TIDMMCRO
RNS Number : 8068G
Micro Focus International plc
01 June 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION. THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
1 June 2017
Micro Focus International plc
HPE Software second quarter and first half results
HPE Software
Hewlett Packard Enterprise ("HPE") yesterday announced its
financial results for the three months ended 30 April 2017 and the
six months ended 30 April 2017. The full announcement by HPE and
accompanying presentation can be viewed on the following
website:
http://investors.hpe.com/financial
On 7 September 2016, Micro Focus International plc ("Micro
Focus" "the Company" or "the Group") and HPE announced that they
had reached a definitive agreement (the "Merger Agreement") on the
terms of a transaction (the "Transaction") pursuant to which the
Company agreed to combine with HPE's software business segment
("HPE Software") by way of a merger (the "Merger") of a wholly
owned subsidiary of Micro Focus, with Seattle SpinCo, Inc., a
wholly owned subsidiary of HPE formed to hold HPE Software for the
purposes of the Transaction. The Transaction was approved by Micro
Focus shareholders on 26 May 2017.
The Transaction constitutes a reverse takeover for Micro Focus
under the Listing Rules. Therefore, in accordance with Listing Rule
5.6.15G(4), Micro Focus discloses the following information from
HPE's financial results for the three months ended 30 April 2017
and the six months ended 30 April 2017, as it relates to HPE
Software. The below financial information supersedes the
information contained in the HPE Software trading update which was
released on 9 May 2017.
Second quarter HPE Software highlights
-- Second quarter reported revenue was US$685m, down 11% year
over year, down 9% when adjusted for divestitures and currency as
declines in Licence and Professional Services more than offset
growth in SaaS as the team works through the transition to Micro
Focus
-- Second quarter reported operating profit of US$181m,
representing an improved operating margin of 26.4% predominantly
driven by the team's continued focus on disciplined cost
controls
-- This is a 160 bps improvement year over year as reported, and
the improvement is over 10 points when adjusted for one-time items
last year including the Tipping Point divestiture gain
First half HPE Software highlights
-- First half reported revenue was US$1,406m, down 10 % year
over year, down 5% when adjusted for divestitures and currency
-- First half reported operating profit of US$335m, representing
an improved operating margin of 23.8%
Summary financials
Revenue by type
The tables below outline the reported revenues for HPE Software
as reported by HPE for both the three months and the six months
ended 30 April of 2017 and 2016 respectively.
HPE Software HPE Software % growth
Reported revenues - three months - three months
ended 30 Apr ended 30 Apr
2017 2016
US$m US$m
===================== ================ ================ =========
Licence revenue $140 $198 (29)%
Support revenue 387 403 (4)%
Professional
services revenue 85 102 (17)%
SaaS revenue 73 71 3%
===================== ================ ================ =========
Total reported
revenue $685 $774 (11)%
===================== ================ ================ =========
HPE Software HPE Software % growth
Reported revenues - six months - six months
ended 30 Apr ended 30 Apr
2017 2016
US$m US$m
===================== ============== ============== =========
Licence revenue $311 $385 (19)%
Support revenue 773 828 (7)%
Professional
services revenue 174 198 (12)%
SaaS revenue 148 143 3%
===================== ============== ============== =========
Total reported
revenue $1,406 $1,554 (10)%
===================== ============== ============== =========
Operating profit
The table below outlines the reported operating profit for HPE
Software as reported by HPE for both the three months and the six
months ended 30 April of 2017 and 2016 respectively.
HPE Software HPE Software
- three months - three months
ended 30 Apr ended 30 Apr
2017 US$m 2016 US$m
======================== ================ ================
Operating profit $181 $192
======================== ================ ================
% margin (based
on reported revenues) 26.4% 24.8%
======================== ================ ================
HPE Software HPE Software
- six months - six months
ended 30 Apr ended 30 Apr
2017 US$m 2016 US$m
======================== ============== ==============
Operating profit $335 $328
======================== ============== ==============
% margin (based
on reported revenues) 23.8% 21.1%
======================== ============== ==============
Adjusted revenue numbers
The Appendix sets out a reconciliation of the reported revenue
numbers referred to above for the adjustments made to take account
of divestitures and changes in currency exchange rates. These
adjusted revenue numbers are shown below.
HPE Software HPE Software % growth
Adjusted revenues - three months - three months (adjusted
ended 30 Apr ended 30 Apr for divestitures
2017 2016 and currency)
US$m US$m
===================== ================ ================ ==================
Licence revenue $139 $193 (28)%
Support revenue 391 392 (0)%
Professional
services revenue 86 102 (16)%
SaaS revenue 74 71 4%
===================== ================ ================ ==================
Total adjusted
revenue $690 $758 (9)%
===================== ================ ================ ==================
HPE Software HPE Software % growth
Adjusted revenues - six months - six months (adjusted
ended 30 Apr ended 30 Apr for divestitures
2017 2016 and currency)
US$m US$m
===================== ============== ============== ==================
Licence revenue $305 $363 (16)%
Support revenue 782 789 (1)%
Professional
services revenue 177 198 (11)%
SaaS revenue 150 143 5%
===================== ============== ============== ==================
Total adjusted
revenue $1,414 $1,493 (5)%
===================== ============== ============== ==================
For further information please contact:
Micro Focus International Plc
Kevin Loosemore (Executive Chairman)
Mike Phillips (Chief Financial Officer)
Tim Brill (Director, Corporate Communications & IR)
+44 16 3556 5605
Powerscourt (PR adviser)
Juliet Callaghan
+44 20 7250 1446
About Micro Focus
Micro Focus (LSE: MCRO.L) is a global enterprise software
company supporting the technology needs and challenges of the
Forbes Global 2,000 (the top 2,000 public companies in the world by
as determined Forbes magazine). Our solutions help organisations
leverage existing IT investments, enterprise applications and
emerging technologies to address complex, rapidly evolving business
requirements while protecting corporate information at all times.
Micro Focus's Product Portfolios are Micro Focus and SUSE. Within
Micro Focus our solution portfolios are COBOL Development and
Mainframe Solutions, Host Connectivity, Identity and Access
Security, IT Development and Operations Management Tools, and
Collaboration and Networking. For more information, visit:
www.microfocus.com. SUSE, a pioneer in Open Source software,
provides reliable, interoperable Linux, cloud infrastructure and
storage solutions that give enterprises greater control and
flexibility. For more information, visit: www.SUSE.com.
About HPE Software
HPE Software is a leading global infrastructure software
provider that allows customers to automate IT operations to
simplify, accelerate and secure business processes. The company
offers a broad range of software for enterprises of all sizes
across four pillars (I) IT Operations Management, (II) Application
Testing & Delivery Management, (III) Security and Information
Governance and (IV) Big Data Platform Analytics. Its software
offerings include licences, support, SaaS and Professional Services
across its product portfolio.
The business operates a global footprint spanning the Americas,
Asia Pacific & Japan and EMEA regions, with over 30,000
customers across the world. The business currently works with 98 of
the Fortune 100 companies.
IMPORTANT NOTICE:
The information contained in this announcement is not for
release, publication or distribution to persons in any jurisdiction
where to do so would breach any applicable law. No public offer of
securities is being made by virtue of this announcement.
This announcement has been prepared for the purposes of
complying with the applicable laws and regulations of the United
Kingdom and the information disclosed may not be the same as that
which would have been disclosed if this announcement had been
prepared in accordance with the laws and regulations of any
jurisdiction outside of the United Kingdom.
The release, publication or distribution of this announcement
in, into or from jurisdictions outside the United Kingdom may be
restricted by law and therefore persons into whose possession this
announcement comes should inform themselves about, and observe such
restrictions. Any failure to comply with the restrictions may
constitute a violation of the securities law of any such
jurisdiction.
ROUNDING OF FIGURES
Certain figures contained in this announcement, including
financial information, have been subject to rounding adjustments.
Accordingly, in certain instances, the sum or percentage change of
the numbers contained in this announcement may not conform exactly
with the total figure given.
NO INCORPORATION OF WEBSITES
Except as otherwise explicitly stated, neither the content of
the Micro Focus website nor the HPE website, nor any other website
accessible via hyperlinks on either such website, is incorporated
into, or forms part of, this communication.
NO PROFIT FORECAST
No statement in this announcement is intended as a profit
forecast of Micro Focus or a profit estimate of Micro Focus and no
statement in this announcement should be interpreted to mean that
earnings per Micro Focus share for the current or future financial
years would necessarily match or exceed the historical published
earnings per Micro Focus share.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
Information set forth in this announcement, oral statements made
regarding the Transaction, and other information published by Micro
Focus or HPE may contain certain statements about Micro Focus, HPE
and HPE Software that are "forward-looking statements" within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995. The forward-looking statements contained in this announcement
may include statements about the expected effects on Micro Focus,
HPE and HPE Software of the Transaction, the anticipated timing and
benefits of the Transaction, Micro Focus' and HPE Software's
anticipated standalone or combined financial results and all other
statements in this announcement other than historical facts.
Without limitation, any statements preceded or followed by or that
include the words "targets", "plans", "believes", "expects",
"intends", "will", "likely", "may", "anticipates", "estimates",
"projects", "should", "would", "expect", "positioned", "strategy",
"future" or words, phrases or terms of similar substance or the
negative thereof, are forward-looking statements. These statements
are based on the current expectations of the management of Micro
Focus, HPE or HPE Software (as the case may be) and are subject to
uncertainty and changes in circumstances and involve risks and
uncertainties that could cause actual results to differ materially
from those expressed or implied in such forward-looking statements.
As such, forward-looking statements should be construed in light of
such factors. Neither Micro Focus nor HPE, nor any of their
respective associates or directors, officers or advisers, provides
any representation, assurance or guarantee that the occurrence of
the events expressed or implied in any forward-looking statements
in this announcement will actually occur or that if any of the
events occur, that the effect on the operations or financial
condition of Micro Focus, HPE or HPE Software will be as expressed
or implied in such forward-looking statements. Forward-looking
statements contained in this communication based on past trends or
activities should not be taken as a representation that such trends
or activities will necessarily continue in the future. In addition,
these statements are based on a number of assumptions that are
subject to change. Such risks, uncertainties and assumptions
include: the satisfaction of the conditions to the Transaction and
other risks related to the completion of the Transaction and
actions related thereto; Micro Focus' and HPE's ability to complete
the Transaction on the anticipated terms and schedule; risks
relating to any unforeseen liabilities of Micro Focus or HPE
Software; future capital expenditures, expenses, revenues,
earnings, synergies, economic performance, indebtedness, financial
condition, losses and future prospects of Micro Focus, HPE Software
and the resulting combined company; business and management
strategies and the expansion and growth of the operations of Micro
Focus, HPE Software and the resulting combined company; the ability
to successfully combine the business of Micro Focus and HPE
Software and to realize expected operational improvement from the
Transaction; the effects of government regulation on the businesses
of Micro Focus, HPE Software or the combined company; the risk that
disruptions from the Transaction will impact Micro Focus' or HPE
Software's business; and Micro Focus', HPE Software's or HPE's
plans, objectives, expectations and intentions generally.
Additional factors can be found under "Risk Factors" in HPE's
Annual Report on Form 10-K for the fiscal year ended October 31,
2016 and subsequent Quarterly Reports on Form 10-Q. For a
discussion of important factors which could cause actual results to
differ from forward looking statements relating to Micro Focus,
refer to Micro Focus's Annual Report and Accounts 2016.
Forward-looking statements included herein are made as of the date
hereof, and none of Micro Focus, HPE Software or HPE undertakes any
obligation to update publicly such statements to reflect subsequent
events or circumstances.
Subject to any requirement under applicable law, Micro Focus
undertakes no obligation to update or revise any forward-looking
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
communication.
NO OFFER OR SOLICITATION
This announcement is for information purposes only and does not
constitute a prospectus or offering memorandum or an offer in
respect of any securities and is not intended to provide the basis
for any decision in respect of Micro Focus, HPE or any other entity
and should not be considered as a recommendation that any investor
should subscribe for or purchase any such securities. Neither the
issue of this announcement nor any part of its contents constitutes
an offer to sell or invitation to purchase any securities of Micro
Focus, HPE or any other entity and no information set out in this
announcement or referred to in other written or oral information is
intended to form the basis of any contract of sale, investment
decision or any decision to purchase any securities in it.
This announcement does not constitute an offer of securities for
sale in the United States or an offer to acquire or exchange
securities in the United States of America. No offer to acquire
securities or to exchange securities for other securities has been
made, or will be made, and no offer of securities has been made, or
will be made, directly or indirectly, in or into, or by use of the
mails, any means or instrumentality of interstate or foreign
commerce or any facilities of a national securities exchange of,
the United States of America or any other country or jurisdiction
in which such offer may not be made other than (i) in accordance
with the requirements under the US Securities Exchange Act of 1934,
as amended, a registration statement under the US Securities Act of
1933, as amended, or the securities laws of such other country or
jurisdiction, as the case may be, or (ii) pursuant to an available
exemption therefrom.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
This communication relates to, amongst other things, the
Transaction. In connection with the Transaction, Micro Focus will
file relevant materials with the SEC, including a registration
statement containing a prospectus relating to Micro Focus' American
Depositary Shares to be issued in connection with the Transaction,
and Seattle Spinco, Inc., a wholly owned subsidiary of HPE will
file a registration statement with the SEC. Micro Focus will mail
the prospectus contained in the registration statement to HPE's
stockholders. This communication is not a substitute for the
registration statements or other document(s) that Micro Focus
and/or HPE may file with the SEC in connection with the
Transaction. INVESTORS ARE URGED TO READ THE REGISTRATION
STATEMENTS AND OTHER DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PARTIES AND THE TRANSACTION. Shareholders will be able to obtain
copies of these documents (when they are available) and other
documents filed with the SEC with respect to Micro Focus free of
charge from the SEC's website at
www.sec.gov. These documents (when they are available) can also
be obtained free of charge from Micro Focus upon written request to
Micro Focus' investor relations or HPE's investor relations.
Appendix
The below tables set out the reconciliation from HPE Software
reported revenues to adjusted revenues on a quarterly basis. The
reconciliation accounts for adjustments made for divestitures and
changes in currency exchange rates over the course of the year.
Revenue has been adjusted to exclude amounts for the Tipping Point
divestiture.
HPE Software revenue by business for the three months ended 30
April 2017
HPE Software HPE Software % growth
- three - three (adjusted
months ended months ended for divestitures
30 Apr 2017 30 Apr 2016 and currency)
US$m US$m
========================= ============== ============== ==================
Reported revenue $140 $198
========================= ============== ============== ==================
Revenue adjusted
for divestitures - (5)
========================= ============== ============== ==================
Adjustment for currency (1) -
========================= ============== ============== ==================
Adjusted Licence
revenue $139 $193 (28)%
========================= ============== ============== ==================
Reported revenue 387 $403
========================= ============== ============== ==================
Revenue adjusted
for divestitures - (11)
========================= ============== ============== ==================
Adjustment for currency 4 -
========================= ============== ============== ==================
Adjusted Support
revenue $391 $392 (0)%
========================= ============== ============== ==================
Reported revenue 85 $102
========================= ============== ============== ==================
Revenue adjusted - -
for divestitures
========================= ============== ============== ==================
Adjustment for currency 1 -
========================= ============== ============== ==================
Adjusted Prof. Serv
revenue $86 $102 (16)%
========================= ============== ============== ==================
Reported revenue 73 $71
========================= ============== ============== ==================
Revenue adjusted - -
for divestitures
========================= ============== ============== ==================
Adjustment for currency 1 -
========================= ============== ============== ==================
Adjusted SaaS revenue $74 $71 4%
========================= ============== ============== ==================
HPE Software total revenue for the three months ended 30 April
2017
HPE Software HPE Software % growth
- three - three (adjusted
months ended months ended for divestitures
30 Apr 2017 30 Apr 2016 and currency)
US$m US$m
========================= ============== ============== ==================
Total reported revenue $685 $774
========================= ============== ============== ==================
Revenue adjusted
for divestitures - (16)
========================= ============== ============== ==================
Adjustment for currency 5 -
========================= ============== ============== ==================
Total adjusted revenue $690 $758 (9)%
========================= ============== ============== ==================
HPE Software revenue by business for the six months ended 30
April 2017
HPE Software HPE Software % growth
- six months - six months (adjusted
ended ended for divestitures
30 Apr 2017 30 Apr 2016 and currency)
US$m US$m
========================= ============== ============== ==================
Reported revenue $311 $385
========================= ============== ============== ==================
Revenue adjusted
for divestitures (5) (22)
========================= ============== ============== ==================
Adjustment for currency - -
========================= ============== ============== ==================
Adjusted Licence
revenue $305 $363 (16)%
========================= ============== ============== ==================
Reported revenue 773 $828
========================= ============== ============== ==================
Revenue adjusted
for divestitures (1) (39)
========================= ============== ============== ==================
Adjustment for currency 9 -
========================= ============== ============== ==================
Adjusted Support
revenue $782 $789 (1)%
========================= ============== ============== ==================
Reported revenue 174 $198
========================= ============== ============== ==================
Revenue adjusted - -
for divestitures
========================= ============== ============== ==================
Adjustment for currency 3 -
========================= ============== ============== ==================
Adjusted Prof. Serv
revenue $177 $198 (11)%
========================= ============== ============== ==================
Reported revenue 148 $143
========================= ============== ============== ==================
Revenue adjusted - -
for divestitures
========================= ============== ============== ==================
Adjustment for currency 2 -
========================= ============== ============== ==================
Adjusted SaaS revenue $150 $143 5%
========================= ============== ============== ==================
HPE Software total revenue for the six months ended 30 April
2017
HPE Software - six months HPE Software - six months % growth (adjusted for
ended ended divestitures and currency)
30 Apr 2017 30 Apr 2016
US$m US$m
============================= ============================ ============================ ===========================
Total reported revenue $1,406 $1,554
============================= ============================ ============================ ===========================
Revenue adjusted for
divestitures (6) (61)
============================= ============================ ============================ ===========================
Adjustment for currency 14 -
============================= ============================ ============================ ===========================
Total adjusted revenue $1,414 $1,493 (5)%
============================= ============================ ============================ ===========================
It is possible that the financial information contained in any
prospectus published in relation to the Transaction may differ from
the financial information included in the Appendix of this
announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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