the end of 2008.

• Micro Focus has a broad industry footprint with blue chip customers and partners. Its software is used by over 70 of the 2004 Fortune “Global 100” companies, and by more than 5,000 customers in total.

• Micro Focus has exhibited a strong financial performance to date. For the nine months ended 31 January 2004 compared with the nine months ended 31 January 2005, Micro Focus’ turnover increased by 20.4 per cent., from US $91.7 million to US $110.5 million respectively, with adjusted EBITDA for the same periods increasing by 54.8 per cent., from US $23.1 million to US $35.7 million, respectively. Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortisation and excludes management charges paid to Golden Gate Capital, stock based compensation, redundancy costs and restructuring costs.

• The IPO is expected to be by way of a placing to institutions. UBS Investment Bank and Goldman Sachs International have been appointed Joint Global Co-Ordinators of the Global Offer.

Board Appointments

In preparation for the planned listing on the London Stock Exchange, Micro Focus announces the appointment of a Non-executive Chairman and an additional Non-executive Director with immediate effect:

Kevin Loosemore has been appointed Non-executive Chairman. Until 31 March 2005, Mr Loosemore was Chief Operating Officer of Cable & Wireless plc. He has more than 20 years experience in the information technology and communications industries in which he has held senior roles including President, Motorola Europe, Middle East and Africa and Chief Executive of IBM UK. Having served on the management committees of both Motorola and IBM he has also been on the board as Non-executive Director of The Big Food Group plc and Executive Director of De La Rue plc.

David Maloney has been appointed Non-executive Director. Mr Maloney is a Non-executive Director of Virgin Mobile Holdings (UK) plc and was previously Chief Financial Officer of Le Meridien Hotels and Resorts and of Thomson Travel Group and Preussag Airlines as well as Group Finance Director of Avis Europe plc. He was on the Boards of both Virgin Mobile Holdings (UK) plc and Avis Europe plc when they listed on the London Stock Exchange in 2004 and 1997, respectively.

With these appointments, Micro Focus now has two Executive and four Non-executive Directors on its Board. Prior to listing we are planning to add one additional independent Director.

Tony Hill, Chief Executive Officer of Micro Focus, commented:

“We believe that Micro Focus’ value proposition to its customers has never been more relevant. As companies around the world seek to reduce operational cost and become more agile, so they are increasingly looking to exploit their investment in legacy IT assets. By helping our customers manage legacy more effectively and drive reuse within contemporary contexts, Micro Focus unlocks sustainable business value. Moreover, our evolutionary approach comes with much less risk than alternative strategies based on wholesale system replacement.

The company has delivered strong revenue and operating margin growth since it was taken private in a leveraged buy-out in August 2001. Today we have a blue-chip customer base, which includes over 70 firms within the 2004 Fortune “Global 100” companies and see significant opportunities for growth particularly through our global partnerships. While future growth is likely to be primarily organic, it may also include selective small scale technology based acquisitions. The IPO is expected to provide funding to capitalise on these opportunities and to drive expansion. In addition, the IPO is expected to enable Micro Focus to achieve a more conventional capital structure for a growth business and an enhanced quoted profile.

In addition, we are delighted to welcome Kevin Loosemore and David Maloney to our Board. They bring with them extensive relevant experience which will, I am sure, be invaluable to the business as we progress towards our listing and as a public company in the longer-term.”

Enquiries:

Micro Focus                                         Tel: +44 (0)1635 32646

Tony Hill Chief Executive Officer, Richard Lloyd – Chief Financial Officer

UBS Investment Bank                           Tel: +44 (0)20 7567 8000

Benjamin Robertson – Executive Director, Jonathan Evans – Director

Goldman Sachs International               Tel: +44 (0)20 7774 1000

Richard Snow – Managing Director, Basil Geoghegan – Executive Director

Financial Dynamics                              Tel: +44 (0)20 7831 3113

Giles Sanderson, Harriet Keen, Cass Helstrip

This announcement has been issued by and is the sole responsibility of the directors of Micro Focus International plc (the “Company). The contents of this announcement have been approved by UBS Limited of 1 Finsbury Avenue, London EC2M 2PP (“UBS” or “UBS Investment Bank”) and by Goldman Sachs International of Peterborough Court, 133 Fleet Street, London EC4A 2BBsolely for the purposes of section 21(2)(b) of The Financial Services and Markets Act 2000. UBS and Goldman Sachs International are acting exclusively for the Company and Golden Gate Capital and no-one else in connection with the proposed offer of shares in the Company (the “Offer”) and willnot be responsible to anyone other than the Company and Golden GateCapital for providing the protections afforded to clients of UBS and Goldman Sachs International or for providing advice in relation to the Offer.

This announcement does not constitute or form part of any offer of securities, or constitute a solicitation of any offer to purchase or subscribe for securities, and any acquisition of or application for shares in the Offer should only be made on the basis of information contained in the listing particulars (the “Listing Particulars”) to be issued in due course in connection with the Offer, and any supplement or amendment thereto. The Listing Particulars will contain certain detailed information about the Company and its management, as well as financial statements and other financial data.

This announcement is not for release, publication or distribution, directly or indirectly, in or into Australia, Canada, Japan or theUnited States.

This announcement does not constitute an offer of securities for sale in any jurisdiction, including the United States. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”), and may not be offered or sold in the United States unless they are registered under the Securities Act or pursuant to an available exemption therefrom. No public offering of securities of the Company is being made in the United States.

Certain statements in this announcement are “forward-looking statements”. The forward-looking statements can be identified by the use of forward-looking terminology including the terms ‘believes’, ‘plans’, ‘projects’, ‘targets’, ‘aims’, ‘would’, ‘could’, ‘anticipates’, ‘expects’, ‘intends’, ‘may’ or ‘will’ and include statements that the Company makes concerning the intended results of its strategy. The Company’s actual results may differ materially from those predicted by the forward-looking statements. Subject to any obligations under the listing rules of the UK Listing Authority following admission to the Official List of the London Stock Exchange, the Company undertakes no obligation to update publicly or revise forward-looking statements, except as required by law. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.

This does not constitute a recommendation concerning the Offer. The value of shares can go down as well as up. Past performance is not a guide to future performance. Potential investors should consult a professional advisor as to the suitability of any offering for the individual concerned.

Stabilisation/FSA

Micro Focus International plc to List on London Stock Exchange

Business of Micro Focus

Micro Focus is a leading provider of legacy development and deployment software with nearly 30 years of expertise. Its software is used by over 70 companies within the 2004 Fortune “Global 100” companies and the Company estimates that there are well in excess of one million licensed users of Micro Focus software worldwide. Micro Focus’ innovative software enables its customers to continue to use and extract value from investments in existing information technology infrastructure (i.e., “legacy” assets), including people and processes. By exploiting the latest technologies and leveraging the strength of its partners worldwide, Micro Focus’ software solutions enable its customers to improve the productivity of application developers, take advantage of web services and migrate existing applications from older platforms, such as the mainframe, to contemporary platforms, such as Windows. As a result, Micro Focus allows its customers to reduce application development costs, increase the flexibility and value of their information technology resources and manage risks inherent to legacy development and deployment.

Micro Focus markets two solutions that allow organisations to unlock the value of their legacy assets – ‘Leverage & Extend’ and ‘Lift & Shift’. Micro Focus’ core ‘Leverage & Extend’ solution is designed to increase the productivity of application developers and allow customers to provide new internal and external user communities with access to critical legacy applications and services residing on older platforms. Micro Focus’ more recent ‘Lift & Shift’ solution allows its customers to migrate legacy applications by providing a mainframe compatible environment on Windows, UNIX and Linux.

The ‘Leverage & Extend’ and ‘Lift & Shift’ solutions can be implemented across a broad range of technologies and as they are complementary, may be implemented individually or in combination with each other. Micro Focus’ solutions enable organisations to extract value from core legacy assets in a way that is evolutionary (as opposed to wholesale replacement), cost-effective and proven.

Underlying Micro Focus’ ability to deliver complementary and comprehensive legacy development and deployment solutions is its commitment to remain at the forefront of technology and product development. Micro Focus has made a significant investment in developing the technologies that support its ‘Leverage & Extend’ and ‘Lift & Shift’ solutions, and is committed to building upon its existing expertise in order to ensure that its software integrates the latest technologies and is capable of being implemented across a wide array of current and developing platforms and architectures.

Ultimately, Micro Focus believes that its comprehensive understanding of legacy technologies, combined with its commitment to software innovation, gives it a distinctive position in the legacy development and deployment market.

Market Opportunity

Micro Focus operates in the legacy development and deployment market, a subset of the large and growing application development and deployment software market. Based on a recent industry report, the application development and deployment software market generated revenues of $33.9 billion in 2003 and is expected to increase at an annual compound growth rate of 6% from 2003 to 2008, reaching revenues of $45.4 billion by the end of 2008.

Financials

Micro Focus is a global company that employs approximately 500 people worldwide, with principal offices in the United Kingdomand United States. For the nine months ended 31 January 2004 compared with the nine months ended 31 January 2005, Micro Focus’ turnover increased by 20.4 per cent., from US$91.7 million to US$110.5 million respectively with adjusted EBITDA for the same periods increasing by 54.8 per cent., from US $23.1 million to US $35.7 million, respectively. Adjusted EBITDA represents earnings before interest, taxes, depreciation and amortisation and excludes management charges paid to Golden Gate Capital, stock based compensation, redundancy costs and restructuring costs. In addition, comparing the same periods, Micro Focus’ operating profit increased by 70.1 per cent., from US$16.7 million to US$28.4 million, respectively. For the nine months to 31 January 2005, the geographic split of turnover was 49.3% North America, 38.1% Europe and the Middle East and 12.6% rest of the world.

History

The Micro Focus business, founded in 1976, traces its origins back to Micro Focus Group plc, an earlier company, which had its ordinary shares listed on the London Stock Exchange and American Depositary Receipts quoted on the NASDAQ Stock Market. In 1998, Micro Focus Group plc purchased Intersolv, Inc., a US company, in a share exchange offer. The combined entity was named MERANT, which maintained a listing on the London Stock Exchange and quotation on NASDAQ until it was acquired by Serena Software Inc. in 2004. In August 2001, following a strategic decision by MERANT to refocus its business, MERANT sold the operations that form the current business of Micro Focus to a newly formed and independent company owned by Golden Gate Capital. Since that sale, Micro Focus has refocused its business on its core competency of legacy development and deployment. As of today and prior to the issue of any new shares, Golden Gate Capital holds approximately 80 per cent. of Micro Focus’ share capital, Parallax Capital Partners holds approximately 8 per cent. and Micro Focus employees hold the remainder.

Customers

Micro Focus targets three main customer segments:

Direct customers pay software licence and maintenance fees directly to Micro Focus and use Micro Focus’ software to maintain and operate core legacy business applications on contemporary platforms.

Indirect customers purchase Micro Focus software and pay software licence and maintenance fees through packaged application providers or systems integrators. Packaged application providers embed Micro Focus software within their packaged applications enabling those applications to be delivered across a broad range of contemporary platforms and architectures. Systems integrators use Micro Focus software to design and implement large, complex legacy development and deployment projects and to provide the technological foundation for the ongoing use of those applications once the modernisation project is complete.

Resellers sell Micro Focus products in geographic areas where Micro Focus does not have a physical presence.

The Board

Micro Focus’ Board now consists of the following directors:

Kevin Loosemore (Non-executive Chairman) – Mr Loosemore was Chief Operating Officer of Cable & Wireless plc. He has more than 20 years experience in the information technology and communications industries in which he has held senior roles including President, Motorola Europe, Middle East and Africa and Chief Executive of IBM UK. Having served on the management committees of both Motorola and IBM he has also been on the board as Non-executive Director of The Big Food Group plc and Executive Director of De La Rue plc.

Anthony Hill (Executive Director and Chief Executive Officer) – Dr Hill became Chief Executive Officer and president of the Company, in August 2001, having joined Micro Focus in 1987. Prior to joining the Company, Dr Hill was European manager for software products at Scientific Software Intercomp, and was a senior consultant at UK Systems House Scicon.

Richard Lloyd (Executive Director and Chief Financial Officer) – Mr Lloyd was named the Company Chief Financial Officer in August 2001, having joined Micro Focus in 1991. Prior to joining the Company, Mr Lloyd was controller at Cullinet Software and has extensive experience in the financial services, manufacturing and government sectors.

David Dominik (Non-executive Director) – Mr Dominik has been a Managing Director of Golden Gate Capital since its inception in 2000. Prior to co-founding Golden Gate Capital, Mr Dominik spent ten years as a managing director at Bain Capital.

Prescott Ashe (Non-executive Director) – Mr Ashe has been a Managing Director of Golden Gate Capital since its inception in 2000. Prior to co-founding Golden Gate Capital, Mr Ashe was a Principal at Bain Capital.

David Maloney (Non-executive Director) – Mr Maloney is a Non-executive Director of Virgin Mobile Holdings (UK) plc. Previously, Mr Maloney was Chief Financial Officer of Le Meridien Hotels and Resorts and of Thomson Travel Group and Preussag Airlines as well as Group Finance Director and Corporate Development Director of Avis Europe plc. He was on the Boards of both Virgin Mobile Holdings (UK) plc and Avis Europe plc when they listed on the London Stock Exchange in 2004 and 1997, respectively.

Reasons for IPO

Micro Focus has delivered strong revenue and operating margin growth since it was taken private in a leveraged buy-out in 2001 and is in a high growth sector of the IT software market, which provides the business with significant opportunities. While these opportunities are likely to be primarily organic, they may also include selective technology based acquisitions. The IPO is expected to provide funding to capitalise on these opportunities and to drive expansion. In addition the IPO is expected to enable Micro Focus to achieve a more conventional capital structure for a growth business and an enhanced public profile.

 

This announcement has been issued by and is the sole responsibility of the directors of Micro Focus International plc (the “Company). The contents of this announcement have been approved by UBS Limited of 1 Finsbury Avenue, London EC2M 2PP (“UBS” or “UBS Investment Bank”) and by Goldman Sachs International of Peterborough Court, 133 Fleet Street, London EC4A 2BBsolely for the purposes of section 21(2)(b) of The Financial Services and Markets Act 2000. UBS and Goldman Sachs International are acting exclusively for the Company and Golden Gate Capital and no-one else in connection with the proposed offer of shares in the Company (the “Offer”) and will not be responsible to anyone other than the Company and Golden Gate Capital for providing the protections afforded to clients of UBS and Goldman Sachs International or for providing advice in relation to the Offer.

This announcement does not constitute or form part of any offer of securities, or constitute a solicitation of any offer to purchase or subscribe for securities, and any acquisition of or application for shares in the Offer should only be made on the basis of information contained in the listing particulars (the “Listing Particulars”) to be issued in due course in connection with the Offer, and any supplement or amendment thereto. The Listing Particulars will contain certain detailed information about the Company and its management, as well as financial statements and other financial data.

This announcement is not for release, publication or distribution, directly or indirectly, in or into Australia, Canada, Japan or theUnited States.

This announcement does not constitute an offer of securities for sale in any jurisdiction, including the United States. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”), and may not be offered or sold in the United States unless they are registered under the Securities Act or pursuant to an available exemption therefrom. No public offering of securities of the Company is being made in the United States.

Certain statements in this announcement are “forward-looking statements”. The forward-looking statements can be identified by the use of forward-looking terminology including the terms ‘believes’, ‘plans’, ‘projects’, ‘targets’, ‘aims’, ‘would’, ‘could’, ‘anticipates’, ‘expects’, ‘intends’, ‘may’ or ‘will’ and include statements that the Company makes concerning the intended results of its strategy. The Company’s actual results may differ materially from those predicted by the forward-looking statements. Subject to any obligations under the listing rules of the UK Listing Authority following admission to the Official List of the London Stock Exchange, the Company undertakes no obligation to update publicly or revise forward-looking statements, except as required by law. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.

This does not constitute a recommendation concerning the Offer. The value of shares can go down as well as up. Past performance is not a guide to future performance. Potential investors should consult a professional advisor as to the suitability of any offering for the individual concerned.

Stabilisation/FSA